Sitting of 11 March 1982

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
PRIVATE BUSINESS

  COUNTY OF AVON BILL [Lords]
  Read the Third time and passed, with amendments.
  ALEXANDRA PARK AND PALACE BILL (By Order)
  LONDON TRANSPORT (LIVERPOOL STREET) BILL (By Order)
  SEVERN-TRENT WATER AUTHORITY BILL (By Order)
  GREATER LONDON COUNCIL (GENERAL POWERS) (No. 2) BILL (By Order)
  TEES AND HARTLEPOOL PORT AUTHORITY BILL (By Order)
  BRITISH TRANSPORT DOCKS BILL (By Order)
  FELTHAM STATION AREA REDEVELOPMENT (LONGFORD RIVER) BILL (By Order)

  CUMBRIA BILL [Lords] (By Order)
  Orders for Second Reading read.
  To be read a Second time upon Thursday 18 March.

Oral Answers to Questions
  NATIONAL FINANCE

    European Community Budget
    Sir Anthony Meyerasked the Chancellor of the Exchequer what proportion of the European Community gross domestic product and of the combined expenditure by the Governments of member States was represented by the 1981 Community budget; and if he has any estimates compiled on a similar basis for 1982 if the present disputed 1982 budget stands.
    The Economic Secretary to the Treasury (Mr. Jock Bruce-Gardyne): The Community budget for 1982 accounted for nearly 0·9 per cent. of the gross domestic product of member States and about 1·9 per cent. of their combined general Government expenditure. I estimate that the 1982 budget, as adopted, would account for about the same proportion of the GDP of member States as in 1981.
    Sir Anthony Meyer: Does that not put in perspective the relative importance of the budget, in comparison with
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    the vast volume of trade which is at risk—£50,000 million of Britain's annual trade with the EEC—if anything affected our membership?
    Mr. Bruce-Gardyne: I can only say that my hon. Friend is, as usual, entirely right in that respect.

    Public Sector Borrowing Requirement
    Sir David Priceasked the Chancellor of the Exchequer if he will distinguish in his treatment of the public sector borrowing requirement between borrowing for current expenditure and borrowing for capital investment.
    The Chief Secretary to the Treasury (Mr. Leon Brittan): Borrowing is not undertaken to finance specific services or projects, but details of current and capita) transactions are set out in the published public sector accounts, most recently in the Financial Statement and Budget Report.
    Sir David Price: Would it not assist my right hon. and learned Friend the Chancellor, in his very commendable efforts to bring down the cost of borrowed money, if he adopted a more selective approach to funding, according to the end use of the borrowing, as he has indeed done in the private sector?
    Mr. Brittan: I do not feel that that would assist my right hon. and learned Friend in achieving his objectives, because, at the end of the day, whatever the purpose of the borrowing, its short-term effect is the same.
    Mr. Horam: Is it not obvious that over the years, under all Governments, the level of capital spending has been ruinously affected by the desire to control total spending and the difficulty within that of controlling current. spending? Therefore, if one took out capital spending, and funded and showed it differently, one would have a PSBR in more understandable and business-like terms.
    Mr. Brittan: Anything that assisted one in reducing. current spending and retaining capital spending would) certainly be very beneficial. However, I disagree with the: constructive thought behind the hon. Gentleman's remarks, because I do not believe that merely by switching the accounting one would be changing anything in reality. The sort of obstacles that one faces are the real pressures in favour of current expenditure on items such as social security and defence, which are important, but all of which point in the opposite direction.
    Mr. Shore: Does the Chief Secretary agree that it makes sense to draw a distinction—as the CBI might put it—between the quality of the PSBR as it reflects capital expenditure and current expenditure? Pressing the Chief Secretary a little further, one of the things that has surely struck him and his colleagues—
    Mr. Speaker: Order. Even right hon. Members on the Opposition Front Bench must ask questions rather than engage in argument.
    Mr. Shore: I shall ask a precise question. Having considered our experience in this matter and our definition of what comprises the PSBR, would we not be more sensible—as have so many other countries, including our European competitors—to use the classification of central Government borrowing requirement and thus exclude from the borrowing requirement our enormous public sector of industry?
    Mr. Brittan: The right hon. Gentleman is making a great mistake if he believes that by excluding the borrowing of the nationalised industries from the public sector borrowing requirement the impact of that borrowing on national resources will be affected. It is ridiculous to expect that to happen. The right hon. Gentleman should be slightly reticent about capital expenditure, having been a member of a Government who, in a couple of years, reduced the proportion of capital expenditure to total expenditure from 19 to 14 per cent.
    Mr. Charles Morrison: Is my right hon. and learned Friend aware that in spite of his helpful replies many of us still remain puzzled as to why it is not possible to draw a distinction between capital and current expenditure when in every other walk of life, private, commercial or industrial, those concerned have to do so?
    Mr. Brittan: The distinction is drawn. I am happy to draw my hon. Friend's attention to the relevant tables in the FSBR and the public expenditure White Paper.
    Mr. Jay: As I know that the Chief Secretary studies his official figures carefully, is he aware that according to his figures total capital expenditure in the public sector greatly exceeds the PSBR?
    Mr. Brittan: Yes.

    Budget
    Mr. Archie Hamiltonasked the Chancellor of the Exchequer what representations he has received on his Budget Statement.
    Mr. Sainsburyasked the Chancellor of the Exchequer what representations he has received on his Budget proposals.
    Mr. Neubertasked the Chancellor of the Exchequer what representations he has received following his Budget Statement.
    The Chancellor of the Exchequer (Sir Geoffrey Howe): As is usual on these occasions, I receive comments and representations from a variety of sources.
    Mr. Hamilton: May I congratulate my right hon. and learned Friend on his successful Budget Statement? Is he aware that many leaders of industry are extremely relieved that the Government are keeping to a financial policy that will lead to lower interest rates and a lower rate of inflation?
    Sir Geoffrey Howe: I am grateful to my hon. Friend for his remarks. I have seen many industrial comments to exactly that effect.
    Mr. Sainsbury: Is my right hon. and learned Friend aware that his Budget Statement has been well received by the many retired people and those engaged in small businesses in my constituency and elsewhere? However, does he appreciate that there is great puzzlement that the Government do not draw a clearer distinction between their capital and their current expenditure? If they were to do so in their public presentation, it might be possible to do still more to encourage British industry to create more jobs and more wealth for Britain.
    Sir Geoffrey Howe: I am aware, as is my right hon. and learned Friend the Chief Secretary, of the keen interest in this subject that is displayed by my hon. Friend, among
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    many others. It is for that reason that we published in last September's economic progress report a clear analysis that made the distinctions that my hon. Friend suggests. The public expenditure White Paper has contained many improvements to make the distinctions very much clearer. It is important that that continues.
    Mr. Neubert: Is my right hon. and learned Friend aware that I share the neat assessment of the Daily Express that his Budget is politically skilful, socially adroit and economically sound? Does he agree that the firm prospect of single figure inflation within a matter of months more than anything else, for the first time for many years, puts the prize of renewed prosperity and increased employment within our grasp?
    Sir Geoffrey Howe: I am grateful to my hon. Friend for drawing to the attention of the House the wise observations of the Daily Express. I entirely endorse the importance of his point. There is every prospect that this Government will be the first for 30 years to have an average level of inflation lower than that of their predecessors.
    Mr. Ioan Evans: Does the Chancellor of the Exchequer realise that for the 3 million unemployed the Budget will be extremely disappointing? As every other Budget that he has introduced has led to an increase in unemployment, can he say whether his latest will reduce unemployment or, as is stated in the Red Book, will add a further 300,000 to the 3 million already unemployed?
    Sir Geoffrey Howe: A number of commentators have said that the Budget is likely to bring forward the time when unemployment will start to decline. There is no doubt that it is important to achieve that. The Budget is designed to promote that purpose, among several others.
    Mr. Eggar: Has my right hon. and learned Friend noticed the welcome that has been given to the abandonment of the medium-term financial strategy and the importance that is being given to monetary policy in general rather than the particular form of monetary policy that was represented in the medium-term financial strategy?
    Sir Geoffrey Howe: I have noticed that one or two appear to share my hon. Friend's view that there has been an abandonment of the medium-term financial strategy. I repeat what I said in my Budget Satement, that the strategy has served and will continue to serve a most important purpose. That is why it is important to retain it. I emphasise that the adjustment in the monetary target that I announced does not imply any relaxation of purpose. It represents a realistic restatement of our determination to maintain a responsible monetary policy.
    Mr. Cook: Will the right hon. and learned Gentleman give a straight answer to the question that was put in vain yesterday to the Chief Secretary and the Financial Secretary? Does the press notice issued by the Treasury about its Budget give an accurate picture of its tax impact? If it does, will he confirm that after his supposed "Budget for the people" a higher percentage of income will be taken in deductions for tax and national insurance contributions for every married taxpayer earning less than £20,000 and every single taxpayer earning less than £10,000? Does he seriously expect the nation to congratulate him on that achievement?
    Sir Geoffrey Howe: I am glad to have the opportunity of making the position clear to the House. Every one of the tables published in the Treasury press notice, as the House would expect, is an accurate statement of the effect of the Budget. The various changes made by my statement on 2 December and in my Budget Statement on Tuesday will have an effect on people's incomes at different times during the year. At the beginning of the financial year in April pay packets will be reduced as a result of the higher national insurance contributions.
    However, as soon as the Budget changes take effect after 26 April, as I said in my Budget Statement, the public will find that their income tax will be reduced. As my right hon. and learned Friend the Chief Secretary said, for most families the income tax reductions will be greater than the extra national insurance contributions. If the hon. Member for Edinburgh, Central (Mr. Cook) reads the sixth table he will find that on 26 April, as income tax changes come into effect some three weeks after the national insurance changes, the income tax reductions will be greater than the extra national insurance contributions. There will be a net gain for married men on earnings of up to £170 per week—[Interruption.] If the hon. Gentleman will be patient, he will have the answer to the question that he has put on many occasions.
    As the year moves on and people receive wage increases, they will pay more tax and higher national insurance contributions. The ninth table of the Treasury press notice shows what will happen where, for example, a person's earnings rise by 7½ per cent. As right hon. and hon. Members have said, on that assumption the table shows that the proportion of income going in tax and national insurance contributions will be somewhat higher in 1981–82. That will not be so for those on the very lowest or the very highest levels of earnings. Families with children will benefit at a later stage in the year from the increases in child benefit and one-parent family benefit. Those are the inevitable consequences of the increases that I made in the tax thresholds even above those required by the Rooker-Wise provisions. I am surprised that Labour Members are not grateful for that very important advance.
    Mr. Shore: I thank the Chancellor for that statement, in so far as it has helped to clarify the issue. Apart from the short-term adjustments between April, when national insurance contribution increases come into effect, and a few weeks later when the tax changes come into effect, with a contrary effect, and on the assumption that the increase in incomes will be about 7½ per cent. during the year to the autumn, for example, and for the rest of the year, and it is exactly as we have said it will be, does he agree that most people will pay a higher proportion of their income in taxation and in national insurance contributions combined than they did last year?
    Sir Geoffrey Howe: On the assumption of 7½ per cent. increases, as set out in the ninth table, at some stage during the year all save those on the very lowest and highest levels of earnings will reach that position. However, an essential component is the 1 per cent. increase in national insurance contributions, which is deliberately endorsed by the House as falling on the shoulders of those in employment to abate the burden of income tax on those out of employment and to abate the burden that would otherwise fall on British industry. It makes a direct contribution to the prospects of recuced unemployment in the year ahead and is entirely helped by my measures.
    Mr. Speaker: Order. We all understand that we must be much quicker on the other questions.
    Mr. Squire askedthe Chancellor of the Exchequer whether, based on the latest available figures for the current year, he considered that his Budget for 1981–82 was reflationary, deflationary or neutral in effect.
    Mr. Brittan: Talk of deflationary or deflationary effects is oversimplified. It ignores the links between fiscal and monetary policy and their effects, through interest rates and the exchange rate, on the economy. Last year's reduction in the PSBR eased the pressure on interest rates and maintained downward pressure on inflation. During the second half of last year output rose.
    Mr. Squire: Has my right hon. and learned Friend read the editorial in yesterday's Financial Times, which suggested that the real reasons for what it describes as the cautious relaxation of Tuesday's statement was that past fiscal restraints had proved too tight? Does my right hon. and learned Friend have any fears that the same may be said in a year's time by the same newspaper about Tuesday's statement?
    Mr. Brittan: I should not like to predict what the newspaper will say, in spite of some of its eminent contributors. If it says the same thing, it will not be right.
    Mr. Newens: Does the Minister recognise that vast numbers of people, including many business men, are deeply disappointed with the Budget in so far as it is, in effect, inflationary and will lead to a continuing rise in unemployment with no real relief being given to those, now more than 1 million, who have been unemployed for over a year? In those circumstances, how on earth can the right hon. and learned Gentleman consider that it is reasonable to argue that this is a Budget that meets the needs of the nation?
    Mr. Brittan: The question was about last year's Budget, but I am happy to answer the hon. Gentleman and point out to him that a Budget that reduces the direct costs to industry of employing people by reducing the national insurance surcharge, and that gives assistance to the construction industry, enterprise and new technology, cannot do other than improve employment prospects, not make them worse.
    Mr. Ward: Is my right hon. and learned Friend aware that the Chancellor's Budget will mean that in the county of Dorset £6 million will be available for industry as a direct result of that Budget? This will be used for investment and to create real long-term jobs. It is not bad for a small county such as Dorset to receive £6 million back in this way.
    Mr. Brittan: I cannot claim to have done the Dorset sums myself, but I am glad to hear the result of them. The same message can come from every county in the country, and I think that the Budget is much welcomed and well received.
    Mr. Straw: Does the Chief Secretary recall that although he yesterday described the suggestion that the Budget was in some sense deflationary as "a fantastic proposition", his hon. Friend the Financial Secretary only six hours later said:
    "In this connection one is again asked 'Is this Budget inflationary?' One cannot answer that question with a direct answer." — [Official Report, 19 March 1982; Vol. 19, c. 940.]

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    Will the Chief Secretary tell us who is right and who is speaking for the Government?
    Mr. Brittan: There is no inconsistency. I said that it was "a fantastic proposition" and that is what my hon. Friend was saying. I explained in answer to the question put by my hon. Friend the Member for Hornchurch (Mr. Squire) exactly why and in what sense the concept of whether something was reflationary, deflationary or neutral was limited. The reason for that is that it is looking at the fiscal side alone and not at the monetary implications of the Budget. It is the two, when put together, that reflect what Government policy as a whole is doing for the economy.

    Civil Service Pay
    Mr. Dubsasked the Chancellor of the Exchequer whether he will make the present arbitration arrangements for Civil Service pay binding on both parties.
    The Minister of State, Treasury (Mr. Barney Hayhoe): No. As agreed last July, this year's arbitration on Civil Service pay is on the basis that the Government reserve the right if necessary to ask the House to approve setting aside the award on the ground of overriding national policy. For the longer term, arrangements will be considered in the light of the Megaw inquiry into Civil Service pay, which is due to report this summer.
    Mr. Dubs: Will the Minister say whether this year's Civil Service pay settlement is to be subject to cash limits? Will he further tell the House on what basis he would reject an arbitration settlement?
    Mr. Hayhoe: We gave an undertaking last year that this year's negotiations and Civil Service pay settlement would be on the basis of there not being a predetermined cash limit, and that assurance holds. With regard to the judgment that the Government will make in the light of the arbitration award, we will wait to see what it is.

    Urban Renewal
    Mr. Greenwayasked the Chancellor of the Exchequer if he will take new iniatives to encourage banks to invest in urban renewal.
    Mr. Bruce-Gardyne: Lending decisions are a matter for the business judgment of the banks themselves. However, as my right hon. and learned Friend announced on Tuesday, my right hon. Friend the Secretary of State for the Environment intends to make special arrangements for giving high priority to joint projects between the public and private sectors in the urban aid and derelict land programmes. The Government also look forward to the findings of the financial institutions group studying urban problems that has been set up by my right hon. Friend the Secretary of State for the Environment.
    Mr. Greenway: Does my hon. Friend agree that financial institutions are bound to look for maximum return on their investment and that inner city areas offer risks in this direction? Will my hon. Friend therefore consider special incentives for them? Does my hon. Friend agree that the 90 per cent. rate increase in London is particularly unhelpful?
    Mr. Bruce-Gardyne: My hon. Friend is correct. It is very hard to see how we can expect to have substantial
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    commercial investment in areas covered by Labour-controlled local authorities, which have put up rating burdens on commercial premises by the sorts of percentages that have occurred in boroughs such as Hackney, where last year commercial rates went up 47 per cent. That is a major deterrent to incoming industry and investment.
    Mr. Eastham: Apart from the banks, would it not be a good idea if we tried to encourage insurance companies to shake out some of the many funds that they have at their disposal? May I remind the Minister that many of the partnership cities have had their assisted area status taken away? If the Government are not prepared to return that status to the partnership areas, will the hon. Gentleman at least give some major tax reliefs to encourage development in these areas?
    Mr. Bruce-Gardyne: It is precisely to enlist the help and support of institutions such as the insurance institutions that my right hon. and learned Friend has established the financial institutions group. It is working hard on joint projects between the private and the public sector on these questions. However, as I said in answer to the original question, the decision must ultimately rest with the commercial institutions concerned.
    We have to face the fact that if assistance is spread too widely it is of benefit to nobody. That is why my right hon. Friend the Secretary of State for Industry has concentrated aid where it will be most effective.

    Demand
    Mr. Eggarasked the Chancellor of the Exchequer whether he expects that his most recent Budget will increase the level of demand.
    Sir Geoffrey Howe: The Budget has been designed to sustain the increase in economic activity that is already taking place. The scale of this increase continues to depend to a large extent on the actions of companies and employees in improving productivity and moderating wage increases.
    Mr. Eggar: Will my right hon. and learned Friend confirm that it is only if output from United Kingdom firms can be increased that we as a country can hope to build on the considerable increase both in productivity and competitiveness that has been one of the great successes of my right hon. and learned Friend's economic policy?
    Sir Geoffrey Howe: I entirely agree with my hon. Friend. The prospect of increasing employment and national wealth will follow from an increase in output manufactured and sold by trade and industry of all kinds. It is for that reason that I emphasise the second part of my original answer.
    Mr. Stoddart: Is it not true that the Budget is, generally speaking, broadly deflationary, and if firms cannot see an opportunity of an extension of demand will this not be a discouragement to them to invest?
    Sir Geoffrey Howe: The misleading nature of the term deflationary is not assisted in achieving clarity if it is prefaced by the words "generally speaking" or "broadly," It is not sensibly possible to apply that kind of analysis on one view. The public sector borrowing requirement in the year ahead is intended to be lower in cash and real terms than in previous years. On another view, it is intended to

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    be larger than it would otherwise have been on the standard assumptions. Neither of those changes can sensibly be described as deflationary or reflationary. If inflation continues to come down as we maintain an improving control over the money supply and excessive public sector borrowing, and if firms and those offering their labour for employment reduce the price at which those things are sold or made available, the volume of real output and of real employment will increase. It is for that reason that the response to a controlled economic environment depends crucially on the performance of those trying to sell their goods and services in it.
    Mr. Henderson: Does my right hon. and learned Friend agree that the reduction of interest rates and the rate of inflation—probably a consequence, though not a part, of the Budget Statement—will lead to higher purchasing powers for individuals and, therefore, potentially an increase in demand?
    Sir Geoffrey Howe: It will have that effect. It will also have the effect of reducing the price of goods and services brought to the market and of increasing the volume that is bought and sold. In both ways it will thus increase real output.
    Mr. Robert Sheldon: I note that the Chancellor of the Exchequer cannot say whether his Budget is reflationary, deflationary or neutral. Will he look at the obvious consequence of his Budget, which is spelt out in the White Paper, that unemployment will increase by 300,000 this year and into the foreseeable future? On my definition, that is deflationary.
    Sir Geoffrey Howe: I am trying, and I shall continue to try, to persuade the right hon. Gentleman that it is quite unhelpful to talk about Budgets being reflationary or deflationary. This Budget is likely to have a beneficial effect on inflation and interest rates, and is therefore liable to improve the prospects for output and employment. I am sorry that the right hon. Gentleman has repeated in the House the misleading point that was made by the right hon. Member for Stepney and Poplar (Mr. Shore) in his broadcast last night, when he sought to quote from the White Paper on employment and suggested that the White Paper meant that the Government assumed that unemployment would rise from its present total to nearer 3¼ million, and then stick there for the foreseeable future. He omitted to add the crucial point contained in the White Paper:
    "If developments on pay and the world economic recovery are favourable, there is a reasonable prospect that unemployment levels in the later years may turn out to be somewhat lower than has been assumed".
    Mr. Shore: In any economic forecast or set of economic assumptions there are always variables. Is it not a fact that what the right hon. and learned Gentleman has published is his best judgment of what will happen, and that is that unemployment will increase?
    Sir Geoffrey Howe: The right hon. Gentleman knows that the White Paper followed the precise pattern of those published by the Government of which he was a member. It sets out an assumption, necessary for the purposes of the Government Actuary's report, as at December when we dealt with the matter. As in his White Paper, it says that for the purposes of the calculation it has been taken as an assumption that the figures of unemployment will average the same figure for this year and for each of the subsequent
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    years of the survey. That is an assumption for the purpose of the Government Actuary's report. It is not a prediction. He was wrong to omit in his broadcast last night the qualifications contained therein.
    Mr. Speaker: Mr. Wainwright, Question No. 9.
    Mr. Stevens rose—
    Mr. Speaker: Order. I had an indication that the hon . Member for Fulham (Mr. Stevens) had withdrawn his question, No. 8. He cannot change his mind halfway through. Either he has withdrawn the question, or he has not. Perhaps the information that reached me was wrong.. If so, I shall make inquiries later. Had the hon. Gentleman withdrawn his question?
    Mr. Stevens: No.
    Mr. Speaker: I shall make inquiries about how I got the message.

    London Docklands
    Mr. Stevensasked the Chancellor of the Exchequer if he will take steps to establish a tax-free area in London Docklands.
    Mr. Brittan: I am not persuaded that there would be any advantage in setting up a tax-free area in London Docklands. The other initiatives that we are pursuing there will be more fruitful. The London Docklands Development Corporation is beginning to make its mark in the area. The enterprise zone at the Isle of Dogs is expected to come into operation next month. That will offer a number of tax concessions and is already attracting considerable interest.
    Mr. Stevens: In view of the unique nature of London Docklands, is my right hon. and learned Friend satisfied that the measures that have been taken to encourage industry into Docklands and into the enterprise zone will work quickly enough to take full advantage of this splendid opening?
    Mr. Brittan: I hope that they will, although they are very much in their infancy. Clearly, we shall want to watch closely whether they make the impact that we hope they will.

    Provisional Budget Statement
    Mr. Richard Wainwrightasked the Chancellor of the Exchequer if he will make it his practice to present a provisional Budget Statement in December with a series of fiscal options for Parliament to consider.
    Sir Geoffrey Howe: As the hon. Member knows, Budget procedures are being studied by the Treasury and Civil Service Select Committee. I await the report of the Committee with interest.
    Mr. Wainwright: Does the Chancellor of the Exchequer agree, especially in the light of his recent experience with table 9 of the Budget press realease, that considerations of tax, social security and energy are now so complex and closely interrelated that even he needs a wider dialogue before reaching firm conclusions to put to the House?
    Sir Geoffrey Howe: I suspect that if some people have found it difficult to follow the tables describing one

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    option, it might compound confusion even more if we were to offer more than one option at the same time. The present method has commended itself to the House over a number of years. It enables the House to concentrate on the plans that are laid before it by the Government. I look forward with interest to see whether the Select Committee will suggest an alternative approach.
    Mr. Dykes: In view of our tradition of the once-a-year principal Budget, will my right hon. and learned Friend say what has been the main modification in monetary policy in Tuesday's announcement?
    Sir Geoffrey Howe: I have already answered that question in the reply that I gave to my hon. Friend the Member for Enfield, North (Mr. Eggar).

    Economic Improvement
    Mr. Winnickasked the Chancellor of the Exchequer when he now expects to see a substantial improvement in the economy.
    Sir Geoffrey Howe: The published forecast shows the recovery being firmly established over the next year, as inflation comes down.
    Mr. Winnick: Is the Chancellor of the Exchequer aware that most people will understand that, after his latest Budget, the chances of a substantial improvement in the economy are as remote as they were under his previous Budgets, and that all the evidence shows that mass unemployment will continue under his Government?
    Sir Geoffrey Howe: If the hon. Gentleman persists in deceiving himself and in setting such a wide distance between his own perception and that of the rest of the country, it is his misfortune, not mine.
    Dr. Mawhinney: How close a relationship does my right hon. and learned Friend see between a substantial improvement in the economy and a substantial reduction in interest rates?
    Sir Geoffrey Howe: If the process proceeds as expected, the two should be closely related.
    Mr. Geoffrey Robinson: Is the Chancellor of the Exchequer aware that the figures published yesterday, showing a massive £4 billion investment in the overseas portfolio, reveal that his stewardship has been an utter disaster in a year—1981—when there was a net disinvestment in manufacturing industry? How can any recovery be based on that loss of investment and jobs at home, when money is flowing across the exchanges into portfolio investments abroad?
    Sir Geoffrey Howe: If the hon. Gentleman had taken part in the NEDC discussion on this subject the other day—the opportunity may yet present itself to him—he would have a better insight into the problem. The movement of money into portfolio and other investment overseas is entirely beneficial, for two reasons. First, it provides better opportunities and outposts for British trading opportunities. Secondly, it replaces the rundown of capital assets in North Sea oil with income-producing assets overseas. Moreover—this is something that I should have thought the Labour party would have mentioned—it makes the exchange rate lower than it would otherwise have been.

    Widows
    Mr. Durantasked the Chancellor of the Exchequer whether he has any plans to meet representatives of the National Association of Widows to discuss the tax position of widows.
    Mr. Bruce-Gardyne: We have not received a request for a meeting with the National Association of Widows this year, but if one is made one of my hon. Friends or I will be glad to see it.
    Mr. Durant: Is my hon. Friend aware that the National Association of Widows was disappointed that the Chancellor in his Budget Statement did not mention the uprating of widows' allowance? Working widows are still concerned that although this allowance has been uprated and followed by the personal allowances, taxes will still claw back some of the money. Is my hon. Friend aware that they are worried that they will not be any better off?
    Mr. Bruce-Gardyne: I hate to say it to my hon. Friend, but he is being a little ungenerous. The Budget provided full price protection of widows' pensions, and also a tax threshold increase for widows of 14 per cent., which is bigger than the pension increase. As a result, fewer widows will now pay tax than in 1981–82. Those who pay tax will have a lower tax burden, and widows over 65 can have over £9 a week in addition to pension, before they are liable for tax, as a result of the age allowance increase. Those are not insignificant benefits.
    Mr. Cook: Will the Economic Secretary confirm that, for the second year running, the basic pension for a widow aged under 65 will, in the next financial year, carry her over the tax threshold? Does he appreciate that that has occurred only since the Government came to office? When can we look forward to the time when the Government will remove such women from tax altogether?
    Mr. Bruce-Gardyne: I cannot confirm that, because it is not accurate. My understanding is that the widow's single allowance plus the £100 assessing tolerance—
    Mr. Cook: Ah, Yes.
    Mr. Bruce-Gardyne: I do not see why we should not take account of the £100 assessing tolerance, because it actually applies. It means that women with earnings-related additions to State pension will not have to pay tax on them unless the additions are more than £64 a week, which is well above the average additions to the State pension.

    Economic Policy
    Mr. Cryerasked the Chancellor of the Exchequer to what extent his Budget furthers the aims of his economic policy.
    Sir Geoffrey Howe: I refer the hon. Member to my Budget Statement.
    Mr. Cryer: Does the Chancellor of the Exchequer realise that there is a recession at the moment, that the Budget will not reduce the dole queues, that it is a cruel deception of the nation to suggest that it will, and that much more vigorous action is needed by the Government to reduce the dole queues, or does he take his advice from the April issue of "Honey" magazine, in which Mark Thatcher says that he decries
    "the notion that there is a recession"?
    Sir Geoffrey Howe: It is quite absurd to suggest that a significantly different economic policy would have a more rapid and effective impact on the dole queue. The hon. Member knows that a different prescription was tried by the Labour Party when in office. It led to a doubling of the dole queue and was not notably successful.
    Mr. Kilroy-Silk: Is the Chancellor of the Exchequer aware that his economic policies have doubled unemployment in my constituency, which now stands at 21·8 per cent? Which measures in the Budget are likely to reduce unemployment in my constituency and how many of my unemployed constituents will have a job as a result of the decisions that he announced on Tuesday?
    Sir Geoffrey Howe: The hon. Gentleman is wholly mistaken to suggest that the level of unemployment in his constituency or any other is a result of Government policy. The measures in the Budget directed to the continued conquest of inflation and to helping British trade and industry are much the most secure foundation for the reduction in unemployment, to which we all look forward.

    Confederation of British Industry
    Mr. Kenneth Lewisasked the Chancellor of the Exchequer what consultations he proposes to have with the Confederation of British Industry following his Budget Statement.
    Sir Geoffrey Howe: I have no plans at present to meet representatives of the confederation before the next meeting of the National Economic Development Council, which is to be held on 7 April.
    Mr. Lewis: I have no doubt that if my right hon. and learned Friend meets representatives of the CBI soon, they will give him a lunch because of what he has done about the national insurance surcharge. It has been brought down effectively for the moment. Will my right hon. and learned Friend keep an open mind for the autumn, because my right hon. and learned Friend the Chief Secretary to the Treasury said that the reduction in that tax would increase employment? If we need to increase employment more, that would be the best tax to reduce in the coming months.
    Sir Geoffrey Howe: My mind is always open to suggestions from my hon. Friend, but I do not wish to lead him to expect any change in the measures that I have announced about the national insurance surcharge. It takes some time to bring them into effect. I am bringing them into effect as early as possible and also taking steps to increase their effectiveness so that industry receives the benefit of the whole 1 per cent. throughout the year.

    Enterprise Zones
    Mr. Anthony Grantasked the Chancellor of the Exchequer if he will review the tax incentives available to enterprise zones.
    Mr. Brittan: The private sector's response to the enterprise zones has been encouraging, but it is still too early to judge which features have been most helpful and therefore it is too early to review the tax incentives.
    Mr. Grant: Is my right hon. and learned Friend aware that some local authorities in enterprise zones are charging high rents because of the Government's subsidy on rates?
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    Will he consider making it mandatory that such local authorities should dispose of the freeholds if they are requested to do so?
    Mr. Brittan: I am grateful to my hon. Friend for drawing my attention to that problem. I hope that he will give us further details, as we must obviously consider it.
    Mr. Eastham: Is it not a farce to introduce enterprise zones only three or four miles away from partnership areas—the very areas that need the sort of assistance that the Government have decided to give to the enterprise zones?
    Mr. Brittan: There is no inconsistency in doing that, because the enterprise zones have a particular role to play in stimulating specified portions of the older industrial areas. Their task is worth while and the fact that there may be other areas of benefit comparatively close by is not an obstacle or an objection.

    Public Ownership (Manufacturing Concerns)
    Mr. Dalyellasked the Chancellor of the Exchequer to what extent he takes into account the effect on manufacturing concerns in public ownership, such as British Leyland, in assessing measures designed to stimulate demand in the economy.
    Sir Geoffrey Howe: The finances of all concerns in public ownership are taken fully into account when we assess Government expenditure and borrowing.
    Mr. Dalyell: Does the Chancellor agree that, as to the proposed sale of the tractor line at Bathgate, the Treasury should be fully informed about the public expenditure consequences of what happens?
    Sir Geoffrey Howe: The sale is a matter for the board of British Leyland.

  PRIME MINISTER

    Engagements
    Mr. Kenneth Lewisasked the Prime Minister if she will list her official engagements for Thursday 11 March.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House, I shall be having further meetings later today, including one with the Speaker of the Peruvian Parliament.
    Mr. Lewis: Is my right hon. Friend aware that the best thing that she has done in recent days is to agree to a relaxation of the public pay guideline of 4 per cent. in favour of giving the nurses 6·4 per cent? That will be appreciated in Britain. Would it not be a good idea if other trade unions in the public sector, with the support of the Leader of the Opposition and the Labour Party, did not use that increase for the nurses to make bigger claims and thus gazump this claim, because that will make it more difficult in future to make exceptions in favour of professions such as the nurses, who are worthy of such an increase?
    The Prime Minister: There were good management grounds for offering nurses more than 4 per cent. and believe that the decision has been welcomed generally. It

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    is, of course, the taxpayers' money, not the Government's money, and my hon. Friend is right to say that it reduces our ability to pay increased wages elsewhere.
    Mr. Foot: Has the right hon. Lady had an opportunity today to study the revelations in The Guardian about the sale of BNOC assets? Although the Labour Party is strongly opposed in principle to the sale, does the right hon. Lady not agree that the error would be compounded if the sale were to take place at a time of falling oil prices? Does she believe that that may account for the suggestions made by Mr. Clive Jenkins about the financial manoeuvrings on the board?
    The Prime Minister: Those who will be interested in purchasing the assets are likely to take a longer-term view of their value rather than a short-term view, based on the immediate prospects for the price of oil.
    Mr. Foot: That was not the question that I put to the right hon. Lady. I wished to know whether she believed that it was a good idea that the sale should take place when oil prices are falling generally. If the right hon. Lady is so confident that the matter is being dealt with properly by the Secretary of State for Energy—who was not so skilful in dealing with Amersham International—and if she is so confident that there is nothing wrong, does she believe that it was wise for the Secretary of State to sack Mr. Clive Jenkins— [HON. MEMBERS: "Yes"]—and remove him from the board, where he could see whether everything was being done properly?
    The Prime Minister: The right hon. Gentleman cannot have heard what I said or realised its implications. Although a sale may take place when the price of oil is falling, those who are interested in purchasing the assets are much more likely to take a long-term view of their value and to judge the price by that long-term view. We believe in privatisation and this will be a good opportunity for people to acquire shares in BNOC. With regard to what the right hon. Gentleman said about Mr. Clive Jenkins, it is the case that Mr. Jenkins was appointed for a period of three years. That period will expire shortly.
    Mr. Montgomery: Will my right hon. Friend find some time today to study the speech made by the right hon. Member for Plymouth, Devonport (Dr. Owen), in which he advocated tougher controls on smoking and drinking? Bearing in mind that the Leader of the Liberal Party has given his tacit support to legalising cannabis, can it be assumed that the policies of the alliance party are to legalise pot and to ban smoking and alcohol, except claret?
    The Prime Minister: It seems to me that these points were made more with a view to obtaining publicity than propounding sound policy.
    Mr. Sandelson: In view of the chaotic conditions now reigning— [HON. MEMBERS: "Reading"]—will the Prime Minister now hold an inquiry into the financing of London Transport to ensure that there is a rational system of subsidies that will provide the proper level of fares and the efficient service that the people of London have a right to expect?
    The Prime Minister: I agree entirely that the people of London have a right to expect a good and efficient service from London Transport. I believe that this can be provided as in the past, with a reasonable rate of subsidy. We condemn totally the strike yesterday, which put to
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    great inconvenience many people in London who, nevertheless, struggled to work. We have no immediate plans for an inquiry into London Transport. We believe that it can be run properly if there is the will to do so, under the present legislation, and with prudent financing.
    Mr. Foxasked the Prime Minister if she will list her official engagements for Thursday 11 March.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Fox: Will my right hon. Friend take time today to consider the frightening figures of increased crime in certain London boroughs, published yesterday? Does she agree that this increase is a direct consequence of a concerted attempt by the Left to undermine the authority of the police? Is it not time to confirm that this criminal minority will be brought to justice and that no accusations of racial discrimination will prevent the police profile that is necessary in these areas to protect decent and law-abiding citizens?
    The Prime Minister: It is the duty of all our citizens to uphold the police—[HON. MEMBERS:"Oh."] It is the duty of all our citizens to uphold the police in the pursuit of their duty of upholding the law. I believe that the public interest requires that all those who are engaged in crime should be detected, arrested, prosecuted and convicted and that this applies whatever— [Interruption.] I think that the hon. Member for Grimsby (Mr. Mitchell), is making for me the very point that was made by one of my hon. Friends about the attitude of some Left-wingers towards the police. I believe that the public interest requires that all those engaged in crime are prosecuted and convicted, regardless of their race or colour. We have equal rights. We have equal responsibilities as well.
    Miss Maynard: Will the Prime Minister take time today to intervene in the dispute between Bernard Matthews, the poultry tycoon, and members of the National Union of Agriculture and Allied Workers in Suffolk and Norfolk, who are on official strike? Is she aware that the strike is the action of desperate men and women, many of whom receive family income supplement, rate rebates and rent rebates, and who have been trying to live on starvation wages? Is the right hon. Lady further aware that these workers fully fulfil her criteria of increased production, having doubled production in the past 12 months? Will she now follow her words with deeds and support these workers who are trying to recover some of the wealth that they have produced?
    The Prime Minister: The answer to the hon. Lady is "No". Industrial relations are a matter between management and all those engaged in the enterprise. I hope that they will sort out this matter successfully. I might point out that my right hon. Friend the Minister of Agriculture, Fisheries and Food took steps that helped considerably all those who produce turkeys in this country. I hope that this will be borne in mind.
    Mr. Tapsell: When the Leader of the Opposition came to see my right hon. Friend to discuss the proposed visit of President Reagan to this country, did he remind her of the occasion in 1955 when Mr. Kruschev visited this building and, at a private dinner with the then leadership of the Labour Party, felt himself to have been so insulted that Mr. Gaitskell found it necessary the following morning to go round to Claridge's hotel to make a formal

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    apology? Is one to assume that discourtesy to the leaders of other great nations is now both obligatory and universally applied so far as the Labour Party is concerned?
    The Prime Minister: I am grateful to my hon. Friend. I hope that we shall do honour to the President of a country who is a staunch and powerful ally in the defence of freedom and a great friend of Britain. To do otherwise would cause untold harm to our relations with that country, to the alliance and to the whole relationship between the United States and Europe. I remember the occasion when the Labour Party invited Mr. Kosygin to address both Houses of Parliament. We, on the Conservative Benches, loyally went along with it.
    Mr. Gordon Wilson: Harking back to the question on the British National Oil Corporation, the Prime Minister said in her reply that the shares and value of BNOC were a long-term asset that investors would realise and recognise. Will she agree, in those circumstances, that it would be more appropriate not to put those shares on to the market because of the long-term potential and to make sure that the full value is recouped when the market for oil shares rises again?
    The Prime Minister: No, Sir. We believe that public ownership is better expressed by shares being genuinely in the hands of individual men and women and not in the hands of the State. In particular, it gives a chance for all those who work for BNOC to acquire a stake and a share in their own company.
    Mr. Wardasked the Prime Minister if she will list her official engagements for 11 March.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Ward: Has my right hon. Friend had time to study the advice given to the National Union of Mineworkers by Mr. Joe Gormley at a dinner given in his honour last night, to the effect that the trade union movement should reject Left-wing extremists? Does she not think that it would be helpful if the Leader of the Opposition endorsed this advice?
    The Prime Minister: I believe that Mr. Gormley rightly condemns extremists in the trade unions. I believe that, in expressing that view, he is firmly supported by the vast majority of trade unionists as well as the vast majority of the people of this country. I also noted his remark that if one follows the leadership of the bully boys, it will be good riddance to a lot of jobs in British coal mining. He has the true interests of the workers of this country at heart.
    Mr. Allen McKay: Will the Prime Minister therefore do a favour to Joe Gormley and ask her right hon. Friend
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    the Secretary of State for the Environment when he intends releasing a decision on the Vale of Belvoir, as this is needed for replacement capacity in the Leicester coalfield? Or is there collusion between the Secretary of State for the Environment and the Secretary of State for Energy to sell off the Vale of Belvoir?
    The Prime Minister: My right hon. Friend the Secretary of State for the Environment, who was responsible for making a decision on this planning application, will, I hope, be in a position to make an announcement soon.
    Viscount Cranborne: Will my right hon. Friend find time today to study this week's reports in the Washington Post, particularly those referring to the right hon. Member for Crosby (Mrs. Williams)? Will my right hon. Friend find time to congratulate her on her perspicacity in recognising the resurgence in the fortunes of the Conservative Party?
    The Prime Minister: I am grateful to my hon. Friend. I believe that the view expressed in the Washington Post will be shared by many people in Britain.
    Mr. William Hamilton: I revert to the question of nurses' pay. Does the right hon. Lady regard it as defensible that her Government should agree to give the police a 13 per cent. increase this year while they give nurses a 6 per cent. increase? Is a nurse worth only half what a policeman is worth? Even with a 6 per cent. increase, a staff nurse will earn less in a year than the right hon. Lady has given as an increase this year to Princess Margaret.
    The Prime Minister: The Government were pledged to uphold the Edmund-Davies report on police pay. They have done so and will continue to do so. The Government should not take lessons from the hon. Gentleman on nurses' pay. After all, it was the Labour Government who kept down nurses' pay in their last years and then referred the whole matter to Clegg.
    Mr. William Hamilton: That is not true. The right hon. Lady is deceiving the House.
    The Prime Minister: It was this Government w ho honoured the Clegg recommendations and who reduced the weekly working hours of nurses, and it is this Government who now pay, through the taxpayer, 76 per cent. more on nursing pay bills than was paid on the day we came into power.
    Mr. William Hamilton: Not one nurse has got that.
    The Prime Minister: The hon. Gentleman never did like the facts, but those are the facts.

Business of the House
3.32 pm
Mr. Michael Foot: Will the Leader of the House state the business for next week?
The Lord President of the Council and Leader of the House of Commons (Mr. Francis Pym): Yes, Sir. The business for next week will be as follows:
MONDAY 15 MARCH—Conclusion of the debate on the Budget Statement.
Motion on the Prevention of Terrorism (Temporary Provisions) Act 1976 (Continuance) Order.
TUESDAY 16 MARCH—Proceedings on the Consolidated Fund (No. 2) Bill.
WEDNESDAY 17 MARCH—Supply (15th Allotted Day)
Until about Seven o'clock there will be a debate on cuts in higher education in Scotland, and afterwards a debate on National Health Service charges for overseas visitors. Both debates will arise on Opposition motions.
Motions on the Wool Textile Industry (Amendments) Orders.
THURSDAY 18 MARCH—Progress on remaining stages of the Social Security and Housing Benefits Bill.
FRIDAY 19 MARCH—Private Members' motions.
MONDAY 22 MARCH—Second Reading of the Mental Health (Amendment) Bill [Lords].
Mr. Foot: May I put three matters to the right hon. Gentleman? First, we understand that a statement will be made later this afternoon about Trident and the Government's proposals. I am sure that the right hon. Gentleman will agree that we must have a debate in the House on that subject. We would wish to have a special debate in Government time, and I hope that the right hon. Gentleman will concur that that is the proper course.
Secondly, the question of the British National Oil Corporation and the sale of assets, to which I referred earlier, is now being discussed in Committee. We were promised—I think for this week—that the Secretary of State for Energy would let us know about the articles of association for Britoil. We do not have them yet. In view of the importance of that matter, the best course would be for the statement to be made in the House. Therefore, particularly in view of the delay in making the statement, I ask that it should be made in the House at the beginning of next week.
Finally, may I ask the right hon. Gentleman to use the Special Standing Committee procedure for the Mental Health (Amendment) Bill? I believe that that would be acceptable to my right hon. and hon. Friends, and I hope that the right hon. Gentleman will consider that.
Mr. Pym: The statement on Trident has not yet been made; my right hon. Friend the Secretary of State for Defence will make it in a moment. Therefore, it would be right to consider the right hon. Gentleman's remarks afterwards. However, I have been considering the matter and it is fair to point out that when a major statement was last made on the Trident programme, in July 1980, the debate asked for was provided in Government time. I shall bear the right hon. Gentleman's point in mind, but it would be a mistake to go any further before the statement has been made.
The point about the publication of the articles of association for Britoil was made in Monday's debate and
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I am sure that my right hon. Friend the Secretary of State will fulfil his promise. I shall certainly discuss the right hon. Gentleman's representations with him. I suspect that the articles would be best presented to the Committee, but I shall consider the right hon. Gentleman's remarks.
I accept that the Mental Health (Amendment) Bill is a suitable Bill for the Special Standing Committee procedure. At the beginning of the Session, I told the House that I did not think that a suitable Bill would be introduced, and that is why I have not tabled a Sessional Order. However, the Bill meets the specification and therefore I am prepared to make the necessary arrangements for it to be considered under that procedure.
Several Hon. Members rose—
Mr. Speaker: Order. The House will be aware that a further statement is to be made. Many right hon. and hon. Members also wish to speak in the main debate. Therefore, I shall allow a quarter of an hour for business questions, which should be enough.
Mr. Cyril D. Townsend: As the last planned debate on the Middle East did not take place, as British forces are once again stationed there and as the House has not had an opportunity to debate Israel's recent legislative action over the Golan Heights, would not the Government show wisdom if they were to initiate an early debate on the Middle East?
Mr. Pym: That is true, if we could find the time. I agree about the importance of the subject, but I cannot foresee an opportunity in the near future. However, I hope that an opportunity will arise before too long.
Mr. Charles R. Morris: Is the right hon. Gentleman aware that about 10 days ago I sought a debate, under Standing Order No. 9, to discuss police operations during the 10-month industrial dispute outside the premises of Laurence Scott Electromotors Limited in my constituency? Does he remember that, in rejecting my application, Mr. Speaker suggested that there were other parliamentary channels available to me? Is the right hon. Gentleman aware that on six different occasions I have applied to raise an Adjournment debate and that each application has been rejected? Is he further aware that I applied to ask two private notice Questions, and that both applications were rejected? Does the right hon. Gentleman realise that on the last Consolidated Fund Bill debate I applied to initiate a debate on this issue, but drew No. 32 among the issues tabled for debate? Against that background of awful luck—
Mr. Speaker: Order. As business questions will last only a quarter of an hour, the right hon. Gentleman is unfair to ask such a long question.
Mr. Morris: I hope that you will forgive me, Mr. Speaker, if I have abused my opportunity, but the issue is important to my constituents. Against that background of awful ill luck, will the right hon. Gentleman make arrangements for a statement to be made next week by the Home Secretary?
Mr. Pym: I shall certainly pass on the right hon. Gentleman's representations. I am sorry that he has not achieved the debate that he desires. Off the top of my head, I do not know whether it will be in order to raise the subject during the debate on the Consolidated Fund.

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However, if it is, perhaps the right hon. Gentleman will draw a higher number than before. I am sorry that I cannot provide time for a debate.
Mr. Harry Greenway: Has my right hon. Friend observed early-day motion 316—on the important subject of school discipline—which stands in the name of 77 right hon. and hon. Members?
[That this House expresses grave concern at the implications of the European Court's ruling on corporal punishment; notes that the decison would appear to question the British view that the teacher is in loco parentis; and requests Her Majesty's Government to take such steps as are necessary to ensure; (a) that the teacher's existing position is maintained and (b) that methods of enforcing discipline should be decided within a school itself.]
Will my right hon. Friend arrange or allow an early debate on this extremely important matter?
Mr. Pym: I cannot find an opportunity in the near future in Government time, but I agree that there is widespread interest in the House on this subject.
Mr. Robert Kilroy-Silk: Will the Leader of the House find time for an early debate on law and order, so that we can analyse the way in which the Government's policies, particularly their economic policies, have contributed to, if not caused, the dramatic and unprecedented increase in serious crime since the Conservative Party came to office?
Mr. Pym: I entirely agree that that is an important subject which the House would very much like to debate. I will, of course, consult my right hon. Friend the Home Secretary, but I must repeat that I do not foresee an early opportunity to debate the subject although I agree that there is a great deal of interest in it on both sides of the House.
Mr. Michael McNair-Wilson: Did my right hon. Friend see the allegations reported in the London evening newspapers yesterday that an IRA defector claimed to have an Irish contact in the House of Commons who supplied him with confidential information about Members of Parliament and their movements? If that statement is true, what inquiries is my right hon. Friend setting up to ensure that security in the House is all that it should be?
Mr. Pym: The police are investigating the extremely serious allegations that were made in that article. I do not think that it would be right for me to comment any further at this stage.
Mr. David Winnick: Leaving aside the manner in which President Reagan's visit to the United Kingdom was announced and the resentment felt in Britain about this issue, will the Leader of the House agree to listen to the views of hon. Members regarding the proposed joint meeting with both Houses of Parliament in Westminster Hall? Does he agree that it is utterly inappropriate for such a gathering to take place in Westminster Hall and that if President Reagan is to address both Houses, as he may wish to do, he should do so from the Royal Gallery from which other distinguished visitors have addressed both Houses of Parliament?
Mr. Pym: I do not think that that really arises on next week's business, but the answer is "Yes". I am certainly
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listening, and will continue to listen, to the views of hon. Members. I can tell the hon. Gentleman that quite a large number of hon. Members do not agree with what he has just said.
Mr. John Stokes: In view of the recent appalling figures for violent street crime, much of which is unfortunately perpetrated by young people, including West Indians, is my right hon. Friend satisfied that there is sufficient moral teaching—instruction in the difference between right and wrong—in schools for young children so that they may have a proper start in life and do not later commit awful crimes?
Mr. Pym: I do not think that it is for me to comment on that except to say, as I said to the hon. Member for Ormskirk (Mr. Kilroy-Silk), that this is an important subject which hon. Members will wish to discuss at some stage.
Mr. loan Evans: In view of today's statement, will the Leader of the House find time for a debate on Trident, if not next week, then soon, and certainly before the Easter recess? Will he also find an early opportunity for a debate on the sale of the British National Oil Corporation? Does he agree that the two are linked? Does he agree that, as BNOC will be sold off for about £10 billion and Trident will cost about £10 billion, the two will be linked in people's minds?
Mr. Pym: On the first part of the hon. Gentleman's question, I have nothing to add to what I said to the Leader of the Opposition. On his second point, the relevant Bill is going through the House. I do not think that anything beyond that by way of extra procedure is required at the moment.
Mr. Michael Shersby: When does my right hon. Friend expect to arrange a debate on the Green Paper on the reform of the domestic rating system?
Mr. Pym: Not in the immediate future. Widespread consultations are taking place and in due course the House will, naturally, wish to express its opinions on the subject.
Mr. Bob Cryer: Will the Leader of the House introduce an Eastbourne Harbour (Repeal) Bill now that the Duke of Devonshire has reneged on all his cronies who crowded into the Chamber, at the request of the Prime Minister's private secretary, to vote for the Bill? Now that he has joined the "Scabs, Dregs and Parasites Party", would it not be reasonable to introduce a repeal Bill?
Mr. Pym: That is not in, my programme.
Mr. Nicholas Baker: Will my right hon. Friend consider finding time for a debate on the functions and existence of the GLC, bearing in mind the chaos into which it has thrown London Transport, its incredible claim to have some power over the police and its default in relation to London ratepayers?
Mr. Pym: I agree that many right hon. and hon. Members have strong views on that subject, but I am afraid that I cannot find time to enable my hon. Friend to express his views in the House.
Mr. Robert C. Brown: Has the Leader of the House seen early-day motion 238 on the Co-operative Wholesale Society and bloodsports?

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[That this House congratulates the Co-operative Wholesale Society on their decision to forbid the hunting of wild animals on land in the ownership of the Cooperative Wholesale Society.]
Is he aware that, if my postbag is representative, there is much public feeling against bloodsports? I realise that a major Bill for the wholesale abolition of bloodsports now would take too long, but will the Leader of the House consider a teeny little Bill and start with the abolition of foxhunting?
Mr. Pym: No, Sir.

Consolidated Fund (No. 2) Bill
Mr. Speaker: Before the debate on Tuesday 16 March on the Second Reading of the Consolidated Fund (No. 2) Bill, hon. Members may hand in to my office by noon on Monday 15 March their names and the topics which they wish to raise. The ballot will be carried out as on the last occasion. An hon. Member may hand in only his or her own name and one topic.
The Bill includes certain defence Supplementary Estimates for the current year as set out in House of Commons Paper 173. Certain civil Supplementary Estimates for the current year are set out in House of Commons Papers 174, 179 and 197. Excesses in civil Estimates for 1980–81 are set out in House of Commons Paper 172. It will be in order on Second Reading to raise topics falling within the ambit of the expenditure proposed in these papers. I shall put out the result of the ballot later on 15 March.

Trident Missile Programme
3.45 pm
The Secretary of State for Defence (Mr. John Nott): With your permission, Mr. Speaker, I should like to make a statement about the Government's decision to modernise the existing Polaris force by replacing it, in the mid-1990s, with a four-boat force based on the Trident II D5 missile system.
On 15 July 1980, my predecessor announced the Government's decision in favour of Trident as the replacement force for Polaris, but, as I told the Defence Committee of the House in March last year, final decisions were still needed on the type of submarine and the choice of missile.
We have now decided that our four Trident submarines, to be built at Vickers, Barrow, will have a larger hull section than previously planned and will incorporate an advanced propulsion system and the latest sonars. After detailed consideration here, and with the United States, we have now decided also to purchase the Trident II D5, instead of the Trident I C4 missile system, from the United States.
The number of warheads that the Trident II D5 missile will carry, and therefore Trident's striking power, remains wholly a matter of choice for the British Government. Our intention is that the move to D5 will not involve any significant change in the planned total number of warheads than we originally envisaged for our Trident I C4 force.
The reasons for our choice of Trident II are briefly as follows. Just as the Polaris system will, by the mid-1990s, have been in service for approaching 30 years and will have reached the end of its operational life, so the Trident system must remain a credible deterrent for a similar period and thus remain operational until 2020—that is, 40 years from now.
Our experience with Polaris and the decision—endorsed by the last Labour Government—to modernise the Polaris missile with Chevaline at great cost has shown us the financial and operational penalties of running and developing a United Kingdom unique system.
Followint President Reagan's decision to accelerate the Trident II D5 programme, if we were to choose the C4 missile, it would enter service with the Royal Navy only shortly before it left service with the United States. This would mean that the United Kingdom alone would be responsible for keeping open special Trident I C4 support facilities in the United States, and the United Kingdom alone would be forced to fund, as with Chevaline, any research and development needed to counter improved Soviet anti-ballistic missile defences. For these reasons, our judgment is that the through life costs for Trident I would almost certainly be higher than for Trident II.
Accordingly, we have entered into an agreement with the United States to purchase Trident H. An exchange of letters between the President of the United States and my right hon. Friend the Prime Minister is set out in Cmnd. 8517 published today, together with an exchange of letters between the United States Defence Secretary and myself on the terms of the arrangements.
The United States Government are selling Trident II to us on more advantageous terms than Trident I. The missile will be purchased by us at the same price as the United States Navy's own requirements in accordance with the Polaris sales agreement. The additional overheads and
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levies will be lower than would have been the case under our 1980 agreement to purchase Trident I C4. In particular, the so-called R and D levy will in fact be a fixed sum in real terms, and there will be a complete waiver of the facilities charge which was part of the C4 deal. I emphasise to the House that the terms protect us completely from development cost escalation. Finally, the United States will waive certain of the Buy American Act provisions and set up a liaison office in London to advise British industry on how they can compete—on equal terms with United States industry—for sub-contracts-for weapon systems components for the D5 programme as a whole, including the American programme.
When I appeared before the House of Commons Defence Committee, I made it clear that the range of options which we still had to study for the Trident system, over and above the total cost of £5,000 million then given, could be confined within an additional £1,000 million at 1980 prices and exchange rates—and so it will.
On this basis, the initial capital costs of the Trident II D5 missile system will be an extra £390 million above the Trident I C4 missile system which represents an addition of about 7 per cent. to the total cost. We have now decided also to fit the latest propulsion system, the British pressurised water reactor 2, already under development, and improved sonar systems, which together with the larger hull will add about a further £500 million to the cost, which will mean additional work for British industry but within the £1,000 million total increase. These changes will greatly improve the efficiency and the quietness of the submarines. As a result, we are planning to run our submarines for around seven years between refits so that the availability of the submarines for patrol can he greatly increased. This will allow us to maintain three boats in the operating cycle for a high proportion of the time. The Trident II D5 missile should also have an in-tube life within the submarine of at least seven years, a much longer period than for Polaris, thus greatly reducing maintenance which will be largely carried out on board the submarine.
At September 1980 prices, therefore, we will spend on Trident about £6,000 million. Updating the price basis to September 1981 prices, which reflects a much lower exchange rate than in September 1980, adds a total of about £1,500 million. So the total cost over the procurement period will, at 1981 prices, be £7,500 million against an estimated total defence budget over the same period of approaching £250,000 million. That is just over 3 per cent. of the total defence budget.
This means that we shall spend on Trident at current prices an average of somewhat under £500 million a year against total defence spending of £14,000 million a year.
I am making available now in the Vote Office a document explaining the Government's decision which also shows on page 8 how the cost of Trident compares with the anticipated capital expenditure on our conventional forces. This information has not been published before.
From this, it can be seen that Trident expenditure over the next 15 years is a far smaller amount than our planned expenditure on equipment for our major conventional capabilities such as anti-submarine warfare or offensive air operations. With the 3 per cent. growth in the defence budget until 1985–86, several billions of pounds extra in real terms will still be available to spend on our conventional defences in future years.

