Sitting of 19 April 1982

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

    Welsh Development Agency
    Mr. Knoxasked the Secretary of State for Wales how many new factory units have been built by the Welsh Development Agency since its inception.
    The Secretary of State for Wales (Mr. Nicholas Edwards): Between January 1976 and March 1982 the Welsh Development Agency completed 836 advance factory units, 11 bespoke factory units and 63 factory extensions.
    Mr. Knox: Will my right hon. Friend confirm that the great majority of those factory units have been allocated or occupied? Does he agree that they are making a genuine contribution to the provision of jobs in Wales?
    Mr. Edwards: I can confirm that allocations have been high. The Department estimates that 1·15 million sq ft of WDA factory space was allocated—that is 186 units—in 1981–82. The vacancy rate has risen, but that is hardly surprising in view of the record level of factory building that has taken place.
    Mr. D. E. Thomas: Will the Secretary of State confirm that the number employed in all the advance factories in Wales has been reduced by more than 10,000 between 1977–80?
    Mr. Edwards: If the hon. Gentleman tables a specific question, I shall answer it. It is true that some of the

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    existing occupants have laid people off during that period. However, a record number of new jobs were created last year by new projects going into WDA factories.
    Mr. Rowlands: Do the figures include the Hoover factory in Merthyr Tydfil? What prospect does the Secretary of State hold out of large numbers being employed in that factory?
    Mr. Edwards: The figures that I have given are for newly completed factories. The hon. Gentleman knows that the Hoover factory was completed some considerable time ago. It is obviously a high priority to find a new user for that factory.
    Mr. Hooson: As the effectiveness of the two development bodies in Wales depends not only on advanced factories but on the availability of investment grants, will my right hon. Friend bear that in mind when the review of the status of Mid-Wales takes place in the next couple of months?
    Mr. Edwards: I have already confirmed to my hon. Friend that we are carefully considering those issues in the review to which he refers.
    Mr. Alec Jones: I welcome and applaud the efforts of the Welsh Development Agency, but will the Secretary of State confirm that in the first days of this month 1,100 manufacturing jobs were lost in South Wales alone? If he finds it difficult to confirm that figure, I refer him to the daily reports in the Western Mail. How many advance factories does he believe are needed to make good that loss, apart from the existing level of unemployment in South Wales?
    Mr. Edwards: I shall put the matter into perspective. The 186 WDA factories to which I referred as being allocated for the year to March 1982 should promise about 4,700 jobs. That is obviously an important contribution.
    Mr. Alec Jones: Promises, promises.
    Several Hon. Members rose——
    Mr. Speaker: Order. I shall call the hon. Members who are rising, but we shall have to move more quickly on the other questions.
    Mr. Jeffrey Thomas: Is the Secretary of State aware that as Dunlop has pulled out of North Gwent with the loss of almost 1,400 jobs in the last two years, the people of North Gwent, while not protesting at Dunlop's action only a few months ago, are horrified that the Department is now encouraging Dunlop to set up a new factory, not in North Gwent, but elsewhere in South Wales?
    Mr. Edwards: The hon. and learned Gentleman is well aware that we have made clear to Dunlop, as to other companies, the range of financial assistance that is offered in existing factories and in new factories. If at some future date the company wishes to set up a new factory, I am sure that that would be welcomed by hon. Members in all parts of the House.
    Sir Anthony Meyer: Does my right hon. Friend accept that much of the good work of the Welsh Development Agency may be undone if the public utilities, particularly the electricity and water authorities, make exorbitant charges for connection? Is he aware that they often charge ridiculous sums for providing electricity and water to these factories?
    Mr. Edwards: I shall certainly bring that point to the attention of those bodies, although it has been my experience in dealing with the statutory authorities that they make considerable efforts to meet the special requirements of incoming industry.

    Planning Applications (Gwynedd)
    Mr. Wigleyasked the Secretary of State for Wales if he will review his policy relating to the criteria used in the granting and withholding of planning permission in Gwynedd, with particular attention to the significance to be attached to the county structure plan, the role of the national parks committee and the views of local authorities.
    The Under-Secretary of State for Wales (Mr. Michael Roberts): No, Sir. Our policy is to determine every planning case on its merits, taking all material considerations into account and giving full weight to the factors mentioned by the hon. Member.
    Mr. Wigley: Is the Minister aware of the grave concern in Gwynedd at the way in which the Welsh Office has overruled the decisions of local planning authorities in several applications in the past few months, particularly in Harlech, Gaerwen and in Groeslon, and that more recently the Welsh Office nominees on the Snowdonia national park authority have swung a decision against the democratic will of the people on the relevant committees in Gwynedd? Does he agree that there is no point in having structure plans and local democratic planning authorities if nominees and the Welsh Office itself throw them overboard in this way?
    Mr. Roberts: Structure plans give very useful guidance, but they are not overriding. Circumstances change, and individual planning decisions must reflect that. There were more than 1,300 appeals against local authority decisions in the Principality last year. The people who make those appeals expect a public hearing, an independent hearing, and a decision by an inspector.
    Mr. Geraint Howells: Does the Minister agree that too much of the land in Wales is under the jurisdiction of the national parks?
    Mr. Roberts: I have no comment to make on that question.

    Welsh Development Agency
    Mr. Foulkesasked the Secretary of State for Wales if he is satisfied with the operation of the Welsh Development Agency within the guidlines set by him.
    Mr. Nicholas Edwards: I shall be discussing the agency's future strategy and operations tomorrow with the board of the agency, but I am satisfied with its achievements to date.
    Mr. Foulkes: Does the Secretary of State agree that the Welsh Development Agency, like the Scottish Development Agency, has had its effectiveness greatly reduced by the restraints put on it by the Government? Will he discuss with the agency tomorrow the possibility of widening its powers and increasing its resources so that it can deal effectively with the high level of unemployment in Wales?
    Mr. Edwards: I find it hard to accept that the agency's effectiveness has been reduced when 836 advance

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    factories have been completed since its inception, 684 of them in the period since may 1979. That is more than three times as much factory space as in the period from January 1976 to May 1979. As I have said, I shall be discussing with the board tomorrow the scope of its future activities.
    Mr. Grist: Does my right hon. Friend agree that the work of the development agency would be severely reduced if this country left the European community, as the Labour Party urges?
    Mr. Edwards: I entirely agree. Indeed, I have just come from a lunch with the CBI, which estimates that it would mean the loss of 1 million jobs.
    Mr. Alec Jones: Does the Secretary of State recall that when we last discussed the Welsh Development Agency, in the Welsh Grand Committee in July last year, he indicated that he was asking the new chairman of the agency to undertake a review of its investment policy, and also expressed the hope that the agency would be prepared to take risks? Will the Secretary of State now tell us the result of that inquiry? Is he satisfied that the agency has sufficient powers and is using them to preserve existing firms and industries in Wales?
    Mr. Edwards: I shall be discussing precisely those issues with the agency tomorrow. The agency has produced a paper setting out certain proposals. It proposed to set up an investment subsidiary to assist it in its tasks. It has carried out exactly the remit that I asked it to undertake.

    Job Creation
    Mr. Ray Powellasked the Secretary of State for Wales what effect the Budget proposals will have on unemployment in Wales.
    Mr. Nicholas Edwards: The Budget measures will foster economic recovery and assist industry to provide viable and secure employment in Wales as elsewhere.
    Mr. Powell: Is the Secretary of State aware that this week alone there has been the closure of the Christie Tyler factory at Bridgend with the loss of 300 jobs, of Avon Rubber, announced this weekend, with the loss of 260 jobs, and of TMD Sewing Industries in the Ogmore valley with the loss of 43 jobs? Does he realise that that is 600 jobs lost in one week? Does he also realise that the Government's financial policy for industry is destroying the whole Welsh industrial base?
    Mr. Edwards: I am sure that against that background the hon. Gentleman will have particularly welcomed the reduction of 4,500 in the number of unemployed in Wales.
    Mr. Delwyn Williams: Is my right hon. Friend aware that in the year from the last quarter of 1980 to the last quarter of 1981 manufacturing production in Wales rose by no less than 13 per cent.?
    Mr. Edwards: I welcome the upturn in industrial production that is taking place, as I welcome the large number of new factories and premises now being opened.

    Unemployment Statistics
    Mr. Barry Jonesasked the Secretary of State for Wales by what percentage unemployment in the Deeside
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    travel-to-work area in the county of Clwyd and in Wales has increased since May 1979; and if he will make a statement.
    Mr. Nicholas Edwards: Between May 1979 and March 1982, unemployment increased by 177·8 per cent., 109 per cent. and 105·2 per cent. respectively. The Government have recognised the special needs of Clwyd by providing substantial additional factory building, at Shotton and by upgrading the Wrexham and Shotton travel-to-work areas.
    Mr. Jones: Does the right hon. Gentleman realise that the latest closure on the horizon in my area is that of Connah's Quay power station, while Courtaulds Flint mill has closed temporarily and the Greenfield paper mill is fighting for its life? Is he aware that those closures affect some 600 jobs in an area with 9,000 out of work and only 1,100 jobs in the pipeline? Will he concede that a major job project must be located on the banks of the Dee? What has happened to the Nissan project?
    Mr. Edwards: I have no further news on the Nissan project, but a number of important firms are considering projects in the area. I am sure that the hon. Gentleman will have welcomed the news that Squibb Surgicare is to take on some 200 people. I recently discussed the future of the Courtaulds works with the chairman of Courtaulds, and he understands the importance of the works to the locality. I have also recently been in touch with my right hon. Friend the Secretary of State for Energy about the future of the power station to which the hon. Gentleman referred.
    Sir Anthony Meyer: In view of the anxiety of people at Point of Ayr that the closure of the Connah's Quay power station may affect their future, will my right hon. Friend join me in pressing my right hon. Friend the Secretary of State for Energy to ensure that the project for the liquefaction of coal at Point of Ayr goes ahead at lull speed?
    Mr. Edwards: I understand the importance of the power station. At the end of the day, however, decisions about the power station must be the responsibility of the CEGB. As I have said, I have been in touch with my right hon. Friend the Secretary of State for Energy about this. I can confirm that work is continuing on the liquefaction project, but I have no new information to give my hon. Friend.
    Mr. Alec Jones: Does the Secretary of State agree that his figures clearly show that unemployment in Wales, even using his favoured seasonally adjusted figures, is now 15·1 per cent.? Unemployment is now higher in Wales than in Scotland or any region in England. Does he further agree that the Government's public expenditure White Paper presumes an increase in unemployment of 300,000 in the coming year, and that the Welsh share of that will be about 17,000? If my figures are too pessimistic, will the Secretary of State give his own figures?
    Mr. Edwards: The unemployment figures are presented on exactly the same basis as those presented by the right hon. Gentleman when he was in the Welsh Office. The Government have not made, and do not intend to make, any forecasts about unemployment levels for the coming year. I am sure that the right hon. Gentleman w ill have welcomed the recent reduction in unemployment levels.

    Schoolchildren (Bus Passes)
    Mr. Tom Ellisasked the Secretary of State for Wales what discussion he has had with county councils concerning the provision of free bus passes for schoolchildren.
    Mr. Michael Roberts: None, Sir.
    Mr. Ellis: Is the Minister aware that some of my constituents who are not prepared to allow their children to walk two and a half miles and more to school along busy main roads are genuinely unable to raise the £50 or £60 a month to pay for their children's bus fares? Does the Minister appreciate that from today, the beginning of the summer term, these children are no longer enjoying the right to universal free education? What advice would he give to such parents?
    Mr. Roberts: I am, of course, aware of the problem in the Clwyd local education authority. The hon. Gentleman knows as well as I do that the decision to withdraw discretionary free bus passes from children is a matter for that authority.
    Mr. Barry Jones: Is that not an unsatisfactory answer, given that in my constituency parents at Broughton who send their children to Saltney high school find that their domestic budgets are being blown to bits because of the extra money that they must find? Is it not about time that the Minister considered giving special and urgent aid to the local authority and to the parents?
    Mr. Roberts: I can understand the anxiety of the parents and of the hon. Gentleman, but I can only give the assurance that all children living beyond the statutory walking distances are entitled to free transport and that the authority will continue to make provision for those children.
    Dr. Roger Thomas: Will the Minister state his policy when children are bussed free of charge considerable distances beyond schools that provide similar and suitable bilingual education? Should not children attend, where humanly possible, the nearest appropriate school that has already been the parental choice?
    Mr. Roberts: If the hon. Gentleman wishes to table that question I shall consider it.
    Mr. D. E. Thomas rose——
    Mr. Speaker: Order. Is the hon. Member's constituency in Clwyd or Gwynedd? It is in Gwynedd. I am sorry. Mr. Hooson to ask question No. 7.

    Mental Health Services
    Mr. Hoosonasked the Secretary of State for Wales what progress he has made with joint financing of personal social services projects for the development of mental health services.
    The Under-Secretary of State for Wales (Mr. Wyn Roberts): Earlier this month my right hon. Friend announced the largest ever increase in the Government's contribution towards joint finance in Wales—more than £1 million for schemes beginning in 1982–83. This brings the total central contributions to jointly financed schemes to almost £4.5 million.
    Mr. Hooson: I am delighted to hear of that progress. Is there any sign that local authorities are having difficulty in matching the Government's contribution?
    Mr. Roberts: The bids for joint finance were six times in excess of the earmarked funds. That does not suggest, to me at any rate, that local authorities are unwilling to bring forward schemes.
    Mr. Wigley: Is the Under-Secretary of State aware of the difficulty of local authorities in meeting their part of the responsibility from those schemes? In his county of Gwynedd the social services committee is having difficulty. Will the Under-Secretary also say what progress has been made on the other aspect of mental health services in Wales—the grants for MENCAP and the development of MENCAP services in Wales?
    Mr. Roberts: In reply to the second part of the question, I should make it clear that the figures do not include the £1·13 million for each of the five years beginning with the year 1983–84 which is concerned with the mental handicap initiative.
    As to the difficulties of local authorities, although one understands them, nevertheless, as I said, there is clearly a considerable desire on the part of local authorities to participate in joint finance.
    Mr. Roy Hughes: Does the Under-Secretary appreciate that there is considerable anxiety about the provision of mental health services in Gwent? We now find that Mr. Ron Evans, who has taken a keen interest in this matter, is to be replaced by an outsider as chairman of the Gwent area health authority. Does the Under-Secretary appreciate that political nepotism in these public appointments is deplored throughout Wales?
    Mr. Roberts: That matter does not arise under this question. However, with regard to the appointment of the new chairman of the Gwent area health authority and the retirement of Mr. Ron Evans, I should point out that Mr. Evans was appointed by the previous Conservative Government.

    Holywell (Bypass)
    Sir Anthony Meyerasked the Secretary of State for Wales whether, in view of the deteriorating condition of the A55 road in the Holywell area, he will bring forward the date for the construction of the Holywell bypass.
    Mr. Michael Roberts: The statutory, engineering and other preparatory work for this scheme has not yet been completed, but it is being proceeded with as quickly as possible.
    Sir Anthony Meyer: Will my hon. Friend please get a move on? The bypass has been under discussion ever since I was first associated with the area 11 years ago. The road is rapidly disappearing down a blooming great hole, and is almost impassable. Does my hon. Friend agree that something must be done about it before 1989?
    Mr. Roberts: I sincerely hope that something will be done before 1989. To begin with, we intend that the existing A55 will be repaired by early next month. The earliest starting date for the bypass that I can give my hon. Friend is September 1984.
    Mr. Barry Jones: Does the Minister understand that those of us who live between Queensferry and Flint are having a torrid time, with huge traffic jams and much environmental blight? Why does not the Minister bring

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    forward the Holywell bypass start date? Is there not proof that the much mooted river road should be started early? Will the Minister cut the waffle and give us some action?
    Mr. Roberts: I understand the frustration of the hon. Member for Flint, East (Mr. Jones), but he might have been generous enough to refer to the considerable landslip in the area, which resulted in a two-year delay in work on the road with which he was once associated.

    Beef Herd
    Mr. Geraint Howellsasked the Secretary of State for Wales if he has any plans to stimulate the beef breeding herd in Wales; and if he will make a statement.
    Mr. Nicholas Edwards: Beef producers' returns have improved considerably during the 1981–82 marketing year. Support measures for the beef industry are currently being reviewed as part of the CAP price-fixing negotiations.
    Mr. Howells: Will the Secretary of State explain why the Government have not paid the extra £29·37 per cow to Welsh beef producers for last year?
    Mr. Edwards: As the hon. Gentleman is aware, we pay substantial grants to Welsh producers and there has been a sharp improvement in returns to beef producers during the past year. The average market price for fat cattle is now 21 per cent. up on last year, and there is a considerable improvement in the market.
    Mr. Hooson: Will my right hon. Friend bear in mind when the discussions take place on the future support for beef that this is the weakest element in the hill and marginal farm economy?
    Mr. Edwards: I understand the importance of this sector, but, as I said, there has been a notable improvement, and prices at the 1981 autumn suckled calf sales were up 20 to 25 per cent. Those are substantially above the increase in input prices during the same period. We are seeing a considerable improvement.

    Trunk Roads
    Mr. Roy Hughesasked the Secretary of State for Wales if he is satisfied with the standard of those trunk roads in Wales principally used by traffic whose destination is the South-East of England.
    Mr. Michael Roberts: Yes, Sir. With the opening of the M4 Bridgend northern bypass in September last year, there is now a road of dual carriageway standard from the South-East of England into Dyfed.
    Mr. Hughes: Does the Minister appreciate that everyone in South Wales is asking about the Severn bridge? Any long-term closure of the bridge would place the whole economy of South Wales in jeopardy. What are the Government's plans for repairing the defects and strengthening the bridge, and is there long-term provision for a new bridge?
    Mr. Roberts: Work on strengthening the bridge is in hand, and my right hon. Friend is awaiting the report of the consultants who were asked to appraise the whole bridge. I think that the House and those of us associated with South Wales recognise the great importance and significance of the smooth use of the Severn bridge for the economy of South Wales.
    Mr. D.E. Thomas: Will the Minister look again at his Department's priorities for the A5 in Wales, in view of the construction work that the Department of Transport is now doing on the M54?
    Mr. Roberts: That matter does not arise from the question.
    Sir Albert Costain: Does the Minister appreciate that a considerable percentage of this traffic to the South-East of England is en route to the Continent? Does he further appreciate that if the Channel tunnel were built a considerable amount of that traffic could go by rail, which would be very much to the satisfaction of the people of Kent? What consultations is he having with his right hon. Friend on the building of the Channel tunnel?
    Mr. Thomas: I am grateful to my hon. Friend for that question. I am not at present engaged in such discussions.
    Mr. Rowlands: I drove across the Severn bridge this morning. Is the hon. Gentleman aware of yet another set of restrictions on that bridge? How many times and how many days in the last 12 months has that bridge been free to traffic as opposed to being heavily restricted, as it was again today, with little evidence of much work being done?
    Mr. Roberts: First, I apologise for my answer to the hon. Member for Merioneth (Mr. Thomas) a few minutes ago. I did not interpret that question as widely as I should have. Of course, we take that matter into consideration.
    I cannot give the hon. Member for Merthyr Tydfil (Mr. Rowlands) information about how many days the bridge has been completely free from restriction, but clearly it has not been sufficient. There have been technical troubles associated with the bridge, and for safety reasons we have had to impose these restrictions. We shall, of course, clear the bridge as soon as we can, because we recognise its significance and importance.
    Mr. Alec Jones: Will the Minister make an authoritative public statement regarding the present condition of the Severn bridge, the steps that are shortly to be taken to improve it and the long-term view regarding the possible need for a second bridge? There is considerable disquiet among industrialists in South Wales, who fear that any closure of, or restrictions on, that bridge would adversely affect industrial development and growth in the area.
    Mr. Roberts: That, of course, is a matter for my right hon. Friend the Secretary of State for Transport, and he has promised to keep the House properly and fully informed.

    University College Hospital, Cardiff
    Mr. Gristasked the Secretary of State for Wales if he will give details of repairs and rebuilding being undertaken at University college hospital, Heath, Cardiff.
    Mr. Wyn Roberts: Remedial works at the University hospital of Wales have covered mosaic cladding, repairs to ceilings in Meirionnydd House, defects in Pembroke and Brecknock residences and ward B4G. I am awaiting a report on the extent of any further works following a detailed structural survey of the hospital.
    Mr. Grist: Pending that survey, will my hon. Friend say what the cost to date has been; what it is expected to

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    be; whether anyone has been held legally responsible; and, when he receives the report, whether we can expect an end of the matter and that we shall not have to repair and rebuild this hospital every eight or 10 years?
    Mr. Roberts: The remedial works undertaken to date have cost £1·8 million. The report on the survey of the defects indicated a total cost of £6·3 million for the necessary remedial works, but a working party was set up to consider what further work was to be funded from central NHS sources. That working party is due to report shortly. It is expected that the cost will be in the region of £2 million, in addition to the £1·8 million in all spent so far.
    As to action against those responsible for the defects, no one has admitted liability and responsibility for the current situation, but writs have been issued against the consultant engineers and the architects with regard to the mosaic defects. The question of litigation in respect of the further defects is also being examined.
    Dr. Roger Thomas: In order to contain the obvious apprehension, as stated by the hon. Member for Cardiff, North (Mr. Grist), will the Minister arrange for Welsh hospital capital building expenditure to match or even exceed the per capita figure for England and Scotland?
    Mr. Roberts: As the hon. Gentleman should know, significant NHS capital works are taking place in Wales. We are building no fewer than four new district general hospitals. Of course, the expenditure figures on the University hospital of Wales must be related to the fact that that hospital would cost £100 million if it were built today.
    Mr. Jeffrey Thomas: Does the Minister agree that it is a public scandal that, so soon after the completion of this hospital, these remedial works are now required? Will he keep the House closely informed of the progress of litigation?
    Mr. Roberts: I agree with a great deal of what the hon. and learned Gentleman has said. I quote from memory, but I think that the hospital is about 10 years old. The Department has been carrying out a study of its procedures for controlling major projects, and it is hoped that the findings will help eliminate future defects in major capital projects.

    Redundancies (Merthyr Tydfil)
    Mr. Rowlandsasked the Secretary of State for Wales if he will estimate the number of redundancies in Merthyr Tydfil since May 1979.
    Mr. Nicholas Edwards: Between May 1979 and March 1982, 3,856 redundancies were notified to the Department of Employment as due to occur in the Merthyr Tydfil area.
    Mr. Rowlands: Is the right hon. Gentleman aware that that is almost the total number of jobs that we could expect even if Nissan came to South Wales, and that is in one community alone? When can we expect some growth and an increase in the number of jobs in Merthyr Tydfil and other Heads of the Valleys communities, or will we be bypassed, in view of the fact that one Minister has referred to traditional industrial communities? When can we expect to see some real growth and real jobs back in the Heads of the Valleys communities?
    Mr. Edwards: I share the hon. Gentleman's concern about unemployment in Merthyr Tydfil, which is clearly extremely serious. It is also true that a number of projects now coming to Wales are deciding to locate in the Heads of the Valleys area. I welcome that. Furthermore, the improved road links that have been completed during the Government's term of office will help, and the hon. Gentleman will know that at present we are pressing ahead with the important road link up the valley to Merthyr.

    Heart Disease
    Mr. Delwyn Williamsasked the Secretary of State for Wales if he will take steps to discover the cause of the high rate of heart deaths in Wales and to improve specialist treatment of heart disease.
    Mr. Wyn Roberts: As long ago as December 1979 my right hon. Friend asked the Welsh Medical Committee to prepare a report on cardiothoracic services in Wales. The report was presented to him in January, and I have myself discussed it with its authors. The report's recommendations are now being examined and costed by Welsh Office officials, and when this work is complete it will be published.
    Mr. Williams: I welcome my hon. Friend's reply. Does he agree that the alleged leak was premature, irresponsible and caused unnecessary anxiety? Will he further take on board the fact that there is only one cardioangiography unit in the whole of Wales—at Cardiff—and, while other units over the border could be used, we do not have trained specialists to use them?
    Mr. Roberts: It is true that many treatments of Welsh people take place outside Wales, in both London and Liverpool. As to the so-called leak of the contents of this report, blatant party political propaganda is involved. Many of the figures, especially with regard to deaths, relate to as far back as 1978.
    Dr. Roger Thomas: In addition to the working party report led by an eminent cardiologist, is the Minister aware of the report of Dr. Farrow, of the Welsh National School of Medicine, who states that expenditure on Welsh health should be according to our higher morbidity and not as calculated at present?
    Mr. Roberts: I am aware of that report, but the one that we are dealing with under this question was commissioned by my right hon. Friend and relates to cardiothoracic surgery in particular.
    Mr. Speaker: In calling the hon. Member for Merioneth (Mr. Thomas), I should point out that earlier I interpreted Question No. 6 narrowly, and I apologise to him. The hon. Gentleman might then have had a chance to ask a question, but he now has the opportunity to do so on Question No. 14.

    Pneumoconiosis Research Unit (South Glamorgan)
    Mr. D. E. Thomasasked the Secretary of State for Wales whether his Department has commissioned any research from the pneumoconiosis research unit in the South Glamorgan area health authority.
    Mr. Wyn Roberts: The Welsh Office has not commissioned any research at the Medical Research Council's pneumoconiosis research unit at Llandough

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    hospital, but the work carried out there on occupational lung disease is directly relevant to health problems in Wales.
    Mr. Thomas: Is the hon. Gentleman aware of the recent statement by the former director of the unit suggesting that it was "withering away"? Is that not a serious statement from someone who was concerned with research that has been vital for Wales, and, more recently, for Cornish tin miners, in relation to industrial chest diseases?
    Mr. Roberts: I understand that the director retired early and that he made some comments to the press, which I read with interest. I have no reason to believe that the future of the unit is in jeopardy. It is dominated by the Medical Research Council, which is sponsored by the Department of Education and Science, and I understand that another director is to be appointed.
    Dr. Roger Thomas: Is the Under-Secretary aware of the poor progress being made in the tripartite talks on pnuemoconiosis between the Government, the NCB and the NUM? Is there nothing that the Secretary of State can do for an area that is more blighted by pneumoconiosis than any other part of the United Kingdom?
    Mr. Roberts: The problem has been with us for a considerable time, but I think that the hon. Gentleman will agree that much has been done over the years. The unit at Llandough is already conducting a major research programme on matters of special interest to Wales.

  INDUSTRY

    Steel Workers (Re-employment)
    Mr. Gregor MacKenzieasked the Secretary of State for Industry if he will make a statement on the progress made in finding replacement jobs for workers declared redundant as a result of steelworks closures.
    The Minister of State, Department of Industry (Mr. Norman Lamont): No national information is available on the success of individual redundant steel workers in finding new jobs. But it is clear that the creation of the necessary new and secure jobs in the areas affected depends primarily on the right economic conditions for industry, which our current and economic policies are intended to create.
    Mr. MacKenzie: Is the hon. Gentleman aware that, while a number of us appreciate that there are difficulties in finding new jobs in steel areas, we were alarmed to read of the BSC's sale of Redpath Engineering to Trafalgar House, which will result in about 600 or 700 redundancies? Will the hon. Gentleman also comment on the rumour that the sale was made for a miserable £10 million and ask his friends at the Department of Trade whether the transaction creates a monopoly?
    Mr. Lamont: There is agreement in principle between the BSC and Trafalgar House for a sale. The right hon. Gentleman will appreciate that it is a matter for the commercial judgment of the BSC. It does not require the consent of the Secretary of State for Industry. Trafalgar House has said that it expects that there will be 600 or 700 redundancies, but that it will do its best to find alternative
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    employment elsewhere in the group, and the redundancies would, of course, be spread throughout the areas where Trafalgar House is located.
    The price is also a matter for the BSC and I see no reason to distrust its commercial judgment. I understand that it took professional advice. The right hon. Gentleman mentioned the question of a monopoly, and I can tell him that the size of the companies involved means that the issue is being considered by the Director General of Fair Trading.
    Mr. Michael Brown: Did my hon. Friend read last Tuesday's Financial Times, which reported the rumour that the European Commission is about to announce a package of aid for steel closure areas and that Scunthorpe is not to be included? Is it not outrageous that, with 8,000 redundant steel workers in my constituency. the area is not to be included in any package of measures? What assistance will his Department provide to Scunthorpe and what representations will it make to the Common Market?
    Mr. Lamont: As my hon. Friend knows, I am aware of the problems of Scunthorpe, and it is certainly one of the most adversely affected steel closure areas. I assure my hon. Friend that we would not want his constituency to be placed in a disadvantageous position by any special measures to help other steel closure areas. His area ought to be entitled to the same aid as other areas.
    Mr. Dormand: The Minister said in answer to my right hon. Friend the Member for Rutherglen (Mr. MacKenzie) that no national figures were available, but is he aware that redundant steel workers form a significant proportion of the large number of unemployed in the Northern region, which still has the most unemployed in England? Ought not the Government to make special provision for redundant steel workers?
    Mr. Lamont: The original question was whether we could identify the reabsorption of steel workers. Unemployment and re-employment figures do not detail the previous occupations of individuals, but I assure the hon. Gentleman that we recognise the special position of steel closure areas. That is why BSC (Industry) has been operating and why European Investment Bank and ECSC schemes are available to help to deal with those grave problems.

  HOUSE OF COMMONS

    Staff (Working Conditions)
    Mr. Canavanasked the right hon. Member for Middlesbrough, as representing the House of Commons Commission, whether the Commission will arrange to meet trade union representatives of the House of Commons employees to discuss their working conditions and related matters.
    Mr. Arthur Bottomley: These matters are normally the subject of consultation between management and trade union representatives, without the direct involvement of the Commission.
    Mr. Canavan: Why is the Commission trying to impose on House of Commons employees a "no-strike" clause, which would shackle the trade unions even more than the Government's obnoxious Employment Bill, which is to be discussed later this week? In view of the

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    understandable opposition of the trade unions concerned and the resultant deadlock in negotiations, will the Commission consider referring the matter to a form of independent arbitration, such as ACAS?
    Mr. Bottomley: It is not the intention of the Commission to impose a "no-strike" clause on anyone, but it takes the view that Parliament's work ought not to be hampered in any way. Consequently, management is meeting the trade unions and I am told that some movement has been made. I hope that a satisfactory settlement will be reached in due course.
    Mr. Cormack: Is the right hon. Gentleman aware that the vast majority of hon. Members fully support him and his colleagues in what they are seeking to do for us all?
    Mr. Jessel: Is the right hon. Gentleman aware that, just as it is an immense privilege for us to serve as hon. Members, so it is a privilege to serve on the staff and to serve the country? Is he further aware that no bolshie attitudes on these matters are wanted round here?

  EDUCATION AND SCIENCE

    Films (Appreciation)
    Mr. Dormandasked the Secretary of State for Education and Science what steps he is taking to encourage the appreciation of films.
    Mr. Freudasked the Secretary of State for Education and Science if he will take further steps to encourage the appreciation of films.
    The Minister for the Arts (Mr. Paul Channon): My responsibilities are limited to film as an art form and the preservation of historical material. I have increased the grant to the British Film Institute to assist with its production and archive activities, and its support for regional film appreciation.
    Mr. Dormand: Does the right hon. Gentleman realise that he takes too narrow a view of his responsibilities for films? In view of the current success of British films, will he take the initiative with his ministerial colleagues in urging the establishment of a British film laboratory, as was strongly recommended recently by the Wilson committee? Would that not assist in maintaining standards, and is that not what a Minister responsible for the arts is supposed to do?
    Mr. Channon: I think that the hon. Gentleman's question is based on a misapprehension. I am not responsible for that matter, which is entirely the responsibility of my noble Friend the Secretary of State for Trade. My right hon. Friend the Leader of the House, a former Secretary of State for Trade, confirms my view. I suggest that the hon. Gentleman addresses his question to the Department of Trade.
    Mr. Freud: As hardly any hon. Members remember the Roman conquest, will the Minister use his best efforts to persuade film makers to put the dates of films in proper numerals instead of in Latin lettering?
    Mr. Channon: I shall certainly consider that point, but I should have thought that the hon. Gentleman would be well able to read the dates of films and I am sure that all other hon. Members, apart from those educated at Eton, are able to do likewise.
    Mr. Sever: I am sure that the Minister will be able to read the voluminous reports that have been produced from many quarters showing that the British film industry is probably now in a better position to advance than at any time since the 'forties? Will the Minister and his Department give the fullest and strongest commitment to do whatever is possible to improve and preserve the British film industry?
    Mr. Channon: I entirely agree with the hon. Gentleman, but he should address his question to the Secretary of State for Trade, who is responsible for the commercial film industry.
    Mr. Cormack: Is my right hon. Friend aware that the Select Committee recently made an excellent report on the preservation of the film archives? When can we expect the Government's response?
    Mr. Channon: I hope that the Government will reply very soon.
    Mr. Christopher Price: Is the Minister happy with the present situation in the Government, whereby he is responsible for "arty" films and the Department of Trade is responsible for all other films? What is he doing in all those Cabinet Committees to achieve a situation whereby one Minister is in charge of the whole industry?
    Mr. Channon: Fortunately, it is not for me to decide on the allocation of ministerial duties. That is the position, and it has been so for a considerable time, and not only under this Government. It would help if the film industry had united views about the Department to which it would like to be responsible.
    Mr. Faulds: Has not the Minister the sensitivity to feel that there is growing concern in the House that matters concerning the film industry in this country are extremely badly ordered? Does he agree—a simple assertion of agreement would do a power of good—that every aspect of films and film making would fare much better in Britain if the responsibility for films were taken away from his colleague in the Department of Trade and put under his cultural concern, where they should more properly be?
    Mr. Channon: I am grateful that hon. Members wish to thrust these important responsibilities on me, but I should be grateful if they would take up this matter with the Prime Minister, who is responsible for the allocation of duties, not I.

    The Arts
    Mr. Silvesterasked the Secretary of State for Education and Science if he is satisfied with the amount of support provided from all sources for the arts in the North-West.
    Mr. Channon: I am never satisfied, but in general I am impressed by what is achieved in this field in the North-West.
    Mr. Silvester: Does my right hon. Friend agree that the arts are an important element in the attractiveness, and therefore in the economy, of the region? Does he therefore agree that it is distressing to see what is happening to the Hallé orchestra, which is being squeezed by a reduction in grant and an increase in charges by the local authority—and is in a static position with the Arts Council—before it can do anything about raising private funds? Would my right hon. Friend care to comment?
    Mr. Channon: It is a great pity that the Hallé orchestra is being squeezed in this way. I hope that my hon. Friend will use his influence to try to persuade the local authority to reconsider its decision, which is small in cash terms but important to the orchestra. In answer to my hon. Friend's question about private help to the arts in the North-West, I hope that there will be an increase in business sponsorship, and I hope to have a meeting there in the not-too-distant future.
    Mr. Robert Sheldon: The Hallé orchestra forms an important part of the cultural life in the whole of the North-West. In view of the local authority decision, will the Minister look at the matter again and see what direct help he can give to maintain this important cultural achievement in the area?
    Mr. Channon: I cannot ask the Arts Council to pay extra money when local authorities are reducing their grants to a particular orchestra. Otherwise, many local authorities would do exactly the same and it would be a great disincentive to people to continue to support them. I hope that hon. Members in the North-West will use their influence to try to make sure that the Hallé is not squeezed in this way by Manchester city.
    Mr. Freud: Will the Minister accept that counties north-west of Southend are equally deprived of arts finance, and will he use his best endeavours to persuade his own county councillors and those around East Anglia to contribute more generously to the arts?
    Mr. Channon: The hon. Gentleman has a valid point, and it is one that I discussed with him recently. Certainly I have it much in mind.
    Mr. Faulds: Will the right hon. Gentleman bring his good offices to bear on the Secretary of State for the Environment, who is much to blame for some of the damage that has been done to these activities throughout the regions?
    Mr. Channon: I certainly do not accept that. It has been interesting to see how local authorities have reacted. Most of them have helped the arts considerably, bearing in mind the present difficulties. It is a great pity that a few of them have reduced their support for the arts in cash terms.

    National Gallery
    Sir David Priceasked the Secretary of State for Education and Science whether he will arrange for the responsibility for the buildings occupied by the National gallery to be vested in the trustees of the National gallery.
    Mr. Channon: The ownership of the National gallery premises is vested in my right hon. Friend the Secretary of State for the Environment on behalf of the Crown. I have had no representations from the trustees that this arrangement is unsatisfactory.
    Sir David Price: Does my right hon. Friend agree that the intervention of the Property Services Agency, in respect of the internal/external fabric of the buildings of the National gallery, means divided responsibility on the part of the trustees? If the trustees are regarded as competent to look after the pictures, which are very much more valuable than the buildings, surely it would be right for them to look after the buildings as well?
    Mr. Channon: I have had no representations from the trustees about the matter, but I shall willingly discuss the matter with them. The situation of the National gallery is exactly the same as that of every other gallery, except the British museum, where, under the British Museum Act, the trustees own the buildings.

    Arts Council
    Mr. Murphyasked the Secretary of State for Education and Science, further to his statement of 22 February, Official Report, c. 643, what progress has been made in his discussions with the Arts Council cm the proportion of its budget spent outside London.
    Mr. Channon: Over 60 per cent. of the Arts Council grant is spent outside London and I am satisfied that the Arts Council is well aware of the importance of helping the arts in the regions.
    Mr. Murphy: Does my right hon. Friend agree that it is important to encourage the development of the arts in the regions, so that every one has the maximum opportunity to benefit from and enjoy them?
    Mr. Channon: I entirely agree with my hon. Friend. I am glad to say that the proportion of the grant spent outside London has increased substantially over the past 20 years or so, and I hope that that trend will continue.
    Mr. Faulds: Does the right hon. Gentleman accept that under the present Secretary-General there has been a large change in the proportion spent in the regions and in the Metropolis? For once, due credit should be given to the gentleman who is responsible for that policy.
    Mr. Channon: I certainly agree.
    Mr. Maxwell-Hyslop: Is it a matter of Government policy what proportion of the funds available to the arts is spent on professionals putting on exhibitions, theatre and opera? Is the proportion that is spent on amateurs performing in the arts in youth orchestras or dramatics of one kind or another a matter of Government policy, or is it entirely at the discretion of the Arts Council?
    Mr. Channon: No. On the whole, the Arts Council's charter restricts its ability to support organisations other than professional organisations. In its charter it has no power to support amateur organisations. The money that it gives is restricted to the professional theatre arid professional organisations.
    Mr. Dormand: A few moments ago the Minister said that the contributions made by the local authorities in the regions are not as great as previously. Has he had representations on the matter? Does he agree that it is an extremely important matter? Is it not true that the arts are suffering as a result of the Government's policy of reducing Exchequer grants to local authorities, not least in the Northern region?
    Mr. Channon: No. I think that the hon. Gentleman must have misheard me. I said that I was delighted that local authorities had not been reducing their expenditure on the arts by a substantial amount. In fact, most local authorities have been giving roughly the same amount as before. I told the hon. Gentleman, I think in reply to a question at our last Question Time, that the Northern area was getting a higher proportion of Government support for the arts than almost anywhere else.
    Mr. Jessel: Will my right hon. Friend ask the Arts Council to continue to maintain its sense of balance in this matter, because London is the arts capital of the world, and that is a tremendous national asset? Many people live in London and many people enjoy coming into London from outside to enjoy arts events which, by their very nature, require large gatherings of people.
    Mr. Channon: Yes. I am sure that all right hon. and hon. Members agree that a substantial proportion has to be spent on London, because that is where many of the centres of national excellence are. I certainly agree with my hon. Friend.
    Mr. Soley: Is the Minister not aware, unlike the hon. Member for Twickenham (Mr. Jessel), that it is not London that is the arts capital of the world, but Hammersmith, North? A number of arts and theatre groups there are in acute financial trouble, partly because
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    of Government cuts in the arts generally. We should be talking not just about the proportion spent on London, as opposed to the rest of Britain, but about the total amount.
    Mr. Channon: That cannot be right. Some groups may be in trouble, but it is not because of Government cuts. The Government have increased the Arts Council grant by a respectable amount considering the difficult economic circumstances. It is open to local authorities and the Greater London Arts Association to help those groups that the hon. Gentleman has in mind.
    Mr. Cormack: Has my right hon. Friend had time to discuss the future of the Arts Council in detail with Sir William Rees-Mogg?
    Mr. Channon: Not as yet. Sir William Rees-Mogg's period of office does not begin until early May. After that, I shall naturally hope to hold a series of discussions with him about the future of the Arts Council.

Falkland Islands
3.30 pm
The Secretary of State for Foreign and Commonwealth Affairs (Mr. Francis Pym): With your permission, Mr. Speaker, I will make a brief statement on the Falkland Islands.
Our objectives remain as already stated to the House. However, I should provide an account of developments since the debate last Wednesday.
Mr. Haig is continuing in his efforts to persuade the Argentine Government to agree to the implementation of Security Council resolution No. 502. His mission provides the best hope of achieving that objective.
The position is still delicate and the House will not expect me to reveal details of the negotiations. I know that the House understands that. We remain grateful to Mr. Haig and will continue to co-operate fully with his efforts to secure the implementation of resolution No. 502.
Meanwhile, we are stepping up the military, economic and diplomatic pressure on Argentina. Our naval task force is steadily approaching the area of the Falklands, and we are continuing to strengthen its ability to carry out whatever tasks may be required of it.
I am glad to tell the House that Norway has today joined members of the European Community and certain important Commonwealth countries in banning imports from Argentina.
The 22 marines who were captured in South Georgia and the remaining seven from the Falklands, as well as 13 British scientists evacuated from South Georgia, have arrived safely in Montevideo. I am glad to say that they are now on their way back to Britain. Fifteen British scientists remain in South Georgia and we have their wellbeing and safety very much in mind. The latest report on 18 April confirmed that all were safe and well.
The three British journalists arrested last week in Argentina are expected to appear before a judge today. The British interests section of the Swiss embassy in Buenos Aires is keeping us informed of developments.
Argentina must have no doubts about our resolve to exercise our rights to the full if this should prove necessary. However, I can assure the House that we are making every possible effort to get a satisfactory solution to this dispute by peaceful means. The Government will continue to keep the House informed.
Mr. Denis Healey: First, I thank the Foreign Secretary for his statement. I hope that he will take similar opportunities to keep the House informed as affairs develop. The Opposition welcome the Norwegian Government's decision to join the Community in sanctions against the Argentine.
The Opposition share the Government's objectives, which include securing the withdrawal of all Argentine troops and other persons from the Falkland Islands before Britain engages in direct negotiations with Argentina for a peaceful settlement of the status of the Islands.
I agree with the right hon. Gentleman—as I think all Labour Members would—that Mr. Haig's mission provides the best hope of a peaceful settlement. I hope that we shall all do everything that we can to assist him to succeed. If no immediate agreement on sovereignty can be reached after an Argentine withdrawal—that seems to be the stumbling block at the moment, according to Mr.
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Secretary Haig's statements—will the Government consider asking the Secretary-General of the United Nations to provide a temporary administrator for the Islands after the Argentine forces have left, so that the sovereignty issue can be put on one side for direct negotiation between Britain and the Argentine? I think that that is the desire of both sides of the House.
I apologise for putting a more hypothetical question to the right hon. Gentleman, but the issue may arise before he next has an opportunity to make a statement to the House. If Mr. Haig should finally decide—as he seemed on the point of doing twice in the last week—that he can contribute nothing more as an "honest broker", will the Government consider asking the Secretary-General of the United Nations to undertake that role, thus freeing he United States Administration to express the views of the American people that America should not behave as neutral between the aggressor and his victim or between a democratic ally and a dictatorship whose actions have often been hostile to the United States in recent years'?
May I finally ask the right hon. Gentleman to answer a question which I put to him in our first debate a fortnight ago? Can he assure the House that the Government will not reduce the forces at present available for the defence of Belize so long as a threat from Guatemala persists?
Mr. Pym: First, we are grateful for what the right hon. Gentleman said at the beginning of his intervention and for the shared objectives and the support that he has given the Government and Mr. Haig in what they are trying to achieve.
The first vital step is to secure the Argentine withdrawal in accordance with Security Council resolution No. 502. The methods are open to discussion, but that must be the first objective. It would be wrong at the present time to consider what might happen in the very unfortunate event of that mission not proving successful. It would be wrong to go beyond that. As I said in my statement, I know that the right hon. Gentleman supports that. At the moment, the hope and the effort must be to do everything possible to make the mission successful.
It has always seemed to me that while Mr. Haig and the United States Administration are trying to achieve the implementation of the resolution by peaceful means it would be inappropriate for them to be in any position other than a reasonably evenhanded one. That is a fair statement of the position. That must continue at the moment.
I assure the right hon. Gentleman that no date has been fixed for any change in the situation in Belize. We have the situation in Central America very much in mind at the present time. No change is envisaged in the foreseeable future in our military situation there.
Mr. Healey: May I correct what I thought was a misunderstanding by the right hon. Gentleman of the suggestion that I put to him regarding the Secretary-General of the United Nations being asked to provide an administrator? The suggestion that I made in the House last week, and which I have repeated since, was that if, as appears to be the case, the impediment to an Argentine agreement to the withdrawal of its forces is the nature of the administration on the islands thereafter, during the period when negotiations between Britain and the Argentine on a permanent settlement must proceed, will the Government consider trying to take the sovereignty issue out of the immediate argument by inviting the United

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Nations to provide an administrator purely for the period between the withdrawal of the Argentine forces and the agreement of a permanent settlement?
Mr. Pym: We have never disguised from the House that the negotiations are clearly difficult and that there are a number of obstacles. A great many proposals and ideas have been brought forward to try to resolve those difficulties. That is what the negotiations are about. As the House was generous enough to understand last week, and as I am sure it will now, while those negotiations are going on, one hopes with a successful outcome, it would be wrong to go into the details of those negotiations. It would certainly be wrong at the moment to project our comments in public beyond this particular stage. It must remain our objective to hope, and to do everything that we can to ensure, that the Haig mission is successful.
Several Hon. Members rose——
Mr. Speaker: Order. As it is clear that we shall return to this subject more than once in the near future, I propose to limit questions this afternoon to 20 minutes. That is a good run and might, indeed, be a bit too long to suit the House.
Mr. J. Enoch Powell: In view of the Government's repeated assurance that no agreement affecting the future status of the Falkland Islands will be made without the consent of the House and the Falkland Islanders, is it not clear that the withdrawal of Argentine forces from the islands cannot be conditional either upon such an agreement or upon the possibility of such an agreement?
Mr. Pym: We have made our position about the status of the islands and the importance that we have always attached to the wishes of the islanders clear from the outset. We have described those wishes as being of paramount importance. Of course, the Argentines have a different point of view about these matters and that is why the negotiations are so difficult and protracted. We are doing everything that we can to ensure that they are successful. The principles upon which we have based our case have been made very clear to the House.
Sir Angus Maude: Whatever may be discussed in subsequent negotiations, will my right hon. Friend confirm that if we are to uphold the vital principle that unprovoked aggression must not be seen to pay, Argentine withdrawal from the Falkland Islands must be total and unconditional, without any Argentine flags or administrators being left behind?
Mr. Pym: My right hon. Friend will agree that the rapid passing of resolution No. 502 in the United Nations was a substantial achievement. It specifically refers to that point. This matter is not only of the utmost importance to Britain but of importance to all freedom-loving countries all round the world. They have just as great an interest in ensuring that withdrawal takes place as we have.
Mr. Jack Ashley: If it is true that the British Government rightly refuse to surrender sovereignty under duress and in the face of unwarranted armed aggression, but that they are prepared to negotiate sovereignty later, are not both countries getting the whole issue out of perspective? Argentina is doing so by its
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statement that its soldiers will stay, dead or alive, on the Falkland Islands, and Britain by its declaration that it will shoot first when the task force arrives. Is that still our position?
Mr. Pym: I am not sure that the right hon. Gentleman is right about shooting first. The Argentines invaded the Falkland Islands when we—like previous Governments—were negotiating with them about the future of the Falkland Islands. In the course of those negotiations we gave due weight to the wishes of the islanders, which was not always to the satisfaction of the Argentines. However, those negotiations were going on. Without any notice, and without telling us of their intentions, the Argentines invaded these islands, and that position cannot be allowed to stand.
Some people may take the right hon. Gentleman's view that the Argentines and the British are getting the issue out of proportion, but the principle of one large country taking another country by invasion and military force cannot be allowed to stand. That is what the issue is all about. The Argentines have acted completely unreasonably. They are now in breach of a mandatory United Nations resolution. All members of the United Nations have an interest in seeing that they fulfil their mandatory obligations.
Mr. James Wellbeloved: Is it not true that while the task force proceeds towards the Falkland Islands war zone the Government are pushing ahead with proposals to reduce the allowances paid to Service men in that fleet? Is it not bad enough that the Navy has to operate under the shadow of cuts in the fleet, without adding insult to injury?
Mr. Pym: The hon. Gentleman must not believe all that he reads in the newspapers. That matter is the responsibility of my right hon. Friend the Secretary of State for Defence, and he has made his proposals public. They are fair and reasonable, and the hon. Gentleman can question him about them.
Sir Nigel Fisher: Will my right hon, Friend keep an open mind about the suggestion of a United Nations presence? If that were offered by the United Nations, it might be the very factor to induce the Argentines to withdraw peaceably. With a United Nations presence, a referendum of the Falkland Islanders could take place, and we all know the probable result of that. That would be a good interim measure.
Mr. Pym: I note that suggestion. During the negotiations, I should not wish to close any options beyond the objectives and principles that we have stated. However, in the course of these long talks we have explored a great many options and there are difficulties about most of them. Therefore, that is not necessarily a way ahead. At present, we must just hope that the present negotiations will, in one way or another, be successful.
Mr. Russell Johnston: Given the point made by right right hon. Member for Leeds, East (Mr. Healey), do the published views of the British ambassador in the United States of America represent the Government's position on the attitude of the United States of America? Can the rght hon. Gentleman say anything more about the Soviet attitude or about its activities?
Mr. Pym: I have made clear our position about the attitude of the United States Government. At present they are involving themselves in negotiations with us and with

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Argentina. That is how that matter must rest. It is true that the Soviet Union is involving itself more with Argentina. Our ambassador in Washinton answered several questions about that in a recent interview and that is, broadly speaking, the position.
Mr. Tam Dalyell: May I repeat a question that was put to the Prime Minister in the first emergency debate, to which she replied that we had many friends? Who are these friends in South America? Are not South Americans, Right, Left and Centre, right across the political spectrum—even among those who have suffered from Right-wing Governments—against us on this issue? Are we not antagonising the entire Hispanic world—[Interruption]—even among those who have suffered from Right-wing Governments? Is it not an illusion to think that the Americans will be less than evenhanded when an American President, based in California, is aware of the Hispanic speaking section of the American population in New Mexico, Arizona and California?
Mr. Pym: It is fair to say that the majority of the South American States have expressed their deep concern over the action taken by the Argentine. They may have a certain sympathy with the Argentine's claims, but they do not have any sympathy with the methods used to try to secure them. I remind the hon. Gentleman that the Organisation of American States did not support the Argentine invasion, and Peru, for example, has proposed a 72-hour truce. Other suggestions are being made. Although the South American countries may express a certain sympathy with the Argentine's ideas, most of them do not approve of the way in which they have been put into effect.
Sir Bernard Braine: We all appreciate Secretary Haig's tireless efforts, but has my right hon. Friend explained to him that, irrespective of the issue of sovereignty, the islanders' right to self-determination is enshrined in the United Nations charter and that, unlike the Argentines, they possess a freely elected legislature or Parliament of their own, which cannot function properly as long as the islanders are menaced by foreign invades with guns? Did my right hon. Friend make it plain to Secretary Haig that there can be no preconditions about sovereignty or anything else as long as Argentine soldiers remain on British soil?
Mr. Pym: There is no question but that the principle of self-determination is part of the United Nations charter. We have paid very careful attention to that. One of the issues is what the Falkland Islanders will want for the future. Before this traumatic experience they had a clear view, and we supported them in that. We do not know what their view will be. That is for the future. However, it is impossible to ascertain those views until the Argentines have withdrawn completely.
Mr. Reginald Freeson: Is it not time that the Government informed the House, by way of a report, of the views that have been obtained from the Falkland Islanders? Is it not a fact that a variety of views have been expressed to official sources by those leaving the Falkland Islands and that there are families of Falkland Islanders in Britain who could be approached for guidance about the Government's political actions? Should not such action be undertaken even now, before the Haig discussions are completed, and regardless of whether they are successful?
Mr. Pym: It is impossible at the moment to claim a general view of what the Falkland Islanders' wishes are while they are under duress. Of course views have been expressed, and we have heard from those who have returned from the Falklands what the islanders' views are, but so long as the islands are under military rule from Argentina it is impossible to know exactly what the islanders think. I have told the House what I expect they would think—that they would want to be more British even than they were before the invasion, if that were possible. That is speculation. We should not anticipate that. The object remains to secure Argentine withdrawal. There is no other first step that can be taken.
Mr. Maurice Macmillan: Will my right hon. Friend accept that whatever negotiations may be necessary about sovereignty now or in future they should start from the basis that, legally, sovereignty is in British hands and that it cannot, for mere convenience, be put into abeyance, as it were, under the United Nations or any other organisation?
Mr. Pym: We start from the clear view that my right hon. Friend the Member for Farnham (Mr. Macmillan) is right. We are in no doubt about our sovereignty position. The Argentine challenges that and makes a separate claim of its own. It is entitled to make that claim, and there are various ways of settling it. The only means that we shall not accept as a method of settling it is the use of force.
Mr. Christopher Price: Does the right hon. Gentleman agree that it is not reasonable to expect people overseas to continue with sanctions if those in the City of London and members of Lloyd's syndicates rat on sanctions? Is the right hon. Gentleman aware that members of Lloyd's syndicates, who are well represented on the Conservative Benches behind him, today gave further insurance cover to Argentine Airlines and are already making arrangments to renew an Argentine Airlines' insurance contract, which expires on 1 May, through Swiss banks if necessary, so that the premiums will not have to come into Britain? Will the right hon. Gentleman ensure that the City puts Britain before its own commercial interests?
Mr. Pym: I cannot comment on those allegations—[HON. MEMBERS: "Why not?"]—but, as the hon. Gentleman knows, many of our friends have taken economic measures against Argentina. No new loans are being authorised or made to the Argentine by the City of London. I cannot comment of the allegation that the hon. Gentleman has made.
Sir David Price: Will my right hon. Friend confirm that the Argentine junta is still unwilling to allow the key question of sovereignty over the Falkland Islands to be determined by the International Court at the Hague, which I understand, would be the correct United Nations solution to this type of problem?
Mr. Pym: That has always been the junta's position. The Argentines see sovereignty as the critical issue and I have no reason to suppose that they have changed their attitude—their objection—to allowing the issue to go to the International Court of Justice. My hon. Friend has referred to an issue which is central to the talks that arc now taking place. Therefore, it would not be right to say anything more at present.
Mr. Michael English: Does the right hon. Gentleman remember the malignant truism uttered by the United States ambassadress to the United Nations who said that if the territory in question—the Falklands—was Argentine territory, the Argentine had clearly not invaded anyone else's territory? Will the right hon. Gentleman consider stating the opposite case and putting our case to the International Court of Justice? If that Court turns it down solely on the ground that the Argentine Government will not accept the case being heard by the International Court of Justice, the right hon. Gentleman must surely realise that that fact alone will weigh in the United States more than many other considerations.
Mr. Pym: That is a possibility, but I must say to the hon. Gentleman that we have never been in any doubt about our title to the Falkland Islands. Without doubt, the Argentines have invaded the islands. The Argentines have a claim that we have been discussing and arguing about for many years. There has been no movement on the issue under previous Governments, but that does not justify the actions that the Argentines have taken. This is a major international event that no country can afford to neglect.
Mr. Jonathan Aitken: I agree with the expressions of gratitude to Secretary Haig, but will my right hon. Friend communicate to Washington the profound misgivings that are felt on both sides of the House about the ambivalent sound and signals coming from the United States' Administration on this issue? In particular, will he consider making a protest about the statements made by the United States ambassador to the United Nations? If such statements are not checked, they could damage the future of the Anglo-American alliance.
Mr. Pym: It is clear that Britain has a great deal of public support in the United States. It is our view that the best achievement for us all would be for Mr. Haig's mission to succeed and for Resolution No. 502 to be implemented. While that process is in hand, it seems inappropriate in the circumstances for the United States Government to align themselves. I am conscious of the fact that among the public in the United States there is a wide measure of support for Britain's case, which they understand very well.
Mr. George Cunningham: Are the Falkland Islanders free to leave the islands if they wish to do so? Are they free in practice to do so, as opposed to what the Argentines say about this? If they are, would it not be right for the British Government to say at this stage that if they do leave temporarily they will assist them to do so, so that they can get out of the combat zone?
Mr. Pym: There is no evidence that Falkland Islanders who wish to leave the islands are being prevented from doing so by Argentina. The hon. Gentleman's second point is one that we are considering sympathetically.
Mr. Peter Viggers: Does my right hon. Friend agree that the Royal Navy and the shore support facilities have performed magnificently? May I put it to him, in the presence of Ministers who have more specific defence responsibilities, that when calm has been restored we should look again at the shape of the Royal Navy and of the shore support facilities to see whether they are best
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suited to guard our vital interests, both inside and outside NATO, and that meanwhile we should not continue with any steps that would weaken the shore support facilities?
Mr. Pym: The whole House will join my hon. Friend in admiring the way in which the Royal Navy has conducted itself. The impressive way and the speed with which the Royal Navy assembled the fleet and set sail indicates that it is in pretty good shape. After this story is over various views will be expressed, but the fact that we could react so swiftly and competently showed that the Royal Navy is in very good shape indeed.
Several Hon. Members rose——
Mr. Speaker: Order. I shall call one more Member from each side. That must be our lot for today.
Mr. Arthur Palmer: In view of the statement made by the American ambassador to the United Nations, is the right hon. Gentleman convinced that in the end President Reagan will be on our side?
Mr. Pym: I cannot go further on that. I am sure that President Reagan would like to be, but the Americans are acting as negotiators. That is a position that should be respected.
Mr. Michael Marshall: Does my right hon. Friend agree that the media have a grave responsibility? Are the Government concerned about the fact that some of the information given on television—for example, about Vulcan and Harrier use and training—seems extremely generous in the circumstances, and perhaps might be examined with more caution in future?
Mr. Pym: My hon. Friend raises an important point. I should not wish to be critical of the way in which the issue has been presented on television. I sometimes wish that pictures and film extracts of the Argentine forces had a caption indicating their source, rather than a picture merely showing that something was happening. It is also fair to say that the correspondents who are with the carrier task force are reporting in a way that people find acceptable. I should not wish to criticise the media, but they have an extremely important role to play now and in the future. I am sure that the media will do their best to fulfil that role honourably.

