Sitting of 30 March 1982

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

    School Leavers
    Mr. Dubsasked the Secretary of State for Employment how many people who have left school since 1979 are now unemployed.
    The Secretary of State for Employment (Mr. Norman Tebbit): The precise information is not available, but at 14 January there were 386,920 people registered as unemployed in the United Kingdom who were under 19 years of age.
    Mr Dubs: Does the Secretary of State agree that among those unemployed school leavers are a large number who have never had the opportunity of training? Does he also agree that they may reach the age of 19, and therefore be too old, before the new training initiative comes into force? Has he any proposals to help those young people, especially the physically handicapped who constitute the largest proportion of those unemployed?
    Mr. Tebbit: I find it difficult to believe that such people have not even had the opportunity of entering a YOP scheme. I share the hon. Gentleman's anxiety that youngsters should receive better industrial and vocational training—that is the purpose of the youth training scheme. Unfortunately, we are not in a position to create for people opportunities that should have been created in the past—perhaps because the previous Government did not have enough money to do anything about it.
    Mr Hannam: Is my right hon. Friend aware that although some 70 per cent. of handicapped school leavers are unemployed, the Manpower Services Commission in London has just turned down the only project advanced for setting up a workshop for disabled school leavers? Will he look into the matter and ask the MSC to reverse that decision?
    Mr. Tebbit: I was not aware that the MSC had done that. I shall certainly look into the matter and write to my hon. Friend to tell him what the MSC gives me as its reason for doing that. Clearly, this is a time when we should do all that we can to protect those least able to protect themselves.
    Mr Kilroy-Silk: Does the Secretary of State agree with what the present Home Secretary said in February 1978—when there were 39,000 unemployed school
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    leavers, compared with 139,000 now—that unemployment among school leavers was a major contributory factor to the increase in juvenile crime? Does that apply today?
    Mr. Tebbit: I should like to consider more closely what my right hon. Friend said, rather than take it from the hon. Gentleman, who does not set it in context. I do not doubt that the devil makes evil work for idle hands, but I also remember that in the soft early 1960s it was suggested that juvenile crime increased because people were too well off. I suspect that original sin has at least as much to do with the problem as do economic circumstances.
    Mr Haselhurst: Does my right hon. Friend agree that the unemployment figures highlight the importance of the Government's new training initiative and the need for the final scheme to be on the broadest and most imaginative scale possible?
    Mr. Tebbit: Yes, I hope that it will be on the broadest and most imaginative scale possible, so long as it is practical, deals with all the 16-year-olds, to whom I have given a guarantee, as well as the 17-year-olds, and is within the restraint of £1 billion per year expenditure.

    Market Harborough
    Mr. Farrasked the Secretary of State for Employment if he will make a statement on employment prospects in the Market Harborough area.
    The Under-Secretary of State for Employment (Mr. David Waddington): Future job prospects in Market Harborough, and elsewhere, will depend on the development of a soundly based economy, which means, among other things, bringing down inflation and continuing to improve productivity and competitiveness. That is the only way to create the new and secure jobs that we all want to see in Market Harborough and throughout the country.
    Mr Farr: I thank my hon. and learned Friend for his reply, and I am glad that unemployment in the Market Harborough area declined again last month, but is he aware of the drift of jobs and companies towards the nearby enterprise zone of Corby? Will he bear in mind the possibility, as is happening in other parts of the country, that enterprise zones may attract old-established companies away from their existing sites?
    Mr. Waddington: Corby is facing a particularly difficult unemployment problem as a result of the closure of the steelworks. I am sure that my hon. Friend will agree that it was necessary for the Government to do everything possible to help. I believe that enterprise zones there and elsewhere will attract new industry. My hon. Friend is right to point out that what is happening in Market Harborough gives us room for cautious optimism, as the unemployment rate there has reduced in the last quarter compared with a year ago.
    Mr Greville Janner: Is the Minister aware that there is no optimism whatever in the county of Leicestershire, where it has been a catastrophic week, with redundancies at British Aerospace and Metal Box, and wicked decision and indecision by the Secretary of State for the Environment on the Belvoir mines? Will he consult the

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    right hon. Gentleman to see what can be done to bring back employment to what will otherwise become an area of ghost towns?
    Mr. Waddington: I think that the statement made by my hon. Friend was very welcome. With regard to the situation in Leicestershire, it is true that there have been redundancies at British Aerospace. How British Aerospace distributes its work between different factories is a matter for the corporation, but in the country as a whole Ministry of Defence work given to British Aerospace has increased steadily in the past three or four years.
    Mr Jim Marshall: Does the Minister recognise that today's statement will be received with hollow laughter in Market Harborough in view of the announcement in the past week of the loss of 1,600 jobs in Leicestershire? When will he realise and inform his right hon. Friend the Secretary of State that it is the Government's economic policy that is driving firms to make redundancies, not any lack of efficiency in the Leicestershire firms which have announced those 1,600 redudancies?
    Mr. Waddington: I am sure that it will not have escaped the notice of the people that the remedy suggested by the Labour Party in its alternative strategy is precisely the recipe that the Labout Government put into effect in 1974 and 1976, which doubled unemployment and brought the IMF on to the scene.

    Women (Unemployment)
    Miss Joan Lestorasked the Secretary of State for Employment if he will list the number of women registered as unemployed for the last month for which figures are available; and what was the figure for 12 months previously.
    The Minister of State, Department of Employment (Mr. Michael Alison): At 11 March 1982 the provisional number of women registered as unemployed in the United Kingdom was 842,504. The corresponding figure for March 1981 was 701,544.
    Miss Lestor: Bearing in mind that those unemployment figures exclude large numbers of women who are not eligible to be included in them and that the new method of compiling figures from October will exclude other women who are not receiving benefits, will the Minister estimate how many women will in future be excluded from the unemployment register? What arrangements is he making to include them when the unemployment figures are announced so that we have a real assessment of the level of unemployment?
    Mr. Alison: It is difficult to give an accurate estimate, but I would judge that in the last category about 10,000 who are at present registered at jobcentres as seeking work will not henceforth register at unemployment benefit offices because they will not be entitled to unemployment benefit. We shall certainly try to estimate the numbers and to relate them regularly to the unemployment figures.
    Mrs. Faith: Does my right hon. Friend agree that, as many women are employed in textiles and in other industries which are suffering particularly from the world recession, emphasis should be placed on training women in the new technology, and schools should encourage girls to take up such opportunities?
    Mr. Alison: I agree with my hon. Friend that women in manufacturing industry have probably suffered disproportionately because they have been concentrated in the lower-skilled work. Taking the economy as a whole, however, women—many of whom are engaged in the service industries—have done rather better than men. Nevertheless, I take my hon. Friend's point that the need for training and retraining is essential, and we are pursuing that policy.

    Textile and Clothing Industries
    Mr. Nicholas Wintertonasked the Secretary of State for Employment what has been the percentage change in the level of employment in the textile and clothing industries over the past six months.
    Mr Waddington: Between June 1981 and December 1981 the numbers of employees in employment in Great Britain in the textile and clothing industries decreased by 1·6 per cent.
    Mr Winterton: When my hon. and learned Friend considers the plight of the textile and clothing industries—I remind my hon. and learned Friend and my hon. Friend the Minister of State in relation to his reply to the last question that women in the industry are not unskilled or lower skilled, but are highly skilled—will he give attention to the problems of the textile machinery industry and particularly to the position of Ernest Scragg and Sons Ltd., which produces some of the most modern high technology draw texturising machinery in the world and exports 95 per cent. of its production to markets throughout the world but which is now in the hands of the receiver? What assistance is he prepared to give that company, and what advice can he offer me to pass on to the employees threatened with redundancy?
    Mr. Waddington: I was, of course, very sorry to hear that the receiver had been called in by Stone Platt Industries Ltd., and I know that a number of redundancies have already been announced, but it must not be assumed that all employees of Stone Platt will lose their jobs. That will depend upon the success of the receiver in selling off various parts of the company. What I have said also applies to Ernest Scragg, which is a part of Stone Platt Industries. My hon. Friend's question would have been more properly directed to the Department of Industry, but I shall pass on all that he has said and it will be noted.
    Mr McNally: Does the Minister agree that workers in the textile industry are probably the best example of moderation in industrial relations, wage restraint and good productivity, and that they have been very poorly rewarded for practising the virtues continually extolled by Ministers?
    Mr. Waddington: As I said to the House not long ago, the textile industry has been facing problems not just for the past few years. It has been contracting for very many years. Hon. Members should address their minds to whether the industry would have been in any better shape if its workers had demanded wages of the level demanded, for instance, by car workers in the Midlands. My bet is that it would have been in far worse shape.
    Mr Sheerman: Will the Minister take time to consider some of the suggestions made in yesterday's debate on textiles and to consult his colleagues in the Department of

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    Industry so that instead of writing off the industry, as the Government seem to have done, we may have some new initiatives in training, marketing and exporting to help the industry to reinvigorate itself?
    Mr. Waddington: I shall, of course, give great attention to what was said yesterday. The hon. Gentleman is wrong to say that the Government have written off the textile industry. No industry in this country is given greater protection. The hon. Gentleman knows that the Government took a tough line in the multi-fibre arrangement negotiations. We wanted quotas to be based on actual 1980 imports and not on 1982 quotas, but we were not successful in sustaining that negotiating stance.

    Unemployment Statistics
    Mr. Cryerasked the Secretary of State for Employment if he will make a statement on the most recent unemployment figures.
    Mr. Parryasked the Secretary of State for Employment if he will make a statement on the latest unemployment figures.
    Mr Tebbit: Unemployment fell this month by over 52,000—the largest fall for the month of March since the current series of figures began in 1948. Following the slowing in the underlying rate of increase in recent months and the fall in inflation, prices and interest rates, there are some grounds for hope that the increase in our competitiveness has begun to arrest the growth in unemployment.
    Mr Cryer: Does the Minister agree that the fall of 52,000 and the drop to below 3 million have been produced by doctoring the figures and persuading about 30,000 men over 60 to go on to long-term supplementary benefit on the basis that they are then removed from the unemployment figures? Instead of twisting the figures, will the Secretary of State devote his energy to creating the real jobs that were promised in the Government's massive advertising campaign in 1979? When do the Government expect unemployment to fall to the level that they inherited from the Labour Government in 1979?
    Mr. Tebbit: The answer to the hon. Gentleman's first question is "No". The answer to his second question is that Governments do not create jobs. Customers create jobs when they buy goods. When customers come forward to buy the goods offered by British industry, British industry will have an increasing number of jobs to offer, but not before.
    Mr Parry: Is the Secretary of State satisfied with the current level of unemployment in the construction industry of 25 per cent. in England, Scotland and Wales and 47–5 per cent. in Northern Ireland? Will the right hon. Gentleman get on his bike and bring his right hon. Friend the Secretary of State for the Environment—the Minister for Merseyside—to Liverpool, where unemployment stands at 45 per cent., to examine the state of the industry there?
    Mr. Tebbit: I congratulate the hon. Gentleman on his original wit. I assure him that I am not happy about the level of unemployment in the construction industry. We have helped to reduce interest rates, although this is not understood by the Leader of the Opposition, to assist particularly the house building section of the construction
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    industry. When other aspects of Government and local government expenditure, especially wages in local government, are better under control, there will be improved prospects for new construction work in local government services.
    Mr Adley: Has my right hon. Friend studied recently the OECD unemployment statistics? Will he confirm that over the last three months the rise in unemployment in this country has been markedly and indeed dramatically lower than in almost every other OECD country? To what does he attribute this development? Does he agree that it would be helpful occasionally if, while not denying our problems, people were made more aware of the extent to which other countries are suffering simultaneously?
    Mr. Tebbit: My hon. Friend is right. The increase in unemployment in a number of other OECD countries is very much greater than in Great Britain. The reason, I suspect, is that our economy is becoming more competitive than theirs. Some countries—especially those that are pursuing Socialist policies—are finding their currency flat on the floor, their interest rates roaring up and their rate of inflation much higher than ours.
    Mr Craigen: Is the Secretary of State not concerned about the major growth in long-term unemployment in this country? Is he not also concerned that his present handling of manpower services may result in the TUC commissioners on the Manpower Services Commission reappraising their participation in these services?
    Mr. Tebbit: Of course I am concerned about the growth in long-term unemployment. It is part of the longterm problems that previous Governments did not successfully tackle. The consequence is inevitable. On the issue of the MSC and the trade union commissioners, I hope that the hon. Gentleman will not believe every piece of tittle-tattle that he reads in the newspapers. I, for my part, hope that the TUC commissioners will remain, alongside the CBI commissioners and the others, within the MSC. It would be extraordinary, at a time when the Government have made available more money than ever before to the Manpower Services Commission to implement, in particular, the new training initiative, about which there is virtually unanimous agreement, for anyone to suggest that any part will walk out of the commission.
    Mr Ward: Is my right hon. Friend able to explain why the Opposition are so displeased that unemployment Ls falling? Is he aware that his hon. Friend the Minister for Industry and Information Technology is visiting my constituency today to inspect one of the largest computerised traffic control systems to be exported by Plessey Controls Ltd. to South America? Does this not show that if one gets out and gets export orders, and that if one produces the right goods at the right time and the right price, one can succeed?
    Mr. Tebbit: My hon. Friend is right. That is the way to save jobs. It is extraordinary that the right hon. Member for Chesterfield (Mr. Varley) should have referred to a fall of 52,000 in the level of unemployment as a tiny number. I wonder what he would have said if it had gone up by 52,000. Would that have been a tiny increase?
    Mr. Varley: How long does the Secretary of State expect registered unemployment to stay below the 3 million mark?
    Mr. Tebbit: I think probably for a month or two until young school leavers come on to the register. That is the time, as every year, when we expect an increase in unemployment. The right hon. Gentleman will obviously take great delight in seeing an increase in the number of people out of work, but he should not laugh too much about it. It is clear that the underlying rate of increase is slowing. The right hon. Gentleman might have to laugh on the other side of his face before the general election.
    Mr Varley: No one is laughing about this matter. We on the Opposition Benches are taking it seriously. Will the right hon. Gentleman admit that the White Paper on public expenditure published at the time of the Budget contains a Government forecast that registered unemployment will stay well above the 3 million mark for the rest of this year at least? Is that not shameful?
    Mr. Tebbit: As the right hon. Gentleman will recollect from his days in the Cabinet, such figures are most certainly not a forecast. The right hon. Gentleman will also recollect that my right hon. and learned Friend the Chancellor of the Exchequer made the point that provided inflation continues on its downward path—the signs are very good—provided that interest rates continue on their downward path, which means better control of Government expenditure—that is being achieved—provided there is increasing productivity, which is also being achieved, and provided that there is resonableness in wage demands, the prospects will be much better than the line in the White Paper to which the right hon. Gentleman refers.

    Manpower Services Commission (Adminstrative Bodies)
    Mr. Hannamasked the Secretary of State for Employment if he will ensure that representatives of Church and other voluntary orgarisations are included in the Manpower Services Commission administrative bodies.
    The Under-Secretary of State for Employment (Mr. Peter Morrison): Voluntary organisations, including the Churches, are already represented on most of the commission's advisory bodies. I will ensure that this continues to be the case.
    Mr Hannam: I am grateful to my hon. Friend for his helpful reply. Is he aware of the increasing and welcome involvement of local churches and voluntary organisations in youth and training employment schemes? Is he aware that, whereas local authorities are represented on the area MSC boards, the Churches and voluntary organisations do not necessarily have places? Will he try to ensure that these are provided?
    Mr. Morrison: I am very much aware of the role that voluntary organisations, including the Churches, play in the Manpower Services Commission's special programmes. In the community enterprise programme, 30 per cent. of places are provided by voluntary organisations, and in the youth opportunities programme the figure is 10 per cent. Each of the 29 special programme area boards has a representative of voluntary organisations. At the present time, six of these members and three chairmen are from the Churches.
    Mr Tilley: Is the Minister not aware that, in south London, representatives of community organisations, who
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    already serve on MSC committees, are becoming increasingly frustrated and angry about the manner in which their views are ignored by officials who arbitrarily redefine what is meant by community benefit. I give two examples? First, the Lambeth Tiles project in my constituency, which the hon. Member for Exeter (Mr. Hannam) has mentioned, would have employed physically and mentally disabled people. Secondly, the Elephant Jobs project has for eight years been employing people. If closed, as the MSC proposes, 142 youngsters in south London will be out of work. Will the hon. Gentleman investigate these matters?
    Mr. Morrison: The hon. Gentleman will have heard what my right hon. Friend the Secretary of State said about the Lambeth Tiles project. I assure the hon. Gentleman that we shall keep him informed on the matter. The Elephant Jobs project is a matter of whether the scheme fits within the rules of the community enterprise programme.

    Preston
    Mr. Stan Thorneasked the Secretary of State for Employment what initiatives he has in mind which will promote jobs in the Preston travel-to-work area.
    Mr Alison: Jobs in Preston and elsewhere depend upon the ability of producers to meet the needs of customers. The Government will continue their successful policy of reducing inflation and encouraging increased productivity towards that objective.
    Mr Thorne: As the customers in Preston in the instance that I have in mind are homeless people, will the Minister arrange for one of his "oppos" in the Department of the Environment to bring building trade workers and building materials together in Preston to produce much-needed houses?
    Mr. Alison: The hon. Gentleman should have addressed that question originally to the Department of the Environment and he will no doubt now do so.
    Mr Thorne: The right hon. Gentleman is interested in jobs.
    Mr Robert Atkins: Does my right hon. Friend not agree that Preston, with its motorway and rail connections, is well placed to benefit to an even greater extent when the recession ends than it is now doing? Does he agree that the development of the dock site, originally planned by the Conservative-controlled council in Preston, will go a long way towards providing new jobs and new hope to people who would otherwise not have a chance?
    Mr. Alison: Yes. I take my hon. Friend's point. The positive emphasis that he puts on the prospects for Preston is the right kind of psychological and practical impression that one should convey to give people hope for the future. It also tends to increase job opportunities.

    Youth Training Scheme
    Mr. Lathamasked the Secretary of State for Employment what representations he has received regarding his proposals for a new youth training scheme; and what general response he has made to those representations.
    Mr. Peter Morrison: We have received a significant and widespread response to our training proposals, which has generally been welcoming. I have been very happy to learn of such support.
    Mr Latham: Is my hon. Friend satisfied that the timetable for this excellent scheme can and will be met by the MSC? Will he keep a close watch on progress in that regard?
    Mr. Morrison: I appreciate that the aims and goals of the MSC are ambitious. I am satisfied at this stage that it will be able to achieve the time scale of 300,000 to 350,000 places by September of next year. I assure my hon. Friend that I shall keep a close watch on the matter.
    Mr Barry Jones: Does the Minister agree that the task group has shown a marked disdain for the Scrooge-like £15 a week? Will the Minister permit and encourage an employers' exercise of topping-up the £15 to a much less insulting figure?
    Mr. Morrison: The hon. Gentleman is obviously aware of facts that I am not aware of. The task group has not yet come forward with its proposals. We shall view them as they come forward, but at this stage it would be wrong for me to answer a hypothetical question.
    The important point is that per 16-year-old trainee per week we shall be spending £53 a week—and that is for the whole year—as opposed to just under £40 on the youth opportunities programme.
    Mr Alton: Has the Minister had time to consider the information that I have sent to his right hon. Friend the Secretary of State for Employment about youth training centres established in Liverpool and elsewhere by the Workers' Revolutionary Party? Is he aware that Miss Vanessa Redgrave has launched an appeal for £100,000 following the opening of the latest of these centres in Nottingham?
    Mr. Morrison: I assure the hon. Gentleman that we shall make certain that no money goes to the Workers' Revolutionary Party.
    Mr Watson: In responding to this representation, will my hon. Friend emphasise that the proposed weekly allowance of £15 per young person is only about a quarter of the total resources being made available for each young person, and that the remainder represents a commitment to the training of young people that is far in excess of anything achieved either by the Labour Government or by any of our industrial competitors in the EEC?
    Mr. Morrison: I could not agree more with what my hon. Friend says. The Government are doing for the unemployed school leaver what successive Governments have failed to do—providing a proper training scheme at the rate of £53 per trainee per week. That is a substantial advance.

    National Community Service
    Mr. Nicholas Bakerasked the Secretary of State for Employment what representations he has received pressing for the introduction of a form of national community service; and if he will make a statement.
    Mr Alison: We have received several representations about national community service. The details of the new youth training scheme are currently being considered by
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    the Manpower Services Commission, and the commission will take account of the contribution that service in the community can make.
    Mr Baker: While thanking my right hon. Friend for that reply, may I ask whether he is aware that there is a growing body of opinion in the House and in the country that favours a form of national community service? Does he agree that such a form of service should be compulsory, should apply to men and women and should allow a choice between military and community service? Does my hon. Friend agree that it should be not a training scheme but an opportunity for young people to serve the community and become adult and responsible citizens?
    Mr. Alison: I cannot support my hon. Friend's contention that a compulsory scheme of communiry service is appropriate or desirable. However, a community element in any training scheme that we propose in the future is important and will feature as such a part. My hon. Friend will no doubt agree that industrially relevant education and training that is equipping youngsters for work in factories, offices or businesses, is making a big, overall contribution to the community benefit.
    Mr Haselhurst: Does my right hon. Friend agree that while community service can play an important part in arrangements made for the 16 to 18-year-olds it is still important that the overall emphasis should be laid on training towards an industrial society?
    Mr. Alison: I fully agree with my hon. Friend. It is crucial both for the consumer and for the producer that relevant skills should be imparted to youngsters, particularly when they are in their formative years.
    Mr Cryer: Is not the notion of a compulsory community service scheme simply an echo of the bankrupt economic policies that the Government have perpetrated on the country because they do not know what else to do with young people? When will the Government produce a change in their policy to bring the level of unemployrneni down to the level that they inherited from the Labour Government, and create the real jobs that they promised in their fraudulent general election campaign in 1979?
    Mr. Alison: The hon. Gentleman misheard my answer—we are not backing any scheme for compulsory training. With regard to the hon. Gentleman's phoney indignation about unemployment, he was in the House when the Labour Government opened the gusher of unemployment by letting it go up to 1½ million, and should know that it will be a great deal more difficult to turn off the gusher than it was to start it.

    West Midlands
    Mrs. Renee Shortasked the Secretary of State for Employment what action he intends to take to reduce the high levels of unemployment in the West Midlands.
    Mr Waddington: The Government's policies are aimed at developing a soundly based economy, which means, among other things, bringing down inflation. As this is achieved and productivity continues to improve, British firms will become more competitive. This is the only way to create new and secure jobs, not only in the West Midlands but throughout the country.
    Mrs. Short: I had hoped that the Minister would have some definite proposals to ease the problems of the West

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    Midlands. Is he aware that the unemployment among building and construction workers generally is three and a half times what it was in 1979? Does he accept that one of the quickest ways of injecting jobs, which will combat inflation, is to do something about that figure?
    Mr. Waddington: The hon. Lady asked whether the Government have any proposals. The Government have policies that are succeeding. The hon. Lady knows of the fall in unemployment. In each of the last eight months vacancies in the West Midlands have been higher than they were a year previously. That should give hope to all those in the West Midlands. I hardly need remind the hon. Lady that the policies espoused by her party do not have the slightest relevance to the problems that we are now facing, and if they were to be put into effect they would no doubt lead to a worse catastrophe than that which hit this country in 1976.
    Mr Stokes: Is my hon. and learned Friend aware that people on the shop floor in the West Midlands are far more realistic in these matters than the hon. Lady, who is always moaning? These workers know very well that as their firms become more efficient and attract more customers, so unemployment will come down.
    Mr Waddington: My hon. Friend is right. One has only to see the massive export orders that have recently been won to realise the gains that have come from improved competitiveness. It is through that that industry will recover in the West Midlands.
    Mr Winnick: Is the Minister aware that the increase in unemployment from 5 per cent. when the Government took office to over 15 per cent. in the West Midlands now is an appalling indictment of Government policies? Is he also aware of the great personal suffering caused to countless families in the region as a result of the Government's policies?
    Mr. Waddington: I am sure that the hon. Gentleman used equally strong language against his own Government when unemployment doubled between 1974 and 1976.
    Mr Butcher: Is my hon. and learned Friend aware that in Coventry the new enterprise allowance scheme has been a great success? In its first month of operation over 114 redundant workers applied to the scheme, over half of whom were rapidly processed and approved? Does my hon. and learned Friend agree that the scheme offers the best chance of liberating people from the dole queue and giving them a new start in life in their new venture?
    Mr. Waddington: My hon. Friend is right when he says that the new enterprise scheme has received a warm welcome, and rightly so. It is proper that people who are prepared to set out on their own should be given some help when they do so.

    South-West Assisted Area
    Mr. Hicksasked the Secretary of State for Employment what is the current level of unemployment for the South-West assisted area; what was the corresponding figure in March 1980; and if he will make a statement.
    Mr Alison: At 11 March 1982 the provisional number of people registered as unemployed in assisted areas in the South-West region was 59,351 compared with 34,770 in March 1980.
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    Future job prospects in this area, as elsewhere, will depend largely on continuing improvement in the country's economic performance. Our special employment and training measures continue to protect those hardest hit by the recession, and the Government's policy of focusing regional assistance specifically on areas in greatest need, such as Cornwall and parts of Devon, is of general benefit to the South-West.
    Mr Hicks: Is my right hon. Friend aware that the South-West assisted area is essentially non-industrial in character and therefore more dependent on the level of public investment than most? Therefore, does my right hon. Friend agree that there is a strong case, notwithstanding the Chancellor's recent announcement, for further assistance, particularly for the building and construction industry? Is he aware that this is especially the case since 90 per cent. of those contracts to the public sector go straight into the private sector, which means that there should be no worry on doctrinaire grounds on this point?
    Mr. Alison:I take note of my hon. Friend's penetrating and analytical point. I remind him that, apart from the good news in the Budget, which he himself noted, nearly £30 million worth of Government assistance has gone to the South-West over the past three years, and that about 90 Government factory units have been completed in an attempt to redress the balance in the direction of manufacturing.
    Mr Stoddart: Is it not a fact that there has been a calculated neglect of the South-West by this Government over a long period, and do not the figures show that? Is it not also a fact that Government policy is to deprive the South-West of real work in an effort to keep wages low? Will the Minister take account of the lobby that was made of this Parliament by construction workers, and yesterday by the group of eight, calling for a massive injection of capital goods into the South-West?
    Mr. Alison: I can only assume that the hon. Gentleman composed his question before he heard the reply that I gave my hon. Friend, which showed that an enormous amount of Government expenditure is going into the South-West.
    Sir Peter Emery: Does my right hon. Friend accept that this Government have done more for the South-West than the Labour Government ever did? Does he also accept that there are parts of the South-West and Devon where there is 13 or 15 per cent. unemployment—much more than in parts of assisted areas? Does he realise the strong feeling that exists because work is siphoned away from those areas into assisted areas? What can he do to assist certain parts of my constituency, which have 15 per cent. unemployment?
    Mr. Alison: I know that my hon. Friend is clearly taking a close interest in the assisted area problem because of the high unemployment in his constituency. He should pursue the matter, as I am sure he has done in the past, with my right hon. Friend the Secretary of State for Industry, who is responsible for assisted areas.

    Industrial Tribunals
    Mr. Greville Jannerasked the Secretary of State for Employment if he will consider seeking to consolidate the statutory and other provisions relating to industrial tribunals.
    Mr. Waddington: The regulations relating to industrial tribunal procedures were consolidated some 18 months ago. My right hon. Friend has no plans at present for any further consolidation.
    Mr Janner: Does the Minister accept that the present industrial tribunal system does not provide adequate protection for employed people? Does he know that 74 per cent. of all claims for unfair dismissal compensation fail, and that at a time when most people who are unfairly dismissed do not bring claims because to do so would be a passport to permanent unemployment?
    Mr. Waddington: The fact that 27·7 per cent. of applications succeed does not mean that justice is not being done. About two-thirds of the total number of complaints are withdrawn or settled at the conciliation stage. It shows that ACAS is doing a good job and that the burden on the tribunals is being relieved.
    Mr Harold Walker: Is the hon. and learned Gentleman aware that the statement that he has just made springs directly from the tightening of the tribunal regulations, which were deliberately designed by the Government to make it more difficult for people who are unfairly dismissed to obtain compensation from the tribunal?
    Mr. Waddington: I do not agree with the right hon. Gentleman for a moment. There were 35,747 applications last year, and the 27·7 per cent. success rate is not out of line with what one would expect, bearing in mind the large number of cases that were settled.

    Wages Councils
    Mr. John Townendasked the Secretary of State for Employment if he will make a statement as to the extent to which the United Kingdom's membership of the International Labour Organisation might restrict the Government's rights to propose to amend or abolish wages councils.
    Mr Tebbit: The United Kingdom's ratification of International Labour Convention No. 26 requires the Government to maintain minimum wage-fixing machinery in trades or parts of trades in which no arrangements exist for the regulation of wages by collective agreement or otherwise, and in which wages are exceptionally low; but partiular wages councils can be changed or abolished where appropriate under the provisions of the Wages Councils Act 1979.
    Mr Townend: Does my right hon. Friend agree that the wages councils' regulations are making a mockery of the Government's attempts to create jobs for school leavers under the young workers schemes? As the ILO presumably has an interest in reducing unemployment, will the Government consider approaching that organisation to see whether it will agree to take 18-year-olds and under out of the jurisdiction of the wages councils? If not, will the Government take unilateral action and turn a Nelsonian blind eye?
    Mr. Tebbit: I entirely agree with my hon. Friend—
    Mr. Harold Walker: What! Entirely agree with that lot?
    Mr. Cryer: Cheap labour.
    Mr Tebbit: I have no intention of trying to make myself heard over barracking from the Opposition.
    Mr Cryer: Get on with it.
    Mr Speaker: Order. The hon. Member for Keighley (Mr. Cryer) must stop shouting all the time. I do not believe that anyone should have to fight to be heard in this House.
    Mr Cryer rose—
    Mr. Speaker: Order. There is no point of order on that.
    Mr Tebbit: As I was saying, I entirely agree with my hon. Friend that excessive wages among youngsters or among older workers put people out of work —
    Mr. Walker: Shameful.
    Mr Tebbit: The right hon. Member for Doncaster (Mr. Walker) may not understand that, but the Ford Motor Company, in cutting the prices of its products, understands it well enough. I shall certainly consider what my hon. Friend the Member for Bridlington (Mr. Townend) said, and I am seriously studying how we can best avoid wages councils putting youngsters out of work and preventing others from coming into work. I notice that, in the light of representations made by employers, and perhaps in the light of the letter written by my right hon. Friend the Minister of State, some wages councils have recently changed their provisional recommendations.
    Mr Cryer: On a point of order, Mr. Speaker.
    Mr John Grant: On a point of order, Mr. Speaker.
    Mr Speaker: Order. I shall take points of order after questions.

  PRIME MINISTER

    Engagements
    Mr. Brothertonasked the Prime Minister if she will list her official engagements for Tuesday 30 March.
    The Secretary of State for the Home Department (Mr. William Whitelaw): I have been asked to reply.
    My right hon. Friend is attending a meeting of the. European Council in Brussels.
    Mr Brotherton: In the light of yesterday's debate on Trident, will my right hon. Friend take time today to consider the need for this country to maintain adequate surface forces? In particular, in view of what is happening in the South Atlantic, will he say that Her Majesty's Government realise the benefits and value of HMS "Endurance", and tell us what steps the Government now propose to take, in view of the value of that ship, either to replace her or to keep her in service?
    Mr. Whitelaw: Certainly the Government accept the value of HMS "Endurance". In answer to my hon. Friend's other question, after all the changes that have been made by my right hon. Friend the Secretary of State for Defence, the Royal Navy will remain one of the largest and best equipped navies in the world, apart from those of the two super Powers.
    Mr John Grant: Does the Home Secretary realise that many of us deplore the continued failure by the Prime Minister to accept the link between rising crime in London

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    and the inner cities and the Government's economic policies, but that on the other hand we also deplore the kind of remarks that were made yesterday by Mr. Ken Livingstone, when he attacked the new Commissioner of Police of the Metropolis before that gentleman has even got his feet under the desk at Scotland Yard? [HON. MEMBERS: "Too long".] Does he accept that the new commissioner should be given a fair run and that he should be given the support of the people at large—
    Mr. Speaker: Order. Hon. Members should be able to put their questions succinctly and to come to a conclusion.
    Mr Grant: May I remind the House that the new commissioner was a London bobby on the beat in the London borough of Islington?
    Mr. Whitelaw: As my right hon. Friend the Prime Minister, I and many other Ministers have always said, unemployment is a factor, but it is not the only factor, and it is certainly no excuse for the increase in crime. I find Mr. Livingstone's remarks about the new commissioner most deplorable and exceptionable in every way. The new commissioner has been appointed and will take office in October. He has an excellent record as a police officer in this country and in Northern Ireland. The hon. Gentleman is right. He was a considerable figure in London's police force before he went to Northern Ireland and has been a bobby on the beat. I deeply resent Mr. Livingstone's implications.
    Sir William Clark: Will my right hon. Friend draw to the Prime Minister's attention the speech made yesterday by the Governor of the Bank of England, and the CBI report, which both show that our economy is picking up? Does he agree that we should cheer and not jeer about that news, which proves that our policies are working and that it would be folly to change them?
    Mr. Whitelaw: I entirely agree with my hon. Friend. I, too, find it extraordinary that Opposition Members jeer rather than cheer at good news.
    Mr Foot: Can the right hon. Gentleman tell us when the Prime Minister said that she accepted the connection between the rate of unemployment and the crime rate, as he said that all Ministers had done so? Will he take account of the fact that a few minutes before he began to answer these questions the Secretary of State for Employment acknowledged that unemployment was soon likely again to be over 3 million and that a major contributory factor would be the number of young people coming on the register? What effects does the right hon. Gentleman believe that that fact will have this summer in Toxteth, Brixton and in many other places? [HON.MEMBERS:"Disgraceful"].
    Mr Whitelaw: I find the right hon. Gentleman's last question highly deplorable. I should have thought that every hon. Member would wish to see peace on our streets and no more riots of any sort this summer. For the right hon. Gentleman to suggest that riots might occur is highly irresponsible.
    I repeat that the Prime Minister, I and other Ministers have always made it clear that unemployment is a factor. But many other factors play a part in the problems of crime. There are many other difficulties and a great many other factors, for which every hon. Member has a responsibility. The right hon. Gentleman knows that very well.
    Mr Foot: If the right hon. Gentleman finds anything deplorable in what I have said, why does he not go away and do his duty by again reading the Scarman report, which justifies up to the hilt everything that I have said?
    Mr. Whitelaw: I simply find it deplorable that the right hon. Gentleman should suggest that there is any excuse whatever for crime or riots on our streets.
    Mr Foot: Will the right hon. Gentleman accept that he knows perfectly well that there is a connection between mass unemployment, particularly among young people, and the riots, which is what the Scarman report said? Does he not accept that the Government should wake up and do their duty to prevent mass unemployment?
    Mr. Whitelaw: The right hon. Gentleman knows very well that the Government have taken many very important steps, following the Scarman report. Such steps will continue to be taken. But nothing that Lord Scarman or anybody else says can excuse violence or riots on our streets. The right hon. Gentleman knows that very well.
    Lord James Douglas-Hamilton: In view of the importance to the Highland economy, will my right hon. Friend do everything within his power to make a suitable power contract available to an operator for the Invergordon smelter?
    Mr. Whitelaw: That matter is being considered by my right hon. Friends. I have nothing further to say at this stage.
    Mr. Ray Powellasked the Prime Minister if she will list her official engagements for Tuesday 30 March.
    Mr Whitelaw: I have been asked to reply.
    I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr Powell: On behalf of the Prime Minister and the Government, will the right hon. Gentleman admit to the disgraceful folly of selling five battleships to Argentina, which are now being used against us in our British protectorate in the Falkland Islands?
    Mr. Whitelaw: I have no knowledge that we ever did such a thing.
    Mr Eldon Griffiths: During a week in which my right hon. Friend successfully routed his critics and confirmed his authority as Home Secretary, may I ask whether he had time to notice the application of stop and search powers by certain pickets at the Massey Ferguson factory? Can he explain why, when stop and search powers are exercised unlawfully by pickets they are supported by certain Labour Members, whereas the proposition that the police should have stop and search powers, approved by the House, is opposed by them?
    Mr. Whitelaw: I agree with my hon. Friend. I find the contrast most extraordinary.
    Mr Soley: What explanation do the Government have for the failure of their law and order policies?
    Mr. Whitelaw: The hon. Gentleman and many others on the Opposition Benches who now propose that there should be more bobbies on the beat should realise that they removed them in the first place.
    Mr. John Townendasked the Prime Minister if she will list her official engagements for 30 March.
    Mr Whitelaw: I have been asked to reply.

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    I refer my hon. Friend to the reply that I gave some moments ago.
    Mr Townend: Does my right hon. Friend agree that in recent years we have had great difficulty in controlling costs on civil engineering contracts, such as those for the Isle of Grain power station and the Humber bridge? Will the Government reconsider their decision to go ahead with the new British Library? Will my right hon. Friend comment on the views of the hon. Member for West Lothian (Mr. Dalyell) that the likely total cost will be £600 million?
    Mr. Whitelaw: It was decided to go ahead with that major project because it was the most cost-effective way to preserve the priceless heritage of books and manuscripts that the library holds. I understand that only the first phase has so far been attempted at a cost of £88 million at current prices. The timing and cost of future phases will be considered, but the estimate is totally out of accord with what the hon. Member for West Lothian (Mr. Dalyell) said.
    Mr Foster: Is the right hon. Gentleman aware that there are now many hundreds of thousands of young people under 25 who have been out of work for over 12 months? Is he further aware of the simmering anger and despair of the large number of young people who regard the society created by his Government as one of no hope and no future? What is he prepared to do about that?
    Mr. Whitelaw: I find it extraordinary that the hon. Gentleman should imply that the Government have created the situation. The unemployment problems that we face, particularly for our young people, have been growing for many years. The Government have taken many steps to alleviate them. We should all welcome that fact.
    Mr Anthony Grant: Will my right hon. Friend ask the Prime Minister, both as Prime Minister and a London Member, to reflect upon the disgraceful waste of ratepayers' money by the Greater London Council in trying to explain the muddle over London Transport? Will she consider whether there is any useful service now performed by the Greater London Council?
    Mr. Whitelaw: I agree with my hon. Friend that the behaviour of the leader of the Greater London Council is quite extraordinary in any democratic society. I hope that it will be widely condemned on both sides of the House.
    Mr Arthur Lewis: Will the Home Secretary, in his dual capacity today, look into the fact that constituents of mine have written to the police and had no answer? Is he aware that they have written to me as their Member of Parliament; that I have written to the police and had no
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    answer? Is he further aware that I have telephoned and had no answer, that I raised the matter in the House last night, and have now received a telephone message without details from the police at Scotland Yard, who do not even know the number of their own police station? As this is a case of people complaining of racial harassment, where racial murders have been committed, will he look into this and see why the police—who are now larger in numbers than they have ever been, with a better organisation and with every facility—cannot answer a Member of Parliament's letter, or do not want to, whereas the Prime Minister can? Will he have a word with me? If he will not I shall cause a disturbance here—[Interruption.]—to draw attention to the fact that the ratepayers, who pay those police, cannot get proper treatment. It is no good the Home Secretary—[Interruption.]
    Mr. Speaker: Order.
    Mr. Whitelaw rose—
    Hon. Members: Answer.
    Mr Whitelaw: The hon. Gentleman has asked me if I will look into those matters. The answer to that is 'Yes". He has asked me if I will talk to him about those matters. "Yes," but not under the threat of duress by his causing a disturbance.
    Mr Lewis: On a point of order, Mr. Speaker.
    Mr. Cryer: On a point of order, Mr. Speaker.
    Mr Speaker: I shall take the hon. Gentleman's point of order after I have heard the hon. Member for Keighley.
    Mr Cryer: In view of the highly unsatisfactory nature of the Secretary of State's reply to question 14, I give notice that I reserve the right to raise this matter on the Adjournment, in view of the very strong expressions of dissent from the Labour Benches.
    Mr Arthur Lewis: On a point of order, Mr. Speaker. I think that the Home Secretary has been here long enough to know that if I say I shall cause a disturbance in the House, that has nothing to do with him; it is to do with Mr Speaker.
    Mr Speaker: Not for the first time, the hon Gentleman is quite correct. The Home Secretary cart look. after his own affairs.
    Mr Ray Powell: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of the reply given by the Home Secretary to my question, I beg to give notice that I shall seek to raise the matter on the Adjournment at the earliest possible opportunity.

South Georgia (Falkland Islands Dependencies)
3.31 pm
The Minister of State, Foreign and Commonwealth Office (Mr. Richard Luce): With permission, Mr. Speaker, I would like to repeat a statement on South Georgia, which my right hon. and noble Friend the Secretary of State for Foreign and Commonwealth Affairs has made in another place.
As I told the House on 23 March, a group of Argentines, employed by a commercial contractor, Mr. Davidoff, an Argentine citizen, landed at Leith harbour on South Georgia on 19 March from an Argentine naval transport vessel. Mr. Davidoff had been informed in advance of the need to seek the necessary permission from the British authorities at Grytviken to land and to carry out this salvage work. He conveyed to the British embassy in Buenos Aires his intention to begin work in South Georgia but gave no indication that he would not follow the normal immigration procedures.
When the party arrived at Leith, it did not seek the required documentation, and when requested by the base commander to proceed to Grytviken in order to do so, it failed to comply. Mr. Davidoff s commercial contract is straightforward. However, it does not absolve him or his employees from complying with the normal immigration procedures. Subsequently, the majority of the Argentine party and the Argentine ship departed, but about a dozen men remained on shore.
We therefore made it clear to the Argentine Government that we regarded them as being present illegally on British territory, and sought their co-operation in arranging for their departure, pointing out, however, that their position could be regularised if they were to seek the necessary authorization. Meanwhile, HMS "Endurance" was ordered to proceed to the area to be available to assist as necessary. She has been standing by since 24 March.
On 25 March, an Argentine vessel delivered further equipment to the group ashore. The Argentine Foreign Minister has said that the Argentine party in South Georgia will be given the full protection of the Argentine Government. Argentine warships are in the area.
The situation which has thus arisen, while not of our seeking, is potentially dangerous. We have no doubts about British sovereignty over this Falkland Islands dependency as over the Falklands themselves.
We remain of the view that the unathorised presence of Argentine citizens in British territory is not acceptable. We have no wish to stand in the way of a normal commercial salvage contract, but the position of those carrying it out must be properly authorised.
Further escalation of this dispute is in no one's interest. In those circumstances, it is clearly right to pursue a diplomatic solution of the problem. This we are doing. I hope that the Argentine Government will take the same view. Meanwhile, the question of security in the Falklands area is being reviewed, although the House will understand that I prefer to say nothing in public about our precautionary measures. I can, however, inform the House that HMS "Endurance" will remain on station as long as is necessary.
Mr Denis Healey: A week has passed since the Minister of State made his first remarks about the problem. I think that his feeble statement this afternoon will lead many, even on this side of the House, to agree for once with The Daily Telegraph that Her Majesty's Government's conduct in this affair appears to be both foolish and spineless. We can all agree that a diplomatic settlement of this dipute is needed. It raises severe problems for the Antarctic treaty, which is, I think, due for renewal next year. I hope that the hon. Gentleman will say something about that.
I think that the hon. Gentleman will agree, as his right hon. Friend the Secretary of State for Defence said yesterday, that diplomacy is unlikely to succeed unless there is an effective deterrent against unilateral action by the other party. There is no doubt that the dispute has revealed that the Government's defence priorities are mistaken. The Government have crippled the Royal Navy for the sake of the Trident programme. The result is that the recent events have found the Government with their trousers down in the South Atlantic. It is not surprising that the Argentine Government have been tempted by the target that they have provided.
We welcome the U-turn on the presence of HMS "Endurance", but the hon. Gentleman must be aware that that clapped out ice-breaker is no match for the five or six warships, armed with Exocet missiles, which the Argentine Government are reported to be sending towards the area.
I can understand that the hon. Gentleman may prefer to say nothing about other measures, but perhaps that is because he has nothing to say. I put it to the hon. Gentleman that the Government have been responsible for a grave dereliction of duty in putting themselves in a position where they are totally incapable of making any response to a threat which has been mounted for the past three weeks.
Mr Luce: It is difficult to understand what the right hon. Gentleman would like us to do. On the one hand, he says that it is right to seek a diplomatic solution—which is precisely what we are trying to do—and, on the other, he seems, in a veiled way, to suggest that we should take some other action. I hope and believe that the House wishes the Government to do whatever they can through diplomatic channels to achieve a peaceful settlement of the problem. As I have said, in the meantime we are reviewing the security situation. It is necessary to do that, and HMS "Endurance" will remain in the area for as long as is necessary.
Mr Healey: The hon. Gentleman has missed the point. The Government have consistently argued that negotiations on such matters cannot succeed unless carried out from a position of strength. The Government have left Britain in a position of extreme weakness as a direct result of their defence priorities. That is why we face a damaging humiliation in a situation that the Government should never have allowed to arise.
Mr Luce: Despite the right hon. Gentleman's wealth of experience, his remarks do not particularly help the situation. We are trying to seek a diplomatic solution to the problem. That is the desire of all those who seek peace in the area. It is right that we should do that. However, as I said last week, it is the British Government's duty to support and defend the islanders to the best of their ability.

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Nevertheless, it is surely preferable that we should do our utmost to seek a diplomatic solution, and we are trying to do that.
Sir Anthony Kershaw: Is it not satisfactory that the impudence of the Argentine Government is matched only by that of the right hon. Member for Leeds, East (Mr. Healey) whose policy was to reduce the Royal Navy and that has led to this state of affairs? Would it not be a good idea if, besides sending massive shipments of grain to Russia, the Argentine concentrated on putting its own house in order and did not indulge in these foreign adventures?
Mr. Luce: My hon. Friend knows something of the problem, and all concerned would agree that it would be sensible not to take provocative action. We should take action that is designed to bring about a peaceful resolution of the problem.
Mr J. Enoch Powell: Is it the Government's view that public opinion in this country would support, if necessary, the use of force to maintain British sovereignty over the Falkland Islands and the dependencies?
Mr. Luce: I should firmly point out that we claim and have sovereignty over the area and there is no shadow of doubt that, if it comes to the point, it will be our duty to defend and support the islanders to the best of our ability. However, our objective is to seek every diplomatic method possible to obtain a peaceful solution.
Sir Bernard Braine: Does my hon. Friend agree that this comic opera would never have taken place but for the Government's continual assertion that we have sovereignty over the Falkland Islands and that nothing will happen as long as the islanders wish to remain British, while at the same time they have forced them into dependence on the Argentine for access to the outside world and have threatened to withdraw and will withdraw the only Royal Navy ship in the area?
My hon. Friend implied that there might be some contingency plans afoot. About time! Will he give an assurance that he will make a statement on the subject next week?
Mr. Luce: As my hon. Friend will have noted, we are reviewing the security situation and HMS "Endurance" will remain on station for as long as necessary. That is the Government's firm decision. My hon. Friend referred to the communications agreement, signed in 1971. However, to suggest that it was forced upon the islanders is unfair, because they gain certain advantages from co-operation. Therefore, it is unfair to say that the agreement was forced on them. They want the best possible communications with the outside world.
Several Hon. Members rose—
Mr. Speaker: Order. I hope that questions and answers will be brief. I shall allow them to continue until 4 o'clock, when another statement will be made.
Mr A. J. Beith: Is not one of the lessons of this affair that any sign of weakness by the British Government, such as the lease-back proposal and the threat to the future of HMS "Endurance", will be exploited by the Argentinians? Is not the Falkland Islanders' right to self-determination at stake?
Mr. Luce: I shall take advantage of the hon. Gentleman's question to repeat that the islanders' wishes are paramount. There should be no change in the situation without the consent of the islanders or that of the British Parliament.
Sir Nigel Fisher: My hon. Friend keeps repeating that we shall stay in the area and help the islanders to the "best of our ability". The trouble is that we have not got the ability. HMS "Endurance" is better than nothing, but in the circumstances it is not enough. What else do the Government propose to do?
Mr. Luce: I know of my hon. Friend's long-standing interest in the subject, but I am sure that he will understand that it would be wrong for me to comment in detail on the security review that we are undertaking. For all our sakes and, above all, for the sake of the islanders, it is most important that we should seek a peaceful diplomatic solution to the problem in South Georgia.
Mr Eric Ogden: Is the Minister aware that his positive response to the mood of the House last week and his quiet determination to maintain and defend British interests in the whole of the South Atlantic should be appreciated by the House? This is what we would expect from the grandson of Admiral Luce, who played an effective part in an earlier battle of the Falkland Islands.
Before some enthusiast outside the House suggests that we should "nuke" the beggars, is it not ludicrous that the sheer incompetence and mismanagement of an Argentinian scrap dealer of dubious probity should now lead to confrontation between two navies that ought to be co-operating? Is that not providing unwise enthusiasts in the Argentine with an opportunity to attempt to divert attention away from their problems? Will the Minister confirm that the British forces available to the Government are by no means as weak as some may assume?
Mr. Luce: I am grateful to the hon. Gentleman for his personal remarks. However, he should not assume that I shall follow exactly what my grandfather did in 1914.
Once again, I reassure the House that we have a duty to the islanders and shall defend them to the best of our ability. We are merely asking Mr. Davidoff and his men to seek the proper authority from those in Grytviken to proceed with the sub-contract.
Sir John Eden: Will my hon. Friend reassure the House that in seeking a diplomatic solution he is taking the initiative, and that, if there were a need for other measures, he would act with speed and determination?
Mr. Luce: I can give my right hon. Friend that assurance.
Mr. Michael English: The whole House will be interested in the precedent that the Government have created by asking a country to help in removing its illegal immigrants who are on British territory. Is the precedent to be extended? Will China, Pakistan and India be similarly asked to help?
Mr. Luce: I would be well advised to stick to the issue of the Falkland Islands.
Sir Frederick Burden: Does not my hon. Friend realise that last week there was great concern in the House when he made his statement, because he made it

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clear that the men were conveyed by a ship belonging to the Argentinian Navy? I hope that my hon. Friend will bear in mind that the Argentine Government must have known that the men were going to the Falkland Islands. We have given undertakings to the people of the Falkland Islands—a British colony—and, while doing everything possible to settle the dispute by diplomatic means, we must take measures to ensure that any follow-up by force by the Argentine to that possible probing operation does not succeed. I draw my hon. Friend's attention to Early-Day Motion 368, which clearly expresses the feelings of many Conservative Members.
Mr Luce: The Government and the House noted that the landing of a number of men on 19 March was undertaken with the use of an Argentine naval vessel. Of course, that caused us concern, and it continues to cause us concern, but that does not detract from the fact that it is important to work as hard as we can for a diplomatic solution.
Mr A. E. P. Duffy: Now that the Secretary of State for Defence has received an object lesson in the irreplaceable value of a visible naval presence, will the Minister convey to his right hon. Friend the fact that a much more compelling deployment than HMS "Endurance" will be required if the Falkland Islands problem is to subside? Does the Minister agree that that type of requirement, together with support, makes nonsense of the defence cuts in surface ships over the past year and shows how misconceived are the Government's present defence priorities?
Mr. Luce: I know of the hon. Gentleman's keen interest in defence. I have already stated that we are undertaking a security review and that we shall defend the islands if necessary. I still express the hope that this will not be necessary.
Mr. Keith Speed: Is it still the Government's intention to scrap HMS "Endurance" when the present emergency is over?
Mr. Luce: I have undertaken, and the Secretary of State for Foreign and Commonwealth Affairs has undertaken, that HMS "Endurance" will remain on station for as long as is necessary. Its future will be examined in the light of a general security review that we are undertaking for the Falklands area.
Mr. John Evans: Why is not our possession of a vastly expensive independent nuclear deterrent deterring the Argentinians?
Mr. Luce: I am Minister of State at the Foreign and Commonwealth Office and not the Secretary of State for Defence.
Sir John Biggs-Davison: Disregarding the quaint expression of jingoism from the Opposition Front Bench, may I ask my hon. Friend whether he is aware that many of us believe that it is better that the precautionary measures for the maintenance of British sovereignty and the protection of British subjects should be effective rather than that they should be publicised? Will my hon. Friend confirm that the foreign flag that was raised on British territory in South Georgia flies there no longer?
Mr. Luce: I am grateful to my hon. Friend for his opening remark. I can confirm that the foreign flag did go up for a short time, but it has been taken down.
Mr Eldon Griffiths: I welcome what my hon. Friend the Minister has said about the Government's intention to defend and support to the best of their ability the legitimate interests of the Falkland Islands and their dependencies. Will my hon. Friend confirm that the ability that is available will be maintained and that he will have regard not merely to the incident concerning a scrap dealer and who stamped his passport but to the wider British interests in oil and gas, fishing and the strategic advantages of that part of the world?
Mr. Luce: I can give my hon. Friend an assurance that we shall take all those factors into account. However, the dispute over the future of the islands remains. It would be in everyone's interests if it could be resolved, but, at the end of the day, if it is necessary we shall defend the islanders to the best of our ability.
Mr James Callaghan: I support the Government's attempts to solve the problem by diplomatic means, which is clearly the best and most sensible way of approaching the problem, but is the Minister aware that there have been other recent occasions when the Argentinians, when beset by internal troubles, have tried the same type of tactical diversion? Is the Minister aware that on a very recent occasion, of which I have full knowledge, Britain assembled ships which had been stationed in the Caribbean, Gibraltar and in the Mediterranean, and stood then about 400 miles off the Falklands in support of HMS "Endurance", and that when this fact became known, without fuss and publicity, a diplomatic solution followed? While I do not press the Minister on what is happening today, I trust that it is the same sort of action.
Mr Luce: I am certain that the House and the Government listened with great respect to what the right hon. Gentleman said. The Government note what he has said.
Mr Neil Thorne: While appreciating that my right hon. and noble Friend the Secretary of State for Foreign and Commonwealth Affairs wishes to deal with the matter through diplomatic channels, and not wishing to compromise him on the methods being used, could not my hon. Friend be a little more positive rather than saying that the Government will use their best endeavours to achieve a solution in this matter to the comfort of our interests throughout the world?
Mr. Luce: As I said in my statement, we cannot underestimate the dangers of the present situation. It is important to do what we can to achieve a sensible resolution of the problem in South Georgia. We have the wider interests of the islanders very much at stake and very much in mind. I can assure my hon. Friend that we shall live up to the assurances that I gave earlier.
Mr John Stokes: Is my hon. Friend aware that, while we support his diplomatic efforts and do not want a Anguilla type operation—as some Members on the Opposition Front Bench seem to want—it must be made clear to Argentina and to the world that on British territory the British view will prevail?
Mr. Luce: I am grateful to my hon. Friend. As a result of the statement, I hope our position is absolutely clear.
Mr. Albert McQuarrie: While I accept what the Secretary of State has said about the United Kingdom having sovereignty and wanting to look after the interests of the people of the Falkland Islands, would it not be better, when there are so few people involved, to implement part of the British Nationality Act to give the Falkland islanders who are still on the islands the right of British nationality and let the Argentine Government see that the territory is still definitely a British possession?
Mr. Luce: My hon. Friend has expressed that view before. There are 1,800 islanders. Of those, 1,400 have the right of abode in Britain. Last year my right hon. Friend the Home Secretary gave an assurance that we would consider all the other cases sympathetically if necessary. I do not believe that what my hon. Friend has suggested is the right way to approach the matter. It is in everyone's interests to find a peaceful resolution to the problem. That is the British Government's responsibility, but we have a duty to the islanders to defend and support their interests.
Mr Richard Alexander: Are we not making heavy weather of this matter? Would not the sensible answer be for the Royal Marines to round up these 12 "Steptoes", put them on a boat and pack them off whence they came? Would not any country do that?
Mr. Luce: I hope that my hon. Friend will pause and reflect on the position in the area and on our responsibility to the islands as much as anything else. Every move that we make must be carefully judged. Our objective must be a peaceful resolution of the problem.
Mr John Farr: I remind my hon. Friend that it ill behoves the right hon. Member for Leeds, East (Mr. Healey) to accuse the Government of being spineless. The Labour Party was in office when the Falkland islands
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were occupied by a party of Argentians and it did nothing. That occurred on the island of Southern Thule. I assure my hon. Friend that any firm action that the Government take will be fully supported by Conservative Members. Will he reconsider the long-term future replacement of HMS "Endurance" in the South Atlantic?
Mr. Luce: I am grateful to my hon. Friend for his support. On the question of the future of HMS "Endurance", I have already made it plain in answer to my hon. Friend the Member for Ashford (Mr. Speed) that HMS "Endurance" will remain on station for as long as is necessary, but that we are undertaking a general security review of the Falklands area. We shall take into account in the review the point about the long-term future of HMS "Endurance".
Mr Healey: Is it not clear from the exchanges to which we have listened that the Government accept that the landing of the men in South Georgia was a deliberate provocation by the Argentinian Government—for what purpose I do not know—and that it took place because the Government have not taken the sensible precaution of assembling adequate naval forces in the area as the Labour Government did in a similar situation? Will the Government learn from this experience that they must exercise more influence on the shape and deployment of our Armed Forces than they are doing at present? This is the first price that we are paying for a dreadful error in priorities in the Goverment's defence policy.
Mr Luce: It is easy for the right hon. Gentleman to preach to us about how we can avoid disputes. We are doing our best to resolve the problem. We have a duty to the islanders, and I have repeated that time and again. I do not think that it helps to try to make comparisons between what previous Governments have done and what this Government have done. We are in a serious situation, and we are trying to resolve it peacefully.

Death Grant
4.2 pm
The Minister for Social Security (Mr. Hugh Rossi): I will, with permission, Mr. Speaker, make a statement about the death grant.
As the House is aware, some 14 years have elapsed since the death grant was last increased. Whilst never designed to cover the full costs of a funeral, the grant has now declined to such a low level in relation to those costs that anxiety is being caused to poor families by this ever widening gap. At the same time, social conditions have improved to such an extent in comparison with those that prevailed in the 1930s and gave rise to the concept of a death grant, that this grant is no longer of the same importance to the large majority of families as it once was.
The Government's prime concern is to devise a scheme that will ensure that the grant is increased to a level sufficient to provide a real contribution to funeral costs for those families in greatest need of such help. One solution would be to make a universal increase in the death grant. However, such an increase could not be-made to a level worth while to those in need without diverting additional considerable resources to those with no real need; and there are more pressing purposes to which we wish to devote such resources, it they were available. Although these considerations have occupied us for some months, it has not been possible to find an easy solution, especially as we have been anxious to avoid means-testing people at the time of bereavement.
An alternative to a universal increase is to abolish the existing contributory death grant and to put in its place a non-contributory funeral grant of a substantial sum but of limited availability. The determining factors for entitlement to a new funeral grant would be the size of the estate left by the deceased and the current receipt by the person responsible for his funeral of one of a specified group of social security benefits. Fewer people would benefit, but the size of the funeral grant could be increased substantially and help brought to those most in need.
We have decided, however, that before reaching any final decision on this fundamental change in the nature of the grant we should set out the problems, what seems to us to be the most practical way of overcoming them, and invite comments. Accordingly, we have published today a consultative document explaining the alternatives in futher detail to see whether they command public support as representing a more effective use of present resources than the existing arrangements. We hope that our ideas will be carefully considered by the many organisations and individuals who will be receiving copies of the document, and we look forward to their views.
Mr J. W. Rooker: I shall give the Minister a chance to tell the House what the Government intend to do about the death grant. His statement contains no figures and provides no details of the options that are set out in the consultative document. Will he confirm that there is no intention to provide any new money either by the national insurance fund or by the Consolidated Fund? Does he accept that the three options that are mentioned in the consultative document would benefit only 65,000 to 125,000 persons compared with the 630,000 who receive some type of death grant under the present system? Does he agree that all the options set out
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in the consultative document will involve the means testing of the deceased spouse or of the person responsible for the funeral bill, and that it is intended to ask questions about other close relatives and their resources?
Why is the capital sum of £1,500, which is mentioned in the consultative document, considerably less than the capital sum which is used for supplementary benefit purposes? Has the hon. Gentleman considered the design of the application form to ensure that it will not be a major deterrent to those applying for what will be a meagre grant that will be means-tested in the 1980 style and made available to only 10 to 20 per cent. of existing beneficiaries? Assuming that any one of the three options set out in the consultative document ever gets on the statute book, do the Government have any intention of regularly uprating the new system? Lastly, on what date will the consultation process end and when is it intended to bring firm proposals before the House?
Mr. Rossi: The note of indignation in the hon. Gentleman's voice would have been rather more impressive if the previous Labour Government had sought to tackle this problem. All that we had from them was a series of statements to the effect that there were higher priorities or that there were no resources available. At least we are making a real attempt to bring forward a viable scheme to help those in greatest need.
There are three possible ways in which we can assist those in greatest need. The larger the amount of the grant the fewer people we shall be able to assist. That is because we are subject to restraint in resources. However, there will be marginal administrative savings as a result of the lesser number of claims to be handled. We hope in some of the options to use some of those savings to increase the benefit and make more money available to those who are in need.
The consultation document will be widely available. The speed with which we can implement any of the changes that are suggested in it will depend on the nature of the public's reaction to the proposals that are set out in the document. Legislation will be required and it will be necessary to find time in the legislative programme.
If a person dies and leaves a free estate of £1,500 or more—we exclude from that the value of the house in which he and his family lived and the value of the contents—the assumption will be made that there is sufficient money in the family to pay for the funeral of the person who has died. The figure of £1,500 has no relation to the supplementary benefit capital cut-off level, and it is roughly four to five times the cost of an average funeral. If the value of the estate is below £1,500 and is not sufficient in those terms, and if the person who is responsible for the burial is receiving one of a number of social security benefits or, for one of the options, is receiving rent rebate or an allowance, that person will be assisted by a funeral grant. That will range from anything between £150 to £250 depending upon the number who are admitted into the scheme.
Several Hon. Members rose—
Mr. Speaker: Order. I hope that we shall have quick questions and answers. I shall allow questions to run until half past four—[HON. MEMBERS: "Oh".] Order. It is difficult for me to tell whether that is a cry of dismay or an indication that the House wants to spend longer on this topic. I shall see how questions and answers go, but half past four is in my mind.
Mr. Donald Stewart: Since people have paid contributions towards the death grant, does the Minister agree that the Government would not allow an insurance company to get away with such a swindle? May we take the Minister's assurance about the issuing of a consultative document and the hint that legislative time may not be available to mean that nothing will be done about the grant?
Mr. Rossi: It is precisely because the option suggested would take away contributory rights that we want the widest possible consultation. It will depend entirely on the reaction of the British people whether we follow that proposal. On the right hon. Gentleman's reference to contributions, the actuarial assessment is that 2p per week is roughly the part of the national insurance contribution of an employee that goes towards paying the current grant of £30. That is useless to families without money and a waste of time to families who have money.
Mr Paul Dean: I welcome my hon. Friend's statement because, for some people, the present grant is not nearly enough and should be bigger. For many people, it is no longer as necessary because they have made their own arrangements. First, will my hon. Friend assure us that there will be no question of any form of means test at the delicate point of bereavement? Secondly, will he confirm that elderly people, presently entirely excluded from the scheme, or who qualify for only a very small grant, will be eligible under the new arrangements? Finally, will he—
Mr. Speaker: Order. We do not need that final point.
Mr Rossi: I assure my hon. Friend that we were determined not to put forward any proposals that would require means testing at the time of the bereavement. The options envisaged that people applying for a funeral grant would make a simple declaration that they were already receiving one of many social security benefits. That is not means testing, but automatic passporting on a simple declaration made. As for the old people, who have no entitlement today to death grant, by changing the basis to a non-contributory benefit, we shall, of course, be bringing them within the ambit and scope of the new arrangements.
Mr Andrew F. Bennett: Will the Minister confirm that the Government have been considering this issue for at least 18 months and that it was considered by the Cabinet on at least two occasions? Does he realise that there will be considerable contempt in Britain for a Government who have run away from taking a decision? He is now putting forward three proposals for consultation. They are all totally unacceptable.
Mr Rossi: We have considered the matter for many months and have done something. The previous Administration did not even bother to consider it and did nothing at all. I do not know how many times it has been before the Cabinet because I am not a member of that august body.
Mr Cranley Onslow: Will not my hon. Friend agree that the first priority must be to extend this grant to those who, at the moment, are too old to qualify for it? We need not hang about on that aspect. Secondly, would it not be a great deal fairer and much more humane
174
if there was an automatic right to a funeral grant? That grant could be recovered by his Department from the estate of the deceased person if it was justified.
Mr Rossi: I am grateful to my hon. Friend for his remarks. I know of his interest in those who have never contributed to the scheme and, therefore, do not now have a death grant, because of their age. We shall certainly consider this aspect to see whether it is possible to introduce interim help before the present scheme, if acceptable to the public, is brought into effect. On the remainder of my hon. Friend's question, again we will have to consider that. I am not able to give an immediate answer.
Mr Clement Freud: While the House welcomes the consultative document, will the Minister tell the House the timetable for payment? Will he also tell the people who are in desperate need and worrying about realistic help—with the high cost of dying—when they may expect to get this payment?
Mr. Rossi: That depends entirely on the reaction that we get to this consultative document. If it is generally welcomed and is not subjected to the sort of carping or party political points that it has been subjected to this afternoon, the Government will be greatly encouraged to bring the matter forward as quickly as possible.
It would be a matter for legislation and there is no vehicle in this parliamentary Session for dealing with the matter. I cannot help the hon. Gentleman beyond that. However, once we introduce legislation, if everyone is agreed, I can get through the House quickly, as he well knows.
Mr A. W. Stallard: Does the Minister accept that his attempts to play down the importance of this matter—he said that the death grant was no longer an important subject—is to misunderstand the whole situation? Is he not also aware that there has been constant consultation throughout the country, over many years? He will remember the 1 million signatures handed to his right hon. Friend the Prime Minister some time ago, as a result of that consultation and the consultations we had with his predecessors. Therefore, will he accept that the package proposed in his consultative document—his broadsheet—will be totally unacceptable to all the organisations involved in arguing for the death grant? Nothing short of a flat rate increase, as suggested by the all-party pensioners group and others, will suffice.
Mr. Rossi: It would be a pity if the hon. Gentleman anticipated answers given by voluntary organisations and other interested bodies outside before they had had an opportunity to study these proposals. I refer him to the research document "Families, Funerals and Finances", which showed that 93 per cent. of families had no difficulty raising money to pay for funerals. If we had a flat increase to perhaps £200 per death, it would increase public expenditure by about £115 million.
If the Chancellor of the Exchequer gave me an extra £115 million to play with, I would find far better uses for it than to pay people who do not need the £200 for a funeral grant. I would refer to the invalidity trap, the 5 per cent. abatement on unemployment benefit and the 5 per cent. abatement on invalidity benefit. I would far rather spend money on these and other things than give very rich people £200 when someone in their family dies.
Mrs. Elaine Kellett-Bowman: Will my hon. Friend accept, that he is mistaken in supposing that this is not a matter of interest to a great many people in a low income area such as I represent? Will he further accept that the old, who are currently excluded, will be greatly relieved to know that they are to be considered in future. Will he give careful consideration before narrowing this matter to the sort of people I represent?
Mr. Rossi: I am grateful to my hon. Friend for her remarks. Of course, I am aware that this matter is of great interest outside the House. Therefore, we dealt with the matter by way of a consultative document, so that we could receive views of the sort she has given before reaching a final decision.
Mr George Foulkes: Surely the Minister is aware that all these options have been known to the Government and voluntary organisations for some time. The organisations have expressed the view that they want a flat rate increase, with the very elderly included. Surely the Minister will agree that this could be achieved by a simple amendment or new clause to the Finance Bill. Will he not agree to that sort of change now?
Mr. Rossi: First, I do not accept the assumption that these options have been worked out and were known to all organisations, as the hon. Gentleman said. In any case, I have already dealt with the financial consequences of a flat rate increase. If it were of a substantial sort, the cost would be significant. I have other uses for that sort of money.
Mr. W. Benyon: On the question of timing, surely we could shorten the consultation process and try to wrap this matter up before the end of the Session.
Mr. Rossi: I note my hon. Friend's remark. I hope that we have a quick and favourable response to our proposals in the consultative document. If that is so, we shall have a fair wind and can proceed quickly.
Mr. Ioan Evans: Does the Minister realise that today's statement will be received with great disappointment by the many organisations connected with old age pensioners who are all concerned with the Death in Dignity Alliance? Does he not realise that, while there is anxiety about the cost of living, there is also deep anxiety among senior citizens about the cost of dying? Will he not give that aspect some urgency and priority? His predecessor in the past 18 months to two years has said that he would put a definite statement before the House before the end of this Session about the payments that such people would receive.
Mr. Rossi: I am aware of the anxiety. That is why we are trying to give greater help than has been available hitherto to families whose need is greatest and where the help is required. The speed of the matter depends on the observations that I have already made.
Mr Robin Maxwell-Hyslop: If it is reasonable to have a cut-off time of three months and two weeks, for response to the consultation document on rates, surely the same cut-off point could be applied to this document? Will that not concentrate the respondents' minds so that they send in their recommendations? If there is no terminal date, will not the response tend to be postponed indefinitely?
Mr. Rossi: If we receive representations after three months from publication they may be too late.
Mr Thomas Cox: Is the Minister aware that outside the House his statement will be seen as typical Government "do nothing" policy on a crucial issue? Is he so unaware of the facts, following the representations that have been made to him, that, in a week when we have discussed the expenditure of millions of pounds on Trident missiles, we cannot even give a realistic death grant? In view of the great play that the Minister has made of his consultative statement, will he personally meet the representatives of the different pensioners' organisations in the United Kingdom, put his points to them and hear their response?
Mr. Rossi: If those organisations wish to see me as well as write to me, I shall try to make myself available to them.
With regard to the rest of the hon. Gentleman's remarks, I cannot add to what I have already said about the indiscriminate nature of a universal death grant and money going to people who do not need it. I am concerned to see that money goes to the people who need it.
Mr Peter Bottomley: I welcome the consultation. Does my hon. Friend accept that the real choice is not whether to have £200 for each funeral, but whether there should be a small increase for all or a significant and real increase for the 10 per cent. who need it? Will my hon. Friend carry out the same process for the birth grant, which affects as many people and is just as important.
Mr Rossi: My hon. Friend is absolutely right in his premise. With regard to the birth grant, having got over this exercise, I am not anxious to go through it again. However, I shall consider the matter.
Mr Mike Thomas: Is the Minister aware that elderly people and their relatives who are seriously worried about the cost of funerals will be almost as pleased about the spinning out of the process that the consultation document recommends as Social Democratic and Liberal Members are about the Government spinning out the business of the House today? Is he further aware that neither of the old parties has anything to be proud of in this matter? While we generally support the approach that the hon. Gentleman is taking in focusing help on those who need it most and while we reject the knee-jerk over-reaction of the Labour Party to his consultation proposals, there are two things that he should do—[Interruption.]
Mr. Speaker: Order. That question is long enough.
Mr. Thomas rose—
Mr. Speaker: Order. If the hon. Gentleman does that again, I shall order him out of the Chamber.
Mr Rossi: I do not think that there is anything for me to answer. No question was put to me.
Mr Ivor Stanbrook: Why do the Government not know their own mind on this subject after so many years of public discussion of it?
Surely we do not need yet another consultative paper to help us to make up our minds. After all, is not the House the proper place for public consultation?
Mr. Rossi: This matter is not without difficulty. We are taking away a contributory benefit. Therefore, we thought it only right to consult the people whose benefit we are taking away.
Mr David Winnick: Is the Minister aware that his statement is unacceptable and that it will cause anger and contempt among the community, who will understand that the Government are extending a means test to the dead?
Mr. Rossi: If the proposals and options are found to be unacceptable, the time when we can give real help towards funeral expenses to people who need it will be postponed further.
Sir William Clark: Is my hon. Friend aware that Conservative Members and people generally throughout the country accept that it must be good sense to give more money to people who need it rather than to give a little to all people, some of whom do not need it? The document will be scrutinised and considered by many old people. Consequently, it is essential that it should be in simple terms. It must not only set out the options clearly but make it clear that representations must be made to the Government by a specific date. The document must give a definite date, and not just state that representations may not be considered after three months.
Mr. Rossi: I hope that the document will be written in reasonably clear English, but there will be a great deal of debate about the matter. During that debate, no doubt the matter will be better explained than I have explained it today.
Mr. David Stoddart: Is the Minister aware that all the proposals in his Green Paper were considered in 1947 before the benefit was made an insurance benefit? Is it not a fact that, by proposing to withdraw the benefit, the hon. Gentleman is proposing to defraud the national insurance payer? Will he drop the document and increase the death grant forthwith, as has been suggested?
Mr. Rossi: I shall not drop the consultation document before the consultation has taken place.
Mr. Anthony Beaumont-Dark: May we hope that my hon. Friend will not be discouraged by that whingeing lot on the Opposition Benches, who, when they could do something about the death grant, did nothing about it year after year, and now suggest that we are reducing it? May we hope that this will be a new start, that we will genuinely get away from the idea of flat increases for everyone and that we will do something to help many of our constituents who need more help than others who are receiving help today?
Mr. Rossi: At a time of limited resources, we must direct those resources where the need is greatest.
Mr. Dennis Skinner: The Minister talks about giving help to those who need it most. Why does he not tell the Chancellor of the Exchequer that when he is drawing up his Budget so that he can carry out that philosophy? Will he bear in mind that only a few weeks ago my hon. Friend the Member for Dundee, West (Mr. Ross) introduced a Bill to raise the death grant to £190, and he was supported by every Labour Member who spoke that day? The reason why the Bill did not make progress was that the Minister and the hon. Members for Watford (Mr.
178
Garel-Jones) and Grantham (Mr. Hogg) talked it out. As a result, millions of people were deprived of a death grant of £190.
Mr. Rossi: That Bill required a universal death grant to be paid across the board for every death. I have already dealt with that point on a number of occasions this afternoon.
Mr. James Hill: My hon. Friend is entitled to more congratulations than he has received so far today. The document is a good step forward. I take his point that the administration must be in the simplest terms. What would happen if during his lifetime, because he was too proud, a deceased person had not been paid supplementary benefit? How would it be proved that that person was in need? How will my hon. Friend answer my query that there is a disincentive —
Mr. Speaker: Order. I shall bring that question to an end because I want to call one more hon. Member.
Mr Rossi: Whether or not the deceased person is in receipt of supplementary benefit is irrelevant to the scheme. It is the size of that person's estate that is material, as well as whether or not the person responsible for the payment of the funeral expenses is himself or herself in receipt of some benefit or other, which is not necessarily restricted to supplementary benefit. It will be seen from the consultation document that a range of benefits is proposed, with different consequences on the size of the grant.
Mr Rooker: Perhaps I can give the Minister a chance to correct one of the answers that he gave. Having had the opportunity to read the last paragraph of the consultation document just now, I see that the Government are allowing a full four months, up to 31 July, for consultation. Therefore, anyone sending a representation after three months will not be too late. This means that there is no hope whatsoever of urgent legislation, even if there were a consensus on any of the three options in this document, in this Session.
My hon. Friends and I have not been carping; nor have we introduced questions of party, such as the Minister has. Will the hon. Gentleman confirm that, since the death grant was introduced in 1948, it has been raised on two occasions, in 1958 by the Conservative Government and in 1967 by the Labour Government?
Mr. Rossi: When the death grant was introduced in 1949, it represented 60 per cent. of the average funeral cost. When it was uprated by the Labour Government in 1967, the uprating represented only 30 per cent. of the average funeral cost. So, even that uprating was not very helpful to the people concerned. The previous Administration made absolutely no attempt whatever to do anything about this matter.
I confirm that, as I have already said, there is no possibility of a Bill being introduced in this Session. There is no room in the timetable. Whether we have a consultation period of three months or four months, the opportunity will be open to us in the next Session, if the country accepts our proposals as reasonable and if the Labour and Social Democratic Parties give us their full support.