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For about 3 per cent. of the defence budget, we shall be modernising the British independent nuclear force that successive Governments have considered to be essential for our national security over the past 30 years. Nothing has happened to change that need—rather the reverse.
The Government remain convinced that no other choice by Trident will provide a credible nuclear deterrent into the year 2000 and beyond. No other use of our resources could possibly contribute as much to our security and the deterrent strength of NATO as a whole. To choose a system lacking in credibility to an aggressor, or, still more, to abandon unilaterally a capability that we have now maintained for three decades, would be a futile gesture that would serve to increase rather than to diminish the risk of war.
Mr. John Silkin: Labour will cancel the Trident project. We shall do so for three basic reasons.
First, this programme escalates the arms race, particularly in the light of the Geneva talks and the United Nations special session on disarmament. Incidentally, I hope that the Prime Minister will be going to that special session.
Secondly, the project breaks the spirit if not the letter of the non-proliferation treaty.
Thirdly, despite all that the Secretary of State says, the expense will have an effect upon our conventional forces which will destroy the security of these islands. Moreover, while I am on the subject, the Secretary of State may bamboozle his colleagues in the Cabinet, but he will not bamboozle the House. He says that the cost is 3 per cent. of defence expenditure, but he does not tell us that it is almost one-quarter of the expenditure on new equipment in the major maximum years.
I wish to ask the Secretary of State the following questions. First, what pressure is he maintaining on the United States Government for the United Kingdom to take part in the Geneva talks? If he says we are to have this new and devastating nuclear weapon system, we should be at the top table of which he talks so often.
Secondly, to what extent will the 50,000 jobs lost as a result of the devastation of our conventional forces by this be offset by the programme itself?
Thirdly, how can the Secretary of State be so sure about the cost? He made an interesting point in this respect. He talked about 1981 prices. There has been 12 per cent. inflation since then. Quite apart from that, however, how can he be so certain of the cost when, first, there is no experience whatever in building submarines of this kind, as they are far larger than any that we have previously had, and, secondly, we do not have experience even with the warheads? Finally, on what basis is the right hon. Gentleman taking the exchange rate in talking about 1985 and onwards?
Mr. Nott: There are many questions to answer. I shall do my best to answer them.
It will be no surprise to the House that the Labour Party now says that if it ever comes to power it will cancel Trident. We realise the pressures upon the right hon. Gentleman from his party. We must be realistic about his difficulties.
When Trident II is introduced it will represent only about 3 per cent. to 4 per cent. of the planned number of Soviet strategic missiles. That is approximately the same
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proportion of the Russian strategic missile force that Polaris represented when it was introduced. It is not true to say that this escalates the arms race. If there is an escalation of the arms race, it comes from the Soviet Union, which is introducing one new SS20 every week.
This is no more than a modernisation of our existing force, which we have retained for 30 years. It does not break the letter of the non-profileration treaty. That is an inaccurate statement. [HON. MEMBERS: "It breaks the spirit".] Nor does it break the spirit. The non-proliferation treaty never sought to refer to existing nuclear powers.
The right hon. Gentleman is in no position to lecture us about conventional forces. There are nearly 30,000 more Regulars and reservists in the Services than there were when we came to office. Every unit is up to strength. We now have one-third more tanks manned and operational in Germany, and the amount spent on defence equipment with British industry in the coming year will have doubled since the last general election. If there is a difference at all, it is only on nuclear policy. The Labour Government modernised Polaris secretly by developing Chevaline while we are doing so openly with Trident.
Is the Labour Party proposing now to increase defence expenditure by 3 per cent. a year? Is it proposing to switch what we would spend on the nuclear deterrent to conventional forces? If so, why did the Labour Party vote to decrease total defence spending to the NATO European average, which would mean spending £3·5 billion a year less than we are spending on defence today?
In regard to the escalation of cost, Vickers, Barrow—whose Member for Parliament is present today—has an excellent record. It has built 17 nuclear submarines with no real cost increases.
The technology is very much the same and we shall benefit from the experience of the United States in building the "Ohio". The Trident II D5 missile will have the same warhead as the Trident I missile. It has already been tested and development is far advanced. I see no reason for escalation in that cost.
The Americans have a very good record of developing missiles to cost. Anyhow, we are wholly protected by a fixed sum against any R and D escalation, as I have already said. The pressurised water reactor, too, has also been nearly developed. We have an enormous contingency allowance in any event in our figures.
I keep on telling the right hon. Gentleman that the Geneva talks are nothing to do with strategic arms. He may believe that they are, but the Soviet Union knows that they are nothing to do with strategic arms. They are to do with European theatre weapons.
On the possible loss of jobs, if the Labour party cancels this programme about £4,000 million worth of business will be lost to British industry. I do not think that any of us has ever believed Labour Party assurances when it has been in Opposition before. Its assurances have always proved wrong in the past, and I see no reason why they will not prove wrong again.
Mr. David Steel: Is the Secretary of State aware that the fact that this Government are continuing openly what the previous Government did secretly is not an argument about the merits of the independent nuclear deterrent? Will he accept that, as no other political party in the House accepts this programme, its likelihood of cancellation is very

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high? What discussion has he had with our allies on that, particularly since it is not required under our obligations to NATO?
Will the right hon. Gentleman confirm that if we leave aside the future commitment in the defence budget on pay, pensions, buildings and so on, the real percentage cost of this system is over 20 per cent. of the capital procurement programme? That is the real effect on the conventional defence system.
Finally, will the right hon. Gentleman be more explicit about the compensation that he believes he has obtained for the jobs lost in our dockyards and electronic industries through the cutbacks in our conventional forces?
Mr. Nott: Our conventional forces are greatly strengthened beyond what they were two and a half years ago. In a whole range of areas the capability of our conventional forces has been transformed since May 1979.
Our allies welcomed the Government's decision to introduce the Trident programme. My predecessor raised this matter in NATO at the time and the introduction of Trident as a modernisation of Polaris was welcomed by our NATO allies.
I invite the right hon. Gentleman and his hon. Friends to study some of the facts. There are obviously some facts which can be available only to a Government. I have looked at every possible option for the modernisation of Polaris with, I hope and I believe, a totally open mind. If he were trying to select an independent nuclear capability that would take us into the year 2000 and beyond, the right hon. Gentleman would find, as I have found, that there is only one option—the Trident system.
Trident will take up on average about 6 per cent. over the years of our total equipment budget. At the very peak of equipment spending it will take up about 11·5 per cent. of that spending. This country, which has been in this business through successive Labour and Conservative Governments for the security of these islands, can afford over the next 18 years, while we are building this, to spend 3 per cent. of the defence budget on this capability. It is essential for the maintenance of peace and the defence of these islands.
Several Hon. Members rose—
Mr. Speaker: I propose to allow 20 minutes for questions on this subject. We cannot debate it today.
Mr. Antony Buck: Is my right hon. Friend aware that those on both sides of the House who try to give even-handed consideration to these matters will welcome what he has just announced, as will people throughout the country? Will he confirm that the main considerations which have caused him to arrive at this conclusion are the same considerations which caused the Labour Party to come to the conclusion that it was right to go for Chevaline relative to Polaris? Will he also confirm that it will mean many jobs for British industry?
Mr. Mott: I can confirm that we are talking about large numbers of jobs for British industry and a huge programme which will stretch over the period of 18 years while this modernisation is being brought forward. I understand that the decision on Chevaline was taken by a rather small number of members of the Labour Government. We have debated the matter openly throughout our period in office, and we have arrived at a decision unanimously after a long debate within the Government.
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Chevaline seemed necessary to the Labour Government to keep Polaris credible as a deterrent to the Soviet Union over the next 10 years. There is no point in retaining a strategic independent deterrent if it is not credible in the eyes of the Soviets. That is the judgment we have to make. It was the judgment that the Labour Government made and the judgment which we have to make about a system which we anticipate will need to be operational 40 years from now.
Mr. Frank Allaun: Does the Secretary of State accept that the latest public opinion polls show a massive 63 per cent. against both versions of the Trident, with only 23 per cent. in favour of them? That is a ratio of nearly three to one. Does he further accept that it is only a year since a similar poll showed that there was opposition, but it was then only 55 per cent. to 33 per cent.? Does this not show that the British people have rejected the Secretary of State's argument on moral, financial and survival grounds?
Mr. Nott: Since I have only just made the statement, it is hard to believe that the British people could have rejected Trident. We can all swap the results of polls with each other, but the polls I take into account are the recent polls in The Observer and The Guardian which showed that 67 per cent. of the British people are in favour of Britain retaining her nuclear deterrent and that within that a majority of Labour Party supporters who were questioned were also in favour of this country retaining an independent deterrent. [Interruption.] We have to show the right hon. Member for Plymouth, Devonport (Dr. Owen) that, if the British people believe in an independent nuclear deterrent, this is the only credible system which will provide us with that capability. That I intend to do from now onwards.
Sir Hugh Fraser: While congratulating my right hon. Friend on the deal that he seems to have effected with the American Government, I should like to express areas of dissent on the Conservative Benches quite separate from those expressed by right hon. and hon. Members on the Opposition Benches. Were now involved in weaponry which is essentially i he weaponry of a super Power. That means that there must be an effect on our conventional defence budget and other parts of our general military budget, the essential balance of which must be a powerful conventional force which is effective and useful. I am sure that several of my hon. Friends find it difficult to accept that we should now embark on a system which, because of its financial and military considerations, is bound to affect this country's general defensive stance, which must essentially be based on common sense.
Mr. Nott: We found in our history that the crossbow was needed to modernise the longbow, and that the pitchfork was not sufficient match for the crossbow. The threat that faces this country comes from a super Power. If my right hon. Friend thinks that we can defend this country against a super Power, bearing in mind the weapons that that super Power possesses, with weapons that are inadequate, he is wrong. If we are to defend these islands against a threat from a super Power, I am afraid that it is necessary to have some weapons that can act as a deterrent against that super Power. That is what we are talking about.
Mr. Robert C. Brown: Is the Secretary of State aware that many thousands of British people of all political persuasions see as a No. 1 priority the defence of the United Kingdom within NATO? Many thousands of them will be dismayed at his statement, which will expose the sharp end of the United Kingdom's defence—the British Army of the Rhine and the Atlantic fleet—and put it in jeopardy.
Mr. Nott: The hon. Gentleman, who has some experience of these matters, must recognise that NATO's deterrent strategy is to a great extent built on nuclear deterrence. There is no point in the Labour Party's trying to pretend that that is not so. When the hon. Gentleman was, I believe, in the Ministry of Defence—anyway, it was three years ago, when the Labour Party was in Government—we could not even man our tanks in the British Army of the Rhine because all the units were so much under strength. We now have a third more tanks manned and operational in Germany than we did then. Throughout our conventional capability the Services are up to strength. We are introducing new weapons systems the whole time.
If we say "We shall not spend that 3 per cent. of the total defence budget on the nuclear capability", we shall be abandoning something that successive Governments, some of which the hon. Gentleman served in, have believed for the past 30 years in retaining. I am saying that for 3 per cent. of the defence budget we can afford to keep in that business. We must afford to keep in that business, because it is necessary for our defence.
Dr. David Owen: The Secretary of State should correct the misleading impression that he gave that the Chevaline decision was made by the last Labour Government. He must be aware that the decision was made by the Administration of the right hon. Member for Sidcup (Mr. Heath), and indeed was even planned and thought about when the previous Labour Government were in power.
On the central question, is the right hon. Gentleman aware that many people—Service men and others, who have had available to them the same information as he has, have come to a different conclusion, and regret the decision to spend in current prices over £8 billion on the Trident missile system? While being fully committed to Britain continuing as long as possible to make a contribution to NATO's nuclear deterrence, they nevertheless believe that it would have been wise for him to spend the money that he has already allocated—£300 million—on Polaris motors, to extend the life of Polaris as long as possible, and to consider in 1990 a decision whether to put cruise missiles on hunter-killer submarines. The right hon. Gentleman is under the most serious criticism for having cut the surface Navy and for having cut the hunter-killer submarine build-up rate. They will not now be able to be built in Barrow, because of the Trident decision.
Mr. Nott: I have not cut the hunter-killer submarine build-up rate. I inherited a programme to have 17 hunter-killer submarines in operation by the end of this decade, and that is what we shall have. If I said that Chevaline was decided on by the last Labour Government, I should have said it was endorsed by the last Labour Government, and carried on by the last Labour Government secretly.
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I am not sure who are the Service men who have the same information as I do and who are against Trident. I know that I am in trouble with some retired admirals, but who are the Service men who have the information that I have at my disposal and who are against the Trident decision? Those Service men who have the same information as I have—and there are very few of them—are unanimously in favour of the decision.
For someone who has served in the Ministry of Defence to suggest that our Polaris submarines can go on into the year 2000 and beyond completely ignores all the advice that anyone is putting forward. They would be too noisy and would be detected. They will then be more than 30 years old. It is an impossible policy. It would not take more than a few minutes to show the right hon. Gentleman why it is nonsense.
If the right hon. Gentleman wants to put cruise missiles on Polaris submarines, the answer is that not only would the submarines be discovered but by the year 2000 the missiles would not penetrate to their target. It would be the biggest waste of money that the SDP had ever contemplated. The right hon. Gentleman's suggestions do not add up. I ask the right hon. Gentleman to come and get some of the facts. If he is humble enough to consider them, perhaps we can convince him that he is wrong.
Mr. Cranley Onslow: In welcoming my right hon. Friend's very important and sensible statement, I should like to tell him that the Select Committee on Defence would much appreciate it if he agreed to give evidence to us at an early convenient date, so that all the facts can be gone through and all the relevant reason for his decision can be established, so far as that is possible in public. That would be for the benefit not merely of Opposition right hon. Members, who seem to have wilfully misinformed themselves, but of the public at large, so that they can understand the full reasons why my right hon. Friend has come to these vital decisions.
Mr. Nott: I shall be happy to come to the Committee at the earliest convenient opportunity. I thank my hon. Friend for the invitation.
Mr. Gordon Wilson: Does the Secretary of State realise that the decision that he has just taken will affect Scotland particularly, since these hellish weapons of destruction will be situated close to Scotland's centre of population? Public opinion in Scotland, including views within the Conservative Party, is utterly hostile to the Trident missile system. Does not the right hon. Gentleman realise that if he goes ahead with the project, if a subsequent Government do not cancel it, a Scottish Parliament or Assembly most certainly will?
Mr. Nott: I do not know that the House regards that as a big threat, but we take note of the hon. Gentleman's views. If the project did not go forward, about 4,000 jobs would be lost at Coulport. Has the hon. Gentleman obtained the views of the 4,000 Scottish people who work in that depot? I do not think that they would agree with him.
Mr. Alan Clark: I congratulate my right hon. Friend on having negotiated a most successful agreement, at a price much less than many of us had feared, for what is unquestionably the finest strategic deterrent system and one best suited to the needs of the United Kingdom. But what guarantees are there that

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during the currency of the procurement of the system it will not be cancelled, either at the whim of the United States Congress or as a result of changes of President or changes of presidential mood or attitude over the next 20 years?
Mr. Nott: On the whole, our allies tend to keep to their agreements. I do not think that such a hypothetical situation has ever arisen, nor do I think that it is probable.
The answer to my hon. Friend's question is that most of the system will be built here, by British industry. It is only the missile and the missile control system that we are buying from the United States. The majority of the expenditure will be made here in the United Kingdom. There is nothing in this technology which we in this country are not inherently capable of producing. Indeed, the French Socialist Government—and in the French Socialist Government the Communists actually declare their colours—are spending 25 per cent. of their present defence budget on their nuclear deterrent. We can do this ourselves, as we have proved with Chevaline, but it would be enormously expensive to do so and it is cheaper to buy the technology from the United States.
Mr. Dick Douglas: Does the Secretary of State recall a speech he made in which he indicated that the cost of Chevaline had gone bananas? What chance is there that the cost involved here in relation to Trident will not go the same way? Additionally, whilst he is talking about jobs, has he noted that in the financial statement one of the worries of this country is import penetration? The cost of going for Trident in this way, and at this time, may be a diminution by British industry generally to compete across the board and thus, whilst strengthening our defence, may be weakening our total economic position.
Mr. Nott: I do not underestimate the technical difficulties which face the United Kingdom industry in competing successfully for the United States Trident programme. On Sub-Harpoon, Chinook, the advanced Harrier, Rapier, and a whole range, we have just recently done about £1,000 million worth of business in defence equipment with the United States.
If the Hawk, the Searchwater and other programmes go forward, we hope to do another £1,000 million worth of business with the United States. If this two-way street did not exist, if we were not buying and selling each other's defence equipment, those extra jobs would not be created for British industry.
I do not accept that this is a programme which is any more subject to escalation of costs than any other highly advanced technology, because most of the content of this programme is already well developed. To say that we have not tested our warheads is not true. We have. It is the same warhead as the Trident I. There is a misunderstanding on this. There is a great deal of business for British industry in this. I hope it succeeds in doing as well on this programme as it has done on the other American programmes.
Mr. Keith Speed: If the choice is between modernising Polaris or between C4 and D5, we are undoubtedly right to stay with D5. There is no alternative. Will the Minister answer two questions? First, we have not heard what will be the percentage of expenditure of the naval equipment programme at the apogee of the Trident expenditure. Secondly, I am concerned about the
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submarine building capacity, because we need a regular building programme for the SSN. Some of the SSNs are getting old and the first one is already to be scrapped. We must be ready to build the new 2400 SSKs.
Mr. Nott: We have a defence equipment programme, and what I am concerned about is defence capability. I look at our overall defences. We are finding money for the Trident programme as a separate item. Trident will be manned by the Royal Navy. It is easier to manage this programme under the Royal Navy and put it in its programme. But it is not right to say that if we had not had Trident the naval programme would have been different. That does not follow logically. It is financed by the defence programme. The SSN programme is going forward as planned when the hon. Member was in the Department. We shall build as many SSNs as we can at Vickers, Barrow, until the moment comes for Trident to take up. We have not yet placed the orders for the SSK programme, but as soon as we are in a position to do so we shall consider which yard shall take them.
Mr. Stanley Newens: Will the Minister tell us how he proposes to meet the costs of this weapon after 1985 when they escalate to the peak? Does he propose to meet them out of the normal defence budget, which will mean cutting down on conventional expenditure, or does he propose to have a special budget which will add even more to the gigantic escalation of defence expenditure which his Government are proposing? If so, how on earth will this country afford it?
Mr. Nott: We have to look ahead over 10 years to see when the peaks of different items of equipment will come. At no point, even in the peak year of spending on Trident, will it be as expensive as Tornado will be next year in my programme. The peak year will probably be in the last year or two of the 1980s. At the peak of our programme D5 will take up about 11½ per cent. We shall pay for it, as we are now paying this year and next year, for a much more expensive programme, namely, the Tornado aircraft. It will be financed in exactly the same way as our conventional programme is being financed now.
Sir Timothy Kitson: Will my right hon. Friend clarify one point in his statement? If the cycle between refits for the new Trident submarine is to be seven years, can he assure the House that there will be no need to order a fifth vessel?
Mr. Nott: Because of the extended length of the refits—seven years—four Trident submarines are equivalent to at least five Polaris submarines. We do not now need to contemplate five submarines. Four Trident D5s, with a much longer refit interval and the in-tube life of seven years, plus the missile, are equivalent to more than five Polaris submarines. We shall have three in the operational cycle for a large proportion of the time.
Mr. Bruce George: Does the Minister agree that it is not simply a replacement programme but that in terms of quality and quantity of warheads D5 represents almost a quantum leap forward? Will the Minister tell the House why we require a hard kill capability? Will he inform his hon. Friends what cherished projects are likely to be cancelled as a result of this £8,000 million expenditure?
Mr. Nott: I am not sure what the hon. Gentleman means by referring to the quality of the warhead. The D5 will have exactly the same warhead as the C4. The yield depends on what we decide the yield will be.
As for quantity, we do not intend to have more warheads than in the case of Trident I. We intend to have approximately the same number as Trident I. So, in terms of quantity, it is not, in our present planning, an escalation. The number of warheads on the missile need not necessarily be more than we now have on Polaris. That is a matter of choice for the British Government of the time.
As for the hard kill capability, it is certainly true that D5 is a more accurate missile than C4 and much more accurate than Polaris. It can knock out a specific discreet target in a way that Polaris could not. But that is not why we want it. We have chosen it because of commonality with the United States. We want to be on the same system as the United States for all the benefits that I gave in my statement.
Mr. Anthony Nelson: I congratulate my right hon. Friend on his decision and on striking what appears to be an exceptionally favourable financial deal. The capital cost of such a programme is undeniably high, but will my right hon. Friend explain about the year-on-year running costs? Is it not a fact that the current cost of the existing Polaris deterrent is about the equivalent of building about 13 miles of motorway a year? Does that not prove that over a period the running cost of the deterrent is a low price to pay for the ultimate guarantee of our national security and independence?
Mr. Nott: My hon. Friend is right. The running costs of our existing strategic deterrent and of Trident are low. To give my hon. Friend an idea, our strategic deterrent requires only about 4,000 to 5,000 people to keep it operational whereas 650,000 people are required for defence overall. Therefore, in terms of revenue, the cost is 1½ per cent. of the defence budget and only 4,000 people of the 650,000 are required, which is a small proportion.
Mr. Denzil Davies: Why does not the Secretary of State come clean with the House and admit that the figure of £7·5 billion is merely one of the heavily massaged Ministry of Defence figures that are put to the Cabinet so that the Secretary of State can try to get past the Treasury and his colleagues? The Secretary of State never answered the question on this matter. The figure will be higher because the submarines are different—witness the American problem with the Ohio submarine—from what we built before. The warhead is different even from the Chevaline warhead. The Secretary of State should have learnt some lessons from that. He has no idea what the exchange rate is likely to be when the payments will have to be made. Is it not clear that the decision has not been based on any rational analysis of Britain's defence and security interests? It is not based on a rational analysis of our economic capacity to bear those burdens. It is an emotional spasm that pays no attention to the test ban treaty or to the arms reduction talks that are taking place. It will merely bring much closer the danger of a nuclear holocaust.
Mr. Nott: If it is an emotional spasm it has been a disease of eight successive Governments. I think that the
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right hon. Gentleman has served in some of them. We shall keep on with the strategic deterrent adopted by his Government until the end of its operational life. The Trident will replace it.
The comprehensive test ban treaty is not relevant. We are in favour of it and we want it. We are trying to get it. I do not know why that should be relevant. We have a large contingency figure in the programme of about £1,000 million. The Ohio programme was the first of its kind. We will benefit from the Americans' experience resulting from the problems that they had. They were welding problems, which I believe we shall not have at Vickers, Barrow. I am afraid that the right hon. Gentleman does not know what the Chevaline warhead is. Few people know. I cannot say more than that. Like members of previous Labour Governments, the right hon. Gentleman would be better advised to think about the security of the the country before he thinks about the problems within his party.
Mr. Bob Cryer: On a point of order, Mr. Speaker. May I ask you to extend questions on the statement, which have taken about 25 minutes so far? There is a one-line Whip on tonight's debate. There have already been two days' debate on the Budget.
Mr. Speaker: Order. I am not open to such representations at this time.
Mr. Cryer: Why not?
Mr. Speaker: Because I have already given the House a decision on the matter. The statement began at a quarter to four. I am not continuing with it.
Mr. Barry Henderson: On a point of order, Mr. Speaker.
Mr. Speaker: Is it on the same matter, because I am not taking points of order on whether I should permit further questions?
Mr. Henderson: I should like to ask you, Mr. Speaker, to put on the record that anyone listening to the questions on the statement might have got the impression that all Scottish Members were called from the Opposition—
Mr. Speaker: Order. I. am sorry for the hon. Gentleman and for all hon. Members who did not catch my eye. However, the questions cannot continue.
Mr. Cryer: Mr. Speaker—
Mr. Speaker: Order. The hon. Gentleman always makes a noise when he is not called. If the rest of the House behaved like that, this place would be bedlam.

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

    REPRESENTATION OF THE PEOPLE
    That the draft Representation of the People (Variation of Limits of Candidates' Election Expenses) Order 1982, which was laid before this House on 18th February, be approved.—[Mr. Thompson.]
    Question agreed to.

Orders of the Day
  WAYS AND MEANS
  Order read for resuming adjourned debate on Question [9 March]
  WAYS AND MEANS

    AMENDMENT OF THE LAW
    Motion made, and Question proposed,
    That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of—

    (a) any amendment with respect to value added tax so as to provide —

    (i) for zero-rating or exempting any supply;

    (ii) for refunding any amount of tax;

    (iii) for varying the rate of that tax otherwise than in relation to all supplies and importations; or

    (iv) for any relief other than relief applying to goods of whatever description or services of whatever description; or

    (b) any amendment relating to the surcharge imposed by the National Insurance Surcharge Act 1976 and applying to some only of the persons by or in respect of whom the surcharge is payable. — [Sir Geoffrey Howe.]

    Question again proposed.

  Budget Resolutions and Economic Situation
  [Relevant European Community documents: Document No. 10077181 and the annual report on the economic situation in the Community (1981) and the economic policy guidelines for 1982.]
  4.35 pm
  The Secretary of State for Social Services (Mr. Norman Fowler): It is right that we are devoting this day in the debate on the Budget Statement of my right hon. and learned Friend, the Chancellor of the Exchequer to social services. It is right on a number of grounds. First, there is the scale of spending itself. Over the next 12 months the Government will be devoting £32 billion to social security, £12 billion to the National Health Service, and £2·2 billion to personal social services. All told that makes up 40 per cent. of public spending—that is an enormous total, and it underlines the Government's determination to bring help to those people most in need. That is a vital objective of the Government, and one which we shall continue to pursue.
  The second reason why this debate is important is equally clear. However much we may wish to make improvements in all the different areas covered by social security and health, we must also recognise that we have to talk about the means to make those advances possible. Good intentions and rhetoric are not enough and that is why my right hon. and learned Friend's Budget is of such importance, because unless we can achieve industrial recovery we will not create the wealth that is necessary to put into effect our plans and aspirations. Equally, unless we can bring inflation under control and permanently down we will certainly not serve the interests of, for example, the elderly, who account for so much of the spending under both the health and the social security headings.
  Turning to social security first, this year's uprating will cost about £3 billion. Of that £3 billion, over half will go
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  to the 9 million retirement pensioners in this country. Our aim has been to protect the elderly during the worst recession that the world has experienced since the end of the Second World War. The fact is that by November this year the level of the pension will have increased by over two-thirds—68·5 per cent. —since we took office. That is a formidable achievement and the Budget Statement of my right hon. and learned Friend means that we have kept entirely to our pledge to compensate pensioners fully for price increases over the lifetime of this Parliament. That is what we said we would do and that is what we are doing.
  It is worth emphasising that pensioners generally will receive in November an 11 per cent. increase—made up of 9 per cent. uprating and the 2 per cent. shortfall. This is at a time when the vast majority in work are settling for increases well below that figure. We believe that it is entirely right to put emphasis on the elderly in this way, but the amount of the resources that we are devoting to this purpose should not be underestimated. It is also worth remembering that, in addition to this general uprating, the benefits of the earnings related scheme introduced with all-party support in 1975 are also beginning to come through.
  There are many features of the uprating statement that I should like to stress. In particular, I mention three, beginning with disabled people. Last year was the International Year of Disabled People. Many people feared that when that year came to an end the special effort that it had generated would also end. That of course, would have been a tragedy and happily there is no sign of that happening. I hope that the action that the Government have taken on mobility allowance will be taken as an earnest of our intent that the effort will not end and that the year itself was simply a springboard for future action. The decision to take mobility allowance out of tax will benefit over 40,000 disabled people.
  However, all told, 215,000 severely disabled people, adults and children, get mobility allowance. The level of claims has been rising, and there is every reason to believe that the publicity last year and continuing efforts to encourage take-up are bearing fruit. This year's increase from £16·50 to £18·30 means that the value of the allowance will have increased by 83 per cent. since the Government took office. For those liable for tax the exemption of the allowance from tax will mean a fun her real improvement of about £5. All of this will make it easier for disabled people to take advantage of the leasing, hire purchase, and now secondhand car arrangements which can be negotiated on favourable terms through Motability. Mobility allowance, in other words, is a lifeline enabling many people to be part of the community, and not apart from it. It is also a vital aid to enabling disabled people to have a job.
  In the same way, I hope that the improvements in the therapeutic earnings limit and the earnings disregard for invalid care allowance will be welcomed by the House. The aim of the therapeutic earnings limit is to give some help in the transition of someone recovering from illness getting back to work. Generally, of course, sickness and invalidity benefit is not paid when a person is working. This scheme allows work under medical supervision, and the 21 per cent. increase of the earnings limit to £20 is a valuable improvement.
  The invalid care allowance is a small but important scheme to help those who are looking after a severely disabled person. The earnings disregard has been £6 since

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  it was introduced in 1976. It is high time that that disregard was increased, and the increase to £12 will restore its original value.
  Above all, these measures underline the Government's continuing commitment to improving the position of disabled people. We will continue to take every opportunity to work towards that goal.
  The second group that I should like to mention are children. Child benefit is paid in respect of almost 13 million children. It is an important benefit in that it brings particular help to the poorest families and brings help to those families in work as well as out of work. I recognise the concern of many of my hon. Friends on this issue and the Government will want to see as much help going through child benefit as possible. The increase of 60p per qualifying child is substantial. It will mean that the cost of child benefit will rise by £400 million a year and that the total cost of child benefit, plus one-parent benefit, will now be £4 billion a year.
  These changes will mean that a one-parent family, not in receipt of any other social security benefits, will find the amount paid for the children rising from £13·80 a week to £15·35. That is a useful increase, but I recognise that the level of benefits is only one part of the question. One-parent families have social as well as financial needs. I am anxious to encourage developments in day care for the young children of such families. If we can achieve them, such developments will benefit both children and parents, and I want to examine the position in this respect.
  Thirdly, there is supplementary benefit. I believe that the step that we have taken on capital disregard is generally welcomed.
  Mr. Patrick Cormack: It is not quite enough.
  Mr. Fowler: The £2,000 cut-off point was too low, and my hon. Friend the Member for Staffordshire, South-West (Mr. Cormack) probably agrees about that.
  Mr. David Winnick rose—
  Mr. Fowler: If the hon. Member for Walsall, North (Mr. Winnick) listens, he may find it helpful for the intervention that he will make. The £2,000 cut-off point was too low and the 25 per cent. increase restores the value the limit had when it was first introduced. I know, obviously, that there is some concern about the limit and the point whether there should be a taper or some similar device. On this, the findings of the supplementary benefit policy inspectorate are important.
  Briefly, the inspectorate's report shows that, at the most, 9,000 claimants out of 3 million at the time of the change lost benefit as a result of the introduction of the new rule; about 1,000 of these qualified for benefit again within a few months in 1980. Of the people who had received redundancy payments, only a handful—1 per cent. of the cases sampled—might have been influenced in their spending by the capital rule.
  On assurance policies, perhaps 8 per cent. of the claimants whose cases were reviewed had a policy, but most of these were worth only a few hundred pounds at the outside.
  Mr. Cormack rose—
  Mr. Fowler: I shall make this point before giving way. Therefore, our initial conclusion is that it is better to raise the disregard than to reintroduce the complication of a taper. I recognise the concern on this aspect on both sides of the House and will clearly make this report available to the House in the near future. We shall, of course, listen to the points that arise from this.
  Mr. Cormack: As my right hon. Friend knows, I am grateful for the small but welcome step that he has made in this matter. Will he accept that it is totally inconsistent with the philosophy of the Conservative Party to oblige people to spend their hard-earned savings when, through no fault of their own, they find themselves in their villages out of work and with little prospect of getting employment? Will he, therefore, give this his immediate attention and, at the very least, give an early pledge that there will be indexation of this limit?
  Mr. Fowler: I cannot give a pledge on indexation. However, because my hon. Friend and I entirely agree on the general point he is putting, I will, of course, say that that is clearly something we will keep constantly under review.
  Mr. Winnick: Is the right hon. Gentleman aware that it is perhaps not a coincidence that the hon. Member for Staffordshire, South-West (Mr. Cormack) and I have been pressing on this issue because we now represent regions to which mass unemployment has returned? It is precisely because of that type of situation, which would not otherwise arise, that we find so much concern.
  If a man in his late to mid-fifties becomes redundant, the chances of his getting another job are remote. Why should he be penalised? I know that the figure given is very small, but it does not alter the injustice to that individual who finds that his redundancy money is included in the £2,000 or £2,500.
  Mr. Fowler: As the hon. Gentleman remarked, the inspectorate's report shows that the redundancy money point does not appear to be a major issue. I am happy to make this offer to the House: we will make the report available. The House may want to discuss that again.
  Mr. A. W. Stallard: Will the Secretary of State, before leaving disregards, say something about the £300 cut-off for single payments? That aspect has caused and is causing extreme hardship to people in real difficulties, particularly because of the severe winter, when they were unable to get assistance with their heating costs because of that cut-off.
  Very often, that £300 has been put by to help people to pay for their funerals. As nothing has been done about the death grant either, they face real difficulties. Will the Secretary of State comment on the £300 cut-off?
  Mr. Fowler: We review that point because I am again conscious of the problems being caused. It is clear from what I have said that we cannot move on that at the moment, but we will continue to keep it under review.
  I promised yesterday that I would put in the Library a note of the way in which we propose to uprate supplementary benefit in future. That I shall do. Meanwhile, hon. Members may find it helpful if I explain in more detail the background to the decision. Until the 1970s, there was no established formula for uprating supplementary benefit, or, before it, national assistance. A statutory formula was then introduced for uprating

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  national insurance benefits by reference to price increases. Although there was, and is, no similar statutory provision for supplementary benefit, the Government of the day followed suit. However, for supplementary benefit purposes, using general price increases as a measure is not satisfactory, because they include housing costs which are already allowed for separately in the calculation of supplementary benefit entitlements. The supplementary benefit scale rates cover all living expenses, other than housing costs.
  Our new approach will avoid these defects by uprating supplementary benefit by reference to the forecast increase in prices, after excluding increases in housing costs. Basically, the effect will be that if housing costs run ahead of the retail price index a claimant's scale rate may be lower but his actual average housing costs will be covered. If housing costs run behind the RPI his scale rate will be above the general figure and his housing costs will still be met. That seems a perfectly reasonable arrangement.
  Mr. Brynmor John: Is it the assumption that the pattern of expenditure of those who have the whole of their housing costs paid will follow the pattern of those who have no housing costs, or will it merely be a scaled down version of what they are already spending?
  Mr. Fowler: The general position is that the scale rates cover all normal living expenses except housing costs. As the hon. Gentleman knows, an amount is added to the scale rates to cover actual housing costs. In other words, housing costs are not involved. Supplementary benefit is different from other benefits in that respect.
  Mr. Chris Patten rose—
  Mr. Fowler: Contrary to a report in this morning's edition of The Guardian, the value of supplementary benefit payments in November 1982 will be significantly higher in real terms than in November 1978 or when the Government took office. If we take the single householder as an example, when we add together the scale rates and the average net housing costs, we estimate that the overall value will have gone up between 10 and 12½ per cent. more than the general RPI—
  Mr. Reg Race: What about council house rent increases?
  Mr. Fowler: —depending on whether the ordinary rate or the long-term rate is payable. The equivalent for a married couple will be between 7½ and 8½ per cent.
  Mr. John rose—
  Mr. Fowler: I give way to the hon. Gentleman if he must intervene.
  Mr. John: If dubious statistics are to be quoted, the right hon. Gentleman must expect to be challenged. Does he agree that he has been able to quote the percentages to which he has just referred only because of the tremendous escalation of council house rents?
  Mr. Fowler: The hon. Gentleman is correct when he says that we are uprating the scale rate of supplementary benefit and then adding the cost of housing. As housing costs have increased by an above average amount the increase that has gone to supplementary benefit has been above average. However, the fact is—[Interruption.]
  Mr. Speaker: Order. Interruptions from a sedentary position ruin a debate in the House. They are unparliamentary.
  Mr. J. W. Rooker: The right hon. Gentleman is misleading the House.
  Mr. Fowler: With no respect to the hon. Gentleman, I am not misleading the House. If the hon. Gentleman knows anything about the subject, which I deeply doubt, he will recognise what I have said. The value of supplementary benefit payments in November 1982 will be significantly higher than the value when the Government came to power.
  Mr. Chris Patten rose—
  Mr. Fowler: I believe that the £3 billion uprating that the Government have announced is a fair response to the undoubted needs in our society. No one doubts that more needs to be done—I am in no doubt about that. However, at a time of undoubted economic stringency throughout the Western world, the Government have acted to protect the position of those most in need of help.
  I hope that the public will not be deceived by any bogus prospectus. It is easy enough to make promises. but the cost of those promises can be immense. I was challenged yesterday afternoon on the alignment of pensions with half national average earnings, which I understand is Labour Party policy. If that were done immediately, it would cost £11·5 billion. It would be interesting to hear what Labour Members would say about that. It would lead to massive increases in national insurance contributions. Those who ponder on these issues might look back to the useful book produced by the former Chief Secretary to the Treasury, the right hon. Member for Heywood and Royton (Mr. Barnett). When the right hon. Gentleman addressed himself to the earnings limit and the with pensions—
  Mr. Rooker: Did you buy the book?
  Mr. Fowler: I did, actually. I bought it with my own money. I hope that the former Chief Secretary will be grateful for that. When considering the earnings limit he wrote:
  "We also built in a major problem for ourselves by agreeing that long-term benefits—
  the jargon for pensions—
  should grow by a minimum of the higher of the annual increase in earnings or prices."
  That seems to show something less than a total commitment to the idea. Much more interesting to those who have listened to social security debates was the issue of the Christmas bonus. The bonus was abolished by the previous Labour Government between 1975 and 1976.
  Mr. Jack Straw: No. The bonus was suspended.
  Mr. Fowler: I am glad that the hon. Gentleman says that it was "suspended". He was Mrs. Barbara Castle's special adviser when the bonus was abolished. Doubtless it was on his advice that the abolition took place.
  Mr. Straw: If the right hon. Gentleman reads further into the book of my right hon. Friend the Member for Heywood and Royton (Mr. Barnett), he will discover that the bonus was suspended for that year on my right hon. Friend's diktat and not on my advice.
  Mr. Fowler: That brings me to an interesting part of the book. It appears that the previous Labour Government

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  were not content with abolishing the bonus because it was suggested by some in the Labour Party that it should be restored. However, the right hon. Gentleman wrote:
  "The Christmas bonus was a very low priority for both David Ennals and Stan Orme, and it had to be almost forced upon them."
  Mr. Rooker: That is right—by Labour Back Benchers.
  Mr. Fowler: The hon. Gentlemen makes the point much more effectively than I can. The right hon. Member for Heywood and Royton added that he hoped very much that the Labour Party would think again before it made any easy promises. He observed:
  "we might be tempted to promise, or at least imply, that, if elected, we will: …reduce unemployment quickly; …increase public expenditure in many areas; … improve general living standards, especially for the low-paid …It is therefore vital that Michael Foot, the new leader of the Labour Party, should make no rash promises. For if he does he will create massive disappointment and anger, especially among those active supporters who so vociferously proclaimed his election as leader."
  There is good advice for the hon. Member for Pontypridd (Mr. John) in that passage.
  Let me briefly set out the position with regard to the National Health Service. The facts are that the Government are spending more not just in cash, but in real terms, than in any year of the previous Labour Government. More resources are going to the hospital and community health services, and more resources are going to the family practitioner services. That is the fact of the matter.
  The services provided by health authorities—that is the hospital and community health services—are planned to grow by 5·8 per cent. up to 1982–83 above the level we inherited for 1978–79. This includes the 4 per cent. growth that we had planned up to and including the present year. If we include capital provision and the family practitioner services the planned growth to 1982–83 is over 6 per cent. This is real growth, over and above inflation, and it will enable the NHS to provide for the increased number of very old people and to make use of advances in medical technology that result in more effective treatments of patients—in hip replacement, transplants, and better diagnostic tests, for example.
  This growth is in line with the previous Government's plans for the period, although we have reasonably enough required health authorities to provide about 0·6 per cent. of the growth by making better use of the resources that they have and we have also asked them to find in England an extra £22 million—equivalent to a further 0·3 per cent.—towards the extra money for the pay of nurses and certain other groups this year. We are, however, providing two-thirds of this extra money by increasing their allocations over the cash plan for health spending in 1982–83.
  On capital investment, the cost of capital works was lower than expected in 1981–82 and projects were carried out faster than usual. As a result health authorities were able to build considerably more than planned and this investment represents a good bargain for the health service. Since 1979, 13 hospital building schemes, each costing more than £2 million, have been completed, another 39 are under construction and a further 85 are at planning, design or tender stages. The estimated total value for all these schemes exceeds £1 billion. The
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  provision for capital spending from next year is designed to enable authorities to maintain about the same average level of capital investment each year as there has been since 1977–78.
  The provision in the White Paper for current spending by health authorities in the years beyond 1982–83, as it is now expressed, requires health authorities to find the growth needed for the development of services—and especially the extra services needed for the continuing increase in the number of the very old—by making further increases in the efficiency with which they use resources.
  Mr. Race: Can the Minister confirm that if the Government's estimates in the White Paper are carried through, in future financial years, it will mean in practice, if inflation sticks at about 10 or 11 per cent, about a 4 per cent. cut in the real value of services in the National Health Service?
  Mr. Fowler: That is not the case. I have already dealt with 1982–83 and I am just coming to 1983–84.
  The White Paper expressly says that the provision for health authorities' spending in these later years is subject to review during the next annual public expenditure survey in the light of the availability of resources and the scope for further increases in NHS efficiency. Clearly we are not able to and should not make provision for further growth in these later years without being sure that the resources could in the event be made available without inflicting damage on the economy generally, and without looking very carefully at the scope for further increases in efficiency. Equally, however, if the general signs for future economic activity are reassuring, when we come during the next survey to consider the health authority provision for the later years, we will take careful account of these factors when we make our decisions.
  I must emphasise the importance of maximising efficiency in the NHS. One of the major changes in the climate of opinion which we have seen in recent years is an increasing public concern over the efficiency of our public services. The measures that we have taken and are taking to improve NHS efficiency are a natural response to that. The measures include first and foremost the restructuring of the health service, and the arrangements for improved health authority accountability. The House has debated restructuring and understands the measures.
  I shall dwell on one further important step that we are taking. We are also introducing, for the first time since the beginning of the National Health Service, annual reviews in each region to strengthen the monitoring services and broaden this monitoring to include an assessment of overall performance and the efficiency of provision.
  Starting this year Ministers are leading departmental reviews of the long-term plans, objectives and effectiveness of each region with the chairmen of RHAs and the chief regional officers. Each regional review will aim to ensure that each region is using the resources allocated to it in accordance with the Government's policies, to agree with the chairmen on the progress and development that the regions will aim to achieve in the ensuing year, and to review progress against previously agreed plans and objectives. The reviews will aim to assess the performance of regions and their DHAs in using manpower and other resources effectively. Ministers will hold RHAs to account for the ways in which resources are used in their regions and RHAs will in turn hold their constituent DHAs to account.
  Mr. John Major: Will my right hon. Friend enlarge on the converse of that point? That is, is he also re-examining the resource allocation working party allocations to ensure that allocations are equitable in the first instance?
  Mr. Fowler: We are continuing with the RAWP system and I guarantee that we shall re-examine it to see that it is as fair as possible in the re-allocation of resources, which is its whole intention.
  In addition I am today announcing two new initiatives designed to help the NHS to ensure that it makes the best possible use of resources available to it. First, I have decided to appoint an inquiry team that will include two members from the private sector to consider measures that will ensure that health authorities identify underused and surplus land and property and, where appropriate, dispose of it to release funds for the development of services within the NHS. The NHS has a large estate of some 51,000 acres. Some 4,000 acres have been identified as surplus to requirements, and are in the pipeline for disposal, but we have to be certain first that all land that is surplus to requirements is identified. I particularly welcome the fact that the inquiry includes two members with great and relevant commercial expertise. Full details of the inquiry's terms of reference and membership are in an answer that I have today given to a question from my hon. Friend the Member for Bexleyheath (Mr. Townsend). [HON. MEMBERS: "Who are they?"' The leading member is Mr. Idris Pearce, and there is a further member, Mr. Paul Draper, also from the private sector. Both of them are leading members of their professions.
  We should not underestimate the contribution that can be made to the National Health Service from sources apart from tax. One of the examples is the income from the private practices. In 1979–80 this brought in £36 million. [HON. MEMBERS: "And the cost?"] In 1981–82 we expect to receive a very substantial £52 million to the National Health Service. It seems to me that that underlines the importance of the kind of measures that I have just announced.
  The theme of commercial expertise is present also in the second initiative that I have to announce. I intend to appoint six firms of accountants to audit the accounts of eight selected district health authorities. The appointments will be for a period of three to five years, starting with the accounts for the year ending in 1983. The external audits of health authority accounts are normally conducted by staff of the audit directorate of the Department of Health and Social Security. In August, we placed with the professional press submissions for tenders by interested independent firms of accountants. The move followed an approach by the Institute of Chartered Accountants in England and Wales, suggesting that commercial auditors could make a valuable contribution to the quality of financial audit and to value for money within the NHS.
  Let me stress, however, that all these developments are being worked up in collaboration with the NHS. I believe that there is a great readiness in the service to make the best possible use of existing resources, and that it is the role of Government to facilitate that. I will be discussing the scope of further increases in efficiency with the chairmen of regional health authorities collectively. I shall have the outcome of my discussions with them very much in mind when we review the provisions for 1983–84 and 1984–85 in the next survey.
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  For the family practitioner services, the White Paper's provisions effectively carry forward the normal provision for increases in demand. The provision is for further growth in the level of services after the present year of about 2 per cent. a year.
  Personal social services are, of course, provided by local authorities, which have been asked to make economies in their overall expenditure. The Government have given a broad indication in the White Paper of their view of priorities as between the different local authority services, and the figures for personal social services very much reflect the relative priorities adopted by local authorities themselves. All local authority services will be involved in the search for economies in 1982–83. For 1983–84 and 1984–85, the personal social services figures indicate broadly the same level of service as in 1982–83, whereas the Government are seeking further real reductions in local authority expenditure in those years.
  Mr. John: I sympathise with the Secretary of State in his difficulty concerning balance, but so far in his speech he has not once mentioned the problem of unemployment. Will he confirm that the recently announced Government scheme to allow unemployed people over the age of 60 to de-register and then get the long-term supplementary benefit rate, by reason of Budget resolution No. 30 to be moved on Monday evening, will bring them into taxation?
  Mr. Fowler: Before I give the hon. Gentleman a definite answer to his question, I should like to check the relative facts. I shall do that and then ask my hon. Friend the Under-Secretary to deal with the matter.
  Taken overall, the provision for social security benefits and for the health and personal social services outlined in the White Paper are evidence that the Government are both responsible in an economic sense and concerned that the people who need financial support and services should be properly looked after. Any Government must represent both the interest of the national community, which provides resources for those benefits and services, and the interests of the individuals receiving those benefits and using those services. I believe that that is what we have done. We are bringing practical help to the people who are most in need. I commend our proposals to the House
  5.13 pm
  Mr. Brynmor John: I agree with the Secretary of State about one thing, although I differ with him about the emphasis. The importance of this debate on social security is undeniable, because more than half the population receives one or other of the social security benefits, the largest categories being retirement pensioners and mothers receiving child benefits. However, a large and growing category—one would not have guessed it from the right hon. Gentleman's speech this afternoon—is the unemployed. The Government assume that they will increase by 300,000. So next year's debate will be followed with keen personal interest by about 1 million more people, who at that time will be directly involved.
  Beneath the welter of figures we must never forget that the sums that we are talking about are what people receive to give them a tolerable life. Our view should therefore be people-centred. Certainly, the Secretary of State's speech could not be accused of that.
  I welcome the hon. Member for Braintree (Mr. Newton), and say farewell to the hon. Member for

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  Wallasey (Mrs. Chalker). The hon. Gentleman will find, as did the hon. Lady, that his task is a daunting one, because his Secretary of State is like Pinocchio, straining to make the facts suit his purpose but, as yet, without the same dire facial results. His lot will be to act as a sort of Jiminy Cricket, the voice of conscience, who, although he may occasionally stray from the truth and swallow many of his words, will nevertheless have some residual folk memory of what the Tory Party said in Opposition, and will have to give to those who want to be warned the information on which to be warned. Alas, like Pinocchio, he will find that the right hon. Gentleman does not always fall into that category. For example, when he spoke about the National Health Service—I understand why he skated so quickly over the benefits—he talked about the £52 million and the great contribution to the National Health Service. That is, at best, about one-half of 1 per cent. in gross terms, without taking the net consequences into effect, and without doing a true costing of the NHS or of the private practice within it.
  The first thing that the hon. Member for Braintree will learn is that his Department and the Treasury have a unique approach to statistics which, for claimants, may be described as a "no win" approach. The retail price index has been universally respected. It is certainly not perfect and has been modified, but it was never regarded as a political plaything. However, when this Government took office, the primary task was to make the facts appear to fit their theories. So they invented the tax and prices index. Unfortunately, instead of the expected lower rate of inflation under this tax-cutting Government, it rose more than the RPI, and now stands at more than 15 per cent. Disgrace: it has not been abolished; it is now largely ignored. Rather like some politicians, it is forgotten but not gone. So we come back to the RPI.
  However, on the new housing benefit, it was suddenly thought that supplementary benefit recipients might be getting too much money, although the Secretary of State euphemistically describes it as double counting. That might give the recipients the princely sum of 25p a week more than they would receive if housing benefits were excluded. To the Secretary of State, that would clearly be largess on an unparalleled scale and could not be allowed.
  So an announcement was made to a bemused Standing Committee of the new Rossi price index, which is to operate only for supplementary benefits, removing the housing costs. Despite the long time that the Secretary of State spent on the matter this afternoon, we have not progressed any further. We do not know exactly how the housing costs are to be removed, or whether the patterns of family expenditure will be adjusted or left in their crude way. Housing costs can be removed in more than one way, but the way in which they are removed gives differences of cuts in the benefit. I shall not suggest ways to the right hon. Gentleman, in case they provide him with too much of a temptation, but I ask him to explain the scheme in detail.
  Once the Government had decided to look at the retail price index for supplementary benefits purposes, one would suppose that they would do a thorough job and consider whether the retail price index was sufficiently sensitive to the needs of the purses of the lowest 25 per cent. of income earners. For those people, larger fuel bills play a much more important part than the average rise in
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  the RPI. For the bottom 25 per cent. of income earners, the rise in the inflation rate has been not 12 per cent. but 14·4 per cent., and even excluding housing costs it is 12·6 per cent.
  This is where the "no win" theory applies. The Government have not considered the higher proportion of increases that the poor might have to pay. In the absence of any Government attempt to make a genuine effort to meet the needs of the poor and the bottom 25 per cent. of earners, the Opposition, together with many people outside the House, will regard the Rossi price index as an exercises in benefit cutting rather than an exercise in realism.
  However, unreality is not the prerogative of the Government. Yesterday the hon. Member for Twickenham (Mr. Jessel) congratulated the Secretary of State on achieving real increases in retirement pensions. Some benefits have increased by more than the inflation rate. The increase in mobility allowance is welcomed, as is its exemption from tax. That will benefit the one in five recipients of the allowance who pay tax on it.
  There may be hidden penalties. I refer to Budget Resolution No. 30. Retirement pensioners who are being persuaded to deregister on the promise that they will get long-term supplementary benefit will find after Monday evening that that long-term benefit will be subject to tax. I hope that the Treasury Minister who replies to the debate will make that absolutely clear.
  Retirement pensions, in common with all the other major benefits, have had no real increase. Provided inflation is no higher than 9 per cent.—I warned the House yesterday of the consequences of past over-optimism—the benefits will not lose their current real value. Two per cent. has been added to compensate for the Chancellor's incorrect forecast in April 1981, and is to be paid in November 1982. The hon. Member for Twickenham should, therefore, appreciate that the real value of these benefits will not get any better but only with luck will they not get any worse.
  If, as my hon. Friend the Member for Bolsover (Mr. Skinner) said yesterday, a fraction of the ingenuity which created a preferential energy scheme for industry had been applied to that domestic fuel market we would not have had so many tales of hardship in the recent severe winter—especially from the elderly. Neither would we have had so many complaints about rocketing standing charges during the past three years. The standing charge for gas has increased by 300 per cent. and for electricity by 80 per cent.
  Similarly, the Chancellor rightly wished to ensure that firms benefited fully from the 1 per cent. cut in the national insurance surcharge, but found that it was three months before he could make the payment. He decided to compensate firms by setting the reduction at 1½ per cent. for the last nine months of the year. No such effort has gone into protecting the pensioners from the effect of high inflation. All that we are told is why the computer cannot produce the print-out for another six months.
  I ask the right hon. Gentleman to consider these two matters again. However, I suggest that he does not leave it to his Minister of State. If the Minister of State devises a scheme the result could be that the pensioner is paying the State rather than the State paying the pensioner.
  The right hon. Gentleman made great play of the pensioners' Christmas bonus which the Government have decided to retain but at the existing figure of £10.
  Sir William Clark rose—
  Mr. John: The hon. Gentleman is the driest of sedentary interrupters. However, I shall not give way for the moment. He must take his medicine first, and if he does not make too much of a face he can intervene later.
  The Government have a duty to maintain the Christmas bonus at its real value of £10.
  Sir William Clark: I accept the hon. Gentleman's logic, but, in those circumstances, why did the Labour Government cancel the Christmas bonus?
  Mr. John: It was cancelled at a time when there was an unparalleled rise in pensions of 21 per cent. It was done in order to make room for those pensions. If the hon. Gentleman does not know that, perhaps he was asleep or in Conservative Party headquarters during that year. He clearly does not like what I say. He plays to the gallery so much that he does not realise that the Government are doing little else. By November this year the £10 Christmas bonus will be worth only one quarter in real terms of what it was worth. It becomes an urgent question now of whether the Government uprate it or scrap it, but they cannot retain it as an empty gesture, although it may please the hon. Gentleman.
  Finally, on this aspect, I mention the death grant. Recent personal bereavement has underlined to me the costs of even modest funerals and the strain which paying for them can impose on families with limited resources. The death grant at its present rate contributes little to those in need. That is why I supported the private Member's Bill of my hon. Friend the Member for Dundee, West (Mr. Ross). I was amazed that the Government Whips, eager to please the Conservative Back Benchers, tried to block the Bill. We were told at the time that the Government had the matter well in hand. However, yesterday we had the "Maggie in Wonderland" spectacle of the Government going backwards on that. The Government set up a Committee which has studied the matter for a long time.
  A statement to the House was promised on many occasions, including just before Christmas, but the Government have now leapt back several steps and promised a consultation paper. In Heaven's name, why? What do they hope to find out that they do not already know, or is the truth that the Committee has come up with a proposal that is unacceptable to the Government and that the only way in which to avoid increasing the death grant is to devise a consultation process which will hold matters back a little more? I hope that, in the clear absence of their own ideas, the Government will give my hon. Friend's Bill a fair wind, because the feeling of let-down among the elderly will be great and grave financial hardships will continue.
  I wish to take up the point of my hon. Friend the Member for Holborn and St. Pancras, South (Mr. Dobson) about the capital disqualification for single payments, which at the moment is £300. In logic and in equity, if the Chancellor is increasing the capital disregard from £2,000 to £2,500 for supplementary benefit, he should also increase the single payments limit from £300 to £375. I hope that he will consider that as a matter of urgency. I welcome also the Chancellor's undertaking to consider redundancy payments and life assurance policies and their relevance to social security payments.
  There were two disturbing aspects of the announcement on Tuesday. The first was the truly pathetic spectacle of
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  the Tory wets. Never have wets been dried out with such a small expenditure of heat. The Chancellor of the Exchequer and the Secretary of State for Social Services may rightly feel that they need no longer take the wets seriously. Just the making good of the 2 per cent. shortfall has silenced the wets on pensions, child benefits and, with the honourable exception of the hon. Member for Bath (Mr. Patten), the cheating of the unemployed by the failure to restore the 5 per cent. clawback.
  The 2 per cent. shortfall being made good is welcome, but let us be under no illusion about why it has been made good. It was not done out of any moral conviction on the part of the Chancellor of the Exchequer or the Secretary of State. If that were so, they would never have done it in the first place. It was done because of the anger on both sides of the House, particularly on the Conservative Benches, when it was announced and the knowledge that we had a new clause on the Order Paper for next Thursday which would have led to the Government's defeat on that issue.
  Therefore, it is not moral conversion but business calculation which has led to the climb-down. I see Conservative Members patting themselves on the back. or as near to that part of their anatomy as they can get, and looking pleased. If they have forced that climb-down, why have they not learnt that they need not have sold themselves so cheaply?
  For example, where yesterday was the vaunted Tory child poverty lobby, who, with well-modulated compassion, have always been threatening anger on the next occasion the Chancellor of the Exchequer makes an announcement on the subject? Not one Conservative Member even mentioned child poverty, although they know it to be pivotal to poverty generally. Not one of them reminded the Secretary of State of the claim of his predecessor or of the Prime Minister to the Tory Party conference in 1977 that it was the "party of the family", and would give child benefit top priority. Most of them were absent on the maxim that the chance of promotion is the better part of valour.
  There was not one question about the failure to raise child benefit by the £1 which was necessary to restore the real value of child benefit to the 1979 level. The Chancellor's failure even to round it up to the full £6 was a miserable example of meanness. As it is, his 60p increase leaves child benefit 40p a week in real terms lower than it was in 1979. That is a 6·4 per cent. reduction in the value of child benefit during the term of the present Government. That is a matter that the right hon. Gentleman did not try to deny and of which Conservative Members should be thoroughly ashamed. The Opposition will also table a new clause about child benefit. We hope that if the souls of Conservative Members are at all "liquid" they will support us and back their words with actions for a change.
  Things are much worse for those who have to bring up children only on social security benefits. They have child support. I hope that the Secretary of State will listen to this because no one on the Conservative Benches seems to understand the problem. Child support is child benefit plus a child dependency allowance. That is what parents receive to look after children. Under the present Government, as child benefit has risen, dependency allowances have steadily fallen. The total has fallen short of the rate of inflation. In money terms, short-term benefits increased by 5p in total last year and will increase

