Sitting of 15 June 1981

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRIVATE BUSINESS
  SOUTH YORKSHIRE BILL
  Read the Third time and passed.
Oral Answers to Questions
  WALES

    Unemployed Persons
    Mr. Ioan Evansasked the Secretary of State for Wales what is the latest figure available for the number of people unemployed in Wales, Mid-Glamorgan and Aberdare; and what percentage these figures represent of the working population.
    The Secretary of State for Wales (Mr. Nicholas Edwards): On 14 May 1981, there were 148,722 persons unemployed in Wales, 28,603 in Mid-Glamorgan and 3,451 in Aberdare; the equivalent of percentage rates of unemployment of 13·7 per cent., 14·8 per cent. and 15·8 per cent. respectively.
    Mr. Evans: How could the Secretary of State say at the weekend that Wales has come through the recession remarkably well when it has suffered more from unemployment that any other region in the United Kingdom, apart from the North, as the figures that he has just given show? Is he aware that this Government's policies have deliberately increased unemployment, so that it is far worse than in any other country in Europe?
    Mr. Edwards: I entirely repudiate the suggestion that the Government's policies have created the situation. Unemployment has risen under successive Governments. Competitiveness and the ability to produce goods are what is important. In my speech, I pointed out that other areas had seen numbers of jobs deteriorate faster. The Welsh share of United Kingdom unemployment has fallen from 6·3 per cent to 5·8 per cent. In view of our severe steel redundancies, it is clear that the other industrial sectors in Wales have stood up remarkably well.
    Sir Raymond Gower: I support and applaud the Government's initiative in retraining, the massive building of new factories and the administrative and budgetary changes to help small companies, and thus deal with unemployment, but will my right hon. Friend and his Cabinet colleagues remember, in their anxiety to help new small companies, not to neglect the interests and needs of older small companies, which are facing difficulties?
    Mr. Edwards: Indeed. A prime objective of the Government's policy has been to reduce public borrowing, and thus interest rates, and to create a situation in which the burden of taxation can also be reduced.
    Mr. Wigley: Is not the time ripe for a major capital investment programme, so that we can pay people to work on many much-needed projects, such as building new houses and roads in Wales, instead of leaving them rotting on the dole?
    Mr. Edwards: The trouble is that all programmes have to be paid for, but we have a substantial public expenditure and construction programme in Wales at present, which is by far the largest programme of site preparation, factory building and road construction so far undertaken in the Principality.
    Mr. Hooson: To complete the record, by how much did unemployment increase in Wales, Mid-Glamorgan and Aberdare under the previous Government?
    Mr. Edwards: Unemployment more than doubled under the previous Government, and trebled in the constituency of the present Leader of the Opposition, when he was Secretary of State for Employment.
    Mr. Alec Jones: How can the Secretary of State reconcile the figures that he gave and the fact that most knowledgable people in Wales expect unemployment to be worse by the end of the year with his statement at the weekend that Wales has come through the recession remarkably well? On what evidence did he base his statement, or was it merely based on optimism and ignorance?
    Mr. Edwards: I based my statement on the facts. The position in Wales has not deteriorated as fast as that in the United Kingdom as a whole. In the previous year, we allocated almost a record amount of new factory space in Wales. In the first five months of this year the number of formal applications was up on the same period last year, as was the number of inquiries and applications for selective financial assistance. Taken with the major package of expenditure on infra-structure, those factors hold out hope for the future. I am happy to be able to say, for example, that Alpha Electrostatic Flocking Ltd announced today that it is setting up a new factory in Bridgend on the Kenfig industrial estate; that is only one of many new companies that are coming into being.
    Several Hon. Members rose—
    Mr. Speaker: Order. This matter comes up again.
    Mr. Ioan Evans: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the Minister's reply, I beg to give notice that I shall seek to raise the matter on the Adjournment.

    Forestry Commission (Land)
    Mr. Colemanasked the Secretary of State for Wales what consultations he has had with the Forestry Commission concerning the sale of property and land in the ownership of the Forestry Commission.
    Mr. Nicholas Edwards: The land and associated property managed by the Forestry Commission is vested in the forestry Ministers, of which I am one, and not in the

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    commission itself. Ministers consult regularly with the commission on policy matters, including the disposal of land.
    Mr. Coleman: Is the right hon. Gentleman aware that an offer was made by the Forestry Commission and accepted by its tenants at Rheola in my constituency that they should be able to purchase their houses? Is he further aware that the offer has since been withdrawn and the tenants told that they must now negotiate with the Aberpergwm estate to purchase those houses? Will he investigate the matter so as to give these Forestry Commission tenants the same rights as he is forcing local authorities to give their tenants?
    Mr. Edwards: I shall certainly look into the matter that the hon. Gentleman has raised. I am not clear from his question whether he is suggesting that property which relates to a particular service, as in the case of the Forestry Commission, should in every case be disposed of to the tenants. That is clearly a matter in which one must consider the circumstances of the case.
    Mr. Hooson: As the Forestry Commission has been in existence for more than 60 years, is not it reasonable that the new Forestry Act should have brought about some turnover in the capital invested in various forms of forestry?
    Mr. Edwards: I am anxious to see an expansion of forest planting. I believe that the best way to achieve this is to make some use of the existing assets and to make the best possible use of the financial resources available.

    Unemployed Persons
    Mr. Barry Jonesasked the Secretary of State for Wales what is the number of people out of work in Wales; what is the increase in the number of jobless since May 1979; and if he will make a statement.
    Mr. Hudson Daviesasked the Secretary of State for Wales what is the total number of unemployed persons in Wales; and what is the percentage increase in the numbers unemployed in Wales between May 1979 and May 1980 and between May 1980 and May 1981.
    Mr. Nicholas Edwards: On 14 May 1981, registered unemployment stood at 148,722, an increase of 65,698 over the total at May 1979. Between May 1979 and May 1980 and between May 1980 and May 1981, levels of unemployment increased by 16·9 per cent. and 53·3 per cent. respectively. Taking the period as a whole, the increase was 79·1 per cent.
    Mr. Jones: Can the right hon. Gentleman yet give us any news about the Nissan-Datsun project? Can he assure us that it will come to Wales? Is he aware that 7,854 Deeside citizens are now out of work, some 40 advance factories are empty and an army of young people are leaving school next month? What hope is there of work for the people on Deeside?
    Mr. Edwards: The Nissan company has said that it will probably announce its general intention as to the investment, although not necessarily the site chosen, by the end of July. I cannot give any further information about the project. I understand the difficult situation on Deeside. I was therefore pleased that Mr. Cotterill, the local director, could speak of record output at Shotton and a full
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    order book. I am also glad to tell the House that Metal Improvement Company Inc. is occupying a 45,000 sq. ft. factory at the Deeside industrial park to make products relating to the A310 airbus.
    Mr. Hudson Davies: Is the Secretary of State aware that the figures that he has given represent a deplorable record of a worsening situation? On a more intimate level, will he concede that, for the 28,603 unemployed in Mid-Glamorgan, the number of jobs available in the same area was 505, which means that only one in 56 has any hope of finding a job? On an even more intimate level, does he further agree that in Rhymney Valley and Caerphilly only one in 80 would have any hope of finding a job? How does he reconcile that with his assertion that Wales has come well through the recession?
    Mr. Edwards: I do not wish in any way to understate the difficulties. Nevertheless, in Mid-Glamorgan, as elsewhere, the number of factory allocations has risen, there is a considerable number of inquiries and there are advance factories ready. In the hon. Gentleman's own locality, which he cited, some companies are doing extremely well. A Pengam based company, Morris Cohen (Underwear) Limited, has just taken additional factory space from the Welsh Development Agency, as it intends almost to double the number that it employs.
    Sir Anthony Meyer: How many existing jobs would be at risk and how many potential jobs would be lost if the Labour Party were ever in a position to carry out its threat to withdraw from the EEC, to which 42 per cent. of British exports now go?
    Mr. Edwards: It would be a total disaster for inward investment in Wales. Most overseas companies would clearly no longer be interested in setting up their plants in Wales. There is the added threat in the Labour Party's programme that, whenever a grant for regional policy assistance is given, it would insist upon a compulsory shareholding in the company. I cannot think of a more disasterous proposal for the future of regional policy in Wales.
    Mr. Geraint Howells: In view of the seriousness of unemployment in many parts of Wales, has the Secretary of State any encouraging news to give to school leavers in Wales this summer?
    Mr. Edwards: I have tried to paint a balanced picture of a serious problem, in which, in the middle of a recession and a time when on past experience regional policy would not be expected to have much effect, we are none the less allocating almost a record number of new factories, the number of new jobs coming into being is very large and there has been a huge upsurge during the first part of this year in the number of inquiries to the small firms service, which is of particular significance in a constituency such as the hon. Gentleman's.
    Mr. Anderson: Whenever I and my colleagues from Mid-Glamorgan have seen the Secretary of State about reassessment of our regional development status, we have been told that the situation is being monitored and, in effect, that unemployment would have to become worse. Is not it now clear that unemployment is getting worse as certainly as night follows day, to quote the Chief Secretary to the Treasury? When, therefore, may we expect a reassessment of our regional development status?
    Mr. Edwards: We have said that we are keeping the situation under review. There is no doubt that there is a serious problem in that part of the country, but there is also, I am sorry to say, a serious problem in other parts of the United Kingdom. We cannot look at a particular travel-to-work area in isolation. If the area were upgraded, there would be a much larger number of upgradings in England, which might not be to the benefit of Wales.
    Mr. Best: Is not it particularly significant that, whenever there are questions to the Secretary of State for Wales, Labour Member home in on the unemployment statistics? When will they wake up to some of the good things that are happening in Wales? Will my right hon. Friend publish the number of jobs being created in Wales, the number of advance factories being let and the upturn of confidence in Wales? Finally, does he agree that everything that has been said so far by Labour Members will do nothing but create further gloom in Wales and further depress business confidence when that is the opposite of the reality?
    Mr. Edwards: I have been publicising those very figures. I also intend to publicise the huge burden of additional cost which "Labour's Programme for Wales" would place upon industry and the particularly disastrous proposal which would ditch regional policy in Britain, including Wales.
    Dr. Roger Thomas: Will the Minister, in the light of the irridescent optimism displayed by his speech at Llandrindod Wells, cast caution to the winds and say by how many thousands he expects unemployment in Wales to have fallen when the next figures are announced?
    Mr. Edwards: I have always made it absolutely clear that I expect the present rise in unemployment to continue for a period. All the history shows that that is the likely pattern of events. But Wales is particularly well placed, with its attractive infrastructure and good industrial relations, to be ready when the upturn comes. If the hon. Member would say more about the splendid industrial relations performance in many companies in Wales, he would do more good for his country than he does by the sort of comments that he makes.

    Royal Regiment (Departmental Leave)
    Mr. Abseasked the Secretary of State for Wales on how many occasions in the last year officials in his Department have been granted special leave for training with the 3rd or 4th (Volunteer) Battalions of the Royal Regiment of Wales.
    Mr. Nicholas Edwards: None, Sir.
    Mr. Abse: Will the Secretary of State continue in that policy and also bring home the Welsh boys who are in the Welsh regiment in Northern Ireland? Why should our boys, some of whom have joined the Forces under the intolerable pressures of Government—
    Mr. Speaker: Order. The hon. Gentleman's question is directed to the wrong Minister. That is a defence matter. The Secretary of State can be questioned only on the matters for which he is responsible.
    Mr. Abse: May I ask the Secretary of State to continue in that policy, in order that it should be made clear that there is an opinion in Wales that the boys in Northern
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    Ireland should be brought home, and in order that they should not be exposed to the vicious hazards to which they are exposed as a result of the overbearing attitude of the hon. Member for Antrim, North (Rev. Ian Paisley) and his ilk, who are accusing the—
    Mr. Speaker: Order. The Secretary of State.
    Mr. Edwards: I would normally grant any reasonable application for leave to serve with the territorial forces, and I believe that it would be the view of most people that it is right that the British Army should seek to maintain law and order in the United Kingdom, and as much in Northern Ireland as it might be expected to do in Wales or anywhere else.
    Mr. Best: Will my right hon. Friend acknowledge the need to facilitate training with the Territorial Army? Is he aware that many young men who are married have to take time off their annual leave to go on a Territorial Army camp? Will he ensure that that policy does not apply to any extent in his own Department, and that members of it will be given additional time to that to which they are ordinarily entitled as annual holiday?
    Mr. Edwards: The terms and conditions under which civil servants are allowed leave are laid down in the Civil Service pay and conditions code. Clearly, the drawing up of that code is not a matter for which I am responsible. However, I repeat that, when applications are made in accordance with that code, I shall be happy to see that they are granted, and to give every encouragement to military service of that kind.

    Council House Sales
    Sir Anthony Meyerasked the Secretary of State for Wales what discussions he has had with local authorities in Wales who are experiencing difficulties or delays over the sale of council houses; and what steps he proposes to take in order to ensure that tenants are able to exercise their rights under the Housing Act 1980 to purchase their council houses.
    The Under-Secretary of State for Wales (Mr. Wyn Roberts): Welsh Office officials have discussed with the local authorities concerned cases where delays have been reported. While I hope and expect that such action will prove unnecessary, my right hon. Friend will not hesitate to use his powers of intervention under section 23 of the Housing Act 1980 if tenants are being prevented from exercising their statutory rights effectively and expeditiously.
    Sir Anthony Meyer: Will my hon. Friend make it plain to the many people in the borough of Rhuddlan w ho have written to me complaining about interminable delays over the purchase of their council house that they will not have to wait much longer and that they will not have to pay any more merely because the council appears to be having difficulties in finding enough expert manpower to carry through the sales?
    Mr. Roberts: The Welsh Office is studying information about the progress being made by Rhuddlan and will be in touch with the authority again as necessary. It is up to local authorities to arrange the staffing so that they can carry out sales under the Housing Act effectively and expeditiously.
    Mr. Alec Jones: Will the Minister confirm that the numbers of local authority staff employed in housing services in Wales fell by 2·6 per cent. between December 1979 and December 1980? How, then, can the Minister expect local authorities to reduce their staffs even further and at the same time accept extra duties imposed on them by the Act? If the Minister is so keen on his policy of compulsory sales, will he agree that, if councils employ more staff to do the work, or even farm the work out, he will meet the full bill?
    Mr. Roberts: The reduction in local authority staff that has taken place is very small compared with the reduction, for example, in Welsh Office staff. We are here dealing with a statutory right on the part of tenants. Surely the right hon. Gentleman is not giving any encouragement to local authorities not to grant that statutory right. The deployment of their staff is entirely a matter for them.

    Schools (Microprocessors)
    Mr. Tom Ellisasked the Secretary of State for Wales how many schools in Wales are using microprocessor systems and software in teaching information technology.
    The Under-Secretary of State for Wales (Mr. Michael Roberts): Some 70 per cent. of maintained secondary schools in Wales offer computer studies courses. Roughly two-thirds of these are thought to have microcomputers and the remainder have access to a mainframe computer.
    Mr. Ellis: Is the Minister aware that a microcomputer manufactured in my constituency and available at competitive prices can be used with systems and software which are already in use in Wales, whereas the RML microcomputer, approved by his right hon. Friend the Secretary of State for Industry, cannot be so used? Will the Minister have a word with his right hon. Friend to see whether the manufacturer in my constituency is discriminated against, and why his right hon. Friend is setting up a system under which taxpayers' money is likely to be wasted?
    Mr. Roberts: There is no question of taxpayers' money being wasted. The microcomputer scheme in schools will be of enormous benefit to schools throughout the United Kingdom. My hon. Friend the Minister for Industry and Information Technology explained that equipment for the scheme was chosen on grounds of technical, educational and financial merit, and that additional machines cannot be considered for inclusion in the present phase of the scheme. But for future phases—there will be future phases—I shall draw his attention to the point made by the hon. Member.
    Mr. Garel-Jones: Is my hon. Friend aware that hon. Members representing English seats recently received from the Department of Education and Science a letter drawing to our attention the fact that the Government intend to have a microprocessor in every secondary school in the United Kingdom, and giving details of schemes that the Government have to promote this end? Will he confirm that those details have also been sent to hon. Members representing Welsh constituencies? If not, will he look into the matter and ensure that they are sent?
    Mr. Roberts: The scheme is for the whole of the United Kingdom, and Welsh authorities have received the same letter.
    Mr. Wigley: The Under-Secretary mentioned that about 70 per cent. of schools may already have micro-processors installed. Will he give an assurance that those schools which have already taken an initiative in this matter and may have devices which are useful, but not up to the standard of those now being supplied, will not be penalised because they have already taken the initiative?
    Mr. Roberts: There is no question of penalising any school in the United Kingdom, but priority will be given to providing microcomputers for those schools that lack them at the moment.
    Dr. Roger Thomas: Is the Minister aware that, to take full advantage of the microprocessors and computers in our schools, urgent steps should be taken to answer the prevalent complaint that there is a distinct shortage of mathematics and physics teachers? Will he agree that, without those teachers, we cannot take full advantage of high technology in our schools?
    Mr. Roberts: It is true that over the last six or seven years a serious shortage of mathematics and physics teachers has developed in our schools. We are already taking steps to put that matter right.

    Council House Sales
    Mr. Bestasked the Secretary of State for Wales how many applications were made by secure tenants to buy their public sector dwellings in Wales in the first quarter of 1981; and what proportion of the total of public sector tenants have now applied for the right to buy in Wales.
    Mr. Wyn Roberts: Approximately 17,000 right-to-buy applications were made in the first quarter of 1981; most will have been made by secure tenants but it is not possible to distinguish these. By the end of the first quarter of this year a total of 28,000, representing almost one-tenth of public-sector tenants in Wales, had applied to buy their homes.
    Mr. Best: Does my hon. Friend agree that it is most encouraging that so many people in Wales are aware of the great benefits of home ownership and of the great opportunity—which represents perhaps the biggest social advance in housing this century—that the Government have given them? My right hon. Friend the Secretary of State has reserve powers to enforce sales if local authorities are recalcitrant and do not carry out the letter of the law. Will my hon. Friend tell the House how his Department monitors whether there are difficulties at local authority level? Only the other day those of us who serve on the Select Committee on Welsh Affairs received evidence from his officials that the only way that his Department gained such information—
    Mr. Speaker: Order. The hon. Gentleman is arguing the case. He should be seeking knowledge, not imparting it.
    Mr. Best: I am obliged, Mr. Speaker. Such information comes to light only because people write to his Department—
    Mr. Speaker: Order. I was disobliged.
    Mr. Roberts: I welcome my hon. Friend's initial point and the fact that so many people in Wales have seen fit to apply for the right to buy and wish to own their own homes. However, we are not monitoring individual right-to-buy applications. We are dealing with complaints as they are made. So far we have received about 160 complaints, which we are following up with the authorities concerned. There is not an authority in Wales that is not actively carrying out the provisions of the Housing Act. At present, my right hon. Friend does not have to use his powers under section 23.
    Mr. Alec Jones: Does the figure of 17,000 mean that there have been 17,000 firm applications to buy, or that mere initial inquiries have been made? What possible advantage can there be to local authorities, ratepayers, or even taxpayers, to sell a council house—according to the figures that the Minister gave me—for £6,208 when it costs a council £17,065 to replace it?
    Mr. Roberts: I confirm that up to 31 March 1981 the number of right-to-buy applications was 28,206. There are benefits for tenants who become home owners and, as the right hon. Gentleman knows, there are enormous potential benefits for local authorities—as they witnessed last year when they sold council houses—because they can use part of the net capital receipts to meet other housing needs.

    Agricultural Department (Staff Transfers)
    Mr. Geraint Howellsasked the Secretary of State for Wales if he has any plans to use compulsory powers to transfer staff against their wishes from the Welsh Office agricultural department in Aberystwyth to Cardiff; and if he will make a statement.
    Mr. Nicholas Edwards: As the House knows, all administrative and executive staff in the Civil Service may be required to move to other posts. I expect eight staff to be moved to Cardiff as a result of the transfer of work; three have volunteered and of the remaining five, two have objected on grounds of hardship. Cases of hardship will be considered by a committee on which the trade union side will be represented.
    Mr. Howells: I am sure that the Secretary of State was surprised when he was told that the majority of his staff would not voluntarily move from Aberystwyth to Cardiff. We are all well aware that they have the right—
    Mr. Speaker: Order. The hon. Gentleman is also arguing his case. I should be much obliged if he would ask a question.
    Mr. Howells: I apologise, Mr. Speaker, but it happens to be one of those days. I am sure that the Secretary of State is aware that the staff have the right to appeal. If they fail to prove hardship, what is the alternative? Will they be made redundant, or what?
    Mr. Edwards: Clearly, the hon. Gentleman did not listen to my answer, because he spoke about a "majority." I said that two objections had been received on the ground of hardship. They will be considered by the appeal committee, on which the trade union side is represented. Generous financial help is given to officers who have to move to take up duties. As I said, administrative and executive staff in the Civil Service may be required to move to other posts if necessary.
    Mr. Best: Is my right hon. Friend aware that the farmers of Anglesey are pleased about his decision that Anglesey is to be included in the marginal land survey?
    Mr. Speaker: Order. Perhaps the Secretary of State can tell me whether that has anything to do with the question. I think not.

    Welsh Development Agency
    Mr. Wigleyasked the Secretary of State for Wales if he will introduce new measures to improve the effectiveness of the Welsh Development Agency.
    Mr. Nicholas Edwards: The agency is providing a wide range of services within the guidelines laid down by the Welsh Office, and is doing so very effectively.
    Mr. Wigley: Is the Secretary of State aware that many small companies are being frustrated in their dealings with the agency, particularly as it appears to scrutinise investment applications of a few thousand pounds for small companies in the same way as it considers £2 million applications? Will the right hon. Gentleman guide the Welsh Development Agency about whether it is reasonable to have different criteria for investment in small companies—particularly new companies without track records—and to take a slightly greater risk with them than with the £2 million investments of the P. Leiner type?
    Mr. Edwards: I know of two cases about which the hon. Gentleman has complained. I have looked into both of them, and I believe that there are no grounds for complaint. In one case financial assistance was offered, and in the other an allocation was made to a factory within seven weeks of the first meeting with the company. About 32 Gwynedd-based companies have received assistance from the agency. Many cases are being dealt with. In addition, eight factory allocations have just been announced in Gwynned.
    Mr. Abse: Does the Secretary of State not feel any need for penitence or a sense of guilt? Is it not a fact that the millions of pounds that were placed at the disposal of the Welsh Development Agency to develop factories have been spent and that unemployment is mounting at a catastrophic rate? Does that not demonstrate that the moneys at its disposal and the investments that have been made are inadequate, and that the Select Committee's view that too little was being spent too late is correct? Does that not show that, as ever, the Secretary of State has been proved wrong in his rejection of the Select Committee's recommendations?
    Mr. Edwards: I note that the hon. Gentleman is in his usual role of the Rebecca of Welsh politics, and is even more inaccurate than that journal. The Welsh Development Agency has undertaken a substantial programme extremely successfully.
    Mr. Barry Jones: Given the horrendous number of redundancies raining down on Wales, should not the Government consider giving stronger powers to the agency in order to create jobs? Will the right hon. Gentleman bear in mind the fact that at Flint and Holywell, in my constituency, male unemployment stands at approximatly 38 and 24 per cent? The agency does excellent work, but will the Secretary of State consider giving it more powers?
    Mr. Edwards: I am grateful to the hon. Gentleman for his acknowledgement of the good work that the agency has

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    undertaken, particularly in its factory building programme. I have not restricted the agency, and its policy has not restricted a willingness to go ahead with investment projects where potentially viable projects are on hand. However, successful and potentially successful companies must come forward.
    Mr. Alec Jones: Despite the figures that the Secretary of State has given today, has he seen the 12 June edition of Estate Times, which contains an advertisement from the Welsh Development Agency saying that more than 100 fully serviced units are available, and that by the end of the year it expects to have an extra 350? Is the right hon. Gentleman satisfied that the agency has sufficient powers to fill those factories and, at the same time, to provide the necessary assistance to existing industry?
    Mr. Edwards: We have always made it clear that the major problem for the following year would be how to fill the massive number of factories that have been built. The right hon. Gentleman has effectively made nonsense of the question asked by the hon. Member for Pontypool (Mr. Abse), who moments ago argued that the programme was inadequate. The right hon. Gentleman is now complaining that there are too many empty factories.
    Mr. Wigley: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of that reply—in fact it was no reply at all—I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest possible opportunity.

    Housing Policies
    Mr. Andersonasked the Secretary of State for Wales if he is satisfied with the results of the Government's housing policies in Wales.
    Mr. Wyn Roberts: I am satisfied that the Government's policies are correct; but it is much too early to have achieved all the results we want.
    Mr. Anderson: Is the Minister aware of some of the results that he is achieving? Does he realise, for example, that starts in the public sector in the last quarter fell by over 50 per cent compared with the same quarter in 1980? Is he not getting the message from directors of housing and his counsellors that not only new builds, but rehabilitation and improvement grants are in decline and that homelessness is increasing substantially in the Principality? In the light of the results, how can he justify housing taking a disproportionate share of the cuts?
    Mr. Roberts: The hon. Gentleman has been selective in his choice of figures. I grant that the halving of public sector starts as between one quarter and another corresponds with the halving of completions between 1975 and 1979. However, the hon. Gentleman forgot to tell the House that completions in the three months ending 30 April 1980 were 2,072, whereas completions in the three months ending 30 April 1981 increased to 2,282.
    Mr. Best: Will my hon. Friend do more to encourage local authorities to take up the Government's excellent improvement for sale scheme and try to make further inroads into dealing with the problem of the 100,000 houses in Wales that are unfit in some material respect? Will he acknowledge that the Government have the schemes, and that it is for local authorities to implement them?
    Mr. Roberts: We have reserved £1·5 million to provide pump priming for the improvement for sale operation. My hon. Friend will know that the Government have a seven-point low-cost home ownership plan that involves improvements of all sorts to existing properties.

    Tourism (Mid-Wales)
    Mr. Delwyn Williamsasked the Secretary of State for Wales what steps the Government have taken to promote tourism in Mid-Wales.
    Mr. Wyn Roberts: The Government continue to support the Wales Tourist Board, whose promotional and marketing work fully recognises the potential of Mid-Wales. In addition, the Welsh Office has secured aid from the European regional development fund for tourism infrastructure projects in the area.
    Mr. Williams: Is my hon. Friend aware that Mid-Wales is the most beautiful part of the United Kingdom? Does he realise that that statement was a commercial for the holiday season? More seriously, will he accept that grants for the tourist industry can only help the service industry and alleviate such unemployment as exists in the region?
    Mr. Roberts: As my hon. Friend knows, I spent part of the weekend in Mid-Wales. Its natural beauty was enhanced by the presence of the Conservative Party conference. Tourism provides much employment in Mid-Wales, and over the past two years the area has received £300,000 in grants under the tourism development scheme, and £200,000 in loans.
    Mr. Hudson Davies: As the assistance that the Wales Tourist Board has been able to give to Mid-Wales and to the whole of Wales has been provided under section 4 of the Development of Tourism Act 1969, will my hon. Friend give an undertaking that if and when the Government publish their review of regional status and any part of Wales loses its assisted area status he will devise a means whereby the board can continue to give section 4 assistance? Will he ensure that it will not be disqualified from doing so by any reduction in assisted status?
    Mr. Roberts: I assure the hon. Gentleman that that issue is under consideration.

    Enterprise Zones
    Mr. Hoosonasked the Secretary of State for Wales what progress has been made in developing the enterprise zone concept in Wales; and whether he will make a statement.
    Mr. Nicholas Edwards: The Lower Swansea Valley enterprise zone designation order came into effect on Thursday 11 June—the first zone to be established in the United Kingdom.
    Mr. Hooson: I congratulate my right hon. Friend on Wales being the first base for one of the new enterprise zones. How many inquiries have been received from businesses that are interested in establishing themselves in the zone?
    Mr. Edwards: Congratulations should go also to the local authority concerned, which has given its wholehearted backing to the project. I am glad to say that 38 firms have agreed terms with Swansea so far and that nearly 300 inquiries have been received.
    Mr. Anderson: When the right hon. Gentleman comes to monitor the success or otherwise of the zone, will he consider not only the number of jobs created within the zone, but the effect on the immediate hinterland.
    Mr. Edwards: Of course I shall. I have always said that it is an experimental scheme. I shall have to see exactly how it operates in practice. I think that the Swansea authority shares my confidence that the zone will benefit the area.

    Water Charges
    Sir Raymond Gowerasked the Secretary of State for Wales if he will take steps to remedy the anomaly whereby there is no reduction of the water charge in the case of a house or bungalow which lacks any bathroom.
    Mr. Wyn Roberts: No, Sir. The lack of a bathroom would be reflected in the rateable value of the property, on which charges for water services are at present generally based.
    Sir Raymond Gower: I am asking my hon. Friend to alter that undesirable state of affairs. Does he not appreciate that, by definition, houses of this sort would probably be occupied by poor people, disadvantaged families and be a section of the community that is obviously declining in numbers? Would it not be a great advantage if the Government framed policies to do what I ask? Does my hon. Friend appreciate that that would give the maximum help to those who need help most, without great expenditure?
    Mr. Roberts: Levying according to the number of water fittings and appliances in a property was considered by the National Water Council. I direct my hon. Friend to the publication entitled "Charging Households for Water". The council observed that there would be considerable difficulty in making and continuing assessments.
    Sir Raymond Gower: Nonsense.

  House of Commons

    Trade Unions
    Mr. Canavanasked the right hon. Member for Middlesbrough, as representing the House of Commons Commission, whether pursuant to his reply to the hon. Member for West Stirlingshire on 11 May he will arrange to meet trade union representatives of employees of the House of Commons Commission.
    Mr. Arthur Bottomley: The Commission has not yet had an opportunity to consider the report of the consultants, which has been submitted in the last few days. It would therefore be premature for me to say whether or not, in the Commission's view, a meeting with trade union representatives will be necessary.
    Mr. Canavan: Is my right hon. Friend aware that, contrary to the reply that I received from the hon. Member for St. Albans (Mr. Goodhew) last month, the trade union
    724
    representatives are far from satisfied? They do not understand precisely what is going on. As consultations on the grading review are being broken off unilaterally by the Commission, which has given no indication where it will proceed from its present position, would it not be fairer, and in the interests of all concerned, for a meeting with the trade union representatives to be called as soon as possible? This is a shocking way for the House of Commons to be treating its employees.
    Mr. Bottomley: With respect to my hon. Friend, that is not so. The Commission believes that it is in everyone's interests that the final report of the consultants, which has already been delayed for a considerable period, and which will take twice as long to be presented as was expected, should be expedited.
    Mr. Michael Brown: How many of those employed by the House of Commons Commission are represented by trade unions?
    Mr. Bottomley: I cannot give the exact figure. However, I am satisfied that the majority are so represented.
    Mr. Alan Williams: Does my right hon. Friend agree that many statutory rights that have been introduced by the House for workers throughout the country generally are denied to servants of the House, some of whom are without negotiated agreements? Will he arrange to have published in Hansard the instances where statutory rights are not being given to servants of the House and specify whether that is the result of negotiations with the unions or whether there has been no such agreement?
    Mr. Bottomley: This is the position in which public servants generally find themselves. For example, they cannot stand for election to local authorities in which they are employed. There are many other reasons why public servants should obtain better representation. That is a matter for the trade unions to pursue themselves. I take note of what my right hon. Friend has said.

  Education and Science

    Public Lending Right
    Mr. Moateasked the Secretary of State for Education and Science if the latest proposals for public lending right include reference books and those purchased by educational bodies.
    The Minister for the Arts (Mr. Paul Channon): There has been no change in these aspects of the proposals. The Public Lending Right Act 1979 extends only to the United Kingdom local authority lending libraries. Libraries in educational establishments will not be included in the scheme.
    Mr. Moate: Is it not extraordinary that a scheme that pretends to give justice to authors excludes a large proportion of them? Is it not time that my right hon. Friend was frank and told the House that he knows that the scheme that he inherited is absurd, unjustifiably expensive to taxpayers and should be decently buried?
    Mr. Channon: My hon. Friend has been an opponent of public lending right for many years. I strongly respect his views, but I do not share them. I supported the Bill when it went through the House, although I am sure that

    725
    it could have been improved. I hope that shortly I shall be able to publish a consultative document to give the House an opportunity to consider the scheme, including all the points that my hon. Friend has raised.
    Mr. Faulds: Does the Minister agree that in principle, and at some convenient date, reference works and those purchased by educational bodies should be included in the coverage of public lending right, whatever amendment that may need when that happy eventuality comes about?
    Mr. Channon: I do not think that the House would expect me to amend an Act that has not yet come into force. I am not sure that I shall get parliamentary time even were I to try to do so. It would be wise if the House would wait for not much longer, when hon. Members will receive the consultative document.
    Mr. Greenway: Is it not true that authors have had to wait for far too long for the establishment of a public lending right? May I have my right hon. Friend's assurance that something will be done before the end of the year?
    Mr. Channon: Something will certainly be done before the end of the year. I share my hon. Friend's view and hope to make an announcement soon; for example, about the appointment of a registrar.
    Mr. English: Now that we have statutory protection for authors, will the Government, who purport to believe in a free market, abolish resale price maintenance for books?
    Mr. Channon: That is a different question, and not one for me. It relates to the controversy of many years ago, when the matter was discussed by the House.
    Mr. English: It is the responsibility of the right hon. Gentleman's Department.
    Mr. Channon: It is not the responsibility of my Department. I note the hon. Gentleman's view, but I have nothing further to say on that topic.

    Railway Preservation
    Mr. Adleyasked the Secretary of State for Education and Science what recent steps he has taken to promote railway preservation as part of the national heritage.
    Mr. Channon: My responsibilities in this field are related only to the interests of museums, but I am most anxious to promote railway preservation and would gladly welcome any suggestions by my hon. Friend.
    Mr. Adley: Is my right hon. Friend aware that the Manpower Services Commission has decreed that the youth opportunities programme and the community enterprise programme are appropriate for railway preservation purposes? As millions are interested in the subject, will my right hon. Friend, as Arts Minister, give voice to their interest and enthusiasm by letting them know from time to time that the Government are interested in their activities?
    Mr. Channon: I am aware of that, and I pay tribute to my hon. Friend's interest and activity in the matter. Hon. Members interested in steam locomotives will be glad to know that of the number of preserved locomotives in Western Europe about one-third are in the United Kingdom. There is a great deal of interest by thousands of people in this country.
    Mr. Bidwell: Is the Minister aware that the railway preservation movement is gathering steam all the time? I speak as a former railway shunter and goods guard. Is the Minister aware that I buttress the remarks of the hon. Member for Christchurch and Lymington (Mr. Adley) and request the Minister to persuade local authorities to assist such activities?
    Mr. Channon: I am strongly in favour of that. As the House knows, a large number of British Rail locomotives are stored at Barry, in which my hon. Friend has taken an interest. There is shortly to be another visit to Barry by those concerned, and if my hon. Friend or any hon. Member wishes to join that group he will be most welcome.
    Mr. Anderson: Is the Minister aware that Sir Peter Parker has said that there will be no new investment in British Railways this year? Unless the Cabinet makes a decision this week on rail electrification, there will be more candidates for his museums.

    British Library
    Mr. Dobsonasked the Secretary of State for Education and Science if he will make a statement on plans for the new British Library.
    Mr. Channon: Preliminary work for the first sub-stage of the Euston Road building is now in hand, and I expect work on the site to begin early in 1982.
    Mr. Dobson: How soon does the Department expect to release the 3 acres at the back of the site, which are not required for library purposes, so that they can be used to provide parks, open spaces and other amenities for the deprived neighbourhood at the back of the proposed library?
    Mr. Channon: I shall examine that and write to the hon. Gentleman. I assure him that I shall do everything that I can to assist him.
    Mr. Moate: Why should millions of books in the British Library be excluded from public lending right?
    Mr. Channon: Because Parliament decided that they should be.

    Arts Council (Grant)
    Mr. Freudasked the Secretary of State for Education and Science when he expects to announce the Arts Council grant for the financial year 1982–83; and if he will make a statement.
    Mr. Channon: As soon as is practicable.
    Mr. Freud: I thank the Minister for that inspired reply. Will he accept that successful administration of the arts is dependent upon planning, and that planning by the arts is difficult unless the announcement of the amount of finance available is given priority?
    Mr. Channon: I agree with the hon. Gentleman that it would be nice to make earlier announcements about available grants. My predecessor was able to do so last December. That was an earlier date than usual, but the difficulty is that it is impossible to make announcements until Ministers have collectively decided all those matters and until detailed negotiation has taken place. I shall do what I can to be helpful and speedy, but I do not wish to raise hopes that I can be quicker than that.
    Mr. Stokes: At this time of financial stringency, can my right hon. Friend give me an assurance that finance for the arts will be as strictly scrutinised as finance for defence?
    Mr. Channon: Finance for the arts will, as always, be extremely strictly scrutinised. I know of my hon. Friend's concern, but he will agree that, for the overwhelming majority, there are immense advantages in the money spent on the arts. There is general agreement in the House that that should continue.
    Mr. Robert Sheldon: Will the Minister take up the suggestion that he made earlier about discussing with the Arts Council the various grants that it makes and ask it to review the amount that it is withholding from, or will not spend on, the D'Oyly Carte Opera Company? Is he aware that many in the North-West have their first contact with opera through D'Oyly Carte? That is important to the North-West, although it may not seem so in London.
    Mr. Channon: I understand the right hon. Gentleman's view about the importance of D'Oyly Carte to many sections of the population. However, it has never received a grant from the Arts Council. It has asked for a substantial grant at a time when the Arts Council grant, although substantial, is being held steady. It is difficult to take on new commitments, and the Arts Council has taken the view that it is wrong to do so. I have already discussed this with the chairman, but, in view of the right hon. Gentleman's concern, I shall raise it again.
    Mr. Blackburn: In carrying out a review of his estimates, will my right hon. Friend bear in mind the essential value of, and the vital role played by, the arts in tourism? Is he aware of the arts' earning capacity for this country? Will he give an assurance that in his considerations he will bear in mind the important role of the arts in tourism?
    Mr. Channon: That is correct. Millions of tourists visit our national collections, stately homes and go to West End and other theatres. I agree with my hon. Friend.
    Mr. Faulds: With the impact of inflation and the increasing demands on the Arts Council, should not the right hon. Gentleman consider a supplementary Government grant to fund organisations such as the D'Oyly Carte Opera Company, the National Youth Orchestra, the Old Vic and other well-deserving projects that are likely to collapse in the present and foreseeable economic circumstances?
    Mr. Channon: As the hon. Member knows, the National Youth Orchestra has been saved and, I hope, has a secure future.
    Mr. Faulds: Not by the Government.
    Mr. Channon: The Arts Council grant this year is £80 million more in real terms than ever before. It is the best grant that any Government have ever given to the Arts Council. Although I should like to do more, it is not fair for the hon. Member to criticise me for what I am doing.

    Arts (Sponsors)
    Mr. Blackburnasked the Secretary of State for Education and Science what steps have been taken to form a central register of possible sponsors of the arts.
    Mr. Channon: I shall do all that I can to bring business sponsors and the arts together, but I do not believe that a register, centrally organised by the Government, would he beneficial. I should be pleased to have my hon. Friends' views on how arts sponsorship may be encouraged.
    Mr. Blackburn: On reflection, does my right hon. Friend agree that sponsorship of the arts is not only vital, but has an important role in the arts? Will he consider issuing a statement when the present proposals for sponsorship have completed their first 12 months?
    Mr. Channon: I should be delighted to answer my hon. Friend if he would care to table a question at the end of the month, which will be a year after the Government's encouragement of business sponsorship. The figures are increasing continually and have probably now reached over £5 million. That is encouraging.
    Mr. Christopher Price: Does the Minister agree that private sponsorship of the arts would go ahead more easily if the chaotic and uncertain tax position under our law were cleared up? When will he respond to the Select Committee's recent report on that issue?
    Mr. Channon: I do not believe that the tax situation or the report of the Select Committee have anything to do with the level of business sponsorship. Most businesses tell me that, under the advertising rules agreed with the Inland Revenue, that is not a problem that concerns them. I am in continual touch with my right hon. Friends about the Select Committee report and I hope to be able to reply before too long.

    Conservation and Restoration (International Centre)
    Mr. Christopher Priceasked the Secretary of State for Education and Science when he intends to reply to the second report of the Select Committee on Education, Science and Arts, HC 274 of Session 1980–81, on the International Centre for the Conservation and Restoration of Cultural Property, Rome.
    Mr. Channon: This is a matter primarily for my right hon. Friend the Minister for Overseas Development. But inter-departmental consultations are taking place and the Government hope to reply by the end of this month.
    Mr. Price: I am grateful for the fact that we are to get a reply to a report for once, but, when the right hon. Gentleman says that it is primarily the responsibility of the Minister for Overseas Development, is he aware that everyone, including the Select Committee, thinks that it ought to be the right hon. Gentleman's responsibility? Will the point of responsibility be included in the reply?
    Mr. Channon: Everything that the Select Committee says will be treated with the utmost care and consideration. I shall bear in mind what the hon. Gentleman has said, and I hope to reply shortly.
    Mr. Faulds: Has the right hon. Gentleman any concept of the damage that is being done to Britain's cultural standing by the withdrawal of this tiny grant and the mean-minded attitude of the Government?
    Mr. Channon: It is a bit early for the hon. Gentleman to say that we are mean-minded. The Government are about to reply to the Select Committee's report. When they have done so, the hon. Gentleman can give us praise or criticism, whichever is due.

Trooping the Colour (Incident)
The Secretary of State for the Home Department (Mr. William Whitelaw): With permission, Mr. Speaker, I will make a statement. As the House is aware, on Saturday 13 June, as Her Majesty was making her way to the ceremony of Trooping the Colour, a man in the crowd of sightseers fired six shots of blank ammunition using an imitation revolver. A man was immediately arrested and has been charged by the police under section 2 of the Treason Act 1842. As the matter is now sub judice, the House will realise that it would be wrong this afternoon to discuss details of the incident itself.
It has not been the practice, nor would it be desirable, to describe the arrangements made for the safety of Her Majesty the Queen and other members of the Royal Family, but I can assure the House that those arrangements are kept under continuing review, and have recently been re-examined. What occurred on Saturday is being carefully studied by the Commissioner of Police of the Metropolis, and full account will be taken of it in future planning arrangements. It is Her Majesty's wish that both on State and less formal occasions she would be able to move freely among her people. Consistent with this, everything will be done to keep the risks to a minimum.
There has been concern in the past about the misuse of replica firearms. Although the law provides severe penalties for their misuse, I have asked my Department, together with chief officers of police, to re-examine, as quickly as possible, what effective controls can be devised.
I am sure that the whole House will wish to put on record its admiration for the calmness and control which Her Majesty displayed throughout.
Mr. Roy Hattersley: I should like to express the relief of the Opposition that neither the Queen nor any of the other participants in, or observers of, the Trooping was injured as a result of the incident on Saturday. I also associate the Opposition Benches with the Home Secretary's expression of admiration for the way in which the Queen reacted to the dangers that she faced.
The Opposition wish to applaud and support the Queen's own view that the day must never come when she is unable to move freely among the people of the United Kingdom. Such a policy may involve personal danger, but we look to the Home Secretary to ensure that the risks involved are kept to an absolute minimum.
The Home Secretary reminded the House that Saturday's incident is sub judice. I hope that commentators who write or broadcast about it will remember that piece of wise advice. However, it is right for me to say that the Opposition will look sympathetically on any proposals that the Home Secretary has to make about tighter controls on firearms—real or replica—within the United Kingdom.
Mr. Whitelaw: I am extremely grateful to the right hon. Gentleman for what he said. I am pleased that he agrees with the view, widely held in the House and throughout the country, that the Queen's duties—and she would expect to carry them out—require her to move freely among her people. Equally, I am grateful to the right hon. Gentleman for expressing the view that it is the task of the Government, and inevitably the Home Secretary and
730
the Commissioner—in the case of the Metropolitan Police—and chief officers outside London, to make sure that the risks are kept to a minimum. That is the correct phrase, and the only phrase that one can use.
The right hon. Gentleman said that the case is sub judice. I am conscious that many people would pick up any failure of mine to observe a rule that is so important and has been so widely referred to on other occasions. I have no intention of giving them the opportunity to express that criticism of me.
As for what the right hon. Gentleman said about firearms in general, and replicas in particular, I am grateful for his support. We will certainly move forward on the basis that we can hope for a wide measure of agreement in the House on anything that we feel able to do on that score.
Mr. David Steel: My colleagues obviously wish to be associated with the remarks of the Home Secretary and the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) on the reaction of Her Majesty to the incident on Saturday.
On the question of the use and misuse of replica firearms, will the right hon. Gentleman undertake that, although the review will be carried out urgently, he will also recognise that the matter should be considered with other Governments since, if possible, we should take a collective view to try to restrict the use and manufacture of imitation firearms?
Will the right hon. Gentleman also go a little further and confirm that at the end of the day, despite advice from police and Ministers, properly given, it must be for Her Majesty to decide the scale of protection that she should be afforded?
Mr. Whitelaw: I am grateful to the right hon. Gentleman for his opening remarks. He also said that it would be best to move with other Governments on the control of firearms and replica firearms, but I take refuge in that well-known phrase that, sometimes,
"the best is the enemy of the good."
If we were to wait for the agreement of all the others we might wait for a very long time. I would try to get it and I should like to get it, but if we have to move on our own we ought to do so.
I can say at once that Her Majesty believes that it is her duty to move freely among her people. She would expect to do that and I am sure that it is the wish of the House that she should be strongly supported in that belief and that action.
Mr. Cranley Onslow: If it is not already an offence to carry a replica firearm in a public place, why should it not be made one without delay?
Mr. Whitelaw: The present law is that, while there are no controls on the importation, display and sale of imitation firearms, those that are capable of being readily converted into lethal weapons or part of one require a licence under the Firarms Act 1968. It is an offence under section 18(1) of that Act to possess an imitation firarm with intent to commit an indictable offence or to resist or seek to prevent arrest.
I should say to my hon. Friend and all who are anxious about this subject that the main problem is distinguishing between realistic imitations of lethal weapons and millions of harmless children's toys. That is the problem that we have to solve. I hope that the House noted that I referred

731
in my statement to "effective controls". That means that we are determined to provide them and to do whatever we can to solve the problem.
Mr. Speaker: As the House knows, today is a Supply day. I have a long list of right hon. and hon. Members who hope to speak. I fear, however, that all will not be able to do so. I propose to allow questions on this matter to continue for a further 10 minutes before moving on to the next business.
Mr. Wm. Ross: I should like to associate my right hon. and hon. Friends and myself with the right hon. Gentleman's remarks of admiration for Her Majesty's behaviour on Saturday. The third major assassination attempt in the Western world this year proves that where a gunman is really determined the person concerned can be assassinated. In view of the fact that assassination is contagious and that any serious assassination attempt always comes from organised terrorism, will the Home Secretary give an assurance that the Government will take whatever steps are necessary to stamp out organised terrorism in the United Kingdom?
Mr. Whitelaw: I am grateful to the hon. Gentleman for what he said on behalf of himself and his colleagues. The problems of imitation firearms exist in different parts of the world. All of us face the problems of terrorism. I do not wish to comment further, except to say that we are determined to do everything possible in this country to reduce to a minimum the risks to the Queen, members of the Royal Family and all in public life.
Mr. Edward Gardner: Does my right hon. Friend agree that what Her Majesty and members of the Royal Family have to fear in carrying out their public duties is not replica firearms but the real thing? As a means of reducing this chilling risk, which is met and accepted with great personal courage, as hon. Members know, will my right hon. Friend consider introducing random spot searches on members of the crowd? I am sure that this would be willingly accepted by the British public.
Mr. Whitelaw: I am grateful to my hon. and learned Friend. Chief officers of police bear the operational responsibility. It is important that neither I nor the House should stray into that field of operational responsibility. The chief officers of police must make difficult decisions. There are great problems attached to those decisions. It would be wrong for any hon. Member to try to tell chief officers of police how to do their job, which I believe they perform with the greatest expertise and skill.
Mr. Edward Lyons: My right hon. and hon. Friends would wish to associate themselves with the remarks that have been made about the incident on Saturday. Will the Home Secretary look again at the demand that I made on the Floor of the House at the time of the India House incident in 1973, for import controls on replica guns? Will the right hon. Gentleman also consider adopting a practice upon which the Japanese insist, namely, that such guns have a red band upon them so that they can be distinguished from the real thing?
Mr. Whitelaw: I am grateful to the hon. and learned Gentleman. We shall, of course, look into these matters. They are inseparable from the examination that we must make of the question of effective controls. I hope that the hon. and learned Gentleman and the House will realise that there are great difficulties in distinguishing between
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realistic imitations of lethal weapons and millions of harmless children's toys, despite all the marks that may be made. It is not easy to distinguish them.
Mr. Eldon Griffiths: Will the Home Secretary accept that, while the vast majority of Metropolitan Police officers would willingly risk their own lives in order to protect the life of Her Majesty the Queen, it is the duty of the Government and Parliament to provide the police with the necessary powers and controls to enable them to perform their duty properly?
Is it not a fact that there has already been a detailed review of the matter of replicas leading to the lamentable conclusion by my right hon. Friend's Department that nothing could be done? I welcome very much what my right hon. Friend says about an urgent review. Will he undertake to provide the House with an opportunity to consider shortly a Bill making it an offence to import, possess, manufacture or sell any device that purports to resemble a weapon unless it is seen to be conspicuously dissimilar from that weapon?
Mr. Whitelaw: I endorse 100 per cent. what my hon. Friend says about the attitude of the Metropolitan Police. It might be appropriate at this stage to state that two people took immediate action following the shooting. One was a special constable of the Metropolitan Police, It is important to mention that fact because of the importance, that should be acknowledged, of those people who give voluntary service as special constables. I shall perhaps be forgiven for saying that the other person was a lance corporal in the Scots Guards. Hon. Members will appreciate that I have a particular feeling for members of the Scots Guards. To hear someone from my old regiment complimented for his action naturally pleases me.
My hon. Friend is not a lawyer; neither am I. It is difficult for us to devise, on the spur of the moment, phrases that would be suitable to be incorporated in an Act of Parliament. I am prepared to accept the general principle of what my hon. Friend says. The reviews that have taken place I fully endorse as Home Secretary. I take full responsibility for what the Home Office decided. The decision was mine. I resent very much statements in some sections of the press that I was divorced from the decision. That is not the case.
I realise now that it is important to get the right controls. I am prepared to undertake that task. My hon. Friend and I should submit ourselves to a careful scrutiny of what the lawyers suggest.
Mr. Bruce George: The House will applaud the courage of the Queen and her measured response afterwards. Does the Home Secretary agree that freedom of movement of the Queen and greatly increased security are not automatically incompatible? Will he promise to give urgent consideration to one of the first sentences in the Queen's Speech in November, proposing the introduction of legislation making it very difficult for criminals or prospective assassins to get their hands on firearms and shotguns?
Mr. Whitelaw: I shall certainly do what the hon. Gentleman asks. I know that he appreciates that the need for the Queen to move freely and the need to give her protection mean that the phrase "reducing the risks to a minimum" is correct and a phrase that I believe the whole country will support.
Mr. John Farr: I should also like to express my admiration for Her Majesty and my relief that the incident was not worse. Does my right hon. Friend recall the India House shoot-out a few years ago, when a man using a replica firearm was killed? At that time I, together with hon. Members on both sides of the House, introduced under the Ten Minutes Rule procedure a Bill entitled the Replica Firearms Control Bill under which a vetting procedure or scrutiny procedure committee was to be established. Will my right hon. Friend re-examine the Bill which had been agreed by all those concerned?
Mr. Whitelaw: Yes, I shall certainly do so.
Mr. David Ennals: Bearing in mind the negative attitude that the Home Secretary has hitherto taken towards legislation controlling the importation, manufacture and possession of replica firearms, does he appreciate that I welcome very much the decision that he has now made? I hope that he will proceed to deal with the matter urgently. I recognise the difficulties, but I do not believe that they cannot be overcome. I hope that the Home Secretary will treat this as a matter of urgency. Not only might Her Majesty have been killed; someone seeing the young man with this weapon might have shot him, or aimed at him and shot someone else. This is a dangerous problem.
Mr. Whitelaw: The right hon. Gentleman and also my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) made representations to me. Having considered their proposals, I concluded that it was right that the situation should remain as it was, bearing in mind the great difficulties involved in making changes. I accept that this situation must now change. If it proves that the right hon. Gentleman and my hon. Friend were right and that I was wrong, it will not be the first time in my political life that I have been proved wrong. I do not resent it in any way.
Mr. Mawby: Is my right hon. Friend aware that the House is very happy that he has agreed to re-examine the
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question of replica weapons? At the same time, we appreciate the great problems, particularly those ensuing from the legitimate use of that type of weapon for starting sports events, and so on. I hope that the right hon. Gentleman will make certain that all the people concerned are fully consulted to make sure that we have the right legislation.
Mr. Whitelaw: That is exactly the problem that I face. Once we have consulted all those concerned, the difficulty of introducing any legislation will be great. We must have something that works and is effective.
Mr. Harry Ewing: While the country will clearly place the emphasis on replica firearms, because of the case to which we are referring at the moment, may I encourage the right hon. Gentleman to take the advice of my right hon. Friend the Shadow Home Secretary—the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley)—and concentrate on the whole problem of firearms, both real and replica? Will he examine the question how these firearms are easily available through mail order catalogues, and how they are advertised for sale?
Mr. Whitelaw: Most certainly. I hope that in my answer to the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) I made it clear that I shall certainly do that—and I shall.

Statutory Instruments, &c.
Mr. Speaker: In order to save the time of the House, I shall put the two motions together.
Ordered,
That the draft Wool Textile Industry (Export Promotion Levy) (Amendment) Order 1981 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Wool Textile Industry (Scientific Research Levy) (Amendment) Order 1981 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Cope.]

Orders of the Day
  SUPPLY
  [20TH ALLOTTED DAY]—considered

  North-West Region
  Motion made, and Question proposed, That this House do now adjourn—[Mr. Cope.]
  3.51 pm
  Mr. James A. Dunn: It is my great privilege to be chosen by my colleagues in the North-West parliamentary group to open this debate on the problems on the North-West region. I am most grateful to my right hon. and hon. Friends for this opportunity, which I now endeavour to take in the ways that they expect of me. On a personal note, it is also a pleasure to return to the Dispatch Box after such a long time away from it.
  My contribution to the debate is made in the aftermath of the people's march for jobs, a unique event in modern times, having its origin and birth in my home town of Liverpool. It was adopted by the whole Labour movement and nurtured by the wholehearted support of Merseyside, the North-West and the nation.
  Every step of the march was a fervent protest on behalf of the beleaguered cities of the North, a condemnation of the bankrupt economic policies of monetarism, now often described as Thatcherism, in my part of the country. Every step of the march and every stop clearly demonstrated the grave concern and frustration of the people at the Conservative Government's failure to meet the real needs of the nation. They sought to demonstrate clearly that Mammon and the market place are not the absolutes that the Government believe them to be.
  Resentment is building up and anger is growing over the ever-increasing upward spiral of unemployment, which continually overwhelms the Government's belated and inadequate measures, with catastrophic results for our people, particularly the young. Youth unemployment continues to increase on Merseyside and in the rest of the North-West. The Manpower Services Commission schemes, the youth opportunities programme, the special temporary employment programme and a number of other schemes that have been introduced are not equal to providing urgently needed career prospects.
  An immediate revision of the Government's manpower policies and programmes is needed to make them much longer lasting. Building on the experience of the youth opportunities programme and of the special temporary employment schemes, it could be developed to integrate job creation with rehabilitation and training on a sufficient scale to meet the size of the problem. It could lead to permanent jobs being created.
  Talking with many who are involved and who have had experience of the MSC programmes, I have been reliably informed that the strict rules of STEP, for instance, have serious limiting features that affect the relevance and the take-up and effectiveness of the scheme. It is said that 12 months is too short a duration to be of great value, and the financial restrictions pose difficulties, because the maximum wage rates reimbursed by the commission are often below the local rate for the job. This often imposes upon the sponsor an additional cost of the part-payment of
  736
  the wages, which more often than not he is not persuaded to accept. That disincentive to the prospective sponsor should be dealt with quickly before it is too late for the scheme to be effective.
  Only a major reorganisation of the youth opportunities programme and the special temporary employment programme and adjusting the time scale from 12 months to three years will provide the facilities for the longer-term job creation that we seek as the basis for good career prospects. Without reorganisation, review and rearrangement of the programmes, our teenagers will be denied an opportunity to create and achieve an independent, rewarding life for themselves and their future families.
  Our youngsters must not be sacrificed upon the altar of monetary strangulation. Further wanton unacceptable cuts of financial resources cannot and will not be tolerated. Our young inheritors must have a better birth right than this. Britain's life blood depends upon it.
  I warn the Government that there is ever-growing bitterness and resentment over the scourge of unemployment. Our young people are now raising their voices loud and clear. More and more families are being affected by this scourge almost daily. Tolerance is stretched to the limit, and patience is coming to an end.
  Unless there is a change in their bankrupt economic policies before it is too late, retribution will come to the Government as surely as night follows day. Reports abound that a special meeting of the Cabinet is to take place this Wednesday to discuss the economic crisis. The Prime Minister said last week that the meeting was to be a normal Cabinet meeting, for normal Cabinet consideration of future public expenditure. To me, that is a more frightening prospect than an emergency Cabinet meeting. It will certainly result in more and even harsher cuts of desperately needed services on which we depend.
  That will be done with considerable disadvantage to all the regions north of Watford. The North-West, the North-East, Yorkshire, Lancashire, Cheshire, Manchester, Merseyside and Liverpool and all the surrounding areas will feel the first impact of the decisions taken by the special meeting. One has only to look at the litany of closures and redundancies which extend unabated in the North-West and, in particular, on Merseyside.
  International Computers Ltd. at Winsford is reported to be closing soon, with more than 1,500 jobs, and further reductions of 4,000 jobs are planned in the associated services and work force. I declare an interest here, because my brother works in the Liverpool region for ICL. Whatever my personal interest, the total job loss for ICL is between 5,200 and 5,500 people. The Burmah Oil Company proposes to close the Ellesmere Port refinery. No doubt many hon. Members have already commented on that closure, and I have no doubt that if freedom were exercised in this House we should hear caustic comments from Conservative Members.
  Mr. Barry Porter: I hope that the hon. Gentleman has examined the reasons for the proposed closure of that refinery, which is in my constituency. I hope that he realises that the company has said that it produces a specialised oil which is not in great demand at present. The company has made projections for five years. The closure has nothing to do with the Government's economic policies, and the company does not blame Government policies.
  Mr. Dunn: The hon. Member for Bebington and Ellesmere Port (Mr. Porter) and I have a friendly relationship, but it would be stretching it too far if I were to accept what he says as the reason for the redundancies. In the end, 1,500 jobs will disappear. For whatever reason, that is unjustified and unacceptable, particularly bearing in mind the large investment that was made in the region at the time—including, I suspect, a considerable amount of Government money.
  Mr. Robert C. Brown: I am grateful to my hon. Friend for giving way, as I do not come from the North-West region, but is he aware that the same company which is closing the refinery in the North-West has only recently gained planning permission for a new refinery in the Thames estuary?
  Mr. Dunn: My hon. Friend makes a telling point. I thank him for informing us of what is happening. It is only one instance of the transfer of activity from one region to another. It clearly shows the absence of a Government regional policy. There should be overall control and supervision of these matters. Notice should be taken when investment is made in one region, then dismantled and transferred later to another region, with considerable profits and with the advantage of derelict land and equipment grants being made available to industries in special development areas such as Merseyside and Ellesmere Port.
  I hope that the hon. Member for Bebington and Ellesmere Port will point that out to those who gave him those admirable reasons and ram that down the locker about the planning consent that the company is seeking elsewhere. Forgive me—you asked for the bullet and you got the 16 in. gun.
  Mr. Robert C. Brown: I am much obliged to my hon. Friend.
  Mr. Speaker: Order. I think that the hon. Gentleman was just looking at me. I have not asked for anything.
  Mr. Dunn: I hope that you will forgive me, Mr. Speaker. In my part of the world we use "you" in an affectionate way, meaning almost everyone. It was not particularly directed at you. I would certainly never fire at you, Mr. Speaker.
  Mr. Speaker: The hon. Gentleman is in the House, not up there.
  Mr. Dunn: There is no answer to that.
  I come back to the litany of closures and redundancies that I mentioned. The Burmah Oil Company is not the only company involved. On my side of the river, there is much doubt, anxiety and concern about BICC at St. Helens. Even more redundancies are forecast, unless the Government carry out further electrification of British Rail main lines. That would make good sense, and provide a better and more viable transport system for inter-city, local, regional and national services. If the order is not forthcoming, all the expertise that has been gathered by BICC may be dissipated, and the consequential redundancies will have a grave effect on each individual concerned, and will disadvantage the community as a whole.
  The contraction of the Liverpool, Birkenhead, Stanlow and Manchester docks involves massive reorganisation, with consequential high job losses. That will affect not
  738
  only the people employed in the port industry, but the transport and service industries which are associated with the ports.
  This high job loss means that employment opportunities will disappear for ever-just as happened in the shipbuilding and ship repair industries on Merseyside. Ship repairing once employed more than 25,000 people. Now it is lucky if it employs 200 people. At one time, shipbuilding employed over 11,000. Now it employs under 4,000.
  Mr. Robert Parry: Will my hon. Friend point out that the printing industry on Merseyside is affected, too? At Bemrose in Liverpool 700 jobs are in jeopardy.
  Mr. Dunn: I confirm what my hon. Friend the Member for Liverpool, Scotland Exchange (Mr. Parry) says. The printing industry is being affected, as is the paper industry. I shall mention a number of associated industries, too.
  I come back to what I was saying about the docks. The employment opportunities that will disappear for ever are a consequence of the closure of large areas of Liverpool and Bootle dockland. That leads me to the inescapable conclusion that the Government are prepared to accept a total closure of the port, if they cannot impose a reconstruction based on pure monetarism and large-scale transfers of trade, either of European cargoes or of some of the Atlantic traffic, too.
  At present, the Mersey Docks and Harbour Company is under intensive examination by the Government, as is the future potential for the port. I have no doubt that the limitations being placed on the company are financial more than anything else. Without going into chapter and verse, it is my view that these capital expenditure constraints are strangling the docks. The future is not encouraging.
  The building and construction industry is so depressed that it is difficult to foresee how it will be revitalised and regenerated. In parts of Liverpool and Merseyside—also, sadly, in my constituency, and doubtless in Scotland Exchange and Walton—unemployment in that industry is about 34 per cent.
  Mr. Robert Kilroy-Silk: I am sure that my hon. Friend is aware that in parts of my constituency unemployment has reached 40 per cent. Perhaps I should point out also that in Kirkby there are 1,000 unemployed building workers chasing three vacancies, 17,000 unemployed construction workers chasing 86 jobs. Does that not give the lie to the Prime Minister's suggestion that people should move to find employment? If not, where should they go to find employment? Does not that also make nonsense of the position in the North-West as a whole, especially Merseyside, where there is such a great need for construction workers to be employed on building the infrastructure of the region?
  Mr. Dunn: My hon. Friend is right. Regrettably, I can confirm that 1,000 are unemployed in the building and construction industry in Kirkby. The Manpower Services Commission made a recent announcement that it was trying to examine the unemployment statistics, and said that that exercise would provided some employment. However, no employment took place. Instead, it transferred people sideways so that they were employed on a different activity in a different Department. The benefit

  739
  that accrued from that exercise was infinitesmal. I am concerned about the matters raised by my hon. Friend. If he catches your eye, Mr. Speaker, he will show more clearly the specific problems that affect his constituency and area. I am sure that he will forgive me if I do not follow in his footsteps now.
  One of the grave concerns about unemployment in the North-West, and the disaster that that causes, is the lack of craft apprenticeships. It appears that they no longer exist. There are grave doubts about the potential for industry if there is an upturn in that sector. Any economic upturn would bring with it the need for skilled craftsmen. The various training schemes make no provision to maintain skills. A recent Act that the Government callously inflicted on the country means that some of the existing training schemes will be dissipated—yet they serve a useful purpose for industry.
  If we examined the position industry by industry we could prove that the North-West suffers disproportionately both in unemployment and in social deprivation. The recent history of textile manufacturers amply shows the Government's complete disregard for that industry's contraction. The past decade has seen a reduction from about 300,000 jobs to the present figure of 48,000. I regret to say that uncertainty still prevails. Unless the Government act against unfair import penetration more closures are almost certain. I am sure that my right and hon. Friends will make those points in more detail during the debate next Thursday.
  Steel, motor manufacturing—especially on Merseyside—engineering, carpet weaving, furniture manufacture, food processing, clothing, fishing, fish processing, shipbuilding and footwear are at great risk. Closures and redundancies are reaching alarming proportions. Without respite from the Government, I do not know what will be the answer to the problems.
  I wish to quote statistics which I extracted from the "Norwida Newsletter" of May 1981. I confess that I am not usually impressed by statistics. I have selected the statistics that I wish to put before the House, and I make no apologies for that. Unemployment in Blackpool stands at 11·8 per cent., with 12,959 out of work. In Lancaster it is 11·5 per cent. and 5,426; in Blackburn 11·7 per cent. and 8,082; in Nelson 11·6 per cent. and 3,063; in Rawtenstall 13·5 per cent. and 2,775; in Liverpool 16·1 per cent. and 76,907—the highest unemployment figure in the region.
  Mr. Kilroy-Silk: It is higher in Ormskirk.
  Mr. Dunn: My hon. Friend is correct. Unemployment in, Ormskirk stands at 17·8 per cent., with 5,488 unemployed. I regret that my hon. Friend has a higher league standing than Liverpool. If it is regrettable for Liverpool; it must be even more so for Ormskirk.
  I could continue with my list and mention Birkenhead, Widnes and Warrington—which is attracting attention at present. Even there unemployment stands at 11·5 per cent. with 9,276 out of work. If there is a by-election in Warrington shortly it will be cold comfort to the Government. Whatever the problems, the Government will emerge at the bottom of the poll with less support than in any by-election in recent years.
  Other areas of high unemployment include St. Helens, Southport, Manchester, Ashton-under-Lyne, Bolton,
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  Bury, Leigh, Wigan and even Oldham, where unemployment stands at 11·3 per cent. with 11,051 out of work. Rochdale's figure is 14·6 per cent.—
  Mr. Joel Barnett: My hon. Friend must be aware that the Oldham and Rochdale figures, appalling as they are, are really much worse because of the rapid closure of mills, which means that far more women become unemployed but do not register because they have no chance of finding another job. Unemployment in those areas is catastrophic.
  Mr. Dunn: My right hon. Friend has rightly drawn my attention to that point. I had intended to bring it to the attention of the House later in my speech. Many female part-time workers do not register as unemployed when they lose their jobs through redundancy or closure. They often lose their jobs through no fault of their own. They are not included in the statistics, although their unemployment has devastating effects on family income. I can even draw the attention of the House to Macclesfield, which has 2,275 unemployed, or 8·1 per cent.
  In case anyone claims that I am quoting selective statistics, I shall round up the figures. In the region as a whole 12·4 per cent. are unemployed, giving a total of 352,618. That is a condemnation of the Government. Only they can resolve the problem, yet they make no attempt to do so.
  Other statistics show the other side of the coin. I often hear it said across the Floor of the House that people should be prepared to take jobs in other areas. The Prime Minister said, "Move, boys, and you will find work." I shall explain the position in the North-West. In Accrington, the unemployment-vacancy ratio is 54·8 per cent., in Birkenhead it is 68·9 per cent., in Widnes 70·8 per cent., in Ormskirk 75·2 per cent., in Crewe 88·2 per cent., in St. Helens 79·4 per cent., in Wigan 89·7 per cent., and in Rochdale 130·8 per cent.
  The statistics go on and on. I am sure that hon. Members have read the document but if not I shall be pleased to lend it to them so that they can examine it in their own time.
  Mr. Mark Lennox-Boyd: As the hon. Gentleman has all the figures in front of him, will he confirm that during the first four months of this year, from January to May, unemployment fell by twice the rate that it fell during the same period last year? Unemployment traditionally falls in the, Lancaster area at the onset of the tourist season. It is falling faster this year than last year.
  Mr. Dunn: The hon. Gentleman is as selective as I am. It all depends on the base from which one starts. I said that I usually discounted the impact and influence of statistics. Evidently the hon. Gentleman relies upon them. I was making a general observation. I hope that he will take my comments in that spirit. I was not dealing in chapter and verse. If I were, it would be even worse, because last year was a disaster, and this year is even worse. The figures may have moved slightly, selectively, in certain areas, but they have not moved in mine; in mine, they have got worse. They have not moved in my hon. Friends' areas; there, too, they have worsened.
  Probably the answer was given by the Chancellor of the Exchequer in his recent Budget speech, when he declared