NEW MEMBER
The following Member took and subscribed the Oath: Right Hon. Roy Harris Jenkins, for Glasgow, Hillhead.
NEW MEMBER

  Statutory Instruments, &c.
  Mr Speaker: I understand that motion No. 4 is not being moved. By leave of the House, I shall put together the Questions on motions Nos. 1, 2 and 3.
  Ordered,
  That the draft Grants by Local Authorities (Percentages and Exchequer Contributions) (Scotland) Order 1982 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Pym.]

  EUROPEAN COMMUNITY DOCUMENTS
  Ordered,
  That European Community Document No. 9478/81, concerning research into shore based maritime navigation aid systems, be referred to a Standing Committee on European Community Documents.
  That Euopean Community Document No. 9779/81 (Corn. (81) 517), concerning a proposed Council decision on a third concerted action programme on medical and public health research, be referred to a Standing Committee on European Community Documents.—[Mr. Pym.]

  PUBLIC LENDING RIGHT
  Ordered,
  That notwithstanding the provisions of paragraph (3) of Standing Order No. 73A (Standing Committees on Statutory Instruments, &c.) the draft Public Lending Right Scheme 1982 be referred to a Standing Committee on Statutory Instruments, &c., and that motions relating to the draft Scheme be proceded with in accordance with paragraphs (4) and (5) of the said Standing Order.—[Mr. Pym]

  Accident Victims (Compensation)
  4.35 pm
  Mr. Greville Janner: I beg to move,
  That leave be given to bring in a Bill to introduce no fault liability for death or personal injury arising from accidents at work or on the highway; and for connected purposes.
  The present system under which victims of accidents at work or on the road either do or do not receive compensation is an archaic, costly, slow and unjust gamble. The law should be altered to follow the lines laid down by the Royal Commission on Civil Liability and Compensation for Personal Injury as long ago as four years. This Bill is designed to introduce the concept of no fault liability into compensation for accidents at work and on the road, and to attempt to ensure that the victims of those accidents receive compensation within a reasonable period of time and without the anguish and prolonged suffering that our present ancient and unkind system often imposes on them.
  For an accident at work an injured person can at present obtain damages or compensation only if he can prove fault, if he can show that he suffered as a result of the negligence or of the breach of statutory duty, usually of the employer or of some other employee but sometimes of a third party.
  There is only one notable exception. Under the Employer's Liability (Defective Equipment) Act 1969, if an employee is injured through a defect in equipment or killed through a defect in plant the employer is deemed to have been negligent. The employee recovers his damages irrespective of proof of fault.
  It is this principle of strict liability, which exists in our law only in those very limited circumstances, that the sponsors of this Bill seek to extend to all accidents, both at work and on the roads. There is no such principle in respect of any accident on the road. If a person is injured or killed in a road accident as, alas, thousands are each year, the only hope of getting damages is for him to show that his injury was caused, or for his dependants to prove that his death was caused, as the result of the negligence of another road user.
  This may sound perfectly reasonable. It may seem sensible to let the courts decide. The system, however, does not work, for three reasons, each of which would be enough to invite radical change in our law. The first is that the average person cannot obtain justice in this country because, unless he is poor enough to qualify for legal aid or rich enough not to need it, the courts are not available to him. The idea that justice is available to all in the United Kingdom is unfortunately a myth.
  Secondly, the time that is taken to reach a court hearing is prolonged, often five or six years from the date of the injury. During that period, the sufferer obtains no recompense whatever.
  Third, when the case comes for trial, those who must attempt to recollect what happened in that instant of disaster have to apply their minds to an incident that occurred, generally in a split second, months or even years before. As a judge recently remarked:
  "As time goes by, memory fades but recollection improves."
  Even when trying to be honest, people find it impossible to establish what happened in a moment long ago, when in many cases they could not recollect this even shortly afterwards.

  181
  The whole system of justice for accident victims is, therefore, in ill repute. The sufferers number thousands. I pay tribute to the people who have set up the National Association of Compensation Victims for bringing these people together and trying to apply much needed pressure on behalf of those who are suffering. There is no need for people like Mrs. Pat Carter or Mrs. Marilyn Salkeld to look very far to find examples of systems that are better, more compassionate and fairer than our own. Such systems exist in 24 states of the United States, in Canada, in two states in Australia, in Sweden and, above all, in New Zealand, where there is an absolutely comprehensive system. It may be paid for by insurers. It may be paid for out of State funds. But it is not right that financial suffering should be endured by those who are least able to cope with it and who should be least required by a decent society to bear it.
  The costs could be set off against the legal costs of the court proceedings and the costs of the insurers. The entire scheme, in whatever form it may come to the House, would be far less expensive than at present appears and would certainly get rid of the awful lottery and gamble which now decides for so many thousands of people whether they can have decent compensation for accidents suffered either at work or on the road.
  Question put and agreed to.
  Bill ordered to be brought in by Mr. Greville Janner, Mr. Jack Ashley, Mr. Barry Jones, Mr. Hugh Dykes, Miss Janet Fookes, Mr. Joseph Ashton, Mr. Jim Marshall, Mr. Ronald W. Brown, Mr. David Mudd, Dr. M. S. Miller and Mr. Barry Sheerman.

  ACCIDENT VICTIMS (COMPENSATION)
  Mr. Greville Janner accordingly presented a Bill to introduce no fault liability for death or personal injury arising from accidents at work or on the highway; and for connected purposes: And the same was read the First time; and ordered to be read a Second time upon Friday 9 July 1982 and to be printed. [Bill 98.]

  FIRE SERVICE COLLEGE BOARD (ABOLITION) BILL [Lords]
  Not amended (in the Standing Committee), considered.
  Motion made and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
  Bill accordingly read the Third time and passed, without amendment.

  Stock Transfer Bill
  Not amended (in the Standing Committee), considered.
  Stock Transfer Bill

    Clause 3
    title>REGULATIONS AND AMENDMENTS RELATING TO THE COMPUTERISED SYSTEM AND EXEMPT TRANSFERS
    4.44 pm
    The Economic Secretary to the Treasury (Mr. Jock Bruce-Gardyne): I beg to move amendment No. 1, in page 3, line 23, after 'of', insert 'or evidencing'.
    Mr Deputy Speaker (Mr. Bernard Weatherill): With this it will be convenient to take Government amendments Nos. 2, 3, 4, and 5.
    Mr Bruce-Gardynesd: I should apologise to the House for the need to introduce these amendments. They are entirely drafting amendments whose need was identified late in the day. The purpose of amendments Nos. 1, 2 and 4 is to cover the position of a small number of debentures for which it is necessary to specify that it applies to documents of or evidence in title. The purpose of the other two amendments is simply to achieve consistency within the relevant schedules where the words in the amendment should have been inserted in the original drafting. I assure the House that they do not change the implications or the consequences of the Bill.
    Amendment agreed to.

    Schedule 2
    CONSEQUENTIAL AMENDMENTS
    Amendments made:
    In page 7, line 29, after first 'of', insert 'or evidencing'.
    In page 7, line 31, after 'certificate', insert 'or other document'.
    In page 8, line 16, after first 'of', insert 'or evidencing'. In page 8, line 18, after 'certificate', insert 'or other document'.
    Motion made and Question, That the Bill be now read the Third time, put forthwith pursuant to Standing Order No. 56 (Third Reading), and agreed to.
    Bill accordingly read the Third time and passed.

    Gas Levy
    4.46 pm
    The Under-Secretary of State for Energy (Mr. John Moore): I beg to move,
    That the draft Gas Levy (Rate for 1982–83) Order 1982, which was laid before this House on 12th March, be approved.
    This order follows on from the freeze on industrial gas contract renewal prices that took place last year, and the announcement made by my right hon. and learned Friend the Chancellor of the Exchequer in his Budget speech that the Government intend to revise British Gas's finances in order to enable the corporation to freeze, until the end of this year, the price of industrial gas sold under contract, for all but the first 25,000 therms taken in the contract year, at the level charged on 1 April.
    Without those two measures, firm gas prices would have been 23 per cent. higher and interruptible prices 24·5 per cent. higher by the end of the year than they would otherwise have been. A very wide spread of customers has benefited- and will continue to benefit. The latest freeze will apply to 95 per cent. of gas sold to industry and 40 per cent. of gas sold to commercial premises. It will be of particular benefit to large, energy-intensive industries such as the chemical industry—40 per cent. of industrial sales in 1980–81 were to that industry—the engineering industry, the metals industry and the building materials industry.
    How do those measures on industrial gas prices relate to the order? Obviously the action taken last year and this year's freeze have had and will have a significant adverse affect on the BGC's profits. Last year's freeze cost the corporation £73 million in lost profits. This year's action is estimated to cost over £60 million. Taking both measures together, therefore, the BGC has suffered a reduction in the profit which it would otherwise have earned of about £130 million to £140 million.
    Although the corporation will benefit from the move, which will bring the price of gas to industry more in line with prices charged to the home, a loss of profits on this scale would have been a heavy financial burden for the corporation to bear. The Government therefore came to the conclusion that, since both freezes followed a specific request from the Government that the corporation should offer some help to industrial customers, it was only right and proper that the BGC should be fully compensated. I am sure that the House will recognise the fairness of that decision. Although, considered from the point of view of the public sector as a whole, it makes no difference whether the BGC or the Government absorb this shortfall—it is purely an accounting change—it makes a great deal of difference to the BGC management, who quite naturally attach great importance to a clear understanding of the financial framework in which they must operate.
    Having agreed that the BGC should be compensated for the effects of this action by the Government, there remained the question of the precise mechanism for achieving it. The most obvious means, both in terms of simplicity and because it is the least disruptive of the financial framework within which the BGC operates, is to reduce the size of the corporation's payments under the Gas Levy Act 1981.
    I know that the Opposition will not dispute that judgment. Speaking during the Committee stage of the
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    Gas Levy Bill about just such a situation as we are now considering, the hon. Member for Merthyr Tydfil (Mr. Rowlands) said:
    "If British Gas is asked to adopt such a policy…it will lose…revenue…That loss of revenue should be taken out of the gas levy, not from the revenues of British Gas…"
    Speaking in the same debate of the method by which the corporation should be compensated for action to stabilise industrial gas prices, the hon. Gentleman said:
    "The easiest way would be to reduce the levy to accommodate British Gas's lost revenue".—[Official Report, 25 February 1981; Vol. 999, c. 907–8.]
    Consequently, at the time that the 1981 freeze was agreed with the corporation, the Government gave the BGC a clear undertaking to review the rate of the levy towards the end of the financial year 1981–82—around the time of the 1982 Budget—by which time the corporation's financial position was expected to be clearer. It would not have made sense to adjust the levy straight away, without the benefit of up-to-date financial forecasts, and run the risk of making an inappropriate adjustment, especially as the Gas Levy Act had only just passed into law and we had had no experience of how the new system would operate in practice. However, we took the immediate step of increasing the corporation's EFL for 1981–82 by £73 million to £317 million in respect of the 1981 freeze. That was necessary because at that time—it has subsequently been put on a post—levy basis—the BGC's EFL was still on a pre-levy basis. Any reduction in the post-levy revenue therefore acted directly to reduce the available amount of money on a pre-levy basis, thus impairing the BGC's ability to achieve its original EFL.
    The reduction in the rate of the levy from 5p per therm to 4p per therm on those contracts that are PRT-exempt which would be brought about by the present order would reduce the BGC's costs by about £140 million in the financial year 1982–83. It will thus compensate the BGC for the effect on its profits of both freezes. The corporation's EFL for 1982–83 is on a post-levy basis, so there is no need to make any changes in respect of this year's freeze, which is forecast to cost £61 million. However, since the compensating reduction in the levy for the 1981 freeze is also being made in the financial year 1982–83, that will increase the amount of cash available to the BGC in that year. We have therefore agreed with the corporation that its original —£2 million EFL for 1982–83 should be reduced to —£75 million.
    The net result of these changes is that BGC's profits over the period of the present financial target will be unaffected by the direct impact of the two freezes, and that BGC's ability to meet its financial target will not be impaired in any way as a direct result of Government action.
    I said earlier that, apart from its simplicity, one attraction of choosing a reduction in the rate of the levy as the means by which BGC should be compensated was that it would leave the corporation's overall financial framework pretty well undisturbed. The other main alternative, that of reducing the financial target, would have been far more disruptive of the corporation's overall financial position, since it would have meant changing the rate of return on capital which the corporation has been aiming at, at a time when it is more than halfway through the three-year period of the present financial target.
    The levy is also the most appropriate vehicle because of the way in which, by making it possible for BGC to have a financial target which envisages a normal

    185
    commercial level of profit, it acts to encourage BGC to maintain its efficiency. Allowing the corporation to retain large windfall profits would, for obvious reasons, have been bound to put at risk its standards of efficiency. On the other hand, removing these windfall profits by means of a crude profits tax would have tended to act as a disincentive to efficiency, since, under such a tax, the corporation would not be allowed to keep any profits above the "normal" level, even if these resulted from increased efficiency. It could also have acted to encourage extravagance in expenditure. The solution which we have adopted, of a levy which operates to remove the source of these windfall profits while allowing the corporation to earn a normal rate of return and to enjoy any benefits resulting from increased efficiency, avoids both these risks. Compensating BGC for the effects of the freezes by changing the financial target would have undermined this framework, and made the levy into a heavy burden which could not fail to adversely affect the corporation's morale and efficiency.
    Mr Robert C. Brown: Is the Minister implying that the windfall profits which he refers to in the case of the British Gas Corporation are not necessarily the result of increased efficiency or general efficiency, but that in the case of the banks they stem from efficiency alone?
    Mr. Moore: I do not think that this is an appropriate time to debate the nature of windfall profits. By definition, windfall profits are in no way connected with the efficiency of banks or, in terms of this debate, of the BGC. They relate to the radical change in the underlying value of the particular asset caused by change in world oil and energy conditions. If the hon. Member wishes, I can come back to that point at the conclusion of this short debate.
    The adjustment to be effected by the order can be supported by hon. Members on both sides of the House, and I therefore commend it to the House.
    4.53 pm
    Mr. Edward Rowlands: The Under-Secretary did me the honour of quoting some of my observations during the Committee stage of what is now the Gas Levy Act. I should like to draw his attention to one or two other things we said about the gas levy in the context of this order. Since the introduction of the gas tax, as we call it, the Government have denied repeatedly that there is any connection between the amount raised under the levy and gas prices. It is our view, supported by the explanation the hon. Gentleman has given, that the order undermines those denials and demonstrates that there is a relationship, directly or indirectly, between the amount of money the Government are seeking to raise from British Gas under the levy and their gas price policy.
    The order reduces the gas levy for 1982–83 by 1p per therm, reducing the tax on British Gas from £750 million, which the Government expected to obtain, to £570 million because the Government want to compensate British Gas for the price concessions made at their behest to industrial gas consumers.
    The hon. Gentleman pointed out that had the Government not introduced the concessions in the Budget last year industrial gas prices would have risen by 23 per cent. They wish to prevent a similar increase this year by asking British Gas to make the concession, while they
    186
    reduce the gas levy from £750 million to £570 million. Therefore there is a clear connection, as we argued in the debates on the Gas Ley Act, between the gas levy and gas prices.
    The Government could help domestic consumers by taxing British Gas less and offering assistance to keep down price increases. That is what they are doing for industrial gas consumers by bringing forward this order and by their budgetary proposals.
    We support the assistance that is being given to industrial gas consumers in the Budget, although we find it nauseating that the Government are trying to claim to be some sort of champion of industrial gas consumers. For the past 18 months hon. Members on both sides of the House have begged the Government to heed the pleas of industrial gas consumers. It is almost a year to the day that we had an Adjournment debate at the behest of the hon. Member for Bedford (Mr. Skeet) on this subject. The Government waffled and procrastinated, but have come forward tardily with genuine assistance for industrial gas consumers who were facing hefty price increases. The cost of the concessions is the reduction proposed in the levy. So clearly there is a direct or indirect relationship between the amount of money raised by the gas levy and the gas prices imposed upon consumers.
    We cannot support the order as it has been put forward; I am hoping to persuade the Minister to withdraw it and bring forward another order in due course. If British Gas can be compensated for concessions to industrial gas consumers, why can the Government not exercise the same sense of moderation and help domestic gas consumers? It is ironic that the Minister quotes a figure of 23 per cent. as the increase that industrial gas consumers would have had to bear without the concessions. That is exactly the increase that domestic gas consumers will face in the coming year as a result of the policy of the Government, not of British Gas.
    We all know the incredible formula proposed by the previous Secretary of State and upheld by the present Secretary of State for Energy of increasing domestic gas prices by 10 per cent. over the rate of inflation. We have opposed it bitterly since its introduction and I have never understood how it helped fight the battle against inflation. It means that nearly 15 million gas customers will face price increases of 10 per cent. above the rate of inflation when they are expected to take wage increases of less than the rate of inflation; 6 per cent. is being offered to nurses and 3 to 4 per cent. to teachers and public service employees. Many firms, such as Hoover in my constituency, are taking no increase in wages this year so that they may survive. Yet the Government insist for the third year running that domestic gas prices will be increased by 10 per cent. above the rate of inflation. In three years this has resulted in a 100 per cent. increase in the price of domestic gas.
    Stripped of the technical explanation that the hon. Gentleman gave, the order says that the Government planned to raid British Gas for £750 million in 1982–83. Because the Government are now belatedly converted to giving assistance to industrial gas consumers, they have decided to raid British Gas only to the tune of £570 million. That is the consequence of the so-called moderation of the order. In 1982–83, £570 million rather than £750 million is to be taken out of British Gas. That is the price of reducing the gas levy rate by 1p per therm.

    187
    Perhaps the Under-Secretary will confirm my figures on the cost of giving moderate support to the domestic gas consumer rather than ruthlessly pursuing the policy of imposing price increases of 10 per cent. more than the rate of inflation, which means 23 per cent. this year, on top of 60 per cent. and 70 per cent. in the past two years. What would be the cost of conceding to domestic consumers a reduction of 1p per therm rather than raising £570 million in tax from British Gas? Would not the cost to British Gas of a 1p per therm concession in order to moderate, however slightly, the savage increase that the Government are imposing on domestic gas consumers this year, amount to £90 million? If the price of gas were reduced by 2p per therm, would not the cost to British Gas be £180 million? That is only one-third of the amount that the Government plan to raise from this order.
    I do not demand that the whole of the levy should be withdrawn, but domestic gas consumers should be given some support similar to that given to industrial consumers. The Under-Secretary should exercise some moderation rather than impose on British Gas a formula for charging domestic consumers an extra 23 per cent. this year, He could take rather less from British Gas through the levy and offer it back to domestic consumers by moderating the increase that the Government are imposing for 1982–83.
    Reducing the price of gas by 1p per therm would cost £90 million. A reduction of 2p per therm would cost £180 million. That is about one-third of what the order will raise in 1982–83. The Government tell us how generous and moderate they are being to British Gas in offering back so much of the money that they intended to take away so as to help the industrial gas consumer. Why do not the Government exercise similar moderation with regard to domestic gas consumers?
    It has been argued that the increase that domestic consumers must pay will fund the concessions made to industrial consumers. That was the Secretary of State's pitch. He suggested that the 100 per cent. increase in gas prices to domestic consumers during the past three years was designed to raise money that could then be offered to provide more assistance to industrial consumers. But the Government could have done both—they could have not raised the tax on British Gas and have offered back to the consumer, both industrial and domestic, the moderate concession that I have proposed.
    I am always willing to be converted. I hope that the Under-Secretary is also open-minded on the subject. I ask him to withdraw the order.
    Mr Tom Ellis: I gather from what the hon. Gentleman says that the Opposition are likely to oppose the order. Does his pricing policy for gas depend solely on the social consequences for domestic gas consumers, or are there other criteria?
    Mr. Rowlands: Many factors govern pricing policy towards domestic or industrial consumers. Social consequences are not the only criterion. It is crazy to raise domestic gas prices three years running by 10 times the rate of inflation while at the same time making firm demands on work people to moderate their wage claims. I do not see how a 23 per cent. increase helps the battle against inflation this year, any more than I could see how the 20-odd per cent. increase in domestic gas prices helped
    188
    the battle against inflation last year. A balance must be struck between genuine economic and commercial considerations.
    The price of gas is not an inessential or marginal item. It is fundamental to the average working person's home in terms of heating costs. There is a good case for asking the Government to think again. They should withdraw the order and return with a lower levy. The Opposition are not asking for the increases to be wiped out. The Government should moderately reduce the extra burdens that they are imposing on domestic gas consumers.
    The Under-Secretary of State made two points in defence of his 23 per cent. domestic gas price increase for 1982–83. He said, first, that only by such a method could the Government give concessions to industrial consumers. The order and his own explanation disprove that. More assistance could be offered to each by not taking so much in the gas levy. Secondly, he argued that selective assistance should not be given to domestic gas consumers because people who do not use gas would not benefit. The same applies to industrial gas consumers, which are a minority of industrial concerns. Once again, a concession is being given to one section of industry. That is perfectly justifiable. Indeed, the Opposition have argued for it for the past year. Either way, 15 million customers are involved. Gas is such a basic resource—for heating factories or homes—that there is a good case for moderating price increases wherever possible. It is clear from the order that it is within the power of Government to moderate price increases to both industrial and domestic consumers. The Government should exercise that moderating influence.
    I hope that the Under-Secretary will withdraw the order in the same spirit in which he moved it and in which I have responded. He could then reintroduce it with, perhaps, a lower rate for the levy in 1982–83, and thus at least graduate the savage increases to domestic consumers that the Government have imposed during the past three years.
    5.7 pm
    Mr. Robert C. Brown (Newcastle-upon-Tyne, West): I am glad that the Government have come forward with this order to reduce the levy by 1p per therm. At long last, they have had to admit that the levy is not just a tax on windfall profits, with all the connotations of ill-gotten gains that that phrase somehow implies.
    This order to reduce the levy by 20 per cent. is long overdue, and it does not go nearly far enough. The levy should never have been imposed in the first place. It was ill conceived and potentially damaging to the gas industry. Had it continued unchanged, there would have been a danger that the British Gas Corporation—a highly profitable nationalized industry—would have gone into deficit in about the third year of operation. By altering the levy at this stage, in response to the Government's own actions in freezing industrial gas prices, the Government are for the first time admitting that the profits of the BGC are due largely to its own actions and decisions.
    The Government should go further into the realm of openness. What do they intend to do when the Oil and Gas (Enterprise) Bill becomes effective? Will they return next Session with the argument that, as the BGC no longer has the volume of sales that it had, because the Government have handed a bonanza to the oil companies, the levy will therefore have to be changed again? In principle, of course, it will not need to be altered, but if the Government

    189
    are already forgoing 20 per cent. of their take this year, will they seek to raise the levy at a later stage to claw back some revenue, or will they rest content with a lower take or seek to impose a similar levy on the private companies? The Government must turn their attention to this now. Otherwise, I fear that the BGC will again be made the involuntary tax collector, extracting ever steeper prices from the domestic consumer as the Government scramble to balance their books before the general election. That is, after all, what privatisation is about. We all know that every one of the privatisation measures introduced by the Government is designed to affect the public sector borrowing requirement in such a way as to allow the Government to amass sufficient funds—in my view, stolen from the British taxpayer—to make some tax handouts prior to the next general election.
    Industrial gas prices would have increased by a further 23 per cent. if the Government had not decided to freeze them. I do not complain about the freezing of industrial gas prices at all, but I repeat the question put by my hon. Friend the Member for Merthyr Tydfil (Mr. Rowlands). Why should not the domestic gas consumer enjoy the benefits of the efficiency of the BGC rather than being punished by the Government year after year? The gas consumers of this country should be under no illusions. On more than one occasion in recent months, the Prime Minister has dishonestly suggested from the Dispatch Box that nationalised industries such as the BGC are causing inflation by what she calls needless price increases. As she well knows, price increases of 10 per cent. above the inflation rate have been imposed by the BGC at the direct dictation of the Government. She should at least be honest enough to admit that it is the Government and not the BGC who are crucifying the British gas consumer.
    5.22 pm
    Mr. Tom Ellis: I had not intended to take part in the debate, as I thought that it would be very much a routine affair, welcoming a measure that ought to please everyone. I was astounded by the approach adopted by the hon. Member for Merthyr Tydfil (Mr. Rowlands).
    I wish to put two points to the House. First, for 20 years or more, I worked in an energy industry. I found that the well-being of that industry was constantly bedevilled by what later came to be known as the unrealistic pricing of the fuel. It is extremely important that all our fuels should be realistically priced. Yet the hon. Member for Merthyr Tydfil seemed to consider only the social effect of gas prices on domestic consumers.
    Mr Robert C. Brown: The hon. Gentleman said that all fuels should be realistically priced, and I agree. Does he suggest that a realistic price is arrived at by the Government of the day laying down that the price shall be increased by the rate of inflation plus 10 per cent?
    Mr. Ellis: The hon. Gentleman is entering a very wide
    area. The relationship of the Government to the nationalised industries is complex. I have long preached that it should be an arm's-length relationship, but precisely how that relationship should be achieved is a very complex matter, and I am not prepared to go into the details raised by the hon. Gentleman at this stage. The subject is far more complex than he appears to realise.
    Secondly, in my constituency there is a large factory which, only six or nine months ago, was anxious to
    190
    expand. That firm was a consumer of gas, but, unfortunately, the gas board was simply not able to supply the gas. Therefore, that factory failed to expand and to employ perhaps 100 additional workers. Perhaps it should have been available, but it was not. Any Government should bear in mind that energy policy must be designed in such a way as to ensure that problems such as occurred in my constituency are not common. The hon. Member for Merthyr Tydfil gave the impression that nothing mattered but the effect on domestic consumers. In reply to my intervention, he said that there were many other criteria, but he did not mention them. He simply plugged the point about the effect of prices on the domestic consumer. If that is the official Opposition's approach, I am extremely surprised.
    Mr Rowlsssands: The hon. Gentleman's comments are
    completely misleading. His attendances in the House are
    so rare that he has not heard the debates on industrial
    energy pricing in the past 18 months to two years. Certainly, I do not recollect his taking part in any of them. Had he done so, he would have heard the balanced view put forward by the Labour Party on this as on every other occasion. He should come in a little more often to hear the debates.
    Mr Ellis: I have taken part in such debates. Moreover, I have listened to the hon. Gentleman's speech today. I had not intended to take part today, but I was so flabbergasted by his naive approach that I felt that somebody had to say something sensible.
    I should make it clear that if the matter is pressed to a Division, the Social Democrats will support the order.
    5.26 pm
    Mr. John Moore: Like the hon. Member for Wrexham (Mr. Ellis), I was flabbergasted and staggered by the attitude of the hon. Member for Merthyr Tydfil (Mr. Rowlands). Listening to nothing and learning nothing, he made the Bourbons seem quite enlightened by comparison. We had an extensive debate on this subject on 2 March. The hon. Gentleman seems unable to get to grips with the reality of the difference between industrial and domestic gas prices, although we discussed it at inordinate length in the last debate on gas. The Labour Party's approach shows a blind refusal to face facts and reality while always seeking the easy route of trying to buy people's votes with their own money. That is one reason why we have to sort out the appalling mess left by the Labour Government.
    I, too, was astonished at the hon. Gentleman's approach to the order, which reduces the gas levy and thus gives effect to the Government's Budget promise to freeze industrial contract prices at the 1 April level for the rest of this year. As such, it is a useful and desirable measure, which should be supported by all. I commend the order to the House.
    Question put:—
    The House divided: Ayes 263, Noes 178.

    Division No. 110]

    [5.17 pm>

    AYES

    Adley, Robert

    Atkins, Robert(PrestonN)

    Alexander, Richard

    Baker, Kenneth(St.M'bone)

    Alison, RtHonMichael

    Beaumont-Dark, Anthony

    Alton, David

    Beith, A.J.

    Ancram, Michael

    Bendall, Vivian

    Arnold, Tom

    Benyon,W. (Buckingham)

    Aspinwall, Jack

    Berry, HonAnthony

    Atkins, RtHonH.(S'thorne)

    Best, Keith

    191

    Bevan, DavidGilroy

    Grieve, Percy

    Biffen, RtHonJohn

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

    Biggs-Davison, SirJohn

    Griffiths, Peter Portsm'thN)

    Blaker, Peter

    Grist, Ian

    Bonsor, SirNicholas

    Grylls, Michael

    Boscawen, HonRobert

    Gummer, JohnSelwyn

    Bottomley, Peter (W'wich W)

    Hamilton, HonA.

    Boyson, DrRhodes

    Hamilton, Michael (Salisbury)

    Bradley, Tom

    Hannam, John

    Braine, SirBernard

    Haselhurst, Alan

    Brittan, Rt.Hon.Leon

    Havers, Rt Hon Sir Michael

    Brocklebank-Fowler,C.

    Hawkins, Paul

    Brooke, HonPeter

    Hawksley, Warren

    Brown, Michael(Brigg&Sc'n)

    Hayhoe, Barney

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

    Heddle, John

    Browne, John (Winchester)

    Henderson, Barry

    Bruce-Gardyne, John

    Heseltine, Rt Hon Michael

    Bryan, Sir Paul

    Hicks, Robert

    Buchanan-Smith, Rt. Hon. A.

    Higgins, Rt Hon Terence L.

    Buck, Antony

    Hill, James

    Budgen, Nick

    Holland, Philip(Carlton)

    Bulmer,Esmond

    Hooson,Tom

    Burden,SirFrederick

    Hordern,Peter

    Butcher, John

    Howe, Rt Hon Sir Geoffrey

    Cadbury, Jocelyn

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

    Carlisle, John(LutonWesy)

    Howell, Ralph(NNorfolk)

    Carlisle, Kenneth(Lincoln)

    Howells, Geraint

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

    Hunt, John(Ravensbourne)

    Cartwright, John

    Hurd, RtHon Douglas

    Chalker, Mrs. Lynda

    Jessel, Toby

    Chapman, Sydney

    JohnsonSmith, Geoffrey

    Churchill,W.S.

    Jopling, RtHon Michael

    Clark, HonA. (Plym'th, S'n)

    Kaberry, Sir Donald

    Clark, Sir W. (Croydon S)

    Kellett-Bowman, Mrs Elaine

    Clarke, Kenneth (Rushcliffe)

    Kershaw, Sir Anthony

    Cockeram, Eric

    Kimball, Sir Marcus

    Corrie, John

    King, Rt Hon Tom

    Costain, Sir Albert

    Lamont, Norman

    Cranborne, Viscount

    Lang, Ian

    Critchley, Julian

    Latham, Michael

    Crouch, David

    Lawrence, Ivan

    Dean, Paul (North Somerset)

    Lawson, Rt Hon Nigel

    Dorrell, Stephen

    Lee, John

    Douglas-Hamilton, Lord J.

    Lennox-Boyd, Ho n Mark

    Dover, Denshore

    Lester, Jim (Beeston)

    Dunn, James A.

    Lewis, Kenneth (Rutland)

    Dunn, Robert (Dartford)

    Lloyd, Peter (Fareham)

    Durant, Tony

    Luce, Richard

    Dykes, Hugh

    Lyell, Nicholas

    Eden, Rt Hon Sir John

    Lyons, Edward (Bradt'dW)

    Edwards, Rt Hon N. (P'broke)

    Mabon, Rt Hon Dr J. Dickson

    Eggar, Tim

    Macfarlane, Neil

    Elliott, Sir William

    MacGregor, John

    Ellis, Tom (Wrexham)

    MacKay, John (Argyll)

    Emery, Sir Peter

    Maclennan, Robert

    Eyre, Reginald

    McNair-Wilson, M. (N'bury)

    Fairgrieve, Sir Russell

    McNair-Wilson, P. (NewF'st)

    Faith, Mrs Sheila

    McNally, Thomas

    Farr, John

    McQuarrie, Albert

    Fell, SirAnthony

    Magee, Bryan

    Fenner, Mrs Peggy

    Marshall, Michael (Arundel)

    Finsberg, Geoffrey

    Mates, Michael

    Fisher, Sir Nigel

    Mather, Carol

    Fletcher, A. (Ed'nb'ghN)

    Maude, Rt Hon Sir Angus

    Fletcher-Cooke, Sir Charles

    Mawby, Ray

    Fookes, Miss Janet

    Mawhinney, Dr Brian

    Forman, Nigel

    Maxwell-Hyslop, Robin

    Fowler, Rt Hon Norman

    Mayhew, Patrick

    Fox, Marcus

    Mellor, David

    Fraser, Rt Hon Sir Hugh

    Meyer, Sir Anthony

    Fraser, Peter (SouthAngus)

    Miller, Hal(B'grove)

    Freud, Clement

    Mills, Iain(Meriden)

    Fry, Peter

    Mills, Peter (West Devon)

    Gardiner, George(Reigate)

    Miscampbell, Norman

    Garel-Jones, Tristan

    Moate, Roger

    Ginsburg, David

    Monro, Sir Hector

    Goodhew, Sir Victor

    Montgomery, Fergus

    Goodlad, Alastair

    Moore, John

    Gow, Ian

    Morrison, Hon C. (Devizes)

    Gray, Hamish

    Morrison, Hon P. (Chester)

    192

    Mudd, David

    Smith, Dudley

    Murphy, Christopher

    Speed, Keith

    Myles, David

    Speller, Tony

    Neale, Gerrard

    Spence, John

    Neubert, Michael

    Spicer, Michael (S Worcs)

    Newton, Tony

    Sproat, Iain

    Normanton, Tom

    Squire, Robin

    O'Halloran, Michael

    Stainton, Keith

    Onslow, Cranley

    Stanbrook, Ivor

    Osborn, John

    Stanley, John

    Owen, Rt Hon Dr David

    Steen, Anthony

    Page, Richard (SW Herts)

    Stewart, A. (E Renfrewshire)

    Parkinson, Rt Hon Cecil

    Stewart, Rt Hon D. (W lsles)

    Parris, Matthew

    Stewart, Ian (Hitchin)

    Patten, Christopher(Bath)

    Stokes, John

    Pattie, Geoffrey

    Stradling Thomas, J.

    Pawsey, James

    Tapsell, Peter

    Penhaligon, David

    Tebbit, Rt Hon Norman

    Percival, Sir Ian

    Temple-Morris, Peter

    Peyton, Rt Hon John

    Thorne, Neil (IlfordSouth)

    Pink, R. Bonner

    Townend, John(Bridlington)

    Pollock, Alexander

    Townsend, Cyril D, (B'heath)

    Porter, Barry

    Trippier, David

    Prentice, Rt Hon Reg

    Viggers, Peter

    Proctor, K. Harvey

    Waddington, David

    Raison, Rt Hon Timothy

    Walker, B. (Perth)

    Rathbone, Tim

    Waller, Gary

    Renton, Tim

    Walters, Dennis

    Rhodes James, Robert

    Ward, John

    Ridley, Hon Nicholas

    Watson, John

    Ridsdale, Sir Julian

    Wells, John(Maidstone)

    Rifkind, Malcolm

    Wheeler, John

    Roberts, M. (CardiffNW)

    Whitelaw, Rt Hon William

    Roper, John

    Whitney, Raymond

    Rossi, Hugh

    Wickenden, Keith

    Rost, Peter

    Wilkinson, John

    Royle, Sir Anthony

    Williams, Rt Hon Mrs (Crosby)

    Sainsbury, Hon Timothy

    Wilson, Gordon (Dundee E)

    St. John-Stevas, Rt Hon N.

    Winterton, Nicholas

    Sandelson, Neville

    Wolfson, Mark

    Shaw, Michael(Scarborough)

    Younger, Rt Hon George

    Shelton, William(Streatham)

    Shepherd, Colin(Hereford)

    Tellers for the Ayes:

    Shepherd, Richard

    Mr. John Cope and Mr. David Hunt.

    Sims, Roger

    Skeet, T. H. H.

    NOES

    Abse, Leo

    Cunliffe, Lawrence

    Allaun, Frank

    Cunningham, G. (Islington S)

    Archer, Rt Hon Peter

    Dalyell, Tam

    Ashley, Rt Hon Jack

    Davidson, Arthur

    Atkinson, N. (H'gey,)

    Davies, Ifor (Gower)

    Bagier, Gordon A.T.

    Davis, Clinton (Hackney C)

    Barnett, Guy (Greenwich)

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

    Bennett, Andrew(St'kp'tN)

    Dean, Joseph (Leeds West)

    Bidwell, Sydney

    Dixon, Donald

    Booth, Rt Hon Albert

    Dobson, Frank

    Boothroyd, Miss Betty

    Dormand, Jack

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

    Douglas, Dick

    Bray, Dr Jeremy

    Dubs, Alfred

    Brown, Hugh D. (Provan)

    Duffy, A. E. P.

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

    Dunlop, John

    Brown, Ron(E'burgh,Leith)

    Dunwoody, Hon Mrs G.

    Buchan, Norman

    Eadie, Alex

    Callaghan, Rt Hon J.

    Eastham, Ken

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

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

    Campbell, Ian

    Ellis, R.(NED'bysh're)

    Canavan, Dennis

    English, Michael

    Carmichael, Neil

    Ennals, Rt Hon David

    Clark, Dr David (S Shields)

    Evans, loan (Aberdare)

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

    Evans, John (Newton)

    Coleman, Donald

    Faulds, Andrew

    Conlan, Bernard

    Field, Frank

    Cook, Robin F.

    Fitch, Alan

    Cowans, Harry

    Fletcher, Ted (Darlington)

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

    Foot, Rt Hon Michael

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

    Ford, Ben

    Crowther, Stan

    Forrester, John

    Cryer, Bob

    Foster, Derek

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    Foulkes, George

    Newens, Stanley

    Freeson, Rt Hon Reginald

    Oakes, Rt Hon Gordon

    Garrett, John (Norwich S)

    O'Neill, Martin

    Garrett, W. E. (Wallsend)

    Palmer, Arthur

    George, Bruce

    Park, George

    Gilbert, Rt Hon Dr John

    Parker, John

    Golding, John

    Parry, Robert

    Graham, Ted

    Pavitt, Laurie

    Grant, George (Morpeth)

    Pendry, Tom

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

    Powell, Raymond (Ogmore)

    Harrison, Rt Hon Walter

    Prescott, John

    Hart, Rt Hon Dame Judith

    Radice, Giles

    Hattersley, Rt Hon Roy

    Rees, Rt Hon M (Leeds S)

    Haynes, Frank

    Richardson, Jo

    Healey, Rt Hon Denis

    Roberts, Albert(Normanton)

    Heffer, Eric S.

    Roberts, Allan (Bootle)

    Hogg, N. (EDunb't'nshire)

    Roberts, Ernest (HackneyN)

    HomeRobertson, John

    Roberts, Gwilym (Cannock)

    Homewood, William

    Robertson, George

    Hooley, Frank

    Robinson, G. (CoventryNW)

    Howell, Rt Hon D.

    Rooker, J. W.

    Hughes, Robert (AberdeenN)

    Ross, Ernest (Dundee West)

    Janner, Hon Greville

    Rowlands, Ted

    Jay, Rt Hon Douglas

    Sever, John

    Jones, Rt Hon Alec (Rh'dda)

    Sheerman, Barry

    Jones, Barry (East Flint)

    Sheldon, Rt Hon R.

    Kaufman, Rt Hon Gerald

    Shore, Rt Hon Peter

    Kerr, Russell

    Short, Mrs Renee

    Kilfedder, James A.

    Silkin, Rt Hon J. (Deptford)

    Lambie, David

    Silkin, Rt Hon S. C. (Dulwich)

    Lamborn, Harry

    Silverman, Julius

    Lamond, James

    Skinner, Dennis

    Leighton, Ronald

    Soley, Clive

    Lewis, Arthur (N'ham NW)

    Spearing, Nigel

    Lewis, Ron (Carlisle)

    Spriggs, Leslie

    Lofthouse, Geoffrey

    Stoddart, David

    McCartney, Hugh

    Stott, Roger

    McDonald, Dr Oonagh

    Summerskill, Hon Dr Shirley

    McElhone, Frank

    Taylor, Mrs Ann (Bolton W)

    McGuire, Michael(Ince)

    Thomas, DrR.(Carmarthen)

    McKay, Allen (Penistone)

    Thorne, Stan (Preston South)

    McKelvey, William

    Tilley, John

    MacKenzie, Rt Hon Gregor

    Tinn, James

    McNamara, Kevin

    Varley, Rt Hon Eric G.

    McTaggart, Robert

    Wainwright, E.(DearneV.)

    Marshall,D(G'gowS'ton)

    Walker, Rt Hon H.(D'caster)

    Marshall, Jim (Leicester S)

    Watkins, David

    Mason, Rt Hon Roy

    Welsh, Michael

    Maxton, John

    White, Frank R.

    Maynard, Miss Joan

    White, J. (G'gowPollok)

    Meacher, Michael

    Whitlock, William

    Mellish, Rt Hon Robert

    Willey, Rt Hon Frederick

    Mikardo, Ian

    Williams, Rt Hon A(S'sea W)

    Millan, Rt Hon Bruce

    Wilson, William (C'trySE)

    Miller, Dr M. S. (E Kilbride)

    Winnick, David

    Mitchell, Austin (Grimsby)

    Morris, Rt Hon C. (O'shaw)

    Tellers for the Noes:

    Morris, Rt Hon J. (Aberavon)

    Mr. James Hamilton and Dr. Edmund Marshall.

    Morton, George

    Question accordingly agreed to.
    Resolved,
    That the draft Gas Levy (Rate for 1982–83) Order 1982, which was laid before this House on 12th March, be approved.

    National Health Service (Dental and Optical Charges)
    5.30 pm
    Mrs. Gwyneth Dunwoody: I beg to move:
    That an humble Address be presented to Her Majesty, praying that the National Health Service (Dental and Optical Charges) Amendment Regulations 1982 (S.I., 1982, No. 284), dated 3rd March 1982, a copy of which was laid before this House on 10th March, be annulled.
    There is nothing worse than having one's promises recorded, particularly in the Official Report, if one does not intend to stick to them. The Government, when they came to office, made great play of their commitment to the principles of the National Health Service. Their election address stated:
    "In our National Health Service standards are falling; there is a crisis of morale; too often patients' needs do not come first".
    That is fine. The House of Commons is, therefore, obliged not simply to look at what the Government say but also at how they behave. The two sets of charges covered by the regulations we are debating have one thing in common. Both are positive deterrents to the patient who seeks specialist help. Both are totally opposed not only by patients but by the professional organisations which wall be most concerned with their administration.
    In the case of dental charges, the British Dental Association has spoken of the anger of its members at the Government's failure to honour an undertaking given by the Minister for Health on 31 March 1981 that charges would rise
    "in line with costs" (Official Report, 31 March 1981; Vol 2, c. 135).
    and no more.
    The BDA points out that when Ministers took office, charges were a maximum £5 for routine treatment with a £30 maximum for all treatment. Those charges are now to be respectively £13 and £90, an increase of nearly treble the original charges in three years. This comes from a Government who actually stated during the election that it was a great lie to suggest that they would increase National Health Service charges. What is more, the proposed increase will exceed the estimated percentage increase in costs by 21 per cent. The real effect of the charges is therefore to impose a straight tax on those seeking dental treatment—a tax, moreover, that will raise £27 million more than the cost to the National Health Service.
    The dental review body set up in 1980 by the right hon. Member for Wanstead and Woodford (Mr. Jenkin) when he was Secretary of State for Social Services published its findings in a report entitled "Towards Better Dental Health: Guidelines for the Future". It stated that dentistry in the NHS should aim at providing the opportunity for everyone to retain a healthy functional dentition for life and that the level of charges to patients should be set as low as possible because of their deterrent effect. That recommendation has been totally ignored by Ministers. even though, on another occasion in this House, when speaking of dental therapists, the Minister, concurring in the shameful closure of the New Cross school of dental therapists, prayed the report in aid on every possible occasion. It would seem that Ministers are not only exceedingly selective in the advice they accept from the review body but that they do not hesitate to ignore its findings completely when they choose.

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    The truth is that the proportion of gross costs recovered from the patient through dental charges has been steadily rising. In 1978–79, the proportion was 19·8 per cent. In 1980–81, it had risen to 22 per cent. What is more, the charges for routine treatment have consistently increased by a greater amount than the increase in costs. The absurd situation has now been reached where over half the adults having treatment are in effect paying the whole costs.
    The patient who visits the dentist regularly and who has his teeth scaled and polished, has some radiographs and perhaps a filling, will be paying in future the whole cost of the treatment. In addition, the patient who is more likely to be deterred from regular check-ups by the increase in charges to a £90 maximum is also more likely to refuse conservative treatment—I use the phrase in the medical sense—when he does go to the dentist and is therefore much more likely to opt for extractions. It is apt that conservative dental treatment in this case should mean that all a patient does is lose his teeth. We shall soon be back to the situation where dental health is a luxury for a few and not the accepted norm for the many.
    In talking on previous occasions of the excess of dental therapists available in the country, the Under-Secretary of State said that dental health was so much improved in the population as a whole that we did not require the same numbers of trained personnel. How long will that situation exist once the new charges come into operation on 1 April? The charges have now been increased four times from £5 to £9 for routine treatment while the maximum charges have gone from £30 to £90.
    If this was not enough, the categories of those eligible for treatment have been changed. One of the groups that most concerns me consists of those young people who are not students and who are now excluded from free treatment. They are also the young people who are likely to suffer most from the increased charges for those aged between 18 and 20. Many of these young people are involved in youth opportunities schemes or work experience. Yet they do not qualify for treatment under the existing exemptions. In my constituency, there have been horrifying cases of people who have gone back to removing their own teeth because they are not eligible for very expensive treatment—a return to the early nineteenth century under an eighteenth century Government. These are hardly the most affluent of our young. The decision to exclude them is unnecessarily punitive.
    The Minister should look again at the whole question. Even if he cannot do anything else, he should get up tonight and say that he intends to change the terms of the regulations in respect of those who fall within this group so that they will in future be covered by the exemptions.
    I come now to the other half of the regulations. The changes in respect of optical charges are even more complex. Not only are the increases themselves absolutely swingeing but the new structure will also be far more difficult to administer. For example, the charges for single vision lenses will now range from £3·70 to £9·25 per lens compared with £2·90 and £3·35 at present. Whereas there were previously two scales of charges, there will now be 15. What is more, there will be additional charges for prisms and tints even when these are prescribed by the practitioner as a result of his examination of the patient.
    This means that the Government are determined to penalise those patients whose need is the greatest. The
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    more visually handicapped—those who need to wear high prescription lenses—will suffer the most under the increases. These are very often the elderly who are least likely to be able to afford the higher charges. It is not right automatically to assume that they will all be entitled, or that they will even be eligible, to claim supplementary benefit. They may be post-operative cataract patients who will require two pairs of National Health Service spectacles. In future, they will be openly penalised by the savage increase in prices. Inevitably, many patients will be deterred from seeking help. Once they realise that NHS spectacles will be considerably dearer they will understand that the whole purpose of these changes is to make it more, not less difficult for people to receive specialist help.
    The impact of these regulations on the health of the nation will be wholly damaging. The increase in charges is a deliberate attempt to move further away from a National Health Service free at the time of use to one in which charges are used as a positive deterrent to the patient. The regulations are opposed by many community health councils on behalf of patients and it is noticeable that the professions concerned are completely opposed to what is contained in them. They will discourage dental and optical treatment by imposing the burden of monetary barriers between the patient and the practitioner and they are a practical demonstration of the small, narrow-minded approach of the present Government to health. The Government resent the existence of the National Health Service and they are doing their best, by bringing in as many additional charges as possible, to deter patients from going for any kind of specialist help.
    Not only are the regulations deliberate in intent, they are an open breach of faith by the Government, even by their own very peculiar standards. They have said that they will increase charges only in line with costs. Yet these charges are way above true costs and are a straight and damaging tax on health care.
    Mr Laurie Pavitt: Let the sick pay.
    Mrs. Dunwoody: As my hon. Friend says—let the sick pay. That has been the basis of Conservative thought for a very long time and that thought is enshrined in the regulations.
    The Royal Commission on the Health Service made it clear that any charges are likely to act as a deterrent to the patient who wishes to seek help. When we return to office, it will be our aim to abolish all theses charges at the earliest possible moment. We wish the NHS restored to what it should be—a protection for the sick in time of need and, a fully comprehensive service free at the point of use and open to all. It should be and it must be an object of pride for all our people. In opposing the regulations the Labour Party has the interests of the people of Great Britain at heart.
    5.43 pm
    The Under-Secretary of State for Health and Social Security (Mr. Geoffrey Finsberg): Last week we read in the press of an alleged altercation between the hon. Member for Crewe (Mrs. Dunwoody) and the right hon. Member for Bristol, South-East (Mr. Benn) about who was entitled to make Health Service policy on behalf of the Opposition. Having heard the hon. Lady, I can say that there is not a jot of difference between them. They are talking sheer rubbish and I shall attempt to explain that to

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    the House in some detail. We have already listened to an immense amount of ill-informed and ill-intentioned comment about the possible effects of the regulations. Therefore, I shall try to put the record straight and to set the proposed increases in perspective.
    First, in spite of what the hon. Member for Crewe said ad nauseam, the increases have to be seen in the context of total NHS spending. The Government, contrary to every word spoken by the hon. Lady, have maintained planned expenditure on the National Health Service as a whole, and that is a significant achievement.
    Up to 1982–83 it is planned to increase in real terms by 6 per cent. To help finance this protection for health expenditure, existing charges to people using the family practitioner services have had to be increased. It is just not possible, given the need to contain public expenditure, to plan for growth without making some offsetting savings.
    The second point that seems to me to have been wholly lost sight of by the Opposition is that we are not proposing to reduce the total amount spent on either the general dental services or the general optical services. Total spending this year on the general dental services will have been about £490 million and it is expected to rise to some £530 million in 1982–83—an increase that includes real growth of 2½ per cent. As for expenditure on the general optical services, this is expected to be £141 million in 1981–82 and to rise to £166 million in 1982–83—a real growth of 2 per cent. So much for the charge about cuts.
    Much has been made of alleged assurances that charges would increase in line with costs, and no more.
    Mrs. Dunwoody rose—
    Mr. Finsberg: I said "alleged", if the hon. Lady will be patient.
    Certainly the 1981 public expenditure White Paper made it clear that the Government intended to raise charges annually in line with costs, but this was not intended to preclude a real terms increase as well, should this prove necessary. The latest review of the Government's public expenditure plans concluded that additional charges revenue would be required to offset growth in expenditure on the family practitioner services.
    This accounts for an extra £27 million from dental charges—about the only fact that the hon. Lady got right—and an extra £6 million from optical charges. We think it is right that those who can afford to do so should make a greater contribution to the cost of services in this way.
    Mr Pavitt: I am following the hon. Gentleman carefully. Will he explain how it is that, with the increased income, the closing of dental therapist schools, the rationalisation of dental medical teaching and the cuts that have taken place in the various parts of the country—for example, in Leicester, there are no NHS dentists available—there will be increased expenditure?
    Mr. Finsberg: It is because we rely on factual information, not on information in newspapers. If the hon. Gentleman would care to write to me and substantiate what he said about there being no NHS dentists in Leicester, I should be grateful. That is a claim I should like to go into.
    We think it right that those who can afford to do so should make a greater contribution. What are the only realistic alternatives? They would have to be cuts in services or increases in taxation, neither of which are
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    acceptable to us. Even with the increases proposed, the Exchequer—the mythical Exchequer that is the taxpayer—will still be meeting 70 per cent—nearly threequarters—of the cost of both the general dental services and the general ophthalmic services.
    We have also heard claims about the deterrent effect of charges, particularly dental charges. While increases in charges may lead to short-term fluctuations in the number of people going to the dentist, there is no evidence of a long-term deterrent effect. The number of courses of treatment has increased steadily since the Government took office—from 28·3 million in 1978–79 to 30 million in 1980–81—and it continues to rise.
    Within these increases there has been no reduction in the proportion of courses of treatment provided to paying patients. Moreover, there are wide-ranging provisions for exemption from charges—all children, pregnant and nursing mothers and students under 19—and for help for those on low incomes. If the hon. Member for Crewe had bothered to read the regulations, she would know that there has not been a single alteration in the exemption categories this year. That took up four minutes of her speech, but she was wholly wrong.
    All families receiving supplementary benefit and family income supplement are automatically entitled to free treatment. Others on low incomes may have nothing to pay or pay only part of the charge, depending on their circumstances. Some 43 per cent. of the courses of dental treatment that attract a fee are, in fact, provided completely free.
    There is still no charge for check-ups, stopping bleeding, repairs to dentures or calling out a dentist in an emergency. Given this protection for the more vulnerable groups, the Government do not believe that people will put their dental health at risk because of increased charges. There is no such evidence from courses of treatment.
    Mr Robert Hicks: I acknowledge that there are fluctuations in the relationship between costs and the standard of dental care. Will my hon. Friend assure the House that if there is any long-term decline in the requirements from our dental service, he will look at the figures and the costs again?
    Mr. Finsberg: I shall be delighted to do that, but we are not prepared to give assurances when there is no evidence to back them. Any sensible Government—and that is what I believe we are—would consider the hard facts that emerge.
    A recently published survey of adult dental health is interesting in this context. It found that fear of the dentist's chair was the main reason for patients putting off treatment rather than cost, and this was particularly so among people who said that they went to the dentist only for an occasional checkup or when having trouble. The best way to combat this is to encourage children from a young age to visit the dentist regularly so that they get over their fear and become regular attendees. Since treatment for the under-18s is free, there can be no question of charges being an obstacle to such health education among the young.
    I turn now to the specific provisions of the regulations On dental charges, the proposal is that from 1 April the maximum charge for a routine course of treatment should increase from £9 to £13, and the maximum for any course of treatment involving the more expensive items from £60

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    to £90. The estimated total yield from charges in 1982–83 will be £151 million, as against £118 million this year. We should be quite clear that the £13 and £90 figures are, as I have said, maximum charges. Many people will pay less, and certain items, such as check-ups—which are, of course, given to almost everybody—are and remain free. The average percentage cost of treatment met by patients will be 30 per cent. and the average for paying patients still only 45 per cent.
    Having heard all the tarradiddle from the hon. Member for Crewe, let us look at what the Labour Government did, after she had ceased to adorn it, having gone to the claret territory of Europe. Several Opposition Members present supported the Government at that time. In 1977, the Labour Government increased the overall maximum charge from £12 to £30—an increase of 150 per cent. compared with our 50 per cent.—and on synthetic resin dentures—those mainly used by the elderly—the charge went up from £12 to £20—and increase of over 50 per cent. compared with our proposed increase of 6 per cent. I do not remember Labour Members voting against that. Yet, today, because they can happily promise things in Opposition, they think that they will get some kudos from opposing these regulations. The proportion of the dental service covered by patients' charges will still be 28·5 per cent. after this year.
    A new feature of the charges proposals is that, instead of a flat-rate charge for all crowns—whatever they cost—there should be a two-tier charge. Given the need to increase charges, we wanted to do this in the fairest way possible. In the past, patients getting crowns with a high gold content enjoyed a high subsidy by comparison with many other items of treatment, and we did not think that we could justify that any longer.
    We have, therefore, set two levels of charge for crowns, depending on the materials used. If a patient has an expensive gold crown, the charge will be higher than for the all-porcelain variety. This is the same principle as is already applied to dentures where there is a higher charge for metal than for plastic dentures.
    This will be about 60 per cent. of the cost. For example, the charges for plastic dentures are to be increased by only small amounts because they were already at about this level, whereas expensive crowns were charged at only about 20 per cent. to 30 per cent. of cost. Therefore, they will go up more.
    Generally, we have tried, where possible, within the present structure of charges, to move towards a more equal charge-cost ratio for the different categories of non-routine treatment. On 21 July 1969, when charges were going up, the late Richard Crossman said:
    "This is an increase in charge which is an adjustment of charge to cost" —[Official Report, 21 July 1969; Vol. 787, c. 1393.]
    That is what we are doing. We are increasing the charges to fit in with the increased cost of the service. Moreover, no one howled down Richard Crossman for his breach of Socialism.
    Mr Pavitt: The Minister should remember that on that occasion I divided the House.
    Mr Finsberg: Alas, I was not here at the time. That is not the point. No one howled him down for a breach of Socialism, and in the Division Labour Members found it necessary to support their own Government.
    Mr Arthur Lewis rose—
    Mr. Finsberg: I shall give way in a moment. If my memory is correct, the vote went in favour of Mr. Richard Crossman. I merely add that I could not have put it better than he did. I do not always agree with what he said, but that happens to be a convenient and useful way of agreeing with him.
    Mr Arthur Lewis: As one who was here at that time I can confirm what my hon. Friend the Member for Brent, South (Mr. Pavitt) said. There was a Division, and we voted against the proposal. I was here at the initiation of the scheme. I was here when the late Aneurin Bevan resigned, as did my right hon. Friend the Member for Huyton (Sir H. Wilson) and others, because they refused to have any charges—even temporarily—put on the Health Service scheme. We are now in 1982, and they are still temporary. We still oppose them, as we did from the beginning.
    Mr Finsberg: I am delighted to confirm what the hon. Member for Newham, North-West (Mr. Lewis), with his long experience in the House, said. It may explain why he has never adorned the Front Bench. He is an honourable person, and I say that with genuine admiration for him. The fact remains that Richard Crossman and the bulk of the Labour Party went along with what I said.
    I want to take up another of the comments of the hon. Member for Crewe. In her speech, she quoted from col. 136 of Hansard of 31 March last year. Clearly, she quoted from a brief that had been given to her, but she had not read, understood or checked it. The page of Hansard is headed—and it is accurate, as Hansard always is under the direction of Mr. Speaker—"Prescription Charges". Nowhere is there a word about any charge other than prescription charges. I have signed about 300 letters to hon. Members pointing out that the information supplied to them by a very august body was inaccurate. On 31 March there was no reference to dental charges. If the hon. Lady had read Hansard and looked at the extract, she would have seen that the hon. Member for Fife, Central (Mr. Hamilton) asked a supplementary question:
    "Does the Minister agree that he invokes a new principle in tying a charge to the rate of inflation? Will he give an assurance that no other Health Service charges will be linked to the rate of inflation?"
    That was the only part that departed from prescription charges. My hon. Friend the then Minister for Health replied:
    "No."—[Official Report, 31 March 1981; Vol. 2, c. 136.]
    That is the only place at which there might have been a reference to the matter, and it was clearly denied on the spot.
    Mr Terry Davis: In view of what the Minister has just said, may I ask him to reconcile his clear and unequivocal statement that there is no reference in Hansard of 31 March 1981 to dental charges with what appears in columns 254–55?
    Mr. Finsberg: I was referring to col. 136 of Hansard for 31 March—prescription charges. That was the question in the references that we all had from many authorities, particularly the British Dental Association.
    Mr. Davis: The Minister unequivocally said that there was no reference on 31 March. In fact, there was a debate on 31 March 1981. I have just referred him to columns 254–55. How does he reconcile the unequivocal statements made at that time by the Minister for Health with the Government's policy today?
    Mr. Finsberg: I will look at that point. I was referring to what the hon. Member for Crewe said. I was not concerned with extra supplementary material.
    Mr Davis rose—
    Mr. Finsberg: I shall give way in a moment. As the hon. Gentleman knows, all the quotations up to now have related to Question Time that day. I was replying to the hon. Lady's reference in that connection.
    Mr Davis: The Minister accused my hon. Friend the Member for Crewe (Mrs. Dunwoody) of not having checked Hansard. Has he checked Hansard for that day?
    Mr. Finsberg: I checked Hansard, as I always do, for the relevant pieces. I am sure that the hon. Gentleman appreciates that when a subject is raised at Question Time and letters have been dealt with on that basis, other matters that suddenly emerge may or may not be relevant. I was not discussing those matters. I was resting my case solely on what has been said so far and which the hon. Member for Crewe repeated.
    The hon. Member for Crewe also made heart-rending references to exemptions that no longer existed. I have shown that those references were equally inaccurate.
    The proposals on optical charges will result in the minimum charge for a lens rising from £2·90 to £3·70. The maximum charge will go up from £8·30 to £15. The estimated total yield from charges in 1982–83 will be £50 million, compared with £35 million this year.
    Before we have too much synthetic anger from the Opposition, I should remind the House that, even after the increases, the percentage of the cost raised by optical charges will be only 30 per cent. as opposed to 34·8 per cent. in 1977–78 and 52 per cent. in 1972–73.
    When the Opposition attack the Government, it is useful to refute their claims with facts. We were told that the Government are determined to break up the NHS, but let us consider my pair of NHS spectacles, which were re-prescribed for me a month ago. They cost me £14·77. After 1 April they will cost £.17·27—an increase of £2·50, or 16 per cent. They are among the cheapest NHS glasses, and I am delighted to pay tribute to my superb optical specialist and to the NHS, as most of us do.
    Mr Mike Thomas: I hesitate to raise this matter, but I wonder whether the hon. Gentleman feels that his speedy move to purchase new glasses could be condemned outside the House as insider dealing?
    Mr. Finsberg: That may be so, but when one is getting a series of headaches, one goes to an optician for a checkup, which is free. The result was that I was prescribed new glasses.
    The main features of our proposals are an increase in the number of band charges from five to 30 and the introduction of additional charges for prisms and tints where prescribed. Those features have resulted from making charges more closely reflect the varying costs of different types of lenses to the NHS.
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    The five-band system operates unfairly in some ways, because the subsidies given on each type of lens are spread unevenly. To a large extent, the restructured charges proposed for 1 April will spread the subsidies more evenly. We have taken care of the needs of those with the poorest sight, who require the most expensive lenses. We have adopted a £15 maximum charge for a lens, so that the greatest subsidies will be given on the most expensive lenses. That measure of protection, together with the remission arrangements for those in greatest need, will mean that no one requiring the strongest lenses need be deterred.
    I hope that I have shown that there is no question of the proposed increases in charges leading to a dismantling of NHS dentistry or optical services. The facts are as I have set them out.
    Mr Jim Craigen: As a Scotsman, I am naturally impressed by the Minister's frugality, but I am not sure whether the example of his own spectacle costs should be translated to those not fortunate enough to be earning the hon. Gentleman's salary. Those on or just below average earnings will get the rough end of the stick.
    Mr Finsberg: No one would say that ministerial salaries are luxurious.
    Mr Andrew F. Bennett: They are a lot better than the wages of many of our constituents.
    Mr Finsberg: We will not go into that at the moment. There is a wide range of exemptions and assistance, and many people will be able to get assistance with the purchase of spectacles. We have made no change in that area.
    Mr Arthur Lewis: Considerable publicity has been given in recent months and years to allegations that there are many monopolistic rackets in the supply of lenses and that one can buy lenses almost anywhere in the world for about one-third of the price paid by our NHS and its customers.
    Will the Minister look into those allegations to find out whether the NHS and the public are being rooked? If there is over-charging, we ought to put a stop to it. I do not expect the hon. Gentleman to give an answer now, but perhaps he will make a statement later.
    Mr Finsberg: I can help the hon. Gentleman. We hope to have later this year the results of an investigation into those matters which is being carried out by the Office of Fair Trading. I am sure that if the hon. Gentleman has any evidence on the subject, the OFT will be pleased to receive it.
    We believe that the vast majority of people are prepared to contribute to the cost of the services that they receive and understand that charges have to rise in the present economic climate. We have protected the position of the less well off. They will continue to be protected by the extensive arrangements for exemptions and help with charges.
    Few can sustain an objection in principle to charges where appropriate. The Opposition certainly cannot do so, in the light of their record in Government of increasing charges year after year. Few can justifiably attack the new charges as excessive and many must see the logic and