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  by lop in total this year. It is obvious that the short-term and long-term dependency allowances have fallen by 60p a week. This is therefore the third year in a row that the dependency allowances have been reduced.
  To put it simply for Conservative Members, those who are unemployed and therefore receive short-term benefits have to bring up their children on child support which is worth 23·3 per cent. less than it was in November, 1979. Widows on long-term benefits have 11·7 per cent. less money to bring up their children than they had in 1979. How on earth can we pretend that we are giving those children equality of opportunity and an equal start in life? I called it yesterday an absolute disgrace. I repeat that some Tories can perhaps liquefy for long enough to criticise their Government for the sheer meanness of the measure.
  The unemployed have suffered in other ways. They have been penalised yet again. Their benefits are to be taxable in July. This is expected to raise £525 million in a full year. But the Government in 1980 could not wait for the happy day to get their hands on the money that the unemployed received, obviously, in the Government's view, undeservedly. By the Social Security (No. 2) Act 1980, the Government abated the increase in short-term benefits, such as unemployment benefit, by 5 per cent. in lieu of taxation. Hon. Members were told that this was only a temporary measure, a bridging operation, until the matter came into tax. When the then Secretary of State, who is now Secretary of State for Industry, spoke in the Standing Committee on the Bill on 30 March 1980, his words left no room for doubt. They are without even the traditional Government hedge against things going wrong. The right hon. Gentleman said:
  "The hon. Gentleman asked specifically about abated unemployment benefit. That will make no difference, because as the unemployment benefit comes into tax so the rationale for the 5 per cent. abatement ends. It is an interim scheme in lieu of taxation. One will give way to the other."—[Official Report, Standing Committee B, 30 March 1980; c. 526.]
  Under this proposal, however, one is not giving way to the other. There will be taxation and also the 5 per cent. abatement. The Secretary of State, in talking about housing benefit, made great play of double counting. According to the Secretary of State, one could not have double counting when talking of social security uprating. But the right hon. Gentleman ignores the double penalties that are imposed upon the unemployed by the 5 per cent. shortfall plus taxation
  Mr. Race: He does not care.
  Mr. John: He does not care to the extent that he will review the operation of it. Perhaps, in the course of a year or so, he may think again about the matter when the figures are to hand. What are these massive costs? We were told that action on pensions would cost billions of pounds. The cost of making good the 5 per cent. abatement this year would be the massive sum of £20 million. In a full year, the cost to the Treasury will be £60 million. This has to be set against an additional £525 million that will be received from the unemployed in taxation.
  I believe that £60 million a year—£20 million this year—is a small price to pay to rectify the fraud that has been perpetrated on the unemployed. One would have thought that even a Government who had debased public standards to the extent that this Government, in the guise
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  of the previous Secretary of State, have debased them would have thought it a small price to pay for having grossly misled the House. One would have also thought it a small price to pay to rescue what remains of the reputation of the right hon. Member for Wanstead and Woodford (Mr. Jenkin). All we have heard from the Secretary of State, no less prone to being rather vague, is an assurance that he will look at the matter. In the meantime, the unemployed will be taxed and their benefits will be abated. It is a mark of the insensitivity of the Government that they do not even look at it.
  The Government's hostility to the unemployed and the sick, particularly those with families, is proved beyond redemption. The real value of unemployment benefit since November 1979 has fallen for single people and for married people by 4 per cent. Last November, it represented a smaller percentage, in relation to earnings, than at any time since 1951. For married couples with two children, and including child benefit, it has fallen not by 4 per cent., as I have claimed for the others, but by 9·3 per cent. Invalidity benefit for single and married people has fallen by 4 per cent. For those with two children, it has fallen by 7 per cent. This is why I say that the Government's record is miserable and that the Budget is totally inadequate in that it clobbers those who should be protected.
  The Tories, at their 1977 conference, claimed to be the party of the family, but they have proved to be the Government who harm families, the unemployed, the pensioners and the sick. In short, they have weakened the fabric of society and destroyed the nation. People consider our debates with intense interest because they are either receiving social security benefits or expect to do so shortly.
  5.40 pm
  Sir Ian Gilmour: The hon. Member for Pontypridd (Mr. John) referred to "Jiminy Cricket" and the voice of conscience. He now occupies his present position because he was the voice of conscience over defence. I congratulate him on that.
  The hon. Gentleman did not make much ground against my right hon. Friend, who had a good story to tell and told it very well. However, I have a couple of reservations about my right hon. Friend's story. First, I am ready to be convinced about supplementary benefit and the ½ per cent., but I have not yet been convinced. I look forward to reading all the documentation. If it is just a method of taking money away from those on supplementary benefit, whatever the logic—and I appreciate there is logic—I would not support it. I am sure that my right hon. Friend has good reasons for it, and I look forward to hearing them.
  My second reservation is about restoring the abatement of unemployment pay now that it is coming into tax. I do not think that my right hon. Friend said too much about that this afternoon. I appreciate that he said he will review it. I hope that he will review it quickly, because the Conservative Party is committed to doing that. There was the reservation "if resources permit". Nevertheless, it is a party commitment and I know that my right hon. Friend will do everything that he can to see that that commitment is honoured as soon as possible.
  What my right hon. Friend the Secretary of State for Social Services said this afternoon is part of the Budget Statement and there is a great deal to welcome. My right

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  hon. and learned Friend the Chancellor has lent a sensitive ear to suggestions that have been put to him by many of my hon. Friends. That fact has been reflected in what my right hon. Friend said this afternoon.
  I congratulate both my right hon. and learned Friend and my right hon. Friend on what they have done for the needy and the disabled. I am especially glad that the 2 per cent. shortfall on unemployment benefit and so on has been restored. The hon. Member for Pontypridd made some disobliging remarks about that.
  Mr. John: True.
  Sir Ian Gilmour: I consider that an extremely useful and important step.
  I welcome my right hon. and learned Friend's help for small business men, his admirable enterprise package and the package on energy costs. I welcome the greater flexibility on monetary policy. Raising monetary targets from 5 to 9 per cent. to 8 to 12 per cent., bearing in mind that sterling M3 rose by 14½ per cent. last year, is a sensible acceptance of reality. The outlook for lower inflation later this year and next year is also highly encouraging.
  I think that my right hon. and learned Friend was right to concentrate his reliefs on lowering industrial costs and income tax. He was right not to reduce the rate of income tax, but to raise the tax thresholds in order to take many people out of tax. That was the right way to go. In other words, my right hon. and learned Friend's distribution of the money that he thought he had available was admirable. My only difference with him is over the amount. I do not think that he has done enough. Some think that he has not stimulated the economy at all and that his Budget is neutral, or even deflationary. Rightly or wrongly, I should prefer to think that my right hon. and learned Friend has given a stimulus to the economy, but that it is a small one at a time when a much larger stimulus was called for. After all, the British economy is in about as much danger of overheating as the Arctic circle. That view is supported by the Government's figures.
  Table 14 on page 25 of the Red Book shows what the Treasury thinks will happen to the gross domestic product. It shows that from the second half of 1981 to the first half of 1983 the economy is expected to grow from 105·5 to 108·2. To put it another way, gross domestic product at factor cost at 1975 prices is expected to grow from £49,700 million in the second half of 1981 to £51,000 million in the first half of 1983. That is a difference of £1,300 million.
  Those figures are far from spectacular and we must strongly hope that they are not too high and that they are, indeed, too low. However, some of the components of those figures are a bit shaky. A chunk comes from growth in other fixed investment. I hope that that is right. In addition, £450 million comes from a change in stocks and I also hope that that is right. However, £600 million—nearly half—comes from a change in the statistical adjustment. I tend to regard the statistical adjustment as being rather like the number that one thinks of in order to discover the figure that one first thought of. However, let us hope that there is a more solid basis than that this time.
  If we hope and assume that the Treasury figures are right, a growth of 2·7 per cent. is projected over 18 months. That is a growth of 1·8 per cent. per year. Given
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  that there has been a considerable drop in gross domestic product over the past three years, that is not a high rate of projected growth. It is certainly not inconsistent with a continuing increase in the already appallingly high rate of unemployment.
  The Blue Book gives a similar picture. I am aware of what my right hon. and learned Friend the Chief Secretary said yesterday about the Blue Book and that the figures are not certain. However, they are not inconsistent with the prescribed growth of gross domestic product in the Red Book. Page 50 of the Blue Book states:
  "It was also assumed that the number of unemployed persons …would average 2·6 million in 1981–82 and 2·9 million in 1982–83".
  Those are, of course, the figures for Great Britain so we must add another 100,000 plus for Northern Ireland to find the figure for the United Kingdom—which is thus an increase from 2·7 million to 3 million.
  Mr. Hugh Dykes: I am sorry to interrupt my right hon. Friend, but he referred to table 14 in the Red Book. I am sure that he made a slip of the tongue when he referred to a 2·7 per cent increase from the second half of 1981 at 105·5, to the first half of 1983, at 108·2. Of course, he must mean 2·7 percentage points, because the base is 105·5, not 100, so it is less than 2·7 per cent.
  Sir Ian Gilmour: My mathematics are not good enough to query that and I accept it. However, the figures that I gave are consistent with an average increase in unemployment of about 30,000 a month for the next six months, or, indeed, even longer. To get an average of 3 million during the year, the figure must go well over the 3 million mark and at present it is below that level, at 2,830,000. That seems to show that unemployment will continue to rise for some time.
  It is not unfair to say that in the past the Government have tended to underestimate the rise in unemployment. If the striking rise in productivity last year takes place this year—as we must all hope—it is likely to produce a greater rise in unemployment than assumed in the Blue Book. To see unemployment rising remorselessly for most or all of next year—mercifully at nothing like such a high rate as it has been, but still at an enormously high rate—does not seem right. That is why I say that my right hon. and learned Friend's stimulus to the economy is far too small. After all, he is not constrained by the balance of payments or by shortage of capacity, and he is certainly not constrained by a shortage of people.
  In his Budget Statement, my right hon. and learned Friend the Chancellor had some eloquent things to say about unemployment. We all know that he genuinely meant them, but if he will forgive my saying so, such eloquence sits a little uneasily with a policy that envisages a steady growth of unemployment to an even higher level. Unfortunately, the Government seem almost resigned to high unemployment.
  The Chancellor says that he is opposed to reflation. On Tuesday, he said:
  "'reflation' does not create jobs that last."—[Official Report, 9 March 1982; Vol. 19, c. 730.]
  I wonder whether he thinks that he has brought about some reflation this year. If he does, presumably he is in favour of what he has done. Or does he think that he has brought about more deflation? That was certainly not the

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  impression that he gave in his excellent speech on Tuesday, and it was denied by my right hon. and learned Friend the Chief Secretary.
  My right hon. and learned Friend the Chancellor seems to talk about reflation as a matter of principle when, in fact, it is a matter of degree.
  A volume of essays published by the IEA, called—rather patronisingly, perhaps—"Could do Better", recently attracted much publicity because one of the essayists envisaged an economic miracle, for which we all hope. But another essayist who contributed to that volume, Professor Thomas Wilson, revived Cornford's principle of unripe time to describe the present position. He asked when, if ever, the time would be ripe for recovery and expansion. I believe that the time is ripe now.
  On Tuesday, the Chancellor produced a very encouraging scheme for putting some of the unemployed to work. I warmly congratulate him on that. It is fair to say that the scheme is somewhat embryonic at present, but I hope that when it becomes less embryonic the Chancellor will remove the restrictions on it.
  Once again, there does not seem to me to be a difference of principle here between what my right hon. and learned Friend is proposing and the Layard proposals that I and many others have advocated for some time. I strongly hope that my right hon. and learned Friend will now go on to embrace the Layard proposals or some variant of them. Some such scheme is certainly necessary.
  There is much good in the Budget. What is not good is the weakness of the projected recovery and the accompanying increase in already very high unemployment. I regret that, while doing so much that is excellent, my right hon. and learned Friend has failed to give sufficient stimulus to the economy. I hope that he will remedy that before long. Meanwhile, I hope that he will work on his scheme for providing jobs so that it becomes capable of substantially reducing unemployment.
  Unemployment is by far the greatest problem facing the country today. It is up to my right hon. and learned Friend the Chancellor, by a variety of methods, to tackle it now.
  5.53 pm
  Mr. Jack Ashley: We have just heard a very interesting speech. The right hon. Member for Chesham and Amersham (Sir I. Gilmour) is always listened to with the greatest respect.
  The right hon. Gentleman's speech was so gracious that there is a danger that its message may not be understood by the Front Bench which he graced until a short while ago. The right hon. Gentleman's congratulations and welcome for the "excellent" speech of the Chancellor and the "fine" speech of the Chief Secretary should in no way disguise or reduce the power of the speech that we have heard. It was very powerful indeed, and I interpret it—the right hon. Gentleman will correct me if I am wrong—as a condemnation of the Government's policy.
  The right hon. Gentleman rightly contended that the need for reflation was a matter of degree and not a matter of principle. That is what the argument is all about. If, as he said, insufficient stimulus has been given to the economy when he believes that a very large stimulus is called for, that in itself is a condemnation of the Chancellor. So his fine and gracious words should not obfuscate the message. The message is that the Chancellor
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  has botched it and has failed to revive the economy and to reduce unemployment. That, in blunter language, is the powerful message given to the House of Commons by one of its most respected Members. I hope that the Prime Minister will not just brush that aside and that the Chancellor will not just blink owlishly at the right hon. Gentleman's comments, because they are supported not only by the Opposition but by many more Conservative Members than is generally believed. I hope that more Conservative Members will find the courage, if not quite the same eloquence, to speak as the right hon. Gentleman has spoken today.
  There was also a warning in the right hon. Gentleman's speech. He said that on certain aspects of supplementary benefit he was ready to be convinced but that he was not yet convinced and was not prepared to support the proposals in certain circumstances which he spelled out. I believe that other Conservative Members have the same reservations and may well wait to be convinced by their own spokesmen before they are prepared to support the Government in the Lobby. I do not say that it is just a matter of courage, because to bring down one's own Government on an issue requires a great deal of calculation. It is not easy to vote against one's own Government, but on some specific issues it must be done. I believe that it may well be done on certain aspects of the Budget.
  I take issue with the right hon. Gentleman on one issue. He said that he was glad about what had been done for the disabled and the needy. I believe that he was wrong and that that was a misjudgment. I shall explain why. If there is one term that I would use to describe the Budget, it is that it is a "gesture" Budget. By gesture or gimmick, it purports to pursue one line of action while in fact taking another. Therefore, I wish to concentrate today on the way in which the Chancellor has dealt with the disabled and the needy. It is not at all a matter for congratulation by the right hon. Gentleman or by any Conservative Member, still less by any Opposition Member.
  Great play has been made of the Chancellor's decision to increase the mobility allowance and to exempt it from income tax. I unreservedly welcome the increase in the allowance and the exemption from income tax, but there is a danger that this may be used by the Chancellor as a device to excuse his failure to help most disabled and needy people in the Budget. It may also be used to create an impression that the Government are being generous to disabled people in general. Indeed, people who should know better, such as the right hon. Gentleman and the leader writers of The Times, have already been fooled by this gimmick.
  In an editorial in The Times yesterday there was a reference to the Government's "concern for the disabled". This sentiment was echoed by the right hon. Gentleman this afternoon and by many quarters of the press. The Secretary of State said that the mobility allowance is a lifeline for the disabled. I accept that it is a lifeline for individual disabled people but my charge is that the concession on the mobility allowance is a fig leaf to cover the Government's naked disregard in the Budget for the vast majority of the disabled. I want to try to prove that charge.
  By the Secretary of State's own confession, mobility allowance is received by only 215,000 disabled, yet there are over 2 Million disabled in Britain today. What has the Chancellor done for the other 1,740,000 disabled who do

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  not receive the mobility allowance apart from a few small earnings limits and disregards mentioned by the Secretary of State? The answer is nothing. Instead of trumpeting about the Government's "concern for the disabled" The Times and other sections of the press should make their headlines read, "Chancellor's neglect of 90 per cent. of disabled people". That is what they should be talking about, because that is what has happened in the Budget. The Chancellor has neglected 90 per cent. of the disabled.
  Even on the mobility allowance itself there are grounds for complaint because the criteria for awarding the allowance are far too restrictive. They exclude many of the disabled who find mobility difficult and expensive. I am thinking of blind and mentally handicapped children. The Secretary of State and the Chancellor should get together and widen the eligibility of the concessions to cover these groups. I hope that the Secretary of State will heed that plea and try to do something about it.
  The right hon. Gentleman also mentioned the restoration of the 2 per cent. cut, which is sometimes called the abatement, in unemployment benefit. Of course, it applies also to invalidity benefit and to the invalidity pension. What the Chancellor did not point out was his refusal to restore the cut of 5 per cent. made in November 1980. That abatement caused a single invalidity pensioner to lose £65 and a married couple to lose £104 in 1981. Where was the Chancellor's concern for those disabled on Tuesday? It was not displayed and no action was taken to do anything about them.
  The Government trot out the excuse that this abatement was made because invalidity benefit would ultimately be subject to tax although the Chancellor knows full well that many invalidity pensioners are below the tax threshold and therefore will not have to pay tax. It is wrong to talk about those people being taxed. They are not going to get any tax back from the Chancellor when the scheme is introduced so they are being treated unfairly. The Chancellor ought to make special provision for them.
  The 5 per cent. abatement applies also to the unemployed. I want to offer Ministers on the Front Bench a warning about that. Those who are disabled cannot fight the 5 per cent. abatement. They rely upon their own arguments, which often are well put, and they matter far more than those of their spokesmen. They have to rely, too, upon the work of voluntary organisations and of their parliamentary spokesmen; I hasten to add that these are unpaid, and it should not be otherwise.
  My warning is that the unemployed are a different proposition. Ministers may think that it is cheap and easy to deprive the unemployed of the 5 per cent. abatement in unemployment benefit because they seem to be weak. I warn Ministers that it will not be cheap. The cost may be astronomical—I choose that word with great care. I believe that Ministers under-estimate the bitterness felt by many unemployed. When that bitterness is added to the frustration and the poverty of unemployment it may become an explosive mixture, leading to crime and riots. We have already had some indications of what can happen. I am not saying that the 5 per cent. abatement will be the cause of riots, but that it might become the spark.
  No one in society is more dangerous than a man with a grievance. If he feels victimised by society he will seek revenge on society. Vengeance begets vengeance just as violence begets violence. The price in financial and human terms, considering the degradation, anger and bitterness of the unemployed, may be appalling. I offer that warning to
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  Ministers with all good will. We are on the brink of something terrible. When the Government grind the faces of the unemployed and the disabled down with this abatement they are facing a dangerous situation. 1 hope they will heed that warning.
  Another gesture in the Budget was the increase in the earnings limit for recipients of the invalid care allowance. The Chancellor, however, was silent about the failure to extend this to thousands of married women or, indeed, to co-habitees. The refusal to extend the invalid care allowance to married women or co-habitees is based on an outmoded assumption about the role of women. In the olden days many men regarded women as inferior. In this modern age only morons and idiots hold the belief that women are inferior, but the Chancellor goes along with that indefensible discrimination against married women. He is wrong to do so, because all the evidence points to the importance of women in the work force. Over 50 per cent. of married women are in the work force, and two-thirds of those in the age group 35–64 are in the work force.
  The Chancellor should recognise the role of women and extend the allowance to all married women and co-habitees. I hope that he will think again, for reasons of justice and common sense, especially as the women are looking after severely disabled people, keeping them cut of hospitals and institutions, and saving the State great sums of money. If they did not look after the severely disabled, the cost to the Government and certainly the Secretary of State—not to the Chancellor—would be enormous. I hope that consideration will be given to the plea to extend the allowance to married women and co-habitees.
  I also want to draw attention to the Chancellor's failure to relieve charities of value added tax. He has made a serious mistake. In no circumstances can the imposition of the tax be justified. It is bizarre that local authorities do not pay VAT on precisely the same kind of services as those provided by the charities. How can that be justified, when people give money to charities for the valuable work that they do and not for the Chancellor to take the money away? The amount lost in VAT is serious and damaging. For the Reform Group of charities alone, the group which has been campaigning, the net loss is £923,000. All that the charities are asking for is equal treatment with the local authorities. That is a very reasonable request.
  If the Chancellor is not prepared to think again about relieving charities of VAT, he should bear in mind an early-day motion tabled by the officers and members of the all-party disablement group and signed by no fewer than 90 Conservative Members. If they are as courageous in voting on the Finance Bill as some have said they may well be, the Government will be in serious trouble. Indeed, the Government may well be humiliated. I cannot see how those 90 Conservative Members can sign the motion, which calls for charities to be relieved of VAT, and then not vote for an amendment which will certainly be tabled by the group. They have a heavy responsibility. It would be more graceful for the Government to offer to give way, rather than lose the vote, as I believe they will.
  This is a "gesture" Budget. When the gestures are swept away—the gestures to the disabled, the unemployed and the under-privileged—it will be seen that those people and their pleas for justice have been neglected. The gestures will be seen as flags of convenience which may well mislead the public. I do not believe that this is a Budget

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  of which the Chancellor can be proud. I hope that he will take into consideration the constructive pleas which have been made.
  6.15 pm
  Mr. Bill Walker: I recognise the sincerity of the right hon. Member for Stoke-on-Trent, South (Mr. Ashley) and acknowledge the long battle that he has fought on behalf of the disabled. I cannot agree with everything that he said, and I am sure that he would not expect me to, but he was less than gracious when commending the positive steps that my right hon. and learned Friend the Chancellor took for the disabled in the Budget. When some efforts are made we should show our appreciation.
  I respect the right hon. Gentleman's views, and I have often supported him. I should like the criteria for the award of the disability allowance to be extended, and the right hon. Gentleman has my support in that, but I qualify that statement. Before we can look for many more of the advances that we would all wish for, the first and most important matter is to create the necessary wealth to provide for those in need.
  I fully support the broad strategy of the Budget, as I supported it in previous Budgets. [Interruption.] I also acted on my views about the previous Budgets. I have no qualms about that. If that causes amusement to Opposition Members, I am always prepared to stand up and be counted.
  However, there are two specific proposals in the Budget that cause me some concern, and I shall return to them later.
  I appreciate the way in which my right hon. and learned Friend has responded to the many representations that he has received and the way in which he has acted so positively in many instances. That shows clearly that he was caring and listening.
  I also congratulate my right hon. and learned Friend on the way in which he set out his proposals. In politics, presentation is often as important as policy. No longer can the Opposition claim that the present Government are not caring. I believe that they have been a caring Government ever since the day we were elected. [Interruption.] I have said so in many speeches. I still believe that they are a caring Government and that we were not presenting or packaging our policies in a way which showed just how much we were caring. I welcome the recognition that the presentation is as important as the policy.
  I turn to a specific aspect of the Budget—expenditure on defence. Earlier this afternoon the hon. Member for Dundee, East (Mr. Wilson) suggested that the Scottish Conservatives were opposed to spending money on updating the nuclear deterrent. I have met none—and I am the Scottish spokesman on defence for the party.
  There are many measures in the Budget to help the disabled, the elderly, single-parent families and the unemployed. I welcome the measure to remove 1·2 million from the income tax net—[Interruption.]
  Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. It would be helpful if hon. Members would not interrupt from a sedentary position. I cannot hear.
  Mr. Race: Does the hon. Gentleman accept that the Chancellor is simply indexing the tax thresholds, so that
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  the 1·2 million people who would have gone into tax had the thresholds not been upgraded will not now do so? But that is very different from taking out of the tax net people who are already paying tax.
  Mr. Walker: I trust that the hon. Member for Wood Green (Mr. Race) will tell that to those who are not going to pay the tax; I am sure they will appreciate it. They will know the difference when the deductions are made from their pay packets. The business world—which I believe I know something about—will also recognise that the measures to help them are about the best they could hope for, or could wish for—and I underline "could wish for"—in the present world circumstances.
  This is a marginally expansionary Budget, as I see it, and should help create confidence among the wealth and job creators of Britain. It will not lead to excessive or rapid changes and consummately will not produce the overheating and stress that would have followed a Budget containing more reflation and more borrowing. The business world does not like rapid changes, whether they are inflationary, deflationary, or whatever. What it likes is gradual change, and that is exactly what this Budget represents.
  Mention has been made by a number of right hon. and hon. Gentlemen on the Opposition Benches of the absence of exchange controls and how that absence is affecting the British economy. In my constituency the largest single employer is the General Accident Assurance Corporation of Perth. The world-wide headquarters of this famous corporation is in Perth and at present a new and impressive headquarters—a multi-million pound headquarters—is being constructed. The reports of the corporation recently published show how the corporation's ability to invest a small proportion of its total investment fund overseas has provided a spread of risk. It has also improved the value of the investors' and policy holders' funds and has ensured the security of many thousands of jobs for employees in Perth and throughout the United Kingdom and in other parts of the world. I welcome the fact that it has this ability to invest abroad.
  I would also like to comment on behalf of one of the major civilian flying training schools in the United Kingdom, which is based at Scone in my constituency. I thank the Chancellor for the 30p per gallon reduction on duty of avgas fuel. This will be a positive help to the school in its efforts to remain competitive in the worldwide market of pilot training, which makes a substantial contribution to the nation's overseas earnings and provides work for many of my constituents. This step will also be appreciated by the business community, which uses light executive aircraft, and by the operators of feeder air services and charter air services throughout Scotland, especially the services to the islands and to the North Sea.
  I now turn to the two measures that cause me concern. In this connection I should also add that I have discussed this with my hon. Friend the Member for Aberdeenshire, East (Mr. McQuarrie) because the same two matters are causing him concern. The first of these is the 30p increase in the price of a bottle of whisky. I accept that this is a 6 per cent. increase and it could well have been a 12 per cent. increase. I also acknowledge and recognise the distinction made between claret and Scotland's famous medicinal drink. I appreciate that the industry has been given a special place by the Chancellor, and we acknowledge that. We fully realise, as does the industry,

  1011
  that this gesture means that the Chancellor appreciates the advantages to the nation of Scotch, which I do not have to over-stress in the House. This matter is certainly something that needs to be looked at very carefully because of the difficulties that are being faced at the moment by the distilleries.
  I would like to caution my right hon. and hon. Friends on the Front Bench about the danger that the whisky industry will face if any attempt is made in the future to harmonise duty and VAT on whisky throughout Europe. Excise duty and VAT in the United Kingdom is presently £5·23 per bottle, and represents about 80 per cent. of the price of a bottle of whisky. VAT and Excise duty in West Germany are £2·28; in the Netherlands, £1·37; in Belgium, £1·73; and in Italy, £1·45. I acknowledge, of course, that in the Irish Republic—they always do things slightly differently there—it is £6·74.
  What I see as being at risk is the long-term sales potential of Scotch, and the effect that the harmonisation could have, because it could only mean a massive increase in the price of Scotch in all the countries I have mentioned. We shall have little cause to complain as our Excise duty and VAT at £5·23 is so much higher than those levied by the other countries in Europe.
  I acknowledge that the Treasury Bench will argue that whisky at constant prices is cheaper today than it was 20 years ago. But that has to be seen against the overseas sales during the same period. In 1962 the overseas sales of Scotch amounted to £80 million. In 1982 it was £800 million, which is a tenfold increase. That is a massive increase in overseas sales. That is what has provided the industry with the opportunity to contribute so handsomely and so regularly to the economy of Scotland, and has created work for so many people, many of them in rural and remote parts of the country.
  There is in my view a danger that Budget decisions taken in isolation could put at risk this wonderful and unique product—a product that could continue to provide jobs and tax revenues as well as—so I am led to believe, because I do not drink whisky—providing the magical medicinal, therapeutic and other qualities claimed for it. Thus, the value of what we call the "cratur" should not be underestimated. As long as it is consumed in moderation, I am assured, it does have all these delightful values, and it can be consumed long after North Sea oil has been exhausted. It is a continuing source of benefit to many, both financially and in other ways.
  Of course, the bulk of Scotch is sold not in the United Kingdom but overseas. When we talk about all other consumable alcoholic drinks we tend to forget that Scotch is unique in this category. The bulk of Scotch—I do not mean just a small percentage of the bulk, but the vast majority, somewhere around 90 per cent.—is sold abroad. We are putting at risk these overseas sales if, in isolation, in every Budget we continue to put up VAT and Excise duty to a point where harmonisation could effectively have a damaging effect on overseas sales. That is the area that is causing me concern, but I acknowledge the special measures taken in this Budget, as does the industry.
  The other matter I am concerned about is the effect that the 9p increase on petrol prices may have in my constituency and other rural constituencies. Many of my constituents living in these rural areas do not have a choice. There is no public transport. Unlike town dwellers, the people in rural areas, those working in hotels or in isolated villages, or farm workers and estate workers
  1012
  who have to travel to work, have no choice. They are forced by circumstances to use private cars. The oil companies have discriminated already against those people. Their pricing practice and policies have led to price differentials of over 20p per gallon in some places and 10p per gallon in others. When that is added to the 20p increase in the previous Budget and the 9p increase in this Budget, that presents serious problems for people who are among the lowest-paid in the land. My constituents cannot understand that, because they do not live far from Grangemouth. It cannot be argued that they are a long way from the refineries. They are not.
  It is more difficult for the people living in East Aberdeenshire to accept the increases when they know that the oil is coming ashore there. Therefore, the argument about increased distribution costs for oil companies is highly suspect. I do not believe that it can be sustained. My constituents living in the isolated glens are not highly paid and the tax on petrol is regressive. Consequently, I am going back to my constituency this weekend to find out from the people affected just what the impact is, what is happening at the village pumps and what price is being charged now for petrol. If I find that petrol is marginally more expensive than it was before, I shall find it difficult and probably impossible to support that proposal in the Budget.
  I am also investigating the cost of derv and the impact that that increase will have on the rural parts of my constituency. My hon. Friend the Member for Aberdeenshire, East is also investigating the impact of that increase on his constituency. He will consider particularly the cost of that increase and its impact on the fish industry and on the distribution of fish because if the tax is found to be regressive, my hon. Friend and I will have to consider our position in respect of not only petrol, but derv.
  I wish to end on a note of optimism because I believe that the Budget will mark the beginning of Britain breaking out of the awful depression that we have experienced for so long. The Budget is designed to help the business community. That is where the wealth creators are. The wealth creators do not sit on the Benches of the House, nor in the other place. They are outside. They are the people who provide the jobs and who do the work. 1 sincerely believe that the Budget will be seen by them as a turning point and the beginning of the way out of the depression.
  6.32 pm
  Mr. John Horam: For someone who is "dry", the hon. Member for Perth and East Perthshire (Mr. Walker) has talked about man) liquid topics. I was amused by what he said about the whisky industry, but I was not sure whether he was right to attribute the favourable treatment accorded to that industry to the Chancellor of the Exchequer. That will be one of the first of the many services that the Social Democratic Party will render in Scotland because of its intervention in the Hillhead by-election.
  Mr. Bill Walker: If the hon. Gentleman is saying that his claret-drinking friend in Hillhead has been helped by the Budget, I doubt it. If he is saying that the Conservative and Labour candidates have been helped by the Budget, I believe that that is just possible.
  Mr. Horam: The whole country has been helped. However, the motives behind the Chancellor's measure were a little suspect.
  The Chancellor has claimed that his Budget is a Budget for industry, jobs and the people. I regret that it is none of those things. The Budget offers no hope to the unemployed. Industry has not received the stimulus that it considered essential for sustained recovery. The poor and the elderly have been accorded the minimum that was required to avoid a worsening of their already desperate plight. For the majority of people their living standards will fall during the next 12 months.
  It is true that the proposals were festooned with cheap baubles that may glitter in the eyes of some out-of-touch Tories, but I do not believe that they deceive many people. Collectively, the proposals add up to little. Many of them bear the hallmarks of haste and panic.
  I shall concentrate on the problem that the right hon. Member for Chesham and Amersham (Sir I. Gilmour) rightly identified as central to our concern. That is the problem of unemployment. It is amazing that the Chancellor could claim in his speech that this was a Budget about jobs, when, at the same time, the documents that accompany that speech show in the assumptions made for expenditure calculations that the number of unemployed will be 300,000 higher in the coming year than in the present year. That is a simple fact.
  When the Chief Secretary was confronted with that fact yesterday he sought refuge in obfuscation, technicality and obscurity—he did so too much. That is becoming a dangerous habit. Talking to the right hon. Member for Stepney and Poplar (Mr. Shore), said:
  "The right hon. Gentleman also ought to know that it is the long-standing practice to adopt as a convention, and no more, for the purpose of estimating public expenditure totals in the White Paper, the assumption in the first year carried over into subsequent years. That is exactly what was done in the last public expenditure White Paper issued by the right hon. Gentleman."—[Official Report, 10 March 1982; Vol. 19, c. 882.]
  That is true. It is a convention that the assumptions for unemployment are carried through from year to year. However, the plain fact is that the assumption has changed to the degree of 300,000 between this and next year. That is the seasonally adjusted total, excluding school leavers, at present 250,000 below the headline total of the unemployed. The figure also does not include Northern Ireland.
  Therefore, a substantial increase in unemployment is expected over the coming 12 months. That cannot be dismissed as a technicality. It is a serious estimate that has been made for proper purposes. The Government must have a clear idea, for calculating expenditure on benefits and other matters, of the unemployment totals that we are expecting. Therefore, the figure is clearly the Government's best informed guess about the course of unemployment over the next 12 months.
  The Chief Secretary went on to say that the Budget measures made it clear that unemployment would begin to fall much earlier than it would have done otherwise. That must have been a record in the history of minimalist statements.
  When will the unemployment figures begin to record the fall that the Chief Secretary mentioned? I am sorry that he is not present today. I remind him that the London Business School, perhaps the most monetarist of all the forecasting organisations, has said in its latest forecast that
  1014
  the seasonally adjusted total of unemployment, excluding school leavers will be 2·9 million for 1982, 2·9 million for 1983 and 3 million for 1984. A forecasting organisation that is known for its monetarist views is thus saying that it believes that unemployment will continue in an upward trend for the next three years.
  When will the fall in unemployment come about? How much will it fall when it begins to fall? There again we come to another mystery. The Chancellor said in his Budget Statement:
  "It is clearly right to do all we can for those obliged to spend a long time without a proper job."—[Official Report, 9 March 1982; vol. 19, c. 731.]
  That in itself is an interesting statement. It makes it clear that for the first time the Government think that we should do something for those who cannot get work in the normal way. Using the Chancellor's phrase, we should resort to "unorthodox measures". The Social Democratic Party believes that the time for that is long overdue.
  The Chancellor added that the Government are considering a scheme for job creation on community projects which will be handled by the Manpower Services Commission. Had that commission been consulted before the Chancellor made his Budget Statement? It seemed clear, from the way that the statement was worded, that it had not been consulted, and, if that is so, it is equally clear that his statement was really a "back of an envelope" commitment. It was included in the statement although no work had been done by the Government on preparing the scheme to go forward.
  The Chancellor, it appears, a few days before the Budget decided to make a gesture—a nod—in the direction of a job creation scheme. However, no work was done on it and the Secretary of State for Employment was merely asked to consult the commission, which would come up with something in three or four months' time—some time in mid-summer—when the unemployment total would have risen further. The scheme is clearly designed to be a simple camouflage against reality.
  It is equally obvious that the scheme is remarkable for its sheer timidity. Total provision will be £150 million plus some expenses, and it is hoped that it can, for illustrative purposes, take 100,000 people out of the dole queues. That is no measure of the size of the problem.
  The programme that Roy Jenkins and the SDP put forward at Hillhead included £500 million to be spent on a similar scheme designed to take 250,000 off the dole queues. We are talking also about a housing improvement insulation scheme alongside that at a net cost of £500 million, taking 250,000 out of the dole queues, a scheme for those in work, a new scheme for the youth unemployed and a £30 subsidy for employers who take on young unemployed.
  The last is a good aspect because a chief criticism of the Government now is that, in going towards the sort of training measures outlined by the Secretary of State for Employment they are destroying the job market for young people. If my experience in Gateshead is anything to go by, young people do not want more and more training. They want more and more real jobs in which there is compulsory day release and some element of training which will help them to do jobs better. They want that and not continuous post-school training.
  Those combined measures, at a total cost exceeding the Government's claims, will, we hope, take about 600,000

  1015
  out of the dole queues over two years. That sort of effort is now required by these admittedly unorthodox and, in many ways, temporary measures.
  We cannot now do much by means of general reflation and so we have, as the Government have now conceded, to resort to these measures. If we resort to them, we must make them work on a scale that will have some impact on the problem.
  Mr. J. Straw: The hon. Gentleman has just spoken about a scheme that would take about 500,000 off the unemployment registers at a cost of £1 billion. Is he aware that the leader of the Liberal Party made a speech just a week ago in which he spoke of a package to create the same number of jobs at a cost of £6 billion? Which is right?
  Mr. Horam: The hon. Gentleman is talking about a difference between the gross cost of a scheme and the net cost. The Liberal leader's measures referred to gross PSBR cost and my measures refer to net cost. In addition, there is a difference on general reflation. I believe that the Liberal Party wishes to have the national insurance surcharge totally abolished. As we said in our statement, we wish to go only halfway down that path. I hope that that is some explanation of these matters.
  Mr. Straw rose—
  Mr. Horam: I do not want to allow the hon. Gentleman to intervene again because I have given a reasonable explanation of the very minor differences between the Liberal Party and the Social Democratic Party. A gulf of difference exists between what we are proposing in the scale of measures, what the Government are proposing, and the approach of the Labour Party, which wants everything plus the kitchen sink. It represents a gulf between common sense and cost-effectiveness. It is lunacy and inflation-prone on one side and means total inaction over employment on the other. [HON. MEMBERS: "Hear, hear."] It is interesting to hear that we have considerable support from Conservative Members on these matters as well.
  On taxation and the national insurance surcharge, Ministers are again apparently trying to put a gloss on things which just does not stand up when the real figures are presented by the officials. Never has a story received such immediate notoriety as table 9 on the income tax figures, contained in the press release issued by the Government yesterday.
  It shows that most typical families will be worse off in the next financial year than in this year as a result of the combination of tax and national insurance contributions brought about by the December statement and the Budget Statement.
  I see the Financial Secretary to the Treasury shaking his head in disagreement, but that aspect was confirmed by the Chancellor during Treasury questions today. It was a credit to the Labour Party today that they at least squeezed that admission out of the Chancellor and there was no way that he could deny it. Even that position rather flatters the Government because their concessions on income tax—a 14 per cent. uprating of the threshold—really means that 12 per cent. is for inflation. Therefore, if we take off the real effect we get only a 24p benefit for the ordinary worker on average
  1016
  earnings in real terms as a result of the Chancellor's measures. If we then add another £1·40 which has to be paid from 1 April, by way of increased national insurance contributions, people are worse off by £1·16 a week in real terms.
  Considering the overall position since the Government came to power, the work of the Institute of Fiscal Studies, which will appear in a Sunday newspaper this week, shows that the effect of the Budget measures, combined with all the previous Budget measures, has been to increase the marginal rate of all tax and contributions combined by about 2·7 per cent. since the Government came into office. Indeed, the average burden of taxation has increased, on the institute's calculations, by about 4·5 per cent. since that time, which shows the extent to which that part of the Conservative philosophy has clearly been reversed.
  It is a measure of the Government's failure that even that concept of tax equity and tax fairness has come to nothing. It will be a clear commitment of any Social Democratic-Liberal alliance Government that, as a first priority, we tackle the whole question of tax thresholds, because they are at the heart of this problem. It was the failure to index them last year, as well as the removal of the lower rate band the previous year, which led to this progressive worsening of the position for poorer families and even for those on average earnings.
  The Chancellor was clear before the Budget that the CBI had set out a set of measures which it regarded as essential for achieving a proper and substantial expansion of the economy. It said in its pre-Budget statement that it was possible, indeed desirable, to go to a PSBR between £12 billion and £15 billion in order to avoid any further fiscal tightening. It recommended a reflationary package between £2 billion and £3 billion. The Government have given it less than half of what industry regarded as essential for sustained recovery. Therefore, we shall not get sustained recovery. Indeed, the real tragedy of the Government's Budget is that it contains no policy for expansion. They cannot have a policy of expansion while they continue on their present ideological track, and they have shown no real desire to depart from that beneath the surface of this Budget.
  6.50 pm
  Mr. David Winnick: The first question to be asked about the Budget is "What will it do for unemployment?" In this instance the answer is clear. The Budget will do nothing to reduce the present level of joblessness. The Government accept that indeed unemployment will continue substantially to increase during the next year.
  In a recent parliamentary answer I was told by the Secretary of State for Industry that manufacturing output in the last quarter of 1981 was 16 per cent. below that for the second quarter of 1979. The Chancellor of the Exchequer must take direct responsibility for policies that have led to such a dramatic decline in industrial production. This dramatic decline in manufacturing output has led to the rise in unemployment generally, including areas such as the West Midlands where previously there was no great unemployment problem. As I said in a question that I put to the Prime Minister a few weeks ago. unemployment in the West Midlands was 5 per cent. when the Government took office. Registered unemployment

  1017
  there is now over 15 per cent. In the Walsall travel-to-work area, where unemployment was under 6 per cent. in May 1979, there is unemployment of over 17 per cent. That is the scale of the immense harm that has been done to British industry by the Government's policies.
  The Government's policies include high interest rates and an exchange rate which is uncompetitive, and makes exporting extremely difficult. The abolition of exchange controls has been another major reason for the return of unemployment since the 1930s. Investment should be taking place in our constituencies, but the money is going abroad. The removal of exchange controls was a direct incentive for the exporting of capital. That is why one of the first priorities of the next Labour Government must be to ensure that exchange controls are restored.
  Mr. Terence Higgins: Does the hon. Gentleman think that that would put the exchange rate up or down?
  Mr. Winnick: Certainly it has continued to increase since the Government have been in office and their policies have been pursued, including the abolition of exchange controls.
  The manner in which the unemployed have been treated must be a cause of great concern to us. It has been suggested in this debate that the Government are a caring Administration. That is so for the richest in the community, but those who have been the victims of the Government's policies do not consider the Government to be caring in any meaningful way.
  My right hon. and hon. Friends have referred to the 5 per cent. cut last year in unemployment benefit. We know that many of those who will be affected will not pay income tax. However, the Government do not intend to restore the 5 per cent. cut. It may seem a small sum to some, but it does not seem so to those who count every penny and who live on the most reduced income. They believe with every justification that they have been cheated.
  What possible justification could there have been for the abolition of earnings related benefit, a scheme that was introduced to cushion the effect of redundancy? The abolition of the benefit has made much more difficult the lives of those who have been made redundant. We have had no real justification from the Government.
  Many of those who have been made redundant have been unable to get another job within 12 months of being declared redundant, and their unemployment benefit has been exhausted. In the West Midlands and in many other areas the chances of getting another job are pretty remote. Those who had savings of more than £2,000 were denied supplementary benefit. Men who had worked all their lives and were made redundant in their late 50s were penalised because they had saved. They were penalised as well because they had received redundancy payments. We welcome the fact that the limit has been increased to £2,500, but it has not gone up enough. If there were not mass unemployment there would not be so much concern, but what chance have men in my constituency in the engineering trade, who have been made redundant at 56, 57 or 58, of getting another job during their working lives? It is understandable that they believe that the Government are acting against their interests.
  1018
  When we compare the way in which the unemployed and those on the lowest incomes are being treated by the Government—all the detailed means testing and many examples of humiliation and pin pricks that the poorest have to suffer—with the way in which the richest in the community have been treated over the past three years by the Government, we can well understand why the Prime Minister and her colleagues are considered to be the most class-based Government for 40 or 50 years. Indeed, the Government have announced in this Budget measures whereby capital transfer tax will be weakened even further. Surely it has been weakened sufficiently in previous Budgets. That is the way that the rich have been treated. They have enjoyed substantial tax reliefs in the previous Budgets. They have been treated very differently from the way in which the people that my hon. Friend and I represent have been treated.
  As my right hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley) said, the Prime Minister and the Chancellor of the Exchequer should take note that among those who are deprived of jobs and who believe that they have no chance of being able to earn their living, especially young people, there is growing resentment and bitterness. That type of resentment and bitterness lingers. It lingered on from the 1930s to the 1940s and 1950s, when there was full employment. People did not forget the 1930s. A new generation is now feeling the bitterness and humiliation of being denied the opportunity of working. The Government will ignore at their peril the feeling that exists in some areas, and especially in certain parts of the inner city areas. Young people ask "What chance is there of getting a job?"
  I am not suggesting that all crime can be said to arise from unemployment, but the problems that understandably cause concern in the community must be worse at a time of mass unemployment. One of the clearest and sharpest points that the Conservative Party made on the hustings during the 1979 general election was that a Conservative Government would reduce taxation. Some of the electorate who would not normally have voted for the Conservative Party were taken in. It is a nice prospect that one's taxation will be reduced. The fact that income tax would be reduced but that indirect taxation would increase was perhaps not made altogether clear, or was not altogether appreciated.
  It emerged from yesterday's debate that arising from the Budget most people will pay more in taxes. It is alarming that those on small incomes have had their income tax burden increased while having to pay more in indirect taxation. I shall give the House some examples of the way in which those on limited incomes have had their tax increased as a result of the Government's policy as set out in their Budget. A married couple with two children on 50 per cent. of the average income paid 6·6 per cent. of their earnings in income tax in 1978–79 and 11·8 per cent. in 1981–82.
  If national insurance is included, this couple on half the average income, paid 12·5 per cent. in 1978–79 and 18·6 per cent. in the last financial year. Again, a couple with two children, earning 75 per cent. of the average income, with national insurance included, would pay 20·8 per cent. in 1978–79 and 24·5 per cent. in the last financial year. On the average income, together with tax and national insurance, the sum paid was 25·2 per cent. in 1978–79 and 27·6 per cent. in 1981–82.

  1019
  However, if one examines the figures for those who earn 500 times the average income—and not many of my constituents earn that—one finds that their combined income tax and national insurance bill has been reduced from 49·7 per cent. to 44·9 per cent. in the same period. I have never been one of those who campaign for an all-round reduction in income tax. A reduction in the standard rate of income tax such as occurred under the Conservative Administration in the first Budget will, in the main, help those with high incomes. It will not help those on low incomes. Moreover, the increased burden on indirect taxation is bound to hurt those with small incomes.
  Those on inadequate incomes, those who find the greatest difficulty in making ends meet, are the people who should receive first priority when it comes to giving some relief in income tax. Part of the reason why so many of our constituents on small incomes have had tax bills that they find great difficulty in meeting is that personal allowances were not increased in the last Budget. I find in my surgeries and the letters of complaint that I receive, that those on small incomes, in some cases with State benefits, still have a tax liability.
  It has been calculated that in order to compensate for no increase in personal allowances last year it would have been necessary to increase the allowance by £400 for a single person and £620 for a married couple. On top of the increased tax burden so many of our constituents, many on small incomes, have had to face exorbitant rent increases. By April this year, council rents will have gone up by 117 per cent. since the Government took office.
  There is also the problem of the fuel increases. Many of our constituents have had tremendous difficulties as a result of the increase in gas prices. Gas has been increased in price by 10 per cent. above the rate of inflation over a period of three years on the direct intervention of the Government. These are additional burdens that people have to meet, and in many cases they have the greatest difficulty in doing so.
  What was required first and foremost was a Budget to deal with the economic and industrial crisis this country is in. The Budget should have planned expansion and jobs to bring back to the areas so hard-hit and devastated—such as the West Midlands—the opportunity for the people to earn their living in a worthwhile way. What was required as well was proper, effective action, certainly lacking in the Budget, to give help to the construction industry. Houses are required. Council house building is at its lowest since the 1920s. At the same time, there are thousands of construction workers on the dole queues. They are the people who should be taken from the dole queues and allowed to do the jobs that they are trained to do and to build the houses that are so urgently needed. That is the sort of need that the Budget should be filling if it had been concerned with putting Britain back on its feet.
  The policy of deflation that has been forced on the country as a result of the Conservative victory in May 1979 has caused untold harm and immense damage to British industry and to the lives of so many people. The Chancellor is a barrister, and like the Chief Secretary will read any brief that he considers is part of his duty, rather as he does in court. However, he is assisted by two hon. Gentlemen, two diehard, one would almost say fanatical, monetarists. They are even perhaps to the Right of the Prime Minister. It is somewhat like putting Dracula in charge of a blood bank. Anyone who believes that there
  1020
  can be any real change in economic policies with the present team in the Treasury and with the type of person that we have as Prime Minister is not facing the facts of life.
  The first priority of this country in different circumstances, and circumstances in which there will be a Labour Government, is to pursue policies opposite to those pursued by this Administration in the past three years. I understand from the press, although I do not know whether it is right—I think that it must be taken somewhat seriously—that the wets have been dried out. Whereas last year some Tory Back Benchers were planning to rebel, not that it came to much, they are now satisfied. Events shall prove whether I am right or wrong—I was not probed wrong when I spoke in such critical terms on previous Budgets. I take the view that this Budget will be as decisively rejected in the country as were the previous ones.
  7.6 pm
  Mr. Terence Higgins: This is the right Budget at the right time, and I congratulate the Chancellor upon it. The Budget speech left a number of aspects of economic policy still unclear, but I hope that the Select Committee on the Treasury and Civil Service will go into the matter in greater detail. I shall refer in detail to some points later.
  I turn first to the attack made on the Chancellor yesterday by the right hon. Member for Stepney and Poplar (Mr. Shore) from the Opposition Front Bench. Some of his points were echoed in the speech of the hon. Member for Walsall, North (Mr. Winnick). What appals me about the attitude of the right hon. Member for Stepney and Poplar is the internal inconsistency in his case. We are told that taxation should be reduced by £9 billion and the PSBR should be raised by about £5½ billion. At the same time, we are told that he wants to see lower interest rates.
  However, as the Chancellor pointed out, the keystone for evaluating the PSBR is what it costs to finance it. In spite of what the right hon. Member for Stepney and Poplar said yesterday, he does not seem to understand that if there is a higher PSBR to be covered one will have to pay more in order to get the money in.
  There is an alternative view, which is simply not to finance it. In that case, one could have a big PSBR with not much higher interest rates, although the idea that there would not be higher interest rates if the PSBR were increased by the amount suggested by the right hon. Member seems to be absurd. In any case, it seems implicit in what he is saying that the money supply will be increased by an astronomic amount. That will clearly have a traumatic effect on the exchange rate.
  Mr. Austin Mitchell: If there is an increased PSBR, that will put up interest rates, so why should exchange rate control be removed, which lets all those billions flow overseas?
  Mr. Higgins: I am coming to the question of exchange controls in a minute, which relates to another inconsistency in the right hon. Gentleman's argument.
  If there is a massive increase in the money supply, as will inevitably be the case under the Labour Party's policies, the effect of that on the exchange rate will lead rapidly, perhaps even the next day or the same day as the Budget, to a rapid change. There will be a massive decline

  1021
  in the sterling exchange rate. Following that, there will be a massive increase in import prices. Then there will be a massive increase in inflation, and as an inevitable result there will be an increase in wage claims and a further deterioration, not an improvement, in our competitive position.
  On the other side of the equation, it is true that the lower exchange rate will make our exports more competitive. However, it takes a long time for exports to respond. For that reason, the policies proposed by the right hon. Member for Stepney and Poplar are inconsistent, incredible, and disastrous for employment.
  It is important to understand the nature of the increase in unemployment which has taken place during the past two years. It has been due to a massive reduction in overmanning. Vast sums have been paid out in redundancy pay. I do not believe that any reflation on the scale envisaged by the right hon. Gentleman would significantly affect the extent to which the present unemployed are reemployed. We should recognise that.
  Mr. Straw: The right hon. Gentleman raises a critical issue of economic analysis about the relationship between the PSBR and interest rates. There may be some relationship, but surely the experience of other countries and of interest rates in this country suggests that there is no rule which says that the PSBR and interest rates are inextricably linked. How does the right hon. Gentleman explain the fact that, according to OECD figures, Japan is running a PSBR of 10 per cent. of its gross domestic product—three times ours—with much lower interest rates? How does he explain the fact that, while the PSBR was coming down in the past two years, interest rates were going up?
  Mr. Higgins: The short answer to the last part of the hon. Gentleman's question is that interest rates went up because it was necessary to protect the exchange rate. In answer to the broader question that he raised, I refer him to the report of the Select Committee on monetary policy and all the evidence that we received on it. It is, I fear, too complicated an issue to deal with adequately in a short speech.
  The right hon. Member for Stepney and Poplar and his colleagues also say that we must bring back exchange controls, and complains about the outflow that has taken place since exchange controls were abolished. If that money had not flowed out, it is quite clear that the exchange rate would be much higher than it is. Yet they want a lower exchange rate. There is a clear inconsistency in policy there.
  Mr. D. N. Campbell-Savours: It would all be worked out with the interest rates.
  Mr. Higgins: That is not so. The whole policy, particularly on unemployment, does not stand up to close examination. Still less does the policy advocated by the Social Democratic Party. The right hon. Member for Crosby (Mrs. Williams) is reported as having said yesterday that there should be more intellectual underpinning of her party's policy. The hon. Member for Gateshead, West (Mr. Horam), in an interesting speech, gave us a variation. The right hon. Lady previously said that, for a net cost of £2·3 billion, her party would reduce
  1022
  unemployment by 1 million in less than two years. Goodness knows what intellectual underpinning would be needed to support that. I personally find the whole policy quite incredible. It is pure cloud-cuckoo-land, and the variation that we had from the hon. Member for Gateshead, West this afternoon was not much better.
  If I may put a little constituency meat in the sandwich, I want to say a word or two about specific measures. I am glad that my right hon. and learned Friend the Chancellor of the Exchequer had an open mind on the arguments that were put to him by various pressure groups, even to the extent of eliminating the duty on 2p gaming machines, which is a matter of particular importance to seaside resorts such as Worthing. Indeed, there may have been great celebrations on Worthing pier, even though the benefit may have been offset to some extent by the increased tax on other gaming machines.
  I welcome the increase in the mobility allowance and the fact that it is not now to be taxed. I also welcome the proposals to help charities. I shall make one comment that I know will not be popular, any more than what the Chancellor said about it was popular. The difficulties involved in relieving charities from value added tax are, as my right hon. and learned Friend said, insuperable. We looked at the matter in immense depth when I was responsible for taking the tax through the House. At that time we gave charities compensating concessions on the covenant side, and there have been further concessions since. I certainly welcome the fact that more has been done to help charities now. However, we should accept the basic argument about VAT. We should help charities in other ways.
  I want to take up one issue raised by the hon. Member for Walsall, North who spoke about the West Midlands. I was speaking in Birmingham at a conference at which Sir Terence Beckett also spoke last week. He said that his first priority was the implementation of the Rooker-Wise amendment. I found that rather surprising. In fact, the Chancellor has done that, and given 2 per cent. extra. He also made a reduction in the national insurance surcharge of 1 per cent., with a special arrangement between August and April. That is a good arrangement, because it is important that that cut in the national insurance surcharge should not go in wage claims. The fact that an additional ½ per cent. is to be given for a limited period will allow us to see how it works out in practice. I certainly hope that it will not go in successive wage claims, and I hope that next April the Chancellor will be able to continue the reduction, and perhaps even make further reductions in the national insurance surcharge.
  Industry has been helped with its energy costs, both with regard to electricity for large firms, and gas prices for a number of firms in the West Midlands.
  Clearly there has been a change in the Government's attitude to monetary policy. My attitude, I hope, has been consistent. Throughout the period of the 1970–74 Government, I believed that control of the money supply was an important aspect of economic policy, and I have maintained that view throughout. The dogmatic approach of this Government when they came to office was open to considerable suggestions, which again the Select Committee pointed out in a major report on this subject. I welcome the change in nuance in some respects which has emerged from the Chancellor's speech, but I also express anxiety lest we go to a further extreme, where monetary policy and control of the money supply are

  1023
  regarded as being of no importance. I hope that, not only have I been consistent, but that I shall maintain a consistent attitude in this respect.
  The changes that have been made are interesting. Clearly M3 has been dethroned from its previous premier position, and we are to take all the monetary measures into account. Apparently, they are to be comprehended within the same range. That is a somewhat strange idea. We know very well that the various monetary aggregates—M1, M3, PSL1, PSL2, and so on—all change at varying rates, and to widen the range to a point at which it is hoped that it will comprehend all those variations is a strange thing to do. However, we shall go into the matter in greater detail in the Select Committee.
  We are now told that the figures in the medium-term financial strategy for later years will be reconsidered in the light of circumstances at the time. The whole basis of the medium-term financial strategy was that it was set, there was to be a steady decline over a period, and, regardless of what happened, one stuck to it. So a little flexibility has been introduced into the approach, and, subject to the qualification that I made earlier, I welcome it.
  I continue to stress—and the Chancellor was right to stress—the importance of the public sector borrowing fund for reasons which I mentioned earlier when I attacked the Opposition proposals. While the relationship is far from clear, and there is what on previous occasions I have called a Bermuda triangle between the PSBR, interest rates, and the money supply, the fact that the PSBR has an important influence on interest rates is beyond dispute.
  That being so, I turn to the other difficult Bermuda triangle. The whole subject is bedevilled with such animals. I refer to the relationship between the monetary aggregates, the exchange rate and the rate of interest. In a fascinating part of his speech my right hon. and learned Friend the Chancellor referred to monetary aggregates and exchange rates affecting interest rates. If monetary aggregates and the exchange rates are both wrong, interest rates go up. If they are both right, interest rates go down. In column 735 of the Official Report, my right hon. and learned Friend the Chancellor said:
  "We could not resist the pressures of rates rising sharply all round the globe"—
  that is, interest rates—
  "we would not have been able to do so whatever the level of our own domestic borrowing. But, because of the firm line taken in my last Budget, our own interest rates, even after the increase in the autumn, did not soar to the levels reached in the financial markets of a number of our competitors."
  The Chancellor clearly recognises, as we all knew, that the interest rates rose because the exchange rate was in danger of collapsing, and that would have had disastrous consequences on inflation.
  That raises the difficult question of what happens when we need to keep interest rates high because of the exchange rate, but where they are higher than necessary to fund the PSBR. In that case, one is overfunded. This is important, because the money supply, for reasons just given, would contract much more than is desired. One then runs into extremely difficult problems of monetary and fiscal balance.
  Mr. Dykes: Would my right hon. Friend agree that my right hon. and learned Friend the Chancellor also made an interesting comment on interest rates being
  "determined in New York anyway"?
  He added:
  1024
  "Such reasoning is mistaken, and the conclusions drawn from it are dangerously wrong."—[Official Report, 9 Match 1982; Vol. 19, c. 735.]
  Does my hon. Friend agree that such conclusions are often correct, and that in the United States the maximum rates have been repeatedly established, hence dragging up our own rates as well?
  Mr. Higgins: I agree; that is the point I was about to make. It is clear that the 2 per cent. increase in interest rates last year was motivated primarily by a need to protect the exchange rate, and that reflected the fact that American interest rates were high.
  It is tremendously important that the Government should have close consultation with the United States on the issue. If the American deficit—the difference between taxation and expenditure—remains as large as it is and continues to grow, inevitably American interest rates will remain high. That is extremely dangerous to the world economy as a whole, or, to be more accurate, for the free world as a whole—but I shall not define that expression.
  The situation in America is not the same as it is in this country. By and large, the Governor of the Bank of England seeks to implement the policy set our by the Chancellor. Paul Volcker, chairman of the Board of Governors, Federal Reserve System, in the United States, is in a much more independent position. If the deficit remains high, I have no doubt that he will maintain interest rates at the level that he believes is necessary.
  There is a need for negotiation with the United States because relations between the United States and the United Kingdom are crucial, in the strict sense of the word, on this issue, rather than with the rest of Europe. It is absolutely essential to endeavour to reduce interest rates in America through negotiation. In that context, the exchanges which we had in the House earlier today on defence expenditure were interesting. It is profoundly important that here and in the United States—which, after all, bears a massive share of defence expenditure—we maintain an adequate defence system.
  However, we must do that over time, which means that we must have the real resources over time. It would be very short-sighted if the rate of increase of defence expenditure in the free world—I use that expression again—were so rapid in so short a time that it massively increased the deficit, especially in the United States of America, with the result that interest rates were far higher there and that there was a recession in the free world and that, as a result, over a reasonable period we had fewer resources to spend on defence and on all other objectives because we had pursued too short-sighted a policy.
  That takes us perhaps into wider areas than the Budget. We must debate those important issues carefully. However, both in the detail and on the Chancellor's general approach to his Budget speech, I believe that he is on the right lines, and I certainly welcome his approach.
  7.25 pm
  Dr. Jeremy Bray: Many points made by the right hon. Member for Worthing (Mr. Higgins) will be taken up in the Treasury and Civil Service Committee, but I wish to deal with some of them now. First, although it is clear that all that we and the EEC can do to bring pressure to bear upon American policy is important, it is not only upon defence that we should concentrate. We must also concentrate upon taxation. It is unrealistic to suppose that the President's commitments

  1025
  to future tax cuts can be carried through or even maintained in Congress. We should say quite clearly to the Americans that we cannot regard them as a unitary State. We must talk to Congress as well as to the President and the Administration.
  The right hon. Member for Worthing made a point about the shadow Budget of my right hon. Friend the Member for Stepney and Poplar (Mr. Shore). I have not seen the Treasury model runs to which my right Friend referred at his press conference, but I was totally baffled by the remarks of the right hon. Member for Worthing. My right hon. Friend's proposals are wholly consistent over the medium term and not just the short term. I rather regret the fact that my right hon. Friend did not publish sufficient tables to make that absolutely clear. It is certainly true that, from such work as I have done on the model and without knowing the work that he has done, his assumptions imply a substantial devaluation. Perhaps they impose strains on the economy but not entirely on the inflationary side. The matter is not simple and straightforward because of the strong anti-inflationary element in the reductions in VAT and the employers' national insurance contribution that he proposed.
  That combination of devaluation and large reductions in indirect taxation enormously increases company profits. It increases greatly the pressure that, for example, Ford workers can put on that company compared with that exerted by local authority manual workers in the public sector. This creates internal tensions within the labour force, which raises the question what we should do about incomes.
  We are quite clear about that in the Labour Party. We talk about it and the TUC-Labour Party liaison committee is working on it. Conservative Members do not appreciate the nature of such discussions. One could not expect the TUC to commit itself to a negotiating position with even a "dead cert" Labour Government. If Conservative Members have discussed that with individual trade unionists, they must realise the relationships within a trade union, let alone between the TUC and its constituent unions. If Conservative Members wish to press effectively they should ask not about exact numbers or a firm commitment, but about the sort of structure that is emerging in discussions about anti-inflationary policy. The crucial question to ask is how any scheme handles wage relativities because of the great tension that has opened up between export-oriented manufacturing industries and public sector jobs, as demonstrated in my right hon. Friend's package.
  This problem is relevant to the political impact of the Budget. We have heard a great deal about the redistributional impact of the income tax changes, but those tax changes come on top of much bigger impacts on redistribution arising from the Government's economic policy.
  Hon. Members have only to look at the new earnings survey, and the change in the distribution of earnings over the past year to see that it is a huge change. I give one example. The 10 per cent. lowest paid manual workers have had a 10 per cent. increase but the 10 per cent. highest paid non-manual workers have had a 15 per cent. increase.
  Hon. Members can also examine average earnings of male workers in particular industries. In the mining
  1026
  industry, in 1981, relative to the average index of 100, earnings dropped from 114·6 to 110. That is a fall of 4·6 per cent, in miners' wages relative to other earnings.
  The relativity of agricultural workers' pay fell from 70·5 to 67·2. The figure for mechanical engineering, the bulk of the engineering industry, fell from 91·3 to 86·5. This huge shift in income distribution that is boiling away in the country has destroyed the political position of the Government. It is not simply a matter of the marginal tax changes that the Government talk about. The Government are living in a fool's paradise if they think that the public relations tour de force by the Chancellor will make any difference to their position in the country. It cannot.
  Conservative Members have also touched upon the abandonment of the medium-term financial strategy. The right hon. Member for Worthing felt that it had been disposed of, and, yesterday, the hon. Member for Enfield, North (Mr. Eggar) summed it up in seven letters—RIP MTFS. But a closer examination is warranted. The Government have abandoned the form. There has been an upward revision of the target range from the 5 to 9 per cent. to which they were committed to the 8 to 12 per cent., on top of the rebasing on last year's excess of 14·5 per cent. compared with the target of 6 to 10 per cent. The Chancellor widened the definition to include the Mos as well as the wider definitions of money supply. The right hon. Member for Worthing will fully recognise the Chancellor's motivation. It was because last year, the Mos and the non-interest-bearing M1s increased only by 3½ and 4 per cent. whereas the PSL1s and 2s increased by 13½ and 12 per cent. He does not know whether the low rate of growth will continue on the noughts and ones or whether it will swing the other way and lead to rapid growth. The Chancellor is hedging his bets and having it both ways. Another important point is that the Chancellor now chooses to regard monetary policy as technical and boring. I am sure that that is right.
  But the effect of abandoning the MTFS should be got into proportion. Three per cent. additional growth on money supply means 1 to 2 per cent. lower interest rates. That, in turn, matches up with a 3 to 4 per cent. devaluation, which in turn reflects perhaps a half per cent. increase in GDP or £1¼ billion. Therefore, the abandonment of the medium-term financial strategy is worth perhaps an additional £1 billion to £1½ billion in demand. That will not pull anyone's chestnuts out of the fire. What is really significant about the abandonment of money supply is that the Chancellor is shown to be in a total vacuum in considering how to run an economy. The right hon. and learned Gentleman has destroyed the medium-term financial strategy. He lingers more or less in that area, but he does not know what to do.
  The only person who thinks that he knows what to do is the Governor of the Bank of England. He thinks that what he is doing is to keep the exchange rate around 90 to 92 on the trade weighted index. This enables the City to see more or less how interest rates will move. That method is, however, terribly vulnerable to any major disturbance in exchange rates of a kind that could be generated by changes in American policy or happenings anywhere else in the world. This policy void is the greatest danger for the Government.
  The fashion has grown up for hon. Members, not only my right hon. Friend the Member for Stepney and Poplar, but the right hon. Member for Chesham and Amersham (Sir I. Gilmour) and the hon. Members for Bath (Mr.

