Sitting of 22 April 1982

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRAYERS
  PRIVATE BUSINESS
    BRITISH RAILWAYS BILL
    As amended, considered; to be read the Third time.
    SEVERN-TRENT WATER AUTHORITY BILL (By Order)
    Read a Second time and committed.

    GREATER LONDON COUNCIL (GENERAL POWERS) (No. 2) BILL (By Order)
    ALEXANDRA PARK AND PALACE BILL (By Order)
    LONDON TRANSPORT (LIVERPOOL STREET) BILL (By Order)
    TEES AND HARTLEPOOL PORT AUTHORITY BILL (By Order)
    FELTHAM STATION AREA REDEVELOPMENT (LONGFORD RIVER) BILL (By Order)
    Orders for Second Reading read.
    To be read a Second time upon Thursday 29 April.

Oral Answers to Questions
  HOME DEPARTMENT

    Serious Crime
    Mr. Kilroy-Silkasked the Secretary of State for the Home Department to what factors he attributes the increase in serious crime.
    Mr. Ioan Evansasked the Secretary of State for the Home Department what are the main reasons for the substantial increase in crime since May 1979.
    The Secretary of State for the Home Department (Mr. William Whitelaw): Recorded crime has been rising for a quarter of a century. The causes of this are complex, and it is unprofitable to seek explanations for short-term variations from year to year.
    Mr. Kilroy-Silk: Does the Home Secretary agree with the comment in the recent edition of the Police Federation's magazine that there is a link between unemployment and juvenile crime and, indeed, with the
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    comments in the United Nations recent report "Economic Crises and Crime" which suggest that there is a strong relationship between increasing unemployment and increasing crime in Britain? Unemployment is by no means the most important, or a single, factor in increasing crime, but does the right hon. Gentleman accept that the most important single measure for reducing crime would be a reduction in unemployment?
    Mr. Whitelaw: No, Sir, I do not accept that.
    Mr. Lawrence: Is not the most important significant immediate cause of increasing crime the fact that potential offenders no longer fear the consequences of their offending? Does that not necessitate an increase in the police force to ensure that detection is more likely, an improvement in the procedure of criminal trials to ensure that conviction is more likely and more prisons to ensure that punishment is more certain?
    Mr. Whitelaw: Yes, Sir. Many of those measures—in fact, all of them—have been taken by the Government in the past three years.
    Mr. Hattersley: Since, as I understand it, the Home Secretary has just said that he did not accept the analysis of my hon. Friend the Member for Ormskirk (Mr. Kilroy-Silk), why did he accept it in 1973, as recorded in at least three copies of Hansard?
    Mr. Whitelaw: 1973?
    Hon. Members: Yes.
    Mr. Hattersley: 1978.
    Mr. Whitelaw: I thought the right hon. Gentleman said 1973. I do not believe I pronounced that in 1973.
    Mr. Kilroy-Silk: Yes, on 27 February.
    Mr. Whitelaw: In 1978, not 1973. I certainly admitted then, as I said before, that unemployment was a factor, but there are many others. I have said that and my right hon. Friend the Prime Minister has said it. Equally, there are many other factors as well.
    Mrs. Knight: Will my right hon. Friend bear in mind that both long-term and short-term remedies can be taken in this matter: to build up the family as a unit, to take action in schools to bring back discipline and respect, to take action in the courts so that penalties are just, and to get more police on the streets?
    Mr. Whitelaw: I agree with my hon. Friend. Many of these matters are for me as Home Secretary. Many of the others are matters for my right hon. Friends. We are discussing these matters together, because a concerted effort by the Government as a whole, backed by the House, is very much needed in all these areas.

    Prison Officers (Pay)
    Mr. Robert Atkinsasked the Secretary of State For the Home Department if he will review the differential pay structure among the senior grades of prison officer.
    The Minister of State, Home Office (Mr. Patrick Mayhew): No, Sir.
    Mr. Atkins: I hesitate to thank my hon. and learned Friend for that brief reply. Does he not think that it is slightly unfair that chief prison officers in many of our

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    prisons, and in Brixton in particular, can earn as much as £4,000 to £5,000 less than principal officers below them? Does that not strike my hon. and learned Friend as a disincentive in the promotion ladder and for career prospects?
    Mr. Mayhew: I understand what lies behind my hon. Friend's question. Many prison officers in overtime grades receive higher earnings than grades above them. The May committee, which reported in 1979, was aware of this. It commented that
    "net earnings cannot be the dominant source of comparison between grades if, for example, one grade achieves a certain result only by long overtime working, or by virtue of compensation for a particular condition of service".
    As regards basic pay, there is a differential between chief officers and the most senior prison grades and the grades below them.
    Mr. Soley: Does the hon. and learned Gentleman recognise that there is an implicit link between training and pay? Will he, therefore, review the training of prison officers with a view to introducing a much longer training period, and from that developing a central pay structure?
    Mr. Mayhew: I take note of what the hon. Gentleman has said. The May committee recommended improved scales for prison officers and extended scales for chief officers—the most senior prison officer grades. A further special review of the pay relativities of these grades could not be justified.

    Special Constabulary
    Mr. Kenneth Lewisasked the Secretary of State for the Home Department whether he is satisfied with the recruitment to the special constabulary; and whether he will make a statement.
    Mr. Whitelaw: Chief officers are fully aware of the vital role of the special constabulary. I am encouraging them to make every effort to recruit as many specials as they can usefully train and deploy.
    Mr. Lewis: I thank my right hon. Friend for that reply. Will he encourage all police forces to allow specials to take on more of the routine work that the police carry out so that the permanent force can be made available for more important matters? Would it not be helpful if we had more specials doing the routine jobs, thereby making community policing more apparent to the public? Will my right hon. Friend examine the scheme that is beginning in Northumbria, where I understand the chief constable is recruiting about 750 volunteers for the specials to act as street policemen in their home areas?
    Mr. Whitelaw: I agree with what my hon. Friend said. I believe, as do the chief constables, that there is considerable scope for using special constables on routine duties and releasing policemen generally for other duties. That is very important. I understand that the Northumbria scheme has been a great success. I congratulate the chief constable of Northumbria on introducing the scheme. I know that similar initiatives are being taken elsewhere.
    Mr. R. C. Mitchell: What success has there been in recruiting members of the ethnic minority communities into the special constabulary?
    Mr. Whitelaw: Rather more than there has been in recruiting them into the regular police.
    Sir William Elliott: Is my right hon. Friend aware that in the report of the chief constable of Northumbria, which was produced this week, a particular tribute is paid to special constables in the context of community relations? There is also a reference to the recruiting programme. The police community relations committee will shortly celebrate its tenth anniversary, and I am sure that my right hon. Friend will wish it well.
    Mr. Whitelaw: I entirely agree with my hon. Friend, who I know takes a particular interest in these matters in the North-East. I am grateful to him for what he has said. There has been a significant development in Northumbria, but I do not wish it to be thought that that is the only police force that is carrying out such an endeavour. Many others are doing so, and I welcome them all.

    Data Protection
    Mr. Christopher Priceasked the Secretary of State for the Home Department if he will set out in the Official Report those categories of information that will be excluded from consideration in his forthcoming White Paper on data protection.
    The Minister of State, Home Office (Mr. Timothy Raison): The White Paper was published on 7 April. It sets out the Government's proposals for legislation to protect personal data processed automatically. Manual records and non-personal data will be excluded and there will be exemptions for certain categories of information in accordance with the provisions of the Council of Europe convention on data protection.
    Mr. Price: Which categories of police information will be within the White Paper provisions and which will be excluded? Does the Home Office agree with the present situation in which the security services' computers can tap into all personal information on other Government computers? Does the White Paper make no proposals to protect the privacy of the individual in this area?
    Mr. Raison: Our aim is that, as far as possible, police records will be brought within the scheme. As the hon. Gentleman knows, there are exemptions to cover State security and the suppression of criminal offences. I think that the hon. Gentleman also knows that it is not the practice to comment on security.
    Mr. Squire: Does my right hon. Friend accept that many of us wish to see the most modern methods used in advancing benefits and combating crime? However, at the same time there must be some recognition of our responsibility to those whose lives are affected by computer security. In that respect, the White Paper has been somewhat disappointing in comparison with the Lindop proposals.
    Mr. Raison: I do not altogether understand the drift of my hon. Friend's question. It is our view that, where we have differed from the Lindop proposals, we have been entirely right to do so. We are seeking an effective but not over-bureaucratic system. We believe that what we have put forward will meet that criterion and enable our industry to take full advantage of modern conditions.
    Mr. Hattersley: I realise that the Minister will not answer questions about what is properly called the secret service computer. Therefore, I shall ask him a question about the other side of the equation. Will he give an

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    assurance that computerised information held in domestic Government Departments will not be made available outside in any circumstances?
    Mr. Raison: Normally, information held in Government Departments, unless covered by the exemptions, will be registered with the registrar, and the conditions under which it will be used will be made absolutely clear.

    Serious Offences (Statistics)
    Mr. Chapmanasked the Secretary of State for the Home Department if he will list those serious offences recorded that have increased over the past five years and those that have decreased in numbers over the same period.
    Mr. Mayhew: In those offence groups for which figures of recorded offences in 1977 and 1981 are directly comparable, increases were recorded for violence against the person, burglary and robbery, and a decrease was recorded for sexual offences.
    Mr. Chapman: My hon. and learned Friend's answer underlines the fact that there has been a decrease in certain categories of crime over the past few years, but does he agree that the best crime deterrent is more policemen on the beat? Is he aware that Londoners welcome the increase of 3,000 policemen in the Metropolitan police force in the past three years? May we have an assurance that that will result in more policemen on the beat in the capital and that that trend will be reflected in other areas?
    Mr. Mayhew: I know it to be the Commissioner's policy to get more policemen back on the beat. That is the policy of chief constables generally throughout England and Wales. It has the great advantage of being exactly what our constituents want to see.
    Mr. John Fraser: Do the figures to which the hon. and learned Gentleman referred suggest that an increase in pornography brings about a decrease in sexual crime?
    Mr. Mayhew: If the figures suggest that to the hon. Gentleman, he is in a very suggestible mood this afternoon.

    Outer London (Crime)
    Mr. John Huntasked the Secretary of State for the Home Department whether he has had any recent discussions with the Commissioner of Police of the Metropolis on the level of crime in outer London; and if he will make a statement.
    Mr. Whitelaw: I am in regular contact with the Commissioner on a wide range of topics, including the level of crime in particular parts of London.
    Mr. Hunt: Does my right hon. Friend acknowledge that there is a significant difference in the pattern of crime between inner and outer London? Does he agree that the burglary of one's home can be an even more traumatic and sickening experience than being mugged in the street? In view of the recent horrific increase in the number of burglaries and robberies in Bromley and elsewhere, will he encourage the Commissioner to organise more frequent panda car patrols in the most vulnerable areas and to mount more "beat the burglar" campaigns, which have already had some limited success?
    Mr. Whitelaw: I accept that there are differences in crime in different parts of the metropolis. I should not like to make any comparison between the effect on someone who is involved in a street crime and the effect on someone who is burgled. Both offences are equally odious.
    My hon. Friend asked me to encourage the Commissioner to organise more frequent panda car patrols. The feeling is that it is important to have more officers back on their feet. We cannot have it all ways all the time.
    My hon. Friend's crime prevention proposals are most important. I hope that a great deal of attention will be paid to them. The more difficult it is for burglars to commit crime, the more they are likely to be deterred.
    Mr. Christopher Price: According to the newspapers this morning, the Commissioner has announced that he will record racial incidents wherever they are alleged. Will he also record allegations of racism by individuals against policemen in stop-and-search operations?
    Mr. Whitelaw: I discuss these matters and what the Commissioner says about them with the Commissioner.
    Mr. Greenway: Does my right hon. Friend agree that if the police are to have the success that is necessary for proper public protection, the damaging attacks that they are having to suffer will so affect their morale that it will be difficult for them to maintain the necessary level of defence of the public?
    Will he note that these attacks come from Left-wing elements and that the committee at County Hall, set up without any remit from the GLC, will not help public protection?
    Mr. Whitelaw: I have made clear on a number of occasions my distaste for some of the remarks made by Mr. Livingstone and Mr. Boatang. They undermine the need, which everyone in the House accepts, for the police to be successful against crime and to prevent trouble in our streets. That is their job. They need the full support of everyone, not only in the House, but in the GLC.
    Mr. Snape: Does the Home Secretary agree with the criticism of the Metropolitan Police expressed by his hon. Friend the Member for Kensington (Sir B. Rhys Williams)—the notorious Left-winger—following the problems in Notting Hill on Tuesday evening?
    Mr. Whitelaw: As a matter of fact, I do not. I believe that the operation conducted by the police in Notting Hill was an example of what is needed. If the House wants not to be properly controlled, it is necessary for firm and clear police action to be taken at the first opportunity. That was done in Notting Hill, and it was most successful.

    Telephone Tapping
    Mr. Cryerasked the Secretary of State for the Home Department if he will publish future Diplock reviews of telephone tapping.
    Mr. Jim Marshallasked the Secretary of State for the Home Department whether he intends to publish future reviews of the Diplock report on telephone tapping.
    Mr. Whitelaw: No, Sir.
    Mr. Cryer: Why did the White Paper of March 1981—"The Interception of Communications in Great Britain"—make no reference to the extensive bugging and

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    tapping undertaken under secret police guidelines that were revealed in The Guardian 12 months later? Successive Governments have had an obsessive craze for secrecy. Are not questions blocked in Parliament and virtually anything but the most limited whitewash on telephone tapping and bugging ruthlessly crushed and not published by the present Government?
    Mr. Whitelaw: Successive Governments have always taken the view that matters of national security and the fight against serious crime should not be discussed in the House. I believe that that is right.
    Mr. Marshall: Will the Home Secretary arrange for his Department to inform hon. Members when it intends to link questions? Until I came into the Chamber no such information had been passed to me.
    I repeat the question put by my hon. Friend the Member for Keighley (Mr. Cryer). Why did not the Home Secretary reveal in the 1981 White Paper the extent of tapping and bugging that had been undertaken without warrant? Why should we have to find out this information in an article in The Guardian about 12 months later? Does the right hon. Gentleman agree that a more important and sinister aspect is that secret guidelines were issued covering tapping and bugging?
    Mr. Whitelaw: On the hon. Gentleman's first point, if there has been a mistake, I take full responsibility and apologise. However, I have been complimented by many hon. Members on both sides of the House for the punctilious way in which the Home Office always lets them know about such matters. I am sorry if a mistake occurred on this occasion.
    On the second point, the hon. Gentleman is confusing surveillance with interception. They are two very different matters.
    Mr. Wigley: Will the Home Secretary give an assurance that he will publish any consultative document that comes from the review that he is currently undertaking into the guidelines on surveillance techniques?
    Mr. Whitelaw: I said that I would publish the guidelines when they were finally concluded, and I will.
    Mr. Adley: On a technical point, does the proliferation of bugging devices in a single exchange affect the efficiency of the service? Will my right hon. Friend investigate what goes on in this building, where almost every call one makes is either a crossed line or an unconnected call?
    Mr. Whitelaw: As Home Secretary I seem to be responsible for many matters, but not, thank goodness, for the efficiency of the telephone service.
    Mr. Skinner: Is the Home Secretary aware that the Government have a funny set of priorities on intelligence collecting? The intelligence collecting service seems to spend much money on telephone tapping and collecting information about people in the trade union movement, but it could not find out about an Argentine invasion 11 days earlier.
    Mr. Whitelaw: I have said to the House before, and I say again, that telephone interceptions are in the main connected with serious crimes. Surely that is what this country wants done.

    Chief Constables (Appointment)
    Mr. Winnickasked the Secretary of State for the Home Department if he is satisfied with the present system of appointment of chief constables.
    Mr. Whitelaw: Yes, Sir.
    Mr. Winnick: Is the Home Secretary aware that many people are more than fed up with the constant, provocative political remarks of the chief constable of Greater Manchester? Could that gentleman be reminded that he is a public servant and that, if he wants to enter politics and engage in political controversy, he should resign his position and do so in the normal manner?
    Mr. Whitelaw: I understand that the chief constable of Manchester wishes to remain in that position. I hope that he will, because I have every confidence in his work.
    Mr. Eggar: Is my right hon. Friend aware that the vast majority of Londoners are fed up to the back teeth with the provocative and political remarks of Mr. Ken Livingstone on the Commissioner-designate of the Metropolitan Police? Will he confirm that the remarks made by Mr. Livingstone and his colleagues make it imperative that responsibility for the Metropolitan Police should remain with him and the House.
    Mr. Whitelaw: I agree with my hon. Friend. I am not a Londoner, but I am equally fed up with Mr. Livingstone's remarks.

    Youth Unemployment
    Mr. Campbell-Savoursasked the Secretary of State for the Home Department whether he will undertake an examination of whether there is a link between youth unemployment and crime or other forms of anti-social activity.
    Mr. Mayhew: The published evidence on the relationship between unemployment and crime is kept under review by the Department.
    Mr. Campbell-Savours: If, in the written reply that is due to me, the Home Secretary identifies an increase in indictable offences in the county of Cumbria, will the hon. and learned Gentleman then accept that there is a link in that county between unemployment and anti-social activity? Does he accept that the best way to reduce the rising crime rate is to provide work for the unemployed and to give direct Government support to the family?
    Mr. Mayhew: My right hon. Friend's answer to the hon. Gentleman's written question is hypothetical. I do not know what will flow from that. However, my right hon. Friend has dealt with the relationship between unemployment and crime. Published research is like a bran tub—there is something in it for everybody. The true situation, looking back over the post-war growth in recorded crime, is that the increase started in the 1950s, when it was not related to an increase in unemployment; it continued into the 1960s, which was a period of relatively full employment; and in the 1970s the year-on-year increases in crime and unemployment were largely independent of each other.
    Mr. Body: Recognising what was said earlier about the factor of unemployment in the crime rate, does my hon. and learned Friend agree that countries that enjoy full

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    employment—Switzerland is an outstanding example—also have an increasingly serious problem of crime committed by young persons?
    Mr. Mayhew: I understand that that is so. It simply shows that the search for a single or simple cause of crime is fruitless. I am certain that, at all levels and in all sections of the community, we must find a way to restore respect for the values that obtained in this country when crime was at a much lower rate.
    Mr. Foster: Why does the Minister not consult people who work in the youth service? They will tell him that there is a close association between rising crime and rising unemployment. Is he completely unaware of the disillusionment, bitterness and anger among young people about unemployment? Is the Minister further aware that the youth opportunities programme, in which the Government take a certain pride, is inadequate and that, unless the new youth training scheme produces jobs, that too, will be inadequate?
    Mr. Mayhew: I am not responsible for the youth opportunities programme, although I have a great admiration for it. I am well aware of the anxieties, frustration and bitterness among young people who are confronted with unemployment, but I disagree that one can draw from that a causative link between unemployment and crime. Research does not support it. There are many better reasons for wanting to get a reduction in unemployment on a lasting basis than the contribution that that could make to law and order.
    Mr. Alton: How does the Minister explain the massive increase in crime on Merseyside, bearing in mind that the figures issued yesterday show a 17 per cent. increase in crime over the first quarter of this year? There has been a 37 per cent. increase in the number of business premises burgled over the past month alone. Does the Minister agree that there are good grounds for reinstating the £500,000 that has been cut from the Merseyside police budget this year?
    Mr. Mayhew: No link can be shown—and it is not for want of trying in many quarters—between local unemployment and local levels of crime. We must seek to re-establish those attitudes towards other people's rights—it is those rights that are damaged by crime—that used to obtain. That is widely understood as something in which the whole community is involved.
    Mr. Grieve: Does my hon. and learned Friend accept that the relationship between unemployment and crime is hardly a direct one or susceptible of proof, and that if one looks at the crime figures when unemployment reached a peak between the wars, one sees that they do not bear any comparison with the crime figures today? Therefore, it would seem that it is not to unemployment but to a general decline in discipline in society that we must look for the cause of crime.
    Mr. Mayhew: I agree with my hon. and learned Friend that it is not possible to find a causative link between one and the other. As my right hon. Friends the Prime Minister and the Home Secretary have frequently said, it has a bearing, but it is only one of many factors. I agree with the thrust of my hon. and learned Friend's question.
    Dr. Summerskill: Does the hon. and learned Gentleman recall that in February 1978 his right hon.
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    Friend the Home Secretary drew a clear causative link between unemployment under a Labour Government and crime and vandalism among young people? However, it does not seem to suit the Conservative Party now to draw that same link.
    Mr. Mayhew: That question has been asked of my right hon. Friend, let alone of me, on many occasions and it has been faithfully dealt with. I do not propose to deal with it now.
    Hon. Members: Answer.
    Mr. Campbell-Savours: On a point of order, Mr. Speaker. In view of the totally unsatisfactory nature of the reply, I shall seek leave to raise the matter on the Adjournment.

    National Police Computer
    Mr. Les Huckfieldasked the Secretary of State for the Home Department what further consideration he has given to the appointment of an independent inspection system on behalf of the public of personal and other information in police computerised and other filing systems, following his reply to the hon. Member for Nuneaton on 18 March, Official Report, c. 474.
    Mr. Raison: The White Paper on data protection, published on 7 April, sets out our proposals for legislation in this matter.
    Mr. Huckfield: Does the right hon. Gentleman accept that the reply given by his right hon. Friend on 18 March, and the replies given this afternoon about the White Paper, still mean that in reality a large portion of police files will be left completely independent and exclusive of any inspection system, even on behalf of the public? Will he therefore have a look at the suggestion that has been made by myself and other hon. Members, that if public access cannot be permitted to these police files—indeed, there are good reasons for that—some kind of independent inspection on behalf of the public should be undertaken?
    Mr. Raison: In our view it will be inappropriate to give the registrar and his staff access to security information, which anyway is covered by internal safeguards. In any event, the registrar could not take public action on such matters if he did have to investigate them.
    Mr. Dickens: As both my right hon. Friend and I have recently been active on the Floor of the House in the matter of data protection, does he accept that it is perhaps more than a little coincidental that both he and I have been victims of clumsy burglaries of our homes? Is it at all possible that MI5 is taking a keen interest in both of us?
    Mr. Raison: I should have thought that the one place where data cannot possibly be protected is on the Floor of the House. On the other hand, I am inclined to the view that what happens to us at home should be a matter of privacy.
    Mr. Meacher: In view of the many leaks that have occurred from local police computers and the fact that such information may sometimes be damaging and inaccurate, will the Minister reconsider whether he should empower a special, duly authorised, security-cleared officer to inspect such files?
    Mr. Raison: I do not think that I can add to what I have just said. If someone were to be given this task, he would not command public confidence unless he could make his findings public, and clearly that would be impossible.
    Mr. Cryer: Is not the Minister disturbed at the fact that apparently a massive sum of money has been granted by the House, without any direct, specific labelling, to enable MI5 to build a computer with at least a 20 million storage capacity, which will have links with every other Government Department, without any protection whatever? Is he aware that his refusal to provide that protection is not good enough?
    Mr. Raison: I do not propose to comment on security matters of that kind.

    Chief Constable (Greater Manchester)
    Mr. Alexander W. Lyonasked the Secretary of State for the Home Department whether the chief constable of Greater Manchester has, under section 12 of the Police Act 1964, referred to him the requirement of the police authority that he should answer questions about the action taken by the police in the Laurence Scott dispute.
    Mr. Whitelaw: No, Sir.
    Mr. Lyon: When a police authority asks its chief constable for a report under section 12, does the Home Secretary agree that the chief constable has no power to refuse unless he appeals to the Home Secretary to back his refusal?
    Mr. Whitelaw: I understand that the chief constable of Greater Manchester has provided that police authority with a report on police operations during the industrial dispute.

    Violent Crime (Statistics)
    Mr. Adleyasked the Secretary of State for the Home Department what has been the rate of increase in violent crime since the ending of capital punishment; and what was the rate of increase over a comparable period before abolition.
    Mr. Mayhew: In the 16 years since 1965 when capital punishment was abolished, the average annual rate of increase of recorded offences of violence against the person was 9 per cent. In the 16 years from 1950 to 1965, it was 10 per cent.
    Mr. Adley: Does my hon. and learned Friend not agree that the best deterrent is probably one that is never invoked? However, in the light of those figures, is it his impression that there is a link between capital punishment as a deterrent and violent crime?
    Mr. Mayhew: I happen to think that the best deterrent is the likelihood, and strong probability, that if someone commits a violent crime he will be caught and severely punished, but no one has been able to establish either for or against capital punishment on the basis of statistics. We shall soon have an opportunity to debate this matter.
    Mr. Edward Lyons: In view of the fall in the occurrence of murder and a high clear-up rate of 97 per cent., and in view of the reduction in rape and other sexual offences, also with a high clear-up rate, is it not obvious that the real problem with which we are confronted is detecting those who commit run-of-the-mill offences?
    Mr. Mayhew: I agree with the hon. and learned Gentleman that the higher the rate of detection, the higher the likelihood of deterrence.
    Mr. Hill: Is my hon. and learned Friend not concerned about those who are in constant danger, such as police officers, prison wardens and those who must deal with acts a terrorism? Is there not a justifiable claim to bring back capital punishment for murder in those categories? Will the House again have a chance to vote on this issue?
    Mr. Mayhew: I do not control these matters, but, like myself, my hon. Friend will have read that we are likely to have an opportunity to deal with these issues, and I do not want to anticipate the arguments that will be appropriate to that occasion.
    Mr. Hattersley: Will the Minister answer the question asked by his hon. Friend the Member for Christchurch and Lymington (Mr. Adley)? Do the figures that he has just given justify the view that capital punishment was a deterrent?
    Mr. Mayhew: These matters are open to a wide variety of interpretations, and I do not wish to add anything today that would spoil what I am sure will be an excellent debate.

    United Kingdom (Entry Visas)
    Mr. Canavanasked the Secretary of State for the Home Department how many people have been refused permission to visit the United Kingdom since May 1979.
    Mr. Raison: Between 1 May 1979 and 31 December 1981 some 15,000 Commonwealth citizens and 32,000 foreign nationals were refused leave to enter the United Kingdom. Separate figures are not readily available to show how many of these were seeking entry as visitors.
    Mr. Canavan: If this is supposed to be a free country, why are visas being persistently refused to certain North Koreans who want to visit this country? Whatever our views may be on the North Korean regime, is not that exclusion carrying non-recognition too far, especially in view of the oft-repeated assertion that the recognition of a Government does not necessarily mean approval of their policies and the fact that the North Korean Government have been a de facto Administration in that part of the world for over a third of a century?
    Mr. Raison: The question of the recognition of a country is not for me. The Government of North Korea are not recognised by Her Majesty's Government. Persons holding national passports issued by such Governments are not given permission to come to the United Kingdom unless their admission is in the public interest or unless there are compassionate features.
    Mr. Stanbrook: Over the same period, how many people who have been admitted to this country as visitors have subsequently stayed on, in contravention of the conditions of their admission?
    Mr. Raison: As I am sure my hon. Friend will appreciate, it is not possible to give the precise figures of overstayers.
    Mr. Tilley: Is the Minister aware that there is increasing distress and resentment among families, particularly among Asian families, who believe that their relatives are being refused permission to visit this country

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    to attend weddings and funerals? Is he further aware that those families now realise that the Conservative manifesto that they may have read in May 1979, which said that there would be special support for the family, was a cruel hoax?
    Mr. Raison: The numbers of refusals among Asian families are low.

    Metropolitan Police (Foot Patrols)
    Mr. John Fraserasked the Secretary of State for the Home Department how many Metropolitan policemen are now engaged on regular foot patrols compared with the number a year previously.
    Mr. Whitelaw: The Commissioner fully shares my wish to see more officers on the beat. In the last year there has been an increase of over 1,600 in the strength of uniformed constables and most of them have been deployed on foot patrols. A more precise figure could be given only at disproportionate cost.
    Mr. Fraser: May I tell the Home Secretary how much I welcome in my borough the increase in the number of policemen on the beat? Will the right hon. Gentleman confirm that the trend to place policemen on the beat will continue and that, if that means an increase in the strength of the Metropolitan Police because of manpower demands, he will not stand in the way of that increase?
    Mr. Whitelaw: I am grateful to the hon. Gentleman for his remarks. I compliment him on the consistent support that he gives to the police in his borough. I wish that everyone else in that borough would give similar support. I am prepared to consider the question of the future strength of the Metropolitan Police.
    Mr. Marlow: Does my right hon. Friend agree that the risk to policemen on the beat from hardened criminals carrying guns, which has vastly increased recently, would be reduced if capital punishment were reintroduced?
    Mr. Whitelaw: That matter will be debated. If I were to give an answer to my hon. Friend, I should be expressing personal views that are not acceptable to many people. I shall not do that until we have the debate.

    Children and Young Persons Act 1969
    Mr. Heddleasked the Secretary of State for the Home Department if he is satisfied with the operation of the Children and Young Persons Act 1969 in respect of those matters for which he has responsibility.
    Mr. Mayhew: We have included in the Criminal Justice Bill the measures that we consider necessary to improve the operation of the 1969 Act.
    Mr. Heddle: As, since 1975, on average over 40 per cent. of all burglaries committed in the West Midlands have been committed by under 17-year-olds, does my hon. and learned Friend agree that the 1969 Act is largely a paper tiger? Will he confirm that the Criminal Justice Bill will restore definite powers to the magistrates to ensure that parents are truly accountable in the courts for the actions of their children?
    Mr. Mayhew: The Bill strengthens the jurisdiction of the criminal courts under the Children and Young Persons Act 1933 to make parents of juvenile offenders liable to pay their fines, compensation orders and costs orders. It
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    also increases to £500 the maximum sum in which they can be bound over to exercise proper care and control. Those will be useful additions to the weapons available to the courts.
    Mr. Kilroy-Silk: Given that we imprison twice as many juvenile offenders today as we did a decade ago and that 75 per cent. of them re-offend on release from penal establishments, will the hon. and learned Gentleman accept that there should now be a major shift of emphasis and resources away from custodial techniques to treatment and care in the community and, particularly, that more resources should be provided for measures such as intermediate treatment?
    Mr. Mayhew: It is desirable that, wherever possible, and consistent with the safety of the public, young offenders should be kept out of custodial establishments. That is why, for example, in the Criminal Justice Bill we are introducing a residential care order, which will enable a young offender to be kept out of custody. I recall that that measure did not win the support of the hon. Gentleman.
    Mr. Peter Bottomley: Before the final stages of the Criminal Justice Bill, will my hon. and learned Friend consider whether there are sufficient powers for the courts to require parents to pay to the court a small sum each week, part or all of which they could get back after a year or two if their child did not re-offend?
    Mr. Mayhew: I note my hon. Friend's suggestion. At a later stage he may care to secure that it can be debated in the House.

  PRIME MINISTER

    Engagements
    Q 1. Mr. Marlowasked the Prime Minister whether she will list her official engagements for 22 April.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall have further meetings later today. This evening I hope to attend a dinner given by the Civic Trust.
    Mr. Marlow: Despite the strong action taken by my right hon. Friend, and despite also the Government's proper desire for a diplomatic solution, both of which have the full support of the nation, has my right hon. Friend noticed reports that General Galtieri is on his way to the Falkland Islands? Does she agree that that provocative move will not help to achieve a peaceful settlement?
    The Prime Minister: I confirm that we strive for a diplomatic and peaceful solution. Nothing that General Galtieri can do by visiting the islands today alters the fact that the islands are under British sovereignty. Neither invasion nor a visit can alter that. The best thing that can be done is to implement United Nations resolution 502 by the withdrawal of Argentine troops. That resolution was passed nearly three weeks ago.
    Mr. David Steel: Did the Cabinet decide this morning to defer publication of the defence White Paper? If so, will it be rewritten to reverse the rundown in naval manpower?
    The Prime Minister: Preparations for the White Paper are complete, but the White Paper is not complete. I do not know when it will be ready to be published, but not next week.
    Mr. Higgins: While we must all hope that the Argentine Government will now comply with resolution 502 and the wishes of the House, if they fail to do so, will my right hon. Friend consider going back to the Security Council and asking for economic sanctions, so that we can see who is prepared to stand up and be counted in the battle against aggressors, and we can be seen to have exhausted all other possible means of persuasion short of military force?
    The Prime Minister: My right hon. Friend knows that at the moment we are concentrating on negotiations through the good offices of Mr. Haig. If those fail, of course we shall consider what other actions should be taken. I can only remind my right hon. Friend that the history of economic sanctions and their effectiveness is not good.
    Dr. Owen: Will the Prime Minister confirm that South Georgia is a direct dependency and is only administered by the Falkland Islands governor and that no Government have ever been prepared to countenance any change in that position in discussions with the Argentine? Will she confirm, further, that there are major British interests in relation to the Antarctic and South Georgia?
    The Prime Minister: I confirm what the right hon. Gentleman has said. South Georgia was administered as a matter of convenience through the governorship of the Falkland Islands. Our title to it is different from that to the Falkland Islands. It is a separate dependency. It is extremely important—for the reasons that the right hon. Gentleman gave, among others.
    Mr. Jim Marshallasked the Prime Minister if she will list her official engagements for Thursday 22 April.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Marshall: I refer to the Prime Minister's earlier answer. Is she prepared to give an undertaking that no force will be used, either against the East or West Falkland Islands, until all avenues of diplomacy, including the United Nations, have been fully explored and exhausted?
    The Prime Minister: I confirm what my right hon. Friend the Foreign Secretary said yesterday, that while we are making every effort to secure a peaceful settlement, the use of force cannot be ruled out.
    Mr. Ernie Ross: Will the Prime Minister take time today to study the reports of the Israeli aggression in Lebanon yesterday? Does she agree that this break in the ceasefire by the Israelis is unprovoked aggression and is yet another step towards an invasion of Southern Lebanon? Will she take time today to condemn that action?
    The Prime Minister: I think that the whole House will have noted what happened yesterday, will have noted it with concern, and will hope that it will give rise to no more hostilities in that region and that the withdrawal from Sinai will continue on time.
    Mr. Aitken: Will my right hon. Friend find time today to examine the record of the Argentine junta in failing to
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    honour certain important international agreements? In particular, will she note the fact that in recent months the junta has dishonoured its international agreement to uphold the authority of the Pope as mediator in the dispute with Chile? Against that background, what possible confidence can Her Majesty's Government have that any agreement that is signed by the Argentine junta is worth the paper that it is written on?
    The Prime Minister: I am well aware of what happened in the dispute to which my hon. Friend refers. I think that another meeting has been called by the Pope on the dispute between Argentine and Chile and that it will take place in the coming two days. It is for the reasons that my hon. Friend adduces that we should watch very carefully the task force and its presence until the withdrawal of those troops is complete.
    Mr. Foot: While we are all, of course, still deeply concerned about the Falklands crisis, may I return to the question that was put by my hon. Friend the Member for Dundee, West (Mr. Ross) about the other crisis on the borders of Lebanon and Israel? Have the Government made representations on the matter, and are we giving support to the Secretary-General's demands that there should be a re-establishment of the ceasefire? Does this not further illustrate how much we are all dependent, large nations and small, on absolute allegiance to the United Nations charter and the determination to carry it out all over the world?
    The Prime Minister: We hope that that ceasefire will not be broken again. I can, of course, assure the right hon. Gentleman that we are doing everything that we can through diplomatic channels to urge restraint, so that the situation does not get worse.
    Mr. Edward Gardner: Is my right hon. Friend aware that those of us, from both sides of the House, who have just returned from the spring meeting of the IPU in Lagos found that delegates from all parts of the Commonwealth recognised the justice of our cause and expressed firm and unequivocal support for what Her Majesty's Government are now doing to deal with the crisis with the Argentine?
    The Prime Minister: I am grateful to my hon. and learned Friend. I think that nations almost everywhere recognise that unprovoked aggression must not be seen to succeed, for if it does not only will it be impossible for the people of the Falkland Islands but for many other peoples across the globe.
    Mr. Spearing: As the Argentine Government are still defying United Nations resolution 502, does that not put a greater obligation on the Security Council and all those members of the United Nations who have condemned Argentine aggression? Can the right hon. Lady now assure the House that the policy and action of Her Majesty's Government will be to retain the support of all those countries which have condemned Argentine aggression, but which may have other views about wider aspects of the matter?
    The Prime Minister: It is certainly true that some countries may have their own views about the actual sovereignty of the Falkland Islands, but most of them have condemned the unprovoked aggression and would support us in securing the withdrawal of the Argentine forces. They would also recognise that we, too, have rights of self-defence under article 51 of the United Nations charter.
    Q3. Mr. Heddleasked the Prime Minister if she will list her official engagements for Thursday 22 April.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Heddle: Does my right hon. Friend agree that the Argentine people have no cause to thank their Government for a rate of inflation of around 140 per cent.? Does she further agree that our rate of inflation is continuing its downward spiral and is on target to fall below 10 per cent. this year? Furthermore, will my right hon. Friend take heart today at the announcement that, together with Japan and France, Great Britain is likely to emerge from the world recession well ahead of our industrial competitors?
    The Prime Minister: I confirm what my hon. Friend has said. The rate of inflation is falling, is continuing to fall, and we expect that it will be below 10 per cent. well before the end of the year. I also confirm that there are forecasts now which point out that the recovery will quicken in this country in the coming year and will be at least as good as that of our major international competitors, and in some cases better.
    Mr. Gordon Wilson: In relation to the Argentine, does the Prime Minister realise that if the Government engage in hostilities before the processes of negotiation have been fully and adequately carried out, a lot of the support that she has received in the House, and at home and abroad, will disappear like snow off the dike on a hot spring day? Will she, therefore, in pursuit of negotiations for a peaceful settlement, consider the transfer of sovereignty to the United Nations—[HON. MEMBERS: "No."]—so that the people living in the Falkland Islands will be able to have their security guaranteed by an international body?
    The Prime Minister: I cannot rule out the use of force. The process of negotiations could go on endlessly. There is a maritime exclusion zone. We must also expect that we have a right of self-defence under article 51 of the charter for islands that have been invaded. Of course we would all prefer, and will do everything possible to seek, a peaceful settlement, but, as the hon. Gentleman will understand, that it is not easy, particularly when seeking a settlement with a country, some of whose people say that they will withdraw only if they succeed in obtaining sovereignty as the price of that withdrawal.
    Mrs. Knight: Will the Prime Minister dissociate herself from those who suggest that the British flag is just another piece of cloth, and those who consider that it might be a convenient ploy to have it fluttering side by side with the Argentine flag, even before the people of the Falklands have had an opportunity to make their decision clear? Will she stress again the vital importance of the symbolism of the British flag?
    The Prime Minister: Yes, of course. To all of us here, and in particular to the Falklands, the flag is a great symbol of pride and allegiance to the Crown. No one would quarrel for a moment with that statement.
    Mr. Parryasked the Prime Minister if she will list her official engagements for Thursday 22 April.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Parry: Will the Prime Minister now offer her resignation, in view of the revelation that her Government have recently been supplying arms to the Argentine that may be used against the Falklanders and British forces`? Is that not tantamount to treasonable conduct?
    The Prime Minister: If the hon. Gentleman looks at the history of the supply of arms to the Argentine he will find that a number of contracts were negotiated during the lifetime of his own Government.
    Mr. Hastings: Does my right hon. Friend agree that the truly remarkable achievement of the Royal Navy and the other Services in mounting this task force with such efficiency and speed has been insufficiently recognised to date? Does she further agree that any continuing plea for a restriction of the use of force, or some other kind of compromise, can serve only to bring comfort and strength to the junta and thus increase the risk of further miscalculation on its part, and loss of life?
    The Prime Minister: I agree with my hon. Friend that the speed with which the Royal Navy assembled the task force, and its efficiency throughout, have been matters of pride for us all. I entirely agree with him that sending the task force efficiently and well-equipped is a factor that is more likely to lead the junta to a peaceful settlement than would have been the case without it.
    Mr. Thomas Coxasked the Prime Minister if she will list her official engagements for 22 April.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Cox: Is the Prime Minister aware that her attitude towards the Fascist junta in the Argentine contrasts with the lack of action by her Government towards another Fascist junta, that in Turkey, which is still occupying part of a Commonwealth country, Cyprus? What is her attitude to that occupation? What action is she taking to have those troops removed? What will she do if the general in Ankara refuses to remove Turkish troops from Cyprus?
    The Prime Minister: I understand that the military Government in Turkey have said that they intend to return to democratic Government as soon as possible. They have indicated to the European Community a timetable under which they hope to achieve that.
    Dr. Mawhinney: Does my right hon. Friend agree that if a democracy is unwilling to defend its own territory or people against conventional armed attack after, and only after, all peace negotiations have been exhausted, it might find that its credibility is seriously damaged when it comes together with other democracies in an organisation such as NATO?
    The Prime Minister: I fully agree with my hon. Friend. One must be prepared to defend those things in which one believes and be prepared to use force if it is the only way to secure a future of liberty and self-determination.

Business of the House
Mr. Michael Foot: Will the Leader of the House announce the business for next week?
The Lord President of the Council and Leader of the House of Commons (Mr. John Biffen): Yes, Sir. The business for next week will be as follows:—
MONDAY 26 APRIL AND TUESDAY 27 APRIL—Further progress in Committee on the Finance Bill.
WEDNESDAY 28 APRIL—Debate on a motion to take note of the White Paper on Northern Ireland, "A Framework for Devolution", Cmnd. 8451.
Motion on the Value Added Tax (Finance) Order. THURSDAY 29 APRIL—Consideration in Committee of the Finance Bill.
FRIDAY 30 APRIL—Private Members' Bills.
Mr. Foot: I have three matters to put to the right hon. Gentleman. First, I thank and congratulate him for arranging that the debate on the White Paper on Northern Ireland should take place on a take-note motion. That is the best way for the whole House to examine the matter in a preliminary way.
Secondly, I assume that the right hon. Gentleman will give an assurance that there will be an early report to the House when the Foreign Secretary returns from his discussions in the United States.
Thirdly, can the right hon. Gentleman clear up the mystery of the disappearing White Paper on defence about which the Prime Minister did not give us any information? Are we likley to have a defence White Paper this year? Can he give us the foggiest idea of what is likely to be in it?
Mr. Biffen: I am sure that the whole House will welcome the enthusiasm that the Leader of the Opposition now shows for defence White Papers. The preparation of the annual statement on the Defence Estimates is substantially complete. My right hon. Friend the Secretary of State for Defence is considering whether, in the light of present circumstances, we should produce an addendum. I am sure that the House will think that that is a measured and prudent reaction.
On the right hon. Gentleman's first point, I thank him for his comments. On his second point, throughout the past week and, indeed, before, we have sought to keep the House fully informed of the moving dramas of the Falkland crisis. I have no doubt that it will be the wish of my right hon. Friend the Foreign Secretary to present his comments to the House on his return from the United States.
Mr. Foot: Will the right hon. Gentleman give the House an absolute assurance here and now that the addendum will be even longer than the White Paper—or is it all to be subsumed under the title "Errata"?
Mr. Biffen: The Leader of the Opposition is more perceptive in his humour than in his final military judgment. I am sure that my right hon. Friend the Secretary of State for Defence will earn the respect and endorsement of the House by taking account of recent events before preparing his defence White Paper.
Mr. David Steel: Can we be assured that the addendum will be carefully prepared and might include a subtraction—the Trident missile programme?
Mr. Biffen: The right hon. Gentleman's views on the significance of Trident to our national defence are well known. I assure him that all documents prepared by the Government are careful.
Sir William Clark: I cannot refrain from asking my right hon. Friend about his new duties. Now that he has taken those responsibilities, is he aware that the Scott report was published nearly 18 months ago? When will the House have an opportunity to discuss it?
Mr. Biffen: I recognise the anxiety of hon. Members about the fact that consideration of that issue is taking some time. The House will understand that it is extremely complex. As the House has already been informed, there will be an opportunity to debate the matter, but I cannot yet announce the time for the debate.
Mr. James Molyneaux: I agree with the Leader of the Opposition that a take-note motion is the appropriate way to proceed with the debate on the White Paper on Northern Ireland. However, as that debate has now been switched from Tuesday to Wednesday, is it now proposed to proceed with the sitting of the Northern Ireland Committee on that day, since the guidelines for the Industrial Development Board that were promised for that day will not now be available for several weeks?
Mr. Biffen: I entirely appreciate the hon. Gentleman's point. I am sure that the matter can be re-examined through the usual channels.
Mr. Andrew F. Bennett: Will the Leader of the House arrange for an early debate on data protection, as it is clear that many people are disappointed with the recently published White Paper?
Mr. Biffen: An interesting debate this week allowed hon. Members to touch on that subject. In those circumstances, I cannot say that there will be another opportunity next week.
Mr. John Stokes: Will my right hon. Friend arrange time for a statement next week if there is any question of calling up reservists if there is some conflict with the Argentine?
Mr. Biffen: In the coming week, as in this, we shall be anxious to consult the House about every point in the Falklands issue whenever that is appropriate.
Mr. Jack Dormand: On the assumption that the Government want maximum publicity for their efforts in the Falklands crisis, will the Leader of the House arrange for a statement or a debate next week on the blacking being carried out by the union ACTT? Is he aware that it arises from the unjust dismissal of 26 film makers from the Central Office of Information and that they are seeking to renegotiate? Is he further aware that I have a letter from the Director-General of the Central Office of Information stating that the two issues are not connected? Is he also aware that I have a copy of a telegram from the Ministry of Defence that strongly requests the union to relieve the Government of the handicap of having Government films blacked, and that filming of the task force operation should be allowed to continue? Is that not a matter of considerable urgency?
Mr. Biffen: I do not in any way wish to disparage the importance of the topic that the hon. Gentleman raises. However, I cannot find time for a debate on it next week.
Mr. John Wells: Can my right hon. Friend give some idea when the Ministry of Agriculture, Fisheries and Food will provide a money resolution for the Southern Water Authority Bill, which is a Private Bill? Is he aware that the delay in providing that money resolution is holding up the Committee proceedings and that that adversely affects the River Medway and many other matters that have nothing to do with the money resolution, which relates to land drainage?
Mr. Biffen: I appreciate the difficulties that my hon. Friend has outlined. My right hon. Friend the Minister of Agriculture, Fisheries and Food has that in mind and believes that progress will be made shortly.
Mr. Sydney Bidwell: Does the Secretary of State for Transport intend to make a statement on increased lorry weights in the next few days?
Mr. Biffen: That is not planned, but I shall draw the hon. Gentleman's remarks to my right hon. Friend's attention.
Sir Frederick Burden: Does my right hon. Friend agree that the defence White Paper has been withdrawn because of the many imponderables that have been created by, and will exist until there is an outcome to, our forces' expedition to the Argentine? Does he also accept that when the White Paper is produced the House will require more than one day in which to debate it? Does he agree that at least two full days should be allocated to the matter?
Mr. Biffen: I note my hon. Friend's remarks about time for a debate. Happily, that does not fall immediately in the coming week. On his first point, it is not true that my right hon. Friend has withdrawn the defence White Paper, but he is certainly considering issuing an addendum which will take into account many of the developments of recent weeks which are clearly in the mind of the House.
Mr. Robert Kilroy-Silk: Is the right hon. Gentleman aware that the first annual report of the chief inspector of the prison service, which was published recently, described the appallingly overcrowded conditions in some of our prisons as degrading and dehumanising? When may we debate this extremely important subject?
Mr. Biffen: I thoroughly agree with the hon. Gentleman about the importance of the subject, but I am afraid that I must offer the disappointing rejoinder that, whenever the debate takes place, it certainly cannot take place next week.
Mr. Bill Walker: Will my right hon. Friend provide an early opportunity to debate the reporting by the media of the Falkland Islands crisis? Is he aware that twice in one week the BB2 "Newsnight" programme deliberately misrepresented the facts about the air situation in relation to the task force?
Mr. Biffen: If the opportunity were provided, I am sure that many hon. Members would wish to pay full tribute to the way in which the media have covered the whole Falklands incident, but such a debate, which would allow my hon. Friend and others to put their points of view, cannot take place next week.
Mr. Christopher Price: May we have a debate next week on the extent to which, in a period
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of free exchange control, the City of London is cooperating with sanctions against Arentina and the extent to which well-known firms in the City are attempting to avoid the sanctions overseas? Does he agree that it is unreasonable to expect our allies in Europe and the United States to help us with economic sanctions against Argentina unless it is absolutely clear that everyone in Britain is co-operating?
Mr. Biffen: The hon. Gentleman makes a number of contentious comments—I make no reference to whether I believe them to be well advised—but apart from such ingenuity as he may use in relation to the Committee stage of the Finance Bill, I see no opportunity for such a debate next week.
Mr. Tony Marlow: As the House has been promised a debate on the Middle East and as it has recently enthusiastically embraced two principles—the right to self-determination, which of course includes the Palestinians, and the principle that no militarily strong and powerful nation should unleash military operations aganist its less powerful neighbours, namely Israel and Lebanon—will my right hon. Friend arrange for that debate as soon as possible?
Mr. Biffen: I think that the House generally is anxious that there should be a debate on foreign affairs and particularly the Middle East, but again, although I hope that it will be in the not too distant future, I am afraid that it cannot be quite so soon as my hon. Friend would wish.
Several Hon. Members rose—
Mr. Speaker: Order. If hon. Members will co-operate by asking brief questions, I shall try to call all those who have been rising.
Mr. Bob Cryer: As the Leader of the House has said that it will be impossible to have a debate on the COI redundancies, may we have a statement on the matter? Is he aware that the ACTT has generously offered to lift the blacking to allow the Government material to be presented even though, just a few weeks ago, the Government arbitrarily sacked 26 skilled, prize-winning film-makers who would be most willing to participate in the exercise if there were only some negotiation about their jobs? May we have a statement next week as a matter of urgency?
Mr. Biffen: I shall certainly pass the hon. Gentleman's remarks to my ministerial colleague who has responsibility in this matter. Then we shall see what happens.
Mr. Nicholas Winterton: Will my right hon. Friend arrange for the Home Secretary to make a statement to the House next week on the unfortunate development of vigilante groups in many cities throughout the United Kingdom? Is he aware that the problem was highlighted in Doctor, a weekly magazine for family practitioners? Is he further aware that it is apparently supported by certain Left-wing members of the Socialist Party and was mentioned in London Labour Briefing, which is an official journal of the Labour Party?
Mr. Biffen: I shall bring my hon. Friend's remarks to the attention of my right hon. Friend the Home Secretary, but I certainly cannot promise that a statement is likely next week.
Mr. D. N. Campbell-Savours: Will the right hon. Gentleman be a little more forthcoming on the

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reply that he gave to his hon. Friend the Member for Northampton, North (Mr. Marlow)? Does he accept that the situation in the Middle East is far more dangerous than that in the Falkland Islands? Does he agree that the House should have the opportunity to express its view on this, not after the event, as in the case of the Falkland Islands, but before any further outbreak of violence in the area?
Mr. Biffen: I appreciate the deep anxiety of many hon. Members about the present difficulties and dangers in the Middle East, and I hope that it will secure a reasonably early debate on foreign affairs, but there is no prospect of such a debate next week.
Mr. Andrew Faulds: In view of the impending changes in naval and nuclear policies, does the right hon. Gentleman agree that it is essential that the House should have the opportunity to debate the accountability of both the Prime Minister and the Secretary of State for Defence, so that we may pass judgment on their performance in those offices and require their resignation?
Mr. Biffen: The absence of debate has never inhibited the hon. Member for Warley, East (Mr. Faulds) from passing judgment. I think that we are sufficiently close to the season for defence debates for it to be reasonable to wait until then.
Mr. Ioan Evans: What progress has been made on the promised inquiry into the events leading to the invasion of the Falkland Islands? May we have an early statement about that inquiry?
Mr. Biffen: The hon. Gentleman raises a very important point. I shall bear in mind the timing of such a statement.
Mr. Dick Douglas: Will the Leader of the House confirm that he has read the Public Accounts Committee report on the Chevaline missile? Will he prevail on the Secretary of State for Defence and on the Treasury to accelerate their response to the report so that the House will be aware of its nature before publication of the defence White Paper?
Mr. Biffen: The Public Accounts Committee report was received yesterday and is now being studied. The Government will reply to the Committee in due course.
Mr. David Winnick: Is the Leader of the House aware that the promised inquiry into the events leading up to the invasion of the Falkland Islands is crucial, in view of the current situation? Can he promise that the inquiry is likely to take place in the very near future?
Mr. Biffen: I do not think that I can go beyond my answer to the hon. Member for Aberdare (Mr. Evans). My right hon. Friend the Prime Minister has made the position quite clear. I think that for the moment the matter must rest there.
Several Hon. Members rose—
Mr. Speaker: Order. I shall call the hon. Member who has only just begun to rise after I have called the two hon. Members who have been doing so continually.
Mr. David Ennals: Has the right hon. Gentleman's attention been drawn to early-day
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motions Nos. 342 and 344 on the importation of seal products, following the motion overwhelmingly carried by the European Assembly?
[That this House expresses its concern at the slaughter of 200,000 baby seals in Northern Canada and, bearing in mind that the United Kingdom is one of the largest importers of seal pelts, welcomes the resolutions passed overwhelmingly by the European Parliament (160 votes to 10) on 11th March calling for a ban on the importation into the European Economic Community of all skins and products derived from young harp and hooded seals and on products coming from seals whose stocks are depleted, threatened or endangered; and calls upon Her Majesty's Government not only to accept this proposal at the Council of Ministers but also, following the example of the United States of America, France, Holland, Italy and Sweden, to take action itself to introduce such an import ban as soon as possible.]
[That this House, noting the decision of the European Parliament of 11th March 1982, requests Her majesty's Government to impose a ban on the import of products derived from baby harp and hooded seals.]
If the right hon. Gentleman cannot arrange a debate on the matter, will he ask the appropriate Minister to make an early statement on it?
Mr. Biffen: As a former Minister at the Department of Trade, I am more than aware of the issue to which the right hon. Gentleman refers. I shall certainly pass his comments to my successor, who I know will be anxious to help in any way that he can.
Mr. Dennis Skinner: Is it not time that the Leader of the House ensured that a statement was made or a debate arranged on the vexed question of nurses' pay? Is it not a scandal that the Government, who were elected in 1979 on the promise of free collective bargaining, are now trying to ensure that the nurses receive a pay increase of only 6·4 per cent. when the rate of inflation is nearly—
Mr. Speaker: Order. Mr. Biffen.
Mr. Biffen: The hon. Gentleman will appreciate that negotiations are still proceeding in the Whitley Council. I think that we had better wait and see what comes out of those negotiations.
Mr. Robert Parry: Will the Leader of the House arrange for the Secretary of State for Employment to make a statement next week on the dispute between dock workers and the National Dock Labour Board over the consultative document? Is the right hon. Gentleman aware that if the document is not withdrawn there will be an official national dock strike?
Mr. Biffen: I understand that the dockers' union is threatening a national strike unless the National Dock Labour Board withdraws its consultative document containing cost-cutting proposals. This is a matter for the National Dock Labour Board, which is responsible for meeting its own administrative costs, and which is composed of an equal number of employer and trade union representatives. In those circumstances, it would not be wise for the Government to make any further move at this time.
Mr. Hal Miller: I should like, Mr. Speaker, to preface my question with an explanation to you that I have been present throughout the

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exchanges but that I had expected this question to be raised by another hon. Member. In his absence, I would seek to put it to my right hon. Friend. Has my right hon. Friend heard of the report that the receiver has today called a meeting of shop stewards in the De Lorean motor plant in Belfast to announce the mothballing of that plant? If that report is correct, will my right hon. Friend at least arrange for a statement at the earliest opportunity, even if he cannot find time for a debate, and so provide hon. Members with the chance to question the Minister responsible?
Mr. Biffen: I have not heard of the last-minute report to which my hon. Friend refers. I shall certainly draw the attention of my right hon. Friend the Secretary of State for Northern Ireland to my hon. Friend's remarks, because I am certain that it is a matter of real concern to the Province.

Members (Personal Attacks)
Mr. Alexander W. Lyon: On a point of order, Mr. Speaker. Last night on the Adjournment, the hon. Member for Altrincham and Sale (Mr. Montgomery) used about half the time available to him to launch a personal attack upon me. He gave me no notice of his intention. I wish to ask you, Mr. Speaker, whether it is still the tradition of the House that when hon. Members intend to make personal attacks of that kind, they should give notice to the hon. Members concerned.
Mr. Speaker: I am already dealing separately with another complaint of a personal attack being made upon an hon. Member. I have not read the details of the Adjournment debate last night. I shall, of course, immediately do so. I would merely say to the House that nothing is ever gained for any of us by personal attacks when reasoned argument is the basis on which we work.

Foreign Secretary (Statement)
Mr. David Winnick: On a point of order, Mr. Speaker. Yesterday, the Secretary of State for Foreign and Commonwealth Affairs apparently returned to the Chamber after his statement to make a further explanation. I am not quarrelling with that. It was his right. You, Mr. Speaker, and the House agreed to it. My question is this. In view of the importance of the content of the Secretary of State's subsequent explanation, made, I believe, some 20 minutes later, would it not have been useful for hon. Members to have had some information that the Foreign Secretary had decided to make it? Most hon. Members were unaware of what was happening.
Mr. Speaker: I should like to explain to the House that the Foreign Secretary came to me during the Ten-Minute Bill that immediately followed his statement. It was not, therefore, 20 minutes. It was at the end of the Ten-Minute Bill. I considered it in the national interest that the right hon. Gentleman should make his statement at once.
Mr. Winnick: Further to the point of order, Mr. Speaker. In case there is any misunderstanding, I am not quarrelling with your judgment. I merely ask that when a supplementary statement is to be made—this is more for the Foreign Secretary than yourself—hon. Members who are not in the Chamber might be notified. Yesterday the vast majority of hon. Members were, for various reasons, not present.
Mr. Speaker: I understand the hon. Gentleman. It was not a supplementary statement. The right hon. Gentleman was correcting one sentence. The Opposition Front Bench was well represented throughout the period. I understand that some hon. Members saw the name appear on the indicator and hurried into the Chamber only to find that it was all over.