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    equity of the new charges, which continue to protect the weak. I hope that the House will consign the prayer to the dustbin.
    6.7 pm
    Mr. David Ennals: I crave the House's indulgence, because I spent the morning at the dentist's and not only will I have difficulty in making myself comprehensible, because of a swollen jaw, but I am in considerable pain. I felt strongly enough to speak in the debate, but I shall not speak at length.
    Nothing that the Minister said undermined the strength of the case made by my hon. Friend the Member for Crewe (Mrs. Dunwoody). The hon. Gentleman's accusations against my hon. Friend were grossly unfair. He accused my hon. Friend of not having briefed herself, but it became clear after the intervention of my hon. Friend the Member for Birmingham, Stechford (Mr. Davis), that the Minister had not briefed himself. He had read what it suited him to read and he quoted what it suited him to quote. That is not what we expect from a Minister, but I fear that it is what we have to expect from a Minister of the present Government.
    What the Government are intending to do, if we do not win the vote, is damnable and grossly against the interests of the National Health dental service. If we look at the increases in 1979, 1980, 1981 and 1982, the Minister cannot deny that dental charges will have almost trebled since his Government came to power. If he denies that, let him get up and say so. We have the figures and they speak for themselves.
    When the Labour Government lost power, a routine treatment cost £5. It went up to £7, £8, £9 and it is now proposed that it should go up to £13. When the Labour Government lost power a course of treatment cost—admittedly at the maximum—£30. It went up to £36, £54, £60 and it is now proposed that it should be increased to £90. For the hon. Gentleman to say, in his concluding remarks, that no one can say that those charges are excessive, means that he does not understand the value of money.
    For some strange reason the Minister seems to be conducting an aggressive war against the British Dental Association. The British Dental Association says:
    "Charges are already an obstacle to necessary dental care for many adult patients."
    The British Dental Association goes on to say:
    "Social security arrangements for patients with low incomes do not help most working families."
    The fact that there are a large number of exemptions does not affect what happens to average middle-aged working people who have to go to the dentist if they are to ensure that they have good dental health.
    The Minister's charge that somehow or other the British Dental Association is putting out facts, figures and conclusions that are misleading or incorrect, is an extraordinary attack upon dentists. They understand dental health better than I do, and better than the Minister does, although, perhaps, not better than the hon. Member for Belper (Mrs. Faith). If he can say what motive the British Dental Association has for the conclusions that it has reached concerning the effect upon the dental health of our people, I would like to hear him.
    Mr Geoffrey Finsberg: I sympathise with the right hon. Gentleman and his swollen jaw. He is going through what I went through four weeks ago.
    I have not attacked the BDA at all. All I have tried to do is to point out that it has sent inaccurate briefings about Question Time on 31 March—no more and no less. I am setting the facts right.
    Mr Ennals: The hon. Gentleman, referring to one of my hon. Friends, said:
    "The hon. Gentleman is using information sent to him by the BDA, which is totally misplaced. It relates only to prescription charges."—[Official Report, 9 March 1982; Vol. 19, c. 710.]
    I want to go on to look at what the White Paper, Cmnd. 8175, "The Government's Public Expenditure Plans 1981–82 to 1983–84," said at page 117, paragraph 15:
    "Charges in all services will increase annually in line with costs".
    The Minister's reply to that was that it did not say that charges would not rise above costs. If there ever was a wriggle, that is it. Anyone who read the statement would understand that it was Government policy to raise charges in line with costs. If they meant to raise them three times as high as costs, or twice as high as costs, they should have said so. If that was too difficult they should have said that prices would rise at least in line with costs or sometimes more, according to the Department's conclusions. However, as it stands that statement is clear and any trying to get away from it is, as I said, sheer wriggling.
    When he comes to reply, will the Minister say how the 44 per cent. increase for routine treatments, and 50 per cent. for other types of treatment, can possibly be justified? Does he deny that it runs contrary to previously declared policy? Does he deny that the new charges will act as an even more substantial deterrent to proper dental care? The statement that I have quoted from the BDA related to the position before the imposition of the extra charges that these regulations are about and which we are praying against.
    What sort of motive does the Minister think the BDA has? He knows as well as I do from my experience as Secretary of State, that dentists' incomes are not affected by the cost of each form of treatment. I have had long discussions with the BDA, although it does not always agree with me. Never, throughout the period of the Labour Government, nor through that of the present Conservative Government, has the BDA taken a position other than to say that to put up charges would deter people on modest incomes. I am not talking about those who are exempt; I am talking about ordinary working people on modest incomes. The BDA has always been against excessive increases, from whatever Government they may have come. The Minister has seriously maligned the BDA by speaking as he has done today.
    The whole motive of the Government is to undermine the National Health dental service in order to push patients into the private sector. The higher the costs imposed by the Government, the more people are likely to want to have private treatment and the less we will have of a real National Health dental service, or for that matter, a real National Health optical service. I hope that that is not the Government's intention. I hope that they will say what their policy is, because that will be the result of constantly raising charges year by year way above the level of inflation. It will do great damage to the dental health of

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    our people. That is an indictment that sits squarely upon the shoulders of the Ministers now occupying the Department of Health and Social Security.
    6.18 pm
    Mr. Mike Thomas: First, I should make clear that the Social Democratic Party would have supported a move of charges in line with costs had that been the issue before us today. I am sorry that the Department of Health has brought before us these quite disproportionate increases. I agree with the right hon. Member for Norwich, North (Mr. Ennals) that they cannot be justified, particularly in the present difficult economic circumstances. I suspect that the increases, which are simply too large, are just another DHSS sacrificial offering to the god of the PSBR. I suspect that there is not much more logic behind them.
    I share the Minister's view that it is hypocritical in the extreme for the Labour Party to come to the House and say that it would wish to abolish all such charges. We know perfectly well that that is the Labour Party promising in Opposition what it did not carry out in Government and what it would not carry out if it were in Government tomorrow. [Interruption.] I opposed it at the time, as the hon. Member for Crewe (Mrs. Dunwoody) may know. The Labour Party is promising something that it will not carry out and that it did not carry out when it had ample opportunity to do so. Therefore, we should not pay too much attention to what Labour Members say.
    I wonder what is different about teeth and eyes. I have never understood why we should be prejudiced about financing a decent level of provision to keep people's teeth in order, to maintain their capacity to eat and masticate properly and to keep people's eyes in order. The prejudice probably dates from a Victorian perception that spectacles and false teeth were cosmetic rather than essential. Perhaps we should review why that distinction is drawn and why we have introduced and sustained charges, particularly for dental and ophthalmic services. However, if the Government had sought an increase in line with costs, we would have been inclined not to oppose it.
    Despite the assurances given by Ministers, I am worried that ophthalmic and dental services are developing not into a two-tier system but into a one-and-a-half tier system. In the second tier, many people fall just outside the exemption limits and the proposed charges will act as a substantial deterrent to treatment. Ministers should take that point more seriously. The British Dental Association has no axe to grind. Its members' incomes do not depend on how many people attend for treatment. Nevertheless, it claims that there is a problem.
    I am inclined to believe my observations when the statistics seem to produce nonsense. We know that dentists in inner urban areas—such as the area that includes my constituency—say that as a result of increased charges, there has been a diminution in the use of services. They expect there to be a further diminution. In other parts of the country people may be well-off and all the courses of treatment that the Minister mentioned may be being taken up. However, dentists have told me that in the inner urban areas fewer people, particularly on the lower income scale, use dental services.
    Mr Clement Freud: Does not my hon. Friend accept that there has not only been a diminution, but—in view of the increase in the number of people and the number of teeth—an alarming diminution?
    Mr. Thomas: I suspect that that is so. No doubt Ministers give us the figures for treatment in good faith, but those figures do not tell the whole story. I hope that the Minister will give an assurance that the Government will reconsider the figures carefully. I should like to know the situation, particularly in our inner urban and poor areas. The hon. Member for Brent, South (Mr. Pavitt) is no longer in the Chamber, but he referred to Leicester. I agree that in many parts of the country dentists are unwilling to take on new NHS patients. In that way, we shall develop a one-and-a-half-tier system of dental care. In principle, the same applies to ophthalmic services, although the problem is not quite so severe.
    I am told by student dental officers that the removal of the exemption for students aged between 19 and 21 has resulted in many students failing to look after their teeth properly after their first year—at the age of 18 or 19—at university or college. That problem should be considered. It is vital that we should not build in such inhibitions. Given the present level of student grants, no one could argue that students are a wealthy group who do not need special care and attention.
    We would have been prepared to support a more modest increase, but in the circumstances, we shall vote in favour of the prayer.
    6.24 pm
    Mr. Andrew F. Bennett: To say the least, the remarks of the hon. Member for Newcastle upon Tyne, East (Mr. Thomas) were illogical. He suggested that the Social Democratic Party would have agreed to the Government sticking to the level of inflation, but said that, as they had asked for a little extra, the SDP would oppose the prayer. However, the hon. Gentleman did not outline the basis on which the charges are fixed. If the charges are fixed on a logical basis, the hon. Gentleman's position might be tenable. However, charges have always been fixed by the amount that the Treasury thought that it could get away with without a major row. There is no logic to that, and that is one of the major disadvantages.
    Mr Mike Thomas: If a Labour Government were elected tomorrow, would they abolish the charges?
    Mr. Bennett: I firmly believe that charges should be abolished. It is unfortunate that, over the years, Labour Governments have not abolished them. There is logic in having no charges and logic in a full cost charge, but little logic in a position in between the two. I regret that the Labour Party has fallen, like the hon. Gentleman, for expediency and for what the Treasury thinks that it can get away with. That results in the worst of all worlds.
    Most people greatly value the National Health Service, but they do not know how much it costs. By imposing charges in this way we shall continue to mislead them by allowing them to think that the NHS is much cheaper than it is. When asked to pay for dental or ophthalmic treatment, most people think that they are meeting most of the cost. They do not realise how little of the cost they meet. Therefore, they do not know the value of the service. That is unfortunate. It would be much better to tell people how much things cost.
    I am not suggesting that there should be charges. It is important to have a free service, but when people ai e prescribed drugs and receive glasses or dental treatment,

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    we should tell them what it costs so that they know the benefit of a free NHS. There is virtue in that. The present system misleads and devalues the NHS by making people feel that it is much cheaper than it is.
    I hope that the Minister will tell us whether he is certain that 100 per cent. of those entitled to exemptions actually receive them. I doubt whether they do. That is one of the worrying facets of the Government's strategy. They say that people are entitled to benefits and exemptions, but I wonder how many receive them. Many of those entitled to social security benefits do not receive them. The take-up rate is not high enough. The Government's case seems to rest on the argument that everyone in need receives an exemption. If so, they should tell the House that there is a 100 per cent. take-up of the right to exemption. I doubt whether the Minister can give the figures, and I am sure that he cannot give an assurance of a 100 per cent. take-up.
    Many of those on low incomes have to pay the charges and then claim a refund. As they tend not to have cheques or bankers' cards, they have to pay in cash. Many of them have not got the money. That is a major problem. Often, it is not the charge that matters for those on low incomes, but what they think it will be. When in work and on relatively high incomes, they may have gone for dental treatment, but when they are in reduced circumstances they do not go to the dentist because they think that there will be a high charge. They are frightened of the cost. They are not aware of the charges that would apply to them and do not realise that they would be exempt from them. Therefore, they are put off not by the cost, but by what they perceive the cost to be.
    Sometimes debates such as this do a disservice to the public, because they give the impression that there are charges. We do not hammer home sufficiently the number of those who will not have to pay. We leave some people with the impression that they will not be able to afford the treatment.
    It is the fear of the cost that puts some people off applying. Others are put off because, when they apply for treatment, they find that it costs them money in the short term—when they do not have it—if not in the long term.
    Will the Minister assure us that the charges do not have any distorting effect on the treatment? I suspect that some dentists take the charges into account. I am told repeatedly that when people go for a check-up, the dentist always manages to find something to do. Often it is a minor filling, a replacement of a filling or a piece of work involving a charge. Time and again constituents ask me "Was that really justified?" One cannot tell unless one is a dentist and has examined the patient's mouth beforehand. After the treatment has been carried out, one cannot be certain whether the dentist, instead of giving a free check-up, found it convenient to carry out dental work to enable him to make a charge, which affected the amount charged to the patient and the amount of remuneration received by him.
    I could say much the same about opticians. We know that the test is free, but there is a suspicion that sometimes the optician recoups more by suggesting that, because there is a minor change in a patient's eyesight, he should have new lenses or spectacles. It worries me that the
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    charges have a distorting effect on professional judgments. I wonder whether as much treatment would take place if the charges were not imposed.
    It would be far better not to increase the charges, but to work towards abolishing them and stressing to people the real value of the National Health Service.
    6.31 pm
    Mr. Clement Freud: I am concerned about the regulations that are before us. My right hon. and hon. Friends will support the humble Address because we feel—I hope that the whole House feels—that the Beveridge concept of 1946 was right. We shall continue to oppose any diminution of that concept. Like my colleague from the Social Democratic Party, the hon. Member for Newcastle-upon-Tyne, East (Mr. Thomas), I am concerned that different parts of the body are being, as it were, privatised. It is absolutely wrong not to feel that dental care is anything but a part of general medical care.
    The idea that we should spend more money having our teeth looked after than our ears is one that I do not accept. We are discussing increases in the cost of the Health Service which are totally unconnected with inflation. We are discussing the introduction of new levels of charges that will involve in administration many who would be better occupied in providing health care. The number of charges in the optical and dental areas will lead to the employment of bureaucrats and the money that will be paid to them should be spent on the care of people.
    The Minister said that this is not a deliberate step in the long-term removal of certain facets from the National Health Service. I hope that he is right. It would be a tragedy if parts of the body were left, as the Scots would say, outwith the Health Service. It would also be a false economy because when a financial disincentive to look after oneself is created and promises are made by the Government that when one reaches a certain financial situation medical benefits will again be forthcoming, people will suffer from a dental or optical debility and wait until they qualify for supplementary benefit; then the cost of putting the problem right will be much higher than it would have been. There will be no saving in real terms.
    I am frightened that we shall create a huge middle class, a class beneath the rich, who can pay and not mind paying, and above the poor who get it for nothing. The middle class will have to weigh the physical malady against the financial deprivation. There is little doubt that no one is happy with what is going on, especially dentists. In a letter to the British Dental Journal, which is not a publication that I read very often, but is pertinent to the case, one David Masorella writes:
    "Madam"—
    that is presumably the editor—
    "Just how are we, as general dental practitioners, expected to be able to fulfil our ethical and moral obligations to the general public in pursuit of our professional duties, when the proposed increases in dental charges are brought into effect? Only too clearly, are we held in high regard by this Government, not for our skills as dental surgeons, but rather in our capacity as unpaid civil servants in the alarming disguise of tax collectors."
    I hope that the Minister has seen that letter. We spoke on the very same subject a few weeks ago when we were discussing health charges for overseas visitors. Here is another instance of those with professional skills being used as tax collectors for the Government when their time and assistance would be much better spent in helping people.

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    I move to the opticians' monopoly. It is a monopoly in the private sector and while it pertains it is doubly wrong to make National Health people pay more for their spectacles. The hon. Member for Newham, North-West (Mr. Lewis), who is no longer in his place, said in an intervention that in certain countries it is possible to buy glasses very much more cheaply than in the United Kingdom. The hon. Gentleman talked about one third of the cost here. I think that everybody knows that there are bucket shops throughout the world where it is possible to buy glasses over the counter. In Hong Kong for example, one can buy glasses for about 75p. In another place my hon. and noble Friend Lord Winstanley said:
    "It does nobody any harm to be wearing the wrong glasses"—
    Mr. Deputy Speaker (Mr. Bryant Godman Irvine): Order. Is the hon. Gentleman quoting from the current Session?
    Mr. Freud: That is a very good question, Mr. Deputy Speaker. To fulfil the demands of order I shall merely say that my hon. and noble Friend Lord Winstanley said at some time in another place that it has never done anybody any harm to wear the wrong glasses. He claimed that the only harm could be a secondary one because as a result of not being able to see very well someone might be run over or find himself in some similar situation which would do no good to his health. I am sure that my hon. and noble Friend put it more eloquently than that.
    The Government seem to be perpetuating the opticians' cartel and supporting it in the same way in which they support the tobacco manufacturers. While that continues there is every reason for them to limit the increases in National Health charges on glasses.
    I hope that the Government will make a clear statement to the effect that dental and optical charges will remain an integral part of the NHS. I accept that the Government's exemption document was prize-winning for its clarity. I hope that they will give the House an assurance that they will also try to win a prize for the efficiency with which it is distributed. It simply is not enough to have a good document. It is also essential that that document should be available to all those who need it.
    6.40 pm
    Mrs. Sheila Faith: Although I am not a practising dentist, I understand the concern of hon. Members that there is to be a large increase in dental charges. I acknowledge that in future, adults will pay half the costs of the service. However, one must bear in mind that we live in a time of economic recession and that all services must bear some of the difficult cuts. For example, education has had to take its share of cuts, whereas the Health Service, on the whole, has been protected. The cost of the Health Service has become a heavier and heavier burden on the economy because of all the new technology and scientific findings—heart and kidney transplants and new medical research. They all place a heavy burden on the economy.
    Therefore, we can understand that the money must come from somewhere. After all, if the Government increased the money given even further, they would have to borrow it and, of course, that would lay a heavy charge on industry. Otherwise, the Government would have to tax more, which would be very unpopular and stunt initiative.
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    Another course would be to print money, which would be inflationary. The Government said that their prime intention was to bring down inflation.
    Nevertheless, I am happy to bear in mind that dental health is improving and that there has been a marked decrease in caries and periodontal disease. The Government are not taking advantage of the situation. We all look forward to the time when the dental surgeon will become more of a dental physician and able to use his skills and training in that direction. There is nothing to stop him using his skills in that way now, because regular dental examinations are still free of charge. That is an important point.
    Therefore, I assume that the same number of people will come forward for treatment. When patients come forward, I suggest that dentists note the people who do not continue treatment, because of the new charges. That aspect should be monitored closely. Dentists could perhaps inform the Minister of that. He might reconsider his decision in the light of their findings. I asked the Minister, during Question Time, whether the money being spent on dental services as a whole was being reduced. He assured me that the cost of dental services was rising by 2 per cent. this year.
    Mr. Freud: Does the hon. Lady accept that if the same number of people are coming forward for dental care and there are now more people than there were, it means a diminution in dental care?
    Mrs. Faith: Because of better standards of oral hygiene and dental health education, and as many areas have fluoridation, fewer people need dental care today. That aspect of dentistry is cost-effective and must be pursued. As dental examinations are still free of charge, there is no reason why this should not continue. Therefore, I shall vote with the Government this evening.
    6.46 pm
    Mr. Laurie Pavitt: The hon. Member for Belper (Mrs. Faith) said that the Health Service had been protected. The area health authority in my constituency has faced a £750,000 cut. The largest regional health authority in Britain—North-West Thames—this year had a 0·03 per cent. increase on the whole of its provision. This will be a swingeing cut in the amount of money available for all sectors of the Health Service.
    The hon. Lady said that there was a diminution in the need for dental care. A fascinating reason for that is that children use fluoride toothpaste and do not spit it out. A recent survey of a dental hospital showed that that factor has been at work. The hon. Lady also knows, as a previous community dental officer, that when it comes to choosing a career in dentistry, the dental officers caring for small kids are at the bottom of the heap. Therefore, the proportion of dental officers available for children in the ILEA area, for example is so fantastic that the amount of service one can give is not what I am sure the hon. Lady would wish.
    What is morally wrong about this increased dental charge? First, in her election campaign, the Prime Minister made a categoric statement about what would happen to the NHS. That statement concerned all Health Service charges; prescriptions, dental health and welfare

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    foods. She stated she had no plans to raise charges on them. As we have seen since 1979, there have been massive increases in all those sectors.
    The charges are morally wrong because we have a comprehensive Health Service paid for, to roughly 84 per cent., out of taxation. Everybody has already paid, and therefore, is covered for dental and eye service. They pay day in and day out. Every time they receive a PAYE statement, they see that they have paid for a dental and optical service. The only people who pay twice are those in need. When charges are imposed in the Health Service, the people who constantly pay for prescriptions are those with coronary thrombosis, on TNT for the rest of their lives. It can be seen from writings of the late Richard Crossman or Barbara Castle's diary that my opposition to NHS charges has been recognised as my King Charles' head within my party. I am a loyal member of the Labour Party yet when I divided the House in the 1960s on this issue it was the largest vote against my own Government. Therefore, I concede we have had problems and the Labour Party's history is full of the results of this division.
    On dental service, I cannot understand why the Government have thrown overboard the whole idea of consultation with the people most concerned. The British Dental Association made representations and put notices on walls in dental surgeries, protesting against the iniquity of the size of these charges and their consequences. Nevertheless, the Government brushed those representations aside. The Association of Optical Practitioners mounted a formidable case as to why this move is bad in terms of prevention of blindness and the way that one should care for the eyesight of the community. However, that has also been brushed aside.
    I do not blame the Minister when he claims credit for increased treatment because I am afraid that all Health Ministers, of both parties, are inclined to consider health as if it were some productive statistic in industry or commerce. There is no pride in the fact that more people need dental treatment, that we need to treat more cases in hospital, or that more people need to wear glasses. The pride should be about the prevention of such things. I am waiting for a Minister of either party to come to the House and say he is pleased to report that we do not need all those hospital beds or glasses because we have solved the problem of prevention rather than cure.
    I had the privilege of serving for three years on the Medical Research Council. I took a keen interest on prevention concerning dental health. It is amazing that politicians have not listened to the technical facts. In 20 years there could be no more denal caries, toothache, oral disease or periodontology. We already know the answers and they do exist.
    I chaired a working party on this subject and was pleased that, after three or four years' struggle, my party, at its annual conference, accepted our recommendations as Labour Party policy. I shall look forward to the time when my hon. Friend the Member for Crewe (Mrs. Dunwoody) is in Government and will carry out that policy. We shall not solve all dental problems in the first five years, but there would be steps forward and a planned elimination achieved in two decades.
    I challenge the Minister about the cuts. There has been an emphasis on treatment. The New Cross dental therapy school is being closed. The Minister and I have
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    corresponded on that matter. I put forward some propositions about the Department's way of thinking on dental education. It is a nonsense that we have put dental hygienists, dental therapists and medical students studying dentistry into separate categories. If the Minister had a new policy, of combined operations, he would not need to put so many burdens upon the poor patient at the other end of the scale.
    I am sure that the Minister will have read all the material that has been produced and the letters written by the British Dental Journal. Therefore, I shall turn to the optical side. One of the paradoxes of the actions of the Government is the way in which their practice differs so much from their preaching. They have a laudable maxim that if one spends money on the National Health Service, one should spend it on the people engaged with patients and not on cumbersome administration. Yet every act that they take increases the amount of administration that is required.
    There has been an increase from five optical charges to 30 charges. Why did the Minister reject the compromise put to him by the Association of Optical Practitioners, which would have brought down that number to 18? Why was that not dealt with? I hope that the Minister will deal with that matter when he replies.
    I shall examine the administration of the 30 new charges. In a letter from the Association of Optical Practitioners it is stated that because of the 30 new charges
    "(i) practitioners will have to spend much more time with patients explaining the new arrangements
    (ii) practice administrative costs will increase considerably, and many of these costs will fall to be included in the NHS fee negotiations
    (iii) an increase in NHS administrative costs, through Family Practitioner Committees, is inevitable as a great deal more checking of opticians' claims will be necessary."
    Either opticians will have a blank cheque to do what they want, or they will have to be monitored. If 30 separate charges have to be monitored any income that the DHSS will receive will be offset against the amount of paperwork, time, and administrators that will be necessary.
    Finally, the letter states:
    "(iv) it will now be virtually impossible for opticians to tell a patient what their NHS charges will be (as between £7–40 and £30–00) until an examination has been completed and their prescription determined."
    It is almost as if bureaucracy runs wild when the Government seek to make such changes. The spin-offs of increased costs never seem to be considered. The problem in the dental service is that a person is not informed whether he will receive treatment on the NHS or will have to pay privately. I quoted a case in the Midlands, where there are only two dentists who are prepared to give NHS service. All the other dentists give only private service.
    Both Labour and Conservative-, Governments have made mistakes about dental provision. The biggest mistake was in the National Health Service Act 1946 when dentists were put on piece work, so that the more holes they filled and the more china and lead they put into people's mouths, the more they were paid. That was a basic mistake. We should have had a list on which there was a family dentist, as is the case with the general practitioner. Children should be taken to the same dentist time after time so that he can take an interest in them and to care for the family.
    Opticians must explain and deal with what is necessary for their patients. I plead a personal case. My hon. Friend

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    the Member for Crewe has already talked about cataracts. I am pleased to say that as well as my two false ears, I have a false eye. I have had an intra-ocular implant, which means that I do not have to wear a contact lens, but I must change my glasses every six months.
    Therefore, the more difficulty the patient is in, under the regulations, the more he will pay. The person who has perfect sight pays nothing. That stands the principle of the National Health Service—that the healthly pay for the sick—on its head. I hope that the Labour Party will have full support in the Lobby in an attempt to pray against these iniquitous proposals.
    6.57 pm
    Mr. Terry Davis: The debate has been remarkable, at least for one thing—a statement by the hon. Member for Newcastle upon Tyne, East (Mr. Thomas) about the policy of the Social Democratic Party on dental and optical charges. He said that the policy of his party was for charges to be increased in line with costs. Therefore, I presume that he accepts the increases that have taken place under the present Government and is only concerned that the charges should increase in line with costs in future. He does not object to the increase that has already taken place in the maximum charge for routine dental treatment from £5 to £9, which is to be further increased on this occasion, and the increase that has already taken place in the maximum charge for other dental treatment from £30 to £60, which is a doubling of the charge. However, I do not think that that was what he said to the electors in Newcastle at the time of the general election.
    My hon. Friend the Member for Stockport, North (Mr. Bennett) asked the Minister a most important question about exemptions. A year ago, my hon. Friend made the same point to the Minister's predecessor, the hon. Member for Reading, South (Dr. Vaughan), who replied that he would look into the way in which the information about exemption from charges for dental treatment was provided. When the Minister for Health replies, I hope that he will tell us what has happened about that promise, because I have not noticed any change in the Government's practices regarding the information that is available to inform people about their rights on exemptions.
    The hon. Member for Belper (Mrs. Faith) said that adults would now pay half the cost of dental treatment. As it stands, I believe that her statement is misleading. The Minister will correct me if I have misunderstood the way in which the charges operate, but I think that they mean that half the adult population will pay the full cost of their treatment and therefore pay half the total cost of treatment. I have been advised by dentists that the increased charges will mean that many adults will pay more than the cost of their own treatment through the NHS. The Minister is shaking his head. We have already had a testimony from the Under-Secretary of State and my right hon. Friend the Member for Norwich, North (Mr. Ennals) about their recent visits to the dentist. I, too, have recently visited the dentist. While I was helpless, I was lobbied most effectively about the increases in dental charges. I was assured that it would be in the interests of those who are fortunate enough to have as good dental health as I enjoy to pay privately rather than to go through the NHS because we would pay more than the cost of the treatment that we received from the NHS. I think I am therefore right in
    214
    saying that half the adult population will pay the full cost of their treatment, and that the hon. Member for Belper may have misled the public when she referred to adults paying only half the cost.
    I turn now to the speech of the Under-Secretary of Slate who began with a sneer at my hon. Friend the Member for Crewe (Mrs. Dunwoody). He claimed that the figure she had quoted of £27 million, as the difference between the increase in charges and the increase in costs, was the only fact she had quoted correctly during her speech. The Minister should be the last Member to point the ringer at other hon. Members and to claim that they have made mistakes of fact in their speeches.
    The Minister, who has not been very long in the Department of Health and Social Security, has already made two mistakes in only six months when talking about dental charges in the House. The first occasion was when he replied to a question that I put to the Secretary of State about the increase in costs. On 7 December the hon. Gentleman replied that the estimated increase in the cost of dental treatment was 16 per cent. Two weeks later, he had to record his apology in the Official Report and express his regret that he had given the wrong figure because the increase was not 16 per cent., but only 7 per cent.
    The Minister made another mistake during Question Time three weeks ago. My hon. Friend the Member for Newcastle upon Tyne, West (Mr. Brown) asked the Minister how he reconciled the promise not to raise charges faster than the increase in costs when this rise would bring in £27 million more than the rise in costs. My hon. Friend went on to ask whether it was a mark of Tory inefficiency that the Government had increased dental charges four times in 34 months compared with one increase in three and a half years when the Labour Government were in office. The Minister replied that it was not a sign of inefficiency on the part of the Government. That is a matter of opinion. He then went on to say that my hon. Friend was using information, sent to him by the British Dental Association, which was totally misplaced and related only to prescription charges. He said that there was no reference to dental charges. Yet, only three weeks earlier, the hon. Gentleman had answered another question in the House confirming that the difference between the yield from dental charges and the increase in costs was expected to be £27 million.
    The hon. Gentleman seems to have a vendetta against the British Dental Association. More important, he seems to be continually making mistakes in the House in dealing with this matter.
    This evening the Minister said that he would set the record straight. He then went on to allege that the Labour Party, when in office, had increased charges "year after year". That was his phrase. That is not correct. The Labour Government did not increase dental charges or charges for opthalmic services year after year. There were, indeed, increases during the period of the Labour Government, but they did not take place "year after year".
    The Minister then went on to accept—
    The Minister for Health (Mr. Kenneth Clarke): Could it be that, because they failed to raise them year after year, they had to increase them by 150 per cent. in one go in 1977?
    Mr. Davis: That may be correct, but they did not raise the charges at all in 1978. I should point out that the

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    Government have already raised the charges not by 100 per cent. or by 150 per cent. They have trebled the amount, not all in one year, but during their term of office.
    Mr. Mike Thomas: I wonder what the hon. Gentleman considers more reprehensible: the rather minor, nitpicking errors of the Minister—no doubt made in good faith and in the heat of the speech—or, with deliberate intent, to tell the electorate that the Labour Party proposes to carry out a policy vis-a-vis dental and ophthalmic charges when it knows perfectly well that, when it comes to office, it will not do so?
    Mr. Davis: The hon. Member for Newcastle upon Tyne, East suffers from a number of psychological problems. First, of course, he is embarrassed about his own record during the last Labour Government. Wriggle as he may, he cannot escape that. Secondly, he must be embarrassed by the contents of his last election address. He did me the courtesy of sending me a copy at the time of the general election. I am not sure why, but he did. I remember reading it very carefully. I recall no pledge to the electors of Newcastle upon Tyne, East that the hon. Gentleman wanted to increase these charges in line with costs. I accept that the hon. Gentleman has changed his party. It seems to me that he has probably changed his opinions as well.
    The Minister accepted that the proportion of the cost borne by the patient would be increased by these new charges. He said that this would "still" be 28 per cent. That, too, is a slightly misleading statement, because it suggests that it is 28 per cent. at present. Of course it is not. The proportion is 23·9 per cent., and it will be increased to 28·5 per cent.—an increase of nearly 5 per cent. in the proportion to be borne by the patient. In 1978–79, the proportion of the cost of dental treatment borne by the patient was less than 20 per cent., so the proportion has increased by nearly half under this Government. That is not an increase in line with the increase in costs. It is a very real increase in the proportion of the cost borne by the patient.
    The Minister also claimed that it had been alleged that charges would rise only in line with costs. He poured scorn on this allegation and referred to the expenditure plans published a year ago. The House will remember that the Government, in their expenditure plans, published a year ago, said:
    "Planned expenditure to 1983–84 reflects the expected changes in demand for general medical, dental, ophthalmic and pharmaceutical services. Charges in all services will increase annually in line with costs."
    They then went on to discuss prescription charges. It was clear that the Government were saying that dental and ophthalmic charges would increase annually in line with costs up to 1983–84.
    That is not what is taking place today. Ministers cannot wriggle out of it. In a debate on 31 March 1981, the Minister for Health said:
    "We are increasing the charges to fit in with the increased cost of the Service. As we announced in the public expenditure White Paper, if necessary these will now be increased annually as the costs vary within the Service."
    Later, he said:
    "We take the view that charges should keep pace with the rising costs of providing these services. That was spelt out in the recent White Paper on public expenditure".—[Official Report, 31 March 1981; Vol. 2, c. 254.]
    216
    It is clear that the policy of the Government a year ago was that dental charges would increase annually in line with costs. There was no suggestion at that time that there might also be a real increase in dental charges—an increase in excess of the increase in costs—if the Government then decided that it was necessary. This change has come with the Minister's arrival at the Department of Health and Social Security.
    The Minister also said that there is no evidence that cost has any effect on the number of people seeking treatment. He may be correct in saying that there is no statistical evidence. The British Dental Association believes that cost does affect the number of people who seek treatment, but that is an opinion. It is an important opinion, however, because it comes from the dentists themselves, and they, after all, are in a position to form a subjective but imporant opinion.
    However, some evidence does exist because, as my hon. Friend the Member for Crewe pointed out, last year the Government published the report of the Dental Strategy Review Group entitled "Towards Better Dental Health—Guidelines for the Future". In paragraph 4.8 of this report, produced by a group which was established by the Government to advise them on dental service policy, we read:
    "There can be no doubt that any charge to patients will deter some from seeking the treatment they need. The level of charges should therefore be set as low as possible."
    That is the opinion of the Dental Strategy Review Group. The Government were quick enough to pick up the suggestion in the report that the New Cross school for dental therapists should be closed, but they have totally ignored that recommendation.
    Indeed, the Under-Secretary of State has changed his opinion, because, as recently as December 1981, in a written answer he said that the available data did not support the contention that patients were putting off treatment for whatever reason. Later he said that there was no evidence that patients were putting off treatment because of the level of dental charges. On being pressed by the hon. Member for Brentwood and Ongar (Mr. McCrindle), he said:
    "The available figures show that there has been a steady increase in the number of courses of dental treatment provided since this Government took office, which suggests that patients are continuing to look after their dental health."—[Official Report, 1 February 1982; Vol. 17, c. 60.]
    The hon. Gentleman made similar statements to several of my hon. Friends in March. However, he qualified them because he was then telling the House that increases in charges
    "may lead to short-term fluctuations in the numbers of people coming forward for National Health Service dental health treatment, but there is no evidence that demand for dental care is sensitive to charges increases in the long run."—[Official Report, 9 March 1982; Vol. 19, c. 389.]
    There may not be any statistical evidence, but there is certainly an informed opinion from the British Dental Association and a most informed opinion from the Dental Strategy Review Group.
    The Government are trying to defend the indefensible this evening. The Opposition will vote for this prayer and against the increases.
    7.11 pm
    The Minister for Health (Mr. Kenneth Clarke): We all appreciate that any increase in National Health Service charges will be unpopular. When the Labour Government

    217
    raised charges they were unpopular, and if we have a Labour Government in the future who raise charges they will also be unpopular. If we ever have the Social Democratic-Liberal alliance in Government, no doubt if it increases the charges it will be unpopular.
    Given the fact that we know that there is bound to be some resistance to any increase in charges for this or other health services, it is understandable that we should give some expression to the outside concern and the lobbying from bodies such as the British Dental Association. However, we do the practice of politics no good if opposition to such charges is turned into a ritual exchange of party political views, especially—I agree with the hon. Member for Newcastle upon Tyne, East (Mr. Thomas)—if Labour Front Bench spokesmen repeat claims that their party will abolish the charges for dental and optical services, when we know perfectly well that they did not think of doing so when in Government and we know that they would have no opportunity to forgo the large sums of money obtained from charges in the future. It is cynical in the extreme to make such statements, which are quite irresponsible for a party that is still the official Opposition.
    I know that the hon. Member for Brent, South (Mr. Pavitt) has an honourable record and has always voted against prescription charges. His right hon. Friend the Member for Norwich, North (Mr. Ennals) and his hon. Friend the Member for Crewe (Mrs. Dunwoody) have been in the Division Lobbies against him in the past when he has voted against Labour Government increases.
    Mr. Pavitt: I wish to deal with the Minister's point about the phasing out of charges, which the 1974 Labour Government wished to carry out. In fact, Barbara Castle did precisely that and we lost £3 million because she made an immediate change in the prescription charges one of the first acts of that Government.
    Mr. Clarke: The hon. Gentleman's memory of the history of the Labour Government is clearer than mine on that matter. He said that the 1974 Government pledged to phase out the charges. As I shall show, in 1977 the Labour Government made a massive increase in dental and optical charges which dwarfs the increase about which Labour Members express such indignation today.
    We must accept the continued existence of charges for optical and dental charges whatever party is in power, because those charges contribute a substantial sum towards the provision and expansion of NHS services generally. There is no way in which a Government can dispose of them in the foreseeable future.
    We had a slightly ritual debate and, while becoming extremely excited, one or two Labour Members went beyond criticising the charges and began to suggest that we wished to change the National Health Service, to drive people into private practice and to pave the way for the end of dental and optical services in the National Health Service. The hon. Member for Isle of Ely (Mr. Freud), being a liberal and sensitive man, was concerned about that and wished me to reaffirm that optical and dental services will remain within the NHS. I am happy to do so.
    The Government are completely committed to the retention of dental and optical services in the Health Service. We are following the practice of raising some modest charges from the proportion of the population that can pay for its treatment, because it contributes towards the resources of the National Health Service. Our only
    218
    motive is to provide more funds for the expansion of the Health Service and for the increased expenditure on general dental and optical services, which has been a pattern of the Government's health policy.
    At one stage the right hon. Member for Norwich, North suggested that the Government might be raising charges to the extent that they would drive people into the private sector. I am glad to say that, even after the increases, NHS charges for that section of the population not exempt will be far below private sector charges. The maximum National Health Service charge for a full set of plastic dentures will still be only £35 whereas, according to figures published by a group of dentists in Barnet in March 1981, even then the private charge would have been about £150. We retain our full commitment to dental and optical services in the National Health Service, and the only sensible debate should be about the level of charges that some patients should contribute towards the National Health Service.
    The hon. Members for Newcastle upon Tyne, East end Isle of Ely both asked, sensibly, why we have such charges for eyes and teeth as opposed to other parts of the body. There is no logical answer to that, but there is a historical one. The policy cannot be changed without forgoing large sums of money that we wish to divert into health services.
    The only person that I could find who attempted to explain why dental and optical services were charged on that basis was a Secretary of State in the Labour Government who raised the charges in July 1969. The late Richard Crossman, with his usual recklessness, attempted to persuade a dissatisfied House that a logical distinction could be drawn. I shall not rely upon it because he was interrupted by some angry Members while he tried to give his explanation. He stated:
    "A person who needs dental or optical services is not normally ill in the usual sense of the word … nor in most cases is he prevented by his condition from going to work. We have made special provision through exemption arrangements for priority classes which have worked for years extremely well. That perhaps is partly why these particular charges have been accepted by the public with comparatively little resentment."—[Official Report,21 July 1969; Vol. 787, c. 1398.]
    Despite the then Labour Government's attempt to justify the increases in those terms, it is best regarded as a historical anomaly. The key point is that the charges raise a substantial sum of money, without excessive public reaction, that can then be diverted—it will be diverted by this Government—into the expansion of the National Health Service.
    I hope that I have shown that we reject the allegation that it is a Government plot to undermine the National Health Service. Our motives for bringing forward the charges are simply to make a contribution to the increased spending in real terms upon the National Health Service that the Government have maintained. As my hon. Friend the Under-Secretary of State made clear when opening the debate, whatever else is said about the Government's record, it is no good making wild assertions about the cults in care or declining standards of health. By next year, under this Government, NHS spending on all services will have increased in real terms by about 6 per cent.
    Today we are concerned about dental and optical services. I am delighted to say that the Government are devoting more resources to both. Expenditure on general dental services will rise from £490 million in 1981–82 to an estimated £530 million in 1982–83. That will be a real growth of about 2·5 per cent. in resources for the general

    219
    dental services. I was asked how far that works its way through into treatment for the patient. We were caught in a new version of Morton's fork by the hon. Member for Brent, South. He suggested that the statistics showing increased dental treatment meant that the nation was getting unhealthier and he thought it was sad that the nation needed extra treatment. If we reach the stage of reducing dental treatment he will say that we are cutting the Health Service. He cannot have it both ways.
    My hon. Friend the Member for Belper (Mrs. Faith) is, I think, the only qualified dentist in the House and therefore knows more than any of us about these matters. She said that the general standard of dental health has been improving. There has been a steady increase in the number of cases of dental treatment provided. In the last year the number of treatments went up from 28·3 million to 30 million and the trend is a continuing increase.
    As to whether or not charges appear to have a deterrent effect on treatment, it may be that any charges have a deterrent effect on a few people, but the underlying trend is that more people are taking dental treatment at a time when the charges are going up. Coming to the point made by the hon. Member for Stockport, North (Mr. Bennett), we exempt a substantial proportion of the population; 43 per cent. of all courses of dental treatment are provided completely free by the National Health Service. Of course, all check-ups and other routine matters are provided free as well.
    Mr. Mike Thomas: The point that concerns me is not the trend of increased treatments, increased spending and all the rest of it. All that I am prepared to accept and welcome. What concerns me is that certain groups are suffering. I mentioned two—those earning relatively low wages and living in inner cities, and students. Those groups are the exception to the rule. The assurance I want from the Minister is that the Government will consider whether there are identifiable groups being discouraged from seeking treatment and whether they will try to do something about it.
    Mr. Clarke: In regard to students, a change in exemptions was made last year. This year we are making no changes in exemptions. I am not aware of any evidence that that has led to a decline in student dental care. If the hon. Member has evidence or if we have access to such evidence, we will examine it.
    I agree that there is a problem in regard to the take-up of exemptions for dental charges. We all agree that a substantial part of the population should be exempt. Some people automatically get their treatment free; others can qualify for exemption. The hon. Member for Stockport, North asked about the exemptions which are given and referred to a prize-winning leaflet produced by the Department of Health and Social Security on exemption from charges for National Health Service dental treatment. I was asked to say what the Government are doing to make that leaflet widely available so that those who are entitled to assistance with charges may know.
    We are publishing a revised leaflet on dental treatment, what it costs, and how to get it free. It will be issued shortly. It will be widely available in dentists' waiting rooms, social security offices, main post offices, community health councils, family practitioner committee offices and citizens' advice bureaux. Dentists will also
    220
    receive a poster for display in their waiting rooms. We will see how well that works. I hope that illustrates that we are maintaining the existing categories of exemption and that we want to ensure so far as possible that people who need assistance with the charges get it.
    Mr. Andrew F. Bennett: How many people who are entitled to exemption or refunds do not get them?
    Mr. Clarke: I do not believe we have that information. I have no ready access to it. If it can be discovered, I shall write to the hon. Gentleman. As I said, we can make the publicity arrangements to ensure that the information on exemptions is widely available.
    I was asked by the hon. Member for Bodmin (Mr. Hicks) what would happen if at some stage we raised the charges to a point where they began to have a deterrent effect on treatment. If it turned out that we had made a misjudgment, we would be happy to look at the evidence of a decrease in the number of dental treatments and the risk to dental health. All the evidence about previous increases in charges under this Government is that they have had no effect on treatments. The number of treatments has increased. We are still able to increase resources to the dental services. For the time being, therefore, and in regard to these regulations, we can put fears of that kind at rest.
    Mr. Terry Davis: Will the Minister tell the House what sort of evidence he would regard as useful?
    Mr. Clarke: It might be a significant drop in the number of dental treatments, a reversal of recent trends, a lack of take-up of dental services, or other evidence by way of surveys of dental health. I do not want to particularise the kind of evidence we would consider. I mean evidence.
    With respect to the case that is being mounted against the Government today, although it is understandable that all dentists prefer the charges to be as low as possible, almost all of it is anecdotal and most of it can be rebutted by such evidence as we have because the number of people getting dental treatment is increasing.
    I do not want to spend so much time on the optical services because there has not been so much concern expressed about them in the debate. Before getting too excited about the opthalmic services, the House ought to appreciate that the background is that increased use is being made of the general ophthalmic services and that the resources going to them are increasing. Spending on general optical services will go up from £141 million in 1981–82 to £166 million in 1982–83. That means that the Government are increasing resources to the general optical services by 2 per cent. in the coming year.
    On the pattern of usage, the number of sight tests has increased since 1980–81 and the number of dispensings has also gone up slightly. The number of sight tests has gone up from 8·3 million to 8·4 million and the increase in dispensings has been from 4·8 million to 4.9 million. Both of those are substantially higher than the 1979 figures when we came into power.
    I was asked about the number of charges that we have introduced. The hon. Member for Crewe and others were critical of the range of charges. This is merely a justifiable attempt to relate the charges to the actual cost of the service. The hon. Member for Brent, South says that that means that those with the worst sight problems are most

    221
    vulnerable to the charges, but I must point out that we have protected those with serious sight problems by putting maxima on the various charges. The maximum charge will be £15 for a lens. Therefore, those with the worst problems with their sight will get the greatest subsidy, if they are from that section of the population that has to make a contribution towards its optical services.
    That is the background—increased resources for dental services, increased resources for the optical services, and more people making use of both of them. We hope that there will be a welcome improvement in the dental and optical health of the nation. It is all very well to say that charging more is unpopular, but there has to be some kind of contribution from the taxpayer if we are to sustain improved services.
    I intimated that I would not go into the various political arguments which have unnecessarily been drawn into the debate. Obviously I have to answer the allegations that we have gone back on what we said. The Prime Minister's guarantee, which was given at the last general election and which was referred to by the hon. Member for Brent, South, was that there would be no new health charges. That was when we were facing the allegation that we were about to introduce payments for hospitals and payments for the Health Service. That was the canard that was shot down then. We have introduced no new forms of health charge. We do not intend to do so.
    Reference was made to various statements by my hon. Friend the Member for Reading, South (Dr. Vaughan), my predecessor. I have scanned not only the pages of Hansard which we knew about from the British Dental Association but the additional pages to which the hon. Member for Birmingham, Stechford (Mr. Davis) was referring. I have found no reference featuring the terms which he kept using that my hon. Friend the Member for Reading, South committed us not to increase charges beyond cost. He said that the policy was to raise the charges in line with cost. At no stage, so far as I can see, did he give any indication that we would not go beyond that. It requires special reading of both the public expenditure White Paper and Hansard to discover that.
    When it comes to quotations, I am surrounded by Hansards and if I wanted to play this game I could go back into what Labour right hon. and hon. Members have said and done about optical and dental charges. In 1977—I think it must have been before the right hon. Member for Norwich, North became Secretary of State or he would not have had the temerity to take part in this debate as he did—the Opposition dealt with dental charges by increasing the overall maximum charge from £12 to £30, an increase of over 150 per cent., compared with our 44 per cent. about which they are so indignant today. The charge on synthetic resin dentures increased from £12 to £20—an increase of more than 50 per cent. compared with our proposed increase of 6 per cent. The practice of distinguishing between various forms of dental care was also introduced by the Opposition. Evidence of vast raisings of charges by successive Labour Governments can be found.
    I examined the 1969 record, when the hon. Members for Brent, South and Newham, North-West (Mr. Lewis) were in the middle of a small Labour revolt against the decision to increase charges. What did I find when I scanned the interesting Division lists? The hon. Member for Crewe, who led for the Opposition today, and the right hon. Member for Norwich, North, who was once
    222
    Secretary of State and who also supported the attack on the Government today, both voted for increased charges on that occasion—against the hon. Member for Brent, South with whom they are cynical enough to align themselves today.
    Mr. Freud: Can the Minister explain how an increase from £12 to £30 is over 150 per cent.?
    Mr. Clarke: My maths is always fallible. The word "over" may turn out to be superfluous, but the calculation of 150 per cent. is certainly defensible. That contrasts strikingly with the 44 per cent. that someone whose maths is better than mine has calculated the Government's increase to be.
    I shall not play politics any further, or I shall be guilty of the behaviour of which I have accused others. I merely say to those who insist that we can forgo the charges or any part of them this year that they must face the problem that the forgoing of revenue to the NHS involves. The only purpose of our increases is to acquire more money to maintain the growth that we are achieving in the NHS. To talk of abolishing charges means that the official Opposition are talking about getting rid of £151 million worth of dental charges and £50 million worth of optical charges next year. We cannot be attacked for cuts that we are not making in the NHS if the Opposition intend to forgo £200 million of revenue for the NHS as one of their first acts if they are returned to Government. The extra money that we are raising by the regulations is £33 million from dental charges and £15 million from optical charges. They are not enormous sums, despite the general economic climate, but when the Government's record of maintaining and improving services is so good the House cannot begrudge a modest contribution to those improvements coming from raising the cost of services as we propose.
    What the Government are doing will not be popular, but it is necessary. To vote for the Opposition motion would therefore be the height of irresponsibility and optimism.
    Question put:—
    The House divided: Ayes 220, Noes 262.

    Division No. 111]

    [7.32 pm

    AYES

    Abse, Leo

    Clark, Dr David (S Shields)

    Allaun, Frank

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

    Alton, David

    Coleman, Donald

    Anderson, Donald

    Concannon, Rt Hon J. D.

    Archer, Rt Hon Peter

    Cook, Robin F.

    Ashley, Rt Hon Jack

    Cowans, Harry

    Atkinson, N.(H'gey,)

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

    Bagier, GordonA.T.

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

    Barnett, Guy (Greenwich)

    Crowther, Stan

    Barnett, Rt Hon Joel (H'wd)

    Cryer, Bob

    Beith, A. J.

    Cunningham, G.(Islington S)

    Bennett, Andrew(St'kp'tN)

    Dalyell, Tam

    Booth, Rt Hon Albert

    Davidson, Arthur

    Boothroyd, Miss Betty

    Davies, Ifor (Gower)

    Bottomley, Rt HonA.(M'b'ro,)

    Davis, Clinton (HackneyC)

    Bradley, Tom

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

    Bray, Dr Jeremy

    Deakins, Eric

    Brown, Hugh D. (Provan)

    Dean, Joseph (Leeds West)

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

    Dewar, Donald

    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

    Canavan, Dennis

    Duffy, A. E, P.

    Carmichael, Neil

    Dunlop, John

    Cartwright, John

    Dunn, James A.

    223

    Dunwoody, Hon Mrs G.

    Mason, Rt Hon Roy

    Eadie, Alex

    Maxton, John

    Eastham, Ken

    Maynard, MissJoan

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

    Meacher, Michael

    Ellis, H.(NED'bysh're)

    Mellish, Rt Hon Robert

    English, Michael

    Mikardo, Ian

    Ennals, Rt Hon David

    Millan, Rt Hon Bruce

    Evans, Ioan (Aberdare)

    Miller, Dr M.S. (EKilbride)

    Evans, John (Newton)

    Mitchell, Austin (Grimsby)

    Faulds, Andrew

    Mitchell, R.C. (Soton Itchen)

    Field, Frank

    Morris, Rt Hon A. (W'shawe)

    Fitch, Alan

    Morris, Rt Hon C. (O'shaw)

    Fitt, Gerard

    Morris, Rt Hon J. (Aberavon)

    Fletcher, Ted (Darlington)

    Newens, Stanley

    Foot, Rt Hon Michael

    Oakes, Rt Hon Gordon

    Ford, Ben

    O'Halloran, Michael

    Forrester, John

    O'Neill, Martin

    Foster, Derek

    Palmer, Arthur

    Foulkes, George

    Park, George

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

    Parker, john

    Freeson, Rt Hon Reginald

    Parry, Robert

    Freud, Clement

    Pavitt, Laurie

    Garrett, John (Norwich S)

    Pendry, Tom

    Garrett, W. E. (Wallsend)

    Penhaligon, David

    George, Bruce

    Powell, Raymond (Ogmore)

    Gilbert, Rt Hon Dr John

    Prescott, John

    Ginsburg, David

    Radice, Giles

    Golding, John

    Rees, Rt Hon M (Leeds S)

    Graham, Ted

    Richardson, Jo

    Grant, George(Morpeth,)

    Roberts, Albert(Normanton)

    Grant, John (Islington C)

    Roberts, Allan(Bootle)

    Hamilton, James(Bothwell)

    Roberts, Gwilym(Cannock)

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

    Robertson, George

    Harrison, Rt Hon Walter

    Robinson, G. (Coventry NW)

    Hart, Rt Hon Dame Judith

    Rooker, J.W.

    Hattersley, Rt Hon Roy

    Roper John

    Haynes, Frank

    Ross, Ernest (Dundee West)

    Healey, Rt Hon Denis

    Rowlands Ted

    Heffer, Eric S.

    Ryman, John

    Hogg, N. (EDunb't'nshire)

    Sandelson, Neville

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

    Sever, John

    Home Robertson, John

    Sheerman, Barry

    Homewood, William

    Sheldon, Rt Hon R.

    Hooley, Frank

    Shore, Rt Hon Peter

    Howell, Rt Hon D.

    Short, Mrs Renée

    Howells, Geraint

    Silkin, Rt Hon J. (Deptford)

    Hughes, Mark(Durham,)

    Silkin, Rt Hon S. C. (Dulwich)

    Hughes, Robert (Aberdeen N)

    Silverman, Julius

    Janner, Hon Greville

    Skinner, Dennis

    Jay, Rt Hon Douglas

    Smyth, Rev. W. M. (Belfast S)

    Jenkins, Rt Hon Roy (Hillhead)

    Soley, Clive

    Jones, Rt Hon Alec (Rh'dda)

    Spearing, Nigel

    Jones, Barry (EastFlint)

    Spriggs, Leslie

    Kaufman, Rt Hon Gerald

    Stallard, A.W.

    Kerr, Russell

    Steel, Rt Hon David

    Kilfedder, James A.

    Stewart, Rt Hon D.(W Isles)

    Kilroy-Silk, Robert

    Stoddart, David

    Lamborn, Harry

    Stott, Roger

    Lamond, James

    Strang, Gavin

    Leighton, Ronald

    Straw, Jack

    Lestor, MissJoan

    Summerskill, Hon Dr Shirley

    Lewis, Arthur (N'ham NW)

    Taylor, Mrs Ann (Bolton W)

    Lewis, Ron (Carlisle)

    Thomas, Mike (Newcastle E)

    Lofthouse, Geoffrey

    Thomas, Dr R. (Carmarthen)

    Lyons, Edward (Bradf'dW)

    Thorne, Stan (PrestonSouth)

    Mabon, Rt Hon Dr J. Dickson

    Tilley, John

    McCartney, Hugh

    Tinn, James

    McDonald, Dr Oonagh

    Torney, Tom

    McElhone, Frank

    Varley, Rt Hon Eric G.

    McGuire, Michael (Ince)

    Wainwright,E. (Dearne V)

    McKay, Allen (Penistone)

    Wainwright, R.(Colne V)

    McKelvey, William

    Walker, Rt Hon H.(D'caster)

    MacKenzie, Rt Hon Gregor

    Watkins, David

    McNamara, Kevin

    Wellbeloved, James

    McTaggart, Robert

    Welsh, Michael

    Magee, Bryan

    White, Frank R.

    Marshall, D(G'gowS'ton)

    White, J. (G'gowPollok)

    Marshall, Dr Edmund (Goole)

    Willey, Rt Hon Frederick

    Marshall, Jim (LeicesterS)

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

    Martin, M (G'gowS'burn)

    Williams, Rt Hon Mrs (Crosby)

    224

    Wilson, Gordon (Dundee E)

    Wright, Sheila

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

    Wilson, William (C'trySE)

    Tellers for the Ayes:

    Winnick, David

    Mr. George Morton and Mr. Lawrence Cunliffe.

    Woodall, Alec

    NOES

    Adley, Robert

    Fell, Sir Anthony

    Alexander, Richard

    Fenner, Mrs Peggy

    Alison, Rt Hon Michael

    Finsberg, Geoffrey

    Ancram, Michael

    Fisher, Sir Nigel

    Arnold, Tom

    Fletcher, A. (Ed'nb'ghN)

    Aspinwall, Jack

    Fletcher-Cooke, Sir Charles

    Atkins, Rt Hon H. (S'thorne)

    Fookes, Miss Janet

    Atkins, Robert(Preston N)

    Forman, Nigel

    Baker, Kenneth(St.M'bone,)

    Fowler, Rt Hon Norman

    Banks, Robert

    Fox, Marcus

    Beaumont-Dark, Anthony

    Fraser, Rt Hon Sir Hugh

    Bendall, Vivian

    Fraser, Peter (SouthAngus)

    Benyon, W. (Buckingham)

    Fry, Peter

    Berry, Hon Anthony

    Gardiner, George(Reigate,)

    Best, Keith

    Glyn, Dr Alan

    Bevan, David Gilroy

    Goodhew, Sir Victor

    Biffen, Rt Hon John

    Goodlad, Alastair

    Blackburn, John

    Gow, Ian

    Blaker, Peter

    Grant, Anthony (Harrow C)

    Body, Richard

    Gray, Hamish

    Bonsor, Sir Nicholas

    Grieve, Percy

    Boscawen, Hon Robert

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

    Boyson, Dr Rhodes

    Griffiths, Peter Portsm 'thN)

    Braine, Sir Bernard

    Grist, Ian

    Bright, Graham

    Grylls, Michael

    Brittan, Rt.Hon.Leon

    Gummer, John Selwyn

    Brooke, Hon Peter

    Hamilton, Hon A.

    Brotherton, Michael

    Hamilton, Michael(Salisbury)

    Brown, Michael(Brigg & Sc'n,)

    Hampson, Dr Keith

    Browne, John(Winchester)

    Hannam john

    Bruce-Gardyne, John

    Haselhurst, Alan

    Bryan, Sir Paul

    Havers, Rt Hon Sir Michael

    Buchanan-Smith, Rt. Hon. A.

    Hawksley, Warren

    Buck, Antony

    Hayhoe, Barney

    Budgen, Nick

    Heddle, John

    Bulmer, Esmond

    Henderson, Barry

    Burden, Sir Frederick

    Heseltine, Rt Hon Michael

    Butcher, John

    Hicks, Robert

    Cadbury, Jocelyn

    Higgins, Rt Hon Terence L.

    Carlisle John (Luton West,)

    Hill, James

    Carlisle, Kenneth (Lincoln)

    Hogg, Hon Douglas(Gr'th'm,)

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

    Holland, Philip(Carlton)

    Chalker, Mrs. Lynda

    Hooson, Tom

    Channon, Rt. Hon. Paul

    Hordern, Peter

    Chapman, Sydney

    Howe, Rt Hon Sir Geoffrey

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

    Howell, Ralph(N Norfolk)

    Clark, Sir W. (Croydon S)

    Hunt, John(Ravensbourne)

    Clarke, Kenneth(Rushcliffe)

    Irving, Charles(Cheltenham)

    Cockeram, Eric

    Jessel, Toby

    Colvin, Michael

    Johnson Smith, Geoffrey

    Cope, John

    Jopling, Rt Hon Michael

    Corrie, John

    Joseph, Rt Hon Sir Keith

    Costain, Sir Albert

    Kaberry, Sir Donald

    Cranborne, Viscount

    Kellett-Bowman, Mrs Elaine

    Critchley, Julian

    Kershaw, Sir Anthony

    Crouch, David

    Kimball, Sir Marcus

    Dean, Paul(North Somerset)

    King, Rt Hon Tom

    Dorrell, Stephen

    Lamont, Norman

    Douglas-Hamilton, Lord J.

    Lang, Ian

    Dover, Denshore

    Latham, Michael

    Dunn, Robert(Dartford)

    Lawrence, Ivan

    Durant, Tony

    Lawson, Rt Hon Nigel

    Dykes, Hugh

    Lee, John

    Eden, Rt Hon Sir John

    Lennox-Boyd, Hon Mark

    Edwards, Rt Hon N. (P'broke)

    Lester, Jim (Beeston)

    Eggar, Tim

    Lewis, Kenneth(Rutland)

    Elliott, Sir William

    Lloyd, Peter (Fareham)

    Emery, Sir Peter

    Loveridge, John

    Eyre, Reginald

    Luce, Richard

    Fairbairn, Nicholas

    Lyell, Nicholas

    Fairgrieve, Sir Russell

    Macfarlane, Neil

    Faith, Mrs Sheila

    MacGregor, John

    Farr, John

    MacKay, John (Argyll)

    225

    Macmillan, Rt Hon M.

    St. John-Stevas, Rt Hon N.

    McNair-Wilson, M. (N'burry)

    Shaw, Michael(Scarborough)

    McNair-Wilson, P.(NewF'st)

    Shelton, William(Streahtam)

    McQuarrie, Albert

    Shepherd, Colin(Hereford)

    Marland, Paul

    Shepherd, Richard

    Marshall, Michael(Arundel)

    Sims, Roger

    Mates, Michael

    Skeet, T. H. H.

    Mather, Carol

    Smith, Dudley

    Maude, Rt Hon Sir Angus

    Speller, Tony

    Mawby, Ray

    Spence, John

    Mawhinney, Dr Brian

    Spicer, Jim (WestDorset)

    Maxwell-Hyslop, Robin

    Spicer, Michael (S Worcs)

    Mayhew, Patrick

    Sproat, Iain

    Mellor, David

    Squire, Robin

    Meyer, Sir Anthony

    Stainton, Keith

    Miller, Hal(B'grove)

    Stanbrook, Ivor

    Mills, Iain(Meriden)

    Stanley, John

    Mills, Peter (WestDevon)

    Steen, Anthony

    Miscampbeil, Norman

    Stevens, Martin

    Moate, Roger

    Stewart, A. (ERenfrewshire)

    Monro, Sir Hector

    Stewart, Ian (Hitchin)

    Montgomery, Fergus

    Stokes, John

    Moore, John

    Stradling Thomas, J.

    Morrison, Hon C. (Devizes)

    Tapsell, Peter

    Morrison, Hon P. (Chester)

    Taylor, Teddy (S'endE)

    Murphy, Christopher

    Tebbit, Rt Hon Norman

    Myles, David

    Temple-Morris, Peter

    Neale, Gerrard

    Thomas, Rt Hon Peter

    Neubert, Michael

    Thorne, Neil(IlfordSouth)

    Newton, Tony

    Thornton, Malcolm

    Normanton, Tom

    Townend, John (Bridlington)

    Onslow, Cranley

    Townsend, Cyril D, (B'heath)

    Osborn, John

    Trippier, David

    Page, John (Harrow, West)

    van Straubenzee, Sir W.

    Page, Richard (SWHerts)

    Vaughan, Dr Gerard

    Parkinson, Rt Hon Cecil

    Viggers, Peter

    Parris, Matthew

    Waddington, David

    Patten, Christopher(Bath)

    Wakeham, John

    Pattie, Geoffrey

    Walker, B. (Perth)

    Pawsey, James

    Walker-Smith, Rt Hon Sir D.

    Percival, Sir Ian

    Waller, Gary

    Peyton, Rt Hon John

    Walters, Dennis

    Pink, R. Bonner

    Ward, John

    Pollock, Alexander

    Warren, Kenneth

    Porter, Barry

    Watson, John

    Prentice, Rt Hon Reg

    Wells, Bowen

    Proctor, K. Harvey

    Wells, John (Maidstone)

    Raison, Rt Hon Timothy

    Wheeler, John

    Rathbone, Tim

    Whitelaw, Rt Hon William

    Renton, Tim

    Whitney, Raymond

    Rhodes James, Robert

    Wickenden, Keith

    Ridley, Hon Nicholas

    Wilkinson, John

    Ridsdale, Sir Julian

    Winterton, Nicholas

    Rifkind, Malcolm

    Wolfson, Mark

    Rippon, Rt Hon Geoffrey

    Young, Sir George(Acton)

    Roberts, M. (Cardiff NW)

    Younger, Rt Hon George

    Rossi, Hugh

    Rost, Peter

    Tellers for the Noes:

    Royle, Sir Anthony

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

    Sainsbury, Hon Timothy

    Question accordingly negatived

    Direct Labour Organisations
    7.44 pm
    Mrs. Ann Taylor: I beg to move,
    That an humble Address be presented to Her Majesty, praying that the Local Government (Direct Labour Organisations) (Competition) (Amendment) Regulations 1982 (S.I., 1982, No. 325), dated 9th March 1982, a copy of which was laid before this House on 11th March, be annulled
    Mr. Deputy Speaker (Mr. Bryant Godman Irvine): I understand that with this it will be convenient to take motion No. 6 on the Order Paper:
    That an humble Address be presented to Her Majesty, praying that the Local Government (Direct Labour Organisations) (Competition) (Scotland) Regulations 1982 (S.I., 1982, No. 318), dated 8th March 1982, a copy of which was laid before this House on 11th March, be annulled
    Mrs. Taylor: The regulations about which we are concerned deal with the new restrictions imposed by the Government on the operation of direct labour organisations. They are being introduced without proper consultation with those most directly involved and before the existing regulations have operated even for 12 months.
    The regulations are designed to offer no more and no less than a few crumbs of comfort to a building industry suffering its worst depression since the war. Like the rest of the country, it is feeling the effects of the Government's decision to cut expenditure on housing, roads and construction generally. The Government can thus offer little hope of prosperity to their one-time friends in the construction industry. Having contributed so much to Tory Party funds in the past and spent so much opposing the Labour Party during the last general election, they have got very little for their money.
    The regulations are yet another and probably the most serious attack by the Government on the whole concept of direct works. The Government's attack began with the Local Government, Planning and Land Act 1980. It was intensified by the regulations that they introduced last year. Now, less than 12 months after those changes, the Government are once again changing the rules of the game and tightening the screw on direct labour organisations. They are doing this partly as a result of their ideological dislike of direct labour organisations, but also because of their need to appease big building interests—which they apparently regard as more important than the value attached by Ministers to their own assurances about the Government's legislation and intentions with regard to direct works.
    I should make it clear at once that Labour Members positively believe in direct labour organisations. We recognise that, by and large, direct works departments have a good record of service to local authorities and to tenants and provide value for money to ratepayers. They have also set an example for the rest of the building industry in terms of security of employment, pensions rights, employment of the disabled, health and safety at work and apprenticeships.
    Whenever we discuss direct labour organisations, however, the Government choose to ignore those points and insist on pressing ahead with their attack on direct labour. As in other areas, they wish to pursue a policy of privatisation which can be pushed through only if new, artifical restraints are imposed on direct labour organisations.