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  enterprise zones. That is cold comfort to us in the North-West, because many in the population of 6½ million believe that the North-West was one of the first enterprise zones—if not the first.
  All that we have inherited from that venture is an over-abundance of industrial dereliction, with all the attendant deprivation of the environment and appallingly inadequate social structures. That is the result of the denial of the reinvestment required. The replacement of equipment and the renewal of manufacturing technology have been sadly lacking. The regeneration of basic industries and skills has not been attempted by the present Government. Yet we urgently need all of this.
  We also need some occupational education and training for men and women and for youngsters to prepare them for any new opportunities. A regional policy must provide sustained financial assistance. We must return to the intermediate, selective and special area statuses. We must restore the assisted area grants to the travel-to-work areas that were deprived of them by the Secretary of State for Industry in 1979–80.
  Selective industrial aids could create worthwhile job opportunities with reasonable career prospects. More attention must be given to the service industries and to social welfare facilities. Adequate resources must be provided to meet the needs of the people in these sectors.
  Housing must be a high priority. We must ensure this in new build, in improvement grants and in the various programmes that replenish the environment. We must have more resources and we must plan more carefully. We must ask the local authorities to involve the voluntary housing associations in a multiplicity of schemes beneficial to the whole community. They have proved that they can rescue and improve old houses and meet the needs of prospective householders. Let us find out what the people want and try to provide it.
  The Department of the Environment ought to use this opportunity to introduce more public works programmes, not fewer. If that were done, housing and the environment would benefit. The Department must also consider the domino effect upon the employment prospects in the building and construction industry.
  In any restructuring of the region, attention must be paid to the inadequacy of the social and welfare provisions. We require a fairer share of the resources for health, hospitals and patient care. Health Service expenditure in the North-West falls far short of that for other regions. Recent cuts have already had disastrous effects on patient care, with demonstrable effects upon local services, such as those in Liverpool. [Interruption.] The hon. Member for Bebington and Ellesmere Port keeps muttering from a sedentary position. I have given way to him once. I find his voice rather strident at present. I ask him to look at what has happened recently and the statement made by the Secretary of State for Social Services about the reorganisation of hospital services on Merseyside.
  Let us look at what the Liverpool regional hospital board has done and how it has been involved in a bitter controversy in recent months over resource allocation and patient services, of which the hon. Member will have been duly notified. The hon. Member will recall the resignation of a medical officer of health, Dr. Doulton, which clearly showed the dissatisfaction and the intensity of the dispute,
  742
  which has never been made fully public, but as time goes on we shall probably learn more. However, there were grave allegations about withholding financial facts from one area hospital board, leading to more conflict, which eventually involved the Minister for Health—the hon. Member for Reading, South (Dr. Vaughan)—who, after long-drawn-out conversations upon these serious matters, managed to introduce some understanding which temporarily relieved, the conflict, and momentarily ended the public debate. Although not achieving complete accord, this respite was welcome as an opportunity for resolving the problem and for dealing with the real issue of reorganisation.
  A consultative document published by the regional officers of the Liverpool hospital board outlined several potential alternatives but expressed preference for dividing Liverpool into two health districts. The document was widely distributed and discussed. Virtually every response opted for a single district, as at present. That view was conveyed to the regional hospital board by the Liverpool city council, Liverpool AHA, the family practioner committee, several local medical committees, the Liverpool community health councils, all the Liverpool area committees of the trade unions involved, some Members of Parliament, and academic and other professional people.
  The regional hospital authority—mostly nonLiverpudlians—met on 27 January this year. It considered the unanimous Liverpool response. Yet by a casting vote of the chairman, Sir Eric Driver—the vote was 9:9; his casting vote made it 10:9—the decision was for the preferred option of his regional officers. That is unusual, if not unique. The consequent recommendation to the Minister was in that vein and was completely at variance with the results of the long-standing, intensive and well-publicised consultations.
  Unfortunately, the Minister has now announced his support for the regional officers' preference, and, although it went through only on a casting vote, he has decided against the unanimous local expression of opinion, and there are to be two district hospital boards for Liverpool. All hell has now broken loose, and consultation has been brought into grave disrepute.
  I could refer to a number of other issues, but my right hon. Friend the Member for Manchester, Openshaw (Mr. Morris), in a similar debate early last year, made many proposals, one of which was for a regional development agency. I support that proposal. I wholeheartedly agree that the only effective method of achieving capital-intensive industries is through the agency of a development corporation. This must be a co-ordinating factor in industrial regeneration and expansion with all the other organisations in the region. The point made in the "Strategic Plan for the North-West", published in 1975, can be seen in the third paragraph of c.95 of Hansard for 21 April 1980.
  In the autumn of last year, the party conferences drew all our attention. All the political parties apparently debated their policy programmes for this year and beyond. In a widely-screened and well-publicised speech, the Prime Minister said that she was not for turning. In my part of the world, that is not exactly what the people have in mind. I warn her that the people's patience is exhausted. I hope that she will heed that message. On behalf of my right hon. and hon. Friends, I say that if she does not, retribution will soon come to her and to all her colleagues.
  4.30 pm
  The Under-Secretary of State for Industry (Mr. John MacGregor): Let me say at the outset that the Government are very much aware of the situation in the North-West and share the concern that, I am sure, will be expressed throughout today's debate. None of us at the Department of Industry have constituencies in the North-West, but we are much guided by colleagues in other Departments. We have shown that concern. We have frequently been to the North-West to look at the problems on the ground. Since May 1979 we have been there on 13 occasions to meet industry and local authorities. In the same period we have received a large number of delegations in London on regional matters.
  Last month I visited the Wirral. I freely admit that that was the first opportunity that I was able to take to go to the Wirral as a Minister. However, that was fairly soon after my appointment. I discussed the current situation with industrialists, met top executives of the Lithium Corporation at the opening of their new £2 million plant, and talked to them about the attractions to inward investors of that region. I opened a small workshop unit estate developed by the English Industrial Estates Corporation.
  I visited successful companies in the region. I sometimes wish that more emphasis were put on some of the successful companies, as, undoubtedly, that helps enormously to increase the attractiveness of coming to the region for others. I talked with Mr. Leslie Young about the plans of the Merseyside Development Corporation.
  I appreciate that that was only a start, but in a two-day visit it was a considerable coverage of the situation. I hope to do more. I was able to see that while there are serious problems there are also signs of success and of hope. Later this week my hon. Friend the Minister of State will be in Greater Manchester for meetings with representatives of the textile industry and the paper and board industry.
  Mr. John Evans: Surely the Minister will concede that, if to visit all the successful firms in the North-West would take two days, if he were to visit all the firms with problems it would take over two months.
  Mr. MacGregor: I am well aware of the problem industries. I shall return to those later. I entirely refute the point made by the hon. Gentleman about visiting successful firms.
  Next month my right hon. Friend the Secretary of State plans to visit the region again. I hope to be back in the North-West in early September—in Lancaster and North-East Lancashire. I hope that that shows the real concern of Ministers in the Department of Industry about the problems.
  It is, of course, easy for politicians simply to list the industries that have been under particular pressure in recent years, the closures and the redundancies, and to bellow from the rooftops that it must be someone else's fault—usually, for the Opposition, it is the Government's fault, except when they are in Government.
  It is easy to insist that everything can be put right by the injection of much more public money. We heard that a great deal from the hon. Member for Liverpool, Kirkdale (Mr. Dunn). It is easy to do so without pausing to think where that money might come from or, if it were a great deal extra, what damage to other industries much higher public expenditure financed by the taxpayer would cause. It is easy to insist, by implication if not overtly, that
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  problems can also be put right by resisting the processes of change and, above all, by ignoring what is happening in the rest of the world. We heard much of that from the hon. Member for Kirkdale. I understand his genuine concern, however.
  It was striking that the hon. Gentleman put forward no remedies except the injection of much more public money simply to prop up industries in difficulties. When listening to the hon. Gentleman, I wondered where his Government stood in relation to the catalogue of, to him, long-standing woes during their periods in office. I have no doubt that we shall hear cries along those lines from many others today. I hope that we shall hear more than a simple recital of difficulties. It does no one a service, least of all those in the North-West, to respond to the situation by a simple gut reaction.
  Therefore, it is essential to analyse the nature of the problem before turning to the specific policy remedies that the Government are pursuing. In the North-West we are seeing a combination of all the factors that have combined to make Britain's industrial performance over recent years so disappointing, compounded by the particular problems—which the North-West shares and has shared for a number of years with other assisted areas—of a concentration of industries in difficulties for one reason or another.
  I share the concern of the hon. Member for Kirkdale that frequently we have not been able to do as much as we would have liked in the North-West, as elsewhere, to deal with Britain's social problems, some of the requirements in the National Health Service, and so on. Britain's poor economic performance over a long time caused the hon. Gentleman's Government—as well as causing difficulties for our Government—not to have the resources to deal with those problems on the scale that he now requires from us.
  The overmanning, the restrictive practices, the poor industrial relations record in many industries, the failure of much of industry to introduce modern techniques and to adapt to change, the poor productivity, the low profitability, the relatively poor record of innovation and the high wage demands in relation to competitors overseas and to our own increased output—all those are factors common to all parts of the country, which we have discussed much in the House. Therefore, I do not intend to elaborate those problems today but simply to remind the House of them.
  In the context of the North-West, however, it is necessary to underline again today that at a time of low world trade and hence even tougher competition, and when we have the advantage in other respects of an oil-boosted pound, we are paying the price for our failure sufficiently to tackle those problems earlier.
  The hon. Member for Kirkdale referred to ICL. The decision that ICL recently had to take relates very much to one of the problems to which I have referred, namely, overmanning. That reflects the new management's determination to restore ICL to financial health, which must be its primary task if the jobs of the great majority of ICL employees are to be safeguarded. It must be recognised that to restore ICL to profitability hard decisions are required. Of course, job losses are always regrettable, but as the company said in its announcement, ICL is overmanned and needs to reduce its overheads severely if it is to recover its former competitive position.
  Mr. Alfred Morris: The Minister said that my hon. Friend the Member for Liverpool, Kirkdale (Mr. Dunn) was advocating simply higher public expenditure. Is the Minister aware that the Government are now spending over £10,000 million on the unemployed? Is he aware that it now costs £4,000 a year and more to keep a single person unemployed and over £6,000 a year to keep unemployed a married man with two children? What possible sense is there in a policy that spends over £10,000 million on unemployment pay when there are so many people who are desperately anxious to work?
  Mr. MacGregor: The right hon. Gentleman must be aware that most calculations also show that to prop up industries and to continue with overmanning in an industry that desperately needs to cut its overheads to compete is more expensive than having to give unemployment benefit to those without work. That is more expensive in the short to medium term and much more expensive in the long term, because it preserves jobs for which there is no justification and slows up the process of restructuring the new industries from which the new prosperity will come.
  Mr. Gerald Kaufman: With regard to ICL, is not the Minister aware that in the North-West we are facing 30 per cent. redundancies compared with 17 per cent. redundancies nationally, and that that situation could be remedied if the Government would take some action and bring forward orders to provide the work? The Government have part of the remedy in their own hands, but they are just not interested.
  Mr. MacGregor: I appreciate the difficulties for the North-West, but commercial decisions about a concentration of 30 per cent., or whatever—I do not have the figures with me—must be for the company.
  Mr. James A. Dunn: Will the hon. Gentleman give way?
  Mr. MacGregor: I must get on, as I have hardly started. I shall give way a little later.
  It will not help the future economic progress of the North-West to postpone tackling the problems and facing decisions on overmanning at a time of world recession merely temporarily to save jobs. We are paying the price for making that mistake too often in the past. Many regions are experiencing difficulties, but I have been struck by what companies—including companies in the North-West—have told me since I have been in the Department. They are now taking decisions that they should have taken before to deal with long-standing matters that make them less efficient than their competitors.
  Mr. Charles R. Morris: The Minister argues that overmanning, restrictive practices and inordinate wage demands have contributed to the problems of the North-West, but not one of those factors applies to the textile industry. The workers have not demanded inordinate wage increases, they co-operated in double-shift working, and they have also co-operated in closing down 400 mills. His arguments have no substance in fact.
  Mr. MacGregor: I must make progress with my speech, but I shall come to that point. In general, my arguments about overmanning, restrictive practices and so on have been well rehearsed in the House and are recognised by many in industry.
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  The North-West, like the North-East, has more than its fair share of industries facing problems, not necessarily of their own making. The world over-capacity in shipbuilding is creating problems for industries in many countries. Problems in the steel industry can, in the long run, be solved only by dealing with European over-capacity. The North-West is also affected by the United Kingdom over-capacity in sugar refining. Canada and Scandinavia have competitive advantages in the paper and board industry because they are close to the source of raw materials and have cheap energy. Then there is our textile industry, which, like other European textile industries, has long had to adjust to the problems of supply from developing countries at the cheaper end of the market and to the introduction of new materials and technologies.
  It is important to understand that the Government are adopting measures appropriate to the circumstances. Some are to give industries time and others to deal with long-standing problems, which require urgent attention.
  I shall not deal at length with the textile industry, because many hon. Members with textile interests in their constituencies dealt with the matter on the Adjournment on 9 June and there will be a full day's debate on Thursday.
  Last week in the House the Minister for Trade acknowledged the importance of the textile industry and our commitment to it. The hon. Member for Kirkdale mentioned the difficulties with which the industry in the North-West has to deal, and his right hon. and hon. Friends reinforced what he said. However, the impression is sometimes given that our entire textile industry is disappearing, so it is worth stating that it still supplies about 70 per cent. by value of all the textiles and clothing purchased in Britain, and is still a substantial and major exporter. Last year the figure was nearly £2,200 million.
  I entirely reject the allegation that the Government are disregarding the industry's problems. Although we reject general import controls as a solution to the problems of any industry, our commitment to the industry is demonstrated by the fact that for no other industry has so much been done to ensure that imports from so-called cheap producers do not do unreasonable harm.
  The Minister for Trade pointed out last week that he now administers 570 quotas from 42 low-cost suppliers from all over the world, and that he has added to the number of quotas at the rate of one every two weeks since the Government came to power. No other industry has received that range of help and support, and it demonstrates our commitment. We recognise that the textile industry has peculiar problems. Although my general criticisms may apply to some textile firms, others are in difficulties through no fault of their own.
  In addition, the European Community, supported by the United Kingdom, has imposed quotas for the first time on imports of American synthetic yarn. The textile, clothing and footwear industry has also received substantial support through regional aid and the temporary short-time working compensation scheme. Since 1 April 1980, £43·4 million has been paid to firms in those sectors under the scheme.
  It is important for the future of the industry that the Government are committed to renegotiating a tough successor to the present multi-fibre arrangement. My hon. Friend has made it clear that the arguments for a recession

  747
  clause, about which the industry is so concerned, are strong. There will be ample opportunity to go over the ground in the debate later this week.
  State aid by itself cannot solve the problems of any sector. I have no doubt that Opposition Members today or on Thursday will mention the schemes for assistance to the textile industry proposed by the Belgian, French and Dutch Governments, but those have not yet been approved by the European Commission and we have no intention of proposing similar schemes. In the long run, industry, including the textile industry—and I am thinking, too, of the necessary adjustment and restructuring from old to new industries, which we must all face—must look to increased productivity and quality, improved marketing and the appropriateness of the product range for the home and export markets that the industry is selling in. We cannot escape from the fact that, especially in a recession, with tough competition, firms must get down to the job of beating the competition. They cannot continue to produce and hope to sell products for which there is no demand.
  Mr. Nicholas Winterton: My hon. Friend has been somewhat scathing, indirectly, about the textile and clothing industry and has mentioned its need to be more efficient. How can a firm be more efficient than Carrington Viyella, at unit 1, which the Prime Minister visited before the last election? It is an investment of £6½ million, which employs merely 81 people. Until recently, it had to operate only one week in two, although, fortunately, it is now working full-time again. Surely my hon. Friend will admit that, with the co-operation of employers and work force, the industry has done all that it can to meet foreign competition, not only from developing but from developed countries. Will he pay tribute to the industry for the tremendous job that it has done in recent times?
  Mr. MacGregor: A problem with having to speak quickly and briefly about long and complex problems is that generalisations do not cover individual circumstances. Although I have not visited the plant, I have no doubt that many textile and other firms have excellent efficiency and productivity. However, because of the changing pattern of world trade, industries that have previously been highly successful may have problems. That is why measures have to be taken to enable industry to adjust. It worries me that through no fault of their own—perhaps because firms to which they supply components are in difficulties because of the recession and may not have been as efficient as they should be—many firms get into considerable difficulties. That is one of the most disturbing aspects of a recession, but, alas, it is sometimes a fact of economic life.
  In the textile industry that inevitably means difficult decisions, but, at the end of the day, the Government's role cannot be that of a crutch to non-competitive industry or to industry with particular problems such as those faced by some firms in the textile industry. It is for management and workers alike to take the oportunities that our policies will offer once the world economic position improves. I known because I have visited them, that many of our textile firms are already succeeding in doing that.
  I come now to the wider areas of Government action. The House is by now well aware that our policy is to concentrate the resources available on those areas with the severest structural problems, so I need not explore at great length the general philosophy behind our approach to
  748
  regional policy. We believe that our approach will make regional industrial policy stronger and more effective than hitherto, by increasing the incentive available to industry to locate or expand in the areas with the severest problems. In the North-West this has meant a recognition that Merseyside faces problems unmatched anywhere within the region. That must be right. But the North-West as a whole benefits from a whole battery of weapons, and a concentration of Government expenditure and efforts, much greater than that applied to most other parts of the country.
  First, in terms of regional policy, the reduction in the areas covered by assisted area status from 44 to 26 per cent, will in itself help those areas still retaining the status by the very fact that the incentives are now available to fewer other parts of the country. I am aware that there is concern among some of my hon. Friends and among Opposition Members about certain areas in the North-West. We have made it clear that we are committed to keeping a close watch for signs of any long-term structural decline relative to other areas that would call for adjustments to present assisted area designations. That still stands.
  I deal next with the Industry Act measures, which my Department administers. Regional development grants amounting to more than £105 million were made to the North-West in the last financial year. That was 21 per cent. of the British total, which shows the extent of concentration. Certainly, the figure for regional development grants was much higher than in earlier recent years. That in itself gives the lie to the hon. Gentleman's proposition. It is so easy to ignore what is being done and simply to go on demanding more and more. Offers of selective assistance under section 7 of the Act over the same financial year amounted to £32 million, or one-fifth of the national figure.
  Over the two financial years since the Government came to power the figure is about £60 million in support of projects estimated to cost £600 million and providing about 20,000 new jobs. A similar number of jobs will have been safeguarded by projects financed by this support. That is worth putting on record, as the cries for more occasionally give the impression that nothing is happening. [HON. MEMBERS: "How many jobs have been lost?"] We have already been through the problems of declining industries. I am well aware of the figures. Nevertheless, hon. Members must recognise that a great deal is being done and that in a difficult world situation, in which so many of our industries are declining or have become uncompetitive, it takes time to carry out the industrial restructuring that we all seek.
  The emphasis on regional development grants and selective financial assistance is particularly important in achieving structural change from the old to the new industries that the region needs, as well as in the context of inward investment and demonstrating the attractiveness of the region to those who might wish to come to this country. I shall return to that later, as one of the difficulties is that, internationally, industry is hardly mobile at present. Nevertheless, the range of incentives exists for the North-West.
  Mr. Anthony Steen: I should be glad of my hon. Friend's comments on two points. Is he aware that one of the problems facing small firms and industry in the large metropolitan areas is the level of

  749
  commercial rates where local authorities continue to run services even though the populations have declined? Does he agree that it would be of great assistance if they would contract out some of their services to private enterprise? Secondly, will he comment on the fact that, so long as small firms cannot expand or develop in the inner areas because the infrastructure grants are not adequate, they tend to go out to the green field sites, thus losing even more rate income for the inner areas?
  Mr. MacGregor: I agree with my hon. Friend's first comments. I shall deal with commercial rates in a moment. On his final point, a great deal is now being done to try to improve derelict sites in inner urban areas. Indeed, the small workshop unit estate that I opened was of precisely that kind. A great deal can be done and is now being done to achieve this. I agree with my hon. Friend that this is particularly relevant to small firms and to businesses starting up.
  In the North-West—including Cumbria, which is now included in the North-West—the English Industrial Estates Corporation has spent more than £9 million on factory construction in the last year—about 28 per cent. of its total expenditure. That is an indication of the degree of concentration. Moreover, it plans to spend more than £14 million in 1981–82, which will help the construction industry, on nearly 62,000 square metres of factory space. A total of 122 factory units is under construction, in addition to 145 units, mainly small, funded by the private sector.
  Another of the good things that have happened over the past year—partly, I believe, in response to the changes in last year's Finance Act with regard to industrial buildings allowance, especially for small units—has been the increasing interest shown by the private sector for the first time in years in building these small workshop units. In the rural parts of the region the Development Commission's COSIRA has nearly 500 square metres under construction and has completed the design of a further 10,000 square metres.
  I wish to deal briefly with a subject that was debated on the Adjournment on 12 March. That debate raised the problem, particularly in the North-West, of older industrial buildings which might, if refurbished, provide premises for new companies, especialy small firms. Some vacant premises, including textile mills, are readily reusable. I know that some of my hon. Friend's, particularly my hon. Friend the Member for Nelson and Colne (Mr. Lee), who has often discussed the matter with me, have a great interest in this matter. Some premises are readily re-usable, and some can be adapted for re-use, while others cannot be viably adapted. It is unreasonable, however, to urge that all these premises should be re-used or adapted.
  The English Industrial Estates Corporation will consider the adaptation of buildings where this can be shown to provide viable new premises. I am pleased to note that several local authorities have already successfully adapted old buildings, sometimes including multi-storey mills, and several property companies have successfully adapted old buildings. As I tried to make clear in the Adjournment debate, however, I cannot emphasise
  750
  too much that all this has been done on a selective basis and by no means all older premises are suitable, physically or financially, for such treatment.
  On the point raised by my hon. Friend the Member for Liverpool, Wavertree (Mr. Steen), I readily understand the psychological as well as the practical barriers to attracting new industry caused by the despoliation of the landscape by previous industrial enterprise. Indeed, the Opposition also referred to this problem. That is why the North-West is receiving as much as one-quarter of all derelict land clearance grants, amounting to about £7·4 million last year.
  It is also worth emphasising the sums received from the European regional development fund, amounting to about £63 million in the last two years, of which two-thirds was for industry projects and the rest for infrastructure projects. The industry project orientation is right, because that is where the crying need now lies. It was pointed out to me in the North-West that the area's transport and communications infrastructure is now very good. That is of fundamental importance in trying to attract such mobile industry as exists at present. [Interruption.] It was achieved by successive Governments, as hon. Members well know.
  When I was in the North-West, a point was put to me which had not previously struck me in this light. The difficulty about excellent communications is that products can go to the North-West as well as be built there and then go to the major markets in the Midlands or the South. That illustrates the importance, when industry is so mobile, of a region stressing its advantages and trying to overcome its image of bad industrial relations. For that reason, there is a heavy responsibility on all hon. Members in the North-West.
  Government efforts to support the North-West are not limited to the construction of factories or the provision of industrial grants. The MSC programme of special measures is helping to mitigate a good deal of the worst effects of unemployment, especially for the young. I shall leave it to my hon. and learned Friend the Member for Clitheroe (Mr. Waddington) to deal later with the points made about the MSC programmes.
  Nearly 53,000 jobs are currently being safeguarded under the temporary short-time working compensation scheme in the North-West, not including Cumbria. Nearly 9,000 people are taking advantage of the job release scheme, and nearly 1,000 are working in community industry schemes. For the young, the youth opportunities programme is giving a chance to those who would otherwise not have a job to gain experience of the world of work. Sixty-four thousand young people in the region joined in the period between April 1980 and April 1981. In addition, nearly 4,000 joined the short-time employment programme in the region over the same period. For these last two programmes the North-West received the highest allocation of resources of any English region over the last two years.
  All that demonstrates how much the Government are doing. The areas that I have been describing are all those in which the Government have a legitimate role to play, but it is vital—this is where we part company from the Opposition and where I part company from the general trend of the speech by the hon. Member for Kirkdale—that we recognise limitations on public expenditure, in two respects. First, there is the overall need to contain public expenditure in the interests primarily of industry and

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  commerce, which are constantly saying that lower interest rates and things of that sort most matter to them. When the hon. Gentleman accused us of monetary strangulation and referred to further financial cutbacks, he meant that he wanted to put up the public sector borrowing requirement by much more and that he wanted to see interest rates going up. I hope that he will tell that to industry and commerce, which are fighting to be competitive in the North-West. That is not the realistic way to create new and lasting jobs.
  The second limitation is the need for industry to solve its problems, to recognise its market opportunities and to achieve its own restructuring. Too much Government subsidy can shield and delay that process. Too much Government interference can push industry in wrong directions.
  The rates burden, to which my attention has been drawn, is one of the significant factors in discouraging businesses of all sizes, but especially small businesses. The new Socialist-controlled local authorities are beginning to claim that they have a mandate to spend more. They did not get that mandate from the business community. They should look to the danger that they will be causing. As in this House, Socialists all too often and all to simply see the spending of more taxpayers' or ratepayers' money as the panacea and then look on in astonishment as the effects of that work through when the bills have to be paid.
  It is noticeable that there are some very large increases in the North-West, and that by far the majority of them are coming from authorities that are Socialist-controlled. I hope that they will consider the need to contain expenditure in the interests of industry and commerce.
  Mr. Jack Straw rose—
  Mr. MacGregor: I hope that the hon. Gentleman will forgive me if I do not give way. He has only just come into the Chamber, and we have had a long debate already.
  The key to industrial and commercial regeneration—I recognise that Liverpool and Manchester were built on commerce—lies with management, the unions and the community. There is a need to show that the area itself is taking steps, not only to improve its industrial performance, but to create the new enterprises that will provide the wider and more stable economic base.
  I pay tribute to a number of developments in the North-West. These are essential if firms that are now highly mobile are to be attracted to the area. The Merseyside image has often been one of bad industrial relations. When I was in Germany recently with a member of the TUC from the Northern area, trying to attract inward investment to this country, the extent to which that factor emerged as a problem was striking. The region, and in particular Labour Members, could do a great deal to overcome the picture that has been built up. I am in favour of putting across positive steps all the time and of drawing attention to the self-help that is now being shown.
  As the Minister responsible for small firms, I am particularly delighted with what has been happening in the North-West in that connection. In May 1979 the staff were handling about 800 inquiries a month. The 11 counsellors were averaging about 85 counselling appointments a month. Now, with a staff of nine, there were almost 800 inquiries a week last month. Counselling appointments have trebled. The trend is upward, and it is particularly
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  significant that 50 per cent. of all inquiries are related to new start-ups. Not all of them will come to maturity, but the level of interest is most significant. I know that a considerable number of them have been caused by people being made redundant, but they are getting out and setting up jobs in the new small firms that will create the industrial future for the region.
  When I opened the new small workshop unit in the Wirral recently, I saw that the spirit of enterprise was very much alive. There was one young chap in particular who struck me with his enterprise. He had been in operation for only six to eight months, but he was already employing three people in the making of car hoods and 80 per cent. of his output was being exported to other EEC countries. [Interruption.] Labour Members must recognise that in the restructuring much of the new employment will come from small businesses, which will grow. That is the significance of the many measures, about 60 in all, that the Government have introduced since they have been in power, culminating in the loan guarantee scheme and the business start-up tax arrangements, which were announced by my right hon. and learned Friend the Chancellor of the Exchequer in the Budget.
  As well as providing new jobs, a greater stability is given to the economies of local communities when there is a much wider range of products and services. With the creation of the two enterprise zones in the region, at Trafford Park and Speke, entrepreneurs have an opportunity to demonstrate their abilities, free from some of the obstacles that local authorities and the Government sometimes place in the way of business men.
  A central theme of the Government's approach is the freeing of business men from unnecessary bureaucracy. [Interruption.] When constructive steps are taken, and when people from the region of the hon. Member for Kirkdale follow up with their own initiative, the hon. Gentleman tends to pour cold water on it. Some of the Government's initiatives have led to the creation of real jobs and to the creation of a good deal of new enterprise.
  The enterprise zones are an experiment. Ministers will look carefully at the results obtained in those zones, but it is already a fact that they have been greatly welcomed by the local authority concerned, and it is our hope that the opportunity that they represent will bring real benefit to the areas in which they are situated.
  I pay tribute to one other respect in which the North-West region is not only demonstrating its self-help, but has been a pioneer. I refer to the example of local enterprise trusts and other similar agencies, such as the Community of St. Helen's Trust, Business Link Ltd. at Runcorn, In Business Ltd. on the Wirral, which I visited recently, and the Sefton Enterprise Trust. The St. Helen's Trust in particular has been an inspirtion and a model for similar ventures elsewhere in the North-West. My hon. Friend the Member for Rossendale (Mr. Trippier) is very much involved with setting up a similar organisation in his constituency. Such initiatives, which harness the energies of all sectors of the community, are to be applauded.
  On a grander scale, the Government have created a channel for Merseyside's energies with the creation of the Merseyside Development Corporation. This will have £18 million in the current financial year to begin work on the regeneration of the disused and derelict dockland areas on each side of the Mersey estuary. I do not understand why Labour Members scorn this initiative, because often the need is to make use of the derelict land that exists in the

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  inner urban areas. Often, these areas are most attractive for new small business unit start-ups. Merseyside is, of course, only one of two areas with such a development corporation and its formation is yet another sign of the Government's concern for the region's situation.
  There are many examples of things in larger companies that are going right for the North-West. I have no doubt that incoming investors are impressed by the good news stories from the region, which show what the North-West can do. Hughes International's decision to assemble buses at Skelmersdale is a sign of confidence in the region, which belies the gloom mongers. Other signs of confidence are the orders for Leyland Trucks and Buses at Workington, for Cammell Laird from Canada, and for GEC at Trafford Park. Why should Ribblesdale Cement invest £22 million at Clitheroe, or UKF invest at Ellesmere Port, or Data Recording Instruments at Winsford, or Eaton Limited at Walkden, if the region had no future? They are all examples of new investment. That is exactly what is needed if we are to restructure industry.
  I have never denied that it would be foolish not to take full account of the problems of the textile industry. A number of companies continue to make good profits in the North-West. I refer, in particular, to Coloroll Ltd., in the constituency of my hon. Friend the Member for Nelson and Colne. For normal, protocol reasons relating to the House, he is unable to contribute to the debate. That company has done well in decorating materials and is moving into textiles. It is developing a large market for furnishing fabrics.
  At the end of the day, the North-West region, like the rest of the country, will benefit from the achievement of the Government's overall objectives of getting inflation down and of reducing interest rates to levels that are below the average of our major competitors. Indeed, interest rates are already at that level. The North-West will benefit from the successful transition from the declining to the new industries, from the stronger management decisions now being taken and from the more realistic approach to wage negotiations that is evident in many sectors of industry and commerce.
  To sum up, the Government are very conscious of the problems facing the region—which are longstanding—and are playing their full and proper part in creating the conditions in which the undoubted reserves of vigour, shrewdness and enterprise, which the people of the region can demonstrate, are able to flourish. But there are limits, financial as well as practical, to the aid that the Government can, or should, give. The Government's policies are aimed at giving every opportunity to those who help themselves—with courage, flair and initiative—to prosper. I have given some examples of self-help in the region, and I am sure that other speakers will tell the House what their constituencies offer in that respect.
  My final word is that while the current situation is difficult—no one denies that—there are also encouraging signs. Clearly, we live in a highly volatile world, and what happens in one major country can quickly have its effect on others. Clearly, too, conditions vary from industry to industry, and often from firm to firm within an industry. There are signs that the bottom of the recession has been reached and that there is some prospect of an improving economic situation. In those circumstances, it is vital that
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  the North-West, and indeed all parts of the country, should take the opportunities that an upturn will bring, and the Government are setting the conditions for that to happen.
  The debate can best contribute to the future of the North-West by demonstrating how ready so many in the North-West are, and have been, to take advantage of the new opportunities and to ensure that restructuring takes place. That is the only satisfactory way to reduce unemployment in the region.
  Several Hon. Members rose—
  Mr. Deputy Speaker (Mr. Bernard Weatherill): The House knows that neither I nor any of my successors has any authority to limit the length of speeches. However, 27 right hon. and hon. Members have shown that they wish to speak in this important debate. Even if hon. Members speak for only 10 minutes, some will be disappointed. I make a special plea for short contributions.
  5.13 pm
  Mr. Robert Sheldon: Hon. Members will be grateful to the Minister for telling us that he is aware of the problems of the North-West. I note his journey to the Wirral and his consequent claim to understand the problems of the North-West. That was wholly inadequate preparation for such a debate. Hon. Members will be impressed by the diversity of problems in the North-West. In my constituency, Mossley is not the same as Hyde, which lies in another part of Tameside in the constituency of my hon. Friend the Member for Stalybridge and Hyde (Mr. Pendry). Those who represent constituencies in the South may think that Reigate and Redhill have similar problems, but the North-West has a diversity of problems. The Minister's common approach showed that he failed to understand that there is a big difference between what he saw at the Wirral and what we see in our constituencies.
  The hon. Gentleman spoke about responsibility for the rundown in the North-West and mentioned overmanning, restrictive practices and wage demands. That shows that he has not been to many of my hon. Friends' constituencies or to my own. We do not have such problems. In his half-day visit to the Wirral he may have found such difficulties, but he did not find them in my constituency or in most other constituencies in the North-West. The problems of overmanning, restrictive practices and high wage demands do not exist in our areas. The hon. Gentleman has got the wrong region. He may find those problems elsewhere, but not in my part of the country.
  We face the problems of a Government-manufactured slump. The problems of the North-West are those of an over-valued pound and a high bank rate. Manufacturing in the Greater Manchester area still accounts for 38 per cent. of employment, compared with much less in the rest of the country. It is a manufacturing area. Unemployment, particularly in the manufacturing industries, hits us hardest. We do not have the soft under-belly of the service industries that exist in the South. We produce goods which we sell abroad and which give us a balance of payments advantage that other countries used to envy. Recently, that has been undermined.
  My constituency contains many small firms. The largest firm in my area is ICL, which lies on the borders of my constituency. Recently, 823 jobs were created but

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  390 people are to be made redundant. That firm has the highest employment in my constituency, although it has fewer than 500 employees.
  The Government do not seem to know what they are doing with one hand, when the other demolishes firms. Government assistance has been haphazard. ICL has been given an extended life from seven to 10 years. Instead of lasting seven years, Government-bought computers last 10 years. At the same time, 390 people have been made redundant at ICL. The Government should revise their policy. Computers were first invented in the Greater Manchester area, were developed, sold all over the world and copied. There has been considerable Government assistance, but the Government have failed to maintain it.
  ICL is not a typical example of industry in the North-West. More typical are the small firms with fewer than 500 employees. They face problems of subcontracting to large firms. As a result of the recession, large firms produce more of their own components, thus forcing greater burdens on the small firms. In the Ashton-under-Lyne travel-to-work area there has been a 114·8 per cent. increase in unemployment in just 12 months. That is the burden of our claim against the Minister. He will not find an answer to those problems by visiting the Wirral or any one small part of the country. He must understand our problems and become more aware of our difficulties.
  Even with an upturn in the economy it would take a long time to improve employment. I do not accept the rosy view about the upturn that is a-coming. I see little sign of it. Government spokesmen are trying to push up the economy by talking about it. There is evidence for that view in what Manchester chamber of commerce has said and done. It has met Members of Parliament from both sides of the House and has given us its view of the economy and the disasters that it sees ahead.
  Good firms, substantial firms, firms that have invested and firms that have a long record of progressive management are seen to be in as much trouble as other firms without that background. The chamber of commerce at Tameside has told us about the problems of unemployment and decline as it sees them. The Secretary of State for Industry has told us that he cannot assist because of what he describes as the broader aspects of his economic and industrial strategy. The Tameside employment strategy group is trying to bring about the necessary changes.
  One necessary change is the restoration of assistance for the assisted areas. It was all very well to talk about a lack of need to assist these areas when they had 5·6 per cent. unemployment—the rate in the Ashton-under-Lyne travel-to-work area—but in the assisted areas in the region unemployment has increased to 12 per cent. in 12 months: one in eight of the working population is unemployed. That picture has to be viewed rather differently, since it does not take into account unemployed women who do not register. We are speaking of an area where traditionally many women have sought employment not merely to earn pin money for themselves but to provide essential finance for the normal running of the community, of their households and of their families.
  Unemployment pay and loss of production costs up to £1 billion a year. There are 141,000 unemployed in the Greater Manchester area—doing nothing, receiving unemployment pay and wandering the streets. We should not accept that. It costs Britain £1 billion to look after those people and their families while they are doing nothing.
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  The Minister asks us what we want done. We want to put the unemployed to work and to give higher priority to the value of the pound, the high bank rate and the Government-manufactured slump.
  The area that I represent has seen great tragedy and great suffering. Much of it has been quiet and unnoticed except by those who do their work diligently as Members of Parliament or local councillors. They discover for themselves what is going on behind closed doors, where people with a pride in their work find themselves without employment. Ministers spend so much of their time in the more prosperous areas. When they visit the North-West they should discover what is happening in the area.
  Week after week in the North-West the certainties of the Minister's economic solutions are moving to doubts. We hope that the doubts will eventually change attitudes. I hope that a change of attitude will be one of the consequences of the debate.
  5.25 pm
  Sir Walter Clegg: The right hon. Member for Ashton-under-Lyne (Mr. Sheldon) made a mean-spirited and unfair attack on my hon. Friend the Under-Secretary of State for Industry and on the Government. My hon. Friend has been in office a few months. He has his job to do in the South and in Parliament as well as in the Department. Many Ministers apart from my hon. Friend have visited the North-West since the Government came into office. It is nonsense to say otherwise. They have visited and they will continue to do so.
  I was glad to see the hon. Member for Liverpool, Kirkdale (Mr. Dunn) at the Dispatch Box. The hon. Gentleman and I have something in common as we are both battery-powered. His battery is a pretty powerful one because he made a long opening speech. I do not intend to follow his example.
  The hon. Gentleman was unfair to the Government and the previous Labour Government when he referred to the shift of NHS resources to the North-West. After the RAWP report the Labour Government started to shift resources to the North-West to correct the imbalance. The present Government have continued to operate that shift. The shift is not as fast as many of us would like, but it would be wrong to give the impression to people in the North-West that nothing on that account is being done.
  Having listened to the hon. Member for Kirkdale and the right hon. Member for Ashton-under-Lyne, one could be forgiven for thinking that unemployment is a new phenomenon in the North-West. In fact, unemployment has been growing over the past decade, during which Governments of both major parties have held power. It is dangerous to suggest that there is a bunch of magic wands waiting to be waved and that when that happens the problems will disappear overnight. That is not true. If magic wands had been available, the previous Labour Government would have waved them when unemployment started to climb during their period of office. Equally, I should expect my right hon. Friends to wave them now if they were available. There are no magic wands.
  Industry has been given many inducements to go to Merseyside. The inducements have been available not for one or two years but for a decade or more. Name the inducement, and Merseyside has had it. It has had special development area status and it will have the new enterprise

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  zone at Speke. Have those inducements and others made any difference to Merseyside's economy? Despite all the money that has been put into Merseyside, the sad truth is that Merseyside's economy is basically unchanged. Those in other parts of Lancashire have asked "What is wrong with the policy? Merseyside, with its high unemployment and great problems, has many facilities, yet it seems that the problems cannot be cured. It is wrong for those in Merseyside to be told "All you need is more money and all your problems will go away." I am certain that that is not the answer.
  The future of the North-West lies in the region's own hands. I shall give one or two examples from my own constituency. The port of Fleetwood has had a terrible time over the past few years with the rundown of the fishing industry. That does not mean that the town is down and out. Other developments are taking place and there are two that I shall mention specifically.
  One of the great engineering firms that repaired ships and manufactured winches was due to go out of business. However, the work force in half the factory grouped together, put in their savings from their redundancy pay and took a risk. They have had help from local government and the Department of Industry, but they have got the firm off the ground and it is looking prosperous.
  The other part of the firm was taken over by a local firm. It did not receive so much Government help but it is restoring the part of the firm of which it took control. At the same time new factories are being developed on the New Dock estate. Some factories are Government-developed and some are being developed by private enterprise. The sites are being taken up quickly and the factories are creating jobs. In addition, the port is gaining increased traffic from the roll-on, roll-off service and from the other services that it can offer. This a picture of a town with difficulties—but, thanks largely to the vigour of the inhabitants, it is overcoming them. That is happening all over the North-West. We do ourselves a great disservice to say that we are all down and out and that we do not have ideas. We have great industries such as British Aerospace and British Nuclear Fuels.
  Mr. StrawBoth nationalised.
  Sir Walter Clegg: The success of British Aerospace was based on the research and development of private enterprise.
  We do little good in these debates by decrying our region. As has been said, we have a wonderful network of motorways to connect us with the rest of this country and the rest of the world. The Government are not wholly responsible for the unemployment. Other factors are involved and it would be foolish of the Opposition not to recognise that. Unemployment cannot be solved by throwing money at it. All we can do to solve it is to help ourselves with what Government help can be reasonably made available. That is now being done.
  5.30 pm
  Mr. Eric S. Heifer: I want to speak about the problems of Merseyside. In the latest "Norwida Newsletter" we read that
  "redundancies are still running at a very high level. In the first four months of 1981 there were 31,666 confirmed redundancies (involving over 10 persons) in the North-West region, 8,062 of
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  which were in the Merseyside special development area. These figures compare with 23,730 and 5,600 redundancies respectively in the same four months of 1980."
  I put a question to the Secretary of State for Employment on 18 May, and I found that between May 1979 and April 1981 the numbers registered as unemployed in the Merseyside special development area had risen by 32,329, an increase of 41·3 per cent. The number out of work in Liverpool for more than two years—that is Liverpool, not Merseyside as a whole—is 14,855, and those who have been out of work for more than one year total 30,000. Those figures suggest, without a shadow of a doubt, the disastrous nature of the Government's economic policy.
  There have always been unemployment problems on Merseyside, because there was too much reliance on the port. The service industries flourished at the expense of engineering and manufacturing. That changed, to some extent, with the advent of the motor car industry on Merseyside. The Labour Party can gain much credit, because it provided all sorts of facilities for and assistance in getting the motor car industry to Merseyside.
  Closures are continuing to occur on a frightening scale. Since the last "Norwida Newsletter"—I cannot go through all the horrific closures, because there is a long list—Courtaulds in Aintree has got rid of 1,550 jobs, and there have been many others, which add up to a pile of closures in 20 or 30 firms. That is between one newsletter and another—not over several months.
  Mr. Kilroy-Silk: My hon. Friend mentioned the Courtaulds factory in Aintree, which, as he knows, is in my constituency. Will he confirm that that closure belies what the hon. Member for North Fylde (Sir W. Clegg) said? The closure was the direct result of the Government's economic policy, high interest rates, high exchange controls and lack of purchasing power because of cuts in public expenditure. That company, with a good product and work force, and high productivity, made a public statement demonstrating that its demise with the loss of jobs was directly attributable to the Government's economic policy.
  Mr. Heffer: My hon. Friend is correct. He and I had conversations and discussions with the management of Coutaulds. We made representations to the Government, as did my hon. Friend the Member for Bootle (Mr. Roberts), along those lines. The company pointed out the disastrous effect that Government policy would have if it was not changed. It was not changed, and our people are now out of work.
  There is also a long list of redundancies in the "Norwida Newsletter". I shall not give the names, as I do not wish to take an unduly long time. The American Canning Company is laying off 300 workers. Austin Packaging is to make 170 people redundant; Berwick Toy Company, 97; Cadbury Typhoo, 96; John Dickinson Stationery, 215; Glaxo, 92; Heat Treatment Engineering, 84; IMI Yorkshire Imperial, 200 and Kraft Foods, 370, staged over three years. The list could continue.
  Vauxhall Motors is making 2,900 workers redundant, and Metal Box Company at Aintree another 124. There are many others, one of which is not in the latest "Norwida Newsletter" list, because it has already taken place. Tate and Lyle has been in Liverpool for over 100 years, but it

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  is now in the process of closing down and only a handful of workers are employed there. All that is due basically to Government policy.
  There is mass unemployment in the Western world because we live with a stupidly organised economic system. That is the main reason, but we have a Government who make it worse. There is the problem of capitalism, which cannot solve unemployment, and the Government, because of their stupid policies, make the position worse.
  The motor car industry was the great hope for Merseyside, and it has been badly affected. An interesting pamphlet issued by TASS-AUEW Merseyside and North Wales divisional council, called "Merseyside Engineering—End of an Era?" is a disturbing document. I hope that the question mark at the end of the title remains a question mark, because if it were removed it would be the end of an era.
  The figures given in the pamphlet are worrying, because between 1971 and 1977—before the latest group of redundancies and during my time in office—the numbers of workers in the vehicle industry in Liverpool, not including the Ellesmere Port plant, fell from 21,000 to 18,000—a drop of about 13 per cent. The latest optimistic estimate from the Liverpool planning office is that there will be no more than 15,000 workers in the vehicle industry by 1986. Other, more pessimistic, observers put the figure at 10,000.
  The Merseyside figures show the decline of the port, with the south docks closed and most of the north docks under-used. We have witnessed the decline of the shipbuilding industry. Cammell Laird has recently won a good order for oil rigs, but it is still in difficulty. We have seen the end of the ship repair industry. I worked in that industry at the end of the Second World War and, as my hon. Friend the Member for Liverpool, Kirkdale (Mr. Dunn) said, there were about 20,000 workers in the industry in those days. Now there are 200, if one is lucky. There is nothing left.
  We have also seen the end of the sugar refining industry on Merseyside, and the motor car industry is in decline. Thousands of construction workers are unemployed. They are not all unskilled workers. Many are highly skilled craftsmen and their abilities are being wasted.
  On top of that come the cuts on public expenditure. The hon. Member for Liverpool, Edge Hill (Mr. Alton) is not here at the moment. When we last discussed the problems of Merseyside. I said that cuts in public expenditure and the attitude of the Liberal council had resulted in workers being made redundant. The hon. Gentleman said that none had been made redundant. In a sense, he is right, because no one has been laid off, but when people have left no one has replaced them. Thousands of workers have not been replaced by local authorities, in Liverpool and elsewhere.
  Other problems are associated with unemployment. According to the chief constable's report, the crime rate on Merseyside has risen by 6·9 per cent. He said that
  "crimes of violence against both persons and property have shown dramatic increases, despite the efforts to contain this type of offence."
  There is a correlation between unemployment and the rising crime rate. When youngsters and others have been out of work for a long time there is an incentive for some to take to crime. I do not blame them; I blame the system that is responsible for it. There has also been an increase in the suicide rate as a result of unemployment.
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  We need a clear policy to deal with the problems of Merseyside. Nationally, we need to reflate the economy and carry out the policies advocated in "Labour's Plan for Expansion". On a Merseyside basis, we need some clear ideas within the national policy.
  I am pleased to see that the hon. Member for Edge Hill has entered the Chamber.
  Mr. David Alton: Will the hon. Gentleman give way?
  Mr. Heller: No, I shall not give way.
  The policies of previous Labour Governments and of Tory Governments before the present Administration have succeeded only marginally. While I was a Minister at the Department of Industry, we made Merseyside a special development area and provided massive aid through the Industry Act. We were also reasonably strict about industrial development certificates. That was helpful, but we found that, despite that aid and the IDC policy, we were merely standing still. If we had not implemented those policies—and the present Government have relaxed the IDC policies—we would have been in a far worse position.
  We need to learn the lessons of that experience. Conservative Members suggest that we should abandon all aids and leave matters to the free market economy, but that is not the answer. The lesson that we have to learn is that the aid that we provide and its administration were not necessarily the best way of dealing with the problems. We have to go beyond that policy.
  One of the Government's answers is to set up enterprise zones. I believe that these mini-Hong Kongs will create more problems than they solve. Nationally, we must halt the Tory cuts, make good those cuts, carry out a programme of public works, train and retrain the unemployed, introduce selective import controls, extend public ownership with a national investment bank and take our oil resources under full public ownership in order to make sure that they are used properly and intelligently.
  All local authorities should bring out from the pigeon holes their plans for capital spending on construction. That involves the Liverpool city council and others, and they must receive assistance from the Government so that that can be done. I do not favour the ring road on Merseyside. That could be dropped, but other projects should be carried out. We must also help small businesses. The hon. Member for North Fylde mentioned the nursery units. They were introduced by a Labour Government. We need to step up that programme and not only build the units, but actively assist to get firms into them so that they can create employment.
  The Government must make good their cuts and allow more house building by local authorities and housing associations. The Liverpool city council should stop building houses for sale—when they are building any at all—and build houses for rent, because thousands of people are living in slum property or are on the housing list and there is a massive demand for homes to rent.
  We should also give more aid to the Mersey docks, so that we can develop the port in line with modern needs. We need to restore IDC policies on a much tighter rein, and we must build more training and retraining centres. We must also ensure that the motor car industry on Merseyside is saved and developed.
  We cannot divorce the problems of the North-West or Merseyside from the problems of the country as a whole.

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  There is no doubt that the technological revolution presents serious implications for future employment, and we have to face that fact. We need a new approach to work, the work ethic, hours of work and so on. We need a 35-hour working week, longer holidays, voluntary early retirement, sabbaticals for workers and more education schemes.
  I know that Conservative Members react with horror to such suggestions, but we should organise society so that we can do those things. We have the potential wealth and it can be created, but society can be organised properly only if we have a redistribution of wealth and a reorganisation of our economic system.
  Those things must be done. If the debate does nothing else, I hope that it will draw the attention of the people of Merseyside and the North-West to the hopeless failure of the Government and to the Labour Party's solutions.
  5.50 pm
  Mr. Robert Atkins: I have been greatly depressed by the remarks of Opposition Members. They have talked only about the bad news. There is much more happening in the North-West that is good news. It should be remembered that the North-West is not confined to Manchester and Liverpool. The region stretches from the Cheshire boundary to the Scottish border. Hon. Members representing other parts of the North-West get a little cross when perpetual attention is paid to Manchester and Liverpool.
  Preston has problems like anywhere else. There are also some good stories to which we should give our attention. Chief among them is British Aerospace, now a public limited company which, as a result of decisions taken by the Government, has had a successful share issue. I do not know the figure for the North-West region, but across the country, the take-up amounted to about 58,000 of those entitled to take shares in the company in which they work. The right hon. Member for Salford, West (Mr. Orme) said again recently that British Aerospace would be renationalised if Labour were returned to power. I shall be interested to hear how a future Labour Government intend to recompense large numbers of employee shareholders—whether terms will be generous or whether they will amount to stealing, as remarks in the past have suggested.
  British Aerospace is a successful company. I heard only today from my contacts in the Warton and Preston division that the training that is taking place at Cottesmore on the new Tornado being delivered to the Italian and German air forces and also to the Royal Air Force is proving even better than expected. All say that it is a wonderful aircraft and a tribute to the work force in the Warton division of British Aerospace. It would be tremendous if more aircraft were ordered by those not already committed to buying them. There may be scope in the Middle East and even among countries on the Indian sub-continent for further orders.
  There is a real possibility of a £500 million-plus extension to the contract that already exists for British Aerospace to provide just about everything for the Royal Saudi air force. This is the largest single contract ever signed by a British company. It is about to be renewed.
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  That must be good news for everyone connected with British Aerospace, both directly and through sub-contracts.
  Amazing work has also been done on the advanced cockpit constructed to a revolutionary design that will benefit aircraft throughout the world. A contract has recently been received for carbon fibre composite research work based essentially on the carbon fibre Jaguar wing.
  One or two decisions need to be taken on the replacement of the Jaguar aircraft.
  Mr. Kilroy-Silk: I am interested in what the hon. Gentleman says. He will, however, be aware that the title of the debate relates to the problems of the North-West. Is he not failing in his duty to his constituents, of whom 14,500 are unemployed, if he does not draw attention to their plight and put pressure on the Government who have caused the majority of that unemployment to change their policies and so ensure full-time employment?
  Mr. Atkins: I shall not give way again if that is to be the nature of any intervention. I accept what hon. Members say, that the debate relates to the problems of the region. I have already said, however, that there is more to be stated about the North-West than merely its problems. I have started by talking about some of the good things. I shall come to some of the problems and concerns in due course. The hon. Member for Ormskirk (Mr. Kilroy-Silk) must bide his time.
  A decision on a replacement for the Jaguar aircraft has been awaited for four or five years. It is urgently needed. The aircraft was originally the AST403 before becoming the European combat aircraft. It is now the light combat aircraft. A decision needs to be taken by the Ministry of Defence procurement executive and the RAF as soon as possible about the aircraft they want, to enable British Aerospace to give some attention to the matter.
  Some of my hon. Friends and I who are interested in aviation have recently been told about the investment-needed in production technology connected with the equipment required to make aircraft. I am informed that in 1970 the United Kingdom investment was one fifth of that of the United States. In 1978, our investment had dropped to one tenth of that of the United States. To make matters worse, our investment in 1978 was less than in either France or Germany, our primary European competitors. This is an area where investment is needed, whether from the Ministry of Defence or—more likely—from the Department of Industry.
  I should like to mention another success story that impinges on my constituency and also that of my hon. Friend the Member for Chorley (Mr. Dover) who will no doubt also refer to the matter in more detail if he is called to speak. I refer to the Leyland Vehicles T45 that gained the truck of the year award earlier this year. Only a month after its European launch, I believe that orders worth £2 million have already been achieved from Spain and Portugal. It is therefore wrong to concentrate merely on depressing stories. This is another success story for the North-West.
  Yet another potential success in the Preston area is the independent local radio franchise for which there are five competitors. This will provide jobs and focus attention on the administrative centre of Preston. [Interruption.] I am sorry that hon. Members, intervening from a sedentary

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  position, do not seem to like good news. I shall continue to spell out the good news so that people know that all is not bad in the North-West.
  I was privileged to be present recently when Prince Charles visited my constituency. He was particularly interested to visit Asian workers in the mills. He was impressed by the success story told to him by the Asian workers, not only about the product they made but also about the community relations in the area.
  Prince Charles also visited the Gujerat Hindu centre in the constituency of the hon. Member for Preston, South (Mr. Thorne) where he met a wide variety of ethnic groups. His visit proved to my satisfaction that, although there are problems in some parts of the country, race relations and community relations in Preston are extremely good. My wish is that they should long remain so. There is no place in Preston or in other parts of the North-West for racism and extremism.
  I should like to mention those people who were put out of the work by the Courtaulds closure soon after I became an hon. Member. It was no fault of this Government that they lost their jobs. I would not advise Opposition Members to enter into this matter too closely. They will discover, if they do not already know, that it was largely through the failure of the last Goverment that the mill faced those problems. The people of Preston know that the mill had been near closure for some time, regrettable though the eventual decision was.
  One or two of those employed at the mill who were put out of work used their redundancy money to set up their own small businesses. I recently had the great pleasure of being told by an Asian constituent at my surgery that, starting from nothing, he will be employing, in a new factory of which he has just bought the lease, 16 to 20 people. That is a tribute to an Asian who came to this country, with all the problems involved, who lost his job and has put the redundancy money to good use building his own business and employing more members of his community.
  I do not want to go on for much longer, because I know that my hon. Friends want to tell other good news stories about the North-West. However, I should draw attention to one or two matters of concern. First, if they did not already know it, the people of Preston must now realise the difference between having a Conservative council and a Labour council in control. Having the Labour Party in control has meant an enormous rate rise. During four years of Tory control of Preston the rates went down. As soon as Labour comes in, the rates go up, and we learnt only recently that a supplementary rate will be levied by the new Socialist Lancashire county council. People must get the message: under Labour the rates go up; under the Tories they go down.
  I am concerned about what appears to be at least a percentage increase in the crime rate in and around Preston. I know that it is no fault of the police. Only recently a distinguished and senior judge, the recorder of Preston, Judge Bill Openshaw, was tragically murdered in his own home. Many hon. Members on both sides of the House will have known him or known of him. That tragedy brought home to the people of Preston on their own doorsteps the fact that there is still a problem of law and order that needs to be resolved.
  I want to conclude by touching on one or two regional points. First—I suspect that Labour Members will agree—I should like Manchester airport to be given much
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  more attention as a gateway to the North-West than it has had so far. It is a well-run, excellent airport, with room for improvement and development. I hope that it will receive the attention that it needs, and that the Minister will refer to the matter in his winding-up speech.
  It was a great insult to all the Manchester men and women of all colours, creeds and politics who have loyally served Queen and country when the city council announced recently that it will have no more military displays by the Army in the city. That was an insult because the Queen's Lancashire Regiment, whose tie I am proud to wear today, and which it gave me when I visited it in Northern Ireland during one of its tours of duty there, has part of its catchment area in Manchester, in the Ashton-under-Lyne area. That decision is disturbing. I hope that Labour Members who believe that many of their constituents have served their country loyally will agree that the decision is an insult, and will work to have it changed.
  There are doubts, problems and concerns in the North-West, and Preston is not alone in that respect. But there is still plenty in my part of the North-West, as many of my right hon. and hon. Friends from the North-West will agree, to acknowledge, applaud and appreciate as good news. I do not want to hear continuously, as we do from Labour right hon. and hon. Members, only the bad news. There is good news, and we should tell the world that that is so.
  6.4 pm
  Mr. Alfred Morris: Naturally I want to speak mainly about Manchester, and I shall do so briefly.
  In the view of many Mancunians, the pre-sent Government have inflicted more grievious havoc on the industrial life of the city than Hitler and his bombers could ever have hoped to accomplish. Speaking as one who was born and bred in Manchester, I can never remember a time when there were so many silent factories in our city, or so many idle hands.
  Never before have there been so many jobs crying out to be done or longer dole queues of people ready and able to do them. Nor, in my lifetime, have the hopes and plans of our young people been so grossly betrayed. "We have been thrown straight on the scrap-heap from school" was how one jobless young Mancunian put it to me.
  If these seem strong charges, they are totally endorsed by the facts. Moreover, the facts speak eloquently for themselves. Manchester is a city that, as successive Governments readily saw in the 1970s, has exceptional needs, requiring special kinds of help. Our needs mainly flow from Manchester's having been the home of the Industrial Revolution and previous Governments freely and rightly accepted the case for special help.
  The inner city partnership is one important example of the Labour Government's approach. Under the present Government, however, unemployment has rapidly increased and the loss of assisted area status gravely compounds our problems. There has also been a devastating cut in grant from the Government for housing and other services and we are now considerably worse off than we were when the inner city partnership was first thought of four years ago.
  I said that the facts speak for themselves. Let me, therefore, quote just some of the more striking facts to the House. In the past two years, unemployment in the

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  Manchester travel-to-work area rose from 5·2 per cent. in May 1979 to 11 per cent. in May 1981. That means that unemployment has more than doubled in the past two years. In 1978, there were six or seven job vacancies for every person registered as unemployed.
  At the latest date for which figures are available there were 35 unemployed people for every vacancy. Nearly 30,000 people under the age of 25 are now unemployed in Manchester. These young people comprise about 40 per cent. of the city's unemployed. In the December quarter of 1980 there was an unprecedented and deeply worrying fall in industrial demand for electricity in the city of 12·44 per cent. compared with the same quarter a year before.
  In spite of high unemployment among building workers, new house building has had to be curtailed and the city is unable to keep its housing stock in proper repair. At the same time, Manchester's ancient sewerage system is collapsing and will get steadily worse because of the Government's restrictions on spending by the North-West water authority. As for our highways and transport, the Government have cut capital expenditure per head below that of any other metropolitan county.
  Some 28 per cent. of Manchester's population has been shown to come within the Government's own definition of "poverty" and the figure is as high as 40 per cent. in nine of the inner city wards. More than 28 per cent. of the city's schoolchildren receive free school meals, compared with 24·4 per cent. in Liverpool, 18 per cent. in Birmingham, and 9·9 per cent. nationally. Over 42 per cent. of Manchester's council tenants receive supplementary benefit or rate rebate.
  This is an appalling catalogue—but not an exhaustive one—of the facts about how the present Government's policies have damaged the city of Manchester and its people. On 24 March I went with a deputation of other Manchester Members and people from every walk of life in the city to see the Secretary of State for the Environment about our current problems. It was a disturbing meeting, which proved beyond doubt that the right hon. Gentleman was not clear about the essential facts of Manchester's special problems. Indeed, it was the fairly general view among my colleagues on the deputation that we had been met with a mixture—a fairly equal mixture—of arrogance and ignorance.
  The right hon. Gentleman had only two main remedies to offer; first, that the city council should sack more people and, secondly, that it should raise rents to even higher levels. Yet, scandalously, the Secretary of State had no idea what existing rent levels were in the city. The town clerk had to write to him on 14 April confirming the facts that we gave verbally at the meeting on 24 March. What the town clerk's letter confirmed was that, including rates and water charges, the tenant of a three-bedroomed council house was paying £18·81 a week. But the Secretary of State still demands that Manchester's rents should be further increased.
  Nor was the Secretary of State aware, at the meeting on 24 March, of the full extent of Manchester's loss of grant aid under the present Government. As the town clerk also said in his letter of 14 April, we have already lost £17·5 million in rate support grant, the equivalent of a rate increase of 23·1p. On top of that we have lost some £14 million in housing aid and are now faced with a crippling further loss through so-called "clawback" of £8½ million
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  in Government grants. Those cuts of £40 million—and that is a minimum figure—add up to a policy of vindictive bias against the city that I represent. It is a policy that is also deeply irresponsible against the background of the present jobs crisis and, indeed, in some respects, a self-defeating policy.
  Take, for example, the effect of the Government's cuts in money available for social services projects. I had a reply recently from a DHSS Minister showing that for the year ended 31 March 1980 the average daily cost of treating a patient in an acute hospital was approximately £55, or over £20,000 a year. The average daily cost of maintaining a resident in a local authority home for the elderly in the same year was £9, or £3,276 a year. Yet many elderly people will find themselves unnecessarily in hospital if the Secretary of State for the Environment continues to cut spending on the local social services that can provide the alternative to hospitalisation.
  The best way to spend money in this field is to give the right help, in the right place and at the right time, and for the Government to put extreme pressure on local social service authorities to cut essential expenditure is as crackpot as it is inhumane. I would have thought that even right hon. and hon. Gentlemen opposite could see the logic of the figures that I have just quoted and the self-defeating stupidity of the Government's priorities in this important field.
  Yet the prime responsibility for this, as for other stupidities, rests not with the Secretary of State for the Environment. He is but the Prime Minister's errand boy in one Department of State and it is thus to her that all of us must now address ourselves. Other towns and cities in the North-West will have their own messages for the right hon. Lady, and they will be as plain spoken as they are urgent. Manchester's message to the Prime Minister and her whole pound-foolish Government is both clear and traightforward—"Either change the disastrous course you are following or for God's sake go."
  6.12 pm
  Mr. Den Dover: We have heard about the problems of industry today. I want to talk about industry, but I also want to talk about the Health Service and the new towns.
  In far too many areas in the Health Service we have wanted a local voice in health provision, casualty services and local health services in general. For far too long the North-Western regional health authority has not responded to those local wishes. The hon. Member for Liverpool, Kirkdale (Mr. Dunn) said that Liverpool wanted not two district health authorities but one large one. The opposite is the case in my area of Chorley and South Ribble. In the large Preston district of 330,000 people we have had little say, if any, in the hospital provision and what should be a local health service.
  It is no good saying that these things are not important, because industry will not set up in areas where there is no casualty service, where the hospital is not large enough to give a full range of facilities, and where first-class local health services cannot be provided.
  The Merseyside development corporation has been mentioned. We must not fall into the trap of providing more and more rented homes in that area. Successive Governments fell into that trap, until the recent decisions by the Secretary of State for the Environment in the central

