Sitting of 26 July 1982

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRIVATE BUSINESS
  GREATER LONDON COUNCIL (GENERAL POWERS) (NO.2) BILL
  Considered; to be read the Third time.

  COMMERCIAL BANKING COMPANY OF SYDNEY LIMITED (MERGER) BILL [Lords] (By Order)
  Order for Third Reading read.
  To be read the Third time tomorrow.

Oral Answers to Questions
  ENERGY

    Coal Mining Subsidence (Compensation)
    Mr. Heddleasked the Secretary of State for Energy whether he has received any representations from organisations representing farmers or landowners in connection with claims for compensation arising from coal mining subsidence following the publication of the Flowers report on coal and the environment.
    The Under-Secretary of State for Energy (Mr. John Moore): I have received representations from the National Farmers Union and the British Property Federation.
    Mr. Heddle: I thank my hon. Friend for the sympathetic and realistic attitude that he and his Department have taken towards compensation for coal mining subsidence. In view of the application by the National Coal Board to work coal under the Vale of Belvoir, does my hon. Friend agree that people whose property suffers subsidence from coal mining do not receive the same consideration as property owners whose properties are acquired for other purposes? Will he have consultations with his colleagues in the Ministry of Agriculture, Fisheries and Food and the Department of the Environment to see that fairness and equity prevail in the future?
    Mr. Moore: I thank my hon. Friend for his kind remarks. We all wish to see a proper balance struck between the interests and needs of the coal industry, of property holders, and of the environment. I take his point about the need for consultation, which I know exists, and I shall stress that to my ministerial colleagues.
    Mr. Rowlands: I represent a community in which for nearly a 100 years properties have suffered from
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    subsidence. If there is to be a new regime for the Vale of Belvoir or anywhere else, will it extend to communities that have long suffered from that problem?
    Mr. Moore: I take the hon. Gentleman's point. We all appreciate the excellent work of the Commission on Energy and the Environment, and the degree to which the CENE report has led to detailed debates with many local authorities, who have considerable experience in such matters.
    Mr. Hughes: Will the. Minister accept that there will be considerable support from both sides of the House for legislative action to improve the present regime whereby the National Coal Board is judge, jury assessor and compensator for too many people?
    Mr. Moore: The hon. Gentleman will be aware from our debates that that, among other matters, is being considered in the Government's answer to the CENE report recommendations.

    Non-nuclear Energy Expenditure
    Mr. Hooleyasked the Secretary of State for Energy what is the current annual rate of public expenditure in alternative, non-nuclear, energy sources in each of the EEC countries, converted as near as possible to £ sterling at the present rate of exchange.
    The Under-Secretary of State for Energy (Mr. David Mellor): The latest available figures are those collected by the International Energy Agency. They cover eight of the 10 Community countries—excluding France and Luxembourg—and show that in 1981 the United Kingdom spent £15·1 million and was in second place. I have arranged for the figures to be extracted and published in the Official Report.
    Mr. Hooley: Is not the disparity between public expenditure on infinitely renewable energy resources and the expenditure on nuclear power utterly grotesque? Is the Minister aware that after 18 years of the advanced gas-cooled reactor programme and the expenditure of billions of pounds of public money, it still satisfies only 1 per cent. of our energy needs? Given a modest improvement in financing, renewable resources could do far better than that.
    Mr. Mellor: The hon. Gentleman and I seem to have this dialogue every time there are energy questions. My answer must remain the same as it was the last time. We have a "renewables" programme which establishes the potential of having renewable energy when we need it. Equally, we believe that nuclear power is a proven technology. The AGR on stream at Hinkley Point is one of the best power stations on the grid. Three other AGRs are expected to come on stream within the next 12 months. There are two new generation AGRs which are progressing according to plan.
    Several Hon. Members rose—
    Mr. Speaker: Order. The questions and answers are too long.
    Mr. Chapman: Will my hon. Friend confirm that we are spending more on research into alternative forms, of energy? That money could be more effectively used if there were no duplication of research with our EEC partners.
    Mr. Mellor: I should not have made the point, but my hon. Friend persuades me to say that in 1976–77, when the Labour Government were in power, about £274,000 was spent on renewable energy. The present figure is £15·1 million.
    Mr. Eadie: Instead of giving us yah-boo answers, does the Minister agree that it would be a disgrace if we were not spending more on alternative sources of energy following the oil crisis of 1973–74? Is he aware that there is great disquiet about the Government's cuts in resources for alternative sources of energy? Can he justify that action when the Middle East is in a state of crisis?
    Mr. Mellor: When we were about six or seven years into the renewable programme it was essential to establish priorities. It is always easy to duck these choices—we have admirable precedents from Labour Members—when decisions have to be made. However, we felt that the time had come when we should pick some winners, and that is what we tried to do.

    New Energy-producing Capacity (Costs)
    Mr. Campbell-Savoursasked the Secretary of State for Energy what studies have been made by his Department of the relative cost of establishing new energy-producing capacity against introducing new conservation measures to achieve the same net energy effect.
    Mr. Mellor: There is no simple choice to be made between investment in energy conservation rather than supply.
    Mr. Campbell-Savours: I do not expect the Minister to accept the case of Friends of the Earth and the link that it believes exists between investment in nuclear power and gains from energy conservation. However, does he accept that it has been able to identify substantial gains that would be available to us? Will he replace the advisory council with a standing commission on energy conservation that will investigate these issues and take evidence? Will he consider putting in his private office a supporter of Friends of the Earth?
    Mr. Mellor: We have recently reconstituted the Advisory Council on Energy Conservation, on which many interests are represented. We believe that it will be an extremely effective body under the distinguished leadership of Dr. Telfer. It is easy to suggest that we should not spend so much money on power stations, but the hon. Gentleman should know that only 7 per cent. of space heating is by electricity. Even if a 25 per cent. saving were achieved in conservation on space heating, electricity demand would be reduced by only 2 per cent. That is why there is no easy relationship between the two factors.
    Mr. Rost: Is it more cost effective to spend public money on keeping open a few high-cost uneconomic pits or on improved insulation in public sector buildings?
    Mr. Mellor: My hon. Friend poses a choice upon which I do not feel I should comment.
    Mr. Palmer: When does the Department of Energy hope to comment on the report of the Select Committee on Energy, which has some valuable things to say about the proper balance between supply and demand?
    Mr. Mellor: I am aware that the Select Committee has recently reported. The Department welcomes the report and is currently studying its response to it, which will be made later in the year.
    Mr. Forman: Is my hon. Friend aware that the studious agnosticism of his original answer was somewhat disappointing? It would be more appropriate if his Department conducted such studies, whatever the methodological difficulties?
    Mr. Mellor: I was trying to convey to the House that I believed in both approaches, not that I did not believe in anything. It is necessary that we have new and efficient power stations to replace elderly power stations in the 1990s. It is equally necessary that we continue to have an effective energy conservation programme.

    NCB (European Community Borrowing)
    Mr. Welshasked the Secretary of State for Energy what was the total borrowing from the EEC by the National Coal Board for the years 1971 to 1979 and 1979 to 1982.
    Mr. John Moore: It was £418 million and £349 million respectively.
    Mr. Welsh: I thank the Minister for that reply. Has any restriction been placed on the National Coal Board's borrowings from the EEC since 1979?
    Mr. Moore: I think that the hon. Gentleman is worried about the absence of borrowings in 1981. That is a reflection of the fact that throughout most of the year it was cheaper by more than 3 per cent. to borrow from British rather than foreign sources.
    Mr. Allen McKay: Following the petroleum industry's financial support of the liquefaction plant, does the Minister intend to proceed with the plant on an experimental basis? Is he aware that if the Government put £1 million into the project the EEC will make £5 million available?
    Mr. Moore: The hon. Gentleman may remember that previously I told the House that the issue was being reviewed by the National Coal Board. The first meeting of the board's review will take place this week.

    Oil Companies (Departmental Discussions)
    Mr. Knoxasked the Secretary of State for Energy what discussions his Department holds on a regular basis with the major oil companies; what subjects are discussed; and when the next meeting will take place.
    The Minister of State, Department of Energy (Mr. Hamish Gray): My Department frequently meets the oil industry in order to discuss a wide range of subjects and will continue to do so.
    Mr. Knox: Have the violent fluctuations in petrol prices in recent years been raised in the discussions with the companies, and has their attention been drawn to the public concern that these price movements have caused? Is it possible to take some action through, for example, the European Community?
    Mr. Gray: I appreciate my hon. Friend's point, but I remind him that harmonisation within the Community was

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    designed to remove dependence on oil and to try to establish common principles for energy pricing. United Kingdom prices net of tax are currently the lowest in the European Community. Alignment of United Kingdom prices to Continental levels would mean a substantial increase in United Kingdom prices.
    Dr. J. Dickson Mabon: Has the Minister been told by the companies that the fall in the oil profile in the late 1980s and early 1990s will mean that we shall lose net self-sufficiency in Great Britain and that about five medium-sized fields will have to be approved every year if we are to keep pace with demand? Will the Minister tell us exactly what will happen about annex Bs?
    Mr. Gray: My information does not tally with that of the right hon. Gentleman. The highest level of exploration since 1977 has been achieved on the United Kingdom continental shelf this year. More exploration wells were drilled in the first half of the year than in the first half of last year. If this rate of activity continues for the rest of the year, a new record could be set in 1982. The Department is in discussions with the licencees of North Alwyn and Clyde. I expect the licencees to submit their projects for approval shortly. Consequent orders should be placed before the end of 1984.
    Mr. Rowlands: When the right hon. Gentleman next meets the oil companies, will he be hawking around the secret report on the valuation of Wytch Farm, made, apparently, at a cost of £100,000? Will the Select Committee have the chance to examine the report before the sale takes place so that the House can made a judgment on whether there is again to be a forced sale at a knockdown price to remove an important asset from the nation and from British Gas?
    Mr. Gray: That is a matter for the British Gas Corporation. I am sure that the hon. Gentleman appreciates that.
    Mr. Eggar: Does my right hon. Friend appreciate that while exploration is an indication of the general level of activity, development is what really matters? Is he not concerned that the Treasury's need for money is overcoming the national interest in getting fields developed, especially in the interests of creating employment?
    Mr. Gray: I cannot accept that. My right hon. and learned Friend the Chancellor of the Exchequer has a difficult task in balancing the scales of justice and ensuring that the nation gets its due in the national interest, while at the same time not removing incentives from oil companies to invest in the North Sea. I do not agree that the companies are postponing the development of an oilfield. If that has taken place, taxation has been only one element in the decision. It is one that usually comes a poor third.
    Mr. Douglas: When the right hon. Gentleman next meets the representatives of Shell and Esso, will he put it to them that the use of the ICI case, which is now before the courts, as an excuse for a reappraisal of the cracker and NGL plants at Moss Morran will be wholly unacceptable to the people of Fife?
    Mr. Gray: I am aware of the hon. Gentleman's very great interest in these matters, which are near to his
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    constituency. I can assure him that any such suggestion from Shell and Esso will not be greeted with any sympathy.
    Mr. McQuarrie: When my right hon. Friend next meets the oil companies, will he try to impress upon them the absolute necessity for an adjustment in the prices of fuel in rural areas, because at present, as my right hon. Friend is aware from his constituency, the prices are devastating and causing a great deal of concern throughout all the rural areas in Scotland?
    Mr. Gray: I know that my hon. Friend is concerned about rural constituencies, as I am. The wholesale price disparity, which remains less than the retail disparity, is likely to narrow as the companies reintroduce temporary sales allowances. Department of Energy officials have been anxious for them to be reintroduced. I am glad to be able to tell the House that one major oil company this weekend reintroduced temporary sales allowances, which should substantially benefit rural areas. I trust that other companies will follow.

    NCB Facilities (Closure)
    Mr. Edwin Wainwrightasked the Secretary of State for Energy whether there are circumstances in which his consent is required to proposals for the closure or disposal of National Coal Board facilities.
    The Secretary of State for Energy (Mr. Nigel Lawson): Apart from overseas activities, the board does not require the consent of the Secretary of State for the closure or disposal of facilities.
    Mr. Wainwright: Does the Secretary of State realise that many people in the mining industry will look askance at his statement? Does he not think that it is ridiculous and ludicrous that there should be a difference between the National Union of Mineworkers and the National Coal Board on what will happen to the mining industry, for example, with regard to pit closures? Will he bear in mind that if he does not want to create disharmony in that nationalised industry he should avoid doing what the Government have been doing too often and too regularly—selling the plums of nationalised industries to their friends and leaving the rest to be looked after by the nation?
    Mr. Lawson: I am sure that, having got that off his chest, the hon. Gentleman feels much better. There is not the difference between the NCB and the NUM—where it matters—that the hon. Gentleman professes to discern. The fact is that pit closures are dealt with through the board's review procedures with the unions, which are at local level, with a right of appeal at national level. The NUM, its geologists and others are constantly in discussion with the NCB at area level on all those matters. Those procedures were instituted in the early 1970s. They continue to this day.
    Mr. Adley: Will my right hon. Friend explain who benefits when men are made to stay at work in old pits, which are extremely unhealthy, when resources are available to open new pits, where plenty of jobs should be available?
    Mr. Lawson: My hon. Friend has a good point. There are many areas in which miners can see the case clearly for the closure of pits and are happy to accept redundancy

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    money. It is interesting to note that when Mr. Scargill was president of the Yorkshire area of the NUM, 11 pits were closed, all with his agreement.
    Mr. Eadie: Does the Secretary of State agree that the Government's contribution to the difficulties that have arisen is based on the fact that there has been a delay in replacing capacity? Does the right hon. Gentleman agree that it would help if the Government considered giving assistance for the replacement? I refer to the disgraceful episode of the Vale of Belvoir.
    Mr. Lawson: I do not see where the disgrace is about the Vale of Belvoir, because I understand that the NCB has made a fresh application, which will be considered soon by the planning authority responsible, which is the Leicestershire county council. I agree with the hon. Gentleman that replacement capacity is important. He may be interested to know that since 1974, when the "Plan for Coal" came into operation, 8 million tonnes of capacity have been lost through closures and 16 million tonnes—twice that amount—of new capacity have been created.

    Commercial Fast Breeder Reactor
    Dr. J. Dickson Mabonasked the Secretary of State for Energy what further progress has been made towards establishing a commercial fast breeder reactor in the United Kingdom.
    Mr. John Moore: The National Nuclear Corporation, in association with the Atomic Energy Authority, is further developing the reference design for a commercial scale fast reactor which was announced by the AEA last year. The authority is undertaking a major programme of fast reactor research and development in support of this work based on the prototype fast reactor and associated fuel plant at Dounreay.
    Dr. Mabon: I am grateful for that answer and the answer to the three written questions which I tabled last Thursday. In what year does the Minister estimate that the commercial fast-breeder reactor will be built? Will the experimental establishment at Dounreay be the basis on which the commercial fast breeder reactor will be established?
    Mr. Moore: It would be impossible for anyone to specify when that reactor will be built. That is a factor in the review of all the policy options that are involved in the Government's review of the fast breeder. With regard to Dounreay, the Government have made it clear that all aspects of fast breeder development must be examined in their policy debate.
    Mr. Gordon Wilson: Bearing in mind the importance of Dounreay to the Highland economy, will the Minister give a guarantee that that establishment will not be closed?
    Mr. Moore: I should have thought that it is not the time to give guarantees when one is considering policy options—[HON. MEMBERS: "Oh."]—and those who wish to encourage irresponsible debate can mutter from Labour Benches. The policy is being reviewed, as the Government have made clear. Dounreay has an important role in the Highlands development area, and there are important employment opportunities at Dounreay, which is a key factor in any such review.
    Sir Peter Emery: Does my hon. Friend agree that it is now 29 years since the first experimental fast-breeder reactor started at Dounreay? Is he aware that many of us believe that all Governments have been somewhat slow in maximising the opportunities of the fast breeder, which would benefit not only our country but many countries throughout the world if we were able to develop a small fast breeder that could be exported?
    Mr. Moore: My hon. Friend is right. The development has been going on for nearly 30 years. The demonstration fast-breeder reactor has been in operation from 1959 to 1977. It is clear that the fundamentals of nuclear development have also changed. The thermal programme in the world has developed more slowly than had been anticipated. It is normal to review the current position on the basis of fundamental economic change.
    Mr. Robert Hughes: While the Minister has recognised the importance of Dounreay to the economy of that part of the world, and while he cannot say now that the new fast-breeder reactor will go to Dounreay, can he give an assurance that in the foreseeable future—for example, five years—no jobs will be lost at Dounreay?
    Mr. Moore: All that I can say is that there is a legitimate examination of the policy options. Within that examination the proper role of Dounreay is a key factor, not just in terms of the job opportunities in the Highlands, but in terms of its expertise and excellence in fast-breeder development.

    Coal Stocks
    Sir William van Straubenzeeasked the Secretary of State for Energy what is the level of coal stocks at the nearest convenient date at power stations in the United Kingdom.
    Mr. Eggarasked the Secretary of State for Energy what is the current level of coal stocks held by the National Coal Board.
    Mr. Lawson: At the end of June the figure in each case is 22 million tonnes.
    Sir William van Straubenzee: That is an encouraging figure. Now that coal can be moved freely by rail, will my right hon. Friend assure me that he will use the summer months to build up the stocks to maximum capacity so that if, regrettably, the threat from Mr. Arthur Scargill were to materialise, the nation would be as well equipped as possible to meet it?
    Mr. Lawson: Those are matters for the NCB and the Central Electricity Generating Board. I am sure that the NCB is anxious to sell as much coal as possible. I am sure that the CEGB is aware of the factors that my hon. Friend has mentioned.
    Mr. Eggar: Will my right hon. Friend confirm that the CEGB has increased the percentage of electricity generated from coal? Will he say to Mr. Scargill that there is no point in producing coal merely for stockpiling, but that it has to be sold?
    Mr. Lawson: My hon. Friend is right. It is true that the percentage of electricity generated by coal has increased. That is a counterpart to the amount generated by oil, which has diminished. If we were to go back from 82 per cent. generated by coal to 68 per cent., that would

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    cost an extra £200 million a year. As for consulting Mr. Scargill, that might be difficult, because at present he is on holiday in Cuba and does not get back until the middle of next month.
    Mr. Eadie: Perhaps the right hon. Gentleman could be serious for a moment. Does he agree that coal stocks could be an appreciating rather than a depreciating asset, bearing in mind the problems in the Middle East? What level of coal stocks does he consider that the industry should have?
    Mr. Lawson: It is as much for the industry as for me to decide that. I think that the industry would feel—I would agree—that the present level of pithead coal stocks is exceptionally high. Bearing in mind the present level of interest rates—we all want them to come down— the cost of carrying such stock is a heavy burden on the Coal Board. They are higher than is desirable. On the other hand, I agree with the hon. Gentleman about the desirability of having adequate stocks at power stations.
    Mr. Squire: Bearing in mind the increased industrial activity on behalf of railway, Health Service and other workers that is now promised by the National Union of Mineworkers, can my right hon. Friend assure me that there is some danger of some stocks being reduced in the next six months?
    Mr. Lawson: That may be so. There was a reduction in power station coal stocks during the prolonged ASLEF dispute in February and March of this year. I do not know whether, as a result of that, the generating board burnt more oil to preserve coal stocks. That was also attacked in The Economist. It is difficult to satisfy even The Economist at any time, let alone a more representative audience.
    Mr. Hardy: Does the right hon. Gentleman agree that the problem of coal stocks or of an energy surplus will not be resolved until there is a Government who are eager to promote economic recovery? Will the right hon. Gentleman underline the point that he seemed to make earlier? Will he say clearly to the nation that it would be idiotic for Britain to reduce its energy production capacity to match the continuing recession?
    Mr. Lawson: It is essential that the Coal Board makes itself economically viable. It recognises that. That is essential for the future and the success of the coal industry. That is true, irrespective of the present recession.

    Coal Industry (Investment)
    Mr. Adleyasked the Secretary of State for Energy when he next intends to meet the president of the National Union of Mineworkers to discuss future investment in the coal industry.
    Mr. Dormandasked the Secretary of State for Energy when he next proposes to meet the chairman of the National Coal Board to discuss investment in the industry.
    Mr. Rostasked the Secretary of State for Energy when he next expects to meet the chairman of the National Coal Board to discuss investment in the industry.
    Mr. Hannamasked the Secretary of State for Energy when last he met the chairman of the National Coal Board to discuss investment in the coal industry.
    Mr. John Moore: I meet periodically the National Coal Board and the NUM to discuss different aspects of the coal mining industry, including investment.
    Mr. Adley: We all enjoy Mr. Scargill's frequent contributions to political debate. Will my hon. Friend confirm what my right hon. Friend the Secretary of State has just said—that Mr. Scargill has gone to Cuba?
    Mr. Skeet: He should stay there.
    Mr. Adley: I should not like him to stay there. He is the best ally that we Tories have. When Mr. Scargill returns, will my hon. Friend inquire whether the visit was political or whether he was trying, for once, to help the British coal mining industry? For example, is Cuba a large potential market for British coal?
    Mr. Moore: I do not have ministerial responsibility for the president of the National Union of Mineworkers. However, I am sure that, as we all know that 82 per cent. of coal is burnt in our power stations, hon. Members will be interested to know that Cuba burns only oil. Nevertheless, I am sure that the Cubans can be persuaded to do as well as we do.
    Several Hon. Members rose—
    Mr. Speaker: Order. I propose to call first the three other hon. Members whose questions are being answered.
    Mr. Rost: When will the Government be able to tell the Coal Board and the NUM that it is time to fix a realistic programme for ending the subsidies and the industry's monopoly by introducing private capital in partnership, so that we can inject some competition? Does my hon. Friend agree that it is nonsensical that British companies such as BP should be forced to go abroad to mine coal and are prohibited from contributing to the economy and genuine competition in Britain?
    Mr. Moore: It is sometimes sad and of significance to us all to remember that, in the past 15 years or so, about £26 billion has gone from the private sector into offshore oilfield development. The country has invested only £3 billion in the coal industry. I say "only", although that is obviously a sizeable amount of money. Investment in the coal industry is in all our interests. One would hope that the industry would welcome it.
    Mr. Hannam: Does my hon. Friend agree that capital investment in the industry this year will reach nearly £900 million? Does he agree that the miners should, therefore, ignore the militant calls of Mr. Scargill and continue the expansion of their industry by opening new pits and closing old, uneconomic ones?
    Mr. Moore: I should like the industry to carry on with its present excellent productivity and improvements. To the extent that the industry is progressing well, I trust that everyone will notice the large amounts of investment that have been made in the industry since "Plan for Coal". There has been £3½ billion of investment. That is considerably more than the £2½ billion that was expected under "Plan for Coal".
    Mr. Barry Jones: Will the Minister do all that he can to bring on the coal liquefaction scheme at Point of Ayr? Is he aware that, in North-East Wales, in the county of Clwyd, unemployment is now 22 per cent. or more and that there is nearly 40 per cent. male unemployment in

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    Flint? Does he understand that unemployed construction workers look to the scheme to help provide them with work?
    Mr. Moore: The hon. Gentleman will remember that I recently met representatives from Clwyd. As I said earlier, a review by the Coal Board of the plant is in process. It is vital, as with many other areas, that projects are developed economically and rationally, for the success of the coal industry in the long run.
    Sir Anthony Meyer: Will my hon. Friend assure me that, unless the present scheme by the Coal Board for the extraction of oil from coal is shown to be completely unworkable, regard will constantly be had to Britain's need for assured supplies of oil, which will eventually run out otherwise, and that oil could be extracted from coal, of which we have almost unlimited reserves?
    Mr. Moore: My hon. Friend is assiduously pursuing his constituents' interests. I understand his point. He will wish to examine the thorough Coal Board review before I comment further.
    Mr. Albert Roberts: Will the Minister bear in mind that when private capital ran the mining industry it was in a deplorable condition? I hope that he will resist the proposals that have been advanced by his hon. Friends.
    Mr. Moore: I trust that those whom I respect and who had interests in and responsibility for the coal industry in the past will join the latter part of the twentieth century with regard to investment by reputable organisations. We are not in 1930, we are in 1982.
    Mr. Skeet: Is my hon. Friend aware that the taxpayer is losing about £35 million as a result of not being able to import more coal? Instead of expecting the CEGB to import 4 million tonnes, as contracted, and then dumping 2 million tonnes of it in Europe, does he agree that it would be more rational to import into the United Kingdom?
    Mr. Moore: I have learnt from experience in the past few years that rationality is not the basis of every debate on the coal industry. The detailed facts that my hon. Friend suggests bear further examination.
    Mr. Eadie: I am sure that the Minister agrees that investment is the key to progress in the coal industry. Will he consult the Government about oil from coal? Does he agree that it not only affects the future of the coal industry, but that British technology could be at stake?
    Mr. Moore: As a member of the Government, I shall indulge in self-consultation. We must make the right decisions in these matters. The right decisions require us to examine the matters carefully, thoroughly and responsibly. We are dealing both with the coal industry, which is crucial, and the future of taxpayers' money.

    Britoil
    Mr. Douglasasked the Secretary of State for Energy if he is now in a position to announce the terms and conditions on which Britoil's shares will be put on to the market.
    Mr. Lawson: No, Sir. However, I can assure the House that there will be no flotation of Britoil and, indeed, no final decision about the method of sale until the House has reassembled after the Summer Recess.
    Mr. Douglas: That is a very welcome reply about timing, but will my right hon. Friend assure the House that he will continue to consider some form of tender option bid so that a price may be set before he embarks on the issue of the shares to the market generally?
    Mr. Lawson: That is certainly among the matters at present under consideration.
    Mr. Renton: I greatly welcome my right hon. Friend's decision to bring Britoil to the market, but can he say to what extent the public issue of the shares in the autumn will depend on stability of oil prices? Would further falls in the international price seriously affect the possibility of bringing the shares to the market in the autumn?
    Mr. Lawson: As I have always made clear, the condition of both the oil market and the oil share market will be among the factors to be taken into account when we finally decide on the timing of the issue. So far, I see no reason why the flotation should not go ahead in the autumn. However, as I have said, no decision has been taken. The decision will be taken nearer the time in the light of conditions at that time.
    Mr. Rowlands: The right hon. Gentleman has just sold the basic pass. Does he not recall the repeated assurances that he and other Ministers gave that there would be no sale of Britoil unless the best possible price could be obtained? Does he agree that no one in his right mind would try to sell a large number of oil shares in the current state of the market? Will he therefore abandon the artificial deadline that he has set to sell the shares by November this year and stand by the assurances given to the House?
    Mr. Lawson: The hon. Gentleman cannot be listening with the care that he usually shows or the care that the right hon. Member for Leeds, South (Mr. Rees) would have shown if he were present. Nobody, not even the hon. Gentleman, knows exactly what conditions will be like in the autumn. All that I have said is that a decision will be taken nearer the time, when we have a better idea of what the conditions are.

    North-Western Electricity Board (Lancashire)
    Mr. Strawasked the Secretary of State for Energy what representations he has received concerning the reorganisation of areas within Lancashire by the North-Western electricity board; and if he will make a statement.
    Mr. Mellor: I have received a number of representations about the plans of the North-Western electricity board to reorganise its areas. This is essentially a management matter for the board.
    Mr. Straw: Is the Minister aware that there is substantial resentment in the Blackburn area, particularly among the staff, about the way in which the decisions were made, particularly the appointment of senior staff, before a decision was made about the location of the new offices? As the explanation given for the changes was that they would secure financial savings, what monitoring will be carried out by the Department or the Electricity Council to ensure that savings are indeed made?
    Mr. Mellor: Although I in no way underestimate the concern that these matters cause in individual constituencies, they are essentially matters for the day-to-day

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    management of the board. Accordingly, the powers of the Department are limited, although we keep in touch on these issues. I know enough about the subject to know that the chairman and deputy chairman of the area board take very seriously the complaints that the hon. Gentleman has raised and would be willing to meet him. The chairman of the North-Western Electricity Consultative Council is also prepared to become involved if the hon. Gentleman wishes.
    Sir Charles Fletcher-Cooke: Is it not strange that the area with the best record in labour relations and efficiency has been eliminated? Is this not another case which proves that, whether it be polytechnics, new towns or whatever, Preston is always preferred to Blackburn, and does my hon. Friend agree that that should stop?
    Mr. Mellor: As I was born in Dorset, I should perhaps not intervene too much in any rivalry that may exist between Preston and Blackburn. These are difficult matters, but, in the interests of efficiency and serving the consumer best, area boards throughout the country have been trying to cut administrative overheads. That is always difficult, but there are local ways of putting forward objections and having them heard. Apart from anything else, the part-time members of the North-Western board are in the majority and can intervene if they see fit.
    Mr. Robert Atkins: Is my hon. Friend aware that the people of Preston are delighted that the part of the North-Western electricity board to which he referred has been centred on Preston and that we are very grateful for the management decision that was taken? Is he also aware that that view is shared by the hon. Member for Preston, South (Mr. Thorne), who is not on the Conservative Benches?
    Mr. Mellor: I think that at this point discretion should be the better part of valour.
    Mr. Spriggs: In considering consultation with other bodies, will the Minister consult the Glass Manufacturers Federation, which represents all the glass firms in the North-West, about its consumption of electricity and about the reorganisation of the electricity board's undertaking in the North-West?
    Mr. Mellor: I have visited factories in the North-West on several occasions since taking office. Representatives of industries know that my door is always open to them if they wish to discuss electricity prices. The hon. Gentleman raises an important point, in that most people feel that they are paying more than they should for electricity. That is why it is crucial for area boards to be able to show that they are not carrying unnecesssary fat in their administration, which means that extra costs are passed on to consumers, particularly industries facing difficulties such as the one to which the hon. Gentleman referred.

  HOUSE OF COMMONS

    Office Accommodation
    Mr. Sainsburyasked the Lord President of the Council if he will initiate an inquiry into any difficulties that hon. Members and their secretaries experience due to the provision of accommodation and facilities in offices outside the main buildings of the Palace of Westminster.
    Mr. Hooleyasked the Lord President of the Council what is his present estimate of the unfilled need for office accommodation by hon. Members, excluding Ministers, in or near the Palace of Westminster.
    The Lord President of the Council and Leader or the House of Commons (Mr. John Biffen): I am aware of the pressure on accommodation, although this cannot be measured absolutely in view of the differing wishes of Members. I should be happy to refer to the Accommodation and Administration Sub-Committee any particular problems within the Committee's remit that arise from the occupation of accommodation outside the main Palace buildings.
    Mr. Sainsbury: Does my right hon. Friend agree that, as more than 40 per cent. of hon. Members and more than 80 per cent. of their secretaries are now provided with desk space—I can scarcely call it accommodation—in five buildings outside the Palace of Westminster, this inevitably means a great deal of time being wasted through people and paper moving around and difficulties in receiving messages and visitors? How much longer does he expect hon. Members to put up with that?
    Mr. Biffen: As a later question deals with the possible extension of accommodation, it might be more appropriate if I addressed myself to that when it arises.
    Mr. Hooley: Is the Lord President aware that in the current Estimates only £700 is allocated to convert a room in a hut on the roof of the Palace of Westminster into an office? Does he regard that as an adequate response to the undoubted need for decent accommodation for Members of Parliament and their staff?
    Mr. Biffen: I shall of course refer the hon. Gentleman's anxieties to the Accommodation and Administration Sub-Committee, but I must point out that there is a limit to what can be made of the resources now available and that any extension of those resources that might arise under question 29 is a matter for substantial decision involving considerable public expenditure.
    Mr. Stanbrook: Will my right hon. Friend remind our hon. Friend the Member for Hove (Mr. Sainsbury) and others who think like him that the main work of the House of Commons is carried out in this Chamber and that anything that takes hon. Members away from this place into offices and forces them to spend an excessive amount of time on paperwork is a weakening of parliamentary democracy?
    Mr. English: Does that include the Cabinet?
    Mr. Biffen: I shall reply in the most dull, downbeat fashion. I do not believe that there is any correlation between effectiveness in the Chamber and the amount of accommodation that an hon. Member has.
    Mr. Campbell-Savours: Why should Members' secretaries have precedence over Members in the allocation of accommodation within the immediate precincts of the Chamber?
    Mr. Biffen: I am not sure that that strictly arises from the answer that I have given, but I shall certainly put that point to the Accommodation and Administration Sub-Committee.
    Mr. Renton: Is my right hon. Friend aware—I am sure he is—that, with all respect to my hon. Friend the Member

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    for Orpington (Mr. Stanbrook), it is not possible in the Chamber to answer letters from one's constituents? Does he agree that most hon. Members and their secretaries work in conditions that would not be tolerated in the private sector, let alone in the great Ministries of Whitehall? Has my right hon. Friend any suggestions as to how to deal with that position without great expense to public funds?
    Mr. Biffen: I do not think that my hon. Friend the Member for Orpington (Mr. Stanbrook) had in mind the point that my hon. Friend the Member for Mid-Sussex (Mr. Renton) seeks to make. However, I do not intend to arbitrate between them. The issue touches upon question 29 and perhaps I can reserve judgment until we reach that question.

    Bridge Street Site
    Mr. Foulkesasked the Lord President of the Council when he expects to receive the report of the sub-Committee considering the provision of additional accommodation for hon. Members on the Bridge Street site.
    Mr. Chapmanasked the Lord President of the Council when he expects the Accommodation and Administration Sub-Committee of the Services Committee to complete its consideration of the possibility of securing the assistance of private funds in the implementation of the Casson report relating to the Bridge Street site.
    Mr. Biffen: The Accommodation and Administration Sub-Committee reported informally to the Services Committee last week. In the light of this report, the Services Committee is of the opinion that the premises fronting on Parliament Street between Derby Gate and Bridge Street, to the west of Cannon Row, should be restored without delay for parliamentary use. It has asked the Sub-Committee to explore means of developing the remainder of the Bridge Street site in such a manner as to safeguard the interests of Parliament and to report as soon as practicable.
    Mr. Foulkes: Has the Lord President of the Council noticed that Conservative hon. Members are prepared to tell workers in the pits and on the railways to modernise their working practices, but do not appear to be willing to do anything about the working practices in this building? Is he aware that secretaries and Members are working in appalling conditions and that some of us, unlike Conservative hon. Members, do not have private offices in the City or elsewhere? Will the Lord President assure us that this welcome report will be accepted by the Government and that action will be taken to give Members some decent conditions so that we can provide a good service to our constituents and can scrutinise legislation properly?
    Mr. Biffen: The recommendation of the Sub-Committee will now go to the Department of the Environment, so that it will buttress the Department in its discussions with the Treasury in determining the PESC allowance.
    Mr. Chapman: Since successive Governments have always managed, for good or ill, to frustrate development proposals for the Bridge Street site, does the Lord President agree that the best way ahead is to invite private
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    investment for a mixed use development of the site, with a lease-back arrangement for extra accommodation? The House can decide nearer the time whether that accommodation should be made available to it.
    Mr. Biffen: My hon. Friend overlooks the fact that the future use of the Bridge Street site has never excited unanimous judgment in the Chamber. As regards private capital, my hon. Friend will have noticed in my main answer that that is one of the options now being considered.
    Mr. Kenneth Lewis: Is my right hon. Friend aware that at the beginning of this Parliament the Bridge Street site development was to have gone ahead but was stopped for reasons of economy? Since then the Government have decided to build a new conference centre on the old Colonial Office site in Parliament Square. Have the Government got their priorities right?
    Mr. Biffen: Clearly there is more than one view on whether the priorities are properly adjudged. My answer shows that the Accommodation and Administration Sub-Committee has reported to the Services Committee on early action for bringing into full parliamentary use the area that is fronted between Derby Gate and Bridge Street to the west of Cannon Row. Surely that is a development to be applauded by my hon. Friend.
    Mr. Sheerman: Is the Leader of the House expecting unanimity in the House before anything is done about accomodation and conditions? If so, is he aware that most of us will be filled with utter dismay about the future? Will the right hon. Gentleman be a little more positive, rather than waiting for unanimity in the House?
    Mr. Biffen: No, Sir. I should have thought that the measured caution of the House demonstrates the House at its best.
    Mr. Robert Atkinsasked the Lord President of the Council whether he will make arrangements to commission a painting or photograph of the present Chamber and Membership of the House.
    Mr. Biffen: I would be prepared to ask the Services Committee or the Works of Art Committee to consider this proposal, if it became evident that there was widespread support for it in the House.
    Mr. Atkins: I thank my right hon. Friend for his constructive answer. Is he aware that it is some time since a photograph or painting of this Chamber and its Membership was commissioned? Bearing in mind that such a commission was exercised in another place recently, does my right hon. Friend agree that it is about time that we authorised such a commission in this Chamber as a matter of urgency?
    Mr. Biffen: I can think of more pressing reforms. I have set only two modest hoops that have to be circumvented to set such a proposal in motion.
    Mr. Winnick: Bearing in mind the majority of the hon. Member for Preston, North (Mr. Atkins), should not the Leader of the House have some sympathy with him, because the hon. Gentleman will one day want to prove to his grandchildren that he actually sat in the House?
    Mr. Biffen: Since a Tory was the immediate predecessor of the hon. Member for Walsall, North (Mr. Winnick), I have every confidence that my hon. Friend will long outlast him.

    Parliamentary Session
    Sir David Priceasked the Lord President of the Council whether he will consider taking appropriate steps to change the parliamentary year so that the new Session of Parliament is opened in January rather than in the autumn.
    Mr. Biffen: I have no such proposals to make to the House.
    Sir David Price: Is my right hon. Friend aware that until the 1930s the new Session of Parliament always commenced at the beginning of the year? Does my right hon. Friend agree that there is great merit in bringing together the parliamentary year, the fiscal year and the calendar year so that, in common with other organisations, Parliament can consider the Government's legislative programme along with their fiscal measures at the same time? That is outwith the issue of how long we sit. Is it not time for a necessary return to older practices?
    Mr. Biffen: I have no wish to stand at this Box as a great reformer. Such a major innovation should be undertaken only after careful study. Perhaps the initial study should be undertaken by my right hon. Friend the Member for Worthing (Mr. Higgins), who is currently conducting a major overhaul of our financial procedures.
    Mr. Gordon Wilson: In spite of the persistence of the Leader of the House in having the House meet in July, does he realise that the Scottish school holidays are now halfway through and that holding the Summer Recess in the autumn does not suit many of us? Further, will the right hon. Gentleman say why the last major piece of business is a Scottish matter and, therefore, an aggravation for those Members who would otherwise have gone away with their families?
    Mr. Biffen: I have a great deal of sympathy with Scottish Members over the present pattern of business. There is not an immediate and overwhelming reason why a spill-over in September would be more acceptable to the House than a spill-over in October. This matter is intimately related to our financial year, and I refer to my previous answer.
    Mr. English: Will the right hon. Gentleman take back his words about reform? After all, he is only the second leader of the House after Dick Crossman to separate decisions on discussions from the discussions themselves, as from last week.
    Mr. Biffen: Perhaps that shows what great errors I commit when I depart from the tenets of Conservatism.

    Underground Car Park
    Mr. Jesselasked the Lord President of the Council if he will take steps to reduce the number of persons entitled to use passes to the Members' car park, New Palace Yard.
    Mr. Anthony Grantasked the Lord President of the Council if he is satisfied that the rules concerning the use of the Members' car park are being complied with; and if he will make a statement.
    Mr. Biffen: I am satisfied that, under normal circumstances, the current ratio of permits to spaces provides optimum use of the car park. Those who use the car park should show their permit on entry and leave it displayed while parked. I have been made aware dial this latter rule is not always complied with and would urge those who do not comply to do so.
    Mr. Jessel: As circumstances are not always normal, will my right hon. Friend help Members to get on with their duties by making sure that there is always room for Members to park, by tightening up the regulations? Is my right hon. Friend aware that the overcrowding is getting worse? Will he ensure that passes issued for the use of Members are not sometimes used by secretaries and research assistants?
    Mr. Biffen: My hon. Friend raises serious and substantial points. Undoubtedly, in the recent past, the rail strike has resulted in quite serious difficulties, and I shall certainly ask the Services Committee again to look at the rules to see whether they can be enforced more effectively.
    Mr. Anthony Grant: Is my right hon. Friend aware that one of the consequences of the congestion last week was that I missed an important vote? Why have there been issued nearly twice as many permits as there are car park spaces, and why are some people using more than one space? In the interests of security as well as convenience, will he ensure that the rule of "one space per Member" is complied with?
    Mr. Biffen: When determining the ratio of 2 : 1, the House authorities had in mind the differing working patterns of hon. Members and the differing working hours of other authorised users. However, if there is serious and substantiated evidence of abuse, it is something that we shall have seriously to consider.

Foreign Affairs Council (Steel)
3.31 pm
The Minister for Trade (Mr. Peter Rees): With permission, Mr. Speaker, I will make a statement about the special session of the Foreign Affairs Council of the European Communities which was held on Saturday 24 July. The purpose of the meeting was to consider the latest developments in the very serious dispute between the Communities and the United States over action taken in the United States against certain steel imports.
Last January the United States steel industry initiated both countervailing and anti-dumping complaints against imports of certain classes of steel from a number of sources, including seven Community countries, one of which is the United Kingdom. In the countervailing cases, provisional duties have been in force since 11 June. Provisional duties in the anti-dumping cases may be determined shortly. There is no assurance that further suits will not be initiated.
The highest rate of provisional duty, at about 40 per cent., has been determined in the case of products exported by the British Steel Corporation. This, as I understand the position, is on the basis that the capital introduced into BSC by the Government, and the waiver of certain BSC obligations, constitute an unfair subsidy to exports into the United States market. This is a formulation which we find quite unacceptable.
The Government's concern is to safeguard the interests of the United Kingdom steel industry, both public and private, in the face of these protectionist measures and to maintain the stability of the internal steel market in the Community. The Community has tried repeatedly but unsuccessfully to achieve a settlement of this dispute on the basis of some limitation of exports to the United States of selected steel products in return for withdrawal by the United States industry of all its countervailing and antidumping complaints. The United Kingdom has fully supported these efforts. However, none of the Community's proposals so far has been acceptable to the United States.
At its session on 19–20 July the Council therefore agreed that the member States worst affected, with the participation of the Commission as co-ordinator, should seek bilateral arrangements with the United States. After midnight on Saturday 24 July action to suspend the current countervailing complaints could be taken by the United States Administration only with the concurrence of the United States steel industry, under United States law.
Regrettably, last Thursday, 22 July, the United States rejected the proposals put to it under this Council decision by the ambassadors of the countries worst affected, including the United Kingdom. The Administration in turn proposed an arrangement for limiting imports of seven products from these countries at an unacceptably low level. In view of the imminence of the deadline, the Council met again on Saturday at the request of Her Majesty's Government and the French Government. It accepted eventually that discussions between the countries worst affected and the United States should continue to see if bilateral agreements were still possible. The Government had despatched to Washington after the Council of 19–20 July a special team accompanied by representatives of the industry. Following the conclusion of the Saturday Council meeting, our team immediately
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took all possible steps with the United States Administration to negotiate a bilateral agreement for the United Kingdom alone.
I have to inform the House that, despite every effort by our team, reinforced by a last minute approach by myself, and despite earlier indications to the contrary from it, the United States Administration were not willing to conclude a bilateral agreement with the United Kingdom.
The decision of Saturday's Council also provides for a new initiative for the settlement of this dispute on a comprehensive basis by the Community. Such a settlement should embrace both current and future countervailing and anti-dumping suits. The precise terms of the Commission's mandate for these negotiations will be determined in the course of this week. During these negotiations we shall ensure that the interests of the United Kingdom steel industry, both public and private, are taken fully into account.
Mr. John Fraser: The House will recognise the serious consequences of that statement, not just for the steel industry, where exports worth about £100 million are at stake, but for world trade. Will the hon. and learned Gentleman make it quite clear to the United States that one cannot tolerate a situation where it wants to make up the rules for others to follow, as it appears to have done for steel, and has done on the Siberian gas pipeline and energy pricing? I hope that he will make it quite clear that the United States must behave like trading partners and not like trading bullies.
Last Monday the Minister promised vigorous action over the United States' measures. That vigorous action, be it from the United Kingdom or the EEC, has, unfortunately, failed to produce results. Will the Minister confirm that the United Kingdom has played by the rules on both pricing and volume and that that has not helped us? Has the United Kingdom been put in jeopardy by the behaviour of other European exporters to the United States? Did the EEC proposals give our steel industry a fair deal? Why was no bilateral arrangement between the United States and the United Kingdom possible? As I understand it, the 40 per cent. duty that is to be slapped on British Steel exports will be much more damaging to our steel industry than any other arrangement on limitation of volumes that might otherwise apply. What further immediate hope, through compensation, other markets or other limitations, can the Minister give to the British steel industry in the immediate future?
Mr. Rees: I assure the House that the most vigorous representations have been made during this dispute. I very much regret that so far that has yielded no results. The various protectionist measures of the United States Administration, both in this and other spheres, have been, and will continue to be, the subject of complaint by the European Community to GATT.
I confirm that the United Kingdom steel producers and exporters have played by the rules, as we understand them, on both price and volume. It is difficult to say how far the United Kingdom steel industry would be affected if these countervailing duties were confirmed. At present, there has been only a preliminary determination. However, my view is that BSC would be unable to sell over a 40 per cent. tariff and would be compelled either to cut production or to look for other markets for its products, perhaps on the Continent.

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I should prefer not to enlarge on the precise proposals that have been put forward in the negotiations either by the Community or by the United Kingdom. It would not be helpful to say what our position has been or what movement from that position we would be prepared to contemplate. I am sure the House recognises that it is difficult to negotiate these delicate matters in public, but I assure it that we shall have the particular interests of the United Kingdom steel industry well in mind.
Since the Council on 19–20 July, we have explored the possibility of bilaterals, first on a co-ordinated basis, and, secondly, on a United Kingdom basis. It would not have been helpful to do so earlier, because we felt that acting as part of the Community would, if I may use the expression, have more clout against the American Administration. There are also certain international obligations to which we must have regard.
With regard to compensation, should it not be possible, against our hope and expectation, to negotiate proper entry for our products into the United States, I am sure that the British Steel Corporation will consider other markets. The long-term future of the industry is, of course, a matter for my right hon. Friend the Secretary of State for Industry.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to allow questions to run until Four o'clock by the digital clock, at which time we must move on.
Sir Anthony Meyer: Does not this sorry tale show that the jobs of British steel workers can best be protected if the European Community acts as one? Is there not now a grave danger that a commercial war with the United States will spread into a commercial war over steel with our European neighbours, with disastrous consequences for the British steel industry?
Mr. Rees: Steel is essentially a Community problem although, naturally, a national Government such as ours must have regard to the specific national implications, which we have done and will continue to do. I hope that my hon. Friend will say that I deprecate the use of words such as "war" or, to quote the words of a Foreign Minister of a neighbouring State, "a progressive divorce." Such metaphors do not advance cool and patient understanding of the problem, but it is true—I cannot conceal it from the House—that commercial relations between the United Kingdom and, indeed, the Community as a whole and the United States are clouded by many outstanding trade issues. It is the hope and determination of the Government, acting with and through the European Community as a whole, that we will patiently resolve the issues to the advantage of steel workers here and on the Continent.
Mr. Barry Jones: What is the estimate of the potential financial and job losses to BSC if the Americans refuse to listen to sense? Is the Minister aware that in January and February of this year Britain imported more than £200 million worth of steel? Does he remember that last year Britain complained vigorously about unfair man-made fibre subsidies that the Americans gave to their textile industry?
Mr. Rees: We are very sensitive to the threat to the jobs of steel workers in this country and—
Mr. John Evans: The Government say that, but they never do anything.
Mr. Rees: If the hon. Gentleman had accompanied me and spent his weekend in Brussels, as I did, he would not have made that ill-judged intervention from a sedentary position.
We are sensitive to the threat to jobs not only in the United Kingdom but on the Continent as a whole. We are aware of the statistics which the hon. Member for Flint, East (Mr. Jones) has drawn to the attention of the House. The most vigorous representations have been made to the United States and, as I have told the House, the Community through the Commission has taken a range of United States protectionist measures to the GATT. I hope that those complaints will be pressed home.
Mr. Ian Wrigglesworth: Is the Minister aware that the Government will have full support from the Social Democrat and Liberal Benches for the action that they are taking? Does he not find it a little incongruous that the party that advocates import controls, right, left and centre, in this country is opposing import controls by another country which is doing damage to our steel industry? Will he ensure that vigorous action is taken to protect steel jobs, which are being shed in increasing numbers? Will lie further ensure that in any package that is agreed between the Community and the United States the interests of Britain as against the other European countries are well taken into account?
Mr. Rees: The hon. Gentleman, presumably speaking for the Social Democratic Party, well makes the point that Britain, both in steel and in other commodities, has a strong interest in preserving the open trading system. It is because we are extremely worried about the threat to that system posed by a range of measures from one of the most important commercial and economic Powers in the world that we propose to follow up this theme vigorously not only in bilateral discussions with the countries concerned, but at the GATT.
Sir David Price: Is my hon. and learned Friend aware that this is not a delicate matter, as he suggested, but a robust matter of trade confrontation? Does he agree, as he appears in his statement to say, that the United Kingdom will have more punch working together with our EEC partners than by working alone?
Mr. Rees: If I have referred to it as a delicate matter, it is because we regret very much that the protectionist actions of a Power which we regard as friendly and an ally of ours should have clouded our relations and put at risk a range of industries and jobs in the United Kingdom. I assure my hon. Friend that I have not been over-oppressed by considerations of delicacy in the representations that I have made on the other side of the Atlantic.
I assure the House that we have kept our partners in the European Community fully informed of what we have been doing, because we think that it is very important that we should all stick together. We feel that we shall have more weight in economic and trade questions if we act as a Community rather than as a series of individual countries.
Mr. Stan Crowther (Rotheram): Is the Minister aware that his personal attempts to safeguard the interests of the British steel industry have widespread support? But is it not obvious that the fact that bilateral negotiations have become necessary is an indication of the miserable failure of the Commission to safeguard the interests of the British

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industry? Is the Minister satisfied that the Commission properly represented the special United Kingdom case, which arises because we have been over-zealous in meeting the Commission's demands for cuts in capacity and manpower? By incurring huge redundancy payments we have been placed in a position whereby the Americans are now claiming that those payments are a form of subsidy.
Mr. Rees: I am grateful to the hon. Gentleman for what he said about my personal attempts. He has put his finger on an illogicality and anomaly in the United States' position, in that what we have done is responsibly to encourage the restructuring of the British Steel Corporation. Indeed, by an irony what we have done was commended by Commerce Secretary Baldrige to Congress, yet what we have done is apparently forming the basis for the most swingeing countervailing tariff of all. If we chose to embark on bilateral negotiations during this week it was because we were acutely concerned about the importance of the 24 July midnight deadline, Washington time. We were concerned not to miss that deadline, the importance of which had been stressed to us by the United States Administration.
Sir Peter Emery: Will my hon. and learned Friend make it clear to the United States that even some of the greatest friends of America in the House find the action taken by the United States Administration absolutely unacceptable? While negotiating as he has to in the most delicate situation, will my hon. and learned Friend publish, in some way or other, all the action in terms of trade retaliation that could be taken by the United Kingdom against the United States' trade with this country, not with the idea that we have to take such retaliation, but to make it known to the United States that many Members in the Chamber find their action so unacceptable that we have to consider what action we can take to defend ourselves?
Mr. Rees: I understand the strength of feeling shown by my hon. Friend and, indeed, by other hon. Members during these exchanges. I am not certain whether it would be helpful at this stage to talk in terms of retaliation. There are, after all, a range of international agreements which we have observed with reasonable fidelity which are designed to provide for the orderly resolution of these problems. As I said in answer to an earlier question, we as a country have a strong interest in the preservation of the open trading system. It is for that that we must work rather than contemplate any type of trade war between ourselves and old friends and allies.
Mr. James Hamilton: Will the Minister recognise that those hon. Members with steel interests in their constituencies believe that there should be bilateral negotiations and that the American people should be left in no doubt that enough is enough? Is the Minister aware that if Scotland fails to benefit from the Siberian pipeline, this will be catastrophic for the steel industry and could easily lead to more than 50,000 redundancies?
Mr. Rees: It was because I felt that it was important to take advantage of the last few hours before the deadline ran out that I instructed our team to press ahead with all possible speed on bilateral negotiations. I have to stress to
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the hon. Gentleman and to the House that a fundamental reason for the United States Administration failing to conclude bilateral negotiations with us before midnight on Saturday was their desire for a much wider and comprehensive deal with the Community as a whole. To be fair, this point was made to me in Washington three weeks ago. In those circumstances I cannot hold out any hope of bilateral negotiations with the United Kingdom being successful in the prevailing situation. I do not, however, wish to contemplate the possibility of failure. Should it turn out that a further effort on behalf of the Community is unsuccessful, we shall not rule out further bilateral negotiations.
The Government are very much aware of the implications of the pipeline project for employment in the United Kingdom, especially in the constituency—I am not sure whether it also effects the hon. Gentleman—of the hon. Member for Dunbartonshire, Central (Mr. McCartney).
Mr. Anthony Grant: Will my hon. and learned Friend remind the United States Administration, in no uncertain terms, of the numerous statements and commitments by President Reagan at the summit and elsewhere in favour of free trade and against protectionism? Will he remind the United States that if this unjustified action should lead to a wave of protectionism it will cause the very political instability, as well as economic instability, in the Western world that it fears?
Mr. Rees: We shall not be slow to quote back in appropriate circumstances various ringing affirmations from the United States Administration in favour of the open trading system. I have told the United States Administration that what they have done and what they propose augurs very badly for a successful outcome of the GATT ministerial meeting in November, to which, I happen to know, it attaches great importance.
Mr. Peter Hardy: Will the Minister confirm that those European companies that may have dumped face less discouraging threats than those parts of Britain that are traditional suppliers of the American market? Some of the steel works in my constituency have been supplying that market for a long time. Given that the steel industry's experience of membership of the European Community has been almost invariably bad, will the Government ensure that they take vigorous unilateral action to see that Britain does not face the harshest penalties of this foolish American course?
Mr. Rees: I do not think it is necessary to compare the performance of the various steel industries in Europe. I note what the hon. Gentleman says. Unilateral action now would not, I believe, prove to be in the long-term interest of the steel industry and those who work in it, some of whom I am aware are ably represented by the hon. Gentleman.
Mr. Hal Miller: Does the Minister not consider that the EEC steel cartel is itself offensive to the open system of trade, which we so strongly support? Will he ask his right hon. Friend the Secretary of State for Industry to consider with his opposite numbers how long this cartel should continue in view of the damage being caused to United Kingdom consumers of steel and the fact that it is leading to imports of manufactures and semi-manufactures of steel?
Mr. Rees: I think that my hon. Friend's question goes slightly outside the basis of my statement. The Government are, naturally, anxious that there should be an orderly and stable market in steel products inside Europe. I do not believe that it would be for the long-term benefit of consumers—it is right that we should pay attention to their interests—or to the steel industry and those working in it if there were to be a destabilised market as a consequence of this or any other proposed measures.
Mr. Frank Hooky: Is the Minister aware that if British steel products are shut out of other markets, the remedy is to control the domestic market? If this Government will not do that, a Labour Government will.
Mr. Rees: It is difficult for me to determine what domestic measures the hon. Gentleman has in mind. I suspect, in any case, that these would not be a matter for me as Minister for Trade.
Mr. John Townend: Will my hon. and learned Friend consider being more forthright with the Americans and pointing out that if they intend to impose an increased duty on British steel to protect their home market, it is just as easy for us to impose increased duties on American textiles and chemicals, which, in the past, have been produced from subsidised feed stocks?
Mr. Rees: I hope that I have been reasonably forthright. This is a matter of personal style. I must leave it to the House and to the American Administration to judge how I have performed. I note what my hon. Friend says. I have already stated that it would be ill-advised for us to talk in terms of a trade war or retaliation, although we are naturally concerned to see how we can counter the protectionist measures of the United States Administration.
Mr. D. N. Campbell-Savours: Does the Minister recognise that, despite the fact that nearly half of BSC's product areas are excluded from the claim made by the Department of Commerce, the British Steel Corporation may introduce those excluded areas into the general areas of consideration? Will he study that aspect closely? It has wider implications for BSC, for the regions and for the industries in which a great number of people are employed.
Mr. Rees: I take note of the point that the hon. Gentleman makes. It would be the wish, I think, of the whole European Community and, in particular, the United Kingdom that there should be a comprehensive settlement of this highly regrettable and damaging dispute.
Mr. Teddy Taylor: Would the problem not have been relieved, or perhaps avoided, if other members of the Common Market cartel had cut their steel capacity as they were pledged to do and which Britain, unfortunately, has done almost single handed? As the Minister stated that we are keeping to the rules on price, can he give a categoric assurance that BSC has not been selling steel in America more cheaply than to steel consumers in Britain?
Mr. Rees: It is true, I believe, that we have restructured more effectively than most of the other countries in the European Community. I am very confident about what my hon. Friend has said. For example, the producers in Holland and Germany have not been singled
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out by the United States for swingeing, countervailing duties of the kind that we have encountered. It would be unwise for me to comment on my hon. Friend's other proposition—
Mr. Taylor: Why?
Mr. Rees: —because I do not want to say anything, unlike, apparently, my hon. Friend, that might prejudice the position of British Steel in the course of the anti-dumping investigation, which continues. We want to arrive at the facts. We are concerned to see that British Steel occupies as strong a position as possible to resist the measures contemplated by the United States Administration both on the countervailing front and on the anti-dumping front.
Mr. Allen McKay: Does the Minister agree that if the Americans go ahead with their proposals, all the efforts of Mr. Ian MacGregor will come to nil and that the steel industry will be further damaged? Does the hon. and learned Gentleman not realise that in my constituency, as in Sheffield, the silverware industry, the cutlery industry, the steel industry and the textile industry will decline virtually to nothing? Is it riot time that he took stronger measures and considered seriously the possibility of import controls, in the long-term interests of these industries?
Mr. Rees: It would not be appropriate for me to engage in a debate about the long-term structure of the British steel industry. That is an important question, but not essentially a question for me, except in its external trade aspect. It might assist the House in its consideration of the issue if I mention that about 200,000 tonnes of BSC's exports to the United States are likely to be affected if the preliminary countervailing duties are confirmed at the 40 per cent. level.
Mr. Jonathan Aitken: When my hon. and learned Friend does his best to fight for Britain's interests in this matter, does he not feel encumbered in his negotiations by the European baggage that he must take with him? Has not Britain already moved further than almost every other European country to meet the terms of fair trade, and are we not being made the scapegoats for the unfair practices of some of our European partners?
Mr. Rees: I shall not conceal it from the House that it sometimes requires delicate negotiations to reconcile all the interests of the Community countries, but, provided that an acceptable balance has been struck, in the end we gain immeasurably in negotiating strength with a Power such as the United States of America if we are part of the Community. I do not wish to sound over-optimistic, but I hope that, as part of the Community, an acceptable deal will be struck that will safeguard the position of the British Steel Corporation, the British private sector and all other European producers and exporters.
Mr. Tom Clarke rose—
Mr. Speaker: I believe that the hon. Gentleman has a constituency interest in this matter.
Mr. Clarke: Is the Minister aware of the great anxiety about the events, especially in Lanarkshire, where many people who used to work for American firms are now in the dole queue? Is he aware that there is especial interest

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in the future of Ravenscraig and Gartcosh and that the events should not be used as an excuse to add to the difficulties of those who work in those plants?
Mr. Rees: Of course I recognise that a range of American measures—not only the countervailing duties, but what is threatened, though I hope will not be implemented, about the trans-Siberian pipeline, which involves many British or even Scottish companies—are of considerable anxiety not only to the hon. Gentleman and those whom he represents but to companies and representatives of other parts of the United Kingdom.

Questions (Constituency Interests)
4.1 pm
Mr. Robert Maclennan: On a point of order, Mr. Speaker. I have waited until now to raise a point of order on questions about Members' constituency interests. You have just called the hon. Member for Coatbridge and Airdrie (Mr. Clarke), recognising that he has a constituency interest. Would you, knowing of my constituency interest in question 7 to the Secretary of State for Energy, consider the appropriate way in which an hon. Member can raise a matter at short notice when something affects his constituency, as the Minister's answer affected mine?
Mr. Speaker: I do not encourage letters about questions on the Order Paper, especially when it is a question from another member of the same party. I do not wish to start the system of hon. Members writing to tell me that they wish to be called on certain questions. I have said several times that it is counter-productive. The practice that I have adopted is the only way to protect the House from that system.

BUSINESS OF THE HOUSE
Ordered,
That, at this day's sitting, notwithstanding the provisions of Standing Order No. 3 (Exempted business) and Standing Order No. 4 (Prayers against statutory instruments, &c. (negative procedure)), the Motions relating to Housing, Social Security and Local Government may be proceeded with, though opposed, for a period of three hours after the first of them has been entered upon, and if proceedings on those Motions have not previously been disposed of, Mr. Speaker shall then put any Question already proposed from the Chair, and any remaining Motions may thereupon be made and the Questions thereon shall be put forthwith.—[Mr. Gummer.]

Housing
4.2 pm
The Minister for Social Security (Mr. Hugh Rossi): I beg to move,
That the draft Housing Benefits Regulations 1982, which were laid before this House on 8th July, be approved.
With this it might be convenient for the House to consider also the following:
The draft Housing Benefits (Permitted Totals for Local Schemes) Regulations 1982.
The draft Supplementary Benefit (Housing Benefits) (Requirements and Resources) Consequential Amendments Regulations 1982.
The Housing Benefits (Subsidy) (No. 1) Order 1982 (S.I., 1982, No. 903), dated 2nd July 1982.
The Housing Benefits (Subsidy) (No. 2) Order 1982 (S.I., 1982, No. 904), dated 2nd July 1982.
The Housing Benefits (Rate Support Grant) Order 1982 (S.I., 1982, No. 905), dated 2nd July 1982.
The Supplementary Benefit (Housing Benefis) (Miscellaneous Consequential Amendments) Regulations 1982 (S.I., 1982, No. 914), dated 6th July 1982.
Mr. Speaker: By leave of the House, we shall discuss the seven orders and regulations together.
Mr. Rossi: As those hon. Members who attend our debates know only too well, social security regulations tend to be lengthy and difficult to understand. I am afraid that our latest arrival, housing benefit, is from the same mould. However, we can take comfort from the fact that we are not introducing a brand new benefit. The current rent and rate rebate and allowance schemes serve as a useful starting point and the House may find it helpful in its consideration of the regulations if I concentrate on explaining the changes that we are making in housing benefit. I shall spend rather less time on the supplementary benefit amending regulations and financial orders as they are consequential to the housing benefit reform.
There are two main strands to the housing benefit regulations. First, there are the changes that are necessary to achieve the unification of the current dual provision of help with housing costs through the rebate and allowance schemes and supplementary benefit. The problem of which benefit to choose—rent rebate or supplementary benefit—has long confronted claimants with an invidious dilemma. However, harmonisation of two separate schemes that were started at different times with different underlying principles has not proved easy. It has inevitably meant dropping the features of one scheme or the other to achieve unification. Secondly, we have examined the current schemes that have run for about 10 years with a fresh eye and have taken the opportunity to make what we believe to be some useful changes and adjustments.
I shall refer to some changes in more detail as I come to the relevant regulations. However, the House might find it useful now to be given an overall view by my drawing together the improvements in the existing rebate and allowance schemes. First, we are widening the definition of rent eligible for rebate. Under the new scheme, it will be possible to give rebates for the first time for charges for the use of furniture included in the rent, most service charges such as garden maintenance, lifts, communal rooms, communal laundry facilities, radio and television relays, porterage and warding service and rents where two homes must be maintained temporarily because of domestic violence or moving home.

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Secondly, we are widening the classes of tenants who can claim rebates to include service occupants and licensees, caravan and houseboat dwellers, including site and mooring charges, hostel dwellers for 14 days or more, business tenants living in mixed hereditaments—for the domestic element—students in university accommodation exempt from the Rent Acts and "shared" owners who rent part of a dwelling.
Thirdly, we have created some new disregards—those items of income that need not be taken into account when calculating entitlement to benefit. They include TOPS travel allowances, parental contributions towards the maintenance of children in advanced education and pensions paid to the victims of Nazi persecution, where there will be a £4 disregard for the first time. The harmonisation of the two systems and the improvements that I have outlined have had to be achieved on an overall cost neutral basis utilising savings in administrative costs that we have achieved for that purpose.
In drafting the regulations we have, of course, drawn heavily on the advice and views of the local authorities, for they bring to such matters the essential practical experience of administering the current schemes. While some associations may still have reservations in principle about the scheme, they would all acknowledge that a genuine consultative process has taken place on the detail of housing benefit. Similarly, the regulations have been sent for comment to several voluntary organisations active in the area who have responded with some helpful comments. I am pleased to place on record the help that we have received from local authorities and voluntary organisations alike. The House may be assured that we have considered their views most carefully.
I turn now to deal with the housing benefit regulations in greater detail. I shall not detain the House on each regulation. Some—for example those dealing with the basic method of calculation—are almost unchanged. My intention is to cover changes of substance.
There are some important changes in definitions made by regulation 2, for example, definition of rent, to which I have already referred. Regulation 3 provides for the commencement of housing benefit in two stages.
As hon. Members know, we have arranged that the simplest cases shall, from 22 November 1982, cease to be eligible for help with their rent and rates from supplementary benefit and shall instead receive a full, 100 per cent., rebate of rent and rates from the local authority. These "simplest cases" are local authority tenants who are living with their partner or dependent children and whose weekly supplementary benefit exceeds the amount of their housing requirements. The remaining cases will be transferred to the authorities in April 1983 at the time that full housing benefit starts. I am sure that this makes sense administratively, and I am glad that most authorities have agreed with me.
Regulations 6 and 7 deal with eligibility for rate rebates and rent allowances by adding new groups that are now excluded from the rebate and allowance schemes. These are the groups that I have already mentioned.
Regulation 9 is one of the corner-stones of housing benefit. It provides that authorities shall, on receipt of a certificate of entitlement to supplementary benefit from the Secretary of State, treat any person named as eligible for housing benefit without further investigation except as to the amount of eligible rent and rates.
Mr. David Alton: Does the Minister agree with Shelter's estimate that 220,000 people who now receive rent or rate rebates will no longer qualify?
Mr. Rossi: Perhaps the hon. Gentleman will elaborate on that point a little later. I am not sure that I agree entirely, but perhaps the hon. Gentleman will catch Mr. Speaker's eye and deal with the matter.
Regulation 10 picks up a point raised in Committee and subsequently pursued by the Campaign for the Homeless and Rootless, among others. It is essentially directed at the problem of short stay hostel dwellers, where there is some evidence to suggest that, under the current schemes, lengthy qualifying periods have been imposed before such people have been accepted as occupying a dwelling as their home. Having considered the representations made on this point, I decided that the qualifying period should not exceed 14 days and entitlement should then be backdated to the date of application so that no benefit is lost. We consulted the local authority associations on this point, and I am glad to report that they accepted that this approach was a reasonable one in the circumstances.
Mr. Andrew F. Bennett: The Minister says that the local authority associations are happy with these proposals, but is CHAR?
Mr. Rossi: The voluntary organisations would have preferred not to have had 14 days as a qualifying period but, as the hon. Gentleman will know, under the existing schemes it has been open to local authorities to make up their own qualifying periods. Some have gone for as much as six months or even longer, which has caused many problems. It has been a matter of negotiation and trying to hold a fair balance between the pressures of voluntary organisations and what the local authorities consider they can practically cope with administratively. Fourteen days has been the shortest period within which local authorities feel that they can cope.
An individual can stay in a hostel for one or two nights, move to another hostel for another two nights, on to a third, and so on, and cart even do so within Greater London. We are dealing with people who are exceedingly mobile. It is difficult for local authorities to catch up with them and to deal with the paperwork. Therefore, it has been felt that 14 days' residence is a reasonable period in those circumstances.
Mr. Andrew F. Bennett: Does the Minister accept that this is a little harsh on some of the groups of people who, because of hostel rules, have to move after two or three days? There is a built-in catch, and they can never get the 14 days, much as they would like to, because of the type of accommodation in which they have to live, which means that they have to move. Will the Minister also accept that the existing supplementary benefit regulations were supposed to deal with people on a day-to-day basis, although we know that in many circumstances they were not able to do so?
Mr. Rossi: It is difficult to deal with the problem of people who are that mobile and whose mode of life is such that they often move from place to place. We have discussed these questions in Committee, as the hon. Gentleman will recall. The regulations will be monitored in their operation. Clearly if, as we learn from experience, we find that improvements of the kind suggested by the hon. Gentleman can be made, we shall do so.

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We must take new steps slowly. This is an innovation and a considerable improvement on the position that has obtained until now. We are doing what the local authorities say is the irreducible minimum as far as their administration is concerned.
Mr. Frank Field: The Minister has just informed the House that the reason why the claims of certain groups cannot be fitted easily into the scheme is their way of life. My hon. Friend was suggesting that the Government's rules about length of stay in Government hostels are such that people are moved on every third day. Therefore, can the Minister give an undertaking that he will look at the rule now so that those in a spike can stay in that one place long enough to qualify under the new scheme?
Mr. Rossi: With regard to hostel dwellers who rapidly move from place to place, the supplementary benefit will be payable to them from the first day of residence. The 14-day period applies only to those who go to a local authority seeking housing benefit.
Mr. Field: The problem that many people have in finding housing is that of producing the rent, or being able to have the rent underwritten. The rules in Government hostels, which were reasonable in the past, mean that people are moved on quickly. If the Minister cannot give an undertaking at least to look at these regulations, it will mean that he is guaranteeing having a mobile group of claimants for ever and a day. If he sticks at the two-week rule, which he has persuasively put to the House today, surely we must change the rules under which people are turfed out on the third day of their stay in a Government spike.
Mr. Rossi: The position of these people with regard to supplementary benefit will remain the same. However, when these people are in for a longer period than just two or three days, they may apply to the local authority. For example, they may go into a YMCA hostel and want to remain there for a while. They can go to the local authority if they are in that place for more than 14 days, and can claim for housing benefit rather than rely on supplementary benefit, which they would have to rely on if they were in Government hostels and subject to the two or three-day rule.
The question of rules and regulations relating to Government hostels, is something that is outside our discussions and raises a great many different issues relating to the purpose of those hostels, how they are organised and why they are run in a particular way. That is not the subject matter of this debate, but we can examine these things to see whether an improvement can be made. I cannot give any commitment that a change will arise out of what we are doing now, because what we are doing today is not strictly relevant to those criteria.
Mr. Andrew F. Bennett: What CHAR and the Labour Party are rightly complaining about is that the Government are making a new class of citizen. At the moment, those who need help ask for supplementary benefit and receive it for their housing and other needs. The Minister is now saying that, with the 14-day rule, a claimant can qualify for housing benefit and supplementary benefit. There is a group of people who will never be able to achieve 14 days
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and will have to be treated specially by supplementary benefit because supplementary benefit will give them housing assistance. CHAR and many others are concerned that we are making a new group of citizens who will be treated less well in practice than they were treated in the past.
Mr. Rossi: I do not accept the gloss that the hon. Gentleman and CHAR put on the situation. As he and CHAR know, at the moment it is entirely at the discretion of local authorities whether to give rent allowances or rent rebates to people in hostel accommodation. We are removing that discretion to a considerable degree. We are saying "You must give a housing benefit, a rebate or an allowance, to people who are in for longer than 14 days". That is a great improvement on the present position. The hon. Gentleman should not pretend that we are being difficult or hard. We are improving a situation that has existed for a long time. I am saying that, for technical and administrative reasons, at a time when the new scheme is coming in and when local authorities have to assimilate many changes, it is not reasonable to ask them to deal flexibly, when they are not in a position to do so, with people who move around, for whatever reason—either because their accommodation will not keep them longer, or because they choose to move around. It is not right to ask local authorities to deal with those people under housing benefit. Those people will continue to be treated, as always, under supplementary benefit until we can improve the system. That is surely eminently reasonable and fair.
Mr. Field: I thank the Minister for his undertaking to look at the matter after today's debate. However, I want to stress what my hon. Friend the Member for Stockport, North (Mr. Bennett) was saying. The Minister is making new rules enhancing the status of all hostel dwellers, providing they are not in hostels run by the Government. Natural justice surely demands that the Government put their own house in order when they are asking others to do so.
Mr. Rossi: I said that, outside the context of these regulations, it will be possible to consider the matter in the continuing reviews that we always carry out of the facilities and services offered by the Government. That will continue to be done, but without any commitment on my part that there will necessarily be changes.
I want to make it clear beyond peradventure that hostel dwellers will continue to get their housing costs with their supplementary benefits. The change that we are making—the 14-day rule—applies merely to those hostel dwellers who do not wish to be treated in that way by housing additions to their supplementary benefit, but who wish to claim for housing benefit. To do that, asking the local authority for help in the local authority-organised scheme, they must have a qualifying 14-day residential period.
I come now to regulation 13, which the House will rightly expect me to spend some time on, because it deals with the needs allowance, which forms the basis of benefit calculations. There is a slight awkwardness on timing here. It is not until July that all the necessary information is available for my right hon. Friend the Secretary of State for the Environment to decide whether, and by what amounts, the needs allowance shall be increased from the

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following November. He also has, by statute, to consult the Advisory Committee on Rent Rebates and Rent Allowances on his proposals.
The rates which appear in the draft regulation are those which he proposes to use from next November, but before making the appropriate regulations he will naturally consider carefully the views of his advisory committee. Should he decide to amend the rates, it would be necessary, in turn, for us to decide whether to bring forward an amending housing benefit regulation in the autumn. Clearly it is desirable that we should adopt, at the start of housing benefit, the existing needs allowances, and continue them for the full year until November 1983.
However, one new figure will not appear in my right hon. Friend's regulation, and that is the 75p per week which will be added to the needs allowance, where the eligible person or his partner or both of them are of pensionable age. I announced in Committee that I propose to make this addition with the twin objectives of reducing the number of losers and the number of topping-up cases—to use the latest jargon, "housing benefit supplement" cases. I am pleased to say that it has proved possible to make this addition from April 1983, and so reduce the number of losers at the start of housing benefit.
Mr. Andrew F. Bennett: Will the Minister enlighten us further about the needs allowance scheme? Is he saying that the needs allowance for this year is being extended for a longer period than would normally happen? If so, how much money are the Government saving?
Mr. Rossi: No. Perhaps I did not make myself clear. For this first year, we are to continue along the lines of the announcement of my right hon. Friend the Secretary of State for the Environment. He has to consult ACRRRA before he can make his regulations stating the figures for the needs allowance. He does not get the information that he needs until July. Therefore, he has not yet consulted ACRRRA. I have put in the figures that I hope will become the allowances in November and that ACRRRA will accept. In other words, the figures are based on the information that we have just received. That will assist the House considerably more than if I had given last year's figures.
If, for some reason, ACRRRA decides that it will not accept the new figures for the needs allowance and, as a result of the consultations between my right hon. Friend the Secretary of State for the Environment and ACRRRA, it is necessary to alter the figures I shall then have to introduce a regulation amending the figures now before the House. That is all that I am saying. It will still be November to November. I hope that what I have said makes the situation a little clearer.
Regulations 16 and 17 deal with eligible rates and eligible rent. No change has been made in the former, but we have been able to make two important improvements in the latter, affecting furniture and service charges. First, it was strongly represented in Committee, by both Labour and Conservative Members, that deductions should not be made for furniture when determining the amount of eligible rent. We agreed to consider the arguments made in the context of available resources. The money required, around £1 million, has now been found, and I am therefore pleased to include this feature in the regulation. Secondly, regulation 17, in conjunction with schedule 3, makes the
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majority of service charges eligible for assistance. I know that both these changes are welcomed by the local authority associations and the voluntary organisations.
Regulations 18 and 19 are concerned with a particularly difficult area of harmonisation, that of non-dependant deductions. Both schemes, that is the current rebate allowances schemes and supplementary benefit, provide for deductions to be made in respect of non-dependant members of a household when calculating the claimant's benefit entitlement. However, the circumstances in which deductions are taken are different, and the supplementary benefit levels of deductions are appreciably higher than those taken under the current schemes.
Clearly under housing benefit there had to be a consistency of treatment. It seemed to me that the existing local authority schemes had a better structure than the supplementary benefit scheme, and I have adopted it. Therefore, no deductions will be made for 16 and 17-year-olds, whether in or out of work even though, in the latter case, they are under supplementary benefit. A modified deduction will be taken from those aged 18 to 20 years. A full deduction will be made from those aged 21 to pensionable age. A reduced deduction will be made for those of pensionable age. Receipt of supplementary benefit results in a reduced contribution.
In one respect I have not adopted the local authority structure. Currently, two deductions are made where there is a non-dependant couple in the household unless they are of pensionable age or receiving supplementary benefit. It seemed fairer to me to follow the supplementary benefit practice of taking only one deduction in respect of that family unit. I hope that the House will welcome that improvement in the local authority schemes.
Mr. Andrew F. Bennett: Will the Minister confirm that that is the cheapest option that was put to him and that it is particularly unfair on the 16 to 17-year-old youngster whose parents are in work?
Mr. Rossi: No. The scheme was not adopted because it was the cheapest. I had to choose one course or the other and it seemed to me to be fairer to choose that which had the greatest relationship to everyday life. It seemed to me that 16 and 17-year-olds should be treated as dependent upon their family, not as non-dependants, whether or not they had a small source of income of their own.
It also seemed to me that 18 to 20-year-olds should not be regarded as having to make, or making in practice, the same kind of contribution towards household expenses as somebody over the age of 21 would be expected to make if still living at home with his or her parents.
When I considered pensionable age I believed that there should be another reduction. Therefore, the full amount is payable by active adults between the age of 21 and pensionable age if they are still members of the household of parents who are on supplementary benefit. I thought that that was a reasonable and sensible approach because it related more to life as lived than did perhaps the supplementary benefit system.
When I came to consider the levels of deduction, it seemed to me that the supplementary benefit rates were more realistic. The full deduction from those aged 21 to pensionable age from November 1982 under supplementary benefit will be £6·55 a week. Such a level of deduction is not, in my view, unreasonable, given the class

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of people with whom we are dealing. Therefore, with the necessary adjustments, the levels of deduction have been set out in the regulations.
There is one other allied change that I should explain at this point, although it is a supplementary benefit matter rather than a housing benefit one, and that is the matter that the hon. Member for Stockport, North (Mr. Bennett) touched upon.
Once it was decided to make no deduction under housing benefit in respect of 16 and 17-year-old non-dependants, the question arose of whether the supplementary benefit housing addition— £0·10 a week from next November—to the non-householder scale rate should be continued in those cases.
It would be quite illogical to make a specific addition to supplementary benefit in order that the recipient might make the appropriate contribution to housing costs and then not make the appropriate deduction when the householder claims supplementary benefit or housing benefit. Therefore, the addition will be withdrawn from this age-group. We anticipate that the numbers of young people of this age-group receiving supplementary benefit will fall considerably once the youth training scheme gets fully into its stride, but I emphasise that any remaining savings from the withdrawal of the housing addition are being ploughed back into housing benefit.
However, I recognise that the loss of the addition next April may cause difficulties in some low-income households. Therefore, I propose to lay, after the recess, a transitional regulation under which 16 and 17-year-old recipients of the non-householder housing addition at the beginning of next April will retain the addition until they cease to receive supplementary benefit. Therefore, no one will incur immediate cash loss as a result of this change.
Mr. Andrew F. Bennett: Will the Minister read that passage again so that it can be clearly understood? Will he tell us on what date people will leave school next Easter? Will next Easter's school leavers qualify for those transitional provisions or not?
Mr. Rossi: I am simply saying that the object of the transitional provisions is to ensure that no one who is receiving the cash at the moment will have that cash taken away when the scheme comes into operation. I should have thought that that made the position clear.
Mr. Andrew F. Bennett: I do not know the dates of the Easter holiday at the moment, but if it starts between 24 and 27 March, all those people entitled to leave school at Easter would presumably qualify for those transitional arrangements, whereas if the Easter holidays start in April they will not qualify.
Mr. Rossi: Easter is a moveable feast. Everything will depend upon whether people are receiving supplementary benefit on the date that the scheme comes into operation, whenever Easter may or may not fall.
Mr. Keith Best: I think that I have followed my hon. Friend so far, but if I have not I am perfectly happy to be corrected. As I understand it, he is saying that the sum of £3·10 a week will not be available as a housing benefit for 16 and 17-year-olds because it is not anticipated that they will hand that over to the householder, whereas for the claimant over the age of 21,
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who is residing in a household but is not the householder himself, the deduction will be £6·55. How much of the housing benefit will be received by the non-householder? Presumably, it should correlate with the amount of the deduction.
Mr. Rossi: I am not sure that I follow what my hon. Friend is trying to ask me, because I was distracted for a moment.
To put the matter as simply as possible, take the case of someone who claims housing benefit and has living in the household people who are classified as non-dependants. In other words, the householder who is paying the rent is not supporting or maintaining those people. They are treated as contributing to the household expenses. Under the scheme the housing benefit is reduced by a fixed amount in order to reflect the fact that a non-dependant is assumed to make a contribution towards the household expenses.
In respect of a non-dependent person between the age of 21 and pensionable age, the deduction made from the housing benefit, on the assumption that there is a contribution to the household, will be £6·55, irrespective of what the non-dependant may be earning. However, if the non-dependant is receiving supplementary benefit, a reduced deduction will be made from the housing benefit to reflect the fact that the person living in the household has all his living expenses, but not his housing expenses provided for him. The figures are given in the regulations. However, I have tried to explain the general principle.
From time to time concern has been expressed that the introduction of housing benefit might lead to difficulties for claimants, because local authorities might be slow in dealing with claims. We have discussed that with the local authority associations and, as a result, regulation 28 provides that authorities must determine
"a claim within fourteen days of being furnished with such information and evidence as it reasonably requires for the purposes of determining that claim, or, if that is not reasonably practicable, as soon as possible thereafter."
Similarly, in a certificated case—where the person is receiving qualifying supplementary benefit—an authority must determine the amount of the rent allowance within 14 days of receiving the certificate, provided that it has the necessary information, and must make interim payments in rent allowance cases if it is not possible to resolve matters within the time limit.
Mr. Best: I hope that my hon. Friend will forgive me for interrupting him again, but does that mean that those who are dependent on the 14-day rule have to be in residence for 28 days before they can get anything? Surely they will have to be there 14 days before they can qualify, and if the local authority has to make its determination within a further 14 days they may have to wait 28 days before receiving anything.
Mr. Rossi: That is not so, because the provision will be back-dated. That is an improvement, because if a tenant applies today for a rebate or an allowance, there is no limit on the time that the local authority could take to process it. However, we have negotiated, and the local authority associations have agreed, that some time limit should be imposed. Therefore, we say that an application should be processed within 14 days unless there is some overriding consideration that makes that impracticable. For example, sudden illness might strike the town hall and that would give those working there a let-out. However, they will

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strive to process the application in accordance with the regulations, and if they do not do so, and they have no let-out, they may be liable for maladministration.
Mr. Jim Craigen: The hon. Gentleman says that he has discussed the matter with the local authority associations, but did he and his Scottish Office colleague take account of the view expressed by the Convention of Scottish Local Authorities that the scheme should be postponed to allow more time for staff training and reorganisation? I think that the date of April 1983 was suggested.
Mr. Rossi: CoSLA was represented on the working group that considered the details of the regulations and it was consulted throughout. I have seen CoSLA representatives in London twice. I am aware that CoSLA disagrees with the scheme in principle and would prefer it to disappear. Therefore, it has suggested several reasons for postponing its operation. However, when we have asked for the detailed reasons for postponement and the practical administrative difficulties, it has not produced any convincing argument. The English and Welsh local authorities can bring the simple case part of the scheme into operation in November, and I see no reason why the Scottish local authorities cannot do what the English local authorities can do.
Mr. Craigen: It might be a case of Scottish backwardness, but might not some of the English local authorities be a little over optimistic? Might they not tend to underestimate the problems involved in the changeover?
Mr. Rossi: No, Sir. I had not wished to detain the House by going over the same ground. However, we are talking about those receiving supplementary benefit. That is assessed not by the local authorities, but by local offices. They send a certificate to local authorities and, provided that there are no non-dependants—because then different circumstances would arise—and provided that, for example, husband, wife and dependent children are on supplementary benefit, the local authority would merely have to cease collecting rent and rates. That is all. I fail to understand the problem. I do not believe that Scottish local authorities are in any way more backward than English local authorities. However, the Scottish local authorities are very canny, and if they can find a Way of postponing the introduction of the scheme, they will do so. CoSLA was unable to produce any convincing administrative reasons for being unable to implement the scheme, although it made it clear that it did not like it.
Mr. Alton: There is also concern among some of the English local authorities. For example, the rebates office in Liverpool will have to deal with another 58,000 cases. Unless more staff are made available—which has implications for the rate support grant settlement—it estimates that it will be extremely difficult to implement the proposals in November.
Mr. Rossi: Again, all those issues have been discussed with the local authority associations. We have undertaken to meet all their additional costs in implementing the scheme, including the additional costs that may be incurred by training staff. The local authority associations are perfectly happy with that.
Mr. Alton: Are local authorities happy to implement the proposals by November?
Mr. Rossi: Yes, Sir. I am talking not about the main scheme, where there may be complications, but about the simple case in which we certify that a tenant is on supplementary benefit. I am discussing only council tenants, who have no non-dependants living with them. The local office will say that as they are on supplementary benefit they should not be charged rent or rates. All that will happen is that the local authority will stop sending out bills. Instead, it will collect the money from us. Therefore, local authorities will have considerable help with their cash flow problems. Instead of having to chase up those who fall behind with their rents because they are finding ends hard to meet on supplementary benefit, they can rest assured that they will not have such problems.
Mr. Alton: What would prevent a local authority from increasing the rents of those on rent direct and from not then increasing the council rents of those not on direct payments?
Mr. Rossi: It would not find it administratively possible to do so. However, if that were to happen, we would react swiftly—[HON. MEMBERS: "How?"] If we cannot deal with that point under existing legislation, we shall have to introduce new legislation or regulations to prevent such a situation.
I turn to a key area of housing benefit upon which a great deal of attention has been focused, that is, the review of housing benefit decisions. Opposition Members argued strongly, at various stages of the Bill, that there should be a formal right of appeal to an independent body, preferably the supplementary benefit appeal tribunal. My view was, and remains, that we should build on the good practice of some authorities and provide for a review by elected representatives and I promised to consider setting that out formally in regulations. This I have done. The House will see from regulations 44 to 50 that a person's rights in this area are set out in full, and it may help if I summarise what they are. First, an authority must notify the person of the determination in writing, give certain basic information about the determination, and inform the person both that he has a right to a detailed statement of how the benefit has been calculated and that he has the right to make representations.
Secondly, an authority must provide a written statement explaining the calculation within 14 days of a request for one. Thirdly, providing a person makes representations within six weeks of notification of the determination, the authority must consider the representations, review the determination, alter or confirm it, and notify the person in writing giving the reasons. Fourthly, if within 28 days of being told of the outcome of the representations a person has requested a review, an authority must arrange for a review board hearing. The review board will be composed of councillors, but it will be acting independently of the authority.
Mr. Alton: How will it be possible for councillors who are members of the local authority that made a decision then to sit independently? Does that not follow the mistakes of the police complaints procedure where the police investigate the police? Does it not identify too closely the watchdog with the burglar?
Mr. Rossi: The councillors will be considering and reviewing decisions made by their officials. They will be dealing with matters of fine detail—the amount of rent, the

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calculations and so on. All those decisions will be made by officials. If someone is dissatisfied with the determination that has been made he has at the moment no right of appeal. The complainant does not even know how his rent or rate rebates are arrived at. He is just told the decision. Under the new system full information will be given. A person will be able to question and challenge the decision to see whether mistakes have been made.
If the applicant believes that mistakes have been made he can formally ask for a review in writing, and that review will not be carried out by the same officials. They must refer the matter to the elected representatives, who will constitute the review board. That is a safety measure. Otherwise, who on earth will do it? One cannot trouble the courts or the Secretary of State with every quarrel and dispute that there may be about a rent or rate rebate calculation. We have adopted a system of allowing a second look by somebody different. I know that some of the voluntary organisations do not like the idea of elected representatives doing that job, but I disagree with them. My experience of a local authority, and of people whom I know serve upon local authorities, is that it will carry out that function impartially. It is very much a matter for locally-elected representatives.
Sir Albert Costain: Will the councillors know the individual, and will the hearings be in public? There is a feeling that the presence of the press may be embarrassing to some tenants.
Mr. Rossi: It is not necessary for these matters to be held in public. The personal financial details of an individual will be under consideration.
Mr. Andrew F. Bennett: An individual may apply for supplementary benefit and be told that he does not qualify. He appeals under the supplementary benefit rules and loses because he is told that he qualifies for housing benefit. The local authority then tells that person that he does not qualify for housing benefit because he should be on supplementary benefit. If that person obtains supplementary benefit he has a passport to local authority housing benefit. Who will adjudicate between the two sets of appeals?
Mr. Rossi: I assure the hon. Gentleman that that position could not arise, because all issues of entitlement to supplementary benefit will be dealt with by the independent statutory adjudicating authorities. A person's entitlement to supplementary benefit has nothing to do with local authorities. They will not and cannot pronounce upon that. They are interested only in the operation of the housing benefit scheme. If they are told that the person is on supplementary benefit and his income is certified by my Department the local authority must accept that fact. There is no way in which it can get out of it.
Regulation 48 sets out the procedure of the board, number of members, the right of a person to be heard, and so on. Fifthly, the review board must hear the review within six weeks of the request, decide whether to confirm or alter the determination, record its decision and reasons in writing and communicate to the authority and to the person. Sixthly, the authority must alter the determination if the review board has come to the view that it should be altered.
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I believe that hon. Members will accept, from the account that I have given, that we have gone a long way towards meeting the anxieties that have been expressed on this score. As I said in Committee, we shall also arrange to monitor the working of the new system. In my view, it will work well and fairly, as it does now informally in a number of authorities, but I accept that we have a duty to keep in touch with developments in this sensitive area of people's rights, and I can assure the House that we shall.
Mr.Field: That is important because people are losing the right to appeal to an independent body. What monitoring of the scheme will be carried out?
Mr. Rossi: I emphasise that nobody is losing any right to appeal. A new right is being created to a new review body. We shall monitor the scheme by asking local authorities to make returns periodically on the numbers of requests for review that they receive. We shall study those and see in how many cases the review has been successful. We shall analyse those figures.
I am sure that hon. Members will be in close touch with their constituents, and will not be slow in drawing matters of that kind to my attention. All matters will be taken into account if I find that the system is not working as well as I hope that it will.
Mr. Field: The Minister has misled the House. Those on supplementary benefit who wish to appeal against that part of their benefit which covers rent can appeal to an independent tribunal. That right will now be lost. My main point is that monitoring is crucially important. The collection of statistics may not give the consumer's response to the appeal, which is most important. I guess that many tenants appearing before a tribunal and seeing councillors will feel that it is a fix. How will the Minister discover whether the consumers feel that it is a fair way to deal with their grievances?
Mr. Rossi: If constituents feel that they have not been dealt with fairly by one body or another, my experience is that they are not slow in making their dissatisfaction known in one way or another. There is no reason why they should not continue to do so for this scheme, as for any other scheme in which they feel they have received a raw deal from an official body.
Mr. John Home Robertson: Is the Minister saying that if a claimant wants to get real justice he should approach his Member of Parliament? Is he really suggesting that the proposed procedure is an improvement on the one that is presently administered through his Department for supplementary benefit claimants?
Mr. Rossi: I am not saying what the hon. Gentleman suggests. I am saying that we shall monitor the system extremely carefully in the way that I have described. However, life is such that claimants will go to their Members of Parliament on local authority matters as well as parliamentary matters. That is a good litmus paper for deciding whether a system is working well. I do not want to encourage the public to trouble their Members of Parliament with local authority matters. I appreciate that they have enough to handle already. However, that way is open to them if they consider it to be appropriate. There is always recourse to the local authority commissioner, the local ombudsman. That system was established by Parliament to deal with complaints of maladministration