  1027
  Patten) and for Enfield, North to put forward packages of alternative proposals. It is a fine sport. It succeeds, I believe, in moving forward the economic debate. The only trouble is that the Cabinet has to catch up. The Cabinet made big progress this year when it actually discussed the general direction of the Budget before the Chancellor had finally made up his mind. I dare say, Mr. Deputy Speaker, that you would lose if you were to bet that the Cabinet was offered any alternative packages. It is, I believe, a racing certainty that it was not. The Cabinet was certainly not put in a position to design alternative packages for itself. Access to the Treasury model is more strictly guarded within Whitehall than it is outside Whitehall.
  Others who have to catch up are the House and the country. It is conceivable that the Chancellor will be forced, even before the end of this Parliament, into proposing serious alternative policies to his Cabinet colleagues. The House and the country need to be presented with those alternatives. This is the subject of the Armstrong report that hon. Members are considering within the Treasury and Civil Service Select Committee. I hope that we shall produce a clear and unanimous recommendation that a provisional Budget and White Papers should be published in time for them to be properly considered. This would avoid the public relations reaction criterion by which the Chancellor at present thinks that he can bring out his Budget. What scares me stiff is not so much the impact of there public relations on the Chancellor as the impact on my right hon. Friend the Member for Stepney and Poplar. If my right hon. Friend thinks that he will get away with that sort of presentation with Labour Members and the Labour movement, he is destined to have second thoughts. I do not suppose, however, that he would try to get away with it.
  There is also need for progress on the state of the art of putting together policy packages. All hon. Members, when they put together packages, talk about the package—the billions off this and the pennies on that. They do not talk about forecasts. They do not say what will happen when their package is built on top of the present state of the economy. They can therefore never be proved wrong. This is comforting for them and their advisers.
  The only serious test of these packages, however, is a much more penetrating comparison of models and different treatments within the same model. It is generally understood by hon. Members that the exchange rate equation and the wage equation in the Treasury model are totally imposed. If those equations are changed, the behaviour of the model changes entirely.
  The Metric model of the French Ministry of Finance is presented far more thoroughly and sensitively than any United Kingdom model. The Government are falling badly behind. Treasury Ministers may slumber through all the official briefings that they get on this sort of thing—just as they are doing now—but as a result of such sloppiness in presentation major errors in policy are made. Those who want evidence of that should talk to my right hon. Friend the Member for Leeds, East (Mr. Healey), the former Chancellor of the Exchequer, about the great change in the savings ratio and the impact that that had on the errors in the economic policy of the last Labour Government. If there are advances in the way in which policy is made, we shall not avoid great uncertainty, frustrations and disappointments, but we shall be in a far better position to see what is going on.
  1028
  There is one problem that I do not see my way through at all. I cannot understand the baffling increase in exports over the past year [Interruption.] One suggestion is that we are developing a dual economy; that one part of British industry is as efficient and competitive as we would wish, thrives in the present environment and has been responsible for a very big increase in exports, and that another sector is totally unable to compete and is vulnerable to exchange rate uncompetitiveness. How policy should be conducted in a diverse economy whose different parts are affected in radically different ways, is, of course, what politics are all about. However, there is no reason why politicians should have to work in the dark about the real impact on firms in our constituencies, which employ our constituents.
  Mr. Bill Walker rose—
  Dr. Bray: I shall not give way, as I shall shortly finish my speech.
  However, income distribution and the impact on particular industries and firms is the way forward in the proper making of a Budget, rather than the charade that we had yesterday.
  7.44 pm
  Mr. Chris Patten: I shall take up in a moment what the hon. Member for Motherwell and Wishaw (Dr. Bray) said about pay. However, I shall start with the self-evident point that no Budget was awaited with more eagerness than the one unveiled on Tuesday. That is pretty curious because all of us know that a single Budget cannot make much difference to the economy. I doubt whether the world will be much different after Tuesday than it would have been if nothing at all had taken place. Judging by the economic indicators and figures for the next couple of years, there is not likely to be very much change as a result of the Budget, with inflation forecasts looking more encouraging, output making a slight and fitful recovery and unemployment remaining grimly high. The Budget is therefore as much a political as an economic event. In that sense I should like to offer a judgment about it later.
  All of us know perfectly well that the Chancellor is operating within a number of difficult and severe constraints. The first is the international situation. In a mad world it is difficult to run a sane domestic economic policy. The good news on the international front is the fall in the oil price, which should mean some increase in output in most of the developed industrialised countries.
  The bad news—to which my right hon. Friend the Member for Worthing (Mr. Higgins) referred—is what Mr. David Stockman called the "magic asterisk". I refer to the enormous federal deficit in the United States of America, which is partly a result not only of defence spending, but of a good deal of supply side twaddle. A deficit of that size combined with a pretty tight monetary policy will mean high interest rates later in the year.
  It is possible that Congress will save our skins. If it does not, Europe will have to consider later in the year what it can do to save us all from the consequences of American economic policy. It is interesting that the once much derided argument about the ring fence seems to have a large number of rather surprising adherents these days.
  The second substantial constraint on my right hon. and learned Friend the Chancellor of the Exchequer is our pay bargaining system, to which my right hon. Friend the

  1029
  Member for Worthing referred. Even with 3 million unemployed and an alleged sea change in attitudes on the shop floor, several of us who argued in the run-up to the Budget for greater help to industry were told with teeth-sucking scepticism that that might feed through into pay. There is some force in that argument and there is much more force in it if one is talking about a £9 billion reflationary package.
  In his response to the Budget Statement, the Leader of the Opposition glided round the whole question of pay policy. As usual, his speech contained a deluge of words which covered a slight drizzle of thought. The right hon. Member for Stepney and Poplar (Mr. Shore) has a rather different technique when faced with the problem to which the hon. Member for Motherwell and Wishaw (Dr. Bray) referred. The right hon. Gentleman's technique is to call the problem something else. Given that he has certain ambitions in the Labour movement and that no one is allowed to use the words "pay policy", he calls it a national economic assessment. He should call it something friendlier or chummier, such as Robin or Nigel—[AN HON. MEMBER: "Or Chris"]—That would do very well. However, we have to put up with "national economic assessment". I shall make the obvious point that if an hon. Member cannot even call a policy what it is, there is not much chance of it being wildly successful.
  The third constraint within which the Chancellor of the Exchequer operates is more of his own making or saying. We are told—this is what the medium-term financial strategy means—that he is our Ulysses, lashed fast to the targets contained in the medium-term financial strategy. The priciple behind all that was enunciated a long time ago by Lewis Carroll, who wrote that anything one is told three times is true.
  This year, we have had the third instalment of the medium-term financial strategy. My right hon. and learned Friend the Chancellor of the Exchequer feels obliged to stick to the targets set for the public sector borrowing requirement for 1982–83 of about £9 billion. Indeed, he has added £500 million—which is welcome—making it £9·5 billion in all. I am sure that such flexibility has existed in the Treasury ever since my hon. Friend the Member for Knutsford (Mr. Bruce-Gardyne) went there.
  I am doubtful about the extent to which my right hon. and learned Friend the Chancellor should be obliged to stick to that target. That is my main argument with my right hon. and learned Friend and the Budget. The markets would not have taken fright if my right hon. and learned Friend had gone for a public sector borrowing requirement of £1 billion or £1·5 billion more than he has gone for. If he had settled for that, he would have made a much greater impact on the problems that he addressed in his Budget Statement.
  After all, my right hon. and learned Friend the Chancellor is settling for a higher public sector borrowing target in 1983–84 than was set out last year in the medium-term financial strategy. Last year, we were told that the public sector borrowing requirement target for 1983–84 would be 2 per cent. of gross domestic product. It has climbed nimbly up to 2¾ per cent. of gross domestic product in the latest Red Book. It may be that 1983–84 is of some significance. I confidently expect that the PSBR for that year will turn out to be a little larger. But if there
  1030
  is no risk to interest rates or the exchange rate with a higher PSBR than was forecast in the medium-term financial strategy for 1983–84, why do we suppose that there would be a risk this year with a PSBR £1 billion or £1½ billion higher than was suggested in the Red Book last year? I find it extremely difficult to fathom the reasoning behind that.
  Just as we have gone for a slightly higher PSBR target for the year after next than was established in the medium-term financial strategy, as my hon. Friend the Member for Enfield, North (Mr. Eggar) and my right hon. Friend the Member for Worthing (Mr. Higgins) have said, we have changed the monetary targets slightly both for the coming year and for the year after that. I do not for one moment assume that that means that the Treasury believe that in the next couple of years the rate of inflation will rise. I believe that it has more to do with the fact that the Treasury expects a mild recovery in the next year or two and that it believes that there should be more money in the economy to sustain it—that is what in the Middle Ages used to be known as reflation. However, I welcome it. It suggests that we have perhaps travelled rather further intellectually during the past year or so than some of us had supposed. I confidently await the use of the word "demand" from the Front Bench by about this time next year. I believe that politics is creeping slowly and haltingly back into the picture. We should offer up a small prayer of gratitude for that—especially those of us who, unlike some of my more austere hon. Friends, are seeking reelection.
  Within the constraints that the Chancellor has established for himself, constraints that I have argued are £1 billion or £1½ billion too tight, it would be churlish, as my hon. Friend the Member for Leek (Mr. Knox) said yesterday, not to congratulate the Chancellor on doing more or less the right things with the limited amount of money that he has decided is available. I especially believe that concentrating on industry the limited extra help that the Chancellor believes exists to help cut its costs and to restore its competitiveness, is entirely the right priority. Ever since I was first elected, I have argued for a cut in the lamentable national insurance surcharge. I hope that before I depart, whenever that may be, the national insurance surcharge will have been abolished. Bearing in mind how small the cost of the Chancellor's cut has turned out to be, because of wholly justifiable decisions to claw back from the public sector, I would have liked him to do more. I hope that in due course, especially if there is no pay explosion of the type to which my right hon. Friend the Member for Worthing alluded, the Chancellor will move towards abolition of the surcharge.
  My right hon. and learned Friend's measures to help the construction industry, to help with energy costs and to help small businesses should produce modest but benign results.
  I am sure that it was absolutely right to concentrate the help that the Chancellor thought that he could give the individual on increasing Rooker-Wise by an extra couple of per cent. rather than by cutting the standard rate. I only wish that he had been able to increase Rooker-Wise by 5 per cent. rather than by 2 per cent. If he had done so, he would have coped with the whole raft of problems that has built up over the past year or so and taken many more people out of tax altogether. I am also extremely grateful to the Treasury for the decision to make good the 2 per

  1031
  cent. shortfall in unemployment benefit and supplementary benefit. In retrospect, it is perhaps surprising that we ever considered not doing so.
  If I may be forgiven for adding ashes to the champagne, I must say that I am still concerned about the decision to change the basis upon which supplementary benefit is operated. I might not feel so concerned if I thought that the Government would be as committed to the scheme if the figures were the other way round—if housing costs were not increasing quite so much as the retail price index. Perhaps I could have a categorical assurance about that it would make a difference.
  A more substantial point was raised by my hon. Friend the Member for Chippenham (Mr. Needham) yesterday concerning the cut in unemployment benefit about a year ago by 5 per cent. in lieu of tax. It is clear that when unemployment benefit is again taxable, we should restore that 5 per cent. cut. That was implicit in all the arguments in favour of—
  Mr. Straw: It was explicit.
  Mr. Patten: It was explicit only in the sense of the usual coda that resources must be there to allow it to happen. I think that it was in Standing Committee, but the hon. Gentleman has bowled so well this week that I do not wish to tangle with him. He would probably knock out my middle stump if I allowed him to intervene for one moment.
  There is no justification for failing to do as much as possible to help the large number of unemployed, most of whom are not in any way responsible for the sad position in which they now find themselves. Unemployment is the most serious and pressing social, economic and political question that we face. It may be that the Conservative Party has been right to make a value judgment, that it is in Britain's best interest to produce less more efficiently rather than to produce more less efficiently.
  It is equally important to our success that we extend as rapidly as we can the efficient productive part of the economy. Until we do, we shall suffer from an appallingly high level of unemployment. That is why the Chancellor was right to announce his £150 million package for the community work scheme for the long-term unemployed. That was a small and rather inadequate start. I look forward to the Chancellor and the Secretary of State for Employment returning to the House later in the year to announce a more substantial set of measures to help the long-term unemployed than was announced rather briefly at the beginning of the Budget Statement.
  My right hon. and learned Friend paid a gracious memorial tribute to Lord Butler at the beginning of his Budget Statement. He did not mention—possibly this would be asking too much—that Lord Butler would have regarded himself—he virtually said as much in "The Art of the Possible"—as a cautious, sensible Keynesian. Lord Butler once said that he who talks about creating pools of unemployment should be thrown in and asked to swim. More recently, writing about Burke and the concepts of legitmate expectations, he said that in advanced industrial democracies, and certainly in this country, people had a legitimate expectation of a job.
  Our generation of politicians will be, and should be, judged on how successfully we can tackle the problem of unemployment without unleashing inflation. I do not believe that the Budget will make unemployment worse.
  1032
  The increase to which others have referred would have taken place anyway. However, I do not believe that the Budget will make unemployment much better. The Budget could have alleviated the unemployment problem rather more if the Chancellor had gone a little further. I still believe that the Budget could be the basis for a more serious attack on unemployment if the Chancellor and the Secretary of State for Employment do more later in the year.
  To that extent, my judgment of the Budget, for what it is worth—I do not want it to sound too much like one of Lord Butler's notorious compliments—would be that it is not only the most recent of the Chancellor's Budgets, but also just about his best.
  8 pm
  Mr. William Hamilton: The hon. Member for Bath (Mr. Patten) brings a refreshing agnosticism to our debates. I am not sure whether he is in the process of drying out or whether he is still suffering from rising damp. He expressed views which have been fairly commonly expressed by Conservative Members about the Budget in general—it is all right as far as it goes, but it does not go far enough. That was the gist of what he said.
  For the Opposition, and for me, the acid test of the Budget was contained in the hon. Gentleman's latter remarks about how far it will make a significant and early impact on the scale of unemployment. The right hon, Member for Chesham and Amersham (Sir I. Gilmour) made precisely that point. He, too, expressed the view which I am bound to say is the consensus in the country and in the House—that, despite the Budget, unemployment will continue to rise in the foreseeable future. It may be slowed a little by the measures in the Budget, but little more than that can be said.
  The right hon. Gentleman said—I hope that I do not misquote him—that the Government seemed resigned to living with high rates of unemployment, and indeed that is true. I go further. I believe that the very high and rising rate of unemployment today, with the accompanying hunger, fear and poverty that it causes, is the scourge of discipline to be imposed upon the work force in the next few years. Indeed, Ministers are on record as saying that civil servants and others will receive no wage increase which even measures up to the rate of inflation because there are 10 people looking for every job that they now occupy.
  The Chancellor of the Exchequer claimed that this was a Budget for industry, for jobs, for people and for economic recovery. I suppose that the general view is that the £640 million to be given back to industry through the national insurance surcharge concession will be of some limited benefit, but it is as well to remember that that will be partly offset, especially in rural areas, by the increases in duty on petrol and derv. That is why Scottish Tory Members are so concerned about those proposals, and the same applies to other parts of the country where people rely on transport of all kinds more than they do in the cities.
  The public sector, however, will not benefit from that concession, although the nationalised industries are large providers of jobs both directly and indirectly. This is just one example of a perverse decision based upon political

  1033
  prejudice on the part of the Government. They do not like nationalised industries, so they intend to penalise them in this way to no good purpose.
  The building industry may be a little happier, but it is currently in the depths of despair. The White Paper on public expenditure to 1984–85 indicates a very substantial cut in housing investment—from £3,320 million in 1981–82 to £2,860 million in 1984–85—and the Scottish figures show a 20 per cent. reduction in housing provision in the same period.
  The help for small businesses, too, is welcome as far as it goes, but it must be seen in the context of what has happened to small businesses over the past three years. Among Scottish businesses, small and large, there were 331 bankruptcies in the past two years—that is more than three per week throughout 1980 and 1981.
  I suppose that every job created by a small firm is acceptable. There is the exciting proposition—I must say that, when the Chancellor read this out, I could not believe it—that school leavers are to be helped to set up their own companies. One can imagine the teenagers of Fife, Glasgow and Liverpool dancing in the streets at the prospect of setting up their own businesses—the dashing young entrepreneurs of Margaret and Geoffrey—but, even if thousands of school leavers set up their own businesses, it is highly unlikely that they will employ many additional workers for a considerable period.
  That just about sums up the total effect of the Budget proposals for jobs. There will be little, if any, reduction in the present monstrous scale of unemployment before the next general election. That must be a great worry to every Conservative Member with a majority of under 10,000.
  The social, political and economic cost of such a colossal and criminal waste of human assets is almost impossible to quantify. The research staff of the House of Commons Library have produced a paper on the cost of unemployment. Anyone who has had dealings with them knows how impeccable and comprehensive their research is. It is very objective, very fair and very full. They have produced the various estimates that have been given of the overall cost of unemployment in terms of tax loss, national insurance contributions not paid, indirect taxes, benefits of all kinds paid out, administrative costs and the rest. I shall quote some of the figures contained in that document.
  The Treasury estimate for 1981–82 was that, for every 100,000 on the dole, the cost was £835 million, the Manpower Services Commission estimate was £735 million—it depends how the calculation is made—and the Institute of Fiscal Studies estimate was £839 million. Taking the median, that means that the cost is about £800 million for every 100,000 on the dole.
  The Library document recalls that on 18 February this year The Times carried a report that an updated version of the Treasury's own economic progress report had been prepared but that it had been decided not to publish it. The reason is not far to seek. The February 1981 estimated cost for 100,000 on the dole was £340 million—or £3,400 per person signing on the dole. It is reported that the 1982 estimate is that in 1981–82 an extra 100,000 on the dole would cost £500 million, although we do not know because the Government have decided not to publish. That works out at £5,000 per person, or £96 every week. That is the financial cost of the dole.
  1034
  Of course, the cost in terms of human misery, deprivation and loss of personal dignity is incalculable. Such things cannot be measured. In that context the Budget showed little more than a remote recognition of the enormity of the criminal waste and the social obscenity of this problem. On the contrary, the unemployed are to be made to suffer further injustices and penalties. The point has been made on both sides that unemployment benefit was cut by 5 per cent. on the assumption that it would be taxed anyway. That 5 per cent. has never been restored. There has not been a promise yet, and I bet that we shall not get one, that it will be restored. So, in addition to people being put on the dole, they are being clobbered financially. As the Tory Bow Group said, if the Government do not restore the 5 per cent. they will be regarded as cheats. That is precisely what they are. They are cheating the unemployed, who are already suffering more than most.
  As for the tax position, I wish to refer to the mess into which the Chief Secretary to the Treasury got last night. He was in considerable difficulty. The right hon. and learned Member for Cleveland and Whitby (Mr. Brittan), who has great intellect and ability, is one of the rising stars of the Tory Party. I want to quote precisely what he said:
  "If one looks at the impact on the individual, the net effect"—
  he was talking about the overall effect of the Budget—
  "including national insurance contributions, is beneficial…"
  The implication was that the effect would be beneficial for every individual. There was immediate consternation on the Government Front Bench. The clanger became apparent. The Financial Secretary to the Treasury was acting as the runner to the box where the advisers are to get the facts and figures. He came back, but did not venture to the aid of his colleague who was in distress. When the Financial Secretary wound up the debate he said, referring to the brick dropped by the right hon. and learned Member for Cleveland and Whitby, that the figures
  "did not mislead the House in any respect."—[Official Report, 10 March 1982; Vol. 19, c. 883–935.]
  I see the Economic Secretary to the Treasury, who is to reply to the debate, nodding agreement. So he is agreeing that the right hon. and learned Member for Cleveland and Whitby said that all individuals will benefit from the tax proposals in the Budget.
  The Financial Secretary then went on at length to contradict the very figures which came from the Treasury, which were published on Tuesday evening and which were quoted by my right hon. Friend the Member for Stepney and Poplar (Mr. Shore). Those figures indisputably show that, in all cases, not until incomes reach £15,000 to £20,000 does the percentage of total income taken in tax and national insurance contributions become less than it was before the Budget.
  In exchanges this afternoon the Chancellor of the Exchequer re-emphasised what the Financial Secretary sought to prove last night—that the figures emanating from the Treasury are not worth the paper they are written on if they have to be so qualified. The implication was that we should not believe the Treasury figures. If those figures are so meaningless and so conditional on all kinds of imponderables in the future, why publish them at all? There must be a large element of truth in them, or they would not be published. I suspect that my hon. Friend the Member for Blackburn (Mr. Straw) will be dealing with

  1035
  this in some detail when he speaks. It behoves the Economic Secretary to the Treasury to reply more satisfactorily on this point tonight.
  If one examines the other tax changes, one finds that the wealthy are to keep more of their capital gains and more of their earned income. They will have greater opportunities to invest in inflation-proof bonds and stocks, whereas the poor will pay more and have their social services provision at both local and national level reduced, whether it he housing, education, health or whatever. My hon. Friend the Member for St. Pancras, North (Mr. Stallard) is interested in the death grant, which is worth a fraction of what it was when it was introduced. This hits hardest the poorest sections of the community.
  Differences in treatment are shown up sharply by the way in which the Government have treated Civil List annuitants and nurses. I raised this with the Prime Minister this afternoon. A staff nurse, a key figure in any hospital, experienced and mature, has a maximum basic pay of £5,426. She is being offered 6 per cent., which means a massive reduction in her standard of living, by this Government. Every other nurse in the country will be treated in the same manner and will suffer a swingeing reduction in standard of living. At the same time, the Civil List figures were produced. The payment to Princess Anne is to go up from £100,000 to £106,500 per annum and Princess Margaret's payment will go up from £98,000 to £104,500, so that they will both receive an increase of £6,500. In other words, these ladies will get a bigger increase this year than a staff nurse gets as a total annual salary. If I wanted to underline that further, I could go on for a long time, but the language I should be tempted to use would be out of order.
  To underline the point, in Scotland, and no doubt elsewhere, the nursing levels in geriatric and psychiatric hospitals are unsatisfactory. A Confederation of Health Service Employees official in Dundee has quoted the gross understaffing of hospitals except by unskilled staff. In the 237-bed Cowglen hospital in Glasgow, 78 per cent. of the staff are untrained; at the Birkwood psychiatric hospital in Lesmahagow in Lanarkshire, 75 per cent. of the nursing staff are untrained; in the Royal Dundee Liff hospital 39 per cent. of the nursing staff are untrained. Every night it is not uncommon throughout the country for one trained nurse to be in charge of several wards at the same time.
  That is the kind of deprivation that ordinary people are suffering. When the Chancellor doles out concessions to the very wealthy, the very privileged, that is what politics in the House and the country are about—how we distribute the country's wealth, in terms not only of wages and salaries but of social provision, in education, housing, health and so on. On those tests and the provision of jobs for our people, this Budget must stand condemned as irrelevant to the problems that we now face.
  8.20 pm
  Mr. Peter Hordern: My right hon. and learned Friend the Chancellor of the Exchequer has had a good reception for his Budget, and he thoroughly deserves it. That reception is heightened by the improbabilities of the proposals of the right hon. Member for Stepney and Poplar (Mr. Shore). I understand that the right hon. Gentleman is urging the Government to spend £9 billion more, apart from other measures, which include
  1036
  the reimposition of exchange controls and something that I heard described today as a national assessment of incomes. It has been called various things in the past.
  I do not know whether the right hon. Gentleman has ever spelt out the proposal thoroughly, nor do I think that he is in a position to do so. I cannot believe that he could possibly have the irresponsibility to urge the Government to spend another £9 billion without having some restraint upon incomes. It is time for the House and the country to hear what the right hon. Gentleman's incomes policy plans are and just how they will be carried out. As it is, we have what might be termed an understanding about an understanding which is to be reached with the trade unions—not a social contract, but just an understanding about an understanding.
  The right hon. Gentleman is not alone in wanting to have some sort of pay policy in exchange for rather more money being introduced into the economy. My right hon . Friend the Member for Chesham and Amersham (Sir I. Gilmour) referred today to the Layard proposals. I thought that my hon. Friend the Member for Bath (Mr. Patten) also referred in positive terms to pay policy. He did not disguise the term but said "pay policy". That is a valid view, but the pay and demand policies of successive Governments over the past 15 years can now be properly assessed.
  In a most interesting letter to The Times on Monday, my right hon. Friend referred to, amongst other things, the increase in costs when we last had a Conservative Government. He said that only one thing had gone wrong, and that was that the threshold agreement produced by the last Conservative Government had been upset by the increase in the price of oil, and this had meant that wages went up much faster afterwards. I had almost forgotten about the threshold agreement, but my right hon. Friend's letter reminded me of the time and the circumstances of what was then called pay policy. I refer to the subsidies given to the nationalised industries to try to keep costs down. In order to try to keep costs down, there were shifts of every sort, which were eventually upset by the threshold being breached.
  I am sorry that my right hon. Friend is not here. I do not think that his analysis of the way in which prices go up can be sustained, if he thinks that increases in costs are the only way in which inflation can happen.
  Mr. Chris Patten rose—
  Mr. Hordern: If I may finish dealing with this point., I shall be happy to give way to my hon. Friend. I am happy to ask him this question, since my right hon. Friend is no here. If higher costs are the reason for increased inflation, how was it that the property boom of 1972–73 took place? Was it really occasioned by a large increase in the costs, of construction companies?
  Mr. Patten: I do not believe for one moment that pay policy can be anything other than a complement to a responsible fiscal and monetary policy. The point that I wanted to put to my hon. Friend, whose arguments in these debates we all take particularly seriously, is as follows. Given the tendency of the pay bargaining system over the past few years consistently to extract a quart from a pint pot, is my hon. Friend saying that the only way in which we can deal with that is by having unemployment at the

  1037
  sort of levels that we are experiencing now, or is there another method for dealing with it, such as West Germany and other countries use?
  Mr. Hordern: I shall be happy to deal with that point, and I intend to do so during my speech. I regret to say that I think that the carrying out of successive pay policies has been responsible for the high level of unemployment of today and the growing level over many years. In the last year of the previous Government, earnings in manufacturing industries increased by about 18 per cent., and after the winter of discontent that Government's pay policy totally collapsed.
  The figures that I am about to give are the increases in public sector wages that Professor Clegg awarded as a result of the total breakdown of the Labour Government's pay policy. In 1980–81 National Health Service wage costs increased by 31 per cent.; teachers by 27 per cent.; universities by 20 per cent.; and the Civil Service by 23 per cent. There is no way in which the private sector can finance such increases, which were the logical outcome of a long period of wages policy and starry-eyed demand policies of injecting fresh funds into the economy, which successive Governments tried over a long period and which failed.
  I am happy to congratulate my right hon. and hon. Friends on having eschewed those policies. We are now seeing results, in that there are now much lower wage increases in the private sector, and wage costs per unit of output, which are the best test, have declined in three out of the past seven months, something that has not happened since the figures were first kept.
  I believe that present levels of unemployment would have been reached in any case, whatever amount of money had been put into the economy. It would have had only a marginal and temporary affect. Furthermore, unemployment ultimately, would have been made much worse, as has been proved by the figures.
  Mr. Straw: Of course, the figures that the hon. Gentleman gives about recent wage settlements are correct, but this is at a time of great fear of unemployment. That is what is holding down wages. Is the hon. Gentleman saying that he cannot foresee unemployment coming down? If he is not, what does he think will happen to wages when it comes down and the fear is removed?
  Mr. Hordern: I think that unemployment will start to come down, because there is much greater productivity, as the hon. Gentleman knows very well, and the level of exports has been very satisfactory and I think will remain satisfactory. There is much more realism in manufacturing industry. If—I admit that it is a big "if"—public sector costs and wages can be controlled and kept to roughly 4 per cent. within the next year or two, there is a real chance that we can achieve much fuller employment than there is now, with the economy moving forward much faster.
  I shall not take up time talking about the size of the public sector borrowing requirement, save only that I think that it is about right. However, I want to say one thing about the method of financing the borrowing which the Government have now chosen. This is a very important and significant matter. I refer to the index-linked gilt.
  An index-linked gilt to last for 29 years is to be issued. I ask the House to recall what has happened during the past
  1038
  29 years. In that period there has been a major advance in the National Health Service. We have more than doubled the number of people who work in it. There were just over 500,000 20 years ago, and there are now 1·2 million. Standards in our schools have improved considerably. In the past 20 years we have had the Robbins report on higher education. We hope and believe that all those who pass sufficient examinations will be able to go to universities. We have built eight new universities in that time. We now have index-linked pensions for civil servants, and the Scott report has suggested that there should be index-linked pensions for all. Now we have an index-linked bond, the interest charge on which will have to be paid by the taxpayer as well.
  These are large, open-ended commitments. I hope that the Treasury Bench has thought them through properly. There is a large potential commitment here which will not easily be met. I do not think we can continue to believe that we can improve our social conditions, improve our health services and our social services and pay for them by means of an index-linked gilt which is a long running open cheque which will have to be met by future Governments and future taxpayers and not by this one alone.
  I should have liked to see in the Budget a proposal to allow early retirement for those who have been out of work for over a year. I understand that had that been the case it would have cost £130 million. There is a distinct difference between allowing somebody to retire early and to be eligible for the retirement pension rather than going on the the long-term supplementary benefit which, of course, is a means-tested benefit. Anyone retiring early should have the dignity of being eligible for a retirement pension and to be able to work without losing that retirement pension. I remind my right hon. and hon. Friends that one of the few specific pledges in our election manifesto was to abolish the earnings rule, and it is time that that was carried through.
  Finally, I should like to see a further significant shift in employees' shareholding possibilities. I welcome the increase from £1,000 to £1,250, being the amount the companies can give to employees, but there is a major opportunity which our party and the Government should grasp before very long.
  There have been substantial increases in share ownership in the United States, and the wage bargains that have been reached in the Ford settlements in the United States, and in Europe as well, demonstrate that there is a much closer connection between the interests of employees and employers in other countries. We should do everything we can to foster this. We have made a notable advance in the last five years in allowing council tenants to purchase their houses at a substantial discount. The next step in what was called many years ago a property-owning democracy should be to allow employees as a right to buy shares in the company in which they work. They should have tax concessions along the lines of the Loi Monory, whereby they could offset any expenditure in buying shares in their company against their income before tax. That, added to the increase in the amount which companies may now give to buy shares in their company, could form part—and a very significant part—of the next step towards a property-owning democracy.
  We shall not secure a united people or realise the concept of one nation by pouring money into the economy

  1039
  or by preaching about it. We shall do so only if it is clear to people working today that they are not simply working for their firm but that their firm is working for them for the very good reason that it belongs to them, at least in part. It is bound to take time, but we cannot expect young people now growing up to bear the heavy burden we are placing upon them without allowing them to share the risks and reap the rewards of the enterprises in which they work.
  8.34 pm
  Mr. Austin Mitchell: What we have been dealing with today, yesterday and Tuesday is not so much the Budget as a "fudge-it" because, with the typical skill of a barrister defending a bad brief, the Chancellor of the Exchequer has fudged most of the major issues. Specifically, the vital need at this moment to expand the economy has been fudged. He has concentrated on what amounts to no more than conjuring tricks in giving this year what should have been given last year, in taking back in direct taxes what he has given out in national insurance contribution cuts. He has concentrated on furniture moving. It is important, given this situation of fudging the issues, to get the basic realities of the Budget absolutely clear. This Government have shown a real mastery of fudging the issues. We have a Prime Minister who has a considerable flair for putting what she does not understand in language everybody can follow. We have a Chancellor of the Exchequer who has a lawyer's tenacity for never raising his eyes above his brief, certainly not to look at the real world around him. If he looked at the real world and specifically at industry, that experience would be too painful. He therefore chooses to plod on unperturbed. Because of his furniture moving, the right hon. and learned Gentleman has concealed the real issues. I repeat what those issues are. First, the Budget increases taxation. Yesterday the Chief Secretary made a mistake. He should have admitted straight away that it was a mistake to say that individuals were better off.
  Table 9 in the documents related to the Budget demonstrates that both single people and married couples who earn up to £15,000 a year pay a higher percentage of their total income in tax and national insurance contributions after the Budget than before.
  Secondly, the Budget is deflationary. At best it is a standstill Budget, but essentially, because of the cuts of 2 per cent. in the cash limits, which make no real margin for inflation, the net effect will be deflationary. That is happening when a massive boost is necessary for the economy.
  Thirdly, the Budget does nothing about Britain's problem of unemployment. The planning assumptions on which the Budget is based are a rise of 300,000 in unemployment. There is nothing in the Budget to stop that becoming the reality that it will become over the next few months.
  We have heard a great deal of and from the Tory "wets". I am sure that if the wets did not exist, the press and the media would have to invent them. We have heard a great deal about the wets' packages for an expansion of £2 billion, £3 billion or nearest offer and £5 billion. They have talked of the need to open a parachute before hitting the ground. I must say to those in the Tory party who have been arguing along those lines that it is no use airing their agony in the Chamber, in the press and on television and
  1040
  then doing nothing about it, because everything now depends not so much on us but on them and on their decisions about the Budget.
  For three years the Opposition have been warning until we have gone red in the face about the economic consequences of the Government's policies. We have warned that deflation is not a cure for inflation. The Government are aiming for a massive deflation. That is a waste of resources. We have warned about the consequences of lost production. There has been a bigger fall in industrial production than in 1929 and 1931. We have warned about the rise of unemployment which is now between 4 and 5 million if one takes into account the people who want to work, but are not registered for work, the people on schemes and others who are not included in the figures.
  Some members of the Government hate their fellow countrymen. The Prime Minister must have a great dislike of her fellow countrymen if she vents such anger on them. However, it is not good economics to ruin the country's industry in order to punish the nation's working people for assumed sins.
  It becomes wearisome for the Opposition to repeat the same obvious point time after time and year after year, when no notice is taken. We have warned the Government for three years. The wets alone have the chance to change some of the disastrous proposals in the Budget.
  In another crisis in the 1940s, the Labour Party was asked to speak for England. Now the wets have a chance to speak for British industry and for the country, which has been ruined by the Government's economic policies. They have the chance to put their courage to the test and to change the Budget and its effects on British industry instead of moaning, making clever speeches in the House and airing their agony on television. If their courage fails them and if they equivocate, as the right hon. Member for Chesham and Amersham certainly did in the Chamber this afternoon, in the face of the Budget and this continuous disastrous deflation, they are failing their country and are showing themselves to be not only gutless and witless but certainly wetless as well.
  The policies being followed by the Government are essentially crude deflation dressed up in the trappings of monetarism. I am a little confused about what these trappings are; something called Mo has entered the Red Book as a monetary-based wide definition of money supply, a sort of cocktail definition. The Government's essential weapon has been, and still is, deflation through the exchange rate. Whereas other countries have had export-led growth, we are now having and have been having over the past few years, import-led contraction. We have seen industry squeezed through interest rates and the exchange rate; exports are effectively taxed by an overvalued exchange rate and imports into this market are subsidised by the same overvalued exchange rate. All that deflation has been engendered essentially as a substitute for incomes policy, to break the negotiating power of trade unions, to make people so frightened for their jobs that they dare not press for wage increases. That is the only logical and conceivable reason behind it.
  The policy is working; settlements are down. All hosannas to the great successes already secured, but let us consider at what cost it has been secured—the rise in unemployment, the laying waste of Britain's industrial future and the laying waste of jobs that will never return. We must by now have lost about one job in five in British

  1041
  industry over the past three years. That comes at the end of a loss approaching 3 million jobs in British industry over the past 15 years. That devastation of industry has occurred in no other advanced industrial country and bodes ill. It will be disastrous when the oil runs out. What are we then to survive on, and what augury will there be for the future?
  When such a policy starts, there is no use hoping for relief and that things will pick up naturally. The logic of this policy is that the Government cannot raise the lid; they dare not, because if this is their only weapon against inflation, as soon as the pressures are eased, inflation automatically picks up. The Government have essentially committed themselves to keeping the pound up with interest rates, which means that industry will be further squeezed.
  The Government are also committed to increasing the burden of taxation. Whether disguised as increases in rates, cuts in Government contributions, increases in nationalised industry charges or taxation, it is an increasing burden to pay for the massive burden of unemployment. The total cost of that must be about £13 billion at the moment and it is pressing on a diminishing productive base. What future is there for the country in that?
  The hon. Member for Gateshead, West (Mr. Horam) complained that industry had to pay the costs of wage increases in the National Health Service. How then can industry bear the costs of this massive unemployment at the same time? If it grumbles at those costs, what are the costs of nearly 4 million unemployed pressing down on industry?
  The waste is harmful and the symptoms of recovery unreal because the increase in productivity that is so much talked about comes essentially because firms with more than one plant are simply closing some of them and concentrating production on the most efficient. That produces an increase in productivity in the figures, but no real increase because other resources are simply laid waste. That is happening at a time when other countries are still investing and growing.
  Everything in British industry is now being jettisoned for sheer survival. Research, design, product development and all the other non-price factors in which we have been so weak in Britain are being cut because of the simple need to keep going and to keep a market share to survive. That process is finite; it can only go on for so long. A comparison is the great trees that seemed to survive the drought in 1976. Everybody said that the trees were not affected, but after two or three years the great trees came crashing down. That is what will happen to British industry if it is made to go on running in this sort of fashion with no profits, investment, research, design or development because everything has been cut back. One has only to consider the features in the Financial Times about how firms are surviving the depression to appreciate that that is exactly what is happening to British industry.
  Is this society, which is divided and embittered by the rise in unemployment, by the savage depression and by the lack of any hope injected by the Government—it is presided over by a litany of prime ministerial blame—the new Britain that we were offered from 1979 onwards? The Prime Minister has been forecasting recovery for months.
  1042
  Every month there is, according to the Prime Minister, an indication that things are on the upturn. There have been so many forecasts of recovery. I shall quote a few—
  Sir William Clark: The hon. Gentleman is much better when he is reading.
  Mr. Mitchell: The quotes are as follows:
  "Any lack of confidence in … the basic strength of business is foolish."
  Secondly,
  "Business and industry have turned the corner."
  Thirdly,
  "We have now passed the worst."
  Fourthly,
  "Courage and resource are already swinging us back on the road to recovery."
  Those were President Hoover's predictions from 1929 to 1930. He used the same language that the Prime Minister is using today. The same policies are being pursued now as in the 1920s. When the Chancellor wants to cut the wages of young people he says what was said to the miners in 1926 when, like today, there was an over-valued exchange rate. He is saying, in effect, "Take an hour on the day and a penny off the pay". That is what people are being asked to do now. The same economics are presiding over this Government as failed so disastrously in the 1920s. It is as if Keynes had never been and as if we had not learnt the lessons of the 1930s.
  It seems that the Conservative Government have not even learnt the lessons that were learnt by the National Government of 1931, who devalued the pound by 35 per cent., imposed a 10 per cent. tariff, brought unemployment down in seven years by over 1 million and increased production from 1929 to 1937 by 38 per cent. Those were the achievements of the National Government, who had the sense to learn from the adverse situation that they faced. The present Government are concentrating on making the situation worse.
  We can make a similar escape from the deflationary trap. We must insulate our economy so that we can rebuild British industry. We must insulate it by means of the exchange rate. Within an insulated economy we must expand. It is a fairly simple and straightforward process. The Prime Minister seems to believe that reflation is inflation, but reflation is expansion of the economy, and that is the only way in which we can provide a future for the economy.
  New industries will not be created in a declining economy. People do not invest in decline. They need a prospect of profit and a future that encourages investment and growth. If we are to transfer skills, people and resources to expanding industries, we need expansion. If we are to separate ourselves from industries that are not viable, we need growth and expansion. In that way resources will be lured by the market mechanism to the industries that are expanding. That is what must happen.
  I must confess that when the Government took office I did not believe what others said would happen. I did not believe that the Government could mean what they were saying and that they intended to do it. I thought at first, with a naive faith in the processes of education, that eventually they would learn economic sense. Many of us thought "They will learn. They cannot go on."
  After two years I thought that sheer electoral survival would force even the most obtuse and loud-mouthed to learn. I thought that they would get cold feet when faced with that necessity. The hon. Member for Bath talked

  1043
  about the desire of Conservative Members to retain their seats. I now realise that neither the learning process nor electoral survival applies. The Government are still persevering and they must, therefore, mean what they say. They must believe in their policies despite the Gadarene rush to destruction. The inconceivable is actually true.
  The Government's future has gone. By persevering they have finished themselves. We are left with the need to consider the future and unity of the United Kingdom, and the growth and development of industry on which that will depend. We must turn our attention to future jobs for our children and our survival when oil begins to run down and, eventually, to run out. All that depends on industry, and it is industry that has been ruined. It is industry that bears the burden of public spending. It is the source of finance for public spending and, as I have said, it is being ruined.
  Without industry how do we survive? If there is no reconstruction, what will happen to us when the oil runs out? The Government have embarked on the irresponsible selling off of the nation's resources in a form of gambler's progress. They are providing give-away bargains for their friends and speculators. National assets and resources are being wastefully disposed of to keep this incompetent Government going. What happens when all our assets and resources have been depleted?
  To see this, the once proud party of patriotism that was supposed to be proud of the country and that carried the Union Jack on its election tables, now running the country, ruining its industry and then blaming the people for what has happened, putting the burden of sacrifice on those people and reducing this country to the offshore social security scrounger of Europe, a kind, plangent periphery, begging money from Europe, is no longer to be able to make jokes about the Prime Minister or about Geoffrey fiddling while Terry Burns but to see unfolding before our eyes a national tragedy.
  8.50 pm
  Mr. Bob Dunn: My right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour), in a thoroughly characteristic and interesting speech, said that if there was ever a time for the economy to be rejuvenated or reheated, it was now and that we had the capacity and the men. I would deny neither of those statements, but if we are talking about gearing the economy to the needs of the 1990s and on to the year 2000 it must be argued that the capacity that we have is not always of the right type in the right industries, and that the men and women that we have are not always trained to take up the jobs in industry.
  I welcome the new training initiative announced early this year by my right hon. Friend the Secretary of State for Employment. It will give people the chance to become equipped with the skills that the needs of the new industries will require them to have. For those who do not wish to take part in the new training initiative I welcome the announcement in the Budget of what I might term "the community task forces". It will enable those who are unemployed to help in their community by painting hospitals and clearing up towns and derelict sites, and to have the rhythm of regular work.
  However, my right hon. Friend the Member for Chesham and Amersham did not mention where the money for his proposals would come from. If one were to accept that the economy could be reheated, it must also be
  1044
  accepted that it might be heated in an uncontrolled fashion, with uncertain results. It might also have the effect of sucking in imports and might discourage investment of the right sort in the right industries, which would have a severe effect on interest rates and, ultimately, on inflation and the preservation of jobs.
  On Tuesday the Chancellor devoted part of his speech to the needs of the construction industry and the creation of jobs therein. In my constituency almost two thirds of houses are owner-occupied. As a result of the right-to-buy legislation some 600 council tenants have acquired their homes since spring 1980. I am sure that most local authorities will be delighted with the news that for the year 1982–83 local authorities will be permitted to spend up to £3 billion on housing, and that £1 billion of that total will be contributed from receipts from council house sales to sitting tenants. As this amounts to an increase of over 30 per cent. in the scale of capital expenditure for 1982–83, compared to the expenditure envisaged in 1981–82, it is a most welcome announcement.
  Many houses in South-East London and south Kent were built in a number of waves, or rather like a layer cake. It is easy to observe on the different phases of urban development, stretching from the 1880s through the early years of this century on to the massive inter-war developments of the 1920s and 1930s. Much work has been done on the smaller houses by enterprising, young and newly married Dartfordians to improve and modernise houses that are 70 years old and more. People who are now embarking, or about to embark, on modernisation will be pleased to know about, and will be satisfied with the increase in the value of grants for major repairs and the provision of basic amenities. The news that improvement grants will until the end of 1982 be increased from 75 to 90 per cent. of the eligible cost will be welcomed by my constituents.
  The third item of good news to my constituents is the Chancellor's decision to raise the thresholds of eligibility for stamp duty from £20,000 to £25,000, and other thresholds accordingly. I long for the day when a Conservative Chancellor will announce the abolition of stamp duty, but in contemplation of the options available to my right hon. and learned Friend in this Budget I remain reluctantly content to wait yet a while.
  This movement in thresholds will be welcome because it aids those who are about to become part of the property owning democracy. It will create work in the construction and allied industries, and it will encourage a movement towards home ownership. My right hon. and learned Friend the Chancellor said in his speech:
  "By the end of this Parliament nearly three out of every five families will own their own homes. This will represent a significant extension of the property-owning democracy. Taken together, these proposals will mean more work for the construction industry, and more jobs for those who work in it".—[Official Report, 9 March 1982; Vol. 19, c. 751.]
  On a wider note, I endorse entirely the action taken by my right hon. and learned Friend to reduce the national insurance surcharge. This surcharge is a tax on employment, as the Treasury Bench will acknowledge. The movement downwards by this Government contrasts largely and beneficially with the Labour Government's movements upwards. This action and the action taken to assist high industrial energy consumers is most welcome. Equally, the Budget is significant for the help that it gives to people, as well as for the help that it gives to industry. I welcome and endorse it completely.
  8.55 pm
  Mr. Stephen Dorrell: Many Members speaking in the House and commentators outside have called this Budget a political Budget. I accept that description, and I do not mean it in a derogatory sense. In my view, one of the functions of a politician is to try to reconcile conflicts in society. The art of politics is the art of being the lubricant by which society resolves its own conflicts. I welcome the Budget because I see it as a political Budget. The right hon. Member for Stoke-on-Trent, South (Mr. Ashley) called it a gesture Budget. Within the terms of reference that the Chancellor gave himself he could not satisfy many people, so it is a compliment to him that within those narrow terms of reference he managed to offend so few people. The Budget has been a political Budget in the best sense of the word, and it contains important measures that should be welcomed.
  First, I welcome the passage in the Budget that deals with social security benefits and charities, although there may be disappointment about the VAT position of charities. I welcome the concession on unemployment benefit and short-term supplementary benefit. I welcome, too, the increase in the mobility allowance, and the fact that it will no longer be subject to income tax. Both those developments represent a recognition by the Government of their important function in holding society together and within the limited means that were available to the Chancellor, being seen to be doing something to respond to deep feelings both inside this House and outside.
  Secondly, I welcome the direction in which the Chancellor chose to make his main tax concessions. I suspect that I and my hon. Friend the Economic Secretary to the Treasury may be two of comparatively few Members of the House who welcomed the increase in VAT when it was introduced in June 1979, and are still happy to do so now.
  Sir William Clark: What does my hon. Friend mean by "few"?
  Mr. Dorrell: Fewer people welcome the tax increase now than did so at that time. I believed that it was right at the time, and I still believe that it was right, and I welcome the Chancellor's decision not to reduce it in this year's Budget.
  I welcome, too, my right hon. and learned Friend's concessions on personal allowances, and not on the standard rate of income tax. I want to make a point of detail in this connection. It relates to the single person's age allowance as it applies to women. There is a curious anomaly in our tax system, whereby the single woman receives her pension at the age of 60, but gets her age allowance at the age of 65. That anomaly creates considerable problems, particularly for widows between the age of 60 and 65. I hope that my hon. Friend will have another look at that point, perhaps before the Finance Bill is presented to the House.
  I welcome the reduction in the National Insurance surcharge. I spoke on that subject many times before the Budget. One surprising aspect was the reaction on the Opposition Benches when it was announced that the full benefit would be clawed back from part of the public sector. On many occasions I have argued, as have Opposition Members, the case for a distinction to be drawn between capital and current expenditure. There is an important distinction to be drawn.
  1046
  I welcome the direction in which the main tax concessions are made, and that part of the Budget which is directed towards the construction industry. The emphasis put by the Chancellor on improvement grants can make an important contribution to the construction industry and to the improvement of our housing stock. Expenditure on that part of our economy will produce a disproportionate effect on employment. Therefore, the scheme to extend improvement grants for the remainder of this year is important. However, since there are only nine months in which the scheme will be available, perhaps the Minister will ensure that it is widely publicised so that the maximum advantage will be taken of it.
  Will the Minister also explain to the House the exact status of the £100 million price tag which my right hon. and learned Friend the Chancellor attached to the scheme? Will he tell the House—if not now, later—what will happen if demand for the 90 per cent. scheme exceeds supply? Some local authorities have been unable to meet the full demand for improvement grants in recent years. If my right hon. and learned Friend the Chancellor's offer dramatically stimulates demand for improvement grants, how will the Government react?
  Finally, and here I disagree with my hon. Friend the Member for Horsham and Crawley (Mr. Hordern), I welcome the extension of the index-linked bonds as a means of financing the public sector borrowing requirement. Apparently, there is also a difference between my hon. Friend the Member for Croydon, South (Sir W. Clark) and myself. Here I agree with Sam Brittan. I find his arguments compelling. The index-linked bonds separate genuine interest payments from what are, in effect, early repayments of capital. This makes the planning of public spending simpler and clearer. Interest on index-linked bonds is genuine interest, and not a cash flow cost of early repayment due to high interest rates.
  The establishment of index-linked bonds is the most important step that the Government have taken towards the permanent establishment of sound money as a basis for running the economy. They are a guarantee to savers that the Government will repay the value that they borrow. As a believer in sound money, and in encouraging savings, I see that as an important contribution to the reestablishment of sound money. Index-linked bonds will contribute to a more sensible funding of the PSBR in future.
  Those aspects of the Budget will make an important contribution to the future development of economic policy in this country.
  I now deal with what is, in effect, the basic Budget judgment which lies at the base of my right hon. and learned Friend's Budget statement. He has stimulated the economy, at least in old-fashioned terms, by an amount which we may disagree about exactly but which is between £1 billion and £1½ billion in the current year and £2½ billion to £3 billion in a full year. I welcome that, but like my hon. Friend the Member for Bath (Mr. Patten) and my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour), I would have wished him to go further.
  That judgment about the extent to which my right hon. and learned Friend could afford to stimulate the economy was based in essence on a financier's view of the PSBR. I still believe that he was looking down the wrong end of the telescope. We all agree that the PSBR is important, but I do not believe that it should be a primary determinant of the extent to which the economy should be stimulated. It

  1047
  should be a limiting factor but not a decisive one. I should prefer to see my right hon. and learned Friend the Chancellor examining much more closely than he did in his speech on Tuesday the effect of what he is doing on demand. As my hon. Friend the Member for Bath said, it would be nice to hear a Chancellor of the Exchequer once again talking directly about the effects of his actions on demand. If one examines the economy today, one finds that a deficiency of demand has caused unemployment to rise and the level of economic activity to be lower than it needs to be.
  Obviously, the key demonstration of that is the high level of unemployment from which we are now suffering. Together with most Conservative Members, I believe that nothing can be done directly to reduce dramatically the rate of unemployment before 1983–84. I put it to my hon. Friend the Economic Secretary to the Treasury that we must not think only in those terms, but, as we cannot do much about unemployment before then, we must think about how we can bring down the rate of unemployment after the next general election.
  Mr. John: After?
  Mr. Dorrell: Yes, after. Any Government that look only to the next election—as I am sure the hon. Gentleman would be the first to argue—are looking after their own political skins and not the national interest. Our job is to begin to lay the foundations for growth in the second half of the 1980s and I make no apology for asking my hon. Friend to consider that this evening. It is not unrealistic for us to expect unemployment to begin to level off and fall unless we are prepared to see a growth of a least 3 per cent. per annum. My doubt as a result of the Chancellor's statement is that I do not see a compelling urgency in that statement to expand demand sufficiently to ensure that output will rise after an election in the mid-1980s and to ensure that unemployment will begin to fall.
  I wish to make two positive suggestions to my hon. Friend about how he could begin to plan for that. First, I refer him to the provision that he has made in the public expenditure plans under the heading "contingency reserve". I believe that that now stands at £2·25 billion for 1982–83. I hope that the Government are beginning to think how that substantial sum of money can be used within their public expenditure plans to stimulate the economy and to derive the maximum benefit for both output and employment.
  Secondly, I hope that the Government will reconsider their statement on the monetary policy and will consider the stance that they should take in the immediate future on the exchange rate. It is true that the exchange rate has fallen substantially from the heights that it achieved last year and it is also true that it is subject to regular intervention now by the Bank of England. Both those developments are welcome. I refer my hon. Friend to an article in the Lloyd's Bank review of January 1982 in which it was stated that a devaluation of 10 per cent. could be expected by 1984 to produce an extra 285,000 jobs in British industry. Those 285,000 jobs are desperately needed and if we are willing now to use all the weapons not simply of money supply but of all other aspects of monetary policy, we can begin to take maximum advantage of the weapons that are at our disposal.
  This was a political Budget and I regard that as a merit and not demerit. I hope that it paves the way for recovery,
  1048
  but I hope also that the Government will make the conscious plans that are necessary to promote that recovery.
  9.10 pm
  Mr. Jack Straw: Never has there been such a conversion on the road to the Whips' Office as the one we have just witnessed by the hon. Member for Loughborough (Mr. Dorrell). He moved so far to the Right in 10 minutes that the hon. Member for Gateshead, West (Mr. Horam) has told me that should he be one of those who applies to join the SDP he will be refused. That is a testament to the way in which he has moved so far—
  Mr. Horam: For the moment, the SDP is satisfied to have the Duke of Devonshire.
  Mr. Straw: The hon. Member for Horsham and Crawley (Mr. Hordern) said that the Budget had been given a good reception. My right hon. Friend the Member for Stoke-on-Trent, South (Mr. Ashley) and my hon. Friends the Members for Walsall, North (Mr. Winnick), Grimsby (Mr. Mitchell), Fife, Central (Mr. Hamilton) arid Motherwell and Wishaw (Dr. Bray) have demonstrated that, although the Budget had a good reception to begin with, that reception is now turning rather sour as the British public are discovering the truth about the Budget and not the veneer.
  I wish to refer to two speeches. The right hon. Member for Worthing (Mr. Higgins) made an interesting contribution—I say that non-pejoratively—about the relationship between public sector borrowing and interest rates. He suggested that the £9 billion expansionary package that my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) proposed would lead to runaway inflation and, as a consequence, to a massive rise in interest rates. The right hon. Gentleman conceded that the relationship between interest rates and the public sector borrowing requirement is complicated. He described it as a Bermuda triangle, and that is surely the case.
  The measure of expansion proposed by the Labour Party in historic terms and by comparison with the expansion of other countries, is modest—to use the adjective of The Guardian, which is not now the loyal and timeless friend of the Labour Party that it once was. The public sector borrowing requirement envisaged by our proposals, about £16 billion in cash terms, represents 6 per cent. of GDP which is exactly the same as the PSBR of the present Government between 1980 and 1981.
  If the right hon. Gentleman believes that there is some type of mechanical and automatic relationship between an increase in the public sector borrowing requirement and an increase in interest rates—that was what he was suggesting in the first part of his speech, although he said something different in the second part—and that £6 billion of extra demand from the public sector would raise interest rates and crowd out investment in the private sector, what about the £6 billion of demand flowing overseas for funds? If public sector borrowing can crowd out private investment, surely borrowing from abroad can crowd out private investment in Britain. This is a point made not only by Opposition Members but by others far more sympathetic to the right hon. Gentleman's view.
  The Economic Secretary to the Treasury (Mr. Jock Bruce-Gardyne): The hon. Gentleman has remarked than his party's PSBR in cash terms would be £16 billion. I take

  1049
  it that this amount is related to the figure given by the right hon. Member for Stepney and Poplar (Mr. Shore) the other day when he talked about a £9 billion addition to spending programmes represented by £5·5 billion on the PSBR. Can the hon. Gentleman explain how the £9 billion on the expenditure programmes can be translated so rapidly through additional income from inflation that the PSBR cost in the first year is reduced to £5·5 billion?
  Mr. Straw: We explained this in a 32-page detailed document. As my hon. Friend the Member for Motherwell and Wishaw (Dr. Bray) has pointed out, the figure of £5·5 billion for the public sector borrowing requirement emerged from the Treasury's own econometric model as a result of a £9 billion expansion. It is normal for Ministers to write to Opposition Members. If the Minister wishes me to write to him to explain how we arrived at the figure, I shall be delighted to do so, provided that he gives me a few days after the Budget debate.
  The hon. Member for Gateshead, West (Mr. Horam) said that the Social Democratic Party, or the section of it that he represents, I assume, is proposing to create £1 billion—
  Mr. Horam: We have no factions.
  Mr. Straw: The hon. Gentleman is obviously not reading the Washington Post with the same assiduity as the rest of us. He proposed that half a million jobs should be created at a cost of £1 billion. That is a cost of £2,000 a job. It is so cheap for a job creation programme that even this Government would have embarked on such a programme if they thought that they could create 500,000 jobs for £1 billion, even over two years, unless it is a make-work road gang programme that involves no real job creation at the end of the day. This really is the politics of make-believe, the waving of a magic wand and the offering of something for nothing.
  Mr. Horam: It is rather less cost-effective, as a matter of fact, than the measures proposed by the Government, which talk of 100,000 jobs at a cost of £150 million.
  Mr. Straw: That may answer my point. In that case, it is simply a make-work, temporary employment scheme. We are not talking about the creation of jobs in the economy that can be sustained. Everyone agrees with that. We are talking about road gangs, make-work and people painting old ladies' houses. That may be useful and beneficial, but it will not improve the production and output of the real economy.
  The hon. Gentleman has also failed to answer the question of the consistency between what the Social Democratic Party says and what the Liberal Party says. The Social Democratic Party says it can provide 500,000 for £1 billion and the Liberal Party says it can provide 500,000 jobs for £6 billion. There is £5 billion between them. The hon. Gentleman says that the difference is that the Liberal figure is a gross cost and the SDP's is a net cost.
  I return to the question put to me by the hon. Member for Knutsford (Mr. Bruce-Gardyne). We have never suggested and would not dream of suggesting that if one expands the economy by £6 billion the increase in the public sector borrowing requirement will be only £1 billion. That flies in the face of everything we know about
  1050
  the relationship between expansion and increases of public borrowing. We have said that, if the economy is expanded by a total stimulus of £9 billion, the Treasury's own econometric model available to us in the Library suggests a public sector borrowing requirement of £5·5 billion. The Social Democratic Party and the Liberal Party must say which is right. Are they saying half a million jobs for £1 billion or are they saying half a million jobs for £6 billion? While the alliance is saying both, they will be believed about neither.
  Mr. Horam: The hon. Gentleman throws so many erroneous statements around that he is confusing himself. The simple truth is that' there is the Labour Party approach that was detailed by the right hon. Member for Stepney and Poplar (Mr. Shore), there is the Government approach and there is the alliance approach. Those are three reasonably distinct approaches which everyone can understand. To talk about figures in the way that he has is totally misleading.
  Mr. Straw: I pass the Liberal Party's document to the hon. Gentleman for him to read during the rest of my speech.
  The catalogue of disaster which has befallen this nation is too well known by all of us for me to go into it at great length, but it bears repeating briefly. It provides the yardstick by which the House and the nation must measure the Government's performance against their promise. There are 3 million unemployed on the register and a further 1 million out of productive work who are not registered, either because they are out of benefit, or their hope of work has been exhausted, or because they are engaged on the many make-work schemes of the Government.
  Mr. Higgins rose—
  Mr. Straw: I shall not give way.
  There are tens of thousands of school leavers facing the prospect of not finding secure employment in the foreseeable future. One in five of our factories have been shut down by a Thatcher blitz which has had a far more devastating effect on the British economy than even the Luftwaffe of the Third Reich. The decline in industrial production and the disruption to the British economy has been fact greater during the last three years than it was at any stage during the war.
  There are towns and cities, regions and countries such as Scotland and Wales, laid waste by the Government's scorched earth approach. In areas such as mine in North-East Lancashire, good people, with an unparalleled record of high productivity, good industrial relations and the lowest wage rates in the country, have seen their lives fall apart as factory after factory has been shut down and Government aid has been taken away. Their families face a life on the dole, with benefits cut and cut again by the Government. They are losing £13 per week as a result of the abolition of the earnings-related supplement and the 5 per cent. cut when the taxation of benefits was introduced. Everybody in work has seen his tax burden rise with his income squeezed by the rise in income tax and in indirect taxes. That is a matter which caused the parliamentary disintegration of the Chief Secretary yesterday and more consternation and confusion among Treasury Ministers and officials than we have witnessed for a long time. That is a question to which I shall come in due course.