Falkland Islands

  Ordered,
  That the Taking of Hostages Bill [Lords] be referred to a Second Reading Committee.—[Mr. Cope.]

  Ordered,
  That the Merchant Shipping (Liner Conferences) Bill be referred to a Second Reading Committee.—[Mr. Cope.]

  STATUTORY INSTRUMENTS, &c.
  Ordered,
  That the Fish Producers' Organizations (Formation Grants) Scheme 1982 (S.I., 1982, No. 498) be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Cope.]

Orders of the Day
  SUPPLY
  [17th Allotted Day]—considered

  Public Accounts
  [Relevant documents: 1st to 17th Reports from the Committee of Public Accounts in Session 1980–81, and the 1.st to 5th Reports in Session 1981–82, and the relevant Government Observations.]
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Cope.]
  4.1 pm
  Mr. Joel Barnett: The reports of the Public Accounts Committee that we are debating are extensive. We are debating the first to the seventeenth reports for 1980–81 and the first to the fifth reports of 1981–82. I am sure that the House will forgive me if I do not refer to every one of them.
  Mr. John Evans: Why not refer to them all?
  Mr. Barnett: If my hon. Friend were to insist on a reference to all of them, I could attempt to do so.
  It is traditional to begin these debates—the fact that it is traditional makes it none the less important—by thanking a number of individuals, especially colleagues on the Public Accounts Committee who always give me the most valuable support, both in Committee and on the Floor of the House. I am most grateful to them. I wish also to thank the Clerks that the PAC has had. I think particularly of the former Clerk, Mrs. Irwin, and the present Clerk, who is John Rose. We have come to expect invaluable service from them and we have not been disappointed either by them or the small staffs that assist them—the Assistant Clerk and the young lady who assists in typing the reports.
  I thank the former Comptroller and Auditor General, Sir Douglas Henley, the present holder of that office, Gordon Downey, the Northern Ireland Comptroller and Auditor-General, Mr. Calvert, and their staffs, who help to give our work the importance with which it is received both in the House and outside. Equally, I thank the former Treasury witness, Mr. Carey, and the present one, Mr. Judd, who gave and who give the PAC invaluable assistance. The same goes for all the Treasury witnesses, the accounting officers and other witnesses who gave evidence to the Committee.
  As I have said, I cannot refer to all the reports that we are considering, but the reports to which I refer have a common thread because they all deal with waste, extravagance, cost-effectiveness and efficiency, value for money, financial control and accountability. All those general issues were at the heart of our major report in the first special report of 1980–81 on the role of the Comptroller and Auditor General. I do not wish to debate that report again today as we debated it as recently as 30 November, when it was virtually unanimously received by the House. Indeed, the Committee condemned the Treasury response, again virtually unanimously, and was supported by nearly 300 Members on both sides of the House in an early-day motion. Since then we have been promised a rather better response from the Treasury, and I hope that we get one. I am sure that the House will want to see a better response.
  30
  We were promised a better response by the former Leader of the House, who has been moved on to higher things. I hope that the present Leader of the House will be able to ensure that there will be no further delays on the part of the Treasury. I hope that the Financial Secretary to the Treasury will be able to give us that assurance. There have been indications that there are to be discussions with the Leader of the House and the Treasury on the new response that we are to expect, but in advance of that meeting I want to express some concern about the reply that was given on 6 April to a question tabled by my hon. Friend the Member for West Lothian (Mr. Dalyell). My hon. Friend asked:
  "Ought the Public Accounts Committee to have access to British Leyland books?"
  That was a fairly simple and straightforward question of the sort that my hon. Friend is adept at asking. I do not wish to refer to British Leyland but I am concerned about the Prime Minister's response. She said:
  "The Government's view is this. The PAC has access to all those papers to which Government Departments have access and for which Ministers are responsible to Parliament. It is our present view that if the PAC were able to call for all papers in respect of public enterprises in regard to commercial contracts or commercial details, that would make it difficult to make those commercial decisions. It would also be extremely difficult to get anyone to run those undertakings."—[Official Report, 6 April 1982; Vol. 21, c. 822.]
  I consider that reply to be important and serious.
  Neither I nor members of the PAC wish to make difficult commercial decisions more difficult. Nor do we want to make more difficult the task of Governments in finding the best possible people to run public enterprises. However, there are two major fallacies in the right hon. Lady's reply. First, there is the fallacy that the way in which the Comptroller and Auditor General and the PAC would deal with these matters when he and it has the access that has been requested would create the difficulties to which she was referring. That is a serious error on the right hon. Lady's part and on that of the Government. There has been much experience about the way in which the Comptroller and Auditor General and the PAC work. That evidence is that there is no reason to hold the fears that the right hon. Lady expressed.
  The second and most important fallacy was the right hon. Lady's total failure to recognise the underlying importance of accountability to Parliament. I understand that it can be something of a nuisance and could create some difficulties, but I hope that all hon. Members will agree that it would be better to be something of a nuisance and to create some difficulties for public industries than to continue with the present system, which provides totally inadequate parliamentary accountability.
  Mr. Tam Dalyell: It was a considered reply because as my right hon. Friend the Member for Heywood and Royton (Mr. Barnett) will recollect, as soon as the question was tabled I sent a long letter to the Prime Minister explaining the background to the question and giving substance to the rather artless question that I asked. I sent copies of that letter to my right hon. Friend and to the right hon. Member for Taunton (Mr. du Cann). It was a reply that the Prime Minister and her civil servants and advisers had presumably been able to think about for 12 days.
  Mr. Barnett: I am obliged to my hon. Friend. I am always grateful to him for his courtesy in letting me know

  31
  when he wishes to raise such issues. When my hon. Friend put his question to the Prime Minister it was at a moment when I think he would have preferred to be putting questions on the issues of the day. However, that does not alter the fact that it was an important question.
  As my hon. Friend rightly said, the Prime Minister has had time to consider her reply. It is sad that she appears to have taken the views that I assume have emanated from the Treasury. I hope that the Financial Secretary will be able to tell us today that, in the light of the clear views of the House, as expressed on 30 November and in an early-day motion, we are entitled to some clarification of the Prime Minister's reply. If we are to have serious and meaningful discussions with the Chancellor and the Leader of the House, I hope that they will be serious and meaningful. I hope that the Government's mind has not been closed in the way that the Prime Minister seemed to indicate.
  In her reply the Prime Minister used expressions such as the Government's "present view". I know how carefully such words are used. I hope that that means that the discussions with the Chancellor will be genuinely open. Perhaps the Financial Secretary can confirm that the Government's present views do not exclude important changes that could go a long way to meet the views of the PAC and a large number of others hon. Members.
  I turn to specific reports that highlight the important issues dealt with in the general report. I hope that, as usual, it will not be thought disrespectful to the serious and important problems of Northern Ireland if I do not refer to the seventh report. It has become the custom to leave such issues to Northern Ireland Members. I am happy to leave the matter to the right hon. Member for Down, South (Mr. Powell).
  Mr. J. Enoch Powell: It is always welcome to Northern Ireland Members if right hon. and hon. Members representing other parts of the United Kingdom show an interest in the affairs of that Province.
  Mr. Barnett: We are dealing with a huge number of reports—17 in one year and five in another. I should like to deal with the issues referred to in the seventh report, but we dealt with them extensively in Committee. I hope that the evidence that we took and the report show how much we concern ourselves with Northern Ireland matters.
  Mr. John Prescott: Colonialism.
  Mr. Barnett: I have never thought of Northern Ireland as anything other than a part of the United Kingdom.
  I wish to deal with the cost-effectiveness and efficiency of a Department that is frequently discussed by the PAC—the Ministry of Defence. It has been reported on critically by successive PACs for 30 years. I refer specifically to the third report of 1980–81. For three successive years—1978–79, 1979–80 and 1980–81—it has exceeded its cash limit. We are well aware of the difficulties of managing development programmes, particularly for sophisticated military equipment. There are great problems. The Comptroller and Auditor General tells us that there are more than 20 projects with costs in excess of £500 million, which highlights the startling size of projects within the Ministry of Defence. There are
  32
  bound to be unforeseen difficulties and escalating costs, but the Ministry of Defence constantly and seriously underestimates them. Would many of the huge projects have been started had there been a more realistic cost estimate?
  The sixteenth report of 1979–80 looked at the costs of the Sting Ray torpedo, which were remarkable. Development and production costs at September 1981 prices totalled £1,211 million. When the project was first mooted in 1969 the estimated cost was £74 million. Of course inflation has been substantial between 1969 and 1981, but it is not unusual in such large projects for the costs to escalate vastly. One wonders whether the Treasury would have agreed to the project had it been suggested that the cost could escalate to that extent. It might have considered a different project or buying a system off the shelf from the United States.
  In the early stages of such a project, when the technical task was considered, there should have been a thorough study, but there is always great urgency to get projects under way. The Sting Ray project started in 1969 and is not yet in full service, yet there was great urgency to get it under way. The PAC was not convinced that curtailing feasibility and project definition studies saves time in the long run. It certainly does not save money.
  Another consideration must be whether it is possible to incorporate incentives to efficiency into contracts for development projects. It is a great problem. I welcome the Ministry of Defence proposal for a measure of joint funding with industry, where possible. Can the Financial Secretary tell us how such joint funding projects are progressing? How does he see them injecting greater incentive for cost-effectiveness?
  I wish to put a topical question in relation to the Ministry of Defence's current cash limit. I do not wish to see our task force to the Falkland Islands restrained by a financial limit, and I doubt whether any other member of the PAC would, but the House is entitled to know how additional cash expenditure will be met. Is the Ministry's cash limit to be wholly suspended or will it be maintained with cuts elsewhere within its budget or with any overspend coming from the general contingency reserve?
  I wish now to deal with financial control and accountability and particularly with the ninth report of 1980–81 on internal audit. To put it mildly, the PAC found the Comptroller and Auditor General's findings disturbing. The overall standard was substantially below what was needed to ensure that departmental systems were operating satisfactorily. Secondly, the audit of computer-based sytems was widely inadequate. Twenty-eight small departments and other bodies with a total voted expenditure in excess of £450 million had no internal audit system.
  Some of the points raised by the Comptroller and Auditor General about internal audit are very interesting. Paragraph 12 of the report sets out clearly some of the reasons that led the Comptroller and Auditor General to be concerned about the internal audit within Government. The Public Accounts Committee felt that the review was a most useful exercise. It was also welcomed by the Treasury and the Civil Service Department, which have now initiated energetic programmes. Will the Financial Secretary tell us what progress has been made?
  The fourteenth report of 1981 about the carry-over of cash limits at the end of the financial year was raised by the Treasury, which was interested in the proposition and

  33
  which put forward some methods of dealing with the problem. We have heard some of the special problems, especially in relation to the Ministry of Defence. The Public Accounts Committee recognised that there were strong arguments both for and against the idea of dealing with the problem of carry-over of cash limits—problems of accountability and control within any Department that had such a carrying-over. With a budget, such as the Ministry of Defence has in 1982–83, of about £14 billion, there will inevitably be problems of carry-over at year ends. Any scheme must be strictly limited to maintain effective financial discipline.
  The Public Accounts Committee favoured a controlled experiment to see whether an effective system of carryover could be allowed for a Department such as the Ministry of Defence. Eventually, we were told that the Treasury had turned down the proposal because it would require the provision of an extra £250 million in 1982–83. The Treasury hoped that it would still be possible to bring the matter forward again, as it said, when financial circumstances permit. What are the prospects for bringing forward an experiment in the near future?
  Another major Department where financial control is of concern is the Department of Health and Social Security. The Committee dealt with various aspects of that in its seventeenth report of 1980–81. It referred especially to control of National Health Service manpower. I stress again that the Public Accounts Committee does not express a view about the total expenditure or total manpower, but believes that, whatever total is decided by the Government, it should be efficiently spent and properly controlled.
  The Committee saw some startling figures. Since 1948, the number of employees in the National Health Service has doubled to more than 930,000. Between 1971 and 1979 there was an increase of 174,000. The number of professional and technical staff in England and Wales rose by 47·4 per cent. and in Scotland by 72·6 per cent. Those NHS increases are astonishing.
  Reasons were given to us by the Department's witnesses that in some ways are understandable. First, there is unlimited demand for health care. Secondly, the growth, range and complexity of treatment demands constantly increasing costs. Thirdly, there has been a growth in the elderly population and, fourthly, and rightly, there have been improvements in conditions of service for the staff. The DHSS took the broad view that adequate control of manpower against that background was best achieved by the use of cash limits.
  As one who introduced or extended the system of cash limits, I am, naturally, not opposed to their use, but the Public Accounts Committee feels that we should explore the feasibility of more detailed controls and targets for administrative and clerical staff rather than just try to control expenditure by cash limits alone. There is a danger that, while keeping within a cash limit, one might seriously distort the size of medical and non-medical staffs and therefore the balance between the two. The Treasury minute in reply to our report states that the Government are inquiring into the causes of growth in administrative and clerical staffs. Perhaps the Financial Secretary will give us whatever information he has about the progress that has been made to date.
  The Public Accounts Committee also considered regional and geographical variations in the National Health Service. We all know those variations because we
  34
  find them in our own constituencies. Paragraph 19 of the report refers to the Comptroller and Auditor General's views and the statistics that he presented to us about the widely varying staff numbers in relation to apparent work load. We recognised that uniformity of staffing levels is not a practical objective. However, we were surprised that the Department disclaimed responsibility for making regional comparisons. That must be surprising, because who can carry that responsibility other than the DHSS? Overall, the Public Accounts Committee expressed deep concern about the slow progress in developing a fully effective system of manpower planning and control. What further action will now be taken?
  I could have chosen many more reports and examples of our concern for value for money, efficiency and effectiveness in the spending of scarce public resources. I have limited myself to comparatively few reports in order to shorten the time that I shall speak in the debate. However, I wish to mention an unusual part of our expenditure which involved the first case of the Public Accounts Committee travelling abroad. It did so only because of the importance that it attaches to the matter. I refer to the fifth report of 1981–82 where we considered expenditure in the EEC and the control exercised by the Court of Auditors. We felt that the Court of Auditors was of growing importance to British taxpayers, given what we know of the lack of efficiency in spending within the EEC. So we took views—they did not wish to call it evidence—from the Court of Auditors and the Commission. We are grateful to them for their cooperation.
  The Court of Auditors was established only in 1977 and we recognised that difficulties with the Commission have arisen. There is a problem of overlap between the two bodies, and there is clearly a need for the powers and functions of the Court of Auditors to be unambiguously defined. Therefore, we recommended that much greater attention should be paid, especially by the Government, to the Court of Auditors' report. But whatever view we take of the level of public expenditure, relatively high levels of expenditure will continue within the EEC and the United Kingdom. There will, therefore, be a constant need for greater efficiency and effectiveness in the spending of public money. The same point applies to better financial control and accountability.
  I hope that the reports that we are debating today, and the continuing work of the Comptroller and Auditor General and the Public Accounts Committee, will help to achieve more effectively the objectives that we all share.
  4.30 pm
  Mr. Peter Hordern: It is a privilege to follow the right hon. Member for Heywood and Royton (Mr. Barnett). I very much enjoy serving under his chairmanship of the Public Accounts Committee. He always asks the most penetrating questions, and he allows his colleagues on the Committee extensive freedom to ask questions—even though to other colleagues they may appear to be rather too extensive—and I am grateful to him for that.
  The right hon. Gentleman mentioned the difficulty which the Comptroller and Auditor General found in getting at the affairs of British Leyland and, I think, of Rolls-Royce. It has always seemed strange to me that the

  35
  Comptroller and Auditor General should not be allowed free access to both bodies, as he has to the nationalised industries.
  The Comptroller and Auditor General has access to the Department of Health and Social Security and to the Department of Education and Science, so that in regard to contracts which those Departments may have with the private sector for the building of hospitals or schools, he has a perfect right to see papers at any stage, but if British Leyland or Rolls-Royce has a commercial contract with another body, he does not have the same right of access. He has access only to whatever papers might be in the Department of Industry relating to those projects. I do not see why that anomaly should exist.
  I know very well that those who serve in British Leyland and in Rolls-Royce regard themselves as somewhat different beings from those who are employed in the public sector, but inasmuch as public expenditure is directed at those bodies, they should be every bit as responsible to this House as are the DHSS and the Department of Education and Science.
  I do not think that the Comptroller and Auditor General would or could operate to the disadvantage of either British Leyland or Rolls-Royce in carrying out its commercial judgement. Indeed, we found that there was every reason for the Comptroller and Auditor General having early access to the papers of the National Enterprise Board. I do not like to think that the House might in future be ill-served as a result of the Comptroller and Auditor General not having access to the papers at an early stage because considerable sums of public money might be involved.
  Another matter touched upon by the right hon. Gentleman was the procurement policy of the Department of Defence, and he mentioned the Sting Ray project. I remember it very well. He said that the sum involved in the Sting Ray torpedo was about £1,200 million. With the rapid technological advance in these weapons, the cost increases are such that, inevitably, expenditure on more conventional weapons within the Department is cut—and cut sharply. I have noticed that in the case of one company in my constituency, MEL. It has found, not that the naval programme has been cut back very much in general, but that in particular, because of the increasing sophistication of weapons, expenditure has been directed elsewhere.
  In the case of Sting Ray—and also in regard to a heavy weapon development of some kind—it seems likely that expenditure will rise even faster than anything that we have known so far, and that expenditure on conventional weapons may decline because of that factor. That policy could damage our defence requirements.
  I know that the House will not expect me to pass by the 17 reports without having something to say on the state of the National Health Service, which always features in our reports. In the two and a half years since the last general election, the number of National Health Service staff has increased by about 67,000. That figure came not from the DHSS but from an announcement in a Government publication, dealing with economic trends, from the Central Statistical Office in January of this year. I rather suspect that the Central Statistical Office knew long before the DHSS how many people were employed in that Department. Indeed, I think that that has been the case for a long time. I believe that even now the Department knows
  36
  only the number of people employed in the NHS as at September last year. The reason is that the Department does not think it is important that it should know how many people are employed within the NHS or what they are doing.
  The central criticism that the Committee has had for a long time in regard to the NHS is that the Department, because of its policy of decentralisation, has judged that it is none of its business to ascertain what the regions are doing, and still less what the districts may be doing and who they might be recruiting.
  The result is that health policy has not been worked out from the centre. There has, as far as I can see, never been any health strategy as such. Policy has been determined by blocks of money which have been allocated to the regions from time to time, and which they have been told to spend as they think fit. We can judge only by the results—it is not up to us to criticise the policy—but we have noticed that in the NHS by far the largest growth in expenditure within personnel has been in the number of administrators, technicians, secretaries and clerks.
  After the last reorganisation of the NHS, the number of administrators grew by about 20 per cent. within the short period of 18 months, and the NHS continues to follow that policy. The latest figures, to the year ending September 1981, show a further increase of about 3,200 in the number of administrators. That is the largest growth in any year since a staggering growth of over 7,000 was achieved in the year ending September 1976. It is not satisfactory to allow expenditure to go on rising in that way without there being any central accountability within the Department.
  We are not concerned here with policy, but I do not think that successive Governments can be faulted in their allocation of resources to health over the many years since the war. The expenditure devoted to the DHSS by successive Governments has been admirable—the proportion of gross national product accounted for by health services has increased regularly year by year—but I cannot say the same about the performance of the NHS.
  In our report in 1980–81 we stated that there were nine new hospitals in England and, three in Scotland which could not be used because there was insufficient revenue to run them. They could not even be opened. A year later we are happy to see that there has been an improvement, and that the figure of 3,000 beds unused has been reduced by 632. It is extraordinary to build hospitals which cannot be used because there is not the revenue available to run them.
  It is common knowledge that the hospital waiting list has decreased in the last two years. It is now 628,000, but that number is higher than it was in either 1977 or 1978. Again, we have figures only for 1980, which in itself is a commentary on the state of efficiency in the National Health Service. They show that the number of cases dealt with has increased in almost every category of health, yet demand is still growing, as is shown by the size of the hospital waiting list.
  The figures also show that despite the hospital building programme there were fewer beds available in every category, whether acute, geriatric, young and disabled, obstetrics, mentally ill or mentally handicapped. It is time that the Department came to a proper strategic decision about the health of the nation. Is it right so to decentralise the expenditure of the Health Service that the Department

  37
  is not aware of what the regions are doing? Is this the best way of obtaining the maximum use of the considerable resources that are devoted to the Health Service?
  After considering the results, the increase in the number of administrators and the cost of running the service, the cuts that have had to be made in hospital building programmes and the inefficiencies that have been drawn to the Committee's attention, not once, but in every year in which we have sat, the judgment must be that the running of our Health Service is bad, and it is high time that it was improved.
  There is a misconception about the position of the Health Service, in particular on pay and salaries. The National Union of Public Employees and the Confederation of Health Service Employees are preparing to take industrial action because they do not agree with the pay formula that has been judged right for them of 6½ per cent. for nurses and 4 per cent. elsewhere. However, to draw a comparison with the outside world, the 6½ percent. limit there would mean that in cash terms there would be no expenditure greater than 6½ per cent. at the end of the year than it was at the beginning.
  In the public sector, 6½ per cent. does not mean the same thing. It certainly does not mean that with the National Health Service, because the amount taken up in wages and salaries forms a fairly constant proportion of all expenditure incurred in the service. That comes to roughly 70 per cent. As the block grant is considerably more than 6 per cent. for the pay factor alone, it is almost certain that the sum that will be spent in wages and salaries in the NHS, because of recruitment on almost every category, will be at least double that pay factor.
  We know that in 1980–81 the cost of wages and salaries rose by £1,200 million, or 31 per cent. Had the same proportion been taken up—that is to say 70 per cent. of the total amount available for the NHS—in wages and salaries, the increase last year would have been about 15 per cent., and not the 6 per cent. guideline.
  Therefore, the NHS is different from the private sector. When we talk about controlling the cost of wages and salaries in the NHS we do not mean what we say. We merely mean that we shall recruit an unquantifiable number of extra people but that the payment that they get is to be confined to 6½ per cent. for nurses and 4 per cent. elsewhere. That is not the language that the private sector understands. There must be a more effective limit on wages and salaries than has so far been exercised.
  During the previous Session we also had a report on the efficacy of regional investment aids. I wish to remind the House that the judgment, after a survey that took about 18 months or two years, was that it was impossible to determine whether regional aids were beneficial. Judgment was suspended because it was too difficult to say, because of a number of difficult factors, whether they had been of any benefit.
  We know that direct regional development aid has increased, substantially in some years, virtually every year. We also know that unemployment in the regions has increased. I do not say that there is a direct connection between the two—I am sure that there is not—but I observe that whereas the Department of Industry here employs about 9,000 people, there is no Department of Industry in West Germany.
  What occurred to the Committee, and what we put in our report, was that it might be worth while looking at other ways of achieving the same effect—regeneration of
  38
  economic activity in the regions—not by direct aid of this kind, but by other means. Whether it should be done by a differential reduction of corporation tax or in the same way as it is done in Ireland or the United States, I do not know. They do it by having a foreign trade zone, as they have in Maryland for example, into which goods may be imported duty free and products assembled and manufactured, but duty is paid only on the foreign content. These routes should be examined.
  Apart from that, we have also to take into account what one must see as the obstacles to growth that have occurred in our development regions over many years. For example, in Glasgow, because of the policy of successive Glasgow councils, the rates levied on commercial and business properties are a good deal higher than in any other part of the country. For example, Marks and Spencer's published a report the other day that said that its rates for its store in the high street of Glasgow were higher than in Oxford Street. If this goes on, it stands to reason that the amount of business and industry available in Glasgow and other capital cities will decline, just as it has in other capital cities throughout the world—for example, New York.
  The Government, in framing their policy on local government expenditure, must come to a decision on whether a local authority should be allowed to charge the commercial and industrial businesses within its areas whatever rates it likes, when those businesses have no voice in the determination of the rates. The Government will have to do something about that.
  There is one other factor about regional development upon which I wish to touch. So far, 35 districts have published land registers showing that there are 22,000 acres of development land that are unused within those areas. In addition, there are another 330 authorities to report. That land is undeveloped largely because of the price paid for it some years ago at the height of the property boom.
  Local authorities have the notion—I do not know whether it is correct—that they cannot sell development land at less than the price that they paid for it. However, as the price that they paid for the land was driven up by the force of inflation, it stands to reason that the only way in which development can ever take place is if further inflation is sufficiently fast to bring the land back on the market.
  It does not make sense that local authorities should be able to act differently from the way that any private business would have to act in similar circumstances. All that is happening is that the debt charge and the interest charge have been rolled up year after year, making it ever less likely that the land will be brought into development. Therefore, the solution must be that local authorities should be instructed to offer this land for development now at the current market price.
  That is the way to get development going. It is absurd that development is being held up simply because local authorities have the impression that they cannot sell at less than the price that they paid for the land. It is an absurdity that is holding up a great deal of economic and construction development, and it should be changed.
  I wish to refer to another of our reports dealing with the private financing of the nationalised industries and the public sector in general. A well-known thesis within the Treasury is called, for want of a better term, crowding out. There is an assumption that a finite sum of money is

  39
  available for financing investment generally, that the public sector has control of the sum, and that whatever the expenditure, and for whatever purpose, the Goverment must not borrow more than a certain stated amount. I recognise this as a powerful factor. I believe that the Government's ability to borrow has a significant impact on the market and on interest rates. It is an important and, indeed, determining factor upon the course of the economy. There seems all the more reason, therefore, that those parts of the industry now within the public sector should be carefully examined to see whether they could be taken out of the public sector, not wholly, but at any rate in part.
  I accept that funds available for investment are limited, and that if it were thought that the public sector was behind investment in nationalised industries and that there would always be a Government guarantee for that borrowing there would be a total drain to that extent upon private resources. It is right, therefore, that the Government should continue with their policy of privatisation. I welcome the steps that have so far been taken, but I believe that there is considerable scope for more to be done.
  I would hope to see not just part, but 51 per cent., of British Telecom sold to the public generally. Institutions have for a long time had to decide where to put their funds. In telecommunications, their only choice has been American Tel and Tel in the United States or Hong Kong Light and Power. Because telecommunications in this country is nationalised, all institutions are debarred from investing in British Telecom. That does not seem a sensible proposition, considering the potential for telecommunications and the big investment prospect in that industry. I hope that the Government will speed up their policy of privatisation, permit at least 51 per cent. of British Telecom to be offered to the public and allow it to stand the test of the market.
  There are other areas. British Rail has an engineering company that employs 35,000 people. I see no reason why it should continue to remain within the public sector. I make no judgment about whether the public sector is better. I have no ideological reasons for saying that it should be in the private sector. My argument is simply that if it can operate better within the private sector, this should happen. It creates jobs and economic progress. I see no reason why British Rail's engineering company should not be privatised to the extent of 51 per cent.
  I come, finally, to internal audit and staff inspection, on which the right hon. Member for Heywood and Royton touched. We found, as the right hon. Gentleman stated, 28 small departments and some other central Government bodies that had no internal audit of any kind. We found that 47 accountants were supposed to be covering the work of more than 1 million civil servants. We found a general lack of professionalism within the internal audit system. I hope that my hon. Friend the Financial Secretary to the Treasury will inform hon. Members about the present position on the internal audit. This is one of two ways in which Government expenditure can be checked. The other is staff inspection.
  Our report on staff inspection produced findings even worse than those on the internal audit. We discovered, in respect of one Department, that it would take seven to 28 years for a staff inspection of that Department alone to be carried out. The staff inspection and the internal audit were
  40
  found to be the only checks upon Government departmental expenditure of any kind. This is a very serious matter. It is not satisfactory to say that ministerial responsibility deals with the situation. In the days of effective ministerial responsibility, Departments were far fewer and significantly smaller in relation to the number of people that they employed.
  Ministers are busy people. They are working on the contents of their red boxes long into the night. How much time is available to them to examine matters of departmental administrative detail? They leave these matters—as they think—to the permanent secretary of the Department. However, the permanent secretary is much too busy to deal with these matters and leaves them to officials at a much lower level. The idea of ministerial responsibility is nothing but a myth. The truth is that Ministers do not know what is going on in their Departments in respect of administrative efficiency. I am not talking about policy. They can therefore scarcely be held responsible for what is happening, whatever the fictional notion.
  The question that faces hon. Members is whether this unsatisfactory situation should be left as it is. Is it right that the public service, which is so large and so varied, should have such an extraordinarily inefficient monitoring system? Hon. Members who are responsible to the House for making these reports, and who are served so well by the Comptroller and Auditor General, have the final responsibility, whatever the fictional notion of ministerial responsibility, for public expenditure. What the Comptroller and Auditor General has unearthed is deeply disturbing. I have yet to hear from the Government any satisfactory assurance that the position will be properly dealt with. I do not think that it can be dealt with, unless there is a change in function.
  It is not right that the Civil Service Department should be solely under the wing of the Treasury. I believe that the Department that is responsible for recruitment and so on should also come under the direct authority of the Prime Minister's office. My right hon. Friend is, after all, the First Lord of the Treasury. Without that kind of authority, I do not think that there will be proper and sufficient examination of the work of the various Departments of State. I hope that my hon. Friend the Financial Secretary will deal with the proposition that I have put forward.
  Over the years there have been many reports dealing with the shortcomings of various Departments, and I have no doubt that there will be many more. I am certain of one thing. Unless the efficiency of Departments is examined much more seriously, and unless the machinery for doing so is changed, irrespective of whether the Prime Minister becomes more responsible or whether greater powers, as we suggest, are given to the Comptroller and Auditor General, something must be done. Otherwise, the faults will grow ever more serious and more damaging to the economy and to the country.
  4.58 pm
  Mr. J. Enoch Powell: In his admirable opening speech, the right hon. Member for Heywood and Royton (Mr. Barnett), the Chairman of the Public Accounts Committee, forswore any intention to refer to the seventh report which is among those before the House, although, in answering an interruption on my part, he drew attention correctly to the amount of time and effort that the Public Accounts Committee devotes to considering the

  41
  reports of the Comptroller and Auditor-General for Northern Ireland on the Northern Ireland accounts. It was, indeed, a beneficent decision when in the life of the previous Parliament the Public Accounts Committee was given the task of including the Northern Ireland accounts and the Comptroller and Auditor-General's report upon them in its purview. That is a matter for satisfaction and gratitude on the part of those who represent Northern Ireland constituencies, and I am grateful to the Northern Ireland Office for having ensured the presence of a Minister during this debate. Not having given notice of the points to which I intend to refer, I would quite understand if I received reply more by way of correspondence than in the wind-up speech. I add to that an apology, should I not be able to be present during the wind-up speech of the Financial Secretary to the Treasury.
  I shall use this opportunity briefly to give local colour and emphasis to four of the matters that were traversed in the seventh report and in the memorandum on the second and seventh reports, which embodies the reply of the Northern Ireland Department of Finance to the observations of the Committee.
  The first of those four subjects is under Class VI, Vote 1, dealing with water and sewerage services. The Committee was stringent in its criticism of the extent to which an-ears of payments for water services had been allowed to grow and of the relative inefficacy of the methods which had been used to bring those payments up to date.
  There is involved here, as in many other of these expenditure matters, an element of fairness as between one citizen and another, which should not be absent from the mind of the House in considering these reports. Arrears on the part of one user of water represent an unfairness borne by other users of water in the same area. In Northern Ireland, where it can be said, with but little exaggeration, that everyone knows everyone else's business, that sense of unfairness, if there is visible slackness on the part of the Government, in exacting arrears that are due, is a very real one and not merely a theoretical, logical consequence of the existence of arrears.
  In the context of water and fairness, I draw attention to the spread of metering for agricultural water supplies. Until recently, a great deal of agricultural water supply has not, in practice, been metered. It is gratifying that the Department of the Environment is now taking steps to provide as rapidly as possible for the metering of those supplies; but metering is still in many areas extremely patchy. From that again arises a natural sense of unfairness between two farmers in the same area, both aware that they have agricultural access to the water supply, and both aware that one is being metered for that supply and the other is not. Therefore, to the encouragement that the Committee gave the Department of the Environment in pressing on with methods of minimising arrears, I add a plea to press on with the provision for metering water supplies, both industrial and agricultural, wherever metering is statutorily appropriate.
  The Under-Secretary of State for Northern Ireland (Mr. John Patten): Before the right hon. Gentleman leaves that point, may I say that we shall, of course, look into metering in the agricultural sector? I reassure him that the considerable efforts of the Department responsible have led to a reduction of the number of people in arrears for six months or more from more than 3,500 at the end
  42
  of 1979 to just over 2,000 at the end of 1981. We are continuing to reduce the numbers of those in arrears for lengthy periods and we intend to continue with those efforts.
  Mr. Powell: I am obliged for that intervention. It illustrates a difficulty under which we always labour when debating these reports, in that necessarily we are debating facts at a time lag of 18 months, or, in many cases even more. It is, therefore, gratifying when we have evidence on the nail, so to speak, of reaction to the reports in the very debate in which those reports are being considered.
  I pass to sickness benefit and detection of fraudulent claiming, dealt with in paragraphs 75 and following of the seventh report. I can understand that the Committee was shocked when it learnt that an effective method of proved efficacy for dealing with fraudulent claims had, on the instructions of the Department, been reduced to the "absolute minimum". It was with some relief that one noted that, in the comments of the Department of Finance in the memorandum, there was a very different picture, and that a different approach breathed through the wording employed. Once again, this is a matter not merely of financial control and avoidance of fraud, but of fairness between one citizen and another. In Northern Ireland, the suspicion—often ungrounded but nevertheless real—that the State treats differently those who are classified as belonging to different communities, renders specially important every measure that can be taken to show that the pursuit of fraud or alleged fraud in claiming of benefits is both even-handed and effective. One will look forward to seeing under the same head in next year's report the results of the exchange which took place between the Committee and the Department of Finance.
  My third subject is Class I, Vote 3
  "Fisheries Grants and loans for the construction of fishing vessels."
  I do not propose to go into detail on the matters—largely bound up with European Economic Community provisions—with which the Committee deals in that section. There is, however, a general factor that ought to be taken into account in the matter of grants for building fishing vessels. It is of both economic and financial importance.
  Recent studies have shown strikingly that the depression of our fishing industry throughout all its sections has, paradoxically and ironically, been partly due to the encouragement to building and, consequently, the encouragement to increased efficiency of catching given to the various fishing fleets of the United Kingdom by the Government subsidies that have been available over the years.
  It is a solemn reflection that we might, by that system of subsidising the construction of new boats, have been contributing to unemployment and recession in the very industry which the subsidies were intended to help. We might even reflect, sardonically, on the fact that at this moment in Northern Ireland we are paying out subsidies both for the construction of new vessels and to the owners of existing vessels who cannot make a livelihood under present conditions from their current operations. That leads me to feel that there should be some more direct relationship between the system of construction subsidies and the prospective volume of work for the industry in the years ahead. I suspect that there has been an undue

  43
  separation between the consideration of subsidy for construction and the consideration of the future fortunes of the industry.
  Perhaps in the years through which we have just lived that was not surprising. He who would have forecast 10 years ago the devastation which the British fishing industry has undergone would have been regarded as a Cassandra-like pessimist. That devastation has had more than one cause; but had we been able to foresee the course of events, we would certainly not have put into the construction of new fishing vessels anything like the amount of subsidy that did go into it during those years.
  I have it in mind, then, that we should be encouraging improvement in the quality and efficiency of the fishing fleet, but that in so doing we should not be expanding its capacity above the level likely to correspond, either in terms of conservation or—alas!—in terms of our situation within the European Economic Community, to the prospects for fishing capabilities and fishing income which lie before the industry. This could be even more important in its financial consequences than the important matters with which the Committee dealt in that part of its report.
  My last observation relates to Class 1, Vote 5, dealing with forest and forest recreation area charges. The section begins by recalling that in Northern Ireland
  "there are 14 major forest recreational areas (including seven forest parks)."
  I wish that I could convey to the House some impression of what lies behind that bald statement and bring to the realisation of the House how remarkably successful and valuable are these parks and recreation areas and what a tremendous experience it can be to see, as I did over the bank holiday weekend, the volume of people using those parks in precisely the ways for which they were intended. People drawn from all sections of the community throughout the Province can be found taking the opportunities for enjoyment which in those areas are combined with the proper economic pursuit of forestry, in an atomsphere of total relaxation and absence of tension.
  The forest parks are among the most remarkable administrative achievements of past and present Northern Ireland Governments. Everyone who has experienced them will wish to see the high standards which they have attained maintained in the coming years. I believe that the maintenance of those standards will have much to do with the finances of those parks and recreation areas, and that the finances will in turn have much to do with the system of charging. Unless the charges levied for caravans and cars—as well as for individuals, although those are relatively small—which use those parks and forest areas are maintained fully on a level not merely with inflation but with the cost of maintaining the parks and improving them beyond their present standard, there will be a reaction from the level that has been attained.
  I was glad that the Committee, like the Comptroller and Auditor General, was sceptical of the notion that an appropriate increase in the charges to match rising real costs and inflation would result in a reduction in the use of the parks. I am prepared to support the view that there need be no hesitation in matching rising costs and inflation with charges, on the ground that the use of the parks would diminish. I venture the prediction that the use of the parks will increase exponentially unless and until there is some falling off in the standard to which they are maintained,
  44
  or in the warden service or the general attention given to them. Therefore, as a representative of a Northern Ireland constituency, I make no apology for asking that my constituents who enjoy those facilities should be charged in full what is needed to maintain those facilities in the manner in which they at present enjoy them.
  Mr. John Patten: I am grateful to the right hon. Gentleman for giving way to me a second time and letting me try to hit the nail on the head a second time in responding to the very hard hitting points made by the Committee.
  The responsible Department has as its main aim in 1982 to move to recovering approximately 80 per cent. of the full costs. By March 1983, it hopes to be in a position to move to recovering 100 per cent. of the full maintenance and other attributable costs. I share the right hon. Gentleman's feeling on this. I do not think that those splendid forest parks will suffer in terms of the number of people who visit them.
  Mr. Powell: My last remark will therefore be that at least one compensation to the House for a Northern Ireland interlude in this debate on the Public Accounts Committee reports is that members of the Committee have been able to see there, with a shorter lapse of time than usual in the wider context, that their work has borne fruit.
  5.15 pm
  Mr. Michael Morris: Before commenting on a number of the reports I wish to make one or two observations on the central question of the role of the Comptroller and Auditor General, and in particular on the first special report, as the Chairman of the Public Accounts Committee, the right hon. Member for Heywood and Royton (Mr. Barnett), did in his introductory speech.
  Reflecting on the very slow progress since that report was issued and the Government response last year, I believe that it is time to consider the three areas pinpointed by the Public Accounts Committee in which progress should be made.
  The first is local government. In a sense, I think that we put that third—certainly I do—in terms of priority. Through the good fortune of parliamentary business, however, it was the first of the three issues to come up for debate on the Local Government Finance (No. 2) Bill. Just a few days ago we received an undertaking from the Minister of State on this matter. Although he could not at that stage accept an amendment tabled by hon. Members from across the whole spectrum in the House, he nevertheless gave what I understood to be a firm commitment that in another place the Government would table an amendment which would meet the spirit and to a large degree the contents of the amendment that we had tabled. I welcome that commitment, and we shall watch carefully for the amendment to be tabled in another place. I took that as a genuine offer and I view it in that light.
  Of the other two areas, like my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) I take a particular interest in the Department of Health and Social Security. Of all the areas of Government expenditure, I view with some incredulity the fact that this Department, in all its elements, is not audited by the Comptroller and Auditor General and his staff. We never have any shortage of questions for that Department, but there seems to be a

  45
  great dearth of information in the replies. Moreover, whenever we question that Department there seem to be horrendous financial problems.
  Although I understand that the Government have put forward, and are indeed implementing, the suggestion that there should be a number of what I believe are termed experimental outside audit exercises in a limited number of district health authorities, this seems a slow and inadequate response. Although it seems perfectly proper for the Comptroller and Auditor General to have some overview, just as we envisage him having some overview with the Audit Commission, my hon. Friend the Financial Secretary should be worried about the lack of control in the Department of Health and Social Security, especially on the health side.
  There is no great necessity to experiment. The problem is there to be seen, and it has been there for a long time. I suggest that my hon. Friend should involve the Comptroller and Auditor General, either directly or indirectly, via these outside accountants. Certainly there should not be a long-term scheme of extensive trials in two, three or half a dozen districts. The problem is urgent and should he tackled quickly.
  The third area is the nationalised industries. As I understand it, the Government's view is that the Monopolies and Mergers Commission is the right vehicle to investigate the efficiency of nationalised industries. The tempo has not exactly been exhausting, but there is evidence of an acceleration, and in the coming 12 months we should see more investigations by the commission.
  In recent weeks proposals have been made that outside consultants should consider certain aspects of some nationalised industries. I have no quarrel with the ability of the consultants—I recognise that they are experienced people who are likely to investigate in depth and to make proposals—but to whom are they reporting? Are they reporting to Ministers? Are they reporting direct to the Cabinet? Are they sending individual reports to the Prime Minister? This is a crucial question. Would it not be better if those experienced consultants reported to those who have had an oversight of the whole spectrum of Government expenditure and who can consider the reports objectively in a non-partisan manner?
  Presumably the consultants are considering not the political aspects of the nationalised industries, but the value for money or the effectiveness of their industries' performances. Therefore, why should it not be the role of Parliament to receive the reports? The vehicle for receiving the reports should be the Public Accounts Committee. We have some expertise. One would not put too great a store on it, but hon. Members who have been on that Committee for a long time have developed the ability to analyse material in an objective and non-partisan manner. On the whole, I believe that the Committee is a great credit to the House. I am sure that the consensus in the House is that the reports are objective, thorough and good value for money.
  One or two of the reports contain suggestions for the running of the Government. I shall merely add one or two comments to those already made by my hon. Friends and by the right hon. Member for Heywood and Royton. In dealing with the third report, on the Ministry of Defence, the right hon. Member for Heywood and Royton rightly emphasised that in studying the report—which is particularly poignant now—no one on the Public Accounts Committee wished to undermine any of the commitments
  46
  given on the task force, the back-up forces or any dimension of the situation in the Falklands or anywhere else that there might be trouble.
  I am not an accountant—if anything I am an administrator—but it is a sad reflection on the Treasury, as the purse keeper, and on the Ministry of Defence, that between them, for three years running—1978–79, 1979–80 and 1980–81—the Ministry of Defence overspent its cash limits, not by the odd £1 million, but by tens of millions of pounds, even after receiving a Supplementary Vote. It is not that the Department found at the end of the year that due to unforeseen circumstances it had overspent. It received a Supplementary Vote halfway through the year. Although there are protestations that action is being taken in the current financial year and that before the current difficulties it was estimated that the Department would be within its budget, that is not acceptable.
  I urge my hon. Friend, and others in authority, to look at some of the detailed areas that we considered in the PAC. The right hon. Gentleman raised one or two of them and I shall deal with one small aspect, in financial terms, that is symbolic of the whole problem at the Ministry of Defence. I refer to the provison of small arms ammunition. This could be of great importance at present.
  We found that there was over-production of small arms ammunition and that the stocks held by the MOD were far higher than it had laid down as its requirements. Moreover, we found that the Department had given instructions to the royal ordnance factory for incorrect requirements, and naturally the ROF had met those requirements. However, despite the overstocking, we are still short of some calibres of ammunition. In this day and age, with such a large Department playing an important role in our national lives, such a situation is not acceptable. The ROF should receive early investigation. Indeed, I suggest that there could be some privatisation.
  The ninth report, on which the Chairman of the Committee laid great emphasis, relates to the internal audit in central Government. This is probably the most important report that we undertook in 1980–81. When I joined the Committee in May 1979, I did not realise just how abysmal was the level of internal audit in central Government. Having come up through local government, I had fondly assumed that every Department of State had a qualified accountant. I did not consider a qualified accountant in every Department of State to be a particularly advanced level of staffing, but we found that in 28 small Departments there was no internal audit. Only 47 qualified accountants were involved in internal audit, concentrated in only 11 Departments.
  This is the most worrying report that I have seen in a long time. In summarising the problem the Comptroller and Auditor General raised three points that are worth emphasising. First, he said that senior management did not appear to appreciate the benefits of modern, efficient internal auditing. Secondly, he said that there was a general lack of professionalism. Perhaps that is not surprising when one reflects on the numbers that I have just given to the House. Thirdly, he said that there was little central co-ordination, and that what there was was weak.
  I have had some correspondence with Baroness Young, who has overall responsibility for the recruitment of accountants in the Civil Service. The tenor of that correspondence to date is that the strategy of the Civil Service Department appears to be not that we will carry

  47
  out an active recruiting drive for qualified accountants, but that internally we will train people who will specialise in accounting, although we will not require that they be qualified accountants. If we are to have a professional internal audit, and, almost by definition, if the people in that role are to have the status due to them, we should in this day and age encourage qualified people to take up these positions.
  The Government, of all people, should set standards to which the outside world should try to aspire. Instead, there is the danger of continuing to have second best in the public service. My hon. Friend should draw it to the attention of those involved that this is an ideal time to carry out such a recruiting drive. There has probably never been a better time to get qualified accountants into the public service, because of the current state of the labour market. I very much hope that my hon. Friend will draw the attention of the Civil Service Department to that fact. I also hope that we shall see some real signs that the Government take internal auditing seriously and believe that this is an area in which there should be substantial progress.
  The eighth and eleventh reports both affect the Department of the Environment. I wish to draw the attention of the House to two points arising from those reports which cover the spectrum of activities within the Department. On the eighth report, I draw the attention of my hon. Friend to something that should cheer him up a little. Class VII, Vote 2, relates to
  "Delays in the receipt of final claims for housing subsidies and other associated grants".
  Local authorities are given some grant on credit, so to speak, and make a final claim, supposedly within nine months of the end of the financial year in which the housing subsidy is applicable.
  I say "supposedly" because very few authorities reach this supposed level of efficiency. Indeed, as at March 1980, no fewer than 28 authorities had not submitted their final claims for the year 1975–76—five years before the date of our report. We are talking not about the odd thousand pounds, but about several millions of pounds. It is a poor reflection on the role of the district audit. Presumably the accounts are closed, because I am not aware of 28 authorities that were outstanding on their district audit at that point. Therefore, we can safely assume that the district audit had been carried out but that this dimension of the district audit had been left hanging in the wind.
  I appreciate that the Treasury minute response gives some up-to-date figures which suggest that we are making progress in getting the laggards up to date, but to have more than one or two local authorities more than a year behind schedule is completely unacceptable. I suggest that my right hon. Friend the Secretary of State for the Environment should look askance at the fact that although the district audit has been carried out, all these claims are still outstanding. It was particularly alarming to discover that the Department of the Environment and the district audit service could not agree how the system should be applied. Someone should have banged some heads together to deal with that dimension at an earlier stage.
  The eleventh report deals with the Housing Corporation and the administration of housing association grants. I declare an interest as one of the honorary board members
  48
  of the Greater London Secondary Housing Association. The Committee welcomed the removal of the duplication of checking, which is what the report is basically about.
  In paragraph 4 we wondered whether the time had not come when the Housing Corporation should be financed by grant-in-aid. We said that we would wish to review that at a later date. I should welcome any comment that my hon. Friend can make this evening about whether the Treasury's view has changed and whether it believes that we are making good progress towards that goal.
  The twelfth report deals with the Inland Revenue and again covers a whole spectrum of activities. The one on which I principally want to comment is the taxation of casual and agency workers. Here again, I hope that the Minister will be able to respond positively.
  The report showed that the Manchester office of the Inland Revenue had done some experimental work within the hotel trade, the licensed trade and the press. In relation to casual workers, it found that the loss of revenue in terms of income tax was about £30 million from the licensed trade and
  "estimated the overall annual tax loss from all irregularities relating to casuals at not less than £100 million."
  That was the figure then. We can assume that it is now considerably more. Here again we are talking not about small amounts of money, but about significant amounts across a limited number of areas of activity.
  In a parliamentary question that I asked the Chancellor of the Exchequer, I drew my hon. Friend's attention to the situation in the United States, where the nearest analogy would be our 714 certificates for the building trade. If someone in the United States wants to work in a motorside restaurant, a pub or a bar, or to do any other kind of casual work, he must present a certificate that proves that he has been paying taxes regularly over a certain period. It is a simple method that works well. It is not seen as Big Brother looking down on people. It seems to work smoothly.
  The response that I received from the Treasury was that this was an interesting idea that merited further attention. What further attention is being given to it? I very much hope that we shall see a positive response to the problem of casual and agency workers, because this loophole ought to be closed. I understand that it has been closed for the press and I see no reason why we should not make progress on other fronts.
  The seventeenth report deals with the NHS. The Committee and the House should be grateful to my hon. Friend the Member for Horsham and Crawley. I know of no one who asks more penetrating questions about the NHS and he has done a better job of controlling the service than successive Secretaries of State of both parties. The DHSS must have a file on my hon. Friend and I suspect that it learns more details of the numbers employed in the NHS from his questions than we learn from the Department.
  My hon. Friend mentioned hospitals that had been built but not opened. I cannot describe my feelings about the fact that hospitals are standing empty and idle. It would not be so bad if I felt that the problem would be dealt with in a year or 18 months, or that someone had made a major error and that it would be possible to correct it after the current financial year, but that is not the case.
  During the Committee's proceedings I asked when the Nottingham hospital, which has, if I remember correctly, more than 350 beds, would be opened. I was told that it

