Sitting of 17 March 1982

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

    Partnership Committees and Programme Authorities
    Mr. Steenasked the Secretary of State for the Environment how much Government money has been made available to the six partnership committees and 15 programme authorities for each of the last two years.
    The Minister for Local Government and Environmental Services (Mr. Tom King): The total resources available under the urban programme for the relevant authorities were some £133 million in 1980–81 and some £146 million in 1981–82. I will, with permission, circulate the figures for individual partnerships and programme authorities in the Official Report. Allocations for 1982–83 will total £179 million.
    Mr. Steen: I recognise the value of these considerable sums of public money in rebuilding the principal urban areas. Is my right hon. Friend aware that Liverpool city council is planning to pull down Clayton Square in the inner neighbourhood, which has 30 shops, banks and even a Catholic shrine? Will he tell the leader of the Liberal city council that, if the council continues to have buildings demolished, the Government will stop the grant of public money?
    Mr. King: My hon. Friend will understand that I cannot comment on the details of what he has described. On the general policy of seeking, where possible, to avoid demolition and encourage renovation, there has been considerable progress. All who are working in inner city areas are well aware of the need to conserve the best and renovate wherever possible.
    Mr. Joseph Dean: Is the Minister aware that the part of his answer dealing with the 15 programme authorities relates to the majority of authorities which, as I understand it, received substantially increased allocations in real terms? However, the city of Leeds has had its allocation reduced by 6 per cent. in real terms. Will he explain why the city of Leeds has been discriminated against? Is he prepared to meet a delegation of Members of Parliament representing that city and members of the city council to explain and discuss this matter?
    Mr. King: I cannot do that without notice. There are 15 programme authorities. I must be sure of the reasons
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    for the decision in this case by my noble Friend the Undersecretary of State for the Environment. Ministers are always willing to receive deputations from Members of Parliament if they wish to raise matters. However, I shall write to the hon. Gentleman when I have made inquiries.
    Mr. Alton: Will the Minister bear in mind that, before any decision could be taken by the Liberal-controlled Liverpool city council in the partnership area, it would require the support of either the Conservative or Labour Party on that council? Therefore, to hold one man responsible is absurd. Does the right hon. Gentleman accept that it would be far more beneficial to the partnership area if the £500, 000 being cut from the Merseyside police budget were to be restored this year rather than frittered away on things such as gardening centres in Toxteth?
    Mr. King: The hon. Gentleman's first point, of course, is correct. I take note of the second point, but it goes rather wider than the original question.
    Mr. Marlow: Does my right hon. Friend agree that, despite the vast amount of Government money spent on inner city areas, there will not be a solution to inner city problems until we have sorted out the problems of crime, particularly violent crime? While we are considering spending more money, will he also get on to the Police Federation, which is campaigning for the reintroduction of capital punishment, so that we may have more effective means of sorting out the problems in inner city areas?
    Mr. King: My right hon. Friend the Prime Minister is involved in that matter. I admire my hon. Friend's ingenuity, but that is not a question directly for me to answer.
    Following is the information:

    Urban Programme Allocations

    £ million cash

    1980–81 Total Allocations

    1981–82* Original Allocations

    Partnerships

    Birmingham

    17·30

    16·93

    Hackney/Islington

    15·35

    15·00

    Lambeth

    9·03

    9·17

    Liverpool

    17·61

    17·61

    Newcastle/Gateshead

    12·91

    13·95

    Manchester/Salford

    17·48

    16·78

    Programme Authorities

    Bolton

    2·11

    2·56

    Bradford

    3·33

    3·12

    Hammersmith and Fulham

    3·33

    4·27

    Hull

    2·62

    3·40

    Leeds

    3·56

    3·75

    Leicester

    3·83

    416

    Middlesbrough

    2·71

    3·43

    Nottingham

    3·41

    3·75

    Oldham

    2·43

    2·85

    Sheffield

    3·44

    3·49

    Sunderland

    2·60

    2·68

    South Tyneside

    2·51

    2·99

    North Tyneside

    2·25

    2·34

    Wirral

    2·67

    2·79

    Wolverhampton

    2·93

    3·22

    * In addition there is £8 million available for further allocations to those authorities that can justify them.

    MINIS System
    Mr. Eggarasked the Secretary of State for the Environment what have been the advantages to his Department of the introduction of the MINIS system.
    The Secretary of State for the Environment (Mr. Michael Heseltine): MINIS enables Ministers and senior officials, among other things, to conduct a regular and systematic review of all aspects of departmental policy, to understand what services cost, to monitor closely the manpower implications of policy decisions and to examine the structure of the management of the Department on a regular basis.
    Mr. Eggar: Will my right hon. Friend confirm that his is the only Department in Whitehall that has installed such an effective and useful system? It is to his great credit that he has introduced such a system. When does he expect other Departments to learn the lessons that he has taught his Department?
    Mr. Heseltine: I am sure that my hon. Friend will wish to discuss those matters with Ministers responsible for other Departments, not with me. It is true that, coincidental with the introduction of the MINIS system, the Department is now saving the equivalent of £70 million a year on wages that it no longer has to pay.
    Mr. Marks: Does that explain why the new chief executive of the Property Services Agency gets 50 per cent. more than his predecessor when the department concerned is being reduced in size?
    Mr. Heseltine: I think it will rapidly be found that he earns the extra money that he receives.

    New Town Houses (Repairs)
    Mr. Dormandasked the Secretary of State for the Environment when he now expects to receive the report from the National Building Agency concerning repairs to houses in new towns.
    The Minister for Housing and Construction (Mr. John Stanley): As I told the hon. Member on 20 January, my right hon. Friend expects on present plans to receive this report by the end of May.
    Mr. Dormand: How much longer does the Minister intend to prevaricate on this matter in relation to the new town of Peterlee? The delay is little short of a scandal. Is he not aware, as a result of the visit to Peterlee by his hon. Friend the Under-Secretary of State, the hon. Member for Ealing, Acton (Sir G. Young), a few weeks ago, of the tremendous difficulties suffered by literally hundreds of families there? Will he authorise an immediate substantial payment so that Easington district council can proceed with many of the repairs now needed for some of these people to live in decent conditions?
    Mr. Stanley: The hon. Gentleman refers to prevarication. I remind him that the Association of District Councils first made representations on this issue to the Labour Government in March 1977. The Labour Government produced no outcome by the time they left office. Within a matter of months of the Conservative Government taking office an offer was made to the Association of District Councils, which, unhappily, it was unable to accept. We hope to have the report by the end of May. I remind the hon. Gentleman that three-quarters
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    of the way through the present financial year Easington had spent only 58 per cent. of its housing capital allocation and housing capital receipts.
    Mr. Newens: On what basis does the Minister have the effrontery to put the blame on the previous Government when three years have elapsed since the present Government came to office? Does he not recognise that this problem has been handled in an absolutely clumsy manner and that there have been completely unjustified delays? How on earth does he expect new town local authorities to plan when they have experienced similar problems over rate support grant decisions?
    Mr. Stanley: I suspect that the hon. Gentleman did not hear what I said in reply to the hon. Member for Easington (Mr. Dormand). The previous Government did nothing for two years. We made an offer to the Association of District Councils within a matter of months of coming to office. The association was not able to accept the offer. That is why we have had to go to the National Building Agency for the survey.
    Mr. Graham: Will the Minister bear in mind that anything less than a generous response will be seen as totally inadequate and in bad faith? Does he acknowledge that councillors have been very patient? Will he confirm undertakings previously given that, before the level of grants is finally determined, full consultation will take place with the councils involved?
    Mr. Stanley: I can confirm what was said by my hon. Friend the Under-Secretary of State in the debate on what became the New Towns Act and that there will be consultation with the authorities concerned.

    Hazardous Waste (Importation)
    Mr. Hardyasked the Secretary of State for the Environment whether he has completed his consultations with industry and local authority associations about his proposals on the import of hazardous waste; and if he will make a statement.
    The Under-Secretary of State for the Environment (Mr. Giles Shaw): Following the Department's review of the controls over imported waste, I announced proposals on 17 December 1981 in a written reply to my hon. Friend the Member for Brigg and Scunthorpe (Mr. Brown). Consultation with industry, local authorities and other interests began on the same date. A few of the principal consultees are still considering their response to the proposals.
    Mr. Hardy: Is the Minister aware that the present situation can justly be described as absurd, not least in regard to weaknesses in the collection and use of information which may be a factor as Britain becomes the dumping ground for every dangerous item of waste in Europe and from further afield?
    Mr. Shaw: I repudiate the suggestion made by the hon. Gentleman. I think that he is referring to the importation of Dutch waste, which was 95 per cent. water.
    Mr. Farr: Does my hon. Friend agree that, apart from the importation of hazardous waste into Britain, there are also problems associated with the transportation as well as the final disposal of waste within Britain? Will he look into these aspects?
    Mr. Shaw: My hon. Friend will be aware of the arrangements made by waste disposal authorities for the selection of sites suitable for handling special waste. I have already reviewed the regulations on this matter and am satisfied that they are working satisfactorily.
    Dr. David Clark: Does the Minister appreciate that, despite his disapproval of what my hon. Friend the Member for Rother Valley (Mr. Hardy) said, Britain is becoming widely regarded as the dustbin of the world not only for Dutch waste but for waste from the United States, Japan, Eire, Denmark and other parts of the world?
    Does he not realise that much of this hazardous waste is stored in east coast ports or is simply poured down disused coal mines? When will he treat this as an urgent problem? When can some action be expected from the Government following the review?
    Mr. Shaw: I remind the hon. Gentleman that the Government took immediate action over the incident relating to the importation of Dutch waste. That led to the review of the regulations and to the consultations that are still proceeding.
    In regard to the hon. Gentleman's claim that the United Kingdom is becoming a dumping ground, I remind him that we have a significant legitimate trade in the processing of waste. Much imported waste becomes primary raw material for other industries—for example, paper and board. Many jobs are at stake. I am determined to preserve those jobs.

    Dwellings for Sale (Improvements)
    Mr. Trippierasked the Secretary of State for the Environment how many local authorities have, since May 1979, carried out schemes for the improvement of dwellings for sale.
    Mr. Stanley: The improvement for sale scheme under the Housing Act 1980 came into effect only in November 1980. We understand that since then approximately 71 local authorities have undertaken improvement for sale.
    Mr. Trippier: I thank my hon. Friend for his encouraging reply. What evidence exists that this is helping people, who otherwise would be unable to move into home ownership from rented accommodation?
    Mr. Stanley: The initial results are very encouraging. The Housing Corporation has conducted a survey of purchasers of the initial houses bought under the improvement for sale scheme. That survey showed that nearly 60 per cent. of the purchasers were under 30 years of age and that one-third of them vacated either local authority or housing association rented accommodation, thereby easing the pressure on rented accommodation.
    Mr. Spriggs: Is the Minister aware that some people in St. Helens are living in privately owned accommodation that is unfit for human habitation? The hon. Gentleman was asked about the sale of council property. Will he also consider a special grant to allow local authorities to build more council houses so that people may have homes that are fit to live in?
    Mr. Stanley: I hope that St. Helens will make full use of the additional allocation provided by my right hon. Friend for the 1982–83 financial year. I am sure that the hon. Gentleman will also welcome the substantial
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    expansion of improvement grants announced last week by my right hon. and learned Friend the Chancellor of the Exchequer.
    Mr. Banks: Are there not many instances of private firms being denied opportunites of tendering for work of this nature because of the activities of direct labour organisations in local authorities? Will my hon. Friend consider reducing the threshold from £100, 000 to perhaps £50, 000 to enable those firms to tender for that sort of work?
    Mr. Stanley: My hon. Friend will be aware that this matter does not arise directly out of the improvement for sale scheme. He may be aware also that my right hon. Friend has laid an order that will have the effect of reducing the tendering threshold for highway works from £100, 000 to £50, 000.

    Bricks
    Mrs. Renée Shortasked the Secretary of State for the Environment what is his latest estimate of the demand for bricks.
    The Under-Secretary of State for the Environment (Sir George Young): Brick deliveries in January this year were 161 million.
    Mrs. Short: The Minister has not answered the question. Is he aware that last year the demand for bricks was the lowest in any peace time year this century due to the cutback in public sector housing and the decline in demand in the private sector? What does he intend to do to ensure that brick firms are producing bricks in two years' time when the Labour Party takes over and starts the building programme again?
    Sir George Young: The hon. Lady asked for the latest estimate of demand. The best estimate of demand is the figure for deliveries—161 million. I hope that the brick industry will respond to the measures taken in the Budget, but the industry has to compete with other construction materials. The industry has been losing its share of the market. It is not solely a matter of the recession affecting the industry.
    Turning to the position in two years' time—when we shall be continuing to have responsibility for the construction industry—I point out that the Government have given the Construction Industry Training Board an additional £3 million this year for the continued training of apprentices and award holders.
    Mr. Latham: Is not the demand for bricks likely to be increased considerably by the recent excellent decision to cut the mortgage rate and by the help given in the Budget for improvement work?
    Sir George Young: My hon. Friend is quite right. I hope that all hon. Members will rejoice in the increase in private sector starts that has already taken place.
    Mrs. Ann Taylor: Will the Minister confirm that there are record stockpiles of bricks in Britain? Will he also confirm that there are enough bricks to house 250, 000 people, to build a new city the size of Leicester, or, indeed, three Tonbridge and Maldons? As there are 400, 000 building workers unemployed, why does the Minister not advocate more action to bring those resources together and build much-needed houses?
    Sir George Young: Tonbridge and Maldon would be a very interesting constituency. There are about 25 weeks' supply at current demand levels. I am sure that the incentive that my right hon. and learned Friend the Chancellor of the Exchequer gave both to home buyers and to the construction industry will ensure that those stocks start to be used.

    Homeless Persons
    Mr. Ron Brownasked the Secretary of State for the Environment how many homeless people were housed by local authorities under the provision of the Housing (Homeless Persons) Act 1977 during 1981.
    Sir George Young: Statistics collected by my Department relate only to England. In 1980–81 some 43, 000 council dwellings were let to the homeless.
    Mr. Brown: Is not the operation of this Act a disgrace and a scandal? Does the Minister not appreciate the misery and suffering endured by many thousands of single homeless people in England and in Scotland? Does he not appreciate that Government policies are responsible for that misery and in a very real sense for the tent city that will grow up as a result? It was the present Government, not Peter Tatchell, who thought up that idea.
    Sir George Young: As the hon. Gentleman may know, we are currently reviewing the Housing (Homeless Persons) Act 1977 and the code of guidance. We hope to announce our conclusions shortly. We are certainly considering all the representations that have been made to us. In the meantime, my Department has taken some initiatives to solve the real problems facing the homeless, including an increased allocation to the Housing Corporation to help people in that category.
    Mr. Stanbrook: As the operation of the Act is, in practice, monstrously unfair to those already on homeless housing lists, because it enables others from outside to jump the queue, will my hon. Friend expedite his proposals for its amendment?
    Sir George Young: We have received many representations on the subject, and several local authorities have made the point made by my hon. Friend. We have taken that point on board, and we hope that the review will be completed shortly.
    Mr. Cartwright: Does the Minister accept that the problems of the single homeless have been a major factor in increasing housing waiting lists in many London boroughs? Will he do more to encourage local authorities to tackle the problem by promoting shared use of some of the less attractive family flats that stand empty for so long?
    Sir George Young: I agree that much could be done by local authorities within existing resources to help the homeless. Certainly the imaginative use of empty houses is one possibility. More properties being used as hostels is another. Some of our initiatives—for example, to allow public sector tenants to take in lodgers—have helped to reduce homelessness.
    Mr. Squire: In the review that my hon. Friend has mentioned, will he undertake to consider those instances where more than one local authority is claimed as the possible supplier of housing, and especially the way in which the giving authority sometimes suffers at the expense of the taking authority?
    Sir George Young: All hon. Members are aware of people being shuffled from one local authority to another. There is an arbitration procedure that should work in such cases to resolve once and for all which local authority is responsible.
    Mr. Stallard: Is the Minister aware of the near-crisis in London in the provision of hostel and housing accommodation for the single homeless? Will he assure the House that he will not give in to demands to weaken the Housing (Homeless Persons) Act 1977 in any way? Rather, will he seriously consider how more resources can be allocated to those local authorities that are trying to tackle the problem?
    Sir George Young: We have already increased the resources available to the Housing Corporation to try to tackle the problem. As to the first part of the question, the hon. Gentleman must await the outcome of the review.
    Mr. David Atkinson: Does my hon. Friend accept that every time he uses the word "shortly" in reply to a question about when the review will be completed, he is getting away with murder, because the review has now taken four years? Does he recall his predecessor's answer to me that an announcement could be expected after the Summer Recess 1980?
    Sir George Young: We seem to have fulfilled that commitment. The issues involved are complex and wide-ranging, and it is important that we give them careful consideration.

    Sports Council
    Mr. Dobsonasked the Secretary of State for the Environment if he will review the workings and finances of the Sports Council; and if he will make a statement.
    The Under-Secretary of State for the Environment (Mr. Neil Macfarlane): I have already reviewed the overall structure of the Sports Council with the aim of refining and improving its workings. I am in the process of slimming down membership by about one-third, and the chairman has reorganised the committee structure.
    Subject to parliamentary approval, the Sports Council's grant-in-aid for 1982–83 will be £22·8 million. I have already met the chairman and agreed his budget proposals for that year. They reflect Government thinking by concentrating resources on the inner city areas. My officials have also discussed with the council's officials their long-term strategy and five-year rolling programme, which I expect to be submitted to me shortly.
    Mr. Dobson: When continuing his discussions with the Sports Council, will the Under-Secretary of State draw to the attention of the chairman the damaging effects of the untimely and ill-considered visit that he and some of his colleagues made to South Africa in 1980 and the contribution that that has made to the weakening in Britain of the back-up to the Gleneagles agreement? In future, will he ensure that the Sports Council does not subordinate the interests of other sports in Britain to those pressure groups from South Africa that wish to make that racist regime respectable, and in that way not follow the example of the Conservative Party's Back Bench sports group?
    Mr. Macfarlane: Perhaps I might set the record straight. The fact-finding visit by representatives of the

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    Sports Council was made in January 1980. On 1 May 1981 the Sports Council agreed that it would continue its policy of supporting the Gleneagles agreement.
    Mr. Kenneth Lewis: Does my hon. Friend agree that the Sports Council's main objective should now be to provide more facilities for the young unemployed? Is he aware that there are many playing fields attached to schools—the matter has been raised by some of us before—that are not used for large periods of the year? Is it not time that he contacted the education authorities and used his influence to get them to make those facilities available for use?
    Mr. Macfarlane: Yes, I accept that. Some issues have emerged in recent months. A sample survey, completed a few months ago, showed that in about 10 per cent. of local authorities, generally speaking, dual use in our schools is extremely encouraging, but there is still much work to be done. I have recently commissioned a survey, conducted by the chairman and management of the regional councils for sport and recreation, which shows good evidence that there is adequate provision of school playing fields for dual use. However, I am not yet satisfied that they are doing enough, and I shall make further moves in the next few weeks.
    Mr. Denis Howell: In view of the unprecedented offers now being made to British sportsmen to forgo the interests of British sport, what action is the Sports Council taking through the governing bodies, and through talking to individual sportsmen, to protect the livelihoods of those still playing in Britain and to protect the great international sporting occasions, such as the Commonwealth Games, which will certainly be under threat if this activity continues?
    Mr. Macfarlane: The right hon. Gentleman's point is important, but it is not necessarily the sole prerogative of the Sports Council to communicate the views of the Government to the governing bodies. I, too, discuss matters with governing bodies. However, I am encouraged by the fact that the Sports Council, as recently as 1 May 1981, reaffirmed its intention to support the Government on the Gleneagles agreement.

    Water Charges
    Mr. Allen McKayasked the Secretary of State for the Environment if he will seek to amend section 30(5) of the Water Act 1973 to provide that retirement pensioners and those in low income groups are given special consideration.
    Mr. Giles Shaw: No, Sir. Water service charges are already taken into account when calculating supplementary benefit. In addition, water authorities will, on request, allow customers to pay by instalments. Several areas operate saving stamp schemes.
    Mr. McKay: Does the Minister realise that his reply will be noted outside the House? Is he aware that he has not taken into consideration those who are now appearing before the county courts and that to pay the water rate bailiffs may have entered their homes to take away furniture that they have had for a long time? Does he also realise that, for the first time, the water authorities have imposed a standing charge of £5? Will he now reconsider his answer and at least rid people of this water charge?
    Mr. Shaw: I understand the hon. Gentleman's anxiety about customers threatened with disconnection, but in the last full year the total number involved in England and Wales was 6, 294, of whom the vast majority were in the Thames water authority area. It is against that background that the hon. Gentleman must recognise that the absolute risk to people is not great. At the same time, the Government have a duty to support the water authorities in the recovery of legitimate charges.
    Mr. Dudley Smith: Will my hon. Friend take into account the burning resentment of pensioners, single people and childless couples who live next door to families of five or six, yet they pay exactly the same water rate?
    Mr. Shaw: It is, in part, for that reason that consumers are now offered optional metering. The amount of water consumed can then be related to their charges. I suspect that that will help to relieve some of the comparative problems raised by my hon. Friend.
    Mr. Woodall: Is the Minister aware that many pensioners, and widows in particular, have for the first time in their lives received a rate demand for water and sewerage? Some of the widows and pensioners who have written to me have received demands for £80·85, but they cannot pay that sum because they do not have the money. It is no use sending a sympathetic letter stating that they may be allowed to pay by instalments. Widows and pensioners do not have that kind of money. Therfore, will the hon. Gentleman reconsider his reply to my hon. Friend the Member for Penistone (Mr. McKay)?
    Mr. Shaw: I shall not reconsider the reply that I gave to the hon. Member for Penistone (Mr. McKay). I emphasise that in many cases those who find it difficult to pay their water charges can get relief through the DHSS system. We are concerned about payment for a service that they receive, not rate rebate.
    Mr. Neale: Will my hon. Friend take into account the annoyance felt by many pensioners in the West Country who are called upon to pay an environmental charge when they have neither water nor sewage facilities connected to their properties, and the fury of commercial ratepayers who are called upon by the water authorities to pay a full rate when they also have neither of those facilities?
    Mr. Shaw: I fully understand my hon. Friend's point. Many customers who do not enjoy the full range of facilities resent paying in part for the facilities enjoyed by others. The fact remains that water charges are levied largely upon consumption, partially on the contribution to the supply and partially on the environmental and other aspects that are shared by everyone in any region.

    Council House Rents
    Mr. Campbell-Savoursasked the Secretary of State for the Environment what is the latest available information on the average increase in council rents in England.
    Mr. Stanley: The average unrebated council house rent in England for 1981–82 is estimated to be £11·50 per dwelling per week, compared with £8·18 per dwelling per week for 1980–81.
    Mr. Campbell-Savours: Is the Minister aware that the latest disgraceful increases are regarded by the 6 million

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    council householders in this country as a tax on council tenants? Is he aware of the deep distress in the Northern region and in my constituency, where council tenants are now required to pay a higher proportion of their incomes on council rents than at any time since 1931? Does the Minister also understand that when he removes £¾ million from the local economy in Workington, he is throwing people out of work? That is the result of his rents strategy.
    Mr. Stanley: As the hon. Gentleman will be aware, at least half of all local authority tenants will not pay the increase in the rents for which his local authority is asking.
    Mr. Stallard: What about the other half?
    Mr. Stanley: Given the number of local authority tenants in receipt of supplementary benefit and rent rebate, there is a substantial measure of rent protection there. The hon. Gentleman referred to the level of rent increases. One wishes that the Labour Party would show the same concern about rate increases, for example by the GLC, that are also imposed on council tenants.
    Mr. Heddle: Does my hon. Friend not agree that had the Labour Party not been so lily-livered when in Government, and had it increased rents reasonably in line with incomes, the rent increases now proposed by the Secretary of State would not have been so great? Does he further agree that the increase in rents as opposed to incomes is only half as much for the council sector as it is for those in the private sector with mortgage repayments?
    Mr. Stanley: My hon. Friend is absolutely right about the position under the previous Government. During the previous Administration, rents increased by only 65 per cent. while earnings went up by 110 per cent. Therefore, in no way did rents stay in line with incomes. My hon. Friend is, therefore, absolutely right.
    Mr. Frank Allaun: Does not the blame for this third increase in three years lie squarely on this Government's shoulders? As an owner-occupier myself, is it not grossly unfair that council tenants should have their subsidy reduced by £600 million—nearly half—in one year while at the same time the subsidy for owner-occupiers should go up to £1, 960 million a year?
    Mr. Stanley: If the hon. Gentleman is saying that he is in favour of a reduction in mortgage tax relief for owner-occupiers—
    Mr. Allaun: No, the opposite.
    Mr. Stanley: —I hope that that will become widely known, because many owner-occupiers would like to know whether that is Labour Party policy.
    Mr. Chapman: As half the number of council house tenants receive rent rebates of one sort or another, would it not be fairer to compare rent levels with average earnings? Has there been a movement in the percentage of the former relative to the latter over the last decade?
    Mr. Stanley: Broadly speaking, during the last decade—taking into account the period of this Government and the period of the last Government—rents have remained broadly in line wth earnings.

    Partnership Committees
    Mr. Stevensasked the Secretary of State for the Environment if he will reconsider his decision to exclude the private sector from membership of partnership committees.
    Mr. Heseltine: No, Sir. I want to keep the partnership committees and the attendant bureaucracy as small as possible. Partnership authorities have been told, however, that their inner area programmes will not be approved if there has not been adequate consultation with the private sector. This appears to be producing the involvement I want to see.
    Mr. Stevens: Is my right hon. Friend aware that at some meetings up to 60 participants, all from the public sector, are present? Does he not agree that, with regard to the Lambeth partnership scheme, where every Conservative councillor is excluded—even though there are 22 Conservative councillors to 36 Labour councillors—some change in the balance of representation is desirable?
    Mr. Heseltine: I sympathise with my hon. Friend's suggestion that we wish to see a greater private sector input. My own experience—not in Lambeth, but elsewhere—is that we are able to achieve a substantial private sector input without the question of the formal membership of the committee being involved.

    House Building (Greater London)
    Mr. Thomas Coxasked the Secretary of State for the Environment if he will list the latest number of (a) private and (b) council housing starts for the Greater London Council area.
    Sir George Young: In 1981, about 2, 000 local authority and 5, 000 private sector dwellings were started in the Greater London area.
    Mr. Cox: Is the Minister aware that that deplorable reply illustrates the total collapse of the Government's housing policy? Is he further aware that next Tuesday there will be a major lobby of this House by the unions involved in the construction industry? Will he give an assurance that he will meet representatives from those unions so that he can learn at first hand just what is happening to building workers who are now on the dole as a direct result of the Government's failure to deal with housing need?
    Sir George Young: I understand that my hon. Friend the Minister for Housing and Construction has agreed to see Len Murray on this subject. Housing starts as a whole in Greater London, including the private sector, were 8, 082 in 1981—an increase from the figure of 7, 500 in 1980. The hon. Gentleman should take into account the fact that last April 40, 000 local authority dwellings in London were empty.
    Mr. Douglas-Mann: Does the Minister accept that London is one of the areas with the greatest housing stress? Has he yet been able to study the report of the Housing Research Foundation, which assesses the overall need for housing to be something in the order of 270, 000 houses a year—a figure close to that contained in the 1977 Green Paper, on which the Secretary of State has poured such scorn? Do the Government now accept that they are completely failing to meet urgent housing needs, which have been positively confirmed by the report?
    Sir George Young: The hon. Gentleman has failed to mention that the Government have introduced many initiatives to boost low-cost home ownership involving the private sector, thereby bringing home ownership within the reach of many. He has failed also to take account of the home improvement scheme. To take housing starts as a proxy for meeting housing need is to consider only part of the picture.
    Mr. Ward: If my hon. Friend meets representatives of the construction industry next week, will he encourage them to investigate the amount of work that is still being farmed out to direct labour organisations instead of being put out to proper tender to help the construction industry? Will he encourage them also to ask local authorities to use some of the funds that they have available from the sale of council houses to produce more capital construction?
    Sir George Young: My hon. Friend is right on both counts. He will know that yesterday my right hon. Friend the Secretary of State laid an order dealing with direct labour, from which I am sure he will draw encouragement. Last Saturday my right hon. Friend drew attention to the tremendous underspend that many local authorities incurred during the current year because they failed realistically to respond to our campaign to enable council tenants to buy their own homes and failed to spend the receipts that that policy generated.
    Mrs. Ann Taylor: In view of the low number of starts and the length of council house waiting lists in London, will the Minister dissociate himself from the statement of the recently knighted Sir Laurie Barratt, who has said that there is an adequate stock of council housing? Will he say publicly that he rejects Sir Laurie Barratt's other suggestion that when a council tenant's income rises above a certain level he should be forced to move into the private sector?
    Sir George Young: It is not the policy of this Administration to force council tenants to move into the private sector and we have never so made it. Next year London will receive HIP allocations equivalent to over £200 per household compared with less than £100 per household in the rest of the country. We have tried to look after London's needs.
    Mr. Squire: I welcome all the initiatives that the Government have taken. Does my hon. Friend recognise that housing starts in neither the private nor the public sectors appear to be able to reduce the growing number of single homeless, especially in greater London?
    Sir George Young: I have referred to some of the initiatives that the Government have taken to try to tackle the problem of the single homeless. I understand that there' is an Adjournment debate on the subject tomorrow evening, during which the arguments will be developed further.

    Liverpool
    Mr. Altonasked the Secretary of State for the Environment what additional public funds from his Department's Vote have been allocated to projects in Liverpool since his visit last summer; whether any projects in Liverpool had the level of public funds available to them reduced in the same period; and if he will name the projects concerned in each case.
    Mr. Heseltine: I have allocated £18 million additional funds to Liverpool for 1982–83. The principal programmes involved are the urban programme, the housing investment programme and that of the Merseyside Development corporation. A number of other proposals are under active consideration. In addition, the Liverpool city council is free to use the flexibility of the capital expenditure controls system to supplement its allocations by, for example, using its capital receipts and the 10 per cent. year-to-year tolerance. I know of no project for which I have a direct responsibility where the level of public funds has been reduced.
    Mr. Alton: I am grateful for the fact that some of the £23·5 million that Liverpool has lost over the past two years appears to have been restored. Does the right hon. Gentleman accept that one of the most chronic problems that Liverpool has to face is the escalation of crime to a level at which one crime is committed every four minutes? In that context a reduction this year in the budget of the Merseyside police of £500, 000 is unacceptable. Will the right hon. Gentleman take every step possible to have that money reinstated so that 1, 000 extra community policemen may be put back on the beat in Liverpool?
    Mr. Heseltine: The hon. Gentleman has misunderstood the point about the £23 million. That is an allocation to the county as opposed to the district, and that sum has not left the area. The disposition of the Merseyside county council police budget is a matter for the authority and my right hon. Friend the Secretary of State for the Home Department.
    Mr. Steen: Does my right hon. Friend agree that the secret of the successful regeneration of the inner areas is not more provision from public funds but the involvement of those living and working in the inner city areas in the decision-making process? Is my right hon. Friend considering how he can extend the involvement of local people in the programmes that he has so ably started?
    Mr. Heseltine: I am grateful to my hon. Friend, who has great experience in these matters. I do not think that I would go quite as far as to say that it is an either, or situation. There is probably a need for both aspects of the problem to be examined. However, the provision of more public money is not of itself a solution to the inner city problem.
    Mr. Parry: Will the right hon. Gentleman accept that there has been widespread disappointment on Merseyside since his appointment last July? What initiatives does he intend to present to the Cabinet with a view to reducing unemployment and deprivation on Merseyside, especially in inner Liverpool? Will he make a statement on his recent meeting with the newly elected leader of the Merseyside county council?
    Mr. Heseltine: I make it my responsibility to keep in close touch with the leaders of the elected majority parties on Merseyside. In that context I asked to see the new leader of the Merseyside county council for an informal discussion of the way in which I could work with the authority. I cannot accept the assumption that there has been disappointment with the work that I have been doing on Merseyside. I never tried to pretend that the general economic decline, which stretches back perhaps over 70 years, could be reversed in seven months.
    Mr. Thornton: All of us on Merseyside will welcome my right hon. Friend's work in Toxteth, following the most distressing events that took place last year. However, does he accept that there is genuine concern among those in other parts of Liverpool, who feel that they are perhaps becoming disadvantaged by an over-concentration on the events that took place in Toxteth and an over-concentration of the moneys that are available to Liverpool in that area?
    Mr. Heseltine: I appreciate the concern that my hon. Friend mentions. I stress that much of my time is devoted to areas other than Liverpool 8, and to areas outside Liverpool. I have been widely involved in projects that extend across Merseyside and I shall continue to be so.
    Mr. Dan Jones: Will the Minister direct some of the money into Burnley—
    Mr. Speaker: Order. On that basis we could go round the whole of the United Kingdom. The hon. Member for Burnley (Mr. Jones) should table a question on Burnley. If he does so, he will obtain a more adequate reply.
    Mr. Jones: May I persist for a minute or two, Mr. Speaker?
    Mr. Speaker: Order. I hope that the House will be tolerant for a moment. There are some special reasons in this instance, which I am not free to disclose.
    Mr. Jones: Yes, Mr. Speaker, there are sound reasons, because the Minister and ministerial colleagues whom he has sent to Burnley have produced a succession of reports and he has done sweet Fanny Adams in response to them.
    Mr. Speaker: Order. The hon. Gentleman has conveyed his views.

    South Africa (Sporting Links)
    Mr. John Carlisleasked the Secretary of State for the Environment if Her Majesty's Government will issue advice to sportsmen intending to visit South Africa on the application of the provisions of the Gleneagles agreement to such visits.
    Mr. Macfarlane: All governing bodies are aware of the Government's position on the Gleneagles agreement. It is for them in the first instance to advise their members.
    Mr. Carlisle: Will my hon. Friend emphasise that the Gleneagles agreement, however innocuous it may be, is merely a discouragement of sporting links with South Africa, and that Her Majesty's Government have no intention of restricting the freedom of choice of sportsmen who intend to play as to where they play and against whom they play? Will he advise sporting bodies, such as the Test and County Cricket Board, that they have no right to victimise players or to withhold a livelihood from players who exercise their own freedom of choice to go to South Africa?
    Mr. Macfarlane: I hope that my hon. Friend will raise his surveillance to the world problems and the importance of multi-racial sport at home and abroad. The Government signed the Gleneagles agreement in 1977 and reaffirmed it last October in Melbourne. It is entirely for the Test and County Cricket Board how it approaches the dialogue with the cricketers who have gone to South Africa. It is not for me.
    Mr. Denis Howell rose—
    Mr. Robert Atkins: Who went to Moscow?
    Mr. Howell: The suggestion that I went with Aston Villa to Moscow to give comfort to the Russians is ludicrous. As it is the return leg tonight, will the Minister join me in sending greetings to Aston Villa in the hope that it will complete the discomfiture of the Russian football team?
    Does the Minister agree that the cricket authorities have done all that they can be expected to do to uphold the Gleneagles agreement, and have been stopped from doing more only by the deception of the cricketers involved, which has put the livelihood of their colleagues in jeopardy? Have the rugby authorities taken a similarly strong line about the clubs of Gloucester and Cardiff? In view of the importance of this issue to world sport and to the Commonwealth Games, will the Minister, either himself or through the Sports Council, call all sports bodies together to consider those great questions for the collective good of British sport?
    Mr. Macfarlane: I gladly endorse the right hon. Gentleman's hopes that Aston Villa, and our other football clubs, should do well in European trophies and championships.
    The International Cricket Conference and the Test and County Cricket Board over the years have made it clear that they will not have matches against South African cricket teams. A number of other international governing bodies have followed suit. So far the Rugby Football Union has not given such directions, but I believe that it is something that it will have to consider, as over 100 nations now play Rugby Union. On the other hand, individuals are free to leave the country to participate in sport, but they must acknowledge the problems. The previous Administration took a similar view.
    Mr. Cyril D. Townsend: As the Government went out of their way to reaffirm the Gleneagles agreement, is it not likely that in the months ahead the people of Britain will appreciate that the activities of the so-called sportsmen in South Africa are shortsighted, selfish and in the long run against the spirit of multi-racial sport, the interests of their colleagues and the long-term interests of the Commonwealth?
    Mr. Macfarlane: No one should underestimate the implications of what is involved. We are waiting to welcome the Indian and Pakistan cricket teams. I can only hope that they will still come here to play. They are welcome in the United Kingdom, as are all multi-racial sporting teams.
    Mr. Roy Hughes: Will the Minister confirm that South African agents are in Britain to recruit teams for boxing, football, rowing, tennis and so on to visit South Africa? Should not the Government make such agents personae non grata, as we are bound to the Gleneagles agreement? Will the hon. Gentleman be forthright in his condemnation of the hon. Member for Luton, West (Mr. Carlisle), who is such an advocate of South African sporting links, especially as he is chairman of the Conservative Back-Bench committee on sport?
    Mr. Macfarlane: Hon. Members are entitled to then-views. I cannot support the hon. Gentleman's observation. I would not know whether there are South African agents in Britain to co-ordinate a campaign to attract sportsmen to South Africa—
    Mr. William Hamilton: The Minister should know.
    Mr. Macfarlane: Hon. Members may suggest that I should know, but this is a democratic State.
    Mr. Flannery: But the Minister knows everything about us.
    Mr. Macfarlane: People are entitled to come and go freely if they have suitable visas or passports and their papers are in order. I see it as no part of my job to monitor the comings and goings of visitors to the United Kingdom.

    Lake District (Planning Agreements)
    Mr. Lennox-Boydasked the Secretary of State for the Environment what are his intentions concerning the future of section 52 planning agreements in the Lake District.
    Mr. Giles Shaw: I am still considering the representations made on the modifications that I have proposed to the relevant part of the structure plan.
    Mr. Lennox-Boyd: Is my hon. Friend aware that many are concerned to know the fate of section 52 agreements, both people such as myself, who are opposed to them and, to be fair, those such as the planning authorities, who impose them? Will he discuss the matter with his colleagues, as an early decision is of the utmost importance?
    Mr. Shaw: I accept my hon. Friend's point. We intend to review the matter and arrive at a decision shortly.
    Mr. Campbell-SavoursIs the Minister aware that the Lake District planning board wishes to retain the powers? Does he accept that one way to deal with the problem of second homes is to amend financial legislation? Does the hon. Gentleman agree that in these times it is utterly unacceptable that a person with two homes, one of which is within a national park, can claim tax relief against mortgage interest payments on the first home?
    Mr. Shaw: I understand that the issue of second homes causes the hon. Gentleman's constituents and those of my hon. Friend the Member for Morecambe and Lonsdale (Mr. Lennox-Boyd) a great deal of difficulty. That is why we must take great care in examining the policy. A number of section 52 agreements have been enforced and some cases are coming before the courts.

    Local Authorities (Private Contractors)
    Mr. Anthony Grantasked the Secretary of State for the Environment if he will facilitate the employment by local authorities of private contractors for refuse collection, waste disposal, cleansing and ancillary services; and if he will make a statement.
    Mr. King: My colleagues and I will continue to encourage local authorities to examine the scope for using private contractors for these and other services. I understand that there has been a significant increase in the number of authorities actively considering that option, as the benefits are becoming more widely appreciated.
    Mr. Grant: Is my right hon. Friend aware that his answer is good news for the local authorites that have
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    increased the use of private contractors? Will he ensure that all the information about the comparative costs of direct labour and private enterprise is made available to elected councillors on local authorities that have not yet had the good sense to use private enterprise, so that empire-building officials cannot pull the wool over their eyes?
    Mr. King: The message is now much more widely understood. The obvious savings and possible economies in a number of areas are widely convassed, and I believe that that will lead to a much greater take-up, A considerable number of authorities are inviting tenders from outside contractors for a range of different council activities.
    Mr. Skinner: Is the Minister aware that in Southend, which was one of the first local authorities to try privatisation, Exclusive Cleaning Ltd., which succeeded in getting the contract, has a director who is a leading Tory councillor in St. Albans, and that the firm did not submit the lowest tender, which came from Southend's direct labour force? Is he further aware that, in the tender, Exclusive Cleaning Ltd. agreed to take on additional houses for £15 per 100, but when it got the contract it changed that to £15 for each house? Does he also know that the matter is before the district auditor, because of the massive losses arising from the acceptance of the contract by the Tory-controlled council? Will the Minister therefore issue a circular pointing out the dangers of accepting such a contract?
    Mr. King: One would like to think that the hon. Gentleman's question was motivated by genuine interest in the most effective way to provide a service in Southend. The hon. Gentleman's distorted version of the facts does not tally with my understanding. I understand that Southend council is satisfied that substantial savings are being made. What is more, the people in Southend are pleased with the vast improvement in the service.

    Vacant and Derelict Land
    Mr. Greenwayasked the Secretary of State for the Environment how many acres of vacant and derelict land have been detailed in the registers set up for that purpose; and what percentage of it has been sold.
    Mr. Heseltine: The 35 registers so far published reveal over 21, 000 acres of unused or underused public land of more than one acre in size. Over 500 acres have been disposed of since the scheme started and a number of other sites are in the course of negotiation.
    Mr. Greenway: I welcome the progress described by my right hon. Friend, but does he agree that auction might produce faster progress in the use of land that is shown publicly on the registers? Does he agree also that auction might bring that land into use more quickly? Is he aware that in my constituency, Sir Laurie Barratt, whose firm has been mentioned earlier, bought some publicly owned land and had starter homes up and occupied in substantially less than a year? Is he not to be congratulated?
    Mr. Heseltine: I certainly congratulate Sir Laurie Barratt on his remarkable achievement of providing low-cost homes for a large number of people who are buying their first house. I sympathise with the wish of my hon.

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    Friend the Member for Ealing, North (Mr. Greenway) to get a move on with the disposal of such land. I am encouraged to discover that although we have so far
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    produced only 35 registers, about half of the land is suitable for development and one-sixth of it is suitable for housing. This is, therefore, a great opportunity.

Coal Mining Subsidence (Fair Compensation) Bill
3.30 pm
Mr. John Heddle: I beg to move,
That leave be given to bring in a Bill to amend the Coal Mining (Subsidence) Act 1957 and the Coal Industry Act 1975; to make new provision for the making of payments in respect of damage and consequential losses caused by subsidence resulting from the working of coal; for the notification of withdrawal of support from land; and for connected purposes.
The present law on compensation, which has not been revised for some 25 years and which gives the National Coal Board considerable discretion in the treatment of claims for compensation, falls well short of protecting adequately the interests of individual home owners, tenants, business men and farmers, whose property is often damaged well beyond repair by coal mining and subsidence.
With the threat—I use that word advisedly—of coal mining hanging over huge areas of the country for many years to come, proper advance notice of mining activities and full compensation to cover consequential losses from subsidence, as is available in all other European countries, is essential in the United Kingdom.
Hon. Members will know that some legal obligations are devolved to the NCB to make good or to compensate for damage caused by subsidence and mining activities. Broadly speaking, those obligations relate only to damage to land and buildings. The legal obligation on the NCB is too loosely defined. Mr. and Mrs. John Citizen are not adequately protected in law. Nor can they necessarily be assured of receiving fair compensation for damage to their home, business premises, farm or smallholding, or for nuisance or disturbance, as would be the case if their property was in the way of a new motorway or bypass.
The reason is simple. The NCB has a duty to compensate the public according to a code of practice, but that code of practice has absolutely no standing in law. It is capable of being interpreted for the convenience of the NCB and cannot readily be challenged by an aggrieved house owner, business man, farmer or smallholder who is perhaps unfamiliar with the nooks and crannies of compensation law. Unlike the application of compensation law in all other respects, the NCB has wide discretion as to how and when to pay compensation. The board therefore has the psychological advantage of being able to act as judge and jury.
Judging from the heart-rending correspondence with many of my constituents in Staffordshire, the board has been known to offer compensation to property owners and tenants on a take-it-or-leave-it basis. I illustrate my point by drawing attention to a question and answer in a National Coal Board booklet entitled "How to make claims under the Act". It says:
"Will the repairs always restore the property completely to its condition before the damage? No. in most cases the Coal Board's obligation is to do such repairs and re-decorations as are needed to make the property reasonably fit for its use at the time that the damage occurred."
Who is to say what was the state of the property when the damage occurred? Moreover, who will determine the definition of "reasonably fit"?
I understood that the basis of compensation in a fair and equitable society was to restore the property to its original
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state or, if that is not possible, to compensate the owner in full. My Bill would give home owners, business men, farmers and smallholders that basic right in law.
Furthermore, the person whose property is affected by subsidence is surely unable to quantify the damage unless he or she has the opportunity to prepare a schedule of the condition of the property before the damage takes place.
The Bill requires the NCB to notify owners and occupiers of property which is liable to be affected by mining that damage is likely. It also requires that such notice should be given at least three months before work commences, to enable the property owner or tenant to prepare a schedule. At the moment, the NCB is obliged merely to place a notice in the public notices section of a local newspaper and in the London Gazette. How many of our consituents make a regular habit of reading the public notices section of their local newspaper? How often do hon. Members read the London Gazette from cover to cover?
The Bill will ensure that the intention to mine is revealed in local searches, in order to put prospective property purchasers from outside a mining area and their solicitors, who may not be familiar with that area, on inquiry. At present, the NCB has no legal duty to advise of its intentions. Nor do local authorities have any legal duty to reveal the position or extent of mining activity.
The Coal Mining (Subsidence) Act 1957 stipulates that compensation shall be based upon the amount that the property has depreciated or the cost of carrying out remedial work, whichever is the less. That is unfair. Sufficent compensation should be paid to restore a property to its former state, or, if that is impossible because the damage is so extensive, there should be sufficent to provide the aggrieved party with suitable alternative or, of practicable, identical accommodation.
Many thousands of acres of good, fertile, cultivable agricultural land are rendered unproductive and unworkable by mining activity each year. It is imperative to protect our declining stock of land. Restoration work should be carried out wherever possible, even though the cost of restoration may exceed the value of the land.
Mr. Dennis Skinner: It all has to come off the shovel.
Mr. Heddle: If the hon. Member for Bolsover (Mr. Skinner) were to listen, he might hear something that is advantageous to his constituents.
Mr. Skinner: Not from a landowner.
Mr. Speaker: Order. The hon. Member for Bolsover (Mr. Skinner) must not shout out from a sedentary position all the time. The House cannot conduct its business in that way.
Mr. Heddle: The Bill seeks to make the NCB responsible in law for consequential losses, as is already the case for householders whose property is taken in whole or in part under the Land Compensation Act 1973.
The coal industry occupies a vital and unique place in our economy and has a duty to work to win coal. For the benefit of the hon. Member for Bolsover, I am not a mining surveyor—
Mr. Skinner: The hon. Gentleman is a valuer.
Mr. Heddle: —or a mining valuer. I in no way criticise the conduct or attitude of the NCB or its employees whose duty it is to operate the code of conduct fairly and equitably.
In the light of the many letters that I and no doubt many hon. Members have received, and in view of the publicity given to heart-rending cases in which whole communities have suffered because of coal mining subsidence, I suggest that the public would be better protected if compensation were put on the same independent basis as all other forms of compensation—in the hands of an independent moderator or umpire. The National Coal Board should be divested of its role as judge and jury and cede the robes to the district valuer. Only then can Mr. and Mrs. John Citizen know that their compensation is determined not at the behest or whim of an interested party, but on the basis of fairness and equity.
Question put and agreed to.
Bill ordered to be brought in by Mr. John Heddle, Sir Derek Walker-Smith, Sir Hugh Fraser, Mr. Jack Ashley, Mr. Tony Durant, Mr. Sydney Chapman and Mr. Patrick Cormack.

Coal Mining Subsidence (Fair Compensation) Bill
  COAL MINING SUBSIDENCE (FAIR COMPENSATION)
  Mr. John Heddle accordingly presented a Bill to amend the Coal Mining (Subsidence) Act 1957 and the Coal Industry Act 1975; to make new provision for the making of payments in respect of damage and consequent losses caused by subsidence resulting from the working of coal; for the notification of withdrawal of support from land; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 7 May and to be printed. [Bill 89.]
Orders of the Day
  SUPPLY
  [15TH ALLOTTED DAY]—considered
  SUPPLY

    Higher Education (Scotland)
    3.41 pm
    Mr. Bruce Millan: I beg to move,
    That this House condemns the cuts made by Her Majesty's Government in higher education in Scotland, which are denying eductional opportunity to qualified young people, causing disruption to university finances and staffing, leading to loss of morale in all sectors of higher education, and imposing hardship on students; and calls for access to higher education to be made available at an adequate level of students' grants to those qualified and able to benefit from it.
    Mr. Speaker: I have selected the amendment in the name of the Prime Minister.
    Mr. Milan: I noticed immediately that the Prime Minister's amendment contained no refutation of the point made in our motion, that the Government's attitude to higher education and particularly the university sector will mean the denial of education opportunities to thousands of young people. Nor does the Government amendment give any educational reason for the Government's recent action. The reason is simple. They can give no educational reason for the cuts in university and other finance now being imposed. The Government simply wish to save public expenditure. They are not concerned about the educational consequences and there are no educational reasons for anything that they have done.
    This country does not overspend on higher education. Comparisons can be made with other countries, but I am always somewhat sceptical about them, as they do not always compare like with like. I shall not go into that today, but such comparisons, even heavily qualified, in no way lead one to conclude that the United Kingdom is particularly generous or extravagent in the provision of higher education. Compared with most of our industrial competitors in other parts of the world, we spend relatively poorly on higher education, and I believe that some of the deficiencies in our industrial, manufacturing and economic structure are not unconnected with that fact.
    Secondly, as a general preliminary point, I should point out that what is happening in higher education today is part of a pattern affecting all our young people leaving school and amounts to a general denial of educational and employment opportunity. There is an appalling unemployment problem among school leavers, especially among those with no qualifications. The latest figure for Scotland is about 22, 000. The real figure is considerably greater, as there are 31, 000 young people on the youth opportunities programme. The real total is therefore more than 50, 000. Moreover, the vast bulk of young people find no jobs on completing a YOP course. The number finding jobs has fallen from 78 per cent in 1978–79 to 30 per cent. now.
    Large numbers of 16 to 19-year-olds receive no education whatever. They are not involved in the formal or informal education system in any way. There has also been a reduction in the number of apprenticeships in

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    Scotland. Furthermore, those who receive education in universities or elsewhere face great problems in finding jobs when they quallify. What is happening in the universities and other sectors of higher education is part of a pattern which is making the situation much worse for many young people.
    Before dealing with the universities, I wish to deal with the sector of higher education in Scotland which is the direct responsibility of the Secretary of State. In doing so, I shall comment briefly on the recent report of the Council for Tertiary Education. Clearly, discussion of that report and the way in which non-university tertiary education is organised in Scotland requires a separate debate, so I shall not be diverted into that today. I make just a few preliminary comments.
    First, the report is not very persuasive about the links between the universities and non-university higher education in Scotland. I certainly agree that a national overview is required, which will have to include the universities as well as the non-university sector. I am also not particularly attracted to the continuation of what is in effect a two-tier system, with the central institutions on the one hand and the local authority sector on the other. Finally, from our experience with the University Grants Committee, with which I shall deal later, the prospect of 100 per cent. funding by the Secretary of State for further education in Scotland does not fill me with any great enthusiasm, given the kind of Government that we at present have. As those matters clearly require a separate debate, I shall not go into detail today, except to say that this whole area of provision is extremely important and it is vital that we get the structure right.
    The position of local authority further education colleges in the Scottish education system was the subject of a parliamentary answer to my hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen) on 17 November last year, from which it seemed that the Government actually expected a reduction in full-time equivalents for vocational education in further education colleges as well as reductions in the university and central institutions sector. If that has not happened, it is not for good educational reasons. If the reduction has not taken place, it is basically because unemployment has forced more young people into education. Also, there is now greater provision in further education colleges relating to the youth opportunities programme, as there will be subsequently for the youth training scheme. We do not yet know the educational content of the youth training scheme in any detail, but it certainly does not by itself provide any real additional educational opportunity in terms of the overall view of education at further education colleges.
    With regard to the colleges of education, I shall not go through the sad and shameful history of the Government's attitude and actions. That ground has been traversed thoroughly on previous occasions. The Government have reneged on the promises that they made in Opposition. They have now closed two colleges and rationalised another, and the number of students entering the colleges in the years after 1982–83 is likely to be substantially reduced, particularly on the secondary side.
    The Government will claim that as the number of pupils in secondary schools is going down, the number of students going into colleges of education will naturally fall as well. What the Government do not point out, and what the Under-Secretary of State in particular, who is always boasting about the fine pupil-teacher ratios does not
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    disclose is that, as the public expenditure White Paper published the other day demonstrates, the Government are planning not for an improvement in PTRs over the next few years but for a substantial deterioration. The figures are disclosed on page 60 of the White Paper.
    At the moment the PTR at the primary stage, which affects the entrance to colleges of education, is 20·3. According to the Government, in 1982–83 that should deteriorate to 21·8 because that is all that they are providing finance for. In secondary schools the 1981–82 PTR is 14·4, but for the next three years the Government are providing for a deterioration of the PTR to 14·6.
    These figures simply mean that if the local authorities allowed a deterioration in the pupil-teacher ratio to bring them into line with the amount of financial provision that the Government will make available in 1982–83 and subsequent years they would have to get rid of 2, 000 teachers. When the Under-Secretary of State boasts about PTRs, the House and the country are not told that the reason for these good PTRs is that local authorities are deliberately providing better ratios than the Government are providing finances for. This is part of the excessive local authority expenditure about which the Secretary of State is always complaining.
    If the local authorities were to reduce PTRs in this way they would have to make teachers redundant. At least that is taken care of in the public expenditure White Paper because we are told that there is provision in subsequent years for redundancy payments to primary teachers. Far from improving the position the Government are asking local authorities to make the position worse in primary and secondary schools, by sacking primary teachers now. They will subsequently sack secondary school teachers as well.
    In secondary schools in particular it is hypocrisy for the Government to be asking for the deterioration in PTRs. As the numbers of secondary pupils go down there are certain diseconomies of scale that mean that if standards are to be maintained PTRs have to be improved. The Government are keen on Munn and Dunning and want to have it implemented in secondary schools, but if that is to happen PTRs will have to improve because that requires more staff. At the very time when the numbers of pupils are going down, and Munn and Dunning is supposed to be introduced, the Government are telling local authorities to make the PTRs in the secondary schools worse. I do not believe that that will happen but if it did it would mean a considerable deterioration in standards. That is part of the background against which we must consider colleges of education in Scotland.
    The Government have gone further than closing two colleges of education and rationalising one other. They are now talking about rationalisation of the courses at the secondary school level. They are also talking about reducing the secondary intake into our colleges of education from 1, 400 last year to 1, 000 this year and 500 by 1985–86. If these reductions are made we cannot maintain the college of education system that we now have in Scotland.
    The Government will have to provide new tasks for the colleges of education or they will have to link the colleges in some other way with other educational institutions unless there are to be further closures in colleges of education in Scotland. If the Government proceed upon this path and insist on these reductions in the PTRs and the colleges of education there will be further closures of those

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    colleges. The Secretary of State must be frank, as he has not been so far, and tell us what he has in mind for colleges of education.
    Some colleges thought they were all right when the previous closures were announced and that they did not have to fight with their colleagues to maintain their colleges. Some of them have already been rudely awakened by the figures published yesterday and some will have an even bigger shock in the future. So too will some Conservative Members who have listened to the honeyed words of the Secretary of State on this matter.
    Central institutions are the other part of the system under the direct control of the Secretary of State. I hope that the Secretary of State can tell us about their funding today. As I understand it, he is talking—no doubt he will correct me if I am wrong—about level funding as a whole for 1982–83, with some switch of resources from art to technical colleges.
    Whatever is happening, the one thing that we can be sure of is that central institutions, any more than the universities of colleges of education, will not be able to meet the demand for qualified young people leaving school who want to enter them. In particular, they will not be able to meet the demand from those young people who are denied university and college of education places because of the university and college cuts. There will be no solution to the Scottish problems through the central institutions, although I shall listen with care to what the Secretary of State has to say.
    Turning from the Secretary of State's direct responsibilities, and before going on to the universities, I wish to say something about students' grants. A critical problem is developing, about which the general public are not yet fully aware. Between 1976 and 1979, the last years of the previous Labour Government—as the National Union of Students, I am glad to see, acknowledged in its submission to the Government for the grant increase for 1982–83—student grants kept pace with changes in the retail price index. Since 1979 there has been a deliberate reduction in the real value of the student grant.
    The NUS reckoned that the increase that would have been required in 1982–83 to bring the grant back to the 1979 value would have been 17·4 per cent. The Government offered an increase of 4 per cent. No doubt they can argue that other people are getting 4 per cent. and that is what they are asking people to accept as a salary or wage increase in the public sector. Yet, the students will not have anything like the 4 per cent. increase, because as well as increasing the grants by only 4 per cent. the Government have also frozen the scales of parental contribution. That means considerably less than 4 per cent. in practice.
    First of all, for those on the minimum grant, which is £410, the grant is frozen. About 10 per cent. who are on that grant now will have no increase. Rather more students will move on to the minimum grant because of the freezing of the parental scale. Some students who get grants above the minimum will go down to the minimum and will have a reduction. Those already on the minimum will have no increase.
    On the maximum grant the increase is 4 per cent., but the number on the maximum grant will be reduced. It will not be the same percentage as in the current year because the freezing of the parental scale will reduce the total
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    percentage of students, which is now about 35 to 40 per cent. Some of them will have the 4 per cent. increase and some will have a reduced grant because the freezing of the parental scale will bring them down from the maximum.
    Students who receive a part grant, which assumes a parental contribution, will suffer. About 50 per cent. of students are in that category. They will receive no increase. If the income of such students' parents has risen in accordance with the national average they will receive severely reduced grants in 1982–83. I hope that Government Members understand that. If they have not already received letters of complaint they can expect many when people who no doubt voted for them at the last election discover that their student sons and daughters will receive reduced grants because of the freezing of the parental scale and the small 4 per cent. increase in grants.
    We do not yet know what all this means. The public expenditure White Paper is a mine of information. I am glad that the Minister responsible for education and science in Scotland is present. Page 38 of the White Paper sets out the results. Student awards in 1981–82 will cost £912 million. In 1982–83 they will cost £760 million. That is a reduction in cash terms of about £150 million. There is no adjustment for inflation in the figures.
    I do not know how that figure is arrived at, but the Secretary of State must have known the average grant in Scotland for 1982–83, compared with 1981–82 before the White Paper was published. The figures in the White Paper have to be adjusted because of changes in fees. The reduction that I have mentioned is not entirely accounted for by the amount of money going to students. We should like the matter cleared up. What is the real increase for 1982–83 for England and, more particularly, for Scotland?
    The Secretary of State must have the figures. What was the average grant for 1981–82 and what, after this generous settlement, will be the average grant for 1982–83? I hope that the Secretary of State will give the figures when he replies to the debate. Whatever the figures, large numbers of students will not even receive the 4 per cent. increase. Many students will receive a reduced grant in cash terms in 1982–83, despite the cost of living, for students as well as for everybody else, going up substantially.
    That is not the end of the Government's meanness to students. The Secretary of State has announced that grants will no longer be paid for repeat years. A feature of our student grant system for as far back as I remember is that all students can repeat a year and still receive grant. They cannot repeat more than a year on a grant and if they have to they finance themselves. The repeat year provision is to be removed. Any student who has to repeat a year must finance himself for that year.
    That is an attack on working-class students. Students from working-class backgrounds struggling through university who have to take a repeat year and who are not financed will have to abandon their courses. Students who are lucky enough to be on minimum grant, who have parents with substantial incomes, or who can find finance through their families, will be able to continue, but the Government's mean provision means that students from modest backgrounds will be forced to abandon their studies. The same is proposed for students who transfer from one course to another. Many students will not be able to continue with their university or other higher education courses.
    Another meanness involves the postgraduate quotas which are to be made permanent. They were reduced in

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    1981–82 by 15 per cent. What will be the further reduction in 1982–83? The quota applies to everybody. Even students of the Church of Scotland and entrants to the legal and other professions will be subject to the postgraduate quota under the new system.
    The public expenditure White Paper contains a sinister phrase. Perhaps the Minister responsible can explain what it means. The Government are trying to move from a system of grants to a system of student loans. I put it on record that the Labour Party opposes that. On page 40 a peculiar phrase suggests that grants to students will be frozen at the 1982–83 level for the next two years of the public expenditure programme. Do the Government intend that? Do they intend to freeze student grants for 1983–84 and 1984–85? The Government must be able to tell us whether that is their intention. If they do not intend to freeze grants I hope that the Secretary of State will explain.
    Students' standards of living in 1982–83 will be reduced. It would be intolerable if in the following years there was a further reduction in the standards of living of higher education students.
    When the cuts were announced by the University Grants Committee last July we made a number of criticisms. Those criticisms are as valid today as they were in July. We said that there was no educational justification for the cuts. No such justification has been produced since then. We said that there would be a denial of opportunity for thousands of young people who were able, qualified and willing to go to Scottish universities. That applies today.
    Indeed, the figures published by the UGC last July understate the position. Read crudely, the figures suggest that the reduction of places in Scotland is about 1, 700. The real reduction is 3, 800, as a letter from the Under-Secretary responsible for Education and Science in Scotland to my hon. Friend the Member for Clackmannan and East Stirlingshire (Mr. O'Neill) admitted the other day. The UGC paper in which the crude figures appear is riddled with inaccuracies. That is only one such inaccuracy.
    The position is worse than that, because the figure takes no account of the fact that we have not reached the peak of potential student population in Scotland, although that peak will be reached in a couple of years.
    We also said that the cuts could not be justified in terms of deployment between courses and universities, some of which are better or more attuned to modern needs than others. The favoured courses such as engineering and science will be badly affected by the cuts announced in July, as will courses in the arts, the humanities and the rest. We said that the UGC had its sums wrong. At some Scottish universities—Aberdeen is a prime example—the figures for student numbers and for finance are not even comparable arithmetically. I will come to the problem that we have in Aberdeen because of that. There was no fairness between universities. Some universities, including the new university at Stirling, were savagely attacked by the UGC.
    We said that there was no point blaming the UGC because it was simply acting as hatchet man for the Government. It is the Government who are responsible, not the UGC. We said that the UGC provisions had not taken account of the four-year degree course in Scottish universities. That charge has not been answered. A number of those points were made at a meeting with the
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    Secretary of State for Education and Science in November. He no more answered them then than he did in the debate the following day or has done since.
    We said that the timetable was too short. Even if what the Government were doing was justified, to do it over three years was absurd and would cause—in the UGC's own phrase—disorder and diseconomy in the universities. That comment has been fully justified by what has happened since last July. We also said that to carry out such a policy on that time scale would be extremely expensive. It would involve large-scale redundancies and expensive redundancy payments because many academic staff have security of tenure. Even if one were agreeable to the reductions—which we were not—to do it over a longer period would save money rather than cause additional expense. In some cases, those reductions would prejudice the viability of individual universities; Stirling was mentioned in that respect.
    When we put that point to the Secretary of State for Education and Science—I am grateful to him for being here this afternoon, despite what I am about to say about him—he said that he did not really want any universities to be closed deliberately. He did not rule out the possibility that some might be closed by accident or inadvertence, but he was not setting out to close any deliberately. All those criticisms have been fully justified by events since last July and none has been answered.
    I think that the Government expected that the fuss and palaver would all blow over, that universities have had such crises before but that things would soon continue calmly and easily. That has not happened. Some university expectations were equally wide of the mark. Some of them, including Scottish universities, in their innocence felt that the injustice was so blatant that they had only to explain it to the UGC for some adjustment to be made. Not a single Scottish university has had any adjustment at all in its provisions following their representations to the UGC. Indeed, in some cases, the UGC has sent them a curt letter which has not answered their points at all but simply said that nothing can be done.
    One change since July is that in January the Secretary of State for Education and Science, acknowledging that there would be 5, 000 redundancies among academic staff, said that he was willing to agree a standard compulsory redundancy scheme. We do not know how much that will cost. Figures of £150 to £200 million have been floating around. What is the Government's estimate of the cost of that scheme? They have taken on an open-ended commitment. It will cost £150 to £200 million to make people unemployed, to reduce standards of academic excellence in universities and to deny university education to large numbers of our young people. It is a complete waste of money. That money should be spent on improving our educational structure and giving additional educational opportunities rather than making people unemployed.
    We are now coming to the crunch. Over the next few months some disagreeable and nasty situations will arise in particular Scottish universities. It looks as if Aberdeen will be the first with 160 redundancies among its academic staff. They will be fought and fought legally. It is an absolute disaster. The UGC has not justified what is happening to Aberdeen. In Stirling there is a critical situation, with which my hon. Friends will deal. There was talk of making 62 academic, and many other non-academic, posts redundant. In Glasgow there has been talk