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  Lancashire development corporation area. The original intention there was to provide three houses for sale for every one for rent.
  The Labour Government completely altered that balance. Instead, they decided to have three houses for rent and only one for sale. That completely unbalanced housing in the area, where previously there was a record of 62 per cent. home ownership. As a result we have massive housing estates that look completely out of place in the green fields of central Lancashire. It is a repeat of what happened in Kirkby and Skelmersdale, where now we see vast housing estates that have been completely vandalised, allowed to rot, and sold off—three-bedroomed houses sometimes being sold for £3,000 or £5,000. That cannot be a sensible use of public money. We in central Lancashire therefore welcome the statement made by the Secretary of State for the Environment on 4 February, that in future the concentration will be on providing the infrastructure and jobs, and that there will be no more rented housing but, instead, housing for sale.
  Mr. Michael McGuire: The hon. Gentleman is overstating the case, certainly about Skelmersdale, which happens to be in my constituency. There are pockets—I repeat, pockets—where, because of unemployment and social problems, some of the houses have been vandalised and sold off, but the hon. Gentleman should not exaggerate and draw the conclusion that that will happen in his area because it has opted for more public housing than he wants.
  Mr. Dover: I thank the hon. Member for Ince (Mr. McGuire) for his interjection. I should welcome the chance to tour the area with him. I could show him not hundreds bur thousands of houses in that state. What worries me is that we shall have a repeat of that performance in central Lancashire.
  We already have many social problems in the Clayton Green area and the Moss Side area at Leyland which have been caused by those new residents. It can be argued that it is right and proper to have rented housing in that area because of the waiting lists. There are some waiting lists in Chorley and South Ribble and Preston councils, but they are not large waiting lists. If local residents want to rent a house they cannot have one. They are told "That is for workers from outside the area—the key workers." Yet the jobs provided by the central Lancashire development corporation are only warehousing and distribution jobs. There are not the massive manufacturing concerns that we had in the new towns in the 1950s and 1960s.
  The Conservative Government have solved the problem. The housing programme was being taken in the wrong direction. Now we are going in a direction that will give better value for money. The money is to be spent on infrastructure and jobs. Where homes are needed, private developers will build them at their expense and risk, and will sell them if there is a market for them. We shall end the launching of massive programmes to provide rented housing at uneconomic rents, disturbing the social balance of the area.
  The main emphasis in this debate should be on the industrial needs and problems of the area. They vary, of course. I dispute what the Minister said earlier about large wage increases, restrictive practices and difficult industrial relations. That is true in some residential areas such as Merseyside, but only a few miles outside that area, in
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  Chorley and South Ribble, we have first-class industrial relations and a work force that is enthusiastic and hard working. It can produce profits, whether in small, medium-sized or large firms, and whether in the public or private sector. I implore any industrialist who is listening to this debate or who reads Hansard to look hard at the area of Chorley and South Ribble and invest there. That would be a wise decision.
  In the case of large firms, we are blessed in the North-West with defence expenditure by the Conservative Government and by nuclear energy expenditure. In Euxton, where there is a large Royal ordnance factory, people are wondering what is to happen to the ROF organisation. They would welcome an early decision to carry on as now. Perhaps there should be a better marketing organisation. Perhaps some of the restrictions on recruitment should be lifted.
  Firms want the problems to be resolved so that they can move into new roles, expand their production, penetrate more export markets and produce some benefits for the local community. Currently, they are at sixes and sevens, wondering what is happening. They are waiting for an early decision.
  Many engineering companies in the energy area welcome the Government's actions. We have the advanced gas-cooled reactor stations and the potential of pressurised water reactor atomic stations. Firms are gearing up to meet the demand. For far too long there has not been a nuclear energy programme in Britain. The orders are now filtering through, although slower than we had hoped. Medium-sized firms have more flexibility than large firms and public sector-based companies, such as Leyland. They can penetrate the export markets while at the same time keeping their original customers.
  Although there has been a reduction in labour forces, it is by no means due entirely to the Government's policies. I have heard many industrialists say "We do not want to say this openly, but we welcome the chance to offload some of our surplus labour". They are producing as many goods, if not more, with a 20 per cent. smaller labour force. That is a measure of the underlying ability of firms in Britain to raise productivity and to compete in world markets.
  Reference has already been made to those with redundancy money setting up firms. I have had experience of that happening in both the South and the North-West. It may appear to be odd, but, as the hon. Member for Liverpool, Walton (Mr. Heffer) said, it is a redistribution of wealth. Instead of people working for large companies or public corporations they are investing in their skills and knowledge, carving their own markets and becoming profitable. They are even penetrating the export markets. That has happened in the Chorley area, which has left behind the old textile industries and moved into new technology. The Robot factory is setting up on the Walton Summit estate. It was recently featured on television when the Prime Minister looked at the robotics exhibition. Britain should be moving into such areas.
  Some hon. Members mentioned the problems in the construction industry. There are many small and medium-sized builders in my constituency who say that the workload is good but that they have difficulty in obtaining skilled men, such as bricklayers and carpenters. The 300,000 unemployed in the construction industry are not

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  a true indicator of the difficulties faced by employers throughout the country in getting construction projects built on time and within financial limits.
  From my experience on the ground, the position in the North-West is not as bad as the picture painted by Opposition Members. A new spirit is abroad. There is a change in the whole emphasis and set-up of industry in the North-West, which must be for the good of the country. Industry is cutting out the dead people—those who have not contributed—and creating new markets. It is penetrating the export markets. With the new mood and, hopefully, the new industrial relations legislation to be introduced during the next Session, we can move on. We have been through a period of great difficulty. We can now build new strengths into the industries of the North-West.
  6.23 pm
  Mr. Robert Parry: I shall follow the line taken by my hon. Friends the Members for Liverpool, Walton (Mr. Heffer) and Liverpool, Kirkdale (Mr. Dunn). As a Liverpool Member, I wish to deal mainly with the problems facing Liverpool and Merseyside. I have been chairman of the Merseyside group of Labour Members since 1976, succeeding my hon. Friend the Member for Kirkdale in that post when he was appointed to the Northern Ireland Office. During the past few years my hon. Friends representing Liverpool constituencies have fought against the massive job losses in Liverpool and on Merseyside.
  My hon. Friend the Member for Walton mentioned the inner ring road, which has caused much controversy during the past couple of years. It has been opposed by the Liverpool city council, the trade unions on Merseyside and the Liverpool and Labour groups on the county council, but it has been fully supported by the Tory group on the county council and the Tory Government. More than £50 million of public money will be spent on a road that nobody wants. It has been opposed by residents, the trades councils, and church leaders.
  A couple of weeks ago there was a resounding victory for the Labour Party in the county council elections on Merseyside. A week before the elections, the Conservatives realised that they were in danger of losing control of the council and called an urgent meeting to discuss tenders for the next leg of the inner ring road contract. The Tories knew that they would probably be beaten in the elections but they carried on with the tenders regardless of the fact that Labour councillors refused to attend the meeting. The county council is now under Labour control. Labour councillors were elected on a mandate to stop the inner ring road being constructed.
  I recently met the leader of the Labour council who told me that if the contract was stopped now a surcharge of £500,000 could be imposed on councillors opposed to the ring road. It is disgraceful that a meeting should have taken place to discuss the tenders and to continue the contract when the Tories knew that they would not be re-elected to carry out the eventual responsibilities. Any surcharge should be imposed on the Tory councillors who pushed through the decision.
  Mr. Alton: What is the attitude of the hon. Gentleman's colleagues on the county council towards the threat, which I know is a real one, of a possible surcharge?
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  Will they nevertheless go ahead with the abandonment of the remainder of the ring road, even if they have to proceed with this leg?
  Mr. Parry: I understand that the county council is taking legal advice about the surcharge. It intends to send representatives to London to obtain the best possible advice. A meeting will be held in Liverpool tomorrow to discuss the matter. If the contract proceeds on the next leg to the end of Scotland Road I, the Labour councillors in my constituency, and the Labour group on the county council will then stop the ring road.
  I have the unenviable record of representing the constituency with the highest level of unemployment of any constituency in Britain. In reply to a question in November the Minister said that the startling figure of almost 19,500 registered unemployed had been reached in that small inner area constituency of about 33,000 people. That is an appalling figure. More than half the people in central Liverpool are unemployed.
  Last week we were given a lecture by the Duke of Edinburgh on the joys of being unemployed. The Duke has never worked and does not know what it is like to be unemployed. He referred to those with qualifications being able to find jobs. My colleagues from the Liverpool area—indeed, from the whole of Lancashire—know thousands of youngsters with good qualifications who have been unemployed for a couple of years. They cannot find work. I wish to remind the Duke that hundreds of youngsters in Liverpool were half-way through their apprenticeships when they were thrown on the scrap-heap. I bitterly remember the 170 young apprentices at Tate and Lyle who, when half-way through their apprenticeships, were thrown on the dole.
  I get sick and tired when Ministers wring their hands at the Dispatch Box, like Uriah Heep, and hope that something will turn up. We are given the same excuses time after time. We have been given them today.
  On 4 June, I asked the Prime Minister to visit Liverpool to look at the effects of her Government's policies on unemployment. She trotted out what has been trotted out today—that Merseyside is a special development area, and that we shall see the setting up of an enterprise zone and an urban development corporation. Merseyside was granted special development area status by a Labour Government. The Tories cannot claim glory for that.
  I should like the Minister to deal with two specific problems that have been bothering me. How many jobs will the enterprise zone create? Will it create 50, or 80, or 100? No one seems to know. When can we expect to see jobs provided by the urban development corporation? Will it be in two years' time or three years' time? We on Merseyside cannot wait that long.
  My hon. Friend the Member for Walton has rightly given a number of facts and figures about Merseyside companies which have closed and about the job losses, which run into thousands. A couple of hundred jobs over the next year or two will not answer Merseyside's problems.
  In replies to questions that I tabled only last Friday, I am told that the number of closures involving redundancies for 10 workers or more between May 1979, when the Tories were elected, and May 1981 was 173, involving 13,590 workers. More important, however, the total number of redundancies which have been officially declared since May 1979 is 41,310. These are shocking

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  figures. They mean, in effect, that 400 workers have been declared redundant every week that the Tories have been in power. The Tories were elected to power saying "Labour does not work". Those figures show clearly that Toryism does not work.
  The Government say that jobs will be provided by the enterprise zone and the development corporation. It reminds me of the White Rabbit in "Alice in Wonderland" who talked about jam yesterday and tomorrow but never jam today. We never had much jam yesterday. We are promised jobs in the future. For us it is jobs yesterday and jobs tomorrow but never jobs today. We desperately want the jobs today.
  The Government's monetary policies are deliberately causing unemployment. In the policies to keep down inflation, the Secretary of State has deliberately accepted that at the end of this year we may see 3 million unemployed. The excuses are still being trotted out. I believe that the Government do not give a damn about job losses. Members of the Tory Front Bench are liars when they talk about unemployment, because they do not worry about unemployment. What we want from this Tory Government is a U-turn. We want to see the implementation of the plans raised by my hon. Friend the Member for Walton for resolving the problems of unemployment on Merseyside. We need a U-turn and the urgent provision of jobs on Merseyside.
  6.33 pm
  Mr. Barry Porter: I am sorry that the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) has left the Chamber, because he said the one thing with which I positively agree—that the North-West as a region does not exist except as a geographical entity. The diversity of problems and interests makes these debates—if that is what they are—a charade.
  What has tended to happen today is that we have not talked about our region as a region. Various contributions have shown problems in particular towns or parts of the region, but at no stage have we been able to talk about the region, because it does not exist. Therefore, any attempt to talk about an overall solution to these diverse problems is dangerous nonsense.
  Like any other part of the country, the North-West will become more or less prosperous, depending on the success or otherwise of the Government's economic strategy. That stands out a mile. The grave reality of our national economic position has at last, rather nastily, come home to the people whom I represent on Merseyside and those in the North-West generally.
  I do not think that the people of this country—certainly not those of the North—are so stupid that they do not realise that for a generation or more we have been indulging in a genteel rake's progress. It is worth repeating that we have paid ourselves more than we have earned. We have produced less than we could have done. We have indulged in public expenditure on a massive scale—very often for the best of social motives. That has been a short-term palliative.
  Mr. Alton: I agree that much money is wasted on spurious things, such as the ring road about which the hon. Member for Liverpool, Scotland Exchange (Mr. Parry) spoke. There are many other examples. Nevertheless, does the hon. Member accept that a probable cost of £6,000 a
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  year per man who remains unemployed is public expenditure as well, and that paying people to do nothing is surely one of the silliest ways of wasting public money?
  Mr. Porter: If that were likely to continue in the long term, the hon. Gentleman would be correct. It would be much better then to pay people to do something rather than nothing. But if it means, in the short term, that some people will be unemployed and the result of that is to defeat inflation, or assist in its defeat, his argument falls.
  Over the years we have also been indulging in the cruel pretence that jobs exist in various industries when clearly they have not existed. The result of that cruel pretence has been to make those uncompetitive industries even more uncompetitive, and to make even greater unemployment in those industries inevitable in the long run. We have done it with steel. We did it with shipbuilding, and to some extent with ship repairing. We did it with the docks in Liverpool, as the hon. Member for Liverpool, Kirkdale (Mr. Dunn) knows only too well.
  By trying to be pleasant and humane and by using lots of other people's money, we have made the problem infinitely worse in financial and human terms. If we cared to address our minds to it, we all knew that this nonsense had to come to an end, but not many of us—I include myself—were prepared to face the unpalatable truth, which is that genuine prosperity would involve a period when a rise in living standards had to halt and marginally to decline while we sorted ourselves out.
  That is what the past two years have been all about. That is why Opposition Members have been reeling off their statistics today. It is politically wonderful for them. It gives them something with which to attack the Government. But things need not have happened as they have if we had had some realism from the previous Administration. If that Administration had dealt with the steel industry and with the docks in Liverpool as they should have been dealt with, all this need not have happened in the way that it has. The task is harder now than it has ever been.
  The alternative strategy of deficit financing, which is what is being offered, by borrowing and printing, is a further cruel deception. The bill for the borrowing must be paid in the end. It can be paid for only by increased production and productivity. From that alone comes greater national wealth. That does not and cannot come basically from Government expenditure. There is no such thing as a free meal. I think that the people of the North-West understand that only too well.
  I offer this thought to the electors of Warrington, if they care to heed it. So far as I understand his party's economic policy—although I gather that we are not supposed to understand what it is—the elegant gentleman from Brussels is offering them a rehash of those economic policies that have brought us to the edge of disaster. Yet that policy is presented to those hard-headed, commonsense people in Warrington as though it were something new.
  Mr. Alton: Will the hon. Member give way?
  Mr. Porter: Not in this case. I understand that the Liberals have withdrawn from Warrington.
  I would like to believe that the demonstrable common sense of Warringtonians will not be deceived by a succession of glib platitudes sandwiched by clichés. When the television crews have gone and the clever gentlemen

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  who write in the Sunday newspapers have returned whence they came, Warrington will still have to earn a living. The idea that at some stage in the future a great and wonderful Government will be created by proportional representation will not help them one jot in the near future.
  The Government, and especially the Prime Minister, have been telling the truth about what has been going on for too long. I am told by Members of the Opposition, boringly and repetitively, that she has frequently said what the truth is. Unless and until we can defeat inflation there is no future—not for the country, not for the North-West, not for anyone.
  It has been argued by Social Democrats in the past that one finances public expenditure by creeping inflation. That argument was advanced by the late Tony Crosland and others. The trouble is that inflation does not creep. One cannot control inflation so that it is reduced to the 1 per cent. or 2 per cent. that we would like to see. We have seen what it does. If the people who advanced that argument in the 1930s and 1940s had seen what inflation did to the country they might have revised their opinions.
  What we are seeing today is the result of a hard two years. We are seeing the signs that what the Prime Minister, the Government and the Chancellor of the Exchequer have been saying is right. We shall see more evidence of that during the next two years.
  Solutions to the problem in the North-West were offered by only two Opposition Members. The hon. Member for Liverpool, Walton (Mr. Heffer) offered us State Socialism. He is right in saying that it has never been tried before. He offered us a solution to the problem of long-term unemployment that has also never been tried before. He suggested that there should be shorter working hours and that everyone should have more holidays. He did not deal with the obvious difficulty in that argument. Unit labour costs would be pushed up immediately and industry would be made more uncompetitive.
  I am not one of those who would say in the House that unemployment will be conquered in the next two years. That will not be so. In an upturn, a fair number of people who are now unemployed will get back into work, but it has not been said often enough in the House that as a country we must face the undeniable fact that a large number of people will be permanently out of work in one way or another. We do not know what that figure will be, because there will be new and different industries. It is difficult to conceive that they will be labour-intensive industries. The Minister mentioned a factory that he opened in my constituency. It is a profitable and good factory, and has a happy work force—there are 13 people. That is the sort of work force that will run factories in the future.
  Instead of the futile nonsense of hurling abuse and statistics across the Chamber, is not it infinitely more sensible to start addressing our minds to the problem of how we will occupy the time of the people who will not be working, in the old sense? The hon. Member for Walton touched on the problem and talked about a rejigging of the work ethic. I do not pretend that I know what the answers are, but I believe that occasionally we should debate something sensible, like that, rather than indulge in party political rhetoric all the time.
  One of the enormous problems in my constituency is youth unemployment. I do not know whether other hon.
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  Members have received the document published by Colt International. I read it on the train. I do not know whether it is an answer, but I commend the Government and every hon. Member to read it. Its title is: "Encouragement of Youth Employment Scheme". In essence, it is a scheme for tax relief to companies in return for employment in proper jobs with proper training for those aged 21 and under. That is a brief resumé of the scheme.
  I advise people to read the document, because while the Government schemes now in operation offer temporary alleviation that will not be enough for young people in the long term. If we are concerned about the long-term prospects for young people we must act swiftly and decisively to try to deal with youth unemployment. If we do not do so we shall live to regret it. That solution could be instituted fairly rapidly if the Government wanted to accept the principle.
  Mr. Nicholas Winterton: I believe that every hon. Member will have received that document from Colt International. I would be obliged if my hon. Friend could go into it in slightly greater detail. It worries me that in some areas many companies are not making a profit, which is why they are not taking on young apprentices to train them. That training is urgently required. Many companies would like to take up Colt International's initiative, but are not able to do so. They wonder how the Government can help firms that are not making a profit, so that tax relief can be given prior to taking on those people.
  Mr. Deputy Speaker (Mr. Ernest Armstrong): In view of my predecessor's appeal for brief speeches, I hope that the hon. Gentleman will not be led too far astray by that appeal for detail.
  Mr. Porter: I would not dream of doing that. As I know that every hon. Member has a copy of the document about that scheme, I do not believe that it will be necessary to go into detail at this stage.
  The solution to which I have referred has the advantage of being simple, profitable and non-bureaucratic, which is presumably why no one has taken it seriously so far. There must be other suggestions from other people and other companies on the same or different lines to try to deal in the short term with the problem of our young unemployed.
  On Merseyside our problems are not all industrial and economic. We also have political problems. The victory of the hard Left in the recent county elections is reflected by the same people dominating the Labour Party on Merseyside. It is not for me to intervene in private matters, but the hon. Member for Liverpool, West Derby (Mr. Ogden) has not merely been on the hit list; he has been hit, although he is not yet down and out. It has been said many times that the Labour Party owed more to Methodism than to Marxism, but I doubt whether that is true of Merseyside today.
  It is food for thought that the Labour opposition on the Liverpool city council voted vigorously against the enterprise zone. It mentioned every conceivable objection to the zone, apart from its real one: it fears that it might work.
  Mr. Allan Roberts: Is the hon. Gentleman aware that many business men and industrialists on Merseyside, particularly those involved in bonded warehousing, are also opposed to the enterprise zone? In

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  my constituency the employers, who vote Conservative, tell me that unless they move into the zone they will face unfair competition, as their main cost is rates. The enterprise zone is not likely to create new jobs; it will merely allow jobs to move from the inner city to Speke.
  Mr. Porter: Those arguments are advanced, and it is not for me tonight to defend the concept of the enterprise zone. I was merely explaining why some of the hon. Gentleman's colleagues on the city council had voted against it. They fear that it may work. The Labour Party on Merseyside has a vested political interest in failure. Its members do not want things to get better, except on their own terms, under their own type of Government and with their own type of docile Member of Parliament. If things got better every argument that they had would be destroyed.
  Finally, I come to a minor problem in the context of the debate, although it is a major one for many people who live in Ellesmere Port. Despite contrary arguments, one of the most popular parts of the Conservative manifesto concerns the right of a tenant to buy his council house. The legislation went through the House and became law, but not one house has been sold in Ellesmere Port since that blessed day. I cannot blame the council for not being keen to sell, as that is its political view, but I do not like the way that it is avoiding its obligations under the Act. What it is doing is clever, but I am not sure whether it is legal.
  Will the Minister examine the policies being pursued by the Ellesmere Port and Neston borough council to avoid its responsibilities? The council, instead of having the properties valued by its own valuer, put them out to the district valuer, which slowed the process down.
  Mr. Roberts: That is allowed for in the Act.
  Mr. Porter: I appreciate that, but the council had sufficient staff of its own for the valuation. Now that the valuations are coming back, the council is disputing them with the district valuer.
  Mr. Roberts: That is also allowed for under the Act.
  Mr. Porter: That I doubt.
  The council wrote to a constituent of mine stating that it was charged under section 10 of the Act with fixing the price at which a property should be sold. That is true, but, having appointed the district valuer to fix a price, I believe that it is a negation of the Act for those who appointed him to dispute it. I hope that the Government will examine the matter.
  The council is using a legal or illegal device there, but, in addition, what is reprehensible, vindictive, mean, spiteful, petty and any other adjective that I can think of is the council's refusal to carry out its obligation as a landlord by refusing to paint and repair houses for which it is responsible merely because tenants have shown an interest in buying them. That is utterly disgraceful. The Minister should take powers to do something for people who have done nothing more than exercise their statutory rights.
  6.56 pm
  Mr. Dan Jones: I shall with studied deliberation deal only with unemployment, and I shall allow nothing to stand between me and the subject. Other hon. Members wish to speak and I want to make room for them to make their contributions.
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  I draw to the attention of the House a statement by the hon. Member who is now the Under-Secretary of State. His statement was relevant to North-East Lancashire, and not everyone pays attention to the area. It is considered sufficient to refer only to Merseyside and Manchester, although North-East Lancashire plays a definite part in the region. I shall deal with the area. I supported the statement when it was made. If the hon. Gentleman made the statement again from the position that he is now privileged to occupy, I should support it again. He stated:
  "That this House draws the attention of Her Majesty's Government to the serious problems still facing North-East Lancashire; and urges the Government to pursue policies which will help to stop any further drift of population away from the area and will encourage industry, widen educational opportunities, improve the environment and communications; and give every possible help to those living in North-East Lancashire in their resolve to make the area a great place in which to live and work."—[Official Report, 14 June 1974; Vol. 874, c. 1991.]
  Hallelujah to that. Unfortunately, the area is not that at all.
  The statement was made on a Friday morning, exactly seven years ago. Every hon. Member on both sides of the House supported the motion. It was to his credit that the hon. Gentleman, whom I respect, moved it, although I doubt whether he would move it against his Government.
  Let me deal with some of the issues raised. The hon. Gentleman referred to communications, intermediate area status and textiles. I shall limit myself to those three aspects. North-East Lancashire is a highly industrialised area, but its communications have remained substantially what they were at the turn of the century although, I am happy to say, in six months the road communications will be complete.
  I was particularly friendly with Sydney Silverman, who at one time represented Nelson and Colne, and we went to see Ernest Marples, who was the impresario at the Ministry of Transport. It was not a bit of good Marples playing the old soldier with Sydney, who was an extremely erudite man. He was probably one of the shrewdest Members of Parliament in the history of this House. The force of his logic compelled Marples to go on record as wanting to create the type of communications that Sydney had asked for from Manchester into North-East Lancashire. Sydney Silverman and Marples are both in their graves, but the promise was never fulfilled and we have suffered ever since as a consequence.
  Who will dispute that transport costs can make or break a company or prevent it from coming to an area which it otherwise might have chosen? Only a fool would deny it. That is why we have earnestly sought this for 21 years. I speak for North-East Lancashire. Others may speak for Manchester and Merseyside, although I must say with regret that I do not believe that Manchester and Merseyside care very much for North-East Lancashire. [Interruption.] Others are entitled to their opinions. I am entitled to mine. I am not convinced otherwise, unless evidence can be produced. I shall reveal in a moment where the evidence can be found for my belief and I shall be prepared to stand by that evidence.
  It has been said today that the work force has not played the game. That might be true in other parts of the country. Having spent 23 years in Burnley, I can say challengingly that we made Frank Whittle's engine possible at the very time of the 1939–45 conflict. People think of Burnley as simply a textile town, but we have an engineering background which transcends that of many areas which receive accolades that they perhaps hardly deserve.

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  During the period 1948–50, two Ministers came to Burnley because the trade unions were talking about diversifying their industry to a greater extent than before. They begged the trade unions and the work force to remain loyal to their industry and not to be tempted by the footloose industry which existed at that time and which they felt might suit them better. They begged the people of Burnley to remain loyal to the textile industry. To the credit of the trade unionists, they did precisely that. But what mention has there been of that today? And what was their reward? Burnley today has practically no textile industry at all.
  I shall cite an instance. About six months ago I drew the attention of Ministers to the fact that in the excellent shopping centre of St. James' Street, Burnley, there were two drapery shops next door to one another. One was a reputable firm selling suits and clothing of that kind. The shop next door sold what I described as flimsy imported cloth of one kind or another. Today, the reputable firm has its shutters up. It no longer exists. The firm next door, selling flimsy imported textiles, has prospered. I have lived in India. I know the poverty which exists there at first hand and I feel desperately unhappy about it. At the same time, can we really reconcile ourselves to the fact that highly-reputable British companies go to the wall while these people come here in a thoroughly mercenary fashion and prosper as never before? If that is the kind of justice that we want in this country, I must confess that I am a Dutchman.
  Mr. James A. Dunn: As a Member for Merseyside, I spoke earlier in the debate of the unfair penetration in the textile industry and asked the Government to take action to stop it. We are concerned about what happens in North-East Lancashire. Regrettably, time was not available for me to deal with the many issues that I know my hon. Friend wishes to bring to the attention of the House. I stress, however, that that was not for lack of concern but only for lack of time.
  Mr. Jones: I shall certainly communicate that to my constituents. They will be pleased to know it. The fact remains that the reputable British firm has gone bust. It has gone bankrupt while what I would call the mercenary spivs are prospering more than ever.
  I wish to make two further brief points. First, we appeal to the Government that the intermediate area status for Burnley be extended from three years to five years in view of the many difficulties that we face. I would welcome support from any part of the House in that plea. I should certainly welcome the support of the Minister who at one time gave such good support to the area. I hope that he will find it possible to do so again.
  Secondly, I am never satisfied that we get a square deal in North-East Lancashire, which I would describe as extending from Blackburn to Barnoldswick. Our people are hardworking and thoroughly dependable. In the 23 years that I have been there, I cannot remember when there was last a strike. If that is not a commendable record, what is?
  There is a gentleman in Manchester by the name of Mr. Sorenson. I am not quite sure what position he occupies except that it is a high executive post for the Government. I ask the Government to sort out Mr. Sorenson and to find out on a pro rata basis how much benefit has gone to Greater Manchester, Merseyside and indeed West
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  Manchester by comparison with the amount sent to North-East Lancashire. I am sure that, certainly for the 23 years that I have been privileged to be there, North-East Lancashire has been the economic and industrial Cinderella of the whole area. Nevertheless, I make no dogmatic statement. I simply call for the information.
  I therefore ask the Government, first, to extend the intermediate area status from three to five years, and, secondly, to provide the information that we anxiously seek, not in order to penalise other areas in any way but simply to obtain the justice to which I believe that North-East Lancashire is entitled. I therefore hope that an inquiry will take place and that the results will be published.
  7.9 pm
  Mr. Nicholas Winterton: I am very pleased to follow the hon. Member for Burnley (Mr. Jones), who has served in the House with distinction for 23 years. I have been here for only 10 years. In that time we have had a great deal of common ground between us, not least in that we both represent areas in the North-West, and have both championed the textile and clothing industries. As the hon. Gentleman knows, I visited his constituency not many weeks ago, where I saw one of the few mills that still exist in Burnley.
  I can only say to my Government, as I would say just as strongly to the Opposition spokesman, that the textile and clothing industries have answered every request to rationalise made by successive Governments since the war. They have installed the most sophisticated and up-to-date equipment and on every occasion they have had the full co-operation of the unions and the work force.
  I pay tribute to Jack Brown, general secretary of the Amalgamated Textile Workers Union. I pay a similar tribute to Alec Smith of the National Union of Tailors and Garment Workers. They have brought their work forces with them in all the rationalisation and reorganisation that the industry has had to face in order to compete in a very fierce world market.
  I do not wish to direct all my comments today to the textile industry, although it is only fair to say that it is perhaps the largest employer in the North-West, and certainly one of the largest employers in the United Kingdom, employing more people than the iron and steel and coal mining industries put together.
  The Government of which the Minister is a member—and of which I am a Back Bench supporter—have given over £5 billion to British Steel. If they had given in indirect assistance to the textile industry just one-fifth of that sum, 160,000 jobs that have been lost in the textile industry in the past two years would not have been lost. Ours is an efficient industry. It is an industry in which there is an unrivalled record of co-operation between work force, management and employer. It needs a tougher MFA than the one that was negotiated on the last occasion, and a more understanding Government.
  My hon. and learned Friend the Under-Secretary of State for Employment has always represented seats in the North-West. He has, fortunately, perhaps the lowest level of unemployment in his constituency of Clitherhoe. He will be aware that it is not just the Ministers that must be blamed. Some Departments are somewhat insensitive, whether it is the Department of Industry or the Department of Trade. The civil servants who are well cushioned in the Departments of State are unaware of the sacrifices made

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  by the manufacturing base of our country in recent years, and the textile industry is a very important part of that manufacturing base.
  I was delighted when the Under-Secretary of State for Industry dwelt so forcefully on the important part that smaller business can play in the regeneration of wealth and in the provision of jobs. I should like to refer to a survey that was carried out in America of Fortune 1,000—the top 1,000 companies in America—in the period 1969 to 1976. In that period, 9 million jobs were created in the United States of America. How many of those new jobs were created by the 1,000 big top companies in the United States of America? Was it 2 million? Was it 3 million? Was it 5 million? Was it 6 million? Let me tell the Minister that the big 1,000 companies did not provide one extra job. Six million of those 9 million jobs were provided by smaller business.
  The future of this country undoubtedly lies in smaller business. It is for that reason that I warmly welcome the steps that the Government have taken to date by way of loan guarantee and the business start-up scheme to encourage smaller business.
  I am sure that my hon. and learned Friend will not mind my saying that the steps taken so far do not go far enough. I want to see the Government give greater encouragement to smaller business. We cannot leave it to the ICIs of this world. Here I declare an interest, for ICI Pharmaceuticals is the biggest single employer in my constituency, with over 4,000 people. Perhaps it is because of the profitable pharmaceutical division that ICI has managed to maintain the work force that it has, although it has laid off more than 5,000 in the fibres division, its textile side.
  The pharmaceutical division is very profitable. I hope, therefore, that in any policies that may or may not be formulated from the Opposition Benches hon. Members will bear in mind the tremendous contribution that the private pharmaceutical companies make not only to employment, but to the economy and to the good health of the people of our nation.
  I come from the southern end of the North-West. As the hon. Member for Liverpool, Kirkdale (Mr. Dunn) pointed out, we do not perhaps suffer quite so much from unemployment as do the other areas in the North-West. Our unemployment figure is about 8·1 per cent., which means that over 2,000 people in Macclesfield are out of work. But I have to tell the Minister that that is double the figure that existed when the Government came to office in May 1979. It is because a number of smaller companies have folded that we have been hit by unemployment. The smaller company has not the collateral to provide as a guarantee to the banking system.
  I have expressed publicly my criticism of the banking system. It has not used the tremendous amount of money that is has made as a result of government policy to sustain the smaller businesses. As a result, many of them have gone out of existence, placing people out of work, and at the same time providing problems for the larger companies to which they were suppliers. As the hon. Member for Burnley implied in some of his comments, the larger companies have in many cases had to go abroad for their components or whatever commodity they were purchasing from the smaller companies here in the United Kingdom.
  But all is not bleak. I say emphatically that the Government's overall strategy is right, to curb inflation—which is the scourge of prosperity and the scourge of savings—and to reduce public expenditure as
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  a percentage of the gross national product. If I criticise my Government, it is because they have got the equation wrong. In cutting public expenditure they have cut capital expenditure rather than revenue/current expenditure.
  I urge my hon. and learned Friend and the Government to go ahead, for example—as has been leaked in some of the Sunday papers—with more electrification of British Rail and to give an early go-ahead to the Channel tunnel. As hon. Members will know, the Channel tunnel can be of tremendous benefit to industry in the North-West.
  Together with the West Midlands, and perhaps to an extent the East Midlands, the North-East and the Northern region, the North-West is the manufacturing heartland of the United Kingdom. This is where the wealth is created. The service industries in the South live to a great extent upon the manufacturing base which, in the main, is north of the Severn-Wash line.
  Mr. Dan Jones: Whatever plans the Government might evolve, they will fail if they do not produce one plan, and that is to train our youth as engineering apprentices.
  Mr. Winterton: I agree with the hon. Gentleman's comment. It is vital to get trained people into the manufacturing industries.
  Only on Friday I was privileged to present trophies and certificates to young people who had taken part in the "Young Enterprise" scheme. Perhaps it appeals mainly to those at the top end of the grammar schools and the sixth forms of the comprehensives and other schools. I pleaded with young people not to go into the Civil Service or into local government. They should go into industry and take a gamble. Manufacturing industry creates the wealth, which in turn provides all the services that local authorities and the Government seek to provide. I take the hon. Gentleman's point very much to heart.
  As I have said, all is not bleak. About two years ago a company called Le Coq Sportif was set up in my constituency. It markets leisure and sports wear. The parent company is French. However, Robby and Ann Brightwell are the directors and leading lights of the company. They are known in another guise as ex-Olympic athletes who performed superbly for this country and who won Olympic medals. They have started a small company that now employs about 50 people. They have reacted to the market and produce high quality goods which the young, in particular, wish to purchase. Although the parent company is French, the majority of the company's goods are made in my constituency or in the North-West. The company is keeping several textile mills in work by marketing something that the country requires.
  Adidas Umbro is also located in my constituency and has a factory in the constituency of my hon. Friend the Member for Cheadle (Mr. Normanton). Again, that company has reacted to the market and is producing goods that people want to buy. Sisis Equipment Ltd. is located in my constituency and is known for grass-cutting equipment and for equipment for the maintenance of sports fields. It is developing sophisticated and advanced equipment which is being exported throughout the world, despite the problems that industry faces. In addition, the company is profitable. I wish it success.
  A semi-Government body, the Machine Tool Industry Research Association, located in Macclesfield—as my hon. Friend knows, no industry has suffered more than that

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  industry—is trying to help that industry to develop new products. It is doing so because it knows that money is no longer available from the Government to fund such activities. That is another example of initiative.
  My hon. Friend the Under-Secretary of State was right to say that we needed initiative. Indeed, that reminds me of my days in the construction industry. As well as selling and hiring equipment that had been manufactured in Britain, we were, in a small way, agents for an American company. I attended a conference at the Rubens hotel, in Victoria. When I went into the conference room I found a sheet of paper and a pencil on the table. However, when I sat down I found a card on my seat. It had one simple message—"You've got to get off your arse to earn a buck". That is all that it said, yet its message remains relevant today.
  Britain must promote itself. The Government have a duty to help industry and to stand up for it. If only we, our embassies, consulates and all the other international bodies of government waved the Union Jack more strongly and forcefully, our industrial base would become stronger. Therefore, in anticipation of Thursday's debate I point out that we must have a stronger MFA. We must not allow the global ceilings to be breached. We must have a recession clause. I hope that that message will also go to the European Parliament. In the past, it has expressed itself forcefully on the subject of textiles and clothing.
  This is an important debate. I commend the speeches made by my hon. Friends the Members for North Fylde (Sir W. Clegg), for Chorley (Mr. Dover), and for Bebington and Ellesmere Port (Mr. Porter). They made valuable contributions. It was perhaps unfortunate that my hon. Friend the Member for Bebington and Ellesmere Port said that all those who had spoken had done so on behalf of their constituents. We are in the House to do just that. That is why I commend the speech made by the hon. Member for Burnley. He has been a Member of Parliament for 23 years because he has stood up for the people of Burnley. It is part of our responsibilities to do that.
  I shall stand up for my constituency, just as I have done by mentioning the names of several companies. Indeed, I shall mention one more. Seddon (United Kingdom) Ltd. makes shirts for one of the biggest retailers. The retail company also has operations on the Continent. The company is more efficient than companies in Hong Kong and many of the countries of the Far East because of its equipment and work practices. The only warning shot that I fire is that, while it is competitive, has the most modern machinery and a responsible and skilled work force, it cannot cater for unfair competition.
  That is why the Government have a duty not only as regards the MFA, but as regards unfair competition from, for example, Japan. Indeed, tonight's Adjournment debate will cover that. If the Japanese can keep out goods by non-tariff barriers, let us tell the Japanese that unless they take more of our goods, we shall stop their goods coming to Britain. Let us stand up for the interests of the United Kingdom. If we do, our people will be behind the Government. They understand our strategy, which is correct. Let us not, by the misuse of tactics, underestimate the sense of our people. They believe that we must conquer inflation and that we must stand on our feet and fight our way in this world if we are to survive and have a prosperous future.
  7.26 pm
  Mr. John Evans: I am grateful, Mr. Deputy Speaker, for this opportunity to participate in the debate, but I take no joy in the subject. There is no joy in the appalling problems of the North-West. The time for debate has been provided by the Opposition. I should like to think that the Government, who have created so many of the problems, will start to supply some of the time.
  I agree with the hon. Member for Macclesfield (Mr. Winterton), because we shall all highlight the problems that our constituents face as a result of the Government's policies. We shall also refer to the wider problems of the North-West. Again, I agree with the hon. Gentleman that the North-West was one of Britain's great producers. Unfortunately, in too many respects it is now an ailing giant that has been progressively brought to its knees by a mixture of incompetence, ideology and stupidity on the part of the Government.
  I trust that under no circumstances will Wednesday's Cabinet meeting seek to tighten the economic screw one more turn. If the Government do so, events in the North-West over the past two years will be as nothing compared with the next 12 months. Few firms in the North-West could stand any further tightening of the Government's monetary and fiscal policies.
  When I listened to the Minister's complacent excuses for failure and the way in which he blamed others, I became depressed. However, when he brought out his miserable list of tiny successes I thought the situation even worse. The Minister has clearly trawled the entire Government to pinpoint any successes in the North-West in the past two years, or anything that could be remotely called a success. At one stage, I wondered whether he was going to talk about a new window cleaning business that had been started by men using their redundancy money.
  I do not suggest that the Government are entirely to blame for all the problems that beset the North-West. I accept that the region has had problems for some time. There are structural problems in some industries, especially in shipbuilding, ship repairing, steel and textiles. However, those problems have been greatly exacerbated by the Government's actions over the past two years. I appreciate that this is not the sort of debate in which one should refer to high interest rates, Government-created inflation and the tremendous rise that took place in the value of sterling in the early part of the Government's life, which created enormous problems for industry. However, many of the problems are a direct result of the Government's policies.
  I shall not concentrate on regional problems or on the problems of the Newton division, which has one of the largest electorates in the North-West and contains four travel-to-work areas. I managed to deal with one of those areas in an Adjournment debate with my hon. Friend the Member for Leigh (Mr. Cunliffe), when we discussed Leigh, Golborne and Lowton. In the not-to-distant future we shall be discussing the problems of St. Helens.
  I shall concentrate tonight on the problems of the Warrington travel-to-work area in which 60,000 of my constituents reside. I have more constituents in the Warrington travel-to-work area than in the old Warrington borough. The people of Warrington will soon be in the unique position of being able to pass judgment on the Government's economic strategy over the past two years

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  and on the political credibility and the Common Market stance of the Liberal and Social Democratic Party bedfellows.
  In reply to a written question, I received an answer from the Under-Secretary of State for Employment on Monday 8 June. My question asked the Secretary of State for Employment for
  "the current level of unemployment in the Warrington travel-to-work area; and what were the figures for May 1980 and May 1979 respectively."
  The Minister replied:
  "The following table gives the numbers registered as unemployed in the Warrington travel-to-work area at the dates specified:

  May 1979 3,908

  May 1980 4,864

  May 1981 9,758*

  * (provisional)".—[Official Report, 8 June 1981; Vol. 6, c. 27.]

  Those figures reflect the enormous rise in unemployment in the area over the past two years, and especially in the past 12 months. I know that some Ministers will take some comfort from the fact that Warrington's dreadful figures are not as bad as some of the other figures that can be quoted in the North-West. Warrington's unemployment is about 12·3 per cent., which pales into insignificance compared with the figures in inner Liverpool. However, the Warrington figures are much more indicative of the major problems in the North-West.
  Warrington has always been a centre of employment for other areas. The terrible redundancies that it has seen over the past 12 months are not confined to Warrington alone. There is incredible diversity of industry in Warrington. In the North-West there are many one- or two-industry towns. We have heard, and we shall hear again, of the problem facing textiles and steel and some sectors of the shipbuilding and ship repairing. However, in Warrington there is almost every aspect of metal manufacture as well as of nuclear engineering, chemicals, steel, brewing, paper, wire making, vehicles, distribution, services and many other types of industry. The events of the past two years at Warrington, especially the past 12 months, show the devastating impact that the Government's ridiculous policies are having on the area.
  Every sector in Warrington has suffered hammer blows during the past two years. The true picture of the devastation that is taking place in Warrington, especially in the older Warrington area, is somewhat obscured by the successes that Warrington new town has had in attracting industry over the past four or five years. The industry that has been attracted by the new town is, generally speaking, in warehousing and services, while the sectors that have suffered the most severe blows are in the manufacturing sector.
  It is interesting to list some of the firms that have suffered over the past 12 months. I shall go back only 12 months because I became tired of running through the list. The list includes the Bewsey and Dallam rolling mill, one of the most efficient and modern rolling mills in the British Steel Corporation's empire, which was operating at a profit until it closed with the loss of 700 jobs last year.
  The Leesona Plastics Company at Burtonwood closed with the loss of over 200 jobs. Rylands and Whitecross, one of the major wire producers in Britain, declared between 600 and 700 redundancies. Rubery Owen, earth moving plant manufacturers, announced over 200 redundancies. Conveyancer Leyland, fork lift truck manufacturers, announced over 150 redundancies.
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  Thames Board Mills, paper and board manufacturers, declared over 200 redundancies. Another paper and board manufacturer, Thames Case, declared over 150 redundancies.
  Lockers, wire manufacturers, announced over 200 redundancies. Another wire manufacturers, Greenings, announced over 200 redundancies. Crossfields, chemical manufacturers, had over 150 redundancies. Simon Vicars, confectionery machinery manufacturers, declared about 100 redundancies. Ruston diesels declared 100 redundancies. Monks construction announced 200 redundancies. Firth (GKN) had over 200 redundancies and British Aluminium had over 200. The brewers, Tetley Walkers, had 60 redundancies. McCorquodales, printers, declared 200 redundancies. That is a sample because the complete list is much longer. Many other firms have declared smaller redundancies and many small firms have closed during the past two years.
  Many people who live in Warrington have told me that they escaped most of the bad times during the depression of the 1930s. Many of those in their sixties and seventies have told me that this is the worst recession ever to strike the Warrington area, which was one of the most prosperous areas in the North-West and, indeed, throughout the country.
  Another element of the Warrington problem is youth unemployment. The problems for youth are as bad as those of any other area in Britain. The Guardian of Warrington referred on 12 June to a job search survey which highlighted trouble spots. The article states:
  "A new survey aimed at extracting jobs for Warrington's young unemployed from industries on the town's growing estates"—
  that is, the new town element—
  "has highlighted just how difficult this 'needle-in-the-haystack' search has become. The result of an intensive probe of key industrial estates, the search involved more than 300 firms but yielded only two permanent vacancies."
  Warrington has trained some of the most highly skilled men and women in the country. It can now produce only two permanent vacancies in a survey of over 300 firms.
  The youngsters are frightened and angry, and there is growing anger and fear among the parents of Warrington's youngsters, who thought that their children would follow them into Warrington's industry to learn the skills that they themselves once possessed. In fact, there is nothing for their youngsters. The election campaign that the Tories fought two years ago referred to the level of unemployment. After two years of Tory rule, we find that the parents are on the dole and youngsters are on the scrapheap. That is what is happening in the North-West.
  Despite our pleas to the Government over the past two years to assist in the problems of the region, they have removed areas such as Warrington from assisted area status. When desperately-needed investment was required the area received a kick in the teeth instead. The Government removed assisted area status from no fewer than 21 travel-to-work areas in the North-West. The working population covered by assisted area status dropped from 7·1 per cent. to 6·6 per cent. of the working population. So the Government's response to our pleas for assistance for the North-West has been to remove vast areas of our region from assisted area status.
  Warrington has been trying desperately to bring its housing stock up to date. This year the Government have slashed the housing investment programme from £6.3 million to £3·7 million, so there will be little, if any, local

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  authority house building in this financial year and the improvement programme will be badly affected. Deterioration of existing housing stock will continue apace.
  Those are a few of the issues that will figure in the Warrington by-election. The electors will be passing judgment on the atrocious performance of the Government. God help the Tory candidate, whoever he is; he will undoubtedly be humiliated and, I suspect, will be in danger of losing his deposit. The electors of Warrington will be passing judgment on the Social Democrats who will be entering the fray at that election.
  I suspect that the people of Warrington, who have shown sound common sense over the years by returning Labour Members of Parliament, Labour county councillors and Labour borough councillors, will not be influenced by the siren voices of the Social Democrats. They will recognise that the Social Democrat candidate is using the by-election as a peg on which to hang his parliamentary ambitions. The Warrington people will not be persuaded that the Common Market—we recall the promises made to us in the Common Market debates—will be the salvation of the country in general and the North-West and Warrington in particular. We have seen the disaster created for our area.
  In conclusion, I refer to the cynical arrangement that exists between the Liberals and the Social Democrats in Warrington. An equally cynical approach has been taken by the Liberals in Cheshire, after the Tory candidates were decimated in the council elections and Labour came within one seat of taking power in Cheshire for the first time in the history of that great county. It was found that the Liberals had entered into an agreement with the Tory party to get themselves a handful of chairmanships and deputy chairmanships.
  Mr. Nicholas Winterton: I must make it clear that I advised my group on the county council to seek an arrangement with the Liberals and the Independent, but I assure the hon. Gentleman that no formal arrangement was reached between the Liberal Party and the Conservative Party at county level.
  Mr. Evans: I am grateful for that assurance. I can only record the fact that the Tory nomination for the chairman of the county council was carried by Tory and Liberal votes and that five Liberal nominations for chairmen and vice chairmen were carried by Tory and Liberal votes.
  Mr. Alton: Will the hon. Member give way?
  Mr. Evans: It may not have been an agreement. The hon. Member for Macclesfield (Mr. Winterton) is a Conservative Member for Cheshire, as I am. The hon. Member for Liverpool, Edge Hill (Mr. Alton) is just another Liberal. I am seeking to prove that the Liberals are prepared to enter into an alliance with anyone if they think that there will be something in it for them. In the by-election the people of Warrington will pass judgment on the Tories and their monstrous economic policy and on the Liberals and Social Democrats in their cynical alliance. I suspect that at the end of the day the Labour candidate will be returned with a larger majority than he had at the last general election.
  7.45 pm
  Mr. David Alton: I am grateful for the opportunity of following the speech by the hon. Member for Newton (Mr. Evans), especially in view of his malicious comments about the Liberal Party. Perhaps "malicious" is too strong a word, and I should substitute "interesting". He may take that as he wishes.
  Over the years, the Liberal Party has tried, in the House and in local government, to show that by putting the interests of the people before the narrow partisan interests of politicians and political interest groups it has proved that it means what it says when it talks about the need for political partnership and co-operation. The people of the country—and, I suspect, the people of Warrington—are looking for politicians who are prepared to put the interests of constituents before those of party. Throughout the debate the slanging match that has gone on is the sort of thing that makes people bitter and cynical about politicians of all persuasions. Instead of saying who did what, when, it would be better to examine how the problems have been caused and what can be done about them.
  I remind the hon. Gentleman, who has criticised the principles of partnership and co-operation, that for a year and a half the Liberals, in alliance with the Labour Party, had a good record in trying to maintain inflation levels, and reduced them to single figures—lower than inflation is today—and managed to bring about a reduction in the rate of increase in unemployment.
  Unemployment is not the invention of the Conservative Government. There were 1½ million people out of work when the Government came to power. It has increased since then, but it is wrong constantly to go on about who created the most unemployment. It would be better, as the hon. Member for Liverpool, Walton (Mr. Heffer) said, to consider the work ethic, image and attitude. In considering the image in the North-West, and Liverpool especially, some of the problems must be laid at our door, and especially at the door of those who preach militancy and aggression as a way of solving problems.
  We are sometimes in danger of striking ourselves out of existence by appearing never to care about attracting industry, enterprise or business into our region. There are those political hotheads who are endangering the future of the hon. Member for Liverpool, Kirkdale (Mr. Dunn) and his colleague the hon. Member for Liverpool, West Derby (Mr. Ogden) and there are those who would much rather put narrow political interests before those of the people whom they represent. Therefore, image is an important commodity in the way in which one deals with the problems of an area. That is why in Liverpool we must reflect on the aggressive way in which we have gone about industrial relations in the past.
  Many of the redundancies that have been brought about have been the fault not of Labour or Conservative Governments but of workers and others involved in industry. To have intransigent management and intransigent trade unions is no way to go about things.
  Partnership and co-operation of the kind that Liberals have long advocated and partnership among politicians are the sort of things that will improve the lot of the people. The hon. Member for Bebington and Ellesmere Port (Mr. Porter) earlier spoke about the problems in his constituency and on Merseyside. He would agree that there have been times when the people on Merseyside could be forgiven for feeling that the Government, and

  787
  especially the right hon. Lady the Prime Minister, lacked compassion in looking at problems of central Liverpool, where, as the hon. Member for Liverpool, Scotland Exchange, (Mr. Parry) said, unemployment is running at over 2 to 1—two people out of work for every one employed. The same is nearly true in my constituency. It is a depressing picture. But it was depressing enough in 1979.
  It would be helpful if the Prime Minister and other Ministers spent some time in Merseyside talking to local politicians and hon. Members and trying to show some concern, instead of creating the impression—whether it is a perception or the truth is almost irrelevant—that, apart from an enterprise zone or an urban development corporation here or there, the Government do not care about the problems. That feeling is certainly abroad on Merseyside.
  The Government should be trying to tackle the massive unemployment level on Merseyside. That relates particularly to bad housing, which is another chronic problem. The North-West probably has more houses without inside sanitation, running hot water or bathrooms than any other area in the country. Yet there are more than 300,000 building workers on the dole. Instead of paying unemployment and social security benefits to those men and not receiving the tax that they would otherwise be paying—the total cost to the Exchequer is about £6,000 per person per annum—it would be sensible to use their skills, talents and energies on useful and productive projects, such as improving the homes and quality of life of those in the North-West.
  Mr. Allan Roberts: And building council houses.
  Mr. Alton: Indeed. We are building fewer council houses this year than at any time since 1924, and that is a matter of great regret. I should like to see us building more sheltered accommodation for the elderly, because there are ageing populations in many parts of the North-West who need security, and we should provide sheltered accommodation for them so that they do not have to be put into geriatric institutions. If they were provided with sheltered accommodation the family houses in which they are living could be freed for families in need.
  It is not merely a question of building more houses and flats that will remain empty. There are 4,000 empty council properties in Liverpool, but they are mainly properties that people do not want to live in. We should be more
  selective in our expenditure of public money.
  I am glad that the hon. Member for Walton has entered the Chamber. He said that he wished that the Liverpool city council was not proceeding with its build-for-sale programme. That is the sort of doctrinaire and dogmatic attitude that I attacked earlier. In partnership with the local authority, building firms such as Wimpey and Barratt are investing money in the North-West and have built, or are building, up to 3,000 houses for sale in Liverpool. Many council tenants are buying those homes, vacating council houses and making way for people on the waiting list. That also keeps people at work in the construction industry.
  Local councils can do little about reductions in the rate support grant or in capital spending programmes. Those are matters for the Department of the Environment, but when there is derelict land in the middle of a city it is lunacy to turn away private investment and prevent people from having the opportunity to buy their own homes. I am
  788
  sure that the hon. Member for Walton will agree, on reflection, that it is the sort of dogmatic and doctrinaire attitude that gives politicians a bad name. I am prepared to give way to the hon. Member, even though he was not courteous enough to give way to me.
  Mr. Heffer: There is a great difference. The hon. Gentleman was not here for the major speeches and he had only just walked in when he tried to intervene in my speech.
  I have never been opposed to private enterprise building houses for sale, but until we have got rid of the waiting lists of people living in overcrowded conditions, slum properties, and so on, the job of the local council should be to provide houses for rent. I do not oppose encouraging private enterprise to build for sale, but I would support local authorities building for sale only when we have got rid of the queues of people who desperately need decent homes.
  Mr. Alton: I was here for the opening speeches. I told the Chair that I had to go to a meeting with the Secretary of State for Education and Science to discuss schools' reorganisation in Liverpool. That took an hour, and I was not able to be here for the beginning of the speech of the hon. Member for Walton. When I returned he would not give way to me.
  The hon. Gentleman says that he does not want to proceed with the building of houses for sale until we have got everybody off the waiting list. There are 16,000 people on the Liverpool waiting list, and some will be able to move into properties vacated by those who buy houses for sale. Of the 3,000 houses built for sale, or in the pipeline, in Liverpool about half have gone to people on the waiting list or in council houses. By saying that we should do nothing, which is what would happen if we got no money from the Government through the rate support grant, the hon. Member for Walton is behaving in an ostrich-like way, for doctrinaire and dogmatic reasons.
  Furthermore, the Walton triangle, in the hon. Gentleman's constituency, is one of the most successful build-for-sale projects in Liverpool. Many people, including council tenants, have been happily rehoused there and have taken the opportunity to have a stake in their own homes. The land has stood derelict for donkeys' years under successive Governments and the council turned it into a good residential area. The houses are bringing in rates for the local authority, which help its efforts to do something about the disgraceful state of the city's finances.
  I am concerned about the sort of image that we should try to create in Liverpool. I want our image to be one of balance, partnership and mix. I agree that there should be houses for sale and for rent alongside each other, but I do not want to see the stigma of public authority housing going on for ever. I was brought up in a council flat, so I know what it is like to live in council accommodation, and I represent many tenants of council tenements and high-rise blocks of flats. But I do not want that for them for ever; I want them to have the opportunity to live in decent homes. That is what matters. The hon. Member for Walton seems to want to create a one-party State, with everyone living in stereotyped homes and doing stereotyped jobs. We want quality, balance and partnership.
  We must also do something about the appalling levels of crime in the North-West. It is amazing that we in

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  Liverpool continue to tolerate the fact that there is one crime in the city every four minutes while, like other places, Liverpool has been taking policemen off the beat and closing local police stations, which are needed to keep communities safely protected.
  People are often living in fear. Many elderly people have been mugged or have had their homes burgled. We concentrate on the perpetrators of crime, but say little about the victims of violent crime of whom there are many in the North-West living in unsafe conditions. That is why I spoke earlier about the need for more sheltered accommodation.
  We must also consider how we police our communities and particularly the need for more policemen on the beat and the need to reopen local police stations. I am sure that the hon. Member for Walton agrees that instead of spending thousands of pounds on new rosewood desks for the chief constable it would be more sensible to use that money to pay our policemen more, to take on more policemen or to reopen local police stations.
  The use of resources must also be considered. If we do not make our region an attractive place to live in, people will not move businesses there and they will not want to live there. If rates continue to soar in every part of the North-West and there are not the right incentives to live there, people will move away, as they have done over the past two decades.
  There are many under-used resources in Liverpool and many ways in which we could save money. The rationalisation of school buildings is one example. I met the Secretary of State for Education earlier to discuss that topic. Schools built for 2,000 pupils have only 300 or 400 children in them, and there are other under-populated schools nearby. It would be much more sensible to centralise the resources and to concentrate on providing decent schools to serve those neighbourhoods.
  Unless that is done, people will not move into those neighbourhoods. One of our great problems in the North-West is that people move away from the region because they do not think that they can get a decent home or a decent job, or have their children decently educated. They do not believe that there is security in the communities where they live.
  We should examine how we govern ourselves and run our affairs. This is one of the few debates since I came to the House in 1979 that has been devoted to the problems of the North-West. Many hon. Members have made a case on behalf of their constituencies and their regions. This demonstrates the need for more regional government. It shows how lopsided is our system of government, when Wales and Scotland can have their own Grand Committees and when hon. Members can take up the time of the House at Question Time putting questions to the Secretary of State about affairs in their countries while we are denied those opportunities in dealing with the problems of the North-West.
  I believe that county councils, which have been a terrible waste of money, should be abolished. Many of their powers should be transferred to district councils. A new level of government should be established within a North-West Assembly, which would bring together the powers of Norwida and Mercedo. We should also examine organisations such as the North-West water authority, which are often undemocratic and unaccountable, and
  790
  which should also be brought within a regional assembly. There should be a Minister for Merseyside, a Minister for Manchester and a Minister for the rest of Lancashire, who would answer questions from hon. Members concerned about the problem of their areas. If there were someone of Cabinet rank accountable to the people of Merseyside, instead of a spread of Ministers, we might get somewhere.
  Mr. Dan Jones: Does the hon. Gentleman realise that that state of affairs has existed in the past, while I have been an hon. Member, although not since he entered the House? I do not know why it has been discontinued.
  Mr. Alton: I am grateful to the hon. Member for Burnley (Mr. Jones). I agree with him. I do not know why that power was given away. The wisdom of the hon. Gentleman's 23 years' service in the House is a factor that should be considered. There is a need for someone who is accountable to Members of the House for the problems of the area.
  Instead of allowing the problem to be dealt with by urban development corporations, enterprise zones and partnership committees, which can conflict, an attempt should be made to pull these matters together and to obtain a more coherent approach to tackling problems. Otherwise, people will say legitimately that we are becoming two nations—North and South. They see that everything goes into the pockets of people living in the South of England while little or nothing is done for the people of the North. If that is how they perceive matters, it will prove a psychological problem that will be hard to overcome.
  8.2 pm
  Mr. Mark Lennox-Boyd: I hope that the hon. Member for Liverpool, Edge Hill (Mr. Alton) will forgive me if I do not pursue his remarks. I make only one general observation on what has become apparent from the contributions of hon. Members. It seems easy to use these occasions to highlight the problems of a particular area, but the solutions to those problems are often different on different occasions.
  I recall that last year when the textile industry and the problems of the North-West were debated Opposition Members emphasised that interest rates were too high and the pound too strong. We have not heard many of those complaints today, perhaps for obvious reasons. The pound has declined in value, while interest rates in some countries for example France and the United States, are higher than they are here. Some of the solutions offered by Opposition Members seem susceptible to fashion. What is fashionable at the moment is increased Government expenditure, with all the ramifications that are so familiar.
  Hon. Members have advocated regional assistance. My constituency straddles the North-West and the Northern area. Part of it is situated in Cumbria and part in Lancashire. When Opposition Members argue for a Northern Development Agency I am always conscious of the problems that would be created for my constituents in North-West Lancashire. All the arguments for the creation of special areas of assistance lead to problems on the periphery and to demands from people outside that the areas of special assistance should be extended. It is easy to state the problems, but difficult to find solutions. Many scapegoats are often found along the way.
  In discussing the problems of the North-West, we are discussing the nation's problems. We are all dependent

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  upon the state of the national economy. I was impressed by the observations of my hon. Friend the Member for Bebington and Ellesmere Port (Mr. Porter), who described the rake's progress from which our economy has suffered over the period since the war. All hon. Members must admit that those of our citizens who are in work and who have been in work over recent years have enjoyed a life of comparative ease. I am happy to exempt the textile industry from the stricture, but it must be admitted that throughout the whole of our industrial scene we do not work as hard as we could. We do not work as hard as do our competitors in other countries.
  To a larger extent than politicians admit, the solution to these problems does not lie wholly within the hands of politicians. When politicians finally face the facts they will be doing the most honest and helpful thing for their constituents. Until we manage to admit the reality of the situation, we shall continue to be tempted to inject money into our economy in a forlorn hope and attempt to mask the reality of our inefficiency.
  I wish to make a few observations about my constituency. The North-West cannot lead the country in its economic revival. It will follow such a revival. I feel however, that the Lancaster area is likely to be part of the North-West that will lead the recovery in that part of the United Kingdom. I agree with hon. Members who have spoken of the negative attitude exemplified by the debate. I am not saying that we should be hopelessly optimistic. It is fair to point out the special problems from which the North-West suffers. If we are to move from decline to expansion, we must address our minds to areas of optimism that will attract industry.
  I am happy to report that a prominent local citizen has indicated that there are signs in Lancaster that the tide is turning. That observation was made by a local Labour politician, who happens to be the mayor of Lancaster. That honour is granted to the Labour Party on many occasions. Whenever an advance factory becomes available in the Lancaster or Morecambe area it is booked before a stone is laid.
  While our unemployment is higher than last year and peaked at 11·6 per cent., it has now fallen to near the national average. The unemployment rate for the period between January and May this year fell by 339, compared with a fall of 122 in the same period the previous year. We usually experience a fall at this time of year, because our economy is based to some extent on the tourist industry, but the decline in the level of unemployment in the first three months of the this year was double that in the first quarter of last year. I read into that nothing more than the most cautious optimism, but the fact should be mentioned; it is significant as far as it goes.
  A business competition offering prize money of £10,000 is being launched in Lancaster this year in co-operation with the local chamber of commerce. Called "Make Lancaster Your Business", it is for the best idea for the launch of a new business. There have already been more than 100 entries. I strongly believe that the 99 that fail to win the prize money will be able, as a result of the publicity that they obtain, to find finance under the business start-up scheme introduced in the last Budget. There is no doubt that no action by any Government will be as good for the citizens of our area as action by the people of the area themselves.
  8.11 pm
  Mr. Allan Roberts: My constituency is in Merseyside, but I feel qualified to speak in a debate on the problems of the whole of the North-West as I was born in Droylsden in Tameside, worked as a social worker and teacher for the Lancashire county council, was a principal officer in the social services department in the city of Salford and served for eight years as a member of the Manchester city council. However, even after that wide experience of the problems of the North-West, those problems of industrial decline and unemployment were brought home to me dramatically when I was translated to Merseyside, which is, as has been said, the graveyard of capitalism. Therefore, I want to say some things about the North-West generally, but I want to concentrate on the problems of my constituency and Merseyside.
  First, I should like to intervene in the dispute between my hon. Friend the Member for Liverpool, Walton (Mr. Heffer) and the hon. Member for Liverpool, Edge Hill (Mr. Alton). I do not believe that the phenomenon of Liberals and Conservatives refusing to meet the housing needs of people and playing about with peripheral palliatives, such as building for sale, is simply a Liverpool phenomenon. It happens in my constituency, in the metropolitan district of Sefton.
  I am sure that my hon. Friend is not against owner-occupation and is not against firms such as Wimpey and Barratt building for sale, even if they build on land that is subsidised and provided by the Liverpool council. What he is against is what I also am against—that being done to the exclusion of building for rent to meet the housing needs of those who cannot afford to buy. It is not just the present Government who have forced the Liverpool city council into doing that. When the money was available to build council houses, the Liberals in Liverpool combined with the Conservatives to vote against Labour's proposals to build low-rise council houses with gardens.
  I should now like to look at the problems of the North-West region generally. One would imagine from the speeches of most Conservative Members that all was for the best in the best of all possible worlds, that the recession was bottoming out and that the real problem was caused by Labour Members highlighting the difficulties of Merseyside and the rest of the North-West. It was suggested that if we concentrated on the successes we should have a truer picture.
  I have here a document produced by the North West Industrial Development Association, hardly a Socialist organisation. The document, called "Unemployment and Investment in North-West England—Cause for Concern" says:
  "the flow of resources into North West England, whether from private or public sources, is not on a scale sufficient to overcome the economic and environmental problems of the region … many of the problems encountered in this region—high unemployment, low investment, poor industrial growth, underground and surface dereliction—"
  the worst of any area in the country. All of those problems and the problems of Merseyside were to be solved by cuts in taxation and a release of the entrepreneur from the shackles of taxation promised in the Government's first Budget. None of that has come true. Apart from not having the public expenditure that we need in areas such as Merseyside, we are not having the private investment.
  Mr. Alton: I agree with much of what the hon. Gentleman has just said. However, there is more public

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  expenditure than in 1979. What the hon. Gentleman should say—and I am sure that he intends to say it—is that we are spending much more now on keeping people out of work by paying them unemployment and social security benefits. Not only are we causing a transfer in the way in which we use our public expenditure, but we are building up social problems, especially among young people and ethnic minority groups.
  Mr. Roberts: There is no doubt that the hon. Gentleman is right, as was the hon. Member for Macclesfield (Mr. Winterton). The Government are switching public expenditure from investment in capital and wealth-producing industry to revenue expenditure in keeping people unemployed. There have been massive increases in the amount of public expenditure on wasteful things of that kind. That is why the Government lost control of the public sector borrowing requirement.
  The document speaks of fixed capital formation per capita by industry as being lower in the North-West than in any other region but adds that:
  "Government capital formation per capita in the North-West has deteriorated steadily relative to other United Kingdom regions."
  That is the general picture as seen by an independent body. The hon. Member for Bebington and Ellesmere Port (Mr. Porter) and other Conservative Members told me that one of the problems was high rates. They told me that there was too much public expenditure, too much taxation, too high rates, and that this created unemployment and a decline in industry. Bootle is in Sefton, one of the lowest-rated metropolitan districts in the country, if not the lowest. It had one of the lowest rate increases ever during the current financial year. An answer by the Under-Secretary of State for the Environment showed a 10·2 per cent. increase, the second lowest, next to that of Calderdale. Despite very low rates and very low rate increases, the decline in job prospects and job opportunities in Sefton, and Bootle in particular, is dramatic.
  Mr. Straw: Does my hon. Friend agree that, despite repeated requests to the Secretary of State for the Environment, the Government have been unable to provide any systematic evidence that there is a link between rate increases and job losses? Indeed, the analysis prepared for me by the Library suggests that there is no relationship.
  Does my hon. Friend also agree that the report by Coopers and Lybrand on non-domestic rates for the Shell Small Business Unit shows that rates are a low industrial cost? They have consistently formed less than 1 per cent. of industry's costs and have not risen faster than other costs, whereas high interest charges, a burden imposed by the present Government, have doubled in the past two years.
  Mr. Roberts: I am sure that my hon. Friend is right. He has recently produced some research on the subject, and I am sure that it is authoritative. The papers that he produces on his own are nearly as good as the ones that we produce together when we co-operate.
  I was drawing a contrast, which illustrates my hon. Friend's point, between the low rates which have persisted for a considerable time in the metropolitan district of Sefton and in Bootle and the appalling unemployment in
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  my constituency. Unemployment continues to rise on North Merseyside. The number of jobless increased in May last year by 4 per cent. Just under 20,000 people are registered as unemployed at the area's three jobcentres.
  There are 19,673 unemployed at the Bootle, Crosby and Walton jobcentres—14,724 men and 4,949 women. That shows an increase in unemployment of one-third during the past year. Bootle shows the largest percentage increase, with unemployment up 40 per cent. on the year, despite low rates, cuts in services and the council willing to wield the axe with an enthusiasm that the Secretary of State himself would display. There are now 7,258 unemployed in Bootle—5,439 men and 1,819 women. Vacancies notified to the jobcentres continue to fall, and are down by 4·7 per cent. in a month—that is last May's figure—and 43 per cent. during the past 12 months. Those are the problems that are faced in Bootle and Merseyside generally.
  One of the problems is that there is not enough public expenditure. One of the major agencies for public expenditure in Merseyside is the county council. That council, the new Merseyside Labour-controlled county council, is facing great problems, and those problems are of the Government's making and of the making of the Conservative council which was defeated in the May election.
  Let us consider transport and the general picture in Merseyside. The Secretary of State for the Environment had an expenditure target for the Merseyside county council to meet. Before May, the Conservative-controlled council made a budget. Now that Labour has taken over, we find that another £19 million needs to be cut from the Tory council's budget to meet the Secretary of State's target. If the Labour-controlled council does not cut the Tory council's budget by that £19 million, it is liable to be fined £4·5 million as a result of the Secretary of State's recent circular. That is not a fine against the Labour council that was elected last May; it is a fine against the people in Merseyside.
  Before May, the county council budgeted for reductions without saying where they were to come from. For transport alone, a wages problem was inherited by the new council. The Conservative-controlled council made an offer of 8·5 per cent. to the unions involved in the passenger transport authority on Merseyside, but, following an instruction, either from Conservative Central Office or from Marsham Street, that offer was withdrawn, and an offer of 6 per cent. was substituted, which obviously was rejected. A fresh offer is being made today by the Labour-controlled council and the bill for that fresh offer—a fair and just offer—will have to be picked up by the county council. It was not budgeted for by the outgoing Tory-controlled council.
  There were planned cuts in services by the Tory-controlled county council—early morning buses, evening buses, Sunday buses, and train services. Fares were to be increased by 15 per cent., despite the fact that the previous fare increase in 1980 resulted in an unexpected decline in the number of passengers to the tune of £1 million, which even that Tory council had not expected. Now the Labour council is rightly restoring the services. It is not increasing the fares by 15 per cent. Rather, it is cutting fares by 10 per cent. to provide much-needed relief for those who depend on public transport, and to attract people back to

  795
  the buses. In fulfilling those election promises, the council is likely to be victimised by the Secretary of State for the Environment.
  Mr. Alton: Will the hon. Gentleman explain one aspect of the cuts in bus services? If there is to be a real cut in bus fares in that part of the country, will people actually pay 10 per cent. less than they are paying at present?
  Mr. Roberts: That is exactly what is proposed. That undertaking was given in the election, and it is being fulfilled. The Labour council intends to cancel the inner ring road. We want the 75 per cent. grant from the Government for that purpose to be given to the county council for other urgent purposes, including the proposals now being put forward for public transport.
  I want to give the lie to what the Minister said in his opening speech, that the justification for getting rid of assisted area status for the rest of the North-West was so that resources could be concentrated in Merseyside. Perhaps that would be justified if more resources were coming to Merseyside in the form of grants in industry, and more investment were coming to Merseyside. But that is not happening. In fact, the Government have made it more difficult to obtain grants in a special development area such as Merseyside. Procedures have been altered so that factories and firms that are expanding do not receive grants.
  The only companies that receive grants are those that are setting up for the first time in Merseyside, and there are very few of them. We are very anxious—for the benefit of Merseyside as a whole, but particularly for the docks—that the 22 per cent. grants for manufacturing industries in special development areas should be given to service industries. The docks are a service industry, and the hinterland of Merseyside has service industries which depend on the docks. That is one specific course of action that we hope will be taken.
  Finally, at the weekend the Financial Secretary to the Treasury said that one cannot fight unemployment, as the Labour movement wants, by fine words and marches. He should be grateful that we have a democratic Labour movement and that we use fine words and marches, because, without a democratic Labour movement, people would express their anger in more difficult and violent ways than fine words and marches. Yet that same Minister then said that we do not really have a problem. He found a new way of expressing the unemployment problem. He said that we do not have 10 per cent. unemployed, we have 90 per cent. employed. He was proud of that figure. That is an insult to the unemployed people in Merseyside who, as was said earlier, number one in two.
  8.27 pm
  Mr. D. A. Trippier: When Her Majesty's Opposition take up time on a Supply Day to point to the problems of the North-West, they are under a moral obligation to put forward a constructive alternative to the Government's policies. That they have so far failed to do. Conservative Members appreciate that the Labour Party—the official Labour Party—is in great difficulty. That is true in the North-West as it is throughout the country, but, far from trying to resolve their differences, they appear hell-bent on committing hara-kiri.
  Mr. Straw: rose—
  Mr. Trippier: I gave way to the hon. Member for Blackburn (Mr. Straw) in the last debate. He has popped in briefly just to make his intervention, without making a formal contribution. Perhaps he will be fortunate in catching your eye later, Mr. Deputy Speaker.
  Perhaps the Conservative Party should be delighted that the Labour Party is in such disarray, but I believe that it is important to have a constructive Opposition. Do the Opposition seriously believe in their alternative strategy, as outlined by the Labour Party Conference last year—the hon. Member for Liverpool, Kirkdale (Mr. Dunn) referred to conferences; we did not raise the matter—which contained three main planks? The first was withdrawal from the Common Market, when the vast majority of firms in the North-West know that their major trading market is West Germany. Is that a serious consideration? The second was the abolition of the House of Lords. Is that the sole topic of conversation in the North-West? The third was unilateral disarmament, which the Labour Party was happy to discuss and vote for at its conference. We shall wait with great interest to see whether it is prepared to include that suggestion in its manifesto for the next general election. I have my doubts.
  The Opposition are trying to kid people in the North-West that if they vote for unilateral disarmament they will save an enormous amount of money. Statistically it can be proved that Trident—an independent nuclear deterrent—costs 2p per day per head of population. The Opposition are trying to kid the public. They cannot be taken seriously. Their alternative strategy does not stand up to close examination. It is so easy for Opposition Members to talk about the way that they would spend money, without a single thought about its source. It is all too easy.
  My hon. Friend the Minister, in an excellent speech, emphasised the need to encourage small businesses, especially new businesses. That is the key to the future success and the increased prosperity of the North-West. Such firms will employ people and create wealth. The hon. Member for Newton (Mr. Evans) joked about the setting up of window cleaning businesses. I cannot find a window cleaner. I have been without one for nine months. I hope that the Minister will take that point on board. I do not want to see headlines in The Times tomorrow saying "Shortage of Window Cleaners in the North-West". The Opposition must realise that many people who want work done both in their firms and their homes cannot find skilled tradesmen becausethere are shortages in those areas.
  No one who has spoken in the debate would argue that the North-West has not been too dependent for too long on traditional industries. Many hon. Members on both sides of the House have fought long and hard for the textile, footwear, paper and other traditional industries. We shall continue to do so. None the less, we acknowledge that too much reliance has been placed on those industries, which has made us vulnerable in times of world recession, such as we now face. The Government are right to encourage new firms starting up in business.
  It is even more important that firms diversify so that Britain becomes less vulnerable. We have relied too much on the traditional industries in the North-West, and my constituency is a classic example. How are we to diversify in the Rossendale Valley? The trade associations, the council and the trade unions—all responsible bodies—ask us to diversify out of the traditional industries of textiles and footwear.