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  would not be until 1985. It is not acceptable that large sums of public money should be used to build capital structures that are left idle for years.
  Perhaps the Trent regional health authority does not have provision in its budget to give priority to the opening of the hospital, but heads need to be banged together and someone needs to be told that the hospital must be opened in the next 12 months—along with every other new hospital that is vacant. If money has to come out of contingency funds, so be it.
  Thanks to my hon. Friend the Financial Secretary to the Treasury's prudence and close control of expenditure, borrowing last year was £1,000 million under budget and I suggest that a little of that should be set aside for opening new hospitals.
  Appendix 8 shows that I asked a few questions about direct labour in the NHS. I received in reply a long document setting out the normal provisions for tendering within the NHS, but there was little information about what I really wanted to know, which was how direct labour tendering in the NHS compared with that in the Department of the Environment.
  The permanent secretary told the Committee that the DHSS broadly followed the directives of the Department of the Environment. Since the Department of the Environment has changed its requirements for direct labour, particularly on maintenance work—at least one-third of projects costing less than £10,000 must go out to competitive tender—will my hon. Friend the Financial Secretary ensure that the DHSS sends out a similar directive through the regions to the district health authorities? If that is right for public sector works within the responsibility of the Department of the Environment—mainly council housing—it is right in the NHS.
  I quiver every time DHSS officials come before the PAC, not because I am afraid to ask questions, but because I am afraid of the answers that I will get. There is less financial control over the DHSS than over any other service in the public sector.
  I emphasised earlier how eagerly members of the PAC were awaiting the Government's revised response to the role of the Comptroller and Auditor General. My hon. Friend the Financial Secretary ought to recognise that that feeling is not confined to members of the PAC and the 287 hon. Members who signed the early-day motion. It must be shared by many more hon. Members, including PPSs and, I suspect, many Ministers.
  I hope that my hon. Friend will recognise that it is not sufficient for Sir Derek Rayner to be used as a fireman to investigate various problems. Parliament should have overall responsibility for public expenditure. I urge the sceptics—presumably there must be some in the Government—to look at some of the PAC reports on sensitive issues, including ICL, public purchasing and the Ministry of Defence, where much of the information was classified. They will see how the PAC handles such difficult matters.
  I have said to the Chairman of the PAC that if the Committee has a weakness it is that we do not go back often enough to check on the progress made in Departments that we have investigated. I suspect that we will view with less than generosity Departments on which we have made critical reports reacting like the usual Treasury minute, when it says:
  "The Treasury note the views of the Committee."
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  If we find that there has been little progress three years after the PAC has made a critical report about a Department, parliamentary pressure to ensure a greater role for the Comptroller and Auditor General will become irresistible. It would be better for the Government to make progress now on the three dimensions that we have talked about than that the matter should blow up and be less easy to handle in two or three years' time.
  5.48 pm
  Mr. Barry Jones: I am glad to speak after the hon. Member of Northampton, South (Mr. Morris). He made some justifiably complimentary remarks about his hon. Friend the Member for Horsham and Crawley (Mr. Hordern), but the hon. Member for Northampton, South is no slouch on the PAC himself, and he may even end up as chairman of the 1922 Committee.
  I wish to comment on the fifth report of the PAC and to deal with regional development aid and inward investment. I will not take up the comments of the hon. Members for Horsham and Crawley and for Northampton, South about privatisation. They are in favour of it, and gave some of their reasons. I suppose that I am ideologically opposed to privatisation.
  We had an interesting note from the Department of Industry about the sale of British Aerospace shares. The number of people who held up to 99 shares in British Aerospace on 18 February 1981—that is, immediately after flotation—was 44,062, whereas by 7 January 1982, the number of such shareholders had declined to only 3,279. On 18 February 1981, only one organisation held 1 million shares or more, whereas by 7 January 1982, 13 organisations had 1 million shares or more. That is an interesting and unusual set of figures. From the evidence given to our Committee by the Department of Industry, one could adduce a strong case against privatisation. One could certainly assert that taxpayers' money was not best used in the British Aerospace flotation.
  The hon. Member for Horsham and Crawley spoke about regional development aid. He said that in West Germany there was no Department of Industry. as we know it. He seemed to approve of that. If there were no Department of Industry in the United Kingdom there would not be many jobs in Wales or other deprived regions.
  In taking evidence from the Department of Industry about regional incentives and their effectiveness and costs, we considered a memorandum. Sadly, it became obvious from the evidence and from the detail in the memorandum that no attempt at comprehensive evaluation of regional policies has been conspicuously successful. From the methods used in the study we found no precise information about the nature or scale of the effects of regional policies. We could not assume the costs that might have been imposed in other areas of the United Kingdom which were not subject to regional policies and incentives. We learnt from the memorandum and from the evidence of the Department's officials that most industrial countries gave preferential treatment to their deprived regions and that there was widespread competition among the nations to attract mobile industrial investment to those areas.
  Later, in the evidence given to us by the Department we learnt, in answer to a question put by our chairman, my right hon. Friend the Member for Heywood and Royton (Mr. Barnett), that between 1971 and 1981 approximately £5 billion was expended by the Department on regional

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  aid. I welcome that expenditure, even on such a huge scale. Without inward investment and without generous regional aid, Britain would be in dire economic straits. There are at least 3 million people out of work, and our shipbuilding, steel and textile industries have contracted or declined. Since 1945, our country has lost 3 million manufacturing jobs, and the smaller number of manufacturing jobs that now remains has to carry non-wealth-creating jobs—the extra 2 million service industry and white-collar jobs that have been created. Britain desperately needs more, not less regional aid, and more, not less, inward investment.
  The studies on inward investment that have ben put in hand show that companies from abroad perform better, on the whole, than native United Kingdom establishments. It is said that they tone up the area in which they are located and the region concerned. The studies also show that inward investment was important in the 1970s. Ford and Sony are but two examples. Companies which are the result of inward investment are frequently well managed, have high productivity and comparatively low unit costs. The studies imply that the host regions for inward investment are well pleased with the location of these factories. It could be said that Wales, Scotland and the North have been hugely improved by the location of factories inspired by inward investment, and that the range of grants and loans under the Industry Act that is available to the Welsh and Scottish Secretaries of State, together with the powers of the development agencies in Wales and Scotland, have been significant in attracting inward investment.
  The Committee was also told in evidence by the Department of Industry, that competition is strong in Western Europe for any footloose investment that might be available from Japan, the United States, West Germany or Switzerland. My constituency is one of a number of United Kingdom locations now competing inside the United Kingdom for the proposed Nissan car factory. There are 9,000 people out of work in my area, and the rate of unemployment is 20 per cent. In 1980, we suffered Europe's largest closure, when the BSC Shotton works shed some 7,000 steelmaking jobs between New Year and Easter. At the same time, our textile mills were contracting, slowly but all too regularly.
  My constituency stands to gain hugely from an active regional policy. It stands to gain even more if there is real value for money from regional aid and investment. In the knowledge that £5 billion worth of investment occurred in the decade 1971–81, it is sad that as yet no one knows—certainly not the Department of Industry—how much money was spent in that decade on attracting inward investment into the United Kingdom. Nobody yet knows to what extent the generous grants and loans made under sections 7 and 8 of the Industry Act have attracted new companies and new jobs. So far, it is impossible to be certain how decisive is a reputation for good industrial relations in attracting inward investment.
  It was clear from the evidence given to us in the Public Accounts Committee by the Department of Industry and those officials responsible for the stimulation of the economies of the deprived regions, that nobody could say for certain to what extent a pleasant environment and good
  52
  motorway connections are decisive in getting the United States, Japan and West Germany to locate their factories in the deprived regions of Britain.
  Notwithstanding the £5 billion outpouring of regional aid, it is disturbing and surprising that the Department of Industry cannot tell us with any certainty what the impact has been on the areas not receiving large-scale regional aid, or the scale of the effect on those regions getting regional aid. Neither the Welsh Office nor the Scottish Office could tell us.
  In so far as inward investment is likely to increase, and is desperately needed by a nation suffering grave industrial decline, and in so far as Britain's regions are competing hard against each other for inward investment, clearly more research, information and study is required by and from the Department of Industry and the Departments in the Welsh and Scottish Offices.
  It is difficult to believe that the Government have no role in the location of inward investment. Projects on a vast scale, such as the Nissan project, might involve £180 million to £200 million or more in grants and loans. That is clearly big money. It is not convincing for the Government or the Department of Industry to give evidence to the Public Accounts Committee, having said that the Government are prepared to give so much assistance, that they are not prepared in any way to give advice or to attempt to steer such a large project to any one of a number of deprived regions to provide employment in the United Kingdom.
  I want to see more not less regional aid. With 3 million people out of work, with hundreds of thousands of bored and aggressive teenagers on the streets, with 1 million long-term unemployed middle-aged men on the scrap heap, we must have more regional aid and more inward investment. In addition, the development of regional policies must be backed by more insight, research and factual information as to the consequences and the nature of the investment and its location in the various areas of Britain.
  Like my right hon. Friend the Member for Heywood and Royton (Mr. Barnett), I view with alarm the huge rise in defence expenditure which is not accompanied by value for money. Like other right hon. and hon. Members, nothing that I am seeking to say now is in any way intended to undermine the venture to the Falkland Islands that the House has recently been debating. My right hon. Friend referred to the Ministry of Defence. There is colossal expenditure by that Department. This coming year it will perhaps be some £14 billion. There is a strong suspicion that value for money for expenditure on such a gigantic scale is frequently not obtained. The Department and the procurement executive frequently come before us apologetically and sometimes indecisively. They frequently do not give convincing evidence that they are in complete control of the vast projects that they and their officials and the armed services have sought and initiated. Given Britain's huge problems—its economy and massive unemployment—that is very disturbing. I think that much of the nation's current oil revenue is being earmarked to cope with future massive Ministry of Defence expenditure.
  One of the saddest occurrences in the Public Accounts Committee was when the Defence Ministry and the procurement executive gave evidence on the Sting Ray torpedo project. It appeared that in 1968, or thereabouts, the go-ahead was given to what was thought to be a £60 million project. We learn that that one project today has

  53
  accounted for £923 million of the nation's wealth. It has not yet entered service and it may go beyond the £923 million to more than £1,000 million. Nobody has yet been able to convince the Public Accounts Committee that sales of that weapon can be made to other nations. Nor has it been demonstrated conclusively that that weapon, which has cost so much of the country's wealth, is any better than a cheaper weapon available from another allied nation in the western hemisphere. That is clearly disturbing.
  The Ministry of Defence says—I think truthfully—that it is constantly seeking to tighten up its control of expenditure. However, if constituencies such as mine are to see more cash and regional development aid poured in, in order to get rid of horrific mass unemployment, clearly the Ministry of Defence and other big spenders in Whitehall have to do better than they are in controlling their projects and programmes.
  The controversial and massive Trident missile project should not go forward. Conventional defence expenditure should have greater consideration. If Sting Ray has been able to get out of control, who can say that the Ministry of Defence will keep the £8 billion Trident project under control? I oppose Trident. It may not be limited to £8 billion. It may go the way of Sting Ray. If it does—as is likely—it will have injurious consequences for all those in the regions who seek a decline in mass unemployment and an increase in inward investment and regional development incentives.
  I hope that the Committee and the House will come back to those issues in the months and the years immediately ahead. If we cannot control defence expenditure, I suspect that there is no way in which we can reduce mass unemployment.
  6.9 pm
  Sir Albert Costain: It is a great pleasure to be called once again in a Public Accounts Committee debate. Over the years, I think that I have attended every one. When I went through my notes over the weekend I found it difficult to make any fresh comments. History seems to repeat itself time and time again.
  I should like, with all sincerity, to pay a special tribute to our Chairman, the right hon. Member for Heywood and Royton (Mr. Barnett). He has a difficult job to control what may be described as all colours of the spectrum of the political landscape, and he does it extraordinarily well. It is always a privilege, when we have a Public Accounts Committee debate, to welcome one or two strangers. I am sorry that they have not been called to speak. I do not criticise the Chair. It just happens to fall in that way. Almost inevitably, people from outside turn up.
  I very much support the Chairman's praise of the staff. They do the work well, are always available to be consulted by members of the Public Accounts Committee and are only too willing to give us their advice. It is appropriate to pay tribute to Robert Taylor, who departed this life during the last Committee session. He did a remarkably good job. He was always very keen on his questioning and did his work very well. We miss him greatly. Fortunately, we are always able to replace even the best Committee members and we have a new hon. Member to carry on his tradition.
  In opening his remarks the Chairman referred to the Prime Minister's statement and to whether the Comptroller and Auditor General should have more power to
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  investigate, in particular, nationalised industries. I am one of the few Committee members who did not sign the early-day motion. The Chairman has been perfectly charming to me about it. I refused to sign it, not because I was in general disagreement with the principle, but because I was extremely worried about the situation. Nationalised industries are enormous organisations, with very high turnovers. We have to find people to manage them at the very highest level and they are not used to being criticised by what they consider to be amateurs. Indeed, some hon. Members are amateurs.
  The heads of nationalised industries are worried that they may be criticised by those who are not in a position to do so. I know of two very capable people who were offered jobs as chairmen of large industries but who refused and unofficially told me at CBI meetings and on other occasions that they had done so because they were worried by the fact that certain hon. Members took a delight in nit-picking about the way in which the organisations were run. They pointed out—it is not a complete parallel—that members of the Cabinet and Ministers have a 30-year secrecy rule. Indeed. some Ministers supervise Departments that are smaller than the nationalised industries that they control. Those two capable men could not see why the secrecy rule should not apply to large nationalised industries.
  Too often a newspaper or journal, such as the New Statesman, will publish an article that is proved, on investigation, to be wrong. Such papers criticise a Department, the sale of arms or bribery. Opposition members take such suggestions up—as they tend to do on reading such articles—and there is a good deal of publicity before there has been any opportunity to investigate the matter properly. That discourages leaders of industry from giving up their time. They lose their enthusiasm for the job because some hon. Members feel, in all sincerity, that it is their job to criticise and to look for newspaper articles that will reveal the sensational. That is a problem. Therefore, I have more sympathy than has the Chairman of the Public Accounts Committee with the Prime Minister's remarks.
  Mr. Joel Barnett: The hon. Gentleman need not apologise to me for not having signed the early-day motion, because it only supported the report of the Public Accounts Committee, which he signed. Indeed, I was very grateful to him for his agreement. I agree that some people in industry feel that they do not want to be badgered and bothered by ill-informed Members of Parliament, or, frequently, by ill-informed Ministers. However, I am sure that the hon. Gentleman will agree that our reports and evidence show that the Public Accounts Committee and the Comptroller and Auditor General do not fall within that category. As I pointed out only today, we well understand and appreciate the problem of getting the best people. I am sure that the hon. Gentleman will further agree that we are well capable of taking account of the worries expressed by the Prime Minister.
  Sir Albert Costain: I am grateful to the right hon. Gentleman for those comments. I said that the report was unanimous and that the Chairman had been extremely clever in persuading people that there was unanimity. I did not feel strongly enough for a minority report, but I felt that I should point out that we realise industry's problems. The right hon. Gentleman will recall that I was one of the

  55
  Committee members who voted against the Committee sitting in public. Robert Taylor and I were the only two to vote against the motion on that occasion. I voted against sitting in public because once the press and other visitors have heard part of the evidence they are apt to assume that what they have heard is right and to criticise regardless. That can do enormous damage to our industrial base.
  The hon. Member for Flint, East (Mr. Jones) mentioned the Ministry of Defence. We all know that that Department overspends and that it is extremely hard to get a yardstick on it. We also know that another Committee will investigate the technicalities and efficiency of the weapons system. We pray to God that that system need not be proved in practice, although the likelihood of that is now greater than before. That is why the Committee is investigating the other aspects. Hon. Members must recall that the Public Accounts Committee was formed for a post mortem examination. We have never dealt with policy. The hon. Member for Flint, East came close to a policy statement, although that is not normally the business of the Committee. He did so in sincerity and was in order, because Mr. Deputy Speaker allowed him to comment. However, harm can be done to companies and individuals who are criticised. Members of Parliament have parliamentary privilege and can say what they like inside the Chamber without being criticised.
  Mr. Dalyell: Does the hon. Gentleman recollect that he and I were members of the Public Accounts Committee under three different Chairmen? I refer to my right hon. Friend the Member for Huyton (Sir H. Wilson), to my former hon. Friend the Member for Sowerby, now Lord Houghton, and to the former hon. Member for Kingston-upon-Thames, Lord Boyd-Carpenter. During that time we investigated Bloodhound and Ferranti and the missile systems. Does the hon. Gentleman agree that if meetings must be in secret—in some ways, curiously enough, I agree with him—the quid pro quo is that the publication of the reports should not be tardy, but speedy? Often, a topical issue has to be cleared up one way or the other.
  Sir Albert Costain: I well recall both the hon. Gentleman's membership of the Committee and the Ferranti incident. Something needed to be exposed. However, that sitting was held not in public but in private. I accept his criticism that the reports were published too slowly, but credit must be given to the Committee now, because the reports are being published so quickly that the printing presses cannot keep up with them. I went to the Library this week to ask for one of our reports that should have been published. I could not understand why the Dickens I had not read it. The Library personnel could not understand why they did not have a copy in stock. It was supposed to have been published on 13 April, but I was told that it was not being printed. We now have the seventeenth report of Session 1980–81.
  The hon. Member for West Lothian (Mr. Dalyell) cannot complain that the reports are too long, but he can complain that we do not discuss them quickly enough in the House. Bearing in mind the attendances when they are being discussed, it might be more effective if we insisted on having a ministerial-type Cabinet to discuss them.
  Hon. Members have highlighted the areas where we have unearthed the biggest problems. Another problem is regional aid, on which we have had several reports. The
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  Public Accounts Committee found that regional aid had cost from £2,000 per job to a fantastic figure, which has been reported but not yet published. It would not be in order for me to refer to that figure, but tens of thousands of pounds per job are involved. All I can say to the hon. Member for West Lothian is that it is customers who provide employment and not Cabinets. Customers buy goods when they are cheap enough and when delivery is reliable. What prevents British industry from being as competitive as industries in other parts of Europe is the very high cost to industry of certain subsidies.
  It was delightful to hear the right hon. Member for Down, South (Mr. Powell) praise the Forestry Commission. I have a personal interest in that subject. I was fascinated to hear him say that we should charge his constituents more. I cannot remember any Member of Parliament rising in the Chamber and begging a Department to charge his constituents more. It is refreshing to hear that. What was interesting was the way in which he highlighted the pleasure that forestry gives to visitors. For years we have been told by the Forestry Commission that we must not allow the public into forests because they will set fire to the lot. So far as I can recall, there have been no fires of any consequence since the public were admitted.
  The same applies to the reservoirs. We used to be told that the public should not be given access to the reservoirs in case they polluted the water. The public are now deriving a great deal of enjoyment from reservoirs inside forestry compounds, and with no detrimental effects.
  It was a great pleasure to serve on the Public Accounts Committee with such a collection of experts. It was extraordinary that whatever subject arose there was always someone on the Committee who knew more about it than the majority. I pay tribute to the ability of the Chairman. During Easter I read his book with interest, in which he recounted how he persuaded his colleagues in the Cabinet to agree with him that they should take less money for their Departments. He has demonstrated his persuasive nature as Chaiman of the Public Accounts Committee. I am afraid that I shall not live long enough to see him write the book about how he used his great charm and personality to persuade members of the Public Accounts Committee to take certain courses.
  6.24 pm
  Mr. William Hamilton: So far as I can recollect, no hon. Member has referred to the twelfth report of the Public Accounts Committee, which dealt with the black economy. By the black economy we mean the non-declaration of taxable incomes from heaven knows how many members of our community. The Inland Revenue estimates that it accounts for about 7½ per cent. of gross domestic product—about £16 billion a year. It amounts to tax losses of about £4 billion a year, which is equivalent to 20 per cent. of the entire yield from income tax. Those are substantial sums. In the weekend press I read an estimate that is considerably in excess of the figures I have just quoted.
  My right hon. Friend the Member for Heywood and Royton (Mr. Barnett), who is an able and eloquent Chairman of the Public Accounts Committee, referred to our role as seeking cost effectiveness, the elimination of waste in public expenditure and the saving of public money. There is now a great opportunity to save the enormous amounts of public money that are being frittered

  57
  away. It was clear to members of the Public Accounts Committee that if the Inland Revenue could employ more staff to chase those who evade their tax responsibilities, great tax savings could result.
  When we were cross-examining Inland Revenue officials, it was established that seven local offices had been established in various Inland Revenue regions to tackle the problem of tax evasion. The seventh office was established in Croydon in the summer of 1981. The additional tax which was collected as a result of the establishment of the first four offices amounted to £11·6 million.
  A pamphlet which had been produced by the Civil Service unions and entitled "Whose pocket are they picking?" suggested that there should be a special office, like the seven that have already been established, in each of the 15 regions of the Inland Revenue. In the Inland Revenue's evidence to the Public Accounts Committee, it was said that there were no immediate plans for increasing the number of such offices, although it was clear that the benefits accruing from their establishment in terms of revenue collection would be enormous. In paragraph 31 of the twelfth report, we said:
  "It is clear that, with the annual tax loss through the black economy running at some £4 billion, there must be areas where the deployment of additional resources would be likely to produce direct returns of many times the staff costs involved. Of perhaps even greater consequence is the likely effect on standards of compliance generally. With the black economy already so pervasive, it seems to us that there is a real danger of tax evasion coming to be regarded as socially and morally acceptable, with consequences spreading beyond the limits of the present black economy. We therefore consider it important that the Department should be seen to be making strenuous efforts to contain and reduce it. We trust that in doing so the Department will not overlook any desirable legislative changes which might avoid the deployment of additional investigative resources, as exemplified by the legislation proposed in the Finance Bill 1981."
  That has been followed up by myself and others in the House, and the Treasury has sought evasive action by referring to a committee that was set up to consider these matters. That committee may well have reported by now. When the Financial Secretary replies, I hope that he will tell us what additional steps have been taken subsequent to the production of the PAC's reports.
  The Financial Secretary to the Treasury (Mr. Nicholas Ridley): I shall certainly do what the hon. Gentleman wishes. However, will he clarify his reference to a committee? I am not clear to which committee he is referring.
  Mr. Hamilton: I have forgotten the name of the chairman. However, to my knowledge a committee was set up to investigate tax evasion and related problems. I understood that the committee was to report very shortly. I guess that it will report some time this year.
  Mr. Ridley: Is the hon. Gentleman thinking of the committee of Lord Keith of Castleacre, which is investigating the powers of the Revenue and Customs and Excise in terms of human rights, privileges and privacies rather than the black economy?
  Mr. Hamilton: I am glad that the hon. Gentleman has refreshed my memory. I was referring to the Keith committee. When I have asked questions on this subject I have been referred to the Keith committee as a reason for not making any further advances in the direction suggested in the PAC report.
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  It is a great pity that attendances at debates on PAC reports are so poor. Almost invariably they are attended by members of the PAC. If hon. Members knew the extent of the opportunities of calling Ministers to account in these debates, they would be filling the Benches. The field is wide open. Every Government Department is exposed to a greater or lesser extent by the reports. After labouring long week after week to produce considerable and important reports on the waste or misuse of enormous sums of public money, it is rather soul-destroying to find that almost invariably the debate is attended exclusively by members of the PAC. It means that we talk to ourselves like freemasons, which is deplorable.
  I am glad that one or two hon. Members who are not members of the PAC are here this evening. They have been or will be able to speak on matters that concern them, their unions or their constituencies. I note that my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) is in his place. I think that I know the subject on which he will speak and I hope that I shall be able to listen to him. I always listen to his contributions with great interest.
  It may be that PAC reports are not meant for public scrutiny. They might best be described as pricey reports and not as Public Accounts Committee reports. The report on the Ministry of Defence is a fairly slim volume but it is priced at £7. It is hardly a best seller in Fife, Central at that price. However, it contains a great deal of dynamite. The report on the financial control and accountability of the National Health Service costs £7·25. It would be interesting to know how many copies of the reports have been sold. There seems to be deliberate intent not to allow the public access to them. They are being priced out of the market. We must make amends as best we can in this place.
  As my right hon. Friend the Member for Heywood and Royton said, the Ministry of Defence seems to think that for special reasons it is exempt from the discipline and stringency of cash limits. It has exceeded those limits three years in succession by hundreds of millions of pounds. Ministry spokesmen say "We are quite exceptional. We cannot keep within the disciplines that the Treasury lays down." The Treasury does not exempt the Ministry of Defence from the disciplines that it imposes, and it should be brought within them. My right hon. Friend was right to say that we are now engaged on a blank-cheque exercise in the Falkland Islands.
  Mr. Dalyell: That is right.
  Mr. Hamilton: We do not know what the eventual cost will be—whether it will be hundreds of millions of pounds or thousands of millions of pounds. However, it is clear that for the Ministry of Defence cash limits will go out of the window. Clearly some other provision will have to be made. Treasury Ministers have said that the exercise will mean public expenditure cuts elsewhere—perhaps further cuts in the Health Service or in housing—or increases in taxation. They have said that it will be necessary to take one course or the other to pay for an exercise which could cost the earth in money terms and in terms of human life. The report on the Ministry of Defence makes disturbing reading. Mind-boggling sums are involved.
  My right hon. Friend the Member for Heywood and Royton has said that there are 20 projects within the Ministry of Defence each in excess of £500 million to date.

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  By the time that they have been completed each of them might have cost double that sum. In paragraph 37 of the report we recount that between 1950 and 1970 the PAC examined examples of development programmes of sophisticated military equipment. The responsibility for those programmes now falls to the procurement executive of the Ministry of Defence. I was not a member of the PAC in the early years, but I have been a member of it latterly. The Committee has found that the common features of sophisticated military projects are large increases in costs over the original estimates and expensive delays in the completion of the development programmes. Both those features and other factors contributed to the enormous disparity between the original estimate and the final cost.
  Various attempts have been made to change the system of control from 1960 onwards, culminating in the recommendations of the inter-departmental steering group on development cost estimating. That was the Daniel report of 1966. The procedures recommended in the report were adopted finally in 1972. According to the Ministry of Defence they remain the basis of the Department's management of development projects. But despite that the situation is as unsatisfactory now as it was in 1950 when we started the exercises.
  The example of the Sting Ray torpedo has been quoted. In 1969 the estimate for that project was £74 million. Now it is £1,211 million at September 1981 prices. That is a colossal sum for a military project that no one else wants. The Department has produced no evidence—I do not believe that there is any—that sales to our NATO allies or anyone else have been or are likely to be concluded. The Ministry of Defence will not tell us for security reasons.
  That brings me to the report on the financial accountability of the National Health Service. The hon. Member for Horsham and Crawley (Mr. Hordern) has aggressively pursued the matter. I would defend to the death the existence and rapid development of the NHS. Any Government who dare to interfere with its basic principles are committing political suicide. Despite the difficulties, it is one of the most popular services in the country. The more cost-effective that we make it, the better. In that regard the hon. Gentleman has performed a valuable service in the PAC.
  At paragraph 42 the report states:
  "In 1980 a test examination by the Comptroller and Auditor General's staff of NHS reports on the commissioning of hospitals recently built or nearing completion showed that in several cases health authorities had referred to design features expected to lead to high running costs. Also, due to shortage of revenue funds, at nine hospitals in England and three in Scotland, full usage of all the facilities provided had been or was likely to be substantially delayed beyond the planned opening dates."
  The Prime Minister from the Dispatch Box stated that the Falkland Islands exercise would be carried through regardless of cost. Had she said that the opening and continuous running of those hospitals would be pursued regardless of cost there would have been greater public acclamation. That those hospitals should be opened and run efficiently for the benefit of our people could be considered to be as important as the expedition to the Falkland Islands.
  At paragraphs 59 to 61 the report refers to the financial accountability of the Health Service to Parliament. That
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  is important. The Health Service is laudable and it is big business, but there is singularly little overall control by the House of expenditure on it. Paragraph 61 states:
  "in our First Special Report in the present Session we recommended that responsibility for the audit of the NHS authorities accounts, which is at present undertaken by the statutory auditors appointed by the Secretaries of State, should be transferred to the Comptroller and Auditor General."
  That comment was also contained in our report on the Comptroller and Auditor General debated in the House last November, as my right hon. Friend the Member for Heywood and Royton reminded the House. Every hon. Member who spoke in the debate supported the PAC's recommendations, but the Government have not accepted them, although they made noises to the effect that they would, in full or in part.
  We recommend that every organisation, however small, that receives public money should come under the eye of the Comptroller and Auditor General. The Prime Minister turned the recommendation down in carefully worded terms a day or so ago in reply to my hon. Friend the Member for West Lothian (Mr. Dalyell). I do not know whether the Financial Secretary will tell us what the Government's intention is, but I hope that we are told before the end of the Session. The House of Commons and not the Treasury or the Government must be sovereign. We must insist on the right to make accountable to the House every body that accepts public money. The Prime Minister says that that would destroy commercial confidence between an organisation and the Government. That is an extremely weak and invalid argument.
  My hon. Friend the Member for West Lothian raised the question of the large sums paid to British Leyland. In our previous debate I thought that he made a speech of undue length, but he made the point. We have pursued the matter in the PAC. It is no secret that the Comptroller and Auditor General has not had access to papers in BL to enable him to come to a sensible and rational decision on its behaviour over Bathgate and other matters. That situation should be remedied; it is undesirable, unacceptable and indefensible.
  The PAC and the Comptroller and Auditor General know how to protect commercial confidence. When matters of commercial confidence are discussed in the PAC we ask the public to leave. The evidence can be eliminated from the public record. Private firms dealing with the PAC have all the protection in the world. But they should be told that as soon as they are in receipt of public money they are accountable to Parliament, through the Comptroller and Auditor General, for how the money is spent. That point has been made repeatedly in the House.
  I hope that the Financial Secretary will give us more than an offhand reply to questions about problems that we feel the Government are evading. The House asks for them to be dealt with with the seriousness that they deserve.
  6.49 pm
  Mr. Raymond Whitney: It was only in July 1981 that I had the privilege of being appointed to the Public Accounts Committee, so this is the first time that I appear in such a debate as a member of the Committee. I take the opportunity to say that the privilege of membership of that Committee has been enhanced by the fact that it gives me the opportunity to serve under the chairmanship of the right hon. Member for Heywood and Royton (Mr. Barnett), who brings to the Committee not

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  only a wide and deep understanding of the world in which the PAC tries to live, but a humorous and distinctive flavour to our proceedings which I, and I am sure every other member of the Committee, find stimulating and rewarding.
  This is not the first time that I have sat on such a debate, because in another capacity I attended the previous one on 29 January 1981. My right hon. Friend the Secretary of State for Energy who was then Financial Secretary to the Treasury, referred to the Public Accounts Commitee as the House's most potent instrument for the restraint of waste and bureaucracy. As someone who yields to no one in the House in his enthusiasm to curtail waste in the public sector and unnecessary bureaucracy, I believed that membership of the Public Accounts Committee would be a challenging and rewarding experience.
  Although I pay tribute to the Chairman and the tremendous experience of my right hon. and hon. Friends on the Committee, so far it has been a relatively disappointing experience. When my right hon. Friend referred to it as the most potent instrument, the accent must have been on its potency rather than on its efficacy as an instrument. The House—and therefore the country and the Government—does not receive its money's worth from the work of the PAC. The many hours put in by other members of the Committee should be tremendously valuable to the work of any Government, but the efforts are not rewarding in terms of saving waste and unnecessary bureaucracy. I do not regard the word "bureaucracy" as perjorative, but we are all interested in reducing an excess of bureaucracy.
  As the new member of the Committee, I do not claim to have a deep knowledge of its effectiveness during the past 120 years. We heard only this afternoon that sometimes successes are scored. My hon. Friend the Under-Secretary of State for Northern Ireland said that it appears that the collection of arrears of water rates in Northern Ireland has been improved. I formed the impression that that was due to the efforts of the Committee, to which the right hon. Member for Down, South (Mr. Powell) paid tribute. We must all take consolation from that.
  However, set against that success—I am sure that it is not the only one—we have a depressing catalogue of a lack of impact or effectiveness of the work put in by the Comptroller and Auditor General and his excellent staff, which is rounded off by the Public Accounts Committee.
  Many tributes have been paid to my hon. Friend the Member for Horsham and Crawley (Mr. Hordern) for his work on the National Health Service. I endorse those tributes, but it is sad that on each occasion that we debate the issue the tale of mistakes, waste and extravagance becomes longer. We have heard today about the Ministry of Defence and the Royal ordnance factories, but there are many other matters on which we have not touched.
  The House should re-examine this, its oldest Select Committee, because we have become a little too accustomed to the fact that it exists. Everyone pays pretty tributes to it but does all too little about it. Perhaps part of the problem lies in the attitude of the media. As the Committee is rather an old gentleman, clearly it lacks the glamour of the new babies. It is entirely normal that the new Select Committees have attracted the media's attention. This is no cry for more air time for the work of our Committee, but it is a political fact that the activities of the Select Committees—whether they travel abroad, grill the Chancellor of the Exchequer or whoever may be
  62
  the Secretary of State in the spotlight—make the headlines and possibly have much more impact on Government decisions than do the workmanlike efforts of the Public Accounts Committee backed up by the Comptroller and Auditor General.
  The reflection of that disappointing level of interest and response is also seen in the attendance at such debates. With one or two special exceptions, hon. Members who are not members of the Public Accounts Committee seldon attend. I hope that it does not seem too partisan if I say that there are few occasions when hon. Members who now represent the Liberal Party or the Social Democratic Party see fit to grace such debates with their presence. That is a sad and regrettable development.
  I hope that not only my hon. Friend the Financial Secretary to the Treasury but the Government will understand that this tool is available not only to the House but to them. They are failing to use it. I join those who have referred to what is, to me, the most worrying area of Government response to the recommendations and attitudes of the Public Accounts Committee. I am referring to the role of the Comptroller and Auditor General and his right to move into a much wider area of public funds than is at present allowed to him.
  The response to the recommendations of the Public Accounts Committee were contained in the White Paper, Cmnd. 8323, to which reference was made in the debate on the Comptroller and Auditor General on 30 November last year. Reference has also been made to a response by the Prime Minister recently to the hon. Member for West Lothian (Mr. Dalyell).
  I should like to examine some of the defences which have been erected by the Government against the proposition that the Comptroller and Auditor General should extend his role of interest into the nationalised industries sector. I find the Government's defence not only disappointing but surprising. Whether we shall hear of a change of heart remains to be seen, but if there is no change of heart at the conclusion of the debate, I hope that at the very least we shall have a more convincing explanation of why this enormous sector of public money should be closed off, as it were, from the guardian of public money. That guardian is initially the House, which passes its responsibility to the Public Accounts Committee, which in turn passes the responsibility for executive action to the Comptroller and Auditor General.
  One defence is that the Government would prefer to leave the operation of public funds in nationalised industries to the Monopolies and Mergers Commission. In the White Paper, Cmnd. 8323, published in July of last year, it is stated that only recently, by the Competition Act 1980, was the Monopolies and Mergers Commission allowed to undertake efficiency investigations into the nationalised industries and certain other public corporations.
  In the White Paper the Government congratulated themselves on the good start which had been made in this process. I welcome that good start and join in the exhortations to the Government and the Monopolies and Mergers Commission to make even greater efforts. However, in paragraph 10 of the White Paper the Government go on to say that they are
  "not convinced that it would be fruitful to replace this framework so soon after its inception."
  I am sure that the Public Accounts Committee was not talking about a replacement, and I should be very surprised

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  if the Treasury or the Government as a whole were seriously under the misapprehension that there was any such proposal. We are talking about something which would be complementary to the work of the Monopolies and Mergers Commission. I should be very grateful if the Financial Secretary would confirm that there was no misapprehension on that score and explain to the House—and certainly to the PAC—what is the problem about giving more power to the elbow of the Monopolies and Mergers Commission. I simply do not see any clash or paradox, or any necessity to choose one or the other.
  Another defence seems to suggest that Ministers are not responsible for the day-to-day management of the nationalised industries. That was the point made by the Financial Secretary in the debate on 30 November last, in which he also said that he
  "wanted to ensure that the Committee's recommendations did not extend to seeking control of money for which Ministers were not responsible."—[Official Report, 30 November 1981; Vol. 14, c. 110.]
  Although I suppose that we can follow the logic of that statement, it would seem to be a fairly alarming proposition to make to a House which is dedicated to the control of Supply.
  There has to be some limit to the extent to which we abrogate responsibility. I do not see that there is a fundamental clash here. It seems to me to be perfectly possible to ensure that the chairman and the board of a nationalised industry are told "Here is the organisation, here are the funds—the day-to-day management of the industry is your responsibility." But, having said that, it seems to me to be perfectly reasonable that the providers of the fund—the taxpayers, through the House of Commons and the Government—should also have a right to at least an outline knowledge of the use to which those funds are put. That seems to me to be a perfectly straightforward commercial proposition, just as any investor in any business would expect to have an annual account of the use to which funds are put.
  The proposition implies no interference in policy, and Ministers will be aware that it is entirely within the 120-year experience of the Public Accounts Committee in those areas of public expenditure in which it is entitled to exercise a watching brief. In other words, the Public Accounts Committee never seeks to intervene in policy. It never seeks to say "We do not think you should have done that", and that something else should have been done. Our concern is with how public resources are used, and we comment on the use of public resources within the policy guidelines for the public sector, which are entirely within the prerogative of Ministers.
  Why cannot a similar operation take place within the nationalised industries? We all accept that the policy concerning the use of resources is within the realm of the chairman and the board of the particular nationalised industry, but surely it is possible to have the same relationship that we have with Departments of State in trying to understand what is being done with the funds.
  The next defence—which was touched on by the hon. Member for Fife, Central (Mr. Hamilton)—related to commercial responsibility and confidentiality. As the hon. Gentleman said, such things are managed perfectly well in other areas which are investigated week by week by the
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  PAC, and I do not believe that it is an adequate reason for objecting to the introduction of the PAC into the operations of the nationalised industries.
  In the White Paper, the Government said that they wanted to see
  "more, not less, involvement of the private sector in the audit of public spending, and to avoid overloading the C & AG."
  Again, I question the validity of those points because no one has suggested, at least, I doubt whether my colleagues on the PAC are necessarily suggesting, that we want to crowd out the private sector of the audit profession. However, we need someone to do something because this is public money. If it means another half dozen employees as members of staff of the Comptroller and Auditor General I for one, although I am keen on reducing unnecessary bureaucracy, might be persuaded that this would be public money well spent. Time and again we come across demonstrations and evidence of public money that is not being well spent. Therefore, that too is a defence that I should question and find it difficult to accept.
  Another argument that has been produced in defence of the Government's position is, I hope, a temporary one. I hope so because, as it has been pointed out by Labour Members, there is a careful wording in these matters. The Chairman of our Committee pointed out, with his nose for these things, that there is a suggestion of a last ditch defence before there is a final yielding of the position. I hope that that is the case.
  We have been told, as part of the Government's case, that it would be difficult to get anyone to run nationalised industries if this condition was imposed. I find that sad and depressing, and I hope that it will be proved misguided in the event. My attitude on nationalised industries, as most hon. Members will know, is that I hope that we can reduce the number of them. There are powerful arguments for this.
  Membership of the PAC—whatever members may feel about the NHS—tends to lead to the view on nationalized industries in the public sector generally, apolitical though we are on the Committee, that the public sector presents enormous difficulties. The more that we can move any operation into the private sector the better it is likely to be performed and the more conscious husbanding of resources is likely to be imposed.
  I hesitate to intrude too much of an entirely political viewpoint into the debate but the move should be towards reducing the public sector as much as we can. The Government are already committed to finding fewer chairmen and board members of nationalised industries because they are committed to privatisation wherever that is possible and sensible. I should have thought that somebody really worthwhile would, for example as chairman of the Chloride group, accept as a fact of life that those who provide the money require from time to time an explanation of how the money is used. He would also then expect, and take it as a fact of life, that where it is the taxpayer who is providing the money, the taxpayer too should have, within the limits that we have just talked about, an explanation of the use of those resources.
  There is a crying need for this action in respect of the nationalised industries. I doubt whether anyone in the House needs persuading about the enormous problems that there are in controlling these industries. Tremendous progress has been made in bringing private sector industry

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  back to reality—and a harsh reality it is, too. We all know that, but we also know that unless we pay our way in the world there can be no private industry.
  However, that is not true in the nationalised sector, at least not in the medium or even the long term, as my right hon. Friend the Financial Secretary pointed out in the debate on 30 November. He said:
  "we fully share the PAC's concern about the need to promote the efficiency of that sector. That is particularly true where competitive pressures are weak or absent."—[Official Report, 30 November 1981; Vol. 14, c. 48.]
  This is precisely the problem—competitive pressures are weak or absent and nationalised industries are also subject to another pressure. They are subject to strong trade union pressure and in many instances trade union monopoly pressure. That is pressure organised not by the ordinary workers but by a small handful of workers.
  I do not wish to get into the heavy political points of this issue but it would be difficult to deny that in any of these sectors it tends to be a very small group of trade union activists who wield the levers. They can do so because of the monopoly position that the particular industry has and the few unions that there are. The whole thing is a very unhealthy and uneconomic waste of resources.
  Surely, if there is one other lever that can be used by the Government and the British people in exerting common sense, the opportunity should be grasped. The PAC, with the work of the Comptroller and Auditor General, is the very epitome of common sense. I challenge anyone to suggest that any of the reports that we are discussing tonight are not based on bipartisan, across the Floor, good British common sense. If we could bring that into the nationalised industries, we should all be the gainers. The Government should understand that they have a great need for such mechanisms because there are all too few of them available.
  For example, I have to declare that I am, at the very best, an agnostic about Sir Derek Rayner's exercise. I recognise his great experience and the amount of effort that he has put into the job while at the same time, remaining the joint managing director of Marks and Spencer. However, there is a great difference between running Marks and Spencer and any other business. There is also a great difference between running a particular business and putting the Civil Service machine right.
  Obviously, there is a great deal that Sir Derek can contribute. Given my own background, I retain some links with the bureaucracy. The stories coming to me from many friends within the bureaucracy, who are as dedicated as any hon. Member to the sensible use of public resources, tend to suggest that sadly, Sir Derek's exercise is a great deal less effective than some of us would hope that it should be, or than some ministerial statements suggest that it is.
  I hope too, if the Government examine this problem, that they will look again at what happens now with the disappearance of the Civil Service Department and its merger with the Treasury, a point touched upon by my hon. Friend the Member for Horsham and Crawley. I believe that this was right. I think, sadly, that the concept of the Civil Service Department was questionable from the beginning. In the event, it is probably not too unfair to say that it became very much a lever and spokesman for some of the Civil Service unions rather than a tool for the
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  Government of the day to achieve a modern Civil Service that would use properly the tremendous human resources available in that body.
  My solution would not be to call for a stronger version of the Prime Minister's office. A strong case exists, I believe, for what I call a restructured Cabinet Office. Departments can easily lapse into paddling their own canoe and furthering their own departmental issues. This means that any Cabinet loses cohesion and coherence. Cabinet Ministers sitting around the table at their meetings are obviously not the vehicle for the sort of long-term thrust to which reference has been made. This is, therefore, not the occasion to ride with any great intensity my hobby horse of the need to restructure the Cabinet Office. I believe, however, that this is an area where government and administration could be improved.
  One other item that over the recent months and weeks of our work on the Public Accounts Committee has caught my eye is the use of public funds in the creation of jobs whatever the development agency involved or whichever part of the country one cares to choose. We have been presented with depressing figures of jobs that have cost £30,000, £40,000 or £50,000 each. This might have been acceptable but for the fact that all too often we have found ourselves examining projects where the jobs have not lasted. There may have been expenditure of £40,000 or £50,000 per capita. Yet, after 18 months, or two or three years, the jobs have disappeared.
  This is an alarming and depressing lesson from which we must learn. I feel often that if one took £50,000 into the street in any of these places and handed it out on a random basis, one would probably find that three out of four would drink it all away but that the fourth might set up a small business that would employ the other three. This would achieve a better result than all the complicated cost-benefit analyses, feasibility studies and all the rest involved in public funding. Once more, I find myself stepping into a partisan area. I shall step out of it again. I suggest however, to Opposition Members that if they study some of the evidence that has been presented, they will find it difficult not to come to the same conclusion.
  I urge the Government to recognise the Public Accounts Committee as a remarkably useful tool. My right hon. Friend the Member for Blaby (Mr. Lawson), in a debate on 29 January 1981, described the Committee as a potent instrument. It is not an instrument in really effective day-to-day use. I hope that the Government will understand the efficacy and the sharpness of the instrument available to them. I hope that they will use it a great deal more effectively than my impression leads me to believe they have done in the past.
  7.27 pm
  Mr. John Prescott: I have the opportunity to break the mould as a non-member of the Committee. I have heard hon. Members complain that there has been no opportunity for non-members of the Committee to speak. If the Committee members were not so concerned to take the opportunity to speak first, other hon. Members might be encouraged to come into the Chamber to discuss the useful work of the Committee. I am sure that other hon. Members would have liked to speak but, with time pressing, they may have become discouraged.
  I wish to refer to three reports, but especially the thirteenth report. I congratulate the Committee on its

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  work. Hon. Members find the reports useful and valuable. I have been helped a great deal in understanding some of the problems with which we are faced. They have assisted me in carrying out certain investigations that I have felt necessary.
  I turn first to the fifth report dealing with regional industrial policy. As an hon. Member with special responsibilities for examining this policy, I was especially interested to read the criticisms of it, most of which criticisms I agree with. As the Committee points out, the £5,000 million spent during the decade has not done a great deal to reduce regional disparity. It has been geared to highly capital-intensive areas. One is therefore led to question such policy.
  To consider giving Nissan £180 million for the number of jobs that would be created does not represent the best use of limited public resources. It is a matter of regional policy to which the House will have to give its attention. The widespread recession induced by the Government means that areas such as the West Midlands and the South-East will be left with high levels of umemployment that, by the standards of the 1950s and 1960s, would be considered mass unemployment. Every region will be concerned about the level of grants that it receives to combat high unemployment.
  I congratulate the Committee on its realism over a possible change of direction in regional policy. I do not accept the Government's call for flexibility in their response to the report. This has led to abolition of the regional planning boards and the IDCs. Local authorities have been attacked for attempting whatever is possible with limited powers to reduce unemployment. The reduction in the number of areas that receive aid shows that the Government have drawn the wrong conclusions from the Committee's report.
  The third report dealing with public purchasing has to be considered together with the Estimates for defence expenditure especially on dockyard services. These matters are causing concern in my constituency and may need to be investigated by the Committee in the future. The report on public purchasing makes it clear that the Treasury guidelines are not solely concerned with cost but have to take other matters into account. This is right. The problems are emphasised in Hull where the Argentine venture means that many trawlers and ferries are being siphoned off, with considerable economic consequences for the port development.
  I do not intend to deploy that argument for long. Nevertheless, compensation policy, as a result of the Government's decision to purchase or acquire vessels, will have a major effect on the economy of the port. It will affect the fishing industry and the landing company which have faced difficulties until now. We now face the fact that less fish will pass through the port. That effect will be exacerbated in the port of Hull by the loss to its income of the trawlers and ferries that are being sent to the Argentine. I hope that Government policy will take account of those considerations rather than be restricted to the narrow compensation that is given to shipowners and trawler owners.
  I shall address my more detailed arguments to the thirteenth report of the Public Accounts Committee which deals with the underwater training centre at Fort William. This is not the first time that the House has had to address
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  itself to a report dealing with that centre. There is a continuing saga of the contractual arrangements that were arrived at between the Manpower Services Commission and the Shenley Trust. I declare an interest. I am a seafarer, am sponsored by the National Union of Seamen and am a diver. My union organises divers in the North Sea. Those are my only interests. I have been anxious to establish a diving centre. I have been raising the matter in the House since the early 1970s. I have been concerned with the death rate of divers in the North Sea.
  We are discussing the Public Accounts Committee's third report on this subject. The first was known as the twelfth report and was published in March 1980. The second was known as the thirty-fifth report and was published in November 1980. The third, which is now before us, is known as the thirteenth report and was published on 9 July 1981. The anxiety that has been consistently expressed in each of those reports has concerned the contract that was negotiated between Shenley Trust and the MSC.
  Although the matter lies within the responsibility of the Department of Employment, there has been much agitation and discussion about who was directly responsible for drawing up the contract. The conclusions that were drawn about the financial circumstances surrounding that contract were rightly pointed out in the twelfth report of March 1980. Its conclusions are relevant to the current report. At paragraph 35 it said:
  "We also consider that the contractual arrangements for running the Centre has unsatisfactory features. The contract with Shenley, a 'cost plus' arrangement, was not the result of formal tendering procedures, but of MSC's consideration of informal proposals from three organisations. This contract allowed Shenley a margin of 70 per cent. over their attributable costs. This appears to us to be an extremely high rate of profit."
  On the information that I have, I fully agree with that conclusion. The House knows that when the matter was discussed that conclusion was seriously challenged by the hon. Member for Honiton (Sir P. Emery) who was then chairman of the Shenley Trust and negotiated the contract. I gave the hon. Gentleman notice only this afternoon that I would raise the matter as I did not realise that it would arise in today's debate. During most of the debate I have been writing notes for my speech. The hon. Gentleman seriously challenged during discussion of the first report on this issue whether excessive profits had been made. I brought another matter to the attention of the House and, by letter, to the Committee. I asked for further investigations into the nature of the contracts and the degree of compensation that would have to be paid for any breach of contract. There is a five-year contract between the MSC and the Shenley Trust for the latter to provide deep sea diving training and to operate the underwater training centre. The chairman of that company was the hon. Member for Honiton who negotiated with another company, of which he was also chairman, which owned the assets of the school. Therefore, the hon. Member for Honiton negotiated with himself as chairman a five-year contract with the MSC to provide training and run the centre, and a 25-year contract to cover the assets. That matter becomes pertinent when the contract with the Government finishes in five years and someone must pay compensation under a break clause in respect of assets that were the subject of the 25-year contract. The matter is not new. The hon. Member for Honiton has expressed in the House his opinion on the circumstances of the contracts.

