Sitting of 26 April 1982

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

    Robot Support Programme
    Mr. Wallerasked the Secretary of State for Industry how many firm applications have now been submitted under the Government's robot support programme.
    The Minister for Industry and Information Technology (Mr. Kenneth Baker): Since April 1981 there have been 97 firm applications for assistance under the scheme. In addition, the Production Engineering Research Association has undertaken 54 robot consultancy studies.
    Mr. Waller: I thank my hon. Friend for that information. Does he agree that in the long term the best way to ensure the regeneration of British industry, and therefore to create more jobs, is to introduce more modern methods, such as robotics? Does he therefore agree that nobody on either side of industry need fear the introduction of those techniques?
    Mr. Baker: Yes, I do. I have made it clear many times that British industry will be competitive for the rest of the century only if it embraces the new technologies. I am glad that this scheme has been so successful.

    British Leyland
    Mr. Goldingasked the Secretary of State for Industry when he last met the chairman of British Leyland to discuss investment in the industry.
    The Minister of State, Department of Industry (Mr. Norman Lamont): My right hon. Friend the Secretary of State and I meet the chairman of BL, whenever the need arises, to discuss a variety of topics.
    Mr. Golding: Is the Minister aware that in the West Midlands male unemployment is now almost one in five and that one in six jobs are dependent on the vehicle industry? What will the Minister do to reassure industrialists and workers alike in the West Midlands that the vehicle industry will not be destroyed?
    Mr. Lamont: I am fully aware of the employment implications of the hon. Gentleman's questions. The Government have shown their willingness to support the motor industry and British Leyland in particular. We have put £970 million into British Leyland since coming to office. Nobody can say that the Government have not made a strong commitment to the motor industry.
    Mr. Stokes: Is my hon. Friend aware that British Leyland now requires to maintain and increase its market share? With respect to the hon. Member for Newcastle under Lyme (Mr. Golding), British Leyland wants more customers, not more speeches.
    Mr. Lamont: I entirely agree. Last year British Leyland managed to increase its market share above what it had planned. New models have been introduced and the response both to the Metro and the Acclaim has been encouraging. Productivity is rising sharply in British Leyland, and at Longbridge, on the Metro line, it is comparable to the best in Europe. British Leyland's future will be secured by its becoming competitive.
    Mr. Orme: Has the Minister discussed with British Leyland the question of buying British? I noted what the Secretary of State said the other day about buying British. It is proposed that British Leyland may buy steel from Brazil. That would be very much against the interests of our steel industry. Is there not a policy for nationalised industries to buy British?
    Mr. Lamont: The right hon. Gentleman knows that there is a Government public purchasing policy. British Leyland is well aware of that. The buying power of the public sector should be used to strengthen British industry. That is the Government's objective, although relations between the British Steel Corporation and British Leyland are a matter for commercial negotiation. We have certainly made the Government's public sector purchasing policy clear to BL.
    Mr. Archie Hamilton: Is my hon. Friend aware how much the taxpayer resents paying large sums into British Leyland when certain parts of it could be divested and financed privately? That particularly applies to the Land Rover part of the group. Has my hon. Friend plans to ensure that that is sold off in the reasonably near future?
    Mr. Lamont: My right hon. Friend the Member for Leeds, North-East (Sir K. Joseph), the former Secretary of State for Industry, made it clear in his statement on 26 January 1981 that the Government supported British Leyland's intentions to create viable businesses and to attract private capital into them. That remains the Government's intention.

    Regional Development
    Mr. Canavanasked the Secretary of State for Industry whether he will take fresh initiatives to aid the regional development of industry.
    Mr. Barry Jonesasked the Secretary of State for Industry whether he proposes to take any additional regional policy initiative in view of the serious and continuing unemployment figures in the United Kingdom; and if he will make a statement.
    The Secretary of State for Industry (Mr. Patrick Jenkin): The most effective stimulus to regional industrial development will be for British industry to continue the improvements in performance which our economic policies are encouraging. Beyond that our regional industrial policy is intended to concentrate the available assistance on those areas that are worst affected.
    Mr. Canavan: Is it not about time that there was a reversal of the deplorable decision taken by the previous

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    Secretary of State for Industry? He reduced the development area status of many areas, including the Stirling travel-to-work area. That area is now faced with the proposed closure of the Player's factory as well as with job losses at Stirling university as a direct result of the Government's policy. Will the Secretary of State now consider restoring Stirling's development area status and uprating Denny to special development area status, because unemployment there is now higher than 30 per cent.?
    Mr. Jenkin: Although unemployment in Stirling is regrettably high, it is not as high as in the assisted areas as a whole. Therefore, I cannot see a strong case for restoring development area status. However, Stirling will remain an intermediate area after the changes that come into force next August.
    Mr. Jones: With tens of thousands of school leavers footloose on the streets, and nearly 1 million long-term unemployed, does not the right hon. Gentleman's regional policy look hesitant and unconvincing? Does he know that the deprived regions have so little confidence in his policies that several of them are competing for the proposed Nissen car project? What can he tell us about that project?
    Mr. Jenkin: I have a feeling that there would be a good deal of competition for the Nissan car project—if that company decided to come to Britain—whatever the level of unemployment. All the evidence suggests that the impact of regional policy on the creation of jobs is more effective if it is concentrated on the areas of greatest need. On the whole, regional policy was more effective in the 1960s, when it was fairly narrowly based, than in the 1970s, when it covered, towards the end, more than half the country and almost 40 per cent. of the working population. The decisions announced in July 1979 by my right hon. Friend the present Secretary of State for Education and Science were designed, once again, to concentrate help on the areas of greatest need.
    Mr. Lennox-Boyd: Is my right hon. Friend aware that one way of helping the regions is to help enterprise agencies such as the one called "Make Lancaster Your Business", which is anxious to be granted approval so that contributions from companies will be granted tax relief? Is my right hon. Friend in a position to say when he will announce his Department's criteria for such approval?
    Mr. Jenkin: Help for enterprise agencies is not confined to the regions. The decision to give tax relief was widely welcomed at the time of the Budget. My Department will be responsible for giving approval and it is working on the criteria. I hope to be able to give some information on that fairly soon.
    Mr. Foster: How can the Secretary of State claim that regional policy has been more effective in the past two years during which it has been more accurately pinpointed, when more jobs have been lost in the past two years than were created in 10 to 15 years of positive regional development policy? Does he realise that unemployment now stands at 20 per cent. in the areas of the Sedgefield and Wear Valley district councils? If the closure of the British Rail works goes ahead unemployment will increase to 30 per cent.
    Mr. Jenkin: I think that the hon. Gentleman has misquoted me. Of course unemployment has risen
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    everywhere during the deepest recession for 50 years. Although it is notoriously difficult to ascribe any change in the level of employment to any particular measure, there is broad agreement that, on the whole, measures are more effective if they are concentrated on the areas of greatest need instead of regional help being spread too thinly across the whole country.
    Mr. McQuarrie: Although I accept that regional aid should be given to the areas of greatest need, is my right hon. Friend aware that in Grampian and in my constituency of East Aberdeenshire unemployment is rising very quickly because oil and gas constructional work and the indigenous industries are suffering as work has come to an end and there is no alternative employment? Will he take steps to alter what his predecessor did in removing the assisted area status of Grampian region, and particularly that of East Aberdeenshire?
    Mr. Jenkin: My hon. Friend will know that we undertook to review areas in which there was a two-step change in the assisted area status. That review is in hand and I hope to announce the results later in the spring. We have also been looking—as I think the House knows—at some of the other areas in which circumstances have changed substantially and beyond the normal trends of the recession. I hope to announce those changes at the same time.
    Mr. John Garrett: What are the industrial improvements of which the right hon. Gentleman spoke in his initial reply, and how have the Government's regional policies brought them about? Surely the most hard-hit regions in Britain have the highest unemployment of any regions in Western Europe. That is a direct result of Government policy.
    Mr. Jenkin: Those industrial improvements consisted of last year's 10 per cent. increase in productivity, the reduction in the growth of unit labour costs from 25 per cent. a year ago to 2·5 per cent. according to the latest figures—a remarkable change—and our increased competitiveness, which is helping us to win substantial contracts overseas. That will restore the health of British industry.
    Several Hon. Members rose——
    Mr. Speaker: Order. We must move on.

    British Steel Corporation
    Mr. Wrigglesworthasked the Secretary of State for Industry when he last met the chairman of the British Steel Corporation to discuss the corporation's corporate plan.
    Mr. Leadbitterasked the Secretary of State for Industry when he last met the chairman of the British Steel Corporation to discuss the corporation's external financing limits.
    Mr. Patrick Jenkin: My hon. Friend the Minister of State, Department of Industry met the chairman of the British Steel Corporation on 30 March. They discussed a range of questions arising from the BSC's new corporate plan for 1982–85, including the external financing limit for 1982–83.
    Mr. Wrigglesworth: As there has been considerable speculation about whether the BSC will meet its targets for

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    the current year, will the right hon. Gentleman make the exact position clear? If the corporation does not meet its targets, what are the implications for the external financing limits and employment?
    Mr. Jenkin: In 1981–82 the BSC hopes to live firmly within its external financing limit. However, as the hon. Gentleman knows, there are a number of considerable uncertainties in the current year and the BSC has brought them to the attention of my hon. Friend the Minister. I refer, for example, to American markets, to anti-dumping and countervailing duty cases, and to the future of the prices regime in Europe. Until those matters are clear, we cannot be certain about the extent to which the BSC can meet its targets.
    Dr. John Cunningham: Given the corporation's present circumstances, does it make sense for it to sell a significant asset, Redpath Dorman Long, which has a full order book for what appears to many people to be a knock-down price? Will not the sale to Trafalgar House create a monopoly in the private sector? Is it not another example of the way in which the Government give away taxpayers' assets at ridiculously low prices?
    Mr. Jenkin: The hon. Gentleman knows perfectly well that the disposal of non-mainstream activities by the corporation is a matter for the BSC. It did not require the Government's consent and was a matter for its management. If the hon. Gentleman wishes to substitute his judgment about the value of RDL for that of Mr. MacGregor and his extremely experienced board, he must take responsibility for that. The price was agreed between the seller and the buyer and the advice of merchant banks was taken about the appropriate figure, given RDL's profit record.
    Mr. William Hamilton: Amersham.
    Mr. Jenkin: With the greatest respect to the hon. Gentleman, this sale has nothing to do with Amersham International. It is a straight sale by BSC of a non-steel making activity. It is entirely appropriate that the BSC should finance part of its development by disposing of assets that are saleable in the market.

    Manufacturing Output
    Mr. Chapmanasked the Secretary of State for Industry if he will give the latest 12-month figures available of the increased percentage in output per head in manufacturing industry and the same information relating to nationalised industries.
    The Under-Secretary of State for Industry (Mr. John Butcher): Output per head in manufacturing industry increased by some 10½ per cent. between the fourth quarter of 1980 and the fourth quarter of 1981, the latest period for which figures are available. Aggregated figures for the nationalised industries, many of which do not form part of manufacturing industry, are not compiled.
    Mr. Chapman: May I congratulate my hon. Friend on his appointment and wish him well in his important responsibilities? May I welcome his answer and ask whether he agrees that increased output leads to the greater likelihood of increased investment in industry, which in turn leads to better job prospects and the prospect of new jobs and to higher wages for all employees in industry?
    Mr. Butcher: My hon. Friend is absolutely right, and I thank him for his kind remarks. There is a benign relationship between productivity, profit and investment, and the regeneration and recreation of jobs that are soundly based on productivity.
    Mr. Major: May I add my congratulations to my lion. Friend on his well-deserved appointment? Notwithstanding the welcome increase in output announced by my hon. Friend, does he agree that it is imperative that the increase should continue if British industry is to remain competitive, prevent import penetration and resecure many of the overseas markets lost during the years of uncompetitiveness?
    Mr. Butcher: The problems with which the Government are currently wrestling are both long-standing and deep-seated. I agree wholeheartedly with my lion. Friend's observations, and I assure him that the improvements that he has outlined will be sought by the Government, especially in the public sector.
    Mr. Golding: Is the Minister aware that average productivity will rise if every firm, except the most productive, is driven into bankruptcy?
    Mr. Butcher: That is rather a simplification of economic objectives. Output increases genuinely when a fixed number of workers produce an enhanced amount of output for the same input. I hope that the hon. Gentleman, when he joins us in debates, especially on British Telecom, will agree with that assertion and that we shall be working on the same side to achieve that objective.
    Mr. Gwilym Robertsasked the Secretary of State for Industry if he is satisfied with the rate of recovery of output from British manufacturing industry.
    The Under-Secretary of State for Industry (Mr. John MacGregor): No. Much obviously depends on the world-wide recovery from the international recession. It is, however, encouraging that between the first half of last year and the second half manufacturing output increased by 2·5 per cent.
    Mr. Roberts: In view of the Minister's reputation for fairness, does he accept that output in the manufacturing industry is lower than when the Government first took office and lower than it has been for the past 14 years? Does he accept that his Department has reigned over the destruction of the base of the British manufacturing industry and the addition of 2 million or 3 million people to the dole queue?
    Mr. MacGregor: Manufacturing output is lower, but the hon. Gentleman—who is also very fair—must acknowledge that that is true of most parts of the world. No doubt he will have seen, according to press reports last Friday, that the Conference Board, a distinguished American body, has concluded that a world recovery may be shaping up—and that Japan, Britain and France are in the vanguard of that recovery. It is significant that Britain is singled out as being in the vanguard. It is certainly the case that manufacturing output is higher now than it was in the spring of 1981.
    Mr. Wrigglesworth: Does the Minister agree that it will help to increase manufacturing output if. we attract overseas investment? Will he explain how Wales, with a population and rate of unemployment similar to the

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    Northern region, has a budget four times that of the North of England Development Council for industrial promotion?
    Mr. MacGregor: Manufacturing output and, often, productivity are enhanced by inward investment, and the United Kingdom has been successful in that. There is a separate question on the order paper on the point that the hon. Gentleman has raised, but it is important to bear in mind that 90 per cent. of all American investment has been attracted here by central Government activity, mainly through the Invest in Britain Bureau and the overseas diplomatic posts.
    Mr. Bill Walker: Does my hon. Friend agree that in some industries, such as the whisky industry, where there is over production, if management and workers apply themselves, increased sales can be obtained and increased profits can be achieved, such as was done by Arthur Bell and Sons?
    Mr. MacGregor: I entirely agree with the general point. What is most important about the way in which improvements are now showing in the British economy is that they are concerned with fundamental problems such as that to which my hon. Friend drew attention. It is significant that in the last quarter of last year output per man hour in manufacturing industry reached a record level and was more than 6 per cent. higher than the average for 1979—the previous best. In many other ways there are improvements on the shop floor and between management and work force, which is where improvement is needed if we are to sell our products.
    Mr. Ashley: What hope does the Minister have for the recovery of the pottery industry? Three more firms in my constituency have closed during the past few months and unemployment is serious. We need ministerial intervention. May we have that as soon as possible and then some Government help?
    Mr. MacGregor: The Government give assistance in many ways, not only through tax reliefs for capital investment, but with schemes designed to improve economic performance and competitiveness. If the right hon. Gentleman wishes to contact me about the prospects for the pottery industry I shall endeavour to answer his questions.
    Mr. Orme: Does the Minister agree that the fall in output in manufacturing industry since 1979 has been 14 per cent., and that both the CBI and the TUC see no longterm propects for that industry? What will the Government do about employment and the manufacturing sector?
    Mr. MacGregor: The important points are that manufacturing output is again rising and that many of the changes are highly beneficial for our future competitiveness. My right hon. Friend referred to unit labour costs, but industrial stoppages are at their lowest for 40 years. The most hopeful sign for the future is that we are tackling our fundamental problems.

    British Leyland
    Mr. Heddleasked the Secretary of State for Industry if he will make a statement on productivity in British Leyland.
    Mr. Butcher: I refer my hon. Friend to the answer that my right hon. Friend the Secretary of State for Industry
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    gave to my hon. Friend the Member for Birmingham, Selly Oak (Mr. Beaumont-Dark) on 22 February 1982. I have nothing further to add.
    Mr. Heddle: Will my hon. Friend confirm that the production of the British Leyland Metro has increased from 7·7 per man-year in 1980 to 22 per man-year in 1982? Is not this welcome improvement due to more flexible working practices, less rigid demarcation lines, a more determined management and a more realistic attitude on the shop floor?
    Mr. Butcher: All those improvements have occurred at British Leyland, especially at the Longbridge plant. My hon. Friend will be interested to know that British Leyland generally had a 30 per cent. increase in productivity during the past year, but almost a 100 per cent. increase at the Longbridge plant, which must be welcomed.
    Mr. Dover: Does my hon. Friend accept that British Leyland productivity has failed to increase during recent years because of the lack of a market? Does he welcome the reports that that market will lift off, and will he do everything possible to ensure that British Leyland increases its share of the market in these difficult times?
    Mr. Butcher: Within the confines of decisions that can be made at Department of Industry level, we shall do everything that we can to ensure that British Leyland's corporate plan and its plans for commercial vehicles receive all due support. We look forward to the commercial division achieving its targets when demand returns.

    Information Technology Advisory Panel (Report)
    Mr. Trippierasked the Secretary of State for Industry what action the Government have taken following the publication of the Information Technology Advisory Panel report.
    Mr. Kenneth Baker: I refer my hon. Friend to the statement made by my right hon. Friend the Home Secretary at the beginning of the debate on direct broadcasting by satellite and cable systems on 20 April 1982 and to my own speech in the same debate.
    Mr. Trippier: I thank my hon. Friend for that reply. How long will consideration of the ITAP report take?
    Mr. Baker: Our aim—it is ambitious—is to conclude all discussions and consultations by the end of the summer and for Lord Hunt to report by 30 September. If we keep to that ambitious timetable we hope that, by the end of the year, we can announce the technical, regulatory and commercial framework that will allow cabling to become a reality.
    Mr. Golding: Is the Minister aware that the Post Office Engineering Union has been disturbed to read of leaks that the Home Office intends to ignore the Department of Industry's desire to provide a modern system of cable and will patch up instead, in the interests of Visionhire and Rediffusion?
    Mr. Baker: If the union has heard that, it has been listening to unfounded rumours. The technical nature of the cable system is very much in the hands of my Department. A committee is deciding whether it should be a copper or fibre optic system and I made our position clear during the debate. Some people have said that the Home

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    Office is dragging its feet, but I do not agree with that assessment. The Home Secretary has given a clear steer to the Home Office and the decision on direct broadcasting by satellite shows the remarkable speed with which the Home Office is moving.
    Mr. Robert Atkins: What steps is my hon. Friend taking in relation to information and production technology to discuss, for example, with my right hon. Friend the Secretary of State for Defence how he might best assist the British aerospace industry?
    Mr. Baker: That question goes wider than the question that we are discussing. As regards the industrial input into the new cabling system, I made it clear to the House before that that will be the most exciting and important economic programme before the country over the next 10 to 15 years. We are discussing with British industry and with those who make cable and attachments that are put on to the cable system how they can plan and make arrangements so that British industry will benefit.
    Mr. McWilliam: Is the Minister completely satisfied that a report made by a panel of interested parties can be a sufficiently realistic and objective report on which to base future progress?
    Mr. Baker: People have schizophrenic attitudes towards the report. We could have done one of two things. We could have gone to business men and asked them to produce a report—which we have done—which is imaginative and challenging, but the report is essentially a consultative document. We could have gone to the Government and asked for a report that put half a dozen reasons on one side and half a dozen on the other, only to be rightly criticised as being dull and unimaginative. We have produced a discussion document which we hope will allow cabling to start in this country in the reasonably near future.
    Mr. Wrigglesworth: Is the Minister aware that his decision on timing will be welcomed, but does he expect that there will be legislation in the next Session, or will it be delayed until the subsequent Session?
    Mr. Baker: It is probable that, in order to establish a cable framework that will involve broadcasting as well as narrowcasting all the extra services—I emphasise that cable television is much more than extra television channels—legislation will be required.
    Mr. Neubert: Is my hon. Friend aware that we in Havering are looking forward to welcoming him to Romford this Wednesday morning when he opens the Havering information technology exhibition? Will he take the opportunity then to reconfirm that innovative industries such as information technology provide the opportunity for increased new employment rather than act as a source of increased unemployment, as is commonly feared?
    Mr. Baker: I am looking forward to my visit to Romford on Wednesday morning. I hope that the citizens will be there in their numbers to greet me. I assure my hon. Friend that one of my main purposes in my various activities in information technology is to release and create job opportunities in Britain for that range of activity in electronics, computing, cable and telecommunications. It will be the fastest-growing area of economic activity for the next 10 years. We cannot afford to lose out on that.
    Dr. John Cunningham: By his answer to my hon. Friend the Member for Blaydon (Mr. McWilliam), has not the Minister conceded that the report is written by people with a narrow, vested interest and that it is a prejudiced report? Is not that the sort of evidence that is being put to the Government by wider representatives of British industry? On a practical note, if the report is so important, will the Minister arrange for it to be placed in the Vote Office so that hon. Members can have easier access to it?
    Mr. Baker: Hon. Members have access to the report. It is a public document and has already gone into a second printing. I shall see whether it can be provided in the Vote Office. I disagree with the hon. Gentleman. The report was written by people who wanted something to happen. Therefore, there is an urgency about it. We have not accepted all its recommendations. The report is essentially a consultative document. I believe that it will he looked upon as historically important in the future.

    Young Persons (Businesses)
    Mr. Kenneth Carlisleasked the Secretary of State for Industry if he is satisfied that enough help is being given to encourage young people to start up in business on their own account.
    Mr. MacGregor: We have taken various steps to encourage enterprise in young people. They are, of course, able to take advantage of the many measures available to stimulate and help small businesses. I am happy to consider any other suggestions that my hon. Friend or others may wish to put forward.
    Mr. Carlisle: I thank my hon. Friend for that reply. Does he agree that we should do more to make more young people aware of the rewards of creating their own business? Will he liaise with the Departments of Education and Science and of Employment to see that proper instruction is given in schools and in the new youth training programme to make young people aware of the many possibilities and challenges of starting their own business?
    Mr. MacGregor: I entirely agree with my hon. Friend. Much more is now happening. The Department has an industry education unit. We are currently working on a number of initiatives to encourage young people to think in terms of starting their own businesses. For example, there are films for showing in schools. I shall continue to liaise along the lines recommended by my hon. Friend.
    Mr. John Garrett: Does the Minister agree that one of the best ways to help young people to set up their own business is to encourage the establishment of cooperatives? What lesson does he learn from the difficulties of the Breckland poultry co-operative in his constituency? Will he make further efforts to help that co-operative?
    Mr. MacGregor: There is a place for co-operatives, but it must not be over-exaggerated. The lesson of the Breckland poultry firm is relevant. On Saturday afternoon I had a long meeting with those who are trying to get things moving. I have spent a great deal of time trying to help the co-operative. It has decided that it would like to proceed as a private firm, making use of schemes such as the business start-up scheme. I have written to the firm today advising it of other ways in which it can go forword.

    Engineering Investment Scheme
    Mr. Squireasked the Secretary of State for Industry how many small firms he expects to benefit from the small engineering firms investment scheme.
    Mr. Tom Benyonasked the Secretary of State for Industry what response there has been to the new small engineering firms investment scheme for small firms in the Midlands.
    Mr. MacGregor: Interest in the scheme has been very high and 397 applications for assistance have already been received. The average project cost to date is about £50,000. On this basis, at least several hundred small firms will benefit. A large number of these applications have originated in the West Midlands.
    Mr. Squire: I congratulate my hon. Friend on his answer and on this latest example of Government assistance to small businesses. Will he undertake to look carefully at giving greater publicity to the scheme, given the time limit, so that other companies that may be eligible do not miss out on the chance of the grant?
    Mr. MacGregor: We have done much already to market the scheme both in terms of general publicity and in sending leaflets direct to 4,000 small engineering firms. The remarkably high rate of applications within the three weeks since the scheme began shows that we are getting the message through. The scheme is organised on the basis of "first come, first served". The fact that so many people have already applied should serve as a warning to others to make their applications as quickly as possible.
    Mr. Woolmer: Are not those schemes desperately needed because of the appalling decline in the engineering industry as a result of the Government's policies? Is the Minister aware that the engineering industry in West Yorkshire has lost one in four jobs since the Government came to office, which is the most significant loss next to job losses in clothing and textiles in West Yorkshire? What is being done to help the engineering industry in Yorkshire as part of the progress that has been reported?
    Mr. MacGregor: Part of the problem was the lack of sufficient investment in a number of small engineering firms before the Government came to office. The worldwide recession has compounded that problem in the sense that those firms do not have the resources to make investment in advanced capital equipment. That is why we have introduced this generous scheme. It is available in Yorkshire and Humberside, where already about 34 firms have applied.
    Mr. Farr: I congratulate my hon. Friend on what he has said. Is he aware that many of the problems associated with small engineering companies are related to the cut-off level of the temporary short-time working compensation scheme being for 10 or more employees being made redundant? Will my hon. Friend consider whether there is a chance of reducing that cut-off level?
    Mr. MacGregor: That is a matter for my right hon. and hon. Friends in the Department of Employment. They have reviewed that point, but the decision was made not to lower the cut-off level, because of administrative difficulties. However, I shall draw my hon. Friend's comments to the attention of the appropriate Ministers in the Department of Employment.

    Confectionery Industry
    Dr. Summerskillasked the Secretary of State for Industry whether, in view of the effect of present levels of value added tax on the confectionery industry, he will seek to introduce a scheme to provide additional financial support for the industry.
    Mr. Norman Lamont: The Government have no plans to introduce a scheme to provide additional financial assistance to the confectionery industry. This industry is eligible for the same range of Government support measures as the generality of manufacturing industry.
    Dr. Summerskill: Will the Minister bear in mind that Rowntree Mackintosh, which is the largest employer in Halifax, and which has a proud reputation nationally and internationally, has been severely hit by value added tax and that, without urgent financial help, hundreds of jobs will be lost as a result of the Government's industrial and economic policies?
    Mr. Lamont: I shall certainly bear in mind what the hon. Lady said, but there is no evidence to suggest that the confectionery industry faces difficulties greater than those that the recession has caused for many industries. Obviously, regional grants in assisted areas and the normal sectoral schemes—product and process development schemes, and Science and Technology Act 1965 assistance—are available for that industry.

    Manufacturing Industry (Investment)
    Mr. Knoxasked the Secretary of State for Industry what was the level of investment in manufacturing industry in each of the last three years, at constant prices.
    Mr. Patrick Jenkin: Including assets leased to manufacturers, at 1975 prices the figures are £4,439 million, £4,157 million and £3,602 million in 1979, 1980 and 1981, respectively.
    Mr. Knox: Does my right hon. Friend agree that those figures provide evidence of a worrying decline in investment in manufacturing industry? Does he further agree that the decline in investment in manufacturing industry will have an adverse effect on our future competitiveness in world markets? Is there not a strong case, if the decline is to be reversed, for a substantial increase in domestic demand to persuade manufacturers that more investment is worth while?
    Mr. Jenkin: I agree that the fall in investment is not welcome. I can take some comfort from the fact that it is not as great as the fall in the last recession, although this recession has gone very much deeper. In other words, firms have maintained a substantial part of their investment programmes. The signs now are that investment is turning the corner. I would expect there to be an increase in 1982 and a bigger increase in 1983. Those are the forecasts.
    I am sure that the right stance now is to help to make industry more competitive and not necessarily to inject a substantial sum of additional demand into the economy. All the evidence suggests that that would lead to higher inflation, not higher output.
    Mr. Campbell-Savours: Is the Secretary of State aware that falling investment in manufacturing industry has meant the advent of depression for many communities

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    in the Northern region, including the town of Maryport in my constituency, where unemployment is now nearly 30 per cent., following the latest redundancies from Spillers last week? Will the Minister introduce selective measures to help such communities to attract the investment that the general strategy of the Government has failed to provide?
    Mr. Jenkin: Many of the firms making equipment for industry have looked overseas and have won some spectacular contracts in other countries, which have gone some way to replace the fall in business in the domestic economy. Many firms in the North of England and elsewhere have taken the opportunity substantially to increase their efficiency and productivity and to reduce their costs relative to those of their competitors. That is the way to win business both here and overseas.
    Mrs. Kellett-Bowman: Will my right hon. Friend seek to expedite the passing of the new draft regulations on the European regional development fund, which will be very much more effective and flexible than the present regulations and should help to increase investment in manufacturing industry and the all-important infrastructure to go with it?
    Mr. Jenkin: I note my hon. Friend's views. I shall certainly look into the matter.
    Mr. Orme: Will the Secretary of State give the House the facts relating to increased investment? All the forecasts—not least from the CBI—are that investment is going down. Where is the evidence for his statement?
    Mr. Jenkin: The right hon. Gentleman will be familiar with the forecasts, published at the time of the Budget, of my right hon. and learned Friend the Chancellor of the Exchequer. In the public sector, investment in new construction will be up by 14 per cent. this year over last, and investment by the nationalised industries will be up by 26 per cent. this year over last. Nationalised industry investment amounts to £½ billion—about one-third of it in British Telecom. The Government are playing their part. We want to see the higher levels of investment which are necessary to get industry moving.

    North of England Development Council
    Mr. Dormandasked the Secretary of State for Industry when he expects to conclude his discussions with representatives of the North of England Development Council on the level of grant to be paid to the council for the three-year period 1983–85.
    Mr. MacGregor: My hon. Friend the Minister of State had a useful meeting with the chairman and directors of the four English regional development organisations on 1 April, and we now hope to reach a decision quickly about the future level of grant.
    Mr. Dormand: What are the so-called constitutional differences which may lead to Wales and Scotland receiving a bigger grant than the North of England Development Council? Why will Wales receive its grant from April 1982, whereas the North of England Development Council will receive its grant from April 1983? We in the north strongly support the case for Wales and Scotland, but the Minister must be under no illusions. We in the north must receive similar treatment.
    Mr. MacGregor: My hon. Friend the Minister of State made it clear that we are anxious that there should be
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    reasonable equity of treatment between the different parts of the United Kingdom, but that does not mean identical amounts of grant, as other factors have to be taken into account. As I indicated in answer to an earlier question, 90 per cent. of successful United States inward investment projects come by way of United Kingdom central Government effort, through the Invest in Britain Bureau and overseas diplomatic posts.
    Many English local authorities in new towns spend public money on overseas promotion, whereas Scottish and Welsh local authorities are not very active in that area. No new Government money is being given to the Development Commission for Wales. The money is being redirected from elsewhere within the Welsh Development Agency budget.
    Dr. John Cunningham: However much the Minister may wriggle, is it not clear that extra resources, which we welcome, have been given to Wales? Should not the critieria be the nature of the problems and the number of people out of work, not some constitutional excuse? Will not the people in the Northern region conclude that yet again the Government have taken a deliberate decision to damage their prospects?
    Mr. MacGregor: Extra resources have not been given. As I indicated a moment ago, it is a change in the distribution of the WDA's budget. There is no extra central Government money, in the sense of new money, going for that purpose this year. It is just a movement within the budget itself.
    The hon. Gentleman ought to be fair and recognise that a very high proportion of regional development grant, which is caused because of investment, goes to the Northern region. We expect nearly 4,000 jobs in the North-East to be created as a result of foreign-owned companies, known to the Invest in Britain Bureau, starling or firmly deciding to start during 1980 and 1981. Inward investment projects have been going to the Northern region. I assure the hon. Gentleman that the interests of that region are always borne in mind in all the activities concerning inward investment.

    North-East Lancashire
    Mr. Strawasked the Secretary of State for Industry what representations he has received on development area status for North-East Lancashire; and if he has made a decision.
    Mr. MacGregor: My right hon. Friend and I have received a number of representations urging development area status for North-East Lancashire. My right hon. Friend saw a deputation from the North-East Lancashire Development Association on 18 March, and he is giving its case careful consideration.
    Mr. Straw: Is the Minister aware that, even since the Adjournment debate last Thursday, yet another firm in the Blackburn travel-to-work area, Mossbridge Yarns, has announced closure, and that there is no sign in North-East Lancashire of the recession coming to an end, let alone being over?
    Is the Minister further aware that the travel-to-work areas of Blackburn, Hyndburn and Burnley have unemployment levels which, although not the average for assisted areas keeping their status, certainly come within

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    the band of areas keeping assisted area status? Therefore, the case for assisted area status for our areas is overwhelming.
    Mr. MacGregor: As the hon. Gentleman knows, we had a full Adjournment debate on the subject on Thursday evening, when I set out the criteria. We have always made it plain that we are prepared to look at any permanent changes in the structural decline of an area relative to other parts of the country. That would apply to North-East Lancashire as well as elsewhere. We shall continue to monitor the position.
    Mr. Arthur Davidson: Will the Minister examine closely the projected unemployment figures for the Accrington travel-to-work area of 19 per cent. and for the Hyndburn area of 16½ per cent.? If he accepts those figures, which have been worked out by the Hyndburn borough council, is not the case for granting development area status not just overwhelming, but unanswerable?
    Mr. MacGregor: One must always be careful about projected figures as distinct from the real, existing figures. The situation can change considerably over the course of a few months. I have seen that happen in other travel-to-work areas. I believe that the hon. and learned Gentleman and representatives of the district council are to see me shortly. We can look at his projections then.

  ATTORNEY-GENERAL

    Police (Complaints)
    Mr. Meacherasked the Attorney-General what is the average prosecution rate by the Director of Public Prosecutions with regard to complaints against the police referred to him.
    The Attorney-General (Sir Michael Havers): The average prosecution rate over the years 1975 to 1979 was 14 per cent.
    Mr. Meacher: Why is it that, according to an answer given to me by the Attorney-General on 4 March, the prosecution rate against police officers is 23 per cent. for road traffic offences and 14 per cent. for theft, but less than 2 per cent. in cases of assault? If the reason is lack of independent witnesses, why is the prosecution rate seven times higher—15 per cent.—for sex offences?
    The Attorney-General: I think that the main reason—not the only reason—is the peculiarity of the right of private prosecution for common assault. Most common assault cases are initiated by the person who has been assaulted. In the minor cases, particularly where there has been a complaint that a police officer pushed a member of the public, the Director of Public Prosecutions usually writes to the complainant advising him of his ordinary remedies.
    Mr. Bill Walker: Does my right hon. and learned Friend agree that many of the complaints against the police are mischievous and, when investigated, found to have no basis in fact?
    The Attorney-General: Inevitably, that is so. An allegation of assault is easily made, even when it is totally unjustified.
    Mr. Archer: Does the Attorney-General agree that the so-called double jeopardy rule in section 49 investigations
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    has no statutory basis? Does he further agree that if the Director of Public Prosecutions decides not to prosecute a case, it cannot meaningfully be said that the officer concerned has never been in jeopardy, because there is no real reason why, if appropriate, he should not be proceeded against for a disciplinary offence?
    The Attorney-General: I am grateful to the right hon. and learned Gentleman. This matter, which I know caused him anxiety when he was in the Department, remains an anxiety for me. I should welcome any chance of a discussion with him on how we might improve the situation.
    Mr. Christopher Price: Does the Attorney-General agree that the position is unsatisfactory, particularly in the light of a recent case where, six years after the event, a citizen of this country has been given record substantial damages against the police? Does he further agree that in such a case it is difficult to initiate a prosecution, although the papers have been sent to the DPP, because, six years after the event, no one can remember exactly what happened? Is there no way of initiating prosecutions earlier?
    The Attorney-General: When I read about that case, which I am sure must have horrified every hon. Member as much as it did me, I instigated inquiries. Much to my surprise, I found that no complaint had been made to the police. Therefore, no section 49 report was made under the Police Act for the Director of Public Prosecutions to consider. His first knowledge of the case was the same as ours—reading of it in the newspapers. That delay was not the fault of the Director of Public Prosecutions or anyone else. Principally, for a reason that I do not understand, it was the fact that no complaint was made in the first place.

    Republic of Ireland (Extradition)
    Mr. Wallerasked the Attorney-General if he has had discussions with the new Attorney-General of the Republic of Ireland about extradition arrangements between the United Kingdom and the Republic of Ireland.
    The Attorney-General: I have been in touch with the new Attorney-General of the Republic of Ireland with a view to resuming the discussions initiated last year with his predecessor. I hope to meet Mr. Connolly very soon for personal talks at which we can carry the discussions forward.
    Mr. Waller: When my right hon. and learned Friend meets his opposite number in the Republic of Ireland, will he seek the maximum co-operation in bringing suspected terrorists to justice? Will he emphasise that such co-operation is in the best interests of both countries?
    The Attorney-General: In my discussions with Mr. Peter Sutherland, the former Attorney-General in the Republic, those issues were very much in mind and agreed upon. I have no reason to believe that I shall not find exactly the same response from the new Attorney-General.
    Mr. Stanbrook: Did the Attorney-General for the Republic refer to the supposed constitutional difficulty in the way of the Republic's ratifying the suppression of terrorism convention? If so, did my right hon. and learned Friend remind him that such difficulty was not apparent when the Republic ratified the genocide convention, which contains similar provisions?
    The Attorney-General: I have always made it clear that the ability of terrorists to shelter behind the exception of political offenders is one of the major obstacles facing us. The Irish side is well aware of this. A number of ways of overcoming the difficulty are available and they were discussed during my previous talks. However, I am not prepared to go into details of what were private and confidential discussions.
    Mr. McNamara: Can the right hon. and learned Gentleman say how many cases we have submitted to the Republic of Ireland to be tried there on the basis of evidence taken in the United Kindgom or in Northern Ireland?
    The Attorney-General: I cannot give the exact number off the cuff. I shall write to the hon. Gentleman. However, he will no doubt share my pleasure in finding that the response to those requests over the past few months has been quick and effective.

    Judges
    Mr. Canavanasked the Attorney-General if he will consider the introduction of new legislation on the appointment and dismissal of judges.
    The Attorney-General: No, Sir.
    Mr. Canavan: Why have the Government not introduced a Bill to enforce the long-overdue retirement of some of the geriatric fossils who use their judicial position to overrule the wishes of the elected representatives of the people on matters such as public transport fares and subsidies?
    The Attorney-General: The three judges who are over the existing retirement age—two English and one Scottish—could not be described by any of the adjectives so poisonously used by the hon. Gentleman. They are respected judges who carry out their job impartially and fairly, as we expect them to do.
    Mr. Maxwell-Hyslop: If my right hon. and learned Friend ever has occasion to consider the processes for dismissing judges, will he ensure, in so far as Parliament is involved, that those processes involve the accused judge being heard either in person or at least by a Committee of the House, as happened in the Jonah Barrington case, but did not happen in the Peter Thomson case?
    The Attorney-General: Since, fortunately, I see no prospect on the horizon of that happening, I will bear in mind what my hon. Friend said, but I shall not promise to do any more than that.
    Mr. Arthur Davidson: What is the objection to introducing a fixed period of training for potential appointments to the judiciary and a periodic refresher course, particularly in sentencing attitudes, during their tenure of office on the Bench? Many other careers have an in-service type of updating. Why not judges?
    The Attorney-General: I should be more ready to accept that question from someone who is not a lawyer and has not had great experience in the courts. Most judges have practised widely in the courts. Furthermore. courses and seminars are regularly arranged on various matters which will come before them, particularly the problems involved in sentencing.

    Theatrical Performances (Prosecutions)
    Mr. Christopher Priceasked the Attorney-General whether, having regard to the statutory provisions relating to the content of theatrical performances, he will discuss with the Director of Public Prosecutions a policy towards initiating or allowing prosections in such cases.
    The Attorney-General: No, Sir.
    Mr. Price: Is the right hon. and learned Gentleman aware that, since the unsatisfactory denouement of Mary Whitehouse's reent dramatic action in the courts, theatre producers simply do not know where they are? Is he further aware that they thought that they were given a guarantee by the Theatres Act that they were subject to that Act, not to the sort of prosecution that we have seen recently under the common law? Does not the Attorney-General think that it is his responsibility, as a member of the Government, to give theatre producers some sort of guidance on when they will be subject to such common law prosecutions and what certainty they may have?
    The Attorney-General: They have the certainty that anything that could be considered an offence under the Treatres Act can be prosecuted only with my consent and at my institution. Unfortunately, it is not only the common law. For example, if a director were determined to be totally realistic in staging the play "Lolita" and insisted that the girl was 14-years-old and that, in the course of the play she was indecently fondled, that would be an offence under the Sexual Offences Act and obviously should be prosecuted as such.

Falkland Islands
3.31 pm
The Prime Minister (Mrs. Margaret Thatcher): With permission, Mr. Speaker, I should like to make a statement about recent developments in relation to the Falkland Islands and South Georgia.
In our continuing pursuit of a negotiated settlement, my right hon. Friend the Foreign and Commonwealth Secretary visited Washington on 22 and 23 April. He had many hours of intensive detailed discussion with Mr. Haig. Their talks proved constructive and helpful, but there are still considerable difficulties. Mr. Haig now intends to pursue his efforts further with the Argentine Government.
However, the Argentine Foreign Minister is reported to be unwilling to continue negotiations at present. I hope that he will reconsider this. As the British task force approaches closer to the Falklands, the urgent need is to speed up the negotiations, not to slow them down. We remain in close touch with Mr. Haig.
I now turn to events on South Georgia yesterday. The first phase of the operation to repossess the island began at first light when the Argentine submarine "Sante Fe" was detected close to British warships that were preparing to land forces on South Georgia.
The United Kingdom had already made it clear to Argentina that any approach on the part of Argentine warships, including submarines, or military aircraft which could amount to a threat to interfere with the mission of British forces would encounter the appropriate response. The "Santa Fe" posed a significant threat to the successful completion of the operation and to British warships and forces launching the landing. Helicopters therefore engaged and disabled the Argentine submarine.
Just after 4 pm London time yesterday, British troops landed on South Georgia and advanced towards Grytviken. At about 6 pm the commander of the Argentine forces in Grytviken surrendered, having offered only limited resistance.
British forces continued to advance during the night and are now in control of Leith, the other main settlement on South Georgia. At 10 o'clock this morning the officer commanding the Argentine forces on South Georgia formally surrendered.
British forces throughout the operation used the minimum force necessary to achieve a successful outcome. No British casualties have been notified and it is reported that only one Argentine sustained serious injuries. About 180 prisoners were taken, including up to 50 military reinforcements who had been on the Argentine submarine. The prisoners will be returned to Argentina.
British Antarctic survey personnel on the island were reported to be safe when we last heard from them early yesterday afternoon. Our forces are making contact with them and arrangements are in hand to evacuate them, if they so wish.
I am sure that the House will join me in congratulating our forces on carrying out this operation successfully, and recapturing the island. The action that we have taken is fully in accord with our inherent right of self-defence under article 51 of the United Nations Charter.
My right hon. Friends and I will continue to keep the House fully informed on the situation as it develops.
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I should like to emphasise that the repossession of South Georgia, including the attack on the Argentine submarine, in no way alters the Government's determination to do everything possible to achieve a negotiated solution to the present crisis. We seek the implementation of the Security Council resolution, and we seek it by peaceful means if possible.
Mr. Michael Foot: I am sure that the Prime Minister must appreciate that, along with other moods, there is a deepening sense of anxiety throughout the country and I trust that she and the Government will take account of it. I am sure that the whole country will be relieved to know that the South Georgia operation was carried through without loss of life on our side and without serious injury on either side.
We are entitled to stress to all concerned that the recovery of South Georgia was fully within our international rights. It was in no sense a breach of the charter, as some have falsely alleged. Indeed, it may help us in other areas, particularly in view of the extreme skill with which the operation was executed. Of course, the Falkland Islands and South Georgia are two very different propositions and I am sure that the House and the country understand that.
However, the most important and persistent question remains, and is indeed intensified. I put the question in the light of what the Prime Minister has said. How are we to pursue the search for the diplomatic and peaceful settlement to which she has referred? What is to happen next? The right hon. Lady spoke of speeding up the negotiations. What steps are the Government taking to speed up those negotiations?
What stage has Mr. Haig's mediation reached, and what will happen if that mediation is not able to be pursued? A question that we have constantly asked throughout the discussions is reiterated in a notable leading article in today's Financial Times. Why have we so far refused to go back to the Security Council? Perhaps I should put the question in a way that the Prime Minister might prefer. When will we return to the Security Council on these matters? In the meantime, how are we to ensure—indeed, to be absolutely sure—that there will be no dangerous escalation of the crisis in any way?
What is the form of political control over military operations? In present circumstances that political control must be absolute and there must be no possibility of any mistakes whatever.
The Opposition remain firmly, unshakably and persistently committed to fresh initiatives in the search for a peaceful settlement. If one initiative fails, another has to be started. Some Conservative Members are laughing, but the approach that I have outlined is the spirit in which the Government should be going about their business.
I retract nothing of what I have said about the charter and South Georgia, but let us take account of the fact that what is legal is not necessarily also prudent. That also has to be taken into account. The search for peace must never be torpedoed by us, and I believe that the House can play a considerable part in ensuring that that spirit informs all our actions.
I ask the Prime Minister not merely to agree to report to the House consistently but to give us much fuller reports than we have been given so far. There is still much to be reported to the House about the negotiations and the possible options. The best course would be for the right

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hon. Lady not only to agree to give reports over the next few days to the House but to agree that there should be a debate on Thursday. We on the Opposition Benches have a right to speak to these matters. We in the House of Commons should keep a persistent control over what the Government propose and intend. I ask the Prime Minister to accede to that request here and now.
The Prime Minister: I thank the right hon. Gentleman for his remarks at the beginning of his intervention. I thank him especially for stressing that we had a right to retake and recapture South Georgia in accordance with the rules of the United Nations charter. I join the right hon. Gentleman in congratulating our forces on the professional skill with which they carried out their task. The right hon. Gentleman says that people are anxious. We share that anxiety in the search for a diplomatic settlement. More than three weeks have elapsed since the United Nations Security Council resolution was passed calling upon the Argentine forces to withdraw. During that time, far from withdrawing, the Argentine Government have put reinforcements of men, equipment, and materials on the island. If we have not yet reached a settlement, the blame lies at the feet of the Argentine Government.
We are naturally ready and anxious at any time to continue these negotiations. We have stayed constantly in touch with Mr. Haig. I hope that Mr. Costa Mendez will reconsider his decision not to see Mr. Haig and that he will see him shortly. If not, Mr. Haig can, of course, communicate with the Argentine Government in other ways.
The right hon. Gentleman mentioned the United Nations. It is, of course, the United Nations Security Council resolution that we want implemented. I do not think that there is any disposition in New York to involve the United Nations further while the negotiations with Mr. Haig are still continuing—[Interruption.] I am reporting what I believe to be the position at the United Nations in New York. I believe that most people there reckon that the best hope for a peaceful settlement is through the negotiations with Mr. Haig, I believe that we must continue those negotiations with all possible speed.
Of course we search for peace. We did not break the peace. We must remember that while we search for that peace our people—British people—are under the occupation of the Argentine invader. We must remember that in the way in which we carry out these negotiations.
The right hon. Gentleman asked for a debate. I hope that he will pursue this matter through the usual channels.
Mr. Foot: We shall certainly pursue the matter through the usual channels, but the right hon. Lady has some influence with the Leader of the House. After all, she has only just appointed him. We are entitled to have a debate this week, especially in the light of the right hon. Lady's replies about what is to be done about getting the negotiations going. She devoted only one half sentence to that matter. "We are keeping in touch with Mr. Haig", was all that she said about the way in which we are making efforts to keep the negotiations going. I hope that the right hon. Lady will agree to the debate and give a much more responsive reply on that aspect of the matter.
The Prime Minister: I trust, nevertheless, that the right hon. Gentleman will pursue the matter through the usual channels.
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As I think the right hon. Gentleman will understand, I cannot give him details of negotiations while they continue, but we pursue them as vigorously as possible. After all, what we are asking for is the withdrawal of Argentine troops in accordance with the United Nations Security Council resolution.
Sir Derek Walker-Smith: Will my right hon. Friend clarify the position about the reference of this dispute to the International Court of Justice, a matter to which reference was made in a leading article in the Financial Times, and it was mentioned by t he Leader of the Opposition, and also in The Times and the Sunday Telegraph? Can she say that, subject to the prior withdrawal of troops by Argentina in conformity with United Nations resolution 502, it is the Government's policy to suggest a reference of the dispute to the Court in accordance with the United Nations charter and the statute of the Court? If, unhappily, there should be a drift to war without any attempt at arbitration, which is so clearly envisaged in the charter, would not posterity marvel, and might it not condemn?
The Prime Minister: I believe that we referred the matter of the dependencies of the Falklands to the International Court of Justice in, I think I am right in saying, 1955. My right hon. and learned Friend will know that both parties have to agree to go to the International Court of Justice for it to adjudicate. We took the case to the Court, but the Argentines did not agree to the jurisdiction of the Court with regard to the dependencies. It is not through any lack of consent on our part that the case has not gone to the International Court of Justice.
Several Hon. Members rose——
Mr. Speaker: Order. I propose to allow 20 minutes for questions today as on previous days.
Dr. David Owen: Is the Prime Minister aware that we on these Benches fully and unequivocally support the decision to repossess South Georgia and congratulate all the Services and Service men, who have taken considerable risks? We are grateful for the fact that there has been no loss of life.
Will the right hon. Lady accept that many of us believe that it is right, with the Organisation of American States meeting in Washington today, to give Secretary of State Haig a few more days, but that the time is approaching when the United States, if it is unable to achieve movement, will have to make a decision to apply economic sanctions? Can the House be given some assurance that before any major escalation of violence took place the Prime Minister would be ready to go to the United Nations to discuss, under articles 82 and 83—these relate to strategic trust areas which would allow for British administration—the possibility of using those provisions for any interim administration?
The Prime Minister: I am grateful to the right hon. Gentleman for what he said at the beginning of his remarks. With regard to the United Nations, it is, after all, the implementation of the United Nations resolution that we seek. As the right hon. Gentleman knows, the United Nations is not in a position to implement the resolution itself. I repeat what I said to the Leader of the Opposition. I believe that it is right at the moment to continue through Mr. Haig to try to seek a peaceful settlement.

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With regard to what the right hon. Gentleman said about the future course of negotiations as a whole, I must point out that time is getting extremely short as the task force approaches the islands. Three weeks have elapsed since the resolution. One cannot have a wide range of choice and a wide range of military options with the task force in the wild and stormy weathers of that area.
Mr. Mark Carlisle: I returned from Washington this morning. Is my right hon. Friend aware of the overwhelming support that exists in America for the action that we are taking and the overwhelming understanding among many Members of Congress and others that the principle at stake is as important to America and the Western world as it is to this country?
The Prime Minister: I am grateful to my right hon. and learned Friend. I believe that the American people know that unprovoked aggression must not be allowed to succeed. If it does, there will be no international law and many people will fear for their future.
Mr. Tony Benn: Is the Prime Minister aware that, although the House and the country are united in condemning the aggression, public opinion, so far as it can be ascertained, favours a much more serious attempt at negotiation through the United Nations than has occurred, and that a majority of people would not follow the Government into a war with the Argentine, which would threaten the loss of many lives, including Service men and Falkland Islanders, which might spread the conflict and which would isolate this country? If the Prime Minister continues to underrate the importance of negotiation and proceeds with the war, the responsibility for the loss of life will rest upon her shoulders.
The Prime Minister: The Government lack no vigour or will to pursue negotiations. The lack is on the part of the Argentine Government to obey the Security Council resolution. In the meantime, perhaps the right hon. Member for Bristol, South-East (Mr. Benn) will remember that our people are under the heel of the Argentine invader.
Mr. John Peyton: Is the Prime Minister aware that few things could do more to bring support to the action that she and the Government are taking than the thoroughly mischievous question asked by the right hon. Member for Bristol, South-East (Mr. Benn)?
Mr. Arthur Bottomley: What is the attitude to the Government's policy of Commonwealth countries in general and those in the West Indies area in particular?
The Prime Minister: Commonwealth countries have been most helpful in condemning the unprovoked aggression of the Argentine. Many of them have stopped imports from that country. New Zealand has also stopped exports. Mr. Fraser has sent a very strong message of support, to the United States Government.
As to the countries in the Caribbean area, Guyana in particular is a member of the Security Council and voted for United Nations resolution 502. There are many territorial disputes in the Caribbean, and many people realise that it is crucial to them that the Argentine should not succeed in its invasion of the Falkland Islands.
Mr. Russell Johnston: Will the Prime Minister convey to the British forces who recaptured South
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Georgia the admiration of Liberal Members for the skill, courage and restraint that they demonstrated in that operation?
As the right hon. Lady has emphasised several times today that time is short, with all that that implies, does she realise that it will inevitably be increasingly difficult to give her a blank cheque without far more information? Has she further considered the suggestion of my right hon. Friend the leader of the Liberal Party that there should be all-party discussions on the matter? Can she say more about economic sanctions, especially the supply of arms? Is it true that Israel is supplying ammunition to the Argentine?
The Prime Minister: The whole House admires what our forces have done, and I shall gladly send that message on behalf of the whole House.
With regard to the hon. Gentleman's first point, time is indeed short. There is no lack of will on our part to negotiate. The trouble is in getting Argentina to withdraw. It may not be possible to achieve an Argentine withdrawal by negotiation, but that is what we are seeking. Argentina has had more than three weeks in which to comply with the Security Council resolution, but it has shown no inclination to do so. Indeed, it has reinforced its troops.
The hon. Gentleman will be aware of European sanctions and those taken by a number of Commonwealth countries. I am not in a position to say precisely what Israel has or has not supplied to the Argentine.
Mr. Julian Amery: I join other right hon. and hon. Members in congratulating the Armed Forces on the skill with which they liberated South Georgia. I also congratulate the Government on taking the decision to authorise that operation.
I welcome the decision to keep the door for negotiation open, but does my right hon. Friend agree that we cannot keep the task force treading water indefinitely at the mercy of the Atlantic storms or the changing tides of political opinion? Does she agree that, having achieved a first success, we must, as soon as all preparations are ready, proceed to the next stage as soon as possible?
The Prime Minister: I am grateful to my right hon. Friend for his comments. I am especially grateful to him for pointing out that time is short because of the weather conditions, the distance from home and because the task force is now approaching the islands. We must take account of that and do everything to speed up negotiations. I hope that that message will get through to the Argentine Government, because that is where it needs to go.
Mr. Douglas Jay: Is it not clear that there will be a far better prospect of an acceptable negotiated settlement if, meanwhile, we fully exercise our unchallengeable rights of self-defence?
The Prime Minister: Yes; I am grateful to the right hon. Gentleman for making that point. We shall have greater chances of a peaceful settlement if we bring greater military pressure to bear on the Argentine Government.
Mr. Robert Rhodes James: Will my right hon. Friend emphasise that since the Government came to office they have done almost everything to attempt to negotiate a peaceful settlement between 1979 and the advent of hostilities and have continued with that approach since? Will she also emphasise that it is not us but the Argentine which has infringed not only the principle but

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also the letter of the United Nations charter and that it is infringing resolution 502? Does she agree that, although recent events have been tragic, they have, nevertheless, shown that Britain has pursued the cause of peace throughout and that we are now defending our rights?
The Prime Minister: I confirm what my hon. Friend says. We are doing everything in accordance with the United Nations charter. We continue to seek a peaceful solution. If we are not successful, the fault will lie not with us or Mr. Haig, but fairly and squarely with the Argentine Government.
Mr. Eric Ogden: Will the Prime Minister find time to give her attention to the problem of British Falkland Island citizens who are in the United Kingdom? Her Majesty's representatives, the governor, and the deputy governor— Mr. Baker—are in. Britain, as are two elected representatives, John Cheek and John Luxton. They have had some support from the Foreign Office, but not very much. The Foreign Office has not yet found a home for the governor. He has not complained, but I do.
Will the right hon. Lady also consider the suggestion made by her hon. Friend the Member for Uxbridge (Mr. Shersby) and myself to the Foreign Office last October that a Falkland Islands secretariat or Government office should be established so that they would receive some support and not be dependent on the good will of the Foreign Office or the charity of the Falkland Island Office?
The Prime Minister: I shall examine the matter urgently. We are in touch with those people. If they need help, of course we must give it.
With regard to the Falkland Islanders still in the Falkland Islands, I have made it clear that if some of them wish to be evacuated temporarily and have not the means to do so, the Government will ensure that the necessary means are provided.
Sir John Eden: Did not the Government make it clear from the outset that if Argentina would not be talked out of the Falkland Islands it would have to be fought out? Now that there can be no doubt about the determination and ability of Britain to take any necessary military action, will the Prime Minister ensure that in the continuing negotiations to secure observance of resolution 502 she will keep the initiative firmly in her hands?
The Prime Minister: We are trying constantly to take initiatives to ensure that the negotiations continue. We shall continue doing that. Only one thing needs to be done immediately under the Security Council resolution—the withdrawal of Argentine forces. After that, negotiations can continue. They have been going on for many years. As soon as the Argentine forces withdraw, we shall be prepared to start negotiations once again.
Mr. Tam Dalyell: As the runway at Port Stanley has been strengthened and lengthened to take Mirages, MiGs and Skyhawks, what are the consequences for air superiority and what will be the next action of the task force?
The Prime Minister: I do not wholly accept the premises upon which the hon. Gentleman's question is founded.
Mr. George Cunningham: Will the right hon. Lady, both directly and
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through the United Nations, bring to the attention of the Argentine Government their obligations under the fourth Geneva convention of 1949 with regard to not compelling Falkland Islanders to remain in those parts of the Falkland Islands that are particularly subject to combat danger?
The Prime Minister: I shall, of course, consider doing what the hon. Gentleman says. Many of the Falkland Islanders have left Port Stanley and gone out to the camp. There are far fewer in Port Stanley now than there were previously, but we shall certainly consider the hon. Gentlman's suggestion.
Sir Bernard Braine: I am sure that in these circumstances it is right and humane to return prisoners of war to the Argentine, but will my right hon. Friend give an assurance that if any difficulty arises about this the names and state of health of such men will be made known to their anxious relatives—in sharp contrast to the inhumane treatment by the Fascist junta of the relatives of thousands of Argentines who have disappeared in recent years and many of whom are now dead?
The Prime Minister: I should make one point clear. These are not prisoners of war. A state of war does not exist between ourselves and the Argentine. They are prisoners, and they will be returned as soon as possible. We shall, of course, let their names and state of health be known to their relatives as soon as possible. I understand that the commander of the Argentine forces on the island is already grateful for the prompt medical attention that was given to the one Argentine marine who was badly hurt.
Mr. Jack Ashley: Does the Prime Minister agree that now is the time for resolution and for her to earn the soubriquet of the Iron Lady by standing firm against the wild voices calling for an increase in violence and a drift to war? Does she agree that neither Britain not the Argentine can benefit from a war? Will she emphasise that we shall seek a negotiated settlement and that, if that requires economic force, we shall use economic force and economic sanctions and, indeed, every sanction short of war, because war would be disastrous?
The Prime Minister: First, a number of countries have joined us in imposing economic sanctions. As the right hon. Gentleman knows, such sanctions are slow to operate and tend not to be wholly successful as there is a good deal of leakage through third countries. Secondly, I agree that resolution is required—resolution to ensure that unprovoked aggression does not succeed.
Sir Nigel Fisher: Despite the comments of my right hon. Friend about economic sanctions, may I revert to the point made by the right hon. Member for Plymouth, Devonport (Dr. Owen)? As Mr. Haig's valiant efforts to mediate have now apparently ended for the time being by the decision of the Argentine Foreign Minister, will my right hon. Friend reconsider the position and suggest to the United States Government that it might now be appropriate for them to impose economic sanctions against the Argentine, if only to show which side they are on?
The Prime Minister: I understand the feelings of my hon. Friend and of many right hon. and hon. Members on this matter. Such economic sanctions would be of a kind and a degree perhaps greater than any other that could be

617
brought to bear. I understand, however, that Mr. Haig believes that the meeting with Mr. Costa Mendez has only been postponed and will take place. Even if it does not, there are means of contacting and negotiating with the Argentine junta direct.
Mr. Eric Deakins: Why must the pace of negotiations be dictated by the requirements of military strategy in the South Atlantic, when our priorities should surely be the other way round?
The Prime Minister: The pace of negotiations has been very swift. When one has a task force such as we have in the wild and stormy weathers of the South Atlantic, that is a limiting factor on possible military activities which any sensible Government must take into account.
Mr. Michael Grylls: Is my right hon. Friend aware that her handling of this crisis has the support of the vast majority of the people of this country? Does she agree that it is important to continue to follow the policy of the stick and the carrot—the stick to ensure that aggression pays no dividends and the carrot to show that we have no quarrel with the Argentine people, but only with the illegal actions of their Government?
The Prime Minister: I accept that negotiations are more likely to succeed if military pressure is kept up. One must always consider the military options, and in doing so we must look after our soldiers and Marines who have to undertake them.
Several Hon. Members rose——
Mr. Speaker: Order. I am sure that we shall be returning to this subject during the week.