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by local authorities. I am reasonably confident that it will reach our ears if, generally speaking, the review boards do not perform their functions as efficiently as we hope they will.
Mr. Craigen: If the colour of the litmus paper changes, will the Minister alter the arrangements? I am more concerned about whether councillors will be readily available to participate in some of the appeals machinery. They are lay people and their time is taken up with many other council duties.
Mr. Rossi: We embarked upon this scheme only after consultation with local authority associations. We asked them whether they would be prepared to take on the burden and we found that they were ready and willing to do so. There are many local authorities that carry out this function now. About 20 years ago—I know that it is a long time to think back—I was the housing chairman of a local authority. The authority operated one of the first differential rent schemes in Britain. There was a management sub-committee and its members were councillors. Those of us who were asked to serve on the sub-committee were quite willing to do so. I think that we dealt with the matters that were brought before us well and impartially. I can assure my hon. Friend the Member for Folkestone and Hythe (Sir A. Costain) that there was the greatest confidentiality.
The local authority had a high reputation among its electors and it continued to enjoy that reputation because it showed that it cared and that councillors would take the trouble willingly and readily to resolve any problems that arose. Local authorities stand only to gain by undertaking the task and doing it as conscientiously as possible.
There is one last area of housing benefit regulations that I should cover. At regulation 51 we provide for the protection against losses through taper changes of more than 75p a week at the start of housing benefit. As I explained in Committee, this protection is to be temporary and the regulation provides for it to end after a year. The resources so released will finance, in part, the additional 75p on the needs allowance for pensioners.
Before turning to the supplementary benefit amending regulations, it may be convenient if I dispose, fairly briefly, of housing benefit financial matters. The Housing Benefit (Permitted Totals for Local Schemes) Regulations make no change, in principle, in the amount that authorities are permitted to spend on local schemes. The Housing Benefit (Subsidy) (No. 1) and (No. 2) Orders and the Housing Benefit (Rate Support Grant) Order set out the financial arrangements for housing benefit. Essentially they provide for local authorities to receive by way of subsidy the extra benefit costs arising from housing benefit and their additional administrative costs—as we promised repeatedly during the passage of the Bill.
It will come as no surprise to hon. Members that the detail of the orders has been the subject of careful discussions with the local authority associations. I think it fair to say that they have no objection to the contents of the orders, although, of course, the detail will have to be kept under review.
I do not propose to spend long on the consequential supplementary benefit amending regulations. A change of this magnitude is bound to require a number of alterations in the supplementary benefit regulations.
There are two matters which I think worth drawing to the particular attention of the House. First, at regulation
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2(12) of the requirements and resource consequential amendments regulations, there appears housing benefit supplement, our old friend "topping-up". The regulation, in effect, provides that a supplement shall be paid if the claimant has net housing costs to meet which are greater than the amount by which his resources exceed his requirements for supplementary benefit purposes. This supplement will be calculated and paid by authorities, although formally it will have to be awarded by a supplementary benefit officer. It is a supplementary benefit and carries with it all the associated rights.
The second area is that of rent arrears. One of the beneficial side effects of housing benefit is that the scope for rent arrears to build up among supplementary benefit claimants will be much reduced. But arrears can occur. For example, a claimant may fail to pay over the sums that have been deducted in the calculation of eligible rent because of the presence of non-dependants in the household, or a claimant may arrive on supplementary benefit with sizeable arrears of rent.
Having taken the views of the local authorities, we have provided in regulation 4(5) of the miscellaneous consequential amendment regulations that from November 1982 £1.30 a week shall be deducted from supplementary benefit and paid over to the landlord in defined circumstances. These are that the claimant is at least 13 weeks in arrears with his rent and the landlord has requested direct payments, or, if less than 13 weeks in arrears with his rent, the benefit officer is of the view that it is in the overriding interests of the claimant and his family that the deduction should be made. A deduction will be made only if there is sufficient supplementary benefit in payment to cover it.
Mr. Alton: The Minister will be aware that the Department of Health and Social Security is often in arrears with its payments to local authorities. Is he able to give a guarantee that payments to local authorities will be made rapidly? Secondly, if money is held back for 13 weeks, it may take 26 weeks before it is paid to a private landlord. During that period it will be possible for notice to be served on a tenant to quit and for him to he evicted. Has the hon. Gentleman had a chance to consider the implications of a delay of 26 weeks?
Mr. Rossi: There have been negotiations with local authorities on the payments that are made to them and they are happy with the arrangements that we propose. They consider them to be a great improvement on the arrangements that they have to make themselves to collect rent moneys direct from their tenants.
Mr. Alton: As I have said, it could be 26 weeks before a private landlord received the money.
Mr. Rossi: Before a tenant can be evicted the landlord has to apply for a court order. If the tenant makes it known to the courts that he is sorting out his housing benefit and supplementary benefit, the usual practice of the courts is to adjourn the matter or to make a temporary order that will enable the administration to be sorted out so that the eviction does not take place. When rent is likely to be paid the courts are unlikely to make an eviction order.
Mr. Alton: I have written to the Minister's Department about one of my constituents, Mrs. O'Neill of Lilley Road, Liverpool, and explained what has happened under the present regulations. I have taken up the matter with the

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Parliamentary Commissioner for Administration. Surely it would be better if, instead of making the situation worse by the introduction of the regulations, the Minister were to take into account the genuine cases of hardship that can be caused.
Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. I must help the House. This is a limited debate of three hours. The Minister has been more than generous in giving way. Some of the interventions have almost exhausted the Minister's right to speak in the debate.
Mr. Rossi: I shall look carefully at Mrs. O'Neill's papers when they come before me and consider whether the circumstances fit in with what we are discussing now. Sometimes we find that they do not quite do so. I shall take your hint, Mr. Deputy Speaker, and not give way again.
Before leaving the regulations, both housing and supplementary benefit, I ought to comment briefly on the overall financial effects. It has been a complex task keeping track of the many changes and the associated costs and savings, but I can assure the House that we have taken pains to ensure that the final outcome is indeed cost-neutral. That is, all identified savings, including those arising on DHSS staff savings, have been put back into the pool to distribute elsewhere in the scheme.
Indeed, we may have a surplus to spend in 1984–85. By then the cost of giving the transitional protection to 16 and 17-year-olds, which I anounced earlier, will have greatly diminished and the resources released will be available for housing benefit. An attractive possibility would be to increase the needs allowance for children and so give a little extra help to working and one-parent families. But it is too soon to give any firm commitment.
Mr. Field: What about pensions?
Mr. Rossi: We have already increased the needs allowance by 75p. We are now considering whether money will become available so that we can give similar benefit to families with children. However, I can give no commitments.
Mr. Field: Oh.
Mr. Rossi: That must be the case.
As I said at the outset, these regulations are long and complex. If my account has also been long—the House is somewhat accountable for that—I hope that I have shed some light on the complexities. I commend the regulations to the House.
5.13 pm
Mr. J. W. Rooker: After one hour and eight minutes the Minister announced that he would not give way again. I am grateful that he has allowed me to make a brief intervention. I hope that he will not lose his train of thought while I make some brief remarks.
The Opposition agree with the concept of a unified housing benefit to get over our constituents' problems of dealing with different agencies and Departments, but I part company from the Minister on everything else that he said. It is for that reason that we shall oppose the regulations. I cannot go over all the reasons why I want to put the case for opposing the regulations. The Minister kicked off with a list of the advantages and a few changes that would flow
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from the system, which would benefit claimants—it is right that there are advantages—but he was not evenhanded, so my hon. Friends and I will have to outline the other side of the coin.
The Minister apologised for the complexity of the regulations. The idea of a unified benefit system, which the regulations are not but they are a step towards it, was to simplify and rationalise the system of rent and rate rebates and the housing side of supplementary benefit. I thought that the idea was to make life simpler for the claimants, but that has not happened. There are signs that some local authorities in England are just waking up to the fact that they are taking on board a massive task of administration in November and next April.
The Minister talked about consulting the local authorities. Has he talked to representatives of the National and Local Government Officers Association? The increased burden will fall on that end of local authorities. That could happen when the annual pay claim is made by local authority workers, who are constantly attacked by the Government. There could be difficulties. Therefore, my first question is: has NALGO been involved in the consultations?
It is typical of the Government and of the Minister to tell us about the little gains, but not that 2 million households—850,000 of those households are pensioner households—will lose money each week when the scheme comes into operation. I know that there are some puny safeguards for pensioners, to limit the weekly loss to 75p, but when the transitional safeguards are withdrawn in April 1984, 500,000 households will be more than 75p a week worse off. Two million households overall will be worse off under this so-called gain, which has been introduced to simplify a complex system.
It is typical of the Government that again they are redistributing poverty systematically among the poor. That is done under the guise of reform—a no-cost change. However, the no-cost changes under the Government always seem to work out, as the supplementary benefit change in November 1980 appeared to work out, so that there are more losers than gainers. At the end of the day the Government are in credit.
I do not intend to fill up my time with too many statistics, but I must put to the Government some figures on matters raised at the beginning of the Minister's speech. They turn on the percentage increase for non-dependants and the way in which the figures have been changed, over inflation, in the so-called operating changes. The figures vary between 50 and 70 per cent. There is a massive increase in the system's needs requirements for non-dependants over and above inflation.
About 250,000 households on rent rebate and 150,000 on rate rebate are affected badly by the change. About 336,000 households will lose an average of £1·14 a week, which is a saving to the Government of nearly £20 million.
On the plus side of the change, because of the way in which the Government have almost rigged the increases above inflation, it looks as though 32,000 households will gain, on average, £2 a week, at a cost to the Government of about £3·3 million. In other words, in this one area, in the changes taking place in November and April in the percentage increase for non-dependants over and above inflation, it seems that the Government are saving £16 million. That matter was not discussed in Committee. The Minister did not refer to it. I should like confirmation of those figures, if not during the debate today, which is time

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limited, then as quickly as possible, preferably before the recess. Under the scheme the £16 million does not appear to be redistributed in the new housing benefit.
This simplified system is complex beyond belief. No wonder the Minister referred to only about seven or eight of the 51 regulations. The poor will lose by the million. The regulations will mean that many poor people who are sick, disabled or single parents will lose the right to a higher rate of supplementary benefit, because they will not be able to get on to supplementary benefit in the first place. That is the result of introducing the housing benefit.
Moreover, I understand that as a result of examining the regulations and the documentation that is attached to them, those people, including pensioners, who are floated off supplementary benefit to housing benefit will lose the automatic right to other benefits, such as dental and optical treatment. Some people, but not pensioners, will lose the right to free prescriptions. The loss of the automatic passport will mean that eligibility for single payments and free milk will also be affected.
The passport effects are not being carried over from supplementary benefit to housing benefit, yet the people who are affected are the poorest in the country. The floated-off people are referred to throughout the regulations as certificated cases. They have been certified by the Government to take a cut in family support through the Welfare State because of the way in which the regulations have been drafted and the way in which housing benefit interacts with supplementary benefit.
To confuse matters even more, regulation 51 mentions housing benefit supplement, not housing benefit or supplementary benefit. It is the invention of someone in the DHSS. It was always referred to in Committee and on Report as topping up. Many claimants refer to themselves as being "on the supplementary". They ask "Have you been to the supplementary?" They talk about various matters in queues at the Post Office and say, "Supplementary? Yes, I'm on it." That can mean supplementary pension or supplementary benefit, or will it mean housing benefit supplement?
Someone in the Department has taken a word that is meaningful to him but which means nothing to people outside. It reminds me of the following:
"Officials are highly educated, but one-sided; in his own department an official can grasp whole trains of thought from a single word, but let him have something from another department explained to him by the hour, he may nod politely, but he won't understand a word of it."
Franz Kafka wrote that.
All hon. Members, even you, Mr. Deputy Speaker, and our constituents will be confused by the word "supplement" being attached to housing benefit. The regulations do justice to the name of Franz Kafka. They are draft regulations. The Minister has not signed them, so I wrote "Franz Kafka" in the appropriate space in my copy. The regulations will be a maze for millions of people who do not stand a chance of receiving the benefits which the House intends they should have.
I understood the Minister to give a concession about 16 and 17-year-olds. My hon. Friends challenged the Minister to read his brief again, but he did not, and so became involved with interventions. Nevertheless, he seems to have made a concession. The change is wrong in principle. Sixteen and 17-year-olds and their families are being told "You are not expected to contribute to the family's housing costs. You are adult, you can get
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married, you could be at work", although they will not be in these cases, "but you are not required to make a direct contribution towards household expenses."
It may surprise some Ministers and Conservative Members, but it is not unknown for children who are unable to contribute adequately to the running of the household to be thrown out, even in 1982. Depriving 16 and 17-year-olds of the non-household addition will not stop some parents from claiming some money from those youngsters to pay for household expenses. My argument relates to parents who are at work. They tell their youngsters to stand on their own two feet. The say "You get your money from the supplementary and make a contribution towards the running of the household".
The Under-Secretary of State for Health and Social Security (Mr. Tony Newton): I do not wish to dismiss out of hand whet the hon. Gentleman is saying, but I wish to draw his attention to the fact that we are debating housing costs, not the making of a contribution towards the running of a household. That is an important distinction. I imagine that in the majority of households young people, whether in work or not, contribute to their general maintenance costs, such as food, but are not expected to contribute to the rent. The hon. Gentleman is making a little too much of the problem of housing costs.
Mr. Rooker: I accept the Minister's point about food. That the addition was given specifically and separately for housing costs, and that it will no longer be given, is a matter that cannot be passed over without comment. It may have a serious effect on some households. I am not putting the case out of proportion. I do not know whether homelessness will increase as a result of the regulations, but it has certainly happened in my constituency, even without this change. It is important to make that point, as the change is substantial.
When the disability allowance was discussed, disabled teenagers were mentioned with regard to the interaction between the non-contributory invalidity pension and housing benefit. It is difficult enough now for youngsters to work out whether they should be on supplementary benefit or NCIP. The introduction of housing benefit costs could make that even more complicated. Perhaps the Minister will address himself to that matter. Youngsters on housing benefit will probably lose entitlement to single payments. That is important for disabled teenagers.
I have used the term "certificated cases". The Secretary of State will send a certificate to local authorities for those who are to be floated off or not required to pay rent or rates. Why cannot claimants have a copy of that certificate? There appears to be no provision for that. The certificate may be useful to obtain unofficial passport benefits, such as cheap hairdos, when a supplementary pension book is displayed. The certificate relates to the claimant. On principle and in terms of good government, the claimant is entitled to a copy of it.
Is there a chance of anyone who is in rent arrears when the changeover takes place in November or April losing a week's benefit? That problem has been put to me. I do not have the details. I should make the debate too complicated if I went into that matter now. Nevertheless, I should like an assurance that there is no possibility that in November or April—because of the different dates for operating the social security system and local authority rent days—people will lose a week's benefit.

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I, and I suspect many hon. Members, object on principle to people being on rent direct, although I can understand and see its advantages. Rents are likely to continue to rise under the present Government. I cannot foresee their not doing so in the light of inflation and the rising cost of living. If rents continue to rise, my constituents will still pay, even though their supplementary pension books will not have had the additional rent costs added to them, possibly for months afterwards, because of shortages of staff in local social security offices.
As a result of the change to rent direct that problem will not arise. People will not have to worry about getting into debt or spending money on rent rather than on food and heating. Although that is an advantage, it is also a means of forcibly controlling the budgets of millions of families in a way more reminiscent of the "Big brother knows best" attitude than of a genuine attempt to achieve a good, workable Welfare State. Despite the advantage, there is something distasteful in the attempt to control the family budgets of millions of people in such detail.
I shall not refer in detail to many of the regulations, but I must deal with regulation 17, relating to unsuitable accommodation, in a context to which the Minister did not refer. The subject was dealt with in Committee, but at that stage we did not have the regulations. It was pointed out that a local authority may deem that a person's house is too big for his needs because it is too expensive and the rates and outgoings are too high. The occupant may be a widow living in the family house after her family has left. Why should she have to leave? I hope that the Minister will deal with this, as regulation 17 provides enough get-outs for local authorities to start to squeeze such people if there are many of them in the area due to the nature of the housing and the demographic structure.
That must be compared with regulation 22, which I shall quote, as it is very short. It states:
"Except in a certificated case"
—that is, a floated-off case
"an authority may, if it considers an eligible person's circumstances are exceptional, grant to him an amount of a housing benefit additional to that to which he is entitled under the other provisions of these regulations."
What are the controls on that? I do not wish to block local authorities being generous in their interpretation of the regulations, but when one compares regulation 22 with the possible implications of regulation 17, one is entitled to ask how the House will learn of the way in which local authorities operate those regulations. The effect could be disastrous for many families. It could also be extremely unfair as between local authorities in the many cases in which the boundary runs, say, down the middle of the high street. If a local authority deliberately seeks to be generous, can the Government send in the district auditor to stop it? How are we to know how regulation 22 will be handled?
I shall not go into detail about the regulations relating to caravan and houseboat owners, incomes from boarders or discharged prisoners, as I do not wish to hog as much time as the Minister did, and I know that my hon. Friend the Member for Stockport, North (Mr. Bennett) will be able to deal with them if he catches your eye, Mr. Deputy Speaker.
Does the Minister believe that the regulations meet the claim of the original consultation document that they
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would simplify and rationalise the system? Claimants will still have to deal with the local authority and the DHSS. The Child Poverty Action Group described the regulations as Byzantine in their complexity. They are a labyrinth. I see that the Minister has still not returned. I do not know whether he has been taken ill after making such a long speech. He admitted that the regulations were highly complex, but he did not make it clear that they would make more than 2 million families poorer than they now are.
Two final examples will show how bad the regulations are and why we oppose them. We make no bones about that. We do not support the regulations, although I put on record at the beginning that we wish to move towards a genuine unified housing benefit.
The Minister did not deal with the minimum payment of supplementary benefit. The regulations lay down a minimum payment of lop. I shall quote briefly from the comments of the Disability Alliance. If the Minister has already seen the document, I hope that he has an answer, as it puts into perspective some the probing questions asked by Opposition Members.
The Disability Alliance says:
"The regulations as drafted do not clarify the position of people who are entitled to less than the minimum payment of supplementary benefit to top up their other income. There will be no problem if a combined payment is possible. However, if a minimum amount of supplementary benefit cannot, in a particular case, be combined with another social security benefit, it cannot be paid. Under the new regulations as drafted, someone entitled to a payment of supplementary benefit of less than the minimum payment of 10p that is not payable cannot be certificated to housing benefit. In order to be certificated, one must be entitled to 'qualifying supplementary benefit'. That is defined as benefit payable.
Housing benefit supplement could provide the answer. However, in order to qualify for that, one's resources must be sufficient to meet one's requirements. A person who is entitled to supplementary benefit has, by definition, insufficient resources to meet their requirements. It would be stretching the meaning of the language to include these people in housing benefit supplement.
We hope that this problem can be solved in a straightforward way."
That is an important problem caused by the effect of the regulation relating to minimum payment of supplementary benefit and it shows the complexity of the regulations as they affect the poorest people in this country. If the Minister cannot give us an answer on this today, he will certainly have to find one.
The Minister made a feeble attempt to help claimants in the terrifying situation that he has created. I refer to the misnamed "right of appeal". I notice that in the regulations it is not described in that way—and rightly so, because whoever drafted the regulations knows full well that it bears no resemblance to what any reasonable person would understand as a right of appeal. The present supplementary benefits system provides a genuine right of appeal. In these regulations, however, I take issue with the very title of schedule 5, which is "Constitution of Review Boards", when it should refer to the constitution of "further review boards", as that is how the boards' activities are described earlier in the regulations. They will be reviewing a review that is first carried out by officials. Only later will elected councillors become involved through the boards and conduct a further review.
So far, I have not come across anyone who regards the provisions of schedule 5 and the regulations as a good way to solve this problem. I understand that the Shelter Housing Aid Centre, the Disability Alliance and the

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CPAG have all criticised them. All those groups are familiar with the normal reasonable rights of appeal that now exist—they do not always work out reasonably, but the procedure at least is accepted as reasonable by most people—but they have all criticised the procedure laid down here.
Schedule 5 provides that a review board appointed by an authority
"shall consist of not less than three … persons"—
that is, three elected local authority councillors. The problem arises because regulation 48 states that only two councillors are necessary for the review board, and one of them has to be in the chair, but the consent of the claimant must be obtained for that procedure.
It may come as a surprise to Ministers to learn that councillors in our large cities are overworked. There is a great deal of pressure on their time. In cities such as Birmingham, Liverpool and Manchester there are meetings every week of what are called lettings and tenancy sub-committees. They deal with rent arrears and many other problems. People queue by the dozen to get into Bush House or one of the other committee rooms in the council offices in Birmingham on Monday and Tuesday evenings. That is a massive extra workload on a councillor's normal council activities and his role as ombudsman in his constituency, but on top of that we are placing on him the burden of the review board. In many cases there will only be two councillors present on the board, because that is all that the officials need to summon up.
I know what it is like to serve on an education committee. Unlike the Minister, I have never been an elected councillor. I have never served on Birmingham city council, but I have always considered that an advantage, because in representing a part of Birmingham in this House I can put the other side of the coin. Too many of my colleagues have been councillors.
I was a co-opted member of an education committee for a short time and occasionally served on the appeals panel for discretionary awards. I know the trouble that officials have in obtaining the minimum number of people to attend. I was not a councillor and had less responsibility than many of my colleagues on the further education subcommittee. Therefore, I know that officials will accept the lower number. Once they have Mr. A and Mr. B promising to attend, that will be the end of the matter.
Claimants will arrive—perhaps with no representation, even though entitled to have someone—to complain about some aspect of the council's dealings with them. They will be told that the hearing can be held immediately, provided they agree to there being only two councillors, one of whom will be in the chair.
If the claimants insist on the statutory right to be heard by three councillors, they will be told to come back another day. They will be told that the councillors are busy, that there is a long queue and that it may be a month or more before a hearing can be arranged, possibly because the councillors are on holiday. The claimants will no doubt agree to the hearing being held with only two councillors. The pressure on claimants will be enormous to accept an unjustified system that is more reminiscent of procedures in an East European State. It ill-behoves the Government to talk about putting in a right that does not exist for our citizens.
The review boards will have no case law to refer to. They will not be able to compare one local authority with
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another. Members of Parliament will not be able to do that. The various pressure and action groups who help tenants and people who have complaints about housing benefit will have difficulty in comparing one local authority with another. Nothing will be written down. There will be no system such as exists with the social security commissioners, where case law is laid down and councillors are guided by officals on procedures and precedents.
It was once said by Aneurin Bevan that the test of progress in society was its impact on the individual. Every piece of legislation that comes before the House should be judged on that basis. These regulations will not have a good effect on individuals. Two million families will lose as a result of them. In many ways the regulations are undemocratic and unfair. The incoming Labour Government who will surely follow this tardy Government will clean up the regulations, democratise them and restore the rights that have been taken away from the people of this country.
5.44 pm
Mr. Tom Benyon: I am grateful for this opportunity of contributing to a debate on what is surely one of the most important topics facing us today—the uprating of social security benefits. It is sad that the importance of the subject is not reflected in the attendance in the Chamber.
The hon. Member for Birmingham, Perry Barr (Mr. Rooker) said that he did not believe that the upratings would have an overall good effect on individuals, but we should look at the other side of the coin and not just one aspect of the upratings. He was optimistic about the possibility of a future Labour Government and all that they would do. That stretched the credibility of the entire House to its outer parameters.
Politics is about priorities of expenditure. Many good things have come from these upratings and it is therefore difficult to see haw anyone can fairly say that we are a party of hard Tories who smack of sharp actions and rhetoric.
The cost of the upratings is about £3 billion. We shall be spending £30 billion in 1982–83 on social security benefits. That is about 26 per cent. of all public expenditure. We have given full price protection to the weekly benefits and made good the 2 per cent. shortfall from 1981. I am pleased that that has been done. The supplementary capital limit has been increased to £2,500, and although I do not believe that that is enough., an increase is welcome.
Mr. Andrew F. Bennett: In introducing the housing benefit regulations the Government claimed that there would be nil cost. The hon. Gentleman appears to be referring to the uprating orders that were dealt with last week.
Mr. Benyon: I am grateful to the hon. Gentleman, but is he saying that I am out of order?
Mr. Bennett: Yes.
Mr. Rooker: This is a free debating Chamber, but none of the issues so far mentioned by the hon. Gentleman are covered by the regulations under discussion
Mr. Benyon: I am grateful for that intervention. However, I shall proceed with my speech. There are

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various aspects on which I must criticise the Government. The £10 Christmas bonus, which has been included in the uprating procedure, has not been increased.
Mr. Brynmor John: On a point of order, Mr. Deputy Speaker. The hon. Gentleman has now mentioned the £10 Christmas bonus. Is he unaware of what these regulations deal with? The matters he mentioned were dealt with in the uprating orders that were debated for three hours last week. It was at a late hour, but I attended the debate and I can assure you, Mr. Deputy Speaker, that they were debated. We are now dealing with the housing regulations. Surely it is out of order to deal with a series of uprating provisions—which the hon. Gentleman even calls uprating provisions—on the regulations now before us.
Mr. Deputy Speaker: This is a wide debate, but I was hoping that the hon. Gentleman would relate his remarks to the regulations before us.
Mr. Benyon: I am grateful to you, Mr. Deputy Speaker. The matters that we are currently debating are all concerned with supplementary benefit and with its uprating in the widest possible aspect. I hoped and believed that my speech was not out of order, and I intend to proceed as I set out.
By their very nature, supplementary benefit and housing regulations are enormously complicated, extremely unfair and arbitrary in the way that they fall on claimants. In many cases, they provide benefits to those who do not need them while providing no benefits to those who are in urgent need and assistance. Usually, they are enormously expensive and horrendously complicated to administer. They are unwieldy and in many aspects of their administration appear to benefit the administrators and draftsmen.
The Government should take an early opportunity to do what they can to rationalise the current structure which has grown up like Topsy over many years. The system has developed piecemeal, with each complicated part built on an incredibly unwieldy, existing machine.
I appreciate that the Government face a lengthy and over-crowded legislative programme during the remainder of this Session and the beginning of the next, but I hope that they will find time to make a start on linking the benefits and the tax system to create a more coherent and sensible system than currently obtains.
The work already done by my hon. Friend the Member for Kensington (Sir B. Rhys Williams) in this regard is of considerable value, and I shall listen to his speech with great interest, as I am sure that it will deal with this matter in great detail. I hope that the Government will take time, which I am sure will be well spent, to rationalise what is currently an extremely expensive and enormously complicated system.
5.52 pm
Mr. Andrew F. Bennett: I rise to oppose some of these regulations because they fail in the principal task enshrined for them in the new Social Security and Housing Benefits Act.
When combined housing benefit was proposed by organisations such as the Supplementary Benefits Commission, the argument was that it would lead to a
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major simplification of the system. Anyone who attended the Committee that dealt with the Act or who listened to the speeches on Second or Third Reading must have realised that the benefits would not simplify the system, and anyone who has listened to the Minister today trying to explain the regulations will not have been convinced that they have done so.
I challenge the Minister to say how he intends to incorporate the regulations in a simple DHSS guide to claimants next November so that they will be understood. I suspect that he will not be able to do so. How does he intend to inform claimants of their rights so that they can understand the system?
The Minister has two tasks. He must inform people on supplementary benefit what will happen to them this November and he must inform everyone else what will happen next April. The test of the regulations is whether that information can be set out simply and clearly in a leaflet that most people will be able to understand.
I understand that at present local authorities are sending on a week's training course some of the rent officers who will administer the scheme. I believe that the citizens advice bureaux are having difficulty explaining how the scheme will work. I suspect that when constituents approach hon. Members in November and December seeking advice on the new system, we shall also have difficulty. The first essential is to produce leaflets that will clarify and explain, and unless the Government do so they will have failed in their task.
How many people will be worse off in the transitional period? My hon. Friend the Member for Birmingham, Perry Barr (Mr. Rooker) asked what would happen in the week that people changed from receiving supplementary benefit and passing it on to the housing department to having the money transferred for them. More often than not, people receive their supplementary benefit on a weekly basis and have their paying-out day determined alphabetically. As a result, they think of their benefit as running from Tuesday to Tuesday or Thursday to Thursday.
Most housing departments also collect rent on different days. Many of them collect it on a fortnightly basis and even, in some instances, on a monthly basis. Quite often, a person pays rent one week in arrears and one week in advance each fortnight or two weeks in arrears and two weeks in advance every month. I seek an absolute guarantee that if someone is paid supplementary benefit on a Tuesday and pays rent on a Thursday there will be no possibility of his losing money during the transitional period. However, I suspect that considerable anomalies will arise, and the loss of half a week's rent, or even more, is a considerable sum for such people.
I also hope that the Minister will turn his attention to the question of rent-free weeks. That is a major problem. In an earlier debate, the Minister's predecessor said that, administratively, it was too difficult to deal with this question. These are only so-called rent-free weeks. Most local authorities charge rent not over 52 weeks but over 50 weeks, and, in some instances, over 48 weeks. That is a simple administrative device to avoid rent collection during the summer holiday period and at Christmas.
Supplementary benefit is always paid over 52 weeks. Therefore, in practice, most people on weekly supplementary benefit have been underpaid the amount needed for rent until they reach the so-called rent-free week when they receive the rent money from

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suspplementary benefit that makes up the underpayment. This November, many people will have accumulated one or one-and-a-half rent-free weeks. I hope that the Minister will give a clear undertaking that no tenant will lose any money. That is the least that the Government can do.
I have referred to the problems of people going on to rent direct. It is also appropriate to consider the problems of them coming off. Not only is it important for the Government and local authorities to notify people that they are now on rent direct, but it is equally important that they notify people as soon as they cease to be eligible. There are many instances where people lose their entitlement to supplementary benefit and do not pay their rent for two or three weeks because of a misunderstanding. As a result, they get into arrears. If someone loses his entitlement to housing benefits, it is important that he should be informed straight away so that he knows that he must start paying rent immediately. The administrative process of coming off rent direct must not take two or three weeks and cause someone to get into arrears.
Although I have repeatedly asked this next question, I have never received a satisfactory answer. At present, paying rent gives individuals some flexibility, and if a person on a low income is receiving supplementary benefit he often needs that flexibility. I do not approve of people getting into rent arrears, but when it comes to ensuring that children have sufficient to eat or are properly clothed after a disaster or problem has cropped up the ability to be late in paying rent gives a family a great deal of flexibility.
Under the new regulations the individual will not receive the rent money and therefore a considerable degree of flexibility will be lost. The Government must offer proposals to allow some flexibility when there is a sudden crisis—perhaps when a child damages or rips a pair of trousers or shoes or when, for one reason or another, food does not last for as long as was expected. Many such disasters can happen to households. At present, those on supplementary benefit have three areas of flexibility—gas money, electricity money and the rent. That flexibility helps families a great deal. By paying housing benefit direct, the Government will remove that flexibility. It will still be possible for people to borrow from the gas or electricity money, but they will have lost the ability to borrow from the rent. I hope the Government will examine the matter seriously.
The Minister was challenged in his speech about the right of a local authority or any other landlord to demand, where a tenant was more than 13 weeks in arrears, an automatic deduction from supplementary benefit to pay off the arrears. I hope that the Minister will assure us that that would happen only with the consent of the individual, and that that consent would be pressed for and asked for only if the deductions were reasonable. Many hon. Members have encountered cases where people have been told that they will be evicted, or that their gas or electricity will be disconnected unless they agree to these deductions. Normally, deductions from any one source are reasonable, but when people are asked to agree to deductions from supplementary benefit for rent, gas and electricity they often find that they do not have enough money to make ends meet. Therefore, I hope the Government will give assurances on that issue.
It was found that that there will be 2 million losers. The Government then built into the scheme that the maximum anyone could lose would be 75p. This will mainly apply from next April because it is those who are on housing
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benefit at the moment, as opposed to supplementary benefit, who will be affected. However, it is important that the Government knew that there would be 2 million losers and tried to limit the amount to 75p. Unfortunately, the regulations will come into effect at the same time as the local authorities will be forced to introduce a rent increase. Therefore, many people will lose the 75p and, in addition, will have to pay the rent increase. Of those who are to lose the 75p, it is guaranteed that they will be protected for the first 12 months. Will the Minister also guarantee that if there are changes in the circumstances of those individuals—if they move house but have to pay roughly the same rent, or if another name is added to the rent book but there is no change in the income of the household—they will still be protected as existing losers, or will they lose that status? That is extremely important.
In his opening remarks the Minister referred to the non-householders, the 16 and 17-year-olds. He said that they would not lose all that much. Indeed, he almost claimed that some would gain. He then admitted that he would introduce a special regulation for the transition, because of the effect on some individuals. Over two or three years the 16 and 17-year-olds will be losing significantly, or the Government would not have felt it necessary to introduce a transitional regulation.
The Minister then told us that it will apply to all 16 and 17-year-olds who receive the non-householder allowance before 1 April. I asked him about the Easter leavers. Next year, Easter Monday will be on 4 April. Those who finish the spring term on the Friday before Palm Sunday will presumably qualify because they will have had one week in March at the old rate of benefit, but those who finish on the Thursday before Good Friday—the last day of their term—will not qualify. I hope the Minister will examine this matter and make it clear that he will do as much as he can to ensure that Easter leavers next year qualify for the transitional provisions and are not excluded.
I turn now to those who live in caravans or houseboats. I understand from the regulations that those who are buying a caravan or houseboat on a mortgage are covered, as are those who are renting. I hope the Minister will confirm that those who are purchasing in other ways, such as hire purchase, will also be covered.
At the beginning to the debate we heard an intervention about hostel dwellers. I must record my worry that the supplementary benefit regulations and the housing benefit regulations, as applied to the homeless, are becoming increasingly discriminatory and are creating a new group of people. That development must be regretted.
In order to leave other hon. Members a reasonable amount of time, I turn finally to the appeals procedure. The appeal regulations are inadequate. The Opposition have repeatedly urged that appeals should go to the supplementary benefit appeals procedure rather than be left with the local authorities. The Minister repeatedly insists that there will be no clashes between the two sets of regulations. I give the example of a woman who applies for supplementary benefit but is refused because the supplementary benefit officer claims that she is cohabiting. The woman would go to the housing department and ask for housing benefit. The housing department would tell her that she could have the housing benefit if she were passported by supplementary benefit, but if she were not passported it could not take her income into account. For the purpose of the housing regulations she would be the tenant, but she would have no income.

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It would say that it could not give her benefit. Such an individual can easily be caught between the two benefits. The social security officer says that the woman is cohabiting, but the housing department says that the woman's name is on the rent book, that she is the tenant and that it is she who is entitled to the housing benefit. The Government will discover a considerable number of cases where the appeal will be against the two sets of regulations and where it will be logical for there to be one appeal hearing rather than to say that a person must first appeal to the supplementary benefits appeal tribunal and that then the person may have to appeal to the housing benefit officer. If they disagree with each other there is no obvious way of resolving the dispute.
My hon. Friend the Member for Perry Barr described the difficulties of getting councillors to carry out the appeal procedure. I agree that that will be a difficulty. He described a case where two councillors turn up for an appeal when there should be three. He described the pressure that can be applied to the person who is appealing to accept only two.
We should also consider the pressure that is applied to the councillors. If one councillor is present, the official, who is keen to deal with the proceedings in fairness to the people who are appealing, might say to another councillor who he happens to see in the council building "Would you mind sitting on the appeal?" The councillor might say "I do not know anything about it". The official could then reply "It does not matter that you do not know anything about it. The chairman of the appeal knows all about it so all you have to do is sit there and put in an appearance." Therefore, the chairman would deal with the appeal. Very often, he may have strong views about the rights and wrongs of claiming benefit. We all know that there are individuals who make comments about scroungers and so on. An individual could have such strong views and might try to impose on the appeal a decision that is both unfair and arbitrary when, if there were a proper appeal procedure which demanded three individuals, possibly with clearly different backgrounds, a much fairer appeal would take place.
These regulations do not simplify the system, which was the original intention. They are riddled with unfairness. The House would do well to vote against at least two of the regulations.
6.10 pm
Sir Brandon Rhys Williams: I welcome the regulations as perhaps the first step in a journey of 100 miles. The Supplementary Benefits Commission campaigned long, and, I think, convincingly for the notion of a new benefit to replace housing assistance provided within the supplementary benefit scheme with rent and rate rebates and allowances provided by local authorities. The commission recommended that a new housing benefit should be introduced. Now we have the unified housing benefit scheme. Moreover, the Social Security Advisory Committee says:
"We welcome it as a much improved system of help with housiing costs."
I did not have the benefit of serving on the Standing Committee. I should like therefore to deal with some general aspects of the scheme. Following my sincere welcome for the scheme, I hope that the Minister will not
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object if I raise questions following doubts that make me wonder whether this is the final answer to the housing problem. I have been concerned for some time with what I would call the redistribution of income industry. This seems to be growing in numbers and complexity when the operations of the computer should be making it a smaller, more immediate and more comprehensible industry. These regulations show what happens when one starts out from Speenhamland and bases benefits on need rather than on the concept of citizenship or universality.
I have listed some items that one would hope to see when a new housing benefit is introduced. It should be simple to understand and easy to administer. The Minister remarked in his opening speech that the regulations are lengthy and difficult to understand. My hon. Friend also said that it is difficult for local authorities to deal with the paper work. There can be no controversy about that. It is the ne plus ultra of complexity and uncomprehensibility. I care intensely about the take-up of benefit. We admire people who are too proud to claim benefits to which they are entitled. We are sorry for people who are perhaps too ill educated or too handicapped to know where they should go to claim that to which they are entitled. It is wrong that the House should introduce a type of benefit where the take-up will inevitably be limited by the difficulty of substantiating claims. There are all the problems of embarrassment in disclosing matters to the local authority together with the complexities of form-filling and duplication. These were the principal reasons for the relative failure of the allowances introduced by the Housing Finance Act 1972, which projected such high ideas only for them to founder because of lack of take-up.
I have taken account of what hon. Members have said about appeals. Members of the public other than those on supplementary benefit who are entitled to claim under the regulations will feel embarrassment if they are obliged to disclose all their personal circumstances before local councillors.
I should like to see a housing benefit that gives direct assistance to the private rented sector, particularly at the lower end of the scale. This sector has been dwindling in an alarming manner, in my constituency as much as anywhere. I hope that it will not continue to dwindle. A housing subsidy for private rented sector rent cannot be obtained in the same manner as one can claim mortgage interest relief. Nor does one gain the benefit of the subsidies that flow naturally if one occupies council accommodation. Unless efforts are made to extend the take-up of the new allowances deliberately into the private rented sector, I am afraid that the effect will not be as great as one might have hoped in preventing further decline.
One essential is that the new scheme should not serve to perpetuate local differences in rent levels. This difference is stimulated to some extent, I believe, by the fact that people paying high rents who are entitled to a supplementary benefit are unable to get their rents paid in full without question in almost every case. It is only a matter of humanity, where people are stuck in accommodation with no means of paying their rent, other than by applying for supplementary benefit, that society must help. It is no doubt a by-product of the lack of fluidity of the housing market that a housing subsidy system has to be produced that is inevitably tailored to local variations. Should not the Minister consider a long programme of phasing out the differences that exist?

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Accommodation in one area can be identical in facilities to that in another but very different in the amount of rent paid.
One might have hoped that this benefit would settle for good the whole question of housing benefits and subsidies. It does not. I do not wish to attach blame to the Minister, whose exemplary opening remarks showed an unusual but highly commendable combination of absolute mastery of the subject and unfailing courtesy to the House. It is rare to find a Minister prepared to show that combination of qualities. I do not wish my hon. Friend to be hurt by my suggestions. I hope that he will think about them for the future.
Why cannot national insurance benefits be included with the scheme? There is concealed within the structure of national insurance benefits a housing allowance. A single person, under national insurance, is entitled to £29·60 while a couple is entitled, not to twice £29·60, but to £47·35. Obviously, for the second person, it is deemed not to be necessary to repeat the whole of the allowance that is paid for the first. The same total could be produced if it was decided that each person, whether single or a couple, was entitled to £17·75 but that there should be a common household element of £11·85 which was given, once for all, to the single householder or to the householder in a pensioner couple. If the national insurance system in future stated plainly that each person is entitled to the same benefit but that the householder is entitled to make a special claim, it would be seen that national insurance already includes a household benefit which at present is £11·85 a week.
Why cannot mortgage interest rebates be included? There are ways in which that reform could and should have been introduced. This is a necessary form of benefit but at present a most unfair one. People have taken out mortgages at different times for different amounts. Some people have no mortgage. The effect of the benefit is uneven. I would prefer that the tax lost through the mortgage interest rebate should be distributed by direct assistance to building societies or by permitting claimants to draw the new housing benefit instead of mortgage interest rebates.
Why was this not made a citizenship benefit instead of being tied to income and need? If necessary, the personal allowance in the tax system could have been poached upon to provide the necessary revenue neutrality. Most taxpayers are above the eligible level of the new benefit. The existing eligible claimants are not taxpayers. It would have been possible to have run together those two forms of allowances—the personal allowance and the new housing allowance—without signifcant overlapping. An opportunity has been lost but it will no doubt recur.
I ask myself, why not amalgamate the work of the Supplementary Benefits Commission completely with the housing and social work departments of local authorities? Is it really necessary for the DHSS to maintain 700 or 800 offices all over the country that to a great extent duplicate the work of the local authorities in the personal assessment of need and in offering care, support and assistance at local level?
Finally, why not use tax returns as the basis of calculation of entitlement? There is much duplication inherent in the regulations because they will require local authorities to do work that, to a great extent, will already have been done by the Inland Revenue, but because there
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is a gulf fixed between the DHSS and the Inland Revenue the work must be done twice. That is a mistake that we should not be making in the computer age.
That leads me to my last point, which is why not wind up the Department of Health and Social Security altogether by taking away the responsibilities for health and reconstituting it as a separate Ministry, taking the entire cash responsibilities of the Department and amalgamating them with the Inland Revenue, and taking the entire responsibilities for care and the work that is done by the local offices and amalgamating them with the responsibilities to be put upon local authorities? I realise that those are big questions for the Minister to answer in this debate and I fear that he may not do so. Nevertheless, he will hear the questions from me again and in the end I shall force him to reply.
6.21 pm
Mr. David Alton: I join the hon. Member for Kensington (Sir B. Rhys Williams) in thanking the Minister for the courtesy that he extended to the House this afternoon. It might be said that, having heard the number of assurances that he gave, especially on matters such as the 16 or 17-year-old non-householders, he will now be known as the "Minister without commitment", because that was the expression that he used several times when asked for assurances during his speech.
Many of us are worried about the regulations because we see them as a sleight of hand. The Minister talked about them "coming from the same mould". He will not mind if I put a different interpretation upon that expression. It strikes me that they come from the same mould as the 5 per cent. reduction in unemployment benefit that the House agreed not long ago. One might say that the regulations are from the same mould, but that some are more mouldy than others. If hon. Members examine the 51 regulations in detail, they will come to the same conclusions as the hon. Member for Birmingham. Perry Barr (Mr. Rooker) and others—that they are Byzantine in their complexity and bewildering to the average person.
Some arguments have already been covered this afternoon but I wish to talk about the complexity of the regulations and their impact on the poorest. I also wish to comment on how they will affect my constituency, which is in a deprived and under-privileged part of Britain.
Like many other hon. Members, I agree with the concept of a unified housing benefit, but this scheme does not satisfy the demands that those of us who believe in a unified housing benefit would put forward. We find the scheme cumbersome and confusing. One need only take one example from the regulations. Page 8 has all the simplicity of a Rubik cube. One would have to be a Philadelphia lawyer or a member of the Audit Commission to understand what paragraph 4 means. It states:
"No amount shall be applicable under this regulation where any member of the assessment unit is a person to whom section 8 or 9 (persons affected by, or returning to full-time employment following, trade disputes) applies.".
(13) In regulation 20 (special cases)—

(a) paragraphs (1) to (5) shall be omitted; and

(b) in paragraph (6)—

(i)for sub-paragraph (c) there shall be substituted the following sub-paragraph: —
"(c) in consequence of the acquisition the aggregate of any amounts which would, but for this paragraph, be applicable under regulations 16, 17 and 19 (excluding any

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amount applicable under regulation 19(1)(a)in respect of water charges) exceed the amount of the eligible rent for the purposes of regulation 16 of the Housing Benefits Regulations immediately before the acquisition;",
(ii) for the words "restricted to that applicable" there shall be substituted the words "restricted to the amount of the eligible rent"."
That is pure gobbledegook and to expect the average person to understand it is asking too much. It is especially ironic when one considers that, in the Government's words, the new scheme would be
"easier to understand and operate"
and be
"uniform throughout Great Britain."
If that is easier to understand than the present regulations, heaven help us all.
Some years ago, when I was chairman of district D committee of Liverpool city council, we tried to achieve a unified housing benefit along the lines of that described by the hon. Member for Kensington to try to increase the take-up of benefits. We conducted a survey of council tenants and found that about one-third were illiterate and therefore incapable of filling in even simple forms. How the Minister or the House can expect the average member of the public, many of whom do not have a grasp of such detail, to understand and to take up the benefit, I do not know. The regulations are a recipe for confusion and bewilderment.
The average corporation tenant will have the same sneaking suspicion that I have—that the regulations have been couched in language that will have the effect of reducing the number of claimants and recipients. That is in line with the 5 per cent. cut in unemployment benefit and that argument is borne out by the effect of the regulations. It is worth mentioning, as the hon. Member for Perry Barr said, that 2 million households will lose up to 75p a week from their rent and rate rebates and allowances. That will include 850,000 pensioners. More than 1 million householders, many of them pensioners, will make a financial gain, but only at the expense of the 2 million losers who must pick up the tab. Robbing Peter to pay Paul, when both are in need of as much help as they can get, is no way to help those most in need.
Who are the 2 million who will have the money taken from them? They are about 10 per cent. of United Kingdom households, people who will be in work but who are at the lower end of the incomes scale. The regulations serve to reinforce poverty, with the poor paying for the even poorer.
Regulation 9 deals with the payment of housing benefit during absence from home. It is not clear to me whether recipients of supplementary benefit can receive payments of housing benefit during temporary absences from home. It could be that, having been encouraged by the Government and the Prime Minister to go off and seek their fortune elsewhere and to become a nation of Dick Whittingtons, they could lose their housing benefit.
I reiterate that the right of appeal against local authority decisions on housing benefit should be independent of council members. Like the Minister, I was a housing committee chairman of a local authority, in which more than 70,000 council tenants lived. Each Friday morning, I chaired the committee that dealt with evictions and appeals. Frequently, as the hon. Member for Stockport, North (Mr. Bennett) said, only one or two members of the
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committee would be present and someone who knew nothing about the cases would be dragged into the meeting. Those people were unduly influenced by the officers of the local authority. It causes some anxiety that a councillor, who has many pressures on him, is likely to be unduly influenced and will not be as independent as the existing DHSS mechanism. That is why I wish the matter to be dealt with by the DHSS, as it is at present, or perhaps by the rent tribunal. It must be dealt with by a body that is independent of the local authority, because the system has the same pitfalls as the police complaints procedure, where the police investigate themselves. It identifies the watchdog with the burglar much too closely and council tenants will have no confidence in it.
As the regulations stand, there cannot be direct payment to private landlords until after 13 weeks of arrears have amassed. This could mean that if that agreement to pay rent direct to a private landlord does not come until the end of the twelfth week, it could be 26 weeks before the private landlord is paid. There are cases similar to the one to which I referred earlier, in which a constituent of mine had to go to the Parliamentary Commissioner on this matter. She was facing eviction because the DHSS had failed to pay the rent that it had agreed to pay direct to the landlord.
It is wrong that someone should be dragged through the legal process. As the Minister said, it may be that at the end of the day the court decides in favour of the tenant, but it should be unnecessary for that to happen. That is why he should look again at the question of the 13-week rule. Similarly it cannot be right that councils sometimes have to wait weeks for the DHSS to pay them the money that they are owed by their tenants. That is another matter that the Minister must clarify further.
This has been an inadequate debate when we consider the implications of these regulations, and this has been a bad two weeks for the worst-off in Britain. Attacks on their standard of living have come fast and furious. First there was the 5 per cent. cut in unemployment benefit, and now there are 51 regulations which make 2 million of our poorest citizens even poorer. About 220,000 householders will lose their rebate entirely. The Minister must deal with this point, which I raised earlier.
Shelter says in its report that it should not be overlooked that 220,000 households lose their rebates entirely. Those people will be worse off. Equally, unless a commitment is given to uprate the rebate needs allowance in line with inflation, many others will lose too. These regulations are part of a package of cuts that represent a mean and miserable attack on the least well-off and least able to pay in our society.
I am conscious that the hon. Member for Anglesey (Mr. Best) is anxious to catch your eye, Mr. Deputy Speaker. I hope that when he does so he will be able to tell us how some of the gobbledegook that I read out earlier can be translated into Welsh—as I understand that he is studying that language—or into Urdu, Hindu, Gujarati, or one of the other languages used by the DHSS.
Mr. Tristan Garel-Jones: Or English.
Mr. Alton: I wish to draw the attention of the House to how these regulations will affect a place such as Liverpool, where one-fifth of the citizens are out of work. Two weeks ago, they suffered the cruel blow of the 5 per

787
cent. cut in unemployment benefit. Today we are reducing the help given to about 25,000 council tenants in Liverpool who are employed, but the lowest paid. The regulations will, on average, cost them a further 75p a week.
As a direct result of these regulations, the Liverpool rebate section will have to be expanded to deal with the 58,000 extra people transferred from the DHSS. That will cost ratepayers more money and the regulations will add to the £10 a week that has been added to council rents since the Government were elected. That £10 a week is a staggering 117 per cent. increase over the past three years. No wonder that council tenants believe that the Government are their enemy.
This second cruel blow will no doubt be supported by Conservative Members, five of whom could have made all the difference if they had defied the Government a fortnight ago. I hope that they will not sleep easy in their beds tonight and will examine their consciences carefully as they vote yet again to inflict misery and suffering on those least able to cope.
6.35 pm
Mr. Keith Best: I can follow the hon. Member for Liverpool, Edge Hill (Mr. Alton) in his concern for the non-direct payment until arrears build up for 13 weeks because I have had similar experiences, and a similar case in my constituency to that which he set out. However, I do not follow him in his somewhat vitriolic attack on the regulations. He will understand if shortage of time prevents me from translating them into Welsh, Urdu or any of the other languages that he mentioned. However, as my hon. Friend the Member for Watford (Mr. Garel-Jones) said, one ought to try to translate these regulations into English first of all.
There is always a danger with regulations that they become a claimant's bane and a lawyer's paradise. I hope that that will not happen with these regulations. They represent a bold attempt by the Government to try to simplify housing benefits. Whether that comes to fruition will be judged only with the benefit of hindsight. It is premature for hon. Members to criticise them out of hand until we have seen how they will work.
I hope that all hon. Members will learn about the complexities of these benefits and be able to interpret them with the same intimacy that my hon. Friend the Minister for Social Security demonstrated. His constituents are fortunate in being able to come to him and know that they will receive a definitive answer on the regulations.
I wish to concentrate on three parts of the regulations where, on the face of it, there appears to be unfairness, but where, on closer scrutiny, this may not be the case. These aspects will need to be monitored carefully, but we hope that they will not act unfairly against claimants. The first of these questions is that of the non-householders' contribution. I refer to the 16 to 17-year-olds who are in receipt of supplementary benefit. Those who are non-householders will no longer receive a housing cost addition of £2·55p. The reason advanced by my hon. Friend the Minister was that deductions will no longer be made from supplementary claimants who are householders for non-dependants who are 16 or 17. That is fine as long as the householder is in receipt of supplementary benefit, but where the householder is not in receipt of supplementary benefit there will clearly be an overall reduction in household income. There is no money available for the 16 or 17-year-old to pay to the person not
788
in receipt of supplementary benefit, but who is the householder. Therefore, that householder will not receive anything for the cost of providing housing for that 16 or 17-year-old claimant.
It might be said that this is discrimination against the 16 or 17-year-old because housing will be more difficult to find. It might further be advanced that it will drive these people out of the household because the householder will say "I will no longer provide a roof over your head because you cannot provide any payment for the accommodation that I provide for you." That is a potential, but not a likely, scenario.
One must bear in mind that 16 or 17-year-olds about whom we are talking are members of the household. This does not apply to the ordinary lodger because the person has to be a member of the household for the regulations to apply. Clearly there is a familial if not a higher moral responsibility on the householder, in the circumstances when the 16 or 17-year-old claimant is a son or daughter, to provide accommodation.
Mr. Rooker: The hon. Gentleman is making a valid point which follows on from mine. However, let us consider the position of a houshold with two brothers, one of whom is working and one of whom is not. The householder is working on low wages—he is not on supplementary benefit—and one brother is contributing to the family budget. Unspoken bitterness may emerge in such a family. That may be wrong, but the potential is there because of the regulations.
Mr. Best: I do not accept that it will create bitterness. Any family with one relative unemployed in those circumstances will not hold it against him. They will be even more determined to try to help him.
My second point concerns regulation 10, hostel dwellers and the 14-day rule. This is not for those in receipt of the supplementary benefit—it applies only to those who are not in receipt of supplementary benefit, who then have to be in one place for a period of continuous residence of 14 days before making a claim. The local authority has 14 days after that in which to decide on the case. That will lead to a minimum of 14 days and a maximum of 28 days before any claim can be processed. It may lead to unfairness. Although the claim can be backdated, it will be unfair if the money is not forthcoming for a maximum of 28 days.
Again, the House should consider the reality. What money are we talking about? It is easy to come out with glib phrases and say that people will be deprived and that there will be hardship because they will not receive the money for about 28 days. We should remember that we are talking only about the housing costs element in hostel accommodation, not the board element, which in most cases is the major part. We are talking about £30 at the most, or a figure of that nature.
Third, I want to say a word about regulation 48 and the appeals procedure. I do not have time to develop my thoughts on this matter, but I hope that my hon. Friend in winding up will deal with it, because a number of hon. Members have mentioned it and its potential unfairness. I accept, as my hon. Friend the Minister for Social Security said, that it would be difficult to do it any other way. Councillors can be independent—they can be lions under the throne of their chief executive—and not entirely subservient to him. However, what about precedent? The

789
advantage in supplementary benefit appeals is that one can refer to existing cases in forming a precedent. How will that operate? Will it go from one local authority to another, or will it be restricted to one? We are worried about that, because we do not want this aspect of housing benefit to become subject to extensive judicial review in the courts, and thus be even more complicated.
6.41 pm
The Under-Secretary of State for Health and Social Security (Mr. Tony Newton): I hope that the House will understand if I rattle through as many points as I can in the time that is available to me between now and 7·2 pm, when the debate is compulsorily ended by the business motion.
First, let me make a general observation. I hope that hon. Members will understand if I do no take as seriously as they might like some of the comments that have been made about the complexity of these amending regulations. First, they are amending regulations, and anyone who has been in this House more than five minutes knows that they are even worse than regulations starting ab initio. Secondly, there is no set of regulations in the whole of social security which would be widely understood by most of the claimants seeking benefit. For instance, if people could claim their retirement pension only if they understood the national insurance regulations, as amended, we should not have to pay as many pensions as we do. Too much emphasis has been put on the complexity of these regulations.
I come to the speech of the hon. Member for Birmingham, Perry Barr (Mr. Rooker). He talked about the complexity, and what I just said in that respect applies to him as well as to the hon. Member for Liverpool, Edge Hill (Mr. Alton). He asked whether NALGO had been consulted. The answer is "No". We have consulted local authorities, and we have properly taken the view that it is up to them—not central Government—to consult NALGO about a scheme that local government is to operate.
Secondly—in a broader and more important sense—there has been much talk about losers. Clearly, in the time that is available, I cannot go over all the ground that was covered extensively in Committee, and, to a degreee, in my hon. Friend's opening speech. However, we have made it clear on a number of occasions that, for reasons that the whole House understands, even if no one likes it, this change is a package which has had to be conducted on a nil cost basis. That meant, inescapably, that there would be some losers and some gainers. To a degree, of course, it is in the interests of those speaking from this Dispatch Box to emphasise the gainers, and of the Opposition to emphasise the losers. We have seen a good deal of that game today.
Mr. Rooker: It is not a game.
Mr. Newton: I am sure that the hon. Gentleman understands the sense in which I use the word. I do not suggest for a moment that it is not a serious argument. All I am saying is that a balanced approach has perhaps not been taken in many of the speeches. It is important to keep the losers in perspective.
There are just under 2 million losers, as hon. Members have said. Against that it should be recognised that no one with income below the needs allowance will lose because
790
of changes in the tapers. I hope that we all agree about that. The distribution of the losers shows that 40 per cent. of them are losing less than 25p a week, 25 per cent. are losing between 25p and 50p a week, and the remainder are losing up to 75p a week. I do not say that those amounts are trivial to the people involved, but we are not talking about large sums. Nearly half the losers in that category are losing less than 25p a week. Of course, the main losers are in categories with higher incomes than those that we are discussing. The average loss is 39p a week.
It is important to remember that the gainers largely include some of the very worst off, and that their gains are significantly more substantial. Indeed, the average gain is approaching £1. The gainers include more than 1 million pensioners, whose position will be improved by the system, and about 80,000 other people who are on supplementary benefit. It is important to remember that, of course, there are losers and gainers, but that the gainers are among the poorest sections of the population and those whom all hon. Members want to help.
The hon. Member for Perry Barr mentioned the housing addition for 16 and 17-year-olds. That point was taken up by both Labour and Conservative Members. I must be honest and say that there are possibilities—indeed certainties—of both gains and losses here. The view that one takes depends on the emphasis that one puts on various possibilities. My hon. Friend the Member for Anglesey (Mr. Best) spoke of one possibility. Let me pose another. Let us consider the household where the parents receive supplementary benefit and the young person is in work but, for some reason, does not contribute to the rent. There is the possibility of bitterness there if the young person does not contribute and the parents do not choose to have a row about it. The parents will be worse off because an assumed contribution will be taken from their benefit. That problem will disappear under the new proposals. The addition will not be made, and the problem will not arise. Of course, not all the cases will be like that—but nor will they all be like the ones postulated by my hon. Friend the Member for Anglesey. It would be a fine judge of human character and the practical realities of day-to-day life who could be absolutely certain how the balance would fall between the various cases.
That is all that I shall say in this connection, except to reply to the hon. Member for Perry Barr who asked whether we were ploughing back all the savings from various bits of that non-dependant addition package into other parts of the package. The answer is a firm "Yes". I am advised that we are ploughing back any savings from that package into the package.
Mr. Rooker: Is the Minister confirming the figures that I used—a gross saving of nearly £20 million and a cost of just over £3 million? So there was a £16 million saving. Were the figures that I gave correct, because of the percentage increase in the addition for the allowance for non-dependants?
Mr. Newton: If the hon. Gentleman will allow me, I shall write to him before the end of the week and give him a commentary of the figures that he used, rather than attempting to debate the matter now. What I can say now is that savings within this package have been reapplied within the package. Although we have been forced to do it on a nil cost basis, I may say—in the hope that no Treasury Minister is listening—that no one is keener than

791
the Minister of State and I to make sure that any savings that we could identify, and which were available for being ploughed back, were ploughed back. Some of the matters described by my hon. Friend today, including the accelerated increase in the needs allowance for pensioners, reflect the efforts that he has made.
With regard to the point raised by the hon. Gentleman about the Disability Alliance, I am advised that we have not seen the letter that he evidently has. Certainly I have not, and I am advised that officials have not either. Rather than comment on the complex point that he raised, I should like to follow it up after the debate, both with him and with the Alliance as soon as possible.
The hon. Gentleman raised the point about certificated cases and whether the claimant should or could have a copy of the certificate. I realise the force of that sensible point. The certificate is the means by which the local authority is authorised to pay the benefit. It is a legal document. It may be complicated in some respects and I am not sure that the claimant would benefit all that much from having a copy of it. However, he will receive a notification from the Department of Health and Social Security's local office explaining the way in which help will be given. As a "passport" piece of paper, I would hope that that meets the need identified by the hon. Gentleman.
The hon. Gentleman raised several points about eligible rent and whether or not people would be discriminated against by local authorities deeming that their accommodation was larger than they required. My hon. Friend the Minister did not comment on that earlier in an effort not to make his speech more extensive than it was forced in the circumstances to be. If the hon. Gentleman looks at regulation 17 he will see that we have taken particular trouble to allay fears that people will be harshly treated in this respect.
Authorities can operate the provision where a person's dwelling is larger than that which he and other people in the accommodation reasonably need, or where the costs of the dwelling are unreasonably high—that is, where either the claimant is living in a needlessly expensive location or, in rent allowance cases, where too much is being charged for the dwelling. We can all agree that some such power is needed in order to prevent obvious possibilities of abuse.
I understand the concern expressed by hon. Members that that power should not be used by authorities as a weapon to force people into smaller and perhaps unsuitable accommodation. If hon. Members look carefully at regulation 17(2), they will see that authorities shall not make a deduction if there is no suitable alternative accommodation available, or if the circumstances of the claimant make it unreasonable to expect him to move. The regulation cites examples of those circumstances. In particular, a deduction should not be made if the age and health of the claimant or his family would make the upheaval of the move an unreasonable burden.
I accept, as so often in such matters, that one cannot be 100 per cent. certain that no problems will arise. However, I assure the hon. Gentleman that if we become convinced that this regulation is being operated in an oppressive way, we shall look again at the terms of the regulation to ensure that that is prevented.
The hon. Gentleman raised the question of regulation 22 and the use of discretion. Authorities already have discretion in relation to the rents scheme. That is not new. I think that I am right in saying that this proposal extends
792
the discretion in relation to rates as distinct from rents. However, the regulations limit the amount of extra benefit that can be pail by way of local schemes using that discretion. In the permitted totals regulations it is provided that authorities can spend up to an extra 10 per cent. in that way. I hope that will reassure the hon. Gentleman that that is a reasonable degree of discretion in line with what happens already but one that is not wholly untrammelled and that could readily lead to abuse. I am reminded that that discretion is entirely in the direction of improving, not detracting from, that which the Government have laid down.
If the hon. Gentleman objects to any discretion at all which leads to variations between the local schemes, it would probably lie between us as a matter of political judgment whether the Government should attempt to lay down every last dot and comma for local authorities, or whether they should leave a degree of discretion to councils and councillors to decide what they would like to do in local circumstances. [Interruption.] There are alway differences in the House as to where those lines should be drawn. However, after some of the things that the hon. Gentleman and his hon. Friends have said about some of my hon. Friends over the past year or two, I would have thought that they might have welcomed some local authority discretion in this area.
The hon. Gentleman raised a point about the minimum payment of supplementary benefit. As I understand it, it is right that a person with less than lop entitlement of supplementary benefit will not get a certificate. However, such persons will be entitled to housing benefit supplement, provided that they meet the necessary conditions, to ensure that they do not lose. Housing benefit supplement is supplementary benefit and carves with it all the same rights to other benefits as go with supplementary benefit. Therefore, subject again to looking in more detail at the point that he has raised, I am reasonably confident that the fears expressed in the letter are somewhat exaggerated.
I shall return to the subject of appeals if I have time, but may I now pass to some of the points raised by the hon. Member for Stockport North (Mr. Bennett)? Both in an intervention in the Minister's speech and in his own speech he raised the question of next year's Easter school leavers. No Easter school leaver next year will get the protection of the housing addition. All people who leave school in the Easter term will be excluded from supplementary benefit until the Monday after Easter Monday, regardless of when they leave. I must also say, quite openly, that our intention is to protect those who will be receiving a housing addition at the time when the changeover takes place. I am not sure that I would even feel it justified to extend that protection, given that it would limit what we could then spend the same money on.
Mr. Andrew F. Bennett: Will the Minister confirm that he is cutting the benefit of next Easter's school leavers by about £2?
Mr. Newton: I do not understand the use of the word "cutting" in that respect. Those school leavers will not have received benefit by that time and, by definition, will not have received a housing addition. If the hon. Gentleman is asking me whether they will receive less benefit than the same school leavers this year, the answer is "Yes." However, that is not at all the same as cutting

793
the benefit currently enjoyed by somebody who has already left school and who is receiving a housing addition. [Interruption.] It is not casuistical. It is logical, sensible and in line with what my hon. Friend said in his opening speech about the reasons for this arrangement.
The hon. Gentleman raised several points regarding explaining the new scheme to claimants. Claimants will receive a notification explaining the way in which help will be given with their rent. Obviously, we shall do our level best to make it as simple and understandable as we can. Those with experience of Department of Health and Social Security leaflets—and other people's leaflets as well—will know that that is often a difficult task, even with schemes with which everybody is familiar. I do not promise that we shall get it all right first time, but we shall try hard to make it as simple and as understandable as we can.
The hon. Gentleman raised several points that I shall have to deal with rapidly, including the question whether the payment of rent direct required the consent of the claimant concerned before it could be put into operation. It does not require the consent of the claimant in circumstances where the benefit officer regards it as being in the claimant's interests. I emphasise that we are here talking about not normal weekly rent payments but the problem of clearing arrears. In general, it is in the claimants' and the authorities' interest and that of everybody else that arrears should not continue to build up and remain unpaid. We envisage that the powers would be used in such circumstances.
There is little time left, but I wish to say at least something about appeals. Almost every hon. Member who has spoken has expressed concern about the idea of an appeals panel that consists of councillors. I cannot go much beyond what my hon. Friend the Minister has said, but as an elected representative I was slightly depressed by the general implication that elected members of district and borough councils could not be trusted to do a responsible job. As the leading elected body in the country, it is extraordinary that the House should reflect so much distrust on those who are elected to other important bodies. In my experience, if elected members of district councils are asked to do such a job—just as they are asked to undertake other comparable tasks, including that of education appeals—they will do so conscientiously and to the best of their ability. I see no reason to doubt that.
As in any appeal machinery, defects may arise that we did not expect. That is why my hon. Friend and I say that we shall monitor it carefully. However, some of the points of conflict that the hon. Member for Stockport, North identified are possible conflicts not between different appeal machineries, but between different sets of regulations and different points in the regulations. Such conflicts can arise and sometimes do arise in regulations covering all areas, regardless of the appeal machinery. In that case, we should sort out the problem by introducing new regulations and not expect the appeal machinery to arbitrate, perhaps, between conflicting provisions.
The regulations are complicated. There may well be teething problems, but the basic aim of the scheme—which was welcomed at the outset—is good, and I hope that the House will accept the regulations.
Question put:—
The House divided: Ayes 297, Noes 235.

Division No. 289]

[7 pm

AYES

Adley, Robert

Fenner, Mrs Peggy

Aitken, Jonathan

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

Alexander, Richard

Fletcher-Cooke, Sir Charles

Alison, Rt Hon Michael

Fookes, Miss Janet

Amery, Rt Hon Julian

Forman, Nigel

Ancram, Michael

Fowler, Rt Hon Norman

Arnold, Tom

Fraser, Rt Hon Sir Hugh

Aspinwall, Jack

Fraser, Peter (South Angus)

Atkins, Robert(Preston N)

Fry, Peter

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

Gardner, Edward (S Fylde)

Baker, Kenneth (St. M'bone)

Garel-Jones, Tristan

Baker, Nicholas (N Dorset)

Gilmour, Rt Hon Sir Ian

Banks, Robert

Glyn, Dr Alan

Beaumont-Dark, Anthony

Goodhart, Sir Philip

Bendall, Vivian

Goodhew, Sir Victor

Bennett, Sir Frederic (T'bay)

Goodlad, Alastair

Benyon, Thomas (A'don)

Gorst, John

Benyon, W. (Buckingham)

Gow, Ian

Best, Keith

Gower, Sir Raymond

Bevan, David Gilroy

Grant, Anthony (Harrow C)

Biffen, Rt Hon John

Gray, Hamish

Blackburn, John

Greenway, Harry

Blaker, Peter

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

Body, Richard

Griffiths, Peter Portsm'th N)

Bonsor, Sir Nicholas

Grist, Ian

Boscawen, Hon Robert

Grylls, Michael

Bottomley, Peter (W'wich W)

Gummer, John Selwyn

Bowden, Andrew

Hamilton, Hon A.

Boyson, Dr Rhodes

Hamilton, Michael (Salisbury)

Braine, Sir Bernard

Hampson, Dr Keith

Brinton, Tim

Hannam, John

Brooke, Hon Peter

Haselhurst, Alan

Brown, Michael (Brigg & Sc'n)

Hastings, Stephen

Browne, John (Winchester)

Havers, Rt Hon Sir Michael

Bruce-Gardyne, John

Hawkins, Sir Paul

Bryan, Sir Paul

Hawksley, Warren

Buchanan-Smith, Rt. Hon. A.

Hayhoe, Barney

Buck, Antony

Heath, Rt Hon Edward

Budgen, Nick

Heddle, John

Bulmer, Esmond

Henderson, Barry

Butcher, John

Heseltine, Rt Hon Michael

Cadbury, Jocelyn

Hicks, Robert

Carlisle, Kenneth (Lincoln)

Higgins, Rt Hon Terence L.

Chalker, Mrs. Lynda

Hill, James

Chapman, Sydney

Hogg, Hon Douglas (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

Clegg, Sir Walter

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

Cockeram, Eric

Howell, Ralph (N Norfolk)

Colvin, Michael

Hunt, David (Wirral)

Cope, John

Hunt, John (Ravensbourne)

Cormack, Patrick

Hurd, Rt Hon Douglas

Corrie, John

Irvine, Bryant Godman

Costain, Sir Albert

Irving, Charles (Cheltenham)

Cranborne, Viscount

Jenkin, Rt Hon Patrick

Crouch, David

Jessel, Toby

Dickens, Geoffrey

Johnson Smith, Sir Geoffrey

Dorrell, Stephen

Jopling, Rt Hon Michael

Douglas-Hamilton, Lord J.

Joseph, Rt Hon Sir Keith

Dover, Denshore

Kaberry, Sir Donald

du Cann, Rt Hon Edward

Kellett-Bowman, Mrs Elaine

Dunn, Robert (Dartford)

Kershaw, Sir Anthony

Durant, Tony

Kimball, Sir Marcus

Eden, Rt Hon Sir John

King, Rt Hon Tom

Edwards, Rt Hon N. (P'broke)

Kitson, Sir Timothy

Eggar, Tim

Knight, Mrs Jill

Elliott, Sir William

Knox, David

Emery, Sir Peter

Lamont, Norman

Eyre, Reginald

Lang, Ian

Fairbairn, Nicholas

Langford-Holt, Sir John

Fairgrieve, Sir Russell

Latham, Michael

Faith, Mrs Sheila

Lawrence, Ivan

Farr, John

Lawson, Rt Hon Nigel

Fell, Sir Anthony

Lee, John

795

Lennox-Boyd, Hon Mark

Rippon, Rt Hon Geoffrey

Lester, Jim (Beeston)

Roberts, M. (Cardiff NW)

Lewis, Kenneth (Rutland)

Roberts, Wyn (Conway)

Lloyd, Ian (Havant & W'loo)

Rossi, Hugh

Lloyd, Peter (Fareham)

Rost, Peter

Loveridge, John

Royle, Sir Anthony

Luce, Richard

Rumbold, Mrs A. C. R.

Lyell, Nicholas

Sainsbury, Hon Timothy

McCrindle, Robert

St. John-Stevas, Rt Hon N.

Macfarlane, Neil

Scott, Nicholas

Macmillan, Rt Hon M.

Shaw, Giles (Pudsey)

McNair-Wilson, M. (N'bury)

Shaw, Sir Michael (Scarb')

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

Shelton, William (Streatham)

McQuarrie, Albert

Shepherd, Colin (Hereford)

Madel, David

Shepherd, Richard

Major, John

Shersby, Michael

Marland, Paul

Silvester, Fred

Marlow, Antony

Sims, Roger

Marshall, Michael (Arundel)

Skeet, T. H. H.

Marten, Rt Hon Neil

Smith, Dudley

Mates, Michael

Smith, Tim (Beaconsfield)

Maude, Rt Hon Sir Angus

Speed, Keith

Mawby, Ray

Speller, Tony

Mawhinney, Dr Brian

Spence, John

Maxwell-Hyslop, Robin

Spicer, Jim (West Dorset)

Mayhew, Patrick

Spicer, Michael (S Worcs)

Mellor, David

Sproat, Iain

Meyer, Sir Anthony

Squire, Robin

Miller, Hal (B'grove)

Stainton, Keith

Mills, Iain (Meriden)

Stanbrook, Ivor

Mills, Sir Peter (West Devon)

Stanley, John

Miscampbell, Norman

Steen, Anthony

Mitchell, David (Basingstoke)

Stevens, Martin

Moate, Roger

Stewart, A.(E Renfrewshire)

Montgomery, Fergus

Stewart, Ian (Hitchin)

Moore, John

Stokes, John

Morgan, Geraint

Stradling Thomas, J.

Morrison, Hon C. (Devizes)

Taylor, Teddy (S'end E)

Morrison, Hon P. (Chester)

Tebbit, Rt Hon Norman

Mudd, David

Temple-Morris, Peter

Murphy, Christopher

Thatcher, Rt Hon Mrs M.

Myles, David

Thomas, Rt Hon Peter

Neale, Gerrard

Thompson, Donald

Needham, Richard

Thorne, Neil (Ilford South)

Nelson, Anthony

Thornton, Malcolm

Neubert, Michael

Townend, John (Bridlington)

Newton, Tony

Townsend, Cyril D, (B'heath)

Normanton, Tom

Trippier, David

Nott, Rt Hon John

Trotter, Neville

Onslow, Cranley

van Straubenzee, Sir W.

Oppenheim, Rt Hon Mrs S.

Vaughan, Dr Gerard

Osborn, John

Viggers, Peter

Page, John (Harrow, West)

Waddington, David

Parkinson, Rt Hon Cecil

Wakeham, John

Parris, Matthew

Waldegrave, Hon William

Pattie, Geoffrey

Walker, B. (Perth)

Pawsey, James

Wall, Sir Patrick

Percival, Sir Ian

Waller, Gary

Peyton, Rt Hon John

Ward, John

Pink, R. Bonner

Watson, John

Porter, Barry

Wells, Bowen

Prentice, Rt Hon Reg

Wells, John (Maidstone)

Price, Sir David (Eastleigh)

Wheeler, John

Prior, Rt Hon James

Whitelaw, Rt Hon William

Proctor, K. Harvey

Wickenden, Keith

Pym, Rt Hon Francis

Wiggin, Jerry

Raison, Rt Hon Timothy

Wilkinson, John

Rathbone, Tim

Williams, D.(Montgomery)

Rees, Peter (Dover and Deal)

Wolfson, Mark

Renton, Tim

Younger, Rt Hon George

Rhodes James, Robert

Rhys Williams, Sir Brandon

Tellers for the Ayes:

Ridley, Hon Nicholas

Mr. Anthony Berry and

Ridsdale, Sir Julian

Mr. Carol Mather.

Rifkind, Malcolm

NOES

Abse, Leo

Alton, David

Adams, Allen

Anderson, Donald

Allaun, Frank

Archer, Rt Hon Peter

796

Ashley, Rt Hon Jack

George, Bruce

Ashton, Joe

Gilbert, Rt Hon Dr John

Atkinson, N. (H'gey,)

Gourlay, Harry

Bagier, Gordon A. T.

Graham, Ted

Barnett, Guy (Greenwich)

Grimond, Rt Hon J.

Barnett, Rt Hon Joel (H'wd)

Hamilton, James (Bothwell)

Beith, A. J.

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

Benn, Rt Hon Tony

Hardy, Peter

Bennett, Andrew (St'kp't N)

Harrison, Rt Hon Walter

Bidwell, Sydney

Hart, Rt Hon Dame Judith

Booth, Rt Hon Albert

Hattersley, Rt Hon Roy

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

Haynes, Frank

Bradley, Tom

Healey, Rt Hon Denis

Bray, Dr Jeremy

Heffer, Eric S.

Brown, Hugh D. (Provan)

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

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

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

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

Home Robertson, John

Brown, Ron (E'burgh, Leith)

Homewood, William

Buchan, Norman

Hooley, Frank

Callaghan, Rt Hon J.

Horam, John

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

Howell, Rt Hon D.

Campbell, Ian

Howells, Geraint

Campbell-Savours, Dale

Hoyle, Douglas

Cant, R. B.

Huckfield, Les

Carmichael, Neil

Hughes, Mark (Durham)

Carter-Jones, Lewis

Hughes, Robert (Aberdeen N)

Clark, Dr David (S Shields)

Hughes, Roy (Newport)

Clarke, Thomas C'b'dge,

Jay, Rt Hon Douglas

A'drie

John, Brynmor

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

Johnson, James (Hull West)

Cohen, Stanley

Johnson, Walter (Derby S)

Coleman, Donald

Jones, Rt Hon Alec (Rh'dda)

Concannon, Rt Hon J. D.

Jones, Barry (East Flint)

Conlan, Bernard

Kaufman, Rt Hon Gerald

Cook, Robin F.

Kerr, Russell

Cowans, Harry

Kinnock, Neil

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

Lamond, James

Crawshaw, Richard

Leadbitter, Ted

Crowther, Stan

Leighton, Ronald

Cryer, Bob

Lestor, Miss Joan

Cunliffe, Lawrence

Lewis, Ron (Carlisle)

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

Litherland, Robert

Dalyell, Tam

Lofthouse, Geoffrey

Davidson, Arthur

Lyon, Alexander (York)

Davies, Rt Hon Denzil (L'lli)

McCartney, Hugh

Davis, Clinton (Hackney C)

McDonald, Dr Oonagh

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

McElhone, Frank

Deakins, Eric

McKelvey, William

Dean, Joseph (Leads West)

MacKenzie, Rt Hon Gregor

Dewar, Donald

Maclennan, Robert

Dixon, Donald

McNally, Thomas

Dobson, Frank

McWilliam, John

Dormand, Jack

Marks, Kenneth

Douglas, Dick

Marshall, D (G'gow S'ton)

Dubs, Alfred

Marshall, Dr Edmund (Goole)

Duffy, A. E. P.

Marshall, Jim (Leicester S)

Dunn, James A.

Martin, M (G'gow S'burn)

Dunwoody, Hon Mrs G.

Mason, Rt Hon Roy

Eadie, Alex

Maynard, Miss Joan

Eastham, Ken

Meacher, Michael

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

Mellish, Rt Hon Robert

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

Mikardo, Ian

Ellis, Tom (Wrexham)

Millan, Rt Hon Bruce

English, Michael

Miller, Dr M. S. (E Kilbride)

Ennals, Rt Hon David

Mitchell, R. C. (Soton Itchen)

Evans, Ioan (Aberdare)

Morris, Rt Hon A. (W'shawe)

Evans, John (Newton)

Morris, Rt Hon C. (O'shaw)

Ewing, Harry

Morris, Rt Hon J. (Aberavon)

Faulds, Andrew

Moyle, Rt Hon Roland

Field, Frank

Mulley, Rt Hon Frederick

Flannery, Martin

Newens, Stanley

Foot, Rt Hon Michael

O'Halloran, Michael

Ford, Ben

O'Neill, Martin

Forrester, John

Orme, Rt Hon Stanley

Foster, Derek

Palmer, Arthur

Foulkes, George

Park, George

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

Parker, John

Freud, Clement

Pavitt, Laurie

Garrett, John (Norwich S)

Pendry, Tom

Garrett, W. E. (Wallsend)

Pitt, William Henry

797

Powell, Raymond (Ogmore)

Stott, Roger

Prescott, John

Strang, Gavin

Price, C. (Lewisham W)

Straw, Jack

Race, Reg

Summerskill, Hon Dr Shirley

Radice, Giles

Thomas, Dafydd (Merioneth)

Rees, Rt Hon M (Leeds S)

Thomas, Jeffrey (Abertillery)

Richardson, Jo

Thorne, Stan (Preston South)

Roberts, Albert (Normanton)

Tilley, John

Roberts, Allan (Bootle)

Tinn, James

Roberts, Ernest (Hackney N)

Torney, Tom

Roberts, Gwilym (Cannock)

Urwin, Rt Hon Tom

Robinson, G. (Coventry NW)

Varley, Rt Hon Eric G.

Robinson, P. (Belfast E)

Wainwright, E. (Dearne V)

Rooker, J. W.

Wainwright, R. (Colne V)

Roper, John

Walker, Rt Hon H. (D'caster)

Ross, Ernest (Dundee West)

Weetch, Ken

Ross, Stephen (Isle of Wight)

Wellbeloved, James

Rowlands, Ted

Welsh, Michael

Ryman, John

White, Frank R.

Sandelson, Neville

White, J. (G'gow Pollok)

Sever, John

Whitehead, Phillip

Sheerman, Barry

Willey, Rt Hon Frederick

Sheldon, Rt Hon R.

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

Shore, Rt Hon Peter

Williams, Rt Hon Mrs (Crosby)

Short, Mrs Renée

Wilson, Gordon (Dundee E)

Silkin, Rt Hon J. (Deptford)

Wilson, Rt Hon Sir H. (H'ton)

Silkin, Rt Hon S. C. (Dulwich)

Wilson, William (C'try SE)

Silverman, Julius

Winnick, David

Skinner, Dennis

Woodall, Alec

Snape, Peter

Woolmer, Kenneth

Soley, Clive

Wrigglesworth, Ian

Spearing, Nigel

Wright, Sheila

Spriggs, Leslie

Young, David (Bolton E)

Stallard, A. W.

Steel, Rt Hon David

Tellers for the Noes:

Stewart, Rt Hon D. (W Isles)

Mr. George Morton and

Stoddart, David

Mr. Allen McKay.

Question accordingly agreed to.
Resolved,
That the draft Housing Benefits Regulations 1982, which were laid before this House on 8th July, be approved.
It being three hours after the commencement of proceedings, MR. DEPUTY SPEAKER proceeded, pursuant to the Order this day, to put forthwith the Questions necessary to dispose of the motions relating to housing and social security.

HOUSING
Resolved,
That the draft Housing Benefits (Permitted Totals for Local Schemes) Regulations 1982, which were laid before this House on 8th July, be approved.— [Mr. Rossi.]

SOCIAL SECURITY
Motion made, and Question put,—
That the draft Supplementary Benefit (Housing Benefits) (Requirements and Resources) Consequential Amendments Regulations 1982, which were laid before this House on 8th July, be approved.
The House divided: Ayes 296, Noes 234.

Division No. 290]

[7.15 pm

AYES

Adley, Robert

Baker, Nicholas (N Dorset)

Aitken, Jonathan

Banks, Robert

Alexander, Richard

Beaumont-Dark, Anthony

Alison, Rt Hon Michael

Bendall, Vivian

Amery, Rt Hon. Julian

Bennett, Sir Frederic (T'bay)

Ancram, Michael

Benyon, Thomas (A'don)

Arnold, Tom

Benyon, W. (Buckingham)

Aspinwall, Jack

Best, Keith

Atkins, Rt Hon H. (S'thorne)

Bevan, David Gilroy

Atkins, Robert (Preston N)

Biffen, Rt Hon John

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

Biggs-Davison, Sir John

Baker, Kenneth (St. M'bone)

Blackburn, John

798

Blaker, Peter

Hamilton, Michael (Salisbury)

Body, Richard

Hampson, Dr Keith

Bonsor, Sir Nicholas

Hannam, John

Boscawen, Hon Robert

Haselhurst, Alan

Bottomley, Peter (W'wich W)

Hastings, Stephen

Bowden, Andrew

Havers, Rt Hon Sir Michael

Boyson, Dr Rhodes

Hawkins, Sir Paul

Braine, Sir Bernard

Hawksley, Warren

Brinton, Tim

Hayhoe, Barney

Brooke, Hon Peter

Heath, Rt Hon Edward

Brown, Michael (Brigg & Sc'n)

Heddle, John

Browne, John (Winchester)

Henderson, Barry

Bruce-Gardyne, John

Heseltine, Rt Hon Michael

Buchanan-Smith, Rt. Hon. A.

Hicks, Robert

Buck, Antony

Higgins, Rt Hon Terence L.

Budgen, Nick

Hill, James

Bulmer, Esmond

Hogg, Hon Douglas (Gr'th'm)

Butcher, John

Holland, Philip (Carlton)

Cadbury, Jocelyn

Hooson, Tom

Carlisle, Kenneth (Lincoln)

Hordern, Peter

Chalker, Mrs. Lynda

Howe, Rt Hon Sir Geoffrey

Chapman, Sydney

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

Churchill, W. S.

Howell, Ralph (N Norfolk)

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

Hunt, David (Wirral)

Clark, Sir W. (Croydon S)

Hunt, John (Ravensbourne)

Clarke, Kenneth (Rushcliffe)

Hurd, Rt Hon Douglas

Clegg, Sir Walter

Irvine, Bryant Godman

Cockeram, Eric

Irving, Charles (Cheltenham)

Colvin, Michael

Jenkin, Rt Hon Patrick

Cope, John

Jessel, Toby

Cormack, Patrick

Johnson Smith, Sir Geoffrey

Corrie, John

Jopling, Rt Hon Michael

Costain, Sir Albert

Joseph, Rt Hon Sir Keith

Cranborne, Viscount

Kaberry, Sir Donald

Crouch, David

Kellett-Bowman, Mrs Elaine

Dickens, Geoffrey

Kershaw, Sir Anthony

Dorrell, Stephen

Kimball, Sir Marcus

Douglas-Hamilton, Lord J.

King, Rt Hon Tom

Dover, Denshore

Kitson, Sir Timothy

du Cann, Rt Hon Edward

Knight, Mrs Jill

Dunn, Robert (Dartford)

Knox, David

Durant, Tony

Lamont, Norman

Eden, Rt Hon Sir John

Lang, Ian

Edwards, Rt Hon N. (P'broke)

Langford-Holt, Sir John

Eggar, Tim

Latham, Michael

Elliott, Sir William

Lawrence, Ivan

Emery, Sir Peter

Lawson, Rt Hon Nigel

Eyre, Reginald

Lee, John

Fairbairn, Nicholas

Lennox-Boyd, Hon Mark

Fairgrieve, Sir Russell

Lester, Jim (Beeston)

Faith, Mrs Sheila

Lewis, Kenneth (Rutland)

Farr, John

Lloyd, Ian (Havant & W'loo)

Fell, Sir Anthony

Lloyd, Peter (Fareham)

Fenner, Mrs Peggy

Loveridge, John

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

Luce, Richard

Fletcher-Cooke, Sir Charles

Lyell, Nicholas

Fookes, Miss Janet

McCrindle, Robert

Forman, Nigel

Macfarlane, Neil

Fowler, Rt Hon Norman

Macmillan, Rt Hon M.

Fraser, Rt Hon Sir Hugh

McNair-Wilson, M. (N'bury)

Fraser, Peter (South Angus)

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

Fry, Peter

McQuarrie, Albert

Gardner, Edward (S Fylde)

Madel, David

Garel-Jones, Tristan

Major, John

Gilmour, Rt Hon Sir Ian

Marland, Paul

Glyn, Dr Alan

Marlow, Antony

Goodhart, Sir Philip

Marshall, Michael (Arundel)

Goodhew, Sir Victor

Marten, Rt Hon Neil

Goodlad, Alastair

Mates, Michael

Gorst, John

Maude, Rt Hon Sir Angus

Gow, Ian

Mawby, Ray

Gower, Sir Raymond

Mawhinney, Dr Brian

Grant, Anthony (Harrow C)

Mayhew, Patrick

Gray, Hamish

Mellor, David

Greenway, Harry

Meyer, Sir Anthony

Griffiths, Peter Portsm'th N)

Miller, Hal (B'grove)

Grist, Ian

Mills, Iain (Meriden)

Grylls, Michael

Mills, Sir Peter (West Devon)

Gummer, John Selwyn

Miscampbell, Norman

Hamilton, Hon A.

Mitchell, David (Basingstoke)

799

Moate, Roger

Silvester, Fred

Montgomery, Fergus

Sims, Roger

Moore, John

Skeet, T. H. H.

Morgan, Geraint

Smith, Dudley

Morrison, Hon C. (Devizes)

Smith, Tim (Beaconsfield)

Morrison, Hon P. (Chester)

Speed, Keith

Mudd, David

Speller, Tony

Murphy, Christopher

Spence, John

Myles, David

Spicer, Jim (West Dorset)

Neale, Gerrard

Spicer, Michael (S Worcs)

Neednam, Richard

Sproat, Iain

Nelson, Anthony

Squire, Robin

Neubert, Michael

Stainton, Keith

Newton, Tony

Stanley, John

Normanton, Tom

Steen, Anthony

Nott, Rt Hon John

Stevens, Martin

Onslow, Cranley

Stewart, A. (E Renfrewshire)

Oppenheim, Rt Hon Mrs S.

Stewart, Ian (Hitchin)

Osborn, John

Stokes, John

Page, John (Harrow, West)

Stradling Thomas, J.

Parkinson, Rt Hon Cecil

Taylor, Teddy (S'end E)

Parris, Matthew

Tebbit, Rt Hon Norman

Pattie, Geoffrey

Temple-Morris, Peter

Pawsey, James

Thatcher, Rt Hon Mrs M.

Percival, Sir Ian

Thomas, Rt Hon Peter

Peyton, Rt Hon John

Thompson, Donald

Pink, R. Bonner

Thorne, Neil (Ilford South)

Porter, Barry

Thornton, Malcolm

Prentice, Rt Hon Reg

Townend, John (Bridlington)

Price, Sir David (Eastleigh)

Townsend, Cyril D, (B'heath)

Prior, Rt Hon James

Trippier, David

Proctor, K. Harvey

Trotter, Neville

Pym, Rt Hon Francis

van Straubenzee, Sir W.