    227
    Those regulations are but the latest area of attack. In introducing them, the Goverment are clearly going back on their own assurances about their intentions with regard to direct labour.
    The index-linking of tendering limits, for example, is very important to all direct labour organisations. When the original legislation went through the House, Ministers gave assurances on several occasions that the Government intended to uprate the limits. They were set extremely low in the first place.
    In February 1980, the then Under-Secretary of State for the Environment, the hon. Member for Shipley (Mr. Fox), in Committee on the Local Government, Planning and Land (No. 2) Bill, said that he and the Government wanted to be fair to the local authorities. Those were almost his last words as a Minister, because he did not last much longer. However, he gave specific assurances about the Government's attitude on uprating the tendering limits. For example, in Committee, he said:
    "We agree. ….that the thresholds should be amended regularly to take account of changing prices."
    Later the Under-Secretary said:
    "I accept the principle of index linking. …it is an important principle."
    The Under-Secretary then said that
    "for any figures to be acceptable in the present climate there must be regular updating."
    The hon. Gentleman added that the Government would, therefore, find a way of index linking the tendering limits.
    It is interesting to consider what happened with regard to index linking on tendering limits now that we have come to these regulations. There has been no uprating. Worse still, the Government have not only refused to uprate their original limits and, therefore, keep their promise, but they have reduced the limits for highway contracts. We shall be interested to hear from the Minister how a reduction from £100,000 to £50,000 in the tendering limit squares with the assurances on uprating that were given by other Ministers in his Department.
    Perhaps we should not dwell too much on Government assurances. They may be as worthless as the Government's assurance that they understood the problems of highway authorities, the need to have a sufficiently large work force to deal with both winter and summer work and the justification for a large investment in the specialist plant that the highway authorities felt was necessary.
    Again, in Committee, the then Under-Secretary said that he believed it was necessary for highway authorities to have sufficient work to keep
    "a team of skilled operatives readily available. They would be necessary to justify investment in specialist plant."
    The hon. Gentleman went on to say:
    "There is, therefore, a particular problem. We have proposed, therefore, that below the £100,000 level there should be no mandatory tendering".—[Official Report, Standing Committee D, 26 February 1980; c. 200–232.]
    However, the Government now propose that the tendering limit of £100,000, set in February 1980, should be only £50,000. Surely all the factors that the Minister thought important in February 1980 are just as relevant now. The limit should not be dropped to £50,000; it should be increased, in line with Government assurances, to £125,000.
    I assure the Minister that not only Opposition Members are worried about the proposed change. Many Tory county councils are worried about the effect that these changes
    228
    will have on them. One senior county engineer and surveyor has recently stated that the original considerations that led the Government to set their limits have not changed and that the limits should now be raised in line with inflation.
    I should like to know how the Minister justifies what has been going on in conjunction with the Department of Transport. The Department of Transport has issued a substantial questionnaire to all highway authorities seeking evidence about the likely impact of the proposed changes. The Government introduced regulations on 16 March, but the response to the questionnaire was not due back at the Department of Transport until 26 March. This shows clearly that the Minister had made up his mind by 16 March, that he had no intention of looking at the opinions of those directly concerned in these matters and that he also had no intention of taking those consultations seriously. I ask the Minister to justify that action and to explain why the questionnaire was sent out at all if the Government had already prejudged the issue.
    The other main change in the regulations is probably even more damaging to local authorities. This concerns tendering for maintenance work on jobs below £10,000. The Government are putting constraints on direct labour organisations that do not apply to private contractors to make it easier for private contractors to win tenders. The Government are still insisting that direct labour organisations must make a return of 5 per cent. on each of the four descriptions of work given them. Yet everyone knows that private builders are not claiming, and are not making, a 5 per cent. return at present. Moreover, private firms can, and often do, balance profit and losses on different contracts. Cross-subsidisation is common in the industry. Direct labour organisations will not be allowed to do that. The Secretary of State will be able to say that one part of a DLO is not performing satisfactorily and will be able to close it down if it does not meet the 5 per cent. target. That situation does not apply to private industry.
    Who will check the returns of building firms with the same scrutiny that is applied to those of DLOs? Will the Minister confirm that the Inland Revenue estimates that tax evasion within the private building industry amounts to £1 billion a year? Will the Minister be making any representations to the Treasury to ensure that local authorities benefit from the 1 per cent. cut in the national insurance surcharge just as private contractors will benefit? If the Minister is not looking into these matters, hon. Members will have further evidence of what he means by fair competition.
    The new regulations on maintenance work mean that the administrative charges of local authorities will increase considerably. My local authority in Bolton had to take on extra temporary staff last year to deal with the tendering arrangements and the regulations that the Minister then introduced. Now that 30 per cent. of maintenance work below £10,000 has to go out to tender, it will have to put more people on to the preparation of tender documents and such activities—all at a cost to the authority.
    At a time when the Secretary of State accuses local authorities of overspending, he is putting more pressure on them. The extra adrnininistration is already costing local authorities money. Sheffield direct works department has been monitoring some of the extra costs involved in the changes so far. As a percentage of the contract sum, the extra cost of the preparation of specifications, tender documents, valuation certificates and suchlike amounts to

    229
    2·63 per cent. The extra cost of the supervising of contracts amounts to more than 4 per cent. That is a total extra cost to the authority of 7 per cent. It estimates that this example is typical of the extra cost to the authority. On average, on maintenance work, local authorities will find their costs increasing by between 5 and 10 per cent., depending on the size and nature of the work. All that means that there will be less work for the authority, because this administrative cost has to come out of the budget for work.
    At the moment, many direct labour organisations believe that they are well organised and can win contracts against fair competition. For example, Manchester estimates that it has won 75 per cent. of the contracts for which it has been tendering. Why should efficient DLOs be burdened with extra bureaucracy when they are already operating satisfactorily? Why should local authorities be forced to do less productive work and more paper work?
    If more work goes to private contractors, the general conditions of employment in the building industry will decline. One of the reasons for local authority costs being higher is the need for increased supervision of private contractors regarding matters such as safety. In Sheffield, in the past three months the local authority has found it necessary to record 37 verbal warnings to contractors because of their failure to comply with safety regulations. Problems ranged from defects in scaffolding to the way in which they dealt with stripped asbestos. Work had to be stopped on three contracts and the factory inspector had to issue four prohibition notices. With such practices going on, it is not surprising that the supervision costs of local authorities increase.
    The Minister is attempting to stack the cards against DLOs, so that private builders can get a bigger slice of the smaller construction cake. It is only because of the Government's failure to pursue a reasonable level of construction work that private builders are interested in direct labour work. If and when there is an upturn in construction work, private contractors will be less interested in DLO work, especially maintenance work, because they will expect a higher return from new build.
    The regulations are little more than a sop to private builders in lieu of a proper building programme. They are an attempt at privatisation that will be costly to the public purse in the same way as the Government's decision to scrap the road construction units has been. That cost £9 million last year in winding-down costs. We have yet to see the total costs when private contractors start to hold local authorities to ransom because they know that local authorities are no longer able to do the work. Even Sir Derek Rayner, in his report on road construction units, acknowledged that the RCUs' costs were 15 per cent. lower than they would have been had the work gone to outside consultants.
    The Government's one-sidedness is apparent in the way in which they insist that DLOs cannot compete with private contractors for work outside their own localities. If the Government are serious about fair competition, they should remove these restrictions and allow DLOs to compete where they wish. The regulations are not an attempt at fair competition for the DLOs. They are vindictive and they discriminate against DLOs.
    However, this is not the end of the story. We are worried about what further restrictions the Minister might want to introduce next year. I hope that he will give us
    230
    some assurances that these regulations will be the end of the line, and that he will not introduce even worse measures next year.
    The Labour Party believes that the Government have not stood by their previous assurances on DLOs. The Government will do anything rather than introduce a reasonable policy for the construction industry. We believe that the regulations are irrelevant and vindictive to Britain's building needs. We shall vote against the regulations.
    8.5 pm
    The Minister for Housing and Construction (Mr. John Stanley): The hon. Member or Bolton, West (Mrs. Taylor) suggested that direct labour organisations felt discriminated against. I assure her and the rest of the House that the private building industry feels that the competition visa vis DLOs is far from fair since the new regime started on 1 April 1981. I shall elaborate on that in a moment.
    I have been looking at the background on the various policy decisions on DLOs in recent years by the Labour party. One of the statements that I came across was that we should ensure that DLOs
    "are efficiently run as separate municipal enterprises, publicly accountable for their performance."
    That is not a policy statement by the National Federation of Building Trades Employers, or by the Federation of Civil Engineering Contractors, or even by the organisation much loved by the Labour Party, the Campaign Against Building Industry Nationalisation. It is an extract from the 1979 general election manifesto of the Labour Party. That manifesto statement alone, that DLOs should be "efficiently run" and "publicly accountable", destroys from the outset the Opposition's case for the prayer.
    I now give some background to the order which is the new statutory provisions concerning DLOs introduced in the Local Government, Planning and Land Act 1980. Those provisions were long overdue. The hon. Member for Bolton, West suggested that DLOs had a good record., and certainly in the late 1960s and throughout the 1970s as the House will recollect, there was a whole series of DLO scandals in individual authorities which evidenced gross inefficiency and gross waste of ratepayers' and taxpayers' money. It was recognised almost universally that there was an imperative need to improve both the efficiency and the accountability of the DLOs.
    Interestingly, even those whose uncritical admiration of most forms of public sector activity is normally fairly boundless were compelled to admit that all was not well with the DLOs. I noted that the hon. Member for Lambeth, Central (Mr. Tilley) who was then chairman of the building works committee of the Wandsworth borough council, felt bound to confess in his pamphlet, "Changing Prospects for Direct Labour" that some of the criticisms had some substance. He went on to say:
    "while many `DLOs' are well run, there are some which are not." Coming from the hon. Member, that was a fairly remarkable confession.
    The need to increase the exposure of DLOs to competition, which is what the regulation seeks to do, was also fully recognised by Ministers in the Labour Government. I note that replying to a question from my hon. Friend the Member for Hove (Mr. Sainsbury) the then Under-Secretary of State said:

    231
    "The efficiency of direct labour departments should be tested in competition with private contractors."—[Official Report, 15 October 1975; Vol. 917, c. 1338.]
    The right hon. Member for Brent, East (Mr. Freeson), when he was Minister for Housing and Construction, set up a departmental working group to examine DLOs and the report of that group reads:
    "No authority should allow work to be allocated to its DLO without assurance from fair and reasonable testing of the market that by doing so benefit will accrue to the ratepayers."
    There could be no more emphatic statement of the desirability of competition with DLOs. That was the background to the new DLO provisions that we introduced in 1980, when there was a well-nigh universal acknowledgement that DLOs should be made more efficient and more accountable.
    The hon. Member for Bolton, West suggested that the regulations were premature, and that the new system should have had longer to settle down. I remind the House that my hon. Friend the Under-Secretary of State for Health and Social Security made our position clear nearly a year ago. He said on 22 June:
    "We propose to review all aspects of the operation of the new regime for DLOs in the light of experience of its working this first year".—[Official Report, 22 June 1981; Vol. 7, c. 56.]
    That DLO review has taken place and has been carried out in detail.
    Mrs. Ann Taylor: Will the Minister tell us more about how he has carried out such a wide and sweeping review in less than nine months since that statement was made? How can he assess the workings of regulations which have not been in operation for 12 months?
    Mr. Stanley: The review has been done in a full and comprehensive manner. We invited representation from local authorities and from the construction industry. The response from the industry was substantial.
    I want to make it plain that, while the review has shown that the majority of authorities have sensibly and responsibly followed the new DLO provisions, it is apparent that a number of councils have blatantly and in a most determined manner sought to prevent DLOs from being exposed to proper competition from the private sector. The value of the construction work now undertaken by DLOs is considerable. In 1981 in Great Britain, DLO output represented about £2 billion worth of construction work. That constitutes a significant slice of work for the construction industry as a whole, and the Government consider it essential that the construction industry as a whole should have a fair chance to compete for it.
    It is clear that in some authorities the private sector has not been given a fair opportunity to compete for this work, and that the name of the game, in some authorities at least, has been to circumvent the intention of the legislation. Councillor John Senior of Sheffield—an authority quoted by the hon. Lady—the convenor of the Association of Direct Labour Organisations made clear that association's objectives when he said, according to the Municipal and Public Services Journal:
    "We mean to obstruct the new laws every inch of the way—that's what we're all about".
    He went on:
    "We should get our solicitors departments to advise us on how to get round the new direct labour legislation".
    232
    That sort of approach is still current in some quarters, and it was vividly reflected in the advice that was given to NUPE members in a recent article in NUPE News:
    "Members of NUPE working for local authorities need to be vigilant. When they hear of any moves—the merest suggestion—that private contractors are contemplated they should raise the matter with their Branch and full-time officer … Above all, NUPE members must be ready to challenge each and every attempt by private contractors to burrow into local authority services".
    Conservative Members feel that the time is overdue for a certain amount of burrowing into certain monopolistic activities.
    I shall describe what the Government propose in these regulations, in the related circulars, and in other ways, to deal with the various devices that have been employed over the past year to prevent DLOs from being exposed to fair competition. First, a number of authorities have excluded all contractors from tendering for DLO work unless they employ 100 per cent. trade union labour. In our view, that is a blatantly restrictive practice, and we greatly welcome the fact that my right hon. Friend the Secretary of State for Employment in the Employment Bill, is making void, and therefore unenforceable, any union labour-only clauses in contracts.
    Second, a number of authorities have imposed a variety of onerous contractual conditions as a means of deterring competition from the private sector. These include, for example, excessive performance bonds, above even the maximum recommended by the local authority associations themselves, and also clauses that enable the local authorities unilaterally to determine whether a breach of contract has occurred, with no independent safeguards for contractors. Although those devices are within the purview both of district auditors and of the Director General of Fair Trading, I draw attention to the fact that my right hon. Friend stated in paragraph 19 of the DoE circular 6/82:
    "They will if necessary seek legislative powers to enable them to prohibit specific requirements or conditions of contract which appear to them to be unreasonable and artificially to reduce fair competition".
    Third, in our view there has been some abuse of the limited exemption from going out to competitive tender on contracts that are extensions of existing ones. In the regulations we are therefore reducing the scope of the exemption for extension contracts, and we are also tightening up the definition of two important terms used in the regulations—the definition of a job, and the definition of estimated cost.
    Fourth, in a number of cases local authorities have gone out to tender, the bids have come in, and the contract has been awarded to the DLO, even though the DLO did not submit the lowest tender. Of the evidence on this point that has come to the Department in recent months, there was, for example, a Harlow council contract worth over £100,000 for an extension to council offices which was awarded to the DLO, even though the DLO was under bid. A Gateshead council house modernisation contract, worth more than £400,000, was awarded to its DLO when again the DLO was under bid. A Sandwell council housing contract worth over £600,000 was given to its DLO, again when its DLO was under bid. The Government consider that, unless there is good reason to act otherwise, it is inexcusable for a local authority to accept other than the lowest tender.
    For that reason my right hon. Friends have now used their new powers under section 18 of the Local Government, Planning and Land Act to issue directions

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    under which the annual reports of direct labour organisations will have to specify the actual contracts awarded to DLOs where the DLO was not the lowest tenderer, and the reasons for the decision in each case. That information will be examined extremely carefully by both my right hon. Friends and by district auditors.
    Finally, the representations that we received in the review convinced us that it was perfectly practical and highly desirable that more of the highways work and maintenance work that is not currently exposed to competition with private sector could and should be put out to tender. Hence our proposals in the regulations to reduce the threshold for competition for highways work from £100,000 to £50,000, and our proposal to put an initial 30 per cent. of maintenance work below the £10,000 threshold out to competition.
    The hon. Lady set out the predictable string of arguments about why further competition is undesirable. The Labour Party has never managed successfully to reconcile its belief that DLOs are the most efficient organisation in the construction industry with its equally fervent belief that they should be shielded from the competition of the private sector to the greatest possible extent. I am not entirely sure how those two can be reconciled. I suggest that the arguments that were advanced are false because a number of authorities are already going out to competition for work below the current thresholds and are doing so perfectly satisfactorily.
    Devon county council, for example, has already adopted a £50,000 threshold for highways work, and I understand that the county has found that that provision provides an efficient use of its resources and is quite satisfied with it.
    Northamptonshire county council does not make any use of a formal threshold for putting highways capital projects out to tender. For a number of years that council has sought competitive quotations for virtually all highways work in its capital programme.
    In London, the borough of Bromley, I understand, put two-thirds of its highways work below the £100,000 threshold out to competitive tender. Croydon is another borough that put work below the £1 00,000 out to tender.
    The same is the case on non-highways maintenance work where many authorities are already putting out a substantial proportion of work below the £10,000 threshold to competitive tender.
    The new towns—for example, Peterborough, Central Lancashire and Warrington—put virtually all their maintenance work out to competitive tender.
    In London, Bromley puts over half its maintenance work below the £10,000 threshold out to competition, and Kensington and Chelsea and Hammersmith and Fulham put some two-thirds out to competition.
    Outside London, many districts, including Solihull, Woking and Brighton, do likewise. Indeed, I understand that in Brighton any work costing more than £1,500 is put out to tender.
    All that could not demonstrate more clearly that the arguments advanced by the Opposition are shallow.
    The Government consider that a further tightening up of the DLO competition regulations is important. Competition is far and away the best guarantee of value for money and of proper protection for the ratepayer and taxpayer. The leading body in local government concerned
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    with proper financial discipline, the Chartered Institute of Public Finance and Accountancy, in its report on DLOs, said:
    "The only reason for the continued existence of a direct works undertaking is its ability to provide a service at least as effective and economical as its competitors."
    We agree with that. Our new regulations are designed precisely to that end, and in the interests of efficiency and economy I ask the House to reject the Opposition's prayer.
    8.22 pm
    Mr. Reginald Freeson: Frankly, I have never heard such a feeble speech about DLOs in all the time that I have been in the House. To talk as though the measures before the House are of any significance for the construction industry's capacity to compete for public works is nonsense. It is a sop, and, frankly, leading representatives of the building industry, with whom I have a great deal of contact, should be ashamed of themselves for the silly, facile and childish campaign that they have continued to run in pursuit of this kind of measure. The Minister is weak to respond to that kind of nonsense. It is irrelevant to the problems of the construction industry. The only relevance it has to direct works is to impose unnecessary restrictions.
    The Minister went through a string of local authorities which were, at least in part, operating the kind of threshold procedure that he is incorporating in the regulations. Well, good luck to them. That is a matter for them. It is a matter for their elected members to decide. It is a matter for their ratepayers and their citizens to argue about, and to change or to extend as they so wish. However, there is absolutely no justification for the Minister to quote such a series of examples in support of a national imposition on all local authorities irrespective of local conditions and economics.
    Strung through the Minister's remarks were a number of quotations; one or two attributed to me and my colleagues in the Labour Government in the Department of the Environment, another attributable to the Chartered Institute of Public Finance and Accountancy and another organisation whose name I have forgotten. In none of those cases was the Minister stating the position being argued, except, possibly, when he referred to the answer to the undated parliamentary question. All those quotations from myself, from CIPFA, and from the working party report of 1978 and others, must be set in context.
    The working party report of 1978 was circulated as a basis for more effective action by DLOs. It was a good report. However, let me deal with some history. The. Minister is fond—as are other Conservative Members and some people in the industry—of raising rather foolish Aunt Sallys as if they are the party of greater efficiency in the construction industry. He does so as if the Conservative Party was the party of greater efficiency in direct works organisations and as if the Labour Party merely accepted, with bright blue eyes, that everything that direct labour organisations did was perfect, efficient and marvellous and that nothing should touch them.
    The history of public policy-making is quite the reverse. In 1969, when I was Parliamentary Secretary in the old Ministry of Housing and Local Government—in the Labour Government before last—we produced a manual. The Labour Government set up a working party, It was the first of its kind. At no stage during the previous 13 years of Conservative Government had anything like

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    that been produced. The manual was entitled "Manual of Principles of Financial and Management Control for Local Authorities Carrying Out New Construction by Direct Labour". It was a guidance document and was issued to all local authorities in co-operation with local authority associations, following extensive study.
    In 1974, when I was appointed Minister—after an intervening period of three and a half years of Conservative Government—I was concerned to ensure that there were efficient direct labour organisations that could undertake a widening role, where it was right for them to do so. Before taking any further steps, I checked to see what had been going on since the Labour Government left office in 1970. The Minister is free to check what I have to say about the previous Conservative Government, because there is nothing secret about it. Between 1970 and 1974 not one step was taken by any Minister in the Department of the Environment to monitor the effects of the manual's circulation. It was left to the incoming Labour Government to do that. We did so with the back-up of CIPFA and we set up another working party, which produced the report of 1978. In addition in the statements that we made and the consultations that we undertook, we issued guidance to ensure that the guidelines set out in the manual—which were reinforced by the CIPFA report and by the working party that I had set up—were applied.
    We began to prepare legislation. It went far beyond the nonsense that we have received from this Government. We were concerned to see efficient, effective local authority direct work organisations and so were the local authority organisations with whom we consulted and studied. We began to draft legislation. Ironically, that draft was ready to be presented, but was killed by the Lib-Lab pact. It would have gone well beyond the legislation that has existed since 1980, which is being reinforced by this legislation.
    We would have given local authorities the power and right to enter into genuinely free and open competition with the industry. We would have given them the power to convert their direct labour organisations into genuinely independent municipal enterprises and building companies. It was all there in draft. They would have been able to compete freely for work outside their boundaries. However, even then the system would not have been fully free, because the provision would merely have been extended to allow them to do work for housing associations, for adjoining local authorities and for public sector services that they were prevented—and are still prevented—from undertaking. That would have been a major policy step forward. To their shame, those in the industry for whom I would otherwise hold great respect ran in fear of the prospect of somewhat freer competition from well-organised direct labour organisations.
    Such legislation would also have brought inefficient organisations to book. The preceding Tory Government did not take any steps to see to that after the publication of the manual. That is the policy background and the approach which, if hon. Members and the industry willed it, could provide the basis for a genuinely fair and objective attitude towards the role of public sector building works. A genuine basis for competition and efficiency must be established but there is no question of greater equity and greater efficiency in the regulations. It is a petty
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    move and a sop to some of the industry's leaders—who should know better—in a difficult situation in which virtually every area of activity has declined.
    In the past few days, I have seen the figures published recently by the Department of the Environment. This is the background to the regulations before us. In 1981 the total output of the construction industry was down by 12 per cent. on 1980. In the last quarter of 1981 it was 4 per cent. lower than in the third quarter, and it was 10 per cent. lower than in the fourth quarter of the previous year. New work in public housing was down by 10 per cent. on the third quarter and was 39 per cent. lower than in the fourth quarter of the previous year. New work in public non-housing works was 4 per cent. lower than in the previous year. New construction in the private industrial sector was down 2 per cent. in the third quarter of 1981 and was 18 per cent. lower than in the fourth quarter of 1980. Under the present Government, every area of activity of the construction industry is down. That is the background to this petty piece of nonsense.
    The regulations are massively irrelevant to the needs of the building industry. It is about time that the Government and the leaders in the industry began to be objective and sensible. Instead of playing around with this silly nonsense, there should be, and there could be, an expansion of public works. It would not produce a radical change overnight—we have gone too far down the road of decline for that—but the works could get under way and in so doing could provide a much larger and more sensible work load in short, medium and long-term programmes for the entire building industry.
    In that context, there would be provision for more work by efficient DLOs without petty constraints, which impose unnecessary costs on local authorities and put at risk the jobs of a growing number who have been employed by DLOs—good craftsmen and good workers who are modestly paid and who provide a good service on the whole.
    I turn to the image of direct works that the Minister has gone out of his way to encourage others to pursue. The Minister is right to say that over the years there have been direct works organisations in a number of local authorities that have operated inefficiently for longer than they should.
    Mr. Michael Brown: Scandals!
    Mr. Freeson: When the hon. Gentleman says that there was a series of scandals, he is grossly overstating the position and is creating a smear. Such language is unnecessary because even where there have been cases of inefficiency it is wrong to generalise and say that they are scandals. There have been scandals but it is true—I do not say this as an excuse for inefficiency in certain direct works organisations—that there have been massive inefficiencies and scandals in the private sector. However, we do not go around smearing the whole of the private building industry.
    This type of political nonsense has been going on for far too many years both in the House and in the media. It is about time that it stopped. It does no good to the construction industry—it does not enhance its work load, it does not improve its efficiency as a whole and it does not do any good to direct works. All it does is mislead the public and the industry. If action is taken as a consequence

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    of this view in the belief that something is being done for the industry when it is not, it will demoralise those who wish to see good standards, good organisation, good management and good work in the public sector. Examples of inefficiency are in the minority.
    Secondly, there are at least as many instances, if not more, where direct works organisations have picked up the tab for collapses in the private building sector on certain contracts. Shortly after I was appointed Minister for Housing and Construction I had the ironic experience of having to instruct my officials to go into close and intense negotiations with the local authority in my constituency because there had been a major collapse by a private sector contractor engaged on a large redevelopment scheme in the area. The direct works organisation had to pick up the contract at an additional cost of £1 million and it had to apply for a special loan sanction. That is not the only example. As a local councillor, leader of the council and a Member of Parliament I am aware of half a dozen large-scale collapses by private contractors over the years.
    The Minister fosters the impression that direct labour organisations have the lion's share of public sector building works, small though they have become over the past two or three years. That impression is incorrect. The bulk of public sector work is undertaken by private contractors. Even in these difficult times half the work load of the building industry, which is worth thousands of millions of pounds a year, is in the public sector, and a large slice of that comes from within the local authority sector. However, only 4 per cent. or 5 per cent. of the total work load in the building industry is carried out by direct works organisations.
    Surely we, the industry and the Government have more important things to concern ourselves with in our involvement with the industry than the petty piece of nonsense that the Government have introduced. It is a sop. It will do no good to the industry. I do not believe that it will make that much difference to the private sector work load. It may increase it marginally by about 1 per cent. Someone who does not need them will make a few more coppers and the ratepayers will have to pick up the tab. It will do the industry no good as it will continue to face the same problems. The measure will damage local authority work and will lead to further demoralisation. It misses the point of what needs to be done for direct works organisations and the construction industry. The Minister should not present pieces of nonsense of this sort. He should go away and do his job of work.
    8.39 pm
    Mr. Tony Durant: I welcome the regulations. Direct works started with the best of motivations. Local authorities wanted some of the small maintenance work on their properties and schools to be carried out by direct labour organisations and the scheme grew. For a long time it did not seem necessary to do very much. The right hon. Member for Brent, East (Mr. Freeson) has told us what he had in mind—thank God it was not enacted—which would have led to the creation of enormous municipal undertakings which could have gone outside the local authority sector to compete all over the place—
    Mr. Ted Graham: Yes, competition.
    Mr. Durant: The right hon. Gentleman made me more frightened than ever. I am not frightened of the word
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    "competition". I like the word. When the right hon. Gentleman served as Minister for Housing and Construction he produced one or two interesting documents. I did not read the municipal undertakings document because it did not see the light of day. However, we heard talk of it. I refer to the development that the right hon. Gentleman said would arise. He said that he was delaying plans which were lost because of the Lib-Lab pact.
    Mr. Freeson: The hon. Gentleman misheard what I said. We undertook a major study in conjunction with local authorities and produced a working party report. That was published, circulated and was obtainable in the Library's Victoria Tower. That circulation became the basis for action by a growing number of local authorities in Britain, before the question of legislation was raised. It was killed by the Lib-Lab pact.
    Mr. Durant: I was not commenting on the right hon. Gentleman's documentation, which was used by local authorities. I was concerned with what it was leading to, what the right hon. Gentleman said was in the legislation pipeline and what was killed by the Lib-Lab pact. The right hon. Gentleman said that local authorities could go out and compete. Opposition Members shouted "Competition" so they must believe that his remarks were right. As a Minister in that Government, he produced a number of papers, including a Green Paper on housing. That was an interesting document, but its proposals were never implemented. He also produced a paper with a yellow cover on the Rent Acts. That was also an interesting document and I still carry it with me. It concerned reforms of the Rent Acts and, again, he ran away from them.
    Therefore, the right hon. Gentleman does not have a great housing record to put to the Government. He produced interesting documents but little came of them. That fact must be clear.
    When I asked the right hon. Gentleman whether we needed these municipal undertakings, he said that he would create them. Do we need them? What are they for? Do we not have a private construction industry prepared to do this work anyway? What is it all for? It is to create a bigger municipal undertaking, and that is a bad step. I have been nervous and suspicious of direct labour organisations all my political life, even when I was a local councillor. When calculating estimates, such organisations do not include a percentage of the chief executive's salary or a percentage of the civic office's costs. They are, of course, all parts of the overheads. If one is running a company, parts of the overheads must go into every contract. However, when one gets down to that sort of detail and considers the estimates, of course, such overheads are not there. There is no point in all this elaboration to do work which plenty of people are already able to do.
    I strongly support this measure. Of course, if local authorities throughout Britain had taken the spirit of the 1980 Act, we would not be discussing these regulations. We are doing that now because many of them set out 10 break that legislation. Therefore, we are trying to put things right. Local authorities found ways of getting round it. If authorities had said that they agreed with the Government's desires, that they seemed reasonable measures and that they would go along with them, we

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    would not now be legislating. That is why the industry has become anxious. One cannot blame it for getting anxious because it is basically unfair competition. Contracts are not put out to full tender in many cases. That should be done. I support the lowering of levels. Unfortunately, in the 1980 legislation, a job was not clearly defined. That may be our fault, since we put the legislation through. A job should be defined, and it now is in these regulations.
    To say that we must have an enormous army of people ready for the weather because otherwise the roads might get blocked is nonsense. Most local authorities must use private contractors during bad weather conditions anyway. It is nonsense to keep a large force ready in case the weather deteriorates and road conditions become bad. That is a complete fabrication and I cannot understand why it is necessary. The legislation that we pushed through was deficient. It did not allow construction and maintenance work to be subdivided to avoid the competition threshold. We now want the competition threshold to be lowered.
    There is detailed documentary evidence that some local authorities, particularly metropolitan authorities, want to get round the regulations and bring in union-only labour contracts. In a free society, is that right? Is that the way we should run our country? Certainly not. Why should that be a term of fixing a competitive contract? That is not fair competition. I was barracked by Opposition Members on the question of fair competition. That is not fair competition by anyone's standards.
    Therefore, I support the regulations because they provide an opportunity for the private sector to do more local government work, which they do well and adequately. The Opposition's arguments are way out and oriented towards the belief that the man in the town hall knows best instead of saying "Cannot we get rid of the elaborate machinery of local government?"
    Mr. Freeson: The legislation will make for more bureaucracy, not less.
    Mr. Durant: Of course it will not. If it makes more, the department needs examination by the district auditor because that means that once again people are not doing the job that they are paid to do.
    The construction industry would like its share of the £1·5 billion worth of work, which is thought to be the amount of local government work to be done at the moment. It is right that the industry should have that opportunity.
    A large number of small firms would like to take on work such as school maintenance. Why should local authorities be involved in such activities? The reason why local government has increased is that it has become involved in work that should be put out to private contract. It is not the job of local authorities to run everything in their areas. That is the slippery road to over-bureaucracy, high costs and high rates.
    Therefore, I support the measure, which is sensible and reasonable. After all, it does not abolish the direct works departments. I may be moving that way, but the Government are not moving that way; they are merely saying that those departments must compete. That is a reasonable statement. Why are Opposition Members so nervous of that? If they are in favour of competition, what
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    is the matter with the regulations? Is there anything wrong with making the competition open and honest? I support the regulations and welcome the Minister's statement.
    8.47 pm
    Mr. Ken Eastham: I cannot make up my mind whether I ought to feel sorry or angry about some of the comments that have been made by Conservative Members. They have made a feeble case in trying to justify the constant attack on direct labour organisations.
    There is what seems to be a constant obstacle course for the direct works organisations. If they can cope with the legislation that the Government have introduced, the Government will go back to the drawing board, take a fresh look at the legislation and see whether they can introduce some more legislation that will frustrate once again direct works organisations. That will continue. I have no doubt that, due to their efficiency, direct labour organisations will still survive. Then the Government will once again go back to the drawing board to try to find some other ways to nobble those organisations.
    We have constantly experienced the hatred of Conservative Members. When I was in local government for years it was the same with Conservative councillors. Often they made all sorts of charges that could not be confirmed or founded, but they were being fed to them by the private sector. They were so panic-stricken that they had to collude in any way so that they could undermine this useful vehicle for the ratepayers.
    I suppose that that is part of the spoils of winning the general election. The private building sector is now expecting to be paid off. That is a consequence of the Conservative Party winning the general election. They will continue to carry on the pay-off and those who will be paying will unfortunately be the ratepayers. The Government are handing out all the goodies as the years go by.
    It seems reasonable for me to remind the House why direct labour organisations were introduced. I spent a number of years in a large and very efficient local authority, a model of its kind, to which central Government, including Conservative Governments, often turn. I remember the early 1960s when we were constantly ripped off by private firms with their price rings. They decided who should receive particular contracts. We had no direct labour organisation at that time. A contract would go out to tender and we used to receive offers from four or five firms which varied by only about £5 for jobs costing hundreds of thousands of pounds. Then one firm would tender for a little less than the others and, surprise, surprise, that company would get the contract. We would all pay through the nose, as ratepayers, and we in local government knew it.
    It was precisely because of this that we had to do something about it. We thought it would be no bad thing if we did without the middle man and organised our own building force to get cracking and beat them at their own game.
    We had to put up not only with price rings but with shoddy workmanship as well. The private sector had a very poor record. Work was not completed on time, there were months of delay with all kinds of excuses offered and there was no accountability such as we can have in our own

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    organisations. When we introduced our direct works organisation, we enjoyed better accountability and also had some say in the finishes.
    Local authorities have one prime responsibility—to get the best possible deal for the ratepayers. So far tonight I have not heard one Government Member express a real, basic interest in the ratepayers, yet it is the ratepayers who ultimately pick up the bill and we should not forget this.
    Mr. Durant: Just as a point of correction, I did mention the ratepayers.
    Mr. Eastham: I am surprised. It must have been such a fleeting reference that I did not pick it up. I am glad that the hon. Member did mention them. More ratepayers ought to take note of some of the speeches which hon. Members on the Government side make in this place, when it comes to getting value for money and when we talk about competition.
    In these proposed amendment regulations we are to introduce a compulsory 5 per cent. profit. The direct labour organisations work for the local authorities yet they are to be compelled to make an extra 5 per cent. As far as we were concerned, if something could be done purely on a cost basis that was what the ratepayer ought to pay. I certainly cannot understand why the direct works organisation has suddenly to take another 5 per cent. profit. It seems absolutely barmy even to consider it.
    Maintenance is what we are primarily discussing tonight, although I should like to deal later with one or two other matters that have been introduced by Members on the Government Benches. It is logical for companies to run their own maintenance organisations. The large engineering company for which I once worked thought it was both profitable and a matter of sound management to have its own maintenance department. It had its own bricklayers, electricians and maintenance men because this saved money. It did not bring in outside contractors. It could have done but would not have dreamed of doing so. It would not have been so barmy. It realised that there is a basic benefit in organising and paying for its own maintenance. Conservative Members cannot deny that.
    Mr. Durant: Although I accept that that was the custom, I assure the hon. Gentleman that industry is putting more and more work out to contract. That is the present trend.
    Mr. Eastham: I would hate to disabuse the hon. Gentleman, but often companies have specialised machinery. Bill Bloggs down the road with his handcart is not usually the right sort of man to maintain expensive, sophisticated equipment. If firms wish to ensure that maintenance is carried out properly, they do it themselves. Even in local government many sorts of sophisticated equipment need maintenance. I do not mean only painting or building walls. Even local authorities have expensive heating plants and air conditioning and it pays them to have specialists working under their control.
    Reference has been made to emergencies. About four or five years ago there was a freak gale in Manchester and the roofs were blown off 500 or 600 houses. Fortunately, because we had a direct labour organisation, we were immediately able to put out an emergency team that could carry out some repairs without any nonsense about tendering. We had that benefit, which has been repeated scores of times when local authorities are faced with emergencies.
    Mr. Bob Cryer: Would my hon. Friend acknowledge that there have been circumstances where even Tory-controlled local authorities have established direct works departments? After local government reorganisation, when the former Keighley borough council—controlled by Right-wing extremist Tories—had handed over the maintenance of council houses entirely to private enterprise contractors, the incoming Conservatives in Bradford found that such a shoddy job had been done by the private companies that they established a direct works department to take over the maintenance.
    Mr. Eastham: I am grateful to my hon. Friend the Member for Keighley (Mr. Cryer). Greater Manchester county council, when it was Conservative-controlled, asked Manchester city council to maintain many lifts in the area. That was a real hard-line Tory council at the time. Thankfully, they were smashed at the previous elections and they are out for four years, but the city council will carry on providing the services in any way possible.
    The new regulations propose that in future there mast be a mass of documentation. After the documentation has been completed, it must be sent out for tendering, with the attendant time lag. The tenders must then be returned and considered. They must be legally vetted and, if the tender is granted to a private firm, we must have inspectors to ensure that the firm has done a good job. It is very tricky to deal with some private concerns.
    Every part of the sequence that I have just mentioned requires manpower. Year after year the Government have been swanking and telling local authorities that they must reduce their staff, but the implementation of this legislation will require more manpower. It has been estimated that the Government are placing a burden of an extra 5 to 7 per cent. on direct labour organisations, which must be paid for by the ratepayers. Central Government will not pay for it. So the ratepayers will be paying mere and ultimately getting less work. That is the kind of philosophy that is being introduced.
    It is interesting to note that some of the biggest building disasters in Manchester were completed by the great champion of the private sector that has been referred to. I will give the House one or two examples. The hon. Member for Brigg and Scunthorpe (Mr. Brown) was shouting, "scandals!" We will talk about scandal. There are scores of examples but I will mention only a few.
    The Bison flats in the Wellington Street development, which I know very well, were completed about 10 years ago and consisted of 1,000 dwellings. They are now so bad that the architects cannot cure all the defects. There has been a survey and the council has been told that it would cost £9 million to make the flats habitable. I call that a massive scandal. The flats will have to be demolished because they are so bad. Unless the council is fortunate when it goes to court, it will be the ratepayers who will ultimately have to pick up the bill.
    Mr. Durant: I am sorry to keep interrupting the hon. Member. I presume that these Bison properties in Manchester were built under contract to the local authority. Surely the local authority bore some responsibility for their condition. If that was a contract put out by the local authority, surely it is partly responsible. I am asking that question.
    Mr. Eastham: You are asking the question. One of the great problems of dealing with the private sector is all the

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    dodging and weaving that goes on. Are you trying to suggest that we need an army of inspectors to watch everything that the private sector does? That is basically what you are saying.
    Mr. Deputy Speaker (Mr. Ernest Armstrong): Order. The hon. Gentleman keeps accusing me of various things. He must not do that.
    Mr. Eastham: I am sorry, Mr. Deputy Speaker. I do not wish to do that.
    The hon. Member for Reading, North (Mr. Durant) is implying that in future when the private sector does any big jobs, we shall have to engage a massive team of inspectors to watch everything that is going on.
    There was another scandal in regard to Manchester abattoir some years ago. A private contractor came in to build a new abattoir. So far as I remember, the price was £3 million. It was a complete shambles. The firm collapsed and left a load of rubble on site. Nothing could be done with it. We had to turn to our direct works organisation and ask it to pick up the pieces. If we had not done that, another private firm might have come in but naturally that would have been at a competitive price. Fortunately we had our own direct labour organisation to do something about it.
    Another example in Manchester is the Turkey Lane development. These flats were built privately about seven years ago. I have been told that massive funding will be required to make them habitable; it is going to cost £750,000 in 1982–83. We shall be lucky if we can keep those flats together rather than being forced ultimately to demolish them. That is another example. It should not be forgotten that the cost of all that must be met by the ratepayers. Yet Tory Members pontificate about saving ratepayers' money, and about responsibility and competition. What kind of competition is that? If Tory Members could cite scandals of that scale—I am only giving odd examples—the House would never hear the end of it. The CABIN organisation and the rest would churn out leaflets about £9 million going down the drain in Bison flats in Wellington Street. They would have gone to town publishing such stories but they do not have them because our organisations are more honourable.
    My right hon. Friend the Member for Brent, East (Mr. Freeson) said that in some towns there have been hiccups, but local authorities have had the courage to face up to them and to try to put matters right. That is quite different from the attitude of Tory Members. Their main desire is to smash direct works organisations. That aim does not hold water and certainly carries no conviction with people living in areas such as mine who recognise the value of these organisations.
    Mr. Michael Brown: The hon. Gentleman has just made a point on which he should be asked to expand. He said that he objected to the possible existence of an entire army of bureaucrats to inspect private building works. Those same local authorities double up on the work of the Housebuilders Federation which imposes extremely tight and stringent inspections on every member of their organisation for every house that is built. Those stringent regulations and inspections are doubled up by local authorities, which are only too anxious to ensure that the same private building contractors have those works inspected when they are intended for private purchasers.
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    The hon. Gentleman's other point—
    Mr. Deputy Speaker: Order. The hon. Gentleman has made one point. He must not make a speech in an intervention.
    Mr. Eastham: I do not see the relevance of the hon. Gentleman's point. I was merely trying to illustrate the enormous problem of coping with some of the cowboys in the private sector. The problem often concerns maintenance. I take the example of painters. If ever there were scandals, there are scandals about painting. Houses in a council estate near me were supposed to receive three coats of paint. The private sector won the contract and I understand that later the painters were seen selling cans of paint that were supposed to have gone on the council houses but were considered spare. Such cases are not unknown.
    Mr. Cryer: Does my hon. Friend accept that direct works departments never try to con the council into accepting new dodges or designs that are not soundly based? Does he also agree that, because they are employed by the council, they give information as fully as they possibly can? There have been no Taylor—"we built Ronan Point"—Woodrow escapades from direct works departments with local authorities having to fork out millions of pounds to make up for deficiencies in the original building design.
    Mr. Eastham: My hon. Friend is absolutely right. Obviously, if officers serving their own local authority do not give the true facts, they are liable to be sacked. That can be done with one's own employees. It is quite different when one is dealing with someone from the other side, who may be selling off his wares by tender and could not care less whether he honours the words of the contract. That is a substantial difference. Local authorities can run their own organisations and pay for expertise. They are answerable to the public—
    Mr. Bob Dunn: No, they are not.
    Mr. Eastham: Yes, they are. The councillors are answerable to the ratepayers. That is what local elections are for. That is accountability.
    We all know what the current crisis in the building industry is really about. The Government are not spending enough money on normal building projects because of their own policy of cuts. They are now trying to appease the private sector by raiding the direct works sector. If they want their friends' support in the next general election, having failed them in one way, they have to find them something. Therefore, they intend to savage the direct works organisations and raid their work to keep their own friends sweet.
    Mr. Freeson: Does my hon. Friend agree that that is a pretty poor return for those members of the industry who ran the CABIN campaign, at a cost of about £1 million, just before the last general election? This measure follows a 40 per cent. collapse in production and resources for the building industry from the public sector.
    Mr. Eastham: My right hon. Friend knows more about CABIN that I do, but there was certainly massive expenditure in my city to try to undermine with half-truths the facts about the building industry.
    I remind the Government that when the private sector is more buoyant it is not interested in building for local

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    authorities. In the early 1970s, with the big building bonanza and the gazumping of house prices, we could not get building workers for love or money. The private sector, which the Government are now hell-bent on bringing into local government affairs, was not interested then. Moreover, I predict that if buoyancy ever returns—that is not likely while the Conservatives are in power, but the fortunes of the building industry are likely to improve when Labour returns to power—the private sector will once again not be interested in building council houses and other run-of-the-mill work where controls are strict. We shall then be in a mess, because by then the Conservatives will have destroyed the fabric and organisation of a building team that can meet the normal demands of ratepayers.
    I was looking today at the Government's expenditure plans. In 1978–79 the amount allocated for new local authority dwellings was £1,105 million. The figure for 1981–82 showed a dramatic fall to £700 million. That is the cause of the problem. The private sector is so desperate that it has to beg the Government to find work for it by taking it away from direct works organisations.
    The solution is simple. The Government should expand the economy and provide the private sector with proper, worthwhile contracts. That would be far more honourable than cutting building works and then saying "The only chance for you, lads, is for us to smash direct works and give you a few jobs there". That is not a satisfactory conclusion. The Government must rethink their policies to get the industry out of the current crisis that the Government themselves have created. The young hon. Member for Brigg and Scunthorpe seems to think that this is funny. I can assure him that representatives of the building trade who came to see us two weeks ago did not regard it as funny when they told us that 400,000 skilled building trade workers had no jobs. If the hon. Gentleman thinks that that is funny, let him say so in his election address. The building trade workers will soon tell him what is what. The regulation will not improve the maintenance programmes for council house tenants and local authorities. There will be more delays, more cost and more shoddy workmanship.
    9.15 pm
    Mr. Michael Brown: It is a pleasure to follow the hon. Member for Manchester, Blackley (Mr. Eastham). He has raised the temperature of the debate. I make no criticism of that. This is a controversial subject and it is proper that both sides of the argument should be aired. I welcome the rise in tone of the debate. It is important that we analyse what is at stake, not only in the regulations, but in what lies behind them.
    The hon. Gentleman and some of his hon. Friends talked about pay-offs to the private building industry. What does CABIN stand for? It is the Campaign Against Building Industry Nationalisation. There was a payoff—the election of a Conservative Government that removed the threat of nationalisation from the private building industry.
    I am glad that there was a pay-off. The industry now has a Government who recognise the importance of the private sector to the building industry. Labour hon. Members owe it to the House and to the private sector of the building industry to state their exact intentions. Should we ever have the misfortune to have a Labour Government, will they again attempt to nationalise the
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    building industry? If so, I hope that the campaign against any threat of nationalisation of the building industry will be re-established. The people of this country, and local authorities in particular, should recognise what nationalisation of the building industry will mean.
    Mr. Cryer rose—
    Mr. Brown: I shall not give way. The hon. Member for Keighley (Mr. Cryer) did not have the courtesy to attend the beginning of the debate; he came in two-thirds of the way through. I am anxious to devote my attention to the regulations.
    I do not want to trade on your indulgence, Mr. Deputy Speaker. Nationalisation of the building industry is, a subject that involves a long and controversial debate.
    I make no apology for wanting to smash direct labour. As the Member for Brigg and Scunthorpe, I have to deal with an expanding direct labour organisation in Humberside county council and in Scunthorpe borough council, which has been Labour-controlled for many years. Humberside voters returned a Conservative-controlled authority in 1977. My hon. Friend the Member for Bridlington (Mr. Townend) was then the leader of that well-run county council. The council contracted out to private industry for school cleaning, window cleaning, and a whole host of activities.
    I congratulate Opposition Members on referring to the poor ratepayer. That is marvellous. We are making some progress. No doubt the many letters they receive about rate increases have drawn their attention to the fact that people have to pay the price. I welcome the word "ratepayer" being used in the speeches of hon. Gentlemen.
    The Humberside county council put out many services to contract. After four years, it offered itself for re-election with a rate reduction. But the local people decided to return a Labour-controlled county council. I do not like what happened. I bet that those who voted for a change will not like it when the demand for a 61 per cent. rate increase pops through their letter boxes. I cannot believe that Humberside ratepayers will say that the 61 per cent. rate increase is worth while and that they will pay it with pleasure because the direct labour department has been expanded.
    Mr. Eastham: I wonder whether the hon. Gentleman understands the financing of rates. Has he heard of the RSG? Does he accept that the savage cuts in the rate support grant have put up the bill to ratepayers?
    Mr. Brown: I would have some sympathy with the hon. Gentleman if the 61 per cent. increase introduced by Humberside county council could be attributed to some action on the part of the Secretary of State. I assure the hon. Gentleman that the last reason that Labour county councillors would dare to raise with the Government as an excuse for putting up the rates to the extent that has occurred is the rate support grant. Humberside county council has done well out of the rate support grant. The county council has unashamedly stated that it will take on people and expand the direct works department.
    Direct labour departments, if expanded, will be more inefficient and will cost the ratepayer—
    Mr. Cryer: How does the hon. Gentleman know?
    Mr. Brown: I shall come to the point that the hon.. Gentleman raises in remarks I wish to make about Scunthorpe borough council. I want, first, to complete my

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    remarks about the Humberside county council. Under Conservative control, the authority had no hesitation in publishing the benefits and savings that had been made for the ratepayer. But no estimates have been produced by the Labour-controlled county council, and there seems no likelihood of the present county councillors acting in a similar manner unless powers are imposed to try to extract from them the information necessary to prove whether they are efficient.
    A point has been raised about Scunthorpe borough council, which has a large direct works department. Opposition Members claim that a great advantage of direct works departments run by local authorities is that the bosses are democratically elected councillors. There are a considerable number of Conservative democratically elected councillors in the borough of Scunthorpe. They are kept out of the committee that deals with direct labour. The press is not admitted. In fairness, I should say that there are other Labour-controlled authorities in Humberside and Yorkshire where Conservative councillors serve on such committees. That does not happen in Scunthorpe. How can the ratepayer judge whether he is getting value for money? Thankfully, as a result of the regulations now before the House, it will be possible to put direct pressure on the borough council to find out what is happening. It has had to be done by difficult means. The local authority is not prepared to allow the official opposition party to have any nominees on the committee to enable them to see what is going on.
    When there is no opportunity for democratically elected councillors of a different political persuasion to find out what is happening within a direct works department, I conclude that is because there is something to hide. If the Labour-controlled Scunthorpe borough council wishes to take issue with me, I suggest that it puts before me and the whole of the local electorate the figures for its direct works department. We are making some progress because, as the result of the boldness of my hon. Friend and the restrictions that he is putting on the profligacy of direct works departments, there will be an opportunity of judging for ourselves.
    My only mild criticism of the resolutions is that they do not go far enough. I should like private enterprise to have the opportunity to tender a little more than it does. I am worried that some devious Labour-controlled local authorities might seek to parcel up one contract into separate contracts spread over a period of time in separate types of activities, so that they do not have to go out to tender. There is nothing wrong with the tendering system. It enables every organisation, private or public, to test itself for its efficiency. Earlier in the debate the Opposition appeared to be calling for competition. They will be able to have it. We are urging that the privileged position of the direct works departments should be taken away.
    Many unsavoury activities are being carried on in Scunthorpe borough council and its direct works department. It has been indicated to me by a roundabout route that the borough council does not have sufficient work to justify the existence of its direct works department and it is frightened of investigation. I suspect that the reason why the borough council does not have sufficient work on hand is that the rate increases of the past year or two years do not persuade many people to come and live in Scunthorpe.
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    The rate increases will inevitably lead to more unemployment. They have cost the British Steel Corporation in Scunthorpe £3 million. Every organisation that I have contacted has complained about them. A publican to whom I spoke last Saturday told me that his rates increased by £5,000 last year. Small builders or manufacturers employing 20 people have had to pay an extra £30,000 in rates. That is the picture of the whole of manufacturing industry in Humberside. These rate increases are caused partly by the inefficiency of direct works departments. The profligacy of such departments is bound to filter through into the rates and cause people to leave the area, which will mean that the direct works departments will have even less work.
    Direct works departments should compete in the open market on the same terms as private enterprise. Nonsense has been talked tonight about the quality of work and of rogue private enterprise builders. On the whole, we are talking about builders who are members of the National Federation of Building Trades Employers and who take out insurance to ensure that their workmanship is up to the standards of the Housebuilders Federation.
    We have to bear in mind that when tenders are invited, there is often an inbuilt element of failure, because those setting the tenders and designing the buildings are trying to get something on the cheap. Local authorities will get only what they pay for. If they design a building, such as a tower block of flats, and try to set a contract with certain types of materials, they cannot blame the builder if he observes the contract.
    Mr. Eastham: One of the examples that I gave earlier was the scandal of the £9 million of defects in the Bison flats in Wellington Street, which were built under a design and build contract. How can that be blamed on the local authority?
    Mr. Brown: I do not know the circumstances of the case that the hon. Gentleman describes. I am prepared to accept what he says. Often, when there is allegedly shoddy workmanship, the contractors have adhered to the tenders, and local authorities do not know what is involved. Local authority inspectors inspect private house building very rigidly and always seem to have enough time to make private building contractors' lives a misery. If local authorities recognised that there is duplication of inspection in the private sector and used some of their inspectors to cope with the problem described by the hon. Gentleman, they might employ those inspectors better.
    The steps taken by the Government are just the beginning. I hope that this is the start, and that one day we shall abolish direct labour departments. The motives of many Labour Members should be challenged on this issue, because they know that employees in direct works departments support the National Union of Public Employees. Why did that union respond so defensively in the pamphlet mentioned by my hon. Friend in his opening speech? My hon. Friend did not quote a paragraph in the document, in which NUPE said that it must ensure that it does everything possible to make its operations efficient, because there may be something in the Government's argument. Therefore, it must ensure that it can meet the Government's case. It realises that it has to justify what it is doing and that there are some things that are not quite right in direct works departments.
    Mr. Donald Dewar: Am I correct in summarising the hon. Gentleman's argument by saying that he objects to and is horrified by the fact that a trade union is interested in efficiency and in protecting its members' jobs?
    Mr. Brown: I am surprised that a trade union should be interested in the efficiency of the work that its members undertake only when pressure is put upon it by my right hon. Friend the Secretary of State. It is a change in the political climate, and one that is welcome. The fact that NUPE is frightened by the threat of ensuring that it has to be more responsive and answerable to public debate, as a result of measures passed by the Government, shows how much that union is on weak ground.
    The DLOs argument is a straightforward case of the Opposition recognising that the unions which support them will lose members. As my hon. Friend the Member for Reading, North (Mr. Durant) said earlier, I cannot understand why a local authority should reject a private contractor on the ground that he allows his employees the freedom to join or not join a trade union. Here, again, dear old Scunthorpe borough council makes sure about that. It is a device to try to cut out the private operator, even when it is known, despite the controls that my hon. Friend seeks to place on local authorities to correct the imbalance in the direct labour departments, that those direct labour departments will not stand up to competition.
    I welcome these measures by the Government as a first step on the long road that we have to travel before we can honestly say that direct works departments are competing fairly. I do not want to see direct works departments survive in the long run. I believe that they will die of their own incompetence. When they have to compete in the outside world, they will find that they are unable to do so and will die. I do not mind competition in the short run. The whole point of the Government's measures is to open up the whole building contracting world to free competition. If direct works departments want to enter the world of competition, so be it for the time being. However, the day will dawn when they will find that they will not be able to compete.
    The regulations are to be welcomed. I believe that the House should give them their full support.
    9.37 pm
    Mr. John Cartwright: There was a moment when I thought that the hon. Member for Brigg and Scunthorpe (Mr. Brown) was intent on talking out the measure rather than supporting and welcoming it.
    When I hear some of the Opposition and Conservative speeches, I recall my experience of direct labour as a local authority leader. When I hear Conservative Members suggesting that it is possible to do without direct labour and that everything can be left to private enterprise, I have to say to the House that that was not my experience.
    Like the hon. Member for Manchester, Blackley (Mr. Eastham), I can recall the building boom of the early 1970s when we could get a private tender for neither love nor money. We hawked private tenders round the United Kingdom and, indeed, round Europe as well. We could not get a single private building firm to tender for major housing developments. Had we not had a direct labour force, there would not have been some of the housing developments which now exist in my constituency.
    It is clear to me that an effective and efficient direct labour department is a worthwhile investment for any local
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    authority and any group of ratepayers. To run down a direct labour department involves major dangers of dependence on private enterprise for which a local authority may later find that it has to pay a high price.
    I underline the fact that a direct labour department must be efficient and effective. It should not be seen as a gigantic municipal job creation scheme, operated at the ratepayers' expense. Over the last year or so, I am bound to say that I have received a great many complaints from my constituents about the standard of council house maintenance provided by my own direct labour department. As I travel round the country, I find that such complaints are mirrored in other areas. I suspect that I am not the only hon. Member who has received complaints about lengthy delays in getting work done; about tenants hanging about waiting for operatives who never turn up; about repeated return visits, particularly when different trades are involved; and about work left half completed. There is a major problem here.
    We have talked a good deal this evening about ratepayers, but we should also be concerned about council tenants. Their rent levels are already quite high enough. They are entitled to reasonable service for repairs to their homes. Sadly, some—I underline "some"—direct labour organisations are not meeting the council housing demands that they should be meeting.
    I am persuaded that there is a powerful case for competition with direct labour organisations. The Government have already introduced that element of competition. It was introduced in April 1981. I have riot heard any clear convincing evidence from the Government tonight to show me that the arrangements made in April 1981 are being substantially undermined by local authorities. Little concrete evidence has been provided to the House tonight to support that suggestion by the Government.
    Direct labour organisations are still adjusting to the new regime that was introduced in April 1981. As yet, there is a limited amount of firm evidence on which one can judge the results of that change. Since the Minister's review was started in September 1981, only six months after the first changes were made, I find it hard to believe that there is firm evidence to justify a further change such as the one that the Government are putting forward tonight.
    It would have been much better to await the results of the first year's operation of the new competition arrangements, when there would have been hard evidence to show the performance of direct labour organisations. If, in the light of firm evidence, it was conclusively shown that there was a need to introduce a further element of competition into direct labour organisations, that measure should have been taken. On the other hand, if, as I suspect, the evidence showed that direct labour organisations had been winning tenders in competition with private enterprise and that they were continuing to provide value for money to the ratepayer, the case for this more rigorous competition could not be sustained.
    The Government's proposals will positively harm direct labour organisations and their efficiency. I understand that all of them have made their arrangements for the 1982–83 programme on the basis of the existing proposals. They need to plan their spending and manpower arrangements, and it is extremely difficult to operate an efficient ship if there is a last-minute change. Indeed, the Government seem to delight in last-minute changes for local

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    authorities. Such a last-minute change would make it very difficult for a direct labour organisation to run an efficient operation in the coming financial year.
    As has been said, the changes will involve additional administrative on-costs, more computer time and more work in the finance and legal departments. All that must be added to the cost to be borne by the direct labour organisations. The County Surveyors Association is hardly a revolutionary body, but it has suggested that 250 extra staff will be needed as a result of the reduction in the tendering limit on highways work.
    I am most concerned about the adverse impact of the proposals on training. There was a belief that local authorities that had taken on additional building and engineering apprentices in their direct labour organisations would be able to charge some of the costs against a central local authority fund. That would apply if they had taken on more than they needed to carry out direct labour work. There is a strong case for local authorities setting such an example and offering more young people the apprentice training that Britain desperately needs.
    We now discover that the district audit service, supported by the Department of the Environment's circular of 15 March, says that all apprentice training costs must be charged to the direct labour organisation. It is true that in paragraph 27 of the joint circular, the Secretaries of State seem to be offering some sort of loophole. They suggest:
    "any authority which believes that it has incurred apprentice training costs over and above those which are related to its DLO needs should identify these, as agreed with its auditor, as a special item in its accounts so that their impact on the rate of return achieved by the authority on its DLO activities can be properly assessed."
    That falls far short of a clear sign to local authorities that an exception will be made for the extra training. Faced by competition from private firms which, on their own admission, are substantially cutting their training activities, many direct labour organisations will also have to cut their apprentice training. The Institute of Municipal Building Management clearly states;
    "There will be a substantial reduction in the number of apprentices trained by local authorities for their DLOs and therefore for the building industry in general."
    That is scandalous, when the building and construction industry desperately needs more skilled young people.
    All of us recognise the problems of the private building industry and, particularly, of small firms. However, those problems cannot and should not be tackled by undermining effective and efficient direct labour organisations. As other hon. Members have said, there is ample maintenance work for everybody as long as the Government authorise a sensible approach to the needs of the existing housing stock. The Greater London house condition survey of 1979 shows that a quarter of all homes in London are unfit, lack modern amenities or are in need of substantial repair. A programme to tackle that problem would do far more for the private builders than an attempt to sneak work from direct labour organisations. The Government's case has not been made out and my right hon. and hon. Friends and I will vote against the regulations.
    9.45 pm
    Sir Albert Costain: It seems not to be appreciated that the regulations do not seek to
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    abolish direct labour organisations. The object is to make them competitive, like ordinary building contractors. The hon. Member for Woolwich, East (Mr. Cartwright) explained at some length the problems of keeping people employed. He suggested that direct labour organisations should be subsidised by the ratepayers to keep the employees in jobs. If the private contractor does not have contracts he will generally find some work for himself and his men.
    Mr. Cartwright: I was saying the exact reverse. I was arguing that direct labour organisations should not be seen as gigantic job creation operations to be paid for by the rates. I said that apprentice training should be an exception, as it is reasonable to ask local authorities to set an example to the rest of the industry.
    Sir Albert Costain: Building itself will supply opportunities for apprentices. Many great firms have implemented that policy. The Opposition are over-keen to stop private enterprise building houses to let. I have said to the right hon. Member for Brent, East (Mr. Freeson) on other occasions that he is responsible for more homelessness than anybody else. There could be 30,000 houses made available for letting and contractors would continue to build more houses for letting.
    Mr. Freeson: I understand the hon. Gentleman to say that 30,000 houses a year could be built for letting and that that would be new build by the private sector. Is he aware that no one is stopping that happening? The Government have introduced measures that they claim will extend the provision of private rented new build housing outside the Rent Acts. Let us wait to see whether there will be 30,000 houses built under the provisions that the Government have provided, about which the hon. Gentleman does not seem to know.
    Sir Albert Costain: I did not say that 30,000 houses would be built. I said that there are 30,000 houses standing empty that are desperately needed and that would be let if the Opposition would undertake not to reverse the proposals that the Government are introducing. I wish to return to direct labour organisations. We are not discussing housing to rent. I understand that the right hon. Gentleman has that on his conscience and that he cannot get it off it.
    The hon. Member for Manchester, Blackley (Mr. Eastham) produced the finest argument to which I have ever listened against direct labour organisations. He claimed that every man who works for a direct labour organisation is a paragon of virtue. Apparently he wants no supervision and needs only to be told to build houses. I have never heard such nonsense. One of the problems with direct labour organisations is that they do not provide enough supervision. They do not estimate correctly and they do not set the men to work.
    I am not for abolishing direct labour organisations. It is necessary for surveyors' departments in all local authorities to have some men on hand for emergencies. The regulations do not seek to abolish the direct labour organisations. They merely ask them to be competitive with ordinary contractors. That is all they ask for. We are simply asking the Opposition to realise that such direct labour organisations cannot be competitive. It is said that they should continue, but that is nonsense.
    Anybody who has had experience in the building industry knows that people generally employed by direct

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    labour organisations have been in, but could not keep, jobs in the building industry. [HoN. MEMBERS: "Oh."] They could not keep their jobs in the building industry. That is what it is all about. Men were made redundant in the building industry because they could not compete and were not sufficiently skilled. They then get jobs in direct labour organisations. These regulations will make direct labour organisations compete in the ordinary way with contractors. What is wrong with that?
    9.51 pm
    Mr. John Maxton: I take up the point made by the hon. Member for Folkestone and Hythe (Sir A. Costain) and my hon. Friend the Member for Manchester, Blackley (Mr. Eastham), about scandals in the building industry in the private sector. Such a scandal exists in Glasgow—the Royal hospital for sick children. That hospital was built by a private contractor under Government orders, of course, and was not put out to contract by a local authority. It was put out to contract by civil servants. It is on the verge of collapse and cannot be properly used. The company involved has faced massive law suits. I shall not name the company, but the hon. Member for Folkestone and Hythe knows perfectly well which company built the hospital.
    Mr. Freeson: Name it.
    Mr. Maxton: I shall not bother naming it because the hon. Member and others know perectly well what I am talking about.
    I am sorry that the hon. Member for Brigg and Scunthorpe (Mr. Brown) has left, especially after criticising my hon. Friend the Member for Keighley (Mr. Cryer) for not attending the debate. the hon. Member for Brigg and Scunthorpe made great play about CABIN and the building industry voting to elect a Tory Government. Its pay-off was that nationalisation was stopped. It must be wondering what sort of pay-off it got. The number of building companies which have gone bust under this Government is legion. The number of people declared redundant is enormous because of the Government cutbacks in building expenditure.
    Of course, there is now an organisation—not CABIN—in Scotland, made up of building companies, construction employers and the trade union movement in the building industry. It is desperately trying to fight for more public expenditure in the construction industry.
    Mr. Keith Wickenden: Does the hon. Gentleman accept that local authorities are presently underspending on their capital expenditure by £1,000 million a year?
    Mr. Maxton: They are certainly not doing that in Scotland.
    The real problem for Britain's building industry is due not to direct works departments but to the Government's cuts in public expenditure.
    It must be made clear, for the first time, that this debate concerns two different sets of regulations. The Scottish and English regulations are not the same. The Scottish regulations do what was done for England and Wales in 1981. In other words, they are regulations that the Government in England and Wales are now amending.
    I am not sure whether I ought to be pleased or unhappy about that. I am pleased that at least we have not yet had the cut from £100,000 to £50,000 in road building
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    contracting and that one-third of maintenance contracts below £10,000 have not yet been put out to tender in Scotland. It is fair to say that that will happen. Therefore, I am unhappy about it in the sense that we shall simply have to go through this procedure yet again for Scotland. From what the Minister for England and Wales has said, it seems that we might be debating yet another motion for England and Wales. In the directive that was published with the regulations the Government have made it clear that 30 per cent. of contracts under £10,000 must be put out to tender. They said that the Government
    "will however, wish to consider, in the light of experience, whether a percentage higher than 30 per cent. should apply from 1 April 1983."
    The use of the word "higher" prejudges the decision.
    It is said not that the figure might be reduced or changed, but that it might be made higher. Therefore, in January, February, or March 1983 there will be another two sets of regulations. The Scottish one will amend the legislation that is going through the House tonight. It will b.c. brought into line with the legislation for England and Wales. At the same time, the English regulations will be changed yet again, so we shall still not be in line with the English.
    We have heard a great deal from Conservative Members about how they wish to see competition. They want free competition and they have said that the direct works departments must be brought into line in terms of competition with private industry.
    The Minister for Housing and Construction quoted from the Department of the Environment working party report. He claimed that that was the basis for the legislation. He should have read a little more because it makes it clear that if there is competition for direct works departments it must be genuine competition. Not only are private enterprise companies allowed to compete with the direct labour organisations for work of the local authority, but the direct labour organisations are allowed to compete for work outside their local authorities. The report states that the direct labour organisations should be able to contract or tender for county councils outside their own authority, district councils and Greater London boroughs and also should be able to carry on work for private house owners in certain circumstances, such as where the dwelling is a former council house.
    Conservative Members make great play of the sale of council houses. The report states that work may be carried out in such dwellings or if the area is a general improvement area or a housing action area, or is subject to a renovation grant.
    In other words, the report said that the competition should go both ways. It is a matter not just of forcing the direct labour organisations to compete, but of allowing them to compete with private companies. The 5 per cent. profit margin was on that basis. It was based not on the direct labour organisations having to do only their own work and no other work but on the fact that they would be working as building companies in the open market. Therefore, one might expect that in normal circumstances—not under the Government—they could achieve that 5 per cent. level. They cannot do that just now because of the restrictions placed on them.
    The report also said that the period over which losses by a direct labour organisation should be carried was five years, not the three years that is being imposed by the Government. At the end of the five-year period, it was not

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    the Secretary of State who was to have the power to deal with the direct labour organisation but the local authority, which would re-examine and reorganise it. Therefore, the document was much more carefully worked out than the Government's proposals.
    I shall take Glasgow as an example. I accept that the direct labour organisation in Glasgow has not been perfect. It is not necessarily the best or most efficient organisation in Great Britain. However, I praise that organisation because of the work that it did for the citizens of Glasgow during the severe weather over Christmas. Many workers worked long hours trying to repair burst pipes, ceilings that had collapsed and flooded houses. They tried to repair houses more rapidly than they would have done otherwise so that the people who were flooded out of their homes could move back. The workers did a tremendous job during that period.
    If we are to have the imposition of these regulations, and the direct works department has to cut back on its staff in order to meet the 5 per cent. limit, possibly losing contracts as well and also facing very severe restraints in terms of expenditure, put on it by the Government, we shall have substantial redundancies in the direct works department in Glasgow. The effect is that if we were to have the same sort of severe weather next year as this, the suffering of the Glasgow council house tenants would be even greater and the period over which this suffering would last would be considerably longer, as the employees of the direct works department will simply not be there to do that job in an emergency.
    The hon. Member for Woolwich, East (Mr. Cartwright) quite rightly mentioned training. I am only sorry that the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) has not been present on the occasion of the first Scottish debate since he entered the House. He might have learnt more about Glasgow if he had stayed. He made great play about how he was going to take a great interest in Glasgow and in Scottish affairs as a whole.
    Mr. Arthur Lewis: I know that he always wants to be fair, but the right hon.
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    Gentleman has a problem, which he is discussing, as to whether he should chuck up his directorship of a bank because, with that £10,000 plus the salary here, plus his Common Market pension, he is in difficulties with regard to his prices and incomes policy.
    Mr. Deputy Speaker: Order. I hope the hon. Gentleman will not pursue that. It has nothing to do with the matter.
    Mr. Maxton: I can assure you, Mr. Deputy Speaker, that I have no intention of going down that particular path, interesting though it is.
    The fact is that we shall have redundancies in Glasgow's direct works department. The work that is at present done by its staff will not be carried out any more efficiently by private enterprise. We shall have less training of building workers. I hope that the Minister in his reply will clarify this point because these regulations cover the Scottish Special Housing Association as well as the local authority direct works departments. The Minister may nod if he wishes to confirm that that is the case.
    In that particular direct works department no new apprentices have been taken on in the past two years and the department has now said it will not take on any next year. Therefore, the bodies that ought to be training young people are not taking them on to train them.
    As to trade union membership, perhaps there is a question there, but a local authority is certainly entitled to know that when a private company puts in a bid the people it says are craftsmen really are craftsmen, properly qualified and having completed an apprenticeship. One way of achieving that is to ensure that they are trade union members because the trade unions make sure that they are properly qualified people. That ought to be borne in mind.
    On the cross-subsidisation of contracts, why should not a DLO be allowed to behave in exactly the same way as a private company? Private companies are allowed to make a loss on one job, a profit on another and count one off against the other. The DLOs are not to be allowed to do that. My constituents and those of other Scottish Members will find that standards of housing repairs and new house building will be seriously eroded by these regulations. I shall therefore vote against them.
    10.4 pm
    Mr. John Ward: I should declare an interest as a director of a construction company. It might prove that I know what I am talking about. I should also apologise to the House for not being here at the beginning of the debate, but I have been in Committee. It rather depends on the activities of the Opposition whether I must leave before the end of the debate.
    I listened carefully to the hon. Member for Glasgow, Cathcart (Mr. Maxton) and I wish that he would explain to us who designed the hospital about which he talked and who was responsible for its supervision, because the most competent builder in the country cannot cope with incompetent design and supervision. I am prejudiced because I believe that any private enterprise, on balance, provides a better return for the taxpayer or ratepayer than any State or local authority enterprise. The proof is that, if we examine the record of the direct labour organisation in Glasgow, we find that it has lost millions of pounds over the years. It is not alone in that.
    The hon. Member for Cathcart also used the hackneyed excuse that a local authority should be able to insist on trade union membership so that it could prove that craftsmen would be employed on the job. Any competent building contractor will ensure that he has competent men working for him, with or without a trade union membership, as suits the men that he employs. I see no reason why we should dragoon people into the trade union movement because local authorities are not prepared to go after fair tenders and obtain value for money for their ratepayers. I welcome the fact that there is a proposal in the Employment Bill to prevent that.
    My welcome to the proposals this evening must include some congratulation to the National Federation of Building Trades Employers and the Federation of Civil Engineering Contractors, which have both been assiduous in drawing to the Minister's attention the problem with the present law. Bad contracts, whether in direct labour organisations or in the private sector, are usually a result of bad supervision and planning.
    I am also glad to see that it will now be possible, because of the activities of the National Federation of Building Trades Employers, for maintenance work to be put out on a schedule of rates to the private sector. If one considers the record of other nationalised industries and corporations, one is not encouraged to support the direct labour organisations run by local authorities.
    Another reason why I believe that the private sector deserves special consideration is that it needs a base in the United Kingdom if our consultant engineers are to continue to do such a massive amount of work in the export market and bring hundreds of millions of pounds in invisible exports into Britain year after year.
    I hope that the regulation will prevent the splitting up of contracts to feather-bed direct labour organisations. The hon. Member for Woolwich, East (Mr. Cartwright) mentioned effective and efficient direct labour organisations. Surely that is precisely what my hon. Friend the Minister is trying to obtain.
    We can examine the record of Newcastle city council's direct labour organisation. Tyne and Wear county council decided to go ahead with four schemes to improve minor roads. The tender from the direct labour organisation was
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    £231,800. The tender ultimately accepted from a private enterprise was £117,535. The chairman of the highways committee might well have said
    "There seems a tremendous difference between the two costs."
    That was a blinding flash of inspiration.
    I agree with the leader of the Conservative Party on Newcastle city council, who said that it is an illustration of what he had been saying all along. He said:
    "It is another example of the council not getting value for money".
    When Newcastle city council's opposition leader says ghat he believes that the private sector can carry out work more efficiently and more cheaply, those figures are confirmation.
    Mr. George Foulkes: Like Freddie Laker.
    Mr. Ward: The problems with direct labour organisations in the past have arisen largely because they have been allowed to cook the books. They did not include overheads such as office costs. Often they hid their plant costs. The new audit commission will winkle out many more problems that the direct labour organisations have caused. The ratepayer is entitled to expect that every local authority will effectively and objectively consider how it spends public money, because it is all public money in the end. If, by going out to private enterprise, local authorities can obtain a better deal for their ratepayers, they should do so. I would have thought that anyone concerned with the efficient and right use of public money would support the regulations.
    There have been a lot of remarks about the need to retain a direct labour organisation. My hon. Friend has put a modest measure before the House. It could well he said that every parcel of local authority activity should be tested against a tender from a private sector organisation. Wherever this has been done, the ratepayer has been seen to be getting value for money. If hon. Members wish to know why the CABIN organisation was formed, they have only to look at the majority by which these regulations will be passed. The Opposition have done nothing hut condemn British industry, including the building industry, to threats of nationalisation and more quangos.
    Mr. Foulkes: We will nationalise the hon. Member if he does not sit down.
    Mr. Ward: I suppose that if I were nationalised that would be one way to get an indefinite State pension with a total amount of inefficiency. As I intend to stay on the Tory side of the House, it is unlikely to happen.
    While we are talking about direct labour organisations, may I ask whether any hon. Member can understand why, with all the crying for extra work in the construction industry and all the problems of unemployment, local authority after local authority is underspending on the amount allowed for new construction?
    My hon. Friend has done the House and the country a favour in presenting the regulations. I wish them well and look forward to supporting them in the Lobby.
    10.12 pm
    Miss Joan Maynard: The Government are anxious to accuse Labour Members of being doctrinaire. These regulations are a piece of doctrinaire policy on their part and another attack on the public sector. The Minister says that we are afraid of fair