British Rail, Shildon
4.6 pm
Mr. Derek Foster: I beg to ask leave to move the Adjournment of the House under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the announced closure of the British Rail engineering works at Shildon, Co. Durham, throwing 2,500 mostly skilled men on to the dole in a town of only 14,000 in which the unemployment rate is already well above the national average."
Shildon produced almost £800,000 of the £1·3 million profit of British Rail Engineering Ltd. last year. The previous managing director of BREL described it as the most efficient wagon works in Europe. Industrial relations have been excellent for many years. The men have cooperated fully in the cost cutting and new working practices to keep their products internationally competitive. Their reward for co-operation has been a hefty kick in the teeth.
Shildon was a birthplace of railways 150 years ago. Timothy Hackworth, who opened the works, was a great rival of George Stephenson, and the first railway in the world ran through Shildon. Four or five generations have given their lives to the works. In any family in Shildon, one will find more commitment to railways than in the entire British Rail Board. Yet no task force will be dispatched to preserve Shildon's way of life. No cash limit free, £275 million operation will be mounted to rescue Shildon from disaster. No brashly baying public-school cultivated voice from the Government Benches will be raised to acclaim the paramountcy of Shildon people's wishes.
This decision is as bad for Shildon as was the closing of the steelworks for Consett. The people of Shildon are shocked, stunned and disbelieving. What can the future hold now for them and their families? The Government and British Rail must recognise the social catastrophe that they are inflicting on this long-suffering Durham community, where the people embrace the solid working-class values of hard work, thrift, sturdy independence and self-help that the Prime Minister purports to admire.
Mr. Speaker: The hon. Member gave me notice before 12 o'clock midday that he would seek to move the Adjournment of the House for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the announced closure of the British Rail engineering works at Shildon, Co. Durham, throwing 2,500 mostly skilled men on to the dole in a town of only 14,000 in which the unemployment rate is already well above the national average."
The House knows that it is always difficult for me when applications are made for emergency debates on the closure of factories. On this occasion I must tell the House that I was in the locality of the works at the weekend. Therefore, it is all the more difficult for me to explain that it is not in my power to decide whether this matter is to be debated. I merely have the right to decide whether we must change our business tonight or tomorrow night for an emergency debate on the proposed action.
I hope that the hon. Gentleman will appreciate that I listened to him with sympathetic concern. However, I have to rule that his submission does not fall within the provisions of the Standing Order, and, therefore, I cannot submit his application to the House.

Members (Personal Attacks)
Mr. Fergus Montgomery: On a point of order, Mr. Speaker. On Thursday 22 April the hon. Member for York (Mr. Lyon) raised a point of order with you in which he claimed that during the Adjournment debate on the previous night I had used about half the time available to me to launch a personal attack on him. You said in your reply, Mr. Speaker, that you had not read the details of the Adjournment debate, as, indeed, you could not have done because it had not been printed in Hansard at that time. As you have now had a chance to read my speech, I should be grateful for your ruling on whether I made a personal attack on the hon. Member for York.
Mr. Speaker: I have had time to read the speech now. My arithmetic differs very considerably from that of the hon. Member for York (Mr. Lyon). It is not really for me to say as I was not in the Chair, but I did not sense in the speech of the hon. Member for Altrincham and Sale (Mr. Montgomery) a personal attack on anyone that was stronger than what is normal in debate in the House. I have read some that have been a great deal tougher.
Mr. Alexander W. Lyon: Further to that point of order, Mr. Speaker. I am sorry if I exaggerated the nature of my complaint. I assumed that where it was the intention of one hon. Member to criticise the views of another in a way that was personally directed at him, there was a duty on that hon. Member to inform the other hon. Member of his intentions. In this case, the hon. Member for Altrincham and Sale (Mr. Montgomery) referred to me a number of times, read out a considerable section of a piece that I had written, and subjected that to criticism. If that is to happen, Mr. Speaker, surely it is normal for notification to take place. It was only in that sense that I referred to the hon. Gentleman's remarks as a personal attack. I did not suggest for one moment that the hon. Gentleman had abused me.
Mr. Speaker: Order. The hon. Members for Altrincham and Sale (Mr. Montgomery) and York (Mr. Lyon) should have settled this matter between themselves in the Tea Room. It is not big enough to bring to the Floor of the House.

STATUTORY INSTRUMENTS, &C.
Ordered,
That the draft Electricity (Borrowing Powers) (Scotland) Order 1982 be referred to a Standing Committee on Statutory Instruments, &c.
That the draft Hovercraft (Application of Enactments) (Amendment) Order 1982 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. David Hunt.]

Orders of the Day

  Finance Bill
  (Clauses 18, 22, 29, 65, 71, 75, 117 and 128 and Schedule 10.)
  Considered in Committee. [Progress 22 April.]
  [MR. BERNARD WEATHERILL in the Chair]

  Finance Bill
    Clause 29

      SOCIAL SECURITY BENEFITS
      4.13 pm
      The Minister of State, Treasury (Mr. Barney Hayhoe): I beg to move amendment No. 13, in page 19, line 3, at end insert 'any condition contained in'
      The Chairman of Ways and Means (Mr. Bernard Weatherill): With this it will be convenient to take Government amendment No. 16.
      Mr. Hayhoe: As the Committee knows, section 27 of the Finance Act 1981 brought into tax benefits paid to the unemployed. That included supplementary benefit paid to the unemployed because a substantial proportion of the unemployed receive supplementary benefit either in place of, or in addition to, unemployment benefit Supplementary benefit that is paid to the unemployed is distinguished for this purpose from other supplementary benefit by reference to social security legislation, the distinction being that that benefit should be taxable if the person's right to it is subject to the condition that he is both registered and available for employment. That condition is set out in section 5 of the Supplementary Benefits Act 1976.
      The social security legislation that is before the House of Commons makes necessary a technical change in the wording. It is for that reason that I move the amendment.
      Amendment agreed to.
      Mr. Hayhoe: I beg to move amendment No. 14, in page 19, line 18, at end insert—
      '(bb) at the end of subsection (5) (meaning of "relevant amount" in respect of any week) there shall be inserted the following words—
      "Any reference in this subsection to an amount or rate or increase specified in any provision is a reference to the amount or rate or increase so specified for the week in question.";'
      This is a highly technical amendment that follows a recent court ruling. It clarifies the law and makes it certain that it is as we thought it to be.
      Amendment agreed to.
      Mr. Robin F. Cook: I beg to move amendment No. 15, in page 19, line 29, after `1982', insert
      `provided that unemployment benefit is increased by 5 per cent.'
      The purpose of the amendment is to postpone the date when unemployment benefit would come into tax, until such time as the Government restore to the unemployed the 5 per cent. in unemployment benefit that they took from them two years ago on the basis that unemployment

      621
      benefit was not liable to tax. The gravamen of my remarks will therefore be addressed to the elementary justice of giving that 5 per cent. back to the unemployed so that they and they alone among the taxpaying public of Great Britain will not be left in the double jeopardy of being subject to two separate forms of taxation on the same income.
      I wish also to put before the Committee a number of reasons why delay in the introduction of this measure should commend itself to the Committee. Last year, the Opposition warned the Government that they were entering into a matter of great complexity and that there was a real probability that their proposal would disappear into a morass of complexity sunk under a weight of anomalies.
      The extent to which we have been proved correct in forecasting the complexity and foreseeing those complications is vividly borne out by the Bill. Only one year after last year's Finance Bill we are faced with a lengthy clause that amends the provisions that were made only last year. Since this lengthy clause was published we have for debate three further Government amendments on a clause that the Government published only last month. I challenge any member of the Committee to take the clause as drafted or, for that matter, to take the amendments that have just been agreed to and, without the advantage of notes on clauses, to make sense of the clause. That is not a rhetorical statement because if we have difficulty in grappling with the text of the Bill and comprehending it, we should reflect on the fact that to put it into practice we depend on the actions of fallible human beings who have to make sense of the dense texture of the legislation that we have passed.
      I wish to turn to a press statement that was issued by the Society of Civil and Public Servants last November by Mr. David Luxton. Mr. Luxton is quoted in the press statement as saying:
      "We would like the Government to postpone the scheme"—
      that is the scheme for the taxation of unemployment benefit—
      "until April, 1983. There is no way our staff could learn all the new procedures and run the system without a gigantic series of blunders before then, given conditions in unemployment benefit offices."
      The full extent of the undertaking facing unemployment benefit offices is conveyed when Mr. Luxton rightly and properly observes that we are considering the taxation of 8 million who every year move in and out of unemployment. We are not merely considering the taxation of 3 million unemployed.
      If the Government were to propose a change in taxation that affected those on the higher rate bands, or those that pay capital transfer tax, and that was likely to give rise to
      "a gigantic series of blunders",
      the bodies that would administer it would not be the only organisations to complain. There would be riots in constituencies, letters would be sent to The Times and the entire tax avoidance industry would hire the Dining Rooms downstairs to lobby us on the necessity to clarify the issue before it passed into law. Conservative Members would queue to intervene in the debate.
      However, we are dealing not with blunders that will affect the wealthiest section of the electorate, but with those that will affect the poorest section. All that we know about unemployment tells us that those who are poor are the most likely to become unemployed, and that the effect
      622
      of unemployment is likely to make them even poorer. It is those people who are now to be subject to the possibility of a
      "gigantic series of blunders."
      These blunders may push their income below the breadline.
      There is another reason why we should be concerned about the poorest in society being liable to blunders in the assessment of their tax liability. A provision was inserted in last year's Finance Bill to the effect that this group of taxpayers, and this group alone, will have no right of appeal against assessment after 30 days have elapsed. The group that will be subjected to the possibility of a series of blunders is the same group that will have the least remedy after 30 days against the wrongful assessment of tax liability.
      In response to criticisms from Inland Revenue staff, representations from the unions and representations from the Department of Employment and the Inland Revenue, the Government propose to delay the implementation of the scheme. That proposal is contained in the clause that we are debating. It is proposed to delay implementation from April 1982 to July 1982.
      Can the Minister of State give the assurance that the Committee wants that the short delay of three months will be sufficient to ensure that those who are subjected to taxation as a result of this provision will not suffer the
      "gigantic series of blunders"
      that those involved in assessment believe is likely to occur?
      I shall be grateful if the Minister tells us what has happened to the training period for the scheme. Training for the application of taxation of unemployment benefit was supposed to start in August 1981 and to continue until April 1982. It could not start in August 1981 because the Civil Service was then in dispute with the Government. It did not start until February 1982. Even with the postponement contained in the clause, there will be a training period of only five months, and not eight months. The training period will be substantially shorter than that envisaged when Ministers urged us to accept the proposal when we were debating last year's Finance Bill. Can the Minister of State give us the assurance that the truncated period of training will be sufficient?
      I was considerably worried when I discovered earlier today that it will be necessary in every case where a claim for unemployment benefit is made for the unemployment benefit officer to add on to the computer code of that claim 17 items, most of which will be taken from the P45. It is the judgment of those involved that if 17 pieces of information are fed on to the computer tape it is highly probable that an error will occur in a number of instances. When that occurs the result is one for concern, for the computer will reject the application for unemployment benefit. That is even more serious than an incorrect assessment of tax liability. The applicant who is seeking unemployment benefit to which he is entitled, which previously he would have received after the first round, will have to encounter a period of delay before he receives the benefit.
      If those who seek unemployment benefit will be liable to a series of blunders in the assessment of tax liability and will have to wait an additional period of delay to get their benefit, it is plain that the Government in all decency should postpone the introduction of the scheme until they can avoid these outcomes.

      623
      It would be appropriate and suitable if the Government considered delaying the introduction of the scheme until the autumn of this year. If they did that there would be two results. First, the Government would be able to retain the original training period of eight months. Secondly, the Government would be able to introduce the taxation of unemployment benefit in November in conjunction with the restoration of the 5 per cent. of unemployment benefit in the upratings in November.
      Whatever date is set for the implementation of this measure, it should in all decency be the date on which the Government restore the 5 per cent. that they took away last March. We understand that the cost of restoring the 5 per cent. will be £60 million. We understand also from a parliamentary question that was answered shortly before the Easter Recess that the total revenue that the Government will receive from the taxation of unemployment benefit is £650 million. There has been a striking change in the estimate that we were given last year. Last year the estimated yield was a mere £240 million. It now stands at nearly treble that which was estimated a year ago. Given such a wide margin of error in the calculation of likely revenue, one cannot but suspect that the Government have no idea what will happen once the clause is introduced.
      If the Government are to receive £650 million in additional taxation, in all honesty, fairness and justice the first charge against that sum should be to pay £60 million to the unemployed to restore the 5 per cent. that was taken from them. However, that is not what the Government propose. One cannot resist the natural temptation to go through the Red Book to ascertain where the money has gone. The Red Book makes it clear that the Government have found £160 million for higher rate thresholds, £50 million for investment income thresholds and £85 million to change the bands of capital transfer tax. By what conceivable perversion of social priorities is it considered more worth while and more just to spend the money taken in the taxation of unemployment benefit on those purposes rather than restoring the 5 per cent. abatement?
      There is another factor that the Committee is entitled to bear in mind when considering the cost of restoring the 5 per cent. abatement. When the then Secretary of State for Social Services qualified earlier statements on the issue he said about the cost of restoring the 5 per cent.:
      "It is a matter for judgment at the time, in relation to available resources, the general level of earnings, what the country can afford, the borrowing requirement and all other factors as to what is the appropriate level."—[Official Report, 21 May 1980; Vol. 985, c. 555–56.]
      It was the Secretary of State who identified the borrowing requirement as the relevant factor when we come to consider whether we can afford to spend £60 million to restore the 5 per cent. abatement.
      The Committee will be aware that the background to the debate is the discovery by the Government that the borrowing requirement for the past financial year was £2 billion less than they had predicted as recently as March. Indeed, it would have been a further £1½ billion less had not the Civil Service dispute fortuitously intervened to keep the Government nearer target on their PSBR requirement.
      4.30 pm
      The discovery cast an ironic light on much of the debate on last year's Budget. The sum of £2 billion would nicely have covered a 15 per cent. increase in the tax threshold.
      624
      It would have enabled the Government to avoid increasing the tax burden and widening the poverty trap, which they introduced last year by not increasing tax thresholds.
      The Government were not to know at the time that their estimate was so far adrift, but they know now. They cannot avoid the fact that any decision that they take on the Finance Bill is taken in the clear knowledge of what happened to the PSBR last year. They could not have hoped for a more favourable background on the borrowing requirement for a decision on whether to restore the 5 per cent. to the unemployed. If, against the background of a much more relaxed borrowing requirement than they had anticipated, they persist in denying the 5 per cent. to the unemployed, they will demonstrate a great meanness of spirit, although I hope that at the end of the debate the Committee can acquit Treasury Ministers of that.
      There are two main reasons why Treasury Ministers should respond to the concern on both sides of the House. First, at the time the 5 per cent. abatement was made, the Government established the relationship between the abatement and the taxation of unemployment benefit. Hon. Members in the Chamber will be familiar with the sacred texts on the matters. Little is to be gained by arguing whether the words as they were spoken formulated a clear, precise and legally binding commitment. Two years ago we were led to believe that the 5 per cent. abatement was a temporary measure and that it would be restored when unemployment benefit was brought into tax. That clear understanding on both sides of the House is much more significant to what we now do than the precise form of words that may have been used at the time.
      The idea that the 5 per cent. was to be restored when taxation was brought in was not held simply on the Opposition Benches. In the debate on 18 March, of the nine Conservative Back Bench speakers only one supported the Government in resisting restoration of the 5 per cent. The other eight urged the Government to restore the 5 per cent.
      Mr. Chris Patten: Will the hon. Gentleman give way?
      Mr. Cook: I give way to one of the eight.
      Mr. Patten: The speech made in favour of the Government proved without a scintilla of doubt that the Government did not have a leg to stand on.
      Mr. Cook: I entirely accept that. To avoid an accusation of being unfair or selective in my quotations, I propose to quote the speech of the only Back Bencher to support the Government's position. The hon. Member for Grantham (Mr. Hogg) stated:
      "There is no doubt that many hon. Members, and people outside the House, believed that the abatement would be made good when unemployment benefit was brought into taxation. There is also no doubt that Ministers have made statements that gave colour to that belief."—[Official Report, 18 March 1982; Vol. 19, c. 516.]
      That was the single Back-Bench speech in support of the Government's position.
      The point was made with greater clarity and perhaps brutality by the Bow Group. In its pre-Budget submission it urged the Government to restore the 5 per cent.
      "on the grounds … that the Conservative Party should not be seen to cheat."
      At the end of the debate we shall know whether the Government—I distinguish between the Conservative Party and the Government—are seen to cheat. The present

      625
      position is a cheat. It leaves the unemployed 5 per cent. worse off. They were not liable to tax and it is now proposed to tax them on what they have left.
      That brings me to the second main reason why the 5 per cent. should be restored. Irrespective of whether the Government committed themselves to restoring the 5 per cent., it should be restored for the simple and basic reasons that the unemployed need the money. They have experienced a steady erosion in the value of benefits since the Government came to office. They lost the earnings-related supplement, which was worth, on average, £11 a week. They have also witnessed a change in the calculation of the child addition, which removes £3·80 a week from the pocket of a person who is unemployed with two children. They have also lost the 5 per cent., which is now worth £1·75 a week. We are considering households that are struggling to survive on £40 to £50 a week, depending on whether the family has two, one or no children.
      When we debated tax thresholds last week my hon. Friends criticised Conservative Members for not understanding the problems of people on low incomes because of their own incomes. In a spirit of humility, and recognising that, to a degree, the debate is not party political, I point out that, living as we do on a comparatively comfortable salary, no hon. Member can comprehend the desperation of a family living on £50 a week or the extent to which its choice might be widened by an additional £1·75.
      For those of us who meet unemployed people among our constituents it is difficult not to be moved by the extent to which simple and straightforward decisions acquire enormous significance in their lives. They have to decide whether they can afford the fare to a job interview or whether they can find the cost of a school outing to which the other children in the class are going, or the price of a pair of children's shoes. Such decisions could be made much easier by the addition of £1·75 a week.
      When the Chancellor introduced the abatement two years ago he said that if we did not cut the benefit to the unemployed they would not find work. He should ponder his experience since then. The unemployed have had their benefit repeatedly cut. It is now only two-fifths of average earnings, which is the lowest since 1948. Unemployment has steadily mounted. The number of people unemployed continues to increase, not because they lead the life of Riley on unemployment benefit but because over the past three years 2 million jobs have been lost. The men are unable to find work. They require no incentive to look for it.
      None of the reputable bodies that has turned over the evidence on the "Why work?" syndrome has found proof to substantiate the claim that anything remotely approaching the present level of unemployment is due to there being no incentive to go back to work. Only 3 per cent. of the unemployed get more benefit than they would in work, and even they make diligent efforts to find work.
      All the authoritative bodies that have examined the question of the 5 per cent. abatement urge the Government to restore it. I pray in aid a body that the Government set up—the Social Security Advisory Committee. It was appointed by the Government in the wake of the closure of the Supplementary Benefits Commission. I expect that, to the chagrin of the Government, it has consistently
      626
      criticised many aspects of their social security policy. Last October its chairman submitted a letter to the Secretary of State for Social Services. Speaking of the unemployed he stated:
      "We believe that the first priority for this group must be restoration of the 5 per cent. cut as soon as possible after unemployment benefit comes into tax; otherwise there would, in effect, be double taxation for this hard-pressed group."
      The Social Security Advisory Committee recommended this as a first priority. The Government have hitherto decided not to do so.
      This debate and our amendment provide a last opportunity for the Government to act and to restore that 5 per cent. to the unemployed. If the Government are not prepared to take that opportunity, the Committee, in all decency, ought to deny the Government the right to tax the unemployed.
      Sir Ian Gilmour: As the hon. Member for Edinburgh, Central (Mr. Cook) pointed out, this is the second time that we have discussed the question of the abatement. The last time was on 18 March, when all the speeches were in the same direction. There has been some doubt about the direction of the speech of my hon. Friend the Member for Grantham (Mr. Hogg) and which side he was on. The answer is that he was on both sides. That is why there has been confusion. Apart from his speech, there was unanimity throughout the House.
      Even my hon. Friend the Minister for Social Security, who, no doubt because of Treasury bludgeoning was not able to agree to the arguments put forward, did not advance any argument as to why the Government should not do what it was obvious to the House they should. I presume that he did not advance an argument because there was not one to advance. He merely said that a line must be drawn somewhere. He did not say why the line should be drawn at that particular and rather eccentric point and why it should exclude the unemployed. Presumably he did not give that explanation, because there is no explanation to give.
      Today, as the hon. Member for Edinburgh, Central has pointed out, the case is even weaker. The hon. Gentleman made a comprehensive speech on the subject, with nearly all of which I agree, and, because this is a simple matter and the facts are not in dispute, I shall not delay the Committee long. I shall go through the facts only briefly.
      First, there is no doubt that the abatement of 5 per cent. was meant to be temporary and interim. That was the impression of those who attended the relevant debate. That is also borne out by common sense and elementary logic. It is common sense and elementary logic that the worst off should not be doubly penalised. If one says that one will do A because at that time it is impossible to do B, it is elementary logic that, when it is possible to do B, one should stop doing A. That is so simple that I am sure that the Minister's advisers will agree that it is incontestable. I hope that he will say something to that effect at the end of the debate.
      The second fact, as the hon. Member for Edinburgh, Central pointed out, is that there are now far more unemployed persons than there were when the abatement was made. Therefore, there is far more hardship than was envisaged at that time. The idea that there should be a problem about the so-called "Why work?" syndrome is a delusion when there are 3 million unemployed.
      The third point is, or should be, common ground to all hon. Members. The least well off should not be made to

      627
      bear the brunt of the Government's policies. Whatever we may think of the Government's economic policies in general—and some of us have different views from others—it ought to be common ground that the unemployed—the least well off and the most unprivileged in our society—should not have to bear the major burden of those policies.
      I wish that we could go even further than is envisaged this afternoon. The Minister, in a previous debate, said:
      "We would like to pay the long-term rate of supplementary benefit to the unemployed, which would cost about £200 million." [Official Report, 18 March 1982; Vol. 20, c. 536.]
      That is what should be done. It is wrong that the unemployed are not entitled to the long-term supplementary rate. We are not discussing that matter this afternoon, but it is incontestable that the unemployed should not be doubly taxed.
      4.45 pm
      The fourth question relates to cost. In the previous debate we were told that we cannot hypothecate revenue. We all accept that, but I hope that the Minister will not use that word this evening. Nevertheless, it is striking to look at the figures. The £375 million in the current year is the figure that the Government will obtain from taxing the short-term unemployment and supplementary benefits. They will receive £650 million in a full year. I do not know the exact cost of doing the right thing and uprating by 5 per cent., but it would be about one-tenth of that sum. From any view, the Government are making a handsome profit out of taxing the unemployed. Therefore, it is plain that they should do what we ask.
      My final point concerns the PSBR. That is a figure to which some people pay more attention than do others. The Government pay the greatest attention to it. They specifically mentioned the PSBR when they talked about uprating or taking away the abatement, and when they imposed it. However, we now have £2 billion more, which destroys the PSBR argument.
      Even before there was no reason why the unemployed should be hit. Now that we have had the new figures, there is even less reason why they should be hit. If my hon. Friend were to attempt to defend his position, he would find it indefensible. It would be sheer irrational meanness not to get rid of the abatement immediately. I cannot believe that the Government will not get rid of it. If they do not, I shall have to vote against them. In common sense and minimum justice, the amendment should be supported by the Government. I trust that that is what they will do.
      Mr. David Winnick: The right hon. Member for Chesham and Amersham (Sir I. Gilmour) has stated his position with honesty and clarity. There are now a number of hon. Members sitting on the Conservative Benches. I may be wrong, but I believe that they are hon. Members who are likely to follow the lead given by the right hon. Member for Chesham and Amersham.
      I have recently finished reading the last book by the late Lord Butler, which was brought out a few weeks after he died. He was as much a Conservative as any hon. Member on the Conservative Benches today, but I find it difficult to believe that if he were around now he would justify what the Government intend to do. I wonder whether those Conservative Members who believe that the Government are justified intend to come to the Chamber to make speeches accordingly.
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      Unemployment is by no means an academic question in the part of the country that I have the honour to represent. I have figures relating to the increase in unemployment in the last three years in the West Midlands. In my travel-to-work area unemployment has increased by 240·9 per cent., in Birmingham by 182 per cent., in Coventry by nearly 145 per cent. and in Dudley and Sandwell by nearly 272 per cent. We have many people who had previously been earning their living but are now in the dole queue. What is so unfortunate is that many of them will remain in the dole queue for a long time.
      It is difficult to understand how anyone can justify the continuing deduction of the 5 per cent. in unemployment benefit, especially now that unemployment benefit is to be subject to income tax. If we were dealing with people with average or higher than average incomes it would not be so important, though the principle would remain important, as my hon. Friend the Member for Edinburgh, Central (Mr. Cook) said. We are, however dealing with those whose incomes are amongst the lowest in the country I remind the Committee that the present rate of unemployment benefit is £22·50 for a single person and £36·40 for a married person, plus 80p for each child. It is clear that every penny must help for anyone living on that sort of income.
      It has to be borne in mind that unemployed people have been singled out by the Government for punishment in a number of ways. An example which makes the amendment all the more relevant is that earnings-related benefit was finally abolished from January of this year. When the appropriate Minister was asked in a parliamentary question the estimated sum that would have been received by unemployed people if the earnings-related supplement had not been abolished, the answer was £11·20 weekly. Here is a considerable amount of money, especially for an unemployed person, which is no longer received by an unemployed person because of Government action.
      Unemployed people will no longer be able to claim a tax refund when they are made redundant. The tax will be adjusted only at the end of the financial year or when employment starts again.
      In all these ways, the person who finds himself, through no fault of his own, without a job is being hit much harder than previously. I can understand the feelings of those who are unemployed, since many of them believe that they are unemployed because of Government policies, and no doubt they are correct in their thinking.
      The increase in unemployment benefit this coming November will mean £25 for a single person and £40·45 for a married couple. But if the 5 per cent. were included from November 1980 it would mean a single person getting £26·10 and a married couple £42·25. When one considers the smallness of the incomes involved, one recognises the importance of the sums that have been lost to the unemployed person—that is, unless the Government decide to change their mind.
      Many unemployed people will not pay income tax because, despite what the Government are doing, their incomes will remain insufficient. Yet they will remain penalised as a result of the 5 per cent. reduction.
      What the Government are doing is the worst type of cheating. They are hitting out at the people who can least afford to lose a penny. Even if no other section of the community was being penalised, this would remain

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      indefensible. But when we consider how those on the highest incomes have benefited, it becomes even more indefensible and even more difficult to understand how the Government can consider the action that they are taking against the unemployed.
      We have to bear in mind all the social tension and aggravation which is bound to occur as a result of a return of mass unemployment. Unemployed people face tremendous difficulties, leaving aside even the financial aspect. They face psychological difficulties, with men in middle age finding themselves without jobs and with the fear that they may not work again. These factors create tremendous hardship for that section of the community who find themselves in the dole queue.
      Our need as a House of Commons is to do all in our power to make their lives more bearable. If Government policy is that the present level of unemployment is inevitable—it is certainly not the Opposition's view—and that there is no alternative, the Government should be taking even more action to defend the people who are the victims of their policy. They are doing the very opposite.
      Sometimes when I speak to unemployed people in my own constituency they say "You have to be unemployed before you realise what we have to face day in and day out." What is more, it affects not just the unemployed person. We have to remember their wives and children. My hon. Friend the Member for Edinburgh, Central spoke of the sorts of decisions that have to be made—whether shoes can be bought, or whether they should go to a jumble sale. They have to face all these difficulties.
      The House of Commons has an obligation to try to alleviate the problems faced by this section of the community—our fellow citizens who are denied the opportunity to work. I hope, therefore, that the amendment will be supported by Government Back Benchers. I doubt whether at the end of the day it will succeed, but the extent to which hon. Members are prepared to back this Opposition amendment will demonstrate just how deep is their commitment to dealing with the plight of the unemployed.
      Mr. Richard Needham: With the possible exception of 3 September 1939, the Opposition could not have chosen a better day to debate this proposal.
      Mr. Chris Patten: A worse day.
      Mr. Needham: I stand corrected by my hon. Friend the Member for Bath (Mr. Patten). But why did they do it? When they tabled the amendment, they must have known that the Falkland Islands crisis was upon us and that to produce such an amendment for debate today would be to put almost every possible obstacle in its path.
      I suppose that there are two possible reasons. The first is incompetence. However, bearing in mind that the hon. Members for Edinburgh, Central (Mr. Cook) and for Blackburn (Mr. Straw) have put their names to the amendment, it is clear that it was not tabled through incompetence, whatever else it might have been. A more likely explanation is that it was designed to embarrass the Government. Probably that has more to do with it than anything else. But if it was to embarrass the Government, it rings a little hollow to hear the hon. Member for Edinburgh, Central, even when he gets his facts right—he did not about children's shoes—talk about the problems of
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      the unemployed. If he was really keen to see the acceptance of the amendment, he would have chosen the place for his battle rather more cleverly. It does not please me and my hon. Friends who have genuine concern for the unemployed to see the tactics of the Opposition, which are either incompetent or designed to embarrass the Government.
      Mr. Robert Sheldon: The hon. Gentleman will be aware that today's business is chosen by the Government.
      Mr. Needham: I am well aware of that, but the right hon. Gentleman is equally aware that the amendments are tabled by the Opposition. They could perfectly well have tabled this amendment for Report.
      Mr. Sheldon: The position will be worse by then.
      Mr. Needham: I can see no reason why it should be.
      It might perhaps be worth considering for a few moments why the Government refuse to allow this 5 per cent. abatement to be reintroduced and why they have decided to abate the 5 per cent.
      I do not want to go back over the debate on 18 March, but it was clear from that that the Government's earlier decision had been that the 5 per cent. was in lieu of taxation. No one argued about that. The point was whether the Government would have sufficient resources to be able to allow that 5 per cent. to be put back. As my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour) and the hon. Member for Edinburgh, Central said, there can be no argument about the savings. The Government are getting £650 million now compared to an additional expenditure of £60 million. That figure is an increase since the debate on 18 March.
      5 pm
      The reply concerning the amount of £525 million, which was uprated to £650 million, was dated 23 March. Therefore, £125 million extra has been added to the Government's take since the debate on 18 March, whereas the cost is £60 million. Therefore, the question whether it is in lieu of taxation cannot be related to cost.
      What is the reason for the Government's present position? I suspect, along with my right hon. and hon. Friends—it was referred to by the hon. Member for Edinburgh, Central—that the main reason is the "Why work?" syndrome. If the abatement is to be allowed, the difference between being in and out of work will be narrowed. But will that really be the case? The answer is "No". My hon. Friends know perfectly well that in the last few years the gap between being in and out of work has increased.
      What other reason is there then? My hon. Friend the Member for Bromsgrove and Redditch (Mr. Miller) asked about those in work who are now getting such small increases. What do they feel when they find that the unemployed will get larger increases than they are receiving? That may be a fair argument this year, but what about last year and the year before that, when the unemployed received much less than those in work were getting? Therefore, that reason cannot stand up.
      My hon. Friend will say that there will be those scroungers who find it better to be on unemployment or supplementary benefit than to be in work. How many of the present number of unemployed does my hon. Friend suggest that applies to? Is it 100,000, 200,000, 500,000

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      or 1 million? What about those who live in Corby or Workington or those parts of Britain where work does not exist? The argument that less money means more work cannot apply there.
      How many of those who have assisted in the loading of the task force will find themselves out of work in the not-too-distant future? How will they feel when the work that they have been doing is rewarded by a 5 per cent. decrease in their unemployment benefit and their short-term supplementary benefit when they become redundant? That brings me to one of the real problems that unemployed people face.
      One of my constituents, who is a single parent with three children, came to me this week. She has been on long-term supplementary benefit because she receives no maintenance from her divorced husband. Her youngest daughter has now reached the age of 16 and she suddenly finds that she must register for work as being unemployed. Immediately she registers for work she is no longer entitled to long-term supplementary benefit. She will get only short-term supplementary benefit, which is £6·50 a week less than long-term supplementary benefit. Have her needs decreased because her daughter has reached the age of 16? Of course, they have not.
      Overall, that woman is £3 a week less well off. On what grounds? I was under the mistaken impression that supplementary benefit was designed to assist people according to their needs. Now it appears that that is not so. The needs of this woman are not less on the day her daughter becomes 16 than they were on the day before. Surely the opposite is true. Why should the needs of an unemployed family be less than the needs of anybody else on long-term supplementary benefit? Why should the financial needs of the unemployed be less than those of anybody else receiving benefit? For the life of me, I cannot understand why.
      If my hon. Friend cannot explain it, will he reconsider the 5 per cent.? In my view, and in the view of my right hon. and hon. Friends, restoring the 5 per cent. does not go as far as we would like it to. Will he give the House the real reason behind the Government's attitude? If he does not do so, however much we would want to support the Government at this difficult time, it will be impossible when the needs of the long-term unemployed are as great as they ever were and when the numbers of the long-term unemployed are increasing.
      Never before in its history has the Conservative Party defended the position that those who cannot care for themselves should suffer. It is high time that the Government—who have got themselves into this mess—took the opportunity that they are offered today to put the matter right, regardless of the Opposition. Those who trust the Conservative Party to represent them demand that that should be done.
      Mr. John Horam: This is a matter of equity for the unemployed. I hope that all those who speak today, as did those who spoke in previous debates, will agree with that.
      The hon. Member for Edinburgh, Central (Mr. Cook) and the right hon. Member for Chesham and Amersham (Sir I. Gilmour) covered the ground comprehensively. We have been over the ground fully in previous debates and I do not want to go over the same ground again. However,
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      there is one point which brings out the full enormity of what the Government have done which I should like to stress.
      Hon. Members support the idea of taxing unemployment benefit in this way, because the prime effect will be to equalise the taxation of those who earn a little during the year compared with those two move in and out of employment during the year and whose income is derived from both earnings and unemployment benefit. In principle, those two groups of people should be taxed equally.
      However, the abatement does something different. It abates the income of all those on unemployment benefit. The income of many of those people would not come into taxation because their unemployment benefit would be below the tax threshold. Therefore, the Government are taxing people at a lower level of income than those who have been in and out of work during the course of the year. While it is true to say that there is a link in time between the idea of a 5 per cent. abatement and taxation of benefits—that the abatement was in lieu of taxation has been established to the satisfaction of the Committee—those two measures are not on all fours. The abatement has a far worse effect on those on the lowest incomes than does taxation. Therefore, although I support the amendment of the hon. Member for Edinburgh, Central, in many ways it does not go far enough. For, even if the amendment is accepted, damage will have been done to people by the abatement far worse than if they had been caught by income tax from the beginning. I refer to those who were unemployed for all that period or for long periods, and they are people at the worst extremity of poverty.
      The Government must answer not only for the unemployment that they have created, but for the level of poverty. By definition, we are talking about those who are affected by both unemployment and poverty. Sometimes journalists point that out, as I represent a tough, North-East constituency with many problems and high unemployment. They ask about the effect of the recession on my constituents. My reply is that I see the effect of the recession in the number of women who break down in tears at my surgery, because they are in despair and at the end of their tether. They do not know how to meet the financial problems facing their families. In the North-East it is often the woman who has to pick up the pieces, sort out the rent, and so on. She has to bear the burden, and she cannot make ends meet. The husband may be unemployed or on short-time working.
      On the whole, I hope that no partisan points will be made in the debate. The urgency and depth of our concern should be expressed by both sides of the Committee so that the Government understand it. I hope that the Government will accept the amendment.
      Mr. Charles Morrison: At the moment, at least, I am bemused by the Government's attitude. Two general principles are involved.
      First, I support the principle that income regardless of its source should be taxed if it is above the tax threshold. If that means that people are taxed as a result of the receipt of benefits, so be it. It is simply a matter of equity of treatment.
      Secondly, we should always—as the Conservative Party has always done—treat the unemployed as generously as possible. That principle is even more

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      important when many people are unemployed not through any fault of their own or through idleness, but simply as a result of a world recession and of a very swift change in industry. Therefore, the question of a work deterrent is not involved.
      Unfortunately, it is only too clear that the Government are in breach of my second principle. It is always possible that circumstances will override any principle or consideration, but I can see no overriding circumstances relating to unemployment benefit. First, the Government believe that they will receive about £650 million from the taxation of benefits, whereas the amendment would cost only about £60 million. Secondly, the estimate of the revenue from the taxation of benefits has been vastly increased. Thirdly, as my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour) pointed out, the public sector borrowing requirement is about £2 billion less than originally estimated. Fourthly, not to put it too strongly, it was at least implied that the 5 per cent. abatement would be temporary.
      The needs of the long-term unemployed are as great as, or greater than, those of anyone else. The best solution would be the provision of jobs, but there are not likely to be jobs for many in the near future, and there will probably never be jobs for a great number of our people. Therefore, we must treat the unemployed as generously as we can and as generously as the Conservative Party has always done. Regrettably, the Government's proposal is far from generous. It comes much nearer to being mean. I hope that the Minister will disabuse me of that. If not, I shall support the amendment.
      5.15 pm
      Mr. Andrew F. Bennett: It is a reflection of the problems of the Committee that all those who have spoken are in favour of the amendment and that most of those who are against it have not bothered to listen to the debate. No doubt the Minister will explain why the Government cannot concede the amendment, but I suspect that with the exception of the Minister those who speak will be in favour of it.
      The hon. Member for Chippenham (Mr. Needham) complained that the Opposition had tabled the amendment on an inconvenient day. No doubt we could have chosen a better day, but the moral for the Committee is that we must return to the issue on every possible occasion until the Government accept the views put forward in the Committee, and not the silent views of those who do not want to come to the Chamber to explain their point of view. If we cannot persuade the Government to concede on this occasion, I hope that we shall find other opportunities to return to the issue during the passage of the Bill and, if necessary, on Report.
      Mr. Needham: I understood the hon. Member for Edinburgh, Central (Mr. Cook) to say that this was the last chance that the Committee and House would have to return to the subject before July.
      Mr. Cook: Perhaps I can put the record straight. I never said any such thing. Indeed, I am sorry if I conveyed that impression. When the hon. Member for Chippenham (Mr. Needham) examines Hansard tomorrow, I do not think that he will find any ground for his belief. We are
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      likely to return to this matter on Report, just as we considered the matter in Committee and on Report during the consideration of the Finance Bill 1981.
      Mr. Bennett: I thank my hon. Friend for that intervention.
      If we cannot get the concession from the Government now, I hope that we shall keep returning to the issue. If the Government wish to make administration simple and straightforward, the sooner they concede the point the better. It would be also be better for the time of the House if the Government conceded the point now, instead of at the end of five or six debates when more and more Conservative Members have—I hope—joined us and pressed the Government to take action. So far, the case has been made out fairly clearly. There is no financial difficulty for the Government if they concede the point. As a result of taxing the benefit they will receive far more money than is necessary to make such a concession.
      I hope that the Minister will explain how an unemployed married man with two children can manage his present weekly budget. If the hon. Gentleman set out the average figure that the married man with two children receives from unemployment and child benefit and the average levels of expenditure, he would convince himself about the need to do something.
      What I find most distressing and disturbing is the fact that, time after time, as I discuss my constituents' money problems, I know that I could not manage on that amount of money. The Minister should set out to the Committee the amount that must be spent on each item, such as housing, food, children—ensuring that they go to school and receive at least some of the things for which other children must pay—clothing and, most of all, a small amount that can be set aside for emergencies. It distresses most of my constituents with children that an unexpected problem may crop up and they have no spare resources to deal with it. The Minister should set out those figures and then tell the Committee why he cannot return the £1·75.
      The Minister must also consider carefully the problems facing the unemployed aged over 55, who will run into increasing difficulties. He should consider the group that will lose £1·10 and the first few months of their period of benefit. Married men in that group may have got over bringing up children or, if single, may have got over some of the early expenses of life. They are at the point when they would hope to start to save for their old age. But because they are unemployed they cannot save, either by putting money in the bank or by acquiring capital goods that will see them well into old age.
      Not only can they not save for their old age but they find that the pension system works against them. Although they can continue to get credits to the basic State pension, they cannot make any contributions to the new earnings-related pension. Not only will they live on a reduced income up to retirement age but, when they reach retirement age, they will be stuck with the State pension, with little added to it from the new earnings-related pension. However, those who are fortunate enough to be working until retirement not only have the extra money to be able to save for their old age but can get far more credits for the earnings-related pension, which means that they will enjoy an enhanced income when they become pensioners. That is another group that would greatly benefit if the £1·75 was returned to it.

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      How far has the Minister considered the interaction between the taxation of employment benefit and the entitlement to supplementary benefit? My impression is that once unemployment benefits are taxed some people will become eligible for supplementary benefit. If that is so, much administration will be involved. I am not clear about the relationship between taxation and the entitlement to supplementary benefit and I hope that the Minister will give us more information on it.
      An assumption that is made by many people, both in the House and outside, is that they can fairly readily bridge shortages of money from one week to another, one month to another or even one year to another because they have a bank account or they can use plastic money—the credit card. That means that they need not worry as much about their weekly income. They can consider their income in global terms and can get over any temporary embarrassment by borrowing money from the bank or from elsewhere.
      I wish to remind the Minister that for many people—many of whom will become unemployed—there is no scope or only limited scope for them to stretch their income from one week to another. What is essential to them is the amount of cash that they have in their pockets, and they must spend that cash. It does not matter to them that they may be entitled to a tax refund at the end of the year. They cannot persuade a bank manager to lend them money because they do not have a bank account. They will find it difficult to persuade a local money lender that he should lend them money on the strength of the fact that they may obtain a tax refund at the end of the year. For them, the essential thing is money in their pockets.
      It is worth remembering that the supplementary benefits system was based on weekly sums of money. The tax system is based on a yearly income. We should not assume that one can transfer from working out money on a weekly basis to working it out annually unless we take into account the ability to spread one's income over that period. It is difficult for many of those who were used to a weekly wage and who must live on weekly benefits to spread their income over a longer period. The Minister should take that into account, especially because the Government are reducing the areas where people with financial difficulties can borrow.
      At the moment, the vast majority of people on low incomes who must live on benefits borrow from three sources—they delay paying their gas bills, or electricity bills or the rent. One may not be happy about that, but those on low incomes can borrow from the gas board, the electricity board and the housing department. As a result of the new Social Security and Housing Benefits Bill, the ability of individuals to delay paying their rent by a fortnight or three weeks will be removed. If they receive supplementary benefit, their rent will be paid direct. If they receive rent and rate rebates, the money will be paid direct. That reduces one area in which those who receive benefits have some flexibility.
      Not only must the Minister return to the family man the £1·75 which will be lost as a result of bringing unemployment benefit into tax, but he should examine ways of increasing the flexibility of those on unemployment benefit to take into account the fact that he is now removing their ability to borrow from the housing department. He is narrowing down the choices and making it a little harder for someone to bridge the gap between the
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      week when he has no money and the future, when he may well receive a tax refund. That will not pay the current bills.
      The Minister must also consider the difficult period between the introduction of the taxation of benefits in July and the coming into effect of the Social Security and Housing Benefits Bill in November and next April. It is difficult to tell an unemployed constituent whether it is better for him to ask for a rent and rate rebate plus the unemployment benefit, or whether he should ask for social security plus unemployment benefit. The purpose of the Government's combined benefit is to simplify that, but anyone who has followed the matter in Committee will realise that it is not simplified very much. As I understand the measure, unemployment benefit will be taxed. If one receives unemployment benefit, one is eligible for extra supplementary benefit, which will also be taxed. If, however, one is persuaded to ask not for supplementary benefit but for a rent and rate rebate, the rebate will not be taxed. Perhaps the Minister can tell me whether that is correct.
      More importantly, will the Minister now give me a simple formula so that I can explain to my constituents whether, at least for the next nine months, they should ask for supplementary benefit in addition to unemployment benefit or for a rent and rate rebate? In which situation will they be better off? I suspect that the Minister will say "Well, it all depends." I am sure that it all depends on the individual amounts of money involved, but I want a simple formula so that I can give people the right advice. That problem adds a further complication to what is already an extremely complicated situation.
      5.30 pm
      Mr. Peter Bottomley: I appreciate the point that the hon. Gentleman is making. I am as interested in the answer as he is. Does the restoration of the 5 per cent. deal with the problem to which he has referred?
      Mr. Bennett: The alternative to putting back the 5 per cent. is to put off introducing the taxation. Therefore, those two arguments should be put forward. If the Government cannot restore the 5 per cent. now, they should put off the introduction of taxation. The arguments that I have put forward are valid. If the taxation is put off until the new housing benefit is introduced, the Government will avoid the problem. I hope that the Minister will give us a little more information.
      I want the Minister to give us an assurance about how the measure will operate. I understand that the individual who comes out of work will have to take a P45 from his last employer to the benefit office. I have come across many people who find it difficult to get hold of that information straight away. In some instances firms go out of business, the liquidator comes in and there are all sorts of reasons why the information is not provided.
      What will happen if the P45 is not produced with regard to unemployment benefit and supplementary benefit, if necessary, being paid the week that they are due? Many of my constituents are concerned not that they receive the money some time but that they receive it when they need it to pay their bills. I hope that the Minister will assure us that, if the measure is introduced in July this year. it will be introduced in such a way that people receive the benefit

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      when they need it and not three, four or five weeks afterwards when they are already in hopeless financial difficulties.
      There is a strong case for the Government conceding the principle that they must give back what they took, otherwise most people will feel that the Government have behaved dishonestly. Not only do I believe that the Government must restore the 5 per cent. but I believe that they must convince the House that they have a practical scheme that will work for my constituents and for all the people so that they receive the money when they need it and not many weeks afterwards.
      Mr. Peter Bottomley: I am delighted that we have the chance to debate this issue because the Committee realises that the decision, if the Committee is to have the opportunity to take a decision that forces the Government's hand, does not come today.
      Mr. D. N. Campbell-Savours: The hon. Gentleman will recall that he expressed that view last time the matter was raised. On that occasion he said that he would not vote with the Opposition.
      Mr. Bottomley: I shall leave the record to deal with the hon. Gentleman's intervention. I intend to vote the way I voted last time. It would probably be more useful if people concentrated on what I was saying rather than——
      Mr. Campbell-Savours: I withdraw my point unreservedly. I was referring to another debate. I apologise.
      Mr. Bottomley: When the hon. Gentleman finds the other debate, he might tell my Whips about it. They would be delighted to see it. I abstained on that occasion.
      A number of us who feel strongly on the issue have not gone round colleagues saying that they should come along and listen to the arguments and then vote in the way that their judgment suggests. As my hon. Friend the Member for Chippenham (Mr. Needham) said, given the other crisis for the time being, it would not be right for us to go into the highways and byways and bring in as many people as possible. I have appointed myself unofficial Whip of the 5 per cent. group. I have asked people not to come. The Whips have not asked them to come. If they had come, I suspect that their experience would have been the same as that of one or two other hon. Members to whom I have spoken almost by mistake. When they have asked what all this is about and I have explained, they have said "That is crazy."
      I suspect that if, instead of being as admirably briefed as my right hon. and hon. Friends, I had copied my hon. Friend the Member for Essex, South-East (Sir. H. Braine), who spoke for four hours so that people started wondering about their tea and supper, more people would have listened to the issues and the Government's promised review would have been accelerated so that, by the time the Minister of State came to the end of his speech, they would have decided to put off taxation until the 5 per cent. was restored. It is a delight to have this debate as part of a Treasury debate, although I regret that my hon. Friend the Minister of State is having to reply because—
      Mr. Needham: So does he.
      Mr. Bottomley: Neither of the Ministers on the Front Bench, if left to themselves instead of taking the Queen's shilling, would decide that this is the best way of saving £60 million. It is probably right to say that the deal was done before either had their present posts.
      What interests me is that, if one goes back to the history of the matter, it is clear that it is the result of horse-trading between the DHSS and the Treasury. The problem is that there has not been ministerial intervention to undo the deal that was done about two years ago. If my right hon. Friend and hon. Friends wrote as many diaries as members of the Opposition when they were in power, in 18 months' time we could look forward to discovering how the deal had been put together.
      I prefer to do without memoirs and to make the Government recognise that by the Report stage of the Finance Bill they should have decided that they will put off taxation. That brings me to a question that the Treasury can take as its responsibility to answer today, if that is possible. What will happen if the amendment is not passed today, but is passed on Report? I shall vote for it. When is the Report stage expected to come? If it comes on or about the time when taxation is applied to unemployment benefit, what "wet weather" procedures are the Government keeping ready for that eventuality? I suspect that, by the time we reach Report, the Government will have succumbed to total persuasion or will at least have changed their minds and will put off taxation of unemployment benefit.
      In an answer to me, my hon. Friend the Under-Secretary of State for Health and Social Security said that it was not possible to restore the 5 per cent. on the benefit this year. That may be right. If that is so, the only way we can do what is right is by putting off the taxation, as the amendment suggests. I hope that the combined ingenuity of Conservative and Opposition Members will find a way in which the issue can be raised again.
      Dr. Brian Mawhinney: Is my hon. Friend elliptically suggesting that it might be better if a decision were not taken in any form until Report?
      Mr. Bottomley: My hon. Friend tempts me to anticipate the peroration that I was saving up for a few minutes' or a few hours' time, so I may repeat myself later. It would be sensible for the hon. Members whose names are on the amendment to withdraw it at the end of the debate so that we have a clearer opportunity of having a full debate attended by many hon. Members on Report and so that the Goverment's mind can be concentrated between now and then, rather than thinking that they would have the same sort of victory as on 18 March. At that time those of us who knew a great deal beforehand and those of us who listened to the debate were convinced about what was right or wrong in the issue.
      I hope that between now and the end of the debate there will be discussions among Opposition Front Bench speakers on the amendment. I am sure that it would be for the convenience of the Committee and, when Report stage comes, for the convenience of the House, for us to have a better opportunity of applying what I gently described as total persuasion to the Government. However, before my hon. Friend the Member for Peterborough (Dr. Mawhinney) drew me down that line, I was about to say something that I have wanted to say here for some time.
      I want to talk about the kinds of issues on which I believe it is right to vote against one's party. The first is

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      on grounds of fairness. That arises on issues such as immigration rules and the distinction made there between males and females. That is an instance in which I believe that fairness overrides one's basic underlying loyalty to colleagues and the Government.
      The second relates to issues of judgment, such as on the question of raising child benefit, where it is my judgment that a substantial increase in child benefit would be associated with a reduction in the levels of pay increases, and with greater fairness to parents when they have families.
      5.45 pm
      The third issue is where a question of principle arises, as with the 5 per cent. abatement. This is not like the debate on 18 March, when we were discussing whether the Government commitment was absolute or conditional, or whether it changed at various stages of the previous debate. It is, as my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour) said, a question of whether what we are doing is wrong. It is quite clear that on this issue what we are doing is right. I do not think that has been challenged in any of the arguments put forward by Ministers.
      It can be argued that it is a de minimis issue if we are talking about 6 million people who may be unemployed during the year, and where the cost of restoring the 5 per cent. abatement is £60 million. We are probably talking of about £10 per person unemployed during the year. I take the point of the hon. Member for Stockport, North (Mr. Bennett) that many of those people are the ones to whom every penny counts, but it is the principle of taking the money from them that matters, rather than the sum itself.
      It can be argued that the £600 million that is being taken by taxation, which I support, is a far larger sum, and that, if we are talking about the available resources to unemployed families, it is a greater imposition to put on the taxation. I do not follow that line of argument because, in the way that taxation usually works, the money comes from those with a tax-paying capacity.
      Mr. Needham: Will my hon. Friend agree that it is an abatement not only on unemployment benefit but on short-term supplementary benefit, and that it is affecting the long-term unemployed and not merely those who are on or off the register?
      Mr. Bottomley: I appreciate my hon. Friend's contribution.
      I should like to have seen the sort of advice that Ministers have been getting as the debate has continued. If I were an official with as great a knowledge as some officials may have on these issues, I suspect that, each time an hon. Member on either side put forward a point, one would be thinking of passing a note to the Minister saying "Got us again, boss—can't answer that point". The objection might be on the ground of cost, except for the fact that the Government do not defend their position so much now on the ground of cost. If it were a PSBR argument, that has been dealt with by my right hon. Friend the Member for Chesham and Amersham, who is a great expert on that subject.
      Incidentally, if it is possible to give advice to those members of the press who may be commenting on the question, the position is not that those who may not vote for the Government are part of the "Gilmour gang", because it is not simply a Left-wing Tory issue. It is far
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      broader than that. I have several respectable Right-wing friends who support monetarism perhaps even more strongly than I do, and who, when they have looked at the issues here, have said "We had better go out of the Chamber, otherwise we might be convinced by the argument". I have had great hopes in regard to my hon. Friend the Member for Croydon, South (Sir W. Clark), who has been present for most of the debate. If I had not done a deal with the Whips, I would almost be inviting him to join me later on.
      The question of fairness was dealt with adequately on 18 March by the Minister for Social Security. All that is left is machismo. Are the Government stuck on trying to defend a decision which, as I have speculated, arose out of the usual horse-trading between the Treasury and the DHSS? It is not necessary for the Government—especially after the good news today about South Georgia—to feel that they have to maintain their prestige and status in front of their own parliamentary troops by defending the argument that £60 million matters so much, especially as the £60 million is a full-year cost and is divided between the PSBR and the national insurance fund. If £30 million of the cost is borne on the national insurance fund, it does not appear at all on the PSBR. It is taken into account by the Government Actuary when he makes decisions on what contributions to national insurance should be by employer and employee.
      It is the Government who link the issues of the 5 per cent. abatement and taxation. It is up to the House to do what the Government would, I am sure, like it to do, and to say "We shall keep them linked and delay the taxation until the 5 per cent. has been put back". The Government have promised us a review. They have also said that, even if the result of the review were to be favourable to those who have lost their 5 per cent., the Government cannot put it back this year. There may be an answer to that and it may be in the Ministers' hands very shortly. The Committee looks forward to sharing in it.
      I was one of the co-authors of the Bow Group pamphlet "The Unkindest Cut", which talked of the possibility of the Government being allowed by the House of Commons to cheat—if one may use the word in this Chamber—those who have suffered the 5 per cent. shortfall. I have described it as the unkindest cut, and if the Committee allow it to continue I think it will be a failing in its duty. What we can do is to follow the line of my hon. Friend the Member for Grantham (Mr. Hogg). Incidentally, I advised my hon. Friend that I might be quoting from him. I have in mind what Mr. Speaker said earlier today about one hon. Member quoting another.
      The quotation given from my hon. Friend's speech by the hon. Member for Edinburgh, Central (Mr. Cook) was the one quotation which makes it absolutely plain that all nine Back Bench Conservative speakers in the debate on 18 March—even though one of them could not bring himself to join the rest of us in the Lobby—believed that what the Government decided on 18 March was not what ought to be decided on 26 April. Certainly the position needs to be reversed by the time we reach Report stage. I shall charitably pass over the rest of the speech made by my hon. Friend. I look forward to hearing today that he has been fully converted.
      I should like now to change slightly the approach to the issue. The Sub-Committee of the Select Committee on the Treasury and Civil Service is looking into questions of incentives and I am sure that we all look forward to reading