Raison, Rt Hon Timothy

Vaughan, Dr Gerard

Rathbone, Tim

Viggers, Peter

Rees, Peter (Dover and Deal)

Waddington, David

Renton, Tim

Wakeham, John

Rhodes James, Robert

Waldegrave, Hon William

Rhys Williams, Sir Brandon

Walker, B. (Perth)

Ridley, Hon Nicholas

Wall, Sir Patrick

Ridsdale, Sir Julian

Waller, Gary

Rifkind, Malcolm

Ward, John

Rippon, Rt Hon Geoffrey

Watson, John

Roberts, M. (Cardiff NW)

Wells, Bowen

Roberts, Wyn (Conway)

Wells, John (Maidstone)

Rossi, Hugh

Wheeler, John

Rost, Peter

Whitelaw, Rt Hon William

Royle, Sir Anthony

Wickenden, Keith

Rumbold, Mrs A. C. R.

Wiggin, Jerry

Sainsbury, Hon Timothy

Wilkinson, John

St. John-Stevas, Rt Hon N.

Williams, D.(Montgomery)

Scott, Nicholas

Woodall, Alec

Shaw, Giles (Pudsey)

Younger, Rt Hon George

Shaw, Sir Michael (Scarb')

Shelton, William (Streatham)

Tellers for the Ayes:

Shepherd, Colin (Hereford)

Mr. Anthony Berry and

Shepherd, Richard

Mr. Carol Mather.

Shersby, Michael

NOES

Abse, Leo

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

Adams, Allen

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

Allaun, Frank

Brown, Ron (E'burgh, Leith)

Anderson, Donald

Buchan, Norman

Archer, Rt Hon Peter

Callaghan, Rt Hon J.

Ashley, Rt Hon Jack

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

Ashton, Joe

Campbell, Ian

Atkinson, N. (H'gey,)

Campbell-Savours, Dale

Bagier, Gordon A. T.

Cant, R. B.

Barnett, Guy (Greenwich)

Carmichael, Neil

Barnett, Rt Hon Joel (H'wd)

Carter-Jones, Lewis

Beith, A. J.

Clark, Dr David (S Shields)

Benn, Rt Hon Tony

Clarke, Thomas C'b'dge,

Bennett, Andrew (St'kp't N)

A'drie

Bidwell, Sydney

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

Booth, Rt Hon Albert

Cohen, Stanley

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

Coleman, Donald

Bradley, Tom

Concannon, Rt Hon J. D.

Bray, Dr Jeremy

Conlan, Bernard

Brown, Hugh D. (Provan)

Cook, Robin F.

800

Cowans, Harry

Kerr, Russell

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

Kinnock, Neil

Crawshaw, Richard

Lamond, James

Crowther, Stan

Leadbitter, Ted

Cryer, Bob

Leighton, Ronald

Cunliffe, Lawrence

Lestor, Miss Joan

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

Lewis, Ron (Carlisle)

Dalyell, Tam

Litherland, Robert

Davidson, Arthur

Lofthouse, Geoffrey

Davies, Rt Hon Denzil (L'lli)

McDonald, Dr Oonagh

Davis, Clinton (Hackney C)

McElhone, Frank

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

McGuire, Michael (Ince)

Deakins, Eric

McKay, Allen (Penistone)

Dean, Joseph (Leeds West)

McKelvey, William

Dewar, Donald

MacKenzie, Rt Hon Gregor

Dixon, Donald

Maclennan, Robert

Dobson, Frank

McNally, Thomas

Dormand, Jack

McWilliam, John

Douglas, Dick

Marks, Kenneth

Dubs, Alfred

Marshall, D (G'gow S'ton)

Duffy, A. E. P.

Marshall, Jim (Leicester S)

Dunn, James A.

Martin, M (G'gow S'burn)

Dunwoody, Hon Mrs G.

Mason, Rt Hon Roy

Eadie, Alex

Maynard, Miss Joan

Eastham, Ken

Meacher, Michael

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

Mellish, Rt Hon Robert

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

Mikardo, Ian

Ellis, Tom (Wrexham)

Millan, Rt Hon Bruce

English, Michael

Miller, Dr M. S. (E Kilbride)

Ennals, Rt Hon David

Mitchell, R. C. (Soton Itchen)

Evans, Ioan (Aberdare)

Morris, Rt Hon A. (W'shawe)

Evans, John (Newton)

Morris, Rt Hon C. (O'shaw)

Ewing, Harry

Morris, Rt Hon J. (Aberavon)

Faulds, Andrew

Morton, George

Field, Frank

Moyle, Rt Hon Roland

Flannery, Martin

Mulley, Rt Hon Frederick

Foot, Rt Hon Michael

Newens, Stanley

Ford, Ben

O'Halloran, Michael

Forrester, John

O'Neill, Martin

Foster, Derek

Orme, Rt Hon Stanley

Foulkes, George

Palmer, Arthur

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

Park, George

Freud, Clement

Parker, John

Garrett, John (Norwich S)

Pavitt, Laurie

Garrett, W. E. (Wallsend)

Pendry, Tom

George, Bruce

Pitt, William Henry

Gilbert, Rt Hon Dr John

Powell, Raymond (Ogmore)

Gourlay, Harry

Prescott, John

Graham, Ted

Price, C. (Lewisham W)

Grimond, Rt Hon J.

Race, Reg

Hamilton, James (Bothwell)

Radice, Giles

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

Rees, Rt Hon M (Leeds S)

Hardy, Peter

Richardson, Jo

Harrison, Rt Hon Walter

Roberts, Albert (Normanton)

Hart, Rt Hon Dame Judith

Roberts, Allan (Bootle)

Hattersley, Rt Hon Roy

Roberts, Ernest (Hackney N)

Haynes, Frank

Roberts, Gwilym (Cannock)

Healey, Rt Hon Denis

Robinson, G. (Coventry NW)

Heffer, Eric S.

Robinson, P. (Belfast E)

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

Rooker, J. W.

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

Roper, John

Home Robertson, John

Ross, Ernest (Dundee West)

Homewood, William

Ross, Stephen (Isle of Wight)

Hooley, Frank

Rowlands, Ted

Horam, John

Ryman, John

Howell, Rt Hon D.

Sandelson, Neville

Howells, Geraint

Sever, John

Hoyle, Douglas

Sheerman, Barry

Huckfield, Les

Sheldon, Rt Hon R.

Hughes, Mark (Durham)

Shore, Rt Hon Peter

Hughes, Robert (Aberdeen N)

Short, Mrs Renée

Hughes, Roy (Newport)

Silkin, Rt Hon J. (Deptford)

Janner, Hon Greville

Silkin, Rt Hon S. C. (Dulwich)

Jay, Rt Hon Douglas

Silverman, Julius

John, Brynmor

Skinner, Dennis

Johnson, James (Hull West)

Snape, Peter

Johnson, Walter (Derby S)

Soley, Clive

Jones, Rt Hon Alec (Rh'dda)

Spearing, Nigel

Jones, Barry (East Flint)

Spriggs, Leslie

Kaufman, Rt Hon Gerald

Stallard, A. W.

801

Stoddart, David

White, Frank R.

Stott, Roger

White, J. (G'gow Pollok)

Strang, Gavin

Whitehead, Phillip

Straw, Jack

Willey, Rt Hon Frederick

Summerskill, Hon Dr Shirley

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

Thomas, Dafydd (Merioneth)

Williams, Rt Hon Mrs (Crosby)

Thomas, Jeffrey (Abertillery)

Wilson, Gordon (Dundee E)

Thorne, Stan (Preston South)

Wilson, Rt Hon Sir H. (H'ton)

Tilley, John

Wilson, William (C'try SE)

Tinn, James

Winnick, David

Torney, Tom

Woodall, Alec

Urwin, Rt Hon Tom

Woolmer, Kenneth

Varley, Rt Hon Eric G.

Wrigglesworth, Ian

Wainwright, E. (Dearne V)

Wright, Sheila

Wainwright, E. (Dearne V)

Young, David (Bolton E)

Walker, Rt Hon H. (D'caster)

Weetch, Ken

Tellers for the Noes:

Wellbeloved, James

Mr. Hugh McCartney and

Welsh, Michael

Dr. Edmund Marshall.

Question accordingly agreed to.

Orders of the Day
  Legal Aid Bill [Lords]
  As amended (in the Standing Committee), considered.
  Legal Aid Bill [Lords]
    New Clause 1

      RESTRICTIONS ON ORDERS FOR CONTRIBUTORS
      'Where a legal aid order is made pursuant to section 7 above giving legal aid

      (a) to a person under the age of twenty-one years;

      (b) to any person in respect of an offence punishable by a term of imprisonment of more than seven years.

      any contribution order required shall not be payable by more than one instalment and shall not exceed the amount which he is capable of paying forthwith in accordance with the Regulations made for the purposes of section 7 above.'.— [Mr. Archer.]
      Brought up, and read the First time.
      7.28 pm
      Mr. Peter Archer: I beg to move, That the clause be read a Second time.
      The new clause concerns the most controversial provision in the Bill, which introduces contribution orders. The issue was discussed repeatedly in Committee and we have made it clear that we believe that the introduction of these orders is a profound mistake. We have given our reasons and I do not propose to repeat them at length. However, as the argument for the clause is that in two categories of case our reasons apply with particular force, I am bound to remind the House of the nature of our previous debates.
      First, we believe that contribution orders will discourage those who are charged with criminal offences from accepting legal aid orders. We know that about 20 per cent. of those who are offered civil aid certificates for civil proceedings reject the offer when they are told of the contribution that they will have to make. And, as the hon. Member for Anglesey (Mr. Best) said on Second Reading, there air many who will not ask for legal aid orders in the knowledge that a contribution will be required. He helpfully drew the Committee's attention to paragraph 4.35 of the report of the Benson Commission, which said:
      "We have received evidence that potential clients are deterred from consulting a solicitor for fear of incurring substantial costs. We believe that this fear, even when unjustified, is a very real one and everything possible should be done to allay it."
      In the presence of the hon. Gentleman, I must tell him that we greatly regretted his absence during the Committee, which we did not believe was his fault.
      7.30 pm
      Of course, it may not be in the best interests of a defendant not to avail himself of legal aid, even when it is subject to a contribution, but people under pressure do not always act according to enlightened self-interest. So we believe that the consequences will be either that those who have a defence will nevertheless plead guilty or that they will conduct contested cases unrepresented. Those consequences will not be conducive either to the ends of justice or to the expeditious dispatch of business in the courts. That is our first objection.
      Secondly, we believe that there will be problems of enforcement. The Solicitor-General explained in Committee that the normal methods of enforcement will not take effect until the proceedings are terminated, so that

      803
      all that can be done during the proceedings is to invite the court to consider whether to revoke the order. If the arrears accumulate at the committal stage, the matter will fall to be considered by the magistrates' court. I am sure that it will not overlook the fact that if it revokes the order and the defendant appears unrepresented, it will be necessary to have a full committal in the old style. If there are other defendants, they will all be involved in a long committal. That will ensure that every penny which might have been recovered by way of contributions will be more than swallowed up in the additional costs.
      If the matter reaches the Crown court, it will fall to the Crown court to consider whether the order should be revoked. We have been told that there will be no revocation until the defendant has had an opportunity to make representations. So there will be an interruption of all the other court business while there is a hearing before the judge, so that he can hear the representations and consider whether to revoke the order. And there will be consequent demands on court time with all the expense that accompanies it. No doubt the judge will reflect that if he revokes the order he may find himself hearing a contested case with an unrepresented defendant, so he will be unlikely to activate that consequence.
      So, while the unknowledgeable, small-time criminals and inadequates will refuse legal aid orders, this will get around among the cognoscenti: "Do not refuse the order. Just apply for it and then default on your contributions. Nothing very much will happen to you". The Widgery committee gave that as one of its carefully considered reasons for advising against the proposal which the Bill seeks to introduce.
      Thirdly, a new range of tasks will be added to those of the staff of magistrates' courts. It may emerge that, after all the injustice, the heartaches and the aggro, such savings as emerge will be swallowed up in overtime payments to clerks in magistrates' courts. They will have to investigate means to assess the total contribution, to divide it into the appropriate number of instalments, to collect and record such it instalments as are paid, to watch for the arrears' and notify em to the courts. They will have to reassess the resources when there is a change of circumstances.
      At present the circumstances of some of my constituents change from week to week. This week they are working overtime to deliver an order and retain a much needed customer. Next week they are reduced to part-time working. The week after they are retained by their employer only with the help of temporary short-time subsidy. So all those calculations will fall to be made not once, but repeatedly.
      We have seen the anxieties which have been occasioned in the legal profession by the Government's proposals to close legal aid assessment offices in areas such as Leeds and Cardiff. Solicitors believe that that will delay yet further the processing of applications for civil legal aid. We shall seek other opportunities to debate that. The magistrates' courts will not find those problems any easier to solve when applied to criminal legal aid.
      The measure would entail taking on more staff. The Solicitor-General sought to reassure us that the extra work could be absorbed by the existing staff. So we assume that that would entail overtime working. We find it hard to believe that at present the staff of the magistrates' courts have so much spare capacity that they can absorb the extra work without creating a ripple on the surface.
      804
      The anxieties expressed by the Law Society in a letter sent to the hon. Members on 19 May were well founded. The contents of that letter were much discussed in Committee. It was concerned, among other things, that the
      "proposed new arrangements will not cause any increase in delay in the grant of legal aid or in the possibility of later delays if there is a failure to pay later instalments of contribution."
      I hope so, too.
      Those are the reasons which we deployed. I do not propose to repeat all those reasons in detail. Our arguments fell on deaf ears. The Government are persisting in their proposals. All those who offered the benefit of their expertise to the Government and who gave so much careful study to the subject—the Legal Action Group, the National Council for Civil Liberties, the Child Poverty Action Group, the National Association of Citizens Advice Bureaux, the National Association of Probation Officers and even the Legal Aid Practitioners Group, with so much expertise and experience—will be left to cry out in future "We told you so."
      The recommendations of the Widgery committee have been ignored. The recommendations of the Royal Commission on legal services have been ignored. But all that advocacy pales before a much more persuasive advocate. I shall quote a formulation of the case, on which I cannot improve:
      "I quite understand that it is attractive to say that a man who is proved to have means and who, after a long trial, is convicted ought to pay something towards the costs of his own unsuccessful defence. At first sight, there would appear to be no flaw in that argument, but the answer, surely, is that if he has means he can be dealt with by being ordered to pay the whole or a substantial part of the costs of the prosecution, without any additional legislative structure, and to pay a fine in addition. If, on the other hand, he is acquitted, I see no reason why he should be asked to contribute towards the cost of his defence."— [Official Report, 12 December 1966; Vol. 738, c. 80.]
      That was said by the Lord Chancellor in a former incarnation. He said it during the Second Reading debate on the Criminal Justice Bill, Hon. Members who were in the Committee on that Bill will recollect an exchange between the right hon. and learned Member for Runcorn (Mr. Carlisle) and me about our respective attitudes to what became the provision of the Criminal Justice Act 1967. He opposed the proposal, as he fairly said, because the contribution was to be levied at the end of the proceedings. The right hon. and learned Gentleman argued for the proposal in the present Bill, so he can claim, as he did with a great deal of justification, that he is being thoroughly consistent, although consistency in a bad cause is a dubious value. I had the advantage of being a PPS at the time, so I retained my normal taciturnity and said nothing during the debates on the proceedings of that Bill which might be quoted against me.
      I voted for the Widgery proposals, which represent the present position. I have never sought to resile from that. The Lord Chancellor, as he then was not, leading for the Opposition at the time, opposed the very principle of providing for any contribution towards criminal legal orders. He was far more hostile than either the right hon. and learned Member for Runcorn or I on that matter. He insisted that there should be no order until the result of the proceedings was known because, he said, it was monstrous that someone might have to make a contribution to the costs of the defence if it transpired that he was acquitted. In Committee, the Lord Chancellor gave the very warning which we have repeatedly given in the present proceedings. On 14 March 1967 he said:

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      "Is it not also dangerous? May it not also be the case that persons who would justifiably have asked for legal aid in order to put forward a defence which might well succeed would be deterred from doing so if they knew, as they will do as I understand Clause 45—if I am wrong I hope to be corrected—that a large sum of money will be mulcted from them towards the legal representation they thereby obtain? I think that persons of that kind will be found and that proper defences will be deterred by those provisions if they are carried into effect. "— [Official Report, Standing Committee A, 14 March 1967; c. 846.]
      He was less charitable to the arguments for requiring any contribution than we have been. He dismissed the then Government's briefing by invoking the words of Chesterton:
      "easy speeches
      That comfort cruel men."
      I do not say that. I do not believe that the Lord Chancellor is a cruel man. I do not believe that the Solicitor-General finds the speeches which he has been making on the subject easy. Perhaps the fault lay with our advocacy of the case. With all the arguments and authorities on our side, we failed to persuade the Government. So the proposal will proceed. We are realistic enough to recognise that we cannot prevent it.
      The new clause accepts that and tries only to restrict it. It is common ground that we must balance the potential savings, such as they are, against the undoubted disadvantages. We propose that it might not apply in two cases where the objections appear especially strongly and where, therefore, the balance of the argument is substantially altered. The first is the case of people under the age of 21. There are many precedents in statute law for distinguishing between persons aged under 21 and persons aged 21 or more. Such a precedent appears in the Powers of Criminal Courts Act 1973 which provides in section 19 for sentences of imprisonment on people aged under 21. In section 21 of that statute, limitations are imposed on the powers to impose custodial sentences on a person under 21 if he is unrepresented.
      Mr. Keith Best (Angelsey): Before the right hon. and learned Gentleman develops that point, perhaps I may return to a general one that he made earlier. He was good enough to refer to me in the opening part of his speech. Does he agree that the present system is that a small down payment is required and at the end of the case further consideration is given about a final contribution? If a person is acquitted, as the right hon. and learned Gentleman will accept, it is the experience of most practitioners that that is not required. As I understand it, the Bill will provide that there will be a continuing contribution until the conclusion of the case. Does the right hon. and learned Gentleman envisage—it would seem to follow that this would be the case, to be fair—if a person is acquitted an order will be made for the repayments to that person of the payments that have been made?
      7.45 pm
      Mr. Archer: The present position is exactly as the hon. Gentleman outlined it. If he read the report of our debate in Committee, the hon. Gentleman would recollect that the Bill provides for the remission of contributions until the hearing. So those who have made some of their contributions but not all will not be required to pay the
      806
      remainder. I understand that, except after acquittal, there is no provision for the return of contributions which have already been made. There is, therefore, a risk of real injustice, the very injustice that the Lord Chancellor referred to when he led the then Opposition. I am grateful to the hon. Gentleman for pointing that matter out. He will understand that I have skated over much of the ground that was covered in Committee simply in the interests of brevity.
      There are respectable precedents for making the distinction which we now seek to make between people aged under 21 and people aged 21 and over. I mentioned two provisions in the Powers of Criminal Courts Act 1973, one of which specifically refers to people under 21 who are unrepresented. They are repeated in clauses 1 and 2 of the Criminal Justice Bill now reaching its final stages in the House. I notice that the first nine clauses of that Bill are headed "Custody and detention of persons under 21". So we are making a respectable distinction, especially for the purpose for which we are making it—the need for representation. There are several relevant considerations. First, if a person under 21 is asked for a series of contributions, it is less likely that that person will be in stable employment. He will therefore be less likely to have the capacity for making adjustments to his expenditure. That, in turn, will make it more likely that he will be deterred from applying for a legal aid order or from accepting one if it is offered. If that person appears unrepresented, he is probably less likely to have the assurance to deal with the situation and to make an adequate defence. He is less likely to be articulate in a formal setting. There is a real danger that justice will not be done. If the courts have that in mind, as we hope that they will, it is probably less likely that arrears will be visited with revocation. But, again, those who will benefit will be those who are knowledgeable and most in touch with professional hardened criminals, those who are most experienced in these matters. As it is less likely that someone under 21 will be in stable employment, the prospect of variations in his income from week to week will be so much the greater. That will lead to additional work and overtime in the offices of magistrates' courts. All the arguments which we have deployed against the proposals are enhanced in the case of defendants aged under 21.
      As for a defendant who faces the prospect of a long term of imprisonment, the dangers of appearing without adequate advice and proper representation are clearly so much the greater than in other cases. It has been suggested that legal aid ought to be provided irrespective of means and without any contribution for some offences. To discuss the possibility of free representation for defendants in criminal cases would extend beyond the permissible boundaries of the debate. The same is true of a discussion of whether justice requires that for some offences representation should be available as of right.
      But we are not going as far as that. We say only that for these offences the position should remain as it is. That has been outlined concisely by the hon. Member for Anglesey. We suggest that seven years' imprisonment should be the cut-off point. Some may believe that that leaves too wide an area in which the defendant who faces a substantial sentence will be left to the circumstances that will follow from the Government's proposals. We deliberately made our proposal extremely limited.

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      We are not trying to challenge what the Government are doing, however much we may deplore it. We are trying to provide for exceptions in two cases. There are two classes of case where the Government's proposals would operate especially harshly, so harshly that the whole balance of the argument is changed. Our proposals are restrained to the point where they might be criticised as selling out to the Government. I hope that the Solicitor-General will respond in the same spirit. We have a legal system of which we properly like to boast. It still enjoys the respect of the world. But I suspect that we now want to have it on the cheap. There are limits as to how far it will retain that respect if we insist on cutting too many corners. The Lord Chancellor was right in 1967. The new clause is really a proposal that he should eat only half the words that he uttered then rather than all of them.
      Mr. Clinton Davis: I shall be brief. As a practising solicitor and one who practised in the criminal courts for a fair period, I read the Official Report of the Committee proceedings with great interest and formed the view—I hope that I am right—that the Solicitor-General did not really have his heart in these proposals. On the practical fears expressed by hon. Members on both sides that in some circumstances the ineluctable result of the Government's proposals would be that defendants would go unrepresented, the right hon. and learned Gentleman's replies were unconvincing to say the least and did not grapple with the real practicalities of the situation.
      The new clause seeks to mitigate some of the worst features of legislation that is not only offensive but impracticable. The Government should look afresh at the likely consequences of this. The case that has been put by so many organisations is overwhelmingly against the proposals. The Government may not wish to look at it afresh as a matter of principle, but in strictly practical terms they should reconsider the proposals, because I believe that the Lord Chancellor and the Law Officers have been impelled to make this decision not on any question of principle or because they really believe in it, but because the Treasury is demanding that they try to make savings in legal aid.
      If there are any savings, as the Solicitor-General claimed in Committee and on Second Reading there would be, I believe that they will be minimal. The burden rests upon him—he has signally failed to discharge it in any of the debates so far—to prove that the savings will be worth while. Indeed, he must do more than that. He must show, as in my submission he has failed to do so far, that the rights of a substantial number of people to be represented and to have their cases properly defended will not be imperilled. The courts will face grave difficulties, as they will have no real flexibility. A person may be tried on a serious charge involving complex matters on which he cannot defend himself properly. If such a defendant is without representation, that will be a grave reflection on the standards of justice that we have come to expect, and are entitled to expect, in this country.
      I shall say nothing of some of the other issues that were raised, as they are not wholly germane to the new clause. In my view, however, my right hon. and learned Friend the Member for Warley, West (Mr. Archer) has put an unassailable case in favour of mitigating at least one of the worst consequences of the proposals. The overwhelming
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      majority of solicitors who practise daily in the criminal courts—I am no longer one of them—fear that the consequences of the legislation will be dramatic.
      To make matters worse, as my right hon. and learned Friend has pointed out, there will be a similarly dramatic increase in the administrative burdens on the already heavily overworked court staff. As a result of other Government policies, sufficient staff to undertake the increased duties are not available. That in itself is serious enough.
      It is just not good enough for the Solicitor-General blandly to rebut the argument by saying that he is satisfied that everything 'will work out all right, that there are sufficient staff and so on, as he blandly asserted in Committee. Incidentally, the note that he struck in those debates was strongly in contrast to the note that he struck in debates on earlier Bills when he was leading for the Opposition and I was the Minister, when he expressed concern about the increased burden of duties on staff dealing with bankruptcies and insolvencies. In many respects, those were far less serious matters than the issues with which we are now dealing. As my right hon. and learned Friend the Member for Warley, West took part in the debates on at least one of those Bills, he will no doubt recall the stance taken by the right hon. and learned Gentleman at that time and how markedly different it was from his stance on these proposals as Solicitor-General.
      I fear that unless a new clause along these lines is accepted, grave hardship will result for this group of people. It is incumbent upon the Solicitor-General to allay the anxieties which we have expressed today and which my right hon. and learned Friend and others expressed in Committee. So far, he has signally failed to do that. We do not make these proposals in any party political sense. Grave anxieties are felt by many people in both professions. The Solicitor-General should not be allowed today to get away with the broad general assurances that posed for genuine argument in previous debates.
      Mr. Best: The Government have argued that one of the objects of the Bill is to introduce greater fairness and to try to achieve a contribution towards defence costs from those who are clearly able to pay—particularly, if I may say so, those who have benefited from crime and who have managed to secrete their unlawfully gained assets. Such people find it easy to pay for the topmost lawyers in the country to put forward defences and sometimes to gain acquittals that might not have been obtained by less expert lawyers.
      The position was set out quite fairly in an article in The Sunday Times of 11 July under the rather unfortunate title "How Lawyers Bend Justice". The article concludes by mentioning a case in which
      "the juror said that the poor performance of the defence counsel was a factor in the decision to find the men not guilty—the jury felt sorry for them!"
      No doubt that is the only reason why I ever achieved acquittals. The article also states:
      "The three most lucrative areas for organised crime in Britain are gambling, drugs, and pornography. Men charged with serious criminal offences in these areas have virtually unlimited money to pay for their defence. It follows that they can afford to engage the finest that the Bar can offer."
      It is those people whom the Bill is largely designed to catch. We must judge the Bill on whether it will achieve that objective.

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      8 pm
      Another reason for the Bill is to try to equate criminal legal aid more with civil legal aid in the way in which contributions are made. However, there is a difference in that, whereas access to the civil courts is on a voluntary basis, access to the criminal courts is not voluntary for those who are charged with offences. The hon. Member for Hackney, Central (Mr. Davis) is right to express the fear that these provisions may act unfairly. We must examine the provisions to see whether that fear can be assuaged.
      I restrict my remarks to the new clause. There are three potential elements of unfairness. The first is the ability of the legally aided person to pay the contributions. Clearly, if he is unable to do so he will not be properly represented. That would be wrong. The second is the contribution expected from other persons, particularly spouses. Neither of those two matters comes within the new clause, but there will be an opportunity to debate them later.
      The third unfairness is whether, at the conclusion of a trial, a person who is acquitted and who has been brought to trial through no fault of his own—he has not put himself in a perilous position—will receive repayment of contributions made under the present system. There is a small down payment and at the end of the trial it is a matter for the judge or the magistrates to decide whether an extra contribution should be made. Under the Bill there will be a continuing course of payment. That will operate unfairly if no provision is made for repayment, as the right hon. and learned Member for Warley, West (Mr. Archer) said, not just of payments made from the beginning of the trial, but in respect of payments made before that time.
      Mr. Clinton Davis: I am not anxious to rush to the defence of the Government on this or any other matter, but there would be provision for just such a case as the hon. Gentleman cites for the judge to award costs in one form or another to a defendant. That would have the effect that the hon. Gentleman seeks to obtain.
      Mr. Best: I am grateful to the hon. Gentleman because he has pre-empted my peroration. Therefore, he will agree that the new clause is not justified and that the Government should be supported. Clause 8(5) states:
      "At the conclusion of the relevant proceedings the court in which those proceedings are concluded may, if it thinks fit—
      (a) remit any sum due under a legal aid contribution order from a legally assisted person which falls to to be paid after the conclusion of those proceedings or, if that person has been acquitted, remit or order the repayment of any sum due from or paid by him under such an order".
      More important, the subsection continues
      "(b) remit or order the repayment of any sum due from or paid by an appropriate contributor under such an order; and where a legally assisted person successfully appeals against his conviction the court which allows his appeal may remit or order the repayment of any sum due from or paid by him or an appropriate contributor under such an order."
      I am glad that the hon. Gentleman and I seem to be ad idem. The facility is provided within the Bill and that assuages my fears on that matter.
      Mr. Archer: Will the hon. Gentleman answer two questions? Since that provision applies only where there is an acquittal, how is the person aged under 21 to know in advance whether he will be acquitted? Secondly, how many young people under 21 does the hon. Gentleman think will have read clause 8(5)?
      Mr. Best: The clause does not refer only to an acquittal. It states:
      "At the conclusion of the relevant proceedings the court in which those proceedings are concluded may, if it thinks fit".
      It adds:
      "which falls to be paid after the conclusion of those proceedings or, if that person has been acquitted, remit or order the repayment of any sum".
      The right hon. and learned Gentleman is correct in that respect.
      My point is that the unfairness would reside in a Bill that would not enable a person who was acquitted to be able to recoup, by order of the learned judge at the conclusion of the proceedings, payments made when that person had been brought to court through no fault of his own. Under the present system no costs are awarded to a successful defendant if, in the consideration of the learned judge at the conclusion of the proceedings, that person has brought the proceedings on his own head. The clause appears to make no fundamental difference to the existing system.
      Mr. Jeffrey Thomas: Will the hon. Gentleman tell us why the normal rule and principle relating to costs should not apply? That is to say, costs follow the event. There has been a recent practice direction by the Lord Chief Justice. Why should not those rules apply?
      Mr. Best: That would be importing the whole element of cost in civil courts into the criminal courts. I accept the hon. and learned Gentleman's comments about the recent direction by the Lord Chief Justice. That is helpful to the Bill. The courts will be able to translate that guidance from the Lord Chief Justice into reality through this clause. There is nothing arcane in that. There is nothing to prevent a court from following the advice of the Lord Chief Justice.
      Mr. Clinton Davis: I hope that the hon. Gentleman's answer to my question will not be as arcane as that given to the hon. and learned Gentleman. Is it not a fact that the merits of the defence where a court decides to award costs are never explored? A submission may be made on grounds of law to dismiss the case and the judge may have to uphold that, although he has not heard the full nature of the defence. In such circumstamces, there is a risk that many courts will not deem it appropriate to make an award of costs or remit the payments that have been made. Does the hon. Gentleman perceive that danger?
      Mr. Best: I disagree with the hon. Gentleman. One is capable of perceiving whether a defendant has brought proceedings on his own head by looking at the prosecution papers. One does not need to know the nature of the defence. The prosecution papers will show whether a person has put himself in a perilous position. Those papers are available to the learned judge who will make his decision, perhaps halfway through the case after legal argument that there is no case to answer, or on acquittal after the evidence produced by the prosecution and the defence.
      Mr. Jeffrey Thomas: I am grateful for this opportunity to make a short contribution to an extremely important debate. If I express my apprehension that not more hon. Members are present, it is simply because this is not a lawyers' Bill—no doubt the rumour circulating in the Corridors is that it is—but rather a consumers' Bill in a real

      811
      and meaningful sense of the word. Frankly, the consumer—the person who wants to apply for legal aid—is being sold very short indeed.
      I hope that the Solicitor-General will not think it offensive if I ask why the Government, in a most obstinate way, are setting their face against all the advice given to them by so many bodies outside the House. Often, in Committee and thereafter, Governments of the day are faced with mounting criticism. In this case, the Law Society, National Council for Civil Liberties, the Legal Action Group and so on were to a man unanimously opposed—
      The Solicitor-General (Sir Ian Percival): It must have been a slip of the tongue, but the Law Society is certainly not opposed to these proposals. I invite the hon. and learned Gentleman to look at the agreed statement made at the last sitting of the Committee.
      Mr. Thomas: Although the Law Society made an agreed statement, the vast majority of the solicitors' profession—I use the Law Society in that sense—is totally opposed to certain provisions in the Bill, as the hon. Member for Hackney, Central (Mr. Davis) said, for very good reasons. Those solicitors are concerned, as is the SDP, that rights given to citizens by the Legal Aid and Advice Act 1949 will be denied to the ordinary man in the street who wishes to apply for legal aid. The Government are driving a coach and horses through the principles enshrined in that Act.
      Mr. Clinton Davis: While I support the general tenor of what the hon. and learned Gentleman is saying, there is something that I have difficulty understanding. The hon. and learned Gentleman served on the Committee, and although he holds these strong views I do not believe that he ventilated them or exercised his vote in any way. Does that represent the standards that are currently deployed by the Social Democrats?
      Mr. Thomas: If the hon. Gentleman wishes to make a cheap party point, in keeping with the kind of philosophy permeating the old parties these days, so be it. Had he been present at the first sitting of the Committee he would have heard me voice my disquiet about these provisions. I therefore hope that he will have the courtesy to withdraw what he has just said.
      Mr. Clinton Davis rose—
      Mr. Thomas: I shall certainly give way if the hon. Gentleman wishes to withdraw what he said.
      Mr. Clinton Davis: The hon. and learned Gentleman was certainly present at the Second Reading Committee, but he was not present at any time when a vote was taken. Is that correct?
      8.15 pm
      Mr. Thomas: The hon. Gentleman alleges that I did not express my views in Committee. That is wholly untrue. I had hoped that the hon. Gentleman would withdraw his remarks, but he has not the decency to do so.
      These changes are designed to bring criminal legal aid more into line with civil aid. There is a crucial difference between the two. In criminal cases it is not a question of a person voluntarily coming before the courts, and there is an assumption that a defendent is innocent until proved guilty. That is why I was surprised at some of the views of the hon. Member for Anglesey (Mr. Best) on costs.
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      The SDP is worried about several aspects of the Bill. We are worried by the fact that the wife's income can be taken into account when deciding what contribution can or should be made to a husband's defence. If the breadwinner is convicted and imprisoned, the wife could find herself in the intolerable situation of having no alternative in certain circumstances but to apply for supplementary benefit.
      The civil legal aid system costs about £12 million a year to administer. So far as I know, the Government have not given an assessment of how much this measure will cost, but the proposed new scheme will certainly equal the cost of administering the civil legal aid scheme. In 1979 the Royal Commission on legal services concluded that such costs were prohibitive.
      The Government are seeking to hit persons at a most vulnerable time in their lives, when they have been charged with criminal offences and are often not at their best in reaching sensible, reasonable or dispassionate conclusions on the conduct of their affairs. That is repugnant.
      The House has no power over the administration of this scheme or the civil legal aid scheme, no Minister is directly responsible for legal services and the legal system, and the Lord Chancellor's Department is the only Department that is not subject to Select Committee scrutiny. Those are three cogent reasons for supporting the new clause.
      I am particularly perturbed at the twelfth report of the Public Accounts Committee on the administration of justice and court fees, which suggests that the Government should seek to recover a greater proportion of the costs of providing court services, including the salaries of judges, by increasing court fees. The cost would inevitably fall on those who use the courts. That was made plain in the evidence to the Committee, including the evidence of the permanent secretary to the Lord Chancellor's Department.
      It appears that the Government's reason for introducing the proposal is to claw back as much money as possible from those who are using the criminal courts. At the same time, with regard to the civil courts, the costs of going to law will become more and more prohibitive. We believe that we are returning to the pre-1948 position, and it will be said that justice, like the Ritz Hotel, is open to all. That is the danger of the Government's proposal, and that is why we shall support the new clause.
      The Solicitor-General: I can only describe the remarks of the hon. and learned Member for Abertillery (Mr. Thomas) as an absolute travesty of the arguments. It may be that because he has taken so little part in them to date he has not grasped them. The hon. and learned Gentleman said that I know that the overwhelming majority of solicitors are against the Government's proposal. That is absolute rubbish. If the hon and learned Gentleman had been in Committee or had read the report of it, he would know that the Law Society supports and always has supported the principle that those who can afford to make a contribution should do so.
      Perhaps it has escaped the hon. and learned Gentleman's attention and that of his hon. Friend the Member for Southampton, Itchen (Mr. Mitchell) that the organisations which are opposed to the Bill—I shall not use the exaggerated terms that other hon. Members have used—are opposed in principle to any contribution to criminal legal aid. That is at the basis of their opposition.

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      The hon. and learned Gentleman also accused the Government of seeking to hit at persons at a vulnerable time. That is absurd. I have said over and over again that it is up to the Government to make the regulations. The onus is on us to make the regulations in such a form that only those who can afford to pay have to pay. If we fail to make the regulations in a form that gives effect to that, of course everyone may criticise us. I have never shrunk from that. It is a pity that there are so many prophets of doom.
      Mr. Jeffrey Thomas: Having regard to the tone of the Solicitor-General's speech and putting aside the cant and the humbug, the Law Officers have become the Treasury's poodles.
      The Solicitor-General: Where the cap fits, wear it. Perhaps those who speak of cant and humbug know more about it than the Government.
      This is a straightforward difference of opinion. The groups to which the right hon. and learned Member for Warley, West (Mr. Archer) referred in much more measured terms than the hon. and learned Gentleman—who seems intent on cramming as much as he can into a few lines—recognised that there is a genuine difference of opinion here. I should like to tell the hon. Member for Hackney, Central (Mr. Davis), who seems to be able to deduce from the written word what one's feelings are, that there is no question of my heart not being in this. I believe the argument is right. It is a short one and I recognise that others may hold different views, but I think that they might at least do us the credit of allowing us to hold our views with equal sincerity.
      I am sorry that hon. Members feel it necessary to be such prophets of doom. It is said widely that the Government's proposal will discourage people from accepting legal aid. If we get the regulations wrong and people have to pay sums that they cannot afford to pay, it will discourage them, but there is no reason to put the point in the terms in which it has been put.
      It is also said that there will be problems of enforcement. There will be assessment and administrative problems, but no one on the Government Benches has ever shrunk from these. What very few right hon. and hon. Members on the Opposition Benches seem to want to recognise is that we have had extremely detailed discussions with those who will have to work the system. Surely they are the people best able to express an opinion about it. They might be wrong. Some of the fears expressed might come about, but there has been a tremendous amount of thought and effort put into ensuring that those fears do not come about. The system will be as simple as possible. The Justices Clerks Association, representing those who will have to carry out the administrative work, accepts the difficulties that will have to be faced and assures us that it can cope with them. This scheme is not something thought up by the Government themselves. The essence of it originated from those professions, which are now said, without justification, to be overwhelmingly against it. The Justices Clerks Association has had a hand in the detailed working from the start.
      The right hon. and learned Member for Warley, West referred to the speech of my noble and learned Friend in the other place. He gave me 10 minutes' notice but that
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      is not sufficient time in which to take instructions. I should, however, like to remind the House of what my noble and learned Friend said at the beginning—
      Mr. Archer: The speech was not in another place. It was in this House.
      The Solicitor-General: I am grateful for the correction. I shall not take more time on the matter. I shall simply remind the House of what my noble and learned Friend the Lord Chancellor said at the outset of the debate on this matter in the other place. Those who suggest that there are Treasury machinations behind the proposal and that I or any other Law Officer is a tool of the Treasury might take heed of what he said. My noble and learned Friend said:
      "When urgent improvements to the legal aid system are delayed for lack of money—and I regard that as the present situation—it cannot be right to stay as we are. We must ensure that those who cannot afford to contribute are not required to contribute. But we must improve the arrangements so that those who can afford to contribute do make some contribution".—[Official Report, House of Lords, 16 March 1982; Vol. 428, c. 541.]
      That is the purpose of the provisions in the Bill. The Government will stand or fall by whether they give effect to them in the practical details appearing in the regulations. I hope that most people will subscribe to the principle that, while those who cannot afford to contribute should not, those who can afford to contribute should, and that they would wish the Government well in these endeavours.
      Mr. Arthur Davidson: One of the unique features of the contribution proposals outlined in the Bill is the fact that no individual, let alone any reputable organisation, has come out enthusiastically in their favour. The Solicitor-General says that the Justices Clerks Association will willingly work the scheme and will not shrink from the difficulties. That is very different from actively wanting the scheme or actively supporting the scheme. Nothing that the Solicitor-General has said in his speech today or in his speeches in Committee has answered the criticisms made about the administrative costs of the new scheme, of the increased bureaucracy to be brought about and of the potential dangers to the liberty of the individual. The best the Government have managed is some sort of tepid, sceptical and reluctant acquiescence while the fact remains that the overwhelming—
      The Solicitor-General: Would the hon. and learned Gentleman describe the words of the Law Society as being tepid and reluctant acquiescence when it says:
      "The Law Society has always supported the basic proposition that those who can afford to make a contribution, out of income or capital, towards the cost of criminal legal aid, should do so".
      8.30 pm
      Mr. Davidson: Yes, I would, because the Law Society in its briefings to us has never said that it supports the proposals. The Solicitor-General knows that well. Any support that the Law Society has given has been qualified. Whether the Solicitor-General wishes to accept it or not, the fact remains that an overwhelming number of organisations have expressed outright hostility and opposition to the idea of assessing and means testing contributions for criminal legal aid in the same way as for civil legal aid. My right hon. and learned Friend the Member for Warley, West (Mr. Archer) listed those organisations. Since I have referred to the Law Society,

      815
      I shall add that the West London Law Society is strongly opposed to the provisions and said so in its briefings to myself and to other Members of the Committee.
      The Government stand in solitary and far from splendid isolation in supporting the proposals. That is not surprising, since there is no rational justification for them. Nothing that the Solicitor-General said has succeeded in convincing the critics that there will be any discernible saving for the legal aid coffers. On the contrary, all the evidence is that more court staff will be necessary to work out the complicated contribution and payment arrangements. Delays will be caused by defendants wishing to represent themselves rather than seek legal representation. That will place a greater strain on the resources of the police and on court staff. As more defendants either refuse legal aid or withdraw their application on the grounds that they cannot afford the contributions or because they have what they conceive as more urgent claims on their resources, so the administrative costs will grow. Defendants will wish to represent themselves, which will lengthen court proceedings, and more time will be spent by the police and court staff in dealing with defendants personally rather than with solicitors or counsel. It will also lead to further delay in cases that come to trial due to indecision or uncertainty in instructing solicitors to act on a defendant's behalf.
      Thus the proposals cannot be justified on the grounds of making substantial savings. The civil legal aid scheme costs £12 million a year to administer. It is most unlikely that the criminal legal aid scheme, as envisaged by the Government, will cost any less. Since the scheme cannot be justified on grounds of either savings or cost, we are entitled to ask on what grounds can it be justified. It cannot be justified because of major dissatisfaction with the present procedure for granting criminal legal aid. The only reason that can be advanced is the desire that is shared by everyone in the House and everyone with experience of the courts, that those who have high incomes or capital salted away and who are charged with a criminal offence—including the frauds, pornographers and drug peddlers referred to by the hon. Member for Anglesey (Mr. Best)—should not have their legal aid costs paid entirely out of public funds. Of course we agree that we wish to catch such people but it is unlikely, for the reasons put forward by my right hon. and learned Friend the Member for Warley, West and by others in Committee, that they will be caught by the provisions. They will know how to evade payment and will succeed in salting away their funds.
      Those who are likely to be caught are those who are uncertain of their rights and who will plead guilty rather than seek legal representation because they believe that it would be too costly or because they wish to get the case over quickly and more cheaply. But they do not appreciate fully the effect of that or understand that they may have a proper, respectable and ultimately successful defence. Among those greatly at risk are young offenders and juveniles. We wish to protect them by our new clause. A conviction brought about because someone wishes to plead guilty rather than seek legal advice in the mistaken belief that it is better to do so can jeopardise him for the rest of his life. A criminal conviction obtained unnecessarily will haunt him for the rest of his career. We also wish to protect those who face sentences of imprisonment of seven years or more.
      816
      We all hoped that the criticisms of the Bill advanced by the various groups and in Committee by hon. Members on both sides of the House would have caused the Solicitor-General and the Government to withdraw the proposal. However, they have not done so. They have ploughed on and their arguments have become more ragged and spurious. I hope that my right hon and hon. Friends will support the clause in the Lobby and, in so doing, protect many people from the folly of the Lord Chancellor in adding the provision to an otherwise worthwhile Bill.
      Quesion put, That the clause be read a Second time:—
      The House divided: Ayes 211, Noes 274.

      Division No. 291]

      [8.40 pm

      AYES

      Abse, Leo

      Ennals, Rt Hon David

      Allaun, Frank

      Evans, Ioan (Aberdare)

      Anderson, Donald

      Evans, John (Newton)

      Archer, Rt Hon Peter

      Ewing, Harry

      Ashley, Rt Hon Jack

      Field, Frank

      Ashton, Joe

      Flannery, Martin

      Atkinson, N.(H'gey,)

      Ford, Ben

      Bagier, Gordon A.T.

      Forrester, John

      Barnett, Rt Hon Joel (H'wd)

      Foster, Derek

      Beith, A. J.

      Foulkes, George

      Benn, Rt Hon Tony

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

      Bennett, Andrew(St'kp't N)

      Garrett, John (Norwich S)

      Bidwell, Sydney

      Garrett, W. E. (Wallsend)

      Booth, Rt Hon Albert

      George, Bruce

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

      Gilbert, Rt Hon Dr John

      Bray, Dr Jeremy

      Gourley, Harry

      Brown, Hugh D. (Provan)

      Graham, Ted

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

      Grimond, Rt Hon J.

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

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

      Brown, Ron (E'burgh, Leith)

      Hardy, Peter

      Buchan, Norman

      Harrison, Rt Hon Walter

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

      Hart, Rt Hon Dame Judith

      Campbell, Ian

      Hattersley, Rt Hon Roy

      Campbell-Savours, Dale

      Haynes, Frank

      Cant, R. B.

      Heffer, Eric S.

      Carmichael, Neil

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

      Carter-Jones, Lewis

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

      Clark, Dr David (S Shields)

      Home Robertson, John

      Clarke, Thomas C'b'dge,

      Homewood, William

      A'drie

      Hooley, Frank

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

      Howell, Rt Hon D.

      Cohen, Stanley

      Howells, Geraint

      Coleman, Donald

      Hoyle, Douglas

      Concannon, Rt Hon J. D.

      Huckfield, Les

      Conlan, Bernard

      Hughes, Mark (Durham)

      Cook, Robin F.

      Hughes, Robert (Aberdeen N)

      Cowans, Harry

      Hughes, Roy (Newport)

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

      Janner, Hon Greville

      Crowther, Stan

      Jay, Rt Hon Douglas

      Cryer, Bob

      John, Brynmor

      Cunliffe, Lawrence

      Johnson, James (Hull West)

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

      Johnson, Walter (Derby S)

      Dalyell, Tam

      Jones, Rt Hon Alec (Rh'dda)

      Davidson, Arthur

      Jones, Barry (East Flint)

      Davies, Rt Hon Denzil (L'lli)

      Kaufman, Rt Hon Gerald

      Davis, Clinton (Hackney C)

      Kerr, Russell

      Davis, Terry (B'ham Stechf'd)

      Kinnock, Neil

      Deakins, Eric

      Lamond, James

      Dean, Joseph (Leeds West)

      Leighton, Ronald

      Dewar, Donald

      Lestor, Miss Joan

      Dixon, Donald

      Lewis, Ron (Carlisle)

      Dobson, Frank

      Litherland, Robert

      Dormand, Jack

      Lofthouse, Geoffrey

      Douglas, Dick

      McCartney, Hugh

      Dubs, Alfred

      McDonald, Dr Oonagh

      Duffy, A. E. P.

      McElhone, Frank

      Dunwoody, Hon Mrs G.

      McGuire, Michael (Ince)

      Eadie, Alex

      McKay, Allen (Penistone)

      Eastham, Ken

      McKelvey, William

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

      MacKenzie, Rt Hon Gregor

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

      McWilliam, John

      Ellis, Tom (Wrexham)

      Marks, Kenneth

      English, Michael

      Marshall, D(G'gow S'ton)

      817

      Marshall, Dr Edmund (Goole)

      Shore, Rt Hon Peter

      Marshall, Jim (Leicester S)

      Silkin, Rt Hon J. (Deptford)

      Martin, M (G'gow S'burn)

      Silkin, Rt Hon S. C. (Dulwich)

      Mason, Rt Hon Roy

      Silverman, Julius

      Maynard, Miss Joan

      Skinner, Dennis

      Meacher, Michael

      Snape, Peter

      Mikardo, Ian

      Soley, Clive

      Millan, Rt Hon Bruce

      Spearing, Nigel

      Miller, Dr M. S. (E Kilbride)

      Spriggs, Leslie

      Mitchell, R. C. (Soton Itchen)

      Stallard, A. W.

      Morris, Rt Hon A. (W'shawe)

      Stoddart, David

      Morris, Rt Hon C. (O'shaw)

      Stott, Roger

      Morris, Rt Hon J. (Aberavon)

      Strang, Gavin

      Moyle, Rt Hon Roland

      Straw, Jack

      Mulley, Rt Hon Frederick

      Summerskill, Hon Dr Shirley

      Newens, Stanley

      Thomas, Dafydd (Merioneth)

      O'Halloran, Michael

      Thomas, Jeffrey (Abertillery)

      O'Neill, Martin

      Thorne, Stan (Preston South)

      Orme, Rt Hon Stanley

      Tilley, John

      Palmer, Arthur

      Tinn, James

      Park, George

      Torney, Tom

      Pavitt, Laurie

      Urwin, Rt Hon Tom

      Pendry, Tom

      Varley, Rt Hon Eric G.

      Pitt, William Henry

      Wainwright, E.(Dearne V)

      Powell, Raymond (Ogmore)

      Walker, Rt Hon H.(D'caster)

      Prescott, John

      Weetch, Ken

      Price, C. (Lewisham W)

      Wellbeloved, James

      Race, Reg

      Welsh, Michael

      Radice, Giles

      White, Frank R.

      Rees, Rt Hon M (Leeds S)

      White, J. (G'gow Pollok)

      Richardson, Jo

      Whitehead, Phillip

      Roberts, Albert (Normanton)

      Willey, Rt Hon Frederick

      Roberts, Allan (Bootle)

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

      Roberts, Ernest (Hackney N)

      Wilson, Rt Hon Sir H.(H'ton)

      Roberts, Gwilym (Cannock)

      Wilson, William (C'try SE)

      Robinson, G. (Coventry NW)

      Winnick, David

      Rooker, J. W.

      Woodall, Alec

      Roper, John

      Woolmer, Kenneth

      Ross, Ernest (Dundee West)

      Wrigglesworth, Ian

      Ross, Stephen (Isle of Wight)

      Wright, Sheila

      Rowlands, Ted

      Young, David (Bolton E)

      Sandelson, Neville

      Sever, John

      Tellers for the Ayes:

      Sheerman, Barry

      Mr. James Hamilton and

      Sheldon, Rt Hon R.

      Mr. George Morton.

      NOES

      Alexander, Richard

      Budgen, Nick

      Alison, Rt Hon Michael

      Bulmer, Esmond

      Amery, Rt Hon Julian

      Butcher, John

      Ancram, Michael

      Cadbury, Jocelyn

      Arnold, Tom

      Carlisle, Kenneth (Lincoln)

      Aspinwall, Jack

      Chalker, Mrs. Lynda

      Atkins, Robert (Preston N)

      Chapman, Sydney

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

      Churchill, W. S.

      Baker, Kenneth(St.M'bone)

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

      Baker, Nicholas (N Dorset)

      Clark, Sir W. (Croydon S)

      Beaumont-Dark, Anthony

      Clarke, Kenneth (Rushcliffe)

      Bendall, Vivian

      Clegg, Sir Walter

      Bennett, Sir Frederic (T'bay)

      Cockeram, Eric

      Benyon, Thomas (A'don)

      Colvin, Michael

      Benyon, W. (Buckingham)

      Cope, John

      Best, Keith

      Cormack, Patrick

      Bevan, David Gilroy

      Corrie, John

      Biffen, Rt Hon John

      Costain, Sir Albert

      Biggs-Davison, Sir John

      Cranborne, Viscount

      Blackburn, John

      Crouch, David

      Blaker, Peter

      Dickens, Geoffrey

      Bonsor, Sir Nicholas

      Dorrell, Stephen

      Boscawen, Hon Robert

      Douglas-Hamilton, Lord J.

      Bowden, Andrew

      Dover, Denshore

      Boyson, Dr Rhodes

      Dunn, Robert (Dartford)

      Braine, Sir Bernard

      Durant, Tony

      Brinton, Tim

      Eden, Rt Hon Sir John

      Brooke, Hon Peter

      Edwards, Rt Hon N. (P'broke)

      Brown, Michael(Brigg & Sc'n)

      Eggar, Tim

      Browne, John (Winchester)

      Elliott, Sir William

      Bruce-Gardyne, John

      Emery, Sir Peter

      Bryan, Sir Paul

      Eyre, Reginald

      Buchanan-Smith, Rt. Hon. A.

      Fairbairn, Nicholas

      818

      Fairgrieve, Sir Russell

      McCrindle, Robert

      Faith, Mrs Sheila

      Macfarlane, Neil

      Farr, John

      Macmillan, Rt Hon M.

      Fell, Sir Anthony

      McNair-Wilson, M. (N'bury)

      Fenner, Mrs Peggy

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

      Fisher, Sir Nigel

      McQuarrie, Albert

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

      Madel, David

      Fletcher-Cooke, Sir Charles

      Major, John

      Fookes, Miss Janet

      Marland, Paul

      Forman, Nigel

      Marlow, Antony

      Fowler, Rt Hon Norman

      Marshall, Michael (Arundel)

      Fraser, Peter (South Angus)

      Marten, Rt Hon Neil

      Fry, Peter

      Mates, Michael

      Gardner, Edward (S Fylde)

      Maude, Rt Hon Sir Angus

      Garel-Jones, Tristan

      Mawby, Ray

      Gilmour, Rt Hon Sir Ian

      Mawhinney, Dr Brian

      Glyn, Dr Alan

      Maxwell-Hyslop, Robin

      Goodhart, Sir Philip

      Mayhew, Patrick

      Goodhew, Sir Victor

      Mellor, David

      Goodlad, Alastair

      Meyer, Sir Anthony

      Gorst, John

      Miller, Hal (B'grove)

      Gow, Ian

      Mills, lain (Meriden)

      Gower, Sir Raymond

      Mills, Sir Peter (West Devon)

      Grant, Anthony (Harrow C)

      Miscampbell, Norman

      Gray, Hamish

      Mitchell, David (Basingstoke)

      Greenway, Harry

      Moate, Roger

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

      Montgomery, Fergus

      Griffiths, Peter Portsm'th N)

      Moore, John

      Grist, Ian

      Morgan, Geraint

      Gummer, John Selwyn

      Morrison, Hon C. (Devizes)

      Hamilton, Hon A.

      Morrison, Hon P. (Chester)

      Hamilton, Michael (Salisbury)

      Mudd, David

      Hampson, Dr Keith

      Murphy, Christopher

      Hannam, John

      Myles, David

      Haselhurst, Alan

      Neale, Gerrard

      Hastings, Stephen

      Needham, Richard

      Havers, Rt Hon Sir Michael

      Nelson, Anthony

      Hawkins, Sir Paul

      Neubert, Michael

      Hawksley, Warren

      Newton, Tony

      Hayhoe, Barney

      Normanton, Tom

      Heddle, John

      Nott, Rt Hon John

      Hicks, Robert

      Onslow, Cranley

      Higgins, Rt Hon Terence L.

      Osborn, John

      Hill, James

      Page, John (Harrow, West)

      Hogg, Hon Douglas (Gr'th'm)

      Parkinson, Rt Hon Cecil

      Holland, Philip (Carlton)

      Parris, Matthew

      Hooson, Tom

      Pattie, Geoffrey

      Hordern, Peter

      Pawsey, James

      Howe, Rt Hon Sir Geoffrey

      Percival, Sir Ian

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

      Pink, R. Bonner

      Howell, Ralph (N Norfolk)

      Porter, Barry

      Hunt, David (Wirral)

      Prentice, Rt Hon Reg

      Hunt, John (Ravensbourne)

      Price, Sir David (Eastleigh)

      Hurd, Rt Hon Douglas

      Prior, Rt Hon James

      Irving, Charles (Cheltenham)

      Proctor, K. Harvey

      Johnson Smith, Sir Geoffrey

      Raison, Rt Hon Timothy

      Jopling, Rt Hon Michael

      Rathbone, Tim

      Joseph, Rt Hon Sir Keith

      Rees, Peter (Dover and Deal)

      Kaberry, Sir Donald

      Renton, Tim

      Kellett-Bowman, Mrs Elaine

      Rhodes James, Robert

      Kershaw, Sir Anthony

      Rhys Williams, Sir Brandon

      Kimball, Sir Marcus

      Ridley, Hon Nicholas

      King, Rt Hon Tom

      Ridsdale, Sir Julian

      Knight, Mrs Jill

      Rifkind, Malcolm

      Knox, David

      Roberts, M. (Cardiff NW)

      Lamont, Norman

      Rossi, Hugh

      Lang, Ian

      Rost, Peter

      Langford-Holt, Sir John

      Rumbold, Mrs A. C. R.

      Latham, Michael

      Ryman, John

      Lawrence, Ivan

      Sainsbury, Hon Timothy

      Lawson, Rt Hon Nigel

      Scott, Nicholas

      Lee, John

      Shaw, Giles (Pudsey)

      Lennox-Boyd, Hon Mark

      Shaw, Sir Michael (Scarb1)

      Lester, Jim (Beeston)

      Shepherd, Colin (Hereford)

      Lewis, Kenneth (Rutland)

      Shepherd, Richard

      Lloyd, Ian (Havant & W'loo)

      Shersby, Michael

      Lloyd, Peter (Fareham)

      Silvester, Fred

      Loveridge, John

      Sims, Roger

      Luce, Richard

      Skeet, T. H. H.

      Lyell, Nicholas

      Smith, Dudley

      819

      Smith, Tim (Beaconsfield)

      Townsend, Cyril D, (B'heath)

      Speed, Keith

      Trippier, David

      Speller, Tony

      Trotter, Neville

      Spence, John

      van Straubenzee, Sir W.

      Spicer, Jim (West Dorset)

      Vaughan, Dr Gerard

      Spicer, Michael (S Worcs)

      Viggers, Peter

      Sproat, lain

      Waddington, David

      Squire, Robin

      Wakeham, John

      Stainton, Keith

      Waldegrave, Hon William

      Stanbrook, Ivor

      Walker, B. (Perth)

      Stanley, John

      Wall, Sir Patrick

      Steen, Anthony

      Waller, Gary

      Stevens, Martin

      Ward, John

      Stewart, A.(E Renfrewshire)

      Warren, Kenneth

      Stewart, Ian (Hitchin)

      Watson, John

      Stradling Thomas, J.

      Wells, Bowen

      Tapsell, Peter

      Wells, John (Maidstone)

      Taylor, Teddy (S'end E)

      Wheeler, John

      Tebbit, Rt Hon Norman

      Wickenden, Keith

      Temple-Morris, Peter

      Williams, D.(Montgomery)

      Thatcher, Rt Hon Mrs M.

      Wolfson, Mark

      Thomas, Rt Hon Peter

      Younger, Rt Hon George

      Thompson, Donald

      Thorne, Neil (Ilford South)

      Tellers for the Noes:

      Thornton, Malcolm

      Mr. Anthony Berry and

      Townend, John (Bridlington)

      Mr. Carol Mather.

      Question accordingly negatived.

    New clause 2

      COMPUTATION OF RESOURCES
      'Regulations made for the purposes of section 7 above shall not require:

      (a) that in computing the disposable income and disposable capital of any person account is to be taken of the resources of any other person;

      (b) that in computing the disposable income of any person account is to be taken of any sums received by him by way of child benefits, non-contributory invalidity pension, mobility allowance, attendance allowance, industrial death benefit, child allowance, invalidity care allowance or educational maintenance allowance.'.—[Mr. Arthur Davidson.]

      Brought up, and read the First time.
      Mr. Arthur Davidson: I beg to move, That the clause be read a Second time.
      The clause deals with one of the most objectionable, unfair and discriminatory aspects of the contribution proposals. As I am sure the House is aware, the Bill proposes that the resources of the spouse, both as to income and capital, will be aggregrated with that of the applicant for legal aid when an assessment is made for the purpose of deciding what the weekly contributions should be.
      As 85 per cent, of those coming before the criminal courts other than for motoring offences are men, those proposals will hit women particularly harshly. The rationale of the proposal is that since the criminal legal aid scheme is to be administered in the same way as the civil legal aid scheme where the spouse's income is aggregated, it is reasonable that criminal legal aid should be similarly aggregated. That is a wrong argument.
      In civil legal aid the spouse and the family benefit, or should benefit, from any damages that the husband or wife may receive as a result of court proceedings or settlement. In addition, if there is any conflict of interest between the husband and wife in civil proceedings—say, in the divorce case—the aggregation of resources does not apply.
      However, with criminal legal aid the circumstances are different.
      Mr. Best: I am following the hon. and learned Gentleman's argument with regard to civil legal aid and the aggregation there. However, there is aggregation in criminal legal aid at present. A spouse's means are taken into account. That measure was passed by a Labour Government in 1967.
      Mr. Davidson: As the hon. Gentleman knows, the contributions are so small in that case that they do not materi-ally affect the spouse. The effect of this will be very different.
      First, it is wrong in principle, as most people would agree, that an innocent spouse should pay for the misdeeds or criminal activities of the husband or wife as the case may be. He or she may be completely ignorant of the partner's crime, because the criminal activities may have been deliberately concealed.
      Therefore, it is wrong that the innocent party should pay for the crimes of his or her partner. Indeed, for the wife it may be the last straw. There may already have been enough strain on the marriage as a result of the partner's criminal activities to entitle her to say that enough is enough and to welcome the fact that he goes to prison as the best thing for him. However, it may be a different matter for the husband.
      Mr. Barry Porter: I can understand the hon. and learned Gentleman's argument as far as it goes. However, I fail to understand his apparent assumption that anybody charged with a criminal offence is guilty of it. Perhaps he will explain.
      Mr. Davidson: Of course, I do not assume that. I am talking about a case where a wife is heartily sick and tired of dealing with somebody who has perhaps committed many criminal offences and who may have reason to believe that this is just another in a long sad story.
      Women and families will suffer further hardship as contributions will be made from income from the time that the legal aid order is made. Therefore, the family's income will be depleted for several weeks or months. As the House knows, it frequently takes about a year for a case to come to trial. The hon. Member for Bebington and Ellesmere Port (Mr. Porter) was right to point out that it may result in an acquittal. In that case, the money will be refunded. However, during that lengthy period, the difficulties and tensions that are bound to arise when someone in the household is charged with a criminal offence will be increased as a result of the added financial difficulties.
      In response to my query in Committee, the Solicitor-General said that he did not envisage a legal aid certificate being revoked if the wife refused to pay the contributions. He said that he did not foresee that happening if an amendment that he had in mind was accepted to make the revocation of the legal aid certificate dependent on the wilful refusal to pay. I am glad to see that the Solicitor-general has tabled an amendment along those lines, although it does not deal with what will happen if the wife refuses to pay. I know what will happen—because the Solicitor-General has told us—if the accused wilfully refuses to pay. However, the hon. and learned Gentleman must tell us whether the legal aid certificate will be revoked if the wife refuses to pay. If he says that the court would not revoke a certificate in those circumstances, because there has been no wilful refusal to pay, it makes nonsense of the whole provision. The family versed in

      821
      criminal law will escape its responsibilities easily, knowing that there is no need for the spouse to pay because the court will not revoke the accused's certificate.
      One of the worst aspects of the proposals is that a whole range of benefits that the spouse receives will be taken into account when assessing the contribution. One of those benefits is child benefit. It seems morally wrong that payments that are meant to benefit the family and the child should go towards the defence of the accused. The new clause sets out many other non-contributory benefits which should not be taken into account when assessing the spouse's resources. In addition to child benefit, it names
      "non-contributory invalidity pension, mobility allowance, attendance allowance, industrial death benefit, child allowance, invalidity care allowance or educational maintenance allowance."
      The purpose of the new clause is to ensure that those benefits are not taken into account when an assessment is made. Many women will be affected by the proposals. The Government sought to play down the effect that the proposals will have on spouses and the effect that aggregation will have on the amount of the contribution. The Lord Chancellor claimed that a two-child family would pay only £3 a week—assuming that only the father works and earns an average wage. There is an obvious flaw in those figures. Only 5 per cent. of working men have dependent wives. The earnings of most married women, as the legal action group bulletin points out, even from part-time work would greatly increase the contribution payable. The same family with the wife earning the average £47·50 gross a week would have to pay £12 a week. That is a substantial contribution.
      9 pm
      In Committee we drew the Solicitor-General's attention to the fact that the contribution proposals relating to capital would mean that those on supplementary benefit and family income supplement would have to pay out of capital. The Solicitor-General said that he would put forward an amendment to deal with those on supplementary benefit and he has. We feel that it is wrong that those on very low incomes such as those receiving family income supplement should have to make a capital contribution. In those circumstances, we feel that the new clause should appeal to the House. It is wrong that the wife, who is an utterly innocent party, should have to contribute substantially from her own resources. That might lead to greater strain on an already strained marriage. I ask that the new clause be supported.
      Mr. Best: The hon. and learned Member for Accrington (Mr. Davidson) has acknowledged that civil legal aid is aggregated and that a spouse's means are taken into account. He says that it is wrong for that to be done for criminal legal aid. When I intervened and pointed out to him that it is already done in criminal legal aid, he said that those means are a small factor in the assessment of a contribution, but he did not deny that aggregation takes place.
      I find that hard to comprehend. I know that it would be wrong for the sins of the fathers to be visited on the sons and that the hon. and learned Member for Accrington was not in the House in 1967, but it was the Labour Government, in the Criminal Justice Act 1967, who enshrined the principle that a spouse's means were to be aggregated for criminal legal aid. I shall wait with interest to hear what my hon. and
      822
      learned Friend the Solicitor-General has to say. The hon. and learned Member for Accrington has made some good points that need to be answered.
      I wish to make two points. The first is that the savings threshold of £1,310 is considerably less than the present threshold for supplementary benefit of £2,000, which is shortly to be increased to £2,500. As there is no maximum for a capital contribution towards legal aid, the savings of a spouse in excess of £1,310 could be demanded by the court as an initial contribution to the costs of the defence of the defendant spouse. If the breadwinner were convicted and sent to prison, the other spouse would have little alternative but to apply for supplementary benefit. I hope that my hon. and learned Friend will deal with that when he replies.
      If a spouse refuses to pay a contribution, there is nothing in the Bill—certainly there will be nothing in the regulations that are likely to emanate from the Bill—to compel that spouse to do so. There is no threat of revocation. That was made clear in Committee on 28 June by my hon. and learned Friend when, in response to an amendment moved by the hon. and learned Member for Accrington, he said:
      "I am advised that the court could not revoke in such circum-stances. That is assuming that the provisions for revocation are tightened up, as I keep promising they will be. In those circumstances, nobody could show that the accused had been guilty of wilful default."—[Official Report, Standing Committee D: 28 June 1982, c. 71.]
      I know that later my hon. and learned Friend will introduce a new clause dealing with a defendant's wilful default. However, many hon. Members will be concerned that there is nothing to compel a spouse to make a contribution through threat of revocation. The paradox is that many other hon. Members on both sides of the House will say "But there is nothing in the Bill which says categorically that a defendant's legal aid order will not be revoked if a spouse fails to make that contribution." I hope that my hon. and learned Friend will seek to overcome the paradox.
      There will be opposition from hon. Members who believe that a spouse should be forced to make a contribution through, perhaps, the threat of revocation, and there will be others—I hope the majority—who will say that it is wrong that if a spouse refuses to make a contribution there is nothing in the Bill which states categorically that the defendant will not have his legal aid removed.
      Mr. R. C. Mitchell: My hon. and learned Friend the Member for Abertillery (Mr. Thomas) has said that this is a consumer's Bill and not a lawyers' Bill. However, I hope that the House will excuse me, the first non-lawyer, for daring to intervene in what has been a lawyers' debate so far.
      I think that we all accept what the Solicitor-General said in reply to the debate on new clause 1, when he argued that it should be the principle that those who can afford to pay should pay. My right hon. and hon. Friends accept that. The argument arises when a decision is made on where the level should be drawn to separate those who we think can afford to pay and those who we think cannot.
      I contend that the civil legal aid regulations are drawn far too tightly. The Solicitor-General has said that he has consulted various legal organisations. Has he consulted the consumer organisations? Did he consult, for example, the citizens advice bureaux, which have to deal with many inquiries? When I talked to those who represent the bureaux I found that they did not like the new regulations.
      To introduce the aggregation that is set out in the new clause in criminal proceedings is a dubious proposition. I

      823
      know that we have aggregation now but it is proposed to change the system that is used to compute resources. It is a dangerous proposition. For example, let us take one of the benefits mentioned in subsection (b) of the new clause—the educational maintenance allowance. It is wrong that in any computation one should count the educational maintenance allowance, which is paid for a specific purpose. If that is counted and if it means that the family income will be reduced, part of the purpose of the educational maintenance allowance will be lost. The child for whom it is payable will not receive the benefit because the family will have to pay a greater contribution for legal aid.
      One point with regard to civil computation, but which also applies to this matter, worries me. It is about the vague thing called notional capital. In the assessment of capital resources, as I understand it—the Solicitor-General will correct me if I am wrong—when one counts capital, it is not just the amount of money that one has in the bank, but notional capital that counts.
      I had a case in which a woman wanted to apply for legal aid for a civil action. She had no resources of her own and no money in the bank. However, her father had left her a share in a house. He had three daughters. The house was divided between the three daughters. However, none of the daughters could sell her share of the house because the mother had to remain in the house while she was alive. She was still alive, so there was no way in which the daughter's share of the house could be realised. However, that was counted as notional capital—one-third of the estimated capital value of the house, which she could not sell. I wrote to the Lord Chancellor and received an unhelpful reply saying that there were places in London where notional capital could be sold and realised, which that lady could do if she wanted.
      Mr. William Wilson: At a price.
      Mr. Mitchell: The hon. Gentleman is right.
      Will that idea of notional capital apply in the assessment for criminal legal aid in the same way as for civil legal aid? It is important that in the debate some of us who are not lawyers should take part. As Members of Parliament we get the sticky end when our constituents come to us and say "These are all the resources that I have. I have an attendance allowance and a mobility allowance, yet I have to pay for legal aid out of my income. My children are suffering." I am unhappy about that. I hope that the House will accept the new clause.
      Mr. Douglas Hogg: Despite the eloquence of the hon. and learned Member for Accrington (Mr. Davidson), I cannot echo his arguments. I have four reasons for saying so.
      First, I do not think that the hon. and learned Gentleman can be heard to say that aggregation is objectionable in principle. As the hon. and learned Gentleman knows, the resources of the spouse, and for that matter the resources of the parent when the applicant is a minor, are already aggregated. That flows from the Legal Aid Act, 1974, which was a reflection of the Criminal Justice Act 1967, for which the Labour Party was responsible. Therefore, what was right then cannot be wrong now in principle.
      824
      Secondly, if the new clause is implemented, it is certain to have revenue implications. When one is dealing with resources, one is concerned with priorities. The new clause does not represent a proper assessment of priorities.
      My third objection is that the new clause is one-sided. The law already provides that when asses sing contributions regard must be had to the cost to the applicant of maintaining a spouse or dependent children. I do not see why, in principle, regard should be had to the cost of maintaining a spouse while ignoring the resources that that spouse brings into the family home.
      Finally, the House knows that in cases of supplementary benefit regard is paid to the capital and income of a spouse living with the claimant. I see no reason why, in dealing with legal aid, we should apply a test that is more generous than that applied to supplementary benefit.
      For those reasons, I hope that the new clause will fail.
      The Solicitor-General: The question of principle has been fully dealt with. It is pretty late in the day for the hon. and learned Member for Accrington (Mr. Davidson) to talk about aggregation being wrong in principle when it is common form in criminal legal aid and civil legal aid. The spouse will be no worse off under these proposals than he or she is under the present system. As I shall show, he or she will be better off.
      9.15 pm
      Hon. Members are forgetting that, of course, it would be wrong to take account of spouses' resources if they were separated or if the case arose from an alleged assault by one on the other or similar circumstances. They would be excluded by the regulations. But when spouses are living together, in general, as the House knows, resources are aggregated. This can be seen as the corollary of the allowances made in computing disposable income. If it were to be abolished, the allowance for a spouse—which on present plans is likely to be about £27 a week—would also have to be removed. The allowances for children, which are likely to range from about £12 to £28 a week, would have to be reduced. Housing costs would have to be apportioned. All those allowances, or disregards as they are called in the profession, rest on the assumption—which I should have thought is a normal and reasonable assumption—that for many purposes a married couple's resources and commit-ments are shared. Disaggregation of income would not only be more unfavourable for many families; it would also be extremely difficult to operate. I have given some reasons why.
      The House must remember that we are discussing pay-ments that are to be made from income, not separate contributions that are ordered against one spouse or the other. We are discussing a contribution that must be assessed on the joint income of both the husband and the wife.
      The hon. Member for Southampton, Itchen (Mr. Mitchell) was right to say that, irrespective of whether we achieve our objective of ensuring that those who cannot afford to pay do not and that those who can afford to pay do, much depends on where we draw the line. I have always accepted that obligation on behalf of the Government. It is fundamental. It must be remembered, however, that the regulations have not yet been drawn up. Some reference was made to why the Consumer Association greatly disliked the regulations. They have not yet been drawn up. Now is the time to express views about what should or should not be included in them. It is a little previous to say that they are wrong.
      Mr. Jeffrey Thomas: Who has been consulted about the regulations?
      The Solicitor-General: There has been the widest consultation. More than once, I have personally invited in Committee all those who have opinions about the matter to express them. I also circulated to the Committee a forecast of the figures that the Government have in mind so that others may comment upon them.
      It is a matter of opinion as to where the line should be drawn. It is to be observed that those who say that this will wreak hardship give as an example a Member of Parliament with a wife in a part-time job and two children, the Member of Parliament earning the normal salary and the wife earning £2,500. That is a not insubstantial joint income. The contribution is assessed at £22 a week. Those who criticise that must remember that someone must pay. The choice lies between Joe Soap the taxpayer and the person who finds himself in those difficulties. The public—[Interruption.] Perhaps Opposition Members do not share our view of a household as a joint effort by people who share their resources.
      When all the representations have been made and taken into account and the figures finally decided, it will be for the public to judge. We must always bear in mind that someone will have to pay—either the taxpayer or the person concerned. Surely no one can fault the principle that the person concerned should pay what he can afford. That will be the purpose of the regulations.
      The second part of the new clause suggests that a great many specified benefits should be disregarded. Of course, some of them must be regarded. The regulations will provide for what is and is not to be disregarded. Some will be disregarded just as they are in civil legal aid. I appreciate the argument that it would be wrong for benefits designed to meet specific additional needs to be taken into account. That is a matter for the regulations and I assure the House that we shall carefully consider which benefits fall into that category.
      I give a word of warning, however. In civil legal aid, child benefit is taken into account, but the allowances for children are 50 per cent. higher than the corresponding allowances for supplementary benefit. If child benefit were not taken into account the allowances for children would naturally have to be lower, so it is not as simple as some Members suggest. It may, of course, be preferable to adopt that approach and to disregard the benefit and to lower the allowance in respect of each child. We shall also consider that carefully. I hope that that gives a useful indication, however brief, of the Government's thinking on that part of the matter.
      To summarise, aggregation of spouses' resources and commitments is a long-standing feature of both criminal and civil legal aid. It is right in principle and if the principle were abandoned the results would be both anomalous and administratively difficult. The question of which benefits should be disregarded is, I suggest, more appropriate for the regulations.
      I hope that the House will reject the new clause.
      Miss Joan Lestor: I do not wish at this stage to get bogged down in questions of principle. I wish to comment on what is likely to happen in practice.
      Mr. Best: While the hon. Lady is still on the question of principle, perhaps she will allow me to correct an error that I made earlier. I fear that I did the hon. and learned Member for
      826
      Accrington (Mr. Davidson) an injustice when I said that he was not responsible for the Criminal Justice Act 1967 which introduced the concept of aggregation. I understand that not only was he in the House at that time, but that he served on the Committee that dealt with that legislation.
      Miss Lestor: Perhaps I should not have been so gracious as to give way to the hon. Gentleman. I do not wish to argue about the principle. I am worried about how the legislation will work in practice. It is no use hon. Members saying that because it is a matter of principle everything that flows from it is bound to work in accord with what we imagine the principle to be. That is not so.
      The hon. Member for Southampton, Itchen (Mr. Mitchell) raised the valid point that, as in many such matters, the consumer groups—those at the receiving end of much of this legislatiorr—are rarely consulted. Had they been consulted, there would have been plenty of comeback. Approaches made to me in my capacity as spokesperson on women's rights show that many such groups, particularly the citizens advice bureaux, are apprehensive about how the proposals will operate in practice.
      Whatever the logic of the principle that those who can afford to pay should be made to do so, it is feared that many people, especially women, will be adversely affected. Nobody has so far dealt with the effect on women of the Government's proposal.
      Mr. Porter: We have heard much about the terrible financial effect on female spouses, but not much about the effect on male spouses. Many women are charged with shoplifting. Is the hon. Lady suggesting that the income or capital of the male spouse should be taken into account when assessing the contribution to legal aid in those cases?
      Miss Lestor: I am not making a special plea for women. I take the same view on spouses whether male or female. Whatever the reasons, and we do not know them, it is mostly men who commit the crimes of the type that we are discussing. Therefore, in introducing a regulation, or a law, which states that the income of spouses must be aggregated for legal aid it logically follows that women are much more likely to be disadvantaged than men. I am saying not that men should pay, but that women should not. However, in applying the principle in this clause women will suffer much more than men. Only 15 per cent. of the crimes concerned are committed by women.
      A fear expressed by citizens advice bureaux is that many families are already in severe financial difficulties. Whether the person charged is eventually found guilty or innocent, the method of recouping the money that has been paid out will plunge them into even further difficulties. One of the worst aspects is, as my hon. and learned Friend the Member for Accrington (Mr. Davidson) said, that a person may be innocent and wholly ignorant of the crime that has been committed by the spouse, but will nevertheless be called upon to pay.
      Another unacceptable aspect is that child benefit will be included in assessing a person's ability to pay. One of the big changes we made in the payment of child benefit was that it would be paid to the mother, as of right, for her children. The House now appears to be going back on that principle by saying that child benefits will be taken into account in the assessment. I do not see how that can be dealt with in the regulations.
      A variation is to take place in that the final assessment will be payable weekly from the time that the legal aid

      827
      order is made and in advance of the trial. If a defendent is acquitted, what method, if any, will be applied to return the money? Will the money be completely lost?
      The Solicitor-General: I am sure that the hon. Lady will want to know immediately that the Bill provides for repayment on acquittal. A court may order the repayment of all sums that have been paid. If the usual practice is followed, where costs follow the event, such an order will be made and all the money paid back.
      Miss Lestor: I do not dispute that an order can or will be made for the money to be paid back. However, at what stage will it be paid back? A family that has already been forced into grave financial difficulties—my hon. Friends have already shown that that will happen—will have to wait some time for the money to be paid back. That complication arises from money being paid in advance.
      There is a further aspect that will cause difficulties. Some women's organisations have pointed out that under the Bill income will be assessed jointly and the amount to be paid then drawn. If one of the partners says "I have no intention of paying for your defence. I am disconcerted about what you have done. I do not want to know.", who is legally responsibly for that element of the contribution? It is possible that some spouses will refuse to be assessed. They are anxious to know what will happen. Will the remaining spouse be liable for the whole amount, or will some means be found of charging the spouse who has not paid?
      The Solicitor-General: The accused person in whose favour the legal aid order is made would be the only person responsible for paying the contribution.
      HON. MEMBERS: That is obvious.
      Miss Lestor: It is said that it is obvious that the person in whose name a legal aid order is made is responsible for paying the contribution. However, if that contribution has been assessed jointly on the income of both spouses, and if one says "I will have nothing to do with this. I refuse to pay", what will happen to the person seeking his defence via a legal aid certificate and unable to pay the full contribution? Many people are worried about that.
      Incidentally, there is no explanation about what is meant by "a spouse". We may well find that, as well as some legal spouses, some common law spouses may be able to evade the responsibility that the Bill seeks to impose. Will a common law man and wife be regarded as spouses for the purposes of the Bill, or will it apply only to people who are legally married? So far as I am aware, no arrangement has been made to cope with common law spouses.
      In many of our debates, the question of a woman's income and her work is often completely overlooked. When I first became interested in this subject, and questioned the amount of money that a family would have to contribute, the Lord Chancellor's Department claimed that a two-child family would pay approximately £3 a week. However, that assumed that only the father was working.
      I believe that about 5 per cent. of working men have dependent wives and children and that the remaining families are to some extent supported by working wives. Therefore, the Lord Chancellor's Department's estimate should be much higher. As the average family today often
      828
      consists of both a working wife and working husband, that fact must be taken into account when trying to play down the contribution that a person is expected to make.
      The argument is that people ought to pay if they can afford to do so and that it should not be left to the taxpayer. However, many people who will be affected will already be in receipt of benefits or will be forced to claim benefits when the financial contribution order to the legal aid certificate is made. They may well have to claim other benefits to survive. We have already been told of the difference between the £1,300 savings threshold for legal aid and the £2,030 which makes a person ineligible for supplementary benefit.
      When legal aid certificates are made many people will have to seek benefits in order to live. What then has been the saving to the taxpayer? There wll be no saving because the taxpayer, from another pocket, will have to subsidise and keep them because their income has been reduced by the way the legal aid certificate money has been calculated. I understand the principle, and no one would argue with the principle that people who can afford to pay should be made to do so. The difficulty occurs when we apply the principle to large numbers of people who cannot afford to pay. Then there is no saving to the taxpayer because they go to the other resources of the State to get back the money that they have paid out.
      We believe that this will not work in practice and will have a detrimental effect particularly on women, but we would apply the principle of our objection to spouses across the board.
      Question put, That the clause be read a Second time:—
      The House divided: Ayes 213, Noes 281.

      Division No. 292]

      [9.40 pm

      AYES

      Abse, Leo

      Cryer, Bob

      Adams, Allen

      Cunliffe, Lawrence

      Allaun, Frank

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

      Anderson, Donald

      Dalyell, Tam

      Archer, Rt Hon Peter

      Davidson, Arthur

      Ashley, Rt Hon Jack

      Davies, Rt Hon Denzil (L'lli)

      Ashton, Joe

      Davis, Clinton (Hackney C)

      Atkinson, N.(H'gey,)

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

      Bagier, Gordon A.T.

      Deakins, Eric

      Barnett, Rt Hon Joel (H'wd)

      Dean, Joseph (Leeds West)

      Beith, A. J.

      Dewar, Donald

      Benn, Rt Hon Tony

      Dixon, Donald

      Bennett, Andrew(St'kp't N)

      Dobson, Frank

      Bidwell, Sydney

      Dormand, Jack

      Booth, Rt Hon Albert

      Douglas, Dick

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

      Dubs, Alfred

      Bray, Dr Jeremy

      Duffy, A. E. P.

      Brown, Hugh D. (Proven)

      Dunwoody, Hon Mrs G.

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

      Eadie, Alex

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

      Eastham, Ken

      Brown, Ron (E'burgh, Leith)

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

      Buchan, Norman

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

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

      Ellis, Tom (Wrexham)

      Campbell-Savours, Dale

      English, Michael

      Cant, R. B.

      Ennals, Rt Hon David

      Carmichael, Neil

      Evans, John (Newton)

      Carter-Jones, Lewis

      Ewing, Harry

      Clark, Dr David (S Shields)

      Faulds, Andrew

      Clarke, Thomas C'b'dge, A'rie

      Field, Frank

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

      Flannery, Martin

      Cohen, Stanley

      Ford, Ben

      Coleman, Donald

      Forrester, John

      Concannon, Rt Hon J. D.

      Foster, Derek

      Conlan, Bernard

      Foulkes, George

      Cook, Robin F.

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

      Cowans, Harry

      Garrett, John (Norwich S)

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

      Garrett, W. E. (Wallsend)

      Crowther, Stan

      829

      George, Bruce

      Palmer, Arthur

      Gilbert, Rt Hon Dr John

      Park, George

      Gourlay, Harry

      Pavitt, Laurie

      Graham, Ted

      Pendry, Tom

      Grimond, Rt Hon J.

      Powell, Raymond (Ogmore)

      Hamilton, James (Bothwell)

      Prescott, John

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

      Price, C. (Lewisham W)

      Hardy, Peter

      Race, Reg

      Harrison, Rt Hon Walter

      Radice, Giles

      Hart, Rt Hon Dame Judith

      Rees, Rt Hon M (Leeds S)

      Haynes, Frank

      Richardson, Jo

      Heffer, Eric S.

      Roberts, Albert (Normanton)

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

      Roberts, Allan (Bootle)

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

      Roberts, Ernest (Hackney N)

      Home Robertson, John

      Roberts, Gwilym (Cannock)

      Homewood, William

      Robinson, G. (Coventry NW)

      Hooley, Frank

      Robinson, P. (Belfast E)

      Howell, Rt Hon D.

      Rooker, J. W.

      Howells, Geraint

      Roper, John

      Hoyle, Douglas

      Ross, Ernest (Dundee West)

      Huckfield, Les

      Ross, Stephen (Isle of Wight)

      Hughes, Mark (Durham)

      Rowlands, Ted

      Hughes, Robert (Aberdeen N)

      Ryman, John

      Hughes, Roy (Newport)

      Sandelson, Neville

      Janner, Hon Greville

      Sever, John

      Jay, Rt Hon Douglas

      Sheerman, Barry

      John, Brynmor

      Sheldon, Rt Hon R.

      Johnson, James (Hull West)

      Shore, Rt Hon Peter

      Johnson, Walter (Derby S)

      Silkin, Rt Hon J. (Deptford)

      Jones, Rt Hon Alec (Rh'dda)

      Silkin, Rt Hon S. C. (Dulwich)

      Jones, Barry (East Flint)

      Silverman, Julius

      Kaufman, Rt Hon Gerald

      Skinner, Dennis

      Kerr, Russell

      Snape, Peter

      Kinnock, Neil

      Soley, Clive

      Lamond, James

      Spearing, Nigel

      Leighton, Ronald

      Spriggs, Leslie

      Lestor, Miss Joan

      Stallard, A. W.

      Lewis, Ron (Carlisle)

      Stoddart, David

      Litherland, Robert

      Stott, Roger

      Lofthouse, Geoffrey

      Strang, Gavin

      Lyon, Alexander (York)

      Straw, Jack

      McCartney, Hugh

      Summerskill, Hon Dr Shirley

      McDonald, Dr Oonagh

      Thomas, Dafydd (Merioneth)

      McElhone, Frank

      Thomas, Jeffrey (Abertillery)

      McGuire, Michael (Ince)

      Thorne, Stan (Preston South)

      McKelvey, William

      Tilley, John

      MacKenzie, Rt Hon Gregor

      Tinn, James

      McWilliam, John

      Torney, Tom

      Marks, Kenneth

      Urwin, Rt Hon Tom

      Marshall, D (G'gow S'ton)

      Varley, Rt Hon Eric G.

      Marshall, Dr Edmund (Goole)

      Wainwright, E.(Dearne V)

      Marshall, Jim (Leicester S)

      Walker, Rt Hon H.(D'caster)

      Martin, M(G'gow S'burn)

      Weetch, Ken

      Mason, Rt Hon Roy

      Wellbeloved, James

      Maynard, Miss Joan

      Welsh, Michael

      Meacher, Michael

      White, Frank R.

      Mikardo, Ian

      Whitehead, Phillip

      Millan, Rt Hon Bruce

      Willey, Rt Hon Frederick

      Miller, Dr M. S. (E Kilbride)

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

      Mitchell, R. C. (Soton Itchen)

      Wilson, Rt Hon Sir H.(H'ton)

      Morris, Rt Hon A. (W'shawe)

      Wilson, William (C'try SE)

      Morris, Rt Hon C. (O'shaw)

      Winnick, David

      Morris, Rt Hon J. (Aberavon)

      Woodall, Alec

      Morton, George

      Woolmer, Kenneth

      Moyle, Rt Hon Roland

      Wrigglesworth, Ian

      Mulley, Rt Hon Frederick

      Wright, Sheila

      Newens, Stanley

      Young, David (Bolton E)

      O'Halloran, Michael

      O'Neill, Martin

      Tellers for the Ayes

      Orme, Rt Hon Stanley

      Mr. Ioan Evans and

      Paisley, Rev Ian

      Mr. Allen McKay.

      NOES

      Alexander, Richard

      Baker, Kenneth(St.M'bone)

      Alison, Rt Hon Michael

      Baker, Nicholas (N Dorset)

      Ancram, Michael

      Banks, Robert

      Arnold, Tom

      Beaumont-Dark, Anthony

      Aspinwall, Jack

      Bendall, Vivian

      Atkins, Robert(Preston N)

      Bennett, Sir Frederic (T'bay)

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

      Benyon, Thomas (A'don)

      830

      Benyon, W. (Buckingham)

      Griffiths, Peter Portsm'th N)

      Best, Keith

      Grist, Ian

      Bevan, David Gilroy

      Grylls, Michael

      Biffen, Rt Hon John

      Gummer, John Selwyn

      Biggs-Davison, Sir John

      Hamilton, Hon A.

      Blackburn, John

      Hamilton, Michael (Salisbury)

      Blaker, Peter

      Hampson, Dr Keith

      Body, Richard

      Hannam, John

      Bonsor, Sir Nicholas

      Haselhurst, Alan

      Boscawen, Hon Robert

      Hastings, Stephen

      Boyson, Dr Rhodes

      Havers, Rt Hon Sir Michael

      Braine, Sir Bernard

      Hawkins, Sir Paul

      Brinton, Tim

      Hawksley, Warren

      Brooke, Hon Peter

      Hayhoe, Barney

      Brown, Michael(Brigg & Sc'n)

      Heddle, John

      Browne, John (Winchester)

      Henderson, Barry

      Bruce-Gardyne, John

      Hicks, Robert

      Bryan, Sir Paul

      Higgins, Rt Hon Terence L.

      Buchanan-Smith, Rt. Hon. A.

      Hill, James

      Budgen, Nick

      Hogg, Hon Douglas (Gr'th'm)

      Bulmer, Esmond

      Holland, Philip (Carlton)

      Butcher, John

      Hooson, Tom

      Cadbury, Jocelyn

      Hordern, Peter

      Carlisle, Kenneth (Lincoln)

      Howe, Rt Hon Sir Geoffrey

      Chalker, Mrs. Lynda

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

      Chapman, Sydney

      Howell, Ralph (N Norfolk)

      Churchill, W. S.

      Hunt, David (Wirral)

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

      Hunt, John (Ravensbourne)

      Clark, Sir W. (Croydon S)

      Hurd, Rt Hon Douglas

      Clarke, Kenneth (Rushcliffe)

      Irving, Charles (Cheltenham)

      Clegg, Sir Walter

      Jessel, Toby

      Cockeram, Eric

      Johnson Smith, Sir Geoffrey

      Colvin, Michael

      Jopling, Rt Hon Michael

      Cope, John

      Joseph, Rt Hon Sir Keith

      Cormack, Patrick

      Kaberry, Sir Donald

      Corrie, John

      Kellett-Bowman, Mrs Elaine

      Costain, Sir Albert

      Kershaw, Sir Anthony

      Cranborne, Viscount

      Kimball, Sir Marcus

      Critchley, Julian

      King, Rt Hon Tom

      Crouch, David

      Knight, Mrs Jill

      Dickens, Geoffrey

      Knox, David

      Dorrell, Stephen

      Lamont, Norman

      Douglas-Hamilton, Lord J.