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  I wish to commend a scheme that I recently launched in my constituency called the Rossendale trust. I cannot claim credit for the idea because it is modelled on the successful St. Helens trust. I am glad to see my right hon. Friend the Member for St. Helens (Mr. Spriggs) is in his place. That trust has achieved such success that it has been responsible for the creation of 750 jobs, with another 7,500 in the pipeline. That is an important achievement.
  I am not saying that we intend slavishly to follow the example set by the St. Helens trust, but its establishment shows that the idea can work. If it can work in St. Helens, it can certainly work in Rossendale. We have an advantage over St. Helens because we have better road communications with the M66 going to the heart of the constituency. Rossendale's infrastructure is also ready. The trust will be a district effort, aimed at combating unemployment in the long term. The means to do that is to marshal the resources of the community to create an environment favourable to the growth of business enterprise, especially new small businesses. In short, it is an exercise in pulling ourselves up by our bootstraps. To achieve those objectives the major influences in the area will work together in the trust.
  The governors of the trust include representatives from the local council, industry and the banks. Essentially, they are non-political. All provide support for the trust's activities. The trust has no resources of its own, with the exception of a limited fund for provision of seed capital. Essentially, the trust relies on the resources of its constituent supporters for effective action.
  The trust cannot claim to create business enterprises directly. It acts to support entrepreneurs who can do so, principally in two ways. The first is consultancy. The resources of industrial supporters enable a high quality of consultancy to be provided at professional level. Solicitors and accountants have offered their services. In addition, we have a promise from the National Westminister Bank of a secondment as deputy director of the trust, who will provide direct financial advice to small firms.
  Does any hon. Member know how to start a small business from scatch? It is not that easy. A recent check list by the Department of Industry gave 21 things that had to be done when companies started up. It is important that the entrepreneurs, the people with the ideas, should be pushed in the right direction and helped.
  However, none of these businesses will start up unless there are premises for them. The infrastructure must be right and the council must do all it can to establish the correct infrastructure. I pay tribute to the Rossendale local authority. It has done a tremendous amount in ensuring that the infrastructure is right. We have the great advantage of the motorway, as I have mentioned. We also have in process of completion four industrial estates, all of which will have small workshop units. The important thing is to ensure that they are filled.
  The trust will bridge the gap between the entrepreneur and the Department of Industry. The Department has to admit that it has not the resources, the manpower or the man hours to be able to advise such people how to start up a business, or to follow them through until they are established.
  In other words, the role of the director of the Rossendale trust is crucial, and the success or failure of the trust will depend largely on the success or failure of its director. It will be his job to ensure that the entrepreneur
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  who comes to the trust is offered facilities for starting up his business, to direct contact with the legal experts and accountants, to deal with registration of the business name, and so on—all the things that are so important.
  I hope that this example of self-help will be emulated in other parts of the North-West. As its main aim is employment, it deserves the support and encouragement of the Opposition as well as the Government. For that reason, I commend it to the House.
  8.38 pm
  Mr. Leslie Spriggs: I did not intend to follow up the remarks of the hon. Member for Rossendale (Mr. Trippier), but I shall deal with the St. Helens Community Trust, to which he referred. St. Helens borough council has been working hard in co-operation with local industrialists. It has received great co-operation from about 50 of them.
  St. Helens is in a difficult period as a result of the Secretary of State for Industry's downgrading it from special development area status to development area status. The hon. Member for Rossendale will probably be aware that that means that the local authority which is downgraded to such an extent loses approximately 7 per cent. of the grant normally paid under special development area status.
  Not only is the local authority affected. If a local authority such as the St. Helens borough council goes ahead with a plan to train school leavers for employment, it must tell the ratepayers that it is increasing rates by X per cent. that year because it intends to use the money for that plan. Such a project will be costly. St. Helens is at present training about 1,000 school leavers who would otherwise be signing the register for unemployment benefit or for employment.
  The hon. Member for North Fylde (Sir W. Clegg) said that he did not believe that the Government were responsible for any unemployment. All I can say is that they should look at what has happened in the country as a whole. The Government have tightened up the spending of most local authorities. They have cut hospital building and house building when many thousands of building workers are signing the register for the dole. That is tragic when many local authority housing departments have long lists of people who are waiting for homes for themselves and their families.
  Another example is the National Health Service prescription charges, which mainly affect the poorest sector of the community. Fares on trains and buses are another example. Not only people who must travel to work, but those who seek employment, are affected. The cuts in public spending mean that, while the Prime Minister and the Secretary of State for Employment advocate moving around the country to look for employment, people who receive the lowest benefits and the least money for survival are not permitted any grant to enable them to do so. That is happening when transport costs have risen to astronomical heights. They are higher than I have ever known in my experience in the House.
  It is wrong for hon. Members to point at one another with regard to unemployment. I have been here long enough to know that unemployment existed when we had a Labour Government. It is still here and it is worse than ever. This Government, who criticised the Labour Administration for the level of unemployment when they were in Opposition, are making a greater mess than ever.

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  Many women who are now out of work have decided not to sign the register because of their family status as housewives and mothers rather than signing on the dole and looking for alternative work. If such people are included, I believe that no fewer than 3 million adults are now unemployed.
  The Minister asked us not to cry "Wolf" and not to decry the region, as it would do more harm than good. Some of us have good news. We have industries in our constituencies of which we are rightly proud. Pilkington Brothers has set up in St. Helens a model headquarters, second to none in the United Kingdom, which should attract other firms to the area. The North-West region, including Merseyside, has large reservoirs of unskilled, semi-skilled and highly skilled workers for new industries coming to the area.
  I do not wish to press the case for St. Helens to the disadvantage of other parts of the region. Many local authorities in the region are without development or special development area status, so have the poorest chance of encouraging firms to come to their areas to take up the slack in the labour force.
  Following the Secretary of State's decision to downgrade St. Helens and other areas in the North-West to development area status or even less, I was part of a parliamentary deputation to his office to protest. The right hon. Gentleman smiled at our protest and said that he did not understand it because downgrading was a sign of success. I know of no downgrading that has proved successful. Downgrading a local authority means cutting its grant by about 7 per cent. If it has to offer 7 per cent. less than other areas to firms looking for sites to develop it will not stand a good chance of attracting them to the area, so its school leavers and adult unemployed will have less chance of finding a job.
  An area's status also has an effect on keeping the jobs that it has. Depriving an area of its grant, especially in the North-West and Merseyside, is unfair to workers, ratepayers and the local authority.
  Let me draw the attention of the Secretaries of State for Industry and Employment to two particular points concerning my area of Merseyside. First, when I met the St. Helens borough council with a group of Members of Parliament I discovered that councillors trying to find employment for the unemployed could not even discover the correct figures for those employed and those out of work in their own area. The unemployment figures for Newton-le-Willows are included in those for Warrington, so the severity of the situation in Newton is disguised. That is one reason why the councillors could not discover the facts.
  Secondly, a jobcentre is needed in Haydock to provide a better employment service to people who live in St. Helens but have to travel outside the borough to register. It would also provide a more accurate employment record for St. Helens.
  It is most important that the Government should recognise the problems of St. Helens. I understand that the local authority has written to the two Secretaries of State to whom I have referred asking them to meet a deputation of councillors and Members of Parliament. I do not know what the Secretaries of State intend to do about this, but I stress that it is a real problem. It is not just a case of going back to the Minister cap in hand and telling him that unemployment has risen still further in the St. Helens borough council area. The problem is far more complex.
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  A great basic industry is involved. The Pilkington flat glass industry, the glass container industry' and the glass scientific equipment industry have all been cutting their work force. The Pilkington company is known world wide not only for its ability to run its business well but for investing many millions of pounds in research. Pilkington Brothers brought float glass to the world. One machine can now produce all the flat glass that is required, sheet glass for windows as well as plate glass, with a minimum of polishing and grinding. Costs have been greatly cut, production has risen extremely high and the float glass machine can produce more flat glass than could be produced in the past with 18,000 employees.
  In that one firm, more than 4,000 people have been made redundant. Other firms are following suit both in St. Helens and throughout the North-West. Technology is taking the place of the labour force and the human race is being placed on the scrap-heap.
  I admit that the Government are spending some money on training. Nevertheless, the downgrading put into operation by the Secretary of State for Industry means that many local authorities have to find money out of ratepayers' pockets to operate training schemes for school leavers and the adult unemployed.
  I should like the Minister to take a message to his colleagues in the Department, and to the Ministers in the Department of Employment, concerning the St. Helens borough council. I make a special appeal on behalf of our local authority, which comprises six parliamentary constituencies. I should like him to consider bringing its representatives down to London, or going to St. Helens himself to meet there the Members of Parliament concerned and the councillors serving on the relevant committee. I should like him to discuss with them the special problems involved in training people and in bringing new firms to the town.
  There is also the problem of finding ways and means of retaining the firms that we have in the town, and the jobs in them. This applies not only to St. Helens but to the entire North-West region. Special measures need to be taken to help all those local authorities to retain the work force that they have in their towns.
  Mr. Deputy Speaker (Mr. Bernard Weatherill): I have been informed that the winding-up speeches will begin at 9.10 pm. If hon. Members will shorten their speeches to about five minutes each, that will be helpful.
  8.56 pm
  Mr. Churchill: Naturally, Mr. Deputy Speaker, I shall, as always, pay heed to your injunction.
  It is a pleasure to follow the hon. Member for St. Helens (Mr. Spriggs). He was unusually frank and free from humbug, if I may say so, in what he said about the grave unemployment problem. All too often one hears people who make a lot of fuss about unemployment when in Opposition, but who ignore it when they get into office. The hon. Gentleman was the first to admit the grave position that existed even under the previous Labour Government. That was a fair point to make.
  The present Administration have had the misfortune of finding that their first two years of office have coincided with the gravest recession that the world has seen in 50 years. It was triggered by oil prices more than doubling during that two-year period. At the time of the last general election, the price of oil stood at $14 a barrel. Today, in

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  spite of recent price reductions on the world market, it stands at $32 a barrel, more than double the amount. This has had a massive impact on all the industrial nations, from which no Government could possibly cushion or shelter British industry or the British people.
  One sees the impact with a vengeance in the industrial heartland of the country. We have had the good fortune to be almost the only industrialised nation in the world, other than the Soviet Union, to be self-suffient in energy, so that the rise in oil prices has hurt us less than it has many other countries. On the other hand, as we are more dependent upon exporting than is almost any other country, it is inevitable that we are hit possibly more than is any other country in a world recession.
  The only wonder is that our export figures have stayed as buoyant as they have during the last few years. They are particularly buoyant at present. In spite of the notoriety of the Japanese as exporters, Britain exports a substantially greater proportion than Japan of total production. The credit should be given, perhaps, to no area more than the North-West. The worldwide recession has devastated British industry. For the greater part of this century Trafford Park was the largest industrial complex in Western Europe. Even today it is a massive employer of labour. More than 35,000 people still go to work there each morning. It is sad that there are no ships that are worth the name on the ship canal. That is partly the result of high dues, and partly the result of industrial disputes. It has become uneconomic for owners to bring ships up to the port of Manchester. That is sad and regrettable.
  The consequences of the world recession are there for all to see. It is scandalous and unacceptable that 367,000 people should be unemployed in the North-West. That is 12·9 per cent. of the population. I hope that the number of unemployed will be reduced at the earliest opportunity. There are great differences of opinion about how to achieve that. Certain Opposition Members say that we should spend more money. That is not the solution. There are 2·5 million unemployed in Great Britain. However, given the size of our economy we have more people in employment than almost any other Western European country.
  Mr. Straw: That is not true. With the exception of Belgium, our rate of unemployment is far higher than the rate found among our industrial competitors. In addition, unemployment in Britain has risen much faster than in any of our EEC competitor countries. On what basis did the hon. Gentleman base his assertion?
  Mr. Churchill: The hon. Gentleman either misunderstood or misheard me. I said that, although we had a high level of unemployment, we could draw some comfort from the fact that we also had one of the highest proportions of people still in work compared with all but two of our competitors in Western Europe.
  The Government must consider how to break out of the vicious circle into which the world recession has propelled us. It has led to a contracting national economy, which in turn has led to ever higher levels of unemployment. That in turn has meant that the taxpayer has had to pay the ever higher burden of unemployment and social security benefits. Consequently, fewer resources are available to the Government for capital investment. Our aim must be to create the virtuous circle of which Iain Macleod spoke
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  with such passion during the 1970 general election, shortly before he was struck down. We must create an expanding economy, which will in turn lead to less unemployment, less public expenditure, more investment, lower taxes and, ultimately, to more jobs.
  One other subject is of concern to my constituents, and that is the high and rising rate of crime and vandalism. Certain areas in my constituency have become virtual no-go areas. They are no-go areas at night, not only for the frail and elderly, but for able-bodied middle-aged men. They do not dare walk home from the pub, because of the high rate of crime.
  In those circumstances, it is reckless and irresponsible in the extreme of the new Socialist-controlled Greater Manchester council to vent its anti-police feelings and prejudices and to instruct the chief officer of police for Greater Manchester to cut his budget for this year by £1 million, which will inevitably mean fewer police on the beat and more crime, more vandalism and less security for the citizens of the area.
  Mr. Robert Litherland rose—
  Mr. Tom McNally: On a point of order, Mr. Deputy Speaker. I raise an issue that is fundamental to this and subsequent debates. Over the past two hours you and your predecessors have called eight hon. Members, of whom six have come from parties other than that which represents the majority in the North-West—namely the Labour Party.
  Mr. Deputy Speaker: That is not a point of order. The hon. Member for Stockport, South (Mr. McNally) knows that the selection of hon. Members to participate in debates rests with the Chair.
  Mr. McNally: On a point of order, Mr. Deputy Speaker. I thought that it was a matter of catching the eye of the Chair. I understand that lists are made. When Liberals, Social Democrarts and Conservatives are called by the Chair during a debate that takes place on an Opposition Supply day, there are fundamental rights—
  Mr. Deputy Speaker: Order. Mr. John Roper.
  Mr. McNally: On a point of order, Mr. Deputy Speaker.
  Mr. Deputy Speaker: Order. The hon. Gentleman knows that if he has any criticism of the Chair he has a remedy other than raising the issue with the occupant of the Chair.
  Mr. McNally: On a point of order, Mr. Deputy Speaker. The majority party in the North-West has been excluded from the debate by decisions taken outside the Chamber to give status to minority parties that should not be given to them. You are proceeding to do so again, Mr. Deputy Speaker, and as a result—
  Mr. Deputy Speaker: Order. Mr. John Roper.
  9.8 pm
  Mr. John Roper: The hon. Member for Stretford (Mr. Churchill) talked about unemployment, but I thought that his attitude to it was one of supreme complacency. Since June 1979 we have seen in the North-West a doubling of unemployment. That has been especially serious in areas that are having their assisted

  803
  area status removed. I speak in particular of Greater Manchester and parts of North Cheshire, including Warrington.
  The Under-Secretary of State for Industry said that the Government are keeping a close watch on developments. In view of the rapid deterioration in the rate of unemployment in the areas which have been assisted and which are soon to lose their assistance, I believe that we need more than a close watch. We need urgent action.
  The Minister referred to the advantages of enterprise zones. Many of those who initially supported the zones, including some in the constituency of the hon. Member for Stretford, are now a great deal more sceptical. They are especially sceptical of the enormous bureaucracy that has been built up around them by the Department of the Environment and others.
  The partnership programmes that were initiated under the Labour Administration have proved that they are valuable. It would be useful if the Government could use and build upon those schemes to provide additional resources for inner city areas. I was surprised when the Under-Secretary of State referred to derelict land grants. It is now much more difficult for local authorities in the North-West to take advantage of the derelict land provisions because of changes in local government finance. I hope that this issue will be considered by the appropriate Department.
  My constituency has benefited significantly from the temporary short-time working scheme. About 53,000 in the North-West have benefited from the scheme, especially in the clothing and textile industries. However, the scheme suffers from a disadvantage in being limited to a certain period. I hope that the Under-Secretary of State for Employment will be able to outline in detail the Government's plan both for extending the period of the scheme and extending its life from the period when it is due to expire. I hope that he will be able to do so because this matter causes considerable concern throughout the North-West.
  Since I have been a Member of the House, I have become accustomed, as we all have, I regret to say, to talking about the difficulties of the textile industries. What has become more serious recently is that those industries that were relatively successful in the 1960s and 1970s in creating jobs to replace those lost in the textile, footwear and mining industries have themselves become the industries in difficulties. ICL has already been referred to but, clearly, references can be made to other industries that have been successful in the past. That is a reflection of the Government's economic policy that has had such bad effects throughout the region.
  Finally, I refer to the problems of youth unemployment. It is not only the short-term problems of youth unemployment that will leave scars in our region, but the attitudes that will develop among our young people if they leave school this year and find themselves out of work, as so many of them will. The serious problems of our region require a number of urgent actions. I am worried that one of the great assets of the region, in terms of its re-industrialisation, its sciences and universities, is now under threat from the Government. Many of my constituents work at Salford University. They are alarmed at the prospects for their university as a result of Government policy of cuts in higher education. Yet their science and engineering are essential if we are to rebuild the economy of the North-West.
  804
  The Government should urgently tackle the problems of the North-West by restoring assisted area status to those areas that have had it removed, by developing plans for training to ensure that we have the skills when the economy builds up, and by substantially revising general economic policies to give us an upturn throughout the economy which will in turn benefit the North-West.
  9.12 pm
  Mr. Charles R. Morris: I preface my speech by thanking the two Ministers—the Under-Secretary of State for Industry, who opened the debate, and the Under-Secretary of State for Employment, who will reply—for the attention that they have given to the problems confronting the North-West. However, I shall comment on the absence of the Secretary of State for Industry from the debate. He has not been present for any part of the six hours during which we have debated this crucial issue. If my memory serves me right, he was not present for the last debate that we had on the problems and issues facing the North-West.
  I congratulate my hon. Friend the Member for Liverpool, Kirkdale (Mr. Dunn) on his opening speech. It was perceptive and thought-provoking. I admired the analogy that he sought to draw between the debate and the People's March for Jobs. If that march and the debate seek to do anything, it is to focus attention on the crucial issue of unemployment as it affects the North-West region. The real achievement of the debate is that it has concentrated correctly on the realities of life and the problems that affect the lives and the economic well—being of nearly 7 million people in the North-West.
  I accept that it would be misleading to convey the impression that all the problems of the North-West started with the election of this disastrous Government in 1979. They did not. But our charge against the Government is that their actions have only exacerbated the problems or, worse still, that they have tended to ignore them.
  Unemployment is the major issue facing the region. The Greater Manchester council outlined the realities of the problems facing the North-West in a document sent to hon. Members recently. In February this year the unemployment rate in the North-West was 12·3 per cent.—a rate exceeded only in Scotland, the North, and Wales. But none of those areas has seen unemployment rising as fast over the past year. In addition, the North-West has substantially more people out of work than has any of those other regions, and more than Wales and the North put together. That is the reality of the problem facing the North-West.
  My hon. Friend the Member for Kirkdale quoted statistics. One can interpret statistics in different ways. One could talk about the 12·3 per cent. average unemployment throughout the region, but the statistic that impinges on the thoughts of everyone in the North-West is that quoted by my hon. Friend the Member for Kirkdale when he highlighted the ratio of the unemployed to vacancies. The problem confronting the unemployed is the prospect of getting a job.
  The appendix to the Norwida report shows the ratios of the unemployed to vacancies in some important areas of the North-West. In Rochdale it is 130 unemployed people for every vacancy at the local employment offices. In Bolton it is 70:1, in Crewe it is 88·2:1 and in Birkenhead it is 69:1. What are the job prospects of the unemployed in those towns and cities?

  805
  I recognise the difficulties that have faced the Government in the past two years, but one tends to judge Governments on their actions, and I am mindful of the actions that the Government took when they assumed responsibility for the affairs of this nation. Within days of taking office they withdrew intermediate area status from many parts of the North-West. That was bound to have an impact on the ability of the region to attract new industry.
  Next, the Government abolished the North-West economic planning council and virtually abandoned the programme of dispersing the Civil Service out of London. No Government should be surprised if the people of the North-West rightly interpret those actions as a kick in the teeth for their region. The Government took these actions in a region struggling to cope with an inherited legacy of urban and industrial dereliction and batting to survive economically with a contracting manufacturing base.
  The Government could not put forward the excuse that they were not aware of the problems confronting the North-West. In 1974 the "Strategic Plan for the North-West" was published, and it said:
  "The North West is clearly in need of considerably more effort and resources before a state of balance can be claimed; until this need is met, the region will continue to be left behind the more favoured regions and its economy and quality of life will continue to suffer … at least a decade of special effort is necessary to establish a reasonable balance between the North-West and other regions."
  Despite that the Government took the action that I have indicated and went on to cut resources in education, hospital and Health Service provision, housing provision and rate support grant for every major authority in the North-West. In the city of Manchester, the cut amounted to £40 million. Liverpool suffered a similar fate, as did every community in the North-West. People who look at the Government's actions ask "Are they really concerned with the future of the North-West? Do they really care?" That is what Ministers must answer.
  As the effect of the Government's policies started to emerge, my colleagues in the North-West group of Labour hon. Members and I were not slow in organising a deputation to see the Secretary of State for Industry. We warned the right hon. Gentleman of the consequences of the withdrawal of intermediate area status from many areas of the North-West. He listened quietly and responded to the points that we put. He also wrote me a letter on 5 October 1979, which stated that:
  "the recent changes in regional industrial policy form part of the Government's policy of creating an economic climate which will encourage enterprise and initiative".
  As a result of two years of enterprise and initiative, there are 350,000 people in the North-West in the dole queue. The right hon. Gentleman talked about initiative and enterprise. He should go to the North-West and start talking about enterprise and initiative to those at Fodens, Vauxhalls, Courtaulds, Tate and Lyle and 100 other companies who have lost jobs during the past two years. It is a strange diagnosis. If what has happened since 5 October 1979 is enterprise and initiative, I hate to think what would happen if the Secretary of State for Industry really put his mind to it.
  I can understand the problems that confront not only the North-West, but the nation as a whole. I believe, however, that the situation in the North-West is sufficiently serious
  806
  to justify a senior Minister of Cabinet rank touring the region to study the scale of the problems, to identify possible solutions and to prepare a plan of action.
  I warn the Government that communities in the North-West will not continue to tolerate men finding themselves and their industrial skills thrown on the scrap-heap and themselves in the dole queue in the numbers experienced so far. They will not continue to tolerate youngsters in many communities still having no hope of obtaining even their first job.
  For far too long children in the North-West region have been educated in old and dilapidated school buildings. For far too long many of the sick and infirm in the North-West have been treated in hospitals built at or before the turn of the century. I heard the chairman of the regional health authority say that he had 18 new hospitals on the drawing-board but that only two had been built. That is the reality of health provision in the region.
  No Government can go on ignoring the plight of the region, which has contributed so much to the industrial history of not only this country but the world.
  Sir Walter Clegg: May I take up the right hon. Gentleman's point about health provision? I said earlier that his Government accepted the resources allocation working party report, which recommended transferring resources from the South-East to the North-West and one other part of the country. That process is still continuing. Will the right hon. Gentleman admit that?
  Mr. Morris: The hon. Gentleman is right. The last Government sought to reallocate resources from the South-East to the North-West. The process is continuing, but there must be positive Government discrimination in favour of the North-West in the provision of health services.
  Mr. Frank R. White: Is my right hon. Friend aware that within the past 12 months the chairman of the North-West regional health authority has said that as a result of the Government's policies in changing the direction of finances to the Health Service RAWP has been put back 30 years in the North-West?
  Mr. Morris: I appreciate my hon. Friend's point.
  We have heard some impressive speeches from both sides of the Chamber on the problems and successes of the region. There has been brilliant analysis of the problems. Hon. Members have succeeded in identifying the problems of the constituencies and communities that they represent, but what the North-West needs now is action.
  I should like a Minister of Cabinet rank to tour the North-West and provide a plan of action. I should also like the Government to give serious consideration to a development agency for the North-West. Attracting industry and inward investment cannot be left to local authorities. Attracting inward investment does not stop at municipal or county boundaries. It must be planned regionally. Development agencies work effectively in Scotland, Wales and Northern Ireland. The North-West is entitled to ask "Why cannot we have similar provisions?"
  In addition, I should like the Government seriously to consider effective curbs on textile imports. I accept that the multi-fibre arrangement is to be debated in the House on Thursday. However, I must say now that the opposition are conscious that imports of textiles and clothing into the

  807
  European Community as a whole from low-cost economies increased by 19 per cent. under the first MFA arrangement and by 7 per cent. under the current MFA.
  Since 1973, total consumption of those products has risen by only 1·2 per cent. The share of the EEC market taken by imports increased from 21 per cent. in 1973 to an estimated 40 per cent. in 1980. We want global ceilings for textile imports, as well as individual quotas. Faced with extinction, we want realism.
  I hope that the Government will give serious consideration to the problems of ICL, because the bulk of that company's manufacturing units are in the North-West. I hope, too, that the Government will consider advancing the replacement of the Government computers. At one time I had responsibility for the Government's computer installations, and I realise that the life of Government computers has recently been extended from seven to 10 years. A number of computers are up for replacement, and I hope that the Government will order them and give job and financial security to ICL.
  Mr. Robert Sheldon: Does my right hon. Friend agree that in addition to not increasing the life of their computers, from seven to 10 years, the Government should accelerate orders, in view of the difficulties of the computer industry and the redundancies that are being declared at Ashton-under-Lyne and in the Greater Manchester area? Those two factors—accelerating orders and reducing the life of computers to what it was previously—would greatly assist the areas.
  Mr. Morris: My right hon. Friend correctly emphasises what was said by my right hon. Friend the Member for Manchester, Ardwick (Mr. Kaufman), who has a major constituency interest in ICL.
  I want to say a brief word about Manchester international airport. I realise that the British Airports Authority is considering a proposal to invest £150 million in Stansted airport, under the guise that it should be London's third airport. I believe that that £150 million should be spent on Manchester international airport. Instead of London's third airport, we should start thinking of Britain's third airport, and make it Manchester.
  The present energy policy, far from assisting industry in the North-West, is doing immeasurable harm to certain sections of industry, particularly steel making, wire making, paper making and chemicals. I hope that the Government will seriously consider the possibility of contract prices of electricity and gas for those industries.
  The Minister argued that it was not the Government's intention to provide a crutch for uncompetitive industries in the North-West. I emphasise that the North-West is not seeking crutches. We are not a lame duck region. With the ingenuity and skills of our people, the North-West can make a real contribution to the future economic well-being of this nation.
  Our debate is about how this Government can provide the opportunity to get the North-West back to work. I remind the Government that the North-West of tomorrow must not be sacrificed in favour of some fashionable monetarist theory of today.
  9.34 pm
  The Under-Secretary of State for Employment (Mr. David Waddington): The right hon. Member for Ashton-under-Lyne (Mr. Sheldon) said that Ministers spent so
  808
  much of their time in the more prosperous areas that they did not have time to consider the problems in the North-West. I do not know whether he was referring to my travels around Padiham, Hapton, Harle Syke and Sabden, but I assure him that I spend a great deal of my time in the North-West. I was taught that people came to London to get into trouble. I spend most of my time trying to keep away from the place. I do not dwell in London for a moment longer than necessary when the week is ended. Most of my hon. Friends who represent the North-West go to at least as much trouble as I do to maintain their ties with the places that sent them here.
  There are many old faces here today, and one or two welcome visitors. I do not know how the North-West will feel when, as is probable, it loses a miner and Methodist minister and receives in exchange an itinerant lecturer from Nuneaton. We wish him well. The North-West has survived worse disasters. We heard an interesting contribution from the hon. Member for Newton (Mr. Evans) who dwelt on what may happen in Warrington. I gather that there is no question of his throwing his hat into the ring.
  We are always glad to see the hon. Member for Burnley (Mr. Jones). He made some kind remarks about me. Somewhat to my embarrassment, he quoted a speech that I made in June or July of 1974. It showed our common interest in the problems of North-East Lancashire. I have no reason to feel horrified at being reminded of what I said. I dwelt at great length on the problem of communications and said that I believed that the prosperity of North-East Lancashire lay in an improvement in communications. I am glad to say that much has happened since then. Only last week the Department of Transport announced that during the next few days a contract will be signed for the construction of the M65 from Hyndburn to Burnley. That is good news. We also know that the Haslinden bypass is well under way. When that road is completed there will be a link from the road to North-East Lancashire through to the M66 and beyond.
  The hon. Member for Burnley also referred to intermediate area status. I remind both him and the right hon. Member for Manchester, Openshaw (Mr. Morris) that we must be careful not to talk loosely about the Government having withdrawn intermediate area status within—as the right hon. Gentleman said—weeks of coming into office. The right hon. Gentleman knows that North-East Lancashire still benefits from intermediate area status. It does not cease to become an intermediate area until the end of July 1982.
  It was necessary to contemplate limited resources being spread over a wide area, and then to decide whether the limited resources should be concentrated in the areas where the problems were greatest. The Department of Industry is keeping a close watch for any signs of a long-term structural decline that might call for adjustments to the present intermediate area status. In that sense, the matter is always under review.
  I am glad that the hon. Member for Burnley is here because before I entered the House he was parliamentary private secretary to the then President of the Board of Trade, the right hon. Member for Battersea, North (Mr. Jay). He came to Burnley many years ago in either 1966 or 1967. To use the vernacular, he got the bird. I remember reading the local newspapers, and few Ministers have received a worse reception. I am making this

  809
  comment because it will remind all hon. Members of what most of them already know—that the problems faced by Lancashire and the North-West generally are not new.
  I do not believe that the problems will be solved by the establishment of a development agency or the creation of a Minister for the North-West or a Minister for Merseyside. We cannot transform a region's prosperity by creating a new agency. We cannot transform an economy by creating more committees or by appointing additional Ministers.
  Mr. Dan Jones: What the hon. and learned Gentleman has said is true. However, surely he would not expect me to have instructed the Minister. I was simply his PPS. The situation was reversed. He was instructing me. All that I ask is that the sentiments admirably expressed at the time be expressed by the hon. and learned Gentleman from his position of advantage—no more than that.
  Mr. Waddington: The hon. Gentleman knows why I was referring to the matter. People need reminding that these problems are not new.
  The North-West is undoubtedly suffering from the present recession, but we must also remember that virtually no area has remained immune. The difference between our area and others is that the difficulties are not new to us. We have had our problems for a long time—although, to hear some Opposition Members, one would scarcely believe that.
  Unemployment brings much misery. We as a Government are determined to do all that we can not merely to alleviate the hardship of unemployment but to deal with the root causes. I do Opposition Members the credit of accepting that they, like us, want a reduction in unemployment. The difference between us is in our judgment as to how that can best be brought about.
  I shall never forget learning first about unemployment as a young man coming down Moor Lane into Padiham and seeing in those days knots of 20 or more men leaning against the church railings. Unemployment today does not bring as much hardship as it did then, but I know perfectly well, as I have always known, what an evil it is. [Interruption.] I wish that Opposition Members would listen for once. They might then leave this Chamber less ignorant than when they entered it.
  Over the years I have also learnt how intractable some of these problems are and how wrong it is for politicians to go around pretending that there are panaceas.
  Mr. Straw: Will the hon. and learned Gentleman give way?
  Mr. Waddington: I shall not give way. The hon. Member has not been present during the debate.
  Mr. Straw: On a point of order, Mr. Deputy Speaker. As the hon. and learned Gentleman has mentioned my absence from the earlier part of the debate, I should like to state for the record that I was not present for the beginning of the debate because I had to see a Minister about yet another catastrophe which the present Government are wreaking in my constituency.
  Mr. Deputy Speaker: That is not a point of order.
  Mr. Waddington: The hon. Member is taking time from those who have been present.
  810
  At present we are suffering from the consequences of lack of competitiveness and from a recession which has hit the whole of the Western world. It is nonsense to talk, as did the right hon. Member for Ashton-under-Lyne, of a Government-manufactured slump. Our problems will not be solved by a massive reflation, but they can be solved if we make sure that we come out of this recession able to seize the opportunities which will then occur and do not repeat the mistakes of yesterday by allowing a new surge of inflation to price us out of the markets of the world.
  I must stress that in these most difficult times the North-West has done remarkably well in helping to sustain the volume of national exports. Finns in the North-West have hung on to many markets at greatly reduced margins, and by doing so have kept themselves in a position to get the maximum benefit from the upturn. Even in these difficult times, people are still prepared to take risks and set up in business, as has been mentioned by my hon. Friends the Members for North Fylde (Sir W. Clegg), Macclesfield (Mr. Winterton), and Preston, North (Mr. Atkins).
  My hon. Friend the Member for Bebington and Ellesmere Port (Mr. Porter) was right to point out some of the hard and unpleasant truths. We have not done well as compared with our competitors in unit labour costs. We have not done well in overmanning and in many sectors in various industries. The docks industry is one for a start.
  Mr. Frank R. White: Which company?
  Mr. Waddington: Every company in the docks industry.
  The North-West has much to offer. I am sorry that sometimes we do not spend enough time saying how much there is to offer. Over many years, we have seen a change from the dependence on our old industries and the new industrial structure coming into existence. That is a well-diversified industrial structure. We have a good, adaptable and highly skilled work force. Over most of the scene, there are extremely good industrial relations. We have a splendid transport system. I have mentioned North-East Lancashire. The first motorway was built in Lancashire—the Preston bypass, the first part of the M6. That was not built under a Labour Government. It was opened on the day of my wedding in 1958, so I remember it.
  Even in these difficult times, the record of achievement has been remarkable, but I shall not read out a catalogue. Hon. Members read the bulletins which are published by the North-West Industrial Development Association. We know what has happened in British Aerospace, electronics and chemicals. That is written for all of us to see. I should like to pay tribute to the work done by Norwida and in North-East Lancashire by the North-East Lancashire Development Association. The hon. Members for Burnley, Blackburn (Mr. Straw) and I know that work well and we have learnt to work with and appreciate the contribution of the officers.
  Mr. Straw: The hon. Member for Nelson and Colne (Mr. Lee) should also be included.
  Mr. Waddington: I am sorry. I should not have omitted my hon. Friend the Member for Nelson and Colne (Mr. Lee).
  Many burdens are faced by industry, some of which are unnecessary. I should like to say a word or two about rates because I cannot accept the assertion that somehow or

  811
  other firms are not affected by high rates, and that high rates cannot lead to job losses. Of course, it is difficult to separate the effect of one increase in costs from another, but industry is bearing an ever greater rates burden. No one can seriously doubt that.
  We have heard much about Manchester in the debate. In Manchester, 64 per cent. of the cost of local government is borne by industry. Industry does not have a vote in the decisions on the expenditure of that money. The right hon. Member for Manchester, Wythenshawe (Mr. Morris) talked about the problems faced by the Manchester city council. It is worth remembering that at least one record has been broken by that council. It has a higher ratio of staff to population than anywhere in the whole country.
  Mr. Kenneth Marks: Will the hon. and learned Gentleman give way?
  Mr. Waddington: No, I shall not give way. I must continue with my speech.
  Energy costs were also mentioned. The NEDC task force report on comparative energy prices concluded that prices of electricity and gas for over 95 per cent. of industrial consumers are not out of line with those on the Continent. Steps have been taken, as the right hon. Member for Wythenshawe knows, to make changes for some large consumers.
  Textiles have been badly hit. That is sad when that industry has an overall level of productivity and an industrial relations record which could be a model for others. The Government have been doing their best to help in the broad framework of their economic policies and their international obligations.
  I hardly need remind hon. Members that there will be a debate on Thursday on the multi-fibre arrangement. The Government have given more protection to the textile and clothing industries than to any other manufacturing industry. From experience at the end of 1980, we all know that trade barriers can lead to retaliation, as we saw with our exports to Indonesia. We took action within the EEC over American yarn. Talking of America, I also remind hon. Members that some pressure will come off industry as a result of the fall in the pound and the decontrol of American oil prices.
  Industry, and particularly the textile industry, receives substantial aid under the Industry Act and the temporary short-time working compension scheme. The picture is not all gloom in the textile industry. Josiah Swale, a specialist silk manufacturer in the constituency of my hon. Friend the Member for Macclesfield, reports overtime since November 1980 and boasts that not a loom has been idle in over three years, which shows what can be done.
  The Government recognise the problems faced by Merseyside, but no other area is eligible for so many forms of financial assistance. The hon. Member for Liverpool, Kirkdale (Mr. Dunn) said that the area deserved sustained financial assistance, which is exactly what it has had. [Interruption.] If the hon. Member for Bury and Radcliffe (Mr. White) wishes to make a speech to himself, perhaps he would make it in the Tea Room.
  Merseyside is a special development area, so is entitled to the highest forms of regional selective assistance. It has an urban development corporation, an inner city partnership and an enterprise zone. No area could have been granted more regional assistance.
  The hon. Member for Liverpool, Walton (Mr. Heffer) made a typically attractive speech. He said that the
  812
  stupidity of our economic system was the cause of the problem. We know what he means. There is an easy way to get rid of unemployment. We could do so by direction of labour or by abandoning our free society, but not many people want that. The hon. Gentleman mentioned crime and unemployment, as did another hon. Member. He said that he did not blame people who committed crimes. Those are dangerous words. When I was at the Bar, the increasing crime rate was blamed on growing prosperity. People now say that less prosperity is to blame. Responsible citizens should not say anything that the ill-informed could take as an excuse for anti-social behaviour.
  Let me deal with public investment in the North-West. The precise effect of regional aid is extremely difficult to quantify. One looks at the aid going to Merseyside and wonders to what extent the system is working. However, projects costing £174 million, and involving 3,267 new jobs and the safeguarding of 7,000 jobs, have been the subject of accepted offers under section 7 of the Industry Act.
  My hon. Friend the Member for North Fylde (Sir W. Clegg) referred to Health Service resources. There has been a shift of resources towards the North-West in each of the last three years, correcting a pronounced imbalance prior to that.
  On housing, my hon. Friend the Member for Chorley (Mr. Dover) made some criticisms about the new town. Nevertheless, 15·5 per cent. of the housing investment programme goes to the North-West. There has been an increase in each of the last two years. The North-West is top of the regional list for housing action areas. West Lancashire district council is to spend 40 per cent. more on housing than its HIP allocation would allow as a direct result of capital receipts.
  What a contrast that is with Ellesmere Port, about which we heard a short time ago, and also, I am afraid, with Burnley. When it was pointed out that various devices were being used to cheat people of their statutory rights, the hon. Member for Bootle (Mr. Roberts) had the impudence to say that it was allowed under the Act. I do not think that anyone should be proud of thinking of devices to cheat people of their rights.
  With regard to roads, starting under the guidance of the great James Drake, the North-West has been in the forefront of the extensive road construction programme since the 1960s. I follow exactly what was in the mind of my hon. Friend the Member for Macclesfield in speaking of a public works programme. Certainly, there are many attractions in that, but it would still involve money which would not bring a return for a long time. My hon. Friend himself reaffirmed his and the Government's determination to get rid of inflation. As he acknowledges, that must remain our chief task. What we do must be in that framework and with the knowledge that that is our main task.
  As a Minister at the Department of Employment, I had intended to speak briefly about our various special programmes. As time is so short, however, I do not think that it would be appropriate for me to do so. Nevertheless, I hope that many people will realise the great help being given to industry by the temporary short-time working compensation scheme and by our special programmes, particularly the youth opportunities programme, from which 64,000 people are benefiting in the North-West. I pay tribute to the unions for their co-operation in that programme.

  813
  We must now look forward, as our new training initiative does, to a time when nobody will leave school without going on to higher education and proper training to learn a skill. Again, however, these things cannot be achieved in a day. I am afraid that I cannot help the hon. Member for Kirkdale by saying that STEP could be extended for three years in the foreseeable future.
  So there it is. We all know the score. We know that the problems are not new and that many of them are outside the control of Government. If things are to pick up in the North-West, as in the country as a whole, we must defeat inflation, and industry must come out of the recession in a competitive position. It must be in a position to produce what people want, when they want it, and at a price that they will pay. There is ample evidence that firms in the
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  North-West realise this and are equipping themselves now to make sure that they take every advantage of the upturn when it comes.
  Our policies are aimed at creating a climate in which firms feel that they can invest and expand with the likelihood of a return on their investment. There is no doubt at all of the important role of the small business sector, about which we have heard a great deal today. We have also heard much about the qualities of the people of Lancashire and the North-West. I am sure that they, under the leadership that we are giving, can master their present difficulties in their interests and in the interests of the country as a whole.
  Mr. Carol Mather (Lord Commissioner of the Treasury): I beg to ask leave to withdraw the motion.
  Motion, by leave, withdrawn.

European Community (Food and Management)
Mr. Deputy Speaker (Mr. Bernard Weatherill): Mr. Speaker has selected the amendment on the Order Paper.
10 pm
The Minister for Overseas Development (Mr. Neil Marten): I beg to move,
That this House takes note of European Community Documents Nos. 4318/79 (amended Commission proposal for a Regulation on Food Aid Management) and 9175/80 (draft Resolution on the use of Community food aid and draft Regulation layind down general rules for the supply of products other than cereals, skimmed milk powder or butteroil to certain developing countries and specialised bodies) and of the updated explanatory memoranda of 5th June; and endorses the Government's intention to work for the early adoption of a Regulation on Food Aid Management, on the lines set out in the explanatory memoranda, and urgently to encourage greater reinforcement by the Community's Food Aid programmes of efforts by developing country recipients to improve their own food and agriculture production.
I welcome the Select Committee's recommendation that because of their legal and political importance these documents should be further considered by the House. Food aid is one of the main instruments of the Community's development policy. Unlike the European development fund, it is provided to developing countries all over the world. It will cost the Community development budget about £200 million this year. About one-fifth of this will fall on the British aid programme.
Mr. Tony Marlow: My right hon. Friend is talking money. I should be very grateful if he would tell he House exactly what, in European prices terms, will be the value of the food that will be distributed in food aid, so that there is no misunderstanding.
Mr. Marten: I shall come to that shortly. I said that it will cost the Community development budget about £200 million this year. About one-fifth of this will fall on the British aid programme. This is apart from the related production and storage costs, which form part of the ordinary cost of the common agricultural policy. So we are not talking about small sums.
This short debate is also timely for another reason. A few days ago there was a debate in another place as a result of a wide ranging report by the relevant Sub-Committee upon the different aspects of the Community's aid policies. Food aid was scrutinised as part of that review, and there was a remarkable unanimity of comment upon it. The Government's own views were given in that debate and closely coincided with what was said by others. We shall be publishing a detailed response to the recommendations made by that Sub-Committee as soon as we can.
These two documents for debate tonight propose, first, a new policy and management framework for food aid and, secondly, arrangements under which it would be possible to supply products other than cereals and dairy products as such aid. They were originally put forward by the Commission about two years ago, but little progress was made, because of conflicting reservations from other member States We are bringing them before the House for examination now because it looks, at last, as though there is a good chance of getting the Council of Ministers to agree in the next few days on compromise arrangements
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based on modifications to them. I shall explain these in a moment, but it may be helpful to the House if I first outline briefly the past history of this question.
When the Community's food aid programme started in 1963, first with cereals and later with dairy products, its chief aim plainly was to dispose of agricultural surpluses. Taking cereals, the Community then became a party in 1967 to the international grains agreement, whose two wings were the wheat trade convention and the food aid convention. So the legal basis on which food has been given as aid has been article 43 of the Treaty, which relates to the common agricultural policy, and article 113, which deals with the common commercial policy.
When we and others joined the Community we too became bound by the food aid convention, and the Community's pledged annual contributions of cereals were increased accordingly. In 1980 a new food aid convention was negotiated. This provides a guaranteed total of cereals aid pledges of 7·6 million tonnes every year until mid-1983 from donor members. The Community's share of this is 1·65 million tonnes, and of this over half—927,663 tonnes—is paid for from the Community's budget and administered by the Commission. The rest is split up between the member States and handled bilaterally. Our own share of this is about 117,000 tonnes.
Dairy products aid began in 1973, and consists of dried skimmed milk and butteroil. Unlike cereals, it is administered and paid for wholly by the Community. It reached its present level of 150,000 tonnes milk powder and 45,000 tonnes butteroil in 1976, when increases were made that, among other things, allowed large amounts to be pledged to India, over several years, to support "Operation Flood"—a scheme that many hon. Members may have seen, which is designed to boost India's dairy industries and to bring important benefits to rural producers. I mention this because so far it is the only example of a forward food aid commitment by the Community over several years ahead.
Very small quantities of sugar have been given as aid through the United Nations Relief and Works Agency to the Palestinian refugees and rapeseed oil is going to China. Very exceptionally some other products have been bought on local markets to meet emergencies—red beans were so provided last year to Nicaragua in the wake of the civil war.
Ever since Britain joined the Community we have striven, with some other member States, to shift the basis and administration of food aid from surplus disposal to development. There was a breakthrough in 1977—I pay tribute to the right hon. Member for Lanark (Dame Judith Hart) on this—when we succeeded in getting the Council of Development Ministers to adopt revised criteria for allotting such aid and a whole range of other policy decisions that improved its effectiveness.
But food aid is really still only a kind of balance of payments aid to the poorer importing countries. At the end of last year, things were carried an important stage further when the Development Council agreed to multi-year forward commitments. These will be made when, amongst other things, food aid is to be used more directly together with European development fund or non-associates' aid to put specific development projects into effect. The Council also agreed to provide a proportion of food aid to build up stocks, case by case, when a developing country is setting up a well-defined, socially useful and economically sound food security programme.

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So far, so good. But there is still much more to be done to see that food aid that is given for development has a really positive effect upon the prospects of the recipients. Those who have looked closely at this question are convinced that in some cases—it may only be a few, but certainly some—the availability of food aid allows difficult decisions to be postponed on necessary changes in internal policy, which would make a big difference to domestic food and agricultural production. And the use of food aid directly for development projects—to pay workers on seasonal construction, or to feed schoolchildren—does not always help these major internal issues to be tackled.
We shall carry forward work in the Community on how to improve things further during our Presidency. The problems that remain will not all be solved simply by the Council adopting a proper management regulation, but when it is agreed the regulation will be a major step forward. First, it will incorporate in Community law the policy improvements already made since 1977, and will found this partly upon article 235—the basis of common development actions—and not article 113, which deals with the common commercial policy. Secondly, it will provide a system for settling food aid issues that is much simpler than the present arrangements, under which, in principle, everything has to be agreed ad hoc by the Council. So it should cut down bureaucratic delays and increase efficiency.
At the same time, the compromise proposals that we are now considering will continue to reserve to the Council decisions on several policy issues regarded as major by various member States. These include the total volume of aid of each product; the share of cereals aid due from individual member States, as against the Community; the list of eligible recipients; the basic and derived products to be supplied; and the general criteria for transport of food aid beyond the FOB stage.
For its part, the Commission will be completely responsible for day-to-day work under the programme. It will also chair a Committee of member States' representatives, which will decide by qualified majority on allocations to individual countries and organisations, on the size of the reserve, and on the amounts of cereals to provide for emergencies and for international reserves.
I should underline that in the case of emergencies, as opposed to food aid for development, the Commission will also be able to decide on individual actions and to provide up to three months' supply of the food deficits needed by those affected. Swift action of this kind is obviously desirable, provided member States are told at once and are given the right to quick consultation as necessary. Last year about 20 per cent. of the cereals programme and 10 per cent. of the dairy products were directly used for emergency relief in this way.
The powers reserved to the Council are the chief difference between the new compromise and the Commission's original proposal, though it also mops up the arrangements for diversifying products and contributing to food security that are proposed in Document 9175/80, on which the Council has already taken the decisions that I have mentioned.
I understand that if the Council accepts the Presidency's proposal the Commission may still dissent, and the matter would then have to go to the European Assembly for
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conciliation. But we place great importance on the early adoption of a sound and continuing new legal basis for food aid.
Mr. Marlow: My right hon. Friend has just said that if there is a disagreement between the Council and the Commission that has to go to the Assembly for conciliation. What powers does the Assembly have? How does it effect that conciliation? I think that it is a very important matter for this House.
Mr. Marten: As I understand it, a conciliation committee has to try to arrive at an acceptable solution. I do not think that the Assembly has any powers in this respect.
We recognise that, like ourselves, other member States have issues of major importance to them on which they want to safeguard their interests. We congratulate the Dutch Presidency on the very considerable efforts and skill that it has deployed in making these compromise proposals, and for our part we want to see them adopted as soon as possible.
I undertake that if the Commission brings forward proposals for additional products to be given as aid we shall ensure that the Select Committee will be given time to comment upon them before the Council adopts them.
Finally, I shall sum up our views on the balance of the Community's food and effort. The volume of food aid is quite large enough. We should not want it increased, and we should indeed prefer to see dairy products aid, which is usually of less value, reduced somewhat.
The distribution of food aid is now broadly satisfactory as between poorer and wealthier countries. Last year 90 per cent. of cereals and 85 per cent. of dairy products went to poorer countries. The Commonwealth received 29 per cent. and 30 per cent. respectively. Because of the special problems in Africa, the share of non-associated countries fell to 34 per cent. and 32 per cent. respectively, but more needs to be done to concentrate the programme if we can, including bigger Community allocations to the main international agencies.
The use of food aid could be further improved, especially by seeing that it reinforces sensible policies for agricultural and food production across the board, rather than sometimes tending to undermine them. Direct help for poor and vulnerable groups, and in emergencies, also means continuing to channel aid through voluntary and international agencies.
The staffing of the Commission's food aid side should, we think, be strengthened by transferring people from less urgent work to somewhere else in the Commission. That is, of course, a matter for the Commission. The way is now open for forward commitments. We should like to see more food aid bought from developing countries, such as Zimbabwe, and more in the form of local products suitable to the people's diet. Article 3(2) of the original Commission proposal has been retained and refined. It mentions specifically the possibility of buying in other developing countries, if possible in the same geographical region, if there is an emergency or if the products needed are not available in the Community market.
While I naturally have sympathy with the general feeling behind the amendment, I regret that the Government cannot accept it. Whether food given to relieve hunger and promote development is in surplus or not, it still has value for the recipients. It is therefore

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rightly classed as "aid", in just the same way as goods and machinery produced by the industries of the originating country. To prevent donors abusing this arrangement by describing as "aid" money that is really spent to support their own farmers, food aid may be valued only at world market prices. So if the total Community cost comes to, say, £500 million, but the world market price for the same products is only half that, £250 million will be shown in chapter 9 of the Community's budget, which deals with development aid, and the rest in chapter 6, which deals with agriculture.
If the Government and the Community accepted the amendment, the consequence would be the transfer of all expenditure from chapter 9, dealing with aid, to chapter 6, dealing with the CAP, with a resulting fall in the Community's aid performance. We could not agree to such a fall on chapter 9 being made up by other Community aid expenditure, since that would push up the overall cost of the Community budget, which we are trying to restrain. Equally, we could not make up the difference ourselves by other forms of non-Community aid, since that would increase public expenditure overall.
Finally, to transfer these costs to chapter 6 would mean giving up all the ground that has been won by this Government and their predecessors in getting food aid more firmly established on a developmental basis. Its disposal would be entirely a matter of agricultural surplus management. The whole basis of the regulations that we are now discussing would collapse. The result might be that much more subsidised food was given away—but without any of the safeguards for which we have worked so hard—or that all food aid grants were stopped and the products were sold instead—probably to wealthier countries.
Mr. Nigel Spearing: I am grateful to the right hon. Gentleman for allowing me to intervene, as my question may save time later. In his explanation of the Government's attitude to the amendment the right hon. Gentleman implied that its acceptance would increase the size of the budget, yet it appears that it is a matter of transfer from one chapter to another. Is he telling the House that the cost of cereal and dairy food aids do not at present come out of the agricultural budget?
Mr. Marten: I said earlier, when I quoted a notional figure of £500 million, that the world price comes under the development budget and the difference between the world price and the export price is on the CAP.
Accordingly, I commend the documents to the House, and the Government's position on them.
10.19 pm
Mr. Frank McElhone: The debate brings into question once again not only the food aid management policy, but the aid and development policies of the Community. Although the Government's motion is more than the usual anodyne motion tabled on such occasions, nevertheless, consistent with his former track record on the Common Market, the Minister will no doubt privately agree, and possibly some day publicly tell us, that the motion is far from radical in its meaning.
I congratulate the Minister on his appointment to the Privy Council. Our difficulty is that, however much we disagree with him, we all like him personally. The right hon. Gentleman and the people of this country know that
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the Government and the Prime Minister are unwilling, if not unable, to achieve the necessary fundamental reforms of the structure of the EEC to do something, as I have urged time and again, about the rampant self-interest of the French.
My right hon. and hon. Friends and I welcome the great election victories of President Mitterrand and the French Socialist Party, but our Prime Minister and Government should have been trying to change the portfolio of the Commissioner for Development. I see the Minister nodding. The French have held that portfolio almost since the Treaty of Rome was signed. No one doubted the efficiency and ability of Claude Cheysson, but he is now the French Minister for External Affairs and we have in his place a former French Minister of Agriculture. The Opposition and some Conservative Members who have expressed concern about the rampant self-interest of the French must have cause for further concern.
If we are to have a realistic food aid programme, we must also have an efficient European development fund, and the Community aid programmes must be just and fair. Former French colonies seem to get an advantage over many British interests, despite the objections of our Government.
Those in the aid world have expressed continuing concern in many meetings with us. We all believe that too often the food aid programmes are merely a ploy for the dumping of CAP surpluses. I have no doubt that that is the main reason why my colleagues tabled their amendment. They are afraid that the abuse will be perpetrated further unless there is some guarantee about money. I am not sure whether the Minister's explanation will satisfy them.
Mr. David Myles: I am trying to understand how the hon. Gentleman can suggest that we give food aid when we do not have the wherewithal—surpluses—to give it.
Mr. McElhone: The Minister said that he hopes that much food aid will come from other developing countries.
There are grave doubts about the honesty of some of our European partners, and it is believed that support for food aid programmes is a ploy to get rid of the surpluses of the CAP. That is the view that I have arrived at after talking to many people who are much more knowledgeable than I about the Community.
The two main elements of the Community's food aid programme are a regular food aid programme and an ad hoc programme for disaster relief. I accept the second element. No one could object to food aid devoted to disaster relief, but I have grave doubts and reservations about the first element. I have made the point about surpluses. For any country that needs food aid on a regular basis, the priorities must be a programme of agricultural production, a programme of rural development, a programme of technical training and urgent programmes of water and irrigation schemes. It would not have been out of order, perhaps, for the Minister to have alluded to some of those matters.
Mrs. Peggy Fenner: I find the hon. Gentleman's condemnation of the French leaders of the aid programme rather astonishing. He congratulated Mitterrand, whose special friend, Claude Cheysson, was the Commissioner in charge of overseas aid in the European Community for some years. I am sorry that the

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hon. Gentleman holds such a low opinion of Claude Cheysson. Mitterrand does not. He has appointed him Foreign Minister.
Mr. McElhone: The hon. Lady has missed the point. I talked about rampant French self-interest. I make no apology for having made that point several times in the House. Anyone who has studied the course of the European development fund will see that from 1975 to 1980 the largest part of the funds went to former French colonies. From memory I can name Niger, Mauretania and Senegal as having received the largest slices of European aid.
We are supposed to be equal partners. I believe that British African interests have suffered badly compared with French interests. It is for the Government and the Ministers who represent us in Europe to back our interests. I recognise that it is not in order to quote the text of debates in the other place, but anyone who reads the debate of 3 June will realise that the noble Lords, including the Chairman of the Select Committee, indicated how the issue of food aid had been badly mishandled. They also made a number of other criticisms, to which I hope I shall be able to allude.
Another major reason for using the priorities that I have outlined is that 70 to 80 per cent. of the population in underdeveloped countries live on the land. It is in these areas that the main development policies are needed, yet anyone who studies the operation of the European development fund will see that a relatively small proportion of its budget goes towards rural development. Members of the Select Committee in the other place complained that Ministers are far from assertive enough in the Councils of the Community when discussing aid policy. The House does not have to take my word for that. The criticisms are well documented and made by those who are supporters of the Government.
The efficiency of EEC aid is also a cause for concern. Six months before the end of the Lomé fund, only 64 per cent. of the total had been committed to projects, and only 27 per cent. had been spent. That was a poor performance compared with any other international aid programme. It is a matter that should be mentioned continually in this type of debate. The second Lomé fund started on 1 January of this year.
On a per capita basis, there will be a reduction of 21 per cent. in the European development fund allocations to under-developed countries. That is very worrying, and hon. Members on both sides of the House should shout about it continually, so that when the Prime Minister and the Foreign Secretary meet other Heads of European Governments they will keep getting across the hunger experienced by so many people because of the lack of an effective European development programme.
Advice has been given by me and others on the Labour Benches with considerable experience of the workings of the European Community. I would go so far as to say that we have on the Labour Benches considerable experts in these matters. The Government lack assertiveness and do not complain to the Community about the treatment of non-associated countries, such as India and Bangladesh. What reason can the Government give for aid going where
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it does under the fund, while very poor countries such as India and Bangladesh are almost left out of the programmes?
This is a short debate, and I do not wish to trespass on the time of other hon. Members who are here to make their contributions. The Opposition are far from happy with the conduct of the food aid programme in the past and have no confidence in future programmes. The conduct of the European development fund is a source of deep concern.
How can the Government be taken seriously when they have announced cut after cut in our own aid programme? Over the next two years we are to make a cut of almost 15 per cent. in real terms. That does not give us much strength of argument, because we are the only Western European nation, I understand, to cut aid in this way. Therefore, we do not have much standing when we make points on issues as important as this.
That is why not only the majority of the British people but the vast majority of the people of the Third world hope and pray that we shall have a Labour Government at the earliest opportunity.
10.32 pm
Mr. Teddy Taylor: I should like to ask my right hon. Friend the Minister three questions arising out of his important speech on this minor motion.
First, will he comment on the point so ably made by the hon. Member for Glasgow, Queen's Park (Mr. McElhone)? Why has food aid so far been limited to certain categories, and what is the reason for the extension? If food aid is designed to help people in under-developed countries, it seems strange that the whole emphasis has been on cereals, dry skimmed milk and butteroil, where there have been the biggest and most uncontrollable surpluses. On what criteria will a decision be made to extend the products covered under the new proposal?
Secondly, will my hon. Friend say something about the percentage of aid that is provided at a price and the percentage that is provided free? There is widespread concern about the devastating effect on the poorest countries of the EEC's irresponsible action in dumping certain products on the world market at knock-down prices. For example, some of the West Indiam countries and Mauritius, with about the lowest per capita income in the world, depend largely on sugar. Some of them have had their economies and their people's living standards devastated by EEC dumping.
My hon. Friend will have noted what has happened to the price of sugar and the damage that that is doing. Can he give us an assurance that none of the activities under this food aid programme will have the same results as those of the EEC in dumping food, as has happened with butter and sugar, at knock-down prices, which are devastating the real economies and the real production of some of the poorest countries in the world?
Mr. Marlow: My hon. Friend answered the question that my hon. Friend the Member for Banff (Mr. Myles) asked by saying that one must have surpluses, or else one cannot produce food aid. It is the surpluses that are depressing the developing countries, and thus depressing their food production. Therefore, the amount of aid that is required is greater than it otherwise would be. The point made by my hon. Friend the Member for Banff was the wrong way round.
Mr. Taylor: My hon. Friend has put the matter very clearly. Although food aid appears to the recipients to be real help to real people with real need, the actual use of the surpluses does more damage to those countries than if there were no aid programme.
I am glad to know that some of the funds that are to be retained by the recipient countries under these proposals will be retained for building up food production in their own countries. That is good, but I fear that the disposition of surpluses, because of EEC policies, is destroying the ability of those countries to build up their own industries and, in particular, their food production. There is no better example than the appalling story of sugar, and, to a lesser degree, what has happened to the wealthier countries, such as Australia and New Zealand, as a result of the dumping of butter at subsidised prices.
The problems of food aid were spotlighted in the report of the House of Lords Select Committee, which contained some devastating conclusions. Does the Minister, in whose judgment on these matters we have every confidence, believe that the problems of food aid are being tackled properly in these new proposals? If so, can we expect that they will take up the slack that is being used to provide the appalling and shameful export of subsidised food to the Soviet Union, which is being used to build, prop up and finance its war machine?
I received the information the other day in a written reply that since the invasion of Afghanistan we have exported no less than 149 million litres of wine to Russia, at an average price of 30p per bottle, which is then sold at about four times the cost. That, of course, will help to finance the Russian war machine. The Minister will have seen the figures of food exports to the Soviet Union, published on 8 December. They show that we broke the record on exports to the Soviet Union in every commodity, except butter, where we exported only 80,000 tonnes.
Can we hope that these proposals will lead to an end to the shameful traffic whereby we provide the Soviet Union with vast quantities of food at knock-down prices, which is then sold at very high prices, thus providing the Soviet Union with vast profits and helping to finance the invasion of Afghanistan? The Minister will know that, far from decreasing, these exports are increasing substantially. For example, in 1980—since the invasion of Afghanistan—we have exported 576,000 tonnes of wheat, 217,000 tonnes of barley, and 342,000 of flour. Vast amounts of food are going to prop up a regime that is causing immense problems for the under-developed countries and obliging them to spend far too much money on weaponry and defence.
We should welcome this proposal if, by sorting out the problems arising from food aid, we could reduce—if not put an end to—the sale of surplus food to the Soviet Union at one-third of the price that pensioners in Britain have to pay for it.
10.39 pm
Mr. Nigel Spearing: I beg to move, at the end of the Question, to add
"but considers that aid expenditure on all items of food which are in surplus with in the European Economic Community should be a charge on the costs of the Common Agricultural Policy and not charged against aid funds".
Everybody in the House, whatever his view about the EEC and the way which its deals with its surpluses, is agreed that the food aid programmes to deal with
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emergencies are good and proper programmes. The only question is whether we supply foods other than those in surplus. The Minister mentioned certain food aids. I hope that when emergencies occur it is the policy of the EEC—I know that it is the policy of the British Government—to supply emergency food aid that is best suited to the nature of the population and the disaster that has taken place. The figures and details that we have seen to date make me doubt whether, in emergencies significant quantities of food are supplied other than those in surplus.
There is a question about longer-term matters. We are right to divide the problems into the calculation of cost, the organisation of distribution, the efficiency with which that is carried out and, possibly, the political implications of the supply of the programmes. I want to deal with the question of cost. It is not simply how much is carried by the CAP—the Minister said that that is the cost of export restitution—but the cost that must be carried by what is notionally the aid budget. The Minister said that the cost in terms of the equivalent world price is charged to the aid budget. It has been made clear in various reports, including that of the House of Lords Select Committee, that, while food aid purchased in the EEC at world prices might be a reasonable calculation, there is some doubt whether the food could be sold at that price. In other words, is not that an overpricing to the aid budget?
The EEC audit board, in its most recent report in the official journal, C342 of 31 December 1980, obligingly set out a table showing the relative expenditure. The expenditure for 1979 is summarised at 351 million EUAs for appropriations for export refunds and 287 million EUAs for appropriations for food aid, giving a total of 638 million EUAs. There is not much difference between the amount charged to aid and that charged to the CAP. The Minister said that where food is in surplus only the export restitutions are charged to the CAP, but the table shows little expenditure on food aid that is not in surplus. Other products shown under the heading "token entry, miscellaneous" total 0·59 million EUAs, against a total expenditure of 287 million EUAs for the items in surplus. Unless the Minister claims to the contrary, it appears that there is virtually no food aid other than foods conveniently in surplus.
The motion has some merit. My hon. Friend the Member for Glasgow, Queen's Park (Mr. McElhone) referred to the passage
"encourage greater reinforcement by the Community's Food Aid programmes of efforts by developing country recipients to improve their own food and agriculture production."
That has been a well-worn theme in many places. I wonder whether the Government motion is worded correctly, because it refers to
"greater reinforcement by the Community's Food Aid programmes".
Perhaps the Minister can tell us where in the food aid programme there is any capital allocation for rural development to enable the countries concerned to increase their own food and agricultural production. I doubt whether there is. I believe that the Minister will say that such programmes come either under the Lomé convention in specific aids or in the European development fund, which is another fund not under food aid, administered in a separate way.
I draw the attention of the House to the fact that the criterion for investment in the European development fund is not by any means the food needs of the countries