  1051
  Try as they may to twist the truth of what is happening to the nation, even this Government know that in the end they cannot mask the reality for long. When they try, as they did yesterday, to mislead and to obfuscate, it only brings the reality to even greater attention.
  Mr. Higgins rose—
  Mr. Straw: I have already given way to the right hon. Gentleman once.
  Because the Government cannot twist the truth for long they are now seeking—
  Mr. Higgins: I did not want to interrupt the hon. Gentleman's hatchet job on the SDP, but he totally misrepresented what I said, as the record will show. Can he explain how this enormous increase in demand of £9 billion tax cuts, £5·5 billion increase in the PSBR, and so on, will not result in an inflationary spiral in which prices and wages clearly chase each other upwards? What will he do about pay in the circumstances that he wants to generate?
  Mr. Straw: I shall send the right hon. Gentleman a copy of the 32-page document which goes into the matter in detail. I allowed the hon. Member for Loughborough (Mr. Dorrell) 10 minutes to speak, so I should be grateful if Conservative Members would allow me time to complete my remarks without constant sniping from the hon. Member for Croydon, South (Sir W. Clark).
  The Government know that they cannot twist the truth for long about today's reality. What they are now seeking to do is to twist the truth about their own promises, and to suggest that what they said all along was that it would be as rough as it has been and that they always knew that the tax burden would increase, that unemployment would double and that the monetarist medicine would take not one Parliament but two to work through and might kill the patient in the meantime. After all, that was the Chancellor of the Exchequer's central claim when he began his Budget Statement—a claim given even more prominence when he went on television to explain his Budget to the nation. He said:
  "Putting Britain back on course was going to be a long haul. It would take more than one parliament. We'd been saying that long before we were elected and most people, I think, realised that we were right because they knew that the economy had been going downhill for a very long time."
  That point was repeated in an extraordinary performance by the hon. Member for Loughborough. Indeed, no myth has been more sedulously fostered by this now desperate Government and none bears so little relation to the truth.
  Of course, the Chancellor of the Exchequer may have some small print somewhere and some alibi, but the message in the Tory manifesto did not contain a word about two Parliaments. The Prime Minister's messages to the nation contained not a word about two Parliaments, nor did the Chief Secretary's message to his constituents in Cleveland and Whitby. Indeed, on 3 August 1978, in what the Chancellor of the Exchequer thought was the run-up to an October election, he said:
  "'Of course, we should want to alter the whole climate as soon as possible, not least because the benefits will be some time a-coming. That is why we are talking about three to four years.' "
  That brings us to the present year of grace, 1982. The right hon. and learned Gentleman continued:
  "Fighting inflation is top priority, with the eventual aim of reducing British inflation to between 2 or 3 per cent. in about three years' time."
  1052
  According to The Times on 3 August 1978, the right hon. and learned Gentleman promised that inflation would fall to 2 per cent. or 3 per cent. not this year, but last year. Finally, the right hon. and learned Gentleman said:
  "'Of course, we should not want to proceed in such a way as to produce what some people would call a dramatic short-term recession.'"
  The only difference between that promise and what happened is that the Government produced not a dramatic short-term recession, but a dramatic long-term recession.
  I turn to what was said on the doorstep. I am indebted to the Whitby Labour Party for letting me have a copy of the Chief Secretary's election address. No doubt he would wish to bury it in the nearest refuse dump, but the Whitby Labour Party sees it as the most fitting memorial to the catalogue of broken promises that litter it. There is no suggestion that unemployment will double or that there will be even a short-term recession or that taxes will increase. First, the Chief Secretary proposed a substantial increase in public expenditure in his area, because he wanted Whitby to be designated as a special development area. That was at a time when unemployment in Whitby stood at 11 per cent.
  The following July—after the Chief Secretary had been elected to Parliament—the Government not only refused to confirm development area status, but downgraded the district to an intermediate area. Now that unemployment has risen from 11 per cent. to 23·6 per cent.—one of the highest levels in the country—the Chief Secretary, as the man who has to guard public expenditure, is writing to the Whitby trades council and Labour Party telling them that the area cannot even be upgraded to a development area. That is the measure of that promise.
  When I turn over the election address I see that the Chief Secretary went even further than the pledge in the Conservative manifesto. The manifesto spoke about cutting income tax at all levels, but the Chief Secretary expanded that promise and said that taxes on income were to be cut at all levels. That includes not only income tax , but national insurance.
  Mr. Major rose—
  Mr. Straw: I shall not give way as I have only five minutes left in which to speak.
  Mr. Major rose—
  Mr. Straw: I am sorry, but I shall not give way.
  Mr. Major rose—
  Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. The hon. Member for Huntingdonshire (Mr. Major) knows that the hon. Member for Blackburn (Mr. Straw) is not giving way.
  Mr. Straw: We then come to the peroration of that election address:
  "Let's get Britain moving again and hold our heads high once more."
  Sir William Clark rose—
  Mr. Straw: No, I shall not give way. The hon Gentleman knows very well why. It is not because I am. worried about his question. It is because I have already given away 10 minutes to a Conservative Member.
  The message that was given by the Chancellor and by the Chief Secretary was the same message that was given

  1053
  by the Prime Minister. She did not say that it would take a Parliament or two for the medicine to work through. She said:
  "Another Labour accusation is that the Tories plan to increase unemployment."
  She said that that was wrong and that
  "we say Labour isn't working. They are the Party of unemployment. We are the Party of opportunity."
  The promise was of less and not more tax, and less and not more unemployment—of prosperity and a new beginning, not of slump and despair.
  Every major pledge made by the Conservatives has been abjectly broken. Unemployment has doubled, and it will rise still further as a result of the Budget and the December measures. Indeed, the right hon. Member for Chesham and Amersham (Sir I. Gilmour) said that unemployment would rise remorselessly for the rest of next year.
  No pledge was more categorically stated in the Conservative manifesto than the pledge to cut direct taxation, and none has been more dramatically broken by the Government. As my hon. Friend the Member for Walsall, North pointed out, the burden of direct taxation at every level of income except for the very rich has risen in every one of the Government's Budgets except the first and now stands very much higher than it did in the last year of the Labour Government.
  The poorest families, those on half average incomes, are paying 18 per cent. of their income in direct tax, compared with only 12 per cent. in 1978–79. The person on average income, if he were now paying the same proportion as he was under Labour, would have a £6 per week smaller tax bill than he has today even after the Budget. The very rich, however, have done extremely well. Cabinet Ministers have found that their take-home pay has increased by £35 per week as a result of changes in taxation for the rich. [Interruption.] These figures were given by the Treasury on 3 December last year and on 17 February this year. Taxation on the very rich—the person earning 10 times the average income—has fallen by £202 per week.
  If there are two conspicuous elements in the last four Budgets, they are, first, that the dole queue has become longer after each Budget, and, secondly, that the rich have done better than ever before. In the last three Budgets, £2,300 million was given away by the Conservatives to the very rich, and a further £555 million has been given away in this Budget. What is so shameful about the Government is the contrast between the way in which they have treated the rich and the way in which they have treated the poor. And what is so shameful about the so-called wets is the way in which, while parading their consciences and suggesting that the Government ought to help the weakest and neediest in society, they have at every stage trooped through the Lobby to support the Government and to vote for policies which do the exact reverse.
  The immorality of the Government is that even within their own programmes and strategy they had a choice. For example, instead of indexing capital gains tax, which makes capital gains tax a joke, they could have restored the 5 per cent. cut in benefits as a result of taxation. They could have made that choice. They could have made a choice not to raise the threshold for capital transfer tax and instead have done something about the taxation of the poor
  1054
  in work. Every time, when faced with such a choice, the Government have chosen to favour the rich and not the poor and the wets have chosen to back them.
  Last December, when the first part of the Budget was announced, we derided the expenditure proposals of the Chief Secretary and the Chancellor. They said that they were not deflationary. Yesterday the Chief Secretary described the suggestion that the Budget was deflationary as fantastic, the Chancellor said today that it all depended, and the Financial Secretary said that he could not answer the question. I will answer it.
  What we know for sure is that this is another Budget for unemployment, another Budget against the poor, another Budget for the rich, and another Budget that will be damaging and destructive to the British economy. We also know that there is an alternative that my right hon. Friend the Member for Stepney and Poplar spelt out yesterday. It gives in detail a prescription for getting the country back to work.
  We do not pretend that it will be easy. It will be more difficult to create 2 million jobs than it has been to destroy them. But the policy will work. It is the only policy that will give this nation and its unemployed work in place of idleness and hope in place of despair.
  9.37 pm
  The Economic Secretary to the Treasury (Mr. Jock Bruce-Gardyne): I was not sure that the hon. Member for Blackburn (Mr. Straw) was going to get round to discusing the Budget. He spent a long time on various election addresses and a certain amount of time on the Social Democratic Party. I thought that he was a little unkind to the hon. Member for Gateshead, West (Mr. Horam).
  He seemed to forget that this has been a great day for the Social Democrats. They have attracted a great convert. As we know, the cellars of Chatsworth are open to the claret-drinking set. I suppose it is a fair exchange. I believe that the noble duke once elected Mr. Roy Jenkins, the candidate in Hillhead, to a celebrated and exclusive club over which his grace has a certain proprietorial interest. Now Roy Jenkins is doing the same by him, so I suppose that is fair enough. In those circumstances if the hon. Member for Gateshead, West indulged in some improbable arithmetic, even by the standards of the Opposition Front Bench, it would be unfair to cavil tonight.
  The third day of the Budget debate is traditionally dominated in the early stages by discussion of the social security uprating announced by the Secretary of State the day before. Today has been no exception. Hon. Members on both sides of the House have ranged wider, as it is appropriate that they should.
  In general it is fair to say that hon. Members on this side of the House have given my right hon. and learned Friend's Budget a warm welcome. [Interruption.] I have not heard otherwise. My right hon. Friend the Member for Worthing (Mr. Higgins), whose contribution unfortunately I did not hear, but of which I have had a full report, was characteristically generous and constructive. His was a most valuable and effective contribution. The speech of my hon. Friend the Member for Bath (Mr. Patten), towards the end was perhaps—dare I say it—a little Butleresque, and none the worse for that.
  The response from the Opposition Benches has been one rather of divine discontent at having little to be discontented about. It was all rather well summed up by

  1055
  the attitude of the right hon. Member for Stoke-on-Trent, South (Mr. Ashley) who came near to denouncing my right hon. and learned Friend for committing the crime of responding so positively to a campaign that for years has been directed in vain at Governments of both parties by the disabled and those who speak for them, by exempting the mobility allowance from tax.
  It appeared that the right hon. Gentleman had had his fox shot. The right hon. Gentleman and I have been associated for many years with one small national charity for the disabled. I share to the full the respect in which he is held in the House for his work for the disabled. However, there is no group in our society more vulnerable to the ravages of inflation than the disabled. If we listened to one tenth of the advice given in this debate from the Opposition Benches, the disabled would be far more damaged by inflation shooting through the roof than by lack of any of the additional aids for which the right hon. Gentleman and others have asked.
  Several right hon. and hon. Members, including the hon. Member for Pontypridd (Mr. John) and my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour), who explained why he could not be present tonight, tended to repeat the canard that the Government are planning for higher unemployment. They are planning no such thing. All that they are doing, as their predecessors did for many years, is to look to the Government Actuary to produce a working assumption. The hon. Gentleman should know that very well. It is not a forecast. It certainly is not an intention. It is what it says—a working assumption.
  When the hon. Gentleman points, as he did today, to the fact that the unemployment level assumed over the planning period in the White Paper is unchanged, he seems to have forgotten that the last White Paper produced by his own Government gave a precisely similar unchanged assumption—and for the same reasons—over the planning period of their White Paper.
  Mr. Straw: If it is just a planning assumption, how is it that the Government Actuary and the Government changed their estimate of unemployment for 1981–82 from 1·8 million—the figure that first appeared in the 1980–81 White Paper—to 2·6 million, which appeared in the December statement just before Christmas? If it is just an assumption, why is the assumption for this year increased by 800,000? Secondly, will unemployment go up or down for the rest of this calendar year?
  Mr. Bruce-Gardyne: If I had known that the hon. Gentleman intended to make another speech, I would not have given way. The answer is very simple, and the hon. Gentleman should know it, without wasting the time of the House. A working assumption is something that comes to be revised, of course, as one goes forward and the evidence changes. That is the nature of a working assumption, whether under the hon. Gentleman's Government or the present Government. There is no change in that. The hon. Member for Pontypridd suggested that a 60-year-old unemployed man who decided to take his name off the register, and thereby claim entitlement at the higher long-term supolementary benefit rate, would, by Budget resolution 30, be clawed back into the tax net. I assure the hon. Gentleman that that is not so; resolution 30 does not have that effect.
  Before I answer some of the points raised in the debate, I want to deal with one or two matters of detail about which
  1056
  I think that it would be for the convenience of the House to add briefly to what my right hon. and learned Friend told the House on Tuesday. I begin with a word about duty deferment. Hon. Members who follow these matters will know that the wine and spirits industry has argued for several years that it should enjoy the right already enjoyed by the brewers and cider-makers to defer payment of Excise duties for up to six weeks after the date at which the duty formally becomes liable.
  It has been argued in support of these representations that our present rules are in conflict with our Community obligations. I am satisfied that this is not the case, since in general we treat home-produced products and imports alike in this respect. The only doubtful areas to date have concerned imports of beer, cider, made-wine and matches. It is for that reason that we have decided to extend duty deferments to imports of these goods from the European Community where the quantities are small and the cost of duty deferment is minimal.
  We have looked carefully and sympathetically at the case for extending duty deferment to wines and spirits. We are aware of the difficult trading conditions facing the domestic spirits industry, and it is for this reason that my right hon. Friend decided not to revalorise the duty on spirits to take full account of inflation in this year's Budget. But we have reluctantly concluded that we could not also provide the duty deferment sought by the trade, which would involve a once-and-for-all loss to the Exchequer of some £200 million and a continuing interest cost of the order of £25–30 million at current rates of interest.
  I now want to talk about bingo duty in the light of the review .[Interruption.] The hon. Member for Fife, Central (Mr. Hamilton) may laugh but these are matters upon which the House has to be informed, and interested parties outside the House need this information. My right hon. and learned Friend the Chief Secretary announced last July a review of the duties. The present exemptions relating to bingo played as an activity at a club or at an entertainment are to be replaced by a new exemption based on the level of prizes. If these exceed £300 in any one day or £1 ,000 in any one week, the club or other promoter will become liable for duty on all bingo promoted over the next three months. Liability will cease when the limits have not been exceeded for 13 consecutive weeks. We believe that this will be fairer to all concerned, and it reflects the balance of representations received during the course of our review.
  There is one further matter to which I must allude, which is Budget resolution 21, providing for some changes in the operation of the Excise duties regulator. Hon. Members with long memories will recall that I have never been a dedicated enthusiast of fine tuning, but since we have the regulator it seems sensible that it should be available for use in a convenient form. [Interruption.] That does not come under the regulator. At present, the regulator relating to tobacco products can be applied discriminately between one tobacco product and another. Not so the regulators relating to alcoholic drinks or hydrocarbon oils. As things stand, each of these can be made to go up in a group or down in a group, but the Chancellor is not empowered to increase the duty by the regulator on, say, beer while leaving the duty on spirits alone, or vice versa. Nor can he raise the duty on derv whilst leaving the duty on petrol alone. This seems illogical. Resolution 21 is designed to give the Chancellor

  1057
  that degree of greater flexibility. I should perhaps add to satisfy any idle curiosity that the fact that we are proposing this change does not indicate any firm intention to make use of it.
  I now want for a moment or two to refer to some of the contributions that have been made in the debate. First of all, might I pick up some of the comments that have come from right hon. and hon. Gentlemen on the Labour Benches on the subject of unemployment, which is bound to be a theme of this debate. I make no complaints about that at all. It really will not do for Labour Members to talk as if mouthing slogans about commitment to full employment will resolve-the problems of the dole queues in this country. They have existed for years and from one cycle to the next the level of unemployment has risen under Governments of different persuasions, from one generation to the next over the whole of the last 20 years.
  Mr. Winnick rose—
  Mr. Bruce-Gardyne: No, I am not going to give way to the hon. Gentleman. I do not have the time.
  To my mind, it is abusive of the unemployed to try to pretend that there is a solution to be found in commitment without any genuine policy intentions lying behind it.
  The truth is that all our experience under successive Governments shows that from one business cycle to the next, the more we have attempted to reflate the economy to full employment, the less successful we have been in achieving that. The Brookings Institution, when it surveyed the United Kingdom economy in the 1970s during the period of office of the previous Labour Government, reckoned that out of every £100 of additional public expenditure, £92 went out in extra imports and prices and just £8 went into additional employment that otherwise would not have occurred.
  Today the trade-off would be worse. That is why it is so vital that we should continue to tackle some of the structural barriers to employment that we have erected. That is why my right hon. and learned Friend said in his Budget speech that the ground between the levels of wages that were too often artificially fixed and the levels at which additional employment could be created is ground that must be explored and developed. That is where the potential of constructive schemes such as the community work project will be so valuable in the months ahead.
  I shall comment briefly on one or two of the other points that have been made in the debate. My hon. Friend the Member for Perth and East Perthshire (Mr. Walker) talked of petrol in rural areas. We accept that in rural areas the prices have not fallen at the petrol pump to the extent that they have elsewhere, so the impact of4the increases in petrol duty is more acute. It is for that reason that my right hon. and learned Friend moderated the increase in petrol duty to an extent that otherwise would not have been justifiable.
  Mr. Tim Eggar: Will my hon. Friend give way?
  Mr. Bruce-Gardyne: I am sorry, but I shall not give way. I have given way several times and I still have some more reading to do before I finish my speech.
  The hon. Member for Motherwell and Wishaw (Dr. Bray) said that the Labour Party was united on an incomes
  1058
  policy. As such a policy is now called a national assessment, it is not difficult to be united on that. However, unfortunately the hon. Member for Blackburn, judging by his reply to the intervention made by my right hon. Friend the Member for Worthing, did not know what the national assessment was or what the subject of agreement in his party might be.
  Many of my hon. Friends commented on the valuable contribution that the Budget makes to the health of the construction industry. That is right. I am glad that that has been welcomed so widely.
  My hon. Friend the Member for Horsham and Crawley (Mr. Hordern) made an effective contribution, as always. He raised doubts about our wisdom in derestricting indexed gilts. My hon. Friend the Member for Loughborough (Mr. Dorrell) took the opposite view. That matter has been the subject of great debate, as my hon. Friends know.
  Understandably my hon. Friend the Member for Horsham and Crawley was concerned about the implications of the spread of index-linked obligations into the future, given the potential irresponsible behaviour of Governments, even, occasionally, Governments of both political parties. I entirely take his point. However, we must ask ourselves what signal we give to savers and others about inflationary expectations if we are issuing long-dated gilts at 16 per cent. or more right on into the twenty-first century. That is now the alternative—
  Mr. Hordern rose—
  Mr. Bruce-Gardyne: I will not give way because before concluding I want to refer to another subject mentioned by several of my hon. Friends and other hon. Gentlemen—the future of the Government's monetary policy.
  An attempt was made to write the epitaph of the medium-term financial strategy, so let me try tonight to set the record straight. Personally, I have never gone along with the line that if the Government are attacked from two opposing flanks, as they are on this point, that proves that they must have got it right. On the other hand, as one who has, throughout the past decade, supported the view that monetary continence is a necessary although not a sufficient precondition for the successful conquest of inflation, I have always recognised the need to take account of the behaviour of all the relevant monetary indicators.
  I remind the House that my right hon. and learned Friend the Chancellor said last year that the Government had to watch not only the performance of sterling M3, but also the performance of other wide aggregates, particularly PSL2, the narrow aggregate M1 and the exchange rate. Surely that is only common sense.
  Those who know about these things will be aware of something called "Goodhart's law". That has nothing to do with my hon. Friend the Member for Beckenham (Sir P. Goodhart), but he and my right hon. Friend the Chief Secretary have relatives, according to whom, the choice of a monetary indicator leads to its distortion. Whatever the validity of that proposition, it is undeniable that the rapid advance of the clearing banks into the housing finance markets over the past 12 months has obscured the message coming from sterling M3. This comes on top of the distortions of the Civil Service dispute and the adjustment to the monetary system following the abolition

  1059
  of exchange control and the corset. As the Red Book makes plain, the exchange rate is both a transmission mechanism by which monetary policy impinges on domestic prices, and an indicator of the stringency or laxity of financial conditions.
  Mr. Winnick: Do you understand that?
  Mr. Bruce-Gardyne: I did when I wrote it. Experience suggests that there has been a growing propensity for savings to be held in money balances: this is the main reason why a relatively fast rate of growth in sterling M3 has been consistent with a slackening in the pace of inflation.
  To ignore this evidence, as some commentators would have us do, by sticking with a sterling M3 target for the year ahead—which was chosen indicatively before this evidence became available—would run the risk of applying an excessive tourniquet to the economy. That is why my right hon. and learned Friend has set a target of 8 to 12 per cent. for both broad and narrow monetary aggregates.
  My right hon. and learned Friend has reaffirmed the Government's overriding commitment to the goal of stable prices. As inflation falls, and interest rates with it, there may be a tendency for the growth of the narrow aggregate M1 to accelerate somewhat. That is because M1 is largely made up of non-interest bearing deposits, so it will normally grow slowly when interest rates are high. However, as interest rates fall, there may be a shift back into non-interest bearing deposits, increasing the rate of growth of M1. That would not be a cause for concern if it had no effect on the level of spending, but we shall have to pay close attention to M1 in case an excessive level of spending does result. Therefore, we shall watch the performance of all the aggregates and other evidence, including the exchange rate, to ensure that we continue our progress along the chosen path of steadily decelerating inflation.
  Many hon. Members have sought to argue the case yet again of combining a cut in interest rates and an increase in borrowing. It was argued that our interest rates are essentially determined by what is happening on the other side of the Atlantic. Of course, that is true and nobody has sought to deny it. We cannot stand aside from the impact of international exchange rate pressures. It is also indisputably true, and all our experience shows, that the less we depend on borrowed money and the lower the domestic pressure on interest rates, the less excessive will be the level of interest rates upon which external forces impinge.
  We could not have escaped the movement in interest rates last autumn. If my right hon. and learned Friend had followed the irresponsible advice given by others at the time of the last Budget, the impact on external interest rate pressures would have begun to pull on much higher levels of underlying interest rates.
  The Budget has been described by my right hon. and learned Friend as a Budget for business and a Budget for the people.
  It being Ten o'clock, the debate stood adjourned.
  Debate to be resumed on Monday next.

  Mr. and Mrs. Wall (Holiday Insurance)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Goodlad.]
  10 pm
  Mr. John Heddle: I am very grateful to you, Mr. Deputy Speaker, for affording me the opportunity to raise an issue which directly affects .5 million or more people who are currently contemplating where to take their holidays this summer. Some will explore some part of England's green and pleasant land while others will seek adventure farther afield. The vast majority will book a package holiday with a recognised tour operator, who will probably be a member of the Association of British Travel Agents. In so doing, the majority of package holiday makers this summer will run the dire risk of being inadequately covered for insurance purposes should some personal accident befall them due to circumstances entirely beyond their control during their holiday.
  In illustration of my contention, I propose to describe briefly to my hon. Friend the Under-Secretary of State for trade, whom I am pleased to see in his place—I take the opportunity of apologising to him for detaining him and delaying his departure to points north of the border—the case of Mr. Robert and Mrs. Sheila Wall of 12 , Barcliffe Avenue, Tamworth.
  In 1976 Mr. and Mrs. Wall booked a holiday with a firm of tour operators that is well known to the House—Silver Wing Holidays, which is a subsidiary of British Airways—and that holiday took them to the Martina hotel in Tenerife. As was the custom in those days—indeed it is still the custom—Mr. and Mrs. Wall were given the option by the tour company of effecting a personal accident insurance policy to cover
  "the loss of one or both limbs, total or irrecoverable loss of all sight in one or both eyes or permanent disablement"
  to the extent of £1,400. The standard form of cover that is more commonly effected today is not £1,400 but £5,000. I stress that this personal accident cover is not obligatory. The holiday-maker has the opportunity of telling the tour operator that he or she has no wish to effect such cover. It is not obligatory; it is discretionary.
  In the case of Mr. and Mrs. Wall there was no clause in the booking form, or the booking conditions, excluding the tour operator from liability for personal injury caused to them, nor was there a clause in the booking form indicating that the tour operators did not own or control the hotel, the Martina hotel in Tenerife.
  Mr. and Mrs. Wall had the misfortune to stay at the hotel at a time when it caught fire. Although the hotel, no doubt, complied with the national and local regulations on hygiene, fire and general safety, and whose condition no doubt satisfied the representatives of the tour operators, Silver Wing Holidays, which I have no doubt made regular and periodic inspections, the secondary fire escape, an external fire escape with a wrought iron gate at the bottom, was padlocked as a security measure during the night. I imagine that that was so not only on the night in question but on most nights.
  Mr. and Mrs. Wall became trapped in the hotel on the night of the fire. Their only means of escape was by knotting sheets together, throwing the sheets out of the window and trusting their luck that the sheets would hold

  1061
  until they reached terra firma. Inevitably the sheets broke, and Mr. and Mrs. Wall fell to the ground from a great height. Mrs. Wall sustained injuries so severe, extensive and critical that she is now permanently disabled and destined to spend the rest of her life in a wheelchair—a dismal prospect at the age of only 43.
  Mr. and Mrs. Wall returned home, claimed on their personal accident insurance cover and received the sum for which they had insured of £1,400. They also decided to sue the British Airways subsidiary, Silver Wings Holidays, for damages which they had sustained. I should add here that there is no evidence whatsoever of negligence on the part of the tour operator in selecting the hotel for inclusion in its brochure. I should further add that in raising this case tonight, I am implying no criticism of British Airways or of their tour subsidiaries, Enterprise Holidays, Sovereign Holidays or Silver Wing Holidays. The executives of these companies have all along been extremely sympathetic to Mr. and Mrs. Wall's plight. Indeed, both they, their solicitors and I, in dealing with this case for some months now, have received nothing but the closest co-operation from the company concerned.
  Mr. and Mrs. Wall pleaded their case here in the Queen's Bench Division in Birmingham before Mr. Justice Hodgson in November. They pleaded their case on the basis that there was a contract between the tour operator and the customers to provide hotel accommodation, and that there was an implied term in the contract that the accommodation was reasonably safe for the purposes the customers of the tour operator were invited to be there. It was further pleaded that, as a result of the wrought iron gate being locked on the night in question, there was a breach of implied care, and that, as a result of that breach, Mr. and Mrs. Wall were injured.
  However, their case was further complicated because of the nature of the contract between the customer and the tour operator and, of course because the hotel was in Tenerife, which is outside the jurisdiction of English courts. The Walls' case was even further complicated because of the intricacies and uncertainties of international legislation.
  For those and other reasons which he set out in his judgment in some detail, Mr. Justice Hodgson summed the case up thus:
  "with considerable regret but with no hesitation I acquit the Defendants (Silver Wing Holidays) of negligence."
  With hindsight, Mr. and Mrs. Wall would have been in a better position today if their personal accident cover had been set at a more realistic level. However, they probably thought, just as 5 million holidaymakers sitting at home browsing through seductive brochures today are thinking, and just as I thought when I booked my first package holiday some 20 years ago—"It can never happen to me".
  In describing the tragic case of my constituents, I seek to highlight the fact that, in view of the problems of international litigation and the difficulty, in any event, even if one is successful in litigation, of enforcing court judgments in other countries, the package holidaymaking public are at great risk from the wilful or innocent negligence of others in general and hotel operators in particular, if they do not include in their holiday baggage a realistic personal accident cover.
  I therefore suggest to my hon. Friend, at least in the case of holidays taken with a subsidiary company of the
  1062
  nationalised airline, and if it is possible with those companies reputable enough to the members of the Association of British Travel Agents, that personal accident cover should be mandatory, and that it should be set at a more realistic level than the discretionary personal accident cover incorporated in holiday booking forms, as I described, of £5,000. I suggest that a realistic personal accident cover should be £15,000 per person per fortnight, three weeks, or month.
  I understand from the British Insurance Association, which supports my proposition in principle, that the premium on £15,000 per person would be about £1 per thousand, which is a £15 once and for all payment, compared with the standard rate of discretionary cover of £5,000 where the premium is £8·50. If the British Insurance Association and the insurance industry generally—which leads the world—were to effect a global insurance package for 5 million package holidaymakers, the premium would be considerably reduced on a quantity discount basis.
  That is the first proposition that I wish to put to my hon. Friend—that the great British public should be better protected against personal accidents sustained while on holiday abroad due to the negligence, either wilful or innocent, of others to the level of £15,000 and not £5,000. Secondly, the package holidaymaking public may be given greater protection and a more satisfactory solution may perhaps be found in arbitration. I commend to my hon. Friend the suggestion that has been brought to my attention by the Chartered Institute of Arbitrators that arbitration contracts should be entered into by tour operators and the overseas hotel operators to enable tripartite arbitrations to take place when appropriate. That would also give much greater protection to the holidaymaker.
  We know that we cannot leave the House tonight in a motor car that does not have a current insurance policy. My hon. Friend the Member for Northwich (Mr. Goodlad) would also agree that if our houses are mortgaged with a building society a condition of the mortgage is that we must effect comprehensive insurance cover. On the same basis, is it not reasonable to suggest that if one is putting one's life into the hands of others—some Continental hotels are known to have lower safety standards than hotels in Britain—one should be adequately protected, especially if the consequences of the wilful or innocent negligence of others lead to such dire and far-reaching circumstances as occurred to Mr. Robert and Mrs. Sheila Wall of Tamworth?
  Had either or both of the solutions that I am putting forward tonight been adopted when Mr. and Mrs. Wall booked their holiday of a lifetime in Tenerife they would not be in such tragic and dire straits today.
  10.12 pm
  The Under-Secretary of State for Trade (Mr. Iain Sproat): My hon. Friend the Member for Lichfield and Tamworth (Mr. Heddle) has described the very distressing experiences of Mr. and Mrs. Wall, whose holiday had such tragic consequences. I should like to place on record my own sympathy for the unhappy position in which they now find themselves. At the same time, I must commend my hon. Friend on his decision to raise this matter in order to focus attention on the wider issue of holiday insurance.
  I should first like to describe briefly the structure of the package holiday industry and the present arrangements for

  1063
  providing holiday insurance. The principal trade association for the travel industry is the Association of British Travel Agents, or ABTA, as it is frequently known. Its members are either tour operators who put together and provide holidays, usually in a packaged form, or retail travel agents whose job it is to sell the tour operators' products. Some ABTA members will operate in both classes. All members are required to observe codes of conduct as a condition of their membership. Compliance is monitored by ABTA, and from time to time by the Director General of Fair Trading, who has given his support to those codes.
  Under the current code for retail agents, they are required to draw the attention of their clients to the insurance facilities and cover available for the holiday and to indicate any exclusions and limitations so that their clients may seek additional cover if deemed desirable or necessary.
  Tour operators under their code are not permitted to print insurance details on the booking forms in their brochures unless the same details are provided separately to each client on or before confirmation of the booking. This ensures that the client will be able to retain a copy of the details of insurance available to him. Operators generally make clear in their brochures the importance of insurance and some go so far as to ask the client for the name of the insurer being used if the one provided by the operator is not being accepted.
  There is keen competition among insurers for travel insurance business and policies are constantly reviewed to meet the requirements of the travelling public. British Airways, for example, has negotiated special holiday insurance schemes for its clients taking its Sovereign and Enterprise holidays with Home and Overseas Insurance Co. Ltd. For its Speedbird Flydrive holidays, a scheme has been arranged with Norwich Union. Both insurers are United Kingdom authorised.
  It is clearly a matter for holiday organisers, such as British Airways, which insurance policies they choose to offer their clients. Personal accident cover now offered by British Airways' insurance is for £5,000 for permanent total disablement. The cover in the Extrasure policy offered by ABTA is the same, although medical expenses can be covered up to £50,000, or more in certain circumstances. If a holidaymaker wishes to obtain higher cover for personal accident he may seek advice from brokers, agents or insurers direct, but he will have to pay a higher premium for more cover.
  Apart from the efforts of tour operators and retail agents to bring insurance cover to the attention of their customers, the Office of Fair Trading has produced a leaflet about package holidays, including insurance cover. The leaflet is available through local consumer advisers, many public libraries and from the Office of Fair Trading itself. In the section on insurance, the leaflet underlines the importance of taking out insurance at the time of booking a holiday. It goes on to suggest that the insurance provided in the holiday brochures should be compared with the schemes which the travel agent can arrange independently.
  Alternatively, it goes on, the holidaymaker may make his or her own arrangements with his or her own insurance company. I need hardly add that this advice from the Office of Fair Trading applies whether or not a holiday is booked through or with an ABTA member. The Foreign
  1064
  and Commonwealth Office, through its Passport Office, issues an essential information leaflet of advice for United Kingdom passport holders who travel abroad. This has a section on insurance which stresses the need for taking out insurance against illness and injury and for making sure that the cover is adequate.
  My hon. Friend has suggested that we should seek to persuade ABTA to make the provision of insurance compulsory with all package holidays and I should like to say something about the Government's attitude towards compulsory insurance particularly.
  The legal obligation to take out private insurance has always been imposed sparingly, usually to ensure that those who suffer injury or bereavement as a result of an accident caused by someone else are not deprived of the compensation due to them through that person's inability to pay.
  Compulsory third party motor insurance, which my hon. Friend rightly mentioned, is an example with which we are all familiar. A system, however, of first party insurance against risks voluntarily undergone—I am sure that my hon. Friend will accept that it is unlikely that people will travel abroad on holiday except of their own free choice—would, I believe, be something of a departure. I also suspect that effective enforcement would prove troublesome to the traveller and would be unlikely to be generally popular.
  If the Government are not prepared to impose an insurance requirement on package holidays, it seems to me that it would not be defensible for them to seek to persuade ABTA—or any other body—to do so. I am satisfied that there already exist satisfactory arrangements to ensure that potential holidaymakers are made aware of the importance of taking out insurance cover and that there is cover widely available at reasonable cost.
  As to the second suggestion made by my hon. Friend about arbitration, he will know that ABTA already supports the arbitration scheme for the travel industry rt. n by the Chartered Institute of Arbitrators. I understand that the institute's latest suggestion represents only its initial thoughts on the subject. To succeed, such a proposal would also require the agreement of overseas hotel operators. I am sure that ABTA will take very careful note of my hon. Friend's remarks, but again I do not see this as being an area for Government intervention.
  The case described by my hon. Friend is a very sad one. I have no doubt, too, that some other holidaymakers suffer mishaps of varying severity. It will be of little comfort to Mr. and Mrs. Wall and to other sufferers, but the fact remains that the vast majority of holidaymakers on package holidays abroad return home without the need to call upon their insurances.
  Even though I do not accept that there is a need for Government action on the lines requested by my hon. Friend, I believe that he has performed a useful service by focusing attention on the issues raised by his constituents' unfortunate experiences. If, as a result of this short debate, holidaymakers are persuaded to take a closer look at the need for, and the cover of, holiday insurance, he will have rendered a very valuable service.
  Question put and agreed to.
  Adjourned accordingly at twenty-one minutes past Ten o' clock.

TRADE
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DEFENCE
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  Republic of Ireland Citizens
  RAF Kemble
  RAF Kemble
  Trident Depot, Loch Long
  Trident Depot, Loch Long
HOME DEPARTMENT
  Glue Sniffing
  Glue Sniffing
  Bullwood Hall Borstal
  Bullwood Hall Borstal
  Unconvicted Persons
  Unconvicted Persons
  Television Licences (Non-possession)
  Television Licences (Non-possession)
  Brixton Prison (Incident)
  Brixton Prison (Incident)
  Immigrants
  Immigrants
  Mr. Vijay Kumar Bagga
  Mr. Vijay Kumar Bagga
  Immigration Rules
  Immigration Rules
  Crime Statistics
  Crime Statistics
  Summer Time
  Summer Time
  Television (Wales)
  Television (Wales)
EMPLOYMENT
  Road Transport Industry (Training)
  Road Transport Industry (Training)
  Unemployment Statistics
  Unemployment Statistics
  Youth Opportunities Programme
  Youth Opportunities Programme
  Noise and Hearing Protection
  Noise and Hearing Protection
AGRICULTURE, FISHERIES AND FOOD
  Slaughterhouses
  Slaughterhouses
  Common Agricultural Policy
  Common Agricultural Policy
  Animals (Ritual Slaughter)
  Animals (Ritual Slaughter)
SOCIAL SERVICES
  Blood Supplies (Private Hospitals)
  Blood Supplies (Private Hospitals)
  Noise and Hearing Protection
  Noise and Hearing Protection
  Dental Therapists
  Dental Therapists
  Regional Health Authorities
  Regional Health Authorities
  District Health Authorities
  District Health Authorities
  Health Authorities (Land Requirements)
  Health Authorities (Land Requirements)
  Health Education Council
  Health Education Council
NORTHERN IRELAND
  Industrial Investment
  Industrial Investment
  Orders in Council
  Orders in Council
  Trout
  Trout
  Rivers
  Rivers
  Standing Advisory Commission on Human Rights (Report)
  Standing Advisory Commission on Human Rights (Report)
INDUSTRY
  Noise and Hearing Protection
  Noise and Hearing Protection
FOREIGN AND COMMONWEALTH AFFAIRS
  South Africa
  South Africa
  Hong Kong
  Hong Kong
  Middle East
  Middle East
EDUCATION AND SCIENCE
  Social Science Research Council
  Social Science Research Council
  Religious Education
  Religious Education
  Teachers (Qualifications)
  Teachers (Qualifications)
  Biology Teaching
  Biology Teaching
  Teachers
  Teachers
  Corporal Punishment
  Corporal Punishment
  Post Graduate Certificate of Education
  Post Graduate Certificate of Education
  Aberdeen University
  Aberdeen University
  Tayside Health Board (Budget)
  Tayside Health Board (Budget)
SCOTLAND
  Unemployment Statistics
  Unemployment Statistics
  Job Vacancies
  Job Vacancies
  Housing Allocation Policies
  Housing Allocation Policies
  Single Person Accommodation
  Single Person Accommodation
  Strathclyde (Economic Regeneration)
  Strathclyde (Economic Regeneration)
  List D Schools
  List D Schools
ENVIRONMENT
  Competitive Tendering
  Competitive Tendering
  Council House Sales
  Council House Sales
  Civil Engineering (Pre-contract Delays)
  Civil Engineering (Pre-contract Delays)
  Rights of Way
  Rights of Way
  "Single and Homeless"
  "Single and Homeless"
  Local Government (Assistance to Industry)
  Local Government (Assistance to Industry)
TRANSPORT
  M1 (Repairs)
  M1 (Repairs)
  Seat Belts
  Seat Belts
  Road Accident Statistics
  Road Accident Statistics
NATIONAL FINANCE
  Inflation
  Inflation
  Tax Revenue
  Tax Revenue
  North Sea Oil
  North Sea Oil
  Tax-free Zone (North-West)
  Tax-free Zone (North-West)
  Provincial Cities (Investment)
  Provincial Cities (Investment)
  Civil Service Pay
  Civil Service Pay
  Industrial Areas (Revival)
  Industrial Areas (Revival)
  Income Distribution
  Income Distribution
  Economic Growth
  Economic Growth
  Single Persons (Taxation)
  Single Persons (Taxation)
  Output
  Output
  Gaming Machines and Bingo Duties
  Gaming Machines and Bingo Duties
  Corporation Tax
  Corporation Tax
  Tax Exiles
  Tax Exiles
  Indexation
  Indexation
  Budget Statement
  Budget Statement
  Pensioners
  Pensioners
  Departmental Recruitment
  Departmental Recruitment
  Pension Funds
  Pension Funds
  Charities
  Charities
  Debt Interest
  Debt Interest
  European Community Budget
  European Community Budget
  Duty-free Allowance
  Duty-free Allowance
  Personal Allowances
  Personal Allowances
  Motor Industry
  Motor Industry
  Gas (Tax Exemption)
  Gas (Tax Exemption)
  Building Societies
  Building Societies
Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Lincoln): The LORD CHANCELLOR on the Woolsack.

Civil Servants: Trade Union Activities
Lord Boyd-Carpenter: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how many civil servants are employed full-time and part-time respectively on work on behalf of trade unions; and what is the annual cost to public funds.
The Chancellor of the Duchy of Lancaster (Baroness Young): My Lords, it is estimated that 287 non-industrial civil servants are engaged full-time as union representatives on industrial relations duties and trade union activities. A further 383 spend more than half of their time in these ways; and some 11,300 less than half. The current annual cost of the paid time-off arrangements is estimated at £12·3 million. These arrangements are part of the 1974 National Whitley Council Agreement on Facilities for Non-Industrial Union Representatives. As the result of a review of the operation of that agreement, it is currently being renegotiated with the unions concerned to provide improved control among other things.
Lord Boyd-Carpenter: My Lords, while I thank my noble friend for that extremely interesting Answer, is this an area of Government expenditure which is being critically looked at?
Baroness Young: My Lords, yes. The agreement is being critically looked at in order to give greater control and accountability.
Lord Davies of Leek: My Lords, on the opposite side of the coin, is there any help to employers and the CBI from these valuable civil servants?
Baroness Young: My Lords, I am not quite sure that I fully understand the import of the noble Lord's question. I cannot comment on industrial relations in other industries.
Lord Harmar-Nicholls: My Lords, can my noble friend say what formula is adopted to adjudge what is half of their time and whether or not the unions ever make any contribution to the "half-times" for the cost of the work they do.
Baroness Young: My Lords, my understanding is that this would depend on the circumstances. Different departments would, of course, have different arrangements.
Lord Taylor of Gryfe: My Lords, does the noble Baroness agree that the maintenance of good industrial relations is dependent on involvement of employees in the affairs of the company in which they are involved, whether as civil servants or private enterprise employees, and that the release of people in this field is extremely important to good industrial relations?
Baroness Young: My Lords, yes, I would entirely agree with what the noble Lord has said. Indeed, it is our wish to have good industrial relations. In fact, our agreement gives more than that which would be essential under the terms of the trade union legislation.
Lord Cooper of Stockton Heath: My Lords, I should like to ask the noble Baroness whether, in conveying this request for information to the appropriate quarters, she might also appreciate and take notice of the fact that trade unions, in fact, spend a great deal of time and manpower on Government work and that this is not at all a one-sided activity. In fact, most of us in the industrial world have encouraged tripartite examination of problems. There is not an industrial problem that arises without the TUC being consulted as to the effect on the workforce.
Baroness Young: My Lords, in answer to that question, of course, the circumstances in each department of the Civil Service would vary, but it is generally estimated that 85 per cent. of the time that is taken up in these discussions is on matters related to industrial relations, and about 15 per cent. of the time is spent on trade union activities.

Historic Houses: Conditions of Grant
3.4 p.m.
The Marquess of Ailesbury: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how many historic house owners have been allowed to break agreements into which they freely entered when obtaining public money in grants for repairs.
The Earl of Avon: My Lords, the number of owners who fail to comply with conditions of grant is unknown, as it is not practicable to keep a continuous check on all properties which have received grant. However, relatively few cases of non-compliance are brought to the attention of the Department of the Environment. In these cases it is rare that some agreement cannot be reached with owners in the public interest.
The Marquess of Ailesbury: My Lords, I thank the noble Earl for that reply. If these agreements can be broken with impunity—as clearly happened in the case to which he kindly gave me a helpful Written Answer on 9th February—that does not exactly encourage the others to stick to their agreements, as they surely should.
The Earl of Avon: My Lords, that happened pre-1979,

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and, of course, since 1979 the Secretary of State has been able to reclaim grants already paid if conditions of grant are not met.
Baroness Birk: My Lords, is not the matter about which we are concerned that of agreements involving access to the houses? Is it not true that now the houses are advertised in the Historic Houses Guide? Does this include "by appointment" houses?—because, when I was a Minister in charge of the department, one of the problems was the "by appointment houses" which had received grants; sometimes it was very difficult for people to get in to see them. Is not one of the answers that, if people cannot get access to a house which is on the list and which can be visited, they should complain either to the Department of the Environment or the Historic Buildings Council as soon as possible?
The Earl of Avon: My Lords, yes, indeed, public access to the property is one of the normal standard conditions, as the noble Baroness has said; and this should be advertised in two separate journals, again as she said. But whether or not that is so for "by appointment" houses, I am not absolutely certain. However, I shall check and confirm that with her. Again, as she rightly said, the very fact that the public complain, brings this to the attention of the department.

The Irish Republic: British Subjects' Voting Rights
3.7 p.m.
Lord Belhaven and Stenton: My Lords, I beg leave to ask the Question which stands in my name of the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will make representations to the Government of the Republic of Ireland urging them to give to British subjects resident in the Republic the same rights and privileges, including that of voting in parliamentary elections, as those enjoyed by citizens of the Republic of Ireland resident in the United Kingdom.
The Parliamentary Under-Secretary of State, Home Office (Lord Belstead): My Lords, this is a matter for the Irish authorities. Both the last two Governments, however, affirmed their intention of introducing legislation to enable United Kingdom citizens to vote at elections to the Dail.
Lord Belhaven and Stenton: My Lords, while thanking my noble friend for that reply, can he say whether Her Majesty's Government consider that intention to be enough?—because this matter has been going on for 50 years, and surely reciprocity, at least between the two countries, should happen now. Is it not about time that Her Majesty's Government were a little firmer with the Government of the Republic of Ireland?
Lord Belstead: My Lords, we consider the intention expressed by the last two Governments of the Republic to be enough.
Lord Shinwell: My Lords, is not this an intolerable situation? Is the Minister aware that only the other day we were informed in your Lordships' House that a British citizen going to the United States of America must be provided with a visa; whereas, Americans can come to this country without having a visa? Why should we have to suffer this humiliation? I do not object to Irish citizens coming to this country and voting in parliamentary elections. I do not object to it at all; it is democratic. Why should we not have the same privilege in the Republic of Ireland?
Lord Belstead: My Lords, Irish citizens have been able to vote here since the Republic left the Commonwealth. Our citizens can already vote in local government and European Parliament elections in the Republic. As I have said, the last two Irish Governments both undertook to enable our citizens to vote at Dail elections. It is true, of course, that there is some difference in the right to stand for the legislative assemblies in both countries. That would, of course, mean that the Republic would have to forfeit the delight of having the noble Lord, Lord Shinwell, in the Seanad.
Lord Blease: My Lords, is the noble Lord the Minister aware that the issues and the anomalies affecting British subjects resident in the Republic of Ireland were carefully examined and documented by the Northern Ireland Human Rights Commission and, indeed, are contained in the second annual report of the Standing Advisory Commission on Human Rights, which was published on 24th February 1977? I understand that it was formally presented to both Houses of this Parliament and that a copy is in our Library. Will the noble Lord draw his noble friend's attention to the fact that the issues are not simple, that they are quite involved and require some consideration, particularly from the point of view of the Irish Republic?
Lord Belstead: My Lords, I am grateful to the noble Lord, Lord Blease, both for what he said about the merits of the case and also for drawing attention to the fact that the Anglo-Irish joint study on citizenship rights, which was a joint study at official level between the two Governments, is a Command Paper which was published in November of last year. The conclusion to that study was that citizens of both countries enjoy virtually all the rights and privileges of citizens of the host country, reflecting the unique relationship between the two countries.
Lord Brockway: My Lords, can the Minister give us any timetable for the settlement of this problem, which has now been discussed for nearly half a century?
Lord Belstead: No, my Lords.

M.1 Motorway: Two-Lane Restrictions
3.11 p.m.
Viscount Hanworth: My Lords, I beg leave to as

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the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government why there are so many two-lane restrictions on the M.1 motorway between London and Birmingham, bearing in mind that the carriageway is in good condition and that no work is taking place on much of the closed areas.
The Earl of Avon: My Lords, the M.1, one of our oldest motorways and in use for over 20 years, now needs extensive repairs. Both major structural repairs and routine maintenance operations are in hand, all of which require lane closures. The reason for these closures, which are necessary to protect the travelling public and workmen as well as to allow work to proceed, may not always be apparent to the passing motorist. However, they are most necessary for reasons of safety.
Viscount Hanworth: My Lords, while thanking the Minister for that reply, may I apologise for the short notice of this Question. It was put down only on Monday and this was the slot that was allocated to me. May I ask the Minister whether he has really looked into this problem? There are miles and miles which are coned off, no work is proceeding, and the carriageway is in perfect condition. Would the noble Earl not think that all that has been done is to let a contract without any consideration whatsoever for the motorist, so that as soon as the contract is let the whole of the area is coned off, and that this really is intolerable and has been done for administrative convenience without any thought whatsoever for the motorist?
The Earl of Avon: My Lords, the Government indeed do consider this very deeply. I should like to refer the noble Viscount to a Question asked by the noble Lord, Lord Beswick, in this House as recently as 9th February when we talked about the maintenance work then, and I note that there were some nine supplementaries on that occasion. The Government are always striving to reduce delays and accidents at repair sites. This year some new measures are being introduced on the M.1. For example, improved crossover arrangements, shorter working lengths, and shorter contract periods, all aimed to help the motorist.
Lord Paget of Northampton: My Lords, on another angle of this question, is the Minister aware that, having used this road since its opening, one owes a certain gratitude for over 20 years of using the safest road in the world from the point of view of traffic accidents?
The Earl of Avon: My Lords, I am grateful to the noble Lord for those remarks. I am sure the noble Lord will equally recall that it was only meant to last for 20 years.
Lord Mowbray and Stourton: My Lords, is my noble friend aware that, having last week twice gone up and down the sister road—the sister road being the A.1—I was most impressed that in no one place was
306
there more than one lane closed, and in no one place was the speed under 40 miles an hour, and I was impressed at the efficiency of the Ministry of Transport?
The Earl of Avon: My Lords, I shall certainly bring my noble friend's remarks to my right honourable friend's attention.
Viscount Hanworth: My Lords, may I finally ask the Minister whether he would seriously look into the position as it stands today, bearing in mind that I came down the road on Monday and that nothing that he has said today satisfies me as a true explanation? Could the noble Earl look into what is in fact happening at the present time?
The Earl of Avon: My Lords, I have actually looked at the maps and seen the work projected over the next few years, and seen the great care with which the Ministry and their officials have looked into this subject. If I can show the noble Viscount anything which will persuade him of the great interest we take, I shall willingly do so.

THE TRIDENT PROGRAMME
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Trenchard will, with the leave of the House, repeat a Statement which is to be made in another place on the United Kingdom Trident programme.