      Lang, Ian

      Dover, Denshore

      Langford-Holt, Sir John

      Dunn, Robert (Dartford)

      Latham, Michael

      Durant, Tony

      Lawrence, Ivan

      Eden, Rt Hon Sir John

      Lawson, Rt Hon Nigel

      Edwards, Rt Hon N. (P'broke)

      Lee, John

      Eggar, Tim

      Lennox-Boyd, Hon Mark

      Elliott, Sir William

      Lester, Jim (Beeston)

      Emery, Sir Peter

      Lewis, Kenneth (Rutland)

      Eyre, Reginald

      Lloyd, Ian (Havant & W'loo)

      Fairbairn, Nicholas

      Lloyd, Peter (Fareham)

      Fairgrieve, Sir Russell

      Loveridge, John

      Faith, Mrs Sheila

      Luce, Richard

      Farr, John

      Lyell, Nicholas

      Fell, Sir Anthony

      McCrindle, Robert

      Fenner, Mrs Peggy

      Macfarlane, Neil

      Fisher, Sir Nigel

      Macmillan, Rt Hon M.

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

      McNair-Wilson, M. (N'bury)

      Fletcher-Cooke, Sir Charles

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

      Fookes, Miss Janet

      McQuarrie, Albert

      Forman, Nigel

      Madel, David

      Fowler, Rt Hon Norman

      Major, John

      Fraser, Peter (South Angus)

      Marland, Paul

      Fry, Peter

      Marlow, Antony

      Gardner, Edward (S Fylde)

      Marshall, Michael (Arundel)

      Garel-Jones, Tristan

      Marten, Rt Hon Neil

      Gilmour, Rt Hon Sir Ian

      Mates, Michael

      Glyn, Dr Alan

      Maude, Rt Hon Sir Angus

      Goodhart, Sir Philip

      Mawby, Ray

      Goodhew, Sir Victor

      Mawhinney, Dr Brian

      Goodlad, Alastair

      Maxwell-Hyslop, Robin

      Gorst, John

      Mayhew, Patrick

      Gow, Ian

      Mellor, David

      Gower, Sir Raymond

      Meyer, Sir Anthony

      Grant, Anthony (Harrow C)

      Miller, Hal (B'grove)

      Gray, Hamish

      Mills, lain (Meriden)

      Greenway, Harry

      Mills, Sir Peter (West Devon)

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

      Miscampbell, Norman

      831

      Mitchell, David (Basingstoke)

      Skeet, T. H. H.

      Moate, Roger

      Smith, Dudley

      Montgomery, Fergus

      Smith, Tim (Beaconsfield)

      Moore, John

      Speed, Keith

      Morgan, Geraint

      Speller, Tony

      Morrison, Hon C. (Devizes)

      Spence, John

      Morrison, Hon P. (Chester)

      Spicer, Jim (West Dorset)

      Mudd, David

      Spicer, Michael (S Worcs)

      Murphy, Christopher

      Sproat, Iain

      Myles, David

      Squire, Robin

      Neale, Gerrard

      Stainton, Keith

      Needham, Richard

      Stanbrook, Ivor

      Nelson, Anthony

      Stanley, John

      Neubert, Michael

      Steen, Anthony

      Newton, Tony

      Stewart, A.(E Renfrewshire)

      Normanton, Tom

      Stewart, Ian (Hitchin)

      Nott, Rt Hon John

      Stradling Thomas, J.

      Onslow, Cranley

      Tapsell, Peter

      Osborn, John

      Taylor, Teddy (S'end E)

      Page, John (Harrow, West)

      Tebbit, Rt Hon Norman

      Parkinson, Rt Hon Cecil

      Temple-Morris, Peter

      Parris, Matthew

      Thatcher, Rt Hon Mrs M.

      Pattie, Geoffrey

      Thomas, Rt Hon Peter

      Pawsey, James

      Thompson, Donald

      Percival, Sir Ian

      Thorne, Neil (Ilford South)

      Pink, R. Bonner

      Thornton, Malcolm

      Porter, Barry

      Townend, John (Bridlington)

      Prentice, Rt Hon Reg

      Townsend, Cyril D, (B'heath)

      Price, Sir David (Eastleigh)

      Trippier, David

      Prior, Rt Hon James

      Trotter, Neville

      Proctor, K. Harvey

      van Straubenzee, Sir W.

      Raison, Rt Hon Timothy

      Vaughan, Dr Gerard

      Rathbone, Tim

      Viggers, Peter

      Rees, Peter (Dover and Deal)

      Waddington, David

      Rees-Davies, W. R.

      Wakeham, John

      Renton, Tim

      Waldegrave, Hon William

      Rhodes James, Robert

      Walker, B. (Perth)

      Rhys Williams, Sir Brandon

      Wall, Sir Patrick

      Ridley, Hon Nicholas

      Waller, Gary

      Ridsdale, Sir Julian

      Ward, John

      Rifkind, Malcolm

      Warren, Kenneth

      Roberts, Wyn (Conway)

      Watson, John

      Rossi, Hugh

      Wells, Bowen

      Rost, Peter

      Wells, John (Maidstone)

      Royle, Sir Anthony

      Wheeler, John

      Rumbold, Mrs A. C. R.

      Whitney, Raymond

      Sainsbury, Hon Timothy

      Wickenden, Keith

      Scott, Nicholas

      Williams, D.(Montgomery)

      Shaw, Giles (Pudsey)

      Wolfson, Mark

      Shaw, Sir Michael (Scarb')

      Younger, Rt Hon George

      Shepherd, Colin (Hereford)

      Shepherd, Richard

      Tellers for the Noes:

      Shersby, Michael

      Mr. Anthony Berry and

      Silvester, Fred

      Mr. Carol Mather.

      Sims, Roger

      Question accordingly negatived.

    New Clause 3

      REVIEW OF INCOME AND CAPITAL LIMITS
      '(1) The Lord Chancellor shall in the tax year 1983–84 and in each subsequent tax year review the limits prescribed in relation to disposable income and disposable capital for the purpose of determining whether those limits have retained their value in relation to the general level of prices obtaining in Great Britain.
      (2) For the purposes of any such review the Lord Chancellor shall estimate the general level of prices in such manner as he thinks fit.
      (3) If on any such review the Lord Chancellor concludes that any of the limits in question have not retained their value as mentioned above, he shall prepare and lay before each House of Parliament the draft of an uprating order increasing those limits at least to such extent as is necessary to restore their value.
      (4) If a draft order laid before Parliament in pursuance of this section is approved by a resolution of each House the Lord Chancellor shall make the order in the form of the draft.
      (5) If on a review the Lord Chancellor determines that he is not required to prepare and lay the draft on an uprating order he
      832
      shall instead lay before each House of Parliament a report explaining his reasons for arriving at that determination'.—[Mr.Archer.]
      Brought up, and read the First time.
      Mr. Archer: I beg to move, That the clause be read a Second time.
      This clause represents a principle that we discussed in Committee. It deals with a problem encountered in many areas of administration—the erosion of statutory limits by inflation. The Government went to the electorate and pledged to solve the problem of inflation by the monetarist policies with which we are all familiar. The Government were prepared to solve it at the cost of massive unemployment, at the expense of small companies and by destroying Britain's industry. We have unemployment, the Government have inflicted massive damage on Britain's industry, they left a trail of small companies in liquidation and we still have inflation. The problem with which the clause seeks to deal is still with us.
      The problem of pensions was tackled in section 125 of the Social Security Pensions Act 1975, which imposed upon the Secretary of Slate an obligation to review inflation annually, and to bring pensions into line with inflation. In the case of Metzger v. The Department of Health and Social Security, the Vice-Chancellor considered the implications of that obligation. We believe that there is room for a similar statutory arrangement for legal aid.
      It is common ground that eligibility levels should be uprated year by year. In Committee, the Solicitor-General confirmed that that was the Government's intention. For many years, the limits were eaten away by inflation. When legal aid was introduced, nearly 80 per cent. of the population was included within the eligibility limits and by 1979 that figure had fallen to about 40 per cent. The Legal Aid Act 1979, passed shortly before the general election, restored the proportion almost to 80 per cent. Already the limits were being uprated each year by statutory order to remain abreast of inflation. That was the Red Queen principle—we were running to try to stay in the same place.
      When the Government returned to power in 1979, they made the normal provision for uprating, so that there were two upratings in 1979—the major statutory uprating before the election and the normal annual uprating later to stay in the same place. But there were no upratings in 1980 or 1981. I understand that the Lord Chancellor is as subject to the Government's cuts as everyone else. But that is the argument for a statutory obligation. It is less easy to miss out when times become hard. It is all too easy to impose the burden of cuts, on those who are most vulnerable and I should have thought that the Lord Chancellor would have welcomed the support of this clause in his battle with the Treasury.
      In Commitee, the Solicitor-General used one argument against our proposal. He said that it went further than was the case with pensions because, he said, the Government had changed the principle of the Social Security Act 1979. That Act provided that the Secretary of State should uprate pensions in accordance with increases either in earnings or in prices, whichever was more favourable to pensioners. It is true that the Government deleted the bit about earnings. Pensioners were no longer to have a statutory right to share in increases in prosperity. Perhaps that does not matter, since there have been no increases in prosperity since the Government's policies took effect.

      833
      We took the Solicitor-General's point and have returned with a proposal which is not open to that objection. Our proposal now seeks only to impose an obligation to stay abreast of prices. The clause would operate on the regulations made by the Lord Chancellor under subsection (2) of clause 7 and would apply only to the limits for criminal aid.
      It might be argued that we have made no similar proposals for civil legal aid. There are two reasons for that. First, it would have been out of order in a Bill dealing with criminal legal aid and, secondly, it registers our belief that the need to ensure that defendants in criminal proceedings are represented properly is of a different order from the need in civil proceedings, important though they may be. Our proposal seeks to keep people out of prison. It is about civil liberties and should be more akin to welfare legislation than to civil legal aid.
      The Solicitor-General referred to the proposal in Committee as an open-ended commitment. It is nothing of the kind. It is clearly limited. We propose a modest commitment to do what the Solicitor-General told us in Committee that the Government had every intention of doing. The House will not require me to develop the case further.
      The Solicitor-General: The right hon. and learned Member for Warley, West (Mr. Archer) is correct. One argument that I advanced in Committee has been met, but only one. The remainder of my arguments are as sound now as they were then. It is an open-ended commitment, because it would be impossible to say how much it would cost in the next year. My right hon. and noble Friend the Lord Chancellor cannot give such a commitment. To do so would bind his hands by limiting the extent to which he could assign priorities on legal aid expenditure.
      I assure the House, as I did the Committee, that the importance of keeping the financial limits for criminal legal aid under regular review is fully recognised. Subject to economic constraints, we intend that the new limits will be uprated regularly. I ask the House to accept that assurance.
      Question put and negatived.

    New Clause 4

      REPORT AS TO CONTRIBUTIONS
      'The Lord Chancellor shall annually lay before each House of Parliament a report setting out the number of legal aid contribution orders made, the total sum ordered to be paid, an analysis of the contributions determined during the year compared with previous years, the total sums respectively collected and in arrears, the number of repayments made to legally aided persons in respect of their contributions, the total sum repaid and the administrative costs respectively of assessing, collecting and repaying contributions, respectively in the magistrates' court and the Crown Court, the number of orders revoked for non-payment, with details of the Courts ordering such revocation; and the number of defendants refusing an offer of legal aid either because they do not wish to pay the contributions or for some other reason'.—[Mr. Arthur Davidson.]
      Brought up, and read the First time.
      Mr. Arthur Davidson: I beg to move, That the clause be read a Second time.
      I shall move the new clause briefly, because we dealt with the principle in Committee. The Solicitor-General
      834
      made certain observations about its shortcomings, which I hope I have covered by adding certain matters to the new clause that I moved in Committee.
      The purpose is to ensure that the new contributions proposal is properly monitored by Parliament, not only because of the fears that have been expressed about the likely effects that it will have on accused persons, but because of the likely expensive administrative costs. No one knows how much the existing system for assessing and running the legal aid scheme costs, because the cost gets lost in the general budget of running the magistrates' courts. The danger is that unless there is a proper method of monitoring all the matters that are involved in the new complicated procedure for assessment, Parliament and the people who are affected by the proposals again will not know the exact costs. That is surely wrong when public money is involved.
      The Solicitor-General, in answer to my proposals in Committee, said that one of his objections to the new clause was that it did not cover everything that we need to know. He said:
      "We shall need all of that information, and more still."
      He added that it would be necessary
      "to keep a close watch on the use by the courts of their powers to revoke legal aid orders for non-payment. The Government will want to know about that, and we shall be very ready to make such information available".—[Official Report, Standing Committee D, 5 July 1982; c. 102.]
      I have taken up the offer and added to my new clause the requirement that the information that is given includes
      "the number of orders revoked for non-payment, with details of the Courts ordering such revocation",
      so that we know which courts have a bad record in that respect and which courts operate more generously and liberally.
      We have also included the requirement to make available information of
      "the number of defendents refusing an offer of legal aid either because they do not wish to pay the contributions or for some other reason".
      I agree that we should have information about whether there is a consistent pattern of revocation in certain areas, or whether certain defendants, certain offences, certain categories or certain age groups consistently refuse legal aid, so that we may know whether the scheme is working properly, or whether it is subject to the pitfalls and dangers which many of us have predicted.
      I need not elaborate further on the reason for the new clause. It is essential that Parliament should have the maximum information possible to see how this controversial scheme is working. I trust that the Solicitor-General will be as helpful as he possibly can—I put it as neutrally and kindly as that—in reply.
      The Solicitor-General: I agree that the maximum information that will be useful must be obtained by my right hon. and noble Friend the Lord Chancellor and made available to all who are interested. I am gratified to find that the proposals in the new clause have, as the hon. and learned Gentleman said, adopted some of my suggestions in Committee.
      It being Ten o'clock, the debate stood adjourned.
      Ordered,
      That, at this day's sitting, the Legal Aid Bill [Lords] may be proceeded with, though opposed, until any hour—[Mr. Brooke.]
      Question again proposed, That the clause be read a Second time.
      The Solicitor-General: As I was saying, I am gratified that the proposals in the new clause have adopted some of the suggestions that I made in Committee about information that could usefully be obtained, but which was not included previously.
      There can be no doubt about the Government's attitude to the collection of useful information, but I must advise the House that it would be premature to permit the Lord Chancellor to make such a report until we are satisfied that our information requirements have been properly defined.
      Further consultation is necessary with interested parties, especially the Justices Clerks Society, which will be responsible for collecting the information. It will be necessary to consider carefully whether it is possible to disentangle administrative costs connected with the collection of contributions from other administrative costs, bearing in mind that the one thing that we do not want to do is to waste any of the money saved on unnecessary administrative procedures. That should go towards providing better legal aid for other people.
      The likelihood is that much of the information listed in the new clause will be published in the criminal statistics. The Lord Chancellor's advisory committee on legal aid may also wish to publish some information in its annual report.
      I assure the House, as I assured the Committee, that it is intended that the new arrangements should be carefully monitored and that the information obtained should be freely available. It would not be sensible to bind the Lord Chancellor to publish a detailed report when the cost of collecting some of the information might far outweigh its usefulness. Therefore, I ask the House to reject the new clause.
      Question put and negatived.

    Clause 6

      REFUSAL OF LEGAL MD BY MAGISTRATES' COURTS
      Mr. Archer: I beg to move amendment No. 1, in page 4, line 7 leave out 'may' and insert 'shall'.
      This is a narrow amendment which proposes an obligation in the Bill to do what the Lord Chancellor and the Solicitor-General assured us they wished to do in any event.
      In another place, my noble Friends raised the question of the vast variations in the refusal rate of applications for legal aid orders between one magistrates' court and another. That matter was raised again on Second Reading and in Committee.
      For the record, let me repeat what I said in Committee. In the Official Report of the Second Reading debate I am recorded as saying that according to the criminal statistics for 1980 the national average rate for refusal was 23 per cent. I accept that the fault was probably mine. The real figure was very much in my mind at the time. Whether the fault lay in my natural confusion or, as I suspect, in my natural inaudibility, the figure is 14 per cent. However, the refusal rate for Uxbridge is 36 per cent. and for Highgate 33 per cent., while for Hampstead next door it is only 4 per cent.
      I find it hard to believe that any local factor could account for that difference. On Second Reading and in Committee I mentioned that Warley, in my constituency, had a refusal rate of 23 per cent. and that that was
      836
      particularly disturbing in a busy court with no duty solicitor scheme. I said that I had written to the clerk to the justices. I have since received from him a very careful and courteous reply attempting to identify some of the possible reasons and pointing out that the court sought to comply with the Lord Chancellor's circular LCD 81(3) of 27 March 1981 enjoining the courts not to exceed the Widgery criteria.
      One happy consequence of the correspondence, of which I am delighted to tell the House, is that there is shortly to be a meeting with those concerned in the borough of Sandwell to explore the prospect of establishing a duty solicitor scheme in both petty sessional divisions in the borough. The Solicitor-General responded to our concern by moving a new clause in Committee to introduce what now appears in the Bill as clause 6. It gives wide powers to the Lord Chancellor to provide recourse to an applicant who has been refused a criminal legal aid order by a magistrates' court.
      I accept, of course, that the Lord Chancellor proposes, in good faith, to make provision, but we should like to know a little more about how he proposes to exercise that power. Of course I understand the need for him to hold consultations, but I hope that by now some of those consultations will have taken place and that the hon. and learned Gentleman can give us a little more information. We had intended to introduce some form of parliamentary control over the regulations and we tabled amendment No. 3 for that purpose. However, I am told that it is unnecessary since that control would exist anyway.
      I note that the Solicitor-General has tabled amendment No. 2 to that same clause and that may be its purport. No doubt the hon. and learned Gentleman will be able at least to allay our curiosity, if not to satisfy it, concerning what the Lord Chancellor proposes to do. I do not propose to develop the argument further, as it has been developed frequently before. If I sit down now, the Solicitor-General may be enabled to pursue that course.
      The Solicitor-General: I understand the reasoning behind the questions that have been put to me. I shall do my best to allay any fears. Nothing is quite as simple as it seems at first sight, and the amendment would create substantial difficulties.
      The main reason is that although clause 6(2) allows different provisions to be made for different cases, the insertion of a requirement such as that envisaged in the amendment would make it obligatory for regulations to be made governing ad cases. There are many cases for which it would not be sensible to institute a right of recourse. For example, more than 1 million minor traffic offences are dealt with in the magistrates' courts each year and, although I am not sure that the amendment's proposers intend this effect, the insertion of a requirement in subsection 6(1) would oblige the Lord Chancellor to make regulations covering all of them. That would clearly be a waste of resources.
      It is not necessarily intended to confine the further right of application to "either way" cases, but the need for a right of recourse is probably strongest in that area and it may be desirable, at least initially, to make regulations dealing only with those offences. If it later became appropriate to extend the right of further application to some other offences, under the flexible arrangements contained in clause 6 as it now stands no further primary legislation would be required.

      837
      There is a second reason why I must resist the amendment. Clause 6(3) requires that regulations should be made with the concurrence of the Treasury. A requirement on the Lord Chancellor to make regulations would be inconsistent with that requirement.
      I should like to make it clear that I object to the amendment on practical grounds. I am at one with its proposers on the principle of introducing a right of further application as soon as practicable. I am advised that consultation is taking place with, among others, the Law Society and the Justices Clerks Society, about the court or body most suitable to hear applications by refused persons. That is the first thing that we have to decide, and I was grateful to the hon. Member for Norwood (Mr. Fraser) for his suggestion, which has been put to those whom we are consulting.
      It is still our view that the Law Society's legal aid committee may be the best option, but one has to keep an open mind and listen carefully to the views of others. Whatever final decision is taken, it is essential to bear in mind that two of the most important features of any arrangement made should be that applications are dealt with promptly, so that there is no delay to proceedings, and that the body chosen should be able to obtain sufficient information from the applicant to make a fully informed decision.
      The flexibility given by the clause in its present form will contribute to the fulfilment of those objectives, and it might be hampered by substituting for that flexibility the fixed requirement which would result if the amendment were carried. I hope that the House will not accept it.
      Mr. Ronald W. Brown: I am unhappy about the Solicitor-General's response. We have heard this story so often before. We say that we shall see how it goes and re-adjust it if necessary. That is exactly what happens with legal aid in other circumstances.
      The Solicitor-General will be aware of the constant rows that I have in the House when I raise constituency matters on this subject. My constituency is in one of those areas that is reluctant to give legal aid. We have continual difficulties with Highbury and Old Street magistrates' courts. They will no doubt be delighted by the Solicitor-General's arguments. The system is flexible, but they need not carry it out if they do not wish to do so. I have talked to the Solicitor-General's Department about the problem.
      I give an example in another sphere. Day after day people fall over and hurt themselves but cannot get legal aid to make a claim for damages under the Highways (Miscellaneous Provisions) Act 1961. I have taken that problem to every Lord Chancellor of all parties since 1964, and each one has explained to me that the 1968 decision in Meggs v Liverpool Corporation is only a guide to legal aid committees, but they take it as gospel, and none of my constituents can obtain help from the legal aid committee, which interprets the law in its own way.
      I believe that here we have a chance to do something positive. I do not understand the Solicitor-General's argument that if "may" is changed to "shall" that will destroy the intention behind the clause. It would read:
      "Provision shall be made by regulations".
      It would be a positive, not a negative, measure. The Solicitor-General argues that the provision should be left
      838
      woolly—that is what he calls flexibility, which is a legal term for woolliness—so that one can talk and argue wound the point for hours.
      Those of us who represent areas where legal aid is a lifeline to those who find themselves in difficulties and having to face the courts do not want this great flexibility. People want their rights. The Solicitor-General no doubt represents a constituency where he can go home at night and lay his head on his pillow and go to sleep. If he were to represent my constituency he would get a telephone call at about half-past Twelve at night and have to go to the local police station to see the wives and families of men who had been taken in and to try to find a friendly solicitor who will obtain legal aid for the man. Hours and hours of one's life are spent, day in and day out, week in and week out in that way. Do not talk to me about flexibility. I have it every day of the week. This is another occasion on which we are deciding new law and making sure that it will not treat people properly.
      10.15 pm
      I hope that the House will not accept the Solicitor-General's assurance that flexibility will mean that everyone will be dealt with justly. I do not believe that. My experience of the courts in the area that I represent suggests that there is enough flexibiliy to result in some people being treated unjustly. Whenever Members of Parliament raise these matters with the Law Officers Department and the Lord Chancellor, their response is "This is a matter of judgment or local magistrates and we cannot interfere." That is true, but I am concerned about the quality of their judgment on occasions. It seems that if there is flexibility there will in some instances be injustice. I do not accept the Solicitor-General's assurance, and I support the amendment.
      Mr. Archer: I seek the leave of the House to speak again. I share some of the concern of the hon. Member for Hackney, South and Shoreditch (Mr. Brown). It is true that "flexibility" is another word for imprecision. Although I do not normally fly to the Government's defence, I recognise two of the arguments which the Solicitor-General advanced. It is true that there is a need for consultation and I am pleased to know that consultations are taking place.
      It is fair to say that the amendment as it is framed may impose an obligation to make regulations that may prove to be unnecessary. The Opposition Front Bench does not propose to press the amendment. However, we shall watch with interest what becomes of the provision that we are discussing. I hope that the hon. Member for Hackney, South and Shoreditch will share our concern.
      The Solicitor-General: I, too, seek the leave of the House to speak again. With respect, I think that the hon. Member for Hackney, South and Shoreditch (Mr. Brown) has misunderstood the purpose of the Bill. For example, he spoke of the unhappy person who needs assistance in court in a hurry. The first part of the Bill is designed to ensure that there will be a better system of duty solicitors, who will be paid to deal with the situation that the hon. Gentleman has in mind.
      My objections to the amendment are purely practical. I am obliged to the right hon. and learned Member for Warley, West (Mr. Archer) for his support. If we made "may" into "shall", regulations would have to be introduced to cover every case. That could well have the

      839
      effect of gumming up the system. We want to concentrate on the areas where the action that the hon. Gentleman wants is most needed. I assure him that we have every intention of making progress.
      Amendment negatived.
      The Solicitor-General: I beg to move amendment No. 2, in page 4, line 19, at end insert—
      '(4) Where a legal aid order is made by virtue of regulations made for the purposes of this section, the provisions of this Act relating to legal aid contribution orders shall have effect with such modifications as may be specified in the regulations.'.
      The amendment fills a gap in clause 6, which was added to the Bill in Committee. It provides that where a court or body exercising the power in clause 6—that is, allowing an appeal—makes a legal aid order after further application for a person who was refused legal aid by a magistrates' court, the assisted person shall contribute in the same way as if he has been granted legal aid by the magistrates' court. This seems entirely logical and I commend the amendment to the House.
      Amendment agreed to.

    Clause 7

      LEGAL AID CONTRIBUTION ORDERS
      The Solicitor-General: I beg to move amendment No. 4, in page 5, line 39, leave out from 'income' to 'of' in line 42 and insert—
      'and disposable capital are treated as not exceeding the prescribed limits at any time when he is in receipt of supplementary benefit under the Supplementary Benefits Act 1976 and that a person's disposable income is treated as not exceeding the prescribed limit at any time when he is in receipt'.
      Mr. Deputy Speaker (Mr. Bernard Weatherill): With this it will be convenient to take Government amendments Nos. 5 and 6.
      The Solicitor-General: The amendment implements an undertaking that I gave in Committee. If it is accepted by the House, the capital of those in receipt of supplementary benefit will not be taken into account. Amendments Nos. 5 and 6 seek to achieve a similar effect. They will ensure that capital will not be taken into account when an applicant is in receipt of family income supplement. As I said in Committee, I have given the matter further thought and I have consulted the Lord Chancellor.
      There are two differences between supplementary benefit and FIS that are relevant to the argument. One is that there is no limit on capital with regard to the granting of family income supplement. The other is that once family income supplement has been awarded, it is paid for one year, even if the recipient's income rises to a level at which he would no longer be eligible. Those are two not insignificant financial differences in the opinion of my right hon. and noble Friend and myself, which distinguish that position from that of a person in receipt of supplementary benefit.
      Therefore, I am happy to be able to implement the undertaking that I gave with regard to supplementary benefit, but for the reasons that I have given I cannot go further and extend the exemption to family income supplement.
      Mr. Arthur Davidson: I thank the Solicitor-General for ensuring that no one in receipt of supplementary benefit will have to make a contribution out of capital
      840
      towards criminal legal aid. I am grateful to the Solicitor-General for carrying out the undertaking given in Committee, which was in response to an amendment that we moved. He has been as good as his word.
      I would have hoped that the Solicitor-General could have done the same in regard to those in receipt of family income supplement because I think that he would agree that it is wrong that those who live on the Government defined poverty line should have to make a contribution out of capital. That applies to those in receipt of family income supplement. However, I appreciate the distinction that the hon. and learned Gentleman has made between family income supplement and supplementary benefit. Therefore, I shall not press our amendments, much as I would like to see those on family income supplement not having to make any contribution out of capital.
      Amendment agreed to.

    Clause 9

      ENFORCEMENT OF LEGAL AID CONTRIBUTION ORDER
      The Solicitor-General: I beg to move amendment No. 7, in page 8, line 3, leave out from 'paid' to end of line 4 and insert:
      'on the making of the legal aid contribution order, the court may direct that the legal aid order shall not take effect until that sum is paid.'
      During our discussion of clause 9 in Committee the hon. Member for Norwood (Mr. Fraser) raised the question of interpretation with regard to the use of the word "forthwith". I gave an explanation of what it was intended to mean. I think that that was what it meant. However, the wording contained in this amendment will put the meaning beyond doubt. For that reason, I commend the amendment to the House.
      Amendment agreed to.
      The Solicitor-General: I beg to move amendment No. 8, in page 8, line 7 after 'paid', insert:
      'by the legally assisted person'.
      Mr. Deputy Speaker: With this it will be convenient to take the following amendments:
      Government amendment No. 9.
      Amendment No. 10, in page 8 line 12 at end insert:
      'and unless satisfied that the failure to pay was in wilful disregard of the order of the court'.
      Government amendment No. 11
      The Solicitor-General: A good deal of our time in Committee was taken up rightly with the circumstances in which a legal aid order might be revoked. I gave an undertaking in Committee to tighten up the circumstances in which an order might be revoked. These amendments give effect to that undertaking.
      The effect of the amendments will be to ensure that courts revoke legal aid orders for non-payment of contribution only where they are satisfied that the legally assisted person was able to pay contribution at a time when he was required, but failed to do so. The amendments also require courts to be satisfied that the legally assisted person, at the time that revocation is being considered, is able to pay all or part of the amount due, but refuses or fails to do so. It will be noted that amendment No. 8 prevents the power to revoke being used when the appropriate contributor has failed or refused to pay.
      The other amendments that are being discussed in this group are designed to achieve the same purpose. They are

      841
      all aimed at the same target. The Government's amendments secure precisely and in full what was intended by the other amendments.
      Mr. Archer: We are grateful to the Government for taking account of the proposals that we made earlier. It is an important improvement. It will spare a great deal of hardship and prevent a great deal of injustice. In the circumstances, I do not propose to move amendment No. 10.
      Amendment agreed to.
      Amendments made: No. 9, in page 8, line 10, leave out `without first' and insert 'unless satisfied, after'.
      No. 11, in page 8, line 12, at end insert—

      '(a) that he was at that time able to pay the sum in question; and

      (b) that he is able to pay the whole or part of it but has failed or refused to do so.'—[The Solicitor-General.]

    Clause 11

      PAYMENT OF COSTS OF LEGAL AID
      The Solicitor-General: I beg to move amendment No. 12, in page 8, line 38, leave out 'section 37(1)' and insert: `subsection (1) of section 37'.
      Mr. Deputy Speaker: With this it will be convenient to take Government amendment No. 13.
      The Solicitor-General: This is a new matter, but I can deal with it briefly none the less. The amendments enable the Lord Chancellor to prohibit by regulation some or all forms of topping up in criminal legal aid. Topping up is the payment for counsel or a solicitor acting for a legally assisted person in addition to the sums that are paid by legal aid. It may be divided into three categories—first, the payment for additional fees of lawyers acting under a legal aid order; secondly, payment for additional lawyers, for instance instructing leading counsel, when legal aid orders are limited to one counsel; thirdly, payment to secure additional evidence, such as the employment of an inquiry agent to trace witnesses.
      In civil legal aid, all forms of topping up are prohibited, but in criminal legal aid there is at present no restriction. It is clear that the first form of topping up that I mentioned should be prohibited. It would be offensive if solicitors said "I shall act for you on legal aid, but I cannot work for the rates that I will get from legal aid so you must make up the difference". I emphasise that we have no evidence that that has happened, but it is important that we ensure that it cannot. It would undermine the legal aid system if it occurred. Both halves of the profession support that view.
      The other forms of topping up raise more difficult questions. The Lord Chancellor would not intend to prohibit them without the agreement of the profession. The Bar and the Law Society have naturally been consulted about the amendment. I invite the House to support it.
      Amendment agreed to.
      Amendment made: No. 13, in page 8, line 43, at end insert—
      '(2) Provision may be made by regulations for prohibiting or restricting the receipt by counsel or a solicitor acting for a legally assisted person of payments otherwise than under the said section 37.'.—[The Solicitor-General.]

    Clause 12

      PAYMENT FOR ADVICE AND ASSISTANCE WHERE LEGAL AID ORDER IS SUBSEQUENTLY MADE
      The Solicitor-General: I beg to move amendment No. 14, in page 9, line 7 leave out from 'proceedings' to end of line 9.
      Mr. Deputy-Speaker: With this it will be convenient to take Government amendments Nos. 16 and 17.
      The Solicitor-General: These amendments remove the requirement that the defendant should only be given credit towards his legal aid contribution for any contribution paid in respect of advice and assistance where the same solicitor gives his advice and assistance and acts for him under a legal aid order.
      Amendment agreed to.
      Amendments made: No. 16, in page 9, line 10 after '(2)' insert:
      'If the solicitor assigned to the person in question by the legal aid order is the same as the solicitor who gave the advice or assistance'.
      No. 17, in page 9, line 24 after 'effect', insert:
      'in a case to which subsection (2) above applies'. —[The Solicitor-General.]

    Clause 14

      CONSEQUENTIAL AMENDMENTS AND REPEALS
      The Solicitor-General: I beg to move amendment No. 18, in page 10, line 34 after 'In', insert:
      'the definition of "legal aid contribution order" in section 25(1) of the Attachment of Earnings Act 1971, in section 92(1) (b) of the Magistrates' Courts Act 1980 and in'.
      Mr. Deputy Speaker: With this it will be convenient to take Government amendment No. 19.
      The Solicitor-General: These amendments are purely technical.
      Amendment agreed to.

    Schedule

      REPEALS
      Amendment made: No. 19, in page 12, line 12, column 3, at end insert—
      'In Schedule 4, paragraph 4.'.—[The Solicitor-General.]
      Question, That the Bill be now read the Third time, put and agreed to.
      Bill accordingly read the Third time and passed, with amendments.

  Shipbuilding (Great Britain)
  10.30 pm
  The Minister of State, Department of Industry (Mr. Norman Lamont): I beg to move,
  That the draft Shipbuilding (Redundancy Payments Scheme) (Great Britain) (Amendment) Order 1982, which was laid before this House on 5th July, be approved.
  Mr. J. Enoch Powell: On a point of order, Mr. Deputy Speaker. I wonder whether it would be for the convenience of the House if you would be prepared to take this and the next order together. They involve the same principle, and from the point of view of Northern Ireland we should be happy to have them debated together.
  Mr. Don Dixon: Further to that point of order, Mr. Deputy Speaker. The shipbuilding industry is under threat in many areas and many hon. Members wish to speak on this order. I therefore suggest that the orders be taken separately, so that hon. Members have the full time in which to put constituency cases.
  Mr. Deputy Speaker (Mr. Ernest Armstrong): Unless there is unanimous agreement that the orders be taken together, they must be taken separately.
  Mr. Lamont: The purpose of the order is twofold: first, to prolong the shipbuilding redundancy payment scheme to 30 June 1985, the maximum period permissible under the statute; and, secondly, to improve the benefits under the scheme.
  As to the prolongation of the scheme, I should first assure the House that this should not be taken as an ill omen for the industry or any cause for alarm. As I told the House in April, British Shipbuilders has made striking progress in financial terms from the depth of the shipbuilding recession. Losses have declined from £110 million in 1979–80 to the very creditable result last year of £19· million loss. Order books now stand at around 540,000 compensated gross registered tons compared with a low of 400,000 tons this time last year. British Shipbuilders has increased its market share to 2·5 per cent. of world new orders, which is the best result of any year since vesting day. These results were obtained in what the chairman has described as "generally difficult trading conditions" and undoubtedly much of the credit must lie in the painful steps which the corporation has had to take to make itself more efficient. The Government have fully supported the corporation in that, to the extent of nearly £600 million since we came to office.
  British Shipbuilders' recent report also discloses problems ahead. On merchant shipbuilding, the chairman states that the world industry is beginning to feel the effects of a deepening recession in the shipping market. He comments that the current offshore boom which started in 1980 is coming to an end and that ship repair has suffered very poor trading conditions. As the House knows, on 15 July British Shipbuilders announced major restructuring plans designed to restore the ship repair division to viability. As the chairman stated, the immediate market prospects overall for the corporation for 1982–83 do not look encouraging.
  Not all the news is bad. British Shipbuilders clearly stands to benefit from the consideration being given to the ship replacement orders following the Falklands operation, and the current naval construction programme
  844
  is being pressed ahead as rapidly as possible. British Shipbuilders and the private sector ship repair companies are benefiting from the refurbishment of merchant ships as they return from the task force. I know that the House is interested in one particular order, and before I sit down I shall say a word about that.
  In this context, the House will also be interested to know that we have decided to relax the rules on credit for conversions. When we extended the scope of the home credit scheme to conversions in 1979, the normal credit period was limited to five years. In view of the increasing importance of conversion work to the ship repair industry, we have now agreed that for a period of 12 months credit of eight-and-a-half years should be available under the home credit scheme as a matter of routine for all conversions with a contract price of over £1 million. I know that this will be welcome to the industry.
  The House will be interested and pleased to know that the European Commission has recently given approval to a further tranche from the intervention fund of £20 million both for British Shipbuilders and the private sector until the expiry of the fifth directive at the end of December. The future of the intervention fund after December will need to be considered against the background of discussions in the early autumn on what Will follow the fifth directive.
  Against the background of British Shipbuilders forecasting more difficult conditions ahead, it would clearly be prudent to prolong the shipbuilding redundancy payments scheme, but we must all hope, as the chairman has said, that British Shipbuilders can take these conditions in its stride and press forward with its plans.
  I turn now to the case for improving the scheme. The scheme was first introduced in 1978 with retrospective effect to British Shipbuilders' vesting day. Since then, while the framework of the scheme has remained unaltered, the benefits available for those over 40 have retained their value in real terms through annual adjustments in the ceiling for reckonable earnings in line with the general redundancy payments scheme. The maximum level of those earnings has gone up from £100 in 1978 to £135 now.
  On the other hand, the lump sum of £300, which is all that is paid to the under-40s under the scheme, has lost considerably in real value, and to restore its 1978 purchasing power about £500 would now be needed. This has tended to overlook the hardship of redundancy for younger men, and the main thrust of the order is to remedy that situation and to give a better deal to the under-40s.
  We have also received representations that the terms of the scheme are unfair to middle management, because of the effect of the £135 a week maximum. However, the scheme has proved to be very cost-effective. At a cost of about £55 million to date, about 20,000 employees have been persuaded to accept redundancy with relatively little industrial disruption. Although there are other costs associated with closure, this compares with an annual saving in British Shipbuilders' manpower costs of more than £150 million. None the less, the effectiveness of the scheme on the present terms has clearly been diminishing.
  The effect of article 2(3) is to revise the provision for the payment of lump sum benefits so that the sum for the under-40s is related to age and service in place of the current flat lump sum of £300, which is paid to all people under 40. From now on it will be related to both age and service—as with those above 40.

  845
  For a person of 25 with five years' service and earning £100 a week, the benefits will be £1,000. A person of 39 with 20 years' service earning £100 will receive £4,000 plus an age amount of £450, making £4,450 in all. The minimum entitlement is £500, which is received by all those over 19 with more than a year's service.
  The proposals will also give some improvement in benefit to the over-40s. This is done partly through a modest improvement in the lump sum through the new age table set out in schedule 1, but chiefly through the new multiplier in schedule 2, which links the length of service element with the previous earnings to determine the larger part of the lump sum and the whole of the sum that is available for income support. It is right that only the over-40s should be eligible for support payments, as they have greater difficulty finding new work.
  The third major improvement is the new definition of previous earnings which entitles scheme beneficiaries to have their benefits based on one and a half times the maximum under the Employment Protection (Consolidation) Act—that is, up to £202·50 a week at present. This has been a subject of considerable concern to management and representations have been received from SAIMA among others. The new definition appears in article 2(1)(b). We hope that it will help middle management. I know that this is a matter of concern to the hon. Member for Bristol, North-East (Mr. Palmer).
  One effect of the changes is that the maximum entitlement under the scheme will go up from £11,550 to £17,200. This is very much a theoretical maximum. It would apply only to someone with 20 years' service who earned over £200 a week. The increase on the previous earnings maximum is the chief factor. A man of 50 with 25 years' service earning £130 a week would have received £10,335 in all under the scheme if he remains unemployed. This is now increased to £10,900.
  I apologise for bombarding the House with these figures. It is, however, important, if hon. Members are to judge the scheme, that they should see the sort of lump sum payments and income support payments that will be available under the scheme. I shall place in the Library a table that will set out some examples of the changes although there are many combinations that one can take. British Shipbuilders will be publishing an updated version of its booklet giving advice and explanation on the working of the scheme.
  To date, scheme beneficiaries—this is the best statistic to give the House an overall impression—have been receiving, according to British Shipbuilders, about £3,700 on average. British Shipbuilders calculates that this will go up to an average of about £5,000. The proposals have been discussed extensively with British Shipbuilders' unions and management and are broadly acceptable to both.
  Another alteration in article 2(4) increases the minimum weekly income support payment from £10 to £20 a week. This means that those who are receiving only modest payments will receive them twice as quickly. This goes some way to deal with the problem raised by the hon. Member for Glasgow, Central (Mr. McTaggart) from time to time—the interaction of these payments and supplementary benefit. For people on very low incomes, this will go some way to modify the problem to which the hon. Gentleman has drawn our attention.
  846
  One of the technical amendments being made is to ensure that all work on the construction of mobile offshore installations is in future brought within the scope of the scheme. This is achieved by articles 2(1)(c) and 2(1)(e). Now that these activities are an essential and important part of British Shipbuilders' work, it is important that the rights enjoyed by men engaged in them are the same as those working in more traditional fields of British Shipbuilders. This is a technical amendment, and such employees, if they become redundant, are for the most part already covered under the scheme.
  I emphasise that the timing of the change should cause no particular concern. It should not be inferred that a substantial number of such redundancies are imminent. It is merely that, as currently drafted, the scheme does not apply to offshore work before vesting day, of which there was very little, nor to employment in this work by those who have joined British Shipbuilders since vesting day. Fairness dictates that those engaged on offshore work should share with those elsewhere in the corporation equal rights to benefit under the scheme.
  I turn to another technical amendment. British Shipbuilders has made a frequent practice of making payments of 12 or 13 weeks' pay "in lieu of notice" to its employees who have accepted redundancy. Views have been expressed that such a payment may in some circumstances rank as a company scheme within the meaning of article 11 of the redundancy payments scheme. If that is the case, the payments made to the employee under the so-called company scheme would be deductible from those paid under the redundancy scheme proper. It is desirable that British Shipbuilders should have the discretion to make those payments in lieu of notice without the risk that, in some cases, the payments might be held to be deductible.
  We have taken the opportunity in article 2(6) of the draft order to clarify the position by ensuring that such payments up to a maximum of 13 weeks are not to be regarded as company schemes, so there is no risk that they might be held to be deductible. That will afford British Shipbuilders some discretion and flexibility to use payments in lieu of notice as an added inducement to their employees to accept redundancy.
  The growth in the practice of making payments in lieu of notice has had a unwelcome side effect and we are taking advantage of the opportunity in the order to rectify it. Before the making of Statutory Instrument 1981 No. 315 in March last year, one requirement for receipt of the weekly support payments under the scheme was that former British Shipbuilders' employees should, if unemployed, be registered for employment. But the 1981 order altered that and provided that, to become eligible for benefit under the scheme, an employee also had to be eligible for unemployment benefit or, if he was ineligible, it had to be the case that he would have been eligible but for falling within one of seven listed categories, for example, that he was sick or had become self-employed in the meantime.
  When my right hon. Friend the Secretary of State for Employment gave the reasons for that change in Committee in February last year, he said that the amendment was so designed that the new link with unemployment benefit did not disentitle anyone who would otherwise be entitled to receive benefits under the scheme. Assurances to the same effect were given in other places. We have since discovered that we had not allowed

  847
  for a complex position, which is when pay in lieu of notice was granted by British Shipbuilders to the employees who accepted redundancy and the period in respect of which pay was given was longer than the period to that employee under the Employment Protection (Consolidation) Act 1978. The period for lieu of notice payments exceeded the statutory notice period and, for that excess period, a person could not receive benefits under the scheme. Therefore, we are taking action under the Appropriation Act to protect those who are currently receiving benefit under the scheme and who are at risk of being affected by the position. They are receiving the scheme benefits in full.
  To put the matter right for the future and to ensure that the assurances given by my right hon. Friend are scrupulously honoured in their entirety, the Government are widening the definition of "unemployed person" so that it includes as an eighth proviso the receipt of pay in lieu of notice for the day in question. That is done in article 2(1)(d) of the draft order. I apologise for the complexity of the explanation, but it is a difficult and important matter.
  Naturally, I hope that little use will be made of the scheme and I have emphasised many times that it should not be interpreted as ushering in an era of great difficulty for British Shipbuilders. I hope that that company can take in its stride the less encouraging outlook that has developed in the market. The Government will certainly give it all the help that they can.
  I am sure that the House would expect me to say something about the Cunard requirement for a container ship—the so-called replacement for the "Atlantic Conveyor". We are not expecting an announcement until the end of this week. As Lord Matthews said, the gap between British Shipbuilders and its competitors is very large, but we are continuing to explore ways of bridging that gap. We are anxious to find a way.
  I commend the order to the House. In the Government's view, it is clearly right, given the less encouraging market and the resultant uncertainties, to prolong and enhance the scheme.
  10.49 pm
  Dr. John Cunningham: A debate on this order relating to improvements in redundancy payment provisions in British Shipbuilders is both timely and apposite. I congratulate the Minister of State on the careful way in which he explained the amendments. My hon. Friends and I appreciate his proposal to place tables in the Library so that we may consult them. I do not agree that this measure is not an ill omen, but it is perhaps symptomatic of the times in which we live and the difficulties now facing British Shipbuilders.
  Unemployment is already more than 3 million, and is high in those areas where British Shipbuilders has its main operations—the Clyde, the Tyne, The Wear, Teesside, Merseyside and—these days, under this Administration—on the South Coast and in the South-West. There is no doubt in the minds of thousands of men and their shop stewards and full-time officers in the industry that they face a crisis of impending redundancy. It is only a matter of days, and well within the memory of the House, since an announcement was made affecting possibly 1,500 shipyard workers on the Tyne, in South Shields and Jarrow. If those redundancies are confirmed, it will be a catastrophe for South Shields. The Minister of State should be in no doubt about that. So, to say that this
  848
  debate should not be taken as a portent of trouble to come is the understatement of the week. Disaster is already facing the 1,500 shipyard workers and their families.
  I agree with the Minister of State—and, for that matter, the managemer.t of British Shipbuilders—that there is likely to be a further decline in demand for ships because of the recession. Orders for new vessels have decreased, compared with the last year. All our information leads us to conclude that that situation is likely to obtain for a number of years—forecasts say until perhaps the mid-1980s.
  Mr. Harry Cowans: I thank my hon. Friend for giving way. He says that there seems to be a decline in orders for new ships, but there is one outstanding type of ship for which there is no decline. If the Government were to take some action, they could fulful the Minister's hope that this document would be used very little. If he put his money where his mouth is straightaway, we could deal with the shortage of other ships later.
  Dr. Cunningham: I agree, and I shall come to that matter in a moment.
  The House recently debated the hiatus in naval orders, which, again, is the result of this Government's policies. That shortfall in expected work for British Shipbuilders had a major impact on the Clyde, the Tyne and the Mersey. Redundancies are likely to result. Again, the Minister of State was less than candid about the likely impact of Government policies on jobs for shipyard workers.
  It may sound reassuring and comforting to people outside who listen to or read this debate and see the sums that the Minister mentioned, but the effect of redundancy payments has gone well beyond their original intentions. The number of jobs disappearing as a result of men being offered large sums to leave industries, with little thought of the long term, when they are young and middle-aged men, is a grave cause for concern.
  I and many of my hon. Friends know, representing industrial areas as we do, the problems that are now being faced by people who, within the past few years, have taken significant sums of money to leave industry only to find that the money does not last for ever. Those large, attractive, sums soon run out when the bills come in. The long-term social consequences for them, their families, the communities and the country as a whole should be considered seriously. However, that is a subject for another debate that we cannot go into detail on tonight.
  Workers in British Shipbuilders have steadily and consistently over recent years been improving their productivity and performance since vesting day in 1977. As is demonstrated by the report published a few days ago on the accounts for 1981–82, the corporation has stayed within the cash limits set down by the Government. Wage negotiations have again been moderate, and excellent team work throughout the corporation has again helped to increase productivity. All that has taken place against a background of reduced financial support from the Government.
  The Minister mentioned the intervention fund. Of course, that is welcome, but I would remind him that in 1977 the fund was originally established at £65 million and later increased to £85 million with a much greater

  849
  percentage of support for any one particular order than exists at present. In real terms the amount of support that the Government are now giving through the intervention fund, taking inflation into account, is nothing like the amount of support that British Shipbuilders were being given at that time.
  I disagree with the Minister, as I am sure do my hon. Friends, that the prospect is anything like as rosy as he tended to suggest for workers in the shipyards. The future for many of them is grim and threatening. I mentioned the Tyne redundancies, announced last week. Recently several of my hon. Friends and I met representatives of workers from the Tyne yards as a whole. They left us in no doubt that, come the autumn of this year, without further significant orders, many hundreds, if not thousands, more jobs are likely to be put at risk.
  That is rather strange to those workers who, a few months ago, saw the P and 0 order for a major cruise ship go abroad and, more recently, a Furness Withy line order go abroad. Now they contemplate the prospect of the replacement for the "Atlantic Conveyor" going abroad, on this occasion probably to the Far East.
  The Government's policies and attitudes do not appear strong enough to the workers. Such work as the early delivery of the "Ark Royal", HMS "Illustrious", HMS "York" and HMS "Liverpool", from the Clyde down to the South Coast, has been praised over and over again by the Royal Navy, newspapers, management and the Prime Minister herself.
  I shall read out some of the comments that appeared on the work done on merchant vessels and conversions for the task force.
  "Round the Clock Working as race is on to finish warship orders … Yards respond to the Falkland crisis."
  And again,
  " 'Busting their guts' for the Falklands—HMS 'Liverpool' is completed well ahead of schedule."
  Such comments have come from all sides on the efforts made by the shipyard workers.
  The men have also been delivering merchant vessels early. However, early delivery brings them face to face, not with more orders or Government support, but with the dole queue. That is the result of improving productivity and of responding to pleas from the Navy and Government Ministers to get those vessels down the slipway. No one can complain about the perfomances of British Shipbuildiers and its management and men.
  Mr. Robert Rhodes James: Yes, they can.
  Dr. Cunningham: No one can complain because in many cases not only has productivity improved—despite what the hon. Gentleman says—in leaps and bounds but British Shipbuilders' tenders are the lowest in Europe. As the Minster recently confirmed in a letter to me, British Shipbuilders has a statutory duty to have regard to the requirements of national defence in maintaining a shipbuilding capability. How is it to be able to maintain that capability if hundreds of millions of pounds of orders in the past three years, and under the Government's policies, are to continue to go abroad?
  British Shipbuilders is told that it must be competitive, but it is competitive with any firm in Europe. Indeed, 60 per cent. of its present merchant order book is for export.
  850
  When we talk about competition, we are discussing not competition with Europe or even with the United States of America but about competition with one part of the world, the Far East and Japan and Korea. British Shipbuilders does not consider that that competition is based on market forces or, indeed, that it is fair. We have some sympathy with that point of view, and we are not alone.
  The Institute of Shipping, based in Bremen, says the same thing. A recent article in Lloyd's List states:
  "South Korea 'poses a threat to the world's yards'."
  The threat is posed not only to British Shipbuilders but to world shipyards. It is common knowledge that these days, the Koreans take the Japanese price and then promise to deliver for 5 per cent. less, regardless of other costs. Many people—not only those in British Shipbuilders—will argue that many of those tenders will barely pay for the cost of materials and labour. Therefore, when talking about competition, we should be talking about competing on an equal basis, with equal levels of support, equal financial arrangements and equal costs for borrowing and the funding of orders. We shall then discuss something that matches like with like.
  Mr. D. N. Campbell-Savours: Is it not significant that under article 92 of the Treaty of Rome, the payment of State aids and subsidies to companies and industries within the EEC is prevented, although we are willing to buy from countries that pay those subsidies? Is there not a contradiction?
  Dr. Cunningham: The general view is that the Government are trying to play the game by one set of rules and other Governments are playing an entirely different game.
  Mr. R. B. Cant rose—
  Dr. Cunningham: I shall not give way as I wish to make a brief speech and I have already given way twice.
  Are not the workers in our shipyards worth something in return for the efforts that they have made both recently, and in the past few years? Do not those people and their families—the men who were lionised in the press during the Falklands crisis—have a future? Should they continue to make a contribution to our trade and defence effectiveness? We are a major maritime nation. Do we need a shipbuilding industry? The answer to those questions from the Opposition, and the Labour Party in particular, is an unequivocal "Yes". There is no such clear commitment from the Government, who cannot make up their minds whether we should maintain a major shipbuilding capability.
  In the first quarter of the year more than 60 per cent. of all OECD orders went to the Far East. The General Council of British Shipping has drawn attention to that problem, as have others in other countries. The position will continue without more aggressive Government support. British Shipbuilders, the Confederation of Shipbuilding and Engineering Unions and the National Union of Seamen call upon the Government to have a maritime strategy, and we subscribe to that approach. How can we stand aside from this serious and deteriorating background? How were the Swedish Government able to intervene a few days ago to ensure that three container ships in the same consortium as Cunard are to be built in Swedish yards? Is there any doubt that the French vessel

  851
  will be built in a French shipyard? If those vessels were for an American line they would be built in an American shipyard.
  Taxpayers are making a significant contribution to enable Cunard to replace the "Atlantic Conveyor", and it seems incredible to most people that it will not be, and cannot be, built in a British shipyard. I shall return to the subject of the "Atlantic Conveyor" shortly. The Government have even created difficulties for British Shipbuilders over the sale of HMS "Invincible". If they had not reneged on their agreement with Australia there is a strong possibility that they would have ordered another vessel from British Shipbuilders. I say to the Government and the Navy "The Tyne workers can build another 'Invincible,' but the Navy cannot build another Swan Hunter." If Swan Hunter's yard and facilities are allowed to go they will almost certainly never be replaced.
  Against a background of orders lost to the Far East and British shipping lines going abroad for their ships, how can the Minister say that redundancy is not likely to grow and threaten shipyard workers? If Cunard eventually places an order in the Far East, the country—this issue cuts right across party boundaries—will greet the decision with derision. How will British Shipbuilders survive as maritime shipbuilders against that background? Mixed yards like Swan Hunter are dependent upon both naval and merchant shipping orders for research and development, design, material ordering, and union co-operation. "Why co-operate when all that the future offers is to work oneself out of a job?" is what shipyard workers are asking. They feel that Lord Matthews and the Government do not give a damn about their future. The prize for working for Great Britain and the task force is a place in the dole queue. Praise in the Daily Express and other newspapers is empty rhetoric when workers are faced with that prospect. Patriotism does not pay the bills for these workers and praise does not fill the slipways. Only orders for ships do those things. The shipyard workers want actions and not words.
  The Minister of State says that there is a ray of hope. We welcome that. We think that there is no reason why the Government should not be saying categorically after weeks of argument, vacillation and delay, that the order will be coming to Britain. Cunard will get at least £10 million worth of taxpayers' money and people of all shades of opinion believe that that money and the money for the order should be spent and invested in Britain. Cunard and the Government should work harder to bridge the gap. They owe that to our shipyard workers.
  Among other things Lord Matthews is the proprietor of the Daily Express. Underneath the title of the newspaper the following appears: "The Voice of Britain". Bearing in mind all that has gone before, if this order goes abroad shipyard workers will conclude that the voice of Britain as expressed by Lord Matthews is a voice that speaks with a forked tongue.
  11.12 pm
  Mr. Arthur Palmer: I shall not speak for long at this declining time of night. Bristol is not a shipbuilding port, although it once was. The "Great Britain" was built at Bristol, but that was rather a long time ago.
  I wish to raise the rather narrower issue of redundancy payments and the position of middle management employees, who are much affected by the level of the
  852
  payments because of the upper limit of the scale. I must declare an interest because the Shipbuilding and Allied Industries Management Association is part. of the Engineers' and Managers' Association, which is my union. My general secretary has corresponded with the Secretary of State on this issue and I have personally corresponded with the Secretary of State.
  The situation that arises in shipbuilding redundancy payment schemes is one that could apply elsewhere, but it is especially significant in this debate. There is a real discrepancy these days between the upper limit of earnings counting for redundancy payments and the upper limits which count for national insurance purposes. In 1965 the upper earnings limit for national insurance purposes was £18 and for redundancy payment purposes it was £40. By 1982 the national insurance contributions upper limit became £220, and for redundancy payments it was £135. There has been a complete reversal in 17 years. There have been certain charges in State pension arrangements which have had an effect on the percentage rates charged to employers and employees, but the operation of the national insurance fund has remained basically unaltered for a long time.
  In contrast, the amount of earnings upon which national insurance contributions are levied has increased at a far faster rate than the earnings limit that counts for redundancy payments. It is appalling to see the discrepancy between the two scales. I am the first to admit that the process occurred under successive Governments—notably in 1972, 1973, 1976 and 1977—but there has been a much greater rate of change since 1979. Therefore, since 1979, the upper earnings national insurance limit has increased by 63 per cent., but the limit on pay for redundancy purposes has increased by barely half that, at 32 per cent.
  Successive Governments have increased percentage contribution rates for national insurance when unemployment has risen. The original intention of the Redundancy Payments Act 1965 was to compensate those who became unemployed. The effect of Government policy has been insidious. In 1965 the maximum level of earnings for redundancy pay was 223 per cent. of average male earnings, but by 1981 it had declined to 93 per cent. In short, the system discriminates particularly against the somewhat higher paid employee, which was never the original intention.
  From the correspondence that I have seen, the minsterial answer is this. I hope that the Minister of State will deal with it. It is that we can now depend more and more upon extra-statutory redundancy payments. That is an unsatisfactory state of affairs because there is nothing positive about that. It depends upon trade union strength and the situation in a particular industry. Non-statutory redundancy is uneven and uncertain. It also discriminates against the public sector.
  The Shipbuilding (Redundancy Payments Scheme) (Great Britain) (Amendment) Order enables me to draw attention to a bad trend that does not always get the attention that it deserves. I confess that there have been some improvements in that scheme, due to strong trade union representations, in which my union played its part, particularly on the length of service, age limits and so on, but the fault of the difference between national insurance limits and the upper level of redundancy payments remains.
  11.17 pm
  Dr. David Clark: I have participated in several of these debates over the years. The report the following day in the Daily Express and other such newspapers states: "Golden Handshakes for Shipyard Workers." The Minister smiles. He has seen such reports. I re-emphasise the point that he made. We are not talking about vast sums of money. As the Minister said, from 1980–81 the average was £3,700—not a great deal when a career and a job are being sacrificed.
  One survey conducted in 1979 showed that only 4 per cent. of the people made redundant at that time were eligible for £5,000 and that well over half of those made redundant would get less than £1,000. Since then the figures have risen, but the amount is small compared with the sacrifice that the men and the communities are making.
  I make this point strongly. We are talking not only about jobs here and now, filled by individuals, but about the future for many communities, the seed corn and the young people who come into the industry. When people sell their jobs in this way, they are often selling the future of their community and their district.
  The Minister said that support payments would not be paid to the under-40s. He used the word "naturally" or "understandably". It is not natural or understandable. In the areas of major shipbuilding there is massive long-term unemployment. In Tyne and Wear alone over 80,000 men are seeking jobs. One-third of them have been out of work for more than 12 months. It matters little whether one is 30 or 50. If one is out of work and a shipyard worker on the Tyne, one will be unemployed for many years. I hope that the Minister will look at that matter for future occasions.
  The Minister said that he thought and hoped that little use would be made of the scheme. I wish that I could share his confidence. His phrase "little use" will sound to my constituents like a classic cliché. The Minister knows that 10 days ago the Government's financial constraint on British Shipbuilders resulted in the town that I represent being decimated. British Shipbuilders announced that there would be about 1,500 redundancies in the ship repairing industry. All the repair yards in South Shields, which have been building ships since Roman times, are to be closed. The planners estimate that for every job in the yard there are three jobs outside. That illustrates the effect on towns such as mine.
  Already the area has 29 per cent. male unemployment. I do not exaggerate. If the redundancy scheme goes through, we shall be talking of about 40 per cent. male unemployment. Yet the Minister says that he hopes that little use will be made of the scheme. I hope so, too. My hope and his hope will be realised only when he is prepared to take action.
  The Government are about to pay £10 million to Cunard. What is the total extra cost of labour of the scheme? Is it more than £10 million or less than £10 million? When I consider that sum, I think about the building yards on the north side of the town. I note the lack of orders. I realise that the Government are contemplating allowing a firm to build a vessel overseas. I fail to comprehend that.
  I wonder why the Minister has not been frank with the House. Perhaps he does not know. Before I came to the House tonight I heard the news. The Secretary of State for Defence has decided to give £3 million to Cunard if it
  854
  builds a ship in the United Kingdom. Why did the Minister not tell us that? Was he not told? If he was not told, he should find out what is happening.
  It should not be a question of the Government trying to bribe Cunard to build that ship in the United Kingdom. Does Cunard not realise that men died on the ship that it is to replace? Is there no patriotism? I have been reading newspapers from the First World War, when there was a great debate about conscription. One of the arguments was "When there is conscription of labour, why should there not be conscription of capital?" The near traitorous action by the Cunard directors, who are prepared to put profits before their country, gains no support among the ordinary people of our country.
  I demand that the Minister takes action to retain jobs for shipyard workers. We have needed shipyard workers in the past—and, by God, we have needed them in the last two or three months—and we shall need them in the future. We want some action.
  11.24 pm
  Mr. Ian Wrigglesworth: I do not disagree with many of the remarks from the Opposition side of the House, but I should like to add some words in support of the orders and on the background against which they are presented.
  The House should agree to the orders. The schemes should be extended and the basis of lump sum payments should be changed. The limit on the previous earnings rule should be increased. That is all acceptable, fair and equitable, but the House should pass the orders with a heavy heart. I wish that they were not necessary.
  A sad state of affairs confronts us in the shipbuilding industry. Other hon. Members have mentioned the unemployment levels in their constituencies. I tell the hon. Member for South Shields (Dr. Clark) that we already have male unemployment rates of over 40 per cent. in some parts of Middlesbrough, and I am sure that that is also the case in his area.
  We have lost 100 ship repair jobs at Smith's dock and 900 further redundancies were declared by the British Steel Corporation this week. A threat also hangs over the ICI petrochemical complex on Teesside. I sometimes think that those in other areas do not appreciate the scale of the disaster that is hitting people's lives in the North-East.
  The prospects are extremely grim. The Government must take a share of the blame not only for the domestic situation, which we tend to concentrate on in the House, but for some of the international situation, which affects shipbuilding much more than some other industries.
  When the right hon. Member for Cardiff, South-East (Mr. Callaghan) was Prime Minister he did much to try to get the strong economies in the world to reflate, to push the weaker economies into reflation and to increase demand in the world economy. The present Prime Minister and her Government have led the world in their monetarist, deflationary policies. Reagonomics and Thatcherite policies have become the norm throughout the Western world, and the result is the depression that faces the West.
  The Government have as much responsibility to try to ensure that demand is increased in the world economy as they have to ensure an increase of demand in the domestic economy. Because of the present state of the British industry, the enhanced scheme will have to be used by

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  British Shipbuilders. When the 1,500 redundancies on the Tyne and the Tees were announced, British Shipbuilders blamed the "appalling market conditions" and those words were taken up by the BSC in announcing its 900 redundancies on Teesside a few days ago.
  No matter what the Government do to get inflation and interest rates down, to improve the other economic indicators and to make companies competitive—I am all in favour of that—it will all have been achieved for nothing if the demand is not there. People will still be going on the dole and will not have the jobs that they had in previous years and the jobs that they deserve.
  Redundancy schemes will fuel inflation by increasing the public sector borrowing requirement and by pouring money into the pockets of non-productive people. The money will be spent not on productive investment, but on compensating people for losing their jobs. That is not the productive way to use public expenditure. It should come as no surprise that we are in the present state of affairs. The Government should realise, as has been made clear, that they are in truly exceptional circumstances with this industry—more so than with other industries in the world.
  The hon. Member for Whitehaven (Dr. Cunningham) referred to the competition that we face from South Korea. I recently looked at some comments that were made earlier this year by the chairman of Lloyd's Register of Shipping, especially those relating to the development of the South Korean shipyards. He described it in the most forceful terms. He said that the development of South Korean yards was a most disturbing factor and that, inevitably, the work that comes from yards that are struggling for orders in other parts of the world is still substantial and that those shipyards would be a threat to British yards. They were the views not of Opposition Members but of the chairman of Lloyd's Register of Shipping, warning about what is happening.
  That represents extra capacity on a world market that is already over subscribed. Everyone knows that. Therefore, how can we be surprised by the prices that are being quoted for the "Atlantic Conveyor"? We are told that the Korean yards quoted Cunard $58 million for the replacement, Japan $65 million, British Shipbuilders $80 million and others quoted up to $115 million. British Shipbuilders was by no means the most expensive, which is the impression that some people have tried to put around. But what an enormous gap. When compared with $115 million, can anyone believe that $58 million is a real market price? It is not. As has been pointed out, that price would not even pay for the materials, never mind the overheads and the manpower to build the ship.
  I should like to know what the Government are doing to find out, so far as is possible through the available channels, how the discrepancy is arising. Is it the case that such a low quotation can be made by another yard on truly competitive terms, or is it, as we know from the passing of other industries, an example of a Government and a sector of industry pursuing a world-wide strategy to ensure that they capture the markets of the world? Are they intent upon undercutting the competition of other yards around the world, thereby forcing them out of business, and taking over those markets in the long term? In other words, are they pursuing the loss-leader approach over a long period of time to undermine our position?
  The Minister shakes his head in disagreement. If that is not so, let us have the facts and understand whether it is exchange rates or other factors that affect prices that
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  enable the Korean yards to quote prices that are so much lower than those of other shipyards in Europe, especially that quoted by British Shipbuilders.
  The Government have a duty to the taxpayer, British Shipbuilders and its workers to discover why that discrepancy occurs. There would be much greater understanding and acceptance of the circumstances if it were discovered that the quotations were being made on truly competitive lines. I do not believe that for one moment but they might be a little more acceptable if that could be proved.
  Mr. Cant: The ITV news broadcast mentioned by my hon. Friend the Member for South Shields (Dr. Clark) said in effect that Lord Matthews had got his sums wrong and that the price differential was not £15 million. Whitehall sources had said that it was only £6 million and that the Government were prepared to give £3 million towards that, so the loss would be only £3 million.
  Mr. Wrigglesworth: As I was in the Chamber, I did not hear the 10 o'clock news, but I hope that what the hon. Gentleman says is true. Lord Matthews getting his sums wrong does not create great confidence in Cunard, but if it leads to the "Atlantic Conveyor" order going to a British yard we should find some consolation in that. Lord Matthews, Cunard and the Government have a duty to stop at nothing to ensure that that order comes to the North-East. The work is urgently required. The quality of the work done there and the effort that has been made have already been described. They are a testimony to the capability of those yards to carry out that work, and there is no justification for the order not going to them.
  I hope that the Minister will take on board the message that the House has given him loud and clear today. In terms of both the "Atlantic Conveyor" and the general demand within the economy, the Government have a major responsibility to take action. Pouring money into redundancy schemes is not a way to create wealth or get people back to work but a waste of resources.
  Concern has been expressed about the scale of the payments and the possibility of misuse. To me, however, it is not the level of payments that is wrong but the fact that alternative employment is not available. It is the way in which the economy is being run that is wrong, not the level of redundancy payments. My father left the steel industry with a pittance after working in it for 40 years. Such a tendency should not be perpetuated. If people have worked for 20 years or 25 years in an industry, they are entitled to a reasonable golden handshake of the kind to which only management has been entitled in the past. That is eminently justified and that is why the order should be approved. The fault lies in the way in which the economy is being run so that those people are condemned to the scrap-heap, in many cases for the rest of their lives if they are nearing retirmement age, and certainly for a great deal longer than should be the case.
  Therefore, in supporting the order today, I hope that the Minister will take on board the points that have been made and will press his colleagues in the Government to introduce a package of measures in the not-too-distant future—if it is too late to do this before the Summer Recess, then certainly in the autumn—to try to get the British economy going again and to increase demand so that major industries such as shipbuilding get the orders that they should. The Government must also take action

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  abroad to ensure that the international economy gets a boost, which can happen only if the kind of policies that the Government have been pursuing are ended not only here but throughout the world.
  11.38 pm
  Mr. Frank Field: In one sense I was grateful to the Minister today, because the longer he spoke the greater was the image of my grandmother rekindled within me. To the many choices and chances in her life she used to respond that half a loaf was better than no loaf at all. The longer the Minister spoke, the more that image came back to me.
  When I visit the Cammell Laird shipyard, the message from the men is not that they are not grateful for improvements in redundancy payments, because of course they are, but their demand is for more work and they ask questions that I cannot answer. As the Minister hopes to respond briefly to the debate, I hope that he will have time to answer those questions. They ask how Parliament can find the time and the taxpayers' money to give them redundancy payments. More importantly, they want to know how Parliament can vote their money to pay unemployment and supplementary benefit but cannot find the money to keep them in work. They pose important questions about our national accounting. The money is available for redundancy payments and to keep men and women idle, but it cannot be found to support the shipbuilding industry to the extent that many hon. Members wish.
  I was pleased with the new note struck by the Minister when he commented on British Shipbuilders' annual report. He commented on the striking progress. Indeed, he could have done a better job than British Shipbuilders, because the main table in the annual report setting out the cost to the Exchequer is presented in "funny" money. It does not take account of inflation.
  If inflation is taken into account, and if one's starting point is the year in which the Government were elected, one finds British Shipbuilders' losses reduced 13-fold since 1979, cash requirements reduced three-fold and the subsidies going to the industry via the intervention fund have been more than halved.
  The Minister was right to talk about striking progress, but what are the Government doing? They have come forward with redundancy payments but have not offered much other positive assistance to help the industry.
  Part of the problem facing shipbuilding is that it is one of our old, staple industries. The conventional wisdom about those industries is that they are dying and the sooner we get rid of them the better. Yet a new industry is arising within shipbuilding. For example, the Cammell Laird yard in my own constituency has diversified considerably over the past few years. It is no longer concerned merely with shipbuilding but is massively concerned with offshore work. The skills that have been developed to meet those requirements are considerable. That is why Labour Members have pleaded with the Government to abandon their view of shipbuilding as an old, staple industry that must quietly be done away with. Instead, they should recognise that industry's success.
  A number of forces in Merseyside have argued against those of us who have gone into the yard and told the men "The only hope of having a long-term future is to improve
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  your productivity". Such forces have a vested interest in the yard not succeeding. However, Cammell Laird recently produced HMS "Liverpool" in four years instead of five.
  People are now asking "Was it worth while making that effort and putting so many men that much nearer the dole queues?" All the Members of Parliament for the area have argued that it was worth while, but that will be proved only if there is another order.
  The Government should look at British Gas and its placement of orders for Morecambe gas. It is making every possible effort to ensure that those orders go to British firms. Why do not the Government follow the policy outlined by the Secretary of State for Education and Science, when he was Secretary of State for Industry, who believed that the Government have a duty to use public sector orders to increase our efficiency? The Government have a major success on their hands. When will they find the time to debate, instead of redundancy payments, positive ways to encourage that success?
  11.45 pm
  Mr. Don Dixon: On every occasion on which the House has discussed the shipbuilding industry since the Government were elected the purpose has been to curtail the borrowing limits, to impose new cash limits or to extend the redundancy payments scheme. It is sad that hon. Members should welcome redundancy payments, when we know that these mean more jobs lost. However, those thrown on the scrap-heap have the right to be cushioned financially. The order bribes people into idleness.
  Hon. Members are not discussing a few jobs. We are talking about the devastation, socially and economically, of whole communities that depend on the shipbuilding and ship repairing industries. My hon. Friend and Member for South Shields (Dr. Clark) remarked upon what would be the effect of 1,400 redundancies in South Tyneside. It seems ironic, in the aftermath of the Falklands war, that the spirits of the shipbuilding community should be so low. I think of those who worked so hard in the ship repair yards of the River Tyne to get HMS "Fearless" ready and the the "Illustrious" finished ahead of time and who are now threatened with redundancy. If the "Atlantic Conveyor" is built outside this country, it will mean that the Government are imposing unemployment.
  Many people would regard the building of that ship in a yard outside this country as an act of betrayal by Cunard and Lord Matthews. It is no good Lord Matthews talking about patriotism during the Falklands war if his deeds show what patriotism means to him after the war. I saw the flags outside the homes of shipyard workers in my constituency at the weekend welcoming home their sons from the Falklands. Those sons, awarded medals for fighting the Falklands war, will be showing them to their parents who are standing in the dole queue.
  We are not competing against Japanese, Korean, German, French, Swedish or Italian shipyards. We are competing against terms offered by Governments outside this country. It is a political game, and the sooner that the Government recognise that the better. It is no argument for the Government to say that they are curbing public expenditure, when the cost of benefit payments and losses of taxation and national insurance are taken into account.

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  The 14,000 workers paid off in the ship repairing industry will cost £7 million in benefits and loss of insurance and taxation.
  The replacement of the "Atlantic Conveyor" will mean 25,000 tonnes of steel being produced by steel workers in this country at a time of crisis in that industry. Materials will account for 60 per cent. of the price of the replacement. Every year, British Shipbuilders places orders amounting to £550 million for materials and equipment. Ninety-four per cent. of purchases are made from United Kingdom companies. The major part of a ship's price is not controlled by British Shipbuilders. Even if the men in the industry agreed to work for no money, we could not compete with the Koreans.
  The British shipbuilding industry and its workers have shown that they are willing to co-operate and that they wish to have a viable industry. Last year only 1 per cent. of working hours were lost through disputes. Since nationalisation in 1977, more than 100 bargaining units have been reduced to one. The workers have accepted the redundancies. Thirty-six shipping berths have closed. Employment on merchant ships has dropped from 38,000 to 18,000. The British shipyard workers now wish the Government to prove that they also wish to have a shipbuilding industry, which is vital to an island economy.
  11.50 pm
  Mr. Harry Cowans: I shall be very brief, because I understand that the Minister may wish to tell us all the good news when he replies. I hope that he has some good news.
  We must realise that the original Shipbuilding (Redundancy Payments) Act 1978 provided a cushion effect for men who were changing jobs. The Minister made great play of the fact, when he introduced the document, that it would be seldom used. I hope that in his reply he will tell us on what he based that assumption. I, as my hon. Friends, have met shipyard builders and repairers on the Tyne and the Wear. They have informed me—I suspect that they are much better informed than the Minister—that in the shipbuilding industry there will be no work after September and that in the ship repair industry here is no work now and nothing for the foreseeable future. On that basis alone, how can the Minister tell the House that he hopes that the scheme will be little used?
  The tragedy is that we are not now talking about cushioning people when they change jobs. We are talking about closing down, on the Tyne and Wear and industry that will never be reopened. Although I appreciate that the trade unions are in favour of the scheme, I tell the workers to divide the redundancy payment lump sums by their wages and they will discover that they are selling out for peanuts.
  11.53 pm
  Mr. Norman Lamont: I am in a dilemma because the last time that I talked to the House about taking the powers to enable us to introduce improvements in the scheme I was accused of being alarmist. The accusation was made that the fact that I was bringing the powers must mean that more redundancies were in the pipeline. Many interpretations were put on the fact that I had appeared at the Dispatch Box and was taking the powers. All that I wished to do tonight in my introductory remarks was to
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  emphasise that the timing of the order was not related to a plan that had been put to me by British Shipbuilders. I wished to calm unnecessary fears.
  At the same time, I emphasised—I have no intention of misleading the House—that the market outlook for shipbuilding is not good. I quoted what the chairman of British Shipbuilders said about that. The climate is difficult. I simply expressed my hope that we need not make too much use of the scheme. We all share that hope, but we know that the outlook for the industry is difficult.
  Naturally, there have been comments about a replacement for the "Atlantic Conveyor". There is not much that I can add to what I have already said. I said that the Government were exploring ways of bridging the gap. The question of a possible Ministry of Defence involvement was raised. I confirm that the Ministry of Defence is involved in discussions with Cunard, along with the Departments of Trade and Industry, on a replacement for the "Atlantic Conveyor". Its usefulness in the Falkland Islands has led the MoD to take an interest in its replacement, but it is too early to comment on the results of the discussions.
  The hon. Member for 'Whitehaven (Dr. Cunningham) mentioned the reductions in the intervention fund. There has been a reduction, and it was deliberate Government policy. The same has happened throughout Europe. It is a European policy to cut back shipbuilding aids, because subsidies are having a counter-productive effect. They are increasing capacity and driving down the price of ships, and that is not in the interests of the industry. That is why Europe feels that it should cut back subsidies so as to be in a better position to meet competition from the Far East.
  The hon. Member made a forceful speech, in which he struck new heights of oratory that we had not expected in this debate on a statutory instrument. However, at one point it was not attached to terra firma at all, and that was when he talked about subsidies and the fact that there is not a free market in shipbuilding. He asked why we were playing according to the rules when everyone else was cheating. He ignores the fact that this Government have given considerable subsidies to British Shipbuilders. It is a travesty to suggest that we are alone in the world—would that it were true—in cutting back subsidies. We have given considerable amounts. In public dividend capital, intervention fund assistance and other assistance we have given nearly £600 million of subsidies to British Shipbuilders since we came to office.
  The problems arising from Korea and Japan cannot simply be dismissed as ones of subsidies. I recently visited Korea and the Hyundai shipyard and saw the advantages there of modern equipment, lower wages and very high productivity. People work there on Saturdays and Sundays. They have tremendous advantages. It is not simply a question of subsidies. That is not the answer. We must strive to become competitive and improve our productivity.
  The hon. Member for Whitehaven mentioned maritime policy. He would like British owners to place more orders in British yards. Of course, we should like that, but we must have regard to British shipping, which is an important economic interest. He accused British shipowners of putting profits before jobs, but he was Nearly in the position of putting shipbuilding jobs before shipping jobs, which are also important to this country.
  The hon. Member for Thornaby (Mr. Wrigglesworth) came back to the usual argument—it is all a lack of

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  demand in the economy, as though somehow shipping is not a world-wide market. Whatever else our Chancellor of the Exchequer does, he does not determine the demand for ships in the world. I should have thought that the hon. Gentleman must know that.
  However, he had his answer to that too—that it is the Prime Minister and the Chancellor of the Exchequer who have inflicted their economic policies on the rest of the world. He endows the Government with great powers of persuasion. I venture to suggest that it is not so much the powers of persuasion, but the facts and obvious rightness of those policies that has led other countries to adopt them.
  I stick to the view that I expressed at the beginning of the debate. Of course, we want to see British shipbuilding prosper. Of course, we do not want to see increasing redundancies. However, we have felt it right to present the order to the House. It makes substantial improvements in the terms for those who are in the unfortunate position of losing their jobs. Those improvements in that scheme have been and will be widely welcomed in the industry. I commend the order to the House.
  Question put and agreed to,
  Resolved,
  That the draft Shipbuilding (Redundancy Payments Scheme) (Great Britain) (Amendment) Order 1982, which was laid before this House on 5th July, be approved.