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    competition. We are not afraid of fair competition, but we object to the Government continually putting obstacles in the way of direct labour organisations so that they cannot compete fairly. That is what we are complaining about.
    I am sorry that the hon. Member for Brigg and Scunthorpe (Mr. Brown) has left the Chamber, because he made some serious accusations against Scunthorpe borough council. If he has any proof of those accusations he should make them in the proper place and let them be properly investigated instead of coming here casting innuendoes against that council.
    The hon. Member complained of unions protecting vested interests when they are trying to protect jobs. Anyone would think that Government Members did not have any vested interests. In effect they are here tonight to defend those vested interests. Let us not be mealy-mouthed about it.
    There has been talk about scandals. Before I came to the House, I was a member of a local authority that was very much Conservative-dominated. All the scandals that we had to deal with arose from the failures of the private sector that we had to deal with. I now represent part of the city of Sheffield. In Hallamshire hospital we are experiencing serious problems about the cost of heating the hospital, with the lift and the laundry equipment. That hospital was built by the private sector. The people of Sheffield are very concerned about what it will cost them to put that scandal right.
    The proposed changes in the regulations will massively increase total administrative costs. They will inevitably take funds from repair work. They will make it more difficult for councils to be competitive. I re-emphasise the point made for my hon. Friend the Member for Bolton, West (Mrs. Taylor) about the Government's broken promises. During the passage of the Local Government, Planning and Land Act 1980, we were told that local authorities would have to put out to tender all highway work worth more than £100,000, except for road bricking and snow clearing, as well as all construction work worth more than £50,000 and all maintenance work worth more than £10,000. The purpose was to give a boost to the private sector at the expense of the councils' direct labour organisations.
    The Government promised that those tendering limits would be regularly increased in line with inflation. That was two years ago. Since then, there has been no increase in the limits. Indeed, the reverse is about to happen. The Secretary of State now plans to reduce the limit on highway work from £100,000 to £50,000 and, even worse for local councils, to change the rule on maintenance work so that in future one-third of all maintenance work must be put out for tender.
    By far the largest amount of council maintenance work involves small jobs costing £20 or so. Under the new rules, if broken windows need to be repaired for three council tenants, only two of the jobs can be done straight away by the council work force. The third window repair will be solemnly put out to tender. No doubt the council workmen will end up doing the job in any case, but the formality will have to be observed. That is a ridiculous proposal. It will be costly to ratepayers and a waste of time from the point of view of those waiting for the repairs to be done.
    Sheffield council estimates that maintenance work organised in that way will add 7 per cent. to the authority's
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    costs. The Secretary of State talks about overspending authorities, but at the same time he is directly responsible for putting extra burdens on the ratepayers.
    Sheffield direct works department was established in 1926 by the first Labour council in order to cut through corruption and red tape and to respond directly to the city's building needs. It has established standards of health and safety, decent working conditions, training and apprenticeships, and, most important, continuity of employment, of which the city is very proud. Sadly, those standards are frequently lacking in the private sector.
    Equally important is the fact that the direct works department is directly accountable to the city's ratepayers. On tenants' requests alone, it carries out 12,000 house repair jobs per month, as well as maintaining all the schools, old people's homes and public buildings in the city. If the council is forced to deal with innumerable private contractors, the cost of that work will be massively increased. Additional office work, the cost of paper and postage, legal wrangles about the cost of workmanship, estimating and accounting work, supervision and inspection, will all add to the costs.
    Sheffield council believes that at times such as this scarce money should be paid to retain skilled employees and tradesmen who know their work and can respond to the needs of the tenants and the people of the city. The Government wish to add to the ever-increasing legion of office staff at the town hall.
    I believe that a Socialist housing policy and a policy for land and the building industry are inextricably linked. [Interruption.] It would be a very bad job if we abolished agriculture, because we should all be very hungry. Not only must the work force be socially organised. The land and the building industry must be socially owned. Local authorities started to employ their own building labour about 100 years ago to provide a better quality service and, a more efficient standard of building service and to avoid being taken for a ride by private contractors wanting to cash in on quick profits. Direct labour serves the people. It does not exist to make a fast buck at their expense. Ever since direct labour organisations were established they have been under attack by private contractors. We are always told that private contractors are in favour of competition. However, they do not seem to like the competition that they have faced from the DLOs.
    The proposals will mean higher administrative costs. Safety standards will fall. Jobs will be lost. The ratepayers will pay more for what will not be as good a job as is now done. For all these reasons, I oppose the regulations that are before the House.
    10.21 pm
    Mr. Den Dover: I declare my interest as parliamentary consultant to the George Wimpey group. I should also declare my interest as a ratepayer in Chorley, Lancashire, and in South Hertsmere, in Hertfordshire. I believe that the regulations will ensure that ratepayers get better value for money in the carrying out of local authority contracts for maintenance and for major capital works.
    My mind goes back a year to the time when the regulations came into being. The Federation of Civil Engineering Contractors—I am a civil engineer—was upset that inadequate background research had taken place into what should be the ceiling above which work should be put out to competition. I believe sincerely that £50,000 is much more appropriate than the former £100,000. I feel

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    that more direct capital works on roads will be brought into competition between direct works departments and private contractors.
    My main misgivings about the regulations are that local authority direct labour departments have been able to abuse the intentions of the 1980 Act. They have split the work into smaller units below the ceilings set by the Government. It has then been possible within the terms of the Act to give further contracts on a negotiated basis sometimes at rates of up to 30 per cent. more than the first contract rates.
    The most awkward aspect is that work has been placed with direct labour organisations even though they have not submitted the lowest bid. I welcome Welsh Office circular 12/82 that includes directions to local authorities to explain why they have given contracts to their direct labour organisations when they have not submitted the lowest price. This will ensure that the Act and the regulations are not abused.
    There is one outstanding feature to which I should like Ministers to give their attention. It is all very well talking of getting building work in competition. I welcome the fact that 30 per cent. of maintenance work will have to be gained in competition. What matters, however, is the final cost. To date, local authorities have been able to say, if the bidding price was £1 million and the all-up cost was £1½ million, that the value is £1½ million.
    There is need for careful control of the certification of the amount of work done by local authority direct works departments. The work should be carefully measured on an independent basis and multiplied by the rates in the contract, where it had been gained in competition, to show the value of the work done rather than the accountants within the direct labour department saying that the cost was so much and that this was therefore the value that they would put to the work. In other words, there is need for independent certification by outside surveyors, by surveyors in another department of the council and by outside consultants. This shortcoming still exists.
    Mr. Eastham: Is the hon. Member aware that many cities have the precise mechanism to which he is referring? It is costed and organised not by the direct works organisations but by a separate department in many local authorities, such as Manchester, with architects and quantity surveyors who as professional people, make their judgments.
    Mr. Dover: I know from my experience at the GLC as director of housing construction that in some authorities there are architects and surveyors who determine what the value should be. I also know from my experience that it is all too easy for a "professional" to have the interests of the council or the direct works department at heart. Unknowingly they raise the value to try to make the books look better than they are.
    The only answer to this problem is to bring in outside accountants and independent surveyors, both quantity and chartered, who know what the building work is about, can take an independent view and say whether the direct works department is losing or making money. That is what I did in the GLC. Until my arrival, the direct works department thought it was making quite a good percentage return on the work that it did. However, it took only a few months of these independent observers and experts to show that the department was making a substantial loss.
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    There is still one more step to take. We must make sure that direct works departments have independent assessments of the work that they have done. It is meaningless for them to say that they have gained the work in competition. Anyone can put in a low price. At least we have the ultimate sanction that if the direct works department is shown to be losing money over the years the Secretary of State can close it. The important question is: what is the value of the work done? I look forward—in addition to the welcome regulations—to some more careful control of the values going into the accounts of the direct labour organisations.
    10.27 pm
    Mr. Allen McKay: I shall start with a point raised by the hon. Member for Chorley (Mr. Dover) about the architects, planners, and quantity surveyors in local authorities. What he said does them no credit. I had the privilege of working for four years with the architects, planners and quantity surveyors in Barnsley authority as chairman of a committee. I assure the hon. Gentleman that what he says is a contradiction in terms. He claimed that these people deliberately put the price low to protect the local authority. That is wrong because it is on that standard that the local authorities tender for the work. If the figure is put low they will not protect either the authority or the workmen. It is a qualified price, the best estimate made by professional people, and it is on that estimate of price, that the council goes to tender on contracts.
    The Minister raised the question of tendering. He made quite a play regarding contracts not going to the lowest tender but to the direct works department against the lowest tender. What he did not say was whether the direct works department had the second, third or fourth lowest tender. As he knows, when authorities consider the contracts that come in they also consider other things besides price. If they always accept the lowest price, people become concerned and know that they are accepting not only the lowest price but possibly future trouble and cost. That point must be borne in mind. Therefore, when the Minister talked about local authorities accepting the quote from the direct works department hie gave only half the story by not saying whether that quote was the second lowest price. In many contracts the lowest price is not accepted. I confess that I believe in selective tendering instead of open tendering. In my view, open tendering is a licence for cowboys. It puts upon the local authority financial obligations which it will have to face in the future as a result of accepting the lowest tender.
    Another aspect of tendering is obvious when one knows the contractors. They over-reach themselves in the men and plant that they use. One knows that if one accepts the lowest tender, there will not only be delays in the programme itself, but there will be increased costs and problems when the clerks of works report on the work that has been done. That can result in litigation with the contractor.
    Because contractors have no work, they tend to cut corners. In trying to put in the lowest tender in an open competition, they do things that they would not do an normal times. That often results in bankruptcy among contractors, which in turn leads to delay and cost to the authority, delay in the completion of houses, and thus to delay in plans for the receipt of rents. It also leads to delay in the completion of other local work. Often one has to

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    resort to the law to get justice. That leads to greater delay. So we should bear in mind all the facts that are involved in tendering.
    The Minister made his usual attack on the trade unions. He talked about NUPE. He seemed to forget that the GMWU, the ETU, and many other trade unions are involved in direct labour organisations. In fact, a lobby that took place last week confirmed the number of trade unions that are involved.
    Then there is the question of taking the building industry into public ownership. A few years ago, a lot of people were running round with placards saying "Hands off the building industry". I am glad to say that they have changed their minds, now that they realise what this Government have done.
    I have a friend who is a master builder, who is now working abroad. At one time he owned his own firm. He moved out of building, and then came back to it. He worked for several people, in charge of their building contracts. Eventually he left, because he could not stand the kind of houses that he was having to build. He said that the houses would be falling down in 20 years' time, and that if he could not build a good type of house he would prefer to leave the country. He was working for private contractors.
    The Airey type houses were a prime example of what local authorities had to build. They are now falling down. The 40 years' life that they were supposed to have is no longer possible.
    I shall say a brief word about the slur cast by the hon. Member for Folkestone and Hythe (Sir A. Costain), who is no longer in the Chamber. He said that workmen who work for local authorities do so only because they are not good enough to work for private industry. That slur should be condemned by the Minister, because local authorities employ some of the finest craftsmen in all trades, as well as some of the finest professional people—all connected with the direct works industry. That slur should be condemned once and for all. Some people who have worked for the local authorities have set up private businesses. They have taught excellent apprentices in all trades for many years, which private industry has not been able to do. I hope that the Minister will say a few words about the statement of the hon. Member for Folkestone and Hythe. As to the local authorities' approach to cartels and trade rings, one of the local Sheffield newspapers recalls a group of Labour Members of Parliament headed by my hon. Friend the Member for Bootle (Mr. Roberts) who tabled a motion in the House calling on the Secretary of State for the Environment to investigate the setting-up of price-fixing rings for painting contracts in the North-West. An attempt was made to extort nearly £200,000 from the Manchester city council and £92,368 has been got away with. That is the type of contractor who brings direpute upon other contractors. As I have tried to say, and as some of my colleagues have said, all local authorities are not alike, nor are all direct works organisations.
    Sheffield has had a tremendous build-up in local authority direct works. In 1926, local government decided upon a programme of direct works. After it had spent a lot of money on newly erected houses it found out, much to its cost, that it had to spend a lot of money on repairs to the newly erected houses. Therefore, it decided to set up a direct works department. From 1926 onwards it took into
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    its orbit the building of houses, schools and public buildings, which were erected to a high standard of public workmanship. In fact, it went a little further, because all the Sheffield trams were built by direct labour and were acknowledged to be the finest in the country. The local authority went on to do great things in public health, child welfare, food purity, control and remedying of disease. The build-up of the direct works department continued as it moved into those fields.
    It now has a work force of 3,000 people and it is substantially a municipal enterprise. That is the type of enterprise that the department is moving into. It is a continued attack not only upon the direct labour organisation itself but a continued attack by the Government upon the local authorities. It is a continued attack upon an organisation that has been set up to serve the needs of the authority and its people.
    In Sheffield, the building maintenance division alone has 1,495 operatives, all working on incentive schemes. The total number of properties maintained last year exceeded 100,000, of which 95,000 are dwellings. I do not think we can set up an organisation under private enterprise that could take over the problems, the maintenance and the repairs of that type of dwelling.
    The roofing section has 28 operatives. Two thousand five hundred repair tickets were issued for asphalt work and an additional 300 jobs were undertaken for minor works, which includes painting and home improvements. A scaffolding section was set up purely and simply because it was found that the costs of going to a private contractor for scaffolding were so high it could take on that job itself at a far cheaper rate. That is why the local authority has built up its direct works department. It also set up a lift section, which has to be on call 24 hours a day to take over emergencies.
    I would like to ask the Minister why it is that, only 12 months after the introduction of similar legislation, the Government have again introduced legislation working against direct works organisations. Why must it be so soon? The position that was created 12 months ago has not yet been fully evaluated? Why is it necessary to decimate further the local authorities' direct labour organisations before we have found out the result of the last bout of legislation? Is it just a sop to the construction industry, as a lot of hon. Members have said? Is it because of Government policies against direct labour organisations and local authorities? Is it because jobs that the private contractor will tender for under the Bill would not have been tendered for in normal circumstances? Is it, therefore, a case of sharing out the existing work, which will decimate the direct labour organisations? The cost to local authorities will be tremendous. The proposal will increase administrative costs and there will be less money available for repairs and maintenance, and that will increase the charges.
    The biggest problem will be to balance work loads planned by the direct works departments. Painters may be brought in prior to repair work. Therefore, the work must be carefully timed with the repair programme. The external work is done in good weather and interior work is done in bad weather. In such a situation, there is little that local authorities can do if they have to tender, because the gap in between may be too large.
    Sheffield has taken tenants' complaints about repairs and maintenance into account, and is running a 13-week programme on a rota work system. Two caravans will

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    move into each area every 13 weeks. Every repair reported within that 13-week period will be done while the direct works department is in that area. The caravans will then move to another area. If the department has to tender for such work, that programme will be lost. The planning, and maintenance of the houses and the welfare of tenants will be put in jeopardy.
    I shall conclude by quoting a letter from the chairman of the committee in Sheffield. She writes:
    "The new changes will massively increase Town Hall administrative costs. This will inevitably take funds from that set aside for the actual repair work. The new legislation says that a sizeable proportion of all the small Council Repair and Maintenance work should be put out to competitive tender from private builders. Since the original Direct Labour Law introduced last April, which extended the areas of work subject to competition, the workload borne by Town Hall administration has quadrupled. The Council estimate that maintenance work organised in this way adds a 7 per cent. cost to the authority. These changes will more than double the present increase in costs.
    The Government is acting totally irresponsibly in changing the rules to this very complex legislation after only 12 months. At the same time as he talks of "overspending authorities", Mr. Heseltine is directly putting extra burdens on the ratepayers … From tenant requests alone, the Sheffield works department carries out 12,000 housing repair jobs a month, as well as maintaining all the schools, old people's homes and public buildings in the city. If the Council is forced to deal with innumerable private contracts to do this work, the cost would be horrifying: Office work; the sheer cost of paper and postage; the legal wrangles over the cost or workmanship; the estimating and accountancy work; the supervision and inspection …
    Accountants and typists cannot actually mend the damaged ceiling or leaking pipe."
    The direct works department will do more administration and less maintenance and repair work.
    I ask hon. Members to vote against the legislation, which represents an attack not only on direct works departments, but on local government and the rent payers and ratepayers, which the Government are supposed to be protecting.
    10.43 pm
    Mr. Neil Carmichael: I had not intended to speak, but when I heard some of the incredible assumptions that Conservative Members made I decided to do so. They implied that private industry meant good, clean, honest and open work, while direct labour meant inefficiency, and—it was hinted—a touch of professional corruption. That was too much for me, and I felt that something should be said.
    I have many complaints and reservations about direct labour. Direct labour organisations are not the be-all and end-all. Not every job should be done by direct labour. Wider interests must be brought in. However, when I hear Conservative Members speak as if everything that direct labour did was bad while everything that private enterprise did was good, I know that they do not realise how direct labour started. It began because of the corruption, inefficiency and appalling workmanship of private industry.
    A library in my area, in Partick, was built by the Scottish building guild in the 1920s. The guild did not survive, because, as my hon. Friend the Member for Glasgow, Cathcart (Mr. Maxton) pointed out, it had to break even year by year. It was not allowed to carry a profit forward and, therefore, it was not able to take a chance on any contracts coming forward.
    The work that was done by private enterprise in those days was appalling. A great deal of the corruption that has
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    taken place in the building industry over the past 20 years has involved private enterprise. Multi-storey flats were sold in package deals. Some of them were extremely dangerous and uninhabitable because of dampness and many associated problems. Private enterprise sold to local authorities throughout the country white elephants of shopping centres. They have become slums and in some instances private firms will not rent the units.
    In the heart of my constituency is the Royal hospital for sick children. It was built by private enterprise. The list of faults is enormously long. Scottish Office Ministers and the hon. Member for Aberdeenshire, West (Sir R. Fairgrieve) are well aware of the deficiencies. The original price was about £3 million and the repairs alone will cost about £7 million. The water supply, the drainage and sewerage systems and the exterior facings have had to be replaced or rebuilt. Every floor has had to be relaid. When the hon. Member for Aberdeenshire, West was an Under-Secretary of State for Scotland he told me in an answer that about 15,000 bed weeks had been lost until about a year ago. Even now not all the wards are occupied. The hospital was built by private enterprise.
    I have some criticisms of direct labour organisations, but Conservative Members should not get wrong ideas aout private enterprise. The hon. Member for Chorley (Mr. Dover) came close to impugning the professional integrity of local authority surveyors. Their professional integrity is being attacked when it is suggested that local authority surveyors cook the books to make prices seem a wee bit better. If the hon. Gentleman believes that, he must accept the old adage in the building industry that more money is made by the surveyor's pencil than by the concrete mixer. That applies equally to private enterprise and local authority direct works departments.
    There will always be large local authority contracts. Scottish Labour Members are always meeting building contractors and trade union representatives who are desperately seeking heavy civil engineering work. The work is not available in the private sector and they have pleaded with us. We have tried to persuade the Government to make it available and—
    Sir Russell Fairgrieve: The hon. Gentleman has mentioned me twice during his speech. He knows perfectly well, as I know very well—he has read the report time and again—that the problems that we experienced in the construction of the Glasgow children's hospital had nothing to do with the building contractors; they were due entirely to wrong political decisions.
    Mr. Carmichael: The hon. Gentleman was chairman of the Conservative Party in Scotland. I am surprised that he takes the view that the problems were due to wrong political decisions. He could have made hay out of suggesting that political decisions were causing problems. It was a bad building decision. I am not ascribing blame at this stage. I want, and would be happy to have, a public inquiry into what went wrong.
    As we know, many scandals have occurred in the building industry over the past 10 to 15 years. Many professional difficulties arose in the building industry over that period. I have often asked for a public inquiry into that hospital. I was unable to get one because Ministers in the Scottish Office have always hidden behind the assumption that there would always be legal proceedings. We are

    267
    hanging on so long over the question of legal proceedings that we will let the matter slip through our fingers. A public inquiry would be of real advantage to the building industry.
    We must continue with direct labour—with all its faults, and I hope that it can significantly improve—because a great deal of the outside building industry is still bad and inefficient. We must have a yardstick by which to judge it, and direct labour is the only yardstick I can think of.
    10.51 pm
    Mr. Donald Dewar: Scotland, which is, of course, my prime consideration tonight, has not been burdened 'oy part HI of the Local Government, Planning and Land Act 1980 before this week. Unfortunately, our period of immunity is coming to an end. We must all now concentrate our minds on how best to minimise the damage that the Government are doing to the construction industry and direct labour organisations, both in Scotland and in England.
    This has been an interesting evening. We have been left without any doubt about the change in the English regulation and the construction of the Scottish regulations. If one were of a charitable disposition, one might think it was something to do with efficiency or the need to make direct labour more efficient and competitive—to make it come out of this period of Conservative Government with a lean and hungry look. We might argue, for all that, that it was still not justified. However, in terms of motivation, it is clear from the speeches tonight that it has nothing to do with efficiency. This is a vendetta against direct labour which is being pursued by the Government and cheered on in voracious style from the Conservative Back Benches.
    The hon. Member for Reading, North (Mr. Durant), in an inelegant phrase, said that the original legislation had been pushed through the House. He was probably right about that. He said that he was always nervous and suspicious when direct labour organisations were mentioned. However, these hints on motivation were, of course, outdone by his hon. Friend the Member for Brigg and Scunthorpe (Mr. Brown). Although I often listen to Scottish debates, I had not heard the hon. Gentleman in full flood before. He struck me as being the Tory equivalent of the Militant Tendency. His speech was a splintered explosion of prejudiced slogans. He made no bones about what he was about. He said that he made no apology for wanting to "slash" direct labour. In fact, he said "smash". His pronounciation of syllables is not as clear as those of his hon. Friend the Member for Edinburgh, Pentlands (Mr. Rifkind). Certainly the motivation and malice were there in plenty. He said that he wanted to "smash" direct labour. Of course, that is exactly what all this is about. He was outdone only by his hon. Friend the Member for Folkestone and Hythe (Sir A. Costain), who put forward the extraordinary proposition that no one working for direct labour was good enough to work in the private sector. He might want in his cooler moments to dissociate himself from that proposition. When the Minister replies, I invite him to make it clear that he would not support that proposition.
    The Opposition are not for a moment trying to whitewash direct labour organisations or saying that they are perfect in every way and area. That would be
    268
    ludicrous. We are saying that it is important that local authorities should have the right to have direct labour organisations and to operate them as they want, untrammelled by Government prejudice and obstruction. We are saying that it is wrong for the Government artificially to build barriers with a view to preventing the proper running of direct labour organisations if democratically elected councillors wish to run them.
    Over the Government's period of office we have been observing a major attack on local democracy. We have seen it in the pile upon pile of legislation, all of it encroaching on and infringing the basic rights of councils to operate and run their own affairs as they see best and being answerable to their electorate. The regulations are another small example of that happening again. The rights of local authorities are being chipped away. Because of the statutory straitjacket into which direct labour is being shoved, it will be more difficult for it to compete effectively and properly. These regulations are not about fair competition but about putting direct labour into an unfair situation in which it cannot compete effectively and responsibly.
    The Minister for Housing and Construction made some complaints about the way in which local authorities had been trying to interpret the regulations, to get round them and to continue to operate their direct labour departments. Local authorities have that right. I am strengthened in that view by the Scottish Development Department's circular 8/1982, with which the Minister will be familiar. The Scottish Office states in that document:
    "It is the responsibility of each individual local authority to interpret the Act in the context of its own particular circumstances."
    I make it clear that I hope that local authorities will continue to exercise that responsibility. If the context of their circumstances means that it is sensible and efficient to have direct labour organisations, I hope that the authorities will continue to operate them effectively.
    The question to which we want to address ourselves from a Scottish point of view is, what will happen in the period that lies ahead? In the Scottish Development Department circular it is said that the proposals, particularly on tendering,
    "are difficult to summarise and have to be studied carefully."
    I suspect that that means that the proposals are devious and obscure.
    It is clear that in two major respects there is a sharp distinction between the arrangements north and south of the border. In England, for highways work, anything above £50,000 has to go to competitive tender. In Scotland the cut-off point is £100,000. For maintenance in England under £10,000, 30 per cent. goes out to tender. In Scotland that 30 per cent. rule applies only to work above £10,000. I am not complaining about those distinctions, nor am I suggesting that we should have the same system north and south of the border. We have our own distinct traditions. If there is a differential in this case, I welcome it.
    We want an explanation and an assurance from the Minister that in a few months the Minister will not trudge back to the Dispatch Box to say that the thresholds will be reduced to £50,000 and £10,000. We do not like the scheme that has ben introduced, but we want an assurance that there will be a period of stability and that the Government will not chop and change, presumably on the basis that direct labour organisations are not suffering enough under this Administration.

    269
    A number of general points can be made about the regulations. They have nothing to do with fair competition. If it was an even-handed scheme meant to keep in balance the private and public sectors, why should we restrict the right of the direct labour organisations to tender in the private sector? It is an inescapable conclusion that prejudice has stopped the Government following the logic of their argument.
    I wish to ask the Minister about a specific and perhaps minor but important point concerning the extension contracts. He will remember that in Scotland, as in England, the extension contract must be granted within 12 months of the orginial contract and that the price increase to take account of inflation must be less than 10 per cent. That is extremely restrictive. I have been advised by many people in the construction industry that it is so restrictive as to be almost unworkable. The circular states that the conditions have been made more rigorous than was first proposed and goes on to refer to the English experience. I suspect that they have been made more rigorous because the Secretary of State is keen that the penalties should bite and that they should be seen to be effective so that he may get the accolade of approval from his friends in the private construction industry.
    If we have an extension contract that is let to the private sector firm that won the original contract, will it be subject to the same restrictions? That is not clear from the documents that have been made available or the rubric of the regulations.
    The Minister will not be surprised to hear me say that the 5 per cent. return on capital provision seems to be totally unreasonable. If we consider what is happening in the private sector, we see that very few firms—very few of the firms that have been represented by Conservative Back Benchers this evening—will be returning 5 per cent. on their capital employed, given the economic blizzard that the Government have managed to conjure up for the construction industry.
    If we consider the explanation given in the circular, which is that the 5 per cent. is not supposed to represent the current rate of return being obtained by industry, but is rather the broad cost of capital over a certain period, we see that we cannot force upon direct labour organisations restrictions which, if they were applied in the private sector, would more than increase the deluge of bankruptcies that has resulted from the Chancellor's economic policy. The point has been made by many of my hon. Friends that it is another example of the same phenomenon. The refusal to allow cross-subsidy between the various areas of activity of a direct works department is again an unnatural restriction which would cause enormous problems for any commercially run firm in the private sector.
    I do not like the regulation. It will have a direct and unpleasant effect on employment prospects in many cities, and especially in my city of Glasgow. In February 1981, the Glasgow direct labour organisation employed 5,326 people. In February 1982 the number had fallen to 4,801—a drop of over 500—and it is well known that the direct labour organisation is being forced to look for another 1,250 redundancies in the months ahead. That is tragic at a time when the housing stock in many parts of Glasgow is deteriorating because of lack of financial input and when unemployment has reached scandalous and disastrous proportions.
    270
    That is not the only problem. Glasgow direct works department employed 141 apprentices. It hoped to be able to take on 70 this year, but it cannot be confident because of the effects of the Government's economic policy, which will be exacerbated and intensified when this straitjacket is clamped upon the normal commercial judgment of the local authority and its direct labour organisation.
    In the circular, the Secretary of State, in a weak and hapless way, pays tribute to the fact that this is a problem. He says that he recognises that a local authority may wish to take on more apprentices than may normally be commercially justified in terms of the 5 per cent. return on current capital, but all that he can suggest is that local authorities should make it a special item in their accounts so that there will be an addendum referring to the fact that the extra apprenticeship places have been filled.
    I wish to have some concrete assurance that that is the position and that it will not be used as a basis on which to claim that there has been a failure to carry out the financial targets under the Local Government, Planning and Land Act 1980, and that that will not be used in turn as an excuse for further restrictions and cutbacks.
    I do not suggest that this serious position is entirely the fault of the regulation. That would be ludicrous, because it has come into effect only now. There are other reasons. Principal among them is the harsh and mean approach to the capital requirements of local authorities in housing by the hon. Member for Pentlands and the Secretary of State.
    To take Glasgow again, it looks as though the capital spend will be about £52 million this year against an initial allocation on a needs basis of £70 million. Hon. Members will realise how inadequate that £52 million is when they remember that last year the initial allocation was £55 million which was subvented during the year. When we take that miserably inadequate allocation and add to it the kind of restriction envisaged in these regulations, we see a situation in which the Government are doing everything they can to strangle the direct labour organisation, on the basis not of rational argument but purely and simply of political prejudice and spite.
    It was extraordinary to listen to the hon. Member for Brigg and Scunthorpe making a charge against the trade unions that they were merely trying to preserve jobs. I have had cause sometimes to criticise trade unions, as we all have on occasions, but it is cheek and brass-necked impudence for anyone to complain, in view of the crisis of employment in the West of Scotland, that trade unions are trying to preserve jobs and the capacity of the local authorities to do good and provide a service for the people they represent.
    This is a sad, vindictive, mean and petty measure, motivated by spite. That may sound like overkill. I see the hon. Member for Pentlands smiling and laughing. Having listened to the speeches from the Benches behind him this evening, I think that every one of my words can be justified to the full. We are piling on direct labour organisations administrative costs, restrictions and burdens. If the Opposition were to suggest the equivalent for the private sector, the howls of pain and outrage from Conservative Members would be deafening, and rightly
    so.
    This is a campaign to make direct labour a failure, to make it unworkable and to ensure that it can be held up to ridicule, not because it is wrong in principle or

    271
    ineffective in practice but because it is the victim of Government obstinacy and prejudice. It is against that that we will be protesting in the Lobbies.
    11.8 pm
    The Under-Secretary of State for Scotland (Mr. Malcolm Rifkind): The hon. Member for Glasgow, Garscadden (Mr. Dewar) has within his vocabulary more pejorative terms than most hon. Members could concoct in the course of six months. He has managed to include most of them in his contribution. He has suggested that the Government are launching a vendetta against direct labour departments and seeking to impose a stranglehold on them. These were the milder terms that he used.
    One would have thought from the contributions of the Opposition that these regulations were of the kind that my hon. Friend the Member for Brigg and Scunthorpe (Mr. Brown) wanted. He said that he would like to see all direct labour departments banned. From some of the comments of Labour Members, one would have thought that that is exactly what these regulations would achieve.
    Both the English and the Scottish regulations seek to achieve a situation whereby direct labour departments will be in a position comparable to that of private enterprise. If they can compete on fair and open terms with private enterprise it is right and proper that they should be able to carry out the work; but if they are unable so to compete, it is not surprising that they should not be able to carry out the work.
    The right hon. Member for Brent, East (Mr. Freeson) gave us a delightful glimpse and insight into the workings of the last Labour Government. He told us that but for the advent of the Lib-Lab pact we would have had not just guidance to local authorities but legislation that would have gone far beyond anything that the Government are contemplating. It would appear that when the right hon. Gentleman was in charge of these matters he was delighted to contemplate such legislation, but when his party goes into Opposition any legislation is to be opposed.
    Mr. Freeson: Is the hon. Gentleman trying to mislead the House? May I recommend to him that he ceases commenting on what I did not say and reads the Official Report tomorrow? He is totally and deliberately, with the help of his hon. Friends, misinterpreting what I said.
    Mr. Rifkind: I took careful note of what the right hon. Gentleman said. He said that his legislation would have gone far beyond anything that the Government contemplate. There was no doubt that that included giving direct labour departments the opportunity to involve themselves in other private sector work. Is he suggesting, however, that he would not only have given direct labour departments far greater power but that he would not have imposed upon them any of the responsibilities or fair tendering requirements that the Government contemplate? If he seeks to give them far greater power without any greater responsibility, his view is shared by his hon. Friend the Member for Garscadden who has just said that, although it was ludicrous to suggest that local authority direct labour departments ever had any faults, he and his hon. Friends stood not only for the maintenance of direct labour departments but for the ability of local authorities to operate them untrammelled—that was the word that he used—explicitly suggesting that in his view local
    272
    authorities should operate no control whatever to ensure that direct labour departments carry out their activities in a fair and open way.
    Mr. Freeson: There is nothing secret or newly revealed about what I said earlier. It is all published and on the record. It was published by CIPFA and in the working party report that my hon. Friend the Member for Glasgow, Carthcart (Mr. Maxton) quoted but apparently received no attention from the Minister. What I said at the time of those reports and again today was that we would have translated into legislation the guidelines in the CIPFA report and the working party report of 1978, but that we would also have included in the legislation proposals to enable those departments, where local authorities could prepare schemes, to be completely independent and to compete elsewhere with private enterprise. That is what I said and that is what I meant.
    Mr. Rifkind: The right hon. Gentleman advocated increased power for direct labour departments without increased responsibility to the ratepayers or the obligation to compete fairly with the private sector.
    Another interesting insight was provided by the hon. Member for Woolwich, East (Mr. Cartwright), who indicated that the SDP intends to vote against the regulations. It is an ironic twist of fate that the first vote cast by the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) will be a vote in favour of Glasgow direct works department which has a reputation for incompetence and inefficiency unparalleled throughout the length and breadth of the United Kingdom.
    I may do the right hon. Gentleman an injustice, but I cannot recall that an at any stage in his long and weary election campaign, in any part of his manifesto or in any remark to the press or to the thousands of people who flocked to hear him, he suggested that one of his first acts in the House in the interests of the constituents of Hillhead would be to do is little bit to preserve the incompetent and inefficient Glasgow direct works department. In a sense, perhaps, I do indeed do the right hon. Gentleman an injustice, because if that is how he intends to vote today it will be in the best traditions of the Labour Party to which he belonged for most of his career. Indeed, it is incumbent upon all Labour Party members in the city of Glasgow and those who were once Labour Party members to keep Glasgow direct works department sacrosanct and untouchable. The right hon. Gentleman has quickly realised the realities of Glasgow left of centre politics.
    I turn from the predicament of the right hon. Member for Hillhead to the specifically Scottish points raised by the hon. Member for Garscadden. The hon. Member for Glasgow, Cathcart (Mr. Maxton), who also spoke on this, suggested that the obligation of Glasgow to carry out the emergency work arising from the recent freeze showed the need for a direct works department. He is clearly out of touch with his own local authority. If he had contacted the authority to find out how it responded to the freeze, he would have been informed that it took on 200 temporary employees to deal with the problem and that once the work was completed it had no further need of them. The matter was not dealt with by the direct labour department, nor could it somehow cope with the entire situation by itself. My hon. Friend the Member for Reading, North (Mr. Durant) was quite right to say that in emergencies it is perfectly possible for local authorities to use the private

    273
    sector, and the concept of an emergency is not of itself proof of the absolute necessity for a direct works department.
    The suggestion of the hon. Member for Manchester, Blackley (Mr. Eastham) that the ability of local authorities to deal with emergency work would be impeded by the regulations is incorrect. Emergencies are specifically exempted from the competitive tendering requirements. There is, therefore, no danger of the kind that the hon. Gentleman indicated.
    The hon. Member for Garscadden, like a number of hon. Members, asked about the position of apprentices. The hon. Gentleman should be aware of the factors that the Government would take into account in respect of a local authority that had more than what might be expected to be its normal share of apprentices. He should also remember that an amendment was tabled yesterday to the Local Government and Planning (Scotland) Bill exempting any apprentices taken on by a local authority as a result of the Manpower Services Commission's job creation programmes. They will not be taken into account in respect of these matters.
    The hon. Gentleman also drew attention to the fact that the Scottish regulations are different in a number of respects from the English regulations. This arises from the simple fact that the Scottish DLO requirements come into effect for the first time tomorrow. The Government, in consultation with the Convention of Scottish Local Authorities, agreed to a delay of 12 months for the implementation of the regulations. These have been fruitful months. There have been discussions with local authorities in Scotland. We do not rule out the possibility of further modifications of the kind inherent in the English regulations before the House today.
    As the Scottish local authorities have been preparing for the initiation of the scheme based on the existing proposals, it is right and proper that this should be translated into action. We shall consult over the next few months to see whether the arguments that have led my right hon. and hon. Friends in the Department of the Environment to make modifications in England apply with equal force in Scotland. I cannot give the hon. Gentleman any guarantee that these additional provisions could not be contemplated in Scottish circumstances. They may be necessary and desirable in Scotland but it is right and proper that we should allow the present regulations to be introduced before any final decision is taken.
    Mr. Maxton: I asked the Minister a specific question about whether the regulations cover the Scottish Special Housing Association? Will he answer that question?
    Mr. Rifkind: As the hon. Gentleman will be aware, these regulations cover local government direct labour organisations. The legislation as a whole applies to the Scottish Special Housing Association, which is covered by the same general requirements. However, the regulations we are discussing are local government regulations. That is a point that the hon. Gentleman may wish to bear in mind.
    Mr. Dewar: On the difference between the English and the Scottish regulations and the likely continuity of the difference, is it fair to say that, despite the qualifications that he has made, the Minister is satisfied that, at the moment, the limits on tendering in the Scottish regulations are correct and that he will at least allow them a reasonably
    274
    stable and lengthy life so that they can be properly assessed? Will he give an assurance that there will not be the situation that has arisen in England where Ministers have returned within 12 months to make the threshold lower?
    Mr. Rifkind: I am not satisfied that they are necessarily correct. We submitted draft regulations to Scottish local authorities last June. We submitted amended regulations at the beginning of this year. As local authorities have been preparing for the introduction of direct labour provisions on the basis of the regulations that they have seen over the past few months, we accept that it would not have been appropriate, having sent draft regulations, now to put before the House regulations that were in any significant sense different from the drafts that they had seen. It is right and proper that local authorities should have the opportunity to implement the regulations. We shall see how they work out.
    I am not suggesting that it will be desirable in the course of the next two or three months to come back with new regulations. A longer period will be required. The English regulations have been in force for at least a year. The new requirements in England will not come into force until October. A significant period will have elapsed before the amendments come into effect in England. I have no doubt that a significant period will be necessary in Scotland for a similar purpose.
    Mr. Dewar: It seems to me to be an extraordinary fudging and mudging position to suggest, as the Minister is suggesting, that he is introducing these specific proposals without being clear that they are right or that they are the best possible starting point. There are a number of proposals for Scottish regulations that have clearly been changed in the course of preparation, because of English experience. That is the exact phrase used in the circular about, for example the 10 per cent. as against the 25 per cent. margin on the extension of contract. Can we then take it, as there have been those changes in the light of English experience and as the Minister has English experience against which to measure his decision to keep the present limits where they differ from England, that he has been convinced in the light of English experience that they are right?
    Mr. Rifkind: The hon. Gentleman has a nerve. If we had today introduced Scottish regulations identical to the English regulations he and his hon. Friends would have been pontificating about the different Scottish requirements and about how insensitive the Scottish Office was to differing Scottish needs and how typical it was of the Government to ignore separate Scottish circumstances.
    Mr. Maxton indicated assent.
    Mr. Rifkind: At least the Member for Cathcart is honest enough to nod his head in agreement. That is exactly how he and his hon. Friends would have reacted.
    The Government are saying that, given the drat regulations that we sent to the Scottish local authorities,. it is right and proper that these regulations should, in al material respects be the same as those draft regulations. We shall allow the regulations to operate for a good period and then in the light of the Scottish experience, plus experience that is relevant from the situation elsewhere in the United Kingdom, we shall decide whether further changes are required.

    275
    The regulations, both Scottish and English, are nothing that a responsible local authority need fear or be concerned about. Any local authority that is competent and has an efficient, well-run, responsible and accountable direct works department will be able to look with complete confidence and equanimity to the future. Those authorities that know that they have for years maintained, at the ratepayers' expense, direct works departments that could not justify fair and open competition with the private sector will have something about which to be concerned, and that is right.
    It is on that basis that I commend the regulations to the House.
    Question put:
    The House divided0:Ayes 206, Noes 261.

    Division No. 112]

    [11.22 pm

    AYES

    Abse, Leo

    Faulds, Andrew

    Allaun, Frank

    Field, Frank

    Anderson, Donald

    Fitch, Alan

    Archer, Rt Hon Peter

    Fletcher, Ted (Darlington)

    Ashley, Rt Hon Jack

    Foot, Rt Hon Michael

    Ashton, Joe

    Ford, Ben

    Atkinson, N. (H'gey.)

    Forrester, John

    Bagier, Gordon A.T.

    Foster, Derek

    Barnett, Guy (Greenwich)

    Foulkes, George

    Barnett, Rt Hon Joel (H'wd)

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

    Beith, A.J.

    Freeson, Rt Hon Reginald

    Bennett, Andrew(St'kp'tN)

    Freud, Clement

    Bidwell, Sydney

    Garrett, John (Norwich S)

    Booth, Rt Hon Albert

    Garrett, W. E. (Wallsend)

    Boothroyd, Miss Betty

    George, Bruce

    Bray, Dr Jeremy

    Gilbert, Rt Hon Dr John

    Brown, Hugh D. (Provan)

    Golding, John

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

    Graham, Ted

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

    Grant, George(Morpeth)

    Brown, Ron (E'burgh, Leith)

    Hamilton, James(Bothwell)

    Buchan, Norman

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

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

    Harrison, Rt Hon Walter

    Campbell, Ian

    Hart, Rt Hon Dame Judith

    Canavan, Dennis

    Hattersley, Rt Hon Roy

    Carmichael, Neil

    Haynes, Frank

    Cartwright, John

    Healey, Rt Hon Denis

    Clark, Dr David (S Shields)

    Heffer, Eric S.

    Cocks, Rt Hon M. (B'stolS)

    Hogg, N. (Edunb't'nshire)

    Coleman, Donald

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

    Concannon, Rt Hon J. D.

    HomeRobertson, John

    Cook, Robin F.

    Homewood, William

    Cowans, Harry

    Hooley, Frank

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

    Howell, Rt Hon D.

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

    Howells, Geraint

    Crowther, Stan

    Hughes, Mark(Durham)

    Cryer, Bob

    Hughes, Robert (Aberdeen N)

    Cunliffe, Lawrence

    Janner, HonGreville

    Davidson, Arthur

    Jay, Rt Hon Douglas

    Davies, Rt Hon Denzil (L'lli)

    Jenkins, Rt Hon Roy (Hillhead)

    Davies, Ifor (Gower)

    Jones, Rt Hon Alec (Rh 'dda)

    Davis, Clinton (Hackney C)

    Jones, Barry (East Flint)

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

    Kaufman, Rt Hon Gerald

    Deakins, Eric

    Kerr, Russell

    Dean, Joseph (Leeds West)

    Kilroy-Silk, Robert

    Dewar, Donald

    Lambie, David

    Dixon, Donald

    Lambom, Harry

    Dobson, Frank

    Lamond, James

    Dormand, Jack

    Leadbitter, Ted

    Douglas, Dick

    Leighton, Ronald

    Dubs, Alfred

    Lestor, Miss Joan

    Duffy, A. E. P.

    Lewis, Arthur (N'ham NW)

    Dunwoody, Hon Mrs G.

    Lewis, Ron (Carlisle)

    Eadie, Alex

    Lofthouse, Geoffrey

    Eastham, Ken

    Lyon, Alexander(York)

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

    McCartney, Hugh

    Ellis, R. (NED'bysh're)

    McDonald, Dr Oonagh

    Ellis, Tom (Wrexham)

    McElhone, Frank

    English, Michael

    McGuire, Michael(Ince)

    Evans, John (Newton)

    McKay, Allen (Penistone)

    276

    McKelvey, William

    Ryman, John

    MacKenzie, RtHonGregor

    Sever, John

    McNamara, Kevin

    Sheerman, Barry

    McTaggart, Robert

    Sheldon, RtHonR.

    Magee, Bryan

    Shore, Rt Hon Peter

    Marshall, D(G'gowS'ton)

    Short, MrsRenée

    Marshall, Dr Edmund (Goole)

    Silkin, Rt Hon J. (Deptford)

    Marshall, Jim (Leicester S)

    Silkin, Rt Hon S. C. (Dulwich)

    Martin, M (G'gowS'burn)

    Silverman, Julius

    Mason, Rt Hon Roy

    Skinner, Dennis

    Maxton, John

    Smith, Rt Hon J. (N Lanark)

    Maynard, Miss Joan

    Soley, Clive

    Meacher, Michael

    Spearing, Nigel

    Mikardo, Ian

    Spriggs, Leslie

    Millan, Rt Hon Bruce

    Stallard, A.W.

    Miller, Dr M.S. (E Kilbride)

    Stewart, Rt Hon D. (W Isles)

    Mitchell, Austin(Grimsby)

    Stoddart, David

    Mitchell, R. C(Soton Itchen)

    Stott, Roger

    Morris, Rt Hon A. (W'shawe)

    Strang, Gavin

    Morris, Rt Hon C. (O'shaw)

    Straw, Jack

    Morris, Rt Hon J. (Aberavon)

    Summerskill, HonDrShirley

    Moyle, Rt Hon Roland

    Taylor, Mrs Ann (Bolton W)

    Newens, Stanley

    Thomas, Dr R. (Carmarthen)

    Oakes, Rt Hon Gordon

    Thorne, Stan (PrestonSouth)

    O'Halloran, Michael

    Tilley, John

    O'Neill, Martin

    Tinn, James

    Palmer, Arthur

    Torney, Tom

    Park, George

    Varley, Rt Hon Eric G.

    Parker, John

    Wainwright, E.(Dearne V)

    Parry, Robert

    Walker, Rt Hon H.(D'caster)

    Pavitt, Laurie

    Watkins, David

    Pendry, Tom

    Welsh, Michael

    Penhaligon, David

    White, Frank R.

    Powell, Raymond (Ogmore)

    White, J. (G'gowPollok)

    Prescott, John

    Whitlock, William

    Radice, Giles

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

    Rees, Rt Hon M (Leeds S)

    Wilson, Gordon (Dundee E)

    Richardson, Jo

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

    Roberts, Albert(Normanton)

    Wilson, William (Ct'rySE)

    Roberts, Allan(Bootle)

    Winnick, David

    Roberts, Gwi lym (Cannock)

    Woodall, Alec

    Robertson, George

    Wright, Sheila

    Robinson, G. (Coventry NW)

    Rooker, J.W.

    Tellers for the Ayes:

    Ross, Ernest (Dundee West)

    Mr. George Morton and Mr. Ioan Evans.

    Rowlands, Ted

    NOES

    Adley, Robert

    Buck, Antony

    Alexander, Richard

    Budgen, Nick

    Alison, Rt Hon Michael

    Bulmer, Esmond

    Ancram, Michael

    Burden, Sir Frederick

    Aspinwall, Jack

    Butcher, John

    Atkins, Robert(Preston N)

    Butler, Hon Adam

    Baker, Kenneth(St.M'bone)

    Cadbury, Jocelyn

    Banks, Robert

    Carlisle, John(LutonWest)

    Beaumont-Dark, Anthony

    Chalker, Mrs. Lynda

    Bendall, Vivian

    Channon, Rt. Hon. Paul

    Benyon, W.(Buckingham)

    Chapman, Sydney

    Berry, Hon Anthony

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

    Best, Keith

    Clark, Sir W. (Croydon S)

    Bevan, David Gilroy

    Clarke, Kenneth (Rushcliffe)

    Biffen, Rt Hon John

    Cockeram, Eric

    Biggs-Davison, Sir John

    Colvin, Michael

    Blackburn, John

    Cope, John

    Blaker, Peter

    Corrie, John

    Body, Richard

    Costain, Sir Albert

    Bonsor, Sir Nicholas

    Cranborne, Viscount

    Boscawen, Hon Robert

    Critchley, Julian

    Boyson, Dr Rhodes

    Crouch, David

    Braine, Sir Bernard

    Dean, Paul (North Somerset)

    Bright, Graham

    Dorrell, Stephen

    Brittan, Rt. Hon. Leon

    Douglas-Hamilton, Lord J.

    Brooke, Hon Peter

    Dover, Denshore

    Brotherton, Michael

    Dunn, Robert (Dartford)

    Brown, Michael(Brigg & Sc'n,)

    Durant, Tony

    Browne, John(Winchester)

    Dykes, Hugh

    Bruce-Gardyne, John

    Edwards, Rt Hon N. (P'broke)

    Bryan, Sir Paul

    Eggar, Tim

    Buchanan-Smith, Rt.Hon.A.

    Elliott, Sir William

    277

    Emery, Sir Peter

    Irving, Charles(Cheltenham)

    Eyre, Reginald

    Jessel, Toby

    Fairbairn, Nicholas

    Johnson Smith, Geoffrey

    Fairgrieve, Sir Russell

    Jopling, Rt Hon Michael

    Faith, Mrs Sheila

    Joseph, Rt Hon Sir Keith

    Farr, John

    Kaberry, Sir Donald

    Fell, Sir Anthony

    Kellett-Bowman, Mrs Elaine

    Fenner, Mrs Peggy

    Kershaw, Sir Anthony

    Finsberg, Geoffrey

    Kimball, Sir Marcus

    Fisher, Sir Nigel

    King, Rt Hon Tom

    Fletcher, A. (Ed'nb'ghN)

    Lamont, Norman

    Fletcher-Cooke, Sir Charles

    Lang, Ian

    Fookes, Miss Janet

    Latham, Michael

    Forman, Nigel

    Lawrence, Ivan

    Fowler, Rt Hon Norman

    Lawson, Rt Hon Nigel

    Fox, Marcus

    Lee, John

    Fraser, Peter (South Angus)

    Lennox-Boyd, Hon Mark

    Fry, Peter

    Lester, Jim (Beeston)

    Gardiner, George(Reigate)

    Lloyd, Peter (Fareham)

    Glyn, Dr Alan

    Loveridge, John

    Goodhew, Sir Victor

    Luce, Richard

    Goodlad, Alastair

    Lyell, Nicholas

    Grant, Anthony (Harrow C)

    Macfarlane, Neil

    Gray, Hamish

    MacGregor, John

    Grieve, Percy

    MacKay, John (Argyll)

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

    Macmillan, Rt Hon M.

    Griffiths, Peter Portsm'thN)

    McNair-Wilson, M.(N'bury)

    Grist, Ian

    McNair-Wilson, P. (NewF'st)

    Grylls, Michael

    McQuarrie, Albert

    Gummer, John Selwyn

    Marland, Paul

    Hamilton, Hon A.

    Marshall, Michae(Arundel)

    Hamilton, Michael(Salisbury)

    Mates, Michael

    Hannam, John

    Mather, Carol

    Haselhurst, Alan

    Maude, Rt Hon Sir Angus

    Havers, Rt Hon Sir Michael

    Mawby, Ray

    Hawksley, Warren

    Mawhinney, Dr Brian

    Hayhoe, Barney

    Maxwell-Hyslop, Robin

    Heddle, John

    Mayhew, Patrick

    Henderson, Barry

    Mellor, David

    Heseltine, Rt Hon Michael

    Meyer, Sir Anthony

    Hicks, Robert

    Miller, Hal (B'grove)

    Higgins, Rt Hon Terence L.

    Mills, Iain(Meriden)

    Hill, James

    Mills, Peter (WestDevon)

    Hogg, Hon Douglas(Gr'th'm,)

    Miscampbell, Norman

    Holland, Philip(Carlton)

    Moate, Roger

    Hooson, Tom

    Monro, Sir Hector

    Hordern, Peter

    Montgomery, Fergus

    Howe, Rt Hon Sir Geoffrey

    Moore, John

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

    Morrison, Hon C. (Devizes)

    Howell, Ralph(N Norfolk)

    Morrison, Hon P. (Chester)

    Hunt, John(Ravensbourne)

    Mudd, David

    Hurd, Rt Hon Douglas

    Murphy, Christopher

    Question accordingly negatived.

    Myles, David

    Spicer, Michael (S Worcs)

    Neale, Gerrard

    Sproat, Iain

    Neubert, Michael

    Squire, Robin

    Newton, Tony

    Stainton, Keith

    Normanton, Tom

    Stanbrook, Ivor

    Onslow, Cranley

    Stanley, John

    Oppenheim, Rt Hon Mrs S.

    Steen, Anthony

    Osborn, John

    Stevens, Martin

    Page, John (Harrow, West)

    Stewart, A.(ERenfrewshire)

    Page, Richard (SW Herts)

    Stewart, Ian (Hitchin)

    Parkinson, Rt Hon Cecil

    Stokes, John

    Parris, Matthew

    Stradling Thomas, J.

    Patten, Christopher(Bath)

    Taylor, Teddy (S'end E)

    Patten, John(Oxford)

    Tebbit, Rt Hon Norman

    Pattie, Geoffrey

    Temple-Morris, Peter

    Pawsey, James

    Thomas, Rt Hon Peter

    Percival, Sir Ian

    Thorne, Neil(Ilford South)

    Peyton, Rt Hon John

    Thornton, Malcolm

    Pink, R. Bonner

    Townend, John(Bridlington

    Pollock, Alexander

    Townsend, Cyril D, (B'heath)

    Porter, Barry

    Trippier, David

    Proctor, K. Harvey

    van Straubenzee, Sir W.

    Raison, Rt Hon Timothy

    Vaughan, Dr Gerard

    Rathbone, Tim

    Viggers, Peter

    Rees-Davies, W. R.

    Waddington, David

    Renton, Tim

    Wakeham, John

    Rhodes James, Robert

    Walker, B. (Perth)

    Ridley, Hon Nicholas

    Walker-Smith, Rt Hon Sir D.

    Ridsdale, Sir Julian

    Waller, Gary

    Rifkind, Malcolm

    Walters, Dennis

    Rippon, Rt Hon Geoffrey

    Ward, John

    Roberts, M. (Cardiff NW)

    Warren, Kenneth

    Rossi, Hugh

    Watson, John

    Rost, Peter

    Wells, Bowen

    Royle, Sir Anthony

    Wells, John (Maidstone)

    Sainsbury, Hon Timothy

    Wheeler, John

    St. John-Stevas, Rt Hon N.

    Whitelaw, Rt Hon William

    Shaw, Giles (Pudsey)

    Whitney, Raymond

    Shaw, Michael (Scarborough)

    Wickenden, Keith

    Shelton, William(Streatham)

    Wilkinson, John

    Shepherd, Colin(Hereford)

    Winterton, Nicholas

    Shepherd, Richard

    Wolfson, Mark

    Silvester, Fred

    Young, Sir George(Acton)

    Sims, Roger

    Younger, Rt Hon George

    Skeet, T. H. H.

    Smith, Dudley

    Tellers for the Noes:

    Speller, Tony

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

    Spence, John

    Spicer, Jim (West Dorset)

    In vitro Pregnancies
    Motion made, and Question proposed, That this House do now adjourn.—[Mr. Gummer.]
    11.35 pm
    Mr. Leo Abse: Early last month I asked the Prime Minister whether, in view of the development of in vitro pregnancies, she would appoint an interdepartmental interdisciplinary advisory committee, not less than half the membership of which would be women, to report on the social, medical, legal and ethical issues involved. It is a request that I repeat tonight. This, of course, is not simply a second request. In fact, I originally demanded it three and a half years ago, on 26 July 1978—on the morning after the birth of the Oldham baby—in a Statutory Instruments Committee debate that I initiated on the genetic manipulation regulations.
    As the record shows, I received a dusty answer from the Department, which at that time was under the control of the right hon. Member for Crosby (Mrs. Williams). Now, suffering the political amnesia which so frequently afflicts members of the Gang of Four, the right hon. Lady attempts to blot out her responsibility for the nation's total lack of preparedness to meet the challenges that test tube baby techniques bring, and, with a rare display of insouciance, she now belatedly calls for a Royal Commission.
    In fact, the right hon. Lady's neglect in the past is a major contributory factor to our present confusions where, once again, technology is leaping ahead without the implications for the future of our society being properly understood or thought through by this legislature, entrusted with the task of making the major policy decisions for the nation.
    I hope that the Minister's response to my plea will not compound the right hon. Lady's blunder, and I hope that he will not attempt to hide behind the fragmentary and necessarily limited approach of the many diverse bodies now pondering the issues, when so clearly there is a need for this House to be provided with the conclusions of a comprehensive Government-initiated review upon which Parliament can make its decisions.
    Let me make it abundantly clear that in initiating this first debate—the first that has ever been held on this issue, such are the priorities in Parliament—I am in no way seeking to follow the deplorable example of the BMA spokesman who recently called for a moratorium on the splendid work being done by Professor Craft of the Royal Free hospital and by Mr. Edwards, Mr. Steptoe and others who have given so much hope to infertile couples yearning for the blessing of parenthood.
    Indeed, the dangers of the Government listening on this issue to individuals or bodies, however high their reputation, without attempting to bring the disciplines and varying bodies together, is only too chasteningly illustrated not only by the ill-informed pontificating of the BMA spokesman but even more seriously by the frustrated conservatism of the Medical Research Council, whose bad advice led to no Government funds whatever being given to research for in vitro fertilisation.
    Steptoe and Edwards achieved the breakthrough despite—not because of—the Medical Research Council. But by that breakthrough the opportunity, if the Government wish to fund appropriately the NHS, has already arrived for thousands of infertile couples to
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    become families. Unhappily, the number of infertile parents appears to be increasing. Child, the valuable and only registered charity for promoting and raising funds for infertility research, claims that infertility problems are becoming far more widespread; that three years ago infertility affected one in 10 couples; and that now it affects one in six. It claims that some of the reasons for this increase are the result of infections of the fallopian tubes caused, it affirms, by the increased number of abortions, the use of the coil and the widespread use of the pill over a long period.
    Certainly, if this reputable charity, which has Professor Craft as one of its trustees, is correct, it appears to be indisputable that infertility problems affect millions, not thousands, of couples in the land.
    How lacking in impartiality responses can be to the yearning for children—and how sinister, therefore, a fragmentary approach to dealing with the innovatory techniques now available can be—is illustrated when one contrasts the profound desires of members of Child to have more hospital facilities available to achieve parenthood with the attitudes struck in the recently published report of the working party of the Free Church Federal Council and the British Council of Churches. None could dispute that much of that report is most constructive, but its hesitant, if not churlish, approach to the allocation of more resources being devoted to those wishing to find families that embrace their own children, reveals, given different needs, prejudices and philosophies, how wide the gap can be between groups considering the challenge of in vitro fertilisation.
    I concur with those demanding increased NHS facilities. Why should the only hope of many infertile couples in Wales rest on their capacity to afford to come to and remain in London for considerable periods, where there may be a slim chance for them to gain the treatment so sparsely available outside the metropolitan teaching hospitals?
    However, the widely different emphases in approach cannot only be shown by listening to the members of Child, eager for parenthood, and then reading this report of the Churches. The Prime Minister responded to my request for a comprehensive Government interdepartmental committee by saying that the Minister was currently awaiting advice from the General Medical Council, the BMA, the Medical Research Council and the Royal College of Obstetricians and Gynaecologists.
    Let me bluntly tell the Minister that that procrastinating reply is not good enough, not only because the past record in this matter raises grave doubts about the soundness of advice on this issue from bodies such as the Medical Research Council—because it obtusely appears to be not activating advice from the Royal College of Psychiatrists and the Institute of Psychoanalysis, which may be able to provide guidance from child psychiatrists and child analysts, since the issues that arise affect the destiny of children as well as parents—but fundamentally because it is bizarre to affect that Government and legislator can shrug off their responsibilities by implicitly saying that these developments—benign in many respects, but dangerous in many others—can be left to the doctors.
    It is abundantly clear that social, ethical and legal issues arise. If the issue were simply that of harvesting an ovum from a woman, fertilising it in the laboratory with sperm taken from the husband, and implanting the resulting embryo back in the woman's womb, there might be a case

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    for resting the issue upon doctor's advice. However, that is not the challenge facing us, and the Prime Minister should know it.
    Let us consider some of the present and potential problems that can arise. First, let none doubt that as the law now stands, a coach and four could be driven through our adoption laws, carefully designed as they are to ensure the long-term welfare of children by surveillance of adoption agencies and rigorous inquiries into the suitability of would-be adopters, and by giving the right to adopted children to have a secure identity by knowing their natural parents. Now, however, an embryo created in vitro, perhaps by strangers to one another, could be sold by an embryo bank and inserted into a woman, who would give birth to a child who would not know who he or she was, from whence he or she sprang, and never perhaps able to gain a confident identity. There is no existing law that makes such practices illegal, and there is no technical reason why that could not happen now.
    However, it is not only our adoption laws that could be subverted. Our laws of legitimacy and inheritance could be thrown into confusion, unable to cope with the new phenomenon of someone else's natural child being given birth to by a stranger. Incest laws could be bypassed. The tragedy of Oedipus, the man marrying his mother, looms into view as the ability to freeze embryos develops and the anonymity of donors of ova is maintained. International sperm banks claiming to offer high quality, high intelligence sperm, are—if some reports are to be believed—already in existence. Certainly, no law exists in this country which insists that there should be adequate medical and psychological screening of AID donors, recipient mothers and social fathers, before any attempt at AID commences.
    The Church's recent report tells of a new practice beginning to emerge, especially in the United States. A fertile woman, frequently a mother who enjoys the experience of pregnancy but not of parenting, is impregnated with the semen of a man married to an infertile wife. By prior arrangements and for an agreed fee, she hands over the child to the couple after the birth. Currently, no attempt has been made to resolve the ethical and legal problems raised by that practice.
    In a recent court decision here in Britain, where a surrogate mother changed her mind and determined to keep the child, the judge described the contract involved as "pernicious". Pernicious it may be, but it certainly is not illegal. If surrogate motherhood is already a possibility, the successful development of in vitro fertilisation now opens the door to womb leasing. Working wives, wanting a child but not wishing to interrupt their working lives for a pregnancy, could engage a woman to lease out her womb to bring to term a foetus which she had no part in producing. There would be no illegality in such a practice.
    How long will it be before the lessons in animal husbandry can be applied to human embryos? Cloning could become a reality, not a piece of science fiction. Side by side with the laudable efforts to manipulate the embryo outside the womb so as to master inherited diseases could come a move into a grey area where the temptation to produce a child without blemish would not be resisted and could lead to genetic engineering and the attempted breeding of a new man.
    All those awesome issues are matters of which Governments should be seized. Each day new bodies, all
    282
    non-governmental, all operating separately, each with a legitimate vested interest, are being set up. Today, in The Times, we learnt of a new working party of four set up by the Council for Science and Society under the chairmanship of a professor of moral and social theology to study the issues.
    Last week I learnt that the Leverhulme Trust had granted £40,000 to the Society for the Study of Medical Ethics to study the ethics of clinical research. The British Medical Association, the General Medical Council, the Royal College of Obstetricians and Gynaecologists, the Medical Research Council, are all variously at work. The Law Commission will shortly be bringing out its report on the law of legitimatcy and will be compelled to deal with the way AID, and, doubtless, in vitro fertilisation, impinges upon its recommendations.
    There is so much activity, but the Government so far remain supine, taking no steps to create the forum into which all those well-intentioned reports—some concluded, some nearly finished, some about to start—could be placed so that an informed consensus can be created and so that the House could take informed decisions that would help the infertile, whilst protecting our society from becoming a victim of its own hubris.
    Tonight I hope that we shall learn from the Minister that the Government's mind is not closed to taking the initiative for which I am pleading. That initiative Is dangerously overdue.
    11.48 pm
    The Under-Secretary of State for Health and Social Security (Mr. Geoffrey Finsberg): The House will be grateful to the hon. Member for Pontypool (Mr. Abse) for initiating this debate. The subject certainly raises far-reaching issues.
    It may be convenient for the House if I start by setting out some of the technical background. I will leave the words about the right hon. Member for Crosby (Mrs. Williams) on the record, as stated by the hon. Gentleman.
    The techniques of in vitro fertilisation and of implantation of a fertilised ovum in the womb have a surprisingly long history. Implantation of a fertilised egg in an animal was achieved as long ago as 1890, at the University of Cambridge—though in that case the fertilisation had occurred by natural means. The next step—fertilisation outside the womb—was first achieved successfully in France in 1954. The extension of these techniques to humans was pioneered by Dr. Robert Edwards—a physiologist at Cambridge—working with Mr. Patrick Steptoe, a surgeon at the Oldham and district general hospital.
    By 1970, those researchers had been successful in producing a fertilised human egg. The next stage—implantation back in the womb—is very much more difficult, and it was 1977 before that was achieved with total success. The first baby conceived outside the mother's body was born in Oldham in June of the next year 1978.
    The intention behind those experiments was to help women who were unable to conceive because their fallopian tubes were absent or blocked by disease. It is not, of course, a cure for all types of infertility;, and even in those cases where it is the appropriate treatment the success rate is still not very high—at best one in five transferred embryos survives. To date, there have been at least eight successful deliveries in this country, and I

    283
    understand that the programme at the clinic now run by Mr. Steptoe and Dr. Edwards has resulted in over 100 pregnancies. Only one other group in this country has used the techniques successfully, though there have been nearly 20 births in Australia and a few in other countries.
    In these cases, in vitro fertilisation has been used simply as a substitute for normal conception. The egg has been implanted back in the woman who produced it originally, after fertilisation by sperm from her husband. The techniques could equally well be used to implant the fertilised egg in the womb of another woman. That has been achieved in veterinary practice but has not so far been tried with humans. This could be of help to women who cannot themselves carry a pregnancy to term, but who could donate an egg, fertilised by their husbands, to be carried by a "surrogate" mother. Conversely, women carriers of hereditary diseases could become pregnant with a donated egg fertilised by their husband's semen—a kind of mirror image of artificial insemination by donor. The problems that that raises are immediately apparent. A child born in that way would have two identifiable mothers—the genetic mother who provided the egg, and the biological mother who carried the child and gave birth. Clearly there are questions about the relative rights of those two vis-a-vis the child, and I shall return to these later.
    There are two other possible developments in this field that have given rise to even greater concern. The first—which has already happened—is the freezing of the embryo after fertilisation, but before implantation. Freezing the embryo allows the time of implantation to be varied so as to give the maximum chance of success. Once again there are obvious problems—to which I will return—about the status of an embryo kept in a frozen state of suspended animation in this way.
    The second development—which has even more of an air of science fiction about it—is tile possibility of cloning. This term describes the technique of producing a number of genetically identical embryos. In theory, starting with a single cell, it is possible to produce a number of animals—or humans—that are genetically identical in all respects. I must stress that in the case of humans this is very much a theoretical possibility. Cloning of humans has not yet occurred, nor is it likely to be technically possible for some years. Of course, that does not mean that we should not start thinking about the problems it might cause at this stage. The potential consequences if cloning were possible are enormous, and there is already much literature on the subject.
    Speaking personally, I must say that I find it very hard to grasp all the implications of a procedure such as this, and I must stress again that the possibility of this sort of technique still lies a fair way in the future. Beyond that, there are even more extraordinary theoretical possibilities of so-called genetic engineering—actual manipulation of genetic material to eliminate the hereditary defect.
    As with so many scientific and technological developments, these possibilities can be of real help to humanity and be of great assistance to couples suffering from the effects of infertility or of a hereditary illness. Equally well, they have their darker side. Once the possibility of manipulation of the act of conception exists, a whole area of possible scientific inquiry opens up—and in this area there are many paths down which some of us, at least, would be most unhappy to see scientists wander.
    284
    It is this thought perhaps which lies at the back of much of the obvious disquiet in the public at large about the directions in which research is going—and even more about the directions in which it might go.
    I have spent some time on the purely technical background because I think it is very important that discussion of this subject should be set firmly in a context of what is occurring and what is not.
    To avoid wasteful speculation, the Government felt that the place to begin a consideration of these issues was with the medical profession, which is in the position to comment against a background of detailed knowledge, and which is equally well in a position to provide the background that the rest of us will need. This is not to say that the profession should have the last word, but I think that it is right that it should have the first. For this reason, as the Prime Minister told the hon. Gentleman, officials of my Department wrote to the various medical bodies asking for their views on the issues.
    The British Medical Association, the Royal College of Obstetricians and Gynaecologists and the Medical Research Council have indicated that they will let us have their views as soon as possible, though in view of the complexity of the issues involved this may take some while. However, the General Medical Council has written to my Department within the past few days to say that it would not wish to express views on these issues unless it was clear that the medical profession in general considered that it would be useful for the council to give advice. It feels also that the issues arising have not yet been made sufficiently explicit for it to be possible at present for them to give advice.
    I emphasise again that we recognise that these are not issues purely for the medical profession. In fact, the chairman of the BMA ethical committee has made just this point himself. The problems involved are very far-reaching and go way beyond purely medical issues. Correspondingly, they must be looked at in a wider arena. Before I turn to what that arena might be, it might be helpful if I elaborated on some of the problems that we see arising.
    First, there are what might be called social problems. Perhaps I could start with the problem of the allocation of resources. This is perhaps not the immediate problem that one thinks of in this context, though from a Minister's chair it is sometimes easy to think that this is the most important of all problems. None the less, I think there are very real issues that arise whenever a new—and expensive—development in medicine becomes available
    I have already referred to the possibility of children with two mothers—a genetic mother and a biological mother. This raises legal questions, to which I will come in a moment, but it also raises social questions. These problems are not completely new, of course. Analogues already exist in the case of adoption or fostering, or in the case of artificial insemination. What we are dealing with here is not something different in kind. It is, I think, something different in degree. There can be no doubt that there must be a very strong relationship between parents and their genetic offspring—to use an older, and less clinical term,
    "flesh of my flesh,
    Bone of my bones".
    Equally well, there can be few relationships as close as that between a woman and a child that she has carried in

    285
    her womb and to whom she has given birth. Any possible conflict between these two rights obviously poses extraordinarily difficult problems and ones of a quite new type.
    The legal issues, are more technical but they are no less important for that reason. First, there are the immediate questions of the legal rights of the two mothers vis-a-vis their offspring. Here again, there are guidelines in the existing law arising from adoption, but precisely because our common law is rooted in the needs of society a new problem for society must be a new problem for the law. The questions are manifold. If one woman agrees to act as surrogate mother for another, should this be a legally enforceable contract? What happens to the offspring if the surrogate mother changes her mind? What happens to the law of inheritance? What about hereditary titles?
    Another group of problems are those arising out of actions for negligence. In recent years, there have been a number of cases of negligence raising novel questions—whether there is a right to sue for damage done in the womb, whether one can claim damages for the fact of being born. The possibility of genetic counselling has raised the possibility of actions for negligence by the child or by its parents when a deformed child is born following counselling. Again, we would not be breaking completely new ground, but I think that there are a number of new permutations and possibilities.
    If the whole purpose of in vitro fertilisation is to avoid a particular genetic defect and this is not avoided, is there an action for negligence? What are the responsibilities of technicians dealing with embryos outside the human body, or of those looking after a freezer containing embryos? I do not suggest that existing law does not have answers to these questions. Once the questions are asked in a completely new context, however, we must consider whether answers provided by existing law are always the best.
    That brings me to what are perhaps the most difficult questions of all—questions which lie closest to the boundary between law and ethics. I refer, of course, to the responsibilities of a doctor toward an embryo fertilised in vitro. Is there a duty to care for it and to keep it alive? Can it be used for research purposes? If so, up to what point of maturation?
    It is clear that these issues involve basic moral questions. Some will no doubt find an answer to these questions more easily than others. I am sure that most people would find difficulty on the cloning of human eggs.
    286
    This has the beneficial aim of a child free of genetic defects but may also have more sinister implications. Today is not the time to attempt to answer these questions, but it is clear that finding an answer generally acceptable to the public at large will not be easy.
    We appreciate the force of the arguments put forward by the hon. Gentleman for an independent inquiry into these questions. However, we must think carefully about the best form for such an inquiry. As I hope I have made clear, the questions raised are far-reaching and cover a wide variety of subjects. I recognise that these are not matters solely for the medical profession. The inquiry must involve experts from a number of fields. Even more importantly, it must involve those who are not experts. It may well be that an interdepartmental committee might be the best approach, but we wish to consider other possibilities. Both membership and terms of reference need to be right. Moreover, we must consider precisely what role the Government should play in the inquiry.
    We are studying these points urgently, and this debate will be helpful to us in these considerations. We are sympathetic to the arguments put forward by the hon. Gentleman. However, at this stage, we would not wish to give a firm commitment to any precise form of inquiry, or to the possible membership.
    The hon. Gentleman made a detailed speech and clearly we shall wish to study it. In response, I have equally tried to give him a considered view of the problems which the Government envisage could arise from this issue. Although people have talked about this issue for years, it is still novel. It has thrown up a wide variety of different ideas, concepts and problems that those who drew up our laws could not have envisaged.
    I hope that the hon. Gentleman will feel, at the end of this important but brief debate, that he has not been brushed aside, and that the Government understand clearly the problems he has put. Merely rushing to set up a committee, without giving consideration to the problems it might meet and without considering properly what terms of reference were needed so that the answers that emerged were practical and sensible, would not be the right way of proceeding.
    I hope that I have convinced the hon. Gentleman that we view this matter seriously and will come to a view on it as soon as possible.
    Question put and agreed to.
    Adjourned accordingly at three minutes past Twelve 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 Rochester.
The Marquess of Exeter—Sat first in Parliament after the death of his brother.