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concerned. We have been told in various ways that the criterion of investment in the European development fund is largely a matter of advice from the European Investment Bank. The criterion of that bank is to provide the highest capital return in the country concerned on a completely commercial basis.
If that is so—I do not believe that the Minister can deny it—I suggest to him that the food production with which we are concerned will not necessarily give the highest rate of return in those developing countries. It may give some rate of return, or a good rate return, but I understand that the EIB wants more than that. It wants the maximum rate of commercial return available. If that is so, it appears that there is no means whereby the objectives of the Government's motion can be achieved, because the money cannot come out of the food aid programme, as the money is not for that purpose. That is not always possible under the EDF. It might be in certain circumstances, but perhaps it is not encouraged as much as it might be.
An important report was made by another place on the development aid policy of the EEC. That is the twenty-first report of this Session, House of Lords 146. Three of four pages are devoted to food aid, all of which become worse and worse as one goes on. I shall quote a paragraph, which succinctly says:
"The evidence suggested that for many countries the administration of EEC food aid, whether for development or for emergency relief, is erratic and haphazard, and that there is inadequate evaluation of the effects of the programme. The Committee heard an example of emergency skimmed milk powder, requested to mitigate the effects of a cyclone, which arrived one and a half years after the emergency. Such occurrences can be attributed to some of the major shortcomings of the food aid administration, which may be summarised as: a very small albeit enterprising staff (only nineteen in Directorate-General VIII); almost no overseas Delegations outside the ACP countries to supervise its implementation; insufficient collaboration with the overseas posts of the Member States or with other multilateral agencies; laborious tendering and procurement procedures (see Annex V); an underlying policy objective of responding to requests from as large a number of countries as possible; and the constraints of annual budgeting."
Mr. Keith Best: For the sake of completeness, will the hon. Gentleman also look at page 45 of the report, in paragraph 9, under the heading "Food aid"? It says:
"The Community's food aid programme suffers from inefficiencies in planning, administration and delivery. The suitability for developing countries of some of the programmes (notable dairy foods) is questionable. A management regulation is necessary to encourage multi-annual planning and less haphazard execution and delivery. The United Kingdom Government should press the Council of Ministers to adopt the Commissions' draft management regulation."
Does the hon. Member subscribe to that?
Mr. Spearing: I confess that I have not looked at the paragraph, but it sounds constructive, and an improvement. I do not suggest that the regulation is not an advance, but there is still a long way to go. There is a great deal lacking in the provision of food aid beyond those items in surplus. The Minister has yet to respond to the question.
I referred to the Court of Auditors' report. It, too, contains severe criticisms of what has been happening. Paragraph 9.4 states:
"As a result of criticism of the food aid operations in the past few years, the European Parliament on 18 April 1979 invited the Court of Auditors to prepare a special report on the subject.
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This report, which has now been submitted to the European Parliament, gives a critical account of Community food aid from its inception until 1979, through the various stages of implementation. The present annual report will therefore concentrate upon the utilization of appropriations in 1979 and the findings made, on the basis of records and on-the-spot visits, in respect of the implementation of the 1979 food aid programme.
In general, the management of food aid showed no notable improvement, not the least because the draft regulation to modify the policy and management of this aid, submitted by the Commission in January 1979, is still before the Council."
The regulation is an improvement, and we welcome such improvements, but I hope that the Minister and the Council will consider the other shortcomings mentioned by the Court of Auditors. On page 146 the report states:
"a large part of Community aid is still shipped on vessels which are not registered either in a Member State of the Community or in the State receiving the aid. Nor is the condition of the vessels used subject to any check; a part of the food aid intended for free distribution had to be sold by a recipient country which was unable to marshal the resources needed for free distribution."
The Minister suggests that the amendment would reduce the amount of food aid available, as it would alter the chapter headings. It may reduce the amount notionally credited to aid, but the figures that I quoted earlier should not be credited to aid. If the food was not distributed in aid, it would, in any case, come under export restitution. From what we gather, virtually all the food aid given is in surplus commodities, so it should properly be charged to the CAP. I do not, therefore, believe that my hon. Friends should withdraw the amendment, although I see why, practically, the Government resist it. I believe that we shall have to resolve the matter by having inserted an "Amendment negatived" in the Official Report, as my hon. Friends wish to register their profound concern over moneys ostensibly for one purpose being used for another.
10.59 pm
Mr. Stephen Dorrell: There seems to be a remarkable degree of unanimity in the House tonight that the food aid programme as developed by the European Community over the past 20 years has been wholly unsatisfactory from the point of view of the developing countries and of anyone interested in aid and development. I suspect that that is common ground among the hon. Member for Newham, South (Mr. Spearing), my hon. Friend the Member for Southend, East (Mr. Taylor) and myself.
I wonder, however, whether many of those who have spoken so far have read in detail what the Commission proposes to do to change the basis on which food aid has been given. I welcome very much what I concede at the outset is a small but important step down the long road towards improvement in the quality of the food aid given by the European Community. I think that the hon. Member for Glasgow, Queen's Park (Mr. McElhone) perhaps underestimated the importance of the right hon. Member for Lanark (Dame Judith Hart), as a Minister, seeking to push the Community down that road and recognising that food aid is a matter not of disposing of agricultural surpluses, but of undertaking something that is relevant in the context of the developing world.
Mr. McElhone: Just for the record, I have more than once paid tribute to my right hon. Friend the Member for Lanark (Dame Judith Hart) for her sterling work, particularly in the Community, and I had hoped that that would be understood by the hon. Gentleman.
Mr. Dorrell: My point was that the right hon. Lady had a perceptible impact in persuading the European Community of the error of its ways. The reports before us tonight are evidence that the Community is beginning to respond to the pressure that British Governments of both parties have been keen to exert upon it.
The Commission's report makes two important points. First, it states that any assistance in the form of food aid must be relevant to the conditions of the recipient in the developing world. Secondly, it uses the dreadful word "multiannual" which I have never seen other than in a European Community document. I assume that that relates to long-term planning, which the Commission has recently been allowed to adopt by the Council of Ministers, and which I very much welcome.
I welcome also the fact that the Commission is now seeking powers to build up stocks of food aid as a kind of buffer against the unforeseen. It is worth reminding those who have stressed the importance of building up stocks to deal with emergency short-term food deficits of the fact that in a country such as Bangladesh such deficits appear almost annually and are not in any real sense emergencies, but are part of regular contingency planning which regularly comes into use.
Mr. Best: Does my hon. Friend agree that the multiannual aspect of this is a welcome but belated acknowledgement of the statement on page 102 of the Brandt report that
"Continuity of food aid, as with any other type of aid, is critical"
and that that is exactly what we should seek to achieve?
Mr. Dorrell: Certainly it is a response to what the Brandt report asked for, and also something that British Governments of both parties have pressed for over a long period. I therefore cannot understand why Labour Members do not welcome that development as wholly positive.
Certain points should also be drawn from later parts of the document. I welcome the Commission's statement that food aid should not be given except in the context of what it calls a "national food strategy". It is recognised on both sides that an emergency response to a food surplus in Europe is not a sufficient basis for giving food aid. It must be part of a national food strategy.
To take up another point made by the hon. Member for Queen's Park, the Community has been giving food aid in the context of a national food strategy to the Indians under the flood scheme and has also indicated a willingness to do so to the Bangladeshis. Bangladesh is mentioned in a footnote as being one of the countries that have adopted a national food strategy. That is one of the safeguards included in the document as a criterion to judge whether a particular food aid project should be recognised by the European Community.
The Commission also says that the Community is keen that food aid should be given by it as part of an integrated development programme at the European end, so that not only must there be a national food programme in the developing country, but there must be an integrated development programme as part of the guidelines for the giving of food aid from the donor country end. Those are precisely the kinds of safeguards that we should look for in the giving of food aid.
I should like briefly to mention some of my concerns about food aid as a way of assisting developing countries,
828
because I share the unease that has been expressed on each side of the House about the consequences of dumping food at concessionary prices and undermining the profitability of agriculture within the developing world. That seems to me to be doing a great disservice to the developing countries, and perhaps salving our consciences at their expense.
There are three methods that are highlighted within the document as being the main methods of giving food aid. The first two methods are counterpart funds, that is to say, giving aid to a developing country's Government which they then sell on to their own country, or, alternatively, paying for work or people hired within the developing country in terms fo the food that they eat. Both methods are dangerous, not only because of the impact they have on agriculture within that developing country, but because of the impact on agriculture within the other supplying developing countries. We have to look not only at the local agriculture, but at the whole supplier-customer relationship within the developing world.
There is a third method which, superficially, might seem to be more attractive. The hon. Member for Waltham Forest (Mr. Deakins) and I recently visited a project in India. It was made clear to us that it was an unattractive way of giving aid. It is what the Commission calls direct action—seeking to take out a section of the community and saying that those people would specially benefit from extra nutrition. Perhaps there can be no better class of persons that might be held to benefit in that way than the mother and the new-born child.
It was as members of the population group that the hon. Member and I went to a project in India where food aid had been given to mothers and new-born children to try to improve the nutritional standard of the new family. It was established that it did not work, for the apparently very simple reason the the mother took the food aid to the market and sold it. It was the most inefficient possible way of giving aid to the people who in the end really needed it. Large sums of money were spent. Someone was paid to monitor the results, and they were shown to be unsuccessful. I hope that the Commission will take note of that kind of experience in assessing future food aid programmes.
All this is simply an illustration of what must now be a very well-worn truth—that the best way of improving someone's standard of living is to give him cash and not to seek to pay him in kind. Whether the recipient is a developing country or an individual, it leaves the opportunity to the recipient to buy the things felt to be of most value.
Mr. Myles: rose—
Mr. Dorrell: I hope that my hon. Friend will forgive me if I do not give way. I have already given way twice, and I know that other hon. Members wish to speak.
If cash is what is important, surely the best kind of food aid is what the Commission calls the triangular deal—a system by which the Commission buys food from a developing country on behalf of other developing countries that need it. That is the kind of assistance that gives real help to people in real need and boosts the development potential of the countries that we are seeking to boost.
Mr. Deputy Speaker (Mr. Ernest Armstrong): There are 26 minutes left for debate, so I hope that those hon. Members who are called will be particularly brief.
11.5 pm
Mr. Eric Deakins: I endorse the argument of my hon. Friend the Member for Newham, South (Mr. Spearing) on the Community's financing of food aid. I shall address myself to the narrow budgetary context of food aid in the Community scheme of finance.
There was a proposal in 1978 and 1979, when the regulations were in gestation, that food aid should be treated more properly as the receptacle for the money that was spent to help developing countries by the disposal of surpluses in the EEC. It seems that that proposal has survived, because the Minister said that as long as we remain a member of the EEC we should switch the emphasis from the disposal of surpluses as part of the CAP to food aid as part of the development budget. In one sense no one could quarrel with that view of how the Community should develop.
Although steps were being taken in 1978 and 1979 to change the budgetary arrangements, according to the Minister's updated explanatory memorandum of 5 June, which is No. 4313–79,
"the earlier proposals for changing budgetary presentation on food aid have been dropped."
It is not clear why they have been dropped, but on the whole I welcome the fact that it has happened. Had the original proposals gone forward there would have been a transfer from the CAP title of the budget to the food aid title. As my hon. Friend the Member for Newham, South said, that would have presented a distorted view to the rest of the world, including the citizens of the EEC, of the actual costs of financing food aid. It would also have taken moneys away from the cost of the CAP and credited them to food aid. That would have meant that the aid and development budget of the Community would have been that much larger and the CAP would have been that much smaller. From a public relations point of view the Community would have killed two birds with one stone. It would have reduced the ostensible cost of the CAP and increased the development budget, which no one in his right mind would want to oppose. What a wonderful example of sleight of hand that would have been. I am glad that it is not taking place. To prevent that happening was one of the purposes of the addendum that was tabled by my right hon. and hon. Friends and myself.
It is clear that 99·9 per cent. of the Community's food aid consists of surplus products and that there would be a cost even if it did not leave the EEC as food aid. I shall not comment on the suitability of the products as food aid. Cereals are obviously very good. Butter is less good, but butteroil and perhaps butterfat can be of assistance from time to time in emergencies. However, if we ever get the CAP in order—I doubt whether that is possible, but that is the aim of Government policy as long as we remain in the Community—we shall have a policy that means that few surpluses are produced. On that basis the Community's food aid programme will decline substantially. That may be said to be a hypothetical issue, but it is the objective of Government policy to get the CAP in order.
If the Government succeed in that objective of reforming the CAP and preventing any further surpluses arising, it will have an impact on the Community's food
830
aid. The Community will have to dig into its budgetary pocket under the development aid heading and start buying food on the world markets at cheaper prices to finance its development budget. That may be no bad thing, but it will increase the net cost to the Community quite substantially.
Although the Minister and the explanatory memorandum have set some of our minds at rest, there are some warnings to be heeded for the future. In spite of the rigmarole that we have heard about the Community moving in a new direction, it still regards food aid as the disposal of surplus products. If those products disappear, which I very much doubt, the food aid will disappear.
11.10 pm
Mr. David Myles: I shall try to be brief, but the House should congratulate my right hon. Friend on becoming a Privy Councillor. Perhaps that will make him more assertive, as the hon. Member for Glasgow, Queen's Park (Mr. McElhone) suggested.
The greatest advocate that the world's hungry have ever had lived near to my home, in the shape of Lord Boyd Orr of Brechin Mearns. Lord Boyd On said that the hungry are crying out for bread and we give them pamphlets. I hope that we are not giving them documents. Lord Boyd Orr also protested that he had no difficulty in persuading farmers of the virtues of nutrition, because they could prove with their stocks that it paid dividends, but he could not convince anyone that the same was true of children. He could have added that when animals are suffering from malnutrition they cease to conceive. Unfortunately, the same is not true of humans.
Lord Boyd Orr was a critic of the marketing boards, as they were organising shortages—a criticism that may be levelled at the Potato Marketing Board but could not be levelled at the Milk Marketing Board, or at the CAP. He saw the danger to that organisation of the shortages that seem to be such a popular concept in the debate.
It is to the great credit of the National Farmers Union that it has never advocated scarcity, although there is no doubt that if those surpluses in Western Europe had never been produced the farming industry would have been much better off.
I welcome the Community documents as being sensible in pointing the way to coping with two Community problems. First, they demonstrate the value of the CAP, lest we should throw the baby out with the bath water before we have conceived a better alternative. Secondly, they suggest ways of partially implementating the recommendations in the Brandt report.
Mr. Marlow: Will my hon. Friend give way?
Mr. Myles: No. My hon. Friend has been bobbing up and down like a jack-in-the-box all night.
Having regard to the Treaty establishing the European Economic Community, articles 43, 209 and 235 thereof and the opinion of the Court of Auditors, it is right that we should recognise that food aid should be made a real instrument of the Community's policy of co-operation with developing countries. Food aid appropriations should be presented in the budget consistent with the nature of the operation's finance and should meet the need for greater budgetary transparency and better management of that aid. It should be recognised especially by those who continually complain about the cost of the CAP, that about

831
36 per cent. of export restitutions on food products goes to Third world countries, and amounts to almost 50 per cent. of the CAP budget.
The intervention stores are valuable to cope with the necessity underlined in the documents for a ready supply of food to meet sudden emergencies. The main items needed are those in surplus—that is, cereals, dried skimmed milk powder and butteroil. To those I add sugar. Surely there is nothing immoral in keeping a reserve of that high-calorie product when it can help the sugar cane producing countries and our sugar beet producers, and calorie deficiency is the greatest immediate problem.
As has been said already, we must be careful that we do not inhibit the incentive to produce food in recipient countries. It cannot be morally justifiable for us or the Community to use that as an instrument to make those countries more dependent on us and, therefore, beholden to our political point of view, but we should recognise that that could be a valuable spin-off.
11.15 pm
Mr. Frank Hooley: In discussing food aid it is appropriate to consider the world food situation. Last year wheat stocks fell for the second consecutive year, and global reserves of wheat are half what they were two years ago. The consequence will be a rise in prices on world markets, which will be serious for Third world countries, which buy 50 per cent. of the 90 million tonnes of wheat traded in world markets. African countries alone spend £2 billion a year on wheat and import 13 million tonnes a year.
The World Bank has predicted that the Third world deficit may be 77 million tonnes by 1985, and the International Food Policy Research Institute has put the deficit at 100 million tonnes or higher. It has been calculated that the number of undernourished people in the world could double to 1,000 million within the next decade.
I welcome the fact that the Minister has said that the objective of the food aid management scheme is to move away from the disposal of surpluses to development policies for food. He said that it is designed to help developing countries with balance of payments problems and to see that they build up sensible stocks for food security programmes. Those are admirable aims, but there are other means of achieving them that are far better in terms of expenditure of money and effort than the Community's scheme, which is basically a means of disposing of 3urplus production.
My hon. Friend the Member for Glasgow, Queen's Park (Mr. McElhone) was right when he said that if the surplus declined because of the reform of the CAP, which does not look likely, the food aid would disappear. We are talking about making the food surpluses look respectable by giving them a purpose that can be passed off to the world as respectable.
A more sensible and constructive policy was outlined by the Minister in a speech to the World Food Council last month. He said:
"In these last days, the Interim Committee of the IMF has agreed important new changes to its Compensatory Financing Facility. These will provide much-needed help to those countries whose own harvests fail unexpectedly, or who find that world prices have suddenly risen, putting normal imports beyond their grasp…this help will involve only light conditionality."
832
That is a far more constructive line of policy, which I hope that the EEC will support, than simply dumping food surpluses.
The right hon. Gentleman went on to say that
"we want to see food aid used much more effectively. Apart from relief and emergency assistance, food aid is still searching for a specially effective role in development."
The documents seem to suggest that it has already found such a role.
The Minister added:
"Many in Britain—including Parliamentary Committees—are questioning the usefulness of providing such help, either as short-term payments support, or in traditional project form. Such aid must more directly reinforce the whole agricultural and food production policies of its recipients."
I see no evidence in the documents that the EEC policy of food aid will achieve that.
I refer next to the sixth point made by the Minister in that speech. The right hon. Gentleman, talking about the International Fund for Agricultural Development, said:
"We also hope all countries will now confirm the pledges they have already made towards the equitable replenishment of the International Fund for Agricultural Development, so that it continues its lending."
A compensatory financing fund from the IMF, an examination of whether food aid is relevant to development at all, and the strengthening and enhancing of the resources of the IFAD amount to a coherent and constructive policy. I am glad that the Minister has put forward such a sensible policy and has supported it at the World Food Council. However, these regulations on food aid management are, at bottom, another way of covering up the appalling deficiencies of the common agricultural policy, and I believe that the amendment in the name of my hon. Friend the Member for Newham, South (Mr. Spearing) is justified.
11.21 pm
Mr. Keith Best: I must be brief, as my right hon. Friend wishes to have five minutes in which to reply to the debate. In the time available one cannot articulate all the matters raised in the documents. Like most hon. Members who have spoken, I welcome what I believe to be a fundamental reappraisal of the EEC's food aid policy. It is a reappraisal that moves in the right direction. Even those of us labelled Euro-fanatics by hon. Members—including some of my hon. Friends who do not necessarily believe the arguments that we put—would not pretend that what we are discussing is the right answer. It is not. It is, however, a move in the right direction.
My hon. Friend the Member for Loughborough (Mr. Dorrell) referred to the multiannual aspect. That is what Brandt was arguing. It is what we should be seeking in developing continuity of aid. One of the most damaging aspects of aid in the past has been its ad hoc nature. Developing countries have not been able to rely on the degree of continuity that is necessary. I wish to restrict my remarks to considering whether the concept of aid is better achieved through the agency of the EEC or through bilateral agreements. At present, 72 per cent. of this nation's aid is handled through bilateral agreements, while only 12 per cent.—equivalent to £107 million—goes towards EEC side.
Much can be argued in favour of directing aid through the EEC. Two aspects were raised in the debate in the other place on 3 June. There is less of a colonial aspect to aid if it is developed on a Community basis rather than on a national basis. There is also more chance of a degree of

833
continuity if aid is directed through the EEC, with all nations agreeing, rather than if it is provided by national Governments on an ad hoc basis, under which the emphasis on food aid can change from year to year, depending upon the vagaries of a nation's own economic situation.
I congratulate my right hon. Friend on his elevation. I hope that he will endeavour to persuade the Government to direct more of the food aid programme through the EEC rather than to purchase bilateral agreements. Such agreements can be extremely dangerous, for the reasons that I have mentioned. If we can achieve a degree of consensus throughout the EEC for providing a continuity of aid to developing countries it will assist the countries concerned. They will know that it is the European Community that is assisting them, rather than nation States for their own private ends.
11.24 pm
Mr. Christopher Brocklebank-Fowler: First, I add the congratulations of the Social Democrats to those that have been offered to the Minister. I am sorry that his elevation has coincided with the spending of the lowest proportion of the GNP on development assistance for 10 years. I congratulate him warmly, nevertheless.
I share the widespread concern and reserve about the usefulness of food aid to development. I do not want to rehearse the arguments too widely: I simply agree with the major points made by the hon. Member for Loughborough (Mr. Dorrell)—[Interruption] The hon. Member for Plymouth, Sutton (Mr. Clark) does not need food aid. He has been out of the Chamber for an hour and 18 minutes. He could do the House the courtesy of being quiet when he returns.
I agree with the hon. Member for Loughborough. The Government's proposal, set out in the explanatory memorandum, does not convince me at all. Much of the food that goes to developing countries undermines their efforts to become self-sufficient in food production.
I am particularly sceptical of the proposal that the ranges of Community food aid products should be extended as proposed. I am nervous about the suggestion that sugar and oil should be added to the list of food aid commodities, because they will be derived from surpluses in Europe. Although I welcome the Minister's assurance that funds should be made available to buy those products from Third world sources, he must carefully watch the French efforts to increase their sugar acreage and dispose of their surpluses in food aid, while making no contributiion to the development of agriculture or the improvement of the standard of living in many of the poorest developing countries.
11.27 pm
Mr. Neil Marten: I take the last point of the hon. Member for Norfolk, North-West (Mr. Brocklebank-Fowler), but, as time is very short, I will not follow him further.
This has been, as the usual saying goes, a wide-ranging debate—rather too wide, in fact, in that many of the points raised, interesting though they are, are not relevant to these documents.
834
For me it is a nostalgic occasion to be in the "hot seat" and not on the Back Benches in a debate on Community documents, but I shall obviously have to reply to many of the points in due course.
One general point that has been raised is that emphasis on agricultural development is one of the main objectives of our aid programme, so that the developing countries can feed themselves as soon as possible. Also, much depends on the developing country itself—for example, in fixing a "right price" for the farmers.
As I have said before in the House, if one's price is sufficiently high, farmers—given the sun of Africa, and so on, and provided there is water—will produce. The high prices in the Common Market, after all, have produced the great surpluses of which many hon. Members have spoken. I have often said to the leaders of the developing countries that if they raised their farm prices they would get much more food production and could then help themselves much more than they do.
Mr. Marlow: rose—
Mr. Marten: In an intervention, my hon. Friend the Member for Northampton, North (Mr. Marlow) asked about conciliation. I gave him an answer that was partly correct but not completely so. The form is this: if the Assembly and the Council cannot agree within a period of conciliation—usually three months—the regulation will take direct effect as originally adopted. However, the aim of conciliation is precisely to see whether differing views can be met.
The hon. Member for Glasgow, Queen's Park (Mr. McElhone) complained that the EDF gives too much to ex-French colonies. The division of the EDF by the Commission was not due to some French plot. To allay disquiet among the 19 Yaoundé associates, including Mauritius, about the position of their special relationship—
It being half-past Eleven o'clock, MR. DEPUTY SPEAKER put the Questions necessary for the disposal of the proceedings, pursuant to Standing Order No. 3 (Exempted Business).
Question, That the amendment be made, put accordingly and negatived.
Main Question put and agreed to.
Resolved,
That this House takes note of European Community Documents Nos. 4318/79 (amended Commission proposal for a Regulation on Food Aid Management) and 9175/80 (draft Resolution on the use of Community food aid and draft Regulation laying down general rules for the supply of products other than cereals, skimmed milk powder or butteroil to certain developing countries and specialised bodies) and of the updated explanatory memoranda of 5 June; and endorses the Government's intention to work for the early adoption of a Regulation on Food Aid Management, on the lines set out in the explanatory memoranda, and urgently to encourage greater reinforcement by the Community's Food Aid programmes of efforts by developing country recipients to improve their own food and agriculture production.
Mr. Deputy Speaker: I am grateful for the self-restraint shown by so many right hon. and hon. Members in a short debate.

STATUTORY INSTRUMENTS, &c.,
Motion made, and Question put forthwith pursuant to Standing Order No. 73A (Standing Committee on Statutory Instruments, &c.)

TERMS AND CONDITIONS OF EMPLOYMENT
That the draft Job Release Act 1977 (Continuation) Order 1981, which was laid before this House on 12 May, be approved.—[Mr. Wakeham.]
Question agreed to.

Japanese Imports
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Wakeham.]
11.30 pm
Mr. Anthony Beaumont-Dark: I am grateful for the opportunity to have this debate and I make no apology for raising at this late hour the problem of Japanese import penetration of this country. Indeed, the fact that the hour is late may be opportune, because many people in British industry feel that the problem that faces our industry from Japanese imports is itself late of solution.
This country has, as I recognise, built itself upon a free-trade concept, and it would be anathema to me and to many other people if we went in for wholesale protectionism, but there comes a time, with certain situations, when to take action is common sense, particularly when one has struggled year after year to come to a solution, as one has with the Japanese, but to almost no avail.
The United Kingdom's trade deficit with Japan has grown from £278 million in 1975 to £1,100 million in 1980, and for 1981, if the figures turn out as they look to be now, it is likely to be £1,400 million. The deficit of the EEC as a whole with Japan is likely to be well in excess of £5,000 million. Over the same period, the import-export ratio has declined from 51 to 38 per cent. This situation shows no semblance of stability or change, and 58 per cent. of Japanese imports are in three product areas—vehicles, consumer electronics and electronic engineering.
I do not always agree with the CBI, but I agree when it says:
"With 2·5 million unemployed, Britain's biggest worry is the danger of losing more jobs. The immediate threat to employment in manufacturing industry is serious enough, but the longer-term threat is to the very survival of some essential parts of our industrial base."
I realise that the Government are talking, have talked long and hard, and have had some success in trying to limit the damage that Japanese imports are doing, particularly to our car industry, but still, after all this talk, the deficit grows. It has risen 500 per cent. in six years.
We have had five years of, on the whole, futile talks and mainly empty promises; talks which finally broke down when hopes of an amicable settlement between the EEC and Japan were dashed. The time is surely opportune to take action. The Japanese Prime Minister is in Europe this very day. He does not want to talk about trade, and I do not blame him. The Foreign Ministers meet on 22 June, the Prime Ministers meet in Luxembourg on 29 June, and a Western economic summit is to be held in Ottawa in July.
The people who wish to see action taken cannot be accused of being backwoodsmen, which is the accusation always made by the critics of any kind of import control. Sir Terence Beckett, who helped to build Ford into a great indigenous motor manufacturing company, cannot be called a backwoodsman. Tube Investments, Guest Keen and Nettlefolds and Lucas Industries are not backwoodsmen. They are all companies that see the danger and the need for action.
After five years of gentle persuasion, which has led almost nowhere, we should tell the Japanese, who respect strength and little else, that the time has come for them to

837
brace themselves for direct action. They will talk and they will bow, and still carry on inexorably taking over—as Beckett put it with laser-beam clarity—the industrial prosperity of the Western world. If they will not act and do it nicely, we should do it by direct action.
We should challenge the Japanese policy through the GATT as well, under articles VIII, X and XXIII, all of which clearly cover the problems that we face with Japan. We should do it if we can jointly with the EEC. If we cannot, we should do it on our own. We should with vigour and bluntness press Japan for the elimination of tariff and non-tariff barriers.
We should push the Japanese Government into taking a real interest in seeing that they purchase more foreign goods for public sector industries, about which they can do something. It is easy for the Japanese to wring their hands, saying that they can do nothing, while their industrialists attempt to wring our industries' necks. We should tell them that if they will not agree to open their home markets—and they are not open—we shall set quotas so that a balance comes about.
The Japanese must be told that the continuing imbalance, which is bringing us to a £1,400 million deficit, cannot continue and will not be allowed to. If we go on year after year talking, the Japanese will be content and happy that we should do so, and still the deficit will grow.
There is one thing that we can do. We should immediately ban exclusive franchises, which the Japanese exploit to the point of scandal. This would at least do something to help our hard-pressed components industry in the Midlands.
Of course, the restraint of trade is not to this country's overall benefit. I am sure that my hon. Friend will tell me that we export twice as much as the Japanese, or will make similar statements. Of course, "Rab" Butler was right when he said years ago that this country had to export or die, and that is as true today as it was then.
I do not suggest that we should intervene where we have real free trade markets and genuine trade. All trade needs real freedom and a real balance to flourish. With the Japanese, it is neither real freedom nor a real balance. The Japanese have various conditions that are peculiar to their market, and it is not just I who says that.
An organisation in Europe, the Orgalime, rightly quotes many restrictions that exist in the Japanese market: whether it is their distribution network, which is linked to producers, where nearly 90 per cent. of the electronics goods markets tends to make it a captive market; whether it is the standardisation of Japanese products, which leads to economies of scale unrivalled in Europe; whether it is technical regulations, such as the Japanese electrical appliance law, which constitute barriers to standardisation and certification and which bolster the protection of the market almost to a cartel; whether it is the structure of Japanese groups and the links that they have, where they can virtually control and often select their own imports; whether it is in investment, where it is virtually impossible for countries to take over investments, but they can take over others; whether it is the liaison and the administration that exists between firms and their trade associations; whether it is the cartel links or monopoly situations that exist, which under our regulations in Europe and the United Kingdom would be a cartel; whether it is the
838
practice of high price public purchasing, which enables firms to increase their export competivity; or whether it is—as so often happens—that the Japanese, when it suits them, can say "You are free to compete", but where no freedom exists.
Sir Terence Beckett talked of the single laser beam destruction of some of our industries. He is right. What about the motor cycle industry? It is not, as people like to say, just because of bad British workmanship or lame dogs. It is television tubes in the United Kingdom, electronics in the United States, and photography and optics in Germany. Today, the threat is motor cars, lorries and vans. Of course we must become more efficient—and I believe that we are doing so. It is a painful process, particularly to the unemployed, but it is necessary. Every one accepts that.
We must remember that Japan has grown by protection, and is helped now by protection, most of it by subtle means. Unless we do something urgently, we as a Government will preside over the unnecessary and disastrous growth in unemployment in the United Kingdom and Europe which we can avoid if we wish. The Japanese are planning to produce 14 million vehicles by 1985, when they have a home market of only 3 million. Are we to do nothing and stand in the midst of ruins and say "We kept faith with our principles, at the expense of our people's jobs"? I am not prepared to do that.
I deal, finally, with the Nissan deal, which was heralded as a great golden calf. If we are not careful, it will be no such thing. It will be a Trojan horse. The Economist last week wrote:
"The last thing Europe needs today is shadow factories that merely bolt together bits shipped from Japan. That would create only token jobs, and little value and damage local component suppliers."
The Ford Motor Company had the courage to come here and build cars, and it says that up to 50,000 jobs could be lost if Nissan is allowed to set up a assembly plant without the strictest conditions. In my view, those conditions should be 80 per cent. at least by weight, not by value, where they can fiddle things, as they so like to do. We should impose the strictest conditions. As Mr. Troy of Ford—who has done more for Britain than any Japanese—said, if he was in the component industry he would be terrified.
We have it in our power to ensure that that fear is unfounded, but not by taking another five years. British industry and jobs do not have the time. The need is for action this day. If the Government act wisely and with firmness the disaster can be avoided and they will gain many friends. Speaking up for Britain is a traditional Conservative stance. It was never more needed than now if the industry of Britain is to have a chance to recover—and nowhere more so than in my native city of Birmingham. It looks anxiously, and I am sure not in vain, to the Government to act in Britain's interest, as the Japanese have always acted in their interest.
11.45 pm
The Under-Secretary of State for Industry (Mr. John MacGregor): I am grateful to my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) for providing an opportunity to debate this extremely important subject and for enabling me, however briefly, to set out some aspects of the Government's

839
position. As he indicated, the consideration of this subject is very timely with the visit of Prime Minister Suzuki this week.
I know that my hon. Friend has visited and been involved with Japan. I should mention that I was a member of a parliamentary group that visited Japan last October. It gave me the opportunity to open my eyes and see a little for myself at first hand. It also gave me the opportunity, with parliamentary colleagues on both sides of the House, to put direct to members of the Japanese Government and the Keidanren the dangers inherent for them in overplaying their trade hand.
I want to begin with a few general remarks to set the context. First, the anxiety about the Community's and Britain's increasing trade deficit with Japan is well founded. My hon. Friend gave figures. The deficit of the Community as a whole with Japan increased from £1,500 million in 1975 to more than £4,000 million in 1980. There has been a further worsening of 46 per cent. from January to April of this year, compared with the same period last year. In the case of Britain—although my figures are slightly different—the deficit with Japan increased from £390 million in 1975 to £1,100 million in 1980. We must put the matter in perspective and remind ourselves that Britain's balance of payments surplus for the first two months of this year, whatever may happen during the remainder of the period, sets that rather in the shade.
We cannot look—and I am sure that my hon. Friend does not look—for a complete balance of trade with Japan, or with any other country. It is true that the United Kingdom has considerable net surpluses with countries, but the scale of imbalance in recent years is threatening the trading system, and that is not in Japan's interest, or anyone else's.
The other major factor is that the rapid increase in Japanese exports is concentrated on specific sectors of industry and not spread across the board. Japan still exports only some 12 per cent. of its GDP compared with Britain's 29 per cent. That is a salutary reminder to us that in an overall trade protection war we would be the losers. Put in another way, Japanese goods still amount to only 3 per cent. of total British imports.
We need to dispel the myth that Japan is unmatchable as a competitor. Overall, it does not have a dominant position. Moreover, in many sectors Japanese industry has no competitive edge. Indeed, the United Kingdom has a positive trade balance with Japan in a number of areas. In sectors such as the car industry, where Japanese imports are high, Britain imports substantially from other industrial countries also. Those facts set the perspective.
However, those remarks mask the fact that Japanese industry has been especially successful in concentrating on certain industrial sectors. I repeat what my hon. Friend mentioned about the director general of the CBI referring in a speech to Japan's laser beam approach. We have seen it in motor cycles and are now seeing it elsewhere, not least in machine tools and microelectronics, where it is making large investments in research and development in industries that are becoming increasingly important to our economic base. They are the industries of the future.
We must agree that Japan's productive efficiency has made Japanese goods relatively cheap and extremely reliable. That benefits consumers directly and provides a stimulus to our industries. However, experience has shown that if Japanese industry—building up often from an originally protected base itself—is allowed free rein
840
with that total blanket approach, entire sectors of European industry can be put at risk—motor cycles being the most obvious example. I think it only fair to add that Japan's success in these sectors is due largely to its doing, very effectively, things that industry in all countries sets out to do.
I am sure that my hon. Friend will agree—he has already said so—that much of what we have seen in terms of Japanese competition underlines the general need to increase the competitiveness of United Kingdom industry. I know that he accepts that blanket protectionism is self-defeating, apart from the fact that it conflicts with our international obligations and with our strong United Kingdom interests in the maintenance of an open trading system. That is not to say, of course, that action should not be taken in sensitive areas to monitor and restrain imports and, as my hon. Friend will know, current bilateral inter-industry arrangements cover about one-quarter of United Kingdom imports from Japan, most notably in vehicles and television sets.
That brings me directly to the motor industry. My hon. Friend referred to it particularly. The Government share the concern that he voiced. Japanese penetration not only of our cars market but of our market for light commercial vehicles remains high. In view of the recently concluded United States/Japanese agreement on restraint of car exports, the Government recognise the fear that that sensitive sector of the European market may be further penetrated by Japanese products.
It is because we recognise the very real problems that this may cause for our manufacturers, at a time when the market is already depressed, that the Government have given their full support to the EEC's attempts to secure from the Japanese a restraint agreement along the lines of the United States agreement, but we have made it crystal clear that any agreement that the EEC can secure with the Japanese must be at least as effective as the present understanding that exists between the SMMT and JAMA.
Just how effective that understanding has been is frequently overlooked by those who are quick to cast us in the role of an easy target. Since the SMMT and JAMA started talking in 1975, Japanese cars have taken a pretty stable share of the United Kingdom market—between 9 per cent. and 11 per cent., but rising exceptionally in 1980. That was at a time when Japanese penetration of the United States market rose to 20 per cent. The SMMT/JAMA understanding is still in force, and we must look to this to continue its restraining role.
Mr. Tanaka, the Minister for MITI, in Japan, has been told this week that we expect the Japanese to hold their market share of cars in the United Kingdom this year below last year's.
Whatever the outcome of the EEC discussions with Japan on cars, and whatever the outcome of the forthcoming Ottawa summit, we have to face the fact that Japanese competition will not simply go away, not least in third markets. We cannot expect to create a wall behind which we can permanently hide from the facts of economic life.
We must, as a nation, adapt to the challenge posed by Japan—and the Government are greatly encouraged by the way in which the United Kingdom, some would say rather late—is rising to that challenge. British Leyland, in particular, has responded well this year in increasing its market share. It is also to be congratulated on taking the initiative in pursuing collaboration with the Japanese

841
industry rather than joining the ranks of the moaning Minnies. It is through activities like BL's collaboration with Honda on the production of the Triumph Acclaim that we will combine the best of Japanese with the best of British. An excellent, independent car company in my constituency—Lotus Cars—has in the past week completed an agreement with Toyota, which underlines the importance of the exhange of technology.
It is because the Government believe that this is the way forward that we have given a warm welcome to the Nissan company's proposal to produce 200,000 cars in the United Kingdom from 1984. When my right hon. Friend the Minister of State announced our welcome—in principle—to the Nissan company in January of this year, he also announced that the company was proposing to source between 60 per cent. and 80 per cent. of its requirements locally. Since the announcement, the Nissan company has made an extensive feasibility study of the United Kingdom as a location, in the course of which it has made many contacts with United Kingdom companies.
I know that some firms in the components industry are concerned about possible Japanese competition if Nissan locates here. To those and to others who have expressed doubts about the value to the United Kingdom of the Nissan project I say this: the Government are aware of the worries. We believe it right that in our discussions Nissan agreed that it will aim to reach 80 per cent. local content as soon as possible, if it decides to come here. However, it is up to those in the industry to do what we believe they can do—demonstrate to Nissan and to other vehicle assemblers that they are capable of producing a fully competitive product. If that is done we can meet the challenge of Japanese imports.
Had time permitted I should have said more about the machine tool industry—in which I take a particular interest—and Japan. However, I hope that I have said enough to show that the Government fully appreciate the importance, in current circumstances, of existing restraint on imports in sensitive areas. We are determined to put across to Japanese Ministers the fact that existing Japanese trading strategies—in particular, concentration on specific industries— are causing great strain. With our EEC partners, we are looking closely at the results of the EEC call for action on the trade imbalance, which is a matter of legitimate concern to all developed countries and which will be raised at the Ottawa summit as a necessary part of the review of world trade.
I turn now to two other points. The first is the opening of Japan's home market, to which my hon. Friend referred. Of course, we recognise that the impetus for that efficiency and drive in many Japanese industries comes from Japan's internal problems, in particular its heavy reliance on imports for energy and raw materials. We understand the Japanese need to export high added value products to pay for those needs. However, we must rightly ask Japan, in its determined and concentrated drive to solve its problem, not to create impossible problems for other nations through the destruction of vital industries and the creation of heavy unemployment.
Now that Japan is a most successful industrial nation, which has built up its industries again, initially and not
842
least through protective trade barriers, its tariff and non-tariff barriers cannot remain as they are. It must take more active note of the complaint that so often it has an impenetrable domestic market. In short, there must be fair play. That is why it is important that the Japanese should show more determination to open up their market to imports and to remove tariff and non-tariff barriers.
I recognise, too, that there are cultural differences in Japan, and other countries, although not in Britain, which cause them to seek naturally to buy their own products. Clearly, there are limits to what can be done about such barriers, but there are the other barriers to which my hon. Friend drew attention, and the Government are actively looking for ways through EEC and bilateral contacts to promote United Kingdom exports to Japan and impress on the Japanese Government the need for determined action to encourage imports. My hon. Friend will no doubt have seen the references in the successive statements of the Foreign Affairs Council of the EEC from November 1980 to May this year, which have our strong backing. We have played a prominent role in forming the initiatives.
I refer briefly to the importance of joint ventures and technology exchange. I am sure that my hon. Friend would agree that the encouragement of Japanese inward investment in the United Kingdom in appropriate areas is a means of strengthening our own economy and reducing imports. Japan built its industrial strength by learning the technology from others, and there are some sectoral areas today in which we can benefit from Japan's new technological advances, as well as, sometimes, from its production and management techniques. However, it is important that it is a two-way process. The Department of Industry is actively promoting the benefits to the United Kingdom of importing technology from Japan by means of joint ventures and other forms of technological collaboration. Industry, too, is increasingly active in that field. In the machine tool industry, for example, several major United Kingdom companies have entered into collaborative agreements.
An important initiative to strengthen United Kingdom industry in high technology areas was the agreement on industrial collaboration reached by the Minister of State with the Japanese Minister of International Trade and Industry in April. The Government are actively preparing, in close consultation with industry, for the follow-up to that. The first joint meeting between MITI and the Department will take place in early September. The Department also intends to sponsor two major studies of technology in Japan on information technology and on the application of electronics to manufacturing processes. It has just gone out to tender on both.
I am sure that my hon. Friend will agree that, just as we have to have regard to the need to protect our sensitive areas in the way that I have described, so, too, it is of great importance to our industry that we benefit from joint ventures and technological collaboration. I hope that the initiative that the Minister of State took in April will lead to many other developments.
I hope that I have said enough to demonstrate to my hon. Friend that the Government are conscious of the problems, and also to show the very much wider context in which relations with Japan must be considered.
Question put and agreed to.
Adjourned accordingly at Twelve midnight.

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

Disarmament Proposals
Lord Brockway: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what response they have made to the document submitted to them by the World Disarmament Campaign containing proposals to the United Nations Disarmament Committee at Geneva for a treaty implementing in phased stages over six years the recommendations of the 1978 UN Special Assembly on Disarmament to be presented to the renewed assembly in June next year.
Lord Skelmersdale: My Lords, the Government have studied the proposals of the World Disarmament Campaign submitted to the Committee on Disarmament in Geneva. In response, we drew attention to the proposals already submitted to the United Nations Secretary-General, giving United Kingdom views on the question of a comprehensive programme of disarmament.
Lord Brockway: My Lords, is the Minister aware that during the Defence debate, the noble Lord, Lord Trefgarne, stated that the Government would give careful consideration to our proposals? Is the noble Lord aware that the United Nations Special Assembly on Disarmament last year recommended the ending of all nuclear weapons and phased progress to general disarmament? Do not our proposals achieve that in a practical way? Is he aware that we now have the support of a majority on the Geneva Committee? Will the United Kingdom change their attitude and give us support there?
Lord Skelmersdale: My Lords, the only thing that I was not aware of in that long list of supplementaries was the fact that the proposals had the support of the majority of the Geneva Committee. However, the Government consider it unrealistic to seek to achieve the ultimate goals of general and complete disarmament of all nations through one treaty. Moreover, it would be impracticable to set time scales for such a treaty in advance like the six-year limit envisaged in the WDC proposal. The proposed treaty would be unnegotiable, we feel, in several respects. For example, it mentions that United Nations inspectors in each state would have unimpeded access to all establishments and records. I cannot see any prospect of the Soviet leadership negotiating such a provision.
Lord Underhill: My Lords, is it not a fact that the Government share in the decision in the final document of the 1978 Special Assembly? Have not the Government also declared their support for the World Disarmament Campaign which is a multilateral campaign? What positive steps are the Government taking to try to work out something rather than just give airy answers?
Lord Skelmersdale: My Lords, I am sorry if your Lordships feel that I have given an airy answer. However, positive steps are being made and our ambassador to the Committee on Disarmament has written in the May edition of Arms Control and Disarmament which is currently available in your Lordships' Library.
Lord Jenkins of Putney: My Lords, will the Government reconsider their position on this matter? Will they recall that the late Lord Louis Mountbatten described the old Roman precept,
"If you desire peace, prepare for war",
as being absolute nuclear nonsense? In the light of that, will the Government look again at their position in this matter?
Lord Skelmersdale: My Lords, like all members of the United Nations, we have accepted general and complete disarmament under strict and effective international control as the ultimate goal of arms control efforts. As the final document of the special session recognised, progress towards world disarmament will depend on the successful negotiation of a number of specific arms control measures.
Lord Stewart of Fulham: My Lords, the noble Lord said that the Soviet Government could not be expected to agree to inspection. While that may very well be true, may I ask when they were last asked?
Lord Skelmersdale: My Lords, I have no information on that particular point. However, we know that they refused even to allow international atomic agency safeguards on their civil nuclear programme.
Lord Ritchie of Dundee: My Lords, is the Minister aware that there are a significant number of young mothers in the country suffering painful anxiety about the future safety of their children under the threat of worldwide nuclear arms proliferation? Would he not agree that the highest priority for this or any Government is to seek to reduce this threat by the vigorous pursuit of disarmament measures such as the one under discussion?
Lord Skelmersdale: My Lords, I also have young children. At a time when the Soviet Union continues to build up its nuclear and conventional forces, unilateral disarmament, which I think probably is the point the noble Lord is getting at, would serve only to undermine our security and weaken NATO's ability to deter aggression. It would also remove the incentive for the Soviet Union to negotiate, and indeed it would add to our own difficulties. One cannot negotiate from a position of weakness.
Lord Ritchie of Dundee: My Lords, I was not advocating—
The Lord President of the Council (Lord Soames): My Lords, I think that the noble Lord, Lord Brockway, has got up in order to ask his last question.
Lord Ritchie of Dundee: I apologise, my Lords.
Lord Brockway: My Lords, is the Minister aware of the massive feeling now on this subject? Is he aware that we are thinking in our meetings not in terms of hundreds but of thousands?—3,000 in Edinburgh, 5,000 in Plymouth and a crowded guildhall at Southampton. Is he aware that this is worldwide and, with unemployment, this problem of nuclear weapons is now becoming a dominant issue in people's minds?
Lord Skelmersdale: My Lords, the noble Lord, Lord Brockway, says this feeling is worldwide. So far as we know, I would have to correct him and to say that it is Westernwide. The authoritarian states do not have, or do not allow, pressure groups such as the noble Lord belongs to, and therefore I think we have a very one-sided view of all this.

Kennels: Licensing Legislation
2.45 p.m.
Lord de Clifford: 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 when they intend to implement the licensing of kennels under the Guard Dogs Act 1975.
The Parliamentary Under-Secretary of State, Home Office (Lord Belstead): My Lords, we have at present no plans to bring these licensing provisions into force, but will continue to keep the matter under review.
Lord de Clifford: My Lords, while thanking the noble Lord for his reply, may I ask whether he is aware that the killing of a child by several guard dogs under training came as a great shock to a number of us? Is he also aware—I think he undoubtedly will be—that the noble Lord, Lord Gordon-Walker, and myself envisaged just such a situation when the Guard Dogs Bill went through Parliament? May I ask my noble friend whether he is also aware, as again I think he will be, that this Act has been in operation for some time, and is it not time that it was brought into effect?
Lord Belstead: My Lords, like my noble friend, I was shocked and saddened to read about the death of Michek Francis on 4th June. He was a baby and so far as we know he died as a result of an attack by Alsatian dogs. There is some doubt whether the dogs in the case were guard dogs. However, if they were guard dogs, and had a licensing system been in operation, we could not say for certain that the incident would have been prevented. However, that does not prevent the thrust of my noble friend's Question, and the answer I have to give him is that to bring in the licensing provisions of the 1975 Act would impose
430
additional burdens on local authorities which the Government would be reluctant to impose in present circumstances.
Lord de Clifford: My Lords, I do not wish to press my noble friend much further, but under this licensing provision is it not a fact that any inspections must be paid for at a rate which covers the cost for the local authority and there is no cost to the rates?
Lord Belstead: My Lords, it depends on how regulations would be drafted under the Act.

Fiscal Legislation: Preparation
2.47 p.m.
Lord Renton: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether it is now accepted by those responsible for the preparation of fiscal legislation that the scope of a charge or relief should be stated clearly in general terms at the beginning of the clause or group of clauses dealing with it, in accordance with recommendation (75) of the Committee on the Preparation of Legislation (Cmnd. 6053).
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I understand from those concerned that the answer to my noble friend's Question is in the negative.
Lord Renton: My Lords, while thanking my noble and learned friend for that unwelcome reply, may I ask this: Is he aware that the Royal Commission on Taxation and the Committee on the Preparation of Legislation did suggest what is proposed in this Question, in fact in the recommendation which the Question refers to, and that parts of this year's Finance Bill do most fortunately follow the recommendation? Will my noble and learned friend therefore please encourage those whose duty it is to draft our fiscal legislation to do what is proposed, namely, to state the scope of the charges and relief wherever it is feasible to do so?
The Lord Chancellor: My Lords, that puts the question in a somewhat different light. Wherever it is feasible to do so I am quite sure they will do so.

Interest Rates: International Agreement
2.49 p.m.
Lord Beswick: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what initiatives they have taken with allies of the western world to secure agreement designed to prevent competitive interest rates.
The Minister of State, Treasury (Lord Cockfield): My Lords, the present high level of interest rates in most countries reflects essentially the need to check monetary growth to curb inflation. Lower interest rates will be achieved not so much by initiatives of the kind the noble Lord has in mind, but by firm fiscal and monetary policy leading to a fall in the rate of inflation.
Lord Beswick: My Lords, I am aware of the noble Lord's doctrine about high interest rates, but I am talking about the artificial and excessive interest rates that occur, for example, in the United States at the present time. Does the noble Lord not agree that whatever short-term improvements there may be to a domestic statistic in the United States, for example, at the present time they are far outweighed by the damage done to the international trading community? Would the noble Lord also not agree that if we are interested in the stability and security of the western world it is as important to get some sensible cooperation in these monetary matters as it is in the military field?
Lord Cockfield: My Lords, we are all anxious to see lower rates of interest. But I do not think that the American Administration would accept the noble Lord's description of American interest rates as being either arbitrary or excessive. He will be interested to know, as I hope he does, that in the last few weeks rates of interest in the United States have already begun to fall. In terms of the long-term health of the international community, the overriding requirement is to reduce the rates of inflation. This does from time to time entail maintaining interest rates which are higher than any of us would like to see.
Lord Hankey: My Lords, are the Government aware that almost everybody in the House will agree with what the noble Lord has said today. But I think that the Question of the noble Lord, Lord Beswick, was to draw attention to the instability of interest rates. Would the Government agree that, when American rates go up very suddenly to an unprecedented level of 20 or 21 per cent., it draws a lot of funds out of the other members of the OECD and has very undesirable effects on their domestic situation? Would it not be advisable to go back in some degree to the principles of the OECD, which are that we should try to conduct our economic policies in such a way that we damage other people's economies as little as possible? If I might ask the noble Lord one more question, would it not be a good idea to ask the Group of 10 to discuss this problem a little more often?
Lord Cockfield: My Lords, I am not at all certain that the noble Lord was asking a question as much as making a long statement of policy. Of course, in principle, we all agree with international collaboration. I am sure that all countries pay regard to the effect of their policies on other people. But it would be quite wrong to regard the weakness of some of the European currencies at present as being primarily the result of funds being siphoned off to the United States, as a result of the high rates of interest prevailing there.
Lord Beswick: My Lords, may I ask the noble Lord to consider that, when he has time to read what the noble Lord on the Cross-Benches had to say, he will find that it was, indeed, a very relevant question? May I ask the noble Lord further whether I am to gather from what he has told me that the answer to my original Question is, No, sir?
Lord Cockfield: My Lords, if the noble Lord is looking for a very brief reply to his question, the answer is that the Government recognise the overriding need for reducing rates of inflation worldwide. This means, from time to time, that rates of interest are seen which are higher than one would normally like to have.
Lord Beswick: My Lords, may I press the noble Lord? I asked what initiatives have been taken to try to secure agreement. Is the answer to that question, none?
Lord Cockfield: My Lords, I, in fact, specifically answered the noble Lord when I said in my reply:
"Lower interest rates will be achieved not so much by initiatives of the kind the noble Lord has in mind, but by firm fiscal and monetary policy".

DINNER
Lord Denham: My Lords, it may be for the convenience of the House if I announce that dinner will be available today at the usual time. The Report stage of the British Telecommunications Bill will adjourn at approximately seven o'clock for a short period. During the adjournment, the Sheep Variable Premium (Protection of Payments) (Amendment) Order 1981 and the Committee stage of the Industrial Diseases (Notification) Bill will be taken.
At a convenient moment after 3.30 this afternoon, my noble and learned friend the Lord Chancellor will, with the leave of the House, repeat a Statement that is to be made in another place on Trooping the Colour.

Education Bill
Brought from the Commons; read 1a, and to be printed.
Education (Scotland) Bill
Brought from the Commons; read 1a, and to be printed.

Insurance Companies Bill
Lord Lyell: My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read 3a.—(Lord Lyell.)
Lord Bruce of Donington: My Lords, we on this side of the House do not seek in any way to prevent the Third Reading of this Bill. We are naturally a little sorry that the Government did not act on the basis

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of our recommendations. Nevertheless, the Bill itself does not raise any profound questions of social or political significance within the party context. We on this side of the House should like to thank the noble Lord for the very great efforts that he made to simplify the provisions of the Bill and to explain it so patiently to the House.
Bill read 3a, with the amendments, and passed, and returned to the Commons.

British Telecommunications Bill
2.57 p.m.
Report received.
Clause 2 [Powers of the Corporation]:
Lord Morris Lord Morris moved Amendment No. 1:
Page 2, line 23, leave out paragraph (b).
The noble Lord said: My Lords, I think it will be for the convenience of the House if I speak to Amendments Nos. 1, 2 and 3 en bloc. These three amendments are covered by precisely the same principle. The purpose of these amendments, as I explained at the Committee stage, is to delete three paragraphs of Clause 2, which I believe are nothing other than three pieces of declaratory law, and which are not necessary. These three paragraphs state that the corporation shall have power to perform services for the Post Office, to perform services for Her Majesty's Government and to perform services for local authorities or National Health Service authorities.
During the Committee stage, my belief that these paragraphs were unnecessary was heightened by virtue of the answer that my noble friend Lord Trefgarne gave to me. He said:
"The two businesses"—
he was referring to the British Telecommunications side of the Post Office and the Post Office itself—
"have provided certain services for each other for many years".
That, of course, is manifestly so. Later he went on to say:
"To agree to this amendment and thus prevent British Telecommunications from providing services for the Post Office would, I feel, lead to an unnecessary disruption of the activities of the two businesses".—[Official Report, 12/5/81; col. 464.]
If the corporation does not have power beforehand to provide services for the Post Office, why is it then necessary to have this power placed in the Bill? Surely it would not act ultra vires. It is plain to me, at any rate, that the British Telecommunications Corporation is perfectly at liberty under the provisions of the Bill to provide services to whomsoever it chooses and in virtually in any way that it chooses. For those reasons, I beg to move.
The Minister of State, Department of Employment (The Earl of Gowrie): My Lords, when we debated this question during the Committee stage of the Bill, my noble friend Lord Morris suggested, as he has again suggested today, that the powers of British Telecom which are contained in Clause 2(1)(b), (c)
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and (d) are unnecessary because of the existence of the power in Clause 2(1)(a) to provide telecommunication and data processing services. I think my noble friend is under a small misapprehension which I hope I can dispel.
The point is that Clause 2(1)(b), (c) and (d) are all necessary because they cover services provided by British Telecom other than telecommunications and data processing services. In the case of Clause 2(1)(b), the two businesses, posts and telecommunications, have provided certain services for each other for many years. The particular examples of which I am thinking are vehicle maintenance, procurement and research and development. Activities such as these obviously do not fall within the power set out in Clause 2(1)(a) and therefore it is necessary to include Clause 2(1)(b), and its parallel provision in Part II of the Bill in Clause 57, in order to allow these necessary and useful services to continue.
Similarly, as regards 2(1)(c) and (d), British Telecom already provides some services other than telecommunication services under the equivalent section, Section 7(1)(d), of the 1996 Post Office Act. The example I have in mind here is the procurement of hearing aids for the DHSS and also an agreement to provide emergency power supplies to hospitals. Again, these subsections allow these necessary services, which are not purely telecom or data processing services, to continue.
I hope therefore that my noble friend appreciates that the point is now clear. These paragraphs are necessary because they are not covered by the powers in Clause 2(1)(a). I would just add that all the services covered by Clause 2(1)(b), (c) and (d) will be performed by BT under specially negotiated contracts. In providing these services, BT will of course be competing with the private sector. Therefore the Post Office, the Government, local authorities and National Health Service authorities will all be able to choose whichever supplier they wish. I hope that, in the light of this detailed, if necessarily rather technical explanation, my noble friend can now agree to withdraw his amendments.
Lord Morris: My Lords, I am most grateful to my noble friend for that very full and careful explanation. It is an immense improvement on the explanation which we received at the Committee stage; certainly it clarifies my mind a great deal. Therefore I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 2 and 3 not moved.]
Lord Morris Lord Morris moved Amendment No. 4:
Page 3, line 13, leave out ("requisite, advantageous or convenient") and insert ("expedient").
The noble Lord said: My Lords, this amendment is precisely the same as an amendment which I moved at the Committee stage. I do so again, for I believe the answer given then was not so satisfactory as I might have wished. In his answer my noble friend Lord Trefgarne said:
"In any case it would not always be easy to prove that a particular activity was expedient and this could give rise to uncertainty as to the practical extent of British Telecom's powers".—[Official Report, 12/5/81, col. 467.]