Transport (London) (Amendment) Bill [H.L.]
Lord Underhill: My Lords, I beg to introduce a Bill to clarify the meaning of the Transport (London) Act 1969 by empowering the Greater London Council to make grants towards the current expenses of the London Transport Executive where such grants appear to the council to be required to provide or secure the provision of such public passenger transport services as best meet the needs for the time being of Greater London; to provide that such grants shall be treated as revenue of the Executive; and for connected purposes. I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.—(Lord Underhill.)
On Question, Bill read a first time, and to be printed.

British Waterways Bill [H.L.]
Read a second time and committed to a Select Committee.
London Transport Bill
Read a third time, and passed, and returned to the Commons with amendments.

Taking of Hostages Bill [H.L.]
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Lord Trefgarne): My Lords, I understand that no amendments have been set down to this Bill and that no noble Lord has indicated a wish to move a manuscript amendment or to speak in Committee. Therefore, unless any noble Lord objects, I beg to move that the order of commitment be discharged.
Moved, That the order of commitment be discharged.—(Lord Trefgarne.)
On Question, Motion agreed to.

Draft Representation of the People (Variation of Limits of Candidates' Election Expenses) Order 1982
3.18 p.m.
Lord Belstead: My Lords, I beg to move that the draft Representation of the People (Variation of Limits of Candidates' Election Expenses) Order 1982, which was laid before this House on 18th February, be approved. My Lords, the amount of money a candidate may spend on the conduct or management of an election is, as I need hardly say, subject to statutory limits. The Representation of the People Act 1978 empowers the Home Secretary to vary the limits on candidates' election expenses by order, subject to the affirmative resolution of both Houses of Parliament, to take account of changes in the value of money. The purpose of this draft order is to increase the limits on candidates' expenses at parliamentary elections and at certain local elections. It follows consultations with local authorities and all the political parties represented at Westminster.
The present limits for parliamentary candidates are £1,750 plus 2p per elector for county constituencies, and £1,750 plus 1½p per elector for borough constituencies. These were fixed in July 1978. The draft order increases these limits, in line with the rise in the Retail Price Index, to £2,700 plus 3·1p per elector for country constituencies and £2,700 plus 2·3p per elector for borough constituencies. This does not, of course, preclude further increases, if necessary, in time for the next general election.
The present limits for all local elections in Great Britain, save those to the Greater London Council, were fixed in an order made in March 1980 by my right honourable friend at £100 plus 2p per elector. The retail price index has risen by about 20 per cent. since then, and the draft order increases the limits for these elections to £120 plus 2·4p per elector. In addition, the maximum sum which may be spent by candidates at elections of certain City of London officers is increased from £750 to £900.
The order-making power in the Representation of the People Act 1978 does not extend to local government elections in Northern Ireland. Furthermore, the present draft order does not extend to elections to the Greater London Council; the GLC limits were increased for the GLC elections last year, and the
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next GLC elections will be held in 1985. As noble Lords will know, the penalties for overspending at elections are severe. For example, a successful candidate who overspends runs the risk of losing his seat. This order will help to ensure that candidates are able to conduct a reasonable campaign without being in danger of a breach of the statutory limits on expenses. We are bringing forward the order now so that it may come into effect in good time for the local elections in May. My Lords, I beg to move.
Moved, That the draft order, laid before the House on 18th February, be approved.—(Lord Belstead.)
Lord Underhill: My Lords, we thank the Minister for explaining the order so clearly. As he said that its terms had met with the agreement of the local authorities and political parties which had been consulted, I need not delay the House for long in giving it support. There are, however, two matters I would raise with the Minister. First, would it be possible in future, instead of having such figures as 3·1p and 2·3p, to round off the increases either to whole or half pence and adjust the flat sum accordingly? It may be said it is easy to multiply by 0·3 or 0·1 but it would be simpler to use round figures and increase the flat rate accordingly, and that could be done without affecting the figure we desire to achieve to meet inflation.
Secondly, it is clear that with inflation—it may be argued that the incomes of everybody should rise accordingly, but life does not work out that way—the cost in a local election of some 10,000 electors will now be a maximum of about £360. That becomes especially difficult for independent candidates, and there are genuine independent candidates in some parts. In view of that, and of the fact that for any organisation contesting the whole 623 seats in the United Kingdom the maximum cost would be a little over £2½ million, may I ask if the Government would consider this an opportune time to consider the proposals of the Houghton Committee on financial aid to political parties; namely, giving aid, if not to central party headquarters then in assisting all candidates, party and independent candidates, with a proportion of their election expenses, as proposed by that committee?
Lord Tordoff: My Lords, like the noble Lord, Lord Underhill, we on these Benches have no real objection to the order, although in the submissions we in the Liberal Party made we asked for somewhat higher levels. I note with interest that the increase is about 54 per cent. for parliamentary elections. If one calculates the rate of inflation from the last elections, in May 1979, that takes us to September of this year. I wonder whether the Government are trying to tell us something—either that they are thinking of having an election then, or that they do not expect inflation to increase after that time.
We did our calculations on the basis of there being an election towards the end of 1983 or early in 1984, in which case the limits should be increased still further, and we suggested £3,000 plus 3·5p for county and £3,000 plus 2·5p for borough constituencies. I go along entirely with what the noble Lord, Lord Underhill, said about rounding up and rounding down. I know that professionals such as he can well do such

309
calculations, with the wonders of modern electronics, but there are people who get confused, and splitting the money up in the way proposed seems a rather strange way of going about it. Rounding up or down in halfpennies would make a difference of only about £60 or £100 on the total limit for a county or borough constituency, and that would not seem to create a grave margin of error.
Although I have to be a little careful in view of certain things going on in certain quarters at the moment, may I ask if the Government would consider looking at the definitions of what constitutes an electoral expense in parliamentary elections? With changing types of electioneering and varying styles of campaigning, grey areas are appearing and a clearer definition, and perhaps an increase beyond the present limits to cater for those problems, might be of help to candidates. Having said that, we support the order.
3.26 p.m.
Lord Belstead: My Lords, I am grateful to the noble Lords, Lord Underhill and Lord Tordoff, for their support for the order. As for the point they both made about the desirability of rounding off the figures for the variable expenses, while I sympathise with the wish to keep the sums involved as straightforward as possible, my right honourable friend is permitted by the terms of the order-making power to vary the figures only to the extent justified by changes in the value of money. I am advised that any rounding of the variable elements to keep them in whole or half pence would therefore be outside the scope of the power under the order. The proposed figures, however, should not present returning officers and election agents with undue difficulties. The calculations will he no more difficult than those which were required under the Representation of the People Act 1974 and those which are currently required for local government elections in Northern Ireland. Having said that, I accept that two wrongs do not make a right and I take the point that it would be desirable to try to round them off. Moreover, I have explained the situation as we find it under the present order-making power.
The noble Lord, Lord Tordoff, asked, incidentally, whether I was trying to tell the House something about the rate of inflation. What I am trying to tell your Lordships, as I said in my opening remarks, is that if any further increase is needed in election expenses, that will not be precluded by agreement to the order, if your Lordships agree to it, before another general election.
The noble Lord, Lord Underhill, asked whether the Government would consider the proposals of the Houghton Committee for financial aid to political parties. That is a matter which all political parties have considered. So far as Government are concerned though, it would, I suppose, be a matter for legislation, and I am afraid I have no more to say on that at present, except to add that I am aware that the maximum personal expenses that a parliamentary candidate can pay without going to his election agent are not dealt with in the order. They are not very satisfactory; they are, I should have thought any fair-minded person would say, too low, but again, they can be dealt with only by primary legislation, and although we accept there is a case for increasing the amount,
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which is £100, I am afraid I cannot give any promise that there will be an opportunity for an increase during this Parliament.
The noble Lord, Lord Tordoff, asked if the Government would look at the definititions of what constitutes an election expense. Certainly we should be ready to look at that, and it may well be being looked at in the review which my right honourable friend has been undertaking of election procedures, and again we are talking about the scope of primary legislation.
On Question, Motion agreed to.

Local Government (Miscellaneous Provisions) Bill
3.30 p.m.
Lord Belstead: My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(Lord Belstead.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clause 1 [Licensing of public entertainments]:
Baroness Birk Baroness Birk moved Amendment No. 1:
Page 1, line 7, leave out subsections (1) and (2) and insert—
("(1) A district council may resolve that Schedule 1 to this Act shall apply to their area and, if a district council so resolve, that Schedule shall come into force in their area on such a day as may be specified in the resolution which must not be before the expiration of a period of 28 days beginning with the day on which the resolution is passed and in any event not earlier than 1st January 1983.
(2) A district council shall publish notice that they have passed a resolution under this section in two consecutive weeks in a local newspaper circulating in their area, and first publication shall not be later than 28 days before the day specified in the resolution for the coming into force of the provisions".).
The noble Baroness said: When we discussed the Bill on Second Reading there was, I think, a feeling among many noble Peers that the provision which gives the powers for licensing entertainment, music and so on entirely to the district councils—in fact, makes it mandatory—was going somewhat too far. It seems to me that there are three possible courses here. First, as the Bill proposes, there could be a mandatory provision that the powers should all go to the district councils. Secondly, there could be a mandatory provision (which I think is proposed in the amendment to be moved later by the noble Baroness, Lady Stedman) that the powers should go to the licensing magistrates. The third course, the one which I suggest, is a more moderate, middle-of-the-road procedure where there would be adoptive powers for the district councils. The councils could then decide whether or not they want to take over the powers.
We believe that the powers ought to be adoptive because that would mean that district councils, instead of having the function forced upon them, would be able to assume it of their own free will. As I mentioned on Second Reading, in Oldham, for instance, the

311
council is very concerned that it would be landed with having to deal with about 200 establishments under these powers. That would mean much extra work and extra expense for the authority, work which at the moment is being carried by the bench of magistrates.
The fundamental point is that at the moment the system appears to be working fairly well, and on Second Reading I suggested that it should be left exactly as it is. In his reply the noble Lord, Lord Bellwin, said he would look at the point to see whether anything could be done about it, though he did not commit himself either way. It seems to us that the amendment would meet the objections of both sides and would at least give to the local authorities some degree of choice, which is taken away as the Bill is at present drafted.
I quite see the point of view that the function should rest entirely with the magistrates. Incidentally, that view is not taken by the Magistrates' Association, o which I am a member, and which is not taking a stance in the matter; it is taken by the Justices' Clerks' Society. From speaking to the clerks in my own division of Highgate, in the Greater London area, I understand their view is that we would not want to take over this particular function; we merely grant licences for liquor, and the local authority deals with licensing of entertainment, music, dancing and so on. So different views are held not only by local councils but by magistrates, too.
An advantage of our amendment is that, first, it would give discretion to the local authorities, instead of taking it from them. It would enable those authorities which already have the powers through instigating their own private Acts to be able to retain them. It would also mean that there would be no mandatory "crush" on local authorities from central Government, saying, "You must do this or that", even if they do not want to do it.
There is one feature of our amendment which I think the Government should bear in mind very strongly at present, when there is such a squeeze not only nationally but in particular on local authorities. To foist on local authorities a function which many of them will not want to undertake, and which would involve them in extra expense, which they could ill afford, seems to be the wrong way to go about the matter; and this is certainly the wrong time to do it. By proceeding in the way we suggest, each authority would be able to make up its own mind. If an authority wished to take over the function, it would be able to do so, but if it wanted to leave it with the magistrates, it would still be able to do so. But to leave local authorities without any room for manoeuvre and without any choice in the matter seems to be absolutely wrong.
Whatever view people take on this issue—whether they feel that the magistrates should have the power, or it should rest with the local authorities—I think they would find it difficult to accept a situation where the local authorities are forced to take on the function even where they do not wish to do so. I beg to move.
Lord Evans of Claughton: I should like to say, briefly, that we very warmly support the amendment
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moved by the noble Baroness. As I said on Second Reading, local authorities are perfectly able to make decisions themselves about these matters. Nearly all the other clauses in the Bill are adoptive; this is one of the very few that are mandatory. As the noble Baroness has said, the question of whether the local licensing magistrates or the local authority should undertake licensing is a fairly open one. There are parts of the country where this kind of work is habitually done by the licensing magistrates; there are other parts where it would be a virtually unheard of procedure and extra staff would have to be taken on. But the basic point is that the provisions of the clause should be adoptive, not mandatory. If one believes in local authorities making their own decision about matters which concern them, then the amendment should be readily accepted by the Committee.
Lord Belstead: I certainly understand the case which has been put very clearly by the noble Baroness, Lady Birk. Like her, I should not wish to do anything that would detract from the vital importance of the work which magistrates do in the United Kingdom. It is vital and very important work. However, in Clause 1 of the Bill there is a point which I am sure the majority of the magistracy have appreciated. Indeed, as the noble Baroness very fairly said, the Magistrates' Association did not raise any objection to the proposal when it was put to them before the Bill was brought to Parliament.
The difficulty is this. At the moment we have in this country a patchwork system of controls over public entertainments. In some areas there are no controls at all; in others they may be exercised by the licensing justices, basically as an adjunct to liquor licensing, or they are exercised by district councils. The purpose of the controls which would be introduced by Schedule 1 (which goes with Clause 1) is threefold. It is to prevent disorder, it is to control noise and it is to impose satisfactory fire and other safety standards.
It is that last one that I would particularly put to the Committee. If your Lordships care to look for just a moment at paragraph 4(2) of Schedule 1, the Committee will notice that there is a requirement there that the licensing authority shall consult the chief officer of police and the fire authority before granting an application. When I say to your Lordships that in 1980, which is the last year for which I have any statistics, nearly 100,000 fires in occupied buildings occurred in this country, with enormous loss financially, your Lordships will realise that the fire and other safety standards of licensing are very important aspects of it.
Indeed, I say this. Were the first two considerations the only or the main ones—that is to say, the considerations of preventing disorder or controlling noise—the Government would be quite happy to leave it to individual councils to decide, in the light of local circumstances, whether controls over public entertainments were necessary. But where the safety of the public attending entertainment is at risk, we really cannot take such a neutral stance. I say that at a time when people are more mobile and more liable to gather, I think it is fair to say, in very large numbers for public entertainments in a way which many years ago they simply were not able to do. People's lives may be at risk from fire, and they really are entitled to

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know that proper measures are being taken for their protection. The only way we can ensure that such measures will be taken is to insist on a mandatory national system of control.
The noble Baroness, if I may just add this, made some play with the cost and the burden which would fall on the district council if the district council does not already have this system. But entertainment licensing in Clause 1 and Schedule 1 is intended to be broadly self-financing, and councils will be able to charge realistic fees to offset their additional costs. That is the effect of paragraph 5 of Schedule 1. Indeed, the noble Baroness asked why we do not leave alone the situation where magistrates are, in the noble Baroness's words, carrying the licensing function absolutely naturally. Really, if it is as simple as that, may I put it to the noble Baroness that I do not think the burden that would be shifted to the district councils will be as onerous as all that.
Baroness Birk: I wonder whether the noble Lord would give way on that. The point about the magistrates at the moment is that the magistrates are sitting every day. Applications for occasional licences are coming up before them all the time, so it is in the natural round of their duty. It just means that you have an extra case or application on your list This is the point about that. But I had moved (I hope the Minister realises this) from that position, that being one that was not acceptable to the Government, leaving well alone. The Government never do, as we know, ever leave well alone: so I have now moved to a different position, which I thought might be more acceptable.
Lord Belstead: The noble Baroness is very agile, and I shall obviously have to be swift in this Committee to follow her; but if I may put it to the noble Baroness, there is a little more to this than just taking an occasional licence application which comes up on the morning that the magistrates are sitting. The whole kernel and pith of the argument that I am trying to put across is that in modern times it really is important for the protection of the public, not only on disorder grounds and on the control of noise grounds, but also on protection from fire grounds, that proper study should be given to the giving of both yearly licences and occasional licences.
When one gets into this particular country I think it is desirable that a local authority—and the Government decided that they would go for the district councils as being really nearest to the local situation—should exercise these functions and should, during the exercise of the functions, consult both the chief constable of police and also, of course, with the local fire brigade. It is on those grounds that we feel it is necessary to give the function to the local authorities, and to make this one mandatory. If we do that, if Parliament agrees, it will mean that the patchwork of rules and regulations about public entertainments around the country will be brought into some sort of sensible uniformity, not done for its own sake but for the protection of the public.
Earl Fortescue: I speak only as an individual magistrate in this matter, and I do not feel very strongly
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on it. Licensing justices, before they would grant a licence to premises for singing, music and dancing, would never do so unless they had obtained a certificate from the chief fire officer. It is as easy for a licensing justice to obtain that certificate as it would be for the district council. On the question of cost, because the premises are probably going to be licensed anyhow it is clearly going to be cheaper for the licensing justices to continue to do the job. As I say, I do not feel particularly strongly about it. The only real advantage that I see in the Bill in its present form is that it would provide uniformity throughout the country.
Baroness Fisher of Rednal: I think that when we are looking at this amendment we are looking at something much more fundamental than the one aspect that we have just spoken about. I think it was Lord Belstead who, on Second Reading, praised the major role that local authorities played in shaping this Bill. Those remarks were contained in column 461 of the report of the Second Reading debate. I think he explained quite clearly what the reasons were for this Bill, and he cited the criteria. The criteria were that the provisions should be well precedented in recent local legislation, and should be necessary and uncontroversial.
Under previous Acts local authorities had to bring forward their local legislation and make it much more homogeneous, and therefore Private Bills started to come forward from all the large local authorities. Many Members of your Lordships' House have sat on Private Bills upstairs, where provisions that we are talking about today were considered. In exceptional cases the results of those Committees sitting upstairs were brought on the to Floor of your Lordships' House; and in one case, on the West Midlands County Council's Bill, a vote had to be taken, even, upon the measures that they wished.
What worries me continually is that Private Bills coming from local authorities and containing good legislation are being completely disregarded by the first clause of the Bill before us. What concerns me is that, as noble Lords said on Second Reading, to promote a Private Bill costs time—parliamentary time as well as local government time—and it costs a great deal of money for the local ratepayers and the local councils. They bring their recommendations forward, the Government accept them and they are placed upon the statute book. Yet in many instances they have been on the statute book only 18 months, and for the very longest two years, before we come forward with a miscellaneous provisions Bill which takes away those powers from the local authorities that have only just had their legislation placed on the statute book.
So we get ourselves into the position where—and again I quote the noble Lord, Lord Belstead:
"If individual local authorities want powers which are novel or necessary for their particular area, they need to come individually to Parliament to ask for those powers". [Official Report, 16/2/82, col. 461.]
What I am trying to say is that local government brought their Private Bills, which were accepted by the committees, accepted by Government and placed on the statute book, and they are now, under the first

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clause of this Bill, losing the powers that have already been granted to them. Kent will lose some powers and, according to my research, Cheshire is given powers that it never asked for and there will be changes in the West Midlands Bill. What does a local authority do then to get those powers back? The noble Lord, Lord Belstead, says, "Bring your Private Bills". What a farcical situation! The local authorities have brought them, they have been taken away by this Bill and they are told to bring them back again if they want those special powers.
I would say to the Committee that we must have regard to local government in these measures. I appreciate what my noble friend Lady Birk has said regarding the justices and I would like to point out that there are difficulties that arise with licensing, especially the possibilities of disorder that arise from individual cases of drunkenness and serious offences that arise when crowd control becomes extremely difficult, especially in the cases where the entertainment has been on a particular premises for one occasion.
I am glad that the noble Lord opposite spelt out clearly that magistrates and the local councillors are all what we would call responsible people. Obviously, they will consider the fire and safety regulations and the police objections, if any. Sitting as a magistrate, I can say that, in every application that comes before the magistrates, the magistrates ask, "Are there any police objections?" and the police are in the court and they stand up if they have objections. They then ask, "And are there any objections from the fire service or any other statutory bodies?" The people with the objections are there in front of the court. It is to introduce a red herring to suggest that this is being done on the grounds of safety. The responsibilities of both bodies are carried out by very understanding persons.
I ought to emphasise the point which the noble Lord, Lord Evans, made when repeating what he said on Second Reading: that it is important that local authorities should be given some control over their local legislation because it is local. Therefore, making this part of the Bill manadatory offends, in my view, the general principle of local choice. I want to make it clear that on this side of the Committee we are not against the principles that are contained in the first Part of the Bill. I hope that what I have explained up to the present emphasises that, if local authorities have already got these powers under their local Acts (and I have read through several of them; and all the local Acts on the statute book so far regarding this have quite definite regulations regarding fire and safety), then why should they not be able to hold on to them?
What I would suggest in conclusion is that before the end of the discussion perhaps we could have the reply which was promised by the noble Lord, Lord Bellwin, when, in winding up the Second Reading debate, he said:
"The question of the repeal of existing local Acts is more difficult and the Government are very alive to the feelings of local authorities who stand to lose current powers if no amendment can be made to this Bill. Therefore, although I cannot give an undertaking, I want to say that the Government are doing all they can to try and find a solution to the problem".—[Official Report, 16/2/82; col.500.]
All I am saying this afternoon is that, if local government
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is to remain local, then serious consideration must be given to our amendment unless we can get a reply which satisfies us following what the noble Lord, Lord Bellwin, said on Second Reading.
Lord Jenkins of Putney: I should like to endorse the point that my noble friend made about local authorities which already have in existence powers similar to those which they would be obliged to undertake after the passage of this Bill. On the other hand, I take Lord Belstead's desire for universality of endorsement, particularly in relation to fire regulations, which is important. From that point of view, I am with the Government's ambitions in this respect, but I think that, if some assurance could be given to my noble friend on the point about those authorities which have already got the powers, this would be satisfactory from my own point of view and perhaps, too, from that of my noble friend.
3.56 p.m.
Lord Belstead: I am grateful to the noble Lord, Lord Jenkins, for recognising the desirability of universality as far as public safety is concerned in the licensing of public entertainments. The difficulty is (and perhaps I may reply here to my noble friend Lord Fortescue) that if on public safety grounds one goes for a uniform system, as do Clause 1 and Schedule 1, then, as the noble Baroness, Lady Birk, in her speech made clear, there are many magistrates' benches which would not want to have these licensing powers. In deciding who should have the licensing powers, it really seemed impossible for the Government to go for the magistrates' courts when many benches had made clear that they took that particular view. On the grounds of good administration and common sense, the Government felt that the district councils were the people to ask to take on the licensing powers.
I would say to the noble Baroness, Lady Fisher, that I was puzzled in her speech because I do not think I know of any powers which are going to be lost when Clause 1 and Schedule 1 come into force, except the power (for a very few local authorities) to license pop festivals—and that is something that we shall come to later in the afternoon. The noble Baroness complained that Private Bills are being disregarded. Not so far as Clause 1 and Schedule 1 are concerned. But, leaving that aside, the whole point of this Bill was that local authorities, knowing that, under local government legislation of the early 1970s, they were going to see their Private Bill powers fall within the next two or three years, came to the previous Government, who passed the Local Government (Miscellaneous Provisions) Act in 1976, and came to the present Government and worked out this second Local Government (Miscellaneous Provisions) Bill, which, if it goes through will be a 1982 Act.
At Second Reading, the president of the Association of County Councils and other noble Lords got up and said that they hoped there would be another Local Government (Miscellaneous Provisions) Bill before the next three years are out and the rest of the Private Bill powers of local authorities fall. It is a little hard to chide the Government with bringing in a Local Government (Miscellaneous Provisions) Bill when this is the one thing that local government has been asking

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for in order to give powers which will relieve them of the necessity of having to bring forward local Bills and will relieve Parliament of the necessity of keeping on having to take local Bills.
The whole reason for Clause 1 and Schedule 1 is that, on the main point of public safety grounds, we have felt that this should be one of the few mandatory provisions in the Bill and that the sensible thing to do is to ask the district councils to undertake the licensing functions.
4 p.m.
Baroness Fisher of Rednal: As to Schedule 7 and the repeal of these Bills—I am looking at Merseyside, West Midlands, Cheshire and West Yorkshire—are not the powers which they have under those recently enacted Acts of Parliament repealed under Clause 1? Have I misunderstood the Bill so much that I have misread that completely? Perhaps the noble Lord will tell me that I am wrong, but I concluded that under the first Part of the Bill those parts of the Bill that are before us in Schedule 7 would be repealed. Am I wrong?
Lord Belstead: The noble Baroness is not wrong, but it is not changing the course of the local authorities in this matter. The noble Baroness has quite rightly drawn my attention to the repeals—and I apologise to her and to the Committee for not making it clear that I was taking this into account. Schedule 7 is doing exactly the same job as Schedule 1, except with regard to pop festivals. It is perfectly true that under Schedule 1 the Isle of Wight will have removed from it a power regulating pop festivals. A few other local authorities will have some rather more peripheral powers with regard to pop festivals. They comprise a special subject which we shall be debating later.
Baroness Birk: I see that the Minister is pretty agile, too. When I cited my first example from my own court that our clerks and magistrates did not want to take on these functions, this was a case of choice. I was illustrating the importance of leaving some openness in this matter. The noble Lord will be well aware—but I must emphasise it again—that we are not suggesting in our amendment that any more functions should pass to magistrates. We are suggesting the reverse: that the onus is on the local authority to take on the functions where and when it will. It may be that gradually all of them will do so. I support what my noble friend Lady Fisher has said. She gave us a very good background and foundation to not only this amendment but the amendments that follow it. They are very important.
To come back to this amendment, my noble friend made it clear—as I hope I do—that when these applications go to the magistrates' court it is not just a case of occasional licences; these matters are checked with the police and the local authority. If they want to say anything about it, they do so. I am sure the Minister would not disagree that the fire authorities have a great responsibility which they exercise very properly all the time.
Unless the Minister can give some instances and evidence of catastrophies that have occurred in areas where the magistrates have been responsible for these
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powers, as compared with areas where the district councils have, then no case has been made out against accepting this amendment. The noble Lord is resting his entire case on the question of safety. This is the first time that I have heard of any doubt cast on safety regulations where the licensing powers have been in the hands of magistrates. If the noble Lord is saying that there is doubt, and if he can give us some examples of where things have gone badly wrong which would not have gone wrong if matters had been handed to the district councils, then the Committee will listen. However, if he does not have that information—and if, as I imagine, that information is not available because it is not the case—then he is projecting forward what he believes may happen in the future.
This is a matter of great importance. This is an extremely moderate amendment. It is not going nearly so far as many of us wanted when we spoke on the matter on Second Reading. The noble Lord will remember that many of us wanted to leave things as they are. Therefore, unless the noble Lord has an answer on these points, I am afraid that I shall divide the Committee on this amendment.
4.5 p.m.
On Question, Whether the said Amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 74; Not-Contents, 124.

DIVISION NO.1

CONTENTS

Amherst, E.

Kilbracken, L.

Ardwick, L.

Killearn, L.

Aylestone, L.

Kilmarnock, L.

Banks, L.

Kissin, L.

Beaumont of Whitley, L.

Leatherland, L.

Beswick, L.

Llewelyn-Davies of Hastoe, B.

Birk, B.

Lloyd of Kilgerran, L.

Bishopston, L. [Teller.]

Longford, E.

Blease, L. [Teller.]

Mais, L.

Boston of Faversham, L.

Maybray-King, L.

Brockway, L.

Mayhew, L.

Collison, L.

Meston, L.

Cooper of Stockton Heath, L.

Mishcon, L.

Darling of Hillsborough, L.

Noel-Baker, L.

Elwyn-Jones, L.

Parry, L.

Evans of Claughton, L.

Peart, L.

Ewart-Biggs, B.

Perry of Walton, L.

Fisher of Rednal, B.

Rathcreedan, L.

Foot, L.

Rochester, L.

Fortescue, E.

Ross of Marnock, L.

Gaitskell, B.

Sefton of Garston, L.

Gifford, L.

Segal, L.

Gladwyn, L.

Shinwell, L.

Greenwood of Rossendale, L.

Stedman, B.

Grey, E.

Stewart of Fulham, L.

Hall, V.

Stone, L.

Hampton, L.

Taylor of Gryfe, L.

Hanworth, V.

Tordoff, L.

Harris of Greenwich, L.

Underhill, L.

Hatch of Lusby, L.

Wade, L.

Hooson, L.

Wallace of Coslany, L.

Irving of Dartford, L.

Wells-Pestell, L.

Jacobson, L.

White, B.

Jeger, B.

Wigoder, L.

John-Mackie, L.

Wilson of Langside, L.

Kaldor, L.

Wootton of Abinger, B.

Kennet, L.

Wynne-Jones, L.

319

NOT-CONTENTS

Ailesbury, M.

Lucas of Chilworth, L.

Airey of Abingdon, B.

Luke, L.

Aldenham, L.

McFadzean, L.

Alexander of Tunis, E.

Mancroft, L.

Alport, L.

Marley, L.

Ampthill, L.

Massereene and Ferrard, V.

Auckland, L.

Mersey, V.

Avon, E.

Montagu of Beaulieu, L.

Balerno, L.

Morris, L.

Bathurst, E.

Mottistone, L.

Belhaven and Stenton, L.

Mowbray and Stourton, L.

Bellwin, L.

Moyne, L.

Beloff, L.

Murton of Lindisfarne, L.

Belstead, L.

Newall, L.

Bessborough, E.

Northchurch, B.

Birdwood, L.

Nugent of Guildford, L.

Blake, L.

Nunburnholme, L.

Bolton, L.

Orkney, E.

Boyd-Carpenter, L.

Orr-Ewing, L.

Caccia, L.

Penrhyn, L.

Campbell of Alloway, L.

Platt of Writtle, B.

Campbell of Croy, L.

Porritt, L.

Clifford of Chudleigh, L.

Rankeillour, L.

Coleraine, L.

Renton, L.

Cottesloe, L.

Ridley, V.

Craigavon, V.

Rochdale, V.

Cullen of Ashbourne, L.

Rodney, L.

Daventry, V.

Romney, E.

De Freyne, L.

Rugby, L.

Denham, L. [Teller.]

St. Aldwyn, E.

Drumalbyn, L.

St. Davids, V.

Eldon, E.

St. Just, L.

Faithfull, B.

Saint Oswald, L.

Falkland, V.

Salisbury, M.

Ferrers, E.

Saltoun, Ly.

Fraser of Kilmorack, L.

Sandford, L.

Gardiner, L.

Sandys, L. [Teller.]

Gardner of Parkes, B.

Seebohm, L.

Glanusk, L.

Selkirk, E.

Glasgow, E.

Soames, L.

Gore-Booth, L.

Spens, L.

Gormanston, V.

Stamp, L.

Gray, L.

Stradbroke, E.

Gridley, L.

Strathcarron, L.

Hailsham of Saint Marylebone, L.

Strathcona and Mount Royal, L.

Halsbury, E.

Strathspey, L.

Henley, L.

Sudeley, L.

Hill-Norton, L.

Swansea, L.

Hives, L.

Swinfen, L.

Hunt of Fawley, L.

Terrington, L.

Hylton-Foster, B.

Thomas of Swynnerton, L.

Ilchester, E.

Thorneycroft, L.

James of Rusholme, L.

Tranmire, L.

Kemsley, V.

Trefgarne, L.

Kinnaird, L.

Trumpington, B.

Lane-Fox, B.

Vaizey, L.

Lauderdale, E.

Vaux of Harrowden, L.

Lawrence, L.

Vivian, L.

Lincoln, Bp.

Westbury, L.

Lindsey and Abingdon, E.

Windlesham, L.

Linlithgow, M.

Wise, L.

Long, V.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
The Earl of Avon: I think this might be a convenient moment to take the Statement. I beg to move that the House be now resumed.
Moved accordingly, and on Question, Motion agreed to.
House resumed.

The Trident Programme
4.15 p.m.
The Minister of State for Defence Procurement (Viscount Trenchard): My Lords, with the leave of the House, I will now repeat the Statement which is being made by my right honourable friend the Secretary of State for Defence in the other place. The Statement is as follows:
"With your permission, Mr. Speaker, I would like to make a Statement about the Government's decision to modernise the existing Polaris force by replacing it, in the mid 1990s, with a four-boat force based on the Trident II D5 missile system.
"On the 15th July 1980 my predecessor announced the Government's decision in favour of Trident as the replacement force for Polaris; but, as I told the Defence Committee of the House in March last year, final decisions were still needed on the type of submarine and the choice of missile.
"We have now decided that our four Trident submarines, to be built at Vickers, Barrow, will have a larger hull section than previously planned, and will incorporate an advanced propulsion system and the latest sonars. And after detailed consideration here, and with the United States, we have now decided also to purchase the Trident II D5, instead of the Trident I C4 missile system, from the United States.
"The number of warheads that the Trident II D5 missile will carry, and therefore Trident's striking power, remains wholly a matter of choice for the British Government; our intention is that the move to D5 will not involve any significant change in the planned total number of warheads than we originally envisaged for our Trident I C4 force.
"The reasons for our choice of Trident II D5 are briefly as follows.
"Just as the Polaris system will, by the mid 1990s, have been in service for approaching 30 years and will have reached the end of its operational life, so the Trident system must remain a credible deterrent for a similar period and thus remain operational until 2020—that is 40 years from now.
"Our experience with Polaris and the decision—endorsed by the last Labour Government—to modern-ise the Polaris missile with Chevaline at great cost, has shown us the financial and operational penalties of running and developing a United Kingdom unique system.
"Following President Reagan's decision to accelerate the Trident II D5 programme, if we were to choose the C4 missile, it would enter service with the Royal Navy only shortly before it left service with the United States. This would mean that the United Kingdom would be alone responsible for keeping open special Trident I C4 support facilities in the US; and the United Kingdom alone would be forced to fund, as we have with Chevaline, any research and development needed to counter improved Soviet anti-ballistic missile defences. For these reasons our judgment is that the through life costs of Trident I C4 would almost certainly be higher than Trident II D5.
"Accordingly we have entered into an agreement

321
with the United States to purchase Trident II D5 and an exchange of letters between the President of the United States and my right honourable friend the Prime Minister is set out in Cmnd. 8517 published today. together with an exchange of letters between the United States Defence Secretary and myself on the terms of the arrangements.
"The United States Government is selling Trident II D5 to us on more advantageous terms than Trident I C4. The missile will be purchased by us at the same price as the United States Navy's own requirements in accordance with the Polaris sales agreement. The additional overheads and levies will be lower than would have been the case under our 1980 agreement to purchase Trident I C4. In particular, the so-called R&D levy will, in fact, be a fixed sum in real terms, and there will be a complete waiver of the facilities charge which was part of the C4 deal. I would emphasise to the House that the terms protect us completely from development cost escalation. Finally, the United States will waive certain of the Buy American Act provisions and set up a liaison office in London in order to advise British industry on how they can compete—on equal terms with United States industry—for subcontracts for weapon system components for the D5 programme as a whole, including the American programme.
"When I appeared before the House of Commons Defence Committee I made it clear that the range of options which we still had to study for the Trident system, over and above the total cost of £5,000 million then given, could be confined within an additional £1,000 million at 1980 prices and exchange rates—and so it will.
"On this basis the initial capital costs of the Trident II D5 missile system will be an extra £390 million above the Trident I C4 missile system which represents an addition of about 7 per cent. to the total cost. And we have now decided also to fit the latest propulsion system, the British pressurised water reactor 2, already under development, and improved sonar systems which together with the larger hull will add about a further £500 million to the cost, which will mean additional work for British industry but within the £1,000 million total increase. These changes will greatly improve the efficiency and the quietness of the submarines: as a result we are planning to run our submarines for around 7 years between refits so that the availability of the submarines for patrol can be greatly increased. This will allow us to maintain three boats in the operating cycle for a high proportion of the time. The Trident II D5 missile should also have an in-tube life within the submarine of at least seven years, a much longer period than for Polaris, thus greatly reducing maintenance which will be largely carried out on board.
"At September 1980 prices, therefore, we will spend on Trident about £6,000 million. Updating the price basis to September 1981, which reflects a much lower exchange rate than in September 1980, adds a total of about £1,500 million. So the total cost over the procurement period will, at 1981 prices, be £7,500 million against an estimated total defence budget over the same period of approaching
322
£250,000 million; that is, just over 3 per cent. of the total defence budget. This means we will spend on Trident at current prices an average of somewhat under £500 million a year against total defence spending of £14,000 million a year.
"I am making available now in the Vote Office a document explaining the Government's decision, which also shows on page 8 how the cost of Trident compares with the anticipated capital expenditure on our conventional forces. This information has not been published before. From this it can be seen that Trident expenditure over the next 15 years is a far smaller amount than our planned expenditure on equipment for our major conventional capabilities, such as anti-submarine warfare or offensive air operations. With the 3 per cent. growth in the defence budget until 1985–86, several billions of pounds extra in real terms will still be available to spend on our conventional defences in future years.
"Mr. Speaker, for about 3 per cent. of the defence budget we will be modernising the British independent nuclear force that successive Governments have considered to be essential for our national security over the past 30 years. Nothing has happened to change that need—rather the reverse.
"The Government remain convinced that no other choice but Trident will provide a credible nuclear deterrent into the year 2000 and beyond; no other use of our resources could possibly contribute as much to our security and the deterrent strength of NATO as a whole. To choose a system lacking in credibility to an aggressor or, still more, to abandon unilaterally a capability we have now maintained for three decades, would be a futile gesture that would serve to increase rather than diminish the risk of war".
My Lords, that ends the Statement. May I mention to the House that the two documents mentioned—the exchange of correspondence as a White Paper, and the second open document on the Trident programme; the first was in 1980—are now available.
4.27 p.m.
Lord Peart: My Lords, the House is grateful to the Minister for the Statement, which is one of great importance and will need careful study. I have quickly looked at the White Paper, if I may call it that, and it is a document which also needs careful study. This Statement is the second of great importance this week, the other being the Budget itself. Indeed, this Statement can be seen as part of the Budget Statement, for the Budget was formulated with the Government's defence priorities very much in mind.
May I ask the Minister: does he not accept that if Britain, or, indeed, any other world power, uses or threatens to use a nuclear capability independently, other countries will seek the same right, with all the terrible consequences for the rest of mankind? Taken with a Statement made a few days ago about reserve forces, which the Government admitted had run rather low, does this not indicate that the Government are paying less attention to conventional forces and much more to the nuclear?—a situation which will alarm some of us, in that we may go nuclear right from the start of an emergency.

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Before we get committed to this new stage, had there better not be much more effort to get the SALT talks going again and to press for mutually balanced force reductions on all sides, in order to avoid escalation? I should like to know the progress being made on that front and on the Geneva talks. I had a promise from Ministers that they would give further information about how these talks have progressed.
Is not this kind of independent defence potential rather contrary to the collective security that we have as members of the NATO alliance, where members should contribute to the whole according to their means, not seeking to emulate each other in what can be done alone, with all the risks involved? May I ask the Minister what consultations have taken place with our NATO allies? Will the Minister say more about the job situation in this country in the joint effort with the United States? Also, what cost escalation does he anticipate over the development and production period to the cost, also, of other priorities? I hope that I may have answers on those points.
4.29 p.m.
Lord Mayhew: My Lords, is the noble Viscount aware that this project is absurdly unsuitable and extravagant for this country? Is he also aware that greater priority will be given to our conventional forces by an Alliance Government, which would have little hesitation in cancelling this project? Is he aware that three of the four political parties in this country strongly oppose the project, that not all the members of his own party are supporting it and that strong reservations are felt about it in the armed services, which have the closest understanding of the disastrous effect in the long-term that it will have on our conventional strength? Will the Minister tell the House, not what proportion of the cost of the total budget it is but what proportion of the total equipment budget it will be, in which year that proportion reaches its maximum, and what that maximum is? Finally, is the Minister aware that it cannot be right to launch a hush national defence project like this on the basis of such narrow political support?
Viscount Trenchard: My Lords, I thank the noble Lord the Leader of the Opposition and the noble Lord, Lord Mayhew, for keeping their comments brief on such a very important subject. I am sure that we shall discuss it in the future. The noble Lord, Lord Mayhew, asserted that if a future Government were made up of other parties they would not be in favour of this and would cancel it. Since my right honourable friend was in balk, so to speak, for quite some while before the Americans made their decision on their nuclear deterrent and we were thus able to have discussions with them and make our own decisions, I hope that Members opposite, and their parties, will not make up their mind until they have looked at the facts. I believe that some reactions are tantamount to saying, "I've made up my mind; don't confuse me with the facts".
The noble Lord, Lord Peart, suggested that proliferation could result from this decision. The Statement makes it very clear that we are but maintaining and modernising (as we have had to do before) what
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successive Governments have done. We do not believe that the maintenance of our existing position—a position, in terms of strategic missiles, of some 3 to 4 per cent. of the Russian quantity of strategic missiles—will be a cause of proliferation. The position would be different if we were to go out, and it would have dangers which are recognised by the whole of NATO and by the United States.
Turning to the noble Lord's point about consultation with the allies, we have consulted them about Trident, as I have made clear in this House on previous occasions—and so has my right honourable friend. Our allies were aware that we were discussing with the United States the form of the Trident missile which we would take.
So far as the very important and strongest member of the NATO alliance is concerned, noble Lords will have an opportunity to read in the White Paper the views of President Reagan and of Secretary for Defense Weinberger, who both regard this move by us as of great importance and as strengthening the defensive NATO alliance for the free world. Both noble Lords mentioned the effect on our conventional forces. The Statement makes it clear that as a result of the policy of this Government our spend on conventional forces in the future will still go up by several billion pounds. That is against a 3 to 4 per cent. increase.
So far as the question asked by the noble Lord, Lord Mayhew, which related to the percentage of the equipment budget is concerned, the 3 per cent. becomes approximately 6 per cent. when expressed as the equipment budget. Regarding his question concerning the peaking of expenditure, the noble Lord will find in the open Government document a very helpful graph which shows this. However, let me say at this stage that the peaking is seen to be a little over 10 per cent. of the equipment budget, which compares with the peaking of Tornado at round about 17 per cent. of the equipment budget.
So far as the arms control talks are concerned, I have to say to the noble Lord the Leader of the Opposition that we shall report from time to time on the progress of the arms control talks. We have said before that the fact that the arms control talks have got started at all is in part due to the firmness of the NATO alliance which has at last brought the USSR to the conference table. Finally, the possession and modernisation of this weapon which we have held for years is necessary in order to maintain a deterrent against any thoughts of aggression. I believe that this has been a powerful contribution to peace over the past 35 years.
Lord Kennet: My Lords, the Government are being both careful and clever in this negotiation and in their presentation of it. It seems to me that good negotiation has led to an advantageous deal, particularly as there is the prospect of much more work for this country than there was in the Polaris programme, and a much higher proportion of the work will be for both American and British forces. For this the Government would be congratulated if we wanted the product. However advantageous, though, the Government cannot be congratulated on a deal which obtains a product which we do not need. And 10 per cent. of the equipment budget at the peak is pretty high. I

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do not emphasise that as the gravest disadvantage. The Trident system itself is too big. Each boat is too big. Would not the Government agree that each boat, looked at in a certain light, is too big? There is a quantum in these matters and that quantum is too big. It is bad for disarmament. We need only a minimum deterrent. There is nothing minimum about Trident.
Baroness Young: My Lords, I am sorry to interrupt the noble Lord, but could he put his points in the form of a question and not make a speech? It is a Statement which we have just had.
Lord Kennet: My Lords, I apologise if I have got the custom of the House wrong. I thought it was in order for those speaking for parties to put their questions in the form of a statement, but as it is not I will proceed by putting them in the form of questions. Is not this vertical proliferation with a vengeance? Is it not time for Governments to cease acting unilaterally in the political sense in these vast defence purchases and to take, I do not say other parties but the House of Commons into their confidence at an earlier stage (which was not done on this occasion) thereby decreasing the risk of inflicting cancellations at a later stage, which can only be unwelcome to the armed forces?
Viscount Trenchard: My Lords, the noble Lord, Lord Kennet, suggests that this is a product which we do not need. I do not think a single suggestion has been made by his party, which includes in its leadership a number of those who have taken part in the independent deterrent decisions of the past, that we do not need a deterrent which is capable, in the opinion of all the experts, of producing the same degree of deterrent power as we have had in the past. In suggesting that all we need is a minimum deterrent, the noble Lord and many others outside the House are, I believe, guilty of wishful thinking.
Her Majesty's Government have examined and re-examined, as the open document makes clear, whether we could have an adequate degree of deterrence which would be credible as an independent deterrent at the end of the century, or in the next century, in any other, cheaper way. I hope that the noble Lord will read our reasoning in that document. Again I say that I hope we shall not have a situation in 1982 (which we have not previously had in this country regarding matters of defence, which are highly delicate—this touches on the point of consultation) where all the responsible parties do not look very closely at the alternatives which are offered. We have now put out two "open Government" documents on this subject, which is more than many other Governments have done in the past.
4.40 p.m.
Lord Orr-Ewing: My Lords, is my noble friend aware that there is a noticeable difference between the sensible, careful and considered position taken in this House by the official Opposition who, like all of us, would like an opportunity to study these two very detailed documents before coming to a final decision, and the Labour spokesman in the other place, who made instant and emotional threats to cancel the whole thing before there is time to make a study? The same view has been
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taken from the Liberal Benches in this House, surprisingly. Most of us would like time to consider this. Could my noble friend tell us how the 3 per cent. estimate for our deterrent compares with the similaestimate for the cost of the French independent deterrent? Does he have any figures to suggest how many jobs would result from this programme, not just at Vickers Barrow but also in the engineering industry, among contractors and sub-contractors, as a result of this ambitious project?
Viscount Trenchard: My Lords, I agree with the first part of my noble friend's remarks, as I have already made clear. With regard to expenditure by the French on their independent nuclear deterrent, the estimate we have is that they spend on their independent nuclear deterrent some 20 per cent. out of their total budget. With regard to jobs, we do not have a precise estimate. The Vickers Barrow line will continue into Trident submarine production following SSN production. There will be new capital equipment required and therefore an increase in jobs at the Vickers yard.
As far as jobs are concerned in relation to the particular opportunity for British firms to offer their goods in sub-contracts for the whole American D5 missile system, this entirely depends on industry. We shall take every step, and the American Administration has agreed to take every step, to try and make it possible, although in this highly specialised world it will not be easy, to compete on fair terms with our American counterparts.
Lord Noel-Baker: My Lords, can the noble Viscount explain, in order that we may comprehend what this new system means, how many warheads we shall have, and what will be the yield of each warhead in kilotons or megatons? May I ask the noble Viscount if his Statement means that the Government are now reconciled to the prospect that the present escalating arms race will continue for 40 years? Does he seriously believe that we should live through those 40 years without the catastrophe of a nuclear war?
Viscount Trenchard: My Lords, the noble Lord, Lord Noel-Baker, asks about the number of nuclear warheads. The Statement makes it clear that we plan, on current intentions, to have the same number of warheads as we would have had on the C4 system. We do not disclose the details of the size of the warhead, although I believe there is no major difference. As regards the "escalating arms race" as the noble Lord mentioned it, the United Kingdom has maintained its deterrent in a world in which modernisation requires change, and is not escalating. The Soviet Union has in all areas escalated very fast in recent years and that country's total defence spending has increased very greatly.
With regard to the noble Lord's question about whether we can see what he perhaps rightly called an armed truce situation continuing indefinitely, our answer is, no. Economics and the determination now being shown by the NATO defensive alliance are two things which provide a better opportunity for progress on arms control and reduction than there has ever been before. But the noble Lord must remember the figure I gave and keep the matter in perspective; this

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deterrent is equal to some 3 or 4 per cent. of the strategic weapons possessed by the Soviet Union.
Lord Gladwyn: My Lords, Are the Government aware that, in the opinion of many noble Lords on this side of the House, the one redeeming feature of their proposal to produce an expensive weapon which would be superfluous in the event of a war in which the Americans were on our side and useless if they were not is that, having opted for the more expensive version of Trident, they will have then to spend less during the initial stages, which will make it easier from the financial point of view for an incoming Government to cancel the project when they come to power in two years' time, as will doubtless be the case?
Viscount Trenchard: My Lords, the noble Lord suggests, as he has done many times before, that the possession of this kind of independent deterrent by us is useless. Yet, many noble Lords have pointed to what they regard as the excess levels of nuclear weapons in the world's armoury as a whole. One cannot have it both ways. The deterrent we have had in the past and the deterrent we mean to maintain is sufficient on its own to cause quite unacceptable damage to any aggressor. It is the key characteristic of an independent deterrent that it should have that power on its own, and it does have that power on its own. Provided that it does, it will never be used, because, in fact, this country will never be attacked in the way that will require that response.
The noble Lord described the D5 system as the "more expensive" system, as indeed I heard the BBC do last night—and the BBC had increased their estimate by £500 million by the 7 o'clock news this morning. The Statement makes it clear that the route we are following on a "through-life" basis is almost certainly less expensive than the C4 route would have been. I believe that for the percentage of budget which it represents, it will continue to provide the best deterrent value in the whole of our budget.
Baroness Young: My Lords, we have now spent more than half an hour on this matter. I should like to suggest that the noble Lord, Lord Hill-Norton, who has been trying to speak since the very start of these proceedings, might now put his question and that we should then return to the Local Government (Miscellaneous Provisions) Bill.
Lord Shinwell: My Lords, I should like to ask—
Baroness Young: My Lords, the noble Lord, Lord Hill-Norton, has been trying to ask a question from the very moment that the Statement was concluded.
4.49 p.m.
Lord Hill-Norton: My Lords, I am very grateful to the noble Baroness. I should like to ask the noble Viscount whether he and his colleagues—not only at the Ministry of Defence—will take exceptional steps to make quite certain that the arguments produced in the Statement by the Defence Secretary are widely disseminated throughout the country, because they are
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simply not understood—as almost all the questions asked in your Lordships' House this afternoon have made quite clear. May I further ask the noble Viscount that when doing so, he should make quite sure that the percentages occupied by other large programmes such as Tornado are drawn in comparison with the costs of this vital component of our defence policy?
Finally, may I ask the noble Viscount whether he may tell the House the extent to which the possession of an independent British nuclear deterrent is welcomed by our European Allies in the North Atlantic Treaty Organisation? And perhaps I may say, as a critic of some aspects of the Government's defence policy, that I think this is the best news I have heard this year.
Viscount Trenchard: My Lords, I am grateful to the noble and gallant Lord for those questions and his final comment. I agree with the noble and gallant Lord that the position is not understood in the country. I have found, travelling up and down myself, that there is just no comprehension of the fact that the Trident cost has little or nothing to do at the present time with the problems of paying for modern weapons in the conventional area. The critics are chasing the wrong fox, and they are a fairly motley pack. I can assure the noble and gallant Lord—
Lord Peart: My Lords, may I intervene to say this to the Minister. We all have a great respect for the noble Viscount, but I think that type of language is the wrong language to use.
Viscount Trenchard: My Lords, I am corrected by the noble Lord, and my old friend, if I may say so. I was referring to the critics up and down the country and not to noble Lords opposite. I think if the noble Lord looks at Hansard he will find that that is correct. The Tornado comparisons and the comparisons with the expenditure on other roles are clearly set out in the open Government document. A welcome from NATO was given by all countries at the time the basic Trident decision was taken. I think I have no more to say.
Lord Shinwell: My Lords—
Baroness Young: My Lords, I, of course, will be guided by the House in this matter. We could, of course, go on taking a great many more questions, and I recognise that this is a most important Statement, but we do have a great deal of other business to do this afternoon. I would have thought that now that we have been very nearly 40 minutes on this Statement it is time to move on to the next business. I would hope that that would be the view of the House.
Lord Beswick: My Lords, would not the noble Baroness the Leader of the House agree that the answer to the last supplementary question did open a whole new series of subjects and that it ought to be possible to challenge some of the statements made in that answer.
Baroness Young: My Lords, of course it is a very big subject. There are a great many facets that cannot possibly be covered in the course of a Statement, or in questions following upon a Statement. I recognise

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that many noble Lords feel very strongly about this issue; we have had a lot of Questions in the House on it. I feel there will be other opportunities to discuss this matter, and I do think we should now move to the next business.
Lord Shinwell: My Lords, is the noble Viscount the Minister aware that, subject to certain conditions, I welcome this Statement. The conditions are, first of all, that the Government, having taken the best advice and after mature consideration, have reached a decision, and I hope it will be the end of the controversy so far as the Government are concerned, although undoubtedly there will be certain implications. The other condition is this.
Baroness Young: My Lords, the noble Lord is not asking a question; he is now on a second statement. I think we had concluded that the House now wished to return to other business. I think we should do that.
Lord Shinwell: My Lords, I have ventured in the past to express opinions on this subject, and I have also been chairman of the House of Lords Study Group. I think I am entitled to express an opinion, but I am merely asking a question. My second question is this—
Baroness Llewelyn-Davies of Hastoe: My Lords, while there are very many noble Lords on this side of the House, and I think on this side in general, who profoundly disagree with a great deal that the Government have said in this Statement, the House accepted the collection of views, taken by the noble Baroness the Leader of the House on three separate occasions, that the discussion on the Statement should conclude. Although I must say again that we disagree with a great deal of what the Government have said, I think we must abide by the conventions of the House.