Small Businesses: Assistance
Lord Northfield: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how much per annum the following district councils, all of which have high unemployment levels, would be able to spend on aid to small businesses under the Government proposals to restrict such expenditure to the product of a halfpenny rate: Alnwick; Derwentside; North Devon; and Blaenau, Gwent.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Bellwin): My Lords, the "inclusive" totals for the authorities concerned would amount to: Alnwick, £24,738; Derwentside, £62,806; North Devon, £72,001; and Blaenau, Gwent, £76,276.
Lord Northfield: My Lords, since unemployment in these four districts is running at something like 17 per cent., 25 per cent., no less than 28 per cent., and 21 per cent., does not the noble Lord think that it was something of a mistake for the Government to recommend that expenditure on assistance to small firms by these districts, in the way of training and other initiatives that they are so successfully pioneering, should be reduced to these relatively trivial sums compared with what they are able to do now?
Lord Bellwin: My Lords, I am sure the noble Lord is aware that at the present time the sums of money available to district authorities of this kind is in total over £90 million, whereas their take-up at the present time is some £12 million. But, even so, I think the basic answer is that that is why we have put out a consultation paper. When we receive the results of the consultations we shall take very careful note of them, as well as of the statements which I know the noble Lord himself has made and the statements that have been made in debates in your Lordships' House in the last week or two. We are indeed considering the point, which I acknowledge is one of much importance.
Lord Shinwell: My Lords, is the noble Lord aware that, in addition to the councils mentioned in the Question, I have received representations from Cleveland and other northern areas which say that the halfpenny is totally inadequate if they are to
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assist in particular small businesses? I understand the Government are anxious to help small businesses. Would the noble Lord not agree that the halfpenny rate is inadequate for that purpose: Would the Government reconsider the matter, in order to help the local councils and also the small businesses?
Lord Bellwin: My Lords, I take the point the noble Lord, Lord Shinwell, makes, but I have to say again that hitherto the take-up has not been anything like the amount available. Nevertheless, the basic point is valid and we recognise it, and that is why we have the consultation paper and why we are listening to what noble Lords have to say on this matter. Helping small businesses is indeed a key priority for the Government. I would also point to the some 60 measures this Government have taken to do that, which we would claim is more than any Government have ever done before in this country.
Lord Cledwyn of Penrhos: My Lords, is the noble Lord aware that we welcome the 60 measures, but is he certain that they are taking effect in the areas where the need is greatest? The need is greatest in areas like Blaenau, Gwent, and the other areas mentioned by my noble friend, and the areas of North Wales where I live, where unemployment is unacceptably high and where Government help does not seem to be having any effect on the problem of rising unemployment. The noble Lord said that consultations are going on. What does he mean by that? This is an answer very often given by Governments to get themselves off the hook. How long are these consultations going to take? The longer they take the longer there will be unemployment, and this is the problem we want the Government to solve quickly.
Lord Bellwyn: My Lords, I am sure the noble Lord has read carefully the consultation paper to which I referred, which, as he will know, is due to be returned by 30th April. Until that is returned clearly one cannot come to conclusions. As was said as recently as last night in your Lordships' House, this matter is of concern and is being treated as such.
Lord Glenamara: My Lords, is the noble Lord aware that Derwentside District Council, which is one of those mentioned in the Question, produced a report recently which showed that unless 7,000 jobs are produced immediately unemployment in that area will rise to 40 per cent. before the end of this year? Is he aware that the ratio of unemployment to vacancies in the Derwentside District is 88:1, and does not this kind of situation call for very much more urgency than the right honourable gentleman has displayed today?
Lord Bellwin: My Lords, it is not "the right honourable gentleman", as I am sure the noble Lord would agree. The fact is that what we are proposing here is another form of allowance to enable local authorities to do things beyond those they are able to do at the present time, consistent with certain other constraints upon them. It is really the question of whether or not this is adequate which is a matter of debate at the moment. In many of the areas of

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the country this halfpenny rate is additional to the 2p rate which may be spent under Section 137 of the 1972 Act; in those cases it is additional. The problem which the noble Lord, Lord Northfield, is bringing up arises because it is in areas like those he mentions, as well as others, that the proposal in the consultation paper is that there should be a reduction from the 2p to the halfpenny. That is what we are looking at at the present time. But can I say before I sit down that it is not Governments that create jobs. Governments create climates; they do not make jobs.
Lord Nugent of Guildford: My Lords, would my noble friend say what effect each extra penny on the rates has on throwing people out of jobs because of the excessive burden that businesses have to bear?
Lord Bellwin: My Lords, clearly I cannot state specifically what that effect is because of the wide difference in different authorities, but that there is an effect upon employment caused by excessively high rates is now beyond any question.
Lord Kaldor: My Lords, would the noble Lord not agree that, if it were not for ideological inhibitions, central Government might be a much more efficient agent for helping areas like Derwentside, rather than leaving it, indirectly, for local government to act: There are areas where these problems are so big—
Several noble Lords: Question!
Lord Bellwin: My Lords, the point is that at present local government has powers to act. It is intended in the consultation paper that there shall be a certain reduction of those powers. But at present the authorities do have powers to act beyond what is in the consultation paper.
Baroness David: My Lords, is the Minister aware that the training centre which the Fenland District Council is running with Manpower Services Commission money has to count against the 2p rate given under the 1972 Act? Would that sort of consideration be taken into account when the Government are finally deciding what they should do as a result of consultations?
Lord Bellwin: My Lords, the noble Baroness makes a very fair point. I would only want to know in the case which she has mentioned whether the authority was, in fact, at present taking up the whole of its allocation. Clearly I do not know and possibly at this moment the noble Baroness does not know. However, the noble Baroness's point about the extent to which training or, for that matter, anything else, is included or excluded, is of importance and I am hoping that that will be something that will be shown up when we get the returns on the consultation paper.

Cystic Fibrosis: Current Research
2.45 p.m.
Lord Molloy: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what research is being carried out into cystic fibrosis and at what cost.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Elton): My Lords, the primary responsibility for publicly-funded biomedical research lies with the Medical Research Council. The council receives a grant in aid from the Department of Education and Science; this has to cover the whole of its field of interest. In 1980–81, it was £71·8 million. Of this, about £100,000 was spent on research related to cystic fibrosis. Other work supported by the council may also prove significantly beneficial in this field. Research into this terrible disease is, of course, also going on in various universities and medical schools, but I cannot say what the cost of this may be.
Lord Molloy: My Lords, is the noble Minister aware that the Cystic Fibrosis Research Trust has, through voluntary endeavour since 1964, garnered £2 million, which has made a massive contribution, as the Minister has said, towards trying to rid our nation of this horrid disease: Is the Minister aware that there seems to be a need for better co-operation between the research trust and the Medical Research Council, particularly in four specific fields: the isolation of the abnormal gene; the identification of the carriers of the gene; pre-natal diagnosis; and control of the illness and control of pseudonionas aeruginosa? Will the Minister make some endeavour—I am sure that he will—to try to bring the research units closer together so that this nation can be rid of the curse of an evil disease?
Lord Elton: My Lords, I am aware of the very valuable work which is done by the Cystic Fibrosis Research Trust and, indeed, of the way in which it has attracted non-public funds for that work, which is extremely welcome. As to the work to which the noble Lord has referred, I point out that the isolation of the gene is a very difficult matter which has not yet been achieved. I would say that the Medical Research Council is aware of the importance of this disease and that the Division of Inherited Metabolic Diseases at the clinical research centre of the MRC includes in its forward programme research into biochemical derangement in cystic fibrosis and also the detection of carriers of this disease. Perhaps I may detain the House a moment longer. It is, in fact, the result of the coincidence of a recessive gene in each parent of a union and when those recessive genes coincide there is a one in four chance that the child resulting will be suffering from cystic fibrosis. It is, of course, a matter for the parents to decide whether they take that chance or not.
Lord Winstanley: My Lords, is the Minister aware that at the moment there is a rather worrying general increase in the incidence of genetically transmitted diseases, of which cystic fibrosis is but one, and that that surely means that the Government should at the moment increase their investment in genetic counselling services rather than reduce it, as appears to be the case: Is the Minister further aware that young people contemplating marriage—and some young people do contemplate

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marriage nowadays—show a great willingness to take advantage of genetic counselling services where those are available, but unhappily in some areas they are not available at all?
Lord Elton: My Lords, of course genetic counselling, admirable as it may be, is a different question, and I cannot respond to the noble Lord's probings on that front without notice. As to the other question which the noble Lord asked, I should say that the Government do, through their departments of health, give guidance to the Medical Research Council as to the need for research and that the need for research into genetically determined illness is, in fact, one of the matters to which they have directed their attention and to which they are responding, as I have just said, by their work at the centre.
Lord Maybray-King: My Lords, in the field of spina bifida and cystic fibrosis—and all the diseases which afflict and handicap children—is not the remarkable feature of our country that so much voluntary work is being done by groups of people and that those groups of people are co-operating with the professions?
Lord Elton: My Lords, the voluntary spirit is one of the hallmarks of this nation, of which we are all proud and from which we all benefit. I should like to endorse what the noble Lord has said and what the noble Lord, Lord Molloy, has implied in this matter, that the voluntary agencies do great work in the medical field as well as in other fields.
Lord Wallace of Coslany: My Lords, is the noble Lord aware that I, too, applaud voluntary effort: However, on this subject of medical research, is it not about time that we—and I am not talking about Governments—the people, with the Government giving the lead, directed a great many more of our resources into research in the field of preventive medicine, rather than possibly spending hundreds and billions of pounds on methods to destroy life: Rather, should we not vote money to save life?
Lord Elton: My Lords, prevention, whether in medicine or in war, is always better than cure. It is my belief that this Government's policies are far more likely to prevent the disease of war in the world than the policies advocated by the noble Lord.
Lord Wells-Pestell: My Lords, is the noble Lord the Minister in a position to inform the House as to the number of deaths in young children resulting from this particular disease? Also, is he in a position to say what success the Medical Research Council is having in this particular field?
Lord Elton: My Lords, the incidence of the disease is about one in 1,600 children. An increasing proportion of those children now survive to adult life. I cannot tell the noble Lord how long into adult life they typically survive. As to the degree of success being achieved, I think that there are a number of areas which are encouraging. I believe that there is an ability to diagnose the disease early in the life of a child
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by means of a blood sample after six weeks. In fact, it is beginning to appear that we may be able to diagnose the disease in utero, which has very important implications for what the parents do about it. In addition, as I say, through the MRC, the Government will be funding research in the future.
Lord Molloy: My Lords, is the noble Lord aware that I am deeply grateful, as I am sure is the House, for the obvious research that he has carried out into my Question? Would he not further agree that, if the exchanges across the Floor of this House could be turned into reality, we should be taking a dramatic step forward in ridding our nation of cystic fibrosis in the manner in which all medical research has to go on, in both the curative and the preventive elements?
Lord Elton: My Lords, I am most grateful to the noble Lord for showing that we share the same interest in this matter.

Westminster Hospital Medical School: Cuts
2.54 p.m.
The Earl of Gosford: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government how many patients (a) in the United Kingdom and (b) outside the United Kingdom, are affected by the £30,000 cut at the Department of Experimental Chemical Pathology at the Westminster Hospital Medical School; and how many centres (a) in the United Kingdom and (b) outside the United Kingdom, can provide a service which can separate and estimate all four forms of Vitamin B12.
Lord Elton: My Lords, the answer to the first part of the noble Earl's Question is none, at least for the present. An alternative source of finance has been secured until the end of the next financial year. In answer to the second part, I can say that I understand that the department is the only centre in the world at present able to separate and estimate the concentration of four forms of Vitamin B12 at present known. There are, however, three other centres in this country that could undertake this work, were it considered necessary so to do; namely, the clinical research centre at North-wick Park, St. Bartholomew's Hospital and the Royal Free Hospital.
The Earl of Gosford: My Lords, I thank the Minister for that reply. Is he aware that this particular unit has had 16 years' experience and that at this particular time the cuts envisaged would mean a 25 per cent. reduction in staff, which in this case would be two people: Is he further aware that the simultaneous separation of an estimation of the four individual parts of the Vitamin B12 compound is very vital for the treatment of anaemia and progressive blindness, let alone mental retardation, which in severe cases can lead to death?
Lord Elton: My Lords, I can answer for the Government but not for the department at the university. I cannot answer for the Westminster Hospital Medical School; I can only observe that they have given a higher priority to many other functions. I understand that this was a considered decision and that it saved them about £30,000 a year. It is not the only place where the work can be done. The money does not come directly from Government; it comes from the University Grants Committee, which sends it to the universities, which decide how to distribute it among their schools and then the departments.
Baroness Jeger: My Lords, are the Government giving any general consideration to the funding of research, which is of national and international importance, and which at present is having to be met out of the decreasing funds of individual hospitals?—because this is the root of the problem at Westminster.
Lord Elton: My Lords, the money which the Government propose to spend on the Medical Research Council next year is £107·4 million, which is an increase over the present year. The money is not diminishing.

Namibia: Settlement Negotiations
3.57 p.m.
Lord Brockway: 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 progress has been made towards a settlement in Namibia.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Lord Trefgarne): My Lords, the Five remain in touch with all concerned about the replies to their revised proposals for constitutional principles for the Namibian Constituent Assembly. They hope soon to settle the questions which remain to be resolved in this phase of the negotiations.
Lord Brockway: My Lords, will the Minister agree that there has been a serious deterioration in the situation since we had our recent debate? First, last week did not the meeting of the senior officials involved declare that there had been "little progress"? Secondly, have not the front line states and SWAPO now rejected the proposal for double voting because of its complexity—seven columns, with the majority of the voters illiterate: Thirdly, what is the prospect of SWAPO referring the whole issue back to the Security Council because of this deadlock? Can the Minister particularly answer the question: What is the Government's view of SWAPO's proposal of direct negotiations with South Africa?
Lord Trefgarne: My Lords, if I may say so, that is a rather comprehensive supplementary question. However, I think that the situation is not necessarily as black as the noble Lord paints it. Certainly SWAPO and others have found some difficulties with proposals
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that were recently put forward in relation to the electoral system, and the Five are now concerned to clarify their position on their proposals to see whether there is any gloss which can be put on them to ease the difficulties which have been seen.
Lord Cledwyn of Penrhos: My Lords, would the noble Lord be good enough to clarify a little further what he has said, especially on the dual voting system, which, as my noble friend has said, is the obstacle? What is the view of Her Majesty's Government on the dual voting system as put forward? Is there any chance that this could be amended? If it is a major obstacle in the negotiations, would it not be desirable that there should be some concession on the voting system in order to achieve a settlement as quickly as possible?
Lord Trefgarne: My Lords, what has been proposed is a mixed system of proportional representation and single-member constituencies, which we think need not be unduly complicated and, indeed, could be put into effect without excessive expense or delay. We believe that it would be fair to all parties competing in the elections, and it is certainly not designed to favour one party or the other. We are now considering the difficulties which the parties have seen in these proposals, to see, as I said, what gloss can be put on them to ease the difficulties.
Lord Brockway: My Lords, could the Minister say what hope there now is of reaching the target of independence next year, not only because of the deadlock in the negotiations but because of the very complicated arrangements which will have to be made after an agreement is reached?
Lord Trefgarne: My Lords, we remain hopeful that the original timetable can be achieved. I would not regard the present situation as deadlocked, as the noble Lord describes it, and perhaps in due course there will be better things to report.

South Georgia (Falkland Islands Dependencies)
3.1 p.m.
The Secretary of State for Foreign and Commonwealth Affairs (Lord Carrington): My Lords, as my noble friend Lord Trefgarne informed the House on 23rd March, a group of Argentines, employed by a commercial contractor, Mr. Davidoff, an Argentine citizen, landed at Leith Harbour on South Georgia on 19th March from an Argentine naval transport vessel. Mr. Davidoff had been informed in advance of the need to seek the necessary permission from the British authorities at Grytviken to land and to carry out this salvage work. He conveyed to the British Embassy in Buenos Aires his intention to begin work in South Georgia but gave no indication that he would not follow the normal immigration procedures.
When the party arrived at Leith they did not seek the required documentation: and when requested by the base commander to proceed to Grytviken in order to do so, they failed to comply. Mr. Davidoff's commercial contract is straightforward. But it does

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not absolve him or his employees from complying with normal immigration procedures. Subsequently, the majority of the Argentinian party and the Argentinian ship departed: but about a dozen men remained on shore.
We therefore made it clear to the Argentine Government that we regarded them as being present illegally on British territory, and sought their co-operation in arranging for their departure, pointing out, however, that their position could be regularised if they were to seek the necessary authorisation. Meanwhile, HMS "Endurance" was ordered to proceed to the area to be available to assist as necessary. She has been standing by since 24th March.
On 25th March an Argentine vessel delivered further equipment to the group ashore. The Argentine Foreign Minister has said that the Argentine party in South Georgia will be given the full protection of the Argentine Government. Argentine warships are in the area.
The situation which has thus arisen, while not of our seeking, is potentially dangerous. We have no doubts about British sovereignty over this Falkland Islands dependency as over the Falklands themselves.
We remain of the view that the unauthorised presence of Argentine citizens in British territory is not acceptable. We have no wish to stand in the way of a normal commercial salvage contract, but the position of those carrying it out must be properly authorised. Further escalation of this dispute is in no one's interest. In these circumstances it is clearly right to pursue a diplomatic solution of this problem. This we are doing. I hope that the Argentine Government will take the same view. Meanwhile, the question of security in the Falklands area is being reviewed, although the House will understand that I prefer to say nothing in public about our precautionary measures. I can, however, inform the House that HMS "Endurance" will remain on station as long as is necessary.
Lord Shackleton: My Lords, on my temporary return to the Front Bench I should like to thank the noble Lord for that measured and sensible Statement. I say "sensible" because if there is one thing that none of us would wish to do it is to exacerbate an already potentially dangerous situation. Clearly the noble Lord appreciates the seriousness in coming back from perhaps a fairly difficult time in Brussels and bound, I hope, for an easier time in Israel—although I rather doubt whether it will be easier.
Nonetheless, the situation is serious enough, and there are one or two questions I should like to ask the noble Lord, while again echoing the importance of us all preserving a due sense of caution because now, of all times, is the time for the exercise of the maximum of diplomatic skills. The fact remains that the Falklands and South Georgia have been British for a very long period. I doubt whether until now there have been anything other than the occasional visiting ship from the Argentine on South Georgia; this beautiful and potentially island is important because it is the potential centre of krill fishing.
Does the noble Lord agree that the preservation of
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British interests in this part of the world—I appreciate his firm reiteration of our stand—concerns not only the protection of the wholly British people in the Falklands but could affect the peace of the whole of that area of the Antarctic? The Antarctic Treaty comes up for revision in 1991. As I have said before, the great strength of that has been that the Cold War has never come to the Antarctic, and it is important for conservation, and all sorts of measures, that we should retain our position in that part of the world.
It is gratifying that HMS "Endurance" is still there. For those who doubt the effectiveness of HMS "Endurance", one is bound to say that it is the presence of the White Ensign and the potential backing of our sovereignty that is important. I am bound to say to the noble Lord that the decision announced some while ago to cancel HMS "Endurance" must have encouraged the Argentines in their belief that the British were on the way out. Indeed, I was rung by a friend of mine in the Argentine Embassy to ask me to confirm that. I of course denied it vigorously. Allowing the settlement of armed men—not to mention pregnant mothers in Southern Thule, also in the Sandwich Islands, so that there should be an Argentine Antarctic citizen born there—and the absence of any strong reaction to that will have encouraged them.
I shall not press the noble Lord—and I think we ought not to—on the subject of the precautionary measures that the Government are taking. Nothing we say here of that kind, no bellicose statement, will help a situation which is difficult enough as it is now. But I should like to ask the noble Lord whether the British Embassy were actually informed that Mr. Davidoff's party was going, whether the governor was informed, because it seems to me that, if he was not, there has been some failing. Perhaps the noble Lord could explain that. I am bound to make the remark that once again we see the whole argument between conventional weapons and nuclear weapons, and whether in a situation like this Trident could be of any help as opposed to more conventional forces.
Lord Gladwyn: My Lords, I too should like to thank the Foreign Secretary for making this Statement, more especially since I understand he has come rushing back from Brussels especially to inform the House of what is happening. I have only two short points to make. We must all hope of course that diplomacy will continue and will succeed in solving this dispute, but of course in the event of diplomacy failing, I imagine that we must all assume also that the Government have contingency plans for, if necessary, settling it by other means.
The second point I should like to make—here I speak with the greatest diffidence—is have we even in the course of this long wrangle considered the possibility of referring the whole matter to the International Court and abiding by the court's decision? I understand that sovereignty disputes are essentially legal matters. In the past many disputes on sovereignty, on border disputes, and so on, have been settled by legal means. If our case is as convincing as we believe it to be, I should have thought that we should lose very little and could gain a great deal by submitting it to the court. But perhaps it has been considered in the past and turned down for reasons of which I am not aware?
Lord Carrington: My Lords, I am sure that both noble Lords who have responded to the Statement are right in saying that diplomacy is the way to settle the problem. After all, that is why we have the Foreigh Office and diplomats, so we must solve it in that way. With regard to the specific questions of the noble Lord, Lord Shackleton, I agree with him that the preservation of British interests is in the interest of peace in the area and, as he knows, the Government support the Antarctic Treaty and I believe that has been useful in keeping the cold war out of that area.
HMS "Endurance", as the noble Lord will have noticed from the Statement, will stay on station for as long as necessary. The review, which I mentioned is taking place on the security of the Falklands, will obviously include the long-term future of "Endurance". The British Embassy did not know the exact date on which Mr. Davidoff was going; they only knew he was going and had no reason to suppose he would not let them know in the proper way, and that is how this particular incident arose. I do not think the noble Lord would expect me on a Statement of this kind to enter into a debate on the merits of conventional or nuclear weapons.
As for the question asked by the noble Lord, Lord Gladwyn, it does of course take two to refer a matter to the International Court of Justice; I do not think they will accept a case unless both participants are prepared to put it to them. I have not looked it up, but my recollection is that we sought to do that quite a long time ago over one of the dependencies—not, I think, the Falkland Islands but one of the dependencies—and the Argentine Government refused. However, that will be one of the ideas which we shall be examining.
Lord Morris: My Lords, while I accept that matching might with might at this particular stage would probably be unhelpful, may I ask whether Her Majesty's Government would consider seriously in the near future at least matching the considerable economic interest which has been shown in the area by virtually every developed country other than the United Kingdom?
Lord Carrington: I take it that my noble friend is talking about the economic development of the Falkland Islands and the dependencies, my Lords. That is obviously something which has been very much in the minds of successive Governments. The noble Lord opposite was concerned with that aspect in the report he made about the Falkland Islands. It is something we are always examining, but my noble friend will recollect that at the moment public money is short.
Lord Murton of Lindisfarne: My Lords, is there any truth that there is still an Argentine presence in Southern Thule?
Lord Carrington: Yes, my Lords; the position in Southern Thule is the same as it has been for a number of years.
Lord Molloy: My Lords, would the noble Lord agree that it is also fundamental for the Argentinians
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to recognise that the British Parliament is overwhelmingly in support of the endeavours of the British Foreigh Secretary and that perhaps there should be utterances in his support not only from our Parliament but from other free Parliaments who have interests in the area?
Lord Carrington: My Lords, I am grateful for those comments and I have no doubt that the Argentine Government, as a result of these exchanges and no doubt what will take place in another place, will be fully aware of that.
The Earl of Glasgow: My Lords, while welcoming the retention of HMS "Endurance" for as long as necessary, may I ask my noble friend whether the situation in the South Atlantic now might produce a slight reprieve for the surface fleet?
Lord Carrington: I did not know the surface fleet had been condemned, my Lords.
Lord Buxton of Alsa: My Lords, before putting my question, I would mention that I have been in the Argentine, the Falkland Islands and South Georgia within the last two weeks. That being so, I would say that in my view the reaction of the Government has been absolutely right and correct in the circumstances, taking into account that our two countries, our two Governments, are in continuous, respectable and honourable diplomatic relations, and the interruption to those by the reckless conduct of naval elements, particularly in South Georgia, is much to be deplored.
Since Argentina is very proud and jealous of her reputation, may I ask my noble friend to appeal to the statesmen in the Argentine régime to exert their influence and persuade the armed forces that untold damage will be done to Argentina's reputation in the long run by this reckless reaction in the middle of honourable negotiations? May I further ask my noble friend to convey to the statesmen in Argentina that the conduct of this enterprise—having been there, I regret to say that it appears to have been devious, carefully reccied, carefully planned and very carefully timed; there is ample and convincing evidence of that—is in danger of destroying at a stroke the plausibility and influence of those of us, both here and in the Falkland Islands, who have been striving to support the intergovernment negotiations and the search for an honourable settlement? Those negotiations are now in mid-stream. Does my noble friend agree—
Noble Lords: Too long!
Lord Buxton of Alsa: I know personally some of the Argentinians, my Lords, so may I appeal through my noble friend to them to take due regard of Argentina's future prestige and reputation in the world?
Lord Carrington: My Lords, I am grateful to my noble friend for making those points because he has deep knowledge of the area—I was going to say unrivalled knowledge, but the noble Lord opposite has knowledge of the area; they both have very specialised knowledge of that part of the world. I am therefore grateful to my noble friend for the help he has

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given in the matter. I certainly shall take note of what he said and, to make just one comment on it, it seems to me that what has happened in the last week or so has not improved the climate of relations for a settlement of the problem.
Lord Shackleton: My Lords, while we do not want to prolong for too long questions on the Statement—and we are grateful for the firm statement made by the noble Lord—I would ask him to check on one point. It is my recollection that an attempt was made on more than one occasion to refer the question of the Falkland Islands to the International Court and that Argentina always refused to participate. It is important that that should be confirmed because this is a matter of international law and I have no doubt that the advice would have been that the British claims were valid.
Lord Carrington: My Lords, my recollection is the same as that of the noble Lord. I did not know about more than one case, but I will certainly look it up.

Salmon Fisheries (Protection) (Scotland) Bill [H.L.]
Bill read a third time, and passed, and sent to the Commons.

Administration of Justice Bill [H.L.]
3.18 p.m.
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I beg to move that the House do now resolve itself into Committee on this Bill.
Moved, That the House do now resolve itself into Committee.—(The Lord Chancellor.)
On Question, Motion agreed to.
House in Committee accordingly.
[The LORD ABERDARE in the Chair.]
Clauses 1 and 2 agreed to.
Clause 3 [Amendment of Fatal Accidents Act 1976]:
Lord Mishcon Lord Mishcon moved Amendment No. 1:
Page 3, line 20, at end insert—
("(g) a reputed spouse of the deceased residing with him at the date of his death.").
The noble Lord said: In this Bill we are reminded of the list of dependants under the Fatal Accidents Act; namely, those who, from their dependency upon someone now deceased as a result of a fatal accident, can claim against the person responsible for the accident in negligence for the loss of that dependency. The list has been extended by the Bill, but it does not include a common law spouse. I think that all of us will appreciate that someone in that position may well indeed have been a dependant and had had removed from her a whole prop in her life (if I may use the phrase) as a result of a fatal accident.
When I ventured to raise this matter on Second Reading, the noble and learned Lord the Lord Chancellor replied with his usual courtesy and breadth of mind. He said that one of the problems—and he did not limit himself to this problem—was that a common law spouse was someone who was unknown by that description in our statutory law. Knowing that the noble and learned Lord is never wrong, I therefore decided that I would waste my time by doing some research. To my astonishment I found that on this occasion my time was not in fact wasted, because indeed the phrase occurs in Section 3(1) of the Pneumoconiosis etc. (Workers' Compensation) Act 1979 in relation to one of the dependants under that Act.
It might very well be that there can be found for a common law spouse a description more suitable than the one which my noble friend and I have inserted in the amendment, but I believe that at the Committee stage of a Bill we are really going for the principle of the matter, not the detail. I say that because on Second Reading my noble friend Lord Elystan-Morgan was most helpful in suggesting that we might borrow from another Act, the Inheritance (Provision for Family and Dependants) Act 1975, in which the definition of a dependant, given right at the end of a long list, is,
"any person…who immediately before the death of the deceased was being maintained, either wholly or partly, by the deceased".
It would be a very good thing if we could have precisely the same list of dependants in two Acts which have something to do with one another, since in both cases one is dealing with the result of a death and looking at the question of dependency. But there is one difference which I must in all honesty point out. The Inheritance (Provision for Family and Dependants) Act 1975 excludes a spouse who has remarried, whereas this Bill includes a spouse who has remarried. It might be thought objectionable that there is the muddle of thinking that the same description of dependants is contained in two Acts, only to find that there is in fact some difference.
So it was for that reason that I pinned my faith on the words of the amendment and straightforwardly called the person whom we were thinking of,
"a reputed spouse of the deceased residing with him at the date of his death".
But I repeat that if the wording is objectionable, I would still ask that at this Committee stage the principle be accepted.
I come now to my final observation. Your Lordships' House is proud of the fact that we move with the times. We are often accused of not doing so, especially when your Lordships have before you—you have had a spate of them recently—Bills on sex matters, including pornography. I refuse to believe that your Lordships' House does not move with the times. It is a well-known fact that, for good or ill, the numbers of common law spouses have increased over the past few years. I do not think that we ought to blind ourselves to the fact that this is very often, though not solely, the case among the poorer sections of our community. For one reason or another they find that it is not suitable to obtain a divorce, or it might very well be, especially now that legal aid is not available, that they cannot afford to obtain a divorce.
So I hope that, consonant with the times and with what is happening in our society, and looking at the misery of someone who has acted as a wife for perhaps very many years and who, as I have said, suddenly finds her prop removed, the Committee will think it appropriate to add the proposed description of person to the list of dependants contained in the Bill. I beg to move.
Lord Simon of Glaisdale: I should like to raise a purely terminological point. The noble Lord, Lord Mishcon, might have found a precedent, but the use of the term "common law wife" in the sense in which it is used in the amendment, can only cause confusion because one can still be married validly, admittedly now under unusual circumstances, at common law—for example, I think probably on a merchant ship that is not in territorial waters; and there are various circumstances. I am very doubtful whether the terminology used by the noble Lord in the amendment achieves the purpose, but at any rate it seems to be advantageous, and should always be advantageous, to avoid the term "common law wife".
Lord Rawlinson of Ewell: I must confess that whenever I am encouraged to move with the times, as I have been by the noble Lord, Lord Mishcon, I immediately get a kind of frisson. We ought to look very carefully at what we are being asked to do when, in your Lordships' Chamber, we are asked to move with the times. I cannot see the purpose of the phrase:
"a reputed spouse of the deceased residing with him at the date of his death".
What is the real reason for it? Is the noble Lord right when, with great persuasiveness, he says that it is the people of the poorer sections of society who might be placed in these circumstances? I should have thought that if we are moving with the times, it would be in the richest circles that one would find,
"a reputed spouse of the deceased residing with him at the date of his death".
Therefore I wonder whether we really should include this phrase. Why should we include it? What is the point of it? Why should we have to include it? There might be very hard circumstances in certain cases, but I wonder whether we should introduce this particular provision in the Bill.
3.29 p.m.
The Lord Chancellor: In view of the fact that I am going to make a number of rather discouraging remarks about the proposed amendment, I should like to point out that on my brief there is marked the word "consider". If anyone does not know what I mean, I am sure that the noble and learned Lord, Lord Elwyn-Jones (whom I am glad to see opposite me) will explain. Therefore I am not being wholly hostile to the amendment, though I am not very attracted either to the terminology of the amendment or necessarily to the principle behind it.
As I tried to explain on Second Reading, this Bill secured a place in the Government programme by the skin of its teeth, and only on condition that it was a good-housekeeping measure which would not give rise to a great deal of confusion or controversy. That
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being so, I think this amendment causes problems probably of a greater kind than the noble Lord has really envisaged. Perhaps I may point out that I did not say that "reputed spouse residing with him" was not to be found in our statute law. It was the phrase "common law wife" at which I slightly bridled, in spite of the learning contributed by my noble and learned friend on the Cross-Benches. So far as I know, it is not a conception with which the law is fully familiar, at any rate in the sense in which it is used in the popular press.
The point I stressed at Second Reading was that there really is a greater difficulty in defining this relationship than the noble Lord, Lord Mishcon, has perhaps recognised, because the intimacy and length of the relationship can be almost infinitely truncated or extended. Now it is of course perfectly true that in the pneumoconiosis scheme (which is rather in a different field of territory and which can be administered administratively rather than by litigation between arm's length litigants, usually consisting of a dependant and an insurance company behind a tortfeasor) the particular phrase which he has plucked out occurs. It is also true that in the family inheritance Act the phrase which the noble Lord, Lord Mishcon, attributed to his noble friend Lord Elystan-Morgan also occurs, the two principles involved being entirely different from one another; one depending on reputation and the other upon actual dependency and maintenance. The principles are fundamentally different.
I must remind the Committee that the Pearson Royal Commission considered the possibility of including (I use the words in quotes) "common law wives" in the class of dependants entitled to claim under the Fatal Accidents Act but was reluctant to propose a change in the law of tort which would conflict with the social security position, since it was fundamental to the approach adopted by the Pearson Commission that the two systems should ultimately be co-ordinated. Of course, the Government are constantly and rather movingly being pressed to adopt the Pearson Commission's report. This amendment would really be to put in the way of such adoption an obstacle even greater than the obstacles which already exist and which have so far prevented us from doing so. I must add that in their report of 1973 (which preceded, I think, the Pearson Report) the Law Commission came to exactly the same conclusion on the slightly different grounds of difficulties of definition and social policy—and, of course, social policy was at the bottom of what my noble and learned friend Lord Rawlinson has just referred to—and added that there might be a case for examining the legal position of a common law wife in all its aspects.
I am not sure that I agree with the noble Lord, Lord Mishcon, about moving with the times. I think I am on the side of my noble and learned friend about that. I think one should consider whether things are right in principle without necessarily deciding whether they correspond with the moving tides of popular opinion in one direction or another. I must say that I find it difficult to see how mere reputation and residence should give rise to a claim under the Fatal Accidents Act; I am not sure, either, that I agree with the noble Lord, Lord Mishcon, in saying that this is a feature confined to the poorer sections of the

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community. I should have thought it was a characteristic of all classes that occasionally they have people living with them who have a certain reputation of matrimonial status which they have not in fact formally achieved.
But suppose you get a short-lived relationship which happens at the moment of death to coincide with residence, without matrimonial status behind it. I think that under this definition such a woman would probably qualify. Suppose you get a woman who lives with a man for 40 years but retains her name of Miss Brown when his name is Mr. Smith. She would get nothing under this Bill. In other words, you have created an anomaly instead of preventing one. Suppose you get two unmarried persons, both with the name of Smith, sometimes with the lady having changed her name by deed poll, though everyone knows that they are not married and therefore her reputation is not that of a wife, but for reasons of social convenience and tact people do not often refer to the fact. Then, again, she would get nothing. But if in fact she had the reputation of being a wife, then she would be entitled to claim. One really does not want, I think, to add to the cost of litigation, and I can see a very fertile subject of dispute in this proposed provision.
There would, I think, be difficulties in introducing reputed spouses into the Fatal Accidents Act which do not exist in the family inheritance Act, which adopts a different formula from that chosen by the noble Lord, Lord Mishcon, or the Pneumoconiosis Act, which is a very narrow scheme limited to a particular disease and which very largely can be administered not by litigation but by administrative process.
This brings me back to the question (because I think it is a real question, and a real question which we must face) whether matrimony, which is a recognisable legal status, should not be the test of making the claim. Marriage is, after all, a contract leading to a legal status which people understand, and the question is whether something outside it which involves no permanence—and, I must add, in other fields of the law, I think, no obligation to maintain during life—should be the test whereby after death the claim should be made against a third party even though he be a tortfeasor. This, to my mind, really does call in question whether it is right that such a claim should exist outside the confines of marriage or the family ties which are already recognised as carrying with them an obligation to maintain.
Having said that, I recognise that the status of (I have sometimes heard them called "cohabitees", though why they should not be called "cohabitors" I have never quite understood; or common law wives, or whatever you choose to name them) does involve a certain degree of anomaly. I therefore recognise—and now, at last, I come back to my word "consider"—that there is a case to consider and that there may be some moral claim to compensation in certain circumstances. For instance, it must be anomalous that the illegitimate child of a particular union has a claim under the Fatal Accidents Act but the mother of the child has no claim under the Fatal Accidents Act. So, without any kind of commitment, and with a good deal of discouragement rather than encouragement, if the noble Lord will forgive me, I will look further into the
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matter, and that, I think, is the utmost I can do at the present stage.
Lord Renton: There is a further anomaly which may or may not have occurred to my noble and learned friend the Lord Chancellor; namely, that although Clause 3 of this Bill does not apply to Scotland, people who have been married in Scotland by cohabitation and repute, and who therefore, under Scottish law, are married, may come to England, live in England and find themselves in some doubt under this clause. To that extent I think that there may well be another anomaly which deserves the further consideration of my noble and learned friend.
3.40 p.m.
Lord Elwyn-Jones: I think the Committee will be grateful to the noble and learned Lord the Lord Chancellor for his open mind in approaching this difficult problem. We are concerned here with a right of action for a wrongful act which has caused death. The law tries in that situation as best it can to compensate the victims of such wrongful acts causing death. There is no doubt that in this country today there are hundreds and thousands of women living in the relationship of reputed spouses who have lived with a man and provided for him. Those of us who have had "surgeries" in the days when we were in another place will have come across many sad cases of poor old things who have looked after the man they were living with—and to speak of it as a lover and lover relationship was grotesque in many situations—who indeed devoted their lives to looking after him, and then there was the sudden catastrophe of the person upon whom they were dependent being killed by the wrongful act of someone else.
In that situation, I should have thought that a sense of responsibility, to say nothing of compassion, ought to move in favour of making provision, if we can, for the victim, as I might call her, in that situation. It is not easy, but it is not beyond the competence of a court to consider the weight of evidence of the extent of the relationship between the man and the woman in the case, the extent of the dependency—there would be neighbours, members of the family. The law considers far more complex and difficult problems than that in deciding whether, as a matter of fact, the claimant was a reputed spouse of the deceased residing with him at the time of his death.
Accordingly, I hope that the noble and learned Lord will not be discouraged by the fear of the noble and learned Lord, Lord Rawlinson, that we are moving with the times. It is not necessarily a bad thing to move with the times. Indeed, the great quality of the reform of the law in my time has been its willingness to live with the times and make it more acceptable and reputable as the factor determining the lives and relationships between our people in our community. It is significant that in Clause 3(5) of the Bill provision is made for the illegitimate child; so that we have already passed beyond the realm of sheer moral judgment in considering where social responsibility should rest and should be determined. Therefore, I hope that further thought to this matter from the noble and learned Lord, who is very sympathetic to these human situations, will result in his coming down,

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perhaps in different wording from that which we have in mind, in favour of the amendment in the fullness of time.
Lord Edmund-Davies: I am in considerable sympathy with the sponsors of this amendment because one finds it not difficult to understand the sort of domestic situation they have it in mind to meet, where people who have been treated as the spouse suffer from a sudden calamity. But the drafting of the amendment is something which calls for the greatest care, otherwise, as the noble and learned Lord the Lord Chancellor has pointed cut, the elasticity of the wording will let in all kinds of situations to which it would be thoroughly undesirable to accord legal recognition. With the utmost diffidence, I apprehend that the sort of situation which the movers of the amendment have in mind is one which is better covered by Clause 3(3)(c):
"any person who was treated by the deceased as his parent"
and maybe a situation where a man and woman have been living together in circumstances, it may be, which prevent their marriage although they desire it, and the man has unquestionably treated the woman in every way as though she were his wife.
In those circumstances, it matters not how long they have lived together or how faithfully he has treated her as a wife Nevertheless, everyone knows that they are not husband and wife and she will get no relief at all. In those circumstances, it may be that when one gets to a later stage of amendment some such language as that employed in Clause 3(3)(c) will meet the situation where everybody knows the couple are not a married couple but nevertheless the treatment of the woman has been that of a spouse. With the utmost diffidence, I make that suggestion.
Baroness Wootton of Abinger: I should like to point out another anomaly which arises. In present circumstances this affects the poorest people of all, those living on supplementary benefit. If a man and woman are living in the same home and officers of the relevant department are convinced that they live as man and wife then the law operates to the disadvantage of the woman. She is deprived of her rights. She may be drawing supplementary benefit in her own right. She is deprived of that right and becomes a dependant of the man. In that case the law giving her a reputed marriage works against her, but in this case it is proposed that it should work to her advantage. It seems anomalous that we should have the two different attitudes. It makes one feel more sympathy with the new arrangement proposed in the amendment. It would take care of the cases where the woman suffered from, as it were, being left out.
Lord Kaldor: I should like to apologise for intervening in a subject outside my field. I wish to make some comment on the discussion over the term "moving with the times". The legislation of a country at any one time necessarily reflects in all its various different aspects the prevailing mores and habits of the society to which the legislation refers. In that sense, it is necessary that Parliament should move with the times and does move with the times. Some 200 years
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ago the death penalty was imposed for dozens of different offences. This penalty would now be regarded by society as quite intolerable and, because society would regard it as intolerable, Parliament abolished the death penalty for most of these offences long before it abolished it altogether. I can give many instances in which the law is changed precisely because the moral judgment of society and the habits of society are changing.
Cohabitation which is not sanctified by marriage is looked upon very differently in the last quarter of the 20th century from what it was a hundred years ago in Victorian times. This discussion, I suggest, would not have arisen if this type of legislation had been brought forward a hundred years or more ago.
3.50 p.m.
Lord Boyd-Carpenter: My noble and learned friend has said that he would consider this matter, and therefore I do not want to prolong the debate. I should like to add one word from this side of the Committee in favour not of the phraseology which the noble Lord, Lord Mishcon, raised, but of the principle embodied in this amendment. Those of us who, like my noble and learned friend the Lord Chancellor, have sat in another place and have had to perform the duties of a constituency Member of Parliament must have come across in the course of our duties in our constituencies a considerable number of cases of people living very happily together in a settled ménage who reference to the electoral register indicated were not, in law, man and wife. If in these circumstances the man is killed in an accident, the lady with whom he has been living for some time suffers in material terms just as much as if she were his lawful wife.
I appreciate well the difficulty of the precise point at which the line should be drawn. I agree wholly with my noble and learned friend on the subject of the sanctity of marriage. However, in many of these cases there is—even for the strictest moralist—no criticism that can be made of the couple. Some of the cases that I recall were cases in which the man had found it impossible for a variety of reasons to obtain a divorce and had set up a home with another lady, which was a throughly settled establishment, his marriage having broken down.
I very much agree with what the noble and learned Lord, Lord Elwyn-Jones, has said, that whatever phraseology we use, it is not beyond the competence of our courts of law to determine whether this is a case of the kind that I think the Committee as a whole wants to see covered, that of a settled establishment—albeit not one blessed by holy matrimony—or a purely temporary arrangement.
Therefore, knowing as I do my noble and learned friend the Lord Chancellor's enormous attainments and, if he will allow me to say, his fundamental goodwill for people who suffer, I have great confidence that he will find a solution to this and come back at another stage.
Baroness Airey of Abingdon: May I, following this speech by my noble friend Lord Boyd-Carpenter, mention that I recently had a letter which is very much the same as he has just mentioned. It is from

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a lady who was living with someone who was killed by the IRA. She was in fact his common law wife and had been so for a substantial amount of time. I am sorry that I have not the facts at my fingertips because I have sent them to her representative in another place. But this seems to me enormously relevant to what the noble Lord has just said. She had lived with him for a very considerable time and she is suffering very considerably by his death at the hands of the IRA.
Lord Elystan-Morgan: May I, as one of the persons who raised this matter at Second Reading, say how deeply grateful I am to the noble and learned Lord the Lord Chancellor for the care and the humanity with which he has, in accordance with the undertaking given at Second Reading, reflected upon this matter. The noble and learned Lord, Lord Rawlinson, asks the rhetorical question: Why should there be a case for compensation? I think it is clear from the contributions of noble Lords and noble Baronesses who have spoken in support of this proposition that the overwhelming case is because the spouse concerned is at the very centre of the disaster area that has been created in that family unit by the death.
I accept that there will be serious difficulties of definition. I also accept that it will be difficult but—as my noble and learned friend Lord Elwyn-Jones has said—certainly not impossible for a court, in examining the nature of the relationship, to come to a conclusion on what cases fall within the category and what cases fall outside it. The cases that would fall within the category, if I may put it in this way, should be the "Doolittle" families of this world. I am sure many in the Committee will remember the argument put forward by Bernard Shaw in relation to that family in Pygmalion, that that relationship was more secure than many relationships that were based upon the formal contract of marriage.
There are difficulties of definition, and I am sure that a very wise and practical path has been pointed out to the Committee by the noble and learned Lord, Lord Edmund-Davies, when he referred to the wording of Clause 3(3)(c). It may well be, however, that the amendment will need some slight adjustment, for it refers to a person treated as a wife. It is not impossible, of course, for there to be more than one person so treated in succession—possibly, indeed, not even in succession but concurrently, so that there would have to be some marriage of that important principle with the principle that is contained in the amendment as drafted.
If I may be so utterly rash, it may be that they can be put together in wording of this nature:
"A person who immediately up to the death has been treated by the deceased as a spouse and maintained as such by him".
That is only a suggestion, but I am sure that with good will these technical difficulties can be overcome.
The Lord Chancellor: I do not need leave to speak, but I do not want to intrude on the Committee unnecessarily. I should like to comment on one or two of the other speeches which have been made since I intervened earlier. I assure the noble Lord, Lord Kaldor, that this is not a question of moral judgments
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about living in sin or anything like that. It is a question to my mind of a very real and difficult problem. I am very anxious—much as I want to help—not to introduce too many difficult and possibly insoluble problems into a Bill which is designed to tidy up part of the statute book.
I am quite sure that reputation at the moment of death is not the right criterion. I was very sympathetic to what my noble and learned friend Lord Edmund-Davies said about a permanent relationship, which rather underlay what the noble Lord, Lord Elystan-Morgan, said a moment ago. I do not think that "treated at the moment of death" helps very much. If I spend a weekend with somebody at the Metropole Hotel, Brighton, register under my name and say to the people with whom we had lunch, "Meet my wife" I am not at all sure that I am not treating her as my wife. Indeed, in Scotland I believe that the most disastrous results might follow.
At any rate, it is more difficult than has appeared. I do not know about the wisdom and the competence of our courts to decide all difficult problems. The difficulty that I see about this—and I say this to the noble and learned Lord, Lord Elwyn-Jones—is that it is either all or nothing. This is one of the difficulties. You have to have a test, a fence, on one side of which somebody who might describe herself, or himself for that matter, as a dependant gets everything—that is to say, they are treated as persons entitled to qualify under the Fatal Accidents Act for damages against a tortfeasor—and on the other side they get nothing. That is to say, you are outside the pale, and a virtue I mentioned of the marriage status is that it is something which is ascertainable; one can find out what it means and one can establish in 19 cases out of 20—probably more—whether that degree exists.
However, if one is going to rely on something like a permanent relationship or an indefinite relationship, as in the Doolittle case, one gets a situation in which one must ask the parliamentary draftsman to say that 12 months will do and six months will not or five years will do and four years will not. I find myself in great difficulty in regard to ingenuity. They talk about my ingenuity and humanity; I hope I have both, but I warn the Committee that both will be taxed to the extreme limits before I can necessarily give in to this principle. All I can promise at this stage is to do what I said at the outset, which is to consider. I am not absolutely sure that the right answer would not be to refer to one of the law reform agencies the whole question of the position of—and I am now using the phrase for the first time without inverted commas—the common law wife. Having said that, I think that I have gone as far as I can.
Lord Elwyn-Jones: Having initially said he would consider the matter, the noble and learned Lord is moving adverbially in the direction of favourably eon sidering the matter—I detect from his last intervention. There is common ground in the Committee that there is a social need here that ought to be met and that could be met. We would he reluctant to accept the difficulties of drafting as a ground for doing nothing in a field where real social misery and social injustice will result unless we do something. However, in the light of the willingness of the noble and learned Lord

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to consider the matter further, I ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Mishcon Lord Mishcon moved Amendment No. 2:
Page 3, line 41, leave out ("bereavement") and insert ("loss of society").
The noble Lord said: With the leave of the Committee, may I speak to Nos. 2 and 3 together, because precisely the same point is involved? Your Lordships will remember that at Second Reading we dealt with a new concept under this Bill in regard to a head of damages which would be awarded as a result of a fatal accident where there was culpability. That head of damages replaced another head which goes under the Bill—that of loss of expectation of life. One is on a question here in these two amendments not only of terminology but, if I may say so, of sensitivity. With regard to the head of damages, the limit under the Bill is £3,500 and is said to be that of bereavement. I ventured to say at Second Reading—I am not the only person who has said it—that it is somewhat insensitive, to say the least, for Parliament to measure what is called a bereavement for a child and a spouse as something which has a limit of £3,500 or £5,000 or £10,000, making that the measure of what Parliament is supposed to award in a case of that kind for the bereavement sustained.
The Pearson Report dealt with this matter and borrowed a phrase from the law of Scotland—and no worse for that—which is "loss of society". That is the phrase used by Pearson, in fact advocating a different measure of damage, because according to the law of Scotland there is no limit to that damage. Pearson recommended a measure of damage which was attuned to the income, the earnings, of the deceased person. It may very well be thought that it is a difficult task enough, as again I tried to say at Second Reading, for any legal practitioner trying to protect and comfort somebody who has been put in the position of a wife with no longer a husband or a child with no longer a father. It is always very difficult, if I may speak from personal experience, to talk about the way in which Parliament has dealt with such pecuniary compensation as can be paid, because of course money cannot make up for the loss of a dear one. If I may speak personally again, I used to have so much difficulty in explaining the head of damages of loss of expectation of life, especially if it were a comparatively young person involved, and telling the member of the family concerned in modern times that that, as a result of various decisions, £1,250 was the figure—almost a fixed one—for loss of expectation of life. I could manage that much more easily—that would be a head of damages that will have gone if this Bill is passed—than I could ever try to explain to somebody this head of damages under "bereavement".
My last argument in trying to persuade the Committee, I hope with not too much difficulty, that "loss of society" is better phraseology, is strengthened by Amendment No. 10, which is to be moved later by the noble and learned Lord the Lord Chancellor. The noble and learned Lord in that amendment is asking the Committee to agree that the right of a person to claim under this section, which would the bereavement
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claim, shall not survive for the benefit of his estate on his death. In other words, if the person who was to be the plaintiff is no longer there because he has passed to a better world, that means that the claim of bereavement will not survive him. Logically, that person suffered the bereavement even if he or she might die very soon afterwards.
Indeed, the very bereavement may have been responsible for the death almost immediately afterwards. How illogical therefore, one might think, if the term "bereavement" is used, that it does not survive the death of the otherwise plaintiff. But if it is a loss of society, how logical that it should not survive, because indeed the loss of society has been so short and if that is the head of compensation, however unfortunate or miserable the succeeding death, it is logical to say: "There has been very little loss of society by virtue of the short period that has elapsed between the two fatal incidents."
Therefore, I hope the Committee will feel that in regard to this new section of the Bill which is, if I may put it very humbly, a very sensible section, we ought to get our terminology right—not just because it is sensible for Parliament to be exact but because it is right that Parliament should be sensitive and feeling. I beg to move.
The Lord Chancellor: This has rather taken me by surprise, and perhaps I had better express my surprise before there is any debate. I was expecting this to extend to a wider range of topics under this head than in fact the noble Lord has chosen, quite within his proper rights, to place together. At first sight the question is simply one of semantics, though it may be one of taste and sensitivity as well. I do not think it really is that, because there is going to be—and perhaps we can deal with it as and when these amendments are moved—a rather more profound debate underlying it, as to which I fancy I take a less sympathetic view than I would take simply on the question of nomenclature.
I think that if we look at the sequence of amendments which bear the name of the noble and learned Lord and his noble friends opposite, what he is seeking to do is not simply to change the concept of damages for bereavement, which is the selection I have made, into a thing which is the same in character but simply has a different name. I think perhaps we would be wasting the time of the Committee in arguing about semantics in that sense. He is really taking a totally different concept of what he wants to insert instead. He is taking what I might call, without disrespect to my noble and learned friend who is sitting exactly on my right, the Scottish definition of "unlimited damages" for loss of society, and substituting that for the conventional figure which, for reasons that I explained on Second Reading, I had selected instead, and which I have chosen to describe as damages for bereavement. There is a fundamental difference of philosophy, therefore, which will emerge as we go on. It may be that I do not want to spend too much time on this issue—is the noble Lord seeking to intervene?
Lord Mishcon: Only, I hope, to help the Committee and, if I may say so respectfully, the noble and learned Lord. I am trying to deal with this matter in two ways:

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first, preserving the whole of his concept of bereavement, but merely altering the title to "loss of society". It may very well be that the Committee will decide that it is proper to fix a limit to that, and it may be the £3,500 proposed in the Bill. As a different point, I shall venture later on to move an amendment to say—whether it be bereavement, loss of society or whatever it be called—that there should be no limit, as indeed there is no limit in Scottish law. My last observation—hopefully to assist the noble and learned Lord—is that, recognising the difference in the law of Scotland where the claim is unlimited, and saying that the law of England, against my argument, should have a limit to this claim, I call it the same as in Scottish law, which is loss of society, even though the recommended limit is very similar to that proposed in this Bill. My points are separate.
The Lord Chancellor: I am very grateful to the noble Lord. But what I was about to say has a certain relevance to the question of nomenclature, which is all that is technically under discussion, because, in addition to removing the limit and therefore changing the conception from a conventional figure to one of solatium, the noble Lord is also going to add to the classes of those who are entitled to the solatium the unmarried child who is a minor. I think that the dispute which we are now having may depend ultimately on the decision to which we come subsequently on some of his later amendments.
Let us suppose that he were to succeed, against, probably, the advice which I am going to give to the Committee, in getting the unmarried minor child added to the class of those entitled to this type of solatium, and let us suppose that there is a child who is aged six months. The loss of society involved in the loss of a parent is virtually nil. It may be a loss of expectation of future society, but, in fact, there is no loss of society, because a child of six months is unaware, very often, of having a father, although it is usually aware of having a mother.
On the other hand, I can cast back—and it is very difficult for me not to speak about this in personal terms, especially as the noble Lord, Lord Mischon, has appealed to sensitivity—because I lost my mother when I was 17. It was a catastrophic event in my life. I had, of course, had her society throughout my boyhood and, to that extent, I suffered less than a child of six months. Yet if you treat it as loss of society and not damages for bereavement, you are getting yourself into the difficulty that if you succeed in inserting this new class—and this is only an example which I am using by way of illustration into—as a separate issue, you will probably achieve less just results than if you leave it as it is.
After all, bereavement is a very definite fact about human life. Loss of society, the society that one gets from one's nearest and dearest, is very much a matter of degree, kind and arguability. Bereavement is a fact. It is caused by death. You can say what it is and when it happens. You can describe it, therefore, by the name which it has. I believe that the Law Commission was right—on the assumption that you accept the philosophy of what I am going to argue about on subsequent amendments—to keep the name as it is. If I were to be defeated by the persuasions or by the
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votes on subsequent amendments I might, of course, revise my opinion. Therefore, I simply say that we had better pass from this and see how the whole sequence goes, and then on Report stage we can decide on our nomenclature. I do not know whether that is commendable to the Committee, but I feel that this is probably the best way forward.
Lord Scarman: I hope that the Committee will stick with the word "bereavement". It illustrates exactly what this conventional award, which is now introduced, is intended to deal with. It is compensation for grief. It is not loss of society. It is loss of a person by death. It is very limited. It is very conventional. It amounts only to a recognition by the state that, in such a situation as this, the fact of bereavement should qualify for some sympathetic recognition. I think, therefore, that the word "bereavement"—it is only one word, instead of three or indeed five—should stand as appropriate.
I think that this is necessary. Otherwise, we are going to have a debate as to why the Lord Chancellor, by order, should vary the sum. What criteria is he taking into account? Is he thinking of inflation? Is he thinking of the quantum of society? This is just a small contribution by the state to the recognition of a spouse's, or a parent's, loss and the grief caused by that loss. Let it remain there in a small, but sympathetic, compass.
Lord Rawlinson of Ewell: I have always thought that for the law to attempt to assess by monetary award some recompense for grief is absurd. I have always thought that it is something which the law cannot do, and which the law should not seek to do. Certainly, it should seek for the monetary compensation to try to put back people into the position in which they were before a great loss was suffered. But for the law to set out and to put in pounds, shillings and pence, as it was, or in pounds and pence, as it is now, some sum is ridiculous. I have been told that I must move with the times, and move with the times I must, and if the money has to go up to £3,500, then up to £3,500 it had better go. But I agree with my noble and learned friend Lord Scarman that what the law wants here is bereavement. Bereavement is what it is meant to be about, though I can see the point made by the noble Lord, Lord Mishcon, about the loss of society. But it is bad enough trying to measure bereavement. Therefore, like my noble and learened friend Lord Scarman, I prefer to keep the word "bereavement".
Baroness Phillips: I should like to support the noble and learned Lord who has just sat down, and I apologise to my noble friend here. This is an example of a debate in which we minor Peers feel very inadequate. We are now listening to a slightly erudite discussion between noble and learned Lords who sit on this Bench and noble and learned Lords who sit on the Bench opposite. But, as a mere magistrate, I would say that the law should be understandable by the common man; or, for that, now read "common woman". The common person understands bereavement. I am not sure that he or she understands the more sophisticated overtones which are now being, introduced.

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Perhaps I could make a plea at the beginning of this Committee stage: if your Lordships really want the rest of us to take part in this debate, it should be remembered that, although we have not got the experience and perhaps the training of those of your Lordships who practise law, we are here as the makers of law. This is a very important point. I hope it will be remembered that we must try to speak for the people outside who need to understand the law if they are to get common justice. Therefore I would support the simplest words. I think that "bereavement" is a very simple word and, as a widow, I endorse what has been said. Nobody can possibly assess any loss in hard cash. We all know that. Compensation cannot be assessed in hard money terms, but bereavement is something which we all understand.
Lord Mishcon: I think the Committee will have been delighted, on a rather sombre subject, to have had the benefit of so much wisdom, some of it esoteric and some of it extremely pragmatic. In those circumstances, and especially in view of what the noble and learned Lord said about the convenience of discussing this matter after other amendments, I beg leave to withdraw.
Amendment, by leave, withdrawn.
[Amendment No. 3 not moved.]
4.21 p.m.
Lord Mishcon Lord Mishcon moved Amendment No. 4:
Page 3, line 44, after ("husband") insert ("or unmarried minor child").
The noble Lord said: In view of what the noble and learned Lord said about damages for bereavement and those who are entitled to claim under that head, I do not propose to bore your Lordships with a long speech. We now know what we are dealing with, whether it be called "loss of society" or "bereavement". In his intervention, the noble and learned Lord, Lord Scarman, spoke in terms of some gesture by society, by Parliament, which recognises grief, and I think that the noble and learned Lord, Lord Rawlinson, said something of the same kind. Realising—as we all do—that we cannot really measure this in pounds, shillings and pence, if I may use an old-fashioned phrase, there ought to be a gesture by society, by Parliament, which recognises grief and bereavement.
The extraordinary thing is that excluded at the moment from the Bill as one entitled to receive that gesture from society, from Parliament, is the child of the person who is the victim of a fatal accident. That seems to us to be quite unacceptable, especially if one limits this to the unmarried minor child. May I say at once that the Pearson Report which dealt with an analogous head of damages, included the unmarried minor child? I go on to say that the difficulties which have been put, so far as I know them, in the way of including the unmarried minor child are the following: first, that it necessitates some form of inquiry as to where the children are—the children I have read of in other debates relating to this matter may be spread all over the world, which is a very unlikely happening, the Committee may well think, in regard to an unmarried minor child. Secondly, that the unmarried
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minor child is most likely going to be a dependant, anyway, under the Fatal Accidents Act. But the surviving spouse is also a dependant under the Fatal Accidents Act.
Your Lordships may well think that there are many cases which all of us—lawyers and laymen alike—can envisage where there would not be a claim as a dependant by an unmarried minor child under the Fatal Accidents Act. What happens if the mother who is not the breadwinner is killed in a fatal accident? In those circumstances, there is no claim by the unmarried minor child. There is no monetary dependency. This is the only way in which we can make a gesture to the unmarried minor child. And what about the case of the father who is suffering from some disability, whether it be blindness or crippling, where the mother has to be the breadwinner: If the father happens to be killed, there is no gesture by Parliament recognising the grief sustained by the unmarried minor child for the loss of the father. He, most likely, was very much more in the company of the child than the mother who in those sad circumstances had to go out to work. There is no gesture at all recognising the grief of which the noble and learned Lord, Lord Scarman, and the noble and learned Lord, Lord Rawlinson, spoke. It seems wrong that the unmarried minor child is excluded and I hope that the Committee will agree with that view. I beg to move.
The Lord Chancellor: Again I am not intending the smallest degree of criticism of the way in which the noble Lord, Lord Mishcon, has chosen to put his amendments, to some extent, in the order in which they come, for which there is normally an overwhelming case; but I find myself rather embarrassed in dealing with this amendment because I had hoped that in one way or another we should deal with this sequence of interdependent amendments more or less as a whole. With great respect, I think one has to make up one's mind what is the philosophy you are trying to introduce into the Fatal Accidents Act when you are trying to introduce any change at all of this kind. I entered into this at some length in my Second Reading speech, but, in dealing with what is really the question of the unmarried minor child, I find myself driven to appeal to the question of philosophy before I deal with the particular case.
I disclosed, quite plainly, my own hand on Second Reading. I said beyond doubt that I share the original philosophy of Lord Campbell's Act. The noble and learned Lord's predecessor, and mine, Lord Campbell, first introduced damages for fatal accidents based entirely on financial loss. He did not do so because he was living in the middle of the 19th century, if I may borrow a phrase from the noble Lord, Lord Kaldor. He did not do so because he as an uncompassionate man. He did so because he thought, basically, that it was degrading to human nature to try to capitalise grief. I disclosed my hand perfectly candidly to the House on Second Reading. I take that view myself.
I receive letters from time to time in which people say, "It is an insult to my wife, to my child, that this sum has been mentioned in connection with their death". But my reply to them always is, "What sum

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would be enough which would not be an insult?" And the bigger the sum in a sense the bigger the insult, because it means you can turn grief into money. A I do not believe that you can. I personally entirely accept the view put forward rather robustly by my noble and learned friend Lord Rawlinson. I said at Second Reading, and I say again, that when one has lost a wife, one does not think in terms of money to compensate for one's grief. I know that the law of Scotland is different. It believes in unlimited damages for loss of society, as it is called in Scotland.
The Law Commission and the Pearson Commission decided, with a wide measure of agreement (I think quite illogically, but still it is what the Bill says and what I am here to put forward, and there were two important dissensions within the Royal Commission) that one cannot have unlimited damages because there is no yardstick by which they can be measured, and it is an insult, in the sense that it is degrading to human nature, to try to find such a yardstick. However, both commissions said that they would recognise a conventional figure. The Law Commission's decision, which I followed with some upgrading for inflation, was to decide on a fixed sum of money which could be altered by the Lord Chancellor form time to time. The Pearson Commission decided on a sum of money calculated by a formula related to the average earnings of the average income earner at the time of the death. I think that both are illogical, and I have said so again and again, but I do believe these recognise in some way—and the noble and learned Lord, Lord Elystan-Morgan, with whom, frankly, I did not agree none the less put this very well—that society does attach importance to human grief. Therefore, the Pearson Commission decided on a conventional figure.
For this purpose, it does not matter whether one chooses the Law Commission's fixed sum or the Pearson Commission's formula. In my law reform, I like to back the informed opinion of experienced people even when, as in this case, my own instincts are quite contrary to what they have decided; I believe it probably does represent the informed public conscience of mankind, and so I find myself recommending the formula. One of the results of the formula will be that the more people one puts inside it, the more one dilutes the sum of money which they get. A woman with 10 children, to take the unmarried minor children, will get practically nothing, although her grief may be as high or higher than the married widow—the previously married widow—with no children or with only one or two children. It was for that reason that the better view, as I shall put it forward, is that the parents may share a grief for the loss of the child and the spouse—not a word I like, but the husband or wife—can take the sum for the loss of the wife or husband, but the unmarried child is excluded. I personally believe that is right. In my view at any rate, the unmarried child, even after I have made my concession to public opinion, should receive that which Lord Campbell originally designed for him or her—namely, the actual financial loss based on a calculation of dependency and with the more generous disregards which we now allow. But to dilute and complicate the kind of calculations which we now have to consider by thoughts of this kind—by dividing it among a large family and possibly among two families, because there may be unmarried children
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of a previous family as well—seems to me impossible to reconcile with the philosophy of the conventional sum, which, rather reluctantly but still without doubt, I have come to put before Parliament. I believe that if we go down this road, we are both complicating and destroying the remaining shreds of logic which the reports of the Pearson Commission and the Law Commission, which for this purpose are to be treated as one, have put before the public.
It is not that I am unsympathetic to the child who has lost a parent. On the other hand, I believe that we have to make certain choices of philosophy and I am pretty sure that I know which is the right one. I feel bound to reiterate a point that I made in our earlier discussions; that if one starts including unmarried minors, one gets into the problem of how one is to talk in terms of grief with respect to the child who never knew its parent—the youngest child of all—whereas the grief of the eldest child is greater. This tends to be so, at least in my own experience. I had the experience of my own children losing their mother recently, and I had the experience of losing my own mother a long time ago. I think that the grief of the child increases with the age of the child, until a given age when the child leaves the parental home—which I suppose is at about the age of majority. I have said what I have to say. I do not pretend that I am arguing an absolutely logical case; I would much rather be arguing the case of my noble and learned friend below the gangways because that argument corresponds with my own philosophy of life. But I have tried to do the best I can for Parliament and I hope I shall be given credit at least for that.
4.37 p.m.
Lord Elwyn-Jones: I see a certain inconsistency between acknowledging the bereavement suffered by a husband or wife and failing to acknowledge and provide for the bereavement of the unmarried minor child; I see a total inconsistency of approach here. I note that the Pearson Commission also rejected acceptance of that inconsistency and, accordingly, I hope that the noble and learned Lord Chancellor may be willing still to accept the necessity for this change once we acknowledge the doctrine of compensation for bereavement.
The Lord Chancellor: I do not believe that I can change from what I have said, because I think, to a greater extent than the noble and learned Lord has given me credit for, that this undermines the philosophy of the Bill which I am seeking to pilot through Parliament. On the other hand, what I suggest would be the way forward is that we leave it at Committee stage and come back to this sequence of amendments at Report stage, when we shall have had the opinion of the Committee expressed on the whole sequence of amendments, so that we can make up our minds on the whole package. I believe that the package stands or falls as a whole and, if you want to have this, you must try a different package. I cannot therefore give much prospect of yielding on this, reluctant as I am to force the issue until the whole sequence has been discussed and gone through.
4.38 p.m.
Lord Mishcon: I find myself in great difficulty, having heard the noble and learned Lord, the Lord Chancellor. He appears to be saying, and I hope that I am interpreting him correctly, that there is here some package which ought to be argued as a package and cannot be dealt with seriatively. What I have tried to argue, and my noble and learned friend Lord Elwyn-Jones has just said this himself, is that, if one decides to try and give a sum of money for bereavement, one must not and cannot leave out, as the Pearson Commission said, the unmarried minor child. I am abandoning here the point of loss of society and bereavement, which is a completely separate argument, for the purposes of this discussion. I am abandoning also for the purpose of this discussion the question of whether it should be £3,500, a fixed sum, or damages at large.
It is as simple as that in my mind. That is the only point covered by this amendment. It is quite without prejudice to any arguments about damages at large or a sum larger than £3,500. It is that narrow principle. That narrow principle, however, in my respectful submission to the Committee, is a terribly valuable one, and, as I repeat, for society, for Parliament not to make this gesture of acknowledgement to the unmarried minor child under this head of damages would in my judgment be quite wrong. I am sorry that the noble and learned Lord, who has a width of mind that usually enables him to be rather less unyielding than he has been on this occasion, cannot accept it. I have heard what he has said, and, if that is really his view, then I think the view of the Committee ought to be tested now, purely on this one point: should the unmarried minor child of somebody killed in a fatal accident through the carelessness, through the negligence, of another be excluded from this bereavement benefit, whatever the amount may be?
The Lord Chancellor: I do not want to intrude on the Committee unduly, but I do not think it is from any lack of width of mind that I fail to impress the noble Lord opposite; nor do I think it is from any lack of sympathy. I think it may be my own stupidity which has failed to get the point across. I do not believe you can reconcile the amendment which the noble Lord has put forward with the Bill as it stands. I believe that in the end it is not a separate point, it is part of the same. If you decide to insert the unmarried minor child, I believe you have killed the conventional sum, and you will then have to go either down the road proposed by the noble and learned Lord, Lord Rawlinson, or down the road of Scotland and have unlimited damages. But I do not think it can be reconciled with the Bill as it stands. Therefore, it is not a separate point, and, if it is passed, you must really make up your mind either that my own instincts are right and it is degrading to human grief to give it money, whether £10 million or £10, which is the view put forward by my noble and learned friend, or alternatively you must go along the road of unlimited damages. I think if you insert this here you are making a nonsense.
This is not my last word at all. Why I suggested the course I did was that I thought that the way things have fallen out, purely because of the order in which
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the amendments have been, quite properly, put down, we ought to take a view of the whole package at this stage and consider it before we seek to decide any part of it. Of course, if the noble Lord wants to take the view of the Committee at this stage, he is at liberty to do so, and I am the last person to try to discourage him, although I do not at all want to turn this Bill into a question of votes and Divisions. But I think it is in the interests of a proper discussion of this measure that we go through this part of the Bill with the sequence of amendments about damages for bereavement, as we have agreed to call it at the moment, first, and then on Report decide what we want to do about them, viewed as a whole. I think if you do it piecemeal in this way you are making a nonsense.
Admittedly, what I have suggested in the Bill, what the Law Commission decided in 1973 and what the Pearson Commission decided later is an illogical concept—namely, that you can turn grief into damages but only on condition that you do it in a conventional way. I want to argue that case to the Committee before we vote on this definitively one way or the other. Otherwise we shall get into a nonsense. I want to argue the case about solatium, which is what the total effect of this sequence of amendments put down by the Opposition would be, and to see where we get after having considered the thing in a coherent way and not before. It is not that I want to stop the noble Lord voting, but I think the result of the vote will be almost meaningless in the light of what I have said.
Lord Mishcon: I should dearly have loved to have agreed with the noble and learned Lord, and I should have loved to save the Committee from a vote, but I must confess that, in the interests of the principle that I have been trying, with my noble friends, to adumbrate, it is not possible—will he forgive this?—to understand his reasoning. I say that in all humility and with all due respect.
How one can say that there is a different principle involved in regard to compensation for grief in the case of a minor unmarried child for the loss of a parent, that the same principle does not apply where the parent has lost a child or where the wife has lost a husband—
The Lord Chancellor: I think the noble Lord meant to say the opposite. What I am saying is that the Bill gives this conventional sum to a spouse and a parent but not to a child, and I think unwittingly the noble Lord put it the other way round.
Lord Mishcon: If I did, I apologise to the Committee. My noble friend helpfully tells me that I did not, but, if I did, obviously it has been put right on the record now. I cannot see that there is the slightest difference in the principle involved. I agree with the noble and learned Lord that either you say there is no compensation to be awarded for grief of this nature because you cannot have it—I understand that point—or you say, yes, we ought to make that recognition, in which case how can there be a difference in principle between the spouse who has lost a husband, the spouse who has lost a wife or the parent who has lost a child, on the one hand, and, on the other hand, the child who has lost a parent?
In those circumstances, since I am not in any way allying that principle to an argument of quantum—and

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I promise the noble and learned Lord that he will not hear me argue the case of the minor unmarried child on quantum—and I am certainly not arguing this case of the minor unmarried child on the title to be given under that head of damages, whether bereavement or loss of society; and since this principle stands alone, and alone within the noble and learned Lord's Bill as he has drawn it and in accordance with his very lucid explanation of it, because that is an isolated point and the noble and learned Lord does not recognise that, I have no alternative but to test the view of the Committee.
4.48 p.m.
On Question, Whether the said amendment (No. 4) shall be agreed to:
Their Lordships divided: Contents, 75; Not-Contents, 108.