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  I understand, however, that the Committee has not investigated that aspect. Certainly more than £250,000 must be paid in compensation for the breaking of that contract. It could be more than £300,000. The latter figure has been mentioned in the reports. That circumstance is relevant to the fact that the school now faces closure and possible difficulties in obtaining further finance. After further investigation, having listened to various complaints about the way in which the Committee had reached its conclusion that excess profit was being made, after further evidence and after the hon. Member for Honiton had given more information, the Committee concluded in the thirty-fifth report of 13 November 1980 in paragraph 6:
  "In these circumstances we see no reason to change the views which we expressed in our Twelfth Report."
  Therefore, the Committee made it clear that excessive profit had been made. The House then debated those reports on 28 January 1981. Many views were expressed by Members on both sides of the House.
  Sir Albert Costain: The debate was on 29 January.
  Mr. Prescott: I am grateful to the hon. Member for Folkestone and Hythe (Sir A. Costain) for that correction. I confused that fact with the fact that on 28 January according to an appendix to the thirteenth report the hon. Member for Honiton sent a letter to the Comptroller and Auditor General giving more figures and information about the contract. That was only the day before the debate in the House. Unfortunately, the Committee was unable to take account of that extra information. The letter suggested that the figures that had previously been given were incorrect and that the Comptroller and Auditor General had misled the Committee. That is a serious matter. The Committee, therefore, was anxious to re-examine the level of profitability. I understand that the Treasury made it known to the Committee that it was not satisfied with the contracts and that they should be different in future. Clearly, therefore, there was no satisfactory outcome.
  The new facts that the hon. Member for Honiton asked the Committee to bear in mind—which are in the report before the House today—included the claim that £144,000 out of a total payment of £209,000 to the company were pre-contract costs. Taking account of that information, the return can be seen to be 14 per cent., rather than 72 per cent., which was Shenley's alleged profit. That information was contained in a letter of 28 January to the Comptroller and Auditor General. That led to the third investigation and to the latest report, which is now before us. It was decided to send the letter to the Manpower Services Commission to see whether better information could be obtained for the Committee on the questions posed by the letter from the hon. Member for Honiton, so that a further assessment could be made as to whether excess profits had in fact been made.
  As the thirteenth report shows, the Comptroller and Auditor General made the matter absolutely clear in the information that he gave to the Committee. He said:
  "I also have to inform PAC, on the basis of my access to MSC's books and records, that there is no documentary evidence there to support your contention that the Commission knows that Shenley had major expenses in the preparation of the feasibility study."
  That appears on page 5 of the report, in a letter dated 20 February from the Comptroller and Auditor General to the hon. Member for Honiton. In other words, the Comptroller and Auditor General made it clear to the Committee that
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  the argument for pre-contract money costs certainly did not come from him and that there was no evidence for it in the books of the Manpower Services Commission which he examined before giving evidence to the Committee.
  Appendix III of the report shows the questions posed to the Manpower Services Commission on the subject of pre-contract costs. Questions were put to the commission by my right hon. Friend the Member for Heywood and Royton (Mr. Barnett) in explicit terms. Question (iii) on page 6 of the report reads:
  "Did MSC at any stage of the negotiations, have an estimate of the order of magnitude of Shenley's expenditure on their feasibility study? In particular, did Shenley's proposal to MSC, or the nature of any feasibility work which they carried out prior to the operative date of the contract, indicate that their studies had been in such depth that they might have incurred expenditure of the order of £144,000?"
  Question (iv) reads as follows:
  "When you gave evidence to the Committee in November 1979, or when the Treasury Minute on the Committee's 12th Report of 1979–80 was presented to Parliament in October 1980, had you become aware of any suggestion that Shenley had incurred 'major expenses' prior to the contract"?
  The reply from the Manpower Services Commission was dated 2 June 1981. In view of the controversial nature of this, it is unfortunate that the commission took so long to provide this information to the Committee, which had been dealing with the matter for some time. Nevertheless, the reply should be put on record. The reply to question (iii) was:
  "There is no evidence to suggest that Shenley Trust Limited gave or offered to give an estimate of the costs incurred in preparing their feasibility study."
  The answer continues, but the rest is not relevant to this point. Hon. Members may look it up if they wish. The reply to question (iv) reads:
  "MSC were aware that Shenley Trust Limited had expended considerable time and effort in compiling their report. The report, dated 10 September 1974, states on page 51 that 'over sixty man weeks had been expended on the investigations and various presentations. Sizeable sums have been expended on research work, on travelling to collect information and on the assimilation and sifting of information to its proper phase in the assessment'."
  It continues:
  "If the sixty man weeks mentioned above can be related to the figure of £57,060 for salaries and £31,441 for accommodation detailed in Annex B to Mr. Emery's letter of 28 January then the average cost per week appears to be very high and to need further explanation."
  On my calculations, that means accommodation costs of £524 per man week. I do not know whether the people involved stayed at the Savoy hotel to prepare their report, but anywhere in the country that kind of expenditure requires explanation, particularly when it is taxpayers' money. We spend enough time appointing social security snoopers to discover whether a fiver has been misappropriated by some unfortunate individual living on £40 or £50 per week. Then to find that sums of this magnitude apparently do not warrant proper or adequate investigation is a matter of great concern and reflects considerable prejudice in this matter. It is therefore my contention that on those questions and replies the Committee has not satisfied the House with the information presented in its final report on this. There are more questions to be answered, certainly about the use of taxpayers' money.
  A number of relevant events have occurred since publication of the report. First, the hon. Member for Honiton, who has been adequately condemned by the Committee for making an excess profit, has been

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  knighted, so he has certainly received his awards. The Fort William school is about to close. The Government have just given notice that from April they will refuse to provide any further funding for it, which effectively means that the school will have to close. The industry has said that it is not prepared to finance the school unless the Treasury will allow the industry to finance its schools through tax concessions, which the Government have refused. Moreover, although the Treasury has said that future contracts should be different, it does not seem to want to do very much in that direction.
  The Government's response is itemised in Cmnd. 8413. There they have a great deal to say about other aspects of the Committee's report, but in relation to the underwater training centre and the possible closure of the only major deep sea diving facility in this country, all that the Government have to say, in paragraph 84, is the following:
  "The Treasury, the Department of Employment and the Manpower Services Commission note the comments of the Committee."
  Frankly, that is not good enough. It is not good enough for the Committee, and I am bound to say to some of my colleagues on the Committee that in the light of these judgments their own conclusions are not satisfactory. The Committee took the view that excessive profits were made and that the matter must be considered. Bearing in mind that the Committee has spent some time considering whether it should continue as a public watchdog committee, and whether it should be a more powerfull Committee of the House, with which I agree, I quote from the thirteenth report the Committee's conclusion on this whole sorry affair:
  "We have decided, in fairness to all concerned, to publish all our communications in this matter. These are appended to this Report. We propose to take no further action on the subject."
  It is totally unsatisfactory for a Committee of the House not to follow through the full investigation of the circumstances of this case. Indeed, its credibility as a Committee to which Back Benchers can refer matters of this kind is very much on the line. If the Committee felt that somebody had made an excessive profit out of taxpayers' money, particularly if the person is a Member of Parliament, that person should be asked to pay back those excessive profits. When Ferranti made excessive profits, it was asked to pay the money back. Surely, the logical conclusion for the Committee would have been to achieve at least that.
  I call upon the Committee to produce a fourth report on this due to the circumstances now surrounding the closure of the school. As I have said, in the compensation terms involving the break clause in the 25-year contract for the assets, the cost involved for whoever takes over financing the school may be some £500,000 and certainly more than £250,000. If the industry or the diving private contractors have to take over this school—they are refusing to do so—surely they will be deterred because they may have to face the compensation terms to be paid for the assets involved in the 25-year contract.
  The Government statement on the future of the school and the withdrawal of funds is completely unacceptable. With trade union officials, I am seeing two Ministers in the Department of Employment tomorrow to register our great concern that the school may be closed at the end of this month.
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  The petroleum industry training board will not use its levy to finance the school, and the private diving contractors are not prepared to finance it. Therefore, this country will be denied an important training facility in an industry that is extremely wealthy by any standard. It has the resources for such finance. It trains men in the most dangerous occupation known. The industry has a far greater proportion of loss of life among its staff than has any other. It is, therefore, completely unacceptable that British divers may have to go to France, Norway or the United States for training in proper and actual deep sea diving to get a job in the North Sea.
  The committee should produce a further report on the circumstances of the contract, which will contribute to the closure of the school, bearing in mind that the taxpayer has invested more than £5 million in it and stands to lose all the assets. The taxpayer, yet again, will have been raked off by a few individuals, to the detriment of the safety of the men working in the North Sea.
  We call on the Government to say that they will considr this matter and that the Public Accounts Committee, which is the watchdog of this House on the use of taxpayers' money, will yet again look at the important issuee involved in the contract. It is essential that we maintain the diving school and essential for the credibility of the House that the Public Accounts Committee should spend more time investigating the circumstances of the contract.
  7.50 pm
  Mr. Geoffrey Dickens: In my short speech I shall allude to the seventeenth report dealing with financial control and accountability in the National Health Service. However, before doing so I congratulate the hon. Member for Kingston upon Hull, East (Mr. Prescott) on his speech on deep sea diving. Last week I was at the Capper-Neill factory in Preston and was able to see some of the equipment that is under construction and the safety back-up equipment. The grave dangers were pointed out to me, as was the need for support lines, services and equipment in deep sea diving. The work commands a tremendous amount of my respect.
  I am certain that, in common wth other Governments, the previous Conservative Government made their fair share of mistakes. Local government reorganisation was not a great success. There was some doubt about the Conservative Government's actions over devolution for Scotland. Inflation-proofed pensions have proved to be a snag. They are nice for hon. Members and others who enjoy them, but they cause great ill-feeling among others.
  The restructuring of the National Health Service by a Conservative Government in 1974 was not a success, and we have recently had the pleasure of unscrambling the position ourselves. That was a useful exercise. I have carefully examined some of the questions asked in the report, and I congratulate the members of the Public Accounts Committee on their questioning and their in-depth supplementaries.
  I do not serve on any of these Committees, and I wonder whether this annual ritual all that it seeks to be. The people examined are permanent secretaries and the chairmen of regional health authorities. They are eminent people, but they are heading-up certain areas. They are the experts, but often the answers that they give are extremely shallow. Sometimes they defend against a difficult

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  question, as a good batsman should, but I am certain that at other times they do not have notice of some of the questions where much information is needed.
  I shall quote a classic example from page 37 of the seventeenth report. The hon. Member for Folkestone and Hythe (Sir A. Costain), said:
  "The catering industry is not noted for its honesty. How many cases of pilfering or fraud have come to light in the last 12 months to your knowledge?"
  The permanent secretary replied:
  "I wish I could give you an accurate answer to that question. I am afraid we do have, in the National Health Service, a relatively high level of pilfering and quite a lot of it, as I have always understood it, is in the catering departments. I could try and get you a better answer if I can."
  The questioner, in depth, then asked:
  "It is not unique to the National Health Service; catering generally is rather liable to pilfering. When you compare the different costs and the different values of the various Areas, have there been any inquiries as to how much of this could be due to pilfering or fiddling with the purchase of food?"
  The permanent secretary replied:
  "I am sorry, I do not have information on that in any quantifiable form".
  That may be because such information is not carefully collated or perhaps because the permanent secretary needed more notice of the question, or even that he was badly advised. Whatever the reason, it is a classic example of the fact that in many instances answers to questions are totally unsatisfactory. I have weaved my way through the report, and that is a fairly consistent pattern.
  The questions are first-class. They are the very questions that I should ask if I served on the Committee. Quite often when I read the report I felt "Well, he ought to have asked that question", and later I discovered that it had been asked. I therefore make no criticism of the Committee or the work that it does, because it spends many hours ensuring that people are accountable to Parliament for their actions and what they spend, but, without a doubt, I am suspicious of the system itself, because I am not sure whether it produces the results that Parliament wants.
  The reorganisation of the NHS led to many misunderstandings. For example, the district authorities and the regional authorities were not clear about their defined responsibilities. It was a grave error on our part to have reorganised the NHS in such a way, and I hope that the responsibilities of the new organisation will be much more clearly defined.
  About 930,000 people work in the NHS. That represents 4 per cent. of the national work force. A total of 73 per cent. of the money in the health budget goes on wages for that vast work force. As I read the report, I thought about the claims of the nurses, auxiliaries and domestics for more money. I thought that if one could effect sensible savings and economies one could, perhaps, find something immediately for the nurses. However, I then weighed that consideration against the fact that 73 per cent. of Health Service expenditure goes on wages alone.
  That poses further questions. For instance, a great responsibility is placed in the hands of our local general practitioners. Whether they know it, or whether we understand it, they undertake a procurement role on behalf of the Health Service. Every day in their surgeries they make out vast orders for drugs to be obtained from random chemists. For example, patients who live in London can
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  take their prescriptions to any chemist, yet those prescriptions are really orders placed on behalf of the NHS.
  Let me give a classic example. For many years, I have been taking tablets to control blood pressure, and have done so under three different doctors. Each has prescribed completely different tablets, which I think do the same thing. At any rate, I am still surviving. However. I do not know which of those tablets costs the most. I cannot judge the tenacity of the pharmaceutical salesman who persuades a doctor that his is a new, better, improved, slower-dissolving tablet than the one used by the GP's father when he was in practice and which may be prescribed elsewhere in the country. Doctors are daily making out hundreds of thousands of orders on the National Health Service. Many of their patients are on tablets for the rest of their lives, day in and day out. We were talking not long ago about the optical cable coming into our homes. Loosely, this can be described as a laser beam cable through which services arrive at our homes. Heaven forbid, but it means that we may have more specialised television channels from which to select, which will require from us yet more decisions every day. There is also the possibility of our reading our gas and electricity meters from the optical cable. Furthermore, a burglar alarm can be attached to the device.
  It has even been said that we could have a doctor service to the home through such a cable, by which one taps out one's symptons and receives back a prescription or some method of curing oneself at home. I think that that is already done in remote countries where doctors are scarce and distances long. The system is certainly used in teaching.
  If that is possible, it leads to what I was suggesting earlier—that if one had certain symptons and needed tablets the same tablets should be prescribed nation-wide to cure that condition. We should not have tablets competing with each other. If there are very good blood tablets—the best available—they should be available nation-wide. In that way, the tablets would be much cheaper.
  Surely such a controlled system would be preferable and could be devised without taking all individual responsibility from the doctor. We must have some control over the vast expenditure daily being prescribed by our GPs. That is one tiny element of health expenditure on which, surely, something can be done.
  Speaking of supplies in general, one cannot walk round a hospital such as one of the many in my constituency without someone saying "If only someone could do something about these wastages". Others say "The money wasted here is nobody's business". But it is somebody's business; it is the taxpayers' and Parliament's business.
  However, I do not believe that any Public Accounts Committee, interviewing the people it does, however good, can produce the right answers. In order to do that, one has to go lower down the line. I do not venture to suggest how we can do that without taking responsibility away from those we appoint.
  The terms of reference of the PAC state:
  "The Committee shall have power to send for persons, papers and records, to report from time to time, and to adjourn from place to place.".
  "Persons" does not mean the permanent secretary all the time. Surely it does not mean only the chairmen of the regional health authorities and their expert accountants,

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  advisers and so on. Surely from time to time it can mean people from lower down the line where one can find how bits and pieces disappear or are wasted and where we can save money.
  If we can save money we might be able to do more for the nurses. I am pleased that the Government have announced that they are developing a system to be implemented next year whereby the nursing profession does not fall behind everyone else, as it has done under successive Governments. Like many others, nurses need immediate help. If I were a ferret I could find that immediate help within the PAC report, but I do not know how we can do the job better.
  It is easy to criticise the system, but it takes a far stronger advocate and a more knowledgeable person than myself to suggest how we might go about making improvements. I am sure that we ought to examine how we take evidence and, more important, from whom we take evidence.
  I must conclude, because other hon. Members wish to speak. I congratulate the members of the PAC. I do not claim to have read all the reports, but I have scanned them. I think of the hours spent on that work and I wonder whether they have been spent wisely. I am sure that the work has been useful, but I am not certain that it has been done in the right way.
  I hope that my hon. Friend the Financial Secretary to the Treasury will offer suggestions on the search for knowledge and accountability and on how we can effect savings and a war on waste.
  8.6 pm
  Mr. Tam Dalyell: At 4.45 pm I warned the Foreign Secretary that, as the attendance in the House was sparse, I hoped to raise a second Adjournment debate on the issue of the Falkland Islands and the views of some of us who dissent from the consensus. I also informed the Speaker's Office that, because few hon. Members were present for the debate on the PAC reports, I hoped that a second Adjournment debate would be possible.
  My actions had an electric effect, thought not the effect that I might have desired. The Government Chief Whip came into the Chamber, made his dispositions and we have had speeches from the Conservative Benches that may have been longer than they would otherwise have been and some hon. Members who did not hear the opening speeches have come hastily into the Chamber, clutching their PAC reports, to make sure that the Falkland Islands debate does not take place.
  We have seen another demonstration of how the House can work, but may people outside will find it extremely odd that in this hour of crisis——
  Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. The hon. Gentleman has made his point. We ought to get back to the debate on the PAC reports.
  Mr. Dalyell: I hope that the point is indeed made.
  As the second Labour non-member of the PAC to take part in the debate, I join my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) in saying that it is right that those who are not current members of the PAC should comment on the work of our colleagues. I do so willingly, because for four years and under three Chairmen I was a member of the Committee and I know how hard
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  our colleagues work. It is a valuable part of the work of the House and deserves more scrutiny than it normally receives.
  My hon. Friend the Member for Kingston upon Hull, East has given a classic example of how PAC debates can be properly used by those with expertise in certain areas, such as diving, legitimately to pursue a cause such as my hon. Friend has advocated so effectively. It would not be out of order for me, as a Scottish Member, to pay tribute to my hon. Friend for the work that he has done on the Fort William centre, which I have visited, and for the diving community, some of whom I represent.
  As my hon. Friend the Member for Fife, Central (Mr. Hamilton) justifiably said, on the last occasion that we debated PAC reports—in November last year—I spoke at inordinate length. My speech concerned the specific issue of Leyland Bathgate and the cannibalisation of the Leyland tractor line—a public asset which has been sold for private profit.
  Having made that speech, and with the good will of the Chairman, my right hon. Friend the Member for Heywood and Royton (Mr. Barnett), on the morning of 1 December—within 18 hours—I went to see Mr. Gordon Downey, the Comptroller and Auditor General, Philip Cousins, the secretary of the Exchequer and Audit Department, and David Myland, who is responsible in the Exchequer and Audit Department for industrial matters. I gave them the many facts that were at my disposal about the sale of the tractor line at Bathgate from Leyland to Marshalls of Gainsborough. I asked them to try to establish the truth and to clear up as soon as possible the putrid atmosphere in my constituency and the suspicions and rumours that were prevalent at that time.
  I thought that that would be done, possibly before Christmas, but if not, at least just after Christmas. In fact, the matter has not yet been cleared up. Certainly, I acquit the Comptroller and Auditor General and my colleagues on the Public Accounts Committee of any sloth in this matter. On the contrary, I know for a certain fact that they have been working extremely hard on the whole Bathgate issue. I simply put down the marker, without going into more detail, that delay in such cases involves very real problems. People want matters such as this cleared up one way or the other. That is why I asked the Prime Minister the question which my right hon. Friend the Member for Heywood and Royton dealt with at considerable length in his speech.
  This is an ongoing issue. I leave it with total confidence in the hands of my right hon. Friend the Member for Heywood and Royton and other right hon. and hon. Members knowing that they will pursue the matter and come to some conclusion. The issues encapsulated in the Bathgate case are of continuity importance, and are not of ephemeral significance.
  In the light of this experience, I am greatly tempted to bother the Comptroller and Auditor General on another issue, the question of the expenditure of public money in relation to Motec of Livingston—the proposed closure of the road transport industry trading board unit. That establishment caters for apprentices, and a great deal of public money—£4 million and £2 million worth of equipment—has been poured into training apprentices, not just from Scotland—from which only 30 per cent. come—but from the north of England. That establishment

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  has built up simulators for faults, paint shops and all sorts of other purpose-built equipment, with accommodation for 200 apprentices on concentrated courses.
  It is little short of wicked, at this stage in our industrial history, when this nation depends so greatly on skill, that we should even contemplate closing such a place. My hon. Friend the Member for Kingston upon Hull, East, who is responsible for regional development policy in the Labour Party, knows very well how important it is to have national skill centres in the regions. Motec is such a centre, and the whole question of closing Motec, and saying that it is, of course, the business of the road transport industry training board, that Governments can pass by like the Biblical Levi on the other side of the road, wash their hands of it, simply will not do in terms of the expenditure of public money.
  I therefore put down the marker here and now that if, after a month, when final talks have taken place, the decision goes ahead to close Motec, I shall be running along to Audit House to ask for the kind of investigation that I believe is legitimate.
  As a result of all that happened, at the request of the Secretary of State for Industry I had an hour and a quarter interview with Sir Peter Carey, accompanied by the Minister of State, the hon. Member for Kingston upon Thames (Mr. Lamont). We await the outcome of those discussions. I hope that the Public Accounts Committee will look at the basic issues. It may well be that, having taken evidence from Jimmy Swan, the convenor of shop stewards at Leyland Bathgate, and from Sir Michael Edwardes, it will come to some definite conclusion.
  Another matter that I wish to raise concerns the work of the PAC in relation to the financial control of the British National Oil Corporation and the advances to the British Gas Corporation. Along with other hon. Members, I was concerned with the marathon work on BNOC and the setting up of Britoil. As a principle, should not the PAC be able to pursue public money, and the scent of public money, wherever it may lead?
  In all the negotiations in the setting up of Britoil I hoped that there would be the access for the PAC that there should be. If anyone needs a reason for that, look at what happened in relation to Amersham and the underwriting of the shares. It is wrong that the PAC should be denied access, along the lines described by the Secretary of State for Energy in the Committee discussing the Oil and Gas (Enterprise) Bill.
  In the light of what was said in Committee—particularly by the Secretary of State for Energy—in relation to Britoil and the British Gas Corporation, have the Government thought any more about the thorny problem of the access of the PAC? Although some hon. Members might think that in the present international situation with the Falkland Islands it was not time to dismantle the nation's oil corporation, or indeed to have an upheaval in the British Gas Corporation, there is an issue of principle here for the PAC. The Secretary of State said in Committee that it was a matter for Treasury Ministers. There was no Treasury Minister on the Committee. If it is a matter for Treasury Ministers, we have this opportunity, for at least an undertaking from the Financial Secretary—on which I shall press him either tonight or on some later occasion—that he will outline the Government's thinking on this matter.
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  I wish to raise a separate matter concerning the Science Research Council. I refer to page ix, paragraph 20 dealing with the allocation of funds by the SRC. It says that We board hoped to spend
  "very close to the cash limit of their total grants in aid. In the event the claims for payment have matured more quickly than they had expected, particularly in the last quarter of the financial year, and they were able to avoid excess expenditure only by postponing certain payments."
  I should declare an interest in my capacity as the Opposition spokesman for science. I have gone into this matter in some depth, particularly with one of the witnesses concerned, the extremely distinguished former chairman of the Science Research Council, Sir Geoffrey Allen. I refer hon. Members to the answer that he gave to my right hon. Friend the Member for Heywood and Royton which appears in paragraph 1179 of the report. He said:
  "There is always a difficulty in forecasting on university research grants and this is because we run this unique and valuable system of the inter-connection between the money we put into the universities and money available for research. Since you cannot plan for research, you do not know what you are going to discover, and that is a very important factor in the effectiveness of research. If I can turn to the specific point in this current year, the first thing we did, as soon as we realised we had got it wrong for 1979–80, we halved the over-allocation, we took it down to £3½ million, and then, in September 1980, we took it out altogether and pulled back the whole of the over-allocation for 1980–81."
  I say only to my colleagues on the Public Accounts Committee that the management of research finance, particularly for the more expensive forms of physics, is very difficult. People do not know what they will discover. My right hon. Friend the Member for Heywood and Royton may say that there are no exceptions and may query where things will end if we start to plead special cases. I shall give way to him if he thinks that I am wrong, but there should be flexibility—year in and year out—for scientific research. The situation is not easy when people are dealing with the undiscovered and the unknown. As my right hon. Friend has not intervened I shall take that as an expression of sympathy—if not agreement—and pass, greatly relieved, to another subject.
  I turn to the Committee's report on the cancellation and suspension of arms sales to Iran and, particularly, to paragraph 57. It states:
  "They had therefore made no wholesale transfer of the selling function from the Ministry to IMS although they were making increased use of the company in particular countries where there was clear advantage in doing so."
  That raises the whole question of arms sales. I know that the Public Accounts Committee should not discuss policy, but simply whether expenditure has been properly incurred. However, the philosophy behind arms sales is important. It is fair to point out that just before the separate crises arose, arms were being sold to both Argentina and Iran and spares were certainly sold. Have the Government rethought the whole question of arms sales? It is a temptingly lucrative trade, but some of us think that the policy of many Western countries to do everything that they can by means of advertisements, credit and inducements to sell arms to regimes should be totally rethought. I hope that as a result of the Falklands Islands crisis there will be a complete overhaul of the whole Government machine of arms sales.
  Mr. Dennis Skinner: Although my hon. Friend said that the Public Accounts Committee did not discuss policy, I think that he will agree that if the selling

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  of arms to Fascist regimes—or, for that matter, to any regimes—results in the taxpayer bearing an enormous amount of expenditure as a result of such folly, or in the taxpayer bearing the cost of the task force being sent to the Falkland Islands, it becomes a matter of concern, indirectly, to the Public Accounts Committee. It will examine a tremendous amount of expenditure that would have been avoided if there had been no arms sales.
  Mr. Dalyell: My immediate instinct is to agree with my hon. Friend the Member for Bolsover (Mr. Skinner) that it does become a matter for the Public Accounts Committee, but since the Chairman of the Public Accounts Committee is keeping a beady eye on me, it may be that his opinion on whether it is a matter for the Public Accounts Committee will be more worth having than mine. I have long since learnt not to tell my colleagues what is their business in Committee. This is a serious matter with which we should be concerned.
  I turn to the cash limits in for the Ministry of Defence. The projects to which my right hon. Friend the Member for Heywood and Royton referred are mind-boggling in terms of cost-effectiveness. Difficult though it may be and misinterpreted at this moment though it may be, there is some obligation to monitor the costs of the task force. In the debate on the Falkland Islands on 7 April, I interrupted the Secretary of State for Defence and asked innocently:
  "What is the cost of all this? Will it come from Departments or from the public sector borrowing requirement? Is there any estimate of the cost?"
  The Secretary of State for Defence replied:
  "We have made no estimate of costs. We are concerned with the success of the operation."—[Official Report, 7 April 1982, Vol. 21, c. 1049].
  I noticed in The Observer that the top saying of the week was
  "We have made no estimate of costs".
  On the following day, 8 April, my hon. Friend the Member for Fife, Central returned to the subject in Prime Minister's Question Time. He asked:
  "Does the Prime Minister agree with the statement made by the Secretary of State for Defence yesterday that the Falkland Islands exercise will go ahead, regardless of cost? Has she any idea of what the cost will be—£ 100 million, £500 million, £1,000 million? How will it be paid for, and how does it come within the cash limits of the Ministry of Defence?"
  The Prime Minister replied:
  "I wish to make it perfectly clear to the hon. Gentleman that when this information first came to me—I said when it did—I took a decision immediately and said that the future of freedom and the reputation of Britain were at stake. We cannot therefore look at it on the basis of precisely how much it will cost. That is what the Contingency Reserve is for."— [Official Report, 8 April 1982, Vol. 21, c. 1084.]
  If, as we all hope, no shots are fired, it may or may not be manageable within the Contingency Reserve. But, of course, that does not let us off a certain obligation to monitor costs. However, it is certain that if an attempt is not made to monitor costs at this stage, every excess of the Ministry of Defence for the next year and subsequent years will be ascribed to the Falkland Islands operation. That is a simply marvellous potential excuse for any excess spending in future.
  I prophesy—I do not prophesy many things—that next year and the year after, as my right hon. Friend the Member for Heywood and Royton goes on with his work, defence officials will come before him, and whenever any excess expenditure is questioned by my right hon. Friend
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  or by hon. Members on the Public Accounts Committee the answer will be the same—"We have to attribute it to the Falkland Islands operation". That is one reason why an attempt should be made at costing.
  In the third report of the Public Accounts Committee the question is raised of the air-to-air refuelling tanker fleet, a subject upon which we also took evidence, which showed the importance of interrelating decisions in different parts of operational planning. For example, a costing should be carried out of the use of Vulcans and the air-to-air fuelling that would be involved. Some of us are deeply alarmed by the talk of the use of Vulcans. They could be used for attacking the landing strip at Port Stanley or for going further and taking retaliatory action against land-based Argentine forces on the South American continent. Once any missiles or bombs fall on the South American mainland the fat will be in the fire, because that, above all else, will unite the Spanish world against us.
  It would be folly of an extraordinary order to fire any rockets or missiles upon the South American mainland. All South American countries, Right, Centre and Left, including many who have suffered on the Left through Right-wing Governments, will unite behind their flags against us. That is becoming clear in Argentina. Perez Esquivel, a Nobel prizewinner, a man who has been tortured by Right-wing Governments, has come down on the side of the light blue and white flag on the issue of the Falkland Islands, the Malvinas.
  I was the leader of a parliamentary delegation to Brazil and I found exactly the same thing on the Right, on the Left and in the Centre. It was generally believed that the Falkland Islands belonged to a South American State. Those who are in a minority in Britain—possibly it is not such a tiny minority as many think—are deeply disturbed by events, especially by the assumption of Sir Nicholas Henderson and others——
  Mr. Deputy Speaker(Mr. Bernard Weatherill): Order. The hon. Gentleman is straying somewhat from the report of the Public Accounts Committee.
  Mr. Dalyell: I shall come back very near home, Mr. Deputy Speaker. I am concerned that the PAC should monitor the costs that will accrue to my former employees, the P. & O. following the conversion of the "Canberra" and the "Uganda". Before I came to this place I worked for two years as a director of studies on the "Uganda's" predecessor, the "Dunera". I have sailed also on the "Uganda". If anyone is thinking of the Uganda as a hospital ship, he must be expecting a great many casualties.
  Mr. Deputy Speaker: Order. We are discussing the reports of the Public Accounts Committee, not what is not in them.
  Mr. Dalyell: I thought that it was in order, Mr. Deputy Speaker, to suggest as tactfully as I could to the Chairman of the PAC, my right hon. Friend the Member for Heywood and Royton, what he should be considering currently. The issue of British Leyland drives a coach and horses through the understandable views of the hon. Member for Folkestone and Hythe (Sir A. Costain) on matters that are post mortem. I thought that the PAC had accepted the principle that it should consider current issues as opposed to those that are post mortem and have ceased to be topical. With all the tact that I can deploy, I suggest

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  that the PAC should examine the cost of converting the "Uganda" under pressure to ensure that the Government are not rooked. When contractors know that a job must be done they can put on it the price that they like. They know that the Government must convert the "Uganda" come what may, and so there is a danger that they will up the price. The PAC should be examining the financial undertakings that have had to be given to get the job done quickly.
  The same consideration must be given to the conversion of fishing vessels into minesweepers. We should look at the value for money of converting fishing vessels with metal hulls to minesweepers. Anyone with technical knowledge knows that a minesweeper needs a plastic or wooden bottom and not a metal one.
  Mr. Tim Sainsbury: On a point of order, Mr. Deputy Speaker. Could you help us by pointing to the part of the reports that deal with that interesting aspect?
  Mr. Deputy Speaker: I am grateful to the hon. Gentleman for his help. I am listening to the hon. Member for West Lothian (Mr. Dalyell) carefully. I have been in the Chair for only five minutes. I do not have the benefit of having heard what the hon. Gentleman said before, but I repeat that if the hon. Gentleman would be kind enough to look at the Order Paper he will find that we are discussing the first to seventeenth PAC reports. I understand that he is touching on what the PAC might discuss in the future, but I believe that we have heard enough of that.
  Mr. Dalyell: It is my particularly good fortune that during my speech there should be a change of Deputy Speaker.
  I do not have all that much sympathy for the hon. Member for Hove (Mr. Sainsbury). He has been wheeled in by the Government Chief Whip to stop me getting my second Adjournment debate, when all these matters would manifestly have been in order.
  Mr. Deputy Speaker: Order. That is definitely out of order. On this Adjournment debate we cannot discuss second Adjournments.
  Mr. Dalyell: I am always obedient to the Chair.
  These are matters for Parliament. The Falklands operation is a matter for Parliament for a particular reason. It is being conducted by very few Ministers. I have been a Member of the House of Commons for nearly 20 years. I am appalled to learn how many Ministers in the Cabinet say that they have not been properly consulted. The Prime Minister is conducting the operation.
  Mr. Deputy Speaker: Order. The hon. Gentleman knows that he is now out of order. He is an experienced parliamentarian. I ask him to come back to order and deal with the subject being debated.
  Mr. Dalyell: As my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) reminds me, this is a debate on the Adjournment of the House.
  Parliament should fight for more and more say in these matters, especially as the policy is being run by the Prime Minister, her Secretary of State for Defence, who wants to save his reputation, a Foreign Secretary new to the job and a principal private secretary, Mr. Clive Whatmore, who, from hearsay, is exercising great power. It is a power absolutely out of keeping——
  Sir Albert Costain: On a point of order, Mr. Deputy Speaker. Are we not creating a dangerous precedent if, in an Adjournment debate, we can talk on anything that we wish?
  Mr. Deputy Speaker: Unfortunately, the Adjournment debate is very wide. I understand the hon. Member for West Lothian is coming to a conclusion. In persisting in his line of argument he is keeping out other hon. Members, including his hon. Friends, who have been here all afternoon and wish to take part in the debate.
  Mr. Dalyell: That consideration weighs heavily with me. If others, such as my hon. Friend the Member for Huddersfield, East (Mr. Sheerman), who has been here a long time, wish to speak, that is a good reason for me to sit down.
  8.38 pm
  Mr. Tim Sainsbury: It is usually a pleasure to listen to the hon. Member for West Lothian (Mr. Dalyell). He puts his points cogently and they are usually interesting. However, I hope that on this occasion the House will forgive me for not following him. He trespassed on the indulgence of the Chair and strayed a long way from the reports that we are discussing. I appreciate that he wishes other matters to be discussed, but in any debate on any subject certain right hon. and hon. Members will always regard other matters as needing the urgent consideration of the House and the pressing attention of hon. Members. The hon. Gentleman cannot complain that the Committee's reports, which most hon. Members regard as of exceptional importance, are not deserving of debate even when other matters press upon us.
  The reports cover a wide area and I wish to say something about four of them. I apologise for not being present at the beginning of the debate. The Public Accounts Committee in its reports must steer between two dangers. The first is that of paying too much attention to the detail. The old story that the time spent on discussion varies inversely with the sum of money involved can on occasions become only too true. The other danger is that the Committee will consider the broad issues and the way in which the money is spent rather than the value for money that is achieved, which I am sure is its main objective. No one would disagree that manpower is the critical element in any area of cost. If one can control manpower, or achieve the correct balance between the number employed and output, one can be reasonably sure of getting value for money.
  The sixth report is of great importance, because it is addressed to th control of Civil Service manpower.. It emphasises the link between the costs of running the Civil Service and the number of people that it employs. However, I stress to my hon. Friend that it is more than that—it is the relationship between the total costs and total output of the Civil Service.
  Paragraphs 6 and 7 of the sixth report are especially revealing, because they highlight the inadequacies of our previous methods of controlling the efficiency of the Civil Service. Paragraph 6, at page vi, emphasises that the Civil Service Department accepted that its view did not always prevail, but that its business was not to "second guess" but to help Departments to establish satisfactory control systems. If it is the Department's business not to second

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  guess but to help people to establish an appropriate control system, it is not doing that job adequately. Surely the essence of the whole thing is to ensure that there are adequate control systems. I hope that now that my hon. Friend and the Treasury have control of such matters they will ensure that every Department has adequate control systems to ensure managerial efficiency within the Civil Service.
  In paragraph 7 the Civil Service Department correctly emphasises the shift of its manpower control system increasingly towards the assessment and monitoring of departmental control systems. However, it is clear from reading the report that that was not carried out adequately. The recently published, well-received and widely commented upon report of the Select Committee on the Treasury and Civil Service again highlighted the need for more attention to be given to the vital problems of the efficiency with which we use manpower and to ensuring that in every area where Civil Service manpower is deployed there are proper control systems, that managerial efficiency is high and that those who have a responsibility for exercising that managerial efficiency are appropriately trained and rewarded.
  The same theme of manpower control and efficiency also comes out in the seventeenth report on financial control and accountability in the National Health Service. By coincidence, again we find that it is paragraph 6 on page vi which highlights the problem, and it is rather horrifying reading, because one finds that
  "the number of NHS employees has more than doubled to over 930,000 whole time equivalents"
  since 1948. That is a considerably greater number of employees than in the whole of the Civil Service, and it highlights the need in the National Health Service for the sort of managerial control over use of manpower for which I have been emphasising the need in the Home Civil Service.
  Reading the report gave one little confidence that there was any great regard for efficiency throughout the NHS. It seemed to me that the report highlighted one matter that is perhaps the key to achieving the sort of performance that one ought to get in the use of manpower in the NHS—the use of comparative statistics.
  Not only are there different regions in the health service, but there is a system of districts, as well as individual hospitals and individual units, many of which are extremely comparable. It seems to me appalling that more use is not being made of comparing the number of people employed to achieve a given function in comparable areas and in comparable hospitals and other NHS establishments.
  Paragraph 11 of the report says:
  "We recognise the difficulty of attempting overall staff planning in the NHS, but taking account of the points we make below, we doubt whether the present largely devolved system of control in England has ensured that the numbers of staff employed have been limited to those strictly necessary to meet the objectives of the NHS."
  One could say that in some ways that is the understatement of the year.
  I think that everyone in the House would agree that there is profound reason to doubt whether we are getting efficiency, not so much in the use of nurses and the trained staff in the National Health Service, as among the large numbers of ancillary staff—the cleaners, caterers and the
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  laundry side. Anyone going into hospital is likely to get the impression that there is a lack of efficiency in those areas and of real managerial control in large areas of cost. I suggest that it is in those areas that we should not only look at the comparative statistics, but should take the very considerable opportunity that exists to improve efficiency by introducing the element of competition.
  I see no reason why the catering, the cleaning or the laundry in many of the units could not be put out to private sector contractors and let on competitive tender. If that were done, very likely a lot of the work would be performed better and more cheaply, and there would be more money left to spend on the vital health aspects of the NHS.
  The tenth report, dealing in part with museums and the arts, refers to the problem of obtaining inventories of what is contained in some of our great museums. Paragraph 27 states that the Science museum and the Victoria and Albert museum each have about 1 million objects in their collections. One can understand the difficulties, but I am rather appalled to read that it might take up to 20 years to get an inventory. The need for an inventory is to find out what is there, what is not there, and what should be there.
  Paragraph 28 mentions one of the reasons why the inventory will take so long. It is due to
  "the problems of identification and description of many of the objects."
  If the objects cannot be identified and described, one wonders what they are doing in the museum.
  This is an area in which there is considerable scope for the use of modern technology. If, perhaps with Government help, we could introduce all the systems of information technology which the Minister for Industry and Information Technology is so keen to promote, it would not only greatly improve the recording of the inventories of our great museums; it might provide an opportunity to export British skills in this area to other countries and thereby provide more employment.
  I could not support more strongly than I do what is said in the fourteenth report about the need to look for some system of achieving carry over. Surely in this day and age we should be looking at the cash control and the cost of a project rather than at the amount of cash that is spent in a year. I congratulate the members of the Committee on the work that they have done. I only wish that there were more time for the House to discuss their valuable reports and perhaps find more effective ways of ensuring that their recommendations are acted upon.
  8.50 pm
  Mr. Barry Sheerman: It was with a sense of supreme irony or déjà vu that on the second occasion I have been waiting to speak on this important subject of the Public Accounts Committee and its reports, I was worried that my hon. Friend the Member for West Lothian (Mr. Dalyell) would pip me at the post as he did on 30 November. On this occasion I have triumphed. I shall be brief and not deal with the detailed aspects of the reports, although I wish to go through a catalogue of them. I shall deal partly with those matters that I wished to discuss on 30 November. I have every right to do that because those matters are involved in the first special report.
  I have been a member of the Public Accounts Committee for exactly one year. Membership of that Committee has been one of the most educative experiences

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  of my three years in the House. Members of the public sometimes under-rate the political skills that are necessary to be a fully effective Member of the House. It is a pity that very often they do not understand the work of the Select Committees, and the central task that the Public Accounts Committee is given.
  These political skills are important, and they are not magically endowed. I believe in the process of apprenticeship, and I hope that in the coming years, if I am fortunate enough to remain a member of the PAC, I shall develop the skills to the extent shown by hon. Members of the Committee from both sides of the House. To extract the right kind of information, or even a small percentage of it, from the witnesses whom we call needs a great deal of political skill.
  It has been a good and historic year to be a member of the Public Accounts Committee. From 1945 there has never been such a period of intense scrutiny of the work of the Public Accounts Committee or so many debates devoted to its role and effectiveness as in the 1980s. The first special report on the role of the Comptroller and Auditor General was a very important watershed. There was a debate on how a parliamentary system modernises and changes itself in line with the social, political and economic changes proceeding in the world at a very fast pace.
  My right hon. Friend the Member for Heywood and Royton (Mr. Barnett) and my hon. Friend the Member for Norwich, South (Mr. Garrett) made this point succinctly in the debate on 30 November. They said clearly that it has been a long time since the PAC has been modernised and up-dated to meet the difficult task of financial audit and accountability imposed on it over the past 100 years.
  An examination of the rate of change and the flow diagram of public expenditure, reveals that Government expenditure has flowed from areas where it has been directly and obviously Government expenditure into public corporations, nationalised industries and a range of bodies that one would not normally, certainly not in the nineteenth century, have associated with Government expenditure.
  Government expenditure is diverse and sophisticated. A powerful body is needed to pursue that finance and expenditure to the point where it is spent. This process would be greatly helped if the recommendations of the special first report were incorporated in their entirety. This is a critical report. Historians looking back on this debate will see it as an important watershed. If the Public Accounts Committee does not develop in line with Government, social and economic changes, it will be increasingly unable to carry out its central and important task. It will become discredited.
  I do not wish to make any comment about the number of hon. Members present in the Chamber or how many people are occupying the Press Gallery. However, there must be some changes that could be made to bring greater attention in the House to the important reports before us. The absence of heads in the Press Gallery indicates that although we are discussing what happens to taxpayers' money, the great press of this country is lacking in its presence and ability to follow anything above mundane and simple issues. As soon as we discuss sophisticated business that is central to the work of the House, there is a distinct lack of interest in Fleet Street.
  If there is to be a proper audit of Government expenditure, the Public Accounts Committee must have
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  access to all bodies in receipt of money voted by Parliament. That was the central recommendation of the special report. Flowing from that, the report suggests that if expenditure cannot be examined in high spending areas such as local government, the Health Service and nationalised industries, then the Public Accounts Committee and the accounting process of Parliament will fall into disrepute. I feel most strongly that that is the case.
  Some hon. Members have mentioned the difficulty of following and auditing expenditure that has flowed to private industry. As a new member of the PAC, that surprises me. I have spent many hours listening, to evidence given by perhaps the most sensitive of Ministries—the Ministry of Defence, on subjects such as the Chevaline delivery system. If hon. Members are able to cope with interrogating Ministers and civil servants over defence expenditure of the most sensitive kind, how can the Public Accounts Committee not have access to matters concerned with commercial confidentiality? It seem.; to me that we must have either both powers or neither. As hon. Members have remarked, the Public Accounts Committee has shown in the past that it is able to deal with problems of commercial confidentiality and sensitivity. It seems not to be a problem.
  There are suggestions that the Public Accounts Committee is not as efficient as it could be and that it should be scrapped and replaced with something new. There are two arguments of concern for serious students of parliamentary procedure. If the financial checking mechanism is essential to this place, if at the end of the day that is one of our central concerns, it can be argued that we should do it properly and be seen to do it properly. I do not wish to pursue this too far, but the special report of the Comptroller and Auditor General made it clear that the powers of the PAC must be extended to flow where the money flows. That is important.
  There are other matters in the report which were perhaps not appropriate to it but which should be considered with it. If the 15 members of the Public Accounts Committee are to scrutinise the range of expenditure that is involved, surely there should be some mechanism by which they have help in carrying out that very important task. I have spoken to members of legislatures in Europe, the United States and elsewhere. They find it laughable that on a Monday afternoon we may be interrogating Ministry of Defence witnesses about sophisticated missile systems, on the Wednesday interrogating people from the Department of Industry about moneys flowing to ICL and then on the following Monday talking about higher education and so on. The list that emerges from the proceedings of the Public Accounts Committee is enough to make the mind boggle. Even the superhuman individuals—myself excepted—who make up the Public Accounts Committee cannot cope with that job and do justice to it without some research back-up and some help to enable us at least to ask the right questions. My year on the Public Accounts Committee has taught me that asking the right questions is central to the task. If the Committee does not have help in that complex task, it cannot do it properly.
  The second way of considering reform of the PAC is to say that as it has not kept pace with modern changes in Government expenditure it should be abolished. I believe that my hon. Friend the Member for Lewisham, West (Mr. Price) takes this view. It is argued that the new Select Committee structure which parallels Government

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  Departments and which seems to be working well should take over the role of the Public Accounts Committee. Each Select Committee would thus have a financial watchdog role and would check expenditure in that way. That is an intelligent response to the problem, but I believe that it is wrong-headed. I believe that the special report brought forward by the PAC is the right answer and will take us many years forward in the intelligent assessment, scrutiny and audit of Government expenditure.
  I return to the debate of 30 November to which I referred earlier. My hon. Friend the Member for Norwich, South made a highly appropriate comment which is central to this issue when he said that Treasury civil servants opposed these reforms. They always have. Therefore, the Treasury Bench opposes the reforms. It says much for the power of our Parliament that we cannot overthrow the Treasury's will on a matter which concerns the machinery and procedure of Parliament. We must seem to outsiders to be members of a supine and spineless Parliament, unable to retrieve its historic rights over Government expenditure. I believe that that is central to the problem and that all historians will tesitfy that the past 100 years have shown that our State audit system has been steadily weakened by the encroachment of the Treasury.
  We have allowed the rights and duties of the House to exercise scrutiny over the Executive to wither, and our system of State audit has become enfeebled. The time is now overdue for the House to take control of our audit system and to develop it to the point where its scrutiny reaches every corner of public expenditure.
  9.5 pm
  Mr. Robert Sheldon: My first duty, as it has been for a number of hon. Members, is to congratulate the Public Accounts Committee on the work that it has done throughout the year. I particularly congratulate my right hon. Friend the Member for Heywood and Royton (Mr. Barnett), a distinguished Chairman, and distinguished members of the Committee. The increasing amount of work that they bring to us shows their dedication to the task and provides the meat which this debate sets out to consume.
  The essential role of the Public Accounts Committee and its work is to bring these important matters to the House. However, we must remember that in attempting to criticise and be censorious—as we must be—we have the enormous advantage of hindsight. It is a great help to see the two years that followed a decision as well as the two years that led up to it. We do not abuse that advantage, but it is right to remember it.
  I disagree a little with my hon. Friends the Members for Huddersfield, East (Mr. Sheerman) and for Fife, Central (Mr. Hamilton) about the attendance at these debates. It would be nice to have large numbers present, but it is not essential to the work of the Public Accounts Committee. In one sense it is even a mark of confidence in the work of the Committee. We are all aware of the importance of its work. If there was any doubt whatever on the way in which the work was being done, this place would be packed with hon. Members wanting to know how the Committee had let down the House, their colleagues and the British taxpayer. It is because we read these reports, consider the various points and judge that the Committee has been doing its job that we leave these
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  debates to those who have a continuing and special interest. There is no lack of interest. It is a sign of confidence, and my right hon. Friend the Member for Heywood and Royton would be right to bask in the confidence that he enjoys.
  Tribute has been paid to Gordon Downey and Sir Douglas Henley. I echo that tribute. We are right to take note of the great public servants whose skill we can bring to bear on these matters, and the advantage that we have in such civil servants. The present attitude to civil servants does not make it certain that this will continue. We owe a great deal to the senior civil servants and to the NCOs—although I should prefer not to use that phrase. The ordinary British administrators, or senior executive officers, have a reputation for being incorruptible which is higher than in most other countries. They have a reputation for competence that is still strong despite some of the attacks that are made at all too frequent intervals.
  I note the recent statement by the Council of Civil Service Unions that young graduates have been put off the Civil Service by the Government's continual denigration of public service. The recruitment of good staff into the executive officer grade is becoming harder. To my knowledge that is largely true. It has not yet gone very far, but there is a danger that in the denigration of these duties and tasks we are doing ourselves no good. It is up to us to make sure that the standards we call for are met with loyalty and that a proper back-up is provided for those who enter public service.
  The hon. Member for Wycombe (Mr. Whitney) said that the success of the Public Accounts Committee was largely measured by the genuine and quick reaction of Government. We see that quite frequently. The Treasury minute needs a lot of deciphering, both because of the way it expresses itself and because of what it leaves out. However, there is no question but that having come before the PAC those civil servants who have appeared have no wish to reappear. If there is some point that they can meet in respect of the criticism that has been placed upon them by the PAC, they will certainly do so. Appearing in that horseshoe for a second time on a charge identical to the first one is something that no civil servant wishes to do. Therefore, in the vast majority of cases there is a genuine and quick reaction where it can be arranged and achieved.
  Let me first deal with the first special report. Here I fully agree with my hon. Friend the Member for Huddersfield, East. It was the clear view of the House of Commons that there should be access to records. My hon. Friend the Member for West Lothian (Mr. Dalyell) was right to ask for clarification of the Prime Minister's reply to the question that he put to her. It is necessary to know what the Government have in mind to be able to improve this access to records.
  If we look at Cmnd. 8323, we see in paragraph 10—which, incidentally, was quoted by the hon. Member for Wycombe—that
  "The Government are not convinced that it would be fruitful to replace"
  the investigation by the Monopolies and Mergers Commission with the ability of the Comptroller and Auditor General to have access to these records. But no one is asking for a replacement. All we are saying is that in certain cases there should be access to these records. The Government seem to be saying that there shall not be access to these records, whatever circumstances might suggest. The House of Commons must show itself to be

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  master of the control of detailed expenditure in a way that reveals that money has been used for the purposes for which it was intended.
  I fully agree with the hon. Member for Wycombe. How can one think of replacing this kind of scrutiny by the PAC with the activities of Sir Derek Rayner with his few civil servants who go around making suggestions, most of which are largely political, while those that are administrative are of fiddling consequence? I should be delighted to have a debate at any time with the Financial Secretary on some of these matters. That is useful but small, but the work of the PAC is major and important. We cannot compare these two types of activity. We need only think of the way in which we are looking at these reports, and we need only compare their strength and importance with the absence of any report on the work of Sir Derek Rayner to understand the true comparison between the magnitudes that we are discussing.
  My hon. Friend the Member for Flint, East (Mr. Jones) spoke about regional industrial assistance. He talked about the problems we have experienced in trying to define what we get for our money. The PAC was wholly right to try to find some way of assessing the more advantageous ways of obtaining results arising from the expenditure of money so that it could decide its usefulness, in what circumstances it would be more useful, and whether it was the best way to proceed. I agree that it is a difficult task. The Treasury Minute says that regional aid is useful. That is generally accepted, but even if it were less than that it would still be essential, if only to show that we are still one nation and that efforts were being made to diminish the differences that are so apparent as soon as one moves north or west from London.
  Of course, the ideal would be to diminish those differences considerably, but even if the diminution were small or, to take an extreme example, there were no diminution, regional aids would at least demonstrate that the Government accepted that we were one nation. That would be important. However, that is putting the issue far too low. Regional assistance achieves much more than that.
  One has only to look at the infrastructure, where the advantages of regional assistance are clear and apparent, to know that it is worth while. I go further and claim that regional aid has been very important, as we can see from the protests made at the dropping of assisted area status, even in my area of Tameside, where I have talked with manufacturers who have demonstrated the disadvantages that they suffer as a result of being denied useful, if limited, regional incentives.
  The PAC's fifth report makes the important point that regional incentives seem to have been more effective before 1971. That is correct. For regional incentives to have their greatest effect they depend on Government's pursuing expansionary policies. It is difficult to ask some areas to expand when the rest are constricting output. It is difficult to set up such counter-flows and it is easier to improve expansion in one part of the country when others are also expanding.
  The hon. Member for Horsham and Crawley (Mr. Hordern) spoke about other methods. He favours spending money on regional incentives. He understands the sort of political and social problems that I have described, but he thinks that there are other methods to deal with them,
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  including corporation tax reductions and foreign trade zones. His suggestions bristle with difficulties, but perhaps such aspects could be considered in future.
  Paragraph 11 of the fifth report states that the incentives to firms to expand and invest are more important than constrictions on firms wishing to expand in the south-east or, as they did until recently, in the Midlands. We have moved from a carrot and stick policy to a carrot only policy.
  I was always a little uneasy about industrial development certificates, which prevented a firm from moving, because I believed that in some cases they may have prevented a firm from expanding at all. Paragraph 13 of the report suggests that IDCs play only a small part today. We have incentives without many disincentives, and that is right in the present circumstances.
  The twelfth report, dealing with the Inland Revenue, has been mentioned by a number of hon. Members, particularly my hon. Friend the Member for Fife, Central, who referred to the black economy, which, according to one estimate, totals about £16 billion, with a tax loss of about £4 billion.
  Much of that money will inevitably be difficult to recover and would involve only small sums, but we must all be concerned about the standards of compliance and none of us can be happy about how the black economy has developed. The general talk that one hears in pubs, clubs and golf clubs shows that compliance is not treated in the same way as it was treated, say, 10, 20 or 30 years ago. There is no doubt that our standards are slipping, and, once they have slipped, the distance lost is difficult to recover. Much more attention should be given to an improvement in compliance, even if one cannot wholly justify the extra sums spent on it. I notice that the Treasury Minute accepts that, too, and that the Treasury has been spending rather more money on training people for that work. I note, too, that there was to be some taxation of casual and agency workers. Perhaps the Financial Secretary will tell us the Government's intentions in this connection when he winds up.
  The fifteenth report looks at private finance in the nationalised industries. It has always been the view of the Treasury that, to obtain private finance, there must be acceptance of genuine risk. Otherwise, one simply creates a new kind of semi-gilts. If the Government give an assurance that they will bail out that private finance, one has gilts with the same sort of backing as there is for stock that the Government broker sells. The difficulty is to obtain the difference, the risk element, for the private sector to bear. In my view, we shall never resolve this difficulty. I am happy to consider any new suggestions but we have been round this course a few times, and nothing new has been suggested, other than privatisation, with which, for political and other reasons, I disagree.
  My own view is much simpler: the purpose of trying to get private funding is to reduce the PSBR. That is what it is all about. Should we not be a little more relaxed about the PSBR? Is a PSBR that has a large element of genuine investment precisely the same as a PSBR that has a limited amount of genuine investment? Are the people who provide the funds for the purchase of that Government stock so naive as not to draw the distinction between a Government who are genuinely investing—providing they give the information and prove that that is what they are doing—and a Government who are not providing a genuine investment? As a result of the concentration on

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  the PSBR, there has been a decline, year after year, of investment in nationalised industries and in capital investment.
  The easiest solution is to adopt a more relaxed attitude to the PSBR, to explain the kind of investment that is being made, and accept that it is still investment, whether it is private or public. It is the investment that matters, not the manner of its investment.
  I turn now to the National Health Service. The PAC report on the NHS was an important one, and one which dismayed many of us when we learnt what was being done in the financial organisation of the NHS. There was an absence of statistics. Of course, one could always improve statistics, but they are necessary if one is to make comparisons. The whole basis of management expertise rests on being able to compare one fact with another, and one use of resources with another. That is what management is about. It is a matter of saying "Here we have a good operation; there we have a bad operation. How can we improve the one that is not so good and bring it up to the standard of the one that is so much better?" There are various ratios of one kind or another. It is not for me to go into the kind of ratios that the National Health Service requires, but anybody with any knowledge of what happens in management accountancy will know that that is how it operates. That is the way to secure improvements in efficiency and effectiveness.
  The levels of food waste, for example, that are mentioned in paragraph 38 are appalling. We all know that when people go into hospital they may be put off their food a little or may want special kinds of food, but that is not something new. That is something that has to be lived with for 30-odd years, ever since the National Health Service started. Why was no central lead given? I am not asking the National Health Service to dictate what goes on in every hospital, but surely some essential central appraisal needs to be given?
  That brings me to the question of investment appraisal, which is the very tool of management efficiency. The Public Accounts Committee expressed its surprise at the failure to make such investment appraisal. We know that the language used by the Public Accounts Committee is restrained. I was astonished that such investment appraisal was not carried out by the National Health Service. Of course, we know that the medical profession can spread medical knowledge throughout the hospitals and areas in which it operates. However, whose responsibility is it to compare the efficiency of an area with another? Whose responsibility is it, not necessarily to direct, but to inform and to request statements as to what might be done? If it is not the work of the DHSS, it is nobody's. We are not talking about some small fund. We are talking about a major expenditure on which the lives and happiness of so many people in Britain depend. If the DHSS does not know, one has to ask "What does it think it is doing? What does it think it exists for?" It is absurd that we have to ask such questions.
  In paragraph 26 of the report the DHSS admitted that it had no staff figures, other than for doctors and dentists, later than 1979. That is wholly inadequate. I hope that those responsible will not need to come before the eagle eye of my right hon. Friend the Member for Heywood and Royton and his Committee again. I hope that before the Committee comes to look at these matters they will have
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  changed and changed quickly in the way that the hon. Member for Wycombe said. We want a genuine and quick reaction from the Department.
  The Court of Auditors formed part of a debate in which I spoke on European matters about a month ago. Following that debate, I had the advantage of receiving a letter from one of the auditors, our good friend Sir Norman Price, who was in charge on the Inland Revenue for many years who appeared before the Conservative Members, my right hon. Friend the Member for Heywood and Royton and my hon. Friend the Member for Fife, Central in the Public Accounts Committee on a number of occasions. He feels that the Court of Auditors is working along the lines of the Public Accounts Committee and the Exchequer and Audit Department. That is the impression that I received. That is wholly valuable, and it shows the influence that we and our work have brought to bear on a different scene.
  I turn to the Ministry of Defence and its third report. My right hon. Friend the Member for Heywood and Royton pointed out that year after year the cash limits are exceeded. In 1979 to 1980 the cash limit was put at £8,005 million and the out-turn was £8,554 million. That was at a time when there was supposed to be a great control, when cash limits were reaching the peak of their efficiency. I listened with great care and interest to what my hon. Friend the Member for West Lothian said about those matters. There will be no constraint in cash limits for the task force. No one could argue with that, because in an emergency such matters are considered much less important that the task ahead. However, we must consider how the overspend will be financed. We do not know how much it will be or where the money will come from. The contingency reserve will cover so many things and there will be so many calls on it by the end of the financial year that the Financial Secretary, Chief Secretary and the Chancellor of the Exchequer will find themselves hard pressed to meet all the demands that will be made.
  We must ask how the Government will deal with the evident overspend. The Chief Secretary has said that the Government's strategy is well on course and that everything is fine. He has said that there will be no problem, because revenue will be buoyant. However, I do not know how he can say that it will be buoyant when we have only just had a Budget. If he got things wrong only a month ago, I do not know what new information he can have to improve the situation. However, we must ask how the Government will finance the extra, considerable expenditure in a way that will at least be no worse than the Ministry of Defence's unhappy record on control of expenditure.
  The debate has been something of a bran tub. Each speaker has put in his hand and come out with something different. That is the nature of Public Accounts Committee debates. As long as there are hon. Members who keep in touch with some of the work, hon. Members will retain their confidence in the PAC, its officers and distinguished Chairman.
  9.31 pm
  The Financial Secretary to the Treasury (Mr. Nicholas Ridley): I, too, congratulate the right hon. Member for Heywood and Royton (Mr. Barnett) and the Committee on the excellent and valuable work that they do. I shall deal first with the "bran tub" and answer as