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    of 431 redundancies over the next three years, including 200 academic staff. In Strathclyde there has been talk of 250 redundancies over three years, including 112 academic staff. In St. Andrews over the next two years 50 academic and 70 non-academic staff will go. Of course, similar tales of woe are to be told at other universities that I have not mentioned.
    The Government have produced unnecessary waste, confusion, bitterness and anger. At the end of the day they are not likely to have saved much, or any money. Nobody in the House or in the universities believes that our educational system must continue unchanged to the end of time. If that feeling existed in some universities until a few years ago, I do not regret that that feeling has passed. The residual lingering feeling that nothing can be changed except for the worse and that expansion in every direction, regardless of priorities, always produces better educational provision, exists only in a few departments. I do not believe that and I never have. I do not believe that it applies to other sectors of our educational system either. If change is to come, it must come within the context of a controlled overall expansion of educational opportunity and expenditure. We cannot get the necessary changes in our educational system, do justice to young people at school, deal with the appallingly difficult problems of 16 to 19-year-olds, or deal with the problems of those in higher education by a process of indiscriminate, ill-considered cuts which are doing immense damage to higher education in Scotland and elsewhere. However, that is the road that the Government have set out upon and that is why we condemn them today.
    4.18 pm
    The Secretary of State for Scotland (Mr. George Younger): I beg to move, to leave out from "That" to the end of the Question and to add instead thereof:
    "this House recognises the need for higher education in Scotland to bear a proportion of reductions in public expenditure and commends the steps taken by Her Majesty's Government and the University Grants Committee to re-order priorities to ensure a high standard of provision consistent with national needs."
    I, too, am glad to have the opportunity this afternoon to cover this important subject. I am grateful to the Opposition for making this time available to us.
    I start by making some complaints to the Opposition about the somewhat strange arrangements under which we are discussing this matter. The right hon. Member for Glasgow, Craigton (Mr. Millan) quite properly devoted a great deal of his speech to the changes that have taken place in the universities. I should have thought that it would be appropriate to have proper arrangements for the right hon. and hon. Gentlemen who are directly responsible to have an opportunity to speak in the debate.
    I am surprised that those Labour Members who are responsible for shadowing the Department of Education and Science—the hon. Member for Bedwellty (Mr. Kinnock) made a short appearance—have not made an appearance. That is to be regretted. Both my right hon. Friend the Secretary of State for Education and Science and my hon. Friend the Member for Bristol, West (Mr. Waldegrave), who have direct responsibilities for the universities, have heard what the right hon. Gentleman has said.
    The right hon. Gentleman's contribution to the debate is deeply disappointing. He rightly expands at length and
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    with great care on all the things that anyone could find that were unsatisfactory about educational provisions in the higher sphere, but if the right hon. Gentleman's position as Opposition spokesman on Scotland means anything, he should have considered the matter in a more responsible and round fashion.
    Anyone can list the things that he would like to see in higher education without paying the slightest regard to the availablility of the money to finance it. It is the easiest thing in the world to do that. I could easily spend half an hour or more listing all the things that I should like to see in higher education, but I should have to ignore the question whether there was enough money to finance them or where one could find such money.
    Mr. John Maxton rose—
    Mr. Younger: I have only just begun my speech and I shall not give way at present. It is understandable that a Back Bencher might make such a speech, but it is deplorable that the right hon. Gentleman should make no reference to the availability of money to finance the task to which he referred.
    The right hon. Gentleman had the effrontery to mention teacher training colleges. Someone from Mars, listening to the debate, might think that that was the aspect that had most deeply shocked the right hon. Gentleman. He might think that the right hon. Gentleman was shocked that anyone should reduce teacher training provision, yet only a few years ago the right hon. Gentleman proposed to close or amalgamate no fewer than four colleges.
    Mr. Robert Hughes rose—
    Mr. Younger: When the arrangements that the right hon. Member for Craigton had made were shown to be inadequate, he abandoned his scheme. The right hon. Gentleman did not mention that today. He gave many figures for pupil-teacher ratios. Of all people, I should not have expected the right hon. Gentleman to make a mistake when using figures to make a point. He is far more expert on figures than most of us will ever be, but, from the way that he presented his case, I gathered that he had taken the present pupil-teacher ratios and compared them with the provisions in the rate support grant for the coming year.
    If the right hon. Gentleman were to compare like with like, he would find a different story. If the right hon. Gentleman were to look at the rate support grants—about which he always complains—he would find that there had been provision in each year for an improvement in the pupil-teacher ratio in primary and secondary education. That goes for the coming year as well. I should have thought that the right hon. Gentleman would know that that was the right way of doing things.
    Mr. Millan: Does the Secretary of State want, or expect, local authorities to reduce pupil-teacher ratios to the levels in the White Paper? Is that what he is asking them to do?
    Mr. Younger: Local authorities are perfectly free to do that. [Interruption.] The right hon. Member for Craigton and the hon. Member for Glasgow, Cathcart (Mr. Maxton) must face the fact that the provisions in the rate support grant settlements allow for the highest ever pupil-teacher ratios. [Interruption.] If local authorities have chosen to spend more and to produce even better ratios, that is their decision. My provisions allow for the highest ever ratios. The right hon. Gentleman should at least admit that.
    Mr. Millan: The right hon. Gentleman is always lecturing local authorities on their extravagent expenditure. Will he now answer my question? He is providing only for badly deteriorating pupil-teacher ratios. Does he expect local authorities to reduce their standards to his?
    Mr. Younger: That is the same question as the right hon. Gentleman asked before. I certainly expect local authorities to reduce their expenditure to reasonable levels. If they choose to do so by reducing their standards, that is their business. My job is to provide for them in the rate support grant. The right hon. Gentleman should know that the pupil-teacher ratios in primary and secondary schools that are provided for in the rate support grant have improved by 0·1 per cent. in each case from 1981–82 to 1982–83. Pupil-teacher ratios will be held steady at that level until 1984–85. Therefore, the lower figures shown for 1980–81 and 1981–82 represent the actual level of staffing and not the staffing levels provided for in the rate support grant. [Interruption.] I think that I have dealt satisfactorily with that point.
    The debate covers higher education generally. I cannot speak for the chorus line on the Opposition Back Benches, but those members will get their chance to speak later.—[Interruption.] As this is a short debate I shall try to cover in the briefest time possible the whole spectrum of higher education.
    Mr. Barry Henderson: On a point of order, Mr. Deputy Speaker. Although we are grateful to my right hon. Friend the Secretary of State for waking up Opposition Members after the opening speech by the right hon. Member for Glasgow, Craigton (Mr. Millan), it would be helpful to hear my right hon. Friend's speech. It is continually being interrupted by Opposition Members, who will no doubt catch your eye in due course.
    Mr. George Foulkes: Further to that point of order, Mr. Deputy Speaker. The debate would be better and there would be less noise from Opposition Members if the Secretary of State had the courage to let hon. Members intervene in his speech.
    Mr. Deputy Speaker (Mr. Bryant Godman Irvine): The best way to debate the subject is to allow the Secretary of State to be heard.
    Mr. Younger: I probably have the best record for giving way. In the space of about six minutes I have given way three times, and I shall not give way again. [Interruption.] Front-Bench Members are the most prestigious and one should give way to them. I am grateful to my hon. Friend the Member for Fife, East (Mr. Henderson) for pointing out that I have succeeded not only in waking up the Opposition—itself quite a feat—and drawing some Opposition Members to the Chamber—which is an unusual pleasure—but in rousing the Opposition to make enough noise to attract the hon. Member for Bedwellty back into the Chamber. That is very welcome. [Interruption.]
    In the brief time available I shall give as many answers as possible to the questions that have been raised about higher education. We should get the balance of our higher education system into perspective. The number of students in Scotland in higher education is divided into the proportion attending each of the sections that make up higher education. In the session 1981–82, 45, 000 students are taking full-time courses at our eight universities;
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    17, 000 in the central institutions and colleges of education and 11, 000 in full-time or sandwich advanced courses in the colleges of further education. That is a total of 73, 000, of which 62 per cent. attend universities and 38 per cent. colleges in the public sector. That clearly shows the great importance in Scotland of the central institutions in higher education as a whole.
    It would have been much more appropriate for my right hon. Friend the Secretary of State for Education and Science to deal with the universities, but as I keep in close touch with the Scottish universities and my right hon. Friend, I should be happy to say a few words about the university system in Scotland.
    Mr. Maxton rose—
    Mr. Younger: I must press on, otherwise I shall take up too much time.
    We can at least unite in regretting that it might be necessary to halt a process of expansion in higher education that began in the Robbins era and that there now must be some reduction in the level of funding. However, there are two significant differences between the Government and the Opposition. First, we recognise the reality of the economic situation, while the Labour Party consistently refuses to do so. Over the years successive Governments have allocated considerable resources to the establishment of new universities and colleges, and to the development of existing institutions. Expansions could not continue in a period of economic stagnation, and therefore some retrenchment is inevitable.
    Secondly, the Conservative Party recognises that what is happening to the universities does not relate in any way to the death blow attitude displayed by the right hon. Member for Craigton. I agree that there are painful and difficult adjustments to make and that the total level of activity in universities—because of those changes—will be reduced, but I am certain that these economies will do no fundamental damage to the structure of our university system, which will remain well able to respond to the challenges that it will face during the years ahead.
    I say that partly because the significance of the economies requested is being massively exaggerated in relation both to the total size and the fundamental health of the university system, and partly because the selectivity with which the cuts have been made by the University Grants Committee has helped to ensure that the best is being preserved and that we shall continue to have a university system that is capable of responding to the demands of the future.
    After all, the reduction in numbers that is required in Scotland amounts to 4·4 per cent. of a total number which has grown every year for many years. It is a reduction that we would have preferred not to make, but it cannot be described in the totally destructive terms that the right hon. Gentleman used today.
    Mr. Dick Douglas: The Secretary of State said that he had been in close touch with the principals of Scottish universities. Can he name one who agrees with the type of selectivity that the UGC has asked the universities to undertake?
    Mr. Younger: It is not for me to put words into the mouths of university principals. [Interruption.] Perhaps the hon. Gentleman does not want to hear the answer to his question. He seems to be engaging in a private

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    discussion with his hon. Friend the Member for Aberdeen, North (Mr. Hughes)—or possibly a private war. Of course I have been in close touch with university principals. I am sure that there is no university principal or headmaster of any school or further education institution who welcomes the fact that he is to get less money to spend next year. Who would? If I may say so, it is an absurd question.
    My second general point is that, even if Opposition Members were to accept the need for a reduction in university expenditure, I should have thought that, on mature reflection, they would agree that it is right that the pattern of that reduction and the advice given to the universities should be decided not by the Government but by the UGC, which is used to apportioning funds between universities.
    Mr. Robert Hughes rose—
    Mr. Younger: Surely I should have the opportunity to develop my argument.
    Mr. Hughes: I thank the Secretary of State for giving way. He knows that the UGC has not explained to any of the universities the reasons why they have been treated in a particular way. Despite all the recommendations that have been made the information is still not available. The UGC has told me that it will not make the information public and that it will not answer my queries about what is happening. Will the right hon. Gentleman bring pressure to bear on the UGC to have a public debate about the secret way in which it has made the cuts?
    Mr. Younger: That is not a matter for me, in any case. Of course, my right hon. Friend will note what the hon. Gentleman says in that regard.
    Mr. Norman Buchan: He is not here.
    Mr. Younger: I ask all right hon. and hon. Members to recognise, as I think the right hon. Member for Craigton did, that the UGC is only doing its job in implementing something for which the Government decided the basic pattern. It is therefore wholly appropriate to pay tribute to the UGC for the way in which it has tackled an exceedingly difficult job. It is right that I should say that.
    I want to make two comments about the university system in Scotland. The first is that, as a simple matter of fact, Scottish universities have fared slightly better than their counterparts in England and Wales in terms of both money and student numbers. The second is that the UGC has specifically recognised two particular features of the Scottish system—the four-year course, and the special circumstances of those Scottish universities that have a larger than average proportion of home-based students. I am therefore satisfied that it would be wrong for any right hon. or hon. Member, in Scotland at any rate, to say that Scotland has been treated worse than any other part of Britain. Indeed, it has been treated slightly better. I emphasise, too, that both the Government and the UGC are doing everything that they can, in an admittedly difficult situation, to make a sensitive and flexible response to a difficult developing situation.
    My right hon. Friend the Secretary of State for Education and Science and the Under-Secretary have been deeply concerned about the Scottish aspects of these changes. Both have met the Scottish principals, and that
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    has helped particularly my responsibilities for health in Scotland. As I announced last December, I have been able to recognise the heavy demands that the Health Service in Scotland makes on the universities, and I have made special provision to allow the replacement in NHS establishments in Scotland of any posts which universities were obliged to cut which were essential to the maintenance of patient care or the output of trained specialists essential to the Health Service.
    My right hon. Friend the Secretary of State for Education and Science has shown his flexibility by being willing to agree to a redundancy compensation scheme for academic staff, which is very similar to that proposed by the Committee of Vice-Chancellors and Principals, and which generously recognises that significant numbers of them have academic tenure to take into account. This has been of significant help to the universities in their task of managing this difficult process of contraction.
    The UGC is also sensitive to the continuing needs of the university system in Scotland. I have discussed the situation with the chairman of the UGC, and I much appreciate the significant amount of time that he personally has given to meetings with the Scottish principals. Although the financial situation leaves it relatively little flexibility, the committee has made certain responses which are worth recording. First, it told Aberdeen that it is sympathetic to the university's desire to develop further its work in engineering, and decided that, if the university were to succeed in obtaining adequate external funding for an additional chair, the committee would consider providing a degree of supporting funding.
    Secondly, it has continued the funding of Edinburgh's work as one of only two specially selected centres in the United Kingdom on the application of microprocessors in science and engineering subjects. Heriot-Watt has also been chosen by the Department of Industry as a centre for the work of its microprocessor applications project.
    Thirdly, the UGC is planning an element of special support for biotechnology in its grant allocations for 1982–83 at a limited number of universities. I am confident that the undoubted expertise that exists in Scottish universities in biotechnology will ensure that they will attract a healthy proportion of the special funds available, and enable them to sustain and further develop their capability in this important area.
    Mr. Dennis Canavan: Will the Minister give way?
    Mr. Younger: No.
    Mr. Canavan rose—
    Mr. Deputy Speaker: Order. The hon. Gentleman must resume his seat if the Minister does not give way.
    Mr. Younger: I have such respect for my own Member of Parliament, the hon. Member for West Stirlingshire (Mr. Canavan), that I want to protect him from making his usual intervention, because it usually rebounds on himself. It is in his own best interests if I let him off.
    Finally, on the universities, I want to emphasise the significance of the broad thrust of the UGC's strategy and how important this is for the economy. The expansion of the university system was planned on the assumption that it could be sustained by continued growth in the economy, and over several years that just has not happened. This

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    meant that when the expansion had to stop we were left with some institutions and departments within institutions that could no longer hope to reach the size originally planned. Some departments were, therefore, too small ever to become efficient or educationally fully effective.
    In making its allocation within the new level of funding proposed for the system the UGC had to take account of this effect, amongst others, in considering how best to achieve the following four aims: first, to ensure the maintenance of a full range of subjects throughout the university system and to protect scholarships generally; secondly, to bring about a significant shift of emphasis in the system towards technology and those aspects of science central to our economic—
    Mr. Canavan rose—
    Mr. Deputy Speaker: Order.
    Mr. Cananvan: On a technology point—
    Mr. Younger: —and industrial future from the point of view of our need both for research and for trained manpower; thirdly, to preserve the vitality of the system and its ability to respond to new needs and challenges; and, lastly, to ensure the continued viability of institutions themselves.
    Given the broad canvas with which the UGC had to deal and the limited time in which it had to work, it is easy for anyone to pick holes in what has been done in detail one way or another, but it is essential to look at the broad strategy, which is what I have tried to do. I am convinced that it is right and that in years to come the breakdown of what has been done in this admittedly difficult matter will prove to have been extraordinarily farsighted.
    I come now to that sector of higher education for which I have a more direct responsibility, the central institutions, the colleges of education and the colleges of further education, in which a considerable amount of advanced work is done. These institutions account for 38 per cent. of all students taking full-time or sandwich courses at degree or equivalent level. The number of students enrolling in these courses continues to increase. In 1979 the number was 20, 000. In 1980 it rose by 10 per cent. to 22, 000, and last year it increased by a further 8 per cent. to 24, 000. It says a great deal for the efficiency of the institutions concerned that they contrived to accommodate this considerable influx without a substantial increase in the level of funding. Ten years ago—
    Mr. Maxton: Will the right hon. Gentleman give way?
    Mr. Younger: I shall break off for a moment to explain to the House that if I go on too long and give way to everyone who would like me to give way, no one else will get in. It is a short debate. I had hoped that I would have the support of hon. Members on all sides in trying to confine my speech to a reasonable length. I do not think that it is fair on Back Benchers on either side if I give way.
    Ten years ago the student-staff ratio in the central institutions stood at 8:1; today the average stands at 10:1; and in the colleges of technology the ratio is even higher. This represents a very significant achievement in terms of the improved utilisation of resources.
    While the Government's expenditure plans allow for the contraction in teacher training to match the declining secondary school population, they will enable grants to the central institutions to be maintained at about the current level, and the provision made for further education
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    generally in the rate support grant settlement for 1982–83 reflects the emphasis which the Government continue to place on the supply of trained manpower for industry and commerce.
    The provision made for the central institutions in 1982–83 allows for expenditure at a level 8 per cent. above that for 1981–82 and 20 per cent. above the level for 1980–81. The RSG settlement for 1982–83 assumes local authority expenditure on further education at a level of 12 per cent. above that for last year. This is a measure of the importance that the Government attach to this sector of education.
    Mr. Millan: Are these cash or real figures?
    Mr. Younger: They are cash figures. All figures shown are cash. It is cash figures that the rest of the country has to work on. [Interruption.] Except the Labour Party, of course.
    This, indeed, is the strength of the so-called public sector of higher education in Scotland, namely that the colleges are engaged in the business of providing vocationally orientated courses which are mounted and constantly adapted to meet the needs of industry, commerce and the professions. Over the years students who have successfully completed these courses have experienced little difficulty in obtaining employment. It is signficant that at the end of 1980, for instance, of those who had graduated in the summer and whose destination was known, only 8·3 per cent. had failed to obtain employment. To put it another way, over 91 per cent. obtained employment.
    The introduction of new courses at advanced level in the central institutions and the other colleges is subject to approval by my Department. The criteria for approval includes evidence of a demand for the course from both employers and students which is not being satisfied by courses already available. This mechanism of control provides a useful safeguard against the proliferation of courses and the waste of resources and helps to ensure that students who successfully complete the course have a reasonable prospect of securing employment. Within the total resources available to the central institutions, my Department is seeking to give priority to those areas which are of key importance to our economic recovery, such as electronics and electrical engineering, computer science and industrial design.
    The consultative paper on electronics manpower which was issued by the Scottish Office in June of last year has been well received by industry and by the universities and colleges. Expansion in the output of both graduates and qualified technicians in this field has a high priority; and it is encouraging that enrolments in both BSc and HND courses in the central institutions and colleges of further education are steadily rising.
    Listening to the doom-laden speeches of Labour Members, one would gather that everywhere in higher education the shutters were going up and the lights were going out. I have no time to catalogue all the innovative and exciting work being undertaken. I shall mention only a few examples: the microelectronics education development centre located at Paisley college of technology, which since its inception in 1980 has provided over 50 courses attended by participants from well over 100 educational, industrial and commercial organisations; the postgraduate courses in offshore technology which have

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    been provided by Robert Gordon's in Aberdeen in support of the oil industry and the offshore survival unit in the same college, which in 1980–81 provided training for over 7, 000 in the industry; the emergence of the Scottish college of textiles at Galashiels as a major centre of textiles technology in this country; the beginnings of work on robotics at Dundee college of technology; work pioneered by Leith nautical college in the handling of hazardous cargo; the introducton at Napier college of a new course in energy engineering and of a distinctive diploma course in European languages and marketing; and the planning—now at an advanced stage—of a new building for the Royal Scottish academy of music and drama, which will further enhance the facilities available in Glasgow for the enjoyment and promotion of the arts.
    If that is a catalogue of a system in total decay and disaster it is a distortion of the whole picture. I hope that Opposition right hon. and hon. Members will remember that there are people working and studying in these institutions who do not require to have the situation unnecessarily made seem worse than it is.
    The painful process of contraction in the colleges of education that I announced in August 1980 has in large measure been achieved. My answer to the question put by the right hon. Member for Craigton in his opening remarks is that no one can ever give a guarantee for ever more about any institution, but we have no plans for any further closures of colleges of education. The contraction process was not an end in itself, but part of the necessary process of enabling the colleges to come to terms with new developments in curriculum, assessment techniques and school organisation and to try to improve the quality of the teaching force even though the number of schools has to decline with the fall in the number of pupils.
    One recent development has been approval of a new secondary teaching qualification in computing; at the same time arrangements are being made for an expanded programme of in-service training courses in computing to complement the rapidly spreading use of micro-computers in schools. In-service training is of increasing importance in a time of rapid technological change, and for this reason the level of funding of the colleges for in-service courses has been maintained at the level set in 1977.
    These are all developments which dispel the notion that higher education in Scotland is suffering from some sort of paralysis. That these developments—and many others—are going ahead even though it is a time of financial stringency bears out my contention about the underlying strength of the system.
    Both sectors of higher education—the universities and the colleges—have their own distinctive contribution to make. It remains Government policy that the role of the non-university institutions in higher education should be complementary to that of the universities and that the advanced courses they provide should have a strong vocational bias, with an increasing emphasis on meeting the demand for skilled manpower in industry and commerce.
    I referred briefly to the machinery which exists to secure effective co-ordination in the provision of courses in the non-university sector. I am glad to say that more recently we have been able to institute informal arrangements for the exchange of information about prospective academic developments with the eight
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    Scottish universities. There are, of course, difficulties in long-term planning in this, as in any field, and there is no suggestion at this stage of dovetailing the provision to be made in the university and non-university sectors. But there are obvious benefits to be gained from the pooling of information, not least at a time when resources are tight, and we have taken the first tentative steps towards achieving closer co-operation at national level.
    There are already very useful links at local level between individual institutions, of course. These take a variety of forms. Co-operation between a university and a neighbouring institution may extend to the establishment of joint departments. An example of this is the link in respect of degree courses in architecture and town planning between the Heriot-Watt university and the Edinburgh college of art. The degree courses provided in some colleges are validated by a neighbouring university. There are also courses provided in a university to which a non-university institution makes its own contribution.
    That kind of co-operation is illustrated by the institution of degree courses at Stirling university with a substantial input by Falkirk college of technology. I welcome this kind of collaboration and I am sure that it will increase as institutions recognise the importance of using to the best advantage the resources available to higher education in Scotland. My Department will continue to promote the exchange of information at national level which will facilitate that sort of collaboration.
    The motion
    "calls for access to higher education to be made available at an adequate level of students' grants".
    Mr. Millan: I hope that the right hon. Gentleman will deal with that matter. He is responsible for it.
    Mr. Younger: I am on the point of dealing with it. I am happy to be able to satisfy the right hon. Gentleman on one thing, if on nothing else.
    The right hon. Gentleman has criticised the Government for increasing the maximum rates of students' awards by no more than 4 per cent. for 1982–83 and for not raising the threshold for parental contributions in line with inflation. I entirely agree that it is desirable to try to increase the level of support for students by the maximum amount every year—at least by as much as inflation—if one can possibly do so. Of course, we wish to try to help students in every possible way.
    On the 4 per cent. increase, the plain fact is that we must tailor our expenditure to what the country can afford. At a time when many people in industry will receive no rise in earnings, and when, indeed, many will have a reduction in earnings, an increase of 4 per cent. is not an unreasonable figure for students to be offered. We cannot exempt students from the essential restraints that everyone else is having to put up with in expenditure generally, both in the private sector and in the rest of the public sector.
    If it had been possible to uprate awards by more than 4 per cent. we would of course have done so, but we must be even-handed in our treatment of a wide variety of different groups of people when we are considering how far our limited means can stretch. It is a luxury open only to an Opposition who do not expect to hold responsibility to look at needs without any regard to the resources to meet them.
    We are asking wage and salary earners in the public sector to accept pay rises that can be accommodated within cash limits of 4 per cent. This applies to teachers,

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    university lecturers, civil servants and various other groups. Therefore, it seems to me not at all unreasonable that students, who are in the same part of the public sector as all those people, should be treated similarly.
    Incidentally, no other country in the EEC supports its students as generously as we do. If the right hon. Gentleman looks at the practice in all our neighbouring countries, he will find that most which offer support have at least an element of loan financing in their arrangements. In those countries where grants are available they are almost always lower than in Great Britain and are certainly subject to much more stringent means-testing than in this country.
    I return to the immediate question of the rates for 1982–83. The right hon. Gentleman was right to say that we had decided not to uprate parental contribution scales. It is true that, as he said, some students will receive less in cash in 1982–83 than they are receiving in 1981–82. This will be the case where their parents have been fortunate enough to enjoy an increase in their income in the previous year. But let us put this change into a reasonable perspective. Any parent on average earnings and with a modest mortgage equivalent to one year's salary will still be below the parental contribution threshold. In other words, his son or daughter will receive maximum grant.
    Let us take what most people will describe as a comfortable level of earnings—about twice the national average, which is perhaps more like the amount earned by the hon. Member for West Stirlingshire. I am not aware whether the hon. Gentleman has a mortgage; I would not pry into that. I have an idea that he probably has a nicely allocated council house which he lives in and enjoys. We at least know that the hon. Gentleman earns a salary of £13, 950 for all the excellent contributions that he makes in the House.
    Mr. David Lambie: I am grateful to the right hon. Gentleman for giving way. He has dealt with the parental contribution of a person on average earnings who is paying a mortgage. Will he deal with the discrimination against the person who is on average earnings and is paying rent? That person is discriminated against because he receives none of the concessions towards paying the rent that the mortgage payer receives towards paying his mortgage.
    Mr. Younger: Such a person may not receive those concessions but he is fortunate in that there is great assistance from the public purse in the payment of the rent.
    I was speaking of the hon. Member for West Stirlingshire earning £13, 950, as other Members of Parliament do, and I was assuming a mortgage of one year's salary, which does not apply to the hon. Gentleman. The parental contribution and the grant will be roughly in balance at about £800 each for a student living away from home. In other words, we ask parents to contribute towards maintenance pound for pound along with the taxpayer. That does not seem to me to be too much to ask of people at that level of earnings to back a lifetime investment in their child's future.
    In addition, in recent years there has been a rise in the proportion of students receiving maximum awards, from just over 30 per cent. in 1978–79 to about 40 per cent. now. This rise tends to show that previous increases in the parental contribution scale may have over-compensated for rises in income, thus bringing more people into
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    eligibility for maximum awards. It is therefore reasonable to stabilise the situation by not increasing the threshold for next year.
    Mr. Millan: All this is very interesting, but I asked the right hon. Gentleman a simple question, and he or his Department must know the answer. What is the average grant for 1981–82 and what will be the average grant for 1982–83? Does it show an increase or a decrease?
    Mr. Younger: The right hon. Gentleman has asked a detailed question. I shall try to give him facts and figures, or ask my hon. Friend the Under-Secretary to do so. The right hon. Gentleman made a point about the total awards expenditure. In the comparison that he took from the public expenditure survey, he overlooked the fact that tuition fees are being halved with effect from 1982–1983, which invalidates making a direct comparison. We expect about 60, 000 awards to be made in the current academic year, at a cost of about £125 million, and we expect similar expenditure next year. In any event, we shall certainly continue to pay grants on a mandatory basis to all eligible students who obtain places in higher education. That is surely the assurance that the right hon. Gentleman wants.
    Mr. Millan: Will the right hon. Gentleman answer my question? A calculation must have been made, before the public expenditure White Paper was published, of the number of grants next year and the average grant compared with 1981–82 in cash terms. Why will he not answer that?
    Mr. Younger: I shall try to express that in the precise form asked for by the right hon. Member for Craigton and will ask the Under-Secretary to deal with it when he replies. The basic figures are approximately 60, 000 people and a total expenditure of £125 million, and we expect something similar next year. In any event, we shall be paying grants to all those who qualify for them.
    Mr. Millan rose—
    Mr. Younger: I must press on. The right hon. Gentleman is pushing the patience of the House a bit far. I have already spoken for far too long, because of constant interruptions. [Interruption.] Perhaps the right hon. Gentleman will pause for a moment from making his speech from a sedentary position. It is not fair to the House to make it impossible for a speech to take a reasonable length, and I hope that he will forgive me if I have spoken for longer than I intended.
    The Opposition chose the subject for debate and the right hon. Member for Craigton looked at only one side of the picture. He considered what he would like done in a perfect world if education were allowed to fulfil every need that anyone could envisage for it. He paid no attention to the requirement that money should be available to do the job, and therefore his case is wholly irresponsible.
    Of course we recognise that asking universities to make economies creates many difficulties for them and puts pressure on people who must, therefore, re-order their priorities. However, everyone in Britain has to accept that when the national economy is going through an extremely difficult period. The proposition, if it is one, that the Opposition have been trying to put forward today seems to be that, although everyone else has to tailor his coat according to his cloth, at a time of great difficulty universities alone should be exempted from that policy. I

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    am certain that that is not the view of those in universities. They have all taken a perfectly responsible view of the difficult task that we are putting on them.
    Scotland's higher education system is having to save some money, but it is a strong, innovative and well-run system, and it can still claim to have some of the highest standards in the world. The motion is wholly unjustified and out of touch with reality, and therefore I ask the House to reject it.
    5.3 pm
    Dr. J. Dickson Mabon: I am extremely flattered to be called to speak so early in this debate. I deeply deplore the fact that, in a short debate of this sort, more than an hour—almost an hour and a quarter—has been taken by the two Front Benches. This is not a private debate between two right hon. Members; it is a public debate. Therefore, I hope that many hon. Members will participate in it.
    The Secretary of State was unreasonable in not addressing himself to the phrase "re-order priorities" in the amendment. My criticism is that, if there must be economies, there should not necessarily be exemptions. Mendes-France said:
    "To govern is to choose."
    It might conceivably be argued, as it was today, that there should be total exemption for universities and university students from any of the Government's necessary economies. On the other hand, the Government must justify many of the economies. The first charge against them is that they have not re-ordered their priorities. If they have, they have not explained them to anybody.
    The Secretary of State made a gallant attempt today to give us a catalogue of what I accept are recent remarkable achievements in Scottish education. We are progressing in new technology and activities which are natural to the development of our economy—at least on oil and gas development. I accept that the right hon. Gentleman's remarks were fair. However, it is not fair to say that every principal of every university in Scotland knows why economies have been thrust on their particular university and why these priorities have been chosen.
    The Secretary of State put some gloss—I could use a stronger word—on the difference in priorities. For example, he mentioned the concern of many people—the effect of university economies on the working of the National Health Service. However, he has said only that special help will be given. Will it be given on the Scottish Office Vote? How much will be given? Why are priorities given to some areas rather than to others? I have received reports from colleagues in the medical profession stating that they are not being properly treated. The criticism still stands that the university cuts and the cuts in colleges of higher education, which will affect ancillaries in medical activities, have not been properly explained.
    Another charge must be levelled not against the principals but against the Secretary of State. Almost all hon. Members met the principals in Committee upstairs at the beginning of this exercise. In a rather helpless way, the principals asked us, as Members of Parliament, to help them, through the UGC, to change the cuts. What did they ask us to do? Did they ask us to change the volume of the cuts? It is clearly the Government's prerogative to decide the volume of the cuts. I listened to the criticisms made
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    not only by Opposition Members, but by Conservative Members. I presumed that the principals were appealing to us to obtain, by individual representation, the general figure of cuts reduced. Working in a synergistic way with that is, of course, the argument that specific universities and colleges of higher education have a case for additional assistance because of their present situation.
    The Secretary of State told us—I cannot support his amendment and would be surprised if Opposition Members and, indeed, some Conservative Members could support it—that the Government have re-ordered their priorities to ensure a high standard of provision. I have not seen much of that. I support the Opposition motion while I admit it is rather one-sided. However, it is the Secretary of State's duty to defend his amendment and, in my submission, he did not do that.
    The Secretary of State gave Aberdeen university as an example of where a special plea had been made on engineering. He, or the UGC, was prepared—I am never sure which is Dr. Jekyll and which is Mr. Hyde—to assist the engineering faculty, and I presume to try to attract a new chair to that university, if assistance could be found from outside. He, or the UGC, would then consider special assistance. Is that on a pound-for-pound basis? To whom is the Secretary of State addressing his remarks in private industry? That is a perfectly reasonable point to make. We have listened for more than 40 minutes to the Secretary of State, yet we are still denied much of the information that we need to make a proper assessment of the amendment and the motion.
    Perhaps I do not criticise the Secretary of State with sufficient vigour. On this occasion I do, because, for a long speech, it was a bad speech. Even more embarrassing to us in this short debate is that we must have two Front Bench speeches at the end—certainly one from the Government to answer the questions that Back Benchers have asked. I specifically raise the question of Aberdeen university because I have little doubt that it reflects the postitions of other universities. The Secretary of State mentioned Edinburgh, Heriot-Watt and other universities seeking outside private assistance to match what the public provision cannot make. It is in that sense that I criticise the Government's amendment and why I cannot see my way to support it. As for the comments about university students, I can perhaps set an example to the House—
    The Under Secretary of State for Education and Science (Mr. William Waldegrave): For those of us who have tried to understand SDP policy on these matters—this is a little difficult because its spokesmen are at sixes and sevens—does he favour the UGC making decisions autonomously, or does he favour political direction?
    Dr. Mabon: I am absolutely against political direction. One needs to distinguish between direction politically in a qualitative sense, which is academically unacceptable, and in a quantitative sense, which is what the Government are doing. There should be no diktat from on high from any Government to the UGC over what the budget should be. There needs to be a two-way traffic. The UGC has to try to argue its case item by item until the sum is known, and not start the other way round.
    Mr. Waldegrave: The right hon. Gentleman's response enables me to explain to the alliance in my constituency that the line it takes does not accord with that of its leaders. I should, however, be glad if the right hon.

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    Gentleman would confirm the words of the spokesman, I believe, for the alliance who stated recently that no one is seriously contemplating a restoration of the cuts. Is that the policy of the SDP?
    Dr. Mabon: Of course, in the short term, the fact is—
    Mr. Foulkes: The right hon. Gentleman has his Whip behind him.
    Dr. Mabon: It is better than scorpions behind the hon. Gentleman.
    We oppose the cuts. We support further consultations with the UGC. We would like to know how private industry can be involved.
    Mr. Foulkes: Oh!
    Dr. Mabon: Why "Oh!"? It is perfectly right to argue these things again. If we are not arguing them again, what is the purpose of the debate? We could send a postcard to the House saying "Yes" or "No". The purpose of the debate—[Interruption.] Some hon. Members apparently cannot even send postcards. The purpose of the debate, I thought, was to try to convince the Government to change their mind. That is what I am suggesting.
    I turn now to student grants. I benefited by the revolution at the end of the last war. I would not have benefited had it not been for the Bevin scheme of 1944. That scheme brought to universities many working class children who would otherwise never have dreamed of going to university. [Interruption.] I cannot hear the hon. Member for Glasgow, Cathcart (Mr. Maxton) because he shouts too loudly. The scheme has been consolidated and evolved by both Governments of the old parties. But we are close to a position of bifurcation.
    The Conservatives are seriously flirting with loans and a means test of quite hard nature. The difference in policies between the two parties has hardened in the last three years. On the Tory side, the hardening is towards loans and strictures on parents despite the Secretary of State's arguments about the £13, 000 a year man. Most people in the country do not earn £13, 000 a year. Many working class families, especially those containing more than one student, face a burden. To that end the Government should be opposed.
    5.13 pm
    Mr. Dennis Canavan: I should like, first, to congratulate my right hon. and hon. Friends on their choice of higher education in Scotland as the subject for debate. Nothing could be dearer to the hearts of many people in Scotland and nothing more relevant to the needs of Scotland. Sadly, nothing could more readily demonstrate the failure of the Government's policies. In higher education, as in other sectors of education, the Government have lurched from one crisis to another. Last summer there was the announcement of a cut of 20, 000 in the number of student places in higher education throughout the United Kingdom. A letter from the University Grants Committee at the time referred to a cut of 1, 730 university places in Scotland, but the real figure, taking a different base line, is twice as much. Account has also to be taken of the cuts in the number of places in colleges of education and higher education.
    Some of the worst effects of the cuts, despite what the Secretary of State said about Scotland not coming off too badly, are to be seen in certain institutions in Scotland,
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    including the University of Stirling in my constituency, not far from where the Secretary of State lives, or used to live. The proposed cut in Stirling is 27 per cent. in student numbers and 23 per cent. in the current grant. By 1984 this will take the university student population down to just over the 2, 000 mark. That is a savage blow for the youngest and smallest university in Scotland. It is the only university in Scotland to have been created out of nothing as a result of the Robbins report in the 1960s.
    Because of the critical situation facing the University of Stirling and because, at the time, I was chairman of the Scottish Labour Party parliamentary group, towards the end of last year I led a delegation of Scottish Labour Members to see the Secretary of State for Education and Science shortly after he took over from the previous incumbent who was sacked. The Under-Secretary of State for Scotland, the hon. Member for Edinburgh, North (Mr. Fletcher), was also present at the meeting. At first I thought that the hon. Gentleman probably intended to join the team in presenting a strong voice for the Scottish universities. We were concerned not only about the University of Stirling but about other Scottish universities, such as the University of Aberdeen which was, and still is, in a critical situation. It takes some believing, but the hon. Member for Edinburgh, North, who has responsibility for education in Scotland, sat dumb and contributed nothing to the meeting. Instead of being a useful member of the team, he was almost like a passenger. This is perhaps not surprising knowing the hon. Gentleman's record in education.
    The hon. Gentleman has been responsible for closing three colleges of education—Hamilton, Callander Park and Craiglockhart. He has copied Ministers in the Department of Education and Science by raising fees for overseas students in Scottish colleges. We now have the ignominious distinction of charging overseas students the highest fees in the world.
    The hon. Gentleman's record on student grants also leaves a lot to be desired. They have not kept pace with inflation. Even the 4 per cent., well below the current rate of inflation, is not a real figure. Many students will receive less in cash terms in the coming session compared with the current session. The Government are stopping grants for students who, for some reason or another, have to repeat courses. Those students may have been ill or experienced learning difficulties. They may simply wish to transfer from one course to another. We should always try to make our system of education as flexible as ever.
    The hon. Gentleman has imposed a quota on many of the postgraduate courses—not only teaching courses, but others such as librarianship, social work and training for the ministry. Many of those students or potential students will be deprived of grants not only in the current session but in forthcoming sessions unless there is a change of policy.
    The hon. Gentleman has also attacked students by withdrawing or threatening to withdraw or reduce their travel expenses. It would be helpful to hear his comments on that matter when he replies. The hon. Gentleman has given no justification—certainly no educational justification—for it. Nor does there appear to be any economic justification.
    The hon. Gentleman asks how the Opposition believe that money can be found for all the improvements that we wish to see brought about. For a start, the Government

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    could cancel Trident. That would save at least £7·5 billion. One could imagine the benefit of such an injection into the higher education system.
    Many of the supposed cuts are false economy. I wonder what will be the net saving in some instances. The figure of £50 million was, I believe, announced not long ago by the Department of Education and Science for restructuring, including the paying of pensions and additional redundancy payments to lecturers. What is the sense in spending £50 million of public money to throw educated men and women on to the dole queues when they could be teaching youngsters who are clamouring to get into universities and colleges? If we are talking about economic recovery, we must bear in mind that the courses that are essential to train the people who are necessary for our economic recovery are the ones that will be cut and hit worst of all.
    I refer the Secretary of State to the Conservative Party manifesto, which returned all the Ministers and all their faithful Back-Bench supporters at the General Election. That stated:
    "Much of our higher education in Britain has a world-wide reputation for its quality. We shall seek to ensure that its excellence is maintained. We are aware of the special problems associated with the need to increase the number of high-quality entrants to the engineering professions."
    I do not know whether the Secretary of State is living in cloud-cuckoo-land. He was afraid to give way to me during his speech, but I can read to him the statistics of the number of science and engineering places that have been cut between the academic years 1980·81 and 1983·84. In Scotland as a whole, the total reduction is 1, 016 places, including 360 at Stirling university and 238 at Strathclyde university.
    Where is the economic, educational or any justification for cutting off the supply of the life blood of future industry, especially engineering, which is so necessary for our economic revival? The sad truth is that, even when the economic revival comes—we shall require a change of Government before it comes—we shall be short of the trained, educated and skilled personnel who are so necessary to take full advantage of that economic recovery. I refer especially to science, engineering and technology.
    What is the alternative, because it is clear that the Government's policy has been discredited? We have heard the SDP alternative. I remind the hon. Member for Greenock and Port Glasgow (Dr. Mabon)—although I do not know for how long he will remain that—of a quotation from The Times Higher Education Supplement of 12 March 1982:
    "A Social Democratic Liberal government would re-examine the Robbins principle but would be unable to restore all the cuts in higher education, Mr. Tom McNally, the SDP education spokesman, said this week."
    Perhaps that should not surprise us too much, because not long ago we saw Roy Jenkins, the carpetbagger himself, who is trying to use the people of Hillhead as a stepping stone back to Parliament, coming up to Scotland, where 97 per cent. of the children are in public sector education, and proclaiming in Hillhead the merits of private sector, fee-paying schools.
    When the right hon. Member for Crosby (Mrs. Williams) was Secretary of State for Education and Science, her record was arguably worse than that of the
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    present Prime Minister. The right hon. Member for Crosby was the first holder of that post to preside over a reduction in real terms in the total budget for education and science. She was responsible for closing down more colleges of education than any Secretary of State before or since. She was responsible for engineering a confrontation with one of the most moderate of trade unions, which made the most modest of wage claims—the Association of University Teachers—and she was also responsible for accelerating the disgraceful trend whereby we now have the ignominious distinction of charging our overseas students the highest fees in the world.
    Mr. Younger: Why did the hon. Gentleman support the right hon. Member for Crosby (Mrs. Williams)?
    Mr. Albert McQuarrie rose—
    Mr. Canavan: I am sorry, but the boss of the hon. Member for Aberdeenshire, East (Mr. McQuarrie) managed to get in first with a fairly weak intervention. He asked why I supported the right hon. Member for Crosby. The answer is that I did not. If he examines the records of the previous Parliament, he will find that I consistently voted for Socialist policies on education and everything else, compared with the right hon. Member for Crosby who, even then, was betraying the Labour Party manifesto and the Socialist commitments that we made to the electorate.
    Mr. Henderson rose—
    Mr. Canavan: I have already given way to No. 1 and picked him off, so I do not wish to embarrass the hon. Member for Fife, East (Mr. Henderson).
    Mr. McQuarrie rose—
    Mr. Canavan: I shall give way to the Buchan bulldog.
    Mr. McQuarrie: I am grateful to the hon. Gentleman. I accept that the hon. Gentleman opposed the right hon. Member for Crosby when she was Secretary of State for Education and Science. However, it must be clear, because she is now a member not of the Labour Party but of the SDP, that she cannot get away from the mistakes that she made then. The Times of 23 August 1978 stated:
    "In November 1976, Mrs. Shirley Williams, who by then had taken over as Secretary of State, announced that local authorities would be asked to reduce their total overseas enrolments to the September 1975 figure."
    That was but one of the many catastrophic decisions that she made as Secretary of State for Education and Science in the Labour Government.
    Mr. Maxton: That is the hon. Gentleman's speech.
    Mr. Canavan: If the right hon. Member for Crosby, when she was Secretary of State for Education and Science, had stood by the commitments in the Labour Party manifesto on education, she would not be in such a terrible mess, which must be embarrassing to her as well as to others in the SDP.
    What we wish as a real alternative is not just a full reversal of the cuts in education, and especially higher education. Neither do we wish only to return to the Robbins principle. We must try to extend the Robbins principle in order to make post-school education open to all who can benefit from it.
    Despite what may be said in history about the 1964–70 Labour Government, one of their finest achievements was

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    the initiation of the Open University. We should try to make every university an open university so that any student who can benefit from and wishes to enter university is guaranteed a place. Instead, we have the reverse. The Secretary of State for Education and Science and his right hon. Friend the Secretary of State for Scotland are closing the door instead of opening it to thousands of well-qualified youngsters who will be thrown on the scrap heap of the dole queue.
    I wish to read an extract from a letter that I received recently from the Chairman of the MacRobert Arts Centre committee at Stirling university. He states:
    "In early September we had arranged to celebrate the tenth anniversary of our founding. If this takes place it could be the event of the year most heavily tinged with irony. For the centre was opened by the man who became the first Chairman of our Advisory Committee and Chairman of our Appeal Fund, namely Viscount Younger of Leckie."
    For the benefit of those who do not know, that is the Secretary of State for Scotland's father. The chairman went on:
    "It is sad that the good deeds of the father should be so soon erased by the doctrinaire obscurantism of the son. But we must remember that this Government was elected to be pragmatic and flexible!"

    We have a Secretary of State for Scotland who is about as flexible as Genghis Khan. He and his right hon. Friend the Secretary of State for Education and Science are behaving like uncivilised, barbaric savages, tearing apart every vestige of education and culture in this country.
    That is why the sooner we get rid of them, the better, so that we can replace them with a Labour Government committed to repairing the damage that has been done, to giving a higher priority to education and to creating a system whereby education, including higher education, is a right for all rather than just a privilege for the few.
    5.30 pm
    Lord James Douglas-Hamilton: I listened to the speech of the hon. Member for West Stirlingshire (Mr. Canavan) with much enjoyment, but he cannot be called a master of understatement. Indeed, there was at least one serious mis-statement in his speech. He said that Craiglockhart had been closed. In fact, it is still on the site—it may have been merged—and it is still operating strongly. I very much welcome that fact, as I am sure the hon. Gentleman does.
    The hon. Gentleman also referred to the Robbins report. After the publication of that report there was an enormous expansion in the number of university students. If one excludes teacher training places and places for those over 21, in the first two years of this Government's term of office there were more places in higher education than the Robbins report predicted. That is in the context of a complete failure of the economy to expand, as Robbins predicted, in order to sustain this growth.
    It would be very nice if the universities were completely immune from plans to restrict public expenditure, but the harsh reality is that virtually no organisations or institutions are immune in the battle against inflation. Indeed, with hyper-inflation they would suffer as much as everyone else.
    I welcome the fact that, in a recent letter, the Secretary of State for Education and Science made available an additional £50 million this year to help with the restructuring of the university system. He wrote:
    "This extra money will be available to help universities adjust to the lower level of funding now proposed, either to help with
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    the cost of redundancy and premature retirement or possibly, in a few cases, to moderate the rate of rundown at individual institutions to achieve the same result with fewer redundancies over a slightly longer time scale".
    It is encouraging that a further amount for restructuring will be made available next year. I hope that it will be a substantial sum. It has made a considerable difference this year and has helped to ease the difficulties of transition.
    Mr. Foulkes: I know that the hon. Gentleman is one of the more sympathetic Conservative Members. Is he aware that heads of departments in Scottish universities are harassing some of their junior staff to try to fill other vacancies to achieve the kind of cuts required by the Government? I hope that he will join me in condemning such a practice wherever it exists. Although I wrote to the Secretary of State for Education and Science some weeks ago, I have not yet had the courtesy of a reply.
    Lord James Douglas-Hamilton: I am grateful to the hon. Gentleman for raising that point. Edinburgh university has very much welcomed the allocation of this further £50 million, which will ease the transition. I take into account what the hon. Gentleman has said, and I shall speak to the university concerned.
    My hon. Friend the Under-Secretary of State for Education and Science, the hon. Member for Bristol, West (Mr. Waldegrave), has visited some of the Scottish universities, including Edinburgh. I am sure that he exercises a benign influence in these matters. The additional problem for Edinburgh university is the expectation of finding a large sum for the universities superannuation pension scheme for academic and academic-related jobs. The national pension scheme has been the subject of an actuarial investigation, and the employers' contributions must be increased by: 3·8 per cent. That means that the universities will have to find an extra £18 million in total.
    In the case of Edinburgh university, an additional £650, 000 a year will have to be found, starting on 1 April 1983. Therefore, this is not an immediate problem, but at present there is no indication where this sum will come from. If it is to be found by the employers and come out of the university budget, that will amount to a further cut.
    I ask the Government to look sympathetically at this problem. It is not a key issue for this year, but it will arise next year, and with Britain now coming out of the recession I hope that the matter will be carefully considered.
    Overall, the Government's policy must be followed through, as there will be a diminishing need for university places, which will begin to take effect after 1983–84. By the mid-1990s there will be 30 per cent. fewer 18-yearolds compared with the mid-1980s. It would have been preferable if savings in higher education could wait until the size of the relevant age group began to fall, but that ignores the fact that constraints on public expenditure, in the interests of the recovery of our trading and manufacturing base, are needed immediately.
    Mr. Robert Hughes: Will the hon. Gentleman give way?
    Lord James Douglas-Hamilton: I should like to continue, because many other hon. Members wish to take part in the debate. I look forward to listening to the hon. Gentleman's contribution, because I am sure that he wants to talk about Aberdeen university.

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    Under the plans of the University Grants Committee, there will be a 5 per cent. reduction in the home and EEC student population by 1984–85 compared with 1979–80. The crux of the matter is that by 1984–85 student places will have fallen to the level that existed under the Labour Government in 1977–78. If the present position, which Labour Members condemn, is so terrible, why did they not condemn the position in 1977–78, because the figures are exactly the same?
    In the process of a reduction in the number of places, Scotland and Scottish universities have fared better than the United Kingdom average, and rightly so, taking account of Scottish circumstances. As the Secretary of State said, the numbers are due to fall by 4½ per cent. in Scotland, whereas the planned reduction for Britain as a whole is 5 per cent. In addition, contrary to what the right hon. Member for Glasgow, Craigton (Mr. Millan) said, allowance has been made for the four-year courses at Scottish universities by permitting an additional year to achieve student numbers. That is entirely appropriate.
    There is a particularly important aspect to the priorities of the UGC. There will be an expansion in certain key areas and more emphasis on training for practical and vocational work of an extremely important kind. That is only appropriate in a country that gave birth to the inventions of Stevenson and Watt, which made so much difference to United Kingdom industry.
    The number of students studying engineering and technology will rise by 2 per cent., mathematics by 3 per cent. and physical sciences by 7 per cent. overall in Britain. There will also be an increase in the number concerned with certain aspects of biological sciences and business studies.
    Mr. Harry Ewing: What about Stirling?
    Lord James Douglas-Hamilton: I have said that, overall, there will be a substantial increase in Scotland. I very much welcome that. The hon. Gentleman may have a specific claim with regard to Stirling, and I hope that he will pursue that matter. Without question, the overall figures are in favour of these areas of study. I am surprised that Labour Members dispute that. The information that I have is conclusively to that effect.
    In this connection, there is a matter relating to Heriot-Watt university about which the Minister responsible for universities can help. That university now has two campuses, one in Edinburgh and one in Riccarton on the west side of the city. There would be an enormous gain if Heriot-Watt could eliminate the costs of twin-site working and be sited entirely at Riccarton. That would release much additional potential, as students and lecturers could work together on research at the same site.
    It would also help the Research Park development, where there are acres for research, which industrialists can take, and do so in conjunction with the university. In the context of large-scale industrial development at Sighthill nearby, there is no doubt that the speedy transfer to this site would greatly increase the university's potential. I hope that my hon. Friend the Under-Secretary of State will take this matter up with the University Grants Committee. There is a need to transfer the university as quickly as possible in the interests of research and industry in Scotland.
    Mr. MaxtonIs the hon. Gentleman prepared to accept the split-site concept at the new St. Andrew's college?
    Lord James Douglas-Hamilton: I should need to know a great deal more about that—
    Mr. Maxton: Oh!
    Lord James Douglas-Hamilton: I misunderstood the hon. Gentleman. I thought that he was referring to a college in Edinburgh. If he is referring to St. Andrew's university—[HON. MEMBERS: "No."]—I should have to know more about the subject before giving an answer.
    The Secretary of State, through the UGC, is providing specific support in particular areas. At Heriot-Watt, the Department of Industry is giving considerable assistance to a microprocessor applications project. There are other forms of assistance for biotechnology at a number of universities. I hope that the Scottish universities will snap up a large part of the funds, bearing in mind their expertise.
    The Government, through the UGC, are providing funds for building progammes in Scotland. The library at Aberdeen university has been extended at a cost of about £1 million. A contribution has been made to Glasgow's Hetherington arts building, as well as a contribution to continuing alterations at Strathclyde, including new library provisions and accommodation for a new computer, starting in 1982–83 at a cost of £1 million.
    Mr. Robert Hughes: The hon. Gentleman must be aware that the ancient library at Kings college, which houses one of the best ancient libraries in Scotland, has been closed because of a lack of funds.
    Lord James Douglas-Hamilton: I am grateful to the hon. Gentleman for mentioning that. However, £1 million will be spent on it from 1981, and I hope that the work will progress as quickly as possible. I am sure that the hon. Gentleman, as a good constituency Member, will push for the opening of that library as soon as possible.
    The shift from the arts and social sciences to engineering and technology will stand Scotland in good stead. Giving greater emphasis to practical and vocational courses, rather than those that are entirely contemplative, and concentrating on providing the best relevant education possible will help secure jobs for the future.
    5.40 pm
    Mr. Gordon Wilson: There is no doubt that the Government's policy on higher education is alien to Scottish tradition. From its beginning the Scottish nation has been interested in education, and I have always been proud of the fact that my country was one of the first to reach out for universal primary education. Moreover, in the Middle Ages Scotland had four universities, whereas England had only two.
    The educational spirit of Scotland has always been extremely strong. The Government may feel that they can get away with cutting back on public expenditure and education in England and Wales but they will not do so in Scotland.
    The Government's policy on universities is outrageous. It has been made clear by the right hon. Member for Glasgow, Craigton (Mr. Millan) that as a result of the cuts about 3, 800 university places will not be available for students. The Government may choose to laugh that off,

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    but that means that 3, 800 youngsters will be deprived of the right to attend university and acquire the skills which should be theirs as of right.
    I belong to a generation which grew up with the understanding that part of its social contract was freedon of access to universities and centres of higher education, and in the past there was a fight to extend the age at which children remained at school. That was all part of the tradition of extending the heritage of our nation's education and of fitting young people for the life ahead.
    I am almost speechless with outrage at the philosophy and barbarism behind the Government's proposals. At the root of it is the fact that Ministers come from a stock or class of people which does not believe in extending education to the lesser orders of society. The Government would not be able to cut away at the feet of the university system and our institutions if they had a basic concept of justice and a grounding in educational philosophy. I should be ashamed to be a member of a Government who operated on the basis of this Government.
    The Secretary of State spoke at length about the impact on the universities. In view of the shortage of time I cannot deal with each university, as some other hon. Members have done, in analysing the losses of academic jobs. However, the universities face significant cuts, and they will have difficulty in cutting back in the time scale presented to them. I disagreed with the Scottish principals when they told me that they wanted more time. I felt they should have fought vigorously to defend their universities, staff and students. However, they argued that a longer period would have enabled them to make economies to avoid the problems faced by the Department of Education and Science arising from tenure and from paying out large sums for unnecessary redundancies.
    I bring a specific issue concerning Dundee university to the Government's attention. In common with other Tayside Members, I received a letter form the Tayside area committee for hospital medical services. The letter states:
    "The University is proposing to make compulsory redundancies in Faculty of Medicine, despite the fact that Dundee University Medical School is already one of the most efficient in the country in the use of financial resources."
    The Secretary of State specifically stated that the Government had acted to prevent an impact on the National Health Service. However, the letter states that there will be no new money to fund these posts and that the money
    "will have to come from the existing NHS budget and this will necessarily impair other parts of the Service."
    I hope that the Secretary of State will remember that Tayside is in an especially difficult position. It is caught in the share and shape agreements, under which its income is to be restricted to benefit other parts of Scotland. It is a heavy burden that it has to bear. The doctors on the committee say specifically that whereas it is the intention of the DHSS to increase the number of consultants there is a danger that their numbers will fall in Tayside. I hope that the Minister will address himself specifically to that issue when he replies.
    Mr. Henderson rose—
    Mr. Wilson: No, I shall not give way. I had better make progress. I hope that the Minister will address himself to the possible decline in the number of consultants in Tayside when he replies, or by letter thereafter.
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    I am worried that the changes that are being made in the universities will restrict the range of degrees on offer and curtail places because of the pressure on the system. For a period English students with A-level qualifications, which were considered to be superior to their Scottish counterparts, managed to get places in certain Scottish universities over the shoulders of equally qualified Scots with the Scottish higher certificate qualification. I want the Government to give an assurance that in no circumstances will that happen under the restrictions which now operate. I ask the Minister to say when he replies that Scots with Scottish qualifications will get priority of entry to their own universities.
    The Minister at the Department of Education and Science who is responsible for the universities must take it into account that Scottish universities occupy a more prominent place in the Scottish education system than English universities occupy within the English system. It seems from the Minister's nod that he has begun to take that fact on board. Scottish universities are functionally different from their English counterparts and include many students who in England might be studying at alternative institutions. Whatever future decisions are taken by the Government, I hope that the different function in Scotland will be recognised and that our education system will not be impaired.
    I deplore and condemn the expenditure cuts and I hope that the Opposition spokesman will indicate where the Labour Party stands when he replies. We have been told that the Social Democratic Party would not make good the cuts. The hon. Member for Bedwellty (Mr. Kinnock), the shadow Secretary of State for Education and Science, said at a fringe meeting during the 1981 Labour Party conference that a Labour Government would not restore spending in higher education to its pre-cut level. He said that such a proposal was "against all reason". If that is so, why is the Labour Party not saying where it stands on the cuts? It is up to the Labour Party to explain what it has in mind—[Interruption.]—and I shall not listen to the comical chorus from the Labour Back Benches. Earlier in the debate the hilarity and jocularity of Labour Back Benchers was a disgrace in a serious debate.
    Mr. Tam Dalyell: I wish to put the remarks of my hon. Friend the Member for Bedwellty (Mr. Kinnock) in context. They related to restoration department by department and not to global restoration.
    Mr. Foulkes: The hon. Member for Dundee, East (Mr. Wilson) would do better to get on with his speech and to give up the pomposity.
    Mr. Wilson: That was skirted over by the right hon. Member for Craigton when he said that a Labour Government would restore everything. As I understand it, the level of public expenditure on education will not be guaranteed by a Labour Government.
    Mr. Norman Hogg: That is not true.
    Mr. Wilson: If that is so, we shall hear about it. We shall hear the extenuations and the explanations.
    Mr. Foulkes: Let us hear your policy.
    Mr. Wilson: We know what happened when the previous Labour Government were in office. Labour Members cannot blame the right hon. Member for Crosby (Mrs. Williams), who was Secretary of State for Education

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    and Science in that Administration, because she acted with the full agreement and consensus of the Labour Cabinet in following pseudo-Socialist policies which it pretended to adopt and never intended to implement.
    Mr. Foulkes: What is your policy?
    Mr. Wilson: During the debates on devolution the Scottish universities opposed any devolution or decentralisation of responsibility from the universities to an elected Scottish body. Whether we have a Scottish UGC with all the universities represented on it or whether we do not have a committee but have a direct involvement with an elected Scottish Parliament, the people in the universities will now begin to realise that they made a severe error by placing their faith in an academically independent UGC, because, as has been acknowledged by the Government, the UGC is carrying out the decisions that were taken by the Government.
    This is the second successive year in which students have been forced to accept a drop in the real value of their grants. The Secretary of State has said that students cannot be absolved from the other changes that are taking place. However, I would draw one specific matter to his attention. The levels of grant are fairly low. When there are increases in the heavy costs of lighting and heating, and in the hall of residence charges, students find life difficult. We are talking not so much about 4 per cent. on wages but 4 per cent. on benefits. Because of their low level, it is worth the Government looking again at the percentage at which increases are made.
    We have discussed and shall discuss again with the Under-Secretary of State for Scotland the repeat grants and specifically the point made by one of my constituents that the higher diploma and HND courses in England are not biased so heavily towards the final year. The way in which the changes are taking place will have a distinct disadvantage for Scotland, but I shall follow the matter through by letter rather than taking up the time of the House.
    There was an encouraging paragraph in the letter dated 12 March that I received from the Under-Secretary of State. He said that the Government had not yet taken a decision on transfer grants and that the whole situation was under review. The Government should seriously consider not making the changes that they had in mind. They would have an unfortunate effect on students because of the younger age entry at our universities and other educational institutions. Scottish students are more likely to make changes, so the transfer grants should be allowed to continue.
    It seems strange that changes have taken place for diploma students which affect future solicitors. The phasing in has been unfortunate. It would seem to impact heavily on those who wish to enter the legal profession and who come from families that could not easily maintain them during the year of diploma service. I ask the Minister to re-examine the matter. I hope that his hands are not tied.
    The intake of colleges of education has been reduced sharply. If one extends the secondary intake percentage basis announced for 1985–86, worrying figures emerge. The percentage intake for Aberdeen would be 55; for Dundee, 35; for Dunfermline, 25; for Jordanhill, 210; for Moray House, 95 and for St. Andrew's, 80. That is a total of 500.
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    Although the Secretary of State has given an assurance that he does not have in mind further rationalisation or closures, I detected a sotto voce remark as he concluded his statement. He said "at this time". Undoubtedly, the Scottish Education Department will have to consider providing alternative work. If such a small number of secondary students are taken in there will be an effect on the staffing at primary level, because there is sometimes cross-support between them.
    I should also like the Government to comment on the fact that the SED now seems to be taking a hawk-like role over grants, entry and so on. The positions seem to have been reversed. That is remarkable. I hope that it is not true. If it is true, I hope that Ministers and the Scottish Education Department will fight for the education system in Scotland, rather than merely trying to influence the Department of Education and Science cuts.
    I disagree entirely with the Government's philosophy. We should spend more on higher education and not cut it. In the Library yesterday I came across a book produced by the British Electrical and Allied Manufactures Association which spoke of the challenge from Japan. It states that, in Japan,
    "Educational standards have improved dramatically since 1960 when it was the norm to leave school at the end of the compulsory period (middle school), at age 15. In 1960, 53·2 per cent. of the labour force had left education after middle school: by 1980 this ratio had dropped to 8·4 per cent. The ratio of high school graduates in the labour force increased from 37·3 per cent. in 1960 to 61·1 per cent. in 1980 and the percentage of those with some form of further or higher education qualification rose from 9·5 per cent. in 1960 to 30·5 per cent. in 1980…
    The educational levels of the labour force account in large measure for its high quality."
    Japan has invested a lot of money in education in the past, and it is clear that it intends to invest even more to raise educational standards. The Japanese know that the future lies in improved educational facilities to make the people more numerate and capable of taking on board technological changes—moving up the technological ladder. If that is Japan's policy as part of its industrial and economic challenge to the rest of the world, we should learn from it.
    Against that background, I ask the Government to reverse their policies.
    5.56 pm
    Mr. Barry Henderson: It is extraordinary to hear the Socialist parties advance, without criticism, the extreme views of the most enthusiastic advocates of the privileged elite in our universities. Thank heavens the Association of University Teachers at St. Andrew's has adopted a more responsible and worthwhile approach, which deserves a great deal more attention.
    Let us look at the fundamental basis of the approach of the Labour Party and its friends. What is the great cut in university finance of which we have heard so much today? On the original proposal it is less than 3 per cent. per annum overall in each of three years. Since the original proposal, the Government have announced over £150 million additional aid for the perceived restructuring as a consequence of the reduction. That is the reality.
    At present we have restraints on the expenditure of central Government, local government and, far more severely, industry. In the £1, 000 million university budget it is not unreasonable to ask for the restraint proposed.
    Mr. Donald Stewart: How does the hon. Gentleman square his view with the example of Glasgow university, where 431 of the teaching staff are to disappear?
    Mr. Henderson: I am grateful to the right hon. Gentleman for raising the point. Three different groups are involved. The Government are responsible for setting the total sum given to the university system through the UGC.
    The reduction that I have described relates to the cuts in the total funding going through the UGC. How the UGC divides that among individual universities is its business, not the Government's, and how individual universities react to the money made available to them is the responsibility of each university. At the end of the procedure, when one examines the work done by particular faculties in individual universities, it is difficult to identify those responsible for decisions at that level. I accept that there is a quandary there, to which the right hon. Member for Western Isles (Mr. Stewart) has drawn attention.
    Mr. Martin J. O'Neill rose—
    Mr. Henderson: No, I shall not give way. It would not be for the convenience of the House if I continued to give way every two or three minutes. I shall finish my speech and then other hon. Members may make theirs.
    The Government are directly responsible for only a tiny proportionate cut in a huge budget. I cannot believe that that of itself is at the heart of the extreme noises made by limited sections of the academic community. The vast majority of people at universities will accept that it is not unreasonable for the university system to accept some of the expenditure constraints that apply to the rest of the public sector.
    On the question of how the reduced funding is distributed, I shall not directly attack the UGC. Its job has not been easy. Indeed, I sometimes wonder whether it has been properly equipped for the job. It has never before had to face the type of decision that it has recently been required to make. It may need strengthening to carry out this important managerial role, which it has not had to perform in the past.
    It is unfortunate that the debate has been politicised. It is worth pointing out that the chairman and most of the members of the UGC were appointed by the Labour Government. I am not making anything of that. I am not criticising the UGC's overall policy. Opposition Members suggest that the UGC is some kind of poodle of the Government, but it is not. It is independent. It has made its own decisions about the distribution of resources made available to it by Parliament.
    The hon. Member for Dundee, East (Mr. Wilson) referred to Dundee medical school. I declare an interest inasmuch as my wife worked there for a year researching perinatal deaths. I shall not say too much about her view of the cost-effectiveness of that medical school except that she did not feel that it operated as a sweat shop or that it was impoverished. The implication of what members of the medical school told the hon. Member for Dundee, East and what they have also told me is that for many years there has been a hidden subsidy from the UGC to the Tayside health board and those who benefit from health
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    services in the area. That is not an appropriate use of moneys provided for UGC purposes. Some attention should be paid to that.
    The hon. Member for West Stirlingshire (Mr. Canavan) referred to the Robbins report. Many of the problems that we now face started in the post-Robbins era. For many universities, it started a growth which was in many ways of great benefit to the community, but which in other ways has led to uncritical expansion of activity without due consideration of how that expansion fits into the work of a university or the work of universities as a whole. The Robbins report, which caused expansion in many universities, hit St. Andrew's university hard, severing the departments of St. Andrew's university which were at Dundee. During the post-Robbins era, St. Andrew's has had to grow to compensate for that.
    I mentioned earlier, as a result of the intervention of the right hon. Member for Western Isles, the confusion of responsibility for any particular decision. I have no quarrel with the overall policy of the UGC. Nor do I think that it has been widely challenged within the universities. It has been suggested that there should be some rationalisation of activities and a small shift in emphasis from arts to sciences and that there should be greater regard than before to standards and to cost performance. I do not think that anybody could quarrel with that. It is in relation to the very difficult individual decisions that the UGC has to make that there is the greatest reason for complaint.
    I believe that the UGC has failed to recognise certain special characteristics of St. Andrew's. I give three reasons. First, there was the post-Robbins effect of the loss of a number of departments at St. Andrew's university. Secondly, St. Andrew's is a centre of excellence both nationally and internationally, as witnessed by the fact that of all the Scottish universities it is the one at which only half the total student population is Scottish based. In other words, it draws students from a very wide area of the country.
    Mr. Gordon Wilson: That is special pleading.
    Mr. Henderson: Thirdly, it has very low unit costs. I do not intend to press the specific case for St. Andrew's any further today. The university has made a plea to the UGC to have its case re-examined. It reports that it has received a reply from the UGC which it did not like and has commented at great length on a number of aspects of it, but it has not made the letter available to me before the debate so I am in no position to argue the case further.
    The right hon. Member for Glasgow, Craigton (Mr. Millan) referred to the problem of grants. I would appreciate help from the Minister on three points.
    First, there is some anxiety that English local authorities, which are accustomed to dealing with three-year degree courses, seem to be limiting grants to three years even for students attending Scottish universities. It is important to ensure that they recognise the tradition of the four-year honours degree course in Scotland. I should be grateful if the Minister will confirm that there is no cause for the anxiety that has been expressed to me about that.
    Secondly, it has been suggested that the travel grant for students should be averaged out, so that if a student happens to live a long way from the university that will just be bad luck. It may be special pleading for St. Andrew's, which attracts students from great distances because it is

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    one of the most popular universities in Great Britain, but I believe that it would be unfortunate if the travel grant ceased to fulfil its present function of recognising the costs of travel to and from the university and the student's home at the beginning and end of the term.
    The third point is transfer of course, as distinct from a student failing to do his stuff academically and ploughing his examinations which is no one's fault but his own. A student may be in a course in a faculty at a Scottish university where there is a wider range of options than is often available in the English departmental system. Having had a better opportunity to consider matters in detail, the student may decide, perhaps on the advice of his tutors, to follow a different course from that in which he started. In those circumstances it would be unfortunate if it was not recognised in the grant.
    The last point about grants is to do with cash limits. I can see the logic of my right hon. Friend's argument that student grants must take account of the cash limit policy being followed generally in the public sector. However, there is one important difference between the likes of a student on the one hand and the Civil Service on the other. We are seeing the reduction of the Civil Service and increasing productivity, and where there is a cash limit on Civil Service wages it enables the Government to pay more in percentage terms to individual civil servants than the actual percentage cash limit. There is not that opportunity for productivity or overtime, or any other ways of increasing earnings, for students. Next year I hope that the student grants will take that into account, even though students can benefit from the social security increases in the summer vacation.
    My right hon. Friend made brief references to the report of the Council for Tertiary Education in Scotland, reviewing structure and management. It is perhaps unfortunate that in this debate we have talked so much about money and so little about education. This must be a very important report. One thing that perhaps we should be thinking about tonight, when the role of the Universities Grant Committee has been partly under discussion, is that the report, to paraphrase, suggests that there should be something equivalent to the UGC to work with the tertiary sector.
    There has been a great deal of argument about demography and the number of student places available. It is important to recognise that, while there is a difference between the population base of those sections of society from which students principally come and society as a whole, nevertheless there will be by 1990 only a third of the number of people reaching the age of eighteen who reach that age this year. We are seeing a substantial drop in potential student numbers over the years and it would be foolish to continue funding on the basis that we will continue to expand as we have in the past.
    Several Hon. Members rose—
    Mr. Speaker: Order. I understand that it is hoped to start the winding-up speeches at twenty five to seven, but I hope that hon. Members will realise that the Front Bench took a long time in a short debate. I shall do my best to help hon. Members if they are brief.
    6.13 pm
    Mr. Jim Craigen: The truth of the matter is that Governments are prepared to spend money on what they want to and not to spend it on other things. Clearly, education will rank as a rather low priority during the lifetime of this Government. One thing that emerged from the speech of the Secretary of State was that he is viewing higher education as a book-keeping exercise despite the cost to the Treasury of unemployment. That cost ought to be in the "Guinness Book of Records". We are spending substantial sums on sustaining unemployment at a time when we could be doing more for industry and education.
    We cannot shelter entirely behind the falling school rolls, because the drop in the number of school leavers will not have a serious effect until the middle of this decade. Already countries such as the United States, Japan and Sweden are educating about twice the percentage of 18-year-olds in higher education as we are. We cannot afford to cut back when applications for university places have reached an all-time high, yet the Government are proposing a 3 per cent. reduction in the number of places in 1982–83 as against 1981–82.
    We ought to consider also the possibilities and potential of adults entering higher education. Why should it be assumed that for all time only school leavers will want to move into higher education? The Open University has shown the clear potential for those in their thirties, forties or fifties who seek higher education.
    In Glasgow we have two universities, Strathclyde and Glasgow, which play a significant part in the local economy, not only by the number of people that they employ and the contribution that they indirectly make to the city's economic base, but to the potential that they afford for young people to get a better opening into industrial life. As my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan) said, the recent Graham report on tertiary education shows that there will be no great increase in resources. All that we can expect at the end of the day in the remainder of the tertiary education sector is a reshuffle of the institutional furniture.
    While I see the Glasgow college of technology, which happens to be in the Maryhill constituency, as a suitable candidate, along with one or two other major Scottish further education colleges, for central funding, I am sceptical about whether that would increase the role that the college of technology would be able to play. I suspect that the Secretary of State will be able to turn the tap much more effectively when he wants to reduce the level of resources available.
    The Secretary of State's statement this afternoon about student grants was unacceptable. He did not explain how the 4 per cent. increase can suffice in the present inflationary situation. I received an answer recently from the Under-Secretary of State for Education and Science to the effect that there had been a 10 per cent. reduction in real terms in the amount of the maintenance award to students. That is not a particularly good record for a Government who keep telling us that they have student interests in mind.
    The decision that has been taken over the parental contribution will be especially harsh on working-class families. It is the lower-paid families that will be up against the problem. It will not make much difference to

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    the better-off families. The Government are more or less showing the red light to working-class families who want to send their young people to universities.
    There are young people on the youth opportunities programme with ability who ought to be given the chance of taking a university or a higher education course, yet they are having to go on a youth opportunities programme because there is no employment available for them either.
    The Government's approach to higher education is blunt and bludgeoning. It is the more cynical because most Cabinet members went to university. The Secretary of State for Scotland went to the same university as the right hon. Member for Leeds, North-East (Sir K. Joseph). In a recent House of Commons Library brief on higher education the point was made from that impartial source that not since the Geddes axe had the universities experienced such cuts in their financial base. Sixty years later we are experiencing the Joseph chopper.
    Mr. Younger: I went to the same university and college as the right hon. Member for Bristol, South-East (Mr. Benn), but that did not do me much good.
    Mr. Craigen: The present incumbent at the Scottish Office was not educated in Scotland, but the majority of his Cabinet colleagues had the benefit of a university education, and yet they are seeking to deny many young people that prospect.
    There is no evidence that the Government have a clear policy for higher education, other than to put up more obstacles for working-class people.
    Mr. Speaker: Mr. Russell Johnston.
    Mr. Maxton: On a point of order, Mr. Speaker. I do not usually challege your calling of speakers and I am loth to do so, but you have called three minority spokesmen who represent five Members of the House when 42 hon. Members put their names to the motion. I find that rather tiring, to say the least.
    Mr. Speaker: I know that it is frustrating for the hon. Gentleman. I have worked out how many minutes the different parties have taken. Minorities are entitled to be heard as well as the bigger parties. I call Mr. Russell Johnston.
    Mr. Foulkes: Further to that point of order, Mr. Speaker.
    Mr. Speaker: I am not prepared to have my selection of hon. Members challenged. I call Mr. Russell Johnston.
    6.22 pm
    Mr. Russell Johnston: I shall not be long. I shall take no more than five minutes, although it is difficult to say anything meaningful in such a short time. Hon. Members have interjected to say that there is not enough time to debate and cross-question. That is what this Chamber is supposed to be good at, and it is regrettable that it cannot exercise that function. We usually end up by making set speeches.
    Mr. Foulkes: Why has the right hon. Member for Roxburgh, Selkirk and Peebles (Mr. Steel), who was recently elected rector of Edinburgh university, not been able to sit through one minute of the debate to look after the interests of the students at that university?
    Mr. Johnston: Because my right hon. Friend is not here.
    398
    As many hon. Members have said, the Government case that they want to save money is ill founded. When one examines the cost of redundancies over the next two or three years and balances that against what is to be saved one realises that we are losing.
    Mr. Waldegrave: The hon. Gentleman is wrong. The Association of University Teachers estimated redundancy costs of about £100 million and savings in the next couple of years of about £200 million net, and after that about £150 million a year.
    Mr. Johnston: I have no time to argue that in detail. The figures have been contested. The chairman of the Stirling university co-ordinating committee, arguing the case for not reducing the numbers to 2, 020 but to 2, 360 said that the additional students would cost only about £435 each a year. The chairman said that he had sent letters of the analysis to the Secretary of State for Education and Science and the Under-Secretary of State, who did not, although asked to do so, provide counter-arguments.
    Mr. Waldegrave: We have heard the answer from the SDP. It will be interesting to hear what the hon. Member for Inverness (Mr. Johnston) says. Is he asking Ministers to intervene in the UGC's distribution?
    Mr. Johnston: I think that the Government have a responsibility for the outcome of the UGC's decisions.
    Mr. Waldegrave: rose—
    Mr. Speaker: Order. The hon. Member for Inverness (Mr. Johnston) promised to try to take only five minutes. His time is almost up.
    Mr. Johnston: I had a prepared speech, but I gave way because I thought that that was right. The Minister was more interested in scoring political points than in seeking a constructive and effective dialogue.
    I have no wish to keep the House long. Aberdeen is the worst hit university. Stirling is badly hit. In Heriot-Watt, courses in Pharmacy and Business organisation which are well subscribed, are to be cut altogether. It is a matter for concern. The hon. Member for Dundee, East (Mr. Wilson) said that in other advanced countries expenditure on students is increasing. It is regrettable that in Britain it appears to be decreasing.
    6.26 pm
    Mr. Bill Walker: I am saddened that we have had to rush the end of the debate. I draw attention to the comments about student grants. One of my daughters is at university, and the second one has been accepted. I accept that it is my duty to contribute to both of my children's personal expenses while they are at university. According to the figures mentioned this afternoon, I shall probably be footing half the cost of the previous grant. That is a worthwhile investment in my children. First, I can afford it. Secondly, I hope that lily contribution will make it possible for others who cannot afford it to go to university.
    May we have an assurance that any youngsters of high calibre and with above average examination results will ' not be excluded from university simply because they come from humble homes? I look for a firm commitment on that. I should contribute even more if I thought that that would make it possible for others to attend university. I was not fortunate enough to attend university, but I should like as many capable people as possible to get there.