Local Government (Miscellaneous Provisions) Bill
4.56 p.m.
House again in Committee.
Baroness Birk Baroness Birk had given notice of her intention to move Amendment No. 2:
Page 2, line 14, leave out subsections (5) and (6).
The noble Baroness said: This is a very short amendment. I will speak very briefly to it so that we can get on with the Bill. In Schedule 1 the paragraph referring to licensing does not apply to this. It says "performed as an incident to a religious meeting or service". We have just inserted the words "or political". We are thinking here of a meeting where it may be felt that they want some singing to take place, or a piano, or some music. I thought this would probably have been quite acceptable to the Government. I do not think there is any more to say on this.
Lord Belstead: I have been taken rather by surprise at the brevity with which the noble Baroness has introduced this. On my reading of this Amendment No. 3 when taken in conjunction with Amendment No.
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4, which I think one is bound to do, it is really tantamount to introducing a licensing system for pop festivals. Before we go any further, may I ask the noble Baroness whether I am right in thinking that?
Baroness Birk: Yes, the Minister is right, but nevertheless even if there had not been an amendment following it we would have wanted to put in "or political" in any case. I may have made a mistake myself, but that is how it struck me. I was going to speak to them together, but I thought they were two separate things. I will carry on and speak to them together.
The Deputy Chairman of Committees: We must be in order. The Question before the Committee is that Amendment No. 2 be agreed to in the name of the noble Baroness, Lady Birk, "Page 2, line 14, leave out subsections (5) and (6)".
Baroness Birk: I am sorry. That amendment is not moved because it is consequential on the amendment which has just been lost.
[Amendment No. 2 not moved]
Schedule 1 [Licensing of public entertainments]:
Baroness Birk Baroness Birk moved Amendment No. 3:
Page 44, line 17, after ("religious") insert ("or political").
The noble Baroness said: I am afraid I did not save much time over that. In moving Amendment No. 3 I will, if I may, speak also to Amendment No. 4. These amendments are to deal with pop festivals, the licensing of pop festivals. I would say from the outset that this is a Bill where, with very few exceptions, there are a variety of opinions—both on the Benches behind me and the Benches opposite—on the different clauses and amendments. We have been trying to find a way in which there can be some sort of control or guidance from the local authorities without necessarily—although some people might like to do so—going the whole way to a licensing system or, perhaps part of the way towards that. I am recalling that it was as regards the proposal in this amendment—not the other one—that the noble Lord, Lord Bellwin, when winding up on Second Reading, said that he would look at the matter. On Second Reading I did say that I would like to see guidelines laid down by the local authorities.
There are, of course, two different types of pop festival; there are the free ones which take place in large areas in the country, and as regards which it is quite often difficult to find out who are the organisers or to lay down conditions which are kept. There are also those which take place in inner areas—for example a football ground or somewhere like that—where, unless there is some control by the local authority, people will either not let the ground be used or the residents in the vicinity will find parking and other matters a great nuisance to them.
The reason that I am rather tentative about the way in which this matter should be dealt with—although I think that somehow we should find some way of dealing with it—is that I would very much dislike doing anything which would result in a ban or an

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embargo on pop festivals. However, I want to ensure that they are conducted in a civilised manner and in the right place. That is why I took the view at the beginning that the only way that I could achieve that was by means of some form of licensing system or something rather like it. If the Minister says that the local authorities could introduce private Bills but that then we would repeal all the local Acts at the back of the Bill—to which my noble friend Lady Fisher referred when speaking to the last amendment—then I think that it would be a great pity if some of the local authorities were put in the position of introducing yet again another Private Bill when they had already been to the trouble and expense of introducing one in the past. I think that would be, as she rightly said, a truly Gilbert and Sullivan situation.
We are worried that the situation will be left without any form of control for local authorities to take on, if and when they wish to do so, and I was hoping that, between Second Reading and now, the Government would have thought the matter out and found some way of dealing with it so that there could be some form of guidance and control either through a type of licensing system or through some other means. I beg to move.
The Deputy Chairman of Committees (Lord Airedale): Before calling this amendment, I should have put the Question, That Clause 1 stand part. Perhaps I may now do that. The Question is, Whether Clause 1 shall stand part of the Bill?
Clause 1 agreed to.
The Deputy Chairman of Committees: The amendment now proposed is in Schedule 1 at page 44, line 17, after "religious" insert "or political".
Lord Evans of Claughton: I should like to say briefly that I recognise the problem and the way in which the noble Baroness has tried to get round it. I think that what the noble Baroness and I, and many others of your Lordships, would want, is the introduction of some kind of control of entertainments which take place wholly or mainly in the open air, as they are at present controlled in Greater London. If one did not exclude political and religious meetings and bazaars and other harmless occupations of that kind, one would sweep a whole lot of perfectly commendable public entertainments into an area where they had to be licensed.
As I see it, the purpose of these two amendments is to say that an entertainment held wholly in the open air should be licensed except for the exceptions of a,
"religious or political meeting or service…as an incident to a bazaar, sale of work, garden party, fete",
and so on. Although I do not seek—I do not think that the noble Baroness seeks—to ban pop festivals, I do seek to give the local authority, if they have a licensing procedure, the opportunity of making a decision as far as the district is concerned in which the pop or similar festival is to take place, about whether they can cope with the kind of trouble that very often goes with these kinds of entertainments—for example, litter and other hazards. It seems to me that, although possibly this is a rather laboured way of doing it, as things stand at the moment the noble Baroness has found the best way of trying to deal with the matter.
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I would like the Minister to explain to us (I am sure that he will try to do so) why what is good enough for Greater London—namely, the control of festivals of this kind—should not also be good enough for the provinces. Some of us have the good fortune to live in the provinces and think that we are at least entitled to equal concern about our lives being disrupted, or possibly being disrupted, by some of the more advanced pop festivals which, I understand, since the 1960s have passed, are not so frequent as they used to be.
On first reading the amendment one concluded that the noble Baroness was trying to press the Government—who were apparently in favour of religious meetings, but not in favour of political meetings—to broaden their outlook. If noble Lords think that religious meetings are no trouble and cause no difficulty, I would invite them to come to the part of the world where I live, because I can assure them that religious meetings can be even more noisy and even more troublesome than political meetings. The general purpose was to try to control in the provinces entertainments which take place wholly and mainly in the open air, and to make exceptions of the two groups of entertainments referred to. I have much pleasure in supporting the proposal which the noble Baroness has put before your Lordships' Committee.
Viscount Ridley: I should like briefly to add a few words of support to the amendment on behalf of the Association of County Councils who I think were very glad to see this amendment before the Committee. In seeking such powers as have been very well described by the noble Baroness, the ACC would not be trying to stop pop festivals in any way, but merely to see that they are subject to proper control, to safeguard both those who take part and, of course, the local neighbourhood. In the past I believe that the Home Office has allowed quite a number of county councils to have such powers in various local Acts. It seems illogical if the Government are now going to oppose the amendment because they already have the powers. If the Bill goes through unamended a great many powers will lapse and several authorities which have taken the considerable time, trouble and expense to acquire these powers will, therefore, lose them. I hope very much that the Government will be sympathetic. On Second Reading we all understood that nothing contentious should be brought forward at this stage of the Bill. I do not believe that this is contentious and I hope that the Government can help us.
Baroness Ewart-Biggs: On Second Reading I spoke about what is the best way to reconcile the young music enthusiasts who want to have pop festivals with the interests of the local residents. The arguments for and against this being best achieved through the local authorities controlling pop festivals seem to me to be as follows. The major argument is that the cause of the pop festival could be very much strengthened if it were felt that the local residents' interests were represented by local authorities.
If I owned a field in Essex, for example, and a group of young people resembling very closely my own children, came and asked me if they could use my field to hold a pop festival in, I would immediately wish to know whether they were going to have help

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in organising the pop festival. I would like to think that there would be help as regards the traffic arrangements—which would be enormous—the litter arrangements and, indeed, the safety arrangements, which I think the Minister brought out when discussing Clause 1. Fire regulations and safety regulations, even out of doors, are something that should not be left in the hands of what is mainly a very youthful group of people. Therefore, as I say, I should have thought that the sympathy of local people, who would be very much affected by the holding of a pop festival, would be much stronger if they knew that the local authority was, in all honesty, representing their interests through organising the pop festival.
Of course, the arguments against are that in some places local authorities would be completely against such an activity and would wish to place an embargo on a pop festival. But, again, I do not think that this would be very probable. As the noble Viscount who preceded me said, it has not happened in Greater London. I do not think that there is very much scope for outright refusal. If, indeed, for some reasons a local authority did put an embargo on a pop festival, then, of course, there would be the right of appeal both to a magistrates' court and to the Crown court. So surely, as my noble friend Lady Birk said, the local authority would always want to lay down guidelines; these would state exactly where the festival should happen, its size, and the best arrangements that would fit in with the interests of the local authority.
Another point which has been made is that several local authorities have, indeed, gained powers to control festivals, and they have only just gained them at great expense and time. It would seem a strange anomaly if they were to approve the provisions of Schedule 6, under which they would lose such powers. After all, these young people indulge in what is a very popular activity, and compared to many of their activities it is an extremely harmless one. Therefore, on balance, I think that they would be better represented if local authorities had power to give them guidelines, and to steer these pop festivals through in the most harmless and peaceful way possible.
Baroness Stedman: When we had a working party on pop festivals, it split down the middle as to whether we ought to be asking for legislation to license or whether we should leave things as they were. For my part, I can see no difficulty whatever in licensing for the genuine commercial pop festivals. But the problems will arise with the so-called "free" festivals, when they invade some farmer's land without asking permission; when there is no one person against whom one can issue writs or against whom one can put out summonses, or with whom one can negotiate. Once the negotiations become a little difficult, that person vanishes and one has to find another person.
Although I think that the licensing of commercial festivals would be workable and would probably be acceptable to local authorities, that will not solve the problem of the "free" festivals; and if they still take place, there will still be itinerant people moving around the countryside until they are able to persuade a farmer that it is in his interests to leave them alone and let them have their pop festival. Then someone has to pay for clearing up the ensuing damage. I only wish that we could find some form of co-operation
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between the people who run the "free" festivals and local authorities.
In our working party we decided that we could not recommend legislation at that time, but we hoped that there would be much more co-operation and, in a sense, a wider welcome by those who wanted to run "free" festivals, to try to do so with the co-operation of the organisers of the "free" festivals and the local authorities concerned. However, there is a tremendous amount of hostility to break down, which has built up over the years, before we can reach that situation. I hope that local authorities will go on trying to co-operate with the organisers of "free" festivals, and I hope that when local authorities are planning their leisure pursuits, they will also plan open spaces in which events like pop festivals can take place without causing too much annoyance to the countryside around and to the people who have to live in it. Although I think that there will be no problems at all as regards licensing legitimate and commercial festivals, I also think there will be tremendous problems in trying to license "free" festivals, and making it stick.
5.14 p.m.
Lord Belstead: My Lords, when the Bill had its Second Reading, I and my noble friend Lord Bellwin gave assurances to your Lordships that the Government were considering whether it would be possible to introduce some sort of control with regard to pop festivals. Since then we have gone into this at some length and given detailed consideration to the problems. But I felt that we ought to hear the views expressed by your Lordships on these two amendments.
The Committee may think that that was not a very adventurous way of approaching the problem, but I think that the Government can be forgiven for hesitating. The noble Baroness, Lady Stedman, who has just spoken, of course, chaired a committee during the time of the previous Government. Although the noble Baroness had just told the Committee that her committee was split down the middle on this particular subject, none the less I think that the committee of the noble Baroness, under her skilful chairmanship, reached a main recommendation, that pop festivals should not be licensed. However, that was followed by a secondary recommendation, that if one local authority took private Act powers to control such festivals, the Government should make licensing powers available on a national basis.
I say that only to show that, clearly, there were different thoughts in the minds of the noble Baroness's committee and maybe in the mind of the noble Baroness herself. Probably, for very much the same reasons as persuaded her committee three or four years ago, the Government, again, were not entirely sure on this matter. If I may say so to the noble Lord, Lord Evans, we are also not entirely sure when we look at the example of London, which the noble Lord put specifically to me. Arguably, the events which are permitted in London by the Greater London legislation are not confined to pop festivals, but are open-air concerts, no different from open-air classical music concerts, which also take place in London during the summer. In looking at the Greater London legislation, it is a little difficult to think that there is an obvious example which should be followed outside London.

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Having said that, and having listened to the Committee debating this matter for the last 20 minutes, on behalf of the Government I should like to say that I accept that there is a case for some controls to be provided and I would be prepared to bring forward amendments on Report. I say that in no way wishing to sweep aside the amendments which the noble Baroness, Lady Birk, and her noble friends are putting forward; but because I think that there are some matters in these amendments which perhaps need some attention. If I may say so, I do not think that the exemptions go quite wide enough in some respects. For instance, I do not think that music incidental to sporting events ought to be controlled, and I think that that is what would happen if these amendments go through unamended. Nor do I think that there should be an exemption for music incidental to political meetings, which, of course, is the subject of the first of the two amendments, as this would put local authorities in the invidious position of having to decide whether a meeting was primarily political or primarily musical. In other ways, the proposed controls are perhaps a little too wide.
Although local authorities are forced to make whatever reasonable licensing conditions they choose for indoor entertainments, we think that there is a case for restricting any powers which they might be given to control pop festivals to their basic aspects. In saying that, I am thinking particularly of the speech made by the noble Baroness, Lady Ewart-Biggs, who felt that sensible, straightforward rules to ensure that proper standards to be followed by young people who want to have a pop festival would not be unreasonable; of the speech made by my noble friend Lord Ridley, who, if I may say so, said very much the same thing; and, indeed, of the speech of the noble Baroness, Lady Birk, who said that pop festivals should be conducted "in a civilised manner".
If we could go down that road, that would mean confining the licensing aspect to such things as public health, safety and noise, and the provision of access for emergency vehicles. I am also persuaded in this, bearing in mind the speech which the noble Baroness, Lady Fisher, made earlier this afternoon, by the effect of the repeal of local legislation. Although it is interesting that the Isle of Wight legislation—which I believe is the only specific pop festival piece of private legislation to be found on the statute book—has never been used by the Isle of Wight, none the less there are about seven more important local authorities which have private legislation on the statute book—the noble Baroness is right on this point—which trenches on how to regulate outdoor entertainments.
If those pieces of legislation are to be removed by this Act, and it is being done because it is so terribly difficult to unpick the bits that relate to pop festivals from other bits in the local legislation, then it is arguable that those local authorities could say, "Well, we do look towards local government in this Bill to put something in its place." I should therefore like to make an offer to the Committee. If the noble Baroness would consider withdrawing the amendment, I should like to be allowed to take this matter away, and then, perhaps in correspondence with the noble Baroness
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and her noble friends, to put forward a suggestion for a Government amendment, or amendments.
If the noble Baroness and her noble friends, and other noble Lords who have taken part in this short debate, do not feel that the Government amendments are sensible, provided there is time we would have a meeting to see whether we could thrash out an agreement, and then get an amendment down on the Marshalled List for Report which might command the acceptance of the whole House. That is the offer that I should like to make. I hope that it will help to take the matter forward.
Lord Sandford: May I make one short comment on what the noble Lord said. First, to welcome it very much, and to ask him, if he is thinking of extending the exemptions, to bear in mind military tattoos as another possibility.
Lord Belstead: Certainly.
Lord Foot: May I draw attention to one small matter. These two amendments that we are talking about relate to two quite different matters. The first amendment—and the noble Baroness who moved the amendment I think did not refer to this at all—
Baroness Birk: I did.
Lord Foot: If the noble Baroness did, I beg her pardon. I did not hear it. The first amendment is to insert the words "or political" after "religious". If I understood what the noble Lord was saying from the Front Bench, he is disinclined at the moment to accept that. When he comes to reconsider the whole matter, I hope he will think better of that. It is an important matter. If the political meetings are not included, then it would be dangerous for the Labour Party to conclude their conferences by singing the "Red Flag", because that would clearly be incidental to a political meeting. They would be opening themselves to penalties for not having applied for a licence. I hope that the noble Lord will in due course consider that it is right to include political meetings.
He was saying that it would be difficult to decide in any particular case whether a political meeting was mainly for musical purposes or only incidentally. I do not think that that difficulty arises because in Schedule 1 the relevant paragraph would read:
"performed as an incident to a religious or political meeting or service".
It seems to me that there would be no greater difficulty in dealing with a political meeting than in dealing with a religious service, because in each case the music has only to be incidental.
Baroness Birk: I should like to thank the Minister for that helpful and generous reply. I am afraid what happened on the first amendment was that I got into a bit of a muddle over the amendment and I moved it briefly before one that should have been moved previously, so perhaps it was not heard. I hope that the Minister will be persuaded by what the noble Lord, Lord Foot, has said, which was really on the lines on which I was going to speak. We are talking about a political meeting with music as well as a religious

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meeting with music; not a musical meeting with religion, or a musical meeting with politics.
I agree that to open this out more would improve it. As I indicated, this was more of a probing amendment, to see whether we could find something. It was an amendment that I certainly would not have been happy with myself had the Government accepted it in its present form. The important thing is to try to find some means by which much greater mutual trust and co-operation is established between people who are trying to organise these things and the authorities on the other side. Could one try to do that.
We know from what the noble Baroness, Lady Stedman, has said, that it is difficult to bring this about. I know that from my experience at the Department of the Environment. But I hope we could do it From what the Minister said about access and keeping down to the practical critieria, and things which are of importance both to residents and to the people participating themselves in the festival we might go a long way. I am grateful to the Minister. It is with great pleasure that I withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 4 not moved.]
5.27 p.m.
Baroness David Baroness David moved Amendment No. 5:
Page 44, line 38, at end insert ("or the provision of one or more electronic or other machines for amusement purposes only")
The noble Baroness said: I should like to speak to Amendment No. 6, which goes with Amendment No. 5. These amendments are to deal with machines which I think are called "space invaders", or some of them are. The two amendments are linked. The first seeks to give district councils power to license places where there are one or more amusement machines not being gaming machines with prizes. District councils need this power to control the growing phenomenon of electronic-type games which do not offer prizes and therefore do not fall within the scope of the Gaming Act 1968. Players pay their money for a go on the machines, so this is entertainment and not gambling. Representations were made last year by some authorities, but the Home Office advised that such machines do not constitute gaming and consequently cannot be controlled under gaming laws. That is the reason for seeking controls under the public entertainment licensing provisions of this Bill.
Now why do we need controls? The Association of Metropolitan Authorities undertook a survey of all its member authorities. The view that controls should be introduced is shared by all authorities regardless of political affiliations. Authorities have pointed out that capital investment in the electronics industry, together with the versatility and apparent development potential of the machines concerned, make it unlikely that the present situation can be dismissed as a short-term craze, and that Parliament should act sooner rather than later.
These machines are being installed, apart from in cafés and public houses, in many ordinary trade premises such as shops and launderettes. The number of young people who congregate to play these machines can be a source of nuisance to neighbours, especially
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if some of them are living in flats above the premises. These machines are very expensive to play, usually about 20p a time, which can last only a matter of seconds for a beginner. The nature of the games encourages children to spend an increasing amount of money to develop their skill and to obtain a higher score than their friends. Pounds can be spent in a matter of minutes.
Increasing evidence is being gathered by the police, education authorities, and social workers as to the detrimental effects of these machines on children. Mr. Foulkes, in the debate in the other place on 20th May in cols. 287 and 289, gave examples of children being up for theft because they had stolen in order to find enough money to play on these machines. One had stolen £106 from his grandmother which she had collected for her funeral. Some others had resorted to blackmail. It is quite a serious problem. We do not want to spoil people's fun and we are not anti these sort of games. They can provide much entertainment and be of considerable help to some people. Brent authority bought a machine for use by handicapped children. Success on the machines depends on very good co-ordination of eye with hand movement, and that is a help for many physically handicapped children.
We are aiming to control the installation of these machines. Parliament has already given local authorities power to control gaming machines with prizes—fruit machines and so on—and it seems reasonable that they should have power to control these new machines in the best interests of local communities. Under the provisions of the schedule, any aggrieved applicant would have the right of appeal against the decision of a local authority to the magistrates' court and against the decision of the magistrates' court to the Crown Court. The object of the second amendment, which is consequential, is to make it clear that gaming machines are not being included within the ambit of the proposed control, as they are already controlled separately. I beg to move.
Lord Belstead: I understand the concern which the noble Baroness expressed and I assure her that I was aware that such concern existed. However, I am rather worried by the amendment. This is an area of social control where the issues are complex and sensitive and it is necessary to consider how far it is right to interfere with business activities which are not inherently unlawful and to consider the extent of the mischief complained of, the scale of interference which might justifiable and the effectiveness with which the proposed controls might be enforced. I do not intend to go into those matters in depth; in fact, I shall pick out only one of them, and the noble Baroness, Lady David, talked about the extent of the mischief complained of.
I do not know to what extent the troubles about which she told the Committee are a social menace. I take absolutely what she said as being the case, but in my mind is the fact, as the Committee will know, that crazes sweep the country from time to time, and it is possible that playing on video machines may be one of those. A few years ago it was difficult to pick one's way down the street with safety without being bowled over by somebody on a skate board. We do not see

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many skate boards today, but we do see an enormous number of young prople on roller skates. Suppose, in our wisdom, Parliament had decided to pass some form of legislation to do with skate boards. We might have looked as though we were a little out of date a couple years later. What, in effect, I am saying therefore is that we might just find in only a year or two from now that we wished, instead of legislating for video machines we had legislated for something else.
There is another point which might lead the sponsors of the amendment to consider the matter further. It is slightly odd from a drafting point of view that the amendment should have been put in with a subsection dealing with public contests—exhibitions, displays of boxing, wrestling, judo, karate and similar sports—and therefore from a drafting point of view another subsection would probably have been desirable. On those grounds, the noble Baroness might wish to think further about the matter and ponder whether we might be falling into the trap of legislating for a passing phase. She mentioned the honourable gentleman Mr. George Foulkes who, in another place, had a Bill under the 10 minute rule procedure to do what the amendment seeks to do. Leave was refused to that Bill, and possibly another place had the same thoughts that passed through my mind on looking at the amendment.
Baroness David: I have listened carefully to the Minister's reply. I am prepared to accept that the drafting is not ideal and that the amendment may not have been applied to the most correct place in the Bill. I am not altogether convinced that it is a passing phase. Too much money is made from these machines for the people running them to let them go out of fashion; they will find different sorts of games to play and will keep the craze going in that way. As gaming machines are dealt with in legislation, it would not seem different to deal with these machines. However, I shall read in the Official Report what the noble Lord said and consider whether to return with a slightly different amendment on Report. Meanwhile, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 6 not moved.]
5.36 p.m.
Baroness Stedman Baroness Stedman moved Amendment No. 7:
Page 45, line 40, leave out ("may remit the whole or any part of") and insert ("shall remit").
The noble Baroness said: I shall speak at the same time to Amendment No. 8 because the two go together. In the Bill we are seeking to introduce a code for public entertainment licensing which will be uniform throughout the country outside Greater London. That means it will apply to village halls, public halls, church halls and community centres. The schedule as drafted provides that local authorities may remit the licence fees in whole or in part for entertainments of an educational nature or entertainments given for a charitable purpose, and my amendment is much firmer than the Bill, in that it would make that power mandatory on the authorities.
Village halls and community centres and their management committees are specially concerned about the question of fees. Village halls are mostly nominated and registered charities. They are managed by voluntary committees who freely give of their time and expertise to the benefit of the whole of the community in their area. In rural areas, where public transport is scarce and often costly, the village hall is increasingly important to the rural community. Finance has always been difficult and a high proportion of the funds to maintain the village hall have to be raised by voluntary effort. While grants have sometimes been available, the Government's decision to end direct capital grants in 1981, together with cutbacks in local authority spending, have reduced the availability of that type of assistance. The same comments would apply to community centres run by voluntary committees, but in urban areas.
The London provisions, on which the schedule is based, give mandatory relief to charities and it would seem right and proper to have a uniform system. Without a mandatory requirement, however, some local authorities may not feel able or be willing to make a rebate. Many village hall committees go to great expense to ensure there are high standards of safety and public protection. Village halls and community centres in urban areas frequently help to reduce the burdens on both central and local government, so their position should be reviewed as sympathetically as possible.
The safety of the public is obviously the point of supreme importance, but a total exemption from fees is needed to encourage the development, while reducing the administrative costs, of village halls and community centres. The administration of the amendment would be straightforward; the Rating Act appears to work easily and charities receive a mandatory relief on 50 per cent. of their rates with an option of further relief at the discretion of their local authorities. As the noble Baroness, Lady Fisher, said earlier, many of the counties already have local Bills under which they are able to do that. The areas where this is so (taken from the 1980 Acts) include the counties of Kent, Greater Manchester, West Yorkshire, Cheshire, West Midlands and Merseyside.
Since the new legislation will replace the relevant provision in those Acts, it seems to me important that the privileges of the charities should not be reduced. Over the years in your Lordships' House we have paid a lot of lip service to rural deprivation and the need to do something for the rural areas. It is with that in mind that I commend the amendments to the Committee as a positive form of help to rural communities. I beg to move.
5.41 p.m.
Lord Clifford of Chudleigh: I should like to support the noble Baroness in her amendment. If I may declare my interest, I would say that I am the president of the parish councils' association for the county in which I live—Devon. Over the years your Lordships' House has tended to forget the importance of the parish as a unit and in particular its village hall, and I believe that the amendment is one way in which the balance can be slightly restored. The tendency towards centralised rule is a great mistake, and I should like to

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quote a story told by my late noble friend Lord Amory. When several years ago he was talking on a local government Bill, he gave an example of two neighbouring parishes in Devon where they were considering amalgamating. One councillor got up and said, "Us don't want to have nothing to do with they there roundheads".
The history of a parish is of special local significance to people in the parish and generally the parish hall has been built by the local people. In more recent years some village halls have received government grants in aid. Some of your Lordships might remember that we had a little trouble, luckily settled in the time of the late Government by the noble Lord, Lord Donaldson. A local parish had collected all the money due to it under the grant system, and then the Government proposed to abolish the system, which would have meant many more years work for the parish. I hope that the Government will accept the amendment because it would add to the local sense of responsibility for the parish hall. It would also remove a grievance felt by local people that others, higher up, are trying to tell them how they should organise their own affairs. The Government should accept the amendment.
Baroness Faithfull: Does not the Minister consider that, as drafted, the Bill reduces the privilege of charities? Bearing in mind what was said by the noble Baroness, Lady Stedman, and the noble Lord who has just spoken, I would point out that those of us who are very much engaged in raising money for charities are all too aware of the great problems facing us at present with VAT. To have imposed yet another problem would lead to real difficulties for charities, two aspects of whose work I would mention. One aspect is the involvement of the local community in the charity and its precepts, and the other is the fun of living in a village and being able to run these kind of affairs. Therefore, I support the noble Baroness in the amendment.
Lord Nugent of Guildford: I should like very briefly to support the noble Baroness in her amendment. As chairman of the trustees of the village hall in my village, I sympathise very much with the tone of her amendment. Our village hall is of course a charity. I come fresh from rasiing about £5,000 in order to repair the roof and redecorate the hall, and this has been quite a mighty effort for a small village. We received a grant of about £500 towards it; so we had to raise £4,500 ourselves. We did it all right, and it was no bad thing that everybody took part in the effort.
The fact is that the village hall is the centre of the life of the village and everything depends on keeping it going. The noble Baroness is quite right—it is a real struggle to keep a village hall going. From time to time you have to have a whip round to raise the money for any major expense. Therefore, the last thing the village halls want to be faced with is an additional fee, even in a small matter such as this. So I hope that my noble friend will aceept the amendment and insert in the Bill the word "shall" instead of the word "may".
Viscount Ridley: I should like to add my voice to the universal support for the amendment which has been
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so well moved by the noble Baroness, Lady Stedman. I speak as president of the community council of my own county of Northumberland, where we have at least 150 village halls, all of which are run by charitable trusts. They have been built with charitable funds and are run by charity. People who run the halls are frightened of the Bill as it stands.
They feel that it would make a considerable difference to the potential fees that a local authority could charge. I shall not repeat the arguments that have been so well presented to the Committee, but I think that it would be universally popular if the Government can accept the amendment.
I understand that in a certain part of the country—I am not able to say where—a local athority has apparently stated that when it receives the powers under the Bill, it intends to raise the fee for a licence for public entertainment to £100. That would of course be possible under the Bill as it stands, and that is why I strongly support the amendment and hope that the Government will give way to what looks like universal pressure to accept it.
Baroness Birk: I fear that I shall introduce a rather different note into the discussion. I want to ask some questions about the matter, since I am slightly worried about it. In general my heart is with the amendment, but I think that the situation is not quite as simple as it appears. All noble Lords who so far have taken part in the debate have spoken as though the amendment refers only to village halls—and with that aspect I have no quarrel at all. I think that village halls should be let free of charge and the licence fee should be remitted on every occasion.
The schedule refers to,
"any part of such fee where in the opinion of the authority the entertainment in question…is of an educational or other like character; or… is given for a charitable or other like purpose".
I take it that that applies to any building within the area of the local authority and any event which is of an educational or charitable nature. I am looking for the maximum discretion for local authorities and for help for the voluntary organisations as well, and I understand that for many authorities the actual licensing will be a new function. The noble Baroness, Lady Stedman, referred to various authorities. I have here a list of them—taken from the 1980 Acts. Presumably such authorities would continue to remit the licence fees.
What worries me is whether the definition of charity would cover registered charities. I do not think that any of us should like to see a situation in which licence fees were remitted for an organisation which went under the cover of charity or semi-charity and which in fact ought to be making its own contribution. Does the proposal take into consideration the size of the charity? If the noble Viscount is right—I have no reason to believe he is not—and the fees are to be as high as he mentioned, and if there is no question of a mandatory remit (I shall be a little worried unless that point is clarified further) then some of the smaller charities could be put to great expense.
I am thinking of this on two grounds. I think that certainly the village hall ought somehow to be exempted from licensing anyway—that is one thing. Then, when we get to the other charities and educational

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purposes, there is a much wider field there. I do not know whether the Minister could answer some of the questions I have raised on that point.
Lord Belstead: The first thing I should like to say is that I appreciate the concern which the noble Baroness, Lady Stedman, has expressed so far as village halls are concerned in relation to Schedule 1, paragraph 5, and indeed which every single Member of the Committee expressed until, quite rightly, the noble Baroness, Lady Birk, put her finger on the fact that the debate had been perhaps couched in rather narrower terms than the effect of the amendment. I agree with the noble Baroness in that.
May I secondly say that I am sure that councils would in practice use their discretion properly so far as educational or charitable bodies are concerned, and it is certainly the Government's intention that they should do so. But I am a little concerned that the authorities should not be prevented from keeping fees when the entertainment is organised by a body which could perhaps very well afford to pay a licence fee. In that respect, perhaps I could just say to my noble friend Lord Ridley that my understanding is that the fees asked in Greater London, for instance, are nothing of the order or of the kind that my noble friend has been led to understand could be asked for the licensing of a village hall.
Having said that, the views expressed have been so overwhelmingly of one kind in this debate that I feel I really must respond by giving an undertaking, which I am going to give, that if the noble Baroness would agree to withdraw the amendment we will certainly do something so far as village halls are concerned. I give that undertaking. Secondly, I ask that the noble Baroness might consider withdrawing the amendment because I am a little worried about the second amendment, No. 8, which could have the effect, I think, of enabling some organisation which is by no stretch of the imagination charitable—it might be any organisation that one could think of—using the premises of a charitable body and then saying that of course it should fall totally outside the scope of licensing and not have to pay a fee at all. I would go no further this evening but say that I think that really is something which would make one want to hesitate and think a little more before one wrote that sort of provision into the Bill.
Finally, may I come back to the noble Baroness, Lady Birk, who drew attention to the fact that the amendments would be a good deal wider than the village hall point. Indeed they would, and it is because I think the Government would want to consider seriously exactly where we would try to draw the line that I should like a little further time to think. I repeat the undertaking I have given, that we must and we will do something so far as village halls are concerned. I think it is possible we can go a bit wider than that, but how wide I am not sure. If the noble Baroness will give me the time to do so, we shall try to think.
Baroness Fisher of Rednal: Could I ask the noble Lord the Minister to bear something in mind when he is considering village halls—and I go along with the sympathy which has been expressed in that regard? In the large urban areas there are big housing estates
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where they have what is called the small tenants' hall which serves exactly the same purpose as the village hall. All I would ask is that perhaps the definition of a village hall might embrace that kind of hall as well in the noble Lord's considerations.
Baroness Stedman: I am most grateful to the noble Lord for offering to take this back and have a look at it. I could not possibly refuse the invitation to withdraw my amendment and let him do that. I hope that perhaps we may get together before the next stage of the Bill.
Lord Belstead: Yes, I will of course write to the noble Baroness.
Baroness Stedman: I beg leave to withdraw the amendment
Amendment, by leave, withdrawn.
[Amendment No. 8 not moved.]
5.55 p.m.
Baroness Stedman Baroness Stedman moved Amendment No. 9:
Page 51, line 23, leave out ("district council for the area") and insert ("licensing justices for the licensing district").
The noble Baroness said: We now come back again to the subject raised by the noble Baroness, Lady Birk, on her first amendment. I referred to the matters covered by this amendment at Second Reading, and I doubted then the wisdom of moving the licensing of public music, singing and dancing from the licensing justices to the local authorities. Many of the premises which have music and dancing licences also have liquor licences, and these licences are granted by the magistrates. The problems of noise and disorder referred to by the noble Lord, Lord Belstead, earlier this afternoon and the supply of liquor are quite inextricably interwoven. Under the procedure outlined in the Bill, both the applicant and an objector would have to make their case before two different tribunals, with the attendant bureaucracy, delay and expense.
The local authorities in Manchester and Bradford have recently taken this power from magistrates, and I believe the licensing justices in those areas share my fears. As I said at Second Reading, the local authorities will now have to set up departments to issue these licences, and this will inevitably cause extra expense at a time when local authorities are facing huge spending cuts in other services. Most justices' clerks currently deal with liquor licensing and music and dancing licensing together administratively, and they will not be able to reduce their staff when this burden is removed. At Second Reading I referred to Bradford, where previously one member of the justices' clerk's staff had dealt with the licensing and now the local authority employ four members of staff to do the same job, and these four members at present take up a lot of the justices' clerk's staff time in dealing with queries from them about the liquor licensing position of the holders or prospective holders of music and dancing licences.
There is then also the question of the cost of licences. The justices' clerks, I understand, charge 25p for a licence, and yet in The Times on 19th February of this year there was a report of the judgment in Regina v.

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The Greater London Council ex parte Rank Organisation Limited. This judgment referred specifically to the Royal Lancaster Gate Hotel after the fees were increased in 1975. In that year the fee payable was £350; in 1976 they paid £525; in 1978, £630; in 1979, £756. But after a new scale was adopted by the GLC in December 1979 that new scale showed increases varying between 257 per cent. and 594 per cent. estimated to produce a revenue of just under £1 million. In 1981, according to the judgment, the fee payable for the Royal Lancaster Hotel was increased to £5,250. Is this an example of the realistic fees referred to earlier by the noble Lord, Lord Belstead?
I hope the noble Lord has considered the points that I raised at Second Reading and that I am raising here today. At this point of time I am treating this more as a probing amendment, to find out how far the Government have got with their thinking and what is their attitude; but I would be grateful if the noble Lord were able to say, if he cannot accept an amendment along the lines that I have put forward today, that he would be willing to consider whether the Government might be favourably disposed towards a proposition at a later stage that the licensing justices should remain the licensing authorities for premises which are also licensed for the sale of intoxicating liquor. I beg to move.
Lord Belstead: The noble Baroness has put the case again—and we debate it at the beginning of the Committee—for leaving the licensing authority powers of Clause 1 and Schedule 1 in the hands of justices instead of in the hands of the local authorities. I think that there has been some considerable misunderstanding about the purpose of Clause 1 and Schedule 1. It is the purpose alone which determined the Government in their feeling that the licensing authority ought to be the district councils. At the moment, as the Committee is aware, the licensing of public entertainments may be carried out by licensing justices under Section 51 of the Public Health (Amendment) Act 1890 and under local Act powers; and by district councils, as well. If Clause 1 and Schedule 1 pass into law, we are not taking away from the justices a power which they have universally. In some areas, district councils perform this function already, and in others there is no power of control. I apologise for repeating that, in the Government view, it is an unsatisfactory state of affairs when the safety of the public may be at risk—and we are talking about very large numbers of people in modern Britain gathering together for public entertainments.
The noble Baroness quoted some startling figures for Greater London charges for licences. All that I would say, gently, is that councils outside London do not all resemble the Greater London Council. I would also say, seriously, that the capacity of the particular hotel which the noble Baroness was talking about, the capacity taken over a period of a year, is enormous. I do not know what is the capacity of the hotel; but it must be gigantic. I wish the hotel good luck in its business, but in addressing oneself to the sort of figures that the noble Baroness quoted, one would want to think about the capacity of the hotel which was paying the charges.
The noble Baroness asked a direct question, which
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is this: Could the licensing justices who would be licensing for liquor licences also remain, if they wish to do so, the licensing justices for public entertainment? The difficulty about that is that one of the rights which Schedule 1 will put into legislation for people who are refused a licence will be a right of appeal to the magistrates' court and from the magistrates' court to the Crown court. If I acceded to the question which the noble Baroness put to me, we should be in the absurd situation of providing that an appeal would lie to the magistrates against the magistrates' own decision.
But it is not on that ground that I am resisting this amendment. It is on the ground of what I believe to be the proper basis for public entertainments in a modern, highly urban society. We are going to take into account the also particularly rural aspect which was put on a previous amendment, and eloquently so, by the noble Baroness.
The noble Baroness, Lady Birk, asked a question on an earlier amendment which I ought to try to answer. It was this. Had I, in effect, cast a slur on the capacity of magistrates to look at the safety aspects of licensing when they were considering a licensing case? The premises, when one is thinking about licensing, should be looked at from such safety aspects as capacity of exits and provision of fire extinguishing and prevention equipment. The premises need to be inspected by fire brigade experts to ensure that proper standards are maintained; and they will make recommendations to the licensing authority when an application is made for a licence.
I do not think that I am being unfair in saying that the licensing justices would not lay claim (except in some cases, perhaps, by the accident of their profession) to expertise in standards of construction and fire safety. And the choice of licensing authority being between the district council and the county council, who are very closely involved professionally with the fire brigades locally, we felt should fall upon the district councils, who, it is true, are not the authority for the fire brigades but who are obviously closely in touch with fire brigade matters.
On those grounds—and I have not referred to finance; I referred to it before—there is the right in the schedule to charge reasonable fees. I do not think that the question of local authorities being out of pocket comes into it. On public safety grounds, we base the fact that we have gone for the district councils being the licensing authorities, and—and I hope the noble Baroness will not mind my saying so—I believe, rightly.
Baroness Birk: I thank the Minister for replying to the point I made. I must point out that the magistrates in the areas where they have the authority to give licences go round and inspect places, and they go round with experts from the local authority. Particularly if it is a new building, the magistrates see it and the local authorities also are asked by the magistrates, and, very often, by the police, about the safety side. I can see the Government will not budge on this aspect, but, please, do not let us have some unnecessary—and I am sure the noble Lord is not meaning to do this—and misleading reasons for turning this down.
As there has been a great deal of stress on the

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question of fire possibilities, I should be grateful if the Minister would have it on record that the fire services will be consulted—not that the local or district councils have to take heed of them but that they will consult them—and that it is considered that the fire authority and, therefore, the fire service are the responsible bodies for fire safety matters. I think the fire service would like to have this on record.
Lord Foot: May I say a word or two in support of fire precautions? It is some time since I was actively engaged in practice before a magistrates' court, but my recollection of licensing law is—and I think it is the same today as when I was practising—that whenever an application is made for the grant of a licence, or whenever an application is made by a licensed premises for some physical alteration in the premises, it is incumbent upon the magistrates to take the opinion of the fire officers upon the proposed alterations or upon the state of the premises as a whole. Therefore, I cannot see there is very much virtue in the argument which the noble Lord was making. As far as I know, these arrangements, which have been in existence for a long time, have worked satisfactorily and there is no reason to support that the magistrates are not a satisfactory body for making decisions of that kind.
The other matter is the point made by the noble Lord about the right of appeal. With respect, again I see no merit in that point. He says that under the provisions of the Bill, if an applicant is refused a licence, he will have a right of appeal to somebody—forget whom; I think it was the magistrates and the Crown court. It would be simple to provide a right of appeal against the refusal of the magistrates and a right of appeal to the Crown court. That could simply be done and that would follow the ordinary course of proceedings before a magistrates' court, where on most matters, if there is a right of appeal at all, it is a right of appeal to the Crown court. Of course, the Crown court being in the locality it would have the capacity to decide a matter of that kind as much as any local authority.
Another matter—it was I think the noble Lord's first point—also seems to have little or no merit. If I understood him rightly, the noble Lord said that it is not universal throughout the land for the licensing of music and dancing to be in the hands of the licensing magistrates. He said that where that prevails it is as a result of some local legislation or, in some cases, the licensing power is already in the hands of the local authority.
Let us accept that that is so. What the amendment of the noble Baroness would do is make the system of licensing by the justices universal throughout the country. It would get rid of the noble Lord's difficulty altogether. The licensing of places for music or dancing would then be the prerogative of the magistrates. Nobody would have to go elsewhere. It is noticeable—is it not?—that when the noble Lord was responding to the noble Baroness he was suggesting that she was wrong. For the moment what I was going to say has escaped my mind. I am inclined to go on speaking until it comes back!
To try and sum the matter up, the three main reasons which the noble Lord advanced seem to have little or no merit. What I meant to say has now come back to me. The point made by the noble Baroness which the
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noble Lord did not answer was as follows. If one is going to carry through the provisions of the Bill as it now stands, one is going to have this absurd situation, that in many cases people will have to go to the licensing justices for one licence and go to the authority for another one. It was noticeable that the noble Lord, no doubt taking reasonable precautions, did not go into that matter at all.
I suggest that we are entitled to have some kind of answer upon that matter which is one of very considerable importance. The system of licensing places for music and dancing has been in the hands of the licensing justices, where is has prevailed, for very many years. So far as I can remember, that has been substantially the situation during the whole of my lifetime. I do not know that anybody up to now has ever complained that it does not work. I do not know that anybody has ever suggested that the system does not work or is antiquated or does not meet the modern world. No arguments of that kind have been advanced; but for some reason or other, presumably in order to bring uniformity into the system and to deal with public entertainment in the same way as it is proposed to deal with sex establishments, it is proposed to abandon a system which has worked perfectly well over the years and to introduce something new and, in doing so, to introduce all the complications of having two authorities which are giving out licences for the same kind of premises.
Lord Belstead: We are treading over familiar ground because we debated this earlier on, I say in reply to the noble Lord, Lord Foot, that we are not debating uniformity for its own sake; we are debating the principle of uniformity because the Government believe and the local authorities feel that on grounds of public safety in a modern world it really is necessary to have some standards which can be relied upon, particularly with very large gatherings of people for public entertainment in a modern world, if one happens to be meeting in one end of the country or the other.
I am sure that the noble Lord will not think I am being discourteous when I say that his very skilful speech consisted of points which are a matter of opinion. The noble Lord and I would disagree on the points which he put forward. What is a matter of fact is that if we are to have a system of licensing, what has become quite clear this afternoon is that some justices in the country would accept to become the licensing authorities, and some justices would not. The noble Baroness, Lady Birk, very fairly made this absolutely clear at the beginning, of the proceedings of the Committee.
However, the Association of District Councils have made it clear to the Government that the district councils would accept the licensing function if it was placed upon them by statute. The noble Baroness asked me one direct question: the position of the fire service in all this. May I direct the attention of the noble Baroness to Schedule 1 paragraph 4(4) where the following is set out:
"In considering any application for the grant, renewal or transfer of an entertainments licence, the appropriate authority shall have regard to any observations submitted to them by the chief officer of police and by the fire authority".
Baroness Stedman: I said in the light of earlier discussions that at this stage this was a probing amendment to find out the Government's views and whether they had progressed any further since Second Reading. Therefore I shall be withdrawing my amendment at this time. I shall read Hansard and consult with those who supported me this afternoon to see whether we can come back at the next stage with a further amendment and hope to put a little more pressure on the Government.
From my knowledge of the fire service in my own locality, they are always consulted as a matter of course by the magistrates whenever they are considering licences, when they are looking at new hotels, looking at new halls and that kind of thing. The fire officer is there in person, not just the certificate. The fire officer is there in order to look at the fire prevention and security side. I am sure that this procedure is generally carried out over the country. I am glad to see that it is written into the Bill, and whoever finally finishes up as the licensing authority will have to consult with the fire service. I beg leave to withdraw the amendment at this stage.
Amendment, by leave, withdrawn.
Schedule 1 agreed to.
Schedule 2 [Amendments consequential on Section 1]:
The Deputy Chairman of Committees (Lord Alport): The Question is that Schedule 2 be the second schedule to the Bill. An amendment by Baroness Birk?
Baroness Birk: I shall not move this amendment.
Schedule 2 agreed to.
6.19 p.m.
Lord Jacques Lord Jacques moved Amendment No. 10:
Before Clause 2, insert the following new clause:
("Use of premises for display of indecent matter.
CONTROL OF SEX ESTABLISHMENTS
. (1) For the purposes of section 22 of the Town and Country Planning Act 1971 (meaning of development), the use of a building for the carrying on of any retail trade or business wherein the primary purpose is that specified in subsection (2) below involves a material change of use of the building and of each part thereof which is so used; and, notwithstanding anything in subsection (2)(f) of that section or in section 23 of that Act, planning permission is required for any such development.
(2) The purpose mentioned in subsection (1) above is any selling, hiring, exchanging, lending, displaying or demonstrating of articles in connection with which indecent matter is ordinarily made available to the public or displayed in, or so as to be visible from, a place to which the public are permitted to have access.
(3) Section 26 of the said Act of 1971 (notices of application) shall apply to any development falling within subsection (1) above as if it were development of a class designated under that section.").
The noble Lord said: I speak to this amendment to give me an opportunity of giving an explanation. I could put a very strong case for this amendment, but, having studied the Marshalled List, I have come to the conclusion that the Government have gone a very long way to meet the points of view of those of us who think that local government should have very firm control over the number—if any—and the location of sex shops. They have done that in their Amendments Nos. 31 and 39. I believe that those amendments go a very long
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way to meet the needs that are required. Because of that, I shall ask leave to withdraw the amendment, always of course reserving the right to move it at the Report stage.
Amendment, by leave, withdrawn.
Clause 2 [Licensing of sex establishments]:
The Earl of Halsbury The Earl of Halsbury moved Amendment No. 11:
Page 2, line 24, leave out from ("resolution") to end of line 37 and insert—
("(2) A local authority may resolve that sex establishments shall not be permitted in their area; and if a local authority do so resolve, as from the date specified in that behalf in the resolution and until such date as the local authority shall by further resolution otherwise determine, which date shall be specified in such further resolution, no person shall in the said area use any premises, vehicle or stall as a sex establishment.
(3) Subsection (2) above does not apply to the sale, supply or demonstration of articles which

(a) are manufactured for use primarily for the purposes of birth control; or

(b) primarily relate to birth control.

(4) The date specified in either of the resolutions referred to in subsections (1) and (2) of this section must not be before the expiration of the period of one month beginning with the day on which the resolution is passed.
(5) A local authority shall publish notice that they have passed a resolution under subsection (1) or (2) of this section in two consecutive weeks in a local newspaper circulating in their area.
(6) The first publication shall not be later than 28 days before the date specified in the said resolution.
(7) The notice shall state the general effect of the resolution.
(8) In this section "sex establishment" has the meaning set out in Schedule 3 to this Act.
(9) A person who knowingly uses or knowingly causes or permits the use of any premises, vehicle or stall contrary to subsection (2) above shall be guilty of an offence and shall be liable on summary conviction to a fine not exceeding £5,000 and, if the contravention constituting the offence of which he is guilty is continued after his conviction of the offence, he shall be guilty of a further offence and liable, in respect thereof, to a fine not exceeding £1,000 for each day on which the contravention is so continued.
Paragraphs 19(5) and (6), 20 and 21 (except sub-paragraph (1) thereof) of the said Schedule shall apply in regard to such offence as if for references therein to offences under paragraph 19 of that Schedule there were substitued references to this offence,
(10) In this Part of this Act "local authority" means:

(a) the council of a district;

(b) the council of a London borough; and

(c) the Common Council of the City of London.").

The noble Earl said: On behalf of my noble friend Lord Nugent of Guildford and myself, I beg to move the amendment which stands in both our names. In doing so, I would seek the permission of the Committee to discuss Amendments Nos. 31 and 39 just referred to by the noble Lord, Lord Jacques, and, unless any noble Lord intervenes or the noble Lord, Lord Belstead, has any objection, I shall suppose that your Lordships are agreeable to that course since the two Government amendments are an alternative to this amendment.
In putting down what is really a new Clause 2, of which subsection (1) is common to both, I must steer between the Scylla of failing to explain the rationale of it and the Charybdis of making a Second Reading speech on the generality of the subject. I will try to avoid both hazards as best I can. Clause 2(1) needs no amendment, but the kernel of our new clause is the ban in subsection (2) which will allow the local authority in

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effect to decide that in no circumstances will it have any sex shops in its district at all. The clause, then, caters in a direct and straightforward way for a wide spectrum of attitudes by local authorities—from the totally permissive attitude which gives no regard to this Bill whatsoever, through an intermediate stage where a limited number of licences are granted, up to the point of a complete embargo.
If your Lordships are prepared to agree with that principle, a number of subsidiary matters follow and consequential clauses have to be written into Clause 2, as amended, because once a resolution is passed that there will he no sex shops in the district, Schedule 3 becomes inoperative unless it is imported back into the amended Clause 2. Broadly speaking, that is done by the rest of the amendments in the proposed alternative clause, and particularly subsection (9), where we introduce a penalty clause. We cross-link that to the schedule in such a way that some of the provisions of the schedule relate to it. If any of your Lordships has difficulty in construing the second half of subsection (9) of the proposed new Clause 2, then "this offence" in the last line and "such offence" in the last line but one both refer to the offence created by subsection (9).
A slight variation is to make it quite clear in the course of the amendment that shops dealing with birth control are not to be classed as sex shops for the purpose of this amendment. For the rest, I think the correlation between the subsections of the amended Clause 2 and the original Clause 2 should be quite clear to your Lordships. The whole of the proposed amendment is a simple, direct and straightforward application of the principle that we want to have a wide spectrum from total permissiveness to total embargo.
In so far as the Government are, as it were, homing on to the same target—and they have gone a long way since Second Reading and since the passage of this Bill through another place—the difference between us is largely a difference of style. Their style of legislation is oblique and circuitous compared with what the noble Lord, Lord Nugent, and I have in mind.
The first axiom of arithmetic as formally presented is that nought is a number, and, if you turn to the proposed Amendment No. 31, it says that for the purpose of sub-paragraph (3)(c) the word "nil" is a permissible number of establishments to have. Your Lordships must then turn to (3)(c), where you will find yourselves concerned with the number of sex establishments in the relevant locality. You must then turn to paragraph 4(i) to find out what the "relevant locality" is. You then find that the relevant locality means the locality where the premises are situated. Just how far that is a circular definition is a matter for a certain amount of guesswork: how widely is the word "locality" to be taken in determining the "relevant locality"? Does it mean the ground plan of the establishment and nothing more? Does it mean the street or the postal district?—or can it mean the entire area within the purview of the relevant local authority?
If it is the wish of your Lordships in due course to prefer the Government's circuitous route to the end which my noble friend and I approach by a direct route, then I must reserve my position regarding a
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further amendment that I might like to put forward at Report stage regarding the phrase "relevant locality"—namely, that, whereas zero is a permissible number for establishments, unity should be a permissible aspect of the area within which the local authority operates, and the locality could be held to be coterminous with the area of the local authority should that be their wish. I hope that, in putting this amendment forward, I have successfully steered between those two hazards which I mentioned at the beginning, that what we propose is clear to your Lordships and that the difference between our approach and that of the Government is clear. I beg to move.
The Deputy Chairman of Committees: I have to advise your Lordships that, if this amendment is agreed to, I shall not be able to call Amendments Nos. 12 and 13.
The Earl of Longford: I should like to support the amendment put forward by the noble Earl, Lord Halsbury, inspired no doubt to a considerable extent by the noble Lord, Lord Nugent. I should like to speak a little more plainly about these sex shops than many of your Lordships seem ready to do. I visited one the other day—I visited a number some years ago—and I am under the impression that very few of your Lordships have made such visits. I did meet one noble Lord this afternoon who had, but he was employed to visit them in a somewhat professional capacity. But there is a strange sort of embarrassment about visiting these places, and we have discussed the whole matter in terms of self-determination of local government, and such topics.
In my opinion, sex shops in almost every case would be a social evil. I think anyone who went into one and anyone who saw one or two of the gadgets that I have brought away—I shall not produce them to your Lordships—would agree that they are instruments of perversion. We can perhaps all feel sorry for a happily married couple who are unable to perform the sexual act and need a little stimulation; but that is not the stock-in-trade of a sex shop. There, anybody who goes into one and looks round will find himself being asked whether he wants to put on a harness and that kind of thing. So that anyone will realise we are dealing with very shocking enterprises.
I say nothing about the motivation. The motivation is just making money, which I suppose is respectable—even making profits is something one cannot exactly despise—but here it is making money out of human weakness and stirring up human lust in a perverse direction. As far as I am concerned, every step that can be taken in this Chamber to make it difficult to buy these things is a step in the right direction. No doubt a number of tactical issues will arise here, but I would only say that I support the amendment and I hope it will prevail.
Lord Somers: I should like to follow the noble Earl who has just sat down by supporting this amendment very strongly. whether the Government choose to accept it as it stands or whether they are going forward on their own line, I feel that some amendment of this kind is very necessary, although I agree that the necessity for it hangs on whether or not you consider

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sexual promiscuity to he a bad thing. There are those who will say that that is merely a matter of personal opinion. but I cannot agree with that. There are certain things that are definitely good and others that are bad, which cannot be questioned as a matter of personal opinion.
I do not think anybody could question that what has happened to our nation as a whole, since some Minister of Education—I cannot remember who it was—decided that sex education should be introduced in our schools, is a bad thing. Abortions have absolutely soared in number; sexual attacks are a matter of everyday news; crimes associated with sexual motives are heard of everywhere, and the damage done to family life has been absolutely irreparable. Therefore, I certainly think that it is a very bad thing.
There is nothing in this amendment to force local authorities to impose a total ban. I know that we do not want to live in a police state, but I cannot help voicing a slight private opinion that I sincerely hope that many authorities will take advantage of this right to impose a ban. The question of the freedom of the individual is often raised. As I said, we do not want total police control of our thoughts or actions, but on freedom of speech there is such a thing as slander and total freedom of speech is, of course, controlled by that.
Are we going to allow local authorities to set up colleges of burglary or something like that? Is burglary a good or a bad thing? Is that merely a matter of opinion? Or, perhaps, they could start courses on slander and libel. Are those bad things or merely a matter of opinion? Or, possibly, they could have courses on shoplifting. I do not know whether or not that is considered a bad thing. But there is such a thing as a definite standard of good or had, which is beyond just a personal opinion. Therefore, I sincerely hope that the Government will either accept this amendment or themselves take steps along the same lines.
Lord Jenkins of Putney: I should like to follow the noble Lord, Lord Somers, because it is time that somebody said he was not in favour of this amendment. Many of the things which the noble Lord, Lord Somers, has said are incontrovertible, are, in fact, controvertible. To equate sex with burglary seems to be a somewhat false analogy. I oppose the amendment, but not because I am against the Bill; the purpose, of the Bill seem to me to be wholly admirable. That these establishments should be brought under control is something with which we on this side of the House will, I am sure, wholly agree. But what is proposed by the amendment is to change the nature of the Bill.
Instead of bringing establishments under control, it will have the effect of giving power to abolish them. The noble Lord and I might disagree about whether or not this is desirable. But what is incontrovertible, if I may adopt the noble Lord's word, is that this amendment is outside the Short Title, and even, I think, the Long Title of the Bill, and in another place it would not be accepted for debate because, in my submission, it is out of order. The limitations of the Bill are quite clearly set out. This is not a Bill to deal with obscenity, as the noble Lord implied. This is a Bill to give local government certain powers. It is a miscellaneous provisions Bill.
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If we were engaged in the business of altering the obscenity laws—and many of us think that that ought to be done—we should have a Bill to do just that. But what the Government seek to do in this Bill, and I support them, is to bring these establishments under control and make it possible for local authorities to regulate establishments within their areas, in such a way as may seem appropriate to them. I want to suggest to the noble Lord that what might be appropriate in Soho is hardly appropriate in Sussex. Therefore, what one set of councillors may decide was in order, so far as they were concerned, would be totally out of order in another area. What the Bill seeks to do is to regulate, according to the circumstances of the case. For this reason, it seems that the Government have it right in the Bill and that the amendment has it wrong, so I hope that your Lordships will not carry the amendment.
Lord Houghton of Sowerby: My noble friend said the other day to me "If you didn't exist, you would have to be invented". That is no longer true, because, following my noble friend Lord Jenkins, there are at least two of us who are opposing this amendment. I am sure that we are not alone, or we ought not to be alone, in thinking that the constant indulgence of ageing noble Lords in this House in condemnation of the sexual activities of others is really a little unseemly I have said before that we have no qualifications for it, either by age or by current experience. So I think we might leave it to others who have a closer interest in what we are talking about—
Lord Somers: May I interrupt the noble Lord for one moment? Would he also consider the constant efforts of noble Lords—ageing noble Lords, perhaps—in this House, myself included, to abolish cruelty to animals a bad thing?
Lord Houghton of Sowerby: That deals with the conduct of other people in inflicting cruelty on other species, which is an entirely different matter, morally and politically. But here we are dealing with sexual activity, which is on the human plane and relates to the conduct of individuals. This is another example of a lot of people getting worked up over sex and panicking into repressive legislation.
I am not going to anticipate what the Government's amendments mean—whether nil is a number, anyway, or what is the definition of a "locality". I shall therefore, concentrate on the amendment which is just plain suppression. That is really what it amounts to, and one of the duties of your Lordships' House, on which we are qualified, is to safeguard the liberty of the subject. That is one of our important roles.
The plausible case for this amendment, though I do not think it has yet been put in quite this form, is that it fortifies local democracy. People in a particular area should be able to judge for themselves, through their elected representatives, whether or not they have sex shops in their locality. But I doubt whether local authorities have the representativeness and the real authority, in all cases, to reach the kind of decision that they are allowed to reach under this amendment. Local authorities cannot totally ban licensed premises. Local authorities cannot ban betting shops, slaughterhouse,

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riding stables or even the obscenities of butchers' shops. All those are lawful activities, and no local authority can ban them completely. They may be given the power to license, and that implies some control, some discretion. But even then there are checks against abuses.
If noble Lords had served, as I did, for three years on the Royal Commission on standards of conduct in public life, they would have heard a good deal of evidence about the tyranny of local authorities, with a built-in majority lasting for years and years for one political party. It is dangerous to allow even an elected local authority to have absolute power. Some check on the abuse of that power is essential in the interests of liberty. That is why the right of appeal is given against refusal of licences in other connections.
Licences generally are for regulation and control. A moment ago, my noble friend Lord Jenkins of Putney referred to the implication of this amendment: that it is for prohibition, not for regulation and control. This section of the Bill deals with regulation and control, not with prohibition. I doubt whether, off the cuff, one could think of any lawful activity which it is within the power of a local authority totally to ban without the right of appeal. I do not know of one. I think a very dangerous principle is embodied in this amendment.
I said a moment ago that I am strongly in favour of banning activities which may involve cruelty to animals, to children, or to anybody. Cruelty is perhaps the greatest crime of all. But we are not dealing with cruelty. Therefore the amendment must be firmly rejected. The Bill is littered with authority for local authorities to issue licences. It is all about the issue of licences. It is not about prohibition.
Another point against this amendment is that it is discriminatory. In making by-laws the Home Office are always careful to guard against by-laws being made which discriminate unfairly as between one section of the community and another, or between certain interests in the community and others. The aim is to keep some kind of balance. Control, Yes, but not prohibition. When I deal on Monday with the County of Lancashire Bill, we shall be looking at the principles which the Home Office have followed in deciding whether or not to confirm by-laws which local authorities wish to introduce. Therefore this amendment is to be rejected on all counts.
If I may be permitted to say just a word or two about the movers of this amendment, the noble Lord, Lord Nugent of Guildford, has had his great parliamentary triumph. His finest hour was on seat belts. Why does he go in search of another? Why can he not rest on his laurels and leave this new battle to be fought, if I may say so by more juvenile hands? Coming to the noble Earl, Lord Halsbury, his triumph was in getting through your Lordships' House on two occasions a most comprehensive Bill of reform for the protection of laboratory animals. His triumph has not yet come. When the Government legislate, that will be his finest hour. Why can he not wait patiently for it instead of chasing after new notoriety, new fame, new grandeur in parliamentary affairs? If I may say so with great respect, I think that both should retire from this sex business—and allow me to retire from it, too.
6.45 p.m.
Lady Saltoun: I think it is time that somebody spoke again in support of the amendment, and I should like to do so. But I support it faute de mieux, because I am sorry that the Government, to which the people of this country look for a lead in these matters, will not ban sex establishments outright. But half a loaf is, after all, better than no bread.
The demand for sex establishments comes from a very small section of the population. The majority of people in this country are decent people, contrary to what one might suppose from reading the newspapers. Are their wishes, their feelings, the welfare of their children and the safety of their wives and daughters to be disregarded because a few depraved people want these establishments, and others have discovered that they can make fortunes by catering for them? If everyone must always have everything he wants, however harmful to himself and to others, why do we not have laws enabling local authorities to license opium dens and the sale of hard drugs? My noble friend Lord Somers has given some other instances, and I think he is quite right. That argument just does not hold water. Make no mistakes: the aim of these establishments is to stimulate desires which then require satisfaction, and assault and rape are frequently the means by which they are satisfied.
In the 10 years after pornography became easily available, rape—which had begun to decline in the early 1960s—increased by over 100 per cent. Every day now we read of cases, and those are only the ones which are reported. I n the Daily Mail of 18th February there is a report of an 89 year old widow being raped in a secure housing unit in Southwark. It is a horrible story. Nowadays in London, and in many other cities, women can no longer go about in safety.
When I was young, pornography was virtually unobtainable, and in most parts of most cities in this country a woman could walk safely through the streets at night. And that is how it should be again. It is not only in their contribution to increasing rape and violence that they are harmful. Quite innocent young people will go into them, in the first instance out of curiosity, and will be corrupted—who would otherwise not have been. Therefore, if the noble Lords whose amendment this is choose to press it, I shall be very happy to follow them into the Lobby.
Lord Beswick: I should like to say how very much I was impressed, as I think many of us were, by the speech of the noble Lady behind me. In many ways it would have been appropriate for the debate to finish on the note which she struck, but I thought I ought simply to say that the interpretation of liberty of the subject given by noble Lords on this Bench is not one which I share.
The more I listen to current debate the more do I begin to look extra carefully at those who try to put forward a case on the basis that it is for the liberty of the individual. What is restriction for one man may be liberty for another. What is liberty for my noble friend Lord Houghton of Sowerby is not liberty, as I see it, for many others in this country. I want the liberty of walking down a street without seeing some of these offensive establishments. I want my children and