DIVISION NO. 1

CONTENTS

Amulree, L.

Kilmarnock, L.

Ardwick, L.

Kinloss, Ly.

Avebury, L.

Leatherland, L.

Aylestone, L.

Lee of Newton, L.

Beswick, L.

Listowel, E.

Birk, B.

Llewelyn-Davies of Hastoe, B.

Bishopston, L. [Teller]

Mishcon, L.

Blease, L.

Molloy, L.

Blyton, L.

Monson, L.

Briginshaw, L.

Noel-Baker, L.

Brockway, L.

Northfield, L.

Brooks of Tremorfa, L.

Oram, L.

Bruce of Donington, L.

Peart, L.

Cledwyn of Penrhos, L.

Phillips, B.

Collison, L.

Pitt of Hampstead, L.

Cooper of Stockton Heath, L.

Ponsonby of Shulbrede, L.

Darling of Hillsborough, L.

Rathcreedan, L.

David, B.

Reilly, L.

Davies of Leek, L.

Richardson, L.

Davies of Penrhys, L.

Ross of Marnock, L.

Elwyn-Jones, L.

Segal, L.

Elystan-Morgan, L.

Shackleton, L.

Ewart-Biggs, B.

Shinwell, L.

Fisher of Rednal, B.

Stamp, L.

Gaitskell, B.

Stewart of Alvechurch, B.

Gifford, L.

Stewart of Fulham, L.

Glenamara, L.

Stone, L.

Gosford, E.

Taylor of Mansfield, L.

Grantchester, L.

Underhill, L.

Gregson, L.

Wade, L.

Houghton of Sowerby, L.

Wallace of Coslany, L. [Teller]

Hunt, L.

Walston, L.

Hutchinson of Lullington, L.

Wedderburn of Charlton, L.

Jacobson, L.

Wells-Pestell, L.

Jeger, B.

White, B.

Jenkins of Putney, L.

Wilson of Radcliffe, L.

John-Mackie, L.

Wootton of Abinger, B.

Kaldor, L.

NOT-CONTENTS

Abinger, L.

Berkeley, B.

Airedale, L.

Bessborough, E.

Airey of Abingdon, B.

Birdwood, L.

Alexander of Tunis, E.

Bridgeman, V.

Allerton, L.

Brookeborough, V.

Alport, L.

Cairns, E.

Ampthill, L.

Cathcart, E.

Auckland, L.

Clinton, L.

Avon, E.

Clitheroe, L.

Belhaven and Stenton, L.

Cockfield, L.

Bellwin, L.

Colville of Culross, V.

Beloff, L.

Cork and Orrery, E.

1302

Craigavon, V.

Mersey, V.

Cranbrook, E.

Milverton, L.

Cullen of Ashbourne, L.

Monk Bretton, L.

Daventry, V.

Mottistone, L.

Denham, L. [Teller]

Murton of Lindisfarne, L.

Dundee, E.

Newall, L.

Ebbisham, L.

Nugent of Guildford, L.

Elliot of Harwood, B.

Onslow, E.

Evans of Claughton, L.

Orr-Ewing, L.

Faithfull, B.

Pender, L.

Ferrers, E.

Portland, D.

Foot, L.

Rankeillour, L.

Forester, L.

Rawlinson of Ewell, L.

Fortescue, E.

Reigate, L.

Fraser of Kilmorack, L.

Renton, L.

Glasgow, E.

Rochdale, V.

Gridley, L.

Rugby, L.

Haig, E.

St. Aldwyn, E.

Hailsham of Saint

St. Davids, V.

Marylebone, L.

St. Just, L.

Hampton, L.

Saint Oswald, L.

Hankey, L.

Sandford, L.

Henley, L.

Sandys, L. [Teller]

Hives, L.

Seear, B.

Home of the Hirsel, L.

Sharples, B.

Hylton-Foster, B.

Skelmersdale, L.

Inglewood, L.

Soames, L.

Killearn, L.

Stanley of Alderley, L.

Kimberley, E.

Stodart of Leaston, L.

Kitchener, E.

Strathcona and Mount

Lindsey and Abingdon, E.

Royal, L.

Lloyd of Kilgerran, L.

Strathspey, L.

Long, V.

Swansea, L.

Lucas of Chilworth, L.

Swinfen, L.

Lyell, L.

Thomas of Swynnerton, L.

McAlpine of Moffat, L.

Trenchard, V.

McFadzean, L.

Trumpington, B.

Mackay of Clashfern, L.

Tweedsmuir, L.

Mackie of Benshie, L.

Vaux of Harrowden, L.

Mais, L.

Vivian, L.

Mancroft, L.

Westbury, L.

Margadale, L.

Willoughby de Broke, L.

Marley, L.

Wise, L.

Resolved in the negative, to accordingly.
4.56 p.m.
Lord Mishcon Lord Mishcon moved Amendment No. 5:
Page 4, leave out lines 7 to 9.
The noble Lord said: I beg to move Amendment No. 5 and with the permission of the Committee I should like to speak at the same time to Amendment No. 6 because both amendments relate to the same point—namely, that there should be no limit on the damages in a bereavement claim. The noble and learned Lord, the Lord Chancellor, was right when he inferred that the argument had very largely taken place in a general discussion of this matter. I do not intend to weary the Committee with any repetition of arguments.
Let me put my case very simply by saying it is right, in my submission, that there should be no arbitrary sum fixed for this bereavement claim. I am saying that the damages should be at large. I am saying that it was decided that, under the law of Scotland—in accordance with the recommendation of the Scottish Law Commission, as I remember it—there should be no limit to a claim under the heading of "loss of society", which is almost the same claim as the one which we are now discussing; that they have had no difficulty in their courts, so far as I know, in making a proper assessment, after inquiry, under this head; and that I see no reason why we should walk, as I said again on Second Reading,

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into the anomalous situation where, if there is an accident just over the border there is no limit to the claim, but if there is an accident this side of the border there is an arbitrary limit to it. Having said that, I think that I have said everything that I can say succinctly in support of the amendment. I beg to move.
The Lord Chancellor: I seem to be getting up all the time, but I hope that I may be forgiven. I think that this really is the kernel of the question which we have really got to decide. The Law Commission and the Pearson Commission have both decided that damages for bereavement should consist of an arbitrary sum—not the same arbitrary sum. The noble Lord in invoking the law of Scotland to my mind might just as well have involved the law of Sweden—although I know no more than he does about what it says as regards this—because we all know that the law of Scotland is in some respects vastly superior to our own and in some respects a miserable reflection of the worst features of English law. But to my mind this is the heart of the matter. Let us suppose that a man loses his wife. In my case, thank God! no one was to blame, so I would not get anything under this Bill, and I did not want to get anything under this Bill. But how do you translate that into money which is not degrading to human nature?
Let us suppose that my wife had been killed in a road accident in this country and under the Bill I had sued. £3,500 might mean a little less to me than it would to a coalminer who had lost his wife and who receives only £100 a week, or whatever it is. Would one take that into account to give me more or less? Will wilful poverty count in your unlimited sum? To my mind it is a meaningless question. It is no good people saying, "Oh well, juries do it in America". We all know that juries do it in America, with what appalling results. It is no good saying that they do it in Scotland, because if you ask a judge an idiotic question, you get a foolish answer. Will you go into the quality of the relationship between the husband and wife?—so that if they were very happy and had been married a long time they would get a lot, and if they were not getting on very well and had quarrels, they would get a little. Will you resurrect the hideous and rather ugly arguments we used to have on damages' claims about the widow's prospects of remarriage?—which were laid to their quietus, I think perhaps unfortunately in the form which the quietus took, during my first term of office. I do not think that anyone would want that.
But how much will you pay the husband for the loss of a wife, or the wife for the loss of a husband, or the parent for the loss of a child? I do not think that there is an answer to this. Will you take into account the degree of blameworthiness in this calculation? There was no guidance in the noble Lord's speech or in the noble Lord's amendment. I am thinking now of a case which I saw in a private letter only three days ago. On a very wet night when visibility was bad a girl was knocked down and killed as a result of a very slight degree of negligence. Will that rate for lower damages than if the same girl had been killed as the result of a drunken driver—a hit and run driver—who is very much to blame? What about the
1304
blameworthiness of servants in this situation: How will you divide up the sum of money? Is the widow to get a separate sum and the children, if you had the children, separate sums? Are the husbands and wife to share the total sum, or will they get separate awards of damages?
I ask these questions not because I want answers, because I know very well that there are no answers which would ever make sense. I believe that the right answer is the answer given by my noble and learned friend Lord Rawlinson, and I have never concealed that. But two Law Commissions have said, "Yes, give damages for bereavement; make it a conventional sum, and allow"—says the Law Commission, as distinct from the Pearson Commission—"for inflation by giving a regulatory power".
It is between those three options that you have to choose. One I believe to be totally meaningless and degrading to human nature, when death is treated as a sort of auction between opposing counsel in a fatal accidents case; and there is my own view, that Lord Campbell was right when he passed his Act, that you cannot turn human grief into money; and there is the view of the great, the good and the wise, which I am putting forward as being the consensus of wise, good and noble human opinion in this country, that you do it by a formula and a conventional sum, making no difference between happy or unhappy marriages, no allowance for remarriage, and no difference between rich and poor, but simply say, "We, out of the conscience of society, give a conventional sum to those who have lost their nearest and dearest; we cannot do better than that; it is only human justice; it is not divine justice, and we must stick by that".
Personally, I know where my heart is and I have said so. It is in favour of dependency only, which was Lord Campbell's original conception. But if we are to have damages for bereavement, let us have the Bill as it stands.
Lord Elywn-Jones: We have had one gnomic silence in the course of this debate, and I wish that we could have had it broken. Scotland has managed to apply a law which the noble and learned Lord the Lord Chancellor has now been dismissing in the most fierce terms.
The Lord Chancellor: Oh, no, not fierce.
Lord Elwyn-Jones: They have lived with it in Scotland since 1976. I hate teasing the noble and learned Lord the Lord Advocate, because he is such a nice man and such an old friend, but it would have been interesting if he could have lifted the veil of silence—
The Lord Chancellor: He might agree with me.
Lord Elwyn-Jones:—and let us know what has been going on in Scotland, which has been applying the very kind of doctrine which my noble friend Lord Mishcon has been advocating. The noble and learned Lord the Lord Chancellor conceded that in some respects Scottish law is far better than ours. Of course, it is. One has heard about the inscrutable Scot, but I have never believed it to be a state of

1305
humanity that exists. But here he is, the very embodiment of it. I do not suppose that I shall get him to his feet on this occasion, but perhaps before we part with this Bill we shall return to this matter again.
However, the problems which have been raised by the noble and learned Lord the Lord Chancellor are, of course, serious problems. The conclusion that we have reached is to accept the apparent persistent and, we hope, superior wisdom of two commissions which have recommended the conclusion to which the Bill has come. I suppose that in a world of fallible human judgment, that is as good as anything that we can hope for. But I am not sure that it is a wholly satisfactory conclusion. I am bound to say, however, that I would not go to the stake for any different one. If only I could have heard what the noble and learned Lord the Lord Advocate had said by way of guidance.
Lord Foot: I should like to intervene for a moment in order to give my unqualified support to what has been said by the noble and learned Lord the Lord Chancellor on this matter. I do not say that because I shall shortly be moving some amendments myself and hoping to curry favour with him. I only want to say a word or two about the argument that has been used, namely, that they have had this system in Scotland since, I think, 1976 and that there is no reason to suppose that it has not worked perfectly admirably. I should have thought that there is every reason to suppose that it has not worked admirably, because, as the noble and learned Lord has said, today the Scottish courts are being called upon to answer unanswerable questions. Who is to know what indignation there may be in some of these cases where an award of so much is given to one person and an award of half that amount is given to another? This is an argument which is used far too often in this House and elsewhere—that they have done this in other countries in the past and it seems to have worked all right.
I remember that it was used in the discussion on seat belts. We were told that they had had them in Australia and in New Zealand, or somewhere, and they seemed to have worked perfectly well; whereas, of course, Members of this House had no idea how the law had worked in Australia or New Zealand at all and it might have been almost disastrous. So I reject that argument. I certainly hope that on this occasion at any rate, noble Lords sitting on the Opposition Front Bench will not press this amendment to a Division.
Lord Rawlinson of Ewell: I have made clear my attitude with regard to damages for bereavement. But let us reflect for a moment what this could lead to if we had damages at large. I do not know what it is like in Scotland; none of us knows what it is like in Scotland. I suppose the cynic would say that, if the wife was killed after the marriage ceremony on the way to the wedding reception, the husband in those circumstances might get vastly more money than someone who has been married for 10 or 15 years, on the calculation that this was going to be a wonderfully happy, exciting marriage.
That has to be contrasted with somebody who has been married for 10 years, and then let us say that
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there were lots of difficulties during the course of that marriage, and therefore, so much. The whole thing is so shoddy that we are better to stick with this statutory figure which has been fixed by the Law Commission. Therefore, irrespective of what happens north of the border or anywhere else, I am quite sure that this is the best solution, although if I had my way the whole of this clause would come out of this Bill.
Lord Elwyn-Jones: I think I have made it clear that we do not intend to press this amendment. It might shorten time if I indicated that at this stage.
Amendment, by leave, withdrawn.
[Amendment No. 6 not moved.]
The Lord Chancellor The Lord Chancellor moved Amendment No. 7:
Page 5, line 23, at end insert—
("(3) In section 3 of the Carriage by Railway Act 1972 (which provides that a person who has a right of action under that Act in respect of the death of a railway passenger shall not bring an action under the Fatal Accidents Act 1976)—

(a)in subsection (1)(a), at the beginning there shall be inserted the words "subject to subsection (1A) below,");

(b) the following subsection shall be inserted after that subsection—

"(1A) Nothing in subsection (1) above affects the right of any person to claim damages for bereavement under section 1A of the Fatal Accidents Act 1976."; and

(c) in subsection (4) after the word "Order", in the second place where it occurs, there shall be inserted the words ", the reference to section 1A of the Fatal Accidents Act 1976 in subsection (1A) above shall be construed as a reference to Article 3A of that Order".").

The noble and learned Lord said: I think I can call this a technical amendment because it extends the right to damages for bereavement not only to the Fatal Accidents Act 1976 but to the Carriage by Railway Act 1972. I think this is a logical extension and I think I can call it technical. I beg to move.
On Question, amendment agreed to.
Clause 3, as amended, agreed to.
Clause 4 [Exclusion of Law Reform (Miscellaneous Provisions) Act 1934]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 8:
Page 5, line 25, leave out ("substituted for the proviso to") and insert ("inserted after").
The noble and learned Lord said: This is to correct a mistake; not quite as the noble Lord, Lord Mishcon, said earlier. The object is that we have somehow succeeded by draftsmanship in killing the action for damages under this part of the Bill if the tortfeasor dies as well as if the injured victim dies. This is to correct that mistake. It is hardly technical, hardly drafting, but it is certainly right. I beg to move.
On Question, amendment agreed to.
The Lord Chancellor The Lord Chancellor moved Amendment No. 9:
Page 5, line 27, at end insert ("(actions to survive death)").
The noble and learned Lord said: This is consequential on the last amendment. I beg to move.
On Question, amendment agreed to.
The Lord Chancellor The Lord Chancellor moved Amendment No. 10:
Page 5, leave out lines 28 to 31 and insert—
(""(1A) The right of a person to claim under section 1A of the Fatal Accidents Act 1976 (bereavement) shall not survive for the benefit of his estate on his death.".").
The noble and learned Lord said: This also is consequential. I beg to move.
On Question, amendment agreed to.
Clause 4, as amended, agreed to.
Clause 5 [Maintenance provided at public expense to be taken into account in the assessment of damages for personal injuries]:
Lord Foot Lord Foot moved Amendment No. 11:
Page 5, line 45, at end insert—
("(2) The Lord Chancellor may by order made by statutory instrument fix such sums or formulae as he may think fit for calculating any such saving to be taken into account under subsection (1) above.").
The noble Lord said: It had been my intention originally to move these two amendments at the same time with the leave of the Committee, but on reflection it would be simpler and easier to dispose of the matter and not take up the time of the Committee if I move this amendment on its own. It probably will be self-explanatory and scarcely in need of explanation. Clause 5, as now drawn, provides:
"In an action…for damages for personal injuries…any saving to the injured person which is attributable to his maintenance wholly or partly at public expense in a hospital, nursing home or other institution shall be set off against any income lost by him as a result of his injuries".
The sole purpose of this small amendment is to provide a mechanism by which the amount of that maintenance can be more readily ascertained. The proposal is that it should be in the power of the Lord Chancellor to make a statutory instrument fixing such sums or formulae—I am not sure whether "formulae" is a suitable word:
"as he may think tit for calculating any such saving to be taken into account under subsection (1) above".
I beg to move.
The Lord Chancellor: This is an amendment which I am sorry that I cannot accept. I fully acknowledge the valuable and constructive thought lying behind it. As it is not a subject about which I could speak with any great authority, I hope I may make rather full use of my notes at least on this occasion. The two amendments, this and the following one, seek to introduce a new paragraph into Clause 5 (which provides that any saving made by the injured person by reason of his maintenance by a hospital at public expense shall be taken into account in assessing damages) empowering the Lord Chancellor to fix sums or formulae by which a saving may be calculated. A further section would then be inserted providing that an injured person who has received benefits at public expense from medical treatment, special appliances or certain social security benefits, should be obliged to notify the body concerned if he commences proceedings.
Lord Foot: May I interrupt the noble and learned Lord? I said at the beginning that I had had it in mind to move both amendments at the same time. As I
1308
understand it, the noble and learned Lord is going on to my second amendment now, upon which I have not yet spoken to the Committee at all.
The Lord Chancellor: Of course, I mean no discourtesy to the noble Lord. It was really for the reason that I hoped he would allow me to make fairly copious use of my notes. Certainly I shall reply separately to his second amendment when I have heard his arguments on it, but in the opinion of those advising me the two correspond rather with his first inclination than his actual progress. If we have understood it wrongly, it is better that I should deploy the argument as it has appealed to my advisers rather than that I should seek to separate them in my own mind, having been previously advised that they are in effect inseparable.
Lord Foot: I wonder whether the noble and learned Lord would permit me then to speak now in support of my second amendment, and then what he has to say, which is already written down, will be relevant. This is an amendment which in my view is of some importance. Part I—the part of the Bill we are now dealing with—is concerned with the amendment of the law on civil liability for personal injuries and the law on damages in such cases.
Although we have had interesting amendments and some considerable discussion up to now, I think it probably is true that the general effect of this part of the Bill first of all is that it is a fairly modest amendment of the prevailing law, and, secondly, I should have thought that generally speaking it is generally acceptable. Any differences that there may be are upon matters of small detail.
My second amendment is designed to ventilate an aspect of this subject which is, I hope I am right in thinking, of rather greater importance than anything we have been discussing up to now. If I were to attempt to give the dignity of a title to the few remarks that I have to make, I think I would call it The Law of Liability for Personal Injuries in the Welfare State.
I wanted to say a few words about the state of the law on liability for personal injuries before the establishment of the Welfare State as we now know it. I do this with great hesitation because there are still in the Committee many noble and learned Lords who are very much more capable of competently speaking about this matter than I am. I think I am right in saying, in simple terms, that the general law on liability for personal injuries was tolerably well established in this country before the establishment of the welfare state as we now know it. The general rule of law which then prevailed—again, to put it in very simple terms—was that where a person sustained injuries attributable to the negligence of another or to a breach of statutory duty on the part of another, he should be entitled to claim damages against that other party and that the measure of damages should be, first, compensation for pain and suffering suffered and, secondly, compensation for financial loss (loss of earnings and the rest); indeed, financial compensation for all the injuries which flowed from the original act of negligence.
That was the general rule, qualified of course by the law of contributory negligence. When I first started in practice, the law of contributory negligence was not the

1309
same as it is now, but then we adopted the principles of Admiralty law and introduced the present conception of contributory negligence. The establishment of the welfare state altered the situation fundamentally in a number of ways but, for my present purposes, in two ways in particular. The first was that under the National Health Service, the injured person became entitled to free medical attention and all the other benefits of the NHS; and, secondly, under the system of national insurance, the financial loss that he sustained was substantially mitigated by the provision of industrial injury, disablement, sickness benefit and the like.
What I think is incontestable is that the benefit of those changes accrued to the advantage of the tortfeasor or to the advantage of the employer in breach of statutory duty. To the extent that the state provided for the injured person's medical needs and compensated him for his loss of earnings and the like, the liability of the tort feasor or employer in breach of statutory duty—perhaps I may call him the tortfeasor alone—was substantially reduced. Rather, it would be more accurate to say that often the benefit of the changes which accrued when the welfare state was set up accrued to the advantage of the tortfeasor's insurance. There are two circumstances in which it is compulsory to take out an insurance policy. One is in relation to a motor car (one is obliged by statute to take out a third party policy) and an employer is obliged compulsorily to take out insurance in respect of his workers.
I am aware—I say this in qualification of what I have just said—that the tortfeasor and his insurers do not always benefit to the full extent of the state's contribution to the injured person, and I will give two illustrations of that. In a claim for loss of earnings, the injured person is required to deduct from his claim on the tortfeasor only one-half of the benefits he has received from the state. Secondly, under the Road Traffic Act 1972, insurers are under an obligation in certain circumstances to pay certain strictly limited expenses incurred for medical treatment in a hospital in treating the injured person. However, that provision is set about by all sorts of difficulty, and my information is that in far too many cases it is wholly ineffective and that the DHSS, hospitals and doctors concerned do not ever recover even the limited sums provided for under that legislation.
What cannot be disputed, I suggest, is that very large sums of public money are today being expended by the state, running not into tens of millions but hundreds of millions of pounds per annum—that is not just my assessment—in medical treatment and various benefits which are never recovered from the tortfeasor or his insurers. If that is right, then it is a serious—I will not say "indictment" because that would be too strong a word—state of affairs regarding the arrangements under which we have lived for many years. It means that a heavy burden is being borne by the taxpayer which is properly the responsibility of the tortfeasor and was his responsibility before the welfare state was set up, because in those days the injured person would have been able to claim, for example, the costs of the medical treatment because he had had to pay for it himself.
If it is conceded that there is here a need for some fairly drastic reform, the question arises as to how it might be achieved. I do not intend to canvass the
1310
various ways which have been thought of by which the situation might be improved, but there is one way by which a claimant in an action for personal injuries might be made the agent of the state for the purpose of recovering for the state the maintenance which has been expended on his behalf. One of the main practical difficulties in achieving any useful result is that under any such scheme as that, if the law is to be effective at all there must be some preliminary procedure by which the state—the DHSS, hospital or doctor concerned—is notified of the existence of a claim, and it is towards solving that initial difficulty in making the claimant, the person injured, an agent for the Crown in recovering for the Crown the monies expended for his benefit that my amendment is addressed.
It provides that the state institution which has provided maintenance shall be notified of the commencement of the proceedings in an action brought by the claiment. I am acutely aware that my amendment goes only to that preliminary matter and does not attempt to deal with the way in which the state's claim against the defendant is to be prosecuted. One reason why I have tabled only this amendment, and have not tried to follow it up with a mechanism by which the injured person could become the agent of the state in his own action, is that it is beyond my compass and powers to do it; it is a very difficult matter. Thus, the purpose of the amendment is simply to pave the way to a wider scheme which would transfer back to the state money which it spends on injured people to the benefit of the insurers of the tortfeasor.
Therefore, my amendment is simply intended to ventilate what I believe to be an important question, and, if possible, to ascertain the reactions of the noble and learned Lord to what I have had to say. I am also acutely aware of the fact that the amendment, as I have put it down, might not have given the noble and learned Lord any clear idea of what arguments I was going to advance this afternoon. I apologise for that, and I really ought, if I had had time, to have given the noble and learned Lord some indication of what was the purpose of the amendment. I hope that he will forgive me for that, and of course I undertake that if he is able to express any sympathy at all for the arguments that I have been advancing, I would, before the next stage of the Bill, endeavour to try to put my proposition into a more coherent and adequate form. I beg to move.
The Lord Chancellor: I am very grateful to the noble Lord for his speech. He need not at all have apologised for not giving me prior indication, because during the course of his speech he very clearly stated that he was ventilating a point. I am sure that noble Lords who have had the benefit of listening to his speech will thank him for having ventilated it, since it is an interesting and important point.
Of course it is quite true that where there is a welfare state providing a free health service and other benefits, and a person who is injured receives treatment under the scheme and does not have to pay for it, to a greater or lesser extent, according to what arrangements are made, the tortfeasor—that is to say, the defendant in the personal injuries litigation—will be

1311
the gainer and not the victim. On the other hand, as the noble Lord, Lord Foot, quite rightly says, in an ideal world (if there is, or could be, such a thing) the Revenue ought to be the gainer by virtue of some mechanism whereby there could be a clawback from the tortfeasor of money spent on the victim. I have every sympathy with that thought.
But I must now do what the noble Lord has asked me to do; namely, to express what at the moment is the view of my advisers as to the two amendments, which I still think are interlocked, both dealing with the same problem, which is a real problem. I am very grateful to the noble Lord for having raised it, and I am sure that if he ever gets wind of this, my right honourable friend the Chancellor of the Exchequer will be filled with enthusiasm for the noble Lord, Lord Foot.
The object is to achieve some formula by way of a clawback. The first amendment (the one moved) empowers the Lord Chancellor to fix sums or formulae by which a saving can be calculated instead of, or in addition to, the present draft of the Bill, which provides that any saving shall be taken into account in assessing damages against the tortfeasor.
The object of the exercise is to enable the relevant body to claw back its expenses from the tortfeasor probably by means of subrogation. As it at present stands, the amendment is defective for two reasons. First, no system of subrogation or clawback is provided for in the amendment, and none at present exists. Secondly, the clause as it stands, unaltered by the amendment, provides for the saving to be taken into account—the new clause covers the total costs. The formula would not then be appropriate, so I am advised, since it would relate to the wrong amount.
Having said that, I shall now consider the meat behind the amendment. The first amendment—the one that imposes on me an obligation to devise a formula—would remove from the judiciary (that is, the courts) the necessity of inquiring what saving the injured person has actually made by virtue of his being maintained in hospital. Since every case, and every saving, is different, the formulae would have to be very complex in order to cover every case. I am advised—again this is a matter for which I have relied somewhat upon advice rather than one on which I will express my opinion, which is probably not as valuable as that of the noble Lord, Lord Foot, which is much more up-to-date than is mine in regard to accident cases—that it is likely that as much, if not more, judicial time and effort would be spent in argument over, and application of, the right formula as would be spent in argument over the amount of any actual saving without using any formula at all. Just as the amount of a dependency claim in a Fatal Accidents Act case may be calculated without reference to a formula, so may the saving.
The administrative costs, so I am advised—and here again I am moving well outside the field in which I am entitled to step with confidence—of any clawback scheme would be huge and would probably outweigh any repayment that the relevant public authorities would receive. The recent White Paper on the reform of the industrial injuries scheme, issued by the Department of Health and Social Security, proposes, for
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consultation purposes, the complete offsetting of social security benefits from tort damages. That was a recommendation of the Pearson Commission. However, at the moment the Government are not pursuing the possibility of recovering the amounts which have been paid out.
Major difficulties, so I am advised, would arise in working out what was and was not part of the costs of medical attention, and I am told that the formula proposed is apt to cover only the saving to the injured person, and not the total cost to the relevant public body. It should be noted that neither Pearson nor the Law Commission commented at any length on a system of subrogation, except to say that the purpose of damages was to compensate the victim and not to punish the tortfeasor, with which view I suppose we would both agree. It is to be noted that the Law Commission did not recommend any change in the analogous rule in Gourley's, case which as the noble Lord, Lord Foot, knows, is about damages being net of income tax.
Obviously this is not a matter upon which I can speak with authority. If the noble Lord, Lord Foot, will withdraw the first of the two amendments and not move the other one, I shall take advice on the matter and write to him, or he can return to it on Report. I will try to be both a little more informative and knowledgeable than I have been so far.
Lord Foot: I am very much obliged for that reply. I never intended to press the amendments. There is I think one small point of misunderstanding in that there is no real relationship between the first amendment and the second amendment. The first amendment is designed simply to clarify the existing law, inviting the noble and learned Lord as Lord Chancellor to produce a formula for calculating the maintenance provided to the injured person by the state.
My second proposal is quite different. I entirely understand that the amounts which would become payable under my second amendment are quite different from the amounts which would be assessed under the first amendment. I entirely accept, of course, what the noble and learned Lord says about the difficulty of preparing a formula, and I do not care a bit if the first amendment is never heard of again. As regards the second amendment, I would make only one observation on what the noble and learned Lord has said about the advice he had received about the administrative cost of clawing back the money which is paid out by the state for the benefit of an injured person.
That is, of course, I understand, a formidable problem, and that is why those people advising me came down, among the various alternatives that you might adopt, in favour of the scheme that I was proposing and which I was trying to explain in broad outline; that is that the claimant in any action, or indeed possibly a person putting forward a claim short of an action, should be able to include in his claim on behalf of the state, by a process of subrogation, the amount of money which is due to the state. If that could be done, then I suggest that the administrative costs of this would not be so enormous, because the administrative job of collecting the money would not fall in the first place upon the hospital or the service or whatever it may

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be: it would fall upon the claimant in the action and all he would have to do is to notify the hospital concerned that he was bringing the action, invite them to tell him how much they had expended for his benefit (which is a very simple matter, I should have thought) and then proceed with his claim in the court; and the DHSS, the doctor, the hospital or whoever it might be would have to play no further part.
I hope the noble and learned Lord will be able to consider with his advisers whether that system, if it could be established, would in fact not involve the very heavy expenditure which he foresees. With that, may I seek the leave of the Committee to withdraw the amendment.
Amendment, by leave, withdrawn.
Clause 5 agreed to.
[Amendment No. 12 not moved.]
Clause 6 [Award of provisional damages]:
The Lord Chancellor The Lord Chancellor moved Amendment No. 13:
Page 6, leave out line 40.
The noble and learned Lord said: In moving Amendment No. 13 perhaps I may speak also to Amendment No. 79, which is consequential on it. They are drafting amendments. Of the two here the second relates to Northern Ireland, and the reason I am deleting the provisions, which is the purpose of the amendment, is that they are said technically to be unnecessary. I beg to move.
On Question, amendment agreed to.
Clause 6, as amended, agreed to.
5.44 p.m.
Lord Mishcon Lord Mishcon moved Amendment No. 14:
After Clause 6, insert the following new clause:
(".Motor accidents
—(1) Where after the commencement of this section the death of or bodily injury to any person is caused by or arises ouy of the use of a motor vehicle on a road in Great Britain and ant of the circumstances specified in subsection (2) of this section applies, the death or injuury shall be deemed (subject to subsection (3) of this section) to be attributable to negligence on the part of the driver of the vehicle (whether or not he is liable in respect of the death or injury apart from this subsection), but without prejudice to the law relating to contributory negligence and to any remedy by way of contribution or contract or otherwise which is available to the driver in respect of the death or injury.
(2) The specified circumstances are where the death or injury arises out of—

(a) any impairment of the driver's physical or mental condition, whatever the cause; or

(b) any latent defect in the vehicle not discoverable by the exercise of reasonable care; or

(c)any natural occurrence amounting in law to an act of God.

(3) Where the circumstances specified in subsection (2)(b) of this section apply and the driver of the vehicle is not its owner but is permitted by the owner to drive the vehicle at the material time, subsection (1) of this section shall have effect as if there were substituted for each reference to the driver of the vehicle a reference to its owner.
(4) This section shall have no effect in criminal proceedings.").
The noble Lord said: I hope to be brief on this amendment. If any of your Lordships happened on some miserable occasion to find yourselves on the pavement and as a result of a motorist having a heart
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attack, of lightning striking a car or of there being a latent defect in the car of which, with reasonable care, the driver could not have known, the person I have selected from your Lordships unfortunately being on that pavement was hit by that car, that person would have no right of recovery because nobody would have been negligent. There is no doubt about it; Pearson considered this case of the latent defect or the act of God, and because of the main recommendation of the Pearson Commission that there should be a no-fault liability combined with tort, there was no point in Pearson making a recommendation in regard to this class of case.
So if I may get to the heart of the amendment immediately, it is this. We are dealing now in this Bill with matters which relate to accidents and injuries from accidents. This may be the opportunity, which may not recur for a very considerable time, to do something about relieving the class of person injured to whom I have just referred; and your Lordships may think that the best way of dealing with it is by saying that there is an imputation of civil negligence which will enable recovery to take place. No criminal negligence follows from this, no criminal liability follows from this, but there is imputed negligence. Contributory negligence and other matters of contract will not in any way be divorced from this principle, so that they can all of them apply. As I said, this may be an occasion, your Lordships may think, for dealing with an aspect of the law which involves, of course, grave injustice where the recipient of the injury is in the position I have outlined. I beg to move.
Lord Renton: I hope my noble and learned friends will go very carefully on this matter because it seems to me that the noble Lord, Lord Mishcon, has suggested that there should be an irrebuttable presumption of negligence in the circumstances described in subsection (2). If we look at those circumstances we find that they are really drawn rather widely. It says:
"any impairment of the driver's physical or mental condition".
Whether permanent or temporary, are we to assume? Then:
"any latent defect in the vehicle not discoverable by the exercise of reasonable care".
This, of course, gives rise to the question of causation. There are some defects which could be alleged to be the cause of an accident, but there might be a dispute about that, also.
I think we need to be very careful indeed before we give rise to anything approaching a fresh irrebuttable presumption in the law of negligence, and more especially so in these particular circumstances. Therefore, with respect, I would not be inclined to support this new clause.
Lord Simon of Glaisdale: May I reinforce the plea for caution made by the noble Lord, Lord Renton? The words "arising out of" obviously fall far short of causation; and the words
"any impairment of the driver's physical or mental condition, whatever the cause".
mean, as the noble Lord, Lord Mishcon, made quite plain, that this is a step towards compensation without liability. Compensation without liability—the Pearson

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proposal—is one thing: this is quite another. This is half-way there. But it still means that the person who has not been negligent, whose negligence has not caused the accident, but who has had some impairment out of which it can be said, in a vague way, the death or injury arose, shall be deemed to be negligent. As a result of his being deemed to be negligent he may lose, without any fault on his part, at least a no-claims bonus, even if his insurance company comes to his rescue, as presumably it will. Therefore, it seems to me that there are two courses, either the Pearson proposal or the present law; but this half-way step is a step which simply is liable to lead to injustice.
The Lord Chancellor: It is my opinion—and I have a good deal of sympathy with some of the thinking behind this—rather for the reasons which have been put forward by my noble and learned friend on the Cross-Benches and my noble friend Lord Renton, that this appears to fall firmly between two stools. When I proposed, as I did, the Pearson Commission being set up, I was very much aware that people got injured through no fault of their own but simply from the presence of motor vehicles on the roads; and the same, I thought, could be applied to some injuries at work where there was no negligence or breach of statutory duty on the part of the employer. I understood perfectly the case for saying in such circumstances that the duty of the motor vehicle owner might be turned into an absolute duty of buying an insurance from Lloyds or someone else and compensating the victim. I was aware equally of what I might call the Massachusetts scheme—and I need not enter into the reasons why I call it so—that is to say, the courts will continue to operate compensation or damages and that the liability for the use of the motor-car on the road should be absolute.
I was aware also of the New Zealand scheme, very much favoured by the Chief Justice of New Zealand at that time, and broadly speaking the Pearson Commission came down in favour of the New Zealand scheme. Whether either of them was right or wrong is not for me to say at this time because the Government have found difficulty in imposing a no-fault liability scheme. This is a very odd provision which does not conform either to the Massachusetts formula, although it shares with the Massachusetts formula the idea that in practice the insurer should be made to pay, although it does not say so; and therefore I suppose it would be met by the motorists out of their insurance premiums. It did not conform at all to the New Zealand type scheme which depends largely on public funds for supplying a new social service in place of the system of tort altogether.
What it does is not acceptable for the reasons that I have tried to explain. It imputes negligence when there is none in a certain number of limited circumstances which are specified in the clause and which are limited to accidents on the road. It imputes negligence to the driver of the vehicle where he is not the same person as the owner and he is driving without the consent of the owner, and on the owner of the vehicle but not the driver when the driver, not being the same person, is driving with the owner's consent. It applies only to accidents which are caused on the road by
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reason of the driver's physical or mental condition or of any impairment of his physical or mental condition which gives rise to the problems of the kind spoken about by my noble and learned friend on the Cross-Benches; of any latent defect in a vehicle not discoverable by the exercise of due care, which has approximately the same or analogous difficulties; and to any natural occurrence amounting in law to an act of God, such as when a motor-car is struck by lightning.
If I were going down that road, I would not limit the case at all. I would not do it by a deeming provision, deeming negligence without there being negligence. I would go down the Massachusetts road; and that would be a big change from the present tort system. This purely artificial method is not one that I could recommend to the Committee. One would only have to see that anomalies would arise and they would be in conflict with the rest of the tort system. For example, a person injured when the other driver had a heart attack at the wheel of his car would be able to recover but where the accident was not caused by the specified circumstances and the plaintiff could not prove negligence he could not recover anything.
The proposed amendment would help some people in some circumstances, but in practice it would be subjected to devastating criticism by those who found that the same injuries which they had suffered fell outside the scope of the clause. I think it is inevitable, and it may be regrettable, that modifications of the fault system in order to do greater justice to particular classes of victim run into this kind of trouble. It is possible that one can either have a fault-based system or one which involves strict liability; but it would be rash, I submit, to embark on an incursion into the law of negligence on the lines suggested in the amendment without thinking through these difficulties and consulting all those involved as to how such a scheme could operate in practice. I would rather go forward on a Massachusetts-based scheme if I was going to stick to tort or quasi-tort and go down the New Zealand road if people decided to implement the Pearson Commission. But this falls firmly, squarely and irreparably between two stools.
5.56 p.m.
Lord Elystan-Morgan: The amendment as drafted by my noble friend Lord Mishcon and my noble and learned friend Lord Elwyn-Jones is far from perfect. That is accepted. The principle, however, is one of considerable significance. Your Lordships have already been told that, after all, in Committee it is possible to give further thought to the technical forms of amendments and to deal with them later at Report. I accept that the amendment is defective in that it does not make it clear that the presumption that it gives rise to is a rebuttable presumption. A presumption which can be rebutted by evidence which at the end of the day establishes on a fair balance of probability or better that the defendant was in no way causative of the accident, would lead to the success of the defendant.
As the Committee heard in the valuable and interesting discussion that occurred on a Motion on 20th January this year, this proposal has distinguished antecedents. It finds its origin in a Bill proposed in

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this House as long ago as 1932 by Lord Danesfort. It is a Bill that was supported by the Government of the day and the reason for supporting the Bill in 1932 was that it was considered that the roads at that time were so dangerous that anybody who took out a vehicle on the roads was adding immeasurably but nevertheless in some slight real degree to the potential danger that existed and, therefore, it was right that a responsibility by way of switching the burden of proof should be placed on the shoulders of a person so involved.
If there was justification 50 years ago, as I am certain there was, for such a viewpoint, how much greater justification is there today with the congestion brought about by, I believe, 16 million vehicles on our roads? The noble and learned Lord the Lord Chancellor makes the fair point that it is something that the Committee should consider and ponder upon before placing responsibility in tort upon a person who may be totally blameless. I accept that, but after all, it is a case, very often, of choosing between two persons each of whom is totally blameless.
Indeed, there are plenty of precedents in law where society takes the view that an act is of such public consequence that very heavy responsibility has to be placed on the person who indulges in that act. Even criminal responsibility is sometimes placed upon such a person. The food and drug Acts are probably the very best examples of that principle. Therefore, though on the face of it it seems unjust, if one looks at the situation through the eyes of the totally innocent victim, then I think that there is a very great deal to be said for it.
The ultimate financial responsibility falls not upon individuals but upon insurance companies or upon the MIB. Ultimately it would mean that the higher cost of premiums would be borne by the motoring public as a whole. That, in my submission, is no less than just. Pearson rejected this but in so doing it made it clear that its main reason—it may well be its central reason—was that it would fly in the face of its own philosophy in relation to no-blame compensation.
If the noble and learned Lord the Lord Chancellor with his hand on his heart can say, "Well, the Massachusetts road is still open"; it is still a possible development for Her Majesty's Government to say in relation to Pearson that it will bring forward legislation to create a no-blame scheme and then quite clearly there would be little to be said for this proposal. If, on the other hand, the noble and learned Lord says: "No, it is now four years since Pearson reported. Full and mature thought has been given to this matter and the Government most certainly will not take the Massachusetts road", then, in my submission, this is a just, proper and practical alternative.
Lord Simon of Glaisdale: I should like to ask the noble Lord, Lord Elystan-Morgan, what he meant by saying that the real intention of this amendment was to create a rebuttable presumption. Surely, the only presumption is the presumption in subsection (1), the deeming, and if that is rebuttable it surely—does it not?—makes nonsense of that subsection. In subsection (2) there is no presumption, no deeming. It says that the circumstances which give rise to the
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deeming of negligence are when the accident arises out of some impairment, et cetera.
Lord Mishcon: My noble friend, Lord Elystan-Morgan, is always very generous in his attributions and he was kind enough to attribute to my noble and learned friend Lord Elwyn-Jones and to myself this piece of beautiful English handiwork, the drafting of this amendment. I want to make it perfectly clear—because it would he quite dishonest of me to claim authorship of it, and I know that I speak for my noble and learned friend Lord Elwyn-Jones—that this comes from a very reputable source indeed, and a very learned source, but not as learned as my noble and learned friend and certainly, as I said, I cannot worthily claim authorship of it.
Having said that, I want to say something very briefly. I would love to have been geographically ambitious and gone either to Massachusetts or New Zealand. I tried hard to preserve some of Pearson or to do something in regard to this part of the law which obviously needs some attention paid to it. The noble and learned Lord the Lord Chancellor recognised that. I hope that possibly between now and Report stage something can be done, as I said, about this class of case so that we do at least have one wee little bit of "Pearson thought" to illuminate our thinking on personal accidents and injuries and the liability in this class of case. With that hope in mind—slightly despairing but nevertheless with that hope still within my breast—I think that it is appropriate for me to ask leave to withdraw the amendment.
Amendment, by leave, withdrawn.
6.5 p.m.
Lord Stanley of Alderley Lord Stanley of Alderley moved Amendment No. 15:
After Clause 6, insert the following new clause:
("Duty of occupier of premises to univited entrant.
Liability for damages in respect of death
or personal injury
.—(1) An occupier of premises owes a duty to an univited entrant upon the premises in respect of a danger if, but only if, the danger is one against which, in all the circumstances of the case, the occupier can reasonably be expected to offer him some protection.
(2) The duty owed by an occupier in accordance with subsection (1) above is a duty to take such care as is reasonable in all the circumstances of the case to see that the entrant does not suffer personal injury or death by reason of the danger.
(3) In the case of any entrant as aforesaid who commits a criminal offence, or purposes to do so, on the premises, the duty owed to such an entrant by the occupier shall be no more than to avoid deliberately imperilling the entrant by any covert device.").
The noble Lord said: My new clause, except for the subsection (3) was drafted by the Law Commission and recommended for enactment by the Pearson Royal Commission on Civil Liability and Compensation for Personal Injury. I am therefore happy about its drafting and its pedigree and indeed it being a suitable amendment for this Bill as I believe it fits neatly into the second, third and fourth lines of the Long Title.
This amendment refers to the liability of occupiers of land to those who trespass on the land. At the moment, the law is in confusion since the case of British Railways Board v. Herrington in 1972. To remind the Committee—although I am sure I do not have to do so—this case involved a child deliberately

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trespassing on a railway line, and then the railway being found to blame. Such of course poses questions as to whether a trespasser, with intent to burgle, who borrows the farmer's ladder which then breaks could sue the occupier? Maybe not, but I am somewhat worried. It would be a strange situation if that were so, and I am sure the Committee could think of similar ones.
Surely the problem of the case of British Railways Board v. Herrington may have prompted the noble and learned Lord the Lord Chancellor in 1972 to ask the Law Commission to examine this problem. The Law Commission did this and they published a draft Bill in 1976. Nothing has germinated, hence my amendment. I hope that the Government will now take some action to redress the balance between the occupier and the trespasser—particularly the trespasser with intent to commit a crime—by accepting this amendment. I beg to move.
Baroness Sharples: I have put my name to this amendment because I am worried. As a landowner, I accept that I have a responsibility to ensure that there is no reasonable likelihood of injury to a possible trespasser who comes on my land. I also acknowledge that I have a duty of care towards uninvited entrants. Given the present situation, as a direct result of the case of British Railways Board v. Herrington in 1972, I fear that we will err on the side of caution and be inclined to deny access to everyone on our land. I feel that the law is not clear enough as to our liability for accidents, and certainly my insurer feels the same. I seek clarification of my position as a landowner and farmer under the present law. I should be most grateful for assistance on this matter.
Lord Monk Bretton: In putting my name to this amendment, I should like to say that the amendment does not seek to return to the status quo before the case of British Railways Board v. Herrington—that is, back to the Occupiers' Liability Act 1957 alone under which there was no protection for trespassers. Neither is it intended to allow occupiers to opt out of their responsibilities. What it is intended to do is to attempt certain clarifications arising after the British Railways Board v. Herrington case and to alter the balance only slightly between the occupier and the trespasser.
No doubt the Committee is aware of the problems that occur in rural areas where, once the factory floor has become the farm with all the space involved, a number of problems arise, particularly the fact that trespass is more common. Advisers to the farming industry have their doubts about the situation and they say it is no longer clear when an occupier is responsible for injuries suffered by trespassers. The occupier could even be responsible in the case of a trespasser with criminal intent. That really sums up the reason for putting down this amendment. If the amendment does not appeal to my noble and learned friend—though I earnestly hope it will—he will nevertheless doubtless be aware of the problems and anxieties of farmers. I hope he will be able to say what progress there has been in refurbishing those proposals made in 1976.
The Lord Chancellor: I do not want to turn a deaf ear to my noble friends who have put forward this amendment, which deals with a very real problem; but I must tell them honestly that I could not allow this amendment in this Bill. For reasons which I explained very fully on Second Reading, this is a Bill designed to improve the administration of justice in a number of non-controversial and, to my mind, absolutely essential but relatively minor areas. I got a place for it on the Government programme, on the basis that the Opposition would agree—which they very kindly did—to Second Reading proceeding in another place. I do not believe that I could "deliver the bacon" if I were to go very far along the lines of using this Bill as a vehicle for this particular type of amendment.
What I say now applies to the sequence of amendments now to be put forward. This one is concerned with introducing a limited duty towards uninvited entrants—a polite way of describing what I previously knew as "trespassers"—coupled with a very low duty of care towards entrants who commit or intend to commit criminal offences on the premises. The second and third new clauses limit the application of the Unfair Contract Terms Act 1977 and the Health and Safety at Work Act 1974 with regard to those who go on to land for recreational purposes. I know they have the support of a number of very influential bodies. I believe the Country Landowners' Association support them, together with the National Farmers' Union and the Central Council for Physical Recreation; so there must be a good deal to be said for them. Their common interest is the difficulty, which is a real one, of allowing free and easy access to country land for recreational purposes without increasing the risk of liability borne by the occupiers of such land—
Lord Stanley of Alderley: I am sorry to interrupt my noble and learned friend—indeed I am fearful of doing so—but he has now gone on to my next two amendments and I was going to say something about them separately because they involve a slightly different problem from trespass.
The Lord Chancellor: I fully agree about that, but I thought it might be for the convenience of my noble friends and of the Committee, since I am told that we are likely to resume the House before the next two amendments are called. If that should be the case, I think I am rendering a service to my noble friend; I am trying to tell him what the attitude is likely to be, though I agree with him that in strict logic I should confine myself to the question of trespassers. But I think that what I have said so far is applicable to the trespassers because I have correctly described the scope of the present amendment. The bodies I have mentioned have been pressing for some time for changes in the law to clarify the liability owed by landowners towards trespassers and to reduce the liability owed by such landowners to visitors who come on to the land for recreational purposes.
I have a certain filial interest in this. One of the things that my father did when he was Lord Chancellor was to preside in a case called Addle v. Dumbreck—and I can see that the noble and learned Lord, Lord Gardiner, recognises that case at once. My father

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was under the impression that this was the final word on the liability owed to trespassers by the occupiers of land. Most unfortunately, it failed to achieve that universal approbation which he had confidently expected would follow his efforts. His son is fully aware of the dangers of thinking that he has made a definitive improvement to the law of the land when he presides at the Appellate Committee! At any rate, the common law position is now not as stated in Addle v. Dumbreck, as my father fondly believed it would be, but as in the case of the British Railways Board v. Herrington. The case does not formulate one clear principle with regard to the liability owed by trespassers, and the Law Commission were asked to consider this area of the law in 1972. A report was published in 1976 and between then and 1978 various attempts were made—successive and numerous attempts—to introduce an occupier's liability Bill dealing with trespassers, based on recommendations made by the Law Commission. Unfortunately they all foundered, principally because the country landowners' lobby—I hope they will not mind my referring to them like that—did not favour the Bill which was proposed. It has since become clear that the country lobby does not like Herrington and they would rather see something along the lines of the Law Commission's recommendations, coupled with an exclusion of liability to the criminal trespasser, then leave things as they are.
In addition, there have been suggestions made by the users of the countryside that the Health and Safety at Work Act 1974 and the Unfair Contract Terms Act 1977 prevent free and easy access to the countryside for leisure purposes, because landowners are now unable to restrict their liability for injuries suffered by people who come on to their land; and that is the rationale of the amendments to which we have not yet come.
Although there is considerable pressure for change in this area of the law, I am bound to tell my noble friends that it would be premature to introduce changes into this Bill. Discussions have been continuing for some months on the question of the extent to which the present law on occupier's liability is restricting access to the countryside. As a result of these discussions, a consultation on the main problems and changes which have been suggested has been undertaken and is still in progress with other departments and a large number of other interested outside bodies, including the Bar, the Law Society, consumer associations and various local authority bodies, which are all closely interested in the result. It would not be right to move prematurely into making changes in this Bill before that consultation has been completed.
The implications of the changes which have been suggested have not yet been thoroughly thought out, and it is possible that they might have consequences not only for countryside use but for the use of urban property as well. The new clauses are not restricted in any way to countryside and would quite clearly extend to urban property. The suggestion that liability for personal injuries suffered by users of the countryside might be restricted by the use of exclusion clauses would be a major departure from the principle established in the Unfair Contract Terms Act 1977, and to restrict liability under the Health and Safety at Work
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Act 1974 would be a major departure from the principle of that Act.
Although the response to the consultation paper has so far been slow, it is at any rate suspected that the suggestions for change put forward in the second and third of the amendments would be controversial, and the possibility that any changes would apply to all property, urban as well as rural, is one that is likely—indeed almost certain—to be resisted by the consumer organisations. My view, on which I have taken advice, is that it would be wrong to introduce changes into the law before the consultation has been completed and full and thorough consideration has been given to its results. There must be consultation in these matters. One of my noble friends behind—I am sorry I cannot be quite certain which—asked me how far the consultations had gone. I will write to him with an accurate description of the position. They are not complete.
I would ask my noble friend, therefore, to withdraw this amendment. We are not blind to the genuine problems involved and to the importance of the interests which promote them. But we are not in a position to use this Bill as a vehicle for them. I hope that with that explanation, which is not intended to be wholly unfavourable, he will find it possible to withdraw this amendment and—I tell him this, because I know that there is to be an early resumption of the House, and I do not think we are likely to reach the next two amendments this afternoon—I hope he will consider that, to this extent, this is a fairly clear prognosis of the kind of answer he is likely to get on those two as well. But, on this one, which is the best of the three from his point of view, I am not yet ready to accept it into this Bill. However, we recognise the importance of the question which he has raised and look at it not unsympathetically.
Lord Stanley of Alderley: I knew that my noble and learned friend would get me in a muddle and, of course, he has. I would start by saying that he trespassed very strongly on my next two amendments, and, if he is going to do that, I do not see why I should not trespass on them, too, which is what I think he wants me to do. We moved on to what I call my Access to the Countryside Bill which he answered, but I do not think he really answered at all satisfactorily.
First, I do not see why I cannot move this amendment, when the Long Title to the Bill states in the second and third lines that it is,
"to amend the law relating to actions for damages for personal injuries, including injuries resulting in death".
This is what we are worried about when people come on to our farms. The point here is that the Government had a conference in June 1981 to decide what should happen and it is now nearly April 1982. I know that the law moves very slowly, and perhaps it is a very good thing that it should. But I should like to draw my noble and learned friend away from his law points, of which I understand not one word, and on to the actual practicalities.
The Government had a conference and a meeting between the parties and they all agreed. If there is one thing that is enormously precious in this life, it is getting two or three people to agree. It is extremely difficult to do that. When you get them to agree, I

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suggest that the answer is to move forward very rapidly, but that is what the Government have not done. My noble and learned friend mentioned lots of other organisations, such as the Consumers' Association, and I thought at one moment he was going to mention the PLO. But they are not involved in this discussion.
I should like a firm assurance from my noble and learned friend that we will have a little more progress, because, as I understand it, the law is there to serve me. I am not there to serve the law. Here we are trying to open the countryside to the people, but, in fact, we are baulked, and I do not believe that that is the Government's intention. I believe that it is the Government's intention to help us open our farms to the public. But I think my noble and learned friend accepted that there are worries over the 1977 Act, tied up with the 1957 Act. It was the 1977 Act which messed up the 1957 Act and, therefore, I should have thought that this Bill, which is a tidying up measure, might tidy up the mess which the 1977 Act made of the 1957 Act.
I could go on and read the speech that I was going to make on the other two amendments, but I have covered most of the points. But there are various issues. First, it is surely very important to differentiate between my obligation as an employer to my employees, and my obligation to the public whom I have invited or have let come on to my farm, with no charge. At the moment, as the law is written, the obligation is absolutely the same. I want to make it clear that I do not want to get out of my common law liability to these people. I just do not want—to use an agricultural term, as my noble and learned friend uses legal terms—to be leant on by the law, which is the position at the moment, and I do not believe that my noble and learned friend wants that either. I implore him now to get these consultations going and to try to keep this matter moving forward. I should have liked to hear him say, but I do not think he will, that by the time the Bill reaches another place we might have made some progress.
The Lord Chancellor: I can say only what I believe to be true. I am in favour of the consultations going forward with all possible speed. I agree that the law is to serve the public and not the public to serve the law, but not entirely that one must press forward with every change which will, in fact, be controversial. I said on the Second Reading of this Bill that I could not take on board a great number of amendments to put into this Bill. I got it into the Government's programme after consultation with various interests in Parliament, in both Houses, and I must keep faith with them.
The only thing my noble friend will achieve by pressing this amendment is simply to lose the whole Bill. I cannot help that. I explained it from the start and I am bound, therefore, to keep this Bill within a reasonable compass. There are a number of amendments of various kinds coming from very different quarters of the House, with some of which I have very great sympathy. But I cannot add to the Bill, at the moment, amendments wholly altering the nature of occupiers' liability, especially as the amendments are not drawn to be limited to rural areas, but, so far as I can see, apply to urban areas as well.
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I do not think I am being unreasonable about this. I am willing to help my noble friend in every way I can, both on this amendment and on the two subsequent amendments. But I cannot necessarily agree that they should be embodied in this Bill, not because they are out of order—of course, they are within the Long Title and the scope of the Bill; it would be very difficult to devise an amendment which was not within the scope of the Bill—and I simply say to my noble friend, in all humility and in words which I hope he will not understand, that I an not leaning on him in the least. I am making a?cri de coeur to allow me to pass rather a harmless measure, although one of monstrous size, and to keep my promises, on the faith of which people have acted to my advantage and which I intend to keep to the best of my ability, cost what it may.
But I am not being unsympathetic to my noble friend. I sympathise with his point. I am anxious for these consultations to go forward. But I am sure that he would not get them through, riding on this particular bicycle. I will try to devise a vehicle for him, if one can be devised. I hope that it will have round wheels and not square wheels, and that it will go forward with acclamation and success. But this, I am afraid, I cannot promise on this occasion and in this context; otherwise, I would.
Lord Stanley of Alderley: With those very kind remarks of my noble and learned friend, of course I will withdraw this amendment. I am sure that if he keeps on pushing at the wheel, we shall one day get these minor adjustments to the law through in a satisfactory Bill. I beg leave to withdraw my amendment.
Amendment, by leave, withdrawn.
Lord Sandys: In view of the considerable length of the debates which are to follow, it might be for the convenience of your Lordships if the House were resumed at this stage. I beg to move that the House do now resume.
Moved, That the House do now resume.—(Lord Sandys.)
Lord Elwyn-Jones: Before the Question is put, may I, on behalf of noble Lords who have taken part in the proceedings since three o'clock, express our gratitude to the noble and learned Lord the Lord Chancellor, who has batted single-handed on most of these matters for over three-and-a-half hours.
The Lord Chancellor: I am very grateful indeed to the noble and learned Lord, who is always more kind to me than I deserve.
House resumed.

Wool Textile Industry (Scientific Research Levy) (Amendment) Order 1982
6.30 p.m.
Lord Cullen of Ashbourne: My Lords, I beg to move that the draft Wool Textile Industry (Scientific Research Levy) (Amendment) Order 1982, which was laid before this House on 2nd March, be approved,

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and, with your Lordships' permission, I will speak also to the draft Wool Textile Industry (Export Promotion Levy) (Amendment) Order 1982 which was laid before this House on 2nd March.
The two orders are closely connected and they can most conveniently be dealt with together. I should explain that it is necessary for there to be two separate orders, although they are closely connected, since the purpose of the two levies is different. One levy is for scientific research into the technical problems of the industry, carried out by WIRA (formerly the Wool Industry Research Association) and the other for the promotion of exports of woollen goods effected by the National Wool Textile Export Corporation, known as NWTEC.
The effect of these orders, which are under the authority of the Industrial Organisation and Development Act 1947, is to provide for the amendment, first, of Statutory Instrument 1970/349 (the Wool Textile Industry (Scientific Research Levy) Order 1970), as amended by Statutory Instrument 1971/881 (the Wool Textile Industry (Scientific Research Levy) Amendment Order 1971); and, second, of Statutory Instrument 1970/348 (the Wool Textile Industry (Export Promotion Levy) Order 1970), as amended by Statutory Instrument 1971/880 (the Wool Textile Industry (Export Promotion Levy) (Amendment) Order 1971). The changes proposed in the orders are twofold. Perhaps the most significant one is that the scientific research levy shall cease to be payable in the wool textile industry after the levy period ending on 31st March 1983. The other is that the orders provide that the level of exemption from liability to pay the two levies (that is, for scientific research and export promotion) will be increased with effect from the current levy period ending on 31st March 1982.
It may be helpful if I explain at this point a little of the background to these statutory levies which were established in 1950. The scientific research levy was introduced to provide funds for scientific research carried out by WIRA. These funds replaced grant hitherto paid by central Government in one form or another since 1918. The export promotion levy was introduced to provide funds for the work of the National Wool Textile Export Corporation which had been financed since 1941 by the Board of Trade. The objective of the levies was to spread the cost of research and export promotion aimed at benefiting the industry as a whole on as equitable a basis as possible to all firms within the industry. The proceeds of these levies are paid over, without deduction, to the two organisations concerned.
As part of a general review of statutory levies in industry, the Department of Industry conducted a poll last year of companies which pay these wool textile industry statutory levies. The result of this poll showed that a significant majority of companies (58 per cent.) had voted for the termination of the scientific research levy and a small majority (51 per cent.) for the continuation of the export promotion levy. It is obviously right that the views expressed by a substantial majority of the industry should be respected. But having accepted the views of industry on the scientific research levy, we recognise the difficulties that would be created in discontinuing it overnight.
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We have taken the view therefore that a period of adjustment is desirable so that the industry and WIRA might consider possible alternative arrangements. In effect, the provisions of the draft order mean that the levy would be phased over a period of some two years after the poll was conducted.
It is certainly not the intention of either the industry or the Government that research carried out by WIRA on behalf of the industry as a whole should cease to exist but rather that, as a result of the draft order and a new system of funding to which it would inevitably give rise, WIRA should become more commercially orientated and responsive to the needs of the industry which it serves. I know that WIRA is confident about its own future in the post-levy period. Many firms have intimated that they would be prepared to contribute by voluntary subscription. It is my belief that a move from a statutory levy to voluntary support, combined with greater reliance on charges for specific services, represents the most effective way of securing this change in direction.
Let me now turn to the second aspect. As I have said, both orders contain provisions to assist at once the smaller firms in the industry by raising, with effect from 1st April 1982, the exemption level below which firms do not have to pay levy. Both levies are collected at the same time on one assessment form. The Department of Industry then divides the proceeds in the appropriate proportions between the two recipient bodies. The exemption limit for both levies is therefore the same. The levies are collected in arrears, the collection commencing on the 1st April 1982 relating to the levy period 1st October 1981 to 31st March 1982.
The present position is that companies are exempted from making payments where the assessed amount would be just under £5, or less, in any six-monthly levy period. The new orders would increase this exemption limit to just under £100 per levy period. At present, some 70 companies out of nearly 700 assessed for levy are exempted from payment. The proposed increase in the limits will exempt approximately 200 further companies. This is a very substantial increase and in suggesting it we have of course had to have regard to Section 9 of the 1947 Act which requires that the authority making the order shall satisfy themselves,
"that the incidence of the charges as between different classes of undertakings in the industry will be in accordance with a fair principle".
We are so satisfied for three reasons. First, these new exemptions will not increase the levy payable by those who remain liable. They will pay the same as before. Second, the new exemptions will not cause a significant loss of revenue to WIRA and the export corporation. The loss will be less than 4 per cent. of these bodies' levy income. Third, many of these smaller companies have in practice received little benefit from the activities which the levies finance.
At present the scientific research levy yields about £411,000 per year and represents about 27 per cent. of WIRA's total income. The remainder of their income is derived from contributions from the Department of Industry towards expenditure on approved Textile Research Council contracts, subscriptions, rent, royalties and the like. The export promotion levy

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yields about £365,000 per year, and represents over 85 per cent. of the export corporation's total income. It is estimated that under the proposals which we are now considering, WIRA's income will be reduced by some £11,700 and the export corporation's by about £10,400 in a full year, or less than 4 per cent. of the amount they receive from levies, though the precise amount is difficult to calculate with certainty because the levies are based by reference to levels of emoluments and weights of fibre supplied which will obviously vary from one year to another.
As is required by the 1947 Act, the department has consulted organisations representative of persons carrying on business and those employed in the industry. The industry's representative organisation, the Confederation of British Wool Textiles, support the changes proposed. The two unions consulted, namely the National Union of Dyers, Bleachers and Textile Workers and the General and Municipal Workers' Union, would prefer that both levies should continue. We have taken serious account of that view, from the organisations representing persons employed in the industry, but we have decided on balance that the scientific research levy should be phased out. The matter has been discussed also with WIRA and the National Wool Textile Export Corporation, which have accepted the proposed amendments to the orders which I am putting before the House, which are essentially based on the wishes of the industry. I therefore ask the House also to accept the wishes of the industry and to approve these orders. I beg to move.
Moved, That the draft order laid before the House on 2nd March be approved.—(LordCullen of Ashbourne).
6.40 p.m.
Lord Bishopston: My Lords, I am sure that we are all grateful to the noble Lord, Lord Cullen of Ash-bourne, for having explained these draft orders in the way he has. On a day when your Lordships' House has already undertaken the consideration of a great deal of business, and when much still remains to be done, there may be a temptation to let these orders go through "on the nod", but I rather feel that if the time was available this topic could be the subject of a major debate because it concerns the present and future position affecting the wool textile industry, which, as many noble Lords will know, has been greatly hit by circumstances to which in a moment I shall briefly make reference.
Although these orders are small and may appear to be insignificant, they are really of great importance to the wool textile industry generally and to certain parts of the United Kingdom in particular, in areas which have been badly hit by the recession and by Government policies. The substance of the Minister's introduction is to warn both us and the wool industry that the levy on the industry for scientific research and the promotion of exports is to be phased out. Another aspect to which the noble Lord has made reference is that each of the orders substantially raises the level (and I am now quoting from the Fifteenth Report from the Joint Committee on Statutory Instruments),
"below which firms in the wool textile industry are exempt from paying the research levy and the export promotion levy payable
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under 1970 Orders in that industry. The levels are, however, raised very dramatically: from £2,500 to £50,000…".
The noble Lord the Minister has made reference to that. I do not want to pursue the report's points about procedure, but it says:
"In this case the effect of the massive increases in the exemption limits proposed by the Order would be that some third of the firms in the industry would be exempt from the levy, as compared with the 10 per cent. of firms that are at present exempt. To raise the exemption limits to such an extent constitutes in the Committee's view an unusual use of the powers conferred by section 9.".
I do not wish to pursue that particular point of the Committee's report, but I want to draw attention to the very high increase in the exemption levels because they are very important.
In one case, as the Minister says, one levy is for scientific research into the technical problems of the industry by WIRA and the other is for the promotion of exports of woollen goods by the National Wool Textile Export Corporation. These levies have helped two aspects which are absolutely vital to the future of the wool textile industry, at a time when the industry has been very badly hit by economic problems and by the economic policies of Her Majesty's Government—especially by high interest rates and foreign competition. Indeed, over the past two years hundreds of wool mills have closed and thousands of jobs in the wool textile industry have been lost in parts of Yorkshire. The unions have been very concerned about these job losses and about future prospects, if this kind of policy continues to prevail. Surely there has never been a time when the industry needed more effective R and D in order to remain competitive in the face of strong challenges from abroad. Adequate investment is vital, but it must be based upon the findings of scientific research, on up-to-date techniques, and have scientific backing.
The other area of great importance is that of export promotion, which is so vital at the present time. The Government will realise that we have to be competitive with economically produced materials and textiles and also by export promotion. There have been reductions in overseas missions in recent years together with a reduction in trade fairs and market research. Although there has been a demand of the industry with both of these levies, without such a levy without co-ordinated research, and without strong export promotion (co-ordinated and not piecemeal, which will be the result of this policy) the wool textile industry will not be ready to face the challenges of the post recession period.
We find ourselves confronted by bad policies yet again. I am sure the industry must realise that, despite the problems, what is needed is centrally co-ordinated research. If this is going to be left to be done piecemeal by firms who are already exempted considerably by this order or, after the levies have been phased out, for firms to pursue their own research, if any at all, without the pressures and incentives of central co-ordination, this will make the industry far less competitive. Therefore, the future of our wool textile industry and the thousands of jobs concerned with it must depend upon more co-ordinated effort backed by Government resources instead of being left to market forces to the detriment of our industry and, surely, to the pleasure of our competitors abroad.