Schools Council
3.56 pm
The Secretary of State for Education and Science (Sir Keith Joseph): With permission, Mr. Speaker, I wish to make a statement about the future of the Schools Council for Curriculum and Examinations.
My right hon. Friend the Secretary of State for Wales and I have considered this matter in the light of Mrs. Trenaman's report, which we published in October, and the comments on it. We are grateful to her for her review. It has prompted us to give fresh thought to the two functions of the council and the best ways of performing them.
These functions concern the system of examinations at 16-plus and 18-plus, and the development of the school curriculum. We have concluded that a single body, constituted as an elaborate network of committees on the lines of the Schools Council, is not well placed to carry out both functions.
On examinations, radical changes are required. Greater attention needs to be given to the co-ordination and supervision of examinations at 16-plus and 18-plus. Ministers need independent, authoritative advice on how these examinations might best serve national aims for education. We shall soon need advice on the national criteria now being developed for the 16-plus examinations. The Schools Council is a large body constituted from the
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nominees of many interest groups. We need a small body comprising persons nominated by the Secretaries of State for their fitness for this particular important responsibility.
My right hon. Friend and I will accordingly discuss with the local authority associations the establishment of an Examinations Council, appointed and funded by the Secretaries of State. I am circulating in the Official Report a note setting out the proposed composition and functions of this council. Copies of the note are available in the Vote Office.
Curriculum development is a practical and professional activity which goes on continually throughout the education system. This activity needs to be reinforced by a national body with the limited task of identifying gaps, helping to fill them and assisting with the dissemination of curricular innovation. Such a body—a School Curriculum Development Council—needs to reflect the many interests concerned, particularly the teachers. Its constitution should promote the sensible ordering of priorities, and efficient operation.
My right hon. Friend and I will discuss with the local authority associations the establishment of such a body. We envisage that it would be appointed by the Secretaries of State after consultation, that it would be financed jointly by local and central Government, but on a more modest scale than the Schools Council, and that most of its members would be teachers. Details of its proposed composition and functions are also set out in the note circulated in the Official Report.
We will also discuss with the local authority associations interim financial support for completing the necessary existing work of the Schools Council. As the new bodies come into operation, we would bring to an end our financial support of the council. We hope that many of the expert staff of the council will be ready to join the new bodies.
My right hon. Friend and I are ready to discuss our proposals with the teachers organisations and the other bodies which nominate members to the council's committees. We hope that everyone will co-operate with the local authorities and ourselves in the new arrangements we propose. Our aim is to improve the quality of the examinations system and to promote the effective development of the school curriculum.
Mr. Neil Kinnock: There is at least one respect in which we agree with the Secretary of State. We, too, wish to improve the quality of the examination system and to promote effective development of the school curriculum. The question is whether the proposals that the Secretary of State has brought before us today will achieve those objectives.
We echo the right hon. Gentleman's thanks to Mrs. Trenaman for the work that she undertook in her review of the Schools Council. It was an extremely valuable exercise. As the two Secretaries of State are supposed to be grateful for what Mrs. Trenaman has done, we record our amazement over the fact that they have rewarded her by rejecting entirely her two most salient recommendations—first, that the Schools Council should remain, and, secondly, that it should be slightly reduced in size and reorganised in its committee structure.
Is this rejection of Mrs. Trenaman's report, which enjoyed widespread support throughout the educational world, due to the fact that the Government did not get their way from Mrs. Trenaman, that they did not obtain

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endorsement of their hoped-for centralisation of the examination and curriculum system, and are now overruling her recommendations to get their own way?
How sincere is the view expressed by the Secretary of State that this matter has been considered afresh? Do not these proposals bear a close similarity to the submissions made by the Department of Education and Science to Mrs. Trenaman in secret? Is this the Government's effort to restore themselves to their original position, without the benefit of Mrs. Trenaman's advice?
Does the Secretary of State believe that even after consultation he can get the necessary comprehension, cooperation and participation for curriculum development examination reform from schools or teachers—whose efforts in those matters are essential—by handing down to them recommendations from centralised patronage bodies—most notably, and indeed notoriously, the Examinations Council—which he proposes should be financed and appointed by the Secretaries of State on their criteria and, apparently, no one else's? Is there not a danger that that body, like the School Curriculum Development Council, will be the creature of the Department, so transgressing some of the best and most cherished characteristics of our decentralised British education system?
Of the Examinations Council and the School Curriculum Development Council, which will be the strongest? Will the examination system and the council's recommendations dominate the curriculum, as is currently the case, or will the examination system start to serve the full broad functions of a modern curriculum?
May we assume that the Secretary of State has had a change of heart and has ignored the advice of his Under-Secretary, the hon. Member for Brent, North (Dr. Boyson), and come to the conclusion that the examination system should serve the wider cause of education in Britain? We have cause to doubt that that is his conviction, because his proposed structure for the Examinations Council does not involve joint partnership with local authorities and will be comprised of people who conform to his criterion of "fitness" for this important responsibility.
Where are the teachers on the Examinations Council? Who else will be on it? For what qualities will he be looking? Does the right hon. Gentleman accept that the Government's record of appointment and dismissal of people heading supposedly independent bodies is not good, as the recent memory of the dismissal of Mr. Glyn England from the Central Electricity Generating Board reminds us?
May I further ask the Secretary of State—[Interruption.] These are extremely important matters. The right hon. Gentleman's statement could change the direction of the British education system. The Government have not given us a day for a debate on education. Therefore, we must take full advantage of opportunities for questioning.
In paragraph 4 of the statement the right hon. Gentleman talks about the co-ordination and supervision of examinations at 16-plus and 18-plus. What has happened to the 17-plus examination? What is the right hon. Gentleman's attitude to other examinations in schools and further education such as City and Guilds, Royal Society of Arts and other examinations which are of considerable importance to the school system?
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Do the radical changes to which the right hon. Gentleman refers in paragraph 4 mean that we shall go radically forward, or radically back in the Whiggish fashion that he has taught us over the years since he achieved eminence for his philosophical considerations?
The right hon. Gentleman spoke of an independent body. How independent can either of the bodies be when they are the product of patronage?
The Secretary of State spoke about national aims for education. What national aims will they be? Will it be the national aim of fossilisation of a selective system, which appears to be the system that he favours, or will they be modern comprehensive aims for education? Will the right hon. Gentleman define "national aims" in a considerably less vague way than his phrase "of proven worth"?
Paragraph 6 says that the School Curriculum Development Council's function will be to identify gaps, to help to fill gaps and to assist with the dissemination of curricula innovation. Will the Government make more money available to fill such gaps in the curriculum? Will there by a major departure from the situation described by the recent report of Her Majesty's Inspectorate, which shows that as a result of Government cuts only five out of 96 English local education authorities satisfactorily provide for schoolchildren?
When the Secretary of State talks about consultation and expresses the hope that people will co-operate with the Government in achieving examination and curriculum development councils, how serious will such consultation be in the light of the fact that he has made the statement today without saying a word to the local authority associations? He will consult them, but that will make no difference whatever on the Examinations Council, on which they will not be represented, or on the School Curriculum Development Council, as they will never have the facilities or the resources to fulfil their functions and the gaps in the curriculum.
Sir Keith Joseph: I do not think that I can answer all those questions. I shall answer the main ones as I see them.
The Government have no intention to centralise. By the decision of Parliament, it is my name that is on the examination certificates that go to children who pass the examinations. To a large extent, the Government have a responsibility for examination policy and for examinations. Therefore, I make no apology for the fact that my right hon. Friend and I seek authoritative advice on examination co-ordination and supervision. We are making no adverse comment on the individual experts among those employed by the Schools Council. We hope that many of them will move to the new body. We are in serious need of authoritative advice on examinations.
The hon. Gentleman asked who will be on the Examinations Council. We shall seek people of good standing who reflect the views of local education authorities, parents, employers, teachers and examination boards.
The hon. Gentleman asked about the curriculum development body. We see curriculum development primarily as an activity conducted by teachers. Therefore, we seek a membership that will consist mainly of teachers. The Schools Council has found how difficult it is to get its work disseminated throughout schools. That is an important job and we treat it so, although the council will primarily have the function of full supervision and of

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filling any gaps. As in Scotland, we imagine that the two separate bodies will co-operate with each other. I think that those are the answers to the main questions.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to allow questions to continue until 4.30 pm.
Mr. A. J. Beith: Would it not have been right for the Secretary of State to express a word of thanks to the many people who have served on the Schools Council and who have given their time and effort to it over the years? The structure of the two bodies may be welcome and satisfactory, but does the right hon. Gentleman recognise that it is worrying that the membership could be so much in his hands? He could surround himself by people of only one opinion. Does he propose to allow the Examinations Council to hear appeals against the decisions of examining boards? Is that not a new development which requires careful consideration?
Sir Keith Joseph: I am sure that the whole House will have appreciated the work of the members of the Schools Council. However, I am not altogether convinced that it is a great retrogression that members of the Government should have some nominations to new bodies in place of nominations by, for instance, trade unions.
The hon. Gentleman is right to suggest that the examinations body should, in our view, take appeals such as it gets already.
Sir William van Straubenzee: Does my right hon. Friend recall that the original founding of the Schools Council was regarded as a milestone which showed the increasing intervention of successive Secretaries of State and Ministers in curriculum matters? Will he accept that it is no disrespect to the many public-spirited men and women who served upon it to say that it did not fulfil the hopes that were then held out for it?
Many of us are glad to see the changes and will be anxious to help them forward. Will my right hon. Friend assist us a little more about the make-up of the Examinations Council, which—as he will agree—has potentially vital work before it? Will he be open to suggestions—not nominations—for membership, so that the membership is as wide as possible and comprises the greatest expertise in its vital task of advising him in such an important area?
Sir Keith Joseph: I am grateful to my hon. Friend for reminding us of the parts played by Lord Eccles and by our former colleague Lord Boyle in the initiation of the Schools Council. We shall welcome recommendations for membership.
Mr. Christopher Price: Does the Secretary of State believe that the curriculum should follow the examinations system, or that the examinations system should follow the curriculum? If he wants the two new quangos to co-operate with each other, why create two instead of leaving the existing one?
Sir Keith Joseph: In life, there is bound to be a link between examinations and curriculum.
Mr. Price: Which came first?
Sir Keith Joseph: The hon. Gentleman is as well aware as I am that curriculum policy has never been the
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province of the Schools Council, but is that of the local education authorities and the Government. He will be well aware that today's announcement does not in any way alter the responsibilities for curriculum policy.
The Schools Council was set up on the assumption that work on the examinations should be in the same hands as work on curriculum development, but that has been shown to be unnecessary, as witnessed by Scotland. In Scotland two separate bodies have the happy experience of collaborating. The Schools Council will readily accept that, however much it may have tried, it did not succeed in integrating the two different functions. That is one of the main reasons why my right hon. Friend the Secretary of State for Wales and I are separating the functions.
Mr. Philip Holland: If my right hon. Friend insists on creating two quangos for the price of one, will he tell us how many additional ministerially appointed "quangoroos" will be required to run the two quangos and the additional cost to public funds?
Sir Keith Joseph: I am glad to assure my hon. Friend that significantly fewer people will be employed in the two smaller bodies than in the large body. After the transition, during which some redundancy payments will have to be made, the cost to public funds will be significantly less.
Mr. Tom McNally: Is the right hon. Gentleman aware that many of us welcome the emphasis in the statement on 16 and 18-plus education? Where does the future of O-Levels, A-levels and CSE examinations lie in the order of his priorities for the work of the new Examinations Council? Many hon. Members will want to know whether he will ask the council to work speedily. Indeed, I know that the right hon. Gentleman has been pondering the matter. Also, what is the scale and nature of its consultations planned with the unions that are involved in education?
Sir Keith Joseph: At the end of my statement I said that we should welcome opportunities to talk to the unions about the School Curriculum Development Council. We expect the Examinations Council greatly to help us to consider the national criteria, which we expect to see by the end of the year. I expect it to help the Secretary of State for Wales and myself to decide whether to move to a single system at 16-plus or to harmonise the two existing systems.
Mr. Harry Greenway: My right hon. Friend was right to pay tribute to the quality and work of those on the Schools Council. However, having been on the receiving end of its work for nearly 20 years, may I tell my right hon. Friend that it made practically no impact on schools or the teaching profession. Therefore, my right hon. Friend's decision is both right and justified.
Will my right hon. Friend give an assurance that he will appoint full-time teachers to the new bodies and not accept nominees from unions, as they are often just cardboard teachers and are not involved in the day-to-day running of schools?
Sir Keith Joseph: I am grateful to my hon. Friend for those remarks. We shall seek people whose contributions will help the work of teachers in schools.
Mr. Nigel Spearing: Does the right hon. Gentleman agree that the nature, place and content of public examinations—on which there is certainly no national consensus—are the overriding factors that

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influence and order the curriculum, particularly in secondary schools? The hon. Gentleman can get confirmation of that from every staff room in the country.
Why does the right hon. Gentleman continue to separate the two related functions? Does he not agree that much of the difficulty in the past 15 years has been due to the fact that successive Secretaries of State and Ministers from both parties have consistently and flagrantly failed to carry out section 4 of the Education Act 1944 in respect of the Central Advisory Council? Would it not be better if the right hon. Gentleman formed such a council to clear up the inevitable mess after his statement?
Sir Keith Joseph: I note that the Select Committee has included the recommendation to re-establish a Central Advisory Council. That is one of the many recommendations to which the Government will address themselves. If the Schools Council had shown itself capable of integrating the work of those concerned with the curriculum with that of those concerned with examinations, we should not have had to seek authoratative advice on examinations. We feel that two separate bodies, each with its separate expertise, will give us more effectiveness and more cost-effectiveness than we have so far had.
Mr. J. F. Pawsey: I welcome my right hon. Friend's statement, in which he referred to the necessary radical changes in examinations. He said that he would set up a new Examinations Council. To what extent will that new council be able to influence examination boards both about subjects and the standards that they set?
Sir Keith Joseph: This is a delicate matter of influence between the weight of the judgments of those whom we appoint to the examinations body and the weight of the judgments of those who sit, with great devotion, on examination boards throughout the country.
Mr. Martin Flannery: Will the Secretary of State accept from me—an ex-elected member of some years' standing of the Schools Council—that it is made up not of cardboard members, but of people who have gone through a process of election to executives and who were then elected within those executives? They have all been practising teachers.
I assure the right hon. Gentleman that the general opinion is that he is in great need of advice from such a body on the examination system. Does the right hon. Gentleman believe that an unelected, appointed body, which will owe patronage to whoever selects its members, will function in the way that a democratically elected body has functioned usefully for years for schools, children and the teaching profession?
Is it not a fact that for years the Conservative Party has waged a vendetta against the Schools Council, because it did not carry out what Conservative Members wanted and engaged in a democratisation of the education system, which they resented? Is that not why an appointed body is about to take over from the Schools Council?
Sir Keith Joseph: I remind the hon. Gentleman that Tory Ministers were responsible for setting up the Schools Council. I do not make judgments about the way in which people conducted themselves on the Schools Council. Mrs. Trenaman made some comments—which the hon. Gentleman may have forgotten—about the conduct of some of the members of the Schools Council.
Mr. Nicholas Winterton: It is irrelevant whether the Schools Council was founded by Tory Ministers. Does my right hon. Friend accept that many Conservative Members would have liked the Schools Council to be abolished lock, stock and barrel? Does he accept also that, if there are to be any remnants, it would be much better to retain only an examinations body, which my right hon. Friend has indicated is important, than to have in addition some nonsensical curriculum development body which has done nothing but damage education over the years?
Sir Keith Joseph: I am glad that the House has heard the views that some people undoubtedly hold. We intend to bring to an end Government funding of the Schools Council and to bring into existence two bodies, which in aggregate will be smaller, with much more specific remits for specific purposes.
Mr. Andrew F. Bennett: Will the Secretary of State tell us when he expects the two new bodies to start operating? As, if they are to be effective, they will have to be involved in a dialogue in which some people will express views critical of the Secretary of State, how does he expect to get people to serve on those bodies and to put forward critical views if they know that their appointment will be dependent upon his decision alone?
Sir Keith Joseph: There are plenty of people who, mercifully, are willing to take public office, generally honorary, as this will be, for the public good and to make known to the Government of the day their views without fear or favour. As for timing, I hope that the examinations body will come into existence very soon and the curriculum development body, with the help of the local education authority associations, by about the turn of the year.
Mr. David Model: Is my right hon. Friend aware that the more effective arrangements that he has announced are in line with the suggestions of the Select Committee? May we be assured that local education will be kept well abreast of curriculum research and will act early on suggestions from this body?
Sir Keith Joseph: I intend to consult the local education authority associations about the setting up, composition and work of the curriculum development body. As for the former point, I note that the Select Committee voted only by a narrow majority against the abolition of the Schools Council.
Mr. Nigel Forman: Is my right hon. Friend aware that his substitution of a body that has had its day, in the shape of the Schools Council, by two narrowly focused and, with any luck, effective bodies in the areas that he mentioned, will be widely welcomed by those who have been following these matters? Will he take steps to ensure that, through bureaucratic drift or any other such process, the bureaucratic nature of the two bodies does not exceed in total that which they replace? Can be also ensure that the influence of Her Majesty' s Inspectorate is very much to the fore in these two areas?
Sir Keith Joseph: To all those points I can give my hon. Friend an affirmative assurance. There are many forces within the Government working to ensure that bureaucratic drift does not occur.
Following is the note:

FUTURE OF THE SCHOOLS COUNCIL: PROPOSED NEW BODIES
1. This note gives details about the two bodies proposed in the statement made by the Secretary of State for Education and Science on 22 April.
Examinations Council
2. This would co-ordinate and supervise the conduct of examinations at 16-plus and 18-plus. Its functions will be:

(a) in regard to the activities of the GCE and CSE boards:

—to ensure that syllabuses and procedures for assessment at 16-plus are in accordance with the national criteria which are to be proposed by the boards and considered by the Secretaries of State,

—to approve new A-level syllabuses and revisions to existing syllabuses,

—to monitor the comparability of standards of both 16-plus and 18-plus examinations,

—to engage in research necessary in support of these activities,

—to consider appeals by individuals;

(b) to advise the Secretaries of State on the validity of national criteria for examinations at 16-plus and generally on how the examination system, at both 16-plus and generally on how the examination system, at both 16-plus and 18-plus, can best serve the needs of the education service and its clients.

3. This body would be formed of about 10 to 15 people drawn from within and outside education, appointed in a personal capacity and unpaid, of good standing in their fields and reflecting a broad spectrum of knowledge and experience. The body will carry out its difficult and important functions through an expert staff. The members will be appointed by the Secretaries of State, after consultation with the interests involved. The body will be funded by the Government.
School Curriculum Development Council
4. Its functions would be:

a. to inform itself broadly of what curriculum development is currently going on,

b. to judge its adequacy and to identify gaps and likely future needs,

c. to stimulate, within a modest budget, work to meet the identified needs, and

d. to promote the dissemination of curriculum innovation, whether stemming from its own work or from that of others, where adequate means do not already exist.

5. The body might have a majority of teachers in a total membership of about 20, appointed by the Secretaries of State in a personal capacity and unpaid. Some two-thirds of the teachers might be selected from lists of names submitted by the teachers' organisations, and these lists, together with names proposed by other bodies, would also be taken into account in appointing the remaining teacher members. Other members would be appointed to reflect appropriate interests: in particular
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the local education authorities, further and higher education, industry and commerce. Departmental officials would not be members of the council, but the Secretaries of State would wish to appoint assessors.
6. The Secretaries of State propose that its funding will be partly by the Government and partly by the local authorities collectively. Some of the Government funding would be by way of specific commissions.
7. The council would appoint its own staff.

BILLS PRESENTED
  DERELICT LAND
  Mr. Secretary Heseltine, supported by Mr. Secretary Edwards, Mr. Secretary Jenkin, Mr. Nicholas Ridley, and Mr. Tom King, presented a Bill to repeal and re-enact with amendments section 97 of the National Parks and Access to the Countryside Act 1949, section 9 of the Local Government Act 1966 and section 8 of the Local Employment Act 1972; to amend section 89 of the said Act of 1949 and section 16 of the Welsh Development Agency Act 1975; and for connected purposes: And the same was read the First time; and ordered to be read a Second time tomorrow and to be printed. [Bill 112].
  LONDON TRANSPORT (INQUIRY)
  Mr. Michael Shersby, supported by Mr. John Wilkinson, Mr. John Loveridge, Mr. John Hunt, Mr. John Wheeler, Mr. Harry Greenway, Mr. Anthony Grant, Mr. Hugh Dykes, Mr. Martin Stevens, Mr. Richard Page, Mr. Tony Durant, and Mr. Nigel Forman, presented a Bill to appoint a Committee of Inquiry to examine methods of administering, financing and utilising London Transport: And the same was read the First time; and ordered to be read a Second time on Friday 7 May and to be printed. [Bill 113].

  SCOTTISH AFFAIRS
  Ordered,
  That the matter of law and order in Scotland, being a matter relating exclusively to Scotland, be referred to the Scottish Grand Committee for their consideration.
  That, in the course of their consideration of the matter of law and order in Scotland, the Scottish Grand Committee may meet in Edinburgh on Monday 24 May at half-past Ten o'clock.—[Mr. Lang.]

Orders of the Day

  Finance Bill
  (Clauses 18, 22, 29, 65, 71, 75, 117 and 128 and Schedule 10)
  Considered in Committee
  MR. BERNARD WEATHERILL in the Chair]
  Ordered,
  That the order in which proceedings in Committee of the whole House on the Finance Bill are to be taken shall be Clauses 22, 18, 29, 117, 65, 71 and 75, Schedule 10 and Clause 128. —[Mr. Britton.]

  Finance Bill
    Clause 22

      PERSONAL RELIEFS.
      4.24 pm
      Mr. Robert Sheldon::I beg to move amendment No. 1, in page 13, line 25, leave out '£2,445' and insert '£2,755'.
      The Chairman: With this it will be convenient to take the following amendments: No. 2, in page 13, line 25, leave out '£2,445' and insert '£2,510'.
      No. 3, in page 13, line 28, leave out '£1,565' and insert '£1,775'.
      No. 4, in page 13, line 28, leave out '£1,565' and insert '£1,609'.
      Mr. Sheldon: I wonder whether we might, for the convenience of the Committee, take also the following amendment:
      No. 6, in page 13, line 30, leave out '£3,295' and insert '£3,387'.
      No. 7, in page 13, line 31, leave out '£2,070' and insert£2,340'
      No. 8, in page 13, line 31, leave out '£2,070' and insert£2,129'
      No. 9, in page 13, line 33, leave out £6,700' and insert '£7,600'.
      No. 10, in page 13, line 33, leave out '£6,700' and insert '£6,903'.
      The Chairman: Would that be for the convenience of the Committee?
      Mr. Richard Wainwright: Although amendments Nos. 5 to 10 are of the same genus and deal with the taxation of the aged, before agreeing to the proposal, as we would like to do, we should like to be assured that if this change is made it will not prevent separate votes on amendments Nos. 2 and 6.
      The Chairman: I could certainly agree to that request by the hon. Gentleman.
      The Chief Secretary to The Treasury (Mr. Leon Brittan): I take it, Mr. Weatherill, that it is proposed to include also amendment No. 5, in page 13, line 30, leave out '£3,295' and insert '£3,735'. I think that by mistake it was not included.
      The Chairman: That would be in the second grouping. As I understand it, it would be for the convenience of the Committee if we took amendments Nos. 1 to 10 together in one debate. That appears to be so.
      Mr. Sheldon: The Government have a few simple economic views, which are reflected in their tax policies which we start to discuss in some detail this afternoon. They believe in the market economy. I should not trust those who preach that economy to go into Sainsbury's with a shopping list, let alone venture into Petticoat Lane. Their belief in these matters has been clearly stated, and continues to be.
      The Government's second broad policy of which we must take note, because it, too, is reflected in the taxation policies that we are discussing, is that they have in mind the need to look after the rich, on the principle that it is the rich who provide the jobs and the wealth of the country. The policy is a simple one: let the rich make even more money and they will spend their time creating new industries, investing in the economy and improving the efficiency of the enterprises for which they are responsible.
      Even though the rich have been encouraged magnificently by the Government, I see no sign of industrial investment expanding in the way that was hoped. Rather, I see a decline, and side by side with that decline in the investment that it had been hoped would increase I see tax havens flourishing as they have never flourished before.
      The two economic views that I have set out hold at least part of the key to the tax policies of which clause 22 is a good example. For the Conservative Government, the taxation of the rich is an economic problem and the taxation of the ordinary person is a budgetary one. They need to reduce the money that is taken from the rich to improve the economy, but they need to increase the money that is taken from ordinary people to pay for the running of the economy.
      Mr. Tony Marlow: Does the right hon. Gentleman agree that if it were not for the likes of Mr. Ken Livingstone across the river the taxation and the budgetary problems of the poor would be rather less than they are at the moment?
      Mr. Sheldon: I find that an incredible assessment. If the hon. Gentleman has the courtesy to stay and listen to these debates he will hear us dealing with the taxation of those people who are least well off and what has happened to them during the lifetime of this Government. He will see from the figures, which will be discussed at some length during the debate, just how ordinary people and, even worse, those with smaller than average incomes, have suffered under this Government. That is one of the marked features of this Conservative Administration which the hon. Gentleman will do well to study. If he has not studied it so far, I hope that he will take note of what is said during these debates.
      4.30 pm
      The Government have divided the people into two parts—the rich, who are made richer to encourage them, and for whom taxation represents a diminishing burden, and the ordinary people, for whom taxation is increased to pay for running the economy. The Government have changed the traditional basis of taxation, which is the raising of tax from the those best able to bear it. The principle so far has been that those with the broadest backs should rightly bear the greatest burdens. That principle has been eroded by the Government in their various Budgets. That is a serious departure, made for reasons that we find unconvincing.

      441
      The first major element came in last year's Budget, though there were signs before. That important change was the failure to uprate the personal allowances in line with the Rooker-Wise amendment, introduced under the last Labour Government. The amendment was the first element of indexation in our tax system, if we exempt the indexation of pensions carried out by a Conservative Government way back in 1972.
      We are not talking about the failure to increase allowances; we are talking about the system of indexing year by year in line with the increases in the cost of living. Following on from that simple element of indexation, which applied to the taxation of ordinary people, there have been further legislative attempts by the Government to index other areas of our tax system. Whereas we indexed the allowances in so far as they applied to ordinary people, the Conservatives have indexed capital transfer tax, capital gains tax, higher rate bands, capital gains tax exemption limits and the CTT bands, and there will be more to come.
      The Government have deliberately zeroed in on the rich in order to give them, at times of both economic difficulty and lesser economic difficulty, increased limits in a way that we find incomprehensible and unjustified.
      The Financial Secretary to the Treasury (Mr. Nicholas Ridley): Will the right hon. Gentleman tell us which way he voted in the Division when the Rooker-Wise amendment was carried in Committee?
      Mr. Sheldon: Will the hon. Gentleman recall what happened on Report, when the Labour Government accepted the amendment? We listened to the arguments and accepted on Report the amendment put forward by my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker). Since then I have not ceased to pay tribute to my hon. Friend for his wise education of the Treasury. I wish that that education had continued into the present Government. Their types of indexation are different from ours. The benefits that they provide in Finance Bill after Finance Bill go directly to those with higher incomes.
      All of this started with the statement by the present Chancellor of the Exchequer in the debate on 25 July 1977, when he said:
      "That is why truth in taxation is important."
      The great claim was that indexation would not be a means to help the wealthy but would be for truth and for telling people what taxation really meant.
      "By failing to keep personal allowances in line with the dreadful ravages inflicted by inflation, the Government have extended the range of disincentives and deepened the poverty trap. Social benefits have risen with full indexation while personal tax thresholds have not. Therefore more people are moving into the band where their earnings in work hardly exceed their earnings out of work … the real thief is inflation. It is the promoter of this increased burden of taxation and we are angry because, due to the Treasury's failure to change the tax system in line with inflation, the Treasury itself becomes the main body to profit from the inflation that it has failed to check. The House should feel quite entitled to impose the indexation obligation on the Government."—[Official Report, 25 July 1977; Vol. 936, c. 70.]
      Those were ringing words, but the right hon. and learned Gentleman last year failed to increase the personal allowances in, line with inflation. He had said that he would index them to ensure that in particular those at the lower levels of incomes would not suffer from inflation.
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      The Government had in mind that they would reduce taxation, because they believed in that. The right hon. Member for Blaby (Mr. Lawson), who is a conviction politician, persuaded a gullible Chancellor to introduce a tax and price index. He talked about the need to show people how they were better off under the present Government. He said that to show that they were a tax-cutting Government they needed an index that did not simply illustrate the way in which retail prices had moved upwards but took account of the way in which taxes would diminish year by year. Side by side with inflation coming down, the levels of taxation would come down even quicker, so there would be two benefits for ordinary people—inflation declining and taxation declining.
      The right hon. Gentleman wanted to introduce an index that made that clear for all to see. Everyone could then go into the negotiating room to discuss increased pay realising how much better off in both those areas he was year by year. The Chancellor said in his speech to a conference organised by the Financial Times on 23 July 1979:
      "There has been a good deal of talk about whether or not the tax changes make most households better off. I hope that the new tax and price index of real take-home pay which the Government hopes shortly to introduce will help to settle this kind of dispute. For the retail price index, by itself, is not a sufficient guide".
      In the period from the introduction of the tax and price index in 1979 to February 1982 the retail price index rose by 35·6 per cent. That is the measure of the decline of the value of money in the economy run by the Conservative Government. At the same time, the tax and price index rose by 42·7 per cent. The position worsens each year. Between March 1981 and February this year the retail price index rose by 9·4 per cent. and the tax and price index rose by 12½ per cent.
      The tax and price index is recording that prices are going up and up. Additionally, we are now being given the useful but not surprising information that taxes are also going up and up. That is the valuable contribution made by the right hon. Member for Blaby. The right hon. Gentleman, who is adept at all these matters, thought up the index. He designed the petard. He constructed it lovingly of selected iron plate, placed the gunpowder inside, and prepared to use it against the enemy. When he arranged the initiating ceremony the whole petard blew up, hoisting the right hon. Gentleman with it.
      But the right hon. Gentleman's ingenuity did not end there. Once he realised that the tax and price index had failed, the base dates were kept separate, so a direct comparison is a tedious operation. Many of us can recognise the hand of the right hon. Member for Blaby in constructing what is a rather difficult exercise for those who wish to make a fairly obvious simple comparison. I am grateful, and I must express my gratitude, to the Library staff for arranging this examination.
      As I mentioned before, the Rooker-Wise amendment was overridden for the very first time by this Government. The principle of truth in taxation—which we understood the Conservative Government were always interested in—gave away to the more important principle that tax reliefs should be available for the better off. This was the principle that finally won in the conflict. It was not a conflict about which we had all that much doubt.
      If we make a further examination to see what happened in the case of the worse off, we see that the level of income at which a typical family started to pay tax fell from 44·7 per cent. of average earnings to an estimated 38 per cent.

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      in November last year. The proportion of a low-paid family's earnings taken in income tax and national insurance contributions increased from 21·9 per cent. to 23·6 per cent. There were further problems for those in the poverty bracket.
      This Government did not just fail to index last year; they failed to raise the allowances at all. So the thief of inflation which made the Chancellor angry when it took place in the lifetime of the last Government—those were his own words; it is a rare attribute of the Chancellor to be angry, he rarely gets angry—was discovered not to be a thief at all last year. The Chancellor of the Exchequer was no thief; he was a removal man and he arrived with a whole pantechnicon and left nothing. There was nothing left to compensate for the increases in inflation then. I understand that the bailiffs—a growing profession under this Government—are supposed to leave a bed and a chair for the occupants. But this Government last year left bare boards. That was all that remained of truth in taxation on that occasion.
      Also, for the first time the Government did not increase the age allowance. Extra consideration has always been given to the age allowance. Many people in work, however difficult their circumstances, always have the prospect of future opportunities to make good the ravages of any year. The problem of the older members of our society is that they see their savings decline, and if benefits or tax allowances to old people are delayed many of them cannot postpone their needs in the same way that young people can. For older people the future is obviously more limited.
      Last November a typical family started to pay tax at an estimated 38 per cent. of average earnings as against the 44·7 per cent. at the beginning of this Administration.
      Looking now at the effect of the 1982 Budget on individual incomes, we are indebted to the Library and to the Institute of Fiscal Studies for an excellent background paper which documents many of these matters. [Interruption.] The hon. Member for Marlow would be well instructed to read this paper carefully. He will find many of the answers in it. I know he prefers to make speeches without notes, but from time to time it is an advantage to have a document which sets out the facts for him to look at. I am going to be tedious and quote one or two facts but perhaps we should hear the comments of the hon. Gentleman first.
      Mr. Marlow: I am grateful to the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) for giving way. He is a very courteous Member of the House. I can see what he is driving at. His amendments are there for us to see: that these allowances should be increased significantly. The right hon. Gentleman is an honest man and would not want to mislead the House. Will he tell the House exactly how much these increases will cost, bearing in mind the massive increases in public expenditure which he and his colleagues are calling for, and tell the House precisely where he intends to get the money?
      4.45 pm
      Mr. Sheldon: That has been made quite clear in previous economic debates. I am happy to have repeated economic debates so as to explain how this Government have such a narrow view of the public sector borrowing requirement that they think that they can tie it down to the nearest £100 million, although the task force going to the
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      South Atlantic will be without cash limits. Who knows, it may be hundreds or even thousands of millions of pounds over which the Government will have no control. They will find, when they come to look at their PSBR, that they will have no control of the kind that they had assumed with such certainty. They will have to consider their policy again right from the beginning as we would wish to see.
      As I said, we are indebted to the Library and to the Institute of Fiscal Studies. Their paper makes use of the family expenditure survey and works out the effect fully and accurately in the case of seven different types of households. It looks at households on half average earnings and goes through seven family households up to five times average earnings. It looks at the effects of their expenditure and the taxes on that expenditure. It comes to a certain number of conclusions, which are set out in this background paper, No. 100. I advise the hon. Member for Northampton, North (Mr. Marlow), when he comes to the House to make speeches or interventions on this matter, to absorb at least one small part of this paper in order to inform himself and others of his hon. Friends on these matters.
      If we consider the impact of the taxation on those on half average earnings, we see that they have suffered a reduction of 45p a week. They will pay an extra 45p a week in income tax. Those on average earnings will suffer to the extent of £1·01 a week, those on one and a half times average earnings will suffer to the extent of £1·75 a week, those on twice average earnings will be £1·50 a week worse off. Those on three times average earnings will suffer to the extent of 25p per week. Those on four times average earnings will be 39p a week worse off. But those on five times average earnings—surprise!—will gain. They are the only ones who will do so. The Library has produced a study showing who gains and who loses, and the only ones to gain will be those on five times average earnings.
      Mr. Brittan: I am sure that it must be inadvertence on the part of the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), because I cannot believe that, with his customary courtesy, he would have wished not to answer the point made by my hon. Friend the Member for Northampton, North (Mr. Marlow). Perhaps he was confused by thinking that my hon. Friend was the Member for Marlow, which of course is his name.
      The cost of the amendment to which the right hon. Gentleman is speaking, over and above what the Government are doing, would be £2 billion in a full year. How does he think that that ought to be financed?
      Mr. Sheldon: I am not sure whether the Minister heard our previous debates on these matters when my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) made it clear that there was to be an increase in the PSBR. Did he not hear that? It was mentioned again and again. I should not have thought that I need to come to the House, which has heard the figure mentioned again and again, and say how we would finance it. We shall increase the borrowing. That should come as no surprise to the right hon. Gentleman. He has attacked us for increasing the borrowing. He is entitled to attack us, but he is not entitled to deny that we have told him how we shall deal with these matters.
      It does not fall to the Chief Secretary to make those points. After all, it was he who said that the ordinary

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      person would be much better off as a result of the Budget. We have had long debates to prove that the ordinary person will do badly out of the Budget and that income tax will be increased. I remember that the matter caused great concern to Treasury Ministers, who were unaware whether people would benefit or lose as a result of the Budget. It has now been proved conclusively that they will lose, in contradistinction to the point made by the Chief Secretary to the Treasury, who was under the misapprehension that the Budget, on which he must have spent a considerable time, would benefit them. We had to show that they would lose, as has now become accepted in our discussions.
      Mr. Tim Eggar: I know that the right hon. Member for Aston-under-Lyne (Mr. Sheldon) is a keen reader of The Guardian. I wonder whether he read the assessment of the economic policies of his right hon. Friend the Member for Stepney and Poplar (Mr. Shore) in that newspaper on Tuesday? As we all wish to debate these matters seriously, will the right hon. Gentleman persuade his right hon. Friend to publish the figures not only for the first year of his simulation on the Treasury model but for subsequent years, because that might give us some interesting information?
      The Second Deputy Chairman (Mr. Ernest Armstrong): Order. I hope that the right hon. Gentleman realises that if he goes down that road we shall be straying far from the amendment.
      Mr. Sheldon: I was sorely tempted to reply to Mr. Huhne, who was putting what he believed to be the Labour Party's budget. If the hon. Member for Enfield, North (Mr. Eggar) is an avid reader of The Guardian, he will have read my right hon. Friend's statement, but perhaps he has not got round to it yet. It is an interesting and excellent statement, which will answer the points about which he seems to be concerned. That is as far as I can take the matter and I hope that it answers the point.
      This year's Budget was said to recognise the wrong that was being done to the ordinary person and to compensate him in some small way for the failure to increase the personal allowances last year. But even in such a Budget the rich once again become better off. That refers only to this clause. What about those that we shall be discussing later on capital taxes in general?
      One series of our amendments embodies the principle that both last year and this year the Rooker-Wise upratings of personal allowances should have been implemented. We have increased both the personal and age allowances by the amounts that the Government failed to uprate last year and should have uprated this year. As a result personal allowances will increase for single and married people, as will age allowances. We shall divide the Committee in such a way as to make it clear that we wish to see those allowances increased in line with inflation and in line with the wishes of the entire Committee, as they were expressed last year.
      The amendments are not magnanimous. They are no more than what is expected as a consequence of inflation. What is more disturbing is that a Government who are anxious to help the better off have failed to increase personal allowances. They have revealed their true intentions to the elderly and others. They have done so on many occasions, but this is a further example, which we wish to divert by a vote this evening.
      Mr. Kenneth Carlisle: Like the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), we, too, consider that tax thresholds are an essential part of our financial structure. One of the best acts of the Budget was to raise those thresholds across the board by about 14 per cent., which is substantially more than the rate of inflation. It took about 500,000 taxpayers out of the tax bracket. It was a most welcome act and is a move in the right direction, because we must all recognise that tax thresholds are much too low. The cost of raising the thresholds was about £2 billion, so it took a substantial slice of the money that my right hon. and learned Friend the Chancellor had available.
      The Government must go much further along that road in future. We must recognise—I believe that the Government do—that low tax thresholds cause substantial hardship and are a great disincentive to everyone in work. My experience, which is restricted to my constituency, is that many families that pay tax should not do so. I have become aware of that through letters, constituency surgeries and talking to people. I am sure that many hon. Members have heard about pensioners, widows and single-parent families who pay tax but who genuinely should not, and the hardship caused by that tax demand. Hon. Members on both sides of the House recognise that for many years we have lived with the nonsense of a growing number of people who receive benefits but who pay tax. No hon. Member could concede that that is sensible.
      Mr. D. N. Campbell-Savours: If the hon. Member for Lincoln (Mr. Carlisle) feels so strongly about the matter, will he support us when we table our amendments on capital gains tax and capital transfer tax, because the Government are giving large sums of money to the better off? The hon. Gentleman obviously wishes to protect the low paid.
      Mr. Carlisle: The hon. Member for Workington (Mr. Campbell-Savours) is going up the wrong path. I have yet to develop the theme of incentives. Perhaps the answer to his question will come later in my speech.
      It is fair to recognise that every party has condemned the idea of people paying tax while receiving benefits. The problem has become worse in the past year. I respect the work of my hon. Friend the Member for Norfolk, North (Mr. Howell), who has argued comprehensibly and powerully about the fault of the "why work" syndrome, the disincentive that it causes and the poverty trap that it creates in society. I am sorry that he is not here today, as his would be a more powerful voice than mine in this matter.
      I welcome the move in the Budget to take 500,000 taxpayers out of the tax bracket. That has been of considerable help to many pensioners and widows in my constituency, and they have recognised the fact. However, I hope that next year my right hon. and learned Friend the Chancellor and his team will consider taking tax thresholds much further than they have this year.
      I distinctly remember that in the May 1979 general election I campaigned hard on a programme of less tax and better incentives. I know from my meetings outside factories and elsewhere that the issue of incentives struck a deep chord among all working people. I am conscious that the pledge that I gave then has not been fulfilled. I recognise that was a pledge for a full Parliament. We still

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      have time to succeed. However, I beg the Treasury to take note that the varying of taxes and the increasing of incentives struck a chord in the hearts of many average earners at that time.
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      The Government have done enough for the better paid. There are sufficient incentives for the creation and building up of small businesses. The Government have done a great deal to help the small business man. I am glad that the Minister of State, Treasury, my hon. Friend the Member for Maldon (Mr. Wakeham), has had a role to play in that respect.
      It is easy to ask the Government to raise tax thresholds, as the Opposition have done. It is easy for the Opposition to pledge to raise tax thresholds. Amendment No. 1 seeks to raise tax thresholds.
      This year, I have supported the Budget strategy. I have told my constituents and others that it is a good Budget. We must recognise that only by controlling borrowing, which means restricting our tax handouts or our expenditure, can we hope to bring down interest rates and inflation. That is central to our escape from recession. It must be remembered that high inflation affects the pensioner and the widow perhaps more than anyone.
      The Budget strategy this year is reasonable, given the money that is available. During a severe recession the Government have sought to cover their costs much more from personal taxation. We all know of the extra sums that have had to be spent to sustain industries, such as British Leyland and the British Steel Corporation, and to expand employment schemes for the young unemployed. The money has had to come from somewhere. Therefore, there has not been sufficient scope to raise tax thresholds as much as we might have done.
      As my right hon. and learned Friend the Chancellor said recently, there are signs that we are emerging from this claustrophobic recession. As we do, the curse of low tax thresholds must be tackled, for that is one of the major pledges that remain to be fulfilled over the last two years of the Government's term of office.
      I welcome the fact that a start has been made in this Budget to raise tax thresholds by more than the rate of inflation. More needs to be done now. I should like my right hon. and learned Friend the Chief Secretary to give his word that the Government regard this matter with great gravity and considerable commitment and that, if the money is available over the next year, priority will be given to raising tax thresholds and creating many more incentives for men and women on average incomes.
      Mr. John Horam: This debate is about tax thresholds, both generally and in relation to the age allowance. Tax thresholds are most important because they have a major and decisive influence on the take-home pay of the lowest paid. It is they, apart from the unemployed, of course, who have the toughest time in a recession.
      I would regard as a major priority of a Social Democratic and Liberal alliance Government the raising of tax thresholds in line with inflation and, whenever the occasion permits, raising them faster than the rate of inflation so that we can see some real uplift in the point at which people begin to pay tax. This is certainly a more important issue than the level of the standard rate of income tax. It has always disappointed me that Conservative Governments appear to pay so much more
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      attention to the standard rate of tax than to the level at which people begin to pay tax. That is far more important to the average and low-paid person's standard of living.
      The problem of tax threshold was not always so severe. In the 1950s it was about level with average male earnings. It has steadily increased under successive Governments over the past few years and has now reached the point where people begin to pay tax at well below half average earnings.
      After all that the Conservative Party said in its manifesto, it is a major crime that the Government have allowed the general slide to worsen. It is estimated that the tax threshold is now £250 lower in real terms than when the Government took office nearly three years ago. That is a measure of the extent to which the Government have gone against the commitment that they and their supporters made at the general election.
      Mr. Kenneth Carlisle rose—
      Mr. Horam: I shall give way to the hon. Gentleman, but I shall not give way again. I want to make a short speech so that I can make another speech somewhere else.
      Mr. Carlisle: I am grateful to the hon. Gentleman for giving way. I know how busy the Social Democrats are. The Government's pledge at the election was for a full term of office. We are only halfway through that teen. Perhaps the hon. Gentleman will be generous enough to recognise that there is still time for us to fulfil that pledge.
      Mr. Horam: There is very little time left. We have had almost three years of Conservative Government. There is little time left, whether it be six months, 18 months or the full two years. Would the hon. Gentleman like to lay a bet with me on what the tax threshold will be at the end of the Government's term of office compared with what it was when they took office? I bet that the £250 real depreciation in the value of tax thresholds will not be made good in the time available.
      The Conservative manifesto said that a Conservative Government would take the lowest paid out of tax altogether. Despite the 500,000 to whom the hon. Gentleman referred, 26·3 million are paying tax this year compared with 26·4 million when the Government came to office. That is a significant difference, especially as unemployment is much higher now than when the Government took office.
      The damage was done last year. The Government recognised that by raising the threshold by 14 per cent. this year-2 per cent. above the going rate of inflation. However, there is a limit to what can be done to make up for the sins of last year. One reason why we shall not be supporting the Labour Party's amendment on general tax thresholds is that it would cost too much. That cost—£2 billion was the Chief Secretary's assessment—shows how irresponsible and opportunistic the Opposition are to call for a doubling of the tax threshold this year.
      The Government's position is untenable at a general level, and it is even worse when it comes to the elderly. The Finance Act 1981 meant that some women between 60 and 65 years of age were taxed on their pensions when they received no other income. That was mollified by the Inland Revenue's concession, but it still required only £56 of graduated pension supplement to bring them into income tax. That is indefensible. Therefore, because of the smaller sums involved and the real hardship caused to the

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      elderly by the Government's failure last year to do anything about tax thresholds, the Social Democratic Party will support amendments to make the Government more generous than they are now.
      Mr. David Winnick: Clause 22 is of great importance. It is particularly important to the many families who live on limited incomes. Therefore, in some respects, it is one of the most important clauses of the Finance Bill that is likely to emerge for debate.
      The hon. Member for Lincoln (Mr. Carlisle) referred to those in his constituency who are clearly paying more in tax than they should be. A number of such cases have been brought to my attention during surgeries and in letters. One elderly widow told me that she had a very small income, that she received only the widow's pension, but that she was having to pay income tax. I wrote to the Inland Revenue in my district and it confirmed that my constituent had an obligation to pay income tax. In the course of the reply I was told:
      "It is true that the single personal allowance of £1,375 per annum is insufficient to cover an annual widow's pension."
      My constituent has an income slightly above that level.
      I wrote to the Minister of State, Treasury, who is not on the Treasury Bench today. I put all the facts before him. I explained how my constituent, with an income of less than £2,000 a year, was being drawn into income tax liability as a result of personal allowances not being increased in the previous financial year. He tried to justify that position in his reply. I forwarded the letter to my constituent, as I was bound to do, and, understandably, it did not provide her with much satisfaction.
      A parliamentary reply of 14 December 1981 stated that about 80,000 more widows of 65 and over were liable to pay tax in 1981–82 than in 1980–81. I imagine that the majority of the 80,000 are living on limited incomes. However, they have been drawn into tax liability. These women have the utmost difficultly in managing from day to day, and it is extremely difficult to justify the argument that they should be paying income tax in the first place.
      The hon. Member for Lincoln was frank when he said that what he promised his constituents during the 1979 election campaign had not come about. Probably the most important promise that the Conservative Party made during that election campaign was that a Conservative Government would reduce tax. During the general election campaign the average person would have said that the main emphasis of the Tory campaign was to reduce income tax. Indeed, without the Conservative Party's promises on income tax reductions, it is likely that a Conservative Government would not have been elected.
      We tried to explain at the hustings that, even if a Conservative Government were able to reduce income tax as the Conservative Party intended, the majority would not be helped—certainly not those on average or below average incomes. We explained that public expenditure would be reduced, which would certainly hit those on low incomes, and that indirect taxation would increase accordingly. However, we lost that argument, and it is no use pretending otherwise.
      5.15 pm
      It is important to consider whether those on small incomes have suffered or benefited as a result of the Government's action on taxation. In 1978–79 a married
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      couple with two children in receipt of 50 per cent. of average income paid 6·6 per cent. of their income in tax. In 1981–82, income tax had increased the proportion to 11·8 per cent. If we move up the scale to 75 per cent. of average income, the income tax liability in 1978–79 was 14·7 per cent. That was the last financial year in which the Labour Government were in office. In 1981–82, the income tax liability became 17·4 per cent. If national insurance contributions are included, a married couple with two children in receipt of 75 per cent. of average income paid 20·8 per cent. of their earnings in income tax and national insurance contributions compared with 24·5 per cent. in 1981–82. That family is not able to say that it has benefited from the promises that the Conservative Party made during the 1979 general election.
      Mr. Campbell-Savours: Who has benefited?
      Mr. Winnick: My hon. Friend has asked an interesting and relevant question. Before I respond to it, I suggest that it is appropriate to consider who has not benefited from the Conservative Party's promises. Much has been made about those on average incomes. We have heard a great deal about how the Government want to help them by providing incentives, for example. In 1978–79, a married person with two children in receipt of average income paid tax and national insurance contributions amounting to 25·2 per cent. of his income. In the past financial year that same person paid tax and insurance contributions amounting to 27·6 per cent. of his earnings. That person has not benefited from the Government's policies. The figures that I have quoted do not include increases in rents, fuel charges and indirect taxation. These are all the things that make life difficult and hard for those on limited incomes.
      Mr. Kenneth Carlisle: Does the hon. Gentleman agree that inflation hits especially hard the weakest in society? If so, does he accept that if Britain increased its borrowings dramatically and lived beyond its means it is likely that the rate of inflation would be increased, whereas the reduction of inflation is likely to be one of the Government's great successes?
      Mr. Winnick: My constituents, and no doubt the hon. Gentleman's constituents, are waiting for the inflation rate to be reduced to the level that obtained when the Labour Government left office. That day has yet to come. We would be silly to dismiss the argument that more borrowing would lead to increased interest rates and a higher inflation rate. One hopes that that would not be the result, but that leads to a much wider argument about dealing with the misery of mass unemployment, which I am unable to advance while speaking to the amendment.
      My hon. Friend the Member for Workington (Mr. Campbell-Savours) asked "Who has benefited?". My right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon) explained who has benefited. It would not help my constituents, who are mainly on limited incomes and paying larger tax bills, if everyone suffered. That would be no consolation to them. However, it is even more irritating that the richest in the community—those who need the least help of all—have benefited from the tax changes and other measures introduced by the Conservative Government since May 1979. For example, a man on five times average income—about £38,500—has seen his tax bill reduced from 49½ per cent. in May 1979 to about 44·9 per cent. That has been a hefty reduction.

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      If we move further up the income scale—incidentally, I am talking about incomes that my constituents do not have and are never likely to have—and take someone with 10 times average income, which is over £77,000 a year—
      Mr. Tristan Garel-Jones: How many are there?
      Mr. Winnick: I understood that a Government Whip was not permitted to intervene in debates. The hon. Member for Watford (Mr. Garel-Jones) can always drop his book and join us. I am not a great believer in ritual. He can go to his former place and join the debate. I do not believe that it is his role to make a running commentary on hon. Members' speeches, but if he wants to continue to do so from his former place I shall not report him to the Chief Whip or the Prime Minister.
      Mr. William Hamilton: The hon. Member for Watford (Mr. Garel-Jones) was found a place in the Whips Office to shut him up.
      Mr. Winnick: That is not a matter on which I shall comment.
      The tax liability of someone earning over £77,000 has dropped from 65 per cent. during the last financial year of the Labour Government to 51 per cent. in 1981–82. There is quite a difference between the way in which those on substantial incomes have benefited and what has happened to those on half or three-quarters of average earnings and those to whom I referred earlier who are on even less than half average income.
      We hear a great deal from the Government Benches about matters such as rent control and the difficulties of widows, but what of the widows who have been penalised over the past few years in the way that I have described?
      I fully support the changes in taxation and personal allowances urged on the Government by the Opposition Front Bench. It has never been my view that there is a good case for reducing the general tax level. First and foremost, our need is to protect those in greatest need. Perhaps it has been unpopular, but I have never played the demagogue like Conservative Members at elections and promised all kinds of tax concessions.
      Reducing the standard rate of taxation does not help the average person; it helps only the richest and most prosperous in the community. I urge the Government to change the tax system. People on the smallest and most limited incomes should not pay tax. It has been pointed out in previous debates that in some cases they are the people who receive State benefits because of their limited incomes and at the same time pay tax. There is no sense in that. It discredits the tax system. Conservative Members may not be worried, but it causes us on these Benches anxiety.
      I believe that taxation is a fair way for raising revenue, and it is the worst kind of trickery to pretend to the electorate that one can reduce taxation for most people. Most of the measures in which I believe, which I defend and, rightly or wrongly, want to see carried out, will come to some extent as a result of taxation. I want to make it clear that my argument, like that of my right hon. and hon. Friends, is not a general argument for reducing taxation as such. I want to help those in greatest need.
      Many of my constituents have been humiliated and means-tested when applying for assistance. If they have more than £2,000, for example—I note that this ceiling is
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      to be raised a little—they cannot draw one penny of supplementary benefit. In many cases their life savings and redundancy money are taken into consideration. The Labour Government did not have that ceiling of £2,000.
      My constituents are means-tested before they can receive supplementary benefit, but prior to the Government's economic policies many would have been earning their own living, and proud to do so. The last thing they wanted was to be on the dole. When I compare the difficulties of those people with what has happened to the richest in our community, I am justified in saying that the Tory Party has again established itself as the party that cares about one tiny section of the community—the richest in Britain.
      There has been hardly any change in the concentration of personal wealth. One per cent. of the population continues to own about 24 per cent. of all private wealth. Five per cent. of the population owns nearly half of the personal wealth of this country. Bearing that in mind, one recognises the scope for fundamental change that we shall expect from a Labour Chancellor.
      Mr. Richard Wainwright: The hon. Member for Walsall, North (Mr. Winnick) gave a particularly convincing demonstration of the peculiarly great hardships for widows and other women pensioners caused by those disgracefully low thresholds. He gave one or two telling individual examples. I hope that his feelings will later lead him to support amendment No. 11.
      I support amendments Nos. 2, 4, 6, 8 and 10, relating to the various income tax thresholds. Earlier, hon. Members correctly claimed that there was grave disapproval on both sides of the Committee of the appallingly low level of tax thresholds. I hope that there will be a convincing demonstration of those all-party feelings in the Lobby tonight.
      However, it is by no means only in this House, important though that is, that these thresholds are conspicuously deplored. For example, the Royal Commission on the taxation of profits and incomes as long ago as 1954 felt it necessary to utter this solemn statement by way of warning:
      "There should be no income tax levied upon any income which is insufficient to provide its owner with what he requires for subsistence."
      What a long, steep descent from civilised standards we have had since then, particularly when one associates with the income tax thresholds that other tax on incomes—national insurance. That has made increasing inroads into incomes of the poor that are well below subsistence levels since the Royal Commission reported.
      It is not only within these shores that low thresholds are regarded as uncivilised. Our partners in the Common Market, with the exception of Italy, do not tolerate tax thresholds anywhere near as low as we have in this country and proposed in the Bill. In West Germany, in 1981, the threshold for income tax was £3,010 sterling equivalent, and that related to a starting rate for income tax of only 18 per cent. In France the threshold was even more civilised—£5,400—with a starting rate for tax of only 7·2 per cent. In Belgium the threshold is £3,300, with a starting rate of 21·7 per cent. We are in a uniquely deplorable state of levying income tax on the poor.
      I emphasise that one of the major factors in creating the present state of hardship—the failure to index tax thresholds last year—is, in the opinion of Liberal Members, far too deep and grave a damage to be put right

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      in one Finance Bill. We cannot support the Labour segment of the Opposition in its proposal that the failure to apply the Rooker-Wise amendment last year can be fully put right this year and that we can go sailing onwards with super-indexation, virtually regardless of cost.
      The cost of repairing last year's damage, approximately £2 billion, would be an impossible burden to assume in one fiscal year. That proposal comes oddly from a Labour Opposition who would finance it by adding a further £2 billion to public sector borrowing without any defence against inflation in the form of an incomes policy. Therefore, I do not support those amendments.
      The Liberal amendments embody an additional 3 per cent. on the previous threshold to acknowledge part of the failure to index in the previous year, making in all a 17 per cent. increase this year. In other words, we believe that last year's damage will have to be recovered by instalments. The approximate cost of £330 million for this fiscal year is a burden that should be accepted, and would be accepted by a Government who had put their defences against inflation into place and operated an incomes policy.
      It is well known that these low thresholds hit two important sections of our population particularly hard—the poorest families with a breadwinner and, at the other end of the scale, elderly people, especially women between the ages of 60 and 65, who receive a pension but who have not reached the age of 65 which would entitle them to age relief for income tax.
      In the first case, the numbers caught in this poverty trap are considerable. It is important to say that, because from time to time some hon. Members have suggested, although their statements have never survived challenge, that the poverty trap is more a statistical theory than a human fact. However, the Low Pay Unit, which only yesterday gave impressive evidence to one of our Select Committees, has given a statistically backed estimate that at least 150,000 families are caught in the poverty trap and have an income less than their supplementary benefit entitlement. It is estimated that the total number of people involved is 390,000. We are talking not about a few freak situations or about a tiny minority which should be relieved in some other way, but about a substantial body of taxpayers.
      5.30 pm
      We must then consider how people can climb out of that poverty trap, which has largely been created by these thresholds. I address my remarks for a moment to people of the Samuel Smiles school, for whom I have no profound disrespect, who might say "If only the breadwinner in these families made more of an effort and bullied his foreman to get some overtime or did a second job, he might bring his family out of this trap".
      The trouble with the poverty trap is that marginal tax rates are so high that someone earning £45 a week with a wife and two children, would be no better off if he managed to jack his earnings up to £85 a week gross. It is a further blot on our income tax system that the marginal tax rate, not the margin created by social security and other benefits, for people in that position is more than 60 per cent., which is higher than the highest marginal rate payable on earned income by any other taxpayer.
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      It is peculiarly perverse that we should impose on people trapped this way a marginal rate that is higher than the rate we deem to be right for people with substanital earned incomes.
      As to the average tax threshold on all income taxpayers, I am informed that as a percentage of average male earnings we are now down to a tax threshold of only 30·33 per cent. In other words, people earning less than a third of average male earnings come into the income tax net. That cannot be right and must be remedied as rapidly as possible by as large an instalment of increased thresholds as the economy can bear.
      Our judgment of that increase is embodied in these amendments. I hope that the Committee will support them, because they are intended to be a responsible answer to the challenge of taxing poverty based on what the economy can afford this year.
      Mr. Campbell-Savours: The debate has been marked by the dire absence of Conservative Members. Indeed, the only Conservative Back Bencher who has spoken is the hon. Member for Lincoln (Mr. Carlisle), who criticised the Government and their strategy. He expressed reservations about the inadequacy of the Government's response to the problems of the lower paid, yet on a number of occasions he has intervened in defence of the Government.
      Outside the Chamber, a colleague told me "The fact that the hon. Member for Lincoln is perhaps to the Left of Dick Taverne may indicate the reason for his reservations". Of course, Mr. Taverne, as a member of the Social Democratic Party, represents the new Conservative strain in monetary matters, in the sense that the SDP represents the old views, recipes and remedies which we all know will not work, particularly to resolve the crisis confronting the British economy.
      The Government's taxation policy is a disaster. It must join the other areas of Government that have proved to be equally disastrous. For example, there is the Government's inability effectively to deal with law and order. They have failed to constrain the disorder in the way that they promised the electorate three years ago. They have failed sufficiently to maintain a defence policy that protects our friends overseas. That has led to the crisis confronting the Government. Indeed, they have failed to deal with unemployment and to defend the poster seen by millions of people during the election, which suggested that Labour's employment policy was not working when clearly it was.
      I remind hon. Members of the statement by the Government in the 1979 Conservative Party manifesto, because it makes interesting reading now. It said:
      "To become more prosperous, Britain must become more productive and the British people must be given more incentive … We shall cut income tax at all levels to reward hard work".
      In the light of the comments made by hon. Members today, including the hon. Member for Lincoln, it is clear that the Government have not fulfilled that expectation and promise.
      The manifesto promised
      "to reward hard work, responsibility and success;"—
      there is little of that—
      "tackle the poverty trap; encourage saving and the wider ownership of property; simplify taxes—like VAT;"—
      that meant doubling it from 8 to 15 per cent.—
      "and reduce tax bureaucracy".
      Mr. Jack Straw: And they said that they would not increase VAT.
      Mr. Campbell-Savours: Yes, indeed. When the Daily Mirror printed the suggestion that they would do so they promised not to increase VAT, yet they did precisely that.
      This absurd document goes on:
      "it is especially important to cut the absurdly high marginal rates of tax both at the bottom and top of the income scale. It must pay a man or woman significantly more to be in, rather than out of, work. Raising tax thresholds will let the low-paid out of the tax net altogether.".
      I recall the Workington by-election. It was an experience that I shall never forget. I remember the door knocking that took place. We were told that the Labour Government's taxation policy would lead to defeat, which is what happened. If one assesses the effect of the weight of taxation on the British people, including my constituents in Workington, it is interesting to note that they are paying more today than they did then. Perhaps today the people will wish to consider their commitment to the Conservative Party. They will do so at the next general election.
      The people were misled during the general election campaign in 1979. The miserly tax concessions that have been made in the Budget have all been overtaken, cast aside and rendered negligible by the effects of the national insurance increases that were introduced before the Budget, and have therefore damaged the interests of the lower paid, again with the result that the poverty trap has deepened. A family with two children is now required to start paying tax on income that is £23 a week below the official poverty line. In my language that means that tax is now being paid on poverty scale incomes. I cannot believe that the Government can use any language or rhetoric at the Dispatch Box to justify the effect of that on many of our constituents.
      Every hon. Member, particularly Opposition Members, will have constituents who have complained in recent months about the burden of taxation that has developed under the Government. That has been accompanied by the substantial rise in council rents over the past few years. They have had to pay substantially increased amounts for many of the services that under the Labour Government were provided free. That is the measure of the effectiveness of the Government.
      I shall now refer to the response by many people outside the House following the statement made by the Chancellor of the Exchequer on taxation policy at the time of the Budget. Much of the euphoria was false and misplaced. Many people believed that they were getting something which they were not getting. It is only when the analysts in the media and my hon. Friends have sat down to evaluate the effects of the Budget measures that it has become increasingly clear that the Government cannot fund the social wage that many of our electorate have come to presume is their right and entitlement. When I refer to the social wage, I refer again to all the public services that for decades successive Governments, including—
      The Second Deputy Chairman: Order. The hon. Gentleman is going wide of the amendments. He must relate what he is saying to the amendments.
      Mr. Campbell-Savours: Perhaps you feel that I am speaking wide of the amendments, Mr. Armstrong. However, I am trying to suggest that, with the increase in taxation that is taking place under the Government and
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      with their refusal to accept our amendments, they further damage the interests of our constituents who are already suffering from the increases to which I have been referring. Therefore, I believe that there is a direct link between the amendments and the points that I am seeking to make.
      The credit that was paid to the Government on their decision to reintroduce a form of indexation of tax thresholds was grossly misplaced. A married couple pay tax on an income that is £4·74 a week lower in real terms than it was two years ago. In 1980 the tax allowance for a married couple was £2,145. If that had been indexed, as it should have been last year, the tax threshold for a married couple in 1981–82 should have been £2,475. This year it should have been £2,775. As it is only £2,445, there must be a shortfall of £330 in the tax threshold which, in our view, is the entitlement of our constituents. I wonder how many fewer people would be paying tax if the Government had decided last year to maintain the indexation policy of the Labour Government.
      5.45 pm
      I am sure that I shall be corrected if I misrepresent his remarks, but in his Budget Statement the Chancellor of the Exchequer said that 1·2 million people would not pay tax next year. That was widely reported in the country as a reduction in the total number of people who would be paying tax. That is not correct. It is a gross misrepresentation of the facts. As I understand it, the number of people who will be paying tax this year is broadly similar to the number of people who were paying tax last year. The 1·2 million people to whom the Chancellor of the Exchequer referred in his Budget Statement are the people who would be paying tax next year in the event that the Government did not raise the tax threshold in line with inflation, or perhaps higher than the level of inflation.
      However, that is not the way in which the Government have sought to present the facts on taxation policy, because they know the truth. They are using every procedural and public relations device to deceive the British people into believing that there has been a general benefit in taxation arising from the implementation of the Chancellor of the Exchequer's policies. That is not so.
      When we consider the innumerable comments that were made before the general election about the need to reduce the numbers who are paying tax, an interesting statistic surfaces. In 1978–79, if one includes tax-paying wives, the number of people paying tax was 26·4 million. In 1979–80 that number had dropped to 26·2 million. In 1980–81 it had dropped to 25·8 million. Last year it increased to 26·3 million.
      Therefore, the reduction in the numbers of people paying tax has been marginal. Although we do not have the figure for next year, it will probably be but 100,000 people fewer. That has all been during a period when 1¾ million people have become unemployed. If the Government were effectively to have reduced the number of people paying tax, at the least we would have presumed is that the statistics would have revealed 2 million fewer people paying tax. That has not been so. The real effect of the Government's policy overall has been to increase as a total percentage of the work force the number of people paying tax.
      We are told that the lowest threshold—in other words, the earliest point for paying tax—in the whole European