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    We must question whether we are making the best possible use of existing facilities and resources in Scotland. Are we catering for the nation's future needs in higher education in a way that will be helpful in the future? Will the changes and the financial constrictions create the permanent damage that some people allege?
    If one removes 4½ per cent. from 100 per cent. one is left with 95½ per cent. That does not seem to decimate anything. If by removing the 4½ per cent. one ensures that others can benefit, I approve. It is unrealistic for individuals engaged in higher education to expect that nothing will change, that whatever is happening in the outside world will not affect them and that they will be insulated. That is not realistic and the House should not expect it to continue in that way.
    No one can deny that there is always scope for improvement in efficiency and performance in any organisation. Higher education is no exception. Colleges of education and universities in Scotland contain considerable areas where efficiency and organisation could be improved. After decades of constant growth, universities were ready for rationalisation. With fewer pupils in schools, there was a need to reduce the total number of students in teacher training colleges.
    Scotland's universities have a proud record and a world-wide reputation. They will rise to the challenge of the times, just as they have done in the past. There are many fine brains available to them. They should be able to make better use than most of what they have available. Those fine brains are never slow to tell everybody else how to improve what they do. I am not being critical. That is one of the functions of our universities. Perhaps they will now turn their great talents and skills to their own use in these difficult times.
    In conclusion, I draw attention to the new training initiative. I hope that this will be the beginning of a more realistic and cost-effective academic and vocational integrated training and education scheme—a scheme that will prepare our young people for tomorrow's world. It is a small beginning, but I am not satisfied with it and I suspect that few other hon. Members will be. However, it is a beginning, although a long overdue beginning.
    I do not believe that all higher education is concerned only with universities. They are only one part of the higher education sector. Therefore, we should not be too concerned if the universitiies have been called upon to make some realistic changes, provided that—and I qualify this—we are satisfied that we are shifting resources to where the needs are greatest. The shift of funds into the new training initiative and into other areas is the beginning of the kind of change for which we have waited for far too long.
    6.31 pm
    Mr. Robert Hughes: The Government have sought to imply that the Opposition's criticisms of what is happening in universities are extreme or ill founded, or both. Yet, as hon. Members know—especially those from the North-East of Scotland—nothing we have said in the House has not been said either publicly or privately by the principal of the university of Aberdeen. He has said quite plainly that the damage being done to Aberdeen university is severe,
    400
    particularly because the cuts have been front-loaded, with 53 per cent. falling in the first year, 27 per cent. in the second year and 20 per cent. in the third year.
    In his latest statement, the principal has made it clear that there will have to be severe staffing reductions. He says:
    "However, it must be emphasised that a reduction in staffing to the levels set out in the Planning Committee report represents a major disruption of the work of the university. The activities of many splendid departments and staff of the highest quality will be seriously damaged with the abandonment of successful careers and the likelihood of much human misery."
    That "human misery" refers not just to university staff losing their jobs, but to the effect upon the quality of education given to the students, and, indeed, the feelings of those young people who will not now be able to go to university.
    Perhaps the hon. Member for Perth and East Perthshire (Mr. Walker) can simply write that off as being of no account. I speak as someone with great regard for our university system, not because I had the opportunity to take part in it, but because of what it has given my children. I bemoan greatly the fact that many young children of the same age as some of my children will not get to university as a result of the cuts.
    Ever since we have raised this matter, the Government have hidden behind the UGC. Every time we have raised this with Ministers, they have said, "Let the university take its case to the UGC and see what happens". What has happened? The UGC wrote to Aberdeen university on 23 February explaining, in one curt paragraph, that the conditions of the July letter about the cuts were unchanged, both as regards the financial position and student numbers. That is a disgrace. Even worse, every attempt to get the UGC to explain its position and to explain why it has acted differently towards different universities has been met with a blank refusal to make the information available.
    I am sorry if I was churlish towards the Under-Secretary of State for Education and Science yesterday during Question Time. I should be grateful if he would do us the courtesy of coming to Aberdeen. However, his visits have not produced any results. There has ben no change and he must be extremely disappointed. Time is short and I shall not speak for long. We are in the process of destroying a university system that has been built up over many years. It is not true that unlimited amounts of money have been poured into our universities over the years. I do not hide behind the fact that in the past four to six years money has been held back and universities have had to make savings. However, given the failure to expand during the past four or five years, this cut is very serious. The Government have made a political decision to cut the UGC's money and it is unfair of them to hide behind that body. They must make more money available. They will reap as they sow and they will reap destruction.
    The Government must realise that the parents of many of those waiting to go to university belong to the middle class and are not used—unlike the working class—to having their living standards attacked. They will bring retribution upon the Government and the Government will deserve everything they get. If we fail to educate our people, we fail to invest in the future. That can mean only ruin for the whole country.
    Mr. Maxton rose—
    Mr. O'Neill rose—
    Mr. Speaker: Mr. O'Neill.
    Mr. Maxton: On a point of order, Mr. Speaker. I appreciate that you cannot call me, but I feel that I must raise a point of order about something said by the Secretary of State. If I had been called I would have raised it in my speech. During his speech—
    Mr. Speaker: Order. Perhaps the hon. Gentleman should whisper to his hon. Friend the Member for Clackmannan and East Stirlingshire (Mr. O'Neill), who is about to speak. I am sorry, but the hon. Gentleman's point is not a point of order if it is a point of argument with the Secretary of State.
    Mr. Maxton: On a point of order, Mr. Speaker. I wish to raise a point of order about the statutes and rights of the House. The House has set up statutory bodies to negotiate salaries. Today, the Secretary of State essentially put aside all those negotiating bodies by saying that certain sections of workers would have to accept a certain pay rise. That raises a constitutional issue about bodies that have been set up by Parliament.
    Mr. Speaker: That is a point of argument and not a point of order upon which I can rule.
    6.37 pm
    Mr. Martin J. O'Neill: The Opposition welcome the debate. We wish to ensure that the position of Scottish universities, colleges of education, the central institutions and colleges of further education, which are under local authority control, is defended in the House. The Secretary of State and the Under-Secretary of State have failed not only to do that, but to provide adequate support for the two basic elements in our higher education programme. They have failed to sustain the Robbins principle and to supply adequate levels of student support.
    The Secretary of State, in a disgraceful speech, failed to give any satisfactory answers to the questions posed by my right hon. Friend the Member for Glasgow, Craigton (Mr. Millan). I hope that the Under-Secretary of State will reconsider those questions when he replies to the debate. What is the real value of the increase in average student grant? The so-called 4 per cent. rise will result in more students being on the minimum grant, fewer students being on the maximum grant and less money for those students in the middle. The situation is totally unsatisfactory. The National Union of Students has suggested that an award of 17·4 per cent. would bring student grants up to the 1979 level. The Government cannot get away from that figure. They will betray even their supporters if they do not come near to that figure soon.
    Final year students will be genuinely concerned. A recent survey in Glasgow university—I am sure that many of the students who took part in the survey will be casting their votes next week—showed that 75 per cent. of final year students are existing on overdrafts. Scottish students have a four-year university course, so they have to live on inadequate grants for a longer time. Therefore, honours students in their third and fourth years will be under extreme financial pressure. It is a complete betrayal of the principle on which the Mackenzie report was based and on which the grant system has operated since 1962.
    On university funding, we must take account of the special nature of Scottish universities. Their special nature
    402
    relates not only to their four-year courses. The whole nature of our course structure is different from that south of the border. There is greater flexibility. Scottish institutions have always been proud of their broad study base. Therefore, it is important that departments should be sustained so that they can fulfil not only their degree awarding function but their service function, whereby students have an opportunity to participate in the widest possible range of study during their time at university. The UGC did not take account of that fact in its funding. I-see that the Under-Secretary of State for Education and Science agrees with me. This serious criticism has not been adequately met.
    We have yet to hear the share of the £50 million that will be made available to Scottish universities for redundancies. We know that the redundancy arrangements do not take adequate account of the members of staff who are under 50 years of age. The Secretary of State praised the UGC for the way in which it carried out the cuts. He spoke about the four criteria that were applied—scholarship, taking due note of technology and making sure that the vitality and viability of institutions were sustained. The UGC has failed on all those counts.
    On scholarship, the basis on which the recommended cuts were made was, to say the least, pretty feeble. On technology, it has not taken adequate account of the tremendous contributions made in that respect by many of our universities, such as Stirling and Aberdeen. On vitality, it is all too clear that universities are now incredibly depressed and that the morale among staff and students is at its lowest ebb. On viability, all we can say is that it is a serious matter when a university in the centre of Scotland has to support only 2, 000 to 2, 100 students. I shall not press the matter too strongly here, but Members of Parliament who represent constituencies in the centre of Scotland do not trust the Secretary of State when he says that he will keep open institutions, because he has already closed one college of education.
    In further education, the idea that potential applicants will be in a position to transfer from some universities to the Napier college in Edinburgh is ludicrous, I discovered today from Lothian region that the expected number of places available at that college next year for technology courses will be down by about 500 on what was expected in 1980 when it started its expansion programme.
    The Labour Party's commitment is clear. It is to sustain the Robbins principle and to ensure adequate support for all those who are qualified to attend. We want to make sure that Scottish universities, colleges of education and technical colleges provide an opportunity for all those who are capable of benefiting from the courses to do so. As my hon. Friend the Member for Glasgow, Maryhill (Mr. Craigen) said, it is not simply a matter of looking at the school figures for prospective fifth and sixth years. We have a responsibility to adults who wish to come back to education to improve their qualifications or to be retrained. The Minister has said nothing today that would suggest that that will be possible with the level of funding that is proposed. Therefore, I have no hesitation in asking the House to give its unqualified support to the motion and to defeat the Government amendment, which is a disgrace to Scottish academic life.
    6.45 pm
    The Under-Secretary of State for Scotland (Mr. Alexander Fletcher): A number of rather wild accusations have been made by Opposition Members about higher education in Scotland—enough to justify this debate. We therefore welcome the opportunity to respond to the many questions that have been asked.
    The hon. Member for Aberdeen, North (Mr. Hughes) made a brief speech, in which he said that we were destroying the university system in Britain. That is untrue. My hon. Friend the Member for Perth and East Perthshire (Mr. Walker) gave the correct response to that when he said that there are many important calls on the Exchequer, particularly from young people. He talked about the needs of apprentices and the tremendous public expenditure on the new training initiative. Important as universities are, and important as our students are, they are not underprivileged. They are not among the members of our society today who are least well looked after or cared for by taxpayers and others.
    The right hon. Member for Glasgow, Craigton (Mr. Millan) asked about the average grant for students. In 1981–82 the figure was £1, 135. That average figure includes students who are on the minimum grant of £410, as I am sure the right hon. Gentleman will appreciate. No precise calculation can be made for the average grant in 1982–83, because it depends on the assessment of parental earnings in as many as 60, 000 cases. However, we estimate at this moment that it will be about the same amount—about £1, 100, the figure for the current year.
    Mr. Millan: The Under-Secretary says that it will be about £1, 100. That would not be about the same amount. That would be a reduction. At best he is saying that there will be no increase in student grants next year.
    Mr. Fletcher: I made the qualification that it was a rough estimate. It is well in advance of the detailed calculations that are being made. The grant will be about the same as in the current year.
    The right hon. Member for Greenock and Port Glasgow (Dr. Mabon) made some exaggerated comments. I was somewhat surprised at him. He claimed that university principals had not been told by the UGC why recommendations for changes had been made. That is untrue. Full consultations took place. It is not good enough to read out one letter from the chairman of the UGC to the principal of a university, when there have been meetings, telephone calls and discussions, not just with the UGC, but with my right hon. and hon. Friends, in particular my hon. Friend the Under-Secretary of State for Education and Science, who takes a close and personal interest in this matter generally and in Scotland in particular. He has sat through this debate and has heard the criticisms that have been made, so there is no justification for the criticisms that the right hon. Gentleman made.
    The right hon. Member also asked about the new engineering chair at Aberdeen. In that case—in Aberdeen, of all places—the UGC is saying "By all means find some private sector support for the project. If you do, not necessarily on a pound-for-pound basis, we will give support to the chair." That is a reasonable point for the UGC to make.
    Mr. Foulkes: Will the hon. Gentleman give way?
    Mr. Fletcher: I must reply to the debate. There is very little time.
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    The hon. Member for West Stirlingshire (Mr. Canavan) raised the question of repeat years. These will not be refused where there are clear medical or compassionate grounds. That has been made clear in the correspondence that I have had with hon. Members, and I am glad to repeat it now. However, the automatic offer of grant for repeat years was over-generous and not necessarily helpful to students or to the universities, because it usually accepted failure or lack of effort far too easily. That cannot be good for the recipients or for the academic institutions. The new policy will be fairer to the students and, of course, to taxpayers.
    My hon. Friend the Member for Edinburgh, West (Lord James Douglas-Hamilton) made a helpful and constructive speech. He was right to set out the benefits that come from the increased number of places available in engineering, mathematics, sciences and other subjects of that kind. We are looking sympathetically at the point that he raised about the university pension fund.
    The UGC has assured Heriot-Watt university that it will be given every encouragement to concentrate its activities at Riccarton and to move out of the city centre.
    Several hon. Members, including the hon. Member for Dundee, East (Mr. Wilson), referred to postgraduate students' allowances. I should like to elaborate a little on this important matter. The scheme for 1982–83 was described in a paper sent out by my Department on 29 January this year. There may be some misconception about this. After the experience of the considerable growth in awards up to 1980–81, we decided to place a ceiling on awards under the scheme. This has meant a reduction in total awards from about 1, 750 to just under 1, 500, but hon. Members will be pleased to learn that we intend to maintain the total of grants at the present level for the next academic session, 1982–83.
    The right hon. Member for Craigton voiced concern about the extension of quota controls to certain courses which were exempted last year. These include the diploma in legal practice, certain diploma courses in architecture and courses for the ministry. I am happy to reassure hon. Members that transitional arrangements are being worked out in consultation with the educational institutions and the professional associations concerned to ensure that students committed to a certain diploma course in one of those subjects before January 1982, when the new policy was announced, will be financed to the end of their studies. The consultation paper promised consultation on the quotas to be fixed for 1982–83, and these are well under way. We are sure that some of the difficulties that have been raised with us will be overcome.
    My hon. Friend the Member for Fife, East (Mr. Henderson) suggested that students at St. Andrews and perhaps other universities in Scotland were not receiving the full grant from local education authorities in England for a full four-year course. We have no evidence of this. If my hon. Friend has details of a specific refusal I should be very grateful if he would let me have them.
    As my hon. Friend said, Labour Members argue about higher education, as they do about everything else, on the narrow basis of public expenditure. This debate has been no exception, with the result that they have failed to realise the major advances that are taking place in higher education in Scotland. Improvements are taking place and financial resources are being conserved at the same time, because there is a greater overall cost-effectiveness.

    405
    As my right hon. Friend said, the strength of our central institutions is that they are engaged in the business of providing vocationally orientated courses that meet the needs of industries and of the professions. As a result the colleges also meet the needs of their students, almost all of whom obtain employment when they graduate. This is particularly the case in electronics, oil and gas, textiles and other industries, at which many more college courses are aimed today than was the case two or three years ago. We have doubled the number of higher national diplomas in electronics. We have increased by 50 per cent. in the past couple of years the number of electrical engineering graduates. These are the sorts of vocational courses that more and more young people want and we are providing them to the best of our ability. These are the skills that industry needs very much today.
    There are two other factors that have helped to bring about the improved cost-effectiveness in higher education. First, there is the liaison between the colleges themselves and between the colleges and universities, which has been led and encouraged by the Scottish Education Department. This has never been better. As a consequence, resources are being put to better use. Secondly, the central institutions have increased considerably their student intake, without a corresponding increase in staff numbers. As my right hon. Friend said, the ratio has gone from eight students to one lecturer about two years ago to 10:1 today without any reduction in standards in the colleges. Those are the sorts of changes and improvements that can be made in higher education, as in anything else, at a time when resources have to be used more effectively.
    With regard to the universities, Opposition Members will realise that the equipment grant is also important, particularly in technical subjects such as science, in the medical schools and in the engineering faculties. Under the Labour Government the equipment grant decreased in real terms, whereas under this Government it has increased in real terms. That is a proper ordering of priorities for higher education in Scotland and elsewhere in the United Kingdom. I am sure that my hon. Friends will appreciate the importance of that decision.
    In regard to higher education funding as it affects Scotland, the figures that I shall quote exclude expenditure on universities but include recurrent expenditure on teacher training, on further education in local authority and central institutions, and on student awards. The Scottish expenditure figures in cash terms for 1981–82 were £281 million, for 1982–83 £295 million and for 1983–84 £306 million. These are modest but important advances in public expenditure aimed at the very area that is the subject of the debate—higher education in Scotland.
    At the same time, expenditure in central institutions is increasing. Provision in percentage terms in 1982–83 is 8 per cent. above that for 1981–82 and 20 per cent. above the level for 1980–81. The rate support grant settlement for 1982–83 assumes local authority expenditure on further education at a level of 12 per cent. above that for last year. That again is a significant contribution to education in Scotland. These figures totally refute the charge that the Government are failing to give the fullest possible support to Scotland's renowned education system.
    Other steps are being taken to improve education in Scotland. We have been very quick off the mark in the introduction of microcomputers into schools and colleges. We have helped to bring together education and industry in microelectronics and in biotechnology. My right hon.
    406
    Friend and I sponsor meetings to make sure that industry and education at the higher level are talking to each other and working with each other.
    My right hon. Friend has made special provision to allow the replacement in National Health Service establishments of any post which universities can no longer afford but which are important for patient care or are important for the output of trained specialists. This is additional funding. It does not come off the revenue amounts made available to the health boards; it has been added to the revenue expenditure of the NHS in Scotland. I believe that Opposition Members will welcome that.
    Hon. Members also raised the question of my right hon. Friend's decision on repeated periods of study. This does not affect students who change courses. We are reviewing our policies in this area, again in consultation with the appropriate education interests.
    The Government have not neglected higher education in Scotland. The University Grants Committee is steering the universities towards more vocational courses, science based. That is admittedly at the expense of fewer places in the arts and social sciences, but it is done to meet national and local needs.
    The transitional period of course raises difficulties, particularly as few people in universities have experienced anything other than an expanding amount of public funding. But the situation requires radical thinking and new ideas, which have been provided both by the Government and by the UGC. This assists in particular the students themselves, who require vocational training so that they can find employment in the competitive industrial situation in the world today.
    I ask my right hon. and hon. Friends to support the amendment and defeat the motion.
    Question put, That the original words stand part of the Question:—
    The House divided: Ayes 231, Noes 293.

    Division No. 93]

    [7 pm

    AYES

    Abse, Leo

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

    Adams, Allen

    Cohen, Stanley

    Allaun, Frank

    Coleman, Donald

    Alton, David

    Concannon, Rt Hon J. D.

    Anderson, Donald

    Conlan, Bernard

    Archer, Rt Hon Peter

    Cowans, Harry

    Ashley, Rt Hon Jack

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

    Ashton, Joe

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

    Atkinson, N. (H'gey, )

    Crowther, Stan

    Bagier, GordonA.T.

    Cryer, Bob

    Barnett, Guy (Greenwich)

    Cunningham, G.(IslingtonS)

    Barnett, Rt Hon Joel (H'wd)

    Cunningham, DrJ. (W'h'n)

    Beith, A.J.

    Dalyell, Tam

    Benn, Rt Hon Tony

    Davidson, Arthur

    Bennett, Andrew(St'kp'tN)

    Davies, Rt Hon Denzil (L 'lli)

    Bidwell, Sydney

    Davies, Ifor (Gower)

    Booth, RtHonAlbert

    Davis, Clinton (Hackney C)

    Boothroyd, MissBetty

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

    Bray, Dr Jeremy

    Deakins, Eric

    Brown, Hugh D. (Provan)

    Dean, Joseph (Leeds West)

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

    Dixon, Donald

    Brown, Ron (E'burgh, Leith)

    Dobson, Frank

    Buchan, Norman

    Dormand, Jack

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

    Douglas, Dick

    Campbell, Ian

    Dubs, Alfred

    Campbell-Savours, Dale

    Duffy, A. E. P.

    Canavan, Dennis

    Dunn, James A.

    Cant, R. B.

    Dunnett, Jack

    Carmichael, Neil

    Eadie, Alex

    Carter-Jones, Lewis

    Eastham, Ken

    Cartwright, John

    Edwards, R. (W'hampt'nS E)

    Clark, Dr David (S Shields)

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

    407

    Ellis, Tom (Wrexham)

    Mellish, RtHon Robert

    English, Michael

    Mikardo, Ian

    Evans, Ioan (Aberdare)

    Millan, RtHon Bruce

    Evans, John (Newton)

    Mitchell, Austin(Grimsby)

    Ewing, Harry

    Mitchell, R.C. (Soton Itchen)

    Field, Frank

    Morris, Rt Hon A. (W'shawe)

    Fitch, Alan

    Morris, Rt Hon C. (O'shaw)

    Flannery, Martin

    Morris, Rt Hon J. (Aberavon)

    Fletcher, Ted (Darlington)

    Moyle, RtHon Roland

    Foot, RtHon Michael

    Mulley, RtHon Frederick

    Ford, Ben

    Newens, Stanley

    Forrester, John

    Oakes, Rt Hon Gordon

    Foster, Derek

    O'Neill, Martin

    Foulkes, George

    Orme, RtHon Stanley

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

    Owen, Rt Hon Dr David

    Freeson, Rt Hon Reginald

    Palmer, Arthur

    Freud, Clement

    Park, George

    Garrett, John (NorwichS)

    Parker, John

    George, Bruce

    Parry, Robert

    Gilbert, RtHon Dr John

    Pavitt, Laurie

    Golding, John

    Pendry, Tom

    Grant, George (Morpeth)

    Penhaligon, David

    Grimond, RtHon J.

    Powell, Raymond (Ogmore)

    Hamilton, James (Bothwell)

    Price, C. (Lewisham W)

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

    Race, Reg

    Hardy, Peter

    Radice, Giles

    Harrison, RtHon Walter

    Richardson, Jo

    Hart, RtHon Dame Judith

    Roberts, Albert (Normanton)

    Hattersley, Rt Hon Roy

    Roberts, Allan(Bootle)

    Haynes, Frank

    Roberts, Ernest (Hackney N)

    Healey, Rt Hon Denis

    Roberts, Gwilym (Cannock)

    Heffer, Eric S.

    Robinson, G. (Coventry NW)

    Hogg, N. (EDunb't'nshire)

    Rodgers, RtHon William

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

    Rooker, J. W.

    HomeRobertson, John

    Roper, John

    Homewood, William

    Ross, Ernest (Dundee West)

    Hooley, Frank

    Rowlands, Ted

    Huckfield, Les

    Ryman, John

    Hughes, Mark (Durham)

    Sever, John

    Hughes, Robert (Aberdeen N)

    Sheerman, Barry

    Hughes, Roy (Newport)

    Sheldon, Rt Hon R.

    Janner, HonGreville

    Shore, Rt Hon Peter

    John, Brynmor

    Short, Mrs Renée

    Johnson, James (Hull West)

    Silkin, RtHon J.(Deptford)

    Johnston, Russell (Inverness)

    Skinner, Dennis

    Jones, Rt Hon Alec (Rh'dda)

    Smith, Rt Hon J. (N Lanark)

    Jones, Barry (East Flint)

    Snape, Peter

    Jones, Dan (Burnley)

    Soley, Clive

    Kaufman, Rt Hon Gerald

    Spearing, Nigel

    Kerr, Russell

    Spriggs, Leslie

    Kilroy-Silk, Robert

    Stallard, A.W.

    Lambie, David

    Steel, Rt Hon David

    Lamborn, Harry

    Stewart, Rt Hon D. (W Isles)

    Lamond, James

    Stoddart, David

    Leadbitter, Ted

    Stott, Roger

    Leighton, Ronald

    Strang, Gavin

    Lestor, MissJoan

    Straw, Jack

    Lewis, Arthur(N'ham NW)

    Summerskill, HonDrShirley

    Lewis, Ron (Carlisle)

    Taylor, Mrs Ann (Bolton W)

    Litherland, Robert

    Thomas, Dafydd (Merioneth)

    Lofthouse, Geoffrey

    Thorne, Stan (PrestonSouth)

    Lyon, Alexander (York)

    Tilley, John

    Lyons, Edward (Bradf'dW)

    Tinn, James

    Mabon, Rt Hon Dr J. Dickson

    Torney, Tom

    McCartney, Hugh

    Urwin, Rt Hon Tom

    McKay, Allen (Penistone)

    Varley, Rt Hon Eric G.

    McKelvey, William

    Wainwright, E, (DearneV)

    MacKenzie, RtHonGregor

    Wainwright, R. (ColneV)

    McNally, Thomas

    Walker, Rt Hon H.(D'caster)

    McNamara, Kevin

    Watkins, David

    McTaggart, Robert

    Wellbeloved, James

    McWilliam, John

    Welsh, Michael

    Marks, Kenneth

    White, Frank R.

    Marshall, D(G'gowS'ton)

    White, J. (G'gow Pollok)

    Marshall, DrEdmund (Goole)

    Whitehead, Phillip

    Marshall, Jim (LeicesterS)

    Whitlock, William

    Martin, M(G'gowS'burn)

    Wigley, Dafydd

    Maxton, John

    Williams, RtHonA.(S'sea W)

    Maynard, MissJoan

    Williams, Rt Hon Mrs (Crosby)

    Meacher, Michael

    Wilson, Gordon (Dundee E)

    408

    Wilson, RtHon Sir H.(H'ton)

    Young, David (Bolton E)

    Wilson, William (C'trySE)

    Winnick, David

    Tellers for the Ayes:

    Woodall, Alec

    Mr. Lawrence Cunliffe and

    Woolmer, Kenneth

    Mr. George Morton.

    Wright, Sheila

    NOES

    Aitken, Jonathan

    Fairgrieve, SirRussell

    Alexander, Richard

    Faith, MrsSheila

    Alison, RtHon Michael

    Farr, John

    Amery, RtHon Julian

    Fell, SirAnthony

    Aspinwall, Jack

    Fenner, Mrs Peggy

    Atkins, Robert (PrestonN)

    Finsberg, Geoffrey

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

    Fisher, SirNigel

    Baker, Kenneth(St.M'bone)

    Fletcher, A. (Ed'nb'ghN)

    Baker, Nicholas (NDorset)

    Fletcher-Cooke, SirCharles

    Banks, Robert

    Fookes, MissJanet

    Beaumont-Dark, Anthony

    Forman, Nigel

    Bendall, Vivian

    Fowler, RtHon Norman

    Benyon, Thomas(A'don)

    Fox, Marcus

    Benyon, W. (Buckingham)

    Fraser, RtHon Sir Hugh

    Best, Keith

    Fry, Peter

    Bevan, David Gilroy

    Gardiner, George (Reigate)

    Biggs-Davison, SirJohn

    Gardner, Edward (SFylde)

    Blackburn, John

    Garel-Jones, Tristan

    Bonsor, SirNicholas

    Gilmour, RtHon Sir Ian

    Boscawen, HonRobert

    Glyn, DrAlan

    Bottomley, Peter (W'wich W)

    Goodhart, SirPhilip

    Boyson, DrRhodes

    Goodhew, SirVictor

    Braine, SirBernard

    Goodlad, Alastair

    Bright, Graham

    Gorst, John

    Brinton, Tim

    Gow, Ian

    Brooke, Hon Peter

    Grant, Anthony (HarrowC)

    Brotherton, Michael

    Gray, Hamish

    Brown, Michael(Brigg&Sc'n)

    Greenway, Harry

    Browne, John(Winchester)

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

    Bruce-Gardyne, John

    Griffiths, Peter Portsm'th N)

    Bryan, Sir Paul

    Grist, Ian

    Buck, Antony

    Gummer, JohnSelwyn

    Budgen, Nick

    Hamilton, Hon A.

    Bulmer, Esmond

    Hamilton, Michael(Salisbury)

    Burden, SirFrederick

    Hampson, DrKeith

    Butcher, John

    Hannam, John

    Cadbury, Jocelyn

    Haselhurst, Alan

    Carlisle, John (LutonWest)

    Hastings, Stephen

    Carlisle, Kenneth (Lincoln)

    Havers, Rt Hon Sir Michael

    Carlisle, RtHon M.(R'c'n)

    Hawksley, Warren

    Chalker, Mrs. Lynda

    Hayhoe, Barney

    Channon, Rt. Hon. Paul

    Heddle, John

    Chapman, Sydney

    Henderson, Barry

    Churchill, W.S.

    Heseltine, RtHon Michael

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

    Hicks, Robert

    Clark, Sir W, (Croydon S)

    Higgins, Rt HonTerence L.

    Clarke, Kenneth(Rushcliffe)

    Hogg, HonDouglas(Gr'th'm)

    Clegg, SirWalter

    Holland, Philip(Carlton)

    Cockeram, Eric

    Hooson, Tom

    Colvin, Michael

    Hordern, Peter

    Cope, John

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

    Cormack, Patrick

    Howell, Ralph (NNorfolk)

    Corrie, John

    Hunt, David (Wirral)

    Costain, SirAlbert

    Hunt, John(Ravensbourne)

    Cranborne, Viscount

    Hurd, RtHon Douglas

    Critchley, Julian

    Irving, Charles(Cheltenham)

    Crouch, David

    Jenkin, Rt Hon Patrick

    Dean, Paul (NorthSomerset)

    JohnsonSmith, Geoffrey

    Dickens, Geoffrey

    Jopling, RtHonMichael

    Dorrell, Stephen

    Joseph, RtHon Sir Keith

    Douglas-Hamilton, LordJ.

    Kaberry, SirDonald

    Dover, Denshore

    Kellett-Bowman, MrsElaine

    Dunn, Robert(Dartford)

    Kershaw, SirAnthony

    Durant, Tony

    Kimball, SirMarcus

    Dykes, Hugh

    King, RtHon Tom

    Eden, RtHon Sir John

    Kitson, SirTimothy

    Edwards, Rt Hon N, (P'broke)

    Knight, MrsJill

    Eggar, Tim

    Knox, David

    Elliott, SirWilliam

    Lamont, Norman

    Emery, Sir Peter

    Lang, Ian

    Eyre, Reginald

    Langford-Holt, SirJohn

    Fairbairn, Nicholas

    Latham, Michael

    409

    Lawrence, Ivan

    Myles, David

    Lawson, Rt Hon Nigel

    Neale, Gerrard

    Lee, John

    Needham, Richard

    LeMarchant, Spencer

    Nelson, Anthony

    Lennox-Boyd, HonMark

    Neubert, Michael

    Lester, Jim (Beeston)

    Newton, Tony

    Lewis, Kenneth (Rutland)

    Onslow, Cranley

    Lloyd, Ian (Havant& W'loo)

    Oppenheim, Rt Hon Mrs S.

    Lloyd, Peter (Fareham)

    Osborn, John

    Loveridge, John

    Page, John (Harrow, West)

    Luce, Richard

    Page, Richard (SWHerts)

    Lyell, Nicholas

    Parkinson, RtHonCecil

    McCrindle, Robert

    Parris, Matthew

    Macfarlane, Neil

    Patten, Christopher(Bath)

    MacGregor, John

    Pawsey, James

    McNair-Wilson, M.(N'bury)

    Peyton, Rt Hon John

    McNair-Wilson, P. (NewF'st)

    Pink, R.Bonner

    McQuarrie, Albert

    Pollock, Alexander

    Madel, David

    Porter, Barry

    Major, John

    Prentice, Rt Hon Reg

    Marland, Paul

    Price, SirDavid (Eastleigh)

    Marlow, Antony

    Prior, Rt Hon James

    Marshall, Michael (Arundel)

    Proctor, K.Harvey

    Mates, Michael

    Pym, Rt Hon Francis

    Maude, Rt Hon Sir Angus

    Raison, RtHonTimothy

    Mawby, Ray

    Rathbone, Tim

    Maxwell-Hyslop, Robin

    Rees, Peter (Dover and Deal)

    Mayhew, Patrick

    Rees-Davies, W. R.

    Mellor, David

    Renton, Tim

    Meyer, SirAnthony

    Rhodes James, Robert

    Miller, Hal (B'grove)

    RhysWilliams, SirBrandon

    Mills, Iain (Meriden)

    Ridley, HonNicholas

    Mills, Peter (WestDevon)

    Ridsdale, SirJulian

    Miscampbell, Norman

    Rifkind, Malcolm

    Mitchell, David (Basingstoke)

    Rippon, RtHonGeoffrey

    Moate, Roger

    Roberts, M. (CardiffNW)

    Monro, SirHector

    Roberts, Wyn (Conway)

    Montgomery, Fergus

    Rossi, Hugh

    Moore, John

    Rost, Peter

    Morgan, Geraint

    Royle, SirAnthony

    Morris, M. (N'hamptonS)

    Sainsbury, HonTimothy

    Morrison, Hon C. (Devizes)

    St. John-Stevas, Rt Hon N.

    Morrison, Hon P. (Chester)

    Shaw, Giles (Pudsey)

    Mudd, David

    Shaw, Michael(Scarborough)

    Murphy, Christopher

    Shelton, William(Streatham)

    410

    Shepherd, Colin(Hereford)

    Townsend, Cyril D, (B'heath)

    Shepherd, Richard

    Trippier, David

    Silvester, Fred

    Trotter, Neville

    Sims, Roger

    van Straubenzee, Sir W.

    Skeet, T. H. H.

    Vaughan, DrGerard

    Smith, Dudley

    Viggers, Peter

    Speed, Keith

    Waddington, David

    Speller, Tony

    Waldegrave, HonWilliam

    Spence, John

    Walker, Rt Hon P.(W'cester)

    Spicer, Jim (WestDorset)

    Walker, B. (Perth)

    Spicer, Michael (SWorcs)

    Walker-Smith, Rt Hon Sir D.

    Sproat, Iain

    Wall, SirPatrick

    Squire, Robin

    Waller, Gary

    Stainton, Keith

    Walters, Dennis

    Stanbrook, Ivor

    Ward, John

    Stanley, John

    Warren, Kenneth

    Steen, Anthony

    Watson, John

    Stevens, Martin

    Wells, Bowen

    Stewart, A. (ERenfrewshire)

    Wells, John(Maidstone)

    Stewart, Ian (Hitchin)

    Wheeler, John

    Stokes, John

    Wickenden, Keith

    StradlingThomas, J.

    Wiggin, Jerry

    Tapsell, Peter

    Williams.D.(Montgomery)

    Taylor, Teddy (S'endE)

    Winterton, Nicholas

    Tebbit, Rt Hon Norman

    Wolfson, Mark

    Temple-Morris, Peter

    Young, SirGeorge(Acton)

    Thatcher, Rt Hon Mrs M.

    Younger, RtHonGeorge

    Thomas, Rt Hon Peter

    Thompson, Donald

    Tellers for the Noes:

    Thorne, Neil(IlfordSouth)

    Mr. Anthony Berry and

    Thornton, Malcolm

    Mr. Carol Mather.

    Townend, John (Bridlington)

    Question accordingly negatived.
    Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 32 (Questions on amendments) and agreed to.
    Main Question, as amended, agreed to.
    Resolved,
    That this House recognises the need for higher education in Scotland to bear a proportion of reductions in public expenditure and commends the steps taken by Her Majesty's Government and the University Grants Committee to re-order priorities to ensure a high standard of provision consistent with national needs.

  Overseas Visitors (Health Service Charges)
  7.13 pm
  Mr. Terry Davis: I beg to move,
  That this House condemns the new arrangements being made by the Secretary of State for Social Services for charges for National Health Service treatment for overseas vistors; draws attention to the favourable position of visitors from the EEC compared with other countries; doubts that these new arrangements will result in an increased revenue of £6 million per annum for the National Health Service; and considers that the proposed changes will not eliminate racial discrimination in the provision of National Health Service treatment.
  Mr. Speaker: I have selected the amendment in the name of the Prime Minister.
  Mr. Davis: Everyone is against abuse of the National Health Service or any other part of what it is now unfashionable to call the "Welfare State". However, in deciding what should be done to prevent abuse, we must have regard to three points. First, any special measures must be effective in preventing or detecting whatever abuse may take place. Secondly, the cost of any such arrangements must be reasonable in relation to the revenue that will be generated. Thirdly, such arrangements must not cause unnecessary offence to other people who are entitled to treatment from the NHS without any change at the time of treatment.
  First, it needs to be emphasised that we are talking about charges for hospital treatment. This may seem an obvious point, but there appears to be some confusion, extending to Ministers. Indeed, it extends to the hon. Member for Reading, South (Dr. Vaughan) who was, until recently, the Minister for Health. He said during a television interview that this upheaval was taking place because people visit Britain and have glasses or dental treatment on the NHS when they are merely visiting. I do not know what the Minister for Health had in mind when he was talking about his new proposals, but they certainly do not cover that sort of case.
  It needs to be clearly and firmly said that many foreigners and overseas visitors are entitled, as of right, to be treated at no charge by the NHS in exactly the same way as any British resident. In the first place, it is residence which matters and not nationality or origin. Many people who are not British citizens are entitled to free treatment by the NHS hospitals and have always been entitled to this free treatment because they live in Britain. They do not have to work here; it is enough to be a resident of England or Wales.
  Over the years, other people who are neither British citizens nor residents have become entitled to free treatment as a result of reciprocal arrangements concluded by successive Governments with the Governments of other countries. That was extended automatically in 1973 to all visitors from the Common Market. Of course, there are other overseas visitors who are not entitled to free treatment in hospital under the NHS.
  Historically, both Conservative and Labour Governments have allowed visitors from other countries to receive free treatment in certain circumstances. It has been called treatment of immediate necessity for conditions arising, or unexpectedly and seriously exacerbated, while the visitors are in this country. It is not
  412
  a right for them to receive free treatment under the National Health Service, but it is not an abuse for them to receive free treatment.
  If they receive treatment in other circumstances, that is, and always has been, wrong. It is an abuse. In seeking to deal with this abuse, the Government have displayed their usual ineptitude. They are not only trying to stop abuse. They are also restricting the circumstances in which the National Health Service will provide free treatment for some but not all overseas visitors. I emphasise "some" overseas visitors.
  The Government's proposals will not affect at least half of the overseas visitors, mainly from the Common Market, to this country. They will continue to receive free treatment in hospitals from the National Health Service. The Government's first mistake was to fail to make any proper estimate of the abuse or the number of people who had previously received National Health Service treatment legitimately and who will be expected to pay in future. It is surely not unreasonable to expect the Government to begin by making an estimate of the numbers of people involved and the cost of their treatment. Instead, Ministers have contented themselves with making a series of unsupported assertions in the House and elsewhere about fairly widespread abuse of the National Health Service by well-heeled foreigners, as the right hon. Member for Wanstead and Woodford (Mr. Jenkin) put it.
  It is significant that the only available figures for the numbers of people involved are contained in the report of the working party established by the Government to look into the procedures for these charges after the decision had been made. What do we find? The working party arranged for 8, 152 people to be questioned. These were people who sought treatment at 10 hospitals in England and Wales. The overwhelming majority, 8, 071 out of the 8, 152, were found to be eligible for free treatment without any doubt whatever.
  Only 81 people out of the 8, 152, or 1 per cent., needed any further questioning. But this did not mean that 1 per cent. of the people being treated at those hospitals were not entitled to free treatment. On the contrary, the detailed analysis in the report shows that these 81 people included 43 who had lived in the United Kingdom for between one and three years or who were United Kingdom residents working abroad and had returned briefly to this country. Both groups will be exempt under the Government's proposals.
  The figure is therefore reduced from 1 per cent. to half of 1 per cent. But the reduction does not stop there. The figure also includes people who had come from the Common Market or from countries with which we have reciprocal arrangements. These people will continue to receive free treatment as overseas visitors. It is not known exactly how many people out of the 8, 152 come into this category because there is some double counting in the analysis provided by the working party. It is, however, known that the 81 people who needed further questioning included 15 from the Common Market, three from Spain, which will shortly join the Common Market, and at least four from countries with which we have reciprocal arrangements.
  These 22, at least, out of the 81 people bring the proportion down to one quarter of one half of 1 per cent., or one person in every thousand, who may be liable to be charged. This is before taking account of overseas visitors who have some communicable disease. Heaven

  413
  knows—certainly the Secretary of State does not—how many people fell into this category. I must stress that these figures show only the number of people—less than one in a thousand—who may be liable to be charged under the Secretary of State's proposals.
  Mr. Robert Atkins: The hon. Gentleman is probably not aware of a letter written during the period of the previous Labour Government, relating to an inquiry from a doctor, which stated:
  "It is well aware of the problem of the abuse of the service to which you draw attention."
  That occurred in October 1978. The previous Labour Government were therefore aware of the problem. Is the hon. Gentleman now seeking to show that it does not exist?
  Mr. Davis: I thought that I had already made it clear that I was not saying that there was no abuse of the National Health Service. I am saying only that it is so minute that it is not worth the trouble of taking these measures. The hon. Member for Preston, North (Mr. Atkins) has referred to a letter written during the period of the previous Labour Government. I recall that when he raised this matter during Question Time the hon. Gentleman flourished a thick file of letters that he said he had received on the issue. The hon. Gentleman never told the House how many of those letters concerned people who will now be charged as a result of the Government's proposal. He never told us how many letters were in the file. He never said how many would be affected by the Government's proposals.
  Let him take out of his file all the letters about people who have lived here for more than one year. Let him take out of his file all the letters about people who have come to work in this country. Let him take out of his file all the letters about wives and husbands, sons and daughters, of people who live in this country. Let him take out of his file all the letters about overseas students who have been here for more than one year. Then let him say how many people will be affected by the Government's proposals.
  Mr. Atkins: The hon. Gentleman provokes me, although I hope, Mr. Deputy Speaker, to catch your eye later to give more details. The simple answer to the hon. Gentleman is that, in one week, on the very issue to which he refers, I received nearly 300 letters, the vast majority from doctors, nurses and health administrators dealing with the very areas of concern to which he has referred. That figure is reached after taking out all the areas that he has understandably excluded.
  Mr. Deputy Speaker (Mr. Ernest Armstrong)Order. A number of hon. Members are waiting to catch my eye. This is a short debate. Long interventions, especially from an hon. Member hoping to catch my eye, make for long speeches.
  Mr. Davis: I do not dispute the hon. Gentleman's statement that he has received 300 letters. I question only that this means that there are 300 overseas visitors who have abused the National Health Service. All hon. Members have heard of people who brandish files of letters. We are not impressed by Preston's version of Senator McCarthy.
  I stress that these figures show only the number of people—less than one in a thousand—who may be liable to be charged under the Secretary of State's proposals.
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  These proposals involve a change in the rules. It cannot be said that one in a thousand hospital patients are abusing the National Health Service. The Secretary of State will say that the figures are only a guide and cannot be taken as a measure of the abuse that he believes to exist somewhere if only he could find it. He can fairly say that these figures rely on questions and answers and that people may not have answered truthfully.
  To be blunt, it is quite likely that people who want to abuse the National Health Service will tell lies, but there is nothing in the proposals to stop that. On the contrary, the report of the working party emphasises that the answers given by the patient should be accepted. There is plenty of room for liars in the new procedure. An overseas visitor liable to pay for treatment can simply lie about the reason for his presence in this country, not tell the truth about the time he has spent here or not tell the truth about whether there is a husband or wife living here. There is nothing to detect these lies. If the new procedure is introduced, it will be totally ineffective in stopping abuse of the National Health Service by overseas visitors. Not only is it ineffective, but I doubt whether it would be cost effective.
  One matter that distinguishes the Government is that Ministers of Health may come and go but they all have one thing in common. They are always evasive about money. Wherever we look—the expected reductions in the management costs of the Health Service as a result of reorganisation or the new dental charges that we discussed last week—those Ministers can never explain where they get their figures from. A classic example is that a year ago the Department of Health and Social Security said that the charges would save £5 million. Now the Secretary of State is saying that the figure is £6 million. In the meantime, the Government—under pressure—have extended the categories of people who will be exempt and have dropped the idea of charging for the community services provided by the National Health Service.
  How has the Secretary of State calculated his figure of £6 million? So far, he has given only one clue. I understand that when he gave evidence to the Race Relations and Immigration Sub-Committee he said that he had assumed that overseas visitors had a similar usage of hospitals as what he described as the "home population". That is a dubious assumption. It is based on several other assumptions, such as that overseas visitors have exactly the same age and occupation profile and medical histories as the population of England and Wales, which is obviously wrong.
  Then there is the assumption that the illnesses experienced by overseas visitors and the treatment received by them are the same as the illnesses of and treatments provided to people who live here. I suspect that that is also wrong. How many overseas visitors have a long period of treatment on a kidney machine, or neurosurgery, or any other expensive treatment? Lastly, there is the assumption that overseas visitors, if they are rot entitled to free treatment, are still going to the National Health Service instead of paying for private treatment.
  It is not only a question of the revenue from those charges but a question of cost. How much will the new-fangled system of questioning cost? The working party says that its elaborate proposals could be implemented without any significant increase in administration costs. It then goes on to say that there might be a need for additional

  415
  staff in some hospitals, but no one knows. The working party's trial involved only the first stage of a proposed two-stage procedure.
  A study of its proposals will show that the extra cost depends upon how many people are referred to the untested second stage, but there is no relationship between the costs of questioning all those people and the eventual amounts charged for treating a small minority of them. After the bills are issued, there is also the cost of collection, especially where there is no machinery for collecting charges to private patients. The more that one examines the figure of £6 million, the more doubtful it looks. I hope that the Secretary of State this evening will either explain his estimate or, better still, publish a paper explaining how he has made the calculations.
  My third point is the unnecessary offence that will be caused by the interrogation of patients, because under the Government's proposal every patient entering a hospital will be required to submit to questioning. That includes everyone entitled to free treatment, even before they receive any treatment. No one knows how many will then be referred to a more detailed interrogation. From the report of the working party, we know that the second stage will include many people who are entitled to free treatment, including those who give unclear or uncertain answers at the first stage. The Secretary of State insisted that no offence would be given. In his submission to the Sub-Committee, he put great emphasis on the fact that when the working party conducted its trial only 12 people refused to answer the questions.
  Typically, the right hon. Gentleman misses the point—in fact he misses three points. First, it was made clear to those taking part in the trial that it was only a trial and that it was voluntary. There is always a better response when people are asked to help in a survey than when they are told that they must answer questions to determine their eligibility for treatment. Secondly, there is no connection between refusal and objection. People may participate in the questioning in a voluntary survey, but that does not mean that they do not object. Thirdly, there was no trial for stage two, with its detailed questions.
  In the Labour Party we have a much more fundamental objection. In his statement to the House and submission to the Sub-Committee, the Secretary of State admitted that under the existing rules and guidance there have been several instances in which members of ethnic minorities—people entitled to free treatment from the National Health Service—have been the victims of racial discrimination. What happens is that someone with a black or brown face is asked to produce his or her passport, irrelevant though that is, in order to prove to the satisfaction of the admissions clerk that there is an entitlement to treatment at the hospital.
  The Government's answer is to put everyone through the hoop and to question everyone regardless of their ethnic origin. However, the real problem comes after that with stage two and the selection of people who will be subject to further questioning. In view of what has already been established about the way in which some clerks behave towards members of ethnic minorities, the Opposition are naturally concerned that the new two-stage procedure may lead to many more instances of discrimination.
  416
  The working party says that if someone answers "Yes" at the first stage, which means that he is entitled to free treatment in a National Health Service hospital, no further questions will be asked. In other words, the clerk should accept whatever the patient says regardless of colour or accent—which may mean North Atlantic—and regardless of any suspicions that the clerk may have which may be reasonable or unreasonable, justified or unjustified.
  Is that really the Government's position? Will the Secretary of State really issue instructions that if a clerk, for whatever reason, suspects that someone is not telling the truth no further questions will be asked? What will he do if his instructions are ignored? Will disciplinary action be taken? The Opposition will believe that when they see it. Meanwhile, we remain unconvinced that the new procedure of questions for all will stop discrimination against some British citizens and residents.
  I wish to put two further points to the House. First, with the new procedure the Government must calculate charges for everything in NHS hospitals. The Opposition have already expressed the view that that may be a paving measure and a way of introducing widespread charges in NHS hospitals, with the intention that eventually everyone will pay. Secondly, a point that has not been brought to public attention is that the Government will not only charge overseas visitors for some treatment of immediate necessity—which was previously provided at no charge—but they will charge overseas visitors for treatment that they would not have had under the present arangements, as I understand them. What is to stop the NHS competing with private medicine? What is to stop NHS hospitals providing treatment for more overseas visitors instead of fewer overseas visitors with the inevitable pressure on hospital waiting lists?
  It is no part of the Oppostions's case to say that there is no abuse of the National Health Service. We say that no one knows its extent. The Government have not made any effort to find out and there is no evidence to suggest that it is anything more than minute. The Government are using a sledgehammer to crack a nut.
  As to the other changes, the Secretary of State has failed to explain how he calculated that his new procedure will earn £6 million for the National Health Service over and above the cost of questioning every patient who goes into hospital and the cost of setting up the machinery to collect the charges. Finally, the new procedure will do nothing to eliminate racial discrimination in the National Health Service. For all those reasons, the Opposition condemn the new arrangements.
  7.39 pm
  The Secretary of State for Social Services (Mr. Norman Fowler): I beg to move, to leave out from "That" to the end of the Question, and to add instead thereof:
  "this House welcomes a commonsense and fair measure to raise extra income for the National Health Service from charging overseas visitors for hospital treatment, which lifts the burden from the British taxpayer and avoids the possibility of racial discrimination in the present hospital admission procedures."
  Perhaps I may start with an agreed basis of facts, because of course there are some facts that cannot be denied. They are not the invention of the Common Market, which is mentioned in the Opposition's motion, nor of my Department. I suggest that there are three such facts.

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  The first is that the number of overseas visitors to this country now totals about 12 million a year, and about 5 million of them are not covered by reciprocal health agreements.
  The second fact is that, unfortunately, some of these visitors who come to this country fall ill and receive hospital treatment. The third fact is that the hospital treatment that they receive costs money.
  I suggest that the initial question is who should pay for this treatment. That basically comes down to whether the British taxpayer should pay, or the foreign visitor—or, to be more accurate, the insurance company covering the foreign visitor.
  The Government's starting position is simply that we see no reason why the British taxpayer should pick up the bill in these cases. Even less do we see any reason for that when, if a British resident goes to a country that is not covered by a reciprocal arrangement, he will have to pay.
  We should be under no illusion about this. If a British resident goes to the United States, Australia, Canada, Nigeria or Japan, falls ill and requires hospital treatment, he will be charged. We are suggesting that if an American, Australian, Canadian, Nigerian or Japanese comes here, he, too, should be charged. We suggest that the cost should not fall on the British taxpayer and that before coming to this country visitors should be warned of the position and insure against the risks. In other words, we are bringing our position into line with that in those countries.
  The position that we are changing—I was not clear having listened to the hon. Member for Birmingham, Stechford (Mr. Davis) whether he was defending it—is completely indefensible, because the present procedure is ramshackle and haphazard in its application. It is indefensible, because for those very reasons it can lead to the possibility of discrimination on racial grounds. The question is, therefore, whether any other objections in principle or practice stand in the way of this common sense move.
  As to the principle, we should remember that the power to charge overseas visitors was not invented by this Government. It was contained in the National Health Service (Amendment) Act 1949. That Act gave the Government power to make regulations to charge persons not ordinarily resident in Great Britain. It is basically that power, introduced by a Labour Government, that we shall be using, and we shall be using it for the very clear reasons set out in the report of the working party that was set up in July 1981 to consider the position.
  The setting up of that working party and the report that it has presented show the care with which we have approached this question. The working party contained representatives from throughout the Health Service and from other organisations, such as the Commission for Racial Equality. It examined the present system and ways of making the suggested new system work.
  There is a procedure for overseas visitors. It was introduced under guidance issued in 1963 and it has remained the policy ever since, including during the period of the Labour Government. In brief, it lays down that short-term visitors should be private patients, but with a number of exceptions. Emergency treatment is free, and that includes treatment arising from an accident or an illness contracted here. Whatever the intention may have
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  been, there is no question but that the present system does not work, and if one reads the working party report one sees that there is no way of reaching any other conclusion.
  A special study was set up at four hospitals, and the conclusions are set out in paragraph 13 of the report. It found, first, that the checks made on patients to establish illegible overseas visitors were infrequent and irregular; secondly, that the registration of patients was largely carried out by clerical officers, many of whom were not aware of any restrictions on NHS treatment of overseas visitors—that does not sound to me to be a system that is working well—and, thirdly, that patients were often questioned about eligibility only if they had given a foreign place of birth or address or were of foreign appearance.
  That is the system that has been examined by the working party and which the Opposition are apparently defending. Those findings were confirmed by a further questionnaire to hospitals and health authorities, and left the working party in no doubt that the present position was unsatisfactory. It is unsatisfactory for a number of reasons: because the intention of the 1963 guidance is clearly being defeated, because the system is wide open to abuse, and because it can lead to discrimination.
  On the question of discrimination, it is worth looking at what the working party said:
  "Because the checks currently used by many hospitals appear to be based on little more than intuition of hospital staff that a patient may not be resident in this country, there is a distinct risk that they may be being applied in a way which discriminates against members of ethnic minorities living here. We therefore feel that there are strong arguments for laying down a uniform procedure for establishing a patient's eligibility and that this procedure should be administered universally".
  The next logical step in the view of both the Government and the working party was to consider whether the proposed new system could work. The working party had already said that hospitals gather a considerable amount of personal detail about a patient entering hospital and that
  "Most staff involved in the registration of patients thought it would be feasible to include in the hospitals' current registration procedure some additional questions to determine eligibility, providing the questions asked were simple and unambiguous".
  The working party then tried out a simple questionnaire at each of 10 hospitals. The questions were designed to check on residence in this country, and the conclusions of the study were again quite clear. They were that, on the evidence of the trial, the procedure could be used to establish rapidly and unobtrusively the prima facie eligibility of the great majority—8, 071 out of 8, 152—of patients.
  The questionnaire also established that most hospitals felt that this part of the procedure could be implemented—this is important—without additional staff being employed. It found that staff reaction was generally favourable, and most staff, including doctors, have been willing to co-operate. It also found that very few—precisely 12—patients out of the 8, 152 had objected to answering the questions.
  Mr. Michael Meacher: The right hon. Gentleman knows that the working party said that extra staff were needed for stage 2 of the procedure. Does he propose to make extra funds available for extra staff? If not, what is his estimate of the cost of transferring existing staff from other more worthwhile duties?
  Mr. Fowler: In respect of stage 1, there is no dispute about extra staff being required. That is what the working party found. As to stage 2 it may be that in some hospitals some extra administrative effort will be required. Given the growth in administrative and clerical staff over the last two or three years, that should be catered for in the present resources of the NHS. There is no indication that the additional administrative effort will outweigh the gain to the National Health Service.
  Following the questionaire, the working party proposed a registration procedure which would be simple to administer and, equally imortant, would reduce the risk of discrimination. The working party commented, and I am sure that this will be accepted by members of the Select Committee:
  "No procedure can be totally discrimination-proof and a lot can depend on the attitude of staff and the way in which the questions are asked. The recommended procedures would, however, include a number of important features which we believe will greatly reduce the possibility of discrimination."
  We have adopted the procedure recommended by the working party. It should go on record that there is little or no discrimination in the NHS. However, the new system, with its universal challenge, reduces the risk of discrimination.
  Basically, a two-stage process is proposed. At stage 1, the admission clerk will ask a number of general questions of everyone. The questions will establish whether the patient has lived in this country for 12 months. That is the basic test. These questions will be added to the admission questions, which are asked in any event.
  Only if he answers "No" to those questions will the patient go to stage 2, where he will be questioned by more senior staff on his eligibility for free treatment. The working party found that in its trial only 1 per cent. of patients went to this stage, and of course some of those would be covered by reciprocal arrangements. I have already told the Select Committee that is considering the issue that detailed guidance will be sent to hospitals on the handling of these cases in stage 2 and, further, that guidance will be circulated in draft to the ethnic community organisations. There will be an opportunity for the House to debate the regulation in a few months' time when it is laid before the House, and when the manual of guidance will also be available. We are aiming to raise additional resources for the Health Service.
  Mr. Alan Clark: Although no one will accept the extraordinary slur on overseas visitors that has been put about by the Opposition, which is that they would universally claim eligibility, it is valid to ask what precautions have been taken to guard against dishonest answers to the questionnaire.
  Mr. Fowler: The first aim will be to ensure that the country of origin, for example the United States or Australia, is aware of the new situation and to ensure that those who come here on holiday or on business are aware of it and take out insurance in exactly the same way as United Kingdom residents would do when visiting the United States or Australia.
  There must be a balance in stage 1. The advantage is that stage 1 avoids discrimination. If, after answering stage 1, it becomes evident to one of the hospital staff—we are not advocating that the staff should seek out this information—that the person concerned is not a resident
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  of the United Kingdom, but comes, for example, from the United States and is returning there, he will be referred to the stage 2 procedure.
  Mr. Alan Clark: Is the stage 2 procedure excluded automatically, as has been alleged by Labour Members?
  Mr. Fowler: It is not. However, if the suspicions of the hospital staff were raised, the issue would be referred to the stage 2 procedure and those questions would be asked.
  Mr. Frank Hooley rose—
  Mr. Alexander W. Lyon rose—
  Mr. Fowler: I give way to the hon. Member for York (Mr. Lyon).
  Mr. Alexander W. Lyon: The right hon. Gentleman told the Select Committee that if the answer to any of the questions was "Yes" there would be no further questions at stage 1, and that only if a suspicion arose later, perhaps in the course of treatment, would the matter be taken further. He said that if somebody said "Yes", there would be no automatic reference to stage 2.
  Mr. Fowler: That is right. The admission clerks will not have the power to cross-question. If someone lied at stage 1 and that became clear to the hospital staff at a later stage, it would be unreasonable for the staff to turn their back on that. That would be farcical, and so the issue would be referred and further inquiries would be made. Surely that is nothing but a commonsense arrangement. If the process leads in that direction, the patient will be questioned by more senior staff on his eligibility for free treatment.
  We are aiming to raise money for the Health Service. Surely that deserves the support of the entire House. The money will go to the service. The original estimate of revenue of £5 million was made by my predecessor and was based on 1979–80 prices. The working party did not quarrel with that estimate. We have uprated the estimate to £7 million in taking account of the increase in inflation. We have deducted £1 million for the concessions that we have made, notably to overseas students.
  The figures can be presented in another way. The cost of acute hospital treatment—this may come as a surprise to those Labour Members who laugh—is £3 billion a year. If the costs of treating visitors were only 0·5 per cent., that would raise about £15 million. A figure of 0·5 per cent. would raise £7½million. That range would be entirely consistent with all the figures and examples that the hon. Member for, Stechford has given. I have never sought to say that £6 million is anything but a modest estimate.
  I suspect that the difference between us is not so much over the estimate as on the principle. The Government believe that it is reasonable to seek and encourage ways to supplement public spending on the National Health Service, which is now over £12 billion a year. That is why we welcome the £52 million a year that is going to the NHS from private practice, and that is why it is condemned by the Opposition. That is why we welcome the £20 million that is coming this year from the sale of surplus land. We want to see that full potential realised. This is money that goes to the Health Service and goes direct to patient care.
  The motion complains that preferential treatment is to be given to EEC visitors needing hospital treatment. The hon. Member for Stechford did not make a great deal of that. That was probably because the hon. Member for

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  Crewe (Mrs. Dunwoody), who leads for the Opposition on these matters, drafted the motion and is not present for the debate.
  Mr. Terry Davis: As the right hon. Gentleman has referred to my hon. Friend the Member for Crewe (Mrs. Dunwoody), he might mention that she is not here because she is ill.
  Mr. Fowler: I understand that and make no criticism. It is not controversial to say that the hon. Lady feels strongly about the EEC. I assume that that is one reason why preferential treatment for EEC visitors is mentioned in the motion, but did not play a large part in the hon. Gentleman's speech.
  The Opposition might have added the names of the countries with which we have reciprocal agreements under which we treat one another's citizens on the same basis. That arrangement is like the arrangement with the EEC. It is fair to the taxpayers of all the countries concerned. There is the additional point about the European Community arrangement. We inherited from the previous Government an arrangement under which EC countries allowed short-term visitors the same treatment as for their insured population, but only to employed people covered under our social security system. It is this Government who have succeeded in negotiating the inclusion of the self-employed in that scheme—something that will help to balance the arrangements. The previous Government failed to achieve that.
  Another major point that should be understood is that we have made a number of important concessions from our initial proposals. Initially, the period of residence was to be three years. We have reduced it to one year. That is a major concession for overseas students. The position is even more favourable for students with regard to general practice. Provided that they are staying for more than 12 months, treatment is free from the beginning. Visiting dependants—spouses and children of people settled in this country—will be exempted.
  We have made every effort to meet the legitimate concern that has been expressed. We have devised a scheme which is administratively simple, which minimises the chance of discrimination and which raises money for the National Health Service. Above all, the public will regard the scheme as fair and will be unable to understand the view of the Opposition that the British taxpayer should shoulder the financial burden of paying for the medical expenses of overseas visitors. It is a sensible and commonsense measure. I hope that the House will reject the Opposition's foolish motion.
  8.3 pm
  Mr. Laurie Pavitt: Anyone who has served on hospital or regional hospital authorities will recognise that the Secretary of State is learning rapidly, but, unfortunately, without a great deal of understanding.
  I wish to refer to the £3, 000 million for acute surgery. The right hon. Gentleman knows as well as I do that for 30 years overseas visitors who have needed medical treatment have paid fully. The abuse is only a small one. From the figures given by the London teaching hospitals, the right hon. Gentleman will know that the proportion of overseas patients who fail to pay their bills is minute compared with the number of British private patients who fail to pay.
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  I wish to confine my remarks to about 10 minutes, so I cannot demolish as many of the right hon. Gentleman's arguments as I would have liked.
  After his statement on 12 March 1981, the right hon. Gentleman's predecessor had second thoughts. I am surprised that, after the working party, the Government have gone ahead with the scheme. It seems that they are obsessed with emotive dogma, out of touch with practicality and ignorant of NHS realities.
  An excellent leader in The Guardian on 23 February was headed "Fowler's Potty Plan". Since then, like most hon. Members, I have had a chance to study the Red Book of the working party report. The Guardian leader could have been three times as long with the factual material which emerges from the report and which shows how ridiculous the proposal is in a comprehensive National Health Service costing £12 billion a year.
  I rarely bore the House with figures, but I must do so now to show how the Secretary of State's calculations are way out of touch with those of hospital administrators. The Department has ordained a 10 per cent. cut in administrative costs this year from 1 April in the hope that the money can be used for medical care. However, the action that the right hon. Gentleman announced will destroy the endeavour. It is diametrically opposed to the aim.
  Let me quote figures from the central Middlesex hospital, which is my local hospital. Hon. Members can translate the figures to hospitals in their constituencies. The statistics will be comparable. In 1981 in-patient admissions were 17, 492, and new out-patient admissions were 24, 918. I am dealing only with the first stage of questioning in these proposals. I am informed that if the admissions officer spends only two minutes per patient, on those figures the total time taken is 177 working days, or an additional 1, 414 hours.
  Nationally, administrative excess costs would be astronomical. In 1980, 6, 808, 000 in-patients were admitted and interviewed. There were 20, 145, 000 new out-patients. I emphasise that that is new-out-patients and not out-patient attendances, for which the figure was 56 million. In a parliamentary answer I was told that it is estimated that, for the year after October 1982, the figures will be 5¾ million new in-patients and 8 million new outpatients. What miracles have happened so that there will in the coming year be less call on the NHS to that extent?
  Let me again do the arithmetic. At two minutes a time, on stage 1, we get 900, 000 hours. With a 40-hour week, that would mean 450 more administrators. I will not come to stage 2, when there is a much greater need to spend time but for which no estimate is possible. However, the Government declare that they want fewer administrators, with more money spent on the practicalities of medical care and treatment.
  I weary of reminding the House that one in three of the patients at the central Middlesex hospital has a black face. The Committee for Racial Equality condemns these changes. It states:
  "This is not the time to impose further stress on the ethnic minorities in this country."
  The working party report to which the right hon. Gentleman referred states:
  "No procedure can be totally discrimination-proof and a lot can depend on the attitude of staff and the way in which the questions are asked. The recommended procedure would, however, include a number of important features which we believe will greatly reduce the possibility of discrimination."