  Shipbuilding (Northern Ireland)
  12 midnight
  The Minister of State, Northern Ireland Office (Mr. Adam Butler): I beg to move,
  That the draft Shipbuilding (Redundancy Payments Scheme) (Northern Ireland) (Amendment) Order 1982, which was laid before this House on 2nd July, be approved.
  There are separate but identical Northern Ireland and Great Britain shipbuilding redundancy payments schemes. Both were made under the Shipbuilding (Redundancy Payments) Act 1978. Our objective is to facilitate the orderly reconstruction of the United Kingdom's nationalised shipbuilding industry by providing financial assistance for employees who in that process are made redundant or are transferred to less well paid employment in the industry.
  The benefits available under the schemes are the same for workers leaving both British Shipbuilders and Harland and Wolff. We have just debated an order dealing with the position in Great Britain. The order before us now proposes amendments to the Northern Ireland scheme which will preserve the position in Northern Ireland on a par with that in Great Britain. Although my hon. Friend the Minister of State, Department of Industry, dealt at some length with the scheme for Great Britain, as some hon. Members may not have been present to hear his speech, it would be proper for me to summarise the main points of the order.
  The main effects of the amendments will be to extend the scheme for two years to 30 June 1985 and to make all redundant employees who come within the scheme, notwithstanding their being under 40, eligible for lump sum payments with a minimum of £500. The over-40s already receive periodic payments as well as a lump sum and that reflects the greater difficulty that individuals in this age group have in finding other work.
  The benefits for the over-40s are also being upgraded, essentially by amending the tabulations used for calculating the entitlements of individuals under the scheme. In addition to this, the maximum weekly earnings limit for the purposes of the scheme is to be 150 per cent. of the maximum under the employment protection legislation. That figure would currently amount to £202·50 per week and the change will mainly affect those in the higher wage and salary brackets, particularly staff employees.
  Together with various technical amendments, the changes that I have outlined will ensure that Northern Ireland shipbuilding workers who become redundant will continue to be treated no less favourably than their Great Britain counterparts.
  In considering Harland and Wolff's immediate prospects, the Government have decided that it would be prudent to make provision for enhanced redundancy terms for workers leaving the company in the medium term. That Harland and Wolff is facing a difficult future is well-known, and I cannot hold out any prospect of immediate or easy solutions.
  In the preceding debate much reference was made to the condition of the shipbuilding industry world-wide. The industry has been affected by acute depression, with little respite for several years. Prospects for the medium term remain gloomy. Demand for new oil tanker or dry bulk tonnage is not expected to improve significantly until 1985

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  at best. Freight rates are currently at a very low ebb and the glut of oil tankers is well-known and is underlined by the large number of tankers laid up throughout the world.
  Moreover, Harland and Wolff operates at an end of the market—in large, relatively unsophisticated ships—which is particularly exposed to Far East competition. A recent study by the Association of West European Shipbuilders of the Korean threat to our yards showed that it was precisely in large bulk carriers that the Korean yards had the greatest cost advantages over Western producers. At the same time, several shipyards, notably in the Far East, are planning to expand their existing capacity. The market is therefore most definitely not in Harland and Wolff's favour, and so the company must clearly take very determined steps towards greater competitiveness if it is to weather the present and forthcoming difficulties.
  The Government are fully aware of the company's present position and prospects. We recently agreed a package of aid for Harland and Wolff under which more than £47 million from public funds will be provided to the company in the current financial year. That comes on top of about £270 million of assistance in all forms which has been provided to Harland and Wolff since 1966, and the total is now equivalent to over £600 million at today's prices. One has to ask whether such a sizeable sum of money could not have been better spent, in part or in whole, in support of other Northern Ireland enterprises, or put to reducing the overall burden of taxation.
  Part of that £47 million of assistance takes the form of subsidies paid from the Harland and Wolff intervention fund. The fund is available to Harland and Wolff alone of Northern Ireland companies and is designed to enable it to match competition for orders by subsidising its costs. I am pleased, again, to tell the House tonight that the European Commission has very recently approved proposals which the United Kingdom Government put to it for continuation of intervention fund subsidies for Harland and Wolff until the end of this year at least. The Commission has agreed that, because of the special circumstances of Harland and Wolff in particular and of Northern Ireland generally, we may continue to grant subsidies to Harland and Wolff at present levels—that is, up to 18 per cent. of the contract price of each ship—whereas other British yards may receive aid up to the lower figure of 15 per cent. This concession will apply only to large ships—Harland and Wolff's speciality—because, as I have just said, they are the subject of the strongest competition from the Far East. The Commission has also agreed that the amount of money which may be used to subsidise new orders will remain at £10 million for commitment on an annual basis, whereas the amount available to other yards has been reduced. The level and amount of subsidy will have to be reviewed towards the end of this year, but I am hopeful that the subsidy will be renewed.
  The Government—and, I might add, the European Commission—have therefore recognised the particular problems of Harland and Wolff and of Northern Ireland in general by providing a higher level of aid than is available for other shipyards in the United Kingdom. This aid should, we hope, give Harland and Wolff an edge over competitors in securing work in the near future. This and previous Governments have done an enormous amount to help Harland and Wolff to survive. That cannot be challenged.
  But I cannot emphasise too strongly that the company's future, its salvation, lies not with the Government but in
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  the hands of the company—management and work force—itself. The Government cannot instruct owners to order ships from Belfast; only competitive prices, a reputation for prompt delivery and high-quality ships can do that. We cannot provide the company with a base-load of naval orders, because warship construction is not compatible with Harland and Wolff's facilities and skills. We have been advised by independent business men of the highest standing that Harland and Wolff's prospect of any major diversification, switching emphasis to non-marine engineering products, is virtually a non-starter. I repeat that Harland and Wolff's salvation is in the company's hands: if it cannot produce the ships that owners want promptly, and at the right price, no one in the company can count on a secure future of stable employment at Queen's Island.
  There is plenty of room for cost-cutting and improvements in delivery. The company's costs are far higher than they should be, and all too frequently it delivers ships late. That also contributes to major losses, which have to be added to the losses arising from the maintenance of production capacity far in excess of demand. All that makes it the more difficult for the yard to win a satisfactory level of new orders, despite the high levels of Government subsidy that are available.
  The company must, therefore, strive towards two targets: first, it must lower its costs; and secondly, it must improve its delivery performance. The company has sought consultants' advice, 'which is now being considered by the board, about how it can cut its overhead costs and bring its facilities more into line with demand. That is critical if employment in a more efficient company is to be secured, and I assure the House that cost-saving measures will have the Government's full support. Savings must be made if the company is to survive. The company—work force and management—has a simple but very stark choice—cut costs or go under.
  No Ministers and no one who has the first idea of the position that Harland and Wolff holds in Northern Ireland want to see the yard close, but it can close itself through being uncompetitive, through not cutting its costs sufficiently and by not winning orders.
  The company must also strive also towards the second objective, which is improved performance. With substantial Government help Harland and Wolff is now working on two large oil tankers and a 170,000-tonne bulk carrier. Those ships are perfectly geared to the yard's facilities. I am sure that many potential buyers will be watching to see whether Harland and Wolff can perform to specification and date, just as the taxpayer will be looking for performance to cost as well. It is not the Government but all employees at Queen's Island who are being put to the test.
  It will readily be appreciated that all this cannot be achieved without cost in terms of redundancies. Job losses there will be, there must be, if employment is to be secured for the majority. The choice is as stark as that for the whole company, management and work force: between a smaller, more efficient company and one which has effectively chosen to close itself.
  The Government have, then, had to take those factors into account in deciding to recommend to the House an extension and enhancement of the Northern Ireland shipbuilding redundancy payments scheme.
  I see no alternative to redundancies. They are essential in the battle for survival. They represent individual

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  sacrifice and hardship. It is up to those who remain to make the sacrifice worth while. The order will help to alleviate the hardship of the individuals who lose their jobs, and I therefore commend it to the House.
  12.13 am
  Mr. Clive Soley: I listened with a deepening sense of gloom to the Minister's comments. He has just spelled out a sentence of death on Harland and Wolff that at best will be delayed. I listened with horror as he described the £600 million subsidy as something that could possibly have been better spent elsewhere. I listened with desperate anxiety when he talked about an 18 per cent. subsidy for Harland and Wolff compared with 15 per cent for the rest of the United Kingdom. What on earth is 3 per cent., given the extra transport and energy costs in Northern Ireland? The Minister's whole philosophy stems from the Government's absurd belief that they should not interfere with the economy of Northern Ireland or the United Kingdom as a whole.
  We know from this debate and from the one that preceded it that the competition that Ministers talk about comes from countries whose Governments involve themselves in the planning, payment, investment and the production of ships. Yet the Government are abandoning shipbuilding in Britain and Northern Ireland and are abandoning those involved in the industry. The Minister has more or less said that he will pull out the plug if they do not cut their costs and pull themselves together. What are they supposed to do? Are they to make yet more people redundant? How small does Harland and Wolff have to become before it is viable? There is a work force now of about 7,000. What will it have to be if the company is to be viable? Will it have to be 5,000 or 3,000? Perhaps the company will have to contract to the extent of building rowing boats before it becomes viable. Is that what the investment in Harland and Wolff has been for?
  In the previous debate the Minister said something that chilled me, and the Minister of State, Northern Ireland Office has said nothing to dispel my fears. The Minister of State, Department of Industry said that Europe has taken the decision not to subsidise, whereas we have been told in this debate that there will be a 3 per cent. increase in the subsidy for Harland and Wolff. If that is the Government's philosophy, the shipbuilding industry in Northern Ireland is doomed to die, and to die quickly.
  If that is the decision that the Government have taken—having listened to the Minister I suspect that it is—it would be far better if they said so openly and immediately embarked on a massive policy of restraint and put money into other investment areas and capital projects to provide alternative employment. Nothing could be worse than letting Harland and Wolff die and doing nothing about it other than saying that it must put its own house in order. It cannot do so without full and detailed involvement by the Government in precisely the same way as Governments involve themselves in Japan, Korea, Germany, France, Spain and in all the other shipbuilding nations. One example was given in the previous debate of three orders being given to the Scandinavian yards. Until we take a similar approach our industries will die.
  When Harland and Wolff dies, what will the Minister do? Will he pick on the next largest industry and say
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  "Unless it gets its house in order it, too, will go to the wall"? If he adopts that approach, we shall go right through the Northern Ireland industries in that way. Indeed, that is what has been happening for the past three years. This is a desperate comment on the Government's economic policies.
  The extension of the scheme for another two years is welcome in its own right, but it shows the seriousness of the position that the company faces. Where is the Minister in the fight for the replacement of the "Atlantic Conveyor"? In the previous debate we heard many appeals for the order to be placed in British yards. I can understand that, especially when the appeal is made by those who represent shipbuilding constituencies. One of the tasks of the Northern Ireland Minister is to try to get the order for Harland and Wolff. The company is capable of building a replacement for the "Atlantic Conveyor". If I lost the fight, I would argue that the company should be given the order to build the engine for the replacement vessel. Let us have some positive involvement by the Ministers responsible for Northern Ireland. The position in Northern Ireland is desperate. I have said many times that even the CBI in Northern Ireland acknowledges that the economy will not get off the ground again until the Government involve themselves in public expenditure programmes.
  I am the first to acknowledge that it is difficult to identify the right programmes that will bring the best sort of employment and the best return. However, that is no excuse for inaction. That does not mean that Ministers should sit back and do nothing. The Minister of State has told us that £600 million of subsidy could well have been spent elsewhere. We are told that the subsidy is to be increased by a marginal 3 per cent. That will not touch transport and energy costs. It seems that that is all that the company will get. There was nothing from the Minister about a battle to get orders for Harland and Wolff, only a demoralising speech that spelt doom and gloom to the workers not only of Harland and Wolff but of all the associated industries that will die with that great company.
  As the Minister said, redundancy payments soften the blow of unemployment but they do not necessarily resolve the individual's longer-term social and economic problems. A sufficiently large sum may give the individual a chance to find alternative work without undue hardship. Alternatively, combined with any savings that he or she might have, he might be able to start a small business or buy a shop, but that applies to a small number of people. The amounts of money that we are talking about are small for such encouragement.
  The other matter that I should like to draw to the Government's attention, if they are serious about generous redundancy payments, is the absurd ruling by the Government through the Department of Health and Social Security that for supplementary benefit purposes there is to be a savings limit of £2,000. What does that mean? It means that if one gets a significant sum that brings one's savings to over £2,000, one has to spend that money before one can get supplementary benefit. It would be fine if one could invest the money in an oil painting or something that would increase in value over the years, but no one is talking seriously about that. Therefore, the person is faced with the choice of either getting no supplementary benefit, or of spending the money on things that he may not need or on luxuries that do not involve more important and long-term decisions. Therefore, that £2,000 minimum savings level imposed by the Department of Health and Social

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  Security is a positive discouragement to use the redundancy money effectively. I should like the Minister to take up that matter with his colleagues and get that rule changed.
  I note that article 3 is amended so that all employees are entitled to a lump sum worked out by age and length of service. That is a marked improvement on the fixed sum that was previously paid to the under-40s. I welcome that.
  In the long run the Government will be judged by the way in which they have allowed British industry, above all in Northern Ireland, to die. They have stood back and said "You must put your own house in order". The Minister did just that tonight.
  No one disputes the fact that industry can be run more efficiently and that improvements can be made. No one disputes that any of the successful economies of the world do not have a detailed and complex involvement by the Government, yet the Government have decided that that is no part of their job. To do that in Northern Ireland of all places is perhaps more than a crime—it is a sin against the people who have already suffered enough.
  If the Minister is going to let Harland and Wolff die, a massive education and retraining scheme will be needed for the workers who lose their jobs, not only the workers from Harland and Wolff but the workers from all the dependent industries and small companies that cling on to it. If those 7,000 people lose their jobs, the multiplier effect on the rest of the economy will be gigantic. The Government complain about increased public expenditure, but the area of public expenditure that has gone up the most desperately and in a most uncontrolled way has been unemployment benefit. So what on earth are we doing, with 21 per cent. unemployed, saying that Harland and Wolff will die if it does not put its own house in order. A minimum of 7,000 people will go on the dole and all the other people in the affected industries that rely on it and the people who rely on the work force in Harland and Wolff spending their wages in their shops and on their businesses will suffer. That is a dangerous economic nonsense.
  Much as I welcome the increases in the order, the Government have failed the country desperately, particularly in Northern Ireland. I want to hear why the Minister has not been fighting for extra consideration for Harland and Wolff, not just 3 per cent. but sufficient to make up for the difference in the transport and energy costs. I want to know why the Government are not fighting for the "Atlantic Conveyor" order and for the order for the engine of that ship. I want to know why they are not trying to arrange other orders, wherever possible, to keep Harland and Wolff working. When it comes to the crunch, people want not redundancy payments, but paid employment. That is not an unreasonable demand.
  12.25 am
  Mr. Peter Robinson: I am pleased to follow the official Opposition spokesman, the hon. Member for Hammersmith, North (Mr. Soley). He has put his finger on the pulse of the issue.
  I listened to the Minister of State open this debate and I heard his colleague open the previous debate. I noted a distinct change in emphasis and presentation. The brave face put on by the Minister in the previous debate was not put on by the Minister in this debate. The Minister spoke of the difficulties. He said that there was no immediate or
  868
  easy solution. He mentioned the acute depression, said that things were gloomy and warned that costs would have to be cut or we would go under.
  I shall have to go back to Belfast and underline the Minister's comments. His were not the words of a Minister trying to encourage a work force to greater productivity. His were not words to inject enthusiasm into any would be shipowner who wants to place an order with Harland and Wolff. His words were prejudicial to any such project. His were the words of a Minister flying a kite and warning that he was about to close a shipyard. Anyone who reads the Minister's speech will understand that that is his message. His chilled and measured tones were more suited to a grave-side oratory. He spoke as if he were delivering the obituary at a funeral.
  I have a constituency interest, but Harland and Wolff has an impact on the Northern Ireland economy as a whole as well as on a small area of East Belfast. At one time Harland and Wolff employed 25,000 people. It now employs between 6,000 and 7,000. Many thousands in other trades are dependent on the shipyards for employment. The Minister's remarks tonight will cause great concern, not only in East Belfast, but in the surrounding area.
  What action has the Minister taken to try to get new orders for the shipyard? He says that greater productivity is needed. Even if the shipyard men work for nothing, they would not be competitive in relation to the Koreans or Japanese. Surely the Minister realises that there is a war between Korean and British Shipbuilders. Unless we have sizeable subsidies, Korea will wipe British Shipbuilders and Harland and Wolff off the market and take the whole shipbuilding scene to itself.
  It is more economic to pay subsidies to Harland and Wolff than to close the yard and pay redundancy and supplementary unemployment benefits. Unemployment and supplementary benefits cost about £5,000 a year per man. It is much more beneficial to give a man a job so that he can do something useful, especially in Northern Ireland. What has the Minister done to inject new orders? There is a flurry every two or three years as the last order is about to go down the slipway at Harland and Wolff. We then search for another job for the men. Why not use the time when there are jobs in the yard to get other orders.
  Too often the men hold on to the job that they have because they know that as soon as it goes they will join the dole queues. That does not help the productivity that the Minister wants to increase. Having heard the Minister's speech, the shipyard trade unionists will perhaps understand more readily why the Secretary of State has been so coy about dealing with their requests made to him.
  Is the Secretary of State not keen to put the facts to the shipyard men, and has he left it to the Minister to do his dirty work, as it appears he has done, tonight? If the Minister deals with that matter when he replies, I hope that he will also pass on to the Secretary of State the trade unionist's request for an all-party delegation to deal with what the Minister acknowledges is a serious situation. The trade unionists and a delegation of all the political parties in Northern Ireland should meet the Minister and the Secretary of State uregently, in the light of the Minister's speech.
  I was disappointed to hear the Minister say that Harland and Wolff would not be in line for any naval contracts. I do not accept that it could not be made into a yard that

  869
  could take on that type of work. I must accept that it cannot do so at the moment, but with a little adjustment it could do so and be competitive at it. The Minister will recall that only a year or two ago the Royal Navy gave some repair work to Harland and Wolff, which it was able to carry out in the specified time. If it cannot be given shipbuilding work, it could be given ship repair work. What approaches has the Minister made to the Secretary of State for Defence about the matter? I trust that he is making every effort to get what work is available for Northern Ireland.
  The Minister seemed to scotch the idea of diversifying the work done by Harland and Wolff. He almost threw it out without any further consideration. His predecessor set up a team to consider diversification. I know that several possible projects were considered. Is the Minister telling the House that none of them is a possibility, That Harland and Wolff can only build bulk carriers, must wait until such orders come along and that it may not tender for anything else? If that is his message, he should make it clearly. The message that will go from the House tonight will not be about redundancy payments. It will be the Minister's ultimatum to Harland and Wolff that it must cut its costs or go under.
  12.32 am
  Mr. James Molyneaux: Most right hon. and hon. Members will remember that when the shipbuilding industry was being nationalised by the Labour Government, we pressed strongly for the inclusion of Harland and Wolff, not because we were wildly enthusiastic about nationalisation—Harland and Wolff was already for practical purposes a Government-owned firm anyway—but because we saw great disadvantages in Harland and Wolff being left outside the larger structure.
  The Minister said that Harland and Wolff has benefited because it has attracted a higher subsidy than other yards in Great Britain. That subsidy appears to have been attracted by bulk carriers—the only type of work that Harland and Wolff can be engaged in at the moment—not because it was isolated from or outside the rest of the United Kingdom.
  I fear that Harland and Wolff will remain stuck with producing only one article unless that sense of isolation is removed. The Minister warned that there is a limited outlet for bulk carriers. We all know that. That is all the more reason why Harland and Wolff should be encouraged, perhaps even jogged a little, to look outside the mould in which it has become stuck.
  The House is perpetuating that separateness by refusing to take the two redundancy payments orders together, as has been done previously. We pretend that there is nothing in common between shipbuilding in the two parts of the Kingdom. If Parliament behaves in that way, we can hardly complain if the two units grow apart or be surprised if the customers and potential customers regards the two as separate and distinct, and perhaps even as rival concerns. Is it any wonder that foreign shipping companies are perplexed when they are told that Britain's shipyards have been nationalised and made into one, when they have, in fact, been made into two?
  We have been assured time and again that relations are excellent and co-operation is good between British Shipbuilders and Harland and Wolff, but may we have examples of where British Shipbuilders, in a spirit of
  870
  unselfishness, has passed on to Harland and Wolff orders for building ships or manufacturing engines that British Shipbuilders could have done itself? In the absence of proof we have to assume that big brother is a greedy and at times selfish bully boy.
  There was a curious incident around Easter time this year when a telex from a reputable source in Brazil alleged that British Shipbuilders' representatives there were doing their best to dissuade a ship owner from specifying Harland and Wolff engines in an order, apparently on the grounds, believe it or not, of the difficult political situation in Northern Ireland.
  The Minister of State and the Secretary of State investigated the claim and concluded that they had to accept the denial of British Shipbuilders. The denial was made by Mr. John Parker, the deputy chief executive of British Shipbuilders. He is a person of the highest integrity, but he is hardly in a position to listen to all that was being whispered by his subordinates in South America.
  It would be unfair to condemn those subordinates, because, even if the claim were true, they were doing no more than engaging in a commercial struggle with a rival concern, in much the same fashion as occurs in competition on free enterprise. The difference is that British Shipbuilders and Harland and Wolff are owned by the same Government, who have a responsibility to ensure that they do not lend support to one to the disadvantage of the other.
  It has been said that much of the previous debate was taken up by demands that the Government should ensure that the contract for the replacement for the "Atlantic Conveyor" should go to a British shipyard. If that means a United Kingdom yard, that is all right by us. Harland and Wolff should be given a fair opportunity to tender, because that is precisely the type of vessel that it is equipped to build.
  Many Harland and Wolff ships served in the task force and proved their worth and reliability. If Harland and Wolff had been encouraged to get out of the bulk carrier and tanker rut and to engage in defence contracts—I do not believe all those who say that the firm cannot do that—perhaps Belfast-built frigates and destroyers would have been less vulnerable than the ships that were lost in the South Atlantic battles.
  I conclude with a reference to the curious relationship between the Government, perhaps in the role of employer, and the shipbuilding employees. The latter organised a meeting in Belfast as long ago as 27 March, to which they invited representatives of the political parties. As one who attended, I found it a very constructive meeting.
  At that meeting it was agreed to request a meeting with the Secretary of State. I imagine that that request would have been on the Secretary of State's desk certainly within the week, as I received my copy four days later. The request had to be reiterated on 23 April, however, and it was not until 29 June that the Northern Ireland Office admitted that the letter—presumably the second letter—could not be traced. The replacement copy provided by the unions' sub-committee apparently did not reach the Northern Ireland Office until 11 June.
  On 29 June, the Private Office set out the reasons why it was thought that it would be far more appropriate for the deputation to meet the Minister of State. The unions disagreed, not through any lack of respect for the Minister of State and his abilities but mainly because vital national

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  decisions were involved and, understandably, they believed rightly or wrongly, that their views should be expressed across the Cabinet table.
  In a letter to the Northern Ireland Office dated 6 July the Harland and Wolff shipbuilding sub-committee stated that it wished to put to the Secretary of State its views not just on Harland and Wolff but on the effect that any reduction or—God forbid—any closure of Harland and Wolff would have on the Northern Ireland economy in general. The secretary to the sub-committee concluded with the following sentence:
  "I would therefore reiterate the importance of meeting the Secretary of State and would like to press him for his attendance at the proposed meeting and hope that our request on this occasion will be treated with the seriousness which it obviously deserves."
  On behalf of the Ulster Unionist Party, I support that plea and that straightforward request, for this reason. Speaking in another place last Thursday, my noble Friend the Minister of State forecast that devolution might not rule for 20 to 30 years. That may even have been wildly optimistic. Certainly, responsibility for Harland and Wolff will continue to rest with the Secretary of State and his 10 successors.
  With that time scale in mind, I urge the Secretary of State to respond to the very reasonable request of the unions that is set out in the correspondence to which I have referred and has the backing of every political party in Northern Ireland. If the situation at Harland and Wolff is as serious as the Minister has warned us that it is, that is surely all the more reason for face to face discussions between Ministers and the work force upon whom so much depends.
  12.43 am
  Mr. Michael Brown: I wish briefly to emphasise one or two points that have been made. I have a constituency interest in this matter as my constituency supplies steel and is thus indirectly bound up with the fortunes of Harland and Wolff.
  After the sombre speech of the Minister earlier, no one can doubt the seriousness of the situation at Harland and Wolff. If anything disastrous happened to that firm, it would be a tragedy for the economy of Northern Ireland, not just for the 6,000 to 7,000 people employed by the company, as the multiplier effect would cause thousands more people in Northern Ireland to lose their jobs as a result.
  My hon. Friend the Minister is right to urge that everything should be done by Harland and Wolff to ensure that delivery of products is made on time and that the firm is as efficient as possible. No one can deny that the United Kingdom shipbuilding industry is not competing in the world market place in the way that the Minister and I would wish, but every country in the Far East that is involved in shipbuilding has absolutely no regard whatever for competitive pricing. Under no circumstances do they aim to make a profit. We must therefore recognise that if Harland and Wolff is to survive—I sincerely hope that it does because of the dire consequences that would result in Northern Ireland if it did not—it will not be against the backcloth of profitability. It could never make a profit and still compete against the Far Eastern countries that subsidise in a vulgar way, to the extent that they are grabbing orders without any regard to profitability.
  In urging efficiency and the fact that the customer should be supplied with the product on time, I hope that
  872
  the Minister wiI1 have regard to the fact that it is completely impossible for Harland and Wolff or any other British shipbuilding firm profitably to compete with Far Eastern countries whose Governments are intent on destroying what remains of the shipbuilding industry, not only in the United Kingdom but in Western Europe as a whole.
  Earlier this year, some of my colleagues were fortunate enough to attend a meeting with the chairman of Harland and Wolff who, like the Minister, underlined the seriousness of tie situation. I welcome the fact that management consultants are at present in Harland and Wolff. From talking to the chairman, I believe that there is room for improvement in the company. It will be completely impossible for Harland and Wolff to compete effectively, and we have a duty to the people of Northern Ireland to recognise that fact. Harland and Wolff is one of our great traditional industries, and to this day is one of our largest employers. The devastation that would be caused to the Northern Ireland economy and to the social fabric of the Province if anything untoward happened is absolutely unthinkable.
  A number of hon. Members have drawn attention to the need to encourage the Government and Harland and Wolff to consider the possibility of diversifying the product base. There is no doubt in my mind that we are putting a mill stone around Harland and Wolff so long as we encourage it to produce only a certain type of ship for which there is massive world overcapacity.
  I sincerely hope that the Government and the Department of Industry will give every encouragement to the British Steel Corporation to place any shipping order with Harland and Wolff. I know that BSC wants to act commercially and that it is considering the purchase of a ship from the cheapest source. However, I hope that BSC will not dream of looking anywhere other than British Shipbuilders or Harland and Wolff. Indeed, the type of ship required by BSC could be ideally built at Harland and Wolff.
  I wish to draw attention to the fact that men aged 57 and under will receive minimum payments lower than those of men over 62. As slightly younger people, likely to be made redundant at Harland and Wolff, will need more help than those approaching retirement age, the Government should consider some change in the balance of assistance.
  12.50 am
  Mr. James A. Dunn: I welcome the convert from Damascus. I do not know whether the arm of the hon. Member for Brigg and Scunthorpe (Mr. Brown) has been twisted. The Minister's speech was a message of despair. I appreciate tremendous problems that confront Harland and Wolff. These are not of its making.
  The Minister has talked of expert advice that calls for improved efficiency, for reduced costs and for improved delivery times. These matters are obvious. If the Minister means what he stated, he should take account of the remarks of the hon. Member for Birkenhead (Mr. Field) who referred to the improvements and achievements at Cammell Laird. A sophisticated warship was completed in four-fifths of the usual time. There was an emergency. An all-out drive was made to provide the ship at the time it was needed to defend the interests of the United Kingdom in a far-off place.
  Those workers will not benefit from the improvements. They will find themselves in the same position as those

  873
  employed at Harland and Wolff. We should not deceive people. The more efficient people sometimes are, the quicker they work themselves out of employment. I recall the expert advice given to the previous Government and their predecessors about the types of ship best suited to be built at Harland and Wolff. It can be seen how gravely we were misled. Some of my former colleagues may not share that view. To limit ourselves to bulk carriers and tankers was probably not the answer, although the so-called experts were loud in their pronouncements that this was the case.
  It is a fact that the Japanese are now worried about the Koreans and the Koreans are worried about their competitors. We are talking about price competition. Our specialised shipbuilding industry cannot hope to compete in terms of cost with nations that have a large reserve of cheap labour, not always highly skilled but trained to carry out part of a prefabrication process. The hon. Member for Brigg and Scunthorpe (Mr. Brown) expressed some anxiety about steel supplies to Harland and Wolff. Not only that firm but the entire shipbuilding world is involved. Other nations seem to find an answer to that. They protect their shipbuilding industries by imposing an additional charge upon imports of either raw materials or the finished product. Perhaps the time has come to examine that system more carefully, although I have grave reservations about it.
  Although I welcome the improvement in redundancy payments, if they prove necessary—the Minister's message tonight makes that almost certain—perhaps he should return to the experts who are responsible for the present position, or move closer to the experts who advise him, and say "Take your finger out and if you cannot advise on what should be done about shipping, you must advise about diversification in steel fabrication or other areas that will meet a market demand?" If he cannot do that, perhaps he should take the advice of the hon. Member for Hammersmith, North (Mr. Soley) and devote his energy to providing retraining facilities and more job opportunities, and close his ears to all the experts who misled me and who may have misled him.
  12.56 am
  Rev. Ian Paisley: The Minister has cast great gloom over the shipbuilding industry in Northern Ireland. I believed that we were hearing an obituary notice for the shipyard, because if the ultimatum that he placed before it is taken seriously, the shipyard must close. It is not possible for it to cut its costing seriously, nor is it possible for the shipyard to become competitive because of what has already been said by both Conservative and Labour Members about the unfair competition from the Far East. If the shipyard is to obtain orders and to sell itself to those who are interested in giving orders for ships, the Minister should carry the flag and inject confidence into the industry. But by his speech tonight he has cast a great question mark over the future of the shipyard.
  The fact that the shipyard is not part of British Shipbuilders is a great disadvantage. I agree with the hon. Member for Antrim, South (Mr. Molyneaux) that those of us who sat together in bygone days were all worried about the isolation of Harland and Wolff. What we said has now come true.
  Mr. J. D. Concannon: I shall tell the hon. Gentleman and the hon. Member for Antrim, South (Mr. Molyneaux) about some of the benefits that I said would accrue from "Ulsterisation" of the shipyard, as we called it at the time. The order for two bulk carriers from BP would not have gone to Harland and Wolff had it been within the confines of the British shipbuilding industry. We could not have concluded the Mann Engineering deal, nor could we have fought off the EEC directive to get rid of 2,000 workers from Harland and Wolff when the Labour Party was in office. Those are three matters that we had in our minds in protecting Harland and Wolff, and keeping it under the Northern Ireland Office, so that we could control and manipulate the situation in favour of the work force at Harland and Wolff.
  Rev. Ian Paisley: It will always be a matter of argument. We see the isolation of Harland and Wolff. The right hon. Gentleman's example, in which we were all concerned, caused us great heart-searching about British Shipbuilders' efforts to keep orders coming to Harland and Wolff. Had we been included, we should surely have got part of the cake, and we could have fought for part of the cake.
  The position of the shipyard and its workers should be put clearly. The Belfast yard works is up against great difficulties, as the right hon. Member for Mansfield (Mr. Concannon) knows. Transport and energy costs tell against its competitiveness, compared with other shipyards in the United Kingdom.
  Surely, there should now be a response to the long called-for meeting between the political parties in Northern Ireland, the trade union representatives, and the Secretary of State and the Minister of State. Why has there been this long delay? My hon. Friend the Member for Belfast, East (Mr. Robinson), in whose constituency the shipyard is situated, wrote to the Secretary of State asking why the meeting had not taken place. He tells me that he has received no reply. As the hon. Member for Antrim, South (Mr. Molyneaux) said, all the political parties and the trade unions were anxious to have a meeting.
  There is great gloom at present in Northern Ireland. The Lear Fan operation has a question mark over it. Now, tonight, we have the sad news about the shipyard. What will it be tomorrow? Surely, it is now time to have an urgent meeting so that the matter can be spelt out. Is it not to be regretted that the Secretary of State did not take the matter on board sooner? I hope that the meeting will take place soon, so that we may know the facts. I trust, therefore, that the Minister will tell us what he has in mind for the proposed meeting.
  1.3 am
  Mr. Adam Butler: Inevitably, and quite properly, this debate has dealt more with the industry than with the immediate problems to which the order refers—amendments to the redundancy payments scheme. I shall deal quickly with two or three points and then come to the tone of my opening speech and the message that I delivered.
  First, in answer to what the hon. Member for Antrim, North (Rev. Ian Paisley) and others said about a possible meeting between my right hon. Friend and the Confederation of Shipbuilding and Engineering Unions and others, it is regrettable that, apparently, a letter was mislaid. On the other hand a reply certainly was sent, in

  875
  the first instance, suggesting that as the Secretary of State had met the CSEU on several occasions and that it was apparently entirely a shipbuilding matter, the Minister directly responsible, namely, myself, should see the CSEU on that occasion.
  As one would expect, the Secretary of State has been extremely generous with his time in seeing various trade union deputations and those from other bodies. I believe that he had in mind anyway, and certainly as a result of representations made tonight, to ask me to suggest to the CSEU that a meeting might be appropriate if it were to cover an area of interest falling within its own field, which is large within the Province, going a bit further than simply Harland and Wolff. That seems to me be the right way to leave that matter.
  Several hon. Members have raised the question of what Harland and Wolff should build. Criticisms have been made of the decision by I think, the previous Administration, but I am pointing no fingers, that Harland and Wolff should concentrate on the larger vessels. At one time that seemed to be the right decision. It happens, as I have said, to be in that area of the market—the large oil tanker and dry bulk market—that there is the biggest depression.
  Mr. Concannon: To put the record straight, I assure the hon. Gentleman that the decision to go in for that market was made long before the decision for direct rule in Northern Ireland.
  Mr. Butler: The right hon. Gentleman is right to correct me. As I said, I am pointing no fingers in this matter. It happens that the facilities at Harland and Wolff are excellent for that purpose. However, there is no reason why it should not, if it so chose, tender for smaller vessels. It follows that because the facilities are specially designed for larger ships, it will carry some additional on-cost if it turns its hand to the smaller vessels. It must judge the balance between the metal work and outfitting as usual. That is a choice that the yard itself will have to make. It is in the context of the intervention fund that the Commission has agreed that vessels over 100,000 tonnes deadweight should attract the higher rate of support.
  Sir John Biggs-Davison: In his earlier speech my hon. Friend gave the impression that it was out of the question that Harland and Wolff should tender for naval vessels. Is that really the case? It used to build ships for the Royal Navy. It has not done so in recent years, but is it impossible for it to adapt to that?
  Mr. Butler: My hon. Friend took the words out of my mouth. I was coming to the question of naval orders. I am advised that Harland and Wolff's existing facilities are not suited for naval ship building. Any yard can be adapted, but the capacity for naval ship building in the United Kingdom is, I am informed, more than adequate for the purpose. Indeed, there has been some reduction in that capacity in the mixed yards. I doubt whether it would be right to spend the necessary sums of money to put Harland and Wolff in a position to make naval ships.
  However, Harland and Wolff is fully capable of refit and repair work on the Royal Fleet Auxiliary vessels. It is only in the past few days that I have again impressed on the Ministry of Defence the facilities that Harland and Wolff has and the dire need for orders of that sort. I hope that we can achieve a response in that area. My right hon.
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  Friend the Secretary of State and I have probably been involved in most of the limited numbers of orders that have been floating around within reach of Harland and Wolff. Indeed, my right hon. Friend personally takes a close interest and gives help where it is proper for him to do so.
  Mr. Soley: Will the Minister make an effort to get the "Atlantic Conveyor" order for Harland and Wolff? If not, will he make an effort to obtain the engine order for that firm? If not, why not?
  Mr. Butler: The hon. Member for Antrim, South (Mr. Molyneaux) said that the "Atlantic Conveyor" was just the right type of ship for Harland and Wolff. However, although one has the impression that the "Atlantic Conveyor" was a sizable vessel, it was below the minimum size that Harland and Wolff has set out to build. Nevertherless, bearing that in mind, there is no reason why it should not tender for it. I understand that its price for such a vessel was very much in line with that of British Shipbuilders. My hon. Friend the Minister has made clear and confirmed the substantial difference in the tender price between British Shipbuilders and the competition from the Far East. The House heard what my hon. Friend had to say on that.
  To revert to the theme of my remarks, hon. Members chose to hear what they wanted to hear and did not take in the whole of my speech. That frequently happens to ministerial speeches. I spoke with extreme realism, and in no sense did I give a message of despair. In no sense was my speech an obituary for the yard. I reject absolutely that it is ministerial intent to close the yard, and what the hon. Member for Hammersmith, North (Mr. Soley) said, when he accused the Government of abandoning Harland and Wolff, of pulling out the plug and of standing back from Harland and Wolff, is nonsense.
  As I reminded the House earlier, in this year alone the Government have put £47–5 million behind the company. Last year we put £46 million behind the company, and the previous year, £42–5 million. Those figures do not include such things as standard capital grants, shipbuilders' relief and the cost of owner's credit, and so on, although they were included in the total figure of £270 million. This year's figure of £47–5 million represents about £7,000 per employee at Harland and Wolff. That can hardly be seen as abandoning Harland and Wolff to its fate. It represents substantial Government support.
  Nevertheless, we must be realistic. If the company is unable to obtain orders with that level of support, and to get orders with 18 or 20 per cent. support as well as the credit arrangements available, there must be a question mark over it. However, the question mark is not as big as many hon. Members have said, because of a matter to which I have drawn special attention and which has often been highlighted. I refer to the scope for improved performance.
  Ministers may have repeated the message time and again, but if the taxpayer is to put such sums into the company, the least that he is entitled to expect is that the management and work force will do everything that they can to help themselves. That is the message that I gave from the Dispatch Box tonight. We know, just as the work force and the management know, that there is room for improved efficiency and for cutting waste and overheads. They probably do not need consultants to tell them, but

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  consultants help to pinpoint the areas of improvement. there is scope for enormous productivity improvements in that yard.
  That is the message that I gave tonight. Given those improvements and the continuing Government support, the yard can carry on, but if those improvements are not made the company will not obtain the orders that are there to be had. The Government do not intend to close the yard. The only thing that will close it is lack of orders. I wanted to put the message across firmly, but in a balanced way, so that the yard listens not just to the sad voices that came from certain parts of the Chamber, but to the Government's realistic appraisal of the position.
  Mr. Soley: The Minister has only himself to blame if he is worried about that image. Did he not say that the £600 million could have been used in better ways? He has just refused to back Harland and Wolff to win the order for the "Atlantic Conveyor". What does he expect the people of Harland and Wolff to believe?
  Mr. Butler: There are many people in Northern Ireland who ask, as I asked rhetorically tonight, whether some or all of that £600 million might not have been better spent in supporting other projects or to the taxpayer's benefit.
  The Government have provided between £45 million and £50 million in each of the past three financial years. We have been prepared to put money behind the company. It is not reasonable to expect that one should continue putting such sums of money behind a company in perpetuity. It will be at somebody else's expense. That is a realistic approach to the problem, which the hon. Gentleman does not always share.
  We are debating only the amendments to the redundancy payment scheme. I feel that the sums of money involved will be necessary, and that in those circumstances it is right to enhance payment to those who lose their jobs at Harland and Wolff. For those reasons, I commend the order to the House.
  Question put and agreed to.
  Resolved,
  That the draft Shipbuilding (Redundancy Payments Scheme) (Northern Ireland) (Amendment) Order 1982, which was laid before this House on 2nd July, be approved.

  Northern Ireland Assembly
  1.17 am
  The Secretary of State for Northern Ireland (Mr. James Prior): I beg to move,
  That the draft Northern Ireland Assembly (Day of Election) Order 1982, which was laid before this House on 14th July, be approved.
  I shall make a comparatively short opening speech and be prepared to answer questions if hon. Members would like me to do so towards the end of the debate.
  The draft order appoints Wednesday 20 October as the date on which election of Members to the new Northern Ireland Assembly will take place. The Assembly was dissolved with effect from 28 March 1975 under section 1(1) of the Northern Ireland Act 1974. The order, if approved, will be made under section 27(7) of the Northern Ireland Constitution Act 1973. The Northern Ireland Act 1982 is now on the statute book. I firmly believe, as I have said before, that the opportunity that the provisions of that Act offer to the people of Northern Ireland, through their elected representatives, to work out among themselves, at their own pace, arrangements for an acceptable form of devolved Government should be grasped.
  The Act does more than that. It provides the opportunity for the Assembly to become immediately more closely involved in scrutinising the day-to-day government of the Province and with the urgent problems that face Northern Ireland. It is right that the voices of Northern Ireland's elected representatives should be heard as soon as possible, responsibly and constructively debating the main issues of the moment.
  I have made it clear that Ministers at the Northern Ireland Office will co-operate fully to help the Assembly in its debates and work. Despite the doubts of some who have spoken in the House in the past few weeks, I am convinced that there is a growing expectation of and a desire for progress in the Province.
  There has been much speculation about how the Act will work in practice. We should now put such speculation behind us and turn our minds to putting the Act's provisions into effect at the earliest reasonable opportunity. That is why the Government have decided that elections to the Assembly should be held in the autumn. The choice of 20 October is designed to strike a balance between allowing sufficient time for the chief electoral officer and his staff to prepare for the election and the Northern Ireland parties to campaign effectively after the holiday season and avoid the approach of winter with limited hours of daylight and the risk of bad weather.
  We have decided that the election should take place on a Wednesday, like local elections in Northern Ireland, so that the counting of votes, which will be a lengthy process in the larger constituencies, can be completed before the weekend. As hon. Members know, the elections will take place on the basis of the present 12 parliamentary constituencies and will return an Assembly of 78 Members. The order setting out the election timetable and the rules for the conduct of the election will be laid shortly, thus providing sufficient time preparation by the electoral staff and the parties.
  1.22 am
  Mr. J. D. Concannon: The order announces that the election will take place on 20 October

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  1982, but throughout the passage of the Northern Ireland Bill great importance was attached to the need for cross-community support and better relations with the Government and institutions of the South. We agreed with those sentiments on the Opposition Benches and with others that were stressed in the White Paper. We wish to see the widest participation in the election that is proposed by the order.
  There is, however, a problem over the contents of the Northern Ireland Assembly Disqualification Act 1975, which, in effect, disqualifies a member of the legislature of any country outside the Commonwealth from sitting in the Northern Ireland Assembly. The White Paper recognised the unique relationship between Britain and Ireland and the inevitable link between the two communities. It stated:
  "So long as the existing institutions of the State are respected, those who favour change should not be debarred from playing a full part in public life."
  Any person from anywhere in the Commonwealth can stand for election to the Assembly. If he gets enough votes he can participate in the Assembly. I am advised that someone from Hong Kong, Zimbabwe or anywhere else in the Commonwealth can stand for the Assembly and, if elected, can take his seat.
  However, the existence of the 1975 Act means that other persons who were born in and who are living in Northern Ireland cannot sit in the Assembly. I understand that the criteria for disqualification from the House is being reviewed and that the Lord President of the Council will receive a report later this year. It was said in another place that the outcome of the review will have its implications for the disqualification criteria for the Assembly. I think that it is generally agreed that the law on disqualification is not satisfactory and that there are inconsistencies.
  I trust that the Secretary of State will find a solution to the problem or will be able to give a full explanation to the few citizens of Northern Ireland who will find themselves unable to take their seats in the Assembly if they secure enough votes to win the election. I understand why a few hon. Members are tittering, but it is obvious that there is a problem for the Secretary of State that should not be compounded. If we are to get cross-community support and the widest possible participation of people in Northern Ireland, we ought to look at those problems.
  Careful explanation by the Secretary of State is needed. There is no better time for him to do it than this evening. Those who are members of legislatures outside the Commonwealth are not debarred from standing for the Assembly. However, if they gain enough votes to win a seat in the Assembly, they can then be debarred by petition and disqualified. However, once elected, the persons have a choice. They can choose either to continue to be part of the legislature of any other country or to take their seats in the Assembly.
  There is a need for clarification. There is confusion on the issue. It is vital that the Secretary of State spells out in detail the position of those caught under the Northern Ireland Assembly Disqualification Act 1975. I am sure that the Secretary of State, as well as my right hon. and hon. Friends, would wish the election to be as smooth as possible. [HON. MEMBERS: "Where are they?"] My right hon. and hon. Friends have great confidence in their Front Bench spokesman, as I keep telling Conservative Members. They leave it to me to speak on such issues.
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  I am sure that the Secretary of State would like to see the election run as smoothly as possible, with the widest spread of candidates. As we have said before, we all believe that cross-community support is vital. I hope that the Secretary of State will make that clear. It is vital for the good start of the operation of the election, whether it is on 20 October, 27 October or 1 January. This situation needs careful explanation. There should be the widest participation. I hope that every party in Northern Ireland involves itself in the election. I desperately want that to happen because that will bring about a better chance of success.
  All those who are not interested in the matter do not wish the operation of the election procedure to be successful. I have listened to that point of view often enough in the House. I want the election to proceed with the widest possible choice and the widest possible participation in Northern Ireland. I do not wish to see anyone disqualified. That requires careful explanation. The situation has not arisen out of the Secretary of State's choosing. It should be made clear whether the people I have mentioned can stand for election, and what happens to them if they stand and win enough votes. Do they have the choice of going back to the legislature or giving that up and sitting in the Assembly, if they desire?
  Rev. Ian Paisley rose—
  Mr. Concannon: I shall not give way as I am coming to the end of my speech.
  There is confusion on the issue. The only person who can clear it up is the Secretary of State. I wish the assembly and the order success. The sooner we can proceed without any inconvenience to the election, the better it will be for the people of Northern Ireland.
  1.28 am
  Mr. Julian Amery: The Bill that we contested so long has become an Act. Now the question is as to when it should be implemented. Having given a good deal of thought to the matter, there is a sense in which I want to say to my right hon. Friend the Secretary of State that I have come to take a slightly different view to that which I took at the beginning, when his proposals were made. On Second Reading the Minister said that the creation of the Assembly would help to restore security and build up the economy in the Province. I found it difficult to see any connection between what he proposed and the objective that it might serve. After thinking deeply and listening to what has been said in other places, I have come to the conclusion that there is a method and logic in what he proposes.
  I shall deal with security first. We came to office with Airey Neave's plan, which amounted to the full integration of Northern Ireland into the United Kingdom. It was made clear to the present Secretary of State's predecessor that if that happened there would be no co-operation from the Republic. The Northern Ireland Office argued strongly that the door should be kept open for the eventual reunion of Northern Ireland with Southern Ireland and that, if that did not happen, the IRA's attitude would make it difficult for the Dublin Government to co-operate.
  The previous Secretary of State tried to introduce a system of devolution. It failed. The IRA struck again. We had a chance to go back to integration, but my right hon.

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  Friend, the Secretary of State, was persuaded to have another stab at devolution to keep the door open. That is what we are now discussing.
  Mr. Deputy Speaker (Mr. Paul Dean): Order. I realise that the right hon. Gentleman is still on his preamble, but I remind him that the order is about the date of the election.
  Mr. Amery: I appreciate that, Mr. Deputy Speaker.
  Sir John Biggs-Davison: On a point of Order, Mr. Deputy Speaker. How is the question of disqualification, raised by the right hon. Member for Mansfield (Mr. Concannon), relevant under the order? If we are to discuss such matters, which appear to be extraneous to the order, surely my right hon. Friend the Member for Brighton, Pavilion (Mr. Amery) is equally in order.
  Mr. Concannon: Further to that point of order, Mr. Deputy Speaker. I pointed out in my speech that a report was due towards the end of the year about the disqualification measure. I was putting that in the context of the order.
  Mr. J. Enoch Powell: Further to that point of order, Mr. Deputy Speaker. Unless this order or another order to similar effect is passed, the Act which has just received Royal Assent will not be implemented. Therefore, the decision whether to pass the order amounts to a decision as to whether, as well as when, that Act should be implemented. If there is no such order, the Act will be brutum fulmen.
  Mr. Deputy Speaker: It is not in order to debate the Act again. Right hon. and hon. Members will wish to use background information, but it would not be in order to reopen the debate on the Act.
  Mr. Amery: I bow to your ruling, Mr. Deputy Speaker. I shall try to be as brief as I can. I shall try to give the background information as briefly as I can. Much has happened since our last debate on the matter. Much has come to light since then, including my right hon. Friend's visit to the United States, which he hoped might help the economy.
  There have always been hopes that American investment might come to Northern Ireland. The influence of Dublin in that respect would be important. Here again, I submit that the advice of the Northern Ireland Office has been "Keep the door open to the Union between the North and the South." I do not know exactly what transpired during my right hon. Friend's visit to the United States, but I suspect that he made it clear to American critics that we were not going for integration but that we were going for devolution and that, therefore, the door was being kept open.
  The original proposal contained in the Act was, therefore, not just an essay in devolution. The whole object of the exercise has been to keep open the door to a united Ireland. That was not made clear to us in earlier debates. We were told that that it was essential to a solution to the problem of terrorism and the improvement of the economy. The Minister of State said in another place that that may take some time—perhaps 20 or 30 years. But the objective is pretty clear.
  The rub is whether Dublin will wait. I apologise for not being present when my right hon. Friend briefly opened
  882
  the debate. We have not yet had a reply to the question about Mr. Abbott's alleged conversation which was raised by the right hon. Member for Down, South (Mr. Powell). I do not know why. Several weeks have passed since the matter was raised. But there has been an answer from Dublin. The Foreign Secretary of the Republic has said that my right hon. Friend's proposal, which we are being called upon to implement, does not conform, in the spirit or in the letter, with previous undertakings. When I read that, I wondered whether it was just Irish extravagance of language or whether the right hon. Member for Down, South and Mr. Abbott were right about there being undertakings. Why was Mr. Haughey so much against the agreement? Is it because the proposals do not go quite as far as he thought had been agreed? I have the impression that both in Dublin and in the IRA headquarters they think that we are on the run. The bombings of last week cast a long shadow over the debate. It is a mistake to think that there is no collusion between Dublin and the IRA. I do not wish to suggest that they are working in harmony. Dublin is just as frightened of the IRA as Belfast. Nevertheless, just like the PLO and the sheiks in the Middle East, Dublin finds it convenient to use the IRA and dangerous to pull away from it. What my right hon. Friend is asking us to implement is becoming clearly a policy of trying to secure an end to terrorism and the bad economic situation by appeasement of Dublin and the IRA.
  Mr. Deputy Speaker: Order. The right hon. Gentleman is going very wide again. I must ask him to address himself to the order.
  Mr. Amery: We are being asked to implement a policy of appeasement. Its character has been underlined by the events of last week. That has happened since the Bill left the House to go to another place. When both the right hon. Member for Down, South and Mr. Conor Cruise O'Brien suggest that such appeasement will not work, we ought to think extremely carefully.
  It follows that if we had accepted the Neave proposals, the IRA would not have stopped its actions, and American help might have been delayed, but once London's determination had been made clear there would have been new thinking in Dublin and in the IRA. Only if we can give certainty about our determination to keep Ulster within the United Kingdom shall we give confidence to investors and deter the terrorists.
  I fear that my right hon. Friend the Secretary of State is on a slippery slope. His measure is law. The date for the first meeting of the Assembly has not been fixed, so why should he not delay a little? Why should he not reply to the bombers by saying that we wish to see what the attitude of Dublin, the bombers and the Province will be? He is rushing an election on the basis of boundaries that correspond to present constituencies and not to the new ones.
  Nothing would give greater confidence to the majority in Ulster than for the Government to delay the implementation that we are being asked to approve. If my right hon. Friend is not prepared to do that, I am sure that he will understand if those of us who care more than he does about the unity of the Kingdom vote against him.
  1.41 am
  Mr. J. Enoch Powell: We are considering the order at a late hour and many hon.

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  Members—not so much those in the Chamber as those in reserve elsewhere—might naturally wonder "Why the hurry?" It is of a piece with the haste with which the legislation that the order implements was passed.
  That was an exceptional piece of legislation, in that it was introduced after Easter—it was post paschal—a season at which it is commonly considered to be belated to introduce major legislation. It had to be got through this House with the assistance of a guillotine and the time for it in another place was so short that serious complaints were voiced in the proceedings there about the adequacy of the opportunity to consider it.
  Upon the heels of Royal Assent to the Act, the order is brought forward. It fixes a date on which it will not be possible for the elections to be held on the new constituencies or on a base that everyone agrees is fairer than that which could be provided within the terms of the Bill, which relate to the existing 12 constituencies.
  It is a natural ground for bewilderment as to why so much haste has been attendant upon the passage and, now, upon the implementation of the legislation. Those who read the speech of Lord Gowrie in the concluding proceedings in another place would be all the more surprised. He said:
  "The proposals that we are making may need 20 or 30 years to mature, or to take hold."
  Lord Gowrie had said earlier:
  "The Bill recognises that movement towards this goal"
  —of durable institutions—
  "may be very slow indeed" —[Official report, House of Lords, 22 July 1982; Vol. 433, c. 985–6.]
  But even those who heard that could hardly have been prepared to be told that it would be a generation before the institutions that were to bring to Northern Ireland the blessings of political stability—the arguments on which the Secretary of State's arguments for the Bill had been based—were dependent on a contingency so remote that many of us here could not reasonably hope to experience it.
  What, then, it might naturally be asked, was the haste either to cram through the Bill in the last two months before the recess or to fix the date for the elections at an unreasonably early time when fair and properly drawn constituencies were not available for the purpose?
  The answer is that the Secretary of State had been working to a time limit. I point out, first, one of the implications of the time scale adumbrated by the Minister of State in another place. If the devolution proposals and the new institutions of self-government adumbrated by the Bill are viewed by the Government as possibly 20 or 30 years ahead, it is clear that this is not a Bill to institute devolved administration in Northern Ireland. That is not its purpose. No Minister has ever introduced a Bill in the House to carry out a purpose and then declared that it would be 20 or 30 years before that purpose matures—I think that that is the right word—or takes hold.
  It is a Bill to set up an Assembly. The business of devolution is incidental to it and remote from the current contemplation of the Government. What the Government were doing and had to do was what the right hon. Member for Leeds, South (Mr. Rees) way back in 1979 prophesied would be done—that an Assembly would be set up. That is the purpose of the Bill.
  The question therefore recurs. Why is there so much hurry to have an Assembly in October? The Secretary of State has explained that it is after the summer and before
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  the winter, but the matter is a little more precise and reasoned than that. It has connections both more subtle and more significant than those with the seasons of summer and winter.
  By the end of the year, it is intended that there shall take place the third in the series of top level meetings between the heads of Government of the United Kingdom and the Irish Republic. Of course, when such meetings take place in November or December the aspiration is always expressed that the next will be after six months. That was the expectation after the Haughey meeting in December 1980 and after the FitzGeraId meeting in November 1981. It is generally accepted by those who arrange these matters, however, that one bids for six months and settles for 12. At any rate, another meeting will be due—indeed, as the Secretary of State knows, it is already being pressed for and the preliminary arrangements for it are probably already being fixed up—before the end of the year in order to continue the series.
  We are told that certain unfinished business must be dealt with at the meeting in December—the third meeting between the Prime Minister of the United Kingdom and the Prime Minister of the Irish Republic. That is the slotting into place of the element that was missing in the arrangements of November 1981 with FitzGerald—the slotting into place of a parliamentary tier of the Anglo-Irish Council. In order that Northern Ireland might be separately represented there, it was necessary that there should be in existence a separate Assembly for the Province. Indeed, as the Irish Prime Minister reflected on the last occasion, it was the absence of such an Assembly that had been the blemish and the gap in what was otherwise the success of his conference.
  It might be thought by some, but not by those who are well informed, that there is a speculative element in the explanation that I have just assigned for the date in the order before us. I assure the House that there is not. The right hon. Member for Brighton, Pavilion (Mr. Amery) has reminded the House that a week or two ago, the Foreign Secretary of the Irish Republic complained that in this legislation the Government had broken not only the spirit but the letter of the arrangments between the two Governments.
  The Irish Foreign Secretary explained that the Government had not consulted the Government of the Republic on the framing of this legislation, and as a consequence it represented a breach of the spirit as well as the letter.
  What is wrong with it from the point of view of the Irish Republic? What is it about the Act that broke the spirit and the letter—the letter in particular—of the arrangments? If one studies the speech of the Foreign Secretary of the Republic in toto, there is no doubt about what he believes the omission to be. It is a specific and binding link between the Assembly and the proposed parliamentary tier of the Anglo-Irish Council.
  If there were any doubt about that, the Secretary of State in his recent visit to Washington made the matter clear enough. He was explaining the lack of an Irish dimension in his devolution initiative. There is a reference to the Irish dimension in the White Paper, but there is nothing about it in the Act. That is where the breach has occurred in the spirit and the letter of the arrangements.
  The right hon. Gentleman said:
  "Nor do I consider that this is in any way a breach of any undertakings that have been given."

  885
  That is a remarkable thing for the right hon. Gentleman to have said, because he has always maintained that there are no such arrangements or agreements. Why did he not say "There are no arrangements"? Why did he say "I do not think there has been any breach of any arrangements or undertakings that have been given"? Why did he not say "There are no undertakings at all"?
  Mr. Prior: Because I just added the words "that have been given", that is all.
  Mr. Powell: But the right hon. Gentleman also said:
  "I think you would recognise that the parliamentary body would take longer to get going."
  The missing element will take time. It did not have to be put in the Act. There is no intention of breaking the undertaking that is part of the understanding arrived at between the Prime Minister and Mr. FitzGerald in November 1981. There is no intention of breaking it because it is something that can be filled in later on. The right hon. Gentleman continued:
  "But this is something that we can continue to work away at."
  That is what the Assembly is for. The overt element that evidently the Irish Republic considered that, on the basis of the agreements between the two Prime Ministers, it was entitled to expect is not in the Act. However the essential thing, an Assembly that can be so worked upon that it will provide the third leg of the Anglo-Irish Council—and thus the route of political progress towards the united Ireland which is the objective of the Irish Republic—is in contemplation, and is there.
  This is not a new story. The right hon. Gentleman is involved in an annual cycle that goes back at least three years and probably further. It was very marked in 1979 when a meeting took place on 5 October between Ministers and officials of the two Governments. That produced agreement on certain security measures. It was hailed in the press at the time as a remarkable achievement in cooperation between the two countries against the terrorist. But there was a quid pro quo, stated clearly in part of the communiqué, following the meeting, that did not achieve great publicity. It stated:
  "The Ministers also discussed the prospects for political progress in Northern Ireland."
  Everyone who knows the language recognises what "political progress" stands for in the vocabulary of this intercourse. The communiqué added:
  "The Irish Ministers emphasised the importance of an early initiative leading to acceptable political institutions which both sections of the community in Northern Ireland could support and sustain."
  They were going straight for power-sharing. At that stage, they were not going, as they are now, primarily for the instrument of the Anglo-Irish Council and the parliamentary tier. The warning, however, was clear. They emphasised the importance of an early initiative. Delay, they argued, is dangerous. Their co-operation, such as it is, is dependent upon there being no unreasonable delay in implementing what they regard as the spirit of the letter of the agreements made. It is for that purpose that the House, having had the Bill forced through it, is asked to write the date of 20 October into its implementation.
  It is a false and dangerous cycle in which the Government have got themselves involved. It is the cycle, as the right hon. Member for Pavilion has remarked, of
  886
  appeasement. It is the cycle of the annual attempt to buy off blackmail. It will not succeed. It cannot succeed. That process never can, and never does, succeed. It is because some hon. Members wish to prevent the consequences of that hopeless attempt being inflicted upon this country and particularly upon the Province that we have opposed the Act and shall oppose the order.
  1.57 am
  Rev. Ian Paisley: The right hon. Member for Mansfield (Mr. Concannon), from the Opposition Front Bench, referred to those who would not be able to stand or who, if they did stand, would not be able to take their seats. His remarks had nothing to do with someone from Zimbabwe, Hong Kong, Singapore, Canada or some other part of the British Commonwealth. The reference was to Mr. Seamus Mallon, deputy leader of the SDLP, and to Dr. Robb, a constituent of mine, who, according to the press, is about to join the SDLP. Mr. Charles Haughey, in his wisdom, nominated both these gentlemen to become Members of the Dublin Senate. They accepted their position in that House of the foreign State of the Irish Republic. By so doing, they disqualified themselves from getting into the Assembly.
  If they are as keen as the right hon. Gentleman maintains they are to get into the Assembly, they can simply resign. They have a choice. Do they want to serve the people of Northern Ireland, or do they want to sit in the Dublin Senate? If Mr. Mallon is interested in the people among whom he lives and works and whom he represents, let him resign from the Dublin Senate and attend to his business in the county of Armagh. As for Dr. Robb, I prophesy that if he stands anywhere in Northern Ireland he will lose his deposit, unless he is lucky enough to get a safe SDLP seat, which is hardly likely at this election. If the Secretary of State attempts to tamper with that matter, he will go a long way towards causing far more upheaval in Northern Ireland than at present, so he should leave well alone. Perhaps after the 30 years that the noble Lord mentioned have expired, those men will be in a different frame of mind.
  Only one people—not this House—can stop a united Ireland, and that is the people of Northern Ireland. There is only one way for a Democrat to believe that the voice of those people can be heard, and that is through the ballot box. We have been told that there is a great change of opinion and that the wind of change is blowing. We have been told that various people will win seats, that there will be a great cross-community support, that orange will fade to yellow and that green will tincture the new mixture of colour. I do not believe a word of it, and 20 October will tell the true tale. People will know then what Northern Ireland really believes.
  On 20 October the people of Northern Ireland will say "No" to a united Ireland or to any steps that the House, the Government, Dublin or the United States of America may wish to take to bring Ulster into the Irish Republic. It is not on. The will of the people of Northern Ireland will keep Ulster out of an Irish Republic. The House could set up an Anglo-Irish Council and decide that all Northern Irish Members should be members of that council. The House could also decide that Mr. John Hume, who is a Member for Northern Ireland in Europe, should be a member of that council. but the Assembly, with a Unionist majority which I believe will be greater than any Unionist majority in Stormont—because the people of Northern

  887
  Ireland are determined to cast a massive vote for the Union at this election—will make its voice heard and say what it believes about such a council. If the House wishes to set it up, the Assembly will have the power to finish it once and for all and to bury it in a Sadducee's grave. If hon. Members are not aware of the analogy, that is a grave without a resurrection.
  That Assembly, overwhelmingly Unionist, will be a buttress against any attempt to set up a credible Anglo-Irish Council or to take us down the road into a united Ireland. Winston Churchill said "Trust the people." I trust the people and am glad that the election is coming. I regret that it is not being fought on 17 seats, because I agree with the right hon. Member for Down, South (Mr. Powell) that it would have been fairer to have it on that basis.
  When Unionist spokesmen said that it should be on the basis of 17 seats, the Secretary of State said that we should get away from the politics of confrontation. It is not confrontation; it is fact. The 17 seats would have been fairer for the community. However, I do not mind how many seats are involved, because I know that the people of Northern Ireland will give their answer loud and clear.
  I say to the right hon. Member for Brighton, Pavilion (Mr. Amery) that it would be an act of folly if the Secretary of State were to change the date. The IRA would rejoice. It would say "We got them to change the date." We have experienced terrible bombings for 13 to 14 years, and this city experienced them the other day. Homes are broken, hearts are sore and tears are shed. The IRA would say that that was all worth while, so the Secretary of State cannot change the date. The election must go on.
  I look forward to the election. The people of Northern Ireland will give their answer to the world and to Charles Haughey. Dublin said that not only had the letter and the spirit been broken but that they would take no interest in security in Northern Ireland unless their wishes and will were heeded. That was blackmail of the worst kind, and the people of Northern Ireland will not stand for it. The Secretary of State can look in vain to Dublin for help with his security policy. We need to secure the border. We need to bring back capital punishment for terrorist crimes. We need to pursue over that border those who murder people in Northern Ireland and deal with them as they should be dealt with.
  No doubt, in the coming months the people of Northern Ireland will prepare themselves for a great election struggle. On 20 October there will be an overwhelming Unionist voice and it will tell this House and the world where the people stand. For me, 20 October cannot come soon enough.
  I am glad that the Minister has learnt that STV counting takes a long time. I am glad, too, that it is to be on Wednesday, instead of Thursday, because I should not stand over a ballot box on the Lord's Day to see myself or anyone else elected. I am glad that the right hon. Gentleman has kept to the fore the traditional view of Ulster Protestants and that the voting and the counting will be over on Saturday. Dear help the people who have to wait until Monday to creep in on the thirty-third count.
  2.7 am
  Mr. James A. Dunn: I welcome the order and I congratulate the Secretary of State on bringing it forward in this way. If it had been delayed, and
  888
  if he had accepted the advice that he has been offered this evening from various parts of the House, there would have been consequential problems.
  I understand what has been said by those who disagree with the Act. I respect their point of view, but I do not share it. I take the view that Northern Ireland needs an Assembly and a voice of its own which can express and advise on matters relating to direct rule, and have a transferred power, fulfilling the conditions contained in the Act.
  I take issue with some hon. Members, not least with the right hon. Member for Pavilion who implied that anyone who disagreed with his point of view cared less about Northern Ireland than he does. If I were to argue that to its logical conclusion I could possibly claim to know Northern Ireland a little more than he and to have visited it more frequently. However, that would not resolve the problem. It resolves nothing to make such challenges one way or the other.
  I take the view that anyone who contributes to debates about Northern Ireland at this hour of the night must care. Those hon. Members who are frequently in such debates, while not sharing a joint approach on every occasion, demonstrate that they care. The essence of democracy is to listen to all sides.
  Those who represent Northern Ireland probably experience a pressure and awareness that is not felt so continuously by those who represent other parts of the United Kingdom. I refer not least to that created by the mindless killing and bombing that we have only recently experienced in London. No doubt there could be serious dangers in the rest of Britain of what is a continuous threat in Northern Ireland. In that regard I share the view expressed by the hon. Member for Antrim, North (Rev. Ian Paisley) that we should not go forward at this time with the Act. To implement the day of poll would have been seen by some as a capitulation to their demands and terrorism. It is still true that anything can be interpreted to suit one's views according to which side of the divide one belongs, which politic one represents or opinion one holds in Northern Ireland.
  The only difference that I have with the hon. Member for Antrim, North tonight is that I hope that there will not be an overwhelming majority of anything. I hope that at the end of the day there is a true representation of all the views that are ever-present in Northern Ireland. It is only in that way that they will be able to convince the House that they are ready and able to take the responsibility of a transferred power. The degree of transfer will be measured by the advice that is given, and clarion calls and loud drums do not always make the best common sense.
  2.12 am
  Sir John Biggs-Davison: The right hon. Member for Mansfield (Mr. Concannon) said that he wanted a smooth election of the Assembly and that he wished it well. He also put forward the view that Senators of the Irish Republic should be allowed to sit in the Assembly.
  If my right hon. Friend the Secretary of State were to accede to such a request, I can think of nothing that would be more likely to make the election to the Assembly anything but smooth. Indeed, it would probably drive the Unionists in Northern Ireland into obstruction or even into abstention. We have heard some strong words already this evening from the hon. Member for Antrim, North (Rev.

  889
  Ian Paisley), speaking for the Democratic Unionist Party, who is about the best supporter that my right hon. Friend has at present of his legislation.
  It is unfortunate that we cannot amend the order. The right hon. Member for Down, South (Mr. Powell) asked what was the haste. Indeed, there are strong arguments for postponement. The date of the election should be fixed so that the election can be held for Assembly seats based on the new parliamentary constituencies of Northern Ireland. That is the logic of the legislation. In so far as there is any feeling in the Province about the Assembly, it is that that should be so. As one who does not want the Assembly at all, I ask, in a constructive spirit, for the deferment of the order.
  We welcome the Secretary of State back from the United States of America. In an editorial, The Christian Science Monitor quotes my right hon. Friend as saying:
  "We must get to the stage where people are responsible for their own decisions or else the extremists will flourish."
  Judging from recent atrocities, the Act and the prospect held out by the order do not constitute any particular deterrent to terrorism. For what it is worth, it has always been my view that the terrorists are encouraged by every such political initiative, because it gives the impression that Ministers are uncertain about what should be done and are lukewarm in their maintenance of the Union.
  In The Irish Times of 14 July Mr. John Hume is reported to have said of my right hon. Friend:
  "He tells the SDLP—and I think he should publicly say so—that he cannot conceive of an administration being formed without the SDLP but I'm quite sure he's not telling that to the Unionists."
  I do not know whether my right hon. Friend said that, but, if he said something like that, it confirms something that several of us said during our debates on the Bill. The devolved Administration on offer is most unlike ay to be taken up. According to the Minister of State, Lord Gowrie, the twenty-first century will probably arrive before the Act—so hastily passed under closure and guillotine—achieves its aims.
  If the House accepts the order, we shall be left with an Assembly that will be expensive. Is it £1 million per annum? It is likely to be troublesome to Governments, to put it mildly, and we could have had such an Assembly without the legislation that the House has painfully enacted. Why have an Assembly? The right hon. Member for Down, South gave an explanation that related not to the good government of Northern Ireland, but to the celebrated Irish dimension and to the parliamentary tier of the Anglo-Irish Council.
  I am a believer in a close relationship between the United Kingdom and the Irish Republic. However, this is no way to promote it. If we are to pursue a proper partnership with the other sovereign State in the British Isles, it is essential to make sure of the Union. Otherwise, the people of Northern Ireland will not be carried with us. I wish that that simple point was understood.
  The Social Democratic Party has attended the debate. I do not know whether it has resolved its differences with the integrationist Social Democratic Forum in Belfast. However, the Chief Secretary to the Treasury made an interesting speech in Yorkshire on 16 July about the SDP's policy of
  "breaking the mould of British politics"
  through
  890
  "a massive transfer of power, functions, personnel and public spending to 12 or 13 regional or national assemblies of Cabinet goverments".
  In his speech, my right hon. Friend referring to what he called
  "Labour's ill-thought out plans for Scotland and Wales"
  said:
  "After rigorous examination, debate and referenda old style devolution was at the time generaly rejected by politicians and public alike as a costly diversion from Britain's pressing problems."
  Later he said:
  "Latent nationalism in Scotland and Wales could once again be fuelled by separate insititutions, so threatening the Union."
  Mr. Deputy Speaker: Order. I am finding it difficult to relate the hon. Gentleman's remarks to the order that we are discussing, which is about the date of the election.
  Sir John Biggs-Davison: I said earlier that I wished for a postponement of the date of the election to an Assembly that I do not want. I shall conclude my remarks by saying, in the Chief Secretary to the Treasury's words, that the order is part of a process that is a costly diversion from the pressing problems of Northern Ireland and is part of a dark process which, again in the words of the Chief Secretary, threatens the Union.
  2.21 am
  Mr. William Ross: The Government still seem to believe that the Northern Ireland people do not understand the effect of the legislation that has been passed. The Northern Ireland people understand clearly that this evening we are being called upon to pass an order for an election to an Assembly that the Government will consider successful only if it brings forward proposals for a power-sharing devolved structure in Northern Ireland. It is a system that the Northern Ireland people have long since rejected and will reject again.
  We can leave on one side the 70 per cent. smoke-screen that has been bandied about since the earliest days of this legislation. Everyone in Ulster understands that what matters to the Government and the House is cross-community support. That is the polite way of promoting power-sharing. It is no use any politician in Northern Ireland saying that the first part of the legislation is OK—the election to the Assembly—and perfectly acceptable, because folk in Northern Ireland understand clearly where the election is supposed to lead. The Northern Ireland electorate is not interested in the method but in the end result, which they have already rejected. The power-sharing structure is the second part of the Act and one cannot have the second part without the first. If there were no election the power-sharing structure could never exist.
  The party of which I am proud to be a member has been against power-sharing. We had hoped that it was dead and buried and would not be resurrected. It is quite clear that the Secretary of State and the Northern Ireland Office hope to have that resurrection. I believe that they will be disappointed, but I am worried about the pain, misery and sorrow that Ulster will suffer before they are prepared to admit the reality of that disappointment. We have always known that Ulster could get a power-sharing devolved Parliament at any moment that we wished to accept it. The fact that we have been without such a structure for these past years is the clearest possible indication that we are not prepared to accept it. We were not prepared to accept it in the past and we shall not accept it in future.

  891
  The Secretary of State is setting up an Assembly to give him the answers and the structure that he wants. He will get the answers and the opinions of the people of Northern Ireland, and I believe that he will not like them. He has not liked the opinions that have been coming from the elected representatives of the people of Northern Ireland in the House. He would love to be able to say that we do not represent accurately the views of the Ulster electorate. He will find out two or three days after 20 October, whenever the results are known, that we reflect that opinion and that what we have said is the clearest voice and the most accurate reflection that he is likely to get.
  It would have befitted the right hon. Gentleman if he had decided to accept majority rule. That is what we are after. He would have served the country and the Province far better if he had stopped hob-nobbing with the Republic and its Ministers, who provide shelter for the IRA and share its political objectives. He should have been trying to defeat that evil organisation rather than dicker with those who share its objectives.
  The hon. Member for Epping Forest (Sir J. Biggs-Davison) said that the terrorists are encouraged by every political initiative of this sort. I think that he was more accurate in using that phrase than he realised at the time. It struck me as one of the most telling phrases that has been used this evening. Every political initiative like this is aimed at power sharing, and power sharing is designed in the long run to take Ulster out of the United Kingdom and into an all-Ireland republic.
  I have fought that objective all my life, both in politics and before. I shall continue to fight it and I believe that the people of Ulster will remain outside that united Ireland and in the United Kingdom whenever the Secretary of State has joined those who have tried a similar policy in the past.
  2.27 am
  Mr. Prior: With the leave of the House, I shall answer some of the questions that have been raised in the debate. I shall respond first to the hon. Member for Londonderry (Mr. Ross), who is entitled to fight for his beliefs. No one in the House would wish to take that entitlement away from him. However, I ask him to turn from his rather dogmatic and doctrinaire view and to think about what has happened to the Province that he loves and the people that he loves over the past few years. The economy, security and the political situation have hardly given him the success that he might have had if he has shown a little less of the doctrinaire approach and a little more generosity of spirit to his fellow beings in both Northern Ireland and Great Britain.
  The right hon. Member for Mansfield (Mr. Concannon) and the hon. Member for Antrim, North (Rev. Ian Paisley) referred to disqualification. I have taken legal advice so that I may present an accurate account of the law as it stands. Disqualification from the Northern Ireland Assembly has been the subject of recent press speculation and some public controversy. It has, of course, been mentioned this evening.
  First, the position on standing for election to the Assembly is that a candidate cannot be validly nominated unless he or she has consented to nomination. In giving this consent the candidate must state that he or she is aware of the provisions of the Northern Ireland Assembly
  892
  Disqualification Act 1975 and that to his or her knowledge and belief he or she is not disqualified from membership of the Assembly.
  Secondly, once an election has taken place, it is open to any person who believes that a Member should be disqualified from taking his seat to lodge an election petition. If the petition were to be upheld, the Member would be unseated and there would have to be a by-election for that seat.
  Thirdly, there have been suggestions that I could in some way remove or waive the grounds for disqualification that affect anyone in that position—Mr. Mallon's name has been mentioned—by exercising the power contained in section 3(3) of the Northern Ireland Assembly Act 1973. However, such a provision in an order under section 3(3) would be outside the ordinary meaning of the words that give the Secretary of State the power. It would amount to repeal of the provision in the Northern Ireland Assembly Disqualification Act 1975. In the absence of words in the enacting provision which expressly authorise the amendment or omission of provisions from primary legislation, I am advised that it would be ultra vices to include such provisions in subordinate legislation.
  In ordinary language, the purpose of the provision is to enable the Secretary of State to give the Assembly the power to waive disqualification where an honest mistake has been made by a Member and has been rectified. For example, if it were found, by chance, that someone held an office of profit under the Crown, that was pointed out to him after he had been elected and he said that he would resign from his office of profit under the Crown, that would be covered.
  However, the provision in question does not get us over the difficulty posed by someone like Mr. Mallon's continuing membership of the Irish Senate. Primary legislation would be needed to change the law in that respect. Mr. Mallon has a difficult choice to make. He must decide whether he can best further the interests of those whom he wishes to serve by membership of the Irish Senate or by seeking election to the Northern Ireland Assembly. I naturally hope that he will choose the Northern Ireland Assembly, but he must be the judge of that.
  As the right hon. Member for Mansfield mentioned, there is currently a review of the criteria for disqualification from the House. I understand that the report will go to my right hon. Friend the Lord President later this year. Although the disqualification criteria for the Northern Ireland Assembly are not wholly identical to those for the House, there is a close link between the two. I am convinced that the outcome of the review will have implications for disqualification criteria for the Assembly. I believe that the right course is to await that report and to consider at that point whether any provisions of the Northern Ireland Assembly Disqualification Act 1975, including the provision that Members of non-Commonwealth legislature cannot be Members of the Northern Ireland Assembly, require amendment. I have thought carefully about that sensitive and difficult issue and have concluded that the way that I suggest would be the right way to proceed. I make it absolutely plain that any changes in the circumstances that have been suggested in the past few days would require primary legislation.
  Mr. Nick Budgen: My right hon. Friend is leaving the matter open. There is a

  893
  clear issue of principle that he must either say that he agrees or does not agree with. To give the impression that it is a mere technicality that can be dealt with by way of a later inquiry and to leave the matter open is once again to leave an air of instability about something that is extremely sensitive.
  Mr. Prior: Certainly not. That would require legislation.
  Mr. Budgen: Does my right hon. Friend want it?
  Mr. Prior: I am prepared to wait until the report has been received by the Committee that is looking at the matter. In time it will be presented to the House. I do not have to state hypothetically what might be my view in future. I am stating the law. I am entitled to my view, and it is that we wait.
  Mr. Budgen: What is my right hon. Friend's view?
  Mr. Prior: It is that we should wait. I have just said that. That remains my view.
  Sir John Biggs-Davison: Is it not unfortunate to have on the record that a Minister says that he would like a certain gentleman to be elected to the Northern Ireland Assembly?
  Mr. Prior: I do not think so. I have made it clear that if it is a case of his standing for the Northern Ireland Assembly or for the Senate, I hope that he will choose to stand for the Assembly. I hope that he will take that decision.
  My right hon. Friend the Member for Brighton, Pavilion (Mr. Amery) referred to the Sloane affair. He asked me why we had not been able to deal with it before. I am anxious to deal with the allegations by the right hon. Member for Down, South (Mr. Powell) and the hon. Member for Antrim, South (Mr. Molyneaux) as quickly as possible. The hon. Member for Antrim, South said in his letter to No. 10 that the author of the note about his interview with Mr. Abbott would make himself available to verify the information contained in his notes. Accordingly the head of the Civil Service arranged an interview which took place last Wednesday, 21 July. Mr. Sloane did not bring his original notes with him. He undertook to send them by post immediately, but the latest information is that they have not yet arrived.
  When the right hon. Member for Down, South raised the matter in the House, he said twice that his hon. Friend the Member for Antrim, South, would be sending all relevant particulars to the Prime Minister forthwith. His letter to No. 10, dated 29 June, was in keeping with that undertaking. I was puzzled that he should write again on 15 July stating that he and his colleague would be available separately to offer evidence and information if that would be helpful, since if either of them had any relevant evidence or information it should have been given in accordance with the undertaking in the House and in the letter of 29 June. I have asked the hon. Member for Antrim, South either to confirm that he has sent the evidence in his possession or to send any evidence that he has about the allegations concerning interviews with Mr. Abbott promised on 29 June.
  Whatever else I may disagree with in the article by the right hon. Member for Down, South in the Sunday Express, I see that he has fallen into the habit of putting
  894
  into inverted commas statements drawn from that set of notes, as if they were specific statements, when he has said in the House that they are only notes.
  My right hon. Friend the Member for Pavilion alleged that the Northern Ireland Office was keeping the door open to Irish unity. The Government's policy, as I have said times without number on the constitutional position, is enshrined in section 1 of the Northern Ireland Constitution Act 1973. Northern Ireland will remain part of the United Kingdom for as long as the people of Northern Ireland wish. That Act makes provision for periodic border polls to establish their wish. It implies that if the majority vote at such a poll is against continuing as part of the United Kingdom, that wish will be respected. In that way our policy is securely founded on the democratic principle of self-determination, not as our enemies maintain, a quasi-colonial policy of keeping Northern Ireland under British rule, come what may.
  It is in that sense, and in that sense alone, that the door is open to Irish unity at some time if the people there so wish. It is a gross distortion to suggest that this consistent policy of successive Governments is a conspiracy to work towards Irish unity. As the hon. Member for Antrim, North said in what I thought was his election speech—I suspect that many people will hear it in the next few weeks and months—the people of Northern Ireland will decide the issue and it is right that they should. I believe and have always believed that the less that is done in London and Dublin behind the backs of the people of Northern Ireland the better it will be. That will deny the right hon. Member for Down, South the view that everything that happens is a conspiracy.
  Mr. Amery: I am grateful to my right hon. Friend for giving way. Would he remember that it was that type of lukewarm formula, that one would retain British sovereignty over the area for so long as the people so wanted it, that led to so many misunderstandings about the Falkland Islands and allowed the Foreign Office to try gradually to coax the Falkland islanders into union? Many of us are anxious that that is what my right hon. Friend is trying to do.
  Mr. Prior: The two are not in any way comparable.
  Anyone who knows Northern Ireland or its people understands that, irrespective of whether there is one or a dozen Acts of Parliament, if the people of Northern Ireland are not prepared to join the South, they will not do so. Unification can be achieved only by consent. It would not matter whether there was an Act of Parliament; it could not and would not happen. Anyone who knows the people of Northern Ireland must understand that. It is not difficult. They are an independent-minded people. They will not be pushed around, and quite right too. That is the position and remains the position.
  I turn now to the number of Assembly members per constituency and why we have gone ahead on the basis of 12 rather than 17 constituencies. I am aware that some political parties in Northern Ireland are critical of the fact that the election will be held on the basis of the existing 12 parliamentary seats. I have said before that the Boundary Commission report on the number of Assembly Members who are to be returned for each of the 17 new parliamentary constituencies would be implemented for the election only if it were received in sufficient time for the political parties and the chief electoral officer and his staff to organise on the basis of the new constituencies.

  895
  I have not yet received the Boundary Commission's report. There can be no question now of any changes—which must be effected by Order in Council—being made in time for the election of 20 October. However, the allocation of seats in paragraph 11 of schedule 2 to the Northern Ireland Act 1982 is based on the 1982 local government register, which is the most up-to-date record available for the distribution of the Northern Ireland electorate.
  I understand that the Boundary Commission will present its final recommendations to me in September. It deserves credit for finishing its unique task—unique in view of the considerable number of new constituencies—as quickly as it has. In no way would it make it possible to hold the election this autumn. I know that it would suit some hon. Members if it could not be held this autumn. It is important that the elections be held as soon as is reasonably convenient so that the people of Northern Ireland can make their decision at the polling booth and the Assembly can start to get down to the important work that must be done.
  It is easy to find fault with any system and with any wish that one may have for Northern Ireland. I hope that perhaps we can unite in our desire to see this Assembly succeed and Northern Ireland prosper. Heaven knows, that part of the United Kingdom deserves our support and help. It is my wish, and that of the House, that we can lead it to a more prosperous and stable future.
  Question put:—
  The House divided: Ayes 66, Noes 11.

  Division No. 293]

  [2.45 am

  AYES

  Alexander, Richard

  Boscawen, Hon Robert

  Alison, Rt Hon Michael

  Butler, Hon Adam

  Ancram, Michael

  Carlisle, Kenneth (Lincoln)

  Beaumont-Dark, Anthony

  Chalker, Mrs. Lynda

  Berry, Hon Anthony

  Cope, John

  Bevan, David Gilroy

  Dorrell, Stephen

  Blackburn, John

  Dover, Denshore

  896

  Dunn, James A.

  Parris, Matthew

  Dunn, Robert (Dartford)

  Prior, Rt Hon James

  Garel-Jones, Tristan

  Ridsdale, Sir Julian

  Griffiths, Peter Portsm'th N)

  Robinson, P. (Belfast E)

  Gummer, John Selwyn

  Roper, John

  Hamilton, Hon A.

  Rumbold, Mrs A. C. R.

  Hampson, Dr Keith

  Sainsbury, Hon Timothy

  Hooson, Tom

  Scott, Nicholas

  Hunt, David (Wirral)

  Shaw, Giles (Pudsey)

  Jopling, Rt Hon Michael

  Silvester, Fred

  Lang, Ian

  Smith, Tim (Beaconsfield)

  Lyell, Nicholas

  Speller, Tony

  Major, John

  Sproat, Iain

  Marlow, Antony

  Stainton, Keith

  Mather, Carol

  Thompson, Donald

  Maxwell-Hyslop, Robin

  Townsend, Cyril D, (B'heath)

  Mayhew, Patrick

  Viggers, Peter

  Mellor, David

  Waddington, David

  Meyer, Sir Anthony

  Waldegrave, Hon William

  Mills, Iain (Meriden)

  Waller, Gary

  Moate, Roger

  Warren, Kenneth

  Morrison, Hon C. (Devizes)

  Watson, John

  Neale, Gerrard

  Wells, Bowen

  Needham, Richard

  Wickenden, Keith

  Nelson, Anthony

  Neubert, Michael

  Tellers for the Ayes:

  Normanton, Tom

  Mr. Peter Brooke and

  Paisley, Rev Ian

  Mr. Alastair Goodlad.

  NOES

  Amery, Rt Hon Julian

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

  Biggs-Davison, Sir John

  Proctor, K. Harvey

  Brown, Michael (Brigg & Sc'n)

  Stanbrook, Ivor

  Budgen, Nick

  Farr, John

  Tellers for the Noes:

  Goodhart, Sir Philip

  Mr. William Ross and

  Lloyd, Peter (Fareham)

  Mr. Christopher Murphy.

  Molyneaux, James

  Question accordingly agreed to.
  Resolved,
  That the draft Northern Ireland Assembly (Day of Election) Order 1982, which was laid before this House on 14th July, be approved.

  Skelmersdale New Town
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Cope.]
  2.55 am
  Mr. Michael McGuire: In raising the question of unemployment in Skelmersdale, I shall seek to prove that the town is a special case with special problems and that it needs special help which, in the main, only the Government can give.
  The unemployment figures for Skelmersdale are distorted because, for statistical purposes, it is linked with Ormskirk to form a common travel-to-work area. I think that the Minister of State, who met some of us earlier today, will agree that the 23·8 per cent. unemployment rate for the area as a whole is the highest in the North West and one of the highest in the country. However, that figure is diluted. The real unemployment rate for Skelmersdale is 34·3 per cent., and male unemployment there is 38 per cent.
  The total number of unemployed in the combined travel-to-work area is 7,316 out of which 5,424 are registered in Skelmersdale. As I have explained, for statistical purposes we are linked with the old town of Ormskirk, because of which the figure is diluted, and while an unemployment rate of 23·8 per cent. is bad, the real level for Skelmersdale is staggering. There are no new jobs, unemployment is high and there is no sign that the problem will be cured. It really is a dead end. Skelmersdale certainly has the highest rate of male unemployment in Great Britain, and apart from a few special areas in Northern Ireland, it must have one of the highest rates in the United Kingdom. As a special development area, Skelmersdale is allocated the highest level of grant-aid that it is possible to get. We must therefore ask how this situation came about and what can we do to remedy it.
  As we reminded the Minister this morning, a few years ago Skelmersdale suffered several serious body blows and in two or three fell swoops lost about 3,000 jobs. Although jobs can return in tens, twenties or even fifties, it takes a long time to fill a hole that big. In fact, it has never been filled since two companies left in such tragic circumstances a few years ago. That is why Skelmersdale now has such a high unemployment rate. The figure in Skelmersdale over the past 10 years has always been above the regional average. As the number creeps up nationally, so it mounts in Skelmersdale. The highest unemployment in the North West is to be found, I believe, at Birkenhead where it amounts to 20 per cent. The figure for Liverpool is slightly lower. If there is to be fine tuning, one has to spotlight where it should occur.
  This is a grim picture. It will be made worse in Skelmersdale when 300 Dunlop workers, now serving 90 days' notice, join the biggest queue in the United Kingdom. Earlier today, the Minister was kind enough to meet, at short notice, a deputation led by myself that included three of the leading members—although they would be too modest to say so—of the Labour group representing Skelmersdale on the West Lancashire district council. They were the leader of the council, Councillor Geoffrey Ellman supported by Councillor Malcolm Ford and Councillor Ray McManus. The Minister must have been impressed with the case that they put and the answers that they gave to his searching questions.
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  The Minister will have been left with a profile of a town of about 42,000 people. It will not reach the planned figure of 80,000 envisaged in 1961. The figure grows only slightly. As one would expect in a new town, 33 per cent. of the population is under 16 years of age. There is a heavy dependence of engineering, semi-skilled and unskilled jobs. Only about 8 per cent. of those employed have managerial, administrative or office type jobs.
  Skelmersdale is not relying solely on the Government. There is a high degree of self-help. A name that has become almost famous in the Department of Employment is that of Father McKenna, who has generated infectious enthusiasm among those with whom he has come into contact. Over 500 young people who would otherwise be wasting away on the scrap heap are involved in Father McKenna's scheme, which endeavours to instil work disciplines and work skills. It is a tragedy that, at the end of the day, there is nowhere for these young people to go. Some are saying that it is not worthwhile taking part in the scheme because they cannot profit from the experience. I believe that hope must be kept alive for these young people.
  The Government recognise, I hope, that they have a special responsibility. I am not condemning a Tory Government for planning the new town in 1961. I would probably have cheered had a Labour Government planned it, among the others that Labour created. It was to be a new town offering a better, richer and fuller life than could be provided in the old Merseyside region. People were attracted to Skelmersdale. Unfortunately, the bright dream has been rudely shattered. We now have a tragic situation. With unemployment on such a scale, although other regions make special pleas, Skelmersdale stands out, not as a disaster area, but as a black spot that needs considerable Government help.
  The Government can offer help in three or four ways. The first is with Hughes International. The Minister knows of the company, because the matter is before his colleagues, although I had rather a dampening reply today from one of them. Hughes International is owned by an entrepreneur of the sort that the Government are said to favour—the "go out and get the business" type. He has promised to deliver—if the Government will be sensible about the export credit guarantee scheme—1,000 jobs to Skelmersdale. Those are real jobs, not Mickey Mouse jobs.
  That business has been secured, albeit in Nigeria, in the face of intense competition; and Mr. Hughes wishes to have realistic help from the Government so that he can create 1,000 real jobs. If the Government do the sums of taking 1,000 men off the dole—no matter how risky the enterprise—they must reward Mr. Hughes' endeavours and enterprise by saying that they will not be as rigid on export credit guarantees as they may be in other circumstances. They should treat if as a special case.
  The Government could also help us to build our new hospital. I told the Minister earlier today that the hospital has already passed the Government's test. They have conducted a profile to find what they call the "best buy", and Skelmersdale new hospital, slimmed down from the original grand design, passed the test. The reason why it was not built was that we were shunted from the Merseyside regional health authority into the North West regional health authority which immediately put us to the bottom of its long queue. Only the Government can rescue us. By doing that, they would fulfil a social need for a

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  hospital. With such high unemployment, to force people to travel to the hospital in the nearest town of Ormskirk is a considerable burden. It would also create permanent jobs, both in the original construction and staffing of the finished hospital. The grand design will not be complete until the hospital is built.
  Another way in which the Government can help is by directing some EEC grants in our direction. Corby, because of the closure of the British Steel Corporation works, was considered to be a disaster area. I do not know its rate of unemployment, but I know that it did not have 38 per cent. male unemployment. The Government treated Corby as a special case and it was locked into a system of EEC grants. I do not know whether the fund that helped Corby can help us, but there must be a fund into which we can be locked. Although there may not be enough money to help us with the Hughes International deal, there may be sufficient to build the hospital.
  The Government should also take on board the proposal for the transfer of a Government Department. It would help to alter our profile if we had the managerial or administrative jobs that at present we do not have. Only 8 per cent. of our people are employed in that type of job. I understand that not all the Government Departments have been allocated, and I believe that Skelmersdale is an outstanding case for consideration.
  I finish on that note, because I want the Minister to have a chance to reply. He told us this morning that he would do his best to answer some of our questions. I have known the right hon. Gentleman sufficiently long to know that he will do his best.
  Skelmersdale is a town which, in its short history, has suffered a series of deep and heavy body blows. They have not been mortal. There is still a good life there. The people are willing workers. That, incidentally, is one reason why Hughes International went there. It had a profile done by outsiders on the best place to put a huge investment that would create 1,000 jobs and, contrary to popular opinion, Skelmersdale is not the worst of the new towns in the United Kingdom. It had the highest grant—something enjoyed by other areas—and it had good communications, but above all, it had good industrial relations. That is why a private entrepreneur is prepared to put a considerable amount of money into a place where he has faith in the people.
  I come back to what I was saying. We have suffered many body blows. We need a boost. We need a fillip. We need to give hope to the people. We have suffered too much bad news. I hope that, as a result of this debate, good news will soon flow to Skelmersdale, that the Government recognise that it is a special case, and that they will give us the special help that is needed to deal with a special problem.
  3.11 am
  The Minister of State, Department of Employment (Mr. Michael Alison): I congratulate the hon. Member for Ince (Mr. McGuire) on his success in securing an Adjournment debate, even at this late hour. I am grateful to him for giving me advance notice of some of the particular problems that he intended to highlight in the debate. This will enable me to respond in more detail to the points that he has made.
  I am also grateful to the hon. Gentleman for arranging for me to meet this morning a deputation of councillors from West Lancashire district council. They have had a
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  long day. Their endurance is as great as that of the hon. Gentleman. As a result of that meeting, I come to the debate this evening with a clearer understanding of the severe problems facing the area. The councillors presented their case forcefully, clearly, and enthusiastically. A number of the specific points that they made have been repeated here this evening, and I shall do my best in the time available to deal with each in turn.
  The hon. Member and the local councillors are understandably concerned about the high unemployment in Skelmersdale. I can assure them that the Government and I share their concern. We are acutely aware of the problems and anxieties that confront those who lose their jobs, or the youngsters who see no prospect of finding one. Unemployment rose sharply under the last Government, as I am sure the hon. Gentleman will accept, and it has risen sharply under this Government. It is rising just as sharply under Governments abroad, although that brings no joy to anyone.
  We are suffering particularly badly at present from a combination of factors which have conspired to raise unemployment levels generally. The international recession caused by the massive oil price rise is one factor. We have also been coping with a "bulge" of school leavers coming on to the job market.
  The hon. Gentleman mentioned the 33 per cent. of youngsters under the age of 18 in Skelmersdale. That shows the youth profile of this new town. But in this country we have been suffering in particular from the weaknesses shown by Governments over the past 15 years on ducking the really difficult decisions. When one considers that during the 1970s wage rates went up by 350 per cent. while productivity required to pay for them went up by only 16 per cent., it is not surprising that unemployment rose sharply under successive Governments.
  On top of all that, Skelmersdale, of course, has its own particular problems. The town suffered a major blow to its industrial base in 1976 when its two largest employers, Thorn and Courtaulds, closed with the loss of 2,500 jobs—25 per cent. of the town's employment. I recognise that that was a body blow. Since then the industrial development situation has been such that it has been difficult to secure sufficient employment opportunities to make good those gigantic losses.
  The Government fully recognise the special problems facing the area; and it is for that reason that Skelmersdale will retain its special development area status when the rest of the Ormskirk travel-to-work area becomes non-assisted from 1 August. As a special development area, the new town will continue to benefit from the full range of regional financial incentives at the highest level available in Great Britain. Skelmersdale will, of course, also benefit from the Government's policy of reducing the number of areas eligible for regional assistance so that aid is concentrated to a much greater degree on places with the worst problems, such as Skelmersdale.
  In the period since the Government came to office assistance worth over £1·7 million has been made available to firms in the Ormskirk travel-to-work area under section 7 of the Industry Act. It was estimated that this assistance would safeguard about 30 jobs and create nearly 1,800 new jobs. About £7 million in regional development grants has been paid to firms in the area. Nearly all of that assistance went to firms in Skelmersdale.

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  However, the only way to obtain substantial and lasting impovements in the employment prospects of Skelmersdale and elsewhere is to get the economy back on to a sound footing. This is what the Government's policies are concentrating on.
  The hon. Gentleman would probably agree that the deployment of resources in Skelmersdale is not the most acute problem. Waiting for winds to blow into our sails is the root of our difficulties.
  However, industry has to play its part too. It has to continue its efforts to improve productivity, reduce costs, improve the quality and design of its goods and become more adaptable to changing markets.
  We are now through the worst of the recession, and employment prospects in the United Kingdom as a whole are improving. The news is no longer all bad. It is no longer all about redundancies—firms closing down, firms on short time—although I would be the first to admit that Skelmersdale has seen more than its fair share of these. There are plenty of good news stories too, even in Skelmersdale.
  Rodco Ltd., for instance, a joint GEC-Pirelli venture, has now completed construction at Stanley of its continuous casting plant for copper wire bar and will provide employment for 120 when in full production later this year.
  Despite the difficult circumstances, people in Skelmersdale are finding jobs. In the past 12 months nearly 2,800 people in the Ormskirk travel-to-work area were placed in employment by the MSC's employment service—nearly 2,000 of them in Skelmersdale. Many more, perhaps two or three times that number, will have found jobs by other means.
  The development corporation has recently completed a number of nursery factories and standard factories of mixed sizes, some of which have aready been let. In the deputation visit the hon. Gentleman made a point about rents which I noted carefully. Last year the corporation completed several workshops and all were let quickly, mostly to new businesses. In fact I understand that since this Government came to office some 50 new small firms have been established in Skelmersdale. Those are now employing about 700 people. The corporation still has a considerable amount of purpose built factory space, readily available to meet any future increase in demand, which will place the town in an advantageous position when the employment opportunities in the area improve.
  However, the hon. Gentleman has suggested this evening certain other ways in which the Government could help the area. The local representatives whom I met this morning also made a number of points, many of which I promised to look into, and I shall do so. They also handed me a copy of a detailed report, recently prepared by the council, on unemployment in the area which I hope to have the opportunity of studying in more detail later, although I had a chance to absorb some of its well deployed facts when I looked at it this morning.
  At our meeting this morning the councillors suggested, for instance, that my Department and the Department of Industry might get together with a specially formed body of local industrialists, local councillors and educationists to develop special initiatives in the area. They also thought that it would be useful for my Department to join Liverpool or Lancaster university to mount a full-scale
  902
  study of the real causes of unemployment in new towns. I have said that I will look at these and various other points and I shall certainly do so. Some, like the lack of further education facilities in Skelmerdale, I shall take up with my colleagues in other Departments.
  There are one or two points that I can deal with now. There was some concern about the fact that changes in the funding arrangements for training workshops might jeopardise the future of the Skelmersdale training workshop. In fact, there have been no changes in the funding arrangemets for those workshops and none is envisaged. The sponsor pays 10 per cent. of the capital costs and the MSC makes up the other 90 per cent. Any capital replacement is funded in exactly the same way. I am told by the MSC that it knows of no problems or complaints arising from the Skelmersdale training workshop and its funding arrangements. I hope that that will be reassuring, particularly as I understand that this particular workshop is regarded by the MSC as one of the best examples in the country in terms both of its operation and the training offered.
  The deputation was also concerned to know whether the young workers scheme covered young people already in employment. I can confirm that employers who already have 16 and 17-year-olds on their staff can apply for support under this scheme for their continued employment provided that the younsters in question have been with the firm for no more than six months and that the other criteria of the scheme, includng the maximum level of earnings allowed, are met.
  The possibility that some Government work might be dispersed to Skelmersdale was also raised. A limited number of planned dispersal moves are in fact proceeding. But a dispersal policy is expensive and the need to contain public expenditure prevents any further initiative. However, when it comes to the location of new government work or the relocation of work for operational reasons, I am assured that the pressing needs of particular areas such as Skelmersdale—where the need is firmly acknowledged—will be given the fullest possible consideration.
  The hon. Gentleman pointed out that one way of creating new jobs in the town, as well as providing a better medical service, would be for the Government to pay for a new hospital to be built. This is, of course, primarily a matter for my right hon. Friend the Secertary of State for Social Services, and I shall pass on the hon. Gentleman's comments to him. However, I understand that the North West regional health authority has a scheme in its capital programme for a community hospital in Skelmersdale which is programmed to start, I am afraid, some time ahead—in the early 1990s. The Skelmersdale scheme was originally to begin in 1981–82 but has, I understand—for the reasons sketched out by the hon. Gentleman—continued to slip back following revisions to the capital programme.
  I am told, however, that the regional health authority has given priority to ensuring that primary health care services are available within the new towns. Four health centres have been opened and a further centre is under consideration. And hospital services are, of course, available at Ormskirk and district general hospital where major developments are planned to start in 1986–87. It was suggested at the meeting this morning that money might be available from the European Community to finance a hospital. I shall pursue that further, but my initial

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  understanding of the situation is that while the Community supports medical research in certain fields, health, being a direct Government responsibility, is specifically excluded from the ambit of the Treaty of Rome. However, I shall look into the matter.
  The hon. Gentleman criticised our export credits guarantee system. He mentioned, in particular, the problems experienced by Mr. George Hughes in obtaining Export Credits Guarantee Department support for large contracts, which he has been trying for some time to win in Nigeria. Again, this is primarily a matter for another Department, as I mentioned to the hon. Gentleman this morning. However, I will pass his comments to my colleagues in the Department of Trade. But I have already been advised by them that although ECGD is as flexible as possible in its requirements, experience has shown that unless the backing of the Federal Government of Nigeria is obtained for large commitments by the State Governments, the risk of non-payment is unacceptably high. A defaulting payer is bad news for everyone, including the workers in Skelmersdale. The ECGD is required to pay its way and so cannot make major exceptions in cases such as this one.
  I believe that ECGD's counterparts abroad would require similar Federal Government backing for business of this magnitude; indeed, some have recently suspended support for business with Nigeria as a whole. Where the non-payment risks are clearly so substantial, the ECGD cannot be expected to bear the costs at the expense of other exporters who provide its resources through premium payments.
  904
  As I have said, future employment prospects in Skelmersdale depend primarily on setting the economy right. Given the difficulties in the outside world, that will, alas, not happen overnight. In the meantime, we are protecting those hardest hit, particularly young people, with our special employment and training measures. Over 1,900 young people have entered the youth opportunities programme since April 1981. Some 150 people in the Ormskirk travel-to-work area are currently benefiting from the temporary short-time working compensation scheme, the job release scheme, and the community enterprise programme. About 79 applications for the young workers scheme have so far been approved in the Ormskirk and Skelmersdale area.
  Temporary help of this nature is all very well, but what young people—and all other age groups for that matter—need most of all are secure, permanent jobs. It is up to the Government to set the nation's economic rigging so that it will catch the trade winds when they blow. This we are striving to do in Skelmersdale and throughout the country. The rest depends partly on what happens in the world outside, but mainly on industry's own efforts to adapt and renew. I confirm that in due course I hope to write to the hon. Gentleman about the other detailed points that we discussed this morning.
  The Question having been proposed after Ten o' dock on Monday evening, and the debate having continued for half an hour, MR. DEPUTY SPEAKER adjourned the House, withour Question put, pursuant to the Standing Order.
  Adjourned at twenty-five minutes past three o' clock am.