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      Community is in the United Kingdom, apart from Italy. Even in Italy the bottom tax band is at a substantially lower rate than in the United Kingdom.
      I shall consider tax thresholds falling as a percentage of average earnings. In April 1979, the figure was 34·42 per cent.—that was during the final year of the Labour Government's period of office. By April 1980 that tax threshold had fallen again to 33·13 per cent. By April 1981 it had fallen to 29·3 per cent. In their projections, as in all the projections they make, the Government are seeking to claim that the threshold will now marginally rise by 1 per cent. We know in advance that that will not be so. The burden of taxation is falling increasingly on the lower paid, and the burden of taxation falls on those people who can ill afford it.
      I want to quote the words of the Prime Minister in 1977, to make my point, certainly in connection with what I said about the European Community:
      "We pay the highest rate of tax at the lowest level of income of any country in the EEC".
      She went on to say:
      "That is the measure of Socialism—the effect on the poorer people of this country."—[Official Report, 29 March 1977; Vol. 929, c. 293.]
      She was criticising the Labour Government for what she believed was their high tax policy at that time, blaming it on what she called "the measure of Socialism". I wonder what she calls it today. Is it the measure of Conservatism? Is it the measure of failure? What is it? The right hon. Lady always seems to pass by when questions of taxation are raised, and selectively produces statistics which in no way reflect the reality of this Government's attitude to taxation. So much for the right hon. Lady's leaky and flimsy attitude to the poor and the lower paid.
      However, in our society there is a group of people who have benefited. We in the House know who those people are, because over the past years in Committee considering the Finance Bill we have repeatedly raised the matter of the better off in society. The media have not reflected our frustrations. What we have said has not been reported in the press. The truth should be told. The better off in society are gaining handsomely again under this Budget from the concessions on capital gains tax and capital transfer tax.
      My hon. Friend the Member for Walsall, North (Mr. Winnick) said that the man who earns five times the average income, £38,610 per annum, benefits under this Budget, in that his tax loading is reduced from what it was in 1979, from 49·7 per cent. of his total income to 44·9 per cent. this year under this Government. There has been a 5 per cent. measurable benefit to the better off, directly arising out of the taxation policies pursued by this Government.
      It is interesting that when my hon. Friend the Member for Walsall, North said that Conservative Members whispered to themselves "How many are they? How few are they?", as if that negated the indecency of pursuing such a policy. It does not matter how many they are. In the view of the lower paid, it is unjust that the better off in society can gain in the way that they have under successive Finance Bills. It is about time that the Chief Secretary informed his constituents in the Northern region why he and the Treasury support a policy that favours the
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      better off, when in that region tens of thousands of people—indeed, hundreds of thousands of people—are now suffering as a result of this Government's policy.
      The reflation proposed by the Social Democratic contingent in the House is quite insufficient to deal with the problems of our society. That is why I support the alternative economic strategy which has been proposed by the Labour Party and which is the only solution to the crisis that confronts our country. Labour Members realise that the economy needs a major reflation if 3 million people are to be put back to work in the way that my right hon. Friend the Leader of the Opposition said at that famous press conference two months ago. We have a major task before us, and the Opposition are ready to take on the responsibilities of carrying out the policies that are necessary if we are to protect the people whom we represent.
      Finally, I want to mention an article that was printed in The Guardian the other day on a matter that was mentioned in a number of other newspapers. Curiously enough, it is a subject which repeatedly crops up prior to the Finance Bill going into Committee each year. It is the black economy. I am told that the article is based on research that was carried out by two eminent economists, Mr. Edgar Feige and Mr. Robert McGee. They maintain that the black economy is now responsible for the loss to the Inland Revenue of possibly as much as £11 billion per year. The relevance of the black economy to this debate is that, if we were to secure only a small portion of that money, it could be offset against the unfair weight of taxation on the lower paid. That £11 billion compares with the £4 billion that was identified by Sir Lawrence Airey, the chairman of the Inland Revenue, when he gave evidence to a Commons Select Committee last year, as representing between 6 and 8 per cent. of the total economy. If it is £11 billion, it is £1½ billion more than this Government's projections for the public sector borrowing requirement. It is madness for this Government to ignore the possibility that the black economy is now of this scale and nature.
      I shall quote what Mr. Feige and Mr. McGee said, according to the journal of the Institute of Economic Affairs:
      "A large and growing unobserved sector has significant implications for our understanding of the macro-economic situation of the British economy"—
      as I understand that statement, it means that the Chief Secretary should now, in the light of the magnitude of that sum, take that potential revenue to the Exchequer into account in the macro-decisions that are taken by this Government and in their determination of the PSBR and other Government financial factors—
      "and for guiding government stabilisation policy."
      The article goes on:
      "Feige and McGee insist that efforts to predict tax revenues, to estimate revenue losses and to determine optimal tax policy can no longer ignore the important consequences of the unobserved sector".
      I recall the Finance Bill debates two years ago, when my hon. Friend the Member for Midlothian (Mr. Eadie), at great length, moved an amendment on the black economy and the lack of response by the Government. I recall that at each stage of the Finance Bill over the past two years the Government have failed to respond as the Opposition demand. We say that if the scale of loss to the Exchequer is now possibly £11 billion, and if it is the sum

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      that was identified by the chairman of the Inland Revenue last year, there is a duty on the Government to treat this as a matter of urgency and to act in the national interest.
      I understand that Treasury Ministers speak for the Civil Service. It is quite insufficient for them to come to the Dispatch Box and repeatedly try to impress the House with the number of civil servants that they have managed to displace. They have been put on the queue of unemployed when there is a demand for more civil servants capable of dealing with the problems of the black economy.
      On this occasion, Opposition Members on the Finance Bill Committee cannot afford to miss the opportunity of pressing our cause on the black economy relentlessly and at every stage, perhaps on every amendment, as we did last year on capital gains and capital transfer tax concessions.
      I hope that the Chief Secretary will refer to the black economy and to the article in the document to which I have referred. He should also give a clear undertaking that this time the Government will not ignore the problem but will take real action to restore the money that is lost to the Exchequer so that it can be used to offset the enormous weight of tax that falls on those whom Labour Members represent—the lower paid, the unemployed and those who need more money to live as a result of the Government's economic strategy.
      6 pm
      Mr. William Hamilton: I shall not take too much time as I understand that there is an arrangement for a Division at about 7 o'clock. I shall refer to some facts that I hope will induce the Chief Secretary, if he is listening, to reply. I shall refer specifically to some remarks that he made on the Budget. He made the absurd claim that almost everyone will be better off in tax terms as a result of the Budget proposals. I hope that he has heard sufficient in the debate so far to convince him that he was misleading the House. It is obvious that millions of people, especially those on below average earnings, and a large number of those on above average earnings, will be worse off as a direct consequence of the Budget.
      I shall quote from a document that was produced by the House of Commons Library research division. It is background paper No. 100 entitled "The impact of the 1982 Budget on individual incomes and real income movements since 1979". I hope that the Chief Secretary has a copy, as he will need to correct it if his assertion is right. Both he and this document cannot be right. I would bank on the Library's figures if I had to choose between them and the Chief Secretary's.
      The Institute for Fiscal Studies carried out the work for the Library research division. The document is divided into three sections. The first deals with income, expenditure and the effect of the Budget on various income groups. The second deals with how the tax system has changed between 1978 and 1982. The third deals with the effect of tax and other changes on the seven family groups in section I. I shall not weary the House with the detailed figures in the document, but I shall refer to the final page.
      Figure 6 is a block diagram of the effect of the Budget on families on half average earnings, average earnings, one-and-a-half, two, three, four and five times average earnings—in other words, a broad sweep of incomes from the very poor to the extremely rich. The block diagram makes it abundantly clear that the most massive penalties have been imposed on those earning minutely or substantially below average earnings.
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      The only group that has gained from the Budget in real terms, taking account of inflation and the rest, is the people on five times average earnings. That evidence has not been produced by the Labour Party or anyone with a political axe to grind. It is produced by some of the most objective and able people at the service of the House. The information that the Library provides for hon. Members is impeccable.
      The block diagram shows clearly that those on half average earnings have lost about 50p a week as a direct result of the Budget taxation proposals. Those on average earnings have lost about £1 a week, those on one-and-ahalf times average earnings more than £1·50, those on twice average earnings about the same, those on three times average earnings about 30p a week and those on four times average earnings about 40p to 50p a week. Only those on five times average earnings have a net gain in real terms.
      The final sentence in the document deals with all other groups—all those receiving less than five times average earnings—who are losing. It says:
      "All other groups make losses, which are more important at below average and average incomes than at higher levels, both because they are greater in nominal terms and because they reflect a higher proportion of those families' incomes."
      Those are the words of an objective document. I refer specifically to those who have lost most heavily as a direct consequence of the Budget because I represent a large number of them, both as a Member of Parliament and as a Member sponsored by the Confederation of Health Service Employees. That trade union represents some of the lowest paid workers in the country. It also represents some of the most worthy citizens.
      I received this morning a letter from a gentleman in Gwent who will add up his pennies after the Budget and will almost certainly find that he is substantially worse off as a result of it. He writes:
      "I am employed by the N.H.S. as a storesman in St. Cadoc's Hospital Gwent and I strongly urge you to support the NHS staffs' united campaign for a 12% pay increase for 1982. N.H.S. staffs, working as a team, are for the most part low paid, highly skilled and extremely dedicated to the N.H.S. and its patients. Many staff including nurses, ancillaries, clerical staff, technicans and junior doctors earn little more then £60 per week.'
      That employee writes:
      "My wages are £50 per week, after stoppages. I have worked for the N.H.S. for 10 years.
      Our 12 per cent. claim is a reasonable demand".
      That claim is far too modest. The Chief Secretary probably spends £50 per night on dinners. Yet that employee who has worked for 10 years in one of the most noble professions in this country takes home only £50 per week, and the Government say that he must be satisfied with a 4 per cent. pay increase and not a penny more.
      What will that employee get out of the Budget? The effect of our amendments is highly marginal and far too modest, but we cannot deal with these people through income tax proposals. We must deal with them in other ways, through a more just economic system and a fairer distribution of the country's wealth.
      A survey was undertaken by my sponsoring union at the Royal Surrey county hospital in Guildford, with the cooperation of the hospital management. Those people will be watching and listening carefully to our debates to see whether we have any concern for their problems. I cite just one or two of the many cases to show the amount of tax that those people pay and why it is essential that something be done in the Bill to protect them. The survey states:

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      "The most senior nurse on duty—a nursing officer responsible for four wards of around 30 beds each—takes home between £460 and £500 a month, depending on her shift pattern. Last month she earned the equivalent of £115 a week."
      That is less than the average earnings on which, according to the Library document, even after the Government's proposals on allowances and so on, employees will be substantially worse off as a result of the Budget. The survey further states that that lady, who receives the princely sum of £115 per week net,
      "has two qualifications—the State Registered Nurse and the State Certificate of Midwifery. On duty she is responsible for over thirty nursing staff. At evenings and weekends she is responsible for nursing services in the entire hospital of 400 beds … Last week she worked through her half day off to help make ends meet."
      I cite just one other case from the many examples given. The survey states:
      "Robin Jago is the senior operating department assistant in theatre. He is responsible for the in-service training of ODA staff, the day to day staffing of the theatre as well as clinical commitments. He has 16 staff in his team. … He takes home £75 a week for a 40 hour week, £95 last week when he worked for 55 hours. His gross was £125·11."—
      that means that he pays £50 per week in tax and national insurance.
      "For on-call duty he receives a 5p an hour allowance."
      Those are the people whom we are exploiting in our hospital service. It behoves the House to call attention to their problem on every possible occasion. They have not been protected. On the contrary, they have been further penalised by the Budget. Moreover, the Government are now telling them that they shall have a pay increase of no more than 4 per cent. this year although the inflation rate is at least 10 per cent. and probably higher. We are asking those people to work hard for starvation wages while attempting to cut their standard of living by a swingeing amount in the forthcoming year.
      It is no wonder that nurses, who do not usually threaten strike action, are now driven to it. I hope that the Government are proud of what they have done to those people. I hope that the Chief Secretary will now make as graceful an apology as he can for having misled the House in such an outrageous way by claiming that all individuals will benefit as a direct consequence of the Budget proposals.
      6.15 pm
      Mr. David Penhaligon: The levels at which tax begins to be paid in this country are extraordinary. Our amendments propose at least minor modifications to the present limits
      The incident which brought the situation home to me most powerfully in the past year was the discovery, after considerable correspondence with the Chancellor, the local tax office and various other people, of the situation facing a 62-year-old widow in my constituency. Her sole income was State benefit, plus—unfortunately, as it turned out—a pension of just £10 per year from her husband's former employer. That £10 per year caused my constituent to lose the exemption given by the Government on the amount of tax payable by widows according to the basic tax thresholds. As a result, the £10 per year pension that her husband had earned for her during his working life cost her £40 or £50 in tax.
      As a Member of Parliament, I often try to explain to constituents the difficulties that face Governments. It is
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      not my job to defend the Government, but it is good for all of us to play our part in explaining that the country is perhaps not quite so easy to run as people sometimes imagine. Nevertheless, I could not think of one coherent or even half-coherent reason why that 62-year-old constituent, whose income consisted entirely of her widow's pension and a miserable £10 per year from her husband's former employer, should pay some £50 in tax. I even wrote to the Chancellor, suggesting that he should compose a letter explaining the position to my constituent, but of course he could not do so.
      The situation is incredible. It was considerably worsened by the Government last year, but the problem has been growing for a considerable number of years. I hope that tax thresholds will be considerably increased by any future Government in which I may be fortunate enough to play a part.
      Mr. Robin F. Cook: Is the hon. Gentleman thinking of joining the Labour Party?
      Mr. Penhaligon: I stand as good a chance as the hon. Gentleman of being a member of the next Government.
      After the Budget, the first £1 of income that will attract tax will be the forty-eighth for a married person and the thirty-first for a single person—income below that being tax free. On that £1, the effective rate of tax taken by the Government—my constituents rightly regard income tax and national insurance contributions as much the same thing—will be 38·75p.
      I would be prepared—I am speaking personally—to vote for an increase in the standard rate of tax if that was the only way by which we could do something about this obscenity. There is no justification for it. Nearly 40p in the pound is taken by the Government on a married person's forty-eighth pound and on a single person's thirty-first pound. The Government campaigned throughout the country—less successfully in my constituency, as it turned out, than in others—about reducing tax. It is therefore extraordinary that the Government have made the situation worse. The Budget has made it marginally even worse than last year if that was possible. I ask the Minister to explain the widespread claim that this year's tax threshold changes will take about 500,000 people out of income tax. That is the figure thrown around on the Opposition Benches, and I recollect that it has been mentioned by a Government Member. I should like the right hon. and learned Gentleman to explain it.
      I have been an hon. Member since October 1974. I suppose that, in that time, not least because of the record of the former Chancellor of the Exchequer, I must have heard at least 10 or 15 Budgets. I should have liked, if I had had some research assistance, to set someone the task of adding together all the people that Chancellors claim to have put outside the tax threshold. I think that there would be very few left paying tax. It is misleading for the Government to claim that the tax changes this year mean that, by the end of the year, when one assumes that most people's incomes are adjusted for a little less than, about, or a bit more than, inflation, 500,000 fewer people will pay income tax. This would mean, in my constituency, that 1,000 people, according to the Chancellor, will not pay tax who paid it last year. Hon. Members know this to be nonsense. Why do the Government insist on going around the country saying it?
      The modest proposal of the Liberal Party, supported by our alliance colleagues, is for a 3 per cent. increase in the

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      thresholds—£44 a year for a single person and £65 a year for a married couple. We recognise that there are considerable economic difficulties. We wish to express dissatisfaction at the current allowances and to indicate a determination to do something about them should we be given the opportunity. I believe that the Government could accept the amendment put down by my colleagues and myself. The total cost is £380 million in a year. When one considers that enough money has been found to launch two thirds of the British Navy to the other side of the world, it is inconceivable that such a modest proposal would seriously affect the country's economy.
      I wish to deal with a matter that the Government have been foolish, psychologically speaking, to pursue. Even in terms of aggregate sums, the amount is not much. A great deal has been made about the amount of tax reduction received by those who earn five times the national average wage. Incredibly few people earn five times the national average wage. I recollect once asking the Chancellor of the Exchequer to state what percentage of the PAYE population earns more than a Member of Parliament. I was surprised to learn that the reply was 1½ per cent. I must admit that I felt far more satisfied with my job at that moment than I did before.
      Not many people have these colossal earnings. The global sum involved in the tax reductions is not large. Psychologically, however, at a time of economic recession and a time when people are unemployed or living on very small incomes, the tax reductions on these high incomes are insanity of the first order. The Government deserve much of the abuse that has been thrown at them.
      I represent a constituency a long way from the House. The average wage in my constituency is more than 20 per cent. below the national average. A working man will be lucky to find a job, especially at the moment, with what is known in my area as a top line of £80 or £85 a week. The hon. Member for Fife, Central (Mr. Hamilton) outlined the pay of many of those employed in the Health Service. There is nothing in his remarks with which I would not concur. In my area, however, those who work in the Health Service, by local standards, are not badly paid. The jobs are enormously sought after.
      These are the sort of wages on which people are forced to bring up families. I cannot believe that the modest proposal put forward from this Bench would cause the Government any serious financial difficulty. To accept the proposal would show the Government's willingness to rectify some of their sins since they took office. I express a clear determination that we shall do something about this problem when we are given the opportunity. I believe that we shall be given the opportunity before long.
      Mr. George Cunningham: I rise only to ask the Minister to explain what the Government have done with regard to the ratio between the single person's allowance and the married man's allowance. Many hon. Members feel that, over a prolonged period, the ratio should be altered in the direction of bringing the two reliefs closer together. By a fractional amount, the figures this year have gone in the opposite direction. I imagine that this is only due to rounding. It is, however, particularly serious because this is the first year in two years that the reliefs have been altered. Two years ago, the figures were set at levels which meant that the married man's allowance was 56 per cent., I think, more than the single person's allowance. This
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      year, following no change last year, the married man's allowance will stand, I believe, at about 56·23 per cent. more than the single person's allowance.
      The difference is no doubt entirely attributable to rounding. I would, however, beg the Minister to see that when this is done the move is made in the other direction. This change can only be done gradually. It is therefore important that, when a change is made, it should bring the two figures closer together rather than the opposite. I should like the Minister to explain the rationale, if there is one, in the Government's mind for the ratio that they have chosen and especially their decision to round in the wrong direction rather than in the right direction.
      Mr. Brittan: I should like to deal first with the specific point raised by the hon. Member for Islington, South and Finsbury (Mr. Cunningham). The hon. Gentleman is right in his guess. There is not, in any sense, a conscious policy decision to move in a particular direction in the balance between allowances. It is simply a question of a convenient figure for the purposes of rounding. The difference, as the hon. Gentleman will appreciate, is so small that the question of the direction of the move was not the dominant consideration in deciding where to put it. If one was making a policy decision, even a decision to move gradually, one would move a little further than has occurred simply as a result of the rounding operation. I shall take account of the direction that the hon. Gentleman commends when these matters are considered in future years. I can obviously make no statement about that now.
      6.30 pm
      This debate is in the best traditions of debates on this Budget in that everybody wants to talk about the Government's economic policy over the past three years or to say that the Budget was doing the right thing and should have done more of it. It is significant that the criticism is not so much of what the Budget has done, but rather of what has happened in previous years or to the effect that the Government have not done more along the same lines. It is in that context that I consider some of the points that have been made. I would remind hon. Members—certainly those who are filling up the Chamber now—that the debate has been purportedly on allowances but it has ranged more widely. I make no complaint about that.
      Clause 22 gives effect to the decision, announced in my right hon. and learned Friend's Budget Statement, to increase personal allowances across the board by about 14 per cent. The Opposition, in their various manifestations, are inviting an increase of 29 per cent. or 17 per cent., as the case may be. The 14 per cent. increase that is implemented in the unamended Finance Bill is 2 per cent. more than inflation in 1981 and 5 per cent. more than the 9 per cent. forecast for the increase in the 1982 retail price index. The burden of income tax will be lower in 1982–83 than it was in 1981–82 for people at all income levels. That statement, which I made in the Budget debate, is unchallengeable.
      In spite of the characteristically intemperate language of the hon. Member for Fife, Central (Mr. Hamilton), having scrutinised everything that I have said, I have found nothing that calls for correction. The full impact of the Budget as a whole, as opposed to the income tax provision, is a different matter. I shall say a word about that in a moment.

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      To return to the allowances, the increase in the married man's allowance which is implemented by the Budget proposals is £300. That is £40 more than the statutory indexation requirement. A married man paying tax at the basic rate will get an income tax reduction of £1.73 a week. The increase in the single allowance is £190, which is £20 more than the statutory requirements, giving a reduced tax payment at the basic rate of £1·10 a week. The cost to the Exchequer of the increases in personal allowances will be £2,050 million in a full year and £1,665 million in 1982–83. That is over £200 million more than the cost of bare indexation. Several hon. Members, including the hon. Member for Workington (Mr. Campbell-Savours), referred to the impact of those proposals, and specifically the ones that we are debating, in the narrower sense of the word, on the total number of taxpayers. The hon. Member for Truro (Mr. Penhaligon) also touched on that point.
      The hon. Member for Workington accused the Chancellor of misrepresentation in saying in his Budget speech that there would be 1·2 million fewer taxpayers in 1982–83 than in 1981–82. There was no misrepresentation. That accusation is wholly false. What the Chancellor said is true. The number of taxpayers will be 1·2 million less than it would have been if the thresholds had remained at their 1981–82 levels.
      About 500,000 people will drop out of tax this year as a result of the increases that we are debating and other factors—as, I think, my hon. Friend the Member for Lincoln (Mr. Carlisle) said. The other 700,000 of the 1·2 million who would have been paying tax if allowances had remained at their 1981–82 levels are people who would otherwise have been brought into tax. There is no mystery about it.
      Mr. Robin F. Cook: I am grateful to the Chief Secretary for his clarification of the figures. I presume that the figure of 500,000 less is as at March 1982. Will the Chief Secretary tell the House how that figure would compare with the figures for March 1981?
      Mr. Brittan: I cannot do that without notice. If the hon. Gentleman would like to have that information he has only to put down a question and he will get it. The Chancellor made an accurate statement about the number of people paying tax at the time of the Budget who would cease paying tax as a result of the Budget. That does not seem to me to be unreasonable.
      As I have said, the burden of income tax will be lower than last year at all levels of income. The question arose in various forms as to the total burden of the Budget. National insurance contributions were changed not in the Budget but elsewhere in legislation. None the less, it may be convenient to take them together with the income tax changes.
      The position is as set out by the Chancellor of the Exchequer in an answer to a question on 11 March, elaborating what had been said earlier in the Budget debate. On the assumption that earnings increased by 7·5 per cent. in 1982–83—which is a particular assumption but by no means the one that will prove to be right—the proportion of income going in income tax and national insurance contributions combined will indeed be higher for most people.
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      It is significant that that is not the case not only for those with the highest incomes but also for those with the lowest. The proportion of earnings going in income tax and national insurance contributions will be lower than last year in the case of a married man earning between £2,300 and £3,800 a year and for a single person or a working wife with earnings between £1,500 and £2,200. In addition, families with children will benefit from the increase in child benefit from November.
      Low-paid families will also benefit from the substantial improvement in family income supplement. Moreover, those over pensionable age who are taxpayers will benefit from the income tax changes. They will not be affected by the national insurance contribution increase and will benefit from the full uprating of the retirement pension in November.
      Mr. Richard Wainwright: Is the Chief Secretary aware that the Treasury table from which he has just made some selective quotations about people on low incomes shows in cold print that for single people with incomes of £3,000 a year right up to £15,000 a year in 1981–82 the proportion taken under the Bill in 1982–83 to those adjusted incomes is in each case higher than in the previous year?
      Mr. Brittan: That is not a result of the Bill. I am sure that the hon. Gentleman did not mean to say that. As the hon. Gentleman will appreciate, the Bill is concerned with income tax and not with national insurance contributions. It is of considerable significance because the statement relating to income tax on which I was challenged was correct and I am now giving the picture for income tax and national insurance contributions which are not covered by the Bill.
      What the hon. Gentleman says is in no sense inconsistent with the point that I was making, which is that, although it is true that the proportion going in income tax and national insurance contributions combined would be higher for most people, that was not the case not only for those on the highest incomes but also for those on the lowest. That is exactly the mirror image that one would expect, as the previous year the indexation provision was not implemented.
      Mr. Straw rose—
      Mr. Brittan: I shall give way in a moment.
      Reference has been made to the background paper produced by the House of Commons Library research division and based on work done by the Institute for Fiscal Studies. That document also purports to discuss the real effect of the Budget. I remind the House that we are discussing the allowances and not the Budget as a whole. Nevertheless, reference was made to it, although the hon. Member concerned has chosen this moment to leave the Chamber without hearing the answer.
      The paper takes account of indirect tax changes as well as of national insurance contributions. The assertions that it makes are based on a number of speculative assessments about the effect of indirect tax changes on such things as the consumption of spirits. It takes no account of the increase in child benefit due in November. It is extraordinary to take account of national insurance contribution changes—although I do not make any complaint about that—but to fail to take account of child benefit.

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      Page 5 of the paper also assumes that families on half average earnings are entitled to family income supplement and to rent and rate rebates, but do not claim them. That is an heroic assumption. Without wishing to criticise the paper, it makes several speculative assumptions. The facts that I have given about the combined effect of national insurance contributions and income tax in relation to percentages are correct.
      The gravamen of the debate is the suggestion by the Labour Party that allowances should be increased by 29 per cent. and the Liberal Party's more modest suggestion that they should be increased by 17 per cent. I shall refer first to the principle of the indexation provisions. They have been rightly described as the "truth in taxation" provisions. I am firmly of the view that no Government—whether Conservative, Labour or of unknown hue—
      Mr. Richard Wainwright: A rainbow Government.
      6.45 pm
      Mr. Brittan: The hon. Gentleman refers to a rainbow Government with pride. [Interruption.] The hon. Member for Blackburn (Mr. Straw) obviously does not regard that as such an attractive appellation. However, the very possibility of mentioning such a thing shows how speculative and almost flippant the debate has become.
      Whatever their political complexion, no Government could or should guarantee that tax rates will be indexed year in and year out in accordance with the increase in inflation. It would be constitutionally impossible for a Government to guarantee to do that, because Parliament is sovereign and would have to consider the matter. Therefore, the purpose of these so-called indexation provisions is truth in taxation. Wherever possible the Government will implement the indexation provision and will index the tax allowance or whatever. However, above all, the Government and the legislation will not permit inflation to affect the burden of taxation without anyone knowing and without any action being required by Parliament.
      The provisions require Parliament to face up to matters and require the Government to say whether they are increasing the allowances in full or in part and to justify that to the House, according to the economic circumstances and to priorities. That is the benefit of the provisions that I warmly support. However, the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) was effectively teased by the Financial Secretary for opposing them when they first came before the House. The provisions do not mean that it is always possible, year in and year out, to implement them. My right hon. and learned Friend the Chancellor of the Exchequer was fully justified last year in not implementing the provisions. The economic circumstances of the country made it impossible to implement them without expending a large sum of money and without increasing the public sector borrowing requirement to a quite unacceptable level.
      At the time of the last Budget, the right hon. Member for Stepney and Poplar (Mr. Shore) and others warned us that if we introduced a Budget that reduced the borrowing requirement to the extent proposed by the Chancellor of the Exchequer the consequences would be dire in the extreme. Far from being dire, the Budget's introduction marked the beginning of this country's emergence from the recession. Because the Government were prepared to
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      take tough steps last year, a report that came out only today describes us, in common with only two other countries, as leading the world out of the recession.
      This year, as we emerge from the recession, my right hon. and learned Friend introduced a Budget very different from that introduced last year. It was not a profligate Budget that sought to distribute largesse on a grandiose scale, as the right hon. Member for Stepney and Poplar desires, but it succeeded in giving assistance both to industry and to individuals over a wide sector.
      Reference has been made to the national insurance contributions which were not in the Budget but which were necessarily increased to pay for the increased social security benefits. Rightly, the people of Britair, require such increases, and know perfectly well that they must be paid for. My right hon. and learned Friend the Chancellor of the Exchequer accurately met the needs of the situation by concentrating his assistance on industry. He concentrated on reducing the national insurance surcharge, on giving assistance to the construction industry, on developing the measures of assistance to new industry and to those concerned with technical innovation and on giving assistance to new industry and to those concerned with technical innovation and on giving assistance to heavy energy users. In an economy emerging from a recession, it was right to give that priority and not to give priority to assistance to the personal taxpayers.
      Even within the content of a Budget that was rightly geared towards industry rather than the personal sector, my right hon. and learned Friend increased allowances by 14 per cent., which is 2 per cent. above the indexation provision. That was a reasonable and responsible response to the needs of the situation and it is reflected in the Bill.
      It must be a question of judgment as to where to give the balance of reliefs as well as their total extent. The totality was responsible and reasonable. I shall deal with the alternatives put forward by the Labour and Liberal Parties. The distribution was right because it concentrated on industry while at the same time allowing more than an indexation provision on allowances.
      What do the official Opposition say? The right hen. Member for Stepney and Poplar has put his name to a series of amendments which would give a 29 per cent. increase in allowances. This would cost over and above what my right hon. and learned Friend the Chancellor of the Exchequer thought appropriate as much as £2,080 million in a full year. When challenged in opening, the right hon. Member for Ashton-under-Lyne was slightly coy about it. He thought that we all ought to know but in the end he said that that money should be raised simply by borrowing.
      Of course, other hon. Members from the Liberal and Social Democratic Benches, including the hon. Member for Gateshead, West (Mr. Horam), immediately joined those of us on this side who would regard that as being utterly irresponsible and likely to jeopardise the recovery which is emerging in the British economy. The impact of extra borrowing of that level would have a severe impact on interest rates and inflation. It is characteristic of the profligacy that passes for policy from the Labour Front Bench today that a proposition of that kind is put before the Committee.
      Obviously the 17 per cent. increase which the Liberal Party and the Social Democrats propose is much more modest than the 14 per cent. put forward by the Government. That goes without saying. None the less I

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      must point out to the hon. Member for Come Valley (Mr. Wainwright) that, although he was modest in manner, the proposals that he put forward are not quite so modest in cost. In a full year they would cost £440 million—not an insubstantial sum.
      Compared with the official Opposition Front Bench, whose propositions are plainly irresponsible, the difference between us and the Social Democrats and Liberal Party is more a question of judgment. The Chancellor has to make a judgment. In his judgment the £440 million that this would cost was better spent on assistance to industry and it would not have been possible both to give assistance to industry on the scale that he gave and to give further indexation of the kind proposed by the
      Mr. Richard Wainwright: Is the right hon. and learned Gentleman not aware that the difference between us is not, as he has just said, only one of judgment but also that the fiscal relaxation which we are proposing we have always put across in accompaniment with the implementation of an incomes policy to protect us from the inflationary consequences?
      Mr. Brittan: I appreciate that. The one difference between the hon. Gentleman and us is that in this respect the Opposition Front Bench and this Front Bench are united. We are united in that each party which has had the responsibility for being in power has had in different ways to try to implement an incomes policy and has seen the consequences of doing that and the long-term harm that it has done to the economy, quite apart from the social, economic and political disruption that was caused. Therefore, the hon. Gentleman can confidently call for incomes policies, never actually having had to face up to the consequences of introducing such a measure.
      The Opposition Front Bench, now that they are safely out of office and are likely to be out for a long time, are toying with the idea of an incomes policy again under another name. This is only just peeping over the horizon in its true colours.
      Mr. Campbell-Savours rose—
      Mr. Brittan: Not on this point. The response of the Government in indexing and going beyond that by 2 per cent., and concentrating their fiscal assistance this year on industry, is the right one. I therefore commend it to the Committee and ask the Committee not to accept the amendments put forward by either of the opposition parties.
      Mr. Cook: I begin by responding to the speech of the Chief Secretary. The right hon. and learned Gentleman made a passing reference to Britain leading the world in a return to growth and compared us with two other countries, France and Japan, both of which have achieved a steady increase in output and in GDP over the past three years. It takes necks of brass to compare with that experience the experience of Britain over the past three years, when Britain has led the world certainly, but with a massive, unprecedented and unequalled drop in output and GDP. It is to be prayed that the rest of the world does not follow that lead.
      I turn from the Chief Secretary's passing reference to macroeconomic affairs to the more narrow points that he argued in relation to the tax thresholds and take him up on
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      two points. First, I return to the intervention which I made during his speech, when I asked him to clarify the calendar basis for his claim that the Budget will remove from taxation half a million people who were previously paying tax. He made it clear that in making that assertion he was comparing the numbers post-April 1982 with the numbers as at March 1982. It follows logically that after any Budget that increases the tax thresholds there must be some reduction in the number of taxpayers. Indeed, the only Budget when that has not applied in recent memory was the Government's Budget of last year, when precisely the same number were paying tax the day after as the day before, because there was no increase in tax thresholds.
      If we are to have an honest comparison and truth in the statistical presentation, we must have, not the figures for April 1982 and March 1982, but those for April 1982 and April 1981, so that we can see what the change has been over the full financial year. When we have that figure, it will be nothing like the figure of half a million to which the Chief Secretary referred.
      The other point on which I have to come back to the Chief Secretary is his argument that the Budget should be welcomed, because as a result people will be paying less in income tax. I think that I speak for all segments of the Opposition when I say that we accept that it is logically unanswerable that the Budget achieves a reduction in the income tax that people have to pay. However, what the Chief Secretary still resists grasping is that in assessing the effect of the total fiscal burden on an individual taxpayer, not only is it legitimate, but it is essential to take into account the combined effect of the changes in income tax and in national insurance contributions which came into operation at the same time. They are plainly designed to balance each other and have a similar impact on the individual taxpayer.
      Whatever the attitude of the Chief Secretary when he opens his salary cheque each month, the average wage earner on receiving his wage packet does not eagerly study it to find out how much he has paid in income tax and how much in national insurance and heave a sigh of relief when he discovers that he has paid more in national insurance than he did the month before but not more in income tax. What he is interested in is how much has been deducted from his wage. It is right and proper that he should be concerned with that. It is the overall level of deductions that affects his standard of living.
      If we have regard to how national insurance contributions have affected post-tax income, we find a different picture from the rosy glow cast by the Chief Secretary's speech. The Government have increased national insurance contributions three times in three years. Those increases have not been, as the Chief Secretary argued, to permit an increase in benefits. Over those three years national insurance benefits have gone down in real terms. Those drawing them have lost 5 per cent. in unemployment benefit and have lost an earnings-related supplement. They are worse off than before, yet when they are in work they are expected to pay even more in contributions than before.
      7 pm
      When we put in the balance the increase of 1 per cent. in national insurance contributions introduced last November and payable from this month, we find that it has the effect of cancelling out the reduction in income tax as a result of the Budget increases in thresholds. Every

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      independent authoritative body that has examined the question has come to the same conclusion. The Library has pointed out that one needs to earn £36,000 a year to achieve a break even point. The Institute for Fiscal Studies, which provided much of the raw data on which the Library reached that conclusion, says that one would require a similar income to break even as a result of the Budget, inking into account all the other forms of taxation.
      One could not expect to find a more independent authoritative body on statistics related to taxation and revenue than the Inland Revenue. Even the Inland Revenue comes to the conclusion that a married couple require an income of £20,000 a year to break even on the combined effect of national insurance contribution increases and income tax reductions. Those earning less—except those around the particular point of the threshold of £20 a week—are all worse off as a result of the changes in the Budget and the national insurance contributions added together.
      The only body of opinion resisting that obvious, irrefutable, arithmetical conclusion is Treasury Ministers. Everyone else has grasped that that conclusion is unavoidable. I can understand why those on the Treasury Bench wish to resist it. The reason takes us back to a paradox which has been at the centre of this debate and to which a number of hon. Members have referred. My hon. Friend the Member for Workington (Mr. Campbell-Savours) referred to it at length in a powerful speech, the first of a number that we shall hear from him in the Committee sittings. My hon. Friend, who set himself a high standard for his future contributions, recalled his experience in the Workington by-election, when his Conservative opponent campaigned on the issue of tax and won on the basis of his promises.
      The only contribution from the Conservative Back Benches was by the hon. Member for Lincoln (Mr. Carlisle), who was honest and candid enough to recall that in the general election he campaigned, not to increase the general level of income tax, but on the promise that his Government would reduce the overall level.
      In case the hon. Gentleman is feeling isolated and lonely because he was the only Conservative Back Bencher to speak in this debate, I can tell him that he was not the only Conservative candidate to campaign on the basis of that promise. I have a press statement issued by the present Chancellor, based on a speech that he made on 30 April 1979; a speech which began with what in retrospect appears a richly ironic opening sentence:
      "Labour have fought one of the most deceitful election campaigns in British political history."
      Even after opening on that basis, the right hon. and learned Gentleman went on to make an unequivocal commitment that a future Conservative Government would cut taxes. He said:
      "Let me set the record straight on taxes. We shall make substantial cuts in income tax. And we shall be raising tax thresholds as well…This means that every taxpayer should be paying less taxes in total."
      That commitment is trenchant and unqualified. There are none of the niggling little caveats now entered by Treasury Ministers about the impossibility of comparing post-Budget and pre-Budget tax liability. The right hon. and learned Gentleman clearly and unequivocally stated that every taxpayer would pay less tax as a result of the Conservatives' tax programmes.
      The reality is that, as speaker after speaker has pointed out, almost every taxpayer is paying more, not less, in tax.
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      A number of my hon. Friends—particularly my hon. Friends the Members for Walsall, North (Mr. Winnick) and for Fife, Central (Mr. Hamilton)—made the point that a favoured few had succeeded in reducing their tax burden even under this Government. I call in aid the statistics produced by the Institute for Fiscal Studies. A person with an income of £30,000 a year, which is well in excess of what is received by most hon. Members on the Opposition Benches and by most of our constituents, is paying 18 per cent. less in income tax than he was in 1979.
      The hon. Member for Lincoln told the Committee, in a very good speech, that he could understand the need for an increase in the income tax burden to pay for the cost of recession induced by his own Front Bench. He must ask himself the following question, to which the Committee is entitled to an answer: if the income tax burden had to be increased because of the recession, why should it not increase for the man earning £30,000? Why should he, and he alone among the taxpayers of Britain, have a reduction in his tax burden while the rest of us face increases?
      Mr. Kenneth Carlisle: The hon. Gentleman must not mislead the Committee. I did not say that the recession was induced by the Government. As he well knows, it was induced by not only world conditions, but high rates of inflation, which started under his Government.
      Mr. Cook: The hon. Gentleman must pardon my rhetorical exaggerations. On an appropriate occasion I am prepared to debate with him the consequences of the recession.
      The hon. Gentleman did not respond to the question that arises naturally out of his speech: why is it that the rest of the body of taxpayers should face an increase in their tax burden while the man earning £30,000, and he alone, has a reduction in his tax burden? By any standards—including, I suspect, by the standards of the hon. Gentleman himself—that contrast is a social outrage.
      After three years of the present Government, after four out of the five Budgets that they will have the opportunity to present, there are now more people paying tax than there were before. That is a striking achievement, since there are 2 million people fewer at work than there were before. Those who are paying tax are paying on a larger proportion of their income. One now requires to earn only 30 per cent. of the average wage to be liable to the standard rate of tax, compared with 52 per cent. in 1978. When people start paying tax, they now pay at a higher marginal rate as a result of the abolition of the reduced rate band by this Government in 1980.
      The only country with a tax structure in which people start paying tax at a higher level than in Britain is Australia. In all the other countries of the world the initial tax rate is lower than in Britain, and in nearly all the initial tax threshold is higher. That is the record. That is what has happened over the past three years.
      I return to what the Chancellor said in a separate speech from the one to which I have referred. He said towards its conclusion:
      "You need not take my word for what we will do. Just judge from your own experience."
      The nation now has the opportunity to judge from its own experience, and when the time comes it will pass the appropriate judgment on what the Government have done over its tax liability. But we can save even the present Treasury Bench from that judgment, by remedying its failure last year to uprate the tax thresholds. We can save

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      Treasury Ministers by carrying the amendments that the Opposition have tabled in a modest attempt to save them from the wrath of the electorate to come.
      The Chief Secretary made much play of the fact that this year the increase in the tax threshold is marginally more than the increase that will be necessary to keep pace with inflation—precisely 2 per cent. more. The Chancellor referred to that increase as an important advance. If we are to test the extent to which it is an important advance, it is necessary to ask what would be the position if last year the Treasury Bench had revalorised personal allowances by the full amount required, had carried through a 15 per cent. increase in tax thresholds, and had this year asked by how much they would need to increase those revalorised tax thresholds in line with the RPI.
      What is the answer? If we apply that calculation to the uprating of the married couple's tax threshold, we find that the figure required is £300, precisely the figure by which the Government propose to increase that threshold in the Budget and Finance Bill. In other words, they have done no more than increase by 12 per cent. last year's tax thresholds, which is what would have happened had they been uprated by the amount appropriate for that year. Taxpayers, both married and single, are still short-changed of the 15 per cent. that they were denied last year.
      The question to which the Committee must address itself is whether those taxpayers are entitled to have that 15 per cent. restored to them. Here there is a division in the Opposition between the official Oppostion and those who are anxious to dissociate themselves from the official Opposition. I should describe them as the provisional Oppostion were it not that they are so much more effectively orthodox than we could ever hope to be.
      The hon. Member for Gateshead, West (Mr. Horam) made a powerful speech about the need to increase tax thresholds in line with inflation. Indeed, the hon. Member said that there should be a major commitment to raise thresholds in line with tax. The hon. Member was so persuaded by his own speech that he promptly disappeared from the Chamber to speak outside the House and will not be present tonight when we vote on this issue. Before he disappeared, he condemned the official Opposition for being irresponsible in putting down amendments which are no more than what he described as a major commitment.
      The hon. Gentleman has left behind to hold the fort the hon. Member for Colne Valley (Mr. Wainwright), who has his own set of amendments, which call for an increase in the tax threshold of 3 per cent. beyond the Government figures. The hon. Member for Gateshead, West said that the increase should be by as large an instalment as possible. The moderately balanced centre between zero and 15 per cent., which we are proposing, would appear for present purposes to be 3 per cent. The hon. Member will concur that if we accept his figure of 3 per cent., and if we accept as a desirable target returning to the position of 1980, the position before last year's Budget, which failed to revalorise the tax threshold, it will require a full Parliament of five years' increases of 3 per cent. to get back to where we were in 1980. I can say to the House that the official Opposition do not believe that we should wait that long for such an unsatisfactory outcome.
      Mr. Richard Wainwright: It is uncharacteristic of the hon. Member for Edinburgh, Central (Mr. Cook) to take
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      such a narrow and pedantic line and suggest that the instalment by which the allowances can be recovered in line with inflation must be continuously 3 per cent. per annum. Does the hon. Member agree that the implementation of a fair and firm incomes policy will make it possible to take a leap next year to bring the whole thing back into line?
      7.15 pm
      Mr. Cook: The only circumstance in which it will be possible to take a major leap next year is if we change the Treasury Bench before the next Budget. We cannot judge what amendments the hon. Member will put forward next year. All that we can judge is the extent to which this year he is prepared to make good lost ground, and the extent to which he is prepared to do that is 3 per cent. of 15 per cent. He must be prepared to defend that judgment. We believe that the situation is too serious to wait that long.
      There are two reasons why we believe that what has happened over the last three years is a major scandal. The first is that not only are the poorer paying more in tax than before, but that they are paying more in tax for poorer public services. Secondly, not only are the poorer paying more tax, but the increase in their tax burden coincides with a sharp reduction in the tax burden on the higher paid.
      The Chief Secretary referred to truth in taxation. I put it to him that as well as truth in taxation the Committee should have regard to truth in election pledges. When Conservative Members went into the election they promised that they would take the low-paid out of tax altogether. The only way in which they have done that is by taking many of the low-paid out of employment and even then they have taken special measures to tax them once they become unemployed. If Conservative Members remember that manifesto of three years ago, and if any of them are troubled by honourable notions about the need to adhere to manifesto pledges, they have the opportunity tonight to refresh their memories and vote with us on our amendments.
      Question put, That the amendment be made:—
      The Committee divided: Ayes 196, Noes 291.

      Division No. 125]

      [7.16 pm

      AYES

      Adams, Allen

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

      Allaun, Frank

      Cohen, Stanley

      Anderson, Donald

      Coleman, Donald

      Archer, RtHonPeter

      Concannon, Rt Hon J. D.

      Ashley, RtHonJack

      Conlan, Bernard

      Ashton, Joe

      Cook, Robin F.

      Atkinson, N. (H'gey,)

      Cowans, Harry

      Barnett, Guy (Greenwich)

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

      Bamett, RtHon Joel (H'wd)

      Crowther, Stan

      Bennett, Andrew (St'kp'tN)

      Cryer, Bob

      Bidwell, Sydney

      Cunliffe, Lawrence

      Booth, RtHonAlbert

      Cunningham, G. (IslingtonS)

      Boothroyd, MissBetty

      Davidson, Arthur

      Bottomley, RtHonA. (M'b'ro)

      Davies, Rt Hon Denzil (L'lli)

      Bray, Dr Jeremy

      Davies, Ifor (Gower)

      Brown, Hugh D. (Provan)

      Davis, Clinton (HackneyC)

      Brown, R. C. (N'castle W)

      Davis, Terry (B'ham, Stechf'd)

      Browr, Ron (E'burgh, Leith)

      Dean, Joseph (Leeds West)

      Buchan, Norman

      Dewar, Donald

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

      Dixon, Donald

      Campbell, Ian

      Dormand, Jack

      Campbell-Savours, Dale

      Douglas, Dick

      Canavan, Dennis

      Dubs, Alfred

      Cant, R. B.

      Duffy, A. E. P.

      Carmichael, Neil

      Dunnett, Jack

      Carter-Jones, Lewis

      Dunwoody, Hon MrsG.

      Clark, Dr David (S Shields)

      Eadie, Alex

      475

      Eastham, Ken

      Morris, Rt Hon C. (O'shaw)

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

      Morris, Rt Hon J. (Aberavon)

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

      Moyle, Rt Hon Roland

      English, Michael

      Mulley, RtHonFrederick

      Ennals, RtHonDavid

      Newens, Stanley

      Evans, Ioan (Aberdare)

      Oakes, Rt Hon Gordon

      Evans, John (Newton)

      O'Neill, Martin

      Field, Frank

      Orme, RtHonStanley

      Fitch, Alan

      Palmer, Arthur

      Flannery, Martin

      Park, George

      Fletcher, Ted (Darlington)

      Parker, John

      Foot, Rt Hon Michael

      Parry, Robert

      Ford, Ben

      Powell, Raymond (Ogmore)

      Forrester, John

      Price, C. (Lewisham W)

      Foster, Derek

      Race, Reg

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

      Radice, Giles

      Freeson, Rt Hon Reginald

      Rees, Rt Hon M (Leeds S)

      Garrett, John (Norwich S)

      Richardson, Jo

      Garrett, W. E. (Wallsend)

      Roberts, Allan (Bootle)

      Gilbert, Rt Hon Dr John

      Roberts, Ernest (Hackney N)

      Golding, John

      Robons, Gmilym (Cannock)

      Graham, Ted

      Robertson, George

      Hamilton, W. W. (C'tralFife)

      Rooker, J. W.

      Hardy, Peter

      Ross, Ernest (Dundee West)

      Harrison, Rt Hon Walter

      Rowlands, Ted

      Hart, Rt Hon Dame Judith

      Ryman, John

      Hattersley, RtHonRoy

      Sever, John

      Haynes, Frank

      Sheerman, Barry

      Healey, Rt Hon Denis

      Sheldon, Rt Hon R.

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

      Shore, Rt Hon Peter

      HomeRobertson, John

      Silkin, Rt Hon J. (Deptford)

      Homewood, William

      Silkin, Rt Hon S. C. (Dulwich)

      Howell, Rt Hon D.

      Silverman, Julius

      Hoyle, Douglas

      Skinner, Dennis

      Huckfield, Les

      Smith, Rt Hon J. (N Lanark)

      Hughes, Mark (Durham)

      Snape, Peter

      Hughes, Robert (Aberdeen N)

      Soley, Clive

      Hughes, Roy (Newport)

      Spearing, Nigel

      Janner, HonGreville

      Spriggs, Leslie

      Jay, Rt Hon Douglas

      Stallard, A.W.

      John, Brynmor

      Stewart, Rt Hon D. (W Isles)

      Johnson, Walter (Derby S)

      Stoddart, David

      Jones, Rt Hon Alec (Rh' dda)

      Stott, Roger

      Jones, Barry (East Flint)

      Strang, Gavin

      Kaufman, Rt Hon Gerald

      Straw, Jack

      Kerr, Russell

      Summerskill, HonDrShirley

      Kilfedder, James A.

      Taylor, Mrs Ann (Bolton W)

      Kilroy-Silk, Robert

      Thomas, Dafydd (Merioneth)

      Lamborn, Harry

      Tilley, John

      Lamond, James

      Tinn, James

      Leadbitter, Ted

      Torney, Tom

      Leighton, Ronald

      Varley, Rt Hon Eric G.

      Lewis, Arthur (N'ham NW)

      Wainwright, E. (DearneV)

      Litherland, Robert

      Walker, Rt Hon H.(D'caster)

      Lofthouse, Geoffrey

      Watkins, David

      Lyon, Alexander (York)

      Weetch, Ken

      McCartney, Hugh

      Welsh, Michael

      McDonald, DrOonagh

      WhiteJ. (G'gow Pollok)

      McKay, Allen (Penistone)

      Whitehead, Phillip

      McKelvey, William

      Whitlock, William

      MacKenzie, Rt Hon Gregor

      Wigley, Dafydd

      McNamara, Kevin

      Willey, RtHonFrederick

      McTaggart, Robert

      Wilson, Gordon (Dundee E)

      Marshall, Dr Edmund (Goole)

      Wilson, William (C'try SE)

      Martin, M (G'gowS'burn)

      Winnick, David

      Mason, Rt Hon Roy

      Woodall, Alec

      Maxton, John

      Woolmer, Kenneth

      Maynard, Miss Joan

      Wright, Sheila

      Meacher, Michael

      Mellish, Rt Hon Robert

      Tellers for the Ayes:

      Mikardo, Ian

      Mr. James Hamilton and Mr. George Morton.

      Miller, Dr M. S. (E Kilbride)

      Mitchell, Austin (Grimsby)

      NOES

      Adley, Robert

      Amery, Rt Hon Julian

      Aitken, Jonathan

      Ancram, Michael

      Alexander, Richard

      Aspinwall, Jack

      Alison, Rt Hon Michael

      Atkins, Rt Hon H. (S'throne)

      Alton, David

      Atkins, Robert (PrestonN)

      476

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

      Fry, Peter

      Baker, Kenneth (St.M'bone)

      Gardiner, George (Reigate)

      Baker, Nicholas (Dorset)

      Gardner, Edward (S Fylde)

      Banks, Robert

      Garel-Jones, Tristan

      Beaumont-Dark, Anthony

      Gilmour, Rt Hon Sir Ian

      Beith, A. J.

      Glyn, Dr Alan

      Bennett, Sir Frederic (T'bay)

      Goodlad, Alastair

      Benyon, Thomas (A'don)

      Gow, Ian

      Benyon, W. (Buckingham)

      Grant, Anthony (Harrow C)

      Berry, HonAnthony

      Gray, Hamish

      Best, Keith

      Greenway, Harry

      Bevan, David Gilroy

      Grieve, Percy

      Biffen, Rt Hon John

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

      Blackburn, John

      Griffiths, Peter Portsm'thN)

      Body, Richard

      Grimond, Rt Hon J.

      Bonsor, SirNicholas

      Grist, Ian

      Boscawen, HonRobert

      Grylls, Michael

      Bottomley, Peter (W'wich W)

      Gummer, JohnSelwyn

      Bowden, Andrew

      Hamilton, Hon A.

      Boyson, Dr Rhodes

      Hamilton, Michael (Salisbury)

      Bradley, Tom

      Hampson, Dr Keith

      Braine, Sir Bernard

      Haselhurst, Alan

      Bright, Graham

      Hastings, Stephen

      Brinton, Tim

      Havers, Rt Hon Sir Michael

      Brittan, Rt.Hon. Leon

      Hawkins, Paul

      Brocklebank-Fowler, C.

      Hawksley, Warren

      Brooke, HonPeter

      Hayhoe, Barney

      Brotherton, Michael

      Heath, Rt Hon Edward

      Brown, Michael (Brigg&Sc'n)

      Heddle, John

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

      Henderson, Barry

      Browne, John (Winchester)

      Hicks, Robert

      Bryan, Sir Paul

      Hill, James

      Buck, Antony

      Hogg, HonDouglas (Gr'th'm)

      Budgen, Nick

      Holland, Philip (Carlton)

      Bulmer, Esmond

      Hooson, Tom

      Burden, Sir Frederick

      Horam, John

      Butcher, John

      Hordern, Peter

      Cadbury, Jocelyn

      Howell, RtHonD. (G'ldf'd)

      Carlisle, John (Luton West)

      Howells, Geraint

      Carlisle, Kenneth (Lincoln)

      Hunt, John (Ravensbourne)

      Chalker, Mrs.Lynda

      Irving, Charles (Cheltenham)

      Chapman, Sydney

      Jenkin, Rt Hon Patrick

      Churchill, W.S.

      Jenkins, Rt Hon Roy (Hillhead)

      Clark, SirW. (CroydonS)

      Jessel, Toby

      Clarke, Kenneth (Rushcliffe)

      JohnsonSmith, Geoffrey

      Cockeram, Eric

      Johnston, Russell (Inverness)

      Colvin, Michael

      Jopling, RtHonMichael

      Cope, John

      Kaberry, Sir Donald

      Corrie, John

      Kershaw, Sir Anthony

      Costain, Sir Albert

      King, Rt Hon Tom

      Cranborne, Viscount

      Kitson, Sir Timothy

      Critchley, Julian

      Knight, Mrs Jill

      Crouch, David

      Knox, David

      Dean, Paul (NorthSomerset)

      Lamont, Norman

      Dickens, Geoffrey

      Latham, Michael

      Douglas-Hamilton, LordJ.

      Lawrence, Ivan

      Dover, Denshore

      Lawson, Rt Hon Nigel

      du Cann, Rt Hon Edward

      LeMarchant, Spencer

      Dunn, James A.

      Lennox-Boyd, Hon Mark

      Dunn, Robert (Dartford)

      Lester, Jim (Beeston)

      Durant, Tony

      Lewis, Kenneth (Rutland)

      Dykes, Hugh

      Lloyd, Ian (Havant&W'loo)

      Eden, Rt Hon Sir John

      Lloyd, Peter (Fareham)

      Edwards, Rt Hon N. (P'broke)

      Loveridge, John

      Eggar, Tim

      Luce, Richard

      Elliott, SirWilliam

      Lyell, Nicholas

      Eyre, Reginald

      McCrindle, Robert

      Fairbairn, Nicholas

      Macfarlane, Neil

      Fairgrieve, Sir Russell

      MacGregor, John

      Faith, MrsSheila

      MacKay, John (Argyll)

      Farr, John

      Macmillan, RtHonM.

      Fell, SirAnthony

      McNair-Wilson, M. (N'bury)

      Finsberg, Geoffrey

      McNair-Wilson, P. (NewF'st)

      Fisher, Sir Nigel

      McNally, Thomas

      Fletcher-Cooke, SirCharles

      Madel, David

      Fookes, Miss Janet

      Major, John

      Fowler, Rt Hon Norman

      Marland, Paul

      Fox, Marcus

      Marlow, Antony

      Fraser, Peter (SouthAngus)

      Marten, Rt Hon Neil

      Freud, Clement

      Mates, Michael

      477

      Mather, Carol

      Shaw, Michael (Scarborough)

      Maude, Rt Hon Sir Angus

      Shelton, William (Streatham)

      Mawby, Ray

      Shepherd, Colin (Hereford)

      Maxwell-Hyslop, Robin

      Shepherd, Richard

      Mayhew, Patrick

      Shersby, Michael

      Mellor, David

      Silvester, Fred

      Meyer, Sir Anthony

      Sims, Roger

      Miller, Hal (B'grove)

      Skeet, T. H. H.