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  many points as possible. I shall then turn to more general matters and to the role of the Comptroller and Auditor General.
  It was a pleasure to listen to a debate opened by the right hon. Member for Heywood and Royton and closed by the right hon. Member for Ashton-under-Lyne (Mr. Sheldon). It was just like old times. It reminded me that they must have grappled with the problem of overspending by the Ministry of Defence. As they rightly said, the House and the Public Accounts Committee have been grappling with that problem for some time. There has been a further attempt to implement procedures of financial control in the Ministry of Defence. Changes have been made, and will continue to be made, in that direction. Wherever there is scope for varying the rate of spend during the financial year, it will be actively examined. However, it needs to be recognised that the scope is limited by the long lead times for purchases of major equipment.
  I was asked about Sting Ray. This is an old subject both for the House and for the Public Accounts Committee. On many occasions criticisms have been answered by officials from the Ministry of Defence, although it is for those who have complained to say whether the answers were satisfactory. Since 1978–79 the cost of the project has not increased in real terms. Sting Ray continues to make satisfactory progress and is expected to enter service shortly.
  I was asked about the joint funding of Ministry of Defence projects. The Ministry of Defence attaches great importance to the possibilities for the joint funding of defence equipment. Joint funding has been discussed with industry in the forum of the National Defence Industrial Council. The Ministry of Defence is now actively seeking a number of projects which offer the possibility of putting joint funding into practice.
  The right hon. Gentleman asked also about efficiency incentives in MOD contracts. If possible, MOD contracts are let on a competitive basis with a fixed price. The price of large contracts is subject to an inflation adjustment. But when contracts have to be let on a non-competitive basis, a fixed price, a target price or some other arrangement is used, which leaves some risk and incentive for the contractor. If the term "easy on development" cannot be defined in detail, it is not possible to negotiate a fixed price, at least in the initial stages. The contract is then let on a cost-plus basis. That is avoided wherever possible.
  The Chief Secretary announced recently that the review board for Government contracts had agreed, at the request of the Government and the CBI, to carry out a major review of contract arrangements for non-competitive contracts. An important aspect of this will be the extent to which contract arrangements can lead to improvements in the efficiency of contractors.
  The right hon. Member for Heywood and Royton's next question—one that was taken up by the hon. Member for West Lothian (Mr. Dalyell)—was about the cost of the present operation in the South Atlantic. Incidentally, I must congratulate the hon. Member for West Lothian on having an Adjournment debate within an Adjournment debate. He will not expect me to answer an Adjournment debate other than the one concerning the Public Accounts Committee's affairs.
  Obviously I cannot assess the cost of the operation. No one can, and it would be absurd to set out to put any cost on it. My right hon. Friends have said that the needs of the
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  task force must and will come first, but that its cost can and must be met in ways consistent with the Government's economic strategy.
  Mr. Dalyell: Will the hon. Gentleman give way?
  Mr. Ridley: No. I wish to finish my sentence. Not all of the cost will be additional. Additional expenditure arises only where the cost of the operation proves to be greater than that of the tasks to which the forces concerned would otherwise be consigned. At this stage the extra cost represents a very small proportion of the defence budget of more than £14 billion. There is therefore no cash or budgetry problem immediately in prospect.
  Mr. Dalyell: I asked the Secretary of State for Defence what would be the cost to public funds of requisitioning the liner "Canberra" for naval purposes. The answer came back that it was too early to say. Has not the Ministry of Defence even an estimate of the cost of requisitioning "Canberra"?
  Mr. Ridley: I seek your protection, Mr. Deputy Speaker. I do not know whether the cost of "Canberra" appears in any of the Public Accounts Committee's reports.
  Mr. Joel Barnett: I understand that the Financial Secretary does not know what the total cost of requisitioning the "Canberra" will be. However. there is an important question which I asked him and which is important to public control of expenditure in the Ministry of Defence. I am not in any way seeking to limit whatever the cost needs to be to deal with the crisis, but is the cash limit of the Ministry of Defence still in place?
  Mr. Ridley: Yes. The cash limit of each Department remains in existence. Any cash limit can be agreed, in which case, as the right hon. Gentleman knows, a Supplementary Estimate is presented to the House. That applies to any Department in any circumstances.
  Many right hon. and hon. Members, including my hon. Friends the Members for Horsham and Crawley (Mr. Hordern) and for Hove (Mr. Sainsbury), consider internal audit to be of the greatest importance. The present programme of work, which was started by the letter of 20 March 1981, which was sent to the permanent secretaries of the 18 major departments, has sparked off a great deal of activity. The programme was extended subsequently to smaller departments and those sponsoring non-departmental bodies with a target date and response commencing 30 April 1982.
  Seven departments have conducted major reviews of their internal audit units to provide a firm foundation for future advance. These departments are the Public Services Agency, the Land Registry, the Inland Revenue, the Departments of Employment and Industry, the Ministry of Agriculture, Fisheries and Food and the Department of Education and Science. Most of the major Departments have now agreed with the Treasury terms of reference and objectives for the internal audit unit, job descriptions for heads of internal audits and firm plans for improving computer audit. The Departments that have not done so are expected to finalise by the end of the month the points of detail that are still being discussed.
  The House may know that 21 changes of head of internal audit have taken place. In 11 instances the post leas been upgraded. In March 1981 the number of heads professionally qualified was five, but they now number

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  15, nine of them being in the major Departments. All Departments have now accepted the systems-based audit approach. Several have changed the scope of their audit so that the systems dealing with non-financial transactions are also to be audited. The need to strengthen and upgrade the internal audit function has been generally recognised and is beginning to be implemented. Comprehensive training needs are being centrally identified with the help of the financial management co-ordination group. A basic training profile will aim to train internal auditors to a fully acceptable standard of performance and will soon be available. I am able to tell my hon. Friend the Member for Northampton, South (Mr. Morris) that we train to the standard that he suggested we should and seek to recruit as he suggested.
  The right hon. Member for Heywood and Royton referred to the carry-over of cash limits at the end of the financial year. The right hon. Gentleman will know that since the PAC's report the Prime Minister announced during questions on 9 February that my right hon. and learned Friend the Chief Secretary would reconsider the matter. There is nothing more to report. There will be a complete review. The object is to find a way round the problem if that is possible. The objection to the scheme is its cost, which is estimated at about £300 million at today's prices.
  Many right hon. and hon. Members have talked about the National Health Service. There has been mounting concern and criticism, which, of course, the Government take seriously. There has been a saving of about £30 million in management costs, which the PAC has welcomed, but there is still a remorseless growth in staff numbers and in costs, which in part represents Government policy. However, it is equally right that the House and the PAC should seek continually to improve value for money in the Health Service.
  The work of my hon. Friend the Member for Horsham and Crawley in this area is much admired and respected by the House. I must tell him that 67,000 extra staff have not come into the Health Service. That is the number in terms of full-time equivalents. I believe that the increase is 47,000 in England, of which 82 per cent. are front-line staff.
  The DHSS is keeping a close watch on the growth of administrative and clerical staff. Selected regions have been asked to take a detailed look at their staffing to see where and why the growth has occurred. Reports received so far from Trent, Mersey and East Anglia suggest that most of the increases have been in secretarial and clerical staff supporting doctors, nurses and other professionals, freeing them to spend more time on patient care.
  Mr. Hordern: If the DHSS has a firm grip on recruitment why does it know only the numbers that have been recruited as at September? Why does it have no further knowledge? Secondly, if it is talking about full-time equivalents, why does it not appreciate that every decision to recruit an extra member of staff should be noted? It does not matter if they are part or whole time. What matters is each conscious decision to recruit an extra member. What matters to the House is the number of those decisions and the cost of the number of staff employed.
  Mr. Ridley: I entirely agree. My hon. Friend will know that my right hon. Friend the Secretary of State for Social Services is making plans to improve the control of staff numbers in the NHS.
  The use of manpower is inevitably a major topic at the annual review meetings with the Secretary of State. Regional manpower comparisons will form part of the comprehensive data base for use at the meetings. I would have more to say, but I do not wish to miss other points that were raised.
  My hon. Friend the Member for Northampton, South asked about direct labour contracts for the Health Service. There is competitive tendering for all capital works and also, with limited exceptions, for maintenance and small repairs. The Secretary of State is satisfied that the requirements are as effective as those now applying to local authorities.
  Mr. Michael Morris: There have been changes in the Department of Environment's requirements in the past six weeks. I asked whether there had been consequential changes in the NHS.
  Mr. Ridley: I shall ask my right hon. Friend the Secretary of State for Social Services to answer the specific and detailed point.
  Many hon. Members mentioned regional policy, including the hon. Members for Flint, East (Mr. Jones) and for Kingston upon Hull, East (Mr. Prescott), as well as my hon. Friend the Member for Horsham and Crawley, although from a slightly different perspective. All Departments have noted the Committee's concern about .the operation of regional policy and have been asked to consider the need to look at the effectiveness of regional policy and to find ways to measure it.
  My hon. Friend suggested that we should consider tax relief as well. We have little, if any, firm evidence on the effectiveness of tax reliefs as instruments of regional policy as compared with the capital grants that we now have. The Government keep the operation of regional policy under review. The choice of tax or expenditure instruments is a relevant consideration, but we must beware of trying to find too many incentives, chopping and changing between different instruments as fashions change. There is a need for stability in regional policy so that firms can plan ahead and so that the instruments in use can play their full part in influencing plans. The Government have noted the report and are continuing carefully to examine whether they could go further to meet the Committee's obvious wishes.
  The hon. Member for Fife, Central (Mr. Hamilton) mentioned the black economy. A great deal of thought and study is going on into how to do more to collect revenue that at present escapes us. The hon. Gentleman may know that in response to the Committee's work on the subject the Inland Revenue has redeployed 400 employees into the different regions expressly to consider some forms of tax evasion. About three-quarters of those will be concerned with checking PAYE performance and trying to pick up any abuse of that system. That is a form of the black economy which represents a large chunk of the revenue lost. Seventy-five of them will be investigating moonlighting.
  We hope that we shall obtain two things from the exercise. The first is how it will be possible to restrict the operation of the black economy, and the second is what

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  is believed to be tolerable by the innocent observer, who clearly must accept that some measures to increase tax compliance are correct and others are not. Alongside the Keith committee, which is studying the latter point, we hope to obtain much more information on the subject.
  Infomation plays a large part in dealing with tax evasion, which brings me to the question of agency workers, about which my hon. Friend the Member for Northampton, South asked me. I said on Second Reading of the Finance Bill that we had decided not to legislate for agency worker companies but that we intended to use section 16 of the Taxes Management Act 1970 to obtain information from the agencies on a regular basis about payments made to agency workers. The returns will now be monitored systematically and we hope to improve tax compliance by those means. The matter must be kept under review. If that is not sufficient, we shall return to the House. However, in order to improve compliance we must have much more information.
  As to the future of the Comptroller and Auditor General and the Public Accounts Committee, the Government have considered carefully the strong arguments put in the debate on 30 November 1981. We have decided that it would be right to have informal discussions with some senior right hon. and hon. Members on both sides of the House to try to find a common position and an agreed solution to the problem. The problem should not exist, because the Government and Parliament have the same objectives. We both wish to improve value for money and to cut waste. We both wish to see more efficiency in the public sector, and now that public spending is reaching £115 billion a year we should agree on how best to achieve that instead of having debates that are not entirely harmonious and issuing White Papers that are not acceptable to the House as a whole.
  The dispute is about means and not ends. We have some difficulties and perhaps hon. Members have fallen into the trap of putting forward too simplistic a solution. I do not wish to pre-empt those talks, but it might help if I mention one or two of the difficulties. The first which concerns the House, is which Select Committees should do what. A small problem is that the PAC has suggested that the Comptroller and Auditor General should have access to the books of all bodies in receipt of money voted by Parliament. The TCSC, in its recent report, changed that to
  "in receipt of public funds".
  The two are very different, so that there is a different interpretation here which the House must reconsider.
  There is, however, a more important point, because the TCSC has now said that it wants other Select Committees to have the use of the resources of the Exchequer and Audit Department. Apart from the greatly increased staff that that would require, the real point is that if the PAC is to investigate a problem and another Select Committee is to investigate that same problem, there will be confusion, and we must make sure that we avoid such confusion.
  Mr. Joel Barnett: I have been listening very carefully to the Minister and I am happy to hear that he wants harmonious debates. It is not the fault of members of the PAC that we have not had them. The Minister seems to be concerned about which Select Committee will deal with these matters. Is he saying that in his concern that the talks between us should be open, he has now accepted the basic point that, one way or the other, there should be proper accountability, and that we are talking only about which Select Committee should handle it?
  Mr. Ridley: I think that we must leave these matters to the talks. I was merely saying that the House must be aware that the bodies about which we are talking cannot be investigated first by the Monopolies and Mergers Commission, then by the Public Accounts Committee, and then by another Committee of the House. We have to take into account, first, the vital importance of protecting public industries from excessive inquiries. That is not just a commercial problem. It is a problem of excessive interference with the time of management. Secondly, the House has to work out the system under which it believes these things should be done.
  I come now to the question of BL and Bathgate. Publicly owned industries and nationalised industries are open to special investigation by the PAC, which has the power to call for persons and papers and records in relation to the accounts laid before Parliament. Those are very formidable powers. Indeed, the Committee has done it in the case of Bathgate. It used its powers in that instance. I do not know whether the powers were adequate to obtain what the Committee wished to obtain. I imagine that they were, because the Committee could have taken the matter further if it had wished to do so.
  The hon. Member for West Lothian mentioned the question that he put to the Prime Minister. The whole House will know that the terms of reference of the PAC, which give the Committee the formal power to send for papers, are no more than the powers to which she was referring. In practice, the PAC usually relies on the access to departmental papers afforded to the Comptroller and Auditor General by virtue of the Act. The Prime Minister was describing that situation in general and shorthand terms and was not suggesting any change in the traditional procedures. My right hon. Friend said that that was the Government's present view, and that in order not to preempt the discussions she was doing no more than stating the existing position and making it clear that all of this could be subject to the discussions that we proposed.
  I reject the suggestion that the Treasury and Civil Service Committee report shows that the Comptroller and Auditor General has been controlled or influenced by the Treasury since at least 1921. The right hon. Member for Heywood and Royton denied this. We offer not to use section 3(1) of the Comptroller and Auditor General Act without the agreement of the PAC, and we offer to find some satisfactory way of dealing with the problem——
  It being Ten o'clock, the motion for Adjournment of the House lapsed, without Question put.

  Housing Association Sales
  10 pm
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Budgen.]
  Mr. Neil Thorne: It may come as no surprise to you, Mr. Weatherill, but it certainly surprised me, to learn that the housing association movement has roots going back to the thirteenth century. In 1235, St. Lawrence's hospital was founded to provide accommodation for two female lepers. More recently, particularly during the Industrial Revolution, we find that a number of housing trusts were set up by philanthropists such as Peabody and Guinness to provide accommodation for those living in slums and unable to afford decent healthy accommodation for their ample families.
  As a result of the problem becoming more acute, and in response to greater expectations in respect of living accommodation, the major role in this sphere appears to have passed to the local authorities by the end of the First World War. Vast council estates were constructed in the 1930s, including that at Becontree and Dagenham, which was the largest estate of its type in the world. This is partly in my constituency. The new major housing role brought with it opportunities to indulge in social engineering, if the late Herbert Morrison, the then Leader of the LCC is to be believed. He boasted that he could convert a safe Conservative seat into a Labour-held seat in 15 years and proceeded to prove it.
  However, in achieving this objective up and down the country, new problems were created in both sociological and economic terms. After the Second World War the deliberate policy of heavily subsidising council rents created a large gap between the owner-occupier and the municipal tenant, particularly as severe rent control was steadily killing off the private rented sector. To bridge the gap, and avoid the creation of two nations—one half council tenants and the other half owneroccupiers—attention was turned towards expansion of the housing association sector and a large variety of alternatives were put forward.
  In 1964 the Housing Corporation was brought into being to encourage these various projects and maintain a form of effective control acceptable to Government, because much of the money being used was provided from public sources. At that time a recession had hit the construction industry, so a number of professional advisers and building firms saw the opportunity to help with the formation of these bodies and at the same time create work for their office and construction workers. There were also a number of enlightened people who took the opportunity to promote the advancement of some worthy objectives, with or sometimes without access to public funds.
  I have been privileged to serve on a number of housing association boards catering for various kinds of need and I am well aware of the importance of containing a wide variety of tenures and providing for different types of tenants. However, I also believe that substantial resources have been provided from the public Exchequer and it seems important that the Government should ensure that their proposals regarding the right to buy should be fair and even-handed. I believe that this is my hon. Friend's wish.
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  I notice that on 28 July last year in reply to the hon. Member for Newham, North-West (Mr. Lewis), who asked about this very point, my hon. Friend the Minister for Housing and Construction replied:
  "Under the Housing Act 1980 tenants of non-charitable housing associations which have received Government funds enjoy the right to buy their homes on the same terms, and subject to the same exclusions, as local authority tenants. Charitable housing associations were also empowered by the Act to sell to tenants if they wished to do so, and to offer discounts off market value up to the level available under the right to buy. No distincition is made in the Act between those housing association tenants who were originally nominated to housing association dwellings by local authorities and those who were not"— [Official Report, 28 July 1981; Vol. 9, c. 442.]
  However, with the exception of the 40,000 co-ownership properties, of which I understand nearly 30,000 have now been sold to their occupiers, there are over 400,000 houses owned by housing associations of one form or another. Of these, only 120,000 are owned by associations that are not controlled by charitable housing associations. A further 40,000 of these are not eligible for the right to buy as they are excluded, being for specialist occupation such as by the disabled or the elderly.
  Although charitable housing associations have been given consent to sell under the Housing Act 1980 buy provisions, very few appear so far to have cooperated. I understand that up to the end of last month only 4,522 notices had been received, being about 5 per cent. of those available, ignoring the charitable associations. It seems, therefore, that there is considerable room for improvement. I have constituents who are particularly anxious to take advantage of these provisions. It seems that the funds that are raised for this purpose should be applied in the same way as those of local authorities where the same purpose applies. The constituents I have in mind are Mr. and Mrs. Reed, tenants of the East London Housing Association. They indicated that they wished to acquire their premises at 135 Thorold Road some while ago and made strong representations to the housing association for this purpose. However, their representations fell on stony ground.
  I understand that they have spent no less than £2,000 on improving the premises they occupy through the installation of double glazing and various other amenities that they wished to provide for their old age. They hoped that they would be able to take advantage of the Government's determination to ensure that council tenants should have every opportunity of becoming owners of their accommodation. They felt that they would not be acting foolishly in expecting the same provisions to be extended in their case. However, it appears that, in their circumstances, because the East London Housing Association is formed as a charitable association, it is not necessarily a charity, but it has a charitable association form of incorporation and is therefore exempted from the provisions.
  It seems to me that, if this is the case, it is wrong that a large section of the community, probably approaching 200,000 occupiers, should be specifically prevented from taking advantage of the Government's determination to give people every right and opportunity to own the houses that they occupy. This is particularly the case in the matter to which I have drawn attention. I ask my hon. Friend to request all housing associations to keep returns showing whether their tenants have made specific applications to them for the right to buy.

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  I also suggest that it should be necessary that a return be submitted to my right hon. Friend's Department at least annually giving this information. Substantial numbers of occupiers would welcome the opportunity to express their wishes as it would then give my hon. Friend some indication of how many people are involved and what are the circumstances of their commitment. I also ask my hon. Friend if he feels that there is sufficient demand to examine a requirement for housing associations to opt out of the right-to-buy provisions. That measure was used in the Leasehold Reform Act 1967. All occupiers of premises on long leases were given the right to buy their freehold. In certain circumstances, freeholders rightly drew attention to the fact that the estates that were laid out formed part of special schemes and that those special schemes would be destroyed if the long leaseholders were enabled to buy their freeholds. They pointed out that that would give the occupants special extra privileges and that they would then have the opportunity to make alterations to the premises that they would not have been able to make as leaseholders, and this would destroy the general make-up of a carefully designed and well laid out estate.
  I remember that many occupiers supported the freeholders in that regard. For example, those living in the Hampstead Garden suburb were a case in point. Many occupiers greatly appreciated the fact that there was a freeholder who took greater care and had greater control over the way in which the accommodation was occupied than would have been possible on an estate of freehold houses. It was then necessary for all those freeholders to show why their schemes should be excluded from the provisions of the Leasehold Reform Act 1967. It now seems to me appropriate that a similar exemption should be applied for by those housing associations that feel that they should have a special exemption from the right-to-buy provision.
  Even in the case of elderly people, there are now some excellent schemes whereby it is possible for the elderly person to acquire a property on a specific understanding that it must be occupied by an elderly person and cannot, therefore, be sold on the open market for general needs housing. Alternatively, the property must be resold to the housing association at the current value when the elderly person either dies or wishes to move. In this way some significant control is maintained.
  It seems, therefore, that where accommodation is occupied by elderly persons there is, or should be, every opportunity for them to own the premises that they occupy. The need to keep those properties entirely within the ownership of the housing association seems to be much less important than it used to be. Leaving aside the other important sector—the disabled—it would now seem to be possible to give everyone a greater opportunity to participate in the right-to-buy provisions. I am convinced that a substantial number of people would greatly appreciate the opportunity to acquire their housing association premises. It is quite wrong that they should be deprived of that right. Does my hon. Friend have any proposals? If so, what can he do to help put the matter right?
  10.15 pm
  The Under-Secretary of State for the Environment (Sir George Young): My hon. Friend the Member for Ilford, South (Mr. Thorne) has made a perceptive and well-researched speech, as one would expect from him. As
  102
  someone who has also played a role in housing associations I appreciate what he said about the importance of the movement generally in tackling the country's housing problems.
  My hon. Friend raised the important subject of sales by housing associations under the Housing Act 1980. The right that the 1980 Act gave to tenants of public sector housing to buy the homes in which they live is one of the key elements of the Government's housing policy. Most of the attention given to the right to buy by the House and by the public has been directed towards local authority housing. However, as my hon. Friend has pointed out, tenants of some housing associations also have the right to buy.
  As my hon. Friend said, there are approximately 400,000 homes rented from housing associations in England and Wales, and we estimate that about 80,000 housing association tenants have the right to buy their homes. These numbers are, of course, small in comparison with the number of local authority dwellings that are subject to the right to buy. But this should not be allowed to overshadow the important contribution which sales by housing associations can make to the growth of home ownership in our society. The Government are anxious to ensure that all tenants wanting to exercise their right to buy can do so without impediment. We also understand the wishes of those housing association tenants who for one reason or another do not have the statutory right to buy but who would dearly like to be able to own a home of their own. My Department has received many letters from people who do not at present have the right to buy. I refer my hon. Friend to what my right hon. Friend the Prime Minister said on 11 February. She said that she was
  "well aware that our pledge at the general election covered those living in leasehold properties belonging to local authorities who wish to buy their homes, but where the local authority does not possess the freehold. Our last legislation did not cover that case. It should be covered. It is our intention to cover it. We have a high priority to do so." [Official Report, 11 February 1982; Vol. 17, c. 1111.]
  That undertaking on leaseholds would apply to housing association tenants as well as local authority tenants.
  My hon. Friend has drawn attention to the very large numbers of tenants of charitable housing associations who do not enjoy the right to buy, and has urged that these people should also be given that statutory right. I have much sympathy with that view. He referred to correspondence that he has had with my Department concerning one of his constituents.
  However, this is by no means a straightforward issue and I think that it may help my hon. Friend if I explain briefly how the right to buy currently applies to housing associations and why it was decided to exclude tenants of charitable institutions from the right to buy provisions of the 1980 Act.
  In order to receive public funds, housing associations must be registered with the Housing Corporation. Tenants of all registered associations are secure tenants under the 1980 Act and have the right to buy, subject to certain conditions, unless they are tenants of certain associations excluded by the Act. Housing trusts and housing associations that are charities are much the most important exclusion. Indeed over two-thirds of all housing associations are charities or have charitable rules.
  Many of the oldest housing associations started work in the nineteenth century with charitable aims, as my hon.

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  Friend reminded the House earlier—to provide decent housing for the poor and aged. Many of the newer associations were also set up for charitable purposes—to help those in inner city areas who could not find or afford decent housing, or to provide housing specifically for the elderly or the infirm. As charities these associations have a special position in our legal system, and are strictly governed by their rules which, together with the charity laws, control what they can and cannot do. Much of their housing stock was provided with charitable funds.
  When the Bill that became the Housing Act 1980 was drafted and put before Parliament the Government recognised that there was a clear difference between housing provided from charitable funds and housing provided by local authorities and non-charitable housing associations, almost all of which has been built or acquired entirely with public funds. For that reason, we excluded charitable housing associations from the right to buy.
  However, we certainly acknowledge that in recent years a great many dwellings have been provided by charitable housing associations entirely or substantially with public funds. It can certainly be argued that the tenants of such dwellings should enjoy the same rights as tenants of other publicly financed housing. No doubt many such tenants would like to buy their homes if given the opportunity at the advantageous terms available under the 1980 Act. My hon. Friend made an eloquent case for an extension of the right to buy, and I can assure him that we will carefully note the points that he has made.
  Meanwhile, the 1980 Act gave charitable housing associations the power to sell homes voluntarily, subject to the conditions of their own trusts. I hope that, where tenants wish to buy, charitable associations will be prepared to consider using their discretionary power to sell.
  In some of the correspondence we have had, my hon. Friend was concerned that tenants of non-charitable housing associations who already enjoy the right to buy under the 1980 Act may be experiencing difficulty in buying their homes. Other hon. Members have contacted the Department on this subject. It is true that, following the passing of the Act, sales by housing associations were rather slow to gather momentum. However, I do not believe that associations generally are adopting the kind of doctrinal opposition that we have seen from certain local authorities.
  We have received some complaints from tenants about excessive delays in completing sales but very few compared with the number of tenants who have bought, or are buying, their homes. All these complaints will be taken up by my Department with the housing association concerned.
  My officials and those of the Housing Corporation have also spent a good deal of time reassuring associations and
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  giving them specific advice. The evidence of my correspondence is that sales are now going ahead, and I hope that no tenants who have claimed the right to buy will have to wait long to complete their purchases.
  If we discover that any associations are delaying sales for no good reason, we shall take an extremely serious view of the matter. The 1980 Act gives my right hon. Friend the Secretary of State the power to intervene where tenants have difficulty in exercising the right to buy effectively and expeditiously. As my hon. Friend knows, we have already used that power in relation to sales by a local authority.
  My hon. Friend referred to statistics about the completion of right-to-buy sales by housing associations. Although we have asked the Housing Corporation to collect this information from associations on a regular basis, the first return will not be available until next month. In the meantime, I can confirm the figure that my hon. Friend gave the House. By the end of March, the total number of section 10 notices served by housing associations in England and Wales was 4,522, and the number of completions with Housing Corporation mortgages was 166. That latter figure is certainly far less than the total number of completions, as the majority of purchases will have obtained mortgages from building societies or banks.
  I hope that that will assure my hon. Friend that we are very much aware of the concern of his constituents and of all housing association tenants who are seeking to buy their homes.
  My hon. Friend suggested that the Secretary of State should direct either the Housing Corporation or the charitable housing associations to keep a record of tenants who wish to buy their homes but who do not have the right to do so at present because their landlords are charities. I must tell him that my right hon. Friend the Secretary of State has no powers to give such directions to associations.
  The Housing Corporation would not necessarily know of tenants wishing to buy their homes but unable to do so, but my Department has received representations from a number of people in this position, and we are considering their views together with the views that my hon. Friend has expressed tonight.
  As to the need to compile information about how many housing association tenants wish to become owner-occupiers, I imagine that those figures would be broadly comparable with the figures for local authority tenants, where the wish to own their homes has been tested several times in surveys and has been found to be at a high level.
  I am grateful to my hon. Friend for bringing these issues to the attention of the House. I assure him and the House that the Government will take every possible step to help everyone whose desire it is to own their own home.
  Question put and agreed to.
  Adjourned accordingly at twenty-four minutes past Ten o'clock.

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  Mr. Michael Bannister
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  Broadmoor
  Broadmoor
  Invalidity Pension
  Invalidity Pension
  Children (Secure Accommodation)
  Children (Secure Accommodation)
  Doctors (Unemployment)
  Doctors (Unemployment)
  Greenwich and Bexley Area Health Authority (Reorganisation)
  Greenwich and Bexley Area Health Authority (Reorganisation)
  Preventive Medicine Regulations
  Preventive Medicine Regulations
  Special Hardships Allowance
  Special Hardships Allowance
  Death Grant
  Death Grant
  Benefit Scales
  Benefit Scales
  Benefits
  Benefits
  Prescriptions
  Prescriptions
  Christmas Bonus
  Christmas Bonus
  Supplementary Benefit
  Supplementary Benefit
  Departmental Office (Archway)
  Departmental Office (Archway)
  Departmental Offices (Computer Terminals)
  Departmental Offices (Computer Terminals)
  Claimants (Home Visits)
  Claimants (Home Visits)
  Camelot Computer Programme
  Camelot Computer Programme
  Prescription Charges (Exemption Certificates)
  Prescription Charges (Exemption Certificates)
  Argentine Citizens
  Argentine Citizens
  Westminster Hospital (Department of Experimental Pathology)
  Westminster Hospital (Department of Experimental Pathology)
  Ambulance Services (Hertfordshire)
  Ambulance Services (Hertfordshire)
TRANSPORT
  Denby Dale to Sheffield Railway Line
  Denby Dale to Sheffield Railway Line
  Maryport Harbour Commissioners
  Maryport Harbour Commissioners
  M25, Reigate
  M25, Reigate
ENVIRONMENT
  Serpentine Lido
  Serpentine Lido
  Council House Sales
  Council House Sales
  Home Improvement Grants
  Home Improvement Grants
  Ordnance Survey
  Ordnance Survey
  European Investment Bank (Interest Rates)
  European Investment Bank (Interest Rates)
  Perivale (Hoover Buildings)
  Perivale (Hoover Buildings)
  Haringey Disablement Association (Urban Aid Grant)
  Haringey Disablement Association (Urban Aid Grant)
  Domestic Rates
  Domestic Rates

Preamble
Reassembling after the Easter Recess, the House met at half-past two of the clock: The LORD CHANCELLOR on the Woolsack.
Prayers—Read by the Lord Bishop of Liverpool.

Nuclear War Theory
Lord Jenkins of Putney: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they believe in the nuclear war theory of mutually assured destruction (MAD) or the newer doctrine of nuclear utilisation target selection (NUTS).
The Minister of State for Defence Procurement (Viscount Trenchard): My Lords, the Government subscribe to NATO's strategy of flexible response, as have successive Governments over recent years. This strategy is designed to prevent the outbreak of war, either nuclear or conventional, between NATO and the Warsaw Pact.
Lord Jenkins of Putney: My Lords, is the noble Viscount aware that preparations for nuclear war have been described by his own Secretary of State for Defence, Mr. John Nott, as essentially lunatic? Will the noble Viscount assure the House that no such lunacy is contemplated in the South Atlantic?
Viscount Trenchard: My Lords, I think that the latter part of the noble Lord's supplementary question does not flow from the Question that he asked, but there is no question but that nuclear weapons are not applicable to the current situation in the Falkland Islands area. In relation to all other statements made by my right honourable friend the Secretary of State, so far as I am aware, they are in accord with my Answer to the noble Lord's Question stating the policy of deterrence.
Lord Gladwyn: My Lords, are the Government aware that the doctrine of flexible response is being increasingly questioned by great experts on both sides of the Atlantic?
Viscount Trenchard: My Lords, I think that the whole area of defence strategy has always been an area in which experts question other experts. The majority of opinions which successive Governments have accepted are in line with those which this Government and NATO as a whole accept fully.
Lord Duncan-Sandys: My Lords, does not the Question reflect the state of mind of the noble Lord?
Lord Brockway: And, perhaps, my Lords, my state of mind as well. May I ask whether the noble Viscount
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has noted the movement that is sweeping America for a worldwide nuclear freeze, supported now by 178 members of Congress, and whether Her Majesty's Government will support that movement?
Viscount Trenchard: My Lords, I am aware of the reflection of recent peace movement ventures which now is apparent in the United States. I am certainly not aware that 178 members of Congress support what he has claimed. The whole Congress, so far as I am aware, fully supports the policy and continuation of NATO and its deterrent strategy.
Lord Jenkins of Putney: My Lords, is the noble Viscount aware that the doctrine of flexible response means that in certain circumstances this country could initiate a nuclear war? Will Her Majesty's Government not take better account of the proposals put forward by Mr. Macnamara and his friends in the United States for an agreement that neither of the super-powers shall be responsible for a first strike?
Viscount Trenchard: My Lords, the noble Lord's supplementary question assumes that NATO and the Warsaw Pact are in the same position and looking at it from opposite angles. NATO is a defensive pact of free democratic countries while the USSR and the Warsaw Pact countries consist of totalitarian régimes that recently again have proved their preparedness to use military force for aggressive purposes. NATO needs a range of options to make clear, as necessary, that no aggressor can get away with it.

The Horn of Africa: Treaty
2.39 p.m.
Lord Avebury: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what they consider to be the implications for peace in the Horn of Africa of the treaty between Libya, Ethiopia and the People's Democratic Republic of Yemen.
The Minister of State, Foreign and Commonwealth Office (Lord Belstead): My Lords, the treaty has not been welcomed by neighbouring countries. It does not seem therefore that this treaty is likely to make any positive contribution to peace in the Horn of Africa.
Lord Avebury: My Lords, will not the noble Lord the Minister go a little further and say that one of the aims of this pact appears to be to destabilise neighbouring countries in the region such as the Sudan, Somalia and Saudi Arabia? Have the Government noted the recent upsurge of acts of international terrorism perpetrated by Libyan and Ethiopian criminals, such as the bomb outrage in Berlin on March 22nd, the stockpiling in Khartoum of arms and equipment of sabotage of a kind similar to those discovered in Nairobi, and the activities of Ethiopian death squads in Djibouti? What steps do the Government think can be taken by the United Kingdom in collaboration with neighbouring

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countries of the region to protect the victims of this aggression?
Lord Belstead: My Lords, I agree with the noble Lord, Lord Avebury, that there is probably very little doubt but that the real objective of the signatories to this treaty is to destabilise matters in the Horn of Africa, particularly the position of Somalia. So far as Libya is concerned, our relations have improved somewhat since 1980, when Libyans were murdered on the streets of London. This has enabled us to enter into some cautious dialogue with the Libyans. I will go little further than that in regard to that country.
Baroness Llewelyn-Davies of Hastoe: My Lords, since the noble Lord referred to Somalia and since it is one of the poorest countries in the world with its addition of the frightful burden of tragic refugees, could not the noble Lord's Government consider giving more than what even the Daily Telegraph called a "small dole" in the form of aid?
Lord Belstead: My Lords, I am sure that the facts do not support the suggestion made by the noble Baroness. Last year we provided relief for refugees in Somalia amounting to £3 million, and of course we have been donors towards the European Community aid for Somalia amounting to some £45 million.
Baroness Llewelyn-Davies of Hastoe: My Lords, does the noble Lord really consider that a large sum of money for such distress?
Lord Belstead: Yes, my Lords.
Baroness Airey of Abingdon: My Lords, is the Minister aware that there is great anxiety in the region mentioned by the noble Lord, Lord Avebury? Is he also aware that the success which we anticipate and which we all pray for in the Falklands will establish our reputation for defence for peace in the world? May I ask that attention should then be increased in this area, which includes Egypt, Somalia, Oman, Pakistan, Bangladesh and Saudi Arabia, all of which are threatened by Soviet strategy in that region?
Lord Belstead: My Lords, I think that the Government should take seriously the question asked by my noble friend Lady Airey, and that is why the Government attach considerable importance to the United States-Somalia defence access agreement, which was concluded in August 1980 and which provides the United States with facilities at Berbera and Mogadishu. So far as the shadowy authority of the Soviet Union is concerned, I would go so far as to say that the Government do not believe that the Soviet Union inspired this treaty. The national preoccupations of the three signatories are quite sufficient to explain the treaty's terms.
Lord Avebury: My Lords, did not the noble Lord hear his colleague on the Front Bench just say in answer to a previous question that we could not allow aggressors to get away with their activities, and we are not looking at a region in which Ethiopia in par-
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ticular has been the aggressor over very many years? In addition to the military steps which are being taken by the United States in conjunction with Somalia to build up their strength in opposition to that aggression, would not one of the best ways of resisting it be to ensure that the economies of the neighbouring countries are more stable than they have been in the past? Would not the noble Lord therefore agree to a combined initiative by the West—particularly the EEC—to look again at the volume of aid to Somalia and the Sudan with a view to relieving them of the burden of the large number of refugees to whom they have to play host and to making their economies really stable and flourishing?
Lord Belstead: My Lords, it is because the Government take seriously the point which has been put to me by the noble Lord that we attach importance to the substantial aid which is given by the European Community to these countries—a matter which is of course kept under review.

Seal Products: EEC Policy
2.46 p.m.
Lord Bethell: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are aware that the European Parliament has voted by 160 votes to 10 to ban the import of seal products into Community member states, whether they propose to implement such a ban within the United Kingdom and whether they will seek to bring about an EEC directive along the lines suggested by the European Parliament.
Lord Lyell: My Lords, Her Majesty's Government are well aware of the European Parliament's resolution but maintain their view that unilateral action to ban imports of seal products would not be justified. The Commission alone can put forward proposals for new Community legislation. If in response to the European Parliament's resolution the Commission tables proposals for a Community-wide ban on imports of seal products, I can assure your Lordships that the Government will consider them very carefully.
Lord Bethell: My Lords, I am grateful to my noble friend. I wonder whether he is aware of the tremendous public feeling on this issue, particularly among young people, and of the volume of mail that has been sent to parliamentarians from constituents on this subject? Will he also confirm that there is in progress at present a scientific survey as to the ecological position of hood and harp seals? If that survey should show that the future of these species is indeed in danger, will he consider very seriously imposing a total ban on the import of seal products?
Lord Lyell: My Lords, regarding the last part of my noble friend's supplementary question, I would refer him to the third sentence of my original Answer. My noble friend will be aware that a study by the Nature Conservancy Council is being undertaken for the

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European Community. The position of the two species mentioned in the resolution is being reviewed, and the outcome of that review is expected by the end of this month. In reply to my noble friend's first two supplementary questions, the answer is, yes.
Lord Bishopston: My Lords, while the ban has been widely welcomed, will the Minister say something about the consistency of his attitude to the ban on the slaughter of seals around our coasts, having regard to what may be the conflicting claims of conservation on the one hand and the interests of the fishing industry on the other?
Lord Lyell: My Lords, the position of the Government is that there is no threat to the conservation of seals around our coasts—indeed, we believe that the problem of conservation is in respect of the fish.
Lord Wynne-Jones: My Lords, will the Minister confirm that these particular species are not included in the list of endangered species? If this is so, is it not undesirable to have unilateral action in such a case, especially when the Canadian Government claim that they have investigated the matter and have approved of it because they consider it essential to cull the seals in the interest of preserving fish?
Lord Lyell: My Lords, I am afraid I cannot confirm that the two species are included in the endangered species list. If I am wrong, I will write to the noble Lord. So far as the Canadian Government's position is concerned, that is a matter for them—we would not wish to add anything to that.

Prisons: Report of H.M. Chief Inspector
2.50 p.m.
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 they propose to do to meet the conclusions made in the report of Her Majesty's Chief Inspector of Prisons that conditions in prison are so brutalising and degrading that they cannot be met by the Government's proposals to build more prisons and improve present buildings.
The Parliamentary Under-Secretary of State, Home Office (Lord Elton): The serious problems facing the prison service to which Her Majesty's Chief Inspector has drawn attention are the result of a mismatch between the demands made on the service and the resources available to it. It is the aim of Government policy to correct that mismatch. The steps which the Government are taking to do so are set out in the foreword to the report to which the noble Lord refers in his Question.
Lord Brockway: My Lords, while recognising that an exchange is more appropriate in the forthcoming debate, may I ask the noble Lord whether, in view of the appalling conditions described in this report,
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they cannot do something more immediate than building new prisons three years hence? For example, can they carry out the recommendations of this report for extended educational facilities in order to relieve the overcrowding in the cells?
Lord Elton: My Lords, as the report has been out barely three weeks, the noble Lord will not expect me to deal in detail with the recommendations within the report. However, I think it is right to say that the Government have on many occasions acknowledged publicly that the prison population is well in excess of available accommodation and we are continuing to encourage the courts to make the fullest possible use of the range of non-custodial alternatives to imprisonment. We are also extending the range of options open to the courts both by our proposals in the Criminal Justice Bill and by the introduction of the partial suspension of sentences.
Baroness Wootton of Abinger: My Lords, does the noble Lord remember that one of the last acts of the Advisory Council on the Penal System was to make a number of recommendations that would materially have shortened prison sentences, and that one of the first acts of this Government was to abolish that council?
Lord Elton: My Lords, nevertheless another of the Government's acts has been to take steps to reduce the length of sentences.
Lord Elwyn-Jones: My Lords, would the Minister say what success has followed the publicity in regard to the lowering of sentences and to treating sentences of imprisonment as a last resort? Is the prison population diminishing and, if so, to what extent?
Lord Elton: My Lords, it is somewhat early to give a specific reply to the noble and learned Lord. There is some evidence that courts are following the lead given by the Lord Chief Justice towards shorter sentences, and we shall continue to encourage that trend.
Lord Molloy: My Lords, is the noble Lord aware that this problem has been growing under successive Governments and that there is a very urgent need for some interim measures? When these are undertaken, in what I hope is the not-too-distant future, will the Prison Officers' Association be taken into full confidence by the Government, since they are the people who share the problem equally with the inmates of the prisons? Could he give the House an assurance that the Prison Officers' Association, who are also facing this despairing situation, will be taken into full confidence by the Government in any action that is contemplated?
Lord Elton: My Lords, as to the first part of the noble Lord's question, I am obliged to him, and indeed my right honourable friend, in the foreword to which I have referred, has pointed out that the major problems to which Her Majesty's Chief Inspector refers have been decades in the making and cannot of course be solved overnight. The noble Lord asked about interim measures. I should point out to your

383
Lordships that the Government are spending £34 million on major capital projects at existing establishments, and £22 million on repairs and maintenance in the current financial year. During the 1980s we expect to spend over £350 million on major capital projects and over £150 million on repairs and maintenance. That is, of course, in addition to the cost of the new prisons we are building. I am sure your Lordships will agree that that represents a substantial investment in the future of the prison service. I also readily acknowledge the valuable part played by the Prison Officers' Association in this progress.
Lord Avebury: My Lords, is there not a substantial difference between the recommendations of the Advisory Council on the Penal System for the reduction across the board in the maximum length of sentences and the policy of the present Government, which is to exhort the courts of their own volition to reduce the length of sentences? This latter approach having now proved to be a failure, should the Government not now go back to read the report of the advisory council?
Lord Elton: My Lords, the Government are of course aware of the difference in policies and have taken what they believe to be the right course. They do not believe they should dictate matters of this kind to the courts when the courts are in a better position to make judgments in individual cases.
Lord Hunt: My Lords, is the Minister aware that in the report referred to by the noble Lord, Lord Brockway, the Chief Inspector of Prisons himself has said quite unequivocally that the only solution to the present deplorable position in our prisons is a reduction in the prison population, not by inference the building of more prisons?
Lord Elton: My Lords, as I said earlier, I do not think that I ought to reply to specific recommendations made in a report which was published only, I think, 20 days ago. I think my right honourable friend should be given credit, and perhaps your Lordships would agree, not only for having set up this inspectorate but also for ensuring that its reports are published—since he was thereby, as it were, cutting a rod for his own back and had some idea as to who would be using it to beat him.
Baroness Trumpington: My Lords, with regard to the use of the word "degrading" in the Question, may I ask whether the improvements to prison buildings will include better toilet facilities, and that the building of the new prisons will result in the business of "slopping out" becoming a thing of the past in the as-near-as-possible future?
Lord Elton: My Lords, I recognise the importance of my noble friend's question and I shall give her the answer in writing.
Lord Wells-Pestell: My Lords, may I ask the Minister whether he is aware that shorter sentences in themselves may empty the prisons or reduce the
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prison population but will not necessarily stop people going back, as the statistics clearly show? Will he not realise, if the department has not already done so, that the important thing when a person comes out of prison, is that he should get the social support which he needs? May I ask what provision is being made for some form of social care after prisoners have finished their prison sentences? At the present moment, as the noble Lord will know, a number of people have qualified as probation officers, but have yet to be employed.
Lord Elton: My Lords, the Government are well aware of the importance of the social aspects of offending and I can assure him that these are taken on board. I do not want to pursue that further; it is a little wide of the Question. But since we are dealing with the number of people in prisons, I would think it right to remind your Lordships that the Government are also anxious that police forces should be kept up to the highest strength and that the rate of detection should be as high as possible. Your Lordships will also realise that resources used in this direction call for a greater need for resources in the direction in which the noble Lord, Lord Brockway, wants them to be spent.
Lord Brockway: My Lords, arising from the replies the Minister has given, may I ask him this: does not the report say that there should be a reduction of 7,000 in the prison population? If a proposal that T made for a wider amnesty is rejected, could there not be an amnesty for selective prisoners reaching the 7,000, many of whom ought not to be in prison at all, as appropriate treatment?
Lord Elton: My Lords, as to which prisoners should not be in prison, that is a matter which would have to be investigated case by case. As to the specific figure put in the report, I must again say that I do not wish to anticipate anything my right honourable friend may say when he has had proper time, which he has not yet had, to consider the contents of the report.
Baroness Wootton of Abinger: My Lords, if the Minister is not able to comment on the report which was published only a few weeks ago, and is equally unable to make use of the report which was published three years ago, would he say what period of delay is natural before any action is taken?
Lord Elton: My Lords, the appropriate period of delay is that necessary to digest information and to apply it correctly. I was asked in the Question on the Order Paper about a report which was published 20 days ago. I was not asked about the previous report. If the noble Baroness wishes to put down a Question, I shall be happy to answer it.
Earl Alexander of Tunis: My Lords, if the Government are going to recommend shorter prison sentences, will they make sure that the victims of crimes are better compensated?
Lord Elton: My Lords, I think that that is a different question.

The Falkland Islands
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon, my noble friend Lord Belstead will, with the leave of the House, repeat a Statement that is to be made in another place on the Falkland Islands.
Hertsmere Borough Council (Rowley Lane) Bill
Read a second time and committed to an Unopposed Bill Committee.
West Yorkshire (Parking and Transport) Bill
Read a second time and committed to a Select Committee.

House of Lords Offices: Second Report of Select Committee
The Chairman of Committees (Lord Aberdare): My Lords, I beg to move that the Second Report from the Select Committee on the House of Lords Offices be agreed to.
Moved, That the Second Report from the Select Committee be agreed to—(Lord Aberdare.)
The Report was as follows:
1. Television Documentary Film on the Palace of Westminster
The Committee have considered a request from the BBC to produce a series of films about the history, art, architecture and work of the Palace of Westminster. They agreed this request subject to the same conditions as were set for the BBC "Nationwide" series of programmes.
2. Library
A Report from the Library Sub-Committee for the year 1981 was laid before the Committee.
3. Staff of the House
A Report from the Sub-Committee on the Staff of the House was received.
4. Photograph of the House in Session
The Committee considered the provisional arrangements that had been made to photograph the House while in session and asked the Administration Sub-Committee to finalise the details.
5. Works of Art
The Committee agreed to a recommendation from the Works of Art Sub-Committee that a bust should be commissioned of Lord Home of the Hirsel. The Chairman of Committees was asked to consider ways in which the project could be financed.
6. Counsel to the Chairman of Committees
The Committee were informed of the retirement on 1st June of Sir Charles Sopwith and the appointment of Mr. Karl Newman, C.B., to the post of Second Counsel to the Chairman of Committees and Legal Adviser to the European Communities Committee.
The Committee authorised a revision in the remuneration paid to the first Counsel for duties as Legal Adviser to the Ecclesiastical Committee and the appointment of an additional Personal Secretary.
7. Parliamentary Delegations
The Committee approved provision for the payment of revised subsistence allowances.
8. Hansard Reporting Staff
The Committee approved revised payments to Editors and Reporters for late night duties and to transcribers.
9. Computer Developments
The Committee were informed that Mr. R. S. Morgan would continue as Computer Development Officer to the Houses of Parliament for a further period of five years from 11th December 1982.
10. Superannuation
The Committee were notified of the following awards:

(a) Pension and lump sum to Mr. W. C. F. Kirke, Principal Doorkeeper, who retired on 31st March 1982

(b) Preserved pension and lump sum to Miss S. D. F. Johns, Personal Secretary, who resigned on 20th March 1981

(c) Pension and lump sum to Mr. D. P. Nicholls, Attendant, who retired on 1st February 1982

(d) Pension and lump sum to Mrs. C. Mason, Cleaner, who formally retired on 1st March 1982

(e) Short service payment to Mr. T. R. Davies, Clerical Officer, who resigned on 12th March 1982

(f) Supplementary death benefit to personal representative of Mrs. K. H. Allen (deceased), former Cleaner, who died on 25th May 1981

(g) Transfer value payment to Government Communications Bureau in respect of Mrs. I. L. Chesney, Cleaner, who resigned on 13th April 1980.

Lord Balfour of Inchrye: My Lords, I should like to raise one question on this report. No doubt your Lordships have all read it, but just in case one or two of your Lordships have not read it, paragraph 4 states:
"Photograph of the House in Session.
The Committee considered the provisional arrangements that had been made to photograph the House while in Session and asked the Administration Sub-Committee to finalise the details".
This is a matter which affects the whole House. The whole House is interested in it and, so far as I know, what we shall next hear are the actual details of the occasion.
Surely, the House should know a little more about the intentions behind this particular operation. The decision has been taken and the details of it have been decentralised to the appropriate sub-committee. I suggest that it would be fairer to the general body of Members of this House if we knew in advance some details of the occasion on which it is proposed that the House should be photographed in session. Is it to be a great occasion, is it to be a special occasion or what is it? Is the House to be in Committee or is the House to be sitting?
I think that it would be right for the general information of the House if, when the appropriate sub-committee has considered its proposals in detail, these were notified to the House before the occasion takes place. I suggest that, either in some form of Statement or some form of information through the Library, we should know something more than just this blank statement that a decision has been taken and decentralised to the appropriate sub-committee.
Lord Aberdare: My Lords, I am grateful to the noble Lord, Lord Balfour of Inchrye, for bringing this matter to our attention. The proposal of a photograph of the House in session was contained in a previous report from the Offices Committee and the House agreed to it in principle. We are now working on the details and I most certainly undertake that, when the details are finalised, they will undoubtedly be brought to your Lordships' attention, because I imagine that as many of your Lordships as possible would like to be in the photograph. It is for that reason that we are, in fact, trying to have it arranged on two different Thursdays, possibly a few weeks apart, so as to suit the convenience of as many of your Lordships as possible. But I certainly undertake that there will be full publicity before any final details are agreed.
On Question, Motion agreed to.