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  West Wales Hospital, Carmarthen (Dialysis Unit)
  West Wales Hospital, Carmarthen (Dialysis Unit)
  Local Authority Farms
  Local Authority Farms
  Mental Hospitals (Ministerial Visits)
  Mental Hospitals (Ministerial Visits)
ENVIRONMENT
  Council House Tenants (Right-to-buy)
  Council House Tenants (Right-to-buy)
  Macclesfield (Council House Sales)
  Macclesfield (Council House Sales)
  Housing Action Areas
  Housing Action Areas
  Liverpool (Tree Planting and Landscaping)
  Liverpool (Tree Planting and Landscaping)
  Show Houses (Rating)
  Show Houses (Rating)
  Repair Grants
  Repair Grants
  Energy Conservation
  Energy Conservation
  Empty Council Houses
  Empty Council Houses
  Wild Birds (Conservation)
  Wild Birds (Conservation)
  New Towns
  New Towns
  West Midlands (Employment)
  West Midlands (Employment)
  Recreation Services (Privatisation)
  Recreation Services (Privatisation)
  Tower Wharf (Cyclists)
  Tower Wharf (Cyclists)
  North Pennines
  North Pennines
  District Heating Scheme (Harlow)
  District Heating Scheme (Harlow)
  Ministerial Visits (Saudi Arabia)
  Ministerial Visits (Saudi Arabia)
TRANSPORT
  Denton (Road Schemes)
  Denton (Road Schemes)
  Mr. Rodney Bitmead
  Mr. Rodney Bitmead
  Motor Vehicles (Construction)
  Motor Vehicles (Construction)
  A50 (Accidents)
  A50 (Accidents)
  Waste Disposal Lorries
  Waste Disposal Lorries
  French Coach Operators (Licences)
  French Coach Operators (Licences)
  Weighbridges (Accuracy)
  Weighbridges (Accuracy)
  Ministerial Visits (Kuwait and Saudi Arabia)
  Ministerial Visits (Kuwait and Saudi Arabia)
  Public Transport (London)
  Public Transport (London)
SCOTLAND
  Education (Parents' Charter)
  Education (Parents' Charter)
  Education Administrators
  Education Administrators
  Perth Prison (Workshop Safety)
  Perth Prison (Workshop Safety)
  New Towns
  New Towns
  Strathclyde (Structure Plan)
  Strathclyde (Structure Plan)
  Common Services Agency
  Common Services Agency
  Gaelic (Examinations)
  Gaelic (Examinations)
  Giant Hogweed
  Giant Hogweed
  Hamilton College of Education
  Hamilton College of Education
  Island Councils (Grants)
  Island Councils (Grants)
  Local Authorities (Agricultural Land Holdings)
  Local Authorities (Agricultural Land Holdings)
  Irish Republican Army
  Irish Republican Army
  Personnel (Security Vetting)
  Personnel (Security Vetting)
  Cameron Report
  Cameron Report
  Bothwell
  Bothwell
  Glasgow, Shettleston
  Glasgow, Shettleston
  Policy Programme (Achievement)
  Policy Programme (Achievement)
  Community Land Act 1975
  Community Land Act 1975

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

Schools and Less Academic Children
Lord Gainford: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they are considering ways of improving the position in schools for the less academic children.
The Parliamentary Under-Secretary of State, Home Office (Lord Elton): My Lords, my right honourable friend the Secretary of State for Education and Science has just announced a programme of development projects in this field worth £2 million per year. In Scotland the Government, education authorities and other bodies have together developed and piloted a range of new foundation level courses.
Lord Gainford: My Lords, I thank my noble friend the Minister for that Answer. Can he please give any information about the programmes for late developers, for teenagers, who might be interested in the 17-plus examination?
Lord Elton: My Lords, the Government fully recognise the importance of the 17-plus age group. Following consultations, the Secretary of State has
2
recently published a document called Seventeen plus: A New Qualification, setting out plans for development of range of new pre-vocational courses which, from 1984, will be available in schools and colleges of further education, and will meet the needs of students who are not attracted to academic provision.
Baroness Jeger: My Lords, while welcoming this modest development, may I remind the Minister—
Several noble Lords: No.
Baroness Jeger: My Lords, may I ask the Minister whether he needs to be reminded that 40 per cent. of our children leave school without taking any examinations at all? In view of that, is it not possible that this new scheme could start before September 1983? Is it a fact that it is not to involve pupils until the fourth form? Surely they are the very pupils who would benefit more if they were given special assistance earlier. Why is the scheme, as I understand it, being limited to only seven or eight local authorities?
Lord Elton: My Lords, the answer to the first question of the noble Baroness is: No, I do not need reminding. In answer to her further questions, I may say that my right honourable friend the Secretary of State for Education and Science announced 10 days ago a programme of development projects in seven or eight local education authority areas in England volunteering, if they will, to begin in September 1983. It will take until then to get the local authorities to volunteer and the plans for the new schemes to be approved and agreed upon. We hope that they will enable authorities to put into practice some of their own ideas for new approaches to the education of the lower-attaining pupils, especially in the last two years of compulsory education. Of course it is important that the interests of these children be looked to at every stage of their education. But the Question relates to this particular phase, and I am convinced that what is being proposed

3
is a very encouraging and imaginative means of developing new ways of seeing that our teachers and our parents do not regard academic ability as the only ability of any value in school, when so many children have other abilities which are of greater importance to them.
Lord Kilmany: My Lords, arising out of that reply, may I ask why, if children are not very academic, they should not be encouraged to play more games?
Lord Elton: My Lords, with the exception of a very few cases of talented people, that is not a profitable form of instruction for later life.
Lord Alexander of Potterhill: My Lords, do I gather from the Minister's reply that it has taken us nearly 40 years to understand the meaning of the 1944 Act, which provided that every child should be educated according to his age, ability and aptitude? As the aptitude changes, so should the educational provision.
Lord Elton: My Lords, the Government and previous Governments are deeply obliged to the contribution which the noble Lord himself has made in arriving at that understanding.
Lord Kilmarnock: My Lords, will the Government consider implementing the Schools Council's proposal for an intermediate or I-level to run alongside A-level?
Lord Elton: My Lords, I think that that is probably a separate issue, but I will consider it further in the columns of Hansard.
Lord Hatch of Lusby: My Lords, would the Minister agree that the children who are suffering most from the Government's cuts in grants to education authorities are those in areas where the comprehensive principle has not, as yet, been applied? Does he know, for example, that in the area where I live in Lincolnshire, where there are grammar schools and secondary modern schools, the secondary modern schools, where the need is greatest, are having to give up facilities like school bands because they are not allowed peripatetic music teachers, whereas grammar schools are able to continue with such facilities? Is this not a sad commentary on the effects of Government cuts in education?
Lord Elton: My Lords, I would doubt if it was, but it is not the subject of the present Question which concerns improving the position in schools for the less academic children. My right honourable friend has announced a very impressive programme for that in an experimental way. The number of areas which still have bipartite systems of education are extremely few and I should not wish to enter into debate now to cover ground which we covered with so much passion in this House many years ago.
Lord Hatch of Lusby: My Lords, does the noble Lord not agree that it is the less academically-inclined children who are in secondary modern schools and
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the more academically-inclined children who are in grammar schools? That is exactly my point.
Lord Elton: My Lords, the noble Lord has stated a self-evident point, but it does not amount to a question.
Lord Leatherland: My Lords, I should like to ask the noble Lord—and I do so as a former bandsman, a euphonium player (that is where I learnt to blow my own trumpet)—whether he will do everything possible to encourage schools to run their own bands?
Lord Elton: My Lords, with the particular example of the noble Lord in mind, I shall, with very great enthusiasm, bring his interest to my right honourable friend's notice.

Motorways: Expenditure
2.44 p.m.
Lord Belhaven and Stenton: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is the projected expenditure on new motorways and repairs to existing motorways in the current financial year and how this compares with the last two years for which figures are available.
The Earl of Avon: My Lords, forecast expenditure on new trunk road motorway construction and improvement in the United Kingdom in 1982–83 is £256 million. This compares with figures for 1981–82 of £217 million and for 1980–81 of £186 million. For motorway maintenance, the figures are £112 million, £103 million and £67 million respectively. Comparable information is not available for local authority motorways.
Lord Belhaven and Stenton: My Lords, I am grateful to my noble friend for that basically very encouraging reply. Can he say when the major works on the M1 and the M6 will be completed, and can he tell the House whether some of the money earmarked for the railways may, instead, be used to hurry up the improvements to motorways and the construction of new motorways?
The Earl of Avon: My Lords, if I may take my noble friend's last point first, I do not think that any such suggestion is in mind at the moment. To return to his point about improvements being made to motorways, particularly on the M1 motorway, this can be divided into two, if not three, points. To start with, there is a widening of the two lanes into a three-lane motorway, which I think all noble Lords will welcome, on both the M1 and the M5. Secondly, there are major maintenance works going on which will take approximately two to three years to complete.
Lord Wells-Pestell: My Lords, is the noble Lord the Minister in a position to indicate whether the fact that we spend so much money on the repair of motor

5
roads and that one or other of them is out of action every day, indicates that this is due to poor construction or to the extent of their use?
The Earl of Avon: My Lords, to take the M1, the life of the M1 has now technically come to an end, so major works are needed to refurbish it. Originally, it was built for a period of 20-odd years, and that period is now over. So major works are required there. One of the reasons that motorways now need major repair is that they have been so successful in taking traffic on them.
Lord O'Neill of the Maine: My Lords, can the Minister say when it is hoped that the M3 may be completed, in view of the fact that it leads to the important port of Southampton?
The Earl of Avon: My Lords, I am afraid that I do not have any information on the M3. I can do the M25, the M42 and the M40.
Lord Underhill: My Lords, would the noble Earl not agree that, although the figures that he has given in reply to the original Question are encouraging, there is a lot of leeway to be made up? Will he take account of the fact that the British Road Federation stated soon after the Budget in April this year that the expenditure on motorways and trunk roads at 1979 prices was only 50 per cent. of what it was in 1975–76 and that the expenditure on all roads, local roads included, was only one-third of the expenditure of 1975–76?
The Earl of Avon: My Lords, I am grateful to the noble Lord for the way in which he has put his question. At the moment I think that we are on the road to getting this correct, if I may use that rather awful pun. The forward roads programme which we now have is intended to keep things on a level par and not to let them get behindhand, which they did in the late 1970s.
Lord Reigate: My Lords, as my noble friend has the answer, could he consider telling us about the M25?
The Earl of Avon: My Lords, I am grateful to my noble friend for following my advice. The London orbital route is the department's top priority. Currently some 75 miles are either complete or under construction. It is hoped that contracts for the remaining 46 miles will be let during the next two years. The whole route should be completed and open to traffic by 1986.
Lord Paget of Northampton: My Lords, can the noble Earl explain why so much of the MI which is neither out of order nor being repaired is marked off for the purpose of repair? Could we not have a little more road until they actually want to repair it?
The Earl of Avon: My Lords, I think that the noble Lord is on a theme on which I have heard him speak two or three times before. Everything possible is being done to help the motorist; using re-design, smoother lane diversions, phasing the contracts and keeping a minimum distance, continuing to provide towing trucks, making maximum use of weekend and night working and providing more information. We are doing as much as we can.
Lord Soames: My Lords, now that we have seen the full effects of motorways being built only for 20 years, can my noble friend say how many years life is anticipated from motorways now being constructed anew?
The Earl of Avon: Indeed, my Lords, the research department at the moment is working on plans to ensure longer life for all motorways.
Baroness Macleod of Borve: My Lords, may I ask my noble friend the Minister whether, from his expert knowledge of all that is going on on our major roads, he can help me with my special road, which is the A40 leading to the M40? The noble Minister will know very well what I mean. The delays are almost more than some of us can take in the morning and in the evening.
The Earl of Avon: My Lords, on the noble Baroness's favourite road, the Hillingdon West End Lane, Polish War Memorial, the works there are to provide a free-flow grade separated junction. They should be completed at the end of next year. The contractors are trying to keep dual two-lanes open during peak hours and as much as possible during the rest of the time. The lighting was examined recently and there are emergency propane fuel lights provided where the electric lighting is inadequate.

Sex Establishment Licences
2.51 p.m.
Lord Nugent of Guildford: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what steps they are taking to provide local authorities with the necessary information for them to conform with paragraph 12(3)(a) of Schedule 3 to the Local Government (Miscellaneous Provisions) Act 1982.
Lord Elton: My Lords, this provision permits local authorities which have adopted Schedule 3 to refuse an application for a sex establishment licence on the grounds that an applicant is unsuitable to hold a licence by reason of having been convicted of an offence or for any other reason. The Government will be drawing the provision to the attention of local authorities and the police by circular in the normal way. It will be for local authorities to determine the information they may reasonably require of applicants; and they will do so in the knowledge that the police must receive copies of all applications and may submit observations upon them.
Lord Nugent of Guildford: My Lords, I thank my noble friend for that informative Answer. Does it mean that the police will have an obligation to appear at these applications for licensing and give evidence in the same way that they would before a magistrates' licensing bench in an application for a liquor licence?
Lord Elton: My Lords, applicants are bound to give notice of an application to the chief officer of police. The chief officer may submit observations on, or objections to, the application. He would no doubt draw attention to any matters which cast doubt on the accuracy of an application. Perhaps I should tell your Lordships that the local authority has power in effect, under paragraph 10(6) of Schedule 3, to require applicants to state whether they have been previously convicted. All applications must be copied to the police under paragraph 10(14), and any applicant giving false information commits an offence and will be liable to prosecution and a fine of up to £10,000. An applicant will therefore either disclose his previous record spontaneously or suffer the risk of its being discovered by the police and making himself liable to prosecution and clearly unsuitable to have a licence.
Baroness Birk: My Lords, would the Minister give a little more information on the second part of that paragraph? "Having been convicted of an offence" is fairly straightforward, and that would be on record. But could the noble Lord add something to what he has said, or rather what he has not said, about "or for any other reasons"? Does that not seem to be a very wide circle? How is this going to be defined so that the local authorities and also the courts may know? —because this is subject to an appeal, whereas unfortunately some of the other reasons for turning down are not.
Lord Elton: My Lords, I do not think that the grounds are any wider than when we so recently discussed this subject on Committee and Report stage of the Bill. The paragraph is paragraph 12(3)(a). It reads:
"The grounds mentioned in sub-paragraph (2) above are—that the applicant is unsuitable to hold the licence by reason of having been convicted of an offence or for any other reason."
It will be for the licensing authority to decide what is reasonable. If it is thought to be unreasonable, that can be tested in the courts.
The Earl of Lauderdale: My Lords, could my noble friend explain how the risk of discovery is going to work? Supposing an applicant puts in false information covering up his criminal past, and supposing the police do not happen to notice this, or, if I may put it another way, the vetting is not very thorough, is not this open to the danger that people may slip through the net and may go unobserved by the police unless there is an obligation on the police to investigate each case?
Lord Elton: My Lords, there is an obligation on the police to receive the copies of the application, the local authority is plainly going to ask the police authority for their comments on the application itself, and the police have access to the criminal record; and beyond that it is really impossible to see how much further one can go.
Lord Nugent of Guildford: My Lords, is my noble friend aware that Mr. Sullivan, who claims to be the owner of the largest chain of sex establishments in the country, has recently been convicted in the Snaresbrook
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Crown Court of living off the immoral earnings of a prostitute, and gaoled for nine months? Would he say whether that offence would be one for which a local authority could disqualify?
Lord Elton: My Lords, I should be very surprised if the local authority decided otherwise.
Baroness Birk: My Lords, may I press the Minister a little further on the point about "or for any other reason"? Is the Minister aware that although this matter was discussed in Committee many of us were unhappy about it, not because it dealt with sex shops but because of the rights of appeal and the rights of individual citizens? Can the noble Lord not say that, even if he cannot give an answer now, this will be gone into further, and that if guidelines are given to local authorities there will be some criteria, or headings, covering the "or for any other reason"?
Lord Elton: My Lords, of course I will consider carefully what the noble Baroness has asked me. I do not think there is such a substantial difficulty as she imagines, because local authorities will themselves have strong views on who are suitable people to conduct these establishments. If the applicants do not come up to those standards, then they have every reason not to give them a licence.
Lord Leatherland: My Lords, would the noble Minister tell us what is meant by the expression "sex establishment", just so that we can keep away from them?
Lord Elton: My Lords. I am trying to recall a similar question which the noble Lord asked me some weeks ago and on which I found it necessary to shelter his ignorance in benefit of his character. A sex establishment is a place such as is frequently found in places like Soho, purveying things about which the noble Lord has already made it clear he does not know a great deal—and more strength to his elbow!
The Earl of Halsbury: My Lords, is the circulation of such details as the noble Lord, Lord Nugent of Guildford, has given to us about the squalid interactions between sex shops, pornography, prostitution and so on, privileged in terms of the laws of libel amongst the citizenry? I do not mean here. Obviously those who wish to keep an eye on these things would like to be informed on this point.
Lord Elton: My Lords, I think it is always libellous to make allegations of criminal activities which have not been proved. There is nothing libellous about the naming to a particular individual of convictions which have not elapsed under the Rehabilitation of Offenders Act.

IRA Terrorists: UK/Irish Police Liaison
2.58 p.m.
Lord Gridley: 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, in view of the terrorist outrage in London on 20th July, to what extent there exists a procedure enabling the Government of the Irish Republic to pass immediately to Her Majesty's Government information about the movements of known and suspected IRA terrorists from Ireland to England.
Lord Elton: My Lords, the Irish Government are as conscious as we are of the need to stamp out IRA terrorism. Monitoring the movements of criminals and exchanging information about them are matters for police forces rather than for Governments. There is close co-operation between police forces in the United Kingdom and the police in the Republic of Ireland on a wide range of matters. As your Lordships will have noticed, both police forces worked together to excellent effect in the arrest and assembling of evidence against Gerard Tuite who was sentenced to ten years' imprisonment after conviction in Dublin of an offence of the possession of explosives which had been committed in London. For obvious reasons it would not be appropriate to enter into details about procedures for passing information.
Lord Gridley: My Lords, I thank my noble friend the Minister for that Answer. Does he realise that in no way do I criticise the police or the Government for the excellent way in which they are handling a difficult situation, but may I ask him whether he is aware that in the recent past there has been a list of outrages by IRA terrorists which remain unresolved and undetected, and men who have been connected with those crimes have not been arrested? Therefore, may I ask my noble friend whether the Government consider that our present methods of detection are adequate, and whether in order to help in the situation it might be advisable to strengthen the Suppression of Terrorism Act 1976?
Lord Elton: My Lords, any Government who said they were satisfied with their methods of dealing with terrorism would be uttering a prelude to catastrophe. We shall never be satisfied, but very considerable resources and ingenuity are expended to this effect. I am well aware of the hideous tally of crime to which my noble friend refers and to a number of those which remain unresolved. I trust that those who perpetrated them will not for a moment mistakenly think that they are now ever free of the danger of conviction. As to the Prevention of Terrorism Act 1976, I believe it was in my noble friend's mind to ask that it should be applied to people coining from places other than Ireland, and indeed it does apply to people coming to this country from the Continent as well.

Business
Lord Denham: My Lords, before my noble friend Lord Cockfield makes a Statement, I should like, with the leave of the House, to confirm the way in which it is proposed that the House should conduct its business today. It has been agreed through the usual channels
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that the Second Reading and remaining stages of the Finance Bill should be taken formally this afternoon. This will be followed by a full economic debate on the Motion standing in the name of the noble Lord, Lord Jacques. Accordingly, a list of speakers has been prepared on this Motion.

EEC Foreign Affairs Council: Steel
3.2 p.m.
The Secretary of State for Trade (Lord Cockfield): My Lords, with leave of the House, I will now make a Statement about the special session of the Foreign Affairs Council of the European Communities which was held on Saturday, 24th July. The purpose of the meeting was to consider the latest developments in the very serious dispute between the Communities and the United States over action taken in the United States against certain steel imports.
Last January, the United States steel industry initiated both countervailing and anti-dumping complaints against imports of certain classes of steel from a number of sources, including seven Community countries, one of which is the United Kingdom. In the countervailing cases, provisional duties have been in force since 11th June. Provisional duties in the anti-dumping cases may be determined shortly. There is no assurance that further suits will not be initiated.
The highest rate of provisional duty, at about 40 per cent., has been determined in the case of products exported by the British Steel Corporation. This, as I understand the position, is on the basis that the capital introduced into BSC by the Government and the waiver of certain BSC obligations constitute an unfair subsidy to exports into the United States market. This is a formulation which we find quite unacceptable.
The Government's concern is to safeguard the interests of the United Kingdom steel industry, both public and private, in the face of these protectionist measures and to maintain the stability of the internal steel market in the Community. The Community has tried repeatedly but unsuccessfully to achieve a settlement of this dispute on the basis of some limitation of exports to the United States of selected steel products in return for withdrawal by the United States industry of all its countervailing and anti-dumping complaints. The United Kingdom has fully supported these efforts. However, none of the Community's proposals so far have been acceptable to the United States.
At its session on 19–20th July, the council therefore agreed that the member states worst affected, with the participation of the Commission as co-ordinator, should seek bilateral arrangements with the United States. After midnight on Saturday, 24th July, action to suspend the current countervailing complaints could be taken by the United States Administration only with the concurrence of the United States steel industry, under United States law.
Regrettably, last Thursday, 22nd July, the United States rejected the proposals put to them under the council decision by the ambassadors of the countries worst affected, including the United Kingdom. The Administration, in turn, proposed an arrangement for limiting imports of seven products from these countries

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at an unacceptably low level. In view of the imminence of the deadline, the council met again on Saturday at the request of Her Majesty's Government and the French Government. It accepted eventually that discussions between the countries worst affected and the Unite States should continue to see if bilateral agreements were still possible.
The Government had despatched to Washington after the council of 19–20th July a special team accompanied by representatives of the industry. Following the conclusion of the Saturday council meeting, our team immediately took all possible steps with the United States Administration to negotiate a bilateral agreement for the United Kingdom alone. I have to inform the House that despite every effort by our team, reinforced by a last-minute approach by the Minister for Trade, and despite earlier indications to the contrary from it, the United States Administration was not willing to conclude a bilateral agreement with the United Kingdom.
The decision of Saturday's council also provides for a new initiative for the settlement of this dispute on a comprehensive basis by the Community. Such a settlement should embrace both current and future countervailing and anti-dumping suits. The precise terms of the Commission's mandate for these negotiations will be determined in the course of this week. During these negotiations we shall ensure that the interests of the United Kingdom steel industry, both public and private, are taken fully into account.
3.8 p.m.
Lord Ponsonby of Shulbrede: My Lords, I thank the noble Lord for informing the House about the latest developments in the very serious dispute between the Commission and the United States over steel imports. Although the noble Lord has repeated many Statements in this House, I am told that this is the first time he has made a Government Statement as Secretary of State. As he will appreciate, a Statement made in this House comes on somewhat earlier than if it is a repeat Statement made in another place, and as a consequence I have only just seen the Statement which he has made. I would appreciate it if he could use his influence to get the procedures altered so that Statements are received earlier so that there can be a proper response from the Opposition.
As it turns out, the Statement he has made did not add much to the very full reports on this dispute which were in all the substantial morning newspapers today. However, I should like the noble Lord to clarify the situation about European steel producers. As the Government see it, have these producers failed to honour the agreements on quotas and prices in the way the British steel producers have honoured those agreements on quotas and prices? The noble Lord referred in the Statement—which we support—to our view about the restructuring costs not forming a subsidy to steel production. The British steel industry is fighting for its life, and is it not true that cheap energy costs in the United States effectively subsidise United States' costs and therefore produce an unfair subsidy in the competition with British steel exports?
If countries act unilaterally by imposing quotas and duties, are we not heading for a trade war which could
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prove devastating all round? If we retaliate, things will only get worse; and indeed one reads in the press this morning that the European Economic Community has just decided to impose a 6·5 per cent. anti-dumping duty on two American fertiliser producers. Perhaps the noble Lord can also say what the Government are doing in general terms to improve the position of British steel exports.
Baroness Seear: My Lords, we from these Benches should also like to thank the noble Lord for the Statement that he has made in your Lordships' House this afternoon. We regard it as a Statement of very great importance and seriousness. We support the Government in attempting to avert the high protection that the United States is imposing against the steel industry, but we very much hope that every possible step will be taken to avoid a trade war breaking out between the United States and this country and the countries of the Community, which could have only the most devastating effect on both sides. Can the noble Lord elaborate somewhat on the defence of the British case in saying that the restructuring costs do not amount to unfair competition? That seems to be a sound argument so far as it stands, but, in the view of the Americans, are other payments being made which cannot be so defended? Will he demonstrate to the House that our case is in fact watertight against the criticisms made by the United States?
I should also like to say that we must welcome the united action of the Community countries. This is surely yet another example of the importance of the Community countries standing together. We understand that bilateral action was attempted with the support of the Community, but can the Minister confirm that every possible effort will be made for the Community to act together and to avoid bilateral settlements unless there is absolutely no other way of dealing with the matter? Surely our strength must rest on a Community stand, rather than on bilateral agreements.
Lord Cockfield: My Lords, I am grateful to both the noble Lord, Lord Ponsonby of Shulbrede, and the noble Baroness, Lady Seear, for what they have said. I am sorry that the Statement was available at only comparatively short notice, but these are important matters, and I thought that we ought to give the House as full a report as possible at the earliest possible time. In view of the fact that the negotiations continued right up until the expiry of the deadline on 24th July—Saturday—and since clearly consideration continued after that date, it was very difficult to have a completed Statement available earlier than it was available.
Both the noble Lord and the noble Baroness raised the extremely important point that we should not allow the situation to escalate into a trade war. I entirely agree with them, and I have myself been very anxious that we should not allow matters to escalate unduly. We are of course hound to protect the interests of our own industry, and we shall continue to do so, but at the same time I very much hope that it will be possible to arrive at a negotiated settlement acceptable to both sides. That has been our objective throughout. As the noble Baroness, Lady Seear, indicated, we have throughout proceeded in close

13
consultation with the Community. The bilateral negotiations have been under the general aegis and watchfulness of the Community. We are inevitably appreciative of the way in which the Community has stood together on this matter, despite the fact that the United Kingdom is by far and away the worst affected, while other countries, such as Holland, Luxembourg, and Germany, are affected to a very much less degree. Nevertheless, the solidarity shown by the Community is of very great importance.
So far as I am aware, the European steel producers have abided by their agreements; and indeed, had they not done so, one would have expected the United States authorities to load the countervailing duties on them very much more heavily than they have done. We entirely reject the basis on which the countervailing duties have been calculated. When I originally called in the American Ambassador I put to him the point that the large amounts of money that we had spent had been directed to reducing the size of the British steel industry, at great social, as well as financial, cost and that this was a contribution towards reducing the over-capacity in the steel industry in the world and was therefore of benefit to the United States Government as much as it was of benefit to the United Kingdom Government. I can assure the House that we will pursue the negotiations as strongly and as effectively as we possibly can.
Lord Harmar-Nicholls: My Lords, as regards the meeting on Saturday to try to arrive at a bilateral agreement, is my noble friend in a position to say how the terms that we would have accepted on such an agreement differed from the terms turned down by the Community as a whole? Can he say whether at the bilateral meeting as regards the strength of their prohibition the United States were just as adamant as they were when they were dealing with the Community as a whole? Was any concession made at all in regard to the possibility of a bilateral agreement, in view of the special considerations of this country?
Lord Cockfield: My Lords, the simple truth of the matter is that the attempt to open bilateral discussion with the United States got nowhere, because when it came to the point they were not prepared to enter into such bilateral discussions.
Lord Diamond: My Lords, is the noble Lord aware that we are particularly grateful to him for having made the Statement because it brings out the fact, which was not generally brought out in the press, that our individual and bilateral attempts were not concerned solely with the fact that we were the worst affected, but arose out of agreement with the Economic Community as a whole? Therefore we were not—as has been suggested—acting as pirates in seeking solely to protect our own interest, irrespective of those of other members of the Community. Will the noble Lord use his good offices to see that the publicity which his Statement will undoubtedly attract includes underlining the aspect that we acted as a full and proper member of the European Community? Will he also accept from a very modest, one-time accountant that the accountancy argument-chopping which the Americans seek to adduce in order to substantiate their case
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would not get us very far? All kinds of other arguments can be equally adduced with regard to all types of other companies and the way in which they build up their costs. It is far better to leave the argument on the basis that the costs have been properly incurred, that the charges for the goods are the normal ones, and therefore every attempt must be made to try not to undermine the basis of costing, but, somehow or other, to reach agreement to prevent the situation from escalating into a trade war.
Lord Cockfield: My Lords, I entirely agree with the noble Lord that we must do everything possible to prevent this dispute escalating. I agree with him also that the basis used by the Department of Commerce in the United States for calculating the countervailing duties is really a quite insupportable one. So far as the negotiations are concerned, we have acted in close concert with the Community throughout, and I am sure that the press will take due note of this.
Lord Soames: My Lords, would my noble friend say which other countries, which other member states of the Community, sought to open bilateral negotiations with the United States? Was it only us? And to what extent was the position we would have liked to put to the Americans, had they been prepared to talk to us, different from that which the Community would have put on our behalf?
Lord Cockfield: My Lords, these negotiations are still continuing, and I think it would be wrong for me to enter into details as to the negotiating position.
Lord Soames: How many other countries were there, my Lords?
Lord Cockfield: My Lords, that, I fear, I am not in a position to answer at this stage, but I will check the point and let my noble friend know.
Lord Boardman: My Lords, does my noble friend not agree that the problem with the steel industry in the world is over-capacity, that we in this country have made relatively a much larger contribution to closing down that capacity than any other country, and that it is for that that we are now being penalised?
Lord Cockfield: My Lords, I entirely agree with the point made by my noble friend; and, indeed, this is the argument that we have consistently advanced to the American Administration.

British Railways Bill
3.22 p.m.
Read a third time, and passed, and returned to the Commons with amendments.

West Yorkshire (Parking and Transport) Bill
Read a third time, and passed, and returned to the Commons with amendments.

Finance Bill
Lord Cockfield: My Lords, I beg to move that this Bill be now read a second time.
Moved, That the Bill he now read a second time.—(Lord Cockfield.)
On Question, Bill read a second time. Then, Standing Order No. 43 having been suspended (pursuant to resolution of July 21) Committee negatived; Bill read a third time, and passed.

Economic Policy
3.24 p.m.
Lord Jacques Lord Jacques rose to call attention to the real cost of Government economic policy during the past three years and the extent to which it has been borne by those least able to bear it; and to move for Papers.
The noble Lord said: My Lords, I beg to move the Motion standing in my name on the Order Paper. In 1975 the United Kingdom output of North Sea oil was only 1½ million tonnes, but in the latter part of the decade the oil flowed at a much greater rate than it had previously, and by 1979 the output was 78 million tonnes. The increase continued into the 'eighties, and last year the output was 89 million tonnnes.
As a result of this substantial increase in the output of North Sea oil in a relatively short period, confident observers began to take a much more optimistic view of the immediate future of the United Kingdom. They knew that in the future we would not be made poorer by increases in the price of oil, because for all practical purposes we were self-sufficient. They knew that our Government would have a new and important source of revenue in the future from the North Sea oil output. They knew that during the whole of the post-war period successive British Governments of both major parties had been in difficulties in world depressions because they had been inhibited when they came to reflate the economy by the effect upon the balance of payments. But now, for the first time, our balance of payments was protected by the output of North Sea oil.
Those were the reasons why they were much more optimistic as to our future. This optimism was reflected in some of the speeches made at the election by some who became Ministers after the election, especially when they talked of reducing taxation and when they said that they had absolutely no intention of doubling VAT. Then they did this at the first Budget. On unemployment, they were a little more cautious, but they said, "We at least hope to do as well as has been done in the last five years".
Three years after the election our dismal economic performance is being blamed upon world recession. In those circumstances, it is reasonable to make comparisons with other countries, and I will rest content to make only two comparisons—not with individual countries, but with the countries covered by OECD. I refer to the Big Seven: that is to say, the United States, Canada, France, Germany, Italy, Japan and the United Kingdom. For convenience, I will call them the Big Seven.
Between 1978 and 1981 the gross domestic product or total output of the Big Seven increased by 5–8 per cent. During the same period the gross domestic product or total output of the United Kingdom declined by 2·2 per cent. So, to get the measure of the gap between us, we have to add the two figures together, and we see that there was a gap of 8 per cent. Whatever reason may be given by the Government, it certainly cannot be world depression, because they were as much affected by would depression as we were.
The other figure I want to quote is on unemployment, and I will use the OECD adjusted figures, which are calculated so that comparability is facilitated. In 1979, when the Government took office—remember, the year that the Government took office—the percentage of unemployment in the Big Seven was 5 per cent. In the United Kingdom it was 5·7 per cent. So we were only 0·7 per cent. above the Big Seven. But in 1982, in the first quarter of this year, the unemployment figure for the Big Seven is 7·4 per cent., whereas in the United Kingdom it is 12·4 per cent. So the Government inherited a percentage of unemployment which was only 0·7 per cent. above that of the Big Seven, and we are now in the position in which it is 5 per cent. more than it is in the Big Seven.
That, I think, portrays the history of the Government in economic affairs perhaps better than any one individual item. The major cause of our abysmal economic performance is the Government's insistence upon monetary targets which were excessively below the total money spending—and they did that regardless of the results; it was a ruthless policy. In consequence of that tight monetary policy, they forced interest to record rates. Despite rising industrial costs, the high rate of interest and the support of North Sea oil for the pound pushed up the value of the pound, and the Government allowed it to be pushed up. They wanted it to be pushed up because it meant that we paid less in sterling prices for our imports and that helped them to reduce inflation—by itself to be admired; but it played havoc with our exports.
Between 1978 and the first quarter of 1981, we became 50 per cent. less competitive on international markets. Never before had we experienced such difficulties in such a short period in our export trade. With falling sales and rising debt charges, companies had to cut their stocks and, in consequence, they cut their output and, in consequence of that, they cut their orders to other firms. Consequently, failure bred failure.
The vulnerability of firms did not so much depend on their efficiency; it depended upon how far they were dependent upon money which was subject to the current rate of interest. That was the test. No matter how efficient they were, if the money on which they traded was subject to the current rate of interest they were likely to be in difficulties. I know of several firms-I have no doubt that every Member of this House knows of several firms—that were quite efficient, but, because of their high debt charges, they had to scale down and are now a mere shadow of what they were.
As late as March 1980 the Government did not forsee the consequences of their economic policy. In that month, March 1980, they forecast that the unemployment figure for 1982–83—that is the present

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year—would be 1·8 million. We know now that they were more than a million out in their estimate. In March 1981, 12 months later, they uplifted the figure from 1·8 million to 2·7 million and, in March 1982, they again uplifted the figures to 2·9 million. There is no time left to uplift it again because we are now at the year concerned; but it is extremely doubtful whether that 2·9 million will be sufficient to cover the total adult unemployment.
Who is paying for this folly in our economic affairs? In a way, we are all paying. Despite the assurance given by the Chancellor when he was Shadow Chancellor, we are all paying roughly twice the rate of VAT. We are all paying greatly increased nationalised industries prices, and some of these prices are so much ahead of the cost of production that there is a hidden element of taxation embodied in the price. We are all having reduced personal allowances for tax purposes after allowing for inflation. The party which enthusiastically fought for indexed personal allowances when it was in Opposition abandoned them when it was in office.
But those who are suffering most are the unemployed. They have lost their livelihood and 1 million of them have been condemned to demoralising idleness for more than a year. After allowing for inflation, their benefits have been reduced by 5 per cent. Witness the revolt of the Government's own Back-Benchers in another place 10 days ago. And their benefits are now to be taxed.
But perhaps the saddest thing of all is the effect upon those who are leaving school and seeking a place in the adult world, and finding there is no place for them. They are not only the saddest case but the most dangerous, for their frustration is liable to explode. There is a need for training of the young but not just training which will keep them temporarily out of mischief; it must be training for gainful employment, the prospects of which are likely to be available when the training is finished.
After the unemployed, the next most hardly hit are those with small earnings. A married man with two children who has only three-quarters of the national average of earnings paid 20 per cent. more in taxes in 1981–1982 than he did in 1978–79. That is a measure of the increased taxes upon the poor. A man with two children and average earnings pays 16 per cent. more after allowing for inflation. But those with the highest earnings are protected by the abolition of the higher rates of tax and many of them are paying less than they paid before this Government took office. If it was the intention of the Government to make the rich richer and the poor poorer, they set about it in the right way.
I come back to where I started, to North Sea oil. Our windfall from the North Sea is being frittered away keeping people in idleness instead of being used to provide assets which this country will need in the future if it is going to be successful. If a nation has assets which either need improving or need to be renewed, it is not just Keynesian economics to employ people to do the work required rather than to pay them to be idle; it is sound commonsense. The sooner the Government learn that the better. I beg to move for Papers.
3.40 p.m.
Lord Cockfield: My Lords, I start on a personal note. I have always tried when I have opened a debate on behalf of the Government to listen to the whole of the debate. Today, unfortunately, I shall not be able to do so as a number of important matters I have to attend to have arisen unexpectedly. I apologise therefore to those noble Lords whose speeches I shall not be able to listen to, but I assure them that I will read what they say with great interest. My noble friends on this Bench will take notice of everything that is said during the debate.
If I may now come to the question of the economy, we are making progress—not as much as we would have wished, but we are making progress all the same. Some of the problems from which we suffer are our own fault. Others lie outside our control. It is easier to deal with the latter first. The United States economy has been in deep recession. The effect on other economies in the world is of course serious. With the United States accounting for 30 per cent. of the manufacturing output of the world, it could not be otherwise. A weak American economy depresses international trade. It depresses commodity prices with particular effects on the developing world, and this poses further obstacles to world trade. In Europe, output is at best stagnating. The high level of interest rates reflecting in large measure but by no means entirely, high rates in the United States, presents another obstacle to recovery. All these developments make prospects for the British economy more difficult than they would otherwise be.
At home, in contrast, our difficulties, which have been built up over a long period of time under successive Administrations, are largely of our own making. But, equally, this holds out the hope that the cure lies within our own hands. Foremost among our difficulties has been the deeply endemic tendency to high rates of inflation, itself a product of lax monetary and fiscal policies. Second has been the high, and until recently escalating, level of our costs due principally to high labour costs. These in turn reflect high pay settlements unmatched by productivity increases: as well as overmanning and the maintenance of outdated, restrictive working practices. The result has been a loss of markets both at home and abroad. In the last 20 years or so our share of international trade has virtually halved—from about 20 per cent. to 10 per cent.—while import penetration has increased by 50 per cent. In short, while we have taken a much smaller share of other people's markets, they have taken a much bigger share of our own. Reflecting all these factors, unemployment has risen to unacceptable levels. That is a matter to which I will return later.
But, so far as matters do rest within our own control, we are getting them right. We have made real progress in the last three years. The rate of inflation is down to 9·2 per cent. and continuing to fall. We shall be the first Government for many years to end their term of office with a lower rate of inflation than we inherited. There is less public attention concentrated now on inflation than has been the case for many years. That reflects the growing success of our policy of reducing inflation and the growing public awareness of that success.

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That success in turn reflects the success of our fiscal and monetary policies. Here again we may not have moved as fast or as far as we would have hoped. But progress has been made and will continue to be made. The money supply—on all three measures—is well within the target range of 8 per cent. to 12 per cent. set by my right honourable friend the Chancellor of the Exchequer in his Budget. We cannot recoup the excesses of past years. But we are now exercising better control. And the beneficial results are there for all to see.
This year—for the first time since 1979—public expenditure as a proportion of national income will have stabilised—at about 44½ per cent. That is significantly higher than it was in 1979. This is partly because of the recession, which reduced national income while at the same time increasing welfare expenditures, and partly because of the inbuilt momentum of earlier public expenditure programmes. That of course is the answer to the point raised by the noble Lord, Lord Jacques, about higher effective rates of tax. But next year the figure will fall: and thereafter we expect it to continue to fall. This will reflect both a tight hand on expenditure: and our gradual recovery from recession.
There has been a dramatic improvement in our productivity and in our cost competitiveness. Output per head in manufacture has risen by 12 per cent. since the end of 1980. At the same time wage inflation has been substantially reduced. The increase in average earnings halved in the 1980–81 pay round, and there has been a further reduction in the current pay round. Settlements are now averaging around 7 per cent. compared with 9 per cent. last time. As a result, our cost competitiveness has improved by some 10 per cent. to 15 per cent. in the last year. The increase in unit labour costs in manufacture is now running at only 3 per cent. compared with a year ago. This is below the average of our major competitors and comparable to that of West Germany and Japan.
A great deal has been said about the exchange rate. The noble Lord, Lord Jacques, touched upon that point. The dramatic rise in the exchange rate which reached a peak early last year caused great problems for industry. But there has since been an equally dramatic fall. The value of the pound, measured against all the major currencies, stands little higher than it was in 1979 and is lower than in 1975. The exchange rate therefore cannot be said to be responsible for our lack of competitiveness. Indeed, a lower exchange rate would compound our troubles. It would lead to higher inflation, and this would feed back into higher costs.
Interest rates are of course too high. But our interest rates have fallen by no less than 4 percentage points compared with the peak reached late last year. The fall in base rate and moderating short term money market rates show that the process is continuing. Perhaps even more remarkable is the way that we have been able, not entirely to insulate ourselves, but to distance ourselves from American interest rates. At the beginning of this year our interest rates were 2 percentage points above American rates: today they are 2 percentage points below. This reflects the success of our domestic policy in reducing inflation,
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controlling Government borrowing and keeping the monetary aggregates within the target range.
Last summer, output began to grow. The second half of last year showed an increase of some 2 per cent. in output in manufacture over the first half. In the first quarter of the current year, recovery appeared to falter. The path of a recession is not like a tennis ball which hits the ground and bounces sharply up again. On the contrary, as a recession comes to an end one must expect the economy for some time to be bumping along the bottom before the upturn becomes clearly established. So what happened in the winter was not unusual. The latest figures are encouraging and confirm the view that, taking one month with another, recovery is under way. The figures for May show a rise in total production of 1½ per cent. over April and in manufacturing output of 11. per cent. For the three months to May, industrial production, is some 3 per cent. above the level of the corresponding months of last year. In the year as a whole we still expect to see an increase, compared with last year, although possibly somewhat less than the 1½ per cent. forecast in the Budget Red Book. Next year—l983—we expect to see a further increase: possibly to around 2 per cent. By then we should expect also to see a recovery in the American economy. Indeed figures just published indicate that in the second quarter of this year the American economy was growing at an annual rate of 1·7 per cent. Recovery in America will of course reinforce recovery in this country and in the industrialised world generally. It will also help the third world.
The rates of recovery we can see ahead are modest. But if sustained and, we hope, improved they provide a solid basis for progress. It has, I know, become fashionable to decry modest increases of this kind as insignificant, as hardly worth mentioning. Nothing could be further from the truth. In the 12 years or so between 1951 and 1964 growth averaged somewhat over 2 per cent. per annum. It permitted a sizeable increase in our standard of living. It left the Tory Party in office for 12 years, to the great and enduring benefit of the people of this country. Our export trade has made and continues to make a notable contribution to our recovery. This is a field for which I have direct ministerial responsibility. Since the autumn of last year our visible exports have been showing an increase in volume terms of about 4 per cent. per annum compared with the figures for the previous year. The increase in the three months to December was 4 per cent. In the first five months of this year—that is to May—the increase was also 4 per cent. If anyone is tempted to say that these figures hide a declining trend, let me say that the increase in the three months to May was 6· per cent.
Particularly encouraging is the success achieved by our leading companies in winning major project orders on world markets. Successes on individual projects in excess of £50 million each over the past 18 months now approach £3 billion in total. These successes in the export field reflect great credit on the companies concerned, on the people who work for them, on their agents and representatives abroad, on the people in this country responsible for export promotion, particularly the British Overseas Trade Board, and on our consular representatives overseas.

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In the four months I have been Secretary of State for Trade I have visited Denmark, Holland, Germany and Canada. Everywhere I find a welcome for British goods and British exporters. Of course there are complaints, but where they are made I insist on their being pursued. Nowhere are our opportunities greater than in Europe. We have our difficulties with the European Community, particularly over the budget. This is a problem to which an answer must be found and it is one that must be acceptable to our Parliament and to our people. But never let us underestimate the benefit to us of membership of the Community. Forty-three per cent. of our exports now go to Europe, compared with 30 per cent. ten years ago. Germany is now our largest export market, closely followed by Holland in third place. But equally our membership of the Community is of immense value to the other members of the Community. They now account for roughly the same proportion—namely, about 43 per cent. of our total imports. And we buy more from Europe than we sell to them. This is a matter our partners in the Community also need to take into account. We are members of the Community: we intend to remain members. Our membership is of mutual benefit: to the other members just as much as it is to ourselves.
Perhaps at this stage I might say a word about standards, a subject for which my department is responsible. Success in trade depends not only on price but on quality as well. The assurance of high quality, of conformity to internationally accepted or recognised standards, sharpens our competitive position both at home and abroad. It helps industry improve its efficiency and reduce its costs. It is of real value to consumers. For all of these reasons, we launched a major initiative this summer, details of which I gave in your Lordships' House on 7th June.
I now propose publishing this week the Government's proposals in more detail. It is important that we maintain the momentum. We are working in close association with the British Standards Institution and I am sure we can count on the support of British industry as well. I referred earlier this afternoon to the position which exists on the export of steel and the countervailing duties imposed by the American Government.
Perhaps I might also refer to a related subject, namely the American export embargo, as it affects our own companies who have contracts connected with the Siberian gas pipeline. We regard the American action as wrong and unprincipled. It is an attempt to interfere with existing contracts and represents an unacceptable extension of American extra-territorial sovereignty. I hope it will be possible to resolve these matters in a mutually acceptable way. But if this proves impossible, I do wish to make it clear that we are determined to defend our own national interests.
I now turn to the problem of unemployment. Unemployment is a great social problem, and the noble Lord, Lord Jacques, was very right to draw attention to it. But while it is a social problem its roots lie in economic circumstances. There have always been fluctuations in trade. The seven fat years are followed by the seven lean years. While the length of the cycle may vary, good times and bad
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follow one another with monotonous regularity and have done so since the dawn of history.
That we—that the world as a whole—should be suffering from recession is not unprecedented. But the recession is deeper than it need have been. It was sparked off by the massive rise in oil prices, and deepened and prolonged by the slowness with which the major industrialised countries adjusted to these events.
But our unemployment is worse than other people's. In the industrial countries of the OECD there are 30 million people unemployed. Three million of these are in the United Kingdom. Our unemployment is some 12 per cent., compared with the OECD average of 8½ per cent.
If a person is self-employed, if he is a farmer, a tradesman or a professional man, his income adjusts automatically to the value of his output. If he produces little, he will earn little. But the person who is employed expects a rate of pay which today is largely fixed and determined by trade union negotiation. If this rate of pay exceeds the value of what he produces, he simply will not be employed. This is what has been happening on a very large scale in this country. People have been demanding pay rates and increases in pay quite out of line with what they produce. As a result, employment has fallen.
The very large increases in pay which took place in 1978, 1979 and 1980 were one of the major causes of the present level of unemployment. The result has been to divide our people into two nations—those still in employment, whose incomes are much higher than they were a few years ago, and those who are unemployed and who are carrying the burden of the excessive pay increases won by those who have remained in employment. Between 1977 and 1981, earnings of those in employment increased in real terms by 10 per cent. At the same time, unemployment doubled.
The primary responsibility for this lies outside Government. In so far as it is due to the excessive power of trade unions, we have sought to reduce that power both in the Employment Act of 1980 and in the Employment Bill which is at present before your Lordships. But the real onus, the real responsibility, rests upon the shoulders of the union leaders and, to some degree, on the shoulders of employers. It is for this reason that we have consistently over the years—and I have done so in your Lordships' House ever since I have been here—stressed the crucial importance of moderate pay settlements. It is only if pay increases are related to productivity that we shall re-establish our competitive position at home and abroad. This is the only way that sound long-term growth can be secured; the only way that sound employment prospects on a long-term basis can be created.
While, therefore, the onus and the responsibility thus rests firmly on the shoulders of employers and workers alike, we have taken a series of measures both in the tax field and elsewhere to encourage business generally, and particularly the growth of small, new businesses. The Finance Bill, which your Lordships have just passed, gave relief of £1 billion a year to industry. In addition to the reduction in the national insurance surcharge, the Budget included many other measures designed to help business directly—for example, the energy, construction, innovation and enterprise packages, as well as helpful improvements in the capital tax régime.

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Growth is not simply a matter of the growth of existing businesses. Indeed, the problem too often is that particular industries expand, grow mature and then decline. It is vitally important, therefore, to encourage the emergence of new industries which will provide the growth and the opportunities for the future. This is why the present Finance Bill, in common with its predecessors, contains special measures designed to help the new, small business.
While, in the end, it will be soundly based growth in output which will provide secure employment, we have taken a series of special measures to help the unemployed. Next year, the new Youth Training Scheme will replace the Youth Opportunities Programme. The long-term unemployed will be helped by the Community Enterprise Programme and by the new scheme announced by my right honourable friend the Chancellor of the Exchequer in his Budget speech. The cost of all these schemes is £1½ billion a year.
I should like to take this opportunity to inform your Lordships of a further important measure which the Government have taken. I have reviewed the orders relating to hire-purchase and the control of hiring, in consultation with my right honourable friend the Chancellor of the Exchequer. We have decided that these controls should now be removed. Controls on hire-purchase were originally part of a wider apparatus of quantatitive controls on credit. Changes in the structure of the consumer credit market mean that they now contribute little to overall economic policy. Removing them is consistent with our policy of dismantling unnecessary controls in the interests of freeing competition and removing economic distortions. The abolition as from midnight tonight of these controls will benefit the sectors most affected by the regulations, particularly motor-cars, but in a way which is consistent with the Government's economic policy. A parallel announcement is being made in another place by my honourable friend the Minister of State for Consumer Affairs.
This is no time for weeping over the past or despairing about the present. This is no time for poring over the entrails of the chicken to search for shreds of evidence on which to base prophesies of doom. Pessimism is the handmaiden of defeat. Doubts become self-fulfilling. We need to build up our national self-confidence. We need to take pride in our achievements. We need to strive for success and build on that success. Slowly but surely, our policies are producing success. Our objective now is to reinforce that success; not to change course, not to mouth shibboleths, not to follow new fashions which are simply old policies dressed up in new clothes and presented by old men in new parties, but to remain steadfast, to place our trust in the British people, as they have placed their trust in us, and to pursue our policies to the success that awaits us.
4.9 p.m.
Baroness Seear: My Lords, I listened to the speech of the noble Lord, Lord Jacques, with interest, but also with some degree of sadness. It was the same old mixture as before, the same adversarial attack on what is going on, the same absence of any realisation of how deep-seated our problems are and how far back
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the causes of them reach. There is no excuse in the Labour Party for such a short-term view. After all, the noble Lord, Lord Kaldor, has instructed us on a very great many occasions—and the Labour Front Bench have heard it as well as all the rest of us—on the fact that the decline of British Industry stretches right back to the end of the 19th century. If this be true, it is a little short-sighted to concentrate so heavily on what has been happening since 1979. It is surely the great economic supporters of the Labour Party in Cambridge, the Wynne Godley group, who are taking the line that the disease in the British economy is such that nothing short of a siege economy, with all the disadvantages that that entails of import controls and the consequences which flow from it, is going to make the restructuring and the change which is essential if there is to be a real recovery a reality. So how the Labour Party can take the line that all that has gone wrong has gone wrong in these recent years, I find difficult to understand.
Moreover, the Labour Party has been in power for 17 years of the years since the Second World War. This has given them ample opportunity to deal with many of the problems which confront us today. They have been in a position of exceptional advantage in attempting to bring understanding of the true nature of the economy, of the need for greater competitiveness, of the need for greater efficiency to the attention (one would hope, with effective action) of their partners in the Labour movement inside the trade unions. What really have they done to get rid of overmanning, to get rid of the restrictive attitude towards change which has meant that the trade union movement, the trade union leadership, has done such a very poor job in improving the standard of living of its own members? "Rubbish", I hear someone say. Our people are very badly paid in comparison with our competitors. This is largely because we have failed to take the action which is necessary—as, for instance, the German trade unions took—in order to make the industry of this country more competitive. What have the Labour Party done to emphasise the importance of profitability? In 1973, the real pre-tax return on capital was 9·1. In 1979, that figure was down to 4·3.
Lord Ardwick: My Lords, is the noble Baroness forgetting that the Leader of her Alliance was Chancellor of the Exchequer for five years and regarded as rather successful?
Baroness Seear: My Lords, I do not at the moment take any responsibility for what Mr. Roy Jenkins did in another place, at another time and in another party. The failure to emphasise right through the country the importance of profit has been one of the real reasons why we are in so poor a state. The Labour Party as a whole, not just during recent Governments but over decades, has contributed more to the decline of this country by denigrating the activities of business in wealth creation than any other single factor. That is more among the intellectual, radical, chique element of the party—not, thank heaven! over-represented in your Lordships' House—than it is among the trade union movement as such and the industrial wing of the party. But failure to appreciate the importance of

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what the wealth-creating sector has to contribute has undermined the developments in this country which we so badly need.
Of course, there have been abuses of power by people in business who have taken unreasonable profit when they have been in a monopoly position and able to do so. But that kind of abuse of power—and it is the abuse of power which we should attack and not the fact of profit itself—is to be found in other sections, too. It is to be found in those elements of the public service which wish to build up large departments, when they are not really necessary, for their own aggrandisement. It is to be found when people inside the Labour movement and the trade union movement use the power which they have at a particular time in order to gain wage increases which are not justified in terms of what they are producing but which they are able to extract because of the power position which they exploit. That kind of abuse of power, on whatever side of industry and in whatever type of employment, is equally to be condemned. So it ill becomes the Labour Party to claim that all the error lies on the other side of the House. We for our part agree that the Government are right to pursue the attempt for greater competitiveness in British industry. There can be no question that the long-term prospects for recovery, and the maintenance of that recovery, for prosperity, for employment, depend upon the improvement in British competitiveness and upon our ability to maintain that improvement when we have it. We agree also that the attempt to reduce inflation has been absolutely essential.
But having said that, and unless anybody thinks that I am no longer sitting on these Benches, far be it from me to continue with any further support for the action and attitudes of Her Majesty's Government. Of course they have been attempting to do the right things, but what kind of a leadership has led to the belief throughout the country that the Government are indifferent to the disastrous consequences of much of their policy? Many of them, I believe, are not indifferent. But it is not enough that they have the right feelings inside them—if, indeed, they have, and I am prepared to believe it. It is the task of a Government to get over to people that they really do understand the disastrous consequences up and down the country for people of the results of the action which they have been taking and to alleviate those consequences in every way they possibly can.
The consequences are both economic and social There are well over 3 million unemployed and the figure is still rising. There are bankruptcies up and down the country of companies—many of them very good companies indeed. And they are the worst hit, because of the very fact that they have been operating in the export market where, above all, we want companies to operate. These are the people who have been hideously badly hit and the consequences will not be easily restored, for once an organisation has gone out of business the chance of bringing it back is pretty poor. Of course, the creation of small businesses to which the noble Lord the Minister has called attention, is desirable, but it takes a very great many small businesses to make up for the collapse of one large business and the consequences which flow from it. So if the Government are going to pursue this
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policy, with the right objectives of increased competitiveness and reduced inflation, they have to carry people with them, and they can carry people with them only if they get over, by whatever means they can, their understanding of the appalling price that is being paid.
I shall not give many examples of the social consequences of unemployment. It does not take much imagination to see what happens as the figures of long-term unemployment rise and rise and when we have a high percentage of school-leavers not getting jobs—though I accept that over recent months there have been moves to improve, and improve in the right direction, the policies to help school leavers. But just let me take as an illustration the relationship, for I believe that there is a relationship, between the increase in crime and the increase in unemployment. If one follows the trend line in the Government's own Home Office Bulletin of admission of youngsters to borstal and to prison and the trend line of the rise in unemployment, one cannot of course prove that the relationship is causal but there is a very remarkable correlation between the two lines.
Again, it takes little imagination to see what those increased rates are going to mean—not just now to those particular youngsters and to their families and to the people who are the victims of those crimes but what it is going to mean over the years to come, because we have so increased the numbers of people who have been confined in borstals or prisons, in terms of the sort of young men and women they will be and the sort of adults they will turn into in the years to come. Moreover, the failure to provide employment for youngsters leaving school, youngsters who quickly pass in to the 20s age group and then into the 30s age group and who have not had the opportunity of training or the discipline of employment means that they are going to remain a serious problem for decades to come, because these things are not easily going to be put right.
I say to the Government, now that things are beginning to change, surely now you can take more effective action to cut the level of unemployment. We are not asking for unthinking reflation. We realise that, if you reflate, to a great extent you will only return to inflation; that it will lead to a sucking-in of imports and to a rise in wages, because the Government have so foolishly set their face against any attempt at an incomes policy—which is the only other way in which one can attempt to check inflation or a return to inflation once recovery comes.
With judicious spending now on activities which will have to be undertaken sooner or later—carefully placed, low-cost job creation to reduce the number of unemployed, which is still rising—so many things can be done. The noble Lord has told us (in many ways we must be pleased to hear it) of a reduction in the hire purchase controls. That must mean that there is some flexibility in money supply, because it will surely mean increases in credit and in lending from the banks, which is in itself an increase in money supply. If there is to be more flexibility in money supply, surely there are other things which are equally as important—and I suspect more important—which could be done with it. For example, we need to allow the public utilities more capital expenditure based on

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borrowing. How long will the Government desist from the idea that investment in the public sector has to come out of current takings? There are therefore these very high charges for gas, electricity and the rest, which are affecting both industry and the ordinary householder alike to quite an alarming extent Surely the Government could now allow these industries to undertake some expenditure, which is now overdue and which will cost us a very great deal more when the time comes when we are forced to undertake it.
There are other exercises—not enormously expensive—which would reduce unemployment in the construction industry; the hardest hit industry of all, and an industry which can employ a very considerable number of unskilled people. Take for example sewerage; not a very exciting industry, but I understand that if something is not done about the sewerage in Manchester soon, it will be extremely difficult for Manchester to remain the healthy and thriving place it has always claimed to be. It cannot only be in Manchester that the drains are breaking down through lack of repair. That work must be undertaken quickly and could be started straight away.
Energy saving and improvements in housing could all involve quite small expenditure per job created. It is work that has to be done and so why cannot the Government start it now? I referred earlier to the importance of seeing that we do not continue with such a high percentage of people—and the number has been going up because of youth unemployment—who have not had any training. We know that the future prospects for the unskilled are bleak in the extreme. We know that we in this country have a far higher percentage of untrained people in our labour force than has any of our rivals. I accept that the Government have taken measures—belatedly, but they have taken them—so that by 1983, they will be improving the training prospects of youngsters. But we have a tremendous backlog of untrained adults, and this is something of very great urgency and something on which we should delay no longer.
In today's newspapers, it is reported that the Government are putting more money into a scheme following the promises of the Chancellor of the Exchequer in the Budget, which will make jobs available for a six-month period at a rate of approximately £60 per person. This will do something for the immediate relief of unemployment, but it does nothing in the longer run. What we need are more jobs of the kind I have been speaking about—with the prospect that they will remain as jobs and will be permanent jobs, even if it delays the fall in inflation somewhat over the months ahead.
There is a world of difference between a man or a boy—or a woman for that matter—taking a job knowing that it is going to last only six months and going into a job where they know that if they get down to it and work effectively, there is the possibility of continuing employment. The offer of a six-month job really does not deal with the problem of unemployment at all, except on the most temporary basis. We are now in a position where far too many people have had these short-term jobs and temporary opportunities only to fall back into unemployment and the cynicism which encourages unemployment; and there is no training
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element in these jobs. We do beg the Government to look again at this and at the ways in which, through voluntary organisations, enduring jobs can be made and maintained, and a proper trade union rate paid for the work to be done.
I fully understand that the noble Lord the Minister does have to go, but I hope that these points will be reinforced to him when he comes to reply. I do not wish to seem ungrateful for what has been reported in the newspapers today, but I am bound to say that it does not begin to meet the needs for continuing employment which has in it a real training component. Anything short of that is fiddling while Rome burns.
4.27 p.m.
Lord Rootes: My Lords, may I crave the customary indulgence of the House for a maiden speaker. I must apologise for my tardiness in making my maiden speech, as I have been a Member of your Lordships' House for 17 years. It has been my sad experience over many years to see the decline of Britain's industrial strength and its loss of markets throughout the world. Whereas British exports of manufactured goods accounted for some 16 per cent. of world exports in the early 1960s, they now account for only 9 per cent. The world recession has brought home to us our vulnerability, and we must judge the problem of today against a longer time span than the last three years, which has seen a depression in the Western world unknown since the 1930s.
With reference to the Government's economic policy, I, in common with others engaged in industry, have been pleased to see a reduction in the rate of inflation and the more realistic approach by industry which has resulted in a more efficient use of labour and resources; thus creating a situation which, it is hoped, will provide an opportunity for economic recovery and increased prosperity in the period ahead of us.
Before referring to specific matters, I must declare to your Lordships certain interests. As many or your Lordships may know, I was chairman of the former public company bearing my family's name. I am a past president of the Society o f Motor Manufacturers and Traders, and I am today a member of its council. I am also at present a director of Lucas Industries and of certain smaller companies in the retail motor trade. Indeed, I have spent all my working life in the motor industry. I mention this background becasue I should like to speak about that great industry, which my right honourable friend the Member for Leeds Northeast in another place referred to as the stunted giant as long ago as the early 1970s. Since that time its performance has deteriorated markedly.
My Lords, the importance of the British motor industry, in which I include component and vehicle manufacturers and supporting industries such as garage equipment manufacturers, is, I believe, undisputed. This industry employs some 500,000 men and women and contributes some 5 per cent. of our gross domestic product. In the last year for which reliable figures are available the industry exported products worth over £4,000 million. But the reason that our industry has been stunted is, in my view, the use of the motorcar as a special source of revenue and the use of the industry by successive Governments over many years as an economic regulator.

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If we want a powerful internationally competitive industry we need fairness of fiscal treatment and a strong home market base. In the period from 1960 to 1973 there were no fewer than 13 changes in hire purchase controls. The constant fiscal changes which distorted the market for cars had a disastrous effect on the ability of the industry to plan ahead, given the long lead times involved and the major investments that are needed. My Lords, I had intended today to refer to the discrimination in the hire purchase terms applied to cars in comparison with other consumer durable goods, but after the statement made by my noble friend, Lord Cockfield, outlining the action to be taken by Her Majesty's Government with regard to hire purchase regulations, these remarks are no longer applicable. I am sure that the motor industry will be very grateful for this relief which the Society of Motor Manufacturers and Traders has urged upon Government.
There remain, however, other fiscal measures in operation which place the British motor industry at a disadvantage compared with our overseas competitors. I refer to the discriminatory car tax peculiar to products of the motor industry which successive Governments have seen fit to impose since the introduction of valued added tax. Also VAT itself is non-allowable for deduction on company purchases of cars, thus imposing in effect a tax on the cost of industry generally, in addition to affecting directly demand for the products of the motor industry. One has only to look at the circumstances of our major Continental competitors compared with our own to realise the extremely adverse effect which past discrimination against the motor industry has had. France now has a home market 25 per cent. larger than that of the United Kingdom, and Germany's home market is 60 per cent. greater, with total car production nearly three times the size of ours in France and nearly four times greater in Germany. This reflects, I believe, the difference in policies of governments. Neither the French nor the German governments operate tax or fiscal measures specifically against the motor-car.
The time is now ripe, I believe, for further steps to be taken in dismantling the fiscal discrimination that has so badly affected the profitability and therefore the efficiency and competitiveness of our industry. I should have liked to see in this year's Finance Bill a reduction of the present car tax of 10 per cent. as a first step to the removal of this discriminatory and harmful tax. I also feel that motor-cars purchased by companies for use in their businesses should be allowable for deduction of VAT. Your Lordships will recognise, I am sure, that it is in the interest of this country generally that we have a strong, profitable and competitive motor manufacturing industry. It is essential that the industry has adequate profitability to finance investment in new plant and machinery, in new models and in research and development. Only in this way can we attract and retain international investment in the vehicle industry and thus also provide employment and support for our component industry, which contributes about 50 per cent. of the motor industry's exports.
My Lords, in the light of these facts, may I express the hope that Her Majesty's Government will feel
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able, as soon as possible, to give further material assistance to the motor industry in the directions I have suggested, thus improving the contribution that the industry can make to the economy.
4.37 p.m.
Lord Underhill: My Lords, it is a privilege to follow the noble Lord, Lord Rootes, in his maiden speech, a speech which I am certain all noble Lords will agree has given the House information based on sound knowledge of our important motor industry and associated industries. I am certain noble Lords would agree that it is our loss that the noble Lord has not spoken for 17 years, and we hope it will not be 17 years, maybe not even 17 days, before the noble Lord addresses us again, not only on this subject on which he has great information and expertise but on other matters as well.
My Lords, before I knew I was to follow the noble Lord, Lord Rootes, it so happens that I was looking at my own maiden speech three years ago, some five months after this Government took office, when I spoke of the Government's policies as they affected the family. I note that I said then:
"We will all agree that millions of families depend upon the services provided by public spending for an effective standard of life; and … we cannot deal with this debate without considering the cuts in public services which seem to be intended or proposed. Life is to be made much harder for millions of families by cuts that will affect children, the elderly, the handicapped and the sick."—[Official Report, 24/11/79, Vol. 402, col. 103.]
The noble Lord, Lord Cockfield, said we must not weep over the past. Some of us are weeping about the present, because when I said those words three years ago I did not know that unemployment would more than double. It has gone up two-and-a-half times since I spoke in that debate three years ago, and is now at a figure of 3·2 million.
When your Lordships debated unemployment in March this year, soon after the Budget, I referred to the TUC estimate based on Government surveys which suggested that if one took into account the special employment measures of the Manpower Services Commission and the fact that so many married women do not register, the figure of unemployment really would be 4 million. I note from the excellent report of your Lordships' Select Committee on Unemployment that in paragraph 3.3, it refers to an estimate that the figure of registered unemployed represents only 75 per cent. of those without jobs and seeking work. That would give a figure of 4¼ million. As has been said, that is some 13·4 per cent. of the workforce. It is the highest figure since unemployment records have been kept. Again, those with whom we are particularly concerned are the long-term unemployed—those who have been without work for 12 months and who number some 1 million—and the large number of school-leavers who have not had a job since they left school.
I do not propose to follow the noble Baroness, Lady Seear, in her critical attack. However, I must say from this side of the House that we have repeatedly stressed our faith in a mixed economy; we have repeatedly said that we believe in a mixed economy; and I am still waiting to hear from the Government side—and maybe from other sides as well—their faith in public

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ownership as well as in the development of private industries. We believe, generally, in a mixed economy.
I have said that I will not follow the noble Baroness, Lady Seear. I would prefer to follow the constructive arguments put forward in your Lordships' Select Committee on Unemployment in which the noble Baroness played a notable part as its chairman. That Select Committee said that it would be foolish to try to distinguish between the suffering of the different categories of unemployed: the young, the family man, the old, the school-leaver and so on. They said that such arguments are fruitless, and that:
"In our opinion, the main criterion for differentiating between the unemployed must be the length of unemployment. In all the above groups the long-term unemployed are most in need of help".
I would agree with that statement in general, except that I should like to repeat the concern put forward by my noble friend Lord Jacques as regards the situation of the school leavers. Some of us left school at a very early age. The thought that one could be 19, 20 or more before one has even an opportunity of working, and the thought that one may possibly have left school two or three years previously, is to my mind appalling and a problem for both the present and the future. The figures in some areas are particularly frightening—for example, one in five out of work. Some towns in Northern Ireland have a third of the workforce without a job.
We are repeatedly told that the recession has reached the trough. We were told that again this afternoon. We have been hearing these statements from Ministers for the last two years. There has been statement after statement that we are now on the turn, but that does not seem to be reflected by the recent regional survey of the CBI. Neither is it reflected in the quarterly report of the Bank of England which was issued in June this year. The noble Baroness, Lady Seear, referred to company liquidations and bankruptcies. The actual figures for England and Wales are 5,550 for the first six months of this year; liquidations and bankruptcies reached record heights—nearly 22 per cent. above the figures for the first six months of 1981, and no less than 75 per cent. above the figures for 1980.
Cuts in local authority services not only lead to further unemployment but mean cuts in essential services which hit those least able to bear them. Cuts in local authority services mean also less purchase of supplies from private suppliers. There is a multiplier effect. So cuts in local government mean cuts in suppliers, and the development of further unemployment.
The numbers in the poverty trap are increasing—that is, persons whose wages are such that they cannot come into supplementary benefit, rent rebates, rate rebates, heating and other charges. That affects an increasing number of our people. The Secretary of State for Industry in a Written Answer on 15th July said that between the first half of 1979 and the three months ending May this year manufacturing productivity fell by 14·7 per cent. It may be encouraging to know that it has evened out, as we have been told, in the last few months; but there instill that huge leeway to be made up in our manufacturing industry.
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I must ask: Where is the demand? We all want improvement in productivity—that is, more output per head. But if there is no increase in demand, the net result is more unemployment. Soon after I had made that note, I read the financial Guardian of Saturday which was making just the same argument—namely, that without an increase in demand any improvement in productivity adds nothing at all to the wealth of the nation. That is reinforced by your Lordships' Select Committee on Unemployment. Incidentally, the report of your Lordships' Select Committee was quoted time and time again in a recent debate in the other place as being a most constructive document worthy of consideration.
In paragraph 14.38 it says:
"While a reduction of the supply of labour can help to remedy unemployment, action on the supply side of the labour market cannot by itself hope to remedy the central problem of a shortage of jobs, seen most clearly in the absolute shortage of notified vacancies compared with the size of the unemployed stock. To remedy this problem action has to be taken on the demand side as well".
The July figures showed a regrettable drop in the number of vacancies. Mr. Tom Clark, the recently elected Member for Coatbridge and Airdrie, in a maiden speech in the other place, referred to an advertisement by the Strathclyde Regional Council for 31 apprentices. There were written applications by no fewer than 3,585 persons—young people—for that limited number of 31 apprentice vacanies. Your Lordships' Select Committee's Report on Unemployment in paragraph 14.39, in the last sentence, said:
"If we wait for demand remedies to operate through general economic recovery, it will be a long wait. Action must be taken to create demand. It is our firm view that the Government must positively assist the creation of jobs".
We now have a waste of skills. We have unused productive resources. All this has taken place at immense cost to the nation. Ministers repeatedly talk to us about public sector borrowing requirements. The unemployed number now 3·2 million and cost the nation some £15 billion a year—in other words, £15,000 million a year. We have repeatedly made statements in your Lordships' House about the cost of an unemployed person, and questions have been put to Ministers about it. The Select Committee's report has a section on this and it gives various tables taking into consideration the loss of revenue as regards income tax, indirect taxes and the loss of national insurance contributions; and the payment of unemployment benefit, the payment of supplementary benefit, rent and rate rebates and other similar provisions. Taking approximate figures, an unemployed person costs the state about £5,000 per annum.
The Government are seeking, we understand, a further cut in local government spending. Incidentally, that will be a £6½ billion cut in local government spending since 1979. Local authority bodies say that it will mean that another 160,000 jobs will have to go. Apart from the fact that there will be personal tragedies, it means another £800 million cost to the Exchequer because of loss of revenue and the unemployment and other benefits which have to be paid out. So what will be saved in local authority spending, the state will have to pay out in additional benefits and loss of revenue.

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In the Northern Ireland appropriation debate last week the noble Viscount, Lord Brookeborough, urged the payment of £4 million to subsidise Northern Ireland's home grown cereals by £15 a tonne. He said that that was necessary to save 5,000 jobs. He said that the loss of those jobs would cost the state £25 million. There was no answer given to what he had to say. It would be interesting if we could have an answer today as to whether it is correct that the expenditure of £4 million could possibly save the state a net figure of £25 million.
The CBI is pressing on the Government the need for an economic package. In all, it wants some £1,800 million reflation. I agree with the noble Baroness, Lady Seear, that there must be moves on constructive jobs—not just filling in holes; for example, building works, reconstruction of sewers, roadworks and—yes, we shall come back to it—vital railway electrification schemes, all of which will help the private suppliers as well.
The noble Lord, Lord Rootes, has said that he welcomes the changes in hire-purchase controls and, although I think most people would recognise this, we must beware of a huge increase sucking in imports, because that will not do this country any good at all. There needs to be the creation of demand. Without demand we cannot possibly reap the benefit of any other measures which are taking place. The TUC wants this, the CBI wants this, the Labour Opposition wants this, and, in varying degrees, the Liberals and the Social Democrats want this. The only people who do not want it are the Government, and I hope that they will listen to this plea this afternoon.
4.51 p.m.
Viscount Chandos: My Lords, in thanking the noble Lord, Lord Jacques, for introducing this debate, I am struck by how apt the Motion is and how unsurprising his phraseology. It seems almost natural to associate the Government's economic policy with cost and not with benefit, not just as a political opponent of this Government, but as anyone working or not working, as the case may be, in this country, anyone retired or anyone studying. The Government did not, of course, promise that it would be easy, but it seems tragic that so much has been sacrificed by so many for what is, so far, so little.
As someone who has recently also made his maiden speech in your Lordships' House, I am full of admiration for the speech of the noble Lord, Lord Rootes. I hope that we shall hear him many more times and that every time he speaks the Government will ease the burden on the industry with which he is so closely associated.
When I spoke a few weeks ago in the debate of my noble friend Lord Kilmarnock on youth unemployment, the Minister, the noble Earl, Lord Ferrers, felt that I had spoken with bitterness about the Government's economic policy. He and his noble colleagues will probably think that I have not mended my ways. Indeed, the noble Lord the Minister, Lord Cockfield, has conferred upon me the burden of being an old man in a new party, perhaps to teach me a lesson. But I should add that it is not for me to speak about the Government's economic policy with bitterness, but perhaps only, like my noble ally, Lady Seear, with
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sadness, because, as the noble Lord, Lord Jacques, has illustrated, there are millions of people in the country who have just cause to feel bitter about the Government's policy.
I hope that your Lordships will forgive me if I rehearse once more the record of the Government and the prospects for the remainder of their term of office. Noble Lords who have already spoken have run through the depressing statistics and I am sure that many more this afternoon will do likewise. Even if repetition of these figures strikes no chord with the Government, perhaps it is a ritual that we should undergo out of respect to those who, through no fault of their own, have suffered through the Government's economic policy.
Since May 1979, real national income has fallen by around 7 per cent., industrial production by 13 per cent. and manufacturing output by almost 20 per cent. In each case, these figures are worse than the equivalent figures for the year 1929 to 1932. Adult unemployment has risen from 1·2 million in 1979 to more than 2·7 million now. Total unemployment now exceeds three million for the first time since 1952, representing one in eight of the work force. The number of long-term unemployed exceeds one million, more than double the figure prevailing when the Government came to power.
These then are the figures which illustrate most starkly the costs of the Government's economic policy, and even the Government must have been dismayed by how much greater those costs have been than they expected—with the Chancellor embarking on his monetarist experiment in the expectation that unemployment would not rise above two million. Certainly, the economic climate worldwide has been harsher than expected, as the noble Lord the Minister has said. But, as I have also suggested before, the Government cannot entirely dissociate themselves from the cause of that global recession, either directly through the United Kingdom's own part in world trade or indirectly through their support for other Governments pursuing similar policies. Nor, as the severity of the problems outside the United Kingdom become apparent, can the Government be blameless for making so little adjustment to their policies according to the changed circumstances.
But, if these are the costs, perhaps they can be justified by other achievements in economic management. The Government made clear at the time of the last general election that they saw the fight against inflation as the first priority. Even if the costs were much higher than the Government expected—and so very much greater perhaps than the electorate were led to believe—real and long-lasting improvements in other areas of the economy might mean that all will not have been in vain.
In the last calendar year before this Government came to office, the retail price index increased by 8·3 per cent., and, while the trend inherited by the Government was certainly one of rising prices, the new Government's subsequent action and inaction, errors and omissions, set the rate accelerating upwards again far faster than would otherwise have been the case, so that the annual rate for 1979 was over 13 per cent. and for 1980, 18 per cent., after periods when the annualised rate was running at closer to 30 per cent.