      Mills, Iain (Meriden)

      Smith, Dudley

      Mills, Peter (West Devon)

      Speed, Keith

      Miscampbell, Norman

      Spence, John

      Mitchell, David (Basongstoke)

      Spicer, Michael (S Worcs)

      Mitchell, R.C. (Soton Itchen)

      Sproat, Iain

      Monro, SirHector

      Squire, Robin

      Montgomery, Fergus

      Stainton, Keith

      Moore, John

      Stanbrook, Ivor

      Morris, M. (N'hampton S)

      Stanley, John

      Morrison, HonC. (Devizes)

      Steel, Rt Hon David

      Morrison, Hon P. (Chester)

      Steen, Anthony

      Mudd, David

      Stevens, Martin

      Murphy, Christopher

      Stewart, Ian (Hitchin)

      Myles, David

      Stokes, John

      Neale, Gerrard

      Stradling Thomas, J.

      Needham, Richard

      Taylor, Teddy (S'end E)

      Nelson, Anthony

      Tebbit, Rt Hon Norman

      Neubert, Michael

      Temple-Morris, Peter

      Newton, Tony

      Thomas, Rt Hon Peter

      Onslow, Cranley

      Thompson, Donald

      Oppenheim, Rt Hon Mrs S.

      Thorne, Neil (IlfordSouth)

      Page, Richard (SW Herts)

      Thornton, Malcolm

      Parris, Matthew

      Townend, John (Bridlington)

      Patten, Christopher (Bath)

      Trippier, David

      Patten, John (Oxford)

      van Straubenzee, Sir W.

      Pattie, Geoffrey

      Vaughan, Dr Gerard

      Pawsey, James

      Viggers, Peter

      Penhaligon, David

      Waddington, David

      Percival, Sir Ian

      Wainwright, R. (Colne V)

      Peyton, Rt Hon John

      Wakeham, John

      Pink, R.Bonner

      Waldegrave, Hon William

      Pollock, Alexander

      Walker, Rt Hon P. (W'cester)

      Porter, Barry

      Walker, B. (Perth)

      Prentice, Rt Hon Reg

      Wall, SirPatrick

      Price, SirDavid (Eastleigh)

      Waller, Gary

      Proctor, K. Harvey

      Walters, Dennis

      Raison, Rt Hon Timothy

      Ward, John

      Rees-Davies, W. R.

      Watson, John

      Renton, Tim

      Wellbeloved, James

      RhodesJames, Robert

      Wells, John (Maidstone)

      RhysWilliams, SirBrandon

      Wheeler, John

      Ridley, HonNicholas

      Whitney, Raymond

      Ridsdale, SirJulian

      Wickenden, Keith

      Rifkind, Malcolm

      Wiggin, Jerry

      Roberts, M. (Cardiff NW)

      Wilkinson, John

      Roberts, Wyn (Conway)

      Williams, D. (Montgomery)

      Roper, John

      Winterton, Nicholas

      Rossi, Hugh

      Wolfson, Mark

      Rost, Peter

      Wrigglesworth, Ian

      Royle, Sir Anthony

      Young, SirGeorge (Acton)

      Sainsbury, Hon Timothy

      St. John-Stevas, Rt Hon N.

      Tellers for the Noes:

      Sandelson, Neville

      Mr. David Hunt and Mr. Ian Lang.

      Shaw, Giles (Pudsey)

      Question accordingly negatived.
      Amendment proposesd: No.2, in page 13, line25, leave out '£2,445' and insert '£2,510'. —[Mr Beith.]
      Question put, That the amendment be made:—
      The committee divided: Ayes 14, Noes 268.

      Division No. 126]

      [7.29 pm

      AYES

      Alton, David

      Kilfedder, James A.

      Cunningham, G. (Islington S)

      Penhaligon, David

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

      Steel, Rt Hon David

      Freud, Clement

      Stewart, Rt Hon D. (W Isles)

      Grimond, Rt Hon J.

      Thomas, Dafydd (Merioneth)

      Howells, Geraint

      Wainwright, R. (ColneV)

      478

      Wigley, Dafydd

      Tellers for the Ayes:

      Wilson, Gordon (Dundee E)

      Mr. A. J. Beith and Mr. Russell Johnston.

      NOES

      Adley, Robert

      Finsberg, Geoffrey

      Aitken, Jonathan

      Fisher, SirNigel

      Alexander, Richard

      Fletcher-Cooke, SirCharles

      Alison, Rt Hon Michael

      Fookes, Miss Janet

      Amery, Rt Hon Julian

      Forman, Nigel

      Ancram, Michael

      Fowler, Rt Hon Norman

      Aspinwall, Jack

      Fox, Marcus

      Atkins, Robert (PrestonN)

      Fraser, Peter (SouthAngus)

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

      Fry, Peter

      Baker, Kenneth (St.M'bone)

      Gardiner, George (Reigatse)

      Baker, Nicholas (N Dorset)

      Gardner, Edward (S Fylde)

      Banks, Robert

      Garel-Jones, Tristan

      Beaumont-Dark, Anthony

      Gilmour, Rt Hon Sir Ian

      Bendall, Vivian

      Glyn, Dr Alan

      Bennett, SirFrederic (T'bay)

      Goodlad, Alastair

      Benyon, Thomas (A'don)

      Gow, Ian

      Benyon, W. (Buckingham)

      Grant, Anthony (Harrow C)

      Berry, HonAnthony

      Gray, Hamish

      Best, Keith

      Greenway, Harry

      Bevan, David Gilroy

      Grieve, Percy

      Biffen, Rt Hon John

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

      Blackburn, John

      Griffiths, Peter Portsm'thN)

      Body, Richard

      Grist, Ian

      Bonsor, SirNicholas

      Grylls, Michael

      Boscawen, HonRobert

      Gummer, JohnSelwyn

      Bottomley, Peter (W'wich W)

      Hamilton, Hon A.

      Bowden, Andrew

      Hamilton, Michael (Salisbury)

      Boyson, Dr Rhodes

      Hampson, Dr Keith

      Braine, SirBernard

      Haselhurst, Alan

      Bright, Graham

      Hastings, Stephen

      Brinton, Tim

      Havers, Rt Hon Sir Michael

      Brittan, Rt.Hon.Leon

      Hawkins, Paul

      Brooke, Hon Peter

      Hawksley, Warren

      Brotherton, Michael

      Hayhoe, Barney

      Brown, Michael (Brigg & Sc'n)

      Heath, Rt Hon Edward

      BrowneJohn (Winchester)

      Heddle, John

      Bryan, Sir Paul

      Henderson, Barry

      Buck, Antony

      Hicks, Robert

      Budgen, Nick

      Hill, James

      Bulmer, Esmond

      Hogg, HonDouglas (Gr'th'm)

      Burden, SirFrederick

      Holland, Philip (Carlton)

      Butcher, John

      Hooson, Tom

      Cadbury, Jocelyn

      Hordern, Peter

      Carlisle, John (Luton West)

      Howell, RtHonD. (G'ldf'd)

      Carlisle, Kenneth (Lincoln)

      Hunt, John (Ravensbourne)

      Chalker, Mrs. Lynda

      Irving, Charles (Cheltenham)

      Chapman, Sydney

      Jenkin, RtHonPatrick

      Churchill, W.S.

      Jessel, Toby

      Clark, SirW. (CroydonS)

      JohnsonSmith, Geoffrey

      Clarke, Kenneth (Rushcliffe)

      Jopling, RtHonMichael

      Cockeram, Eric

      Kaberry, SirDonald

      Colvin, Michael

      Kershaw, SirAnthony

      Cope, John

      King, RtHonTom

      Corrie, John

      Kitson, Sir Timothy

      Costain, Sir Albert

      Knight, MrsJill

      Cranborne, Viscount

      Knox, David

      Critchley, Julian

      Lamont, Norman

      Crouch, David

      Langford-Holt, SirJohn

      Dean, Paul (NorthSomerset)

      Latham, Michael

      Dickens, Geoffrey

      Lawrence, Ivan

      Douglas-Hamilton, LordJ.

      Lawson, RtHonNigel

      Dover, Denshore

      LeMarchant, Spencer

      du Cann, Rt Hon Edward

      Lennox-Boyd, HonMark

      Dunn, Robert (Dartford)

      Lewis, Ron (Carlisle)

      Durant, Tony

      Lloyd, Ian (Havant& W'loo)

      Dykes, Hugh

      Lloyd, Peter (Fareham)

      Eden, RtHonSirJohn

      Loveridge, John

      Edwards, Rt Hon N. (P'broke)

      Luce, Richard

      Eggar, Tim

      Lyell, Nicholas

      Elliott, SirWilliam

      McCrindle, Robert

      Eyre, Reginald

      Macfarlane, Neil

      Fairbairn, Nicholas

      MacGregor, John

      Fairgrieve, SirRussell

      MacKay, John (Argyll)

      Faith, MrsSheila

      Macmillan, Rt Hon M.

      Farr, John

      McNair-Wilson, M. (N'bury)

      479

      McNair-Wilson, P. (NewF'st)

      Sainsbury, HonTimothy

      Madel, David

      St. John-Stevas, Rt Hon N.

      Major, John

      Shaw, Giles (Pudsey)

      Marland, Paul

      Shaw, Michael (Scarborough)

      Marlow, Antony

      Shelton, William (Streatham)

      Marten, Rt Hon Neil

      Shepherd, Colin (Hereford)

      Mates, Michael

      Shepherd, Richard

      Mather, Carol

      Shersby, Michael

      Maude, RtHonSirAngus

      Silvester, Fred

      Mawby, Ray

      Sims, Roger

      Maxwell-Hyslop, Robin

      Skeet, T. H. H.

      Mayhew, Patrick

      Smith, Dudley

      Mellor, David

      Speed, Keith

      Meyer, Sir Anthony

      Spence, John

      Miller, Hal (B'grove)

      Spicer, Michael (S Worcs)

      Miller, Iain (Meriden)

      Sproat, Iain

      Mills, Peter (West Devon)

      Squire, Robin

      Miscampbell, Norman

      Stainton, Keith

      Mitchell, David (Basingstoke)

      Stanbrook, Ivor

      Monro, SirHector

      Stanley, John

      Montgomery, Fergus

      Steen, Anthony

      Moore, John

      Stevens, Martin

      Morris, M. (N'hamptonS)

      Stewart, Ian (Hitchin)

      Morrison, HonC. (Devizes)

      Stokes, John

      Morrison, Hon P. (Chester)

      Stradling Thomas, J.

      Mudd, David

      Taylor, Teddy (S'end E)

      Murphy, Christopher

      Tebbit, Rt Hon Norman

      Myles, David

      Temple-Morris, Peter

      Neale, Gerrard

      Thomas, Rt Hon Peter

      Needham, Richard

      Thompson, Donald

      Nelson, Anthony

      Thorne, Neil (IlfordSouth)

      Neubert, Michael

      Thornton, Malcolm

      Newton, Tony

      Townend, John (Bridlington.)

      Onslow, Cranley

      Trippier, David

      Oppenheim, Rt Hon Mrs S.

      van Straubenzee, Sir W.

      Page, Richard (SW Herts)

      Vaughan, Dr Gerard

      Parris, Matthew

      Viggers, Peter

      Patten, Christopher (Bath)

      Waddington, David

      Patten, John (Oxford)

      Wakeham, John

      Pattie, Geoffrey

      Waldegrave, HonWilliam

      Pawsey, James

      Walker, Rt Hon P. (W'cester)

      Percival, Sir Ian

      Walker, B. (Perth)

      Peyton, Rt Hon John

      Wall, Sir Patrick

      Pink, R.Bonner

      Walier, Gary

      Pollock, Alexander

      Walters, Dennis

      Porter, Barry

      Ward, John

      Prentice, Rt Hon Reg

      Watson, John

      Price, SirDavid (Eastleigh)

      Wells, John (Maidstone)

      Proctor, K. Harvey

      Wheeler, John

      Raison, RtHonTimothy

      Whitney, Raymond

      Rees-Davies, W. R.

      Wickenden, Keith

      Renton, Tim

      Wiggin, Jerry

      Rhodes James, Robert

      Wilkinson, John

      RhysWilliams, SirBrandon

      Williams, D. (Montgomery)

      Ridley, HonNicholas

      Winterton, Nicholas

      Rifkind, Malcolm

      Wolfson, Mark

      Roberts, M. (Cardiff NW)

      Young, SirGeorge (Acton)

      Roberts, Wyn (Conway)

      Rossi, Hugh

      Tellers for the Noes:

      Rost, Peter

      Mr. Ian Lang and Mr. David Hunt.

      Royle, Sir Anthony

      Question accordingly negatived.
      Amendment proposed: No. 5, in page 13, line 30, leave out '£3,295' and insert '£3,735'.n —[Mr.Robert Sheldon]
      Question put, That the amendment be made:—
      The Committee divided: Ayes 189, Noes 266.

      Division No. 127]

      [7.40 pm

      AYES

      Adams, Allen

      Bidweil, Sydney

      Allaun, Frank

      Booth, RtHonAlbert

      Anderson, Donald

      Boothroyd, MissBetty

      Archer, Rt Hon Peter

      Bottomley, RtHonA. (M'b'ro)

      Ashley, Rt Hon Jack

      Bray, Dr Jeremy

      Ashton, Joe

      Brown, Hugh D. (Provan)

      Atkinson, N. (H'gey,)

      Brown, R. C. (N'castle W)

      Barnett, Guy (Greenwich)

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

      Barnett, Rt Hon Joel (H'wd)

      Buchan, Norman

      480

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

      Lamborn, Harry

      Campbell, Ian

      Lamond, James

      Campbell-Savours, Dale

      Leadbitter, Ted

      Canavan, Dennis

      Leighton, Ronald

      Cant, R. B.

      Lewis, Arthu r (N'ham NW)

      Carmichael, Neil

      Litherland, Robert

      Carter-Jones, Lewis

      Lofthouse, Geoffrey

      Clark, Dr David (S Shields)

      Lyon, Alexander (York)

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

      McCartney, Hugh

      Cohen, Stanley

      McDonald, DrOonagh

      Coleman, Donald

      McKay, Allen (Penistone)

      Concannon, Rt Hon J. D.

      McKelvey, William

      Conlan, Bernard

      MacKenzie, Rt Hon Gregor

      Cook, Robin F.

      McNamara, Kevin

      Cowans, Harry

      McTaggart, Robert

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

      McWilliam, John

      Craigen, J. M. (G'gow, M'hill)

      Marshall, DrEdmund (Goole)

      Crowther, Stan

      Martin, M (G'gowS 'burn)

      Cryer, Bob

      Mason, Rt Hon Roy

      Cunningham, G. (IslingtonS)

      Maxton, John

      Davidson, Arthur

      Maynard, MissJoan

      Davies, Rt Hon Denzil (L'lli)

      Meacher, Michaei

      Davis, Clinton (Hackney C)

      Mellish, Rt Hon Robert

      Davis, Terry (B 'ham, Stechf'd)

      Mlkardo, Ian

      Dean, Joseph (Leeds West)

      Miller, Dr M.S. (E Kilbride)

      Dewar, Donald

      Mitchell, Austin (Grimsby)

      Dixon, Donald

      Morris, Rt Hon J. (Aberavon)

      Dormand, Jack

      Morton, George

      Douglas, Dick

      Moyle, Rt Hon Roland

      Dubs, Alfred

      Mulley, Rt Hon Frederick

      Duffy, A. E. P.

      Newens, Stanley

      Dunnett, Jack

      Oakes, Rt Hon Gordon

      Dunwoody, Hon Mrs G.

      O'Neill, Martin

      Eadie, Alex

      Orme, Rt Hon Stanley

      Eastham, Ken

      Palmer, Arthur

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

      Park, George

      Ellis, R (NE D'bysh're)

      Parker, John

      English, Michael

      Parry, Robert

      Ennals, Rt Hon David

      Powell, Raymond (Ogmore)

      Evans, Ioan (Aberdare)

      Price, C. (Lewisham W)

      Evans, John (Newton)

      Race, Reg

      Field, Frank

      Radice, Giles

      Flannery, Martin

      Rees, Rt Hon M (Leeds S)

      Fletcher, Ted (Darlington)

      Richardson, Jo

      Foot, Rt Hon Michael

      Roberts, Allan (Bootle)

      Ford, Ben

      Roberts, Gwilym (Cannock)

      Forrester, John

      Robertson, George

      Foster, Derek

      Robinson, G. (Coventry NW)

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

      Rooker, J. W.

      Freeson, Rt Hon Reginald

      Ross, Ernest (Dundee West)

      Garrett, John (Norwich S)

      Rowlands, Ted

      Garrett, W. E. (Wallsend)

      Ryman, John

      Gilbert, RtHonDrJohn

      Sever, John

      Golding, John

      Sheerman, Barry

      Graham, Ted

      Sheldon, Rt Hon R.

      Hamilton, W. W. (C'tralFife)

      Shore, Rt Hon Peter

      Hardy, Peter

      Silkin, RtHonJ. (Deptford)

      Harrison, RtHonWalter

      Silkin, Rt Hon S. C. (Dulwich)

      Hart, Rt Hon Dame Judith

      Silverman, Julius

      Hattersley, Rt Hon Roy

      Skinner, Dennls

      Haynes, Frank

      Smith, Rt Hon J. (N Lanark)

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

      Snape, Peter

      HomeRobertson, John

      Soley, Clive

      Homewood, Willlam

      Spearing, Nigel

      Howell, Rt Hon D.

      Spriggs, Leslie

      Hoyle, Douglas

      Stewart, Rt Hon D. (W Isles)

      Huckfield, Les

      Stoddart, David

      Hughes, Mark (Durham)

      Stott, Roger

      Hughes, Robert (Aberdeen N)

      Strang, Gavin

      Hughes, Roy (Newport)

      Straw, Jack

      Janner, HonGreville

      Summerskill, HonDrShirley

      Jay, Rt Hon Douglas

      Thomas, Dafydd (Merioneth)

      John, Brynmor

      Tilley, John

      Johnson, Walter (Derby S)

      Tinn, James

      Jones, Rt Hon Alec (Rh'dda)

      Torney, Tom

      Jones, Barry (East Flint)

      Varley, Rt Hon Eric G.

      Kaufman, Rt Hon Gerald

      Wainwright, E. (Dearne V)

      Kerr, Russell

      Walker, Rt Hon H. (D'caster)

      Kilfedder, James A.

      Watkins, David

      Kilroy-Silk, Robert

      Weetch, Ken

      481

      Welsh, Michael

      Woodall, Alec

      White, J. (G'gow Pollok)

      Woolmer, Kenneth

      Whitehead, Phillip

      Wright, Sheila

      Wigley, Dafydd

      Willey, Rt Hon Frederick

      Tellers for the Ayes:

      Wilson, Gordon (DundeeE)

      Mr. Lawience Cunliffe and Mr. James Hamilton.

      Wilson, William (C'trySE)

      Winnick, David

      NOES

      Adley, Robert

      Fairbairn, Nicholas

      Aitken, Jonathan

      Fairgrieve, SirRussell

      Alexander, Richard

      Faith, MrsSheila

      Alison, RtHonMichael

      Farr, John

      Amery, Rt Hon Julian

      Finsberg, Geoffrey

      Ancram, Michael

      Fisher, Sir Nigel

      Aspinwall, Jack

      Fletcher-Cooke, SirCharles

      Atkins, Robert (PrestonN)

      Fookes, MissJanet

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

      Forman, Nigel

      Baker, Kenneth (St.M'bone)

      Fowler, Rt Hon Norman

      Baker, Nicholas (Dorset)

      Fox, Marcus

      Banks, Robert

      Fraser, Peter (SouthAngus)

      Beaumont-Dark, Anthony

      Fry, Peter

      Bendall, Vivian

      Gardiner, George (Reigate)

      Bennett, SirFrederic (T'bay)

      Gardner, Edward (S Fylde)

      Benyon, Thomas (A'don)

      Glyn, Dr Alan

      Benyon, W. (Buckingham)

      Goodlad, Alastair

      Berry, HonAnthony

      Gow, Ian

      Best, Keith

      Grant, Anthony (Harrow C)

      Bevan, DavidGilroy

      Gray, Hamish

      Biffen, Rt Hon John

      Greenway, Harry

      Blackbum, John

      Grieve, Percy

      Body, Richard

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

      Bonsor, SirNicholas

      Griffiths, Peter Portsm'th N)

      Bottomley, Peter (W'wich W)

      Grist, Ian

      Bowden, Andrew

      Grylls, Michael

      Boyson, Dr Rhodes

      Gummer, JohnSelwyn

      Braine, SirBernard

      Hamilton, HonA.

      Bright, Graham

      Hamilton, Michael (Salisbury)

      Brinton, Tim

      Hampson, DrKeith

      Brittan, Rt.Hon.Leon

      Haselhurst, Alan

      Brooke, Hon Peter

      Hastings, Stephen

      Brotherton, Michael

      Hawkins, Paul

      Brown, Michael (Brigg&Sc'n)

      Hawksley, Warren

      Browne, John (Winchester)

      Hayhoe, Barney

      Bryan, SirPaul

      Heath, RtHonEdward

      Buck, Antony

      Heddle, John

      Budgen, Nick

      Henderson, Barry

      Bulmer, Esmond

      Hicks, Robert

      Burden, SirFrederick

      Hill, James

      Butcher, John

      Hogg, HonDouglas (Gr'th'm)

      Cadbury, Jocelyn

      Holland, Philip (Carton)

      Carlisle, John (LutonWest)

      Hooson, Tom

      Carlisle, Kenneth (Lincoln)

      Hordern, Peter

      Chalker, Mrs. Lynda

      Howell, RtHonD. (G'ldf'd)

      Chapman, Sydney

      Howell, Ralph (Norfolk)

      Churchill, W.S.

      Hunt, David (Wirral)

      Clark, Sir W. (Croydon S)

      Hunl, John (Ravensbourne)

      Clarke, Kenneth (Rushcliffe)

      Jenkin, RtHonPatrick

      Cockeram, Eric

      Jessel, Toby

      Colvin, Michael

      JohnsonSmith, Geoffrey

      Cope, John

      Jopling, RtHonMichael

      Corrie, John

      Kaberry, SirDonald

      Costain, SirAlbert

      Kershaw, SirAnthony

      Cranborne, Viscount

      King, Rt Hon Tom

      Critchley, Julian

      Kitson, SirTimothy

      Crouch, David

      Knight, MrsJill

      Dean, Paul (North Somerset)

      Knox, David

      Dickens, Geoffrey

      Lamont, Norman

      Douglas-Hamilton, LordJ.

      Lang, Ian

      Dover, Denshore

      Langford-Holt, SirJohn

      du Cann, Rt Hon Edward

      Latham, Michael

      Dunn, Robert (Darfford)

      Lawrence, Ivan

      Durant, Tony

      Lawson, Rt Hon Nigel

      Dykes, Hugh

      LeMarchant, Spencer

      Eden, Rt Hon Sir John

      Lennox-Boyd, HonMark

      Edwards, Rt Hon N. (P'broke)

      Lester, Jim (Beeston)

      Eggar, Tim

      Lewis, Kenneth (Rutland)

      Elliott, SirWilliam

      Lloyd, Ian (Havant & W'loo)

      Eyre, Reginald

      Lloyd, Peter (Fareham)

      482

      Loveridge, John

      Roberts, M. (CardiffNW)

      Luce, Richard

      Roberts, Wyn (Conway)

      Lyell, Nicholas

      Rossi, Hugh

      McCrindle, Robert

      Rost, Peter

      Macfarlane, Neil

      Royle, SirAnthony

      MacGregor, John

      Sainsbury, Hon Timothy

      MacKay, John (Argyll)

      St. John-Stevas, Rt Hon N.

      Macmillan, Rt Hon M.

      Shaw, Giles (Pudsey)

      McNair-Wilson, M. (N'bury)

      Shaw, Michael (Scarborough)

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

      Shelton, William (Streatham)

      Madel, David

      Shepherd, Colin (Hereford)

      Major, John

      Shepherd, Richard

      Marland, Paul

      Shersby, Michael

      Marlow, Antony

      Silvester, Fred

      Marten, Rt Hon Neil

      Sims, Roger

      Mates, Michael

      Skeet, T. H. H.

      Mather, Carol

      Smith, Dudley

      Maude, Rt Hon Sir Angus

      Speed, Keith

      Mawby, Ray

      Spence, John

      Maxwell-Hyslop, Robin

      Spicer, Michael (S Worcs)

      Mayhew, Patrick

      Sproat, Iain

      Mellor, David

      Squire, Robin

      Meyer, Sir Anthony

      Stainton, Keith

      Miller, Hal (B'grove)

      Stanbrook, Ivor

      Mills, Iain (Meriden)

      Stanley, John

      Mills, Peter (West Devon)

      Steen, Anthony

      Miscampbell, Norman

      Stevens, Martin

      Mitchell, David (Basingstoke)

      Stewart, Ian (Hitchin)

      Monro, SirHector

      Stokes, John

      Montgomery, Fergus

      Stradling Thomas, J.

      Moore, John

      Taylor, Teddy (S'end E)

      Morris, M. (N'hampton S)

      Tebbit, Rt Hon Norman

      Morrison, HonC. (Devizes)

      Temple-Morris, Peter

      Morrison, Hon P. (Chester)

      Thomas, Rt Hon Peter

      Mudd, David

      Thompson, Donald

      Murphy, Christopher

      Thorne, Neil (IlfordSouth)

      Myles, David

      Thornton, Malcolm

      Neale, Gerrard

      Townend, John (Bridlington)

      Needham, Richard

      Trippier, David

      Nelson, Anthony

      van Straubenzee, SirW.

      Neubert, Michael

      Vaughan, DrGerard

      Newton, Tony

      Viggers, Peter

      Onslow, Cranley

      Waddington, David

      Oppenheim, Rt Hon Mrs S.

      Wakeham, John

      Page, Richard (SW Herts)

      Waldegrave, HonWilliam

      Parris, Matthew

      Walker, Rt HonP. (W'cester)

      Patten, Christopher (Bath)

      Walker, B. (Perth)

      Patten, John (Oxford)

      Wall, SirPatrick

      Pattie, Geoffrey

      Waller, Gary

      Pawsey, James

      Walters, Dennis

      Percival, Sir Ian

      Ward, John

      Peyton, Rt Hon John

      Watson, John

      Pink, R.Bonner

      Wheeler, John

      Pollock, Alexander

      Whitney, Raymond

      Porter, Barry

      Wickenden, Keith

      Prentice, Rt Hon Reg

      Wiggin, Jerry

      Price, SirDavid (Eastleigh)

      Wilkinson, John

      Proctor, K. Harvey

      Williams, D. (Montgomery)

      Raison, Rt Hon Timothy

      Winterton, Nicholas

      Rees-Davies, W. R.

      Wolfson, Mark

      Renton, Tim

      Young, SirGeorge (Acton)

      Rhodes James, Robert

      Rhys Williams, SirBrandon

      Tellers for the Noes:

      Ridley, HonNicholas

      Mr. Robert Boscawen and Mr. Tristan Garel-Jones.

      Rifkind, Malcolm

      Question accordingly negatived.
      Amendment proposed: No. 6, in page 13, line 30, leave out '£3,295' and insert '£3,387'.—[Mr. Beith.]
      Question put, That the amendment be made:—
      The Committee divided: Ayes 24, Noes 261.

      Division No. 128]

      [7.51 pm

      AYES

      Alton, David

      Freud, Clement

      Brocklebank-Fowler, C.

      Grimond, Rt Hon J.

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

      Horam, John

      Cunningham, G. (IslingtonS)

      Howells, Geraint

      Dunn, James A.

      Jenkins, RtHonRoy (Hillhead)

      483

      Kilfedder, JamesA.

      Wainwright, R. (Colne V)

      McNally, Thomas

      Wellbeloved, James

      Mitchell, R. C. (Soton Itchen)

      Wigley, Dafydd

      Penhaligon, David

      Wilson, Gordon (Dundee E)

      Roper, John

      Wrigglesworth, Ian

      Sandelson, Neville

      Steel, Rt Hon David

      Tellers for the Ayes:

      Stewart, Rt Hon D. (W lsles)

      Mr. A. J. Beith and Mr. Russell Johnston.

      Thomas, Dafydd (Merioneth)

      NOES

      Aitken, Jonathan

      Eyre, Reginald

      Alexander, Richard

      Fairbairn, Nicholas

      Alison, Rt Hon Michael

      Fairgrieve, SirRussell

      Amery, Rt Hon Julian

      Faith, MrsSheila

      Ancram, Michael

      Farr, John

      Aspinwall, Jack

      Finsberg, Geoffrey

      Atkins, Robert (Preston N)

      Fisher, SirNigel

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

      Fletcher-Cooke, SirCharles

      Baker, Kenneth (St.M'bone)

      Fookes, MissJanet

      Baker, Nicholas (N Dorset)

      Forman, Nigel

      Banks, Robert

      Fowler, Rt Hon Norman

      Beaumont-Dark, Anthony

      Fox, Marcus

      Bendall, Vivian

      Fraser, Peter (SouthAngus)

      Bennett, SirFrederic (T'bay)

      Fry, Peter

      Benyon, Thomas (A'don)

      Gardiner, George (Reigate)

      Benyon, W. (Buckingham)

      Gardner, Edward (S Fylde)

      Berry, HonAnthony

      Glyn, Dr Alan

      Best, Keith

      Goodlad, Alastair

      Bevan, David Gilroy

      Gow, Ian

      Biffen, Rt Hon John

      Grant, Anthony (Harrow C)

      Blackburn, John

      Gray, Hamish

      Body, Richard

      Greenway, Harry

      Bonsor, SirNicholas

      Grieve, Percy

      Boscawen, HonRobert

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

      Bottomley, Peter (W'wich W)

      Griffiths, Peter Portsm'thN)

      Bowden, Andrew

      Grist, Ian

      Boyson, DrRhodes

      Grylls, Michael

      Braine, SirBernard

      Gummer, JohnSelwyn

      Bright, Graham

      Hamllton, Hon A.

      Brinton, Tim

      Hamilton, Michael (Salisbury)

      Brittan, Rt. Hon. Leon

      Hampson, DrKeith

      Brooke, Hon Peter

      Haselhurst, Alan

      Brotherton, Michael

      Hastings, Stephen

      Brown, Michael (Brigg&Sc'n)

      Hawkins, Paul

      Browne, John (Winchester)

      Hawksley, Warren

      Bryan, SirPaul

      Hayhoe, Barney

      Buck, Antony

      Heath, Rt Hon Edward

      Budgen, Nick

      Heddle, John

      Bulmer, Esmond

      Henderson, Barry

      Burden, SirFrederick

      Hicks, Robert

      Butcher, John

      Hill, James

      Cadbury, Jocelyn

      Hogg, Hon Douglas (Gr'th'm)

      Carlisle, John (LutonWest)

      Holland, Philip (Carlton)

      Carlisle, Kenneth (Lincoln)

      Hooson, Tom

      Chalker, Mrs.Lynda

      Hordern, Peter

      Chapman, Sydney

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

      Churchill, W.S.

      Howell, Ralph (NNorfolk)

      Clark, Sir W. (Croydon S)

      Hunt, John (Ravensbourne)

      Clarke, Kenneth (Rushcliffe)

      Irving, Charles (Cheltenham)

      Cockeram, Eric

      Jenkin, RtHonPatrick

      Colvin, Michael

      Jessel, Toby

      Cope, John

      JohnsonSmith, Geoffrey

      Corrie, John

      Jopling, RtHonMichael

      Costain, SirAlbert

      Kaberry, SirDonald

      Cranborne, Viscount

      Kershaw, SirAnthony

      Critchley, Julian

      King, Rt Hon Tom

      Crouch, David

      Kitson, SirTimothy

      Dean, Paul (NorthSomerset)

      Knight, MrsJill

      Dickens, Geoffrey

      Knox, David

      Douglas-Hamilton, LordJ.

      Lamont, Norman

      Dover, Denshore

      Lang, Ian

      du Cann, Rt Hon Edward

      Langford-Holt, SirJohn

      Dunn, Robert (Dartford)

      Latham, Michael

      Durant, Tony

      Lawrence, Ivan

      Dykes, Hugh

      Lawson, Rt Hon Nigel

      Eden, Rt Hon Sir John

      LeMarchant, Spencer

      Edwards, Rt Hon N. (P'broke)

      Lennox-Boyd, HonMark

      Eggar, Tim

      Lester, Jim (Beeston)

      Elliott, SirWilliam

      Lewis, Kenneth (Rutland)

      484

      Lloyd, Ian (Havant & W'loo)

      Ridley, Hon Nicholas

      Lloyd, Peter (Fareham)

      Rifkind, Malcolm

      Loveridge, John

      Roberts, M. (Cardiff NW)

      Luce, Richard

      Roberts, Wyn (Conway)

      Lyell, Nicholas

      Rossi, Hugh

      McCrindle, Robert

      Rost, Peter

      Macfarlane, Neil

      Royle, Sir Anthony

      MacGregor John

      Sainsbury, Hon Timothy

      MacKay, John (Argyll)

      Shaw, Giles (Pudsey)

      Macmillan, Rt Hon M.

      Shaw, Michael (Scarborough)

      McNair-Wilson, M. (N'bury)

      Shelton, William (Streatham)

      McNair-Wilson, P. (NewF'st)

      Shepherd, Colin (Hereford)

      Madel, David

      Shepherd, Richard

      Major, John

      Shersby, Michael

      Marland, Paul

      Silvester, Fred

      Marlow, Antony

      Sims, Roger

      Marten, Rt Hon Neil

      Smith, Dudley

      Mates, Michael

      Speed, Keith

      Mather, Carol

      Spence, John

      Maude, Rt Hon SirAngus

      Spicer, Michael (S Worcs)

      Mawby, Ray

      Sproat, Iain

      Maxwell-Hyslop, Robin

      Squire, Robin

      Mayhew, Patrick

      Stainton, Keith

      Mellor, David

      Stanbrook, Ivor

      Meyer, Sir Anthony

      Stanley, John

      Miller, Hal (B'grove)

      Steen, Anthony

      Mills, Iain (Meriden)

      Stevens, Martin

      Mills, Peter (West Devon)

      Stewart, Ian (Hitchin)

      Miscampbell, Norman

      Stokes, John

      Mitchell, David (Basingstoke)

      StradlingThomas, J.

      Monro, SirHector

      Taylor, Teddy (S'end E)

      Montgomery, Fergus

      Temple-Morris, Peter

      Moore, John

      Thomas, Rt Hon Peter

      Morris, M. (N'hamptonS)

      Thompson, Donald

      Morrison, Hon C. (Devizes)

      Thorne, Neil (IlfordSouth)

      Morrison, Hon P. (Chester)

      Thornton, Malcolm

      Mudd, David

      Townend, John (Bridlington)

      Murphy, Christopher

      Trippier, David

      Myles, David

      van Straubenzee, Sir W

      Neale, Gerrard

      Vaughan, DrGerard

      Needham, Richard

      Viggers, Peter

      Nelson, Anthony

      Waddington, David

      Neubert, Michael

      Wakeham, John

      Newton, Tony

      Waldegrave, HonWilliam

      Onslow, Cranley

      Walker, B. (Perth)

      Oppenhelm, Rt Hon Mrs S.

      Wall, Sir Patrick

      Page, Richard (SW Herts)

      Waller, Gary

      Parris, Matthew

      Walters, Dennis

      Patten, Christopher (Bath)

      Ward, John

      Patten, John (Oxford)

      Watson, John

      Pattie, Geoffrey

      Wheeler, John

      Pawsey, James

      Whitney, Raymond

      Percival, Sir Ian

      Wickenden, Keith

      Peyton, Rt Hon John

      Wiggin, Jerry

      Pink, R. Bonner

      Wilkinson, John

      Pollock, Alexander

      Williams, D. (Montgomery)

      Porter, Barry

      Winterton, Nicholas

      Prentlce, Rt Hon Reg

      Wolfson, Mark

      Price, Sir David (Eastleigh)

      Young, SirGeorge (Acton)

      Proctor, K. Harvey

      Raison, RtHonTimothy

      Tellers for the Noes:

      Rees-Davies, W. R.

      Mr. David Hunt and Mr. Tristan Garel-Jones.

      Renton, Tim

      Rhys Williams, Sir Brandon

      Question accordingly negatived.
      8 pm
      Mr. Richard Wainwright: I beg to move amendment No. 11, in page 13, line 33, at end insert—
      '(3) In subsection (1A) of section 8 of the Taxes Act (personal reliefs: age allowance) for the words "of the age of sixty-five or upwards" wherever they appear there shall be substituted the words "of pensionable age"; and at the end of that subsection there shall be added the words "and the expression 'pensionable age' shall bear the same meaning as in Schedule 20 to the Social Security Act 1975".
      (4) At the end of section 15A of the Taxes Act (personal reliefs: widows' bereavement allowance) the following words

      485
      shall be added "and, to the extent that such deduction is not utilised by reason of an insufficiency of her total income, any amount so utilised shall be similarly available for the following year".
      This amendment is not very expensive to the Revenue, but it is related to two aspects of the tax structure that I and my hon. Friends regard as unfair. As it is not expensive, it gives the Chief Secretary, his fellow Treasury Ministers and the Government a small opportunity to redeem their reputation.
      In the first place, as they cannot keep their promise to reduce the overall tax burden, surely they will grasp the opportunity to make that burden fall more fairly by removing from the deadweight of taxation some of the most jagged nails and spears that hurt the most vulnerable people in our community.
      As the Chief Secretary now appears on television at frequent intervals and tells the nation that the negligence of the Foreign Office may result in higher taxes, surely he will welcome an opportunity to include a brief tailpiece saying that the Government are showing evidence of doing their best to ensure that those higher taxes will not in future be applied quite as unfairly as taxes have been in the past.
      The amendment is two-pronged, and each part applies to clause 22 which deals with thresholds. The proposed subsection (3) deals with the unfairness that was commented upon adversely on both sides of the House during our Finance Bill and Budget debates last year, particularly by the hon. Member for Birmingham, Perry Barr (Mr. Rooker), who produced some appalling examples of this hardship, and by Liberal Members. The criticism is that, so long as we have these disgracefully low thresholds for liability to income tax, women who at the age of 60 draw a pension under the Social Security Act 1975 will be at risk until they reach 65, the earliest age at which income tax age relief applies.
      In no way does the amendment, either in its wording or purpose, attempt to sanctify a particular age for women to start drawing a retirement pension. It carefully avoids using any stated age, and simply requires that the "pensionable age", as defined by law, shall become the point at which age relief for income tax shall apply to all taxpayers. In no way does the amendment judge the age at which women should become pensionable.
      Rightly or wrongly, under the law as it now stands, that age is 60. If the amendment were to be applied now, women taxpayers would be eligible for income tax age relief at 60. As a result—this is the whole thrust of the amendment—women on a bare State pension plus a small graduated pension, or women who inherited a modest pension from their husbands' employers, would escape tax.
      Among other things, that would end a particularly dangerous trap that I should like to describe. During the proper hubbub last year about the number of women pensioners between 60 and 65 receiving income tax demands merely because of their pensions, the Government replied that that was not a great hardship to many people because the Inland Revenue did not bother to collect tax of less than £30. We should be thankful for that highly irregular mercy.
      However—and this is scandalous—if the amount due from the pensioner is £31, the whole of that sum is immediately payable. There is no question of the £30
      486
      being a threshold and the pensioner paying only the amount over £30. Not a bit of it. Immediately the liability exceeds £30, the lot becomes payable. That happens to a considerable number of women pensioners between 60 and 65.
      If clause 22 goes through unamended, income tax relief for a single person will be £1,565. In November, these women will receive a pension of £1,708. At once, there is the obvious gap between the pension and the appallingly low threshold. In addition, everything in our tax system is based on the single, highly-insulated fiscal year. Therefore, one must have regard to the figure in the fiscal year.
      If the Government's pension intentions are honoured, as I am sure they will be in dark November, the pension for such a person in the fiscal year 1982–83 will be £1,609. That by itself marginally exceeds the proposed single person's threshold. As I have already said, many of these people also receive a graduated pension from the State, for which they have paid in the past, or a pension, usually small, relating to their own past employment or their husbands' employment. Therefore, it will require only £56 of graduated or occupational pension to bring such a woman into tax until she reaches the age of 65.
      That is wholly unacceptable. It is penalising people who are receiving a benefit—benefits that Parliament has decided people require and should be paid—and who do not have any other income in addition. I re-emphasise that I am talking not about women between 60 and 65 who have other substantial means—that is a different matter—but about people who are trying to live on the benefit that Parliament has considered to be appropriate for them.
      The revenue loss involved would not be substantial, but the esteem in which the Government are held would rise considerably. Every hon. Member has his own surgery cases on this matter. The people who come to my surgery are appalled at the folly and administrative costs of putting a pension into someone's handbag and then taking out the tax.
      I have been asked by thrifty Yorkshire women how much it costs the State, therefore the taxpayer, to go through that ridiculous rigmarole. I have not yet been able to obtain an estimate from the Inland Revenue, but the figure must be substantial. There are misunderstandings in some cases, because often the Revenue puts the whole tax burden on total income on the PAYE code for one sort of pension and people become confused because they think that they are being taxed in error.
      It is the job of the Government to draft the amendment in proper form. That is one of the few jobs that they can perform with total satisfaction—or they should.
      The second heading of my amendment is different, but it relates also to women. I refer to the proposed subsection (4). It is not a substantial matter, but it seems to cry out for relief. The amendment tries to remedy what I have always regarded as an unfortunate, pedantic and legalistic aspect of our tax structure.
      Almost everything in taxation of the individual is confined to the one sacred tax year. If an incident occurs to someone immediately after 5 April, he will find that his tax circumstances are different from what they would have been if the incident had happened on 4 April. That is a feature of our tax structure that I regard as outmoded. I hope that in this instance we shall mitigate it.

      487
      In his Budget Statement in March 1980 the Chancellor of the Exchequer made the following unexceptionable and welcome remarks:
      "I want also to do something more for widows in the difficult time immediately following bereavement. I therefore propose to increase the present single allowance that widows receive for the tax year in which they are bereaved. The addition for that year will, at its maximum, bring the single allowance for widows up to the level of the married allowance."—[Official Report, 26 March 1980; Vol. 981, c. 1477.]
      As we said in Committee in 1980, that was a civilised thing to do. However, even then we had to press the Government to amend and improve that proposal, which they did. The amount of the allowance that most widows, unless they have substanial means, can use depends on the sheer accident of the month in which they are bereaved. For example, the amount of allowance that a widow is able to use if she is bereaved in the first month of the tax year, if her income is appropriate, is £880. If she is bereaved in the last month of the tax year, there will be only £73 of the allowance available. The Committee will appreciate that that is not giving full expression to the Chancellor of the Exchequer's worthy purpose.
      The amendment simply proposes that the allowance, if necessary, should run to a second year—not for ever. People in equal circumstances should be treated equally by allowing a carry-over of the allowance to the second year if the bereavement takes place in the latter part of the first tax year.
      Those are the two parts of the amendment. I hope that both parts commend themselves to the Committee, and particularly to the Government.
      Mr. Cook: I do not know whether the Liberal Party's procedure has been infected by its new alliance with defectors from the Labour Party, but it appears that the procedure for producing amendments has suffered from the process, well known to the Labour movement, of the production of composites through a compositing meeting. The hon. Member for Colne Valley (Mr. Wainwright) has produced what can only be described as a composite amendment. There are two separate issues rolled into one. I listened with interest to what he said about the widows' bereavement allowance. He has identified a genuine problem on which the official Opposition will reflect.
      8.15 pm
      However, we are not immediately enamoured of the principle of carrying a personal allowance forward from one financial year to another. There might be diffiulties with the precedent that would be created. However, the hon. Gentleman has touched on a genuine problem. We shall take to heart what he has said and consider what can be done. We look forward with interest to hearing what the Government propose to do with the hon. Gentleman's amendment.
      The other matter that the hon. Gentleman raised is also a genuine and real issue that probably affects more people more intimately than the first matter to which I referred. As the hon. Gentleman said, the position of single women pensioners between 60 and 65 exercised the minds of the Committee during the Finance Bill 1981. I join with the hon. Gentleman in paying tribute to my hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) because of the persistence with which he pursued the issue.
      The position of women in that age group is an outrage. Over the past year a basic pension was sufficient to carry them over their personal tax threshold. They avoided tax
      488
      liability only because the amount by which they exceeded the threshold was within the administrative tolerance. However, that was by so narrow a margin that it required an additional income of only 33p a week to carry them over that administrative tolerance. In some cases a graduated pension payment would be sufficient to carry them over that small additional sum. That meant that for the first time in our history since the introduction of the State pension some pensioners found that they were liable to tax on nothing but the State pension.
      I thoroughly endorse the hon. Gentleman's point. It is probably the most acute aspect of the difficulty. At the point at which those people enter tax liability, the administrative tolerance ceases to be a blessing and becomes a curse. At that point they are liable to tax not simply on the amount by which they have crossed the threshold into tax liability, but on the £100 that previously was covered by the administrative tolerance.
      I should like to share with the Committee the case of one of my constituents. I am not seeking to make a constituency point, because there are similar constituents in the constituency of every hon. Member. My constituent had fallen foul of that aspect of the Finance Bill 1981. She received a graduated addition to her pension that carried her up to, but not over, the administrative tolerance. In the preceding year she had received notice of a roof repair that was required on her house, which in Scotland can be legally enforced by the local authority.
      This is a tribute to the care with which that lady shepherded her money, given how little her income was. Over that year she had succeeded in saving £200 at the bank. She therefore became liable—I can only describe it as liable rather than entitled—to interest on her bank deposit of £20. That £20 of bank interest carried her over the administrative tolerance threshold and triggered off a tax liability not just for that £20 but for the full £120 by which she exceeded her personal tax threshold. As a result of the income of £20 of bank interest, she received a tax demand for £40—30 per cent. of £140. She was paying tax on that £20 at a marginal rate of 200 per cent.
      I wrote to the Chancellor of the Exchequer to draw his attention to this case and to the extent to which it highlighted a danger of which several hon. Members, including myself and the hon. Member for Colne Valley, had warned during the passage of the 1981 Finance Bill. I received a reply from the noble Lord Cockfield, who has since been translated to higher office, in which he had the impertinence to suggest that my constituent should be indebted to the Government because they had cut the rate of tax she paid from 33 per cent. to 30 per cent.
      To suggest that is to miss the point. Before the 1981 Finance Bill, my constituent did not pay tax at all Moreover, if she had been liable for tax, she would have paid it at the rate of 25 per cent., instead of the standard rate of 33 per cent. Indeed, as a result of what the Government did, she was paying tax at a higher rate than she otherwise would have done. The final lunacy is that I could advise my constituent—if she had been willing to do so, but in the circumstances she was not—to go to the DHSS and obtain a supplementary pension which would cover the extent to which she was liable for tax.
      I come to the case of Miss D, who was mentioned by both myself and my hon. Friend the Member for Perry Barr, when we considered the matter on Report in 1981. As hon. Members who were present on that occasion may recollect, Miss D, was a client—if that is the right

      489
      word—of the social services department at Harlow new town. The case was brought to my attention and to the attention of my hon. Friend the Member for Perry Barr because the lady found that she was simultaneously paying £4·06 in tax and drawing £9·06 in supplementary pension. She was a woman aged 60 to 65, retired and drawing a State pension. The £9 that she drew in supplementary pension was calculated to reflect her tax liability.
      The final touch of farce has occurred since we debated the matter on Report in 1981. On appeal, Miss D was successful in persuading the supplementary benefit appeal tribunal to backdate her entitlement to supplementary pension to cover her tax liability to the start of the 1981–82 tax year, on the ground that it was so unlikely that she would find herself liable to tax in that year that she could not have reasonably anticipated it at the start of the tax year.
      That situation is an offence to reason. There is no need for us to become morally indignant or to describe it as a social outrage. It is irrational. It is preposterous that the House should lay down a level which represents a minimum income standard, and then find that there are people with less than that income paying tax. Yet that is precisely what happens, particularly with the 60 to 65 age group living on State pension.
      To a degree, the problem is reduced this year because the tax threshold has been increased by 4 per cent. more than the State pension. Nevertheless, the problem remains, as the hon. Member for Colne Valley made clear. Women in this position still find that they have a State pension which exceeds the single person's allowance for 1982–83. Again, they are saved from being liable to tax on that State pension only by the operation of the administrative tolerance. This year, they require an additional income of £1·25 a week to become liable to payment of tax. If they receive such an income, it will then trigger a tax liability of 58p per week, or a marginal rate of tax of 46 per cent.
      We are talking about a group of people whose income hovers around £30 a week. It is one of the poorest sections of the community, if the term "poorest" is to have any meaning at all. The situation is an outrage. It is an offence to reason that this group should be subjected to tax liability. It is particularly outrageous when we reflect that in this Finance Bill £400 million has been found to uprate the higher thresholds for the higher rate bands, which apply to people who have much less hardship in meeting their tax bill than the people whom we are considering in the amendment.
      The Government have created a new defect in the British tax structure. That in itself is something of an achievement. As they have devised this anomaly, so they have a duty to resolve it. Because of the difficulty involved in the other part of the hon. Gentleman's amendment, it is not the appropriate vehicle for remedying it, but I warn the Chief Secretary that if, between now and Report, no remedy is put forward for the category of women in this position, we on the official Opposition Front Bench will press the matter strongly and divide on it on Report.
      Mr. Brittan: If I follow the hon. Member for Edinburgh, Central (Mr. Cook) in this respect, it is to deal in reverse order with the two limbs of the amendment of the hon. Member for Colne Valley (Mr. Wainwright).
      490
      The cost of allowing the widow's bereavement allowance to be carried forward to the year after bereavement in the way that the hon. Member for Colne Valley proposes would be £15 million in a full year. The hon. Gentleman was good enough to say that it was this Government who introduced this allowance in 1980. It was aimed at helping widows in the difficult period immediately following breavement, when they have to make financial as well as personal adjustments to a difficult situation. It was well received and, I think, has been most welcome.
      Although I understand the reason why the hon. Member for Colne Valley has put forward the amendment, I cannot commend it to the Committee, because, as the hon. Member for Edinburgh, Central said, it would be a radical departure from our tax situation. I am not suggesting that radical departures are never appropriate—they often are—but the amendment would be a strange vehicle by which to introduce a departure of this kind.
      Our objection, leaving aside the question whether this is the vehicle to make a fundamental change of this kind, is that it would introduce considerable complexity, and therefore administrative cost, into the handling of these affairs. The Revenue would need extra staff. It would often be some time into the tax year before it could be established how much of the allowance was available to be carried forward, and if the amount had been over-estimated the widow would be faced with an increase in her tax bill part of the way through the year.
      Moreover, in equity, the argument is not quite as straightforward as it might seem. The people most likely to have an unused part of the allowance are those whose husbands died towards the end of the tax year, but in the first part of the year, when the husband was alive, they are more likely to have been in a position to get the full benefit of the married man's allowance against the combined incomes of husband and wife, so that counter-balances it is some cases. I am not saying that there are not cases when that does not happen, but the situation is not quite as clear-cut as the hon. Gentleman would have us believe. The administrative complexity of making the change would be considerable, and there is a cost. For those reasons, I cannot commend that limb of the amendment to the Committee.
      On the first limb of the amendment, the Committee will be grateful to the hon. Members for Colne Valley and for Edinburgh, Central for raising once again the question of widows and single women aged 60 to 64. As the hon. Member for Edinburgh, Central rightly said, their position is substantially eased by the Budget proposals.
      In 1982–83, women with basic pension alone and no other income will not have to pay tax because of the £100 assessing tolerance. Women with earnings-related additions to their State pension will not have to pay tax unless those additions are more than £64 a year, which is well above the average amount of such additions to State pensions. That is a considerable improvement on last year. About half of the widows and single women in that age group will not pay tax at all. The number paying tax will be about 50,000 fewer than in 1981–82, even after taking account of the pensions increase in November 1982.
      There has been a substantial improvement in the financial position of women this year simply because of the increase in the allowance. That is the right approach to the problem. Of course it would be nice to go further, but we have not been able to do so. It would be a mistake

      491
      to try to solve the problem by giving the age allowance to women aged 60. The cost of doing that would be quite substantial—about £85 million in a full year. That would not be the right approach in principle to the problem, because the age allowance is, as its name suggests, an allowance for old age—not for retirement as such.
      8.30 pm
      If the proposals of the hon. Member for Colne Valley were enacted, they would introduce a number of anomalies. Many men stop working at 60 and many women keep on working after that age. The amendment would give age allowance at 60 to women who were still at work as well as to those who had retired, but deny it it men of the same age even if they had stopped work. Widows aged 50 or more receive the same pension as single women and widows over 60, and one of the results of the amendment would be to give the relief to a woman over 60 who was still working and had no pension, but deny it to a widow under 60 even though she is receiving a pension and is not working.
      There are other anomalies with regard to married couples. The mischief, to the extent that it exists, and the extent to which it has not been met by the increase in allowances, is more to do with the fact that there is no common pension age for men and women. The White Paper on the elderly opened up for public discussion the possibility of men and women receiving a State pension at the same age. The Select Committee on Social Services is considering that.
      The approach of the hon. Member for Colne Valley is not right. The mischief, to the extent that it exists, has been substantially ameliorated by the Budget. The costs of going further, whether in the direction and by the means that the hon. Gentleman suggests, or in any other way, would be substantial. I cannot, therefore, commend the amendment to the House.
      Mr. Richard Wainwright: The Chief Secretary's reply to both heads of the Liberal amendment is disappointing. I should not have been at all miffed if he had pointed out some of the defects of the details of our proposal and showed how a superior measure could remedy the injustices that were well outlined by the hon. Member for Edinburgh, Central (Mr. Cook) and, I hope, myself. However, the Chief Secretary has done nothing of the kind.
      He has belaboured the Committee, not for the first time, about the cost to the Revenue. The cost of each of the branches of the amendment is small compared with what the Government are prepared to spend on their friends. It is intolerable that women, who are vulnerable in many financial respects, should be deprived of reasonably fair treatment simply because the costs that are apparently not taken into account with regard to concessions to large taxpayers are regarded as insurmountable and mountainous when proposals of this kind are brought forward. There was an atmosphere about the Chief Secretary's reply—it was partly true also of the speech of the hon. Member for Edinburgh, Central—of the good old political firms of Box and Cox, of Punch and Judy, of Mr. See and Mr. Saw, of Tweedledum and Tweedledee. Both are wedded to keeping our dear old rickety tax machine in virtually its present state. The unfair Procrustean bed of the single fiscal year whereby all hope dies with regard to allowances on 5 April each year must apparently be maintained as part of the torture, the cold water treatment
      492
      of the British people, that has made us the great nation that we are. It is nonsense that in 1982, in the age of the computer, we should be imprisoned by the concept of the single fiscal year. I was disappointed that both Front Benches seemed to regard the single fiscal year as sacred, so the bereaved would just have to lump it. That is just not good enough.
      Mr. Cook: The hon. Gentleman must not misrepresent our position. I entirely accepted that there was a problem with the bereavement allowance which would require solution. I urge the hon. Gentleman that he should not lightly concede the principle of allowances not being carried forward from one year to the other. If he is in any doubt as to the dangers that lie ahead on that path, he should reflect on what has happened with corporation tax, which has produced a yearly tax overhang which accrues faster than the total revenue from the tax.
      Mr. Wainwright: I entirely part company with the hon. Gentleman on that. When I practised as an accountant, I could have laid my hand on my heart and said that, if there had been no carry-over of corporation tax from one year to the next, three quarters of the well-run businesses of this country would have been in the bankruptcy court. It is an extremely civilised principle, and it is notable that all Governments have been forced to admit it for the business sector. Otherwise there would be no corporate taxpayers left to milk. But the poor old individual, especially the woman, has to lump it Carry-over can be admitted for ICI, GKN, GEC and all limited companies, but not for the individual—and the alliance stands for the individual.
      Mr. Straw: Which one?
      Mr. Wainwright: The rainbow alliance, as I said before—SDP and Liberal.
      I was staggered at the Chief Secretary's extraordinarily callous defence of the present position when he said that ladies who were bereaved in the latter part of the tax year had enjoyed the benefit of the married allowance in the earlier part of the year. But the husband was not dead then. He had to be fed and looked after, his room had to be heated, and so on. The married allowance was needed for that. We believe that every widow who pays tax is entitled to 12 months of married allowance after bereavement. That is the only way to give proper effect to the admirable purpose outlined by the Chancellor in March 1980, and nothing that has been said today has convinced me or, I think, my hon. Friends otherwise.
      The second and more substantial grievance, in which more people are involved, is that tax is simply levied on the amount to which the House decides that retired people are entitled in State benefit. In other words, the House contradicts on a Thursday what it has solemnly voted for on, say, a Monday. That brings the House into disrepute, and it makes the law and especially the Treasury look an ass in the eyes of many people.
      In gathering ammunition on this, I have been assisted by one of the most reputable charities for the elderly, Help the Aged, which drew my particular attention to the added insult of the present tax position. As I hinted in my earlier speech, when women between the ages of 60 and 65 are taxed on a pension plus a graduated supplement or occupational pension, the tax is usually collected by applying an exorbitant rate of PAYE to the additional pension.

      493
      Help the Aged cites the case of one client whose papers it has carefully examined who, as a result of this, was given an F tax code on her occupational pension last year so that this iniquitous amount could be levied. The result was a tax rate of no less than 40 per cent. on her occupational pension. Not only had she to pay the money, but she had all the frustration of suddenly finding that, as an elderly and retired person, she was given a PAYE code resulting in tax at 40 per cent. Help the Aged assures me that a considerable number of people have very properly asked it why they have received such hefty PAYE codes.
      One other part of the Chief Secretary's thin defence calls for comment. He said that we were trying to apply age relief to people who were simply retired. I must tell him that in the part of the country from which I come—the county of Yorkshire that he used to have a share in representing—this is still known as the old age pension. I am convinced that for the rest of my lifetime at any rate the vast majority of people in and around Collie Valley will rightly describe it by its proper Anglo-Saxon name and not apply the Latinised vague and meaningless term, retirement pension.
      I had hoped to see some glint of civilisation in the Government's eyes and some sign that they would act to make the tax system in this respect less of a nonsense. Instead, we have had an implacable attitude from the Chief Secretary. I have no option but to recommend to my right hon and hon. Friends that we press the amendment to a Division.
      Question put, That the amendment be made:—
      The Committee divided: Ayes 19, Noes 236.

      Division No. 129]

      [8.40 pm

      AYES

      Alton, David

      Steel, Rt Hon David

      Brocklebank-Fowler, C.

      Stewart, Rt Hon D. (W Isles)

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

      Thomas, Dafydd (Merioneth)

      Horam, John

      Wainwright, R. (Colne V)

      Howells, Geraint

      Wellbeloved, James

      Johnston, Russell (Inverness)

      Wigley, Dafydd

      Kilfedder, JamesA.

      Wilson, Gordon (DundeeE)

      McNally, Thomas

      Mitchell, R. C. (Soton Itchen)

      Tellers for the Ayes:

      Penhaligon, David

      Mr. A. J. Beith and Mr. Clement Freud

      Sandelson, Neville

      Skinner, Dennis

      NOES

      Alexander, Richard

      Braine, Sir Bernard

      Alison, Rt Hon Michael

      Bright, Graham

      Amery, Rt Hon Julian

      Brinton, Tim

      Ancram, Michael

      Brittan, Rt. Hon. Leon

      Aspinwall Jack

      Brotherton, Michael

      Atkins, Robert (Preston N)

      Browne, John (Winchester)

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

      Buck, Antony

      Baker, Kenneth (St. M'bone,)

      Budgen, Nick

      Baker, Nicholas (N Dorset)

      Bulmer, Esmond

      Banks, Robert

      Burden, Sir Frederick

      Beaumont-Dark, Anthony

      Butcher, John

      Bendall, Vivian

      Cadbury, Jocelyn

      Bennett, Sir Frederic (T'bay)

      Carlisle, John (Luton West)

      Benyon, Thomas (A'don)

      Carlisle, Kenneth (Lincoln)

      Benyon, W. (Buckingham)

      Chalker, Mrs. Lynda

      Best, Keith

      Chapman, Sydney

      Bevan, David Gilroy

      Churchill, W.S.