Civil Aviation Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

Public Lending Right Scheme 1982
3.6 p.m.
The Earl of Avon The Earl of Avon rose to move, That the draft scheme laid before the House on 8th March be approved.
The noble Earl said: My Lords, the principle of public lending right has enjoyed support from all parties, and the completion of the scheme is the culmination of many years' endeavour for those distinguished supporters of PLR who helped to carry the torch for the idea through difficult times. We believe that this is an important moment for the cultural life of the country.
Although it is a major step forward, it represents no more than justice for authors. The principle enshrined in the public lending right is that some modest reimbursement should be made to authors for the use of their books in public libraries. Our library service is a major social provision and a shop window for publishing. But while it undeniably makes books available to everyone, it is equally indisputable that authors do suffer a loss of income by the provision of a free lending service.
The Public Lending Right Act 1979 established a new right of personal property to be determined by the number of times an author's books are lent from public libraries. This is an important point. It enables authors' payments to be directly related to the use of their books and the Act requires the entitlements to be determined in respect of any book. It is therefore far more just than basing payments on the purchase of books by library authorities, or a count of the books at present on library shelves—neither of which would relate to usage, or determine a right in respect of each book borrowed, as required by the Act.
The Act also requires authors to establish their right by registration of their books. It places the responsibility for the maintenance of a register in the hands of a registrar, who will also manage the funds voted by Parliament for the purpose. The registrar was appointed by my right honourable friend the Minister for the Arts last September. He has established his office and started various essential preparations, including the recruitment of the first of his staff.
Despite the complexities required by a legislative scheme, particular attention has been paid to the simplicity of the arrangements in operation. It is very important that administrative costs should be kept to the minimum necessary for the efficient operation of the scheme. The Act requires the administrative costs of the scheme, including the reimbursement of costs incurred by local library authorities, to be deducted from the funds voted by Parliament. These deductions will represent the first charge on the funds and the balance will be distributed among the authors. The Act places a limit on the size of the fund; that is £2 million. This cannot be increased, either in volume terms, or to keep pace with inflation, without specific
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parliamentary approval. For this reason, the scheme deals with a wide range of contingencies that may arise in order to give the registrar immediate guidance and also to minimise administrative effort later on.
Similarly, it is important that the demands placed upon library authorities be contained. The local authorities have been very co-operative during the consultations on the scheme and this whole exercise would not be possible without their help. Local library authorities will be able to claim in full all reasonable costs incurred at the request of the registrar.
A great deal of effort has gone into reducing the size of the sample to achieve a reasonable accuracy of payments at a minimum administrative cost.
It is proposed to establish a sample of 16 libraries. This is considerably smaller than the sample size upon which earlier planning studies were based. The reduction has been achieved by learning more about reading habits across the country. This has replaced some planning assumptions with hard fact and has led to a refinement of the statistical basis of the sample. The sample will be changed regularly by replacing four libraries every year and this, taken with the geographical spread of the sample, we believe will maintain a satisfactory level of accuracy in terms of notional loans. The smaller sample means a significant reduction in administrative costs and in the requirements placed upon the library authorities.
If I may now turn briefly to the main features of the scheme, an author must establish the new right by registering his or her books. The registration must be made by the author or joint authors, up to three in number. Authors must therefore, as your Lordships will understand, be alive to register. It is open to all authors who are United Kingdom or European Community citizens resident in the United Kingdom. I recognise that there is a case for saying that all authors ought to be able to register, whether resident in this country or not. But that raises difficult issues. Some of the problems were recognised during discussions on the Bill and there remains a widely held view that the scheme should ensure that United Kingdom taxpayers' money would benefit only our own authors. The inclusion of European Community authors living in this country is deemed necessary to be in the spirit of the terms of the Treaty of Rome.
I come now to the mechanism for payment. Since arrangements must be completed in the financial year and based upon loan statistics, there is a timetable which starts with a July to June statistical year. The registrar collects statistics from the regional count of sample libraries and grosses these up to give national figures for each book and each author. Only when the results are available, in the autumn, is he in a position to assess his payments within the limits set under the scheme. This will enable him to calculate the rate per loan and, if need be, to adjust the rate to ensure that as much of the money available as possible is distributed among the authors. The timetable then allows an amending order to be made in the autumn to adjust the rate of loan, if necessary. Payments to authors will be made thereafter, up to the end of the financial year.
In devising this scheme, after consultations with both the authors and the local authorities, as many points

389
of criticism have been met as possible. In particular, there is an upper limit per author which means that a very popular author does not necessarily scoop the pool, although he or she will get a reasonable recompense—that is, up to £5,000 per annum. A lower limit of £5 per registered interest has been included to avoid unnecessary administration in paying out tiny sums, or the problem of carry-over from one year to the next. Any sums not paid out because they are above the upper limit or below the £5 lower limit will be returned to the pool and thus will increase the rate per loan.
I know that there is one issue on which some authors remain concerned: the question of reciprocity. During the debate on the scheme in the other place my right honourable friend Mr. Paul Channon gave an assurance about reciprocity. He said:
"I am very ready to see examined the possibility of reciprocal arrangements with other countries that have relevant schemes. It would have been impossible for us to include reciprocal provisions in the present scheme on the basis of our present knowledge of arrangements elsewhere, and without making it very much more complicated".
If I may elaborate, the Australian scheme includes non-nationals resident in Australia but is not loan-based; the West German scheme is not based on a full count of loans, nor does it return all the money available to individual authors. Nevertheless, it is recognised that the Federal Republic does already make certain payments to British authors registered with it, and in principle we shall be very ready to examine whether corresponding arrangements can be made to include registered German authors within the provisions of the United Kingdom scheme. It will take time to consider the details of the German arrangements and to be assured that they are sufficiently comparable to justify bringing in reciprocal provisions here.
We shall obviously also have to have regard to the legal confines of the United Kingdom scheme which lays down, in accordance with the Act, the arrangements for passing on the right established in books for a period of 50 years after an author's death, by assignation or testamentary disposition. I can assure the House that these are matters that we shall be willing to consider further as soon as we have experience of operating the scheme on a United Kingdom basis in its present form.
My right honourable friend intends to bring into immediate effect those parts of the scheme required for the registrar to continue his preparations. Part III of the scheme dealing with the establishment of the register will take effect from September when the registrar will start to process authors' applications. Part IV of the scheme dealing with the arrangements for the sample and the collection of loan data will come into effect as soon as possible to give the registrar and the local library authorities the maximum time to prepare. It is expected that loan recording will commence during the winter, probably in January 1983. Part V will then come into force in July 1983 to enable the registrar to calculate the first public lending right payments to authors on the basis of the data collected between January and June next year. This data will be grossed up to represent 12 months' loans. It was hoped to make the first payments at the end of this year, but as the House will realise, this has proved
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impossible because of the time needed to introduce all the necessary preparations, particularly the statistical sampling. Nevertheless, the final preparations are now well in hand.
What we have at present before the House is something of a break-through. It represents the first attempt to give authors some direct payment in relation to the number of times their books are borrowed. It represents the culmination of many years' pleading by authors' interests, but only the start of a scheme which can be tailored to the amount of money available year by year, and changes in circumstances or need. I ask noble Lords to give this imaginative scheme a fair wind. I beg to move.
Moved, That the draft scheme laid before the House on 8th March be approved.—(The Earl of Avon.)
3.17 p.m.
Lord Ardwick: My Lords, all of us will rejoice that the public lending right scheme is about to ascend after two decades of preparation on the ground. I give my congratulations to the noble Lord, Lord Willis, and his colleagues for their long and successful campaign. One must also congratulate the Minister on evolving a scheme that looks to be both practicable and economical. There were no easy answers even to such basic questions as, What is a book? and, Who is an author? What strikes one as inspired is the decision to reckon the frequency of borrowing by means of a sample of 16 carefully selected libraries rather than to have every library make an individual return. That would have been costly of effort, even in these days of the computer.
Of course, any scheme which attempts to be simple has to make a number of arbitrary judgments which seem to be unfair. It is the attempt to be fair which is responsible for many of the fantastic complications of our tax law, and it is such complications that the Minister has avoided in his public lending scheme. What is important now is that the scheme should be approved without any amendment so that next year the recording of lending can begin, followed by the disbursement of the first of the annual £2 million into the pockets of the deserving authors. May I say that George Orwell perhaps never imagined that his heirs would be the beneficiaries of this in 1984.
But the Minister should of course be thinking of what subsequent improvements can be made to the scheme. The first of these—I was very glad to hear the noble Earl mention it—would be reciprocal arrangements with countries which have, or are now preparing, their own public lending right scheme. We should do very well out of this because British authors write so many very good books which are very much enjoyed abroad.
The other provision which I should like to see, although I recognise that this is very difficult, is reward for the translator. There is inspired translation—the Authorised Version, or Urquhart's Rabelais, or Murray's Euripides—which are great works of art and deserve reward; but there are bread and butter translations whose width is more impressive than their quality and which are perhaps adequately rewarded at the going rate. It is, of course, very difficult to judge which is which. These and other matters are for the future.
Meanwhile, let the authors start to draw their rewards,

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with the stars enjoying their maximum of £5,000 and the groundlings their pathetic minimum of £5—a contribution made by the use of a mere 100 borrowers because apparently the reward is 5p per borrowing—a kind of "bob a job" basis. And let the Government show some modest generosity by indexing the global sum. This sum of £2 million has already lost quite a lot of its value since it was proposed and this should be restored as quickly as possible.
3.20 p.m.
Lord Beaumont of Whitley: My Lords, we on these Benches do of course welcome the implementation and introduction of this grant scheme. It is something which noble Lords in all parts of the House have been agreed upon in principle and we are only glad that after rather a long time we should actually be coming somewhere near to fruition. Our free library system in this country is probably one of the great institutions of the world. We all of us benefit from it and it has only been sad that in the past the benefits of this institution have been coupled with possibly a certain amount of injustice to individual authors. However, that is now being remedied and we are all grateful. I would like to join with the noble Lord, Lord Ardwick, in his remarks congratulating the elegant simplicity of the statistical base which has been found for making the calculations.
There are only three points which I want to raise with the Government. One of them has already been very largely dealt with by the noble Earl, Lord Avon; the reciprocity with other countries. I am delighted to know that the Minister has committed himself on this matter and that we will see some progress. I must say that when we examine in Hansard the remarks which the Minister made about the great difficulty which is involved, I am not certain that they will stand up to all that much examination. The West German scheme, for instance, although different in some particulars from ours, is there and is known about. I would have thought we could have gone quite a long way already with producing arrangements for a simple reciprocity between the two countries. I hope that bureaucratic considerations will not be allowed to interfere with getting on with what in principle must be a fairly simple job.
There are one or two other small points which I believe can be made. There is the definition of the size of the book and the stipulation that a book must have a certain amount of text in it. I am far from clear why photographers or draughtsmen who may not be at all gifted in the use of the written word should have to produce 24, 32 or whatever number of pages of text to pad out a book which may be extremely valuable in its own right without that textual matter. Although that point cannot be dealt with at this moment, because we do not wish to delay the scheme in any way, it is one that demands looking at again in the interests of justice.
Finally, I am not at all certain why the Government have I ejected the idea put forward to them by the authors that the number of assignees of public lending right should be limited. In fact, I believe the authors put it to them that there should only he a maximum of one assignee. It is the object of everyone concerned
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in this—the Government and the authors—that there should be the minimum of bureaucracy and that the maximum amount of money should go to the authors themselves. Obviously there will be quite a lot of effort (and therefore money) taken up in the administration of the assignment and payment to assignees. It would have been much better for a greater proportion to go to the authors themselves in their lifetimes or during their time of active work, even if it had been at the expense of not having a maximum of four people to whom the copyright could be assigned. I think that needs looking at again. Nonetheless, this is a very welcome scheme. It redounds credit not only upon those who have been putting it forward over the years but also on the Government for taking it aboard during a period of financial stringency. We are all extremely grateful.
3.25 p.m.
Lord Donaldson of Kingsbridge: My Lords, it is with real delight that I welcome this document and congratulate the Minister for the Arts and his representative here, the noble Earl, on producing something as economical as this has turned out to be. I first came into this matter halfway through the first Bill which I had to take over from the noble Lord, Lord Strabolgi. I was very upset to find that the Bill was fillibustered out in another place. The second time, when the noble Lord, Lord Willis, produced the Bill, my noble friend Lord Kilmarnock made a splendid maiden speech. On that occassion, however, the Bill again failed to get through. Finally, we have reality. It is a moment of great excitement and interest to all of us who have been working on this.
I would like to say only two things in addition to the various comments which have been made by noble Lords who have already spoken—and with all of which I agree. I wonder whether the sum of £5,000 is not rather high as a maximum and whether there will be anything left for the other people? I think that is something we must look at. Secondly, I very much wish to endorse the suggestion made by the noble Lord, Lord Ardwick, that there should be indexation. If ever there was a case for indexation, this it is. We ought to start from two years ago, or even from five years ago, when the proposal was first put forward with a figure of £2 million—I suppose that would have grown to about £7 million by now. With just these few thoughts, I welcome this scheme and congratulate the Government upon it.
3.27 p.m.
Lord Vaizey: My Lords, I would like to congratulate my noble friend Lord Avon on his introduction to this new scheme. I should also like to welcome the noble Lord, Lord Ardwick, to the Front Bench; he is a great ornament to and a distinguished member of the Labour Party. I must declare an interest because I have already received my first payment under the German scheme, of £4.23p. I look forward to receiving much more in the longer term. For that reason, I particularly support the principle of reciprocity mentioned by my noble friend Lord Avon and supported by other speakers.
This is an important new right in the cultural field

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and one that should be pursued in other countries and in other fields. It seems to me that the scheme has been well drawn up. It is both efficient and economical in its administration and it is something that can be widely commended. As the noble Lord, Lord Ardwick, hinted, there is a major innovation in this piece of legislation because, so far as I know, it is the first scheme under an Act of Parliament which is specifically based on the statistical technique of sampling.
Sampling is quite a modern statistical technique, although it is the basis of the science of statistics. It was actually introduced as a result of innovations made by Louis Pasteur and by a brewer at the Guinness Brewery who wrote anonymously under the name "Student". In fact, Student's Law is one of the basic principles of statistics. The brewer in question sampled the various barrels of stout to see which of them had "gone off", to avoid the problem of having to taste every barrel of stout. So sampling is a basis of statistics.
It is very interesting to those few of us who sit in your Lordships' House who are not barristers or solicitors, to discover how few modern statistical techniques are used in legislation. For example, the idea that fines levied by the courts should he indexed would appear to be a revolutionary idea to lawyers, whereas it seems an elementary idea to economists and statisticians. I hope, therefore, this piece of legislation, which is immensely welcome in itself, extremely well drafted and extremely efficient, and which embodies a principle of no little importance, will provide a model for other pieces of administrative law which go through your Lordships' House. I hope very much that they will be given as fair a wind as this piece of legislation.
Before I sit down, may I just say that the noble Lord, Lord Willis, who sits over there, is immensely to be congratulated upon this major step forward in the interests of the arts in this country.
Lord Somers: My Lords, may I say how very much I appreciate this scheme, which provides for authors a parallel to the performing right scheme which composers have enjoyed for so long. I should like to ask the noble Earl one question. What will be the position for translators of foreign books? I should declare an interest herein that I am in the process of making one myself. Will the right have to be divided between the translator and the author, or what will be the position?
Lord Willis: My Lords, I spent last Saturday afternoon at Gatwick Airport waiting for an aeroplane that had been delayed three times. When it eventually arrived five hours late, your Lordships may imagine that it was a heartwarming experience, and I feel rather the same today as I stand up and find that public lending right has at last come before the House in its final form. It has been a very long haul, not only for me, but for my fellow authors, and we are, I am afraid, in danger of being drowned in euphoria about this particular scheme. I do want to join in the general congratulations offered to the Minister for producing an efficient scheme, a scheme which has taken some consideration of the criticisms that authors have put forward, and which I hope will work—in fact, I am sure it will work.
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However, I do want to add one or two further points to those already made by other noble Lords. First of all, on the question of reciprocity, as the noble Lord, Lord Vaizey, said—and I thank him for his kind remarks about me personally—we are already receiving large sums of money from the German public lending right; British authors are already receiving these. There is a grave danger that unless we do make reciprocal arrangements with the Germans these sums of money will be lost. I welcome the very clear statement that the noble Earl made about this. I should like him to emphasise one point when he replies. Would the Minister be prepared to enter into immediate negotiations with the representatives of the German Federal Government about reciprocity, because my understanding of the situation is that there are no problems that cannot be fairly easily solved? I believe that, if those discussions were to take place, there would be an atmosphere of goodwill and a solution would come up within a very short period of time.
The other point is this question of indexing. Already the original sum put forward has shrunk alarmingly since the scheme was first put forward four or five years ago. It has remained constant throughout all these inflationary years and therefore it is worth a great deal less than it was originally. Authors are not greedy; as I have said several times in the debates on this subject, we only want what is right and fair. Would it not be possible for the Minister to bring before the House at a fairly early time a modest proposal to index-link the sum that is going to be made available in the general pool? I do not think this would particularly embarrass the Government, it certainly would not embarrass the Opposition. It would prevent this becoming a subject of controversy over the next years, with authors agitating for more money. It would seem to me that this would remove a very serious point from controversy.
Having said those things, I want once again to thank the Minister, to thank my noble friends and friends on all sides of the House for the constant support they have given me and my friends over the years on this subject, and to wish this scheme not only a fair wind, but a full sail.
Lord Denham: My Lords, I wonder whether the noble Lord, Lord Jenkins, will forgive me. I think there may be one or two other noble Lords who wish to speak on this matter. Perhaps this might be a convenient moment to interrupt the proceedings to take the Statement.

The Falkland Islands
3.35 p.m.
Lord Belstead: My Lords, with the leave of the House, I will now repeat a Statement being made in another place by my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs. The Statement is as follows:
"With your permission, Mr. Speaker, I will make a Statement on the Falkland Islands.
"Our objectives remain as already stated to the

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House. But I should provide an account of developments since the debate last Wednesday. Mr. Haig is continuing in his efforts to persuade the Argentine Government to agree to the implementation of Security Council Resolution No. 502. His mission provides the best hope of achieving a peaceful settlement.
"The position is still delicate, and the House will not expect me to reveal details of the negotiations. We remain grateful to Mr. Haig and shall continue to co-operate fully with his efforts.
"Meanwhile we are stepping up the military, economic and diplomatic pressure on Argentina. Our naval task force is steadily approaching the area of the Falklands, and we are continuing to strengthen its ability to carry out whatever tasks may be required of it.
"I am glad to tell the House that Norway has today joined with the members of the European Community and certain important Commonwealth countries in banning imports from Argentina.
"The 22 marines who were captured in South Georgia and the remaining seven from the Falklands, as well as 13 British scientists evacuated from South Georgia, have arrived safely in Montevideo. I am glad to say that we expect them back in Britain very shortly.
"Fifteen British scientists remain in South Georgia, and we have their well-being and safety very much in mind. The latest report on 18th April confirmed that all were safe and well.
"The three British journalists arrested last week in Argentina are expected to appear before a judge today. The British Interests Section of the Swiss Embassy in Buenos Aires are keeping us informed of developments.
"Argentina must have no doubts about our resolve to exercise our rights to the full if this should prove necessary. But I can assure the House that we are making every possible effort to get a satisfactory solution to this dispute by peaceful means. The Government will continue to keep the House informed."
My Lords, that is the Statement.
Lord Shackleton: My Lords, we are grateful to the noble Lord, and again we do not expect him necessarily to go into much further detail at this moment. It clearly is still the firm view of all the parties in this country—all the leading parties anyway—that we support the Government in the steps that they are taking, and the remarks that I am about to make, if I may, are not designed in any way to weaken the Government's resolve in this matter, which we support. Clearly, we agree that the Haig mission is at the moment the best hope, but none the less we may have to face the fact that the terms that would be remotely acceptable to the British Government, with their original statements, will be unacceptable to the junta in the Argentine.
I would like to ask the Government to consider whether they have any further steps of an international kind that might be taken. It has been suggested—I think it is important that this suggestion should be taken seriously, although again the Government may
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not wish to comment without due thinking—that we should ask the United Nations to appoint an administrator without prejudice of any kind to the future. I want to reiterate that there is no weakening of our support for the Government. My own experience in the past, as I mentioned elsewhere, with the United Nations, has not been entirely happy in certain circumstances and that is why I would like to stress that it should be "an administrator". If that should come about a condition must be that we return to the pre-invasion circumstances and the law that prevails, whether it concerns driving on the left, divorce or anything else, is restored to the situation as it was before the aggression. If that does not come off and if the original Haig initiative does not come off, I hope that that would absolve the Americans and the United States any more from trying to be an honest broker in this matter. We welcome this as a posture, but the simple fact is—I hope that this is being made clear—that this is an aggression by an undemocratic country against a loyal ally of the United States backed by a democratic Government.
The British Government over the years have been willing to discuss sovereignty subject always to the wishes of the islanders themselves. I would suggest that it is time that the United States, like Norway, should support us in this matter. There is a great deal at stake. I am not wishing to criticise Mr. Haig or his efforts at the moment, but as we mentioned before and as the noble Lord recognised, it is a question of not only the Falklands but the whole peace of that part of the world—the Antarctic Treaty, South Georgia and so on.
I should like to ask the noble Lord one or two questions. He stated that the 15 scientists, I think it was, or the scientists in South Georgia were still, so far as we knew, all right. Included in that number were the two young women who are out there filming. Are they all right? The noble Lord may not be able to answer that question. Nonetheless, we are concerned in the long run with winter approaching. Will he also make sure that, whatever else happens, we do not weaken the situation in Belize where, because of the threat of this particular problem, there is again the possibility of another aggression which has practically been attempted in the past?
I should like to ask the Government whether they are proposing to publish the British case. I have no doubt that our case in international law is sound: 150 years of occupation and the refusal of the Argentines to go to the Hague Court. Yet there are still too many people in this country who do not know the case. Just because we have debated it and understand it, does not mean that there are not some people who are saying, "What does it really matter?". I think that it is time that the Government put their case and I would ask the noble Baroness also to bear this suggestion in mind.
3.44 p.m.
Lord Gladwyn: My Lords, we, too, are grateful to the noble Lord for repeating this Statement which, for reasons which we completely understand, does not add very much to our knowledge. However—and here I agree with the noble Lord, Lord Shackleton—I believe that the great majority of people in this country feel that there is hardly likely to be any peaceful solution of

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this dispute unless the Argentine Government accept the legally enforceable decision of the Security Council to withdraw their troops from the Falkland Islands. If they decline to do so for any reason and the occupation goes on, I think that people here generally will begin to wonder what is the use of the United Nations and whether it is even worthwhile continuing our subscription. It is also true that, given the Security Council's legally valid decision and in the regrettable absence of any United Nations machinery for enforcing the decision, we are fully entitled, if necessary and if practicable, to use force ourselves, if only under Article 51 of the charter.
But I also believe that the whole purpose of Mr. Haig's intensive discussions with both sides during the last few days has been to discover, if possible, the broad lines—perhaps the very broad lines—not only of a short-term but also of a long-term solution which would appear to the majority of people here at any rate to be, on the face of it, reasonable. In other words, as I ventured to suggest last Wednesday, a formula which, while, of course, safeguarding the interests of those islanders who might also regard it as reasonable, would nevertheless give some satisfaction to the long held, if legally quite invalid, claim which has resulted, to use the words of the charter, in an undeniable threat to international peace and security. I wonder whether, by any chance, the Government, while naturally not giving us any details of what is going on, would like to comment on this aspect of the existing crisis.
3.46 p.m.
Lord Belstead: My Lords, I am grateful to both the noble Lord, Lord Shackleton, and the noble Lord, Lord Gladwyn, for their response to my right honourable friend's Statement. The noble Lord, Lord Shackleton, referred to the efforts being made by Mr. Haig and the stance adopted by the United States Government in this matter. Her Majesty's Government accept that, while Mr. Haig is engaged in such very delicate negotiations, the United States Government consider it inappropriate to align themselves with either party although, of course, the United States Government have fully supported Security Council Resolution 502. Let me in saying that immediately go on to refer to the points made by both noble Lords about the United Nations. Here the Government take the view that the implementation of Security Council Resolution 502 should remain the United Nations' first objective. At present Mr. Haig's mission offers the best prospects of this.
I was interested, if I may say so on behalf of the Government, in the view expressed by the noble Lord, Lord Shackleton, that in the event of some closer United Nations participation—for instance, the noble Lord suggested to your Lordships' House a United Nations administrator—the situation in the Falkland Islands would have to be the situation as it had pertained before the agression took place. That is both robust and wise advice.
I really do not think that I can add any more to what the noble Lord, Lord Gladwyn, put forward, both in the debate on 14th April and this afternoon, so far as the United Nations position is concerned, except to repeat that we believe that the implementation of
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Security Council Resolution 502 should remain the United Nations' first objective.
Let me very quickly reply to the other questions that were asked of me. Miss Buxton and Miss Price—the two English ladies who were in South Georgia—are, according to our information, still in South Georgia. So far as the position of Belize is concerned, let me repeat what has already been said in your Lordships' House—namely, that no decision has yet been taken on a date for withdrawal of British troops. The British garrison is in Belize to deter external aggression against Belize and, if necessary, to defend Belize against aggression. The noble Lord put to me, "Would it not be wise to publish our case?". The noble Lord himself, of course, with all his experience and authority put the case very briefly in your Lordships' debate on 3rd April and I sought to do likewise briefly on 14th April. I should like to take back with me and to pass on to my right honourable friend the more specific recommendation made by the noble Lord, Lord Shackleton, in this respect.
Lord Boyd-Carpenter: My Lords, can my noble friend say whether General Haig is still in Buenos Aires? Secondly, is he aware—I think that he is—that the admirable unity of opinion in this country on this grave issue owes an enormous amount to the calm firmness of the leadership of Her Majesty's Government?
Lord Belstead: My Lords, the information which I had rather less than an hour and a half ago was that Mr. Haig remains in Buenos Aires. I am grateful to my noble friend for what he has said about the stance of the Government and I am sure that my noble friend would join with me in saying that it has been very important that we have received wise and calm advice from all sides in your Lordships' House.
Lord Aylestone: My Lords, is the noble Lord aware that, as the Government have already stated, probably the best hope at the moment lies in the activities of the American Secretary of State, Mr. Haig? I think it would be appropriate from this House, and unquestionably from the other House, if at this stage we say to him and to the American people that we are most grateful for the untiring efforts that they are making in what seems to be an insoluble situation. Is the noble Lord also aware that the alleged statement in the press (I hope that it is alleged and untrue) of the President of Argentina, that there will be no solution to this problem and that his troops will remain there, alive or dead, makes the activity and the work that Mr. Haig is doing almost impossible?
Lord Belstead: My Lords, on behalf of the Government, I agree with the noble Lord. It is worth reminding your Lordships' House that we are talking in the context of Security Council Resolution 502, which is mandatory, and it is because that mandatory resolution has been flouted—and by "flouted" I mean that on the day following the passing of that resolution the Argentines invaded South Georgia—that the Argentine has been more or less condemned by most countries in the rest of the world and has not been effectively supported in any way by the countries of Latin America.
Lord Robbins: My Lords, in reference to the request by the noble Lord, Lord Shackleton, that the general case be actively promulgated, can the noble Lord say whether or not that is practicable in the immediate future, and that the Government would be prepared to release details of the cases in the past when the Government have offered to submit the question at issue to the International Court? The most reverend Primate the Archbishop of Canterbury, in his illuminating speech last Wednesday, alluded to the breach of international law which is implied by this aggression. I am quite sure that very few people in this country have the vaguest idea of the offer in the past to submit the issue to the International Court.
Lord Belstead: My Lords, like previous Administrations in government, Her Majesty's Government have always made clear their willingness to negotiate on all aspects of the Falkland Islands dispute. The Argentines have never shown any interest in referring the sovereignty question to the International Court and the fact is that we have not proposed it. That, therefore, is the way in which the question of reference to the International Court stands at the present time. I think I should repeat that what we very strongly feel at the present time as a matter of policy is that the first thing to do is to ensure that Security Council Resolution 502 is implemented.
Lord Mishcon: My Lords, in regard to any statement that is made at the present time, would the Minister not agree, first, that there should be a withdrawal and, secondly, that our preparedness to submit this issue to the International Court would, from a world point of view and from the point of view of the people of this country, be a sign of strength?
Lord Belstead: My Lords, I certainly take on board what the noble Lord has said, but, as I have already said, the first priority for Her Majesty's Government is implementation of Security Council Resolution 502.
Lord Stewart of Fulham: My Lords, is the noble Lord the Minister quite certain that we have never proposed to take this case to the International Court? I had understood long ago that we were willing to do so and that the Argentines were not.
Lord Belstead: My Lords, my advice is as I replied to the noble Lord, Lord Robbins, a couple of minutes ago.
Lord Brockway: My Lords, is the Minister aware how warmly many of us have welcomed the statement at the end of the declaration, that all efforts will be made to seek a peaceable settlement of this problem? On a number of occasions the Minister has referred to Resolution 502. Is it not the case that even before that resolution made the demand for the withdrawal of Argentine troops, it asked for a cessation of hostilities? Can the Minister say what has been done to carry out that first demand of Resolution 502? Has any effort been made to secure a truce during the negotiations, with Argentina ending its supply of soldiers and equipment to the Falkland Islands and ourselves halting our fleet while the negotiations take place?
Lord Belstead: My Lords, as I have already said to your Lordships' House, the House would not expect the Government to give details of the very delicate negotiations in which Mr. Haig is involved at the moment. But I do say that it is the objective of Mr. Haig's mission to ensure that there is a peaceful negotiated settlement to this dispute.
Lord Alport: My Lords, I should like to ask my noble friend to clear up a matter because, although he has already made the statement clear, it is so contrary to what I understood in the past that I should like to address him on it. Is it the case that we have never suggested to any Argentine Government that the Falkland Islands dispute should be referred to the International Court?
Lord Belstead: My Lords, that is the case.
Lord Elwyn-Jones: My Lords, is that on the basis that we have never resiled from our legal title or from our sovereignty in the Falkland Islands and, therefore, if the matter was in issue it would be for the Argentinians to take it? In that situation did we indicate that we would be very happy to submit to the jurisdiction of the International Court?
Lord Belstead: My Lords, the noble and learned Lord is indeed being helpful in asking that question. I confess that I had not thought the matter through as far as that. I should like to make it quite clear that in Her Majesty's Government's view the question of sovereignty is, of course, not in issue.
Lord Molloy: My Lords, with regard to the islanders themselves, can the noble Lord the Minister make any statement with regard to conditions on the Falkland Islands under this illegal occupation by a fascist country? Secondly, can he give the House an assurance that if, as time goes on and we reach crisis point, there should be any dramatic change in the way in which our fellow Britons are being treated, a report will be made to the House at the earliest possible convenience of the Government?
Lord Belstead: My Lords, from reports which we have received from those who have returned from the Falkland Islands we have not heard of maltreatment of people upon the Falkland Islands, or, indeed, of the cessation of normal services. But, of course, it is impossible to tell what are the real views of people whose country is occupied by an alien power.
Lord Renton: My Lords, has my noble friend any confirmation of the reports that Argentinian troops, or some of them, are hungry and are having to turn to the British people in the Falkland Islands to relieve their hunger?
Lord Belstead: My Lords, I have understood that from the television transmissions. However, on this point I know no more than my noble friend.
Lord Leatherland: My Lords, would the noble Minister not agree that troops of any country in any circumstances are always hungry?
Lord Monson: My Lords, is the Minister aware that the Russians are cynically exploiting the requisitioning of British cruise liners for the task force by rushing in to grab the lion's share of the British cruise trade? In view of Russian support for Argentinian aggression, will the Government seriously consider banning all Russian cruise ships from British ports forthwith?
Lord Belstead: My Lords, I think that because of the present situation of the very delicate negotiations of Mr. Haig, the House would not expect me to give any forecast of steps which Her Majesty's Government now intend to take.
The Earl of Glasgow: My Lords, can my noble friend tell us what is Her Majesty's Government's policy towards South Georgia? It seems that the activity in the Falkland Islands will go on for a considerable time, and South Georgia, once recovered for us, must remain British and out of this issue in support of our Antarctic possessions.
Lord Belstead: My Lords, may I say to my noble friend that the policy of Her Majesty's Government towards South Georgia is precisely the same as the policy of Her Majesty's Government towards the rest of the Falkland Islands.
Lord Shackleton: My Lords, is the noble Lord aware that in fact the Norwegians have a better claim to South Georgia than the Argentines because they have been whaling there for years? It is quite ludicrous that the Argentines should claim that. May I again ask the noble Lord whether he will seriously consider putting out the case, because the point made by my noble and learned friend Lord Elwyn-Jones is one that has escaped a lot of people. My recollection is that we offered to take our claims to the Antarctic to The Hague court, but I think it is this juridical side that again could be explored more closely. If the Minister, well informed and generally courteous as he is to this House, is not really very well aware of it, it suggests that quite a lot of others of us are not.
Lord Belstead: My Lords, I shall certainly draw what the noble Lord and the noble and learned Lord, Lord Elwyn-Jones, have said to the attention of my right honourable friend.
Lord Beswick: My Lords, did I hear the noble Lord say that we had never suggested to the Argentines that the matter should be referred to the International Court? Is is not a fact that in 1948 Mr. Ernest Bevin announced in the House of Commons quite definitely that he had made that suggestion to the Argentine?
Lord Belstead: My Lords, I was advised before making the Statement to your Lordships this afternoon that the Argentines have never shown any interest in referring the sovereignty question to the International Court, and we have not proposed it.
Lord Beswick: My Lords, that is quite true. What I understood the noble Lord to say was that we had never suggested it should go to the International Court.
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The fact that the Argentines turned down that suggestion is another matter.
Lord Belstead: My Lords, at the risk of belabouring this point too far the words which I have just spoken in answer to Lord Beswick's last question were precisely the same words that I used when I originally answered the noble Lord, Lord Robbins.

Public Lending Right Scheme 1982
Debate resumed.
4.4 p.m.
Lord Jenkins of Putney: My Lords, having with some difficulty restrained myself from asking a question on the Statement on the Falklands, may I draw your Lordships back to the draft Public Lending Right Scheme in which there is a unanimity in the House which is probably greater in fact than the unanimity which appeared to exist on the previous question. I venture to say a few words on the subject because I was the Minister who in 1974–76 had the pleasure and the duty, as Minister for the Arts at that time, of introducing the first Public Lending Right Bill in another place. My noble friend Lord Willis will remember the struggles we had in that earlier period to bring the idea of public lending right round to the position of general acceptability which it has now obtained. In those earlier days the whole idea was strongly resisted and resented in library circles, and it was not easy to get the general acceptance which now exists.
As has been said—and this is welcome—from the beginning this has been an all-party affair. There has been support among all parties for the idea of public lending right. But, equally, the opposition was an all-party affair as well. I may possibly leave the Liberals out of that suggestion. I am not sure whether they joined in the oppositional endeavours towards public lending right. It certainly existed in both the major parties during that period. As the noble Lord, Lord Donaldson, said, the opposition were successful in preventing the first Public Lending Right Bill getting on the statute book. It got to a final stage, and indeed in all essences that first Bill was similar to the second Bill which the then Minister, Mr. St. JohnStevas, succeeded in getting on to the statute book.
This draft public lending right scheme follows in essence—there are important changes in detail—from those early endeavours. I therefore join in the general welcome which has been given in an especially hearty fashion, because here is the culmination of something which I had the pleasure of starting in a governmental sense. It is always welcome to see something which you started brought to a conclusion, although, as the noble Minister has said, it is hardly a conclusion; in a way it is a fresh beginning. It is the start of something which we all hope will grow to something of extreme significance.
The other point I would wish to make about public lending right is that the idea of payment for use is something which is widespread in our society. I hope that it will develop and become significant, and that

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in the course of time it may be spread to the work of other artists. If it is a good thing that writers shall receive a continuing remuneration arising from the sale, or lending or reading of their books, it would be an equally good thing, and equally possible in these days, to make an arrangement whereby painters would also receive a continuing remuneration from the exhibition and sale of their works. This is something to which at some time we shall get around.
Having said that, I only wish to join in the general welcome, to express the hope that the draft lending right scheme will speedily come into effect and that writers will benefit as much by it as we all hope that they have done over the years. I believe it will become an extremely important international development which all of us on all sides in this House will welcome.
The Earl of Gosford: My Lords, I should like to express my solidarity with the writers, and briefly congratulate them on reaching this point. I certainly have enjoyed books in the library, and I hope that at some time, as libraries are increasingly lending pictures to the public, the writers may support us in the future too.
Baroness Wootton of Abinger: My Lords, I have a few questions for the noble Earl about the administration of this scheme, but I think they can now wait until it is in operation. I should like to add my congratulations on the lucid and helpful way in which the noble Earl has explained what is, after all, quite a complex scheme. I should like to confirm the hope that we may have reciprocity. I was once surprised to find in the Peking University Library a book of my own. I trust that we shall have negotiations with the Republic of China as well as with those near at home.
The negotiations have been prolonged. One may take the old proverb and say that the mountain has been in travail, and it has produced, I would not say the proverbial mouse, but something rather less than a giant. But today of all days we might hope that it is a good omen that prolonged negotiations, possibly even in other contexts with which we are more immediately concerned, may result in a happy ending.
The Earl of Avon: My Lords, I am grateful to all noble Lords who have taken part in this short debate.
I am particularly grateful for their response, for their kind remarks about my right honourable friend the Minister for the Arts and for their kind remarks about the scheme itself, and I shall endeavour briefly to answer some of the questions put to me.
The noble Lord, Lord Beaumont, mentioned the question of assignments. Although an author can assign his rights to up to four people, the registrar will have dealings with only one assignee, in order to minimise the administrative costs. The noble Lord also mentioned photographers having to pad out their books. That came about by the need to define a book, and it was thought that the reference to a number of pages would mean that we should also have to define what was a page. It has generally been felt that the scheme should, in the main, reward the written word, and that is why 32 pages have to be at least half text, so that an illustrator who fulfils that requirement will
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qualify. The difficulty of phographers should, I suggest, be borne in mind by the noble Lord, Lord Jenkins, when he thinks of how we shall reimburse the painter as well.
The noble Lords, Lord Ardwick and Lord Somers, drew my attention to the question of translators. They are excluded on the grounds of equity because, where an author remained ineligible during his lifetime, it would, we think, be contentious if, upon his death, his translator was able to register all his works. However, that matter can be looked at in due course when the scheme is in operation.
Several noble Lords referred to the limit of £2 million. That can, of course, be changed with Parliamentary approval, as I said in my opening remarks. There was also some comment about index-linking. The amount available can be adjusted annually by resolution. That would allow for index-linking, and no doubt that consideration will be kept in mind by the Government of the day.
We had quite a discussion about reciprocity, and I can tell the House that the registrar will be ready to begin to study the question of reciprocal arrangements with the appropriate German authorities at an early date. In fact, he is intending at present to go there this year, which shows that we are not just saying words. I assure the House that the other comments that were made will be looked into. As I said in my opening remarks, this is a scheme which we are getting off the ground, and of course we can look at it after it has been going for several years.
On Question, Motion agreed to.

Shops Bill [H.L.]
4.13 p.m.
Report received.
Lord Robertson of Oakridge Lord Robertson of Oakridge moved Amendment No. 1:
After Clause 1, insert the following new clause:
("Exemption from employment on certain days
.—(1) It shall be a term of employment of any person employed in a shop that he shall not be required to undertake employment on any day on which he conscientiously believes that he should not work by reason of the religious faith which he practices:
Provided that the employer shall be entitled to require reasonable proof of the bona fide nature of that belief.
(2) This section shall not apply in respect of the employment by any registered pharmacist within the meaning of the Pharmacy and Poisons Act 1933 of any person employed in connection with the sale or supply of medicines or medical or surgical appliances in any premises required to be kept open on Sunday for the serving of customers in pursuance of a contract between the occupier of the premises and an Area Health Authority".
(3) In this section "shop" has the same meaning as in the Shops Act 1950.").
The noble Lord said: My Lords, the aim of this amendment is to make it possible for those who, on religious grounds, conscientiously feel that they should not work on any particular day of the week not to do so. Your Lordships will recall that in Committee I moved a similar amendment confined to exemption on Sundays. I was much encouraged by the sympathy and support which that amendment received. A

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number of points were raised, however, and I promised to consider them so as to bring forward another amendment, revised as necessary, at this stage.
Several noble Lords expressed the view that the exemption should cover faiths other than Christianity and, therefore, other days of the week, and that I have included in the amendment. I must apologise for a spelling mistake in the word "practises" at the end of the first paragraph of subsection (1); I was out of the country last week and I am afraid I failed to notice it. The question of chemists required to be open on Sunday was also raised, and I have included that point in the revised amendment. It includes another alteration, which is that the employer would be enabled to require the employee to substantiate the religious grounds for objecting to working on the day in question.
I do not think I need say more on the principle or indeed the feelings behind the amendment. If anyone requires further information, the most enjoyable way of getting it that I can recommend is to see the excellent Oscar-winning film "Chariots of Fire" in which the Christian, Eric Liddell, gives up the strong chance of an Olympic medal because one of the heats is to be run on a Sunday and he feels that that is inconsistent with setting aside one day a week for the Lord. The film has won top awards on both sides of the Atlantic, and I believe that is partly because the feeling and principle held to by Eric Liddell regardless of the cost it could have brought to him—and in some respects did bring to him—ring as true today as they did 58 years ago. I beg to move.
Baroness Trumpington: My Lords, the amendment is, as has been explained, a revised version of the amendment which the noble Lord, Lord Robertson, moved in Committee. In its revised form, I say at once, it is a significant improvement on the amendment we had before us then, and I congratulate and thank the noble Lord for the effort he has made to meet some of the objections to his amendment, some of them made by me, which in part gave rise to his withdrawing the amendment at that stage. In particular, in its revised form the amendment now makes proper allowance for the fact, raised at the earlier stage, that we now live in a multi-racial society and that other religions treat days other than than Sunday as their holy days. That aspect would be met by the revised amendment. Further, the amendment, by making special provision exempting pharmacists from its ambit, would go a little way towards dealing with the problems of special cases.
Having said that, I fear I am still unable to support the amendment in its present form. As before, I am wholeheartedly in favour of the principle which the amendment enshrines. Of course, nobody would favour the idea of a shopworker—or anybody else, for that matter—being compelled to work on a Sunday if he or she objected to working on that day. (Incidentally, one wonders how many people go to see "Chariots of Fire" on a Sunday.) The same goes for any other day of the week in respect of which such objections might apply for religions other than the Christian religion.
Accepting, as I do, the principle that shopworkers should not be compelled to work on Sundays when they believe they should not on religious grounds,
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we must then consider two further matters: first, does it necessarily follow that the principle has to be put into some statutory form and, secondly, assuming that it must be put into some statutory form, is the form in which it is proposed to do so, the right and appropriate form in which to do so? In considering the first question, I am far from being convinced that it is necessary to put this important principle into statutory form. The noble Lord, Lord Robertson, eloquently put the case for the principle of not having to work on a Sunday when conscience dictates otherwise, but he has not demonstrated that, unless we add his proposed new clause to the Bill, shopworkers who object to working on Sundays on those grounds would actually be required to do so.
Let us consider what is likely to happen. When the Bill comes into force, according to the noble Lord's hypothesis, some shops now required by law to remain closed will decide to open. In those shops, so the hypothesis runs, there are at present working some shopworkers who have sincere and bona fide religious beliefs which require that they shall not work on Sundays. The management of those shops—those which have now decided to open on Sundays—say to their staffs, "As from next week"—or next month or whatever is decided—"we shall be opening on Sundays. That means that all of you who work in our shop will have to work on Sundays, whether or not you like it and whether or not you believe in it". That is the hypothesis on which the amendment is founded. Would it really be like that? I cannot see it happening that way at all.
The most important point surely is this. If the shop worker is not required under the terms of his present employment to work on Sundays, nothing in my Bill will change that. The mere fact that his employer becomes entitled by law to open on Sunday does not change by one iota the terms of employment of the existing employees. In order to get any one of the existing employees to work on a Sunday it would be necessary for the employer to negotiate with the employees either individually or collectively—it might be through their trade union—and include provisions for working on a Sunday.
Any shop worker who objects on either religious or any other grounds to working on Sunday would at that stage be able to resist being made to work on that day. In effect it is already the position legally that no shop worker can be compelled to work on a Sunday under the existing law, except in those shops within the present exemptions. So any change in working hours to bring in Sunday working can be brought about only with the consent of the employees concerned. That means in effect that the employees concerned—those who object to Sunday working on religious grounds—already have to all intents and purposes the benefit which the amendment seeks to confer; namely, the right not to work on Sunday.
Any shop worker within the noble Lord's contemplation as being in need of the protection which the clause would confer need do no more than say to his employer, when Sunday working is to be introduced, "Not me, thank you. I do not agree with it. I am not required to do Sunday working now. You cannot make me do it unless I agree to a change in my working hours. I do not agree. I will stick to my present

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arrangements, and there is nothing that you can do to make me change my mind." That surely is the reality. The existing employees already enjoy the rights which this clause would seek to confer. It is quite unnecessary both in law and in practice.
Of course, it might he said that employers will bring pressure to bear on their employees to make them work on Sundays whether they like it or not. Perhaps they will—a few of them—but in that case the noble Lord's amendment will not help them any more than does the protection that they already enjoy by means of the terms of their existing employment conditions, to which I have referred. We should bear in mind that the existing employment law would protect shop workers from being unfairly dismissed, and that would, of course, include circumstances where an employer sought to dismiss an employee on the grounds that the employee would not agree to work on a Sunday where in the past he was not required to do so. So I would suggest to the House that the existing law already more than adequately covers what the noble Lord has in mind, and there is no need for the amendment. But even if there were a call for a conscience clause of this kind, we would have most carefully to consider whether the amendment would be the right and appropriate way to achieve it. I apologise for "going on", but this is my only chance.
The amendment would introduce a special kind of privilege for shop workers. Incidentally, I see from the clock that I have spoken for "no" minutes. There are plenty of other workers who work on Sundays: railway workers, those employed in posts and telecommunications, bus drivers, those employed in the leisure industries, and many others. If shop workers are to have a conscience clause by statute in this form, why not train drivers, petrol pump attendants, and all those other workers whose employment is such that working on Sundays arises from time to time? It would put shop workers in an anomalous position. It would put them in a privileged position compared with other workers whose employment involves working on Sundays. I suggest to the House that just because we are allowing shops to open on Sundays it should not mean that the workers need a special protection compared with the other workers whose occupation entails working on Sundays.
The noble Lord, Lord Robertson of Oakridge, has not enlightened the House on how railway workers and telephone workers who have conscientious objections to working on Sundays fare under the present law. We can only speculate as to whether there are problems about Sunday working for those who have religious objections to doing so where they fall within those classes of occupation where already Sunday working is allowed. But since we have heard nothing of the problems that they encounter, is it not reasonable to conclude that there are in fact no problems, or at least so few as not to make it necessary to legislate along the lines of the present amendment in order to provide necessary safeguards? In other words, if shopworkers need this kind of protection, then all workers who might have to work on a Sunday need it, and we need to legislate on these lines in the context of an employment protection Bill, and not in the context of a Bill designed to relax shop opening hours.
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In conclusion, let me emphasise once again that I have a great deal of sympathy for the principles which underlie the amendment, and that I am second to none in the desire to see that no shop worker is forced to work on a Sunday, or whatever day it is to which he has a religious objection to working, when he has genuine objections to doing so. Reluctantly, I cannot accept the amendment for the reasons that I have given. I cannot commend the amendment to your Lordships' House, and while accepting the spirit of it, I have to advise your Lordships to reject it. Surely this must be the longest speech ever made in "two minutes"!
Baroness MacLeod of Borve: My Lords, I should like, very briefly, to support my noble friend. Unfortunately this is the first time that I have been able to do so on what I regard as a very important Bill. I want to take this opportunity to congratulate my noble friend on piloting the Bill through the House. I believe that my noble friend Lady Trumpington has completely and sufficiently covered the point about the conscience clause—certainly from my point of view.
I want to make one other point, about an inaccuracy in the amendment, which would mean that your Lordships could not pass it this afternoon. The amendment refers to area health authorities, but there are no area health authorities. There are district health authorities, as from 1st April, and therefore on that ground alone I could not possibly support the amendment.
4.28 p.m.
Lord Bishopston: My Lords, I rise to seek some clarification from the noble Baroness, Lady Trumpington, intended, as always, to help her elucidate some of the questions raised, to her benefit or the benefit of others. I think that the amendment is an important one, since, as the noble Lord has said, it seeks to amend the Bill to take into account conscientious objection to working on certain days. It also has important implications for Christians, Jews, and indeed those of other faiths, and one might also have to take into account the sensitivities of ethnic minorities.
As we have been told by the noble Baroness, there has been conducted a poll which indicates a majority of consumers wanting a change to the Shops Acts to give them the freedom which she has already detailed —the freedom to shop whenever they wish. But we know, too, that some consumers are also shopworkers, and whether when they referred in the poll to being consumers they had in mind the effects of the Bill is another thing. They will be involved as a result of the changes in the Bill, if it becomes law.
It has also been pointed out that a significant number of shopworkers are also women, indeed married women. One can imagine some of the conflicts which will arise for women workers with homes and families when they have to weigh the interests of their families and the cooking of the Sunday joint with the demands of their shopkeeper employers. Duty would be entwined with some religious beliefs, and it would be difficult for us to implement that part of the amendment which states:
"Provided that the employer shall be entitled to require reasonable proof of the bona fide nature of that belief".

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Such a provision might be quite justified in an amendment of this kind, and it naturally calls into question the need for some kind of appeals procedure in order to arbitrate between the claims of the shop worker wanting to be exempted on grounds of religious belief and the claims of the employer, based on commercial reasons.
I would draw the attention of the noble Baroness to my understanding that in the closed shop legislation there are trade union membership safeguards with an appeals procedure; but I was not quite sure what was the case made by the noble Baroness. On the one hand, I think she accepts the case for some kind of exemption in respect of those with religious beliefs, but, on the other hand, says it is unnecessary because it is already in the legislation. She also says that if the concession was given to shopworkers, then the same kind of concession would be demanded by many other people as well. I was not quite sure what she had in mind when she mentioned, also, that if shopworkers were not obliged to work already on a Sunday they would not be obliged to work on a Sunday if the law were changed. Of course, if nobody works on a Sunday then no one is obliged to do so; but if other people in an establishment have to work on a Sunday, then surely everyone working there would be expected to work in the same way.
Baroness Trumpington: My Lords, may I just say to the noble Lord, Lord Bishopston, that he does realise, I hope, that I am in no position to answer any questions. As I pointed out, I was speaking at length because that was my only chance, this being Report stage.
Lord Bishopston: My Lords, I recognise the point being made there by the noble Baroness, but I am trying to be helpful to her by saying that some of us may have questions or doubts in our minds about some of the points she has raised, and it may be helpful to her if she can make known her views on these particular matters.
The other aspect is one which I have raised on previous occasions, and it is that the Bill goes beyond the Shops Acts because those working in banks and post offices, accountants, car park attendants and many others, may also have to work on a Sunday, and may also want to plead religious objection to doing so. Of course, the fact is that if the employer is told by his employees that they have objections to working on a Sunday, then we all know very well that there are 3 million people in the queues (many of them shop-workers, indeed) who would be quite ready to take the place of those who have genuine objections to working on a Sunday. I make these points because it may be that at a later stage the noble Baroness might feel inclined to look at the matter again to see whether some of the anomalies created by the Bill, which inherently is very simple indeed, can be tidied up.
Lord Robbins: My Lords, I agree completely with what the noble Baroness has said, and I simply cannot understand the alleged contradictions which the noble Lord, Lord Bishopston, professes to see in her exposition. In my judgment the noble Baroness demonstrated completely that either the amendment is superfluous—the grievances of those who object to
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working on days to which they attribute religious significance are covered already by the law or by custom—or, if that is not the case, then the amendment is entirely inappropriate in this context. If one has a special statute dealing with shops, then clearly one should have a special statute dealing with all forms of occupation in which the participants are asked to work on Sundays. I see no contradiction at all between the two points which the noble Baroness tried to bring out.
On the other hand, I see substantial objections to subsection (2) of the amendment, which singles out chemists as being excluded from the stipulations of subsection (1). If subsection (1) is necessary, then subsection (2) is incomplete and all sorts of occupations ought to be included, which I would humbly submit would transform the Bill in its simple reference. I conclude by saying that all that this Bill does is to create a greater freedom for those who prefer it.
Lord Monson: My Lords, I thoroughly agree with my noble friend Lord Robertson of Oakridge about the excellence of the film Chariots of Fire. On the other hand, I must disagree thoroughly with his amendment, for the reasons which the noble Baroness, Lady Trumpington, has so eloquently given. The noble Lord, Lord Bishopston, suggested that married women would find themselves in a dilemma if this amendment were not passed. May I point out to him that many bus conductors, ticket collectors, booking clerks, possibly airline stewardesses, and certainly nurses, policewomen and hospital doctors are already married women, and they do not seem to find too much of a problem.
Lord Elton: My Lords, I of course have the greatest respect for the views of the noble Lord, Lord Robertson, on this subject, and I understand fully the purpose of his amendment; but for a number of reasons I would advise your Lordships to consider its implications very carefully indeed before agreeing to accept it. Apart from a reservation about a reference to the Pharmacy and Poisons Act 1933, which has in fact been repealed, the Government have two main reservations about the desirability of including this amendment in my noble friend's Bill.
In the first place, we believe that terms and conditions of work are essentially matters which are best negotiated between employees and employers. After all, these parties are in a far better position than the Government could be to assess the circumstances of their trade, the needs and market position of their own firm and the requirements of the workers in employment there; so intervention would normally be inappropriate. On these grounds we would say to the noble Lord, Lord Robertson, that his amendment would appear to make statutory a provision which it really is up to individual workers to negotiate with their employers, if they feel strongly enough on the subject.
I think your Lordships will agree that, as my noble friend's Bill seeks to bring shops into line with other establishments employing people, it would be rational that shop assistants' conditions of service should, as far as possible, be on the same basis as those of other sections of trade and commerce—and noble Lords all round the House have made this point. In the view

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of the Government, therefore, the provision of facilities to enable workers, whatever their trade or profession, to observe holy days is best negotiated at the local level. I understand that this is the view also of the Commission for Racial Equality; and, incidentally, your Lordships may be interested to know that the commission have prepared guidance for employers on the issues involved in Moslem religious observance at the workplace.
My second point relates to the practicality of the noble Lord's amendment. I think he will agree that it might often be extremely difficult for an employer to establish whether someone really does hold a conscientious objection on religious grounds and is not simply exploiting a conscience clause for his own convenience. Although I know he said that the employer should have reasonable proof of this conviction, it is very difficult to see what it might be in every case. This has certainly been the experience of the Board of Deputies of British Jews, who since 1937 have been responsible for administering the Jewish Tribunal—appointed under the 1950 Act by my right honourable friend the Home Secretary—for inquiring into the conscientious objection of Jewish traders who, by virtue of their registration under the Act by the local authorities, are permitted to trade on Sundays. Unless some machinery were established to which employers and employees could refer dubious cases, I think that the provision would be unworkable and would tie the hands of employers quite unnecessarily.
I hope I have not given the House or the noble Lord, Lord Robertson, the impression that the Government are insensitive to the beliefs of those who try to follow their conscience in regard to any faith. But I really do believe that his amendment goes further than we might wish. As I have said, we think that this is a matter which should be negotiated locally by the parties concerned. We have no reason to believe that Christians and members of other faiths who wish to abstain from work in other trades and professions experience any difficulty, and I hope therefore that the noble Lord will agree to withdraw his amendment.
Lord Bishopston: My Lords, before the noble Lord sits down, will he accept that he has given some replies to questions that I put to the noble Baroness, to which, for reasons of order, she could not reply? We welcome some of the safeguards to which the noble Lord drew our attention.
Lord Jacques: My Lords, if this Bill ever sees the light of day as legislation, the real motive power behind it will be fear. Even if they do not want to do so, people will feel compelled to open their shops on Sundays in order to retain their market share. Employees will work on Sundays, not because they want to do so but because they will be afraid of losing their jobs. Fear will be the most important of the motive powers, and this will apply whether this amendment is in the Bill or not. Therefore, I feel quite indifferent.
Lord Mottistone: My Lords, may I ask a question of the noble Lord, Lord Jacques? Would he not agree
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that, if what he says is correct, it would apply today in Scotland?
Lord Jacques: No, my Lords. Scotland, I think, is quite different. I believe that the pattern that we are likely to get in this country will be more like that in some of the States of America than that in Scotland. Because of the distribution of population, the concentration of mutiples and department stores is different here from that in Scotland. One can find any number of places that are different—for example, the Falkland Islands.
Lord Robertson of Oakridge: My Lords, I am grateful to those noble Lords who have taken part in this short debate on my amendment. I thank the noble Baroness, Lady Trumpington, for the detailed and courteous way in which she replied. I think an important principle is involved here. Also I think there is something in what the noble Lord, Lord Jacques, has said in that the extra freedom which will be given to consumers, owners and proprietors of shops will carry a price, and part of the price will fall in the area of job security. No one can tell how my amendment would work out, but I believe it would significantly enhance the job security of those who feel in the way I have described on religious grounds.
On the question of creating a special case for shopworkers, I believe that the shopworkers are in a totally different category from essential workers. As Government speakers have been at pains to say in the debates that we have had on this Bill, they have not brought forward legislation of their own because there is no consensus on this subject and feelings run strongly in both directions. Feelings do not run strongly on whether, for instance, the telephone system should operate on Sundays, and therefore I think there is a distinct difference. I was impressed by what was said by the noble Lord, Lord Elton. I am grateful for the assurances and the other information that he gave, and in the circumstances I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.