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      the report of its considerations. What I fear is that the Committee and the Government will not take properly into account the way in which we should look at benefits, at taxations and at incomes. It is not just a question of incentive to work; it should be a life-cycle approach.
      I am associated with a body called Family Forum, which brings together a large number of national and local voluntary organisations and is trying to put forward the concept of analysing what sort of incomes people get—whether they are earned incomes or benefit incomes—over a life-cycle. Only in that way can one get a recognition that the person who is receiving unemployment benefit today is the person who was contributing a short time ago and hopes to contribute again in the future; that the families who will be getting child benefit in 20 years' time are those who are probably enjoying a higher income at the moment and ought to be willing to pay more in order to get more later on.
      The people who are born today will have periods when they are unable to work, because they are below the working age or because they are sick or unemployed. Rather than promoting a battle between those in work and those out of work, those who are sick and those who are healthy and those with family dependants and those without, we should try to consider the results of the Treasury and DHSS proposals and the decisions taken by the House. We should put all those together and ask what is fair, right and appropriate. People have different income levels, family circumstances and so on and bringing the family life-cycle into account will help even on the smaller subject that we are discussing.
      Perhaps I have said enough for today. I shall keep the rest of my speech for the Report stage when, as I said earlier, we shall have a greater chance to make sure that the Government are persuaded by their own common sense and compassion and by their own principles and sense of fairness, especially as put forward by most of their supporters who have been in the Chamber today.
      Mr. Jim Craigen: I do not wish to undermine what was said by the hon. Member for Woolwich, West (Mr. Bottomley), but I do not entirely share his confidence that those who win the argument in the Committee necessarily win the battle.
      It is appropriate that the amendment has been tabled for discussion, even if it is overshadowed by wider international problems. My hon. Friend the Member for Edinburgh, Central (Mr. Cook) was right to raise the problem of the 5 per cent. abatement and the need for the Government to restore it.
      One astonishing aspect of the debate is the all-party support for the amendment. One or two of the hard-nosed Tories who insist on introducing such legislation should be here to defend their attitude. Once again we have the iniquity of an underprivileged section of the community being penalised. The Chancellor of the Exchequer appears to be acting like the Sheriff of Nottingham—he wants to take from the poor and give to the rich. My hon. Friend the Member for Edinburgh, Central categorised a number of measures that would easily add up to £60 million.
      There is no way that we can budge the present level of unemployment in most parts of the country. What has not been made clear in the debate so far is that the 3 million unemployed are not spread equally over the country. There
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      are parts of the country where high unemployment is a fact of life that will persist for the next three to five years. A growing percentage of unemployed will be out of work for a long time. There will be 1 million long-term unemployed before the year is out. That is why we should be pressing now for a restoration of the abatement.
      Unemployment is, moreover, hitting many more sections of the community than hitherto. Many professional people who thought they would never be affected by unemployment are now out of work—architects, teachers and doctors. Unemployment is no longer affecting only the manual and skilled workers who, in the past, have been all too accustomed to periods of unemployment. I hope that the Government will consider the position afresh and take into account the tremendous all-party support for the amendment.
      The hon. Member for Chippenham (Mr. Needham) raised a pertinent point in referring to one of the reasons that he thought might be in the minds of his hard-nosed colleagues who are not present today—the differential between those who are unemployed and those who are in low-paid jobs. The Chancellor is taking care of that differential, because the increases in employees' national insurance are reducing the extent to which take-home pay becomes a factor.
      The Chancellor of the Exchequer's suggestion in the Budget that he would help to set up a number of schemes whereby unemployed people could do voluntary work without its affecting their supplementary benefit shows that even he accepts that the unemployed want to do something. Incidentally, the Chancellor is prepared to pay out £8 million or £9 million to administer that scheme, so I do not know why the Government should not concede the point made in the amendment.
      Given the battery of legislation passed against the unemployed over the past 12 or 24 months, including the disappearance of earnings-related benefit and other measures to make life more difficult for the unemployed, I hope that the Committee will approve the amendment.
      Mr. Chris Patten: We have been here before, as several right hon. and hon. Gentlemen have pointed out. We circumnavigated the question on the Report stage of the Social Security and Housing Benefits Bill. On that occasion those of us who disagree with the Government on this issue won the argument.
      There was no dispute about that, as the hon. Member for Birkenhead (Mr. Field) said at the time and as the hon. Member for Edinburgh, Central (Mr. Cook) said this afternoon. The speech of my hon. Friend the Member for Grantham (Mr. Hogg) also made the point on that occasion. We are not now sure of the intention of the speech of my hon. Friend, but we know that the result was to demonstrate, beyond, as my hon. Friend might say, peradventure, that the Government do not have a leg to stand on and that there is nothing to be said for the Government's case. I am sorry that my hon. Friend has chosen not to be here today. He could have made the point for us better than we are able to do ourselves.
      The arguments today are virtually identical to those used on the last occasion that we discussed this issue. The only difference is the cast on the two Front Benches.
      Mr. Kenneth Lewis: I am glad that my hon.Friend has drawn attention to the cast. I do not know whether it is any better looking than on the

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      previous occasion. I felt that the Minister who wound up the debate last time was convinced by the arguments. At the end of the debate he said that the Government intended to do something and that they would not take too long about it. I hope that the present cast on the Government Front Bench will improve on that and will tell us that they will do something about the position in the Finance Bill.
      Mr. Patten: I have so much respect for my hon. Friend the Member for Brentford and Isleworth (Mr. Hayhoe), who is to reply to the debate, that I assume that what my hon. Friend the Member for Rutland and Stamford (Mr. Lewis) just said is probably the case. Ministers have to do some pretty rum things from time to time and it is probably my hon. Friend's turn this evening. If he is putting the case for the Government, at least it should not take him long. As my hon. Friend would be the first to admit in other circumstances, the Government do not have a case. That is why they cannot produce even one supporter from the Government Back Benches to put the case for them today.
      I am sorry that it is my hon. Friend the Minister of State who will put the Government's case. I do not wish to blight his career, but I cannot imagine that he has his heart or his head in what he may have to say. He comes from an honourable tradition in the Conservative Party, though it may not he too popular at the moment, represented by Rab Butler and lain Macleod. It is difficult to imagine them putting the case for what the Government are trying to do.
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      As my hon. Friend the Member for Chippenham (Mr. Needham) said, this is not the best tactical time for the debate, as the Opposition will appreciate. However, as long as the Government take their present view, I wish to win the battle. I am sorry that the Opposition's lack of tactical sense makes it less likely that we shall be able to accomplish that objective, but I must say in fairness to them that they could legitimately point out that if enough Liberal or SDP Members had been here on the previous occasion there would have been no need for this debate. We could have disposed of the matter satisfactorily, particularly to the unemployed, on 18 March.
      There are other reasons why it is not wholly fair to criticise the Opposition's tactical sense. The people who have got us into this pickle and who are imposing intolerable strains on their supporters' loyalty are the Government. We should not forget that the Government have themselves to blame. They have put forward a defence which is, at best, casually inadequate and, at worst, plain shifty.
      If we comb the columns of Hansard for the various remarks of Ministers, we find three main arguments against the Government's proposal. I shall not go through all the quotations again or ask about the meaning of "interim" or "temporary" or "in lieu". The most distinguished of all the quotations that we have ferreted out is that which made it clear that the rationale for the abatement would end when the benefit came into tax. We shall expect to hear from the Minister of State what is the new rationale. We have failed to unearth it so far and we look forward to hearing what it is.
      The second argument, and it is the strongest, is that regardless of what hon. Members have said and whether a commitment on Report is more significant than a commitment on Second Reading—a matter that was taken up by a number of hon. Members, including my hon. Friend the Member for Grantham—the Government are
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      plain wrong. We should not be putting what amounts to a double penalty on the unemployed. The Social Security Advisory Committee stressed that in its letter to my right hon. Friend the Secretary of State for Social Services in the autumn last year and again in its recent report.
      We are applying double taxation to one of the most severely disadvantaged groups in the community. Moreover, it is a group which we all agree is not responsible for the circumstances in which it finds itself. It is the rationale, if I may return to that word, for the Government's economic policies that those who have Lost their jobs are wholly innocent victims of the fight to abate inflation and the attempt to make British industry more competitive.
      The Committee should do all that it can at every opportunity to look after the unemployed as well as the country can afford to look after them. Far from talking about whether we should restore the 5 per cent. cut in unemployment benefit, we should be talking about introducing a long-term unemployment rate. More than 1 million people, including 250,000 aged between 18 and 24, have been out of work for more than a year. We should certainly not be talking about mean little measures to save £60 million at the expense of the unemployed.
      Another argument that may feature in the rationale, which has been absent until now, but will presumably turn up with the drinks trolley later in the evening, is the argument about the cost. My right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour) and my hon. Friend the Member for Chippenham said that the £ 60 million saving is only about one-tenth of what the Government are receiving from the taxation of short-term benefits. Yet we still cannot find it in ourselves to give that money back. It is scandalous that we should behave in that way.
      The position is made even more ludicrous by the public sector borrowing requirement figure for last year. The difference between the estimate and the actual figure was what my right hon. Friend the Leader of the House would describe as something that fell within the historic margin of error. There was a £2 billion difference between what my right hon. and learned Friend the Chancellor of the Exchequer spoke of in his Budget Statement—one might ask in passing whether he based his Budget judgment on a £10½ billion PSBR—and the turnout figure of L8½ billion.
      Some of us who have occasionally mentioned the PSBR in our speeches may believe that the figures confirm our view that the PSBR is not the ideal totem pole for a sensible economic policy. Some may argue that the figures suggest that the Government's fiscal stance last year was more contractionary than may have been desired. Some may argue that the figure demonstrates how we could have done more to help the unemployed, not just this year, but last year, too.
      But even if the figures do not demonstrate any of those views, they surely demonstrate that the Government have far more money than they need to restore the £60 million for the unemployed. The more that I develop the argument, the more I am convinced that my hon. Friend the Minister of State will tell us that the Government have at last seen sense and do not intend to be obstinate for a moment longer.
      I am sure that I have already said more than is good far me, but I wish to make one other point. I hope that I do not sound too sanctimonious, but it is difficult to make the

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      point without sounding a little priggish. The Government have behaved absurdly. Governments often behave absurdly and paint themselves into corners. The Government may think that they will demonstrate a lack of machismo if they admit that they were wrong and "Give 'em the money, Barney".
      There is a more important matter. There is, as I have already suggested, a certain tradition—it is, I think, an honourable and decent tradition—in the Conservative Party. Even though this may not be the ideal moment to vote on the issue and we may have to return to it later in the summer, I think that someone, in the light of that tradition, has to go into the Lobby tonight against the Government, however embarrassing or awkward it may be, to try to encourage the Government to show sense on this issue. I intend to go into the Lobby against the Government unless they change their mind. I hope that I shall be joined by some of my hon. Friends.
      Mr. Peter Bottomley: On a point of order, Miss Boothroyd. During my speech, there was a slight difference between the hon. Member for Workington (Mr. Campbell-Savours) and me. I should like to clear the air. When the Government announced last year that there would be a 2 per cent. shortfall on benefits, I made a speech, but did not vote against the Government because I thought that the matter would be put right in the Budget. I hope that the Government will make it unnecessary to do the same tonight.
      The Chairman (Miss Betty Boothroyd): That is not a point of order for the Chair but the hon. Gentleman did rather well.
      Mr. J. W. Rooker: I have no doubt that the hon. Member for Woolwich, West (Mr. Bottomley) feels better for making those remarks. It is a pleasure to follow the hon. Member for Bath (Mr. Patten). I apologise for missing the first two or three speeches. It is clear from what I have heard both today and also on 18 March, when I was present but mainly silent, that these have been occasions when no-one can accuse us of indulging in yah-boo politics or of opposition for the sake of opposition. This is no longer a debating Chamber when it comes to the matter before us. Everyone speaks with one voice. I have not heard a single speech in favour of the Government or opposed to the amendment. Apart from the wayward path taken by the hon. Member for Grantham (Mr. Hogg), the same happened on 18 March. There were no speeches in favour of the Government's approach except that made by the Minister in winding up the debate.
      The tragedy, as the hon. Member for Bath has reminded the Committee, is that if, on 18 March, all the Members of the minor parties, the SDP, the Liberal Party, the Nationalist parties and the Irish parties, had been present and had voted with the Opposition, the Government would have lost by a majority of two. If one adds up the votes on that day, the total comes nowhere near 635. Labour Members pair only with Tory Members and Tory Members only with Labour Members. We counted ourselves out. It was the minor parties, the Liberals, and the SDP, that let down the unemployed on that occasion.
      I cannot be certain—I have not asked all of them—that if all the hon. Members representing minor parties had been present, they would have voted with the Opposition.
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      I have my doubts about one or two of the Irish Members. The fact remains that the Government's majority of 30 was the smallest in this Parliament that I can recall for a major debate involving a three-line Whip. I would not have put any money on those circumstances arising on an issue related to social security. It did, however, arise on 18 March. Plenty of lobbying is being done. I hope that the stand taken by Conservative Members and the possibility of support from SDP Members and Liberals—their Benches are empty at this moment, but there has been one speech by an SDP Member—will enable us to settle this matter tonight. It would not be resolved in the most convenient form. It would nevertheless be got out of the way.
      My hon. Friend the Member for Edinburgh, Central (Mr. Cook) has given a number of quotations. I do not intend to do the same. But, whatever the words used by the former Secretary of State in Standing Committee at 1.30 am on 30 April 1980—I refer to column 526—the import was clear, regardless of what arguments occurred in Committee, on Report, on Third Reading or outside the House. The Minister for Social Security, winding up the debate on 18 March, actually went further—I do not know whether the hon. Gentleman appreciated this at the time—than any previous Minister on the issue. I do not know whether he actually intended to say
      "We have said that the abatement will not be a permanent reduction."
      A few sentences later, referring to the 5 per cent. abatement, he said,
      "At the right time it will be made good".—[Official Report, 18 March 1982; Vol. 20, c. 536.]
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      That was a much more positive statement than any previously heard from a Minister. There was, however, no means by which hon. Members could check on his remarks when he was winding up a highly contentious debate and being given a rough ride from his own side. There was no way of obtaining clarity or asking the hon. Gentleman if he knew what he had said.
      The time to make up the amount is this year as the benefits are brought into tax. That is the intention of the amendment. It is easy to bandy quotes around. As many hon. Members have made clear, something much more important is at stake than mere words in Hansard expressed in Committee or in the Chamber. It is the credibility of Government measures accepted at the time by the House in good faith. We opposed the 5 per cent. abatement in 1980. Conservative Members accepted what was being done in good faith and in the belief that the 5 per cent. cut in the five separate national insurance contributory benefits in lieu of taxation would be put right as soon as the Government were able to bring the benefits into the PAYE system. Since that time, there has been pressure upon the Government in debate and through parliamentary questions to speed up the matter.
      Of the five benefits that suffered the 5 per cent. cut, unemployment benefit is the first to be caught in the tax net. It is true that sickness benefit will be caught, in effect, from April next year, at the start of the financial year, as a result of measures in the Social Security and Housing Benefits Bill currently in the other place. That is the time, I would suggest, for Conservative Back Benchers to make a stand. No one can criticise Opposition Members too harshly for not making a principled stand on that measure as it progressed through the House. Nor can it be argued

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      that the Opposition have failed to make a principled stand on the 5 per cent. cut in invalidity benefit. That is the cruellest of the cuts. There is an unqualified commitment by the Government to reinstate the 5 per cent. cut when it comes into taxation. There is not a glimmer on the horizon of measures to bring the invalidity pension into taxation. Each week that passes, long-term sick and chronically disabled couples lose about £2. It is cruel beyond belief that there should be no sign from the Government that they intend to put the matter right or to bring the invalidity pension into tax which, for the majority of people, would mean an increase in benefit because the majority will not be taxed.
      Unemployment benefit, as I say, is the first of the five benefits to be caught. It is right that a stand should be made. The matter is complex. The Government have an advantage. The hon. Member for Woolwich, West suggests that hon. Members call it a day and that they do not press the amendment on the grounds that there can be a similar amendment before a full House of Commons on Report when hon. Members can listen to the arguments, weigh up the pros and cons, and vote as free hon. Members. It is beyond belief that the House will be full on that occasion. Today's debate will not raise headlines in the press tomorrow. There were a few headlines after the debate on 18 March, but that was because of a Government Back Bench revolt. But the subject does not generally raise headlines, and in present circumstances is even less likely to do so.
      The same will be true on Report. This subject is not like capital punishment. In the days leading up to that debate hon. Members representing both sides of the argument will be wheeled on to the "Today" programme and the "Jimmy Young Show". The arguments will be built up for the public. The news will be that there is a big occasion down at the House of Commons. When benefits for the unemployed are being debated, there is no hope of a big set piece debate with many hon. Members listening to the arguments. The amendment, therefore, must be pressed because opportunities for such a debate are few and far between. The Opposition and Conservative Members—Conservative Members are free to table amendments such as the Opposition's—must come back again and again on the issue. That is the only way in which the Government will be forced to concede anything on the issue. It is the only way that the public and those who comment on our affairs will grasp that a major injustice is being perpetrated by the Government with the sanction of the House of Commons.
      The tragedy of the issue—I do not see any of my hon. Friends who will leap on me for what I am about to say—is that if this were not a Finance Bill and the argument were to developed in great detail in the Chamber and we lost the Bill could go to the other place where the argument could again be developed in the same detail by noble Lords who are seized of the unfairness and cruelty of it. That is an example where the other place could have righted what we had done wrong.
      I do not suggest that that is an argument for keeping an unelected House of Lords, or for sending the Finance Bill there, but this is the kind of issue that puts the credibility and morality of both the House of Commons and the Government's stand at stake. The Bill is seen by hon. Members on both sides of the House to be grossly unfair and cruel to the disadvantaged members of society.
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      Although, because of the payroll vote and patronage, the House cannot put the matter right, the other place could have done so.
      There are matters, such as school transport, on which I have argued that although the other place might have been wrong to overturn the decision of an elected House of Commons, on those issues it was right. This is another example. Unfortunately, that solution is not available to us.
      The Social Security (No. 2) Bill 1980 was guillotined. The former Secretary of State, in the early days of that Committee before it was guillotined, made remarks that have been quoted often. The guillotine was introduced within two days of the 1980 Budget. As a result, the Bill whistled through the House in about three weeks. Conservative Members were deceived. They believed what their Front Bench told them because of the words that they employed. Giving them the benefit of the doubt, I accept that the majority of Conservative Members did not want to listen to the arguments advanced by myself and my colleagues in Committee as the legislation was highly partisan. There were six clauses that abolished or cut six social security benefits. It was a highly partisan issue. The 5 per cent. was said to be transient and interim. It was easy for Conservative Members to accept the arguments of their Front Bench.
      The chickens have come home to roost. Conservative Members have seen what the Minister said on 18 March, or the implication of what he said prior to the Budget. The matter was not referred to in the Budget. I do not know why. I cannot believe that the Chancellor of the Exchequer forgot to mention it. It was clear, however, to hon. Members who follow these matters that there would be a statement of Government intent before the year in which the benefits came into tax. That means that there should have been a statement before the Budget. There certainly should have been a statement before March or the beginning of the current financial year. No statement was made until one was forced out of the Government by the Opposition new clause on the Social Security Bill on 18 March. We have still got no further.
      The social security and tax systems are highly individualistic. I still receive letters, as I suspect do Conservative Members, asking me to oppose clauses that are now part of the Social Security Act 1980. It is only now, as some of the effects of that measure come fully into force, that people grasp them. One needs only contrast the campaign being waged by the trade union movement against what it regards as an attack on its collective rights in the Employment Bill with the almost complete silence, even from the poverty lobby, about the attack on individual rights by the Social Security Act 1980. That Act cut, curtailed or abolished the benefits received by millions of people. The amendment gives us an opportunity to correct one of those injustices.
      Unfortunately, there is no massive lobby or pressure group for the unemployed and the sick. The matter has been left to small numbers of hon. Members. I except the constant prodding of the Unemployment Alliance, the Child Poverty Action Group and the Low Pay Research Unit. There has been no mass movement. The Minister of State knows that the votes are in the bag. He knows also that if he had to give way he would not be here. The job would be given to a Treasury Minister if there were a good statement or announcement to be made.

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      I shall make one further point which underlines what has been said about the commitment of Ministers towards benefit and the restoration of the 5 per cent. We have now reached the point where, in the near future, certainly at the beginning of the next tax year, sickness benefit, which is one of the five, and industrial injury benefit will be treated likewise. In Standing Committee B on the Social Security and Housing Benefits Bill, while discussing clause 36, I asked the Minister for Social Security about the restoration of the 5 per cent. abatement of sickness and injury benefits. He said:
      "The abatement will be restored as soon as the benefits are brought into taxation. That undertaking is unqualified."—[Official Report, Standing Committee B, 9 February 1982; c. 422.]
      That is the first statement of its kind since the passing of the Social Security (No. 2) Act 1980. The undertaking with regard to sickness and industrial injury benefit is "unqualified". Are those weasel words? Were they just thrown away to shut up my hon. Friends and myself, and to stop us pressing the Minister? Were they intended to sweeten Back Bench Conservatives? It is an unqualified commitment.
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      In two years of debate, that commitment had never before been given, either in the Chamber or in any Committee. If anything needs to be done now or on Report to reinforce Conservative doubters on the subject of unemployment benefit, it is to draw their attention to this further, total commitment in respect of the other benefits. If we lose today, I hope and expect that Conservative Members will confront the Government with the words that I have quoted and the excellent Library research note no. 68 in which, for the first time, the Library has produced a blow-by-blow account to inform hon. Members and people outside exactly what happened and all the arguments that were used in the Standing Committee on the Social Security and Housing Benefits Bill.
      I hope that Conservative Members will take all that to the Minister of State, the Secretary of State and Chancellor, because they must know whether that commitment means anything. That should then dictate what happens to this Bill. If that commitment is not backed up, I expect Conservative Members who have appointed themselves unofficial Whips on this matter to bring 50 or 60 of their hon. Friends into the Lobby with us on Report. That is what I expect to happen if we fail today. Anything less would be a cruel deception of the unemployed, the sick and the industrially injured, and the House and the country should know that. Moreover, I expect the same of the SDP and Liberal Members who were missing on 18 March.
      There is enough on record about the credibility of Government and the morality of the House to ensure that what happens on Report will be absolutely clear. We are here to do one thing—to be honest and to speak for our constituents. We speak and act for the underprivileged who have no pressure groups to do this for them. Because of the nature of the system, only elected Members of Parliament can defend people who are unjustly treated by the income tax and social security systems. Anything less would be unworthy of the House of Commons.
      Mr. Geoffrey Lofthouse: I had not intended to take part in the debate, but, having listened to it, I wish to contribute, albeit briefly. My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) said that this was not a big House of Commons occasion and that it would not receive much press coverage. To me, it is indeed a big House of Commons occasion. The standard of living of millions of men and women is being reduced by £1·75 per week for married couples and £1·10 per week for single people. If that is not a matter for great concern, I do not know what is. If Conservative Members are to retain any credibility, there should be no possibility of the amendment being defeated.
      I shall not quote past references at length, but it is right and proper to test whether the Government have any credibility or whether they could be accused of cheating. In the Standing Committee on the Social Security (No. 2) Bill, the then Secretary of State for Social Services, the right hon. Member for Wanstead and Woodford (Mr. Jenkin), said:
      "as the unemployment benefit comes into tax so the rationale for the 5 per cent. abatement ends. It is an interim scheme in lieu of taxation. One will give way to the other."—[Official Report, Standing Committee B, 30 April 1980; c. 526.]
      During the passage of the Finance Bill 1981, the then Financial Secretary, the right hon. Member for Blaby (Mr. Lawson), said that a decision whether or not to make good the abatement in 1982 would be made in the course of the public expenditure review. The right hon. Gentleman then said:
      "The results of those discussions will be put before the House and the country well before April 1982".—[Official Report, 11 May 1981; Vol. 4, c. 514.]
      The Chancellor remained silent on the matter in his Budget speech. When challenged in the debate on the Social Security and Housing Benefits Bill, however, the Minister for Social Security stated
      "We have said that the abatement will not be a permanent reduction. It is equally clear that the abatement cannot be made good now, but it will be made good. My right hon. Friends have the matter under review."—[Official Report, 18 March 1982; Vol. 20, c.536.]
      If those statements were honestly intended, and if the Government are to retain credibility, there should be no doubt whatever about the decision on the amendment today.
      In situations such as this, the function of the House of Commons becomes a myth. If debate means anything, it must mean the attempt to influence the way in which hon. Members vote. I have not heard one Conservative Member speak in favour of the Government in the past week's debates on this matter. That being so, the Conservative and, indeed, the Liberal and SDP Benches should have been full today if, as they constantly suggest, hon. Members had any real concern for the unemployed who are to suffer a reduction in their standard of living.
      Very shortly, hon. Members will be trooping through the Lobby to vote against the amendment without having heard one word of the argument for it. I know that is a pattern of our procedure, but today hon. Members will be voting against an amendment to help millions of unemployed people who have no voice, no muscle and no body to protect and defend them. I respectfully put it to Conservative Members that, after all the statements and near promises made by the Government, those who vote against the amendment will be cheating the unemployed. I hope that the unemployed will realise that the crocodile

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      tears shed by hon. Members in various parts of the Committee about their plight mean nothng to those who troop through the Lobby to vote against the amendment.
      My hon. Friend the Member for Perry Barr said that this is probably not the best time to press the amendment in a Division, but I believe that it is, because I have no confidence whatever that the Government will put the matter right in future.
      Mr.Campbell-Savours: There are occasions when hon. Members feel angry about and disturbed by the Government's decisions. The Opposition have sought not to claim a monopoly on that feeling. Anxiety over this issue has been expressed from both sides of the Committee. I should not like my hon. Friends or, indeed, other hon. Members to feel that Labour Members are alone on this issue, because a few Conservative Members—12 or perhaps 15—have expressed support for us today. However, there are at least 280 who will blindly go into the Lobby to support the Government on what many of us feel to be a grave injustice for a particular group in society.
      I can only compare my sense of anger with the feeling that one has when reading newspaper articles about vivisection or interference with children. Such matters make one seethe with anger. Perhaps I am being unfairly melodramatic, but I am trying to express the view that many hon. Members must feel about this issue.
      We are seeing an injustice today. It may be that tactically we cannot win our case today, but we must pursue it on behalf of those who demand that the Government respond to their anxieties.
      The right hon. Member for Chesham and Amersham (Sir I. Gilmour) and the hon. Members for Bath (Mr. Patten) and Chippenham (Mr. Needham) said that the Government's public sector borrowing target should be more flexible and that, in view of the shortfall of £2 billion on last year's Budget Statement, the money was available. If the Government are unwilling to accept that that £2 billion can be included in the argument on flexibility, they would do well to consider other ways of adjusting their budgetary, measures so that the £60 million to which we refer can be made available.
      In Committee and on Report my right hon. and hon. Friends will table amendments on capital transfer tax and capital gains tax. Conservative Members would do well to consider the implications of such amendments. I am not asking them to compromise themselves politically, but if they really feel the passion that they have expressed in their speeches, they should take the opportunity to show that they believe that within the Exchequer money which is being given to the better off in society could be made available to the group covered by the amendment.
      As unemployment increases, the income of the unemployed in particular communities becomes more important. When unemployment is well spread in a community, a sense of interdependence is developed. One family will help another. However, in areas of heavy concentrations of unemployment the ability to be interdependent is reduced as fewer resources are available. The amendment would help to relieve anxieties in areas where heavy pockets of unemployment exist. We all have such areas in our constituencies.
      6.45 pm
      We should also consider the escalating problem of unemployment. An interesting updating of the views of the Cambridge Economic Policy Group was published in The
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      Guardian today. Hon. Members on both sides of the Committee will have read of its forecasts for the coming years. The Cambridge Economic Policy Group does not confine itself to short-term forecasting. It is more inclined to consider the long-term implications of Government policy. According to its predictions, which have been particularly accurate over the years, the Prime Minister's strategy may lead to as many as 4½ million being unemployed by 1985. Even if we were to pursue the conventional reflation that has been proposed by the Social Democratic and Liberal Parties, in 1985 we would still have more unemployed than we have today. The Cambridge Economic Policy Group suggests that the Labour Party's package, which is not limited by an incomes policy, would still leave 1¾ million people unemployed in 1985. Many of us believe that there will be some form of agreement on incomes and that that figure will be substantially less. My argument is that those are significant figures of unemployment and that therefore there will be no prospect of work for many of those who now languish in unemployment.
      There is a duty on the Government to consider their whole attitude to the income funding of those who and themselves in such circumstances. As the hon. Member for Bath so aptly said, it is grossly unfair for the Government to set out an economic strategy that they believe, even if I do not, will have the effect of reducing inflation and producing a more buoyant economy and, in turn, providing more jobs—that is all part of an ideological prescription—and, as part of that prescription, to impose on those who are required to take the medicine an unfair rate of pay, because that is what it is. They are being paid to remove themselves from employment to secure what the Government believe to be a more secure strategy for the future.
      Some weeks ago, the Select Committee on the Treasury and Civil Service produced statistics on unemployment. It stated that the assumed rate of growth over four years of a cyclical upswing was insufficient to reduce unemployment significantly and was clearly disturbing as it suggested a trend of increasing unemployment over the cycle as a whole. That all-party Committee has unanimously supported the view that unemployment is here to stay. If so, it must be for the Government to respond and to relieve the conditions in which the unemployed find themselves.
      Very few of us have experienced unemployment. Some Labour Members may have done so, but I cannot imagine what it is like. I can talk only in general terms about the impact on the family. Few Members can appreciate fully the problems of unemployment. It would be wrong for the Government and for hon. Members not to respond to this condition merely because they have not experienced it. There is a duty on every Member to recognise his responsibilities as they affect those to whom I have referred. We find it difficult to understand the despair in families where there is unemployment.
      In the past, families in my constituency and in other constituencies have had two income earners, two heads of family. The wife has possibly worked on a production line in a factory, and the husband has been a skilled worker. The incomes of those families have been cut by the Government's experiment with monetarist economics. There is now great indignity. When the Minister of State replies, he will do well to address himself to the experiences of families that suffer unemployment. I hope

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      that he will make every effort to express the Government's view, or what I hope to be their view, and will acknowledge that they are concerned. If the amendment fails to win the support of the Committee when the Division takes place, this will not be the end of the argument.
      The Government have been unwilling to face their responsibilities in the funding of unemployment pay. As they have found themselves unable to cope with the problems in the economy, they have allowed themselves to be led down the path of penalising those in society who are least able to defend their own interests and to fend for themselves. As a result, they have secured a route for reinforcing their monetarist strategy that is based on damaging the interests of the unemployed by reducing the amount of money that they have available to fund their everyday needs. They are pursuing a policy on the cheap in the sense of support for the unemployed.
      I do not intend to rehearse all the views that were expressed when we debated supplementary benefit about two years ago, or the statements that have been made by Treasury Ministers on this issue over the years. However, it is significant that the Bow Group, in a recent Budget submission, argued that the abatement should be made good
      "on the grounds of fairness towards those in most need and political self-interest."
      I am told that, additionally, it made a plea that the Conservative Party
      "should not be seen to cheat."
      That is fairly aggressive and emotive language.
      I have read some of the literature that circulates within and outside the Conservative Party—for example, the "Conservative Case" by Quintin Hogg, as he then was, which was written shortly after the war. Its purpose was to try to establish in the mind of the reader that the Tory Party's role was to redress imbalances and what it believed to be the excesses of the great reformers. It does not seem to see itself in the ideological role that the Prime Minister has managed to adopt under this Government. Indeed, it could be said that historically there is a need for Conservative Governments at certain times. However, their purpose is to redress only what they regard as excesses in reform that have been introduced by other Governments and not to make draconian changes. It has never been suggested that a Conservative Government should be elected to pursue ideological objectives that will greatly damage the interests of the British people and, in so doing, divide the nation.
      The issue that we are debating must be seen against the background of the measures that have been introduced over the past three years relating to capital transfer tax and capital gains tax. In the Budget major concessions are made yet again to the better off in society. At the same time, the Government refuse to deal with the problem of unemployment and the abatement issue. This serves to reinforce the divisions that exist between the two nations—those who are exceptionally well off and those who are exceptionally poor.
      I implore the Minister of State to impress upon his right hon. and hon. Friends in the Treasury and on his officials who make recommendations to the Government that we can no longer put up with the present approach. People are suffering in a way that no one can in justice defend. The
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      Government are under an obligation to redress the imbalance which has grown as a result of the monstrous decision that was taken about two years ago.
      Mr. Michael Welsh: In November 1980 the 5 per cent. abatement issue was the subject of a great deal of argument. It was generally agreed that the abatement would be corrected when unemployment pay was taxed, which is to happen in July. It was understood that an unemployed married couple would receive a £1·75p increase when taxation took place. It now appears that may not happen.
      I have told my constituents about the proposed increase on a number of occasions. I have explained that the correction would take place on the taxation of unemployment benefit. In any event, I have always considered that the unemployed should not be taxed. I have argued that we should tax the rich, not the poor. Every Bill that the Government have introduced and enacted has made the working class and the poor suffer. Since taking office in May 1979, they have not introduced a Bill with a view to taxing the rich.
      The Government's approach on this issue is immoral. Issues of this sort transcend party policy. They go beyond politics and the law of the land. The great moral issues must be prominent in a free society.
      Over the past two years Ministers have clearly said that the unemployed will have the 5 per cent. restored to them. I have said to my constituents "You will get the 5 per cent. when they tax you." Unless the Government change their mind, it seems that I shall have to return to my constituency and explain that the Government were not telling the truth.
      That is an indictment against politicians. If I do not explain to my constituents that the Government were not telling the truth, they will accuse me of not telling the truth when, of course, I have been telling the truth throughout. I shall have to explain that an amendment, tabled by my right hon. and hon. Friends, designed to restore the 5 per cent. was resisted by the Government, notwithstanding that Conservative Back Benchers who participated in the debate agreed with the amendment.
      I am working class and I know working-class people. Many Conservatives hardly ever meet such people. Working-class people are sincere and honest. They do not believe that the Government can do this to them. They do not believe that even Tories can be so dishonest. They take a man's word as his bond.
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      We are talking about 3 million or 4 million people, not just a few members of Lloyd's, for instance. It is strange that the Government should turn their back on that number of people at this time. They do not know what will happen on 6 May.
      A free press in a free society should keep the people informed. It is an indictment of the media that they have not informed the people about this measure and the Social Security (No. 2) Act. They have not done their duty. The Doncaster Evening Post is Conservative-controlled, but the people in my area were lucky enough to be informed by it of the measure. Other newspapers and the television have given it no publicity. It is difficult to keep the people informed in the circumstances.
      We must help those unfortunate people. The Minister said that the measure will save £60 million. It will steal that money from the unemployed, and the unemployed can

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      least afford it. They find it hard to manage. They do not go on Continental holidays or fly to other parts of the world. They are lucky to send their kiddies on an outing or to go on a day trip to Bridlington. Even this Government should help them. They should not attack the unemployed; they should provide for them. Britain has always provided for the needy. We have been proud of that. It is terrible for the Government to attack the poor.
      I come from Yorkshire. I do not hesitate to say that what the Government are doing is not cricket. They are not playing the game with the right people. They do not deserve to get the measure through. We deserve to win the amendment and they deserve to lose. Goodness and right are on our side. I hope that Conservative Back Benchers will go into the Lobby with us. Let us look after the 4 million lads and lasses who cannot look after themselves because of the economic situation. I hope that as many Conservative Members as possible will find it in their hearts to support the amendment.
      Mr. Derek Foster: It is always a pleasure to follow my hon. Friend the Member for Don Valley (Mr. Welsh). He speaks from a depth of experience of the struggles of working people. His words have an authentic ring, which is often lacking in speeches from Conservative Members.
      I believe that my hon. Friends' motives in penning the amendment are as pure as the driven snow. They wish to save the Government from themselves. They are in a terrible mess and we are striving to find a way out for them.
      It is interesting to watch the impassive faces of Ministers as they are battered by their Back Benchers. They show not a flicker of receptiveness, emotion or humour as they reel beneath the blows. We are reluctant to intrude on the bitter family struggle. Nothing like that happens in the Labour Party. We conduct our business with brotherly love and compassion. We fall out rarely. It was interesting to observe such things. We may have learnt something.
      The Government have increased unemployment to 3 million. If we count those who fail to register, we see that the number is higher. In the Financial Times and The Guardian today the Cambridge school predicts that if the present policies are continued unemployment may reach 4½ million or 5 million. More than 1 million people have been out of work for over 12 months. That is a horror story.
      However, we know that the Conservatives are men of compassion. They tell us so frequently. We hear their crocodile tears splashing into their gins and tonics. They do no want to impose this horrible suffering on people, but they are doing it for their own good, just like the sadistic school master who has a glint of pleasure in his eye as he swishes his cane.
      It was interesting to hear the still small, but audible, voice of Tory conscience. We were glad to hear 4. I do not know what impression it will have on the Government. I hope that many Conservatives will go into the Lobby with us, but I suspect that we shall be on the losing side when the votes are counted.
      We want justice for the unemployed. My hon. Friend the Member for Workington (Mr. Campbell-Savours) said that few hon. Members have been unemployed. I had that dubious privilege. About 12 years ago I was unemployed for almost 12 months. I know the humiliation of going to
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      the DHSS to claim a pittance of £5 a week and tramping the streets of Sunderland to look for work, because I could not even afford the bus fare. It would help if more hon. Members had a similar experience. I hope that many Tories will have the experience soon. If a general election were called, I suspect the 4 million unemployed would vote with their feet to a man to get rid of the Government who have caused the unemployment.
      Much injustice has been perpetrated on the unemployed during the life of this Parliament. They can no longer claim earnings-related benefit, their benefits have been reduced and they are continually harassed by the DHSS fraud squad. Here we have another instance of how a promise given by Ministers has not been fulfilled. I do not wish to go into chapter and verse. That has been done already.
      I was impressed by the speech of the hon. Member for Bath (Mr. Patten), who said that this measure represented double taxation on the most disadvantaged groups in our society. I hope that Ministers will take notice of that speech, because it is incumbent upon them to do so. Those of us who are privileged in this community—and Members of Parliament are extremely privileged people—should do what we can to ease the burden of unemployment among those who have to suffer it. The cost of redeeming this promise is a trivial amount. We are told that it would be about £60 million, which is less than one tenth of the money that the Government will gain by taxing unemployment benefit.
      This £60 million is a small amount for the Government to dig in their heels over. I wonder what their reasoning is. I hope that we shall be given the rationale for maintaining this position. I look forward to the Minister's explanation of why the Government are so determined to resist the amendment. This determination is all the more puzzling when one examines the figures for the PSBR. They have been published recently and show that they are £2 billion less than was originally estimated. If I remember correctly, that was estimated only at the time of the Budget.
      Why is it that with such scope for being generous the Government are digging in their heels on this issue? It makes nonsense of their claim to be compassionate about the unemployed. It would be possible to give some credence to the claim of compassion if all this were necessary. I reject the Government's economic strategy, but we must accept that the Conservative Party believes in it—believes that it is all necessary and, ultimately, is for the betterment of society and the reduction of unemployment.
      The Labour Party rejects that policy, but, if the Conservative Party believes in it, it has a moral responsibility to deal compassionately with the unemployed. If it admits that because of its monetarist policies there has to be a temporary period when unemployment is high, then, in all conscience, it has a moral responsibility to provide proper income support for those unfortunates who find themselves unemployed as a result of the Government's policy, or for any reason.
      My hon. Friend the Member for Workington was right when he said that whatever policies are pursued, by whichever Government, in the next five to seven year t, they will result in a long period of high unemployment. Even if the Labour Party were returned to office tomorrow and implemented with great vigour its radical strategy for reducing unemployment, and even if we were successful

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      in bringing unemployment down to below 1 million within the lifetime of a Parliament, we are still talking about excessively high unemployment until about 1989 or 1990.
      7.15 pm
      What can we do about the unemployed in the interim period? We cannot just leave them abandoned or impose this suffering on them without giving them any relief. Do not Ministers believe that there is a moral responsibility to be fair and just to the unemployed? We can look at the problem by saying that the unemployed are doing us a service. If they were not unemployed, others in our society would have to be. Those others may well be hon. Members here today.
      There is a moral responsibility to do something about unemployment in this interim period. There are many measures that are necessary and the amendment is only one of them. It is puzzling why the Government are digging in their heels so firmly on this small matter. The cost of implementing it would be small in relation to the money that the Government will get in taxation. I hope that there will be a detailed explanation of why they cannot agree to the amendment.
      The long-term unemployed suffer most as the result of unemployment. I wonder how many people in the Chamber have any concept of how worrying and distressing it is not to know how one can pay the gas or electricity bill or the rent., or how to send the children to school properly clothed and with a proper breakfast inside them. Those are problems that people in our society wrestle with day after day. Many mothers are being driven to distraction because of these problems.
      We can discuss these matters in a sophisticated way and invent a whole range of complicated and convoluted arguments on sophisticated points, but when it comes down to it there are people going through the most difficult period of suffering that they have ever experienced.
      Here is an opportunity for the House to make life a little bit better for some of our people. I do not know why Conservative Members will not come into the Lobby to support the amendment and make life a little more tolerable for many of our people.
      Mr. Hayhoe: The clause to which the amendment relates is concerned with the postponement by three months of the taxation of unemployment benefit. That was a decision of the House some time ago. I congratulate the drafters of the amendment on their ingenuity in getting in order an amendment that would give an opportunity for a further debate about the 5 per cent. abatement of unemployment benefit, and a rerun of the debate of 18 March to which much reference has been made already.
      A number of hon. Members on both sides of the House have referred to the timing of the debate. Some of my hon. Friends have suggested that a bad time has been chosen by the Opposition, and that it would have been better to wait. On the other hand, the hon. Member for Stockport, North (Mr. Bennett) thought that it was right to seek to achieve the amendment today and, if not today, to try again. However, the timing of the debate is not a matter for me. We have had a repetition of what has been heard before.
      The hon. Member for Edinburgh, Central (Mr. Cook) at least referred to the substance of the clause when he spoke about the postponement and asked whether there would be sufficient time to introduce the taxation of
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      unemployment benefit by July on the sensible presumption that the amendment would be defeated. I am advised that the staff will be ready to operate these new provisions by July.
      The hon. Gentleman asked whether a mistake in putting the taxation information on to the unemployment benefit office computer could lead to delay in the payment of benefit to an unemployed person. I can assure him that that sort of delay will not occur.
      The hon. Gentleman referred to the yield estimates—the figures associated with both the amendment and with the taxation of unemployment benefit. I can confirm to him that the yield from the taxation of unemployment and supplementary benefit in a full year will be £650 million and that the cost of restoring the 5 per cent. abatement in a full year would be £60 million.
      Reference was made by the hon. Member for Edinburgh, Central and by my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour) to the public sector borrowing requirement and the recent welcome news that in 1981–82 the latest figures are showing that it is £2 billion less than was estimated only some weeks ago. Right hon. and hon. Members who understand these matters will know that when we talk about the PSBR we are talking of the difference between two very substantial sums of well over £100 billion. At this stage of the succeeding financial year it is not possible to determine the results exactly. That being so, there is this difference between the two levels—there have been fewer payments out and more payments in than expected. The full explanation of the £2 billion has been given.
      It is suggested that in some way this statistical exercise concerned with the figures for the past financial year could influence the decisions which are to be taken today about the taxation of unemployment benefit and the restoration of the abatement. However, they have no relation to the PSBR of last year. These decisions have been made in the context of public expenditure and revenue-raising this year.
      I was asked by the hon. Member for Edinburgh, Central whether the Government were committed to making good the abatement of 5 per cent. when unemployment benefit came into taxation, and whether certain eventualities did not flow from it. He seemed to ignore whether the making of the commitment was central to the issue. I shall return to that, but first I want to deploy the argument as to whether the Government are committed to the proposal.
      Mr. Cook: I felicitate the Minister on having accepted the argument about the unreliability of the PSBR which has been put forward by critics of the Government's strategy over the past three years. The statement that he has just made will be of great importance to us in future debates on economic strategy. But I return to one of the questions that I put to him earlier. The Minister has just confirmed that the expected yield from the taxation of unemployment benefit is £650 million. Will he explain how the expected yield this year is £650 million when last year the Committee on the 1981 Finance Bill was told that the expected yield was only £240 million?
      Mr. Hayhoe: I am unable to give the hon. Gentleman that information immediately, but my understanding is that, to the extent that the margins of error affect the PSBR, they are published in available texts and that anyone who follows these matters closely appreciates that

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      these margins exist. If the hon. Gentleman thinks that I have said something new, he is singularly ill informed about the normal basis of the financial statistics provided by successive Governments.
      The hon. Member for Stockport, North raised a number of matters about the effect on supplementary benefit levels. He suggested that taxing benefit might push a claimant below the supplementary benefit level and make him entitled to it. That is not so, because the method of taxing benefit is such that tax will not be deducted from the benefit as it is being paid. The benefit will continue to be paid gross. Taxation will not in any case take a person below the needs level of supplementary benefit.
      Mr. Andrew F. Bennett: At present, if someone gets a tax refund, that is taken into account in calculating supplementary benefit. Since no tax refunds will be paid until the end of the year, those amounts will not be taken into account, which should mean that more people will be entitled to supplementary benefit. Will the hon. Gentleman confirm that that is the position?
      Mr. Hayhoe: A comparison between refunds which might be made at present and those which might be made in future could have some influence. Perhaps I may be allowed to look into that aspect of the matter.
      The hon. Member for Stockport, North also wanted to know whether a delay in producing a P45 form would cause any hold-up in the payment of benefit. I am advised that it will not.
      My hon. Friend the Member for Chippenham (Mr. Needham) spoke of the 5 per cent. abatement applying to unemployment and supplementary benefit for the unemployed. I can assure him that the abatement does not apply to supplementary benefit. That remains available as a safety net in cases where hardship may otherwise be involved.
      I was grateful to my hon. Friend the Member for Bath (Mr. Patten) for his gracious comments. I am sure that he was, as always, trying to be helpful. He referred, as did other hon. Members, to statements made by my right hon. Friend who is now the Secretary of State for Industry during the debates on the Social Security (No. 2) Bill. We heard many quotations from what was said in a very long debate, though most attention was concentrated on the remarks made by my right hon. Friend at about 1.25 in the morning of 30 April-1 May.
      It distorts the sense of that debate to suggest that the words used by my right hon. Friend at that early hour of the morning changed what he had been saying throughout the rest of the debate. If my right hon. Friend had made a new and highly important statement, it is remarkable that members of the Committee, who voted only a few minutes later, did not realise that it had happened. The hon. Member for Stockport, North was present. He did not refer to it. The hon. Member for Birmingham, Perry Barr (Mr. Rooker) is very lyrical about these matters. Why did not he refer to it? He is not the sort of hon. Member who is slow in coming forward if he thinks that he has won a victory.
      Mr. Rooker: I did not refer to it at the time for the very same reason that I did not refer to the unqualified commitment to restore the 5 per cent. on injury benefit given by the Minister for Social Security in Committee a
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      few weeks ago on the Social Security and Housing Benefits Bill. I accepted it at face value, as other hon. Members did.
      7.30 pm
      Mr. Hayhoe: "At face value" was in the context of all the other Minister's statements during the course of a long debate which made it perfectly clear that he was not entering into a specific commitment linking the ending of that rebate with the bringing in of the taxation of unemployment benefit. Those people who argue that case should look back over the long series of comments made by my right hon. Friend in that debate. The point was raised during the debate on the Social Security and Housing Benefits Report stage. None of my hon. Friends—whose strong feelings on these matters I appreciate—suggested that my right hon. Friend had sought to deceive the Committee. Nobody questioned his integrity. I hope that his integrity will not be questioned now. He has made it clear that he was not changing ground in the early hours of the morning. Therefore, the words that he had used consistently earlier in the day do not have the meaning which has been linked with them. Those are the words which stand.
      Mr. Chris Patten: May I try once again this evening to be helpful to my hon. Friend? For the time being, I am prepared to concede that "temporary" and "interim" mean "permanent". Will my hon. Friend turn to the nub of the question, which is whether it is right to double tax the severely disadvantaged group. That is the point mentioned by the Social Security Advisory Committee. That is the real point at issue.
      Mr. Hayhoe: There are many points at issue in the debate. Like my hon. Friend the Member for Bath, I have sat through the whole debate and listened to the many arguments that have been produced, as my hon. Friend acknowledged. He claimed that he and his colleagues had won the arguments on 18 March, but he went on to say that the arguments being made today were identical. I agree. However, on abatement, all I can do at this hour, with people looking at the clock, without repeating what was said last time, is to reiterate the point made by my hon. Friend the Minister for Social Security in winding up that debate. He said:
      "My right hon. Friends on the Front Bench have promised to keep this matter under review. We have said that the abatement will not be a permanent reduction"
      —that answers one of my hon. Friend's points
      "It is equally clear that the abatement cannot be made good now, but it will be made good. My right hon. Friends have the matter under review. At the right time it will be made good."—[Official Report, 18 March 1982; Vol. 20, c. 536.]
      Mr. Needham rose——
      Mr. Hayhoe: On abatement, I can only be expected—by those who understand the way in which Government works—to reiterate the view of the Minister for Social Security at the Dispatch Box about a month ago.
      My hon. Friend the Member for Woolwich, West (Mr. Bottomley) asked what would happen if the amendment were passed. He got it right. He said that if the amendment were passed it would mean that unemployment benefit could not be subject to taxation as from July this year. The principle of making unemployment benefit taxable has been debated and approved by the Committee. The amendment would delay that agreed taxation of unemployment benefit. If the amendment were passed, it

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      could cost £650 million in the context of a full year. We should not seek to do that by a back door route. I hope that the Committee will reject the amendment.
      Mr. Rooker: We are in Committee. We are under no time constraints. The Minister has twisted the words of the amendment. If the amendment were carried unemployment benefit could be taxed from 5 July, provided that the 5 per cent. was put on from November. It is as simple as that.
      Mr. Hayhoe: It is perfectly clear, and it was made clear in the debate, that the effect of the amendment, since one would not be able to do that, would be that the taxation of unemployment benefit, which the Committee has approved of in the past, could not be achieved by the July date.
      Mr. Peter Bottomley: The point that I was making, as my hon. Friend appreciates, is that if we pass the amendment either now—which I doubt, because there were not enough listening to the debate—or on Report, the Government will be faced with losing £650 million in taxation or giving back the £60 million which the Committee understands should be put back on unemployment benefit.
      Mr. Cook: It would be a great pity if what has been a constructive and positive debate over the last four hours were to end in a procedural wrangle on a technicality. If there is anything in the amendment that will crate technical problems for Treasury Bench Members, we offer them the honourable deal that they should accept in principle what we are trying to establish and we will happily not press our amendment to a Division. They can then bring back on Report whatever amendment is appropriate to secure the principle underlying the amendment. There is no adequate technical difficulty here to explain why the Treasury Bench is resisting the principle that is clearly supported by all hon. Members.
      Mr. Hayhoe: I was not suggesting that there was a technical difficulty. I made it clear that on the question of abatement I stood by the position that was enunciated from the Dispatch Box on 18 March by my hon. Friend the Minister for Social Security. I did not seek in any way to resile from that position. However, I also said what would be the immediate effect of the issue raised by my hon. Friend—no more than that.
      Mr. Cook: That intervention was at least useful in establishing that there is not a technical difficulty to the amendment being accepted. It is a question of principle. It is not sufficient for the hon. Gentleman to say to the Committee that he rests on the reply given by the Minister for Social Security on 18 March. The Minister for Social Security did not explain why the Government are refusing to restore the 5 per cent. abatement. No explanation was provided by the Minister in that debate.
      The Minister's reply was useful in one respect, in that he confirmed the figures. We now have it on record that last year the Treasury expected £240 million from the taxation of unemployment benefit. This year it expects to get £650 million from taxation. By any standard, those are generous margins of error. If the Treasury is so uncertain about the impact on its tax revenue of this measure, how can it be sure what the impact will be on the many poor
      662
      households that will be called upon to pay the tax to provide that revenue? Many of them will be subject to a liability which appears to be very uncertain.
      The essential point remains that the Government will receive £410 million more in tax than they expected last year. If they receive a bonus of £410 million above what they thought they would get when they brought the clause forward last year, the case for resisting giving only £60 million of that to the unemployed by the 5 per cent. is overwhelming. There are no possible grounds on which the Government can argue that they do not have the money. They will be left with £350 million more than they thought they would get in the first place.
      The Minister suggested that we should not rely on any one quotation but should look at the whole, that we should add up all the quotations and find the average. If that is so, let me throw in another quotation. It is a quotation from a speech made, not late at night, but at a reasonable hour, within the Chamber. The right hon. Member for Daventry (Mr. Prentice) said
      "we have a rough and ready substitute to last until 1982, when we hope to bring in proper taxation".
      There is no room for equivocation. It is perfectly clear that in that right hon. Gentleman's mind—if not in the minds of his colleagues—the 5 per cent. abatement would be restored when tax was brought in in 1982.
      Mr. Reg Prentice: Will the hon. Gentleman take it from me that I was in no sense saying that the 5 per cent. would be restored. That was not in my mind. Nor is it explicitly or implictly contained in anything that has been quoted.
      Mr. Cook: I shall repeat those words:
      "we have a rough and ready substitute to last until 1982, when we hope to bring in proper taxation."—[Official Report, 15 April 1980; Vol. 982, c. 1142.]
      If that was not an indication that the right hon. Member for Daventry thought that the Government would restore the 5 per cent. abatement when taxation was introduced in 1982, he did not choose his words carefully enough to convey a lucid impression. Any objective and impartial audience would have assumed that he said that the 5 per cent. abatement would not last beyond 1982, when taxation would be introduced.
      Mr. Prentice: I accept criticism of my syntax, but I had no right at that time, and did not claim the right, to say what financial priorities would be announced by the Chancellor of the Exchequer two years later. The hon. Gentleman has no right to assume that I meant anything of the sort.
      Mr. Cook: I entirely accept that the right hon. Gentleman could not commit a future Government, even if the Government in question are of the same colour and party as the right hon. Gentleman, and even if he is no longer a member of it. But the right hon. Gentleman must face the fact that the words that he chose—perhaps without sufficient care—conveyed the impression that the Government would restore the 5 per cent. when taxation was introduced. That impression is the vital political factor, and not what may have been in the right hon. Gentleman's mind when he chose those words.
      As Conservative Back Benchers have pointed out, the Minister has failed to answer the critical question hanging over the debate. The 5 per cent. abatement was introduced on the basis that it was the rationale for the abatement.

      663
      However, that is plainly not now the rationale for the abatement, because unemployment benefit will be taxed from July this year. Hon. Members will accept that the Minister offered no explanation of the new rationale for the 5 per cent. abatement. What is there to continue to justify the 5 per cent. abatement beyond July 1982?
      Before the Minister replied we had had a harmonious and constructive debate. Until the hon. Gentleman spoke, not one of the 15 hon. Members who spoke had supported the Government's position. Every hon. Member criticised it. Conservative Members raised only one controversial point—whether this was the time to raise the issue. My hon. Friend the Member for Workington (Mr. Campbell-Savours) got into some difficulty when he suggested that some of those who had spoken had said on 18 March that this would be an appropriate time. I cannot remember whether the hon. Gentleman that I have in mind represents Woolwich. East or Woolwich, West. However, the more Left-wing of the Woolwich Members—I recall that it is the hon. Member for Woolwich, West—voted and spoke on that occasion. In addition, the hon. Member for Rutland and Stamford (Mr. Lewis) said:
      "There is time to put the matter right in the Finance Bill."—[Official Report, 18 March 1982; Vol. 20, c. 521.]
      In our innocence we attempted to do that, but we are now told that this is not the right time to put the matter right. We are told that we should have waited until Report.
      We have been criticised by several Conservative Members, and therefore I wish to put it on record that we chose the clause for debate on the Floor of the House before events on the other side of the globe began, understandably, to preoccupy hon. Members. I do not suggest that our choice would have been different had our information on what would happen been more accurate and reliable than that of the official intelligence service and had we known that the Falkland Islands were about to be invaded, but we believe that the unemployed should have their 5 per cent. back. We have not discovered that conviction in the past month: we have consistently argued for it during the past two years. Nor do we think that the unemployed should be expected to wait until General Galtieri has conceded the issue of sovereignty before they get their 5 per cent.
      7.45 pm
      I understood what the hon. Member for Chippenham (Mr. Needham) was saying when he pointed out that events 8,000 miles away make it more difficult for him to vote for something that he believes is right. However, that is for him to decide. I do not say that glibly, because it is much more difficult to vote against one's Government when there is a real possibility of winning. I know how difficult it is, because my hon. Friends and I have done it. Indeed, I pay tribute to my hon. Friend the Member for Birmingham, Perry Ban (Mr. Rooker), because he voted against the Government in circumstances that remain spectacular. He took 10 cents off the pound, which is more than the hon. Member for Chippenham will do if he votes with us tonight. However, there are times when a choice must be made and it is not always given to us to choose that time.
      Mr. Needham: I did not suggest what I might or might not do. I said that it was for Opposition Members to decide the best tactics to win. My position has been clear, as the hon. Gentleman knows. The question will be decided in
      664
      the next few minutes and for all his gibes and amusement it will be seen at the end of the day that the hon. Gentleman has not helped the unemployed as he might have done if he had withdrawn the amendment earlier.
      Mr. Cook: I have argued the case that I argued from the Dispatch Box during the consideration of the lash two Finance Bills. I have not invented it in the last two weeks to embarrass the Government. Like my hon. Friends, I feel strongly about it. If the Division does not reflect the balance of opinion expressed in the debate, and if, after the Division bells have rung, we are defeated by the silent majority who have not favoured us with their presence, we shall return to the matter on Report.
      The Minister paid tribute to our ingenuity in drafting the amendment. I should not wish him to leave the Chamber thinking that the amendment has exhausted our ingenuity. We shall apply it yet again to the problem. However, if we left the matter until Report there would be some unsatisfactory consequences. For example, we might not reach Report until after 4 July when taxation liability is triggered for the unemployed. Indeed, we are most unlikely to reach Report until the uprating orders have been put before the House and debated, which would be the appropriate occasion to restore the 5 per cent. Nevertheless, if we are defeated tonight we shall seek to return to this matter on Report. I warn those Conservative Back Benchers who have spoken in the debate that our expectations are raised and that we shall look for great things when the matter is raised on Report.
      We have had a useful and good debate. If we have to return to the issue on Report, I hope that some of those who propose to vote with the Government tonight will at least join us then and explain why they did so and why they believed that the 5 per cent. should not be restored. It is the view not only of the Opposition but of all those who have taken part in the debate—with the exception of the Minister—that the 5 per cent. should be restored. It should be restored because the unemployed need the money far more than those who pay the higher rate bands of capital transfer tax, who have received from the Bill far larger sums than is necessary to do simple justice to the unemployed. The 5 per cent. should be restored to the unemployed because the House was persuaded to vote for it on the basis that it was an interim measure in lieu of taxation.
      We are now asked to accept that it should become an indefinite measure in addition to taxation. I do not believe that the Committee can, in honour, allow the Treasury Bench to juggle in this way with statements made in the Chamber. I hope that the Committee will refuse to allow it to do so.
      Question put, That the amendment be made:—
      The Committee divided: Ayes 207, Noes 255.