      Biffen, Rt Hon John

      Clark, SirW. (Croydon S)

      Blackburn, John

      Clarke, Kenneth (Rushcliffe)

      Body, Richard

      Colvin, Michael

      Bottomley, Peter (W'wich W)

      Cope, John

      Bowden, Andrew

      Corrie, John

      Boyson, Dr Rhodes

      Costain, Sir Albert

      494

      Cranborne, Viscount

      Lewis, Kenneth (Rutland)

      Critchley, Julian

      Lloyd, Ian (Havant & W'loo)

      Dean, Paul (North Somerset)

      Lloyd, Peter (Fareham)

      Dickens, Geoffrey

      Loveridge, John

      Douglas-Hamilton, Lord J.

      Luce, Richard

      Dover, Denshore

      Lyell, Nicholas

      du Cann, Rt Hon Edward

      McCrindle, Robert

      Dunn, Robert (Dartford)

      MacGregor, John

      Durant, Tony

      MacKay, John (Argyll)

      Dykes, Hugh

      McNair-Wilson, M. (N'bury)

      Eden, Rt Hon Sir John

      McNair-Wilson, P. (NewF'st)

      Edwards, Rt Hon N. (P'broke)

      Madel, David

      Eggar, Tim

      Major, John

      Eyre, Reginald

      Marland, Paul

      Fairbairn, Nicholas

      Marlow, Antony

      Fairgrieve, Sir Russell

      Marten, Rt Hon Neil

      Faith, Mrs Sheila

      Mates, Michael

      Farr, John

      Mather, Carol

      Finsberg, Geoffrey

      Maude, Rt Hon Sir Angus

      Fisher, Sir Nigel

      Mawby, Ray

      Fletcher-Cooke, Sir Charles

      Maxwell-Hyslop, Robin

      Fookes, Miss Janet

      Mayhew, Patrick

      Forman, Nigel

      Mellor, David

      Fowler, Rt Hon Norman

      Miller, Hal (B'grove)

      Fox, Marcus

      Mills, Iain (Meriden)

      Fraser, Peter (South Angus)

      Mills, Peter (West Devon)

      Fry, Peter

      Mitchell, David (Basingstoke)

      Gardiner, George (Reigate)

      Monro, Sir Hector

      Gardner, Edward (S Fylde)

      Montgomery, Fergus

      Garel-Jones, Tristan

      Moore, John

      Glyn, Dr Alan

      Morris, M. (N'hampton S)

      Goodlad, Alastair

      Morrison, Hon C. (Devizes)

      Gow, Ian

      Morrison, Hon P. (Chester)

      Grant, Anthony (HarrowC)

      Mudd, David

      Gray, Hamish

      Murphy, Christopher

      Greenway, Harry

      Myles, David

      Grieve, Percy

      Neale, Gerrard

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

      Needham, Richard

      Griffiths, Peter Portsm'th N)

      Nelson, Anthony

      Grist, Ian

      Neubert, Michael

      Gummer, John Selwyn

      Newton, Tony

      Hamilton, Hon A.

      Onslow, Cranley

      Hamilton, Michael (Salisbury)

      Oppenheim, Rt Hon Mrs S.

      Hampson, Dr Keith

      Page, Richard (SW Herts)

      Haselhurst, Alan

      Parris, Matthew

      Havers, Rt Hon Sir Michael

      Patten, Christopher (Bath)

      Hawkins, Paul

      Patten, John (Oxford)

      Hawksley, Warren

      Pattie, Geoffrey

      Hayhoe, Barney

      Pawsey, James

      Heath, Rt Hon Edward

      Percival, Sir Ian

      Heddle, John

      Pink, R. Bonner

      Henderson, Barry

      Pollock, Alexander

      Hicks, Robert

      Proctor, K. Harvey

      Hill, James

      Raison, Rt Hon Timothy

      Hogg, Hon Douglas (Gr'th'm)

      Renton, Tim

      Holland, Philip (Carlton)

      Rhodes James, Robert

      Hooson, Tom

      Rhys Williams, Sir Brandon

      Hordern, Peter

      Ridley, Hon Nicholas

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

      Rifkind, Malcolm

      Howell, Ralph (N Norfolk)

      Roberts, M. (Cardiff NW)

      Hunt, David (Wirral)

      Roberts, Wyn (Conway)

      Hunt, John (Ravensbourne)

      Rossi, Hugh

      Irving. Charles (Cheltenham)

      Rost, Peter

      Jenkin, Rt Hon Patrick

      Sainsbury, Hon Timothy

      Jessel, Toby

      Shaw, Giles (Pudsey)

      Johnson Smith, Geoffrey

      Sheldon, Rt Hon R.

      Jopling, Rt Hon Michael

      Shelton, William (Streatham)

      Kaberry, Sir Donald

      Shepherd, Richard

      King, Rt Hon Tom

      Silvester, Fred

      Knight, Mrs Jill

      Sims, Roger

      Knox, David

      Smith, Dudley

      Lamont, Norman

      Speed, Keith

      Lang, Ian

      Spence, John

      Langford-Holt, Sir John

      Spicer, Michael (S Worcs)

      Latham, Michael

      Stainton, Keith

      Lawrence, Ivan

      Stanbrook, Ivor

      Lawson, Rt Hon Nigel

      Stanley, John

      Le Marchant, Spencer

      Steen, Anthony

      Lennox-Boyd, Hon Mark

      Stevens, Martin

      Lester, Jim (Beeston)

      Stewart, Ian (Hitchin)

      495

      Stokes, John

      Wall, Sir Patrick

      Stradling Thomas J.

      Waller, Gary

      Taylor, Teddy (S'endE)

      Walters, Dennis

      Temple-Morris, Peter

      Ward, John

      Thomas, Rt Hon Peter

      Watson, John

      Thompson, Donald

      Wheeler, John

      Thorne, Neil (IlfordSouth)

      Whitney, Raymond

      Thornton, Malcolm

      Wickenden, Keith

      Townend, John (Bridlington)

      Wiggin, Jerry

      Trippier, David

      Wilkinson, John

      van Straubenzee, Sir W.

      Winterton, Nicholas

      Vaughan, DrGerard

      Wolfson, Mark

      Viggers, Peter

      Young, Sir George (Acton)

      Waddington, David

      Wakeham, John

      Tellers for the Noes:

      Waldegrave, Hon William

      Mr. Robert Boscawen and Mr. Peter Brooke.

      Walker, B. (Perth)

      Question accordingly negatived.
      Clause 22 ordered to stand part of the Bill.

    Clause 18

      CHARGE OF INCOME TAX FOR 1982–83
      Mr. Straw: I beg to move amendment No. 12, in page 12, line 23, after 'charged', insert—
      `(i) in respect of so much of an individual's total income as does not exceed £750 at the rate of 25 per cent.;
      (ii),'.
      It may be for the convenience of hon. Members, so that they are not detained too late tonight, if I range slightly wider than I would otherwise in the debate on the amendment and take in some of the remarks that I might have made in the clause stand part debate.
      There have been many references by my right hon. and hon. Friends this afternoon to the pledges made by the Conservative Party at the last election to reduce income tax at all levels. The Conservative Party manifesto says:
      "We shall cut income tax at all levels to reward hard work, responsibility and success; tackle the poverty trap … It is especially important to cut the absurdly high marginal rates of tax both at the bottom and top of the income scale."
      It is important to emphasise that, while the manifesto contained only a reference to income tax, during the course of the election campaign, in their anxiety to win the election, Conservative spokesmen gradually extended the pledge to cover not only income tax but all taxes on earnings, including national insurance contributions. It is important to have that point on the record. That pledge was made by the Chancellor of the Exchequer in a speech at Whitefield on 24 April 1979. He departed from the language in the manifesto, which referred to income tax, and spoke deliberately about lowering taxes on income, and taxes on income include national insurance contributions.
      In a speech on 16 April 1979, the Prime Minister spelt out six steps to Britain's recovery. One of those steps was lower taxes on earnings. If there was any dubiety, it was dispelled by the Prime Minister in a speech on 19 April—just three days later—in the town hall, Birmingham. The right hon. Lady said:
      "I say to every worker in the Midlands, to every person who goes out to earn a living: the Conservatives are on your side …. It's our intention to rebuild our industries on the rock hard and well-tested foundations of incentive and profit."
      It gets better:
      "We are going to do it by … making it pay to work again, by seeing that those who put their back into the job get good wages with fewer 'deductions' and more for the family to spend as it chooses."
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      However, as my hon. Friend the Member for Edinburgh, Central (Mr. Cook) spelt out, deductions are what matter, and they include national insurance contributions as well as income tax. It was to reduce deductions, not just income tax, that the Prime Minister made her explicit and categoric pledge during the election. It is important to get that on the record. It is not just a point of sophistry or a casuistical point. Given the judgment that must be made by Parliament and the electorate, it is vital to ascertain precisely what the Prime Minister and her colleagues promised at the election. Since the election, the Chancellor of the Exchequer and the Chief Secretary have often attempted to suggest that national insurance contributions are not a form of tax. I have heard the Prime Minister suggest on more than one occasion that it is not a tax and that the justification for raising national insurance contributions is that those in work should pay for those out of work. I should have thought that applied equally to the payment of income tax.
      Far from treating national insurance contributions less and less as a tax, the Government are treating them more and more as a tax. They have destroyed much of the insurance principle that lay behind the original separation of national insurance contributions from income tax. They have destroyed a central element of the insurance principle for the short-term benefit of the relation to earnings. When earnings-related contributions were introduced by the present Secretary of State for Education and Science in the Social Security Act 1973, they were justified on the ground that they would produce earnings-related benefits. The Government have now broken that link, particularly for short-term benefits.
      Partly as a result of the break in that link and of the increase in national insurance contributions, the burden of direct tax on low incomes has greatly increased. That is demonstrated by the figures that the Government were forced to give in response to questions from others as well as myself on the changing burden of taxation between the last year of the Labour Government and this year. In 1978–79 a married couple with two children on half average earnings had to devote about 12·5 per cent. of their income to tax and national insurance contributions. Today, that figure has increased by 50 per cent. There has been an increase in the real burden of taxation on the lowest paid to over 18·5 per cent. The direct tax burden on a family on three-quarters of average income has increased from 20·8 per cent. in 1978–79 to 24·7 per cent. today. As nine out of 10 families know to their cost, the reality of the Government's tax record has been not that direct taxes have gone down but that they have gone up.
      9 pm
      What perhaps is not appreciated sufficiently, although we may have succeeded finally in securing the understanding of Conservative Members and the people, is that, while the burden of direct tax has gone up, the burden of indirect tax has also increased. Under this Government the burden of total taxation has increased dramatically at all levels of earnings until one gets to earnings which are above twice the average, but that affects only about 8 per cent. of taxpayers.
      The Conservative Party, in its election manifesto, pledged itself to tackle the poverty trap. According to the manifesto, it was especially important to cut the absurdly high marginal rates of tax at the bottom of the income scale. It is in the context of the poverty trap and the

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      absurdly high marginal rates of tax at the bottom of the scale that the Government have produced that the case for a reduced rate band becomes very strong.
      I spelt out the way in which the tax burden on the lowest paid has increased dramatically during the past four years. The Government may say in reply—this point was made by the Institute for Fiscal Studies when it put in evidence two years ago against the idea of a reduced rate band—that very few families earn only half average earnings, or £80 per week, so it is using a sledge hammer to crack a nut.
      I should like to make two points in reply to points that the Minister will no doubt make and also to the calculations of the Institute for Fiscal Studies. First, when we talk about an average income of £80 per week, which is half average earnings, we mean that the wage of the breadwinner is about £69 and that he is receiving child benefit of about £11 in addition. There may be few people in Surrey, East or Cirencester and Tewkesbury who earn only £69 per week, but I warrant that in Stepney, Ashton, Edinburgh, Workington, Glasgow and all the constituencies represented by the Opposition Members there are hundreds of thousands who earn only £69 per week. I could name hundreds of my constituents in Blackburn who earn that or less, so we are talking about many people.
      The second point is that the taxation of unemployment benefit and supplementary benefit will bring the income of many more families into the tax bracket where half avearge earnings are taxed. This will apply particularly where a breadwinner loses his job half-way through the year, and typically where he loses his job in the autumn. If we take into account that those who are already on low earnings are likely to be in insecure, often seasonal, employment and will lose their jobs as winter approaches, we are again talking about large numbers.
      Before the taxation of unemployment benefit was agreed, those who lost their jobs half-way through the year, having been earning approximately £70 per week, would have dropped out of taxation altogether because their total taxable income during the year would have been less than their personal allowance as married men. Therefore, someone earning up to £90 per week for half the year who was declared redundant in the autumn would have paid no tax at all. If someone earning £90 a week on gross earnings of, say, £100—the maximum of this example—becomes unemployed half-way through the year, his total taxable earnings for the whole year will work out at half average earnings, because his unemployment benefit of £41 a week will now be taxed by the Government. Thousands of people who previously would not have been within this tax bracket, which the IFS and the Government dismissed as a piece of statistical imagination, will be brought into it because of the taxation of unemployment benefit.
      Mr. Campbell-Savours: There is also the delay in paying rebate.
      Mr. Straw: As my hon. Friend says, those people's disposable income will also be greatly affected by the delays in paying rebates until the end of the year.
      Mr. Jim Craigen: Most people do not need highly paid economists to tell them that the Government are proving a very costly experience for
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      them. The Government have not only raised the tax levels but they are telling working people to take less in wage increases.
      Mr. Straw: Indeed, they are, but the Government use highly paid economists to try to suggest that our case on behalf of our constituents is a figment of our imagination. Sad to say, the IFS fell into that trap when it suggested that only about 10,000 families would benefit from a reduced rate band of 25 per cent.
      The case for a reduced rate band has been discussed many times. A feature of the taxation system throughout the 1950s and part of the 1960s was not one reduced rate band but three. Indeed, a reduced rate band was reintroduced by the Labour Government in 1966, abolished in 1970, reintroduced by the Labour Government in 1978, and abolished by the present Government in 1980. It has been given great consideration by Parliament over many years. It was last discussed during the Committee stage of the 1980 Finance Bill, when much of the discussion centred on evidence submitted by Mr. C. N. Morris, of the IFS, about its operation.
      The IFS said that pound for pound it was better to spend the cash that one would spend on a reduced rate band to raise personal allowances, which would take more people out of taxation than would the reduced rate band. In short, it said that there was confusion between the marginal rate of tax and the average rate, and that what mattered, except for a small group, was not the marginal rate but the average rate, and that people's position would be no different with a marginal rate of 25 per cent. on a small band of their income rather than 30 per cent. The IFS also claimed that only about 10,000 families would benefit from a reduced rate band. When that evidence was discussed, the hon. Member for Gateshead, West (Mr. Horam) described it as not a fiscal study but fiscal sorcery. On that occasion, if no other, he was fairly close to the mark.
      I concede to the IFS and those who are held in high regard by the Opposition, such as David Piachaud, that the case against the reduced rate band is respectable and needs to be considered. However, it has been well answered by a submission by Christopher Pond and Clive Playford, of the Low Pay Unit, who took issue with the IFS evidence. They said that the argument that it was better to spend the cash on personal allowances rather than on the reduced rate band was
      "true only at a single point in time. In any one financial year it is always more beneficial to the low paid to have an increase in allowances than the maintenance of a lower rate of tax. But if such allowances are not fully index linked then the following year part, if not all, of the value of the increase in allowances will have been eroded by inflation. The reduced rate band, on the other hand, will remain as a structural feature of the tax system."
      Exactly the situation that the Low Pay Unit predicted in its evidence has now arisen. There has been a failure fully to index not only last year but, for the reasons given by Labour Members, this year. That failure fully to index has increased the burden of taxation by 50 per cent. in real terms for those on the lowest incomes.
      It is in the context of that failure, which we regret but can do nothing about, that the case for a reduced rate band to provide some amelioration in the tax burden for the lowest paid becomes overwhelming. When the reduced rate band was abolished by the Government in 1980, the full year's costing given in the Red Book at that time was

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      a saving of £901 million. I dare say that the Minister will give the Treasury's present estimate of the cost. Sadly, the Government, this year as last year, refused to provide the Opposition with a tax ready reckoner before the Budget. It does not lie in the mouth of the Chief Secretary or the Minister to cavil at the cost of amendments that the Opposition are forced to make when they refuse to provide the information, as they did in answer to a parliamentary question from me before the Budget.
      Moreover, the Government have failed to publish their own tax ready reckoner, which they traditionally publish after the Budget. My own calculation—and I shall be interested to hear the Minister's—is that if the cost of abolishing the lower rate band in 1980–81 was £900 million, the cost of restoring it today may be £1,100 million to £1,200 million. The Minister will no doubt ask the question that he asked of my right hon. Friend the Member for Ashton-under-Lyne (Mr. Sheldon): where is the money to come from? I will provide an answer to that, but I also make one other point. In these debates on the Finance Bill, given the procedures and the procedural straitjacket within which we operate, there is no opportunity for the Opposition to put forward their alternative Budget or their studied Budget judgment. That is why my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) had to put forward that considered judgment outside rather than inside the House of Commons.
      Our job in the course of these debates is to criticise the Government, constructively we hope, and to allow the Committee to judge whether the Government are standing by their promises, rather than to state what we would do in the alternative. That applies to personal allowances where, if the Government had stuck to their promises, the bill would have been the £2,000 million that they were suggesting should be paid.
      Where might the money come from? Again, Opposition Members have dealt at length and with great eloquence which the way in which the tax burden on the rich has been reduced while that on the poor and on everybody else in work has been increased. I shall not go over that. In answering the question that the Minister will pose about where the money will come from, I want to deal with the cost of these enormous and gratuitous increases in tax payments to the rich, the cost that has fallen on the country, in order to reduce the burden of taxation on single Cabinet Ministers from 52½ per cent. to 46 per cent., and those who are married with two children from 50 per cent. to 44 per cent. It is the cost of those reductions and the reductions for those with higher incomes.
      9.15 pm
      It is interesting that although the Government made it plain before the general election that they would cut taxation for the rich as well as the poor—they have kept that promise and a good bit more—they have suddenly become coy about the cost of the tax cuts to the rich. On 8 April the hon. Member for Ealing, North (Mr. Greenway) asked the Chancellor of the Exchequer
      "by what percentage the basic rate of income tax could be reduced if the top rate were raised to its 1979 level."
      The Chancellor replied:
      "The re-imposition of an 83 per cent. top rate of income tax would finance a reduction of less than one quarter of 1p in the basic rate."
      He went on in a supplementary answer to say:
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      "Any attempt to whoop up envious onslaughts on the higher paid could generate …negligible revenue."—[Official Report, 8 April 1982; Vol. 21, c. 1077.]
      At best, that reply was seriously misleading and, in my judgment, verging on the mendacious.
      The Library's estimate of the cost of reducing the basic rate by 1p in 1982–83 prices is £950 million. One quarter of that is £237 million. My hon. Friend the Member for Oldham, West (Mr. Meacher) asked the Chancellor on the same day:
      "What is the total annual cost at current prices of changes in taxation of the higher rate—and higher rate thresholds— of income tax, capital transfer tax and capital gains tax made in his last four Budgets, apart from the cost of any adjustments to these taxes to maintain the real burden at the levels which obtained in 1978–79."—[Official Report, 8 April 1982; Vol. 21, c. 449.]
      He was told that the cost was £740 million in a full year.
      There is more to that because when the Library checked with the Inland Revenue about the composition of that answer it was told that £5 million of the total was for capital transfer tax, because, even after all the giveaways, capital transfer tax had not been indexed at 1978–79 levels. I find that surprising, but we shall accept it for the moment.
      The Inland Revenue also said that capital gains tax concessions had cost only £90 million above indexation. Of the full cost of £740 million, £655 million was the cost to the tax concessions made to the rich above the need to index, at the higher rates and on higher thresholds. But, by sleight of hand, the Treasury omitted to mention the cost of the investment income surcharge, which applies only to those on higher rates. That is another £210 million. On the Treasury's own figures, the cost of the concessions to the rich, above those necessary to maintain their real value as at 1978–79, is not £237 million, as the Chancellor intimated on 8 April, but £865 million.
      Both the Financial Secretary and the Chancellor have a serious duty to explain to the Committee how they gave an answer that was so clearly at variance with the facts also provided on that day.
      Mr. John Maxton: Can my hon. Friend the Member for Blackburn (Mr. Straw) tell me how many families benefited from the changes? The Government said that only 10,000 families would benefit from the lower rate band. We wish to know how many families at the top end benefited.
      Mr. Straw: I can tell my hon. Friend that 93 per cent. of taxpayers earn twice average earnings or less. Those who receive substantial benefits—those earning five times average earnings or more—represent 2 per cent. or 3 per cent. of all taxpayers.
      Mr. Greenway: I have known the hon. Gentleman for many years and I know that he would not mislead anyone, or wish to do so. In my question I was tackling the principle that is adopted by Opposition economic spokesmen, who have consistently led the public to believe that by restoring the high levels of taxation in the early part of 1979 they would release large sums of money that could be used to reduce the burden on those paying taxation at the lower rates. I do not know whether the hon. Gentleman's figures are right or wrong, but they make no difference to my argument. I have a duty to tell him that he must say where the money should come from to finance some of the tax cutting that he is talking about.
      Mr. Straw: The Chancellor of the Exchequer told the hon. Gentleman that the figure was £237 million, which

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      in my judgment is not a negligible revenue, bearing in mind that we receive letters from DHSS Ministers telling us that they cannot allow the unemployed some tiny concession because it would cost £2 million. At the same time £237 million is described as negligible. However, it appears that the actual cost to the Treasury is £950 million, which is exactly the cost of reducing income tax by 1p in the pound, which is a substantial thing to do if that is what a Government want to do.
      Mr. Campbell-Savours: My hon. Friend has brought to the Committee's attention a major area of consideration. It seems that £700 million is unaccounted for, although that has been denied in Parliament. That is what we shall have to pay to meet the demands of the better off in our society. I hope that the Minister will address himself to this issue if to no other. He should respond to my hon. Friend's argument and withdraw the statements that he and his right hon. and hon. Friends have made in denial of my hon. Friend's assertions.
      Mr. Straw: I hope that the Minister will bear in mind my hon. Friend's intervention.
      When the Government were in Opposition they complained that the then Labour Government were practising the politics of envy. That was a charge which had little evidence to support it. It was really an aggressive and assertive defence of massive and growing inequalities in our society. It was the Conservatives' attempt to justify those inequalities. They always forgot to mention the sin of avarice, which is a far deadlier sin than that of envy. The Government have unquestionably practised the politics of greed. They have done so without shame.
      The Government have torn up their taxation pledges to the poor. They have transferred the burden of taxation from the rich to the poor and they have made the divisions in our society far greater rather than less. These policies have hardly been the one nation politics of Disraeli, which the Government are proud to claim, let alone the moralities of St. Francis of Assisi, to which we were all treated when the Prime Minister crossed the portals of No. 10 on that dismal day three years ago.
      The acceptance of amendment No. 12 would go some little way to putting some fairness into the unfair tax system that the Government have created, and some way to reducing the burden of taxation on the poor. It is in that spirit that I commend it to the Committee.
      Mr. Maxton: I shall be brief, but I have one or two points to make on this important issue.
      People are paying tax who should not be doing so. I give one example. I received a letter from a constituent who is a widow, working as a home help, but who is receiving no widow's benefit because her husband became ill and was unable to work for the last 14 years of his life. She has an unemployed son of 17 living at home. She earns £59 a week and pays £9 a week in tax. She pays a further £4 in national insurance, together with a superannuation payment. She takes home a total of £42 a week. She is perhaps paying more tax than she should, but she is still within the tax band.
      It is nonsense that in this day and age a person earning £59 a week and paying rent—her rent rebate is being reduced by the Government.—
      Mr. Arthur Lewis: Be fair. Surely my hon. Friend knows that his constituent must pay towards the 60 per cent. increase for Sir Michael Edwardes. He must have his £95,000 and if she does not contribute towards it, how will he get it?
      Mr. Maxton: I find it difficult to accept my hon. Friend's slightly sarcastic standard of fairness. It would be grossly unfair if this woman were taxed to pay for that.
      As a result of the cuts in the higher tax bands, some people receive more per week from the Government in tax handbacks than that woman earns, and she has to keep herself and her family. That is what the Government are doing.
      I cite that case as an example, but in my constituency there are many like her, and many on even lower incomes, because many are unemployed. On the housing estate in which she lives, which has a population of 39,000, more than 30 per cent. are unemployed. They receive less than that woman, but at least she has a job.
      The woman is a home help, doing what most people consider to be a useful service. However, she is paying more in rent because she is not receiving the same amount of rent rebate. She is paying higher bus fares because the Government have imposed on local authorities the need to meet increased transport costs. She is paying increasingly higher prices for many other things, including electricity. She is trying to handle all these increases on £42 a week. It is a disgrace that anyone shold be asked to live on such a low income. She says that she does not know how she will manage. If she does not pay the electricity bill because she does not have the money, the electricity board will disconnect her supply. She will be without electricity, and that is not unusual in my constituency.
      Labour Members are constantly reminded of similar examples. Conservative Members may say that we have nice, comfortable incomes. That is true, but week after week we come into contact with people who have incomes near the poverty level. They have incomes which Conservative Members could not live on even if they tried. They have no idea of what it means to live on such low incomes. Conservative Members spend as much in one night taking their wives to a restaurant for dinner as that woman receives to handle her budget for one week.
      Moreover, the Government are imposing on that woman a 4 per cent. limit on the rise in her income. That is what the Government's tax policies are all about, and that is why I shall vote for the amendment.
      9.30 pm
      Mr. Ridley: The amendment relates to the 25 per cent. lower rate band which the Opposition suggest should be restored. It has proved to be a peg for the hon. Members for Glasgow, Cathcart (Mr. Maxton) and Blackburn (Mr. Straw) to debate wider issues. I would rather debate the peg—[HON. MEMBERS: "What about the wider issues?"] I should like to debate the wider issues that relate to the suggestion that has been made by the Opposition. As the Opposition have put those wider issues at the forefront of their case in support of the amendment, it is only right that we should judge whether the amendment has any effect on the wider issues.
      The hon. Member for Blackburn said that we have refused to give figures about the costs of various tax changes about which Labour Members have inquired. I know that there is a convention not to give estimates before

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      the Budget, but since then I have answered literally hundreds of detailed questions and have given vast quantities of information in tabular form which the Revenue has prepared with great care and at great cost so that hon. Members can be informed about all aspects of costs, percentages or changes.
      The hon. Member for Blackburn has been supplied with copious information. He has got everything that he wanted. We have done all that we possibly can. It is therefore wrong for the hon. Gentleman to complain about the service that he has received. Had he tabled a question about the amendment, I could have told him that as drafted it would cost the PSBR £620 million in 1982–83. In a full year, the cost would be £770 million. I imagine that the hon. Gentleman would like to include the lower rate band for an earning wife. That was a feature of the reduced rate band in 1978–79. In that case, the PSBR cost this year would be £730 million, and the full-year cost would be £900 million.
      The Opposition have had a good day. My right hon. and learned Friend the Chief Secretary replied to a debate on an amendment that would have cost £2,080 million. They have also asked for another £900 million in a full year, bringing the total to £2,980 million. Therefore, we are touching on £3 billion in one day.
      Throughout the long nights of the Finance Bill Committee I intend to keep a tally of the cost of the Opposition amendments. By the time we get to the end of the Committee proceedings, I imagine that the figure will be slightly higher.
      I shall say nothing more about how these proposals are to be financed. My hon. Friend the Member for Northampton, North (Mr. Marlow) asked those questions of the Opposition, hut, as The Guardian is quick to point out, we do not get sensible answers.
      If we had £900 million in a full year to use, what would be the best way to spend it? In pursuit of the objectives of the hon. Member for Blackburn to help those at the bottom of the scale, where life is tightest and taxation pinches hardest, we should like to create the maximum help. I have a witness for saying that raising the thresholds would be best. That witness is the right hon. Member for Llanelli (Mr. Davies). When he was a Treasury Minister he said on 3 March 1977:
      "A reduced rate hand, as distinct from an increase in the tax threshold, would not give most help to those on the smallest incomes. For the man on the tax threshold complete exemption for a few pounds is worth more than a lower rate of tax on a larger band of income which he has not got."—[Official Report, 3 March 1977; Vol. 927, c. 747.]
      That is just right.
      The hon. Member for Blackburn quoted figures that were stated in the Institute for Fiscal Studies paper by Morris and Warren. Admittedly, that was in 1980, but those figures are still valid as a matter of principle. The figures in the table prove that at the lowest rates of income that attract tax people are worse off and the benefit such as there is from transferring money from the allowances to a reduced rate band—revenue neutral, for the sake of the argument—benefits people slightly higher up the scale and not those at the bottom of the scale.
      The most helpful thing that one can do for the people about whom the hon. Gentleman was talking is to let them out of tax. The more one can let them out of tax, the better. Therefore, I am surprised that the hon. Gentleman puts his name, and gives his support, to an amendment that does not let such people out of tax, but which includes more
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      people in tax than would be necessary if the alternative course of raising the allowances that my right hon. and learned Friend the Chancellor of the Exchequer has taken were followed.
      There is another point. The Opposition's amendment would concentrate the advantage on people equally, whether they were married or single. I am not sure that it is not better, in trying to use the £900 million to the best advantage, in the hypothetical sense, that we should seek to apply it more to married couples and families than to single people. That is another advantage to be derived from using the money to increase the allowances rather than to introduce a reduced rate band.
      Mr. Cook: The Financial Secretary cannot play around with how he would spend the hypothetical sum of £900 million when he has told the House that he is against spending it. The House has voted against amendments tabled by the official Opposition to increase the tax thresholds. It voted against them on advice from the Dispatch Box. If the Financial Secretary will agree to use his influence with the Chancellor of the Exchequer to accept those amendments on Report, we shall seek to withdraw our amendment now.
      Mr. Ridley: The hon. Gentleman seems to want to have it both ways. We have increased the allowances. This is a hypothetical question. If the Chancellor of the Exchequer now had a further £900 million available, I am arguing about whether it would he best invested in a further increase in allowances or a reduced rate band. I am sorry to say that that money is not available to him. However, I do not want to shirk the point of principle that has been raised by the Opposition in the amendment.
      Finally, I shall refer to the question of the so-called poverty trap and the advantages of a reduced rate band or otherwise in relation to the starting rate of tax for those who increase their income to the point where they first reach the tax level. In this country we have a high initial rate of tax at 30 per cent. Admittedly, it was higher in the past, when it was as high as 35 per cent. in some years. It is one of the unusual features of our tax system. However, it is not unique, as the right hon. Member for Ashton-under-Lyne (Mr. Sheldon) said earlier today. I believe that Australia has a higher starting threshold, and possibly one or two other countries as well.
      The arguments about the poverty trap are not greatly affected by the proposition that there should be a reduced rate band of £750 over and above the allowances. Incomes in that range which would pay tax within the reduced rate band are very low. It may be of interest to the Committee if I quote the part of the Institute for Fiscal Studies paper by Morris and Warren which analyses the people who were in the reduced rate band between 1978 and 1980 which we abolished in 1980.
      Their estimate—I make it clear that I am only quoting their work, which I believe to be reputable and sound—is that there were about 3½ million people in that band. Of those 3½ million people, they estimated that there were 1,130,000 pensioners or people without occupations, 1,220,000 wives working part time, 160,000 wives working full time, and 510,000 under 21, making a total of over 3 million of the 3½ million people who were not heads of families and breadwinners. Of the people who were solely dependent for maintaining themselves or their families, there were about 130,000 single people and 300,000 married men.

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      Thus, the evidence suggests that people in this range of income are few in relation to those whose sole source of income it is. Many of the people in this band of income either derive income from other sources, or are married and therefore their husbands have other sources, or perhaps are young people who are still living at home. The effect of reducing the tax rate from 30 per cent. to 25 per cent. within this £750 range of income will give a little special help to a large number of people who do not particularly need it, whereas the effect of increasing the allowances would help people who need it more.
      Mr. StrawI return to the question whether women in part-time work are in need. For most women, part-time jobs are taken on to earn not pin money but desperately needed cash for their family income.
      I want to ask the hon. Gentleman one question. Does he accept that, with taxation of unemployment benefits, a large group of people who lose their jobs during the course of the year and then have to rely on taxed unemployment benefit will now come into the tax bracket that we are discussing?
      Mr. Ridley: On the hon. Gentleman's first point, I did not say "women"—I said "wives". I was talking about working wives whose husbands also work. By corrupting it to women, the hon. Gentleman implied that they were sole earners. That is not the essence of what I was saying.
      9.45 pm
      When people fall into a given range of low income, whether as a result of low wages or unemployment benefit or a combination of both, as the hon. Member for Blackburn (Mr. Straw) rightly said, those people will be in low ranges of income in total. The Opposition amendment raises the question whether it is better to try to help them through the rather blunt instrument of the tax system—not the social security system—by increasing allowances, or by introducing a reduced rate band. I suggest that, on all the three tests that I have described so far, the answer is, as Morris and Warren said:
      "We have found little substance in any of the arguments in favour of the reduced rate band. It does not help the low paid. It does not significantly increase incentives either for those in work or as between those in work and those out of work. Few of those who were in the reduced rate band were in the poverty trap and few of those who were in the poverty trap were in the reduced rate band. The wide basic rate band is one difference between the British income tax system and those of other countries which is actually worth preserving."
      The expert evidence, therefore, does not support the Opposition. I add as a throw-away line that the Opposition's suggestion would be more complicated, harder to understand and would require many extra Inland Revenue staff to administer.
      I have one further point to add to the discussion about the alternative to the threshold. The hon. Member for Blackburn asked my right hon. and learned Friend how many people were let out of tax by the Budget. As he fairly said, there can be no doubt that on the day before the Budget there are a number of people paying tax who will be let out of tax the day after. The figures that my right hon. and learned Friend gave were for those who paid tax during the tax year 1981—82. There will be 500,000 fewer paying tax during the tax year 1982–83. One can take any date in the year as a base. A person is either a taxpayer or
      506
      not. Taking like with like, there will be 500,000 fewer taxpayers in 1982–83 than there were in 1981–82 as a result of my right hon. and learned Friend's proposals.
      The hon. Member for Blackburn returned to the theme, about which we shall no doubt hear a great deal more, that the Budget increases the proportion of tax on some people in the middle range of incomes assuming that they satisfy certain conditions about the increase in their earnings—whether they are working, pensioners or whatever. The figures that the hon. Gentleman quoted were accurate. I have given him many figures in answer to parliamentary questions. He can quarry through them as much as he likes, but he is chasing the wrong fox. It will run a little, but it is not the real one. The real fox is the question "Are people better or worse off?" [HON. MEMBERS: "They are worse off'.) I shall give the figures. In 1978–79, the average weekly earnings for a single person after income tax were £70·67. In the year just past, they were £112·06—an increase of 58 per cent. For married people, the increase was 54 per cent.
      Mr. Campbell-Savours: What about national insurance?
      Mr. Ridley: I have not quoted figures for national insurance, but the difference would be marginal. Those increases must be compared with the far smaller increase in the retail price index. As I said in the Budget debate, simply concentrating on the proportion of tax and national insurance from one year to another ignores the real question whether people have greater disposable incomes. The Opposition should concentrate on that instead of making bogus points.
      For those reasons, and because the Oppostion amendment provides no help for people where the shoe really pinches, I ask my hon. Friends to reject the amendment.
      Mr. Straw: The only people making bogus points have been the Government in trying to place a smokescreen around the clear, categorical promises that they made at the general election to reduce direct taxation and deductions from wages on all levels of income. The Opposition have been asking exactly the right question. How has the burden of taxation changed in the last four years? As my hon. Friend the Member for Walsall, North (Mr. Winnick) said, we have not gone around the country saying that we propose major increases in social programmes and lower taxes. It was the Conservatives who on every hustings in the last election said that taxes would be lower, but they have ensured that taxes have become higher except for the very rich.
      If the Financial Secretary really wishes to ask his question and not simply give cash figures for increases in the past four years he must give figures to show that there has been a real improvement in living standards for the average family, taking account not only of income tax but of national insurance and the other hidden taxes that people have had to face in council rents, fares, gas charges and the rest. Translated into those real terms, we find that the family on average earnings had £110 per week in 1978, £115 per week in 1979 but £108 per week in 1982—a reduction of 1·1 per cent. The reduction in living standards for those on half average earnings was 5 per cent., while for those on 10 times average earnings there was an increase of 44 per cent. So the Financial Secretary has come up with the wrong answer even to his own question.

      507
      The Financial Secretary quoted the comments of my right hon. Friend the Member for Llanelli (Mr. Davies) in 1977 to the effect that raising the thresholds would be best. We all agree that that would be best, but the best has not been done by the Government. Therefore, we have had to consider a second best. The Government may have raised the thresholds this year, but they have raised them by less than the amount by which they would have had to raise them if they had raised them last year, which they failed to do. The failure to raise thresholds over the lifetime of this Government is one of the reasons for the dramatic increase in the tax burden on the poorer section of society. The Financial Secretary said that the most helpful solution would have been to let such people out of tax altogether. Of course that would have been the most helpful solution, but, far from letting the poor out of tax, the Government have brought them into an ever-increasing tax burden which has already risen by 50 per cent.
      Mr. Ridley: Perhaps the hon. Gentleman did not hear me say a short time ago that half a million people have been let out of tax by the Budget.
      Mr. Straw: Of course I heard, but that is compared with last year. We are concerned at what has happened over the lifetime of the Government.
      Mr. Brittan: That is not what the debate is about.
      Mr. Straw: The Chief Secretary says that that is not what the debate is about. However, the Chief Secretary often says that the Government should be judged on what happens not even in one Parliament but in two. Here he is trying to suggest that he only started last year. The truth is that in 1978–79, those on half average earnings were paying 12½ per cent. of their income in deductions and now they are paying over 18½ per cent. That is a dramatic increase in the burden of taxation. The Government have done nothing for taxation of the poor except to make it worse.
      We do not believe that this is the best thing to do but we certainly believe that when this Government have refused to agree to our other amendments it is better than doing nothing. When the hon. Gentleman is working out his little tally, he should be aware that we certainly saw this amendment as an alternative to the last. To accumulate the cost of the last amendment and this one is to make a mockery of any serious discussion about the burden of taxation and the burden that should fall on the country as a whole.
      The hon. Gentleman failed to mention one further point in his reply. I mentioned the extraordinary discrepancy between the Chancellor's claim that the reimposition of an 83 per cent. top rate of income tax would finance a reduction of less than one-quarter of 1p in the basic rate of tax, which is about £237 million. Information based on Inland Revenue figures, but elaborating that given to my hon. Friend the Member for Oldham, West (Mr. Meacher), shows that the total cost of tax giveaways to the very rich over and above that needed for indexing purposes was £865 million—at least three times as much.
      The hon. Member for Ealing, North (Mr. Greenway) was given full notice by me. I would refer to his question which is why he was here in the Committee. He may have told the Financial Secretary that it was coming up. In any event the Financial Secretary had a duty to reply to the point which I raised, to explain how the House has been given the impression, to quote the Chancellor, that
      508
      "envious onslaughts on the higher paid could generate … negligible revenue'.
      That was exactly what he said on 8 April, yet when we flush out from the Government the true figures this "negligible revenue" turns out to be £865 million from income tax and another £90 milion from capital gains tax.
      We want an answer to this discrepancy. If we do not receive the answer tonight, as I suspect, we shall certainly continue to pursue it.
      Mr. Ridley: I must apologise to the hon. Gentleman. I should have given him the answer. It is very simple and straightforward. The question of my hon. Friend the Member for Ealing, North (Mr. Greenway) was, what was the value of the concessions in the 65 to 83 per cent. range? The answer was £230 million. He did not ask what was the cost of the changes in the other rate bands—the 40 per cent., 45 per cent., 50 per cent. and 60 per cent. rate bands. That accounts for the difference of £655 million.
      Mr. Straw: The Financial Secretary has even got the original question wrong. The original question was by what percentage the basic rate of income tax could be reduced if the top rate was raised to its 1979 level. One has to assume that if the top rate is raised the other rates are raised with it. [HON. MEMBERS: "Why?"] Because the whole sense of the question by the hon. Member for Ealing, North was, what would be saved if the burden of taxation on the higher paid were brought back to the level that obtained in 1979? That is exactly what the hon. Gentleman asked in his supplementary question when he spoke of all the things that can be financed by raising taxation to the level that prevailed when the Government came to office. It was in response to that question that the Chancellor suggested that
      "Any attempt to whoop up envious onslaughts on the higher paid could generate … negligible revenue."—[Official Report, 8 April 1982; Vol. 21, c. 1077.]
      That "negligible revenue" turns out to be about £865 million. Even £237 million is not negligible by any stretch of the imagination.
      This debate has been concerned with the burden of taxation which the Government have imposed, particularly on the poorest in our community. The amendment seeks to relieve some of that burden on the poorest in our community in circumstances where the Government have refused to relieve that burden through the better course of raising the level of personal allowances. In that spirit, I commend the amendment to the Committee.
      Question put, That the amendment be made:—
      The Committee divided: Ayes 183, Noes 249.

      Division No. 130]

      [10.01 pm

      AYES

      Adams,Allen

      Buchan,Norman

      Allaun,Frank

      Callaghan, Rt Hon J.

      Anderson,Donald

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

      Archer, Rt Hon Peter

      Campbell Ian

      Ashley, RtHonJack

      Campbell-Savours,Dale

      Ashton,joe

      Canavan,Dennis

      Atkinson,N.(H'gey,)

      Cant, R. B.

      Barnett,Guy(Greenwich)

      Carmichael,Neil

      Barnett, Rt Hon Joel(H'wd)

      Carter-Jones,Lewis

      Bidwell,Sydney

      Clark, Dr David(S Shields)

      Booth,RtHonAlbert

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

      Boothroyd,MissBetty

      Cohen,Stanley

      Bray, Dr Jeremy

      Coleman,Donald

      Brown, Hugh D.(Provan)

      Conlan,Bernard

      Brown, R. C.(N'castle W)

      Cook, Robin F.

      Brown, Ron(E'burgh, Leith)

      Cowans,Harry

      509

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

      Marshall,DrEdmund(Goole)

      Craigen, J. M.(G'gow, M'hill)

      Martin,M(G'gowS'burn)

      Crowther,Stan

      Mason, Rt Hon Roy

      Cryer,Bob

      Maxton,John

      Cunliffe,Lawrence

      Maynard, Miss Joan

      Davidson,Arthur

      Meacher,Michael

      Davies, Rt Hon Denzil(L'lli)

      Mikardo,Ian

      Davis, Clinton(HackneyC)

      Miller,Dr M.S.(E Kilbride)

      Davis,Terry(B'ham,Stechf'd)

      Mitchell,Austinf(Grimsby)

      Dean, Joseph(Leeds West)

      Morris, Rt Hon J.(Aberavon)

      Dewar,Donald

      Moyle, RtHonRoland

      Dixon,Donald

      Mulley,RtHonFrederick

      Dobson,Frank

      Newens,Stanley

      Dormand,Jack

      Oakes, Rt Hon Gordon

      Douglas,Dick

      O'Neill,Martin

      Dubs,Alfred

      Orme, Rt Hon Stanley

      Dunnett,Jack

      Palmer,Arthur

      Dunwoody, Hon Mrs G.

      Park,George

      Eadie,Alex

      Parker,John

      Eastham, Ken

      Parry,Robert

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

      Powell,Raymond(Ogmore)

      English,Michael

      Price, C.(Lewisham W)

      Ennals, RtHonDavid

      Race, Reg

      Evans, loan(Aberdare)

      Radice,Giles

      Evans, John(Newton)

      Rees, Rt Hon M(Leeds S)

      Field,Frank

      Richardson,Jo

      Flannery,Martin

      Roberts,Altan(Bootle)

      Fletcher Ted(Darlington)

      Roberts, Ernest(Hackney N)

      Foot, RtHonMichael

      Roberts,Gwilym(Cannock)

      Ford,Ben

      Robertson,George

      Forrester,John

      Robinson, G.(CoventryNW)

      Foster,Derek

      Rooker, J. W.

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

      Ross, Ernest(Dundee West)

      Freeson,RtHonReginald

      Rowlands, Ted

      Garrett, John(NorwichS)

      Ryman,John

      Garrett, W. E.(Wallsend)

      Sever, John

      Gilbert, RtHonDrJohn

      Sheerman,Barry

      Golding, John

      Sheldon, RtHonR.

      Graham,Ted

      Shore, RtHonPeter

      Hamilton,James(Bothwell)

      Silkin, RtHon J.(Deptford)

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

      Silkin, Rt Hon S. C.(Dulwich)

      Hardy, Peter

      Silverman,Julius

      Harrison, RtHon Walter

      Skinner,Dennis

      Hart, RtHonDameJudith

      Smith, Rt Hon J.(N Lanark)

      Hattersley, Rt Hon Roy

      Soley,Clive

      Haynes, Frank

      Spearing,Nigel

      HomeRobertson,John

      Spriggs,Leslie

      Homewood,William

      Stallard,A.W.

      Howell, Rt Hon D.

      Stoddart,David

      Hoyle,Douglas

      Stott,Roger

      Huckfield,Les

      Strang,Gavin

      Hughes,Mark(Durham)

      Straw,Jack

      Hughes, Robert(Aberdeen N)

      Summerskill,HonDrShirley

      Hughes, Roy(Newport)

      Thomas,Dafydd(Merioneth)

      Janner,HonGreville

      Tilley,John

      Jay, RtHonDouglas

      Tinn,James

      John,Brynmor

      Torney,Tom

      Johnson, Walter(Derby S)

      Urwin, RtHonTom

      Jones, Rt Hon Alec(Rh 'dda)

      Varley, Rt Hon Eric G.

      Kaufman, Rt Hon Gerald

      Wainwright, E(D'earneV)

      Kerr,Russell

      Walker, Rt HonH.(caster)

      KilfedderJamesA.

      Watkins,David

      Kilroy-Silk,Robert

      Weetch, Ken

      Lamborn,Harry

      Welsh,Michael

      Lamond,James

      White,J.(G'gow Pollok)

      Leadbitter,Ted

      Whitehead,Phillip

      Leighton,Ronald

      Whitlock,William

      Lewis, Arthur(N'ham NW)

      Wilson, Gordon(Dundee E)

      Litherland,Robert

      Wilson,William (C'try SE)

      Lofthouse,Geoffrey

      Winnick,David

      Lyon,Alexander(York)

      Woodall,Alec

      McCartney,Hugh

      Woolmer,Kenneth

      McDonald,DrOonagh

      Wright,Sheila

      McKelvey,William

      MacKenzie, RtHonGregor

      Tellers for the Ayes:

      McNamara,Kevin

      Mr. George Morton and Mr. Allen McKay

      McTaggart,Robert

      McWilliam,John

      510

      NOES

      Adley,Robert

      Gardiner,George(Reigate)

      Aitken,Jonathan

      Gardner, Edward(S Fylde)

      Alexander,Richard

      Glyn, Dr Alan

      Alison,RtHonMichael

      Goodlad,Alastair

      Ancram,Michael

      Gow, Ian

      Aspinwall,Jack

      Grant, Anthony(Harrow C)

      Atkins,Robert(PrestonN)

      Gray, Hamish

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

      Greenway,Harry

      Baker,Kenneth(St.M'bone,)

      Grieve, Percy

      Baker, Nicholas(NDorset)

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

      Banks,Robert

      Griffiths,Peter Porfsm'thN)

      Beaumont-Dark,Anthony

      Grist, Ian

      Bendall,Vivian

      Grylls,Michael

      Bennett, Sir Frederic(T'bay)

      Hamilton,HonA.

      Benyon,Thomas(A'don)

      Hamilton,Michael(Salisbury)

      BenyonW.(Buckingham)

      Hampson,DrKeith

      Berry,HonAnthony

      Haselhurst,Alan

      Best,Keith

      Havers, Rt Hon Sir Michael

      Bevan,DavidGilroy

      Hawkins,Paul

      Biffen,RtHonJohn

      Hawksley,Warren

      Blackburn,John

      Hayhoe,Barney

      Body,Richard

      Heath,RtHonEdward

      Bonsor,SirNicholas

      Heddle,John

      Boscawen,HonRobert

      Henderson,Barry

      Bottomley,Peter (W'wich W)

      Hicks,Robert

      Boyson,DrRhodes

      Hill,James

      Braine,SirBernard

      Hogg,HonDouglas(Gr'th'm)

      Bright,Graham

      Holland,Philip(Carlton)

      Brinton,Tim

      Hooson,Tom

      Brittan,Rt.Hon.Leon

      Hordern,Peter

      Brooke,HonPeter

      Howell, RtHon D.(G'ldf'd)

      Brotherton,Michael

      Howell,Ralph(NNorfolk)

      Brown,Michael(Brigg &Sc'n,)

      Hunt,David (Wirral)

      Bryan,SirPaul

      Hunt,John(Ravensbourne)

      Buck,Antony

      Jenkin,RtHonPatrick

      Budgen,Nick

      Jessel, Toby

      Bulmer,Esmond

      JohnsonSmith,Geoffrey

      Burden,SirFrederick

      Jopling,RtHonMichael

      Butcher,John

      Kaberry,SirDonald

      Cadbury,Jocelyn

      Kershaw,SirAnthony

      Carlisle, John(Luton West)

      King, Rt Hon Tom

      Carlisle,Kenneth(Lincoln)

      Knight, MrsJill

      Chalker, Mrs.Lynda

      Knox,David

      Chapman,Sydney

      Lamont,Norman

      Churchill,W.S.

      Lang,Ian

      Clark, SirW.(CroydonS)

      Langford-Holt,SirJohn

      Clarke,Kenneth(Rushcliffe)

      Latham,Michael

      Colvin,Michael

      Lawrence,Ivan

      Cope,John

      Lawson,RtHonNigel

      Corriejohn

      LeMarchant,Spencer

      Costain,SirAlbert

      Lennox-Boyd,HonMark

      Critchley,Julian

      Lester,Jim(Beeston)

      Crouch,David

      Lewis,Kenneth(Rutland)

      Dean, Paul(North Somerset)

      Lloyd, Ian(Havant & W'loo)

      Dickens,Geoffrey

      Lloyd, Peter(Fareham)

      Douglas-Hamilton,LordJ.

      Loveridge,John

      Dover,Denshore

      Luce,Richard

      du Cann, Rt Hon Edward

      Lyell,Nicholas

      Dunn,Robert(Dartford)

      McCrindle,Robert

      Durant,Tony

      Macfarlane,Neil

      Dykes, Hugh

      MacGregor,John

      Eden, RtHonSirJohn

      MacKay, John(Argyll)

      Edwards, Rt Hon N.(P'broke)

      McNair-Wilson,M.(N'bury)

      Eggar,Tim

      McNair-Wilson, P.(NewF'st)

      Eyre,Reginald

      Madel,David

      Fairbairn,Nicholas

      Major,John

      Fairgrieve,SirRussell

      Marland,Paul

      Faith,MrsSheila

      Marlow,Antony

      Farr,John

      Marten,RtHonNeil

      Fenner, MrsPeggy

      Mates,Michael

      Finsberg,Geoffrey

      Mather,Carol

      Fisher, SirNigel

      Maude, RtHonSirAngus

      Fletcher-Cooke,SirCharles

      Mawby, Ray

      Fookes, MissJanet

      Maxwell-Hyslop,Robin

      Forman,Nigel

      Mayhew,Patrick

      Fowler, Rt Hon Norman

      Mellor,David

      Fox,Marcus

      Miller,Hal(B'grove)

      Fraser, Peter(SouthAngus)

      Mills,Iain(Meriden)

      Fry, Peter

      Mills, Peter(WestDevon)

      511

      Miscampbell,Norman

      Roberts, M.(CardiffNW)

      Mitckell,David(Basingstoke)

      Roberts, Wyn(Conway)

      Monro,SirHector

      Rossi,Hugh

      Montgomery, Fergus

      Rost, Peter

      Moore,John

      Royle,SirAnthony

      Morris, M.(N'hamptonS)

      Sainsbury,HonTimothy

      Morrison, HonC.(Devizes)

      Shaw, Giles(Pudsey)

      Morrison, Hon P.(Chester)

      Shelton,William(Streatham)

      Mudd,David

      Shepherd,Colin(Hereford)

      Murphy,Christopher

      Shepherd,Richard

      Myles, David

      Shersby,Michael

      Neale,Gerrard

      Silvester,Fred

      Needham,Richard

      Sims,Roger

      Nelson,Anthony

      Smith,Dudley

      Neubert,Michael

      Speed,Keith

      Newton,Tony

      Spence,John

      Onslow,Cranley

      Spicer, Michael(S Worcs)

      Oppenheim, Rt Hon Mrs S.

      Squire,Robin

      Page, Richard(SWHerts)

      Stainton,Keith

      Parris,Matthew

      Stanbrook,Ivor

      Patten,Christopher(Bath)

      Stanley,John

      Patten, John(Oxford)

      Steen,Anthony

      Pattie,Geoffrey

      Stevens,Martin

      Pawsey, James

      Stewart, Ian(Hitchin)

      Percival,SirIan

      Stokes,John

      Pink,R.Bonner

      Stradling,Thomas,J.

      Pollock,Alexander

      Taylor, Teddy(S'end E)

      Porter,Barry

      Temple-Morris,Peter

      Prentice, Rt Hon Reg

      Thomas, Rt Hon Peter

      Proctor, K. Harvey

      Thompson,Donald

      Raison, RtHonTimothy

      Thorne,Nieil(IlfordSouth)

      Renton,Tim

      Thornton,Malcolm

      Rhodes James, Robert

      Townend, John(Bridlington)

      RhysWilliams,SirBrandon

      Trippier,David

      Ridley,HonNicholas

      van Straubenzee, Sir W.

      Rifkind,Malcolm

      Vaughan,DrGerard

      512

      Viggers,Peter

      Wickenden,Keith

      Waddington,David

      Wiggin,Jerry

      Wakeham,John

      Wilkinson,John

      Waldegrave,HonWilliam

      Williams,D.(Montgomery)

      Walker, B.(Perth)

      Winterton,Nicholas

      Wall,SirPatrick

      Wolfson,Mark

      Waller,Gary

      Young,SirGeorge(Acton)

      Walters,Dennis

      Ward,John

      Tellers for the Noes:

      Watson,John

      Mr. Selwyn Gummer and Mr. Tristan Garel-Jones.

      Wheeler,John

      Whitney,Raymond

      Question accordingly negatived.
      Clause 18 ordered to stand part of the Bill.
      To report Progress and ask leave to sit again tomorrow—[Mr. Britton.]
      Committee report Progress; to sit again tomorrow.

  HOUSE OF COMMONS (SERVICES)
  Ordered,
  That the Standing Order of 15th June 1979 relating to the nomination of the Select Committee on House of Commons (Services) be amended, by leaving out Mr. Francis Pym and inserting Mr. John Biffen.—[Mr. John Stradling Thomas.]

  PRIVILEGES
  Ordered,
  That the Standing Order of 27th June 1979 relating to the nomination of the Committee of Privileges be amended, by leaving out Mr. Francis Pym and inserting Mr. John Biffen.— [Mr. John Stradling Thomas.]