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  Anyone who knows Brent, Brixton or Toxteth is aware that the Government are perpetrating the greatest nonsense ever. The changes may rationally or intellectually be seen as improvements, but my black people will feel certain that they are racial discrimination, even though they are carried out in the gentlest possible way. Unemployment in my area has doubled, and 80 per cent. of the unemployed school leavers from some schools are black. This is not the time to make changes that they may seem to be discriminating racially.
  Mr. Fowler: The hon. Gentleman is making a serious charge. He has read the report and will have seen there the point about the prospect of discrimination in the present procedure. What is his solution for that?
  Mr. Pavitt: Under the present procedure, the situation in, for example, Sutton Coldfield is different from that in central Middlesex. Most hospital workers are understanding and compassionate. They are not governed by DHSS circulars. The way in which these matters are dealt with now does not alter the fact that it will be compulsory to ask that question at stage 1. The result will be more of what happened at St. Stephen's, Fulham a year ago. Echoes will go right through the black community that this is prejudicial against ethnic minorities. That will be the accepted belief. The extra responsibility that will fall on the new district health authority, which will be formed in only a fortnight's time, is a nonsense in health administration.
  For Brent, the real cuts in NHS expenditure on RAWP figures this year will entail a shortage of £280, 000 for development and a loss of 1·7 per cent. or £¾ million for growth. The right hon. Gentleman knows that that is because the north-west Thames area has a growth rate of 0·03 per cent., for historical reasons. The Government are passing the buck with regard to the nurses' pay award. Almost before the district health authorities have their feet under the table, they may have to find 2½ per cent. of the award which is to be transferred from national to district level.
  The Government pursue what seems to be a rational approach, but they have no understanding of people, health or the realities of the situation. This is an example of the type of dogma that the Government pursue. I shall pray for the sanity of the newly-appointed district health authority finance officers who will have to try to cope with the Government's mental deficiency.
  8.11 pm
  Mr. John Page: I am sorry that it is impossible for me to agree with the hon. Member for Brent, South (Mr. Pavitt) whose sincerity in activities relating to the Health Service is known and apprecated by all. I hope to deal later with some of the illogicalities in his speech.
  I congratulate the Government on introducing the new plan. I have been advocating its like for the past 25 years. Indeed, I discussed it at my original selection committee at Eton and Slough. That explains my—unnatural, I hope—ego-tripping in tabling an amendment of congratulation to the early-day motion in the name of the hon. Member for Crewe (Mrs. Dunwoody).
  I wish that my hon. Friend the Member for Sowerby (Mr. Thompson) would finish his conversation with my
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  right hon. Friend the Secretary of State. I am about to be frightfully nice to my right hon. Friend, and I do not want him to miss the bouquets. My right hon. Friend's speech was devastating in its logic, transparent in its common sense and remarkable in its sincerity. Perhaps he will give me a job. Those who have had the opportunity of listening to my right hon. Friend's speech need no further explanation of the Government's case. Therefore, I shall deal later with something completely new.
  The Opposition are wholly out of step with public opinion on this matter. From time to time, we all say that our views are supported by public opinion but I have heard no such claim in the two Opposition speeches so far. I believe that the public entirely support the Government's view on this matter. [Interruption.] My constituents are great travellers and very cosmopolitan in attitude. They love to welcome overseas visitors to Harrow—one of the most beautiful suburbs of London—but they resent seeing them getting something for nothing, whether it be in health services or London transport fares.
  The hon. Member for Birmingham, Stechford (Mr. Davis), in his rather ranting speech, did not deny that there are abuses. If there are abuses, surely it is right for the Government to do something about them. It was only at the end of the hon. Gentleman's speech that we discovered the real reason for his strong opposition. He resented the idea that anything whatever in the National Health Service should be paid for in any way. The sacred cow must not be touched—even to dress its wounds.
  The most absurd criticism was that the new scheme might make race relations more difficult. I agree with my right hon. Friend the Secretary of State that the new scheme will improve race relations by changing the present procedures, which are worrying to many people. The idea that the Health Service might put off people who come a long distance, especially those with black faces, is ridiculous. If they have paid £100, £200 or even more for an airline ticket, an extra £5 for insurance is negligible, and it is a wise and sensible step to take in any case.
  Under the new stage 1, I hope people will be required to know their national insurance number. I wonder how many hon. Members present today know theirs. I hope that my right hon. Friend will feel that now is the time to tighten up this aspect of Health Service administration.
  I make one personal comment which I hope will be treated as privileged. Twenty years after my wife left Cambridge and we had a fairly large family, she received a letter from a Cambridge doctor saying that he was retiring and that her card would be transferred to another doctor. I suppose that that old boy had been drawing his basic fee on my wife's name for 20 years. I do not resent that, but I wonder how many hundreds, thousands or even hundreds of thousands of duplications of health cards there are in the country. [HON. MEMBERS: "Was she black?"] My wife is not black. She is not even a Red Indian—thank goodness.
  I turn to the important, positive and absolutely brand new part of my speech. I draw attention to recommendation 792 of the Council of Europe, passed on 18 September 1976, recommending
  "the institution of an international medical credit card".
  It may surprise some Labour Members to know that I was chairman of the Social and Health Committee at the time it was published, but it may not surprise them to know that our activities were often more social than they were healthy. That recommendation was introduced by Mr.

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  Cordle, our colleague and former Member for Bournemouth, East. [Interruption.] We should give credit where credit is due.
  I ask my right hon. Friend the Secretary of State to give that recommendation his full consideration, because it is a gem that will make him even more famous than he is now if he adopts it and gets it through during his tenure of office. The idea is that throughout the 21 countries of the Council of Europe those who go abroad should have a medical credit card similar to Diners Club or American Express, or whatever the hon. Member for Isle of Ely (Mr. Freud) thinks is the most trendy credit card to brandish about these days. With this card in one's pocket, whenever one went through the Council of Europe countries—and it could be extended to other countries in Eastern Europe with which there are reciprocal arrangements—any payment for medical or hospital treatment could be dealt with on a credit card basis. I am sure that hon. Members have either personal or constituency experience of the difficulty of making a claim after returning from a holiday, when one has been ill, and having to go through the tedious formalities. If this went through, in future, in, I hope, every country of the world ultimately, an internatinal medical credit card could be used. Many of the expensive and useless procedures could be got rid of. Reciprocity is not enough. We need a simpler way of dealing with these charges.
  I ask my right hon. Friend the Secretary of State—I shall send him a copy of the recommendation—to get some of his officials to examine it and to have discussions with insurance companies to see whether such a credit card could be instituted. If so, it would be something of which we, if we initiated it, could be justly proud.
  8.23 pm
  Mr. Clement Freud: I shall not pursue the points made by the hon. Member for Harrow, West (Mr. Page) other than to mention that the idea of a medical credit card—when credit card companies demand 5 per cent. of the action, which would be £300, 000 plus administrative costs—would just about wreck the savings occasioned by the measure.
  The hon. Member for Harrow, West began by congratulating the Secretary of State. I begin by commending the Opposition on the motion, which has great relevance. This evening we are being asked to approve or disapprove the abandoning of what has always been the pride of our National Health Service: the giving of free medical aid to those in need of it. We are asked to do this to save what, by all accounts, is a piddling sum of money—£6 million—and if the Secretary of State estimates that it is £6 million the sum is likely to be rather less, because Government estimates in matters like this are always on the high side.
  I contend that the savings that will be achieved by asking each patient who comes to a hospital a question which must take 20 seconds per patient will be erased by the administrative costs. We know what will happen. Over the months hospital officials will become bored with asking patient after patient the same question, to which they will receive the same reply—"Yes." Eventually they will confine their questioning to people of whom they are suspicious, such as black people or anyone with a foreign accent.
  If the Minister says that at a cost of £9, 000 per constituency one can conduct the questioning and
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  requestioning and then follow up suspicions that the first answer might not be the right answer, I should like to know how. How can all that extra work be done at so little extra cost? I do not believe that it can. For this doubtful benefit, we would lose our reputation as a generous and caring nation that worries about the health of its own and other people and provides a cure when needed.
  The Secretary of State should aim at reciprocity with other nations. That would be more sensible than what is being done. It would certainly be infinitely more sensible than introducing a credit card system. It might be sensible, certainly in the case of Nigeria, if people who come here are compelled to take out insurance before they leave their native shores.
  I am concerned about three fundamental aspects. First, I am concerned about overseas students. They are deeply worried. An overseas student, particularly if he is here on a short, sharp course lasting only a year, has enough on his plate. If he is made to pay for medical services. he might not go to a doctor when he should. The danger to him and the country would be substantial.
  Racial discrimination has been mentioned. It will continue to be mentioned. That problem will be accentuated as the scheme progresses. The change in the system will deter early diagnosis. If there is no free Health Service, people will not go to a doctor when they should and short-term savings to the Health Service would become counter-effective because of epidemics.
  My right hon. and hon. Friends take pride in our National Health Service, as I hope do many Conservative Members. We want no diminution of it. If there were genuine savings we might approve, but I do not believe that an arguable £6 million in a budget of £3, 000 million is a genuine saving. This minimal proposed saving has no overall relevance and will harm our reputation. My right hon. and hon. Friends and I will vote with the Opposition.
  8.35 pm
  Mr. Robert Atkins: The abuse of the National Health Service by foreign tourists came to my attention in July 1979 when my little girl was ill and was taken to hospital, where she stayed for a couple of weeks. I discovered that the poor child next to her in hospital was of Iranian origin at the time when her country, sadly, was facing difficulties. I was moved to inquire about her position in relation to fees and other expenses.
  I did not think a great deal of it, but I tabled a parliamentary question. I set out not to provoke publicity, but to seek information. Some publicity followed the tabling of the question and the answer. My mail bag expanded. I do not have to tell hon. Members that when one's mail expands to five or six letters on a subject one takes serious notice.
  As a result of that I asked another parliamentary question and received a further answer. I also did a brief radio interview on the "Today" programme. Within about 10 days I had received an enormous amount of correspondence—nearly 300 letters. The vast majority of them were from doctors, nurses and administrators within the Health Service. They are the people—Labour Members may deride this, either indirectly or directly, in the context of this discussion—who face the realities of the problem day by day and know what is going on.
  I want to answer some of the unpleasant and unmerited attacks and smears by Opposition spokesmen, whatever party they represent, because I believe that the sensible

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  decision taken by my right hon. Friend to do something about this anomaly stands happily on its own and does not merit the attacks that have been made.
  It is instructive to consider the position of the Labour Government over this issue. One of my doctor correspondents sent me a copy of his correspondence in pursuit of this matter in the summer of 1978. He received a variety of replies over a period of time. First, he received a letter from the right hon. Member for Lewisham, East (Mr. Moyle), the Minister responsible for this matter in September 1978, who said:
  "I do not consider it likely that there is improper use of the NHS by foreign visitors, nor is it as large a problem as my correspondent believes or that there is abuse on a massive scale."
  That was the view of the then Minister, despite the evidence that was being accumulated.
  In a further letter in October 1978 he said that he was well aware of the problem to which my correspondent had drawn his attention only a month previously. He went on to say that under section 121 of the National Health Service Act 1977, which substantially embodied the provisions of section 17 of the National Health Service (Amendment) Act 1949, passed by a Labour Government, Ministers were empowered to make regulations under which charges could be levied on persons not ordinarily resident in Great Britain for certain services in particular circumstances as might be provided. However, no such regulations were made. That is instructive.
  In May 1979, just before the general election, in a further letter from the same Department—although not from the Minister—the point was made that if it did happen that a patient from a country without reciprocal health arrangements ended up in an NHS hospital that was not authorised to treat private resident patients under section 65 of the National Health Service Act 1977, neither the hospital nor the consultant who treated that patient would have any authority to charge the patient.
  In other words, there was no real attempt by the Labour Government to face their responsibilities—responsibilities which I readily admit to the hon. Member for Brent, South (Mr. Pavia) I did not know a great deal about until I tabled the parliamentary question as a matter of interest, and as a result of the response from the people who actually know the subject at first hand. I recognise that the hon. Gentleman is well informed on matters relating to the National Health Service, but I suggest that there are people working within the Health Service at all levels who have a different view from his, and I would seek to substantiate that view.
  It was unfortunate that the hon. Member for Birmingham, Stechford (Mr. Davis) said that I was being McCarthyite in the way that I raised these matters. I shall not take issue with him over that, because I do not think he really believes it. However, the Opposition say that, if nothing else, this system enhances racialism. I resent that slur. Many of my right hon. and hon. Friends will resent that suggestion. I served for nearly 10 years on the London borough of Haringey, which has similar problems to those in the area represented by the hon. Member for Brent, South, and I also served on the executive of the community relations council. I did an enormous amount of work with my hon. Friend the Member for Hornsey (Mr. Rossi) in that area, where there is a substantial immigrant population.
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  When I became the candidate for Preston, I sought to represent a constituency with a large Asian population. As most hon. Members would do in those circumstances, I have done an enormous amount of work to represent my constituents' interests. So racist am I that I was one of those Conservative Members—I make no play of this, but merely record the fact—who did not support the Government on the immigration rules. I am not one of those who can be accused on my record, actions and words of being a racist in intent. I resent the slur being put about that anyone who supports such changes is a racist.
  The provision merely rectifies an anomaly that leaves us out of line with almost every country in the free world. This action does not in any way represent an attack on the Good Samaritan policy that all hon. Members broadly support. I refer to the policy of dealing with emergencies first and subsequently asking for any financial contribution that can be made. That occurs in almost every country in the free world. We could still carry out such a policy.
  Judging by some of my correspondents' experiences of the system of retrieval under the Labour Government's rules, the form E111 procedure was, according to all accounts, something of a comic performance. In addition, it was often difficult to get money out of embassies, which denied any knowledge of citizens who were supposed to be in their care. However, we can retrieve some of the finance if we accept the Government's rules and proposals.
  It has been suggested by the Labour and Liberal Parties that there is no abuse or that it is too small to worry about. My constituents in the North-West—and I am sure that this is true of my hon. Friends' constituents—do not consider £6 million as too small a sum to worry about. Britain has been in trouble because not enough people worry about sums such as £6 million. It does not matter whether the sum is £6 million, £60 million or £100, 000. If the situation is wrong, we should do something about it.
  Mr. Edward Lyons: Is the hon. Gentleman in favour of charging foreigners for entry to our museums and art galleries? What about the subsidy of several million pounds a year to Covent Garden? Americans take great advantage of that and pay half the value of the full ticket. Does the hon. Gentleman want to try to save some of that money, too?
  Mr. Atkins: I do not wish to be drawn on a separate argument, but my brief reply is that I am in favour of charges for museums and galleries. Money raised from outside users will go much of the way towards making our museums and art galleries more efficient and effective. However, given the time constraint I do not wish to take up that separate argument.
  The Opposition misjudge the situation if they believe that there is no public concern, particularly among the medical profession, about the abuse that has occurred in recent years. I shall refer to some of the correspondence that I have received, but which I did not seek to provoke. Heaven alone knows that we have enough constituency problems every day without having to cope with such enormous amounts of correspondence. Of nearly 300 letters, the vast majority came from doctors, nurses and administrators. I shall make that point over and over again, because it bears repeating.
  The first letter was sent by a lady in South London, who is involved in administering an ante-natal clinic in a hospital. She wrote:

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  "One person came from Ghana. She was given an indefinite stay but went home and then came back to this country in March 1981. Her baby is due now and she says she has no money. She says she does not intend to stay here for good and will be going home in about two years. She also said that seeing as she used to live here she is entitled to maternity grant and benefits".
  The same lady mentioned another case and wrote:
  "A lady from Nigeria came here seven months pregnant. At the same time she is only staying a year on her passport. Surely she got pregnant in her own country and none of them are working. Why shouldn't she pay for her confinement".
  My hon. Friends may think that that is a fair point.
  Another letter comes from a different part of the world, Yorkshire. The problem is not confined to London, where the tourists are. The correspondent wrote:
  "I met a young Cypriot in a cafe, who informed me that her two brothers are staying in Harrogate at the moment and that she is going to Harrogate in May in order to have her second baby. How can this be, except as I suspect, by false pretences?"
  Then there is the case in another part of London of a lady who came from the Ivory Coast. She stayed until June 1980 and went home for three months. She then came back to this country in October 1980. The Home Office allowed her two months' stay. She came to the ante-natal clinic in November this year, having got herself pregnant. So it goes on.
  I have a letter from a senior nurse in another part of London, who said that
  "not only do women come here from abroad to have their babies either privately or in the NHS obstetric units, but they all receive at least one visit from the Health Visitor 10 days after the birth—in my experience they rarely leave Britain before the baby is one month old".
  Now I have a classic example. It is from a higher clerical officer in an ante-natal clinic. She writes:
  "A couple from Brazil came over on passports stamped for 6 months. He was a private paying student, and she was five months pregnant. When told that they were not entitled to national health and that they would have to pay, the husband argued most strongly, saying that when you come to England you do not have to pay. However, he paid for a few visits and then produced a letter from his embassy saying that they were going to employ him, but would not say for how long. When I phoned the Department of Health and Social Security they said that there was nothing we could do and that they could have the baby here free of charge. They agreed with me that something fishy was going on but there was nothing that could be done. When I told the husband that they would not have to pay after all, he laughed and said we were an easy touch. He then asked for a refund on the payments he had already made."
  I have given only a tiny slice of the correspondence that I have received.
  Mr. Alexander W. Lyon: I hesitate to intervene on every case, but in most of the cases that the hon. Gentleman has mentioned the person was entitled to be here and to receive free treatment under the immigration rules. In the last case, if the Brazilian embassy's letter was correct and the man had been employed here, or had entered into employment, the DHSS advice was correct. The man is entitled to free medical treatment, and will be entitled to it under the rules that are being put forward.
  Mr. Atkins: I am sure that the hon. Gentleman does not fail to recognise that the people concerned realised that they were out to "con" the British taxpayer. They themselves recognised that fact, as my correspondence suggests. If they recognised that, surely that is clear evidence. [Interruption.] It is no good Opposition Members shouting and shrieking. They know full well that they are wrong and that they made a mistake which they are trying to get out of.
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  I received a letter from a senior doctor in Leicestershire, who said that he was closely connected with a situation where a Portuguese resident was brought to this country with serious leg trouble, which he believed was gangrene. The man was admitted to a National Health hospital and had a leg amputated. A temporary artificial leg was fitted, and the man duly returned home. Some months later, again he visited the area on holiday, and had a final artificial leg fitted, again under the National Health Service, entirely free. These letters are from doctors, administrators and nurses who know what is going on. They recognise that this is an abuse. On this issue the British public are much more sound than the Opposition, whether Labour or Liberal.
  Here is a letter from another doctor in Sheffield:
  "I have … personal experience of a patient presenting himself at Heathrow from Hong Kong without having had a chest X-ray and was found on X-ray at Heathrow to have open tuberculosis. He was immediately admitted to a NHS hospital, and subsequently treated at great expense for the next two years".
  Mr. Edward LyonsThe hon. Gentleman has just quoted a case from Hong Kong. Before that, he quoted a case from Portugal. Is he aware that there are reciprocal arrangements with both those countries, and that in future, after these regulations, those people will still be entitled to have that treatment? One example that the hon. Gentleman gave concerned a person who was permanently settled here. Under the new regulations, all those people will remain entitled to the same treatment as before. Will he deal with people who will not be entitled to treatment?
  Mr. Fowler: There is no reciprocal arrangement.
  Mr. Atkins: As my right hon. Friend has rightly said, almost inaudibly, there is no reciprocal arrangement with Portugal or Hong Kong. The hon. Gentleman is wrong.
  Mr. Edward Lyons rose—
  Mr. Atkins: I cannot go on giving way. Other hon. Members want to speak and they may get a chance if hon. Members stop intervening. [Interruption.] I am sorry to confuse right hon. and hon. Members opposite with the facts. They may not like them, but people throughout the country are recognising what is happening. [Interruption.] I resent interventions which suggest that anything to do with Portugal or Hong Kong involves racism. The hon. Member for Walsall, North (Mr. Winnick) is the sort of person who stirs up racism. I take it ill from him—
  Mr. John Page: He has just come in.
  Mr. Atkins: He has just come in, as my hon. Friend says.
  I may bore hon. Members opposite by quoting from letters from people who care. We are not talking about the average anonymous letter or the concern of people at different levels. I am quoting letters from doctors, nurses and administrators, the people who are running the National Health Service. Labour Members, with their bleeding hearts on their sleeves, pretend that they care more about society than anyone else. The letters that I am quoting are from people who face the problem at first hand and know what is going on. Opposition Members ignore at their peril—and peril it may be—what these people are saying.
  One could delay the House for a long time on this, but I do not intend to do that. I conclude, therefore, by referring to two or three other letters that I have received. One, signed by eight nurses in a hospital in London, says:

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  "Most people that I work with, in five different clinics, feel very strongly about this issue, particularly since if we or our children apply for such a service abroad we invariably must pay for it."
  Point proven.
  A letter from another doctor says:
  "We must surely be bonkers. When are we going to wake up to the situation in this country? When our people go abroad and unfortunately have to go to hospital, especially in America, we have to pay. So why are we being so soft on people coming here?"
  Finally, in this context I quote from a doctor who has spoken to several people in the family practitioner committee. He said that in the Bristol area the medical profession would back me in my campaign—I am sure they will back my right hon. Friend—all the way. Indeed, the British Medical Association issued a statement when the matter was raised originally, in which it said that it backed the campaign. It said:
  "Our policy is that payment should be enforced for medical services provided in this country for visiting nationals of those countries with which we do not have reciprocal arrangements.
  The British Medical Association and its official representative body believed that there was abuse about which something had to be done.
  The examples that I have given are only a tiny minority of the letters that I have had from people working in the Health Service. If they do not serve to show that there is substantial public and medical concern about the abuse to support what my right hon. Friend is doing, I do not know what more is required. The Labour Party has misjudged the mood of the nation, as it so often does. This is a necessary rectification of an anomaly which annoys many people in the medical profession and in the country as a whole. I therefore warmly welcome what my right hon. Friend is doing.
  8.49 pm
  Mr. Alfred Dubs: The hon. Member for Preston, North (Mr. Atkins) referred to several examples of abuse. If he will refer to schedule 3 of the circular sent out by the DHSS last year, he will see that on the list of countries for whose citizens treatment will be provided is Portugal—along with Austria, Bulgaria, Czechoslovakia and so on. In that respect at least the hon. Member was misinformed, because we have an agreement with that country.
  Mr. William Hamilton: And Hong Kong.
  Mr. John Page: Would the man from Portugal be able to have his amputation and false leg free?
  Mr. Alexander W. Lyon: Yes.
  Mr. Page: How does the hon. Gentleman know? Is he certain?
  Mr. Dubs: I had said hardly more than one sentence before giving way.
  The statement at the beginning of schedule 3 is:
  "Treatment of immediate necessity provided in respect of nationals of, and citizens of the United Kingdom and colonies resident in the following countries and territories".
  Over many years we have heard many stories of what has happened to United Kingdom visitors to countries such as the United States. There have been depressing stories of treatment being refused until the individual concerned could produce enough money to pay for it. Over many
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  years we have prided ourselves on having a better system—treating people on the basis of their need. We have said that we shall not engage in hassles over whether they have enough money to be entitled to such treatment.
  If the Secretary of State's proposals are implemented—I hope that they will not be—a different situation will prevail in the National Health Service. For example, a student from another country—say, Bangladesh—might be knocked down by a motor car and taken to hospital. As an emergency case, he can have treatment free of charge, but if he needs further treatment in the hospital—perhaps for a broken leg needing inpatient care—he will have to pay for it. If he cannot pay, is he to be discharged while still requiring treatment, or will some other arrangement be made?
  The Government's reasons for their policy are, according to the Secretary of State, the saving of £6 million, the provision of what the right hon. Gentleman calls a fair system, and the lessening of alleged abuse. I believe that those of us on the Labour Benches broadly agree that the scheme is wrong in principle. It is a departure from the basis of a free NHS; it introduces a major element of discrimination against people who are not white; and in any case it will not save £6 million.
  I agree that the stage 1 questions to be asked are innocuous enough. If the intention is carried out, they will be asked of everybody entering hospital for treatment. The sting is in stage 2. We do not know what the stage 2 questions will be. Naturally, there is apprehension about how stage 2 will work. The Secretary of State has cleverly introduced the scheme, but has left us all wondering what stage 2 will be all about. When we asked the right hon. Gentleman in the Select Committee on Home Affairs, he could not say, but he told us that he would present his proposals later.
  In 1978 the Department of Health and Social Security looked into the matter. After all, the idea of charging is not new. It concluded:
  "it is likely that the administrative cost of making the additional inquiries necessary would be as great and probably greater than the revenue which would be received from charging visitors for the cost of emergency treatment."
  That was the view of the Department advising the Secretary of State four years ago. When the point was put to the right hon. Gentleman in the Select Committee, he replied
  "We have made a better assessment now and our figures are more accurate."
  What is the basis of that "more accurate" assessment that has been made more recently? The first part of the assessment is the survey carried out on behalf of the working party, to which reference has already been made. The survey found that, of 8, 152 people going for hospital treatment, 81 would have been suitable for possible further questioning if the stage 2 questioning had been available. Despite the complexity of the analysis, despite the figures and despite the detail, there is no table in the report showing how many of the 8, 152 would be liable to pay under the new arrangements. We have various tables that tend to confuse rather than to clarify. It is clear that at least half of the total of 81 would not be liable to pay on the criteria that they were working abroad as United Kingdom residents, and were returning to or living in the United Kingdom for a year.

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  Another set of criteria relates to the urgency of the need for treatment. There are about 44 people in that category. However, we cannot make a cross-reference between the two groups.
  A third group consists of people from countries where they normally reside. Although it is clear that 15 individuals come from countries with which we have reciprocal agreements, it may well be that many of the others come under different categories.
  The Minister for Health (Mr. Kenneth Clarke): The hon. Gentleman has obviously gone into the details. Therefore, he will know from the tables that 12 Americans are identified. I am trying to understand his position. Is he saying that there is something wrong in American tourists, admitted to hospital, paying for their treatment out of insurance policies that they would presumably expect to take out and that it is wrong not to expect the British taxpayer to pay for those Americans' appendicitis or other hospital treatments? Why is he so root and branch against what seems to be a perfectly sensible proposition?
  Mr. Dubs: I shall deal with that point in a moment. I was seeking to test the proposition that the Secretary of State put forward: that a careful assessment showed a saving of £6 million, from the introduction of the scheme. Despite the detailed tables in the report, it is still impossible to deduce how may individuals will have to pay under the new arrangements. There cannot be many, or the Secretary of State would have been the first to present such information.
  As the Minister said, the table includes 12 people from the United States. Even if every one of those had to pay, that is still only 12 out of 81 from an overall total of 8, 152. The least we could have expected from an investigation based on interviewing over 8, 000 people would have been an indication of the numbers liable to pay. That is the one figure on which the Secretary of State could have based his assesment of £6 million, but that figure does not appear.
  Therefore, the Secretary of State, in a document prepared by his Department, presented to the Select Committee an alternative based on the ratio of visitors from countries with which we do not normally have reciprocal agreements as the total number of hospital patients in Britain. The document states:
  "Since records do not show present use of hospital services by visitors, one can only assume usage similar to that of the home population; the estimate of £6 million annually has been derived from that."
  That is a rough and ready estimate. There is no supporting evidence to show the intervening stages and whether any assumptions were made about the nature of the treatment, which would exclude certain people under psychiatric treatment and so on. It is a hit and miss basis for arriving at a figure of £6 million.
  The Secretary of State told the Select Committee that, of the £6 million, £1 million would be obtained by charging overseas students. There is not a shred of evidence in the report of the working party or in anything else that has come from the Secretary of State, the Minister or the DHSS to support claim that one-sixth of the total that the Health Service will allegedly obtain will come from students. More supporting evidence would be necessary for that.
  Without any knowledge of how stage 2 will operate, we clearly cannot say whether it will be discriminatory. For
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  the life of me, I cannot understand how we can have stage 2 questioning without there being an element of discrimination in the way that it will be applied. The overwhelming view of National Health Service bodies and others, which gave evidence to the Select Committee, is that there is a danger that the new tests will be seen as discriminatory.
  The Brent health district said:
  "Our experience suggests that the mere process of assessing eligibility is looked upon as discriminatory notwithstanding the fact that all patients are expected to submit to the test."
  That is a reference to stage 1, let alone what happens under stage 2.
  The Kensington, Chelsea and Westminster area health authority stated:
  "However carefully the rules are applied, distress and offence will inevitably be caused to some patients who are in fact entitled to treatment."
  The TUC made a similar comment. The Association of Community Health Councils expressed concern, as did the West Midlands regional health authority. So did the Commission for Racial Equality. One could go on referring to various organisations and bodies, many of them directly concerned with the day-to-day administration of the National Health Service, which believe that the effect of the proposals will be discriminatory.
  The next problem is the burden on National Health Service staff in administring what will prove to be a very complex system. It is not merely a matter of saying—however the details of stage 2 are worked out—that certain groups will be exempt and then discovering whether people fall into those groups. There is, for example, the question of refugees. It is by no means clear whether we are talking about people who have been granted refugee status or people who have come to this country and are applying for refugee status. What will happen to people waiting for the Home Office to confirm whether they are refugees?
  Many people, who are subject to the immigration rules, have a complicated immigration status. It is difficult enough for experts in immigration law or for hon. Members, at their surgeries, to resolve the immigration status of some people who come to us for help in certain matters. Yet some of the complexities will be applied to discover whether people are exempt from the charges inherent in the new procedure. The difficulty of applying the system and the need for Health Service staff to understand it fully and to have special training makes me wonder whether the whole thing is worth while.
  Another problem is what will happen to students, liable in the first year to pay, who go into hospital before they have been here a year but are not sent the bill until after the year has elapsed. They will presumably have to pay because they were ill before qualifying. There may be a large number of borderline cases. Will a person who applies for refugee status, becomes ill, and is then given refugee status get his money back retrospectively? Will he have to pay? The scheme will be difficult to apply.
  Another difficulty is the sort of evidence that might be necessary. The Secretary of State has at no time denied that passports might not be helpful in enabling people to establish that they are exempt from the need to pay. It is a very short step from that proposition to the one that people will feel pressurised to produce their passports. The Minister shakes his head. People will feel that it is much

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  easier to come along with their passports. There will be an implicit and insidious pressure for people to come along with their passports.
  The DHSS accepts the passport as evidence of entitlement to supplementary benefit. It maintains that this is part of the procedure that is supported by the Secretary of State. Many hon. Members know of constituents, fully entitled to supplementary benefit, who, having been abroad for a short period, have to go through the business of producing their passports to establish their entitlement to supplementary benefit.
  Mr. Alexander W. Lyon: With respect to my hon. Friend, no one is bound to produce his passport. Home Office Ministers have made clear on several occasions that for no purpose whatever is anyone bound to produce his passport. At the moment people are not bound to produce passports for treatment in the National Health Service, but some are being asked to do so. It is this development that hon. Members now fear will be extended more widely.
  Mr. Dubs: I thank my hon. Friend for that intervention. Nevertheless, letters from Ministers at the Department of Health and Social Security about passports have certainly not repudiated the practice whereby, in some instances, DHSS officers have asked for passports.
  Mr. Kenneth Clarke: The manual of guidance, on which my right hon. Friend said that we shall be consulting, will be issued to officers carrying out the Secretary of State's questioning. It will tell them not to ask for passports. The reason for that, apart from the sensitivity of the subject, is that it does not have much relevance. Nationality will not determine entitlement to treatment. The questions will be aimed at where the man has been living and, if he has been here for less than a year, what he is here for. That is hardly likely to be racially discriminatory. As we see from the answers, we are likely to get places such as Wyoming or Adelaide as the person's residence, and then the insurance company will pay the bill.
  Mr. Dubs: I understand what the Minister has said. If that is an assurance that passports will never in any circumstances be asked for as a test of eligibility for Health Service treatment, we have not so far received such an assurance from the Secretary of State. It is helpful to have that assurance from the Minister.
  Mr. William Hamilton: I have a document from the Association of Scottish Local Health Councils, which states:
  "The DHSS has stated that it sees no reason why people should not be asked to produce passports since there is no requirement to carry identity cards in the United Kingdom."
  That is on the matter that we are now debating.
  Mr. Dubs: That was my understanding of the position. I hope that we can have some further clarification of it. Certainly the Minister has made the position a little more clear than it was up to now. I hope that it represents a change of heart by his Department. If so, he is to be congratulated on having brought it about. It certainly removes one of the main anxieties—although not the only one—about the way in which this procedure will be applied.
  There are obviously political disagreements between the two sides of the House on the principle of the matter.
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  It has not been shown convincingly that we can avoid the new practice being discriminatory or being seen to be discriminatory, especially against people whose skins are not white. It would be far better for the Government to say that their policy is to extend the number of reciprocal agreements, so that we in turn can provide free NHS treatment to visitors from abroad, and that the main thrust of our policy should be to try to achieve similar benefits for British people when they visit other countries. I hope that the Minister and the Secretary of State will think again and decide in the end not to introduce this proposal.
  Several Hon. Members rose—
  Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. Before I call the next speaker, it may be for the convenience of the House if I say that I am informed that the winding-up speeches will begin at 9.35 pm and there are a number of hon. Members who wish to speak.
  9.8 pm
  Sir William van Straubenzee: I shall respond to what was clearly a message and therefore make only a short speech. I appreciate that the debate is about the whole range of charges in the National Health Service for overseas visitors. However, I wish to concentrate my few remarks upon one section.
  I have listened to most of the debate and have missed only one speech, about which I am sorry. It seems to me that there is more agreement than might otherwise have been supposed. There is agreement that there is some abuse, but there is probably disagreement about how much. I see the hon. Member for Birmingham, Stechford (Mr. Davis) nodding agreement. There is disagreement about whether an additional inflow of £6 million is worth it or whether that will happen. I take the view that many small savings or additional inflows is a valuable way of assisting the funding of the National Health Service and other matters about which I cannot talk this evening.
  From my modest experience as a constituency Member, I know that few matters arouse more passionate hostility and anger among perfectly decent people who do not have an ounce of prejudice in their veins than the feeling of misuse of the NHS, as they believe, with the occasional actual example, by those who come from abroad. We are not talking about a free Health Service. Our constituents are paying considerably and so are their employers. We owe it to them to be extremely careful.
  The group on which I wish to concentrate is overseas students. The Minister for Health's assumption of his new office gives enormous pleasure to many of his hon. Friends who admire his qualities. To him I say that I am extremely grateful for the advances that have been made insofar as they affect overseas students. I have always deeply felt that there is nothing less than a moral duty on a rich nation, which we still are in world terms, to share part of its education heritage with students from other parts of the world, preferably countries that are less well off, but also countries that as well or better off. I was therefore troubled about these charges as first proposed because they were an additional burden on the students I have in mind.
  In general terms, for many years I have always doubted whether our previous system of financing overseas students was sufficiently discriminatory. I believe that, arising out of recent changes, we shall be able to make great improvements, particularly as we can afford more.

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  I rejoice in the fact that a student enrolling for a course lasting longer than one year will now have his medical treatment from his doctor, and other than in the first year his treatment in hospital, provided. My hon. and learned Friend must understand that many people welcome that. They are grateful for it and appreciate the care and attention that I personally know Ministers gave to this problem.
  We are not completely home and dry. I would not expect us to be so until we finally see the form of the regulations that will be laid before the House. Let me illustrate the sort of thing that we must try to hammer out. It was referred to briefly by the hon. Member for Battersea, South (Mr. Dubbs). I confess that I am not clear, if I were an overseas student and required, in week 50 of my first year, hospital treatment which extended two weeks into my second year, whether I would have to pay for only two weeks or for the four weeks. I simply use the four-week illustration for ease of example. Obviously the period could be considerably longer.
  My right hon. Friend fairly made the point that we would be expecting overseas visitors—in that, he must have included overseas students—to rely increasingly upon insurance cover for this liability, just as all hon. Members do when they visit countries with which we do not have a reciprocal arrangement. I do not expect my hon. and learned Friend to reply to this detailed point. I ask him to do no more than bear it in mind when he hammers out the details. I am concerned about this because insurers are at work on policies, and in the student world there is an intelligent operation run by Endsleigh Insurance which will be known to several hon. Members.
  I have made careful inquiries and I believe that the company can—I truncate an elaborate matter—produce a group policy to cover this year, for £75 outside London, and £100 for inside London. [Laughter.] I do not know why hon. Members laugh. Many of us have a common interest in these matters. When considering the large sums spent by students—often at considerable sacrifice—on travel, fares and caring for themselves when in this country, that is not a massive additional sum. We must be reasonably practical even when we care deeply about a subject. I do not regard the premium as unreasonable, but it could be reduced.
  The National Union of Students receives a great deal of stick—regretfully, often from the Conservative Members. I know that in matters political that stick is justified. However, for many years I have said, and will continue to say, that on matters technical relating to students the NUS can be extremely effective. Tonight's debate is, in part, a reflection of that.
  The union's representations to my hon. and learned Friend and my right hon. Friends and their predecessors have been extremely responsible, well researched and technically competent. When my hon. and learned Friend replies, I hope that he will agree to listen to narrow, technical representations which might make all the difference, from whatever reputable source, and I hope that he will include Government Back Benchers.
  The hon. Member for Battersea, South is right in saying that there are matters of definition and precision on which it would be enormously helpful to have more clarity.
  I am happy to be making this representation to my hon. and learned Friend because he will remember that we first met when he was a distinguished officer of the Federation of Conservative Students. That illustrates how old I have
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  become. I am extremely sorry that his successor generation—the leadership, not the rank and file—of that splendid organisation takes such a narrow dog-in-the-manger view of its wider responsibilities to students in the National Union of Students, although we shall no doubt get that right.
  I believe that my right hon. and hon. Friends on the Front Bench have materially helped in this sphere. I fully understand the problem of the one-year course students. I believe that examination will prove that a large proportion of them are studying languages. In many sub-degree courses—often overlooked in regard to overseas students—where qualifications are being obtained, the course is longer than one year. Even so, I hope my hon. and learned Friend will be receptive to representations.
  My hon. and learned Friend has received a great deal of criticism, —I am not noted for saying in a smarmy way that I think my leaders are doing splendidly, though generally I do—but I say without equivocation that we have taken a great step forward and I, for one, am grateful.
  9.20 pm
  Mr. Michael Meacher: I hope that the hon. Member for Wokingham (Sir W van Straubenzee) will forgive me if I do not take up his remarks on overseas students. Time is pressing and I wish to advance a rather different argument.
  The central issue is the Government's motives and intentions, because it is difficult to take the Govermnent's claims at face value. There has been a great deal of discussion about the benefit of saving £6 million. If that were really the issue, the smallest attack on the black economy, which is now costing Britain between £3, 000 million and £4, 000 million a year—that is the official estimate—would provide a flow of funds for the National Health Service hundreds of times greater than the Government's puny measure.
  There is no evidence of extensive abuse of the NHS by foreign tourists coming to Britain only for NHS treatment. The hon. Member for Preston, North (Mr. Atkins) quoted the results of an entirely unstructured sample that was totally unrepresentative, and the Minister knows that. The official survey suggests that in more than 99 per cent. of such cases there was no abuse. My hon. Friend the Member for Birmingham, Stechford (Mr. Davis) has shown that the degree of abuse, as reflected in the official survey, is a tiny fraction of 1 per cent. In those circumstances, how can the Government justify introducing an eligibility test for everyone applying for NHS treatment to winkle out a minuscule number of foreign tourists, a fraction of whom might be abusing the NHS?
  In 1973 the Department of Health and Social Security found that the sum spent on treating visitors was only about £1 million. That was a fraction of about one-twentieth of 1 per cent. That is almost exactly what £6 million is as a fraction of £12 billion, which is the total annual cost of the NHS now. Even that figure included the cost of treating those covered by reciprocal health agreements, which are perfectly legitimate.
  The administrative costs of the Government's scheme would most certainly exceed the net savings in preventing abuse. The working party estimated that the saving might be £5 million. It would be wrong to take that as a firm figure. It is uncertain what the saving will be. The working

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  party did not know how many persons might be deterred and how many persons might opt for private treatment, for example.
  An offsetting factor is the extra cost of staffing. When I intervened in the Secretary of State's speech to advance that argument he gave an extremely unsatisfactory answer. He said that no extra staffing would be made available. However, there will be the hidden cost of transferring staff from other more worthwhile duties to implement the scheme. The scheme will involve the printing and distribution of manuals, the training of staff to use them and the printing of a vast number of extra forms. That is a curious thing for the Government to be doing when we bear in mind their concern about unnecessary official forms.
  What is the Government's estimate of the total offsets? That is the relevant figure if we are to judge the real gain, if there will be one. Given that there is clearly negligible abuse and little or no net savings, what is the Government's motive? Several reports have appeared, which have not been denied, that the Government are continuing to seek ways of changing the structure of the NHS so that it rests on an insurance basis. The Government have expressed a general desire to privatise up to 25 per cent. of the NHS. Against that background it is difficult to avoid drawing the conclusion, whatever protestations may be made by the Secretary of State, that the Government's real intention is to lay down an administrative framework and to pave the way for setting up a National Health insurance scheme.
  Once we have administrators checking every patient's eligibility, there will be nothing simpler than to set them to check on every patient's health insurance. A health insurance scheme could then be introduced at low cost. The Government could come to the House and say "It will cost the taxpayer hardly anything."
  We are opposed to this mean-minded and petty proposal, partly because of this clear ulterior motive, but there are several other objections to the scheme. The scheme will force NHS staff into the role of immigration officers. As an hon. Member sponsored by the Confederation of Health Service Employees, I assure the Secretary of State that that is unacceptable to members of that union and, I am sure, to other NHS unions.
  Paragraph 39 of the working party report states that extra staff would be required for stage 2. The Secretary of State made it clear that he would not provide extra funds. What is certain is that shortage of time and the unpleasantness of the task will lead to corners being cut in asking questions. The people who will bear the brunt of the questioning will be those with black or brown faces, with odd sounding names or with funny accents. The Secretary of State's suggestions that there will be no increase in discrimination in the National Health Service is ill founded.
  Mrs. Elaine Kellett-Bowman: Paragraph 39 of the report states clearly that
  "there should be a net gain to the NHS."
  Would the hon. Gentleman regard that as inconsiderable?
  Mr. Meacher: Whether there is a net gain depends on the offset of the savings. It is our view that the offset of
  440
  any savings is likely to exceed what are alleged to be the gross savings. The proposals will be an adminstrative nightmare.
  Mrs. Kellett-Bowman rose—
  Mr. Meacher: Every patient will have to be checked. That will include psychiatric and geriatric patients who make up the majority of those who enter NHS hospitals.
  Just for amusement I shall quote an extreme case, which will show the absurdity of the proposals. It is suggested that all cases of sexually transmitted diseases caught in Britain should be tackled free, while cases imported by the visitor should be charged. How on earth does one tell the difference? I do not have to tell the Minister that germs do not come to Britain carrying flags and passports.
  Mr. Kenneth Clarke: The hon. Member has produced at least six inaccuracies in the past five minutes. His last statement is wrong. Treatment of communicable diseases will be free. It does not matter where they have been contracted.
  The hon. Gentleman referred to racial discrimination. The only people who will be asked stage 2 questions will be those who have said that they do not live in Britain, or have not lived here for long enough, or who arouse suspicion. In a city such as Nottingham there would be more questioning at a hospital of someone with an Australian accent who has got through stage 1 than there is likely to be of any person who has an Indian face. An Indian is more likely to live in Nottingham than anyone with a strong Australian or American accent. The hon. Gentleman's proposition that this is likely to lead to the questioning of immigrants is preposterous, and is likely to set off completely false fears.
  Mr. Meacher: The hon. and learned Gentleman is wrong. If the Secretary of State is not prepared to make available extra funds and staff, there will be corner cutting in the asking of questions. Everyone will not be subjected to this procedure. It will apply, as the Minister for Health said significantly, in cases where there are suspicions. Those suspicions will depend, at least partly, on the colour of face, on accents and on other such matters.
  The Government have claimed that emergency treatment will be available free to everyone. That is not the case. Only treatment in casualty and out-patient departments will be free. What will happen with emergency in-patients? Presumably, when serious cases are admitted as in-patients—as, indeed, almost all are—they will be charged at the full private rate. If that is the case, it suggests that the Government have been exceedingly misleading in suggesting that emergency treatment will be free.
  Information is to be sought from the Home Office via the DHSS where there is doubt about a patient's immigration status. That could have an extremely serious effect. In certain cases it could lead to unwillingness to seek medical treatment where it was clearly needed. If a person was carrying a highly infectious disease, the implications would be extremely dangerous for the individual and for the population in general. It is a serious loophole in the proposals.
  The Government claim that people who are not eligible for treatment can take out health insurance or go private, but DHSS Ministers should not be in the business of

  441
  boosting profits for private medical or insurance companies. If foreign tourists still use NHS facilities, how will simply paying for them reduce NHS waiting lists?
  The Government should not expect NHS staff to do their dirty work in cracking down on immigration—that is what is about—or in reducing eligibility for NHS treatment. It is a mean-minded, petty, nasty little measure. It will not reduce racial discrimination in the NHS. It will produce negligible—if, indeed, any—net savings. It could lead to infectious illnesses remaining untreated. I hope that the House will decisively reject it.
  9.31 pm
  Mr Alexander W. Lyon: In the Select Committee on Monday the Secretary of State refused to accept that £6 million was peanuts. He said that a responsible Government must consider sums of that magnitude seriously. On Wednesday, the Secretary of State for Defence, when asked about £12 million for territorial divisions, said that that sum was peanuts. It depends on one's view.
  Why are the Government so concerned, considering the small saving? The only enlightenment came from the hon. Member for Preston, North (Mr. Atkins). The fiasco arises because he visited his daughter in hospital and asked questions about a patient in a neighbouring bed. We have had a build-up of popular opinion. The hon. Gentleman read out letters. People have written to him about cases, 90 per cent. of whom were eligible for free treatment, even under the old rules, and about the same proportion of whom would be eligible under the new rules. Ninety per cent. of the cases were wrongly perceived because the patients were of foreign extraction. The reaction is prejudice against their treatment.
  That is the danger, above all, that worries me about the proposals. However carefully conceived stage 1 is, stage 2, which we know nothing about and which the Minister has refused to tell even the Select Committee about, will animate the prejudice against people of foreign extraction. I do not wish to pay that price to collect £6 million.
  I object to the proposal on principle. My hon. Friend the Member for Birmingham, Stechford (Mr. Davis) said that there was some abuse in the proposal. The original concept of the NHS was that it would be wholly free to all, including visitors. In 1949, Nye Bevan introduced an amending Bill, because pressure had been put on him. It was put forward in the context that there would be regulations, but they were never introduced. Over the years people have tried haphazardly to implement the 1949 legislation.
  In such a situation, one cannot tell people that there are rules, that for them to be treated is against those rules, and that they are therefore abusing the system. There is an abuse of the system only if people consciously try to defraud it. The Government may try to clarify the situation by introducing rules, and there might be an abuse of the system thereafter, but the Government cannot depend upon past abuses when rules have never existed.
  In 1963, a circular was issued, but it has never been enforced in practice. Now every patient going into hospital will have to be asked questions. When that has been done, it may be possible for someone to study the answers and decide whether a patient is trying to deceive the NHS. The scale of the problem will therefore increase.
  The hon. Member for Preston, North having returned, I can tell him that the Select Committee has a mass of
  442
  evidence from hospital administrators throughout the country. Only a few suggested that a scheme of this type was needed. The great majority said that if there was anything that they could describe as an abuse, it was on a small scale. It is, therefore, nonsense for us to take the risk—and there is a risk, whatever the Government say—of exciting racial antagonism at this difficult time merely to make a saving that the Minister cannot prove of about £6 million.
  9.36 pm
  Mr. Terry Davis: I shall be brief to allow the Minister as much time as possible to reply.
  I shall deal first with the point made by my hon. Friend the Member for York (Mr. Lyon) about whether there is any abuse of the NHS. I refer my hon. Friend to what our hon. Friend the Member for Waltham Forest (Mr. Deakins) said on 8 November 1978. He explained that if visitors came to this country specifically for treatment, then unless they were within one of the categories where free treatment is provided—if they came from Common Market countries or those with reciprocal arrangements—they would be abusing the system.
  I did not say that the hon. Member for Preston, North (Mr. Atkins) was racialist. I said that he was engaged in McCarthyite tactics by brandishing a file of 300 letters. As I listened to some of those letters, I formed the same opinion as my hon. Friend the Member for York. Most of those people were entitled to free treatment under the NHS and will still be entitled to it under the proposed arrangements.
  There is a reciprocal arrangement with Portugal. I understand that a reciprocal arrangement with Hong Kong is about to come into effect. The gentleman from Brazil is also entitled to free treatment under the Government's proposal. A letter from the Brazilian embassy stating that he is to begin work here is sufficient. When the hon. Member for Preston, North advanced those as examples of abuse he confirmed my earlier comment.
  The hon. Member for Preston, North also said that £6 million is not a small sum. He is making the same fundamental mistake that has been made by all Conservative Members. There is no truth in that figure. There is no evidence to suggest that the cost of the abuse of the NHS is £6 million or any other figure. No figure has been given. The £6 million is the Government's estimate of the revenue that could be obtained as a result of changing the rules for people who are entitled to free treatment under the present arrangements.
  When I asked the Secretary of State how the £6 million had been calculated, he referred the House back to the original estimate of £5 million provided by his predecessor. That is no answer. The House and the country should know where the £5 million came from. We have had no answer from the Government. I hope that we shall get one.
  As for overseas students, it has not so far been mentioned that one fifth of overseas students in this country are paid for by the Foreign Office, so one fifth of the expected £1 million revenue will still come from the British taxpayer. Indeed, the cost will be more than the £200, 000 for the cost of treatment, because insurance premiums will have to be paid by the Foreign Office, so the taxpayer will be contributing to the profits of the insurance company.

  443
  The Minister pointed out in an intervention that among those 81 people who seemed to need further questioning in the working party survey were 12 Americans. He asked whether my hon. Friend the Member for Battersea, South (Mr. Dubs) thought that those 12 American tourists should pay for their appendicitis operations. He made two assumptions. We do not know whether they were tourists, nor do we know for what conditions they were being treated in National Health Service hospitals.
  The Minister cannot tell us whether they had lived in the United Kingdom for more than one year. He cannot say whether any of them were American students who had been studying at college or university here for more than a year. There is no proof that there were 12 Americans covered by the survey who would not have paid charges in the past but who would pay charges in the future. The Minister does not know whether they were treated for measles or food poisoning. Perhaps they were all tourists suffering from food poisoning, for which treatment will be free under the Government's proposals.
  Mr. Kenneth Clarke: Only as out-patients.
  Mr. Davis: There will be no charge for out-patients who go to accident or emergency departments, but there will be charges for patients admitted to hospital as a result of accidents. In other words, if an overseas visitor is involved in a car accident and suffers a cut face, he will receive free treatment whatever his origin, but if he is so seriously injured that he is unconscious and is taken to hospital with broken legs or a fractured skull the Government want to charge him for the treatment. The more seriously a person is injured, the more likely he is to be charged by the Government.
  The Government should concentrate on concluding reciprocal arrangements with other countries. In 1978, we were told that the Labour Government had begun such discussions with the American and Canadian Governments. What has happened to those discussions in the past three years?
  I am prepared to agree that there may be some abuse, although we do not know how much. We know, however, that there are other abuses. If the Government are so concerned about abuse of the Health Service, what are they doing about the abuses for which there is evidence? For example, the Government's own auditors have found abuse by consultants in the Greenwich and Bexley area health authority who have been charging private patients for National Health Service facilities but not passing the money on to the NHS. That is the kind of abuse that the Government should tackle.
  9.42 pm
  The Minister for Health (Mr. Kenneth Clarke): I well understand that there may be concern about the apparent complexities of this issue, in view of the wide range of visitors who come here, but I think that the Opposition have gone in not just for misunderstanding complexities, which at times is understandable and which I might presume myself, but for absurd exaggeration of their case. By the time we reached the speech of the hon. Member for Oldham, West (Mr. Meacher), the whole exercise was supposed to be a sinister plot to abolish the
  444
  free Health Service for British residents—having heard on the way about a new drive against illegal immigration, new attempts to undermine race relations and so on.
  As my right hon. Friend the Secretary of State said in opening the debate, this is a perfectly commonsense measure which does not give rise to any of those fanciful fears and will be widely appreciated by the British public once it is understood. It has one simple aim, which should command universal support, and that is to obtain more resources for the National Health Service. It is not a vast amount of money, but the National Health Service is not so awash with money that £6 million can be lightly waved aside as the Opposition did.
  That worthwhile, modest sum will be achieved by introducing arrangements whereby certain treatment for short-term overseas visitors—the bulk of whom are usually described as tourists—should be paid for by their insurance companies, assuming that they take out an insurance policy, and not by the British taxpayer. That seems a sensible proposition.
  The hon. Members for York (Mr. Lyon) and for Birmingham, Stechford (Mr. Davis) seemed to imply that we should run some kind of international free Health Service, regardless of the figures in the report. They never gave a clear answer to my question: if a Texan oil man comes here and is taken ill with appendicitis, do the Opposition believe that the British taxpayer should pay, or that an American insurance company should pay? We say that an American insurance company should pay, and I think that most people would agree with that.
  Nevertheless, the Government believe that if this matter is not handled carefully odd difficulties will arise, as in some of the cases that have been described. For that reason we have taken particular care on the subject of racial discrimination. The Opposition missed the point that one of the things that the working party uncovered was that the existing arrangements give rise to serious risk of racial discrimination. Those arrangements were tolerated by the previous Government, and the Opposition wish to leave them alone, despite their present and proven risk of racial discrimination. We have devised arrangements that will avoid that risk. To accuse my hon. Friend the Member for Preston, North (Mr. Atkins), or my right hon. Friend the Member for Sutton Coldfield (Mr. Fowler), or myself, or any other hon. Member who has spoken in the debate of being in favour of racial discrimination is absurd and insulting.
  My hon. Friend the Member for Wokingham (Sir W. van Straubenzee) was concerned about students. The Government were also worried about the effects of the original proposals on students. That is why we have gone so far to make considerable concessions and we will meet all the costs of students, except for their first year hospital charges. My hon. Friend the Member for Wokingham appreciates, as the hon. Member for the Isle of Ely (Mr. Freud) does not, that students coming here on long-term courses could go on to their general practitioner's list and obtain medical treatment. I accept the point made by my hon. Friend the Member for Wokingham about those on short-term language courses, and shall examine it.
  It should be taken for granted, although it is not, that we will ensure that patients are not refused treatment for accidents or emergencies and that they will have free out-patient treatment. We shall also give free treatment for communicable diseases, wherever they have been contracted. The spirit that has been described as the "spirit

  445
  of the Good Samaritan" should exist within the National Health Service. That will be retained intact and is not threatened by our proposals.
  In short, the British taxpayer will say "What a sensible way of getting a few million pounds extra for the NHS. Why on earth was this not done before? What on earth are the Opposition getting so excited about? Why do they feel it is so easy to waive aside this sum of money?" My right hon. Friend explained how we arrived at this sum of money. It is not a precise estimate; nobody has ever said that it is. However one arrives at it, and my right hon. Friend gave two methods of doing so, it seems to be about right and is probably a slight underestimate.
  The Government accept that we are probably talking in terms of only about 0·5 per cent. of the patients in hospitals. Those patients are included in the 4·6 million people who come to this country in any one year—short-term overseas visitors who are not covered by European Community or reciprocal agreements. I shall not relate the arguments advanced by my right hon. Friend, but the figure of 0·5 per cent. gives about £6 million, which will be new income for the National Health Service and will go to the district health authorities.
  That sum of £6 million was described by the hon. Member for the Isle of Ely as "piffling" and by the hon. Member for York as "peanuts". In the context of the National Health Service it is neither piffling nor peanuts. If Opposition Members wish to know, I can give a few examples of why we are so concerned about £6 million. It would enable the NHS to treat 8, 000 more acute patients, or provide 200 hospital new beds, or run 40 body scanners for a year, or provide 400 new residential places for the elderly, or 350 new residential places for the adult mentally handicapped, or new residential places for mentally handicapped children. That is not piffling and the British public will not appreciate why the Opposition are not interested in that, but prefer to provide free treatment for Australians who are involved in road accidents in this country, rather than looking at the kinds of facilities that £6 million could provide.
  The hon. Member for Isle of Ely said that the administrative costs would outweigh all this—
  Mr. Edward Lyons: The Minister refers solely to Australians and Americans, but what about the large number of elderly persons coming to visit ethnic minorities in this country and to see their children and grandchildren? Many of them will be too old to come with any insurance scheme and cannot be insured. Is not the proposal an attempt to raise money mainly from elderly people in the Third world, and not from Americans, Europeans and others, who will come insured?
  Mr. Clarke: For some reason, hon. Members who are interested in race relations keep trying to make that case. I do not mind their being so sensitive about race relations, but they have chosen the wrong subject. The nationalities that emerged in the working party report were American, Australian and Nigerian. Dependants of people resident here will be exempt from the arrangements when they are here. We are talking about £6 million and about charging short-term visitors, who will probably be tourists.
  Administrative costs have been criticised. Comments have been made about the administrative complexities and the dangers that could arise. The administrative costs were estimated by the hon. Member for Brent, South (Mr.
  446
  Pavitt). He said that he did not usually go in for figures. There was a flaw in his figures. He made the preposterous suggestion that the three simple questions in stage 1 questioning would take two minutes to administer. The questions will be put mainly to ordinary British residents, who will answer "Yes. Yes. Yes." The 20 seconds suggested by the hon. Member for Brent, South were wildly divorced from reality.
  The working party membership included senior National Health Service administrative officers who have expertise in the subject. On the basis of their inquiries it was decided that stage 1 with the three simple questions, would require no extra staff. They decided that stage 2 could be implemented without any significant extra cost. The only increase in cost would be for hospitals with a large number of overseas visitors—such as some of the London hospitals—where additional costs might be involved. We are talking about perhaps half a staff post. The £6 million that we hope to gain vastly outweighs any administrative costs.
  The administrative process has been attacked in various ways on the basis that it will be racially discriminatory. It is suggested that it might allow COHSE members to use it as a new drive against illegal immigration.
  The hon. Member for Stechford described the first stage as being the interrogation of patients. We are talking about adding three questions to the existing process for registration at a hospital. We are asking difficult questions such as "What is your name? What is your address? What appears to be the matter?" Other questions are also asked when a person is registered for hospital treatment. Three additional questions are to be asked. Almost all the patients will find them straightforward. The clerical officer will not be allowed to challenge the answers. He will merely record the answers. There is no question of cross-examination.
  As the working party report shows, the bulk of the answers will be "Yes. Yes. Yes." Only a few people will move to the second stage. Most of them will be Americans, Australians or Nigerians, who will cheerily say "No". The only question required at that stage will be "Where do you live?" An address in Wyoming, for instance, will be given and arrangements will be made to collect money through an insurance company. Most people admitted to hospital will have taken the prudent step of taking out insurance.
  There might be some difficult cases. There might be language difficulties and some people will be from the ethnic minorities. Most of the people questioned at the second stage will say that they have not been living in the country for the requisite period. The people from countries with reciprocal agreements and from the European Community will be identified. Only a few of the others are likely to give rise to any difficulty.
  As I have said, Conservative Members are highly sensitive—as sensitive as the other Opposition Members—to any suggestion that will introduce racial discrimination into any aspect of the Health Service. We have become particularly sensitive because it was Conservative policy which threw up the evidence that there is racial discrimination in the existing arrangements which the Opposition want to keep going and keep sacrosanct.
  We have, therefore, decided that to make sure that there will be no difficulties, a clear manual of guidance will be issued for the more senior staff carrying out the second

  447
  should not do. That will be before the House, because we will be consulting widely upon it. The regulations on which the whole thing is founded will be before the House and we will consult bodies such as the Commission for Racial Equality, representatives of ethnic minorities, and so on, to make sure that we do not introduce any racially discriminatory procedure. There is really no reason at all why we should, because all that the second stage will be seeking to establish is the residence of the person in question and how long he has been here. If he has been here for less than 12 months we need to establish why he is here. If he is here to work, and in the one or two other cases that have been described, he will still get treatment free.
  The hon. Member for Stechford was quite right. Nationality does not have any bearing on eligibility for National Health Service treatment in Britain. Therefore, there is no point in asking for somebody's passport, because in most cases his nationality will not be relevant. I repeat what I said to the hon. Member for Battersea, South (Mr. Dubs) that the manual of guidance will contain instructions to people carrying out the second stage that they are not to ask for passports and people are not to be required to produce them.
  That again will be an improvement on the present position, which is being defended by the hon. Members for Battersea, South and for Stechford. The working party discovered that misguided staff have been left so much in the dark by the Labour Party in their previous years of administering the present system that they are asking for passports.
  The present system, for which the Labour Party was responsible and is now defending, is largely administered on the intuition of the administrators, who often do not understand the rules. They tend to question people who give foreign addresses or who have a foreign appearance, and that must mean that they are largely questioning black or brown people. Our manual of guidance, which the Opposition are resisting and which presumably they are about to vote against because it is part of our policy, will for the first time establish—unless the Opposition are successful—that people are not to ask for passports when deciding elegibility.
  Mr. Dubs: Will the Minister concede that there is not one member of the Labour Party who has ever defended a system that demands the production of passports as a test of eligibility for Health Service treatment?
  Mr. Clarke: I accept that no member of the Labour Party has done that deliberately. Every member of the Labour Party who has spoken in this debate has done so by accident, because the Opposition are defending the present position. What we are putting forward is a system with a manual of guidance which says that it is not to happen. It may be that there is a dawning of understanding and we are coming so close to each other in principle that the Division need never happen.
  During the last two minutes let me try to make that clear by getting away from the fanciful fears that I have largely answered by illustrating what will be the actual situation that these rules will produce. They will change the situation of tourists in this country. That is the largest group of people who will be affected. Tourists will ask
  448
  their travel agents about the health arrangements of the United Kingdom.
  At the moment they get a pleasant surprise, because they are told that the chances are that it will be free in Britain, unlike anywhere else in the world. They will in future take out an insurance policy, just as we do when we go to America or Australia. That is a sensible arrangement. We will table the regulations to introduce the scheme soon. We hope to introduce it in October, so as not to surprise this year's summer visitors. We hope that the £6 million extra for the Health Service will be wisely spent by the health authorities.
  Question put, That the original words stand part of the Question:—
  The House divided: Ayes 226, Noes 295.

  Division No. 94]

  [10 pm

  AYES

  Abse, Leo

  Dunn, James A.

  Adams, Allen

  Dunnett, Jack

  Allaun, Frank

  Eadie, Alex

  Alton, David

  Eastham, Ken

  Anderson, Donald

  Edwards, R. (W'hamptn S E)

  Archer, Rt Hon Peter

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

  Ashley, Rt Hon Jack

  Ellis, Tom (Wrexham)

  Ashton, Joe

  English, Michael

  Atkinson, N. (H'gey)

  Evans, loan (Aberdare)

  Bagier, GordonA.T.

  Evans, John (Newton)

  Barnett.Guy (Greenwich)

  Ewing, Harry

  Barnett, Rt Hon Joel (H'wd)

  Field, Frank

  Beith, A.J.

  Fitch, Alan

  Benn, Rt Hon Tony

  Flannery, Martin

  Bennett, Andrew (St'Kp'tN)

  Fletcher, Ted (Darlington)

  Bidwell, Sydney

  Foot, Rt Hon Michael

  Booth, Rt Hon Albert

  Ford, Ben

  Boothroyd, MissBetty

  Forrester, John

  Bray, Dr Jeremy

  Foster, Derek

  Brown, Hugh D. (Provan)

  Foulkes, George

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

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

  Brown, Ron (E'burgh, Leith)

  Freeson, Rt Hon Reginald

  Buchan, Norman

  Freud, Clement

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

  Garrett, John (Norwich S)

  Campbell, Ian

  George, Bruce

  Campbell-Savours, Dale

  Gilbert, Rt Hon Dr John

  Canavan, Dennis

  Ginsburg, David

  Cant, R. B.

  Golding, John

  Carmichael, Neil

  Grant, George (Morpeth)

  Carter-Jones, Lewis

  Hamilton, James (Bothwell)

  Cartwright, John

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

  Clark, Dr David (S Shields)

  Hardy, Peter

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

  Harrison, Rt Hon Walter

  Cohen, Stanley

  Hart, Rt Hon Dame Judith

  Coleman, Donald

  Hattersley, Rt Hon Roy

  Concannon, Rt Hon J. D.

  Haynes, Frank

  Conlan, Bernard

  Healey, Rt Hon Denis

  Cowans, Harry

  Heffer, Eric S.

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

  Hogg, N. (EDunb't'nshire)

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

  HomeRobertson, John

  Crowther, Stan

  Homewood, William

  Cryer, Bob

  Hooley, Frank

  Cunliffe, Lawrence

  Horam, John

  Cunningham, DrJ. (W'h'n)

  Howells, Geraint

  Dalyell, Tam

  Huckfield, Les

  Davidson, Arthur

  Hughes, Mark (Durham)

  Davies, Rt Hon Denzill (L'lli)

  Hughes, Robert (Aberdeen N)

  Davies, Ifor (Gower)

  Hughes, Roy (Newport)

  Davis, Clinton (Hackney C)

  Janner, Hon Greville

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

  Jay, Rt Hon Douglas

  Deakins, Eric

  Johnson, James (Hull West)

  Dean, Joseph (Leeds West)

  Jones, Rt Hon Alec (Rh'dda)

  Dixon, Donald

  Jones, Barry (East Flint)

  Dobson, Frank

  Jones, Dan (Burnley)

  Dormand, Jack

  Kaufman, Rt Hon Gerald

  Douglas, Dick

  Kerr, Russell

  Dubs, Alfred

  Kilroy-Silk, Robert

  Duffy, A. E. P.