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than 20 per cent. So now the Government wish to take credit for an inflation rate which is once more in single figures and about the same level as that prevailing when they took office. Both Government and independent forecasts certainly suggest that the rate of inflation will go lower still, to a level perhaps that we have not seen for some time, and that an upward trend will not develop for some little time.
But how many of your Lordships believe in your hearts that the root cause of the country's economic malaise will really have been tackled so that economic growth of any noticeable level can be resumed without inflation accelerating again? I suggest that it is not possible to impose real cuts in the income of much of the country's workforce, private sector and occasionally public sector alike, through fear and the big stick. Where there have been gains in productivity and improvements in working practice, it has often been at a terrible cost both materially to those keeping, as well as to those losing, their jobs, and to the relationship between the workforce and the management and even between the workforce and its own unions.
Even if I differ with many of those sitting on the Government Benches on whether the policies of the last three years have produced benefits that are remotely comparable with the costs, I do at least hope that, starting from this point—from which I would not have chosen to start—they will agree that policies must be adopted that will allow the paltry benefits to be maintained and built upon. If the profit and loss account of this Government's economic policy is drawn up then, I believe that the figure on the bottom line will prove to be negative. The noble Lord, Lord Bruce of Donington, will tell you better than I that accounting is an art and not an exact science, and in economics perhaps it is more difficult still to get agreement from all sides.
But even if the Government's economic auditors can be persuaded to see a profit and not a loss, what can be said about the second proposition of the noble Lord, Lord Jacques, that the costs involved have been borne unfairly by those who have been least able to bear them? To say that the plight of those two million people who have lost their jobs since the Government came to office was better than that of the people without jobs in the great depression would perhaps be to damn the Government with faint praise. Perhaps that is what the Government deserve. I and all my noble friends on these Benches therefore deeply regret the failure of those in another place to persuade the Government to restore the five per cent. cut in social security benefits.
In general, the Government's economic policy has widened the gap between rich and poor, both between individuals and between regions. The switch in emphasis from direct to indirect taxation, quite apart from a severe effect on the rate of inflation, further discriminated against the least well off. The cuts in direct taxation, particularly for those with higher incomes, may not have caused the Government to lose much revenue, but it did nothing to improve the relations between the lower paid and the out-of-work and those in well paid positions—and I fear that legacy will come to haunt us in the future. I hope that this—or more likely the next—Government will exercise
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greater sensitivity in balancing the need for incentive and the need for fairness.
There have been real cuts in the health service when measured against the population's demographic changes, and there have been cuts in education and the provision of facitities for culture and leisure, which have generally seemed to be based on pettiness or even xenophobia more than economic management. With nearly 20 more noble Lords still to speak this afternoon I shall not list further instances of the Government's dismal record. Instead, perhaps with humility, I could try to sum up what I see to be the Government's greatest error in their economic policies and, from that, try to draw a more positive and possibly optimistic conclusion—dependent either on the Government changing their policy or, more likely, on a change in Government.
Many observers associate the single—or should I say narrow—minded pursuit of monetary targets by the Government most closely with the damage suffered by the real economy. It is undeniable that this was the most important factor in pushing interest rates and exchange rates to levels which caused devastating and irretrievable damage to British industry. The noble Minister, Lord Cockfield, is rightly proud—as am I—that many British companies have overcome these obstacles, remained in business and even prospered. But many have unnecessarily gone to the wall or have had to cut back drastically, and many more will bear the scars for years to come—to say nothing of their current and former employees.
The noble Lord, the Minister is therefore straining the credulity of your Lordships in asking for the Government to be given credit for the fall in interets rates which has occurred, from the very high levels engineered by their own folly. In fact, I believe that the fall in interest rates has occurred not solely because the Government have forced the country into the deepest recession for 50 years, but also because the Government have in fact changed their policy to take greater account of other variables such as the exchange rate. As long ago as 1970 the Bank of England Quarterly Bulletin published what I still believe is a classic summary of monetary policy and its effect on economic activity. Its title was The Importance of Money, so one would have expected the Government to regard it favourably. But it concluded:
"Basing policy, quasi-automatically, upon the variations in one simple indicator would lead to a hardening of the arteries of judgment."
The arteries of judgment were certainly hardened for many painful months in the last three years, but perhaps we should be thankful that they have not yet hardened terminally. In fact I believe that there is something more fundamental behind the Government's mistaken policies, and something which relates ironically to the mistakes committed by the previous Conservative Government. I hope that to suggest this will not cause too much pain to those of this Government who have devoted so much time to dissociating themselves from everything they and their former colleagues did a few years previously. My right honourable colleagues in another place are not the only ones who have to justify their past actions.
The Conservative Government of 1970 to 1974 tried to shape the country's economy into the sort of

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growth rate to which developing south-east Asian countries could aspire. The result was unmitigated disaster. This Government have tried to apply an equal if not greater shock to the system in a vain attempt to achieve the sort of 19th century society in which the workforce gratefully accept whatever pay, whatever conditions, or whatever largesse an autocratic employer dictates. That too, if continued, will end in disaster. The Conservative Governments since 1970 have acted like two doctors treating a sickly, perhaps rather portly, patient. The first doctor, having tried to make the patient run a marathon in the midday sun, has been succeeded by the other who has tried to make the patient swim in Arctic waters—with both hands tied behind his back. It is perhaps surprising that the patient has not expired altogether.
My Lords, the British economy, as it merges from an industrial age into a post-industrial age, is a temporarily frail but essentially robust patient. It cannot, however, survive the shock treatment meted out by this or other recent Governments. The noble Lord the Minister has tried to mock the policies advocated by my party as having been tried and failed. With respect, I should like to suggest that previous governments have never in the recent past applied stable policies to industry and commerce for long enough to allow any real chance of soundly-based economic recovery. The Social Democrats propose economic and industrial policies which combine long-run stability with gradual changes in vital areas such as industrial democracy. I believe that the electorate next year, or the year after, will see this to be a far better way than further sharp and unsettling changes, whether they be more deflationary monetarism or import controls, nationalisation and withdrawal from the European Communities.
5.8 p.m.
Lord Kindersley: My Lords, awed by my surroundings and by the distinction of the speakers who have preceded me and of those who will follow, I am nevertheless daring to say a few words of a general nature in this debate upon the Government's economic policy. Perhaps I should first admit that I am by nature an optimist, and I should also make it clear that I have spent a large part of my business life travelling round the world trying to finance exports of capital goods from this country. I therefore find myself continuously looking at this country from afar and of discussing and listening to the views upon our situation of others from abroad.
In the past even my optimism has been shaken, and something very close to depression has taken its place as I have seen us slipping further and further behind in the exports stakes. Why has this happened? There have been some explanations in the House today, and there are of course a number of reasons and even more theories about why. But it would be presumptuous of me to expound my own theory on this, the first occasion on which it has been my privilege to address this House. It is enough to say that management and labour have been equally to blame, and it is sad that only an excessively severe economic and financial squeeze has inspired both to come to their senses, to recognise the facts of life, and to work together to become competitive again.
Of course it is painful. When one lives in a land
38
of make believe for so long one comes down to earth with a deafening, sickening thud, and some firms and even industries have died on landing. Others, on the other hand, have found spring heels of which they were only dimly aware and they are now preparing themselves for action. I say "preparing" because we are a nation that depends on world trade, and world trade is laboriously trying to get out of the low gear in which it has been grinding along for far too long.
There are encouraging signs. The recent lowering of interest rates on both sides of the Atlantic is one. But there are also ominous ones, and among the most ominous are the signs of deterioration in the balance of payments of the developing countries. This is a cause, in my view, not just for concern but for alarm. Their condition is precarious and has come about for reasons which are quite outside their control. The Western World surely cannot be content with a situation in which the prices of manufactured goods exported to these countries continue to rise, while the prices of the commodities on which their purchasing power depends continues to decline. There is a limit to the benefit an industrialised country can get from the terms of trade moving in its favour. That limit has clearly been reached when its customers go bankrupt, and that has started to happen. I realise there is no ready answer to this problem, but solutions must be found if the Government's economic policy is not to be knocked sideways by the bankruptcy of the developing world.
5.12 p.m.
Lord Ardwick: My Lords, first I wish to congratulate the noble Lord, Lord Kindersley, on his maiden speech, which was worthy of the famous name he bears, and not only on the male side. I recall that when I was at the Observer newspaper there was a Miss Kindersley—possibly an aunt or great-aunt of the noble Lord's—who kept us on the straight and narrow financial path, a very necessary endeavour with profligate newspaper men.
I must also congratulate the noble Lord, Lord Rootes, for bringing to us his industrial knowledge. There was a time when it was suggested that this House should really be a house of industry, and if we had had a number of people like Lord Rootes, that might indeed have produced a very good house. I am sorry this was not the maiden speech of the noble Viscount, Lord Chandos. If it had been his maiden speech, it would have been quite acceptable for me to say it was one of the most superb radical speeches I had heard in your Lordships' House. But as it is not customary for members of this party to bestow praise on members of the SDP, I am afraid I must abstain from so doing.
Every schoolboy in every fifth-form debating society knows there are differences on economic policy inside the Government and in broader Conservative circles. And, like all internal differences, this one is marked by some acrimony and sometimes some acerbity of speech. Yet the difference between the two sides is not very great quantitatively. They are those between a group who want a modest and selective reflation and a Government who intend to stick to their deflationary course with perhaps a small modification to prevent further decline in output

39
and profit. The difference is not very wide because it is now conventional pessimism or realism to say that it is impossible to take any major reflationary action though economic management as practiced since 1945 in order to make a serious impact on unemployment.
We seem to be back to the 1930s when Governments could see no positive way of dealing with mass unemployment and could only pray that prudent finance would, in the end, produce an upturn, and of course that upturn did come in the 1930s with a building boom followed by a rearmament boom. Many of us this afternoon, as we listened to the noble Lord, Lord Cockfield, talking about old policies in new clothes, must have felt that what he was propounding was very much an old policy in old clothes. Many of us remember, looking back to the 1930s, how long were the years of anguish, how deeply the shame of mass unemployment gnawed at the national conscience and how inadequate the recovery was; even when war began, the level of unemployment was still unacceptable. Now the unemployment is back with us, though with some differences; the 1930s were years of chronic deflation while the 1970s are years of chronic cost inflation; but both seem to create a deficiency of demand.
All we thought we had learned in the recent past about demand management is now regarded as fallacious and dangerous, the harbinger of further inflation and the creator of further unemployment. Yet the Government's policies seem to be making things worse. They have seen a succession of false dawns in the past 12 months, and if they are compelled to act now in the modest way they have suggested this afternoon, it is surely out of shame that their prophecies have been so false. We have been eternally bottoming out of the recession, yet we always seem to be in the same place.
Behind them they have a tremulous Treasury who seem to fear that if the economy were to take off, there would soon be a formidable deficit on the external account. We are told that even the modest goal of getting unemployment down to the still unacceptable level of 2 million would produce a payments deficit of about £5 billion, and that could not be sustained for long. The reason given for not taking the risk of stimulating the economy in any serious way is the economic stagnation among the industrial countries of the world—among those countries in which we should have to expand our exports. Until they move forward, then, it is argued, we must just carry on as well as we can.
We look back on the decade before 1973 as a golden age. The developed countries then had an annual cumulative growth rate of 5 per cent. Then came the oil shock and for two years growth almost stopped. But growth came back, though at a lower rate, until the second oil shock in 1979. Since then, growth has almost stopped and the forecasts are frightening. The developed world is not expected to grow by more than 3 per cent. a year, and Europe by even less. If that is so, it means there will be no real reduction in unemployment.
The noble Lord, Lord Cockfield, made several optimistic projections today, putting despair behind
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him, but there was one he did not make. He did not say when unemployment might come down even by half a million, to 2½ million; he did not even say when it might be a quarter of a million fewer than it is today. You cannot make a speech which purports to reflect some optimism about the Government's policy without saying something about its impact on unemployment.
Faced with this situation, this world recession, you would expect that statesmen would seek a world solution and that Britain, as a nation more dependent than most on international trade, would be in the van of the movement. Not so. The June summit at Versailles looked at the 30 million unemployed in the developed world and it did nothing. The unhappiest figure at Versailles was the host, M. Mitterrand. Just after he came to power he tried to persuade the member nations of the European Community to attempt a concerted expansion, but he failed to convince Mr. Schmidt and Mrs. Thatcher that that was practicable. He has already encountered difficulties of trying to reflate alone in a stagnant world. He has had to devalue, and impose a wage-price freeze. I thought that the Guardian put it rather neatly:
"It is difficult to act separately and impossible to act together while Mrs. Thatcher and Mr. Reagan refuse to alter their policies".
They are both old laissez-faire characters, sturdy believers in a dubious faith that the market will do the job on its own, if we can only suppress inflation.
Yet, without some management of demand, without a firm attempt by the developed world to create and maintain stable parities based on economic performance, without some agreement on interest rates, we shall never bring back the conditions of full employment. So far, unemployment has been accepted with remarkable complacency. But these are still early days. I think that many of us cannot really believe that the golden age is over. Savings, plus the solidarity of families, less ungenerous—even with the 5 per cent. cut—unemployment pay than there was before the war, and the decline in the guilt-inducing puritan work ethic, have for the moment alleviated the plight of many of the unemployed.
Unemployment is still felt as a personal problem, rather than as a social problem. There must be much private despair today, even if television and convenience foods are an improvement on the cinema and the bread and "marge" of the 'thirties. But there is a real danger that one day the despair will boil over, and since we live in what Marshall McLuhan called a global village, it could well be a world movement.
However, the Government seem to accept that high unemployment is a permanent phenomenon of our society, and so we must learn to live with it. The conscience of the employed classes, especially the employed middle-class, has not yet been touched, as it was in the 1930s, when it produced a movement of opinion which helped to create the revolution of 1945. But touched in the end it will be, if unemployment at its present rate is allowed to go on. The danger will be that out of the despair will come policies as vain as those which are now being pursued, and perhaps even more socially dangerous.
5.23 p.m.
Lord Boyd-Carpenter: My Lords, the debate has been marked by two extremely distinguished maiden speeches, both delivered by bearers of names of great significance and high regard in British industry. I suppose that it would be an impertinence for me to seek to congratulate the noble Lord, Lord Rootes, since he disclosed that he had been in this House nearly twice as long as I have, but I am sure that we share the hope expressed by the noble Lord opposite that he will allow an interval much shorter than 17 years to elapse before he next addresses us. Listening to the maiden speeches of both of my noble friends, I could not help thinking what a powerful argument their presence in the House is for the existence of your Lordships' House as at present constituted, because here we are able to draw on reserves of experience and practical knowledge of the working of the British economy at a high level which, though comparisons are invidious, it would not be possible for another place to match.
I want to come at once to the assistance of the noble Lord, Lord Ardwick. He began to refer to the speech of the noble Viscount, Lord Chandos, and then suddenly recalled that he was not officially on speaking terms with a member of the noble Viscount's party. I should like to pick up what the noble Lord half said. The noble Viscount undoubtedly made a speech of a splendidly old-fashioned, radical kind. Indeed, I hope that he will not mind my saying that he took me back about 37 years, to the time when Members of another place were occupying this Chamber, when members of the Labour Party were sitting where the noble Viscount is now sitting, and where the kind of speech that he made was made again and again by the less sophisticated supporters of the then Administration.
It struck one as odd that the speech should come from a representative of a party that has told us that it is going to create a new mould for British politics, that it is all going to be new and splendid, and that the older parties are to disappear. In the speech—I think that when he reads Hansard tomorrow, the noble Viscount will find that what I am about to say is not unfair—we had just the same sad tale of woe and of grievances that we heard so often from members of the Labour Party in this very Chamber, when it was occupied by Members of another place all those years ago.
What we did not hear from the noble Viscount, any more than we heard from those whose speeches he sought to emulate, was any indication of what his noble friends, or his right honourable friends—including even the two of them who I think have actually been elected as such in another place, as opposed to those who were elected under other colours and now sit there under SDP colours—would actually do about the present situation if, by some fantastic freak of the electoral system, they were to be placed in a position of responsibility. We heard not a word. I say in fairness to the noble Lord, Lord Jacques—though I disagree with his remedies—that he and the noble Lord, Lord Underhill, with the great ability that they both show, gave the policy of the Labour Party. In a masterly speech, my noble friend Lord Cockfield expounded the policy of the Government,
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But it is curious that the SDP now apparently wishes us to know that it has nothing to offer—a matter which does not occasion many of us any undue surprise.
I am sorry that the debate is not taking place on the Finance Bill itself, rather than on the Motion of the noble Lord, Lord Jacques. The matter was otherwise arranged, and we must abide by the arrangement. But of course this House is fully entitled to debate the Finance Bill, and it would be a great pity—I think that the noble Lord, Lord Jacques, himself would agree with me—to start establishing the custom that the Finance Bill should go on the nod and that a debate on another Motion be taken. That would mean that very soon those who compile the documents that guide us would begin to say that it was not the practice of the House to debate the Finance Bill. So I serve notice to my noble friends that if next year a similar expedient is attempted, they will find that there will be at least one noble Lord who will insist on excercising his right on the Finance Bill, even if it upsets the nicely worked out programme of the Government of the day.
I am strengthened in that view by the really quite extraordinary Motion of the noble Lord, Lord Jacques. The Motion refers to the "real" cost of Government policy. What does "real" mean? I can understand the reference to the cost, but what is the difference between the cost and the real cost? Is the word put in only for decoration? Yet the House is having its attention drawn to this phrase, even though at the end of the debate the noble Lord will probably not press the Motion.
The other part of the Motion refers to those least able to afford the cost. I wonder whether we can get clear exactly whom the noble Lord means by the word "those". First, does he mean the unemployed? All of us in this House—there is no difference between us on this—care a great deal about the position of the unemployed. Where we differ is on what is the best method of finding them employment and getting down the horrifying numbers of unemployed. Is that what the noble Lord means? If he does, then I must differ from the terms of his Motion, because I believe that what the Government are doing is the only sound and long-term way of dealing with the problem of un-employment—and that is, above all, of course, in the interests of those who today suffer the appalling misfortune of unemployment. Or does he refer (as in some parts of his speech I rather thought the noble Lord was referring) to the lower paid? This again, of course, is the traditional Labour Party line. The Labour Party always suffers from what you might call the Lazarus syndrome; that is, they tend to feel that those who are on low earnings are in some ways so much more meritorious and valuable than those on higher earnings. This reflects, I think, where the real, basic difference between the parties arises.
The noble Lord's Motion, and his speech, concentrated on the distribution of wealth, which is the prevailing interest of the Labour Party. It did not attempt to deal, if he will allow me to say so, with what to some of us on this side seems the more important point—the creation of wealth. Here we come, you see, to the great difficulty, if what the noble Lord is referring to is the lower paid. It may well be the case (I think in many cases it is the case) that if you wish to stimulate economic recovery you have to treat with

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particular tenderness those who are effective wealthproducers—many of them, of course, the better paid. You must not discourage them by excessive taxation; you must not induce them to go abroad because they feel they are not allowed to retain a proper share of their earnings in the United Kingdom; you must not discourage them from additional effort and responsibility because they feel that they are not going to get the reward for it. This, I think, is where the fundamental difference between the parties lies, and it came out very clearly this afternoon.
The Labour Party, as I say, is concerned with the distribution of wealth. Of course, that is a very much easier problem than the creation of it. Gray, I think, dealt with it thus:
"Th'applause of listening senates to command,
The threats of pain and ruin to despise,
To scatter plenty o'er a smiling land,
And read their history in a nation's eyes".
If government in a modern industrial society at the depth of a world depression was as easy as that, then the problems of my noble friends on the Front Bench would be very largely resolved. But the only problem on which the solution of the others depends is how to increase, how to maximise, the creation of wealth.
I am not asking your Lordships to take this from theory. Perhaps your Lordships would cast your minds back to what is now called the Macmillan era, the era of the 1950s and early 1960s, when every year the national product rose and every year the yield of taxation increased and the rates of taxation were reduced, but even so there was a surplus available, because of the growing national income, out of which to finance improvements. At that time improvements in social services (with which I, as some of your Lordships may remember, had a certain amount to do) and other activities of the state were financed every year out of growing national prosperity.
It was because at that time, and for a time, it appeared that the problem of increasing the creation of wealth was being solved that in those days unemployment was low, inflation was negligible, the social services were increased (sometimes by appreciable amounts) every year and the individual standard of life of citizens at all levels improved. It must surely be the object of policy of any Government to try to get back to a similar state of affairs in which wealth is being produced in such quantities that it is available to finance all these efforts in that way.
My noble friend Lord Cockfield, I thought very properly, attributed to the attitude of organised labour, at least some of the blame for our failure today to create additional wealth, and I am afraid there is a great deal of truth in that. Let us start with the basic fact, which was referred to at col. 730 of the Official Report of 9th March of another place, by my right honourable friend the Chancellor of the Exchequer in his Budget speech. He said—and I think this is extraordinarily significant in this context:
"Since 1960 the real purchasing power of the average citizen … has risen by over two-thirds,"
but over the same period, from 1960,
"the real return on capital employed in British industry has fallen by five-sixths".
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There, apart from the world situation, is surely one of the factors which has generated massive unemployment in this country, because if the return on capital is cut back, if profits are cut back, two things happen: there are not the resources available for new investment, nor is there an inducement to investors to invest in British industry. It is because, largely under the influence of the trade unions and the pressure they have exercised, the return on capital employed in British industry has sunk, under all Governments, for the last twenty years, that, I suggest to your Lordships, a good deal of our unemployment has arisen.
My Lords, it does not stop there. Your Lordships know only too well how out-of-date union reactions have handicapped management in trying to modernise industry and in trying to achieve high productivity. The tragedy of the ASLEF strike will leave its financial consequences with the railways, and so with our community, for years. Some people years hence will be unemployed because of the ASLEF strike in 1982. The behaviour of the unions in the docks and in Fleet Street, the overmanning and the inefficiency which results from it, all, in the long run, lead to lack of competitiveness and therefore, ultimately, to unemployment. These are the facts which we have to face, unpalatable to many of us as they are.
These are not the only factors, of course. I myself believe that the Government could do more by way of capital investment. I am wholly against those who wish to speed up current spending, because that money employs people temporarily, no doubt, and then it is gone. But money invested in viable and profitable capital investment—profitable in the broad sense—is there to increase our wealth-creating capacity for the future. I often think we did better some years ago in the presentation of the Budget when we presented current expenditure above the line and capital below it. That, in a way, emphasised to those who, unlike the noble Lord, Lord Bruce of Donington, are not accountants, and who would not be worried by this anyhow—it got into everybody's mind—the very fundamental distinction between current and capital expenditure.
While I criticise the Government to some extent for not cutting current expenditure even more than they have—though from my past experience I know how hard that is—I think they ought to consider, by way of investment, a considerable expansion. If I cite the motorways, to which the noble Earl, Lord Avon, referred earlier today, or airfields or house construction, I suppose I should disclose an interest as chairman of a company which manufactures cement. But I am trying to put that out of my mind for the moment, and I am suggesting that some additional stimulus should be given to the economy, because I believe some additional stimulus is needed. Though the symptoms are good, though inflation is coming down and productivity is going up, though there are good signs, I think some acceleration of this process is desirable for many reasons, and I suggest to the Government that it can best be done through stepping up public investment as well as facilitating private investment.
The only other aspects of the matter which I hope that the Government will consider are the burden on industry of taxation; a great deal still of the notorious

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national insurance employers' surcharge remains, a direct tax on employment which is wholly indefensible at a time of high unemployment; the very high level of local rates which fall heavily on industry—and industry has no vote, no say in the decision as to what the rates should be. Rates have become a growing burden on companies, given the large increases of recent years. I am told that rates paid by industrial and commercial companies as a proportion of their real, inflation-adjusted, pre-tax profits, excluding North Sea activities, but before deduction of interest, have risen from about one-sixth in 1980 to well over a half in 1981. I understand that there is to be a Statement tomorrow on local government expenditure. I hope that it will not exclude the context of the heavy burden of rates on industry, which can do nothing about them except to add them to its costs.
Nonetheless, my Lords, I remain moderately optimistic. I believe that the Government's policies are working through, although I should like to see them accelerated; and I would remind your Lordships of some remarks made by that very remarkable man Mr Lee Kuan Yew on a visit last week to this country. I had the privilege of hearing three speeches from him, every one a joy. In one of them, he referred to the position of the British economy and he said—and I am closely paraphrasing—that what you need in Britain is to show the same spirit in economic and industrial activity as you have recently shown in the Falklands. If you have that unity of spirit, that willingness to sacrifice, that determination to get on with the job regardless of difficulties and past practices, there is no reason why this country should not recover.
Those words come from, I think, one of the greatest men in the world, a man whose own Singapore is an example to the world of how well run a small community can be, a community that has grown and prospered. It is advice given to us, I think in the kindliest way, by a very great man. I hope that we will follow it.
Viscount Chandos: My Lords, before the noble Lord sits down, I should like to answer him briefly. I did not think it appropriate to rehearse the detailed policies which my party outlined in this document and many others. I will happily send the noble Lord a copy. What I did was to try to outline the general philosophy which my party holds and which, if the electoral system (which the noble Lord himself says is freakish) allows us, would give us the chance to promote the creation of wealth and not the destruction of it.
5.44 p.m.
Lord Wells-Pestell: My Lords, it was not my intention to participate in this debate, for the simple reason that we have been down this road more times than I care to remember in the last three years. We have had a number of debates on the economics of the Government. The noble Lord, Lord Boyd-Carpenter, is usually one of the fairest people in this House. I had reason to be grateful to him when I was a junior Minister because he came to my rescue on more than one occasion when he told his own side that they were quite wrong; and that is always a delight if you happen to be on the other side. I would point out to the noble Lord—because I think he treated the noble Viscount, Lord Chandos, and, for that matter, my noble friend,
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Lord Jacques, a little unfairly—that, if one reads the Motion, one sees that we are under no obligation to this House to talk about policies.
The Motion is:
"To call attention to the real cost of Government economic policy during the past three years and the extent to which it has been borne by those least able to bear it".
There is no mandate anywhere in the Motion to talk about policies and there is no reason why we should do so. If the noble Lord thinks that the use of the word "real" is unnecessary, may I point out to him that if you take out the word "real", you do not deal with the really significant features to which this Motion wishes to draw attention. On can ask a man what it costs to run his car. He will tell you what it costs. But the "real" cost is the cost taking into account depreciation and all sorts of other things. It is the real cost of this Government's activity that I want to concern myself with at the present moment.
My Lords, I am concerned with the effect that this Government have had upon a large section of our people in the last three years. I am not concerned with the economic aspects; I am concerned with the effect of Government policy on those people who are least able to withstand it. We have been told of what has happened in a number of ways but, when one looks at the present system resulting from this Government's activities, we heard from two speakers this afternoon in your Lordships' House—my noble friend, Lord Jacques, and the noble Viscount, Lord Chandos—neither of whom was contradicted by the Minister himself or by anybody speaking afterwards that the poor had become poorer and the rich had become richer. This has not been denied because it cannot be denied. It is a fact and it speaks for itself.
The other thing which grieves a good many of us is this treatment by the Minister and by those, who support him of unemployment as a statistic. When it was mentioned in the House of Commons last week that there were over 3 million unemployed, the Prime Minister said that it is very disturbing, indeed. The noble Lord, the Secretary of State, Lord Cockfield, this afternoon said that it was a great social problem—and there it finishes so far as the party opposite is concerned. There has not been one Member of the Government side who, to my recollection, raised one word in defence of the unemployed when their unemployment benefit was reduced by 5 per cent. Yes, in the other House, there were about two dozen who were prepared to put their political future on the line and who had the courage to do something about it. But, to my knowledge, there has not been a single Member of the Government side who rose in defence of the unemployed.
My Lords, can you imagine a more wicked, a more paltry action on the part of any Government than to take the worst-off section in the community and say, "We will reduce your income by 5 per cent."? It is not a statistic. It is 3 million people with red blood coursing through their veins, people like you and me who, perhaps, in many instances do not know where their next meal is coming from or who, if they do, know that it is going to be a very limited meal. You cannot dismiss them by saying that it is 3 million unemployed. It is 1 in 8 of the working population, or 13·4 per cent. of the working population. Of that number, something

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like 303,000 are school-leavers. There has been no evidence at all in the past three years of efforts by the Government to do anything tangible for the unemployed. In fact, as I say, they reduced their benefit. They have been accepted as a statistic. I think that the Government have either lacked the will or do not have the real wisdom to do anything about it.
It is all very well for the Government to take the view that we are getting round the corner, that we are overtaking recession. Last week the chairman of the CBI did not think that the Government were dealing with the situation. A few days ago the chairman of the Association of Chambers of Commerce did not think that the Government had yet come to grips with recession. So I think that the time has come when the Government will do well to consider what kind of society we really want in this country. With the very greatest respect, if I may say so, it will depend on our concept of social justice. I beg the Government to consider this.
If they consider that the kind of society that we want in this country, notwithstanding the economic difficulties—and I do not deny for one moment that we have had economic difficulties—is going to be based on social justice, then I believe that there are people in the Conservative Party who would say that there is a vast section of people in this country who can afford to pay a bit more than they are paying now. If it is true that the poor are getting poorer and the rich are getting richer, you cannot get it from the poor.
The noble Lord, Lord Boyd-Carpenter, says that we are bothered about the distribution of wealth. Of course we are bothered about the distribution of wealth, and the Tory Party are concerned with the creation of it. Who does the party think creates that wealth? It is the miners and the factory workers. It is the people in our vast organisations. They are the creators; they are the producers. They are the people who are producing the wealth, not the Conservative Party. I am not going to say that we do not need administrators, and good administrators. Of course we do. But they are not the producers. If the producers say, "Look, we need more money" then I think they are entitled to be considered. We talk about the low wage-earner. Do Members opposite really know what we are talking about when we talk about low wage-earners? The hospital workers, by and large, are the poorest paid workers in the country. If your Lordships read the daily press you will see that some of them are taking home £52, £53 and £54 a week. That would not pay the rent of the homes of some noble Lords opposite, let alone enable them to live.
Let us be realistic: it is the unemployed, the young and the old, who are the real casualties of the present system. People are getting so frustrated that before long—if it has not already happened; and in some places it has happened—this mounting frustration can only express itself in one of several ways. One is physical violence. That we know something about. Another is an increase in crime—and we have it, my Lords. Also we have the worst drug-taking scene that we have ever had in this country since drugs were talked about.
I am not saying that the Government are in themselves responsible for this. I can remember that
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between 1964 and 1970, when unemployment mounted, we then in Government were accused of creating unemployment. I am making no accusation of that kind. What I am saying is that if we do not come to grips with that problem pretty soon then we shall have frustration expressing itself in real violence. We shall continue to have an increase in crime and it is not much use talking about prison reform in those circumstances. We shall have a far bigger drug problem than we have ever had before. These three things are worse today than they have ever been in our history.
I want to say that I believe that the most significant happening to occur in this country since 1945 was the founding of the National Health Service. We could not afford it. We were completely and totally bankrupt at the end of the war. We had sold every possession, every bond, that we had. We were totally bankrupt as a nation. Yet we found not just the time, we found the money, to start what I believe was the most significant development that has happened in this country since the war, if not in our history. Yet it is running down. I honestly believe that there are members not in your Lordships' House but in the Conservative Party who would be glad to see it run down.
A noble Lord: No!
Lord Wells-Pestell: Well, my Lords, I am glad that somebody can talk for everybody in the Conservative Party. That is more than I can do in the Labour Party.
Lord Boyd-Carpenter: Fair enough!
Lord Wells-Pestell: My Lords, too many Members opposite and in the Conservative Party have paid lip service to the National Health Service for far too long. We do not see restrictions on private medical services. Of course we do not because there are so many people who can afford to pay for them and to buy them. In a democracy I do not really object to it. But I object when it is done at the expense of a service which is needed by nine people out of 10. I was appalled to read only two days ago in one of our national newspapers that 34 children, most of them dying, have been turned away from Guy's Hospital. London, this year, because the hospital could not afford enough nurses to care for them. The crisis was apparently disclosed by Professor Cyril Chantler, the Professor of Paediatrics at the hospital, who said that most children turned away this year were mortally ill suffering from burns, congenital heart disease, infections, lung diseases, meningitis, encephalitis and poisoning.
This is what he has written recently in the British Medical Journal—I know that it will come as a surprise to a large number of noble Lords opposite, because they are not au fait as to what is going on in the National Health Service at the present moment. I should like to quote what he has written. It is this:
"It is sometimes difficult not to believe that a major contribution of the National Health Service has been to restrict the health care available to the population, thus containing costs at a level lower than for almost any other developed country in the world. Whether that is what the people want is another matter."
This Government—whether noble Lords opposite like it or not—are in no small way responsible for this,

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in the same way that they are responsible for the curtailing of a large number of the services which local authorities have been giving for a good many years to the mentally ill, the physically ill, the aged, to children in care, and so on. Authority after authority has had to curtail its activities, and what I am concerned about, as are my noble friends here, is that whatever economic difficulties a country is going through the Government should pause and take stock not only of the economic situation but of what can be done to cushion those who can least afford to bear the brunt of those economic difficulties. I do not think that this Government have taken sufficient steps in that direction.
6 p.m.
Lord Boardman: My Lords, the noble Lord, Lord Wells-Pestell, mentioned the nurses, but is it not a fact that today there are more nurses and they are better paid in real terms than was the case during the time when the noble Lord was in office? The noble Lord will find that is so. Whether there are enough or whether they are well enough paid is another question, but I think it ill becomes the noble Lord to criticise the achievements, with all the difficulties, which have been faced in the health service by this Government.
Lord Molloy: Will the noble Lord give way? If he is asking a question I can correct him. The facts are simply these: the number of students who started in 1978–79 are now full-time nurses. What is perturbing is that in a few years' time, because of the lack of student nurses, we shall have a shortage and if they have to carry on with this minimum pay we shall be lucky if we have any nurses at all.
Lord Boardman: My Lords, I am grateful to the noble Lord: I think he does confirm the point that I made. The noble Lord, Lord Wells-Pestell, also referred quite rightly to the fact that the Motion did not require the Opposition to spell out their own policies; but in so far as they criticise the result and are not prepared to say what they would do, one is bound to seek explanations and perhaps I shall have an opportunity of doing so a little later in my speech. However, first, I should like to join with other noble Lords in congratulating my noble friends Lord Rootes and Lord Kindersley on their maiden speeches, and to note with pleasure the considerable experience, the wide industrial experience, that they will bring to the House.
I am sure the whole House is grateful to the noble Lord, Lord Jacques, for raising this matter today because it opens up a very wide field. I believe his motion can be divided into three parts. First, there is the cost of the policies; secondly, the reasons why the policies were necessary; and, thirdly the consequences. As regards the cost of the policies, the very high level of unemployment and the tragically high level among the young and the lack of jobs for school-leavers, I am sure we all feel that this is a matter of grave concern and that the price is very high. I am sure it is a situation we all wish to see remedied at the earliest possible moment, and there I agree with the noble Lord.
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But, when we turn to the cause of the high level of unemployment, I am afraid that I part company with the noble Lord. We really are paying the price for decades of drift; and the longer action has been put off by successive Governments the more costly is the price and the more painful it is to deal with the problems that have been caused. As a nation we can only survive if we can compete in world markets and my noble friend Lord Boyd-Carpenter said that we must create the national wealth and create more efficient industries. Of course he is right, and my noble friend Lord Cockfield also referred to this. We must be able to compete in world markets. Just taking the 10 years from 1970 to 1980—they cover a period of government of which I am proud to have been a member and I do not attempt to escape all responsibility for it—during those years we paid ourselves increases in wages at over twice the rate paid by our international competitors. Yet our productivity—my noble friend Lord Cockfield also referred to this—was only half their rate. Inevitably that must mean lost jobs, low profits, if any profits at all, and lack of capital for investment.
There has been reference to the position in 1979 when this Government came into Office. While one is reluctant to job back too much, I think it is fair, particularly in view of the speeches from the Benches opposite, to remember that at that time inflation was mounting at a very rapid rate and so were the number of days lost through industrial action. Placing those hard facts against the background of the world scene at that time—a deepening world recession and oil prices which had multiplied 10 times since 1973—one could see that the Government inherited a country that was rapidly going broke.
The Government's top priority, which was set out in its manifesto and which has been made plain throughout by the Government, was to reduce the rate of inflation. In that, success is appearing day after day and the inflation rate is coming down. Now, for the first time since the 1950s, I think we have a firm trend downwards in the rate of inflation. The major battle has been with inflation, and, like all battles, it has caused many casualties. It involved the need to encourage industry. Governments cannot make industry do anything, except to create the environment and to encourage industry to become more efficient and to create the national wealth to which my noble friend Lord Boyd-Carpenter referred.
As my noble friend Lord Cockfield said, productivity in the last 12 months in manufacturing has risen by 12 per cent. over the previous year. That is a very encouraging achievement. He also said that unit labour costs have gone up only three per cent. during the last year, which places us in a strong position against our international competitors. Time lost in industrial disputes was less in the last two years than at any time since the war. That reflects great credit on all involved in industry: management, labour and trade unions. They have had a difficult and painful struggle and the credit belongs to them. It has been a painful experience for the Government and for employers, who have had to close plants and create redundancies. But of course it has been most painful of all for the victims of unemployment—victims who all too often are innocent of any responsibility for the

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practices and restrictions which brought about many of the difficulties over the last decade. Certainly school-leavers must be innocent of any blame and it is indeed a tragedy that we all acknowledge—that is, the difficulties they are having in finding jobs.
The noble Lord, Lord Jacques, referred to the burden falling upon those least able to bear it. I hope I am not being unfair to him if I assume that he was referring primarily to the elderly, the disabled and those in the low income groups. If so, I must remind the noble Lord that the position of those groups has been protected by this Government beyond any measure of protection extended by previous Governments. All benefits they have been receiving will be raised again in November, as the noble Lord will recall, and they have more than kept pace with the rate of inflation and the anticipated rate of inflation ahead. So that, in so far as the Government have been able to protect, they have done so. What they have not been able to do is to protect jobs. Indeed, no Government can protect jobs, although some may say that the measure of protection that has been extended to the public sector is far greater than the protection that it has been possible to give in the private sector.
I have referred to the noble Lord, Lord Wells-Pestell, claiming that it is not necessary for the Opposition to spell out their policies to deal with this matter, and I have said that I am tempted to fill the gap for them. But the gap is filled by the policy document, of which I know the noble Lord will be aware, and which was published the other day—Labour's Programme for 1982. That, I suggest, is an example of crude and fairly extreme socialism. It includes massive further nationalisation, ignoring the fairly disastrous track record that nationalised industries have to show over the years, since they were introduced by the party opposite.
But the part of that document which is most relevant to this debate might be
"Labour rejects the idea that reducing inflation is a precondition for economic growth and high employment."
That is quite contrary to what had been the policy and views of many distinguished former and present members of the Labour Party. Indeed, the last Labour Prime Minister, Mr. Callaghan, said this in a speech at his party conference. If your Lordships will bear with me, I think it is worth repeating, because it is so relevant to the issues today. He said:
"We used to think that you could just spend your way out of a recession by cutting taxes and boosting Government spending. I tell you, in all candour, that that option no longer exists and that, in so far as it ever did exist, it worked by injecting inflation into the economy. Each time that has happened the average level of unemployment has risen. Higher inflation followed by higher unemployment—that is the history of the last 20 years",
and, of course, how right he was. It is a view which I hope will be noted by his successor. Indeed, his successor as party Leader, Mr. Michael Foot, himself adopted the same theme—and I quote from Hansard—when he said: "Inflation helps to cause unemployment".
So it was, I think, common ground that you cannot buy your way out of inflation. You cannot buy your way out of a recession by printing money or by injecting further money into the system. I agree with my noble friend Lord Boyd-Carpenter that further capital investment would be very welcome,
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indeed, if it could be financed by cuts in current expenditure. That, indeed, must be the policy to pursue.
I was a little intrigued as to where the noble Baroness, Lady Seear, stood upon this issue. I welcomed her eloquent comments upon the record of the Labour Party, which I thought she put with great style and accuracy, and all of which I could endorse. But I felt that, perhaps, she spoiled the effect by partly going along their road in recommending that further money is injected into the system. I would remind her of what was said by one of her colleagues, Mr. Jo Grimond, only a few months ago in the Journal of Economic Affairs. He said
"At present, the Liberal/Social Democratic Alliance occasionally looks too much like a halfway house on the old road of State socialism. It will spend more than the Tories, but rather less than Labour. Such compromises may win votes, but they will not improve the country."
I would say to the noble Baroness that, in so far as she accuses the Labour Party of wishing to spend excessively, I hope she will not try to compromise by suggesting that the right course is to go about halfway between what they want and what this Government, very rightly, believe is the right balance to achieve.
As to the future—and I think that we should be directing our minds to that, rather than to the past, apart from drawing lessons from it—I am disappointed that it is taking so long to move out of the recession and for the benefits to come through. Certainly, I and, I am sure, many of your Lordships hoped that they were coming through rather more quickly than they have. But I welcome the measures which have been announced today, and what has been said about the need to stimulate more industrial activity, but without, in any way, undermining the sound foundations which have been laid by this Government. To restore this nation, as a prosperous and influential power for the good of all people, will need patience, compassion, and courage, and I believe that this Government possess all three of those qualities.
6.16 p.m.
Lord Balogh: My Lords, I have always been very bothered by the etiquette of this House, that you have to congratulate Peers who move Motions, irrespective of whether you agree or disagree violently with them. But today I have the great privilege of congratulating my noble friend Lord Jacques on his successful attempt to bring the economic condition of the country in front of this House. Equally, I must congratulate the two extremely interesting maiden speakers—both young men who have a great deal to contribute here. I hope that we shall hear them from time to time.
I now come to the manifold appearances of the noble Lord the Secretary of State. Do I discern a certain mellowing of voice and content? At any rate, we have had less teaching from him on all the exploded economic theories than for many a day. As economists, we must be thankful to Mrs. Thatcher. Her obstinacy and partial—therefore, often misleading—knowledge have performed a unique task where better authors and experts have failed. She has presented us with a controlled experiment. Experiment in economics is a very doubtful weapon. Opportunities to test scientifically the truth or fallacy of policies are rare.

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In this case, however, we shall know beyond doubt whether the monetarist laissez-faire analysis is a secure basis for modern economic policy. If the final outcome is failure, no one will convincingly be able to say that the theory was insufficiently put into practice—3 million on the dole can vouch for that.
Yet it seems to me that the chief gurus, Friedman and Hayek, are beginning to dissociate themselves from their previous allegiance. One of the most enthusiastic monetarists, Mr. Budd, of the London Business School, has likened himself to a rat swimming away from the sinking ship "Monetarism" using the back-stroke so that he can deny his ever having sailed on the vessel. In fact, politics inspired by monetarism have proven to be, as we insisted all along, a failure and capable of influencing inflation only indiscreetly only through mass unemployment caused by old-fashioned restrictive policies, savagely administered. It is no coincidence that most industrial countries are now suffering from this. The reaction against Keynesianism has brought about a policy turn which can lead only to catastrophe.
The relative decline of Britain dates, of course, more or less from 100 years ago. Her absolute decline is less than a decade old. The short answer concerning the cause is not difficult to find. British domestic investment was insufficient to allow a steady expansion. The cumulative result of this is that production plant per head of the working force is far less, and far less technically developed, than in competing industrialised countries. Whenever a Government attempted to escape this vicious circle they ran into shortages of modern plant and skilled labour. Consequently, our share of the world's exports declined while our imports rose by leaps and bounds.
Hot money, lodged in London, was periodically withdrawn whenever confidence waned, and exchange controls, which had been weakened throughout the postwar period, were suddenly abolished. The export of capital is tremendous. It was especially sinister because it stimulated foreign industries. Moreover, the decision was taken not to prevent a rise in the exchange rate of the pound, whenever the outlook seemed more favourable and when the hot money returned. There was a relapse to restrictive policies and to the monetarist belief that inflation was the most damaging force in modern social life. The Government hoped to curb it through simple monetary measures, by keeping the increase in the money supply down. In addition, incentives would be restored by cuts in progressive income and corporation taxes and by cutting public expenditure on social services. The total social wage has been slashed. This policy was regularly defended as a means of mastering inflation.
It must, however, be said that the public's hostility to the trade unions, due to their reckless use of the strike weapon, aroused a degree of unpopularity of the Labour Party, with which the unions were clearly identified, which led to the former defeat in 1970 and 1979. The noble Lord opposite quoted Mr. Callaghan's unfortunate remark. One could trace this to his son-in-law who was an ardent monetarist, but I do not want to go into that. Wage demands remained unrelated to the increase in productivity and were an important—perhaps the most important—cause of cost inflation. Comparability still holds us in thrall. Only a well
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prepared incomes policy, based on equity and buttressed by a social contract, could, it seems, overcome the political dilemma between inflation and unemployment.
Labour's crisis could not have occurred at a more fatal moment. After the 1945 débacle, the Conservative Party used the post-war period, 1946 to 1951, to revise their strategy and tactics. This phase ended at the conference at Selsdon, preparatory to the election of 1970. As Mr. Heath's Government led to an electoral defeat and he had for a moment associated himself with a policy of direct controls, the Conservative Party turned to a policy of laissez faire, denationalisation and monetarist control. This basic change in policy implied a backslide of monumental consequence. The attempt at monetary control led to unprecedently high rates of interest which caused a rapid increase in unemployment. Mrs. Thatcher asserted that this policy would create a stable base for a subsequent expansion. Still, as a civilised incomes policy was still ruled out by both the Government and the two sides of industry, the struggle led to a further weakening of the unions, and the international competitiveness of the country, especially in manufacturing, was subjected to a further pressure.
The present Conservative Government concentrated on weakening the bargaining power of the unions by direct legislation. When Mrs. Thatcher talks about the Tory success she forgets how much of the increase in productivity merely registers the sacking of the least productive manpower and the closing of obsolete factories one after another. She has decreased, not increased, national income.
A free-for-all in the labour market, which is oligopolistically organised on the side of both the employers and the employees, is no longer compatible either with the maintenance of full employment or with the continuation of a satisfactory rate of increase in the material resources which society needs for the creation of a better and fuller life. The spiral of wage inflation poses a continued threat to the external position of the country. It also militates against the attainment of greater equality in the distribution of non-profit income. Unions are not equally well organised, nor are all occupatons of equal national strategic importance, with the result that the lowest paid and the weakest fare progressively worst.
British economists were persuaded by the success of the 1931 emergency measures, that changes in the rate of exchange could harmonise internal and external differences in policies. I have never believed this. Apart from the tariff protection, Britain was helped by a number of very important factors, not the least Imperial Preference, which are most unlikely to recur. Yet the post-Second World War period, under Keynesian management, saw a continuous increase in employment and real incomes, in deep contrast with the post-First World War period of fluctuations, unemployment and misery which threaten to return.
There remained, however, structural deficiencies. In the short term, these led to a steady inflationary pressure which has been discussed by so many noble Lords opposite that I need not go into it. For a long term strategy there would have had to be a conscious plan for all incomes and not only a restriction of wages, as some Social Democrats now believe. Nor do I think that without giving employees a greater say in management there can be uninterrupted progress.

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It must be emphasised, however, that the bitter resistance against such a solution is the outcome of the growing influence of monetarism in Britain and elsewhere. This resulted in the use of old time measures, with the result that unemployment increased. Efforts to solve this problem without a planned, conscious policy to by-pass the resistance and escape conflict were unsuccessful. Several Administrations—Butler in 1955, Maudling in 1963, Heath in 1970—tried to boost economic activity by releasing purchasing power, in the hope that this would lead to an increase in consumption balanced by higher productivity and thus turn a vicious circle into a virtuous one. The increase in income, however, created by the Government mainly resulted in an increase in imports and hindrance to exports. Balance of payments crises continued, which made continuation of an expansionary policy impossible.
The great politico-economic issue in this country and elsewhere is how to combine a high level of income and employment without causing explosive inflation. The present governments of both countries—the United Kingdom and USA—have quite unequivocally repudiated any measure beyond restraint in the fiscal and monetary field to achieve stability. Such indirect measures would increase the public sector borrowing requirement—the PSBR. One of the most important developments lately was the elevation of the PSBR into a target and indicator instead of M3 (volume of money). The new features are the sales of a large chunk of the public sector to contain increases in the PSBR.
From the view point of financial balance, the selling of nationalised industries to the private sector does not represent a deflationary move as everybody, including the Secretary of State, claimed. The vast potential sales would almost certainly lead to the forgoing by the Government of potential equity gains, as the potential buyers would be anticipating pressure in the equity market and lower the bidding price. This was the experience in the case of both Amersham International and BP sales.
Governments also tried to give new incentives by cutting direct taxation—and in both countries, social services have come under attack. Altogether, this represented a diversion of the national income in favour of the rich. The general decrease in real incomes and the consequent rise in unemployment, the continued monetary squeeze, the high rate of interest and cut-backs, make it difficult to see any expansionary force, despite presidential and ministerial assurances. The truth is that they have created an embittered working class, held back from inflationary demands for higher wages by unemployment, and attempting to enforce their wage demands by strikes. Once the Government reverse their restrictive policies—for example, for electoral reasons—it is not unlikely that the various interests will once more repeat the same mistakes. They will lock into the revival high wage claims and the vicious circle will then have been completed once more—and unemployment increased in a destructive way. Unfortunately, union leaders seem to have neither the political sensitivity nor an understanding of the workings of a mixed economy, when incomes and employment are increasing and demand is high.
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Britains' problems have been aggravated by two unfavourable changes in the world economy. The first of these is the instability of world income. Indeed, the two Governments of the United Kingdom and the USA blame their own discomfiture on the worldwide crisis. This is utter nonsense. The gravity of the British long-run outlook is emphasised by the fact that, with oil prices maintained at recent levels it could not make effective use of the immense gain resulting from the discovery of oil and gas in the North Sea in huge quantities. Britain was freed from a potential vast loss by becoming a net oil exporter and, what is perhaps even more important, a saving in foreign exchange on oil imports was no longer required. Yet the British current balance of payments has been only hesitantly positive. The non-oil trade is persistently deficient, which represents a future threat for the coming generation.
This is not all. The first impact of oil earnings and savings have contributed directly and indirectly to a rise in the foreign exchange value of sterling, with severe pressure on export and import substitution. Out of wealth, penury has been created. It is difficult to see the way out of our troubles without some direct protection. The industrial problem is similar to that experienced at the beginning of the First World War. As we have already mentioned, certain vital new industries are non-existent or are lacking in strength, and could only be dealt with one by one. This means that a favourable outcome of this particular aspect would seem to depend, as in the previous period, on specific safeguarding duties. Devaluation might be necessary, but in my opinion it cannot represent a sufficient force.
Leaders of the countries of OECD should read the history of the American collapse in 1933–34. They would find threatening signs of a repetition of those calamities in the near future. Unfortunately, we and the USA have no Roosevelt now to save us by commonsense empiricism. Our danger is great because of the triumph of monetarist economic theory in practically all important industrialised countries. In academe, the disillusionment has already gone some way. Politicians and civil servants, seemingly, have not yet had enough crises.
The second of the main causes aggravating the future is the problem of the domestic policy. The dominant oligopolistic changes, including the vagaries of oil prices, have confirmed one's worst fears. Socially, we are dominated by the basic contradiction between the increase in the bargaining power of the working class and the distribution of incomes. This is the reason for the increasing weakness, which is as yet unacknowledged and which threatens our future.
6.37 p.m.
Lord Monson: My Lords, may I join other noble Lords in congratulating the two maiden speakers upon their concise and stimulating contributions. In view of the long list of speakers I will not range over the whole field of economic activity or, for that matter, of economic inactivity. I will concentrate on two features of this year's Finance Bill which I believe to be unfair but nevertheless capable of rectification in the next Budget, or mini-budget, whenever it may come.

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But I should first like to put it to the Government that one possible way of giving a stimulus to industry without encouraging a flood of imports—and I fear that abolition of hire purchase controls may do exactly that, welcome though abolition undoubtedly is from the point of view of a free society—would be to up-rate capital allowances and grants (for industrial building, for example) by say 10 per cent, for the rest of this financial year and for the financial year 1983–84 only—the allowances to revert to their current level after March 1984. Coupled with the lower interest rates which appear to be on the way, this should encourage businessmen to bring forward plans for capital investment which might otherwise be postponed, and produce a beneficial ripple effect throughout the whole economy.
I must briefly take issue with the noble Lord, Lord Jacques, for criticising the Chancellor of the Exchequer's decision back in 1979 to reduce the marginal rates of tax on higher incomes. I wonder whether the noble Lord realises that this reduction did nothing more than bring the United Kingdom into line, as regards taxation on higher incomes, with nearly every other civilised, industrialised country? Now to the questions of fairness. Where I do strongly agree with the noble Lord, Lord Jacques, is on his attack on the high rate of tax—both marginal rates and overall rates—imposed on low incomes. This is one of the reasons for the well-known poverty trap. When I say tax, I include, of course, national insurance contributions, which are demonstrably a form of taxation.
Partly because of the unfortunate abolition of the lower rate tax band—and I know that the noble Baroness, Lady Seear, and the Liberal party join with me in deploring its abolition—and partly because of the Government's failure to raise personal allowances fully in line with inflation since 1979, a single man or single woman now pays tax and national insurance combined at a marginal rate of no less than 38·75 per cent. on earnings in excess of £30 a week. I wonder if the noble Lord who is to reply can say whether there is any country in Western Europe or North America where such high marginal rates apply to such low earnings? Indeed, a juvenile or a part-timer earning £29·40 a week would be ill-advised to accept a rise of £2 a week, should it be offered to him, because if he were to do so he would find himself paying a marginal rate of tax and national insurance of well over 100 per cent. on the £2 in question.
I do hope that when the next Budget is being formulated the Government will forget for a moment the perennial Conservative obsession with the standard rate of tax, by which I mean the Conservative's naïve belief that a reduction in the standard rate of tax is the key to electoral success: I do not believe it is true in any case. Instead I hope they will increase personal allowances—I do not mean the higher rate bands, but the standard personal allowances—by considerably more than the rate of inflation, so as to reduce, if not entirely to eliminate, the poverty trap.
The second unfairness in the Budget relates to the Chancellor's proposals for the reform of capital gains tax. It is hard to think of any other recent instance when what purports to be a great reforming measure to rectify longstanding injustices, has been given such a frosty reception, has been greeted with such a universal
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thumbs-down by merchant bankers, stockbrokers, solicitors, accountants, financial journalists and indeed anybody else who has any knowledge of the subject. This widespread disappointment and disapproval is based on two aspects of the proposals. The first is their complexity, which arises largely from the abolition of the pooling arrangements for shares acquired over an extended period.
Secondly, and far more important, is the unfairness of the proposals in so far as long-term holders are concerned. Short-term speculators in contrast get off lightly—rather too lightly some may think. As far as long-term holders are concerned, the unfairness stems first of all from the decision to index the acquisition price rather than the sale price. This results in an inbuilt bias against those who acquired their holdings prior to 1982. For reasons too technical to explain today, the future indexation of their pre-1982 holding will not in consequence be fully effective against future inflation.
Even worse is the refusal to make any allowance for past inflation. Since April 1965, when long-term capital gains tax was introduced, the adjusted retail price index has risen approximately 5½ times; in other words, a share bought for £1 then is worth £5·50 now if it has done no more than keep pace with inflation. But although there is obviously no real gain, the holder will continue to be taxed as if he had made a gain of 450 per cent. In practice the position is actually worse, since so few shares have beaten inflation; most portfolios show a loss in real terms, but the tax will nevertheless be payable on those losses. I believe this is certainly not what Mr. Callaghan or the Labour Party intended when they introduced capital gains tax in 1965.
It is claimed by the Government that the higher annual exemption will help shareholders. It may, of course, help holders of portfolios of stocks and ordinary shares, but it will not help anybody who bought a cottage in Cornwall 10 or 15 years ago; it will not help Members of either House of Parliament whose homes happen to be in Scotland, Wales, the West Country or the North of England, who have had to buy a flat in London so as to fulfil their parliamentary duties more effectively and who, upon retirement or loss of their seat, will almost certainly have to pay tax upon a possibly non-existent real gain.
To introduce indexation at this time when inflation, we are told, is on the way down to 7 or 72 per cent. by the end of 1982 or the beginning of 1983 is surely shutting the stable door well after the inflationary horse has bolted. It is the past 17 years, and in particular the past 10 to 12 years, that we are concerned with. It is no good the Government saying, "This past inflation is nothing to do with us; it is all Labour's fault", because a very great deal of the inflation of the past 10 to 12 years occurred under Conservative Administrations or was initiated under Conservative Administrations. So I urge the Government to do the decent thing and reduce tax on past paper gains, even if it means having to raise the tax on real gains to some extent by way of compensation. I stress as strongly as I can that few fair-minded people object to paying tax, even at a rate in excess of 30 per cent., on genuine gains; it is a tax on bogus gains to which they object.
If I may put one final point; it is accepted that the

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Government will be obliged to raise extra revenue in order to cover the cost of liberating the Falklands from foreign occupation. If they cannot manage to exempt past paper gains from tax altogether, as I have suggested, could they perhaps adopt the excellent suggestion made by correspondents in the Financial Times a few months ago; namely, to introduce a reduced rate of capital gains tax, say 15 or 20 per cent., on holdings which have been held for more than five or 10 years and which are realised during the current financial year 1982–83 only? This would almost certainly lead to a flood of realisations of longterm gains, thereby, with luck, raising enough additional revenue to cover a substantial part of the Falklands operation.
6.48 p.m.
Lord Hatch of Lusby: My Lords, there have been times during this afternoon's debate when, as an historian, I have wondered whether we had wandered back into the 18th century and were discussing these issues in Versailles. The sound of this institution, representing as it does and consisting as it does of representatives of the greatest landowning, wealth-owning section of our community, talking about the problems of the unemployed, of the poorly paid, of the sick, of the aged, does at times smack of the hypocritical.
The Earl of Longford: My Lords, if I may interrupt the noble Lord, surely we are qualified to speak about the aged here.
Lord Hatch of Lusby: My Lords, I accept the correction of the noble Earl but would add that we are not entitled to talk about the experience of the indignant aged. However, we are here to discuss these matters, and I should like to add my congratulations to the two maiden speakers who have spoken this afternoon, and to assure them that they are not only welcomed by this side but that they may very well find that there is a certain degree of understanding and sympathy on this side for the problems of industrialists which they will not find in the Government or the Front Bench behind which they speak.
In introducing what I have to say, which consists of only one point, I should like, also, to ask the noble Lords, who are making notes for the noble Minister who is to wind up, to note certain specific questions which I would like him to answer. Let me also assure the noble Lord, Lord Boyd-Carpenter, that I want to refer specifically to the issue which he raised on the contrast between the distribution of and the creation of wealth.
The first question that I should like to put to the noble Lord, Lord Cockfield, is to ask him when he is winding up, to meet the specific argument which some of us on this side of the House have been trying to make for several years now. We have had this afternoon and this evening, as we have had so many times previously, an unconvincing apologia for the consequences of Government policies, based upon the fact of world recession. It seems that the Government will either blame world recession for the results of their policies or, if they cannot do that, they will blame
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the trade unions. I would like the noble Lord who is to wind up to meet the argument that it is specific British Government policies which are at least partly responsible for the world recession and particularly for British sufferings and the British decline within that world recession.
Let me give noble Lords an example of the point that I am making. Last week, I asked the noble Lord, Lord Cockfield, whether he agreed with certain quotations from the Bank of England Review. The second quotation, which is the only one with which I am going to deal tonight, reads as follows:
"The weakening of commodity prices is seriously worsening the income and payments position of many developing countries. This, in turn, is tending to reduce their demand for imports from the advanced countries and is thus one of the elements contributing to the general weakness in prospect".
The answer that I received from the noble Lord to the question as to whether he agreed with this, consisted of the following words:
"So far as the noble Lord's second question is concerned—the effect of weakening commodity prices on the economy of the developing countries—I agree that this is a serious matter".
He then goes on to say:
"Weakening commodity prices are a reflection of recession."— [Official Report, 20/7/82; col. 751.]
But that was not the point that I was asking him. I was suggesting, quoting the Bank of England itself, that the weakening of commodity prices is a cause of recession—not a reflection of recession, but a cause of recession. That was also what the Bank of England was suggesting.
My reason for raising this point tonight, is simply that every time I have tried to persuade the noble Lord, Lord Cockfield, to answer in terms of the effect of Government policies on certain specific consequences, he has always used the tactic of refusing to answer the direct question, and has slid around it and said, "Well, this is caused by recession". I point out that that particular question was asked on the very day that the country's worst figures in history for unemployment were published to add to the record bankruptcies which the Government have now admitted to me were recorded last year. The point to which I would like the noble Lord to address himself is whether he will meet the charge that noble Lords on this side of the House and right honourable and honourable Members of the same party in another place are trying to get the Government to argue about—namely; that certain Government policies are causing the type of circumstances which my noble friends have been describing this afternoon. I have no intention of going into the question of unemployment, the sick, the low paid and so on. That has been done so excellently by my noble friends here, particularly by my noble friend Lord Jacques and my noble friend Lord Wells-Pestell. I want to concentrate on one issue alone.
It is now nearly three years ago since I asked the noble Lord who was answering from the Front Bench on behalf of the Government, what he expected to be the effect of the removal of exchange controls. I was told that this would be a release—if I recall the words—of our people to invest as they wished. I want just for a moment or two to see what has, in fact, happened over that three-year period so far as the effect of the removal of exchange controls is concerned. I allege—this is my challenge to the Minister—as I suggested at

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that time, that the removal of exchange controls would lead to certain specific consequences. I believe that the figures that I am now about to offer to the Front Bench opposite will bear out that prediction of three years ago.
In 1978, the export of capital for all purposes from this country was £4·6 billion—I repeat, £4·6 billion. Last year, it was £11 billion. Yet, at the same time, the noble Lord cannot answer, "Ah, yes, but you are not taking into account the inward flow of capital", because I am taking into account the inward flow of capital. It was £2·9 billion last year. So we are left with an adverse balance on capital account of £8·2 billion.
What does that lead to? It leads to a number of consequences. The first is that the availability of capital for domestic business in this country is greatly reduced and so is the Government's ability to borrow. This reduces the amount of capital available both for the Government and for domestic business which in its turn inevitably leads to high interest rates and the high interest rates which have been mentioned by noble Lords opposite in particular, which are so restricting the development of British industry. But it leads to other matters. Direct investment overseas last year came to £5·2 billion. That is to be compared with £6·2 billion—only £1 billion more—of direct investment in United Kingdom manufacturing industry. In other words, over £5 billion is going abroad in investment—direct investment, not portfolio investment—whereas in this country only £1 billion more is being invested in manufacturing industry. In fact, since the election of 1979 investment in British manufacturing industry has fallen by 26 per cent., whereas investment overseas has increased by round about 95 per cent.
Again, what are the consequences? The figure that I have just given for last year represents about £500 for every family in this country: that is, about £500 for every family in this country was invested overseas last year, either by industrial or by financial institutions. That was investment in foreign jobs—in jobs for people in other countries. I would challenge the Conservative Party opposite to tell the unemployed in this country that and to tell the public that. Why do they not include that in one of their political broadcasts: "This is what our policy leads to: we remove exchange controls and so we are able to invest in overseas industries and overseas enterprises and buy overseas shares".
It could be said—and I would think that it was a perfectly fair argument—"But you want this country to invest more heavily in third world countries", where the purchasing power is so low—as I quoted from the Bank of England earlier on—that the lack of purchasing power is damaging the industrial prospects of the industrial world. But this is not being invested in the Third World. This is being invested almost entirely in the developed, industrialised world; in other words, in those countries which are our major competitors. When the noble Lord, Lord Cockfield, talks—as he did in his speech this afternoon—about import penetration, is it any wonder that the investors in this country are helping that import penetration by investing in those very countries which are competing with ours, as I am sure later on, when he has recovered from his maiden speech, the noble Lord, Lord Rootes,
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will be able to tell us from the point of view of his own industry.
How does this fit in with the Government's vision of themselves in the world? Because whereas this Government last year, by their removal of exchange controls, allowed 22 per cent. of the total investment of Britain to go abroad, no other industrialised country invested more than 5 per cent. in overseas investments. In other words, Britain was sending abroad four times as much of its capital investment as any other country in the world. The companies that invest abroad—the major companies, the big companies—are those same companies that are cutting employment at home and adding to the unemployed at home. I give three examples: Grand Metropolitan, Pilkington's and the Imperial Group, all of which were major investors abroad and all of which were cutting their work force at home.
Of course, when the Government talk, as they have done when they have raised this matter before, here and in another place, about there being a lack of profitable opportunities in this country, what are they saying? They are saying that after three years of Conservative Government there is such a lack of opportunities for profitable investment in this country that 22 per cent. of our total investment is going abroad, that we are losing jobs at home, that we losing investment at home and that our industries are dying. In other words—and here I come to the speech of the noble Lord, Lord Boyd-Carpenter—when it comes to the question of going abroad, will the noble Lord just consider that the biggest factor which has led and is leading today to wealth producers in this country going abroad has been the removal of exchange controls by the Government which he supports.
This situation is getting worse. Last year the ratio of outward to inward investment as regards this country was six to one. The situation is getting worse. As the noble Lord said, these are the people who are going abroad; these are the people who could be helping to direct the production of wealth at home; but they are finding that their profitability is greater when they send their money abroad. So, of course, they do so.
Lord Boyd-Carpenter: My Lords, if the noble Lord will allow me, I am afraid it must be my fault that he must have misunderstood me. My reference to going abroad was the well-known fact that a number of high taxpayers have taken themselves abroad because of the level of taxation, as a result of which we have lost any taxation upon their incomes. It had nothing whatever to do with exchange control.
Lord Hatch of Lusby: My Lords, that may have been the intention of the noble Lord, but I still think that there is a connection between the thrust of his argument and the point that I am making, because it is the wealthy who are in a position to invest abroad, and the wealthy are investing abroad. The wealthy are often investing with their feet as well as with their bank balances.
So, we have a situation created through the removal of exchange controls, through the operation of the process which three years ago I tried to argue with the noble Lord, Lord Cockfield—who I am glad to see

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has now safely returned—a situation in which the few very wealthy in this country are watching with equanimity as British manufacturing industry dies. Why with equanimity?—because they are comfortably cushioned by the receipts which they receive from their foreign investments. What more could create the two-nation syndrome which has already been mentioned in this debate this afternoon? The opportunity that has given to the export of capital from this country has been disastrous, is being disastrous and is becoming increasingly disastrous for the industry of this country or for any opportunity for the revival of industry in this country.
It is disastrous for the over 3 million who are unemployed, who have lost their jobs in industry in this country. It is benefiting only those whom I believe this Government represent, and who I would particularly mention to the two noble Lords who made their maiden speeches this afternoon. This Government represent the large companies, the financial institutions, the speculators. But look at the record of this Government when it comes to the smaller businesses. Look at the record number of bankruptcies over the past 12 months, and the record since 1979 of bankruptcies. Look at the record of investment in industry in this country since this Government removed exchange controls.
I would ask the noble Lord who is to wind up to answer specifically the question which I am sure his noble friend will pass on to him: is this not a factor in the recession in British industry? Is this not a factor in the suffering of the unemployed, whose numbers are mounting? Is this not, above all, a factor in the obstruction of an industrial recovery in this country which the present Government are constantly seeing on the horizon but which never seems to get any nearer?
7.12 p.m.
Lord Camoys: My Lords, I am not sure whether I am fortunate or unfortunate in following the noble Lord, Lord Hatch. Certainly what he says has persuaded me to alter to some extent the argument that I was going to make. It seems to me obvious that the noble Lord totally misunderstands one of the main purposes of the Government's policy, which is to increase the chances for really productive investment in this country. This obviously escapes the noble Lord's attention. Indeed, unless there are good projects capital will not be invested, and we have seen that for years past. It certainly will not be invested in productive projects.
Indeed, at this time, contrary to what the noble Lord seems to think, there is a great deal of capital available, and as a merchant banker in some sense I have to compete with that other capital. There is a great deal of capital for good projects. One of the reasons why I support the Government's policy is that one of their aims must be to make our industry more productive, and therefore more receptive and more attractive to the capital that does exist.
Like others, I am grateful to the noble Lord, Lord Jacques, for this opportunity to discuss the state of the economy; first, because, of course, that matter is one of great concern, and secondly, because after only two
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years of what I would call real Tory economic policy, it is only now that one can perhaps assess the results therefrom. Before going any further, I should like to add my congratulations to the noble Lords, Lord Rootes and Lord Kindersley, who have made their maiden speeches this afternoon. Each is distinguished in his own field of activity, as their speeches very well demonstrated.
One would have to be totally insensitive not to be concerned at the current level of unemployment, at the lack of growth in GDP, and the lack of investment. As a banker, I have to admit that I find it difficult to disagree with the gloomy views of the CBI, particularly when one considers the weak state of the world economy. The recession obviously is not over. Bankruptcies, receiverships, et cetera, continue, and small- and medium-sized companies are still failing, causing further redundancies. Nevertheless, I believe that benefits have accrued and are still accruing from the Government's economic strategy. Those benefits are at this stage less obvious and deserve explanation, but are nonetheless considerable, and to my mind should allow the Government to seriously consider providing a moderate economic boost.
After a shaky start the Government's economic policy is proving successful in many areas: as has been mentioned before, in bringing down the rate of inflation and money rates; in controlling the PSBR; in bringing down the real rate of wage increases; and in tackling the monumental costs both of previous nationalisation policies and of the consequential public sector monopolies. Nobody could pretend that the Government have been entirely successful in persuading the public sector unions that if they demand high wage settlements so there will be fewer jobs available overall for the currently unemployed. In my humble opinion, however, the Government have succeeded in engendering a far greater sense of realism in this country than has prevailed for many years. That realism applies as much to what you might call management as to those who report to them.
Inflation continues on its downward path. By early 1983 I agree it could be down to 8 per cent., and hopefully by March of next year down to 7½ per cent; a fact which should be reflected in money rates, and hopefully will lead to a reopening of the corporate bond market. In the face of American interest rates and in an area free of exchange control, that is a real achievement; one that was inconceivable no less than three years ago. Another achievement is the control of the PSBR, which can only be further aided as the privatisation programme continues. I happen to have been a privileged witness to the privatisation of the National Freight Corporation and the creation of something called Project Mercury. If they are well managed the benefits to this economy will be considerable. But more needs to be done along these lines in the public sector, and it is most interesting to observe the effects of competition on British Telecom, and the mere hint of such on the Post Office. The management and employees of both have reacted positively, and, I believe we will see, very successfully, to the real world.
So far as the private sector is concerned, I believe that the Government have laid the basis for much more success. The measures that have been introduced

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to assist the small businesses have surely gone nearly as far as even the Government's most ardent supporters would have dared hope. This year's Finance Bill will have demonstrated that as much as anything, had it not been for the Inland Revenue's highly developed skill in blunting Government objectives yet again, and there are many examples that can be given.
While in most matters I am a strong supporter of the Government's economic strategy and policies, and while I acknowledge and respect their achievements to date, I have two suggestions to make and one important area of concern to raise. My first suggestion is that the Government could and should now take steps to help industry as a whole. Partly due to the weak state of the world economy—a factor to which we may need pay more attention than France, Ireland, or the noble Viscount, Lord Chandos, or the noble Lord, Lord Hatch, appear to do—industry is still in a very depressed state; we should recognise that and therefore be careful. But, with the greater sense of realism now prevailing, there exists a capacity in many companies in many parts of industry to profitably increase production with all that means for GDP, provided demand increases.
Relaxation of hire-purchase restrictions will obviously be welcome to the car and consumer goods industries, but one should not ignore the likely consequence of higher imports. But could not a boost of, say, £1 billion be provided by either engaging the private sector in one or more major construction works—in perhaps the largely outdated sewerage system—or by a reduction in employees' national insurance contributions, or by a combination of both? Would this not create real jobs? I believe it would, and I believe it would not be a great risk for that amount of money to be spent.
The Government have quite rightly stated their desire to see a revival in the corporate bond market. This would not only help boost the economy but would assist in the control of bank credit in this country, which is a subject to which so much attention is paid. At the same time as having this desire the Government still allow purchases of Government securities to enjoy considerable tax advantages. No wonder that that market shows very little sign of renewal. Corporate issues should either enjoy the same benefits as Government issues, or the concessions on Government issues should be abolished altogether. That is my second suggestion.
Of great concern to myself as a banker—and I should emphasise, and I do very clearly, that I voice my own personal views—is the Government's ambivalent attitude to our banking industry and to the clearing bank groups in particular. On the one hand—perhaps this is nothing new—the banks are berated for not providing sufficient funds for industry and for being unadventurous. Yet, when profits are made which allow the industry to lend, they are either heavily taxed or threatened with special taxes.
I can understand, of course, at a time of low profitability throughout industry, the desire of Government to acquire a greater share of profits made by service industries. Yet, to my mind, the windfall tax was very misguided and short-sighted, as any future imposition of such a tax would be. During the time
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that very high interest rates have prevailed in recent years, the banks earned a return of only between 25 and 28 per cent. per annum on shareholders' funds, and I believe they might have been criticised for that low level, given the high rates of interest. Such returns should, in my opinion, be considered as moderate. Indeed, for an industry whose stock in trade depreciates at the rate of inflation, if one looks at the real rate of return in terms of current cost accounting—the noble Lord, Lord Bruce, will know this—the banks have been doing no more than standing still, and that is really the acid test. The banks' capital ratios are now stretched, partly as a result of having to recycle the so-called petrodollars. If depositors' funds are to remain as safe as they always have been, the banks must be allowed—indeed, should be encouraged—to retain profits to build their capital bases accordingly.
Nor should we forget that the absence of a corporate bond market has over many years placed a further strain on the banking industry's balance sheets. I am sure that some noble Lords would argue that the effective rate of tax paid by the major banks is well below 52 per cent., and indeed it is; yet that is largely a reflection of the volume of leasing business written, which is and has been of direct benefit to British industry. Indeed, the Chancellor of the Exchequer himself has stated that the growth of leasing has kept investments in our economy at a higher level than would otherwise be the case. A banking levy is, no doubt, a source of short-term political gain, but in the long-term I believe it could harm not only the clearing banks but, perhaps of greater interest to your Lordships, their industrial customers as well.
As an employee of a clearing bank for four years, and as an employee elsewhere before, I can say with some conviction that the clearing banks adopt a more adventurous, more helpful and more sympathetic approach to lending than any independent merchant bank or foreign bank that I know in the City. Yet such a policy inevitably leads to some bad debts and provisions being made. Again, this can place strain on capital ratios. Healthy levels of retentions provide the main practical way to maintain the capital base and the clearing banks' lending capacity. Nor should one complacently assume that our banking industry's capital ratios are as strong as they once were, compared with those in certain European and American countries. That is a point which has some relevance in the precarious state of international credit at the moment and should be examined, I suggest, with great care.
In short, I ask that the Government appreciate that by attacking the banking industry they are indirectly attacking the manufacturing companies and indeed the new high technology companies whose health is vital to the economic recovery or this country. A healthy and profitable banking industry is crucial to economic growth. While the concern of the noble Lord, Lord Jacques, for those who are suffering during this very painful recession is wholly understandable and is shared, as my noble friend Lord Boyd-Carpenter mentioned, by all noble Lords, nevertheless, I can see no reasonable alternative to the Government's overall strategy, and it is one I support.
Lord Hatch of Lusby: My Lords, may I ask the noble Lord to explain what appeared to be a contradiction in

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his reply to me at the beginning of his speech—I did not want to interrupt him at that point—when he said, on the one hand, that I was wrong in suggesting there was a shortage of capital because of the export of capital, while on the other he admitted there were a record number of bankruptiecs among small and middle-sized firms? How does he equate the two?
Lord Camoys: Capital has to be attracted, my Lords, and unless there is direction of investment—which perhaps the noble Lord would prefer—it is inconceivable that capital will go into companies which are about to become bankrupt. That is the whole problem. What the Government, it seems to me, are trying to do is to make industry more healthy and attractive for capital to invest in, and if it does so, then no doubt more capital will remain in this country.
7.26 p.m.
Lord Houghton of Sowerby: My Lords, I share the disappointment of the noble Lord, Lord Boyd-Carpenter, that we are having nothing to say about the Finance Bill. It seems very strange that we are having nothing useful to say about a Bill of 157 clauses and 22 schedules. Last year some of us did have something to say, but it was not welcome in some quarters. At least, a note of discontent on my part was received with consternation on the Front Bench opposite. We had our debate last year on the Finance Bill on a Friday, which is usually the day we reserve for animals and pornography. We are now having it on a Monday, with more time. I believe the business managers of your Lordships' House were rather afraid that if we began to debate the Finance Bill today we might go on for a very long time, with the fate of the Bill hanging in the balance until late this evening; and they wanted to get it safely tucked away with as little debate as possible, and then we could range over the whole economy and no harm would be done.
We have a duty. It may be that because it is the Finance Bill this House feels a deep inhibition against debating the measure which led to the difficulties of 71 years ago. But many of us were not here when Mr. Balfour's poodle took such a hiding in the Parliament Act 1911 and the world has moved on since then. Although the major prohibition remains, our freedom to debate a Bill without amending it remains also. We are not solely a revising Chamber; sometimes I think we carry that function too far. Consider the meal we make of Employment Bills and Social Security Bills; there is money in those, too. But when it comes to the Finance Bill, we feel it is more than we ought to deal with.
There are aspects of the Finance Bill which it would have been relevant and proper for us to discuss. Consider the narrow majority the Government had in another place to retain the reduction in unemployment benefit, which created a rebellion because it was alleged the Government were in breach of faith; that they said they would restore the cut when they brought unemployment benefit into direct taxation, and they failed to do so. If this is the House of experience, if not always of wisdom, surely we are worth listening to now and then, even on matters of finance.
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Last year I made some reference to the black economy and, more pertinently then, to the strike economy; there was a Civil Service strike on this time last year and I said certain things about it. The noble Lord, Lord Cockfield, whom I am pleased to see in his place, studiously ignored everything I said, on the ground, he explained later, that since the dispute was in progress, it would be wise on his part not to comment on my remarks. Shortly after that the strike ended. I shall not say that it was settled, but it ended; and I think that Parliament, and for that matter the public, have given far too little attention to that serious breakdown in public administration. It was a serious thing to have happened; it had never happened before, certainly not on that scale.
The cost to the country was quite significant, due to the failure of revenues to reach their destinations. The cost in terms of efficiency and interruption of services to the public was serious, too. Last year, I objected to the Finance Bill on the ground that there was little purpose in throwing more work by way of legislation upon the two major revenue departments when they were in a state of mutiny and were refusing to handle the money. When, in the name of an industrial dispute, revenue men suppress their predatory instincts to the extent of saying, "We will not touch the money", there is something seriously wrong; and that is what they were doing. It led to large-scale borrowing by the Government in order to make good the revenue that was being lost. I hope that in due season the Public Accounts Committee will study some of those happenings in order to see exactly what effect they had on public administration.
The form of industrial action that was adopted in the Civil Service—under great provocation, I may say—was to select key points where money was going through in very large quantities and to pull out the specialists in those sectors, so that they stopped work, and were sustained by a voluntary levy provided by those who remained more or less at work. From the point of view of those actually on strike the scale was quite small. I think that at no time were there many more than 5,000 civil servants on strike. But the rest of the Civil Service decided that it must sustain adequately those who were on strike, and since payments made to strikers in lieu of wages are not the profits of holding an office, they are tax free; always remember that, my Lords.
The finances of the strike have recently been published. By voluntary levies the Civil Services collected £9 million for distribution among the strikers who were holding up the nation's revenue. Even a small organisation, such as the First Division Association, and the top ranking inspectors of taxes—the administrative class in the Civil Service, the top brass—subscribed £90,000. Other organisations representing managerial grades went into the £2 million bracket. So during the period £9 million was collected to maintain the strike. The Inland Revenue and the Customs and Excise took the brunt of it because they handled the money. In general the Civil Service was anxious not to interfere with services to the public, but merely to prevent the cash flow from going forward as required.
That all happened as a result of the Government's treatment of the Civil Service agreement with regard to fair comparability and arbitration. It was unnecessary

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to have got to that stage of bitter dispute. Happily, the Government decided that, as regards the pay claim for 1982—I have been talking about 1981—if they failed to reach agreement, they would refer the matter to arbitration. That passed off peacefully. The Government reserved their position, saying that, in the event of a tribunal making an award which was in excess of what they believed Parliament should be asked to accept, they would have to demur about it. But that did not happen; and the arbitration tribunal made an award that the Civil Service accepted. After the strike it was also part of the settlement that there should be appointed an inquiry. This has taken place under Mr. Justice Megaw, and a report of it has recently been published. No doubt considerable discussion and negotiation in regard to it might be necessary.
All I want to say about the matter—and it cannot wait until next year—is that I hope that the Government will attach the greatest importance to retaining the right of the Civil Service to go to arbitration. Compulsory arbitration was a fixed and firm agreement in the Civil Service for very many years. Winston Churchill tried to take it away in 1925, but he changed his mind under the strong pressure of the Civil Service and Parliament to retain it.
The position of the Civil Service is that its employers are Government, and Government have their own policies—economic, social, financial—which they might be pursuing to the possible detriment of the wellbeing of the employees in the Civil Service. Therefore an independent check on what the Government are doing to their own workers has been regarded as an essential condition of peaceful relationships between state employees and the Government. The arbitration agreement, combined with the Whitley Council system in the Civil Service, have provided harmonious industrial relations for 60 years and were only seriously breached last year when the Government threw aside not only the principles upon which pay was being fixed, but also the right to go to arbitration. That was a serious error, and undoubtedly it precipitated the dispute which arose.
If my experience is worth anything to the Government—and I hope that it is worth a little—I would say that the agreement provides an important condition for the future, and I hope that it will be retained. The Government have always had in reserve the sovereign power of Parliament to accept, or not to accept, what might be awarded by an independent tribunal. Never before has the claim been made that an arbitration tribunal has the last word in matters of public affairs. The Government reserved their position last time, and it was accepted as part of the conditions of going to arbitration.
Well, that is what I wanted to say, and it has more to do with the Finance Bill than with this more general debate on the economic situation. Until the noble Lord, Lord Wells-Pestell, drew attention to it, I had not realised that the Motion was so narrowly drawn; but the list of speakers bears the heading: "Debate on Government's Economic Policy". The highly interesting speech of the noble Lord, Lord Cockfield, earlier on, amounted to a general survey of the Government's economic policy, and much of the debate since has been on those lines.
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On the more general situation—and I shall not detain the House for more than a couple of minutes—listening to the debate, as I have been doing, and recalling the innumerable debates on the economy that we have had in Parliament and outside over the last 35 years, I wonder whether we shall ever stop talking about it. Will the economy ever reach the condition that Parliament need no longer have concern about it, nor even discuss it, except to distribute its rewards?
On the other hand, I wonder whether the mixed capitalist economy has a limited future in this country. There are some members of the Labour Party who think that it probably has only a limited future. I believe that probably the next Parliament will be a decisive one. However it is composed, I believe the next Parliament will be a decisive one for the course of British politics. There are those who want a stronger management of the economy; but I think it has to be realised that in order to manage the economy you have to be able to manage people. If you stop persuading them (and there are limits to persuasion) then you get into the field of coercion and the curtailment of liberty—and that, of course, is the future that some of us dread: that so much may have to be given up by way of personal liberty in order to secure economic equilibrium.
But we are beset by many problems throughout the world. New countries are coming into the field of manufactured goods. We have new competitors, and we are no longer able to take advantage of buying commodities at a low price, converting them into manufactured goods and selling them at a high price. Our profit is not going to be made that way. We have also been perplexed by the oil bonanza, which we thought was going to shower prosperity upon the country. Yet there is no doubt that the high exchange rate of 1980–81, which was such an encumbrance to our exporters, was lifted by confidence in this country, partly because we had a favourable contribution to our balance of payments and also a strengthening on capital account. We became strong in two elements of the economy, although the rise in the exchange rate weakened our competitiveness in the markets of the world. That was not our fault, let us say; but we probably did not respond as we should have done to the consequences of the rise in the exchange rate.
My fear is that the alternative strategy which we hear so much about in various quarters now—that there is an alternative to what the Government are doing; and I am sure there is; there must be—has to be accompanied, as it seems to me, by something that this Government have not got and the previous Labour Governments struggled very hard to get but failed to get, and that is wage control. "An incomes policy" is the more acceptable term to use; but unless there is an element of incomes policy then one is driven into monetarism. The last Labour Government attempted a combination of the two, but that proved so irksome to many sections of working people that they revolted against it, and the industrial and social unrest that followed undoubtedly damaged seriously the Labour Government's prospects of returning to office.
So here we are, with a new Government three years ago and probably a new Government two years from

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now, and no stability will come this way probably because we have not discovered the foundations of agreement to get the best out of the system. If we cannot get the best out of the system because some people want a different system, then I think we are going to be plagued with a divided country—divided industrially, divided politically. We are not going to have the unity of purpose to meet the challenges of the future. Other countries are going to have something more inspiring than we have to drive them on; and that goes for many of the new countries which are entering into the field of manufacture and international trade at the present time.
My Lords, these are only a few thoughts in my mind, because I feel difficulty in coming to grips with the mechanics of what may be needed when I have seen from experience so much difficulty in adjusting human attitudes to the problems which confront us. I think it is our conservatism, really, which is at the foundation of our inability to adjust; but as we are going now, I think we have the danger before us of a lurch to one extreme and then to the other. Somewhere, at some time soon, I feel, those who believe in the free democratic system that we have at the present time have got to find the basis upon which the country can co-operate more closely, and have a firmer purpose for the future than at the present time.
7.46 p.m.
The Earl of Longford: My Lords, I have such a respect for the noble Lord, Lord Houghton, that I am always anxious to agree with him, and I usually find it easy enough except when we deal with one of his special interests, like pornography, and then we sometimes have a little more trouble. But tonight there was no difficulty at all about following him, although I am perhaps slightly more optimistic about the future than he appears to be.
I shall speak, if I may, from a slightly different angle from that of most of the other speakers so far. May I say at once that the case for the Motion was brilliantly presented by the noble Lord, Lord Jacques. His speech was a small masterpiece (because it was quite short) and it was supported very effectively by other speakers. But for my part, I will sum up my thoughts on the main topic, in a sense, by a quotation from the all-party report of the House of Lords Select Committee on Unemployment. I stress the fact that it is an all-party report. It included, incidentally, on its committee a former Home Secretary, and also a brilliant economist in Lord Vaizey, who is equally brilliant whichever party he is adorning for the moment. At any rate, the other side were powerfully represented, as, of course, were our party and other groups. They say—
Baroness Seear: My Lords, would the noble Earl forgive me for interrupting him? I think in fairness one ought to make the point that Lord Vaizey did not agree with some important points in the report.
The Earl of Longford: My Lords, perhaps his brilliance flickered for a moment just at that time, but so far as I am concerned I would follow him a very
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long way for all sorts of reasons, some of them personal, except when he disagrees with my own party. Now I shall read this quotation, which may or may not be familiar already to the noble Lord, but I would imagine that Lord Vaizey would be happy with this conclusion. The quotation runs:
"We regard the existence of over 3 million unemployed as an affront; a prodigal waste of human resources; the source of much personal misery, and a stumbling block in the way of prosperity."
This is from the all-party committee. It continues:
"Although unemployment has taught and is teaching salutory lessons about the risks of inefficiency, over-manning and restrictive practices",
as referred to by the noble Lord, Lord Cockfield,
"the price is too high".
So that was the conclusion of the all-party committee—that the price is too high. I will not develop that part of the argument, which has been dealt with already very effectively.
Again, other speakers have vividly illustrated (and there are more to come who will illustrate just as vividly) the bitter miseries which are the direct consequences of the Government's policies. None of us, I would hope, whatever our party, would fail to agree about the fact of the pain inflicted. We on these Benches, even if we believed that there would be some ultimate benefit, would consider that the price paid in human waste and suffering in these years is far too high. The House may have heard, perhaps rather too often, that for many years I have been associated with some of the most vulnerable groups in our society: the homeless young, the young blacks, the mentally afflicted and the ex-offenders among them. Groups like these and many similar groups are probably more damaged than any others except perhaps the old, or the indigent old referred to by the noble Lord, Lord Hatch, at times when the social services are being savagely interfered with.
I have time this afternoon for only one illustration and I would draw it from the wider area of average young people and not those who are thought of as especially disadvantaged. I was talking at the weekend to a chaplain in a large comprehensive school in the North of England. This chaplain tries to keep in touch with the young people when they leave school. He sees them about in the town and so on. He told me that, leaving out those who have gone on to full-time education, he had not, until last Tuesday, met a single young boy or girl who left a year ago who had got a job—not a single one. But last Tuesday one boy came up to him with shining eyes and said: I have actually got a job—one job out of all those school leavers.
Yet our Prime Minister, about whom I shall be speaking respectfully but candidly in a moment, had this to say in an interview with Mr. George Gale in this morning's Daily Express. I am now quoting Mrs. Thatcher:
"You see, Mr. Gale, there is no need for a person of 16 or 17 to be unemployed"—
I may tell the noble Lord that I am reading from the Daily Express. Although the Daily Express is not always completely correct I do not think they could have got this wrong. She said to Mr. Gale that there was no need for a person of 16 or 17 to be unemployed. If the noble Lord wonders whether I have taken it out

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of context, then I am perfectly ready to pass this across to him so that when he replies he will see the context in which it was said. That is what she said—when the actual facts, to everybody who knows them, are totally opposite. In charity, I am afraid we must put it down, as they say in certain theological circles, to invincible ignorance. It is not a quality that we particularly value in our national leader.
Lord Boardman: My Lords, I have not read the article, but could it be that that was in the context of youth training schemes and youth opportunity schemes which are going to ensure that no one is without a job or a training opportunity on leaving school?
The Earl of Longford: My Lords, I am ready to let the Minister see the full context and let him answer if he feels it necessary. I was quoting what she said and setting it against the real truth. Of course, I know that she would never have said it if she knew what the real situation was. Incidentally, I doubt whether the Box is going to help very much here.
My Lords, I hope not to be misunderstood if I say what is commonly accepted: that the present Government's strategy is associated to an exceptional degree with the present Prime Minister. She is a lady whom I respect and, indeed, admire as I think most decent people do, as a person, so that there is nothing remotely personal in what I am saying. Nobody supposes that the policies being followed by the noble Lord's party were devised by the noble Lord, Lord Cockfield. With all his great abilities, he is an instrument of their policies. No one supposes that they are a continuation of the policies of Mr. Harold Macmillan (who was referred to earlier) or of Lord Butler of or Mr. Heath. They have come to us with the present Prime Minister. As someone who once taught history, I can think of no Prime Minister in our whole history who has imposed her personal philosophy to such a large extent on the social and economic life of the country. I do not say that in denigration. If her ideas are right and she is the only one who possesses them, well, let us have them imposed on us. I am just recording a fact about which I think there can be very little argument.
The Prime Minister has described herself as a conviction politician. I accept that unreservedly. I would go further and describe her as a moralist politican, and I say that in no derogatory sense at all. I have been labelled in my time as a do-gooder. I do not see why we should not have a do-gooding Prime Minister; that is, if she is doing good. I would define her as a moral person—not only in the personal sense, which I take for granted, but because she is one who has strong moral ideas which she feels should be laid before the nation and which she hopes to persuade the nation to adopt. I hope that that is not said in an offensive way.
She is deliberately, and very articulately, setting out to improve the moral standards of this country—and I am not saying that they do not need improving. She clearly believes that much in this direction can be achieved both by exhortation and by legislative action. She has called on various occasions—and I am not now referring to the Falklands issue at all; because she has been making these speeches, as I think noble Lords will confirm, for some years—for a return to the
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ancient virtues of self-discipline, self-sacrifice and the like.
No one doubts her power of self-discipline and, on the subject of self-sacrifice, I think since as I am speaking rather sharply I should not fail to mention the point, which is entirely to her credit, that she has apparently given up a quarter of her official salary; so do not let me suggest that there is any weakness on that front. But we must look behind the words used—"self-discipline" and "self-sacrifice"—to the implications in practice. I discover in her application of these ideas a conviction that the Welfare State has gone too far. That idea is, of course, anathema to those of us (most of us, I think), on these Benches who think that it has not gone far enough. I am not too sure about my old friend (if I may call him that) Lord Boyd-Carpenter. I am not quite sure from his speech today where he would stand on that particular intention. But, at any rate, it seems fairly clear that this Government, led by this very strong-minded and eloquent Prime Minister, take the view that the Welfare State has gone too far. Putting it now not into her words but into my words, it seems to me that she believes that in our attempts to be our brother's keeper we have dragged both ourselves and our brothers down into the pit; and she feels that that has been the wrong approach altogether.
Along with that I find, in her mind—and of course this has been in the minds of many Conservatives for years; but they have had rather to suppress these convictions until they were given the leadership of this lady recently—a touching belief in the teachings of Adam Smith. On occasions, she has praised Adam Smith and the Wealth of Nations which, as some will remember, was published in 1776. Now, along with that, goes a belief in the philosophy of the competitive market. I am sure that the noble Lord, Lord Cockfield, is not going to differ from the market philosophy. That, at least, I am sure he will accept. And along with it, too, goes a deification of economic man. Economic man, of course, the man of the economic textbooks (who had rather fallen into disrepute recently) is now back again.
He is the man who enriches all of us by seeking to enrich himself in all circumstances. That is the philosophy of Adam Smith, and some of the older ones of us will remember being taught our economics along those lines. Recently, that has been thought rather reactionary and out-moded. But economic man is back again. It is a painful fact that economic man is today simply a synonym for greedy man. I believe—and I have said this here before and I know I am saying something that no one will particularly like—that collective group selfishness is the plague of the modern age, not only in this but in other industrial countries; and that applies whether we are talking of business men or professional men, doctors or Government servants or working class people.
The only comment I would make on the last point is that the noble Lord, Lord Boyd-Carpenter, spent quite a lot of time criticising the trade unions. If the trade unions have developed any philosophy of sectional selfishness they have learned it from higher up; they have learned it from the business men and the wealthy people who have pursued their own interest to great advantage when the working men were im-

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potent. If I may say so—and this has been brought up by more than one speaker—they are pursuing it pretty effectively through the agency of the present Government. However, let us leave that point to look after itself for the moment.
I shall never believe that the unremitting pursuit of what appears to be group self-interest is any kind of escape from our present troubles; but I do not despair. That is why I said I am more hopeful than the noble Lord, Lord Houghton. He was so pessimistic that I think he had to go and refresh himself in more agreeable surroundings. When Mrs. Thatcher first became Prime Minister she declaimed from the steps of Downing Street with passionate sincerity St. Francis Assisi's prayer for peace. I am sure it is familiar to all noble Lords, but maybe I can remind you of a few sentences:
"Lord, make me an instrument of Your peace. Where there is hatred let me sow love; where there is injury, pardon; where there is doubt, faith; where there is despair, hope; where there is darkness, light; and where there is sadness, joy"
Other fine words went along with those.
It happened that just before she became Prime Minister I had written a small book about St. Francis of Assisi, and that is why I took a keen interest in her views. I was glad to discover later she has always looked upon St. Francis of Assisi as one of her favourite saints. Whatever else I am criticising her for this evening, I am not criticising that judgment. What does St. Francis of Assisi stand for in so far as we can apply the spiritual teachings of a saint to our hard, worldly affairs? Whatever else he does not stand for, he does not stand for hard line policies which have produced 3 million unemployed and made it impossible for school-leavers in large parts of the country to get any kind of job.
Here, as I draw to a close, I venture to quote one more saying from the all-party report on unemployment:
"It is a hard but inescapable fact that in a democracy any policy requires a basis of consent."
I will never believe that this country will consent permanently to a policy which leaves us with 3 million unemployed. May I humbly and respectfully suggest to the Prime Minister that she thinks again. May I beg her to ask herself whether the true wealth of nations—in this case Britain—can ever be found in ruthless dedication of statistical targets. Should we not rather seek it in a very different area of values—values to which she has made it plain that she is in no way insensitive, as is evidenced from her longstanding devotion to the ideals of St. Francis of Assisi?
8.4 p.m.
Baroness Lane-Fox: My Lords, I regret that I was not present to hear the maiden speech of my noble friend Lord Kindersley about which I hear such good reports. However, I am delighted to have been present to hear the splendidly fact-filled maiden speech of my noble friend Lord Rootes and I should like to add my congratulations to the many that he has already received.
The Motion asks to what extent the real cost of Government economic policy in the past three years has been borne by those least able to bear it. I bring to this subject a simple view formed partly as a consumer
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and partly as one of those who has for many years sought to obtain higher pensions and allowances to relieve certain sections of hardship. The plight of pensioners, whether supplementary, old-age or invalidity, easily becomes unacceptable to those of us who know and care, and makes us long for a goose to lay the golden eggs, or even for a munificent Father Christmas to fill the deserving pocket purse or stocking. In fact, to long for the wealth-producers referred to by my noble friend Lord Boyd-Carpenter. Of course, we seldom speak of the increases in pensions, mobility and other allowances, for if we did, this would weaken our case for the further increases which must be pursued for long to come if we are to compensate for gaps in various benefits as they have existed for years under successive Governments of both parties.
As your Lordships will know, despite the inadequacies and anomalies that still exist, increases in pensions have been considerable in the past three years. Notwithstanding this, the real enemy of the pensioner is high inflation. To receive a higher pension only to find that prices have risen outside your purchasing power is a constant source of anxiety and unhappiness.
High inflation hits first and hardest at those with little or no income margin, with no fall back. In addition, it tortures those who have lived thrifty, hard-working lives and have put aside a nest egg for a rainy day. For those people the rains came with high inflation and some pensioners have had to liquefy their assets just to pay to live. Undoubtedly, this thoroughly unsatisfactory situation required to be fought on behalf of many groups of pensioners. Now, a sharp reduction in the rate of inflation has been achieved with an underlying downward trend in the United Kingdom inflation rate for the first time since the 1950s, I believe.
Over the past three years, the Government's policy appears to me to have aimed to make the country better able to cope with current world recession. The fact that output per head in manufacturing has risen sharply since 1980 backed up by a comparatively lower rate of inflation, suggests that industry will become more competitive and attractive to investment. As capital investment is the seed corn for future manufacturing prosperity and competitiveness, surely the uncomfortable steps taken to achieve this end are justified. If we do not have hearts of stone, the dreadful dilemma of unemployment touches all of us particularly those of us who have ourselves searched for employment.
But the Government have taken special measures. Perhaps the most important one, as announced this afternoon, is the abolition of hire purchase restrictions. But there are other measures to employ many more of the young unemployed such as in an expanded Youth Opportunities Programme, a Youth Training Scheme, Young Workers Scheme, Community Industry, Training for Skills and Unified Vocational Preparation, plus arrangements for numbers of pupils to stay on at school. Unemployed adults will be helped by the Job Release Scheme, Community Enterprise Programme and Enterprise Allowance Scheme. There are other schemes too. So the effort is there. Of course we should all like much more to be done. But it is a great start, and thank goodness for that. What is certain is that the Government's prime purpose "to defeat

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rising inflation" is succeeding. I repeat that it is my belief that those who have the least to lose are the ones worst hit by economic crises, recessions and inflation. Therefore, I think that those termed in the Motion as "least able to bear it" have been suffering the trauma of rehabiliation towards a more stable economy to rescue them from future undue inflation. Finally, rehabilitation can be hard and almost cruel to bear for the weak, but (as on this occasion) it can be immensely beneficial.
8.10 p.m.
Baroness Ewart-Biggs: My Lords, I should like first to thank my noble friend for introducing the subject we have been debating this evening and for presenting it to us in such a very lucid and human way. I should like also to congratulate the two maiden speakers. Remembering the great trauma that the occasion presented to me, I very much admired their calm and clear delivery.
I thought I would concentrate on the second part of this Motion, as the previous speaker has done—namely, on how the Government's social and economic policies are affecting those least able to bear them. First, however, may I point out that the recent findings of a research programme into aspects of deprivation which was carried out by the Department of Health and Social Security and the Social Sciences Research Council are very relevant to the particular issue we are debating this eveing. As the report defines the three more gravely disadvantaged groups at present in Britain as being the unemployed, the elderly and the single parent family, I thought I would try to evaluate how economic and social policies are affecting these last two groups, as the unemployed have been singled out for attention already by several of my noble friends.
The first reason why these two groups have fallen into the poverty trap is that the numbers in each case have risen dramatically and very fast in recent years. Statistics now reveal that one family in 10 is headed by a lone mother, with a much lower proportion by a lone father; and there are about eight million people aged 65 or over in Britain, many of them living alone.
Originally, speaking generally, mothers found themselves alone mainly as a result of widowhood, but now the numbers have been swelled by increases in illegitimacy, divorce, separation and a greater tendency of lone mothers to establish households on their own. Widows, recognised as they were by the state as being a legitimate form of single parent, are slightly better provided for, in that they receive a pension whether they work or not. But the incomes of other categories of single mothers are very deficient. Apart from any funding they can get from the fathers of their children, state benefits are not sufficient to allow mothers to stay at home and look after their children in any degree of security, and lone mothers are put at an even greater disadvantage by their lack of opportunity to boost their income. On the one hand, single mothers lack a partner to help with household costs and, on the other hand, their parental responsibilities mean that they can rarely take on full-time employment. Furthermore, there is the additional injustice that single-parent mothers who wish to work receive very little help from a tax system which does not even
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acknowledge the costs of child minding as an allowable expense. Also, for those mothers who do not work there is no real financial recognition in tax or benefit systems of their vital role in child rearing. Apart from the adverse financial consequences, this treatment makes the mother feel that the rest of society is unsympathetic to her particular predicament.
Furthermore, it should be remembered that a failure to guarantee single-parent families an adequate income is contributing to their disadvantage in other ways. Quite apart from a low income meaning little to spend on necessities such as food and clothes and on so-called luxuries which families need, these families, whose choice of somewhere to live may be restricted by a lack of money as well as by social stigma, are more likely than most to end up in very poor housing.
Such disadvantage probably goes quite some way to explain why children from one-parent families tend to do less well at school than other children. Their home environment is not conducive to physical well-being or any kind of scholastic study. They are in all probability suffering from a repercussion of the tension and anxiety that single mothers, facing life alone, are beset by. So, through a combination of poverty, poor housing and additional tension, the children of single parents are among the most likely to suffer cruelty and abuse and eventually to be received into care.
Another cruel facet of the circumstances surrounding single-parent families is that a lone mother feels her poverty more as it affects her children. A lone mother is very conscious of her own inadequacy, which she may feel led her in the first place to her existing predicament. She recognises that the same inadequacy prevents her from coping with life, dealing with the mounting pressure of debt under which she often finds herself and responding to the demands put on her by her children. The final cruel paradox is that a single parent is more likely than others to run into debt through her desperate wish to see her children better dressed and provided for than others, as a way to compensate them for the absence of the other parent. She will do her buying mainly through mail orders and then, when the bills start to come in, she can never catch up. She is continually running in order to stay in the same place. So, although the system will have given her both support and care during pregnancy and immediately afterwards, her allowances are in no way in line with the growing cost of children as they get older. Thus her ultimate fear is that her own inadequacy in dealing with all these problems will lead to her child or children being put into care.
As I said at the beginning of my remarks, there are now 8 million people in Britain who are over 65, and the evidence points strongly to the fact that the structure of social policies is no longer protecting them from extreme deprivation. This deprivation is brought on by an array of factors such as long periods of retirement, the value of savings eroded by inflation, small state pensions and few opportunities to earn extra money. Perhaps the most noticeable consequence of poverty on the elderly is the effect it can have on their health. Old people living alone have to buy food in small quantities, and hence expensively; and many seem not to be able to afford a nutritious and a varied diet. More important, perhaps, is the difficulty that many old