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If it would not be easy to prove that a particular activity was expedient, how much more difficult, I suggest, would it be to establish whether it was convenient, not to say requisite or advantageous. I believe that the use of the word "expedient" as opposed to these three words would not make life more difficult. On the contrary, they would not limit any of the powers of British Telecommunications, because one could not go any wider than "expedient". I beg to move.
Lord Lyell: My Lords, as my noble friend Lord Morris has already said, my noble friend the Minister, Lord Trefgarne, attempted to give an explanation to my noble friend at an earlier stage about this amendment. The word "expedient" in this case could be construed as narrower than the phrase "requisite, advantageous or convenient". While the Government have no wish to narrow the powers of British Telecom, the advice we have received makes us unable to accept the addition which my noble friend seeks to make to the Bill.
I hope my noble friend will accept that the phrase which is used in this Bill, we hope satisfactorily, is common to several nationalised industry Acts which have a good track record both for clarity and for expression. The coal, the electricity and the gas industries are several examples, as well as the Post Office. All of them have similarly worded powers to those which are found in the Bill. I hope this explanation will go a little further towards satisfying my noble friend Lord Morris.
Lord Morris: My Lords, indeed it does. I am most grateful to my noble friend. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 3 [General duty of the Corporation]:
3.6 p.m.
Lord Glenamara Lord Glenamara moved Amendment No. 5:
Page 6, line 2, after ("Islands") insert ("including its rural communities").
The noble Lord said: My Lords, the purpose of this amendment is to call attention once more to the damage this Bill is going to do to people living in rural areas. The rural areas are already suffering in a great many ways. Transport in many villages is now poorer than it was at the end of the last century. The additional 20p per gallon on petrol has added to the difficulties of people living in those areas. It is agreed by everybody who understands this Bill that it will put up by a good deal the cost of the telephone in rural areas. It is also going to make the obtaining of equipment beyond the first telephone much more difficult.
Had the Government been more open about this issue during the Committee stage, we should not have found ourselves today in the position of having to put forward an amendment at the Report stage to safeguard the rural areas. Ministers opposite know quite well what effect this Bill will have in rural areas, but they have never admitted that what we and almost everybody else who understands the Bill have said is correct.
One of the clearest features of the Bill is the restriction it now places on British Telecom's duty to provide a telephone service throughout the United Kingdom. Let us be quite clear about what the Bill does. It lays on British Telecommunications a simple duty. The only obligation it has is to provide the first telephone in every home. There is no obligation beyond that. There the duty stops. That is a fact of which the Government are well aware, since Clause 3 clearly reflects this change in duty.
During the Committee stage debate on this issue I was taken to task by the noble Earl, Lord Gowrie, on a number of occasions, but on 12th May he said:
"He really should not, in my view, stir up anxieties among the disabled or people in rural areas that in some way they are going to be denied access to a telephone".—[Official Report, col. 479.]
If the noble Earl will look through what I said, I never at any time said that. Of course, people will continue to be able to go to British Telecommunications for the provision of the first telephone. What we on this side of the House and what many other people outside it have said, and I repeat it, is that if they live in rural areas and want any additional apparatus in their home, their office, their firms, the local auction mart or anywhere else, they may find themselves in difficulty in finding suppliers. Once installed, they may find difficulty in getting maintenance services. For both the supply and maintenance of equipment they are likely to pay a very much higher price than they have done to date.
The Government should not try to escape the logical consequences of the policy they have adopted in this Bill. BT, as a monopoly supplier of telecommunications services in the United Kingdom, has traditionally subsidised the provision of services where they are unprofitable, by provision where they are highly profitable. For example, cities have always subsidised the rural areas and there really is no other way to provide a national telephone system in this country. The Government propose to change all that. They propose to introduce competition and private sector firms will inescapably concentrate on competing with British Telecom in areas where the profit potential for them is high. It is not because they are wicked or lacking in social responsibility but that is in the nature of a private firm. It is their nature and their duty imposed by company law and the Government should recognise that. To the extent that that competition is successful—and I take it that the Government want private firms to compete successfully—BT's revenues will be reduced and its ability to subsidise unprofitable services, such as those in rural areas, will thereby be diminished.
Of course, I do not expect the process to stop there. If I were the chairman of BT, confronted with the threat of the implementation of the Beesley Report and facing competition in the provision of terminal apparatus of the kind I have just been talking about, I should be engaged in a thorough reassessment of BT's role. Indeed, I should be very surprised if the chairman of BT was not doing that already. I should be looking for a new strategy that would enable British Telecom to retain the largest possible market share in the areas open to competition. Inevitably therefore I should, to a far greater degree than up to

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the present, concentrate my resources, both of manpower and of finance, in areas where I expected competition to be the fiercest; that is, in the provision of certain types of terminal apparatus in the urban areas of the United Kingdom. As the Government require BT to generate most of the funds for investment, BT really has no option. The Government require BT to find most of its funds for investment itself, so it has no other course available to it except this kind of reassessment of its strategy.
I think it is fair to require a monopoly supplier to operate to some degree in an uncommercial fashion. That is the tradition which has shaped the attitude of BT. It is for that reason that it has for years been subsidising, for example, the telephone box on the village green at considerable loss and has done very much work in developing new aids for the disabled, without concern for the profitability of either of those projects. Inevitably under the new pattern which will emerge during the next three years under this Bill, those attitudes in BT will change, unless of course BT is to suffer a catastrophic drop in revenue, and I think it would be franker if the Government admitted that, but that of course is what the Government want. They want to import a harsh commercial attitude because they believe that the market can solve everything—it can solve the supply of anything we want and it can get the price right.
In the Committee stage the noble Earl, Lord Gowrie, indicated—and I quote:
"If British Telecom were to fail to provide reasonable service in any part of the country—it is open to the Secretary of State to give them directions to do so either under Clause 6(2) or (3) or under Clause 6(5)".—[Official Report, 12/5/81; col. 480].
Here again I am sure that on reflection the noble Earl will feel that he is in danger of misleading the House, for if BT no longer has a duty, other than the duty to provide the first telephone in any home, I should he very surprised indeed if the Secretary of State would then be acting within his powers in directing them to provide more than the first telephone in any home. But I am sure that if I am misleading the House one of the noble Lords will interrupt me. Does one of the noble Lords wish to interrupt me and say that the Secretary of State would have the power to give BT a direction to provide something apart from the first telephone? I am quite willing to give way if the noble Earl wishes to intervene. Well, perhaps he will reply later.
Today we are going to consider in more detail the position on the Beesley Report. However, I call the report to my aid in re-emphasising that the Government are well aware of the fact that the cost to the residential and rural customer of telecommunication services is bound to rise. For much of the dispute between Professor Beesley, the Secretary of State and other parties about the extent to which his recommendations would lead to increases in charges is based on the fact that Professor Beesley assumes that BT will, if his recommendations are implemented, re-balance its tariff structure. Re-balancing means, quite simply, a process of spreading the burden of profit more evenly across the services that it provides. In other words, insisting that everything shall be profitable—the telephone box on the village green, the farm telephone across a mile of fields or a remote moor in the north
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of England, and so on. So the extensive traditional subsidising of loss-making services which has continued in the British Post Office for very many years will have to be greatly reduced, if not altogether stopped. One of the less profitable services that BT provides is residential installations anywhere—not just in rural areas—and I do not think any noble Lord would contradict the fact that installing a telephone on the Island of Skye or in a remote Cumbrian farm is unlikely to be profitable to anybody, unless at a massive cost.
On this side of the House we believe profoundly that the Government are quite wrong in bringing forward this Bill and doing what they are doing to telecommunications in this country. We believe that they are moving in the wrong direction for telecommunications. We do not believe that the provision of an effective telecommunications system can be a product, like strawberries or any other product, which can be left to market forces to regulate the supply and the price. We believe that an efficient and well run telecommunications service is a social as well as an economic necessity and therefore that telecommunications has a social role to play, particularly in rural areas. The Government view the matter otherwise, but they should not seek to ride two horses and try to delude people into believing that they can import market forces (as they are doing) into the provision of telecommunications and at the same time leave the social role of BT in rural areas undisturbed. That cannot be done. They cannot ride those two horses at once. One cannot bring in market forces and at the same time enable British Telecommunications to retain that social role.
I hope the noble Earl, Lord Gowrie, will therefore take a somewhat franker line on the effect that this Bill will have in rural areas than he did at the Committee stage. The Government have been less than open about the effect that the Bill will have on rural areas and residential customers generally. The purpose of this debate has been to enable Ministers to come clean, to tell the House, to tell the country, to tell noble Lords exactly what effect the Bill is likely to have. I hope the ultimate effect of the amendment is to write a very minor safeguard into the Bill for the rural areas of this country.
Lord Mottistone: My Lords, in the mid-sixties I had the good fortune to live for a year in Canada, where the telephone is produced by the Bell Telephone Company. I can assure your Lordships that not only did they provide the telephones the people in the towns and cities and rural areas needed, but they did it more cheaply. One of the reasons they managed to do this was by not wasting a lot of money on trying to underpin things in an orderly bureaucratic fashion. The other reason was that if the communities reckoned they were not getting the service they wanted they jolly well found it themselves. The did not think they had to fall back on "Auntie" Government to provide it for them; they thought they had to get on and do it, and they negotiated hard and they found the money collectively and all sorts of things like that.
I really think the noble Lord is not allowing us to free the British people to look after themselves instead of being looked after by central Government. That is the message of this Bill. I really think we want to stop

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trying to cosset poor little British Telecom because the Post Office has been nationalised for centuries; and what a pity! I think we want to say: "This is a commercial operation; for heaven's sake, let us follow in the footsteps of our cousins in North America who really know the way to do things on a free enterprise basis".
As to the particular amendment, I welcome the phraseology of the Bill as it stands, though this might sound contradictory to what I have just said. Islands, as I tried to explain to your Lordships earlier, particularly in the local government Bill last year, have a special problem; they have a communication problem which involves the sea, and it is different. You can quite easily dig a trench for a telephone down the side of the road but you cannot put it under the water, to take that one example. In regard to the local government Bill we had the problem of trying to persuade the Government that we do have a special extra cost because of the sea transport situation. I will not go over that ground again. But the fact is that in Canada, about which I spoke a moment ago, they do have a very special underpinning and subsidising of all the transport to all their islands in a way that I hope to show the Government in due course, when I have a little time to do it. Therefore, I think that this amendment is misconceived. It misses the point of the Bill. It tries to put us back again in a terrible straitjacket, and it does not understand that uniquely islands require special treatment in a way that rural areas never will.
Lord Underhill: My Lords, with due respect to the noble Lord, Lord Mottistone, I wonder whether he has got it completely right. We are not talking about cosseting British Telecom. I do not like the word, but we are talking about cosseting the consumer; this is the important thing. No reference has been made, so far as I can gather, to the question of maintenance. The noble Lord, Lord Mottistone, says that in Canada it is done much cheaper. Nothing can be much cheaper than nothing. British Telecom carries out maintenance as part of its normal rental charge. What will be the position in the rural areas? If, as my noble friend Lord Glenamara has pointed out, and it cannot be denied, profitable services are to be taken away by licence from British Telecom, obviously British Telecom has to make a very important decision: Does it carry on in difficult rural areas? Many noble Lords come from rural areas; they know that telecom engineers go out in all weathers, at almost all hours, to deal with problems of maintenance, and that is included in the telephone rental charge. Nothing can be cheaper than that. British Telecom will have to take an important decision. If it is going to be denied other important revenues it has got to decide whether it carries on maintenance at its present cost.
It may be argued that the private sector will take over the maintenance. That may be, but it will be at an additional cost. No private sector is going to take over maintenance in the rural areas unless it can make a useful remuneration. I do not expect any private company to carry out maintenance work for the love of doing it. Therefore, that aspect has got to be dealt with when we are considering this amendment.
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An obligation must be placed upon someone to ensure that the services in the rural areas are continued. Many noble Lords come from the rural areas. I hope they will look at this, and, if mine is not the answer, perhaps they will tell me what the answer is. The only answer can be private sector charges at a profit, which will be far greater than the charges made by British Telecom at the moment.
Lord Hawke: My Lords, may I ask my noble friend about one point that rather troubles me? Living in a rural area, with some extensions to the telephone—many people are in the same boat, of course—those extensions belong to, and are rented from, the Post Office at the moment. After the passage of this Bill, the Post Office will presumably come and mend my main telephone free of charge, as they do at the moment, but will it be incumbent upon them to come and mend the extensions free of charge, as they do at the moment, or will they be able to levy a charge for doing that?
The Earl of Gowrie: My Lords, I would have to take advice on my noble friend's question. I think the position would be that, where British Telecom are freely competing for the provision of services with the private sector, as against any undertakings they have given to my noble friend or others, on the mainframe system they would be able to levy a charge. But I will take advice about that and come back to my noble friend, if he will be so kind as to allow me that passage of time.
My Lords, I think the noble Lord, Lord Glenamara, is a marvellous addition to your Lordships' House, in that, in keeping with the traditions of the House, he is very experienced, very lucid, and extremely conservative. One of the real puzzles, I think, of political life over the last 10 years in which I have been engaged about it is the steady progression of the Labour Party towards being the party principally of the defence of the status quo. We have had time and time again in this debate, and indeed in other debates, the argument put to us which, if I may synopsise it, and the noble Lord, Lord Glenamara, put it very clearly, goes something like this: in order to provide the bread of the social service we should be allowed a monopoly on the jam to put on it. I think there is a false logic here.
The same arguments were heard most conspicuously about 15 to 20 years ago when it was suggested that the BBC monopoly should be done away with. The implication then was that if the BBC lost its monopoly all forms of the admirable Reithian tradition would be thrown out of the window and the effects would be calamitous on our broadcasting system. In fact, while we can all find things to criticise in the BBC or the ITV, or indeed in any of the media, just as they find things to criticise where we are concerned in the legislature, I think most of us agree without sentimentality that we have probably one of the finest broadcasting systems in the world, if not the finest, and that the process of competition between these two services has been to the immeasurable benefit of both. Therefore, I simply do not accept the central premise of the noble Lord's argument.
Turning away from the central premise to some of the detail, the amendment itself of course is extremely curious, since there can surely be no doubt that the

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term "British islands" includes the whole country, including the rural communities. It would be very odd if we had, as it were, hived them off in our description of this country as the British Islands. The duty as contained in the Bill makes it absolutely clear that British Telecom must have regard to the social, commercial and industrial needs of the British Isles. As I have already said, this necessarily includes the rural communities. British Telecom will continue to provide the public network and the prime instrument throughout the country. Even if it is more expensive to provide a prime instrument on the island of Skye than it is to provide one in, say, Belgravia, think of the number of prime instruments required in Belgravia and how perfectly delicious it is in commercial terms to have that monopoly of supply. There should not be too much difficulty for British Telecom in meeting its social and commercial obligations, given that it has been allowed to retain the prime instrument and the basic network, which is where most of the demand is. Whatever the fantasies all of us may have in respect of wonderful new processes and inventions, I believe most of us accept that over the next 10 or 20 years the bulk of the market will still be in the provision of the basic prime instrument.
The noble Lord, Lord Glenamara, has suggested that this Bill will result in an increase in charges in rural areas. This is a seductive argument and I believe that the noble Lord was being a little too sensitive when he appeared to have had his feelings rather hurt by my implication at Committee stage that the noble Lord was running around stirring up anxiety. The reason why I believe that the noble Lord opposite is being a little disingenuous is because he knows perfectly well that tariffs are affected by a wide range of factors. Pay has something to do with the tariffs that are charged by a large public sector monopoly. Staffing levels have something to do with charges. While I very much welcome the passionate concern expressed by the noble Lord, Lord Glenamara, and shown by the Labour Party for the fate of customers in rural areas, I do hope that they will bring equal pressures to bear on the public trading sector unions in these large monopoly industries, to see that they are equally sensitive to the costs which devolve on consumers in rural areas.
I can assure your Lordships' House that if British Telecom did choose to discriminate in some way against their customers in rural areas—and I cannot imagine that they would—then the Secretary of State would be able to direct British Telecom to cease doing so, because the Secretary of State has very considerable powers in Clause 6—his social override powers, if you like. Therefore, it seems to me that the duty of British Telecom to have regard to the interests of rural communities quite clearly remains. The Government are convinced that consumers of British Telecom communications will benefit from the introduction of competition. I must say that I find it obscurely insulting, as someone who spends some of his time in rural areas, to think that those who live there would be less interested in receiving the new products, technology and services than their counterparts in the towns. I should have thought that the more remote one's community was, the more likely one would be to wish it to be clocked-in to the central communications system which we all enjoy and wish to improve. I
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hope that what I have said will persuade the House that the noble Lord, Lord Glenamara, has raised something of a red herring—although admittedly he has dyed it blue in doing so.
Lord Hawke: My Lords, before my noble friend the Minister sits down, may I just ask him—
The Earl of Gowrie: My Lords, I did say to my noble friend Lord Hawke, that I would come back to his point and in fact, mirabile dictu, my original answer was correct, and what I said to him was confirmed by the Box. The contracts entered into in respect of the primary network obtain, but if new services are provided by British Telecom they could levy a charge for that maintenance.
Lord Hawke: My Lords, I do not believe my noble friend quite got the point. I was asking whether there would be a charge in respect of existing ancillary services; those that are being maintained free of charge at the moment. I refer to those cases where British Telecom own the apparatus and rent it out to the subscriber. In future, after this Bill passes, will there be a charge?
The Earl of Gowrie: My Lords, at the moment, the corporation, regardless of the passage of this Bill—and this is the point that I really want to get across—can seek Parliamentary assent to levy charges if it finds that it cannot maintain a service economically. The short answer to my noble friend is that the position changes in no way.
Lord Mottistone: My Lords, will my noble friend the Minister confirm that what he said earlier in his speech indicated that where this clause mentions "British Islands" it is not, as I had assumed, the islands surrounding Britain, but the "British Isles" as I learnt about them in school, including the Republic of Ireland?
The Earl of Gowrie: My Lords, I do not think my noble friend is right in thinking that. As one who hails from the Republic of Ireland, the phrase we use there in this context is "these islands". That has become a tactful and general geographical expression. Quite clearly "British Islands" means the United Kingdom, and the emphasis is on the provision of services to off-shore communities within the United Kingdom.
Lord Kilbracken: My Lords, I do not know that I can agree. I come from the same Republic and I too talk about "these islands". Is it not the case, however illogical and unjustifiable it may be, that the term "British Isles" as defined in British legislation does in fact include the 26 Counties?
The Earl of Gowrie: My Lords, it is a confusing issue, as the noble Lord is aware, because the technical definition of the word "Scot" is an Irishman. Our history and geography and culture are pretty confused on these issues, but I do not think our legislation is.
3.38 p.m.
Lord Glenamara: My Lords, with the tremendous

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honesty that characterises him, if I may say so, the noble Lord, Lord Mottistone, let the cat out of the bag. He said that people in rural areas could look after themselves. He said that they could club together to buy the services that they wanted, and if the Post Office finds that it is no longer able to provide a telephone box on the village green, the local community can have whist drives, beetle drives and dances to raise the money for one. That illustrates the divide between us. We believe that it is right and proper for more lucrative areas to subsidise those areas which cannot pay their own way. The noble Earl, Lord Gowrie, mentioned Belgravia; I wish my noble friend Lord Lever were here because I am sure he would agree that it would be right and proper for Belgravia to subsidise Benbecula in the Hebrides.
The Earl of Gowrie: But Belgravia does do that, my Lords.
Lord Glenamara: Of course it does, my Lords. That is our whole point—and it should continue to do so, but the noble Earl does not believe that.
The Earl of Gowrie: My Lords, if the noble Lord will allow me, the point I was making is that Belgravia does subsidise the Isle of Skye and I am sure the noble Lord, Lord Lever, is very content that it should do so. It will continue to do so in respect of the monopoly over the primary network. All we are suggesting liberalising is the secondary apparatus, which should generate a great deal of development employment in this country, and I should have thought that the noble Lord, Lord Glenamara, would have welcomed that.
Lord Glenamara: My Lords, I have listened carefully to the noble Earl's interjection, but I cannot see that it is very relevant to what I was saying. What we are saying is that it is right and proper that Belgravia should subsidise the islands in the Hebrides. The noble Earl criticised me for saying that. If I could return to remarks made by the noble Lord. Lord Mottistone, for a moment, he accused me of wanting to put the country back into a straitjacket. I hope that noble Lords have looked at what my colleagues and I are suggesting. In Clause 3 it says:
"It shall also be the duty of the Corporation, in exercising its powers, to have regard to"—
and then there are listed a number of matters, including:
"the social, industrial and commercial needs of the British Islands".
We are suggesting that we then insert:
"including its rural communities".
I should hardly have thought that such a step would be putting the country back in a straitjacket. To say that is really coming it a bit much, even from the noble Lord, Lord Mottistone.
The noble Lord, Lord Hawke, raised the important question of maintenance. The Post Office will, of course, have to charge maintenance in future. It is now included in the rental, but in future, as certain as day follows night, when this Bill becomes operative they will have to charge separate fees for maintenance.
The noble Earl, Lord Gowrie, criticised me for wanting to preserve the status quo. I think that the
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status quo is a highly desirable state of affairs sometimes. If I am standing on the top of a cliff and the option is to be pushed over it, then I shall want to preserve the status quo—and that is just about what this Bill proposes. The noble Lord said that the term "British Islands" included rural areas. Of course it does, but we are all agreed, I think, that they are at special risk here and we simply wish by this very innocuous amendment to underline their importance and to emphasise the need to safeguard them.
As regards tariffs, I hope that noble Lords listened to what the noble Earl, Lord Gowrie, said. He still has not told us whether or not, in the opinion of the Government, this Bill will cause tariffs to rise in rural areas. What did he do? He got off on to the old red herring about the unions and pay demands. It was a little unfortunate because in this particular industry the unions—and there are two—are probably the most responsible unions in the British Isles, so he really cannot put forward that plea in this case. Noble Lords should note that we have still not yet been told whether, as a result of this Bill, telephone bills and maintenance charges will go up in the rural areas. We say that they will and everybody who is informed about this matter and who has considered the Bill agrees that they will go up. The noble Earl, Lord Gowrie, still has not told us the Government's view.
We are still confused (are we not?) about the Minister's power to direct. The Minister may well have the power, as the noble Earl says, to direct BT if it is seen to be discriminating against rural areas—that would be very difficult to prove, but I agree that he would probably have the power to direct it in those circumstances. But what happens if BT refuses to install a PABX in a local auction mart; the one I quoted earlier? Would he have the power to direct it to do that?—of course he would not. The Minister has no power to direct in matters of that kind.
Finally, the noble Earl criticised me—and I am amazed about this—saying that I was not in favour of rural areas having up-to-date equipment. The whole of my argument is that I am in favour of them having the best equipment but they will not have it under this Bill. That is the whole point. I am sorry that the noble Earl missed it. I want them to continue to have the best equipment available in the Islands and Highlands; the remote areas; Cumbria where I was born, brought up and live; and areas like that. The whole point is that I am afraid that under this Bill they will not get that. So please; I did not say that they ought not to have it. I am sorry that the Government have taken the view which they have taken. This is a very sensible amendment and I hope that many noble Lords—for example, those who voted on the question of rural transport—will feel that they can support us in this matter.
The Lord Chancellor: My Lords, it is up to me to put the Question. However, if there is likely to be a Division I wonder whether the House would prefer me to make the Statement next or to put the Question? I shall take it upon myself to make the Statement.
Several noble Lords: Question!
The Lord Chancellor: My Lords, if that is the case then I must put the Question.
3.45 p.m.
On Question, Whether the said amendment (No. 5) shall be agreed to?
Their Lordships divided: Contents, 52: Not-Contents, 101.

CONTENTS

Ardwick, L.

John-Mackie, L.

Bacon, B.

Kilbracken, L.

Beswick, L.

Leatherland, L.

Bishopston, L. [Teller.]

Listowel, E.

Blyton, L.

Lovell-Davis, L.

Briginshaw, L.

Molloy, L.

Brockway, L.

Morris of Grasmere, L.

Bruce of Donington, L.

Oram, L.

Cledwyn of Penrhos, L.

Pargiter, L.

Collison, L.

Peart, L.

Crowther-Hunt, L.

Phillips, B.

David, B. [Teller.]

Ponsonby of Shulbrede, L.

Ewart-Biggs, B.

Reilly, L.

Fisher of Rednal, B.

Sefton of Garston, L.

Gaitskell, B.

Shinwell, L.

Glenamara, L.

Stewart of Alvechurch, B.

Greenwood of Rossendale, L.

Stewart of Fulham, L.

Hale, L.

Stone, L.

Hall, V.

Strabolgi, L.

Hayter, L.

Strauss, L.

Henderson, L.

Taylor of Mansfield, L.

Howie of Troon, L.

Underhill, L.

Jacques, L.

Wallace of Coslany, L.

Janner, L.

Wedderburn of Charlton, L.

Jeger, B.

Wilson of Radcliffe, L.

Jenkins of Putney, L.

Wootton of Abinger, B.

NOT-CONTENTS

Alport, L.

Grimston of Westbury, L.

Ampthill, L.

Hailsham of Saint Marylebone, L.

Amulree, L.

Auckland, L.

Hankey, L.

Avon, E.

Hanworth, V.

Balfour of Inchrye, L.

Hawke, L.

Beaumont of Whitley, L.

Hives, L.

Beloff, L.

Home of the Hirsel, L.

Bellwin, L.

Hylton-Foster, B.

Belstead, L.

Ilchester, E.

Bessborough, E.

Kennet, L.

Boyd-Carpenter, L.

Kinloss, Ly.

Byers, L.

Lane-Fox, B.

Caccia, L.

Long, V.

Campbell of Croy, L.

Lothian, M.

Cawley, L.

Loudoun, C.

Clancarty, E.

Luke, L.

Cockfield, L.

Lyell, L.

Cottesloe, L.

McAlpine of Moffat, L.

Croft, L.

McFadzean, L.

Cullen of Ashbourne, L.

Macleod of Borve, B.

Daventry, V.

Mansfield, E.

Davidson, V.

Marley, L.

De La Warr, E.

Montgomery of Alamein, V.

Denham, L. [Teller.]

Morris, L.

Dundee, E.

Mottistone, L.

Effingham, E.

Moyne, L.

Elibank, L.

Murton of Lindisfarne, L.

Elliot of Harwood, B.

Northchurch, B.

Evans of Claughton, L.

Nugent of Guildford, L.

Exeter, M.

Nunburnholme, L.

Faithfull, B.

Orkney, E.

Ferrers, E.

Orr-Ewing, L.

Fortescue, E.

Penrhyn, L.

Fraser of Kilmorack, L.

Rankeillour, L.

Gainford, L.

Rawlinson of Ewell, L.

Gibson-Watt, L.

Reigate, L.

Glenkinglas, L.

Renton, L.

Gore-Booth, L.

Robbins, L.

Gormanston, V.

Rigby, L.

Gowrie, E.

Sainsbury, L.

Gridley, L.

St. Aldwyn, E.

446

Sandford, L.

Trefgarne, L.

Sandys, L. [Teller.]

Trumpington, B.

Savile, L.

Vaux of Harrowden, L.

Seear, B.

Vivian, L.

Skelmersdale, L.

Wakefield of Kendal, L.

Soames, L.

Ward of Witley, V.

Strathcarron, L.

Westbury, L.

Strathspey, L.

Wigoder, L.

Sudeley, L.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.

Trooping the Colour: Incident
3.52 p.m.
The Lord Chancellor: My Lords, before, from the Woolsack, I call Amendment No. 6, with the leave of the House perhaps I may now repeat a Statement being made in another place by my right honourable friend the Home Secretary. The Statement reads as follows:
"As the House is aware, on Saturday, 13th June, as Her Majesty was making Her way to the ceremony of Trooping the Colour, a man in the crowd of sightseers fired six shots of blank ammunition using an imitation revolver. A man was immediately arrested and has been charged by the police under Section 2 of the Treason Act 1842. As the matter is now sub judice, the House will realise that it would be wrong this afternoon to discuss the details of the incident itself.
"It has not been the practice, nor would it be desirable, to describe the arrangements made for the safety of Her Majesty The Queen and other members of the Royal Family, but I can assure the House that those arrangements are kept under continuing review, and have recently been re-examined. What occurred on Saturday is being carefully studied by the Commissioner of Police of the Metropolis, and full account will be taken of it in future planning arrangements. It is Her Majesty's wish that both on state and on less formal occasions she should be able to move freely among her people. Consistent with this everything will be done to keep the risks to a minimum.
"There has been concern in the past about the misuse of replica firearms. Although the law provides severe penalties for their misuse, I have asked my department, together with chief officers of police, to re-examine, as quickly as possible, what effective controls can be devised.
"I am sure that the whole House will wish to put on record its admiration for the calmness and control which Her Majesty displayed throughout".
My Lords, that concludes the Statement.
Lord Peart: My Lords, first, I should like to express the relief of the Opposition that neither The Queen nor any of her subjects was injured as a result of the incident last Saturday. I should also like to thank the noble and learned Lord the Lord Chancellor for the Statement that he has made. The Opposition wish to applaud and support The Queen's own view that the day must never come when she is unable to move

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freely among the people of the United Kingdom. I know that sometimes this creates difficulties and that it may involve personal danger. But we look to the Home Office to ensure that the risks involved are kept to a minimum.
In another place the Home Secretary has reminded us that the incident is now sub judice, and therefore it would be wrong for us to go into detail. However, all of us admire The Queen. Our constitutional Monarchy is something that we treasure and we hope that it will show to the people of many other countries that we are proud of Her Majesty for her courage and for all that she stands for.
Lord Wigoder: My Lords, we on these Benches should also like to express our respectful admiration for the incredible composure shown by Her Majesty at a moment which, at that time, must have seemed to be one of very real danger. I should like to ask the noble and learned Lord on the Woolsack only this question. Is it not a fact that year after year a substantial number of serious criminal offences, particularly of armed robbery, are committed by people using imitation firearms which are skilfully produced, which are advertised for sale without any restriction, and which are bought and sold without any limitation whatever? If that is so, would not the noble and learned Lord say that it is at least the intention of the Government to legislate as soon as possible to prevent this, once they are satisfied that there is a practicable way of doing so?
The Lord Chancellor: My Lords, I am very grateful to both noble Lords for the way in which this Statement has been received. I am sure that they were expressing the feelings of every person in this House in what they said about The Queen and the way in which she behaved on this occasion. Of course, she also showed very considerable horsemanship. It should not be forgotten that riding on horseback can lead to fatal accidents if the horse is in any way disturbed.
Responding for the moment to what the noble Lord, Lord Wigoder, has asked me, I do not know the figure for offences committed with dummy firearms. I have read in the papers of precisely this happening, and it is obviously one of the arguments which my right honourable friend will be taking into account when he looks at the review which he has said in the Statement will be undertaken. Quite obviously, in view of the words in the Statement I cannot go further this afternoon.
Lord Kennet: My Lords, I should like to associate all of us on this Bench, both present and absent, with what has been said by the noble and learned Lord the Lord Chancellor, and by the spokesmen of the two longer established Opposition parties, especially about the deportment of Her Majesty during the incident on Saturday. I should also like to put a question, which has been raised, to the noble and learned Lord in a slightly different way. Is it not now nearly time that we shifted our interest in preventing these attempts and apparent attempts away from the local protection of public figures—which events around the world in recent months and years have shown to be impossible
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to achieve to perfection—towards a yet stricter control not only of guns but of toy guns, replica guns, air guns or anything which can look, sound or smell like a gun?—as both democracy and Monarchy depend upon the free circulation of politicians and monarchs, and neither depends on the free possession of guns.
The Lord Chancellor: My Lords, obviously these are questions which we must all ask ourselves since our anxieties have been very well focussed by what happened on Saturday. I know that toy guns and the difficulty of differentiating the toy from the so-called replica are part of the problem which my right honourable friend is having considered. I have sometimes doubted the wisdom of toy guns myself. I think we perhaps sometimes underestimate the importance of child play in adult behaviour, but of course it raises a very big question. There are literally millions of objects which would fall into this category. Whether one is talking about replicas or toys there are a very large number already available in the country, and therefore if one turns off the tap now to a larger or a greater extent there would still be those objects which it would be very difficult to control. I think that that is about all I can say about that at the present stage.
Baroness Hylton-Foster: My Lords, I am sure that those sitting on the Cross-Benches will want to be associated with the feelings of thankfulness that no harm came to Her Majesty the Queen on this occasion, and also to express our congratulations on her courage at this very difficult time.
The Lord Chancellor: My Lords, I am very grateful to the noble Baroness, whose words will again find an echo in all our hearts.

British Telecommunications Bill
Report stage resumed.
Clause 4 [Redistribution of property, rights and liabilities among wholly owned subsidiaries]:
4.2 p.m.
Lord Morris Lord Morris moved Amendment No. 6:
Page 6, line 35, leave out ("exclusive privilege of providing") and insert ("power to provide").
The noble Lord said: My Lords, the purpose of this amendment is to draw your Lordships' attention to references in the Bill to an "exclusive privilege of providing" services when there is no such exclusive privilege. I believe it would be for your Lordships' convenience if we were to take Amendments Nos. 6, 12, 14 and 17 together because the principle underlying this amendment covers all four amendments. This amendment is a drafting amendment, for it really does jar that there should be a reference in these four places in the Bill to the provision of services which the corporation has the exclusive privilege of providing, when the clause of the Bill which covers the exclusive privilege—namely, Clause 12—refers only to the exclusive privilege of running telecommunication systems.
That apart, my noble friend Lord Trefgarne was kind enough to write to me on this very point. He suggested in the letter that my amendment might imply that British Telecommunications' powers are limited to the monopoly. The purpose of the amendment is nothing whatsoever to do with an attempt to limit the powers of British Telecommunications. Indeed, British Telecommunications' powers are not limited if one were to read Clause 2, which has very wide powers granted to British Telecommunications which go beyond the monopoly itself. I do not argue with that because they are obviously necessary. My noble friend Lord Trefgarne said in the letter that he believed that British Telecommunications should be free to compete outside the monopoly with the private sector provided that the competition is fair. I cannot see that this amendment in any way stops, or prevents, British Telecommunications from competing outside the monopoly. I would commend this amendment to your Lordships' attention.
I was also puzzled with the suggestion that the running of systems itself is not wide enough to empower British Telecommunications to carry out the necessary services attached to the running of systems. I do not believe that that is so. Indeed, my noble friend Lord Gowrie, on the first day of the Committee stage, on certainly two occasions stated that the intention of the Bill was indeed to limit the monopoly solely to the public switch telephone network and the provision of the first instrument. That being so, I would suggest that Her Majesty's Government should welcome this amendment. I beg to move.
The Earl of Gowrie: My Lords, it may assist my noble friend if I explain the purpose of subsection (4) of Clause 12, to which he has just referred and to which he drew attention when this House considered the clause in Committee. I apologise in advance that this is a detailed, rather technical matter but I shall do my best to make it clear. This subsection is no more than a definition of the phrase "services which the corporation has the exclusive privilege of providing". It does not create a new conclusive privilege; there is only one such privilege conferred by the Bill—that of running telecommunications systems. However, the corporation does have power under Clause 2 to provide telecommunications and data processing services, and of course it has a duty under Clause 3 to provide such telephone services as satisfy all reasonable demands for them. It is not an undue simplification to say that the running of systems for which the corporation is given an exclusive privilege is a means to the end of providing services. It is in the nature of things that some of these services, for example the basic public telephone service, could not be provided by anybody else unless they were to run a system, and to run a system would infringe British Telecom's exclusive privilege. These are what is meant by services which the corporation has the exclusive privilege of providing, and Clause 12(4) simply says so in order to try to make the meaning of the phrase precise.
It is necessary to be so precise because the phrase is used at several points in the Bill. These points which are picked out by my noble friend's other amendments, which we are now considering, are all ones at which
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British Telecom is either made subject to special powers, or is given special privileges or obligations, because it has a monopoly and is charged with a duty. It would not be appropriate for these powers, privileges and obligations to apply to British Telecom's competitive activities, and so to make this distinction the Bill refers to services which the Corporation has the exclusive privilege of providing. I hope this explanation will convince my noble friend that there is nothing sinister about Clause 12(4).
The amendments to Clauses 4, 6 and 9 have effects which my noble friend may not have intended. In each of these the intention of the Bill is to make provisions that apply only to services in which British Telecom enjoys a monopoly by virtue of its exclusive privilege to run systems. For example, Clause 6(5) allows my right honourable friend the Secretary of State to give the corporation directions when, in its provision of monopoly services, it is showing undue discrimination or preference. That is the watchdog role where monopoly is concerned. My noble friend's amendment, if read with its natural meaning, would extend that watchdog power to all services. But British Telecom's competitors would not be subject to such directions, and they would therefore enjoy a potential unfair competitive advantage over British Telecom, and I do not believe that that would be right.
The amendment to Clause 9(2), in its natural meaning, would limit the power of my right honourable friend to withdraw services from the scrutiny of the Post Office Users' National Council so that it applied only to those services that the corporation did not have power to provide. That would, therefore, nullify the provision, which I am sure is not my noble friend's intention. With that explanation of the meaning of Clause 12(4), I hope he will not press the amendment.
Lord Morris: My Lords, I am not happy with that explanation. Before deciding the course to adopt, may I ask my noble friend whether he thinks the answer might be to refer to the "exclusive privilege" in the heading of Clause 12, which might handle the objection to the reference elsewhere in the Bill to "exclusive privilege" and which apparently does not appear in the Bill?
Lord Orr-Ewing: My Lords, I do not like the provision where Clause 4(3) states quite clearly:
"with the provision of services which … the Corporation has the exclusive privilege of providing".
It does not enumerate the services, and I think any person could argue that that relates to all services, yet we have specifically encouraged competition in services because we know it is an area where the Post Office is rather weak. I therefore urge my noble friend to look for a solution perhaps at this point in the Bill, at Clause 4(3), because at present it does not make sense to me and I am sure it will not make sense to many people reading the Bill.
The Earl of Gowrie: My Lords, I think both my noble friends are unhappy about something which is not in the nature of policy or in the nature of the Bill but which is primarily semantic. We are concerned to see that the common or everyday use of the word "services" can continue to function because, as I

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said in my opening response, there are conditions in which the running of systems, which is the exclusive privilege of British Telecom and which I think we all accept, tangents on to services; it is in the nature of things that the basic public telephone service could not be provided by anybody unless they infringed the monopoly to run a system.
We have taken care, at the risk of the ordinary pedantry of legislation, to spell out this distinction between systems and services throughout the Bill by the repetitions I have mentioned, and I think is necessary. However, if we went down the road my noble friend suggests, my advice is that there would be confusion where the use of the word (this is the semantic point) "service" in fact implied the running of a system. That principle is clear and we have tried, therefore, to clarify the language in respect of it.
Lord Morris: I was not of course suggesting anything sinister in the use of the words "exclusive privilege" as applied to the services, my Lords. However, I believe this could be an important point because from, an observation made in Committee by my noble friend Lord Trefgarne, I understood that the Post Office had never prayed in aid the exclusive privilege point since the passing of the 1969 Act. Apparently what they do pray in aid are their property rights in the equipment—that would be the cable, junction boxes, the telephone instruments, the items which come under the terms of the schemes through which they provide the services—and it is that about which I am concerned because they have the ultimate sanction of pulling out the plug.
The Earl of Gowrie: I think I have made the position clear, my Lords. While both my noble friends Lord Morris and Lord Orr-Ewing have made the area in which they have some disquiet clear, I am saying there is no justification for that disquiet. While we have phrased the Bill in such a way as to make that distinction between systems and services, very often the word "service" is used in a context where the running of a system is also implied. That is the problem we have had and I have outlined the way we have tried to solve it. I do not think there is any need for my noble friends' disquiet in that as we have the basic principle of the monopoly in running the system into which services can be slotted or injected, those services can be provided by British Telecom in free competition, and they can also be provided by other organisations, and that is the purpose of the liberalising passages of the Bill. I do not believe, therefore, that their anxiety is justified, but I shall read in Hansard what they have said and if I find that my use or the Bill's use of semantics is at variance with theirs, I shall table a Government amendment at a later stage. I hope with that assurance my noble friend will not press the amendment.
Lord Morris: I am most grateful to my noble friend, my Lords, and it would be churlish of me not to thank him warmly for a much fuller explanation than was received at an earlier stage of the Bill. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
4.17 p.m.
Lord Lyell Lord Lyell moved Amendment No. 7:
Page 7, line 22, after second ("to") insert ("a transfer by or").
The noble Lord said: My Lords, I am sure the House will be grateful if I speak at the same time to the following amendments: Nos. 8, 16, 65, 66 and 89. These are drafting amendments to ensure that all references to the transfer of property rights and liabilities under the Bill are phrased in the same way. This group of amendments removes a number of minor inconsistencies in the drafting of the Bill.
On Question, amendment agreed to.
Lord Lyell Lord Lyell moved Amendment No. 8:
Page 7, line 23, after ("to") insert ("a transfer by or").
On Question, amendment agreed to.
Clause 5 [Control of wholly owned subsidiaries]:
Lord Morris Lord Morris moved Amendment No. 9:
Page 7, line 43, leave out sub-paragraph (ii).
The noble Lord said: My Lords, I think it would be convenient to the House if I spoke at the same time to Amendment No. 10. I raised this matter in Committee and in so doing questioned the necessity for a public trading corporation to have need to hide behind the skirts of a nominee company. I was assured at that stage that my noble friend would look at the matter again and I tabled the amendment in order that he might do just that.
Lord Lyell: My Lords, as my noble friend said, this subject was raised in Committee and, as the House may be aware, my noble friend's proposal would require British Telecom or a wholly-owned subsidiary to obtain the consent of my right honourable friend the Secretary of State before it issued any shares, stocks or other interest to a nominee of British Telecom itself or to one of its wholly-owned subsidiaries. The definition of a wholly-owned subsidiary of another body corporate which we find in Section 150(4) of the Companies Act 1948 means that even if shares in a wholly-owned subsidiary of British Telecom are transferred to a nominee of that company, or to a wholly-owned subsidiary, that company remains a wholly-owned subsidiary subject to the same controls under the Bill. There is thus no need for the Secretary of State's consent to be required.
I am sure that the House will be aware that the use of nominees is a perfectly standard business practice, and certainly it cannot be ruled out that British Telecom may find it convenient to operate in this way at some stage. The Companies Acts require every company to have not less than two registered shareholders and so, in effect, it is necessary that at least one share in each wholly-owned subsidiary should be registered in the name of a nominee.
That explanation was of necessity slightly technical, but I hope that it will go some way towards enabling my noble friend Lord Morris to feel more satisfied than he did on an earlier occasion.
Lord Morris: My Lords, I am most grateful to my noble friend for that explanation. In the light of my

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slight misgivings about a public corporation hiding behind the skirts of a nominee, I should like to ask whether it would be possible, not by legislation, but by executive order, for Her Majesty's Government to instruct British Telecommunications that, where it is not the de jure owner of shares in subsidiary companies, but is the beneficial owner, a statement to that effect be made? That would make it quite clear to members of the public that the beneficial owner of the shares was a public corporation.
Lord Lyell: My Lords, my noble friend has, in cricketing parlance, howled me something of a tricky and fast ball. I shall answer with a dead bat and say that if my noble friend's wishes cannot be met, I shall certainly endeavour to see what can be done. I hope he will agree that I should write to him on the last part of his query.
Lord Morris: My Lords, I am most grateful to my noble friend for that reply, in the light of which I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 10 not moved.]
Clause 6 [General control and supervision by the Secretary of State]:
4.23 p.m.
Lord Morris Lord Morris moved Amendment No. 11:
Page 9, line 12, after ("agreement") insert ("including the obligations arising by virtue of the provisions of Article 90(l) of the Treaty of Rome").
The noble Lord said: My Lords, at the Committee stage I spoke at hideous length and, I fear, with some complication to an amendment similar to this one, and no doubt your Lordships will be delighted to learn that I shall not retrace those steps. However, in his answer my noble friend Lord Trefgarne raised a point which, following some research, I believe has some merit. He said, as reported at column 524 of the Official Report of 12th May,
"where in a situation such as this one identifies a particular international agreement … then in certain circumstances one tends to imply that other international agreements are not therefore necessarily covered".
It is for that reason that I have altered the amendment slightly from the form in which I tabled it at the Committee stage. Previously the amendment read:
"… and in particular to facilitate the discharge of the obligations by virtue of the provisions of Article 90(1) of the Treaty of Rome".
I have changed the opening words from "and in particular to" to
"including the obligations arising by virtue of …"
et cetera. I believe, no doubt wrongly, that that meets the point raised by my noble friend Lord Trefgarne. With those words I beg to move.
Lord Lyell: My Lords, my noble friend Lord Morris has this afternoon added to the very lucid account which he gave at the Committee stage. I hope that he will not expect me to go further into a definitive opinion on a matter as intricate as European Economic
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Community competition law, and in particular all the implications of Article 90 of the Treaty of Rome. I would agree that British Telecom is bound by EEC law in the way in which it conducts its business. British Telecom must very carefully avoid illegal abuse of a dominant market position, and I can, and do, go so far as to reassure the House that both the Government and British Telecom are in regular contact with the Competition Directorate of the European Commission on this particular matter which my noble friend has raised.
However, I fear that I have a divergence of opinion with my noble friend over the need to add to Clause 6 of the Bill a specific mention of the Treaty of Rome. Clause 6(4) is a general, and indeed necessary, provision which among other things enables the Secretary of State to give directions to the corporation to secure compliance with the United Kingdom Government's international obligations. These obligations arise in many fields, including, for example, that of defence; the Treaty of Rome is one among many. If the wording proposed by my noble friend Lord Morris were to be adopted, it would elevate obligations under the Treaty of Rome above any other international obligagations. Should there ever be a conflict in the field of telecommunications between, for example, our obligations to NATO and those under the Treaty of Rome, the Secretary of State would have to give priority to the obligations to the EEC. This turn of events might be very unlikely, but should our obligations to two differing international bodies ever clash, then the Government would certainly wish to consider this particular matter on its merits, and in consultation with our partners in other countries which are affected by the point at issue. Therefore it would be wrong for the Bill to prejudge this issue.
We are very grateful to my noble friend for the clear way that he has drawn attention to the relevance of Community law to all who compete in the telecommunications market, and above all to British Telecom. I hope that the explanation that I have given is not too hypothetical. We believe that it is realistic and that my noble friend's query is a little beyond the bounds of reason at the moment.
Baroness Phillips: My Lords, before the noble Lord proceeds to deal further with his amendment, I should like to say to the Minister that I found his explanation very curious. He says, "Maybe", but we are dealing with rather important legislation. As I understood it, what he said in essence was that if a particular treaty is named, it must take priority over treaties that are not named. Surely that would introduce a rather strange form of government. As we are all aware, we suffer all the time from directives from the European Communities. These directives affect us all the time, whereas treaties with NATO and other bodies do not affect us in the same way. I think that the noble Lord, Lord Morris, is on to a very important point. I do not know what he thinks, but I do not regard the explanation offered by Her Majesty's Government as very satisfactory.
Lord Morris: My Lords, I must confess that I am now slightly more enlightened than I was. As I understand my noble friend's explanation, it seems to be

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based on a somewhat esoteric form of construction. My sole intention in suggesting the amendment for inclusion in the Bill was (as my noble friend suggested) in order to draw attention to the vitally important fair competition provisions of the Treaty of Rome. I thought that this was a neat and brief way to go about it. I believe that this matter is very important because of Her Majesty's Government oft-stated view that one of the primary tenets of the Bill is that the British Telecommunications Corporation should trade on a fair basis with the private sector, and indeed vice versa. However, in the light of what my noble friend has said, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 12 not moved.]
4.30 p.m.
Lord Caccia Lord Caccia moved Amendment No. 13:
After Clause 8, insert the following new clause:
("Annual report by Secretary of State
. The Secretary of State shall prepare and publish annually a report to Parliament on the performance of his responsibilities with respect to telecommunications under this Act with particular reference to those functions carried out by him under sections 6, 12, 15 and 16 below.").
The noble Lord said: My Lords, with this Bill we are setting out on a new course for telecommunications in this country, involving wide-ranging and important powers of the Secretary of State, a position for British Telecommunications and the interests of industry and the consumer.
If I may say so with respect, the answers given by the Government in another place and here have helped a great deal to explain, whether or not you like the Bill, how the Government intend that it shall operate. But it is a new course, and both for the purposes of Parliament and of industry, and of the consumer, is it not highly desirable, at the least, that the Secretary of State should annually give some account of the way in which he has carried out the very important and, I say again, wide-ranging functions which the Bill confers upon him?
True, under Clause 6(12) British Telecommunications will have to produce an annual report, but, although it might be possible to deduce from such a report what has been the part played by the Secretary of State in any year, the question arises whether this is a wholly satisfactory way of proceeding. I would suggest that in his own interests, even, the Secretary of State might wish to supply a separate annual report, and thereby not put everything on to British Telecommunications in this respect. As I say, you might be able to deduce what he had done but you would not hear in his own words what his decisions had been.
True, also, under Clause 6(7) it is laid down:
"The Secretary of State shall lay before each House of Parliament a copy of every direction given under subsection (6) unless he is of opinion that disclosure of the direction is against—

(a) the interests of national security; or

(b) the commercial interests of any person".

But, of course, his powers are very much more wide-ranging and important than those covered by that provision in subsection (7).
It is with those arguments in mind that I would propose
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this amendment. I recognise, of course, that it may not be in a form which the Government would find acceptable, either as to its place in the Bill or as to its wording. But I would draw attention to the fact that it also sets out the particular respects in which the Secretary of State may wish to give an annual account of his functions—namely, under Clauses 6, 12, 15, and 16. But those are not exclusive, and the main purpose of this amendment is to suggest that in the general interests—parliamentary interests and the interests of industry—the Secretary of State would himself wish to lay an annual report. I beg to move.
Lord Orr-Ewing: My Lords, I am really hopeful that for the first time—I think I have taken part in the debates on a number of amendments to successive Bills, first the Employment Bill and now this Bill, both dealt with by my noble friend, and always with elegance, courtesy and efficiency—this proposal that the Secretary of State should publish an annual account might be accepted. Surely every single major corporation produces an annual account. They have consumer councils, as POUNC does in this case, and it is a perfectly customary arrangement. I feel sure that, of all the nationalised industries, British Telecom, with a virtual monopoly, even after this Bill, would not want to be the only one which does not publish an annual account. It is of such importance to so many people in this country that I think it is right that an annual account should be published.
We shall go on later to discuss various amendments, but I notice that a brief sent to me by the Post Office Engineering Union—it is a brief which I believe the noble Lord, Lord Glenamara, has also probably had, judging from one or two of the phrases that he has used —says that they want to ensure,
"that the Secretary of State pays proper attention to the impact of his decisions on the manufacturing sector".
This is behind much of what the noble Lord, Lord Caccia, said. We want the Secretary of State to bear responsibility and to give an account of that responsibility in an annual report, and to make sure that he carries out all the consultations, not just with BT but with the industry in general and other aspects of this very important sector.
There is something else I must mention here. My noble friend dealt with the breaking up of the BBC monopoly, and I was very concerned with that in my early days in the House. I remember all the warnings; but I also remember that even when that monopoly was broken there was a cosy relationship—a very cosy, almost too cosy, relationship—between the Postmaster-General's Department and the BBC. This had grown up over 20 or 30 years, and I have no doubt that over the years the same relationship has grown up between the people responsible in the Ministry and British Telecom. Therefore, I would hope that we make sure that proper consultation is carried out before coming to decisions, not just with British Telecom but with all other people—the industry in general, and other people closely concerned with the well-being of this industry and, therefore, of course, with our exports, with our technology and with the well-being and prosperity of telecommunications.
Earl De La Warr: My Lords, I should like to say that I think the idea behind this amendment is a very sensible one indeed. The Secretary of State has, after all, given himself unusually wide powers over the whole industry—British Telecom in particular, but not confined to British Telecom. I quite understand why he has done it. He is trying to achieve something that is right at the heart of what has been called the new industrial revolution, and in order to do that he has wanted to make sure that at least in reserve he has the powers to see that certain very important and new things happen. So, as I say, it is understandable.
But, from that, does it not follow that it is also understandable that Parliament would wish, once a year, just like the shareholders of any private enterprise company, to have an account from the Secretary of State as to how he has exercised his stewardship? That is all that is being asked. One would hope that the Secretary of State would be happy to go to Parliament and say, "This is what I have done", and perhaps take the opportunity to say as well, "And this is the way I am thinking about the future". So this suggestion appears to me to be eminently reasonable.
Having said that, I recognise—and I think this was behind something that the noble Lord, Lord Caccia, said—that there may be difficulties, particularly in the wording of this amendment. I think that what I, for one, want to hear (I cannot speak for the noble Lord, Lord Caccia) is an undertaking from the Government that it is their intention to come before the House once a year and offer an account of their stewardship, and to give both Houses the opportunity to make their comments. If my noble friend finds it difficult, as possibly he may, to put this into primary legislation, then speaking for myself alone, because I cannot speak for anybody else, I would be very happy to hear him give an undertaking, provided only that it is very specific. If he can do that, then it is possible that some of us will be satisfied. But I repeat that the principle that is behind the noble Lord's amendment is in my opinion an admirable one.
Lord Harmar-Nicholls: My Lords, my instinct is against this amendment. I recognise the attractiveness of cosmetically appearing to keep Parliament fully in the picture, and that this ought to be the case. One recognises that one could preen oneself that one had protected the nation by getting these annual reports. But my instinct is against it because statutory annual reports of all sorts become such a formality that they often do not play an important part in explaining the picture or in a sharing of minds with others. Where there is a great difference in this matter with private industry, to which my noble friend Lord De La Warr referred, is this. Private businesses have not got Question Time every day where any Question one wants to put can be dealt with and one is kept up to date. Private businesses have no Adjournment Debates. Private businesses have not the same facilities for Ministers in charge to come and give reports, not necessarily annually but when they think they are necessary.
I recognise the purity of writing into the legislation that under statute we must have a report; but I do not know that one wants to be cosmetic on this. We do not want to put the onus on this department or on
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that department of making a report just because they have to do so, irrespective of whether the conditions under consideration necessitate it, particularly when we have all the other opportunities which are denied to private business to know how things are going on. For my sins, I am a chairman of companies and of a couple of public companies and we have to give half-yearly reports, which are now to be made three-monthly reports and then we have the annual report of the chairman. We know how formalised that is. I think it is right in the case of private industry because they do not have these alternative ways, nor can the shareholders question the management with the same ease as we can in Parliament. I would say that, attractive though it seems and purist though it is, in the sense of having it written into the Bill, I would not wish this amendment to be accepted. I would leave it to the good sense of Parliament to decide when it wants to know something at Question Time and on adjournment, and so on. I would leave it to the good sense of the Minister to use his judgment as to where he thinks there ought to be a sharing of minds with Parliament.
Lord Orr-Ewing: My Lords, is my noble friend wrong in referring to leaving it to the good sense of Parliament? We cannot probe into the details of nationalised industries, into their price structures, into their policies, into delays in issuing licences or into whether licences have been given. None of that is open to us to discuss in detail. Only the broad structure and capital expenditure of the nationalised industries come under the control of Parliament. It is a problem that Parliament has not yet resolved.
Lord Harmar-Nicholls: My Lords, my noble friend and I have been in and around Parliament for the past 30 years. He knows well there are many opportunities for him and for any other Member, on adjournment and in other ways, to find out what he wants to know. Nothing is kept from the probing of MPs if they really want to know about it. It may not be done in a formalised way as in an annual report, but there is no question but that, if any Member of Parliament wants to know anything about anything in this country, he can find out if he uses the machinery properly. Putting this in a formalised way, attractive though it may seem, is an unnecessary burden and will cause the use of a lot of paper and words which will not get us anywhere. It is up to Members of Parliament, apprised, as they are, by their constituencies as to what is wrong, to use the facilities which are open to them and not to formalise their methods. I do not know what will be the reaction of my noble friend on the Front Bench. He may want to accept it; but I still think it is unnecessary.
Lord Byers: My Lords, before the noble Lord sits down, I think it is important that he should get the record right. The noble Lord gives the impression, which will go abroad out of this House, that you can deal with the day-to-day working of nationalised industries by asking a Question in another place. Such a Question would be stopped by the Table. It would not be allowed to go forward.
Lord Harmar-Nicholls: My Lords, I say to the noble Lord that the probe you can make if you have an annual report (as is proposed here) is no wider and gives no more opportunity to go into depths than if you use the facilities in this place. If you have an annual report, you are still prevented by the Table from going into the day-to-day running of the nationalised industries—and rightly so. The fact that you have an annual report will not overcome the freedom that we rightly give to the nationalised industries who have to run separately and who need freedom. There is nothing you can do arising out of an annual report that cannot be done by Questions or an Adjournment Debate or the proper use of the machinery set down in Parliament for the use of Members.
Lord Noel-Baker: My Lords, may I support what was said by the noble Lord who has just sat down? When I was in the other place in charge of nationalised industries, coal, gas and electricity, I had a dispute with the late Lord Morrison (the then Herbert Morrison) about answering Questions there on day-to-day management. In fact I never refused to answer a single Question put to me by any Member of another place. The Table never made any trouble and I always found it of the utmost advantage both to the nationalised board and to the other place to have the fullest information given at Question Time which anyone could ask for.
Lord Morris: My Lords, I find it unusual that I should have to disagree with my noble friend Lord Harmar-Nicholls, with whom I normally agree on almost every subject. However, I believe that he is not aware that the whole point of this amendment is that if the steward has to account then it concentrates the mind wonderfully. If one compares the other nationalised industries with British Telecom, then it is plain to see that in the case of British Telecom, unlike many other nationalised industries, the Secretary of State has considerable powers, far more so than in British Rail or the gas board or others. This is the key. It is not so much that he should account for his good stewardship and for what he has done, but, above all, for what he has not done and what he intends to do. It is essential to planning in industry because it affects directly and indirectly the private sector operation. It is this worshipping at the altar of more open government that commends this amendment to me.
The Earl of Gowrie: My Lords, I think the fact that there has been this lively debate indicates that people are concerned about a problem which is not peculiar to this industry or to this parliamentary system, but to the whole question of relationships between large public trading sector industries and questions of public accountability and the accountability of Ministers who sponsor them but do not run them. I share many of my noble friends' innate feelings that in an ideal world we would not have started down this road of large public trading sector monopolies with sponsoring Ministers but that it would be disruptive and difficult to alter them or to change the system altogether. What we seek to do is to try to liberalise them and thereby introduce elements of organic change.
During this process it is obviously necessary that
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two things obtain. One is that one can scrutinise the sponsoring and responsible Minister; and I think my noble friend Lord Harmar-Nicholls was very clear, in that that is available to Parliament and that Parliament is not noticeably reticent in grilling its Minister. Whereas all Ministers, I suppose, from time to time seek refuge in the old formula about "these are matters for the day-to-day running" of the Post Office or whatever industry it is, they can seldom get away with that for very long if parliamentarians actually seek to raise the matter not only in Questions but in Adjournment Debates, Unstarred Questions or general debates in this House.
Against that general issue of principle (which I thought my noble friend Lord Harmar-Nicholls answered very well) there is an additional reassurance available to those who, like the noble Lords, Lord Caccia, Lord Morris and Lord Orr-Ewing, are concerned that there will not be enough data for us in Parliament or members of the public generally to make assessments about the performance of what is, we hope, an expanding public industry, but also an industry which will of course absorb very large sums of money.
I have quite a detailed brief, but the burden of what have to say can be put very shortly. I agree with the noble Lord, Lord Caccia, in what he seeks to achieve, but I feel that what he seeks to achieve is covered by the Bill, not simply by existing parliamentary procedures—though those put forward by my noble friend meet some of the objections that he raised—but by the publications, running and activities of the corporation. To add to the cover in the form of a statutory obligation would add to administrative and other costs which those of us on this side of the House are equally particularly keen to keep down. My noble friend Lord De La Warr left me a loophole here in his kind and tactful way by suggesting that if I could convince your Lordships that the matter was covered, it might not be the most appropriate thing to do to add to that cover by a statutory obligation.
Before going any further, I should just like to clear up one technical point. The new clause proposed by the noble Lords, Lord Caccia and Lord Orr-Ewing, refers to responsibilities of the Secretary of State, under Clauses 6, 12, 15 and 16, but, so far as I am aware, the Secretary of State has no direct responsibilities under Clause 12. I shall therefore refer only to the other three clauses mentioned.
I hope that it will be agreeable to the Liberal Benches in particular—and the noble Lord, Lord Byers, did come in briefly on the debate—if I discuss Amendment No. 39 with this amendment, which is the same general point of principle, though this does not pre-empt in any way Amendment No. 39 being moved later. Under Clauses 6, 15 and 16 the Secretary of State has a number of powers to give the corporation directions in certain circumstances.
It will reassure my noble friend if I remind them that Clause 6(13) provides that all such directions (with the only exception of national security issues) must be published in British Telecom's annual report, which the Secretary of State must lay before each House of Parliament. Moreover, any directions given by the Secretary of State to the corporation for the creation of subsidiaries or the disposal of any assets must (except in specialised circumstances of the kind

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I have mentioned) be laid by him before Parliament at the time the directions are given, irrespective of the fact that they will be published later in the annual report. Then again, under Clause 15, all general licences must be published, and under Clause 16 notification of an approval of a standard or a variation in or any withdrawal of a standard must also be published.
There is already provision, as the House will be aware, for the publication and/or notification to Parliament of the performance of most of the Secretary of State's responsibilities under these clauses. Those that are not specifically provided for are in Clause 6. My right honourable friend's discussion of the research and development programme, his approval for their capital investment programme and his ability to request information of the corporation, would all be covered in the annual report. As I have already said, the annual report has to be laid before Parliament. The capital programme, which is of great concern to Parliament at the moment, is inevitably also published in the annual Public Expenditure White Paper.
Moving to new Clause 39, the new clause proposed by the noble Lords, Lord Lloyd and Lord Winstanley, that suggests that the Secretary of State's annual report should refer specifically to the exercise of his powers in respect of finance, innovation and export. Now again in this case, the exercise of his financial powers will be covered twofold: once by the annual report laid before Parliament, and by the Public Expenditure White Paper. I am not sure which power noble Lords are referring to as regards "innovation" and "export", but I can only assume that they must mean the powers under Clauses 6(9) and 15, to which I have already referred.
In sum, my Lords, I believe that all the statutory obligations laid by the Bill on the Secretary of State to publish or notify Parliament of his actions provide an adequate check on the exercise of his powers, and the nub of my objection to an annual report—which is an admirable principle in the private sector, as we have acknowledged—is that it would simply repeat information of which Parliament had been notified in most cases twice over already. If we add that notification to the ordinary powers of ordinary Members of Parliament and ordinary Members of your Lordships' House, which my noble friend Lord Harmar-Nicholls clearly delineated, we would be piling Ossa on Pelion to go for a statutory annual report in the way that has been proposed.
I hope, therefore, that the statutory objection will be the objection that is laid at my door rather than any doubt on my part or obfuscation by me as to this accountability and this possibility for scrutiny not being of the first importance, not only to the parliamentary system but also to the healthy development of this corporation.
Lord Caccia: My Lords, I am grateful to the Minister for that reply and clear account of the various ways in which the Secretary of State will—as he already is—be brought to account to Parliament. I should like to study carefully what he said. If necessary, I shall return to this at a later stage.
At this stage I would only say to the noble Lord, Lord Harmar-Nicholls, that I entirely sympathise
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with all that he has to say about the undesirability of the proliferation of more paper work. We are all drowned by that already. Admitedly, by question and answer we often can get the information which is needed, but, as has already been said by the noble Lord, Lord Morris, there is a difference here, in that the Secretary of State is being given far wider powers under this Bill than otherwise has happened in other cases quoted.
Secondly, the procedures under the Bill are going to be of vital interest not only to the corporation itself but of course to the whole supporting industry. It was with those considerations in mind that I had thought it might be of general use and interest to Parliament, to industry and to the consumer that there should be an opportunity once a year, quite apart from the annual report of the British Telecommunications Corporation—that is a different thing—to learn once a year how the Secretary of State had dealt with his responsibilities. Perhaps I may take up the words of the noble Earl, Lord Dc La Warr, in suggesting that something more is demanded than all the individual bits and pieces that have gone before Parliament during the year in the way described by the noble Earl, Lord Gowrie, even including some indication of the way in which he intends to develop the considerable powers that he has under this Bill and the procedures he wishes to follow. Perhaps the noble Earl would also give some consideration to this aspect. Subject to that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 14 not moved.]
5.01 p.m.
Lord Orr-Ewing Lord Orr-Ewing moved Amendment No. 15:
After Clause 9, insert the following new clause:
("Regular consultation by Secretary of State
. The Secretary of State shall make formal provision for consultation on a regular basis with the Corporation, Users' Councils, business and domestic users of the Corporation's systems, suppliers of telecommunications systems and services, and others with relevant interests or experience.").
The noble Lord said: My Lords, this follows in the same group as Amendment No. 13, which we have just discussed, and I think it might be for the convenience of the House and of my noble friend if I took Amendments Nos. 15 and 35A together, and thus helped to speed up the process.
My noble friend and the House will be aware that all these three are alternative, fall-back positions, because many of us felt that there should be a "buffer" state between the very big responsibilities put on the Minister himself under this Bill, and the other interested parties. We had advocated in Second Reading a telecom authority and many other people and representations from trade associations, trade unions and the like, have all suggested that this might be a good solution. But the Government appear to have turned their minds and heads against this particular solution and therefore we are moving a series of amendments as an alternative to make sure that the Minister does give a proper account of his responsibilities and answers in other ways.
We were advocating a body similar to the Civil

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Aeronautics Authority or the IBA, but that again was rejected. The point really is that he has to consult the trade associations, the telecommunications industry as a whole, the BSI, the BEAB, British Telecom, the new corporation, and indeed he has to take the responsibility for licensing. On that last one, I should like to quote some of the anxieties which were voiced by the National Computing Centre in their journal of April 1981, which succinctly put the point—I may say that they again wanted a telecommunications authority. They say.
"Without such a body there is now the possibility under the Bill as it now stands that de facto control of licensing could revert to BT or be exercised within the Department without sufficient evidence of public discussion of the issues, neither of which seems to us to preserve user interest."
That is exactly the point I was trying to make on the amendment of the noble Lord, Lord Caccia.
Regarding these amendments, I would ask my noble friend to consider whether we have not got an alternative, more accountability. For instance, it has been put, and it was put again by the National Computing Centre in a report they have sent to Sir Keith Joseph, which is to be published shortly, I think, when they said they were worried about the pricing policy of British Telecom. For example, they could so charge users for the facilities they have as to slow down progress until such time as they could come in with a competitive piece of apparatus and be ready to compete with the private sector. That surely is anti-social, and it is not the intention of my noble friend in this Bill to produce that state of affairs.
Also in this Bill there is no appeal mechanism. How are we going to be sure that people will not feel they have been wrongly treated if they have produced a piece of equipment for which they believe there is a market and regarding which they have risked their own money on R & D, on testing the equipment, presenting it to the BSI and other bodies and they are also ready to market it and risk their own money in so doing, and they cannot then get a licence? Who do they appeal to? Judge and jury in every case is the Minister. That is why we thought we would bring forward this series of amendments and in them we ought to make it quite clear that the Minister has this responsibility and that he should so man-up his Department with people who become professional so that they they should not be dependent on British Telecom for their advice—least of all in fact British Telecom. By having that body they should then carry out the responsibilities which are now given to them. We have very considerable perturbation as to whether he will be suitably equipped to carry them out, but at least these amendments do lay down exactly what he should do and how he should carry out his duties. I beg to move.
The Earl of Gowrie: My Lords, these amendments would place a formal obligation on my right honourable friend the Home Secretary to consult interested parties at regular intervals. I am grateful to my noble friend, in the interests of getting on with the Report stage, in that he recommended that we should also look now at his new clause, Amendment No. 35A. My brief argues that the same substantive issues are
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covered by Amendment No. 36 in the names of the noble Lords, Lord Lloyd of Kilgerran and Lord Winstanley. I notice the noble Lord, Lord Byers, nodding at that, and perhaps I may therefore speak to that as well.
I am certainly in complete agreement that effective consultation will be indispensable to the Government in achieving their policies in the sphere of which the Bill forms a part. I think my noble friend is aware that the Department of Industry already has a consultative committee on which sit representatives of all the interests which are listed in his amendments. As well as consulting through this representative body, the Department is in regular contact with a great many individuals and organisations which are concerned about telecommunications. From time to time it has more formally invited the submission of users' views, as is happening in the consultations arising in connection with Professor Beesley's report. The value of this approach to consultation lies in its flexibility and in the fact that it can occur as and when it is necessary. Therefore I do confess that I have some difficulty with these amendments in that they do provide a rather less flexible system by imposing a formal and statutory requirement to consult interested parties at these regular intervals.
Of course, there is a place for a consultative group, as I have said already, which already exists. Our philosophy is that the strength and value of the work of such a group owes a great deal to the fact that it is there to respond to a need rather than to a statutory imposition which could, I think, be regarded as a burden but more relevantly perhaps, it would effectively mean that the existing flexible procedures would inevitably, in order to avoid duplication, have to be abandoned if this statutory road were chosen.
Also in respect of my noble friend's new clause, if I am reading it aright, I am myself doubtful as to whether it would be right to set out in a statute a requirement that certain bodies must act in accordance with certain policies if you do not at the same time also set out in the statute what those policies are. You would get muddled law there. Either the Government's policies are embodied in law, in which case, of course, the corporation and other bodies have to obey them, or the Secretary of State has to use his powers of persuasion to see that his policies are implemented. It does not seem to me to be very compatible with our legal system to enshrine in statute quite the open-ended requirement that my noble friend's new clause seeks to do.
But while I have that technical objection, as it were, I believe that I can put my noble friend's mind at rest in relation to policy, in relation to our determination to ensure that the corporation carries out Government policies. I can remind him that the Secretary of State has a number of powers in the Bill to give the corporation directions of both a general and a specific nature, which can be used to bring it back on course if it is thought to be straying. I refer to Clause 6(3) and (5), Clause 16(2), Clause 6(6) and Clause 15(2). On many occasions, I have said that I consider most of these powers in this Bill to be reserve powers and the Secretary of State does not expect to have to use them frequently. But they are, of course, there and, therefore, the corporation does not need a further

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statutory method to see that it is carrying out Government policies.
I hope that what I have said has reassured the House that we are not in any way seeking to prevent consultation. One would not want that, and development of the industry would be quite impossible, so long as a large part of it was in the public sector, without such consultation. In view of that reassurance and that indication that the Government are susceptible of common sense, I hope that my noble friend will be able to withdraw his amendment.
Lord Orr-Ewing: My Lords, I am most grateful to my noble friend. He did not mention Amendment No. 35A and the new clause in which I mentioned "without delay" and "with reasons". There are many ways of "belling the cat", and one of the ways about which Government departments are very wise is an unconscionable delay in giving decisions. Delays in competitive industry are very expensive, if you are using your own money, paying heavy interest and waiting for some "pay-back". Can my noble friend assure us that there will not be unconscionable delay, and that when licences are rejected by the Secretary of State the person applying will, at least, be given some explanation that will allow him to direct his attentions to modifying the apparatus that he is developing, and then to resubmit it for inspection purposes to see whether he can market it? Could my noble friend deal with those points and, if I am reasonably satisfied—and I am sure that I shall be, because my noble friend is very co-operative in these areas—I shall then beg leave to withdraw the amendment. Perhaps he could deal with those points first.
The Earl of Gowrie: My Lords, I take my noble friend's point about the necessity not to hold decisions too long, and I do not think that anybody has a very glorious record in the public trading sector on this front. But it is important that the right decision is made; and we have also been debating the need for consultation. What I have to rest on is that various noble Lords have pointed out that the Bill gives the Secretary of State wide powers.
Some have expressed certain doubts about these, but even if those doubts are well- founded—and I have tried to show that, in most cases, I do not think they are—there is, at least, the "upside", the benefit side, of the wide powers of the Secretary of State; that if something is taking too long or is interfering with policy, with the development of the corporation, with the interests of the taxpayer, with the public sector borrowing requirement or whatever, you have this fellow to grill, to interrogate and to throw coconuts at, if need be, and can urge that he gets along with it. Therefore, I should have thought that those wide enabling powers are something of a guarantee that decisions are taken with all due expediency.
If we enshrine in statute that they have to be taken with expediency, however worthy that is and however much we all approve it, we shall then probably have to take out of the statute anything that could contribute to delay which might also be worthy, in the way of consultation or whatever. Otherwise, the law will be in a muddle and will be bad law. But I recognize
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how damaging economically it can be for important decisions to be postponed. Of course, British Telecom will have a very considerable degree of independence in its operating decisions, and it is certainly aware of the perils of delay. If, for some reason, it appears to be dragging its feet, then, as I said in the previous debate, we have methods of getting at the Secretary of State in order to get him to see that it gets a move on.
Lord Orr-Ewing: My Lords, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 10 [Transfer to the Corporation of certain property, rights and liabilities of the Post Office]:
5.17 p.m.
Lord Lyell Lord Lyell moved Amendment No. 16:
Page 14, line 20, leave out from second ("Act") to end of line 21 and insert ("includes a reference to a transfer under subsection (6)").
The noble Lord said: My Lords, this is part of a series of technical amendments to which I have spoken. It goes with Amendment No. 7 in the series. My Lords, I beg to move.
On Question, amendment agreed to.
[Amendment No. 17 not moved.]
Clause 13 [General classes of acts not infringing the telecommunication privilege]:
Lord Morris Lord Morris moved Amendment No. 18:
Page 16, line 13, leave out ("received or") and
The noble Lord said: My Lords, I believe that it will be for the convenience of your Lordships if I speak to Amendments Nos. 18 and 19 together. I tabled precisely the same amendment at the Committee stage and I was delighted to hear my noble friend Lord Lyell say:
"… if there is any logical or drafting matter here, perhaps my noble friend will permit me to get in touch with him before the next stage of the Bill".—[Official Report, 18/5/81; col. 745.]
I was very grateful for that suggestion. Unfortunately, he has not been in touch with me on that point. My noble friend also warned me that the answer could be more than esoteric. That is something which I shall have to bear with as much fortitude as I can muster. My Lords, I beg to move.
Lord Lyell: My Lords, first, I owe my noble friend apologies for not getting in touch with him. He and the whole House know that we have had more than enough time and opportunity to be in touch with each other, both formally and informally, since the last stage. I shall also have to apologise to my noble friend for the fair length of my reply to his very relevant and well-constructed amendments. But I hope that what I have to say will provide even greater clarity in the perception or reception of what we are discussing today.
The House will appreciate that my noble friend is motivated by a tremendous desire to improve the drafting of this Bill, but I am afraid that these amendments do not achieve what he hopes. If I may briefly