      Division No. 131]

      [7.49 pm

      AYES

      Adams,Allen

      Benn, Rt Hon Tony

      Allaun, Frank

      Bennett,Andrew(St'kp'tN)

      Alton,David

      Bidwell,Sydney

      Anderson,Donald

      Booth,RtHonAlbert

      Archer, Rt Hon Peter

      Boothroyd,MissBetty

      Ashley, RtHonJack

      Bottomley,RtHonA.(M'b'ro)

      Ashton,Joe

      Bottomley, Peter (W'wich W)

      Atkinson,N (H'gey,)

      Bray, Dr Jeremy

      Bagier,GordonA.T.

      Brocklebank-Fowler,C.

      Barnett, Guy (Greenwich)

      Brown, Hugh D. (Provan)

      665

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

      Johnston,Russell(Inverness)

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

      Jones, Rt Hon Alec (Rh'dda)

      Brown, Ron (E'burgh, Leith)

      Jones, Barry (East Flint)

      Buchan,Norman

      Jones, Dan (Burnley)

      Callaghan,Rt Hon J.

      Kaufman, Rt Hon Gerald

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

      Kerr,Russell

      Campbell, Ian

      Kilroy-Silk,Robert

      Campbell-Savours,Dale

      Knox,David

      Canavan,Dennis

      Lambie,David

      Cant, R. B.

      Lamond,James

      Carmichael,Neil

      Leighton,Ronald

      Carter-Jones,Lewis

      Lewis,Ron (Carlisle)

      Cartwright,John

      Litherland,Robert

      Clark, Dr David (S Shields)

      Lofthouse,Geoffrey

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

      Lyon,Alexander(York)

      Cohen,Stanley

      Lyons, Edward (Bradf'd' W)

      Coleman,Donald

      Mabon, Rt Hon Dr J. Dickson

      Concannon, Rt Hon J. D.

      McCartney,Hugh

      Cook, Robin F.

      McDonald, Dr Oonagh

      Cowans,Harry

      McKelvey,William

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

      MacKenzie, Rt Hon Gregor

      Critchley,Julian

      Maclennan,Robert

      Crowther,Stan

      McNamara,Kevin

      Cryer,Bob

      McTaggart,Robert

      Cunliffe,Lawrence

      McWilliam,John

      Cunningham,G.(Islingfon S)

      Magee,Bryan

      Cunningham, DrJ. (W'h'n)

      Marks,Kenneth

      Davidson,Arthur

      Marshall,D(G'gowS'ton)

      Davies, Ifor (Gower)

      Marshall,DrEdmund (Goole)

      Davis, Clinton (HackneyC)

      Marshall, Jim (LeicesterS)

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

      Martin,M(G'gowS'burn)

      Deakins,Eric

      Mason, Rt Hon Roy

      Dean, Joseph (Leeds West)

      Maxton,John

      Dixon,Donald

      Maynard,MissJoan

      Dobson,Frank

      Meacher,Michael

      Dormand,Jack

      Mikardo,Ian

      Douglas,Dick

      Millan,RtHonBruce

      Dubs,Alfred

      Mitchell,Austin(Grimsby,)

      Dunnett,jack

      Mitchell, R.C. (Soton Itchen)

      Dunwoody, Hon Mrs G.

      Morris, Rt Hon A. (W'shawe)

      Eadie,Alex

      Morris, Rt Hon C. (O'shaw)

      Ellis,R. (NED'bysh're)

      Morrison, Hon C. (Devizes)

      English,Michael

      Morton,George

      Evans, loan (Aberdare)

      Moyle,Rt Hon Roland

      Fitch, Alan

      Needham,Richard

      Flannery,Martin

      Newens,Stanley

      Fletcher Ted (Darlington)

      Oakes, Rt Hon Gordon

      Forrester,John

      O'Neill,Martin

      Foster,Derek

      Orme, Rt Hon Stanley

      Foulkes,George

      Palmer,Arthur

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

      Park, George

      Freeson, Rt Hon Reginald

      Parker,John

      Freud,Clement

      Parry,Robert

      Garrett, John (NorwichS)

      Patten,Christopher(Bath)

      George,Bruce

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

      Gilbert, Rt Hon Dr John

      Prescott,John

      Gilmour, Rt Hon Sir Ian

      Price, C. (Lewisham W)

      Golding,John

      Radice,Giles

      Grant, John (IslingtonC)

      Rees, Rt Hon M (Leeds S)

      Grimond,Rt Hon J.

      Richardson,Jo

      Hamilton,James(Bothwell)

      Roberts,Allan (Bootle)

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

      Roberts, Ernest (HackneyN)

      Harrison, Rt Hon Walter

      Roberts,Gwilym(Cannock)

      Hart, Rt Hon Dame Judith

      Robertson,George

      Haselhurst,Alan

      Robinson, G. (CoventryNW)

      Hattersley, Rt Hon Roy

      Rooker, J. W.

      Heffer, Eric S.

      Roper,John

      Hicks,Robert

      Ross, Ernest (Dundee West)

      Hogg, N. (EDunb't'nshire)

      Rowlands,Ted

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

      Ryman,John

      HomeRobertson,John

      Sever,John

      Homewood,William

      Sheerman,Barry

      Hooley,Frank

      Sheldon, Rt Hon R.

      Horam,John

      Shore, Rt Hon Peter

      Hoyle,Douglas

      Silkin, Rt Hon J. (Deptford)

      Hughes,Mark(Durham)

      Silkin, Rt Hon S. C. (Dulwich)

      Janner,HonGreville

      Silverman,Julius

      Jay, Rt Hon Douglas

      Skinner,Dennis

      John,Brynmor

      Smith, Rt Hon J. (N Lanark)

      Johnson, Walter (DerbyS)

      Snape, Peter

      666

      Soley,Clive

      Weetch, Ken

      Spearing,Nigel

      Welsh,Michael

      Spriggs,Leslie

      White, Frank R.

      Stott,Roger

      White,J. (G'gowPollok)

      Straw,Jack

      Wigley,Dafydd

      Summerskill,HonDrShirley

      Willey,Rt Hon Frederick

      Taylor, Mrs Ann (Bolton W)

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

      Thomas,Dafydd (Merioneth)

      Wilson,William (C'try SE)

      Thomas, Mike (Newcastle E)

      Winnick,David

      Thomas,DrR. (Carmarthen)

      Woolmer,Kenneth

      Thorne, Stan (PrestonSouth)

      Wright,Sheila

      Tinn,James

      Varley, Rt Hon Eric G.

      Tellers for the Ayes:

      Wainwright,R.(ColneV)

      Mr. Frank Haynes and Mr. Allen McKay.

      Walker, Rt Hon H.(D'caster)

      Watkins,David

      NOES

      Adley,Robert

      du Cann, Rt Hon Edward

      Aitken,Jonathan

      Eden,Rt Hon Sir John

      Alexander,Richard

      Edwards, Rt Hon N. (P'broke)

      Alison,Rt Hon Michael

      Eggar, Tim

      Amery, Rt Hon Julian

      Elliott,SirWilliam

      Ancram,Michael

      Emery, Sir Peter

      Arnold, Tom

      Eyre,Reginald

      Aspinwall,Jack

      Faith,Mrs Sheila

      Atkins, Rt Hon H.(S'thorne,)

      Farr,John

      Atkins,Robert(PrestonN)

      Fell,Sir Anthony

      Baker,Kenneth(St.M'bone,)

      Fenner, Mrs Peggy

      Baker, Nicholas (NDorset)

      Finsberg,Geoffrey

      Banks,Robert

      Fisher,SirNigel

      Beaumont-Dark,Anthony

      Fletcher-Cooke,SirCharles

      Bendall,Vivian

      Fookes, Miss Janet

      Benyon,Thomas(A'don)

      Forman,Nigel

      Benyon,W. (Buckingham)

      Fowler, Rt Hon Norman

      Berry,HonAnthony

      Fox,Marcus

      Bevan,DavidGilroy

      Fraser, Peter (SouthAngus)

      Biffen,Rt Hon John

      Fry, Peter

      Blackburn,John

      Gardiner,George(Reigate)

      Blaker, Peter

      Gardner, Edward (S Fylde)

      Body,Richard

      Garel-Jones,Tristan

      Bonsor,SirNicholas

      Glyn, Dr Alan

      Bowden,Andrew

      Goodhart,SirPhilip

      Boyson,DrRhodes

      Goodhew,SirVictor

      Braine,SirBernard

      Goodlad,Alastair

      Brinton,Tim

      Gow, Ian

      Brittan,Rt.Hon.Leon

      Gray,Hamish

      Brooke,HonPeter

      Greenway,Harry

      Brotherton,Michael

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

      Brown,Michael(Brigg&Sc'n,)

      Griffiths, Peter Portsm 'thN)

      Browne,John(Winchester)

      Grist, Ian

      Bruce-Gardyne,John

      Grylls,Michael

      Bryan,SirPaul

      Gummer,JohnSelwyn

      Buchanan-Smith,Rt.Hon.A.

      Hamilton, Hon A.

      Buck,Antony

      Hamilton,Michael(Salisbury)

      Budgen,Nick

      Hampson,Dr Keith

      Bulmer,Esmond

      Hannam,John

      Butcher,John

      Hastings,Stephen

      Butler,HonAdam

      Havers, Rt Hon Sir Michael

      Cadbury,Jocelyn

      Hawksley,Warren

      Carlisle, John (Luton West)

      Hayhoe, Barney

      Carlisle,Kenneth (Lincoln)

      Heddle,John

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

      Henderson,Barry

      Chalker,Mrs.Lynda

      Heseltine,RtHonMichael

      Channon,Rt.Hon.Paul

      Higgins, Rt Hon Terence L.

      Chapman,Sydney

      Hogg,HonDouglas(Gr'th'm)

      Churchill,W.S.

      Holland,Philip(Carlton)

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

      Hooson,Tom

      Clark, Sir W.(Croydon S)

      Hordern,Peter

      Clarke,Kenneth(Rushcliffe)

      Howe, Rt Hon Sir Geoffrey

      Cockeram,Eric

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

      Cope,John

      Howell,Ralph (NNorfolk)

      Corrie,John

      Hunt,john (Ravensbourne)

      Costain,SirAlbert

      lrving,Charles(Cheltenham)

      Cranborne,Viscount

      Jenkin,RtHonPatrick

      Crouch,David

      JohnsonSmith,Geoffrey

      Dean, Paul (NorthSomerset)

      Jopling,RtHonMichael

      Dickens,Geoffrey

      Joseph, Rt Hon Sir Keith

      Douglas-Hamilton,LordJ.

      Kaberry,SirDonald

      Dover,Denshore

      Kellett-Bowman,MrsElaine

      667

      Kershaw,SirAnthony

      Rathbone,Tim

      King, Rt Hon Tom

      Renton,Tim

      Kitson,Sir Timothy

      RhysWilliams,Sir Brandon

      Lamont,Norman

      Ridsdale,SirJulian

      Lang, Ian

      Rifkind,Malcolm

      Latham,Michael

      Rippon, Rt Hon Geoffrey

      Lawrence,Ivan

      Roberts, M. (Cardiff NW)

      Lawson,Rt Hon Nigel

      Roberts, Wyn (Conway)

      Lee,john

      Rossi,Hugh

      LeMarchant,Spencer

      Royle,SirAnthony

      Lennox-Boyd,HonMark

      Sainsbury,HonTimothy

      Lloyd, Peter (Fareham)

      Scott,Nicholas

      Loveridge,John

      Shaw, Giles (Pudsey)

      Luce,Richard

      Shaw,Michael(Scarborough)

      Lyell,Nicholas

      Shelton, William (Streatham)

      Macfarlane,Neil

      Shepherd,Colin (Hereford)

      MacGregorJohn

      Shersby,Michael

      MacKay,John (Argyll)

      Silvester,Fred

      Macmillan, Rt Hon M.

      Sims, Roger

      McNair-Wilson,M.(N'bury)

      Speller,Tony

      McNair-Wiison, P. (NewF'st)

      Spicer, Jim (West Dorset)

      McQuarrie,Albert

      Spicer, Michael (SWorcs)

      Major,john

      Sproat,Iain

      Marland,Paul

      Stanbrook,Ivor

      Mates,Michael

      Stanley,John

      Mather,Carol

      Steen,Anthony

      Maude, Rt Hon Sir Angus

      Stevens,Martin

      Mawby, Ray

      Stewart,A.(ERenfrewshire)

      Mawhinney,DrBrian

      Stewart,Ian(Hitchin)

      Maxwell-Hyslop,Robin

      Stokes,John

      Mayhew,Patrick

      StradlingThomas,J.

      Mellor,David

      Taylor, Teddy (S'endE)

      Mills,Iain(Meriden)

      Tebbit, Rt Hon Norman

      Mills, Peter (WestDevon)

      Temple-Morris,Peter

      Miscampbell,Norman

      Thomas, Rt Hon Peter

      Mitchell,David (Basingstoke)

      Thompson,Donald

      Moate,Roger

      Thorne, Neil (IlfordSouth)

      Monro,SirHector

      Thornton,Malcolm

      Montgomery,Fergus

      Townend,John(Bridlington)

      Moore,John

      Townsend, Cyril D, (B'heath)

      Morgan,Geraint

      Trippier,David

      Morris, M. (N'hamptonS)

      Trotter,Neville

      Morrison, Hon P. (Chester)

      Vaughan,DrGerard

      Mudd,David

      Viggers,Peter

      Murphy,Christopher

      Waddington,David

      Myles,David

      Wakeham,john

      Nelson,Anthony

      Waldegrave,HonWilliam

      Neubert,Michael

      Walker, B. (Perth)

      Newton,Tony

      Walker-Smith, RtHonSirD.

      Normanton,Tom

      Waller,Gary

      Nott, Rt Hon John

      Ward, john

      Onslow,Cranley

      Warren,Kenneth

      Oppenheim, Rt Hon Mrs S.

      Wells,Bowen

      Page, Richard (SWHerts)

      Wells,John(Maidstone)

      Parkinson, RtHonCecil

      Wheeler,john

      Parris,Matthew

      Whitelaw, RtHon William

      Patten,John (Oxford)

      Wickenden,Keith

      Pattie,Geoffrey

      Wiggin,jerry

      Pawsey, James

      Wilkinson,John

      Percival,Sir Ian

      Williams,D.(Montgomery)

      Peyton, RtHonJohn

      Wolfson,Mark

      Pink, R.Bonner

      Young,SirGeorge (Acton)

      Pollock,Alexander

      Younger, RtHonGeorge

      Porter,Barry

      Prentice, RtHonReg

      Tellers for the Noes:

      Price, SirDavid (Eastleigh)

      Mr. Robert Boscawen and Mr. David Hunt.

      Proctor, K. Harvey

      Raison, RtHonTimothy

      Question accordingly negatived.
      Amendment made: No.16, in page 19, line 32, after second "to", insert "any condition contained in".—[Mr. Hayhoe.]
      Clause 29, as amended, ordered to stand part of the Bill.

    Clause 117

      INCREASE OF PETROLEUM REVENUE TAX AND ENDING OF SUPPLEMENTARY PETROLEUM DUTY
      8 pm
      Mr. Jack Straw: I beg to move amendment No. 17, in page 84, line 37, leave out subsection (2).
      It may be for the convenience of the Committee if the debate on amendment No. 17 takes in remarks that we would make on the clause stand part debate, so that there is one debate rather than two. It may also be for the convenience of the Committee if I explain that the Opposition do not intend to push amendment No. 17 to a vote. We see this as an opportunity for a debate on the matter.
      The proposals that we are debating are the eighth set of major changes to the oil taxation regime that the Government have made in 30 months. The consistent feature about the eight sets of changes is that each change has provoked a chorus of disappointment and anger from the oil companies, dismay from the Government Benches and incomprehension about the Government's intentions and actions from those who wish to see an effective but fair system of taxation for North Sea oil. This set of changes is no different in that respect.
      When the new proposals were announced, they were met with a chorus of complaint from the oil companies.
      The Scotsman reported that
      "North Sea oil company cash flow will be severely curtailed during the next two years as a result of the Budget changes in taxation".
      The Daily Telegraph suggested that the tax changes would sacrifice oil self-sufficiency. The Financial Times, which may be a more impartial reporter than The Daily Telegraph or The Scotsman, stated:
      "The industry is dismayed that the proposed changes will still leave a tax structure vulnerable to more revisions. Companies have told the Chancellor that repeated changes—seven in the past two years—have inhibited long-term investment decisions."
      The Financial Times also stated:
      "Offshore operators warned yesterday that some small North Sea oilfields might still be left underdeveloped following Budget changes in the oil taxation structure."
      Therefore, from all quarters of the oil industry, there has been criticism of the proposals.
      Given that criticism and the criticism that we make, too, it is necessary, before we examine the detail of the proposals, to contrast the performance of the Government against their promise. As I have explained, there have been eight major sets of changes in oil taxation in 30 months. There is the possibility of more in future. How different that is from the Government's promise.
      Many of my hon. Friends will recall that throughout the period from 1974 to 1979 Conservative Members lost no time in criticising the Labour Government for what they regarded as penal and capricious measures of taxation imposed on the oil companies, although those allegedly penal and capricious measures were considerably less than they are today. We also recall the fine words of the right hon. Member for Bridgwater (Mr. King), now the Minister for Local Government and Environmental Services, who was the official spokesman on energy during the election. In a statement on energy policy on 10 April 1979, he said:

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      "We are still at the point where, by restoring confidence, the North Sea success story could be prolonged into the 1980s … Confidence has been shattered by frequent changes in the rules and by Labour's hostility to private enterprise."
      I am glad to see that provoked a wry smile from the hon. Member for Enfield, North (Mr. Eggar). The Conservative spokesman further stated:
      "We shall pursue a steady policy designed to secure the fullest advantage to the nation as a whole … We shall therefore review the Government's licensing and tax policies to achieve these benefits".
      Those were the benefits for the nation. The right hon. Gentleman attacked the Labour Government for the changes that they announced in October 1978. The Government implemented almost all those changes shortly after they came to power, but in April 1979 the right hon. Gentleman suggested that those proposals
      "were cobbled together in a hurry without consultation as a gimmick for the election from which they shrank in October. Any tax changes designed to increase revenue which actually prevent the development of promising small oilfields will be self-defeating."
      The right hon. Gentleman went on to say that the oil industry
      "needs a clear assurance that there will not be countless changes in the rules and that there will be full consultation. As a possible means of reducing the uncertainty we shall examine whether a more predictable formula could be incorporated in the tax system to take fuller account of the changes in the real price of oil and in interest rates without the need to introduce further legislation on each occasion."
      That was a statement of hope after the experience of the previous Government.
      Seven changes later, The Sunday Times, in a major review of oil taxation in November 1980, stated:
      "In a handful of minutes last Monday Sir Geoffrey Howe replaced Tony Benn as the oil industry's No. 1 villain. The Chancellor made the seventh change in oil taxation in 18 months and in the process tore up a whole book of election promises. In order to balance his own books he took a cool billion from oil company coffers without even a thank you."
      That is the promise of the Government measured alongside their performance. It was The Sunday Times which said that by November 1980 the Chancellor had become the "No. 1 villain" of the oil companies, replacing even my right hon. Friend the Member for Bristol, South-East (Mr. Benn). I dare say that it still sticks to that view, since the one thing that the Government have not done in the changes that they have introduced is to alter the total revenue that they will receive from the North Sea.
      Last year, the supplementary petroleum duty was justified to the Committee and to the House as a temporary measure pending a major review of the taxation system. We supported the Government's intention to hold a major review, but we doubted whether they would complete it on time. Indeed, in Committee upstairs, we proposed that the SPD should be carried forward for a further accounting period to 31 December 1982 to give the Government further time to consult and to form a proper judgment about the future of oil taxation. Interestingly, it was our judgment about the time scale that held the day, because supplementary petroleum duty is to run until 31 December 1982.
      During this time of major review the Government have received many representations from UKOOA, BRINDEXindex, the Institute for Fiscal Studies and many other bodies which are all concerned to see whether it is possible to establish a fairer and more effective system of
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      oil taxation, even accepting, as we do, that there is an overriding need to ensure that the total take from the North Sea is not very different from what it is under the existing regime.
      As a result of that review, the Government have settled on only one change of any substance. It is difficult to see why the Government, given their commitment to a major review, and given the time that they have spent on this issue and the many proposals which they have received, have not come up with something more comprehensive and lasting than the proposals that they have made.
      I know that most of my hon. Friends are familiar with the changes that the Government are proposing, but I shall spell out what they are changing and how, in one important respect, it is very little different from the supplementary petroleum duty that the new scheme is proposed to replace. Supplementary petroleum duty, which was introduced last year, is charged as a tax on gross revenue, not on profit, and it is charged at 20 per cent., less an initial allowance for each taxable period. The objection to that tax was that it was a tax on turnover, that it was deducted in assessing profits but not in assessing petroleum revenue tax liabilities, and that it could be paid only if an overall loss were made on the field during the course of its operation, which in most cases was very unlikely.
      The Committee will see from the Bill the SPD is being abolished and replaced by a new tax—advance petroleum revenue tax. However, it is important, particularly when talking about the cash flow of the oil companies, to recognise that the assessment for advance petroleum revenue tax is done in exactly the same way as the assessment for supplementary petroleum duty. The APRT in the initial period is supplementary petroleum duty, because the charge to advance petroleum revenue tax is assessed at 20 per cent. on gross revenue, less an oil allowance, in exactly the same way as SPD is assessed at the moment. Of course, there is an important conceptual change within the framework of the tax. APRT is offsettable against liabilities to petroleum revenue tax, whereas supplementary petroleum duty is offset only against profits.
      Moreover, it will be possible for companies to offset their APRT payments against their total PRT liabilities during the course of a field's life. Where the APRT that is paid exceeds the total petroleum revenue liability, the oil company concerned can receive a rebate. Although the company would get a rebate, I understand that that would be many years later, and it would also be without any payment of interest. Therefore, the company still has the cash flow problem of paying out the cash, even though, in the event, its total petroleum tax liabilities are less than its total payment of APRT.
      8.15 pm
      That is the essence of what the Government have proposed. They have also, as a consequential measure, proposed that the rate of PRT which is charged, which now forms the base of the tax, should be increased from 70 per cent. to 75 per cent. The overall effect is that the marginal tax rate, taking account of all the taxes, decreases from a little over 90 per cent. to a little over 89½ per cent. The effects are marginal.

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      Several suggestions were put forward for replacing the existing system of taxation. Before I come to them, I wish to raise some important questions about the effect of APRT, and I shall be glad if the Minister will answer them.
      How many fields does the Minister expect there will be where the total payment of APRT is likely to exceed their liability to petroleum revenue tax? According to Wood Mackenzie, in its commentary on the tax—I can find no specific reference to what is said but I am sure there must be one, otherwise it would not be said—the Chancellor, in his Budget speech,
      "expressed the view that it was unlikely that any fields would be in this position".
      In other words, where APRT payments exceeded their PRT liability.
      "Much will depend on future oil prices, production rates and so forth. However, on the basis of our current calculations it would appear that Beatrice will at least pay considerably more APRT than the mainstream PRT liability."
      Wood Mackenzie suggests that the Beatrice field, the one being developed by BNOC, may come within that category. Will the Minister give some indication of the current assessment by the Government of how many fields come within that category?
      My next point also relates to the comments by Wood Mackenzie on the effect of the tax on a company's cash flow. The claims of oil companies and stockbrokers who advise them are not necessarily or by definition statements of the truth. None the less, they pose questions which need answers. The claim is that the new timings for payments of APRT will squeeze an extra £500 million out of oil companies over the period until the first quarter of 1984. I shall be glad to have the Minister's comments on that aspect.
      My next point is perhaps even more important. It relates to the effect that APRT may have on the extraction policies of oil companies where they are dealing with fields approaching the end of their life. A gentleman called Martin Lovegrove—I understand that he was a senior executive with BNOC before becoming an independent oil consultant—wrote what seemed to me to be a considered piece in The Guardian on 24 March 1982. He suggested that the facility for companies to obtain a rebate on APRT, where their PRT liability was not exhausted, would act as an incentive to companies to shut up shop and to close a field before the end of its useful life. He said:
      "The APRT system, however, will encourage companies to shut down platforms early. It may even be more economic for many to abandon fields before the current estimates of reserves are recovered, because when the field's life is ended not only do the companies avoid paying more APRT but they will get a 'nest-egg' of past payments returned to them by the Government—albeit not inflation proofed. This effect is nothing short of disastrous and if left unchanged will most surely mean that Britain will be a net importer of oil by the end of this decade."
      That is a serious point about the, perhaps accidental, operation of APRT that would not have arisen under the supplementary petroleum duty because the companies did not stand to get back anything unless they made no profit. However, that situation is unlikely to arise. That serious point made by Martin Lovegrove requires an answer.
      Having dealt with the proposed change to the oil taxation scheme, I come to whether it would have been possible to introduce a major reform in petroleum revenue tax as was suggested by some in the oil industry and by the Institute for Fiscal Studies. In addition, although I do not wish to rub in the point, during the election campaign
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      the Conservative Party suggested that it would introduce a comprehensive and major change in the oil taxation system that would last and not need eight changes.
      Many of the proposals received by the Government came straight from the oil companies. If the companies now find that their representations are falling on deafer ears than they expected, they have only themselves to blame. Their partisanship during the period of the Labour Government and the partisan manner in which they briefed the Conservative Opposition left them with few friends on the Labour Benches who are willing to take what they say at face value. Of course, they now find that the Government are far more avaricious in their desire to get their hands on the oil companies' profits than the Labour Government ever dreamt of. Therefore, to some extent the oil companies have only themselves to blame.
      Mr. Tim Eggar: Is the hon. Gentleman saying that a Labour Government would have taxed the oil companies at a lower rate?
      Mr. Straw: I doubt whether a Labour Government would have taxed them more. Had we sought to tax the oil companies as much as the Government have and had we made eight changes to the taxation system in 30 months, the Conservative Benches would have been packed with hon. Gentlemen well briefed by the oil companies.
      It is ironic that, throughout the period of the Labour Government, Conservative Members and official Opposition spokesmen expressed great reservations about the level of oil taxation and the system. They committed themselves to introducing major and successful reforms. All they have done is to make a complicated system more complicated. They have simply added pieces to it, cobbled other pieces together on top of it and substantially increased the total take. They have justified that, as they did last year, by saying that they needed the money.
      Having made those points about the partisanship of the oil companies, and although we take what they say with a pinch of salt and treat it with scepticism, we do not dismiss out of hand what they say. It is important that the Committee should not dismiss out of hand the considered report of the Institute for Fiscal Studies on the taxation of North Sea oil. That report was drawn up by a committee comprised of people with great experience in the oil companies and others who were expert and, perhaps, more detached.
      I do not suggest, and nor does the institute, that its scheme is the last word in oil taxation. The institute produced a relatively slim report, and the details will have to be worked out, but it seemed to address itself to the problems in the present system, which is complicated and involves four different taxes. The Under-Secretary may say that the Government have reduced the number to three by changing SDP into APRT, but there are still four systems of computing the charge to tax, even if one of the charges is deductible against another.
      My right hon. and learned Friends will remember from our discussions on last year's Finance Bill that the taxation system is fearsomely complicated and involves all sorts of problems about uplift, safeguard, separation and many other concepts that I thought that I could forget last year, and had to relearn for this debate.
      The Institute for Fiscal Studies proposed a single system of taxation based on the profitability of fields. The tax rate would be brought in at varying levels as different

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      rates of return on the fields were triggered. That seems, in principle, to be a system which deserves the greatest consideration.
      I found it difficult to follow some of the institute's calculations, particularly the suggestion that the total take under its illustrative projection would be exactly the same as under the present system. I do not understand, though there may be an explanation, how £7·4 billion, which is the total take for 1983, under the present system is the same as £6·6 billion, which is the institute's proposed total take, excluding corporation tax. However, it seems that the proposed system could be used to produce more or less the same take as the present system produces.
      As the Government have had so much time to consider alternatives and as they have received representations from the institute, we need a detailed explanation of why they chose not to go for a change in the system or for a system that would last, but have instead added to the present rather rickety structure, with the possibility that it will be changed in future.
      The Opposition's interest is for the highest possible return to be achieved for the nation in the tax take from the North Sea, consistent with a fair return to the oil companies, the most productive use of North Sea resources and a sensible depletion policy.
      We do not cavil about the Government's total revenue take, which is one reason why we will not divide the House on the amendment, but we question whether the Government's course of eight changes in 30 months is the best way forward, and there are many questions about the system that the Government need to answer.
      8.30 pm
      Mr. Eggar: I listened to the hon. Member for Blackburn (Mr. Straw) with considerable interest as he tried to attack the Government on the one hand and yet tried to retain the purity of his Socialist soul on the other. It was an interesting example of how far the hon. Gentleman has progressed from those heady days when he had a purity of conscience as leader of the National Union of Students. I agree with the hon. Gentleman on one matter. Oil taxation is in a mess, basically because the original scheme, put forward and accepted by the then Government, was unfortunately badly thought out and designed in particular with the interests of the two major oil companies, BP and Esso, which advised the Government at the time on the structure to be adopted, in mind. I have no doubt that this is the origin of the problem.
      I was also extremely attracted by the proposal put forward by the Institute for Fiscal Studies. There is a good argument for radical reform of the oil taxation system. However, the more one goes into the implications of any radical reform, the more obvious the difficulties become. On balance, I felt that the analysis by the Institute for Fiscal Studies would not carry the day and that it would not have been right for the Government to adopt it. The structure makes the oil companies into utilities. It makes them into companies that need to have a fixed rate of return. That is not a position that any sensible company, even a State oil company, should be ready to espouse. Oil companies are, after all, in the business of risk-taking. It is reasonable for them to expect a higher return if they take higher risks.
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      The other difficulty with the IFS proposal is that once one tries to overturn an established system of taxation like PRT one inevitably gets winners and losers among the oil companies. Even if the logic of the IFS proposal had been followed through as fairly and impartially as possible, some companies would have benefited considerably and some companies would have lost considerably. For that reason alone, a modification of the existing system was probably preferable. This means, however, that there will have to be considerable, continuing changes as there are changes in the position in the North Sea in the sizes of the fields and in technology. One of the industry's criticisms of this and the previous Government has been the frequency of oil taxation changes. That is a cost and a problem that the industry has to bear because of the origins of the tax structure set down in the original PRT proposal.
      Mr. Dick Douglas: Circumstances in the North Sea are changing now. The Government's proposals are based on existing fields and make no allowance for the fields that we need to develop.
      Mr. Eggar: I could not agree more. I shall develop that point.
      The hon. Member for Blackburn was unfair to the Government as, indeed, have been the oil companies. It was, after all, the oil companies themselves that put forward the argument against SPD and in favour of an advance PRT system. That was put forward by the United Kingdom Offshore Operators Association. The industry has been less than generous in accepting that the Government have followed the proposals that the tax subcommittee of UKOOA advanced.
      The industry's major anxiety is that the Government's tax take has not fallen. A reduction in the overall Government tax take was an integral part of the industry's proposals. It argues, not unreasonably, that, just as the Government said that as oil prices increased so would the tax, when oil prices fall, and therefore companies are making less money, taxes should come down also.
      It is obvious that any company and any individual would prefer to pay less rather than more tax. It must come as no surprise to the oil industry that the Government have not reduced their tax take. Those of us who talk to oil companies, including Opposition Members, gave as our considered view that, bearing in mind the state of the economy, there was no way that the Government would accept a system that involved a significant reduction in the tax take. That is the reality which the industry should have realised. I am rather surprised at the attitude that some have taken.
      The Government are quite right to stress that the overwhelming criterion that they must apply is not the oil companies' but the national interest. The Government must make a judgment of what that national interest is. The Government should have considered several factors before making changes. Perhaps they have paid less attention to some than is appropriate. First is the lack of tax stability and certainty. On balance, we are landed with the present tax system, one of the unfortunate results of which is some uncertainty. I am afraid that the industry must accept that. We must welcome, as I notice the hon. Member for Blackburn did not, the Chancellor's statement that he hoped that this would be the last change and that we were going in for a period of stability.
      Secondly, it must be the Governmet's intention—I recognise that this is more a matter for the Department of

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      Energy than for the Treasury—to promote exploration for oil and to promote development of oil reserves once they have been identified and found. The Government say that there is no sign that their tax changes have had any effect on that because the level of exploration remains high as indicated by the interest in the seventh round.
      The Department of Energy and the Treasury fail to recognise that it is extremely cheap, in oil company terms, to drill a well and to explore. It may cost £5 million or £10 million, which is big money to many companies, to drill a well. But compared with development costs in the North Sea which may be £500 million to £1,500 million, £5 million here or there on a well is not significant. Therefore, any Government who look to the level of exploration as an indicator of whether the industry has been put off by their policies is failing to take all the factors into account. Equally, no oil company will cease production on an existing field. That makes no economic sense. For an indicator of the effect of Government policy and other factors we must look to the level of development.
      It is a sad fact that there has been remarkably little development recently. I understand that there will be no platform orders for the northern North Sea—that excludes the Morecambe Bay development—this year. It is the first year for many that there will be no major platform orders. That represents far more than a loss of profit by oil companies. It means a major loss of jobs in the United Kingdom—in the construction yards for the jackets and for the module builders. It is a considerable achievement by the Government that United Kingdom contractors win about 80 per cent. of all orders going to the North Sea. That is a lot of jobs. So it is not merely that oil companies are losing profit. It can be argued that Government oil taxation policy leads directly to a loss of jobs.
      The Government also sometimes fail to appreciate that the PRT system was originally developed for very large fields producing anything up to 500,000 barrels a day and containing up to 1 billion barrels of reserves. We are now entering the second phase of development in the North Sea. There are at present 26 fields either producing or under development. The next 11 fields that have been defined as possible commercial developments are only a quarter of the size of those already in production. As the nature of the fields changes, the Government should adjust the oil taxation system to take account of that. Although the advance PRT was a significant improvement on the previous SPD—it is not just a tax on revenue, as the hon. Member for Blackburn rather mischievously suggested, as his smile now shows—it does not take account of the downgrading in the size of fields coming up for development now and in the future. Moreover, if we are honest, just as we argued that as oil prices rose, taxation must also rise, so the reverse argument should at least be taken into account.
      My greatest criticism is not so much of the changes in the Bill as of the omissions from it. I had hoped that there would be specific proposals for three kinds of field. First, there are the highly marginal fields, which probably need a special taxation system of their own. Secondly, there are the so-called satellite fields, of which Claymore is an example. The North Claymore development would have required a unique platform system which would probably have been built by British Shipbuilders, but, because of the last taxation changes, it did not go ahead. It seems curious that an otherwise viable development which would have
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      produced profits for the oil companies, extra taxation for the Government and jobs for the people producing the equipment did not proceed because of the nature of the taxation and the rules of PRT. The third area to which the Government should pay attention but, regrettably, so far have not done so is further investment to provide additional compressor stations or whatever is needed to increase recovery from existing fields.
      All of those factors relate to small fields. We are not dealing with great glamour fields such as the Forties. Nevertheless, these smaller fields are important if we are to gain the maximum benefit for the country from the North Sea. As the territory matures and as additional secondary and even tertiary recovery techniques rare required, increasing attention must be paid to these factors.
      The Government have some discretion to encourage developments of this kind. Two come to mind immediately. The Government can—although they never have—rebate some of the 12½ per cent. royalties normally due to them. I hope that the Minister will comment on that. The Government could give some encouragement to oil companies by saying that where there is a highly marginal field the Government will consider with an entirely open mind ceding some of the royalties that would otherwise be due to them.
      8.45 pm
      The other area that needs further investigation is field definition. Before the partners in the South-West Claymore field, which is another development of the Claymore field, decided that they were prepared to drill additional wells to discover what was in the field, they felt that in order to justify spending additional money they had to go to the Department of Energy and obtain a clear ruling as to whether the South-West Claymore field was separate from the main Claymore field. In that case, the Department of Energy was able to say that that was a geologically separate field and would be treated as such for PRT purposes. The Department of Energy has an element of discretion. I hope that the Minister will say that the Department of Energy will look carefully at applications for definitions of fields because the way in which a field is defined—whether it is a separate field or part of an original accumulation—can have a key effect on whether the field is to be developed.
      The oil companies are not the most popular organisations to argue for. They do not have many friends on the Conservative side of the House or, obviously, on the Labour side. None the less, the North Sea and the service industries for the North Sea are the most dynamic part of our economy at the moment. They need more support than the present Government or previous Governments have given them. It would be a great tragedy if, through the need for money as dictated by the Treasury, we drove away the companies from those fields and destroyed the considerable technical and engineering expertise that has been developed in Britain. We should not be under any illusion. The oil industry is a world-wide industry. If British or American petroleum engineers feel that they have not a reasonable future and that a reasonable number of developments are not materialising in the North Sea for them to work on it will not need a decision by their companies to withdraw them from the North Sea and put them in part of their other world-wide operations. They will go of their own accord to develop their careers.

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      We have had considerable success in building up offshore technology in many areas. Of course, if there are no domestic orders available, companies will do their best to export, but traditionally any developing industry, particularly in high technology areas such as the North Sea, needs a sound home demand from which to build. Perhaps we are becoming a little too occupied with the immediate tax take. Perhaps we are not paying enough attention to the future and to the fact that if we allow a significant planned and phased development of our North Sea assets to continue the tax take in the long run and the tax recovery in future years will be much greater than the tax forgone in the immediate future.
      I am not happy with what the Government propose. I hope they will keep the matter under close review and realise that the long-term future may dictate measures other than, perhaps, what short-term public sector borrowing requirement considerations may dictate and that we may hope for a sympathetic response from the Minister now and in Standing Committee.
      Mr. J. Grimond: The taxation system of Britain is now in such a muddle that every hon. Member is aware that even those with the simplest form of income are unable to discover what tax they should pay. It is high time that the system was overhauled.
      It is particularly unfortunate that petroleum taxation, which is a fairly recent development, is constantly being changed and is already in a muddle almost equal to that of the general system. Consideration must be given to the weight of oil and petroleum taxation. There are still many applications for licences in the North Sea and a certain amount of exploration is taking place, but development has undoubtedly been slowed down.
      There is a case for slowing down development. There are those who think that the oil is better kept at the bottom of the sea than constantly being exploited for temporary advantage. However, that is not the point taken by the Government. The Government assure us—or at least they were doing so until quite recently—that their taxation system is not preventing the development of the North Sea and that it is not part of Government strategy to damp down development.
      The second drawback of the present taxation policy is uncertainty, because it is constantly changing. This is having an extremely serious effect not only on the oil companies, which to some extent can look after themselves, but on the whole of Scottish industry. The rig and platform builders and module builders now have no work. The problem does not end there, because it is filtering through to the whole of Scottish industry. Those who laid out large amounts of capital on the understanding that there would be steady development in the North Sea now find that they are without orders because of taxation changes.
      I represent a constituency that is particularly dependent upon oil, as are other areas in the north of Scotland. In addition to the general damage that is being done to the Scottish economy by the uncertainty about taxation and the contraction of the oil companies, there are particularly serious results in the north of Scotland and in my constituency. For example, in Shetland and Orkney the local authority is liable to lose a large proportion of its income through the derating of the terminals at Sullom
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      Voe and Flotta. There is no doubt that a few years ago the oil companies would have made good a considerable proportion of that loss. They showed every inclination to do so, and I must pay them a compliment, because they have been extremely co-operative in matters affecting the local economy. However, now that the Government have levied extra taxation upon them they are not in a position to make good the loss.
      The Government are taking the extra taxation for themselves and depriving local authorities of revenue from the oil companies. The same is true of barrelage and the contributions that it makes to the charitable fund in Shetland and other causes. A large proportion of the economy of Orkney and Shetland has been geared to the steady development of oil. That is now problematical owing to the constant uncertainty about taxation as well as the high rate at which tax is levied.
      If we are not careful, the companies will move their resources and skills to other places. I am informed that there is great interest in oil in the sea off China. Apparently many oil companies are investigating whether the terms offered by the Chinese Government will be easier for them than the terms offered by the British Government. There are other places in which the oil companies are beginning to feel that they might get a better deal than in the United Kingdom.
      The Government must not be misled by the exploration that is taking place and the applications that will be made for licences when the next round takes place. Let them remember that development is not going ahead. Let them bear strongly in mind the effect upon the local economy and upon local authorities which, through no fault of their own, and no desire of their own, have become liable to great expenditure because of oil.
      Shetland has been changed tremendously by oil, in many respects for the worse. It has had to lay out large capital sums. The oil companies are being squeezed by the Government and cannot make the contribution that was expected. Above all, the Government must not ignore the effect on the Scottish and English economies. I have in mind building and engineering and the expected benefits to industry from the development of oil.
      There may be a good case to slow down development. There is a good case for conservation. But there is no case whatever for creating uncertainty throughout the oil and related industries, even as a means of pursuing conservation.
      Mr. Richard Page: My hon. Friend the Member for Enfield, North (Mr. Eggar) put the case admirably. My purpose is to reinforce the warning that we gave in Committee last year. If the North Sea oil tax regime is not substantially altered, it will reduce the development rate of the fields.
      I was glad to hear the hon. Member for Blackburn (Mr. Straw) singing a slightly different tune from last year. Special petroleum duty was introduced in 1981 because there was no time to work out a more integrated change to the tax structure. I do not particularly care for it. I do not approve of the principle of taxing companies on revenue. I much prefer the principle of taxing them on profits. It was acceptable for one year while the oil companies, through the UKOOA, worked out more acceptable alternatives.
      The oil companies have cried wolf many times, and each time they have been found out. This year's Budget,

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      with the increase from 70 to 75 per cent. PRT, and the introduction of advance PRT, will further hold back not exploration but development. I agree with the hon. Member for Blackburn that there is the danger that we could cease to be self-sufficient in oil in the tail end of the 1980s to the beginning of the 1990s and eventually become a net importer of oil. No new field has been developed since Hutton in 1980. Three days ago Shell turned down the opportunity to develop the Tern field. That confirms that exploration is going ahead but that development is coming to a stop.
      I do not wish to labour the taxation point or to stray into clause 124. The new tax structure, especially with APRT and the Exchequer's natural desire to smooth tax payments, will not give an incentive to invest in satellite development. My hon. Friend the Member for Enfield, North made that point about the Claymore field. APRT will be a further restriction on the development of marginal fields. The restriction is a hangover from the Finance Act 1981.
      APRT will hit hardest fields of low profitability which have low PRT liabilities. It is perhaps one of the most worrying parts of the Chancellor's approach. The UKOOA recognises that by proposing that temporary APRT could be offset against PRT or an allowance be made so that, as the field came to the end of its life and there are not the PRT liabilities, the advanced payments could be returned. At present APRT is becoming a forced loan to the Government, with no interest attached, for a period that could exceed 20 years. The effect on cash flow is obviously worrying and serious.
      As a matter of principle I start to query the concept behind the tax. In short, I am sad that the new tax structure makes it difficult for North Sea oil operators to generate enough capital to finance the development of their new fields—developments that have to take place if we are to remain oil self-sufficient. I do not want to see this country held to ransom by oil producers from overseas.
      9 pm
      Dr. J. Dickson Mabon: The speeches so far have been of high calibre. The hon. Member for Blackburn (Mr. Straw) asked some pertinent questions. The principal one that I should like answered tonight is that of waste. There may be a serious threat to existing fields, particularly earlier ones that might be reaching the end of their production profile. There will be a strong temptation, because of the financial structure, prematurely to shut them, leaving a great deal of oil that will never be recovered. It would be utter waste on an unforgivable scale if some of the existing fields were to suffer that way.
      The Minister may not be able adequately to answer this point tonight, and I do not criticise him for that. However, he should take back to the Treasury the point that it is in serious danger, as all Treasuries are, of overtaxing the golden goose and ensuring that we do not get a full and proper return for the nation.
      If we tax oil at any time, we must examine the other industries that we want to succeed. We should maximise the amount of money going to the Exchequer from profits made in the field. I am glad that the hon. Member for Blackburn conceded that the oil companies expect and ought to get a fair return on their capital. It is a question not just of justice, but of the companies going to other offshore fields in other parts of the world—a problem to
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      which the right hon. Member for Orkney and Shetland (Mr. Grimond) referred. They could start to invest in other areas, leaving the North Sea relatively undeveloped.
      I do not believe that all the best fields in the North Sea have been discovered. There may be no more large discoveries to be made, but collectively there may still be a large amount of oil to be taken out of the North Sea. That is a second warning that the Treasury must heed. The nature of the production profile, as it is called, of the North Sea province over the next 20 years is important. It would be a tragedy if Britain slipped from self-sufficiency to being a net importer of oil. It is no consolation that oil prices seem to have gone down for the present. That does not mean that we can afford to return to being a net importer of oil.
      The hon. Member for Hertfordshire, South-West (Mr. Page) said that we have not had an annex B approved by the Government since August 1980. By coincidence the SPD was announced in November 1980. I am not deceived by all that the oil companies have said in the past. One does not have to be an ex-Minister of State, Department of Energy, to realise that sometimes the oil companies cry wolf. Therefore, they are not listened to when they are serious. However, they are now serious and there is a possibility that they will not go ahead with pending developments.
      The Minister of State, Department of Energy has gone on record in The Oilman of 24 April 1982. He said that there were three annex Bs pending. An annex B is a submission to the Department of Energy for permission to go ahead and develop a field that has been appraised in every conceivable way by the operator company, the consortium and the Department of Energy. Everybody knows the three possibilities. It is by no means certain that they will go ahead.
      However, the Minister solemnly said that he was confident
      "that none of them is likely to be retracted because of the current taxation structure."
      I hope that the Minister is right, but that is not my information. I hope that I am wrong and that they will go ahead.
      The Minister of State said that
      "the current depressed fabrication industry would significantly improve after the next 18 months as new orders came on stream."
      But he added that it was dependent on these annex Bs being approved. That is absolutely true.
      I have always wanted to quote from the Largs and Millport Weekly News, the paper that I was brought up on as a little boy. On the front page of the current issue of this splendid weekly newspaper there is a reference to Ayrshire Marine Constructors. From my flat in Largs, I can see the growing platform being built there at Hunsterston, but the men building this novel and remarkable platform, which is due to leave for emplacement later, have been given a 90-day notice. It means that unless another order is secured within 90 days, they will be unemployed. That, in turn, affects 800 families who live in Ayrshire, Lanarkshire and Renfrewshire and even some whose homes are in England. It would have an impact which could spread quite extensively. Incidentally, these are not the only people under 90-day notices. In the Financial Times of 21 April there is a list: Lewis Offshore, Ayrshire Marine, Charlton Leslie of Wallsend on Tyneside and William Press on Teesside. All of them either have or are about to issue 90-day notices on substantial numbers of workers.

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      I declare an interest. I am a deputy chairman of RGC Offshore. We employ about 800 men. We are not in danger of issuing 90-day notices because at present we are building the very large Beryl B jacket. But if no further orders are secured by Christmas of 1983 or by the spring of 1984, we could be in the same position.
      That brings me to the third point that I wish to make. We do not have to beware just of waste because of the failure fully to exploit fields. It is not just a matter of self-sufficiency for Great Britain. We also have to consider the immense loss of talent which, under successive Governments, we have created in the last 10 years from very little information right up through a superb learning curve so that we are now in the position of having one of the best offshore fabricating industries in the world.
      The Offshore Supplies Office has done a great deal to help the industry to get 80 per cent. of the United Kingdom market, and its director general is right when he says that we ought to go out and seek more orders abroad. That was the purpose of building up the industry. It was not just to capture our own market in a protectionist way. The intention was to be able to service offshore oil fields abroad as well as in the North Sea. If we sacrifice these men at these establishments, we shall not be able to go out into the export market. Therefore, it behoves the Department of Energy to press Treasury Ministers to realise that the Government are going too far. The warning signs are clear.
      I do not join in the cries of wolf made by the oil companies, but this time I believe that they are sincere. They are immensely shocked at the way in which UKOOA' s submission has, in effect, been thrown out. Never before have the companies come together through UKOOA to put a submission to the Government in a united form. In my time, during the consultations between August 1978 and the spring of 1979, I had the pleasure of being with the right hon. Member for Heywood and Royton (Mr. Barnett), then Chief Secretary, and the right hon. Member for Ashton-under-Lyne (Mr. Sheldon), then Financial Secretary, and we had to interview each company. They did not want to be interviewed collectively or in groups. They wanted to be seen individually. It is all the more remarkable that the oil industry has come together in one submission to the Treasury and asked to be listened to.
      I have no doubt that the reference made to the proposal of the Institute for Fiscal Studies is valid. I hope that the purpose of the debate is to persuade the Government—and probably their successors—to consider the revision of the system of taxation in the North Sea in order to achieve the four objectives that I have set out.
      Mr. Robert Sheldon: I recall the discussions when the proposals for a different form of taxation were put to the right hon. Gentleman. He did not respond on that occasion.
      Dr. Mabon: I wish that I had been in a sufficiently strong position to be able to respond and decide. It would have been much better if I had been listened to. Unfortunately, I was not in that supreme position. Perhaps time has not passed me by and I might yet have that opportunity, in which case I shall read this speech with immense pleasure so that I can carry out what I am advocating.
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      It is up to the Government—and I hope their successors—to try to review the system in order to be consistent with those four aims. I accept that, as a nation, we should expect to get a reasonable share of North Sea profits, but that is not the overriding objective of the British people. Another objective is to avoid wasting our oil and gas, either by fiscal nonsense or by inadequate procedures on the part of the Department of Energy. It is wrong that we should lose self-sufficiency at any time during this century. Only a genius of a Government could organise that. However, it is conceivable that, if the Treasury gets its way, we could see a dip in prodution before the end of the century and we would not have self-sufficieny in oil.
      The offshore supplies industry has had a superb record of achievement in the past 10 years. Therefore, I plead with the Minister, apart from answering the various points that have been raised in the debate, to go back to the Treasury better informed and say that perhaps we are getting close to the point at which the law of diminished returns will apply and Britain's self-sufficiency will be prejudiced. An otherwise enterprising industry does not deserve to be penalised by heavy and awesome fiscal burdens.
      Mr. Douglas: I listened with great interest to the right hon. Member for Greenock and Port Glasgow (Dr. Mabon), as I did to other right hon. and hon. Members who have participated in the debate. I hope that Ministers will note the degree of anxiety that is being expressed by hon. Members. As has been put rather whimsically, there is a feeling that we are liable to kill the goose that lays the golden eggs. We should be careful how we balance the need to obtain some of the economic rent, which undoubtedly can accrue to companies in the North Sea, against the need to ensure security of supply and self-sufficiency for as far into the future as we possibly can.
      As my hon. Friend the Member for Blackburn (Mr. Straw) said, there have been a remarkable number of changes in taxation. We are now into the eighth change in 30 months. We used to talk of seven changes in a shorter period of 18 months. In the development of an area as complicated as the North Sea, some stability in taxation is needed. No one can argue that we have had such stability.
      9.15 pm
      Given the discoveries that have been made, it may be justifiable to play about lightly with the tax regime and to expect the companies to suffer. However, the statistics alluded to by the hon. Member for Enfield, North (Mr. Eggar) show that the average size of the first 25 or 26 fields has been about 447 million barrels. The average size of the next 11 fields that may be up for development is only about 91 million barrels. There are 37 other "marginal" fields whose average size is only 62 million barrels. We are going for smaller and deeper fields and the cost of production per daily barrel is rising considerably.
      In the early 1970s, when I first began to pay attention to the industry, we were talking about £1,000 per daily barrel for production costs. The range is now anything between £10,000 and £20,000 per daily barrel. The report shows that the Government's fiscal mechanism may lead to the destruction of the onshore industry that we have built up over a considerable period, particularly in Scotland and the north of England. As the right hon. Member for Greenock and Port Glasgow said, it is all very well for the

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      director general of the Offshore Supplies Office to say that he is encouraged by the way in which companies try to find work overseas. The Government may tell us how much overseas work is going to Scottish and United Kingdom yards. In the next few weeks there will be a massive British stand at the offshore technology conference and exhibition in Houston, Texas. However, how much work do we win against overseas competitors in their own areas? For example, how much work do we get from Norway and how much offshore work do we get from the United States of America? I doubt whether we win much work there. We have some work in Brazil and we cannot forget Canada.
      The right hon. Member for Orkney and Shetland (Mr. Grimond) mentioned the possible and probable development of China. Our expertise is related to what is happening in offshore China. How many orders for United Kingdom yards are we likely to get from China? I recognise that it is difficult to maintain orders without a cyclical effect. However, the Government's policy is doing nothing to damp down the cyclical effect. Indeed, the Government's policies are designed to increase the cyclical effects of depression and slump and of boom. Unfortunately, we seem to be moving into a slump.
      In its quarterly bulletin, the Bank of England had an excellent article about the longer term economic effects of North Sea oil and gas. Page 63 states:
      "Clearly, then, the benefits of the North Sea accrue in great measure to the Government. In 1980, tax revenues from this source amounted to more than 4% of total receipts from taxes, and by 1985 this may more than double. But even after this taxation, North Sea cash flow is not a trivial proportion of UK industrial and commercial company gross after-tax profits, and it is expected to increase sharply in the next few years. Pre-tax, North Sea licences earned about one third of all gross trading profits, net of stock appreciation, in the UK in 1980."
      Perhaps the Minister can give us the projection for 1981, because these are considerable flows accruing to Britain as a whole. We wish to ensure that those flows are kept up.
      If we consider an important item of depletion policy we find that, after discussing some technical aspects and other incidental developments, the article states:
      "Severe though these technical difficulties are, they might prove less important than a failure to assess properly the economic consequences of a given depletion policy. One of these relates to the security of supply: it is likely to be of considerable economic and political value to the UK to be in a position to save itself, and its main economic partners, from the worst disruptive consequences of any future interruption to world oil supplies."
      That is above and beyond arguments about tax revenue. We must devise a policy to ensure that we keep the security of supply as far into the future as possible.
      References have been made to the UKOOA submission to the Government, and I wish to ask some direct questions about it. I should declare my interest in offshore oil in that I advise a drilling company and a diving company. I am also being sponsored in the London marathon by some oil companies, which will donate 10 barrels of oil if I complete the course. Their view of the spot market price after 9 May varies. One company puts it at about £200, another at £170 and another at £150, so I am a little worried about the spot market.
      Mr. Straw: Is my hon. Friend taking it in kind?
      Mr. Douglas: It will be donated in cash to a well-known charity.
      The UKOOA view of advance petroleum revenue tax is that there should be a sliding scale of tax. Will that
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      argument be accepted or will we have 20 per cent. until kingdom come? As the hon. Member for Enfield, North (Mr. Eggar) knows, UKOOA argued for greater consideration to be given to the definition of satellite fields and to a consideration of how one gives incentives to develop deeper fields. I know that there is great difficulty in obtaining a balance between Government revenues and incentives to explore, develop and produce to the technical optimum.
      The hon. Member for Enfield, North alluded to different forms of recovery. There is no incentive in the Government's proposals to give assistance to what we loosely call tertiary recovery. There has been some experimentation in the Forties field in different forms of tertiary recovery. Fortunately, the rate of recovery has been running at over 40 per cent. However, we should give incentives to ensure that the maximum technically possible amount of oil is taken, because it will be difficult to return to those fields once the primary and secondary recoveries have been carried out. That should be related to new developments in platform construction and design. The Government are lacking in that incentive and should give greater consideration to ensuring that the maximum amount of oil is extracted from the North Sea and that we maintain self-sufficiency for the longest possible time.
      I shall allude to one or two matters directly affecting my constituency in clauses that are related to clause 117. During the Budget debate in a discussion on ethane I asked the Chancellor of the Exchequer if the provisions in clause 119 might be broadened to include propane and butane, which are extremely important. I wish to ask about the definition of ethane in that clause. I am sure that my hon. Friend the Member for Clackmannan and East Stirling-shire (Mr. O'Neill), with his interest, will want to cover this point, too.
      The definition of ethane is extremely slim. Clause 119(6)(a) states:
      "ethane means oil consisting of ethane to a level of purity consistent with normal commercial standards."
      That is an extremely slim definition, particularly as in the Oil and Gas (Enterprise) Bill we had a comprehensive definition of gas inspired by the hon. Member for Bedford (Mr. Skeet). Those are important considerations.
      The right hon. Member for Orkney and Shetland (Mr. Grimond) has talked about the concern of Scottish local authorities about the derating of certain industrial aspects of petrochemical development. I do not expect the Minister to reply to that, although the right hon. Gentleman might expect it. That matter also affects my constituency.
      Over a considerable number of years we have built tip an onshore industry related to the harshest and most difficult areas of offshore oil development. That expertise ought to be used internationally. The international credibility of our onshore and offshore industries will depend on the prudent use to which we put our scarce oil and gas resources. We know now that exploration is declining and that development is declining. The Government, by their taxation policy, cannot absolve themselves from their responsibility in relation to that decline.
      Mr. Martin J. O'Neill: Until my hon. Friend the Member for Dunfermline (Mr. Douglas) spoke, the emphasis in the debate had been on the offshore implications of taxation