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people currently experience in keeping warm. Recent and massive increases in the price of fuel seem responsible for the alarming rise in the cases of hypothermia and death among old people that have recently been reported.
In more general terms, the physical care of old people may also suffer. The elderly frequently live in unmodernised housing and are rarely in a position to improve their circumstances. Also, they are unlikely to have any spare cash to allow them to compensate for their personal disabilities by enlisting the help of non-statutory services. There can be no doubt that all these difficulties are being aggravated and will be further aggravated by the cuts in the social services, in local authority spending and in the health services. In fact the system is no longer really geared to the size of the problem presented by such a large group of elderly people.
So, what can be done to relieve the plight of the elderly and stop them feeling, as some do, that they are a burden on society? And what can be done to alleviate the multiple deprivation of the single parents and to prevent their children becoming alienated from the community and a danger to it? First, of course, there is a great deal the Government can do in re-aligning their social and economic policies to meet real needs; but there is also something that members of the community in general can contribute. There can be no doubt that the stigma of poverty can only be accentuated by society's ignorance of social problems and social policies. I have often felt that there prevails in Britain more than elsewhere a great inhibition upon the discussion of social problems such as poverty, old age, crime, race, child abuse, mental handicap and so on. The press and the media certainly make a contribution to the discussion, but that is often tinged either with sentimentality or with sensationalism, and consequently can have an adverse effect. Undoubtedly, increased social awareness can but lead to a greater tolerance on the part of the more fortunate members of the community towards the less so. It must be true to say that the individual does have a great responsibility in setting the tone: it is his values and those of society generally which will eventually determine the extent of the attack made by Government against disadvantage.
Finally, my Lords, what are the changes in Government policies necessary to help the most deprived? First, since bad housing contributes to the most basic deprivation in the cycle, the trend of recent years towards a reduction in spending on housing should be reversed and, instead, the construction of houses for the low income bracket should be given a very high priority in social policy and public expenditure.
Secondly, lack of income remains the common denominator of deprivation, and many of the poorest members of our society are those who depend for long periods on state benefits. It is now quite evident that, certainly so far as the elderly and single-parent families are concerned, basic benefit levels are quite simply inadequate. These should be increased as a matter of priority, and, in particular, supplementary benefit levels. On another aspect, the aim of the National Insurance scheme was, essentially, to provide a comprehensive and adequate income maintenance
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system for those unable to support themselves by work. At present, it excludes too many people because of the restrictions of the categories and contribution conditions. Thus, if contribution tests were withdrawn and entitlements redrawn, benefits could be extended to, among others, single-parent families. And, in order to relate to new patterns of living and working, there is a very great need to revise the co-ordination of fiscal and income maintenance policies.
A further way of helping children in all the low income families is through a substantial increase in universal child benefit allowance. But, as I said earlier, on account of the present high cost of food and children's clothing, the expenditure incurred in feeding, clothing and entertaining a 13 or 14 year old child bears no resemblance to the cost of looking after a baby or a small child. It would, therefore, be very much more appropriate if benefit could be more closely geared to the actual cost of children which, of course, rises as they get older. So may I end by saying, as the noble Lord the Minister said, that while the tennis ball is busy bumping along the bottom, the realisation of the old dream of one nation is becoming more remote.
8.22 p.m.
Lord Davies of Leek: My Lords, we have had a long and interesting debate and, quite certainly, the maiden speeches of the noble Lord, Lord Rootes, and of the merchant adventurer, the noble Lord, Lord Kindersley, as well as the speech of the noble Viscount, Lord Chandos, were—and I hope that I do not sound pompus or condescending—excellent contributions to this debate. All the speeches were worth listening to and being looked into by the Government. Undoubtedly, over the gamut of the debate there is quite a lot of information for the Government who are now in power to sift out useful topics.
It is late, so I shall not trespass too long on the time of the House. I travelled today in my car some 180 miles and I listened to the service in St. Paul's Cathedral. It was inter-denominational and there were religious people of different points of view. It was a brilliant service, soberly put forward, weighing the issues of peace and war, weighing the problems confronting us today and paying tribute not only to the 250 young men who died on the Falklands but to the 400 men who have died while trying to bring sanity into the almost impossible problem of Northern Ireland, together with the thousands of others who have been injured. That is the kind of world that we are living in and it is not one about which to make cheap jokes across the floor of the House.
Speaking as one who has spent most of his life in South Wales and who saw the poverty and misery that unemployment can bring, I do not believe that we are succeeding in a nation where unemployment is now creeping up to 3·2 million and where we could, by the next General Election—I say this without exaggeration and it is nothing to be proud about—have 4 million unemployed. What answers do we find in this Chamber, or anywhere else in the governmental system, to that problem? Not so long ago I saw shipbuilding in Korea, I have seen the motor-car factories in Japan and I have seen work going on in

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many other parts of the world. We are no longer top dogs, as we were in the 19th century, when we had 290 steam engines before the rest of the world had any. We are facing that situation and it needs the best of thinking.
I have one caveat for the Government, who are in a simple state of euphoria. There is no guarantee that the Conservatives will win the next election, if we creep up to 4 million unemployed. We are more likely to get a state of society which is on the road to an authoritarianism which could be dubbed fascism. That is the danger of the world in which we are living. I have seen fascism in Spain and in many other parts of the world, and there should be a reality on both sides of the House about tackling this problem of unemployment, and about giving dignity to human beings.
My noble friend Lord Jacques, in a brilliant 14-minutes speech, called attention to the real cost of the Government's economic policy over the past three years, and to the extent to which it has been borne by those least able to bear it. Those least able to bear it are the axle on which the wheel of the misery that we are in today is turning. The Treasury analysis of the movements of real take-home pay, given in answer to a Parliamentary Question, shows a sharp decline in living standards over the past two years. I do not want to give masses of statistics, but there was an improvement in the first year of Tory rule which was much greater for the better-off than for the low paid. Taking the three years of Thatcherism, there has been a 4·1 per cent. decline in real pay for a single man on half-average income, and a 3·2 per cent. decline in the standards of a married man with two children.
The Financial Times stated:
"Sir Geoffrey Howe, Chancellor of the Exchequer, at a press conference on 6th July, said that the Government's approach means substantially lower pay rises than last year and, in the face of the present level of unemployment, might well mean no pay increases at all."
The Financial Times said that undoubtedly this would lead to higher unemployment. I do not want to make cheap jokes about the lady Prime Minister, but she could be described as the panjandrum of politics at the present moment, because she does not seem to be sure of the direction in which she is going. There are more "wets" turning up in the Conservative Party now than ever before in its history and they are beginning to grumble.
Here is the 64,000-dollar question. If 3 million unemployed, and a spread of labour-saving machinery, is called success, there is no hope in that and concept of capitalism. There cannot be any success in a society that is doing well for the upper crust if 3 million of the lower crust are bumping along the bottom. Safety nets for the unemployed and the sick have been attacked, and some have been destroyed. I am going to ask only one question, and will then sit down, because I promised to be brief. I want to know whether it is true that the Government intend to drop the fair wage contract, which was originally set up in 1891. There was a fair wage concept at the International Labour Office, and in 1946 the Labour Government confirmed the fair wage contract.
What does this mean? It is not abstruse or esoteric. This is all that now stands between Britain and noncompliance with the International Labour Office in
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Geneva. The fair wage contract ensures that when authorities give work to private contractors those contractors cannot undercut—because they must pay fair wages in an effort to get lucrative local government or Government contracts anywhere within the European Convention or within Europe. Convention 94 of the International Labour Office came into force in 1952 and was ratified by Britain. Have this Government now indicated that they may renounce this convention, which can be done at 10-year intervals? The Government will be looking to renounce it, when? They are to renounce the fair wages clause at the International Labour Office in September while we are in recess. This is monetarism gone mad. This clause is a protection for contracts. It is a protection for Conservative Governments or Labour Governments when in power. The fair wages clause should not be interfered with. I shall leave my question at that. Much though I should like to speak for another 10 minutes, I shall sit down and shall hope to get an answer to my question.
8.31 p.m.
Lord Selsdon: My Lords, I have very considerable sympathy with the Motion of the noble Lord, Lord Jacques. Also I have had a high regard, over some time in this House, for his integrity and sense of purpose. However, during the past few years in various economic debates, particularly since this Government have been in power, I have not found one straw to clutch at which leads me to believe that noble Lords opposite or their friends in another place have a credible alternative policy when the priority, agreed by all concerned prior to the last election, was fighting inflation. That does not mean that in any way I wish to criticise or that I shall fail to listen to the views expressed by noble Lords on the Benches opposite.
However, I recall a saying of the developed world: "A man who does not know"—and indeed they do not know what to do—"is a teacher. Do not ignore him. Heed him". I am sure my noble friend Lord Cockfield will advise noble Lords opposite that he will take note of their suggestions—although, as I say, no credible alternative policy has been put forward. The same saying continues: "A man"—or perhaps a woman—"who knows that he"—or she—"knows, is a leader. Follow him"—or her. This is what I believe we should do with the present Government. They are a strong Government. They are resolute. They have a sense of purpose. While the impact of their policies and the pressures thereby created may not have fallen evenly on people over the past three years, it is a fact of life that there is a strong resolution.
The same sense of purpose and knowledge came through in the speeches of my two noble friends here. They certainly knew that they knew, and they conveyed that impression to us. We should follow them. The same saying continues: "A man who does not know that he knows, is asleep. Awaken him". My two noble friends rested for some time before entering your Lordships' House. Now that they are awakened, I know that we shall have the pleasure of hearing from them more often in the future.
I submit to your Lordships that the country as a whole has been awakened, and that in or among what we call managers—or, as some on some sides would

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say, the wealth creators, or others the brains, or those who have the potential to lead and develop—there is a new thinking. I submit that a few years ago the main ambition of the manager was to try to climb the next rung on the corporate pyramid within which he worked, claiming that he was not paid enough to survive in a high inflation society, that he could not afford a mortgage, that he could not afford holidays. Therefore he sought more money. That same seeking for more money spread throughout all sectors of industry and public and private life. Now I submit the tide has turned and that the same people who were discontented before are saying, "Well, I am not too badly paid but I am not being productive enough", or, "I do not have the chance to build, develop and create", because prosperity in this country is created by individuals who come together or even work on their own.
My own family had some ties with the motor trade. I recall being told that a motor-car was not made anywhere: that the individual components were made in garages and back rooms and put together by men of foresight who added the brand name; and that as soon as the motor trade brought everybody together under one roof and the individual initiative, or the free thinking of an engineer was tied into a corporate structure, productivity fell. I think we have seen a return to the possibility of increased productivity.
I would summarise it in this way. Some time ago there was, I believe, a Member of your Lordships' House who, when asked by his son what his son should do in order to be productive and successful, said, "My son, there are only three things that you can do. Either you are one of them that do, or you are one of them that advise people how to do, or you are one of them that takes the credit for them that do. If I were you, I would think about being the first, once again, because there is no competition in Britain these days". If we can persuade people to get out to do or to create, we shall change the structure of our economy. Here the barriers and the burdens imposed by Government unfairly are restrictive. By this I mean the burden or the way that taxation falls. It falls least upon the biggest and the largest because they are encouraged to reinvest and to expand, and it falls heaviest upon the smallest. I have raised this theme before, but it is one which I should like to suggest should for ever be considered.
There are two practical suggestions which I should like to put forward. One begins with the motor industry. But I would not say the motor industry as such. It begins by the allocation by Government of existing resources. To me, when so many people are crying out for resources to meet a demand, it seems strange that a large Japanese car company which has announced that it may wish to invest in the United Kingdom almost has to stand aside in the rush by public authorities and others to woo it, creating in my mind the impression that there are more than sufficient resources to support inward investment, a theme that I have raised before. I do not believe that you can bribe people to invest. They will invest if the demand is there. If it is not, nothing on earth will persuade them, because it will be a mistake in the long run.
Therefore I submit that some of the resources which
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may have been allocated to try to attract companies such as Nissan or others should, maybe, be reallocated to support demand which does exist. The theme again is that demand is greatest at the moment in the developing world, which is starved of resources and where perhaps a more judicious and pragmatic application of increased aid funds could produce increased demand at home, which would create more jobs and encourage investment. Currently, something like 7 per cent. of our aid budget is allocated under the aid-trade provision—that is, to create or to win orders overseas, which in fact effectively create jobs at home. The gearing of that is quite incredible: that £1 creates perhaps £4 worth of business, or orders, and with it comes the demand. I must pause for a moment to refer to the work of my noble friend Lord Kindersley with the Commonwealth Development Corporation which has shown remarkable courage and success around the world. Once again I believe that it could benefit from increased resources.
So I started with the car, which was the backbone of our economy, submitting that resources allocated to encourage people like the Japanese to come here may be better allocated in other areas. The second thing is new resources and new investment. I think that now that we have a stable economic situation (and it is stable, with indicators pointing in the right direction) with people complaining that perhaps demand has been too squeezed, there should be some form of expansion. This is a point which my noble friend Lord Cockfield mentioned this afternoon. But coupled with that—and the comments of my noble friend Lord Boyd-Carpenter—there may be a need for capital investment. I think that there is a case for sewerage and for water treatment, although I must declare an interest. As chairman of a consortium called British Waste Water, this is something which I should welcome. However, one must look at what is politically acceptable to the current administration and at what would make the greatest sense. To me, this is more related to the subject of tomorrow's debate, to the area of defence as a whole.
I come back to the second pillar of our historic industrial development, the shipbuilding industry. It is indeed sad that a ship should sink and that the owners should wish to build her replacement in a Korean or Japanese yard because the price is better. It is not the price; it is perhaps the productivity that is better. I shall for ever rue the day when my noble friends and I did not fight strongly enough on the nationalisation Bill for the ship building industry, because, without doubt, our productivity has fallen—although British Shipbuilders themselves have reduced their loss and, effectively, most of the public corporations spend their lives trying to plug the hole in the bucket rather than trying to expand. But surely, a situation has arisen that none of us foresaw and none of us wish, our ships once played a major role in the world, and we should give careful thought as to whether our future strategy in relation to ships—be they military, naval or merchant marine—should be harmonised. I have always supported the navy; my son wants to go into it and I was in it too. History plays a part—and the noble Lord, Lord Hatch of Lusby, will understand that.
There are capital ships these days; these are submarines

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beneath the surface. In the last war they may have been aircraft carriers and in the First World War the dreadnoughts. They would have been ships of the line in Nelson's day. Then there are the rest. The rest in general are floating platforms. There are more floating platforms today than there have been, maybe, since the time of the "Mary Rose", when one loaded as much armament as possible on the top and set to sea. I submit that for the future these floating platforms—whether they be for the Navy or the Merchant Marine—could be of similar construction and design. It calls for some form of thinking in the shipbuilding field, but, allied to it, perhaps, considerable investment in the defence field as a whole. The defence estimates will show that there are roughly £1·8 billion of defence sales around the world. The events of recent weeks have drawn the attention of the rest of the world to the supreme competence and confidence of the British in the defence field. I think that is something which it would be timely and opportune to exploit, and perhaps link it with increased investment by the Government in that field.
For the first time in a long time I sit down in an economic debate with a sense of hope. Perhaps it is because more people around the world think that we are going to do better and well in the future than we do ourselves. My own job takes me to many countries, and in the past six months I have come across great praise for the strength of purpose of our Government and for the way in which policies are being tackled, and—perhaps more—that for the first time Britain is becoming competitive and constructive in many fields abroad. I do not believe that we should see a change of policy. Some mild reflation is desirable. I am grateful to the noble Lord, Lord Jacques, for having raised this issue.
8.43 p.m.
Lord Bruce of Donington: My Lords, the statement by noble Lord, Lord Selsdon, which many of us may have thought erred slightly on the side of complacency—that we had in his view reached a stable economic situation—presents the precise reasons for the initiation of this debate by my noble friend Lord Jacques. If wide sections of the Conservative Party are convinced that this is really a stable situation, then the speech of my noble friend Lord Jacques in which he drew attention to the consequences of the Government's policies upon certain sections of the community, is more than abundantly justified.
This has been a long and interesting debate. It falls to me also to add my congratulations to the noble Lord, Lord Rootes, on his maiden speech. I must express my apologies to him that I did not realise it was to be his maiden speech, but I must say that he spoke as one who has thoroughly accustomed himself to the whole attitude of the House and its atmosphere. We hope that he will speak many times again. I should also like to congratulate the noble Lord, Lord Kindersley, on his maiden speech. We do on occasions, as we all know, receive very valuable contributions in the field of finance. Some of them are not always unanimous. They sometimes come from the Cross-Benches and have even been known to stray into the Front Bench opposite. But to have another
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contribution from an expert in the financial field is always valuable in any debate we have.
In the course of the speech made by the noble Baroness, Lady Seear, she seemed to suggest that those of us who disagreed with her were guilty of making partisan speeches. The noble Baroness is well noted for her very moderate and genial approach in this House, but I rather wish she would listen to a playback of her quite partisan attack on the Labour Party. I sincerely hope that when she feels inclined to make strictures on those whose duty it is to criticise where criticism is due, she will also read—if she did not hear—the most admirable speech made by the noble Viscount, Lord Chandos; a speech to which, even though the noble Viscount does not belong to my party, I am very pleased to pay my own tribute.
It must not be imagined that we do not, as Members of this House, have an obligation to criticise in the most stringent terms, if necessary, those whose whole philosophy and convictions are diametrically opposed to those of us who believe in our beliefs with equal sincerity. Perhaps I may commend to the noble Baroness, Lady Seear, the observation that those who cry, "A plague o' both your houses" very often end up with a plague themselves. There is no case in this modern age for benevolent neutrality that is so dulcet that it blows over all the differences. Otherwise, we are not performing our functions as a house of debate within a free democracy.
In the course of the debate, my noble friend Lord Jacques was admirably supported, I am sure your Lordships will agree, by my noble friend Lord Underhill, who graphically drew attention to the various vistas which have been held out to the country over the past three years as to the possible future course of our affairs. Also, we had from my noble friend, Lord Ardwick, the somewhat pertinent view—to which I hope the noble Lord, Lord Cockfield, will reply when his turn comes—that so far the Government have failed to make any proposals whatsoever, or make any forecasts whatsoever, concerning unemployment. I venture to repeat the question of my noble friend: what do the Government propose to do about unemployment, aside from many of the measures which must be regarded as temporary expedients and which, to some extent, must be regarded as a means of reducing the signing-on numbers and of lowering the apparent figures which people have to take into account?
Then there was the very moving speech, many may feel, from my noble friend Lord Wells-Pestell, who speaks with deep knowledge and deep passion concerning those millions of our fellow countrymen who have suffered severely as a result of the policies that have been imposed by Her Majesty's Government. And I will come to the observations of the noble Lord, Lord Boyd-Carpenter, on this matter at a little later stage. I well recall him over a year ago saying that we had to endure the bitter medicine. All I would remind him is that it is mainly the poor that have the bitter medicine and it is the rich that have the benefits so far.
There was the speech of my noble friend Lord Hatch of Lusby, who spoke of the way in which the economies of the developing countries were proceeding, the effect that they were having upon our own

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prosperity here, or otherwise our own economy here, and the effect they were having on the European economies. Then there was my noble friend Lord Houghton of Sowerby, who, after making some very learned observations on the Finance Bill itself, which was the formal subject of the debate, did utter a fear which found an echo in the hearts of many of us when he said that he did not see the economy and society developing on the lines on which it appeared to be bent without some coercion eventually emerging within our society. In view of the long experience of Lord Houghton of Sowerby, this is something that we would do well to bear in mind.
My noble friend Lord Longford made his inimitable contribution in drawing the attention of the House to the sometimes conflicting strands that he seemed to find in the mind of the Prime Minister, and I thought that in requoting the citation from Saint Francis of Assisi he probably brought home more poignantly to the House the departure of the Government from the philosophy that was propounded than possibly anything else could have done.
My noble friend Lady Ewart-Biggs dealt, as she always does, very expertly with the fate of those that are deprived but not necessarily unemployed. Sometimes, although we concentrate on the unemployed, and very rightly so, we tend to forget the other people who are deprived. Then my noble friend Lord Davies of Leek spoke movingly of the service at St. Paul's and also expressed his misgivings as to the way in which society was going under the policies of the present Government.
My purpose here tonight will be a very limited one indeed, because most of the points that were made by the noble Lord, Lord Cockfield, have already been dealt with in his absence by my noble friends. But tonight I propose to meet the Government head on and to invite them to answer, not necessarily now but later, when they have had an opportunity of examining what I have had to say. One of the advantages for the Government in speaking a second time—certainly do not complain of the pleasure of listening to the dulcet tones of the noble Lord, Lord Cockfield, twice—is that in replying you can always ignore any point upon which you are unsure; one can always refuse, or fail, to answer any question put in the hope that ultimately one can get away with it.
The Government, after having abandoned their monetary controls as a means of getting the nation out of its ills, having almost forgotten about the public sector borrowing requirement, except when it suits them, having almost abandoned out of decency the whole question of public expenditure, bearing in mind that the extra unemployment they have created is already costing the country over £9,000 million a year, have now come to their own alibi to explain the position in which we are. Let us make no mistake about the position. Let us count the benefits over these last three years and two months. We have inflation running at a rate which is one penny in the pound less than the rate of inflation when they took over. Inflation has not come down. In fact, the value of the pound compared with when they took over is now approximately 66p. Prices are still going up. I certainly give the noble Lord this—I do not wish to
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deny him the achievement—the rate has now come down by one penny in the pound below what it was in 1979. I give the noble Lord that.
And what else have the Government achieved? They have achieved a slight increase in output over the last one or two months. As the noble Lord now admits, in contradistinction to his earlier speeches, it is bumping along the bottom. And the noble Lord sought to derive some comfort from that situation, in referring to his prediction that it might rise 1 or 2 per cent. over the next year or so, by referring us back to the good old Conservative days when it was increased at the rate of 2 per cent. a year. And he explained how wonderfully we were all getting on on that basis. What he did not say, but what the country now well knows, is that manufacturing production has dropped in this last three years by nearly 18 per cent. He did not mention that. So that is another one of his achievements. What other achievements are there? One per cent. off the rate of inflation, and the cost, an extra 1,890,000 unemployed! No wonder my noble friends—many of my noble friends—asked: Is it worth the cost?
The Government think that they have found an alibi. It really is not their fault at all, nothing to do with them; there is a world depression, and, after all, we cannot be expected to do anything other than roll along with it. My noble friends have disposed of that in the course of this evening's debate. And the noble Lord himself is an honest man; he knows that that is no alibi anyway. So now the whole excuse of the Government is that the only way to get out of the situation in which we now find ourselves is to become competitive. The noble Lord and his right honourable friend in another place have been full of homilies as to how it is vitally necessary to reduce labour costs, how it is vitally necessary that we should be able to compete in the markets of the world and that it was the workers themselves—the noble Lord said it himself and it was echoed by many of his noble friends—who were employed, and who were demanding too high wages who were causing unemployment. That is the alibi upon which the noble Lord now rests.
I do not mind the noble Lord having an alibi. What troubles me is that he might believe it himself. If this Administration really believes that unemployment is caused by the actions of the employed working people themselves and the trade unions, then this country is in a very dangerous situation indeed. The facts, of course, are exactly the reverse.
As I demonstrated to the House on 17th March last, the alleged fact that British goods are uncompetitive abroad is a myth. I demonstrated to the House on 17th March that that was not so. I said at column 717:
"First, in regard to hourly compensation of production workers in manufacturing in 10 countries in 1980—and this particular part of the report does not relate to production statistics that I shall provide presently—it was found that in 1980, and taking the hourly compensation as including all national insurance costs and everything else associated with it and taking the United States index as 100, the figure in the United Kingdom was 71, in Belgium it was 133, in Germany it was 120, in Netherlands it was 123, in Sweden it was 127 and in Italy it was 91. There was only one country where there was a lower hourly compensation cost, and that was in Japan".
But then one might say, "Well, of course, that is only the wage rate, what about productivity?" In that same debate I quoted from an extremely reputable

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report that made a survey of manufacture in South Wales. The important point about it was that the performance of British workers was tested against American workers in the United States using identical machinery. The point I want to stress is "using identical machinery".
As regards output per unit wage cost, the report,
"shows that over half the companies had an output per unit wage of at least 1·25 times that in a comparable industrial plant in the USA".
I stick to that. If the noble Lord has evidence in fact which is based upon reputable figures, other than the supposition that exists in his mind, that the British worker is any less productive than any other worker anywhere, let him produce his figures—I challenge him to do so—and I will debate the matter with him in the House any day.
The fact of the matter is that the main uncompetitiveness in British industry over the last 3½ years, during which we have been inflicted with this Government, has been due to the Government's foreign exchange policy, their policy of interest rates that have forced up the rate of exchange and, in fact, subsidised imports to a point where our own domestic products here cannot compete with them anyway. So the import penetration has increased precisely because of the exchange rate policy adopted by the noble Lord, which has also inflicted hardship upon exporters as well. Let not the noble Lord disclaim responsibility for that and say, "Well, of course the interest rates are all due to the interplay of market forces". One of the first things that the noble Lord's Government did when they came to office was to shove up the interest rate deliberately on their own initiative by some 4 per cent. That, of course, increased the costs of production in most of our factories and increased the rate of inflation as well. No; when they are talking about competition the Government mean something else altogether.
Your Lordships may have noticed, when the "Canberra" came back from the Falklands after having served there, that 129 of her deck and engineroom hands who have returned from the campaign are to lose their jobs to Indian seamen who will be employed at about a quarter of their pay. That is what competition means. If capital that has no fealty to any country—not to this one, not to any country—cannot get the labour it wants at one price, it will go wherever it can get it notwithstanding the national implications of what it is doing. Mr. Alan Langley explained and said:
"I can fully understand and sympathise with the people who have contributed to this heroic voyage and have acted magnificently in every way and now find themselves without employment"—
here come the crocodile tears with which we are so familiar in this House; he goes on:
"But the fact is that we are in a highly competitive situation and if we employed entirely UK seafarers, the 'Canberra' could not afford to sail. Employment is a very high cost factor. The employing of non-domiciled labour, mostly from India, is historic and in recent years we have actually been increasing the number of seafarers from the UK".
I trust that when the noble Lord, Lord Boyd-Carpenter, for whom I have a very considerable personal respect, comes to invoke the Falklands spirit, which he seemed to do at one moment in his speech, he will remember how at any rate one company treated the Falklands
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spirit as soon as the struggle, in which its directors had not participated personally, had ended.
Similar observations apply to the "Atlantic Conveyor". There is the question of the replacement of the "Atlantic Conveyor", for the use of which I believe that the Cunard Company has already received some £9 million in compensation. It is to be replaced, and I think it is to be replaced either in Japan or South Korea. This is a most patriotic spirit that must reflect the respect which certain sections of the commercial and business community—some of them with powerful press interests—have as regards the people of this country! Yes, we are back to the question of competition. That, of course, is why the investment, to which my noble friend Lord Hatch of Lusby referred, has gone, in its thousands and in its millions into Korea, Hong Kong, Taiwan and Brazil—because their union labour is not so organised as it is here; low wages can be got away with.
Therefore, when they are talking of competition, they are not talking of conventional competition within the industrialised countries—between ourselves and America, between ourselves and Germany or between ourselves and France—although there are exchange considerations that result in a lack of competitiveness here; what they are really after and what they want to drive the British worker down to are the levels of pay which obtain in countries such as Korea, Taiwan and Hong Kong. Then they think that they will be able to get their way, and then—and only then—will the stable conditions to which the noble Lord, Lord Selsdon, referred, endure: when the power of the trade union movement In this country is broken by the ever-increasing incursion of low labour-cost products being imported into this country. The only answer to it that the Government have is an ever-increasing exhortation to be competitive. That is the competitive case of the Government killed. If they have an answer to it, let them produce it—if necessary in this debate, if necessary later—because we will not let it go. That is their last alibi. Let us hope that the next time they will produce a better one.
In the meantime, the people of the United Kingdom should not feel that we in this House regard unemployment as another statistic; at any rate, those of us on this side of the House do not. It is a problem which strikes to the vitals of the whole social cohesion of the country. No mass importation of water cannon into this country—and we already have four sample water cannons here at the moment—will be able to quench the quite natural reaction to a Government that appear to ignore the elementary human principles which should be enshrined in Government: ensuring as a first priority that all of their citizens are fully and gainfully employed. This Government have no intention of pursuing that objective; they have abandoned the objective of full employment. The only useful function or step that this Government can now contribute to the unemployed is to join their ranks themselves.
9.12 p.m.
Lord Cockfield: My Lords, may I have your permission to speak for a second time? It is never easy in some 20 minutes to answer a debate which has ranged so widely and which has lasted for virtually six hours, but I should like to start by joining the many noble

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Lords who have congratulated the two maiden speakers today—the noble Lord, Lord Rootes, and the noble Lord, Lord Kindersley—on two most interesting and distinguished maiden speeches. The noble Lord, Lord Rootes, speaks with very great knowledge and authority on the motor industry and I was very pleased indeed with the welcome that he gave to the announcement that I made about the withdrawal of the hire purchase controls.
The noble Lord, Lord Jacques, who initiated this debate, always speaks with great sincerity, and although we do not agree with his analysis of economic circumstances we do, indeed, understand his concern about the social problems to which unemployment gives rise. This is why I analysed the causes of unemployment in such detail, and why we have so consistently advocated moderation in pay settlements as a means to avoid further losses in employment. The noble Lord, Lord Bruce of Donington, seemed to think that this was something which had appeared suddenly in the last few months. If he will, as I have often recommended him to do, read the speeches that I have delivered in your Lordships' House over a long period of time, he will find that that particular theme occurs consistently.
The noble Baroness, Lady Seear, delivered one of the most trenchant and destructive analyses of Labour Party policy which it has ever been my pleasure to listen to. She did, of course, catch the noble Lord, Lord Bruce of Donington, on the raw, and he protested very strongly. I had never thought hitherto that he was such a sensitive plant. But, when it came to the question of what alternative policies the Liberal Party could offer, I found myself very much in sympathy with my noble friend Lord Selsdon who felt that few effective alternatives had in fact been proposed, although, if I may say so, the noble Baroness's rejection of Mr. Roy Jenkins' policies was one of the real gems of this debate.
Baroness Seear: Mr. Jenkins' policies in a previous incarnation.
Lord Cockfield: My Lords, I am most grateful to the noble Baroness. Whether Mr. Roy Jenkins has reformed or not is a matter that I leave her and the noble Earl, Lord Longford, to fight out between themselves. The noble Lord, Lord Underhill, raised the almost traditional question of the poverty trap. This is of course an important matter. But he seemed to regard the improvements made in the family income supplement scheme as indicating an increase in the number of people in the poverty trap. But this is quite a misleading way of looking at the matter as it would mean that any improvement in welfare benefits for the lower income groups would automatically increase the number of people in the poverty trap. Such an argument is the economic equivalent of the logical reductio ad absurdum.
My noble friend Lord Boyd-Carpenter in a typically powerful and thought provoking speech referred to the great damage done to the national economy by the fall in the real rate of return on capital. As he so validly pointed out, this has, in large measure, been due to excessive pressure by the trade unions which has
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resulted in what should be the seed corn being consumed in current wages and salaries. We do indeed need additional investment but this requires two things. It requires the necessary finance which can best come from retained profits, and it needs also the real prospect of an adequate rate of return on that new investment. At the moment, both are lacking. This is why a recovery in the level of profitability is so essential.
I really felt that the noble Lord, Lord Hatch of Lusby, ought to take his noble friend Lord Bruce of Donington aside and explain to the noble Lord, Lord Bruce, that imports from the Third World are one of the ways of sustaining the very often meagre level of subsistence of the people in those countries, and the bitter attack made by the noble Lord, Lord Bruce of Donington, on imports from the Third World was, I thought, a little exaggerated.
Lord Bruce of Donington: My Lords, would the noble Lord be good enough to explain exactly how I attacked imports from Third World countries? I shall read him in Hansard tomorrow, and he will read me, but of course I deny that.
Lord Cockfield: My Lords, I note the noble Lord's denial. If in fact I have misinterpreted him, I am sorry. But we will read each other's remarks tomorrow. I have not the slightest wish to misinterpret him. He referred to seamen on the "Canberra" at some length, and I thought he then went on to refer to imports into this country from low cost countries overseas, many of which of course are in the Third World. We will read the report tomorrow.
The noble Lord, Lord Hatch of Lusby, if I may come back to less contentious matters, seemed to be under the impression that what was fundamentally wrong with this country was the outflow on capital account. But this outflow is simply the counterpart of the very large surplus we are currently earning on the balance of payments. In other words, what is happening is that we are investing abroad the surplus we are earning on our foreign trade. The future flow of income from these investments will be to the enduring benefit of this country. Also, this investment is often to the benefit of the Third World as well, If there is a shortage of investment in this country, it is not due to a shortage of funds. It is due to an inadequate return on that capital, a point made strongly not only by my noble friend Lord Boyd-Carpenter but also by my noble friend Lord Selsdon. If therefore the noble Lord, Lord Hatch, wishes to see an increase in the level of investment in this country, he needs to join my noble friends in seeking also to secure a higher level of return on capital invested.
The noble Lord, Lord Houghton, raised the question of Civil Service pay. The Megaw Committee was appointed to examine this problem. It has now reported. I suggest that the right thing is for all concerned now to give that report their most careful consideration. That is what the Government, for their part, are now doing.
The noble Earl, Lord Longford, in one of the most interesting and ingenious pieces of misquotation I have heard for a very long time, attacked my right honourable friend the Prime Minister on the basis of what the noble Earl thought she had said in reply to

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an interview published in the Daily Express. I fear, therefore, that I must read out the whole of what she said; I am sorry to inflict this on your Lordships, but, in view of the nature of the attack made by the noble Earl, I think I have no alternative. The question started like this:
"But can the average young unemployed youth start up a business?"
The reply was:
"No, of couse he cannot. But he can take advantage of all the training and education there is. I am very disappointed at the number of youngsters who choose to leave school at 16 and take Social Security. I prefer them to stay at school or take a training course".
I diverge from the quotation to remark that I explained at some length in my speech the training courses which had been made available by the Government. My right honourable friend was then asked the following question:
"But doesn't the Social Security system encourage them to take these benefits?"
The reply was:
"At the moment I am afraid that is so. It does encourage some of them. You see, there is no need for a person of 16 or 17 to be unemployed. There are places"—
The Earl of Longford: May I interrupt here very briefly?
Lord Cockfield: No, the noble Earl may not interrupt. He started by a selective quotation. I am now reading the complete quotation and the noble Earl might at least do me the courtesy of permitting me to finish reading it. I shall therefore start again, even at the expense of taking an extra few seconds:
"At the moment I am afraid that is so. It does encourage some of them. You see, there is no need for a person of 16 or 17 to be unemployed. There are places in the schools and places in further education"
The Earl of Longford: May I interrupt?
Noble Lords: Order!
Lord Cockfield: My Lords, if you read those two replies together, it is abundantly clear that what my right honourable friend was referring to was the availability of places in schools, in further education and in training schemes.
The Earl of Longford: Am I allowed to interrupt now?
Lord Cockfield: In a moment. I am surprised that the noble Earl should have put any other interpretation on those remarks.
The Earl of Longford: My Lords, I believe I referred earlier to the noble Lord as Lord "Cock-field" and I apologise for that but for nothing else. I read out one sentence which he has at last got round to; he has now read out the sentence I quoted, although I do not have with me a copy of the complete quotation. That was the sentence in which she said there was no reason why a young person of 16 or 17 should be unemployed. I say that is absolute nonsense.
Lord Boyd-Carpenter: Oh?
The Earl of Longford: That is true. If one takes the country as a whole, to say that there is no reason why a person of 16 or 17 should be unemployed is absolute nonsense.
Lord Cockfield: My Lords, the noble Earl is doing exactly what I said at the beginning he was doing—he is selectively quoting. Out of two replies, he has not quoted even one of them in full. He has picked out a single sentence without any relevance to the context, the qualifications, or what else was said.
I now come—
The Earl of Longford: My Lords, am I allowed to interrupt the noble Lord? It is for him to say whether he will give way. I quoted one sentence and I said that I was ready to hand over to the noble Lord the whole passage if he wished to put it in context. Nothing could have been more straightforward than that. I say again that the original remark, which the noble Lord has had to repeat, was absolute nonsense.
Lord Cockfield: My Lords, had the noble Earl himself taken the advantage of reading the whole passage, he would not have misrepresented my right honourable friend in the way that he has done, and he really cannot get away with that sort of thing.
Perhaps I may turn to the speech of the noble Lord, Lord Bruce of Donington. It was an interesting speech, because it started on a very statesmanlike plain, and subsequently developed in a rather different way. I want to pick up just one or two points that he made. He claimed that what the Conservative Party thought was that we had "reached a stable situation", and it was on that basis that he was attacking the Government's policy. In my own speech I had at great length made clear that the economy was now on an improving trend. This is the view that is taken by most outside forecasters. The leading indicators published by the Central Statistical Office in fact give this message. As I said—and I made no attempt to gloss over it—there has been a difficult period during which the economy was bumping along the bottom. But I hope that we have lived through that and that the upward trend is now established.
The noble Lord also claimed that we had abandoned our monetary controls, forgotten the PSBR, and abandoned the question of public expenditure. Nothing could be further from the truth. In fact, as I said in my own speech, on the basis of the three measures the money supply is now within the target range of 8 to 12 per cent. announced by my right honourable friend the Chancellor of the Exchequer. Far from having forgotten the PSBR, we regard it as one of the most important elements because it has a very significant bearing on rates of interest, which is one of the matters which greatly, and rightly, concern the noble Lord.
So far as public expenditure is concerned, in the course of my own speech I pointed out that the proportion of the gross national product going in public expenditure was last year higher than it was in 1979, due in part to increasing welfare expenditure—something that I should have thought the noble Lord would be anxious to support—and that our intention was to ensure that in future years the proportion of the national income taken in public expenditure in fact falls.
The noble Lord also claimed that the fact that British goods were uncompetitive abroad was a myth; and he said that the problem was due to the exchange

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rate policy pursued by the Government. There is no substance in either of those claims. If British goods had been fully competitive we would not have seen a situation in which over a period of 20 years or so our share of international trade had halved. Nor would we have seen a situation in which import penetration had increased by 50 per cent. The proof of the pudding is in the eating. This is what has happened, and it is the clearest possible demonstration that over a period of time our competitiveness has declined.
The noble Lord referred also to exchange rate policy, but the simple truth of the matter is that the pound today, measured against the other leading currencies—not just against the dollar but against the Smithsonian basket of currencies—stands at approximately 92, compared with 100 in 1975. So the exchange rate over this period had actually fallen. To suggest, therefore, that our loss of competitiveness is due to the exchange rate is completely inaccurate. We went through—
Lord Bruce of Donington: My Lords—
Lord Cockfield: May I complete this point? We went through a very difficult period in which the exchange rate was very high, but that period lasted for a very brief while indeed; and the current exchange rate, as I say, is not significantly higher than it was in 1979 and is noticeably lower than it was in 1975.
Lord Bruce of Donington: My Lords, I am grateful to the noble Lord for giving way. If the noble Lord will turn to Table 18 in the latest Bank of England review he will find that, of course, that is quite true in the case of the United States dollar, where the value of the pound has gone down significantly, which of course affects the Smithsonian index. But if he will look at the case of Belgium, France, Italy, the Netherlands and Germany he will find that the high exchange rate policy still obtains.
Lord Cockfield: My Lords, the only fair comparison is to take a basket of the currencies which are in fact trade weighted. This is what is done in order to calculate the Smithsonian parity, and the figures are in fact as I have quoted them. The current exchange rate is significantly lower than it was in 1975, and only a little higher than it was in 1979. The noble Lord raised the question of the "Atlantic Conveyer"—a subject which has caused a great deal of comment, and rightly so. We recognise the importance of this issue, and very much hope that Cunard will build in the United Kingdom. Her Majesty's Government continue to keep closely in touch with Cunard about their decision.
Finally, I should like to say just this. For many years now we as a country have been going down a blind alley. As each recession and each recovery has followed the previous one, we have ended up with a higher rate of inflation and a higher rate of unemployment. It was absolutely essential from the point of view of the future prosperity and, indeed, survival of this country that we should reverse that process. This is the job to which we set our hand in 1979. We did not for a moment believe it was going to be an easy task. It has not been an easy task; it has brought
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great difficulties. But there is really no policy which has been put forward which offers a better hope for the future. We propose, therefore, pursuing our policy to its successful conclusion.
Lord Bruce of Donington: My Lords, before the noble Lord sits down, will he give me one final answer? I do not ask for it now. The noble Lord will recall that I made the point — indeed, I made a challenge—about unit labour costs in the United Kingdom; about productivity by people belonging to our own country as compared with the United States, and about labour costs. These are contained at column 673 of the Hansard of 17th March. I should be grateful if the noble Lord will confirm to the House that he will read that column, he will read the contentions contained in it and that he will either agree with them or publicly disprove them.
Lord Davies of Leek: My Lords, may I ask the noble Lord—and I thank him for his reply; but I asked a categorical question about the fair wages clause in the International Labour Office which is going to be discussed in September and are the Government prepared to withdraw that fair wages clause and what attitude will they take? If I cannot get an answer tonight, then perhaps I can be answered later.
Lord Cockfield: My Lords, if the position is as the noble Lord says, that it is going to be discussed in September, I should hardly think it appropriate to discuss it now.
Lord Davies of Leek: My Lords, that is very clever but I am asking this. Will the noble Lord confirm that it is being discussed? That was a clever piece of debating; it was not a commonsense answer. I am asking the noble Lord to confirm that it will be discussed.
Lord Cockfield: My Lords, I am not prepared to comment on what appeared to be a newspaper report. I had assumed that the noble Lord was giving us this information on his own authority; but if he was merely quoting a newspaper report, then I can only say that I have no comment to make on that.
Lord Davies of Leek: My Lords, it was not quoting a newspaper report. I was asking the Government—but we will leave it at that. I am not getting the courtesy of a reply.
Lord Jacques: My Lords, I would draw the attention of the noble Lord the Minister to the fact that at least one matter has had the support of both sides of the House on several occasions—the need for further capital investment now. It came from both sides and from several speakers from both sides.
Having got that point home, may I congratulate the maiden speakers, thank everybody who took part in the debate and ask leave to withdraw the Motion.
Motion for Papers, by leave, withdrawn.

Stock Transfer Bill
Read a third time, and passed.

Criminal Procedure: Independent Prosecutors
9.38 p.m.
Lord Wigoder Lord Wigoder rose to ask Her Majesty's Government whether they are taking any steps to implement the proposals for a system of independent prosecutors in Part II of the Report of the Royal Commission on Criminal Procedure, revised as necessary to make the system national rather than locally based.
The noble Lord said: My Lords, we now at last come to the important part of the day's business! I beg leave to move the Motion in my name on the Order Paper.
The Royal Commission, as your Lordships will know, reported in January 1981. Part II, a very substantial part of that report, is devoted entirely to the prosecution of offenders—Chapter 6 to discussing the present position and Chapter 7 to putting forward a number of radical proposals for the reorganisation of the whole system. Those proposals were radical. They were not new; they had been discussed on many previous occasions and they raised issues of very great importance as to who it is who should investigate the commission of an offence, who should take the decision to prosecute, who should conduct the proceedings and to whom should each of those people be responsible.
This has been the subject of debate for many years. Justice, I think—and the noble and learned Lord, Lord Gardiner, will know more about this than I—has raised this problem on many occasions going back for over 20 years. In 1962 the Royal Commission on the Police made proposals similar to those contained in the recent Royal Commission report. The reason why bodies of various nature have raised these issues is because they are not academic issues; they are issues of fundamental importance to the whole administration of justice.
It is important that the right decisions should be made as to who should be prosecuted and for what offence, because if the wrong decisions are made acquittals inevitably are obtained and a vast amount of time and money is wasted in the result. It is important that our whole prosecuting system would give the impression of being fair, and there are obvious dangers if those who carry out the investigation—that is, inevitably, police officers—are exactly the same people as those who take the decision to prosecute and are exactly the same people as those who proceed in the magistrates' courts to conduct the prosections.
I am not suggesting that the belief is justified, but the belief is inevitable that if that system prevails there will be those who will be tempted to press for convictions; there are those who will be tempted not to make available evidence that ought to made available to a court if a more independent system were adopted. It is a matter of importance to the whole community that our prosecution system should be seen to be open and should be recognised to be properly accountable. It is a matter of importance to all of us that it should be efficient—efficient in the sense that there should be uniform standards applied throughout the country and that prosecutions should be conducted by people of
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ability who fully understand the issues and are able to take an independent and dispassionate view of the procedures.
The present position, as I indicated to your Lordships, is analysed in some detail in Chapter 6 of the Royal Commission's report. Their findings, briefly, are that the present position is throughly unsatisfactory. I think perhaps to call it chaotic would not be putting it too strongly. This is, first, from the point of view that anyone in certain circumstances may prosecute. There is no uniformity; there is no control. Secondly, in some 33 out of 43 police authorities—if I have the figures precisely correct—there are prosecuting solicitors who conduct proceedings but do so in a variety of different relationships to their own police force, whereas in the remaining 10 of the 43 areas reliance so placed in one way or another upon private firms of solicitors. Thirdly, the role is confused as to the position of the Director of Public Prosecutions and the various other prosecuting agencies that carry out a substantial number of prosecutions in our courts.
Without referring in any more detail to the analysis in Chapter 6, the first question upon which I should like the Minister's assistance this evening is this: do the Government accept the analysis in broad terms in that chapter of the Royal Commission's report, and do they therefore accept that some steps must be taken to rectify the position? I am not asking the Minister to do very much more than confirm what the Home Secretary said in the debate in the other place on 20th November 1981 at column 532 of Hansard, when he said:
"At a minimum, we should like to see the more comprehensive development of prosecuting solicitors departments which, at present, exist in only about three-quarters of the police forces"
That was the Home Secretary's observation. Mr Mayhew, when he wound up for the Opposition, said at column 590 of Hansard:
"We believe, as my right honourable friend said, that, in the first instance, and, as he said, at the minimum, there should be an extension of the county prosecuting solicitors departments. It is right, in my view at any rate, that prosecuting solicitors should have responsibility for the fundamental decisions connected with the running of a prosecution."
Assuming, as I do, that the noble Lord the Minister is going to say that the Government stand by that general position, the second question follows at once from that: What are the Government going to do about it and what steps are they going to take as a minimum, as his right honourable friend said in another place, in order to ensure that there is a national network of county prosecuting solicitors' departments?
Turning now to Chapter 7 of the commission's report, what proposals do they make in order to deal with the present situation? First, there arises the question of the present position, that the police investigate and also take the decisions to prosecute; it is then for the solicitor to take over. That is, in broad terms, what the Royal Commission approved. They preferred that to the position with the procurator fiscal in Scotland; and I shall listen with interest to what my noble and learned friend Lord Wilson of Langside has to say on this point, that the actual decision to prosecute should be taken out of the

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hands of the police and put into the hands of the prosecution's solicitor.
It may be, as the Royal Commission suggested, that in this country this is perhaps a somewhat grey area and it is difficult to form any clear demarcation line; that is why they suggested the matter should be left as it is. I would ask the Government whether they agree with that finding of the Royal Commission, or whether they feel it would be preferable to accept the Scottish system and have a rather more distinct separation between the investigation and charge on the one hand, and the decision to prosecute on the other.
Secondly, the Royal Commission dealt with the question, where there is a prosecuting solicitor—and it is hoped they will be everywhere in the near future—should it be the prosecuting solicitor or the chief constable who, in the last analysis, has the right to withdraw a prosecution or a charge? That is not a matter upon which I would express any strong feelings because I should have thought that in most well-organised authorities and with a little goodwill and commonsense, the prosecuting solicitor and the chief constable would be on such terms that any dispute would be unlikely. But I should like to ask the Government whether they have any view on that particular problem which was dealt with in the Royal Commission report.
Thirdly, the Royal Commission recommended that prosecuting solicitors should prosecute; in other words, that they should take over in the magistrates' courts the advocacy which at the moment in many cases is conducted by police officers. That is obviously desirable in the interests of appearing to be fair, and I make no criticism of the way in which police officers conduct prosecutions. Equally, it will save a good deal of police time. I hope it might be possible for the Minister to indicate how many police officers are employed, either part-time or full-time, on this task of presenting cases at the magistrates' courts; how many of them could thus be put back on duty if the work were taken over by prosecuting solicitors and what cost, in terms of police officers, would thus be saved.
Fourthly, the Royal Commission suggested that the framework of police prosecuting authorities should be based locally and should be accountable to local bodies especially established for that purpose. When the Royal Commission report was debated in the other place on 20th November last, it was the whole of the report that was debated and not simply Part II of it, which we are discussing this evening. But, in so far as most of the Members of another place who spoke dealt with Part II to some extent, opinion was almost unanimous—I think that there was only one dissenting voice—first, that the Philips proposals, in general terms, that there should be a national framework of prosecuting authorities, was desirable; and, secondly, all except one suggested that it would be better if it were done on a national basis, rather than on the local basis that the Philips Commission had reported. That is why, in the terms of the Question that I am asking, I have stressed the desirability of the national, rather than the local, basis.
It is clearly an arguable matter, but there are grounds
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for suggesting that a national basis would be preferable. First, it ought to lead to greater efficiency, if a way can be found of doing it without creating a wholly unnecessary bureaucracy. Secondly, it would help to create a degree of uniformity which is clearly desirable where criminal prosecutions are concerned. Thirdly, it would create a unified career structure for members of that profession, which is vitally important, if, in the future, it is to attract sufficiently suitable and able candidates. Fourthly, it may be possible to find a better solution to accountability than the one which the Philips Commission reported. If there were a nationally based structure, it would clearly be answerable to the Home Secretary or to the Attorney-General.
Therefore, I should like to ask the Minister, when he replies, first, whether the Government are persuaded by the weight of argument in the other place in November last year that it should be a nationally based structure; and, secondly, if so, whether they are also persuaded by the weight of argument in the other place that it would be desirable, in the interests of independence—or, at least, to be one step removed from Government—that it should be the Attorney-General's department rather than the Home Secretary that should have control over the system and to which it should be accountable.
All this has resource implications; practically everything one says these days in your Lordships' House has resource implications. The Royal Commission made its best estimate that it would cost about £4 million, but it may be that the Government have other views by now; and, again, it may be that, when the noble Lord replies, he will be able to bring that figure up to date, so that we can see what sort of figure it is that we are dealing with and to what extent savings in police time, savings in unnecessary prosecutions and so on can be put against that figure.
The final argument that I should bring to your Lordships' attention is one of which I know the noble Lord the Minister is aware. When the Home Affairs Committee on Police Complaints Procedures reported in another place on 26th May this year, they said in paragraph 39—and they regarded it as so important that they put it into black type, for almost the only time in their report:
"We support the proposals of the Royal Commission on Criminal Procedure, which were based on extensive evidence taken over a period of two years, and would wish to see the introduction by the Government of a Crown prosecutor service, both for its own sake and for the contribution it could make towards a satisfactory solution of the problems attending investigation of complaints against the police."
I should like to ask the Minister whether he has any comment to make about that, and whether the Government accept the view put forward there that there is this further advantage, which I think was not considered by the Royal Commission in its time.
As I said, the Royal Commission has reported, consultations have now taken place, the Government have made it clear in a Written Answer in another place on 25th June this year that those consultations were with some 27 other bodies, the vast majority of which, although not all, approved the proposals. There were dissentient voices, and I am sorry to see that many of them were the dissentient voices of police officers. It may be that police officers have misunderstood these proposals and appear to think that

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they constitute some sort of attack in some way upon them, or their fairness, or their ability. Nothing, I am sure, is further from the thoughts of those of us who wish to press this proposal. We are anxious to see that the police are assisted in carrying out their duties properly, and we believe that this is a sensible and desirable way of doing so.
The Government have also made it clear that there are to be no further consultations. In other words, the time for discussion is over; the time for action has now arrived. The Government have two alternatives: either they can put the report back on the shelf or they can legislate. I should be the first to accept that putting Royal Commission reports back on shelves is not an entirely unknown activity for Governments of various political parties, but I hope we shall be able to hear from the Minister tonight that the urgency and importance to the public of this matter is such that the Government do not propose to put this report back on the shelf.
The Government have indicated that they propose to legislate at a very early moment on other parts of the Royal Commission's report—in particular, I think, on the part relating to police powers. I hope the Minister will find it possible to say tonight—although he cannot of course commit himself to the course of future legislation—that when the Government do do that, they will give very serious consideration indeed to the possibility of legislating also in order to provide a national prosecution service.
9.57 p.m.
Lord Mishcon: My Lords, a House rich in quality if poor in quantity is very much indebted to the noble Lord, Lord Wigoder, for putting down this Motion this evening so that even at this hour we can concentrate upon a most important report. I am quite sure that we all share the hope of the noble Lord that this is not one of those reports which is put into a drawer and then forgotten. The noble and learned Lord, Lord Gardiner, has certainly spoken about this matter on several occasions. When that happens there is not only a waste of the extremely valuable time given by members of Royal Commissions but, if I may introduce a sordid thought, there is a waste of money. I notice that the cost of producing this Royal Commission report, with its analyses and its findings, was over £1 million. It would therefore indeed be a waste of money, quite apart from time, of a very material nature if once again this were a report which found its way into a Government drawer and did not receive a positive response.
I wonder whether I may usefully employ the few moments during which I propose to address your Lordships by filling in some of the gaps which, of necessity, the noble Lord, Lord Wigoder, had to leave because his address to us was limited to 20 minutes. I listened to him, therefore, with some care in order to ascertain those matters in the report which I thought were vital but which he could not deal with, because of the comparative brevity of his speech. One wonders whether any system can be right in regard to justice if there is a failure to have a national pattern in order that people who have to decide whether or not to prosecute citizens should be able to administer a caution—
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whether the case which they have before them, with all the evidence, is deficient and therefore the time of the public, of the judiciary and of jurymen should not be wasted, quite apart from the fact of putting the citizen in peril by a charge being preferred against him.
One of the things I have learned from this report, and I believe your Lordships will be interested in this as well, were acquittal statistics based on 1978 figures—the latest year for which the commission could obtain figures. I found the acquittal statistics to be quite amazing, and so did the Royal Commission. On 1978 figures—and these statistics were borrowed from criminal statistics for England and Wales 1978 and judicial statistics for the same year—it is indicated that 47 per cent. of defendants pleading not guilty in the Crown Courts and 50 per. cent in the magistrates' courts were acquitted.
Your Lordships may think from those figures alone that they merely showed the ability of members of the legal profession to defend with great adequacy those clients whom they represented, but the figures do not finish there, and this is the material part of them. Of those acquitted in the Crown Court, 19 per cent. were ordered to be acquitted by the judge. In 24 per cent. of the acquittals, the judge directed the jury to acquit. That means that 43 per cent. of cases which resulted in acquittal in the Crown Court failed because the prosecution was not even able to adduce sufficient evidence to make out a prima facie case. It that is not an argument for saying that we have at least to give great consideration to whether or not the present prosecution system in our country is in order, then, if I may respectfully say so, I do not know what would ever convince us.
Therefore, it seems necessary that we should be looking to see whether, quite apart from the question of fairness which was so properly raised by the noble Lord, Lord Wigoder, on questions of efficiency and on questions of wastage of time—especially when our courts are crammed full of cases and some of the greatest injustices are being perpetrated by defendants having charges hanging over their heads for many months and, in some cases, for well over a year—this is not a material consideration for us to take into account.
The next point I should like to mention which the noble Lord, Lord Wigoder, did not have time to cover is this. Take it for granted, and I certainly do, that the report of the Royal Commission makes out a case for the need for a revision of the prosecution procedure by a division between those who investigate and those who decide to prosecute; there is an injustice which is being perpetrated through there not being a uniform pattern on prosecution policy and on the policy of whether or not one administers a caution. May I again quote some figures, because they are so interesting? They are to be found on page 136 of the report. Your Lordships will forgive me if I read out these very interesting figures:
"In 1978 the Cheshire, Cleveland, Durham, Greater Manchester, Hertfordshire, City of London, and Merseyside forces and the Metropolitan Police cautioned 2 per cent. or fewer of adults for indictable offences while Wiltshire cautioned 14 per cent., Devon and Cornwall 15 per cent. and Suffolk 22 per cent. The Leicestershire and South Wales forces cautioned 33 per cent. and 34 per cent. respectively of juveniles for indictable offences in that year, while Dorset, and Devon and Cornwall cautioned 67 per cent. and 69 per cent. respectively."

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These figures, showing this terrific variety of pattern, again show the necessity for some sort of uniform prosecution policy. Indeed, if one were taking this argument lightly—none of us wish to do so—it really is a question of deciding, if you are going to commit an offence and do not want to be prosecuted, in which part of the country you ought to decide to live, and certainly which part of the country you ought to take your youthful children to in case they fall into juvenile delinquency.
As I said, the hour is late, and I have picked out just a couple of points which I think your Lordships will find useful in deciding that the Royal Commission had indeed made out a case for uniformity. May I add one other consideration. I think it is terribly important that the police of our country—indeed, we have discussed this on more than one occasion in your Lordships' House—should be upon such terms with the civilian population that they continue to have, as they deserve to have, complete respect and the reputation for impartiality. When we have debated race relations in this House we have talked with some sorrow of the unfortunate relationships that have grown up in certain parts of the country where there is a substantial immigrant population and where there is a feeling, justified or not, that the police have a grudge against a certain ethnic minority. In this House we have always said that we would never want to believe that; that if there was a minority in the police force guilty of such behaviour we would want those members of the police force to be treated as though they were bringing down the reputation of a great police force in this country.
It is a fact that, if you have such varying ideas of prosecution, or caution, or where there is no case and where there is a case, if the police are both the investigating and prosecuting authority there will be the feeling that this antagonism which is suspected has been carried to the measure of a prosecution where no prosecution should be brought. But if indeed there is, be it at national level or local level, a separate prosecuting authority consisting of members of the legal profession, who will decide, at a certain stage, whether a prosecution should be continued in our courts and then conduct the prosecution, and that authority is completely different and separate from those who have investigated the crime, and indeed in most cases those who have stopped the alleged offender, then I think you will see not only that justice is done but that it is seen to be done.
So there is no doubt that there are valuable recommendations in this section of the report to which the noble Lord, Lord Wigoder, has been good enough to refer us, and I hope with him that these recommendations will find their way into some Act of Parliament. Unfortunately, they do not seem to have found their way into the Criminal Justice Bill, but the noble Lord the Minister may think that enough already has found its way into that. But if we cannot have it in that Bill I hope we will have it in the legislation to which Lord Wigoder referred by anticipation when he dealt with what the Home Secretary had said in another context. These recommendations are important, and I hope the Government give them consideration, and, as I said, that some sort of activity will result from this Report.
10.10 p.m.
Lord Wilson of Langside: My Lords, I shall say very little but I must certainly echo the words of the noble Lord, Lord Mishcon, in expressing our gratitude to the noble Lord, Lord Wigoder, for raising the questions arising on this altogether important and interesting Royal Commission report. I shall say very little particularly because, of course, in this context I speak as a foreign lawyer. Indeed, as a foreign lawyer unprompted, I should not have ventured, even briefly, to speak in the House tonight.
I observe that in paragraph 7.24 of the report there appear the following words:
"A centrally directed national prosecution system for England and Wales is neither desirable nor necessary".
Of course, in my part of the country, prosecution is nationally and centrally directed and in the hands entirely of the Lord Advocate and his subordinate prosecutors. We regard the system there as being highly satisfactory; there is no pressure to change it. Until recently, in an unfortunate case in Glasgow, the textbooks were prone to say that private prosecution was, indeed, as dead as the hiccup. I think one can say for our system that any hiccup that there may be is due to human error rather than to any fault in the machine.
I say that only for the following reason. When I read this report my whole experience convinced me that to say that such a system was entirely inappropriate to England and Wales was absolutely right. The centrepiece on which they appeared to base that conclusion was the danger of a growth of bureaucracy in the system. In a prosecution system it is all-important, of course, to avoid that. We are able to avoid it in the northern part of the United Kingdom because we are a small, self-contained country and we all know one another. The Lord Advocate knows all the judges and he probably knows all his procurators-fiscal. It is easy to keep control over the whole operation of the system from the centre without allowing an undesirable bureaucracy to develop. I can well see that this would be a quite different problem in England and Wales.
One question that was raised by the noble Lord, Lord Wigoder, concerned the responsibility for the decision as to prosecution as between the procurator-fiscal and the police. I would not venture to suggest how this responsibility should be allocated in England and Wales, but in Scotland the responsibility is clearly upon the shoulders of the procurator-fiscal. But he works in close consultation and co-operation with the police, and the matter seems to give rise to no difficulties.
I would say, finally, for our system, that I think that our acquittal rate is somewhat lower than yours. I would not take up your Lordships' time by referring to the Scottish criminal statistics, but I think I can say that, in so far as the acquittal rate is a measure of the efficiency of the system—and it is only one—our acquittal rate is, or has been up until recently, a tolerable one.
In conclusion, I would only say this, and I said that I would say very little in part because I am a foreign lawyer. I should simply like to leave your Lordships with the impression of a foreign lawyer—who has spent most of his working life under a system of public prosecutions closely organised from the centre—reading this report dealing with your quite different

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system. I must say that I found it an impressively wise report, if I may say so without presumption; I hope it does not sound presumptuous of a mere foreigner to say something like this of a report of a Royal Commission. But I approached it tentatively and with a certain hesitation, and only because of the promptings of the noble Lord, Lord Wigoder. But I am glad that he prompted me and I was impressed by its wisdom. I hope that the Government will have some effective answers to the questions which have been raised in the debate tonight.
If I may say so without introducing a note of rancour in a context and at an hour when rancour is perhaps not appropriate, the system of prosecutions is, of course, an important factor in the maintenance of law and order. It is not the only factor, but it is quite an important one. From time to time, it has appeared to me that this present Government, like some of their predecessors, in relation to law and order are strong on words and not quite so effective in action. I hope that the answers of the Government to the proposals in this report will perhaps show that they are now prepared to match action to their words.
10.17 p.m.
Lord Gardiner: My Lords, I too, am grateful to the noble Lord, Lord Wigoder, for having given us the opportunity to discuss this report, or part of it, tonight. As your Lordships know, I have always felt that we treat very poorly those who serve on Royal Commissions and departmental committees. They receive no pay and the work takes up an enormous amount of their time. For the chairman, of course, it must become a full-time job for about four years. It always seems to me to be extremely discourteous if, when, as here, they have spent four years on a task like this and produced this very full report, it is not discussed in Parliament. Fortunately, I hope they will never know that we are discussing it with only one Member on the Government side of the House sitting behind the Front Bench.
I am also deeply grateful to the Royal Commission itself, for the reasons which I shall venture to give. For some 12 years, I have been intimately connected with the Justice Report on the Prosecution Process. The noble Lord, Lord Widoger, was one of the two chairmen of the committee which produced that report. I was not on the committee but I was on the council at a time when the noble Lord, Lord Shawcross, was the chairman. We were actuated in that committee principally by two things. The first was that in every country, at least in every democratic country—certainly throughout Europe—the police have two important functions. One is the prevention of crime. I am a Londoner and when I was a boy in London you never knew when you would meet the local bobby coming round the corner, and the local bobby knew his local customers. Secondly, when a crime is committed, the police have the function of trying to ascertain who has committed it.
Throughout democratic Europe it is only in England, Wales and Northern Ireland that the police have had a third function; namely, to prosecute. This happened nowhere else. In every other democratic part of Europe there has always been some form of indepen-
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dent prosecutor who held a fair balance between the police and the citizen. We felt that these powers, which no other police force had, put too much temptation into the hands of the police. Of course, the police have never been allowed to prosecute in Scotland. There they have always had the procurator-fiscal system.
I do not want to exaggerate things but undoubtedly there were a certain number of cases which ought never to have been brought because the evidence simply was not there. There were a certain number of cases in which police put in the "verbals"; that is, they reported the suspect as having said something that he did not. I do not doubt that most of them were cases in which the policeman honestly believed that this was the man who had committed the crime and that he was putting in something which would help, he thought, in the cause of justice. This did not happen in the country districts where people know one another. It only happened in London and large towns.
I remember a police sergeant we used to have in Birmingham. It did not matter what he interrogated anybody about, the first thing the man always said was, "I wonder who has grassed on me"? It became obvious that this could not happen in every case that he interrogated, but that was always his evidence. This became known to the Bar and, through the Bar, to the judge on the circuit, and the judge was told not to pay too much attention to it. But we felt that it was the system that exposed the police to too much temptation. We never of course foresaw for a moment that a time might come when the Commissioner of the Metropolitan Police would forceably retire 400 policemen. The word "Countryman" had never been heard of. However, we felt that there was that danger, and that was why we recommended that in future there should be a public prosecutor in a national service under the Attorney-General at the head.
A few months before the Justice report, namely in 1969, a Committee had been appointed about the police in Northern Ireland, of which the noble Lord, Lord Hunt, was chairman. Lord Hunt's committee had recommended that the police should be stopped prosecuting in Northern Ireland except in very minor cases and that Northern Ireland should have the Scottish system of the procurator-fiscal. Two years after that there was a Bill in Stormont that would have implemented the Justice system. After direct rule, the then Conservative Government introduced an order which would have applied the Justice system to Northern Ireland.
In the course of the debate the Attorney-General, the present noble and learned Lord, Lord Rawlinson, in introducing the order said:
"The answer to my honourable friend is that the proposals in this Order for the Director of Public Prosecutions Northern Ireland enact every one of the recommendations which were made by the Justice Committee Report on Prosecutions in England and Wales. The Committee of Justice recommended that there should be certain changes in the English system. Each of its recommendations was incorporated in the Northern Ireland Bill."
When he wound up in the debate he said substantially the same, saying that what was being done was exactly the proposals made in the Justice report on the prosecution process. The introduction of that system in

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Northern Ireland has been a great success, and I say that for two reasons, the first because the Royal Commission in paragraph 7.14 of their report at page 148 say:
"Our discussions with the police in Northern Ireland and with the Director of Public Prosecutions there, who since 1972 has had responsibility for prosecutions in all indictable and serious summary offences, suggests that the system is working well and to the satisfaction of the police as well as that of other parties".
Secondly, I can confirm that myself because, as chairman of the Gardiner Committee, we saw everybody concerned in Northern Ireland—in the police: the chief constable, the superintendents, the CID and Special Branch; the Chief Justice, the Director of Public Prosecutions and the Bar and Law Society—and in a country in which they are not slow to allege bias, nobody even suggested that the Director was partial to the Protestants or the Catholics, and there is no doubt therefore that the system has had a great success in being applied in Northern Ireland.
For some years I have, I am afraid, bothered the Home Office to apply the system here. Their only reason against it that I was ever given was the enormous cost. I am not particularly good at finance but I used to discuss this with the Association of Prosecuting Solicitors, who maintained that the Home Office figures were entirely wrong, that they had no basis for them at all and that they, the prosecuting solicitors, knew all about the costs because they had all their records. They maintained there would be an actual saving if you allowed for the fact that it would free a substantial number of high grade police officers who would be devoting all their time to prosecutions. So although there would be a number of assistant prosecutors to pay, there would be that saving and, on balance, they thought there would be a credit balance and not a debit balance.
It all ended with a deputation which I took to the Home Office. Mr. Danks, the Secretary of the Association of Prosecuting Solicitors came with me, and finally the Home Office had to agree that they had no real basis for their own figures or for challenging Mr. Danks' figures. In 1977 various things happened. The Labour Party Conference had a resolution down about the Justice Report on the Prosecution Process. This was remitted to the National Executive Committee, which accepted it, so it became Labour Party policy. In the same year, I was pleased to read in The Times that the policy committee of the Liberal Party had accepted the Justice Report on the Prosecution Process.
This report is, of course, not the Justice proposals at all. What is being proposed by the Royal Commission is a purely local police body. When I say "police body", it is not designed to divide the country into local authority areas or anything of that sort. It would be divided into police districts, and in each police district there would be what the Royal Commission call a police and prosecution authority. As I understand it, the police will decide all the preliminary points, whereas under the Justice system, the Director or Assistant Director will decide whether or not there is to be a prosecution.
Under the Royal Commission's proposals, the people who will decide whether or not there is to be a prosecution are the police; the people who will decide
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who is to be prosecuted are the police; and the people who will decide what the charges are to be, which is also important, are the police. In that queer authority according to the Royal Commission's report, the prosecutor and the chief constable would be of the same status. How that would actually work out in practice, I cannot really see. Therefore I would strongly support the plea that the noble Lord, Lord Wigoder, has made, that it should be a national service under the Attorney-General, and not a system under which the police would decide everything that mattered, and only then would it go to someone of equivalent status to the chief constable.
There is one odd thing that I did not understand about the report. The noble Lord, Lord Elton, is always so obliging, and if he can help on this point, I am sure that he will. What I cannot understand is as follows. It was always at the substance of the Justice report that we were very peculiar in that, alone among all the democratic European countries, we gave the police a right to prosecute. One would have expected that there would have been done some research work into how all the prosecuting systems in Europe worked out. A paper describing the German system was published; that is the only one. I was interested in what my noble friend Lord Mishcon said about the German system, because the Justice report published two appendices, one describing the German system, the other describing a system in the Netherlands. But of course Justice has no means with which to do a proper research survey, and I confess to being disappointed that the Royal Commission did not do such a survey, either.
I remember the Justice description of the German system. What surprised me most—the figures bear some resemblance to those quoted by my noble friend Lord Mishcon—was that the public prosecutor prosecuted in only fewer than half of the cases that the police sent him. On the other hand, when he did prosecute, the conviction rate was 90 per cent. So under the German system they did not get the type of case in which now the judge has to direct the jury that they must acquit, because it is really a case which should not have been brought.
What surprises me is that the Royal Commission makes no reference at all—except that in a research paper, not in the main body of the report, there is the reference to the German system—to anything that happens in any European democratic country. I cannot think of a reason for that, since the point was the whole basis of the Justice report. At one time I thought that I knew what was the reason. I thought that the commission must have considered that while the Justice system might work in a small country, it could not work in a large country such as England and Wales. And what about Germany, what about France, what about Italy?—all three of which have bigger populations than England and Wales. So that could not have been the reason.
Then I considered that perhaps the commission thought in that most of the European democratic countries there is not the kind of prosecutions which we have, an accusatorial system. I thought that the commission's reasoning might have been based on the fact that those countries did not have the accusatorial system. But the commission could not have thought

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that because Scotland has our system, Northern Ireland has our system. So that could not have been the reason. I was completedly "fogged", and if the noble Lord can tell us why he thinks that in the report—which took four years to prepare, and which in a sense was started by the Justice Report on the Prosecution Process—there is no reference to what happens in any European democratic country, I should be very grateful.
Lastly, as the noble Lord, Lord Wigoder, stated, the matter was discussed in the other place on 20th November, and I was very interested to see that members of all parties seemed strongly to support the service being a national one, and not a local one as proposed by the Royal Commission. I was particularly interested to see that the honourable Member for Bury St. Edmunds, Mr. Griffiths, speaking, he said, on behalf of the Police Federation, said that the Police Federation themselves would prefer a national system. He was also strongly supported by the chairman of a body called the All-Party Penal Affairs Group, of which the noble Lord, Lord Elton, may have heard and of which I am but a humble and very insignificant member.
So I would welcome any information that the Minister can give us as to what the Government's intentions are; and for the reasons I have ventured to give I hope very much that, whatever they do, they will give us a national service under the Attorney-General and not this curious local police authority suggested by the Royal Commission.
10.36 p.m.
Lord Hutchinson of Lullington: My Lords, so far as the criminal process in this country is concerned, this report of the Royal Commission is probably the most important document that has emerged since the war. It is a great pity, therefore, that the first time that this matter has been debated in your Lordships' House should be at such a late hour at the fag-end of the Session and in an almost empty Chamber. I think it is a pity, also, that we are debating this part of the report, separated from the rest of it. Nevertheless, I, too, am grateful to my noble friend Lord Wigoder for introducing this debate, even if it is a hurried and inadequate one.
Speaking for myself, I find Part II of this report one of the very best sections of it. It deals with the crucial matter of the prosecution system; and the decisions that the Government ultimately take upon it will have the most far-reaching influence on the integrity and efficiency of criminal trials in the next two or three decades. All the weaknesses of the present system are excellently set out in the report, and, basically, what they really amount to is (is it not?) that at the moment there is no system.
Anyone can prosecute for most offences in this country, and yet there are a hundred statutes which require the Attorney-General or the Director of Public Prosecutions either to conduct the prosecution or to give their consent to a prosecution being brought. A quarter of all prosecutions, apart from motoring offences, are in fact instigated by other agencies than the police—the Inland Revenue, the DHSS, British Transport, Customs and Excise and so on. And, of course, whether one is prosecuted in this country
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will very often depend at the moment on the moral attitude of the particular chief constable in the district.
I suggest that these matters are surely clear. First, that a prosecutor must be a totally independent and detached individual, and, as the report suggests, could properly be called the Crown prosecutor. He must work in harmony with the local chief constable, but at arm's length. He must run his own department and be accountable in some reasonably democratic manner. He must be efficient; and his main task must be to see that only properly selected, prepared and presented cases come before the courts. Furthermore, there must be separation between the investigation and the conduct of the case. I would add to those propositions, more controversially, that there must be the abolition of the private prosecution by the individual citizen, and that most prosecutions by other agencies should either be taken over by the Crown prosecutor or supervised by him.
That leaves, of course, three vital questions. Can there be separation between investigation and the decision to prosecute, about which we have heard a lot this evening? Should the system be local or national; and can there and should there be consistency of policy throughout the country? Speaking for myself, I find myself still ambivalent, really, on those three vital questions, and I certainly came here to take part in this debate, more to listen than to pronounce. I sincerely hope that the Secretary of State will do as he has so admirably done in relation to the future of the Judges' Rules: be able in this case to produce proposals, as he has done in those matters, for general public discussion before coming to a final decision on this absolutely crucial question.
My own personal inclination is to lean towards the conclusions of this report under all three heads. I would suggest, as the commission suggests, that it is really too impractical to dissociate in all cases the conduct of the investigation from the decision to prosecute. The critical decisions bringing the accused person into the system really have to be (do they not?) made by the police in a vast number of cases. I would say with the greatest respect, as the noble Lord, Lord Mishcon, and the noble and learned Lord, Lord Gardiner, have said, that it is easy to say that there should be a division; but is it really practical in the circumstances of immediate arrest or in relation to offences where bail is not going to be granted and in an innumerable number of unimportant and less serious cases, for one to have this strict division between the investigation and the decision to prosecute? Interestingly, the Royal Commission found on a careful inquiry that the procurator-fiscal in Scotland—and I now obviously speak with the greatest of respect to my noble and foreign friend on my right—in many cases, indeed in the majority of cases, simply acted as a rubber stamp to decisions which had already been made by the police. Furthermore, they found, going over to the United States, that the district attorney carried out a very substantial amount of investigation with his own staff into white-collar crime.
So those interesting results emerged from this report but neither of them, in fact, are examples which prove that separation would be practicable in this country. If the Crown prosecutor is really independent—appointed, as I would suggest, certainly in the same way as Crown Court judges are appointed; not, of course, by the noble

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and learned Lord the Lord Chancellor, but, in my view, by the Attorney-General—if he is given status and salary equivalent, say, to a Crown Court judge, if he is then made responsible for the conduct of all prosecutions, surely then he will see to it by a correct procedure of checks and balances that unsupportable charges or summonses do not come before the courts. That is a very crucial and important matter.
The relationship between the Crown prosecutor and the Attorney-General would then be very similar to that between the Director of Public Prosecutions and the Attorney-General at the moment. The Crown prosecutors would function really as local Directors of Public Prosecution and, indeed, the Director's department could be made responsible for the staffing and standards of prosecution departments across the country. My own inclination in the matter of administration of justice leans towards a local rather than national basis. I am supported in that inclination by experience of what has happened since the Beeching Report, in which so much of the advantages that came from local administration of justice have been abolished. One's experience of the whole of the administration of the Crown Courts being put into the hands of the noble and learned Lord the Lord Chancellor's Office—certainly speaking for myself—can hardly be described as any great success.
It is important that the administration of justice should be, so far as possible, part of local life; that the local considerations must affect prosecution policy. We surely cannot have a policy which can go right across the board. There are always bound to be reasons for prosecuting certain kinds of offences in one part of the country which would not be appropriate in certain other parts of the country. I suggest that local considerations are of the greatest possible importance. Local interest and local understanding and local participation in the administration of justice are very important. Guidelines and influence from the centre, yes. Certainly my inclination would be against directives.
So far as accountability is concerned, what the report describes as explanatory accountability, again, in spite of what the noble and learned Lord, Lord Gardiner, described as this "queer authority", the prosecution and police authority, I would incline to some authority of that sort with the chief constable and Crown prosecutor working to the same body but with responsibilities clearly defined; then the Crown prosecutors policy being open to question in Parliament of course through the Attorney-General, as the policy of the Director of Public Prosecutions now is. A London-based national prosecuting authority, though having, I see, the advantages of consistency of policy and independence of local pressures, and the other advantages which my noble friend Lord Wigoder has pointed out, I would still agree with this report, would become bureaucratic; that there would be elaborate reporting systems going through the hierarchy back to the Minister, and there would indeed be, as the report says, strong forces at work to further the interests at the centre rather than the local interests.
With those observations, obviously one has left a great many difficulties in the air, particularly the special case of what authority there should be in London. One cannot help wondering whether the undoubted
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degree of corruption which there has been in the Metropolitan Police, and which has been quite clear to many of those who have practised in London courts for many years—and now everybody has become aware of it—may not be due in some part to the fact that that police force has not been subject to any real democratic authority but has of course been responsible directly to the Home Secretary.
The whole question that we are discussing tonight is bound up with the possibility of the formation ultimately of a Ministry of Justice and the removal from the Home Office of the responsibility for many other facets of the administration of the criminal law. That raises far larger questions which I, for one, sincerely hope we shall be able to debate on another day.
10.50 p.m.
Lord Elton: My Lords, the Report of the Royal Commission on Criminal Procedure was published in January of last year. The Question tabled by the noble Lord, Lord Wigoder, provides a timely and welcome opportunity for Her Majesty's Government to respond to the recommendations made in the second part of that report and I am grateful to him, too, for giving occasion for the interesting contributions of the five other noble Lords who have spoken in the debate.
Your Lordships will recall that in the autumn of last year the Home Office issued a consultative memorandum in which were outlined a number of questions. The questions were those on which Ministers were anxious to know the opinion of interested bodies and, indeed, the general public as a whole.
Among these were a number of questions relating specifically to prosecution arrangements: both questions of principle about the need for alteration in the present system, and practical questions about the organisation, financing and control of any new arrangements. In a debate on the Royal Commission's report on 20th November last in another place, my right honourable friend the Home Secretary indicated that the Government were giving careful thought to these questions and would take full account of the views expressed on them in Parliament and elsewhere. This we have now done, and I am able today to tell your Lordships the result.
Noble Lords will recall that the Royal Commission found the existing prosecution arrangements in England and Wales to be deficient in respect of fairness, openness, accountability and efficiency. Those, as the noble Lord, Lord Wigoder, said, are important matters; and the statistics referred to by the noble Lord, Lord Mishcon, in his lucid speech—I had marked my text in the same place as he had marked his—served to heighten their importance. The commission considered whether the right course would be to set up an independent prosecution service organised on a national basis, on the lines of the procurator fiscal service in Scotland. It was interesting to hear the argument tossed to and fro between the Benches on the other side of the House as to whether this was a good thing or not.
The Royal Commission rejected this option because they believed that, if that system were applied in England and Wales, the much larger scale would result in an organisation that was altogether too bureaucratic and top-heavy. Their preference was that the arrangements should continue to be locally based, and they recommended that statutory provision should be made

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for the appointment of a Crown prosecutor for each police area. The Crown prosecutor's functions were to be, first, the conduct of all criminal cases once the decision to initiate proceedings had been taken by the police; with that went discretion to alter or drop charges. The second function was the provision of legal advice to the police on prosecution matters. The third was the provision of advocates in the magistrates' court (to the exclusion of the police) and the briefing of counsel in the Crown Court where appropriate.
The noble Lord, Lord Wigoder, kindly gave me notice of several questions he intended to raise, and he will be interested to know that research initiated by the Royal Commission indicated that about 500 police officers would be released for other duties if police officers ceased to conduct prosecutions in magistrates' courts. That, I do not doubt, will strike a sympathetic and nostalgic chord in the mind of the noble and learned Lord, Lord Gardiner, who, as he told us, suggested just as much some years ago.
The Crown prosecutor would, in respect of resources and efficiency, be accountable to a "police and prosecutions authority" which would be an expansion of the existing police authority. They thought that at national level the Attorney-General should have responsibility for prosecution policy, and that he or the Home Secretary should have responsibilities with regard to the administration and finance of the prosecution service similar to those which the Home Secretary has in relation to the police. The Crown prosecutor would prosecute cases brought by "private" police forces, but Government departments and other public agencies which now carry through their own prosecutions would continue to do so. If the Crown prosecutor refused to take up a case brought to him by a private citizen, the latter would be able to apply to a magistrates' court for leave to institute proceedings himself; if leave were granted, the cost of the prosecution would be borne by public funds. Those, in general terms, were the conclusions of the report.
The Government recognise that there is a strong case, in principle, for establishing a prosecution service independent of the police in some form. At the same time—and this is a very familiar theme—we have to bear in mind the need to contain public expenditure and public service manpower; we have to ensure that any changes made or planned keep within the limits of available resources. I am echoing a phrase of the noble Lord, Lord Wigoder, in his compellingly interesting opening speech. Furthermore, we do share the reservations which have been widely expressed about the Royal Commission's proposals on how such a service should be organised and controlled. Those reservations are implicit in the noble Lord's Question itself.
These proposals of the Royal Commission envisaged that a Crown prosecutor for each police area should be appointed, subject to central Government approval by a local supervisory authority, and that he should be accountable to that authority not only on administrative matters but also, in what the Royal Commission called an "explanatory" mode, for his general policy. The debate in another place on 20th November elicited no support whatever for this feature of the Royal Commission's proposals; and, indeed, we share the
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misgivings that appear to be widely felt about whether these proposals would be workable, and about the effect which they might have on the independence of prosecutors decisions.
However, if there are defects in the Royal Commission's scheme, that does not mean that there is some alternative scheme ready to hand which is free of all imperfections. For the noble Lord, Lord Wigoder, the obvious alternative to the Royal Commission's scheme is a national system. But that, in turn, raises a quite different set of problems, on which I shall elaborate in a moment, and these have not yet received the study that they require. The Royal Commission certainly did not examine the implications of a national system in any detail—understandably enough, since they believed that they had devised a different and better scheme. So I suggest to noble Lords that we have not yet reached a point at which we can take a decision about the form that an independent prosecution service, if we established one, should take.
At present, the conduct of public prosecutions in England and Wales is divided between, first, the Director of Public Prosecutions, dealing with the smallest but most important number of cases; secondly, 43 chief officers of police—I confirm the number—of whom 33 have the assistance of prosecuting solicitors' departments; and, thirdly, a varied assortment of Government departments, local authorities and other public bodies. If the chief officers of police no longer have the final say in the conduct of police prosecutions, who is to take their place for this purpose? We could hardly have two separate national prosecution agencies, one consisting of the DPP's department, as now constituted, and the other comprising a new and entirely separate corps of Crown prosecutors.
And here we have a problem, because to combine the two would make the Director responsible for all prosecutions, regardless of their importance. This would mean a dramatic change in the nature of the Director's office and an equally dramatic change in the size and organisation of the department. There would be implications, too, for the nature and extent of the Law Officers' accountability to Parliament for prosecution decisions. Nor can we entirely discount the Royal Commission's fears that the resulting structure would become top-heavy. As the noble and learned Lord, Lord Scarman, put it in his letter in The Times on 14th July:
"there are dangers—those of an extra wheel to the administrative coach resulting in delay, expense, bureaucratisation."
For these reasons it would, in the Government's opinion, be unwise to dismiss altogether the concept of a prosecution system organised on a local basis. There may be alternatives to the Royal Commission's scheme which would avoid the dangers both of over-centralisation and of the kind of local accountability which the commission proposed.
The noble Lord referred in his opening to the general colour of the advice which we received in response to our consultation memorandum, and, in particular, to the summary list of those who made representations, which my honourable and learned friend published in reply to a Question by the honourable Member for Hazel Grove in another place. I can confirm that the overwhelming majority of commentators favoured

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an independent prosecution service, but that there was no very clear consensus on whether it should be on a national or on a local footing.
However, I have not come to the House this evening merely to explain how difficult all this is. The Government have a clear responsibility to find and to recommend to Parliament what we consider to be the best practical solution to these difficulties. But first there does need to be further analysis and study of the problems I have outlined. The time, in the phrase of the noble Lord, Lord Wigoder, for consultation, therefore, is not past because this ought to be conducted not solely within the Whitehall machine but in consultation with representatives of the bodies which have an interest in the subject, including the prosecuting solicitors now in office, the legal profession as a whole, the local authorities and the police. For this purpose the Government propose to reappoint the working party on prosecution arrangements which last year carried out a preliminary assessment for Ministers of Part II of the Royal Commission's report. This is a working party of officials under Home Office chairmanship, comprising also representatives of the Lord Chancellor's and Law Officers' departments, and including the Director of Public Prosecutions.
Given that the Government do not find the Royal Commission's proposals acceptable as they stand, the working party's task now will be to advise Ministers on what would be the best model for the organisation of an independent prosecution service on some other basis, what problems would arise and how best they could be solved, and what the resource implications would be. They would not be limited to considering organisation on a national basis but would be able also to examine local, regional and, indeed, other possible forms. After carrying out the wide-ranging consultations I have mentioned, they might wish to present Ministers with a set of options, indicating the implications and the advantages or disadvantages of each.
Our exact destination is not clear, and that is why we have decided to reconstitute the working party to obtain further advice. But certain things have been made clear to us about our destination by the report of the Royal Commission and we intend to take three steps in that direction in the light of that report. The commission itself saw transition to an independent prosecution service as a gradual process, and the taking of these interim steps is entirely appropriate to that approach.
First, my right honourable and learned friend the Attorney-General proposes to give to all who prosecute on behalf of the public some guidance on criteria for prosecution which will be closely in accordance with the spirit of the Royal Commission's recommendations. We in the Home Office will bring this guidance to the attention of chief officers of police. Secondly, the Director of Public Prosecutions will, with the approval of my right honourable and learned friend the Attorney-General ask the chief officers of police to consult him in every case in which the chief officer wishes to continue criminal proceedings, contrary to the advice of the solicitor having the conduct of the proceedings. Thirdly, we shall maintain the policy of favouring the establishment of
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prosecuting solicitors' departments and the Home Office will proceed to draw up models for the organisation of prosectuing solicitors' departments with a view to promoting efficiency and cost effectiveness.
Interim measures on these lines will be taken after consultation with interested bodies outside Whitehall and will be supplemented by research aimed at updating the information obtained by the Royal Commission about the working of the existing arrangements. That information will of course, I can assure the noble Lord, Lord Wigoder, include information on the resource implications of anything that may be proposed.
A number of your Lordships asked questions which I shall attempt now to reply to. With regard to the question about the Home Affairs Committee report, the noble Lord was interested in the correlation of policy on police complaints with that on the independent prosecution system. My right honourable friend the Home Secretary has made it clear that the Government still have the recommendation in the Home Affairs Committee's report under consideration and that our conclusions will be announced as soon as practicable. He has also said that he intends to bring forward proposals for legislation. To what extent an independent prosecution service can assume responsibility for police complaints depends on, among other things, the model finally adopted. We cannot therefore judge at present how far the committee's long-term aim is attainable until we see what emerges from the steps I have just announced. The committee's recommendations for reform in the meantime relate specifically to complaints procedures and not to prosecution arrangements generally.
The noble Lord, Lord Mishcon, inquired on the subject of cautioning. My right honourable friend accepts the case for reducing the wide variations to which the noble Lord referred in his statistical review, where this is possible. The Home Office has held discussions with chief officers to that end. As a first step, a research programme is being mounted which will draw on the results of a current survey of present practice. But, in the context of this debate, I would say in reply to the noble Lord's question that the Royal Commission placed importance on the police continuing to have discretion to prosecute. I hope that your Lordships accept that the measures being undertaken by the Government in the context of cautioning provide the best way forward in the direction which the Royal Commission recommends on that subject.
This debate has performed one of the important functions of both Houses of Parliament; and that is the edification of the Minister. If I have not referred specifically to interventions by your Lordships, it is through no lack of regard for what has been said. Indeed, I have not referred specifically to the noble and learned Lord, Lord Wilson of Langside, or to the noble Lord, Lord Hutchinson of Lullington, but in fact much of what they have said has been echoed in my own speech.
I heard with very great interest the noble and learned Lord, Lord Wilson of Langside, warning us against the central system and finishing up by recommending ambivalence to the Government. There was considerable interest, too, in the general approval expressed by several noble Lords of the separation of

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the functions of investigation and prosecution. That is, on present balance, our own view—but, in the context of police complaints, it is possible to advance another view with some considerable persuasion. I should not like to give the impression that we have come to a final view on this. So we do occupy the ambivalent position of the noble and learned Lord in that respect.
The noble and learned Lord, Lord Gardiner, asked an interesting question about the researches of the commission and the reason for the way in which they were planned. I cannot speak for the commission but the one crumb of information I can give him is that, although I know it is true that the Royal Commission did not itself research into prosecution systems in other European countries, members of the commission in fact visited Denmark, the Netherlands and Sweden, but not—interestingly enough—Germany, to study at first hand their prosecution systems.
I hope that this summary of where the Government now stand on Part II of the Royal Commission's report, and of the further study and action we are putting in hand, has been helpful to the noble Lord, Lord Wigoder, and to the House as a whole. Clearly, we are not in a position to give a date for future legislation on the main issue, but I have already announced interim measures, and we shall keep Parliament informed of further developments in the months to come. Everything that the noble Lord, Lord Wigoder, has said—I have an awful feeling he is going to say, "Before the noble Lord sits down", and I am going to sit down very quickly—has resource implications, including keeping your Lordships' House sitting at a late hour.
Lord Wigoder: My Lords, all I was going to say before the noble Lord sat down after that most helpful and constructive speech was this: Could he assure us that the working party will be reappointed in the near future and instructed to treat their task as one of urgency?
Lord Hutchinson of Lullington: My Lords—
Lord Denham: Order!
Lord Elton: I think, my Lords, that although the noble Lord, Lord Wigoder, asked a question, I can stretch the rules of order to the extent of giving a monosyllabic reply, which is what I would have done; the answer to his question is, yes.

Greater London Council (Money) Bill
Committed to an Unopposed Bill Committee.
  WINE BY THE GLASS: LEGISLATION
  WINE BY THE GLASS: LEGISLATION
  BRITISH MIDLAND AIRWAYS: ROUTE APPLICATION
  BRITISH MIDLAND AIRWAYS: ROUTE APPLICATION
  THE HUMANITIES: RESEARCH COUNCIL
  THE HUMANITIES: RESEARCH COUNCIL
  NORTHERN IRELAND: TRIAL BY JUDGE AND JURY
  NORTHERN IRELAND: TRIAL BY JUDGE AND JURY
  DESCHEDULED OFFENCES: ATTORNEY- GENERAL'S CERTIFICATION
  DESCHEDULED OFFENCES: ATTORNEY- GENERAL'S CERTIFICATION