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my grandchildren to be able to walk down these streets without being offended by some of these establishments.
The noble Lord, Lord Houghton of Sowerby, is very careful to put forward this battlecry of liberty of the subject, but I notice that he wants to restrict the liberty of the individual subject in many ways when it comes to his cruelty to animals legislation. I notice, too, that he wants to restrict the liberty of the subject when it comes to the question of unborn children. I do feel that he was unfair on the noble Lord, Lord Nugent of Guildford, and the noble Earl, Lord Halsbury. Personally I greatly respect the courage they have shown in putting forward ideas for us to discuss and this amendment.
Cruelty can be defined in many ways. There is an element of cruelty in society today which was probably not so pronounced when first I entered political life. I believe that this cruelty has been enhanced by the permissive legislation we have seen in recent decades. I would like to think that the tide is now beginning to turn. I believe that the Government, with the amendments they have brought forward, have themselves responded to this new feeling in society. I feel certain that the amendment proposed by the noble Earl is also in response to this new feeling. After all, this is not a question of prohibition. This is a question of people being able to elect a local authority with the right to say whether there will be certain establishments in the locality or not.
I was surprised that my noble friend Lord Jenkins of Putney said that although he was in favour of control, he was not in favour of taking it to the lengths suggested by the noble Lords opposite. If one is going to have the power to control, surely one should be able to control matters to the extent of saying that a certain type of establishment will not be allowed in this place or that place. As the noble Lord said, it may be that councillors elected in another part of the country will take a different view. As I see it, the Bill before us now—even as amended by the noble Earl's amendment—would still allow a properly elected local authority in one part of the country to take a different view from that which I personally would take in my area.
Lord Jenkins of Putney: Perhaps my noble friend will allow me to explain the difference between us on this point. It is not that I wish to limit the powers of councils to do as they please; it is that I do not wish to give them an overall power under which, for reasons quite separate from those laid down as being appropriate under local government legislation, they would be able to take steps on moral grounds. That is not what we are about here.
Lord Beswick: One day, I shall have to have a debate with my noble friend about what constitutes moral grounds. I believe the interpretation can be very wide indeed. We are talking about the judgment of local authorities in saying whether or not a certain type of establishment is appropriate in a particular locality. All I am saying to my noble friend Lord Jenkins of Putney is that, if one is going to give local authorities the power to stop something happening in a particular locality, it is quite wrong to say that in other localities they must agree with that thing happening.
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That is what my noble friend is saying, in effect. All we are saying is that if the local authority has the power to act in one locality it should have the power to act also in a neighbouring locality, provided that it comes within the council's area. I hope that the noble Earl will see fit to press his amendment. Certainly I for my part will be prepared to support it.
6.54 p.m.
The Lord Bishop of Lincoln: I would like to support this amendment. As we all know, sex shops exist and the object of this Bill is to control their existence. It seems to me that from this amendment stems the capacity of local authorities to do exactly that.
Lord Tranmire: May I come back to the point of this amendment? At the present time, the number of sex shops in this country is growing considerably, and local authorities do not have the power to control that growth. Sex shops are a form of environmental pollution. Your Lordships' Committee should give adequate powers to local authorities. That seems to me to be the nub of the matter. Is the "juvenile" noble Lord, Lord Houghton of Sowerby, aware of what is happening; that large sums of money are being made by the proprietors of these sex shops throughout the country? It is our duty to give local authorities the power to control their numbers and location, and whether we take the amendment moved by the noble Earl, Lord Halsbury, or the Government's amendments on the Marshalled List, is not the point.
The noble Earl, Lord Halsbury, said that we must have a sensible form of definition of the area of control. I do not consider that the relevant area in paragraph 4 of Schedule 3 is a reasonable way of dealing with this. For one thing, whatever the definition, it must be one that will apply to rural areas as well as to urban areas. The locality definition certainly would not apply to some of the more remote areas which are worried at the moment by the threat of the spread of sex shops. I hope that between now and Report stage, whatever happens to this amendment, the Government wil look at the definition and see whether it is effective.
Lord Robertson of Oakridge: I want just to take up one point mentioned by the noble Lord, Lord Houghton of Sowerby. I can well understand how people can hold varied views on the amendment; but how anyone can say that cruelty is not involved, I cannot understand. If we were dealing just with immorality, that would be one thing; but in my submission it is the sadistic aspect of some sexual material which is the serious aspect of this problem.
Baroness Ewart-Biggs: I should like to make one point which, although not being entirely relevant to the amendment, is very relevant to the issue. Although I am not concerned so much with whether a local authority should be able to ban or not ban, I am concerned with the degree of the shop itself. There is no doubt that there are many varied degrees and it is not only my noble friend Lord Longford who has found out about this. Where I live, in Chelsea, there is a very discreet establishment and I went to talk to the gentleman who runs it. He held very strong views about the type of shop which operates in Soho. In fact, I could

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not see how he was going to make very much money because there was nothing very expensive in his shop. He told me about the people who visit his shop and mentioned with great pride the lady who dropped in on her way back from Ascot last summer to pick up something she needed. I feel it is a pity that this particular establishment should be "knocked in", with the other kind. From my modest investigation, it became quite clear that there are two kinds of establishment; one would possibly fit in with today's world but the other is that with which cruelty and degradation is associated—although it seems that in our minds we see them both falling within the same category.
Lord Monson: As one known to be in favour of the greatest possible degree of individual freedom, let me say at once that I do not oppose all the restrictive amendments relating to sex shops which appear on the Marshalled List. For instance, I find that Amendment No. 34, which would prevent people under the age of 18 patronising or working in sex shops, highly commendable and I would certainly support it. But I believe that the amendment we are discussing now is the thin end of a dangerous wedge of censorship, which I have always opposed, and therefore I must oppose the amendment.
When the Indecent Displays Bill promoted by the noble Lord, Lord Nugent of Guildford, was going through Parliament only a few months ago, assurances were given that this was not the start of a puritan backlash or of some puritanical crusade to put the clock back 25 years and prevent adults from buying or reading whatever they wished. It was on that assurance, I believe, that the noble Lord's Bill received the degree of support which it did.
However, Amendment No. 11 is not concerned with the public nuisance aspect of sex shops, nor with whether the shop is sited in close proximity to a school or some other place where young people tend to gather. This amendment provides that a sex shop may be driven out of business even if it has a plain, inoffensive frontage, which could not possibly offend the noble Lord, Lord Beswick, or members of his family, and even if it is sited well away from schools or residential areas. It would be put out of business solely because its mere existence offends some pressure group.
This is analogous to the argument used in the mid-1960s against the Bill introduced by noble Earl, Lord Arran, to liberalise the law relating to private male homosexual behaviour following the recommendations of the Wolfenden Committee. Opponents of that Bill argued that the mere knowledge that such activity was taking place somewhere, even though it might be behind closed doors, which by definition it had to be, was offensive to them and should therefore be banned. Luckily, their arguments lost the day, and I do not think there are now many people who would wish things to revert to the pre-1967 situation in that regard.
Of course, if it could be proved beyond doubt that sex shops were harmful, as opposed to merely irritating, there would indeed be a case for an out-and-out ban. But obviously there is no such evidence; otherwise the Government would be duty bound to take steps to ban such shops outright and would already have started
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to do so. Might it, on the contrary, be the case that distasteful though these establishments are—certainly I have no wish to defend them—they may have one useful function? (Here I am afraid I must disgaree with my noble friend Lady Saltoun, although it is purely a matter of judgment—nobody can be certain) I understand that these shops cater for those whose particular proclivities cannot easily be satisfied elsewhere. If these people's desires are frustrated through the removal or closing down of sex shops, is it not possible that innocent women and children are going to find themselves put more at risk from rape and indecent assault than would otherwise be the case?
Lord Swinfen: As one of the more juvenile Members of your Lordships' House, I should like to support this amendment, first, because I am not very fond of sex shops in any case, and, secondly because I think it is very much clearer for the layman reading the Act which this Bill will become than is the Government's own amendment. Having myself on occasions had cause to thumb through various Acts of Parliament to try to find out what they mean, it is sometimes very difficult. I think it is essential that it should be as clear and as easy as possible for the layman. The people who are going to have to work this Bill when it becomes an Act are laymen, the vast majority of them with very little legal training. They may have advisers, but they themselves have to make the decisions
I feel also that every authority must have the power to say that they wish to have no sex shops in their areas. I do not think sex shops do a great deal of good. They may help some people. But one reads in the newspapers of more and more marriages breaking down because of the odd sexual behaviour of one partner or another, and I am sure that this is encouraged by sex shops and the perverted objects they sell, the magazines and books they produce. They are perverting the whole idea of sex and turning it into pure self-gratification rather than an act of love between two people. I hope that my noble friend on the Front Bench will see his way to agreeing to the amendment proposed by the noble Earl, Lord Halsbury, and the noble Lord, Lord Nugent, in place of his own. I wish it well.
Lord Underhill: I should like to say a few brief words, as I did refer to this in my speech at Second Reading. First, every noble Lord who has spoken has referred to sex shops, but the amendment deals with sex establishments, and that includes sex cinemas. One has to link that up with what is described as these "activities", both the sex shops and the sex cinema, in the terms of Schedule 3. It is the activities listed there to which many noble Lords, including myself, take great exception. It is not a question of freedom of the individual. It is a question whether there is freedom of the individual to interfere with other people and to affect other people and other people's lives, and to affect children's lives by affecting their outlook. I think that is very important.
The only other point I would mention is this. If one accepted the logic of some of the arguments, including that of my noble friend Lord Jenkins, it would mean that the local authority representative could say, "Well, as we must not have an umbrella ban, although

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people want it, it is good for the south ward to have this, but it is not good for the north ward, where I live, to have it". I think this is putting local authority members into an impossible situation. If the people of the area believe that this is offensive and dangerous for themselves or their children, I think they should have the freedom to make that decision.
7.15 p.m.
Lord Belstead: This amendment would give a local authority the right to impose as a matter of general principle a complete prohibition on trade in the materials covered by the schedule. I think the speeches which have been made in this debate on this amendment have shown that there are deep feelings generated by this particular subject and also by this particular amendment. I think the problem with the amendment is that, even though the trade which would go on in those places could be entirely lawful under the general criminal law as the law stands, what we should be doing in a local government regulation Bill would in fact be altering the general criminal law. Having said that, I do hope that the noble Earl, Lord Halsbury, and indeed my noble friend Lord Nugent, who has not yet spoken to the amendment, will not be under any misapprehension that the Government, in taking the view which we do, which I am going to explain very briefly, are any less concerned to ensure that local authorities are provided with fully effective powers to control these premises.
My noble friend Lord Tranmire, in speaking pretty trenchantly about this amendment, said that one thing he was absolutely certain of was that there should be adequate powers for local authorities. May I just set out very briefly the powers which we have put down from the Government point of view? The grounds for refusal provided in the Bill by paragraph 11 of Schedule 3 are extensive. In particular, as Amendment No. 31—which the noble Earl wished to he discussed with this amendment—proposes to make clear, the local authority would be able to form the opinion that it would be inappropriate to have any sex shops at all in the locality to which the application relates. The local authority would be able to refuse to issue a licence on that ground alone, saying that nil would be the correct number of sex shops for the locality. That would be the effect of one of the Government amendments, Amendment No. 31. We have also put down Amendments Nos. 37 and 39, which propose that the local authority's judgment on the question of whether a sex shop is appropriate should be final; in other words, on that question there should be no appeal. We have put down those two groups of amendments in the light of concern expressed before this debate took place that, as has happened in other fields, a local authority's judgment might be overturned by a court which is less familiar with local circumstances. That really is the effect of the Government's amendments, which we have not yet come to. I should like to return to what I consider to be the main purpose of this amendment—
Lord Beswick: If I may intervene, will the noble Lord be good enough to say something about the definition of "locality"? If it is to be a narrow definition,
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Amendment No. 31 makes absolutely no difference to the Bill at all.
Lord Belstead: With respect, I do not agree with the noble Lord. As my noble friend Lord Tranmire pointed out, "locality" is defined in Schedule 3, paragraph 4. It says:
"the relevant locality' means—
(i) in relation to any premises, the locality where they are situated".
It will be for the local authority to decide exactly what is the locality. It will not be possible—and I am absolutely at one with the noble Lord in wishing to make perfectly certain that there is no loophole—for an application for a sex shop to be able to slip through a loophole because in some way it can say that it does not belong to a locality at all. The local authority will decide, in its wisdom, what the locality is for each application and will be able—because of the Government amendments to which we have not yet come—first, to decide that it is possible to say that for the locality the number will be nil; and secondly, to say that, incidentally, their decision (if that is their decision) on the inappropriateness of the application for a sex shop shall not be overridden on appeal. Let me come back to what I believe is the main purpose of the amendment.
Lord Swinfen: I wonder if my noble friend will give way? I wish to raise a matter on the question of "locality". Does it include the whole of a local authority's area or does it only refer to parts of it? Can a local authority decide that the whole of its area is a locality or will it only have the power to ban sex shops in certain parts?
Lord Belstead: I think that my noble friend Lord Swinfen really answers the question by asking it. Obviously, if in relation to any premises the locality is clearly going to be the whole of the local authority area, that is the locality for the particular application. But if the local authority on receiving an application decides that the locality is a particular area in a town, then that is the locality. However, I repeat: I do not believe, when one reads Schedule 3, paragraph 4, that it will by any stretch of the imagination, be possible for an applicant for a sex shop licence in some way to slip through the licensing procedure because the applicant can find a locality which is not covered by the definition.
The Earl of Halsbury: Will the noble Lord give way? What the noble Lord has said seems to me extraordinarily important and has a bearing on the proposed amendment on Report which I foreshadowed. If I understand him correctly, it lies within the authority of a local authority to say, "So far as we are concerned our area is one locality". Do I interpret the noble Lord correctly?
Lord Belstead: I repeat that, if one looks at Schedule 3, paragraph 4, it says:
"the relevant locality" means—
(i) in relation to any premises, the locality where they are situated".
It is, therefore, for the local authority, who must decide the application, to interpret that. It can only interpret

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it, presumably, by deciding two matters: first, the nature of the application; and secondly, the local authority's own understanding of the way in which its area is made up. I do not think that I can go further than that at present.
Lord Ross of Marnock: Will the Minister allow me to intervene?
Lord Belstead: I shall give way once more.
Lord Ross of Marnock: It is rather confusing. The noble Lord mentioned the definition of "the relevant locality" but we also have the definition of "the chief officer of police". It says:
"in relation to any locality, means the chief officer of police for the police area in which the locality is situated".
So there is very considerable confusion in the noble Lord's explanation of the powers of a local authority to define "locality" differently from what the Government themselves state is the meaning of "locality" in respect of the chief of police.
Lord Belstead: I do not think that it is entirely easy to interpret. What I am absolutely certain about is that the chief officer of police does not, with respect to the noble Lord, Lord Ross, have anything to do with it at all.
Lord Ross of Marnock: It is the question of "locality".
Lord Belstead: Obviously, localities will fall within the force area of a chief constable. As regards that point, it is as simple as that. As regards the point which we have been discussing in question and answer, I would just add the following. Flexibility is needed, in that almost certainly "locality" does not mean the whole area of the local authority district, because almost certainly there will be applications for different areas. However, I repeat what I have said before: first of all, the local authority will presumably have to take into account the nature of the application. That must persuade the local authority as to what the locality for that application is liable to be. Secondly, the local authority presumably must consult its own officers as to what it believes the correct locality is. Thirdly, I repeat, I do not believe, therefore, that there is any possibility—but I would obviously like to look at this again and will certainly do so as a result of this brief exchange—of an application in some way slipping through a loophole by being able to suggest that it does not belong to any locality covered at all. I shall certainly give way to the noble Earl.
The Earl of Halsbury: Frankly, slipping through loopholes is not the point on my mind. I am concerned that the process of being refused a licence would go on and on from locality to locality instead of a simple decision being taken.
Lord Belstead: May I look at the matter again? I think that I have said as much as I can and the noble Earl, and, indeed, any other noble Lord, can return to the matter. I shall return to what I believe is the
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main purpose of the amendment. It may very well be that, as a matter of policy, a district council will wish to have no sex shops in a particular locality. But in a local government Bill and in a schedule dealing with control by licensing, I think the Government believe that the authority really should be required to look at each application, although, as I have said, the Government intend to ask your Lordships to make it crystal clear in the Bill that the authority has the right on each application to decide that no sex shop may be established in a locality and has the right not to have that decision overturned on appeal. I hope that that shows that, although noble Lords, and the Government are approaching the matter in different ways, it will enable licensing authorities to reach the same conclusion in the end, if that is their judgment.
I hope that, with that assurance, the noble Lord, Lord Nugent of Guildford, and the noble Earl, Lord Halsbury, may feel that it would be right at least to have a look at the Government amendments, to which we have not yet come, and to withdraw this amendment at the present time, always of course leaving themselves free, without commitment, to decide how they will proceed on Report.
The Earl of Lauderdale: Before the noble Lord sits down I wonder if he would make one matter clear? He has said that he will look again at what is meant by "locality". Those of us who have read the Bill notice that the word "locality" occurs three times in that paragraph of the schedule. At one point it relates to the police area and at another point it is not quite clear to what it relates. My noble friend says that he will look at it again. Is he telling us that if the present amendment were to be withdrawn and, therefore, his own amendment comes to be called, he will, in fact, withdraw it, and will come again with new phrasing at the Report stage?—or is he going to push on with his own amendment, if the one that we are discussing fails?
Lord Belstead: I must make it absolutely clear to my noble friend Lord Lauderdale that I think that it is highly important—I am absolutely at one with the noble Lord, Lord Halsbury, and the noble Lord, Lord Nugent—that one of these amendments should go on to the face of the Bill. I think that, on the grounds that I have tried to deploy, the Government's amendments are the more appropriate. I know that Governments are very fond of saying that they want their own amendments. However, I do think that in a local government Bill, which is a controlling measure, to put in an amendment which in fact would change the criminal law would be less appropriate than putting into the Bill, if your Lordships agree, amendments which would tighten the control in this area on which many of your Lordships feel so deeply.
Baroness Birk: I was waiting to hear what the Minister had to say and I had intended to speak on the Government amendments, as I thought that there was a possibility that the noble Earl, Lord Halsbury, and the noble Lord, Lord Nugent of Guildford, would withdraw their amendment. But the Minister has now said fairly specifically what is in the Government's

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amendments, and it seems to me that this has become almost one general debate.
First, I do not like the amendment moved by the noble Earl, Lord Halsbury. Secondly, I do not like the Government's amendments. However, I think that the amendment of the noble Earl, Lord Halsbury, and the noble Lord, Lord Nugent of Guildford, is more frank and more honest in its intention than the Government amendments. The Minister has just said that he thinks it would be quite wrong in a Bill of this kind—which is (and we must keep remembering this) a local government Bill—to have something in it which makes a general ban and which comes almost into the area of criminal law.
So, instead of a straightforward:
"A local authority may resolve that sex establishment shall not be permitted in their area",
we have an amendment which, apart from the inelegance of its language, seems to me to be much more fudgy:
"Nil may be an appropriate number for the purposes of".
that particular paragraph. This is a completely backdoor way of dealing with something which should be in public legislation. The Minister has said that this is not the intention, but this is what is happening and what will happen. I have listened very carefully to what every noble Lord has said and, particularly on a subject like this, everyone must take a personal view and express a personal opinion. But to try to do something in a Bill which has no place for it, seems to me to be a matter of principle, which is rather different from talking about sex shops, or what we are talking about.
This schedule is trying to restrict where it can, and trying to give local authorities the power to decide and to say that in their area, no matter what some people may feel about it—and, after all, in a democracy the views of the minority are important; there are also views of a vociferous minority who may be against sex shops in a particular area; and all this needs to be taken into account—there shall be no sex shops. This is in spite of the fact that today sex shops are legal. We are talking about something that is a legal activity. I think that we must remember that and concentrate on it.
Having said that:
"Nil may be an appropriate number…",
I listened very carefully to what the Minister said about "the relevant locality". He said in answer to the noble Lord, Lord Swinfen, that it clearly could be the whole local authority area; he then said that it does not mean the whole area of the local authority; he then said that they must also consult their own officers. Where I felt at one with the noble Earl, Lord Halsbury, was when he was trying to elicit what this meant, as, indeed, were other noble Lords. It is still not clear.
I would certainly go along with the proposition that a local authority may decide that in a particular locality within its area—meaning a particular district, a particular location, or a particular group of streets or roads—it did not want any sex shops. But that is entirely different from saying that in the whole of Hackney, in the whole of Islington, in the whole of Westminster or wherever you like, we can decide that there will he no sex shops at all. This seems to me
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to be getting very close to—in fact, to be getting right on top of—the whole problem of censorship. This is not the Bill for it. If the Government feel as strongly as this about it, the right place for this to be is in public legilsation, for sex shops to be made illegal, if that is the will of Parliament, and for the Government not to deal with it in this way.
Together with the nil proposition or the proposition of the noble Earl and the noble Lord whose amendment this is, there is also the taking away of the right of appeal. My noble friend Lord Houghton is absolutely right about this. It is now a completely closed box. On the one hand, a local authority can say that there should be no sex shops or sex establishments; on the other hand, there is no right of appeal. This is getting round any intention of valid licensing at all.
The Government are trying to base this on the gaming law. This is not a proper analogy. First, the control of gaming lies finally within a central authority, the Gaming Board. There is no sex board or sex shop board—no quango to deal with sex, at least not yet. There may be one, but there is not one at the moment. Therefore, the Gaming Board can represent its views to the licensing magistrates when a licence is applied for or when there is the question of an appeal.
Therefore, if the Government are to follow the approach of the gaming legislation, there must be this sort of global authority which has overall supervision and can monitor what is going on. Throughout, on everything, if you look at the gaming Acts, there is a right of appeal. To have such a licensing system without a right of appeal is, I repeat, a matter of very important principle. For a moment we must forget, if we can, that this is about sex; this is about an activity that is legal, which a number of people want and make use of. Yet the Government are to make it possible for it to be banned in an area and, at the same time, there will be no right of appeal.
When the Government borrow all this procedure from the gaming legislation, they seem to forget that in the past gaming has had a long history of penal legislation which, of course, sex has not—certainly not in this sort of context. So for myself—and even speaking on this side of the Committee it is perfectly clear that I can speak only for myself, for many of my noble friends take an entirely different view, which I totally respect—I find that I cannot go along with the amendment which we are at present discussing; nor can I go along with the Government amendments that will be moved later.
My noble friend Lord Longford has said that sex shops are a social evil. There are a great many things that one could call social evils. He has said that people are making, money out of human weakness. People are making money out of drink. I have even seen my noble friend have a drink; I have had some very pleasant drinks with him. People make money out of the human weakness of vanity when they sell us clothes. There are all sorts of examples of this. I do not think that this is enough. If he wants to say that all sex shops must be banned, a different route must be followed. The noble Lord, Lord Somers, asked: what has happened to our nation as a whole since sex education in our schools? I shall not delay on that because that is a slightly different subject, but if we are to put such a premium on ignorance and believe

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that that will help young people, God help us all and the youngsters in the future.
The noble Lord, Lord Tranmire, spoke about environmental pollution. There are some environmental pollutions that are very much worse in this country today. I think that the effect of lead in petrol and some of the catastrophies that we have had with waste material have caused more harm than sex shops, especially if there are now to be controls on them. Nobody has to enter them. People may not like the look of them, but not all of them are as garish as those we see in Soho. People have the right to patronise them or not, as they think fit. I have no affection for them. They neither attract me nor do I particularly like them, but we should not get quite so hot under the collar if other people find that they supply a need for them, which I do not think is really any of our business. I would say, let us have a licensing system, let us have control, but not prohibition and not allied with a system from which there is no means of appeal.
Lord Nugent of Guildford: On behalf of my noble friend Lord Halsbury and myself I should thank my noble friend Lord Bestead for his reply to our amendment, which has promoted an extremely interesting debate. I should like to thank most warmly those who have been good enough to support our amendment. Turning to my noble friend's Amendments Nos. 31, 37 and 39, in my opinion, by a circuitous route, they achieve the same end. They will allow the local authority to deal with proposals, with applications for sex shops, as they come along and will enable them to decide not to have one if they feel that it is not appropriate for their area, and they are protected in that decision by Amendment No. 39 which will deny an appeal to the applicant.
I believe that, albeit by a circuitous route this in substance meets our amendment. Many noble Lords and noble Baronesses who have spoken would obviously have preferred the direct approach; the direct power in the local authority to pass a resolution. However, there is weight, which I recognise, in my noble friend's point that our amendment would change the criminal law on obscenity, and therefore there is a constitutional objection there. The noble Lord, Lord Jenkins, was on the same point. Therefore, I would feel that we should accept the amendments which my noble friend is going to move later as being adequate in meeting the purpose that we had in mind.
The noble Lord, Lord Houghton, delivered—I am sure in a jocular fashion—an attack on me and my noble friend Lord Halsbury, and charged us with being notoriety seekers. I do not really believe that anyone in the Committee would agree with him on that. Neither of us has any interest in seeking notoriety. I am sure that my noble friend Lord Halsbury's objective in coming here is exactly the same as mine; we are here to serve as well as we can. If I achieve a minor success in getting seatbelts made compulsory, I am glad to do so, but it is only in combination with everybody else here and elsewhere. I am certainly not going to be deterred by the fact that I am getting older from taking on subjects like this one, which are particularly unpleasant to tackle.
The noble Lord, Lord Houghton, must have felt
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when he was listening to the noble Lady, Lady Saltoun, speaking behind him—she is about half his age—that he was pretty adequately answered. How many people seeing these sex shops think how dangerous they are? My noble friend Lord Swinfen, again a young man compared to the rest of us, expressed a similar view. The noble Lord, Lord Houghton, is very experienced himself and certainly is not deterred by age from having a go too, and if notoriety was the only thing that was to prevent us having a go he would have stopped long ago because his fame goes far and wide for the causes he takes up.
In this particular context we are taking over a Bill in which these proposals for licensing were only looked at in the House of Commons at the end of the Report stage. They were never looked at in Committee stage. Therefore, we have a special duty to look at the Bill in detail here and to improve it in any way we can. I am sure that the noble Lord, Lord Houghton, has read the debates in another place. The general trend of almost every speech made was that the Bill needed strengthening.
One of the precedents that was picked up was that referred to by the noble Baroness, Lady Birk, of the proliferation of betting shops, and how objectionable it is that all over the place, on almost every corner, you pretty well fall over them. We have far more than we need. Because the machinery of appeal operated to detach the final decision from local considerations to the Crown Court, so decisions were taken in many cases to allow licences where, in the view of everyone in the locality, they should never have been granted. This is one of the reasons why the opinion was so strongly expressed in the House of Commons—and noble Lords have expressed it again tonight—that the power of appeal should not be allowed in the case where the local authority has taken this decision.
I would feel that my noble friend Lord Belstead has tried to meet the sense of the majority of us here. He has also tried to meet the sense of the almost universally expressed opinion in the House of Commons that something of this kind is needed. It is in that spirit that I am accepting my noble friend's amendments, and advising noble Lords and noble Baronesses on all sides who have been good enough to support us that we should accept this as being adequate. I hope when we come to the point later on in the Marshalled List the noble Baroness, Lady Birk, will not feel quite so savage about these amendments and might even accept them. I beg leave to withdraw the amendment.
The Earl of Halsbury: May I just say that I agree with my noble friend Lord Nugent, and associate myself with his Motion to withdraw the amendment.
Amendment, by leave, withdrawn.
The Deputy Chairman of Committees (Lord Greenwood of Rossendale): Amendment No. 12. I must tell your Lordships that if this is agreed to I shall not be able to call Amendment No. 13.
7.37 p.m.
Lord Jacques Lord Jacques moved Amendment No. 12:
Page 2, line 33, leave out ("that section") and insert ("paragraph 5(1) of that Schedule").
The noble Lord said: This amendment has two objectives. First, to correct an error. The error is acknowledged by the Government in their Amendment No. 13. The word "section" should read "Schedule". But this amendment, as distinct from the Government's amendment, has a second objective. If the local authority is required to publish a notice stating the general effect of the whole of Schedule 3, the notice would have to be long and elaborate, since otherwise questions might arise as to whether or not the authority had complied with the Act and the provisions were in force in their area.
Long newspaper notices are expensive and are seldom read. It is suggested that it would be sufficient to require the notice to state the effects of the principal operative provision of the schedule as set out in paragraph 5(1) with any relevant explanation of the expression "sex establishment". I beg to move.
Lord Belstead: Perhaps it would speed matters along after the long debate we have just had, which has covered so much of the ground, if I spoke to the next amendment in speaking to Amendment No. 12. Certainly the noble Lord, Lord Jacques, has put his finger on an important drafting point. "Section" ought to read "Schedule", and it ought to read "Schedule" for a good reason, because people will want to know what is the schedule which is the operative part of the Bill so far as the rules about sex establishments are concerned. But, with respect to the noble Lord, if the requirement for a notice is confined only to paragraph 1, that would not be satisfactory. There would be no obligation to give the date on which the licensing controls are to come into force, to give one example. But more generally, I think that without taking up a huge amount of print in the local press it would not be beyond the wit of the local authority concerned to make up a pro forma, before they ever start considering licensing sex establishments, which would be succinct and short and would give just a brief outline to people who wanted to know what was in the schedule. For that reason, we should prefer to refer to the schedule rather than just to paragraph 5(1) of the schedule.
Lord Jacques: Would the noble Lord have another look at the matter to see whether it would be possible to have some restriction? Perhaps the restriction I have indicated—namely, paragraph 5(1)—would not be sufficient and that there should be a little more. Frankly, however, it need not be the whole schedule. Let us try to reduce the expenditure of local authorities. Over the years Parliament has tended to give local government elaborate duties and responsibilities and then, at the end of the day, to grumble because they spend too much. In this case expenditure by local authorities could be restricted, and lest anybody thinks we are speaking of a minor expense, I assure the Committee, from long experience of private or co-operative business, that by making cuts of this sort all over the place, in the end one gets a big saving. That is where good management comes in. I therefore ask the Minister to have another look at the issue to avoid having unnecessarily long newspaper advertisements which today are costlier than ever.
Lord Belstead: If the noble Lord would withdraw the amendment, for the reasons I gave, I shall certainly look at the matter again. I admit that last night I began to write on a piece of paper the sort of headings I thought might be needed at short notice. It came to rather a long list and I tore the piece of paper up and decided not to use it in the debate on this amendment. I think the noble Lord has a point and I will undertake to look at it again. Meanwhile, perhaps he would agree, so that the text of the Bill makes sense, to withdraw his amendment and agree to the following one.
Lord Jacques: I shall be glad to do that, but I emphasise that I am very serious about this. It may be a small point but it is a most important one affecting good management. I shall have a good look at the Marshalled List to see if anything has been tabled for Report and if, on the final day when amendments must be tabled, I see that nothing has been done, there will be another amendment tabled by me. On that understanding, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Belstead Lord Belstead moved Amendment No. 13:
Page 2, line 33, leave out ("section") and insert ("Schedule").
On Question, amendment agreed to.
Clause 2, as amended, agreed to.
Schedule 3 [Sex establishments]:
Lord Belstead Lord Belstead moved Amendment No. 14:
Page 53, line 2, at end insert—
("Saving for existing law.
Nothing in this Schedule—

(a) shall afford a defence to a charge in respect of any offence at common law or under an enactment other than this Schedule; or

(b) shall be taken into account in any way—

(i) at a trial for such an offence; or

(ii) in proceedings for forfeiture under section 3 of the Obscene Publications Act 1959 or section 5 of the Protection of Children Act 1978; or

(c) shall in any way limit the other powers exercisable under either of those Acts.").

The noble Lord said: I will, with permission, speak at the same time to Amendment No. 41. These amendments serve two purposes. The first fulfils the undertaking which I gave on Second Reading that the Government would propose an amendment to move the present paragraph 25 in Schedule 3 to the head of the schedule. That followed a suggestion in another place that it would be helpful in order to give greater prominence to the fact that, as the paragraph makes clear, nothing is made lawful by the schedule that is presently unlawful. The second purpose which is fulfilled by the amendments is to ensure that the saving for the criminal law applies to forfeiture proceedings under the Obscene Publications Act 1959 and the Protection of Children Act 1978.
At present, paragraph 25 of Schedule 3 refers to "offences" and a "trial for an offence". That is not appropriate in the case of forfeiture proceedings, since the latter are not criminal proceedings, for there is no defendant and no trial. The only question at issue in such proceedings is whether the articles which have been seized should be ordered by the court to be forfeited. It would clearly be highly undesirable

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if it were possible to advance an argument at forfeiture proceedings that an order should not be made because the articles had been seized from premises which had been issued with a licence. Similarly, the issue of a licence should not be held to affect the powers in those Acts, such as entry and seizure, which preceded forfeiture proceedings. Accordingly, it is proposed in Amendment No. 41 that the present paragraph should be amended by adding sub-paragraph (b) (ii) and sub-paragraph (c). I hope that explanation is intelligible.
On Question, amendment agreed to.
The Deputy Chairman of Committees: In calling Amendment No. 15, I have to inform the Committee that if that is agreed to, I shall not be able to call Amendment No. 17.
7.46 p.m.
Lord Nugent of Guildford Lord Nugent of Guildford moved Amendment No. 15:
Page 53, line 13, leave out from ("activity") to ("or" in line 15.
The noble Lord said: It may be for the convenience of the Committee if I speak at the same time to Amendments Nos. 18, 20 and 22; possibly the noble Baroness, Lady Birk, would like to include in the debate Amendment No. 16; and perhaps my noble friend Lord Belstead would like us to include Amendments Nos. 17, 19, 21 and 23, because they are really alternatives to my amendment.
The purpose of this series of amendments is to leave out words in the schedule describing the activities in a sex establishment, either a cinema or shop. They appear in the schedule, and when they appeared they surprised and shocked honourable and right honourable Members of another place, who expressed their surprise and shock, and noble Lords here. Especially the words complained of were:
"acts of force, restraint, violence or cruelty which are associated with sexual activity"
and a good many people were shaken by the following sentence:
"concerned primarily, with the portrayal of, or primarily deal with or relate to, genital organs or urinary or excretary functions".
Those words are repeated, as it were, throughout the other amendments, so I need not trouble the Committee with them again.
There are two reasons why those words shock people. First, it seemed that by including them in the licensing provisions Parliament was, by implication, legalising them; but on the face of them, those activities and materials are illegal in the terms of the Obscene Publications Act 1959. Therefore, they pose the second question: if they are illegal, as appears to be the case, why are the operators not prosecuted? Having done some visiting of sex shops, I have a better idea of what the answer is to that. In any event, those are two questions which my noble friend Lord Belstead must answer: is there not a real implication that by a licensing scheme we are legalising them, and why is it that the operators are not prosecuted? It is not necessary for me to expand the matter further. Those are the two points which I am sure my noble friend will wish to
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answer and to which other noble Lords may wish to speak. I beg to move.
The Lord Bishop of Norwich: I should like to support the amendment of the noble Lord, Lord Nugent of Guildford, and if for a moment I may backtrack, I should like to say how grateful I think we all are to the noble Lord, Lord Belstead, for the point that lie made about paragraph 25. The matter is brought into better proportion by the assurance he gave us that the provision would not make legal activities that are already illegal. One of the anxieties as well as one of the problems about the Bill has arisen from being explicit about the terrible things that are mentioned. That places an aura of permission over them, even though we dislike them.
I think that the background to the present amendment of the noble Lord, Lord Nugent, is strengthened by the assurance of the Minister that paragraph 25 will be placed near the head of the schedule. We would be concerned about anything which in years to come could be shown to "respectable-ise", let alone legalise, some of the quite terrible things listed on page 54. For a moment I wish to refer to something that the noble Baroness, Lady Birk, said. Those things listed are there not to help people in their weakness but to pander to people in their lust, and that is something which I believe we in this Chamber should do our best to restrain. I see no problem over the question of liberty—I listened very carefully to the noble Baroness, Lady Birk—because when it comes to driving on the left-hand side of the road liberty is restricted as a natural concomitant to guard against serious danger. Since some of the things mentioned in this part of the schedule can only place people in serious danger, I am sure that we are right to be restrictive and to be quite open about our restriction for the sake of caring for others. Therefore I should like to support the amendment of Lord Nugent and to thank the Minister, the noble Lord, Lord Belstead, for his earlier remarks, from which it is clear that in a way lie is seeking to contain the problems which we are debating at such length and I believe in so proper a manner.
Baroness Birk: I should like to support the amendment. My name is attached to some of the other amendments, though due to an error on my part my name is not attached to the first amendment in the group. At this late hour I should like to speak briefly to the noble Lord's amendment, my own amendment, and the Government amendment. This is one occasion on which I agree with some of the people on the other side of the fence in their approach to the Bill. I find the spelling out of the meaning in a statute quite obnoxious. I also find the drafting rather extraordinary, rather rococo. I also think that some of the words are redundant. Many distinguished legal opinions which I have sought agree with my view on the redundancy point. I think that this kind of language is quite unnecessary in the statute. It seems to me that, if the words are omitted from the paragraphs in the way proposed in the amendments, almost the whole field would be covered. In relation to sex shops the schedule would then refer to
"sex articles, or other things intended for use in connection with, or for the purpose of stimulating or encouraging sexual activity".

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I appreciate that the Government have put forward what I would call a halfway house position. They have removed what they obviously feel are the most repulsive words so far as the Committee is concerned, and have left it at that. But I think that they will get themselves into a legal tangle, quite apart from the semantics, or whether one likes the language or the way in which it is used. If one includes certain activities, one is in difficulty if everything is not included. If an attempt is made to include everything, but that is not possible, due probably to both legal and moral inhibitions, it is easier for someone to say, "You haven't covered that"; or, "This is covered in this way". Once a list is included and no generality is attached, there are problems. Personally, I should much prefer to see the provision extend only to the words "sexual activity"—which seem to cover it all—and not include the words "force" or "restraint". That is probably too much to hope for, but that is certainly the way I should like to see the Bill amended.
I think there will be quite a muddle and some confusion if other words are added. I do not want to delay the Committee this evening, but one could raise all kinds of questions on the words that are included and the words that have been taken out; and it would not make the legislation any clearer. In fact, as with so much legislation, it would make it easier for the lawyers. In a way I think it is much easier for people to dodge the issue when things are only half spelled out, instead of having a full stop after the words "sexual activity".
Lord Swinfen: I, too, should like to support the amendment. Though not a lawyer, I think that as it stands, the provision could possibly lead to encouragement of contravention of the Obscene Publications Act 1959. As I understand it, the act of rape is an act of force associated with certain sexual activity. As I read it, the wording of the Bill could well encourage people to watch films of rape which could lead them to indulge in rape, which to all sensible people is an abhorrent form of violence. Apart from that, any form of violence or cruelty involving sex that is encouraged is a matter of sexual gratification, rather than of love, and is something that we certainly should not encourage. I have a feeling that, as worded at the moment, the Bill could lead to such encouragement, and therefore I wish to support the amendment.
Lord Belstead: In the Second Reading debate on the Bill concern was expressed that the inclusion of the words to which all the amendments are directed, relating to the definition of premises, could imply that in some way Parliament condones such activity. I think that it was implicit in the first question that my noble friend Lord Nugent asked that this point still very much concerns him. I am most grateful to the right reverned Prelate the Bishop of Norwich for referring back to the previous amendment and making plain yet again that by bringing paragraph 25 of the Schedule to the head of the Schedule we shall be making clear that sex shops are subject to the law and that the schedule makes lawful nothing that is presently unlawful.
I should now like to turn to the exact wording, since that is what we are talking about. On Second Reading the noble Baroness, Lady Birk, suggested that the references to,
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"acts of force, restraint, violence or cruelty"
could be omitted entirely, and I think that she said again this evening that that would be her preferred option. The noble Baroness argued that those words were redundant because anything that was covered by them would be caught by the term "sexual activity". Nothing would give me greater pleasure than to agree with the noble Baroness in her judgment on this matter, since I find the references in legislation as distasteful as I know she does. But I have to say that we do not believe that alone the reference to "sexual activity" would go wide enough. I think I must say quite plainly to the Committee that we think that the omission of all these terms really would leave significant loopholes which would certainly be exploited.
If I may turn to the amendments in the names of the noble Baroness and of the noble Earl, Lord Halsbury, but moved by my noble friend Lord Nugent, while much of the material covered by these terms would probably be covered by the term "sexual activity", I am advised that some material, in particular that concerned with bondage or other acts concerned with the infliction of pain, again might not be covered by the schedule. The sexual content of such practices is usually apparent, but it does not necessarily follow that it would therefore constitute sexual activity and come within the scope of paragraph 2(1)(a) or the equivalent provisions. I think it really is far from fanciful, in our view, that premises might seek to specialise in such material if by doing so they could escape the licensing controls entirely. This is the only thing which divides the amendments which the Government have put down—Amendment No. 17 and then Nos. 19, 21 and 23, which are just that bit different—from my noble friend's amendments, because we are keeping in some extra words.
If I may go on, it is of course very much easier to criticise other people's amendments than to bring forward one's own in regard to this very difficult schedule, and I should like to emphasise that, while we have been anxious to do what we could to meet the objections which were expressed on Second Reading, with which the Government are in agreement, our first priority really must be to ensure that the definitions in this schedule are sufficiently comprehensive so as not to place the licensing scheme in jeopardy.
So the Government believe that it would be safe to omit the words "violence" and "cruelty", which are perhaps the two words which have given the greatest offence, provided that the words "force" and "restraint" are retained. The term "force" would, we think, cover adequately material depicting acts of violence or cruelty, with one important exception, and this is where, for example, someone adopts the practice of voluntarily submitting himself or herself to bondage. For this reason we think that the term "restraint", too, has got to be retained.
I hope I have said enough—your Lordships may say more than enough—to convince the Committee that the amendments which the Government have tabled go as far as it is possible to go without incurring a serious risk of undermining the proposed controls. I think nothing is of greater importance in the Bill than that the definitions succeed in imposing a licensing requirement on premises which Parliament intends to be subject to these controls. If we err, I think we really must

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err on the side of caution. It is that, and nothing more, which divides me from those who have moved the amendment.
Before I sit down, however, I must answer the second question of my noble friend Lord Nugent. My noble friend said, "There are acts which are referred to here in the schedule which are in fact illegal; why are they not prosecuted?" Material dealing with these activities is not necessarily unlawful. Acts of force, for example, may vary considerably in their degree of severity. But the controls which we are imposing in this amendment really have got to cover everything, whether or not criminal proceedings may be possible. However, may I just point out that the saving for the criminal law means that criminal proceedings can of course then be taken whether or not a licence has been issued.
I repeat that I hope the Committee will agree that perhaps the amendments which, from a Government point of view, we feel we have had to bring forward, are necessary. We bring them forward with no pleasure, only because we think that they are needed.
The Earl of Halsbury: I naturally support the amendment standing in my name and in the name of my noble friend, but I did so in the first instance only as a balance of judgment. The two factors to which the noble Lord, Lord Belstead, has referred were pulling in opposite directions in my mind. One was the factor of leaving loopholes which people would specialise in if there was not some kind of restraint; the other was the factor of licensing anything so manifestly in breach of the criminal law as it stands at the moment. On balance, I felt that I inclined to the view expressed in this amendment, and I associated myself with it.
Since then I have had an opportunity to study the alternative put forward on behalf of the Government by the noble Lord, Lord Belstead, which has been referred to—typically Amendment No. 17, as an alternative—and I think it a happy compromise. A fortiori, violence and cruelty would be an excess of force or restraint, and if one was, as it were, embargoed so would the other two obviously be and we would not be licensing something which was manifestly contrary to the criminal law. So for my own part, while supporting the amendment of my noble friend which stands also in my own name, I think that the alternative put forward by the noble Lord, Lord Belstead, is a happy compromise.
Lord Nugent of Guildford: I must thank my noble friend Lord Belstead for his reply and, in particular, for the amendments he has put down to meet the point which appears in all our amendments. I recognise his dilemma, that he must make the definition wide enough to cover what goes on in sex establishments and yet try to avoid as too offensive the terms in which he defines it, although everybody found it to be so. I am afraid I have to join Lord Longford as one who has visited sex shops now and testify that everything goes on in sex establishments, and the law is freely breached in every way. The 1959 Act is breached in a way which could be prosecuted any day, and there are unlicensed cinemas all over the place. For a variety of reasons that I will not go into now, prosecutions can only be taken a limited number of times,
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perhaps four times a year, and the operators simply do not mind; they operate illegally the rest of the time.
One of our problems in licensing is going to be to get the operators to be licensed and then to enforce the licensing system. So I sympathise with my noble friend, that just to follow our amendment and leave out all those words would have left too big a loophole, and I recognise that my noble friend has probably struck about the right compromise in leaving out "violence" and "cruelty" and in keeping in the rest. But I make the point to noble Lords generally that what goes on in these sex establishments really beggars imagination, and if every one of us went there I think even the noble Lord, Lord Houghton, might wonder whether this was a good cause to defend. But, anyway, that is a point that perhaps we can discuss on some other occasion. I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
[Amendment No. 16 not moved.]
Lord Belstead Lord Belstead moved Amendment No. 17:
Page 53, line 14, leave out (", restraint, violence or cruelty") and insert ("or restraint").
On Question, amendment agreed to.
Lord Nugent of Guildford Lord Nugent of Guildford moved Amendment No. 17A:
Page 53, line 29, at end insert—
("Meaning of "Sex Encounter Premises".
. In this Schedule "Sex Encounter Premises" means—any premises which are used for the presentation of an activity or display which is primarily designed to provide for the sexual stimulation (whether by verbal or any other means) of persons admitted to the premises not being premises which are—

(a) for the time being licensed under the Theatres Act 1968; or

(b) for the time being licensed under Schedule 12 to the London Government Act 1963 or Schedule (Licensing of Sex Establishments) to this Act, and are for the time being used for a purpose for which a licence is required under the said Schedule 12 to the London Government Act 1963 or Schedule (Licensing of Sex Establishments) to this Act.").

The noble Lord said: This is one of the amendments of the London Boroughs Association, and, of course, they are authorities, particularly Westminster, which have a very full experience of sex establishments. I would imagine that between the Paddington area and the Soho area there must be close on a couple of hundred of them, and the authorities know all the difficulties of trying to deal with these strange and unhappy places. This particular amendment is to include in the schedule what are known as sex encounter premises or nude encounter parlours. I do not propose at this time of night to spoil your night's rest by describing to your Lordships what goes on there. I will spare your Lordships the detailed description; although if any noble Lord or noble Baroness wishes to have a detailed description I shall be ready to give it; I have it all here.
The fact is that these nude encounter parlours, as I think they are usually called, are normally used as a prelude to prostitution. Very heavy charges are made for them: £5 or £10 for ten minutes or 15 minutes, that sort of thing. So they are very lucrative and, at present, the law does not cover them. This is

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the case for including them in the licensing system and why the London Boroughs Association want them included. I suspect that my noble friend may tell me that these establishments and activities are covered by the existing offence of keeping a brothel. It would be so, if there were two or more girls involved; but, if there is only one girl involved, then they are not covered. Noble Lords may be surprised to hear that in one of the sex shops which I visited, and which had one of these nude encounter parlours, we discussed the point with them that they could be caught for keeping a brothel. They said, "Ah! We have only got one girl now". So they are wise to that. The operators have a number of premises with one girl in each; so that it appears that a loophole can be found in the existing law.
Therefore, it is desirable that these places should be in the licensing system, too. The London boroughs regard this as analogous to the control of massage and sauna parlours. They have had so much experience with this sort of thing that we should listen to them and consider whether the amendment should not go into the Bill. My noble friend may not like the form in which the amendment is put down, but the point has weight in it and I hope that he will be willing to look at it. I beg to move.
Baroness Birk: I support the amendment in principle. This is a new one on me. I did not know about sex encounter establishments. But it seems to me that if they are going to go into the Bill then the definition of "sex establishments" at the beginning of Schedule 3 should have to include sex encounter shops. That is my only comment. I support the amendment.
Lord Belstead: It is clear from the information that I have received from the Metropolitan Police about these premises that they can and do serve as a front for prostitution. I agree with my noble friend Lord Nugent on that. I understand that there were four such premises in operation in the Soho area last year and that proceedings have been taken in each case alleging brothel keeping. In two only of the three cases which have been decided, were convictions secured on that count. The third case resulted in an acquittal. My understanding is that it was not disputed that prostitution had taken place but the court was not satisfied that the defendant was responsible. The fourth case is being heard today.
The view which the Government have consistently taken in this matter is that it would be inappropriate to licence these premises in the light of what is known about their activities. I believe that they can be distinguished from sex shops. The activities of these premises cross far more clearly than sex shops the borderline between legality and illegality, and it is apparent that they can be dealt with under the general criminal law, which, in our view, is the proper course. At least, that seemed the proper course until I listened to the speech of my noble friend Lord Nugent, who raises an important point, in that he says that he believes that there is a loophole. I should very much like to discuss this with him so far as the loophole is concerned. I am advised that it would be likely that, in a one-girl establishment, the persons running such an establishment would be guilty of living on the earnings
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of prostitution; but I do not know how the penalities for that would compare with putting this amendment into the schedule. The noble Baroness, Lady Birk, is absolutely right. The Government believe that there would be a need to put down another amendment to allow "sex encounter premises" to come within the definition of "sex establishments" in paragraph 1.
I wonder whether my noble friend might see fit to withdraw the amendment for the time being so that perhaps he and I could discuss the matter. I should like to take further advice and I should like to have a word with my noble friend to see where the right answer lies. I am certain that my noble friend has told us the whole of the case so far as he knows it, and I believe that I have replied giving the whole case so far as I know it. Now that we have had the debate in the Committee, it would be worth while giving this further study before writing anything on to the face of the Bill.
Lord Nugent of Guildford: I thank my noble friend for his, as usual, helpful and sympathetic answer. I believe there is a point here. One must understand that in these sex establishments there are many rooms and many activities going on. There are very astute and resourceful people, constantly thinking of new ideas. This is a very new one; and the London Boroughs say, "Let us close this loophole before it is developed extensively". I thank my noble friend. I shall be pleased to discuss it with him. We can visit one together. One way or another we will investigate. Perhaps I shall be able to convince my noble friend that it is necessary to include it in the schedule. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 18 not moved.]
Lord Belstead Lord Belstead moved Amendment No. 19:
Page 53, line 38, leave out (", restraint, violence or cruelty") and insert ("or restraint").
On Question, amendment agreed to.
[Amendment No. 20 not moved.]
Lord Belstead Lord Belstead moved Amendment No. 21:
Page 54, line 1, leave out (", restraint, violence or cruelty") and insert ("or restraint").
On Question, amendment agreed to.
[Amendment No. 22 not moved.]
Lord Belstead Lord Belstead moved Amendment No. 23:
Page 54, line 13, leave out (", restraint, violence or cruelty") and insert ("or restraint").
On Question, amendment agreed to.
8.19 p.m.
Lord Houghton of Sowerby Lord Houghton of Sowerby moved Amendment No. 24:
Page 55, line 29, at end insert—
("Provided that no such term, condition or restriction shall relate to articles for sale, hire, exchange, loan, display or demonstration or to the extent to which the business may consist of selling, hiring, exchanging, lending or demonstrating such articles.").
The noble Lord said: I beg to move the amendment standing in my name on the Marshalled List. If I may, I will preface my remarks by the general observation

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that I think the Government have got themselves into unnecessary difficulties over this set of proposals by not giving them enough thought before introducing them into another place. This is the second time that a Bill dealing with this kind of subject has come to your Lordships' House, ill-thought-out, badly constructed and containing provisions which, when you examine them closely, have very disturbing meanings.
This should have been a separate Bill dealing with the whole problem, so that we could have had adequate opportunity of considering all the implications of what was proposed. Indeed, such a general public Bill could have included any provisions for total banning of particular articles or activities had we considered it necessary. However, as it is, local authorities are being left to carry pretty well the whole responsibility and it is not a responsibility that local authorities are equipped to carry. In no other respect are they to be given comparable responsibilities. That shows how unsuitable is our method of approach.
If we look at page 55, on the granting of a licence, Schedule 3, paragraph 7 says that the licence may be granted on such terms and conditions and subject to such restrictions as may be so specified. That is absolutely carte blanche. It would facilitate, if one is to take its literal meaning, the intervention by the licensing authority on the nature of the business. A local authority could say: "We will grant you a licence on condition that you do not have the whole box of tricks; you do not have this; we object to that. You can sell certain articles but you will be prohibited from selling others. In other words, we are going to decide what kind of sex shop you are going to have under the licence that we shall grant".
Thus we may get as between different local authorities, and indeed within the same area of local authorities, different kinds of licence for different kinds of sex shops. This means therefore some kind of classification or grade of sex shop. One might be called a fully fledged sex shop, with no holds barred. Another one might be called a modified sex shop, restricted as to certain articles. There may be some shops which may wish to stock particular articles that might not be regarded as sex shop articles. There are all sorts of problems here which will probably give rise to a packet of trouble in the future.
This amendment seeks to restrain local authorities from granting licences on conditions which amount to running the business or deciding how the business shall be run and having inspectors to go round to see that it is being run according to the detailed conditions that have been imposed. Is this the intention? Do we envisage the inspector visiting to see what transactions are actually going on and to satisfy himself that the conditions as to certain articles or equipment are not the subject of sale in that shop? This is a ridiculous situation. We are going to have another army of inspectors going round to see whether sex shops are doing what they are supposed to be doing, and nothing else. The opportunity for refinement in judgment, what is appropriate in particular areas, is very wide indeed.
This amendment seeks to provide that in laying down the conditions the local authority shall not be able to impose conditions which,
"… relate to articles for sale, hire, exchange, loan, display or
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demonstration or to the extent to which the business may consist of selling, hiring, exchanging, lending or demonstrating such articles.".
This is a lot of rigmarole in order to define the area of exclusion of the conditions which might otherwise be imposed by the local authority. I think that the Minister had better tell us—if he knows—what is intended, what is in mind. Is it literal? Is it by reference to some standards of common sense, or is it by reference to what local authorities may deem to be their appropriate function, or what? This is, when we say it shall be given on such conditions and restrictions as may be so specified. I hope, therefore, that this amendment will be taken seriously by the Government. I say in conclusion (to save referring to it again) that this relates also to Amendment No. 32 where exactly the same considerations arise. I beg to move.
Lord Belstead: Lord Houghton's concern is that a local authority should not be able to negate the effect of issuing a licence by prescribing that the premises may trade in certain types of articles but not in others. If we take premises which are operating wholly as a sex shop, the advice which I have received is that a local authority would be acting ultra vires if it sought to impose such conditions. This is logical enough. If someone is required to apply for a licence because he engages in certain activities, it would make little sense if he were issued with a licence, but only on condition that he desisted from some or all of those activities.
So the noble Lord will see that I am in the process of answering the specific question which he asked me, which is: What does it mean in paragraph 7 of Schedule 3 when there is reference to the terms and conditions and subject to such restrictions as may be so specified for the granting of a licence?
But I am advised that a distinction can be drawn between the imposition of conditions relating to the sale of articles with which the schedule is concerned and conditions relating to other articles. For example, a local authority would be able, we think, to impose a condition prohibiting a sex shop from branching out into the sale of other articles, such as food or sweets and tobacco, in order to attract customers. It seems to me to be both desirable and right that such conditions may be imposed. The amendment of the noble Lord, Lord Houghton, would prevent such a condition being imposed.
Similarly, we think it reasonable that if a licensing authority issues a licence to premises on the basis that it is partly a sex shop and partly something else, it should be able to ensure that the premises are not immediately turned into a sex shop alone. I am advised that a condition having this effect would be within the powers of a licensing authority; but, once again, this would not he possible if the noble Lord's amendment were accepted. It is on those grounds that I do not intend to accept Lord Houghton's amendment.
Lord Houghton of Sowerby: I am grateful to the noble Lord for his explanation. I think that I may be content with that, but I should like to consider it further. I agree that as the amendment is drafted it is probably open to the same criticism as paragraph 7. This is the difficulty of the meaning of words and whether one can define one's purpose and intention

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sufficiently clearly to avoid ambiguity. I have certainly no intention of suggesting that a sex shop should turn itself into a restaurant, a food shop or sell other goods to entice people into the shop. A sex shop, we all understand, has to stick to sex. In those circumstances, one would not allow it to go more widely. If, however, the restraints which local authorities could properly put upon their trading conditions would amount to undue interference in the full exercise of the licence granted, then there is a point of difficulty. However, for the moment I shall beg leave to withdraw the amendment and see whether it needs to be pursued further.
Amendment, by leave, withdrawn.
Lord Sandys: I think that this may be a convenient moment to adjourn the Committee stage. Therefore, I beg to move that the House do now resume.
Moved accordingly, and, on Question, Motion agreed to.
House resumed.

Hong Kong and China Gas Company Limited Bill [H.L.]
Thomas Brown and Sons, Limited Bill [H.L.]
The Examiner's certificates that the further Standing Orders have been complied with were ordered to lie on the Table and the Bills were committed to Unopposed Bill Committees.

TABLE 1

FAMILIES RECEIVING CHILD BENEFIT, FAMILY INCOME SUPPLEMENT, ONE PARENT BENEFIT AND GUARDIAN'S ALLOWANCE

Great Britain

Benefit and date to which figures relate

Number of families

Entitled

Receiving

Notes

Child benefit December 1980

7,100,000

7,100,000

Family income supplement(FIS) October 1981

Not known

124,000 (63,000 two parent families 2,000 one parent families headed by male59,000 one parent families headed by female)

It is not possible to estimate the numbers entitled to family income supplement (FIS) at October 1981. The latest estimate of FIS take-up is contained in the explanatory note of 6th July 1981, headed "The take-up of family income supplement: note on the estimate derived from the Family Finances Survey". Copies have been deposited in the Library of the House.

One parent benefit November1980

800,000(100,000 male700,000 female)

437,000(57,000 male380,000 female)

These figures include recipients of supplementary benefit, who may not gain financially because, when entitlement to supplementary benefit is assessed, one parent benefit is taken fully into account. The estimated take-up of one parent benefit among families who stand to gain is 66 per cent.

Guardian's allowance December 1981

Not known

3,362*

County of Avon Bill [H.L.]
The Bill was returned from the Commons agreed to with amendments; the amendments were considered and agreed to.
  SOCIAL SECURITY BENEFITS: ENTITLEMENT AND TAKE-UP
  SOCIAL SECURITY BENEFITS: ENTITLEMENT AND TAKE-UP
  ONE-PARENT SUPPLEMENTARY ALLOWANCE: ENTITLEMENT AND TAKE-UP
  ONE-PARENT SUPPLEMENTARY ALLOWANCE: ENTITLEMENT AND TAKE-UP
  FAMILY INCOME SUPPLEMENT: ENTITLEMENT AND TAKE-UP
  FAMILY INCOME SUPPLEMENT: ENTITLEMENT AND TAKE-UP
  HEALTH CENTRES
  HEALTH CENTRES
  THE PUBLIC TRUSTEE: COST
  THE PUBLIC TRUSTEE: COST
  ROADSIDE BREATH TESTS
  ROADSIDE BREATH TESTS
  ECGD: PU BLICATION OF AUDITED ACCOUNTS
  ECGD: PU BLICATION OF AUDITED ACCOUNTS