  North-East Lancashire (Government Assistance)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Lang.]
  10.14 pm
  Mr. Jack Straw: I am glad that I have been joined for this debate by my hon. and learned Friend the Member for Accrington (Mr. Davidson) and by the hon. Member for Rossendale (Mr. Trippier). My hon. Friend the Member for Burnley (Mr. Jones) told me that he would have liked to be present, but he is unavoidably absent because he has had to go to Burnley tonight to keep an appointment tomorrow morning. The hon. Member for Nelson and Colne (Mr. Lee) asked me to make it clear that he, too, would have wished to be present, but he is on an important trip to America.
  All of us, together with the people in North-East Lancashire, are deeply grateful to Mr. Speaker for having selected this subject for debate. To us there is no more important issue than the future prosperity of North-East Lancashire and the part that the Government can and should play in reversing the terrifying decline which the area has suffered over the past three years, by, above all, acceding to the request of the North-East Lancashire Development Association for development area status, a request which, I should like to emphasise, is backed by all parties and every responsible group in the area. I am glad that the hon. and learned Member for Darwen (Sir C. Fletcher-Cooke) acknowledges that.
  A comprehensive submission of the case for development area status was made by NELDA in January of this year. The Minister has that and it is not necessary for me to repeat it in every detail. No doubt the Minister and his Secretary of State are also fully aware of the careful and wide-ranging series of articles about North-East Lancashire's recent industrial decline which have appeared in the Lancashire Evening Telegraph and in its sister newspaper, the Burnley Evening Star since those two papers launched their "Save East Lancashire" campaign in mid-February. Those articles give more fully and in many ways more eloquently than I can the roll-call of dead and dying firms and the tragic personal and human consequences which have followed the decline. We commend those newspapers for the initiative that they have taken.
  The House will wish me to outline the case for North-East Lancashire and to spell out why the area needs special help. To do that, I must give a little history. The prosperity of North-East Lancashire was founded on the twin staples of the Industrial Revolution, cotton and coal. In the 'twenties and 'thirties three-quarters of those employed in my constituency and in most of the other constituencies in North-East Lancashire worked in textiles. Such heavy reliance on a single product, cotton, was not healthy. When the country as a whole first caught a cold and then bronchitis in the slump of 1929, North-East Lancashire nearly died. Throughout the 'thirties, as the study, "Readjustment in Lancashire", by the University of Manchester made clear, the area was one of the unemployment black spots.
  The area was saved, partly by the war and the change in economic policy that that caused, but also by the
  514
  recognition in the late 'thirties, again by all parties, that the area would help itself but that it needed Government and local government help. One of the biggest employers in my area, Mullard, was sited in Blackburn because of incentives provided by the Government and the borough council, supported by both sides of the council. There are many similar examples across North-East Lancashire.
  It is remarkable that, despite the area's history and the very high levels of unemployment there throughout the 1930s, in the period from 1945 to 1976 there was truly full employment. From 1976 to 1979 it was not the happiest of stories, but unemployment was no more than about 6 per cent. in 1979. For that long period there was full employment. One reason was that in the late 1960s the Government had recognised that the area had special problems. There was disguised unemployment, reflected in high levels of migration from the area, and there were communication problems. As a result of the recognition of those special problems, the area was given intermediate area status by the Labour Government. That was confirmed by the Conservative Government in the 1970s and maintained throughout the period of the Labour Government from 1974 until 1979.
  In July 1979 the Secretary of State for Industry announced that the whole area was to lose its development area status in August 1982. That decision was justified partly on the ground that the aid should be concentrated in those areas where it was needed most, but also in terms of the Government's overall economic strategy, which was expected to lead to greater opportunity and more jobs. It is not my task or intention to make complaints about the Government's economic policies. There are other occasions on which we can do that. I say only that, whatever the intention behind the strategy in July 1979, it is apparent that it has not worked out as intended. That is reflected by what has happened in North-East Lancashire.
  The Minister will, of course, be concerned about whether the position in North-East Lancashire is worse than it is lsewhere in the country as a whole. He and his predecessors have made it clear that what they are really concerned about is whether there has been a relative change in the position of one travel-to-work area compared with others.
  The submission from NELDA and the figures that I shall give make it absolutely clear that there has been a dramatic change in the relative position of North-East Lancashire. The figures in the NELDA submission are for the two-year period from September 1979 to September 1981. I can give the Minister figures for three years, from March 1979 until March 1982. Because they cover the same months in each year, we avoid the problems of seasonal fluctuations.
  In the country as a whole, unemployment has risen in that period by 113 per cent. In the North-West it has risen by 111 per cent., and in Blackpool, which is continuing with its assisted area status, it has risen by only 89 per cent. In Lancaster, which also continues with assisted area status, it has risen by 76 per cent. In North-East Lancashire unemployment has increased over the past three years by no less than 176 per cent.—more than twice as much as the increase in Lancaster and Blackpool and 60 percentage points up on the increase for the North-West and the United Kingdom as a whole.
  There is no question but that there has been a dramatic, appalling change in the relative position of North-East

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  Lancashire. That relative change justifies NELDA's case for development area status. I hope that the Minister will answer it tonight.
  Other figures, which I shall send to the Minister, show that although textiles account for a third-6,000 out of 19,000—of the declared redundancies, the pattern of redundancies has been spread right across the diversified industrial base of the area. There have been another 6,000 in mechanical and electrical engineering, almost 1,000 in clothing and footwear, and others spread across the industrial structure.
  I hope that the Minister will say that North-East Lancashire will receive development area status. If he does not, he should confirm that the area will be the subject of a proper, formal review. I hope that he will give at least that commitment, which he and his predecessors have not given in the past.
  North-East Lancashire has been renowned for high productivity, good industrial relations and low wages. It has a long history of helping itself. It has done so in the past and will do so in the future. It also needs the help of the Government, and I hope that the Minister will tell us that we shall get that help, which will provide hope for an area which has lost a great deal of hope over the past three years.
  10.26 pm
  Mr. Arthur Davidson: I congratulate my hon. Friend the Member for Blackburn (Mr. Straw) on the way he has set out the indisputable case for the early granting of development area status to North-East Lancashire. I would also like to associate myself with his praise for the way the Lancashire Evening Telegraph has sustained the momentum of its "Save East Lancashire" campaign.
  I want to add one or two alarming figures to those already given by my hon. Friend the Member for Blackburn. The Hyndburn area is rapidly becoming a disaster area. The unemployment rate in the Accrington travel-to-work area is 15·3 per cent.; in the Hyndburn area it is 14·9 per cent. With the horrifying glut of recently-announced redundancies, the projected figures for May and June will be about 19 per cent. in the Accrington area and 16½ per cent. in the Hyndburn area. The average unemployment rate in the present intermediate area is about 13 per cent., and the average unemployment rates in the present development areas are about 16 per cent.
  On either basis, the case for granting development area status to Hyndburn—although I am associating myself with the general campaign for granting it to North-East Lancashire—is overwhelming. Unless the Minister accedes to the request, I fear that there will be despair, despondency and gloom in an area which has always been cheerful and has managed to overcome its adversity.
  10.28 pm
  Mr. D. A. Trippier: I am grateful for the opportunity to make a brief contribution in this debate. I compliment the hon. Member for Blackburn (Mr. Straw) on raising this matter. It is much appreciated that he has sought to be non-partisan in his speech, which is welcome to those of us who sit on the Government benches, including my hon. and learned Friends the Members for Darwen (Sir C. Fletcher-Cooke), and for Clitheroe (Mr.
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  Waddington) and the hon. Member for Nelson and Colne (Mr. Lee) who is unavoidably absent due to his important visit to the United States.
  I value this opportunity to speak and to thank the Minister for recently receiving a delegation from my constituency, Rossendale, which in the main comprised representatives of the local authority. I considered that he was extremely sympathetic to the plight which we face. I wish to thank him for visiting Rossendale last year. I hope that he found that a fruitful and useful visit. He was well received.
  It is well to remember two things, having listened carefully to the contribution of the hon. Member for Blackburn. When one is putting a case for North-East Lancashire, as NELDA has done effectively, it is difficult to compare the plight of Rossendale, Blackburn and Accrington with the plight of Clitheroe, where the unemployment figures are vastly different. There is a danger of crying wolf in applying to the Government for assisted area status, preferably development area status, for certain areas in the sub-region.
  Our over-dependence in Rossendale on textiles and footwear is one of the greatest dangers we face in that 45 per cent. of the work force are employed in those two industries which are both labour-intensive and are regarded by most people as declining. The truth is that Rossendale has not diversified like other areas within the sub-region of North-East Lancashire, which makes us much more vulnerable. Because of our over-dependence on textiles and footwear, we have suffered greatly with the recent international decline in trading within those two industries.
  Most of my constituents accept that there must be a transitional period in which we can diversify into other industries, but as the hon. Member for Blackburn eloquently said, we need time to diversify. We are short of that time. We also need fair competition. Although I realise that my hon. Friend is not responsible for it, development area status for Rossendale is now vital. I am grateful to my hon. Friend the Minister for the support and help that he has given in my constituency for starting up and encouraging the Rossendale Trust. Anything that he can do in future to encourage the growth of small businesses will be very much appreciated.
  I hope that the Minister will view seriously the representations made to him by NELDA, that he will consider sympathetically our recommendations in Rossendale, and that he will take into account all that has been said in this debate.
  10.30 pm
  The Under-Secretary of State for Industry (Mr. John MacGregor): The hon. Member for Blackburn (Mr. Straw) was in full flow earlier this evening and I congratulate him on the fluent presentation of his case in this debate. I hope that the hon. and learned Member for Accrington (Mr. Davidson) will forgive me if I do not refer to his points, but, as he knows, just before the House rose for the Easter Recess we had an Adjournment debate in which I discussed briefly assisted area status.
  I am well aware of the position in the area to which this debate refers. We have not been short of representations about it, although we have also received many representations from other parts of Britain, all of which have individual reasons for believing that they should receive special treatment. We have made it plain on many

  517
  occasions that, as a Government, we are always prepared to consider representations from any area. I have met the hon. Member for Blackburn and I recently received a deputation from Rossendale.
  On that basis, my right hon. Friend the Secretary of State recently agreed to receive a deputation from the North-East Lancashire Development Association, which presented the case that the hon. Member for Blackburn presented this evening. My right hon. Friend is giving the matter careful consideration and has passed on the representations about inner urban area status under the Inner Urban Areas Act 1978 to my right hon. Friend the Secretary of State for the Environment, which he pledged to do when he met that deputation, and he will give his decision in due course.
  I fully understand the difficulties of the area and I sympathise with all those affected, but the hon. Gentleman will forgive me if I do not give a substantive reply to the points made by the recent deputation, because that is a matter for my right hon. Friend and I do not wish to anticipate the outcome of his considerations. However, I can assure him that I shall bring to his attention the points made by hon. Members during this debate.
  Nevertheless, it would be helpful if I were to remind the House of the basis of our regional industrial policy and the general principles that apply.
  Mr. Straw: I should be grateful if the Minister would tell us when the Secretary of State will make his decision.
  Mr. MacGregor: The hon. Gentleman must forgive me if I do not answer that tonight. We have received many representations, and we must consider them all.
  I do not intend to go into the wider economic background, but successive Governments have followed a regional policy designed to correct imbalances in the distribution of employment and in regional disparities that have developed over some years as traditional industries have declined. I stress that that policy has been, and continues to be, aimed at encouraging new industrial investment in the various areas with a view to correcting the imbalances in their industrial structure.
  When we came to office we looked for a way of making regional policy more effective. We are doing so essentially by making it more selective. When the changes take full effect this August, the coverage of assisted areas will be reduced from 44 per cent. to about 26 per cent. of the working population, thus concentrating on the areas of greatest need.
  By consequently reducing regional aid, we are also reducing the burden on public expenditure, although there are many other ways in which aid is given to industry generally. This will help indirectly to reduce the burden on industry by dealing with the public sector borrowing requirement. I do not need to go into that in detail, because we have often debated it in the House.
  I remind the House that rather than remove assisted area status from certain areas immediately we allowed three years' grace. The House will want to know that £9·3 million of regional development grant and selective financial assistance has been paid or offered to industry in North-East Lancashire by the Government and a substantial portion relates to projects completed in the transitional period.
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  We are required by the Act to have regard to certain criteria in designated areas. These are considered in relation to the general approach of making regional development assistance more selective and hence more effective. Past evidence of regional assistance tends to suggest that the more selective assistance is the more effective.
  In that overall context we must first consider the rate of unemployment. It is important that the absolute level of long-term unemployment for any one travel-to-work area is considered relative to all other travel-to-work areas. The hon. Gentleman has made play of the relative increases in North-East Lancashire. They are deeply regrettable, but it must be born in mind that proportionate increases that relate to a previous date and not to other areas are not the relevant criteria as much depends on the starting date. The relevant criterion is the level of unemployment in the country at any one time.
  The hon. Gentleman knows that successive Governments have designated assisted areas by reference to travel-to-work areas because they represent reasonably self-contained labour markets and are the smallest areas for which the Department of Employment is able to calculate meaningful unemployment rates. A travel-to-work area is based on factual information that is collected in the census of population and updated by the Department of Employment in consultation with local interests.
  I shall explain how the system works, because I find that there is a great deal of misunderstanding about travel-to-work areas. Officials in the Department of Employment take one of the employment office areas and examine where people live and where they work. If about 70 per cent. of those who live in the area also work in it and 70 per cent. of those who work in the area also live there, the employment office area is regarded as a self-contained travel-to-work area. However, if there is evidence of significant commuting across employment office area boundaries, the areas are linked together as appropriate to satisfy the same criteria.
  Successive Governments have come to the conclusion that that is the most effective way of assessing levels of unemployment. That is why my right hon. Friend emphasised when he met the deputation from the North-East Lancashire Development Association that the Government would consider the case in the light of individual travel-to-work areas rather than the area as a whole. My hon. Friend the Member for Rossendale (Mr. Trippier) has given one indication of why that is necessary. That must be said when representations are being made to declare all the travel-to-work areas in the area assisted areas.
  We must consider also evidence of long-term structural decline. It is recognised that traditionally north-east Lancashire has depended largely on the textile and footwear industries. We all know that these industries are having to adjust to changes in the world economy. It does not necessarily follow that because an area is facing a degree of structural decline—I emphasise "degree"—in certain industries it should necessarily be an assisted area. That facet must be considered along with the other criteria.
  In north-east Lancashire there are a number of travel-to-work areas in which over the past 10 years there has been a considerable diversification of industry. However, I recognise that in Rossendale there is a heavy preponderance of footwear and textile undertakings.

  519
  The third consideration is the geographical position, especially in relation to markets and communications. I visited Rossendale and Nelson and Colne last year, and I am aware of those difficulties. However, there are plans to improve communications in the Calder Valley. We must consider also the prospects of achieving other jobs in the travel-to-work areas and the changes that can take place. The designation of assisted areas is one of the most difficult that faces my Department. Events that have taken place while I have been in the Department have shown that it would have been wrong to take certain decisions. In some cases natural economic forces mean that new jobs can be created. That aspect must be also considered.
  I draw attention to some of the good news in the hon. Gentleman's constituency. Philips (Mullard) will almost double its £7 million investment in its video disc pressing plant to meet greater than expected demand for its programmes and discs. The current work force is likely to double to about 200. MEC Pressings (Blackburn) has been bought by the Risden Corporation, the leading American manufacturer of cosmetic containers, which plans to double the investment already envisaged for the next five years. American executives are looking for further sites in Blackburn to set up a finishing plant which will provide up to 100 additional jobs. AFM Leisure has developed a new micro-electronic gaming machine. That company has won about £2 million worth of new orders and in the short term will provide an additional 50 or 60 jobs. Netlon plans to open a new factory which will create 100 jobs in the next few years. I could go on. There is movement within the area.
  I make one other relevant point. In North-East Lancashire total unemployment last month was 27,748. It is interesting to note that in the past year the employment service placed 19,500 people in employment in North-East Lancashire. Many more will have found jobs by other means. I state that simply to indicate that there is a great deal more movement in the economy than levels of unemployment would sometimes suggest.
  I state these facts to give the hon. Gentleman some indication of the considerations in our minds. It is important to mention the domino effect. One cannot change the status of one travel-to-work area in isolation. There will be immediate legitimate representations and epectations from many other parts of the country. To put this into perspective in relation to North-East Lancashire—I say this without any commitment but to give an indication of some other statistics that must be considered as well as those given by the hon. Gentleman—only the Rossendale travel-to-work area, at 15·5 per cent., had a 1981 average unemployment rate that
  520
  was above the average of all remaining intermediate areas for the same period. I refer to the average for the intermediate areas after August 1982. The relative position has not changed since then. Rossendale now has an unemployment level of 16·1 per cent., whereas the intermediate area average is 14·6 per cent. No other travel-to-work areas in North-East Lancashire have unemployment levels above 14·6 per cent., and a number are considerably well below. Those factors have to be taken into account.
  As I said, earlier this month I saw a deputation from Rossendale, and I am fully conscious of the serious problems facing the area. I have just referred to its level of unemployment.
  I shall put the domino effect another way—the hon. Gentleman is fair on these matters and that is why I seek to do him justice by giving a full reply. If one considers the areas by level of unemployment rate—I refer to assisted areas boundaries as they will be after August 1982—59 areas will become non-assisted or are already non-assisted. Of those, 23 will become non-assisted. They have a higher level of unemployment than the hon. Gentleman's travel-to-work area. After August 1982 there will be 127 travel-to-work areas which will continue to have assisted area status of one sort or another.
  That will show the hon. Gentleman the number of travel-to-work areas all over the country that will immediately make representations on the domino effect. I make that point to show the hon. Gentleman some of the factors that must be taken into account.
  It is important to consider stability in regional policy. I discussed this with the hon. Gentleman when he came to see me, so I can be brief. Stability is essential if industry is to plan ahead effectively. For investment incentives to have a real effect on industry's decisions on where to locate, they must be stable and predictable. That is why we do not work on a hand-to-mouth basis, constantly chopping and changing.
  Those are the major criteria that my right hon. Friend the Secretary of State will be applying in consideration of the case. I do not want to predict the outcome at this stage.
  There are many other measures, including enterprise allowances, that we have recently specifically introduced, concentrating on one of the selected areas in North-East Lancashire. Many other measures of national effect, and many other measures of— —
  The Question having been proposed after Ten o'clock and the debate having continued for hay' an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at sixteen minutes to Eleven o'clock.

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Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Liverpool): The LORD CHANCELLOR on the Woolsack.

Local Authorities: Subsidies from Rates
Lord Belhaven and Stenton: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will use their powers under Section 137(4) of the Local Government Act 1972 to lower the ceiling of 2p on the rate which local authorities are permitted to raise for charitable and public service purposes, which in the case of Greater London already permits the raising of £40 million, and whether they consider that subsidies to such publications as Lesbian Line and London Gay Teenage Group fall within the purposes of Section 137 of the Act.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Bellwin): My Lords, my right honourable friend the Secretary of State for the Environment does not propose to reduce the present limit of a 2p rate product on expenditure by local authorities. This section provides a useful flexibility for authorities. I accept that this flexibility may, on occasions, lead to use of public funds for purposes which many may consider undesirable or even deplorable and that is a matter on which the authority concerned will be answerable to its electorate. Ministers have no authority to rule whether particular subsidies are within the law, but I would stress that if the district auditor considers expenditure illegal or unreasonable he may initiate action at any time.
Lord Belhaven and Stenton: My Lords, I thank my noble friend for that reply. Is he aware that the GLC has a continuing policy of giving grants to all sorts of questionable organisations and publications, and that this is scandalising the hard-pressed ratepayers of London who see their money being used for openly immoral purposes? This is a matter—
Several noble Lords: Reading!
Lord Belhaven and Stenton: —which must concern all the people in the country and not just the people of London.
Lord Bellwin: My Lords, I am aware of the concern which exists at the present time, not least by people on all sides of local government, and I thank my noble friend for drawing this matter to the attention of the House in the way he does.
Baroness Birk: My Lords, is the Minister aware that we on this side are pleased to hear him make
622
a categorical statement that the ceiling is not to be reduced? Is he aware also—as, evidently, his noble friend is not aware—that the bulk of the money which is spent by the GLC under this section goes to industry and commerce, and that a great deal of the other money goes to organisations such as the St. John Ambulance Brigade, tenants' organisations and legal resource centres, with a certain amount also going to servicing police and other committees? Would the noble Lord not agree that the small amount that remains must be left to the discretion of the local authorities? As he rightly said, is it not then up to the electors themselves to make their own representations?
Lord Bellwin: My Lords, in fact, all the spending, on whatever purpose, is up to the local authority to decide. The point that I think my noble friend was making was whether or not it was considered to be a fair, proper or reasonable application, and that is why I made the observation that I did.
Lord Strabolgi: My Lords, following what my noble friend has said, are the Government also aware that a great proportion of this money also goes to help music and the arts, out of all proportion to the small peripheral publications which are mentioned in the Question?
Lord Bellwin: My Lords, I would give the same reply as I gave to the noble Baroness, Lady Birk. But I think it would also be proper to say that, regardless of the amount of money, there is concern on the point that my noble friend raises and, I think, proper concern.
Lord Mowbray and Stourton: My Lords, disregarding the issues of this Question, will my noble friend the Minister say that he does not approve of Lord Belhaven's use of the verb "scandalising"?
Lord Bellwin: My Lords, I am not sure what my noble friend is trying to get me to say. I thought, frankly, that the use of the word in this context was not inappropriate.

Playgrounds and Playing Fields
3.5 p.m.
Lord Davies of Leek: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will encourage local authorities not to sell off playgrounds and playing fields when schools are closed but rather preserve them for use by children.
The Parliamentary Under-Secretary of State, Home Office (Lord Elton): My Lords, no. This is for local authorities themselves to decide.
Lord Davies of Leek: My Lords, am I right, or is my hearing failing? Did the noble Lord say, "No"? Is he aware that if he said that he will not encourage

623
local authorities not to sell off playing grounds, we are undermining the future of Britain? The playing fields of Britain are important for the men of the future, and not only from Eton. Most of the men of the future do not come from Eton. May I point out—
Noble Lords: No!
Lord Davies of Leek: My Lords, I said "May I". May I ask the noble Lord whether he is aware that in the country districts of England, far from England's countryside being an adventure playground, the streets of the villages are limited? When a village school closes and the village playground goes, because of the intense agriculture and farming, children cannot kick a ball around.
Noble Lords: Speech!
Lord Davies of Leek: My Lords, will the noble Lord, therefore, please encourage local authorities? Will he help to keep a register of playing fields in local areas that should be kept alive, and thus encourage the National Playing Fields Association and the noble Lord, Lord Luke, who for 30 years has been the chairman of that organisation?
Lord Elton: My Lords, the noble Lord has amply demonstrated not only the acuteness of his hearing but also the fact that there are some games that one can play without any playing fields at all. I think I should point out to the noble Lord that it does not always follow that an abandoned school has its playing field in the area where playing space is most needed, and the best thing may be to sell that and buy another one in a better place. The only people who can decide that are the local authority—not central Government. As to the need for an actual reduction in the number of schools, I think I should remind the noble Lord that in his own part of the country, and indeed all over the country, it is considerable. The department carried out a study of school buildings, which was published in 1977. That resulted in an estimate that, by 1986, there would be over 3 million primary and secondary school places surplus to requirement. We do not, of course, intend to close all of them, but the target is 1·3 million.
Lord Davies of Leek: My Lords, is the noble Lord aware that he has given the number of primary school places? It is the number of playing fields that I am interested in.
Lord Elton: My Lords, maybe the noble Lord's hearing is not as good as I thought it was. I said primary and secondary schools.
Lord Balfour of Inchrye: My Lords, may I ask the Minister whether, in view of the fact that in the technological years ahead leisure will be one of the most important things we can have in this country, and can teach people to use, it would be wise for the Government to regard every open space as precious for the future, and not to desecrate it by building, if it is possible to avoid doing so?
Lord Elton: My Lords, I have great sympathy with the emotional appeal of what my noble friend has said, but the fact remains that there are some open spaces that are not much use. One of the virtues of the new regulations which the department has brought out is that the only area which will count towards a minimum play area for a school is one which can be used for team games, and which can be expected to be usable for seven hours a week. That does not mean that there will not be flower beds, coppices and so on, but it does mean that all the play space that is available is usable. When that sort of space becomes available, no doubt there will be a very strong case for its retention for public use. But the people who can determine whether it is the best place for public use are not central Government, nor the Department of Education, but the local authority.
Lord Stanley of Alderley: My Lords, I wonder whether my noble friend is aware that one of the problems when a school closes is that the trustees of that school's playing ground cease to get any rent? Therefore, they cannot pay any rates to the local authority and they have to sell the playing ground. I wonder whether my noble friend could tell me what action, if any, the Government, or local government, could take to allow these playing fields to remain playing fields?
Lord Elton: My Lords, I understand the noble Lord's difficulty. I can tell him that there is statutory provision for local authorities to give discretionary rate relief in respect of charitable bodies. If the noble Lord will bear with me, I shall try to give him more particular information in writing.
Baroness Birk: My Lords, will the Minister bear in mind that the standard which has been laid down is that there should be six acres of recreational or free ground for every 1,000 people in the population? If the Minister accepts that this is so—and I gather this is a generally accepted doctrine—will he not go back to my noble friend's original Question, which was to encourage local authorities not to sell off playgrounds and open spaces, since, particularly around urban areas, this means even more crowding and far less open space, which is detrimental to the social life of the community?
Lord Elton: My Lords, I shall not remind the noble Baroness of the celebrated London case which took place under the jurisdiction of the previous Administration. I will merely say that where there is a shortfall in the requirement of the ratio of space to people the local authority is under an obligation to meet that requirement. And if it has surplus school playing fields available to it, that is a means by which it can do it. It should not be done by central Government.

The Falkland Islands
3.12 p.m.
Lord Molloy: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they have any statement to make on the situation in the Falkland Islands.
The Minister of State, Foreign and Commonwealth Office (Lord Belstead): My Lords, I repeated yesterday in your Lordships' House a Statement made in another place by my right honourable friend the Secretary of State for Foreign and Commonwealth Affairs. The Government will continue to keep Parliament informed.
Lord Molloy: My Lords, in view of what the noble Lord has just said, I believe and hope, with the leave of the House, that we ought to leave it at that for the time being.
Lord Belstead: My Lords, I am grateful to the noble Lord and agree with him.
Lord Jenkins of Putney: My Lords, is the noble Lord aware—
Several noble Lords: Order!
Lord Jenkins of Putney:—that not all of us are content to leave it at that for the time being? Is the noble Lord aware that the United Nations Resolution 502, which the Government claim as their licence for action, calls upon both Britain and Argentina to refrain from the use or the threat of force—
Several noble Lords: Reading!
Lord Jenkins of Putney:—in the region of the Falkland Islands? Are not both the task force and the maritime exclusion zone in breach of that resolution?
Lord Belstead: My Lords, the sending of the British task force is fully covered by Article 51 of the United Nations Charter. However, in saying that to the noble Lord, may I add that my right honourable friend the Foreign and Commonwealth Secretary's journey to Washington and all the efforts of the British Government are designed to secure a peaceful settlement.
Lord Brockway: My Lords, may I ask the Minister, first in reference to Resolution 502, whether or not the first demand is the cessation of hostilities? In that situation, would it not be good to secure such a cessation so that a truce can be made while negotiations are taking place? Secondly, would the Government support the idea of a United Nations presence in the Falklands, with a peace-keeping force to replace the Argentine occupation?
Lord Belstead: My Lords, at the present time I do not think that it would be for the convenience of the House to pursue these matters.

SCHOOLS COUNCIL FOR THE CURRICULUM AND EXAMINATIONS
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon, my noble friend Lord Elton will, with the leave of the House, repeat a Statement
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which is to be made in another place on the future of the Schools Council for Curriculum and Examinations.

Local Government Finance (No. 2) Bill
3.15 p.m.
Lord Bellwin: My Lords, I beg to move that this Bill be now read a second time. The Bill has three purposes. First, it abolishes supplementary rates and precepts. Local authorities will therefore have to set their rates or precepts for complete financial years. Secondly, it enables the Secretary of State to protect from any general loss of grant local authorities which meet their individual spending targets. Thirdly, it sets up an audit commission to be responsible for the audit of local authorities in England and Wales.
Part I of the Bill abolishes supplementary rates and precepts and ensures that local authorities cover their estimated expenditure needs for each complete financial year by making a single rate or precept, beginning with the financial year 1982–83. Let there be no sorrow over the demise of supplementary rates. The power to levy supplementary rates or precepts has existed for a long time in England and Wales but there has never been a similar power in Scotland. And in England and Wales successive generations of local authorities have taken the view that supplementary and unexpected rate demands part way through the year are highly undesirable. Domestic ratepayers expect that the rate demand they receive at the beginning of the year tells them their total liability for that year. They budget accordingly. And unbudgeted, unexpected supplementary demands can only cause quite unreasonable confusion and financial difficulties, especially for those on low incomes. Until recently, local authorities of all political persuasions have recognised this and made every effort to avoid such unfortunate and unpopular demands.
Equally, for non-domestic ratepayers who have no local voice by which they can protest, the effects can be extremely harsh. Industry and commerce cannot plan their budgets efficiently and effectively if they are suddenly called upon to meet unpredictable supplementary rate demands. We really cannot and must not turn a deaf ear to the cries of firms who see such unexpected drains on their resources as a real danger to their continued existence, let alone growth. We are talking about the potential effect on employment as well as individual firms' prosperity. We should not forget that. All ratepayers are entitled to expect financial stability from their local authorities.
The majority of local authorities are still able and determined to manage their financial affairs prudently, effectively and responsibly. They still feel that the last thing they wish to impose on their ratepayers is a demand for a supplementary payment on top of the one budgeted for and announced at the beginning of the financial year. So it is a power that has rarely been used—that is, until recently.
The financial year 1981–82 saw a sudden flurry of supplementary rates and precepts, not from the vast majority of local authorities by any means. But a significant number of local authorities raised supplementary rates or precepts on their own account, often following changes of political control. The unfortu-

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nate effects of these unexpected rate demands on local ratepayers are clear. But there was also a more wide-ranging defect. A large proportion were levied—and I have to say nearly all—by Labour authorities to finance increases in expenditure plans in direct defiance of the Government's request for reduced expenditure. As a result, many millions of pounds were added to the total local government overspend in 1981–82.
Traditionally, local government, regardless of political colour, has respected central Government's right to set national targets for expenditure and has cooperated voluntarily to enable those targets to be achieved. The current irresponsibility has put this traditional relationship at risk because no central Government could allow such a position to continue. But this Bill does not set a limit for local government expenditure. It does not limit the rate which a local authority may levy.
Clauses 1 and 2 simply ensure that each local authority plans its expenditure for the whole year, sets its single rate accordingly, and then lives within the means it has planned. This is the practice of the vast majority of prudent, responsible authorities already. So let us have no tears for supplementary rating; it is a power which the majority of local authorities have never wished nor needed to use—even in times of crisis—but which a minority have now made clear they will abuse.
Turning to Clause 3, it is of course important to ensure that no doubt arises as to the credit-worthiness of English and Welsh local authorities in the new circumstances. This is essential for the lenders, the authorities, and their employees. The Government also recognise that there may be times when a local authority will face a quite sudden and unexpected demand on its resources (for example, following a natural disaster) which cannot be met by its contingency funds. In such circumstances special temporary borrowing approval may be sought from the Secretary of State under Schedule 13 to the Local Government Act 1972. But, since this provision does not apply to the Greater London Council, although it applies to all other English and Welsh authorities, Clause 3 ensures that similar provision is made for the GLC. As for all other authorities, such consent will be given only where it is absolutely essential for the expenditure to take place to meet unavoidable commitments. A condition of any borrowing approved in this way will be that it should be repaid out of revenue income within the first quarter of the following year.
Before I move on to Part II of the Bill, your Lordships may be aware of the commitment made by the Government during the course of the Bill's Committee stage in another place to bring forward amendments to clarify the position of rating and precepting authorities, and of ratepayers, in the light of the complicated rating issues which were raised by this House's ruling in the GLC/Bromley case. In particular, provisions will be needed to cover powers and duties to reduce a rate and to make refunds where a precept or rate is found to be unlawful. I am sure your Lordships will wish to know that local authority associations are being consulted on the best means of achieving our objective of clarifying and protecting the position of
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both rating authorities and ratepayers. I will be tabling the necessary amendments in good time for our discussion in Committee of Part I of the Bill.
Part II of the Bill is necessary because some local authorities have been unwilling to work voluntarily within the Government's public expenditure guidelines. The aggregate overspend in 1980–81 was such that we decided we had to take action. We therefore reduced the total amount of grant available for distribution by £200 million. This was necessarily indiscriminate and affected authorities that had reduced their expenditure just as much as it did those authorities that were in fact responsible for the overspend. Under the legislation then in force, there was no way of it being otherwise. But Section 59 of the Local Government, Planning and Land Act 1980 provided a way of adjusting the grant payable to an individual authority. We therefore proposed as early as January 1981 to use this means of protecting the grant entitlements of authorities that individually met their targets if there had to be a general reduction of grant because of aggregate overspending in 1981–82.
In December 1981 my right honourable friend announced the principles on which a similar scheme would, if necessary, operate in 1982–83. In view of the importance of these proposals, we have taken the opportunity presented by this Bill to seek specific statutory authority for the grant adjustment they involve: in essence, that is what Part II of the Bill is about. There was some concern expressed when the Bill was introduced in another place, but the powers provided for in the Bill went beyond those suggested by our present proposals and could be used in conjunction with those contained in Part I of the Bill to reduce the amount of grant payable to an authority after it had made its rate for the year. My right honourable friend the Minister for Local Government and Environmental Services therefore made it clear that this was not our intention and introduced amendments which will, for future years, require the principles on which a differential grant holdback scheme is operated to be spelled out in advance in the Rate Support Grant Report for the year in question. He gave an assurance that for 1981–82 and 1982–83 we do not intend to implement differential holdback schemes more severe than those already announced. I hope that those assurances have gone some way towards allaying the fears felt by some local authorities.
I should perhaps warn your Lordships that the Government may find it necessary to introduce further amendments in Committee—not, I must make it clear, so that we can change the proposals we have already made, but in order to make sure that the safeguards we have built in already at the request of local authority associations do not prevent us from carrying out our existing policy; in particular, the exclusion of certain categories of expenditure from the calculation of performance against target. None of these amendments will affect the central purpose of Part II, which is to make express provision for adjustments to the grant entitlements of individual authorities for the purpose of encouraging those reductions in the overall level of local government expenditure that the Government think necessary, having regard to general economic conditions.
Part III of the Bill provides for the setting up of an

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audit commission. Noble Lords may ask why we should change the existing audit arrangements. We have done so for three reasons: to make audit more independent, to enhance the audit function, and to provide for greater public accountability. Audit must be an independent process and must be seen to be independent from central and local government. I would therefore argue without apology that it is right and proper to set up the audit commission as a separate, independent body responsible for local government audit. One of the duties of the commission will be to appoint the auditors to each local authority. This represents a change from the present system whereby local authorities appoint their own auditors, and I know that this change has attracted adverse comment. I would reply, firmly, that independent appointment is an important part of the audit process, especially for bodies where so much public money is involved. The principle of independent appointment is widely observed elsewhere in the public sector. Nationalised industries, the National Health Service and many other public bodies have their auditors appointed by the sponsoring Minister. Central Government departments are themselves audited by the Comptroller and Auditor-General, who is quite independent of the departmental Ministers. It seems to me to be quite right that auditors for local government also should be independently appointed.
I wish to stress that the Government intend local government itself to be well represented on the membership of the commission, together, we hope, with a range of other interests. Indeed, one of the aspects of the Bill that I would especially commend to your Lordships is that in future local government will be able to play an important and central part in the policy direction of the audit system—a role for which the present arrangements do not provide. So nobody can say that we are in some way cutting local government out of decisions about its audit system—quite the contrary, in fact.
Independence from central Government is just as important. At present the district audit service is staffed by civil servants and organised as part of the Department of the Environment. We believe that there should be a clearer separation of audit from central Government, which establishing the commission will achieve. However, Parliament has a legitimate interest in statutory bodies of this kind. It is for that reason that the Bill provides for the Secretary of State to be given certain powers in respect of the commission—for example, to appoint members and to give directions. Such powers are well precedented. We regard these powers as constitutionally necessary to ensure a proper degree of ministerial answerability to Parliament.
I should like to turn now to the enhanced role of audit, particularly in the field of value-for-money auditing. Value-for-money auditing is not new, but it is an area where practice is developing. Under the Bill, the auditor will for the first time be given an explicit duty to consider value-for-money matters. Closely linked with the value-for-money element in the audits of individual authorities will be the commission's statutory responsibility to carry out more general studies across a range of local authorities. These will help identify best practice in the provision of local
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authority services, and will be an important tool for individual auditors. And, of course, they should prove valuable to local authorities themselves.
I am in no doubt that this greater emphasis on value-for-money audit represents a thoroughly worthwhile advance for local government. I know there has been concern that, in his value-for-money work, the auditor may trespass on what are essentially matters of political policy rather than audit matters as such. I should like to assure your Lordships that this is neither the intention, nor, in the Government's view, the effect of this Bill. The Bill has been amended in another place to make this point even more clear. And my right honourable friend the Minister made a statement in the other place to confirm the position.
In the context of value-for-money audit, it would be appropriate for me to say that the Government envisage greater use of the private sector in local government audit under the commission. We consider that the private sector has a great deal of valuable experience to offer, especially in the field of value-for-money work. We do not say, of course, that the private sector will have nothing to learn from existing local government audit practice; on the contrary, we recognise the special expertise of the district audit service. But we think the two can complement each other, to the benefit of local government as a whole.
This brings me to our third objective—that is, improved accountability of local authorities to their electorates. The Bill achieves this improved accountability by requiring the auditor to consider whether a report should, in the public interest, be made immediately rather than at the end of the audit. It gives local government electors wider rights of objection. In future, local electors will be able to object about an matter on which the auditor can make a report rather than just issues of illegal or improper expenditure, as at present. And a strengthened audit function as a whole can only improve the quality of financial information available to ratepayers, and, for that matter, to elected members.
I have so far dwelt on the changes which are envisaged for local government audit. But I should stress that the independent position of the auditors themselves will not be changed by the Bill. There is no question of auditors coming under the control of the commission. At present, auditors are answerable to the courts for the way in which they discharge their statutory functions. That will continue to be the case.
I should touch briefly on an amendment which the Government envisage to Part III of the Bill. It arises from an amendment tabled in another place by, among others, the chairman of the Public Accounts Committee, and the chairman of the Treasury and Civil Service Committee. As many noble Lords will know, it would have required the commission to carry out studies of the effect which actions by central Government have on the economy, efficiency and effectiveness of local government services. It would have been for the Comptroller and Auditor-General to consider these studies, and to report to Parliament. This amendment was withdrawn in another place, but only after a commitment to table an amendment in your Lordships' House, after full discussion with interested parties. All I wish to do for the present is to reaffirm the Government's intention to table such an amendment.

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Its precise form has yet to be decided, because the promised consultations are still to be completed. But we do intend that your Lordships' House and another place should be enabled to have a proper debate on the important issues involved.
With that, I also conclude my comments on the Bill as a whole. I look forward, as always, to hearing your Lordships' views in debate. I commend the Bill to your Lordships as a measure which will encourage responsible and effective local government. I suggest that the Bill is worthy of your Lordships' support, and I beg to move.
Moved, That the Bill be now read a second time—(Lord Bellwin.]
3.35 p.m.
Baroness Birk: My Lords, may I first thank the Minister for his full exposition of this Bill and, if I may, apologise if I cannot be here at the end of the proceedings, depending on the time, as I have a longstanding engagement which I have explained to the Minister. I hope we will finish in time because I would very much like to hear the winding-up speeches.
This Bill comes to us from another place having seen many changes in its passage. Indeed, I think that calling it a No. 2 Bill could be said almost to display lamentable numeracy; with the demise of the No. 1 Bill and the changes in Committee, this version has evolved as a fourth or fifth version in the Government's latest attempt to shackle local authorities to their monetarist theory of reducing public expenditure. The Minister's fine and eloquent words will not really cloak what is one of the major points underlying the Bill.
That said, there have been some important changes made during the passage of the Bill in another place, and this Bill is now a rather less disastrous attack on local government than the Government's earlier efforts. The Government have listened to the case being made by the local authority associations and have in some areas responded in a positive manner. For this, it is only fair to say, credit is due. Let us hope that the same good sense is continued in your Lordships' House while we are considering this Bill, and that the Government will then agree—when they are in the process of rewriting parts of the Bill with the amendments they are themselves to bring forward—to change it further so that it is improved rather more, as it is still a very highly unpalatable piece of legislation.
Like other interested noble Lords, I have received comments on this Bill from all three major local authority associations: the metropolitan authorities, the county councils and the district councils. The interesting thing about it is this, that all three of them—one is under Labour control and two under Conservative control—remain opposed to this Bill. It takes a great deal to unite local government in this country in this way, particularly when the associations we are talking about cross party lines. So let us see how the Government have managed to achieve this feat with this particular Local Government Finance Bill that we have here.
As the Minister has explained, Clauses 1 and 2 take away from local authorities the right to levy supplementary rates. This, do not let us forget, is a con-
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stitutional shift away from the partnership that has always existed between central and local government. It has often been said that people pay their taxes in sorrow and their rates in anger. Supplementary rates must then be paid in a great rage. Clearly, supplementary rates are unpopular, and not least for the 32 English local authorities which levied them in 1981–82.
My Lords, those councils did not undertake the exercise lightly. The supplementary rates were levied to finance grant reductions the Secretary of State had made—unlawfully, as it turned out—and which he is now seeking to legalise retrospectively in this Bill. They were levied to protect essential local services; they were levied to protect schools, housing, social services, from the ravages of inflation that the Government's economic policies have inflicted upon local government. And they were levied to finance changes in policy for which newly elected Labour authorities had a clear electoral mandate.
Local authorities have had the power to levy supplementary rates since at least 1601—that is, going right back to the beginning of the 17th century. It is true, as I think the Minister said, that this power has rarely been used, and even in the exceptional circumstances of 1981–82 only 32 out of 412 English local authorities levied them. The Government have made out no real case for this power to be abolished. Whatever they might say, the real answer is that it gets them off two hooks. First, it disingenuously confuses the issue of supplementary rates defined in the traditional manner—that is, the local authority coming back for another bite of the cherry during the year—with the Government's earlier attempt to impose referenda on local authorities. Supplementary rates for referendum purposes were defined as "supplementary" to the Government's limit. Secondly, it gets them off the hook of what to do about rates in the long term. All of the local authority associations have been concerned about the lack of flexibility which will result from this. They are concerned as to what they are going to do if there are riots in their areas, if there are emergencies, like flooding and snow. This runs through the comments and anxieties of all the local authority associations.
While sitting listening to the noble Lord recommending this Bill to the House, I was wondering what different tack he would be on if he were not the Minister in the Department of the Environment, but still the leader of Leeds Council. I think that, with his very great experience, ability and success as a local government man, he would have been hammering on those doors so hard objecting to most of what is in the Bill.
The Government's Green Paper on rates provides no firm answer as to what is going to happen and what the Government will do about rates, although the Prime Minister did make a rash electoral promise to abolish rates. It was also said that this is an interim Bill which will be in action while it is decided how to reform the rating system. If that is really so, then why is this not being promoted for a limited period? Perhaps the Minister can tell us about that. Again, the local authority associations think that this should be the procedure; but it is not. At the moment it is down for ever, for as long as the Government last—

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unless of course, the Government feel that they are only in government for a very short interim period themselves, in which case we can do something about this legislation when we return to power.
Let us now look at the Bill again. Not only are Clauses 1 and 2 unnecessary, but they are retrospective, which is generally considered in this country as legislative anathema. The Government will have to make out a very good case for retrospection if this House is to approve the Bill. I am talking not only about my noble friends behind me, but about people in various other parts of the House. The ratepayers of Bedfordshire and the councillors of Bedfordshire County Council also await the Government's statements on this part of the Bill with interest. It is true that the Minister for Local Government said, in Standing Committee on 2nd March, that the Bill will invalidate retrospectively supplementary rates or precepts for 1981–83, including those made prior to 1st April, and amendments will be brought forward in this House.
However, it is not quite as simple as that. Doubts still remain, and other legal opinions are not anything like as certain as the opinion upon which the Minister for local government is acting, and their opinion is that the legality is extremely questionable. I think that these points will be raised by noble Lords in this House and can be pressed quite substantially.
Clause 3 appears innocuous enough on the surface. It is to make sure that interest payable on money borrowed by local authorities shall be the first charge on the local authorities' revenue. But it is only necessary because, for the first time, local authorities are to lose some of their revenue raising powers—that is to say, the supplementary rates. Thus, two possibilities result from this, both of which are extremely serious and cannot be skated over. Either local authorities start borrowing to finance revenue expenditure—a very slippery path that New York went down a few years ago—or they could become insolvent. In that case the Government are trying to protect the money brokers in the City at the expense of local authority employees, who will be less well protected than the private sector employees in the event of their employer becoming insolvent, because the private sector employees' wages will still continue to be a first charge on revenue.
Clause 4 is extremely complex and likely to become more complex as it receives further consideration in Committee. Part I of the Bill changes the law that dates back to 1601. Part II of the Bill, consisting of just Clause 4, changes the law that dates back to 1980—the Local Government, Planning and Land Act. That Act introduced the frightfully complicated and mind-blowing block grant system. Now, after only one year of operation—no, during its first year of operation, because the Bill is retrospective and changes the law for the financial year ended 31st March 1982—the Government seek to change the system yet again. The clause talks about "expenditure guidance" being given by the Secretary of State to individual local authorities. That is just a euphemism for the Secretary of State setting an expenditure target for each local authority. And if local authorities do not obey those targets, they will lose grant. So do not let us have any misunderstanding about this.
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How will the Secretary of State set those targets? If the 1982–83 process is anything to go by, only a few cognoscente will understand. In setting targets for 1982–83, by order, in anticipation of the enactment of this Bill, the Secretary of State fell foul of the Select Committee on Statutory Instruments, and quite right it was, too. I cannot imagine many people understanding the process or the Secretary of State's description of "skewing" and "iterative processes". "Skewing" evidently means where the target consists of two components: GRE and 1981–82 performance against target. The "iterative processes are that the total of targets has to equal total expenditure—I do not even understand it myself and I cannot read my writing. Whatever effect this Bill has on local government, those words and some of the language certainly have a very destructive effect on the English language. But will the Secretary of State and his officials be in a better position with their skewing and iterative processes to assess how much each local authority need to spend or how much the electorate want them to spend?—of course not.
Furthermore, the action of the Government, in setting restrictive targets for the very inner city areas which they were so concerned about last year, means that the cuts in the RSG hit them harder, and so less money in real terms will go to those areas than, in fact, has done this year; and this, at a time when the Secretary of State is personally taking such an interest, particularly in Liverpool, does not really seem to make very much sense, and certainly is socially disastrous.
We understand that further fundamental amendments will have to be made to this clause to legalise the targets already set for 1981–82 and 1982–83. If that is so, this House will have to examine them very carefully indeed. But it would, of course, be very much better if the Government were to drop the whole idea of trying to set targets for individual local authorities. Each time they try it, they step into a legal minefield of their own creation. Local government finance, it seems, is providing a growth industry to the legal profession and for the paper-makers. Each time we have a new copy of this Bill the price increases. This will continue through the Committee stage. Therefore there are two groups of people who will probably make something out of it, but not the ratepayers and the general public.
Part III of the Bill sets up the audit commission. The local authority associations have all expressed very grave concern about this. Not only does it take away the local authorities' right to choose their own auditor, but it will result in auditors being imposed upon them. At present local authorities can either use the district auditor or go to firms themselves. They have the opportunity to go to outside firms, and many of them do so. Therefore, the private sector is certainly not totally neglected in this way. Moreover, it replaces the present arrangements for auditing local authorities with a quango appointed by the Secretary of State.
In the past, since they came to office, the Government have shown themselves to be very adept at cutting quangoes. In fact, they played a sort of numbers game. I remember with great sorrow that a small committee attached to the Department of the Environment was cut immediately and saved no money. It

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was concerned with bird life in the royal parks and comprised a group of four or five dedicated people who cost not a penny to the department but who gave us some knowledge, which we would not otherwise have had, of the rare birds of the parks. The committee which I set up for sculpture in the royal parks, which also cost nothing and which had the services of very distinguished art historians and sculptors, was also done away with.
Should not the Department of the Environment remember that it is also concerned with the quality of life and not just with all this financial miasma which does not seem to result in any increased quality of life but in a great deal of sorrow and complication? According to the Bill, the Secretary of State may have to "consult" the local authorities and other bodies about the audit commission, but in the final analysis it is he who appoints people to the commission. If he will not mind my saying so, the Minister had the gall to stand there and say that this is a body which would be more independent. It will not be independent at all. It will be boxed in in every way. It will be boxed in in its constitution and in what it does; the local authorities will be boxed in as to what sort of choice they will have or will not have. Therefore, to call it independent seems to me to be interpreting the word in a rather extraordinary way.
As time is going on, I should briefly like to quote some of the views of the Association of County Councils. They are rather good. They say that they,
"regret the refusal of the Government to accept at Committee stage an amendment which would have permitted local authorities to retain the right to appoint their auditor".
The Association of District Councils—and this too is a Tory body—says:
"There is no evidence that the present arrangement has been inadequate or in any way detrimental to the independence and effectiveness of external audit of local authorities' accounts".
The Association of Metropolitan Authorities says this:
"It takes away from local authorities the right to appoint their own auditor".
This view has been expressed accross the board. I think and hope that a number of Conservatives in this House will be as concerned as a number were in the other place who spoke up during the stages of the Bill in that place. There is a very real danger that this commission will be the financial handmaiden of the Secretary of State. He will have the power to direct it to undertake extraordinary audits of individual local authorities. In Clause 20 the commission will have the duty to undertake efficiency studies of local services. This extends the audit into what could be very dangerous and emotive areas, areas which local authorities now deal with through LAMSAC. It is ironic that, at the moment when the Government intend to set up an audit commission to undertake this work, they are to withdraw £500 million from LAMSAC.
The really basic danger is that this commission is under the direction of the Secretary of State, and this applies from whichever party he might come. It is this that deeply concerns and worries local authorities and the local authority associations. It is not a party political point; it is a question of the increasing dominance of central Government at the expense of local democracy. It reduces financing powers for local
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authorities; it means direct interference in the grant and expenditure of local authorities and the imposition of the Secretary of State's "hit squads" from the audit commission looking at the local decisions of local communities. This is really what this Bill is about.
In the guise of complicated financial changes, it is the Secretary of State in Marsham Street who is, once again, imposing his will on local councils. The grip of more and more central control over local government is now almost reaching strangling point. Local authorities are becoming more and more the impotent agents of central Government. This is very demoralising people of high quality and ability from taking on local councillors. One certain way of eroding local government to the point of feebleness is by discouraging people of high quality and ability from taking on the job of councillors, and thereby losing the indispensable experience of local knowledge and sensitive contact. If they are to be reduced to puppets of this sort, it will be very difficult to find men and women of sufficient calibre to come forward.
This, as I think I have made clear, is a bad Bill in what it seeks to do, in its retrospection and even in its drafting. We shall oppose it and endeavour to make substantial changes to this unhappy piece of legislation.
3.56 p.m.
Lord Evans of Claughton: My Lords, I should like to join the noble Baroness, Lady Birk, in congratulating the noble Lord the Minister on the clear way in which he defended the indefensible, but he did it very capably and we wish him well. I, too, may conceivably, if we make this debate drag on long enough, have to leave before the end, but I trust that that will not be the case.
From these Benches we have over the years consistently opposed the erosion of local democracy and freedom represented by the legislation that this Government have introduced ever since they took office in 1979. It is hardly surprising that one should have this difference because, as I think I have said before in your Lordships' House, the Secretary of State's philosophy and attitude to local government is totally different from that of my party and myself; in that financially at least, and, I think, on a broader basis, the Secretary of State, as the noble Baroness has suggested, seems to want to reduce local government to being purely a local agency of central Government. As she has rightly said, there will be nothing like the attraction for people of ability to come in and be part of a mere agency with no independence or power of their own.
Very clearly this Bill, even as amended so far, makes fundamental changes in the constitutional and financial relationship between local and central Government. On Clauses 1 and 2, in my opinion the Government have taken an extremely serious step in eroding the autonomy of local government. As the noble Lord the Minister suggested, knowing who the Secretary of State was, I agree that it may have been tactless for so many local authorities to impose supplementary rates this year. But, broadly speaking, over the years supplementary rates have been used only in ertremis. I very much regret that this power is being taken away. As far as I can see, powers to levy supplementary rates and precepts have been totally abolished without any concessions of any kind whatever being made. So local authorities which are fire and police authorities

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have, for instance, no flexibility at all to meet index-linked increases in salaries and wages granted by central Government. They have no flexibility to deal with totally unpredictable occurrences, such as riots and floods, and no ability to deal perhaps with more predictable economic factors, such as hyper-inflation.
I hope that the Government will introduce amendments to clarify—as I think the noble Lord the Minister indicated they probably would—whether supplementary rates or precepts made before 1st April this year but relating to 1982–83 will be rendered unlawful retrospectively by this Bill. I must say and underline—and it is the view probably held very broadly in your Lordships' House—that to act retrospectively in this field would be totally wrong and contrary to the spit it of the constitution of this country. My hope is that the Minister will be able firmly to reassure us during the Committee stage.
I understand that during the Report stage in another place the announcement was made that amendments of some kind would be tabled here. We shall obviously have to look at them very carefully. I hope that the Minister will also clarify statements by his right honourable friend that these provisions are temporary. As the noble Baroness, Lady Birk, said, we should like to know how long is "temporary" and how "temporary" is to be enshrined in legislation. Is it to be imposed for one year, or is it to be brought in by order? These are the kinds of things that it is important to establish.
Part II, the block grant, is the linchpin of the whole Bill, and the part of the Bill that has given the most trouble and continues, as has been said, to give the most trouble. What local authorities need more than anything in budgeting is reasonable certainty as to the level of the revenue they can expect to receive. This clause, as originally drawn, included a system of differential holdback—if I may use the appalling jargon—of grant, which meant that local authorities would not have known the amount or the basis on which money was being withheld from them for failing to reach the "target" set for them by the Government until after the start of their financial year. I think we all welcome the fact that this appalling proposal has now been withdrawn.
As the Bill stands, I now understand that local authorities in future will know how much grant they stand to lose before they complete their budget and so can fix a rate taking any loss of grant into account. Since they will no longer be able to levy a supplementary rate because of the first part of the Bill, they will presumably levy a higher rate to make sure that the unexpected occurrences, to which we have referred, are taken into account. So it may be that the very legislation that the Government are introducing will create a position where budgets and rates are at a higher level than they would otherwise have been to cover the problems brought about by the absence of supplementary rating.
On this clause, we all on this side are left with many doubts and uncertainties. The legislation will be retrospective for the financial year 1982–83. There are still legal doubts about the validity of some parts of the 1982–83 and 1981–82 targets which will mean, I believe, further redrafting. In particular the amendment to Clause 4 by the addition of subsection (5) is unsatisfactory. The alteration was, I believe—if I
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could believe that anything was well intentioned—well intentioned to protect local authorities from the prospect of being forced into a level of expenditure determined by the Secretary of State. This alteration however could now bear extremely hardly on classes of local authorities. There does not now seem any way in which the Secretary of State can apply differential standards to, say, metropolitan counties, with their particular problems—for instance, police, inner urban problems and transport—without applying the same changes, the same standards to, say, shire counties, which have entirely different problems and whose biggest expenditure item is in the field of education. What must be made clear—and I hope will be—is that the multiplier will apply to all local authorities of a class and not to individual local authorities or to all local authorities.
The complexity and uncertainty that I and the noble Baroness have mentioned underline two principles. First, I believe that Governments will always get into difficulties, and will deserve to, when they interfere with the affairs of democratically elected and constituted local authorities. Secondly—and this is very important—there is the need to carry out a root and branch reform of local government finance to enable local authorities to raise far more of their own money through new and their own resources, and perhaps a reformed rating system, so that local authorities are no longer so unhealthily dependent on central Government grants.
I hope that what I regard as the disappointing Green Paper, Alternatives to Domestic Rates, will produce much more imaginative legislation in due course so that the rate support grant will become purely an instrument for equalisation, which should therefore reduce the grant element from the present over 60 per cent. of a local authority's resources to perhaps under 25 per cent., provided we can raise finances in other and newer ways like the local income tax and other systems which have been discussed in the Green Paper.
Coming now to the last part, Part III, covering accounts and audit, I oppose this totally. I could not believe what I heard the noble Lord the Minister say in defending this particular part. In my experience from 25 years in local government—and the noble Lord the Minister and many other noble Lords will perhaps have had longer experience than I—the district audit service was a great success. It was widely respected. It was totally independent and disinterested, and it did a first-class job.
The Secretary of State has given the sop to the local authorities of a form of consultation, but basically he has retained power to himself, as the noble Baroness has said, to run the audit commission as a quasi Government quango. He can give it directions which it must obey. The commission is wholly appointed by the Secretary of State, and the appointment of its chief officer must be approved by the Secretary of State. Local authorities, and several Members of your Lordships' House, are going to be somewhat cynical about the Secretary of State's and the Minister's claim that it will be an independent body. If that is independence, I wonder what bondage is?
Finally, the refusal of the Government to allow local authorities to choose their own auditor from an approved Government list strikes me as a petty inter-

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ference with the liberty of local government. I warmly hope that the Government will change their mind on this. They have had universal disapprobation of this proposal from all the local authority associations. I understand that in another place there were, as the noble Lord the Minister mentioned, suggestions that the examination of local authority accounts should come under the aegis of the Comptroller and Auditor-General, and therefore under the direct scrutiny of a Select Committee. I gather from what the noble Lord the Minister has said that he is bringing in amendments to this, but at this point I would have certain strong reservations about that, too, as a further interference with the sovereignty and freedom of local government.
When we discussed the Local Government, Planning and Land Bill, I condemned large parts of it but said that there were some good parts to it. But I am afraid I cannot even give that crumb of sympathy for this totally misconceived, totally wrong and totally illiberal piece of legislation. We shall oppose it all the way through.
4.8 p.m.
Baroness Stedman: My Lords, as the noble Lord, Lord Bellwin, has said in his courteous introduction to the Bill, Part I provides for the abolition of the supplementary rates and precepts and requires local authorities to make their rates and precepts for a complete financial year. I believe that most noble Lords in the House would accept the Government's right to control the overall spending of local authorities, but frankly this second attempt at legislation, though different from the No. 1 Bill, is really no better than the first.
At present, early in the year the Secretary of State issues to each local authority the grant settlement which supposedly gives to each authority enough information for them to calculate what grant it can expect to receive for the coming year, given certain spending levels. The local authorities then set about preparing their budgets. They levy a rate to make up the difference between the total expenditure and their probable grant income. In normal circumstances, this has worked, but, in practice in the last three years, most authorities have spent most of their time revising their budget to suit the whims of the Secretary of State. Given normal circumstances, the difficulties only came if there was anything which could not be foreseen at the beginning of the year and which caused a local authority to overspend—for example, the uncertainty of interest rates caused by a change in the national or even the world economic climate, or climatic conditions of floods and snow and perhaps damage to sea defences.
It is true that the Secretary of State has allowed an escape clause to let him give his personal sanction to an authority to undertake temporary borrowing and to repay the loan out of their next year's rate. But surely what will really happen is that local authorities will build in a cushion to their budgets to allow for those unforeseen circumstances, and their ratepayers will be asked to pay much more because there is no guarantee that the Secretary of State will not change his mind as to grant levels or that interest rates might increase or that some major disaster might occur.
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In addition to those reasons there are other factors outside Government control: inflation can outstrip Government assumptions on pay and prices, assumptions which have been properly followed in computing the initial budget of the authorities; changes by Government in the powers and duties of local authorities during the year; a Government reduction of an authority's level of grant after the start of the year; the rates of national insurance and other imposts that can flow from Government budgets; following local authority elections, they may need to finance some new policies or higher standards on which they have been elected by the voters in their area; and there could also be a much lower than expected income from fees and grants as a consequence of running into a recession.
In the event of the revenue raised by the main rate and precept proving insufficient due to unforeseen circumstances, Part I represents a break in the fundamental tradition of local authorities that revenue expenditure is financed in the year in which it has occurred. The power to go cap in hand to the Secretary of State for permission to borrow for revenue expenditure must surely damage the credit-worthiness of local authorities. Authorities should have the power to borrow without the consent of the Secretary of State when the need to borrow arises from circumstances outside their control or, at the very least, when the need to borrow arises directly from the actions of central Government.
We are talking about a period of 15 months between the announcement of a grant settlement and the end of the financial year to which it relates. There is no assurance as to grant levels and I believe a clause should be included which would absolutely prevent a Secretary of State from reducing grant levels during a financial year in order to give local authorities some degree of security and stability. The Government really should take more time to think through the real effects of this legislation and not rush into it simply because they wish to impose it immediately.
Way back in November, the Secretary of State was reported as saying that he would accept a clause in the Bill limiting its life to two or three years, as the proposals were designed, as the noble Lord told us, solely as a temporary measure. Like the noble Baroness, Lady Birk, and the noble Lord, Lord Evans, I am interested: do the Government intend to honour that commitment and introduce their own new clause?
We do not like Clause 4 because it changes the whole emphasis of the way in which the grant mechanisms can be used. The powers given to the Secretary of State put him in the potential position of direct conflict with individual councils which choose not to reduce their expenditure. If the Secretary of State reduces the grant and then refuses to allow a local authority to borrow temporarily, the expenditure of that authority will have to be reduced. And if the councillors failed to agree on the reduction and the council decided that it would finance the expenditure by temporary borrowing, that temporary borrowing would be illegal and the councillors would be liable to a surcharge and possibly to disqualification. Such a decision would also put the treasurers of local authorities in a very invidious position because they must refuse to borrow where the borrowing is illegal, so they could not carry out the wishes of their councils.

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The practical consequences of this legislation are also important. If, after considering the initial budget, the Secretary of State decides that the expenditure of a local authority should be reduced, information about changes in grant are unlikely to be available before June. By June a local authority's options to curtail expenditure are very much limited. For example, if those cuts were to be made in what is perhaps the biggest single item of local authority expenditure, teachers' salaries, by June it would not be possible to reduce the numbers until the following Christmas because of the teachers' conditions of service.
Thus, to achieve the reduction in expenditure, four times as many teachers would have to go at Christmas as would have been necessary if the expenditure cut required had been known when the rate settlement was originally announced. All that that would do would be to unbalance the teaching labour force, cost a lot of redundancy pay and involve local authorities in re-employing most of the teachers the following April because the full year financial effect would be far greater than was needed. No right-minded authority would do that, but instead would make excessive cuts in text books, library and class materials and in the maintenance of buildings and grounds.
I am also concerned about the Government's use of grant-related expenditure assessments. They were originally intended for use in block grant distribution only. Now they are used for Government spending targets for individual authorities. Even for block grant purposes their use was very suspect and unreliable. If the Secretary of State really intends to use them, then those assessments must be made more stable and much more acceptable to the local authorities. Thus, Clauses 1, 2 and 4 taken together put the local authorities, I believe, in a position of subordination to the Secretary of State in Marsham Street.
Neither have we been persuaded that the proposed audit commission is such a tremendous extra safeguard for local democracy. The present statutory independence of district auditors from central and local government is and has been a reasonable safeguard for the ratepayers. The proposed commission is a very different animal with its chairman, vice-chairman and members all appointed by the Secretary of State, who will be able to fix the fees, to require an extraordinary audit and to direct the commission in the discharge of its functions. That is not a formula for an independent watchdog on behalf of the ratepayers. It is more a lapdog of the Secretary of State. We are not opposed to the idea of a commission, but we would want to see that such a body was really independent, with no overtones of central control and with generous representation for local government; "well represented"—as referred to by the noble Lord, Lord Bellwin—is not sufficiently reassuring. The Bill tries once again to make local government accountable to Whitehall, whereas we see democratic decisions and control working downwards to the local people and not upwards to the Secretary of State in Marsham Street.
The noble Lord, Lord Bellwin, will recall that for some months he has been considering how best to assist parish councils in expenditure on concurrent
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services, and I regret there still appears to be nothing in the Bill that will help parish councils. It should not be an impossible task to sort out how district councils pass on that part of their rate support grant to parish councils where they provide the services.
The precepts of the parish, town and community services—and there are over 8,000 of them—which are met wholly by rates levied on the ratepayers of those councils, are taken into account when the size of the block grant payable to district councils is determined. But none of that relevant grant has to be paid to parish councils, and neither is it credited in such a way that the parish ratepayers gain some benefit. Instead it goes to the district ratepayers, even though it was the parishes which bore the initial expenditure. That is grossly unfair, and all the ministerial sympathy in the world does not help us solve the problem.
It was over a year ago that I suggested that the Secretary of State could make regulations as to how RSG attracted to district councils for parish council expenditure could and should be passed on to the parish council. The noble Lord then said that he would look into it, but we have heard no more, we have seen no action, and there is nothing about it in the Bill. Is the noble Lord intending to introduce a new clause, or to make a statement about making enabling regulations?
During the Secretary of State's period at Marsham Street he has changed the grant position four times, and the present formula makes the old RSG and regression analysis look like a child's game of ludo. The whole of the Secretary of State's three-year tenure seems to have been spent in one assault and attack after another, causing grievious and actual bodily harm to local government. This is still a bad Bill, and a dangerous Bill, and we shall join with the noble Baroness on the Opposition Front Bench, and the noble Lord, Lord Evans of Claughton, in trying to make it more acceptable before it leaves our House.