  Lambie.David

  449

  Lamborn, Harry

  Rooker, J. W.

  Lamond, James

  Roper, John

  Leadbitter, Ted

  Ross, Ernest (Dundee West)

  Leighton, Ronald

  Rowlands, Ted

  Lestor, MissJoan

  Ryman, John

  Lewis, Arthur (N'ham NW)

  Sever, John

  Lewis, Ron (Carlisle)

  Sheerman, Barry

  Litherland, Robert

  Sheldon, Rt Hon R.

  Lofthouse, Geoffrey

  Shore, Rt Hon Peter

  Lyon, Alexander (York)

  Short, Mrs Renée

  Lyons, Edward (Bradf'dW)

  Silkin, Rt Hon J. (Deptford)

  McDonald, DrOonagh

  Silkin, Rt Hon S. C. (Dulwich)

  McKay, Allen (Penistone)

  Skinner, Dennis

  McKelvey, William

  Smith, Rt Hon J. (N Lanark)

  MacKenzie, Rt Hon Gregor

  Snape, Peter

  McNamara, Kevin

  Soley, Clive

  McTaggart, Robert

  Spearing, Nigel

  McWilliam, John

  Spriggs, Leslie

  Marks, Kenneth

  Stallard, A. W.

  Marshall, D (G'gowS'ton)

  Steel, Rt Hon David

  Marshall, DrEdmund (Goole)

  Stewart, Rt Hon D. (W Isles)

  Marshall, Jim (Leicester S)

  Stoddart, David

  Martin, M (G'gowS'burn)

  Stott, Roger

  Maxton, John

  Strang, Gavin

  Maynard, MissJoan

  Straw, Jack

  Meacher, Michael

  Summerskill, HonDrShirley

  Mellish, Rt Hon Robert

  Taylor, Mrs Ann (Bolton W)

  Mikardo, Ian

  Thomas, Dafydd (Merioneth)

  Millan, Rt Hon Bruce

  Thorne, Stan (Preston South)

  Mitchell, Austin (Grimsby)

  Tilley, John

  Mitchell, R.C. (Soton Itchen)

  Torney, Tom

  Morris, Rt Hon A. (W'shawe)

  Urwin, Rt Hon Tom

  Morris, Rt Hon C, (O'shaw)

  Varley, Rt Hon Eric G.

  Morris, Rt Hon J. (Aberavon)

  Wainwright, E. (Dearne V)

  Morton, George

  Walker, Rt Hon H. (D'caster)

  Moyle, Rt Hon Roland

  Watkins, David

  Mulley, Rt Hon Frederick

  Wellbeloved.James

  Newens, Stanley

  Welsh, Michael

  Oakes, Rt Hon Gordon

  White, Frank R.

  O'Neill, Martin

  White, J. (G'gow Pollok)

  Orme, Rt Hon Stanley

  Whitehead, Phillip

  Owen, Rt Hon Dr David

  Whitlock, William

  Palmer, Arthur

  Wigley, Dafydd

  Park, George

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

  Parker, John

  Williams, Rt Hon Mrs (Crosby)

  Parry, Robert

  Wilson, Gordon (Dundee E)

  Pavitt, Laurie

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

  Pendry, Tom

  Wilson, William (C'try SE)

  Powell, Raymond (Ogmore)

  Winnick, David

  Price, C. (Lewisham W)

  Woodall, Alec

  Race, Reg

  Woolmer, Kenneth

  Richardson, Jo

  Wright, Sheila

  Roberts, Albert (Normanton)

  Young, David (Bolton E)

  Roberts, Allan (Bootle)

  Roberts, Ernest (Hackney N)

  Tellers for the Ayes:

  Roberts, Gwilym (Cannock)

  Mr. Hugh McCartney and

  Robinson, G. (Coventry NW)

  Mr. James Tinn.

  NOES

  Aitken, Jonathan

  Boyson, Dr Rhodes

  Alexander, Richard

  Braine, SirBernard

  Alison, Rt Hon Michael

  Bright, Graham

  Amery, Rt Hon Julian

  Brinton, Tim

  Aspinwall, Jack

  Brotherton, Michael

  Atkins, Robert (Preston N)

  Brown, Michael (Brigg&Sc'n)

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

  Browne, John (Winchester)

  Baker, Nicholas (N Dorset)

  Bruce-Gardyne, John

  Banks, Robert

  Bryan, Sir Paul

  Beaumont-Dark, Anthony

  Buck, Antony

  Bendall, Vivian

  Budgen, Nick

  Benyon, Thomas (A'don)

  Bulmer, Esmond

  Benyon, W. (Buckingham)

  Burden, SirFrederick

  Best, Keith

  Butcher, John

  Bevan, David Gilroy

  Cadbury, Jocelyn

  Biffen, Rt Hon John

  Carlisle, John (LutonWest)

  Biggs-Davison, SirJohn

  Carlisle, Kenneth (Lincoln)

  Blackburn, John

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

  Bonsor, SirNicholas

  Chalker, Mrs. Lynda

  Boscawen, HonRobert

  Channon, Rt. Hon. Paul

  Bottomley, Peter (W'wich W)

  Chapman, Sydney

  450

  Churchill, W.S.

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

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

  Howell, Ralph (N Norfolk)

  Clark, Sir W. (Croydon S)

  Hunt, David (Wirral)

  Clarke, Kenneth (Rushcliffe)

  Hunt, John (Ravensbourne)

  Clegg, SirWalter

  Hurd, Rt Hon Douglas

  Cockeram, Eric

  Irving, Charles (Cheltenham)

  Colvin, Michael

  Jenkin, Rt Hon Patrick

  Cope, John

  JohnsonSmith, Geoffrey

  Cormack, Patrick

  Jopling, Rt Hon Michael

  Corrie, John

  Joseph, Rt Hon Sir Keith

  Costain, SirAlbert

  Kaberry, SirDonald

  Cranborne, Viscount

  Kellett-Bowman, MrsElaine

  Critchley, Julian

  Kershaw, SirAnthony

  Crouch, David

  Kimball, SirMarcus

  Dean, Paul (NorthSomerset)

  King, Rt Hon Tom

  Dickens, Geoffrey

  Knight, MrsJill

  Dorrell, Stephen

  Knox, David

  Douglas-Hamilton, LordJ.

  Lamont, Norman

  Dover, Denshore

  Lang, Ian

  Dunn, Robert (Dartford)

  Langford-Holt, SirJohn

  Durant, Tony

  Latham, Michael

  Dykes, Hugh

  Lawrence, Ivan

  Eden, Rt Hon Sir John

  Lawson, Rt Hon Nigel

  Edwards, Rt Hon N. (P'broke)

  Lee, John

  Eggar, Tim

  LeMarchant, Spencer

  Elliott, SirWilliam

  Lennox-Boyd, HonMark

  Emery, Sir Peter

  Lester, Jim (Beeston)

  Eyre, Reginald

  Lews, Kennelh (Rutland)

  Fairbairn, Nicholas

  Lloyd, Ian (Havant& W'loo)

  Fairgrieve, SirRussell

  Lloyd, Peter (Fareham)

  Faith, MrsSheila

  Loveridge, John

  Farr, John

  Luce, Richard

  Fell, SirAnthony

  Lyell, Nicholas

  Fenner, Mrs Peggy

  McCrindle, Robert

  Finsberg, Geoffrey

  Macfarlane, Neil

  Fisher, SirNigel

  MacGregor, John

  Fletcher, A. (Ed'nb'ghN)

  McNair-Wilson, M. (N'bury)

  Fletcher-Cooke, SirCharles

  McNair-Wilson, P. (NewF'st)

  Fookes, Miss Janet

  McQuarrie, Albert

  Forman, Nigel

  Madel, David

  Fowler, Rt Hon Norman

  Major, John

  Fox, Marcus

  Marland, Paul

  Fraser, Rt Hon Sir Hugh

  Marlow, Antony

  Fry, Peter

  Marshall, Michael (Arundel)

  Gardiner, George (Reigate)

  Mates, Michael

  Gardner, Edward (S Fylde)

  Maude, Rt Hon Sir Angus

  Garel-Jones, Tristan

  Mawby, Ray

  Gilmour, Rt Hon Sir Ian

  Maxwell-Hyslop, Robin

  Glyn, Dr Alan

  Mayhew, Patrick

  Goodhart, SirPhilip

  Mellor, David

  Goodhew, SirVictor

  Meyer, Sir Anthony

  Goodlad, Alastair

  Miller, Hal (B'grove)

  Gorst, John

  Mills, Iain (Meriden)

  Gow, Ian

  Mills, Peter (West Devon)

  Grant, Anthony (Harrow C)

  Miscampbell, Norman

  Gray, Hamish

  Mitchell, David (Basingstoke)

  Greenway, Harry

  Moate, Roger

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

  Molyneaux, James

  Griffiths, Peter Portsm'thN)

  Monro, SirHector

  Grist, Ian

  Montgomery, Fergus

  Gummer, JohnSelwyn

  Moore, John

  Hamilton, Hon A.

  Morgan, Geraint

  Hamilton, Michael (Salibury)

  Morris, M. (N'hampton S)

  Hampson, Dr Keith

  Morrison, Hon C. (Devizes)

  Hannam, John

  Morrison, Hon P. (Chester)

  Haselhurst, Alan

  Mudd, David

  Hastings, Stephen

  Murphy, Christopher

  Havers, Rt Hon Sir Michael

  Myles, David

  Hawksley, Warren

  Neale, Gerrard

  Hayhoe, Barney

  Needham, Richard

  Heath, Rt Hon Edward

  Nelson, Anthony

  Heddle, John

  Neubert.Michael

  Henderson, Barry

  Newton, Tony

  Heseltine, Rt Hon Michael

  Nott, Rt Hon John

  Hicks, Robert

  Onslow, Cranley

  Higgins, Rt Hon Terence L.

  Oppenheim, Rt Hon Mrs S.

  Hogg, HonDouglas (Gr'th'm)

  Osborn, John

  Holland, Philip (Carlton)

  Page, John (Harrow, West)

  Hooson, Tom

  Page, Richard (SW Herts)

  Hordern, Peter

  Parkinson, Rt Hon Cecil

  451

  Parris, Matthew

  Stanley, John

  Patten, Christopher (Bath)

  Steen, Anthony

  Pawsey, James

  Stewart, A. (ERenfrewshire)

  Penhaligon, David

  Stewart, Ian (Hitchin)

  Peyton, Rt Hon John

  Stokes, John

  Pink, R.Bonner

  Stradling Thomas, J.

  Pollock, Alexander

  Tapsell, Peter

  Porter, Barry

  Taylor, Teddy (S'end E)

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

  Tebbit, Rt Hon Norman

  Prentice, Rt Hon Reg

  Temple-Morris, Peter

  Price, SirDavid (Eastleigh)

  Thatcher, Rt Hon Mrs M.

  Prior, Rt Hon James

  Thomas, Rt Hon Peter

  Proctor, K. Harvey

  Thompson, Donald

  Pym, Rt Hon Francis

  Thome, Neil (IlfordSouth)

  Rathbone, Tim

  Thornton, Malcolm

  Rees, Peter (Dover and Deal)

  Townend, John (Bridlington)

  Rees-Davies, W. R.

  Townsend, Cyril D, (B'heath)

  Renton, Tim

  Trippier, David

  RhodesJames, Robert

  Trotter, Neville

  RhysWilliams, Sir Brandon

  van Straubenzee, Sir W.

  Ridley, HonNicholas

  Vaughan, DrGerard

  Ridsdale, SirJulian

  Viggers, Peter

  Rifkind, Malcolm

  Waddington, David

  Rippon, Rt Hon Geoffrey

  Waldegrave, HonWilliam

  Roberts, M. (Cardiff NW)

  Walker, Rt Hon P.(W'cester)

  Roberts, Wyn (Conway)

  Walker, B. (Perth)

  Rossi, Hugh

  Walker-Smith, Rt Hon Sir D.

  Rost, Peter

  Wall, SirPatrick

  Royle, SirAnthony

  Waller, Gary

  Sainsbury, HonTimothy

  Walters, Dennis

  St. John-Stevas, Rt Hon N.

  Ward, John

  Shaw, Giles (Pudsey)

  Warren, Kenneth

  Shaw, Giles (Scarborough)

  Watson, John

  Shelton, William (Streatham)

  Wells, Bowen

  Shepherd, Colin (Hereford)

  Wells, John (Maidstone)

  Shepherd, Richard

  Wheeler, John

  Silvester, Fred

  Whitelaw, Rt Hon William

  Sims, Roger

  Wickenden, Keith

  Skeet, T. H. H.

  Wiggin, Jerry

  Smith, Dudley

  Williams, D. (Montgomery)

  Speed, Keith

  Winterton, Nicholas

  Speller, Tony

  Wolfson, Mark

  Spence, John

  Young, SirGeorge (Acton)

  Spicer, Jim (WestDorset)

  Younger, Rt Hon George

  Spicer, Michael (S Worcs)

  Sproat, Iain

  Tellers for the Noes:

  Squire, Robin

  Mr. Anthony Berry and

  Stainton, Keith

  Mr. Carol Mather.

  Stanbrook, Ivor

  Question accordingly negatived.
  Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 32 (Questions on amendments) and agreed to.
  Main Question, as amended, agreed to.
  Resolved,
  That this House welcomes a commonsense and fair measure to raise extra income for the National Health Service from charging overseas visitors for hospital treatment, which lifts the burden from the British taxpayer and avoids the possibility of racial discrimination in the present hospital admission procedures.

  Overseas Visitors (Health Service Charges)

    STANDING ORDER NO. 40 (COMMITTAL OF BILLS)
    Ordered,
    That, for the remainder of the present Session, Standing Order No. 40 (Committal of bills) shall have effect as if there were inserted, in line 8, after the word 'committee', the words, 'or to a special standing committee', and in line 11, after the word 'Member', the words, 'or in the case of a motion to commit a bill to a special standing committee by a Minister of the Crown.'—[Mr. Pym.]

    SPECIAL STANDING COMMITTEES
    Ordered,
    That—

    (1) A special standing committee to which a bill has been committed under the provisions of Standing Order No. 40 (Committal of bills) shall have power during a period not exceeding 28 days, excluding periods when the House is adjourned for more than two days, from the committal of the bill, to send for persons, papers and records and to hold up to four morning sittings of not more than two and a half hours each. The first such sitting shall be in private and the remainder, except as the Committee order otherwise, shall be for the purpose of hearing oral evidence and shall be in public. The oral evidence shall be printed in the Official Report together with such written evidence as the committee may order to be so printed.

    (2) For the sittings referred to in paragraph (1) of this Order, and notwithstanding the provisions of Standing Order No. 61(1) (Chairmen of standing committees) and Standing Order No. 65(1) (Procedure in standing committees)—

    (i) Mr. Speaker shall appoint any Member other than a Minister of the Crown as chairman of a special standing committee;

    (ii) the chairman shall be included in calculating the quorum of the committee.

    (3) When a special standing committee has completed consideration of a Bill, the chairman shall put the question, 'That I do report the Bill to the House' unless a Minister of the Crown shall move 'That the Committee do now adjourn'. If such a motion is made, the question theron shall be put forthwith and, notwithstanding the provisions of Standing Order No. 64 (Meetings of standing committees), may be decided after One o'clock.

    (4) If the question is agreed to, the committee shall meet again on the day and at the hour named by the chairman to consider any amendments which may be moved by a Minister of the Crown which

    (a) arise from undertakings given by Ministers of the Crown during previous sittings of the committee;

    (b) are consequent upon previous decisons of the committee;

    (c) have been shown to be necessary during the committee's proceedings.

    (5) If the proceedings have not been concluded before the end of two and a half hours the Chairman shall interrupt them and put the question 'That I do report the Bill to the House', unless on a motion made by a Minister of the Crown, on which the question shall be put forthwith, the Committee agree that further consideration of the Bill be adjourned, or that the debate be adjourned.

    (6) The day and hour of any further sitting shall be named by the chairman, and the provisions of paragraph (5) shall apply thereto.

    (7) Except as provided in the foregoing paragraphs, the Standing Orders relating to standing committees shall apply to any special standing committee.—[Mr. Pym.]

  Voluntary-aided and Controlled Schools
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Gummer.]
  10.15 pm
  Mr. John Butcher: In these sensitive days—[Interruption.]
  Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. Perhaps the lion. Gentleman will wait a moment while the Chamber clears.
  Mr. Butcher: In these sensitive days I should begin by declaring a sort of interest in the subject of voluntary-aided and controlled schools, in that I have two children who attend a Church of England infants school. I am much satisfied with the education that they are receiving.
  Having said that, I should concentrate on the proper contribution that Church schools make to education provision in the United Kingdom, both in the physical and material sense and in the moral, if not even spiritual, sense. To do this I should like to cite the example of the provision made in the city of Coventry by Church schools. I am delighted to report that we have an above-average number of Church schools, probably as a result of fairly large immigration into the city of people from Ireland in the late 1940s and early 1950s.
  The result is that 17 per cent. of primary school places in the city are now provided by Roman Catholic schools and 6·6 per cent. by Church of England schools, giving a total of 7, 200 places in addition to the 25, 500 totally funded by the local education authority. At secondary level 18·5 per cent. of the places are provided by Roman Catholic schools and 3 per cent. by Church of England schools.
  Surely in these days, when education budgets are constricted, my hon. Friend the Under-Secretary of State for Education and Science does not need to be reminded of the important financial contribution that those schools make in the 15 per cent. of initial building costs that they provide. When repairs and maintenance budgets are being reduced—or being made more efficient, should I say?—the maintenance of the external fabric of a building can cost a considerable sum.
  Moving on to the broad issue of the subject of tonight's debate, I should like first to refer to a booklet entitled "The Catholic School", published in 1977, which says on page 22:
  "The Catholic school community…is an irreplaceable source of service, not only to the pupils and its other members, but also to society. Today especially one sees a world which clamours for solidarity and yet experiences the rise of new forms of individualism. Society can take note from the Catholic school that it is possible to create true communities out of a common effort for the common good. In the pluralistic society of today the Catholic school, moreover, by maintaining an institutional Christian presence in the academic world, proclaims by its very existence the enriching power of the faith as the answer to the enormous problems which afflict mankind. Above all, it is called to render a humble loving service to the Church by ensuring that she is present in the scholastic field for the benefit of the human family."
  In the Durham report the following observations are made:
  "It is a Christian's concern for the wholeness of the human being, for the quality of the common life, for the direction in which man goes that turns him towards education now and sets
  454
  him inside it and will not let him disengage…We are in, and will remain in, education because that is where we belong. The pursuit of truth and the imparting of it are very much our business, as are the healthy enlargement of men's minds and personalities and the creation of truly human relationships and communities."
  No reasonable hon. Gentleman would disagree with those very noble and laudable words.
  In my six years as a member of the Birmingham city education committee and three years as its vice-chairman, there were rarely any arguments about the role of Church schools. Indeed, parents often demanded of me that we should keep politics out of education. We did our best to do that and I am reminded that we used to say there were three major political parties in Birmingham; members of the Conservative and Labour Parties and members of the education committee. Sadly, politics is intervening more and more in education and I am afraid to report, even in the role of Church schools, that a rather vituperative political dimension is being added.
  The education system in Britain comprises a variety of schools to meet the needs and aspirations of a variety of children. I include in that total system the independent schools that are under open attack from the Labour party and muted attack from the Social Democrats.
  However, I wish to concentrate tonight on the voluntary sector and, particularly, on the major part of it—Church schools. They are also under attack, especially from the Labour Party at local level and by some Labour councillors—the people who implement Labour's education policy. It is a part of Labour's overall policy to be against any sort of independence, even semi-independence, in education. It would simply have the schools totally controlled by the State.
  Voluntary schools are most excellent where we can observe the benefits of less State control, and of the input from foundations and persons dedicated to good education, without any axe to grind beyond that of ensuring that good education is available in their schools. Church schools are particularly well known for their insistence on good discipline, moral standards and, of course, teaching of religion. When there is general agreement today that standards of behaviour and discipline leave much to be desired, it would be utter stupidity to destroy these havens of such good behaviour and discipline.
  Of course, the hon. Member for Bedwellty (Mr. Kinnock) is shrewd enough to appreciate the electoral liability of alienating the millions of voters who support Church schools, many of whom use them. He must be particularly concerned at the growing antipathy of the Catholic vote when they see their schools under threat. Nevertheless, whether he likes it or not, Labour is increasingly adopting an anti-Church schools attitude, not least in London.
  Mr. Harry Greenway: My hon. Friend mentioned the hon. Member for Bedwellty (Mr. Kinnock). Is he aware that in the London borough of Ealing, which I represent, in a three-tier system there are five Church of England lower schools, three Church of England middle schools and, up to two years ago, there was no Church of England high school? The Church and people of Ealing set out to establish such a school. The hon. Member for Bedwellty visited Ealing more than once, speaking vituperatively and aggressively against the establishment of that school. The National Executive

  455
  Committee of the Labour Party did its utmost, in every possible way, to prevent the Church of England from establishing a new Church of England school in Ealing, to the eternal shame of the Labour Party in Britain. That must not be forgotten, and it occurred only two years ago. I am happy to say that the battle has been won and the school established.
  Mr. Butcher: I am grateful to my hon. Friend for that intervention. If something should come out of this debate, I hope it will be an assiduous investigation in constituencies throughout the land into the attitude of local Labour Parties towards denominational schools.
  The London Labour Party produced a draft manifesto in preparation for the last GLC elections. That was prepared in September 1980 and Labour proposed policies in that document to curtail the rights of voluntary schools, reduce their intakes and, eventually, eliminate them altogether. Of course, such policies are wrapped up in party jargon. A passage states:
  "We deplore the attitude of those voluntary schools which seek to retain an element of selection in their intake and we intend to ensure that these schools bear a fair share of any reductions in size resulting from falling rolls."
  Another says:
  "No child should be educationally segregated by virtue of his or her sex, religious, ethnic, or socio-economic status".
  What that means, among other things, is that a Catholic school may not select children for that school on the grounds of their being Catholic. Further on, the document says:
  "In order to further the spirit of a fully comprehensive education service, the status, pupil selection system, and role of the voluntary school sector should be completely reviewed with the aim of ending all selectivity".
  That again is a euphemism for saying that a Church school may not select admissions—not even on grounds of Church commitment. It is interesting that almost identical policies came out some months later at the Easter conference of the National Union of Teachers in 1981 as a motion submitted by the Lewisham branch of the union. It was a long motion listing five ways in which Church schools should be made "more accountable", as the motion put it. It sought to prevent Church affiliation from being a criterion for admission of pupils. It sought to have the local authority control three quarters of the governors. It sought to prevent religious affiliation being a factor in appointing staff. It sought to prevent the proportion of pupils in voluntary schools increasing in any area.
  So seriously did the Catholic Church take this threat that the diocese of Westminster circulated all its Catholic schools with the terms of the motion and a point by point answer to it. The diocese makes the valid point that in some areas there have never been enough Catholic school places to meet the demand from the local Catholic population. Falling numbers of children, including those among the Catholic community, mean that by retaining the same number of Catholic school places, the demand from the Catholic community can at last be met. Those who, in the past, have been unable to find a Catholic place can now do so. In other areas, where the supply of Catholic places has in the past matched demand, the diocese rightly concedes that places will need to be taken out of use as that demand falls.
  This is the major onslaught on the Catholic schools at present.
  Mr. J. F. Pawsey: My hon. Friend makes a valid point. He speaks without bias. He is not a member of the Catholic faith, although he is a well-known and respected member of the Church of England. It is fair to say that Church of England schools also play a prominent part in the life of the educational system and denominational schools. There are many good Church of England schools. Will my hon. Friend agree that those Church of England schools are also directly under threat from Opposition Members, including the hon. Member for Bedwellty, (Mr. Kinnock)?
  Mr. Butcher: I am much obliged to my hon. Friend. I would not like to go against moves towards ecumenicalism on the matter. I am sure that the two parts of this equation feel equally under threat.
  The antagonists are saying that if, in an area, the number of Church school places has been, in the past, say 10 per cent. of the total number of maintained school places, then, when the total demand for school places falls, as is happening in London and the other big cities, the number of Church places should still be no more than 10 per cent. Yet, if the free expression of parental choice is permitted, all the evidence is that far more parents prefer a Church school for their child than they have been able to achieve in recent years. Now, with falling rolls, there should be a greater opportunity to meet that parental choice.
  A very articulate priest who resides in my constituency has addressed himself to thoughts on the role of Church schools. He says:
  "To the Roman Catholics themselves the schools allow growth within their faith, not in isolation but hopefully allowing children to face society with firm Christian principles."
  He lists as a second advantage:
  "To the general education system the schools allow a viable variation for parental choice".
  Thirdly, he sees the schools as "a strength" with
  "a strong philosophy of education to counteract some of the more extreme doctrines that seem to abound these days".
  The Church schools are the enemies of intolerance and the disseminators of clear Christian values. I have sought this debate for two reasons—to reaffirm the role and value of Church schools and to put a shot across the bows of those who may be tempted to produce policies that threaten their existence within a pluralistic society.
  I conclude with a further quotation from a Church of England man, the Rev. Gerard Hughes, of the Coventry diocesan education team, who said:
  "Education tends to socialise its pupils. We must, however, go beyond this and try to initiate children into what is valuable in society".
  I am sure that reasonably-minded hon. Members will support that objective and I hope that my hon. Freind will lend his support to that category of schools which is most assiduous in its pursuit.
  10.29 pm
  The Under-Secretary of State for Education and Science (Dr. Rhodes Boyson): We owe a debt to my hon. Friend the Member for Coventry, South-West (Mr. Butcher) for introducing this debate today. I know that many others present, including my hon. Friends the Members for Rugby (Mr. Pawsey), for Winchester (Mr. Browne), for Ealing, North (Mr. Greenway), for Dartford (Mr. Dunn) and myself are concerned about the preservation of voluntary schools in Britain. I draw attention to the empty Opposition Benches and to the

  457
  absence of any Labour, Liberal or SDP Member, when everyone knew that there was to be an Adjournment debate this evening about voluntary schools and their importance to the educational system.
  I greatly respect my hon. Friend the Member for Coventry, South-West. I met him when he was on the education committee in Birmingham and when I spoke to the advisory committee of the Conservative Party in that area. Our friendship, which I very much treasure, began in those days before he joined us as a Member of Parliament.
  Tonight he has drawn our attention to the valuable part played by the voluntary schools in the education service of Britain. I am only too pleased to assure him that the Government continue to support the voluntary schools, especially the Church schools, and that, as far as any Government can, they will protect those schools from those who would destroy them or, as seems to be the policy of the Labour Party, slowly to strangle them.
  Such voluntary schools—which are largely Catholic, Anglican or Jewish, but which could be used by other multi-racial or ethnic groups, and which frequently are in some parts of Britain—give parents the opportunity to have their children taught in a school where religious and moral values reflect those of the Church and the family. In an age when moral values are under attack, that ensures that children are brought up with roots that can withstand the storms of adolescence. Never have religiously based schools been more necessary.
  Voluntary schools are also part of the free society. They balance the increasing power of the Government and local education authorities, of which I have always been suspicious. Lord Acton's dictum was
  "Power tends to corrupt and absolute power corrupts absolutely"
  and a free society will be preserved only by power centres that are not pawns of the State but which can balance the State's powers. Voluntary schools are one of the foundation stones of the free society. Poland is a current warning of the need for alternative power structures independent of the State.
  My hon. Friend rightly drew attention to documents emanating from the Labour Party, which wishes to control admissions to these schools, taking away from the Church control of over its own schools and reducing the intake to those schools, even against parental wishes. I wish to bring my hon. Friends up to date—my hon. Friend spoke of the draft manifestos of last year—about what has happened more recently along those lines. Further documents published since the local elections of last year regrettably demonstrate that the fervour of the Socialists to control, to use one of their euphemisms, the Church schools remains unabated.
  The Socialist Education Association produced a document only last December entitled "The Dual System of Voluntary and County Schools". The Socialist Education Association is affiliated to the Labour Party, and the president and driving force of that association is none other than Mrs. Caroline Benn, wife of the right hon. Member for Bristol, South-East (Mr. Benn). Mrs. Benn
  458
  said that the document would be considered by the Labour Party national executive committee with a view to incorporating it into party policy.
  The proposals in that document amount to the eventual abolition of Church schools. The local education authorities would control admissions to the voluntary schools. At present the head and the governors control admissions and, to take a simple example, they admit Catholics to Catholic schools. The Socialists would take away the right of control over admissions. If they do that, the special ethos of those schools will be completely destroyed.
  Similarly, under this recommendation the local education authorities would control staff appointments to the voluntary schools, which again is a way of removing the special attributes of the schools. But the most immediate and effective control that the Socialist Education Association proposes is on the actual numbers allowed into those schools, to which my hon. Friend referred. Hon. Members will not be surprised to learn that while most areas of the country are suffering from falling school rolls, the numbers applying to the voluntary schools are holding up more than those to the county schools. In other words, left to themselves, many parents show a preference for the voluntary schools such that numbers in these schools decline only slowly compared to the greater decline in the county schools.
  To this state of affairs the Socialist Education Association says:
  "The local authority must be given powers to see that schools share the falls and closures equitably, rather than leave developments to be determined by crude market forces."
  Presumably what is meant by "crude market forces" is parental choice. The association seems to be saying that the parents—presumably ratepayers and taxpayers—should not be allowed to exercise choice for their own children.
  Mr. Pawsey: Does my hon. Friend recognise that Catholics raise money for their own schools? Surely they are putting their choice where their money is.
  Dr. Boyson: I welcome that intervention. Catholics do raise money for their schools. Even in the building of schools they raise 15 per cent. of the cost. There is a financial penalty clause which accompanies that choice.
  The document continues:
  "Legislation will be required to give local authorities the right to determine school size after due consultation with all interested parties."
  We know what is sometimes meant by consultation. This is what was in the Labour Government's 1979 Education Bill of the right hon. Member for Crosby (Mrs. Williams), who was the then Secretary of State for Education and Science. That Bill fell with the election.
  The right hon. Lady makes much of her 1979 Bill, and she claims that we simply stole it and turned it into our 1980 Act. We certainly "stole" the non-controversial bits, such as calling managers and governors of schools simply governors. On admissions and the voluntary schools, however, we made very careful and intentional changes to

  459
  what she had proposed in order to restore the full rights of the voluntary schools and to make sure that these rights would be retained.
  The right hon. Lady's Bill would have made it possible for local authorities, supported by the Secretary of State, to impose a reduction on the entry to a popular voluntary school, even where such reduction was clearly against the wishes of the parents, and clearly against the so-called "crude market forces". In Committee I led the then Conservative Opposition in opposing the Bill. That Opposition fought it tooth and nail. We kept the Bill in Committee until the previous Labour Goverment fell. In other words, the right hon. Lady attempted the kind of legislation that the Socialist Education Association is still asking for today. Indeed, the SEA is kind enough to give us credit for supporting the voluntary schools in our 1980 Act, which I took through Committee. It states:
  "The 1980 Education Act gave aided voluntary schools significant new independent powers in matters of admissions and certain appeals"
  The hon. Member for Bedwellty (Mr. Kinnock), the chief Opposition spokesman on education, has gone to some lengths to try to distance himself from these views of the Socialist Education Association. He even found it necessary to write to the Catholic newspapers pointing out that the document was only a discussion document and was not necessarily Labour Party policy.
  Mr. Pawsey: We will not be taken in by that.
  Dr. Boyson: Quite so. I do not think that we are being taken in by that. However, the document states:
  "This is not the first time the Labour Party has committed itself to discuss problems arising over the dual system. In our party programme 1973, setting out policy for a future Labour Government, we pledged that a Labour Government would start informal talks with the voluntary sector on some of the problems being met."
  We know what those informal talks would mean. We are entitled to observe that what may be extreme Bennite policies one year tend to become accepted Labour policy the next.
  Furthermore, we are entitled to observe that the former leader of the ILEA, Sir Ashley Bramall, and a present ILEA committee chairman, Miss Margaret Morgan, as well as the hon. Member for Lewisham, West (Mr. Price), are listed as contributors to the Socialist Education Association document. I was also amazed to find that an ILEA inspector is listed as a contributor to that political document.
  Let me quote from another Socialist source. There is a journal published by the Left-wing branch of the London Labour Party under the name TLK. That stands, believe it or not, for "Teaching London Kids". In one issue a Mr. Dave Pictor states:
  "The proportion of pupils in voluntary schools is rising fast…The 1980 Education Act by deliberately strengthening the position of the voluntary aided and special agreement schools is an attempt to permanently defend those voluntary schools."
  We say "Amen" to that. He, too, credits us with defending Church schools. I consider that not an attack but an honour.
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  Mr. Pictor also says of the Catholic schools:
  "What is most unacceptable about the position is the way in which the Catholic authorities, by virtue of the aided status, are able to formulate their own plans for secondary organisation."
  At least he concedes:
  "The way forward is not instant abolition of the voluntary schools".
  I have to say, however, that the way that he emphasises instant abolition seems to imply that the way forward is the eventual strangulation of the voluntary schools. However, the Left-wing of the Labour Party kindly reminds the hon. Member for Bedwellty that the matter of the Church schools is a "political hot potato" and that
  "If handled in a clumsy way it could lose votes".
  If that is all that the Labour Party offers, can voluntary schools look to the SDP for help? I sadly fear not. Not only did the right hon. Member for Crosby, when she was still in the Labour Party, put into her 1979 Bill proposals that would have seriously curtailed the voluntary schools, but let us look at what the SDP is saying now.
  I quote from the Camden SDP:
  "the county and voluntary schools should share equally in falling pupil entry, and that all schools should be kept open with reduced intake."
  That is what my hon. Friend the Member for Coventry, South-West quoted the Labour Party as saying. Here again the SDP is saying that the voluntary schools must take an equal share of falling rolls, ignoring the fact that there is still a tremendous demand for those schools and that parents do not want them to be cut back equally with the other schools. One outcome of that SDP policy would be the end of the Church schools, for many of them are only three forms of entry. To reduce their intake still further would be to make them very difficult to run.
  Let me return to Labour's policy and quote another of the formidable Benn family. Councillor Hilary Benn, now I believe the prospective parliamentary Labour candidate for Ealing, North, and son of Caroline and the right hon. Member for Bristol, South-East, in a letter to The Times of 12 February this year stated:
  "The case against any extension of voluntary aided denominational education is overwhelming."
  Again, betraying that true Socialist view, he stated:
  "The most fundamental objection of all is that the principle of comprehensive education, whose purpose is to break down barriers of selection, class, race and social inequality, would be irrevocably damaged if our education system were to be divided on religious lines."
  In other words Church schools can stay if they are not concerned with religion—one can have any colour of car as long as it is black.
  No wonder the Church schools are alarmed. No wonder they look to the Conservative Party as the only party that clearly and without a shadow of doubt continues to support the retention and the continued independence of the voluntary sector of education.
  This is not a political monopoly, however, that we should like to preserve. We should be only too delighted to have the Labour Party and the SDP joining us in clear and full defence both on religious and personal choice

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  grounds. I regret that this is not at present the case. We should welcome the presence of the SDP to hear what is being said in the debate.
  My hon. Friend the Member for Harrow, West (Mr. Page) is a great supporter of voluntary schools. I welcome his presence.
  The debate has been important. The preservation of religious schools is important on religious grounds and for the defence of freedom.
  Mr. Greenway: I attended the weekly communion service of the Twyford Church of England high school in
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  Ealing last week. Children of all races were there, which proves that the schools are multiracial and rules out the Labour Party's racial objection.
  Dr. Boyson: There were three times as many first choices for the school this year, after it had become a Church of England school, than three years ago, when it was non-denominational. Despite the Labour Party's total opposition, the success of the transfer of the school to become a Church of England school is demonstrated by the parental support. I trust that similar parental choice will be permitted throughout the country.
  Question put and agreed to.
  Adjourned accordingly at sixteen minutes to Eleven o'clock.

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

Lord Brightman
The Right Honourable Sir John Anson Brightman, Knight, a Lord Justice of Appeal, having been appointed a Lord of Appeal in Ordinary and thereby created a Baron for life, by the style and title of Baron Brightman, of Ibthorpe in the County of Hampshire—Was, in his robes, introduced between the Lord Killearn and the Lord Wilberforce.

Students: Polytechnics and Universities
2.47 p.m.
Lord Mackie of Benshie: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether their policy is to divert students into polytechnics rather than universities.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Elton): My Lords, in order to maintain academic standards and preserve the research capacity, the University Grants Committee has given universities guidance on student numbers. In so far as the non-university higher education sector has found itself able to increase intakes without lowering standards, this is welcome to Her Majesty's Government so long as it is consistent with resources available for awards.
Lord Mackie of Benshie: My Lords, is the Minister aware that his reply will give some pleasure to the universities, but is he also aware that a feeling per-tains among the universities giving excellent technical scientific courses that the Government prefer to save money—and, indeed, the policy of the UGC reinforces this view—by diverting students into polytechnics; and will he give the House an assurance that the Government fully appreciate the wider educational scope available to students who are successful in getting into universities to take technical and scientific degrees?
Lord Elton: My Lords, the Government are indeed aware of the importance of technological development and technological education. Indeed, the plans of the University Grants Committee for student target numbers envisage a positive move in favour of subjects related to technology and science.
Lord Wynne-Jones: My Lords, will the noble Lord bear in mind that there are two separate sectors of
644
higher education, and that unless both sectors are treated properly we shall not have a good higher education system? In particular, will he bear in mind that the main function of a university now is to advance knowledge, and unless it has the resources to do that it cannot possibly play its proper part? Will he also bear in mind that the polytechnics play an equally important part but that it is more than likely that in a country like ours, or, indeed, in any modern community, one has to put tremendous resources into the polytechnics? Will he bear in mind——
Several noble Lords: Too long!
Lord Wynne-Jones: Will the noble Lord bear in mind and not just look as though he were surprised that I am asking the question) that unless the polytechnics are given the money—and at the present time the pool has been capped, and therefore they have not been given the money like——
Several noble Lords: Speech!
Lord Wynne-Jones: My Lords, will the noble Lord ensure that the polytechnics, with the universities, get proper resources?
Lord Elton: My Lords, I am tempted to say, yes, I will bear everything in mind that the noble Lord has said in so far as I can recall it. I think the salient points to which I should wish to reply in that contribution would be that the Government are in fact treating both sectors with a close degree of equality. The Government are aware of the necessity to preserve excellence in both. We already have the UGC for the university sector; and we now have the national advisory body for the advanced, further education sector. We are also aware of the importance of the advancement of knowledge in this country, and, in-deed, in the capacity to turn that knowledge into industrial progress as well as academic progress. Upon that necessity hinges the vital need to reduce unnecessary expenditure in this country on un-productive things and to get the best possible result for our money in the academic world, so that we can develop the industrial base which pays for everything, including academic progress.
Lord Avebury: My Lords, if the Government's purpose is to get the best possible value for money and at the same time, as the noble Lord the Minister said in answer to my noble friend, to encourage people to go in for technological and scientific education, may I ask him this question: Is it not wrong that the effect of the imposition of numbers limits on the universities has been to damage disproportionately some of the technologically based universities such as Aston and some of the faculties which are essential to the future of this country, such as the faculties of computing in universities like Cambridge and Kent, while at the same time allowing the student numbers in similar faculties to rise in the polytechnics?
Lord Elton: My Lords, first I remind the noble Lord that almost every university has some aspect of

645
technological excellence to offer to its students. Secondly, I remind him of the terms of an earlier answer in which I put before your Lordships the actual effect of the UGC request for undergraduate targets of the universities which were formerly colleges of advanced technology. If the noble Lord will look at that, he will find that the areas he is most concerned with have been very fairly dealt with. In combination with the answer I gave the noble Lord a moment ago about the overall advance in numbers, in proportions of students attending technologically related subjects, I think he should be satisfied with the position.
Baroness David: My Lords, will the Minister agree that there will be a drop of 30,000 of advanced students by 1984–85 when we shall then have the lowest proportion of 18 year-olds in higher education for 18 years? Also, would it be possible for him to tell us, as the White Paper does not break down the figures, the numbers of university admissions and the number of admissions to the maintained sector? As I say, in the White Paper they are given altogether, and it would be interesting to know how they break down.
Lord Elton: My Lords, I do not have a precise breakdown beyond the figures given in the White Paper. If it is available to me, I shall write to the noble Baroness about that, as indeed I will about her projection which I think is a little on the pessimistic side.

Cigarette Advertising
2.55 p.m.
Lord Airedale: My Lords. I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they subscribe to the view that a society which allows cigarettes to be advertised is plainly not one which is strenuously trying to discourage people from smoking them.
Lord Elton: No, my Lords. We are committed to doing all we can to reduce the amount of cigarette smoking and hence the death and disease associated with it. But there is no clear evidence that a ban on cigarette advertising would lead to such a decline. As for discouraging smoking, I would remind noble Lords that the Government are making available over £2 million in the forthcoming financial year for the Health Education Council to spend on anti-smoking measures mainly directed at young people.
Lord Airedale: My Lords, may we be told what is the present state of play in the long-standing discussions that go on between the Government and the industry regarding cigarette advertising?
Lord Elton: My Lords, on the specific area of sport sponsorship, which is an important area of promotion, the main advance is that all media advertising for
646
sponsored sporting activities, and most promotional signs at meetings where these take place, will carry the Government health warning in exactly the same way as cigarette advertisements do, so that the advertisers are actually paying for the Government advertising. In addition, the industry have agreed not to sponsor activities in which the majority of participants are under 18. Furthermore, no sports which have not already been sponsored by industry will now be sponsored without Government agreement.
Lord Blyton: My Lords, is the Minister aware that there need not be any worry about advertising against smoking? The Chancellor of the Exchequer has already done that with his high taxation on tobacco and now people have consumer resistance, and therefore people will not smoke. So there is no worry about advertising against cigarette smoking.
Lord Elton: My Lords, nonetheless, the Government must take a position on this matter.
Lord Glenkinglas: My Lords, will my noble friend bear in mind that in a free society it is probably undesirable for a Government to control advertising?
Lord Elton: My Lords, as the noble Lord will have observed, we are seeking to proceed by agreement.
Baroness Jeger: My Lords, is it not inconsistent of the Government to forbid straightforward cigarette advertising on television but to allow the indirect advertisements which appear as the backdrop to every sponsored sporting campaign? If the Government thinks advertising does not make any difference, why not lift the whole ban?
Lord Elton: My Lords, as I was at pains to explain a moment ago, the backdrop in future will carry in almost every case the Government's warning at the expense of the advertiser.
Baroness Birk: My Lords, may I say as a one-time chairman of the Health Education Council that I am glad as always to hear the Government are putting money into it. It seems an odd situation, for it is a drop in the ocean—will he not agree?—compared with what the advertising companies are spending on advertising. In view of that fact, is it not true that his answer to the noble Lord, Lord Airedale, should have been that the Government do not subscribe to the view that they are trying strenuously to discourage people from smoking because they are supporting advertising? At least be honest about it.
Lord Elton: My Lords, things are not so simple as the noble Baroness supposes. If I may use figures to demonstrate, in 1974 in this country 51 per cent. of men smoked cigarettes. By 1980 that figure was 42 per cent. It is very difficult to make comparisons internationally; but in Norway where advertising was banned in 1975—which is what the noble Baroness would have us do—the percentage of men smoking dropped from 52 per cent. to 42 per cent. over the same period. That is the same period—almost exactly the same decline; a total ban on advertising in one

647
country and agreements in this country with no difference in the result.
Lord Mackie of Benshie: My Lords, will the Minister advise the cigarette industry that they are wasting their money by advertising?
Lord Elton: My Lords, I would not seek to advise anybody how to run their own show. I would say, however, that advertising companies are very anxious to persuade consumers of another brand to transfer to their own. That is what a lot of this is about.
Lord Paget of Northampton: My Lords, I know—
Viscount St. Davids: My Lords—
Lord Paget of Northampton: —we have problems in Government—
Several noble Lords: Order!
The Chancellor of the Duchy of Lancaster (Baroness Young): My Lords, I am sure that the House would wish to have questions from both noble Lords who are at present standing. Perhaps we could have the question from the noble Lord, Lord Paget, and then the question from the noble Viscount, Lord St. Davids.
Lord Paget of Northampton: My Lords, we know that Governments have to deal in pros and cons, but I wonder whether the Minister can answer yes or no to this question. Are the Government in favour of more jobs or fewer jobs in Imperial Tobacco Company factories?
Lord Elton: My Lords, the Government are, of course, in favour of greater employment opportunities throughout the country, and welcome any efforts which companies can make to diversify into fields in which they are able to excel.
Viscount St. Davids: My Lords, will the noble Lord explain what appears, on the face of it, to be rather inconsistent? The Government are saying that advertising has no effect and, therefore, they are not stopping the tobacco companies from advertising. At the same time, they are themselves putting on an advertising campaign. Are they suggesting that that campaign will have no effect?
Lord Elton: No, my Lords. I am not saying that advertising has no effect. What I am saying is that it is doubtful how great is the effect of advertising on consumption as a whole. If you look at foreign examples, it does not appear to be great. It has a considerable effect, I am given to understand, on which brand people smoke. If we can use the battle between the companies, as to who shall smoke more of their brand, as an opportunity for advertising the fact that people ought to give up smoking, as I did when I reached 40 a day, I think that that is not inconsistent.
Lord Wells-Pestell: My Lords, may I ask the noble Lord the Minister, having regard to the fact that
648
advertisements at sports functions are limited in size, and must be, whether the Government will take steps to see that the warning is of a size that people can read?
Lord Elton: My Lords, I will certainly take that to my honourable friend with that responsibility as a practical and sensible suggestion.
Lord Kaldor: My Lords, does the Minister agree that if rival companies advertise in equal measure, the pull exerted by one company is cancelled by the opposite pull exerted by the other?
Lord Elton: My Lords, the noble Lord has expressed much more elegantly than I could, or indeed have, one of the elementary factors in this situation.
Lord Leatherland: My Lords, does the Minister agree that the only way to get smoking reduced is through the will-power of people themselves?
Lord Elton: My Lords, if we can reinforce that will-power, I think it will be a good thing.

Prisoners of War: Officer's Pay Deductions
3.3 p.m.
Lord Clifford of Chudleigh: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what was the commencement date for deductions from the pay of officer prisoners of war in the Second World War and when did those deductions cease.
The Minister of State for Defence Procurement (Viscount Trenchard): My Lords, the pay accounts of officer prisoners of war in the Second World War were reduced by the amount of pay they were due to receive from the enemy with effect from the date of capture and throughout the period of captivity. There is some evidence that deductions did not continue after March 1945.
Lord Clifford of Chudleigh: My Lords, coming on top of the humiliating working group report, with its odious comparisons of proved inaccuracy, can the noble Viscount visualise the effect of his reply on, for example, someone who was taken prisoner in the desert, with up to three months transit in appalling conditions, marching from Tmimi Barce and all stations west of Tripoli; who learns today that up to half his pay was deducted from the date when he was taken prisoner, and knows, as he now does, that those deductions, unlike those made by other countries, were paid back to the Treasury instead of to the prisoners concerned at the end of the war?
Viscount Trenchard: My Lords, the noble Lord's Question on this subject, about which he has asked other Questions, related to the start date and the

649
stop date of deductions. I have previously made clear that a number of credits were made against those deductions and, finally, refunds. Since the noble Lord's previous Question, I have seen the unofficial committee of my noble friend Lord Kimberley and have provided a lot of information, which is summarised in a letter from me to him dated 22nd February (in the Library). of which one conclusion is that such evidence as we have—incomplete at this stage—suggests very strongly that two-thirds of the deductions of prisoners of war in camps in Germany and Italy were either credited or refunded. That seems to me to be rather greater evidence—and I hope that noble Lords will read the documents that I have tabled in the Library—that the policy of the day, whether it was right or wrong, was in the main carried out.
Lord Shinwell: My Lords, is the noble Viscount aware that, despite his industry and concern in this matter, many of us have received representations from many quarters, and from overseas, from ex-prisoners of war who believe that they have a substantial case? Is it not likely that this controversy will continue for some considerable time? Is there not the suitable and reasonable alternative that the Government should agree to appoint a small committee of, perhaps, two or three judges or some Members of this House, who will be regarded as independent, to conduct an inquiry and bring the matter to a satisfactory conclusion?
Viscount Trenchard: My Lords, I believe that I have on previous occasions given quite a lot of reasons why we think that an inquiry now could not elicit what happened to individuals at that time. It is for that reason, of not wishing to raise false expectations, that the Government continue to maintain that there is no point, but many disadvantages, in an inquiry. I am waiting to hear from my noble friend, as chairman of his un-official committee, the results of further detailed discussions between one of his members and my officials, and I can only say that I hope very much that we shall have satisfied him. I know that representations continue. It is a very long time ago and it is extremely hard at this stage to know what actually happened, when the noble Lord who asked this Question himself said that when he returned to this country he put his Italian pay book into Cox and Kings. But we have found that the orderly room sergeants of the units which they rejoined, Cox and Kings and Lloyds—and in every pay account we have found—did carry out the policy of the Government.
Lord Mottistone: My Lords, is it not a fact that, in the long run and in the last resort, some of the monies which ought to go to the ex-prisoners of war are being retained by the Treasury? Would it not be sensible to have a solution whereby some of the monies which the Treasury have held on to, which ought in some way or another to have gone to the ex-prisoners of war, are paid into some officers' charity of an appropriate type, as a gesture by the Government that they recognise that it is not proper for the Treasury to hold on to monies which they really do not deserve to have?
Viscount Trenchard: My Lords, I dealt with my noble
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friend's point, and I have to say that if he will read in Hansard the report of the Unstarred Question which was asked by my noble friend Lord Kimberley, he will see that it is not the case that, under the policy of the day, the Treasury made off with money which was owed to prisoners. The premise of his question is simply not accurate, and I would ask him to read again the Hansard report of the debate.
Lord Bruce of Donington: My Lords, is the noble Viscount aware, as my noble friend Lord Shinwell has just indicated, that this is a problem which will not go away? Is he further aware that, according to his own answer, at least one-third of the persons concerned did not receive and were not credited with the refunds to which they were entitled? Is the noble Viscount also aware that there is abundant evidence that this is the case in a whole series of instances? Therefore, will the noble Viscount please consider inviting applications from the survivors—and there still must be some, although they are a diminishing number—who feel aggrieved, to be sent to him, in order for them to be examined and monitored, with a view to at any rate some contribution being made to those which are adjudged to be quite well founded and correctly stated?
Viscount Trenchard: My Lords, the noble Lord's opinion is that this is a problem which will not go away. I can only say that I have heard from a number of ex-prisoners who were worried as a result of the media coverage of this subject that they may have missed money which was their due, and who, having read the debate that took place in this House, do at least now say that they have no accurate recollection and it may well be that their accounts were credited. The noble Lord says that at least one-third were not credited. If he will read the letter that I have had placed in the Library, dated 22nd February, and the document attached to it, I believe he will be quite unable to hold to that point of view. I would ask him to read the letter.
Regarding his reference to survivors, a very large number of ex-prisoners are still alive. We have thousands of letters and I have read a very great many of them. The vast majority confirm that they had no recollection at the time, and the majority of them left pay matters to their orderly room sergeants and others when they were very delighted to be back.

Defence Planning: Public Sector Co-operation
3.12 p.m.
Lord Renton: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they will request the nationalised industries and other public corporations to co-operate fully with the local authorities' emergency planning teams so as to achieve increased preparedness for protecting the public against conventional or nuclear attack and against fallout drifting from the continent.
The Parliamentary Under-Secretary of State, Home Office (Lord Belstead): My Lords, nationalised industries and other public corporations are, where appropriate, already involved in home defence planning at national, regional and local level. County civil emergency planning officers are encouraged to work directly with the local representatives of public sector organisations and in general there is good co-operation at this level; but the final responsibility for home defence planning in these organisations lies with the sponsoring department. Following the home defence review in 1980, good progress continues to be made in improving the state of preparedness of the public sector.
Lord Renton: My Lords, while thanking my noble friend for that reply, may I remind him of the paramount importance of getting the public utilities involved in this emergency planning process? Will he give an undertaking to your Lordships that the Government will monitor that progress in order to see that proper arrangements are being made?
Lord Belstead: My Lords, I entirely agree with my noble friend about the importance of this matter. The Government are looking urgently at the role of industry in the event of war. Meanwhile a great deal is being done, and I will certainly give my noble friend the undertaking he has asked for.
Lord Jenkins of Putney: My Lords, would it not be more moral and perhaps more sensible for the Government to devote the resources they are proposing to devote to Trident II, to providing the cities of this country with an effective anti-missile defence system such as exists in Moscow?
Lord Belstead: My Lords, that is a question which is ingenious but irrelevant.
Lord Inglewood: My Lords, my noble friend spoke of "good progress", as if all counties and authorities were active in this direction. Can he say what action the Government propose to take where a county council such as Cumbria has brought all civil defence planning to an end?
Lord Belstead: My Lords, the Government have hitherto succeeded in convincing local authorities to fulfil the requirements of civil defence legislation. If my noble friend has any information to the contrary, I know that my right honourable friend would be very glad to have it.

Unemployment and Industrial Recovery
3.14 p.m.
Lord Glenamara Lord Glenamara rose to call attention to the need for Her Majesty's Government to introduce effective measures to stimulate industrial growth and to deal with the continuing grave problem of unemployment; and to move for Papers.
The noble Lord said: My Lords, high up on the moors of County Durham to the south of Tyneside there is an old industrial town of 31,000 souls: it is
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called Consett. If this were a sermon—which Heaven forbid!—its text would be the town of Consett, because that town is symbolic of what has happened to Britain in the last three years. Physically Consett is dominated by Consett Iron Works—a vast complex of furnaces, industrial buildings and slag heaps. But today the furnaces are cold and empty, the works are silent and closed and only a pitiful hulk remains of a former industrial giant which for generations provided the town with employment. I am quite sure that Shelley would have forgiven me for adapting the last lines his sonnet Ozymandias:
"Nothing beside remains around the decay of that colossal wreck;
Boundless and bare the lone and level moors stretch far away".
The Consett Iron Works were not unprofitable: on the contrary, their record of profitability and production was good—indeed excellent—up to the day they closed. But the policies of this Government, which have turned a mild recession into a deep slump, as President Reagan's policies are doing in America, depressed the demand for steel to the point at which even highly profitable works could not survive; and so Consett had to close.
The late Ellen Wilkinson before the war wrote a book called The Town that was Murdered about her constituency of Jarrow. This is another Durham town which has been murdered by a post-war Conservative Government. Today 25 per cent. of the working population of Consett, and 30 per cent. of the male population, are out of work. The recent report on the Consett crisis was prepared by the local authority, the Derwentside District Council. They estimated that 7,000 jobs would be required to avoid an unemployment figure of 40 per cent. by the end of this year. There are no prospects whatever in that area of any employment on this scale. Imagine the plight of the men and women of Consett when the redundancy pay runs out, as it will very shortly. Imagine the plight of those in this town who are paying mortgages and those with families to feed and clothe. Imagine the dismay in those homes when the gas bills come in later this year—up by 22 per cent.—or the electricity bills next month, which are up by 10 per cent.
I said Consett was symbolic. Indeed it is repeated across the whole of the North-East—Hartlepool 20 per cent. unemployed; Peterlee 17 per cent.; South Tyne 18 per cent.; Jarrow 18 per cent.; Teesside 19 per cent. and Wearside 19 per cent. Figures such as these have not been seen for half a century. They have taken us back to the 1930s with a vengeance. And the picture of Consett is not only symbolic of the North-East but it is seen across the whole of Britain: Wales 16·2 per cent.; Scotland 15·3 per cent.; the North-West 15·2 per cent. and the West Midlands—of all places—15·3 per cent. Even the glittering Mecca of the un-employed itself, Greater London, has 9·2 per cent.
These figures are bad enough, but the figures of male unemployment are quite horrific. For example, Red-car, a little town on the coast, has 42 per cent. unemployment. What hope is there of employment for those who are unemployed? The United Kingdom has 3 million unemployed and at the latest published figures there were 114,000 vacancies: that is 26 people for one vacancy. In Consett it is 88 people for one vacancy,

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and in the North as a whole it is 44 people for one vacancy. I have here a cutting from last Friday's Newcastle Evening Chronicle in which they say that 810 people applied for one job, pumping fuel into aeroplanes at Newcastle airport. I repeat: 810 people for one job.
These facts speak for themselves. If you are out of a job today in Britain the chances of securing one are getting less and less; and 30 per cent. of the workless have been out of work for a year or more. A million people have been out of work for at least a year. What a colossal human tragedy. These are men and women who have got to pay the rent or the mortgages. They have got to pay the grossly inflated fuel prices. They have got to feed and clothe their children. These are the men and women who have got the same hopes and dreams for themselves and their families as we all have, and they are the men and women who have got the same one-way ticket through life as we all have. I must tell your Lordships that many of them are beginning to think that they are not going to get very much out of their one life. There is a colossal human and social cost and there is also a colossal financial and economic cost. We have estimated that the cost of maintaining 3 million unemployed is £15 billion a year in social benefits and loss of tax revenue.
How far removed all this is when it is put into human terms from the media commentators who were wheeled out of their universities last week to comment on the Budget and on unemployment as though it were an abstruse problem in applied mathematics. And how far removed it is from the sycophantic Tory press who labour night and day to dress up every crumb, if I may mix my metaphors, which falls from the Chancellor's table as though it were a great and beneficent new deal for the nation. When it is put in human terms, these are our fellow men. They are not statistics. They are men, women and children.
There has got to be a better way of running the country than this. Of course Ministers are sincere, decent people who are just as concerned about the unemployed as everybody else. I do not seek for one minute to impugn their sincerity or their humanity but they are mistaken, tragically mistaken, doubly mistaken—both in their policies and in persisting in those policies long after they have been seen to fail. Cromwell, in a letter to the General Assembly of the Church of Scotland, said:
"I beseech you in the bowels of Christ, think it possible you may be mistaken".
So the plight and the prospects of the workless get worse all the time as the Government persist with their policies.
May I ask your Lordships to look at the monthly increases in unemployment in 1981: 88, 74, 74, 71, 60, 36, 30, 44, 44, 54, 34, 16 and in the first month of this year 45. To be fair, I have omitted school-leavers from those figures. By contrast, in the last 18 months of the Labour Government, unemployment fell by 120,000—the seasonally adjusted figures. When this Government came into office, unemployment was 5·6 per cent. Since then it has gone up by 70 per cent.—to 12·5 per cent.
The Government have said repeatedly that action on unemployment, apart from the schemes, which we welcome, run by the Manpower Services Commission,
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must await a reduction in inflation and that that alone will lead to a reduction in unemployment. This is their No. 1 priority. How have they done on that? They have failed to reduce inflation by a complete percentage point since the Budget of 1981 to the present time. So what confidence can anybody have in a Government who make that their number one priority when they have not achieved one percentage point since the Budget of last year? The inflation rate is now well in excess of the figure they inherited. They took over a figure of 10·3 per cent. They hoisted it to 21·9 per cent. in May 1980, and it is now stuck in a groove at about 12 per cent.
So may I ask the Minister who is going to reply: how long must the unemployed wait if they have got to await a reduction in inflation? At this rate of progress they have got to wait indefinitely. Indeed, the Treasury hand-out last week at the time of the Budget said that there would be an increase of one-third of a million this year, and that after that the unemployment figure would remain at that level indefinitely. But most of the things which the Government have done have fuelled inflation. They have stoked it up. They have stoked up the inflation which they said it was their major objective to damp down.
I believe it is thoroughly misleading not to include last autumn's measures in deciding whether the Budget is reflationary or deflationary. If this is done and they are looked at together, the Budget is thoroughly deflationary. For example, what has the outrageous way in which fuel prices have been manipulated by this Government as a form of taxation done to inflation? Prices have gone up 22 per cent. but gas has gone up 97·8 per cent. since this Government came into office. (It is going up 22 per cent. this year, and the 22 per cent. is included in the 97·8 per cent.) Electricity is going up 10 per cent. this year and it has gone up 86 per cent. since this Government came into office. What will that do to inflation? What will the £78 per annum increase in the national insurance contribution—and that is an underestimate—do this year to inflation, or the £2·50 per week on council house rents, or today's forecast of 15 per cent. on rates? I know from experience—many of us here have had experience—that whenever Ministers are considering measures of this kind some bright boy from the Treasury will always say, "Ah, Minister, this will only add 0·7 per cent. to the retail price index". But what they leave out of account is the head of steam which increases of this kind give to wage demands. So Government policies fuel inflation. However, the Government say that the workless have got to wait until inflation comes down. What a cruel illogicality that is in this Government's policy.
Of the major industrial countries, only Belgium has a worse record for unemployment. But we are an oil exporting country. We are a country which is self-sufficient in energy. With all this abundance of riches, Britain ought to be on top of the world, not at the bottom of the list. We are a nation which lives by manufacturing and most of the jobs lost have been lost in manufacturing industry. One-fifth of our manufacturing industry has been destroyed in the past three years.
I do not know whether noble Lords noticed in yesterday's Financial Times an article, headlined "Manufacturing output falls to lowest point since

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1967", which commented on some official figures issued on Monday. It pointed out that manufacturing output fell for the third successive month to a level which is hardly better than a year ago (which is one-sixth less than it was at the time of the general election) and that manufacturing output had fallen 19 per cent. since January 1979. It fell 6·3 per cent. in 1981. No wonder we have got 3 million unemployed. Of course, the effect of factory closures is cumulative because industries supply each other with plant, equipment and components. That is why the Consett ironworks have closed. It is part of the fall of the dominoes which monetarism has initiated and sustained in our manufacturing industry.
A major reason for the wholesale destruction of our manufacturing industry has been the penal rates of interest imposed and sustained by this Government; the highest ever known—17 per cent. As far as I can discover, they have never been higher. They have been kept at this level because of the Government's "medium term financial strategy". One has to say that in hushed tones, and one has to write it with capital letters because it has endowed the money supply with a mystical significance in the Government—I was going to say, on the other side of the House.
We welcome the minor relaxation in the Budget but we believe it is quite inadequate to reverse the slide into even greater catastrophe. Yet it is an ill wind that blows nobody any good; the clearing banks' profits last year were £1·7 billion. We believe that the "medium term financial strategy" must be straightforwardly abandoned now. It has to be replaced by an alternative economic strategy; a strategy that makes the reduction in unemployment its No. 1 priority. The central objective of the new economic strategy must be a substantial and sustained reduction in unemployment. Not by schemes to paint the parish council hall or to clean the pond on the village green. They are laudable projects and I am not knocking them, but they are in the field of voluntary work and not a device to reduce unemployment figures. Nor even by schemes which enable 18-year-old school-leavers to start their own businesses. But by a scheme for a substantial and sustained reduction in unemployment in British industry.
The aim of our strategy, which we are putting before the nation, is to reduce unemployment over the next five years by 2½ million. We believe this can be done if both sides of industry, the Government and the people are prepared to make employment and output their top, overriding priority and to accept the measures which are necessary to achieve it. We must recognise that the market place approach we have had for the past three years has failed. The market place has degenerated into a jungle where those with muscle and claw survive and prosper while the rest live in fear and insecurity, and therefore some controls are necessary.
I said a minute ago that we are a manufacturing country. We live by and large in Britain by importing raw materials, applying to them our brainpower and skill (which we have in abundance in these islands) and making goods to sell at home and abroad. As one of my greatly respected noble friends said yesterday, overseas markets are insatiable provided we have the
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right goods, at the right time, at the right price. The first essential in putting Britain back to work, in making an impact on these tragic figures, is to increase the demand for our goods, both at home and overseas. I said that one-sixth of our manufacturing industry had disappeared in the past three years, but according to the CBI figures, of the factories which have survived 80 per cent. are working below capacity.
Why is there such a damaging drop in demand for the products of our industry? I believe there are three reasons. First, there is the loss of competitiveness. Secondly, there is the drop in domestic demand because of cuts in public expenditure and 3 million unemployed. Thirdly, there is the increased burden of taxation. I want to say a brief word about each. First, on the matter of competitiveness, in the first two years of this Government there was a rapid climb in the exchange rate to a point at which many of our competitors in other countries gained a 30 per cent. price advantage over British firms. It fell in the first part of last year, but since then it has been relatively stable. However, it still makes us 20 per cent. less competitive than we were in world markets.
A first requirement in restoring our competitiveness is a more realistic exchange rate. By direct intervention and by cuts in bank lending rates a Labour Government would ensure that the Government brought about a more realistic rate of exchange. In order to limit the resulting pressure on inflation, there would have to be offsetting pressures to support prices, but a number of options are available. There is the remaining surcharge on the national insurance contribution, and we greatly welcome the reduction in the Budget. There is the possibility of cutting VAT (which this Government doubled). There is also the possibility of relaxing the financial vice in which all nationalised industries are held. We suggest that £4½ billion should be devoted to these cost restraint measures in that kind of way. There is a price to be paid for restoring international competitiveness, but it can be met by counter measures such as those on internal costs. Of course, cuts in interest rates (which would accompany a reduction in the exchange rates) would affect the Retail Price Index, for example by reducing mortgage repayments.
Secondly, a word about increasing demand. Capital investment in the public sector as a percentage of Government expenditure has fallen from 22 per cent. in 1971 to 11 per cent. in 1981. It is worth reminding ourselves what we mean when we talk about "public expenditure" and "public investment in the private sector". What we are investing in is a national infrastructure; in railways, coal mines, steel works, telecommunications, houses, colleges, roads, et cetera. It is an infrastructure essential to a healthy economy and a healthy industry.
We on this side of the House believe in a mixed economy. It is worth recalling also that so-called "public investment" is all spent in the private sector; yet it is talked about as though it were spent somewhere else. It all comes back to private industry; for example, British Telecom's investment programme is money spent with GEC, Plessey, STC and so on. Similarly with roads, the money goes to the great cement manufacturing companies. With houses and coal mines it is just the same. When we are talking about "public investment" we are talking about orders