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      and the jitteriness that the oil companies are now experiencing. Those of us who have oil-related interests in our constituencies tend on occasions to look a little askance at the oil companies when they seem to be crying wolf. However, there is a consensus in the Committee that the plight of the oil companies is such that each of us has in his own way to look at ways of seeking to help them in this difficult time. The fact that there have been eight changes of regime in a short period has meant that a whole range of activities must be looked at with a view to saving money and to reducing the potential for loss.
      British Petroleum is of considerable interest to my constituents. I am talking about Grangemouth, which abuts my constituency. My hon. Friend the Member for Stirling, Falkirk and Grangemouth (Mr. Ewing), were it not for family illness, would probably have made the representations that I am making this evening.
      My hon. Friend the Member for Dunfermline referred to clause 119. Difficulties have arisen because we were inclined to believe that the assumption behind the clauses was that there would be a gas-gathering pipeline and that there would be ease of access to supplies from Brent and Magnus, which at present do not exist. There are implications for the pipelines on the mainland. Those of us who have knowledge of the geography of Scotland will appreciate that there is a missing link between Moss Morran and Grangemouth.
      9.30 pm
      Part of the problem is that about two-thirds of the ethane that will eventually arrive at Grangemouth will be subject to a different tax regime from that enjoyed by the crackers at Moss Morran. Thus, in the context of the difficulties in which the oil companies find themselves as a result of the constant changes and jitteriness of the industry and the recession, I make a plea for special consideration to be given to the old established petrochemical complexes which, ironically, could suffer as a result of the discovery of North Sea oil.
      We recognise that in the past these complexes have been the first to benefit. Before Moss Morran comes into operation, there will probably be a period of about 12 months when the Grangemouth cracker facilities will be available for use and will provide the kind of revenue which is obviously the desire of the Government in this part of the Bill.
      I should like the Minister to re-examine the definition of ethane, because we feel that, in the context of the difficulties in which the oil industry finds itself now, and in the light of the many graphic descriptions we have had this evening of the problems of the supply industries, those who are downstream are experiencing equal difficulties. Certainly the narrowness of the definition in clause 119(5) will create difficulties and could jeopardise the efficiency of the Grangemouth operation.
      Scottish Members and those who wish to see the old established friends of the oil industry given a chance would like to think that the Government, in reconsidering the context of this legislation, will at the same time reconsider the effects of clause 119.
      It would be wrong for us to cry wolf at this time, because this type of approach by the oil companies is no longer relevant. They are in serious difficulties. There is already a facility at Grangemouth. It was built in the late
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      1960s. It would now cost £250 million to replace it, and to adapt it to meet the challenge which would come from the supply of ethane at realistic prices would cost about £25 million. In the context of the oil industry such sums are not large, although they seem so to mere mortals such as ourselves. Nevertheless, these sums could be expended, the facilities could be made available and the production realised within a relatively short period. Therefore, I ask the Minister to re-examine the taxation of impure ethane, because it is an area in which one group could benefit quickly. Moreover, the revenue from it could be increased, because the financial position of this enterprise could be turned round in a very short time.
      I am conscious that I could be accused of special pleading, and I do not deny that, but it is not special pleading that would disadvantage anyone else in the oil industry in the United Kingdom. The main consumer of the products of the chemical works to which I am referring is a wholly owned subsidiary of British Petroleum, and I understand that it would be possible for that wholly owned subsidiary to make considerable use of those products were the scheme to go ahead.
      The Government have had criticism of varying degrees of severity from both sides of the Committee. None of us wants to throw up the chance of ensuring a reasonable tax take to the Treasury, but we feel that there are areas where account should be taken of mitigating circumstances. The figure of £5 million to £10 million in tax relief, if Grangemouth could be treated in the same way as Moss Morran, would be more than justified by the opportunities for the BP chemicals exercise in Grangemouth. It would be able to make considerable profits and to contribute in other ways to the wellbeing of the community and to the provision of additional revenues to the Treasury.
      Mr. David Lambie: I add my voice to those of hon. Members on each side of the Committee who have said that the present problems of the North Sea oil and gas industries are caused by rising taxes and falling prices. As a country, we can do very little about the second of those factors—falling prices—but as a country—and this is the nub of the debate tonight—we can do a lot about the rising taxes being proposed by the Government.
      The Government, by their taxation policies, are continuing to discourage new developments as well as sacrificing the extension of oil self-sufficiency for the United Kingdom. From the investment point of view, the Government must think again and provide incentives to end the hold-up of new oil developments. The effect of the very high taxation brought in by the Government is to create an enormous amount of uncertainty in the planning of the oil companies. Indeed, it is strange that in speaking to the chairmen and managers of various international oil companies and in listening to their criticism of present Tory Government policy one hears over and over again the phrase "Bring back Tony Benn—all is forgiven."
      It seems strange that the international oil companies, the multinationals, are now looking back with a certain nostalgia to the period when my right hon. Friend the Member for Bristol, South-East (Mr. Benn) was the Secretary of State for Energy and when my right hon. Friend the Member for Greenock and Port Glasgow (Dr. Mabon) was the Minister of State at the Department of Energy. That shows how the confidence of the

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      multinational oil companies, which supported the election of the Tory Government, has been shattered by the policies carried out by the Government during the last three years.
      With the oil companies holding back on billions of pounds worth of North Sea development—not to say preparing to take up the battle of taxation—I believe that we are heading for a period of prolonged nervous indecision. New oilfields need to be brought on stream in the mid-1980s, because fields that have been producing since the mid-1970s will by that time start to go into decline.
      A long period of uncertainty is not needed at this time. There has to be an assurance that the Government will not chop and change taxation policies every couple of years or so. The oil companies need, and are seeking, a much longer period of stability, and the Government must give it to them. Present North Sea tax changes are not in the best long-term interest of this country and of the people who work in the oil industry. In fact, last year's cancellation by the Government of the huge North Sea gas-gathering pipeline now places question marks over some of the more isolated marginal oilfields. This has created uncertainty among the companies that service the oilfields.
      I wish to take up the point raised by my right hon. Friend the Member for Greenock and Port Glasgow, who dealt with the Government's changes in the oil taxation policy for the onshore industry. He quoted from the Largs and Millport Weeklyy, News. He said that he did so because he has a house in Largs. However, perhaps the reason why he quoted from that paper is that he is having difficulty in finding a seat in the Greenock or Port Glasgow area. I say that as a personal friend. If the boundary changes proposed by the Parliamentary Boundary Commission for Scotland are accepted there will be a new seat, Cunningham, North, in the centre of which will be Largs. Given my right hon. Friend's association with Largs, and being an avid reader of the Largs and Millport Weekly News, he might have the opportunity to become a prospective candidate for the new seat, but he might have to beat my son-in-law to get it.
      I read in my own local newspaper, the Ardrossan and Saltcoats Herald, that there will be 900 redundancies at Ayrshire Marine Constructors at Hunterston in Ayrshire. Approximately 1,100 people work there and 90 days' notice of redundancy has been given to 900 workers. That might not be a serious problem in other areas, but, as my right hon. Friend the Member for Greenock and Port Glasgow knows, it is a serious problem in North Ayrshire where the unemployment rate is 25 per cent. Every third man is unemployed, yet one of the largest employers in the area is making 900 men redundant.
      The majority of those men live in my constituency or in the neighbouring constituency of Bute and North Ayrshire. If they register at the employment exchange the ratio will be one in two men unemployed. Hon. Members on both sides of the Committee who have never experienced such high unemployment cannot realise how it can kill an area and any opportunity of development in it. Young people leaving secondary school with all their aspirations and qualifications have no opportunity or hope of getting a job. That is why I hope that the Government will change the taxation policy.
      I agree with hon. Members who have spoken about the tradition among hon. Members who believe that the multinational oil companies cry wolf. The companies can shift profits and losses from one part of the world to another and the only people to benefit are the shareholders.
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      But we have reached the stage where the Government must listen to the oil companies and to hon. Members on both sides of the House and reconsider their oil taxation policy. Perhaps we should go back to some of the policies operated by my right hon. Friend the Member for Bristol, South-East and my right hon. Friend the Member for Greenock and Port Glasgow. We have to reconsider those policies to try to get things moving again.
      About 7,000 people work in the five main oil platform construction yards in Scotland, which are all at various stages of rundown. The first crisis will be at Hunterston. We must get more orders, and the only way to do that is to give oil companies the facilities and money to expand production and to search for new fields to bring in more oil and more work for our people.
      9.45 pm
      There are rumours throughout Ayrshire that large oil and/or gas finds have been made in the Firth of Clyde off the Isle of Arran. Every oil company denies that those finds have been made and are ready for exploitation, but we have heard in my area rumours of oil companies taking options on hotels and derelict areas of land. One area in a former local shipyard is being sought by the local authority for industrial development, but it is rumoured that the harbour company is holding on to the land for when the oil companies start developing the oil and/or gas fields off the Isle of Arran.
      If those rumours are correct, we must get quick development to bring work to our people and the only way to do that is for the Government to change their taxation policy and to give oil companies money to develop fields in the Firth of Clyde.
      In Norway, if an oil company undertakes exploration, it must publish the evidence and tell the Government and its competitors whether the searches have been successful. If we are to give our oil companies more money by reducing taxation, we must also ensure that we follow the Norwegian example and make companies publish details of their explorations.
      I want to know whether BP has discovered oil off the Isle of Arran. Is it holding up development? If the company has discovered oil, it is the Government's duty to ensure that is has the money to develop the fields as quickly as possible.
      I hope that the Government will listen to the hon. Members on both sides who have called for a change in taxation policy and that they will play fair by the oil companies, but will impose restrictions to ensure that work is given to my constituents who have been given 90 days' notice of redundancy. A new order is needed now.
      The Minister of State, Treasury (Mr. John Wakeham): This has been a wide ranging and valuable debate of high calibre. I hope that I can live up to the standard that has been set. I should like, first, to speak about the Opposition's amendment. They did not say much about it. I do not particularly mind that. I should perhaps say something about it, however, before dealing more generally with the difficult and complex problem of oil taxation together with some of the wider issues raised by hon. Members on both sides of the Committee.
      I listened carefully to the hon. Member for Blackburn (Mr. Straw). I think that I am now clear about the purpose of the amendment. It was to have the valuable debate that has taken place. In legal terms, however, the amendment would have had the effect of leaving SPD to terminate at

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      the end of June 1982 as provided by last year's Finance Act but without any replacement before 1 January 1983. This would have cost the Exchequer £460 million in lost revenue in 1982–83 or nearly three times the amount that the oil industry's proposals would have cost.
      It was not a proposal that, at first glance, I would have expected to appeal to the Opposition. If, however, their intention is to retain SPD and raise the PRT to 75 per cent. as well, the effect would have been to endanger substantially future development. The revenue left in the hands of the companies, after tax at the margin, would have fallen by one-eighth and would have been substantially higher than the tax regime that existed in the days when the right hon. Member for Greenock and Port Glasgow (Dr. Mabon) was at the Department of Energy.
      The hon. Member for Blackburn made a number of complaints about the changes on taxation that have taken place since the Government came to power. At the beginning of my career on this Bench, I would not want to go to the scaffold defending the fact that there have been a number of changes or denying it. I think, however, that the hon. Gentleman did slightly over-egg the pudding. According to my reckoning, there have been five sets of changes under the government—the Finance Act 1979, the Petroleum Revenue Tax Act 1980, the Finance Act, 1980, the Finance Act 1981 and this year's Bill. The first followed the previous Government's proposals. The last is to effect, by and large, the wishes of the industry.
      The hon. Gentleman did not give sufficient credit to the substantial changes that have taken place in the environment since 1979. There has been the real increase in the sterling oil price of 30 per cent. even after the latest changes. The extension of the time limit of SPD was not to give more time for thought but to give the pattern of tax take that was considered appropriate by the Government. The Committee will be aware that the background against which decisions on oil tax are taken is always volatile but that the context in which our recent decisions were made was more turbulent than usual. This has served to emphasise the need to have for the North Sea a tax structure that is robust against rising and falling prices.
      After the Budget last year, which introduced supplementary petroleum duty, the oil industry was critical of the new structure. My right hon. and learned Friend the Chancellor of the Exchequer therefore invited the oil industry to submit alternative proposals on North Sea taxation before deciding on the form of more permanent arrangements. The response to the invitation from industry representatives and others has been interesting and helpful. We have studied the representations carefully before deciding which elements of the proposals could be recommended to the House in this year's Finance Bill and those which we could not accept. There were two main issues to be considered—first, the level of Government take and, secondly, the structure and fiscal regime in the North Sea.
      In considering the appropriate level of Government take, we must strike a delicate balance between the needs of the companies for an adequate return on their investment and the need of the nation to secure the full benefit from a national resource. The balance is not easily achieved and we have to look very carefully at the level of profits that companies may expect to make in the North
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      Sea to ensure that the returns are fair and attractive. We looked both at the estimated level of returns on existing fields and at probable future developments.
      We did not examine just one indicator of profitability or one future economic scenario. We looked at the estimates across a wide range of possible outcomes to judge the effect of changes in oil prices, costs and production on the profitability of the fields. The detailed analysis included falls in oil prices as steep as and steeper than those of recent weeks.
      The results show that even on pessimistic assumptions profitability would have remained sufficient to make exploration and development reasonably attractive.
      The right hon. Member for Greenock and Port Glasgow referred to the low return on capital. The companies still make handsome returns compared with the rest of British industry. Three-fifths of them achieve returns of between 10 per cent. and 20 per cent. on capital employed, and many make a good deal more than that.
      Several operators are actively discussing development applications with the Department of Energy. It would be rash to speculate on the number that will materialise, but on the figures several remain very attractive.
      We therefore concluded that a reduction in take of the size proposed by UKOOA of about £160 million this year and £500 million in each of the next two years could not be justified, but that some marginal reduction in the tax burden starting next year would be reasonable.
      The hon. Member for Blackburn asked about the effect on cash flow. I cannot confirm the figure of £500 million that he gave. We estimate that it is more likely to be about £110 million in 1983–84. Looked at another way, we estimate that the saving in interest costs to the PSBR from the advance take would be about £10 million in 1982–83 or £40 million in 1983–84. I think that that gives a fair indication of the level.
      Mr. Straw: The Minister may not be able to answer this immediately, but if the Wood Mackenzie figure is roughly correct and if we expect, say, a 10 per cent. interest rate in 1983–84, would not £40 million represent interest on £400 million which the Government would otherwise have to borrow?
      Mr. Wakeham: I think that it would be rather higher than that. If I borrowed £500 million from the hon. Gentleman for a year and paid interest of £40 million, I should not do too badly. As I have said, I think that the figure would be rather less than £500 million, but I will check to make sure that we are right.
      Turning to the structure, the main advantage of SPD was that it enabled the Government to share in the revenue on the large, profitable fields from the start of field life. The smaller fields were protected by the oil allowances up to 500,000 tonnes per year. The smaller the field, the greater was the relative importance and value of the oil allowance.
      On the other hand, we regarded as matters of some concern the industry's strong opposition to a separate tax based on gross revenues rather than gross profits and the tendency of SPD to slow the rate of return on incremental projects such as satellite fields, coupled with its general insensitivity to costs. The industry urged the abolition of SPD and favoured a system of advance PRT payments to meet the Government's requirement to secure some yield from the fields in the early years of production.

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      My hon. Friend the Member for Enfield, North (Mr. Eggar) asked about highly marginal fields. Here the Government are prepared to consider royalty refunds and my right hon. Friend the Secretary of State for Energy will be happy to discuss with any company the setting up of firm proposals.
      My hon. Friend referred also to the definition of fields. Fields are defined according to geographical considerations. UKOOA discussed some alternatives with us before the Budget but no alternative scheme was considered to be possible.
      We were unable to accede to the industry's proposal that the advance payments should be on a temporary basis only, to be phased out over a period of years, because of the cost and the loss of future flexibility. But we did feel that a move in the general direction advocated by the industry was both possible and desirable. This underlines the decison to introduce a system of advance payments of PRT on a permanent basis.
      However, in order to achieve from the North Sea the overall yield that was felt to be appropriate it was decided to increase the rate of PRT from 70 to 75 per cent. at the same time. The system of advance payments of PRT—APRT—will achieve one of the Government's main objectives—that of advancing some of the take from the larger profitable fields into the period immediately after production starts. The smaller fields will continue to be protected by the oil allowance. I agree with the right hon. Member for Greenock and Port Glasgow that the profile of future developments will indicate that there will be a great many smaller fields rather than the large ones of the past.
      In most cases APRT will be completely set off against ordinary PRT liabilities within four years. It will be relatively rare for APRT to exceed PRT liability over a field's life and for the excess APRT to be stranded without being set off. But if this should occur, the excess APRT would be repaid at the end of the field's life. I cannot make a detailed comment on any one field, but not more than two or three fields would be affected.
      The right hon. Member for Greenock and Port Glasgow referred also to the premature close-down of fields. There is no reason to expect that APRT will lead to premature close-down. Companies would have to face abandonment costs, and to close down early would advance those costs as well as their prospective repayment of APRT. We reckon that the repayments of APRT will be a rare occurrence. In addition, the cash flow after tax in those years will be substantial. The APRT allowance will mean that the fields stop paying APRT well before the closedown becomes worth while.
      The other changes will smooth the collection of PRT so that the bulk of it is received in monthly instalments.
      Dr. J. Dickson Mabon: Is there any way in which a company that is going to close down, contrary to the national interest, can consult the Treasury? Is there any mechanism, apart from royalty oil, by which the Treasury might be able to persuade the company to continue in production, perhaps, by fiscal relief of some sort?
      Mr. Wakeham: I cannot say that such discussions would be useful, but the Treasury and the Inland Revenue would examine any problems to see whether there was any way in which they could help. As we reckon that only two or three fields are likely to have advance payments paid
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      over and above their PRT liabilities toward the end of their lives, it is not likely to be a major problem. If it turns out to be so we must examine it.
      I was about to deal with the smoothing of the collection of PRT so that the bulk of it is received in monthly instalments. It is a matter of concern to the money markets to have record-breaking cheques being paid on only two days in a year. I am sure that a smoother pattern of payments will be welcomed by everyone involved in the markets.
      It has been suggested by the Select Committee on the Treasury and Civil Service that the change has been designed to bring 14½ months' revenue into 1983–84. That is a misunderstanding. The Select Committee wrongly assumed that the first instalment would be paid on 1 July 1983. There is a two-months' lag in instalments, and the first instalment will not be paid until 1 September 1983. There will be some acceleration of take, but the effect will be to increase revenues by only about 2 per cent. in 1983–84 and not 20 per cent. This will be more than outweighed by the cost of the structural changes. Even allowing for the interest costs of borrowing to pay earlier instalments, companies will be better off next year by about £70 million.
      We believe that these changes should go a long way to meet the industry's understandable worries about future development. The UKOOA went further and proposed additional relief for satellite fields and the extension of oil allowance after the existing 10-year ration expires. The removal of SPD will improve the post-tax position of satellite fields as well as other forms of incremental investment so that the rate of return on such investments will be close to what it would have been if there had been no tax. We see no reason at present to give any additional relief in this area.
      Moreover, the proposals would have led to considerable definition problems, and on examination did not appear to us to be practical. An extended oil allowance would be expensive in the longer term and would have little relevance in the short to medium terms. It is not clear at this stage whether the after-tax cash flow in the latter years of a field's life would be insufficient, and we did not feel able to propose a costly remedy to an unproven and remote problem.
      I remind the Committee that the Chancellor announced in his Budget Statement that a consultative paper would be issued shortly with a view to legislation in 1983 on PRT relief for certain types of expenditure, especially expenditure on long-term assets, the use of which is shared, or the user of which is changed over the life of the asset, and the taxation of incidental receipts, including pipeline tariffs, accruing to the owner from the users of these assets. I hope that these will meet satisfactorily the taxation problems arising from changes that are occurring as developments take place.
      The hon. Member for Blackburn and other hon. Members referred to the tax proposals which originated from the Institute for Fiscal Studies. The institute suggests that we should adopt a much more radical approach and replace some or all of the North Sea taxes with one progressive tax on return of capital. We accept that its scheme is ingenious and radical. However, it would be much more progressive than the present system on the rate of return. Of course, the rate of return is not the only indicator that companies consider. Net present values, for example, would also be significant.

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      The institute's scheme does not have an equivalent to the oil allowance and would therefore tax small fields, which are likely to be in the majority in future, more severely than do the Government's proposals, and so act as a disincentive to some types of needed development. It would be wrong not to apply the normal corporation tax to the oil industry. It would be hard in particular to justify exempting oilfields from all tax up to a 15 per cent. return while other industries had no such protection.
      The industry made it clear to us that such a radical change in structure, with its inevitable upheaval, would not be welcomed. It was particularly concerned that a radical change would create uncertainty for investment and pose major transitional problems. Those last two points carry particular weight. Although more radical proposals are interesting, it is not desirable or sensible to implement sweeping changes of that nature at this stage with all the uncertainties that that would involve.
      The right hon. Member for Orkney and Shetland (Mr. Grimond) raised a number of points. It is not realistic to suppose that local authorities will have to reduce their charges because of the recent tax increases. Of course we keep international trends in view, but they cannot be considered in isolation. Other non-fiscal matters also have to be considered. Compared with Norway, our tax regime is relatively more favourable to small fields, which is important for the future of our industry.
      Several hon. Members raised the question of the definition of ethane. That will be debated under clause 119. As my right hon. and learned Friend the Chief Secretary stated, we are considering an extension to other feedstocks. Ethane was defined in simple terms of commercial purity. Any type definition will be a straitjacket for companies and the Revenue. I am not in a position to give results of the study at present.
      Mr. Douglas: Does the Minister expect to have a view on propane and butane before Report?
      Mr. Wakeham: I can go no further at present. We are considering whether we can come up with a satisfactory solution. We are willing to see what we can do.
      I hope that the right hon. Member for Aston-under-Lyne (Mr. Sheldon) will not press the amendment to a Division. The changes proposed in this and subsequent clauses will provide a flexible system and a firm base for companies' development plans. There are major uncertainties about the future movement of oil prices. It is a risky business, but the returns are commensurate with the risk. The Government fully share in the risk through the tax system. The new tax system is a fair balance between the interests of the Government and the industry.
      Mr. Robert Sheldon: I congratulate the Minister of State on his appearance at the Dispatch Box in his new capacity. I first encountered him in Committee on the 1976 Finance Bill. Through a mishap with the Whips he was placed on the Committee and was subsequently found not to be a member of it. Our relations have been cordial, and I hope that that will continue.
      The amendment was designed to afford a debate on a number of important issues. We have succeeded in that, and, at the end of my remarks, I shall beg to ask leave to withdraw the amendment.
      My hon. Friends the Members for Central Ayrshire (Mr. Lambie), Dunfermline (Mr. Douglas) and
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      Clackmannan and East Stirlingshire (Mr. O' Neill) and the right hon. Members for Greenock and Port Glasgow (Dr. Mabon) and Orkney and Shetland (Mr. Grimond) have all pointed out that we are dealing not only with a major source of energy but with a major industry. We have had the advantage of the expertise and experience of those concerned in this industry.
      The history of the taxation of oil started with the Public Accounts Committee in 1972, which brought out its famous report showing that we were selling our rights ridiculously cheaply to the oil companies which were there to make use of the blocks that they were taking over. The introduction of the taxation system started in 1975–76 and dealt with these tax changes, the introduction of the royalty payments, corporation tax, petroleum revenue tax, and now the supplementary petrol duty that we are disposing of. Together with that, there was a ring fence, oil allowances for small fields, an uplift for investment and safeguards. It was an absurd structure, and the Inland Revenue did not distinguish itself in providing this structure of taxation.
      The hon. Member for Enfield, North (Mr. Eggar) talked about the petroleum tax being penal and capricious, but he must remember that it was introduced at a rate of 45 per cent. Under this legislation it is being increased to 75 per cent. as a reasonable response to the way in which oil prices have moved and other factors have altered over the intervening years. He also talked about the clever and ingenious oil companies. We must remember that it is not in all countries that the oil companies are regarded in this way. He said that the oil companies did not have many friends, but he must compare the United Kingdom with other countries such as the United States and the Middle East where oil companies are disliked much more intensely than they are here.
      Oil companies, with their enormous turnovers as big as the revenues of many medium-sized countries, are used to, and frequently do, negotiate with countries as equal to equal. One of the surprises that I can recall was that of having oil companies dealing with Governments rather differently from the way in which other companies do. This was not necessarily in a way that was suitable or advantageous to the oil companies. They had that feeling of excessive over-confidence and power in dealing with the country with which they have to co-operate and whose laws they have to accept.
      Since then we have seen further taxes. Supplementary petrol duty is now being changed to the advance petroleum revenue tax. That will be offset against PRT whereas the old supplementary petroleum duty was offset against losses. The overall effect on the Government take will be much the same. For that reason, we are not opposing the legislation in principle, although there will be a number of matters of detail to which we shall turn in Committee.
      My hon. Friend the Member for Dunfermline talked about the difficulties of cyclical movements. The price of oil normally goes up and up, but for the first time there has been a decline in the price of oil. There are those who can see where the cycle will end or how these things will come to change over succeeding years. I do not make any predictions, but I point out that the change in the price of oil is an unusual event and is something that we should not take as being a normal pattern for the future. Our history in these matters is far too short to determine for us any cyclical pattern of which we can make some use.

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      A very important point that was made underlined the problem of oilfields reaching the ends of their working lives. I recall that the intention behind the major reform that was promised by the Government, although there is no sign of its implementation, was to deal with some of those oilfields as they reached the ends of their working lives. The Institute for Fiscal Studies talked about the system which it suggested. It was based on the progressive rate of return, and some of us thought that perhaps the taxation system should have started at the very beginning on the basis of the rate of return.
      The Minister of State talks quite rightly about the way in which oil companies are being successful. What criteria does he use to assess their success? Quite rightly he assesses their success on the basis of their rate of return; and there are those who think that that might have been the basis of an oil taxation system. Instead, we have produced complication upon complication to obviate the very errors in the way in which this taxation system has developed over the years. The right hon. Member for Orkney and Shetland described it as a muddle almost as bad as the general system of taxation, but at least the general system of taxation is based upon correct principles. It has become more elaborate, complicated and tedious, but it is based on the right principles. The problem about oil taxation is that some of us doubt whether the same can be said of it. So we have to look for some changes. Unfortunately, the changes mentioned by the Minister do not go to the heart of the change of principle which might be considered essential.
      My hon. Friend the Member for Dunfermline talked about the depletion policy and a Government statement on it. I am afraid that we are still without a general statement on depletion policy. It can be looked at in two ways. We have gold in the vaults of the Bank of England which costs money to maintain, which requires guarding and which occupies very expensive space on an important prime site in the centre of London. We have oil in the North Sea which does not take up expensive space. In a number of cases it may save some cost. The argument is about which one is best: is it better to have gold in the vaults of the Bank of England under the terms and conditions that it is there, or is it better to have oil in the North Sea? There is argument for both. However, currently we are using about 75 million tonnes of oil a year and we are producing in excess of 100 million tonnes, and clearly the two are out of balance.
      I appreciate that it is not possible to make short-term changes to production. But we have to realise that our asset is likely to remain an asset for a very long time to come. We need to take a long view of our oil since it is not possible to turn off the tap. Because of the amortisation of capital equipment, that would produce extra costs for a company which had organised its planned production of
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      oil on one basis, and it cannot suddenly be changed to another. However, there are aspects to this depletion policy which need to be explored. I hope that the Government will give it more attention than we have seen so far.
      As for the production profile mentioned by the right hon. Member for Greenock and Port Glasgow of course we really want a tax profile that copies the profit profile and the production profile during the lifetime of a field so that at each stage an incentive is there which is sufficient but which allows the tax revenue to be maintained.
      My hon. Friend the Member for Dunfermline talked about tertiary recovery. It will be essential that there is incentive at the end of the life of an oilfield when the oil rigs are still in position. Once they are removed, in most instances that oil is likely to be lost for ever. It will be important, as a number of fields near the end of their working life, to ensure that those last elements of oil are extracted and that the tax system that we have devised does not harm that. That is sheer profit for Britain and must not be forgone.
      Our present tax structure does not guarantee to do all that. I look forward to more work being done by the Inland Revenue. I believe that it owes that to the oil industry and to Britain for its lack of foresight at an earlier stage. The Inland Revenue needs to rethink. It has ability, and unquestionably it has the expertise. In addition, it now has the experience. It should provide us with a taxation system better than the one that we have today.
      I beg to ask leave to withdraw the amendment.
      Amendment, by leave, withdrawn.
      Clause 117 ordered to stand part of the Bill.
      To report Progress and ask leave to sit again.—[Mr. David Hunt.]
      Committee report Progress; to sit again tomorrow.

    CIVIC GOVERNMENT (SCOTLAND) BILL [LORDS]
    Order for Second Reading read.
    Ordered,
    That the Bill be committed to a Scottish Standing Committee.—[ Mr. David Hunt.]

    CIVIC GOVERNMENT (SCOTLAND) [MONEY]
    Queen's Recommendation having been signified—
    Resolved,
    That, for the purposes of any Act of the present Session to make provision as regards Scotland for the licensing and regulation of certain activities; as to lost and abandoned property and property in the possession of persons taken into police custody; and as to certain other functions of local authorities and their officers, it is expedient to authorise the payment out of money provided by Parliament of any increase attributable to the said Act of the present Session in the sums payable out of moneys so provided under any other Act.—[Mr. David Hunt.]

  Petition

    MR. BARRY PROSSER
    10.27 pm
    Mr. John G. Blackburn (Dudley, West): With your permission, Mr. Deputy Speaker, I rise to exercise the sovereign and constitutional right of an hon. Member to place before the House a petition in respect of his constituents.
    I do this to fulfil a personal pledge to my constituents in August 1980 to raise this matter before my fellow right hon. and hon. Members.
    The petition contains four signatures. They are the signatures of the widow, brother and two close relatives. It relates to the death of my constituent, Mr. Barry Prosser, in Winson Green prison while in custody on remand for medical reports in August 1980.
    I also present a similar petition in identical terms containing 4,436 signatures. The over-riding motive behind this course of action is to ensure that never again in the history of the prison service do we have such a case.
    The petition states:
    To the Honourable the Commons of Great Britain and Northern Ireland in Parliament assembled.
    The Humble Petition of the Family of Barry Prosser sheweth that there is great concern about the circumstances surrounding the death of Barry Prosser in August 1980.
    Wherefore your Petitioners pray that your Honourable House will instruct the Home Secretary to set up a Public Enquiry into the conditions at Winson Green prison which led to the death of Barry Prosser in August 1980.
    And your Petitioners, as in duty bound, will ever pray etc.
    I pray that this night the House will receive the petition.
    To lie upon the Table.

  Chronically Sick and Disabled Persons Act
  Motion made, and Question proposed, That this House do now adjourn.—[ Mr. David Hunt.]
  10.29 pm
  Mr. Alfred Morris: I know that the Minister will agree with me that the subject of this debate is of the first importance to disabled people and their families and to the organisations that exist to represent their interests. In a recent book about the Chronically Sick and Disabled Persons Act, entitled "A Charter for the Disabled", my respected former parliamentary colleague Bryan Gould says that the late Richard Crossman, then Secretary of State for Social Services, was anything but enthusiastic about the Act's provisions when they were first proposed in 1969. On that occasion, the victory went to disabled people and to Parliament.
  More than 12 years later, the Act still has opponents, including a number of some subtlety, and the House must remain vigilant to ensure that it is the claims of disabled people and the will of Parliament that prevail. The supporters of my Bill were not, at any stage, all of one political party. They were drawn from both sides of both Houses of Parliament. Beyond Westminster, we had the backing and advice of many distinguished people in local government and the voluntary sector. I believe that we succeeded in turning our precepts into law because our sole concern was to improve both the well-being and status of disabled people. That concern is now much more widely shared in Parliament and the country and those who, for whatever reason try to frustrate the Act's purpose, must be warned that they will not be allowed to succeed.
  Lack of time prevents me from detailing tonight the transformation that has taken place in the lives of disabled people since 1970 when the Bill became law. Millions have been helped directly as disabled people by its provisions and millions more indirectly by the support it gives to their families. Some local authorities were slow off the mark, but the majority have attempted full and humane implementation of the Act; and many councils are continuing to do so despite the devastating effects of the Government's policies on local government. Some authorities have recently been shown to be in clear breach of the law, however, and in this regard a recent statement by the Secretary of State for the Environment was especially disquieting.
  In reply to an intervention of mine on 16 February about the statutory duties of local authorities under the Chronically Sick and Disabled Persons Act, in the debate on the Rate Support Grant (Increase) Order 1982, the Secretary of State said that
  "the arrangement of priorities within each authority is a matter for that authority. We have made it clear that where the cuts should come is a matter for the individual authority's choice and discretion."—[Official Report, 16 February 1982; Vol. 18, c. 153.]
  That statement gave the impression that local authorities could pick and choose whether to fulfil their legal duties. As the Minister replying to the debate tonight has the advantage of being a lawyer, I hope that he will make it clear to his ministerial colleague that local authorities have no choice or discretion about whether to meet their statutory duties. To "house train" the Secretary

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  of State for the Environment in this matter will not be easy, but it is essential that he should no longer be allowed to mislead local public representatives about their legal duties, and the hon. Gentleman should at least make the attempt.
  The requirements of the law are not in dispute. In the first place, the local authority has a duty to assess the needs of any permanently and substantially disabled person in its area for any or all of the services listed in section 2 of the Act. If, after making an assessment, the local authority believes that the disabled person needs a service, it has a duty to make arrangements for provision within a reasonable time. The corollary of this duty, as I made clear more than once when I was the Minister, is that no local authority may lawfully withdraw a service from a disabled person if his need for the service has not diminished. Nor is it lawful for a local authority to plead lack of funds as an excuse for not providing a service. Again, although it may recover charges for any of the services, a local authority may not refuse or withdraw a service if the disabled person is unable to pay.
  The Minister has never challenged these statements of the effect of the law; indeed, he has confirmed them on several occasions. The problem arises when a local authority fails to fulfil its duties. Following a decision of the Court of Appeal in 1978, the only recourse is to the Secretary of State for Social Services; and it is on the manner in which the Secretary of State has acted as the ultimate court of appeal that I shall be concentrating this evening.
  Eighteen months ago, 15 charities, led by the Royal Association for Disability and Rehabilitation (RADAR), joined forces in a project to ensure full enforcement of the Act. The other charities were the Spastics Society, the Multiple Sclerosis Society of Great Britain and Northern Ireland, the Muscular Dystrophy Group of Great Britain, the National Society for Mentally Handicapped Children and Adults, Age Concern, Arthritis Care, the Association for Spina Bifida and Hydrocephalus, the Disabled Drivers' Motor Club Limited, Outset, the British Polio Fellowship, the Leonard Cheshire Foundation, the Royal National Institute for the Deaf, the Spinal Injuries Association and the Child Poverty Action Group.
  A report of the first year's work, entitled "Putting Teeth in the Act", was published last month and I pay tribute tonight to Peter Mitchell and Mrs. Jane Cook whose work on the project has rightly been very highly praised by the all-party disablement group in the House. Mrs. Ursula Keeble preceded Mrs. Jane Cook and she, too, deserves the highest praise for her work on the enforcement project. By now, nearly 1,000 individual cases have been examined. Thirteen authorities have been referred to the Secretary of State for Social Services and two to the Secretary of State for Wales. Five of the 13 referrals were about failure to assess need, five about failure to provide a service after acceptance of need, and three about withdrawal of a service where the disabled person's need for it had not diminished.
  Four of the cases relating to failure to assess need concerned a blanket refusal by the local authority to assist with holidays. These have been the least successful referrals to the Secretary of State; and I shall return to the individual cases in a moment. The fifth concerned failure to assess need for aids. A reply on this was received by RADAR earlier this month; and I shall be referring to it later in my speech.
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  Four of the five cases concerning failure to provide a service after acceptance of need related to the provision of telephones and one to failure to provide an adaptation to a disabled person's home. I shall be referring in detail to two of the telephone cases, in Wandsworth and Liverpool, and to the case about home adaptations in Barking, since they illustrate important facets of the use of the Secretary of State's default powers.
  The third form of unlawful action was withdrawal of a service. RADAR, on behalf of the 15 charities, referred two authorities to the Secretary of State for the withdrawal of home helps and one for withdrawing assistance with telephone rentals and advising disabled people to ask for their telephone to be disconnected if they could no longer afford it. Happily, the last case was resolved by the council elections last May.
  In March of last year two authorities, Richmond and Wiltshire, were referred to the Secretary of State on the grounds that they refused point blank to consider assisting disabled people with holidays. The individuals who had complained to RADAR wished to remain anonymous. Two months later, however, the DHSS replied to the effect that the Secretary of State could only initiate an inquiry into a complaint on behalf of a named disabled person. RADAR was advised by the project's lawyers that, In reaching this decision, the Secretary of State had misdirected himself as to his duties under the Act, but the Attorney-General refused the charities leave to challenge his ministerial colleague's decision in the courts. I shall also be returning to this crucial issue as I proceed.
  Even when an individual was named, the Secretary of State showed little sense of urgency in ensuring that justice was done. The third referral to him was of two people in Oxfordshire who had been illegally refused assessment for a holiday on the grounds that the authority was not providing any. The case was referred on 16 March 1981 and the Secretary of State did not reply to RADAR until almost a year later, on 3 March 1982. Last November, I had already been convinced that the delay by the Secretary of State constituted gross maladministration, causing manifest injustice to the disabled people involved, and I referred the matter to the Ombudsman.
  The Secretary of State's eventual reply about the Oxfordshire cases was revealing. The two relevant paragraphs read:
  "We have been informed by the Chief Executive of Oxfordshire that the authority has agreed to make provision for holidays for disabled people. The Director of Social Services is now considering arrangements whereby a local voluntary organisation will undertake both the assessment of need and arrangements for the provision of such holidays on an agency basis for the local authority. We are assured that in the particular cases of Mrs. P and Mrs. C their needs will be assessed when the revised scheme is finalised.
  In view of these assurances, it is apparent that Oxfordshire County Council are now fulfilling their statutory duties in this matter. The question of a default order does not, therefore, arise."
  I emphasise the word "now" in the last paragraph quoted. The Secretary of State clearly accepts that, for a whole year, the council was in breach of the law. Yet there is not one word of criticism of the council or of regret for the two disabled women concerned. In my opinion, the Secretary of State was gravely failing in his duties by not making a default order last summer and so ensuring that disabled people in Oxfordshire obtained their holidays then.

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  The final sentence is also incorrect since the letter states only that the Director of Social Services is "considering" arrangements, not putting the Act into effect. Can the Minister give the House more information tonight? My information is that Oxfordshire is making a token gesture and providing only a very limited number of holidays for the more persistent disabled people. Will the Minister now remind the council of its duty under section 1 of the Act to inform all disabled people in Oxfordshire of their right for their need for a holiday to be assessed?
  One consistent feature of the Secretary of State's inquiries has been their inordinate delay. The second consistent feature has been the efforts he has taken to do no more than he has persuaded himself is required by his minimal interpretation of the law. Take the case of West Sussex. There the council withdrew home helps from people who could not afford the charges they were imposing. Three individual cases were referred to the Secretary of State and, five months later, he replied saying that their home helps had been restored. But what about other disabled people in West Sussex? What action has the Secretary of State taken on the issues of principle and of law to protect disabled people as a whole in the county?
  Three disabled people in Brent complained last year to RADAR to the effect that they had received a circular letter stating that the council was not providing assistance in response to their request for help with a holiday. The cases were sent to the Secretary of State in May 1981 and, at the end of August, he replied to the effect that the council was still running its own holiday scheme and, if the people concerned had asked to be included, they would have been considered. I remind the Secretary of State that section 1 of the 1970 Act places a clear statutory duty on local authorities to inform disabled people about the services it provides. Yet no information about the council's holiday scheme was included in the letter of refusal sent to the three disabled people who had complained. How does the Minister react to that?
  In Barking, an elderly woman who had been waiting for over a year for a simple adaptation she needed to her home, was admitted by the Director of Social Services to be only one of many. Following an inquiry, the Secretary of State wrote back to RADAR to say that the adaptation had been done. The Secretary of State showed no sign of being concerned about other cases in the borough, but I am happy to say that the council has cleared the backlog.
  The pattern was now becoming clear to the 15 charities. After considerable expense by them, by the Department and by the councils, the referral procedure was, except in the case of holidays, resulting in belated provision or restoration of a service for the individuals whose names were referred to the Secretary of State. That pattern was, however, broken by the London borough of Wandsworth. There the Secretary of State put pressure on the council to supply a telephone for the one person named by RADAR. But the Director of Social Services refused to allow her to jump the queue when many people in greater need had been waiting for a telephone much longer. Much to his credit, he put it to his council that it must provide money to clear the entire waiting list for telephones; and that is what was done.
  Matters took a rather different turn in Liverpool, although the position there had been much the same as in Wandsworth. One individual had enlisted RADAR's help
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  to obtain a telephone from a waiting list of several hundred. The case was that of a woman who had been discharged from hospital after a double amputation. She had been told that she was a priority case for provision of a telephone but would have to wait two years for it to be installed. She was also very urgently in need of adaptations to her home. In fact, she ws homebound because of access difficulties and was consequently at severe risk in case of fire, which should remind everyone that the Act is not about trivialities but one whose purpose is to help some of the most hard-pressed and needful people in Britain today.
  Following RADAR's complaint and the Secretary of State's intervention, the disabled woman obtained her telephone, but both the council and the Secretary of State were happy to let matters rest there, notwithstanding reports, including one by Pat Healy in The Times on 24 December 1981, that many hundreds more disabled people were being herded on to Liverpool's waiting list.
  Fortunately, RADAR was not prepared to let maters rest and wrote again to the Secretary of State asking for an inquiry to be made into the circumstances of the other people on the waiting list, even although their names were unknown.
  This time RADAR struck gold. On 17 March the DHSS wrote again to Liverpool asking for its comments on RADAR's letter so that the Secretary of State might consider what action he should take under section 36. On the same day, the city council was writing to a number of Liverpool's Members of Parliament informing them that the council had made a further £20,000 available for the provision of telephones.
  For the purposes of tonight's debate the Department's letter is of greater significance than Liverpool's belated acceptance of its legal duties, because, as I said earlier, the Secretary of State had hitherto been arguing that he could conduct inquiries only into complaints relating to named individuals. There is said to be more joy in Heaven at one sinner who repenteth than at 99 just persons, and I know that the 15 charities would want me to acknowledge tonight the importance of the Government's volte face.
  I know that those charities would also like me to place on the parliamentary record the implications of the decision to act on RADAR's letter without quoting the cases of named individuals. The Minister has now accepted that he has a duty under section 36 of the National Assistance Act 1948 to institute inquiries where there is evidence submitted to him that local authorities are in breach of their statutory duties towards disabled people under section 2 of the Chronically Sick and Disabled Persons Act 1970, even if it is not possible to supply the names of all or any of the disabled people who are suffering as a result.
  The Minister's acceptance of this duty is deeply important to disabled people throughout the country. What I hope he will now do—and what many people outside this House will expect him to do tonight—is to announce in clear terms that he will henceforth take all steps necessary to ensure that disabled people, irrespective of whether they are able to complain, are informed of, and in fact receive, all the services that Parliament intended them to have.
  In this regard, I shall be grateful if the Minister can comment tonight on a recent reply to RADAR about inquiries by his Department into a case in Lewisham. In July 1981, RADAR referred the case to the Secretary of State because of a delay in assessing the needs of a named

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  disabled person. In correspondence with RADAR, the council had said that several people were in a similar position because of the shortage of staff. I understand that the Department wrote to the council in August 1981 and that the chief executive replied in September. Yet the Department did not write again to RADAR until this April, following parliamentary questions by my hon. Friend the Member for Lewisham, West (Mr. Price).
  There are two matters of concern to RADAR and the other charities. First, the Secretary of State declared himself happy that the needs of the complainant had been adequately assessed, although no visit was made. The charities want the Minister now to say, therefore, whether he stands by the advice given by the DHSS in 1970, when the present Secretary of State for Education and Science was Secretary of State for Social Services, that assessments should be complete and not partial and should consider all relevant needs. They also want him to explain how assessments for adaptations to somebody's home can be done from the town hall.
  Equally important to the 15 charities is the fact that, in the reply that the DHSS received from Lewisham's chief executive, it was stated that 1,355 disabled people were on the waiting list for aids and adaptations of whom 542 were classified as
  "priority, housebound, severely disabled or with degenerative diseases".
  Yet this information was not even mentioned in the Department's reply to RADAR. It was provided by the chief executive to my hon. Friend the Member for Lewisham, West.
  There is not the time now to go through all the cases investigated by RADAR, many of which are very disturbing and indeed heart-rending. As I said, my principal purpose tonight is to subject to parliamentary examination the way in which the Secretary of State has been performing his duties under the law.
  The Minister should answer four questions. First, does he accept that section 2 of the 1970 Act lays a duty on local authorities to help all disabled people in need in their areas and not just the odd individual who contacts RADAR? Secondly, does he accept that Parliament has laid a duty on the Secretary of State to ensure that the law is obeyed? Thirdly, will he assure the House that from now on he will conduct urgent and comprehensive inquiries into any evidence submitted to him that local authorities are not fulfilling their statutory duties? Fourthly, will he make it pikestaff plain that he will have no hesitation in using his default powers whenever it is necessary to ensure that disabled people receive the services that Parliament intended for them?
  As well as placing on the parliamentary record his answers to those four questions, I hope that the Minister will join me in paying tribute tonight to the 15 charities for their leadership in having mounted the enforcement project and for providing so much help since to so many disabled people.
  10.50 pm
  The Minister for Social Security (Mr. Hugh Rossi): Firstly, may I take this opportunity of thanking the right hon. Member for Manchester, Wythenshawe (Mr. Morris) for raising this difficult matter. His concern for the well-being of disabled people is well known and appreciated.
  For many years it has been the practice in this House not to regard policies for disabled people as being a matter
  704
  of contention between the parties. The policies that I now pursue on behalf of disabled people, including the matters we are now discussing, do not differ markedly from those of the right hon. Gentleman when he was in office.
  We all want to achieve for disabled people full and dignified lives, where possible within the community. To achieve that, many disabled people need some degree of support from the community whether in terms of financial benefits or services and facilities. Much of the progress along that road has been assisted by the Chronically Sick and Disabled Persons Act 1970 which was passed with all-party support and sponsorship and of which the right hon. Gentleman had the singular honour to be principal author. That Act was of its time. It gave legislative form to the increased awareness then of the needs, and also the rights, of our fellow citizens who happen to experience disabilities.
  I think I am right in saying that that awareness which led directly to this Act has increased steadily since 1970, with the process being greatly assisted by the International Year of Disabled People, and has been matched by a continuing increase of expenditure upon personal social services by local authorities. From 1970 to now there has been a startling increase in expenditure in real terms upon services and benefits for disabled people. Yet as awareness has increased so, too, has pressure for further progress.
  That brings me more specifically to the question of the enforcement of the duty imposed upon local authorities by section 2 of the 1970 Act. My answer to the right hon. Gentleman is that that is a legal duty imposed on all local authorities that have a responsibility for personal social services. In the vast majority of cases—these must be numbered annually by tens of thousands—there is no need for any enforcement. Local authorities are well aware of the duties imposed by section 2 and, in the main, they carry them out quickly, effectively and willingly.
  To hear some people talk one would think that local authorities did not want to provide the necessary support for disabled people. Of course they do. It is one of their functions and they wish to carry it out to the best of their abilities. Moreover, each local authority is far better placed to know exactly what it is necessary for them to provide than I or my Department, sitting in isolation at the Elephant and Castle, possibly can.
  The problem then, to the extent that there is one, is at the margins. Some disabled people, quite naturally, do not think that their local authority is doing for them what the statutory duty demands they should. In a few cases it is possible that from time to time they are right. How can the duty be enforced in those few cases?
  The right hon. Gentleman has been critical of the way in which my Department has dealt with applications to my right hon. Friend the Secretary of State to exercise his powers under section 36 of the National Assistance Act 1948. He said that the Department takes too long to deal with these default applications. They do, indeed, take an inordinate length of time, but the right hon. Gentleman will know from his own experience of these cases when in office that the sensitive issues involved do not readily lend themselves to this sort of procedure.
  These default applications are tremendously time consuming for both the Department and the local authorities concerned—often ludicrously out of proportion to the actual services in question. However, we think it more important to encourage a local authority to reappraise its policies where it may be mistaken, and to give it an

  705
  opportunity to do so, than it is to invoke formal proceedings against it. That is my policy, and that was the right hon. Gentleman's policy. Getting an outcome favourable to a disabled client, where this is justified, is what matters most.
  In view of the questions posed by the right hon. Gentleman, perhaps I should outline what I am advised is the legal position. Section 2 of the Act is about the provision of certain services by a local authority for an individual. That is all that it is about, and the duty is caught by the provisions of section 29 of National Assistance Act 1948. In consequence, the default powers in section 36 of the 1948 Act bite on that duty.
  When asked to exercise his section 36 powers in the sort of cases with which we are concerned, the Secretary of State has to consider whether the local authority is performing its functions under section 2 of the 1970 Act. As I have said, that section concerns only local authority provision for individuals and, therefore, that is what the Secretary of State must look at. There is nothing else that he can properly consider.
  The right hon. Gentleman and others may find that unsatisfactory. So do I, but that is what the Acts provide. A number of alternatives have been proposed in the House from time to time, but no one has come up with an alternative that is satisfactory to all.
  The right hon. Gentleman referred to a number of specific cases and puts me in a difficulty, because they are all instances in which my right hon. Friend has to act in a quasi-judicial manner. It would not be proper for me to discuss how he comes to his conclusion in such cases, especially since some are before him at present. The right hon. Gentleman referred to one or two of those cases.
  However, I can talk in general terms about whether the recent action of the Liverpool council demonstrates a change of policy. I must disabuse the right hon. Gentleman, because there has been no change of policy. In that case, as in all others that come before the Secretary of State, the local authority concerned has responded positively to the preliminary inquiries that are always made before the default powers can be exercised. That reinforces my basic premise that local authorities are responsible and well-intentioned.
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  I am prepared to reaffirm and to stress, because the right hon. Gentleman asked me to do so, that the Secretary of State will continue to consider any case put to him in which there is evidence that a local authority may be failing to meet its duty, and he will take appropriate action if necessary.
  The right hon. Gentleman made much of the report by RADAR and the 14 charities which came together in a campaign for the absolute implementation of section 2. Much of the report was critical of the Department and of the Secretary of State. However, may I take the opportunity to praise the campaigners on at least part of their activities? I appreciate their intent and commend their effort. I also, of course, dispute their criticism and regret the unnecessarily antagonistic stance that they have sometimes adopted towards local authorities, but the fact remains that they have performed the function of eloquent and tireless advocates for disabled people, many of whom may tire easily or may have difficulty in expressing themselves.
  RADAR and the other charities have performed the function of intermediary and trouble-shooter in many individual cases, clearing up misunderstandings. I praise them for that, as I know that many disabled people have cause to be grateful to them. The fact that that is so is in no sense a criticism of local authorities which have patently reacted constructively when approached in the same spirit.
  At the end of the day, only a very small fraction of the cases that the RADAR campaign considered—the right hon. Gentleman mentioned the figure of 13 or 14—resulted in an application to the Secretary of State to exercise his default powers under section 36 of the 1948 Act. Those cases must be seen in the context of the tens of thousands of cases in which local authorities readily, quickly and effectively give help to disabled people.
  Perhaps RADAR has proved itself to be the solution to the problem that it sought to solve.
  The Question having been proposed after Ten o'clock and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
  Adjourned at one minute to Eleven o'clock.

ATTORNEY-GENERAL
  Legal Aid
  Legal Aid
  Public Property (Damage and Costs)
  Public Property (Damage and Costs)
  Old Bailey (Trials)
  Old Bailey (Trials)
  Land Registry
  Land Registry
  Credit Reference Agencies
  Credit Reference Agencies
TRADE
  Copyright Law (United States)
  Copyright Law (United States)
  Redpath Dorman Long (Takeover)
  Redpath Dorman Long (Takeover)
  Petrol (Retail Price)
  Petrol (Retail Price)
  Falklands Islands (Requisitioned Vessels)
  Falklands Islands (Requisitioned Vessels)
  Sea Bed Exploitation
  Sea Bed Exploitation
NATIONAL FINANCE
  Personal Taxation
  Personal Taxation
  Swansea Airport
  Swansea Airport
  Manufactures (Imports-Exports)
  Manufactures (Imports-Exports)
  British Steel Corporation and British Transport Docks Board (Litigation)
  British Steel Corporation and British Transport Docks Board (Litigation)
  Gross Domestic Product
  Gross Domestic Product
  Mortgages (Tax Relief)
  Mortgages (Tax Relief)
  Index-Linked Pensions
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AGRICULTURE, FISHERIES AND FOOD
  Animal Breeding Research
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PRIME MINISTER
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INDUSTRY
  Design Centre (Cambridge)
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  Manufacturing Output
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  Microelectronics Industry
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  Special Development, Development and Intermediate Areas
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  Rolls-Royce (1971) Limited
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WALES
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  General Practitioners
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  South Glamorgan (Health Administrator)
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  Aberystwyth-Cardigan Trunk Road
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  Housing Investment Allocations
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  Housing Expenditure
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  Employment Statistics
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  Redundancies (Deeside, Wrexham and Rhyl)
  Redundancies (Deeside, Wrexham and Rhyl)
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NORTHERN IRELAND
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TRANSPORT
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  Disabled Persons
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ENVIRONMENT
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  Local Public Inquiry (Goole)
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  West Yorkshire (Derelict Land)
  West Yorkshire (Derelict Land)
  Employment and Job Creation
  Employment and Job Creation
  Campaign for Nuclear Disarmament
  Campaign for Nuclear Disarmament
  Hounslow Hospital
  Hounslow Hospital
  Windscale
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  Conservation
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FOREIGN AND COMMONWEALTH AFFAIRS
  Vientiane
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  Falkland Islands
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  Argentina
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  Dubai
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  South America
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LORD PRESIDENT OF THE COUNCIL
  Parliamentarians (Pay and Allowances)
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EMPLOYMENT
  Sandwell
  Sandwell
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  Dockworkers (Redundancy Payments)
  Steel Industry
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  Women (Benefits)
  Women (Benefits)
  Industrial Training Boards
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  Unemployment Statistics
  Unemployment Statistics
  Royal Navy Dockyard, Chatham
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HOME DEPARTMENT
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  Repatriation (Baggage Allowances)
  Repatriation (Baggage Allowances)
  Metropolitan Police (Protective Overalls)
  Metropolitan Police (Protective Overalls)
  Crime Statistics
  Crime Statistics
  Violent Crime Statistics (Ethnic Origins)
  Violent Crime Statistics (Ethnic Origins)
SOCIAL SERVICES
  Fluoride and Cancer
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  National Health Service (Equipment Thefts)
  National Health Service (Equipment Thefts)
  Mrs. Brett
  Mrs. Brett
  Overseas Visitors (Health Care)
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  Hounslow Hospital
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  Tobacco Industry (Agreement)
  Tobacco Industry (Agreement)
  Junior Medical Staff
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  National Pensioners Convention (Proposals)
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  Heart Transplants
  Heart Transplants
  Heart Disease and Smoking
  Heart Disease and Smoking
  Nurses and Midwives
  Nurses and Midwives
  Supplementary Benefit
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  Argentine Corporations (British Pensioners)
  Argentine Corporations (British Pensioners)
  Disabled Persons (Part-time Employment)
  Disabled Persons (Part-time Employment)
  Claimants (Lambeth, Central)
  Claimants (Lambeth, Central)
EDUCATION AND SCIENCE
  Delinquency
  Delinquency
  School Meals
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  Social Research Budget
  Social Research Budget
SCOTLAND
  Highland Craftpoint
  Highland Craftpoint
  Unemployment
  Unemployment
  Solar Heating
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  Social Science Research Council
  Social Science Research Council
DEFENCE
  Claims Commission
  Claims Commission
  Argentina
  Argentina
  Animals (Experiments)
  Animals (Experiments)
  Falkland Islands
  Falkland Islands
  Overseas Allowance
  Overseas Allowance
  Warships
  Warships
  Standby Squadron
  Standby Squadron
  "Uganda"
  "Uganda"

Preamble
The House met at half-past two of the clock: The CHAIRMAN OF COMMITTEES on the Woolsack.
Prayers—Read by the Lord Bishop of Hereford.