The Schools Council for the Curriculum and Examinations
4.22 p.m.
Lord Elton: My Lords, with the leave of the House, I should like to repeat a Statement being made in another place by my right honourable friend the Secretary of State for Education and Science about the future of the Schools Council for Curriculum and Examinations.
The Statement is as follows:
"With permission, Mr. Speaker, I wish to make a Statement about the future of the Schools Council for Curriculum and Examinations.
"My right honourable friend the Secretary of State for Wales and I have considered this matter in the light of Mrs. Trenaman's report, which we published in October, and the comments on it. We are grateful to her for her review. It has prompted us to give fresh thought to the two functions of the council and the best ways of performing them.
"These functions concern the system of examinations at 16-plus and 18-plus, and the development of the school curriculum. We have concluded that a single body, constituted as an elaborate net-

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work of committees on the lines of the Schools Council, is not well placed to carry out both functions.
"On examinations, radical changes are required. Greater attention needs to be given to the coordination and supervision of examinations at 16-plus and 18-plus. Ministers need independent authoritative advice on how these examinations might best serve national aims for education. We shall soon need advice on the national criteria now being developed for the 16-plus examinations. The Schools Council is a large body constituted from the nominees of many interest groups. We need a small body comprising persons nominated by the Secretaries of State for their fitness for this particular important responsibility.
"My right honourable friend and I will accordingly discuss with the local authority associations the establishment of an Examinations Council, appointed and funded by the Secretaries of State. I am circulating in the Official Report a note setting out the proposed composition and functions of this council. Copies of the note are available in the Vote Office.
"Curriculum development is a practical and professional activity which goes on continually throughout the education system. This activity needs to be reinforced by a national body with the limited task of identifying gaps, helping to fill them, and assisting with the dissemination of curricular innovation. Such a body—a School Curriculum Development Council—needs to reflect the many interests concerned, particularly the teachers. Its constitution should promote the sensible ordering of priorities, and efficient operation. My right honourable friend and I will discuss with the local authority associations the establishment of such a body. We envisage that it would be appointed by the Secretaries of State after consultation, that it would be financed jointly by local and central Government, but on a more modest scale than the Schools Council, and that most of its members would be teachers. Details of its proposed composition and functions are also set out in the note circulated in the Official Report.
"We will also discuss with the local authority associations interim financial support for completing the necessary existing work of the Schools Council. As the new bodies come into operation, we would bring to an end our financial support of the council. We hope that many of the expert staff of the council will be ready to join the new bodies.
"My right honourable friend and I are ready to discuss our proposals with the teachers' organisations and the other bodies who nominate members to the council's committees. We hope that everyone will co-operate with the local authorities and ourselves in the new arrangements we propose. Our aim is to improve the quality of the examinations system and to promote the effective development of the school curriculum."
My Lords, that is the end of the Statement.
Following is the information referred to:
FUTURE OF THE SCHOOLS COUNCIL: PROPOSED NEW BODIES
1. This note gives details about the two bodies proposed in the Statement made by the Secretary of State for Education and Science on 22nd April.
Examinations Council
2. This would co-ordinate and supervise the conduct of examinations at 16-plus and 18-plus. Its functions will be:

(a) In regard to the activities of the GCE and CSE boards:

to ensure that syllabuses and procedures for assessment at 16-plus are in accordance with the national criteria which are to be proposed by the boards and considered by the Secretaries of State;

to approve new A-level syllabuses and revisions to existing syllabuses;

to monitor the comparability of standards of both 16-plus and 18-plus examinations;

to engage in research necessary in support of these activities; to consider appeals by individuals;

(b) To advise the Secretaries of State on the validity of national criteria for examinations at 16-plus and generally on how the examination system, at both 16-plus and 18-plus, can best serve the needs of the education service and its clients.

3. This body would be formed of about 10 to 15 people drawn from within and outside education, appointed in a personal capacity and unpaid, of good standing in their fields and reflecting a broad spectrum of knowledge and experience. The body will carry out its difficult and important functions through an expert staff. The members will be appointed by the Secretaries of State, after consultation with the interests involved. The body will be funded by the Government.
School Curriculum Development Council
4. Its functions would be:

(a) to inform itself broadly of what curriculum development is currently going on;

(b) to judge its adequacy and to identify gaps and likely future needs;

(c) to stimulate, within a modest budget, work to meet the identified needs; and

(d) to promote the dissemination of curriculum innovation, whether stemming from its own work or from that of others, where adequate means do not already exist.

5. The body might have a majority of teachers in a total membership of about 20, appointed by the Secretaries of State in a personal capacity and unpaid. Some two-thirds of the teachers might be selected from lists of names submitted by the teachers' organisations, and these lists, together with names proposed by other bodies, would also be taken into account in appointing the remaining teachers members. Other members would be appointed to reflect appropriate interests: in particular the local education authorities, further and higher education, industry and commerce. Departmental officials would not be members of the council, but the Secretaries of State would wish to appoint assessors.
6. The Secretaries of State propose that its funding will be partly by the Government and partly by the local authorities collectively. Some of the Government funding would be by way of specific commissions.
7. The council would appoint its own staff.
4.26 p.m.
Baroness David: My Lords, I should like to thank the Minister for repeating the Statement, and we, too, are grateful for Mrs. Trenaman's review of the Schools Council, but we are surprised that despite the gratitude that the Secretary of State expresses, he has ignored her recommendation for a national body dealing with both curriculum and examinations. The Schools Council is to be abolished. Instead of Mrs. Trenaman's recommendation for a streamlined council, with the number of committees reduced and the numbers on those committees reduced—with which we were in complete agreement—there are to be two councils—one on examinations and one on the curriculum. The Secretary of State will apparently have great powers of

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patronage, as the appointments are to be entirely in his hands. This means very much greater control by Ministers and the department.
Which is to be the more important council? I guess the examinations one. I ask, are there to be any teachers on this council? There is no mention of that in the Statement. Will the Examinations Council determine the curriculum?—because that we believe would be most unfortunate and deplorable.
In paragraph 4 the Statement says, on examinations, that radical changes are required. After recent announcements on the 16-plus, one wonders very much what the radical changes will be. Can the Minister enlighten us as to what is meant by that? Is the Examinations Council, which is comprised of only 10 to 15 people, to give—I quote from the Statement—the
"authoritative advice on how these examinations might best serve national aims for education"?
The 16-plus and the 18-plus are mentioned in the Statement, but the 17-plus is not. Are they, too, to be within the province of the new council?
The Curriculum Council, the Statement says, is to identify gaps and likely future needs. Will there be the resources to fill those gaps, if they are identified by the new council? The recent HMI report on the schools would suggest that there would not be the resources.
Lastly, with regard to consultations, were there consultations with the local authority associations before this Statement was drawn up? Since they contribute half the funds for the Schools Council, it would seem right that they should have been consulted. I should like to know the answer to that. Is this really a consultation document? Is it a document that is going to be discussed properly by all involved, and will the Secretary of State be willing to make any changes in his proposals if they do not seem acceptable to all the parties?
Lord Beaumont of Whitley: My Lords, we, too, should like to thank the Minister for repeating the Statement, and we should like to give it a broad welcome. While not sharing the Government's total reaction against quangos, we believe that very often they are cumbersome bodies with too much to do and with aims that are too muddled. We think that the suggestion of two separate bodies with very specific aims is an intelligent and useful one. Nevertheless, there is the problem of the relationship of each body to the other, which has been mentioned by the noble Baroness, Lady David. How are they to connect with one another? Which of the two is to have the greater influence? It would in particular be an extremely bad thing if it were the new examinations body that was going to make the running.
I think there is a very wide appreciation now that the education system in this country is very severely hampered by the influence of the universities all the way down in secondary education, and this change would seem as if it might work to reinforce that rather than to relieve it. It might, therefore, for instance, work against the present movement for education for capability and for the arts in education.
So, on the whole, a welcome to this scheme, but I think there are some undoubted snags and we should like to know a bit more about that. There is just one question in particular. Noble Lords will not have
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had the note that has gone with this Statement, but among the functions of the Education Board is that of considering appeals by individuals. Whereas, of course, it is always welcome, not least on Liberal Benches, that there should be appeals from decisions of all kinds, is it being suggested that there should be a major setting up of appeals from examination results, or what does this particular phrase mean? But on the whole we give a general welcome to the scheme.
Lord Elton: My Lords, I am grateful to the noble Baroness and to the noble Lord for their reception of this Statement, more so perhaps to the noble Lord than to the noble Baroness. I note that they both approached it with a certain reservation, which is understandable because it is a new document. I can confirm to the noble Baroness that this is in fact an occasion on which Parliament is the first to know the intention of the Government, and the discussion will take place in the light of the Statement which has been made this afternoon in both Houses. She asked about the composition of the Examination Council. This body, it is envisaged, would be formed of about 10 to 15 people drawn from both within and outside education; appointed in a personal capacity, and not paid; of good standing in their fields, and reflecting a broad spectrum of knowledge and experience.
The noble Baroness referred to radical changes. Of course, the final recommendations on the 16-plus examinations are in formulation, and it is our intention to have this new body ready to advise the Government around the turn of the year, when we expect those to be available. The 17-plus is a separate issue, and at this stage, at least, will not come under the purview of either of the new bodies.
The noble Lord, Lord Beaumont, was anxious about the question of the curriculum development aspect of the work being overshadowed by examinations. I think the Government have sufficiently often made the public and the House aware of their own concern that the curriculum should always remain at the centre of the educational system. I have probably responded to all the points that I am able to among those that noble Lords have brought before me at this stage. I think the noble Baroness is going to return to the charge, but I shall resume my seat.
Lord Kilmarnock: My Lords, I, too, should like to thank the noble Lord for repeating the Statement made in another place. Our welcome I think rather depends on the relationship that the two new bodies are going to have—a point made by the noble Lord, Lord Beaumont of Whitley. The Schools Council, after all, was the Schools Council for Curriculum and Examinations. In fact, it was given a new constitution in March 1978—that was only four years ago—and one wonders whether it is really necessary to change the arrangements so radically in such a short time. No body is perfect, of course, and the Statement refer; to an elaborate network of committees; but, after all, the Schools Council was concerned with both functions—that is both curriculum and examination—and it is quite possible that some of this elaboration may have been necessary.
I wonder whether it is really necessary and desirable

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to separate curriculum and examinations to this extent. Our education system is, as the noble Lord, Lord Beaumont, has said, examination-led, and it should be the other way round: the exam should be the child of the curriculum, rather than vice versa. I am slightly concerned that this trend may possibly be accentuated by the new proposals.
However, since the Government propose a separate examination body, could I ask the noble Lord three questions? First, are the Government going to shelter behind the new body as an excuse for dragging their feet in the unification of GCE and CSE exams, to which they are committed? Second, will the Government consider proceeding rapidly towards a new vocational or pre-vocational examination at 17, along the lines recommended by the Mansell Committee? Thirdly, will the new body give serious consideration to the Schools Council's proposal for an I-level to run concurrently with A-levels? This was a very valuable suggestion, in my view, which was made by the Schools Council, and I hope it simply will not get lost in the reorganisation.
Lord Elton: My Lords, I am also grateful to the noble Lord for his reception of this Statement. He asks whether it was necessary to carry out such a drastic simplification so soon. I think it might be worth saying that one of the anomalies of the Schools Council is that it was not actually a council at all. It was made up of a finance and priorities committee, with 28 members; a professional committee, with 37 members; and a convocation, with 56 members. That brings it to 121. In addition, there were an examinations committee, a primary curriculum committee, a secondary curriculum committee, a committee for Wales, a publications committee, a parents' liaison group, a further education liaison group and a world of work liaison group, bringing the total number of committee posts up to 305.
That total does not include observers or assessors; nor the members of the 15 subject committees, or the four monitoring and review groups; nor the projects steering groups. The subject committees alone add a potential 231 further members. I recognise that the work is complex, but I think the noble Lord will recognise that the machinery was complex and that there was danger in this of diffusion of the work. Indeed, this is what the Government felt was happening. The appointment, as the noble Lord said, was made in 1978. I need not remind him that this Government came into office in 1979. I think we have operated, if I may say so, with both prudence and despatch in bringing forward this proposed reform at this time.
Baroness David: My Lords, I did ask one question which was not answered by the noble Lord, and that is whether there were to be any teachers on the Examinations Council. The noble Lord read out from the note, which I had read before because I was kindly supplied with it, where it says specifically that on the Curriculum Council there will be teachers; but it does not say that in relation to the Examinations Council.
Lord Elton: My Lords, the noble Baroness knows as well as I do from the note that the people will be appointed after discussion, and at this stage, therefore,
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it is not possible for me to say who they will be. Also from the note she will know that they will be appointed from both within and without education. I would be very surprised indeed, as would the noble Baroness be, if the people from within education did not include any teachers.
I did not reply to the second of the questions asked by the noble Lord, Lord Kilmarnock, about the 17-plus examination. I had intended to make it clear that that is without the purview of the present arrangements. He also raised the point about the A-levels. I regret to say that I have lost the point and will have to write to him, unless he would like to remind me of it now if the House would forbear.
Lord Kilmarnock: Very briefly, my Lords, I asked the noble Lord whether the Schools Council's proposals for an I-level, an intermediate level, to run alongside and concurrently with A-levels, was still under consideration.
Lord Elton: My Lords, this is something which is under consideration. I could not now tell the noble Lord.
Lord Robbins: My Lords, may I ask the Minister to expatiate a little further on the relationship between the two bodies which the Statement says are to be constituted. I did not gather from the Statement or from his elucidatory remarks any conception of this future relationship. Who is to be top dog?
Lord Elton: My Lords, the proposals that the Government have, where they are fairly clear in our minds, are proposals for discussions with local authorities and other interested bodies. I would expect the relationship to develop in the light of those discussions. They do relate to each other, but I would remind your Lordships that we are talking about curriculum development and not curriculum policy. That may seem a subtle distinction, but it alters somewhat the importance of the curricular aspect of the examination function. Both bodies will work to my right honourable friend. My right honourable friend is very well seized of the interrelationship between these two aspects of the work of the current council. It is one of the criticisms that one hears of the existing Schools Council that this relationship is not sufficiently closely reflected in its current workings. I think the noble Lord may be assured that this important aspect will not be lost sight of.
Lord Cledwyn of Penrhos: My Lords, in view of the fact that the Secretary of State for Wales is responsible for education in Wales in its totality, would it not have been appropriate to set up comparable councils in Wales to deal with examinations and with curricula? To what extent was thought given to this? Is the noble Lord aware that there is a strong tradition of education in Wales, that there are national educational bodies in Wales and that there was expectation that the Government would have given consideration to the Welsh identity in this respect? It was a new opportunity for them to do so. Will the noble Lord convey this view to his right honourable friend if his right honourable friend has not already thought of this?

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Meanwhile, can he say what Welsh representation it was intended that there should be on these committees?
Lord Elton: My Lords, I shall be happy to take to both my right honourable friends, the Secretary of State for Education and Science and the Secretary of State for Wales the concern which the noble Lord has put before the House. The Secretary of State for Wales was a party to all these arrangements, and the document carries his approval as it does that of my right honourable friend. I would say that this House and the Government are aware of the distinctness of Welsh culture and the tenacity with which certain Members of this House feel it necessary to defend it. At the same time, we are seized of the strength which can derive from single institutions covering both the Kingdom and the Principality if the Welsh ingredient is preserved therein.
I cannot say what individuals will be appointed after consultation but both my right honourable friends will be keenly aware of the noble Lord's aspirations and the spirit of education in Wales. I am certain that that will not be lost sight of.
Lord Cledwyn of Penrhos: My Lords, are the Government now proposing to bring Scotland within the scheme?
Lord Elton: No, my Lords. The Scottish system appears to bring benefit to the Scots, I believe, sufficient for it not to be added to by their being brought into the English system. I should not like this to be thought of as an English system, because it is also a system which embraces the people of Wales, is it not?
Lord Beloff: My Lords, since the Minister has received some criticism on the Statement, may I, from this side of the House and particularly from those who have been concerned about the deterioration in standards of schooling, give a very considerable welcome to the thought of a new beginning. I think it was essential, if we were to break out of what some might regard as a vicious circle, that we should have two new bodies to look afresh at these two main components of our educational system. One hopes in particular—and I think I gathered this from the Statement; although I should be glad to be reassured—that the new body on examinations will be able to have a fresh and thorough look at the ill-starred proposal for amalgamating the two 16-plus examinations.
Lord Elton: My Lords, if I may say so, the noble Lord behind me has laid a curate's egg. I agree with him that a new beginning is a welcome occasion. I must say that I do not share his anxieties about the 16-plus which we debated with such closeness even under the last Government. I think it is very agreeable that having got out of the morass then proposed, we have arrived at something for which there can be general support. The other factor which the noble Lord will find strengthens his argument is that, when it was proposed within the Committee on Education, Science and the Arts in the other place that the Schools Council should be abolished, that proposal was rejected by one vote only.
Lord Beaumont of Whitley: My Lords, the noble Lord did not answer my question about the appeals procedure envisaged for this small examination body and how broad would be its scope.
Lord Elton: My Lords, that is a possibility embraced within general policy. I cannot permit the noble Lord to pin me down more closely. It is one of the things that will be discussed.
Baroness Denington: My Lords, may I ask that the Secretary of State in making the appointments of those other than educationalists should give serious thought to appointing industrialists from the various aspects of industry, as it is surely essential in this day and age that we get a much closer relationship between the needs of the workplace and education?
Lord Elton: My Lords, I am obliged for that thought. It has been on our minds to see—and it is difficult to say this without appearing to diminish the stature of education—that the product is something which suits the consumer. Otherwise, children of talent will find that, because their talents have not been developed in the right direction, they cannot be employed as they should. I shall put that before my right honourable friend.

Local Government Finance (No. 2) Bill
4.49 p.m.
Second Reading debate resumed.
Lord Hill of Luton: My Lords, if I may, I will submit to your Lordships two points, one general and the other specific, which stem from the consideration of this Bill. Two years ago, when we were discussing the No. 1 Bill, the noble Lord, Lord Bellwin, again and again assured us of his faith in local government and asserted that nothing was then occurring in any way to damage its autonomy. I suspect that many of your Lordships, as I did, accepted those assurances. His colleague, Mr. Toni King, perhaps went a little further when he said in another place:
"I challenge anyone to tell me that our proposals actually undermine the basic automonv of local government".
High sounding words! But I think it is our task now to examine the proposals in this Bill in relation to that basic question of local autonomy: in other words, how do the assurances of 1980 stand up in relation to this Bill in 1982?
I want to examine it in relation to the experience of one authority which is characteristic of the experience of others. Let us take this year, 1982. In the early part of 1982, the district authority in question received an estimate of the block grant that it was subsequently to receive. On the basis of that estimate, it founded its rate, which has been issued. In due course it will receive confirmation of that estimate. That will be in September; not this year but next year. There will be a provisional estimate at the beginning of this year; a final decision in September of next year. If some authorities have been naughty and excessive in their expenditure, then the amount will be less than the estimate. What is named in September of next year

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will be less than the estimates submitted to the authority in the early part of this year.
As your Lordships know, there will be no question at that time of a supplementary rate; the authority will have to borrow with the consent of the department and then repay the borrowing in due course. The first question that I ask myself is: is that consistent with the autonomy of local government, imprisoned as it were by a block grant calculation that very few people understand—I, for one, do not—and with a timetable of this kind between the estimate and the certainty?
I am bound to say that I regard this financial aspect of what is now proposed to be a definite if temporary—for the Bill is described as interim—reduction in the autonomy of local authorities. Of course, some other words have been used. By the way, I think that the noble Lord, Lord Evans, raised a point—and I think the noble Baroness raised an associated question—that this kind of system is an invitation to local authorities to raise by rate more than they need to build up balances as against the day when they need the additional moneys but are denied the power of a supplementary rate. Of course, they will. To that extent, it would defeat the purpose that the noble Lord described in his initial speech.
My experience in local government goes back 50 years in the sense that I was then a local government officer and I put in a spell at housing and local government. Also I was for 15 years independent chairman of a local authority Whitley Council. I am sure of this. Any diminution in the role, in the autonomy, of local authorities in this country, even for an arguable economy for a short period of time, will permanently damage the democratic structure in this government based as it is on central and local government. I confess that by the very mechanics of this system, by the very arithmetic of it—unintelligible for the most part—these things represent in total a limitation of the autonomy of local authorities.
There were some other observations by Mr. Tom King. He said two years ago that when the funds had been distributed it was then a matter for local authorities and their councillors as to what their expenditure decisions were. He said that it was their choice between services, their choice as to the volume of expenditure and their choice as to the rate levels that they decided to impose. That was two years ago. That was said in defence of the other Bill. Is it true today? Will it be true when this Bill has been passed? The answer is too self-evident for one to give it.
I believe that we are seeing the beginning of the whittling away of the independence of local authorities. One other factor—it may come surprisingly from me—is that there are to be some local government elections. What if a party going to those elections submits proposals involving increased expenditure? We may all be in favour of general economy, but we are all in favour of expenditure under some heading. But what if the party explains it clearly and explicitly to the electorate, wins an election and goes back to the town hall? What is it to do? It cannot have a supplementary rate, although it deliberately put forward a policy of increased expenditure. All it can do is ask the permission of the civil servants in Marsham Street
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to raise a loan. Is that an interference with the autonomy of local government? I can see no other answer but an affirmative one to that question.
The second point that I want to raise has already been touched upon and it is the specific point raised by Clause 2 of the Bill which says that a precepting authority shall not have power to issue a supplementary precept, and so on. Subsection (3) says that this clause has effect in relation to any financial year beginning on or after 1st April 1982. My Lords, is that retrospective? The Ministry lawyers say, Yes. Legal advisers to two of the districts in the County of Bedfordshire say, No. It must be cleared up. In the case of Bedfordshire the precept was issued before 1st April. The money has been gathered in instalments. What happens if this is retrospective? Four district councils in Bedfordshire want some money back. Some ratepayers who have already paid their rates want some money back. It is of first class importance to make absolutely plain whether this is retrospective or not.
The alternative is an expensive battle—in which only the lawyers will be in profit—as to its exact meaning. The House is entitled to say to the Government: "There is ambiguity in this important clause even if it affects only one local authority. Please remove the ambiguity. If it is retrospective, if it covers the supplementary precept issued by the Bedfordshire County Council in respect of which payment has been made of first instalments by four district councils within its area, please make it clear that it is retrospective and that the money which was illegally paid to the Bedfordshire County Council, and possibly too by the ratepayers, will be returned, and that there is power to return that money".
I hope that it will not be thought because, as I understand it, only one county council issued a supplementary precept before this April date that that is not worth general legislation. It is, my Lords. There should be no ambiguity as to what this Bill means when so much money is involved. In the case of Luton, the sum involved runs into millions by virtue of this supplementary precept. So I would urge the Government to make it absolutely plain and—dare I say it? even in spite of their lawyers' advice—to remove this ambiguity and to deal with the consequences that arise from its retrospective character.
I end as I began: I am sure there are many like myself, with no party political views today, who are beginning to feel that the process has begun—with the best possible motives, in the interests no doubt of the national economy and of discouraging excessive expenditure by local authorities—despite the assurances that were given and accepted two years ago, of whittling away the autonomy of local authorities and submitting authority (I say this without offence to the Civil Service, for which I have a great respect) to Civil Service bureaucratic decisions in Marsham Street, because no Minister can possibly undertake the detailed scrutiny of the work involved in the relationship between the department and local authorities. I think we would do well to search hard for these minor and often arithmetical changes that nibble away at the autonomy of local government, for in the long run we should greatly regret the lowered strength and the lowered capacity of local government and the transfer

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of its functions, directly or indirectly, to central Government.
5.2 p.m.
Lord Mottistone: My Lords, it is always a pleasure to follow the noble and eminent Lord, Lord Hill of Luton; but what he has just been saying has tended to remind me of listening to him on the radio many years ago as he tells us about the ills of government. I should like to thank my noble friend Lord Bellwin for clearly explaining this Bill to us. He had a fair amount of "flak" from every Bench since then, and I must say the crocodile tears from the Benches immediately opposite made me think—perhaps I am wrong, but has no Labour Government ever been accused of taking away the autonomy of local government at any time in its career? Really, the Government are trying to do what they had to do against the problems of the day, and I wish them well in trying to do that.
Baroness Birk: My Lords, would the noble Lord give way? Of course, he is right when he says that every Government is accused of taking away autonomy; most Governments do take a bit away and give a bit. This is quite a different case, and I think he must look at it in the same way as the noble Lord, Lord Hill, did, as something quite out of the ordinary. This is a whole sequence of provisions destroying the independence of local government.
Lord Mottistone: My Lords, I have heard that before too. I am advised by the CBI, and I was delighted to hear my noble friend Lord Bellwin so clearly recognise the problems of the non-domestic ratepayer when he made his introductory speech. It is becoming increasingly acknowledged that business has a strong case for having its rate burden alleviated on many grounds. First, there have been many problems in recent years such as company closures, unused capacity and unemployment, due in the main to rising costs and falling profits. Business rates have contributed to that. They have risen, as a proportion of real profits, from 16 per cent. in 1969 to over 50 per cent in 1980; both figures apply before tax and interest have been paid and exclude North Sea activities.
Secondly, business rates bear no relation—and I have made this point before in your Lordships' House—to ability to pay, since there are no subsidies or rebates for businesses in financial difficulties and there is no link with profits. The business ratepayer pays at a higher poundage than the domestic ratepayer, yet he benefits less from the provision of services. In addition, he usually has to pay relatively more for the services he uses, such as refuse collection, than his domestic counterpart. Domestic rates are subsidised by a government grant (domestic rate relief) of 18.5 pence in the pound, which is equivalent to £850 million per annum at 1982/83 prices. In 1981/82 the yield from rates was £4.8 billion from the domestic sector and £5.2 billion from business. In 1982/83 business will pay close to 5.9 billion, and it should be noted in passing that business now pays more in rates than in corporation tax.
Thirdly, rates are a tax on property. As things stand, business can only reduce the rate burden by cutting down on the premises it occupies or by moving.
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The former is often not possible and the prospects for moving to another local authority area are also limited. Oil refineries and chemical plants, for example, cannot be moved at will and companies need to think long and hard before leaving a well-trained and experienced workforce.
There are three possible ways within the Bill in which business might be helped. These are: the introduction of an element of derating for business, a ceiling on business rate increases and a rating relief for hereditaments partially used—
Lord Hawke: My Lords, if I might interrupt my noble friend for one second, is there not another method, which is to give business people a vote so that they can turn out extravagant councillors?
Lord Mottistone: My Lords, my noble friend Lord Hawke will not be aware that we have looked at that, and the fact is that you cannot give them an effective vote which carries any weight at all, so to go hack to that does not solve the problem. The main argument against derating is probably cost, which would have to be funded by central government. However, if the finance could not be raised in any other way the subsidy to the domestic ratepayer should be reduced and spread evenly between the domestic and business ratepayer. An advantage of that proposal would be that it would he in line with the Government policy in reducing business costs and increasing local accountability.
With regard to a ceiling on business rate increases, this has been discussed by the CBI with the Government for some time. Representations have been prompted by rates increasing faster than inflation and the proposal is that they should be limited each year to the Government's inflation assumption in the rate support grant settlement.
Finally, with regard to rating relief for hereditaments which are partially used, my noble friend the Minister will remember this as "mothballing relief", which we tried to persuade him to adopt in the Local Government, Planning and Land Act 1980. The principle is straightforward and allows reduced rates on industrial premises which are unoccupied, rather like private houses. This enables businesses in times of recession to retain their factories and other businesses rather than to sell them off, so that they are ready for the upturn in the economy. I shall be putting down amendments to include these points in the Bill and of course they may require an amendment to the Long Title; that I appreciate.
We note with gratitude in today's Times that the Government are to make payments totalling over £2 billion to non-domestic ratepayers who should have received relief because part of their properties may lie in an enterprise zone. It is hoped that this appreciation of the need for fair treatment of business will be reflected in the Government's response to our amendments. In conclusion, it is hoped most fervently that the Government will make every effort to provide the much needed practical help to industry which the country so desperately needs at this time.
5.10 p.m.
Lord Irving of Dartford: My Lords, I am sorry that

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the noble Lord, Lord Hill of Luton, has left the Chamber, because I wanted to say what a privilege it is to speak in the same debate as the noble Lord. I think that he was one of the best Ministers of Local Government that we have had since the war and my local authority, although not of the same political persuasion, has always looked back with gratitude to what he did particularly in respect of atmospheric pollution in North-West Kent and a number of other matters.
This Bill has had a chequered career, almost as chequered as the Local Government, Planning and Land Act of 18 months ago. In fact, it is difficult to recall two Bills which suffered so acutely in their passage through the Houses of Parliament. Seldom has a Bill been introduced, withdrawn, reintroduced, amended, re-amended and, we hope, further amended in this House. Happily, a number of the most unacceptable aspects of the Bill have been dropped. The referendums, which were originally at the heart of the Bill, have gone. Selective mid-year holdbacks, which would have made it difficult for a local authority to predict its income, because the Government were taking power to change the rules halfway through the year, have also gone.
However, despite these changes, the ADC, of which I am a vice-president, still finds the Bill objectionable, because it represents a belief that the people in Whitehall know best—a view which I am sure the noble Lord, Lord Bellwin, would have contested if a Labour Government had introduced a measure of this kind. As my noble friend Lady Birk said, he would have been in the march from Leeds to West-minister to oppose it most strongly. It just shows what a transformation there is for one in moving from local government to Westminster. I am sorry that the noble Lord did not do what I did, and kept a foot in both camps. He might have kept his equilibrium a little better.
The Bill rests on the view that central Government, which cannot be said to manage its own expenditure very well, is the only defence for the ratepayer against unreasonable rate demands. I want to make two points. First, the ADC and I accept that the Government of the day must be in control of the overall budget of cash and manpower in the country—not just during the recession, but all the time. Otherwise, no economic planning is possible.
To answer the noble Lord, Lord Mottistone, of course there is need for control, but the local authority associations, 18 months ago and again now, offered their co-operation in seeking to help the Government to achieve their objectives, but were swept aside. So there is no co-operation there, where it could be real and effective and could help the Government to achieve, in terms of the national budget, what they are entitled to expect. We certainly believe that local government should be accountable, but down to the ratepayer—otherwise, local government will atrophy—and not up to the Secretary of State. The Bill does nothing to strengthen local democracy or even to increase its efficiency.
What the Government have done, on the admission of the noble Lord, Lord Bellwin, is indiscriminate and some of us feel this very strongly indeed. Most local authorities are highly responsible, and some of those
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who get into difficulty usually have problems that ought to be faced up to in another context. I speak in two capacities, one as the chairman of the finance committee of a district council, where in 1981–82 the borough rate did not rise, and where in 1982–83 the borough rate dropped by 1p. Indeed, we kept our budgeting within the volume target set to us by central Government.
Despite compliance with central Government's requirements, and also very firm discipline, we were at the same time able to finance a new project which will be opened in September. It is a new theatre hall which will cost £5 million, but when it opens only £1/2 million will be outstanding to be paid and we shall owe that £1/2 million to ourselves. I believe that our new hall, which will be called the Orchard, will be a centre for the arts in the South-East. It is already apparent that it will be very popular indeed. The point I am making here is that this kind of initiative and this remarkable achievement will no longer be possible with the regimes that have been imposed by the Local Government, Planning and Land Act last year and this new Bill now.
Lord Bellwin: My Lords, would the noble Lord please explain to us why this will no longer be possible?
Lord Irving of Dartford: My Lords, the fact is that such a scheme, with the targets set on revenue and the restrictions on capital expenditure, would not be within the capacity of a district the size of ours, or indeed of any local authority at all. If the noble Lord says that if we put up a similar scheme next week he will approve it, then I shall accept that we are being misled. But everyone in local government knows that that is not possible. The revenue expenditure will be set by target, and is already being set by target. Also, capital expenditure is limited to £5,000 as a top figure without the permission of the Minister. So the effect will be to prevent people of ability from coming into local government and making the best of local government, with local initiative responsible to a local democracy.
Secondly, I am also a vice-president of the Council of European Municipalities and, as a result, have had some contact with local government systems in other parts of Europe. Our local government system has been admired by people in many countries. It has been admired, because of its independence—an independence which has virtually disappeared. I speak as someone who really believes in local government and local initiative. It has an important part to play in the health of our democracy, both centrally and locally, and I regret its passing.
Although welcoming the withdrawal of the original Bill in December, and the amendments made at Committee stage and on Report on 5th April, the ADC remains concerned about certain aspects of the Bill and will seek to amend it as it passes through this House. It believes that Parts I and II should be regarded as a temporary interim measure of central Government control, pending fundamental changes in the system of local finance. We do not believe that the Government would have introduced such ponderous interim solutions if they had had permanent solutions available on which they could decided. But we still believe that

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Parts I and II should be interim soultions and not permanent solutions.
In this respect, the association has already submitted constructive views on financial reforms, aimed at strengthening the constitutional status and role of local government by increasing local accountability, reducing dependence on central subventions and providing locally controlled sources of income. An approach on these lines would, in the association's view, be far more likely to meet the Government's objectives than the present ever-tightening expenditure controls that we see today.
Part I—Rates, precepts and borrowing—abolishes the power of local authorities to make supplementary rates. The association's main concern is that district councils no longer have this reserve power—because it is a reserve power, which has been used very infrequently in the past—to deal with unforeseeable reductions in income, or additions to expenditure brought about by emergencies, disasters or severe weather conditions. Without it, local authorities will have to be over-cautious and, as the noble Baroness, Lady Stedman, said, they will build in a cushion, which means that estimates will be greater than they need to be.
The association is also concerned about the situation, as the noble Lord, Lord Hill of Luton, said, in Bedfordshire and will wish to be satisfied that the proposed Government amendments to the Bill will remove any doubts about the retrospective invalidation of supplementary rates or precepts in respect of 1982–83, whether made before or after the commencement of the year.
Part III of the Bill establishes the audit commission for local authorities in England and Wales, which will be responsible for securing the audit of accounts of local authorities and certain other bodies. The ADC remains in principle opposed to the proposed commission. The association recognises the importance to local government of an independent, impartial and effective external audit system, but it has been widely recognised and widely acknowledged, both inside and outside local government, that the district audit service has been independent of both central and local government. By statute it is given this independent status which has inspired confidence in both local government and the public. The ADC cannot see the justification or necessity for the proposed audit commission. It could only add considerably to a local authority's already substantial audit costs and would not be seen by the public to be any more independent and impartial than the existing district audit inspectorate.
The main justification for the commission is said to be the need to develop and expand audit effort in local government, particularly value for money. The ADC does not accept the fact that the audit commission is the right vehicle to achieve the Government's value for money objectives. It supports the wish to improve efficiency and cost effectiveness but points out that the annual report of the Chief inspector of Audit and local authorities' own bodies, such as the Local Authorities Management Services and Computer Committee—LAMSAC—which have an impressive record, are a better basis for this kind of development. Moreover, the publication of an annual report by the Chief Inspector of Audit, coupled with the work of the Advisory Council on Local Government, which was set up in 1979, provides an adequate means of high-
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lighting issues of general public interest and concern, including value for money, encouraging local authorities to improve their efficiency and effectiveness.
So far as membership is concerned, the association believes nevertheless that if the audit commission is to be established there should be proper consultation with the local authority associations—and not from a list. Indeed, it believes that as local government will have to foot the Bill and make the largest input into the success of this new commission, it ought to have a majority of the places on the commission. And it will seek, during the passage of the Bill, to bring that about.
It is a great pity that the choice of auditor is no longer going to be available to local government. There is no evidence to suggest that the district audit service and the local audit has not served local government well, effectively and impartially. The important thing is not its structure but that standards are maintained upon which local government and, above all, the public can rely. It makes the whole business of the commission wholly unnecessary.
One more point I want to mention is the amendment which was moved on Report and which was supported by the noble Lord, Lord Bellwin, in his opening speech. The association will oppose the view that the Comptroller and Auditor-General should be involved in district audit and value for money studies. His direct involvement would require an unacceptable change in the existing constitutional relationship between local government and Parliament. Local authorities are directly elected and are autonomous bodies answerable to their electorates for the discharge of their statutory powers and not to Parliament or to Ministers. The association feels, and fears, that this latest move, and the undertaking given by the noble Lord, Lord Bellwin, could be the first step towards parliamentary control of individual local authorities through the Comptroller and Auditor-General. This would have serious consequences for local autonomy and accountability. The ADC will look critically at the Government's own proposals in the light of these constitutional implications. Our view is that it would be a retrograde step, and we oppose it. The Bill is a bad Bill. We in the ADC will do our best to amend it as it passes through this House.
Lord Monson: My Lords, before the noble Lord sits down, I wonder whether he could answer one question. He spoke of this Bill as being a threat to local democracy. Would he not agree that, so long as such a high proportion of local government electors pay no rates or receive rent rebates, central Government must intervene to protect those who are liable to pay rates, because those who pay no rates, or whose rates are being heavily subsidised, have no incentive to vote against extravagance?
Lord Irving of Dartford: My Lords, neither I nor the local authority associations have objected to a review of the sources of local government finance. We have been saying for many years that it is an absolutely essential part of the re-organisation of local government. But this has never been done. Most of the points which the noble Lord has raised could be dealt with by a change in the way in which rates are

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levied. I should be happy to join with the noble Lord in getting that change accepted by the Government as soon as possible.
5.26 p.m.
Baroness Platt of Writtle: My Lords, I thank my noble friend the Minister for his clear exposition of this Bill. It has been substantially altered since first-seeing the light of day, and that is a relief to many of us, especially the dropping of the clause to require a referendum before levying a supplementary rate. There are those who would have liked to keep the power to levy a supplementary rate, but until a few years ago a supplementary rate was a rarity. And for many of us it is an anathema as it presents, as my noble friend the Minister said, an unexpected bill to ratepayers in the middle of a financial year which could be a considerable burden both to firms and to individuals.
Another improvement is that in the original Bill the Secretary of State had the power to alter the block grant entitlement to an authority during the financial year. This has now been amended. In the same way as an unexpected bill is a shock to ratepayers in the middle of a financial year, a change of this nature is very difficult for a local authority to absorb. It is vital that local authorities should know the grant they are to receive well before the beginning of a financial year so that they can prepare a sensible budget, exercise proper forethought and then adhere to the budgetary plan throughout the financial year. The reverse has been the case in the last few years and this has not contributed to responsible budgetary control by economical councils. Changes made in the middle of a financial year are always more drastic and arbitrary as there are only a few remaining months in which to cut expenditure. I know that the Association of County Councils is especially pleased that the Government have recognised the need for certainty for local authorities in their budget-making process. We all hope that the amount of block grant will be announced earlier this year.
Part III of the Bill establishes an audit commission for local authorities in England and Wales which will be responsible for securing the audit of the accounts of local authorities and certain other bodies. The Association of County Councils is opposed to the establishment of a commission to assume responsibility for the audit of local authority accounts. This provision will transfer the work of the district audit service to the commission and another quango will have to be set up.
One of the abiding strengths of the present audit system for local government is the statutory independence which the district auditor enjoys. Nobody, either in central or local government, has power to influence him in the execution of his duties. This independence has produced a totally impartial audit service which over the years has gained the respect and confidence of local authorities and their electors. The association feels that the Government have not made a convincing case for replacing these tried and tested arrangements. While the Government have agreed to the inclusion in the Bill of provisions for consultation with the local authority associations and individual local authorities, where appropriate, never-
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theless the Secretary of State has retained to himself effective power over all significant aspects of the commission's functions.
The association greatly regrets the refusal of the Government at Committee stage to accept an amendment which would have permitted local authorities to retain the right to appoint their auditors chosen from a list previously approved by the commission. The removal of this right changes the present carefully balanced constitutional and legal position and fails to recognise the essential democratic accountability of local authorities to their electorates. The association remains opposed to the principle of the establishment of the commission, but, should the Government continue with their proposals, the association would wish to see even at this stage amendments which will achieve a greater measure of independence for the commission and a framework more in keeping with the constitutional position of local government. I know that my noble friend Lord Ridley, who unfortunately is unable to be present today, will wish to refer to the association's apprehensions in detail at Committee stage.
I welcome the statement made by my noble friend the Minister that local government will be closely involved in the commission. Speaking from personal experience in Essex, we are one of the 14 local authorities to which the Secretary of State has already appointed private auditors as their district auditors. Until now, we have always used the District Audit Service, with whom we have an excellent relationship, in seeing that our accounts are prepared in a proper manner and respecting fully our fiduciary duty to our ratepayers. We were, therefore, anxious about the appointment of a new firm of private auditors. After representations to the Secretary of State we met our new auditors before a final decision was made. As a result, we now feel that we can build a similarly good relationship with them; to see that we do carry out value-for-money exercises in co-operation and operate responsibly and economically. We are grateful to the Secretary of State for this opportunity. We are also unique, perhaps, in that our private auditors are going to operate at local level in co-operation with the district auditor. We feel that is very valuable, in bringing both services to work together. However, in the last resort it must always be the councillors who are elected and who are responsible to the ratepayers, and the auditors should not usurp that function and try to dictate policy. This is a fundamental aspect of local democracy which I feel good private auditors will recognise. I believe that, if the Bill could provide for councils to choose their auditors from an approved list, this would enable better relationships to be set up to the benefit of local authority accounting procedures.
This Bill still seeks to control further local government from the centre. I am aware of the difficulties which the Secretary of State has suffered in his proper exercise of central Government control over the expenditure of local government. A few councils have not followed the normal co-operation between central and local government, and have increased local government expenditure against the wishes of the Government. I very much regret this as it is leading to further detailed central controls of local government as a whole. My own deeply-held view, which I have already ex-

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pressed in your Lordships' House on several occasions, is that the success of, and the degree of responsibility exercised by, local government depends on the calibre of the people involved. Good officers will only be attracted into the various professions involved if they feel that they can exercise their talents reasonably widely. Members with extensive experience of life, both in the voluntary and commercial and industrial fields, will serve only if they too feel they have worthwhile responsibilities to carry out. Too detailed control will encourage neither, and only the mediocre will take part to the detriment of local government.
I welcome the Government's Green Paper on alternatives to the rates, as does the Association of County Councils. I hope that rates will be retained, although reformed in some of the ways suggested. I hope, too, that a poll tax will be brought in to provide the proportionate revenues needed by local government so that people contribute to the services they desire. The noble Lord, Lord Monson, was asking a moment ago how people can affect local government, and it seems to me that this would be one way in which they could affect local government. This Bill's underlying intention is to encourage responsible attitudes in local government towards its ratepayers—and that still does include a great deal of freedom for local government. Instead of more detailed control I feel that a reasonable poll tax as part of local government revenue would encourage the whole electorate to take a greater interest in the way in which local government spends its money. This must be democratically desirable and much more likely to encourage people of intelligence, innovation and responsibility to serve as both officers and members so that local government—a vital part of the democratic system in this country—continues to be well administered.
5.37 p.m.
Lord Bruce of Donington: My Lords, the House is is indebted to the noble Lord, Lord Bellwin, for having introduced this Bill. He will forgive me if I am bound to point out to him that the Bill has not really received a considerable degree of support among your Lordships. Aside from the somewhat muted support from the noble Baroness, which was carefully circumscribed by the qualifications which she gave, the noble Lord the Minister has received no support at all. The noble Lord, Lord Mottistone, who I observe is no longer with us, used the opportunity not to discuss the Bill itself but to give us the considered views of the Confederation of British Industry, which I do not consider are particularly relevant to the Bill at this stage.
The speech made by my noble friend Lady Birk relieves me of the necessity of going very deeply into the contents of the Bill. My noble friend was thoroughly supported in practically everything that she said, not only by the noble Lord, Lord Evans of Claughton—who I thought dealt very effectively with the retrospective legislation aspect—but also by the noble Baroness, Lady Stedman, who made a devastating speech which dismantled practically every argument which the noble Lord, Lord Bellwin, was able to put forward. We were also indebted to the noble Lord, Lord Hill of Luton, for having exhumed from the public records some of the Government's earlier
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pronouncements in favour of local government freedom, which their action since then has almost completely destroyed. We were also indebted to my noble friend Lord Irving of Dartford for having presented the views of the Association of District Councils, as indeed we were to the noble Baroness, Lady Platt of Writtle, for giving us some outline of the views held by the Association of County Councils.
With regard to Parts I and II of the Bill, I shall have very little to add to what has been said by so many of your Lordships. Indeed, one hopes that from across the party Benches in the House, from the Benches opposite, from the Cross-Benches, as well as from the Benches behind me and to the side of me, we may be able to induce the Government to make a number of important changes to the Bill at Committee stage. Let not the noble Lord think, in spite of the dulcet tones with which he addresses us, that he can persuade all of his noble friends to agree with him, unless of course he applies the party whip which will enable him possibly to maintain certain sections of the Bill intact. From our point of view, it looks as though we are in for an interesting Committee stage in which all kinds of things might happen.
As to Parts I and II of the Bill, let us be quite clear as to what fundamentally we are talking about. We are, of course, really talking about a transference of wealth, a transference of resources from one section of the population to the other. What ultimately we are talking about is the further impoverishment of the poor for the benefit of the rich. And I will explain to the noble Lord precisely why. The difficulties into which local authorities—and not wholly Labour local authorities—in the United Kingdom have been put have come about precisely because central Government have sought to impose upon them financial constrictions in support of an economic and financial policy which now lies wholly discredited throughout the country. This is what it is all about.
The difficulties, and indeed the supplementary rates that have been levied, have been caused fundamentally by the drive by the Government to reduce their own proportion of local government expenditure so as to throw the burden on the local authorities; then in support of their monetarist dogma discouraging them from raising further funds beyond the Government's own financial constraints. The noble Lord, Lord Bellwin, will undoubtedly say, as indeed he has said many times, that this Government have made more money available in real terms to local authorities than has been the case before. What he does not realise is the devastating impact upon the conditions of people living within these local authorities brought about by the economic, financial and industrial policies followed by his Government.
What local authorities are now faced with is a position where, in order to keep within the financial constraints, they are having to make considerable inroads into their educational services, into their domiciliary services, into other social services all the way along the line. The effect of that is this. You cannot ill-treat a local authority; a local authority has no personal identity which it is possible to injure. What you can do is to injure people. What has happened during the last three years is that the economic, industrial and financial policies of the Government

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have meant a growing amount of poverty in the United Kingdom, a growing amount of unemployment. I do not say this provocatively, either. There is a growing amount of social distress which in terms of the work of local government has brought an increased demand upon their services. Therefore, there has been an increased need for local authority services against a background of rigid financial constraint.
Over the last few years, the last three years in particular, not only has the real money wage of the bulk of the British people gone down—and the noble Lord, if he is in any doubt, should refer to the Taxes and Prices Index upon which his Government set such store in the heady days of August 1979; there has also been a reduction in the social wage, which is taken into account in determining the overall standard of life within which an individual exists at this time. So both the real wage and the social wage have gone down at the same time as the real wage, the real income, the real salary, the real bonus, the real compensation of the higher income groups has gone up.
That is what I meant when I said that all this Bill really effectively does in political terms is to assist in the inevitable process which the Tory Party desperately needs to conceal, that the rich get richer and the poor get poorer. That is why the next Government will repeal these provisions, together with the other provisions which form a part of the whole financial structure organisation as between central Government and local government, which have been the hallmark of the present Administration.
I now pass to Part III of the Bill which envisages the establishment of an Audit Commission. Let me say at once that any efforts by any Administration, including this Administration, to get value for money in the services that local government provides, or indeed that any other industry or national service provides, will immediately have our support. It is quite right that the noble Lord and the noble Lord's Government should address their minds to this question. Indeed, for some time there has been in existence the audit inspectorate, with its team of district auditors, who have up to now performed the audit function. They comprise qualified accountants from a variety of approved accountancy bodies, and they comprise also a number of people who are not in fact qualified by professional standards but who by now have accumulated such experience in the work that they are every hit as efficient as those who are qualified.
It is common ground, I believe on both sides of the House, that the district audit service has done very well indeed and has given local authorities a good and impartial service. No noble Lord here this afternoon has offered any criticism at all, and rightly so. Up to now, however, local authorities have been able to choose: they can either have a district auditor, or, subject to certain conditions, they can themselves engage independent firms of auditors in private practice, provided that they have the suitable qualification.
Before I proceed further to discuss this matter, it is proper that I should disclose quite frankly a personal interest. I am a practising chartered accountant with a firm called Halpern and Woolf who have tenders at the moment outstanding with the auditor inspectorate in Bristol. It is well, therefore, that the Houses
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should know that that is so. I am, indeed, hopeful that the House, on the basis of my observations so far and, indeed, on other business in this House, will accept the fact that I shall endeavour to give my views precisely as I feel, and precisely as I believe, regardless of any interest that I may hold indirectly as a result of my active membership of the firm to which I have referred.
Not only has this part of the Bill brought the conception of the new Audit Commission into being but it has also brought forward a completely new function for auditing and I am talking now in the statutory sense. Under Clause 9(1) (c) the auditor is required—whether he be a district auditor appointed or a private auditor—to satisfy himself:
"that the body whose accounts are being audited has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources".
This is an audit responsiblity that is not given to the auditors appointed to audit the accounts of public companies in industry and commerce or even to private industry and commerce. All that the auditor is required to do is to certify, after his examination, after his questioning and after the explanations that have been given to him, that the accounts presented to the shareholders of the company—whether it be a PLC or a private company—show a true and fair view of the company's affairs. It is not normally, under British company law, any part of the responsibility of an auditor to come to any conclusion as to whether the company:
"has made proper arrangements for securing economy, efficiency and effectiveness in its use of resources".
If that were otherwise, audit reports on companies all companies—would run to levels which it would be difficult for Tolstoy's novels to compete with in size.
It has always been the responsibility of the directors of a company to take steps to ensure that that company makes:
"… proper arrangements for securing economy, efficiency and effectiveness",
and nobody else's. Ultimately, of course, they are responsible to the shareholders in a general meeting. I ask myself whether it is wise that this responsibility for ensuring:
"proper arrangements for securing economy, efficiency and effectiveness".
should be taken out of the responsibility of the local authority itself, of its officers and its councillors. I am also minded to ask myself: If this is to be the responsibility of district auditors in the future, in addition to other responsibilities, to which I shall come, is there any real reason why central Government should not subject themselves to these particular disciplines? If there has been any exceeding of targets of expenditure, if there has been any considerable increase above budget targets and so-called forecasts, which has been the most guilty—local authorities in the United Kingdom or central Government? If there are to be benefits which flow from the Audit Commission in the appointment of firms of outside auditors with a view to ensuring that proper arrangements are made for securing economy, efficiency and effectiveness in the use of their resources, why should that not apply to the Department of the Environment?

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I should love to go inside the Department of the Environment in order to determine whether they are using their resources properly, efficiently and so on. Why should they be exempt? Why not apply it to the Ministry of Defence? If the Audit Commission is of such advantage, why should we restrict its operation in this way and deny the public the benefit of it?
As has been said on two occasions during the current debate—and I do not want to detain the House too long—the one difficulty about the Audit Commission is that it is liable to receive directions from the Secretary of State. I do not know how that will fit in with the competence of the Audit Commission or, indeed, those who are going to accept the work from local authorities on the recommendation of the Audit Commission itself. I must say that, if I personally were to receive a direction from the Secretary of State as to how I was to carry out an audit, I would tell him to go and get lost, because it would be entirely against the independence of my own profession, the independence, that it has built up over the years and which it has preserved against all Governments and against all interests, in presenting and insisting on the presentation of what it considers to be, and what no one else considers to be, a true and fair view of the state of affairs of the company or the organisation whose accounts it is auditing.
I come back to the point about the value for money audit. There is no reason at all why any local authority, should it so wish, should not have a value for money audit. That, however, should be at the discretion of the councillors themselves. Does the noble Lord really think that councillors on a local authority and the officials on a local authority, are so dumb and insensitive that they themselves do not know what is happening about value for money, except perhaps those who may have a vested interest in the work that is being carried out on its particular behalf? I do not believe these things.
Moreover—and I will leave the remainder of the points for Committee because they are too detailed—let us consider the other responsibilities which are now laid upon the district auditor under Clause 11 of the Bill. I appeal to noble Lords in this House who have some professional and business experience—there are, indeed, many—just to contemplate what the Government are doing, or rather what they propose to do. I invite the noble Lord himself to listen very carefully now to what I am going to say. Clause 11 of the Bill requires:
"At each audit by an auditor under this Part of this Act any persons interested"—
mark this—
"any persons interested may inspect the accounts to be audited and all books, deeds, contracts, bills, vouchers and receipts relating to them and make copies of all or any part of the accounts and those other documents".
Let us say that the auditor already has the books in his possession and is working on them. Let us say that there is one interested person who comes along and says, "Look, under Section 11(1) of the Act I want to see these books and documents relating to this particular matter". The auditor or one of his staff has to stop. He may have to search for papers—they may not all be in exactly one spot—or he may have trouble
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in assembling them. Nevertheless, there could be 50 persons a week who had an interest in this. Let us suppose that there was an organised Conservative interest in the accounts of the Labour-controlled council and 50 individual ratepayers, members of the Conservative Party, on separate days for the next several weeks demanded to exert their rights under this subsection. That would, of course, disrupt the work of the entire audit and, indeed, would be very costly. Then Clause 11(2) says:
"At the request of a local government elector for any area to which those accounts relate, the auditor shall give the elector or any representative of his an opportunity to question the auditor about the accounts".
I appeal to noble Lords who are businessmen, who are professional men and who have any experience in these affairs to contemplate the idiotic nature of this provision. It would mean that an auditor would have to hold himself available at the request of any elector to answer any questions. In the case of a Conservative authority I guarantee to tell the noble Lord that I could organise 500 visits on a local auditor in a month to keep him sufficiently occupied under this particular clause. It is not a responsibility that a shareholder in a public or private company can demand. A shareholder can go along to an annual general meeting where the auditor will, of course, read the report of that public liability company and will answer questions. But the auditor of a company or of a public corporation is not required to answer a question of any interested shareholder or of any interested customer. Noble Lords should consider the expense that would be involved in this on the assumption that the auditor will be permitted to charge on the basis of his own diary records: "Interviewed Mrs. B. from 11 to 12 on the subject of so and so—so many hours", whatever it may be. Noble Lords must consider the expense.
Subsection (3) says:
"… any local government elector for any area to which those accounts relate, or any representative of his, may attend before the auditor and make objections".
In certain circumstances, I wonder whether the auditor will be able to do any audit work at all. This is completely ridiculous. I shall not pursue the point further now. Quite clearly, these are matters which we shall have to clear up in Committee, and, indeed, upon which we, on these Benches, will hope, right across the whole spectrum of your Lordships' House, to obtain support for reasonable amendment of these clauses, which have been drafted without any regard as to the actual procedure that happens in audit. Audit involves work. It involves examination and evaluation of documents; it involves questioning people and all the rest without being encumbered by this kind of thing. As I have said, there are many other detailed points upon this aspect of the Bill.
Viscount Colville of Culross: My Lords, will the noble Lord give way for one moment? I have heard the criticism that he has made about this passage in the Bill, but I am sure that he would like to refresh his memory about the existing provisions in the Local Government Act 1972, of which in my time I have had considerable experience. I am fully aware that they take up a certain amount of time and trouble, but they

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are not all that dissimilar to the provisions in this legislation.
Lord Bruce of Donington: My Lords, I take the noble Viscount's point. But that Act did not impose on auditors the additional responsibilities that are put on them under Clause 9 of the Bill and which, indeed, in the current circumstances, are likely to ground the gravamen of most complaints; that is, value for money.
Viscount Colville of Culross: My Lords, I am talking about Clause 11.
Lord Bruce of Donington: My Lords, if the noble Lord will forgive me, I do not know whether he was here at the time when I referred to Clause 9, which sets out the additional responsibilities that are laid upon auditors and the additional area, over which inquiries may be made, objections may be raised, and queries may arise. That is the point I make. Within the general atmosphere created by this Bill and all the purposes behind it, I think that these particular clauses will need some very considerable qualification and revision. We shall give this Bill very careful examination during the Committee stage. We know that we shall receive the co-operation of the noble Lord, Lord Bellwin, who is invariably courteous on these occasions and who we hope will be extremely reasonable. Perhaps I may assure him that, as always, we shall seek to be as constructive as we can in these matters. However, I am afraid that we cannot disguise our view—which, on the basis of the debate this afternoon, is the view of the House or of those Members of the House who have been present—that the Bill is a bad and unnecessary Bill.
6.6 p.m.
Lord Bellwin: My Lords, I was very glad to hear the noble Lord say that he knows I shall deal courteously with matters as we go along, but I must say he does not make it easy, does he? We have had an interesting and, in the main, though not entirely, constructive debate, and I am certainly obliged to noble Lords who have spoken. Because I happen to disagree with very much of what most of them said—as I shall try to cover in a moment—that does not mean to say that I did not appreciate what they said and how they said it—mainly how they said it—and that we shall read very carefully what was said.
In winding up, one wants to cover all the points made, but clearly it is not possible. When I am faced with a Bill of this particular kind, which at last is home ground for me, I am tempted at this stage to go into too much detail, and I shall try to resist doing so. Still, let us see how we go. On Part I of the Bill, I cannot accept the suggestion that the abolition of supplementary rates and precepts constitutes an unwarranted interference with local autonomy. Authorities will remain free to set their own spending and rating levels, which is a crucial point. The ban should cause few problems for the vast majority of responsible authorities which manage their finances prudently.
These proposals are the result of the action of an irresponsible minority of authorities which have recently
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levied supplementary rates in order to increase their spending in defiance of Government requests for economies. It must be said that such behaviour not only puts at risk the traditional relationship of voluntary co-operation between central and local government, but it also puts an intolerable burden on hard-pressed ratepayers in both the business and domestic sectors. As my noble friend Lord Mottistone stressed in the case of the business community, many of these people can ill afford further heavy unexpected demands for supplementary rates.
The noble Baroness, Lady Birk, together I think with the noble Lord, Lord Irving, asked what I would have said had I been in my former role in Leeds at this stage and faced with the Bill. I will tell them what I would have said, because I was always very proud of the record, certainly of Leeds, but also of local government as a whole. Indeed, at one time I was vice-chairman of the AMA and charged specially with much of their discussion on financial matters. I repeat that I and the Labour members of the AMA were proud of the fact that we ran our authority carefully; we watched every penny as best we could. We certainly did not spend the money on some of the things that were raised at Question Time today. I am appalled by some of the things that are happening in local government, but I shall not digress.
To talk about supplementary rates was unheard of. I happened to know that there was such a thing as supplementary rates, but in all the years that I was in local government in Leeds it was never mentioned at all. I am asked what would I do so far as supplementaries go. In the first instance, I was totally horrified at the whole business. The noble Lord, Lord Hill, is always a delight to listen to, even if we do not always agree. When he talks about local authorities having their autonomy whittled away by these proposals on supplementary rates, I do not take that at all. In Scotland, for example, they have not power to levy supplementary rates, and have not had them. But they do not say that this has therefore whittled away their local autonomy.
We always took care in contingencies of matters of this kind. We assumed that there would be things that would go wrong. Any prudent authority would do that. But it did not mean that we therefore decided to rate up out of what might happen. This was with ratepayers' money. Our attitude to ratepayers' money was vastly different from the attitude of some of these local authorities—I am glad to say it is only a minority —who seem to have no regard for their ratepayers.
We were told earlier on that this whole business of rates, and so on, is all part of the autonomy, and authorities have the right and have a mandate. I think the noble Lord, Lord Hill, asked us—and, if it was not the noble Lord, he will accept my apology—what about the authority which gets a mandate at elections to come back to increase its spending, and then does come back? What about them? Are they not entitled to do this? They are certainly entitled to tell the electorate what they propose to do, but what they are not entitled to do, nor did we ever do it when I was in local government, is to disregard totally the Government's guidelines about spending as if they did not matter tuppence, because they do.
I submit that the national mandate is a prior mandate.