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for private industry. If we are to reverse the decline in recent years of our investment in the future, there must be an ambitious programme of public investment. There must be an equally ambitious programme to channel support to private industry where it is needed.
One cannot, of course, turn capital investment on like a tap, immediately; it takes a long time. To restore capital investment to the 1975 level would require an immediate increase of £7 billion, and that is impracticable. We suggest that there should be an immediate £1 billion programme—extra capital spending in the private sector and to aid private industry. It would, of course, have to be raised considerably in subsequent years. But as most capital investment projects take time to bring on stream, there would have to be a major boosting of current public expenditure. There are limitless opportunities to do this after three years of this Government, in the areas of health, education, social services and so on. We are suggesting an additional £3½ billion of current public spending. Here again, the greater part of this additional current spending by public authorities would eventually find its way into private sector industry.
The local authorities' spending has fallen by £2,250 million between 1978–79 and 1981–82. The rate support grant for 1982–83 is 8·7 per cent. less in real terms than the inadequate level of this year. Virtually all of this shortfall, apart from that which goes to taxation and savings (both of which go to the Government) is orders lost to the private sector of industry.
A word on taxation. I trust that the Minister has now read the Inland Revenue's figures on taxation, of which the Chief Secretary to the Treasury was obviously ignorant during the Budget debate last week. I have here the figures published by the Inland Revenue last week. They show that the percentage of income taken in tax from both single persons and married couples with two children will further increase in 1982–83 over 1981–82. As you would expect under this Government, that is only up to £20,000 per annum. After that, of course, the figures decrease, which is precisely what you would expect. In Labour's last year a married couple on average earnings paid 41·5 per cent. of their earnings in tax. This year, the same couple will pay 46 per cent. of their earnings. This is after three years of a Government which got elected on the pledge of reduced taxation.
There are three elements in our alternative strategy: £1 billion additional capital spending in the public and private sectors, £3½ billion additional current spending, and £4½ billion cost restraint measures, such as a reduction of VAT, national insurance surcharge and so on. That adds up to £9 billion, on which I will say a word in a moment. This package would be supported by a depreciation of sterling to a realistic level to offset our loss of competitiveness, and by the reintroduction of exchange controls. May I say that this was warmly supported in a speech a fortnight ago by Mr. Edward Heath. Since the Government removed exchange controls—and that was one of the most irresponsible things they did—a vast amount of capital has flowed out from Britain to our competitor countries in pursuit of highest interest rates. So, in a sense, we have been importing high interest rates.
In addition to this, we would recreate a new price commission. One of the most irresponsible things,
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one of the silliest things, the Government did was to abolish the Price Commission. The word "profiteering" is not very often heard nowadays, but it goes on on an enormous scale. We are all charged prices for goods and services which bear no relation whatever to costs; they are quite arbitrary. So there is need for a new watchdog body.
Although the package adds up to £9 billion, it would not have this impact on the public sector borrowing requirement, because of the reduction in unemployment which it would effect and the consequent reduction in social benefits and the consequent increase in tax revenue. We calculate that its net effect would be £5.5 billion. We believe that additional borrowing of this order is well within the capacity of an economy such as ours, which has perhaps the most highly developed financial sector in the world. To suggest, as some are doing, as the Prime Minister constantly does, that it would crowd out investment in private industry has been described, not by members of the Labour Party, but by Mr. Edward Du Cann, as a ridiculous theory; cash is available on a massive scale. In any event, an increase in Government borrowing for the purposes I have set out would be partly offset by a decrease in company borrowing.
The package would provide a massive blood transfusion for both public and private sectors. We have tested the package using the Treasury's own model, and its effect in quite dramatic. It would result in an increase in output in the first year of 5 per cent., a reduction in unemployment in the first year of half a million, and a 2½ million reduction in five years, which is our aim. The North of England alone—that is the North-East; technically, in the journal "the North" means the North-East—needs the creation of 50,000 new jobs simply to prevent unemployment from going up any further.
The best service this Government could render the nation would be to go. In the words of Lady Macbeth to Ross and Lennox,
"Stand not upon the order of your going, But go at once".
That is the best advice we can give them. For there is now a credible alternative before the country to the baleful strategy which has wrought so much cruel harm to our economy and to the lives of so many of of our fellowmen in the past three years. It is a strategy which offers hope, well-founded hope, to the depressed and anxious towns of Britain, where, otherwise, there will be no hope. Through it, Consett and all the other communities across the land can live and work and prosper again. My Lords, I beg to move for Papers.
3.45 p.m.
Lord Banks: My Lords, I should like to begin by thanking the noble Lord, Lord Glenamara, for moving this Motion this afternoon. It gives us the opportunity to discuss the strategy underlying last week's Budget and also to consider once again the serious economic problems facing our country. I say at the beginning that I agree with much that the noble Lord said, although I will comment a little later, perhaps adversely, on one or two aspects.
The Motion raises the main issue separating the Government, on the one hand, and the official Opposition,

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the Liberal-Social Democrat Alliance and much of the Conservative Party, including Mr. Edward Heath and Sir Ian Gilmour, on the other hand. That issue is whether, with three million unemployed, the Government should act to increase demand. Should demand be deliberately increased by the Government to reduce unemployment? Of course, back in the inter-war years, Maynard Keynes and Lloyd George argued that that was exactly what the Government should do. During the war, in 1944, the coalition Government's White Paper on employment policy made it clear that at that time all political parties in this country had come to accept those policies. That White Paper said:
"A country will not suffer from mass unemployment so long as the total demand for its goods and services is maintained at a high level".
The White Paper also put the responsibility for maintaining that high demand firmly on the Government. So far as I am aware, the present Government is the first to repudiate that doctrine.
As I understand it, the Government say that there is no lack of demand in the economy, that there is plenty of demand but that British industry is uncompetitive and cannot satisfy it; British industry is uncompetitive because the workforce has priced itself out of the market, and it has priced itself out of the market because of the inflation in the United Kingdom. Therefore, so the argument goes, reduce inflation in the United Kingdom and our industry will become compeitive again, the £8 billion surplus on the balance of payments will presumably double or treble, all will be well with British industry and unemployment will fall. That is the theory which led the Chancellor of the Exchequer to say in another place earlier this week that the fall in the inflation rate was the best news for the unemployed. So it has been the Government's policy, believing that, to get inflation down at all costs.
We on these Benches are as anxious to see inflation reduced as anyone, but we believe that you can pay too high a price. Of course, the instrument which the Government have used to effect this broader strategy is the medium term financial strategy. That argues that there is a connection between money supply and inflation and therefore we must reduce the rate of growth in the money supply to reduce inflation: to do that, we must reduce the public sector borrowing requirement, and, to do that, we must reduce Government spending. So we have had the cuts that we have discussed often enough in this House, cuts extending even to social security, to personal social services and to university education, Sir Leo Pliatzky in the Financial Times on the 15th of this month said that there was quite a squeeze in many areas at the present time in our economy, and he went on to point out that for other reasons, and notable among them the rise in unemployment, expenditure had nevertheless increased. The point that I want to make is that modifications to the medium term financial strategy are subsidiary to the basic policy, which is designed to secure a reduction in inflation at all costs and to prevent any Government stimulus to demand, and that this has resulted in very considerable contraction of the economy. We have had in this country a tighter economic policy than those found in other industrial
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countries. David Blake, the economics editor of The Times, writing in that paper on 9th March, said:
"For the seven largest industrial countries as a whole, all of whom were grappling with inflation, the tightening of policy was about a quarter as fierce as here".
Following the Budget it has been suggested that monetarism is dead. It is certainly true that monetary targets have not been achieved. It is certainly true that monetary targets have been modified, although they are still set at levels which are below experience. It is certainly true that the connection between money supply and inflation has not been glaringly obvious. It seems that a wider array of monetary indicators is now to be relied upon. Other indicators—the public sector borrowing requirement, the exchange rate, the interest rate—are all to be weighed the one against the other. There is to be a more pragmatic approach. But the Government's strategy is basically the same: a reduction in the inflation rate at almost any cost, and the deflationary stance continues and the Budget does not depart from it.
Of course the Government say that there is no alternative. But I wonder whether, when they say that, they are fully aware of the economic, social and moral consequences of a continuing level of three million unemployed. I do not mean simply what the effect is now, but what the effect must be if that is a continuing feature of our economic life. I wonder whether they are fully aware of the damage to our manufacturing industry which their policy has so far caused. Is there not a danger that the cure could kill the patient?
Nobody denies the baleful influence of inflation. But we cannot view this problem in purely economic terms. If the Government get inflation well into single figures, which is what they aim to do, how will they keep it there? Surely there can be no relaxation? Surely the Government will be obliged by the logic of their own case to continue the present régime? Indeed, they do propose to cut public expenditure in real terms in 1983–84—something which they have not as yet achieved.
I find it hard to accept that there is plenty of demand in the economy and that all that is necessary is a return of competitiveness. There is a world recession, there is a lack of demand throughout Western Europe and there is a lack of demand which is worse in this country than in the other industrial countries. Obviously, competitiveness is a factor and it is not merely a question of efficiency: it is a question of the part played by a high exchange rate and high interest rates, to which the noble Lord, Lord Glenamara, has referred. There are certain products which have been particularly badly affected by foreign competition. But there is a lack of demand here, as elsewhere, and that lack of demand has been accentuated by the Government's tighter policies.
Of course, world recovery—if it comes, as we hope it will—and lower oil prices will have some effect on employment. It seems that the Government must regard lower oil prices at the moment as rather like the United States Cavalry—galloping to the rescue in what they must hope will be the nick of time. But, with unemployment at three million and growing, is unemployment going to be substantially reduced so

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long as—to move to another metaphor—the Government keep their foot on the brake? The Government say that, if we increase demand, we increase inflation. If we increase inflation, then there is pressure for higher wages which account for 70 per cent. of costs, which is a point which we must not forget. Moreover, if that happens and wage settlements are higher, then the jobs which we might create by this additional demand are very soon lost. That is why we say on these Benches that, in order to prevent that, it is necessary to have an incomes policy.
The Government refuse to have an incomes policy; rather, in effect, the threat of unemployment and of bankruptcy—and I do not mean that these are thought of as an incomes policy by the Government—are their incomes policy. The Government say, "Well, incomes policies have been tried and in the end they have failed". But the Government's policy has been tried as well, and, so far as unemployment is concerned, after three years it is a monumental failure. An incomes policy has never been applied by a Government which have believed in it all along. Governments have been forced to do it against their wishes. They have begun by not wanting to have an incomes policy and they have ended by having one. It has been cobbled together to meet an immediate situation. I believe that, if it were applied by a Government which believed in it, which had prepared the ground for it, and which was at the same time introducing sonic measure of industrial democracy and partnership of the kind that exists, for example, in West Germany, the whole situation would be very different.
But, if the Government reject an incomes policy, then Mr. Peter Shore seems to be moving slowly towards one very hesitatingly and very vaguely. We know, of course, that the Labour Party is divided on this issue and that Mr. Benn is very much against it, although I was glad to see Mr. Varley speaking out very strongly in favour of it earlier this week. But in these circumstances it is not surprising that the noble Lord, Lord Glenamara, did not—I think I am right in saying—mention the subject of an incomes policy this afternoon, and I felt that that was the one great weakness in the scheme which he was putting forward at the end of his speech.
We say that the Government should take a deliberate decision to reflate the economy, but that they should do so with caution. We are afraid that Mr. Shore's £9 billion reflation would be too much, and certainly it would be so without an incomes policy. We have preferred a more modest figure of between £4 billion and £6 billion. We have on various occasions set out in some detail what the package would consist of and, indeed, we have debated the matter in this House. We did so a year ago and it has been restated since then. I felt that it was not necessary this afternoon for me to go over the details again because I wanted to address myself particularly to the basic issue.
While we have some very important differences with the official Opposition over the scale of inflation, over the basic need for an incomes policy and over import controls, which they want to associate with their plan and which we oppose, nevertheless we on these Benches fully agree with the noble Lord, Lord Glenamara, that the Government have a responsibility
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to stimulate demand in order to begin to tackle the grave problem of the three million unemployed.
3.59 p.m.
The Minister of State, Treasury (Lord Cockfield): My Lords, 30 years ago I worked for Lord Butler on the preparation of his first Budget. Tributes have been paid from all quarters of your Lordships' House and, indeed, throughout the nation to the outstanding contribution Lord Butler made to our national life. But to me he will always remain someone from whom I learned so much and remember with such affection. He was my senior supporter when I was introduced into your Lordships' House. Every year since we came into office he would ask me for a report on the state of the national economy, and every year he would place me on probation for a further 12 months. I am greatly saddened that this year I shall be unable to make my report to him.
There can be no doubt that we are now gradually moving out of the recession. Manufacturing output in the second half of 1981 showed an increase of 2 per cent. over the first half of the year. Total output was also marginally up. The fall in January, to which the noble Lord, Lord Glenamara, referred, is disappointing. It was the result of atrocious weather and strike action, particularly by ASLEF.
But this is only a temporary set-back. This year—for 1982 as a whole—we expect a rise of 1½ per cent. in total output and a rise of 3 per cent. in manufacturing output. In 1983 the improvement will extend further.
There are other indicators of progress. For example, construction orders in 1981 were up by 9 per cent. on the second half of 1980; engineering orders were up by 17 per cent.; engineering export orders were up by 20 per cent.; private housing starts were up by 37 per cent.; and exports volumes (excluding oil) in the four months to December were up by 5½ per cent. compared with the second half of 1980. These are all significant indications of progress. They are not crumbs, as the noble Lord, Lord Glenamara, has suggested.
Some people are now arguing that continued recession in the United States will adversely affect this country and, to use the space age metaphor, will abort our own recovery. We cannot ignore what is happening in America, but, if I may paraphrase Metternich, it does not necessarily follow that when Washington sneezes the whole world catches cold.
The recession started later in the United States than it did here. It would not be surprising if recovery started later there as well. This, indeed, is what happened in the 1930s. I would expect therefore that continued recession in America would slow down our rate of recovery, not stop it; and that when America begins to emerge from the recession this would add impetus to our own recovery.
It is true that progress to date has been slow and that recovery is still patchy. But it does no good, and is no good service to the nation, to denigrate the progress which has been made. This is an area in which confidence is of great importance. We need to reinforce that confidence, not damage it.
Trade recessions are not like tennis balls. They do not hit the ground and then bounce sharply up. There is a decline, a bottoming out and then a recovery,

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slow at first but gathering momentum. But, of course, it is not enough to view recovery as an act of faith or of history. There are economic deveopments—often themselves arising out of the recession—which lead to the recovery. There are two important developments of this kind which can be identified today.
First, the fall in the price of oil. It was the two great oil price explosions in 1973–74 and 1979–80 which, on each occasion, sparked off worldwide inflation and worldwide recession. There is good reason to hope that the present fall in oil prices will reverse that process; that is, that it will lead to lower inflation and increased output. But it is essential—even more essential in present circumstances—that Governments should continue to follow responsible fiscal and monetary policies, to ensure that the benefits do feed through into lower inflation and thus into sustained and sound long-term growth—and are not frittered away in an inflationary but short-lived burst of activity.
The problem we ourselves have to face is a particularly difficult one. While the benefits to industry and to the consumer of a falling oil price are very great, we also lose a great deal of revenue from the North Sea. Despite this, my right honourable friend the Chancellor of the Exchequer has succeeded in restraining public borrowing for the coming year within a total of £9½ billion, a smaller proportion of the gross domestic product than for the year just ending; and he has done this while at the same time making significant reductions in taxation, not only for industry but for people as well. Keeping public borrowing under tight control in this way is an essential element in relation to the next matter I propose referring to; namely, rates of interest.
Recovery from the Great Depression of the 1930s was led by a fall in interest rates, which led, in turn, to an increase in capital expenditure of all kinds, particularly on construction. The present high rates of interest reflect in part the level of inflation. Progress in reducing interest rates means that we must also reduce the rate of inflation. The policy underlying the Budget is to make progress on both these fronts. The rate of inflation has come down from a peak of 22 per cent. in 1980 to 1½ per cent. now, and we expect it to fall progressively from now on—to 9 per cent. by the end of this year and to 7½ per cent. by the second quarter of 1983. Interest rates have also eased since the Budget. In particular, the building society interest rate has been cut by no less than 1½ percentage points.
Here again some people attempt to argue that we have no real control over interest rates, which they say are effectively dictated by events in Washington. Like so many criticisms, this is at best a half truth. Interest rates are affected both by international developments and by internal policies—in varying degrees, sometimes with one the dominant factor, sometimes the other.
There is little we can do about events in America. But we are responsible for what happens in this country. This is why the Government's borrowing must be kept down to a level which can be financed at reasonable and reducing rates of interest. One thing that is certain is that however potent American influences may be, if we restrain our own levels of borrowing, interest rates in this country will be lower
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than they otherwise would have been. This was clearly demonstrated by what happened after the Budget last year. In the six months following that Budget, interest rates were on average four points below American and French levels, and on a par with German levels.
Expanding world trade and lower interest rates provide a background for recovery in this country. But by themselves they are not sufficient. It is vitally important that we reduce the level of our costs so that we are fully competitive with other major industrial countries. Costs in this country, and principally labour costs, have escalated in a way which has lost us markets at home and abroad. In the 20 years since 1960 our share of world trade has halved and import penetration into our home market has doubled.
The noble Lord, Lord Glenamara, quoted the case of Consett, which is a great tragedy for the people living there. But both Consett and the steel industry generally are one of the tragedies that arise from the excessive level of costs, the lack of competitiveness and an un-willingness, until the very last moment, to bring levels of manning down to international levels.
The deterioration in our competitive position has been going on for a long time, but the immense increases in pay in 1979 and 1980 made the position very much worse. The noble Lord, Lord Glenamara, spoke as though it was the exchange rate which was to blame, but in fact today sterling's effective exchange rate is close to the level at which it stood when the Government took office. The loss of competitiveness since then reflects essentially excessive increases in domestic costs.
It is also relevant to draw attention to the fact that half of the loss of competitiveness since 1976 took place under the previous Government. The only way that industry could have survived the massive pay increases that took place in the 1979–80 pay round was by shedding labour, and this is one of the major reasons for the present level of unemployment. The union leadership—and the companies which gave in to them—must bear a very heavy responsibility for the resulting high level of unemployment.
We will reduce the level of unemployment significantly by, and only by, improving our productivity and holding down increases in costs so that we regain the ground that we have lost. This is the only way. We cannot continually compensate for excessive cost increases by a perpetual succession of devaluations. This only leads to higher inflation which feeds back into higher wages and still higher cost increases.
If there was any lesson to be learned from the experience of the previous Administration it is surely that; and in fact they were finally reduced to the stage where the pound had been devalued to so low a level that it was in risk of disappearing from sight altogether, and the only thing that the Government could then do was to call in the IMF to rescue them. Does the noble Lord, Lord Glenamara, seriously wish to repeat that experience? Surely we ought, whichever party we belong to, to be able to learn the lessons of history to that extent.
Productivity increased very sharply last year—in manufacturing by 10 per cent. This reflected a substantial shakeout of labour and reduction of excessive manning levels. It is unlikely that we can continue to show increases at that level. But if we are to hold

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our place in world trade and compete effectively with imports at home it is essential that we should continue to make substantial progress. This increase in productivity is essential in the public sector as well as in the private sector.
Last year the headlong increase in costs in manufacture was very greatly moderated. Pay settlements were about half the level they had been in the previous year. As a result, in the last quarter of 1981 unit wage costs in manufacture were less than 3 per cent. higher than a year earlier. This compares with an increase of 23 per cent. in 1980. It is because increased employment depends upon increased output, and increased output depends in turn on increased productivity and lower costs, that we put such emphasis on the need for moderate—and reducing—pay settlements. Those in employment—and those who represent them—owe a duty to the unemployed. It is in their hands to create the conditions which will lead to an expansion in output, an increase in employment and a reduction in unemployment.
Those who watch television will by now be familiar with the growing practice of scientists and archeologists of exhuming ancient corpses. Their number is now joined by Mr. Michael Foot, who this week has exhumed the corpse of the social contract. Unfortunately, he has not completed the process by conducting the autopsy. I had intended doing it for him. But it has already been done much more effectively by his former colleague in Government, Mr. Joel Barnett. In his embarrassingly revealing book, Inside the Treasury, Mr. Barnett says:
"The disastrous social contract may have helped to secure our election victory but it did nothing to prevent—some would argue that it ensured—the 27 per cent. growth in earnings that followed"—
and I would add the 27 per cent. inflation as well. If Mr. Michael Foot ever gets the chance of putting his theories into practice they will produce the same disastrous results next time as they did last time.
There is no solution to our problems in a programme of massive and inflationary increases in public expenditure, with vain attempts to hold at bay the resulting surge in inflation and fall in the value of our currency by relying on the devices of a seige economy bolstered up by dubious agreements with politically motivated trade union leaders. None of this will work. The noble Lord, Lord Glenamara, quoted certain figures which he said had been obtained by the use of the Treasury model. The Treasury model is not a machine like those which appear in Las Vegas. It is, in fact, a collection of a large number of formulae which are made available to certain people operating in this field, who then use a computer to calculate results from this model depending on the input they feed into it, and, most important of all, the interpretation they place upon the results which emerge.
It is not an automatic process at all. There is a great deal of interpretation in it. According to yesterday's Guardian, the wage and prices equation was overridden in the course of the work to which the noble Lord, Lord Glenamara, refers, and it would be interesting to know whether in fact this is true. I have no knowledge of the matter, I am merely quoting a report which appears in the Guardian, but if it is true that the wages and prices equation in the
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Treasury model was overridden then the results it produces can be of very little relevance.
We believe the duty rests on Government to conduct their own affairs prudently and wisely; and there is an equal duty on management and workers in industry. The Government have, for their part, also introduced a series of specific measures to help. I shall concentrate on the fiscal measures we have taken and my noble friend the Deputy Leader of the House will deal with the specific measures taken to help industry and employment when he replies to the debate.
First, I would comment on what is popularly described as "the cost of unemployment". This point was raised by the noble Lord, Lord Glenamara, and I have no doubt it will be referred to by the noble Lord, Lord Kilmarnock, who has done a great deal of work on the subject. Unemployment is a tragedy for the individual. It is a loss of national output and national wealth. We should as a nation be much better off if the labour market worked in a way which provided employment for all our people; if our level of productivity was such that all our people could be employed at the level of wages they demand. But it is a very far cry from saying that to attempting to place specific figures on "the cost to Government" of unemployment.
If by "cost" one means the amount of unemployment or other benefit paid, that is readily ascertainable and amounts, on average, to about £1,600 per annum per head. But if one tries to add to that what is claimed to be the loss of tax consequent upon unemployment one runs into immediate difficulties. Unemployment is the result of economic change. Such changes will also affect the yield of taxation. But it is quite fallacious to assume that the change in the yield of taxation can be related directly to the rise in unemployment. They both flow from a common cause but they do not flow from one another. The effect on the yield of taxation depends on the nature of the economic changes. There is no a priori reason to suppose that the yield of taxation will vary in a predetermined way in relation to changes in unemployment or even necessarily move in any particular direction. Nor does experience in this country in the last few years suggest that a relationship of the kind postulated exists.
Thus, if unemployment increases as a result of an excessive rise in wages, the effect may actually be to increase the yield of taxation, not reduce it. The reason quite simply is that the increased pay received by those remaining in employment will be charged at marginal rates, while the pay lost by those becoming unemployed would have been liable at average rates only. This is not a fanciful example; it illustrates what has been happening in this country in the last few years. This is an extremely complex problem and much more work needs to be done on it. Meanwhile, claims that unemployment costs the Government £15 billion a year or some other such large figure need to be viewed with extreme scepticism.
There is another aspect. To suggest that a "loss" is something you can spend is an absurdity. All that would be available to spend is the amount of benefits actually being paid, on average about £30 a week. Anything above that adds to public expenditure and it will have broadly comparable effects as other additions to public expenditure and needs to be judged

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in much the same way. The only way that one can create additional jobs at a cost of a modest increase in public expenditure is on the lines of the imaginative new community work programme adumbrated by my right honourable friend the Chancellor of the Exchequer in his Budget speech.
I return to the question of the measures taken by the Government in the fiscal field. The Budget this year is directed specifically to helping industry and employment; help to industry is also help to people, in just the same way as help to people is help to industry. I have already mentioned the restraint on public borrowing designed to ease the pressure on interest rates. There is the reduction in the national income surcharge, which will cost £640 million net this year and will benefit industry and business generally by the same amount. That is direct assistance to industry to help reduce its costs. It is crucially important that the money should be used to reduce costs and improve profitability and not be allowed to leak away into higher pay settlements. There is the energy package, designed to give industry further help on energy prices, at a cost of £160 million; the construction package, costing £240 million; the innovation package, costing £130 million spread over three years; the enterprise package, costing £80 million, including substantial improvements in the small workshops scheme, which has been an outstanding success, in the business start-up scheme, in the small loans guarantee scheme and in the taxation of small businesses.
The individual taxpayer has been helped too. The income tax allowances have been increased by more than the rate of inflation, while indirect taxes have been increased by less than the rate of inflation. There is the reduction in stamp duty which will assist mobility and help first-time home buyers. There are improvements in retirement annuity relief for the self-employed. The Budget therefore, in all its aspects, is an integral part of the Government's strategy to help industry, to help the economy, to improve employment prospects and thus lead to a reduction in unemployment.
The path along which we have embarked offers real hope for the future; reduced inflation, rising output, improving competitiveness and the opportunity of creating new employment on a sound long-term basis. But, in the end, it is up to the people themselves to decide whether to seize the opportunities which are there for the taking. The hallmark of freedom is just this freedom to decide. Governments cannot do this for their people. If they try, the long-term effect is always damaging. It is very tempting in times of difficulty to try to shelter behind the skirts of Government. It never works. We believe in giving people the freedom to make a success of their lives and to help other people to make a success of their lives too. We will help in every way we can—by creating the right conditions and by removing obstacles and impediments to growth and progress—but the ultimate responsibility rests on the shoulders of the people themselves. We are making progress and we shall continue to make progress. It is in that direction that success for our people lies, and that success we shall achieve.
4.30 p.m.
Lord Kilmarnock: My Lords, this is the third time
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in as many months that I have spoken on measures to combat unemployment, but I shall not apologise for doing so. The theme is central to the Motion before the House, and the problem simply will become more intractable the longer nothing is done about it. Previously I have gone out of my way not to pin all the blame on the Government and to attribute a proper proportion of responsibility to factors beyond their control. But things have now come to such a pass that I am afraid I have to withdraw that olive branch.
The Prime Minister tells us that unemployment is unavoidable on account of the world recession. If that were so, our recession surely would be no worse than anybody else's and, if anything, should be less severe as a result of our cushion of North Sea oil. In fact, however, our unemployment is higher and our loss of output greater than those of any other comparable nation.
The Government have sought, they claim, to create the climate for recovery. This they have conspicuously failed to do. They claim with pride—the noble Lord has just claimed—that exports are holding up remarkably well, but if they looked behind the aggregate figures that they are so proud of, they would find that exports are being maintained in many cases by firms cutting, or even totally eliminating, profit margins, and if the firms engaged in this heroic exercise do not shortly get some relief through stimulus of the home market, there will be further waves of bankruptcies.
Furthermore, even if the climate does improve and slimmer and fitter industries can gird up their loins and go forward, it will be because of the labour that they have left behind; it will be on the basis of increased labour productivity and reduced workforces. Successful trading may be the key to economic survival, but it is not necessarily the cure for unemployment. I am not against the market, but the time has passed, possibly for ever, when the marketplace of its own accord can absorb all those who want, or need, to work.
In these circumstances any responsible, any prudent Government (the noble Lord, Lord Cockfield, mentioned the prudence of the Government) will put high on their list of priorities—I would suggest at the top of the list—a series of measures designed to minimise the human misery and the threat to the social fabric which comes about when millions of people are quite simply surplus to market requirements.
Of course measures cost money, but so does unemployment, which, as the noble Lord, Lord Glenamara, mentioned, is at the moment estimated in some quarters as costing the Exchequer in the region of £14 billion to £15 billion a year in disbursements and loss of revenue in one form or another, to say nothing of loss of output. The noble Lord, Lord Cockfield, was perfectly right in saying that I would turn to this topic. As he said, it is a complex one. The Treasury has constantly argued that it does not have anything like that sum to disburse in job creation at nil cost. It is of course true that nil-cost solutions do not exist; but that does not mean that there are not cheap solutions, and it is worth looking at some of the figures.
The Chief Secretary to the Treasury, Mr. Leon Brittan, in a press release on 5th February last, said that the re-employment of someone at present on the register would, on average, save the Government £30 a week in benefits—that was a figure also given by the

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noble Lord, Lord Cockfield—and if the wage paid were £90, the Government would receive an additional £30 in taxes and national insurance contributions. The net job cost would thus be £30 a week, or roughly £1,500 a year—not such a bad deal, even at that, you might think. But those figures need careful examination.
First of all, the average benefits across the board must be much nearer £40 than £30 a week. In the case of a married man with two children (a fairly typical unemployed person) on £90 per week, for example, the cost of his arrival on the unemployment register is, or will be from November 1982, £76, made up as follows: unemployment benefit £40.65; rent and rate rebates £8; supplementary benefit top-up £2—those are the outgoings—plus losses to the Government of £12.89 income tax; plus employee's national insurance contribution of £7.87; plus £5 approximately in indirect taxes.
Furthermore, the figure of £76 presupposes that he does not claim family income supplement and that he was previously employed in the public sector. But we know that very few public sector jobs have gone, and if, as is more likely, he was previously employed in the private sector, the Government lose a further £10.98 in employer's national insurance contribution, making his re-employment in the private sector, even with a relatively high subsidy, virtually a nil-cost solution. Even if he were to be re-employed in the public sector, in which case the Government would receive no employer's national insurance contribution, the difference between his unemployed cost and a wage of £90 is only £14. If the Government seek to add something for materials and administration, we would not seek to dispute that, but at the lower echelons of the health service or local authority services, where the scope lies, this would not be very great.
Furthermore, Mr. Brittan's estimate that the average previous earnings of the unemployed were in the region of £90 is also open to question. I seem to remember—the noble Lord, Lord Cockfield, will correct me if I am wrong here—that the Treasury has hitherto calculated the average previous earnings of the unemployed at 80 per cent. of the national average wage. The national average wage is now £140—£140.50 to be precise—and 80 per cent. of that is not £90, but £112. It is obvious that the higher the previous earnings, the more the Government lose in revenue when that person becomes unemployed. I would therefore suggest to the noble Lord that there is an alarming under-estimate by the Treasury of the real Exchequer costs of unemployment and thus of the amounts that could be devoted to job subsidies at virtually no net cost and to job creation, at very modest financial cost to the nation. Perhaps the noble Earl would care to comment on that when he winds up.
Against that background, the proposal made by Mr. Roy Jenkins for a £70-a-week subsidy to employers for every additional worker taken on who has been unemployed for six months becomes feasible and realistic. If you are going to subsidise employment, it makes sense to pay employment subsidies which are job specific, rather than investment subsidies which are not. It is also clearly true that it is more advantageous to the Government to subsidise jobs in the private sector than in the public sector, owing to the additional
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revenue derived from the employers' national insurance contributions and the fact that there are no non-wage costs.
However, there is probably a limit to the additional labour that the private sector can absorb and remain cost-effective. We therefore think it reasonable to aim at an additional 250,000 jobs by this method, for which we have allowed £500 million; that is to say, £2,000 per job per year to take account of the fact that some of the jobs would have been created in any event.
Next, we propose a national campaign of housing rehabilitation and insulation, and environmental improvement. The materials cost of painting and decorating is low relative to the cost of labour, and many of the unemployed, setting aside the 15 per cent. who actually come from the construction industry, have some of the basic skills. Our proposal is therefore to recruit people at £15 to £20 a week over and above their benefit rates. The management and supervision of the programme will be entrusted to the Manpower Services Commission, and the work sub-contracted to private firms, though the local authority direct labour organisations could also participate if their unions would allow them. Clients would pay little more than the cost of the materials. Here, also, is an area in which local authority improvement grants could be revived at very low cost using this source of labour.
It is not only houses that need a lick of paint, or a new bathroom, or insulation to conserve energy. There is a multitude of things that the long-term unemployed could be doing. London, for example, is coming apart at the seams. In many streets not far from this historic precinct the paving stones are thrusting up at crazy angles, almost as if they were tombstones and the Day of Judgment were at hand. Perhaps it is, my Lords.
In addition to being a threat to life and limb, the streets are filthy. There is an incredible amount of labour-intensive work crying out to be done. Our scheme would make all this possible at relatively low cost. We have calculated another 250,000 jobs at a net cost not exceeding £500 million, though I would say that as many people again could be employed to the vast benefit of themselves and the environment in which we live. It cannot be objected that this is inflationary, for the addition to the PSBR is low, and other measures that we shall propose will reduce the cost of Government debt.
Thirdly, we propose a youth employment subsidy of £30 for every youth employed under 18. This scheme recognises the understandable desire of many young people to have real jobs, rather than continue in full-time education or training, but there would be an obligatory minimum of one day's job release paid out of public funds. This would of course be directed at the same client group as the Government's YTS (Youth Training Scheme), to which it could be seen as an alternative. In an individual case it would cost less than a place on the YTS. But, if the effect were to create an additional 50,000 jobs over and above the YTS, we have calculated the cost at £150 million.
Fourthly, we want to improve the position of women, who are particularly hard hit by the recession, and we propose to increase public spending on domiciliary care services and home helps, who can, for example, assist old people to continue living in their own homes,

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rather than in more costly and less congenial residential care. We have calculated that 60,000 such jobs would cost £200 million, though personally I believe that there is further scope here, particularly if the scheme provides those part-time jobs of between four and six hours a day that are so attractive to married women with children.
The emergency programme I have outlined under these four headings—and let no one doubt we have an emergency on our hands—would reduce unemployment by some 600,000 at a net cost on the PSBR of £1½ billion. There are in addition budgetary measures whose employment effects cannot be so accurately targeted. My noble friend Lord Chandos will deal with some of these in due course. They will, of course, have beneficial side-effects on unemployment. The Government have belatedly reduced the national insurance surcharge to employers. This is desirable for a number of reasons quite apart from employment, and we would have done the same, or cut it by slightly more; but it has to be recognised that this is an expensive remedy if seen purely in employment terms, because it will be mainly reflected in increased profitability and possibly in reinvestment.
But there is one area, which is an obvious winner both for job creation and for the satisfaction of crying social need, in which we do not think the Government have gone anywhere near far enough, and that is in the increase of public expenditure with special emphasis on construction. I know the Government have made some provisions in the Budget, but they are not enough. I have wearied your Lordships before on the appalling condition of our housing stock, the low level of housing starts, the millions of sub-standard dwellings and so forth. To be very brief, we propose a major increase in expenditure on house-building plus an increase in improvement grants and substantially increased funds for housing associations.
We would supplement this housing effort with an additional £500 million on small civil engineering projects and improvements to roads, sewage and drainage. This construction programme as a whole would aim to create an additional 250,000 jobs at a net PSBR cost of about £1 billion. This is not, it will be appreciated, a public works programme of the lavish capital-intensive type or of the digging-holes-and-filling-them-in type. It would do ordinary jobs that sorely need to be done.
I will not subject the House to further details. Our whole package would aim to create approximately a million jobs over two years at a PSBR cost of approximately £4 billion. It is not pie in the sky. It promises nothing that could not be fulfilled; whereas the official Opposition's fortress Britain policy would, I fear, be not only extremely expensive but also have us starving to death rather rapidly behind our moat and drawbridge. Here, I think, is where I come nearest to agreeing with the noble Lord, Lord Cockfield.
To put our proposals in their context, may I just remind your Lordships of the following facts? The national income—that is, money GDP at market prices—is forecast here in the budget report at £280 billion for 1982–83. My Lords, £4 billion is one-seventieth part of that, and the cost of Government borrowing would in any case be reduced by lower
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interest rates. As I have said before, attracting hot money into the country by high interest rates is a double-edged weapon. None of these measures is inflationary because the job creation costs are very largely offset by the decrease in unemployment costs, and do not impinge on the externally traded sector of the economy. Much human disillusion and bitterness would be halted, and some enthusiasm generated. The environment would be improved, and the housing scheme in particular would have a national appeal. Everyone likes to be proud of his home. But above all we should have a social policy going hand in hand with an economic policy. The present Government's social policy is simply a bleeding victim on the bleak altar of economic aggregates.
Finally, the following quotation from James Burn-ham's The Managerial Revolution, which came out in 1940, seems horrifyingly apposite:
"Continuous mass unemployment is not new in history. It is a symptom that a given type of social organisation is just about finished. It was found among the poorer citizens during the last years of Athens, among the urban proletariat … in the Roman Empire and, very notably, at the end of the Middle Ages, among the dispossessed serfs and villeins who had been thrown off the land to make way for capitalistic use of the land.
"Mass unemployment means that the given type of social organisation has broken down, that it cannot any longer provide its members with socially useful functions even according to its own ideas of what is socially useful. It cannot support these masses for any length of time in idleness, for its resources are not sufficient. The unemployed hover on the fringe of society, on the one hand like a terrible weight dragging it down and bleeding it to death, on the other a constant irritant and reservoir of forces directed against society".
Let that not be written on the tombstone of this country.
4.45 p.m.
Lord Allen of Fallowfield: My Lords, throughout my public life I have always tried to resist the temptation of the easy option, when confronted with problems, to blame the other person, or in this particular case, when looking at the British economy as of now, to blame the Government. I find it very difficult to follow my own standard when making a contribution to the debate this afternoon, notwithstanding all the things that have been said in support of the Government's strategy by the noble Lord, Lord Cockfield.
While there may be differing views as to the reasons for our industrial decline relative to most other developed countries, the fact that we are in decline cannot be in dispute. As the world we live in, and particularly the United Kingdom, becomes necessarily complicated, we sometimes seem to lose sight of those simple principles without which no enterprise, whether it be a company or a country, can be successful. Our decline as an industrial nation vis-à-vis our international competitors is of course due to a variety of complicated causes, as the noble Lord, Lord Cockfield, has said; but the one simple factor lying behind it is, I believe, a total lack of confidence and trust. If I agree with anything that the noble Lord on the Front Bench opposite said, it is that—and I quote his words—"confidence is of the greatest importance". I agree, but that is what we have been missing in the last three years.
It is obvious that the workforces seem to have little confidence in or understanding of direction of Government

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policy, and some managements, for their part, have had little confidence in the Government. Against that backcloth it is hardly surprising that the rest of the world has seemed to show so little confidence in Britain. Our inadequate investment record compared with many industrial countries is long-standing, as is our failure to work to maximum efficiency such investment as there has been.
If we look at the trends for manufacturing investment in the United Kingdom—and they have been dealt with by the noble Lord, Lord Glenamara, in the presentation of his case—the figures are alarming. I have listened very intently to the figures used by the noble Lord, Lord Cockfield, but the figures I have been looking at and examining indicate quite clearly to me that manufacturing investment has fallen by over 21 per cent. since mid-1979, and it is predicted to fall by a further 5 per cent. in 1982. The contribution that high interest rates has made to this malaise cannot be overlooked. Under the monetarist approach, companies have been forced to pay high interest rates. This has obviously retarded economic growth nationally. The long-run failure to invest is clearly at the heart of the failure of British industry. This means quite clearly that our workforce is supported by less investment in the United Kingdom than our trading competitors.
It would also be encouraging, particularly to those managing industry and those working in industry, if the Government changed their approach to exchange controls and gave some clear indication of their willingness to defend the British economy during this malaise against destabilising movements of capital and to counter the growing problems of investment funds, especially pension funds, being placed overseas.
What I cannot understand is the logic of the Government's argument that their policies have been designed to assist recovery in the private sector. The facts belie this myth. We all know how Government policies have cut order books of British firms, both for home and export sales, and their attempts to cut public borrowing have compelled private firms to borrow more at record rates of interest.
I am sad to listen in a debate of this kind to implications that the problems of the British economy, as stated by the Government's representatives, are the responsibility of a number of factors: first of all, that our lack of competitiveness is due to labour costs. That is an absolute nonsense, my Lord and for those who believe otherwise I would ask them to examine the league tables of wages costs among the nine countries in Europe and elsewhere. The United Kingdom is at the bottom of that pile, so please let us not have the excuse that lack of competitiveness is because of high labour rates or high unit labour costs in Britain.
It is also implied—if not expressly so—that unemployment is the responsibility of inflationary wage demands. How can it be, against the background that I have just referred to of wage rates in Europe and the world generally by comparison with what they are here? If, as the noble Lord, Lord Cockfield, said, there is an improvement in labour unit costs, as envisaged by his Government in recent months, then I would assume—to take the logic to its useful conclusion—that if there is an improvement in unit costs in the manner indicated,
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then we should see a downward trend in unemployment and not an upward one.
Of course, I agree with him when he says that we believe in the freedom of the people to make a success of their lives. In a talk I gave recently to unemployed people I attempted to use a similar analogy. I must say that it did not go down very well. Freedom to do what? Freedom to walk the streets? Freedom to get on your bike looking for a job that is not there? Those kinds of freedoms are alien and should be alien to any British way of life.
Whatever one's political convictions, there can be few who are not worried, if not alarmed, about the challenges which face us in the United Kingdom, not least in the area of achieving much more productive industrial relations. I say that with great sadness because there is still in this country between the three principal parties, which are very important to the success of this economy, a dialogue of the deaf. I hope that the Government genuinely believe that this is an important key, as I do, to a healthy economy, and that they will take a different attitude from their attitude in the past in trying to face up to this problem with the two other parties which are basically interested in this matter. Because of Government policies we are now faced with the survival of jobs—that is, for those who are lucky enough to have one, and have not become a casualty of the Government's economic management of the economy—and we are also faced with the survival of companies; and in some cases the survival of whole industries is at stake.
What a tragedy this is proving to be, when we have so much going for us in this country today: wealth in the form of North Sea oil resources; technological breakthrough and know-how; and yet our affairs continue to be in a mess. Inflation rises, unemployment goes on rising to unacceptably high figures and political and economic wisdom is in short supply. In the face of this appalling social and economic tragedy, how one can be expected to believe all that is claimed to be in store for the nation in the future, or be euphoric about the Chancellor's last Budget—which fails to make now, or in the medium to long term, any impact on jobs—is really beyond the comprehension of the man in the street.
The attempt, through the Budget, to mask the real effect of Government policy over the past three years—which by any measurement you wish to use can only be described as an economic and social disaster—in an effort to promise "jam tomorrow" for some of the Hillhead voters must pale into insignificance when examined alongside and against the record of the Government's past mismanagement of the economy, for which they must be indicted and condemned as being guilty of creating an inertia of fear, suspicion and criticism, a lack of commitment and will to do better, and an absence of determination to utilise the effective use of all our resources—including human.
In fact, the insecurity which has been created in the homes and families of the bulk of our people, and the destruction of family life in too many homes, is in my considered opinion one of the great impediments to acceptance of timely change, thereby losing initiatives in restoring Britain's economic performance. What this country needs now, if I may say so, is a kinder and more caring and considerate society, with greater social

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harmony, an antidote to mass disobedience, and the abolition of all the symptoms which justify the belief in many minds that we in Britain are creating a two-nation society: those who have, and those who are going without. We need better leadership and vision which will appeal to the imagination of the people. We do not have it at the moment. It is said that, where there is no vision, the people perish.
In recent years it has become fashionable to talk about Britain's industrial decline. Indeed if one is to believe certain recent commentators, just as Britain was the first country to experience the Industrial Revolution, so we are on the verge of being the first country to experience the process which has been given the term "de-industrialisation"—in other terms, the total collapse or near collapse of the manufacturing base of the economy of Britain, which has been even more marked. My evidence for this is a quotation from the TUC Programme for Recovery 1982. I commend those who take a contrary view of the economy and how it is being managed to read the TUC Programme for Recovery 1982. If I may weary the House with just this one quotation, it is as follows:
"Manufacturing output in the third quarter of 1981 was 16·5 per cent. below the level in May 1979. Metal manufacturing output, which includes the steel industry, has fallen by over 32 per cent., textiles by 26 per cent. and engineering by 17 per cent. There was a record number of bankruptcies in 1981. In the first quarter of 1981 companies were being liquidated at an annual rate of 9,600 compared with 4,500 in 1979 and only 2,500 in 1973. Small firms, on which the Government has pinned its hopes for recovery, growth and employment, have been particularly severely hit. Neither old traditional manufacturing industries, such as textiles and steel, nor new technology industries have escaped the ravages of the recession."
There is no question that our manufacturing sector has performed badly over recent years. All the figures show, for example, a consistent decline in manufacturing's percentage share of the total labour force. Of course, that fact in itself is not necessarily serious, but when one combines it with statistics which demonstrate manufacturing industry's declining share of total United Kingdom investment, and also with the decline in the percentage contribution of manufacturing to gross domestic product, then one is forced to conclude that something is seriously wrong in the economy.
I conclude by reiterating what I have said earlier and in this House on previous occasions during debates on the economy—that unemployment is a scandal. It cannot be justified by any Government on any count—economic, social, morally or ethically. The—
Lord Soames: My Lords, will the noble Lord forgive me for one moment if I ask him: which country of the industrialised world does not have a level of unemployment which is scandalous?
Lord Allen of Fallowfield: My Lords, I am dealing at the moment with the British economy. It is not good enough always to want to pray in aid, because of your own incapacity to manage the economy, what is happening somewhere else. So I would conclude by saying that the stigma which has blighted our society since 1979 remains after the Budget in the same form as before the Budget, and is likely to remain so for both the short and the long term. It seems to those who are
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unfortunate enough not to be in gainful employment that there is very little marked basic change in the direction of the Government's strategy, notwithstanding all the goodies that were suggested in the Budget.
5.2 p.m.
Lord Thorneycroft: My Lords, these are grave and complicated matters that we are discussing this afternoon. I would say this on the Motion put forward by the noble Lord, Lord Glenamara, as it is written: I would support it. I rather agree with what it says and I would give him any of the papers that he wants. But the effective measures I would choose would, I think, vary a little from his. It is an honour to follow the noble Lord, Lord Allen of Fallowfield. He speaks with great knowledge of the trade union movement and has made a speech of moderation and quietness. He said he did not like to aproach something in which we all blame one another. I share that view. He found it rather difficult not to blame the Government. I must tell him that great numbers of the public are finding it increasing difficult not to blame the trade unions, and even I may say a word about them. But I think we want to speak with moderation of one another's faults.
I would give one assurance to the House: I have been nowhere near the Treasury model. That is an asset for anyone making a speech on this subject and I think the House will be relieved to know it. Nor am I going to embark on what I call "the wet-dry argument". I understand it—nobody can accuse me of not being interested in public expenditure and all that. I know the arguments and I know that Peter Shore is leading the wets, almost obscured by spray at the moment, far out in front—there is £7 billion, £8 billion, £9 billion to spend—anything so long as it is a lap beyond the noble Lord, Lord Kilmarnock. At the other end, I know that there are the "drys". At least I imagine that somewhere in a Treasury corridor there is someone trying to find out what M3 is and believing with all his heart that, if he could only find it and stick to it, all would be well. I do not believe either view.
I stick to my old school, which is the school of the rising damp. I believe that Governments spend more than they want to in a recession; they always have and always will. I do not believe there is much room to manoeuvre and I do not believe for a moment that the noble Lord, Lord Glenamara, would embark on the kind of policies he described in his opening speech, which were, I think, effectively destroyed by the noble Lord, Lord Cockfield. I cannot believe that he would put that money in without anything even resembling an incomes policy to hold it. I hold the central position; and in the centre I think the Government are about right. I notice that others think this, too. The CBI think the Government are about right, and even the polls, for what they are worth, seem to think the same; and so I compliment them on that.
What I am concerned with is growth and jobs. I think, as the noble Lord, Lord Cockfield, said, that perhaps the most important thing which has happened in this world recently is not the Budget—that can only affect affairs inside this country—but the fall in oil prices. Perhaps I would put it a little differently from the way he did, with deference. I would say that the world recession has now progressed to a point where

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it is actually destroying its own origins; that is to say, if the recession was triggered by two great surging increases in oil prices, we have now reached a stage in the cycle where most of the world—I am talking about the world as a whole—can no longer afford to pay such prices for oil, and the cycle has begun to come around, as he says, in a different direction.
In the meanwhile, we here in the United Kingdom have not cured a world recession—it is not within the power of an individual country to cure a world recession—but we have refrained from doing anything silly. We have also rejected the advice to plunge into massive expenditure, and we have in fact conducted the situation to a point at which this country is today infinitely more efficient and infinitely more able to deal with problems of world trade than it was when the Government came into office. The Government ought to be sincerely complimented on that. It was a brave and great achievement, and I believe their reward will come to them for that. Therefore, as I say, with oil prices beginning to turn round and with many other factors mentioned by the noble Lord, Lord Cockfield—interest rates lowering and inflation looking as though it is coming down again—all these factors are for the first time for a long time moving a little in the right direction.
What are the matters which are of real concern to us? I am going to mention them. I do not pretend I know the answers to all the main ones but I think I know what the questions are, and they are not solely concerned with the debate as to whether Lord Keynes or Professor Hayek had got the right of it. They are much closer to the world we actually live in. There is the structure of British industry today, and, I would say to the noble Lord, Lord Allen, there are the unions. They have a really major part to play. Then there is the nature of the unemployment problem and, perhaps above everything else, there are wages. Wages have dramatic effects on whether jobs are available.
May I say just a word about structure. If we are going to ask how to get investment going and jobs provided, it is a good thing to take a good hard look at who is going to provide the jobs and where we are going to invest. Half of industry in this country, or virtually half, is now in public ownership. I am not standing here just to criticise the Labour Party for that. They were not alone. Indeed, the SDP backed them fully in that progress. Even the Conservatives have, from time to time, put things into public ownership. But that is where matters stand today, and the problem of new capital formation in public industry is one of the greatest problems that confronts this country. Oddly enough, it is a problem that was hardly debated at the time when public ownership started on this route. It was forgotten. But the problem of how you amass the money and put it into this great sector is very difficult to solve. Of course, the problem of monopoly unions and all that goes with them is also very basic. That is the centre of our problem in the structure.
There are two themes being struck by the Government, if I read the papers aright. One which I saw this morning is that they are again going to look at how we manage the relationship between the Government and the nationalised industries. The Think Tank has produced a report which is so indelicate that it
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has not been published at all. I would say to my noble friend Lord Cockfield, that a debate in your Lordships' House on the subject of the Think Tank report on what Governments should do with public industry would be a very worthwhile debate, and I should very much like to see it.
There is the Department of Industry Industrial Development Unit, and we are told that it is to be strengthened. That is a good thing. Then there is a rival team in the Treasury. Why let the Department of Industry get away with it? There is the Public Enterprise Analysis Unit in the Treasury, and that is to be strengthened, as well. And there is the Monopolies Commission looking on. I am not going to deride these efforts. I have been in Government myself and I am sure that they are admirable things to do. But the idea that you can really run enterprise in that way is remote from my experience. The noble Lord, Lord Marsh, is not in the House, but I love to listen to his speeches describing the problems of how you run a railway with a Government sitting on your shoulder. It is quite moving and most impressive.
I think of the industries that I know, such as Trust Houses Forte. I ask your Lordships to imagine it being run by the Public Enterprise Analysis Unit of the Treasury. We would never have any breakfast. The world does not exist in this way. So while it may be right to pursue these things—and we have been over and over this ground—it is not the answer. And we still have this massive state sector closed to the investment of the great institutions. If they come in, it is said that it is increasing the public sector borrowing requirement. So we sit there, with half the industry of this country arguing as to whether we can increase the public sector borrowing requirement, or what will happen if we do.
Mr. Peter Hordern, who is a very able Member of another place, wrote two articles a fortnight ago upon this subject in the Daily Telegraph, and if my noble friend Lord Cockfield has not read them I shall provide a copy for him. He described in vivid terms the problem of how you get investment into the public sector. Bascially, of course, it would be to get the things out of the public sector and, certainly, we ought to study that immensely carefully. If we can get anything more out of the public sector, and open it up to investment by the institutions of this country, that is the way to go for growth, that is what jobs are about, instead of arguing the rights and wrongs of which economic theory ought to guide us in the investment. So I hope that the Treasury will send for Mr. Peter Hordern, not to invite him into the Government, because he is too valuable outside, but at least to listen to what he has to say.
One point he makes is that if you want to sell something, do not be too pernickety about the price. It would be infinitely better to get these things out of the public sector at a lower price, if we could get investment moving into them. My noble friend Lord Cockfield, in an earlier incarnation, was chairman of Boots. I think that one reason why he makes such distinguished speeches here is that he talks with knowledge of these matters. He was a very successful chairman of Boots, but I bet my bottom dollar that there were moments when he sold activities

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below what they stood at in the books, in order to get rid of them and to get somebody else to run them, because he no longer felt that they were profitable to Boots. The Treasury, alas!, does not keep any books, or practically none. If they kept any books, we would know what these assets are really standing at.
But, one way or another, the lesson must be to be prepared to divest ourselves of a larger portion of the public sector than we have done at the moment; not on doctrinal grounds—I have the greatest admiration for men working in the public sector—but because we want to throw them open to the investment that can take place, with the whole massive resources of the City of London and the rest, and without arguing all the time about whether it fits in with the particular economic theory of the moment.
My second point is about the unions and I shall be very brief. The unions play a great role in this country, but I would ask the noble Lord, Lord Allen, to think really deeply about whether, at the present time, they are contributing to investment and jobs. If I were a great trade unionist—I do not suppose that I would ever have become one—I would be thinking deeply at this moment about what could be done. It is easy to take the exaggerated cases. If any of your Lordships want to put a man, a boy, a son or a grandson into a privileged position, you ask him to join a chapel of a printers' union. That is hereditary. It is far better than going to Eton and the work is minimal. They are admirable men—I do not criticise them; they nearly all vote Conservative, they have lots of spare time and they are running small businesses on their own. That is the extreme end of it. Compared to them, an ASLEF driver is sweated labour.
But all through large sections of the trade union movement today—and this is serious—there is the greatest difficulty in persuading anyone to adopt the modern technology, to use the new machinery, to adopt the new management methods and the rest. I do not say that it cannot be done, but there are managers who spend nine-tenths of their time on this. I had a very good manager whom I saw the other day. He had just left and I wished him well. He handled the labour situations beautifully, with patience and consideration. I asked him, "What are you going to do?" and he replied, "Lord Thorneycroft, I am going to get as far from the trade union movement as I possibly can. I couldn't stand it any longer." That was not a man who disliked them. It was a man who got on very well with his fellow men. But there was the constant effort of having to persuade men against their will, and who were always arguing, to adopt new and better methods.
I would say this to the noble Lord, Lord Allen. It is true that the wages in this country are relatively low. It is not true that wage costs are relatively low, not in any industry that I have had anything to do with. It is that gap between us and the labour costs of our principal competitors that is the most difficult. Then there is the wages question itself. The noble Lord, Lord Glenamara, said practically nothing about wages, and yet it seems incredible to make a speech about jobs without making a speech about wages.
The noble Lord, Lord Banks, was very kind to him; he said he thought that the noble Lord, Lord Glenamara, must have meant something which he did not quite hear. But he never mentioned how
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he would hold the situation when he had put £9 billion into the economy. He was going to repeat all the things which had happened before, without even an attempt to hold wages. That would be disastrous for jobs and for investment. I am amazed that anybody should put forward proposals of that kind.
I do not believe in a wages policy. I do not think that we ought to let people like Professor Clegg wander around too much. I was in the Shadow Cabinet before the last election, and I think I can honestly say that I begged my colleagues to dump Professor Clegg before the election: to say that we would have nothing to do with him. I thought he was a public danger and I was right. It was entirely to the credit and honour of my colleagues that they felt that they could not follow my advice. But the results have been disastrous—in loss of jobs, in increase in interest rates. This profession of the professional negotiator, conciliator, arbitrator and the rest is one of the biggest dangers we have in this world. I am not referring to Members of your Lordships' House. Members of your Lordships' House rise to the head of every profession, including this one. But there are others throughout the country—wages councils, for instance—who are all pricing people steadily out of jobs.
My last point is about the study of unemployment. If I was unemployed, I should get rather bored listening to people arguing economic theory in front of me. I should ask somebody to sit down and study the problems which confront us. They are not all concerned with high-faluting economics. There are employed people who have two jobs; there are unemployed people who have jobs. There are all sorts of varied situations. There are people who would ordinarily work but who will not work because of the poverty trap; there are people who are pricing themselves out of jobs.
The noble Lord, Lord Harris of High Cross, wrote a wholly admirable article in today's Daily Telegraph which I wish I could incorporate in my speech, but for purposes of time I shall not. I simply say that it would be very wise if a study in depth of the realities of unemployment, of the things that really dissuade people from employing others, the role of the poverty trap and the rest were undertaken. I think the noble Lord, Lord Harris of High Cross, was right in saying that the producers of this country can earn the wages which the consumers are prepared to pay for them. That is the basis of employment. These are the realities of how to achieve the objectives for which the noble Lord, Lord Glenamara, asked.
5.24 p.m.
Lord Kaldor: My Lords, I am afraid that I shall be unable to spend much time upon answering the noble Lord, Lord Thorneycroft, sorely tempted though I am by some of the remarks which he has made. However, it is not true to say that it is easier to invest in private industry. It is the reluctance of British private industry to invest on an adequate scale which is the long term cause of our decline.
The period when we really industrialised fast was under the Lloyd-George régime—after 1916. Hundreds of war factories were built. That was a period when industrialisation proceeded fastest. Again, when one considers wage inflation, the two periods of rapid wage

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inflation, to which the noble Lord, Lord Cockfield, referred more than once, happened to be the responsibility of Tory, not Labour, Governments. The first was in 1974. It occurred while Labour was in power but it was the automatic consequence of legally entrenched threshold agreements which the previous Heath Government introduced in October 1973 and which automatically lifted wage and price levels by something like 20 per cent. in that year.
The second great wage explosion occurred after the present Government came to power, not before. The winter of discontent in 1979 added only about 2 per cent. to the annual increase in earnings—from 14 per cent. to 16 per cent. However, as a result of the disastrous Budget of 1979, the first Tory Budget which increased the cost of living by 20 per cent. and more, wages followed prices and reached in the following wage round—between August 1979 and August 1980–22 per cent. From those high levels, you can then show that you are making great progress in coming down. But it is rather like the Duke of York going to the top of a very high hill and then taking credit for being able to descend from that hill.
In my first speech after the present Government came to power, I congratulated noble Lords opposite on their election victory and offered them my best wishes. At the same time I expressed extreme scepticism about the basic theories and propositions upon which their whole philosophy rests. I said, however, that if at the end of the day they were shown to have been right I should have the intellectual honesty to admit it. That day certainly is not yet. After three years their whole policy as it was originally presented is in shambles. They have failed to secure any of the objectives which they so proudly and confidently proclaimed at the beginning.
Of course, when you listen to such an extremely able and skilful speech as we heard from the noble Lord, Lord Cockfield, this afternoon, you do not get that impression. You get the very opposite impression: that everything which this Government have done was planned, was wise, was inevitable and was effective. However, to obtain a better perspective I suggest that you should compare the present speech of the noble Lord, Lord Cockfield, with the speeches which he made three years ago, because they are very different. The claims are very different. The language is very different, as I shall proceed to show.
A simple comparison of successive red books issued each year with the Budget is sufficient to reveal the truth. The Government's basic philosophy in 1979, equally ably expounded then by the noble Lord, Lord Cockfield, as today, was that the Government's first priority was to bring down inflation; inflation was entirely a matter of the money supply. Therefore,
"to reduce inflation, the Government will progressively reduce the growth of the money supply and will pursue the policies necessary to achieve this aim".
Since the speed with which inflation would fall would also depend upon expectations, to provide a firm basis for those expectations the Government made a firm commitment that there would be a progressive reduction in money supply growth over a four year period. Sterling M3 was planned to come down at a steady rate from 7 to 11 per cent. in 1980–81 to 4 to 8 per cent. in 1983–84. The rate of interest was
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immediately raised to 14 per cent. upon the ground—and upon no other ground—that the rate of interest was the way to reduce the rate of growth of the money supply.
The money supply failed to respond in the next few months, so in November the rate of interest was raised to 17 per cent. But after that—it is still the first year—the Government ran out of breath. Although in their Green Paper on monetary control it was clearly laid down that interest rates would be raised, come what may, however high they may be, whenever the growth of the money supply exceeded, or threatened to exceed the target (which it did and which it continued to do) the opposition from industry was so strong that they could never bring themselves to go above 17 per cent. They maintained it at 17 per cent., against violent opposition from British industry, as long as they possibly could. Afterwards, in clear violation of the rules, the rate of interest was lowered in successive steps until last year's Budget when the rate was put back exactly where the Government found it when they came in, at a target range of 8 per cent. to 12 per cent. Since then interest rates were raised again, but that served a different purpose—to protect the exchange rate of the pound, rightly or wrongly.
Now let us take the following year's red book—that of 1981. The commitment about money supply was repeated in much the same words. It was admitted that things had not worked out according to plan and this was blamed somewhat vaguely on "major imbalances in the economy", without saying what those imbalances were, which caused sterling M3 to grow by 20 per cent. a year instead of by the 10 per cent. which was foreseen in the previous red book. But no attempt was made to claw back this excess money in subsequent years and the targets for later years were reproduced unchanged. These envisaged 8 per cent. growth, or the middle of a 6 to 10 per cent. range, in the financial year 1981–82.
However, lo and behold! sterling M3 continued to misbehave. It rose by 14½ per cent. instead of by 8 per cent. in the next financial year. At last, the Government threw in the sponge and the new table for monetary growth, Table 5 in the 1982–83 red book, envisages 8 to 12 per cent. for 1982–83—in other words, exactly the same target that Mr. Denis Healey had (and whose inadequacies were blamed for all our ills). From now on, the noble Lord, Lord Cockfield, three years ago said, everything would be different and everything would be made to depend on the money supply. This 8 to 12 per cent. should be compared with the 5 to 9 per cent. which was the figure in the original medium-term strategy for the same year.
In the three years since the present explicitly monetarist Government came to power, the money supply has grown much faster than before. Compared with the five years from 1974–79, under Denis Healey, between 1979 and now the annual rate of growth in the money supply is 80 per cent. larger. If one takes an even better measure, which is not sterling M3, which is an artificial thing, but M3, the excess in the rate of growth of money supply under a monetarist Government was fully 100 per cent. Money supply increased twice as fast as it had before.
On the other hand, remarkably, the Government do not claim credit for their real achievements, which are a

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rise of nearly 2 million unemployed, a fall of 6 per cent. in the GDP, and a fall of 19 per cent. in manufacturing production. To be fair, one of Mrs. Thatcher's closest supporters, Mr. Arthur Seldon of the Institute of Economic Affairs (a close colleague of the noble Lord, Lord Harris) writing for an American journal published far away in San Francisco, drew up a balance sheet of "Margaret Thatcher's successes and failures". He listed the rise in unemployment by 1½ million in two years as being her No. 1 success—indeed, the only one of any consequence. The others were a slight reduction in the rate of increases in wages and prices, and a reduction in pay settlements to the level at which they stood when Mrs. Thatcher first came in. Mr. Seldon listed all other aspects of the Government's policy—taxation, Government expenditure, PSBR and bureaucracy—as "failures". I cannot spend more time on this remarkable paper, but I am going to place a copy of this article in the Library. That Mr. Seldon should regard higher unemployment as such a good thing is further evidence of a quiet intellectual U-turn by the Friedmanites and the Thatcherites. Originally, high involuntary unemployment was not regarded as either a necessary part or consequence of monetarism. One could quote plenty of passages from Milton Friedman and his true followers in this country to the effect that trade unions are quite harmless; if they raised wages above the true market level they would simply price themselves out of jobs but they could not—I repeat, "not"—cause either costs of production or prices to rise because these are firmly tied to the money supply. This was the core of the philosophy of the present Government.
It was only the bitter experience of the Government's first year in office—when prices rose by 21 per cent. instead of the 10 per cent. forecast—which convinced the Government that control over the money supply was not enough; one must also have low pay settlements. Indeed, without low pay settlements, the growth of the money supply could not be slowed down either. But the Government did discover that by driving firms to the verge of bankruptcy and beyond it, it was possible to bring down pay settlements quite considerably. If a firm is on the verge of going into liquidation, then in order to keep it alive, keep it on that verge, one can bring about quite a significant moderation in wage claims. Faced with the prospect of job losses and permanent unemployment, a wage earner is willing to accept a cut in his real wages. In other words, the chief aim of the policy was to lower wage settlements and thereby lower the rate of inflation.
What have the Government achieved? They claim that there is a wonderful new spirit of leanness and efficiency in industry and that we are on the brink of an "economic miracle" such as happened in Germany under Professor Erhard. Unfortunately, all this is just talk. None of these claims shows up in the statistics which matter—those of output, consumption, investment or exports. In a few minutes, I am going to take the noble Lord, Lord Cockfield, to task for a little playfulness with statistics.
The Prime Minister has proclaimed at least once a year, if not twice, that the worst of the recession is over and that from now on, the economy is on an
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upward path. This has been said ever since the middle of 1980 and it is still being said. The last time industrial production was proclaimed to have reached bottom was in the three months from March to May 1981. We heard the noble Lord, Lord Cockfield, say that from then on, we have been recovering. Indeed, in the subsequent three months August-October, manufacturing output was fully 1½ per cent. higher, which in annual terms is quite a substantial figure. Ministers were not slow in claiming credit for it, as the noble Lord, Lord Cockfield, claimed credit today. Unfortunately, it has turned out to be a false dawn. It is not true that just January was a bad figure; the whole of the last three months was bad. In the three months, November to January, production fell by more than 2 per cent. as compared to the previous three months.
So in the last three months manufacturing production was lower than in any previous three months in the life of the present Government. You have to go back 15 or 20 years to find output as low as that. And there is no sign that it is improving. All this is just talk; when the figures come out, they show time and again that production is lower than before. October was an exception, it was a freak month; production was 2 per cent. higher than either in earlier or later months. It was on this one month's figure that all the Government's optimism was based.
If we take the forecasts—after all, the forecasts were prepared long before the January production figures were known, and they now look too sanguine—by the first part of 1983, which is the furthest forecasts go, GDP will be 3·4 per cent, higher than at its lowest point in the first half of 1981. What a wonderful improvement to look forward to. From the depths of the recession, in two years, 24 months, you will have managed to increase manufacturing production by 3·4 per cent. This is what they claim. But these claims are already overtaken by the latest figures, the figures published since, and it is no more probable that a rise of 3·4 per cent. will be realised than that the figures will show a fall by 2 per cent. a year between now and 1983.
Even if we take the Government's figures at their face value, the net result of the whole Thatcher experiment will be a reduction of wealth. Real GDP is forecast to be some 4 per cent. less than in the second quarter of 1979, when the present Government took office. We have to go back a long time to find an instance when a Government went out leaving the country poorer than when they came in. Perhaps the Government of Ramsay MacDonald from 1929 to 1931 qualifies for this description.
The purpose of national policy is to increase the production of wealth, and that cannot be repeated too often. It is not increased productivity, it is not lower inflation, it is not lower budget deficits; all these things are only important if they serve the end of increased production of wealth. Initially this was recognised. Initially the Government proclaimed that their basic aim was:
"to create conditions for a sustainable growth of output and employment".
We hear less about this now. After three years, despite numerous optimistic ministerial speeches, there is no sign whatever of this happening. The official explanation—we have heard it several times today, not

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least from the noble Lord, Lord Thorneycroft—is that the whole world is in a state of recession; how could we have opted out of it, when everybody else is in recession? Well, this leaves out of account the fact that while our industrial partners were at the losing end of the oil crisis, we were at the gaining end. It was our peculiar misfortune that oil and Mrs. Thatcher came on full stream more or less at the same time.
Therefore, all the benefits, all the potentialities which North Sea Oil gave for renewing our industrial equipment, for renewing our ageing and crumbling infrastructure and modernising British industry were entirely wasted. We reduced our GDP just when our potential GDP was enlarged by a new source of income, oil, the exploitation of which would have required a large increase in effective demand sufficient to maintain employment while avoiding vast balance of payments surpluses. The difference between us and other industrial countries is that all other industrial countries are constrained, on account of oil, by their balance of payments, and they could only expand further or faster or follow a more expansionary policy by incurring bigger balance of payments deficits. But our balance of payments is in surplus to the tune of £8 billion, for the first time for I do not know how many years. We are not constrained by our balance of payments; we do not have the excuse that we cannot expand because our balance of payments would not allow it.
However, bygones are bygones. When the present policies are finally abandoned and put into reverse gear, which I am sure will happen, Britain's capacity to produce will be found to have shrunk a great deal. And, however much the policies are put into reverse, the losses caused by the Thatcher experiment will never be recouped. At any particular future date the country will inevitably be poorer than it would have been if the Thatcher experiment, the triumph of monetarism and the magic of money supply, had never taken place.
5.47 p.m.
Lord Ardwick: My Lords, I hope to say something towards the end of my speech about the subject which the noble Lord, Lord Thorneycroft, raised. May I say at the beginning that, like my noble friend, I was very sceptical about the Government's policy when they came into office, but I suspended my disbelief in the hope that there might after all be an Erhard style miracle. But I no longer had to suspend that disbelief when I saw that quite a number of highly intelligent people on the Conservative Benches in another place were even more sceptical than I was about the effect of the Government's policy.
During the past few days it has been asserted in another place that the English phenomenon known as Butskellism is dead, and what was described, rather surprisingly, as the alien one of Hayekism and Friedmanism lay on the next mortuary slab. I have two hopes; one is that naive monetarism, if not dead, is discredited for all time, and that one day Butskellism will be resurrected.
Butskellism did not postulate that the two main parties should be in substantial agreement with one another. The Labour Party was not obliged to forfeit the priority it has always accorded to economic and social equality, nor its belief in public ownership; and it was not required to cease striving for ever
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greater equality. Butskellism did not oblige the Conservatives to share this socialist goal. Conservatism remained about inequality, about unequal rewards for skill, enterprise and privilege. What Butskellism did mean was that the two major parties had high on the list of their priorities the deliberate pursuit of full employment, expanding output, adequate state welfare and the maintenance of our traditional political freedoms. Surely this is the minimum consensus for a civilised and united society.
Butskellism was founded on the 1944 White Paper, which said:
"The Government accept as one of their primary aims and responsibilities the maintenance of a high and stable level of employment after the war".
That priority has not merely been set aside as impossible during a worldwide recession which has produced unemployment almost everywhere: the Government of the party opposite seem to believe today that there is little that Governments can do at any time to engender full employment and increasing output. Full employment might be a happy consequence of other policies, but it is not deliberately to be contrived, to be aimed at. There can, of course, be ingenious palliatives and micro-economic stimuli such as were quite usefully provided in the Budget. But the macro approach, Conservatives now seem to argue, is fallacious. We bury Keynesism with Butskellism and accept the Benn-Joseph polarities as inevitable. Surely a choice of this momentous kind puts too much strain on the electors.
But even those who doubt what Governments can do to restore full employment must admit that Governments can cause unemployment. That is what this Government have done. The recession of 1981 was deeper and more violent than the Government had anticipated. They have made it worse. Many of us will remember 1947 when the Labour Chancellor inflated a natural boom which before long had to be deflated or, as we called it then, "disinflated". This Conservative Government have done the opposite. They deflated in a recession.
The second thoughts that people have had on the Budget are less favourable than were the first ones. The Treasury mountain laboured and when a mouse appeared people said, "what a jolly creature". One lot of people admired its bright eyes; another admired the deft movement of its paws and a third the sleekness of its fur. Only later did they notice that the creature was very small, very weak and capable of uttering only a squeak.
The Budget with its dubious forecast of an increase in output of 1½ per cent. is a mouse that is admittedly going to make no impact on unemployment at all. In fact unemployment, which now embraces one registered worker in eight, is expected to rise by 300,000. Yet the Government seem to be euphoric, as though this were a glorious morning and everything was going their way. They certainly have enjoyed some strokes of good luck. Cheaper oil will have, perhaps, quite a substantial reflationary effect. The reduction of interest rates from their absurd height makes young people happy by relieving a little their crippling mortgages and putting some money into their pockets. But interest rates will have to fall a lot lower before they are an encouragement to business investment. The uncertainties of American financial policy must deter anybody from predicting that interest rates must inevitably fall.