Embassies: UK Commercial Staff
Lord Shinwell: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how many British embassies abroad have commercial advisers with expert knowledge of trade and industry, and contracts and sales; and whether the activities of such advisers are valuable in promoting British trading links.
The Minister of State, Foreign and Commonwealth Office (Lord Belstead): My Lords, of the 208 diplomatic service posts overseas (of which 151 are embassies and high commissions), 183 have a trained commercial staff. The function of this staff is to provide a wide range of services to British exporters, who frequently commend the help they have received.
Lord Shinwell: My Lords, I am obliged to the noble Lord for his Answer. It is a factual reply, but I am not sure that it is encouraging enough. Would he agree with me that not a solution itself but an approach to the solution of the unemployment problem is the revival of international trade— buying and selling, high production (cheap production, if possible) and high consumption? That is what is required. There are millions of people in the world who want more goods—more implements, more housing and all the rest—and there are millions of people who are ready to do the work in order to provide them. Would the Minister devote a little more attention to ascertaining whether our commercial attachés—I am not making any criticism of them—are getting their backs into it and boosting trade relations?
Lord Belstead: My Lords, I agree entirely with the noble Lord that the commercial officers in posts overseas do a very good job.
The Earl of Halsbury: My Lords, is the noble Lord aware that whenever in the past I had business overseas I always took a letter of introduction to the commercial counsellor at the local embassy and that always I found him to be very well informed and enormously helpful?
Lord Belstead: My Lords, I am extremely grateful to the noble Earl.
Lord Glenkinglas: My Lords, would my noble friend study the question of agricultural exports? Having had a great deal of experience in foreign posts, may I say that this was the one failure in a good many of
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them because so few people were trained in agriculture. And they were mostly in the Argentine, which we can forget for the moment.
Lord Belstead: My Lords, I will look particularly at this point which my noble friend draws to my attention.
Lord Oram: My Lords, would the noble Lord agree that particularly in relation to developing countries it is important that these commercial advisers should also be as expert as possible in the development needs of the country where they are serving? Supplying those development needs very much fits in with the kind of thing which my noble friend Lord Shinwell has in mind.
Lord Belstead: My Lords, I am grateful to the noble Lord, with his extensive experience of trade matters. It is worth making the point that I tried to look up what I hoped would be some suitable statistics. Although I realise that Nigeria is a country very rich in raw materials, none the less there is presumably a great deal of development work there to be done. The latest figures which I have, giving Nigeria as an example, show an 89 per cent. increase in our exports to Nigeria in 1980 compared with 1979. Somebody has been doing a lot of good work in that way. I think that it is a combination of our firms in this country and of the work which is done in the posts overseas.
Lord Bruce of Donington: My Lords, with those considerations in mind, will the noble Lord resist any endeavours which are made by various Ministers, and in particular by the right honourable lady the Prime Minister herself, to effect cuts in staff? Will the noble Lord resist such cuts in respect of commercial counsellors in the embassies, bearing in mind the excellent job which they do? Will the noble Lord also bear in mind that, far from decreasing the number which are employed, a great effort should be made to increase their number?
Lord Belstead: My Lords, the department of my right honourable friend the Foreign and Commonwealth Secretary has got manpower targets, just like other Government departments, which fall within the general policy of the Government, and those targets we intend to achieve.
Lord Energlyn: My Lords, while expressing great admiration for the trade counsellors in the various embassies I have had contact with throughout the world, and while supporting the Question asked by the noble Lord, Lord Shinwell, that we have here potentially the greatest sales organisation available to us, may I ask the Minister whether he is prepared to consider the suggestion that a review committee might be set up? There is nothing invidious about this suggestion, because the trade counsellors themselves would like their status to be clarified. They themselves do not know quite how far to go.
Lord Belstead: My Lords, I should like to draw the suggestion of the noble Lord on that point to the attention of my right honourable friend.
Lord Leatherland: My Lords, the noble Lord gave figures of our exports to Nigeria. Could he also give the figures relating to our imports from that country, which I think were slightly in excess of the exports?
Lord Belstead: My Lords, I am afraid I cannot do so. I admit that the figures which I gave were selective.
Lord Auckland: My Lords, would my noble friend not agree that our honorary consuls in many countries, particularly in America and Scandinavia, do a first-class job? On that basis, would he convey the congratulations of the House to his right honourable friend?
Lord Belstead: My Lords, I am grateful to my noble friend for those remarks.
Lord Shinwell: My Lords, is the noble Lord aware that I make no criticism of the commercial attachés or diplomats? What applies to those who work on behalf of the Government and the country applies equally to those in industry. All I am asking for is that they should get their backs into it at a time when we need their services more than ever.
Lord Belstead: My Lords, I entirely agree with the noble Lord. I assure him that there is nothing between the noble Lord and the Government and, I think, the rest of the House on this particular matter.
Lord De Freyne: My Lords, my noble friend mentioned an 89 per cent. increase in exports between our country and Nigeria. Can he say how far back he is going on that statement—and by how much?
Lord Belstead: My Lords, that was a figure comparing 1980 with 1979.

Nuclear War and Capital Punishment
2.43 p.m.
Lord Gardiner: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government when they propose to seek parliamentary approval for the imposition by civil servants or others of capital punishment during an atomic war.
The Parliamentary Under-Secretary of State, Home Office (Lord Elton): My Lords, the imposition of such a penalty could only be by a power granted under emergency legislation which would itself have to be passed by Parliament. It would be for the Government of the day to decide whether circumstances justified the introduction of such legislation, whether they warranted the inclusion in it of such a power, and also, if they did, by whom that power would be exercised.
Lord Gardiner: My Lords, while thanking the noble Lord for that reply, may I ask him whether, having
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regard to a view held by many that an atomic war is perhaps likely to arise either by human error or by a computer error, it is not rather rash to leave the passing of such legislation to an unspecified time?
Lord Elton: My Lords, circumstances change through history and Governments have to be free to change the response according to the changes in the circumstances. This sort of provision is kept continually under review, and I therefore cannot answer the noble Lord's question more precisely than I have done.
Lord Elwyn-Jones: My Lords, is it conceivable that anyone other than a judge could pass a sentence of death, whatever might happen thereafter?
Lord Elton: My Lords, the Question was, first, what the sentencing powers would be and, secondly, who would have to discharge the judicial function under circumstances in which normal arrangements could perhaps not continue.
Lord Paget of Northampton: My Lords, is not the question of capital punishment after nuclear war a little otiose? Surely there will be awfully few people left either to be hanged or to do the hanging?
Lord Elton: My Lords, the answer to a hypothetical question is itself always hypothetical. Whether it is also otiose, I cannot say.
Lord Hooson: My Lords, did the noble Lord, Lord Elton, say that the Government have contingency plans or draft legislation to allow people other than judges to pass the death penalty?
Lord Elton: My Lords, as I think I made clear, the Government necessarily have draft contingency plans to meet circumstances as they arise. But the circumstances are very varied and so therefore are the plans.
Lord Jenkins of Putney: My Lords, is it not the case that the draft contingency plans to which the noble Lord has referred in fact envisage the death penalty being passed and carried out by persons other than judges?
Lord Elton: My Lords, as I sought to make clear, the contingencies are so varied that I cannot specify what they may contain in every case.
Lord Gardiner: My Lords, is the noble Lord aware that in his letter to me of 11th November the noble Lord, Lord Belstead, forecast regulations providing for trial, if practicable, by a jury of five persons and no appeal?
Lord Elton: My Lords, as I recall the letter, it referred to the circular ES3 1976, which was drafted and circulated by the previous Administration and which this Government decided should be made public. It was to that the noble Lord referred. Those provisions are kept under review.

Wholesale Prices
2.45 p.m.
Baroness Trumpington: My Lords, I beg leave to ask the Question which stands in the name of my noble friend Lady Elliot of Harwood on the Order Paper. I am sure that the House will be sorry to hear that my noble friend has injured her eye and cannot be present today.
The Question was as follows:
To ask Her Majesty's Government what has been the rate of increase in wholesale prices in the last six months compared with the previous half year period.
Lord Cullen of Ashbourne: My Lords, over the past six months, wholesale output prices have risen by 4¼ per cent., compared with a 5 per cent. increase for the previous six-monthly period.
Baroness Trumpington: My Lords, while thanking my noble friend for his reply and welcoming this good news, does he agree that what he has just told us will be of great benefit to people who purchase from wholesalers, which will in turn be passed on to the consumer?
Lord Cullen of Ashbourne: Yes, my Lords, I would agree with that; but, in looking at the Retail Price Index, though the fall in wholesale prices will of course be helpful, there will be various other matters to take into account. However, the Government estimate a 9 per cent. increase in RPI by the end of this year and a 7½ per cent. increase during next year.
Lord Molloy: My Lords, does the noble Lord not agree that good news sometimes stops at the wholesalers and that there is no great evidence to show that it is passed on to the general body of consumers? Should this not occupy the mind of the Government; to see that fair play goes right the way through?
Lord Cullen of Ashbourne: My Lords, I was trying to indicate that it is not wholesale prices alone which affect the RPI.

Supplementary Benefit: 21-Hour Rule
2.47 p.m.
Baroness David: 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 a decision has been taken on the 21-hour rule and the entitlement to supplementary benefit for those unemployed young people who are undertaking part-time courses at school or college.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Trefgarne): My Lords, the Government have been reviewing the details of the 21-hour rule in the light of the Chief Supplementary Benefit Officer's recent guidance on the
702
interpretation of the present regulation. As my honourable friend the Parliamentary Under-Secretary said in another place on 6th April, our aim is to secure that the 21 hours permitted for benefit purposes covers classroom instruction only, subject to the introduction of additional safeguards to ensure that people who have withdrawn wholly from the employment field to pursue their studies are not entitled to benefit. The details are still under consideration but my honourable friend hopes to be able to make an announcement shortly.
Baroness David: My Lords, I should like to thank the noble Lord the Minister for that reply, which is certainly a great deal more encouraging than the Answer I received the last time I asked this Question. If a satisfactory decision does come out of this and the 21 hours can be spent on classroom work in the college or school, will Appendix I to Guidance to Supplementary Benefit Officers be altered quickly? Also, is the noble Lord aware that in only the past few days I have heard of one case where a student who was studying for only four hours at college had his supplementary benefit stopped? I do not know whether this was because he was studying for an A-level, but he has to wait eight weeks to appeal and will therefore either miss his supplementary benefit over that eight weeks or will miss the course. Will the Minister hurry this up as much as possible?
Lord Trefgarne: My Lords, I certainly agree that the present arrangement is unsatisfactory. It will be necessary, I understand, to change the existing Supplementary Benefit (Conditions of Entitlement) Regulations 1981, and that will be done as soon as agreement has been reached on the way forward.
Lord Alexander of Potterhill: My Lords, the last time this question was before your Lordships' House I made an estimate of the effect of the ruling and was told I was wrong by the noble Lord, Lord Elton, who was then replying. I am bound to thank him for the fact that he was kind enough to write to me a few days later and agree that the answer was in error. The effect of what the Minister has now said is a reduction to 25 per cent. of the present rule. My estimate was that the 21-hour rule—
Several noble Lords: Question!
Lord Alexander of Potterhill: Does the Minister agree that under the present arrangements the 21-hour rule allows for precisely five to six hours of tuition, and to call that "full-time" is manifest nonsense?
Lord Trefgarne: My Lords, I certainly agree that the effect of the recent decision is unsatisfactory, and that is why the Government are reconsidering the matter in the way that I have described. I must, however, say that the recent decision is currently the subject of an appeal to the Commissioner and I would not wish to forecast the outcome of that appeal.
Lord Avebury: My Lords, can the Minister say roughly what is the time-scale of the present review, and will he in undertaking that review pay particular

703
attention to the difficulties faced by refugees here, who may have more need than anybody else of the education and training of which they are deprived? Because they cannot possibly forgo the supplementary benefit, which they would have to do if they undertook full-time courses in education.
Lord Trefgarne: My Lords, I cannot precisely forecast the time-scale upon which my honourable friend will be bound in reaching his decision, but I can assure the noble Lord that he is seized of the urgency of the matter.
Baroness Jeger: My Lords, although my noble friend's Question referred specifically to unemployed young people, can the Minister assure the House that there will be no age bar and that people of more mature age will be encouraged and not disadvantaged if they take up further study? Secondly, can he say what is to happen, after the 21 hours of classroom work, to the young man or woman who goes home with a library book and does some study? Are they prejudicing their right to benefit, whereas if they went out to play bingo they would keep to the 21 hours?
Lord Trefgarne: My Lords, the noble Baroness's question goes to the very heart of the question. As I said in the original Answer, the intention is that the 21 hours should relate only to classroom work.
Baroness David: My Lords, can the Minister answer the second part of my first supplementary question? Will he try to speed up the appeals procedure when a case has to go to appeal, so that either the supplementary benefit or the hours of tuition are not lost for long?
Lord Trefgarne: My Lords, the appeal procedure is, of course, independent of Government. I am sure that the noble Baroness would not wish us to intervene in any formal way in this, but I will certainly see if there is any difficulty with the time taken by appeals, and perhaps write to the noble Baroness if there is.
Baroness Jeger: My Lords, I did not hear the Minister answer my first supplementary about whether there was in effect any age bar, notwithstanding that my noble friend's Question referred specifically to the young unemployed.
Lord Trefgarne: My Lords, in this context different arrangements apply to those over 21. Perhaps I might write to the noble Baroness with the details.

The Falkland Islands
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend the Leader of the House will, with the leave of the House, repeat a Statement that is to be made in another place on the Falkland Islands.
Dinner
Lord Denham: My Lords, it may be for the convienence of the House if I announce that dinner will be available tomorrow evening.

Social Security and Housing Benefits Bill
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Trefgarne): My Lords, I beg to move the Motion standing in my name on the Order Paper.
Moved, That it be an instruction to the Committee of the Whole House to whom the Social Security and Housing Benefits Bill has been committed that they consider the Bill in the following order:

Clauses 1 to 3,

Schedule 1,

Clauses 4 to 10,

Schedule 2,

Clauses 11 to 15,

Schedule 3,

Clauses 16 to 47,

Schedules 4 and 5.

—(Lord Trefgarne.)

On Question, Motion agreed to.

Inter-Governmental Maritime Consultative Organisation (Immunities and Privileges) (Amendment) Order 1982
2.55 p.m.
Lord Skelmersdale: My Lords, I beg to move that the Inter-Governmental Maritime Consultative Organisation (Immunities and Privileges) (Amendment) Order 1982 be approved. The words "Inter-Governmental Maritime Consultative Organisation" being rather a mouthful, I hope the House will allow me on this occasion to use the acronym IMCO throughout in my few words on the order.
The order is required to give effect to an Exchange of Notes between the Government and IMCO amending the IMCO Headquarters Agreement. The amendment is to allow member states to establish in this country permanent missions accredited to IMCO.
The convention establishing IMCO entered into force on 17th March 1958 and the organisation set up its headquarters in London early the following year. A Headquarters Agreement was concluded with IMCO in 1968. IMCO's purpose is to provide the means for co-operation and exchange of information among Governments on technical matters related to international shipping, especially with regard to the establishment of internationally agreed standards for the safety of life at sea and the prevention and control of marine pollution from ships. IMCO is responsible for calling international maritime conferences and drafting international maritime conventions, instruments and agreements. It has produced numerous technical codes relating to the carriage of various types of cargoes such as chemicals, ores, nuclear materials and other dangerous goods, and

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covering the construction and equipment of specialised ships like gas and chemical carriers. Your Lordships will be aware that IMCO is the only United Nations body with its headquarters in this country.
The IMCO Council first considered the question of permanent missions as long ago as 1975 and, although our representatives have always argued that members' interests were adequately served by their diplomatic missions in London, or by visiting experts, it was accepted in 1979 that there was no objection in principle to the establishment of permanent missions. In reaching this decision we were guided by the fact that the majority of IMCO's members wanted to be free to establish permanent missions. Although there are no non-embassy missions at the moment, and these are not expected, other comparable specialised agencies in other cities are served by such missions and have permanent missions accredited to them. In the light of these considerations we have agreed with IMCO that the Headquarters Agreement should be amended in the manner set out in Cmnd. 8495 which was laid before this House on 16th February.
The draft order before your Lordships would implement that amendment. It grants certain limited immunities and privileges to permanent representatives of member states and resident members of permanent missions. However, as we do not expect many members of IMCO to establish separate permanent missions here I do not think your Lordships need have much concern over this order. The order does not apply to IMCO headquarters' staff members. They are already provided for under the existing provisions of the Headquarters Agreement. The immunities it accords are much less than those given to embassy personnel of diplomatic rank. The immunity from jurisdiction is restricted to official acts, and will not, therefore, apply if they should, for example, commit traffic offences or not pay their rates, both aspects of immunity which I know have caused your Lordships concern in the past. Given IMCO's role in a wide variety of maritime matters which are of great importance to us as a major shipping nation and as a coastal state, I hope that your Lordships will show support for the work of this important organisation by approving this order. I beg to move.
Moved, That the Inter-Governmental Maritime Consultative Organisation (Immunities and Privileges) (Amendment) Order 1982 be approved.—(Lord Skelmersdale.)
3. p.m.
Lord Bishopston: My Lords, I am sure we are all grateful to the noble Lord for explaining the order which amends the Headquarters Agreement between Her Majesty's Government and IMCO, allowing member states to establish permanent missions here. As the Minister has said, the order brings IMCO into line with other UN agencies, such as FAO and UNESCO, in respect of an IMCO base in this country. The organisation has some very important functions, not least those concerned with marine pollution—a matter of great concern to the United Kingdom and, indeed, to many other countries—as well as other specialist functions. The order also grants, as the noble Lord said, certain immunities and privileges to permanent staff representatives of diplomatic rank.
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I should be grateful if the noble Lord would answer one or two questions, of some of which I have given him notice. First, can he say whether the immunities extend to the families of mission personnel? Secondly, in what way do the immunities and privileges differ from those granted to other missions' representatives and staff? Thirdly, do the immunities extend to road and traffic legislation requirements? Is there a limitation on the missions? Another question which occurs to me, and of which I have not given notice, concerns any taxation immunities which would apply in this case.
Lord Skelmersdale: My Lords, I am grateful to the noble Lord, Lord Bishopston, for his reception of the order. The noble Lord has asked me one or two questions. I think that perhaps I dealt with his question about traffic and road legislation in my original introduction. The answer is that immunities are not confirmed for that. The noble Lord also asked how the immunities of the personnel of such missions differ from diplomatic immunities. The answer is—again as I think I said originally—that the immunities in this case are only for official acts in the normal course of the duties of those personnel, whereas diplomats are exempt all the time, whatever they are doing. Therefore, it is a very minor form of immunity and privilege.
As regards the families of mission personnel, the only immunity which extends to wives and families is that of immigration. Once they are actually here they do not get any immunities at all. As to limitations of numbers, yes, we can control the size of these missions, and the annex to Cmnd. 8495 contains the agreed procedure—the accreditation to IMCO of permanent representatives and their staff. If the person is not already a member of an embassy, IMCO must inform Her Majesty's Government. If we should object to the person either because of something that he has done or because we think that the mission is already big enough, consultations must take place between Her Majesty's Government and IMCO.
The question of tax is a little complicated. However, basically, it works in the same way as it does for any person working abroad. In this case, representatives will be exempt from tax on their salaries paid to them by their Governments—that is, exempt from tax in this country; what happens in their countries of origin is, of course, a matter for those countries.
I hope that I have tidied up all the questions which the noble Lord has asked me. As I said at the beginning, I am very grateful for his reception of the order.
On Question, Motion agreed to.

Shops Bill [H.L.]
3.4 p.m.
Baroness Trumpington: My Lords, I beg to move that this Bill be now read a third time. The time has come for me to wish my Bill Godspeed as it leaves the calm waters of this House for the more stormy seas in another place. I can think of no better pilot than the honourable Member for Plymouth, Drake, and I pass my Bill over to her with pride because it is not only a good Bill, but also long overdue.

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Your Lordships will recall that this House has divided only once during the passage of the Bill. That Division was caused by an amendment to allow shops to open until 1 p.m. on Sundays. It also included a schedule of exemptions. The fact that the amendment was moved by the noble Lord, Lord Jacques, who represents the interests of the Co-op in this House, was not only a remarkable tribute to his powers of persuasion, but also a very real advance on the attitude of the Co-op from their previously entrenched position against all Sunday trading. That amendment was defeated by a huge majority of 118 to 46 votes.
I should at this stage like to thank most warmly all those noble Lords from all sides of the House who have supported me by their votes and by their constructive and eloquent speeches throughout the passage of the Bill. My sincere thanks must also be expressed to the Department of the Home Office for their great assistance in the redrafting of the various schedules, et cetera. The help given by the Home Office has been invaluable, because, by reason of the various alterations and tidying-up measures which they suggested, it has been possible to end up with an unamended Bill which repeals the strictures—I knew it came in somewhere—imposed on shops in England and Wales while continuing to protect shopworkers. I was going to say that I felt sure that I could count on my noble friend Lord Elton to pass on my gratitude to my noble friend Lord Belstead, but, as I see that he is here himself, I should like to thank him most warmly for being my unofficial guru on the matter of shops trading until he left the Home Office for another place, or, rather for another department. My jokes are unintentional this afternoon!
I must underline the fact that the Bill, unlike its predecessor, is going to another place unamended. The noble Lord, Lord Robertson of Oakridge, tabled his amendments with the best of intentions. I did not support them—not because I did not support the principle involved, but because I felt that my Bill was not the place to provide legislation which deals with conditions and terms of employment, apart from the safeguards which are already incorporated.
What, therefore, has surprised me above all has been the lack of opposition from the union USDAW. I realise that the climate of opinion against Sunday and late night trading has shifted positively in support of repealing the 1950 Act. However, I must confess that, although I realise that many people would be all too happy to be able to earn those extra few pounds on a Sunday, I had expected formidable opposition from the union. Instead, and much to my delight, opposition from the union was voiced only once during Second Reading. The noble Lord, Lord Allen of Fallowfield, quite contrary to my expectations, did not bring forward any amendments at the Committee stage or again at the Report stage. I can only think that this must represent a change of opinion on the part of the union in line with the general feeling among customers and shopkeepers alike throughout the country. If the article entitled, "Union eases line on Sunday trading" in The Times today and in other newspapers is accurate, then that is indeed so, and I greatly welcome the evidence that USDAW is looking
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to the future. This, my Lords, is timely and exciting news.
My final thanks are most certainly due to the representatives of the National Consumer Council, WHICH and JGW Government Relations for their tremendous help and enthusiasm. Their belief as well as mine was summed up I think, by the noble Lord, Lord Robbins, at the Report stage, when he said:
"all this Bill does is to create a greater freedom for those who prefer it "—[Official Report, 19/4/82; col. 410.]
I should like to finish on a personal note by saying that I very much hope that this Bill will succeed in another place, not only because I believe so passionately in its principles, but also because it would be nice if the honourable member for Plymouth, Drake, and I, might be remembered by our friends as joint Mothers of the Free. I beg to move.
Moved, That the Bill be now read a third time. —(Baroness Trumpington.)
Lord Sainsbury: My Lords, I was unable to take part in the Second Reading debate on this Private Member's Bill as I was abroad at the time. Therefore, I should like to make a brief statement, but I shall not detain your Lordships long. The subject of trading hours affects so many people—shopworkers, consumers and those who live in the neighbourhood of high streets and shopping centres. For example, in the light of the changed social circumstances over the last 30 years since the passing of the Shops Act, I feel that the subject calls for a proper independent inquiry, where evidence can be taken from all those interested and affected parties. After this inquiry the Government should, in my opinion, cease their benevolent neutrality and introduce the necessary Bill. Therefore, I cannot support the present Bill.
3.12 p.m.
Lord Jacques: My Lords, first, I should like to congratulate the noble Baroness on the way in which she has piloted her Bill through the House. I think that it has met with admiration on all sides, not only among her friends but also among her opponents. Next I should like to ask the Minister a question. I think that we were told on Second Reading that there was an understanding between the department and the trade union that before any general legislation was introduced, the trade union would at least be informed. There was an implication that they would be given an opportunity to put their point of view and that it might go as far as consultation. I should like to know whether that applies to this Bill, as the Government have been so benevolent in their neutrality.
I would also follow the noble Lord, Lord Sainsbury, in pleading with the Government to have regard to the views which have been put forward by the employers' associations in the retail trade. The employers' associations in the retail trade come under the umbrella of the Retail Consortium. The Retail Consortium has made representations to the Government and it is seeing a Minister of State of the Home Office at an early date. The consortium is asking that, before there is this kind of radical change in law, there should be a proper inquiry as to the wider implications; for

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example, the implications for local authorities' refuse collection and libraries, the implications for transport, the implications for the Post Office, for banks, and so on; but, above all, the implications for family life in an industry where such a huge proportion of the workers are married women.
Like myself, the consortium does not accept that the pattern in England and Wales will follow that of Scotland. The position is quite different; there is a quite different population distribution. Furthermore, there is a puritan influence in Scotland which does not spread very far over the border, and it is the puritan influence in Scotland which has kept back Sunday trading without the need for law. That influence is not here and the pattern that is likely to come here will be different. Both the consortium and I believe that it is much more likely that if we have the free-for-all which is given by this Bill, we should have a pattern like some of the states in the United States; that is, their biggest shopping day would be Sunday and they would commence their sales at two o'clock on a Sunday afternoon.
We believe that, because of the pattern in this country, what will probably happen will be that shops will open all day on Sunday and close on Monday. I believe that that is a very great possibility if this Bill ever becomes law. I am confirmed in that view when I look at first-hand at the trading that was done last Good Friday in department stores and hypermarkets which were open. I am convinced that if they are free to open on Sundays, hypermarkets would open on Sundays and close on Mondays.
In conclusion, I am very glad to see the noble Lord, Lord Simon of Glaisdale, in his place. When he spoke in support of this Bill it passed through my mind that shopkeepers do not have the long waiting lists of the courts, but the people who work in the courts can go home on a Friday night and forget their work until Monday morning. Shopkeepers already work on Saturdays and now they will be expected to work on Sundays if we ever get this Bill. I still regard this as a bad Bill, a Bill which lacks compromise and a Bill which is one-sided. I hope that it will never see the light of day.
3.16 p.m.
Lord Lucas of Chilworth: My Lords, I should like to congratulate my noble friend Lady Trumpington on having reached this stage with this Bill. I am particularly anxious for my noble friend the Minister to enlighten us as to the position which was briefly referred to by the noble Lord, Lord Jacques, when we last discussed the Bill. At that time the noble Lord said that he believed that fear would drive the shopkeeper to open and that fear would drive the employee to work. As I understand it—perhaps my noble friend will correct me—is it not a fact that if an employee's contract of employment is to be altered to include some element of Sunday working, and if he or she fails to accept that change and is dismissed, there would be a case of wrongful dismissal to go before a tribunal. If a potential employee applied to a company and said, "Yes, I should like to work for you as you have advertised, but I am afraid that I have certain religious or other scruples and am not able to work on a Sunday", and the job is then refused by the potential employer, would that applicant have a case
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under any of the discrimination laws that apply as regards religious beliefs?
There is a point with regard to the Retail Consortium which I think needs mentioning. It has been said that the Retail Consortium, the umbrella under which the majority of traders operate—it is almost like a trade association; indeed, it is one—is divided among itself as to the wisdom of trading. Of course I hope that this Bill proceeds through the other place and ends up on the statute book, but there is no compulsion either for members of the Retail Consortium or for anybody else. It seems to me that it is ridiculous that people in certain areas cannot take advantage of the trading pattern. If it means working on Sunday or opening the shop on Sunday and closing on Monday, Thursday, Friday or whatever, I do not think it matters at all. I think that one must meet the demand. Whether they are small businesses, medium businesses or large businesses, I do not believe that anyone will be so foolish as to be driven to opening for extended hours over seven days a week because there is a law that so permits.
I am sorry again to pick on something that the noble Lord, Lord Jacques, has said. Of course, I do not mean it personally. He thought that we might get to a state reminiscent of America. I believe that we are far more likely to get to a state reminiscent of the Continent, where Sunday trading, or trading over seven days, is quite the usual pattern. Indeed, in many of the small towns much of the trade, whether in foodstuffs or clothing, is done by small businesses controlled by families, and they fill a need. They have fairly long lunch-hours for which they stop working fairly early in the afternoon. I can see that kind of thing happening here, and I think it is to be welcomed. It will certainly give further opportunities of employment in a service industry. We need both—the employment opportunities and the service that that kind of industry would provide. I hope that my noble friend's Bill proceeds firmly on its way.
Lord Mottistone: My Lords, may I say a few words in support of my noble friend's Bill, which was well argued at Second Reading. The same sort of arguments were produced from certain members of the Opposition, but I am delighted to say not from too many. I hope that this Bill gets the support that the House has clearly given it through its various stages, and I wish it well.
3.22 p.m.
Lord Bishopston: My Lords, I feel that we are all grateful, as indeed other noble Lords have intimated, to the noble Baroness for her initiation of this measure dealing, as it does, to some extent with the anomalies of the Shops Acts. They have been detailed at some length. It has involved for her a great deal of work, and she has helpfully given publicity to something which urgently needs a comprehensive review—this was a point made by various noble Lords in this debate—certainly if it is to be done in such a way as not to create even more anomalies. Noble Lords have put forward various suggestions. I suppose with a Bill concerning Shops Acts you might call them "counter proposals"!

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As I pointed out during previous stages of the Bill, it is a matter which needs the widest consultation and consideration; certainly something which would exceed what might be expected of a Private Member's measure. Various noble Lords have made contributions. I do not need to reiterate the list of tributes which the noble Baroness has rightly given, but I would draw attention to the concerns of the noble Lord, Lord Robertson of Oakridge, who, like many of us, was concerned about the change in the pattern of family life and domestic life. This is a factor of great importance to our nation. My noble friends Lord Jacques and Lord Allen of Fallowfield made contributions concerning the interests of the workers in shops and of the unions concerned.
I would say to the noble Baroness that USDAW and other unions are opposed to this measure as it is, although they recognise that some changes are necessary in the light of the present situation. If the matter is to get detailed examination within many organisations, then much work will be entailed. It seems clear with regard to the Bill that all the bodies connected with the Shops Acts' requirements have not had close consultation. I make no criticism of the noble Baroness on that point, because it entails a great deal of work whether by a Private Member or the Government. Without that there will be discontent and possibly further anomalies.
I have already mentioned the undoubted effect which these, and indeed any other changes in the shops legislation, will have on other trades. This is a point which has not been followed up nationally, as it should have been. One tends to say that if we do not work in shops it does not affect us. But if shops do open longer hours and at different times, then of course other trades and professions and bodies will also be affected by such a measure.
The noble Baroness claims that people should have the freedom to open shops when they like. There was a great deal of support for that, as the poll has shown by a clear majority. I am not sure whether some of the people who said that they would like shops to open would have been so keen if, as shop-workers themselves, they and their families were going to be affected by the consequences of that change. The noble Lord, Lord Lucas of Chilworth, referred a few moments ago to the concern of the Retail Consortium with regard to this. It is also interesting that the butchers' organisation has now made an announcement that butchers do not like the prospect of working on Sundays. I wonder, with regard to the butchers, whether the noble Baroness has had a joint meeting, if that is the term to use, with the butchers to discuss their views on this.
Baroness Trumpington: My Lords, the noble Lord is still going on the assumption that I am saying "must" instead of "may".
Lord Bishopston: My Lords, other noble Lords have made it clear that if some shops may open on Sunday they may find that they must open then because their competitors have decided to do the same. Therefore, there is very little freedom. The freedom to open on Sunday is not quite the kind of freedom
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that one would anticipate. I am not against Sunday opening, but I believe that it should be done after widespread consultation. I am sure that the noble Baroness would think very little of a housewife who left getting the Sunday joint to, say, 11 o'clock on a Sunday morning. She knows, as we all do, that with freezers and refrigerators the storage of food long-term, or for shorter periods, should enable shopworkers to have a day off when their families are not obliged to work.
Lord Reigate: My Lords, may I intervene? I only want to stop this rather wandering on to this butcher thing. I live in a neighbourhood with five food shops open within five minutes walk, and not a single butcher open within 20 minutes walk on a Sunday morning.
Lord Bishopston: My Lords, I think that the butchers' organisation was concerned that if there was a general trend towards opening with some of their members and also other trades, the butchers would have to come in line. The other aspect is that if we have the right to shop when we like then we can equally ask why not the right to bank, or withdraw cash from the banks, to require the services of the post office, the right to go to a chemist, the dentist, the optician, or to an accountant and other professions at the same time?
Indeed, it may be necessary when certain shops are open for other ancillary trades and professions to provide back-up services. It would certainly apply to the transport services needing to refill the supermarket shelves. It would also involve car park attendants. This would involve consultation with local authorities. I only mention the point that this should receive much wider interest than it has had because it goes beyond the opening of shops.
The purpose of my short intervention is to express gratitude to the noble Baroness, Lady Trumpington, for her action in raising the matter and spotlighting the anomalies and inconsistencies of the present shops' legislation. I suggest that at least, whatever the future of her Bill, she has really made a case for the Government to intervene. A quick look at some of the Bills which have come before both Houses of Parliament in the last quarter of a century indicates that. There was a Shops Bill in 1956–57 introduced by the noble Lord, Lord Mancroft. It had five days of your Lordships' time. There was the Shops (Airports) Bill 1961–62, a Private Member's measure in the other place, and also the Shops (Early Closing Days) Bill 1964–65 in the other place. There was the Shops (Sunday Trading) (No. 2) Bill introduced here by the noble Lord, Lord Derwent. There was the Shops (Sunday Trading) Bill 1970–71 also introduced by the same noble Lord. There was another measure, the Shops (Holiday Resorts—Sunday Trading) Bill 1975–76 introduced by my noble friend Lady Phillips, and the Shops (Sunday Trading) Bill 1978–79 introduced by my noble friend Lord Ponsonby.
The noble Lord, Lord Belstead, when I raised this matter of the Government taking action for a comprehensive review, said in a previous debate on this subject that the Government do not wish to intervene on a matter where there is not general public agreement. If that is the case, then of course the Government will

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withdraw the Employment Bill and the Oil and Gas (Enterprise) Bill, and quite a few other measures. This would certainly add to the House's indebtedness to the noble Baroness for introducing this Bill. I finish on the theme that there is a real and urgent need for a wide review and wide consultation with all concerned with this matter. I feel sure that noble Lords will wish Her Majesty's Government to reconsider their present policy of leaving such matters to the inevitably piecemeal efforts of Private Members.
3.30 p.m.
Lord Elton: My Lords, I too wish to congratulate my noble friend for the very determined way in which she has piloted her Bill through its stages in your Lordships' House. Although I was not present for the earlier stages, the reports of those debates are of great interest, and her reference to the tranquil waters of this House left me surprised by the notable ripples which we have encountered since she sat down. The discussions we have had on this complex and emotive subject have been well-informed and useful.
I am sure noble Lords will join me in expressing thanks to noble Lords who have brought to the discussion both their experience and their expertise, and I would mention in particular the contributions of the noble Lords, Lord Harris of High Cross and Lord Robbins, who spoke on the Bill's economic implications; those of the right reverend Prelate the Bishop of Norwich and the noble Lord, Lord Robertson of Oakridge, who were right to remind us of the important part religion plays in our national life; that of the noble Lord, Lord Young, who spoke for the consumer; and those of the noble Lords, Lord Jacques and Lord Sainsbury, who have long experience of the retail trade, and Lord Sainsbury added a footnote of great interest to the debate a few moments ago.
To the noble Lord, Lord Jacques, I would say that no Government habitually consult with trade unions on other people's Private Member's Bills, but we should be glad to consider any views which USDAW might like to put forward. As to the undertaking of the Government in regard to consultations before a Government Bill, should a Government Bill come forward, that undertaking would of course hold good. We are also grateful to the noble Lord, Lord Bishopston, for his contributions during the progress of the Bill. There can be no doubt that the discussions have shown that there is at least a concensus that the legislation in this area is outdated and needs reform. At the same time, they have shown that we still lack total agreement on how that reform should be devised. The noble Lord, Lord Bishopston, thought that might be a recipe for inanition to be spread to all areas of Government policy. I must disappoint him in that respect. But we note that the shopworkers' union and sections of the retail trade are opposed to my noble friend's Bill on the grounds that it goes too far and could have unfortunate consequences for shopkeepers, their employees and consumers alike, and the noble Lord, Lord Jacques, was eloquent in that respect.
On Second Reading, my noble friend Lord Belstead outlined the conclusions reached by the Government. On behalf of my right honourable friend the Home Secretary, he said we found no point of principle for opposing my noble friend's Bill, but because of the
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strength of opposition to it by many retailers and by the union, we felt it would not be appropriate to introduce a Bill of our own at this time. However, the Bill has given us a valuable opportunity to consider the whole subject and, whether or not it makes further progress in another place, I am sure the House will agree that the policy to which it seeks to give effect at least merits the fullest parliamentary discussion. I again thank my noble friend for having given us this valuable and extended opportunity for debate.
On Question, Bill read a third time, and passed, and sent to the Commons.

The Falkland Islands
3.34 p.m.
The Lord Privy Seal (Baroness Young): My Lords, with the leave of the House, I will now repeat a Statement being made in another place by my right honourable friend the Prime Minister. The Statement is as follows:
"With permission, Mr. Speaker, I should like to make a Statement about recent developments in relation to the Falkland Islands.
"In our continuing pursuit of a negotiated settlement, my right honourable friend the Foreign and Commonwealth Secretary visited Washington on 22nd and 23rd April. He had many hours of intensive detailed discussion with Mr. Haig. Their talks proved constructive and helpful, but there are still considerable difficulties. Mr. Haig now intends to pursue his efforts further with the Argentine Government.
"However, the Argentine Foreign Minister is reported to be unwilling to continue negotiations at present. I hope he will reconsider this. As the British task force approaches closer to the Falklands, the urgent need is to speed up the negotiations, not slow them down. We remain in close touch with Mr. Haig.
"I now turn to events on South Georgia yesterday. The first phase of the operation to repossess the island began at first light, when the Argentine submarine 'Sante Fe' was detected close to British warships preparing to land forces on South Georgia.
"The United Kingdom had already made it clear to Argentina that any approach on the part of Argentine warships, including submarines or military aircraft, which could amount to a threat to interfere with the mission of British forces, would encounter the appropriate response. The 'Santa Fe' posed a significant threat to the successful completion of the operation and to British warships and forces launching the landing. Helicopters from the British warships therefore engaged and disabled the Argentine submarine.
"Just after 4 p.m. London time yesterday, British troops landed on South Georgia and advanced towards Grytviken. At about 6 p.m. the Commander of the Argentine forces in Grytviken surrendered, having offered only limited resistance. British forces continued to advance during the night and are now in control of Leith, the other main settlement on

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South Georgia. At 10 o'clock this morning, the officer commanding the Argentine forces on South Georgia formally surrendered.
"British forces throughout the operation used the minimum force necessary to achieve a successful outcome. No British casualties have been notified and it is reported that only one Argentine sustained serious injuries. About 180 prisoners were taken, including some reinforcements who had been on the Argentinian submarine. The prisoners will be returned to Argentina.
"British Antarctic Survey personnel on the island were reported to be safe when we last heard early yesterday afternoon. Our forces are making contact with them, and arrangements are in hand to evacuate them if they so wish.
"I am sure the House will join me in congratulating our forces on carrying out this operation successfully and recapturing the island. The action we have taken is fully in accord with our inherent right of self-defence under Article 51 of the United Nations Charter.
"Mr. Speaker, my right honourable friends and I will continue to keep the House fully informed on the situation as it develops. I should like to emphasise that the repossession of South Georgia, including the attack on the Argentine submarine, in no way alters the Government's determination to do everything possible to achieve a negotiated solution to the present crisis. We seek the implementation of the Security Council resolution, and we seek it by peaceful means if possible."
My Lords, that concludes the Statement.
3.39 p.m.
Lord Shackleton: My Lords, the whole House will wish to extend the most heartfelt congratulations to the British armed forces. The achievement—which I will not say exceeded our expectations because we have very high expectations—is a matter for the greatest congratulation to those who planned and carried out what could have been a very dangerous operation. It is even more satisfactory that it was implemented without loss of British life and the wounding of only one Argentinian, and I would say at the outset how right the Government are to return the Argentinian prisoners to the Argentine.
I have at times bored the House by my insistence on the importance of South Georgia, and, because it is very important, I am delighted that it has been the first objective. The objective is much more than simply that of repossessing a British settlement; it is a key place in relation to conservation, and indeed to the whole of the Antartic. I would hope that the British forces will, within a very short time, retake South Thule, which is only a volcano. There are only a few people there and they, too, can be comfortably sent home to the Argentine.
It is necessary to stress, as the Statement did, that this was an action taken within the terms of the charter, in self-defence, and those of us who occasionally have listened to radio and television commentators asking questions such as, "Aren't you starting the hostilities?" must rebut such remarks as a monstrous suggestion.
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Indeed, everything that has been done has been consistent, and I am delighted that the Government are still proceeding to seek a peaceful solution by negotiation.
It is hoped that the United States Government will now join their European allies in taking such necessary economic measures as will make sure that this particular exercise of bravado by the Argentine Government comes to an end. The Argentines are not going to be very comfortable. They are going to run out of water. I gather that some of their vehicles went over the water pipes at Stanley and the reservoirs leaked. There are all kinds of reasons why, provided we do not seek an all-out assault, we might be able to solve the problem peacefully. It must be clear to everyone that we are totally determined to drive off this particular aggression.
There are one or two small questions that I should like to ask. Can the Government say anything further about the British Antarctic Survey personnel on South Georgia? Of course we have in mind the noble Lord's daughter, who is out there. I suspect that we shall be getting some marvellous films for Anglia. I know the noble Lord's daughter not only as a very attractive lady, but also as one well able to look after herself, and we should like to know of any news at any time. I think it important that the Government should constantly keep in touch with the British Antarctic Survey so that—I want to reiterate—the families of personnel, who are worried about them, know what is happening.
One would clearly wish to encourage further the efforts by Mr. Haig. I find it astonishing that the Argentine Foreign Minister, who is obviously very thrown by events, should still say that this is war, and I hope therefore that our friends at the OAS will now speak up for the British action in their own interests, in terms of resisting some of the aggressions across boundaries that might well take place.
I should like again to reiterate to the noble Baroness the hope that she and the Government will not exclude involving the United Nations in the ultimate solution, which will perhaps provide a peaceful reoccupation of the islands and which will then enable the wishes of the Falkland islanders finally to be settled. Will the noble Baroness also take some initiative, or ask the Government to take some initiative, either through the International Red Cross, or otherwise, to fulfil their suggestion that those who wish to leave the islands will be able to do so during this period?
3.44 p.m.
Lord Gladwyn: My Lords, we, too, should like to thank the Leader of the House for repeating the Statement. I suppose that everybody here will welcome, as such, the forcible ejection of Argentine troops from a British island, which they seized by force, in flagrant defiance of Argentine's obligation under the charter, and over which the Argentine Government had never pretended to have even the faintest shadowy claim. We must also surely extend our warmest congratulations to the Royal Navy and the Marines on a splendid military operation. To have transported, at only three weeks' notice, over 8,000 miles of ocean, sufficient force to undertake the operation successfully, with no casualties, and in appalling climatic

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conditions, would certainly reflect the greatest credit on all the units concerned.
But, my Lords, surely the reoccupation of South Georgia where, after all, the Argentines had very few troops and no air cover, does not in itself make much easier the reoccupation of the Falkland Islands themselves, where, we understand, the Argentines have air cover and apparently about 7,000 troops. Forcible reoccupation of the islands should be undertaken, if at all, only in the last resort. It would seem that in default of an agreed solution—and here I agree with the noble Lord, Lord Shackleton—the blockade, coupled with economic sanctions, would be the best way to reduce the garrison to ineffectiveness and bring the Argentine Government back to the negotiating table.
However, I suggest that once negotiations have been resumed, as we all hope they will be—and here I speak personally—we might well, from what is now obviously a stronger position than we had previously, consider the possibility of making some further concessions to the Argentine point of view. This may be an unpopular thing to say, but I should nevertheless like to say it. In any case, what was proposed in the last Haig talks in Washington by the Americans, and apparently rejected by us, should surely now at this stage be made public. Parliament should then say whether it is happy with such rejection, or whether it believes that the Government should by one means or another go a little further.
No doubt everything depends on whether we now receive full United States support; but we must recognise that our American friends have great difficulties with the Organisation of American States, and that it would be of considerable assistance to them if they could point to the fact that Britain was, as it were, leaning over backwards to arrive at a peaceful solution, leading eventually to friendly co-operation with the Argentine Republic, possibly under some new management.
Baroness Young: My Lords, I should like to thank both noble Lords for their very warm congratulations to our armed forces on what they have achieved. As the noble Lord, Lord Shackleton, quite rightly said, it was a remarkable achievement on the part of both the planners and the forces themselves who took part in the operation. I am glad, too, to have had the recognition of the importance that we all attach to South Georgia—a point which I believe has been brought out very much in debates in this House. As both noble Lords have said, we had a right to take this robust stand under Article 51 of the United Nations Charter.
The noble Lord, Lord Shackleton, asked me three questions. First, he wanted to know whether I could add anything further about the Antarctic Survey personnel. The latest information I have is that, as was indicated in the Statement, they are all reported to be safe and well. They are at a number of locations throughout South Georgia, and our forces are making contact with them. The question of whether or not they should be evacuated is being taken up with the British Antarctic Survey, and we are in touch with the headquarters at Cambridge. The noble Lord, Lord Shackleton, asked me another question, about the
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further intervention of the United Nations in the negotiations. Our view remains that, while the negotiations with Mr. Haig are still going on, it would be right to continue in this way because we hope that we shall achieve a successful solution, and at this particular time there is no reason to suppose that further intervention on the part of the United Nations would be appropriate.
On the last point that the noble Lord raised about the islanders being able to leave, I should like to confirm that the Government's position is that any islander who wishes to leave for the time being, and is able to get to either Buenos Aires or Montevideo, will be assisted to return to Britain. He should contact either the British interest section of the Swiss Embassy in the British Embassy premises, or the British Embassy in Montevideo. Those British citizens who do not have current British passports will have them issued to them in either Buenos Aires or Montevideo. Once each returned islander is in Britain, his case will be considered with the greatest sympathy, and the Government will not be found lacking in generosity.
I am grateful, too, to the noble Lord, Lord Gladwyn, for his reception of the Statement, and in particular for his generous remarks about the armed services. He asked about further concessions to the Argentines. I think it would be right to say that the Government's position is that we cannot negotiate under duress and, as a matter of first importance, the Argentinian troops must leave the Falkland Islands.
Lord Aylestone: My Lords, in congratulating Her Majesty's forces on their great success in reoccupying our territory of South Georgia, may I ask Her Majesty's Government if the time is not now ripe for all-party talks to take place on the whole question of the current Falklands situation? The time certainly is not ripe at the moment to decide the future of the Falklands; but that can be done when the islands return to British sovereignty.
Baroness Young: My Lords, I should like to thank the noble Lord, Lord Aylestone, for his remarks. I shall take note of them, but, as he will appreciate, the Government are keeping Parliament informed of developments as they unfold over the present situation.
Lord Morris: My Lords, may I ask my noble friend the Leader of the House whether Her Majesty's Government would note very well the very warm reception of the Statement she has just repeated by Her Majesty's Government's Loyal Opposition in this House? Could she please be good enough to use her best offices to draw to the attention of the Leader of Her Majesty's Opposition in another place to the very reasonable tone used by the spokesmen for Her Majesty's Loyal Opposition in this place as opposed to the Opposition leaders in another place?
Baroness Young: My Lords, I do not think it would be appropriate for me to comment on affairs in another place. I hope that, as I have indicated when speaking to the responses to the Statement today, my colleagues and I in this House have been grateful for the debates that we have had in this House, which I think have been very responsible and helpful;

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and we have been very pleased with the remarks that the noble Lord, Lord Shackleton, has made today, as on other occasions.
Lord Peart: My Lords, I hope that the noble Lord will not carry on in this way. After all, we all want a successful outcome. I think that, after saying what he has said, he ought to give an apology. In any case it is not true.
Several noble Lords: It is not true.
Lord Soames: My Lords, there can be no doubt that throughout the whole House there is a feeling of the greatest admiration for the way in which this operation has been carried out. The repossession of South Georgia no doubt will prove to be of the greatest possible use in having terra firma for our forces amid somewhat inhospitable waters. That is one of the many reasons why it gives the House pleasure that South Georgia is back in British hands. When repeating the Statement, my noble friend said that the Foreign Secretary of the Argentine seemed (to say the least) to be somewhat hesitant in getting back to the negotiatiating table at the moment. As a result of that, if the Argentine Government continue to refuse to negotiate, and it looks more likely that some degree, at least, of force will be necessary in the Falklands, I wonder whether my noble friend would give some thought to this.
When we last had a debate on this matter I suggested that secret diplomacy was all-important, but I think that if the time comes when it will be necessary to use a greater degree of force, it will at the same time be necessary for us to take action to ensure that the world understands why we are doing it. This will be necessary so that world opinion, which is firmly on our side at the moment, should remain on our side and that we should be seen to have taken all reasonable measures in the negotiations to arrive at a satisfactory solution by negotiation, and that therefore it was only through lack of success (with our doing everything possible to bring about that success) that it is necessary to use force, and that that is the reason why we had to do so.
I think the moment will come when it will be necessary for the Government to say somewhat more. I am not saying that that moment has come today; but these matters can move quickly and I hope that this will be borne in mind. The moment may not be far off when it will be necessary for us to explain just how far we have gone to try to ensure that we arrive at a diplomatically negotiated settlement.
Baroness Young: My Lords, I should like to thank my noble friend Lord Soames for his intervention which is very important. He, himself, has had much experience of diplomatic negotiations. As he rightly says, secret diplomacy is probably the way of making most progress at the present time. What has been encouraging is the support that we have had from the rest of the world—and notably from our friends in the EEC and from other countries in the Commonwealth. I take his point and I think it is only right that I should reiterate that it is our hope still that we shall be able to be reach a diplomatic solution to this
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present crisis; although, as we have always indicated, we have not ruled out the use of force. Perhaps I might answer the very important intervention by the noble Lord, Lord Peart, and to confirm what I think is only just and right; that the Government are glad and grateful for the support of Her Majesty's Opposition in another place.
Lord Shinwell: My Lords, did I understand the noble Baroness the Leader of the House to have said that we are not prepared to negotiate under duress? If that is the position, ought we not to say that the Argentinians should take their forces out of the islands and then we shall be prepared to negotiate? Is that not what it means?
Baroness Young: My Lords, I hope that that was the point that I made clear; we are negotiating, but we believe that the Argentines should withdraw their forces from the islands. That is part of the Security Council Resolution 502.
Lord George-Brown: My Lords, I took a slightly unpopular position the other day on the question of the use of force here. I will not repeat all that today, although I think we are still talking much too easily about the use of force to retake the Falkland Islands. May I follow up something said by the noble Lord, Lord Soames? If we are in fact to persuade the world that we are seeking negotiation and a peaceful solution before we arrive at any question of using force, is the noble Baroness able to get her right honourable friend the Prime Minister to "back off" some of the statements which have impaled us on a hook; and, in particular, the question of the islanders' views being paramount? So long as that stays so, genuine negotiations seem unable to take place. The world is not going to be persuaded that we are freely negotiating about a possible alternative solution—I have called it the two-flag solution—if in fact the power of veto is left in the hands of the 500 families, most of whom are share crofters of the Falkland Islands Company. Can we get a public statement that the Government are backing off from the statements which have boxed them and this country into a corner?
Baroness Young: My Lords, I have noted what the noble Lord has said. He is repeating the argument that he used in the debate the other day. I should remind him and the House that there have been two basic principles in this dispute. One is that aggressors should be deterred and the other is the right of self-determination of peoples—and those are two principles on which we have stood.
Lord Jenkins of Putney: My Lords, is the noble Baroness aware that even those of us who have been critical, and who remain critical, of the Government's policy in this matter must nevertheless admire the way in which this operation has been carried out? May I follow a point made by my noble friend Lord Shackle-ton when he referred to the United Nations? May I ask whether the Government will accept as an interim measure a United Nations peace-keeping force on the Falkland Islands?
Baroness Young: My Lords, we are always glad to have support for our policies, even from so unexpected a source, if I may say so, as the noble Lord, Lord Jenkins, and I thank him for it. Regarding a United Nations peace-keeping force, I cannot at this stage go into any details about anything which is being discussed. It would he quite inappropriate to comment while diplomacy is still operating.
Lord Jenkins of Putney: My Lords, I must correct the noble Baroness. It was not the Government's policies that I was praising but the operation which was carried out.
Lord Hankey: My Lords, will the Government bear in mind the lessons of the Suez affair, when we appreciated very much the importance of the United Nations, as was very right and proper, but we were strung along and ultimately time ran out on us? Will the Government agree that there is a time factor in this part of the South Atlantic, where winter is fast approaching and where the weather will be so shockingly bad in the months to come that an opposed landing will be very much harder to carry out? Will it not be wise to take account of the time factor in this matter in deciding what we should do?
Baroness Young: My Lords, I am sure that one can always learn lessons from the past. I have no doubt that notice has been taken over this particular matter. So far as military actions are concerned, again the House will not expect me to comment; but I have no doubt that the point that the noble Lord, Lord Hankey, has made about the weather has been taken into consideration.
Lord Brockway: My Lords, may I ask the noble Baroness the Leader of the House whether the Government will be submitting a Motion to Parliament supporting what they are doing, or whether they will allow a debate upon these issues? Does she not agree that the brief comments which are made after a Statement are not a democratic way of taking the view of Parliament? Is she aware that many of us would like to contribute to such discussions—I hope in a constructive way—although we do not hide the fact that we do not support the policy which the Government are pursuing?
Baroness Young: My Lords, throughout this very difficult situation in the Falkland Islands I hope that I have correctly interpreted the wishes of the House, and that on each occasion when another place has been recalled we too have met for a debate. All Statements have been repeated in this House, and of course it is always open, if the House would like another full-scale debate on the Falkland Islands, for one to be arranged through the usual channels. I am sure that it will be the wish of the House that it should be kept fully informed of the situation as it develops. That is the wish that I have tried to interpret at each stage.
Lord Harris of Greenwich: My Lords, may I ask the noble Baroness whether she is aware that many of us are grateful for the fact that all the Statements made in another place have been repeated in this House?
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However, will she also be aware, looking back tomorrow morning on the text of what she said this afternoon, that on a number of occasions she has pointed out that it is impossible to answer particular questions because of the delicate nature of this situation? Could I not therefore come back to the point made by my noble friend Lord Aylestone: given the very difficult decisions that are likely to arise in the next two or three weeks, is it not highly desirable that the Government should offer to meet leaders of the other parties so that a number of these matters can be discussed, which clearly cannot be done on the Floor of either House of Parliament?
Baroness Young: My Lords, I shall certainly take note of what the noble Lord, Lord Harris, has said on the subject, as of course I said I would in the case of the remarks of the noble Lord, Lord Aylestone. The noble Lord—and I hope all noble Lords—will appreciate that while these very difficult negotiations are proceeding, and while we are in a very serious situation, it is most unwise to say publicly anything further than need be said. I am not declining to say anything for any other reason. Of course, I shall take note of the points that have been made.
Lord Buxton of Alsa: My Lords, may I ask my noble friend briefly whether the Government will now remove entirely South Georgia and the dependencies from the agenda of any further diplomatic negotiations, since Argentina has never in all history had any basis whatever for having anything to do with those territories?
Baroness Young: My Lords, I take note of what my noble friend Lord Buxton has said on this matter and I will see that it is conveyed to my right honourable friend.
Lord Forester: My Lords, is my noble friend aware of the overwhelming support which Her Majesty's Government have from the people of the United States of America? I have returned from Washington this morning with a political group, and it was wonderful to know that the people of the United States support us as strongly as they do.
Baroness Young: My Lords, I am most grateful for that intervention from my noble friend Lord Forester. I am sure that the whole House is glad to hear it. I shall certainly pass that on, too.