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It always was and it always must be, if one thinks carefully. All the Labour leaders that I knew and still know agree with me that that has to be the priority. Those who are concerned about local government must go along with me about the future of local government, and the relationship with the centre, and, if we ever get to the point where local government really does not care, and will not have regard to the centre's requirements arising out of the national policy, where will the relationship ultimately be? To me, that is a far greater danger and greater menace to those of us who are interested in the future of local government than anything that we have ever talked about or want to talk about.
Baroness Birk: My Lords, I do not want to hold up the Minister at this stage, but he surely must agree that local government has never been squeezed so dry of funds from the centre as at the moment. This is why these things are happening. There may be some irresponsible people, but that is not the basis of the whole story. They are completely squeezed.
Lord Bellwin: My Lords, two points on that. First, I would remind the noble Baroness of Circular 45/1976, when local government was told, because the IMF had been brought in, that there must be an immediate reduction of 3 per cent. across the board. That is an enormous reduction to make: 3 per cent. across the board against the 5·6 per cent. reduction that we are calling for over three years. Let us keep it in perspective. At that time, what was local government's response? They responded by doing it, because that was the kind of sense of responsibility that they had then, and that still exists today among the majority of people in local government. My concern is about the minority who are not concerned. We have to do something to protect, first, the country's overall spending, and we are talking here of a £1·5 billion overspend in a year. These are figures unheard of in the past. They also have to take care of those who have to foot the bills at the end.
I shall be here a long time if I do not press on. I had better comment on a point that the noble Baroness made, because others did too. Indeed, the noble Lord, Lord Hill, was anxious about this retrospective point. This is in Part I. Clearly the Bill indicates that the ban will operate in relation to any financial year beginning on or after 1st April 1982. In the Government's view, therefore, as my right honourable friend made clear in another place last month, the Bill will invalidate retrospectively any supplementary rates and precepts made for 1982 whether before or after 1st April.
I appreciate the problems that have arisen in Bedfordshire, where the county council issued a supplementary precept for 1982–83. It will automatically fall when the Bill receives Royal Assent. Nevertheless, I can assure the House that, in drafting the amendments we shall be tabling in Committee, we shall deal with matters such as the consequences of an invalid rate or precept. I entirely accept the need for absolute clarity as to the effects of the legislation. This was a point that the noble Lord, Lord Hill, was making. I assure him that it will be borne very much in mind.
May I say on the whole subject of borrowing—the
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noble Baronesses, Lady Stedman and Lady Birk, referred to borrowing, insolvency, and so on—that there is no question of us being on a "slippery slope". If I were to develop the argument on this, I should have to remind the noble Baroness that local authorities in Scotland have never had the power to raise supplementary rates, as she knows. I am not aware that as a result they have experienced any doubts about their creditworthiness when attempting to borrow money. I understand what the noble Baroness says on that, and it is a fair point to make, but I truly do not believe there will be any need for concern on that.
I have listened with care to the comments made on Part II of the Bill. Before turning to some of the detailed points, I should remind your Lordships that the policy which lies behind Part II starts with concern about the national economy, which, as I said a moment ago, is, and always has been, accepted, as the proper concern of central Government. In fairness, it would need to be said that in an expanding economy—and I suggest this was the point the noble Baroness was also trying to bring out when she interrupted me a moment ago—local authorities found it relatively easy to work within the guidelines set down by Government. She knows—I was one of those doing it—that some authorities have found it difficult to comply now.
That is not surprising. It is always more difficult to run an efficient authority than it is to allow sprawling growth to drift into inefficiency. I say gladly that some authorities, usually those with a tradition of efficient and effective management, have responded magnificently. That is the only word to apply to them. But that is precisely why we do not want to penalise such authorities indiscriminately. That is why we have proposed a discriminating form of pressure through the grant on those authorities that are overspending their targets. That is what Part II of the Bill is all about.
I am tempted here to go into some of the points on block grant that I have in front of me. That should be soporific as a suggestion in itself, but I shall hold that back for the Committee stage, except to say that the noble Lord, Lord Hill, described the position of a district authority which he said was typical, and he argued that the very mechanics of block grants represented a diminution in the autonomy of local government.
The position the noble Lord described by which an authority will not know its final grant entitlement until after the end of the grant year is not new. It is not changed in any way by the Bill now before us. Even under the 1974 Act, the conclusive calculation of grant was not made until audited figures were available after the end of the grant year. As the 1980 Act explicitly based grant on out-turn expenditure, it is clear that the final calculations cannot he made until some time after the year in question. Most of the changes will be the result of changes in an authority's own expenditure, and will therefore be predictable. In the circumstances, I really do not think that the marginal changes that remain represent the threat to autonomy that the noble Lord suggested.
The noble Baroness, Lady Birk, and the noble Lord, Lord Irving, asked whether we were dealing with a No. 2, 3, 4 or 5 Local Government Finance Bill, and of course it is easy to make that sort of point. The answer is that one cannot have it both ways. If one

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really wants to have a measure amended, and claim success as an Opposition for what has been achieved in another place and what one hopes to achieve here, then of course the Bill will be amended, and in due course one will be able to refer to it as Bill No. 5 or No. 6, but I hope that will be said as a form of praise rather than criticism. I will take it as such, anyway, until I am told to the contrary.
I assure the House that I accept as very real concern the remarks that have been made by most noble Lords who have spoken, including my noble friend Lady Platt, about the whittling away of local autonomy. I am now referring to Part II of the Bill. I truly do not believe that is so, and I shall comment on that in general when I make my final remarks shortly. In the meantime, I repeat what I said a moment ago; that it was always accepted that one must work within the parameters laid down. I am sure that I will be returning to that point time and again in Committee because it is fundamental.
I would tell the noble Lord, Lord Bruce—in doing so I am grateful to an interruption by my noble friend Lord Colville, who was abolutely right—that the provisions of Clause 11 on the inspection of accounts are already part of the local government audit system and have been, I am told, for 100 years or more. I am sure we shall have much discussion of that sort of topic in Committee, so if Lord Bruce will permit me, I will not go into the nuts and bolts of it today, as I wish to comment on a few matters in general before coming to Part III of the Bill.
The noble Lord, Lord Evans, in, as always, a helpful if critical speech—in answering him I am talking generally about the district audit service—said the district audit service had been a great success, and, frankly, I agree with him. In what it has done it has been a great success. What we are concerned to ensure, however, is, first, that the audit service should continue to be a success and, secondly, that it should do the things it has not done in the past—that it should become more involved in the whole value for money scene, more about which I shall say later. But that is not to criticise either its independence or achievements so far. The aim is to make it even better, and why should we not want to do that?
The noble Baroness, Lady Birk, knows that I always make a careful note of her words. She said the Bill would have an adverse effect on the quality of life. I would remind her that a Tory Government introduced, among other things, the Wildlife and Countryside Bill, which many, including the noble Baroness, would think made a contribution to what she really means by the quality of life, and the same applies to other Bills which this Government have introduced and with which I have been concerned in debating with her. If she will allow me, therefore, we need not make a big thing of that part of her comments.
The noble Baroness, Lady Birk, also referred to LAMSAC and said the Government were not making a contribution. Personally, I have always supported LAMSAC in what it has done. It was financed hitherto 50 per cent. by central Government and 50 per cent. by local government. It was set up to study the O and M, as it were—the workings and management systems—of local government. I won-
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der how many noble Lords know that LAMSAC was not allowed to disseminate to its own members the results of its findings. They could supply them only on request. They must, therefore, do their best to make it known that they have specialised knowledge and information, and that state of affairs has not helped LAMSAC to achieve what many of us hoped it would achieve, but possibly that, too, is for another day.
The noble Baroness, Lady Stedman, thought the Bill was not a better way of providing local democracy. The measure is concerned with local accountability, as part of achieving that in the end, and that is more than just a nuance; much of the Bill is about accountability, and that is the way in which I would answer the point she made.
Part III of the Bill deals with the local government audit. I tried in my opening speech to outline the three main aims; independence of audit, an enhanced role for audit and improved public accountability. I have not heard anything—not even from the noble Lord, Lord Bruce, who was the most detailed on the matter—to convince me that we are achieving less than that. I shall resist the temptation to pick up the various points Lord Bruce and others made, except to make a general comment about value for money, which is an important objective. Those who really are concerned with this issue must appreciate that when we talk about cutting back spending, the first things to cut back on are not the nursery school, the aged persons' home or even the number of teachers. The first question to ask is, "How can we do it better? How can we get more by spending the same?" It may be said that that sounds a trite and pious observation which everybody makes, but the House can take it from me that that is not what happens in most of local government. The first observation to be made in many authorities—not the majority, I am happy to say—when called on by Government to keep spending within certain parameters is, "What shall we cut out?" That is not the way. It is really all about getting more for what is spent, and if this or any other Bill, or any other system of audit or anything else, will help to encourage people (make them, if you like) to be concerned with value for money, that must be right, and I am glad to see the noble Lord, Lord Bruce, nodding in agreement with me on that because that truly is the thrust of it.
The second thrust of the three proposals is the accountability factor. I do not consider it any encroachment on or whittling away of local government autonomy if there is a call for more accountability. Why not make such a call? We never mind laying everything out on the table. Everything is open for inspection, but the problem hitherto has been that while the estimates and accounts are there at the end of the year, few can truly understand them. When the noble Lord, Lord Bruce, looks at a set of local government assessments at the end of the year, even he, with his expert knowledge, while he can understand them, has to plough through them. He would be the first to agree on that. The lay person has no idea what they mean. If we can call for a more simplified method of presentation and ask for more accountability, why should we not do so? Why should local government consider that to be an encroachment on them? I do

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not think they will when they consider that aspect of it, and I hope they will think very seriously about it.
I should perhaps comment on the point the noble Lord, Lord Bruce, made about central Government; the credit of central Government is, as he knows better than I do, a matter for, for example, the Public Accounts Committee and the Comptroller and Auditor General, and I am sure they will read the noble Lord's comments with interest. Indeed, I will ensure that they are brought to their attention, which should please him.
The noble Lord, Lord Irving, thought I should have kept a foot in both camps, including local government, but I am sure he knows that Ministers cannot do those things, even if one wanted to do so. He thought that what we were proposing was indiscriminate. I do not accept that. I would say that the previous position was indiscriminate and that what we are trying to do is not to disadvantage those who are doing those things which it is felt ought to be done.
The noble Lord, Lord Evans of Claughton, and the noble Baroness, Lady Birk, said that what we are proposing would discourage people from going into local government. The noble Lord said that our proposals were misconceived and illiberal. Well, illiberal in one sense they certainly are, as he would expect, but illiberal in another sense they are not, I respectfully submit. Not for one moment do I think that they will inhibit anyone who is interested in local government. If we can, once and for all, get right the relationship between central and local government, people will go into local government in a way in which they have not been doing so for the past 25 years, never mind in more recent times.
The noble Baroness, Lady Stedman, raised a matter concerning parish councils. I suppose I should have realised that she might do that. She asked about the position under the block grant system. She will know that the same point was raised in another place, both in Committee and on Report. The question is not as simple as it might appear at first sight. The powers of parish councils are concurrent with some of those exercised by district councils, and, as the noble Baroness knows, there are serious problems in attributing the responsibility for expenditure to different tiers. It is for that reason that parish council expenditure counts as part of the total expenditure of the district council for block grant purposes. If the noble Baroness wants to press the case that she was making, I suggest that before she does so, she has a long talk with the Association of District Councils, and sees what it says about the matter. The noble Baroness knows enough about this business to know what the association thinks—and it is not the same as the point of view that she was putting forward.
The noble Lord, Lord Hill of Luton, spoke of what my right honourable friend Tom King had said. I am glad to see Tom King in the Chamber, and I am sure that he will read with interest what the noble Lord said. I would not take back anything that I said, or for that matter anything that Mr. King said, during the long passage of the 1980 Bill, I do not believe that our proposals are whittling away local democracy. I make my point, as I did on the national mandate, which I think is all-powerful. I should like to say only one thing to the noble Lord with regard to what he said about local freedoms. In my time there have
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been very few cases where central government have done anything to turn back local government freedom and autonomy. I should like to give the noble Lord one example, which I think is very important. It refers to what we did with capital expenditure controls under the 1980 Act. I say now, as I have said before, that what we did was arguably, or rather unarguably, the greatest attempt to give to local government a freedom that it had never had.
The noble Lord, Lord Irving of Dartford, asked whether we would give borrowing powers in order to do something regarding capital spending. Need I say again that prior to the 1980 Act, if local government wanted to put up a rabbit hutch, it had to come to London to get permission? That was the freedom that local government had so far as capital spending was concerned. On the other hand, today local government is given an overall figure, which it may supplement in any of several ways, not least by capital receipts which they have, and then they can spend the money any way that they wish. That is a freedom that has long been wanted. For a long time I preached for it, and no one will tell me that by comparison with the previous situation, what I have just described is not a tremendous freedom. Perhaps we shall come back to that question another day. I was grateful for the support that my noble friend Lord Mottistone gave me. I understand his concern about the business rate. He will know that we shall feed his comments into the discussions that are now taking place on the whole matter of rating reform; and we shall read his comments with great care.
Finally, so far as the noble Lord, Lord Bruce of Donington, is concerned, what can I say to him? He talked about "The further impoverishment of the poor for the benefit of the rich". Well, that is good party stuff, and I always pay tribute to that, but, frankly, I do not think that it has the slighest relevance to the Bill. But I understand the noble Lord's view—and why should he not make his point? That is what debating is all about. The noble Lord said that I had no support. Well, time will tell. We had no support when we were dealing with block grant. But I challenge anyone now to deny that what we are achieving by way of block grant involves a relative—and I stress the word "relative"—simplicity of understanding compared to the multiple regression analysis basis that applied previously. The difference is astonishing. We now have the 62 factors laid out on the table, and I have the privilege of going through them with authority after authority, who either like or do not like any particular one of them. At least we can have a debate about where the grant comes from. There was no debate previously. One cranked the handle, and if the answer was not right, one cranked it again. Out came the numbers, and that was your lot. There was no debate about that. So block grant is an advance, but we had no support for it at the time.
Of course the noble Lord would not expect me to have agreed with him for one moment when he said that the Government's financial policy is now discredited throughout the whole country. Of all the things he said, that was the one with which I would quarrel most of all. Time will tell how far such discredit has spread. The noble Lord said that the

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next Government will repeal these proposals. What he meant was, the next Labour Government—and that is a vastly different thing! However, I have said enough for now. No doubt from what I have been saying, your Lordships will have gathered that I do not agree with what most of your Lordships have said. I think that this is a splendid Bill. It takes us much further down the road towards better, more open, more accountable local government. With my background I have not the slightest hesitation in saying that I am very proud to support the Bill, and I hope that your Lordships will do the same.
On Question, Bill read a second time and committed to a Committee of the Whole House.

Charities Legislation: Modernisation
6.36 p.m.
Lord Allen of Abbeydale Lord Allen of Abbeydale rose to ask Her Majesty's Government whether they now contemplate introducing legislation to modernise and clarify the law relating to charities. The noble Lord said: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. I should like to begin by saying what a pleasure it is that the noble Lord, Lord Elton, will be replying to the debate. I trust that he welcomes the prospect of speaking from time to time about the straightforward and uncontroversial matters with which his new department deals. He might perhaps think that charity is not an entirely inappropriate subject for what I think is his first Home Office debate. I should like to thank the right reverend Prelate and the other noble Lords who have put down their names to speak in a debate which, though brief, is concerned with what to my mind is a very important subject.
It is perhaps appropriate that we should go on to talk about charities immediately after the Local Government Finance Bill, when it is a feature of our society that the discharge of the social responsibilities of local government depends so much on the contribution of voluntary effort, financial and personal, through charitable organisations. We are very fortunate in this country to have such a wealth of charitable support, and it is a contribution that is recognised by the state in the various tax exemptions which have been conferred. I gladly recognise that though there has remained a certain difference of opinion about VAT, during the last two years certainly very worthwhile additional tax benefits have been given —or are being given—to charities.
All that means that a balance has to be struck between encouraging voluntary effort without stifling initiative and without undue interference from Government, and on the other hand ensuring that the money which the public, as either donors or taxpayers, contributes is not wasted through diversion to non-charitable purposes. But it also means the introduction of a new dimension in charity law. Its traditional purpose was to protect the property and resources devoted to charity, but it has come to take on the role of providing the yardstick against which claims to fiscal benefit are judged, and hence has become subject to new pressures, and has had to face new tests.
I am well aware that the present Government have so
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far taken the view that the basic principles of the existing law and the way in which they are administered remain broadly satisfactory. They have not been shaken in that view by some of the events which have caught the headlines in recent times; for example, the problems arising from disaster funds, the arguments about political activities on behalf of charities and the exchanges which are still going on about the Unification Church, or whatever title it is the "Moonies" use for their organisation.
The Government seem to have taken the view that issues of this kind are merely hiccups in a perfectly satisfactory system. Others have taken the view that they are symptoms of problems which are quite deep-seated. Certainly there is plenty of concern on the part of many charities on a scale considerable enough to lead the National Council for Voluntary Organisations to put in train in the next few weeks and the next few months a fresh series of consultations to assess the need for change. It is also a fact that a Select Committee in another place in 1975, and a committee under the noble Lord, Lord Goodman, in 1976, both thought that changes in the law were called for. Although the Government have made a general statement of policy, I am not aware that they have ever commented in detail on the proposals of these two bodies.
A short debate like this is not the occasion for going through all the issues where change might be considered, and I should like myself to concentrate on two main questions. The first arises from the fact that there is no statutory definition of a charity. Let me say straightaway that I doubt whether it will ever he possible to provide one, but I do not think that anyone would deny that the patchwork we have at present is not without its obscurities and anomalies—I hope all the negatives in that sentence come out in the right way.
One always starts with the preamble to the Statute of Charitable Uses 1601, which gave an indication of the matters then considered to fall within the ambit of charity and which continued to be a source of analogy and interpretation—a bit like the American Supreme Court trying to interpret their 18th century constitution in the light of modern problems. Then, going on from 1601 and pausing briefly with Sir Samuel Romilley in 1804, one goes to Lord Macnaghten in the Pemsel case in 1891. Basing himself on the 1601 preamble and various judicial decisions, he classified charities in four categories: trusts for the relief of poverty, for the advancement of education, for the advancement of religion and for other purposes beneficial to the community. So it seems to me we are in the position, which strikes me as being a little odd, that in order to decide what is a charity the Charity Commissioners and the courts, as I understand it, have regard to a preamble in a Tudor Act which has disappeared from the statute book and to the test of benefit to the community which is laid down in a judicial decision and not in any Act of Parliament.
The Goodman Committee, to which I referred, came down in favour of restating in modern language those categories of activity which are properly regarded as charitable and would be generally accepted as worthy of support; in other words, giving guidance, but without attempting a definition, much as the 1601 preamble tried to do. This approach has considerable attractions. I trust the Government have not closed their

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mind to tackling the problem on these lines; or, if they have, I hope the Minister will be able to tell us why.
I hope, too, that the Government will be prepared to contemplate some rather closer definition of the judicial phrase about "purposes beneficial to the community". There are various activities which have developed as social conditions have changed where there remain doubts and difficulties; for example, the giving of information and advice, counselling, environmental improvement, promotion of the arts, research, unemployment, religions of a kind which Lord MacNaghten cannot have dreamed about, unconventional medicine, race relations and so on. There are even those who have some slight difficulty in seeing how fee-charging public schools and expensive private hospitals meet the test of benefit to the community; and certainly some of the self-help organisations find themselves in difficulties.
The noble Lord, Lord Goodman, who unfortunately cannot be with us this evening, tells me that in his view the position of sport in relation to charity law is chaotic and that the Sports Council would greatly welcome clarification. He also tells me that the somewhat anaemic Act which was passed in 1958 to deal with recreation is not working well. The Charity Commission, for example, seem to have the idea that the provision of facilities for a single sport does not come within the Act, even if the facilities are open to everybody, because a lot of people may not be interested in that particular sport; and the suggestion is that if this is a correct interpretation of the law as it is then the law needs changing.
In this context the particular issue of disaster funds calls for special mention. I find it interesting that the Aberfan appeal was a charity, whereas Penlee was not. I cannot help wondering whether the Attorney-General's helpful guidelines after Penlee may not be filed away and overlooked by those concerned the next time we have a disaster which touches the nation's heart and the contributions start pouring in straightaway. If under the guidelines the fund becomes non-charitable questions of tax arise, and one wonders whether there is not a case for legislation authorising the Home Secretary to declare an occurrence to be a disaster and for a non-charitable fund in relation to that disaster then to be put in the same position as a charitable fund as regards tax in relation both to donors and to trustees.
My second main point I can deal with very much more briefly. It relates to political activities. It is an issue which affects only a minority of charities, but where it does arise it can be quite troublesome. Everyone would agree that an organisation which exists to serve only political purposes or to promote party interests should not qualify; but despite guidance from the Charity Commission I find that there is a good deal of doubt and uncertainty among certain charities as to how far political activity ancillary to a charitable purpose is acceptable, and just where the boundary lies between permissible education of the public and impermissible propaganda.
It so happens that this is not an area where there have been all that many decisions by the courts; and although there has quite recently been an important ruling in the case of the Amnesty International Trust, I am not sure whether even this ruling is going to resolve all the doubts. One organiser put it recently that it
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seemed to him that any organisation which aspired to alleviate the problems of its neighbourhood by any means more rational than a traditional social welfare approach was unlikely to be able to do so both effectively and legally as a charity. He may or may not be right, but I submit to the Government that it would be wrong to ignore the anxieties which a minority of charities have on this issue and the genuine doubts about what is permissible. I would remind the Minister that the Select Committee and the Goodman Committee both looked for some change in the law here.
I have already been speaking for long enough, but before I sit down I should like briefly to mention two other points. One is the quite simple one of the cost of going to the courts to challenge decisions by the Charity Commissioners, a cost which is of such a proportion as to make this remedy of rather limited use. I am aware of two charities which carry out not dissimilar services to the community and wish to merge but who, for some reason, have been refused permission to do so by the Charity Commissioners. They estimate that it will cost them at least £5,000 to go through the process of persuading the courts that the Charity Commissioners have been unduly rigid. I know the problems about legal aid but both the Select Committee and the Goodman Committee thought there was a case here for financial help. I could wish, too, that there was some provision in the statute which enabled the Charity Commissioners themselves to go to the courts for some kind of declaratory judgment on difficult and important legal issues.
My last point relates to parishes (which have been the subject of discussion in the debate preceding this one) in the rather special context of parochial charities for the poor. There are a great many of these and, contrary to popular belief, some of them have quite a lot of money. The Charities Act 1960 made provision for schemes for voluntary mergers but not all that much has been achieved. The noble Lord, Lord Renton, who piloted the 1960 Bill through another place tells me that his view is that this provision has not fulfilled the hopes that were placed upon it. I am, I confess, a little unhappy that if there is a parochial charity with more money than it needs to meet its traditional obligations of helping the poor within the parish, the tendency is to allow it to use the surplus for any other purpose in the parish rather than that it should be merged with charities in other parishes so that the funds can be used for the original purpose of helping the poor but over a wider area. I think there is an argument here for legislation imposing an element of compulsion, but I shall not pursue that point any further this evening. However, I hope that the noble Baroness, Lady Faithfull, will be touching on this topic when she speaks a little later.
I am sorry to have been so long, but, as I said at the beginning, it is an important topic and it is important that there should be confidence in the law and in its administration. I think that Parliament perhaps has concerned itself too little in the past with some of these issues. I think I am right in believing that there has never been a debate on any of the annual reports of the Charity Commissioners. I shall listen with interest to what the noble Lord the Minister and the other speakers have to say. Perhaps I could end with the warning (if that is the appropriate word) that, in the

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case of this debate, the Government cannot count on having heard the last of these issues.
6.54 p.m.
Lord Mishcon: My Lords, the House, as always, will be grateful to the noble Lord, Lord Allen of Abbeydale, not only for raising this important matter but for the manner, clarity and eloquence with which he has done so. I would like to share his joy that the noble Lord, Lord Elton, will be replying to this debate. We have heard that sport is in a doubtful state in regard to charity. But I trust, especially in view of the glorious past in the game of cricket of the right reverend Prelate, that when he follows me in this debate the noble Lord, Lord Elton, will at least take the message back with him tonight—if I may quote the finishing words of the noble Lord, Lord Allen—and not merely present a straight bat in knocking the ball back to the bowler, but rather, either now or in the future, show us a few glorious strokes, preferably on the offside, and that we may have some boundaries to register in future, so that the law, in the language of this Motion, will be both modernised and clarified.
It is right, as the noble Lord, Lord Allen of Abbey-dale, has said, that this is an important subject. I was interested to note from the 1980 Report of the Charity Commissioners for England and Wales that they now have 136, 048 registered charities. So that your Lordships are at least reminded of your Lordships' part in dealing with the question of voluntary organisations and charities, may I say that a debate in this House which took place on 22nd June 1949 receives a preeminent place in the report in December 1952 of the Committee on the Law and Practice relating to Charitable Trusts. That committee was known as the Nathan Committee in view of the fact that the late Lord Nathan presided over it.
I am proud to read, if your Lordships will bear with me, the remarks made from the same position that I occupy at this moment—but it was a question of a far more eminent person making the remarks, I hasten to add. They were remarks by Lord Pakenham (as he then was) in that debate which was on a Motion introduced by the late Lord Samuel. The Motion was:
"To call attention to the need for the encouragement of voluntary action to promote social progress".
In the Nathan Report the debate was described as "historic"; it provided an opportunity for discussing the place of charity and voluntary action in the Welfare State; there was unanimity expressed on the value as a national asset of voluntary action and the charitable role of our citizens; and this was in spite of the extension of public services.
The noble Lord, Lord Pakenham (the noble Earl, Lord Longford, as we know him now) in winding up for the then Government said:
"We have moved far from the era of laissez-faire. We have entered what Lord Lindsay and others have called 'the era of the positive state'. But even at the risk of repetition, I want to make it plain beyond any shadow of misunderstanding that, in the view of the Government, democracy without voluntary exertion and voluntary idealism loses its soul".
That is the end of what seems to me to be a worthy quotation in the context of the Motion introduced by the noble Lord, Lord Allen of Abbeydale.
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The noble Lord, Lord Allen of Abbeydale, dealt with various aspects of the present law relating to charity and drew rather graphically on its history and its ancient origins. Those origins date back to an Act of Parliament of 1601. The noble Lord referred to the definitions in the last part of the 19th century, or, rather the four categories which were given by Lord MacNaghten and which survive to this day. On the definition question which he raised I think it is important (I believe that he would want to emphasise this) that when this matter was reviewed both by the Nathan Committee and by the Goodman Committee, to which he referred, the wealth of legal decisions which had been made over the centuries was referred to with great respect. It was hoped that if indeed there would be a statutory definition, it should be one in simple language which would deal with the categories in the same way that the noble Lord, Lord Allen, suggested, and that definition would allow that great body of case law and precedent to remain, which I think has added so valuably to our legal history and to what can be deemed to be a charity.
There is not the slightest doubt—this Motion refers to modernisation—that that definition, in rather simpler language than has been employed in the 1601 Act at all events, should bring up to date the modern concept of charity; and, as the noble Lord, Lord Allen, said, quite obviously over the century those boundaries have been extended.
The noble Lord referred to one of the charitable categories referred to in the four categories of MacNaghten. He referred to the advancement of religion. It is absolutely right that that is a category—and I should be so interested if the right reverend Prelate the Bishop of Liverpool cared to comment on this, but that must be a matter for him to decide—in which some reform, some clarification, is without any doubt necessary. We have had examples recently. The noble Lord, Lord Allen, mentioned the difficulties in which the Charity Commissioners have been placed regarding knowing what religion is supposed to mean in this context.
I advocate very definitely a respectful attention to the wording of the Goodman Report. I certainly could not better it and I therefore propose, with your Lordships' leave, to quote it. This is what the Committee said on that subject:
"We consider that those seeking charitable status for the promotion of movements, whether religious or not, should be required to satisfy the Charity Commissioners or the court that their advancement is for the benefit of the community according to certain basic concepts which should be established. We would not regard the number of adherents as a principal test of acceptability".
I do not think I could improve upon that wording. I therefore refer the Minister to it, although I am sure he has read that recommendation in the Goodman Report. I hope very much that in his reply he will be able to say something of a constructive nature in regard to that aspect.
There was one matter that the noble Lord, Lord Allen—he could not get everything into his very concise speech—did not mention. That is that although the advancement of education is one of the four categories, the advancement of the arts is not. There is no doubt at all that the Charity Commissioners in many respects find themselves in difficulty when there is an

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application made to them for the registration of a charity where the advancement of some arts is being put forward as the object of the charity. There are many arts that are obviously of general acceptability. But then there is the fringe of certain of the arts, and I personally have experience of one of them where there was a genuine attempt to preserve the art of the circus in this country. An educational establishment was hoped for in order to handle this on a completely non-profitmaking basis, to educate youngsters in the art of circus, and so on.
The Charity Commissioners told me that they found the greatest difficulty, in view of their limitations, in saying that this was an art for the benefit of a section of the community, and they even had doubt whether it was an art at all. There are so many things on the fringe of this subject which obviously ought to be looked into if we are trying to modernise and clarify the law of charity.
I do not intend to add anything to what the noble Lord, Lord Allen, said about political activities. It is a very delicate subject—and the noble Lord, Lord Allen, made this clear in his speech—and nobody is looking for charitable status for those who quite openly—and that is their right—wish to issue political propaganda. When one gets to the type of political activity which is required in order to fight for a definite aspect of social welfare, when one gets political activity which aims to relieve poverty or to advance the arts, then one walks into the very grey area that the noble Lord, Lord Allen, referred to.
Here again, there were some very sensible guidelines, if I may respectfully say so, which were set out in the Goodman Report and which were referred to. This time I promise the House that I shall not endeavour to quote them, because they are exactly the lines to which the noble Lord, Lord Allen, referred. On the question of disaster funds—a matter which again was raised by the noble Lord—I remember that, when the Aberfan disaster befell us, there was a question regarding that disaster fund, not as to whether it was a charity but whether it remained a charity—and this was exactly the point in the Penlee case—when one satisfied the needs of those who were in pecuniary need as a result of the disaster.
Therefore, if one had an over-subscription of funds, could one pass it over to those who had suffered so much in the disaster, the families of those who had died, and so on? Was one doing this within a charitable object covered by charitable status if indeed one went beyond their immediate needs? That is, whether it was £5, 000—which was a figure we have heard of recently in regard to another disaster—or whatever it may be. There is not the slightest doubt that here again, having had two experiences, at both Aberfan and Penlee, when obviously we must go beyond the question of the Attorney General's guidelines, there must be an enactment so that in future the position of a disaster fund is made absolutely clear in law and it has a proper charitable status.
There are two other matters to which I shortly refer. The first one is the question of the Charity Commissioners which as a result of the Nathan Committee and the White Paper of 1955 found themselves with powers and duties under the Charities Act 1960. I want to pay my tribute, as one who has had quite a
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bit to do with the Charity Commissioners, to the courtesy that one always finds when one applies to the staff of the Charity Commissioners for assistance.
I know that those who practise my profession get a little disappointed—and this is serious when there are matters of great need that a proposed charity has to deal with—the time that is taken for the approval of the draft documents of the charity, which have to go to the Inland Revenue, quite apart from the Charity Commissioners. One is very lucky if one gets the registration of a charity through in something under six months. That procedure ought to be hastened. I know that they had difficulties with staff at a time when there were many applications being made for registration, but that situation still obtains. I feel that a little more administrative skill would enable those applications to be handled with more expedition.
Having said that, I suppose it is a little inconsistent if I try to add to their duties; but I hope that, if there were any statute to cover the modern conditions of a charity, the Charity Commissioners would be empowered to make far more inquiries of some of the small charities—but it could apply to some larger ones—to make sure that they are being properly administered. The fact of registration and of having to submit accounts and so on does not mean—unless those are perused and there are powers and duties imposed upon the Charity Commissioners to go a little further—that the charities in this country are being looked at as they should be in order to see that they are properly and sensibly run. That does not mean, of course, that I am advocating interference with the proper discretion of the trustees of a charity to administer that charity.
Lastly, I know that the noble Lord, Lord Allen, was short of time and most likely he would have liked to give very much more attention to the question of what used to be called, I think, "common good funds", national and local. I find myself in precisely the same position, looking at the clock, as I am anxious not to test the patience of the House, since your Lordships would obviously like to hear speakers other than myself. Therefore I am hoping that as a consequence of this debate the whole question of national and local "common good funds" —they have other names given to them—may be advanced by other speakers and, if not by other speakers, then possibly the noble Lord the Minister may refer to the Government's thinking in regard to that important matter later.
I should like to express again my great gratitude to the noble Lord, Lord Allen of Abbeydale, for having raised an important matter. I share his hope that it will not be a question of another Motion moved but that in fact some action will be taken as a result of his contribution to the House tonight.
7.12 p.m.
The Lord Bishop of Liverpool: My Lords, I, too, am grateful to the noble Lord, Lord Allen of Abbeydale, for putting down this Question. I, too, believe it to be extremely timely and I hope that Her Majesty's Government will now consider introducing legislation to modernise and clarify the law relating to charities. Those of us who are concerned with the charitable

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work of the Churches do not agree that the law is tidy or as good as it could be at the moment, and there is a strong feeling that there is a need for a look at the law.
I will concentrate on the experience of the Churches rather than on sport, although I thank the noble Lord, Lord Mishcon, for a nice reminder of the beginning of the cricket season on a pleasant day. Although I have had enough experience of a variety of inner city charities and have found those raising similar questions, I shall concentrate on the charitable work of the Churches and particularly on the great charities concerned with overseas aid. In July 1980, a former Member of your Lordships' House, Bishop Gerald Ellison, led a deputation to the Home Office representing the major Church charities and the National Council for Voluntary Organisations. Bishop Ellison said then that, so far from being happy about the status quo, the leading charities found themselves increasingly hampered in some of their activities, especially overseas, by an over-rigid interpretation of the law of charity. That deputation pressed for greater flexibility in the administration of the law and in the implementation of the reforms recommended by both the Goodman Committee and the Select Committee of another place, which have been referred to previously.
In 1981, the British Council of Churches held a consultation on the Churches and charity law, which was attended by representatives from 22 organisations. Thinking simply of some of the best known and largest charities concerned, it was agreed at that consultation that the activities of bodies such as Christian Aid, Oxfam, War on Want and CAFOD were being seriously hampered by the way in which the law is administered. The Charity Commissioners exercise what have become in effect quasi-judicial powers because of the prohibitive expense of taking their rulings to the courts. I know that staff members of these charities have to spend great amounts of time producing detailed answers to repeated questioning about the causes they support. An organisation like Christian Aid is particularly vulnerable because it operates so openly and publishes quarterly all the grants that it makes. They will tell you that there is an urgent need for a change in the law. Smaller charities simply do not have the staff to persist in such arguments.
It seems to me there will always be many borderline cases in charity law but the borderlines ought to be located in places rather different from where they are today, and that some matters should be made much plainer and more unquestioned than they are today. I am conscious of intricacies of the law, but we need to stand back from those intricacies and look boldly at what should and what should not be regarded as charitable. It should not be a matter of argument that ways and means should be found to make charitable status available to help the poor and disadvantaged. Further, charitable status should be available not only for the relief of poverty but for its prevention. In a common-sense discussion those sorts of statements seem very obvious: yet it is precisely around here that some of the borderline issues are to be located. Charities are told that they must beware of campaigning for political action or of blurring the line between religious purposes on the one hand and changing
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attitudes or providing for social needs on the other.
Let me give your Lordships two examples. The first is one I was myself involved in. Some of us were exploring the possibility that the Church of England might itself promote a special fund to support self-help groups in the black and Asian communities in this country and to provide an educational programme among Church members to change attitudes there towards the black and brown people. We made preliminary inquiries of the Charity Commissioners and were told—I think this may have been a world record—by return of post that the courts have repeatedly held that to seek to change attitudes is not a charitable purpose.
The Chairman of the Central Board of Finance of the Church of England at the time was Sir Arnold France and he was extremely nervous when in discussion with me that the Church of England might lose its charitable status. I think he recognised the brief glint in my eye when it crossed my mind that an educational programme might indeed be furthered by the Church of England losing its charitable status because it was determined to do something to help the disadvantaged.
My second example occurs quite frequently. The Church desires to use the proceeds of the sale of a redundant church building and it thinks that the best community use for that would be to support a housing association or to make church land available to a housing association at less than the best price possible. We in the Churches are frequently put under intense pressure that the moral and right thing is to do just that. The response of the Charity Commissioners has been that Churches hold their land and property in trust strictly for the purposes for which money was originally given—namely, the advancement of the Christian religion.
At that point we come back again to some definitions. They will say it is by virtue of that sole purpose that charitable status is given to the Churches; but the Charity Commissioners have drawn those definitions very rigidly. Only those activities directly associated with the worship of God, such as praise, prayer, preaching and evangelism are deemed to contribute to the advancement of religion. I hope your Lordships might agree that the Churches should have some say in what contributes to the advance of religion, and sometimes we wish to deploy our resources in ways which seem to us to be a natural expression of our religious faith. Yes, my Lords, I believe that we ought to make the attempt to say something about the nature of a particular religion, when charitable status is asked for.
It seems to me that a prime reason for charitable status should be to prevent poverty, as well as to relieve it, and that will mean things like changing attitudes. Repeatedly this issue is raised in connection with charities which seek to help the most disadvantaged groups in our society. It is a proper question, I believe, to ask why the borderline is located there and not, for example, near the promotion of education in private schools.
I am one of those to whom the noble Lord, Lord Allen, alluded, who question that charitable status is appropriate to private schools. They are concerned with changing attitudes. But to many people, the

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maintenance of private education is a highly political act, with large consequences upon separate development in the life of the community and upon the schools which poor and disadvantaged children attend.
An old distinction seems to be being repeated. To change the social order is regarded as political. To maintain it is not. We need to be honest with ourselves, rather than label action which we do not agree with, in moments like these, as political. Of course, political activity must have limits set to it in charity law, with more careful definitions than exist at present. But it seems to many of us that the Goodman Report has made helpful proposals in this area.
Perhaps another distinction survives, too. Old and traditional religious charities are acceptable if they try to change attitudes; newer ones are out. I will give your Lordships some examples. The Lord's Day Observance Society has for 100 years been a religious and campaigning body. The Quakers have maintained their peace testimony for 300 years. The Church Missionary Society campaigned vigorously for changes in legislation on the issue of slavery during the 1800s. The administration of the law today has made such proper campaigning more difficult for a charity than it was.
I hope that your Lordships will take seriously how unhelpful the repeated questioning by the Charity Commissioners, with their very large powers, is to the honoured charities that I have mentioned—Christian Aid, Oxfam, War on Want and CAFOD. The case of Amnesty International has added to the difficulties and the nervousness. There is, I believe, an urgent need for consideration of a change in the law, and I hope that the Government will proceed towards preparing such legislation.
7.24 p.m.
Baroness Faithfull: My Lords, not only are Members in your Lordships' House grateful to the noble Lord, Lord Allen of Abbeydale, for setting down this Unstarred Question, but so are many people throughout the length and breadth of the land who are pressing for the modernisation and clarification of the law relating to charity. I would ask my noble friend the Minister, who is to reply, two questions and make one comment.
The first question concerns the structure and accountability of the Charity Commission. Before the Charities Act 1960, the Charity Commission was made up of a parliamentary commissioner who was a MP but not a member of the Government. It was his role to answer questions on the Floor of the House of Commons. In addition, there were not more than three paid commissioners, of whom two were barristers. In 1951, as has been said, the Nathan Committee made a recommendation in its report, concerning the cy près doctrine. As is well known in your Lordships' House, the cy près doctrine is derived from the Norman French, meaning as near as possible. Thus, if the terms of the original bequest became obsolete, an application by the trustees to the commission could be made and the terms of reference changed as near as possible to the original.
The Nathan Committee recommended a change in the doctrine of cy près; namely, that where the original purpose of the charity had ceased to exist, the terms of reference could be extended to provide an effective method of using the bequest available by virtue of the
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gift, regard being had to the spirit of the original gift. The Nathan Committee took the view that the widening of the cy près principle would mean that the commission would, in effect, become more of a policy-making body, able to respond to the needs of the times, rather than a quasi-legal body interpreting the law in each case. This was mentioned by the right reverend Prelate.
To carry out the recommended change, the Nathan Committee sought to alter the structure of the commission so that there should be not less than five, and not more than nine, men and women of standing in public affairs to comprise the commission. The commission would be served by an administrative staff and advised by a committee of experts, only some of whom would be members of the legal profession. I mean no disrespect to the noble Lord, Lord Mishcon. Thus, the commission would be brought nearer to those in the community whom all charities seek to serve.
Four years later, in 1955, a White Paper was issued accepting the wider interpretation of cy près, but rejecting the restructuring of the commission and adhering to the legal flavour of the commission. The effect, unfortunately, was to abolish the MP commissioner and to make the Home Secretary answerable to Parliament. But, as I understand it, the Home Secretary was not to interfere with the policy of the commission. Therefore, the commission was to be isolated from outside scrutiny, as is the Board of Inland Revenue and the Land Registry. The Charities Act 1960 was passed.
In 1975 a Select Committee of the House of Commons expressed concern that the commission was an isolated body, apparently accountable to no one, out of touch with social conditions and a quasi-legal body. To counter this, the Select Committee recommended that a charity tribunal be set up and a standing panel to be drawn from members of local authority social services, voluntary agencies and, I myself would add, the church.
In 1976, as has been stated earlier, the Goodman Report drew attention to the absence of the lay element of the commission and, among many other things, recommended the publication of an annual report. As has been said, it was recommended that appeal from the Charity Commissioners decision on a point of law should go to the High Court but be legally aided. Could my noble friend the Minister indicate whether Her Majesty's Government are likely to structure the commission so as to meet the needs of the community, and further to provide for an element of accountability and initiative?
My second question concerns the accounts of charities. I wonder whether it is realised that the accounts of personal charities need not by law be audited. In principle, the commission scrutinises the accounts of each charity, but we have worked it out that they can really scrutinise those accounts only once every 16 years. I think that the noble Lord, Lord Mishcon, referred to this. I heard yesterday of a local charity yielding £60 per annum, £50 of which was given to the secretary, leaving £10 to spend during any one year. Is my noble friend the Minister at ease over this state of affairs?
Finally, I am grateful to the noble Lord, Lord Allen of Abbeydale, for mentioning parochial charities. I shall seek in the next Session to introduce a Private

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Member's Bill called the Parochial Charities (Neighbourhood) Trusts Bill. Throughout the country money is locked up in parochial charities which is not always used to meet the needs that the original bequest intended—and in some cases is not used at all. For instance, money was left in a number of small charities to provide gruel for the poor of the village. In one place I know there is no village now, and I do not quite know who drinks gruel. There are many people in need in the areas of health, education or poverty whose wants are not met by the statutory services.
However, I would lay a wager that, despite the needs of many in our society, despite the money which is available, the commission, as at present constituted, will not accept the Bill. The hands of the present commissioners are tied. They are asked to operate a hopeless structure which is outdated, isolationist, not accountable to Parliament and, as a quasi-legal body, in no position to initiate policy. Indeed, it could be said that with social conditions as they are today, the present structure—and I underline the word "structure" —of the commission is as dead as the dodo. The structure is extinct. I pay tribute to the individual commissioners and I congratulate Mr. Dennis Peach on his appointment. I sympathise with them over their restricted and outdated role, and hope that Her Majesty's Government will initiate reform and change.
7.32 p.m.
Lord Elton: My Lords, I have listened with very great interest and very great profit to this debate. I am, as are the rest of your Lordships, most grateful to the noble Lord, Lord Allen of Abbeydale, for giving the House an opportunity to discuss a subject which is not often aired in such a considered and rational a manner. The noble Lord, I may say, who made some kind introductory remarks, has always appeared most distinguished to me and he appears to be increasingly distinguished with every move of ministerial post I make as I grow closer to his roots.
We are all agreed upon certain fundamental principles concerning charity law. First, the scope of charity which it embodies must command general agreement and understanding. Charities enjoy considerable privileges. The most notable are relief from most forms of direct taxation and exemption from the rule against perpetuities. Unless they are considered to be morally worthy by the community in general, there is little reason for them to do so. Secondly, charity law must be flexible enough to be able to adapt to the needs of society (that is a continuing theme in what every noble Lord has said so far), to embrace new forms of charitable activity and to discard outdated ones. Thirdly, it must ensure that the wishes of donors are respected so that people who make charitable donations or bequests from purely altruistic motives may do so in the knowledge that their wishes will be respected. Lastly, there must be provisions to ensure that the trustees of charitable funds can be supervised and the funds safeguarded.
I was interested in the conflict of opinions between, on the one hand, the noble Lord, Lord Mishcon, and my noble friend Lady Faithfull and, on the other hand, the right reverend Prelate, because the first two whom I mentioned said that there must be closer
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investigation while the other speaker said, "Let us be less trammelled by supervision". We are all at one in believing—indeed, the noble Lord, Lord Mishcon, waxed eloquent (he waxed, perhaps it might be said, eloquent at second hand, but nevertheless he waxed eloquent) on the matter of voluntary effort being so close to the soul of the nation.
From time to time there is concern about one or other of these aspects of charity law and, at less frequent intervals, that law itself is reviewed. As noble Lords have remarked, there have been three such reviews since the last war. The Nathan Report of 1952 led to the Charities Act 1960. I think the time lapse between the report and the legislation is indicative of the difficulties of legislating in this field. The Act confirmed the Charity Commission's position as a quasi-judicial body, independent of Government, whose decisions are subject to appeal only in the High Court. It also codified and extended its powers. It is by virtue of this Act that my right honourable friend the Home Secretary appoints the Charity Commissioners and presents their annual report to Parliament.
There have also been, as your Lordships know and have mentioned, two further inquiries into charity law since 1960. In 1974–75 the Expenditure Committee reported to Parliament on the Charity Commissioners and their accountability. This was closely followed by the report of the Committee on Charity Law and Voluntary Organisations—the committee so very ably chaired by the noble Lord, Lord Goodman, whom the noble Lord, Lord Allen of Abbeydale, so properly regretted not being able to have in his aid today. The Government considered both of these reports in detail, but concluded that they saw no reason for change in charity law. That conclusion was announced in this House two years ago and it still holds good. Let me briefly explain why that should be. In doing so, I shall refer particularly to the four areas I have just outlined. The first three, as by now I am sure your Lordships will agree, are closely inter-linked.
First, the Government are satisfied that the present legal scope of charity is broadly understood and accepted by the community in general. The fact that it is not embodied in a statute does not, in my view, make any difference. The present law is based on a preamble to the Statute of Charitable Uses of 1601 which set out a list of things which might be deemed to be charitable. What we are looking at, as the noble Lord, Lord Mishcon, in particular, emphasised, is something which is rather vague in outline. He quoted the example of a circus, or the perpetuation of the art (or perhaps it is the skill) of the circus performer being perpetuated by educational means. I rather think that he has put his finger on something which weakens rather than strengthens his case. Where you have an absolutely diamond hard definition there is no flexibility. The inevitable result is that you have people beyond the border which the right reverend Prelate wished so often to push outwards and you are not able administratively or judicially to extend that border if it is fixed with diamond sharpness on the statute book. I see that the noble Lord wants to put me right. He is well entitled to do so, since his knowledge of these matters is so formidable.
Lord Mishcon: My Lords, met with those very courteous words, I almost wish that I was not intervening because I may be showing my ignorance instead of the knowledge which I am supposed to have. The point I was making, and which I believe other speakers were making, on this matter was not that there should be an inflexible definition but that categories bringing the matter up to date should be clearly stated in simple language in an Act of Parliament with the same flexibility as the four categories are now supposed to have and with all the wealth of legal precedents upon which future decisions could be made.
Lord Elton: My Lords, I am much obliged to the noble Lord. What I shall be doing very shortly is reading the record of this debate, and when I do so I shall take that point very much on board.
The list of categories was not intended to be exhaustive and it has never been so treated. Over the years there has been a huge body of case law that has developed which has extended the scope of charity by analogy to suit changing times. In 1891, in the Pemsel case which has already been quoted this evening, Lord MacNaghten classified charitable objects into the four main groups which have been mentioned: trusts for the relief of poverty; trusts for the advancement of education; trusts for the advancement of religion; and trusts for other purposes beneficial to the community—a term, I would think, of considerable elasticity. This is the basic framework used by the Charity Commission and the courts today.
Of course, there are those who disagree with the decisions that have been taken within that framework, but that will happen whatever framework we use and whether or not there is a statutory definition of charity. I would discuss some of the points of contention in a moment, but first I must say why the Government disagree with the Goodman Committee's recommendations, not that there should be a new statutory definition of charity—for the disadvantage of losing the accumulated wisdom of case law and perhaps saddling ourselves with an inadequate and inflexible definition are obvious—but that there should be a re-statement of the old preamble in a new list of charitable purposes I believe this is closer to what the noble Lord, Lord Mishcon, was asking for.
We accept that this might have presentational advantages for the layman, although I would not for a moment suggest that the noble Lord is a layman in this; but we do not think that it is worthwhile. It would not affect the application of the law in any way and in fact might serve to complicate it by introducing new elements of uncertainty and insecurity. Indeed, the historical periods in which the first codification was written, and the date when the noble Lord, Lord Goodman, proposed that it should be put into new language, make me think really that the original codification was, as it were, the Authorised Version of charity law and that what is now proposed is the New English Bible. What I mean is that the contents will be much the same but the expression might perhaps be less elegant and rather longer. I hope I am not offending any theological sensitivities of the right reverend Prelate, because I have no intention of doing that.
May I at this point refer to a matter which has been
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raised by three noble Lords; the question of a disaster fund and recent experience in this field. Following the "Penlee" lifeboat disaster last year, there was considerable discussion, both in Parliament and in the media, about the adequacy of charity law in relation to disaster funds. I dare say that imparted a little impetus to the noble Lord, Lord Allen of Abbeydale, towards the Chamber this evening. The noble Baroness, Lady Ewart-Biggs, among others, has proposed a national disaster fund, but most of the controversy stems from an ignorance of charity law and not from defects in that law. It stems from people's fear that money which they have donated specifically to help the dependants of the victims would be withheld.
The problem was that the trustees wished to obtain charitable status, for understandable if mercenary reasons, to seek exemption from direct taxation for the funds concerned, although not for the income received by the dependants. However, charitable status brings with it the restriction that the beneficiaries may not be made better off than they would otherwise have been. In the "Penlee" case, where eight families stood to share over £2 million, charitable status would have deprived them of a very great deal of money. In the event the question did not arise because the trusts were made out in favour of a smal number of clearly identifiable beneficiaries and therefore did not fulfil the requirement of public benefit. However, there have been in the past disaster funds; notably, the one established after the Aberfan tragedy, where most of the victims were children, which had been granted charitable status but where the money has only been put to limited use, such as improving community facilities; that is, the test of generality is applied. The result of the "Penlee" case has been the issue by the Attorney General of guidance to banks, solicitors and others who may be involved in disaster appeals about the financial implications of charitable status and suggested forms of trust deeds which can be adopted according to the status desired. I do not think that these will be abandoned and forgotten. The principle of the law remains unchanged. While on the subject of disaster funds, I will also answer another question in this context. I understand that the charitable status of the Aberfan disaster fund continues because the remaining funds continue to be applied for charitable purposes within the terms of the trust deed.
As we are now discussing individual cases, perhaps I may turn to the question of sports, where the courts have long held that the promotion of sport in itself is not charitable. It is, perhaps, something that is naturally pursued by the human beings but the promotion of sport may be charitable if it forms part of the curriculum or extra-curricula activities of students at schools and universities. In this context, the noble Lord, Lord Mishcon, asked for glorious boundaries from the right reverend Prelate. Your Lordships may forgive me, and indeed congratulate me, if I manage merely to turn that away into the slips because I was and always have been only a "wet bob".
Perhaps I may now return to public concern about the charitable status of certain religious sects, upon which attention has been focussed for the past year in respect of two organisations associated with the Unification Church. As their status is currently

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being considered and may eventually be the subject of an appeal in the High Court, it would clearly be inappropriate for me to comment on that case. More generally, it has been suggested that religious sects should prove that they are of moral benefit to the community before they are registered as charities and that it is wrong to distinguish between religious sects and organisations which are devoted to moral or ethical advancement without belief in a deity. On the first point, there is considerable misunderstanding. In the wording of the Pemsel classification, there is a clear inference that all four heads of charity require an organisation to be a benefit to the community; in the case of religion, education and the relief of poverty, there is a presumption of public benefit—but it is no more than that. A trust for the relief of a small number of identifiable poor people, for example, would almost certainly not be charitable because it did not extend to a sufficiently large section of the community.
On the second point, there is a difficulty in amending the law to give charitable status by a widening of the religious head of charity—specifially to those aiming at the advancement of ethical or philosophic movements which are not founded on belief in a deity. The difficulty is that it would encourage claims to charitable status from bodies whose ideas of moral or social improvement have a philosophic basis that finds expression in activities which are outside the scope of charity as hitherto accepted.
I believe, my Lords, that I have put that rather mildly. For example, bodies which are essentially political factions or pressure groups must not be allowed to assume the guise of charities. Here again, we come against the boundary definitions which worry the right reverend Prelate, and I must say that I shall be reading his remarks with the greatest of interest in that context as well as in the context of the other matters to which he addressed himself. Although the Government sympathise with the desire of some ethical societies to obtain charitable status, they do not consider that it would be possible to devise an amendment of this nature without creating the loophole which we fear.
Your Lordships have expressed concern about the cost of challenging definitions, and of course challenges will always arise where there is a lack of certainty. The Charity Commissioners do a great deal to avoid the need for litigation by giving free advice and trying hard to get agreement with charity trustees, always subject to complying with the law as the commission finds it.
Turning specifically to political activities, the present limitations seem satisfactory. Obviously, it would be wrong for political organisations to achieve charitable status simply as such. The question is, how far can a charity become involved in politics in furtherance of its ends? The Charity Commissioners produced guidance in their annual reports for 1969 and 1973, saying in effect that a charity may give expert advice on request to the Govermnent, civil servants, inquiries and investigatory bodies, and may promote its own private legislation or support legislation which will be of benefit to it. What a charity may not do is to adopt or support political means of remedying the
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ills it seeks to relieve. The right reverend Prelate takes exception to this. He sees difficulties with the border placed where it is—keeping politics out and trying to distinguish between political and religious objectives.
I think nobody who is within his Church can fail to recognise that there is a political implication for every religious belief and very often a religious implication for every political belief. The danger we seek to avoid is using the national fiscal resources to support overtly political objectives of which the large part of the society from which the fiscal support derives may not approve. So there is a difficulty at least equal to that which he finds, a difficulty for the secular authority equal to that of the religious authority which he represents.
It has been suggested that the commission's guidelines should be more liberally drawn, but we do feel for those reasons that they are liberal enough. The second general principle we can all agree upon is that charity law should be flexible enough to respond to new forms of charity and to discard outdated ones. I think this is best ensured by the case law approach which I have already outlined.
On the question which so closely occupied my noble friend Lady Faithful], she has referred to the cy près process, and it is obviously understood by your Lordships and I will not spend time elaborating on what it is. I think it may come as a surprise to her and to some of your Lordships to know that the Charity Commission at present using this, and with no such compulsion as my noble friend would have, already amalgamates some 1,000 trusts each year. Without additional staff it could not cope with the extra work which compulsion would create. Compulsion would result in money being diverted from the purposes for which it was intended. Voluntary amalgamation is available and arrangements can almost always be found for amalgamation if trustees are prepared to consider the suggestions of the commissioners.
I come finally to the statutory provisions to prevent abuse of charitable status. When the financial benefits are so great, there is an obvious risk that some organisations will want to obtain it for the wrong reasons. Given the care with which the Charity Commission examines application for registration and the criterion of benefit to the community which must be satisfied, I do not think there is a great risk that inherently unworthy organisations will be registered to start with. But, if it appears that they are, I do ask the noble Lord, Lord Mishcon, in particular to reflect on the difference of role between the Charity Commissioners and the High Court. The Charity Commissioners decide whether in fact the objects of the charity are indeed charitable. If they are, it becomes a charity. If it is then not conducted in pursuit of the aims for which charitable status was accorded, it is not the charity which is at fault but it is the fault of the people who run it. The recourse of the commissioners is to remove them and substitute others. If what they have done is criminal, it is not a matter for the commissioners but a matter for the courts. They are not, as it were, a police of charity. If it is thought that there is too little supervision, I merely quote the right reverend Prelate in my defence.

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I think I must draw to a conclusion. There is much more that I should like to say. What I have said would not, I think, be complete if I did not say that in this country we have a splendid tradition of public giving to good causes of great variety and in some cases of no little eccentricity. They do an immense amount of good, and this House can applaud them wholeheartedly. In particular, I think your Lordships should know that successive Home Secretaries have had every reason to be grateful to Mr. Terence FitzGerald, who was Chief Charity Commissioner from 1975 until March of this year and who made a very distinguished contribution as leader of this important branch of the public service. I should also like on this occasion to welcome the new Chief Charity Commissioner, Mr. Dennis Peach, on behalf of my right honourable friend, and, if I may, on your Lordships' behalf as well, because all your Lordships who are present are clearly dedicated to the cause which he now comes to support.
I shall read with great interest and with an open mind what has been said today. I make no commitment; my position is as it was when I came in, that the Charity Commission rests securely upon a satisfactory foundation. But my mind will not be closed when I read what your Lordships have had to say, because I always find after your Lordships have spoken that I have a very great deal to learn. I am grateful to the noble Lord for his Question.

Hampshire Bill [H.L.]
Reported from the Select Committee with amendments.
  NHS AND PRIVATE SECTOR BEDS: DISTRIBUTION
  NHS AND PRIVATE SECTOR BEDS: DISTRIBUTION
  UNITED NATIONS: DISARMAMENT CONFERENCE
  UNITED NATIONS: DISARMAMENT CONFERENCE
  EL SALVADOR: IRISH DELEGATION'S REPORT
  EL SALVADOR: IRISH DELEGATION'S REPORT
  EL SALVADOR ELECTIONS: UK REPORT
  EL SALVADOR ELECTIONS: UK REPORT
  ROYAL NAVY PERSONNEL: EXTENSION OF SERVICE
  ROYAL NAVY PERSONNEL: EXTENSION OF SERVICE