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We see a Government incapable of facing the challenge of our times, a challenge presented by a dangerously high level of unemployment and a desperately low level of output. The Government speak with pride of a gain in productivity, but this has been achieved by bankrupting not just the least efficient, but some of the merely less efficient and some of the less fortunate enterprises. The commentator got it right who said that it was like a cricket team playing only its eight best batsmen and then boasting of an increased batting average.
We must be grateful to the Tory dissidents—I prefer that term to "Tory wets"—for limiting the damage done to the economy by the hard line monetarists of the Government. Their advocacy and the bitter lessons of experience, have caused the Government to begin to move away from their stultifying ideology towards what the honourable Member for Bexleyheath described as pragmatism. But if pragmatism merely means that the ideology will be replaced by old style deflation, it will not be a very great improvement. The positive remedies are not there yet, or do not appear to be there. Perhaps the Government will be emboldened as the election draws nearer.
This has been a very difficult Budget to interpret. As Graham Serjeant said in the Sunday Times:
"Sophisticated analysts could not decide whether it was reflationary, deflationary or neutral or by how much".
As my noble friend Lord Kaldor recalled, the Government began their life with a blithe confidence that income tax cuts, lower Government expenditure and stern control of the money supply would restore the economy. But the tax cuts did not dynamise our entrepreneurs and their executives. The money supply evaded both control and measurement. And the PSBR has turned out to be too whimsically and fortuitously compiled to be the powerful economic totem that it used to be. Thus the Government's medium-term strategy seems to have become so attenuated that it is almost imperceptible.
The Government are now on the run-up to the election. What leads them to suppose that they can appeal successfully to the electorate if they go to the people with 3 million unemployed, as it looks as though they will, and with lower output than when they took office, plus a long trail of bankrupted businesses? The Government's hopes, I suspect, are based on nothing more substantial than the latest public opinion polls where they are ahead of one party which is struggling to remain whole, and of another party which is striving to be born. The Conservative Party seems to believe that, if unemployment is not actually increasing, if inflation is down a few points and if the Official Receiver is not on overtime, the electorate, helped perhaps by a few more sweeteners, will be complacent enough to give them a new life. So the current mass unemployment can be faced not without compassion but without the urgent concern that a modern Government should show.
Of course nobody believes that there is a quick solution for the unemployment problem. However, that does not mean that no solution exists. The Government seem to be terrified even of a modest reflation. They are the victimes of their own dogmatic
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propaganda. They invent alarming similes about throwing petrol on the fire, when somebody merely proposes that they should stir the sulking embers with a few puffs of the bellows. Surely with the spare capacity Britain has in manpower and machines, a modest reflation could be attempted without the risk of further inflation?
For a radical attack on unemployment and for a powerful reflation it will, of course, be necessary to have the co-operation of the trade unions. It will not be easy to get that co-operation. We are in a very sad plight in this country compared with what happens, for example, in the continent of Europe where they have the concept of what they call the social partners: the Government, industry and the unions. They seem to be able to establish a rapport. Here, we are all in separate compartments with none of us getting on very well with the other.
I do not think that the Government get on very well with industry. Indeed, I was rather horrified by the remarks of the noble Lord, Lord Thorneycroft, this afternoon about the unions. I was horrified not by what he actually said—his words, as usual, were carefully chosen—but by the tone of his remarks, his feeling towards the trade unions. I did not think that that kind of feeling would be voiced by anybody as eminent as he has been in Government—only a few weeks ago he was the chairman of the Conservative Party. I cannot think of anywhere in Europe where that kind of relationship would exist with the trade union movement. I am not suggesting that all the faults are on Lord Thorneycroft's side, but it is characteristic of the British economy, of British society, and until we cure it I do not think that we shall make the kind of progress that we need to make.
As I say, for a radical attack on the problem, no Government can operate without the co-operation of the trade union movement. It will not be easy to get; it will certainly not be easy for a Government that inflict upon the trade unions punitive legislation. The trade union movement, like the Government, sometimes lives in a cloud cuckoo-land of ideology, pretending that all that is needed is a large stimulus to demand and some import controls. Of course, the leaders of the unions, with their first-class economic advisers, know that this is not true, but it makes life easier to pretend that this is wisdom. However, some day they must educate and lead the people who do not understand the problem—the people on the workshop floor.
What needs to be said in bold language—which can be said by Back-Benchers everywhere—is that we cannot return to full employment and growth without an incomes policy that is accepted and respected. What form it should take or could take, I should not like to speculate. There must be a rejection of the behaviour of those disastrous months before the last general election, when the unions were bursting out of their incomes' restraint and the Conservatives were saying that that kind of restraint was not necessary in a well run society.
However, there is too much pessimism about the possibility of full employment. People talk as though there will never be jobs for all again. It is a fallacy, as every economist knows, that there is only a limited number of jobs and so jobs must be rationed or shared,

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or people in their fifties, in what is now biologically middle-age, must be compulsorily retired to make way for a younger generation. I regard that as a cruel and unnecessary solution, and one which we should put on one side, without examining it any further.
6.2 p.m.
Lord Nugent of Guildford: My Lords, I was glad to hear the noble Lord's last words. I did not agree with all that he said earlier, but I certainly agree with that. When he allowed the Government to have a bit of good luck as regards the lower oil price and said that that would undoubtedly help the Government's policies, he might have mentioned that the Government had a stroke of extremely bad luck in 1979–80 when the price of oil more than doubled. As I am sure he well knows, this was certainly one of the major factors adding to our economic difficulties.
I thought that the opening speech of the noble Lord, Lord Glenamara, was very moving. He knows as well as I do—because he has been in public life for many years—that all in public life share his feelings of distress about the enormous number of unemployed, and especially the position of youngsters. Our problem is: what is the best way in which to tackle it? I believe that what we are doing as a Government is the right way of doing it. However, I listened with great interest to what the noble Lord had to say in his very lucid exposition of the labour policies which provide for this huge expansion of £9 billion, and how it would be employed.
We all have different views, whether we are on the Opposition side or whether we are on the Government side, but I should like to remind the noble Lord, Lord Glenamara, what his right honourable friend Mr. Callaghan said when he was Prime Minister in 1976. I have gone back in the records to see just how the Labour Government faced the enormous problems which they had at that time. Shortly afterwards they had to call on the IMF to bail out the country, when our solvency was really in danger. This is what Mr. Callaghan said to the Labour Party Conference at Blackpool in 1976:
"We used to think that you could just spend your way-out of a recession by cutting taxes, by boosting Government spending. I tell you in all candour that that option no longer exists and that in so far as it did exist, it worked by injecting inflation into the economy, and each time that happened the average level of unemployment has risen. Higher inflation followed by higher unemployment—that is the history of the past 20 years".
The noble Lord, Lord Glenamara, was probably there and probably heard Mr. Callaghan make that speech. It must have been a very sobering moment for the supporters of the Labour Party, in the middle of great problems, as they were, and responsible for governing the country. But that is the fact of the matter. When you are running the show and you have to look closely at all sides of the problems, you see exactly what are the implications and you see that this vast expansion—this vast spending of Government money—which looks so attractive and as though it would help you out of your problems, will only make matters worse. After all, this has been tried several times in the last 20 years. So what Mr. Callaghan was saying was only repeating what, unhappily, we had all come to know was the fact.
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In my belief, and evidently in the belief of a great many people in the country, this Budget is showing evidence that Government policies are beginning to work. As my noble friend Lord Cockfield has said, output in 1982–83 is forecast for an increase of 1½ per cent., and more in 1983–84. Exports are up. In his interesting speech, the noble Lord, Lord Kilmarnock, said that manufacturers were only making exports successful by cutting their margins to ribbons, and were not making profits there at all. But every balance sheet you look at shows that it is in the export markets that manufacturers are making their profits. Therefore, this confirms that productivity per man, which increased so satisfactorily last year by some 10 per cent., is, in fact, giving us a competitive edge which we simply have not had in the past.
Inflation, which is now at 12 per cent., it is true rose, but it has now come down to 12 per cent. and it will go on down this year. There is a prospect that by the end of the year inflation will be in single figures at last. So we seem to have checked the downward slide from which we have been suffering in recent years.
I believe that there is only one certain path to industrial expansion and reduced unemployment, and that is through higher productivity in industry and close monetary discipline in public expenditure. The Government are following both those lines. The relief schemes—with which I shall not deal now because I understand that my noble friend Lord Ferrers will deal with them when he winds up—naturally appeal to all of us especially the training schemes which help youth and which generally relieve the distressing impact of unemployed youth. We are spending £1½ million on those in the coming year. Of course, the Government have substantially helped industry by cutting the national insurance contribution. Let me remind noble Lords opposite that this heavy burden on industry was imposed by the Labour Government. This is one of the heavier burdens which employers have to carry. At least we have been able to cut off a third of it and I hope that in the years to come, we shall cut off the rest.
There are two other points which I should like to make. I turn, first, to monetary discipline in public expenditure. The public sector borrowing requirement has always appealed to me as the easiest thing for the layman to understand. This, after all, is the difference between what Government are spending and what they raise in revenue. They have to borrow to get the rest. We have begun to reduce that. In 1981–82 it was £10½ billion. For this year just starting, 1982–83, it is going down to £9½ billion, 3½ per cent. of GDP, with a forecast for the following year, 1983–84, of £6 billion.
This is an important indicator. Let no one think that it is a theoretical figure. Each year's addition to the past debt is the amount of the public sector borrowing requirement, and interest has to be paid on it by the taxpayers. During the last Labour Government from 1974 to 1979 the national debt was actually doubled, and the interest now forecast for the coming year on the national debt is £11·6 billion. That is equal to the total cost of social security. What a way to spend our money. If only we could stop borrowing this huge sum of money every year in order to pay our way, which is what we are doing,

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how grateful our successors would be who have to go on paying that interest for years and years.
At least my noble friend and his right honourable friends in the other place are moving in that direction, and good luck to them, and may the day come when we do not have to borrow at all. But, of course, if the noble Lord, Lord Glenamara, had his way, this figure would go shooting up and go from bad to worse. This has a direct relationship with interest rates. The more the Government go into the market to borrow, the more interest rates go up, and this affects all industry. It is worth making the point that a 1 per cent. reduction in interest rates saves industry something of the order of £340 million a year. We are down to 12 per cent. today. I am happy to hear that by the end of the year we shall be considerably lower. Of course large numbers of people in the country will be very grateful that their mortgage rates have gone down by 1½ per cent.
My last point is the Government's success in checking excessive wage and salary increases unrelated to increased productivity. Our record here has been spoken about, but I pick out one or two figures which make the point. I take the CBI figures from 1968 to 1980. In those 12 years, our earnings went up by 400 per cent. and our output by 30 per cent. Those are figures which tell the whole story in a nutshell of why we have lost markets year after year throughout the world.
However, the CBI data bank for the end of last year showed that wage and salary settlements this winter have been running at something of the order of an increase of plus 4 per cent. to 6 per cent. This is evidence that in industry employers and employees have really got the message that increased pay is only possible if increased productivity—does the noble Lord wish to intervene?
Lord Bruce of Donington: My Lords, I must apologise for interrupting the noble Lord. I merely wanted him to continue his argument, if he will. Is the noble Lord also aware that there was a survey published in The Times last week that showed, unlike the restraint to which he has referred, that directors of most public companies increased their remuneration last year on average by 14 per cent., and many of them very much above that? Does the noble Lord call that restraint as well?
Lord Nugent of Guildford: My Lords, the noble Lord knows far more about the balance sheets of public companies than I do. Therefore, he would know that what is paid must be a matter for judgment by individual boards. Directors may not have had an increase in previous years. There are a lot of factors that come into it in deciding what they should be paid. I would certainly agree with the implication of the noble Lord's observation that it is very much up to directors who are leading companies, large and small, to condition the emoluments that go to themselves so that they show the kind of example that they should show to their employees who are restrained—as indeed they are now—in their wage and salary increases. But I believe that in the main the message has got over that increased pay is only possible if increased productivity is there. The
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engineering industry, which last winter made a settlement of some 4 per cent. to 5 per cent. for wages, is a good example of this. They realised that if excessive pay demands were agreed to, this would inevitably mean bankrupt businesses—and, unhappily, all too many have gone that way—and lost jobs.
I agree with my noble friend Lord Thorneycroft, who said in his, as usual, brilliant, highly entertaining and interesting speech that the public sector continues to be a major problem in this field. There on the one hand are the Government as the ultimate paymaster behind the scenes, and on the other hand is the monopoly strength of these great corporations. It is difficult to make them responsive to the market, but Ministers are struggling. They struggle and struggle to try to get payments at a reasonable level, but it has sometimes proved unsatisfactorily high. This is not in the country's interest. It pushes up prices and it upsets the whole community. I agree with my noble friend Lord Thorneycroft that there is still a major problem there, and in my judgment the cost of the public sector is higher than we, as a nation, can afford.
I believe that my right honourable friend Mrs. Thatcher, as Prime Minister, must be given credit for this change in mental outlook which is being achieved throughout the country. The noble Lord, Lord Ardwick, asked how we shall feel going into a general election with 3 million unemployed for whom we are responsible. Of course we shall feel immensely responsible and immensely concerned, but the fact that we are in a world recession is something that the nation understands. I believe that they understand that this Government are giving a lead in the only direction that is going to save us, which is by constraining industry to reduce its costs and to increase its productivity. Only in that way will they win new markets, and so eventually, as some are beginning to do now, expand their production and be able to take on more labour.
Lord Kaldor: My Lords, will the noble Lord permit me? Does the noble Lord agree that our success in exports pales beside our failure in our home market? Despite the increasing recession, our manufactured imports have increased twice as fast, percentage-wise, as our exports since this Government came into office.
Lord Nugent of Guildford: My Lords, of course, I do. It is a perfectly good point, it is true. I think that this is because the firms who are exporting are, in the main, big, strong firms. They understand better what they are about. They have braced themselves to face competition abroad. So many of our firms in the domestic market have been accustomed to the protection of the domestic market, and, when they have had to meet the competition of imports, far too many of them simply have not shown the capacity to do so. Well, many of them are learning to do so. I am sure more of them will learn to do so. The message is getting over to them that there is only one way to their salvation, to their continued existence, and that is in their own hard work, efficiency and productivity. That is the only way. It will be not their salvation only, it will be the salvation of the nation.
I congratulate my right honourable friend the Prime Minister because her tenacity and courage have held us

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to this path. Despite all the pressures and many doubts of my honurable friends and right honourable friends in another place, she stuck to this path. It is the only path to our salvation. We still have in this country the resilience, the enterprise, the inventiveness to succeed on this path, and that will gradually absorb this all-too-large number of unemployed, for the benefit of those individuals and the benefit of the nation.
6.20 p.m.
Baroness Ewart-Biggs: My Lords, first I wish to thank the noble Lord, Lord Glenamara, for initiating this important debate and, secondly, to apologise because I shall probably not be able to stay to the end of the debate in view of a long-term commitment which I dare not dishonour. I shall introduce into the debate a few ideas and a considerable number of apprehensions about policy towards youth unemployment. I appreciate that that is rather a departure from previous noble Lords, who have concentrated completely on economic theories, but I thought I might speak a little about that section of the community who seem to be suffering particularly from those economic theories. I shall, therefore, take this opportunity to present some aspects of youth unemployment, first regarding the present initiatives for those school-leavers for whom there are no jobs; secondly, the general reactions to the proposed new training schemes due to start in September 1983; and, thirdly, a little about the work that is being done for the young unemployed by the youth services and other agencies.
On the first point, that of job creation, I think it would be generally agreed that the youth opportunities programmes, although criticised on many fronts, have provided occupation for a great number of school-leavers. A youth centre in Yorkshire told me that of its just over 3,000 registered unemployed teenagers, about half were with the youth opportunities programme. Clearly, all the schemes have not been perfect, but many have proved that when organised properly—whether by voluntary organisations, local authorities or employers on their premises—youngsters really have benefited from a good and positive input of life and social skills and a variety of different work experiences. Many of the young people, having come out as failures from their secondary schooldays, needed an injection of confidence, which they have been given through those programmes.
Criticism has been levelled mainly at work experience programmes in employers' premises, the criticism that some firms have taken advantage of a free source of labour and have employed a stream of trainees for six-month periods and have offered little in the way of training. At the other extreme, some firms have given first-class training and work experience and, on completion of a successful six-month period, have been able to employ trainees on a permanent basis. At present, trainees receive an allowance of £25 a week and they join programmes through choice. Where the youth opportunities programmes began to run into real trouble was due to their having been conceived to deal with only a limited number of school-leavers and to act merely as a bridge to permanent employment. The knowledge that there have been no jobs at the end of their period of training has caused a great deal of apathy among the young participants.
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That, briefly, is a record of the youth opportunities programme, and it must be remembered that young people have at least enjoyed complete freedom of choice whether to join the schemes or not. However, regarding my second point, that of the new training initiative contemplated for next year, the terms are very different. The initiative comprises a 12-month programme designed to absorb all school-leavers with a weekly training allowance of £15. The scheme embraces the principle of better liaison with technical colleges, more sophisticated educational input and a higher degree of skill attainment, and all that is of course to be applauded.
But there is great concern among youth workers about certain aspects. One is the fact that the scheme is compulsory, allowing no 16-year-old to take a full-time permanent post except for apprenticeship, denying school-leavers any choice, or indeed any share, of the jobs on the market. Another is that the training allowance of £15 a week, in 1983, will be entirely unrealistic, coupled with the fact that the proposal incorporates the removal of benefit entitlement to which school-leavers are at present entitled. There is great concern about the hardship that will bring to families already hit by rising unemployment and the implications of it on the level of theft and crime locally. Then there is criticism that the proposals are purely in terms of equipping young people for employment and do not take into account other life skills which recognise that young people will not automatically find vacant job to which to move on. My final criticism of the initiative is that voluntary organisations appear to have no place in the scheme, despite the fact that they have built up a valuable body of knowledge about training programmes and have had a pioneering role in the youth opportunities programme generally. Neither does the important role of the community services appear to have a place in the new initiative.
Finally, I wish to comment on the enormously important work being done by youth organisations to help prepare young people for the rapidly-changing employment pattern which confronts them. It is generally found that most of today's generation of young still do not want to change their expectations; they want a job and the money that goes with it. It is only by force of circumstance and argument that they will settle for the money alone. Most of them, if unable to get a job through conventional channels, make no effort to get one in any other way. That is partly through ignorance and partly through the feeling that a proper job comes only via the proper channels.
Although the majority of young people still embrace the traditional work ethic, there is a growing number of young people involving themselves in new subcultures; for example, we have seen the great rise in the "punk" culture and that of Rastafarianism, the latter being the major one, and of course such groups flourish as a reaction to the lack of jobs. It is strongly felt among youth workers that where young people are interested in alternative life styles and activities, it is important to support and facilitate them. Training schemes should embrace such activities at the same time as dwelling on more vocational training, laying stress on the fact that any such new concept is not an alternative to training but a complement to it.

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The general consensus among all those involved with young people—whether they come from educational authorities, careers offices, industry, voluntary or charitable organisations and so on—is to agree on the priority of working towards making young people accept the importance of education and higher training as life-long assets and the need to dissuade them from the attitude that if they cannot apply their education and training to an actual job, then such education and training is not worth acquiring.
Isolation and loneliness among the young unemployed is a subject of major concern. It is difficult for young people to realise that the greater the range of social and work skills they acquire, the broader will be their lifestyle both in relation to employment as well as to non-paid interests. I would, therefore stress the fears entertained by many in the youth services about the present policy regarding youth unemployment. They emphasise that any future Government training programmes must not be geared totally towards motivating young people to work while at the same time denying them a share of the jobs available. Nothing could be designed to create a greater sense of frustration and resentment, coupled with a total alienation and a feeling of aggression towards the community, as has been demonstrated tragically in Toxteth, Brixton and other places.
If the Government really believe in investing for the future of Britain, they must invest in today's youth, the generation who, after all, will carry a heavier responsibility in time to come. It is no good offering only a compulsory training scheme and £15 a week, with a denial of any supplementary benefits, to some of the country's least privileged teenagers. Speaking from a moral attitude, I think it fair to say that the emphasis should not be on the young unemployed being a problem and expense to society, but more that society has confronted young people with the problem of unemployment.
6.30 p.m.
Lord Mais: My Lords, I should like to add my thanks to the noble Lord, Lord Glenamara, for giving us the opportunity to debate what is not only a very interesting subject, but in the present day a very serious and an almost disastrous one. I imagine that in your Lordships' House there are many who will remember, as I do only too well, the early 'thirties, when unemployment was as bad as, if not worse than, it is today—and the like of which we have not seen in the years between then and now. In the early 'thirties it was difficult to find employment, whether one had a trade or a technical qualification; it made no difference, there were no jobs there; and that I am afraid is beginning to appear to be the situation that we are now in.
There are few things in life more demoralising than to want work and for there to be no jobs, with little prospect of there being one in the foreseeable future. That was the situation that my generation faced in the early 'thirties—and many with me. I regret to say that it is a very similar situation that this generation is now facing.
As an indication of what it was like, I would point out that of my term out of college as an engineer, only
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two of the whole term found employment. Fortunately for us, I suppose, not very long afterwards the drums of war began to beat, industry picked up accordingly, and therefore we were not unemployed for all that long. But that situation does not exist today, and if possible some alternative other than war must be found to employ the people, in particular the young people, of this country.
I find it encouraging to hear that Her Majesty's Government are prepared to take measures with regard to certain industries, including the industry in which I spent all my working life—the construction industry—with a view to making it possible for them perhaps to employ a larger workforce. If that be so, I am relieved because it was the construction industry which in 1932 was the first industry to begin to show an improvement in the general turnover, profitability, and the amount of work involved. Regrettably, much of the work arose because we had woken up to the fact that we might be facing a war in the near, or not so far distant, future and much of the work was connected with that. But the fact remains that the construction industry is very labour-intensive and it can absorb a considerable number of unskilled and semi-skilled men. Therefore, it could increase its workforce considerably without seeking highly-trained people in large numbers.
I hope that, in whatever proposals they make, Her Majesty's Government will consider encouraging firms to employ as many younger people as possible. It is the young people upon whom the future of this country depends, and it is probably they who at the moment are more disillusioned than any other section of the population. I think that the Government should go even to the length of offering some form of subsidy, or other aid, to firms that can take on young people and, if not teach them a trade, at least give them something to do and to some extent restore the pride that one derives from having a job and doing it well.
Unemployment pay costs this country a great deal of money. It produces absolutely nothing, except possibly hopelessness, bitterness, and in the end a loss of self-respect. Surely it is better to spend a little more, or a great deal more, and have something to show for it at the end of the day, rather than pour out large sums of money just to provide people with the bare necessities of life and little hope for the future.
My Lords, we all, I am sure, deplore the vandalism and violence which at present exists in this country, in particular among the younger people. Nevertheless, I believe that you cannot divorce the vandalism and violence from the fact of the high level of unemployment among the young. If people are idle, not only do they become bitter, but they look around for something with which to amuse themselves. I have just been talking about the construction industry, and I should think that quite a lot of work is being provided in and around London and elsewhere. My own station at home no longer has any windows, the telephone has been torn out by the roots, and two of the doors cannot be locked because they have been removed and not yet found. This reflects pure frustration. If the young had something to do, something to keep them occupied during the day, they would probably be too tired to go around wrecking railway stations.
In most of our towns and cities there are areas badly in need of improvement and modernisation.

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There has been a tendency for people to move out of the centres of cities and towns, but there are still large areas which could be modernised and improved. Of course the problem is that one might run into opposition from industry itself if one attempts to form groups of younger people or unemployed people to restore the very derelict areas in most of the cities, in particular in some parts of the City of London, or in London as a whole.
Some people to whom I have spoken say that we have to learn to live with 3 million or more unemployed. That is, they say, part of the price that we pay for progress in mechanisation and automation. If that be so, I would feel inclined to say that it is too high a price to pay.
Mention has been made of the possibility of early retirement and shorter working hours, so that more people can he employed, and the older members of the community make way for the younger members. I agree with the noble Lord, Lord Ardwick; I think that this would be an unsatisfactory solution, and it would be a very cruel solution, too.
I appreciate that we might have to face the choice between some form of controlled inflation or a steady rate, and even a higher rate, of unemployment. I admit that the answers to the problems are difficult, but they are, I believe, the most important problems that the present Government, or any Government, can possibly face, and, very largely, the future of the country, and in particular law and order, is at stake.
I know that I have tended to concentrate more on the industry that I know most about. The situation there is that it is at last beginning to show signs of a slight upsurge in the amount of work available; but as I said earlier, it was the engineering industry and the construction industry which led the way in the 'thirties. Whether that can happen again, I do not know. I hope it can. But one thing is certain: this is not just a matter of business or commerce. It is far more a human matter, or a matter of common humanity, and I do not believe the country can really live with itself and with the massive unemployment that exists today and is likely to increase.
6.41 p.m.
Lord Selsdon: My Lords, I would not be human if I did not express some doubt about the policies of this Government. When they came to power, I must admit, I supported wholeheartedly the theory behind their policies. But I wondered after a while as to whether it would be practical for the Government to implement everything they sought to do. As I recall it, there was a trident of policies. The first was to reduce or control inflation, and all sides of this House agreed that inflation was the greatest priority Then it was to remove restrictions and control Government spending. That was the second part. The third was to restore initiative and enterprise by reduced taxation and new incentives.
This, to some extent, began to work. Then it went astray because I believe the Government found it impossible to reduce their expenditure in the way they had hoped. As a result, in order to achieve their monetary targets, increased pressure came upon the very sector they were seeking to support and stimulate—the productive sector. This caused a greater level of
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recession or deflation in manufacturing industry and the productive sector than perhaps was desirable. At the same time, inflation (as we call it) in the public sector remained relatively high.
But this is history, because these days we look back at past revered economists rather as though they were revered historians, forgetting that every one of them had something practical and sensible to contribute. But irrespective of the past, the worry I think I had was that, although I am meant to be a halfhearted economist and a banker, I have never really understood monetarism. These "buzz" words have always caused me concern, and I think the Government and Members on this side of the House have had difficulty in explaining to people exactly what is monetarism. But the results of the policies, whether the balance in the implementation of them has been right, has been success; and this last Budget has been the only Budget that I can remember where the supporters of one type of policy can find no real criticism, and the opponents of the Government can again find no real criticism.
So what are the criticisms of the Government's medium-term strategy at the moment? It boils down to one thing: how much more should he injected into the economy, not necessarily how much less. We hear the figures of £2 billion, £4 billion, £6 billion, £8 billion. It reminds me rather of the sort of cheerleaders that one sees at an American ice-hockey match chanting, "2–4–6–8, who do we appreciate?", as though a Government will in fact win the support of the electorate by taking a figure out of the air and saying, "We will spend this".
If the Government decide that they will inject too much money into the economy, their policies will fail; inflation would rise again, and before long we would have all the various M1s and M3s expanding at an outrageous rate, and we would have what one might call monetary motorway madness. Inflation would return, and with inflation would come all the criticisms from all parties and everyone of varying political persuasions.
The question therefore is not how much more one can inject back into the economy, but how one can effectively apply the resources within the limits of public expenditure to deal with the problem of unemployment. Because this is a social problem rather than an economic problem, irrespective of what the noble Lord, Lord Mais, has said in terms of expenditure upon the unemployed at the moment. I thought I would see whether I could persuade your Lordships to a certain way of thinking, and there were three topics that I was going to try to cover. The first one is related to demand, and the effect of demand or expenditure on employment.
We should perhaps look at the transition that has taken place in the employed sector over the period of this Administration and the last Administration. We often fail to remember that of the 21 million people in employment, or thereabouts, 8 million to 9 million are women and the rest are men; but within the industrial sectors an interesting change has taken place which no Government have managed to halt. It may be the wrong change, it may be the right change. That is in the production industry sector, or, perhaps more important, in the manufacturing sector. Since 1973 the number of people employed in this

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sector have fallen from 8 million to 6 million. Two million people have come out of that sector. Some have been re-engaged in the service industries, some have been re-engaged in Government departments and some have not been able to be re-engaged at all. I would suggest to your Lordships that the main reason for the rise in unemployment is the increased labour available from the manufacturing sector.
This trend has more recently introduced some other interesting developments. Productivity per head has risen to the highest level since, I think, 1973. You could argue that because there has been a squeeze there have been fewer people employed and, although production may have gone down, the figure given to the average batsman (which I think the noble Lord, Lord Ardwick, referred to) is a real one in that case. But the question which I put is: if one injects more money into the economy, will you provide more employment for people in the manufacturing sector? I say, No, you will not; you will in fact create inflation. More than that, you will have an impact upon the balance of trade because, these days, if one has any form of boom which may ultimately reflect itself in a consumer boom the purchase of consumer durables takes place, and the bulk of consumer durables sold in the United Kingdom in general are manufactured abroad, whether they be motor cars, white goods or things of this sort. This is the sector, the consumer durables sector, that we as a nation have lost—not completely—to foreigners.
You can then say, "If you inject money into the economy to try to create investment in capital plant and machinery, that may have a temporary effect, but where is the demand for the products that will be produced by that industrial sector?" I submit to your Lordships that this demand is not purely domestic demand. The real demand is perhaps the international demand, and it has been pointed out on many occasions that of all the developed economies in the world the United Kingdom depends more upon international trade than anyone else—one-third of our economy. That means, perhaps, reflected into jobs, 7 million out of 21 million; in the manufacturing sector, of the 6 million, 2 million jobs.
Rather than create false demand at home, I would submit that perhaps we might pay more attention to looking at a formula which could satisfy the demand which already exists abroad—and there is very considerable demand throughout the world. That demand is to some extent having a greater impact upon our economy than in previous years. Our balance of trade is extremely good at the moment. We are competitive again in the world. I think, although there has been a strike on trade figures, when they come out we will find there was a 20 per cent. increase in exports last year; and in the sector which I deal with, the Middle East, I can promise your Lordships that the increase will be around 33⅓ per cent., and in some countries 40 or 50 per cent. That sort of demand, other than the demand in developing countries, is for capital plant and machinery and for the very goods that are in the sector of our economy where we have shed labour and where the unemployment problem is highest.
The Treasury have always been very reluctant to try to put a figure upon the number of jobs created
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by a certain level of export orders. But the figure I am led to believe is currently being floated about is that an export order of £17,000 creates one job in manufacturing industry, and since manufacturing industry is under one-third of total employment the subsequent jobs in service industries could follow therefrom. I do not believe, recognising the dependence of our economy upon international trade, that sufficient resources are being allocated to this sector.
The British, I have often found, are strange people. I do not believe that the provision of money in itself will make people do things. One cannot bribe somebody to move to a development area by cheaper money. What will do it is when they know that there is demand at the end of the day for the goods produced. One-third of that demand at the moment is abroad, and I believe it could be substantially higher. I do not wish to develop in this time too much of that theory except to say that with the CBI and the TUC we are trying to work out some submission to the Government because the allocation of our resources into this sector with employment in mind could have a greater impact.
There are several other factors that one should look at. The problem that we have at home too is the shift to the service industries. It is not a problem, it is an opportunity. My next point is taxation. Taxation in general creates considerable problems because at the moment I think of the total "take" that the Inland Revenue have of some £35 billion from taxation on profits, corporation tax or income tax, roughly £31 billion comes from income tax and only £4 billion from corporation tax.
Noble Lords opposite have often said that people are not paying their fair share of tax. This may be true but tax allowances in general permit people to have further investment in their sector and it is the way that they are applied that bothers me. In particular, I think not of the larger corporation, which in general will pay a relatively low percentage of tax, but of the smaller one, which is seeking to expand and grow. We have often heard the theory that each small business takes on one or two new people and there is not unemployment but a labour shortage.
I have been looking at small businesses; the general complaint that one finds is that there are good ones and bad ones. But they are not, in general, capital intensive. It is not the plant and machinery that they need. They need the labour force to enable them to carry out extra orders. I wish to give your Lordships two simple examples. One is a small painting and decorating business owned by two people, doing extremely well with a turnover of £100,000 and employing eight people. They do not dare take on any more so they subcontract labour. The return to the owners who started from a relatively small base with a £1,000 is very interesting. They pay 50 per cent. tax on their salary, and on the extra profit they pay 40 per cent. tax. They would like to put the money back into the business but they do not want to buy plant and machinery; they do not want to take on anyone else because the administrative costs are too complicated and difficult.
The second one is a small marine engineering organisation—although it is not that small—which sells in a very difficult market. It turns over about £450,000 a year and does extremely well. The person who owns

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it trades as an individual and pays 60 per cent. tax at the moment. These two types of businesses—and there are many like them—say, "Perhaps we could take on more people and expand if the tax burden applied to us at the moment was not as great as it is". It is not the plant and machinery which necessarily creates the jobs; it is the orders and demand. The demand for services, and the maintenance services that the British can provide at home and worldwide, is very considerable and we are extremely good at it.
This is something that I suggest the Government look at because the burden or relationship between income tax and tax on profits is rather a strange one. It would be much better to shift the balance away from the smaller companies and pay closer attention to the way that tax relief is given.
My final point is a social one. It refers effectively to the young and the prematurely retired. I have another part-time Government job in that I chair what must be the biggest Quango in the United Kingdom: the Greater London and South-East Council for Sport and Recreation. It is our job to look after the people in London, Surrey, Sussex and Kent when they are not sleeping and when they are not working. We believe that they will work less and a strategy has been produced which your Lordships may see in due course. It is quite interesting the way that there is no difference of view between the various political factions in this. Half our executive committee of 170 are trade unionists and we have representatives from the Army, Navy, and Air Force. There is a move towards greater activity and a lot can be done in the leisure and recreational field which the Government have not considered. This is not a question of capital expenditure; it is a question of organisation.
We have, as we know, the problems of the inner urban areas but there are many developments, and the noble Lord, Lord Mais, pointed out that there are many things that the young can do that they would actualy enjoy. Some that we would not expect people to enjoy are as follows. When we said get up in the morning and run round the park, 50,000 people got up and ran round the park. When we said, enter a marathon in London, too many people entered. Some 10,000 people have entered for the bicycle ride from London to Brighton and back again. More significant among the very young, the Metropolitan Police run a five-a-side competition. Some 47,000 children have entered this year.
There is a mood away from watching things and towards doing things. If we cannot provide a way whereby people who may not be working at a particular time or are prematurely retired can occupy themselves and make a contribution to society, then we will be suffering and that will lead to despair. Clive Jenkins, with whom we have been talking on this aspect, pointed out that if work were worthwhile the rich would have kept it to themselves. He has been advocating a 35 hour week for a long period of time.
Before I sit down, may I summarise briefly what I have said. I believe that we could do more to help the unemployed if the Government were to consider re-allocating existing resources, without new resources, towards satisfying the demand that exists abroad. Where I can assure your Lordships that we are com-
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petitive again. I believe that more employment would take place in the small businesses if the Government would look at the way the burden of taxation falls upon the man who does not have a capital-intensive business but has demand and needs additional labour.
Finally, I believe that we should all look at the problems of the organisation of the young, the prematurely retired and others because there are many things that one could do which do not need capital expenditure. It is surely the duty of Government first and foremost not so much to think of economy but the welfare and happiness of the people.
6.57 p.m.
Lord Granville of Eye: My Lords, I shall not attempt to follow the interesting arguments of the noble Lord, Lord Selsdon, regarding the amount of employment which can be absorbed in small businesses. No doubt the Minister will deal with that. I should like to add my congratulations to the noble Lord, Lord Glenamara, for having introduced this Motion, which all of us will find no difficulty in supporting, and for an interesting speech.
I also enjoyed—as I always do—listening to the speech of the noble Lord, Lord Thorneycroft, because he has seen it all before and, if I may say so, he has done it all before, and so he knows all about it. Like so many speakers, he emphasised the fact that this is a world problem today, a universal problem. In the United States of America there are 7 or 8 million unemployed. In Europe, 10 million are unemployed.
The noble Lord and the Minister referred to 1931 and how we overcame that world economic crisis when we then had 2¾ million unemployed. We had a world economic conference at the British Museum. We had 66 nations there. Franklin Roosevelt wrecked the whole thing with a telegram. We went into the next building and formed the British Commonwealth economic policy; but we achieved nothing from the conference. In 1931, with 2¾ million unemployed, the Labour Government were in office; Mr. MacDonald was the Prime Minister. They had three Ministers, a triumvirate, to deal with unemployment. They were Mr. Thomas, Mr. Lansbury, and Oswald Moseley, who resigned because the Government were not getting on with some of the schemes and formed a new party which had a very short life.
It is interesting, as we have been referring to what happened in 1931, to recall that the Liberal Party produced a very interesting policy called We Can Conquer Unemployment. It referred to the rehabilitation and rebuilding of docks, mines and agriculture—all of it. The Labour Government were a minority Government and the Liberal Party fought it 59-strong. They submitted these plans to the Labour Government and the Labour Prime Minister. They were turned down and Lloyd George was told, with other Liberals, to go to the Treasury and convince them that the cost of those plans was worthwhile and that they would work. I think it was the late Sir Dingle Foot who said: "I do not care if Lloyd George camps on the doorstep of No. 10 as long as he gets the beast to move." But the Treasury killed it and I wondered, listening to the detailed description by the noble Lord, Lord Glenamara, today, whether these plans might not meet the same fate.

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The revival, in 1931 as has been said by several noble Lords, really began with that one word "confidence". Overseas and at home, I believe that this is still the vital key in dealing with our problems today. And confidence depends upon the revival of the enginering industry, upon low interest rates, upon good industrial co-operation and upon the ability to attract investment. What will frighten away investment, whether from overseas or in this country, as the noble Lord, Lord Thorneycroft, said, is the continuation of strikes. If you go abroad, perhaps to the Middle East, which has been referred to, they say to you: "You cannot deliver: you are suffering from the English disease and you cannot solve it, so why should we give you orders?" If you go to industrial fairs on the Continent, you are very often told the same thing. It is the media—the moment you get a stoppage or a strike the television cameras are down at the factory gate and the matter is given priority, showing on all newsreels both at home and abroad.
In 1975 and 1976, as has been referred to many times in this debate, there was something of a wages explosion and a lot of people found themselves at the end of the week getting a better wage packet. There was an increase in television sets, holidays in Spain, cars on hire-purchase, hi-fi equipment and so on. The real tragedy today is that the people cannot keep up their hire-purchase payments any more. That is the problem. They were told it was going to last; but it did not last.
It has been said many times, even in this debate, that a great industrial country depends upon industrial efficiency, and so we have to ask ourselves: are our national overheads too high? Are they too big a burden on industry, large and small? Have we in fact reached the age of leisure? Are too many people doing the wrong jobs—easy-going jobs in which nothing matters any more? Can we compete with Germany, Japan, Taiwan and the developing countries? very little reference has been made in this debate to the silicon chip. What happens when the silicon chip and the robot really take over in factories, large and small? You will get a very considerable reduction in the labour force in factories. What will happen then? Will these schemes help in that situation?
The noble Baroness, Lady Ewart-Biggs, said, and I believe, that we have to take the opportunity to train more young people. I happen to be helping to sponsor some young men who are going to Japan, Germany and the United States of America. They are going to Silicon Valley and they are going to discover the working of the silicon chip and the wonders of electronics in general. Frankly, I think the Government could do more in this respect. I know they are doing something, but more of the larger industries could sponsor this kind of thing so that young men can go overseas and acquire new skills. But when we get the silicon chip really operative in the great engineering and other productive industries, can we maintain a population of 55 million by taking in each other's washing, to take up the slack?
It has been a very interesting debate but it is quite obvious that, with the background to all this, one gets the impression that all the schemes which are to be put forward are palliatives to deal with the situation
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now, and none seems to be dealing with this vital problem. If you are going to make British industry efficient and competitive with the great manufacturing industries of the world, if you are going in for the silicon chip and robot production, what are you going to do with the enormous number of people who will be displaced from factories? I had hoped that we might perhaps hear something about that today, and I very much hope that the Government have it in mind.
7.8 p.m.
Viscount Chandos: My Lords, I should like to thank the noble Lord, Lord Glenamara, for introducing this debate on such an important subject at so timely a moment. The few days that have passed since the Government introduced their latest Budget have allowed us to consider more carefully the effects of the measures put forward and to assess them in the context of the requirements of the country. I should like also to apologise to the noble Lord, Lord Glenamara, and to my noble ally Lord Banks for arriving too late to hear their speeches.
As a practising banker, it is with some diffidence that I speak, since bankers, however closely involved with the fortunes of British industry—perhaps sometimes not closely enough—do not have the detailed experience of the day-to-day problems of industry which industrialists themselves inevitably have. To digress for a moment, it seems to me that bankers should provide the link for other commercial organisations between the financial markets in which the banks have expertise and the commercial markets in which other companies operate. It is therefore the responsibility of banks to ensure that industrial companies know as much as possible about how the financial markets can be used to help those companies' businesses and to ensure that those companies, having been able to consider all the options, can complete the necessary financial transactions as effectively and cheaply as possible. I believe that there is enough still to be done in this modest respect on the part of the banking community, without bankers thinking that they know all the other answers to the problems of industry. For that reason, although I should like to offer a few comments about the broader questions raised both by this Government's policy and by what I believe my noble friends on this Bench would like to see done, I shall principally try to make some observations as a result of the admittedly, short experience I have had of the financial markets.
The noble Lord, Lord Ardwick, has compared the Government's Budget to a squeaking little mouse. I believe that the measures introduced by the Chancellor last week may equally be compared to the legendary fiddling of the Emperor Nero while Rome burned. Three years ago, the Prime Minister and the Chancellor perhaps felt that they were the leaders of the strings of a massed orchestra, but, now that the effects of their policy have been seen, support has ebbed away and they are left to play a plaintive little sonata, or perhaps it is a trio to include the noble Lord, Lord Cockfield.
There is not, of course, any unanimity among forecasters as to the effect of the Government's Budget on the level of unemployment in terms of precise numbers, but the overall effect can only be described

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as negligible. It seems to me that, to spend time discussing whether the measures are likely to reduce unemployment by 50,000 or 100,000, when the current number of unemployed exceeds 3 million, is time ill-spent. Indeed, of the hour and three-quarters which the Chancellor spent in introducing his Budget, only a fraction of that time was used in outlining measures that can have any effect in the foreseeable future on the level of unemployment, with the vast majority of the time being spent on technicalities and abstruse changes, some of which, individually, may well find wider support from these Benches and elsewhere, but which, in aggregate, do remarkably little in terms of creating new jobs now or in the future.
I should like, for instance, to take the example of the further measures introduced by the Chancellor this year to encourage investment in new businesses by private individuals, to which the noble Lord the Minister also referred. There can be no doubt that there are risks involved in investing in new businesses, and it may, therefore, be justifiable to provide favourable tax treatment to investors, even those who are already very wealthy, to ensure that funds are available for viable new companies. I think, myself, notwithstanding the findings of the distinguished members of the Wilson Committee, that it is not so much that there is a shortage of funds available for new or small companies, but that there is generally an ignorance among small businessmen as to the sources from which finance can be found and as to the terms which are reasonable for the funds to be provided on.
That said, however, what justification is there for the Chancellor in increasing the annual amount on which an individual can receive tax relief in respect of investment in new companies from £10,000 to £20,000 when in reality what is inhibiting further growth in the number of new companies being formed is not the shortage of capital, but the shortage of buyers for their products? I believe that, if your Lordships asked a cross-section of financial institutions whether the increase in the annual allowance was needed, they would tell you that, in fact, even under the existing limit there are more potential funds available than reasonable propositions in which those funds can be invested. I believe that this is one example out of many of the Government starting at the wrong end of a problem and, inevitably, coming to the wrong conclusion.
The low level of demand in the domestic economy makes the viability of many worthwhile new businesses doubtful, whatever the availability of finance, and export markets hardly offer any more favourable a prospect, even if the level of the sterling exchange rate is, at least, a little closer to that at which efficient United Kingdom companies can compete against international competitors than was the case when the Government's monetary policies were having their most disastrous effect on the level of sterling.
The noble Lord the Minister pointed out that the effective level of sterling is now the same as that prevailing when the Government took office. May I remind your Lordships that the unnecessary rise and then fall in the value of sterling in the intervening period has caused exporters to lose markets which will take years to recover? If the Government really wish to see new companies spring up and flourish, and so provide the jobs that are so desperately needed,
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they cannot expect this to happen solely through capital being made more readily available through the medium of wealthy investors, with a large proportion of the cost being effectively borne, anyway, by the Exchequer.
My noble friend Lord Kilmarnock has outlined the measures which these Benches would have liked to see introduced last week to stimulate the economy and create new jobs. I believe that the cost which my noble friend gave of £4 billion included some measures which the Government did, in fact, introduce, so that the net cost of our proposals to produce, perhaps, 10 times as many jobs as the Government's measures will, would have been nearer £2 billion than £4 billion. I maintain that such additional expenditure would have had a negligible effect on the rate of inflation and would have given a far greater chance for small businesses to thrive and, in turn, perhaps make the concessions to individual investors more justifiable through the consequent demand for capital.
I believe that a greater increase in public expenditure could have been introduced by the Chancellor, without adverse effects on inflationary expectations or the level of interest rates. The City is learning, like other supporters of the Government, that an obsession with any particular set of figures can be misleading. Moreover, the willingness of the Government to introduce new methods of financing their borrowing requirement through the widespread availability of index-linked gilts is to be welcomed. But it is to be regretted that the scope offered by such a change has not been exploited. Samuel Brittan—long a proponent of increasing the use of index-linked Government debt, but no economic spendthrift,—writing in the Financial Times last Thursday showed no family favouritism in describing the Budget as "pedestrian". It seems tragic that, as the wagon containing new jobs rolls ever more quickly downhill, the Government can only walk to try to catch it.
The views of these Benches about the need for substantial changes in the structure of industry and the introduction of industrial democracy are well-known. I fervently hope that when new jobs are created—agonisingly slowly, if the Government's present policies continue—those taking the jobs will have a greater involvement in the running of the businesses for which they work, and a fair participation in the profits that are achieved. This should be an essential part of achieving an acceptable incomes policy and, thereby, ensuring that the new jobs created remain secure whatever the world economy brings in future years.
I should like to end by making one further point. The Government have displayed, as I have tried to show earlier, an attitude based on the view that, if money is available for investment, then new businesses will start and unemployment will fall. Even if the Government did stimulate the domestic economy, as I believe they should, and the international markets offered better prospects, there would still be much to he done to ensure that British companies prosper in an increasingly competitive and technologically demanding world. As I have just mentioned, industrial democracy is one important area for much-needed change, and a more open and less dogmatic approach to the role of Government in their relations with

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industry is another, particularly in the field of exports. I was disappointed that the noble Lord, Lord Thorneycroft, despite his pleas for moderation, spoke so immoderately not only about the unions but also about the Government's involvement with industry. There are, of course, unhappy instances, but there are happy ones as well. I wonder whether the noble Lord, Lord Thorneycroft, believes, for instance, that British Aerospace would have been more successful in its constituent parts which existed before its nationalisation, than it is in its present form.
In my view, however, possibly the most important area for improvement is that of business education and training. This country is clearly falling rapidly behind many of our competitors in the provision of vocational training generally. I believe that this is particularly apparent in the case of management training. If you compared this country with the United States, I would suggest that the enormously more developed business education system in the United States would be seen to make the difference in performance—not so much of the largest companies but much more in that of the smaller, medium-sized companies from where so much growth, output and employment should be coming. So many more small businessmen in the United States have had some training in all or most of the basic business disciplines that I believe they find it much easier to push their companies from the category of small to not-so-small and then to medium-sized enterprises.
As I said earlier, there is, I believe, much that banks, other financial institutions and professional bodies should do to make their services more widely appreciated and understood by small businessmen, but I have no doubt that a substantially increased level of business education at secondary, graduate and postgraduate level would also make a significant contribution to the growth of our small company sector. I therefore also call on the Government to introduce within our schools, universities and polytechnics a much greater provision for business education. I am no more hopeful that this might be achieved than any of the other measures which I and other noble Lords today have called for, but we should not stop trying for as long as our industrial performance is so poor, by international standards, and our unemployment so shamefully high.
7.22 p.m.
Lord Underhill: My Lords, I, too, would like to thank my noble friend Lord Glenamara for opening this debate with such a compelling speech, backed up as it was with so much factual information. The fact that he was able to give that information avoids the necessity for me to go over the same ground.
When speaking of the highest figure we have ever had of just over 3 million unemployed, one ought to take into account that this is not the maximum un-employment figure which we have at the moment. If we take out the special employment measures of the Manpower Services Commission, that would account for another 350,000. There is a substantial number of married women who do not register. Many of these women found it necessary to go to work to balance the family budget. The TUC, based on Government
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surveys, estimate that there is an unregistered un-employment figure of some 670,000, which brings the total unemployed figure nearer to 4 million. It is a figure which we ought to keep in mind.
My noble friend referred to the fact that nearly 1 million people have been out of work now for nearly a year, that one-quarter of those are under the age of 25, while about half are over 55. One ought to bear that figure in mind when one considers the points made by the noble Lord, Lord Granville of Eye.
As my noble friend spoke of Consett in such moving terms, one has to recall that there are plenty of areas in the country with 20 to 25 per cent. unemployment, even though the regional average may be below that. My mind went back to the Labour Party's distressed areas commission of the middle 1930s which uncovered the disaster in all those areas. But there are more people out of work now than there were in that great depression of the 1930s. During last year, living standards fell on average by some 3 per cent. As an average figure, it means that many must have suffered considerably more than that.
We are encouraged by the development of small businesses. I was very interested in the speech of the noble Lord, Lord Selsdon, on this and similar matters. However, wherever one goes one finds that small-sized and medium-sized factories are up for sale or for lease. I live on the outskirts of London where there are small industrial estates. Factory after factory has been closed down and is up for sale. Although we may be building up small businesses we are closing down the medium-sized and just below medium-sized industries. We have to remember the figure which was mentioned by my noble friend Lord Allen of Fallowfield. Last year there were getting on for 10,000 bankruptcies—double the figure of the year before.
Of course the problem started before 1979, and of course one recognises that there is a world recession, but it cannot be denied that the Government's policies have contributed materially to our position. One noble Lord who intervened—I cannot remember who—said that all industrial countries are facing unemployment. However, I believe the figures demonstrate that Britain's unemployment has been going up much more quickly than that of other industrial nations—and more quickly than that of our EEC partners. I think these are official figures. Bearing in mind that Britain is one of the few countries which is self-sufficient in oil—indeed, self-sufficient in all energy supplies—this makes our position extremely dangerous.
As has been mentioned, behind cold figures and percentages there are human tragedies. I believe that the Government individually are as much concerned with the tragedies behind unemployment as are we on this side of the House. The trouble, however, is that the Government's policies do not help to deal with the situation. And the Government cannot make up their mind about whether they should make a complete change in order to cope with the situation.
Another tragedy is that 40 per cent. of those out of work are young persons under the age of 25. This is a great tragedy. I am certain that Mr. Chris Chataway, who was on Robin Day's programme a fortnight or so ago, meant it kindly when he said that some young people may find that they will never have a job. It will be terrible if we have to face that position. My noble

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friend referred to some 30 jobless seeking each vacancy. As I have already mentioned, I live on the outskirts of London, in the first borough over the Greater London boundary. When I picked up my local paper the other day I found that in Waltham Forest, which is just inside the London boundary, there are 8,310 jobless chasing 310 vacancies registered at employment and careers offices. In Redbridge, which is quite a substantial borough (again the last one on the other side of my own district) 250 jobs are being chased by 6,776 jobless.
The noble Lord, Lord Cockfield, said that the hallmark of freedom is people deciding their own future, but 30 people chasing one job cannot decide their own future. I know that they can turn out this Government at the next election, but what is to be done during the next 12 months, 18 months, two years? Unfortunately, they must rely to a great extent on the Government to take measures to cope with the situation.
We all agree that inflation is a problem. However, we were told that the Government's monetarist policy would deal with the situation. Everybody knows that inflation is slightly higher now than when the Government came to office in 1979. Noble Lords will recall that when the first Budget of this Government was introduced they said their tax reductions would help to tackle industrial decline. Incidentally, only the better off benefited from that Budget. As again has been stressed by my noble friend, we have the same position with the present Budget. But did we get increased investment? The noble Lord, Lord Cockfield, listed a number of reasons for the lack of competitiveness of British industry, but I cannot recall him mentioning that there has not been investment in British industry. The position is that investment in manufacturing industry is down 21 per cent. over the last two years. That is the lowest figure for some 20 years.
The noble Lord also ridiculed (and I believe that "ridiculed" is the right word) the Labour Government's social contract with the trade unions. That worked successfully for 2½ years. I, together with other noble Lords, believe that we will move towards some kind of wages policy, but it will have to be not a wages policy but an incomes policy; it would have to be related to other things. The noble Lord, Lord Banks, referred to industrial democracy, and that is one thing it will have to be linked to. I wish to emphasise as strongly as I can, while using parliamentary language, that there is no hope at all of getting agreement with the trade unions on wages or an incomes policy unless this Government change their attitude towards the trade union organisations. Without the co-operation of the trade unions that is something that will be impossible to achieve. Many of us believe that some form of incomes policy will be essential.
The Government also said that another solution was to cut public spending. Despite massive cuts in direct public spending matters have got worse—otherwise we would not be in the position of having more than 3 million people unemployed. Then, local authorities spending was held to blame. Their capital and current spending has been slashed by nearly 11 per cent. between 1978–79 and 1981–82. What has happened is that unemployment has doubled and, as other noble Lords have stressed, the industrial base is being emasculated.
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Just an hour or so ago, I was looking at some EEC figures which showed that the United Kingdom's public sector borrowing requirement as a percentage of our GNDP is 5·9 per cent. The percentage for five other EEC countries is considerably higher in each case—three of them being double that figure. I was very sorry to hear the noble Lord, Lord Cockfield, argue about the cost of unemployment. Everybody knows that unemployment must cost the Exchequer and the nation something. Yesterday, I happened to pick up in your Lordships' Library some figures on the cost of unemployment produced by the House of Commons' Library research division. There I find three figures. The Treasury figures work out at £5,000 per annum. The Manpower Services Commission figure works aut at £4,380 per annum. The Institute for Fiscal Studies presents a figure of £4,500 per annum. I understand there was an argument about this and that the noble Lord went into some detail to explain this away. I will just read one extract. First of all, reference is made to the fact that the February 1981 edition of the Treasury's Economic Progress Report included an article on costing of unemployment. It went on:
"On 18th February 1982 The Times carried a report that an updated version of the Economic Progress Report figures had been prepared but it had been decided not to publish the revision".
The 1981 figures showed that the cost was £3,400 per person and that the 1982 figure would have shown a cost of £5,000 per annum.
Lord Cockfield: My Lords, I am sorry to interrupt the noble Lord, Lord Underhill. He refers to figures not being published. I did explain the background at great length. Is he seriously suggesting that the Government should publish figures in which they have no confidence?
Lord Underhill: I am suggesting that the Government should publish the actual figures so that we can see them. We could check these figures against the estimate of the Manpower Services Commission and against those figures produced by the Institute for Fiscal Studies, which I do not believe is a Marxist organisation.
Lord Glenamara: Would my noble friend agree that the Treasury figure of £5,000 produces exactly the total which I quoted, of £15 billion?
Lord Underhill: Yes, I would, and that is why I wish to stress this point.
Lord Cockfield: My Lords, the noble Lord claims that this is a Treasury figure. Perhaps he would quote his authority for that statement.
Lord Underhill: My Lords, the figures here show something much more substantial than the figure of £1,600 to which the noble Lord, Lord Cockfield, referred. I am not prepared to bandy figures about in detail. My noble friend says that we should stick to the Treasury figures. We do know that unemployment costs a considerable amount of money, whether it is caused by loss of taxes, by loss of VAT, or because of the unemployment benefits which have to be paid.

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Obviously unemployment is going to cost the nation a considerable amount of money and I will return to that point later.
It is tragic that in order to get income the Government are so readily selling off the nation's assets. How much has selling off of any one of the assets of the public industries affected the immediate economic and industrial position, and how will it affect the economic and industrial position, and how will it affect the economic and industrial position in the future? The Government are trying to raise money without any thought of the future possible income for the nation, in order to follow their doctrinaire policies. My noble friend has said that ours is a mixed economy. I have mentioned this time and time again in your Lordships' House. The Government say repeatedly that they also believe in a mixed economy, but as they unfold one measure after another for selling off the nation's assets (I hate the term "privatisation") one has grave doubts about whether the Government really do believe in a mixed economy and therefore about the way in which these sales are really affecting our industrial position.
There must, of course, be more economic planning, more public intervention and more public accountability. My noble friend set out in some detail Labour's alternative strategy, which I support. We cannot just rely on "something turning up" to end the recession—and that appears to be the Government's policy. I hope that the noble Earl who is to reply will provide us with a firm account of what the Government's long term plans are. I hope that it will not be just to tinker with unemployment, to deal with 50,000 people this year, but that we are really going to get unemployment figures down. We must create some demand—not just a consumer boom which will suck in imports, but investment for constructive projects.
Just before the Budget, the Shadow Chancellor said,
"It is fallacious to see any conflict of interest between investment in industry and investment in economic infrastructure".
He went on to say:
"Unless the Government invest in efficient energy, transport and communications systems, private industry will be handicapped in its competition with other nations".
Reference has been made by some noble Lords to lack of demand. I should like to give one simple example. If brickmaking plants turned out more bricks, it would not be of any value unless someone wished to use those extra bricks. It would be no use just stacking thousands of bricks in a field. Someone has to create a demand whereby those bricks will be used.
The noble Lord, Lord Cockfield, referred to a constructive package in the Budget. The noble Lord ought to keep in mind that housing starts in 1981, for both private and public building combined, were the lowest in some 60 years. We have a waiting list of nearly 1¼ million and nearly 400,000 construction workers jobless but wanting to build, make repairs, and rehabilitate property. The Observer Business News reported on Sunday that the construction industry's powerful "Group of 8" estimates that there will be a further drop of 1 to 2 per cent. in the construction industry's output this year and that the Chancellor's measures will have little impact on the 400,000 unemployed building
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workers. The chairman of the "Group of 8" was quoted as saying,
"The further we fall back, the more difficult it will he to respond to economic recovery when it comes".
We need to have investment in British Telecom; at the moment 80 per cent. is derived from the industry's own resources. We need to do something more about the North Sea gas gathering pipeline, something about our collapsing sewers and about our road programme. I heard this morning that the water industry badly needs to see the renewal of some of our water supply pipes. All this material is obtained from the private sector. When one injects investment and starts construction of this kind there is the multiplier effect, from the supplier to the other supplier, and it affects shopkeepers, and so you have this great turn round.
My Lords, time is getting on and I shall not say much more. The Sunday Times business section said:
"Extra unemployment pay boosts spending directly but is more inflationary and creates fewer jobs than the same money spent repairing the roads".
That is the essence of what I want to say. I was very pleased that my noble friend Lord Allen referred to the TUC Programme for Recovery. If noble Lords believe that the Labour Party programme was based on too many political arguments, I believe the Programme for Recovery ought to be compulsive reading for every noble Lord in the House. It is based on facts and on statistics, well thought out and documented. I hope the Government will appreciate that unemployment can be created by Governments and jobs can also be created by Governments. That is what we wish to set out to achieve.
7.42 p.m.
Lord Whaddon: My Lords, I must express regret to noble Lords that my name did not appear on the speakers list. It was submitted in good time, but disappeared somewhere in the bureaucracy. I shall, therefore, not detain the House for long. I am one of those who agree with the noble Lord, Lord Underhill, that the social compact worked extremely well for two and a half years or so, and it was a great shame indeed that it finally collapsed in the winter of discontent. Certainly, if any of our hopes are to be fulfilled, there must be reflation of demand, as my noble friend Lord Chandos pointed out. But we cannot hope to expand the economy again without running into disastrous inflation unless a more hopeful form of incomes policy emerges. A simple understanding or expression of pious hope between unions and Government is not enough. The Government must be prepared to have at least reserve powers to back up their aims. In this connection the most useful suggestion made in many months has certainly been the inflation tax, which has yet to be tried out.
I would simply intervene for two minutes to put forward one small suggestion with regard to small firms. Everybody, of course, is in favour of small firms; it is like being in favour of motherhood; we are all in favour but how can we do so constructively? The last Labour Government and the present Government have made considerable changes in taxation which are favourable to the climate for small firms. The loans guarantee scheme is greatly to be welcomed, although I personally cannot understand for the life

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of me why the three per cent. extra interest charge is levied. Interest charges are already horrific, and why small firms should be loaded with the extra 3 per cent. for these loan guarantees is beyond me when one considers that the Government are supposed to be so favourable to small firms.
The business start-up scheme has also been improved. A number of banks and the CBI are looking at providing new sources of finance. But a number of problems still remain intractable for small companies starting up. The old Macmillan gap still largely remains. The fact is that if one goes with a good idea and asks for £1 million it is relatively easy to get, but go and ask for £20,000 for a good new idea and it is extremely difficult to get. It may be that the local bank manager will provide the money for somebody he knows if he has faith in the man, but a good idea which needs thorough investigation costs any of the financial institutions £10,000 or £20,000 to look at. If an entrepreneur goes asking for less than £100,000, he is not going to get looked at.
There is, therefore, a need for a new approach. The Department of Industry has been tending to show favour towards the American ideas in the Small Business Administration. I would suggest that we have a much more successful example in our own country which for some reason the Department of Industry seems to have ignored. That lies in the CoSIRA model. I should declare that I have for some years been on the board of management of CoSIRA. It has proved to be immensely popular with the users and immensely efficient of the risk capital involved. Less than ·7 per cent. has been lost, compared to something like 6 per cent. under the American schemes. Why, therefore, have we not taken this model for use throughout the country?
I would, therefore, urge the Government to consider most urgently the extension of the CoSIRA type operation into the urban areas, which are vastly bigger, of course, than the rural areas. By basing their assistance to small firms on small industry committees of local businessmen they give a much more comprehensive support. The applications for finance are vetted by that local committee and money can then be provided from Government sources or from private sources. I do not mind which. Whether it is public or private, the vetting costs of the applications are negligible, and loans of £5,000, £10,000 or £20,000 can generate new employment.
The CoSIRA type of organisation also does not just respond. The small industries advisers of the Department of Industry in the towns now take a very responsive role; they wait for applicants to come to them. What we need in the towns is for the organisers, the small industries committees I am suggesting, to go round and see what is possible and promote ideas in their areas. In far too many cases people who could and should be generating small firms simply do not know how to begin. If public promotions and educational programmes are carried out in their areas, such as is already done in the rural areas, this is bound to have a similar response.
The structure I am suggesting, if simply inaugurated now throughout Great Britain, would inevitably be very expensive. If one were simply to do a back-of-the-envelope calculation, one is talking of many
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hundreds of millions, perhaps £1,000 million if one were to create a CoSIRA type organisation throughout all British towns. I am not suggesting that this should be done overnight, although one must think in terms of this sort of money if one is to give small business the boost that it really needs and deserves. What I am suggesting is that without delay the Government take three or four towns throughout the country, because the urban environment is very different from the rural environment; rather than simply reproducing CoSIRA throughout the towns, I am suggesting that they take three or four towns and start off this CoSIRA type organisation in those towns for one or two years, getting the experience in the urban environment and seeing exactly what type of organisation should be spread throughout the country. I ask the noble Lord the Minister to take my idea back to the Department of the Environment and urge them, before they spend more public money on a plethora of half-baked schemes for the towns, to look at the success we have had in the rural areas and build on that successful example.
7.50 p.m.
Lord Bruce of Donington: My Lords, the House has already thanked my noble friend Lord Glenamara for introducing this Motion which has, indeed, afforded us the opportunity of a wide-ranging debate. However, I find one thing a little remarkable about it. The party opposite has been repeating over the last three years, as a half apologetic reason for not doing any more than it has been doing, the plea that there is no alternative. My noble friend has put forward, albeit briefly, a plan of action in broad terms to deal with the current emergency. Despite the fact that a very similar plan, perhaps on a smaller scale, was put forward by the noble Lord, Lord Banks, on behalf of the Liberal Party, and despite the fact that an even more slightly modified version was put forward on behalf of the Social Democratic Party, there has been no real endeavour either by the noble Lord, Lord Cockfield, or by the noble Lord, Lord Thorneycroft, nor, so far as I can see, by any other noble Lord on the Benches opposite, to come to grips with the proposals that have been put forward.
I would have expected, and the House would have expected, reasonably close attention to have been paid to the proposals. They have been made public now for quite a number of days and I would have expected a reasoned response. But no; we have had no kind of reasoned response at all—just the same kind of speech with which the noble Lord. Lord Cockfield, has favoured us these last three years, in more or less the same terms, but brought up to date with slight changes in detail. The noble Lord has been endeavouring to stand on a policy which he quite clearly knows is completely indefensible. Monetarism is dead. He himself has participated in the burial. It would be unkind to dissect that matter further because my noble friend Lord Kaldor has already disposed of the noble Lord and his argument in the speech that he made only a short while ago. There is nothing more to say to the noble Lord, Lord Cockfield, about his policies save to mention the results, to which I shall shortly turn.
The noble Lord, Lord Thorneycroft, was evidently so bored with hearing the same speech from his noble