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recapitulate on the amendments, they are to exempt from the monopoly communication by visible light, where the communication which is being transmitted by this light is capable of being received and analysed by the human eye. I shall come to analysis in a minute. I know that my noble friend will agree that this is common sense and that it would be absolutely absurd if the use of a telescope or binoculars were to infringe the monopoly. The present wording which we find in the Bill achieves, we believe, the end we seek. For this reason we believe that the amendments are unnecessary.
The first amendment, Amendment No. 18, seeks to remove the reference to the eye receiving the things conveyed. There is a very subtle though not insignificant difference between receiving a message and perceiving it. I am given to understand that perceiving implies understanding. This goes beyond receiving, which is much more passive. A message may be received but it may not necessarily be perceived. Perhaps I could give an example. For instance, if a message in morse code were to be sent by heliograph, this would be received as a series of dots and dashes but the letters and words being conveyed would not necessarily be perceived or understood unless the recipient had his morse code book with him. If Amendment No. 18 were made, it would, we believe, narrow the exemption which is taken directly from the 1969 Act. I am quite sure that my noble friend does not intend this.
Turning to Amendment No. 19, the concern which we believe is in my noble friend's mind is that the use of optical aids such as spectacles or binoculars might infringe the monopoly. May I take this opportunity of assuring the House categorically that the present drafting does not have this effect. The exemption in Clause 13(1)(a) is cast in terms of whether the things conveyed are capable of being received or perceived by the unaided eye, not whether they actually are perceived or received. Thus, the fact that I might need a telescope to perceive a message from a distant heliograph does not result in my infringing the monopoly. The message would be capable of being perceived by the unaided eye of an observer closer to the source of light. So there is no infringement.
The words "without more" are intended to catch the use of both sophisticated and complicated apparatus that, for example, by slowing down the modulations of a very rapidly changing light beam or converting the wavelength of an infra-red beam renders the message intelligible to the unaided eye. The message would not be capable of being received by the eye, no matter how close the observer was to the source unless one had this complicated and sophisticated apparatus which could be used to aid the eye.
Amendment No. 19 would result in the use of such apparatus being within the exemption, despite the fact that it is manifestly equivalent to similar systems using other parts of the electro-magnetic spectrum and thus should be treated accordingly.
I am certain that my noble friend does not intend to include equipment within the exemption. Therefore I hope he will be sufficiently reassured and satisfied by the lengthy and detailed explanation which perforce I have had to give.
Lord Morris: My Lords, I am most grateful to my noble friend. That the explanation was indeed esoteric in no way made it less fascinating. I am entirely satisfied with the explanation, though before withdrawing the amendment I would point out that this subsection is a very good example of Parliament legislating for inventions which have not yet been invented. As a practice, I find this a little disturbing. Notwithstanding that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 19 not moved.]
5.25 p.m.
Lord Mottistone Lord Mottistone moved Amendments Nos. 20 to 23:
Page 17, line 30, leave out ("person") and insert ("business")
Page 17, line 21, leave out ("person") and insert ("business")
Page 17, line 23, leave out ("person") and insert ("business")
Page 17, line 24, leave out ("person") and insert ("business").
The noble Lord said: My Lords, with the permission of the House I should like to take Amendments Nos. 20, 21, 22 and 23 en bloc. These amendments are designed to underline the point which I raised in my Amendment No. 70, on the second day of our Committee stage on 18th May about the need for freedom for independent companies or businesses to install and maintain their own equipment, which would include private automatic branch exchanges. At that time, in response to a very reasoned and carefully put over argument by my noble friend Lord Gowrie, I withdrew the amendment. However, since then I have read carefully what my noble friend has said and it throws up an important question of detail. I must apologise to my noble friend for the fact that in the intervening period I have not had time to let him know what this question is. I shall fully understand if at this stage he cannot give me a specific answer. At the top of col. 754 my noble friend said:
"After careful consideration, we were persuaded that where a PABX employed digital stored programme control technology, British Telecom should be able to perform its network supervision remotely from a central location".
The question which arises from that is what is meant in that context by digital stored programme control technology? It seems to me and to those who have advised me that it could have two meanings.
The first might be that the technology of the stored programme control is digital—that is, that the SPC is exercised by a digital computer. If that is so, the implication is that all current computer-controlled SPC PABXs are already included in the phrase of my noble friend in col. 754. The only exceptions would be a few hard wired stored programme controls and all Strowger and crossbar PABXs. If that is so, this is satisfactory. However, we believe that the current interpretation by British Telecom is that the meaning of my noble friend's phrase is that the stored programme exercises control over the switching of trains of digits as opposed to the switching paths over which analog signals pass. I must apologise to your Lordships for the technicality, but it is a deeply important technical question, the outcome of which can make a great deal of difference to industry and, in the end, to the commercial success and profitability of industry.
At least two of the companies currently selling analog SPC PABXs in the United Kingdom claim that

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the technology is available for the remote supervision of those parameters which may disturb the public network. What we ask is whether the Government will now extend the right of private maintenance to analog SPC systems. The wording I have quoted from my noble friend's reply to me implied that this might be so, but other things which he has said, and what is understood by British Telecom's attitude to this, make us fear that this is not so.
The point is made by major companies in this country that remote supervision of their analog system would be no more difficult and could be easier than for digital systems. Another major company comments that they have the capability but have not used it in PABXs in the United Kingdom—and I quote from them:
"Because of the current maintenance philosophy of British Telecom".
I referred to parameters which might disturb the public network and the ones that we are considering here (so that my noble friend may be aware of them) should not be more than high or dangerous voltages, signal frequencies and levels that could cause interference or mis-operation or signalling conditions to which the network cannot respond correctly. I make that point to show that we, and the companies that I have quoted that have that capability, understand exactly what could upset the network and we would see that as being perfectly reasonable.
The technology is there; the maintenance men are there—and I spoke about that at Committee stage. So we want to be assured that the Government are being properly advised and understand that a delay in the private maintenance of PABXs is not justified. Furthermore, in order to avoid the postponement of PABX purchases (that is, new PABXs) that may or may not conform to the Government's precise rulings in this area—until they can be bought with the choice of private or British Telecom maintenance and the consequent delay in the development of British systems; and that is important in order to encourage British competition, which is what is behind the Bill as a whole in this area—can my noble friend assure me that the liberalisation of SBC PABX maintenance will be developed or allowed as soon as possible, and as soon as the necessary standards have been agreed—and indeed that it shall be retrospective?
I apologise to the House, as well as to my noble friend that I was not able to put this complicated argument to him on paper in advance. I shall quite understand if he cannot give me an immediate answer. But perhaps I might underline the message. The necessary know-how to allow SBC PABXs of all sorts (except those which I mentioned were excluded earlier) is there. It could be done now; there is no need for delay. If there is delay it is feared that British industry will not be geared to be in the competitive battle when the freedom that my noble friend announced earlier would be spread over a three-year period is available. We must make sure that British industry is ready to grasp the nettle when it comes. The noble Lords opposite are fearful—I understand them—that British industry is going to be swamped by people from overseas.
The whole point is that we must allow our people to get going. What is underlining my argument is
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that we should free things so that companies may get on and buy new PABXs and maintain them themselves and give British industry a chance to develop the techniques necessary to allow this remote supervision of them. I hope that my noble friend has got the message and can reply to me. If he can do it now—super; otherwise, in a letter in a way in which I shall not feel hound to return to the charge at a later stage. I beg to move.
The Earl of Gowrie: My Lords, one of the pleasures of preparation for this particular Bill was that one went around the industry and received very interesting and enlightening briefings and also a preview of many exciting new products. I made every effort to "mug-up" some technical knowledge in a fast developing sphere. I reckon that probably I got to O-level, but not to A-level or to PhD, as evidenced by my noble friend's question; so I hope that he will allow me the indulgence that he was kind enough to suggest. I will have his point looked at and will write to him. If he is not satisfied and/or if he wishes to engage the House in the fact that he is not satisfied, perhaps we could return to it at a later stage.
Lord Morris: My Lords, perhaps I may make a quick attempt to dissuade my noble friend from retabling this amendment, whatever happens. Perhaps I might make the point that if this amendment were carried as at present drafted, the individual would be excluded from an exception to the monopoly. A business or a body of persons only would be included as an exception to the monopoly. There is a slight flaw in the drafting.
Lord Mottistone: My Lords, I admit to the fact that I had to find some way of doing it without frightening my noble friend that I was going to cut something vital out of the Bill. It occurred to me that perhaps my noble friend Lord Morris would like to do his own maintenance and pass the necessary examinations! In a way these exemptions apply to business. However, having said that very briefly, I thank my noble friend and I understand of course, that like myself he is not as expert in this area as we should like to be and I look forward to receiving a letter from him, I hope reasonably soon. With that, I beg leave to withdraw Amendments Nos. 20 to 23.
Amendments, by leave, withdrawn.
Clause 15 [Saving for things done under a licence]:
5.38 p.m.
Lord Mottistone Lord Mottistone moved Amendment No. 24:
Page 18, line 2, leave out ("with") and insert ("which includes").
The noble Lord said: My Lords, with the leave of the House, I should like to suggest that we take Amendments Nos. 29 and 30 with this amendment. At the Committee stage—again on the second day—my noble friend Lord Trefgarne, at column 747, in answer to my amendments Nos. 68 and 69, which related to British shipping said:

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"I can confirm, as my noble friend pointed out, the Secretary of State's powers to issue licences in Clause 15, permitting licensed shipowners to operate their own coast radio stations should that be appropriate.".
Later, in answer to a point raised by the noble Lord, Lord Lloyd of Kilgerran, my noble friend Lord Trefgarne said (at col. 748) that he saw the argument of the noble Lord, Lord Lloyd, and indeed the argument of myself, that there might be trouble if British Telecom were the only people concerned with the grant of licences. He went on to say:
"… but of course that is not the case. The Secretary of State has a role to play as defined in Clause 15".
The main point about this is that Clause 15, without the amendments which I have proposed, implies—in the various places in which the amendment would take effect—that in Clause 15(1)(a), for example,
"the Secretary of State, after consultation with the corporation".
It does not give the point which I think my noble friend Lord Trefgarne was trying to make in answer to my Committee amendment, that the Secretary of State will consult with all sorts of people. It implies that he consults only with the corporation, and that is the one thing that we want to get away from. As we found at Committee stage, the object of this Bill is to a certain extent—this is what noble Lords opposite are finding it difficult to live with—that the corporation is going to be in free competition with other similarly capable private enterprise companies. To that extent it will be a private enterprise company just like any other.
What one is terribly fussed about is that only the corporation will turn out to be the main advisers, a point made by my noble friend Lord Orr-Ewing, by the noble Lord, Lord Caccia and by my noble friend Lord Morris. We are very concerned that in practice, even if not in theory, the only advisers to the Government will be the corporation, as has been one of the troubles over the years up to now. So the object of my amendments is to try to ensure that the revised phraseology will make it the duty of the Secretary of State to consult with others as well as the corporation. Of course he must consult with the corporation—that is perfectly reasonable; but we do want to have something a little stronger in the Bill to try to bring this about. I hope, therefore, that my noble friend will find himself able to agree to my amendments. I beg to move.
Lord Lyell: My Lords, we are very grateful to my noble friend Lord Mottistone for moving his amendments so clearly and for being so helpful in giving us all the references to the comments of my noble friend the Minister, Lord Trefgarne, at an earlier stage in the Bill. I have listened carefully to what my noble friend has said, hoping that it ties up with what was said and is more or less parallel with what was said at an earlier stage. I hope that he and the House agree that the first amendment sought by my noble friend would oblige my right honourable friend the Secretary of State to consult with other bodies than British Telecom when making decisions on the licensing of any systems or apparatus, and also when approving standards or apparatus for connection to the public network.
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Of course we would sympathise with my noble friend wishing to make the process of licensing and approval as open as possible. I hope he and the House would agree that in practice this system of obligatory consultation will often create various difficulties, and indeed will create unnecessary delay in many cases. The department has already established broadly based consultative machinery which has played a very important part, and will continue to do so, in giving advice; it will continue to remain in existence after the enactment of this Bill.
I would assure the House, and would very firmly assure my noble friend, that this machinery of consultation will be used whenever the Secretary of State plans to use his power in a way which would break new ground or would set an important precedent. But in one or two matters—for instance, approval of standards—we require to see that matters will be routine, and therefore it would be wasteful to be obliged to go through a general consultative process for each and every one of these routine matters on each occasion when they were to be considered. This is especially true since the British Standards Institution already has a consensus procedure which ensures that standards are normally fully acceptable to those affected by them before they are ever submitted for approval by the Secretary of State.
Consultation would take place if the approval were to include special or unusual conditions, but we would not expect this to be the case very often, and indeed the need to consult bodies other than British Telecom is unlikely to be very frequent. Of course, there will be other situations, mainly in the area of licensing, where individual interests will be at stake and where it would not be right to expose applications to wide scrutiny. But the present wording of Clauses 15 and 16 does not in any way prevent the Secretary of State from seeking advice from parties who will be interested wherever this is necessary. I do once again assure the House that this will be done through machinery which is already set up and is already working very well. The Government have already agreed, after discussion in another place, to a statutory obligation to consult British Telecom only, because it is evident that as the network provider they must have a say on the connection of apparatus to public circuits. These particular considerations really could not apply to any individual interest groups or the special situations suggested by my noble friend Lord Mottistone.
Lord Mottistone: My Lords, I am most grateful to my noble friend. Before I go on, he said there is already provision within Clause 15 for outside consultation, but he did not, as is normally the case, draw my attention to just where that provision might be. Is he able to do that for me?
Lord Morris: My Lords, it may be that I can help my noble friend Lord Mottistone on this amendment. In Section 9 of the Wireless Telegraphy Act there is a consultative duty on the Postmaster-General, now the Secretary of State, to consult with those people who are affected by decisions in that particular field. I am afraid my noble friend Lord Mottistone is really flying in the face of reality. In truth, in dealing with Governments,

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more particularly than with persons, unfortunately the reality of consultations happens only when it suits Governments, and not individuals. In this instance of the Wireless Telegraphy Act, although there is there a duty to consult parties who are interested and affected by a Government department decision, this does not necessarily come about. I have a Question down on this subject for answer tomorrow; the radio regulative department of the Home Office manifestly, as far as I can understand, have been trying as hard as they can to avoid consultation. It is extremely difficult, even where there is the formal means for consultation within a Bill, to ensure that Government departments do consult people when it suits the people who should be consulted, rather than the other way round.
Lord Lyell: My Lords, may I take the first point and reply to my noble friend Lord Mottistone. I am advised, as indeed I hope I had said, that there is no specific provision in Clauses 15 and 16 to oblige the Secretary of State to consult, but, on the other hand, there is nothing specifically to prevent him consulting with whomsoever he chooses. I think that would go some way towards disposing of the question which was raised by my noble friend Lord Morris as to forcing the Secretary of State to consult various bodies. I think it might also be relevant to the question asked by the noble Baroness, Lady Phillips, at an earlier stage, in that if we put in one body there would be at least a hundred, possibly a thousand, who would also fit into that category at some special time, who would require to be consulted, or might feel that they should be consulted. I hope we can take it that the wording of Clauses 15 and 16 is permissive and will not do anything to impinge on proper and valid consultation, where relevant, by the Secretary of State with interested bodies who feel they have a relevant case to put to him.
Lord Mottistone: My Lords, I thank my noble friend Lord Lyell, and indeed my noble friend Lord Morris, for clarifying the issue and indeed giving point to the underlying submissions which gave rise to my amendment at this stage and at Committee stage. This is not a satisfactory situation; and neither is it satisfactory that there is something in the Bill that provides for consultation because, as my noble friend Lord Morris has said, even that is not all that helpful. I believe that what my shipping friends have to do is to wait until this Bill is enacted and then, as quick as may be, put in a request for coast stations for a group of shipping companies, as has been suggested, and see what happens.
In the event that they get a dusty answer from the Secretary of State, they will be quite within their rights, in view of what my noble friend has said, to ask, "Who have you consulted and why have you rejected us"? In the Post Office they have somehow managed to brush aside this sort of thing in a grand way in the past; let us hope that they will not be able to do so in future. With that comment, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5.51 p.m.
Lord Glenamara Lord Glenamara moved Amendment No. 25:
Page 18, line 9, leave out ("running of any such telecommunications system") and insert ("supply and maintenance of apparatus to be connected to a system run by the Corporation").
The noble Lord said: This is the Beesley amendment, but I should like to speak also to Amendments Nos. 31 and 32. The purpose of these amendments is to prevent the Secretary of State from licensing the extensive use of value added network services and private transmission systems, as recommended by Professor Beesley. We believe that Professor Beesley's report would be potentially much more damaging than the proposal in the Bill itself to open up terminal equipment to competition.
At the Committee stage we were criticised for defending Professor Beesley while at the same time attacking the conclusions reached in his report. That debate reflected feelings of disquiet which emerged on all sides of the Committee about the conclusions reached by Professor Beesley after his brief, three-month study. I would remind noble Lords present at that time, or who read the debate, of the speech made by the noble Earl, Lord De La Warr. We make no apology for returning to this theme at the Report stage, although noble Lords will be pleased to hear that I have no intention of going through all the details of the Beesley report.
We believe it is very important that members of your Lordships' House should consider very carefully how far they wish the Government to go in applying their policy for the opening up of competition in telecommunications. The opening up of terminal equipment to competition as proposed in this Bill is one thing, but opening up transmission systems to competition is quite another thing—one that is not proposed in the Bill but is proposed in the Beesley Report. Noble Lords will have noticed from the Order Paper that we do not seek to prevent the Secretary of State from licensing the competitive supply of terminal equipment, as proposed in the Bill; although at Committee stage we did put forward such an amendment and argued it very strongly. We did so because we believed it was right that my own party in this House as well as in another place should clarify its objections to a policy that we believe will be profoundly damaging to customers of British Telecom and to its suppliers, as well as inflicting yet more burdens on the residential telephone subscribers.
However, we do recognise that your Lordships are reluctant to pursue an amendment to the principles of the Bill, which have been approved in the other place. The amendment now before your Lordships is in a different category. The Beesley Report was not opposed in the other place; indeed, the Beesley Report had not been published when the Bill was discussed in the other place—it was not known about in the other place. When the Secretary of State for Industry made his original statement on the Government's policies for telecommunications in July 1980, the policy proposed for value added network services was very different from that which is now recommended in the Beesley Report, which, incidentally, the Secretary of State has given every indication of accepting.
Eleven months ago the Department of Industry's policy was that value added network services should

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only be licensed when British Telecom was not offering the particular service involved and had no plans to do so within a given period. Then Professor Beesley was asked to look into the question of whether there was further scope for the competitive supply of value added network services. The recommendations made in the report went very much further than the Secretary of State's policy announced last July and even beyond the terms of reference that had been given to Professor Beesley. Moreover the Beesley Report itself, as I have said, was published after the Bill had concluded its passage through the other place. I believe that places a special responsibility on your Lordships' House, for, if Parliament is to scrutinise the merits of this aspect of Government policy, it can only be scrutinised in this House.
Noble Lords will appreciate that if the Beesley Report is implemented it will have a profound effect on the development of telecommunications in this country, and yet, as one noble Lord after another stated when we discussed this at Committee stage, the report is based on minimal study, minimal consultation and—we believe—minimal consideration. I make no apology for reminding noble Lords about this. I repeat that we believe this is no fault of Professor Beesley himself. The fault was that Professor Beesley was compelled by the Department of Industry to keep to a time table that made it quite impossible for him to give proper consideration to the many difficult and highly technical issues involved in the subject he had been asked to cover. It is the Government we are blaming for the inadequacies of the Beesley Report and its unsoundness, and not Professor Beesley himself.
During Committee Stage my noble friend Lord Underhill pointed out that of the organisations and individuals listed as having given evidence to Professor Beesley very few, on enquiry, were able to confirm a submission of any very substantial evidence during the course of Professor Beesley's inquiry. I believe it would be worthwhile updating your Lordships on this point, because it does bring home very vividly something we have tried to stress during our consideration of the Beesley Report. The point is that a major change of policy, with profound implications, is being taken on the basis of quite inadequate consultation and thought. Of the 36 sources quoted in Professor Beesley's report, 28 were approached by letter. Of these, 22 have replied to date. I understand that of the 22, only seven submitted written evidence; four generally supporting the trend towards increased competitive supply of value added network services and three in opposition. None of the four who supplied evidence in support of the extension of the competitive supply of value added network services touched on the question of international resale or private transmission, because those were outside Professor Beesley's terms of reference.
Noble Lords may therefore ask, where did Professor Beesley find any support for this proposal? As far as we can tell, Professor Beesley's most important recommendation was made without any consultation or without receiving any evidence at all—because it was outside his terms of reference. Of those who responded, two-thirds provided only, as they said,
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the more casual kind of oral evidence. I say "casual" because invariably, we have been told, such evidence consisted of an informal conversation. To our knowledge, no detailed minutes of evidence were taken, as is normal when oral evidence is given on such a major question. Some of those listed were, quite frankly, astonished at their inclusion and they have no record whatever of even informal conversations having taken place.
Professor Beesley was obviously greatly influenced by the United States experience. He visited the United States for one week during his inquiries. I may say that both as Postmaster General and as Chairman of Cable and Wireless I paid many visits to the United States to study their system, but I would hesitate to make any recommendations for radical changes in our own system on the basis of those visits. Anyway, he reached conclusions about the American experience which we believe are not sound, because, in practice, the United States experience substantially confirms the view—contrary to what he concluded—that allowing private transmission and resale does not promote innovative services: all that it promotes is cream skimming. Microwave Communications Incorporated (MCI), which operates the largest system competitive with AT and T, has abandoned all pretence of innovative work and simply undercuts AT and T on a limited number of the most heavily used transmission routes. Those facts must surely underline the doubts and fears of many involved in the industry about the way in which this major matter is being handled by the Government. Indeed, we might say, what a way to run a country!—certainly it is no basis on which to carry out radical changes in our most complicated and sensitive public utility.
On 27th May this year, there was an article in Electronics Weekly which said:
"There is utterly no reason why we should consider Beesley the last word on the subject, and had a similar report from such a source backed the BT's monopoly, as others much more well-informed have done in the past, the suppliers would have ignored it. Sir George"—
that is, Sir George Jefferson—
"was quite right to highlight the haste with which Beesley's report was prepared and published, and the even more surprising nimbleness of the Whitehall machine in nipping in and seeking to implement it. The two months which the government has allowed for the debate is, as Sir George says, far too short a time to consider the highly complicated effects of changes which will affect all of us well into the next century … The makers, for example, were given a three-year breathing space by Sir Keith Joseph when he announced that the supply of equipment would be open to competition with British Telecom equipment. Sir George, in asking for what he called a 'soundly conceived and carefully phased' process of change, was not asking for a great deal."
At Report stage the noble Earl, Lord Gowrie, opposed our amendment on Beesley on the grounds that it was too restrictive on the Secretary of State. We have tried to avoid that as regards these amendments. I do not believe that that view bears analysis but the present amendments, if they were accepted into the Bill, would leave the Secretary of State free to license the competitive supply of terminals, and that is the point at which this Bill and the policy underlining it had the approval of the other place: that and that alone. So what are we proposing does not offend against your Lordships' constitutional practice in this

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matter. However, many of those in the industry who broadly support the competitive supply of terminal apparatus are very mindful of the need to preserve a truly national network of the highest possible technical standard. Very few in the industry are in doubt that Professor Beesley's report threatens this essential requirement.
I need not remind your Lordships about the extremely unpleasant effect that Beesley would have on residential charges for telephones. Everybody, including Beesley himself, has admitted that his proposals would put up residential charges. The estimates range from 2 per cent.—Beesley's own estimate—to 63 per cent. which is British Telecom's estimate of the increase that this would cause, and Keith Joseph lies about halfway or a third of the way in between the two.
Most impartial observers would agree that the Beesley report simply fails to justify the conclusions and recommendations reached by the study. If the Government proceed to implement its recommendations they will be taking an enormous gamble to the clear detriment of 90 per cent. of British Telecom's customers, on the basis of totally inadequate consideration and debate. That was the view of the noble Earl, Lord De La Warr, as well as my view, and that is the view of Sir George Jefferson, the Chairman of British Telecom. The process which has taken two decades of debate and decision in the United States is to be thrust on the United Kingdom after only three months' study.
There is a good case, I believe, for the House of Lords to pass this amendment and to refuse to allow the Government to rush into a situation with potentially disastrous consequences for telecommunications in this country on the basis of totally inadequate consideration and debate on the issue. I invite noble Lords on both sides of the House to support us in this matter. I beg to move.
Lord Morris: My Lords, I am puzzled by the vigorous opposition of the noble Lord, Lord Glenamara in carrying the point underlying his amendment and particularly in blaming Her Majesty's Government for the Beesley Report. I find it rather analogous to shooting the harbinger of bad news. In so far as the Government might take up Beesley's points, or any of them, I should have thought that that was the time to oppose Her Majesty's Government. However, Her Majesty's Government have not in its entirety, and above all in its detail, endorsed the whole of Beesley and, in their desperate attempt to oppose, I do not really believe that it is absolutely fair that Her Majesty's loyal Opposition should attack the Government for something which, at present, is nothing other than an hypothesis.
Lord Underhill: My Lords, I have no intention of going through the criticisms that I made in Committee about the details of Beesley, but I should like to ask one or two questions. Was the Government's attitude based on Beesley? If so, surely the account which has been given by my noble friend about the inadequate survey and the limited time, must be important factors despite any views that may be expressed by the noble Lord, Lord Morris, or any other noble Lord. If the Government's view was based on Beesley, then I must again ask: is it not strange that this report—if it was
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so important to the Government's view—was not available to the other place until it had completely passed the Bill? If the Government's attitude is not based on Beesley, then I should like to ask the Minister on what information did the Government base their decision which is in accordance with what Beesley has recommended? If the Government had any other sources on which to take their decision, why then did we have the Beesley inquiry, report and survey?
Those are important questions. If it should transpire that the Government's decision was mainly based on Beesley, then surely the inadequate survey seems to suggest, despite what noble Lords say about this side of the House, that the Government are following a clear example of doctrinaire policy in this matter in their endeavour to get the utmost so-called endorsing views in order to back up their case. Although we are not discussing it now, another matter that will be reflected if the Government decide to go ahead is their proposal to close down the 250 or so showrooms of British Gas. It is the same sort of doctrinaire policy which has come up time and time again. I should like to know quite clearly whether the Government's policy was based on Beesley and, if not, why did we have Beesley? If it was not based on Beesley, on what was it based?
The Earl of Gowrie: My Lords, I am very happy to save time and take up the challenge of the noble Lord, Lord Underhill, directly. The Government's policies were not based on Beesley; they were based on doctrine. It is the clear doctrine of the Government to try to liberalise British Telecommunication's monopoly and, indeed, wherever possible and at responsible speed, to try to privatise the public sector trading monopolies wherever they can.
The Government have made a start on these policies in a number of fields, including this one, and we intend to continue with this policy. If that is doctrinaire, all I can say is that it is a doctrine that was put squarely to the public and to the electorate at the time of the last election and would, in my view, be likely to be followed by additional manifesto commitments come the time of the next election.
The Government consider that relaxation of this monopoly, and indeed, other monopolies, at the Government's initiative and in pursuance of the Government's policy, should primarily be carried out by the Secretary of State, who is answerable to Parliament just as Parliament is answerable to the electorate. Therefore, I think that that is a clear answer about the underlying motivations of the Government.
In a moment I shall have something to say about the Beesley Report itself, though I must say that I enjoyed the skill with which the noble Lord, Lord Glenamara, tried to praise Professor Beesley, the man, while divorcing himself altogether from any praise of Professor Beesley's conclusions. I do not think that it would be any secret to say that as life unfolds and works out, Professor Beesley's conclusions are likely to wish the Government to go at a greater speed than, in fact, the Government may be able to go. Therefore, I think that the conclusions reached by the noble Lord, Lord Glenamara, are very extraordinary.
Of course, the Government are not looking to Professor Beesley for confirmation of what is a clear policy

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decision, but they are having consultations and they are using Professor Beesley's admirable report as a document for debate and discussion. That debate and discussion is taking place now and since, as many noble Lords have recognised, this is a Bill with wide enabling powers, of course the Government in their use of these powers can make use not only of Professor Beesley's conclusions, but also of the conclusions of the debate on the report, including conclusions made to us by the noble Lord, Lord Glenamara.
Therefore, behind this amendment is not a debate about whether Professor Beesley had enough time or whether the remit given to him was the appropriate one; there is a clear policy difference between the noble Lord, Lord Glenamara, and ourselves as to the principle of this matter. He has made his position very clear; I hope that I can make our position very clear. But let us not pretend that these amendments are anything other than amendments of principle, or wrecking amendments in our parliamentary slang. If they were to be accepted, the power to license the running of systems would no longer exist and all telecommunication systems, other than those falling within the exemptions of Clause 13, could be run only by British Telecom, unless it happened to wish to delegate this task through some contractual arrangement. The régime therefore being proposed under the noble Lord's amendments would, in fact, be much less liberal than the Post Office Act 1969, the so-called Stonehouse Act. That would be regressive indeed.
The amendment also appears to me to be designed to take away the Secretary of State's powers to license additional networks, as well as the many classes of value-added network services which are dependent on systems connected to the network, and also to take away the freedom of network use. The amendments would strengthen the corporation's monopoly over the running of telecommunications systems, and severely curtail the Secretary of State's power to accomplish his liberalisation policy. Therefore, the amendments are designed to make it impossible to introduce competition in the provision of the network and in the provision of most important kinds of services to third parties using the public network.
Turning from these wide issues of principle which are clearly before the House, the noble Lord, Lord Glenamara, asked me one or two specific points. He asked me about international resale issues and competitive transmission services. The recommendations in Professor Beesley's report—and these are subsidiary to his main conclusions—were mentioned because the report considered that there were implications in these areas in relation to the uses of the network. As I said, subsequent to publication of the report, a public debate is taking place and the Government are not bound by the report other than agreeing with the central premises of the report which are close to the Government's own policy.
For the second time today the noble Lord, Lord Glenamara, claimed that domestic charges would rise if the Bill was implemented or if the implications of the Beesley Report were to be accepted. It is true that Professor Beesley's calculations are based on British Telecom's own figures. He shows that even if the total prospective loss of revenue to the corporation by 1984–85, due to complete liberalisation of
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network use, was to be made up by an increase in domestic rentals (as the noble Lord fears) on the worst assumptions rentals would need to increase by no more than about £6.40 or about 10 per cent. or 11 per cent. of what rentals could by that time be expected to be in any case, unless we can continue to contain inflation. It is inflation and pay and wage factors which are at the heart of increases in price to the consumer, rather than policy of this general kind.
I endorse what the noble Lord said earlier about the responsibility of the unions involved in this field. Nevertheless, unions make no secret that part of their duty to their membership is to keep pace with increases in the cost of living; and so long as unions successfully keep pace with increases in the cost of living, those increases will continue apace and so will the job losses attendant on them. Those are broad issues with which we are wrestling, as the previous Government had to wrestle with them, over all sectors of the economy. But it is entirely misleading to think that it is policy of this kind which is liable to be the main upward push on increases in costs rather than the inflationary and other factors that I have mentioned.
I think that we have also barely begun to appreciate the very great range of possible services that can be brought directly to homes and businesses throughout the entire telephone network. If the experience of America is anything to go by, the corporation will raise considerable revenue from the providers of these services; and, indeed, despite the noble Lord's accusations that providers of third party services have been "cream-skimming", as he put it, in America AT and T has continued to improve its financial position and—and this is of very great interest to me, primarily as an employment Minister—AT and T has continued to take on more labour.
It is astonishing to me that the Opposition, which understandably draw our attention to the great concern that we all have about high and rising levels of unemployment, are opposed to policies which are specifically designed to generate more wealth, more activity and more employment in this economy. Our analysis is that more jobs will be created in the new service industries themselves as well as in the industries that supply the hardware and software that would be needed. I am grateful at least to the noble Lord, Lord Glenamara, in that, as I said earlier, with his great experience and skill he has no difficulty in putting clear choices before the House. This is a straight policy issue between him and ourselves, and my own view would be that the House would have to make up its mind accordingly on the merits.
Lord Glenamara: My Lords, the noble Earl was perfectly honest when he said that this was a matter of doctrine so far as he was concerned, and now we know. This is what we have been saying for a long time; that this is being done for purely doctrinal, theological Tory reasons.
The Earl of Gowrie: Hear, hear!
Lord Glenamara: Hear, hear! The Minister is confirming it. So there is no assessment in depth of policy alternatives. As I said in our last debate, they simply look at their problem and then they apply their Tory commandments: the efficacy of the market

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place; down with the unions; public enterprise is bad; private enterprise is good. Whether they are appropriate or not, they apply these dogmas to every problem that comes along. That is the whole basis of this Government: apply their theology to every single problem. So now we know.
The noble Earl said that this was a wrecking amendment. It is no such thing. I pointed out that the amendment would enable the Secretary of State, as the Bill proposes, to open attachments to terminals to competition, but what it would do would be to preserve the integrity of a national system to which those attachments were attached. That is our only concern, to preserve that. I thank the noble Earl very much, and I hope everybody, including the press, will take note that Beesley's proposals, according to him, will cause residential telephone rentals, quarterly rentals, to rise by £6. That was his estimate, so you can be quite sure it will be £26.
The Earl of Gowrie: My Lords, would the noble Lord allow me? I should like to make what I said absolutely clear. By £6.40 between now and 1984–1985. That is not a very substantial rise in annual terms.
Lord Glenamara: My Lords, if the noble Earl was living on a retirement pension, as many telephone subscribers are, he would know how big a rise £6 was. Anyhow we are told, admitted by the Government, that these proposals if implemented will add £6 to the quarterly rental. So let us all get that quite clear. The noble Earl said that we are against the generation of wealth—"This would not generate any more wealth". Well his proposal will certainly generate some more wealth, but it will generate it for the investing public and not for the ordinary telephone subscribers.
As the noble Earl said, this is a clear divide between the two sides. We on this side wish to preserve the integrity of the national telecommunications system. On that side they wish their Tory dogma to prevail. That is the issue in this Division. I hope my noble friends will carry the amendment to the Lobby.
6.24 p.m.
On Question, Whether the said amendment (No. 25) shall be agreed to?
Their Lordships divided: Contents, 44; Not-Contents, 102.

CONTENTS

Ardwick, L.

Jacques, L.

Aylestone, L.

Janner, L.

Bacon, B.

Jeger, B.

Bishopston, L. [Teller.]

Jenkins of Putney, L.

Boston of Faversham, L.

John-Mackie, L.

Bruce of Donington, L.

Kilbracken, L.

Cledwyn of Penrhos, L.

Kilmarnock, L.

Collison, L.

Longford, E.

David, B. [Teller.]

Lovell-Davis, L.

Elwyn-Jones, L.

Molloy, L.

Ewart-Biggs, B.

Oram, L.

Glenamara, L.

Peart, L.

Hale, L.

Plant, L.

Hanworth, V.

Ponsonby of Shulbrede, L.

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Ross of Marnock, L.

Wallace of Coslany, L.

Sefton of Garston, L.

Wedderburn of Charlton, L.

Shinwell, L.

Wells-Pestell, L.

Stewart of Alvechurch, B.

Whaddon, L.

Stewart of Fulham, L.

Willis, L.

Stone, L.

Wilson of Radcliffe, L.

Taylor of Mansfield, L.

Wootton of Abinger, B.

Underhill, L.

Young of Dartington, L.

NOT-CONTENTS

Ailesbury, M.

Luke, L.

Airey of Abingdon, B.

Lyell, L.

Amherst, E.

McFadzean, L.

Auckland, L.

Macleod of Borve, B.

Avon, E.

Mancroft, L.

Barrington, V.

Mansfield, E.

Beaumont of Whitley, L.

Marley, L.

Bellwin, L.

Monk Bretton, L.

Belstead, L.

Morris, L.

Boardman, L.

Mottistone, L.

Brabazon of Tara, L.

Mountevans, L.

Bridgeman, V.

Murton of Lindisfarne, L.

Brougham and Vaux, L.

Northchurch, B.

Caccia, L.

Ogmore, L.

Chitnis, L.

Orkney, E.

Cockfield, L.

Orr-Ewing, L.

Colville of Culross, V.

Penrhyn, L.

Colwyn, L.

Rankeillour, L.

Craigavon, E.

Rawlinson of Ewell, L.

Croft, L.

Renton, L.

Croham, L.

Rochester, L.

Cromartie, E.

Romney, E.

Cullen of Ashbourne, L.

St. Aldwyn, E.

Daventry, V.

Saint Oswald, L.

Davidson, V.

Sandford, L.

de Clifford, L.

Sandys, L. [Teller.]

De La Warr, E.

Savile, L.

Denham, L. [Teller.]

Seear, B.

Eccles, V.

Sharples, B.

Elliot of Harwood, B.

Skelmersdale, L.

Evans of Claughton, L.

Spens, L.

Faithfull, B.

Stamp, L.

Ferrers, E.

Stanley of Alderley, L.

Fortescue, E.

Stedman, B.

Fraser of Kilmorack, L.

Strathclyde, L.

Gormanston, V.

Strathspey, L.

Gowrie, E.

Sudeley, L.

Greenway, L.

Swinfen, L.

Gridley, L.

Swinton, E.

Grimston of Westbury, L.

Terrington, L.

Hailsham of Saint Marylebone, L.

Tordoff, L.

Trenchard, V.

Halsbury, E.

Trumpington, B.

Harris of Greenwich, L.

Vaizey, L.

Hives, L.

Vaux of Harrowden, L.

Hylton-Foster, B.

Vickers, B.

Inglewood, L.

Vivian, L.

Kinloss, Ly.

Wakefield of Kendal, L.

Lane-Fox, B.

Ward of Witley, V.

Lindsey and Abingdon, E.

Westbury, L.

Long, V.

Wigoder, L.

Loudoun, C.

Resolved in the negative, and amendment disagreed to accordingly.
6.32 p.m.
Lord Glenamara Lord Glenamara moved Amendment No. 26:
Page 18, line 13, at end insert—
( ) The Secretary of State shall not grant a licence under paragraph (a) or issue a direction to the Corporation under subsection (2) unless he is satisfied that he will not thereby adversely affect the prospects of the British telecommunications manufacturing sector.").
The noble Lord said: My Lords, the purpose of this amendment is to call attention to the threat to the

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British telecommunications manufacturing industry as a result of the Bill. The measure gives the Secretary of State power to license exceptions to the monopoly in the provision of telecommunications, which is transferred from the Post Office to British Telecom in Clause 12. The Bill does not say how the Government are to use that power, though the Government have themselves made clear how they intend to use it; the first telephone in the customer's premises is to remain the monopoly of British Telecom and all other terminal apparatus will be open to competition—that is, both in the installation and maintenance of it—and we are told now that the maintenance of PABXs will also be open to competition.
Even more threatening than that are the recommendations of the Beesley Report, which we considered in debating the last amendment. These proposals have come to be referred to as "liberalisation", and I protested about the misuse of that word in our last debates. In any event, this so-called liberalisation will have two massive effects, both of which will do enormous damage to our British telecommunications manufacturing industry. First, it will lead to a flood of foreign-manufactured telecommunications imports and, secondly, it will reduce British Telecom's capacity to place orders for equipment with British firms. I will comment on each of those effects resulting from the Bill, starting with the second.
The Bill's proposals, when operative, will impoverish British Telecom. The Beesley proposals will reduce the revenue by £110 million, according to Beesley himself. But of course when the terminal equipment is open to competition—as I pointed out an hour or so ago, presumably the Government want it to succeed—the revenue of BT must be reduced, if it succeeds, and so it will impoverish BT. Perhaps that is the wrong way to put it; it will reduce BT's revenue because under Clause 3, they are charged with the duty of providing:
"throughout the British Islands … such telephone services as satisfy all reasonable demands upon them".
That is, except—and the Bill says this—where they are provided by other persons, and they will certainly tend to be so provided where they are most lucrative.
Noble Lords must remember that the reduction of BT's revenue which will follow is in the context of the Government's external financing limits policy which not only limits BT's investment programme at a level which is well below what the British economy requires, but also forces British Telecom to generate the greater part of the capital required, and requires it to borrow the rest from the Government. BT—the Post Office at present—buys 95 per cent. by value of its requirements from British manufacturers. BT is virtually their only market for large complex switching equipment; 80 per cent. of their output as a whole goes to BT and therefore, from those two figures, it will be seen that any interference with BT's capacity to order equipment will immediately affect the British telecommunications manufacturing firms. The Bill represents a major interference in the capacity of BT to place those orders because if their revenue falls, as it will, so must their investment programmes. A recent NEDO report said:
"Recent cash limits for BT have halved the industry's order book for certain types of equipment".
I have received a letter—I assume other noble Lords have received it too—from the managing director of Plessey, Mr. D. H. Pitcher, who says among other things:
"One issue in particular stands out which needs to be resolved. This concerns the funding of BT. The UK has no specific and clear strategy for telecommunications. The substitute for strategy is the large procurement programme of BT. In Plessey and the other manufacturers, this is the basis for maintaining the financial and technical resources required to develop new products. Without a balanced and steady ordering profile from BT, it is impossible to sustain our product development programmes aimed at the commercial and export markets. We will be disadvantaged and the UK régime will continue to fall behind the French, German, Japanese and the Americans. A sound, stable, continuing domestic market is essential to the development of export markets".
That is an elementary economic truth, but it is one which the present Government are prepared to put at risk in pursuance of the noble Earl's dogma about which he was telling us a short while ago.
A senior manager in one telecommunications firm has estimated that the Government's proposals under the Bill could put at risk 30 per cent. of the industry's output. There is another very practical difficulty which the manufacturers face but of which the Government appear completely unaware, and this too has been set out with great clarity in a document sent to noble Lords by the Post Office Engineering Union today, and I can best refer to it by quoting from a speech which the noble Earl made on 18th May:
"The introduction of competition in the market for attachments, where it does not already exist, will be introduced in a phased licensing programme over the next three years or so. That is to allow our manufacturers, who so far have been designing their products primarily to meet particular specifications of the Post Office, to adjust to the new competitive conditions and to develop products to match those produced elsewhere".
Perhaps the noble Earl will tell us how they can start to develop products for new markets before the technical specifications are known. I am told that between one year and three years' work on the specifications is required before publication, and even after publication they will need a considerable period to market suitable products for the attachments. Perhaps the noble Earl will tell us about that. I mention it because it is a practical difficulty that the firms have.
The noble Earl went on to say, at col. 762 of the Official Report of 18th May:
"I am quite certain that our manufacturers are watching the progress—this final progress, so to speak—of the Bill through Parliament very carefully and they really have little excuse not to get to work right away in order to adapt to the changed conditions which we are creating and which overwhelmingly they themselves have asked for".
That reminds me very much of a speech that Mr. Edward Heath made about industry when he was Prime Minister. There appears to be scant regard by the Government for the problems of the telecommunications industry in overcoming difficulties that this change will involve. So that is the first problem, the first massive effect that the Bill will have on our telecommunications industry.
The second problem is the danger of a flood of foreign imports. I believe that it is going to be a free-for-all. I imagine that noble Lords often look in the windows of shops selling electronic products and they will be aware of the flood of products into the United Kingdom market from Japan, Korea,

485
Hong Kong, Sweden, Germany, the United States and France, some of them shoddy, some of them excellent. Is it to be supposed that these foreign firms will not do their utmost to capture this new, lucrative market which this kind British Government are opening up for them?
When I was a young man I was very keen on motorcycles. I had an AJS. Some of my friends had BSAs, Panthers, and so on. Today there is virtually no motor-cycle manufacturing capacity left in this country. If noble Lords look at the motor-cycles being ridden by the police in London, they will not find a single British model among them. They are virtually all Japanese or German. Perhaps in a few years' time we shall be saying that we used to have a motor-car industry.
How much value have the reciprocal agreements, with which Sir Keith Joseph hopes to safeguard the telecommunications industry, been to those industries against the invasion of our domestic markets? Anyhow, with a trading reciprocal agreement there is no guarantee of access to the foreign market for our manufacturers. I think that the only countries where that can be guaranteed are communist countries, Eastern European countries, where there is a central buying agency for the whole of each country, and it decides how much of each product it buys, and where it buys it. Of course if such an agreement were made with a country of that kind, there would be guaranteed access in return for accepting a quantity of their exports. But of course in countries such as Japan, America, Sweden and Germany there is no guarantee of access at all. Short of outright protection, import controls and tariffs, there is no way in which our telecommunications industry can be safeguarded, and I believe that British manufacturers are becoming increasinely concerned about the flood of foreign imports.
After the Government's announcement last July, Business Week published an article with the heading, "A bonanza for US manufacturers". The article concluded:
"US makers of telecommunications equipment may stand to gain the most from Britain's July 21st decision to rescind the state monopoly of telecommunications equipment".
We know that GTE (General Telephone and Electronics) which is a major United States manufacturer, is now looking at setting up a manufacturing operation in the United Kingdom.
There is no doubt whatever that as the Government's timetable under the Bill comes closer, the fears and apprehensions of British manufacturers are mounting. I do not think that the Government have yet given them any comfort at all. They have no answer to their fears. They have talked vaguely of reciprocal trading agreements, but they are no answer; they are ineffective. The detailed setting of standards by supposedly impartial bodies is the method by which our competitors find a way of effectively restricting imports. I think that the British Government show every sign of playing the game "fairly"; that is, at the expense of British jobs and the future of a very important section of British manufacturing. So there is a very real danger that the firms that are now sending vast amounts of electronic equipment to this country will
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start to send vast amounts of telecommunications equipment as well,
In view of the fears and apprehensions of the British manufacturers, we have tabled the amendment. All it does is to require the Secretary of State, when he issues a licence, to satisfy himself that the use of the licensing powers in Clause 15 of the Bill does not threaten the interests of British manufacturers. I shall summarise what I have said. I have said that the proposals in the Bill, plus the Beesley proposals if they are implemented, will in our view present two massive threats to our own very important telecommunications manufacturing industry. First, if implemented, the proposals will reduce British Telecommunications' ability to order equipment. They are hound to do that; and BT is the main source of orders at the moment. Secondly, we think that the proposals will, inevitably, lead to a flood of foreign imports. If the House of Lords really is a revising Chamber, if noble Lords are concerned about the British Telecommunications manufacturing industry—as I know they are—I invite them to support us in the amendments. I beg to move.
Lord Underhill: My Lords, I am certain that no noble Lord wishes to make this debate into a party dogfight. However, I must refer to the justification that the noble Earl has put forward for the entire principles of the Bill, according to Conservative doctrine, for which he says there is a mandate. Incidentally, I become very perturbed about mandates, because sometimes there might be only three words hidden in an election manifesto and it is then claimed that one has a mandate. During the Division I went to my case and took out a copy of the Conservative manifesto. I cannot see anything in the manifesto about British Telecom; I cannot see anything in it about the Post Office; I cannot see anything in it about following the principle that Beesley has put forward and the Government have accepted—not a word!
The only references to public industries concern aerospace, shipbuilding, the National Freight Corporation, and the public bus services. What I do see is the following statement:
"We want to see those industries that remain nationalised running more successfully and we will therefore interfere less with their management and set them a clearer financial discipline in which to work".
Several noble Lords: Hear, hear!
Lord Underhill: There is nothing in what I have read out that justifies the "Hear, hears" from the Government Benches, since in the Bill there is clear interference with the whole of Telecom, and when we come to deal with another amendment we shall see what is happening to the question of financial discipline. As my noble friend has pointed out, and as has been mentioned in the letter from the Plessey management, the question, of funding is linked very closely with the question of British Telecom development.
My noble friend read out a letter from the director of Telecom. In another note that it issued, Telecom added:
"British Telecom will remain Plessey's biggest customer for many years. Much of our product development will depend on BT ordering programmes which in turn depend on BT funding".

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In a later amendment we shall have to return to that reference to dependence on BT funding.
The amendment which my noble friend has moved says that the Secretary of State shall not do these things,
"unless he is satisfied that he will not thereby adversely affect the prospects of the British telecommunications manufacturing sector".
I am sure the Government will be prepared to accept that attitude. Otherwise, it means that they are prepared adversely to affect British Telecommunications' manufacturing ability. When I saw this amendment down, I remembered that in Section 99 of the Local Government Act 1980, which dealt with the disposal of land owned by public bodies, the Government deliberately put in a proviso which made it quite clear that no land belonging to the public bodies should be disposed of unless the Government were satisfied that there would be no serious detriment to the performance of their functions or the carrying on of their undertakings. So this amendment is seeking to put into this Bill the same sort of proviso as the Government put into their own Local Government Bill, for it is saying that action will not be taken which adversely affects British Telecom. Therefore, there seems to be no reason why the Government should not accept that principle.
Lord Morris: My Lords, I am sure I am not alone in getting exceptionally weary of noble Lords opposite continually blaming the Government, or considering that the Government are responsible, for creating unemployment or for the insolvency of businesses. It just flies totally in the face of reality. Notwithstanding that, one of the more objectionable parts of this amendment, as I see it, is the phrase "the British telecommunications manufacturing sector". I wonder whether the noble Lord, Lord Glenamara, could possibly define for me—it would be a great help—what he means by "the British telecommunications manufacturing sector". As far as I am concerned, any company that generates jobs, which in turn generate funds in this country, is to that extent a British company. That is the thing that matters. The owners of the company, be they British shareholders or any other shareholders, I believe to be of no importance whatsoever.
Lord Molloy: My Lords, I feel that the noble Lord, Lord Morris, has earned himself a great distinction today. He is probably the only man in this country who really believes that the present Government have not set about deliberately creating unemployment. But I want to say that while there are issues that might divide either side of your Lordships' House with regard to public ownership and private enterprise, I would have thought that this amendment would appeal to the noble Earl, because whatever system either side of this House wants to adopt, what both want to see, I feel sure, is that British industry gains from it. I am so pleased that the noble Earl nods his head, because if that is so I cannot see how he can resist this amendment, which proposes that, irrespective of whether it is carried on by British Telecom or whether British private entrepreneurs come in, there will be a safety valve, the safety valve being that the Secretary
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of State shall have power and authority, and shall exercise it, to see that nothing happens that damages, not British private enterprise, not British public ownership, but Great Britain and its people. That is the issue, and that is what I hope will not divide us tonight.
In this particular aspect I see something that can unite us, and what can unite us is this: if we accept this amendment, not only shall we be assisting and aiding and safeguarding British Telecom, but perhaps it might well be that we shall be making a contribution towards reducing unemployment in this country, or at least preventing an increase in unemployment. May I put this to the noble Earl? If instead of British Telecom this Bill was about another publicly-owned sector—the Royal Air Force, the British Navy or the British Army—would they be prepared to go into the Lobbies on the basis of that public sector, of that publicly-owned endeavour, and vote against this amendment? The matter now lies solely and absolutely on the conscience of every noble Lord in this House.
6.53 p.m.
The Earl of Gowrie: My Lords, it was indeed the case when we debated the previous amendment that there was a clear divide—a divide of doctrine, if you like—between the two principal parties in your Lordships' House. We had made it clear that we should seek to liberalise the public sector where we could, and that this Bill was designed, indeed, to preserve the integrity of the network (as the noble Lord, Lord Glenamara, put it) but to allow companies to compete in providing the services which could integrate with the national network. That is a clear policy issue, if you like, between us. Therefore, our argument could rest on political or, if your Lordships prefer the word, doctrinal or even theological grounds. In fact, when I was being brought up, a little theology was not thought to be such a disastrous thing from time to time.
But here, as I think the noble Lord, Lord Molloy, reminded us—and I certainly agree with him—we are not on very different ground. We are all concerned for the welfare of the British telecommunications manufacturing industry, and of the very many people who depend on it for their livelihood. Indeed, as employment Minister, I have a very special interest, as I said earlier to the noble Lord, Lord Glenamara, in seeing some of these new industries which can slot into the network getting off the ground so that more wealth is generated and more jobs are created—and that, of course, is the source of employment. At heart, employment is conditioned by customers and by demand.
I am quite sure that our native manufacturers have a bright future before them in this field, and I do not think that I need prove my credentials to the House with yet another account of the prospects for growth in information, technology and telecommunications industries, or the Government's commitment to them. I am also with noble Lords opposite in believing that there is a danger to our industry while a transition takes place from monopoly to greater competition, though I would hasten to say that a primal monopoly in this field is still being retained. We should not allow our doctrinal or theological differences to obscure the fact that what

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we are talking about is the liberalisation of the vehicles that travel on the road, rather than the liberalisation of so to speak, the road itself.
I am therefore in considerable sympathy with the spirit behind the amendment, as well as the way in which the noble Lord, Lord Glenamara, moved it and the way in which other noble Lords have supported it. The reason I resist it is that the amendment is not necessary. It is, in jargon, as it were, tautological, because my right honourable friend the Secretary of State has said that the liberalisation of subscriber apparatus will be phased over a three-year period in order to give industry time to prepare for the new market conditions. I have every confidence that British industry will be able to react to the new market conditions; and were it not able to react—were it so uncompetitive in cost terms, in wage terms, in poor management or in restrictive labour practices, or in an inability to attract investment—then I do not see why the consumer or the customer should be burdened with an incompetent domestic industry and not allowed in some way to be able to utilise new goods and services in this field.
Lord Molloy: My Lords, will the noble Earl allow me to interrupt him?
The Earl of Gowrie: My Lords, I will give way, but I did not want to give way at that sentence because I wanted to go on to say that it is much too gloomy to say that there is no prospect for our native industry; that the Government—wisely, in my view—are protecting our native industry during the changeover period, and that they have interpreted this changeover period pretty generously.
Lord Molloy: My Lords, I am grateful to the noble Earl. Surely he must understand that when one talks about a British publicly-owned industry, whether it be British Telecom or the National Coal Board or the Steel Corporation, there is massive support from private endeavour. Very many private industry endeavours depend on their parent, the publicly-owned industry. Their competition and their earnestness is as decent and sincere as anyone else's within the private or publicly-owned sector. Therefore, I beg the noble Earl to bear that in mind as well.
The Earl of Gowrie: My Lords, certainly I agree with the noble Lord. Nothing that I suggested went on the old private/public sector divide. I am conscious in my job of the contribution of the coal industry to the export of mining equipment. This is an admirable industry and it has responded very well and is providing some of the most advanced equipment in the world. There is no division between us. We say that a wise parent protects the child as it grows up but that it would be a foolish parent that sought to protect the child once it had become an adult. The Government have also to take into account other interests. In only the last amendment the noble Lord, Lord Glenamara, was urging us to pay more attention to the interests of the consumers. Thinking protectionism, apart from the damage it would do to a still very flourishing and
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successful exporting country, would not be in the interests of consumers ultimately.
Our belief is that our job in Government is to try to create a climate in which enterprise and industry can flourish as free as possible from the intervention of the state; and I include in that rubric the public sector trading industries as well. Obviously the service industries cannot be covered by that; but I do not think that the NUM or the NCB want any more intervention from us than they can possibly get away with. The liberalisation of Telecoms is part of this process and I see nothing in the amendment or, I hope, in my response to it, which divides us; but if I were to advise my noble friends on this side to accept it, we would be writing two contradictory pieces of simultaneous identical advice into the Bill and we would also be calling into considerable question the sincerity of the interim protection period that the Bill already provides for. Therefore, I hope that, in the light of what I have said and in the length I have taken to find agreements between us, noble Lords will not press their amendment.
Lord Glenamara: My Lords, I am disappointed in what the noble Earl has said or, at least, in the conclusion that he reached and not so much in what he said, especially on one of his last points. It is beyond my comprehension how we are seeking to write something contradictory into the Bill. If noble Lords have read it they will know that this is what we propose to insert:
"The Secretary of State shall not grant a licence under paragraph (a) or issue a direction to the Corporation under subsection (2) unless he is satisfied that he will not thereby adversely affect the prospects of the British telecommunications manufacturing sector".
I cannot imagine anything more reasonable than that. I do not understand why the Minister cannot accept that.
However, time is getting on and I do not propose to push this to a Division. I hope that I am around in 10 years' time and that the noble Earl is around, too. I doubt whether this Chamber will be now that it has abandoned its role as a revising Chamber on this Bill. If we are, it will be interesting to see what has happened to the telecommunications industry as a result of this Bill; but before then, no doubt, there will be a long period of Labour rule when the matter will have been put right again. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Lyell: My Lords, I hope that this may be a convenient moment to move that further consideration of this Bill on Report be adjourned.
Moved accordingly and on Question Motion agreed to.

Sheep Variable Premium (Protection of Payments) (Amendment) Order 1981
The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers)The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers) rose to move that the order laid before the House on 21st May be approved.
The noble Earl said: My Lords, I beg to move, that the Sheep Variable Premium (Protection of Payments) (Amendment) Order 1981 a copy of which was laid before this House on 21st May, be approved. This order amends the Sheep Variable Premium (Protection of Payments) (No. 2) Order 1980, by introducing a new mark which may be applied to live sheep qualifying for premium payment under the Community sheepmeat régime. Like the national arrangements which preceded it, the régeme requires that animals which have been certified as eligible for variable premium payment must be indelibly marked, so that they cannot be fraudulently presented for premium payment a second time. Having considered alternative methods over the years, the Government feel that the only truly indelible form of marking for live sheep is ear punching.
The current Protection of Payments Order provides that the prescribed mark should be a punch hole either in the form of a 12 millimetre circle or of an equilateral triangular mark with 13 millimetre sides. In fact, the triangular punches have proved impractical for technical reasons and the order presently before the House deletes the provision for triangular punch holes and replaces it with one for a smaller 6 millimetre (approximately ¼ inch) circular punch hole.
We intend to introduce the new six-millimetre punches only for the certification of live sheep exported from the United Kingdom. The larger 12 millimetre instruments, which have been in use up to now, will continue to be used for domestic certifications at liveweight, where they have proved satisfactory. It is not proposed to adopt the smaller punch for domestic certification because a six millimetre hole in the animals' ears would have time grow over during its lifetime, thereby enabling it to be presented for premium payment more than once. Noble Lords will appreciate that any such loophole in the United Kingdom's financial control arrangements could lead the Community's auditors to disallow Community reimbursement of sums paid out in premium payments to United Kingdom farmers. can inform the House that this order has been considered by the Joint Committee on Statutory Instruments and that they have made no comments on it. I hope with that brief introduction, the House will approve this quite small technical amendment to the arrangements for the administration of the sheepmeat régime in the United Kingdom.
Moved, that the order laid before the House on 21st May be approved.—(Earl Ferrers.)
7.9 p.m.
Lord Bishopston: My Lords, I do not know whether it is appropriate to say that I have been earmarked to speak in this matter—only briefly, of course, because it is not a contentious matter. There are two points I should like to raise. Would the Minister say what consultations with the industry took place before the introduction of the order? Further, the House will know that over many years successive Governments have recognised that the only indelible and sure way of marking live sheep is by ear punching. As the Minister has said, the Sheep Variable Premium (Protection of Payments) (No. 2) Order 1980 which came into operation on 29th November 1980 required for live animals that the mark should be an ear punch
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in the form of a circular punch hole of 12mm diameter within a tattoo or an equilateral triangular punch hole with sides measuring about 13mm in length.
Triangular punch have proved to be impracticable. This order deletes them from the list of prescribed marks and substitutes a circular punch of about 6mm in diameter. If a punched hole alone is regarded as being sufficient, I wonder why it is proposed to reduce the diameter to 6mm, particularly as the Minister said there may be the possibility of a smaller or 6mm punched hole growing over thereby creating the risk of double certification with animals being fraudulently prescribed for a premium a second time. If the noble Earl would comment on those few points it would be helpful.
Earl Ferrers: My Lords, may I be permitted to say at the outset what a pleasure it is to see the noble Lord, Lord Bishopston, taking part in agricultural matters once again. Certainly as far as I know this is the first time in this House. Of course he was a distinguished Minister of State in the department in which I have the honour to be involved. I was not a little concerned when I saw in a previous Honours List the preponderence of ex-Ministers of State from the Ministry of Agriculture now coming into the House to keep us all very much on the ball.
As usual, and as is expected, the noble Lord Lord Bishopston, has put his finger on a number of important points. This is quite a small order and the noble Lord referred to the consultations. We did not consider this a particularly controversial subject and therefore consultations as such with the industry have not been undertaken. There have been a lot of consultations within the department and with myself in particular over this.
He asked why it is necessary to produce a smaller ear punch as opposed to a bigger one. The fact is, as I explained, when a sheep is presented at the market, it has a large hole punched in its ear. If it were a small hole it would be possible for somebody to buy the sheep, the hole would heal and the sheep could be presented again. Where it is for export, the punching is done at the lairage immediately before the animal is exported. Therefore, it is considered perfectly suitable to have a much smaller mark because the animal is going to be exported and will not be able to be certified or be presented for certification a second time. Clearly, the smaller the hole, the less distress it causes the animal. That is the reason why the smaller hole was decided upon. I hope that that answers the noble Lord's questions. I am grateful to him for accepting this order and the way in which he had done so. I look forward to him taking part in debates on agriculture on many occasions and keeping all of us on the ball as is his right and due.
Lord Swinfen: My Lords, my noble friend said that the object of using a smaller hole was to cause less distress to the sheep. Is there any hole smaller than the 12mm one which is large enough for all practical purposes not to grow over that could be used so that more sheep could be caused less distress?
Earl Ferrers: My Lords, if I have understood my noble friend's question correctly, he is referring to sheep which are being exported.
Lord Swinfen: No, my Lords, the larger hole for use only in this country.
Earl Ferrers: My Lords, it then becomes a question of what is the practical size. Our experience and belief is that if you have a hole less than 12 mm it is always possible that the hole will heal over and the animal could be presented again. If that were to happen, the auditors of the Commission could easily find that we had been misappropriating funds by paying twice on one animal. Nobody likes earpunching of any animals. It is a fact of agricultural life. We have tried to ensure that the punched hole is as small as feasible and practicable.
On Question, Motion agreed to.

Industrial Diseases (Notification) Bill
7.16 p.m.
Lord Plant: My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the Order of Commitment be discharged.
Moved, That the Order of Commitment be discharged.—(Lord Plant.)
On Question, Motion agreed to.
Viscount Long: My Lords, I beg to move that the House do now adjourn during pleasure until 7.45 p.m.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.17 to 7.45 p.m.]

British Telecommunications Bill
Further considered on Report.
Lord Morris Lord Morris moved Amendment No. 27:
Page 18, line 14, leave out subsection (2).
The noble Lord said: My Lords, the purpose of this amendment is to delete Clause 15(2) from the Bill. This is one of the clauses which is new—new, that is to say, from the point of view of the equivalent section of the 1969 Act. I move it to eludicate from Her Majesty's Government the reason for this clause. Your Lordships will remember that Clause 15(1)(b) says that:
"(1) A licence may be granted— …
(b) with the consent of, or in accordance with the terms of a general authority given by, the Secretary of State, by the Corporation, …".
I have difficulty in understanding why the separate power is required for the Secretary of State to direct the corporation to grant licences when the Secretary of State himself can grant a licence by virtue of the provisions of Clause 15(1)(a). The only reason I can see in which such circumstances could arise is where the Secretary of State, rather than take upon himself the responsibility to grant the licence, chooses
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that the corportion shall grant the licence. The problem there is that it is that much more difficult to get to the decision-making process of the corporation than it is necessarily with the Secretary of State. With that, I beg to move Amendment No. 27.
Lord Lyell: My Lords, as I am sure my noble friend will be aware, the relaxation of the monopoly is indeed the policy of the Government. We believe that it is right that the Secretary of State, who is answerable to Parliament, should be responsible for granting the main licences in the strategic sense that will make a reality of liberalisation and, indeed, which will define its principal directions. Most of these cardinal licences will be general licences that are granted under this clause and others which will give everybody the right to run a system of a specified kind.
Through his statutory consultations with BT, my right honourable friend the Secretary of State, as well as holding wider consultations with other interested bodies, will be able to ensure that these relatively few key licences are not in any technical respect defective. But of course from time to time there may well be cases of individual licence applications that are very important, for example, as precedents in the carrying forward of the main thrust of this Bill in liberalising the monopoly. Individual licences are more likely to involve quite detailed technical considerations that only the network operator can deal with satisfactorily.
If and when that is the case, Clause 15(2) will allow the Secretary of State to take responsibility by directing BT to license, while at same time allowing BT to deal directly with any special terms that would call for detailed and specialised knowledge of the network or indeed of BT's operating methods. Clause 15(2) neatly combines the Secretary of State's responsibility for overall policy with a sensible method of dealing with technical detail, however fine. I hope that that brief, but not too detailed, explanation may go some way towards helping my noble friend.
Lord Morris: My Lords, that has, indeed, gone a long way towards helping me. May I, on a point of further clarification, ask my noble friend whether it is envisaged that the licence granted by the Secretary of State, by virtue of Clause 15(1)(a), will be of only a general character, and that a licence granted through the direction mechanism, by virtue of Clause 15(2), will be of a more specific or detailed nature?
Lord Lyell: My Lords, we should need to take great care in defining the areas. My noble friend talked about general areas in respect of Clause 15(1)(a), and areas of a more detailed kind under Clause 15(2). The wording in subsection (2) seems to overlap a licence covered by either subsection (1)(a) or subsection (I)(b). Therefore, given this overlap of possible details, some licences might go into a reasonable amount of detail and yet, at the same time, cover fairly wide generalities in a certain sector of communication, be it voice, speech, light and so on.
I do not think that an analysis of subsection (1) or subsection (2) would necessarily lead into the classifications mentioned by my noble friend. Probably, there could be other divisions. But I wonder whether

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we could consider exactly what has been said by my noble friend. I undertake to be expeditious and to be in much closer and swifter touch with him on this point than I was the last time, when I promised my noble friend that I would inform him. I certainly undertake to attempt some analysis of the problems of Clause 15(1)(a) and Clause 15(2) before the next stage.
Lord Morris: My Lords, I am most grateful. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
7.55 p.m.
Lord Morris Lord Morris moved Amendment No. 28:
Page 18, line 43, leave out subsection (7).
The noble Lord said: My Lords, at the Committee stage I argued in some detail about my concern that a licence granted under this clause could not be impugned on the grounds that it was granted neither with the consent of, nor in accordance with the terms of a general authority given by, the Secretary of State. My concern centres around the fact that subsection (7) vitiates the corporation's duty under Clause 15(1)(b) to seek the consent of, or to look to the terms of a general authority given by, the Secretary of State prior to the granting of a licence.
In answer to that, my noble friend Lord Lyell said, among other things:
"I am advised that the main object of subsection (7) is to ensure that a licensee will not be penalised for any illegal acts done wittingly or unwittingly by British Telecommunications".—[Official Report, 18/5/81; col. 790.]
The only observation one could possibly make on that is: I should think so, too!
But my major concern, which was not really dealt with, although my noble friend Lord Lyell promised to return to it at a later stage, was where a licence could be granted by the corporation to favour one private sector company to the disfavour of its competitors, without the consent of, or within the terms of a general authority given by, the Secretary of State. This could happen and, for the harmed or wronged company to have no recourse to the licensing authority—namely, the corporation—could constitute a very serious wrong. My Lords, I beg to move.
Lord Lyell: My Lords, it is clear from my noble friend's speech, and from various comments of other noble Lords, that there is still some misunderstanding about the exact scope and purpose of subsection (7). I hope that, in the course of my brief remarks, I shall be able to alleviate some of the concern that is felt about this subsection.
First, the subsection in no way gives to British Telecom, or to any of its licensees, carte blanche to disregard the rights of any third party or its other legal obligations or duties. If British Telecom were to infringe some such rights in issuing a licence, the aggrieved party would be fully able to explore the usual and proper legal remedies in the normal way, just as it would be able to do at the moment.
All that subsection (7) seeks to do is to protect the licensees of British Telecom against the unlikely event of a licence being granted by BT ultra vires, without the
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consent of the Secretary of State. Were this to happen, it would render the licensees unwittingly open to charges of infringing the monopoly and thus to criminal sanctions. It would plainly be unsatisfactory if BT's licensees could be put at even a slight risk of infringing BT's monopoly as a result of the fault of BT itself. The provision that we have included in subsection (7) enables licensees to operate without having to undergo the inordinate, lengthy and unnecessary delay involved in checking that the Secretary of State's consent had been given to the licence. The subsection can be found in exactly analogous form in Section 27(6) of the 1969 Act. We believe that subsection (7) of the Bill will be even more desirable in the future when we envisage greater competition being allowed under licences.
May I take this opportunity to stress and reiterate most strongly that the subsection in no way allows British Telecommunications to disregard its wider legal duties and obligations. I hope that this firm and categorical reassurance will go a long way towards clearing up any misunderstanding there may still be in my noble friend's mind and that, far more importantly, it will reassure him.
Lord Morris: My Lords, I am most grateful to my noble friend for his response. It goes further than a long way; it goes to the end of the road. Not only I, but many others who have been concerned about the subsection, will be most grateful to him for explaining it so clearly. With that, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 29, 30, 31 and 32 not moved.]
Clause 17 [Marking orders]:
8.4 p.m.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 33:
Page 21, line 19, leave out from ("to") to end of line 20 and insert ("a fine").
The noble Earl said: My Lords, the House will recall that when we discussed the Bill during its Committee stage my noble friend Lord De La Warr tabled some amendments to remove the penalty of imprisonment from the offences in Clauses 17 and 18. At that time I promised the Committee to consider the point and to undertake consultations to see whether there were any wider policy implications which should be considered. I am very happy to say that I have done this. In the light of this wider consideration, I can now agree that imprisonment would not be an appropriate penalty in these cases. The penalty on indictment will therefore simply be an unlimited fine. I am most grateful to my noble friend for the great contribution which he has made. These Government amendments make the necessary changes. I beg to move.
Earl De La Warr: My Lords, I am sure that the whole House will be very grateful to the Government for having taken on board this point and for having moved the two amendments which were suggested at an earlier stage.
Lord Morris: My Lords, before we leave the amendment, may I ask my noble friend what precisely "unlimited fine" means? I was puzzled to see that there is no ceiling for the offence of conviction on indictment.
The Earl of Gowrie: "Unlimited fine" means a fine on which there is no limit.
On Question, amendment agreed to.
Clause 18 [Information etc. to be given in advertisements]:
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 34:
Page 22, line 12, leave out from ("to") to end of line 13 and insert ("a fine").
The noble Earl said: My Lords, this is consequential on the previous amendment.
On Question, amendment agreed to.
Clause 19 [Offences under sections 17 and 18 due to default of third person]:
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 35:
After Clause 19, insert the following new clause:
("Enforcement of sections 17 and 18
.—(1) A relevant authority shall have power to purchase apparatus, and to authorise any of their officers to purchase apparatus on their behalf, for the purpose of ascertaining whether sections 17 and 18 and orders made under those sections (in this section referred to as "the relevant provisions") are being complied with.
(2) Every local weights and measures authority in Great Britain shall have power to enforce the relevant provisions within their area; but nothing in this subsection shall be construed as authorising a local weights and measures authority in Scotland to institute proceedings for an offence.
(3) In this section "relevant authority" means—

(a) in relation to Great Britain, the Secretary of State or a local weights and measures authority on whom a power to enforce the relevant provisions is conferred by subsection (2);

(b) in relation to Northern Ireland, the Department of Commerce for Northern Ireland; and

(c) in relation to the Isle of Man, the Board of Consume Affairs.").