Broadcasting Finance Bill [H.L.]
4.44 p.m.
Lord Jenkins of Putney: My Lords, I beg to move that this Bill be now read a second time. This happens to be by chance the anniversary of the day on which I learned a year ago that I was to become a Member of your Lordships' House, but it is the first time on which I have ventured to introduce a Bill into this Chamber and I hope that I may crave for a little indulgence which might be appropriate for a "new boy" if in so doing perhaps I have failed to carry out all the preliminary work which might have been appropriate to introducing a Bill which brings a rather complex idea before your Lordships. As a member of the Government, one goes into highly complex operations in sounding out all sorts of opinions all over the place and, before introducing a measure one has White Papers or Green Papers and goodness knows what else. None of that has been done and therefore I come before

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your Lordships with an unargued proposal: this is the first time that your Lordships will have heard anyone say anything in favour of the idea.
It would be unreasonable for me to expect your Lordships immediately to leap up and shout, "Eureka! This is something we have been waiting for all these years! This is just the thing we want!" Therefore, I will spend the first part of my introductory remarks on explaining the nature of the problem which the Bill seeks to solve, and the second part on explaining the Bill itself.
I should like to begin by saying that British broadcasting is among the best in the world and that the licence fee is small in relation to the quality and quantity of information and entertainment which is enjoyed by the viewer and the listener. Nevertheless, now that a full colour licence costs £46, and the figure must rise further if the standard of BBC radio and television is to be maintained and improved, increasing strains are being encountered which must be tackled before they get out of hand. The licence is a permit to install:
"apparatus for the purpose of receiving visual images sent by television from authorised broadcasting stations"—
that is, from the BBC and IBA. That is to say, one must have a licence even if one looks exclusively at programmes financed by advertising.
However, the licence fee is widely regarded as something one pays to look at BBC television. There is substance to this view for, after deductions, all the money goes to finance the corporation. Here lies the crux of the problem. The licence fee bears most hardly on the lower income families and it is precisely these families who look at BBC television least and who therefore resent the licence fee with a bitterness which can be testified to by every Member of Parliament. Members of another House, irrespective of whichever part of the country they come from or whichever party they represent, will tell you that this is something which people whose incomes are not among the largest regard as an imposition. As these Channel Three viewers see it, they are being forced to pay increasing sums for something they do not consume.
The stock answer to the problem is to say, "Cancel the licence fee and transfer the cost to taxation". This is strongly resisted by the BBC, who fear the spectre of Government control. Whether this fear is justified or not is beside the point. The fear is as real in Broadcasting House as is the conviction of commercial television watchers that they are being "conned". These are the two incompatibles, one might say, which this Bill seeks to resolve.
In an endeavour to do something to meet what is seen as being a reasonable complaint without changing fundamentally the licensing system on which we depend, further anomalies have been created by providing for collective licensing for those old folks who live in homes so that they pay a purely nominal fee and one licence is held on behalf of all the people who live in that place. That has only created more bitterness among the majority who live with families or by themselves, because they obviously do not benefit by the collective licence which is available to some others. Therefore the time has come for a radical solution to this problem before evasion of the licence fee—and what is seen as an unjust tax—becomes even more widespread than it is now.
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That brings me to the manner in which the Bill seeks to solve the problem which I have just described. The Bill reduces the licence fee to £10 from its present figure of £46—and £5 for black and white television only. May I, before I go on to describe the Bill, insert in parenthesis a word of appreciation to the House of Lords Public Bill Office, whose help in drafting the Bill which I am about to describe has been quite invaluable?
The Bill creates a broadcasting finance board whose chairman and vice-chairman are appointed by the Government. The other members of the board are appointed by the BBC and by the IBA. The board receives the licence fee and all broadcasting advertising revenue. It also receives a Government grant and may receive other monies granted to it by other bodies. Here the Bill is defective. It is my fault and that of no one else. An amendment to the Bill as printed will be required in order to make it clear that the board is entitled to receive a Government grant if the Government so decide.
The Bill takes something from the recommendations of the Pilkington Committee of 1962, for it is the board's main duty to redistribute the money that it receives to the BBC and the IBA. The programme contractors continue to put on programmes as at present but their income arrives from the board via the IBA, which acquires the duty of redistributing its share of the total revenue, as was recommended all those years ago by the Pilkington Committee. The small licence fee will be augmented not only by the total advertising revenue. This is important because the advertising revenue at the moment is subjected to a massive deduction by the Treasury. The TV levy, as it is called, now amounts to £52 million. This is taken out of broadcasting every year by the Treasury and is never seen again. Under this plan, of course, that £52 million will remain in broadcasting, will be part of the revenue of the broadcasting finance board, and will be available to put increasing programmes and meet increasing costs.
I have heard very substantial complaints from BBC sound radio people since their national income was abolished. The licensing fee, is now a television licensing fee. They say that, since they were deprived of a revenue which is specifically their own in relation to sound radio, they have been deprived of reasonable sums needed adequately to run a sound broadcasting system which is of not only a national but a local charater. In the proposal that I place before your Lordships, since the broadcasting finance board will have the right to ask for and receive, a Government grant, all forms of radio and television will have more money to use on programmes. The grant, however, need not necessarily be so large, because of course there is this extra £52 million which is now being taken out of television and which, under this proposal, will remain in.
The BBC will not have to take advertising. This the corporation is thoroughly against. It will no longer have to argue for increases in the licence fee, though it will undoubtedly and quite properly seek to maximise the Government grant, both directly and through its representatives on the board. The commercial radio and television programme companies will be relieved of the direct pressure of advertising interests, which will deal with the IBA on terms which the authority will agree with them.

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In sum, this is an attempt—perhaps an imperfect one —which I submit for your Lordships' consideration to solve a problem which has been with us for a long time. By this Bill, the British broadcasting, communications and entertainment media will be given a rational basis on which they will be able to grow and cope with the technical developments which are crowding upon them: satellite, video, cable. Other future developments are coming, and the fundamental basis of broadcasting finance is entirely unsound. This is an attempt to put it on a basis upon which it can survive in future. It is an attempt to ensure that these new developments can be faced and can be benefited from without the broadcasting system in this country losing its popularity, losing its independence or losing its variety and its excellence. It is essential to preserve these things, and it is my hope that your Lordships will will feel that this Bill is an endeavour to do that and at the same time to solve this difficult problem.
I am conscious of the fact that the Bill may need attention in detail. I should be very happy to listen to what your Lordships have to say, but it is my hope that you will feel that the changes which clearly need to be made in the Bill can be made in Committee, and that you will decide that the Bill is worth a Second Reading. I beg to move.
Moved, That the Bill be now read a second time. —(Lord Jenkins of Putney.)
4.57 p.m.
Lord Aylestone: My Lords, the proposal in the Bill is not unlike a proposal that was before the Annan Committee which sat a year or two ago. Its title was dissimilar. It was called the Public Broadcasting Commission and was completely rejected by the Annan Committee. The noble Lord's proposal in this Bill is laudable in the sense that he seeks to reduce the licence fee from its present £46 per year to £10 per year. No one who pays a licence fee will object to that.
However, I am afraid that my conclusion, in looking at this Bill—not in a great deal of detail, because we have not had a great deal of detail—is that not only would it reduce the licence fee from £46 a year to £10 a year, it would considerably reduce the number of programmes that are made, either by the BBC or the IBA. This is at a time when, within a very few months, we are going to have a fourth channel. I am grateful to the noble Lord for explaining the way in which broadcasting—both television and radio—is at present financed. Of course, he is quite right. The BBC's income comes entirely from the licence fee after the collection charge has been made for getting the money through the Post Office or in any other way. He is again right in saying that many people never quite understand that the licence fee covers all the programmes that they see: both BBC and IBA programmes.
What the noble Lord did not explain (and I am sure that this was purely an omission) is that in financing the other side of the coin—that is to say, in financing the independent side—the first charge on the advertising revenue is the making of programmes. Then there is a rental which is payable to the IBA for the transmission of the programmes. At this stage it is absolutely similar to the BBC although the method of
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raising the money is different. The noble Lord is quite right in saying that there is a charge—he said £52 million but it is much nearer £60 million, I think, and the noble Lord the Minister will probably remind us about that when he replies—which is taken from the industry as an additional rental, an additional charge. After that, from whatever is left the 15 contracting companies can make a profit. Of course, many of them do make quite a good profit; others do not. Some in fact would be better off investing their money in a building society at the current rate of 8·75 per cent. than they would be leaving it in television broadcasting, and certainly in radio. Let us hope all that improves.
Among the proposals in this Bill the noble Lord introduces what he calls the "Broadcasting Finance Board", which would receive the whole of the licence fee of £10—not £46—plus the whole of the advertising revenue, and the Government would immediately lose their first figure of, whatever is it—£52 million or £60 million. The noble Lord then suggests that to make up for any loss in the cost of broadcasting incurred by the BBC or the IBA the Government should pay a sum of money out of the public purse.
Let us try to look in detail at how this would work out. Assuming that the BBC today need a licence fee of £46 per licence-holder, as I personally do—indeed I think it is probably not enough, and I agree with the noble Lord, Lord Jenkins—they are going to get only £10, so the remaining £36, now obtained from the licence-holder, has to come out of a central fund set up by this Bill. In that sense it can only come partly from the £50 to £60 million that the Government pay or out of advertising revenue. The BBC therefore are being subsidised by money raised from advertising. A lot of people do not object to this at all, but the BBC do. They think that as a result they would lose their independence; and if they wish to retain the same sort of standards as now exist, some of the money to enable them to do that has to come from the independent side of broadcasting. That means they will be losers, because £50 million or £52 million is not going to make up for what the BBC lose. Therefore there will be fewer programmes made.
The House will be aware that both the BBC and the IBA have to cut their cloth according to the amount of material they have, and whether they are making a drama programme, a current affairs programme or whatever it may be, they have to look at the cost before they even start making it. That is why I said at the beginning that, if this system were approved and adopted, it would result in fewer programmes for people to look at and the programmes would not be of the standard we get now. Personally, I would prefer to see more money being spent on broadcasting now, from whatever source it comes, than that there should be a reduction in the number and quality of programmes.
I hope that my noble friend will consider the points I have made and those which other noble Lords will make during the course of this debate. I should like to thank him for introducing this matter. While I always enjoy debates about broadcasting—I do not think we get enough of them—I hope that at the end of the debate the noble Lord, Lord Jenkins, will think it worthwhile to withdraw his Bill rather than take it further in this House or in another place.
5.6 p.m.
Lord Hill of Luton: My Lords, the noble Lord, Lord Jenkins, began his studiously moderate speech by raising a point of general difficulty which we must all accept exists. The broadcasting licence fee, standing now at £46 and inevitably bound to rise with inflation, I suppose presents very great difficulty to a proportion of the population who are, to put it simply, too poor to contribute such a sum even by the instalment system which has been introduced in recent years. I agree there is a problem which needs a solution, but I submit to your Lordships that this Bill is not the solution.
Let us look at what this means. It means that the BBC's annual income, as I calculate it, would fall by £580 million per year. The independent companies' advertising income is of the order of £645 million a year. What is left when the BBC's income has fallen by £580 million is about £170 million that goes into this new finance committee kitty, and the whole of the £645 million of advertising income of the independent companies also goes into that kitty. So the total income of the finance board would amount to some £815 million, formed by those two elements.
If existing costs remain at the present level, the £815 million will be there to finance an expenditure of £1,410 million, which is the sum total of the existing expenditure of the two broadcasting companies. The net deficit, after allowing for the end of the levy—whether it is £40 million, £50 million, £60 million, but I take it as £50 million—to be met from the Exchequer is £645 million a year. The noble Lord, Lord Jenkins, forgot to add anything to his Bill to authorise the payment out of taxation of £645 million. This, of course, stems from the fact that the licence fee is to be reduced to £10 not only for those who find it difficult to pay but for the whole community of licence holders.
So let us begin with that position: we are considering a Bill which, when the noble Lord, Lord Jenkins, has had time to make this adjustment in order to make it clear that the state makes up the deficit, involves expenditure by the state of £645 million a year. No doubt that will be increasing year by year hereafter; and of course both services will be commercial services, for the BBC will be financed—like independent television—from a kitty which consists both of licence income and advertising income. It is difficult to see ahead what may happen, but both will be financed by advertising even though only one collects the money, as it were, by exhibiting advertisements on its programmes.
Let us assume that the state pays up that vast sum of £645 million. How is it to be distributed? There is to be a finance board, with two members from each of the services and a chairman and deputy chairman appointed by the state. It is a fair bet that the two services will disagree as to the distribution of the kitty—I may be unduly pessimistic, but life has taught me that such will be the result—particularly independent television, which sees money collected by its own advertising organisation being skimmed off, perhaps more than skimmed off, by their competitor, the BBC. But they will disagree about many pounds.
What happens then? In a tie, the chairman will have a second casting vote, but of course there will be an appeal and it will go up to the Secretary of State. The Secretary of State decides the disposal—if the
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present level of expenditure is maintained—of those many millions of pounds; and, of course, every year, on the assumption of an annual allocation, there will be such an appeal. The Government will inevitably be brought into broadcasting in a way that has hitherto been prevented and has not happened; and they must be, for they will be making up this deficit of £645 million. How can you keep them out? It is inevitable, whatever gentle words are used, that the Government will want a big say in its use and in its sharing between the services.
In other words, this Bill, with its innocent and admirable purpose, will lead inevitably to a very much greater influence over broadcasting by the Government of the day. There are some people who want that. There are one or two today—I am thinking of one, in particular—who attribute all the evils to the media in general, and to broadcasting in particular. I would not go so far as to say that that is the real purpose of the noble Lord. He might have an inkling that way, but I have no direct evidence. I have just a wholesome suspicion. But whether or not he intends that, this means the end of what has proved a satisfactory service—a public service and a commercial service competing with each other—
Lord Jenkins of Putney: My Lords, would the noble Lord not agree that the Government are already today heavily involved in broadcasting finance? Would he not agree that every year an argument goes on with the BBC as to how much the licence fee should be? Would he not agree that the Government are taking large sums of money out of commercial television? Are not the Government already in it up to the neck?
Lord Hill of Luton: My Lords, let us look at it. The licence fee used to be considered every five years. It is likely now to be every three years. Yes, my Lords, there is an argument about the size of the licence fee every three years. This Bill ensures a bigger argument every year and a bigger opportunity for control of the licence system as we have known it. Of course it does. This is the beginning of the end of what has proved to be a reasonably satisfactory system. By all means, let us solve the problem of many people who, by reason of poverty, cannot afford the licence. But there are other ways of solving such problems, particularly for a section of the community which probably relies on broadcasting more than any other. There is the problem and let us solve that.
But, for heaven's sake!, do not let us ask the state, even though the amendment is not yet in the Bill, to pay up this vast sum of money of £645 million, and set up a body which, by its very nature, will represent a Government influence over, and a Government pressure on, broadcasting such as we have avoided with great skill in this country. And do not let us think that this is just an innocent aid to the poor. It is a recipe for Government intervention in broadcasting of a kind that we have not seen in this country to date.
5.16 p.m.
Lord Willis: My Lords, like other noble Lords who have spoken, I applaud the motives of my noble friend Lord Jenkins in putting forward this Bill, particularly his concentration on the needs of the poorer sections of the community in relation to the licence fee. But

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I must say that I concur with other noble Lords in hoping that the House will reject this Bill. In my view, it is the wrong Bill at the wrong time, though not necessarily in the wrong place.
I do not want to go over all the arguments again, because they have been admirably covered by the noble Lords, Lord Aylestone and Lord Hill. But the thought of a finance board doling out money in this way fills me with absolute horror, because there is a point that the noble Lord, Lord Hill, did not touch on, but which is very important; that is, that this finance board, composed of a chairman, a deputy chairman and two representatives of each authority—by the way, it will also be another Quango—will inevitably have to make value judgments about our broadcasting.
In other words, each year the BBC will go and say "We are proposing to do so many series. We are proposing to extend here and to do this" and so on, while ITV will go along and say "We are proposing to do even better that that". There will inevitably be fierce arguments and the chairman and the deputy chairman will, in the end, have to take value judgments and say "We think that we should give more money to ITA this year, because they are going to do Brideshead Revisited and less money to the BBC, because they are not" and vice versa. They will have to make value judgments, which such a board is not equipped to do.
Another point that has to be made, apart from the huge Government subsidy which would be necessary, is the fact that there would be less enthusiasm on the part of the independent commercial companies to gather up the advertising, if they knew that a great section of it would be spent on the BBC. So there are so many arguments against this. I hope that my noble friend will withdraw the Bill and that he may come back at another time and give the House an opportunity to debate, in a different way, some possibilities of removing the burden of the licence fee from old age pensioners and from the poorer sections of the community. But what we need for that is something more simple and more direct.
May I beg him, at the same time, not to live under this delusion that I have found other noble Lords and Members of the other place live under, that, somehow, this country is divided into intelligent people who watch the BBC and the great masses who watch the ITV. They are the poorer sections of the community. They have the lumpen diet. They have "Crossroads", "Coronation Street" and so on, and the other people listen to the BBC, or watch the BBC, because it is infinitely superior. Noble Lords ought to know that the ratings do not bear this out at all. It is right across the board. People are very evenly divided in their tastes.
I venture to suggest that I move around just as much as my noble friend who has introduced this Bill, and I have met from time to time, as we all have met, objections from people about the size of the licence fee. But I have never had the licence fee thrust down my throat, because people say, "We only watch commercial television I venture to suggest that not many people have had that. Indeed, the record of commercial television in terms of quality matches the BBC in all respects, especially in recent years. There
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is no reason to think that people feel this kind of bitterness because they are paying for a BBC service. This is a kind of illusion which has been fostered through Tribune and which has taken on the virtue of a myth. Believe me, my Lords, it does not really exist.
My final point is that to pass this Bill, if it had any chance in the other place, would be once again to throw television and broadcasting into turmoil. We have just been through it all. We have just reallocated the franchises, the licences and so on. We have just agreed on a three-year fee for the BBC licence. Are we now going to throw it all back into the pot, with all the tremendous problems which would arise, simply because the noble Lord quite rightly wants to do something about the high level of the licence fee for poorer people? May I beg him, please, to withdraw the Bill and to come back to us again with a simpler and more straightforward proposal about the licence fee which we can debate?
5.21 p.m.
Lord Ardwick: My Lords, I hope that the noble Lord, Lord Hill of Luton, and the noble Lord, Lord Aylestone, will forgive me if I use the term "commercial television" instead of the correct term "independent television", because I want to talk about independence and I think it might be rather confusing if I talk all the time about independent television.
I have tried to put my prejudice, which is in favour of the prevailing system, aside and to look positively at the Bill, first because it is the inspiration of my noble friend and, secondly, because I know that he is as deeply concerned as I am, and as we all are, about value and standards, and in particular about the level of our culture. The Prime Minister chose a dedicated man indeed when he made Hugh Jenkins Minister for the Arts. But I am afraid that I can find little to commend in the Bill. Of course we should all like to find a way of financing the BBC which would be painless, but it could only be done by making the corporation dependent either on advertising or on general taxation, thus concealing the smart inflicted by the licence fee under the deeper pain which we all feel as we pay VAT and our income tax.
But painlessness cannot be the only aim of the exercise. We shrink, and we rightly shrink, from making public service broadcasting dependent on advertising, with all the compromises that that requires, and we recoil before the idea that the BBC should be directly financed by Government. Of course the BBC can never be wholly independent of Government, but it can be—and is— almost entirely independent of Government. That is one of the blessings which we enjoy, and it is envied by people like us in many countries of the world.
Some of us on this side of the House have a special reason for valuing the independence of the BBC. The BBC is not just a theatre, a cinema, a play centre of party games. It is also a great electronic newspaper—not an opinionated one, but a newspaper that provides facts and both analyses and broadcasts opinions. My party has enjoyed for many years the support, though not the uncritical support, of one powerful group of newspapers with a genius for political impact. Nevertheless, the preponderance of the spoken word in Britain is not on the side of Labour, and the BBC,

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and commercial television, with their fair and balanced presentation, makes the imbalance of the printed word less unacceptable. Of course, all political parties get upset if they think for one moment that the balance has been lost, but that only shows how strong in this country is the idea of balance and how usual is the achievement of balance by independent television and by the BBC. Nobody can complain at this moment, for example, that the electorate has not had full access to the views of Mr. Foot and Mr. Healey on the Falklands crisis.
This tradition of fairness, of balanced public service broadcasting, has been developed under the leadership of Director-Generals like Reith, Haley and Greene, fortified by a number of strong-minded chairmen of governors, and this outlook on how broadcasting should be carried out has, almost unconsciously, been adopted by commercial television. Yet all this developed almost fortuitously out of the original decision to finance the BBC by the product of a licensing system. For although in one sense licence fees are Government money collected by the Post Office and disbursed by the Home Office, with the consent of Parliament, they are money to which the BBC has a clear and uncontested right and can spend in any way the governors decide, within the terms of the charter. If ever that right were diminished, as the noble Lord, Lord Hill of Luton, has pointed out, and the BBC had to depend on the generosity of the Government of the day, then its independence would be in danger. The licence fee is in fact the very palladium of its liberties.
My noble friend seems to be motivated by two generous aspirations: to relieve pensioners of a heavy annual financial burden and to appease some impoverished viewers who are angry at having to pay a licence fee because, they say, they watch only commercial television. This argument does scant justice to the popular appeal of the BBC or the serious programmes of commercial television, as my noble friend Lord Willis pointed out. I do not believe there was an audience which watched "Brideshead" on commercial television simply because it was on commercial television and which would not have looked at Morecambe and Wise in the days when they were on the BBC.
The BBC has shown a remarkable ability to maintain its integrity and to fulfil its prescribed social purpose, which lies in keeping its mass audience. It has roughly 50 per cent. of the total audience, but of course it is not the same 50 per cent. every day. Most viewers commute between the channels. But the BBC has always realised that if it failed to keep its mass audience, then its right to a substantial licence fee would come under challenge—perhaps under valid challenge. Yet my noble friend is proposing a ludicrously small licence fee, the balance of the cost to be made up by a slice of the advertising revenue of commercial television, plus a Government grant. And the money would be dished out by a tripartite board.
On what principles would the share-out be? What profit should be allowed to the programme companies? What should their costs be? And with what assiduity should they continue to canvass advertising? The licence fee will of course have to go up. But is it really a heavy burden for most households in this country
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today? There is a problem which most of us in this Chamber have when we talk about sums of money. Our ideas of the value of pounds and pence were formed before 1939. For a few of us they were formed before 1914. It is very hard for us all to grasp that £1 in 1938 would buy as much as £17 would buy today. It is very difficult for us to realise that when today we hand a cloakroom attendant a 10p piece we are giving him not two shillings, not even the 6d which was the minimum tip before the war. We are giving him about a penny-three-farthings. If we want to give the pre-war minimum, then we must give 40p, and we might as well make it a 50p coin—which would be only very slightly generous.
The licence fee today is £46. I shudder as I write out the cheque because I find it very hard to realise that this is the equivalent of less than £3 pre-war—less than £3 a year. Of course it is hard on poor families, but they are selective poor families. They manage to find the rental for colour television, or the hire-purchase money. This is a general problem of poverty and not a special one. It is hard on pensioners too, but if we feel that they as a class ought to have colour television because it is a life-enhancing necessity for aging people who cannot get about as they used to do, then we should find a way of subsidising them directly instead of changing the whole system of broadcast finance, as this Bill proposes.
To me, it seems that the proposed new system breaks down at every point. It removes from the programme companies the incentive to earn their own revenues, to decide what their audience targets should be, what expenditures they should undertake and what profits they should try to make. These are essential disciplines well appreciated not only by broadcasters but also by those of us who have run newspapers, too. If the system proposed in the Bill were accepted, it would not be long before the BBC came under pressure to contribute to its keep by also taking advertising. Yet this would not reduce the dependence of both broadcasting systems on Government support because the amount of advertising money, even for television, is limited.
The danger is that if one increases the number of companies taking advertising, one does not increase the amount of advertising revenue which is available. There is a danger too, in the near future, that the increase in the number of channels available will spread broadcasting talent too thinly and the present excellence of our programmes could be diluted. It is essential, in this transitional period in particular, to maintain the existing broadcasting authorities as the custodians of a splendid tradition. I am not suggesting that our television is perfect, that its taste is impeccable and that its politics are always in perfect balance; but there is nothing better anywhere, and we must take care to protect it and preserve it: otherwise, we shall finish up as a small island of public service broadcasting surrounded by a sea of mush.
5.32 p.m.
Lord Elton: My Lords, this House takes a very considerable interest in questions of broadcasting policy and I am very much aware of the enormous concentration of experience and authority represented on the short list of speakers for this afternoon. For the

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enjoyment and illumination of listening to that alone, the noble Lord, Lord Jenkins of Putney, should be congratulated. I welcome the opportunity which he has afforded to the House today for this debate on the important matter of broadcasting finance. I am sorry, however, (particularly, since this is the first occasion on which I have spoken for the Government on broadcasting) that I cannot extend a similar welcome to the proposals in the noble Lord's Bill. I am indeed grateful to him for his explanation of the motivation behind his polite but fundamental assault on the present system of paying for broadcasting in this country—which was not, perhaps, evident from the text of the Bill itself.
The main responsibility of Government, and indeed of Parliament, in relation to broadcasting is to establish the framework and the structure within which television and sound broadcasting services are provided to the general public. At the heart of that structure lie the arrangements which have been devised for the financing of them. It may be for the assistance of the House if I were to summarise briefly what the existing financial arrangements for broadcasting in this country are. The BBC's domestic television and radio services are financed by sums paid to the BBC which are equivalent to the net revenue from the television licence fees. The continuation of these financial arrangements is provided for in the BBC's new Licence and Agreement, which was made last May and which was approved (as it had to be before it could take effect) by a resolution in another place. Last December my right honourable friend the Home Secretary made an order, to which noble Lords have referred, increasing the television licence fees from £34 for colour and £12 for monochrome to £46 and £15 respectively. He made it clear that, in deciding on this increase, his intention was that the fees should not be increased for at least three years and that he is expecting the corporation to live within the revenue which the new fees will produce until the end of the 1984–85 financial year. That at least will provide a respite for those poorer licence-payers to whom the noble Lord, Lord Hill of Luton, so eloquently drew our attention. It is also a step towards avoiding an adjustment of fees on an annual basis, against which, with others, the noble Lord, Lord Jenkins of Putney, complained.
The noble Lord, Lord Jenkins of Putney, referred to pressure on licences as a source of revenue, and certainly it is a less buoyant source of revenue than it was, as the noble Lord, Lord Ardwick, has made clear to your Lordships. We are aware of this and are seeking to reverse that trend. Only last month, my right honourable friend announced the Government's decision in principle to authorise the BBC to provide two television channels of direct broadcasting by satellite. One of these would be financed from the licence fee revenue, augmented perhaps by a supplemental licence fee for the reception of DBS transmissions; the other from revenue obtained from subscriptions from those members of the public wishing to receive the service.
On the independent side, television and local radio services are financed directly or indirectly by revenue obtained from the sale of advertising time in television
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and local radio programmes by the IBA's ITV, and independent local radio programme contractors. All this is very elementary to your Lordships but it is important to have it on the record in this discussion. The regionally based ITV service is financed directly, while the fourth channel, and in part the Welsh fourth channel, will be financed indirectly from this source of revenue—that is, from money provided by the IBA out of the sums collected from the ITV companies. An important feature of the financial arrangements I have just outlined is that they seek to avoid direct competition between the broadcasting organisations for the same sources of finance. This feature, which was endorsed by the Committee on the Future of Broadcasting chaired by the noble Lord, Lord Annan, has been regarded as important for the preservation of the quality and range of our broadcasting services—services which, I would endorse, are widely regarded both at home and abroad as second to none in the world.
It is against this background, my Lords, that I should now like to comment on the proposals in the noble Lord's Broadcasting Finance Bill. This appears to contemplate that our broadcasting services would continue to be financed by the television licence fee and by advertising. However, it proposes, I would suggest, nothing short of a wholesale dismantling not only of the existing arrangements for broadcasting finance, but also of the framework of independent broadcasting as we know it. In place of the very separate and distinct arrangements which have been made for financing the BBC's services on the one hand and those of the independent sector on the other, the Bill would establsh a Broadcasting Finance Board which would be the recipient of all revenue for broadcasting, both from the licence fee and from radio and television advertising. The board would distribute the money so received to the BBC and the IBA "in such proportions" (and I am now quoting from Clause 3(1) of the noble Lord's Bill) "as the board may determine". The Bill goes on, in Clause 7, to provide that if the BBC or the IBA are aggrieved by any decision of the board (presumably any decision on the allocation of money between them and they could well be frequent), then they may appeal to the Secretary of State for the Home Department, whose decision is presumably intended to be final.
My Lords, this is not the occasion to comment on detailed aspects of the Bill and I propose this afternoon to outline only what seem to Government to be the major difficulties with the noble Lord's proposals. But before I do so I think it only right to remind your Lordships that broadcasting finance is hardly a matter which Parliament has ignored, or which it has had no opportunity to consider, over recent years. One of the significant features of the existing arrangements for broadcasting finance which I have described is that they have all been the subject of extensive debate, inside Parliament and outside Parliament, since the publication of the report of the committee under the chairmanship of the noble Lord, Lord Annan. Moreover, the financial arrangements for ITV and independent local radio were endorsed, and those for the fourth and Welsh fourth channels determined, by Parliament in the Broadcasting Act 1980, now consolidated in the Broadcasting Act 1981.

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The arrangements for financing the BBC have, as I have already mentioned, been continued in the Corporation's new Licence and Agreement. These decisions have followed a period of great uncertainty in the broadcasting world, particularly about finance; indeed with the fourth and Welsh fourth channels due to come on the air later this year, it is fair to say that there remains a degree of uncertainty in the independent sector. I mention this because, even if the noble Lord's proposals commended themselves to your Lordships, we should have to think very hard before embarking on a wholesale dismembering of financial arrangements so recently determined, particularly in view of the further uncertainty which this would be bound to create. The present time, as the noble Lord, Lord Willis, has so lightly said, would not be appropriate for such radical changes even if they were to commend themselves to your Lordships, which I hope they will not.
Turning now to our specific criticisms of the noble Lord's Bill, the first concerns the effect which it would have on the amount and sources of finance available for broadcasting in this country. It will not have escaped your Lordships' attention that the Bill would place a maximum of £10 on the colour television licence and £5 on the monochrome fee. The present levels of £46 and £15 respectively are expected to yield during the current financial year a net revenue of £690 million. Fees of £10 and £5, however, would yield net revenue of little more than £110 million. How, I wondered earlier today, was the difference to be made up. The Bill was silent, but the noble Lord has kindly made good the omission, and it is to be made up by grants, presumably from the Government. That is understandable, because I do not see how advertising revenue could make up the shortfall even if the present limits on the amount of advertising permitted on ITV and independent local radio were increased. If the noble Lord has it in mind, and we do now know that he does, that the shortfall should be made up from direct government grant, I have to say that this idea is acceptable to the Government neither in principle nor in terms of the effect it would have in terms of public expenditure. The noble Lord, Lord Aylestone, made a considerable point of this, and it was eloquently elaborated by the noble Lord, Lord Hill of Luton.
The objection in principle is that direct government subvention would threaten the editorial independence of the broadcasters. It is for this reason that successive Governments and successive committees of inquiry have set their faces against this means of finance. The noble Lords, Lord Hill, and Lord Ardwick, in particular emphasised this, and I endorse the alarm which they express at this proposal. This House is the traditional defender of the liberties both of the realm and of its citizens, and I would be sorry indeed if the noble Lord, Lord Jenkins of Putney, were to celebrate what he tells us is the anniversary of his invitation to join it by weakening that important bastion against excessive concentration of power in the hands of politicians. The third possibility, to avoid that, would be that broadcasting finance should actually be reduced by getting on for £600 million a year, and I do not believe that the reduction which this would be bound to entail, either in the quality or the quantity,
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or in both quality and quantity, in broadcasting would be acceptable either to Parliament or to the general public or indeed to the noble Lord, Lord Jenkins of Putney, and he said he did not intend that.
The second criticism I would make of the Bill is that it would not only have the effect of dismantling the arrangements for financing our broadcasting services, it would also have the effect of dismantling the structure of independent broadcasting as Parliament has recently approved it. The existing independent broadcasting system is founded on a contractual relationship between the IBA and the programme contractors. In return for providing programmes for broadcasting by the IBA and for paying rentals to the authority the programmes contractors have the right to sell advertising time in the programmes they provide. It is very hard to see how this or any other contractual arrangement could exist if the ITV and independent local radio companies had to provide programmes on the basis the noble Lord proposes.
The basis would appear to be as follows. First, the Broadcasting Finance Board would determine a global figure for all the services provided by the IBA. That, I presume, is intended to include all the services provided by both ITV and independent local radio; that much is clear. I also presume, though there is no mention of them in the Bill, that it would also apply to the services provided by the Fourth Channel Company and in part by the Welsh Fourth Channel Authority. All that is to be thrown into the noble Lords' melting pot. I presume, also, that the next stage would be for the IBA to decide what should be the proportions in which this revenue should be distributed between ITV, independent local radio, the fourth channel and the Welsh fourth channel. But that judgement of Solomon would not be the last it has to perform. The third stage would presumably be for the IBA to decide the proper deserts of every independent television and local radio company as well.
What I am saying is that the financial arrangements envisaged in the noble Lord's Bill would simply not be compatible with the existing structure of ITV. It would also, and this is no less an objection, destroy the special relationship which the licence fee system creates between the BBC and the general public. The third, and in the Government's view perhaps the most compelling, argument against the proposals is that which the Annan Committee used against similar proposals which it received. These proposals, for reasons which I believe are still valid today, are not acceptable. They considered that a single body with power to allocate finance to broadcasting organisations would concentrate power over broadcasting in too few hands. I say it although the proposal is that the membership of the board should be appointed by the BBC and the IBA. In addition, it would represent a return to monopoly control of broadcasting when experience has shown that regulated competition is fundamentally healthy. Furthermore, such a body would be bound to increase the risk of political interference with broadcasting. Indeed, the Bill seems positively to invite it by making the decisions of the Broadcasting Finance Board appealable to the Secretary of State. I find it hard to imagine that any decision by the board would not be appealed against by one or other of the broadcasting organisations, if not

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by both. The noble Lord's Bill gives absolutely no indication as to the criteria which the proposed board should apply in determining the allocation of funds between the BBC and the IBA. Nor does it give any indication of the criteria which the Secretary of State should apply in determining appeals against the board's decisions. I am convinced that the Bill is a recipe for that political interference in broadcasting against which successive Governments have rightly set their faces.
I hope that I shall have persuaded the noble Lord of the dangers and problems which his Bill, if enacted, would create. I am not sure that it was necessary for me so to do, having heard the trenchant series of attacks upon it that preceded my delivery. I hope I can perhaps also persuade him that to cope in so short a measure as this with the huge ramifications of the wholesale changes he proposes is a legislative impossibility. I have listened with great interest and respect to a former chairman of the BBC, a former chairman of the IBA, indeed a former chairman of both, the writer of a famous, and for my part much lamented television serial as well as many other items for broadcasting, and a most distinguished journalist, and from not one of them did I detect one grain of support for the noble Lord's Bill. He has nevertheless provided us with an occasion of edification, but in view of what has been said already I hope your Lordships will not pass this Bill on Second Reading. And, in view of what has been said, I think any pretention of mine to cry,"My bird", as it falls to the ground would be drowned by the cries of other noble Lords who have shown so clearly that it is not acceptable to this House.
5.49 p.m.
Lord Jenkins of Putney: My Lords, I am grateful to your Lordships for the attention you have given to this Bill. As has been said, the quality of the contributions stems from their great experience in the media, and I will in a moment refer to some of those contributions. Before I do that I would say that I am perhaps one of the very few people on this side of the House who welcomed the arrival of commercial television in the beginning. I think that most of us on this side of the House are rather late conversions on this. However, the reason why I personally supported the arrival of commercial television was not that I am over-fond of capitalism but that I was at that time working closely, for and with, the British Actors' Equity Association and I saw here the arrival of a separate employer. Actors at that time were working wholly for the BBC as far as television was concerned, and the BBC, as a single employer will do, held them down. The remuneration that they received at the hands of the BBC was very small. Actors began to be paid decent money in television only when an alternative employer arrived on the scene. From that time, television, instead of being a spare-time occupation for an actor, gradually became something central to his economic life. That is the background against which I see the problem.
Also, I have been devoted utterly and absolutely to the notion of the mixed economy so far as the media of communication and entertainment are concerned.
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I am a very great supporter of state theatre, of the National Theatre and the Royal Shakespeare. But I do not wish to get rid of the commercial theatre, because I believe that the duality which exists in the theatre, the duality which exists in our television, is its strength. So the Bill begins from the proposition that basically we have our system right, in the sense that the dual control—commercial television competing with the state supported system—is, in my view, fundamentally correct. I think that it is correct in all areas of the media and correct so far as the theatre and television are concerned. I even go so far as to say that I think that it would be correct so far as the press is concerned. One of these days I hope that we shall begin to take that message as far as regards the press, and thereby deal with some of the problems which the noble Lord, Lord Ardwick, discerned—if he will forgive me for saying so—in his over press-orientated contribution.
The contribution of the noble Lord, Lord Hill of Luton, was exceptionally valuable although he profoundly disagreed with me. He gave a factual contribution in which he told me how much the Government grant would have to be, and I accept his figures absolutely. The Government would have to find something of the order of £600 million in order to maintain television at its present level of excellence. I think that that correctly summarises what he said. I entirely accept that. Indeed, that is why I said at the beginning that an amendment to make that clear would be necessary in the Bill. That slipped out in the course of drafting and, as I said, that was my fault and nobody else's.
Nevertheless, if I may say so, I think that the noble Lord, Lord Hill, led us a little astray. The £600 million to which he refers is already being taken out of the taxpayers' pocket in the licence fee. It is not a new £600 million. The licence fee would be reduced from £46 to £10. It is £600 million gross. It is coming out of the public's pocket, but it is coming out in terms of a licence. The £600 million required by this Bill is not a new £600 million but the same £600 million, but it would be found in terms of a Government grant rather than by means of a licence fee. Therefore, it is not an additional and fresh sum but simply a different way of finding the money. In other words, it is not found by the Government; ultimately, the whole cost of television in one way or another is found by the listener, the viewer or the taxpayer. He pays for it in the licence fee; he pays for it in taxation; he pays for it over the top on what he pays for goods which in turn pay for the advertising. Ultimately, we cannot escape from the fact that the money has to be found. However, although the noble Lord disagrees with my Bill, I personally do not see the sinister overtones which he sees in it. It seems to me to be a method of preserving the independence of television and not one of limiting it in any way. One way or another, these problems must be solved. The continual growth of the licence fee must be dealt with in some way.
I noticed in the contributions of noble Lords that, although they found things to disagree with in the Bill, they were not very free with their alternative proposals. I did not hear anyone say that we should put it all on taxation. If anybody had said that, I should have opposed it very strongly. However, nobody came up

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with that proposal. In other words, nobody has come up with an alternative. The problem itself would he recognised more freely by my noble friend Lord Willis, for example, if he had ever had any constituents. But he never has had any constituents, and anybody who has had constituents—
Lord Willis: My Lords, will the noble Lord allow me to interrupt? I have never had any constituents, but I move around the country doing extensive research with ordinary people for the programmes that I write. I think that they are as much constituents as the constituents of any MP.
Lord Jenkins of Putney: My Lords, my noble friend and I must disagree on that point. I think that it is the case—and I do not think that anybody would disagree—that one of the constant nags that Members of Parliament receive is complaints about the continual rise in the licence fee. As I made clear at the beginning, I personally do not believe that, in terms of its cost and value, this nagging is justified. But that it is there and that it is a real hardship bending upon many people in the poorer sections of the community, there can be no reasonable doubt.
The contribution of the noble Lord, Lord Aylestone, was equally well informed. I disagree with him on the following point. It does not seem to me that the relationship between the Independent Broadcasting Authority and the programme companies was, in fact, intended in the original Act in the way that it has turned out. That is a relationship which has developed over the years and the Motion that it is some sort of God-given thing which is inherent in the legislation itself is, in my view, wrong. The proposals which were before Annan—although I agree that they were not accepted by Annan—seemed to me to have more substance in them and to be more worthy of further consideration than perhaps the noble Lord led us to believe. This suggestion provides a future basis of broadcasting finance which could cope better with the increasing technicalities of broadcasting, with the new ideas of a fourth channel, cable television and so on, and provide a basis which could cope with it more easily than our present system, which somehow or other must be changed.
Other noble Lords have made useful and interesting contributions, and I agreed with a good deal that they had to say, although I am bound to admit that they fundamentally disagreed with the proposal that I am putting before the House this afternoon. That has often been my experience in life. I often find myself starting things off which somebody else has to finish. This may be one of those occasions—I do not know.
One of the advantages of the system that I am suggesting to your Lordships is that it lifts the direct pressure of advertisers off the backs of the programme companies. As Pilkington pointed out, if that pressure is taken off, the programme companies could continue with the business of making programmes which is their fundamental job and they would not have to spend most of their time raising their own revenue—the revenue would arrive but it would arrive not so directly. So, because the broadcasting finance board is a body which stands between the Government and the broadcasters, it seems to me that, so far from bringing Government directly to bear upon the broadcasters, it lifts it off the broadcasters and it places a barrier between the
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broadcasters and the Government in the same way as the Arts Council stands as a barrier between the performer, the theatre producer—the entertainment producer—and the Government. The broadcasting finance board brings in that element of an independent body standing between the people who are actually doing the job on the ground and the influence of Government.
So, in many respects I should have thought that the effects of this Bill would be opposite to those which many noble Lords have feared. In the interests of time I hope noble Lords will forgive me if I do not refer directly to all their interesting and valuable contributions. In that I hope I may include the forgiveness of both the Front Benches for not examining in detail the contributions of both Front Bench speakers.
I think that it is time that I reached, on my feet, a conclusion as to what I shall ask your Lordships to do about this Bill. It seems to me that I have a choice. I can, against the advice of the noble Lord, Lord Elton, ask your Lordships to give the Bill a Second Reading and ask noble Lords to make any objections to the Bill, if they have them, or any improvements to the Bill, in the Committee stage by the process of amendment, and at the end produce a Bill which, on Third Reading, your Lordships' House might find acceptable. Alternatively, I could seek the leave of the House to withdraw the Bill.
In making up my mind about this, there is a consideration which should weigh in the balance. As has been said on all sides, we have had—I hope that this is the case; I, myself, think it to be the case—a useful discussion, a discussion which will not leave the matter where it is, but which will take up the problem, because it is a problem that must be solved. In leaning towards not pursuing the matter to a Division, I do so not only because I think that I should be hopelessly defeated if I were to try to do so—I am not entirely sure that I should get sufficient support to mount a Division —but because fundamentally I believe that this is a matter which ought ultimately to be decided by process of Government legislation, perhaps introduced in another place, because it is intimately concerned with money and by tradition your Lordships' House does not concern itself quite so closely with money as does the other place.
For all those reasons—with a little reluctance, but nonetheless with sincere gratitude to your Lordships for the attention that you have given the matter, and in the hope that it will proceed in some form or another in the future—I therefore beg leave to withdraw the Motion for Second Reading.
Motion for Second Reading, by leave, withdrawn.
Bill, by leave, withdrawn.