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friend he had the fortitude to listen to this afternoon, that he decided to liven up the proceedings somewhat in his inimitable style. And his inimitable style, of course, invariably comprises putting up dummies and then knocking them down again. He had no constructive observation whatever to make on the proposals that were put forward. He was only concerned with making a half-hearted defence—which he dressed up behind effusive compliments—of the policies or the lack of them that had been propounded by his noble friend. I rather thought that he fell short of the occasion.
The position is one of the utmost gravity and ought not to be treated with any kind of levity. I thought that the noble Lord sought to blur the plight of the unemployed by saying, "Well, of course, some of them"—he did not define how many—"probably have spare time jobs. Some of those in jobs already are probably causing a bit of unemployment by doing double jobs". In short, he sought to minimise the problem that exists for three million unemployed and probably nearer four million, if we take into account the figures put forward by the noble Lord, Lord Underhill.
Does the noble Lord really think that the hundreds of thousands of people who are 45 or in the their fifties and who will never get another job again if existing policies are continued, will put up with it without very serious complaint? Do the Government think that the social cohesion upon which a democratic society depends will be maintained in full order and with free social intercourse among people, with a reasonable degree of civic serenity and calm, so long as this state of affairs is permitted to continue?—I think not. People will not live long and they will not endure long, having no hope at all. They will not endure long the feeling that they are despised and are not wanted and are not taken into account in any way. Therefore, the problem is grave and any serious endeavour such as has been made today by my noble friend and by other noble Lords in various parts of the House really to apply their minds to alternatives, ought to receive far more serious examination.
Where do we stand after three years of the Conservative Government following, presumably, the policies that they had determined from the outset? In possession of a vast parliamentary majority with the support of, indeed, 75 per cent. of the national press and a sizeable part of the media, they have had complete power to do whatever they thought it necessary to do. I am not impugning their integrity. Others may, perhaps, question their wisdom and perspicacity. But after all this time, after all these wonderful policies, how much longer are we going to be told, year in and year out, or promised at six-monthly intervals, that there will be much better times and that production is going up or, to use the favourite phrase, "the underlying trend is favourable"?
We have 4 million unemployed. We have manufacturing production down by 19 to 20 per cent. We have inflation at above the figure when the Government took over three years ago. Some £16 billion has left the country for investment overseas since the removal of exchange control. Interest rates, which were 12 per cent. in 1979, are now 13 per cent. The
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exchange rate is within two cents of what it was before. And what else?
Surely, the logic of the noble Lord, which he has paraded before this House so often, must lead even him to suspect the validity of the policies that he has been carrying out. After all, it is now three years since they came to power. But, of course, the noble Lord always shifts the responsibility, saying that the responsibility is, of course, not the responsibility of Government, no matter how great their majority. The noble Lord put it quite neatly—he has abdicated all responsibility; it is up to the people to decide and, therefore, Governments do not influence economic events.
The noble Lord, Lord Thorneycroft, made that point on the last occasion on which the subject was debated in this House, saying that there is little Governments can do, that it is all up to market forces. That is what the noble Lord said today: that it is up to the people to decide; that, if those in employment seek too high a remuneration, they must expect that there will be more unemployed. In other words, the plight of the unemployed—and it is a real and personal plight—is blamed, not on the Government who have been sitting in the seat of power, but upon the employed people.
Therefore, over the past three years the ground has shifted. First, the Government were going to control the money supply; then it was the public sector borrowing requirement; then it was public expenditure. Now we are told—and, in fact, the orchestra has been working overtime, particularly in the past six months—that the real fault is that we are not sufficiently competitive, implying of course that the British people are not working hard enough, that they are not justifying the amount of pay that they receive in comparison with our competitors.
Three points fall to be made about that. I thought that one of them was made very well, not only by the noble Lord, Lord Allen of Fallowfield, but also by the noble Viscount, Lord Chandos, who referred to this aspect of the matter—to the fact that productivity depended on two factors. It depended on human effort and the pay that was given to the person for making that human effort, but it also depended on the quality and quantity of the machinery and plant available for that purpose.
The first point I want to make is a very clear one, and I am afraid that the noble Lord is not in a position to deny it. The noble Lord, Lord Cockfield, will perhaps note that, when I refer to investment in manufacturing industry, I mean just that, and not the Inland Revenue all-embracing investment, including investment in service industries. I say that in case he bandies that figure about, as he did on a previous occasion, in place of manufacturing investment. Ever since 1950 manufacturing investment, expressed as a percentage of the gross domestic product of the United Kingdom, has been approximately 30 per cent. below that of France, 40 per cent. below that of Germany and 60 per cent. below that of Japan. Until investment is made on comprehensive lines, it is not quite fair to blame it on labour productivity. Fortunately, we have been able to obtain some data which show the relative performance of United Kingdom

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workers, together with their rates of pay, working in American factories established in this country using identical equipment to that used in the United States. Therefore, we can get a true measure of comparison.
For your Lordships' information, the report was made by Maynard and Barry, a Theodore Barry Associates Group company, on the experience of 80 United States subsidiaries in Wales, and was published in September 1980. I am well aware, and would indeed hesitate to impute, that Wales—particularly South Wales—is anything but perhaps a slight cut above sonic other parts of the country which I shall not mention. But, broadly speaking, I think that what goes for Welsh workers, making allowance for the fact that they come from the land of our fathers, is applicable to the lot.
What was found? First, in regard to hourly compensation of production workers in manufacturing in 10 countries in 1980—and this particular part of the report does not relate to the production statistics that I shall provide presently—it was found, taking the hourly compensation as including all national insurance costs and everything else associated with it and taking the United States index as 100, the figure in the United Kingdom was 71, in Belgium it was 133, in Germany it was 120, in the Netherlands it was 123, in Sweden it was 127 and in Italy it was 91. There was only one country where there was a lower hourly compensation cost, and that was Japan.
I turn now to what the report describes as:
"Productivity in Wales compared with the USA".
The report states—and the figures are all here:
"Approximately 60% of companies stated that their output per person (as previously defined) was at least as high as in the USA".
and it gives the tables. As for "Output Per Unit Wage Cost", it says:
"The table below"—
and I can read the table if necessary—
"shows that over half the companies had an output per unit wage cost of at least 1·25 times that in a comparable industrial plant in the USA".
This shows that the myth, which has been put about these many months, about the alleged inefficiency and over-payment of the ordinary working-class person in this country, is indeed a myth. The whole trouble is that the truth takes a long time to catch up with the myth. So I trust that before the Government talk about competitiveness, they will take these figures into account, and that they will further take into account what has already been made clear, that investment is the principal problem.
The results of three years are known. What then are the conditions which have to be dealt with by the carrying into operation of the plan which my noble friend has briefly outlined, or indeed of the modified plans which have been put forward as alternatives by the noble Lords, Lord Banks and Lord Kilmarnock? The current reports show not only that industry has been largely devastated. It is well known in the City—and I speak subject to correction by those who are in the banking profession—and in those banking circles in which I move, that, with the current high rates of interest, a substantial proportion of British industry today is only in existence and only remains ticking over by the forbearance of the banks. If the banks ever took the carpet away, then there would be the
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most appalling crash that the country has ever known. Had the banks over the last two years followed the same policy that the banks followed in the 1930s that would already have happened.
However, it is not only a matter of the mass destruction of certain parts of industrial plants and industry in this country. The transport system is already in considerable disarray. Roads are falling into ruin, sewers are in desperate need of repair and renewal and in the education field there are going to be 25 per cent. less students in polytechnics and colleges, not-withstanding the clamant need for there to be much more trained skill in the country to serve its future and developing industrial and communications role.
In the field of health, we have continued stories of crumbling hospital buildings. We have sad stories of where the lack of provision of a comparatively small sum of money for things like kidney machines has resulted in loss of life. There have been cases, which noble Lords must have seen in the press, where some doctors, owing to the lack of funds, have been forced into a position where they have had to choose in the case of certain diseases which children shall be treated and which children will have to die. There is a situation in which the dental health of the country is deteriorating. There are even circumstances reported in The Times this morning where, due to lack of funds, further development of a particular type of cancer research is threatened. There are all the reductions that have taken place in social security. This is after taking into account the provisions of the recent, inconsequential Budget.
This is the position that any plan has to take into account. It would be wrong to say that there is an instant plan that could cure all these ills quickly. It would also be irresponsible to put forward a plan in any other terms that would not produce a breach in the current battle against inflation to any significant degree. That is why the plan put forward by my noble friend is a sober plan. It envisages only an effective injection into the system of some £9,000 million—a far smaller sum, incidentally, than the noble Lord's margin of error in calculating M3 from time to time. This is a mathematical tolerance that the country might well be prepared to accept, at any rate, as giving more chance.
It might well be—and I willingly concede it to the noble Lord—that the plan put forward by my noble friend would result in the rate of inflation being 2½ per cent. higher than it might otherwise have been, although this might be compensated for—nobody can tell—by a further decline in the price of oil. I say that it might be. But even if it receives a 2½ per cent. addition to what otherwise might have been, let us take the noble Lords' forecast of a reduction by 2½ per cent. in the next 18 months. Therefore, all it would mean, on the assumption that it was inflationary to that degree of 2½ per cent., is carrying on at the existing 12 per cent. at which we have been stuck over the last 18 months.
Therefore, we on this side of the House are not saying that the policy is without that possible disadvantage, to the extent that we do not know because, of course, who knows what the future price of oil is going to be? What we do know, however, is that the rate of interest has to come down. We are grateful for the assurance of the noble Lord this afternoon that it is the one instrument over which the Government have a large

719
measure of control. I would say 70 per cent. control. They moved it up all right in the first few months they were in office; they could equally well move it down again, and this they will have to do.
It may well be that in so doing funds may flow from London, or that funds that otherwise might have flowed to London will not come to London and the exchange rate will consequently come down. But, in a reply to a question the other day (which I have in front of me) when we were discussing the outflow of British funds, the noble Lord presented that as an advantage. The fact that £16,000 million of funds have left the country had the advantage, from his standpoint, that it prevented the rate of exchange from rising higher than it would otherwise have done. Therefore, the noble Lord really is in sympathy with the reduction by the Government, if necessary, of the rate of interest.
I would suggest to the noble Lord and to the House that it is far better that exchange controls should be reinstituted so that the money can be invested in productive manufacturing plant in the United Kingdom, and then produce exactly the same result of lowering the exchange rate, and thus make British goods more competitive by the simple method of lowering the rate of interest. There is no reason why it should not be done. If the noble Lord would like to read the speech of his right honourable friend Mr. Edward Heath in the other place a couple of days ago he would be informed of the techniques by which this could be done.
Therefore, in expressing our appreciation of the plan put forward by the noble Lord and the reactions of your Lordships, let us remember that the people of this country will expect something to be done. They will not go on indefinitely taking year in and year out the baleful banalities that sometimes come from the opposite Front Bench. They want action, and sooner or later they are going to lose patience with the excuses that have been brought forward. Sooner or later they are going seriously to consider and support such constructive alternatives as can be laid before them.
8.20 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers): My Lords, the House is grateful to the noble Lord, Lord Glenamara, for introducing this debate on what is a very important and fundamental subject, and I found his speech most impressive. It came from the heart and I think it struck a chord in noble Lords in all parts of the House. He referred to a number of points, of acute concern equally to the Government as they are to himself.
I could not help thinking that there was a slight distinction between his speech and that of the noble Lord, Lord Bruce of Donington, who cannot avoid—I do not blame him for it—making party political points in a manner peculiar to himself. We accept that and I shall resist the temptation to reply to some of his less generous and more personal remarks about my noble friends Lord Cockfield and Lord Thorneycroft. I did not think they added greatly to the quality of the debate. I do not regard this as a matter of scoring party political points, and the debate has been
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remarkably devoid of such points. I shall have to be particularly careful for fear that I slip into the position, as the noble Lord, Lord Bruce, suggested, of making baleful banalities from the Dispatch Box. I do not believe that anything Lord Bruce has heard from my noble friend Lord Cockfield on any occasion falls into that category.
The contributions which have been made today are part of the national search for a solution to the problems which are affecting every man, woman or child in this country. We will study very carefully what has been said in the debate. I shall not follow the noble Lord, Lord Kaldor, into the quicksands of macro-economics, of which I am not an expert and of which he is. I shall certainly take note of the suggestions put forward by the noble Lord, Lord Glenamara, by the noble Lord, Lord Kilmarnock, from the Social Democrats, and by the noble Lord, Lord Banks, from the Liberal Party.
I realise that whatever the problems, the solutions are extremely difficult, and I would be the first to conclude that there is nothing more personally wounding than for a person to be made unemployed or for a young school-leaver entering the threshold of life to find there is no employment. The noble Lords, Lord Glenamara and Lord Underhill, referred to a number of people looking for the same job. That is, of course, a devastating state of affairs and one which no Government would wish to see. The shockwaves which surround such a state of affairs and the deep personal impact they make on people go very deep. Everyone wants to be wanted; and not to be wanted in work, apart from the eonomic effects that has, is a humiliating experience and it is up to all of us to try to find a solution. I agree with the noble Lord, Lord Banks, who said that the long-term effect of long-term un-employment has a far-reaching personal significance. The suggestions which your Lordships, correctly and helpfully, have put forward today will be studied with great care.
There is no blueprint for success. There is no simple answer. Had there been, any Government would have produced it. The fact is that we must deal with the world as we find it and there are certain basic factors which, I suggest, we must remember. The first is that the present situation is not of the Government's making. The Government are seeking to find a solution to a situation which would face any Government in office of whatever party. The method and variety of solutions may be different according to individual choice, but the facts of the situation would remain the same. The noble Lord, Lord Bruce, complained that there was a shortage of money. Of course there is. Of course there is more we all want to do, but it can be done only if we can afford it.
Secondly, the problems are not confined to the United Kingdom; they affect the whole of the industrialised Western world. Thirdly, on the whole, Governments do not create things. People create. Governments can only set the conditions in which people can give of their best. To set conditions in which people can give of their best at a time of world recession—which means that the ability of others to purchase that which is created is limited—makes the setting of those conditions infinitely more difficult. The noble Lord, Lord Bruce, said that for three years the Government

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had complete power to do what they liked. That showed a total lack of appreciation of reality. Governments do not control economics, any more than they control nature. In both cases they merely influence and can manipulate, but they do not control.
The noble Lord, Lord Banks, was not sure the Government were right to put such a high priority on the attack on inflation, and the noble Lord, Lord Underhill, asked what the Government's long-term plans were to stimulate jobs. Of course, in the end jobs can be created only by people wanting to buy what is produced; the only way in which British industry can hope to compete in world markets is if our goods are competitive. If we have a rate of inflation higher than our competitor nations, our goods become increasingly less competitive. If the German rate of inflation, for instance, is consistently half that of the United Kingdom, which at the moment it is, then even if annual wage increases were the same, our goods would become automatically and progressively less competitive in world markets. British industry would find it less easy to sell, would find it less easy to employ and unemployment would become higher.
That is why the Government have made a determined attack on inflation, and it has had some notable successes. The rate of inflation has been halved since the peak in the spring of 1980, when it was 21·9 per cent., down to the present monthly increase making it 12 per cent. When the noble Lord, Lord Banks, asks if we are right to set that as such a priority, my answer is that that is the raison d'être behind it. I was glad to hear my noble friend Lord Selsdon say there were many opportunities abroad for business. So there are, provided of course we are competitive. In a world the population of which has increased by 50 per cent. since the end of the last world war, a world in which people must be fed, there must be demand, and we can meet it only if we are competitive.
My noble friend Lord Cockfield said the deterioration in the international situation owes most of its origin to the oil price increases of 1973–74 and 1979–80. It does not do any harm to remind ourselves of the alarming facts. In 1970, oil was 1·30 dollars a barrel. In 1981 it was 34 dollars a barrel, a 26-fold increase in 11 years. It is that which has stimulated and created inflation in so many countries and which has thrown the elementary exercise of budgeting, on which every business depends, into total confusion. That is why, like my noble friend Lord Thorneycroft, the Government welcome the recent fall in oil prices, which should help industry. Lord Thorneycroft graciously described himself as "rising damp". I am not sure I know what that is and I see that my noble friend is not in his place; perhaps he has risen already, damp or otherwise. I would merely say that we can unite in rejoicing in the joys of lowering oil prices.
Unfortunately, Britain was in a worse state to face the recession than most of our competitors. We had been losing the competitive edge which for years we had had on the markets of the world. Unemployment has been made significantly worse by our paying ourselves far more than we could afford. The noble Lord, Lord Banks, said—I think he was quoting—that we had priced ourselves out of the market. During the 1978–79 and 1979–80 pay rounds, earnings rose by over
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40 per cent., which was quite unrelated to increases in productivity.
An essential element in the climb out of the recession is good industrial relations. Over many years, and in too many parts of industry and commerce, our progress has been dogged by endless and futile disputes about unrealistic pay demands or outdated lines of demarcation, the introduction of new technology, and so forth. These disputes have done nothing to improve our competitiveness; all they have done in fact is to help our overseas competitors. This is elementary, but it is true.
We have spent too much time arguing among ourselves and trying to protect jobs, as opposed to trying to ensure that our industry, or job, or firm is highly competitive. We cannot afford these types of dispute. They hurt the companies which provide the jobs, they hurt the people who go on strike, and they hurt others who are not on strike and who want to remain in employment. But our factories must be modernised and must be competitive, and it is up to both employers and employees to work together to ensure that that happens.
My noble friend Lord Thorneycroft said that it is vital to see new technologies in industry. I would agree. The noble Lord, Lord Mais, referred to the fact that we might have to be satisfied with 3 million unemployed. The noble Lord, Lord Granville of Eye, referred to the anxiety which he saw in the silicon chip. The noble Lord, Lord Ardwick, on the same point, said that he was concerned that we might have to have a permanent high level of unemployment.
My Lords, I disagree. There are those who say that the introduction of new technology will put people out of work, and that it should be resisted. In fact that is a fallacy. If the introduction of new technology results in a firm being more competitive, then the resistance to the new improvements in fact puts far more jobs at risk than does accepting them. When the horse gave way to the internal combustion engine, the wheel-wrights', the smiths'; the saddlers' jobs all went, but in their stead there rose a whole new era of mechanics, garage proprietors, motor manufacturers and tanker builders, all of whom created new jobs. The telephone never put people out of work.
Therefore I would reject the philosophy that says that because of the enormous strides in computers, micro-processors and suchlike, the new technologies will put people out of work to such an extent that we shall have to contemplate a permanent level of high unemployment. These tools are the servants of man, not his masters, and used properly they can create employment and provide new opportunities.
We must not repeat the mistakes which we made in the 1950s. Then, and in the following decade, we failed to reap the benefits which others, notably Japan and West Germany, gained in applying automation and new technologies to their factories. The Advisory Council for Applied Research and Development gave this warning: If we fail to take advantage of these new processes then certainly in the long term, and often in the short term too, more unemployment will result from loss of market share following a failure to innovate than from the introduction of a new technology. Conversely, if the introduction of new technology by a firm leads to an increase in its market share, then

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there is almost invariably an increase in employment opportunities in that firm. An increase in productivity in service industries often leads to greater variety or quality in the service provided, than to a reduction in the numbers employed. The Advisory Council added:
"If we retain outdated methods, we shall lose markets because of the inferior quality of our goods. We have no option but to attempt to match the productivity, and product quality of our overseas competitors".
Those simple facts ought to be enshrined by both management and workforce in each firm as part of fundamental philosophy. We disregard these simple facts at our peril.
For far too long we have come to believe that work is there for the benefit of those who are employed. The hard fact is that work is there only for the benefit of the customer, and if goods are not produced at a time, at a price, and in a condition which is attractive to potential purchasers, then the customer will buy elsewhere, and the employment—both the workforce and the management—just goes.
It is a matter of enormous concern to Government and individuals alike that unemployment has reached the extent that it has. The noble Lord, Lord Allen of Fallowfield, said that it was a scandal. The noble Lord, Lord Underhill, among many others, referred to this plight. Of course it is a matter of great concern to us, but it is as well to remember that we in this country are not alone in this. In Canada, France, Italy they are experiencing the highest unemployment levels ever. In the United States and West Germany they have the highest levels since 1935. But despite the fact that we have so many unemployed, it is worth remembering that we have in fact a higher proportion of our people in this country employed than is the case in any other country in the European Community, other than Denmark.
We have an unhappy knack, though, of all too frequently contributing to what is a worldwide phenomenon by our own internal actions. Management and workers must work together in harmony with each other. Too often management virtually conceded its right to manage and, in order to avoid confrontation, has simply given way to a union's every demand. That might have been possible, though undesirable, in times of economic growth with full employment, but in the long term it has stored up a legacy of inefficiency and restrictive practices which have resulted in our industry being all too often uncompetitive, and from which we are now suffering. The tragic fact is that the unemployment which was previously hidden in industry has now found its way on to the unemployment register.
That is part of the cause of our difficulties, but there are very encouraging signs. The number of days lost in strikes has gone down from 29.4 million in 1979 to 4.2 million in 1981—an immence improvement. Already there are signs of a turn in the economy. Output rose in both the third and fourth quarters of 1981, and is expected to rise by a further 1½ per cent. in 1982. Manufacturing output should grow even faster, perhaps by 3 per cent. Productivity in the manufacturing sector rose by no less than 10 per cent. in the course of last year, and as a result of more moderate pay settlements and the depreciation of sterling, the index of competitiveness—which is an
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indicator of the amount of wages required to produce a unit of output—has improved by about 10 per cent. since the first quarter of 1981.
Short-time working was dramatically reduced by three-quarters, and overtime working was increased by 15 per cent. during the course of last year. Vacancies have been increasing since the middle of last year, being about 25 per cent. higher in January and February this year compared with the second quarter of last year. As the noble Lord, Lord Kaldor, said, the balance of payments current account is estimated to have been about £8,000 million in surplus last year, and that is the highest that it has ever been. The rise in our unit labour cost, which was previously among the fastest in the world, has been transformed into one of the more modest. With one or two notable exceptions from the public sector, industry has become much less strike prone. All that is an encouraging and successful story in times when world conditions are not only unhelpful, but positively unencouraging.
The Government are helping industry in these difficult times, as my noble friend Lord Selsdon will know only too well. In 1982–83 the supply estimates allow for industrial support of towards £1·5 billion, including support for specific industries. Among other things, that allows the Government to assist anywhere in the country industrial projects which are likely to benefit the United Kingdom and the national interests. Assistance is available for projects which create new jobs or which safeguard existing ones in assisted areas. There are regional development grants, which are streamlined to concentrate help on the most needy areas. Government grants are also available to industry towards the cost of converting oil-fired boilers to coal; and up to £50 million was made available in the two years 1981–82 and 1982–83.
The noble Lord, Lord Whaddon, the noble Lord, Lord Granville of Eye, and my noble friend Lord Selsdon referred to the importance of small businesses. They are quite right. Small businesses are vitally important, not only from the point of view of economic encouragement but from the point of view of the employment that they create. Existing and new small businesses have a vital role to play in the economic growth of the country, and the Government have introduced over 70 measures to help these small firms. There is the loan guarantee scheme, which encourages banks to lend money to new and existing small firms. The total sum available for loans in the first year was raised in the Budget by £50 million to £150 million, and a further £150 million will be available from June 1982 to May 1983.
The business start-up scheme was introduced in 1981–82 to allow private individuals to get tax relief at their marginal top rates on up to £10,000 a year invested in new businesses. The relief limit was increased to £20,000 for each of the years 1982–83 and 1983–84 in the Budget. This encourages new businesses requiring a modest amount of risk capital during their early years. Then there are many schemes for helping new technologies and micro-electronics. One of the problems is the lack of awareness by industry of the opportunities which are afforded by new technology, and the Government have designated 1982 as Information Technology Year in order to encourage these new technologies. The major event

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of the year is a two-day conference which the Prime Minister will open in the Barbican Centre in London on 8th and 9th December.
All this is positive stuff which we are doing to encourage industry. But important though it is, of course, it does not help the people who, regrettably, because of the recession, are not able to find work. It is the Government's concern to help these people as much as possible by providing opportunities for work where this can be reasonably done, and also by training them for work so that there are skilled people available when the recession comes to an end. The noble Baroness, Lady Ewart-Biggs, said that she wanted more done. My Lords, in this financial year alone over £1,000 million is being spent by the Government on special employment measures, and this will rise to nearly £1,500 million in 1982–83. Overall, the various schemes at present are helping over half a million people, and they are saving over 300,000 people from having to sign on the unemployed register.
We must not, however, mistake the purpose of such measures. They alone will not solve the problem of unemployment—nor are they intended so to do. The Government's basic economic strategy is designed to reduce inflation and so to make our industries more efficient and more competitive in the world markets. The help which we are giving to young people who are unemployed goes hand in hand with the arrangements which we are making to improve training. Our plans to improve training are to develop more open and flexible forms of skill training which are based on agreed standards of skill, to improve vocational preparation for young people by offering a combination of work experience and related training and education, and to improve training opportunities for adults.
My Lords, proper training arrangements cannot in themselves solve all our problems; but without them we will never be able to move ahead to take advantage of future opportunities. We are providing for the development of an open-tech programme, to make technical training more accessible; and we are introducing a new £1,000 million Youth Training Scheme guaranteeing, from September 1983, a full year's foundation training for all those leaving school at the minimum age without jobs.
The Youth Training Scheme will be a more constructive and positive way of helping young people. It will replace the Youth Opportunities Programme which was started in 1978 to help those aged under 18 who could not find jobs. En the last four years, the programme has grown to between three and four times its original size, and this year it will have some 550,000 entrants. It has been particularly successful in providing work experience for this huge number of young people. In 1982–83 Government expenditure on this will be £747 million.
There is a very real cause for concern about the number of young people who receive little or no training on their entry into the labour market. The Government's aim is that the new Youth Training Scheme should provide a full year's foundation training for all unemployed 16-year-old school-leavers compared with the present average of 23 weeks on the Youth Opportunities Programme. The Government are asking the Manpower Services Commission to develop the programme so as to provide 100,000 of the new 12-month training places in the year starting in September
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1982, in preparation for providing such places for all school-leaver entrants in 1983.
We estimate that when the scheme is fully in operation there will be some 300,000 young people on courses at any one time. While the Manpower Services Commission will play a central role in this new scheme, it will also need the support of many sections of the community; and, contrary to what the noble Baroness, Lady Ewart-Biggs, said, voluntary organisations will not be excluded. We rely on employers and other sponsors to provide courses of the right quality at local level, as we have relied on them under the Youth Opportunities Programme.
Another scheme which began to operate on 4th January is helping young people directly to get jobs. That is the Young Workers' Scheme, designed to encourage employers to take on more young people at realistic wage rates which reflect their inexperience and frequently their need for training. That is going to cost about £59 million in 1982–83.
Then there is the Job Release Scheme. The Prime Minister announced the expansion of this scheme last year. Now men who are aged between 62 and 64 will be able to apply for job release until the end of March 1984. Women aged 59 and disabled men over 60 will also be able to apply until March 1984. This is the first time that any Government have committed themselves to accept applications on to this scheme for more than a year ahead; and that is going to cost £244 million in 1982–83.
Then there is the Temporary Short-Time Working Compensation Scheme. That is a short term measure which encourages firms to adopt short-time working as an alternative to making some or all of their workers redundant. That is going to cost £118 million for 1982–83. Then there is the Enterprise Allowance Scheme. Then there is the Community Enterprise Programme, which is going to cost £157 million in 1982–83. The Government are constantly looking for new ways of helping the unemployed, and we shall certainly take into consideration the ideas which have been suggested by your Lordships this evening.
So, in fact, the Government are doing quite a lot, and I reject the view which insinuates that the Government are content to see unemployment at its present level. I reject the view that insinuates that the Government are doing too little to alleviate it, or too little to prevent it. That just does not measure up to the facts; and I was glad that my noble friend Lord Nugent agreed with that.
In the end, my Lords, the life and the success of a nation depends not on Governments but on individuals. Governments can set the conditions—they can help—but it is individuals who are the people who make successes and upon whose successes others depend. We—Great Britain or the Government—cannot be responsible for a world recession. That is a fact of life with which we have to contend. We are, though, as individuals, whether employers, employees or politicians, responsible for the actions which we take within this country. It must be our determination at all levels to ensure that our businesses succeed and prosper. We cannot afford to pursue selfish ends if, by pursuing them, we adversely affect our fellow men or our businesses, upon which not only our own livelihood but the livelihood of others depends.

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Governments can exhort and can set the conditions. These we have done and are doing. Governments can help by providing money to train people. This we have done and are doing. But the success of any business—and there are plenty who have succeeded—depends on those who operate it and on those who work in it. We are involved in a corporate effort between Government and people and between employer and employee. If we continue along the lines on which we have started, we will see industry pick up; we will see employment pick up; and so as a country and as individuals we will pull ourselves out of the recession and out of the hideous effects of it in which we find ourselves.
8.51 p.m.
Lord Glenamara: My Lords, we have had a very good debate and I should like to thank all noble Lords on both sides of the House who have contributed to it. We have these very good debates frequently in the House of Lords, but nothing much seems to happen as a result of them. So I was very pleased to have the assurance from the noble Earl, Lord Ferrers, that he will take back all the points which have been raised and have them examined. Above all, I should ask all the Ministers present—and there are four of them at the moment—to transmit to their departments, to the ministerial and Civil Service heads of departments, the deep anxiety expressed on all sides of the House about the continuing evil of unemployment. After all the myriad things pulled out of the barrel in the past few minutes by the noble Earl, the simple fact remains that unemployment remains at 3 million and will go up by 300,000 this year. I beg leave to withdraw the Motion for Papers standing in my name.
Motion for Papers, by leave, withdrawn.

Consolidated Fund (No. 2) Bill
The Bill was brought from the Commons endorsed with the certificate of the Speaker that the Bill is a Money Bill; read a first time, and ordered to be printed.

Namibia: Independence Negotiations
8.52 p.m.
Lord Hatch of Lusby Lord Hatch of Lusby rose to ask Her Majesty's Government what is the latest situation in the negotiations for the independence of Namibia and what policy they are adopting.
The noble Lord said: I beg leave to ask the Question standing in my name on the Order Paper. The Question is a request to the Government to state their policy towards the situation now existing in Namibia. Namibia is the latest—perhaps the last but one—of the measures which have been taken to dissolve the European empire. The previous occasion on which this was done was the Lancaster House Conference of two and a half years ago, for which both respect and congratulation are due to the present Government, as also to the party of which I am a member, which did
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a great deal to prepare for the success of that conference.
The previous decision of this nature was that which dissolved the Central African Federation. I should like to pay respect to the memory of Lord Butler. This is not just on my own behalf but on behalf of many millions of people in Central Africa. In the tributes which have been paid to Lord Butler, it appears to have been largely overlooked that he was the last Minister for Central Africa, he was the last Secretary of State for Central Africa, and it was his responsibility to wind up that federation. In doing so, he showed a decisiveness which many critics have alleged he did not possess but which I was privileged to see at first hand, and was further privileged to discuss with him on several occasions, both during the course of his tenure of office and when he moved on to Trinity College, Cambridge. I can assure his widow and family that there are many, many millions of Africans in Central Africa who would like to pay respect to the memory of the work that he did in 1962.
We are discussing a situation of war. Those of us who reside constantly in any part of Central and Southern Africa are living in the middle of a war situation. I have only to refer you to this morning's newspapers where you will see the account of the killing of over 200 Namibians on Angolan soil—at least the claim from the South African Government that this was done last weekend. This is the atmosphere, an atmosphere of death, torture, brutality, insecurity and constant warfare.
We are entitled to ask the Government what position they are taking, what policy they are following, in this situation. I would remind the members of the Government—as I did last July—that this is a situation which was originally the responsibility of the British Crown and British Government. The original mandate over what was then South-West Africa came from the British Crown. So the responsibility lies heavier on the Government and people of this country than on any other. Last July, the noble Lord who replied to my Question assured the House that the present Government were entirely wedded to Resolution 435 of the United Nations.
I should like to ask the Government tonight a number of questions about Resolution 435 because it seems to me from my observations on the spot that that resolution is being progressively diluted. Unfortunately, after the Geneva Conference of just over 12 months ago, the contact group of five, of which our Government is a member, appeared to pass on responsibility almost solely to the United States. The United States talked about strengthening Resolution 435.
That word "strengthening" should be in inverted commas, because what we have seen since the United States took the major responsibility for the aftermath of the Geneva Conference appears to me to weaken Resolution 435, if not in some respects actually to contradict it. Let me go quickly through the events since we last discussed this issue of Namibia last July. It was in October that the contact group visited us in Central Africa. They brought with them a skeleton plan. That plan was so widely distributed that it is betraying no secrets to refer to what was in it.
The first measure that I should like to draw to the Government's attention was that, whereas Resolution

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435 at least assumed that there would be an elected assembly which would then create a constitution which would be drawn up by the elected representatives of Namibia, in the contact group's plan of last October the constitutional principles were to be agreed before the elections took place. This is a great practical issue. For example, among the constitutional principles was included the right of compensation for any property taken over by the state. What does that mean? Does it not mean that, if the newly-elected Government of Namibia were, for example, to take over Rio Tinto Zinc or De Beers—two of the major mining companies in Namibia today—there would already have been a forced agreement that compensation should be paid before even the elections took place?
Again, in Resolution 435 it was clearly stated that Namibia should be one political entity; yet in the October plan the assembly was to consist of different political groups. But suppose the Namibian people do not want to elect different political groups: are they to be imposed upon them? According to the plan, this was one of the conditions of agreement. The assembly had to consist of different political groups, which is a very long way from the concept of one political entity. Within that plan also there was at least the suggestion that proportional representation might be used as the method of election. I say "suggestion" because it was not laid down as a specific proposal.
After the contact group had been out to Central Africa the major nationalist organisation, SWAPO, recognised as the representative of the Namibian people by the United Nations and the representatives of the front line states met together; and I was appalled when I came back to this country in December to discover that there was a general assumption right across the political lines that SWAPO and the front line states had agreed to the contact group's plan. That was never the case. SWAPO and the front line states suggested certain amendments. They accepted that the contact group should continue its negotiating work but they never at any time agreed to that plan; and there were certain specific parts of the plan to which they had objections and to which they suggested important amendments.
Then in that same month of December further changes were made to Resolution 435. It was then suggested not only that proportional representation should be introduced as the method of election but that proportioanl representation should be linked to a constituency situation, so that a certain number—nobody knew how many—of voters in Namibia would have two votes.
The obvious objective of this move, which still further weakened Resolution 435, was to assist the South Africans with their control of their clients within Namibia, to stimulate tribalism and to appeal to tribalism above the national appeal which SWAPO had always put forward and, in particular, to assist the Turnhalle Alliance. As a two-thirds majority had to be obtained for any change in the constitution, it was apparent that this new electoral system would encourage smaller parties, particularly tribal parties, and would open the way to the blocking of a SWAPO Government with real power to implement a new constitution.
So there followed another conference between SWAPO and the frontline states which was held in Lusaka over a weekend, with SWAPO representatives, with frontline states representatives and with representatives from the United Nations. Here let me ask the Government whether they are aware that SWAPO categorically rejected the concept of double voting. They would not consider any form of electoral system which gave any elector two votes. They were supported in that stand by the frontline states.
Then 10 days ago, in Maputo in Mozambique, yet another conference was held—this time, I think, largely because the front-line states and the people of Namibia are getting impatient with the delays which appear to have struck the contact group and the negotiators. At that conference the front-line states for the first time publicly declared their support for military action both by SWAPO and by the African National Congress within South Africa.
I am asking the Government whether they are aware of this sequence of events, because in the meantime, while the negotiators have been going to and fro, while discussions have been held at the United Nations and while the State Department and Dr. Crocker have been inventing their various peculiar forms of electoral systems, Namibia is being raped by the mining companies as well as by the South African forces. Do the Government agree that the removal and sale of uranium from the Rossing mine of RTZ is against international law? Are the Government aware that the diamond mining company of De Beers is pulling out diamonds from the country as fast as it can, and leaving great gaping holes in the landscape?
But beyond this, and perhaps of even greater menace, there has continued the consistent South African foreign policy of procrastination. All the time, the South African Government has been willing to talk and to negotiate until it comes to any point of decision, but as soon as that point is reached the South African Government then backs away. This is not an accident. This is a deliberate policy, because, while the South African Government is following its policy of procrastination, it is at the same time establishing its own system of tribal homelands in Namibia, as it has done within the bounds of the Republic itself, strengthening the political rule of its own clients and increasing its military control and its terrorist tactics against the people of Namibia and its occupation of Southern Angola. In short, it is following a policy, which it has clearly stated to be the building up of a constellation of states around the Republic of South Africa, all of them dependent upon Pretoria.
I am very grateful to the noble Earl who has stepped in to answer this debate, and I should like to conclude by simply asking him certain specific questions of which I have given him notice. First, what evidence do the Government have that the South African Government has changed its policy by one iota since it sabotaged the Geneva Conference at the beginning of 1981, particularly when it is the Prime Minister of South Africa, Mr. Botha himself, who has said that South Africa has no intention of handing Namibia over to SWAPO? How can that be equated with free and fair elections in which the Namibian people choose their own representatives?
Secondly, do the Government consider that the various alternative forms of electoral system, which

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have been devised by Dr. Crocker and his colleagues and by the contact group, including proportional representation, the constituency system, the double-voting system, the insistence that constitutional principles shall be agreed before the elections and the fact that the assembly shall be composed of different political groups, are consistent with Resolution 435?
Thirdly, are the Government aware that the Front Line States and SWAPO are totally opposed to, and will not countenance in any circumstances, the double-voting system which has been proposed, and other issues that arise from the plan that was put before them last autumn? Fourthly, do the Government agree that it is a breach of international law for the mining companies to continue to export minerals from Namibia against the decision of the United Nations and the International Court of Justice, and do they not deplore the fact that such milling companies have, or have had, on their boards leading public figures from across the political spectrum from this country?
Lastly, will the Government categorically and unreservedly condemn the invasion and occupation of Angola by South African troops, and, if they will do so, what action are the Government taking in a situation of war, of much more open war than is to be found in, for example, eastern Europe today? What action are the Government taking? What policy are they following to bring to an end this aggression and invasion by South African troops of a friendly country, namely Angola?
9.14 p.m.
Lord Cledwyn of Penrhos: My Lords, my noble friend Lord Hatch of Lusby is very well qualified to speak about Namibia and its problems, and his speech showed how well equipped he is in terms of knowledge and practical experience of Southern Africa. My noble friend has raised a number of important practical points about Resolution 435 and has made a number of serious allegations about departures from the operation of Resolution 435 with which I feel sure the Minister will wish to deal in his reply.
Namibia, this comparatively large country—four times the size of our own with a small population of I million people—poses a problem not only for the African continent but for the whole world. It is in danger of becoming a pawn in a very large game. And in spite of all the United Nations resolutions, the promises, the well-meaning initiatives and the conferences, Namibia still remains under the control of South Africa. The manoeuvrings and manipulations in which South Africa has engaged in order to retain control over Namibia over the last 15 years and more have, I suppose, gained that country some time. But it has not been time well spent, for each month that goes by makes the problem more intractable.
There are some international negotiations where time is available and necessary to achieve the right kind of solution. Namibia is not one of these. Time has run out. I doubt whether an appeal to Pretoria along these lines will have much effect, but I would hope that the United States Government might realise at last that time is of the essence in Namibia. If the United States Administration think that they are justified in playing
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it long and cool for strategic reasons based on South Africa, they are making a sizeable miscalculation, because increasing bitterness and instability ill Namibia itself, and in neighbouring countries as well, can in fact destroy their strategy as well as the influence of the West in Southern Africa.
The noble Lord, Lord Carrington, the Foreign Secretary, predicted in sombre words what the consequences of failure to negotiate a settlement in Namibia would be. The noble Lord said at the Commonwealth Summit in Melbourne, and the words are as valid today as when he uttered them:
"I see nothing but a bloody war, and in the course of that bloody war I think you would see the devastation, or at any rate the crippling of Namibia".
All the evidence, as my noble friend has said, points to a worsening situation.
People sometimes draw comparisons between the position in Rhodesia, as it was, and Namibia. They are mistaken to read too much into the comparison. But for the intransigence of Mr. Smith and his party, Zimbabwe would have had its independence many years ago. Britain, the legal sovereign power, desired that Zimbabwe should have independence, and although the South African Government played a peculiar game they would not have stood in the last ditch for Mr. Smith. Nor did they. But South Africa is a powerful occupying State in Namibia, an occupying state which has obdurately refused to yield the mandate given them in 1922. And because of their obduracy they have, and are, endangering the stability of the entire Southern African region.
The effect on neighbouring countries is profound and upon Angola very serious indeed, as again my noble friend has explained. Its economy is being damaged by the conflict and, although it is potentially one of the richest countries in Africa, it has no hope of developing its wealth while the war continues. SWAPO is largely based there and, whatever the Angolans themselves may think by now, the war also appears to "legitimise" the presence of Cuban troops in Angola. When I was in Luanda some three years ago I had the impression that even then they would like to be rid of foreign troops from their country. I believe that that feeling is much stronger today. I also understand that President dos Santos is anxious to negotiate now, and in that I believe he deserves the support of us all. I hope Her Majesty's Government will take the initiative in giving him all assistance.
We hear a great deal of talk about the encroachment of Marxism in African countries, about the dangers of Soviet intervention, and so on. South African propaganda is strong on this line. Of course, the Soviet Union likes to extend its sphere of influence, something which all countries will need to watch. But Presidents like Kaunda, Banda, Nyerere, Mugabe, Arap Moi and others have shown clearly that what they want is stable African States without outside interference.
They are Africans first and Africans second. They are Marxists too if it suits them, or if they are driven to seek out so-called Marxist sources. Against that background, what we would like to know from the noble Lord the Minister is how the current negotiations are proceeding. The so-called contact Group to which

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my noble friend referred has, I believe, tried hard to find solutions, but I cannot see Independence based on free elections coming as soon as most of us would wish it. A sad weakness of the contact group is that it does not have the legal authority which Britain enjoyed in Zimbabwe, but the new principles advanced by contact have received a widespread welcome here. Maybe I differ here to some degree from my noble friend. I personally consider that we are indebted to Dr. Chester Crocker and his team for the patient way in which they have sought to pursue these negotiations. What I would say to my noble friend is this. This is a great problem and one that is not easy to solve. It requires patient negotiations. Sometimes one gets frustrated and irritated by the lack of progress but, nevertheless, we must be grateful to those who are making an effort.
South Africa has reacted with the usual mixture of Yes and No. I would like the noble Lord the Minister to indicate how the Government see the position. When are free elections likely to take place? Is it still likely that they will take place on 1st March 1983? My noble friend will have noted that while it is necessary to be realistic, especially when one is dealing with South Africa, I am not quite so pessimistic as he is about the contact group. The group has provided a fair basis for negotiation and possible settlement—that was certainly the reaction in Africa. My noble friend indicated certain points of disagreement with the proposals made by the contact group. He referred, quite properly, to the problem of the right to compensation. He dealt with the question of the one political entity as against possible different political groups, with proportional representation, and so on. I regard these as "committee" points and not as great points of principle to he realised and determined now. What is important is that we should make progress towards a settlement, and these are matters which can be discussed at a conference in due course. What I want to see is more realistic practical progress.
The six African front-line states, together with Kenya and Nigeria, did in my view extend a general welcome to the contact group proposals in the first instance. Since then, I agree, they have come forward with reservations—but again, these are matters which can be the basis of discussion. I do not consider them to be an insuperable obstacle to a settlement. Again, I believe that we should be grateful to the contact group for the efforts it is making. The five nations are now renewing their attempt to clarify the first phase of their revised settlement plan and I wish them success.
Can the noble Lord the Minister give us an up to date assessment of prospects? We recognise that there are formidable obstacles to be overcome bat the sooner the process starts—the sooner we get the United Nations Security Council resolution authorising the appointment of the United Nations special representative—then the sooner there will be a ceasefire and the better things will be for all of us. Then we shall start making some progress. I do not believe that we can ask the Government for more than that they should bring all possible pressure to bear upon the parties concerned, and especially upon the United States of America and South Africa, to work towards what one hopes will be a stable settlement.
9.25 p.m.
The Lord Bishop of Chelmsford: My Lords, I wish to express my gratitude to the noble Lord, Lord Hatch of Lusby, for putting down this Question and for the impressive expertise he brought to it. I claim no such expertise myself. I have been to southern Africa on two occasions for several months and have many contacts there. But I want to bring this evening some of the views of a delegation of the British Council of Churches which a month or two ago went to Namibia. It was led by the Bishop of Manchester, Stanley Booth-Clibborn. He was accompanied by an ex-Moderator of the United Reformed Church and a Provincial Superior of the Congregation of Notre Dame, who of course is Roman Catholic, and also a Minister of the Church of Scotland, which has such an impressive record in its work in Africa. So I think it is an impressive group.
Their host during their time in Namibia was the Christian Council of Namibia, and they discovered, somewhat to their surprise, that 75 per cent. of Namibians are Christians. I find that impressive, because what it means to an African to be a Christian is a good deal more impressive than what it means to most English people. The Church leaders with whom they shared their experience, by virtue of their representative character and because there were fewer restraints on them than there are on secular speakers there, were in a unique position to speak for the people of their country. Nevertheless, they themselves suffered persecution, and I quote here from a statement which they were allowed to make, being leading Christians of Namibia, before Mr. Botha himself, in which they said that they too have experienced the deportation of leaders and workers:
"Many were refused visas. Others with permanent resident status had their permits withdrawn. Some were arrested and detained, all without recourse to a court of law, without the Churches to which the individuals belonged being informed".
They spoke also of their concern about the killing of innocent people, about the wanton destruction of property, about beatings and about torture, and about the dangers, particularly during the night, which are abroad in that country. The British Council of Churches delegation in fact examined over 20 cases of such abuses and were satisfied as to their truth.
The report which this delegation made was a full one, and I choose four points only from it. The fundamental problem in Namibia is, of course, how to end its occupation, against the will of the majority of people, by a foreign power, by South Africa. Namibians wish South Africa to leave the territory, and believe that, as she refuses to go, she should be removed, by force if necessary. This is one of the factors in the widespread support for SWAPO, which is made up of 75 per cent. of Christians. The activities of SWAPO's military wing are an important factor in the effort to force South Africa to leave Namibia, but of course they are not in themselves sufficient to compel her to do so.
SWAPO are accused of many atrocities, and Church leaders in Namibia have expressed their support mainly for non-violent ways, and they underline the importance of both the education of public opinion and the generation of diplomatic pressure within the international community which, if South Africa is

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to agree to a cease-fire, it is essential to provide for fair elections and for withdrawal.
We have heard about the United Nations Security Council Resolution 435. This, of course, was welcomed in Namibia. But they are concerned about what seems to them to be the lack of pressure on South Africa by the contact group. They are suspicious. The question is frequently posed—the delegation heard this often—in this way: Is the West's primary concern with the South African Government's interests—and they really believe it is—or are they concerned with war-weary and harassed Namibia? They answer in a way which is to our discredit. Surely justice requires that we in the United Kingdom, along with other members of the United Nations, identify ourselves with the Namibians.
The November 1981 Assembly of the British Council of Churches declared that Her Majesty's Government would be justified in supporting a call in the United Nations for the imposition of mandatory sanctions against South Africa, should she continue to prevent the implementation of the programme of independence. We all hope that the present negotiations will not come to grief due to her intransigence; but should this materialise, then Her Majesty's Government will surely have to devise a policy which regards the feelings of Namibians and the international community as primary, and demands that the interests of Namibia take precedence over those of South Africa.
The second point which they make, which has not been mentioned, concerns Walvis Bay. There is great suspicion in Namibia that South Africa is excessively influencing the negotiating pattern of the contact group, and it is heightened by the fact that the port of Walvis Bay has been incorporated into South Africa, robbing the Namibians, therefore, of the only deep water port in their territory. It is a matter of grave concern that Namibia's problems in attaining economic independence will be substantial enough without the added burden of being dependent upon a South African controlled port for its foreign trade and the other implications of that fact. Failure to resolve the matter of the transfer of Walvis Bay before independence could well create an area of future conflict and should receive urgent attention by the Western contact group.
I come to the third point. At the end of last month the Council of Churches in Namibia expressed concern that the contact group's proposed voting arrangements for independence elections, as detailed in the document, were unnecessarily complex, and the leaders in their statement before Mr. Botha made that point. I think that the matter has been laboured enough already in this debate. One or other system would be preferable for the people although one takes seriously the point made by the noble Lord, Lord Hatch of Lusby, concerning tribalism. Anyway, many people have sufficient trouble with one man one vote, let alone trying to cope with one man two votes.
Fourthly, and finally, the group felt considerable concern because of the tendency revealed not only by South African newspapers and media, but by the media in this country, to analyse and present Namibia from the perspective of South Africa rather than from the perspective of the Namibians themselves, who long to
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end the war and who long for independence. I give a simple instance of this bias which has, in fact, been mentioned. Although the SWAPO liberation movement is ministered to by the Church and receives support from people who are overwhelmingly Christians, it is, of course, often presented as a terrorist group which is anti-Church and anti-Christian, which is a tool of Moscow; while in fact the military struggle is of a nationalist movement seeking to rid Namibia of an illegal South African presence.
The picture is often painted of a Marxist movement, controlled from Moscow, seeking to overthrow the legitimate forces of law and order. The suffering of the civilian population is more often attributed to terrorist activity when, in fact, it is inflicted by the arbitary actions of the South African security forces. A Church spokesman declared:
"We wish to he protected from our protectors".
Just as our Government are called upon to understand Namibia's problems through identification with its people, so the media should respond to the need to present Namibia from the perspective of its nationals and their legitimate needs. The public image presented to us now by Mr. Mugabe, when contrasted with that of two years ago, is striking.
It is incumbent upon us to take note of all these horrible facts and the thwarted ambition of the people of Namibia, and to do all in our power that we can to support them in every way, and to support Her Majesty's Government in their efforts in that direction.
9.36 p.m.
The Earl of Bessborough: My Lords, I welcome the Unstarred Question of the noble Lord, Lord Hatch, because last month I visited Namibia for the first time and spent a full week there. I went there at the invitation of the Proswa Namibia Foundation to give their annual foundation address, and during that week's stay I had meetings with the Administrator General, Mr. Danie Hough, and also with Mr. H. J. von Hase, a recent and most distinguished member of the Ministers' Council. I also met representatives of several of the principal political parties in the country, including of course members of the Democratic Turnhalle Alliance, the DTA, which includes, as we know, the 11 ethnic groups. I also saw the President of the South-West African National Union, SWANU, as it is known. I had talks with the Secretary-General of the Namibian Council of Churches as well as with representatives of the Namibia Independence Party and the leader of the SWAPO Democrats.
I had meetings, too, with a number of representatives of finance, commerce, mining and industry in the area, and spent a day at the Rossing uranium mine. At Rossing I found 3,600 miners very happily working and in their new township of Arandis. I also had a meeting with the South-West African Defence Head-quarters and spent the whole morning there, and I visited a military training school where the commandant had recently been commanding a battalion in the north, in what he described at that time as a war of low intensity".
All in all, as your Lordships will appreciate, I was able to sound out a broad spectrum of opinion. I shall not repeat what I said in the debate last July,

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but I would say that one of the principal impressions that I received was that representatives of the political parties and, indeed, the ethnic groups, seemed rather lost and uncertain about the future. They did not seem to know what was going on as regards the negotiations about which we have heard. I found all this rather sad.
Several of those to whom I spoke regretted the absence of a representative of the five power contact group in the capital, Windhoek, though they recognised that from time to time representatives of the five embassies in Pretoria visit Windhoek and that Dr. Chester Crocker, the United States Assistant Secretary and leader of the five power group, has himself spent some time in the country. In my view, the United States must take the lead in this situation, unlike in Zimbabwe, where it was clearly a British responsibility to take the lead. However, those I met wished that there was someone permanently in Windhoek to whom they could refer in order to keep up to date with the progress of negotiations. They recognised that such representation would have to be on the clear understanding that the appointment of such a representative would not imply official recognition of the present Ministers' Council. I put this point to my noble friend Lord Trefgarne and Foreign and Commonwealth officials on my return quite recently. I would certainly be interested to hear whether my noble friend Lord Avon can say anything on this matter of five power representation there this evening.
In general, I should like to say how interesting I found this visit and how impressed I was by the determination and tenacity of all those working in that vast and arid land—a country which until my wife and I arrived there had had no rain for over three years. It seemed to me a miracle how all those I met, whether working in mining, industry, commerce, agriculture, banking or other activities in Namibia have contrived to create so much out of such an apparently inhospitable environment.
I was impressed too by the fact that, after all, racial discrimination has been abolished by law, and that in my hotel black Africans appeared to come and go as they pleased, in contrast to the situation in South Africa itself. I hope in this way that Namibia is,
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or will he, setting an example in this respect. I understand, incidentally—I got this report only this morning —that Dr. Ben Africa, a member of the Namibian Ministers' Council, announced only two days ago that the Ministers' Council had decided in principle that local authorities in Namibia should come under the jurisdiction of the central Government from 1st April.
If successful, this move would enable the Ministers' Council to open to all races municipal facilities such as the capital's public library and the city swimming pool which are, I know, currently reserved for whites. These would certainly be moves in the right direction, and there have been others. But I recognise that the decision by the Ministers' Councils would still have to be approved by the South African Administrator General, whose office holds at present the ultimate legislative and executive powers of government.
May I just add this. I hope that when the country achieves its independence it will be in a position to join the British Commonwealth and also the Lomé Convention and the Assembly of the African, Caribbean and Pacific countries—the ACP countries. This would then presumably entitle them to Commonwealth and European Community aid, which I think they would find considerably more useful and rewarding than that offered by the Soviet Union or the East Germans.
I am not saying that Commonwealth and Community aid could altogether replace the massive financial and other assistance which the country at present receives from South Africa. South African assistance would, in my view, have to continue for many reasons. First, because so many firms in the country are subsidiaries of South African concerns, and the whole banking system is at present dependent on South Africa, with whom of course there is monetary union in so far as the rand is the currency throughout the region.
Namibia must, in my view, continue to depend economically, to a very considerable extent, on South Africa. For these reasons, I much look forward to hearing what my noble friend has to say about the progress of current negotiations, and especially whether there has been any progress in deciding on an electoral system for elections which I hope will take place certainly not later than the autumn of next year.
9.45 p.m.
Lord Brockway: My Lords, my first words must be to thank my noble friend Lord Hatch for initiating this debate and to congratulate him on the masterly, informed speech he delivered. I wish to associate myself with what he said in tribute to the late Lord Butler. Like him, I had some association with Lord Butler on colonial issues. I was deeply impressed by his tolerance, open-mindedness and willingness to hear views which were not his own, and particularly I pay tribute to the great Act which ended the Federation of Central Africa and brought independence to its countries.
It is 16 years since The Hague Court decided that the South African occupation of Namibia was illegal. That such a long period should have passed shows either the weakness or indifference of the world to determining that such a decision should be carried out. Throughout those 16 years the South African Government have delayed any solution of the problem, sometimes coming near to it and then withdrawing and sometimes creating a critical situation at a moment of crisis by their invasion of Angola. I have been glad to hear, during those years remarks made from our Front Bench, particularly by my noble friend Lady Llewelyn-Davies, protesting against the delays which South Africa has imposed upon a solution.
I listened with great interest to the speech of the noble Earl, Lord Bessborough. On the whole he gave an optimistic picture of the situation in Namibia, and I assure him that we share his hopes about the future. But, from all the information one receives, I think it doubtful whether we can take that optimistic view. He indicated that action had been taken in Namibia against apartheid and racial discrimination and mentioned particularly the Racial Discrimination Act. I shall return to that shortly, but first I must say that during the period when South Africa has controlled Namibia, its influence has been to establish there the very foundations of the apartheid system; namely, the segregation of people according to their race and ethnic origins and to prevent their unity. That is the very basis of apartheid and it has been the policy which the South African Government have been following. It has established an assembly, based upon ethnic groups, with the party which it has supported, the Democratic Turnhalle Alliance.
This week there has taken place an event that is likely to destroy the whole construction of the ethnic base that the South African Government have established. The President of the Democratic Turnhalle Alliance has resigned. He resigned on the ground that South Africa is producing an apartheid policy in its establishment of these ethnic antagonisms. He is the head of the largest ethnic group, the Ovambo, and that action on his part is likely to destroy his party and destroy the very basis of South African domination within Namibia—
The Earl of Bessborough: My Lords, does the noble Lord agree that the President, Peter Kalangula, has not in fact been followed by many of his colleagues in resigning from the DTA?
Lord Brockway: Yes, my Lords, but he is the leader of the largest ethnic party, and, if that party withdraws, as it has, the whole strength of that movement will disappear.
I want to depart from those preliminary remarks to deal immediately with the argument that the Racial Discrimination Act, and the proclamation of equal pay in the public sector, whatever the race, have been a large contribution towards ending discrimination in Namibia. The Racial Discrimination Act itself contained reservations. It contained the reservation of permits to allow restaurants and hotels to "protect civilised standards". I do not know whether in his visit to Namibia the noble Earl was able to visit the Apollo restaurant and hotel in Windhoek, one of the major restaurants and hotels there. That hotel still prohibits any black person from entering, in accordance with the reservation in the Act which allows for people to be refused entry on the ground that they are repudiating the protection of civilised standards.
So far as equal pay is concerned, it is not being observed in Namibia. I quote from the Windhoek Observer, three years after the Act was introduced. The newspaper stated:
"Equal pay for equal work, as it stands presently, is a farce…. There are very few instances which have honoured this legislation".
When we begin to look at the contrast between the payments made to whites and to blacks in Namibia, we see how that criticism is justified. The United Nations study in 1978 said that the per capita income of whites was 3,000 rupees, whereas the per capita income of blacks was 125 rupees—24 times as much for the whites as the blacks received.
I take a further instance of this, and I take it from the very organisation which invited the noble Earl to go to Namibia. I take it from the director of that organisation. In October 1981 the director of the Private Sector Foundation of Namibia said that the difference between the payment to whites and the payment of blacks in Namibia was still 12 to 1; that it was 12 times larger for the whites than it was for the blacks. That is an indication how far the policy of equal pay has been carried out.
It is not hidden today that the reason why America has urged upon the contact group the electoral system in Namibia of two votes—one proportional representation, one direct—is to keep SWAPO from winning the election. That is recognised. I think that on technical grounds one can suggest that in a country which is fairly new to electoral methods that complicated system will make it very difficult for a true result to be obtained.
What is this fear of SWAPO? The fear of SWAPO is in South Africa, in America and in many capitalist countries of the world, because SWAPO would stand for the ending of economic imperialism in Namibia. It is dismissed as Marxist and communist. There are many elements within it which are neither, and we make a great mistake today when we suggest that every country in Africa which stands against the economic imperialism of the past is necessarily a copy of the Soviet Union or a copy of China. There is Mozambique, with its community democracy,

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so different from either. There is Angola, and even Ethiopia, in its land reform, though I disagree with its treatment of Eritrea, not copying either the Soviet Union or China.
What we should recognise is that these new countries are applying an African socialism which is very distinct from either the Soviet Union or China. I want to admit that democratic socialists themselves are a little to blame if these are always recognised as communist countries. There are only two or three socialist countries in the whole of Africa which are affiliated to the Socialist Internationale. It is a great mistake to take the view that if SWAPO gained control of Namibia it would necessarily be following either the Soviet Union of the Chinese example.
I want to end by emphasising the very great seriousness of the situation in Namibia for peace in Africa. Unless a settlement can be reached in Namibia, unless South Africa will accept it, unless America and the contact group can accept a solution which is desired by the people of Namibia, the danger of the present civil war spreading is very great indeed.
I urge the Government to have an open mind upon these issues and to put first and foremost their desire for a settlement. The Leader of the Labour Party, Mr. Michael Foot, made an important speech on this subject at the first meeting of the anti-aparthied conference. I am surprised that the media has not reported it. He made a speech first in which he said that a Labour Government will carry out the instructions of the United Nations and the International Court at the Hague and refuse to receive in this country minerals from Namibia, including uranium. He made that statement definitely as Labour Party policy. He said, secondly, what is even more serious: that a Labour Government, unless South Africa will change its attitude on aparthied and towards Namibia, will support economic sanctions against South Africa. Those two statements illustrate the danger of the present situation, and I urge Her Majesty's Government to look at the situation in a new way and to seek a solution which gives promise of a settlement.
10.3 p.m.
The Earl of Avon: My Lords, the Government welcome the oppportunity which the noble Lord's Question has provided to have the problem of Namibia fully aired in this House. His expertise on this subject—noted by all the speakers—amply demonstrated in his contribution to this evening's debate, is extensive and well-known. I, too, should like to join with other noble Lords in their tributes to Lord Butler of Saffron Walden, not so much about Central Africa, where I was not connected with him, but as more of a personal tribute for he was, of course, a family friend for many years.
Britain has a long historical connection with southern Africa. The Government have been closely involved with the Namibia problem since the Western five first put forward their proposals for a solution in 1978, and subsequently pursued their efforts to achieve a peaceful settlement in accordance with Security Council Resolution 435. That remains a central objective of the Government. Peaceful change in the region is both
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desirable in itself and also for the benefits it would bring to the populations of those troubled countries; a solution to the Namibia question would be a demonstration of the possibility of dealing with international trouble spots through negotiation instead of through the bitterness and suffering of armed struggle. The failure of these negotiations would lead to indefinite delay in the achievement of independence for the Namibian people, and to a protraction of the fighting in Angola and in Namibia itself—fighting to which no definite outcome is in any case likely for either side.
That is why the Governments of the Western five have attached high priority to the resumption of the negotiations; negotiations which were unfortunately interrupted by the failure of the pre-implementation meeting in January last year. The five subsequently agreed on a 3-phase process of negotiation, aimed at beginning implementation of the UN plan during 1982.
In answer to the question of the noble Lord, Lord Hatch, as to the South African intentions towards agreeing to a settlement, it is the case that the South African Government have agreed to this 3-phase concept and are fully engaged in negotiations with the five. In the first phase the five are inviting all parties contesting the elections to Namibia's Constituent Assembly to subscribe to certain constitutional principles.
Noble Lords will probably be aware that we now have agreement to most of our proposals, but some points raised by the front line states and SWAPO require further consideration. These relate primarily to the system of election which the five have proposed for the elections to the Constituent Assembly. I do not wish to go into any detail since the negotiations are confidential. We believe that our proposed system would be fair to all parties and groups and is in no way inconsistent with the provisions of the United Nations plan.
The noble Lord, Lord Hatch, asked a number of questions regarding the contents of the constitutional principles, and the noble Lord, Lord Brockway, I think, made some rather sweeping assumptions which I hope to correct. I would assure the House that the five are completely satisfied that these principles are wholly compatible with the Security Council Resolution 435 and do not detract from the right of Namibia's elected representatives to decide on their own constitution and their own future. The five are certain that the proposed electoral arrangements are wholly fair.
All the five have Governments with a solid commitment to the democratic principle, including the principle of equality of voting rights. Any suggestion that they would be parties to arrangements which were undemocratic or which conflicted with those principles is quite unfounded. I would remind the House that the United Nations plan specifies that all electoral arrangements will enter into force only when approved by a special representative of the United Nations Secretary-General. The five are making every effort to surmount the obstacles to the completion of phase 1, and we hope thereby to build confidence and to encourage the flexible attitudes which we shall need in tackling the difficult issues that will arise in the next phase.
When we have reached agreement on the constitutional principles—but not before—we shall move on to phase 2. That phase concerns mainly the im-

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partiality of the electoral process and the size, role and composition of the United Nations Transition Assistance Group. All concerned need to be convinced that the arrangements for the elections to the Constituent Assembly will be totally fair to all parties participating.
The South Africans have for a long time made clear their concern about the United Nations impartaility. We believe we can find ways to deal with these concerns, with the co-operation of the front line states and other African Governments. For ourselves, we and our partners in the five have the fullest confidence in the United Nations Secretary-General and his staff and in their ability to carry out impartially all the tasks assigned to them under the United Nations plan.
The problems due for discussion in phase 2 will be highly contentious. To resolve them will require a positive and less suspicious approach from all the parties concerned. We hope that the front line states and SWAPO will understand that the need of the five to take account of reasonable South African concerns does not mean that we are in any way taking sides or ignoring matters of interest to themselves. Similarly, we hope that South Africa will continue to accept the need for an internationally acceptable framework for a settlement.
It is one of the hard realities of the negotiations that there will be no agreement, no ceasefire, no elections and no independence for Namibia unless we take account of the essential interests of all the parties concerned, even though this may sometimes lay us open to the suspicion of favouring one side or the other. We hope that the five's approach will be recognised as offering the only real hope of securing an end to the South African unlawful occupation of Namibia, and so of achieving a settlement in the interests of the people of Namibia and of the peace and security of the region as a whole.
The last of our three phases will comprise agreement on a date for implementation and the implementation process itself. The United Nations plan allows for at least seven months between the ceasefire and the constituent assembly elections, which implies independence for Namibia sometime in 1983, if all goes well.
The right reverend Prelate the Bishop of Chelmsford mentioned the problem of Walvis Bay. We believe that the current negotiations have enough complexities and we should not wish to prejudice them by introducing an additional element. The five have made clear their view that resolution of the question of Walvis Bay should be left between the South African Government and an elected Government of Namibia. We hope that, in the event, a satisfactory compromise will be found.
We have repeatedly condemned South African incursions into Southern Angola and called for immediate withdrawal of South African troops. We wholly deplore the latest South African action which is reported in the press today and was mentioned by the noble Lord, Lord Hatch. These incursions serve only to emphasise the urgent need to reach a Namibian settlement. I agree with the noble Lord, Lord Cledwyn of Penrhos, that time is of the essence, while patience is also necessary.
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The Government are aware of the contents of the report published by a delegation from the British Council of Churches after their recent visit to Namibia to which the right reverend Prelate referred. My honourable friend the Minister of State saw the delegation and discussed these matters with them. The Government abhor the use of violence, particularly against innocent civilians, from whatever source. The continuation of incidents such as those reported to the Churches' delegation adds yet further emphasis to the need to bring about a settlement in Namibia and thus to remove one major source of violence and suffering in the region. Sanctions would not have the effect claimed, but would, we believe, delay Namibian independence by ruining the chance of a negotiated solution to the Namibia problem.
In answer to the question of the noble Lord, Lord Hatch, about the front line states and SWAPO's proposals last October: yes indeed, they did put forward some proposals. These were considered and taken into account in the revised version produced by the five in December. The noble Lord also asked whether it was the case that SWAPO rejected the double election plan proposed at the end of 1981. It is true that SWAPO and the front line states have difficulty in accepting the mixed electoral system which the five have proposed for the Namibian constituency assembly to which I have already referred.
The noble Lord, Lord Hatch, asked about the importation of uranium from Namibia to the United Kingdom. The Government do not accept as valid the United Nations Council for Namibia Decree No. 1, which purports to prevent the exportation of natural resources in Namibia, since the United Nations General Assembly acted beyond its powers in setting up the council. The Government therefore have no grounds for interfering with this or any other trade between Namibia and the United Kingdom which does not conflict with any of our international obligations. We consider that the activities of British multinationals provide a much-needed stimulus to the deprived economy of the country and benefit their predominantly black workforce and, indirectly, the Namibian people as a whole. A settlement under the United Nations would be as much in the interest of companies operating in Namibia as in those of the Namibian people.
The noble Lord, Lord Brockway, touched on the defections from the Democratic Turnhalle Alliance, and I must say that I think it remains to be seen whether Mr. Kalangula's defection will affect the negotiations. The five's main interlocutors remain the South African Government, but we aim to take account of the legitimate interests of all Governments and parties concerned. It is too soon at the moment to assess what effect, if any, this will have.
My noble friend Lord Bessborough asked why the five are not permanently represented in Windhoek, and I think all noble Lords will have listened with interest to his report of his recent journey. None of the five accepts as legitimate the "Council of Ministers" or the "National Assembly", both of which were created as a result of the elections in December 1978, which were conducted without international supervision. But our representatives in South Africa maintain regular contact with the leaders of the internal parties in Windhoek. We consider these arrangements appropriate and satisfactory. However, we

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shall, of course, carefully study my noble friend's remarks this evening.
To sum up, the noble Lord, Lord Hatch, will I hope be reassured by the awareness of the Government and by their close interest. The five are persevering with their efforts to reach a peaceful solution through negotiation. We remain convinced that this course offers the best chance of reaching a settlement and of ending the violence. The only alternative is the escalation of bitter fighting in Namibia and Angola, with no certainty of how things would turn out in the end. This alternative is not acceptable to us, nor I think to any sensible person. Quite apart from the suffering of those directly involved, these consequences of a failure of the negotiations carry obvious risks for western interests. The five can only achieve their objective with the help and understanding of all the parties directly involved. The prize of an equitable and lasting settlement is there. Let us hope that the parties to the dispute will seize it.
Lord Hatch of Lusby: My Lords, before the noble Earl sits down, may I first thank him for his reply and secondly ask him whether he could address himself to a particular question which I asked: while welcoming the condemnation of the South African invasion of Angola, have the British Government any plans, particularly in view of their attitude towards events in eastern Europe, as to action which they can take to stop further invasions and to use their influence on the South African Government to withdraw from Southern Angola?
The Earl of Avon: My Lords, I do not think I can add anything to what I said about that, which was a straightforward reply to the noble Lord's question regarding the present Government's actions.

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