The noble Earl said: My Lords, this new clause clarifies the means of enforcing the marking orders which will be made under Clauses 17 and 18 of the Bill concerning telecommunications apparatus. In general, these provisions are based on the corresponding sections of the Trade Descriptions Act 1968 which also contains a power to make marking orders enforceable by local weights and measures authorities. It is our intention that marking orders under the Bill should be enforced by local weights and measures authorities and this clause makes the necessary provisions. I beg to move.
Lord Ponsonby of Shulbrede: My Lords, the implications of this amendment, as the noble Earl said in moving it, are that local weights and measures authorities are to be the enforcement authority for Clauses 17 and 18 in respect of all apparatus, whether marked or unmarked. This implies the purchase and testing of equipment and the undertaking of prosecutions, all of
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which could be very costly for the local authority. No mention is made of any role for British Telecom. This placee additional duties on local authorities. There is no assurance that local authorities will receive any additional financial compensation as a result of having to carry out these duties. The public and British Telecom will expect the enforcement of these provisions by local weights and measures authorities to be properly carried out.
Unless local authorities have the additional financial resources available to them to carry out these duties, they will only be able to try to fit in this task with the other priorities which they have, including their mandatory duties, at a time when their resources are already overstretched and when authorities as a whole are under extreme pressure to reduce expenditure. Local authorities will no doubt have to decide what priority to give to this particular function. I hope that the noble Earl will be able to give a satisfactory assurance to local authorities.
The Earl of Gowrie: My Lords, I share the concern and desire of the noble Lord, Lord Ponsonby of Shulbrede, that local authoriies should not have placed upon them additional burdens at a time when we are anxious that so far as expenditure is concerned they should put their own house in order. We have therefore not thought it right to impose upon them a duty to enforce the order. We are confident that they will be able, and will wish, to take the steps which they feel to be necessary to enforce marking orders within their areas.
It will continue to be the duty of local weights and measures authorities to enforce the comparable provisions of the Trade Descriptions Act where that is relevant to telecommunications; but in practical terms we envisage that the corporation itself will participate in the enforcement of these matters and will cooperate with local authorities and relieve any burdens on them. For instance, I would expect British Telecom to undertake any testing which may be necessary and, if need be, to give evidence on technical matters. So I believe that, in practice, marking orders will have a substantial deterrent effect on the supply of wrongly marked or unmarked equipment, that enforcement will be a co-operative venture which is not enforced on local authorities and that in fact it will prove to be no very great burden upon them.
On Question, amendment agreed to.
[Amendment No. 35A not moved.]
Lord Winstanley Lord Winstanley had given notice of his intention to move Amendment No. 36:
After Clause 20, insert the following new clause:
("Duties of Secretary of State
.—(1) The Secretary of State shall institute and publish formal procedures for carrying out the functions reserved to him under sections 6, 12, 15 and 16.
(2) The said procedures shall include formal provision for consultation on a regular basis between representatives of the Corporation, business and domestic users of the Corporation's systems, suppliers of telecommunications systems and services, and others with relevant interests or experience to the said functions.").
The noble Lord said: My Lords, Amendment No. 36 stands in the name of the noble Lord, Lord

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Lloyd of Kilgerran, and myself. In the absence of my noble friend, who I understand is either in Hong Kong or on his way to your Lordships' House therefrom, may I say a brief word. If my recollection is correct, I understand—
The Earl of Gowrie: My Lords, I am most grateful to the noble Lord but in fact we debated this clause with Amendment No. 15 and I think I had the consent of the then leader of the Liberal Benches that we should do so. Does the noble Lord wish to debate it again?
Lord Winstanley: My Lords, I am grateful to the noble Earl. That indeed was my understanding of the situation and I am glad to have it confirmed. Having had it confirmed, the amendment is not moved.
[Amendment No. 36 not moved.]
Clause 21 [Deemed contracts in certain cases]:
Lord Mottistone Lord Mottistone moved Amendment No. 37:
Page 24, line 15, leave out ("in pursuance of a scheme made under section 20").
The noble Lord said: My Lords, at the Committee stage I tabled an amendment (No. 96) which covered this general area, and my noble friend Lord Trefgarne was very helpful and drew my attention to Clause 21 of the Bill. He pointed out that schemes, as they are called, had been exempt from contractual liability in the past but were now not going to be so exempt, and he said, at col. 801 of Hansard of 18th May:
"Generally speaking, almost all Post Office telecommunications services are supplied under schemes".
That is absolutely true in questions of total numbers but in fact there are some services and associated apparatus, such as wide band and international and digital circuits rented to business which are not in schemes, and it is very important that these kinds of contracts—which is what they are—should have the same exemption from Clause 22 of the Bill as the other schemes which are mentioned in Clause 21.
So I should be grateful if my noble friend could tell me whether it is known to him that there are these very important provisions on equipment and circuits which fall outside the scheme's arrangement. It is in this area that delay in provision can be very costly to a company—and we are really talking only about big companies in this area—that has invested in a complete new communications system if it cannot then exploit it for lack of circuits, and it has no redress. That is the point. This is the exemption, that the Post Office and British Telecom remove the redress. Fundamentally, those areas in which British Telecom does not face competition now are precisely those areas in which the customer needs protection because he has no alternative supplier.
At a later point in his speech my noble friend Lord Trefgarne referred to the right balance between the rights of the individual subscriber and the costs to users in general. I would suggest to my noble friend that this is a misleading way of putting things. We are really talking about business errors. If none of us made errors there would be no problem over contracts and later actions. The costs of all business errors are
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either charged to the customers in general or to the owners in general. Such errors should be firmly dealt with by good management.
For example, I should like to ask my noble friend (although I do not suppose it would be fair to expect him to reply immediately) how much it would cost to pay the penalty of one year's failures and delays in British Telecom. It would be a very interesting thing to look into. So I think it would be only fair if the amendment that I propose, which leaves out the particular reference in Clause 21 to "in pursuance of a scheme" so that the provision then becomes general, covering all services that the corporation may supply, would be a very fair one, because it allows for the special cases to which I have been referring. I beg to move.
Lord Morris: My Lords, while I support entirely the spirit behind the amendment moved by my noble friend, I am a little puzzled as to the necessity for it because, if a customer of British Telecommunications were to enter into a contract outside their scheme, I imagine that the normal common law of contract would prevail and the necessity for this amendment would become doubtful, although I may be quite wrong in saying that.
Likewise, as regards the terms and presumably the customer problem—although I have a great sympathy with this amendment—there is a problem whereby a customer or putative customer of British Telecommunications is under the sanction that if BT are the only people who can provide this particular service or part of the service, if they write into the contract a term which says that there is no recourse under that contract, the customer will be forced to accept that.
Lord Mottistone: My Lords, before my noble friend sits down, perhaps I may draw his attention to Clause 22(1), which was the one I sought to amend before, which gives the let-out to British Telecom.
Lord Morris: My Lords, that is in tort, not in contract.
Lord Lyell: My Lords, before I attempt to reply to the amendment which has been moved by my noble friend Lord Mottistone, or indeed attempt to put any quantity upon the penalty for the total delays in one year of British Telecom—or words to that effect; we shall certainly be able to garner it from the Official Report—before I attempt any such Herculean intellectual feat, I am sure the House would find it helpful if I were to try first to explain the intention which lies behind Clause 21.
Under the 1969 Act, the Post Office was able to provide its services under schemes made under Section 28 of that Act. In view of the little legal tussle—or dare I call it a dialogue?—between my two noble friends, Lord Mottistone and Lord Morris, as to what was contract and what was tort, I am instructed that these schemes in Clause 21, which indeed are made currently under Section 28 of the 1969 Act, are not contracts and that therefore the Post Office had, and still has, no contractual liability. Generally speaking, almost all Post Office telecommunications services are supplied in this way—namely, under schemes—and Clause 20 gives to British Telecom a similar power to supply its equipment under schemes.

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Clause 21(1) of the Bill deals specifically with the supply of apparatus and deems supply of apparatus under schemes to be contractual. This process ensures that the subscriber has all the same rights as under a contract. It also means that, broadly speaking, British Telecom will be supplying apparatus under the same legal framework as its competitors. This change, which is a significant improvement—and we believe a very welcome improvement—in the rights of customers, has been welcomed both here and in another place. Without Clause 21(1), schemes would continue to be non-contractual as far as the supply of apparatus is concerned, as for everything else. So we regard it as essential that the clause contains a reference to schemes. But there is no need for there to be any reference in this clause to any other form of supply by British Telecom, since this would automatically involve a contract of one kind or another and British Telecom would have the normal contractual liability in the same way as anybody else.
I hope this explanation has been of some assistance to my noble friend Lord Mottistone. I hope it has also been of some help to my noble friend Lord Morris. I am sure the House would welcome that I should read carefully the particular questions posed to me by my noble friend Lord Mottistone and that I should reply to him as expeditiously as far as I can, but I would warn him and the House that such figures as he has asked me to supply are very broad ranging and probably extremely difficult to obtain with any reasonable degree of accuracy; but, nevertheless, as in all cases, I will do my best.
Lord Mottistone: I must thank both my noble friends, particularly my noble friend Lord Lyell, for his closing remarks. Of course nobody will ever supply them to him; it would not suit them to do so. But it would be very nice to get the figures. I really think, if I may speak on behalf of my noble friend Lord Morris, that they have both told me the same story; that is, that a contract which is not in a scheme is a contract. That is very useful to have in print. I thank my noble friends very much and beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos 38 and 39 not moved.]
Clause 22 [Exclusion of certain liabilities in tort in relation to telecommunications]:
Lord Morris Lord Morris moved Amendment No. 40:
Page 25, line 5, at beginning insert ("unreasonable").
The noble Lord said: My Lords, I think it would be for the convenience of the House if I were to speak to Amendments Nos. 40 to 44 en bloc because the same principle attaches to all five amendments. Your Lordships will be aware that there is a duty cast upon the corporation by virtue of the provisions of Clause 3 to supply telephone services as satisfy all reasonable demands for them. The intention of this amendment is so to apply the same test of reasonableness for actions in tort. I believe this is extremely important because this would be setting the corporation on precisely the same basis as competitors in the private sector. I do not
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need to develop this because I know your Lordships are more than well aware of the damage that can be done to companies and to individuals by unreasonable delay or unreasonable failure, interruption or suspension of the service to the customer by the corporation.
If I may move forward to the unreasonable omission from the directory for use in connection with the telecommunication service, perhaps I can illustrate this with a case I was closely connected with. A company involved in what are commonly called "car telephones" was refused an entry in the Yellow Pages directory by the Post Office on totally spurious grounds, which I will not go into. Although the customer wanted it under this heading, which is perfectly proper—most people think of car telephones as just that—there was a feeling that the Post Office were determined to make life as difficult as possible for their competitors. It is for this sort of practice that I believe the test of reasonableness would be extremely useful. I beg to move.
Lord Lyell: My Lords, the effect of the five amendments which have been spoken to by my noble friend would, I understand, be to give to British Telecom an exemption from liability in tort only for unreasonable actions which are covered by Clause 22(1). Thus presumably if British Telecom caused a person loss or damage when acting reasonably in such cases it could be held liable. I appreciate that the tort of negligence, which is the one we are mainly concerned with in this case, is primarily concerned with what we call unreasonable actions. It has been described somewhat irreverently as "leaving undone those things which ought to have been done and doing those things which ought not have been done". I am sure that will help my noble friend Lord Morris; it is beginning to help me anyhow. However, I am advised that this is not invariably the case; my quotation does not always match up with what the noble Lord seeks to apply in Clause 22(1). Therefore, we think it would be very strange to give British Telecom an exemption for its unreasonable actions but not for its reasonable ones, however remote the chance might be of a case brought in this latter example.
I did point out earlier in Commitee that the amendments of my noble friend would lead to great uncertainty in the operation of Clause 22 since a court would have to decide whether or not a particular act, or indeed a failure to act, was unreasonable. I hope that will be of considerable help to my noble friend. Certainly I think we should not go too far in further definitions of the law of tort. We should wait for my noble and learned friend who is normally upon the Woolsack.
Lord Morris: My Lords, I think that is very wise advice. With that I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 41 to 44 not moved.]
8.29 p.m.
Lord Winstanley Lord Winstanley moved Amendment No. 45:
After Clause 22, insert the following new clause:
("Telecommunications Authority
.—(1) The Secretary of State shall establish a public authority to be called the Telecommunications Authority hereinafter referred to in this Act as "The Authority".
(2) The Authority shall be responsible to the Secretary of State for the management of the telecommunications environment of the British Islands including the performing of the functions of the Secretary of State under sections 6, 12, 15 and 16 of this Act and shall publish an annual report in relation to its activities.").
The noble Lord said: My Lords, in the absence of my noble friend Lord Lloyd of Kilgerran, I beg to move Amendment No. 45, which, as your Lordships will see, consists of a new clause which seeks to do little, save to establish a public authority to be called the Telecommunications Authority and set out certain functions which that authority must fulfil.
Then it requires that authority to publish an annual report in relation to its activities. My recollection is that this is a matter which was ventilated in Committee and I do not think it would serve the interests of your Lordships' House if I went over the argument again. What I think might be helpful to the House would be if we were to hear the arguments or comments of the noble Earl who is to reply to this second bite of the cherry, if I may so put it. I beg to move.
The Earl of Gowrie: My Lords, I appreciate the position which the noble Lord, Lord Winstanley, is in. I believe the noble Lord, Lord Lloyd of Kilgerran, is even now winging his way towards us from the far East. It may be that my remarks will percolate through the scaffolding and reach him in one way or another sooner or later. This amendment is in fact quite plainly a narrow variation of one introduced by the noble Lord, Lord Lloyd, in Committee.
The noble Lord has sought to make this amendment less detailed, perhaps in an attempt to reduce the functions of the body which he proposes should be created although I am surprised to see that the noble Lord considers that the new body should also exercise the Secretary of State's powers under Clause 6 of the Bill. In fact this is a departure from the noble Lord's suggestion and it is not acceptable to the Government. The powers in Clause 6, such as those concerning the control of British Telecom's investment programme and the powers to give directions in the interests of national security or in relations with other Governments, are surely not those which would be practical or appropriate for the Secretary of State to delegate to a Quango. I do not base my opposition to the proposed clause on those grounds alone, but rather to the wider principle that the amendment advocates an additional layer of decision-taking and one that can only be thought necessary if the new regime is to be based on regulated competition, whereas the Government want to see as much competition as possible. Our proposals go a long way to complete deregulation without the intermediate of regulated competition.
The logic of that is that the trend is of rapidly increasing momentum in the United States, where the concept of regulated competition originated. In our judgment it will be only a matter of time before, in this industry, that tendency also gains momentum in Europe. Our proposal would put this country in the lead in Europe and fully on a par with the world leaders in the field. Also, the implication is that any regulatory effort required would be relatively small. Much liberalisation can be achieved through the handful of strategic general licences, which is at the core of the
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mechanics of the Bill and as your Lordships' House is aware, our view is that this responsibility should rest firmly with the Secretary of State, who is also responsible to Parliament.
We had quite a debate in this House earlier this afternoon regarding the various safeguards which exist. The same is true of the continuing regulatory licensing effort that will be required, which the department has the capacity to deal with and which has access to expert and technical advice. I have tried to look sympathetically at the noble Lord's amendment, as I did in Committee, but he proposes expensive additional machinery—certainly out of kilter with general Liberal Party positions on bureaucracy—and I hope that he, or the noble Lord, Lord Winstanley, by proxy, will be willing to withdraw the amendment.
Lord Morris: My Lords, is my noble friend the Minister confident that the Department of Industry will have the necessary know-how, and expertise to fulfil its highly onerous function by virtue of this Bill? At the same time, may I also ask my noble friend whether serious consideration has been given to moving the regulatory department from the Home Office to the Department of Industry? I believe such a move is absolutely vital because, with the integration of the information technology and telecommunications technology, proper and careful planning of the electromagnetic spectrum is essential. I would most humbly suggest that the Cinderella of the departments of state—namely, the Home Office—is the wrong girl, so to speak, to be looking after the increasingly important question of the radio spectrum.
The Earl of Gowrie: My Lords, I am not sure that I think of my right honourable friend the Home Secretary as Cinderella; it is not an easy role for him to take.
Lord Morris: My Lords, I meant that the Home Office was the Cinderella of the departments of state, in that everything is thrown at it.
The Earl of Gowrie: My Lords, my comment still stands. For the duration of the Government my right honourable friend is the Home Office and, as I said, I feel that Cinderella is a curious role in which to cast him. In fact it is the radio regulatory matters which are for the Home Office, and they exercise those powers very well. Our intention is that the bulk of the regulatory work will be achieved under general licences, as I said. I do not think my noble friend need be too alarmed about the issue of whether departments of state have sufficient expertise. Departments of state are long-used to dealing with specialised areas of activity in the economy. My own department, the Department of Industry and the Department of Energy, all have their own boffins, if I may put it that way. It is perfectly possible to sub-contract work to boffins outside one's own department where necessary, and so I do not believe there need be any great anxiety on that score.
Lord Winstanley: My Lords, I have no way of knowing whether my noble friend Lord Lloyd of Kilgerran will find the noble Earl's answer wholly acceptable and satisfactory, but I am bound to say that having read carefully the noble Earl's answer on a previous occasion,

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at Committee stage, it seems to me that he has gone a little further on this occasion and into other matters. It may well be that my noble friend will not wish to pursue the matter further. The noble Earl the Minister was entirely right when he said that noble Lords on these Benches are wholly opposed to unnecessary, inefficient and cumbersome bureaucracy—whether it be the Cinderella in the Home Office or the ugly sisters in the Department of Industry, I do not know. We certainly accept the noble Earl's remarks and we are glad to see unnecessary bureaucracy disappearing. I believe my noble friend felt that bureaucracy would be under more direct public control were it vested in an authority of the kind proposed in his amendment rather than being hidden away somewhere in the labyrinths of Whitehall. However, having heard the noble Earl's answer, which I am sure my noble friend will wish to study, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
8.38 p.m.
Lord Ponsonby of Shulbrede Lord Ponsonby of Shulbrede moved Amendment No. 46:
Page 26, leave out lines 7 to 9.
The noble Lord said: My Lords, Clause 23(1) imposes upon British Telecom the general financial duty at least to break even. This is a common provision in nationalised industry legislation, and a corresponding duty is presently in force for the Post Office under Section 31 of the Post Office Act 1969. Further to this general duty, Clause 23(2) allows the Secretary of State to set specific financial targets in relation to different assets and activities of the corporation.
Provisions concerning the setting of financial targets for nationalised industries have become increasingly common in recent legislation. For example, Section 14 of the Iron and Steel Act 1975 gives the Secretary of State the power to determine the rate of return on net assets as a whole which the British Steel Corporation would be required to achieve. Section 5 of the Petroleum and Submarine Pipe-Lines Act 1975 contains a much wider power which requires BNOC to perform such financial duties as the Secretary of State may specify. Similar powers were incorporated in the Aircraft and Shipbuilding Industries Act 1977.
The proposals in this Bill differ from the precedents I have mentioned in that they are more specific. Clause 23(2)(a) provides that different targets may be set at different times for different activities and assets. This power is sufficiently wide to enable the Secretary of State to interfere with British Telecom's pricing structure—for example, by specifying an especially high rate of return for a particularly competitive activity. British Telecom would naturally be opposed to any such interference. This amendment deletes that paragraph.
We believe that the provisions of this paragraph are unprecedented and give the Secretary of State very considerable power—too much power—and he could use the paragraph to meddle in British Telecom's pricing policy if, for example, British Telecom came through fair but effective competition to dominate a particular sector or a competitive market.
We appreciate the Government's concern to stop British Telecom pricing competitive activities unfairly by, for example, cross-subsidising from monopoly revenues. Having said that, this paragraph as it stands gives the Secretary of State powers way beyond those powers which he needs. As I have said, the paragraph enables the Secretary of State to interfere in the day-to-day running of British Telecom. One would have thought from the remarks which the noble Earl made earlier this evening that that was against the Government's philosophies. I hope that the noble Earl will be able to clarify how the Government intend to use these powers. I beg to move.
Earl De La Warr: My Lords, I have assumed, like the noble Lord, Lord Ponsonby of Shulbrede, that the purpose of this particular paragraph was to make sure—and to do no more than make sure—that the corporation did not make use of its monopoly activities to subsidise its competitive activities. In so far as that is its sole purpose, I am perfectly happy with it and I think that it is quite fair.
Having said that, I must say that any noble Lord who has worked in a large and diverse corporation like British Telecom will know that never is there a time when one part of the business is not in trouble—it might be the overseas business, it might be Prestel or it might be a number of things. When that happens it is the duty of the board of directors—and they are a body of gentlemen who, I think, have not been referred to enough during the course of our debates—to decide whether they are able to put it right; and, if they think that they can put it right, whether they are justified in subsidising what they must regard as the temporarily unprofitable side of the business until it gets on its feet again.
Therefore, let us not use the word "cross-subsidisation" in too pejorative a way. If the directors conclude that it cannot be put right, then they sometimes have to take the chopper to it. The reason I am saying this is that I am so anxious to hear from the Government that they do regard the board of directors as people who have that sort of duty, just like the board of directors in any other company whether it be public or private. So if my noble friend could help us by confirming that there is a narrow but wholly legitimate reason for this paragraph and that in general terms it is not the Secretary of State's intention to go beyond that, then I think that there are many of us who would be extremely relieved.
The Earl of Gowrie: My Lords, perhaps I may take up first the point made by my noble friend. It obviously is necessary to have powers to set different targets for BT's monopoly and competitive activities. However, it did prove extremely intractable to us to draft the clause in such a way that the powers were explicitly limited to that. Ministers have told the corporation that they have no intention of using powers in this way.
From what the noble Lord, Lord Ponsonby, said, he supports the general principle of Government setting the financial target for nationalised industries and, since it is a fundamental part of the relationship between Government and industry, of giving the target a statutory basis. So there is no difference between us.

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Of course, there is no difference also between my noble friend and myself in that we want the board of directors to behave like a board of directors and we do not want to interfere in their detailed management decisions. But we cannot pretend that we are in anything other than public sector monopoly territory and as noble Lords know, wherever they stand on these particular industries, that does give Parliament, the Secretary of State, the Government, the Treasury and so on—but essentially the Government and Parliament—a special relationship with these industries. One can try to leave them to manage their affairs as if they were private sector industries and, indeed, that is what we seek to do. However, one cannot get away from the fact that they are providing great public services and also they are subject to Government guarantees in financial terms which are inherently and essentially different from the conditions under which private sector industry operates.
The noble Lord's amendment questions the need for the powers to extend to setting different targets for different parts of the corporation's business. It seems to us that the obvious example where this would be necessary would be those parts of the business which are open to competition. It is by no means clear that the same financial target as applies to the corporation's monopoly functions, should also apply to its competitive activities. They are inherently different in kind. Indeed, it might be that no statutory financial target would be appropriate for this part of the business.
We therefore are inexorably drawn by logic to the fact that flexibility is needed and the flexibility needed would be removed if this amendment were made. I cannot feel that a restriction to a single financial target, applicable to the whole business, would either be helpful to the Government with the necessary eye that has to be kept on broad external financial limits or to the hoard of directors of BT. I hope, therefore, that the frank explanation that I have given of the need for the powers will satisfy the noble Lord and that, if satisfied, he will feel able to withdraw the amendment.
Lord Ponsonby of Shulbrede: My Lords, I should like to thank the noble Earl for his explanation and for his indication of how he would see the Secretary of State using his powers. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
8.50 p.m.
Clause 25 [Borrowing powers of the Corporation and its wholly owned subsidiaries]:
Lord Glenamara Lord Glenamara moved Amendment No. 47:
Page 27, line 1, leave out ("temporarily").
The noble Lord said: My Lords, three amendments go with this amendment. The noble Lord, Lord Lyell, quoted the 1662 Book of Common Prayer, Cranmer's book. I am glad that he quoted Cranmer's book and not the Alternative Service Book. We come now to a group of amendments on cash limits, on which I am afraid that the Government have erred and strayed from their ways like lost sheep and followed too much the devices and desires of the Treasury. The purpose of our amendments is to give the Government a chance
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to return to the fold of sanity and common sense.
The amendments seek to remove the distinction between temporary and long-term borrowing and to alter the requirement from that of gaining the consent of the Secretary of State for Industry and the approval of the Treasury to a process of consultation with the Treasury. Essentially, these amendments seek to give a much freer hand to BT to determine where it should raise finance.
The noble Earl, Lord Gowrie, occupied a lonely position during the Committee stage debate on the cash limits issue. On 19th May, he defended cash limits on three main grounds: first, that if British Telecom was able to borrow freely, it would crowd out or divert funds from the private sector. The Wilson Committee Report is the most recent of a number of reports that have stated that there is no shortage of investment finance for projects with an adequate rate of return. Even the reduction of BT's real rate of return target from 5 per cent. to 4 per cent., announced on 2nd June, is virtually double the average rate of return of 2 per cent. for British business quoted in a recent Bank of England report. So there is not much substance in the first point made by the noble Earl.
Secondly, he argued that the national and international money markets perceive:
"nationalised industry borrowing as carrying an implicit Government guarantee".
Therefore, presumably, Governments have to control borrowing. To the extent that this statement is true, the difficulty surely is self-created by the Government's insistence on the idea of a notional guarantee. So far as I know, no other European Government has adopted a cash limits policy on telecommunications finance or, to my knowledge, classes investment by nationalised industries as public investment. That was the second reason which the noble Earl gave.
Thirdly, he maintained that the sheer size and recent increase in BT's investment proves its adequacy. The fact is, that we are still investing less per head of population in telecommunications than almost any other competitor country. At constant prices, current investment has merely returned to the level it achieved in 1973–74. This is too important an issue to be sacrificed to ideological fixations.
The noble Earl, Lord Gowrie, was the sole contributor to the debate during the Committee stage to defend the Government's policies—the only one in the whole Committee. Increased investment in Telecom is vital for our industrial future. At the moment, the customer is paying the price for that investment through increased prices—there were two major increases last year; a policy which has, in the depths of the recession, proved self-defeating, as disconnections are increasing. If the Government believe in letting market forces rule—and they are always saying that they do—they should let the market determine the size of BT's investment by letting the market judge just how willing it is to lend to British Telecom.
The House of Lords' existence is justified by its supporters in terms, first, of its ability to put common sense before party dogma and, secondly, its capacity to introduce essential improvements to poorly drafted Bills. On both of those grounds, I would commend this amendment to your Lordships. We believe that there can be no clearer case for revision by a revising

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Chamber than to support an amendment on the issue of cash limits. With the exception of Treasury Ministers reading gloomily from Great George Street briefs, no volunteer can be found to support the absurd doctrine of cash limits, which is preventing so much essential investment in publicly-owned industries such as British Telecommunications.
I do not believe that we need to run through all the arguments again which we deployed in Committee. It is surely sufficient to say that, although there are widely different opinions on many other aspects of the Government's policy towards telecommunications, on the issue of cash limits all those involved in the industry stand united.
In an earlier amendment, I quoted the letter from the managing director of Plessey's. The Government expect telecommunications manufacturers to be able to respond to the challenge of competition in the terminal apparatus markets and to be able to resist the very real threat of a flood of foreign imports, as I said on the last amendment that I moved. But while industry is seeking to gear itself to this competition it is being subjected to considerable uncertainty as regards its major customer. The recent NEDO publication, to which I have already referred, pointed out that order books for certain types of telecommunication equipment had been more than halved as a direct result of the restrictions on BT investment imposed by the Government's doctrine of cash limits.
We know from earlier debates in Committee and on Second Reading that we have the support of all parties in the House of Lords on this issue. We also know from earlier debates that despite that support, some noble Lords feel reluctant to follow the logic of their thinking into the Division Lobby. But, I would ask them to think again. An amendment forced on the Government on this issue would clearly demonstrate to the Government and to the country the strength of feeling about the absurdity of current Government policy on this point. I have no doubt that the noble Earl, Lord Gowrie, will suggest that the amendment would leave the Bill in an inappropriate form. If that is so, then it is purely a technical matter and the Government could correct any technical problems through tabling amendments in another place. Doubtless, in his response, the noble Earl will suggest that it would be particularly inappropriate to amend the Bill at this time; first, because the Government have recently offered some concession by announcing an increase in BT's external financing limit for the current year, and, secondly, because the matter is now under consideration both by a Select Committee of another place, and by a NEDO committee, and we are glad that it is. However, in our view, neither of these two reasons has much force.
Although it is true that on 2nd June, the Government announced a £200 million extension on BT's cash limit, this still leaves British Telecom £120 million short of the resources it requires even to maintain the investment programme at current levels. In practice, no one who works in the industry is in any doubt that we should be investing very much more than we are. Moreover, above all, what is required both by the manufacturers and by British Telecom is financial stability and certainty. Financial stability will enable BT to plan its investment sensibly, and to maintain its
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orders from the manufacturers without continual chopping and changing in order to meet the financial problems caused by current Government policy. Again I would remind noble Lords of the letter from the managing director of Plessey.
It is the uncertainty caused by the present situation, the requirement continually to revise investment plans, that is the most damaging feature of the cash limit policy so far as the manufacturers are concerned. The uncertainty is not overcome by short-term concessions, welcome as the extra £200 million was this year. It will only be overcome, my Lords, when British Telecom is free to determine its investment programme on the basis of commercial considerations and commercial judgments.
We on our side of the House welcome very much the fact that NEDO and the Select Committee have chosen to examine the issues posed by cash limits on nationalised industries. Both inquiries provide overdue recognition of the relevance of these problems to our economic development over the next decade. But what better opportunity could be provided to this House to set a lead to both the NEDO Committee and the Select Committee? Both committees are considering the issue as it affects nationalised industries in general.
Of course, these industries vary a great deal. They range enormously from the profitable, like British Telecom, to the unprofitable; from those that provide the seed corn of future industrial development, like British Telecom, and those that are to a substantial degree relics of the past industrial pattern. All, for a variety of reasons, must in my view, and the view of my party, be publicly owned. And yet the priority we should accord to them varies. But the one area of total unanimity is the industry we are considering today. It is an industry which is highly profitable and which is in the forefront of advanced technology.
No commentator, so far as I am aware, can or has resisted, or failed to acknowledge, the strength of the case for substantially greater investment in British Telecom. Indeed, it is the absurdity of the restrictions on BT's investment that has led many commentators to consider the broader issues of cash limits on nationalised industries generally. This is an issue on which, for once, we find ourselves united in this House, so far as one can judge from the Committee stage. I say united because I venture to suggest, as I did last time, that if the noble Earl, Lord Gowrie, were speaking from his own convictions, he too would speak in favour of the amendment we are putting forward today. If the House of Lords has a role it is in expressing a unity of purpose, a commonsense consensus of the kind that has emerged over cash limits, and so I beg your Lordships to take the opportunity to pass this set of amendments. I beg to move.
9.4 p.m.
The Earl of Gowrie: My Lords, it is nice to imagine that we all enjoy unanimity about external financing limits. I can console the noble Lord, and indeed the House, by saying that the Government will unconditionally welcome any valid means of raising extra finance for telecommunications investment outside public sector borrowing requirement constraints. It is not good enough, however, for the noble Lord, Lord Glenamara, to say that the Government are entwined

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in dogma, or doctrine over this issue, because the mechanisms, and indeed the whole philosophy of external financing limits, were introduced into our system by the previous Government, of which Lord Glenamara was a distinguished Member and is indeed associated, I suppose, more than with any other single individual, with his right honourable friend the former Chancellor, Mr. Healey. I do not think that, whatever our differences with Mr. Healey, we would accuse him of ideological fixations.
The fact is that Mr. Healey analysed, and successive Governments have had to analyse, that the scale of the operations of the public sector monopolies does give them a unique and curious position in this economy. We have gone over those arguments, and I do not intend to repeat them now. What I can do is to repeat my original remark that the Government will welcome a valid means of raising extra finance for telecommunications investment outside PSBR constraints, and indeed one of the central purposes of the kind of liberalising policies in whose direction we are taking a few first cautious steps this evening is to see that in the future more financing outside PSBR can be achieved.
The other thing that I would contest in the remarks made by the noble Lord is that it is true that we would like to see even greater investment in this sector—investment nearer, say, French and German levels. Nevertheless, since this Government have been in office we have increased in real terms, in constant prices, the amount of money available for the external financing limits in this field. It has been a steady increase, and the increase is planned to continue through to 1984. It is a substantial advance on the sums provided for by the previous Government, who indeed as part of their public expenditure cuts policy had to hit this sector, particularly the capital programmes, particularly hard.
An earnest of our intentions is that my honourable friend the Minister of State for Information Technology recently announced in another place that British Telecom's external financing cover for this financial year, for 1981–82, was to be increased by £200 million. That in a year when all EFLs are subject to considerable restraint is an earnest of the confidence we feel in this industry and its need to invest.
It is not the choice of this Government that British Governments have got into the relation with the public trading sector monopolies that they have. This was a system inflicted on our political economy by socialism, and it has borne a very heavy cost and made it difficult for such industries to behave as their modern managements would like them to behave. Part of the whole purpose, as I said, of our policy in this field is to try to chip away at this system, to liberalise it and get it more in line with the competitive demands of a late 20th century economy rather than an economy run on principles arising out of injustices or whatever in the 19th century. It is a slow and intractable business, and I recommend the Bill and its provisions as a substantial step forward in the direction which, rather curiously, the noble Lord, Lord Glenamara, himself appears also to desire.
Lord Underhill: My Lords, what disappoints me about the noble Earl's reply is something I have
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mentioned on more than one occasion; namely, that I am certain he believes in a mixed economy, though one would never believe that from the arguments he frequently adduces from the Government Front Bench. I believe in a mixed economy, which means there must be efficient, properly run national industries—that is the phrase to use—and therefore we are playing a different ball game from the one the noble Earl outlined. First, we have the need to develop British Telecom's national network to the utmost extent and we must enable BT to compete on fair commercial terms with the on-moving private sector. That requires finance. We must also, as my noble friend pointed out, be in a position to help manufacturers of equipment who need the stability and long-term basis of orders which can be given only by BT, and BT can give that only if they have the necessary finance. Dare I also mention that we are in the ball game of having 2½ million unemployed? Any investment which is directed towards constructive industry can only be to the advantage of the whole nation.
I repeat what has been said often before, namely that BT needs investment of £2.2 billion a year, and about 90 per cent. of that is found from its own resources. How many other businesses would think it right to provide nearly 90 per cent. of a £2 billion investment programme a year out of its own resources? It is a great credit to a national industry that it is able to do it. I am wondering whether, even at this stage, we can begin to think what difference there is between an industry of this kind—which is efficient and able to pay its way and pay the interest on any financing it borrows—and the same industry under private control.
The Earl of Gowrie: My Lords, as the noble Lord put the question squarely to me, perhaps I might answer it now. The essential difference is that it is not so much that Governments, whether the previous or present Government, make the judgment about the financing of nationalised industries. It is that the money markets do, and the money markets judge that financing in this sector on this scale carries an explicit Government guarantee. If I or my right honourable friend the Chancellor were to announce to the world that the Government were abolishing a guarantee in this area, the noble Lord, Lord Underhill, would probably find that the financing for such industries was very much harder to achieve. That really is the nub of the issue. It has not changed between this Government and their predecessor, and when the noble Lord makes political points, which it is perfectly fair for him to do, he should also recognise that continuity.
Lord Underhill: I was not aware that I was making any political points, my Lords. I thought I was putting forward a sensible and logical argument free of party politics. I must draw attention to some earlier comments of the noble Earl in a similar context. The only reason I am on my feet now is that, unfortunately, this issue came up at about 9.30 at night in Committee and it is coming up again late tonight, yet this is the most crucial issue facing the development of British Telecom.
What did the noble Earl say on that occasion? I quote from col. 813 of the Official Report of 18th May:
"I got the feeling that what he"—

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he was referring to me—
"really wanted was nationalisation without tears. We on this side of the Committee are not over-enamoured of nationalisation"—
that surprises me!—
"but in the provision of great public services we can often see its logic and indeed we have kept more of the special privilege or the monopoly power of British Telecommunications than some of our own supporters would have liked. But one does pay for having a nationalised industry …".
Well, frankly, my Lords, surely that is not the language that we ought to be using. It is not a question of whether we are to pay for a nationalised industry, for bailing someone out. This is a matter concerning a great public national industry, and it is surely in the interests of the whole nation that we help British Telecom, first, to develop its own network, and, secondly, to help to develop the position of the private manufacturers who rely on BT. Surely that is the way that we ought to be looking at it, and I hope that the noble Earl will reconsider what he has said—
The Earl of Gowrie: My Lords, I am most grateful to the noble Lord for giving way. With the leave of the House, before the noble Lord sits down I wish to mention that in the passage that he quoted from my speech in Committee he was making an error of interpretation which might have been due to a fault of mine. I did not mean it as a complaint that one has to pay for investment. Of course investment has to be paid for, and money has to be found. When I spoke about the noble Lord wanting nationalisation without tears, I was saying that where a nationalised industry whose financing, whether current or capital, carries implicit Government guarantee, one is in the territory of external financial limits, whether one likes it or not. That is the difficulty which successive Governments have had to face, and which no Government have yet found their way out of.
Lord Underhill: My Lords, I do not want to prolong the argument, but the noble Earl asked me to give way to him, and I should in turn like to ask what might have been the position of Rolls-Royce?—an undertaking which was in a more difficult position than the one that we are now considering. I do not think that the argument we are now hearing about obtained then.
Lord Morris: My Lords, at the Committee stage of the Bill on this issue I raised a point which, no doubt unwittingly, was not taken up by my noble friend Lord Gowrie. That was not really surprising since the point was not put in interrogative form. I have a suspicion that I am being very naive about it, but, very simply, it is as follows. In the private sector when a private corporation guarantees a loan, the guarantee does not form any part of the monetary measure of that company. It is included solely by way of a note on the balance sheet. I have never quite been able to understand why in the accounts of nationalised industries a guarantee, expressed or implied, has to be included as part of the PSBR. I should be most grateful for an explanation.
Lord Winstanley: My Lords, in discussing this group of amendments so ably and persuasively spoken to
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by the noble Lord, Lord Glenamara, and so eloquently, though briefly, supported by the noble Lord, Lord Morris, I wonder whether at the same time we may discuss Amendment No. 51. It deals with precisely the same point, and appears in the names of my noble friends Lord Lloyd of Kilgerran and Lady Seear, as well as my name. Amendment No. 51 does not perhaps go the whole way, as do certain of the amendments of the noble Lord, Lord Glenamara, but it goes part of the way, and so perhaps it would be convenient to the House if we were to get rid of Amendment No. 51 at the same time as we deal with the other group of amendments, since it deals with precisely the same point.
The point in question was raised on Second Reading by my noble friend Lord Byers, the Leader of the Liberal Party in your Lordships' House. He spoke very persuasively and very powerfully on the importance of the telecommunications industry being able to raise its finance, its capital, on the market in the ordinary way. The main argument advanced against that point by the noble Earl tonight, as well as at Second Reading and in Committee, has always been the same; namely, that if a nationalised industry is allowed to raise capital on the market, somehow investors know that behind the industry stand the Government. I do not think that potential investors would be greatly reassured by such a statement. I believe that their confidence is in the telecommunications industry. There is an enthusiasm to invest. This is not for a moment regarded as risk capital. It is regarded as an area in which the City would like to invest, given the opportunity.
I am not a Keynesian economist; indeed, I am not an economist at all. I am not a Keynesian of the kind who thinks that at the moment Britain can spend her way out of all her problems. However, I believe that it is desperately important that we pour investment into certain areas, in particular into the science-based industries and into industries such as telecommunications. By doing that we can certainly do much to avoid in future many of the difficulties that we now face.
I really think that we must get away from this preoccupation with the fact that the ability to raise finance on the market, which Telecom undoubtedly could, somehow is a factor in the public sector borrowing requirement. I do not see how that can be; I do not see why it need be. The noble Lord, Lord Glenamara, said that this is a matter on which there is agreement in all parts of your Lordships' House. There is not necessarily agreement in all parts of all parts of your Lordships' House, but I think the noble Earl would certainly accept that there are noble Lords of all political persuasions and all political viewpoints who take the view which has been expressed by the noble Lord, Lord Glenamara, that the restraints must now be removed.
I merely say to the noble Earl that the last of these amendments, which I should like to be considered along with these others, which I am sure would save your Lordships' time, perhaps goes less far than any of the others. It leaves the Secretary of State with the power to intervene and prevent developments of this kind, and merely takes out the words "and the approval of the Treasury". It removes what we

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perhaps might regard as the nigger in the woodpile, if that is not considered a racial and wholly improper remark at the moment. I hope that perhaps the noble Earl can respond to that amendment.
The Earl of Gowrie: My Lords, if I may answer the very direct question put to me by my noble friend—
Lord Ponsonby of Shulbrede: Order!
The Earl of Gowrie: My Lords, I was asked a question by my noble friend and I sought to answer it, but if your Lordships do not wish me to then I shall not.
Lord Ponsonby of Shulbrede: I think it is "by leave", probably, my Lords.
The Earl of Gowrie: My Lords, by rising to my feet I am seeking the leave of the House. I will sit down if the leave is not granted to me. I think the answer to the very straightforward question put to me very clearly by my noble friend Lord Morris could also answer the general points made by the noble Lord, Lord Winstanley. The difficulty is that behind private sector borrowing there is the assumption that competition or investment can end in failure. Behind public sector borrowing that assumption does not exist, and that quite radically alters the character of the borrowing. In my contention it alters the character of one's decisions at a very micro-level in private life. If you get money from somebody who cannot go broke as against money from somebody who can, the terms and conditions of your borrowing alter in degree; and, of course, it is a very much larger degree where Governments are concerned.
That said, I do not find the position wholly satisfactory. What I find unsatisfactory is that these conditions are imposed upon Ministers by the nature of the nationalised sector itself. I go back to my previous remarks to the noble Lord, Lord Underhill, that there may he very good and justifiable arguments for having a large public sector, but if you do have a large public sector you have to pay for it by submitting yourself to the constraints of the fact that the Government stand behind the borrowing. If you can in some way demolish the public sector, or have less of it, you have fewer of such constraints on the borrowing. That is what I meant by saying that you pay for this privilege or for this burden, according to which way you look at it, of having a large public sector.
But I would try to give a ray of light, if you like, to the House. In my original remarks I said that if the Government can find ways, if there are ways, for financing in the public sector generally—I am not just talking about British Telecom—to be done outside public sector borrowing funding guarantees, we would greatly welcome them. I hope that with that asurance, and in view of the fact that we have been over this argument in great detail at Committee stage, noble Lords will not seek to press their amendment.
Lord Glenamara: My Lords, I thank the noble Earl for what he said in his opening reply and for what he said just now. I imagine he chose his words very carefully, as it is a matter of some significance. We shall look at what he said very carefully indeed, but it
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looks to me as though it might be the first slight sign of a thaw in the Government's attitude; so I am grateful to him for that. The noble Earl quoted the Labour Government. Of course there is a very great difference. We are now in the depths of a major recession. In these circumstances, it is surely quite ridiculous to limit profitable investment in an industry in this arbitrary way—and it is arbitrary—simply because it is publicly-owned. The limitation does not apply to a privately-owned industry. If this were lifted, a major contribution could be made to creating jobs and, as the noble Lord, Lord Winstanley, has said, to creating the kind of infrastructure that this country, a highly-developed technological society, will need when we come out of the recession.
The noble Earl talked about the guarantee, but this is purely academic in the case of an industry like British telecommunications. There is not the slightest possibility of British Telecom reneging on borrowing in the market. Therefore, the Government's notional guarantee in the case of an industry like this—not in the case of some industries, I agree, but in the case of this industry and one or two others—means nothing at all. There is no earthly reason why BT, like any other major profitable industry, should not be free to determine its own investment programme and to borrow freely where it wishes. The noble Earl appeared to be saying that external financing limits are an essential characteristic of a publicly-owned firm. Is that what the noble Earl was saying?
The Earl of Gowrie: Broadly, my Lords.
Lord Glenamara: Then, my Lords, will the noble Earl reply to the question that I asked him in the last debate and tell me about Cable and Wireless, with which this Bill deals? They are 100 per cent. owned by the Government, but external financing limits do not apply to them. They are free to borrow wherever they can get the best terms in the world, and they do so successfully—in this country, in Hong Kong, in the Gulf or anywhere else. That is a public wholly-owned industry in the same kind of business as British Telecom but external financial limits do not apply, and rightly so. There is no problem about raising money.
I am grateful to the noble Earl for what he has said but we feel so strongly about this matter that I am afraid that my noble friends and I must carry it to a Division.
9.27 p.m.
On Question, Whether the said amendment (No. 47) shall be agreed to?
Their Lordships divided: Contents. 27; Not-Contents, 60.

CONTENTS

Ardwick, L.

Howie of Troon, L.

Bishopston, L. [Teller.]

John-Mackie, L.

Boston of Faversham, L.

Northfield, L.

Brooks of Tremorfa, L.

Peart, L.

Caccia, L.

Pitt of Hampstead, L.

Collison, L.

Ponsonby of Shulbrede, L.

David, B. [Teller.]

Rochester, L.

De La Warr, E.

Ross of Marnock, L.

Elwyn-Jones, L.

Shackleton, L.

Glenamara, L.

Stedman, B.

517

Stewart of Alvechurch, B.

Underhill, L.

Stewart of Fulham, L.

Wells-Pestell, L.

Stone, L.

Winstanley, L.

Tordoff, L.

NOT-CONTENTS

Airey of Abingdon, B.

Loudoun, C.

Ampthill, L.

Lyell, L.

Avon, E.

Macleod of Borve, B.

Belstead, L.

Mansfield, E.

Boardman, L.

Marley, L.

Boyd of Merton, V.

Monk Bretton, L.

Brabazon of Tara, L.

Morris, L.

Bridgeman, V.

Mottistone, L.

Brougham and Vaux, L.

Murton of Lindisfarne, L.

Chelwood, L.

Newall, L.

Cockfield, L.

Rankeillour, L.

Colville of Culross, V.

Redesdale, L.

Craigmyle, L.

Reigate, L.

Croft, L.

Sandford, L.

Cullen of Ashbourne, L.

Sandys, L. [Teller.]

de Clifford, L.

Savile, L.

Denham, L. [Teller.]

Sharples, B.

Dormer, L.

Skelmersdale, L.

Dundee, E.

Stradbroke, E.

Eccles, V.

Strathclyde, L.

Elliot of Harwood, B.

Swinton, E.

Ferrers, E.

Trefgarne, L.

Fortescue, E.

Trenchard, V.

Gowrie, E.

Trumpington, B.

Grimston of Westbury, L.

Vaizey, L.

Hailsham of Saint Marylebone, L.

Vaux of Harrowden, L.

Vickers, B.

Hive, L.

Vivian, L.

Inglewood, L.

Ward of Witley, V.

Kinloss, Ly.

Westbury, L.

Long, V.

Resolved in the negative, and amendment disagreed to accordingly.
[Amendments Nos. 48 to 51 not moved.]
9.35 p.m.
Lord Morris Lord Morris moved Amendment No. 52:
Page 27, line 20, at end insert ("and where consent or approval by virtue of the provisions of paragraph (2)(b) above is withheld reasons for withholding such consent or approval shall be given in writing by the Secretary of State to the Corporation").
The noble Lord said: My Lords, I have the feeling that by moving this amendment I am whistling in the wind: for, in my experience, the one thing that Ministers and Departments of State do not like doing is justifying their decisions. It is rather like putting oneself on a ducking stool or putting one's own head into a pillory. In worshipping at the altar of "more open government" I believe this amendment would prove of value to the Government, for what it does fundamentally is to support the Conservative Government's fundamental tenet that it is not the business of Government to be in business. Where the Treasury in practice effectively takes a business decision by withholding consent to a loan for British Telecom—
The Earl of Gowrie: My Lords, I am most grateful to my noble friend for giving way. I am very much under the impression that this was debated, because the substantive issue is the same and was indeed brought to a decision following the last debate. We are still on the external financing limit territory, are we not?
Lord Morris: My Lords, as I understand it, this amendment raises a very different principle: that is
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that Her Majesty's Government must give reasons to the corporation as to why they withhold consent. It is slightly different from the previous amendment, but I believe that is the case. I must repeat what I said: if Her Majesty's Government take a business decision on behalf of the corporation, I think it is only fair that they should give reasons to the corporation for the withholding of consent for external borrowing by British Telecom. With that, I beg leave to move the amendment.
Lord Lyell: My Lords, we believe this amendment proposes that in the event of the Government going so far as to withhold their consent or approval from British Telecom's application for any long-term finance in the money markets, the Secretary of State should write to British Telecom, giving the reasons for a particular decision. If any amendment is required—and I would remind the House, as I am sure my noble friend is aware, that the Government have recently announced an increase in British Telecom's external financing limit for 1981–82—this is agreed with the business as a matter of general policy, not as a special decision on whether a particular loan will, or will not, obtain Government consent.
The general guidelines on the type of borrowing which a nationalised industry, or something like British Telecom, may undertake—for example, relating to the permitted sources of short-term funding—are likewise settled as a matter of general policy. When nationalised industries feel that a certain aspect of Government policy on their borrowing is causing them difficulty, discussions are held to see whether any changes can be made.
Any industry such as British Telecom is aware of which loan applications are likely to prove acceptable to the Government, and thus can avoid the embarrassing and disruptive situation which would arise if it submitted a loan application which the Government felt obliged to refuse. The amendment of my noble friend is unnecessary since, in practice, the reasons for the Government's policies are explained to the nationalised industries, and it would not help the process of explanation which needs to be carried out before any formal loan applications are submitted.
Lord Morris: My Lords, I am most grateful for my noble friend's explanation. Not for the first time, I have learned something tonight. I was under the impression that loans were applied for at the Treasury on a piecemeal basis. I did not realise that the general blanket control was handled in that way. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 30 [The Corporation's accounts and audit thereof]:
Lord Morris Lord Morris moved Amendment No. 53:
Page 31, line 24, leave out ("161(1)(a)") and insert ("13").
The noble Lord said: My Lords, I think it would be convenient if I spoke to Amendments Nos. 53 and 54 together. I spoke to these amendments at a very late hour in the Committee stage, and I am sure that my

519
noble friend and your Lordships are aware of the point underlying them. As I have no desire to delay your Lordships any further, I beg to move.
Lord Lyell: My Lords, it was I who explained to my noble friend at that late hour in our deliberations that Section 13 of the Companies Act 1976 does not supersede or in any way replace Section 161(1)(a) of the Companies Act 1948. What that section in the 1948 Act does is to define a person who is qualified for appointment as auditor of a company as,
"a member of a body of accountants established in the United Kingdom and for the time being recognised for the purposes of this provision by the Secretary of State".
Section 13 of the 1976 Act lists the bodies of accountants now recognised by the Secretary of State for the purposes of Section 161(1)(a) of the 1948 Act. That is all that Section 13 is designed to do. I hope that that further clarifies the position for my noble friend. Fortunately, the hour is not so late as it was when we discussed this subject at the last stage.
Lord Morris: My Lords, my noble friend is certainly right on that last point. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 54 not moved.]
Clause 32 [Power of the Secretary of State to make orders about pensions]:
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 54A:
Page 32, line 24, after ("of") insert ("any").
The noble Earl said: My Lords, with the leave of the House, I should like to speak to Amendments Nos. 54A and 54B, as well as Amendments Nos. 55A to 55F and 77A and 77B en bloc. This is a series of amendments to Clause 32 which clarify the drafting of the pensions clause in a number of ways. It may be helpful, therefore, if we take them all together.
The House will be aware that my honourable friend the Minister of State for Industry and Information Technology has been consulting the Post Office, the trustees of the Post Office Pension Fund and the unions concerning the future of the fund. These consultations are now almost complete, but the Government want a little time to reflect on the issues and do not propose to take any hasty decisions. I gave the House an assurance during Committee that no final decision will be taken without full consultation. I should like to repeat that assurance on this occasion.
The House may be aware that the Post Office Board has recommended that the existing pensions fund should be split into two, with one fund for each corporation, but that the trustees and the unions would prefer the single fund to be maintained. A number of compromise solutions have also been suggested which involve varying degrees of separation, including the possibility of two sets of trustees or two schemes but enjoying a common investment fund. I think it will be readily agreed that the Bill should not exclude the possibility of implementing any solution which had the support of all the parties concerned or which was
520
felt to be the most acceptable compromise between them. These amendments are designed to achieve this end. They are necessarily a complex set of amendments, but I should like to stress again that many of them are merely to ensure that all possible solutions to the pensions fund debate and issue can be implemented under the Bill. The Government have not yet come to a conclusion. We intend to proceed with the maximum degree of consent. I am sure your Lordships will agree that it would be wrong for the drafting of the Bill to rule out particular solutions before any such decisions have been taken. I hope therefore that the House can accept this package of amendments.
Lord Ponsonby of Shulbrede: My Lords, the noble Earl has explained very fully this package of amendments. This makes it unnecessary for me to make the speech which I was going to make on my Amendment No. 55. That amendment was tabled specifically for the purpose of finding out what is the present state of the Government's thinking with regard to the splitting of the fund. I am glad to know that the Government are still maintaining a very flexible attitude and that they intend to move with the fullest support and co-operation of all those involved.
On Question, amendment agreed to.
The Deputy Speaker (Lord Ampthill)The Deputy Speaker (Lord Ampthill): My Lords, before calling Amendment No. 54B, I have to point out that if it is agreed to I cannot call Amendment No. 55.
9.47 p.m.
The Earl of Gowrie The Earl of Gowrie moved Amendment No. 54B:
Page 32, leave out lines 27 to 32 and insert—
("(b) the transfer of rights and liabilities as respects any persons to whom this section applies from trustees of a Post Office scheme to trustees of a Corporation scheme;
(bb) the requiring of persons who are both trustees of a Post Office scheme and trustees of a Corporation scheme to hold the whole or any part of a pension fund held for the purposes of the Post Office scheme partly for those purposes and partly for the purposes of the Corporation scheme;
(bc) the transfer to investment trustees appointed both in pursuance of a Post Office scheme and a Corporation scheme of the whole or any part of a pension fund held for the purposes of either of those schemes or partly for the purposes of one and partly for the purposes of the other;
(c) the apportionment between trustees of a Post Office scheme and trustees of a Corporation scheme of a pension fund held for the purposes of the Post Office scheme or partly for the purposes of that scheme and partly for the purposes of the Corporation scheme;").
On Question, amendment agreed to.
The Earl of Gowrie The Earl of Gowrie moved Amendments Nos. 55A, 55B, 55C, 55D, 55E and 55F:
Page 32, line 34, leave out ("that") and insert ("the 1969")
Page 32, line 37, leave out ("this") and insert ("that")
Page 32, line 38, after ("supplemental") insert ("or incidental")
Page 32, line 39, at end insert ("any statutory provision, any contract of employment and")
Page 33, line 2, after ("payment") insert ("or purposes connected with the payment")
Page 33, line 10, after ("ceases") insert ("or ceased").
On Question, amendments agreed to.
Clause 52 [Documentary evidence as to sums due for services]:
Lord Morris Lord Morris moved Amendment No. 56:
Page 43, line 8, after ("services") insert ("or under an agreement with respect to telecommunication services provided by it (subject to any term of the agreement to the contrary)").
The noble Lord said: My Lords, this is purely a drafting amendment. I believe that it aids the Bill in that it clarifies and shortens Clause 52. Your Lordships will be aware that there is no substantive change to the meaning of this clause, with one minor exception. By drafting effectively subsections (1) and (2) in this way, the phrase "subject to any term of the agreement to the contrary" attaches to both a certificate under a scheme under Section 20 and to an agreement with respect to telecommunications provided other than under a scheme under Section 20. I do not think that this does any harm at all. As I see it, there is no reason why British Telecommunications should not wish to write this presumption of documentary evidence out of their scheme under Section 20, should they so wish. I believe that this is a very minor improvement to the Bill. I beg to move.
Lord Lyell: My Lords, I am sure the House will appreciate the efforts of my noble friend to add clarity to the Bill tonight. Of course we accept my noble friend's wish that the Bill should include nothing that is excessive and indeed that he wishes to cut any unnecessary verbiage from the Bill, and, above all, to see that it is as short and as understandable as possible. But I hope my noble friend may be able to accept that his drafting is not adequate in this particular case. The proviso, "subject to any terms of the agreement to the contrary", has to qualify the verb "shall" as in line 14 on page 43 of the Bill and the amendment simply cannot be construed in a way that is consistent with what is in the Bill.
Although it might be possible to combine the subsections 52(1) and 52(2) we believe that the outcome would be more than a little clumsy and, above all, more difficult to understand and I am afraid that would vitiate the laudable efforts of my noble friend to see that the Bill is clearer than he believes it to be at the moment. I hope my noble friend will accept that the Bill as it stands is as clear as we can make it.
Lord Morris: My Lords, I am grateful to my noble friend for that explanation and I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 57 not moved.]
Clause 54 [Power of local authorities to contribute towards new offices or facilities]:
Lord Lyell Lord Lyell moved Amendment No. 58:
Page 44, line 2, after ("authorise") insert ("the giving of an undertaking as respects").
The noble Lord said: My Lords, this is a brief drafting amendment. Subsection (1) of the clause provides for the giving of undertakings by local authorities which can recompense British Telecom's
522
losses in connection with facilities which it provides and not for local authorities to authorise British Telecom to provide those facilities. The amendment corrects the drafting of subsection (3) accordingly. I beg to move.
On Question, amendment agreed to.
Clause 56 [Interpretation and extent of Part I]:
Lord Lyell Lord Lyell moved Amendment No. 59:
Page 45, leave out line 10.
The noble Lord said: My Lords, I hope it will be for the convenience of the House if I speak also to Amendment No. 82. These are two simple drafting amendments which move the definition of the word "pension" from Clause 56, interpretation and extent of Part to Clause 84, the general interpretation. This is necessary because the term "pension" appears also in Clause 75. I beg to move.
On Question, amendment agreed to.
Clause 57 [Powers of the Post Office]:
The Deputy Speaker The Deputy Speaker: My Lords, Amendment No. 60 should read "Page 46, line 4, after ("For") insert ("paragraphs (a) to (d) of").
Lord Lyell Lord Lyell moved Amendments 60–64:
Page 46, line 4, after ("For") insert ("paragraphs (a) to (b) of")
Page 46, leave out lines 6 and 7 and insert ("paragraphs")
Page 46, line 21, after ("authorities") insert—
("(1A) At the end of that subsection there shall be inserted the words")
Page 46, line 28, at end insert—
("(1B) After that subsection there shall be inserted the following subsection").
Page 47, line 31, leave out ("This section") and insert ("Subsections (1) and (2)").
The noble Lord said: My Lords, I wish to point out first of all that there is a small printing error in the Marshalled List. I apologise to the House for this. I understand that Amendment 60 should read "after ("For") insert ("paragraphs (a) to (d) of"). Granted that, I hope it will be for the convenience of the House if I move Amendments Nos 60 to 64 en bloc and speak also to Amendments 97 and to 99 to 102 inclusive.
This group of amendments, which appears numerous and possibly complicated, performs, as I am sure the House will accept, a simple and, I hope, a useful function. At present, Clause 57 sets out the powers of the new Post Office and this is due to come into operation on the appointed day after the passage of this Bill. This is clearly the case because, by virtue of Clause 1(2), British Telecom will not take on its full powers until that day. But the Post Office has notified us that it would like to take advantage of its new power to provide counter services for nationalised industries before that date. Therefore these amendments provide this particular power contained in Section 7(1)(f) of the 1969 Act as inserted by Clause 57(1) of the Bill tonight. This power will come into effect at Royal Assent. I am sure the House will agree that the Post Office should be allowed to avail itself of its new power as it wishes at the earliest opportunity.

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I hope, therefore, the House will support this vast block of amendmens. I beg to move.
Lord Ponsonby of Shulbrede: My Lords, I welcome the tabling of these amendments and I am only sorry that the Government have not been able to see fit to extend the range of counter services which the Post Office could provide to the private sector as well as to the nationalised sector.
On Question, amendments agreed to.
Clause 59 [Redistribution of property, rights and liabilities among wholly owned subsidiaries]:
Lord Lyell Lord Lyell moved Amendments Nos. 65 and 66:
Page 49, line 19, after second ("to") insert("a transfer by or").
Page 49, line 20, after ("as") insert ("a reference to a transfer by or").
The noble Lord said: My Lords, I spoke to these amendments when I moved Amendment No. 7 earlier this afternoon. I hope it will be for the convenience of the House if I move Amendments Nos. 65 and 66 together. I beg to move.
On Question, amendments agreed to.
Clause 65 [Exclusive privilege of the Post Office with respect to the conveyance etc. of letters]:
The Earl of Gowrie The Earl of Gowrie moved Amendments Nos. 67 to 69:
Page 55, line 1, leave out ("Part") and insert ("section and section 66—
"correspondent", in relation to a letter or other communication, means the sender or the addressee;
"employee", in relation to a body corporate, includes any officer or director of the body corporate and any other person taking part in its management, and "employer" and other cognate expressions shall be construed accordingly;")
Page 55, line 7, leave out ("the sender or the addressee") and insert ("either correspondent")
Page 55, line 14, leave out ("Post Office Acts") and insert "1953 Act, the 1969 Act or this Part").
The noble Earl said: My Lords, Amendments Nos. 67 to 69 are formal drafting amendments. I beg to move.
On Question, amendments agreed to.
Lord Lyell: My Lords, I understand it has been agreed through the usual channels that this might be a convenient place to adjourn consideration of the Bill on Report. I see my noble friend, who will have further information on this.
Lord Sandys: My Lords, I think this would be a convenient moment to adjourn the consideration on Report. I beg to move.
Moved accordingly, and, on Question, Motion agreed to.

SOUTH YORKSHIRE BILL
Brought from the Commons; read 1a, and referred to the Examiners.
  IMMIGRATION: APPEALS TO ADJUDICATORS BY DEPENDANTS
  IMMIGRATION: APPEALS TO ADJUDICATORS BY DEPENDANTS
  PRISONERS: WEEKLY MAINTENANCE COSTS
  PRISONERS: WEEKLY MAINTENANCE COSTS
  EEC/YUGOSLAVIA: COMMERCIAL CO-OPERATION AGREEMENT
  EEC/YUGOSLAVIA: COMMERCIAL CO-OPERATION AGREEMENT
  YELLOWLEES REPORT: INSTRUCTIONS TO MEDICAL OFFICERS
  YELLOWLEES REPORT: INSTRUCTIONS TO MEDICAL OFFICERS
  POULTRY PRODUCTION: COMPETITION FROM BRITTANY
  POULTRY PRODUCTION: COMPETITION FROM BRITTANY
  FISHING VESSELS: EEC GRANTS
  FISHING VESSELS: EEC GRANTS
  SHEEPMEAT: EXPORTS TO EEC
  SHEEPMEAT: EXPORTS TO EEC
  SCALLOP FISHERIES: CLOSE SEASONS
  SCALLOP FISHERIES: CLOSE SEASONS
  THE CAPLAN REPORT
  THE CAPLAN REPORT
  DEFENCE EXPENDITURE
  DEFENCE EXPENDITURE