The Armitage Report: Lorries, People and the Environment
6.2 p.m.
Lord Underhill Lord Underhill rose to ask Her Majesty's Government what action they will be taking with regard to the proposals on the Armitage Inquiry into Lorries, People and the Environment.
The noble Lord said: My Lords, I beg to ask the Question standing in my name and, in doing so, I would stress that this is the first opportunity that your Lord-

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ships' House has had to discuss the Armitage Report and the Government's proposals to it as set out in their White Paper of 1st December. I start with the premise that road freight transport is absolutely essential to the economy of our country. Eighty-three per cent, of the total freight tonnage is conveyed by road. In 1980, if we take all freights conveyed by all means measured in tonne-kilometres, some 63 per cent. was conveyed by road and 12 per cent. by rail.
Having said that, it must be pointed out that the average energy used per tonne mile is three times more by road than that by rail, and rail's advantage in this respect should be increased with general electrification. The Armitage Report itself draws attention to the fact that there are 40 million tonnes existing long-distance road freight which is suitable for conveyance by road. That would be significant for BR, but from the total freight conveyed by road would be very insignificant, although the percentage would be much higher if one took the heavier lorries only travelling over 125 miles.
Other countries handle these matters differently. I am simply making a statement about it, not suggesting that we should follow. Much greater financial help is given to the railways, far more rail electrification and there is quantity licensing of lorries. In fact, paragraph 127 of the report points out that EEC countries have a far more interventionist approach to the question of transport.
We cannot consider the question of lorries—whether heavy or otherwise—in isolation and I am sorry that there is little reference in the report to the possibility of giving serious consideration to an integrated transport policy. The Government make no reference to this in their White Paper. The report, quite properly, stresses the advantages, of the lorry in its door-to-door service to customers and that the entire distribution system and also some industries are actually built around the system of our lorries.
Over the past 33 years there has been a continuous trend towards heavier lorries, and this is set out in Table 1 in the Armitage Report. In 1960 there were 10 times as many lorries over eight tonnes as there were in 1946, and in 1979, 100 times as many. It is claimed that heavier lorries will lead to a smaller number of vehicles on the roads. That has not been borne out in the past. The Government accept the estimate set out in the Transport and Road Research Laboratory Report, SR590, that if freight remains at the 1977 level, over a number of years roughly 79,000 32½-tonne lorries will be replaced by only 69,000 lorries.
Lord Davies of Leek: My Lords, will my noble friend give way for a moment? I apologise for being late, but perhaps we could look at this quotation. I cannot follow it. At page 152, at paragraph 4.2.1 it says that the total amount of heavy lorry traffic would be reduced by allowing heavier lorries. That is the axis of their entire argument, but it assumes that the impedimenta of traffic is static. I do not know how, logically, anyone could accept that. The roads of Britain are bad enough now without anything else. I am sorry that I interrupted, but I wanted to impress that upon my noble friend.
Lord Underhill: My Lords, my noble friend makes a point with which I shall deal in some of the following
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figures. It is claimed that two-thirds of the existing 32½ tonners will be replaced by 43,000 heavier lorries, 80 per cent. of which will be 38-tonne and 40-tonne vehicles.
What is the evidence for this? The total carriage of freight by road was 1,525 million tonnes in 1967, and this fell to 1,435 million tonnes in 1977. But the number of heavier lorries increased during that period. Another TRRL Report, SR572, also points out that the actual load factor of lorries over eight tonnes has declined from some 65 per cent. to 50 per cent. over the past 10 years.
The other research laboratory report to which I referred, SR590, on page 22 refers to operators' estimates of the number of vehicles that they may need in their fleet if heavier lorries came into being. It says that there could be a plus or minus of 3 per cent. in fleet numbers and then admits:
"this introduces an element of uncertainty, both in the number of vehicles expected and in the magnitude of the operating cost savings."
That is in the TRRL report. The same report on page 7 says:
"While there are considerable cost savings in carrying more goods on heavier goods vehicles of up to 24 tonnes gross vehicle weight, additional savings from using even heavier vehicles are very much less and the cost per tonne-mile levels out beyond 26 tonnes GVW, implying that savings are small for heavier vehicles."
That was confirmed by evidence given by the National Freight Corporation to Armitage, when they said:
"If the 40 tonner were loaded at less than 90 per cent. of its payload potential, it would cost more to run per tonne-mile than a 32 tonner".
Even if the aspirations of the number of lorries was achieved, what would be the cost? Paragraph 118 of Armitage suggests that there is a danger of us getting this matter out of proportion. It says:
"it would be foolish to sacrifice a large part of the clear economic benefits of lorries for the sake of marginal environmental improvements to which few attached any significant value".
But then it compensated that statement in the final sentence of the same paragraph:
"There must be improvement, both for the sake of the quality of people's lives and because, without it, resentment and hostility towards the lorry will increase and put at risk the economic advantages of the lorry".
The Secretary of State put the position succinctly on 21st January 1981 in the other place, when at column 824 he said:
"The essential question is whether we can get the economic effects of the lorry without paying an environmental price that the public would regard as too high. In other words where does the public interest lie?"
That I suggest, is the important issue which faces us in the debate tonight on this Question.
Paragraph 139 of the report, which I paraphrase, says that the objective must be to reduce substantially the adverse effects of lorries, and reduce the problems caused by lorries in as many as possible of the places which would suffer large deterioration in conditions if nothing further was done. I would ask your Lordships: do the recommendations of the report match up to that statement? It is claimed that the heavier lorry will save the haulage industry some £150 million a year, and help to provide a still more efficient and economical service. But I understand that the user

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expenditure on road freight per annum in 1979 was £13,500 million—the actual user cost. The £150 million represents 0·1 per cent., and a tenth of a penny in the pound if that was conveyed to the consumers.
Armitage looked then at the various problems. In paragraph 133 it said that these are such places as where conditions will become seriously worse; on roads carrying very heavy traffic; places unlikely to be by-passed before the end of the century. In evidence to Armitage the Department of Transport said that 500 such by-passes will be required. But it stated that the county surveyors challenge this and said at least 600 would be needed. I note that on 5th March this year the Department of Transport press notice stated that 35 new local by-passes at a cost of some £130 million are to be constructed, and in the next four to five years some further 220 towns and villages will benefit from by-passes. I do not believe that the press notice stated the actual cost.
I would ask the Minister: how many towns of 10,000 population or more will not have a by-pass by the end of the century? What about the places with below 10,000 population? Surely they have to be by-passed as well. It is no good looking only at the major roads, because lorries of all sizes go on minor roads as well as major roads. Paragraph 58 of the report stresses:
"roads [will] have to be constructed to higher standards to accommodate lorries"
must be made stronger, and bridges be built higher and stronger, and gradients be reduced; and that lorry traffic adds 15 per cent. on road costs. Paragraph 59 goes on to say that lorries account for over 90 per cent. of the road damage, and that major maintenance work is having to be done on motorways earlier than was anticipated.
Lord Davies of Leek: My Lords, may I stop the noble Lord again? I have been following, too. Again, this is a marvellous situation. There is no estimate given. We get these estimates of what the lorries will do, but what about the farmland and the number of gallons of milk lost because new roads are cut in new areas? There is no assessment anywhere in this report of the effect on the balance of payments because of agricultural losses through the diversion of these roads. I am glad that the noble Lord has given me the opportunity to get that point on the record.
Lord Underhill: My Lords, I am certain that what my noble friend has said will be followed by the point that, even if we were able to improve all the main highways with by-passes, there still would be the problem of lorries coming off motorways and on to other roads, into conurbations, warehouses, factories and distribution points, et cetera. This point is emphasised in paragraph 229 of the report. This says that although the M.25 will be useful we must not overstress the importance of the M.25 because 95 per cent. of the lorries coming into London do so because they have business in London, and only 5 per cent. go straight through. Therefore, the M.25 will not avoid the problem of all the lorries coming off there and coming into London.
Paragraph 82 of the report says that the intrusion comes most from lorries using inadequate roads, and
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that even the heaviest lorries are being used increasingly for delivery to shops. That will be amplified if the heavier lorries are to be used by distribution to shops. Paragraph 112 says:
"Any conclusions about the location of lorry problems are therefore extremely tentative."
Unfortunately, I think there is too little in the report about the possible development of break bulk depots, and of transhipment depots which may be run jointly by industry or even by local authorities in order that we can, if there is an advantage in heavier lorries, avoid the heavy lorries coming on to the inadequate roads about which Armitage reports. There is nothing in the recommendations about this. An independent survey would appear to be required. There is nothing whatever in the Government White Paper.
Paragraph 132 makes a statement that it seems probable that the total of environmental damage done by lorries in the period to the end of the century will grow, but not by the same proportion as the mileage of the heaviest lorries. I would suggest that that is of poor satisfaction to anybody who is suffering inconvenience, and will suffer increased inconvenience.
What will be the effect on bridges? This is dealt with at some length in paragraphs 391 to 400. I have not time to go into great detail, but the consultant engineers, Husband and Company, commissioned by the department, suggest that if bridges are to be strengthened expenditure of some £1,200 million will be required to cover the bridges on the A. roads and also on the minor roads. County engineers do not accept the figures given in the Armitage Report. They say they want far more surveys. British Rail, which is the largest bridge owner, is said to dispute the assumptions on bridge damage contained in the report. It is emphasised that the problem could be more serious if a number of heavy lorries follow each other, no matter what the number of axles. Despite this, Armitage recommends the heavier lorry, and the Government in the White Paper set on one side, I would suggest rather superficially, what could be the effect on bridges. It says that 200 bridges on trunk roads may have to be assessed. I should like to know how they got that figure. What about the minor roads, and all the other roads on which the heavier lorries will go?
What is the effect on underground pipes? There are about 125,000 miles of gas pipes, and 200,000 miles of water mains. The British Gas Corporation expressed to Armitage on the explosions which took place in Manchester in 1977, the view that heavy lorries were the serious cause. The National Water Council, also in evidence to Armitage, said that the impact of road traffic on underground services causes considerable damage and is responsible for a large proportion of sewer and water mains maintenance repair bills. However, what does Armitage say in paragraph 60? It says:
"Lorries probably contribute to damage to [underground] pipes … although there is no evidence that they are the main cause of damage or even a main contributor."
Paragraph 390 says:
"Little is known about the effects of lorries on underground pipes, and it is difficult to say precisely what would be the effects of heavier lorries."
Surprisingly, despite that and without solid evidence,

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Armitage proceeds, although stating that more research needs to be done on the question.
We find the same lack of evidence with regard to vibration. Paragraph 94 says:
"There is no objective comprehensible evidence on the effects of vibration";
and paragraph 97 speaks of ignorance about the effects of vibration on old buildings. The same is said in paragraph 88:
"There is no usable nationally-based representative series of statistics about lorry noise",
although the Noise Advisory Council has estimated that £1,600 million would be needed to insulate against noise from all traffic, the figure having been based on the Government's own criteria. Is the question of noise to be included in the annual testing of heavy goods vehicles?
The report states there is no research at all on the effect on pavements, verges and road furniture where lorries leave the highway, and paragraph 104 says:
"There is no conclusive evidence about the trends in smoke fumes from individual lorries in recent years."
But despite all those reservations, the recommendation is put forward for 44 tonne lorries, which the Government have rejected in favour of 40.
While I must not delay your Lordships for too long, I must refer to the question of the determination of the number of axles. Armitage points out that the amount of road damage by vehicles depends on weights imposed through the individual axles. However, I find that paragraph 378 states:
"What is known as the fourth power law for determining road damage has been derived from experiments carried out by the American Association of State Highway Officials (AASHO) between 1958 and 1960".
There have been criticisms—I hope the Minister will be able to answer them—that those American tests were carried out at a constant speed of 35 mph on good quality surfaces—flat and straight—and took no account of highway conditions, corners and gradients.
The Government's White Paper makes clear that their determination on the number of axles is based on those AASHO tests. I find that even in the TRRL report to which I referred, SR590, there is
"considerable doubt about the applicability of the fourth power law on certain types of vehicles and road construction. Nevertheless, it has been taken as the best means for calculating the overall damage effects of a changed axle spectrum. There is also uncertainty about the best methods for calculating the effects of heavier lorries on bridges".
Thus, we have not only Armitage expressing doubt about the fourth power law but the TRRL report expressing such doubts. Yet the Government accept it in their White Paper as the justification for heavier lorries.
I wish to emphasise that there are conflicting interests; while the manufacturers of lorries obviously want a quick decision—because they want to know what to do—problems have been put up by other bodies, including local authorities, who suggest that many surveys have yet to be made. Over and above the Government White Paper issued on 1st December, the Government have asked local authorities—certainly they have asked the AMA—for details on six important aspects on which they could not possibly have done
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detailed work yet. I should like to know whether the Government intend to hold up their final decision until they have received real answers to some of the problems that have been set.
Far too many doubts are expressed in the Armitage Report, and there are far too many issues about which Armitage says there is need for more research and information. Indeed, I should like to know whether the Department of Transport has a section dealing with the environment so that all matters can be considered within that department. If so, may we be told the size of that section? In my view, the Government White Paper does not deal with those doubts and reservations. It deals with a number of them rather superficially and, based on that, my Question asks what action the Government propose to take.
6.25 p.m.
Lord Tanlaw: My Lords, we are grateful to the noble Lord, Lord Underhill, for raising this subject because it is about time the Government responded to the Armitage Report and recommendations and made clear what is their attitude to those recommendations. Indeed, I am not sure why the Government are apparently so hesitant about committing themselves to the Armitage proposals. Perhaps they are backing away from the apparent conflict of interest between those who are part of the environmental lobby and those who wish to see an efficient and integrated transport system in Britain. I should be grateful if, when he replies, the Minister would spell out clearly whether it is the Government's policy to have integration in all sections of the transport industry, for that is the attitude of these Benches, which is based on the urgent need for integration of the interests of both the environment and an efficient transport industry. Of course that means compromise, but it need not necessarily mean confrontation, or in this case inaction, on the part of the Government or an inefficient road transport industry.
As the noble Lord, Lord Underhill, said, the main recommendation in the Armitage Report is to alter the specification of heavy vehicles in line with the EEC. I am really in no position, without the knowledge of Lord Underhill, to question the technical details of that; I can only assume that the report is accurate and that all the evidence put before it is what is available to us today on which to make decisions for a transport policy. I would therefore agree with Sir Arthur Armitage in his statement to the House of Commons Transport Committee on 25th February 1981 when he said:
"There would be a help for both the economy and the environment if you increased the weight but not the size … of lorries … but did not in any way lower safety standards, noise standards or vibration standards."
If that is what the Armitage Report is saying, then we accept it, and we accept the general recommendations contained in the report in the hope that they will reduce the transport and distribution costs of industry and commerce by about £400 million per year—£150 million due to increased carrying capacity and £225 million due to changes in speed limits—without any direct cost to the Government or taxpayer. If those savings can be achieved, that should have a particular impact on the transport of bulk materials, especially foodstuffs, agricultural supplies, produce, fuels and

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so on, which must be of benefit to the consumer because of the lowering of costs of transport.
As for the technical considerations, I understand that the proposals will result in a lorry which is no bigger in load space than the existing 32·5 tonne lorry; the extra 19 inches in length is included on the basis of enlarging the driver's cab for increased safety and comfort. The increased number of axles and their configuration is, I assume, to make the heavier lorry less damaging to the roads and underground pipes and bridges referred to by the noble Lord, Lord Underhill. I cannot dispute any of that; I am assured by the report that it is correct and, if it is, we accept it. If it can be proved—and perhaps the Government will guide us on it—should we doubt it? If we do not doubt it, then I can see nothing wrong with the proposals.
The reason why we accept the changes is that technically the 40 tonne lorry is no bigger than existing lorries. It is apparently safer and environmentally more acceptable. Nevertheless, it is a very large lorry indeed and the big "if" we have concerns the building of by-passes around towns, villages and any conurbations through which the lorries will be diverted. If the Government say we are not to build the by-passes, then we must oppose the change and ask the Government seriously to reconsider what they are doing in terms of their transport policy, because, without the by-passes yet with the lorries, there will be created a massive confrontation with the environmentalists and indeed with anybody who wants to live a civilised life in this country. Therefore I assume all along that the road-building programme will be integrated in terms of timing with the legislation that is to introduce new and heavier vehicles on to our roads.
I also accept the argument that has been put forward by the road transport lobby that there will be an increase in job security. First, the heavier lorry will keep United Kingdom industry competitive, and, secondly, it will, it is hoped, provide new jobs in the construction industry, in the building of the new by-passes, dual carriageways and motorways which will have to be provided in conjunction with the introduction of new lorries. Thirdly, the heavier lorry will provide certainty and an established home base for the motor vehicle and allied industries for the foreseeable future. Fourthly, it will reduce transport costs for industrial and commercial developments in rural areas. So people living in the country will, in theory, benefit from a decrease in transport costs.
I should like the noble Lord the Minister to answer one question in particular. Will the by-passes be constructed before the specifications become law? I shall be much reassured if he is able to say that that will be the case.
Armitage has also referred to the question of heavy vehicle parking in central parts of towns and cities. We strongly believe that there is a need to separate the requirements of the driver from those of his vehicle during a night's stopover. In each case the requirments are completely different. I feel that this is a matter for local councils. They have a responsibility to their ratepayers to prevent large lorries from parking in the centre of cities or towns where no facilities are available. We must bear in mind that the driver must have an overnight stopover, rather than sleep in
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his cab, and so there must be some meeting of minds on this question. It is up to the local authorities ot provide lorry parks on the outer rims of cities or towns, and so avoid drivers having to take vehicles into the centre of cities. I do not see how this can be achieved in any other way. If ratepayers find heavy vehicles parked in the centre of towns or cities, they must look at their representation and perhaps change their councillors, or at least form a deputation. This is entirely a local responsibility, not a national one.
The noble Lord, Lord Underhill, quoted many statistics, and I shall add only a couple more. I am sure that he will approve of them. It might be worth mentioning that the capacity of one freight train is the equivalent of 60 heavy lorries. A double-track railway can, I understand, carry the freight equivalent of 1,000 to 2,400 lorries per hour each way. Those figures give some idea of the maximum comparative capacities of road and rail.
The question remains—I have raised this on previous occasions in the House—of how the switch of 40 million tonnes of freight from road to rail can be achieved. Many ideas have been put forward, and I should like the Government to look at an old suggestion which I believe has considerable relevance in an integrated transport system for the future. It is simply that the revenue collected from all road transport and from fuel oil taxes for transport should be pooled to create an integrated road/rail and inland waterway system, operated by a single Government body. Here I take up a point made by the noble Lord, Lord Underhill. The motorways were not designed for today's load factors, and it is the overloading of the motorway system that is causing the break-up of the surface, requiring extra expenditure. Yet the extra expenditure is not passed on to the heavy lorry operators.
I believe that there is a good case for a Government body becoming responsible for all main motorways and bypasses, as well as the permanent way of the railways, including all its fixtures and fittings. The railways would then become the operating company and would pay a suitable rent to the Government body. This is not a new idea. In the United States, Amtrack owns all the track and the various operating railroad companies pay rent for the use of the track. I believe that many of the existing problems regarding the financing of British Railways—with the muddle that the Government seem to be in in distinguishing the capital programme from the revenue programme—could be greatly eased if the Government were to consider the idea that, in the same way as they own the roads, they should own the railway track. British Rail would become the operator and would pay rent.
I believe that that would greatly assist in costing the efficiency of the railways in their operations and manning levels, while at the same time it would put them on a more competitive basis with roads used by heavy freight traffic. This parity cannot be achieved until the British Rail electrification programme is further ahead than it is at the moment. I ask the Government to look again at why they appear to be delaying British Rail's electrification programme simply because it would appear that there is a temporary drop in world energy prices.
It may be worth reminding the noble Lord the Minister of something that was said by Sheikh Yamani

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in a most remarkable speech in London on 31st March this year. He reminded his audience that consumers— that is, consumers in the Western world—
"may be confronted with the unpleasant possibility of all the admirable activities carried out over the past 10 years in the development of new and renewable energy sources coming to a sudden halt. Faced with a gloomy outlook of future energy prices, the economic feasibility of projects under way in those sources could change dramatically. Already many such projects that had been planned for development in the last few years were either abandoned last year or, at best, rescheduled for execution at a later point in the future. Any further drop in the international price of energy will only aggravate this situation".
What Sheikh Yamani was saying was that many of the alternative energy projects—and I include among them rail electrification, or having a proper, efficient rail system in this country by the turn of the century—have been put back or delayed simply because there appears to be no problem with regard to energy; the energy crisis has faded away for a while. This represents a very false sense of security, and I hope that the Government will confirm that they are not suffering from that at the moment.
Finally, I should like to say a few words about the EEC. The EEC proposals are based essentially on the 40-tonne lorry. When agreed, these proposals will become legally applicable for transport purposes within the EEC, which includes this country. If the United Kingdom withdrew from the European Economic Community, the consequences would be detrimental and almost unthinkable. There would be double handling charges at both ports, and there would be different regulations, different standards, and so on. I sincerely hope that the noble Lord, Lord Underhill, will persuade those members of his party who are very enthusiastic about withdrawal from the EEC that that would be quite disastrous in terms of road transport across the continent. There would be no beneficiaries at all, and the costs to the consumer would be far greater. The cost to British industry would be almost catastrophic. I hope that the noble Lord will use his knowledge and influence in this area to effect a change of heart perhaps—or perhaps not, I do not mind, really. But the more people there are who believe that the EEC is really beneficial to this country in terms of jobs, the happier everyone will be.
I believe that the Armitage Report and the requirements in it are designed merely to keep in step with EEC requirements, and we from these Benches fully support them. I look forward to some constructive comments from the noble Lord the Minister when he winds up, so as to help us in our further deliberations on the creation of an integrated transport system, of which the Armitage Report is part.
6.40 p.m.
Lord Stanley of Alderley: My Lords, I welcome the Question asked by the noble Lord, Lord Underhill, on the Armitage Report, though I have to say to him that I do not really agree with his view, despite his persuasiveness and, indeed, despite the help from his noble friend Lord Davies of Leek. I would only say to the noble Lord, Lord Davies of Leek, that perhaps he has been absent from Wales too long, and that he has got the wrong end of the stick on this occasion.
I wish to concentrate my remarks on the proposal
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in the Armitage Report to allow lorries to increase to the standard now prevailing in the Common Market of 44 tonnes from our existing 32, and the consequences this report has on "land take". As a farmer, who must insist on the most economic method of transport from his farm to the consumer or from his supplier to himself, I hope that the Government will allow weights of 44 tonnes—and this despite the fact that I live in a village. I am convinced that heavier lorries will damage my peace no more than the present lighter ones, and it must be a fact that there will be fewer of them as each will carry more. I am sorry to say to the noble Lord, Lord Underhill, to whom I listened very carefully—I hope he will not mind my saying this—that I thought he was adopting a rather Canute-like approach to the problem and the particular figures he took out of the Armitage Report. I think the point about the damage to the environment is the size of the lorry, not the weight, and as I understand it the size will not be increased.
However, I note that one of the suggestions to alleviate the problems of lorries is the building of more roads and bypasses, which was referred to by the noble Lord, Lord Tanlaw, and the noble Lord, Lord Davies of Leek—and certainly I can agree with him on this point. Here I must declare an interest, because the proposed M.40 is going to go through the farm that I tenant in Oxford and is going to take 30 acres and approximately a mile and a quarter of the farm, apart from dissecting it.
The problem I should like the Government to consider and, indeed, to answer is that if these new roads are going to be built they should look again at the hardship caused by dividing farms in half. The severance of farms can be ruinous and destroy one's life's work of farm improvement; and the terms of compensation are totally out-of-date, dating back to at least 1968, I think, if not before. In particular, I ask the Government to consult with the Ministry of Agriculture to find out how farming has changed over the last 10 years and how, as a result of these changes, the severance of a farm is so very much more serious than it was in 1968.
Although it may not have reached the Department of the Environment, there has been a very exciting and, I think, admirable revolution in farming techniques and yields since 1968, and this, in particular, on the more difficult, unstable soils that in the 1920s were not even cultivated. If roads dissect farms many of these new techniques, which have enabled these higher yields to be achieved, and greater efficiency, become impossible, so making the farm uneconomic in the 1980s, let alone the 1990s; whereas perhaps a similar dissection in the 1960s or 1970s would not have had half the consequences. To give one very small example, dissecting a rectangular-shaped field into two triangles, particularly on unstable soils, causes disastrous compaction; and it is problems of this sort that I want my noble friend to consider with his department.
Sadly, the terms of compensation operated by my noble friend's officials do not seem to recognise, even, the difference between stable and unstable soils; and certainly I have very grave doubts whether the rules now used—I am not blaming his department; they have to go by the rules—understand the finesse now achieved with the present method of under-drainage of these

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soils, the difficult ones in particular. There is also the problem of accommodation bridges, the rules for which date back to 1968. I need hardly remind your Lordships what has happened to fuel prices since that date, and the further you have to travel to bring in your corn or your cattle, obviously the more fuel you use. All these points were, I believe, discussed by the Leicht Committee, and I ask the Government when they will take note of them.
There is one other, small point (but perhaps I consider it not small) and that is that, at the moment, compensation is based on the gross margin loss of the land taken. In fact, it should be based on the total return lost from that acreage, as the taking away from the farm of an acreage will not reduce the farmer's fixed costs one iota. I cannot expect a precise answer to these problems from my noble friend tonight, but I hope I will get the answer that he will look at these problems. I hope he will be able to accept tonight that the principle of compensation, particularly to the tenant farmer for severance of his farm by these roads to take these lorries, will be that the farm should be returned to its former efficiency—even, for instance, if it means, on occasions, a completely new layout of, say, the drainage system. Unless this principle is accepted there will be no good will from those who have their livelihoods taken from them for these new roads and lorries, and I fear that cases as shown by that delightful comedy My Father knew Lloyd George will occur more and more often.
6.47 p.m.
Lord Mottistone: My Lords, I, too, welcome the Question asked by the noble Lord, Lord Underhill, and, indeed, the terms in which it is written. I should perhaps advise your Lordships that I have myself been advised mainly by the CBI on this occasion, and my noble friend on the Front Bench will be surprised to hear that I am giving preference to that advice over the counter-advice given to me by the Isle of Wight, who, on the whole, hate big lorries whatever size they are; but, then, the Isle of Wight has only about half a mile of dual carriageway, so it is really rather different from anywhere else in the country, as I often say to my noble friend.
I was disappointed in the speech of the noble Lord, Lord Underhill, because with the greatest possible respect to him—and I respect his views, and not only his speeches, normally very much—he seemed to have dug out of the Armitage Report all that he could find that was adverse and paid but little regard to the well-balanced conclusions at the end. We can all find the adverse bits, but there are a lot of good points about the proposals, to which I shall come. But the thing about which I entirely agree with him is the importance of a decision, and I hope my noble friend Lord Bellwin will be able to give us one. I say that for the point which was raised by, I think, the noble Lord, Lord Tanlaw, that above everything else the manufacturers need to know. They are in a state of limbo because they do not know what axle weights are going to be required of them, or when, so that they can make the right sort of vehicles and so that the purchasers know which vehicles to buy.
The importance here, my Lords, above everything
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else, is our share of the EEC market. I suspect my noble friend Lord Lucas will be referring to these things, so I shall just put it in the mind of my noble friend that a decision is really getting vital, and we would hope to get it as soon as practicable.
Now the question of the EEC which I have mentioned was also mentioned by the noble Lord, Lord Tanlaw, and he touched on the point, which I think perhaps I might be allowed to emphasise, that the EEC proposals are in the main based on a 40-tonne lorry, and when this is agreed it will be obligatory legally for us to allow in 40-tonne lorries even if we do not have them ourselves. So we shall be at a grave disadvantage: not only will our manufacturers not be building lorries which are being used on the Continent, but also we shall have to let these vehicles in whether or not we like it. That is one of the things that we have to bear. It means, therefore, that the outline programme of the Government, which includes the by-passes to take these vehicles, is going to be necessary anyhow, whether or not we have these vehicles. I would not go as far as the noble Lord, Lord Tanlaw, and say, "Don't let us have the specifications introduced here until such time as the by-passes are built", because in the nature of things the by-passes are going to take quite a long time to build. There are one or two bypasses which I should have liked to see in the Government programme but which are not there—like that around Tarporley in Cheshire on which we had a lot of discussion when I lived there six or seven years ago. It is not in the programme. We must get on with these things.
I should have thought that we need to make a decision and accept the fact that, as a European nation, even if we do not stay in the Common Market—although I think we shall—we shall need the roads and need to compete with the transport. I agree, although I believe the noble Lord, Lord Underhill, does not agree, with the view that the Armitage package will reduce the transport and distribution costs of industry. My noble friend behind me made the point about increased garage capacity. It seems to me it must be so, unless we find ourselves carrying more; and in the nature of things this is unlikely because the particular saving will be in the transport of bulk materials, especially foodstuffs, and agricultural supplies and produce. Foodstuffs, as I know from my other work, are stabilising because the population is stablised, so, in the nature of things, that large chunk will not change much and bulk materials from heavy industry which do not go on rail will, I should think, stay much the same.
There is every reason to suppose that we will not have extra lorries. Armitage forecast that the total number will drop when the size goes up. Again, as the noble Lord, Lord Tanlaw, said, the lorry is no bigger in load space. The only extra space is in driver comfort and, therefore, with their extra axles they cause less trouble for roads and bridges. It was bridges that the noble Lord, Lord Underwood, made such a fuss about; and the answer to it is that it will be better for his bridges and not worse.
Lord Underhill: My Lords, the noble Lord's thesis is correct if one accepts the fourth power law which apparently even Armitage has questioned—and I am

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referring to the fourth power law which determines the weight on each axle. Even Armitage has expressed some dubiety about this. It is all based on the American experiment.
Lord Mottistone: My Lords, I should not have thought that this was a subject which I read into Armitage. Otherwise, his main recommendations are not as substantiated as I read them to be. Probably that is as much as I should reasonably burden your Lordships with at this stage because a great many important points were made by the noble Lord, Lord Tanlaw, with whom I agreed except for his (dare I say?) Quango that he was going to set up to manage from the centre all the transport systems in the country. I do not think that that sort of body is likely to work any more than other bodies like it have worked.
Lord Tanlaw: My Lords, the noble Lord may have misunderstood. My suggestion was that the Government owned the railway tracks as the Government own the motorways; so that it gave some sort of parity to rail freight. It would be a Government body. That was the main purpose of my argument and not just the setting up of an administrative body.
Lord Mottistone: My Lords, of course, I understand that, but I think that we can leave it as one area in which I do not agree with the noble Lord. In other respects, I agree with him. I hope that my noble friend not only can give an answer today on when he foresees a decision being made, if he cannot give an actual decision, but I hope he will bear in mind that from industry's point of view, not only do we want to know the answer but industry as a whole favours the proposals, hopes very much that they will be brought into being and that the gloomy forebodings of Lord Underhill are not given the priority he would have wished.
6.55 p.m.
Lord Lucas of Chilworth: My Lords, in joining this debate, I feel that I should declare my interest in the subject matter of the Unstirred Question. It is simply that I am the president of the Institute of Transport Administration. That is the only interest that I have to declare in this matter. It is the Institute whose membership includes road, rail, sea and air administrators who sent a telegram shortly after the publication of the report to the Minister at the time accepting the report as a package and hoping—that was in 1980—that something shortly would come of it. I can understand the modus operandi of the noble Lord, Lord Underhill, tonight. He has put down an Unstarred Question; he has not put down the ordinary kind of Motion for general debate which we might have expected and which both he and I hoped for on a Wednesday. So it is not unnatural that where he has doubts in that long report he should pick out all those points about which he has doubts and ask questions.
The doubts come perhaps from those things of which he is not fully aware, so those which are more readily understandable by us all were not brought out by him. I do not agree with some of the conclusions that he
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came to in asking that long list of questions and I rather agree with the noble Lord who suggested that he had selected perhaps the worst of Armitage. Some noble Lords may think those are the best points. I think there are some better ones. I think we make a great mistake in picking out particular bits and not treating Armitage, with its 58 recommendations, as a total package. That is the thing; for, whichever way you argue, whatever answer my noble friend will give, it must, I suggest, be prefaced by the words "On balance". There is no right and no wrong in this.
I believe that the report—and this is the first time we have been able to discuss it—demands our congratulations to the chairman and its members. They were, all of them, quite independent of the various lobbies that have emerged so vociferously over the last two years. I think the report is balanced and I believe also—and this is confirmed by my noble friends —that it is not only the transport industry, whether road or rail, but all of industry who generally subscribe to the package and who say, "We have had this independent report; we have talked and talked for years. When are we going to get on and do something about it?"
The noble Lord, Lord Underhill, gave a quotation. If I have it wrong, I ask him to correct me. I believe he quoted from a debate in another place the words, "There must be improvements to the environment". I think I am right. That goes without saying. Notwithstanding any advances in numbers of vehicles and weights of vehicles or whether they are motor cars or not. There are now something over 15 million motor cars licensed on the road and something like 20 million vehicles—a huge increase. How is improvement to the environment going to be met? It is going to be met by industry and the taxpayer in taxes. In particular, it is going to come from the people who use road transport. There has to be a quid pro quo.
The costs of meeting environmental requirements are going to be heavy. There is no practical or technical difficulty in meeting the environmental demands regarding the vehicle or the route. It is how much one is prepared to pay that is the difficulty. For example, a current 32 tonne two by two axle articulated vehicle costs around £35,000 or £40,000. It lasts for something like five years. A tri-axle tractor unit adds something like £5,000. Anti-locking devices on the braking add from £1,500 to £2,000 per vehicle.
The Foden and Leyland so-called quiet vehicles, which have been running for the past two years with the latest development in noise suppression and so on, are going to add ·25 gallons of fuel per mile to the operating cost. That is not an insignificant amount when you think that the average vehicle will only cover six or seven miles to the gallon. All these matters are within our grasp, they have just to be paid for.
In my right honourable friend the Minister's press release of 26th March, when he talked about the new basis for lorry taxation contained in the 1982 Finance Bill, he said—I am going to paraphrase for the sake of time—that first they were determined to get a position where all groups of lorries pay their fair share of the costs of building and maintaining roads. Taken as a whole, lorries cover the costs but the heaviest groups fall short. That is what he said about taxation.

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In putting that into effect he is suggesting in October of this year that an average 32-tonne two by two lorry—two axles on the tractor unit and two axles on the trailer unit—currently taxed at £1,651 will go up to £1,820. That is a not inconsiderable increase you will accept, my Lords. Secondly, he goes on to say that moreover it makes sense to recognise that road damage depends on the number of axles over which the weight of the lorry and its load is spread, and there is to be a different rate there. On a gross 32-tonne vehicle on five axles that taxation figure is proposed to drop to £1,350. That is one side of the cost.
The other side of the cost is how much the customer is going to pay. We have had from my noble friend Lord Stanley the typical argument that I would expect from a typical customer. I look at my noble friend not as an operator or supplier, but as a customer. He wants to get his goods, his fertilizers and so on, on to his farm as quickly, expeditiously and as inexpensively as he can. He wants to take his goods to market in exactly the same way.
It is the customer who demands the method, the mode of transport; and it is no good the noble Lord, Lord Stone, shaking his head, because there is no way in a free society that one can control the mode by which people move their goods or themselves. I suggest any other way would be futile. Indeed, I think it goes back to the early 1930s when we had laws which promoted by way of taxation traffic to rail—and I do not want to get into a road/rail argument—and it failed.
People will choose the easiest and most convenient way of moving themselves and their goods. It can be seen in the use of the motor car. There is no denying it and there are no controls that are going to alter that unless one puts in pecuniary controls that make life totally impossible. I believe that there are three main points at issue here in accepting the broad tenor of the Armitage report and that we should move to a heavier vehicle. The first is, as my noble friend Lord Mottistone and the noble Lord, Lord Tanlaw, pointed out, our commercial motor vehicle building industry has to compete on equal terms with other suppliers. They cannot because they do not know what to build. If they know what to build it, then they can do it. They have to build what I can best describe as a pan-European vehicle, not one for England, another for France and another for somewhere else.
Noble Lords have already pointed out that there are overriding economic advantages to industry, and that means to society at large, by going to the bigger vehicle. If one looks at a heavy vehicle as an extension of a factory, an assembly line, the cheaper those goods can get to the ultimate consumer, the more orders will be obtained and the more jobs will be created. The whole society benefits. There is no doubt about that at all. If we did not have heavier lorries, the environmental disadvantages of today's traffic would not go away. But the increase in the overall weight coupled with all the regulations that are sensible and proper to incorporate at one and the same time covering noise—looking to 1983—axle weights, vibration, braking, steering, and so on, all of which are technically feasible, are literally 12 or 24 months away from being able to be put into practice. They can then bring the environmental advantages that we want.
My noble friend the Minister will no doubt remind
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us of the road build programmes, the by-pass programmes, and I do not want to go into that. But make no mistake—and the Windsor cordon experiment proved it—if one takes lorries from one area, everybody says "Fine, they are off my doorstep". However, they are going in most cases to appear on somebody else's doorstep. One cannot entirely move that problem away, however many by-passes one builds.
The noble Lord, Lord Tanlaw, made a very pertinent point on transhipment depots and parking areas. Some local authorities are absolutely appalling and do not take advantage of the powers that are currently available to them. Others—the Penrith depot is one—are excellent. The co-operation of the local authority, one of the major oil companies, the Department of Transport and the operators in the area is a splendid example of what actually can be done. There are others. There are the lorry routes and the action areas. All these matters are palliatives, not cures. They can never be cures. We need in this island a transport system similar to that which we have. It has to move into the 20th century and it has to move competitively. I believe that Armitage, as a package—some parts are bad and some are good—shows a reasonable balance. I believe it should be accepted and implemented as quickly as possible.
I suppose I could best sum up my feelings by saying to the Government: "What are you going to do?" and reminding them that we have proposals with regard to noise levels, with regard to taxation and fair shares and we have proposals for by-pass programmes. What we must now have for the sake of all industry are firm proposals with regard to the weight question and—of the greatest importance to industry and to the community, and I do not mean the European Community, but the community at large—we must have a date for the implementation of those proposals. Without that—I will finish on the point which my noble friend almost suggested that I should make—we are going to lose the opportunity of shipping our manufactured goods which I do not believe are going to remain static; I believe they will increase and 40 per cent. of them go to Europe anyway. The bulk of them go in standard 40 ft. ISO containers and their capacity has to be maximised. Therefore, they have to go in a lorry capable of carrying the weight. We need that decision and I do ask my noble friend, whatever answers he gives to the questions put by the noble Lord, Lord Underhill, to answer this one please: how much and when?
7.12 p.m.
Baroness Platt of Writtle: My Lords, I too welcome the raising of this subject by the noble Lord, Lord Underhill. The Armitage Report and the action that the Government propose to take on it is very important to this country and to the people who live here. We are all concerned about the movement of lorries and the effect they have on our environment. I speak with some feeling, as I live in a house which is more than 200 years old and which lies within 10 feet of a main road in a beautiful and ancient village, which has been in dire need of a by-pass for at least 30 years to my personal knowledge. I speak naturally of my own village of Writtle in the county of Essex. We at last now have a by-pass planned for the year 1985/86

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but this is still dependent for its completion on future years' transport supplementary grant.
Lorries thunder past our house daily, so naturally I want to see the Government carry out their promised programme of by-passes to historic towns and villages so that the lorries may proceed without hindrance, more safely, at a higher speed and without endangering people's lives in the places where they live. It seems to me important that the number of lorry movements should be kept to a minimum so that an increase in weight per lorry would be an advantage as long as the weight per axle is limited so as not to increase unduly the wear and tear on the roads and nearby property. I also welcome new regulations to be brought into force, I understand, by 1983 to reduce the maximum noise limit on lorries.
I am glad, too, that the Government are to make new regulations to ensure the provision of the extra axle to reduce individual axle loads on the heaviest lorries, and also that the width of lorries is not to be increased, that the height is to be regulated—I believe for the first time—and that the length of lorries is to be only marginally increased to allow better accommodation for the drivers and thereby reduce their fatigue. I hope, too, that the rear and side guards will be made mandatory as soon as possible, and I welcome the fact that improved braking standards will be required next year. All these increases in safety standards are of vital importance in reducing people's instinctive fear of heavy lorries. I hope they will be shown to increase the safety of lorries in practice.
Most goods in this country travel short distances and we all want to see our local shops, industries and farms supplied with the goods they and we need. It is important that, wherever possible, the long-distance trade should go by train, but it must be realised that most goods travelling by train will also be involved in two road journeys: one at the beginning and another at the end of their travels. Both these journeys will disturb people locally and will also increase the cost of the goods because of the added commercial costs of transfer between the two forms of transport—a cost we, the consumers, will have to pay. I therefore believe that we must accept that many goods will always travel by lorry for our own, the consumer's, convenience.
This Government often say that local government should spend less on revenue and more on capital expenditure. In most services capital expenditure eventually increases revenue expenditure too, as it results in increased running costs: heating, lighting, cleaning, staffing and so on. Highway expenditure alone does not do that to the same extent. A new road will need less maintenance and the only increased expenditure is to cover loan charges. If the Government can therefore increase transport supplementary grants to local authorities, as indeed Essex has done this year—and I am very grateful to them—and allow them to cover both capital and loan charges on the use of that money, they will be encouraging local authorities in capital expenditure which provides employment for the construction industry.
The taxes resulting from the vehicles being taxed on laden rather than unladen weights should in my view go entirely for financing the necessary by-passes of towns and villages. If the Government carry out this policy,
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it should in a number of ways contribute to our economic recovery. The relaxing of restriction on lorry weights should help industry and commerce to provide our goods at lower prices, and also enable us to compete more effectively in overseas markets. Also, the provision of better roads should help to carry our own goods more effectively, both to us (the consumers) and to our export markets overseas.
I speak with some feeling of the roads through Essex to the haven ports of Harwich, Ipswich and Felixstowe. A few weeks ago I was speaking to industrialists in Birmingham who, to my surprise, shared this interest as their goods from the Midlands vitally need good roads to these haven ports. So that is a national need.
I hope very much that the Government will continue to put forward an integrated policy of providing better roads and sensible but less restricted regulations on lorry weights. The Government's own statement that the package is designed to get safer, quieter and cleaner vehicles on the road as fast as possible, and to take the lorries away from where people live and work, is a policy that I hope the Government will pursue vigorously, to the benefit of this country and of the people who live in it.
7.18 p.m.
Lord Davies of Leek: My Lords, I want to trespass on the time of the House for just about five minutes, having sat through the debate. I apologise for not having got here in time to put my name down. I want it to be understood that while one is criticising it does not mean that one does not appreciate the amount of work that the Armitage Inquiry and all the people who worked on it did. Nevertheless, I think other points of view ought to be aired. While paying a tribute to Sir Arthur Armitage and the people who are there involved, naturally they would take a point of view that would be on the side of lorry transport—
Lord Lucas of Chilworth: Why, my Lords?
Lord Davies of Leek: There is nothing wrong in that because they are experts. There is nothing wrong in taking a point of view that is opposed to what I say—I will certainly give way.
Lord Lucas of Chilworth: My Lords, I am most grateful to the noble Lord for giving way. I just wondered why he said they would "naturally" take that view. There is nothing natural in their taking any one particular view.
Lord Davies of Leek: My Lords, they have certainly taken a point of view here that I do not like—and that is the end of the argument! I gave way for the noble Lord to ask a question and I have given a fair answer. This is the kind of world in which we live. This is a debating chamber, not a prayer. I happen to remember Beeching and the absolute joy and enthusiasm exhibited for the Beeching Report. I should have liked the Armitage Committee to look into the hundreds and hundreds of miles of railway embankments that could have been made into roads in many areas and be used now for transport. That must be done.
One of the tragedies is that we have "Beechingised" the railways of Britain and that is one of the most

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dangerous things to do for the strategy of this country. I remember the movement of children from great cities during the last war. If we had not had railway trains in those days, what would it have been like to move millions from Manchester, Liverpool and London? But we gave all that away. I have suggested that part of the defence budget of Britain should be put into transport.
Kipling said "Transport is civilisation", but on reading this report it seems that there is a bit of civilisation that was missed. Paragraph 136 admits that,
"The total volume of emissions from the lorries is likely to increase, though at a slow rate".
Then, paragraph 137 states that:
"The position with vibration is similar".
The noble Baroness talked about her area being shaken. This Palace, where the judges sit, is shuddering every day as the lorries move outside this beautiful building—
Lord Inglewood: My Lords, would the noble Lord allow me to interrupt?
Lord Davies of Leek: I seem to be upsetting people.
Lord Inglewood: My Lords, I am not at all upset. But, quite apart from the shuddering, would the noble Lord not think that there is a great problem here? If he stood on the pavement edge at the corner of Bridge Street and Parliament Square, as I hope the Minister will be able to say he has done, how long is it before his feet are run over or his legs are broken?
Lord Davies of Leek: Exactly, my Lords. We are increasing the problem without looking at it in depth. Life at the Archway in London now is a misery. No matter what everyone does, that road will be there for years and years, and the problem of moving valuable property to get a road for the lorries is still very much there.
Let me quickly spike down a couple of other points. On emissions, have we given up the search into the chemical effect of lead poisoning on the child mind? That should have been looked at. They are playing it down now, but lead, in its effect on children, is a serious matter—that should have been looked at in depth. It should have been in the report. Again, how much real work is being done by the Transport and Road Research Laboratory into the throwing up of spray by the heavier lorries with the extra axles? I have used the M.1 when life can be dangerous, and if a windscreen wiper fails it can be serious. Does the noble Lord want me to give way again? I shall need six minutes rather than five.
Lord Redesdale: My Lords, I did not understand why the noble Lord was talking about lead, because I did not think there was any lead in diesel fuel.
Lord Davies of Leek: My Lords, the diesel fumes are still more poisonous. One should know that. It takes only a slight knowledge of chemistry to understand the reason for the poisoning, but I shall not go into that in any more depth. An estimate of accidents is given. I do not take that. Finally—
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and your Lordships will probably be pleased that I have said "finally"—this is too expensive for our economy and I am quite sure that the Armitage Report could not go through as it stands.
Before I sit down, I shall quote from the First Report of the Select Committee on the European Communities 1981–82—and I appreciate the work that it did—which states on page ix the opinion of the Committee:
"The Commission argues that a substantial portion of present road traffic should be transferred to combined transport, in order to secure the expected benefits in relief of congestion, improved safety and efficiency".
That means that we should now be looking more seriously than we have done before at the combined use of road, rail and canals. We have thrown away millions and millions of poundsworth of our economy and the effort of our ancestors, which would have been of great use to us today. I sincerely hope that, before we accept this report "on the nod", more attention will be given to many of the realities which the Armitage Report missed.
7.25 p.m.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Bellwin): My Lords, the Government greatly welcome this opportunity to hear the views of the House on this most important subject and, like others, I am grateful to the noble Lord, Lord Underhill, for introducing this debate in the way he has done. May I also say that I am grateful to all noble Lords, and to my noble friend Lady Platt, for what I consider to be the really constructive comments that everyone has made. We shall study them very carefully.
I am glad to see that the Question of the noble Lord, Lord Underhill, was specifically linked to the Armitage Report. It is a report which is too much stigmatised and too little read and considered. The Armitage inquiry was established by the Government in 1979 to look at the whole range of problems caused by the great growth of lorry traffic. The Armitage inquiry was an independent inquiry, which received a great deal of evidence from organisations and individuals. It produced a full and detailed report. It is not just a report about lorry weights. Far from it: only seven of its 58 recommendations were concerned with lorry weights. Sir Arthur Armitage and his expert assessors, for whose work the Government were very grateful, produced a formidable, comprehensive series of proposals for dealing with the environmental problems caused by lorries and ensuring that we have an efficient freight transport system.
As everyone now knows, the Government issued a White Paper on Lorries, People and the Environment in December 1981 which built on the recommendations of the Armitage inquiry. We have had many representations about the White Paper and we are carefully considering them. We are now reaching the stage where the Government can come to final conclusions. They are certainly determined to do so. There has been too much delay in this matter, over a long period of time, to the detriment of people's quality of life, the environment and British industry and jobs. Without exception, noble Lords who have spoken will be glad to know that we will be making a final announcement

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very shortly. If your Lordships ask how shortly is "shortly", I would reply that we should need to have another debate on that. But your Lordships who hear me speak from this Dispatch Box, not for the first time, know that if I say "shortly" I mean "shortly".
Of course, this is an extremely contentious, difficult and emotional subject. That is entirely understandable. For all the reasons spelled out so clearly by Armitage, lorries create many problems. We all know that from our own experience. We in this House have a great fund of knowledge about and care for the built environment, historic towns and the countryside. We will have no difficulty in drawing on that to provide eloquent testimony to the effects of lorries.
The fact of the matter is that nobody loves lorries. Whatever we do, we shall never make them desirable objects, though in some parts of the country more lorries would be a welcome sign of more business activity and more jobs. But it is no use merely beating our breasts on the subject. It is no use yearning for a golden age preceding the invention of the internal combustion engine. Most of all, it is no use doing nothing. To do nothing only allows the situation to get worse. The real question is: how can we help to civilise the lorry, improve the quality of life for people who are suffering from its effects, make lorries safer and quieter, and, at the same time, make sure that the country gets an efficient, responsive freight transport system? We shall achieve that only if we approach the subject with cool and careful deliberation.
That is exactly what the Armitage inquiry did. It made many suggestions to improve the environment. We built on that in the White Paper. In a moment, I will list some of the things that we are doing. But that is not the complete story. The White Paper was more than a beginning. It contained very substantial proposals, but we have already gone beyond the White Paper and will be further extending our proposals before making the final announcement to which I referred a moment ago. Our whole approach is based upon a recognition of the seriousness of the problem and a determination—and I do mean a determination—to deal with it. That was Armitage's main message and, if I may say so, no previous Government have taken it.
The first requirement is to take lorry traffic away from the places where people work and live. By-passes, where they are possible, can be the most effective way of doing this. We see our programme of by-passes as an essential part of our strategy for reconciling our dependence on lorry traffic with the need to protect and improve the environment. Already this year we have announced the addition to the trunk road programme of 15 by-passes. More than 120 schemes are now in preparation. Over half of these will have been built or will be under construction by the middle of the decade. By the end of the decade we shall be able to devote even more of the available resources to the few by-passes which will still be required. We should not forget that other schemes for strategic routes, such as the M.25, will also relieve communities of through traffic. Motorways are among our most effective by-passes.
The transport supplementary grant settlement, announced in December, will enable 35 more local
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authority by-pass schemes to go ahead. My right honourable friend will continue to give favourable treatment to proposals for by-passes by local authorities. The 20 or so trunk road by-passes now under construction, together with the local schemes under construction, will take traffic out of nearly 100 communities, and at least another 120 towns and villages will benefit from schemes to be started in the next two to three years. By any standards that is a substantial achievement. I hope that this will be gratifying to the noble Lord, Lord Tanlaw, who in particular emphasised this aspect of what we are doing—as, for that matter, did other speakers. I hope they will feel encouraged by it. To answer the noble Lord, Lord Underhill, it is not possible to say how many towns will not be by-passed by the end of the century, but I say again that by the middle of this decade nearly half of all the new schemes started will be by-passes. That illustrates the urgency which the Government attach to this particular aspect of the problem.
Another way to keep lorries away from people is by designating lorry routes or prohibiting lorries from particularly unsuitable roads. Armitage recognised, and we accept, that responsibility for lorry routing must remain with local authorities and that they have the necessary powers. The local authorities themselves agree. Only the local authorities in fact have the local knowledge to do the job properly. But as we all know, the performance of local authorities using the same powers varies greatly. We want to encourage local authorities to do more to control lorries. But lorry control schemes, it has to be said, are not always possible. It is not sensible, for example, merely to transfer lorry nuisance from one group of residents to those living on an alternative route. But, even so, more undoubtedly can be done, and we shall shortly issue a circular which suggests how authorities can take a fresh look at the scope for additional controls in their areas. My right honourable friend will, in addition, be announcing further measures to assist and encourage the use of lorry control schemes.
We are also giving serious consideration to the idea of "lorry action areas" for places exceptionally badly affected by lorry nuisance and unlikely to be helped by methods of diverting traffic. Local authorities will have additional powers and additional financial assistance to carry out local relief measures, such as double glazing or better quality road surfaces.
We are making lorries safer. My noble friend Lady Platt of Writtle and the noble Lord, Lord Davies of Leek, referred to this point. Sideguards, to protect pedestrians and cyclists—the most vulnerable road users—will be made compulsory. So will rear under-run guards on lorries, to protect motorists. Better braking standards will be required for all vehicles manufactured after October this year. We are looking into the best way of making compulsory some sort of spray suppression equipment. Everyone who is really concerned about road safety will recognise the contribution that these measures will make to reducing the number of accidents involving lorries. I am happy to say that the Royal Society for the Prevention of Accidents has given our package of proposals its full support.

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Lorries are being made quieter. We have already set a reduced noise level of 88 decibels for the heaviest vehicles and this will come into force next year. We are looking beyond that to 1990, when we want to see lorries as quiet as the family cars of 1981. When I said that last time we debated this matter, I noticed one or two smiles around the House. Well, I am saying it again today, so that should be an indication of the confidence which I have. All these standards must be enforced. We are increasing enforcement effort, with more staff and equipment, to deal with overloading and other safety standards. All these measures contribute to a comprehensive, effective attack on the lorry problem.
But Armitage also argued for heavier lorries. One would think from the public and parliamentary reaction that both Armitage and the Government had made no other recommendations, but it is worth going back to what Armitage himself said. There is no question of heavier lorries being in some way a quid pro quo for environmental improvements. On the contrary, to quote Armitage;
"Heavier lorries, even when considered in isolation from the wider changes affecting all lorries, would bring both economic and environmental benefits".
That is the last sentence of the whole Armitage Report. The Government accept the logic of that report. However, we have, I believe, improved on Armitage's weight proposals.
Sir Arthur Armitage himself saw the need to compromise on the EEC proposals so as to fit United Kingdom circumstances. We in turn have seen some need to fit the Armitage proposals rather better to our own circumstances. For that reason, the Government have rejected Armitage's proposals for 44-tonne lorries. We are now considering the reactions to our proposals on weights, as on all the other proposals in the White Paper. I am not able to announce our main decision today. However, there are certain general points about heavier lorries which are valid and which will remain valid, whatever are our final decisions.
Many of our lorries are already designed to carry more weight than the law now allows them. If we allowed them to carry more goods, we could have fewer lorries to carry the same amount of freight. That, as Armitage pointed out, will itself bring environmental advantages. It will also mean a reduction in industry's costs. Unlike the noble Lord, Lord Underhill, I do not believe that we can just brush this aside—though, knowing him as I do, I doubt whether he does brush it aside. Nevertheless, I attach probably more importance to the point than does the noble Lord. For example, using 38-tonne lorries instead of 32·5-tonne lorries gives savings in transport costs in the range of 5 to 9 per cent. The benefits to industry have been conservatively estimated at £1·5 billion over the next decade. The benefit will be greater if there is further economic growth, as I am sure there will be. We are in no position to reject such economic gains. Areas such as Scotland and Devon and Cornwall, distant from large markets, have most to gain.
Lord Davies of Leek: My Lords, I hope that some grants will go to the local authorities for all this wonderful work which the Minister is envisaging. I hope a formula will be found to get some money to
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Scotland, to parts of Wales, which I am accused of having left for a long time, and elsewhere. Can the noble Lord say whether any money will go to the local authorities for this work?
Lord Bellwin: My Lords, I specifically said earlier, in connection with relief and other work, that we do not expect authorities to do it without it costing money and that we are cognisant of that fact. In principle, therefore, I do not quarrel with what the noble Lord says. However, the transport supplementary grant has to be part of the whole scene. There could be big savings for bulk freight, and anyone who is sceptical should simply ask British industry or British shippers—and my noble friend Lord Mottistone made the point, as he so often does, for them. These important benefits will also extend to agriculture, which is a major user of bulk freight. Fertiliser, oil and other goods will be delivered to farms more efficiently. There will also be savings in the cost of moving produce from farms—especially for heavy produce such as sugar beet, potatoes and milk, but also for many other horticultural products where some use could be made of the increased payloads.
I can assure my noble friend Lord Stanley of Alderley, that the Government are fully aware of the problems which farmers may face when agricultural land is taken for new roads. As a first step, we take considerable pains to keep the amount of farmland we take down to the absolute minimum. This factor is always taken into account in the selection of routes and in detail design. Inevitably, we cannot always avoid taking agricultural land. Nor, I am afraid, can we always avoid the particular problem to which my noble friend very properly referred—namely, that of farm severance. We do pay compensation to a farmer who loses his land, and the compensation takes account of any additional loss in the value of his land because it has been severed. I am only too aware that the compensation point is always a controversial question; that is one reason why the amount of compensation is determined independently by the district valuer and why the landowner has a right of appeal to the Land Tribunal. Wherever we can justify doing so, we will on request provide accommodation works, bridges or underpasses for farmers whose land is severed. I hope that we can be as liberal in providing works of this sort as is consistent with the need to protect the public purse.
Having said that, I must acknowledge the point made by my noble friend Lord Stanley of Alderley. I note that the farming community feel that we are not as liberal as we might be—particularly, perhaps, over the standards of work which we provide. I listened very carefully to what my noble friend said on this. I can and do assure him that we will look at his point on compensation. I can tell him that my right honourable friends are looking again at this problem at the moment.
Lord Stanley of Alderley: My Lords, if my noble friend will give way for a moment, the real problem that is worrying us mostly is the updating of the terms. If he assures me that that is one of the things at which the Government will be looking, it will make me happy.
Lord Bellwin: My Lords, we want to read very carefully what my noble friend has said. He made his

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points extremely well and, obviously, with expert knowledge. I can certainly undertake that the last point he made will also be considered.
Heavier lorries will do less damage to the roads. For example, a 38-tonne lorry which will have five axles will do 20 per cent. less damage than the existing 32.5-tonne lorry. The noble Lord, Lord Underhill, referred to this matter. May I say that Armitage critically examined the evidence of research results on road damage? The tests undertaken by the American Association of State Highway Officials to which he referred involved, I understand, lorries running on roads of widely differing strengths. The Transport and Road Research Laboratory have examined the AASHO tests and concluded that they were well designed. Indeed, authorities throughout the world use the fourth power law as giving the best overall indication of the damage done to roads by vehicles.
The noble Lord, Lord Underhill, mentioned his concern about bridges. I will send the noble Lord a technical note by the department describing the effects of heavier lorries. I hope he will see from that that our expert advice is that the great majority of bridges will suffer no more damage than they do now, although some bridges with very long spans will need to be assessed individually. I could go into quite some depth but time is pressing and I believe it would be better if I dealt with that point in the way I have suggested.
New controls on lorry dimensions will be introduced for the first time. There will be a height limit on heavier lorries—the first time we have had a height limit. There will be no increase in the width of the lorry. There will for the first time be a limit on the length of semi-trailers. A small increase of ½ metre in the total length of lorries will improve their turning circles, leaving space for additional noise insulation and sleeper cabs. We shall ensure, as a minimum, that heavier lorries meet all the safety standards of existing lorries. But we shall go beyond that. For instance, from the outset all heavier lorries must have sideguards.
In looking at all these proposals, I would ask the House particularly to bear in mind two important points. The first is the overwhelming importance which lorries now have in the freight system. As the noble Lord, Lord Underhill, rightly said, lorries carry more than 80 per cent. of all inland freight. The noble Lord, Lord Tanlaw, asked whether the Government want an integrated transport system. Of course we want to help railways and waterways, which have environmental advantages. We are taking special measures to do so, including much higher taxes on lorries to ensure that they pay their way, and grants to finance new railway and waterway facilities.
Only this month, we announced grants of more than £2 million towards the cost of providing rail handling facilities for industry. This will take 1½ million tonnes of coal and gypsum off the roads, and more than 500 heavy lorry journeys each day will be avoided. More than £500,000 went to a Blue Circle Industries' cement works in Derbyshire, and it means that their coal will now be carried by rail instead of by road, which would have affected Sheffield and villages in the Peak National Park. Nearly £80,000 went to Storey Brothers near Manningtree in Essex (and I am sure that my noble
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friend Lady Platt of Writtle will be glad to hear that) and this will help to avoid coal being carried by lorry from Coventry—particularly through the narrow roads of Constable Country. Where we can, we are helping industry to take advantage of the benefits of rail freight and keep lorries out of some of our most beautiful countryside. But it is unrealistic to believe that we can turn away from the lorry as the provider of the great majority of our freight. The Government are all in favour of integration if this means efficient, co-ordinated operation—but not if it is an excuse for bureaucratic control and inefficiency. We believe that the transport modes should operate in a framework of fair competition which will encourage efficiency and innovation.
As I come to the end of my remarks, the second point I want to stress is, what would be the consequence of our not going ahead? The consequences of rejecting our proposals would be that matters would get worse, not better; worse for people whose lives are badly affected by lorries, worse for communities, worse for the economy. I am particularly grateful to my noble friend Lord Lucas of Chilworth, who is always so knowledgeable in this field. He was so right when he referred to the fact that a total package was what was needed, and that is exactly what we have in mind. I endorse his tribute, and the tributes paid by others, to the Armitage Committee, and we shall want to read and consider carefully what my noble friend has said.
I have other points to make and would like to refer to them all, but I think not, in view of the time factor. I hope that noble Lords will excuse me if I do not do so. May I just say something to the noble Lord, Lord Davies of Leek (who is always a delight to listen to, whether he puts his name down before hand or not) on his point about converting railway lines to roads? This has been done in some cases but a general problem with many of the lines which were closed by Beeching is that they serve areas of declining transport need. It would not make economic sense to convert all of them to roads. Nevertheless the noble Lord's point does have merit.
So, my Lords, I ask you to bear with us a little longer to await our further announcement, which will reinforce the great efforts, the unique efforts, which my right honourable friend is making to deal with the too-long neglected problems created by lorries.

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