Town and Country Planning (Amendment) Bill [H.L.]
4.6 p.m.
Lord Vaizey: My Lords, I beg to move that this Bill be now read a second time. This is a Bill entirely concerned with the environment, and with only one aspect of the environment: the preservation of neglected buildings of special architectural or historic interest, and of certain neglected buildings in conservation areas. The proper upkeep of such buildings has been the subject of increasing concern in recent years. I have a

723
list of those pulled down last year which is staggering: a building of historic interest on the list has been pulled down in every county in the country.
Briefly, the problem is the failure of existing statutory powers to deal adequately with cases where owners deliberately neglect such buildings, often because it is more profitable for them to redevelop the site. Eventually, buildings become so neglected that there is little option but to demolish them. As I say, this has happened in every county in the Kingdom in the year 1981. There have been many instances of deliberate neglect cited in the press, and presumably from the lists there are many more. Alas! at present there are only two courses open to a local authority where such neglect occurs: if the building is unoccupied, they may carry out emergency repairs under Section 101 of the Town and Country Planning Act 1971 (as amended), but such repairs have to be very limited, as paragraph 99 of the Department of the Environment Circular 23/77 makes clear. They do not begin to tackle the job of properly preserving a building, and inevitably it continues to deteriorate, though more slowly.
If permanent repairs, aimed at the proper long-term preservation of a building are desired, a local authority or the Secretary of State must first serve a repairs notice under Section 115 of the Act of 1971, and then take compulsory purchase action under Section 114. In practice, an owner may well spin out the procedure for so long that, by the time it is completed and a decision reached, the building is too far gone to save and compulsory purchase is a violent weapon—a Trident. I prefer a marine commando unit, which is what this Bill prepares the local authority to have. It is not surprising, therefore, that the procedure appears to be discredited and is hardly ever used, with the result that virtually no effective protection is being afforded by existing legislation to deliberately neglected buildings.
The purpose of this Bill is to supplement and partly replace the provisions I have described. It is a logical successor to a Private Member's measure introduced in another place by Mr. Michael Shersby, the Member for Uxbridge, which, in turn, supplemented provisions in the Civic Amenities Act 1967—a pioneering Act sponsored by my noble friend Lord Duncan-Sandys. I should like to pay trubute to Mr. G. E. Allan, a lawyer practising in the planning field, whose article, "Conservation of buildings of merit", in The Journal of Planning and Environment Law (1977), pointed the way ahead.
I am glad to inform the House that consultations have taken place with the major national amenity societies, and almost all have written to me indicating support for the measure. I have written to the local authority associations, and I think it is fair to say that there seems to be a reasonable prospect that they will support the principles of the Bill. From the nature of the Bill, I hope that it will, like its predecessors, receive all-party backing. I know that it does not have Government support, on the grounds that eventually they will get around to doing it themselves. Therefore, I hope that my introduction of this Bill will help them loang that way. Noble Lords may be interested to
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know that I shall deposit later today in the Library a copy of my notes on the clauses of the Bill.
I now turn to describe, quite briefly, the Bill's main provisions. Clause 1 supplements Section 101 of the Town and Country Planning Act 1971. It extends the section to buildings which are not necessarily unoccupied—that is to say, they may well have squatters—and provides that notice of works to be undertaken by a local authority, or the Secretary of State, shall be given to occupiers as well as to owners. Subsections (6) to (9) of Section 101 are repealed and replaced under Clause 2 by Sections 101D and 101E. Clause 2, which deals with the proper long-term repair of neglected buildings, inserts Sections 101A to 101E in the Act of 1971. Section 101A is, in many respects, the crucial point. It enables a local authority to serve a notice—a listed building preservation notice—requiring an owner to carry out works which are considered necessary for the proper preservation of a neglected building. An authority must first be satisfied that the works are capable of being executed at reasonable cost. Section 101B enables an authority to enforce the notice by undertaking the work themselves, if the owner fails to comply. That is the marine commando unit, if I may use a topical analogy. Section 101C confers like powers on the Secretary of State, though I suppose that he would wish to use them only very sparingly. Section 101D empowers a local authority or the Secretary or State to recover their expenses, plus interest, from the owner. Recovery is by action—namely, in a county court or the High Court or, summarily, in a magistrates' court.
The clause charges the authority's or the Secretary of State's expenses, plus interest, on the premises and confers on them, for the purpose of enforcing the charge, many of the powers of mortgagees under the Law of Property Act 1925. The right to impose a charge on property and to sell it to realise sums outstanding is long overdue, and greatly reduces the need for compulsory purchase. Section 101E enables the owner to make representations to the Secretary of State against the recovery of expenses, on the grounds that the works were unnecessary, that the demand was unreasonable or that there would be undue hardship. No proceedings for recovery may be taken until the representations are determined.
I now turn to Clause 3. I am sure that the House will recognise that it would be inequitable for listed building preservation notices to be served under Clause 2 in respect of neglected buildings that cannot be properly preserved at reasonable expense. In these restricted circumstances, there is a continuing need for a compulsory purchase procedure along the lines provided by Sections 114 and 115 of the Act of 1971, both in relation to listed buildings and to certain unlisted buildings which are in conservation areas. Clause 3 therefore amends and applies Sections 114 and 115, which are otherwise superseded by the Bill, to these very restricted circumstances.
Clause 4 extends Section 280(4) of the Act of 1971 to Sections 101A to 101C. This section, which applies, among others, to Section 101, enables a person duly authorised by a local authority or the Secretary of State to enter any land for the purpose of ascertaining

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whether any of the functions conferred by Section 101 should be exercised, or for the purpose of actually exercising those functions.
Clause 5 increases various penalties. The maximum penalty which may be imposed on summary conviction for unauthorised works to listed buildings, or unlisted buildings in conservation areas, is currently £1,000. This is clearly insufficient. In many instances, developers owning what would otherwise be valuable sites if protected buildings were altered, extended or demolished, are unlikely to be deterred from acting unlawfully by maximum penalties at this level. The clause therefore raises the maximum penalties for these offences to £5,000, or to such other sum as may be substituted by order to reflect inflation. Clause 6 enables the provisions of the Bill to be extended to Scotland, and Clause 7 deals with the citation and commencement.
I have briefly outlined the purposes of this Bill which, as I said, has the support of all the major amenity societies in the country, and I hope that it will commend itself to your Lordships for Second Reading. I believe that there is a great public interest today in preservation, as evinced by the rapid growth of amenity societies, and nowhere is the feeling greater than among young people. I believe that this Bill is the next step on the way to meeting this interest, and that it is a Bill which future generations will welcome. Such deficiencies as it may contain can no doubt be adequately dealt with in Committee and in another place. Therefore, I hope that the House will give the Bill a Second Reading. My Lords, I beg to move.
Moved, That the Bill be now read a second time. —(Lord Vaizey.)
Lord Kennet: My Lords, before the noble Lord sits down, I wonder whether he can clarify one point? On my reading of the Bill, I thought it abolished the right of compulsory purchase for a neglected listed building in all circumstances, or in some circumstances. But from his speech, it sounded as though it did not abolish the right of compulsory purchase in the case of a neglected listed building in any circumstance. Can the noble Lord just clarify that?
Lord Vaizey: Yes, my Lords. I am grateful to the noble Lord for enabling me to clarify that point. It abolishes the power of compulsory purchase, save in one instance. That instance is a very limited one, where it is not possible to preserve a building at reasonable expense. That is really a listed building which is in a state of terrible dereliction and where a major operation is needed to restore it, in which case there is power of compulsory purchase for the local authority or the Secretary of State to undertake a major restoration.
4.17 p.m.
Baroness Birk: My Lords, may I first congratulate the noble Lord, Lord Vaizey, on bringing forward to this House a Bill on such a very important subject? It is something which has been going on over many years—I suppose one could say decades—and which still urgently needs attention. The Bill's objectives are not only admirable, but absolutely necessary. I know from personal experience, from having been a Minister at the Department of the Environment
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and responsible for this whole area of conservation and listed buildings, how long we were trying to find some way of dealing with this matter. I know how difficult it was then and how difficult it will appear even now, when we hear the noble Earl's reply, to get Governments to take a line soon enough, or to do anything except to mouth nice phrases and give verbal support, but not to put it into legislative action.
One of the main troubles is that, politically, it is not a very attractive cause. Therefore, whenever a piece of legislation comes along in which it could quite easily be neatly embedded, there are always reasons given why there is no time to do it, or why there are other priority matters, so it always gets left and is pushed under the carpet for another time. The noble Lord was absolutely right when he said that, while this delay is going on and on, buildings are being demolished or are not being cared for, and one cannot put these right at the end of the day. Even if something is done, buildings that are lost will have been lost for ever. This is the terrible trouble about lack of conservation in any field.
The last occasion when I certainly hoped that something would be done about this was the Committee stage of the Local Government, Planning and Land (No. 2) Bill. I then moved an amendment—admittedly it was very late at night so it probably did not get the attention or support I thought it deserved—which was quite simply to delete the word "unoccupied" from Section 101 of the Act. I did not think at that time it was necessarily the final or definitive way of dealing with the matter, but that there was a place for it to be done in this Bill I think went without question. Further, if the Government had been willing to do so, an amendment could have been moved on Report stage in order to do something about it.
I think the following is a very important and relevant quotation from what the noble Lord, Lord Bellwin, said on that occasion when I moved my amendment at Committee stage. He said, at column 1046 of the Official Report, on 13th October 1980;
"We share the noble Baroness's concern to strengthen the local authorities' power to require repairs to a listed building, but I fear the proposal in its present form is not acceptable. Entering occupied premises against the wishes of the owner to carry out work is always open to very real objections of the invasion of privacy and rights of property".
I will come back to that in a moment, but this is the important point:
"Nevertheless, we accept that there is a case for strengthening the powers currently available and have in fact completed a considerable amount of preliminary work aimed at augmenting the present powers by introducing an alternative to compulsory purchase under Section 114 "—
—that is Section 114 of the Town and Country Planning Act 1971, to which the noble Lord, Lord Vaizey, has referred and with which his Bill is intertwined. The noble Lord went on:
"This would involve seeking a court order to carry out the repairs specified under a notice served under Section 115 if they have not been carried out within the statutory two-month period. If the order were granted, the authority or the Secretary of State could also seek to recover the cost of the work. The procedure would be complicated by the fact that there is a limit of £2,000 on the amount that can be recovered in the county court".
Since then the limit in the county court has been

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raised to £5,000, so that is no longer a barrier. He went on to say:
"Unfortunately, there simply has not been time to work out the details of this procedure or to consult the local authority associations in time for their inclusion in this Bill. I am sure the noble Baroness, Lady Birk, will agree that it is important to get any amended procedure right and I hope, therefore, that with the assurance that the department have proposals in mind which they will discuss in due course, she may feel able to withdraw the amendment".
With that assurance, I did withdraw my amendment, and, let us be quite frank, I would not in any event have got it through at that time of night and with empty Benches. But that was in October 1980, 18 months ago, and we have heard nothing of it at all.
There is no proposal, so far as I can see, to include it in the Local Government (Miscellaneous Provisions) Bill, which is proceeding in a rather stately and slow manner through Parliament. I would hasten to say that I am not asking for it to go faster, because we have enough on our plate with the other Local Government Bills at present. Nevertheless, it is miscellaneous and covers a wide range—almost everything under the sun—so that a niche could be found for it perhaps in this Bill if the noble Lord's Bill does not manage to progress as I know he hopes it will.
I have one or two reservations about it, but I think the noble Lord would be the first to agree that if one can get this kind of change made in a Government measure it is much better as it would then almost certainly go through. But this Bill will at least put some pressure on the Ministers. I think it is only fair to say that the department itself is well aware of the need for this provision, as it has always been in the past. I spent many hours in discussion with officials in the department and we were always ready to pounce if a suitable piece of legislation which could take it in happily enabled us to try to include something of this kind. Unfortunately we were not able to do so.
Turning now to the Bill itself, the noble Lord, Lord Vaizey, gave an extremely lucid explanation of something which is really quite complicated because one has to keep referring to the original legislation, and most of the town and country planning Bills seem to be fairly complex. This is no different from the others. I am not blaming the noble Lord for that, but it is a problem with this type of legislation.
One thing I am concerned about is the weakening of the compulsory purchase procedure. I am glad that the noble Lord, Lord Kennet, obtained an explanation from the noble Lord, Lord Vaizey, of what he meant by that. He said that under his Bill it would not be possible to use that procedure except where, as I understand it, the cost of the repairs was considered to be unreasonable. I feel this is a mistake. Up to now experience has shown that the threat of a compulsory purchase order has often had a very healthy result in that it gets many owners to undertake repairs when otherwise they would not do so. I know that the Historic Buildings Council would be very unhappy to see the old Section 114 weakened in this way. If the Bill is to proceed that would certainly be one of the amendments I would be anxious to see, because if the provision is not weakened it does not mean to say that local authorities have to use it any more than they
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do at present. It is not used that much, but what is used is the threat of it; and that really acts as a healthy deterrent. Many owners either then do the repairs or sell the property under Section 115. Today there are more building preservation trusts than there were when I was at the department, two of which stand out in Hampshire and Derbyshire. Many other districts also have preservation trusts. They back up repairs notices and are able to achieve results by pressing very hard.
My second reservation concerns the lack of any appeals procedure in the Bill. It is the custom, I think, and it is right in this country that where we are going to take some quite draconian action, even where it is much needed and well merited, a person on whom a notice is served should be able to appeal. The only appeal provided for in the Bill as it stands refers to the question of recovery of expenses where, within 28 days, a person may make representations to the Secretary of State. That is rather different.
Under this Bill, after two months' notice the local authority goes straight in, does the repairs and presents the owner or occupier with the account for the work done. I think there could be cases where, for example, somebody in the house is very ill, but after two months the authority just go in and do it because they are entitled to. It would almost be their duty to do so under the Bill as it stands. It seems to me that one must make provisions for certain cases, and either one should go to the Secretary of State—people might possibly feel that that is generally not as good a way as going to a court, which they would feel is rather more objective and judicial in its findings—or go to a court. If the court does not accept the representations—if one does not make out an acceptable case against the notice being served—then it goes ahead and the local authority does not have to do anything about it. I am not suggesting that the local authority should go to the court to get an order. It ought to be the other way round.
The fact that the owner has the right of appeal to the court does not necessarily mean that this right would always be used and would cause undue delay. Most people in their senses do not want to be put to the trouble and expense of court actions. A requirement that if, after two months' notice, they were not prepared to accept people coming in to do the repairs there should be a court application would probably mean that owners would be prepared to go ahead and have the repairs carried out.
There are other points which I could make. However, I have to leave fairly early, and as I should like to hear the other speeches in this debate I must try to keep my own as short as possible. At the same time one ought to build up more interest on the part of the local authorities. There has been a great improvement in many areas, but a number of local authorities are not interested in conservation of this kind or in keeping their listed buildings in repair. I tried to promote the idea of conservation advisory committees, and a number of such committees were set up. However, a great many more are needed. My idea was that there should be a combination of members of the local authority and of local heritage and other amenity societies, as well as other local people. They would then advise the authority. Because the authority had people on the

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advisory committee they would have very much more clout and influence. Where these committees are working successfully they are able, not only in this area but in all the other areas of conservation, to do a very good job.
One needs the support of the local authorities. I do not know whether the noble Lord will be able to give us the views of the local authority associations or of local authorities generally on the Bill as it stands. I am not referring to the general point, because that is supported by many of them. However, I suspect that they would not be very happy about the weakening of the compulsory purchase procedure.
Money is a very great problem. For this Bill to be successful, local authorities must be prepared to spend more money. Their cash flow will be engaged in the first instance. Where they are unable to recover the money from the owner they will be landed with the bill. Because of the very severe cuts in local authority expenditure, there must be an acknowledgment by central Government of the importance of this problem. They must make available to local authorities contingency funds with which to carry out this work so that authorities are not put in the position of having to cut down on services, which many authorities may feel are more vital than conservation, because they have a different approach. Therefore, resources are a very important part of the problem. Whether one can put this into legislation I do not know, but central Government must give this a much higher order of priority.
At a time when more interest is being shown in the way our cities, our countryside and other places look, at a time when there is an outcry (this has been going on now for many years) against certain architectural plans for buildings—as we saw recently in the case of the Green Giant—we should build on this concern. Concern, though, is not sufficient. Resources go with it. Education is important. However, a great deal of education is being done through the heritage education group. So we come back to money. The bare bones of this Bill are absolutely essential. It is vital for us to deal with occupied buildings. It is also essential for us to remember that in October 1980 we were told that procedures were in hand. My impression then was that those procedures were almost ripe to be dropped into a legislative niche. On that account, therefore, it is fair to hurry the Government along and to ask for something more specific.
Finally, may I ask the Minister when he replies to indicate whether he would be agreeable to changes in the Bill regarding the compulsory purchase procedure. There may be others as well. I should like to know. This is very important not only from the practical point of view but from the point of view of justice—whether there could be some form of appeals procedure: an interim stage during which people would have an opportunity to object to what had been decided. With the best will in the world, one is not always right about decisions which are made. People will want to feel that they have recourse to a court which will enable them to obtain justice. Furthermore, if they believed that a local authority was getting at them but the local authority's view was upheld by the court, that would be very helpful and would strengthen the hand of the local authority.
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If the Government do not like the Bill as it stands and have objections to it other than the ones which I have made, I hope they will be able to tell us that they will come forward with other proposals and that they are prepared to go faster than they have with the promise which was made about 18 months ago. If they are not able to do so, I hope they will be able to help along the noble Lord's Bill so that, apart from the points which I have made and the points which no doubt others including the noble Earl will make, the Bill can be put right and, at last, something can be done about a subject which has been hanging around for years and years. Alas! the buildings themselves do not hang around.
4.39 p.m.
Lord Kennet: My Lords, we have to take the Bills which come before the House, not the Bills or clauses which do not. Much though we may wish that the contents of this Bill had come from the Government, they do not. The Bill comes as a Private Member's Bill. Consequently, we have to realise the Bill is less likely to become law. But it is up to us to treat it as though it were to become law, in case it does, which I think the House should desire. The Bill ought to be welcomed by the House as a whole. Everything in it is clearly a move in the right direction if one desires to stop the renewed increase, which I understand is occurring, in the loss of listed buildings. The number of such losses dropped for a number of years but the fact is that recently it has begun to increase again.
The provision that a neglected listed building need not be unoccupied if it is to be permissible for the local authority to repair it and to charge the neglectful owner is clearly right. All the clarification of the procedures for direct repair by local authority and charge on the owner is desirable. The powers of entry, though no doubt alarming, are, I think, upon reflection, desirable—that is, powers of entry on the part of the local authority—and the "upping" of the penalty for unauthorised works and unauthorised demolition is clearly in the right direction, though I am not sure that it goes far enough.
I believe the House need not worry, either, about the introduction of a sliding scale, or rising scale, as I understand it, which may be applied by the Secretary of State by order to meet inflation, so that (I hope I have this right) what is £5,000 today will, if inflation halves the value of the currency in 10 years, be £10,000 in 10 years' time. This is obviously a wise provision and I think something which might be followed in many other Acts of Parliament which contain penal provisions; and if ever the value of our currency goes up, then we shall look to the Minister to come to Parliament and reduce the maximum penalties for various offences. This is all perfectly logical.
I come now to my only objection to the Bill, which is the same as the principal objection of the noble Baroness, Lady Birk. It concerns the virtual abolition of the existing local authority power of compulsory purchase in the case of a severely neglected listed building. Fifteen years ago, in 1967, when I was the junior Minister responsible for this side of things in the old Ministry of Housing and Local Government, I was preparing the 1968 Town and Country Planning Bill which introduced this power for the first time.

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I remember quite clearly that my intention and wish and hope was to get an unconditional and absolutely clear power of compulsory purchase for local authorities at existing use value—this was the point. If a local authority had to purchase a listed building in, say, the centre of a city at development value, they would never do it because the value would be so high; and that would be precisely why the owner was allowing the building to decay. I wanted them to get the right to purchase it at existing use value, whatever it was—a house or a pub, a Georgian terrace house, a half-timbered house in a town or whatever it was. But owing to my own inexperience or to my faint-heartedness, I allowed the procedure to be so wrapped up in "ifs" and "buts", proofs and counter-proofs, questions and counter-questions, with appeal to the higher tier of local authority, to the Secretary of State, to the courts, to the valuer, at every stage by all parties, that I was not surprised to learn when inquiring a few years afterwards that the provision had hardly ever been used. It is a great pity; it was my fault. I should have known better and either insisted on getting it right and straight and clear in one move or dropped the whole thing.
There it stands, my Lords—an inefficacious power. I very much regret that the noble Lord has decided to abolish all this, except that part which applies to circumstances where nobody could possibly ever want to use it, because if it is to apply only where a building cannot be restored except at unreasonable cost, what can a local authority be supposed to wish to do with that site except to demolish the building and grant itself full development value, even if it had not paid it, which it probably had? No, my Lords; I do not think this is a sensible way to act at all. If I have understood it correctly, this is not a conservation or preservation measure. The survival of that one version of the power might be looked upon as a measure to allow or even encourage local authorities to swipe a bit of development value and still sacrifice a listed building to the community.
So what I hope the House may agree to do in Committee—and I hope the noble Lord, Lord Vaizey, may agree, on reflection, and after careful discussion, that this is the right thing to do—is not to abolish part of that power but, on the contrary, to confirm it and to make it perfectly clear that the power is to be exercised at existing use value; that is to say, that a local authority, if it cannot persuade the owner of a listed building to restore it, and if it is incovenient to the local authority to go in and restore it itself, whether because it just happens to be inconvenient or because it appears that it will never get the money back from the owner (which is the more likely case), should be perfectly free to purchase that building at its market value for the use to which it is at that time put—namely, as a house, as a pub, as a small shop or whatever it may be.
Then, of course, the local authority would be bound by preservation law—including this Bill, if it goes through; and if the local authority itself were to neglect to keep that building up, perhaps in some secret hope of being able to obtain the development value later, after it has fallen down, then the Secretary of State would be able to step in and exert the full battery of these powers against the local authority. We would
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then have a logical and justifiable system which I believe really would stop the loss of listed buildings throughout the country. With that single exception, which I hope your Lordships will put right in Committee or at Report stage, I think the House ought to welcome a Second Reading for this Bill.
4.46 p.m.
The Marquess of Linlithgow: My Lords, I would really like to put a question, if I may, to my noble friend Lord Vaizey, because there are many of us extremely interested in this problem and it has never been entirely clear how it works. The question I want to ask is this. We have been discussing mostly houses, pubs and shops which might or might not be made available for accommodation. But, of course, the preservation orders cover a much wider range of buildings. Though your Lordships may well suppose that what I am going to say is not intended to be taken seriously, I can assure your Lordships that in terms of finance and money it is so.
There are some estates which contain quite a number of these listed buildings. Many of them have gone too far to be restored except at vast cost. But there also exist a number of smaller buildings. Although we do not have them in Scotland, in England there are windmills, which, of course, can be turned into dwellings. Curiously enough, in Scotland there are a whole number of dovecotes. These are very large buildings. There are many of them, and they in fact go way back into the fourteenth and fifteenth centuries. The reason for building them was that the pigeons, regarding them as their home, laid their eggs there; the young were taken, and made a very succulent addition to the local diet.
I know of one case where there are two dovecotes in a small area. There is a preservation order on both, and an approach has been made by the local authority to discover whether or not the owner is prepared to renovate them. The smaller of the two would represent a renovation cost of £800 or £1,000. The other is a very different matter indeed. It is a very much larger affair, and the repair bill could run to £10,000 or £12,000.
I should like to be told—and I should like my mind to be clear on this—where anybody stands who has that kind of problem. He is approached by, say, the local authority, or, curiously enough, he may be approached by the Historic Buildings Council, or he may well be living in the house for which he applies for, and often will get, a grant, particularly if the house is open to the public. The Historic Buildings Council may well say to him, "You are not being very co-operative about this £20,000 or £30,000 which we think you should spend on these buildings". The local authority may say, We should like you to repair these buildings". The owner perhaps says, "I am sorry; but I would rather spend the £10,000, £20,000 or £30,000 on the building in which I live (which is also listed) than spend the money on building up something which looks very nice but is not particularly useful".
What I am not clear about is the next step. Can the local authority move in and spend the money on repairing? If the local authority cannot do so, who else can do so? Thirdly, is it absolutely certain

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that whoever spends the money can then apply to the owner of the buildings to recover the money? Finally, I understand from what I have heard most clearly put—and there seems little doubt—that the final sanction is compulsory purchase, which may or may not be changed if this Bill goes through. I hope I have made my question clear. I think my main question is: Can an owner of these places literally say, "I cannot afford it; I cannot pay it, I am going to spend the money on a farm or anyhow on putting a farm on to a satisfactory basis by my standards"? Where does he stand? I support the Bill because I believe in preservation and this Bill sounds to me to be a very good one. I merely state my query in order to clear my own mind before Committee stage.
4.51 p.m.
The Earl of Avon: My Lords, I am grateful to my noble friend Lord Vaizey both for introducing this Bill and for the way in which he explained it. He lavished quite a number of military examples in his opening remarks and I hope that he will not find my own speech too much of an old-fashioned pillbox. I do not intend to take up the point raised by my noble friend Lord Linlithgow as I believe it was really addressed to my noble friend Lord Vaizey.
The Government share the noble Lord's concern to strengthen local authorities' powers to require repairs to listed buildings. We also wish to introduce changes to the penalties for the more serious offences under Sections 55 and 57(1) of the Town and Country Planning Act 1971, but, however much we appreciate the thought behind the Bill, we do not believe that this is the right way to proceed. The noble Baroness, Lady Birk, made some comments about an earlier amendment which she raised and which indeed I have read—and I have also read my noble friend Lord Bellwin's reply. I hope that the noble Baroness will find some positive ideas in what I have to say. So far as the timing is concerned, I have to say that we are still looking for the "legislative dish" which I believe she herself also searched for when she was in my position.
Clause 1 would give local authorities the power to carry out urgent works for the preservation of a listed building after giving not less than seven days' notice to the owner and occupier. The existing legislation restricts these powers to unoccupied buildings and to service of notices on the owner. A power to enter occupied premises against the wishes of the owner to carry out work in the way proposed is open to objections on the grounds of the invasion of privacy and rights of property. It could also be difficult to execute the works if the building is occupied. The type of work which can be carried out under the existing legislation, as the Explanatory Memorandum to the Bill points out, is limited to what is necessary to make a building wind, weather and vandal-proof. This is a very limiting factor, although useful in the right cases. For example, a tarpaulin or other form of temporary roofing can be put on a roof to prevent rainwater entering. This sort of temporary repair is unlikely to be necessary in an occupied building because most occupants, even if not particularly interested in the architectural or historic interest of the building, usually want to keep dry, warm and reasonably secure.
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Clause 2 of the Bill, which is intended to replace Section 115 of the Town and Country Planning Act 1971, would permit much more extensive repairs to listed buildings and the recovery of expenses incurred from the owner. Currently under Section 115, local authorities are empowered to serve a repairs notice on any listed building requiring works to be carried out for the proper preservation of the building within two months. But Section 115 has no teeth unless an authority is prepared to follow up the repairs notice with compulsory acquisition under Section 114. Understandably, many authorities are reluctant to make a compulsory purchase order, although some do. Many more find the mere existence of the power useful in discussions with owners and persuade them to carry out works voluntarily or to sell the building, perhaps to a local preservation trust who are willing to take it on and repair it.
The Government accept that there is a real case for strengthening the powers currently available and have carried out preliminary work aimed at augmenting the present powers. When a repairs notice under Section 115 has not been complied with within the statutory two months, we are thinking of introducing an alternative procedure to compulsory purchase under Section 114. Any legislation which confers on local authorities a power to enter premises and carry out substantial reinstatement work must, surely at some point, be subject to control by the courts. The details of how this control should be exercised are still being considered and I am sure noble Lords will agree that it is important to get any amended procedure absolutely correct.
Like the noble Baroness, Lady Birk, and the noble Lord, Lord Kennet, we too have doubts about Clause 3 of the Bill, which would restrict the current powers of compulsory acquisition under Section 114 to properties which are incapable of repair at reasonable expense. First, there will be no incentive for a local authority to acquire a property which cannot be repaired at reasonable expense; secondly, cases can arise where purchase by a local authority is the only way of saving an important building even though the cost of repair is considerable.
Finally, I should like to turn to the increased penalties proposed in Clause 5. The proposal for a maximum fine of a prescribed sum of £5,000 on summary conviction for an offence under Sections 55 or 57(1) of the 1971 Act is far higher than the present maximum fines of £1,000 for an offence under Section 55 and £100 for an offence under Section 57(1). What is more important, it is out of line with Home Office penalties for similar offences, as well as being above the general limits for penalties in the courts which govern fines imposed in magistrates' courts—at present £1,000 and six months' imprisonment. The Government are aware, however, of the need to revise the penalties for listed building offences and wish to introduce changes which go further than the proposals in this Bill by introducing a separate offence for the unlawful total demolition of a listed building. I have indeed taken note of the suggestion made by the noble Lord, Lord Kennet, which I thought was of interest.
The Bill of my noble friend Lord Vaizey has, as all noble Lords have said, commendable objectives, but for reasons which I have explained it is not a good Bill that the Government feel they can support. I hope,

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however, that with the assurance that the department have proposals in mind which go quite a long way towards meeting some of these objectives, my noble friend may feel that he need take this Bill no further.
4.58 p.m.
Lord Vaizey: My Lords, I should like to thank all Members of the House who have taken part in this short but interesting Second Reading debate. I should particularly like to thank the noble Baroness, Lady Birk, for her contribution, and also the noble Lord, Lord Kennet. Both had extremely distinguished records at what is now the Department of the Environment and their interest is both an informed and important one.
Perhaps I may deal first with the substantial questions which the noble Baroness, Lady Birk, addressed to me. The first question was a general one, which she shares with the noble Lord, Lord Kennet, and, somewhat to my surprise, with my noble friend Lord Avon; it concerned the weakening of compulsory purchase powers. The compulsory purchase power is in fact hardly ever used in these circumstances. In Mr. Allan's original article, which was the original point from which this Bill has sprung, it was pointed out that the procedure is inevitably slow and cumbersome and, above all, it is expensive; many councils baulk at the prosect of spending large sums on the purchase and repair of decaying buildings, often large and remote, with limited public utility. The power, therefore, is rarely used, and it is chiefly used as a threat before negotiation. What this Bill does is not to abolish that power but to limit it. Of course it remains for other purposes in the general legislation, but it adds to that power the more realistic threat—namely, if you do not repair your own building, the local authority will repair it for you and send you the bill.
That then raises the question which the noble Baroness, Lady Birk, raised, which I think is an important and interesting one—namely, whether or not this imposes financial liabilities on the local authorities which will increase their use of public funds. I can see circumstances in which that is so, but the Bill not only gives the authority the right to recover the expenditure with interest at the prevailing rate, but of course it enables it to proceed by the normal procedure of getting hold of the assets and selling them. So, apart from the administrative costs of the procedure, which surely must be more limited than those of the compulsory purchase power procedure, I should have thought that this would not be a net addition to the burden on public funds, though that is something that my advisers and I will wish to look at with great care.
I can assure the noble Baroness that the local authority associations are being consulted, and that all the amenity societies have been consulted and have expressed their support. On the question of the appeals procedure, my understanding in bringing the Bill before your Lordships was that it did not necessarily override the appeals procedure which already exists in the legislation. As the noble Baroness correctly pointed out, this area of legislation, town and country planning, is indeed a minefield. If for any reason my friends and I have got it wrong, we should hope very much to look at it again. I hope that in those respects I have
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been able to satisfy the noble Baroness that we shall be able to take on board the points she has so tellingly raised.
Baroness Birk: My Lords, before the noble Lord leaves that, may I just say that in Clause 2 of the Bill where it lists the cases of expenses, it includes the right of the owner to make representations,
"in a case where those expenses have been incurred under section 101 … that recovery of the amount would cause him undue hardship".
I think this was touched on by the noble Marquess. If the owner can prove that it will cause hardship and it is impossible for him to pay—I am not suggesting the repairs should not be done—will that amount fall on the local authority or on central Government? I think this is extremely important, and the co-operation of local authorities will depend on where the money is to come from.
Lord Vaizey: My Lords, I think the answer is that it depends on who issues the order in the first place—on whether it is the local authority or the Department of the Environment.
Before coming to the Lord Kennet's points, I want to thank my noble friend Lord Linlithgow for his most helpful speech. May I say that, in these particular instances where you have a penurious owner of an historic monument which is falling down, I think there is a genuine problem? I must say that the dovecotes to which the noble Marquess referred—there is a very beautiful one at Gordonstoun School—are some of Scotland's most historic and important buildings. But, as he pointed out, they are very expensive to maintain, you cannot use them live in them, and, if you cannot afford to maintain them, what do you do? I think the answer to that must ultimately be compulsory purchase powers, because I see no conceivable way of recovering the money from somebody who has not got the money. So that would be in the mind of the local authority in choosing which particular power to exercise. But I can see from the noble Baroness's face that I have not totally satisfied her on that point.
I turn to the points the noble Lord, Lord Kennet, raised, some of which overlapped with those of the noble Baroness. The number of listed buildings falling down is, alas, rising. I have here a list of those in 1981; it runs to 13 closely typed foolscap pages of buildings already listed as of historic importance which have actually fallen down. That it seems to me is something which no person concerned with the history of these islands could for one minute countenance without trying to do something about it.
I am sorry that I appear to be intending to abolish the compulsory purchase powers. I am not abolishing them; I am limiting them and trying to keep them for a safe target, the target at which they are actually directed, rather than that they should be used as a threat. There, of course, speaking from these Benches, one is in a cleft stick, since my noble friend on the Front Bench first of all appeals to the sacred rights of property, saying that that must not be limited in any respect, and condemns the invasion of privacy. Of course, the purpose of listing buildings is to limit the law of privacy and the rights of property. These buildings

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have been declared under statutory authority to be matters of national interest and concern so that the power of the individual is limited. In the later stages of his speech, my noble friend deeply regretted that the power of compulsory purchase was being limited by my Bill. He can have it one way but he cannot have it both ways—not simultaneously in one speech.
What I am trying to do is to make the law more effective and more important. I am very glad indeed to learn that the Government are thinking of strengthening the powers by an alternative procedure, and I am also glad that this alternative procedure will be subject to control by the courts when it finally emerges. I am also interested to discover that £5,000 is regarded as too high a figure for a fine to be imposed on a property developer who has deliberately allowed an Elizabethan building in the centre of a town to collapse because the site when cleared by a bulldozer is worth something in the neighbourhood of £2 million. I personally think £5,000 is too moderate in such circumstances, and therefore I do not agree with my noble friend.
The Earl of Avon: My Lords, I did go on to say that we are considering introducing a separate offence of unlawful total demolition of a listed building, which would take care of that case.
Lord Vaizey: My Lords, I am delighted to hear we are in agreement on this side on that particular point. My Lords, as I have lost the bit of paper which tells me what to do next, what I intend to do is not to withdraw the Bill but to ask your Lordships' House to give it a Second Reading, so that, if the opportunity arises through the usual channels, we may look at it in much greater detail, because I think sufficient interest has been shown on all sides to indicate that there are matters in it which are worthy of consideration.
On Question, Bill read a second time, and committed to a Committee of the Whole House.

ECC 8th Report: Competition Practice
5.9 p.m.
Lord Scarman Lord Scarman rose to move, That this House takes note of the Report of the European Communities Committee on Competition Practice (8th Report, 1981–82, H.L. 91).
The noble and learned Lord said: My Lords, I beg to move that the House takes note of the 8th Report this Session of the Select Committee on the European Communities. The report is entitled "Competition Practice" and it is concerned with a scrutiny undertaken by the Select Committee of the practices and procedures of the institutions of the European Economic Community concerned with the enforcement of the provisions in the Treaty of Rome dealing with competition between trading undertakings in the member states of the Common Market.
My Lords, the report does not deal in any way with the economic policy that lies behind the rules in the treaty concerned to promote fair and free competition. The report is solely concerned with the problems associated with the practice and procedure of enforcing
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those rules. A common lawyer would immediately say that it was concerned with the natural justice of the way in which the institutions of the Community, and particularly of course the Commission, carry out their tasks of enforcement. The Select Committee undertook this examination because they were faced with growing concern and critical comment on some of the procedures employed by the Commission in the investigation, prosecution and decision of competition cases.
Before I embark upon any sort of explanation—and my explanation will be very short—of the complexities which inevitably surround this subject, let me say at once that none who gave evidence, and many did give evidence, to the Select Committee had anything but admiration for the way in which the appropriate directorate-general of the Commission—DG IV—fulfilled its very trying responsibilities under the treaty. Indeed, it would be fair to say that such criticisms as were made arose from matters which it is immensely difficult—be you administrator or judge—to control: questions of delay, questions of a fair opportunity to deal with a complicated set of economic facts.
Nobody doubted the will and determination of the European Commission to carry out its task justly, fairly and efficiently. Nevertheless, there was a considerable body of evidence expressing concern. When the Select Committee, through its legal sub-committee, came to take evidence both orally and in writing, this concern was expressed by businessmen and professional men, and not only English businessmen and professional men, but by professional men, and businessmen from other member states.
We had in the course of our scrutiny the invaluable assistance of Senor Aurelio Pappalardo, who was in charge of the very important directorate in DG IV which is concerned with competition matters. He and his colleague came and assisted the subcommittee in oral discussion. That discussion I am glad to say is printed as an appendix to the report, and any interested person who studies the contribution that Senor Pappalardo and his colleague M. Bail made to the deliberations of the Select Committee will immediately see that there was a great willingness on their part to see where deficiencies had arisen or where criticisms might be made, and an eagerness to correct such deficiencies, if any were shown, and to approach all such matters in a very constructive way. I say this not through any desire to flatter but because in effect it will make my task of opening this debate very much easier than it might otherwise have been.
After we had had the benefit of these deliberations and of taking the evidence to which I have referred, my noble and learned friend Lord Fraser of Tullybelton and I went to Brussels to discuss these problems of enforcement of the competition rules with senior persons in DG IV, the appropriate directorate. We learnt from those discussions, as we also learnt from the oral assistance that Senor Pappalardo gave us, that the Commission was itself reviewing its procedures and, quite independently, was moving towards very much the same sort of conclusions as, at that time, was the sub-committee of the Select Committee. Greatly heartened by that, my noble and learned friend and I returned. We proceeded with the other members of the sub-committee to a final consideration. The draft

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report was considered and eventually accepted, with, of course, modifications, by the Select Committee, and was published in February this year.
Almost at the same time—I am not sure of the exact date—the Commission published its 11th Report on Competition Policy, and it included some 14 paragraphs dealing with the matter that your Lordships' Select Committee had under review—namely, the practice and procedures of the Commission in the enforcement of the competition policy. Those 14 paragraphs contain very much what is to be found in the report that your Lordships' Select Committee is now presenting to the House. I am hoping, therefore, that there is really very little left in controversy and I hope that we shall hear from my noble and learned friend the Lord Advocate that the Government will be doing their best, in co-operation with the Commission and others, to see that improvements—most of them merely administrative in character, but some of them perhaps legal—will be implemented.
I have spent time on this part of the story because it is an indication of the value of your Lordships' Select Committee on the European Communities. If, with the co-operation—co-operation which I salute—of the Commission, we can proceed towards a cool and dispassionate review of difficulties and defects and then proceed, of course along our different lines and quite independently, towards a formulation of reform, there are really ways and means here of developing the flexibility and justice of the relations between member states and the institutions of the Community. That is perhaps the most important feature to which I would wish to draw attention in this debate.
I shall now come very shortly to just some of the matters which are covered by the report, which is of substantial size. I should not dream of trying to cover all the matters covered in the report. Fair and free competition has been enshrined as a principle of the Treaty of Rome ever since the treaty came into being. It is provided in one of the early articles of the treaty that member states are required to institute a system for ensuring that competition in trade within the member states shall not be distorted. This has been in the Treaty of Rome from the inception, and I would just say that when, on 1st January 1973, the United Kingdom acceded to the treaty, we acceded to a treaty which had had those policy provisions in it from the beginning.
The treaty also contains rules to promote fair and free competition. As regards the treaty, those rules can be summarised as two prohibitions and one escape clause. The first prohibition is against agreements between trading undertakings or concerted practices whose object or effect is to prevent, restrict or distort competition. Such agreements and concerted practices are prohibited; they are automatically void. There is, however, an escape clause. An undertaking which notifies an agreement which may contravene Article 85—which is the article with which I am now concerned—can get it considered by the Commission and even though the Commission should hold that it infringes the article, the Commission can grant exemption. There are two types of exemption—exemptions in individual cases, and block exemptions. The other prohibition is a prohibition against abuse of a dominant
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position in the trade within the member states. Again, that abuse, if proved—if the Commission is satisfied—is itself prohibiting.
Plainly, those are very great powers. They are absolutely prohibited—automatically prohibited, to use the language of the treaty—and there is exemption only if an undertaker who wishes to get exemption can satisfy the Commission that the prohibition against his concerted practice need not be declared applicable.
These prohibitions and the exercise of the escape clause were entrusted for fulfilment not only to the institution of the Community—namely, the Commission—but also to the administrative and judicial authorities of the member states. Nevertheless, as time has gone on, it has become clear that the main burden of the task of ensuring that these prohibitions were effective has fallen to the Commission, and that was, indeed, envisaged in Article 89 of the treaty. In the very early days the Council adopted a regulation—I think it was Regulation 17 of 1962—which elaborated the procedures and defined the functions of those institutions of the Common Market concerned with the enforcement of these prohibitions and, indeed, with the enforcement of the rules.
That regulation empowered the Commission to impose fines and penalties for infringements upon those undertakings which failed to comply with some legitimate requirement made by the Commission in the course of the Commission's investigation of a complaint of infringement. Again, they were, of course, unique powers. However, the Commission—and the function of the court was defined in Regulation 17—was subject to the jurisdiction of the European Court of Justice.
Regulation 17 did one other thing: it added a further escape clause. It provided a procedure called negative clearance. Negative clearance is when the Commission, upon application by a trading undertaking, takes a look at a proposed joint trading venture to see whether, upon the information provided, it—that is, the Commission—thinks that it is or will be an infringement. If, upon the information supplied, the Commission takes the view that it will not be, then it may issue a negative clearance.
So I hope that I have said enough—it is, of course, over-simplified—to indicate that the European Commission, in discharge of its duty under Article 89 of implementing the rules dealing with competition, has very great powers. Some of them would appear to be judicial; some of them are administrative. Again, I emphasise that these powers have been with the Commission, and have been in active exercise by the Commission, ever since the inception of the Common Market, long before the United Kingdom entered the Common Market; and when we acceded—as we did in 1972—and entered the Market on 1st January 1973, we must be taken to have known, to have understood and to have accepted this distribution of power and the exercise of this power by the Commission.
Again, I make these points clear, because to a common lawyer accustomed to our form of administrative law, judicial review and so forth, it might seem that the Commission was put in a position which was really too strong to be safe. But—and I think that history has shown this—this is not fair either to the treaty and

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its provisions, or to the way in which those provisions have been exercised.
First, let me admit that in our terms—not necessarily terms that would be used the other side of the Channel—the Commission is investigator, prosecutor and decider, subject only to the right of appeal to the European Court of Justice. But essentially the Commission's function is an administrative one. It has to consider questions which are administrative in character—questions of policy—in the way in which it deals with its responsibilities under Articles 85 and 86. It has, of course, judical functions in that administrative context. It deals with those subject, of course, to the review of the European Court of Justice. This is something which is implicit in the treaty and has been, and is in fact, consistent with the way in which administrative law has developed on the Continent of Europe. Nevertheless, clearly there are dangers. It is to those dangers and those risks that the report under consideration was directed.
Let me just mention a few of them. First, the procedure of investigation is essentially written in character. Business undertakings have felt that they have not been able to see all the relevant documents considered by the Commission in dealing with their case, whether it be a case of infringement or a case of application for exemption. True, as the investigation proceeds, there is a good deal of interchange and meetings, and so forth, between the undertaking under review and the Commission. There comes a moment, if it feels that there is very possibly an infringement, when the Commission is under an obligation to provide to the undertaking under investigation a statement in writing of its objections to the practice, or agreement, or abuse, which it is considering, and that statement of objections does indicate the documents upon which the Commission has founded its opinion. If thereafter the undertaking wishes it, it can have an oral hearing with the officers of the Commission in which it can clarify its position and indicate its defence. Of course it has always the opportunity of putting its case in writing.
The fear voiced by witnesses to the committee was that, although all the documents on which the Commission relies will in this process be shown to the undertaking there may be other relevant documents which do not support the Commission's case for infringement but which would perhaps support, or enable the undertaking under review to develop, a defence to the case of infringement made against it. This point of course could be met, as witnesses said, if there was a rule—it could be introduced by an administrative decision—that in the course of an investigation the Commission must make available to the undertaking under review all the relevant documents in its possession, subject only to certain safeguards for other people's trade secrets and for confidential matters.
I am glad to say that this matter is no longer in dispute. In their 11th Report, to which I have referred, the Commission have said that there is much to be said in principle for allowing, subject to safeguards, access to the file. The Bar of England, and others, made it absolutely clear that this was the major reform which practitioners in competition matters in Brussels and before the court in Luxembourg want. They feel that
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if they are given access to the file then much of their fears that justice may not be done will be dispelled. They will have a fair chance of refuting the case against them, or of developing their own case.
I pass to another matter. Of course powers of investigation have to be conferred upon a body like the Commission undertaking an investigation into practices believed to be incompatible with the Common Market. These powers are of course set out in Rule 17 of 1962. They include—I can take it quite shortly—the power based upon such a decision (I use "decision" in the formal Common Market law sense) to arrive one morning at the premises of the undertaking and to demand entry, and to demand the power to examine relevant documents. This is a power which can be exercised by a decision of the Commission without the authority of any judge or judicial figure.
Of course, it appears as something very abnormal, to put it mildly, to an English lawyer. But again we were told by our witnesses that in practice this power, which is an essential power, is reasonably exercised. However, there clearly is a case, and the Select Committee accepted it, that this power should be subject to some independent review before it is exercised. It might be done by one judge of the European Court nominated for the purpose by the President of that Court. It could also be done by some other independent person.
That leads me to another proposal which the Select Committee had under review. It is clear that there is something unsatisfactory, likely to cause lack of confidence, in the administrative body which investigates and formulates the case of infringement; something upon which they should then have the power to decide whether or not an infringement has taken place. Many of our witnesses suggested some independent person from outside should come in at the stage of the oral hearing after the statement of objections, and make up his mind as to whether there was an infringement.
Unfortunately, it would be difficult to do that without revising the treaty because it would be creating a new institution in the Economic Community. It might conceivably be done by a judge of the European Court, but your committee came to the conclusion that it could be done administratively by introducing into the appropriate Directorate General an officer who, although a servant of the Community, was in an independent position and only took charge of the proceedings at the stage in which the Commission had to consider at the oral hearing the statement of objections and the answers to it. I shall not trouble you with it. We thought that there might be introduced a further preliminary hearing, but that is a matter of detail into which clearly I have not got time to go.
That was our recommendation. The Commission, in its 11th Report, has accepted that at that stage, the stage of the oral hearing, there should be a new officer; a hearing officer who should come in at that stage and then take charge of the proceedings. That is, in other words, exactly what our proposal is. I have mentioned those matters just to show how there has been this coincident consensus of views reached quite independently.
I have time to deal with a final matter, and that is the role of the European Court of Justice, which can

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review all penalties and fines imposed by the Commission and, under the general powers contained in the treaty, can review the decisions of the Commission. The court is suffering from a very great overload. Delays are serious, and yet the evidence which the Commission has considered, as has your Lordships' Select Committee, is clear that many people are concerned at the quality of the fact-finding and economic analysis to be found in the Commission's decisions on competition matters and are concerned that the European Court is not geared sufficiently so as to be able to review both questions of fact, which are often complicated economic questions, and questions of law. Indeed, the Commission here go further than your Lordships' Select Committee; in their report they say that to satisfy the business community as to the objectivity and genuine autonomy of the decisions reached by the Commission, there should be introduced what they call a two-tier system of judicial review; that is, the European Court, or some other court added to it, reviewing at first instance questions of fact and law, and a subsequent appeal on questions of law only.
The Select Committee, like myself, and the chairman of its legal sub-committee, are, of course, timid characters; we dare not go that far. We merely suggested—because I have great respect for judges—that the European Court might review its structure and arrangements so as to make there available a more effective form of judicial review. The Commission has taken, I am glad to say, the bit between its teeth and has said, "Let us have a two-tier judicial system". If those—there are others as well—reforms are introduced, then I can tell your Lordships that those who gave evidence to the Select Committee would be perfectly happy with the way in which the competition rules and procedures of the Common Market are being enforced. I am aware that I have taken an unconscionably long time exploring this subject, but it is important and I am reporting very satisfactory developments both inside and outside this House. My Lords, I beg to move.
Moved, That this House takes note of the report of the European Communities Committee on Competition Practice (8th Report, 1981–82, H.L. 91).—(Lord Scarman.)
5.44 p.m.
Baroness Seear: My Lords, the whole House will be grateful yet again to the noble and learned Lord, Lord Scarman, and Sub-Committee E, for the very lucid report he has given to your Lordships and, if I dare say so, for the brilliant exposition we have just heard of the content of that report. Reading the report, one is struck, as a non-lawer—looking at it primarily from a political point of view—by the great change in attitude (a change by no means for the better) which has taken place since the treaty was signed to the present day.
After all, one of the major purposes of the treaty was just the development of that fair and free competition, the administration of which is dealt with in the proposals and report before the House today. It was in the pursuit of that fair and free competition—although it was not the only reason for it—that those of us who, in the early days were enthusiastic for
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the treaty and Britain's entry into the Community gave it such wholehearted support. We recognised that it was a means by which the prosperity of the countries of the Community could be enhanced and the benefit of consumers inside the Community advanced.
Yet as we look as what has happened and as we look at attitudes today, we see how far we are from a consensus on the importance, even against immediate national interest, of the pursuit of fair and free competition. We hear far more about cases in which individual national interest is voiced against the overall development of Community policy in that area, rather than the way in which there is strong united support for the development of free and fair competition and the measures which are to be taken to ensure that that happens.
Along with a determination to pursue that objective, in the days when the treaty was being signed and the United Kingdom signed and entered the Community, it was accepted that the Commission was the appropriate institution, the instrument for implementing those policies, subject always of course to appeal to the European Court. Yet today one hears far more of criticism, often ill-informed and often bigoted, of the work of the Commission, rather than a recognition of the vast and important task it has to perform and the extent to which, with all its admitted limitation, it has been trying to carry out that task. Those of us who still profoundly believe in the importance of the objectives of the treaty, and the institutions that have been established, will be grateful to the noble and learned Lord for emphasising how much the Commission has been attempting to carry out the tasks with which it has been charged to the benefit of all members of the Community.
Just because there has been such a change in attitude and such a falling away from the enthusiasm for the purposes and instruments of the institutions of the Community, it is of the first importance that any legitimate criticism should be met and that where it can be made out that there are defects, or even the suspicion of defects, in the way in which the policy is being administered, those criticisms should be met and changes brought about so that they can no longer be levelled. In looking at the recommendations made by Sub-Committee E, I would draw particular attention to two areas which—from the point of view not of those concerned primarily with the legal aspects of the treaty but who are concerned with the way in which it works and its impact on ordinary businesses, producers and consumers—require attention.
The noble and learned Lord, Lord Scarman, gave us a great deal of information and advice about the problems arising from the inevitable concentration of powers in the hands of the Commission. He made it clear that it was inevitable that those powers should be so concentrated. But he also made it clear—particularly perhaps for those of us brought up in a legal tradition and with assumptions about legal practices different from those in continental Europe—that that concentration of power rouses anxieties which we should wish to have relieved. Therefore, the suggestions in the report are designed to make it clear that, in the old cliché, not only is justice done but is seen to be done, and that people

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can be satisfied that the ordinarily laws of natural justice by which people know the circumstances and facts under which they are being judged are in fact being adequately met by the provisions under which the regulations are carried out. That is surely an improvement which we must all desire to see come about.
The second criticism that seems to me of great importance from the point of view of the people who are directly affected by the application of the regulations is the question of delay. The law's delays is an old joke, but it is not a joke for the people who are affected by them, and when we read that a case can go on not just for weeks, but even for years, and when we think of the implications of delay, surely this situation urgently needs to be rectified. After all, the people who are waiting for decisions, the organisations, the companies concerned, are the people who at present are struggling to maintain the wealth-creation of the Community. If they are held up, they, and not only they, but members of the Community, and individuals in the Community, are impoverished thereby. Surely such delay is not only harmful to the economic development of the Community but also very harmful to the respect and regard in which the Community is held.
For those reasons it seems to me that the recommendations put forward in the report are of very great concern to the effective working of the Community and to those of us who believe that the effective working of the Community is still of the very greatest importance for the development of the wealth of all members of the Community and indeed for the employment prospects of people inside the Community. Only if the competition policy is working properly and swiftly can we derive the full benefits, and today it is all too clear that we need those benefits as we never needed them before.
So although this might not appear to be a matter of the highest and most obvious political importance, it is, I believe, something to which we need urgently to pay attention and to the importance of which we need to attach great emphasis. I very much hope that the Government will accept the recommendations and, having accepted them, will push in every way open to them to see that the recommendations are in fact implemented within the institutions of the Community, and that the public know what is being done, and why it is being done.
We are leaving it very late to re-establish understanding and popularity of the workings of the European Community, to re-establish a realisation of how much, properly developed, the Community can be for the wellbeing of this country. The Government have here an opportunity, on the basis of the recommendations so carefully worked out by Sub-Committee E, to take this development a stage further, and to do so quickly.
5.53 p.m.
Baroness Elles: My Lords, I, too, should like to add my thanks to the noble and learned Lord, Lord Scarman, not only for his impressive introduction, but also, if I may dare to say so, for the charm and brilliant persuasion that he used in Brussels in order that such a positive contribution as the 11th competition report should be produced very much at the same time as the Select Committee's report which is
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before your Lordships' House. It is indeed a most welcome step, and those of us who have been involved in this matter for some time receive it with the greatest of pleasure.
As the noble Baroness, Lady Seear, has pointed out, the subject before your Lordships' House might appear rather esoteric and of concern only to lawyers, but the recommendations in the report very generally reflect the anxieties and concern of businesses not only in the United Kingdom but throughout the Community over the uncertainties and delays resulting from Commission practices in administering the rules governing competition policy. It cannot be stressed too often that, since competition policy lies at the heart of European Economic Community policies creating a common market, the efficient and fair conduct of that policy is essential. In this country, we are well aware that it is the business community who are looking to the benefits of the European Community as a whole, who need support in their progress and economic development. Therefore it is up to us in this country to see that businesses receive fair treatment and can understand the workings of the Commission in this field.
As the noble and learned Lord, Lord Scarman, has pointed out, the powers of the Commission are formidable and, unfortunately comparatively unknown. As he has also pointed out, it is the scrutiny of the powers—how they are used, and how they affect the rights of those against whom they are used—which forms the basis of the report, which I heartily endorse. Indeed the inclusion in the Commsision's own recently published 11th Report on competition policy of modifications and changes in their procedures, many in line with the recommendations of the Select Committee's report (as the noble and learned Lord has pointed out), is most welcome. It undoubtedly reflects the willingness of the directorates of the Commission concerned to listen to the comments and criticisms of your Lordships' Select Committee and, if I may add, members of the European Parliament, in a positive and constructive manner. This is a most welcome approach, and one which I know your Lordships' House will certainly commend.
The Commission must surely accept, however, that, despite their undoubted good faith in a difficult task, some public discussion of their methods and procedures and the effects on industry as a whole is necessary. Of course it is well known that officials do not like public discussion of their administrative actions, and over this I sympathise with the Commission. Nevertheless, we must get on with our task. Businesses were alerted to some of the problems by the use in this country for the first time, in June 1979, of the investigation procedure, without previous notification, under Article 14(3) of Regulation 17. This was in the case of National Panasonic. Here I would add to the comment of the noble and learned Lord, Lord Scarman, when he said that the Commission had stated that it had had no previous complaints about this situation. It is understandable that it had no previous complaints, because the procedure had not previously been used in this country. In fact seven cases involving this part cular procedure were used by the Commission for the first time in June 1979, so it was perfectly logical that there should not have been any previous complaint.

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The powers of the Commission have been further highlighted not only by the use of that particular procedure, which was unknown to businesses in this country, but also by the very heavy fines which have been imposed in recent competition cases; for instance, about £3 million was recently imposed on Pioneer. The Commission cannot therefore be surprised that the public's attention has been drawn to their implementation of procedures which, even though they may be fair, must be seen to be fair (as the noble Baroness has already mentioned) by those affected by the Commission's decisions.
The role of the Commission as investigator, prosecutor and judge has repeatedly been stressed, and I would therefore refer to just one or two examples under these heads contained in the recommendations of the committee. First, I shall refer to investigations. During the National Panasonic investigation (which has been referred to as a dawn raid) the legal adviser's presence was not awaited before the investigating procedure began. He was in fact some distance away and was not available for some hours. Although it was submitted to the European Court by the Commission that his absence in no way prejudiced Panasonic's interests, I was very pleased to see that both our Select Committee's report and the Commission's 11th Report recommended the desirability of the legal adviser's presence, although there does not happen to be mention of this in Regulation 17/62. Whether or not that position will need amendment, I do not know. Whether it will become part of the administrative practice of the Commission to allow this to happen, again I do not know, but I very much hope that my noble and learned friend the Lord Advocate will be taking up this point at a later stage.
Secondly, there is the procecutor's role and the introduction of "hearing officers", very much in line with our own recommendation from the Select Committee. Here again, I very much welcome the proposal, since personally I did not think that the idea of an independent person was practicable or could be instituted in view of the difficulties of having possibly to amend the treaty. Whereas originally the hearings may have been conducted with a certain autonomy and objectivity, in the new proposal that can be not only assured, but seen to be assured.
Thirdly, there is the judicial role. In the discussions which took place in the Select Committee and from evidence from many legal and business organisations, it became clear that some more effective and less time-consuming procedure should be established to provide judicial review or control over the Commission's administrative acts. Reflected in paragraph 41 of our report and spelt out in the Commission's own report is the proposal for the introduction of the two-tier system to which the noble and learned Lord, Lord Scarman, has already referred, with the court of first instance examining questions of fact and law and the second considering questions of law. As I understand it, as it is at present constituted, the European Court does not have time, let alone any other power, to examine questions of fact in so many cases before it, and I firmly believe that this proposal in our recommendations and those of the Commission would be a great improvement on the present practice.
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The last point I wish to raise is the question of obtaining exemptions or negative clearance for agreements which may be in breach of Article 85, which has been referred to already by the noble and learned Lord. It is not often appreciated that there is an enormous backlog of agreements which have been notified but which are awaiting decision. The 11th Report reveals that as at 31st December 1981 there were over 4,300 cases outstanding—that means agreements notified to the Commission and waiting for some answer—while during that year Directorate-General IV took only 11 formal decisions and settled about 200 informally. In fact, of course, the Commission is slipping further and further behind. During 1981 itself there were 185 fresh notifications or applications, 45 complaints from companies against other companies and 63 proceedings opened on the Commission's own initiative.
To meet this problem, the Commission has suggested an increased use of what are known as "comfort letters" (I am not quite sure to whom they give comfort except possibly the writer) and the division of cases into those that are relatively straightforward and those that are not. I believe that the former is the wrong answer and detrimental to companies' interests. If these "comfort letters" are to be used more extensively, companies will go on being persuaded to cede ground to the Commission for commercial reasons, and ground thus ceded has already had great value as a series of precedents to the Commission. Publication of such letters in the Official Journal—which is, of course, proposed by the Commission—is unlikely to strengthen their legal impact because comments received will still remain only expressions of opinion, whatever the wishes of the Commission may be.
Far better, I submit, is the Select Committee's proposal, set out at paragraph 37 of the report, that a notified agreement should be automatically exempted for three years unless the Commission acts within 90 days or the agreement has been fraudulently filed. This might usefully be combined with earlier publication of the intention to exempt.
Even with the proposal of the Commission, there would still be two lacunae. There will be, first, clearing up the backlog of notifications, which may well require additional, even if only temporary, staff to deal with the enormous number of cases; and, secondly and more seriously, unless the Select Committee's proposal is accepted, rights of third parties will be affected by the decision of the Commission that any agreement is in breach of Article 85. New agreements affecting, for instance, joint ventures or know-how agreements, all part and parcel of European Community industrial activity, should not be subject to administrative blocks because suitable methods of procedure cannot be found. The present system cannot be helpful to businesses whose search for new outlets and projects is one of the urgently-needed means of creating new jobs and reducing unemployment.
In conclusion, I think it is fair to say that on the whole the recommendations put forward by your Lordships' Select Committee, and those of the Commission in the 11th Report on Competition Policy, will go a long way towards meeting the very serious objections and concern which have been raised by businesses

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throughout the Community. I should like to heartily endorse the recommendations before your Lordships' House, and to add my thanks also to the staff of the Commission, who have given of their time to deal with these problems and to discuss the problems with the Select Committee, and who are always prepared to talk and discuss with Members both of your Lordships' House and of the European Parliament on matters which concern us all. So I would turn now to my noble and learned friend the Lord Advocate, hoping that he will press these points home and see that businesses in Britain are protected in the ways recommended by your Lordships' House.
6.5 p.m.
Lord Plowden: My Lords, as an industrialist I welcome this report, and I am grateful to the noble and learned Lord, Lord Scarman, for the lucid and powerful way in which he opened this debate. Much that comes out of the European Community can be likened to the curate's egg—good in parts. It is good that the Commission should endeavour to promote economic activity throughout the Community by fair competition, but, as so often, the methods and procedures it adopts to execute its policies can hamper and even injure the organisations that produce the wealth upon which all else depends. This is succinctly described in paragraph 5 of the report:
"It needs little imagination to appreciate the extent to which the competition rules impinge on the business community not only in requiring its members to ensure that their agreements and practices are not in infringement but also in subjecting them to the rigours of investigation".
This debate is taking place very soon after the publication of the report, and there has not really been time for its recommendations to be fully considered by all those interested. Nevertheless, I am quite sure that all in industry will welcome the general tone and thrust of the report. We can all endorse the principle that the rules and procedures of the Commission should be seen to be just and fair, as well as effective. The evidence presented in the report about the disquiet on this score is a most useful record of such fears, and one which can be drawn upon by those endeavouring to get changes.
The proposal that there should be access by the accused undertaking to all the relevant information in the Commission's file—subject, of course, to the need to protect confidentiality—is a most important one. I believe that there are signs from the Commission's 11th Report on Competition Policy that it is itself inclining in this direction, albeit gently—extremely gently. I hope that the report (which, like others from your Lordships' House, will I know be studied carefully in Brussels) will overcome any residual hesitation that they still have about this.
The proposal of the report for a preliminary hearing to clarify the facts of any particular case is most helpful, as are its recommendations with regard to the procedures of the advisory committee. I am quite sure that all those in industry who have urged these reforms will be most grateful for the backing that they have received by this report.
I am not sure how far those in industry—at least, those represented by UNICE and the CBI—will regard the report's recommendations for the appointment of
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an additional director of DG IV to preside over both the preliminary hearing and the formal oral hearing as satisfying their proposal for an independent person; but there is no doubt at all that it is a step in the right direction, and again I understand, as the noble and learned Lord, Lord Scarman, said in his speech, that the Commission is considering the appointment of hearing officers of some kind. Perhaps the recommendation made by the report is one which they might accept with good grace.
I am quite sure that I am not alone in being surprised, even horrified, at the statistics in paragraph 34 about the delays in decision-making in cases of negative clearance and exemption. I endorse wholeheartedly the opening sentence of paragraph 35 which says that these delays are simply not acceptable. I do not feel competent to comment on the contribution to reducing these delays which will be made by the proposals put forward in paragraph 37 but they are a step in the right direction. Industry will be glad to see the suggestion in paragraph 39 which urges the Commission to review the consultation procedures by which the competition directive takes into account the views of other directives. Competition policy is not an end in itself, although it is quite understandable that those whose job it is to enforce Community competition rules can lose sight of the wider issues under the heavy pressures to which, undoubtedly, they are subject. But reminders about other dimensions of industrial policy are at least healthy. I hope that the report will lead to further improvement in this area.
Finally, the Commission's 11th Report on Competition Policies, to judge from the extracts which have so far been seen in this country, or, so far as I have been able to see them, takes a defensive line on the whole about amendments to procedures, let alone to regulations or even to the Treaty of Rome itself. Its standpoint seems to be that the current arrangements have stood the test of time and that all that is necessary to allay the apprehensions which have been expressed is to allay them—but there is no indication of how they propose to do this without some changes of procedure.
I believe that further effort, perhaps much more effort, will be needed to emphasise the reality and validity of these apprehensions which have come from both industry and the legal profession if we are to achieve the real improvements which are absolutely essential if competition practice and policy is to be useful rather than a hindrance. I am quite sure that this report, particularly in view of its distinguished judicial parentage, will be of great help in achieving this, and I welcome it as a significant step along a very difficult road.
6.13 p.m.
Lord Benson: My Lords, I, too, hope that this report by the sub-committee will commend itself to your Lordships' House. Under the Treaty of Rome, the Commission—and their responsibilities are in no way challenged in the report—have the responsibility of stamping out unfair competition and improper trade practices. The sub-committee directed its attention to the procedures and came to the conclusion, it seems to me, that in four respects they were open to

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criticism. The first has already been emphasised in this House: that the Commission is investigator, prosecutor and judge in its own cause. That is contrary to the principle of natural justice. I emphasise that at no point was the integrity of the Commission in challenge. The second was that facts and information which might have a bearing on the decision were not automatically disclosed to defendants. The third was that fact-finding by the directorate was inadequate and the co-ordination with other directorates was not satisfactory. The fourth was that there were unacceptable delays and, as has been mentioned, in extreme cases the delays were exceptional, stretching to 15 years and 18 years.
I think it is important for us to bear in mind what the European Convention on Human Rights decided before the Treaty of Rome. In Article 6 it said:
"In the determination of his civil rights everyone is entitled to a fair and public hearing within a reasonable time by an independent and impartial tribunal".
To some extent, therefore, it would seem that the Commission's procedures fall short of the articles set out in the treaty. The sub-committee proposed six remedies. If those remedies are acceptable to the Commission, they perhaps will not wholly expunge but will go a long way to removing all these difficulties.
The first is that an additional director should be appointed who would take control of proceedings at a preliminary stage and should also take the chair at the oral hearing. I think it is doubtful whether, on the strictest interpretation, that amounts to an "independent and impartial tribunal", but, whether it does so or not, it will go a long way towards overcoming the objection. The second remedy is that all the facts (subject to satisfactory safeguards) should be made available to defendants so that they know the charges against them. The third is that there should be a preliminary meeting before the oral hearing to establish the facts. The fourth is that the staffing of the directorate should be examined. I believe that this is where some of the major problems arise because, by the exigencies of the budget, they have been seriously starved of efficient and competent staff. None of these four remedies requires any change in the law.
The fifth remedy is that, to overcome the unacceptable delays, claims for exemption should automatically be granted if they are not dealt with within a specified time. The last remedy suggested is that there should be some restructuring of the European Court so that cases may be brought to trial more quickly. These last two remedies may require some change in the law and, possibly, some revision of the treaty itself. It is clear that there has been a good deal of frustration and disquiet among trade and industry in all parts of the Community about these procedures. I hope that if this report commends itself to your Lordships' House it may be reviewed by the Commission and that they will be willing to smile upon some of the remedies which have been suggested.
19 p.m.
The Earl of Onslow: My Lords, I must apologise for not having put down my name as a speaker in this debate. I can think of no excuse except that I just
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did not read the piece of paper before me. I want to talk about one aspect only of this report. I had the enormous privilege of serving on this committee under the noble and learned Lord, Lord Scarman—and when one serves under somebody like him, one gets one's mind stretched and one is left with a nice feeling afterwards to see that perhaps one can be more capable than one sometimes gives the impression of being. I want to draw attention to the recommendation which deals with the right of entry under Article 14.3 of Regulation 17.
As the noble Baroness, Lady Seear, said earlier, it is essential that the Community does not get itself a bad name. I suspect that at the moment it is going through a resurgence of popularity because of the reaction in Brussels to the Falkland Islands crisis. I can think of nothing which would put that reaction more at risk if the rights of entry, which are absolute under the treaty, could be misused by a civil servant of DG IV. They have not done so; they are men of the utmost integrity, but mistakes can happen. We in this country like people to have warrants before they search. As the report says, the Inland Revenue and value added tax authorities have much greater powers than DG IV. But there is one major difference. They have to go to a High Court judge and say, "Here is the evidence. Please may we act on it?"
DG IV does not have to do that. It can go to a High Court judge and say, "They will not let us in". That High Court judge then has to give them a warrant. He has no option under the law but to give them a warrant. He has no power of discretion. Mr. Pappalardo gave long and detailed evidence. One has the feeling that there are not many people from this country who could give evidence to an Italian court in fluent Italian as well as he gave evidence to the English sub-committee in good and fluent English. Obviously, we thank him very much for it. He was saying that he did not have enough powers.
However, Mr. Pappalardo possibly did not understand the powers that he had. The noble and learned Lord, Lord Scarman, in the course of the evidence, said that he thought that Mr. Pappalardo did have the powers that I thought he had and Mr. Pappalardo thought that he did not, which were these absolute powers. He says he does not have a power to take documents but he has the power, it appears, to read the documents and photograph them. I cannot see any difference between taking a document, and putting it through a copying machine and having a copy of it. I suggest to your Lordships that recommendation (f) is really fundamental to and extremely important for our future relationship with the Community. We as a sub-committee recommended that the judge of the European court, or a court nominated by him, should have the power to sign warrants.
It was interesting that several Community judicial proceedings do not have warrants in them. It appears that it is very dear to our hearts but is not so dear to some of the Community people. This is something which is worrying for us. It is something which could bring to the Community a bad name and I sincerely hope that this recommendation is acted upon very strongly by Her Majesty's Government.
6.24 p.m.
Lord Bruce of Donington: My Lords, we on this side of your Lordships' House should like to congratulate the noble and learned Lord, Lord Scarman, and his committee on the detailed and excellent report that they have produced. We are also indebted to the noble and learned Lord personally for the very lucid way in which he described the contents of the report and gave us the benefit of his views upon them. It will be quite unnecessary for me—and indeed when replying to the noble and learned Lord of such legal distinction almost an impertinence on my part—to comment over-much on the more detailed legal questions with which he has dealt and which, I shall freely admit to your Lordships, I am quite unequal to dealing with.
These are very considerable legal questions. Much of the debate has centred on the powers of DG IV, the directorate general in charge of competition policy. If I understood the noble and learned Lord aright, he was inclined to favour—I was unable to detect whether it was with enthusiasm or reluctance—the establishment of a new section within DG IV, a new directorate, which would itself separately exercise the judicial function.
I must say that my immediate reaction to that—and with all due deference to the noble and learned Lord—is one of tremendous unease. I do not like, and we in the United Kingdom have never liked at any time, the situation that one body should be competent to accuse, investigate, hear and also pronounce decisions. I speak subject to historic or other correction, but we have always prided ourselves in the final analysis on the complete independence of the judiciary itself as against any administrative function that is not associated with the particular functions of a court.
Therefore, I am not very happy about that. I am even less happy that, as I think will be generally conceded, the Commission is a body which in itself is responsible to no one at all. Were it responsible ultimately to the European Parliament or something of that kind, I would feel a little happier. I am well aware, of course, that its decisions are open to the appeal before the European Court.
However, the method of its operation and indeed the field of its activity are determined by its own interpretation of Articles 85 to 90 of the Treaty of Rome, as jndeed amplified by the Council Regulation No. 17 to which many of your Lordships have referred. That is the area of activity with which I should like to deal this afternoon, without discussing too much the political and economic context within which its activities fall, because that would raise the whole question of the proper influence of market forces and other dark subjects of that kind that are possibly more suitable for a more controversial debate.
I am therefore concerned with the area within which DG IV functions in practice. One matter has not been revealed this afternoon—and I do not say in any sinister sense that somebody has concealed it; the facts may not be known. Something which has not been revealed or discussed is the impact that the activities of the competition directorate have had, either on industry or the services in Europe or indeed upon consumers.
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The figures provided—and the noble Baroness, Lady Elles, has already referred to them—indicate a remarkably few number of cases which have been dealt with, and the arrears, as she said and as were indicated by the noble Lord, Lord Benson, are horrific. Many noble Lords made the same point.
What then has been the impact on the European Community of the activities of DG IV? Is it possible to quantify them in any way? One could say that whatever cases have been decided—and there have been remarkably few—some of them may have affected only small or medium-sized businesses and may have had a deterrent effect on those who have become aware of the results of the decisions of the Commission.
If the noble and learned Lord opposite has any information to the contrary I should be very glad to have it, but my own feeling is that competition as between countries in the EEC that has been mitigated by the actions of DG IV, would probably be very considerably below the distortions caused by differences in exchange rates which have been artificially stimulated at one time or another, that have been due to disparate energy prices or to transport costs. I would have thought that these particular factors, some of which have already been the subject of complaint by industry in the United Kingdom, have probably had a far greater detrimental effect than some of the restrictive practices that have been dealt with by the Commission. I would not wish to condemn it on that account, but I think we ought to get it into proportion.
More particularly I am disturbed by the cases that the Commission, DG IV, have seen fit not to handle. They have, on complaint or of their own accord, brought a certain number of cases and the statistics set out the number of cases settled, either formally by decision or informally after discussion. I would hazard a guess that when the full story is told the economic impact of the result has not been considerable. What bothers me are the cases which the European Commission, DG IV, have not taken into account and have not, so far as one can see, endeavoured to deal with.
I would refer in particular to the case of airline fares in Europe. I am bound to refer to those because the artificial cartel in European air fares, arrived at quite clearly by state or quasi-state agreement, is a public scandal of the first magnitude. Moreover, I would have thought—I speak subject to correction—that they are covered most explicitly in Article 90 of the Treaty of Rome. In pointing this out, I know that I run the risk of detailed dissection, and possibly destruction, by the noble and learned Lord opposite, and possibly even by the noble and learned Lord, Lord Scarman, himself; but I read Article 90 as follows:
"In the case of public undertakings and undertakings to which member states grant special or exclusive rights, member states shall neither enact nor maintain in force any measure contrary to the rules contained in this treaty, in particular to those rules provided for in Article 7 and Articles 85 to 94 inclusive".
In Part 2 of the same article it says:
"Undertakings entrusted with the supply of services of general economic interest or having by way of a tax monopoly shall be subject to the rules contained in this treaty, in particular to the rules of competition, in so far as giving effect to such rules does not obstruct the achievement in law or in fact of the particular tasks assigned to them. The development of trade must not be

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affected to such an extent as would be contrary to the interests of the Community".
I may be wrong—I stand open to correction by people who are more trained in legal affairs than I—but I would have thought that Article 90, read in conjunction with Articles 85 and 86 which are reproduced at Appendix 1A of the Report of the Select Committee, gives full power and indeed is an open challenge and authority to DG IV to take action in pursuance of the aims set out in Articles 85 and 86 in order to break this wretched air fares monopoly under which most of Europe languishes at the present time. I do not think that would be beyond its capability, and if somebody produces a detailed argument in the tortuous legal language that is sometimes not wholly comprehensible to laymen like myself, that of course it is all perfectly in accordance with the law that the Commission should take no action of that kind, then with the greatest possible respect I shall reiterate the popular saying: "The law is an ass"—and the European law is even worse than that.
It should not have been left to the noble Lord, Lord Bethall, with whom I have had no conversations whatsoever in regard to this matter, to bring a case against the Commission before the European Court in order to establish this point. So I am a little worried about the way in which DG IV sets about its task. Bearing in mind the quantity of cases still on their books it may well be that they consider they have enough on their plates without embarking on an enterprise of that kind. If so, let them say so. In any case, the numbers are inadequate. According to the particular section of the report which deals with this, their personnel amounted to some 270—at any rate that was the establishment at the time of the report, but they do not say the actual numbers.
I also observe from the information given in Appendix 3, which deals with qualifications of the officials working within the Directorate-General, that 50 per cent. have been working in that field for more than 10 years and a further 10 per cent. for more than five years. Then it says:
"In terms of academic training, roughly 50 per cent. of Grade A officials have legal background, more than 20 per cent. are economists, the rest having had university training in various other fields".
I half expected that the noble Lord, Lord Benson, would raise an eyebrow at this because it does not appear that the accountancy profession has any profound representation inside DG IV. I raise no particular personal complaint about that. I myself am very busy. But investigations of companies' affairs must involve a good deal of investigating books and accounts of one type or another, in order to ascertain the facts upon which some decision is due to be made, and it might have been desirable that the continental or EEC accounting profession were rather more heavily represented than is indicated in this report. Quite clearly, the total numbers will have to be increased. The noble and learned Lord, Lord Scarman, said that in his report and he emphasised it again today.
One thing is certain. The report itself, with which I have no quarrel, has been so well produced and so well thought out that, evidently, the European Commission think it proper to carry out about 75 per cent.
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of its recommendations. This is a very great tribute to the work carried out in your Lordships' House by the committee concerned, and by the noble and learned Lord himself. My misgiving, once again, is that, on the face of it, DG IV appears to have tackled only the peripherals of the main competition problem in Europe. One hopes that it will endeavour to cast its net much wider, unless it is prevented from doing so.
Although the noble and learned Lord did not have time to mention it in his speech, under Rule 17 of the Council there is an advisory committee which, in effect, acts as a filter or as an overall supervising body—if I understand the wording of Rule 17 correctly—over the activities of DG IV itself or of the Commission, in so far as it deals with matters of competition. This general advisory council, to whom all decisions must be communicated and with whom a continuous liaison is obviously maintained—at least, it should be if Rule 17 is complied with—is composed of representatives of member states. Are we once again back into the situation where we have a minor version of the Council of Ministers, where the general advisory council, with all its representatives of the various countries, gets together and decides, "No, this is not a case with which the Commission ought to proceed"? That would explain the position about air fares, if, on the general advisory council, which, in effect, acts as a supervising body of DG IV, agreement had been come to by member states that it might be better not to tackle this problem.
I may have got it wrong. I am making no accusation. I am not even implying anything undesirable. But I think that I am entitled to a frank answer to the question. I am quite willing to accept a correction in the matter and, if I have got it wrong in any way, I shall humbly accept it. In the meantime, the authors of this report, your Lordships, DG IV, the Council of Ministers and the lot should bear in mind that the ultimate purpose of these activities is the protection of the consumer at large. Never, never should that be forgotten.
6.45 p.m.
The Lord Advocate (Lord Mackay of Clashfern): My Lords, I should first like to add my voice to those of your Lordships who have already congratulated the Select Committee on their comprehensive and very helpful report. In particular, I should like to join in thanking the chairman of the sub-committee which produced the report, and the noble and learned Lord, Lord Scarman, who also introduced it to your Lordships' House with such characteristic clarity in opening the debate today. I must say that I, for my part, was not able to detect any amount of timidity in that introduction. In addition to the noble and learned Lord himself, I should also like to mention all of your Lordships who participated in the work of the sub-committee and all of those who gave evidence before the sub-committee. Like the noble and learned Lord, I feel sure that your Lordships would wish to express our appreciation to them, because the quality of this is, to a considerable extent, assisted by the quality of the evidence which they were prepared to give—and to come some distance to give—and to give with a great deal of expertise as well as courtesy.

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Although the subject of the report may not be of such universal interest as that of the other report, which is generally known by the noble and learned Lord's name, it is nevertheless a most important subject not only to lawyers but to men of business, and indeed to everyone who is interested in the economic wellbeing of our own country and of the other countries of the Community. I should like to endorse on that aspect what has been said by the noble Baroness, Lady Seear, by my noble friend Lady Elles and I think, also, by the noble Lord, Lord Plowden.
The Government greatly welcome this report as providing a valuable analysis of the European Commission's competition procedures and the criticisms that have been made of them. I emphasise that I understand the debate today to be taken up with questions about the procedures which the Commission uses, rather than the scope or subject matter of particular cases. Your Lordships' committee have examined the issues very thoroughly, setting the procedures in their proper context, and have offered a number of constructive suggestions for ways in which the procedures might be improved.
As your Lordships know, and as the noble and learned Lord, Lord Scarman, said in introducing the report, the basic rules of the treaty are set out in Articles 85 and 86. They are designed to ensure that there is free and fair competition in trade between member states, and that the trade barriers which have been abolished by the treaty are not replaced by private barriers erected by firms which would defeat the treaty's objective of creating a common market in goods and services within the Community.
The Government, of course, give their wholehearted support to these aims, and therefore believe that the rules need to be enforced effectively. We recognise, however, like your Lordships' Committee, that there may be room for improvement in certain aspects of the Community's procedures for operating these rules. But I should like to make it clear at the outset that we should not wish to see any changes introduced which would lead to a weakening in the enforcement of the Community's competition rules.
Complaints have been made—and your Lordships have heard examples today—that under the present procedures justice may not always be seen to be done, and that firms ought to be able to operate their businesses with a greater degree of legal certainty. The Government believe that there is some justification in the present situation for these complaints. It is right that ways should be sought to avoid them in the future, and the Select Committee's report addresses itself to this important task. As has been mentioned, the Commission itself has been reviewing its procedure and, in its recently published 11th Report on Competition Policy, it also proposes some improvements. It is therefore extremely timely for your Lordships today to be discussing this issue. We should recognise, however, that responsibility for initiating any changes to the Commission's internal procedures or to Community regulations lies with the Commission and not with Her Majesty's Government. We are naturally very willing to discuss the proposals of your Lordships' committee with the Commission and hope to do so, but I want it to be clear that if I indicate that the Government agree with a proposal, it does not necessa
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rily mean that it lies in our power, in our own hands, to implement it.
We also need to bear in mind that any changes would apply throughout the Community, not just in the United Kingdom, and that they therefore need to be broadly acceptable to other member states. It is in this context particularly that I should like to welcome the visit of the noble and learned Lord, Lord Scarman, and the noble and learned Lord, Lord Fraser of Tullybelton, to Brussels and thank them. It is important that what we feel about these matters should be understood not only here but also in Brussels and throughout the Community generally.
I should like to turn now to the conclusions in the report and, I hope, to fulfil the expectation which the noble and learned Lord expressed in opening regarding our attitude to it. I am pleased to be able to say that the Government agree with almost all of the recommendations in the report. However, I should like to say a little about each of the principal recommendations separately. In the general part of their conclusions the committee recognise that the Commission must be primarily responsible for the task of enforcing the competition rules and that they must also have some judicial powers. They emphasise, however, that in exercising these functions the Commission must, so far as possible, apply the recognised standards of natural justice in adjudicating in contentious or disputed cases. The Government naturally strongly agree with these views. They do not call for any specific action but they do set the context for our consideration of the detailed suggestions which follow.
May I deal first with the reforms which, it seems to us, would not need a change in the law. The first of these is that the Commission should give the accused undertaking access to the whole of their file. This was strongly supported by the noble Lord, Lord Plowden, and the noble Lord, Lord Benson. We would regard this as a most important recommendation. A major criticism of the existing procedures has been that undertakings are not always made aware of the full extent of the case against them or of the evidence on which the Commission are relying in reaching their decision. Full disclosure of the Commission's file should go a long way to meet this criticism.
And, of course, as the noble and learned Lord, Lord Scarman, pointed out, it goes further than that, because it would also give the accused undertaking access to information favourable to that undertaking which is in the possession of the Commission and of which, but for such a provision as this, the accused undertaking might not be aware. Therefore I am very glad to see that the Commission itself now seem to intend acting along the lines proposed by your Lordships' committee. The precise form of the implementation remains to be seen but there will, as the committee recognise, need to be safeguards to protect the secrecy of information about the complainant's business or some third party's business which may be mentioned in the documents. If these safeguards are not provided, the Commission could find that information is no longer available from sources on which they are to some extent dependent. Therefore it is obvious that certain safeguards, as the committee recognise, require to be worked out. But the principle seems to us to be entirely acceptable.

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The report also proposes that the undertakings should be able to have a preliminary meeting with the Commission to clarify issues arising from the statement of objections. While the Government support this proposal, they believe that if the new procedure were available as a matter of course it might become an excuse for unwarranted delay or merely duplicate the formal oral hearing. I hope that some way can be found to avoid this difficulty, since it would be a useful improvement and might in certain circumstances save a great deal of time if an undertaking were able at an early stage to clear up any doubts about the basis of the case against it and correct any misunderstandings by the Commission.
A number of those who, as the committee records, submitted evidence to the committee proposed that there should be an "independent person" to review the Commission's actions in competition cases. While the committee conclude that it would not be possible to appoint someone outside the Commission to carry out this role without amendment of the treaty, they do make a very useful proposal for the appointment of a new director within Directorate-General IV whowould be separate from those responsible for investigating and prosecuting the cases. The new director would chair the preliminary meeting and the oral hearing and would be responsible for drafting the Commission's decision. If it were implemented, this would go a considerable way towards separating the functions of prosecution and adjudication which are at present carried out by the same officials.
The Government regard this as among the most important of the Select Committee's proposals since, if it were combined with a satisfactory procedure for access to the Commission's file, it should largely allay the criticisms that have been made. I noticed that the noble Lord, Lord Plowden, while welcoming this was inclined to think that perhaps it did not go quite far enough. But at least it seems to us to be a proposal which is of considerable value and which, as he said, goes in the right direction.
I come now to those reforms suggested by your Lordships' Committee which would, as we understand them, require a change in the law. First, the committee conclude that the Commission's power to carry out investigations at a firm's premises, which has been the subject of some criticism, is a necessary power. However, they recommend that before such an investigation is carried out it should be necessary to obtain the leave of a judge of the European Court or the leave of the new independent director. The Government would welcome this innovation. We understand the concern that has been expressed about these powers by my noble friend Lady Elles, by my noble friend Lord Onslow and others. We believe that there is some doubt about whether the treaty would permit a single judge to act in the manner envisaged by the committee. On the other hand, to require the leave of the court as a whole would be an impossibly cumbersome procedure for authorising a surprise visit. Obtaining the leave of the judge would, moreover, in any event require an amendment to Regulation 17, which would need the support of other member states who have not so far shown the same concern about this matter as critics in the United Kingdom. Obtaining the leave of the
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new director, if there is to be one, would in the Government's view be an improvement, and we would support this if the judicial alternative turns out not to be available.
We also support the proposal that an undertaking should be allowed to have its legal adviser present during an investigation, which I believe is, anyway, the normal practice. I am including this in reforms which require a change in the law to make them necessary, although, so far as the practice is concerned, it can happen now. However, we can see that it might not be practicable in the case of unannounced visits to delay the start of an investigation to allow for the arrival of the legal adviser, since this could afford, in certain circumstances, too great an opportunity to destroy documents and hence frustrate the whole purpose of the visit.
The proposals of your Lordships' committee for avoiding the present delays in dealing with applications for negative clearance or exemption we welcome, and we hope to have an opportunity to explore them with the Commission. Could I say here that we strongly endorse the views which have been expressed on all sides of the House about the need for reasonable expedition and about undue delay in matters of this kind being extremely damaging. And, of course, in certain circumstances, it is quite clearly beyond what is in any degree acceptable. The proposal for an automatic exemption for notified agreements after the lapse of a suitable time would require an amendment to Regulation 17. The administrative and legal implications require further study but we hope that any difficulties can be overcome so that the present legal uncertainty can be removed from the backlog of notified agreements.
The question of the confidentiality of communications between a lawyer and his client, to which the committee refers, is an important one. As the issues are currently before the European Court, we can only agree with the Select Committee's conclusion that consideration must await the court's decision.
The Select Committee's Report also deals—and the noble Lord, Lord Bruce of Donington, referred to this—with the procedure of the advisory committee of national competition experts which gives the Commission its opinion on individual cases. The Government agree with the recommendation that the undertaking concerned should be informed of the documents which the Commission submit to the advisory committee and that these should always include the minutes of the oral hearing. We are, however, more doubtful about the further recommendation under this heading; that the committee's opinion should be communicated to the undertaking. The question arises, what use would the undertaking be able to make of the information? If it could be used, for example, in a case before the European Court, this would be equivalent to publishing the opinion—which your Lordships' Committee do not recommend. There would be a danger that the independence of the advisory committee's opinion could be jeopardised if it were made public. On balance, on the basis of the information so far available, the Government feel that the current procedure whereby the committee's opinion is not made available to the undertaking should probably be retained.

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Your Lordships' committee also considered the role of the European Court in competition cases. Their primary concern was with the time it takes to obtain a ruling from the court and they recommend that the court should examine its own structure and responsibilities. The Government welcome this recommendation since there would clearly be benefits in providing arrangements which allowed the court to rule with less delay and possibly more effectively. It is possible, however, that if some of the other recommendations of the Select Committee are implemented, particularly the disclosure of the Commission's file, there will he fewer appeals to the court and the need for considering its restructuring will therefore diminish. Thus we think that the primary emphasis should be on improving the Commission's procedures rather than extending the court's ability to review the Commission's work; thus dealing with the problem at the base stage.
Like your Lordships' Committee, the Government welcome the European Commission's internal review of their competition procedures. The adequacy of the staffing of the competition Directorate-General, their co-ordination with other Directorates-General, and their internal procedures for fact finding and economic analysis are all subjects which merit examination. We now have some of the fruits of the review in the Commission's 11th Report to which reference has been made, both by myself and by other noble Lords earlier. However, it is fair to say that the report does not seem to cover all the issues which the Select Committee considered should be examined. Nevertheless, we are encouraged by the Commission's report to think that they are not unreceptive to proposals for improvements in their procedures and this leads me to believe that there will be scope for a useful discussion with the Commission of the proposals we have been considering in your Lordships' House today as well as the proposals put forward by the Commission themselves.
May I conclude by saying that the Government strongly support the need for effective and reasonably expeditious measures for enforcement of the competition rules of the treaty. We believe that a number of the proposals of your Lordships' Committee would, if implemented satisfactorily, go a considerable way towards meeting the criticisms which have been made of the present arrangements. The Government are also very grateful for the opportunity given to us by today's debate to hear the views of so many of your Lordships. We shall take note of them all and will make the best use of them that we possibly can in the discussions which we hope to have with the Commission. The noble Lord, Lord Bruce of Donington, raised some questions about particular cases—particularly that which the noble Lord, Lord Bethell, is engaged upon. Since that is a matter which is before the European Court, I believe it would be inappropriate of me to deal with it.
7.4 p.m.
Lord Scarman: My Lords, in thanking noble Lords for their various instructive and valuable contributions to this debate, I would like to say that I believe it to have been a very valuable discussion of an extremely important topic. The attitude of Her Majesty's Government as illustrated by the speech of the noble
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and learned Lord the Lord Advocate clearly must be encouraging not only to the Select Committee (which, perhaps, hardly matters) but to the businessmen and professional men of Europe as well as of this country who gave evidence and voiced their anxieties which I am satisfied will now largely be met if the recommendations—or a substantial amount of the recommendations—contained in the report can be implemented.
I wish to mention only two matters because I touched on neither of them directly when introducing this debate. First, several noble Lords—I think particularly of the speeches made by the noble Baroness, Lady Seear, the noble Baroness, Lady Elles, and the noble Lord, Lord Plowden—stressed the danger of delay in the processes of the Commission. The committee took the view that the delays revealed by the evidence in the negative clearance and exemption notification cases were intolerable. Strangely enough, the delays in dealing with infringement cases are nothing like so serious as those suffered by applicants in negative clearance and exemption cases. The figures are quite horrifying. The noble Lord, Lord Plowden, referred to them and they are found set out in the report. Unless these delays are tackled it is hopeless to expect that the business community will be satisfied with the procedures of the Commission.
The second point I should like to mention was that made by the noble and learned Lord Advocate at the very end of his speech, when he emphasised that what is really of first-rate importance is to improve the quality of the investigations and decisions made by the Commission, and that improving the review processes of the European Court of Justice, although important, is not of the same significance. I wholly agree with the noble and learned Lord, the Lord Advocate; we must concentrate on improving the quality of the Commission's work. If that can be achieved, then the review process by the European Court of Justice does not assume anything like the same importance. I think that this has been a useful debate to a large number of very important trading enterprises—important to the future prosperity of the United Kingdom as well as to that of the other member states.
On Question, Motion agreed to.

The A320 Airbus: British Finance
7.8 p.m.
Lord Beswick Lord Beswick rose to ask Her Majesty's Government to what extent they are prepared to finance a British component in the A320 Airbus as part of the policy of encouraging European collaboration in growth areas of advanced technology.
The noble Lord said: My Lords, the purpose of this Question is to get a statement, as clear as possible in present circumstances, about the Government's position regarding Britain's partnership in Airbus Industrie. I shall suggest that the future of that partnership will to an important degree depend upon Britain's contribution to the proposed A320 Airbus. Therefore, I am asking about the possibility of Government support—which means financial support, or launching aid as it was once called.
May I briefly say something about Airbus Industrie? It is one of the most successful examples—probably the most successful example—of the beneficial possibilities of European collaboration. At the time when I left the supervisory board, more remained in my view to be done about its financial control, but its technological and commercial expertise and achievements must be wholeheartedly admired. In this organisation it is not just a matter of talk; they have been successful in a very hard competitive market. Over 500 orders and options have been won for the A300 and A310 versions of the airbus. It is sad, at least in my opinion, to think that the only major airline in Europe which has not bought the airbus is British Airways.
The decision as to whether to take up a partnership in Airbus Industrie was one of the most important and probably the most difficult that the newly formed British Aerospace had to make. There was a quite fascinating body of opinion and interests in support of the idea that Britain's only hope of getting a place in the larger civil airliner business was as some sort of sub-contractor to the American Boeing company. I am sure that those views were held sincerely as well as strongly, though I thought then, and I think now, that British Airways and Rolls-Royce accepted the possibility of an American monopoly in this field with a touch of complacency. However, the decision was made for British Aerospace to join AI as an equal partner with our French and German friends. Most informed people have said subsequently that it was the right decision.
The other partners in AI now want to build on success and extend the airbus range with the A320 150-seater aircraft. Both the French and German partners have had encouragement from their respective Governments. The French, in their logical way, have said that Air France will buy 50 of these machines. I could say a lot about the advanced character of this fuel-saving aircraft, but it is not for me at this time to spell out the technical advantages. Others elsewhere will do that more completely than I. But I do stress that there is no doubt about the potential market. This is the market that we, Britain, know best. The A320 will replace the 1–11, the Trident, the 727, the 737 and the DC9. It is estimated that 2,500 aircraft of this size and range will be ordered by the year 2000. Present airbus customers are estimated to want 1,000 aircraft by the same end-of-century date. I understand that the financial forecasts are made on a rather more conservative sales figure of 750, and, given sales of that order, there should be a positive return by the 1990s.
My Lords, if these are the estimates, it is fair to ask why British Aerospace need to come for launching aid. The answer is that they do not have the amounts of money needed over the necessary years of peak investment. They have backed their own judgment with their own money with the smaller aircraft, the Jetstream and the BAe146. In those two cases, if on a smaller scale, the money invested on R and D and initial production involves a wait of years before there is a positive return.
When supporters of the present Government went round the BAe factories telling of the alleged advantages of selling off half the company, they said quite often
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and quite firmly that one of the advantages would be that the new company would be eligible for launching aid. It is a curious fact that under public ownership all the previous assistance to the industry—funds for civil aircraft research and for launching costs—was ended abruptly. I am now asking whether these promises of launching aid will be fulfilled, always assuming of course that further information as it becomes available will be considered, by both BAe and the Government, to justify the go-ahead. But it seems to me that the credibility of Britain as a partner will be accepted only if it is known that the money could be made available.
Conceivably the partners may want launch orders in addition to that of Air France. There are still important questions regarding engine availability. But in all those necessary decisions and discussions Britain should be taking part on the basis that they will be taking up their share of liabilities and opportunities. There is also the key question as to what that share should be. We have more experience in Britain in building this size of aircraft. We should be taking a leading part. Moreover, unless we are in at the beginning with a leading part the position of British suppliers of equipment, and indeed of engines, must be less favourable.
I would like to say something about the terms of any financial support, and I hope there is no need for me to stress that I am only giving my personal views. As I understand it, the requirement is for a repayable loan, not a gift. The terms of that loan will no doubt be open to negotiation. In the old days of private ownership the repayment of any launching aid was usually dependent upon the success of the project concerned. The company itself took little risk. There were exceptions and it is true that successive Governments were beginning to tire of the "heads you win, tails we lose" sort of arrangement. What I want to say here is that if the aid can be given only on the basis that its return is guaranteed by the company and not by the success of the particular project, then I hope that that arrangement will be acceptable to all concerned.
Then I want to ask the Minister who is to reply for the Government whether they have contemplated the situation if Britain fails to keep up with the other partners. McDonnell Douglas have now pulled out of this particular market. There would be an absolute killing to be made if Boeing were left with a monopoly, but there would also be a very good living for two competing manufacturers, one American and one European.
If BAe dropped out of the European project almost certainly others would come forward. I believe the Australians are interested. So are the Canadians. The Spaniards no doubt will take up their small share, and I gather that the Italians are beginning to change their minds about the merits of A.I. membership. Then there is always Fokker, who can be expected to do what is necessary to keep their capacity employed. It is not unfair to say that our standing in this business would be a diminishing one if we did drop out and others took our place.
I make one last point. According to a report issued by the West German Embassy after the meeting of Chancellor Schmidt with President Mitterrand, the

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Chancellor referred to what he called the special relationship between Germany and France and gave the collaboration of the two countries on aircraft manufacture as one piece of evidence, and he suggested it should be taken further. The implications of that are quite wide and they should be considered.
My Lords, I am sure that the Minister who is to reply will agree that we are not here talking of a prestige project, but of a practical commercial development in the sort of growth industry in which we can earn a living. I hope that the Minister will be able to say that he agrees with that line of thought and that the Government are prepared, given all the necessary information, to back up their thinking with the necessary funds.
7.20 p.m.
Earl Amherst: My Lords, I rise to support the noble Lord, Lord Beswick, in his Unstarred Question. He has explained it in such great detail that he has left hardly anything for me to say. There surely can be no question that joining their European partners, the French and the Germans, in the production of the A320 Airbus, would provide Eurospace with the unique opportunity of participating in the field of advanced technology involved in the production of this particular civil aircraft. So I shall not take up your Lordships' time in repeating what we have already been told, save to emphasise that the A320 is undoubtedly an important advance in the medium/short range, 150 passenger capacity, particularly in fuel economy and noise reduction.
In comparison with the Boeing 727, it is reported that this airbus has a 46 per cent. lower fuel burn and a 23 per cent. to 27 per cent. lower operating cost than the American aircraft. As the noble Lord, Lord Beswick, has already told us, backed by the French Government, Air France has already ordered 50 of these aircraft, and I believe that the Germans are reported to be giving high priority to the project.
It is true that, for better or for worse, British Airways have placed their bet on the Boeing 727 partly, as far as I can make out, on the score that this Boeing—the one that the corporation will get—is to be powered by Rolls-Royce engines. However, I think that it should be noted that this does not apply to the whole range of this aircraft.
It is, of course, for British Aerospace to take the final decision. But I am told that it cannot do so unless it is assured of Government financial backing in one form or another. Discussions have been going on for quite a while. Meantime it is said that the French and Germans are becoming impatient at the delay and are pressuring Aerospace for an answer. Therefore, there does seem to be an urgency in the matter and a good reason to ask the Government the Question that is now put down and when a reply might be received. If there is to be further delay or, indeed, the Government finally decided to say, "No", then no doubt British Aerospace will have missed the bus, and through no fault of its own. Therefore, from these Benches, we strongly support the noble Lord, Lord Beswick, in his Unstarred Question.
7.24 p.m.
Earl De La Warr: My Lords, I should like to add my thanks to the noble Lord, Lord Beswick, for asking this very appropriate Unstarred Question at this particular time. It seems to me that with the question of the A320 and the future of this country's association with it, go very much wider issues. I want to be careful not to embarrass either British Aerospace or the Government—or perhaps I should put it in the other order—because I know that careful discussions are going on at this moment. Indeed, some very senior members of British Aerospace were in Toulouse only about a fortnight ago doing some heavy work about the future of the aeroplane.
I think that there are two basic commercial factors that are at work today, both of which have been referred to. The first is that we are going into one of the crucial phases of aeroplane manufacture, for the reason that the noble Lord has told us—namely, that the present range of short and medium haul aircraft are just getting to the stage where they are obsolescent. Whether they like it or not—and many airlines do not like it because they have not had a very prosperous time recently—they have got to be replaced over the next, say, naught to ten years.
The second fundamental factor is that Boeings are likely to be left as the only civil aircraft manufacturer of any size unless Airbus Industrie are vigorous enough to give them a good run for their money. Although we all love our American allies, I do not think that we in Europe as a whole would wish to see the Boeing Company have a monopoly of that type.
I shall refer very briefly to the glittering success that Airbus Industrie have had in their very short career. There are 550 or so sold or on order; the 350-seater airbus is already flying and a smaller 240 to 250-seater—the A310—is just about to start. I suppose that Airbus Industrie could have taken the decision that they would go for the longer haul. I think that they have the possibility of stretching the airbus or giving it four engines. But they have decided that their priority is the A320. This will give them a complete range from 350-seaters down to 150, and should enable them to take on almost anything that Boeings can produce within that range. The noble Lord referred to the fact that the A320 was likely to be the most advanced plane technologically, and I think that we can be very optimistic about it. It will, I suppose, compete successfully with the B757, and I believe that it will also compete with the stretched version of the 737—that is the 737–300—which is already being sold, but which of course is not a new aircraft technologically or in any other way.
I am quite sure that Airbus Industrie, and the partners individually, have had very extensive marketing investigations and that they are very sure of their facts. I know them to be optimistic. They say 700 to 800 A320's and they add, and rightly, that if the A320 can break into the American market then, of course, the orders go up almost 100 at a time.
That brings us to the crucial question that has been raised—the question of United Kingdom participation. The noble Lord has said all that needs to be said about the details of the financial aid that is needed. I think we can take it that British Aerospace would like at

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least 30 per cent., and that means something like £500 million to £600 milion. That, for the reasons that we have heard, can only come from the Government. It will give British Aerospace a much larger slice of the manufacture of the aeroplane than it has had with the airbus, where it has had only the wings. I suppose that the wings are fairly important. When I am airborne I am more especially aware of that. There would be the possibility that we could get the front end. I suppose that there is a possibility that we might get all or part of the assembly. However, these are matters which we must leave to British Aerospace and its partners.
There is one specific point that I should like to make which has not been made previously, and it concerns all the components that go into a modern aircraft. The whole of the avionics industry is interested in the various electrical bits and pieces which make up a modern aircraft. I think it is true to say that in the A300 and the A310 the British manufacturers have had a pretty thin slice; it has really been carved up between the French and the Germans. Whether or not this is the responsibility of British Aerospace, I should not like to say, but I think that, in addition to an extra slice of the assembly of the aircraft itself, there is a chance for the avionics industry as a whole to get a good deal more business in the future, particularly if we are assembling a large part of the aeroplane.
Launch aid has been promised and I have no reason to doubt that it will be forthcoming; in my view so compelling are the reasons. But bigger issues are raised. They have been raised by the noble Lord, Lord Beswick, and by the noble Earl, Lord Amherst. These are the issues of the long-term relationship of British Aerospace with Airbus Industrie, and therefore with the whole orbit of civil aircraft manufacture. At this moment we must ask ourselves: "Are we to be full partners in this great enterprise, or not?" This is not an easy question because the French and the German philosophy of aid to growth industries is different from ours. They tend to go further and they tend to go quicker. This is not meant to imply any direct or indirect criticism of the Government, but it is a factor that we have to face.
It must be immensely difficult to negotiate in a consortium of this complexity when you do not know whether you have the money or, if you have, how much. I do not know how British Aerospace can do it and, if I may say so, I think that they are being extremely patient. Surely in any consortium it is an ordinary business rule that the chap who gets into the consortium last never gets the best. You could say that the early bird gets the worm and the last one gets the wings. We hope that it will be different this time.
Therefore, I say that there is much at stake in terms of the British national interest. I put it that the mind of British Aerospace must be very exercised at this moment, and, like the noble Lord, Lord Beswick, I very much hope to hear from the Government that their minds too are exercised and that they will give us some information tonight which will help us in the solution of these problems.
7.33 p.m.
Lord Whaddon: My Lords, I must admit that I am always biased in favour of an aeroplane when it looks
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right. When it looks right it usually flies right, and from the sketches and drawings that I have seen, this A320 project certainly looks right. So I start off biased in favour of the project anyway.
The noble Lord, Lord Beswick, spoke of the great decisions that had to be made a few years ago as to which way the British aircraft industry went—with America or into the great European consortium. It chose to go with Europe, as it now turns out very rightly. In his modesty, the noble Lord did not mention his own vital part in this. He deserves the sincere compliments of the whole country on the part he played. I understand that it was quite a battle, but he was right.
Of course, the decision on the A320 must partly depend on what we make of the success or otherwise of Airbus Industrie up to now. To date it has been a surprisingly great success. Airbus took half of the going market in wide-bodied jets in the last 12 months, which is a very impressive performance. The spread of the sales was also very impressive. We were not restricted to a very few customers, but there were some 40 airline customers throughout the world, which gives a very solid base for future expansion. Moreover, the project was on time—a rather rare achievement in the industry.
The Hatfield and Chester branches of British Aerospace have benefited to the extent of some £650 million-worth of orders—a very important input into those highly technological areas. What else can one say about the present airbuses? Last but not least, the pilots love them. One has only to talk to the pilots to appreciate that they really like these aircraft, which, again, is an important factor. So there is a good base of success on which to judge future proposals.
But where do we go from here? Lockheed is out and the ending of the TriStar means less work in the future on that project for Rolls-Royce. So we must think in terms of Rolls-Royce as well. McDonnell Douglas retreating leaves Boeing in a massively dominant position. As has already been mentioned—and I would underline it—we dare not leave a monopoly position to one company in the world. There must be at least a second company in the big jet market, and a European Airbus competitor must be our number one priority.
There is the possibility of going for a stretched 300. The TA-11 has been mentioned and has been pushed, particularly by Germany. It is tempting, but on several counts it does not commend itself to me and I doubt whether we are in a position to do both projects, simultaneously at any rate. I understand that the potential market is much smaller for the TA-11, and I do not think that we should stand to gain so much from the engine side. Therefore the A320 looks a very tempting option indeed, dictated largely by the market, with 2,500 possible sales for this size of aircraft and, hopefully, a potential of around 1,000 for Airbus Industrie.
An integral part of this project would be the engines and the Rolls-Royce Japan 500, the RJ500, is integral in considering this matter. There are two partners interested up to now—Japan and Rolls-Royce—and a strong possibility of an American partner coming in. So hopefully the cost of that engine will be divided three ways. Guessing off the top of my head, we are

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still likely to be in for perhaps £300 million for the cost of the engines. But we must be in aero engines: that is an absolute must. The A320 provides a massive market for that engine as well. So there is a very strong extra reason to go for the A320.
The running down of the BAC 1–11 means that the Weybridge/Bristol part of British Aerospace will be looking for some work. The A320 provides that future for those parts of British Aerospace. I seem to remember that some 12,000 workers are employed in those factories. Those factories have some of the finest technological teams in the world. If we do not provide continuity of work for them, some of the best engineering teams in the world will begin to break up and disperse. It is imperative that we provide continuity for those teams and hold them together. The A320 provides such an opportunity.
Lastly, the extension of the range of aircraft from the A320, the 150-seater, up to the big A300 extends the range of products we can offer to customers and strengthens the whole base of the company, so that it makes sense from a number of sides. The Government say that the upturn of the economy is just about with us, and I do not disagree with that. It is difficult on timing, but it seems that we may have bottomed out. The lead time on these aircraft is years. We cannot afford to wait for the time when the boom is with us before we start work on the aircraft. The aircraft have to be ready by the time the boom arrives, which means that a decision is urgent on this matter.
The Cambridge economists pointed out in the press only this morning the dangers of the British economy depending too much on service industries, and how we must not and dare not allow the high technology industries to rot away. Here is an absolutely core industry that we must back. The decision time is imminent. The noble Earl went for the 30 per cent. option. I would not object, but, bearing in mind the RJ 500 costs as well, plus the fact that the French are undoubtedly going to be pushing to continue the assembly, I think that the 20 per cent./£400 million option plus the RJ 500 might possibly be more realistic.
I say to the Government, pluck up your courage and make this decision. It is a chicken and egg. Do we wait for the boom to set in? We cannot afford to wait. If the Government make this decision and lose money over it, I promise now that I shall not complain. But if the Government procrastinate so long that they miss the bus—in this case the airbus—then I shall complain most bitterly.
7.42 p.m.
Lord Ponsonby of Shulbrede: My Lords, may I first thank the noble Lord, Lord Beswick, for initiating this debate this evening on the A320 Airbus. It is fair to say that nobody is better qualified than the noble Lord to speak on this subject. He has been ably supported by a number of noble Lords, including the noble Earl, Lord Amherst, who speaks as one who first qualified as a commercial pilot over 50 years ago. Therefore his experience must be particularly relevant to a debate such as this.
The noble Lord, Lord Beswick, underlined the success of British Aerospace in securing orders for the A300 and the A310: over 300 for the A300 and almost 200 for the A310. As we were reminded by another
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noble Lord, these orders were spread over 40 separate airlines, indicating a wide measure of support for these two initial airbuses. I have no doubt that similar success would follow if British Aerospace participated in the manufacture of the A320.
It could well be that the future development of the aircraft manufacturing field could mean that in the not too distant future there will be only two major aircraft manufacturers in the world; Boeing and Airbus Industrie. This fact was referred to by the noble Lord, Lord Beswick. He also mentioned that other competitors might try to enter this field. This point was underlined by the noble Earl, Lord De La Warr, and the noble Lord, Lord Whaddon. It is very much in our interests that we should participate.
As those of your Lordships who are very much concerned in the civil aviation field will know, there has been frequent criticism of the air fares charged in Europe as compared with the air fares charged for similar journeys in the United States. This criticism is in some ways well justified, although we know that there are special reasons why this should be so. Therefore, it is right and proper that all efforts should be made to encourage airlines—indeed, as they are encouraged by the very force of economics—to operate economically and effectively; and also that they should be able to operate effectively on those routes which do not carry as much traffic as the routes on which the large Jumbos are operating. The A320 will be able to cater particularly for that need.
The Question asked by the noble Lord, Lord Beswick, refers particularly to launching aid for the A320. The amount involved is large. The development costs will not be recuperated for several years. As the noble Lord, Lord Beswick, stressed, the amount advanced would be a repayable loan. As he suggested, it should be guaranteed by the success of the enterprise. I do do know whether it was coincidental or not, but I received this morning in the post the annual report and accounts of British Aerospace. I read with interest the chairman of British Aerospace in his annual report stating:
"Two projects under consideration are the 150 seat airliner, the Airbus A320, and a new military combat aircraft, the P110. Both are good examples of projects which have particular slots in the market which will last beyond the year 2000. They are programmes which are significant for the long term future of the current aircraft manufacturing base in this country. Each is in a market in which the dominant competitors are directly or indirectly assisted by their Governments in the national interest. Unless the Company is placed in a position comparable with its competitors it will be unable to compete and will be forced to reduce its capacity in aircraft design and manufacture. Active discussions are taking place with the Government regarding this aspect of the Company's future".
A large number of jobs are dependent on the Government's decision on this matter. This was a point underlined by the noble Lord, Lord Whaddon, in his speech. A recent estimate in the Financial Times put the figure at something like 3,000 jobs being dependent on our participation. I hope that the noble Lord, Lord Cullen of Ashbourne, who is going to reply this evening for the Government will be able to give some encouragement. As the noble Lord, Lord Whaddon, said, whatever option the Government are going to choose, let them make a decision, because this is something which we cannot pass up.
7.49 p.m.
Lord Cullen of Ashbourne: My Lords, we have had an extremely interesting debate on this subject, a very exciting project in which all noble Lords are interested, and nobody better to raise this matter than the noble Lord, Lord Beswick, with his great experience in the industry and a person who has made such a distinguished contribution in the service of that industry. The British Government continue to give their support to Airbus Industrie within which British Aerospace has a 20 per cent. partnership share. We congratulate Airbus Industrie on the successes it has achieved. It has shown that a European collaborative venture can rival the major United States manufacturers. Indeed, Airbus Industrie is now second only to Boeing as a producer of wide-bodied aircraft.
We note Airbus Industrie's desire to extend their family of aircraft by developing the A320 to serve as a replacement for the present generation of narrow-bodied aircraft. There is certainly a major world market for an aircraft of that type and I would in no way disagree with the order of magnitude quoted by the noble Lord, Lord Beswick. The Government have been approached by British Aerospace about the availability of launch aid to support its participation in the project. As a private sector concern, British Aerospace is now eligible to apply for such launch aid, but the Government have no obligation to provide financial assistance. Each application must be looked at on its merits against the background of current public expenditure constraints.
We shall have regard to wider industrial benefits and to the general desirability of fostering European industrial collaboration, but we must build aircraft for profit and not for prestige, and it was on that note that the noble Lord, Lord Beswick, concluded his speech. The prospect of a satisfactory real rate of return on the investment is what the Government have to be satisfied about. The noble Lord, Lord Beswick, is of course well aware that the aerospace industry has in the past benefited from significant Government investment, but has not always provided a commercial return. I was very interested in a suggestion the noble Lord made, that it might be worth considering the repayment of launch aid being guaranteed by British Aerospace. Coming from the noble Lord, that is a suggestion which I am sure my right honourable friend the Secretary of State will wish to study.
We recognise that the French Government have already been able to announce their willingness in principle to give financial support provided there is evidence that airlines will commit themselves to the aircraft. We understand that the German Government, while like ourselves supporting the participation of their national industry in Airbus Industrie, have as yet taken no position on the A320. They are waiting a firm proposal from German industrialists together with an assessment of the project's viability. There is thus some similarity between the British and German positions.
Just how far the world's airlines would be prepared to commit themselves to a new aircraft for delivery as from 1986 is uncertain. Airlines undoubtedly see the need for a fuel-efficient aircraft of the size and range of the proposed A320. On the other hand, as my noble
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friend Lord De La Warr pointed out, few airlines at present have the financial strength or confidence to commit themselves to massive investment in new aircraft. For the aircraft manufacturers, the problem is compounded by the minimum lead time of four to five years for a new civil aircraft, incorporating major advances in technology, to progress from drawing board to entry into service.
The Government understand the strategic importance for British Aerospace's future, as a civil aircraft manufacturer, of participation in commercially viable new Airbus Industrie projects. The level of that participation—the main alternatives, as noble Lords have said, in the case of the A320 are 30 per cent. or 20 per cent.—is, however, ultimately a commercial matter for negotiation between British Aerospace and its partners in Airbus Industrie; they must determine the most cost-effective basis for each new programme.
The Government realise that the A320 could represent important opportunities for British engine and equipment suppliers, the importance of which was pointed out by my noble friend Lord De La Warr. We shall certainly take that factor into account in our assessment of the case for launch aid. Airbus Industrie may, of course, see advantages in commonality as between the equipment on the A320 and the equipment currently on the wide-bodied models. On the particular question of engines, to which the noble Lord, Lord Whaddon, referred, Rolls-Royce are in close contact with Airbus Industrie about the prospective use on the A320 of the Anglo-Japanese RJ 500 engine. It is up to Rolls-Royce to demonstrate they have a competitive and cost-effective product. Rolls-Royce are also actively exploring, with the Government's encouragement, the possibility of widening the collaboration on the RJ 500 to include partners other than the Japanese. That is a matter entirely for Rolls-Royce in the first instance. An application from Rolls-Royce for launch aid for the RJ 500 would be treated on its merits and within the general criteria I have described.
The short answer to the noble Lord's Question, therefore, is that the Government's assessment of the commercial viability of, and likely financial returns from, the A320 project has not yet been completed. We await further information from British Aerospace. The Government believe it would be premature to take any view on the question of launch aid for the A320 until those studies have been completed. We are not waiting for the boom to which the noble Lord, Lord Whaddon, referred, but we certainly intend to reach a decision with the minimum delay compatible with a proper appraisal of the case.

  POLICE: COMPLAINTS PROCEDURE
  POLICE: COMPLAINTS PROCEDURE
  OIL POLLUTION: COSTINGS
  OIL POLLUTION: COSTINGS
  PUBLIC RECORD OFFICE: FEASIBILITY STUDY
  PUBLIC RECORD OFFICE: FEASIBILITY STUDY
  VIENNA NEGOTIATIONS ON REDUCTION OF ARMED FORCES
  VIENNA NEGOTIATIONS ON REDUCTION OF ARMED FORCES