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This is a bad policy. It is too late for the Government to review their policy now, but, whatever takes its place, we should bear in mind the need for coordinated and effective research to help in our competitiveness in the future.
Lord Cullen of Ashbourne: My Lords, the noble Lord, Lord Bishopston, will be pleased to hear that WIRA itself is very happy with this new development and sees the co-ordination which the noble Lord talked about working very well on a voluntary basis, with firms being able to tailor their research even better under the new system to the requirements of their individual companies. The noble Lord referred to the rundown in the wool textile industry as a result of this Government's policy. The really great days of the wool textile industry peaked in the 1920s, and I am afraid that there has been a falling off in wool textiles ever since those days, with, admittedly, a considerable fall-off in the period of the recent recession.
On Question, Motion agreed to.

Wool Textile Industry (Export Promotion Levy) (Amendment) Order 1982
6.47 p.m.
Lord Cullen of Ashbourne Lord Cullen of Ashbourne rose to move, That the draft order laid before the House on 2nd March be approved.
Lord Cullen of Ashbourne: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
On Question, Motion agreed to.

Social Security (Class 1 Contributions—Contracted-out Percentages) Order 1982
6.48 p.m.
Lord Cullen of Ashbourne Lord Cullen of Ashbourne rose to move, That the draft order laid before the House on 3rd March be approved.
The noble Lord said: My Lords, with your Lordships' agreement, for the convenience of the House I propose to deal in my opening remarks with the draft order to which I have just referred and with the draft regulations which appear next on the Order Paper.
The background to these two statutory instruments is technically complex, as can be judged from the reports by my right honourable friend the Secretary of State for Social Services and the Government Actuary. However, I shall do my best to avoid burdening your Lordships with too many technicalities and concentrate so far as possible on the social and policy issues.
My right honourable friend the Secretary of State for Social Services has a statutory duty to review at least every five years the terms under which good occupational pension schemes can be used to contract employees out of the earnings-related tier of the state retirement pension arrangements. In this the
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first review, we are making the minimum number of changes consistent with fairness to all parties; for we are but four years into the 20-year maturity of a new scheme. Before describing the changes we propose from April 1983, I should like to remind the House of the recent background to, and the structure of, the current atrangements.
Under the provisions of the 1975 Pensions Acts, a substantial earnings-related pension will become available as the new state scheme matures. This pension is in addition to the flat rate retirement pension. So that these state scheme arrangements could dovetail with the provisions of existing occupational pension schemes, the Act provides that members of occupational schemes may, on strict conditions, be contracted-out of the earnings-related element of the state scheme. The essence of contracting-out is that occupational schemes guarantee to provide a pension broadly equivalent to the state additional pension. To finance this commitment, national insurance contributions for contracted-out employments are reduced.
Originally, the Government of the day had it in mind to reduce national insurance contributions by a total of 6½ per cent., but in fact settled for 7 per cent., so that a reasonable contingency margin was allowed. This concession was particularly helpful to schemes with above-average concentrations of female or elderly employees (for whom it is more costly to provide pensions), but it was intended also to allay anxieties about the viability of contracting-out in uncertain economic conditions. Other important safeguards were introduced to apply when schemes had to buy back into the state scheme.
There can he no doubt that these contracting-out arrangements, which took effect in April 1978, have been a considerable success. Of the 11·6 million current members of occupational schemes in 1979, some 10·3 million were contracted-out. Occupational schemes have investments whose current value probably exceeds £75 billion. Much of this investment is in British industry. Given these statistics, I am sure your Lordships will readily appreciate that one of the Government's primary objectives is to maintain the stability of these arrangements so far as is practicable.
I turn now to the revision of the contracted-out contribution reduction that is the subject of the draft order. When the DHSS consulted the interested parties in August last year, it issued a technical analysis prepared by the Government Actuary. His analysis showed that a contribution reduction of only 6 per cent., a full 1 per cent. below the current 7 per cent. reduction, could be justified but that a financially neutral option would be an abatement of ¾ per cent. to 6¼ per cent. We chose this option because the ¾ per cent. abatement could be justified purely in terms of the reduced costs of covering contracted-out commitments—½per cent. because, as the average age in contracted-out schemes reduces, a reduced level of funding is required; ¼ per cent. because actual age and sex distribution data could be substituted for earlier estimates.
But there are other important considerations which justify our decision to opt for 6¼ per cent. We believe that to have taken a harder line could have riskezd a movement away from contracting-out. This could have disturbed investment markets and jeopardised the

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pension expectations of the scheme members concerned. On the other hand, to have opted for a lesser abatement would have improved the terms for contracting-out to the disadvantage of full-rate national insurance contributions—that is, those not members of contracted-out schemes. Finally 6¼ per cent. is in our judgement an admirable compromise which strikes a fair balance between those like the TUC who championed the cause of full-rate contributors by pressing for 6 per cent. and those like contracted-out employers and the pensions movement who would have preferred 6½ per cent.
I shall deal next with the apportionment of the ¾ per cent. abatement between employer and employee. To give a modest boost to contracted-out employers, the Government have decided to share the abatement almost equally between employer and employee rather than in proportion to the present shares of 4·5 per cent. and 2·5 per cent. respectively. The new contribution reductions from April 1983 will be 4·1 per cent. employer and 2·15 per cent. employee. It is to be hoped employers will acknowledge that we have helped them as far as possible, given the need to strike a fair balance.
I turn now to the changes in the so called buy-back terms which are the subject of the draft regulations which appear next on the Order Paper. Contracted-out schemes may in certain circumstances transfer their liabilities to the state scheme by paying premiums. A premium reading taken from the appropriate actuarial table is subject to adjustment by a device called the average market level indicator. This device was introduced as a political concession to protect occupational schemes which would otherwise have had to sell investments at a loss in order to raise the cash for premiums. It is clear from the Government Actuary's report, and generally recognised by those who contributed at the consultation stage of the review, that the present arrangement has persistently worked to the excessive advantage of schemes and the disadvantage of the National Insurance Fund. The modification embodied in the draft regulations corrects the position while at the same time maintaining the original objective. In the interests of stability, the modification is to be phased in by five annual steps.
The modified formula, based on the expert advice of the Government Actuary, is intended to secure premiums which are more balanced. The gradual phasing of the increases meets the wishes of the pensions movement. However, the Occupational Pensions Schemes Joint Working Group have in a letter to my right honourable friend expressed some anxiety about the effect of the premium increases in the event of a serious deterioration in he investment markets. So far, we have only an outline of their thinking, but we are confident that there is no immediate cause for concern and that it is right to proceed with the regulations as they now stand. My right honourable friend has made it quite clear that, when he has received full details of the group's precise misgivings, he will consider the matter further. Of course, any view expressed by your Lordships will be carefully noted and brought to the attention of my right honourable friend and the Government Actuary.
Finally, I conclude my opening remarks by reaffirming the Government's commitment to the partnership between the state and occupational pension schemes—
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a partnership which ensures that the burden of providing income in retirement is shared on fair terms. I ask your Lordships to recognise that the Government have approached these reviews responsibly and objectively and have sought to maintain confidence in the partnership by striking the fairest possible balance between the conflicting interests. I beg to move.
Moved, That the Social Security (Class I Contributions—Contracted-out Percentanges) Order 1982, laid before the House on 3rd March, be agreed to.—(Lord Cullen of Ashbourne.)
Baroness Jeger: My Lords, nothing could look duller on the Order Paper than the listing of these two orders before your Lordships tonight, and it would he very hard for people who have not taken a special interest in these matters to realise that we are dealing with orders of intense human interest which affect millions of people as regards the standard of living they can expect when they come to retire. So I want to ask the noble Lord a few questions and make some observations on what sounds a very arcane and complicated matter with which one is tempted to deal rather formally, especially in view of the considerable business still before the House.
I remember in another place when the 1975 Social Security Pensions Act was brought into force. I think that was a measure of great political courage and imagination which was approved on all sides of the House, because the introduction of the right to opt out of national insurance and into occupational schemes was, I think, a very progressive and fair measure. Because so many people are involved, we must be sure that we get things right. The noble Minister has made clear that, at present, people who opt out, enjoy a reduction of 7 per cent. in their Class I national insurance contributions. The TUC, as the noble Minister rightly said, would prefer it to stay at a 7 per cent. abatement. But I understand that employers would have preferred 6½ per cent. The Government have decided on 6¼ per cent.
I do not want to go into a great deal of actuarial detail—in fact, as probably the least numerate Member of your Lordships' House, I certainly could not do so. But I was grateful that the Minister explained that the shift in this abatement and the new division mean that, instead of a share of 4½ per cent. from the employer, and 2½ per cent. from the employee, it is now moving to 4.1 per cent. from the employer and 2.15 per cent. from the worker. My arithmetic may be appalling, and I am sure that the noble Minister will correct me if I am wrong, but as I work it out it means that the workers are about 0.1 per cent. worse off. I do not know how much that would come to in money terms for a worker on average wages per week, but however little it is, considering the very big increase in national insurance contributions overall, I hope that it is not the beginning of a further shift to make the workers' contribution greater. It may seem a small matter at the moment—0.1 per cent—but I very much hope that it is not the first swallow indicating that the Government are changing their mind and deliberately going in for a policy which will worsen conditions for the employees.
I want to raise some points which are not strictly detailed but which I think are very relevant. I understand—again subject to correction—that a change of a

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¼ per cent. is worth about £125 million to the pension industry. I think that that means that the Government ought to be dealing perhaps a little more persuasively with what I must call "the pension industry". There are many schemes which affect people who have contracted out, where transferability ought to be improved. There are many people who find that, through changing jobs—which increasing numbers of people have to do—their pension rights are still adversely affected.
When we brought in the Bill in the other place in 1975 I remember being told that the average time that a worker stayed in a job was 10 years and that much of the actuarial work was based on the fact that 10 years was a fair average. I think that anyone who stays in a job for 10 years nowadays is very lucky indeed. It is the early leavers—early leavers often through absolutely no fault of their own—who are not as warmly protected as they should be in many of these schemes. If we are to encourage the occupational pension industry, then I think that we must ask for some more social justice and understanding in that direction as there are serious losses for many people when they change their jobs. I understand that the Occupational Pensions Board is concerned about this matter and I hope that we may be able to hear—if not tonight then at some future time—what notice is being taken of their representations.
Of course in most of these schemes there is no inflation-proofing. It may be that, with the changes that are being brought in, some consideration should be given at least to an element of inflation-proofing because one hesitates to think what will happen to some of these pensions in 20 years time, in terms of their buying power. The only other point I want to make about buy-back schemes has, I think, been dealt with very fairly by the noble Minister. I understand that he agrees that the Occupational Pension Schemes' Joint Working Group has expressed some anxiety about the present situation and the very large increase which is to be phased in.
The final point that I want to make concerns the basis upon which many of these calculations are made. Again I do not want to go into detail. I shall only say that I do not think that anybody can be sure that we have the formula absolutely right. For the benefit of any noble Lord who may not have this exciting document before him I shall quote from the Explanatory Note. It says:
"These regulations continue to provide that the market level indicators are averaged over the first 5 days on which the London Stock Exchange is open during the month in which the liability for the payment of a premium arises".
It is very exciting stuff!
"But phased adjustments to this calculation are introduced where the average market level indicator would have been less than 105. Provision is also made for rounding".
This may be absolutely the best formula in the world, but I am always suspicious of such formulae and I would be interested to know whether any consideration is being given to possible amendment which obviously we cannot do tonight. But I think that it would be wrong if these measures went through the House without us indicating, from this side at least, that we do want to see them in the framework of further, longer term consideration.
7.7 p.m.
Lord Banks: My Lords, I should like to join the noble Baroness in thanking the noble Lord, Lord Cullen of Ashbourne, for his explanation of these measures. Perhaps I should begin by declaring an interest since I am an insurance broker and it is part of my task to advise my clients as to whether they should contract out of their pension schemes or contract them in.
I noticed in the Secretary of State's report—and I think that this sentiment was echoed in the speech of the noble Baroness—the following words:
"When the 1975 Bill was under consideration there was a great measure of consensus between the main political parties. There was a common will to make the proposed arrangements work and endure".
I should like to make just a brief comment on that. We on these Benches would greatly have preferred a higher basic pension and we did put forward an entirely different proposal in place of the earnings related pension. We called it the "central account idea" which I explained during the Second Reading debate in this House on 24th June 1975. But we did say that if the Government's proposals were the ones that were to be effective, and not ours, then we certainly hoped that, the decision having been made, there would be no more chopping and changing and that we would all co-operate to make them work. So there was not exactly consensus about what should be done, but there was consensus about a general effort, after the decision had been made, to make whatever scheme was chosen, work. So far as we are concerned, that still applies.
These measures are technical and not, on the whole, controversial. But, of course, as has already been pointed out by the noble Lord, Lord Cullen, they do affect all contracted-out schemes. Indeed, 45 per cent. of all those who are employed are in contracted out schemes, and that covers nine-tenths of people who are in occupational schemes. All those schemes must be reviewed in the light of the new terms. So what we are discussing this evening is of some fairly widespread significance.
We have, of course, always known that after five years the 7 per cent. abatement in the national insurance contribution for contracted out schemes would be reduced. As more people with a larger accrual period for their guaranteed minimum pensions replaced those with a shorter accrual period, the degree of funding necessary in the occupational schemes would be reduced. Of course, some adjustment is also necessary as details about the distribution of membership by sex, age and earnings are now known, but were not known in 1975, when they could only be assumed. In the light of the Government Actuary's report on these matters, the reduction to 6¼ per cent. is not unreasonable. As the noble Lord pointed out, it is half way between the 6½ per cent. which was asked for by the employers and the pensions movement and the 6 per cent.—not the 7 per cent. as, I think, the noble Baroness said—which the TUC wanted, championing, as the noble Lord said, the cause of the full contributors—those who are contracted in.
The noble Baroness referred to a ¼ per cent. alteration in the rebate as being worth £125 million to the pension industry. I think that that figure originated in an article published in the Financial Times on 4th March,

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and it was, as I understood it, the value of a ¼ per cent. rebate. That was the total value of it. If you reduce the rebate by I per cent., the money goes to the National Insurance Fund, but, if you increase it by ¼ per cent., the money goes to employers and employees who make the contributions, and it does not follow by any means that it will be spent on further pensions. So I do not think that it is correct to say that it is worth £125 million to the pensions industry.
However, I agree with the noble Baroness when she regrets that the split between employers and employees is marginally in favour of employers, in view, as she said, of the recent increases which have been made in the last two or three years in the national insurance contributions of employees.
There were rumours that the Government were going to make it prohibitively expensive to buy hack into the state scheme, but I do not think that that has proved so in practice. The 12 per cent. limit on the inflation figures in the five years before buying back, which was a safeguard, remains and the average market level indicators which are used to adjust the premium in the light of market conditions—that is, the premium which has to be paid to buy somebody back into the earnings-related pension part of the state scheme—have, as the noble Lord said, been working out too favourably for occupational schemes as against the National Insurance Fund. As he also said, I think that that is generally agreed. But, as both the noble Lord and the noble Baroness pointed out, some fear has been expressed that the balance has perhaps now tipped the other way.
If the indicator is in the 70–80 range, it will add 3 per cent. to 5 per cent. over the present position each year for five years, so at the end of five years, if the indicator is in that range, the premiums would be about 15 per cent. to 25 per cent. higher than they are now. I think that obviously this must be watched, and I am sure the noble Lord would agree that it must be monitored carefully. However, on the whole, I think that the buying-back position is not substantially altered.
I must resist the temptation to talk about transferability and the inflation-proofing of occupational schemes over and above the guaranteed minimum pension, attractive as it would be to do so. These are important problems, but I do not think that they are entirely relevant to today's debate. The worst problem is the long-term financial viability of the scheme in the first quarter of the next century. I am sure that we shall have to discuss these matters seriously before long, but for today we are content that these orders should be approved.
Lord Kilmarnock: My Lords, I, too, should like to thank the noble Lord, Lord Cullen of Ashbourne, for his clear and thorough exposition of the origin, purpose and effects of these draft regulations and this draft order. As he has explained, they are the outcome of the first quinquennial review of the relationship between occupational pension schemes, whose beneficiaries are partly contracted out of the state scheme, and the state scheme itself, as provided in the Act of 1975, which came into effect in April 1978, almost exactly five years ago.
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At first sight, the adjustments here may seem of small account—a matter of fine tuning of a complex scheme which is, on the whole, working rather well. The noble Lord, Lord Cullen, with some justification, claimed success for it. However, it is an important matter, affecting, as it does according to the Government Actuary's report, some 10.3 million people. Incidentally, this report Command—Paper 8516—makes very interesting reading and provides a great deal of useful information on how the Social Security Pensions Act has been working in so far as it applies to occupational pensions. I commend it to all your Lordships who are interested in these matters.
One of the most delicate pieces in the mechanism linking these funds to the basic state scheme is the state scheme premium payable when contracting-out ceases and responsibility for a guaranteed minimum pension is transferred—in full or in part—from a contracted out scheme to the state scheme. According to the Government Actuary in paragraph 55, in cases where such transfers have taken place, occupational schemes would appear to have made a profit from the contribution reductions they have been allowed.
As the noble Lord, Lord Cullen, has confirmed, this is what is really behind the new mechanism for calculating the average market indicator, which determines the amount of premium payable when an occupational pension scheme ceases to contract out of the state retirement pension scheme. There are no grounds that I personally can find for quarrelling with this adjustment, though, as the noble Lord, Lord Banks, said, I think it wants to be watched.
However, like both the noble Baroness, Lady Jeger, and the noble Lord, Lord Banks, I must express some unease at the other main provision which is the subject of the draft order: namely, that in which the state contribution reduction allowed to those contracted out—those 10 million—is abated from a total of 7 per cent. to 6¼ per cent. This in itself may be reasonable. Indeed, the Government appear to have opted for a classic compromise—the noble Lord, Lord Cullen, confessed to this—between the 6½ per cent. that was acceptable to employers and the 6 per cent. argued for by the trade unions, representing full rate contributors. However, like the noble Baroness, Lady Jeger, and the noble Lord, Lord Banks, I am less than happy with the way in which abatement is shared between employer and employee. The employer's proportion goes down from 4·5 per cent. to 4·1 per cent. and the employee's from 2·5 per cent. to 2·15 per cent. The Secretary of State acknowledges in his report—Command 8518—that:
"This split is marginally less heavy on employers than the one which was strictly proportional to the existing reduction".
"Marginal" is stretching a point, because 0·35 per cent. subtracted from 2·5 per cent. is proportionally a considerably greater reduction than 0·4 per cent. subtracted from 4·5 per cent. So the phrase "almost equally" used by the noble Lord, Lord Cullen, is not in fact quite accurate here.
One understands, of course, the desire not to increase business costs and to cushion the employer. But the proper way to do this, I submit, would have been in allowing a reduction of the national insurance surcharge rather greater than the 1 per cent. given in the Budget. The way in which the Government have chosen

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to do it means that 10 million people will have their pay packets further reduced—not by very much perhaps, as the noble Baroness pointed out, but it all adds up, especially on top of the recent 1 per cent. increase for all Class 1 employees. In our view, it would have been better if this abatement had been shared on a basis of strict proportionality.
Lord Cullen of Ashbourne: My Lords, I am grateful to noble Lords for their reception of these orders, and one or two points have been raised. The noble Baroness mentioned the employer's contribution rise, which was also mentioned by other noble Lords. Perhaps she would like to know that an employee on average weekly earnings will pay an increased contribution of no more than 12p per week as a result of the 0·1 per cent. reapportionment of the contribution between employer and employee. The noble Baroness asked me whether this was the thin end of the wedge and whether this might go on in the future, but I am in no position to give her any views on that subject. The noble Baroness also asked what the £125 million was worth to the pension industry, but the noble Lord, Lord Banks, kindly answered that matter for me.
The noble Baroness mentioned early leavers, and the noble Lord, Lord Banks, resisted speaking about it. It is a matter which concerns everybody. It really has no relevance in this particular debate we are having today, and it is a matter which of course is being studied, and studied very keenly. The noble Baroness asked about the market level indicator formula, which certainly looks on the face of it extremely complicated. The modified formula, like the existing formula, produces a single index number each month to be used in conjunction with the reading from the relevant actuarial table. The index number is readily available from DHSS officials, who do all the necessary calculations. Pension schemes individually do not need to calculate the index number. This is easily available to all concerned.
I would not wish to bring this debate to a close without acknowledging the spirit of co-operation between the political parties which has existed in recent years on pension matters. I believe that the political consensus has characterised our debate today and was indeed a feature of the approach to these statutory instruments in another place. The Government have no wish to disturb the political consensus, because we believe that there can be no better guarantee of the continuing success of the contracted-out arrangements. I commend to your Lordships these statutory instruments, which take into account the interests of all parties and seek to strike a fair balance between them. I beg to move.
On Question, Motion agreed to.

State Scheme Premiums (Actuarial Tables) Amendment Regulations 1982
Lord Cullen of Ashbourne Lord Cullen of Ashbourne rose to move, That the draft regulations laid before the House on 3rd March be approved.
The noble Lord said: My Lords, I beg to move.
On Question, Motion agreed to.

ECC 10th Report: Guidelines for European Agriculture and the 1982–83
7.23 p.m.
Lord Mottistone Lord Mottistone rose to move, That this House takes note of the report of the European Communities Committee on Guidelines for European Agriculture and the 1982–83 Farm Price Proposals (10th Report, 1981–82, H.L. 101).
The noble Lord said: My Lords, I am privileged to introduce the Motion standing in my name. At the outset I must remind your Lordships that I have to declare an interest, being in the employ of the Cake and Biscuit Alliance and the Cocoa, Chocolate and Confectionery Alliance, and thus have a bias in favour of food processors. I am indeed most grateful to our sub-committee chairman, the noble Lord, Lord Cledwyn, for inviting me to present the report to your Lordships on his behalf, because I had the privilege of chairing relevant meetings when we were taking evidence on which we wrote the report. I am also most grateful to my noble friend and the "usual channels" for facilitating the start of this debate just before dark. At one stage I thought I was going to be able to say well before dark, but we did not quite achieve that.
Our report considers guidelines for the improvement of the common agricultural policy which was issued by the Commission during 1981. It compares these with the price proposals for 1982–83 which were issued late in January 1982. We did not get the proposals in this House until well into February, and this gave us a very short time indeed to take the necessary evidence and to prepare the report. Indeed, though I think we got written evidence from all interested parties at—least, I hope so—we only took oral evidence from a selected few. However, all the evidence is published in vol. II of the report—which is not available today but will be shortly—and I can assure all those concerned that all the evidence, whether written or oral, and at whatever time, has been given due weight in the production of the report.
We also were only able to tackle four of the main product areas, though the price proposals cover another five sectors. There was no time to give them the scrutiny that they deserved. So once again—and we had to do this last year, and I think in pretty well every earlier year—we suggested to the Commission that these price proposals could well be submitted earlier. Just when, one cannot be sure, but clearly late January is not early enough, and we might suggest that they would consider making them before Christmas.
It would also be helpful—I do not know to whom I address these remarks; I rather suspect to the British Foreign Office—if, like many other organisations, but not parliamentary ones, when important papers of the sort of these proposals are issued by the Commission they could be got in some form or another to this House within days, and not in a week or two's time. I hope that my noble friend who will be replying for the Government will take the point that this is something which really is an administrative nonsense. It applies equally to his own department. They cannot get their papers as quickly as they should because they have to go through some process which is quite unnecessary, and yet we find that people who have offices in Brussels,

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as indeed the Government have, are able to get these papers the next day although official Ministeries, your Lordships' House and the other place, do not get them until some ridiculous machine has been made to work.
On a totally separate matter, the sub-committee fully appreciated that underlying the validity or otherwise of the price proposals was the wider discussion on the budget with its particular implications for this country. In view, however, of the timing of the budget decisions, the undesirability of speculating about them, and the need for an early report if the views of your Lordships' House were to have any impact on the decisions of agriculture Ministers who start their next meetings tomorrow, Sub-Committee D, which prepared the report, had to decide to stick to its last and concentrate on the proposals relating to agriculture and food.
In the interests of time I shall draw the attention of the House to only a limited number of major points in the report, and hope that my colleagues will fill the inevitable gaps. We start with Part II which discusses the guidelines, and those were generally welcomed by all giving evidence except the Dairy Trade Federation. The guidelines were thought by the Committee to be working in the right direction. Indeed, they followed many of the recommendations made by the Select Committee in its report on the common agricultural policy issued in February 1980. Sub-Committee D thus thought it reasonable to examine the price proposals against the background of the guidelines to see to what extent they had been progressed in those proposals.
In Part III the committee considers the guidelines and price proposals against the background of the current economic situstion in some detail. Though agriculture has suffered from the effects of inflation over past years, so have other industries, and it is suggested that agriculture should bear its share of the adverse circumstances. To inject at this point a personal thought, the difficulty seems to me to lie in the conflicting aims of Article 39 of the Treaty of Rome, which is repeated in the report to which I referred on the common agricultural policy in 1980.
I select particularly item (b) in paragraph 8 of the report, which refers to ensuring:
"a fair standard of living for the agricultural community, in particular by increasing the individual earnings of persons engaged in agriculture".
and sub-paragraph (e), which in contrast refers to ensuring:
"that supplies reach consumers at reasonable prices".
The problem is that the balance between those two points—incidentally, I note that Mr. Dalsager, the Agricultural Commissioner, in talking to the European Parliament, picked out those two as being the particular points which needed to be balanced—can be achieved only by giving due weight to the needs of all the consumers of agricultural raw materials as well as giving due weight to the producers of agricultural raw materials. And the Commission is not organised to do that. It has a very strong agricultural directorate-general in DG6, but it does not have anything comparable to look after the interests of the consumers or users of the raw materials. It needs to take a serious look at dealing with the problem.
In Part IV the committee turns its attention to a detailed assessment of the price proposals and notes that they recommend the highest increase yet made by the Commission. For those who have a copy of the report, a glance at the table at the end of paragraph 38 shows that the council has consistently added to the proposals in all the years since this country joined the Community. Not only are the price proposals inconsistent with the guidelines but they make no serious effort to contain the surpluses.
I divert briefly to draw attention to what I believe to have been the most irresponsible proposals made in the European Parliament last week, when, among other things, they called for a 14 per cent. increase in prices. We hope to hear a great deal more about that from the noble Lord, Lord John-Mackie, who kindly went to Strasbourg to attend the debates of that Parliament on behalf of the sub-committee. I would only say at this stage that those who are keen on the preservation of the Community—and one trusts that all the Members of the European Parliament, with the exception perhaps of a few Labour Members (I do not want to divert on to that) want to preserve the Community—really must (and this applies to the Commission's staff, too) take the point that if we go on overdoing the demand on Community resources for the CAP, the people of Europe will start to get fed-up—they are the consumers, after all—and say, "We have had enough of it". It is vital that those points are taken more seriously by those who are in a position to make decisions.
In Part V the committee consider the proposals for the four main product groups, but I will touch only briefly on those in the hope that my noble colleagues will tackle them in detail. The House might note in paragraph 44 of the report that support is given to the proposal for a lesser price increase for cereals than for livestock, thus introducing a welcome balance more favourable to livestock farmers. With regard to both sugar and milk, commented on in paragraphs 60 to 70, the proposals do nothing effective to contain surpluses and indeed pass on extra prices to the consumer. Particularly disappointing is the idea of a super levy specifically designed to discourage increased production, which has once again been discarded by the Commission. Concerning beef, the retention of the British variable premium scheme is welcomed and indeed is recommended as a permanent part of the beef régime.
In Part VI the committee give their view on the detailed effects on the United Kingdom in general and on Northern Ireland in particular, but I expect my noble friend Lord Brookeborough and the noble Lord, Lord Blease, to get their teeth into the latter subject. In the conclusions, in Part VII, the committee summarise the good points of the guidelines, welcoming particularly the concept of production objectives five years hence and the strong recommendation that the common policy should be for food as well as agriculture, on the lines recommended in the committee's 1980 report on the CAP, which is referred to earlier. In paragraph 83, the committee sums up its disappointment at the price proposals not carrying forward the imaginative suggestions in the guidelines.
The report concludes with a summary of the detailed point made by the committee. There are many

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nuggets of valuable information at the end of volume 1 of the report, in the tables, and I would draw your Lordships' attention particularly to table 9 and the two Ministry of Agriculture notes immediately following it. I believe those to be particularly valuable for general consumption. I suspect we may have two tables numbered 1; there is a table No. 1 at page XXX and another table No. 1, which I think should be No. 10, at page XLVI. That is the only mistake I have found, although I cannot claim to have read through the whole document completely thoroughly.
My noble friends who are gallant enough to take part in this delayed debate will appreciate that the more quickly we speak the more we shall be able to cover. have endeavoured desperately to keep to under 20 minutes; the noble Lord, Lord Mackie of Benshie, did not think I would make it in 15 minutes, and he was right, but I hope to do it in 20.
Lord Mackie of Benshie: Would the noble Lord give way?
Lord Mottistone: I hope the noble Lord will not stop me now, my Lords, because I have nearly finished and whatever the noble Lord wanted to say he will be able to say in a moment. It is sad that the first faltering steps in the guidelines towards rescuing the common agricultural policy from becoming the scapegoat of all the ills of the Community, whether real or imagined, seem to have been halted by this year's price proposals. My Lords, I beg to move.
Moved, That this House takes note of the report of the European Communities Committee on Guidelines for European Agriculture and the 1982–83 Farm Price Proposals (10th Report, 1981–82, H.L. 101).—(Lord Mottistone.)
7.37 p.m.
Lord Mackie of Benshie: My Lords, the noble Lord, Lord Mottistone, moved the Motion in a shorter time than he thought. Like many people outside agriculture, he missed the fact—he missed several facts, but he missed this one in particular—that the clock did not change, so he actually moved it in about three minutes less than the time he thought he would take. However, one expects farmers to be sharper than other people at noticing such matters. I wish at the outset to declare an interest, which is a total, strong and wholly subjective interest. Nothing I say will be fair. It will be directed wholly towards the farming industry because I regard that as the most important industry in the world, one which is in sad straits in many places.
I have been a member of the committee for some years and I have always tried to be objective. I have always thought that the greatest asset a farmer needs is not high but secure prices; he needs to know that he will get a certain price for his produce. He certainly needs, as a producer who takes two, three or four years in planning and producing his goods, to have some protection against the vagaries of the market. In that market, a 5 per cent. surplus can drop the price by 50 per cent., while a 5 per cent. shortage can raise it by 50 per cent., which is much to be desired. But taken as a whole, farmers have accepted that security is more important to production than high prices.
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We are looking at the whole question of the CAP, which is what everyone is now doing. We are not discussing simply the price view. We are discussing the whole trend of the CAP, and when we do that we ought to look at the trend in the world. The prices in the world markets are set by two factors. One is the CAP's subsidised export policy. That is one of the major factors in reducing the world price. The other is that in the United States and Canada there are enormous areas of land and by the prodigal use of cheap energy—much cheaper than ours—they race over vast tracts to produce grain in particular at a price which is below the cost of production in Europe.
But how long that can last in a world in which there is a shortage of energy I do not know. I do not think that it can last very long, and certainly we are getting many signs that the world cost of food is going to rise. I believe that we ought to take this factor into account when we are talking about the future of the CAP. I also believe that we ought strongly to take into account what is happening in Europe today. The NFU and other farming bodies have produced masses of figures, which cannot be contradicted, about the state of the industry. I know that all industries are in a curious state; the recession and the high interest rates have seen to that. But in farming there has been a steady decline in real income and an enormous build-up in indebtedness, which in Denmark, with high rates of inflation, is now resulting in a flood of bankruptcies. One-and-a-half years ago there were between only 100 and 200 bankruptcies in Denmark among the farming community, but I think that last year the figure was in the region of 4,000. There has been this sudden onrush of difficulty, and of high interest rates; but it must also have something to do with low returns.
When we look at the CAP we must take into account the other factors as well. I agree that the consumer and the processor have to be taken into account. But in fact the farming industry is in a bad way. It has to its credit tremendous achievements in Europe in the supply of, and continuity of supply of, food and in the lowering of the world price of food. But such achievements will not continue if farming falls into a greater and greater state of indebtedness and suddenly large numbers of small farmers in Denmark and other countries not backed by a strong industrial base start to go bankrupt.
We have the special case of Northern Ireland, which I agree should be treated as a special case when one considers the energy and efficiency with which the livestock industry there was built up on the competent importing and unloading of grain. I agree, too, that we must consider the consumer. I say "consider the consumer"; of course we consider the consumer, we are producing for the consumer, the consumer is our customer. But I should like us to assess how the consumer is doing. There do not appear to be any figures in the report which actually give that information. There must be such figures, and I am sorry that I have not myself managed to dig them out. I should like to see figures relating to inside the Common Market for the consumer's proportion of income spent on food. Certainly as prosperity rose in the Community over the last 20 years the proportion has been going down; I think most people know that. But we really want to know whether the consumer is

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getting a fair deal. Of course the consumer always wants cheaper and cheaper food, particularly in this country, where there has been a tradition of cheap food from abroad. But I should like to have the actual figures. I think that our Committee might well look them out and try to do something towards showing whether the consumer is getting a fair deal, rather than merely leave it to the consumer to "beef" about general prosperity in agriculture, which is more imagined than real.
The noble Lord, Lord Mottistone, declared his interest with total frankness. I am always "rabbiting on" at him about the processors and how incompetent they are—in a joke, but not much of a joke. The Ministry of Agriculture has produced very interesting figures, which are given in the annex to the report. It is stated:
"Since the end of 1978 retail food prices have risen 37 per cent. compared with 51 per cent. for the all-items retail price index".
That is a considerable difference; it is a very significant figure. But the really significant figure is that of the 37 per cent. rise
"roughly two-thirds…was attributable to the rise in the costs of processing, packaging, distribution and retailing",
and only one-third was related to the miserable farmer who, it is traditionally claimed, is over-fed, over-rewarded and feather-bedded in this country. I think that your Lordships' House would do well to note these official figures. I think that the House should also note other figures, which are easy available, such as those relating to the rise in productivity in farming; and if in this country we had the same rise in industry, we would be way ahead of Germany, France and all the other countries of Europe.
As regards the detail, I have gone over the points and I think I have 10 "Yesses" to our Committee's proposal. One cannot expect a committee to be wholly unanimous in these matters, much though I respect many of our members. I wish briefly to make one or two points on some of the questions raised. Paragraph 85(iii) of the report states that
"An increase of 9 per cent. in institutional prices is too high, if not accompanied by realistic production objectives".
I think that that is a very good point. We really must guarantee a price to farmers. I do not think that 9 per cent. is too high, but the figure must be tied in with some limit to production, and we cannot guarantee any given amount of increased production. The report of the committee also states:
"The interests of consumers and the food industry should be given greater weight in the formulation of a common policy for food…".
I consider that that is not a correct statement. I think that the interests should be given proper weight, not greater weight than they merit. Proper weight at the time depends a little on what one thinks oneself.
With regard to cereal substitutes, although at present the import of manioc is valuable to Northern Ireland, which is a hard-hit area, we need to look at this question in relation to the common agricultural policy as a whole. The common agricultural policy is about producing and protecting the growth of cereals and other crops in this country. Why one should discriminate against the third world producer of barley
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in favour of the third world producer of manioc I do not know. It is not logical in any shape or form. Personally I disagreed whole heartedly with the committee on this point. Of course we must take account of the damage that has already been done to the economy of Thailand by the encouragement of this production, but we should realise that the situation is not logical.
I do not propose to speak for much longer. I believe that the Committee has done extremely valuable work. It does work that no one else does, and the report is extremely valuable. However we must be very careful that we do not suddenly find that we have knocked back a very competent and efficient industry and that it is then incapable of doing its job when the world trend in production of food might well go into reverse and we might again be short of food in the world.
7.50 p.m.
Lord John-Mackie: My Lords, I have often been thankful that my noble brother is about 12 years younger than me, which has shortened the period that I have had to play second fiddle to him. As the noble Lord, Lord Mottistone, said, on behalf of the subcommittee I was very lucky to be sent over to Strasbourg to listen to the two-day debate on this subject. He mentioned the difficulty of getting papers here. I can assure him that there was no difficulty over there. It was quite amazing how the report or any document one wanted was produced literally within minutes over there. Like him, I see no reason why it should take so long here, and I am glad he has put it to his Front Bench that they should do something about it.
In Strasbourg, the French farmers demonstrated outside the building. My French is not very good but I thought that I should go and try to speak to them to see if I could get anything out of them. The two I fell in with who were willing to speak to me were what I would call roughish sorts of chaps who were obviously a working farmer and a wine-grower from Montpellier, with whom the only thing I had in common was our liking for the stuff. I then pointed out to them that I was a farmer, and they immediately stood back and said, "Oh—a gentleman farmer!" I have always liked the occasional times when I have been called a gentleman, and after 55 years working I can hardly not be a farmer; but when the two are coupled together I cringe a bit. I had difficulty in explaining to them that I really was a working farmer.
I think this demonstration was very well conducted, and I think the French farmers have a case. Obviously their income has been falling very quickly indeed. I spoke to somebody from the Milk Marketing Board who had been at the Paris demonstration, and they said that was an extraordinary demonstration, very disciplined in every way and obviously one that was carried out not to create a furore but really to impress on the French Government the difficulties under which the French farmers suffer.
So far as the debate was concerned, and the set-up there, I was rather disappointed at the very few people who attended for this very important debate. Out of well over 400 MEPs there were roughly only 40 or 50 who were in the Chamber at any one time, until I discovered that every MEP has a room complete with a

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television set and a comfortable chair and that it is much easier to see and hear the debate there than in the Chamber. Even when the President of the Commission spoke, and other notables, at the small ceremony that there was at midday on the Thursday to mark the 25 years that the EEC has been in existence, there were less than 20 per cent. of the MEPs there. So I was rather disappointed in that.
I also found the debate very difficult to follow. No doubt many of your Lordships have been there, but it is a huge amphitheatre and it was difficult to place the various political categories as they spoke. The other thing was that although I would hand it to the interpreters in their interpretation, it was very difficult to look at a man speaking and listen to a woman's voice interpreting, and vice versa. But you did get used to it.
On a broad basis, I should like to make one or two points. One of the things that was raised was the question of green money, MCAs and the European monetary system. These were mentioned by many speakers, and it was pointed out that the EEC could never operate properly until MCAs and green money were done away with and every country, including Britain, joins the EMS. I trust that the noble Lord, Lord O'Hagan, will come back to this House and try again. We all know the many difficulties in getting rid of the MCAs and the green money and joining the EMS, but I think it is absolutely essential that we get over those difficulties as soon as possible.
Another point mentioned was inflation and the effect that it had on trying to arrange prices with countries with different levels of inflation. This difficulty was brought up by quite a few of the MEPs, and one can quite see, of course, that if you got inflation down to a common level, and a low level at that, then fixing prices would he much easier.
The other broad point I would wish to mention is that many MEPs mentioned the fact that unless the CAP was a success, as it was the cornerstone of the EEC things could go very wrong indeed. I am paraphrasing here, but, as we all know, in Article 39 the objective is to increase agricultural producion to give (1) an adequate supply of food at (2) reasonable prices to consumers and provide (3) a fair standard of living for the farming community. I am not sure that my noble brother would agree with the adjective "fair" when referring to the standard, but I think that is reasonable.
It was very forcefully pointed out by many members that (1)—that is to say, the production of food—had been achieved, but that (2)—the reasonable prices—was in doubt, and, in relation to (3), whatever standard had been achieved in the first 20 years in the last five it had been falling and falling rapidly. This was very strongly put, particularly by the French and the Italians.
At suitable times during the debate the President of the Commission, Mr. Thorn, and the President of the Council of Ministers and the Commissioner for Agriculture all made quite long and detailed speeches to members to try and get them to accept the Commission's proposals of 9 per cent. Of course, it was of no avail, but I should like to quote what M. Dalsager said at the end of his speech:
"In terms of expenditure alone, the figures are respectively"—
that means for the rest of 1982 and then for a full year—
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"about 800 and 1,600 MECU"
for a 14 per cent. rise in prices. Then:
"Our own proposal…would mean a net increase in expenditure of about 400 million ECU in 1982 and about 800 million ECU in a full 12 months".
But the main point that he made—and I am quoting again—was:
"We consider that, with the economies that are still possible in the 1982 budget, it should be possible to finance this expenditure without a supplementray budget".
I think that is a very important point that he made. However, as I say, their appeals were to no effect.
I shall try to keep it as short as possible, but perhaps I can give some of the main points that were made by the members. One was whether you could graduate prices in various ways in line with the level of inflation in particular countries. This was emphasised by one or two people, but one of the British members did not think that this would work, it would be far too difficult. I think he was probably right there. Of course, great stress was laid on what a 16 per cent. increase would do to the budget figures, which I have quoted. They were 14 per cent., and 16 per cent. would be more; and, of course, as the noble Lord, Lord Mottistone, has pointed out, in paragraph 28 of our report we show the figures indicating what would be the effect of a 9 per cent. increase.
There was a lot of discussion—my noble brother mentioned this—on how much effect each 1 per cent. increase would have on retail price increases to the consumer. One person mentioned what a burden this would be to food manufacturers, and I am sorry to say to the noble Lord, Lord Mottistone, that that was not received very well. There was also much discussion on the closing of the gap between the EEC prices and the world prices, particularly the USA cereal prices. It was very ably pointed out by one member how difficult this would be; that it would only be done by increasing world prices in various ways—increasing the price of the energy required to produce food in the world, and the various tremendous demands that there will be as countries develop and are able to pay for more food—because it would be very difficult indeed to actually reduce EEC prices. One member pointed out very ably that reducing cereal production would simply be cutting our own throats. This is quite right; we would simply have to import more, and the economy would be worse off.
There was a very interesting point made by a British member. As has often been pointed out, the small dairy farmer, particularly in Italy, in France and in Bavaria, has no method open to him other than the production of milk. This British MEP said that there was and I agree with him. Specialised beef production is a possibility in these small dairy farms and it should be encouraged. If this recession would recede, if I can use such a term, then the demand for food should increase, the demand for beef should increase and this would help the changeover from dairying. It should be pointed out that beef production makes for an easier life than milk production.
There was a voluable Greek who said that they were not able to sell their oranges. A lot of countries in the EEC were buying oranges from South Africa and elsewhere. He thought there should be far more emphasis on internal trade. He felt so hot about it

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that unless things improve, he said, then Greece should get out. I think that all I would say about the French Members is that they were all for the farmers. An Irish speaker made an emotional speech saying that the argument was not about prices but about people. I think there is a lot in what he said. We all know that a rise in farm prices affects the community, the whole community, in the countryside. We are inclined to be talking prices all the time and to forget about the effect on the rural community. He was very much against Britain buying from New Zealand and Australia and he was also against bureaucracy in the EEC, saying that more attention should be paid to the elected body in Strasbourg where he was speaking. He supported the demonstration outside and wanted the full 16 per cent.
Then I would refer to the only person who mentioned the question of reducing costs, which is a very important consideration in this argument. He pointed out that it was the continual increase in costs which caused the demands for increasing prices. He was an Italian MEP and his speech was well received. I think it should be given attention. There was a Dutch Member who felt that the farms were getting too big and, speaking at one time in my life from a large glasshouse myself, I would agree there, because we have got a situation where land is getting into too few hands and the farm family is not farm fully appreciated. Another Irish speaker was very annoyed at Britain. He said they had changed the rules twice. I am not sure which rules he referred to and I am not sure about twice, but he made the point hotly. He felt, too, that national aid should be used more to influence prices rather than on the produce.
A Danish Member, a man after my own heart, wanted all surpluses to be channelled to the people who need them in the developing countries. He admitted that there would be some difficulties with sugar which many developing countries produce; but he has a point. Somebody raised the point that perhaps providing food and advice to the developing countries would ultimately hurt our own farmers, but that was not too well received. One Member thought that we should use food exports, as do the Americans, as a weapon. The point was made that national aid was eroding the CAP and emphasised that national aid would need to be controlled very shortly.
The British Left tore into the farming lobby—and I do not need to tell your Lordships who did the tearing. There were strong pleas for the consumers and it was interesting that in the same Left-wing bloc in the Chamber, the French, Italian and to some extent the German Left took a different attitude, no doubt due to where their political support came from.
There was a proposal that a means test should be developed in order to provide direct aids to farms, but this was not well received. I should say that fvoting took place on 87 resolutions and that all of them, discussed separately, took the whole morning, from 9 a.m. till after 1 p.m. Your Lordships know the result. They voted for the 14 per cent. increase. The British Right voted for it.
On our report, which disagrees with this figure, there will be a lot of argument before the final figure is agreed.
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On the general principles of our conclusions, I agree; but I would add a rider to No. 4. If a reduction in farm incomes reduces production or creates bankruptcies as in Denmark, as my noble relative mentioned, we shall have a self-defeating exercise. Farm incomes do more than give a living to the farmer and his family. They have to provide for expansion and if the industry has not the resources to do this it will not achieve the objectives of Article 39 of the Treaty. That is all I have to say. I know that there is a lot to be filled in and I hope that some of my colleagues on the Committee will do so. I should like to congratulate the noble Lord, Lord Mottistone, on chairing most of the committee work which was done. I have sat under many chairmen but I have never met anybody better at slapping one down pleasantly, with no umbrage on either side. I should like to congratulate him on the way he did it and the speed with which he carried through this report.
8.7 p.m.
Lord Walston: My Lords, I should like to continue on the note on which the noble Lord, Lord John-Mackie, closed and to thank the noble Lord, Lord Mottistone, for his introduction of this debate and for his chairmanship of those meetings of Sub-Committee D which were largely instrumental in producing this report. I should like also to thank the chairman of the committee, the noble Lord, Lord Cledwyn, for the part he played in this, both in the background and in the foreground, and to express my disappointment that he is not taking part in this debate, not only as the chairman of Sub-Committee D but also as a former Minister of Agriculture and one of the most knowledgeable Members of this House in this whole vast, important subject.
My Lords, I go on, alas! with an apology. I am already overdue at a dinner meeting with the National Farmers' Union at which they wish to put to certain members of the Social Democratic Party their views about agriculture; I should already be there. I hope your Lordships will forgive me if I do not follow the correct—and my usual—practice of remaining until the end of the debate, but I feel it is important for me to move on. In particular, I apologise to the noble Earl for not being here to listen to his final comments. I can assure the House that I shall read in the Official Report not only what he has aid but what is said by all other participants in this debate.
In spite of the place where in due course I am going to take some light refreshment and in spite of the fact that I am a farmer myself, as I think some of your Lordships may remember, I want to make it clear that I am in no way a spokesman for the NFU. In fact, if they were to listen to what I am going to say they might be unhappy that they had invited me this evening. It is not that I do not think that there is strength in some of their arguments; but, as so often is the case in these matters, those arguments are somewhat overemphasised, whereas the other side of the arguments is glossed over.
I suggest that in any discussion on agricultural policy—and that includes of course the pricing mechanism—there are three outstanding points that must be borne in mind. The first of these—I have said this before, but I think it bears repeating—is that farmers

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have no God-given right to grow food and crops in any unlimited quantities according to what they wish to produce. They have no more right to be farmers than doctors have to cure the sick, than engine drivers have to drive engines or stockbrokers have to broke stocks. The only justification for doing these things is if the consumer wants the produce, if the patient wishes to he cured, if the passenger wishes to be driven in the train and if the investor wishes to have his stocks exchanged. So it is with farming. We can only justify our existence as farmers if we are producing what the consumer wants and, coupled with that, at a price that the consumer can afford.
The second point is that farming is becoming increasingly specialised. The days are past when the average farmer, the typical farmer, had a few acres of wheat, potatoes, turnips and sugar beet, and a few cows to be milked, a few chickens from which he collected eggs and a few pigs that he fattened. Those things are in the far distant past on almost every farm in the United Kingdom and a growing number of farms within the Community.
Farming is a highly specialised operation and a highly capital-intensive operation. You have to be a specialist grain producer, a specialist dairy farmer or a specialist pig producer. In order to be that, not only do you need the expertise—which takes many years to acquire—you also need very heavy capital investment. It follows from that that one cannot shift from one form of production to another, from one form of cultivation to another, depending on relatively minor alterations in the prices of the different commodities year by year. So it is hopeless to think that, by manipulating prices by the annual price review, or whatever one wishes to call it, that takes place in Brussels, one can significantly alter the pattern of agricultural production. That can only be done—and I shall revert to this later—by a long-term policy which people accept and believe in.
The third point that must be borne in mind is that while undoubtedly a decline in the profitability of farming hurts the farmer—he has less money to spend—provided that decline takes place somewhat slowly, he can in the main adjust himself and adjust his form of farming and adjust his way of life. He will not he able to have so good a life as he had when profits were high, but he can survive. In the long term, the real sufferer is the consumer, the nation. We have a vast investment in our agricultural land. If the fertility of that land declines—as undoubtedly it does in periods of declining farm profitability—if the equipment of that land is not renewed and maintained, if the research and development of all the ancillary industries, the geneticists, the plant breeders the cattle breeders, the agro-chemical research chemists and all the rest of them, and the machinery designers also, is not maintained, then eventually there will not be so much investment in all these essential aspects of modern and efficient farming. Therefore, sooner or later, after a period of 10 or 15 years, the efficiency of farming will decline, the cost of food will rise and the consumer will suffer.
It will cost hundreds of millions of pounds to redress that balance. As we experienced in the run-up to the war years, after years of decline of agriculture through the depression, the late 'twenties and 'thirties,
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the cost to this country of rehabilitating our land and agriculture was enormous. Those are the three factors which must be borne in mind in attempting to formulate an agricultural policy and even in attempting to come to reasonable prices for farmers and for consumers.
The noble Lord, Lord Mottistone, has rightly said that the guidelines produced by the Commission show signs of moving in the right direction and of accepting these points that I have made. They specially recognise the importance of the long-term nature of farming. A five-year rolling programme is the right way in which to start to achieve this, with the Commission saying how much of each of the major commodities it wishes to produce for the consumers within the Community, and basing the price proposals upon that long-term rolling programme. It is very sad indeed that, having said these brave words in the guidelines, today's price proposals make no mention of them whatsoever.
In so far as the Commission attempts to do this, it is in my opinion doing it in the wrong way. It does put forward some target for wheat production for the coming year—a target. But the target is higher than the present amount of wheat produced within the Community. Whatever may be happening in the years ahead—and I think that in the next 10 years we may well experience a great difference in the availability of wheat on world markets—there is no getting away from the fact that there is today a world surplus of wheat and that the price that is being paid to the Community producers is higher than the price that would have to be paid on the world markets. It surely would be right not to reduce the price of wheat but to reduce the target at which we are aiming, to reduce the standard quantity, in view of the world situation.
Similarly, we have a world surplus of sugar, yet there is no mention in the price proposals of reducing the quota that already exists for sugar. I know that it cannot be done until next year, but there is no indication that next year there will be any attempt to do this. With milk, we have the same situation: over-production of dairy products throughout the whole of the Community. Although there could be a super levy by which, in effect, the price received by the producer for milk would he reduced pro rata according to the amount by which the producer exceeded the standard quantity or quantum—whatever word one wishes to use—the price proposals have run away from even that step in the right direction.
It must be a fact that, once this quantum, this standard quantity, this objective—whatever one wishes to call it—has been fixed, it will be then very much easier to arrive at an appropriate price for the commodity in question. So far as I am concerned, I think that the target that they propose—an overall target of a 9 per cent. increase in price—would, given the situation as it is today with inflation of costs, be a perfectly reasonable one if the quantum that was to be produced and which was subject to this guaranteed price, was in fact a realistic one instead of being an increase on the present year.
I say that I would support a 9 per cent. increase in price because some facts that perhaps we do not appreciate enough are contained in this important little publication, The Annual Review of Agriculture 1982

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from the Ministry of Agriculture. On page 12 is a table (Table 1) which shows that the annual average index number of the price of goods and services currently consumed in agriculture—in other words, the cost of inputs—where 1975 was 100, is now 203: that is, it has slightly more than doubled in the last six years, whereas the annual average index numbers of producer prices for consumer products during the same time have gone up only 75 per cent. I know that other industries are suffering the same squeeze and I am not complaining about it, but one must realise that this is happening and one must also realise, as the noble Lord, Lord Mackie of Benshie, rightly pointed out, that the prices received by the farmer within the Community have risen very much less than has the Retail Price Index or the general level of inflation.
It follows from this that the effect on retail food prices will he far less than the actual 9 per cent. rise and, on the Retail Price Index, even less than that—something of the order of 1 per cent., if as much as that. Therefore, I suggest most strongly that, in the long-term interests of consumers no less than in those of the producers, it is essential that farmers should have realistic and even generous prices for that quantity of their produce that the Community wishes them to produce. They should be free to produce as much as they like in excess of that but should not go to the Community for guaranteed prices, to take it into intervention, or to subsidise their exports. They must carry the can for anything that they produce which is surplus to these amounts.
These quantities and the prices should be set so far as possible within the five-year rolling programme and—this is a very important point—they must not be used as bargaining points within the EEC's discussions on other matters. I sincerely hope that in the discussions which are to take place shortly Her Majesty's Government will not use as a bargaining point in the overall discussion of the British contribution the matter of farm prices. It is too important to be used as a pawn in a matter of this sort.
Agriculture will never flourish and consumers will never be properly served if food production is used as a political football or as a means of bargaining between member states. It must not be influenced by the fact that there may be an election in France and the farm vote is important; that there is an election in Bavaria and the Government are losing ground; or that there is an election in this country and consumer prices must be kept down. These are not factors which should be borne in mind in arriving at decisions on matters which affect not the immediate future—they cannot affect that—but the future well-being of this country's and the Community's most important industry and the industry which provides the very means of livelihood to the whole of the population.
8.25 p.m.
Lord Stodart of Leaston: My Lords, I, like many others so far, must declare an interest. I am a farmer and I have no hesitation about saying that I am thus biased heavily—though I think not quite so heavily as the noble Lord, Lord Mackie of Benshie—in favour of food producers. But I do congratulate those who have
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produced a most interesting report—and I agree with the noble Lord who said, "with many nuggets of valuable information". However—and this is perhaps where I may become slightly irreverent—I am bound to say that I feel a certain wry amusement at the views which have been expressed in advance of this debate in material sent to us by the food producers (the National Farmers' Union), on the one hand, and, on the other, the food processors and distributors, who I think I might refer to as the FMF. My amusement extends also—I hope with not excessive irreverence—to the views of the Select Committee as expressed in one sentence in paragraph 83, which says:
"Last year the Committee recommended that guidelines should be based on a policy for food and agriculture combined. That remains the Committee's strongly held view".
On at least five subjects, neither of the two organisations seems to agree at all. On cereals, if I may paraphrase, the NFU found it "totally unrealistic and unacceptable to reduce prices". The FMF said that prices should not be increased. On sugar, the NFU asked for an above-average increase and the FMF asked for a freeze on the present price. There is a certain amount of agreement on peas and beans, in that each organisation welcomes the intention to support for human consumption, but they fall out over the demand made by the NFU for a higher price. On milk, the NFU say: "Suspend or reduce the co-responsibility levy", and, "No discrimination to favour small farmers". On the other hand, the FMF call for the price mechanism to balance supply and demand. As for the green pound, the NFU say very firmly, "No revaluation", while the FMF say "Revalue at all costs". So there is hardly a point on which they seem to agree: yet these are the two arms of the food industry with which my noble friend the Minister of State for Agriculture and Food—forgetting about fisheries for a moment—has to deal. I suggest that the composure which my noble friend invariably shows is quite remarkable, although this is perhaps no particular surprise to those who know him well.
My wry amusement goes back to a conversation which I remember having, when I was in my noble friend's position at the Ministry of Agriculture about 12 years ago, with a leading figure in the supermarket world who came to see me to question a statement I had made at a public meeting. The statement was to the effect that, of every pound that the housewife spent, the farmer at that time, in the days of the old currency, received six shillings and eight pence. That figure was official then, and I am led to believe that the farmers' share now is down to nearer 25p than 33p. But this supermarket leader asked me, "Why cause a breach between farmers and distributors, because our interests are precisely the same?" My reply then, as it would be today, was, "Our interests are, in fact, diametrically opposed. You want to buy as cheaply as you can, given that you are given the highest quality. I want to sell for as high a price as I can get". Profit is not altogether an irrelevant barometer of efficiency, and farmers are continually, and very rightly, being urged to be more efficient. What is more, one thing in these days of very high interest rates that would make perhaps not a substantial contribution, but a very significant one to farmers' cashflow, would be if these big supermarkets, who are taking up more and more of the

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food supplies of this country and who seem, from what I observe of them, to draw vast sums from their consumers in cash, could help farmers and distributors who supply them by paying them a bit quicker.
The Food Manufacturers' Federation point to overproduction in certain commodities and they call for a freeze on prices, if not a reduction. I would defy anybody so to arrange things that there is neither a shortage nor a surplus of food produced in this country. It is not possible. Of the two, I am in no doubt that surplus is the better, provided that it is not too great. One may well ask why beef is costing so much today. In one West End store at the moment, fillet steak is being priced at over £6 a lb., and I think the indications are that beef is in very short supply. It is certainly true that every abattoir in the country is working under capacity, so far as beef is concerned. If you freeze prices, what happens to production in an industry whose income went down by half in real terms between 1976 and 1980, whose borrowing has doubled in the last three years and whose prices have risen by just over 30 per cent. in the last three years, compared with a rise in food prices of 37 per cent.—this figure has already been given—and a rise in the retail price index of 51 per cent.? Without doubt production would start falling and investment would tail off still more.
I totally agree with what the noble Lord, Lord Mackie of Benshie, said about farmers' desires for stable prices, and also with the noble Lord, Lord Walston, who spoke a few words, if I may paraphrase them, about the hopelessness of darting about out of one kind of production into another, trying desperately to follow the market. I did it once in the days of my youth before the war and it landed me in the most appalling mess.
I take the point made by the FMF about consumer resistance. I would only say that consumers have brought a tremendous lot on themselves, by demanding such things as convenience foods. I have no doubt there is a figure showing what that has done in sending up the prices that consumers have to pay. I agree that some farmers still take that old wartime attitude of saying "I have grown it and you bloody well buy it"—
The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers): Order!
Lord Stodart of Leaston: "You jolly well buy it". This is why, while I think that the FMF is wrong to ask for no increase, I believe that the NFU goes too far. I think we have to share in the inflationary problems of others, and I am afraid—disagreeing with the Committee in this—that I think the 9 per cent. suggested by the Commission is not far wrong, provided that there is, as I am certain there will continue to be, an increase in productivity.
Of course, the CAP has many faults. It seems totally ludicrous that, apparently, serious thought is being given to paying higher prices for milk to farmers with five cows or even less. I cannot help wondering why note cannot be taken of the success of this country's agricultural policy in increasing the cow numbers in our herds and the higher productivity and lower costs that this has achieved. As I have many times told the House as a simple farmer: Oh! for some
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simplicity in the various jargon that the CAP uses. Ten years ago, all that was pretty impossible to understand were things called positive MCAs, supplements and abatements to target prices. But now we have not only positive MCAs but negative ones. We have the milk co-responsibility levies and proposals to modulate them, and grain weights quoted in kilogrammes per hectare-litre: and I defy any noble Lord to convert those into pounds per bushel, even with a pocket calculator. If only we could get some of the terms that are used in the Community changed, so that farmers could really understand them, it would be a tremendous blessing. I would say: Yes, by all means trim the fat and the flabbiness off the CAP. There is a tremendous lot of it there. Make it into a much more effective and a much more disciplined machine. But what experience I have had leads me to be a very strong supporter of a really healthy and highly productive home agriculture.
8.39 p.m.
Viscount Sidmouth: My Lords, 1982 has not only brought the 25th birthday of the European Community, but is also proving to be somewhat of a crisis year. By fairly common consent, this crisis arises from the predominance of the common agricultural policy in the affairs of the Community, even though it is only one of the subjects deemed in the Treaty of Rome to be in need of a common policy. This situation traces back to the political facts of life when the Community first came into being, in that, owing to the unfortunate absence of Britain at that time, the two countries whose interests had most importantly to be considered were Germany and France. Accordingly, a basic deal was struck, whereby Germany gained a great new free trade area for its manufactured goods and France the same for its agricultural produce. Thus, from the start, the advent of Britain with its efficient agriculture was bound to create problems, which have yet to be resolved.
The basic procedures of the CAP have seemed vulnerable, ever since they were first enunciated some 20 years ago, in their declared purpose of ensuring a fair return to the farmer at reasonable prices to the consumer. Several noble Lords have referred to this project which is, in any case, akin to squaring the circle. There are those who think that it can only be done by having an unlimited world market in foodstuffs, with the rules of competition being the final arbiter of prices. This is neither the time nor the occasion to examine why that policy is considered unworkable and has been rejected by the Community in favour of a managed régime within the economic boundaries of the Community itself. The doubt, I believe, has always been that the system of support and guaranteed prices which has been adopted would not in itself be sufficiently finely tuned to control the surpluses which were in some cases endemic when the Community came into being.
In the event, the machinery has worked rather better than might have been expected, though not without producing some well-publicised surpluses and throwing up the problem of the British balance of payments. The guidelines for European agriculture, produced last year by the Commission and referred to in paragraphs 7 and 8 of the report of the Select Committee, must be

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seen as going a considerable way towards better regulation of overall production, though hardly perhaps in themselves towards solving the British problem.
The report approves the guidelines in the main, with the exception of the "active export policy". It goes on, however, to touch on what is thought by many to lie at the root of the matter, which is political acceptance. In a speech last night the President of the Community referred to the increasing divergence of views between the member states which is rapidly creating a situation where policies, soundly based on economic and administrative sense, get lost or contorted in the political punch-up. He attributed these bad effects to General de Gaulle's concept of Europe des nations and the doctrine of unanimity, which in effect gives a veto to each member state in all policy matters that fall to be decided by the Council of Ministers. Further progress will probably only be assured when the Council is ready to proceed by way of voting, which is provided for in the Treaty of Rome, but that day does not at present seem to be in sight.
If I declare an interest, it would normally be as a horticulturist with strong farming connections. In fact, British horticulturists have only a marginal interest in the price proposals, since very little of their produce goes into intervention. Although we come within the common external tariff, most of the strongest competitors for our market are also within the Community and we are therefore exposed to the full blast of competition, having been until nine years ago an industry fairly strongly protected by national tariffs. As some of your Lordships will be aware—and I believe that this includes the noble Earl the Minister—we are battered but unbowed. We have recently suffered serious and unfair damage from the application of national aids, and proposals regarding the Dutch gas price for their glasshouse industry are still awaited. It is much to be hoped that they will be made known before this House comes to debate the forthcoming report of the Select Committee on National Aids.
Finally, I believe the report is right in drawing attention to the importance of realistic production objectives which should be a complement to the proposals on price. In this context, it may be that price increases averaging 9 per cent. across the board are too high, but so far as the British farmer is concerned this would come down to 5 per cent. if the revaluation of the green pound is put into effect. The combined result of both sets of proposals is well set out in Table 2 of the report, which indicates that after allowing for anticipated inflation the implied real price change for British agriculture would be minus 6 per cent. in the national currency. On this basis, no one could deny that farmers are being called upon to make great sacrifices at a time of economic recession.
8.45 p.m.
Lord Collison: My Lords, I was under the impression that this debate was going to take place very much later. I am glad that arrangements have been made to bring it on earlier, but because of that anticipation I went upstairs and the Writing Room is littered with paper which I have thrown away. Therefore, my speech may appear to be a bit staccato and I hope
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your Lordships will forgive me for that. There are one or two points that I want to make, although a few of them have already been mentioned.
First, may I thank the noble Lord, Lord Mottistone, for his chairmanship of the committee and for introducing the report. As has already been said, the noble Lord was a very able chairman. Under his leadership and guidance the committee made good progress and I believe that it has made a good report. As the noble Lord said, last year Committee B said that the Commission should publish its annual review proposals much earlier to give time for public discussion and debate before the Council of Ministers considered them. This year the proposals were issued at the end of January. The committee welcomed this. However, there was still very little time for proper examination. Therefore, the committee once again reiterated its view that the Commission should publish the price proposals before the end of the preceding year.
On the guidelines, the Commission's statement,
"After 20 years the CAP needs to be adapted to the new realities of general economic conditions and of the agricultural sector itself"
is to be welcomed. It shows a sense of realism and underlines the need for progressive change.
The evidence showed that the guidelines, although criticised in many directions, were generally seen to be a step forward. The committee also took that view and considers the guidelines as a serious and useful attempt to identify deficiencies of the CAP.
The committee welcomed the proposal to issue the guidelines for five years. We believe that this is an excellent proposal, but obviously it must be—and we clearly said so—on a rolling basis. One could not set prices, for example, for five years in advance or even for next year in advance. It has to be done on a rolling basis and I am sure that that point of view will be accepted. It is equally true that action will have to be pursued consistently over several years. I am sure noble Lords will agree that it is completely unrealistic to think it would be politically possible to introduce overnight comprehensive and radical change, since any such attempt could only be disastrous for agriculture and its associated industries. Nevertheless, it was seen as important that positive implementing action should be taken this year, and we hope that they have tried to take some action which is in the direction to which the guidelines point.
The question of prices is a matter, as we have already heard this evening, of considerable controversy. On the one hand, in their evidence the NFU argue that the proposed increases are too low. We have heard about what has been happening on the Continent. We were told by the NFU of the difficulties which British agriculture has faced and of the problems relating to real incomes in the light of the proposed changes. I do not need to go over all that again, because it has already been dealt with so ably by other noble Lords. On the other hand, others, including representatives of the food industry and the consumers, have taken the opposite view. They think that the prices are too high. This difference of opinion was to be expected. There are two interests which appeal to be clashing with each other in expressing their own particular points of view.
However, in the Commission's statement the point is made that taking the real world as it is, a case can be

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made on security of employment or balance of payments grounds for maintaining premiums on output, by fixing institutional support prices at a level that represents a percentage above that determined by market forces. Agriculture has a legitimate claim to be included, but there are risks involved—for example, the danger of the industry ceasing to improve its competitiveness by raising its productivity. We have stressed that premiums for agriculture should be geared to efficient production and rising productivity. This is particularly true for those commodities which are in surplus. There is a danger too that surpluses might be perpetuated (and this could apply to the export policy too) which the consumer has to subsidise, because the high intervention prices will encourage farmers to put their crops into intervention.
There are matters of general agreement. On green currency the committee endorses the view that adjustments should be made in accordance with their expected effect on member states, which would mean a much smaller adjustment or MCA for the United Kingdom. The NFU pointed out that the Commission's proposal would reduce the value of the proposed 9 per cent. price increase (if the figure is going to be 9 per cent.) to less than 4 per cent. On some individual points, there was strong support for the committee's views on basic and super co-responsibility levies. The Commission wishes the levy to remain at 2½ per cent. This levy was intended to be used to raise revenue for the disposal of surpluses, but the sum raised is much more than can be used for that purpose so that, as the consumer representatives say, the levy is really a tax on consumers and will tend to reduce consumption rather than increase it.
The Ministry of Agriculture has always opposed the basic levy on the grounds that it has done nothing to control the surplus but has simply transferred the cost of financing it to the consumer. I understand that since our report has been published, proposals have now been laid before the European Parliament which envisage a reduction in the co-responsibility levy from 2·5 per cent. to 1·5 per cent. on the first 60,000 kilogrammes of milk supplied. That does not alter the point which has been made. The Ministry has pointed out, as we have done, that there is a great hardship on the efficient British farmer and on their efficient farmers elsewhere, because of the method. The Committee regret that the idea of a "super levy" on production in excess of the approved level has not been taken up and if it is not, believes that the levy should be much reduced if not entirely removed. With regard to the proposed exemptions for the small producer, the Ministry of Agriculture has estimated that if the measures were applied to the first 30,000 kilogrammes, a quarter of EEC milk production would be exempted. The proportion would range from 10·5 per cent. in the United Kingdom compared to a maximum of one-third in Germany, so that the United Kingdom would be funding substantially more than the others, which would amount to a very significant discrimination against the more efficient producers in the Community.
The committee expressed sympathy with the objective of helping small farmers but felt this should be done by direct income payments via social and regional funds. The committee also felt that certain steps had been taken in the direction of the guidelines and while they
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appreciate that one cannot go too far or too fast towards totally implementing the proposals, they hoped that something more could have been done on this occasion. With regard to the arguments about the price level, I am convinced that it is important that agriculture should be healthy. I am equally convinced that consumer interests should be looked after and that the interest of the trade should be looked after too. I see no reason why these three interests should not be met without damage by one to the other. If a proper policy is evolved, and I hope that it will be after the guide lines have been properly implemented, we should experience no difficulty, and disputes in most fields will be resolved because there will be a common interest.
8.57 p.m.
Viscount Brookeborough: My Lords, I first wish to thank my noble friend Lord Mottistone for his very able introduction of this report and I also agree with other noble Lords in paying their compliments on his handling of the committee as its chairman. I would also like to join with the noble Lord who expressed his sorrow that the noble Lord, Lord Cledwyn of Penrhos, was not taking part in this debate because at the other meetings at which he has chaired the committee, we could not have been better chaired.
My noble friend Lord Mottistone was faced with a time factor and he certainly carried that through when it came to the revisions. I would like to pay special tribute to our specialist advisers, our clerks and our printers. Whipped on, as we were, by the noble Baroness, Lady White, to get the report through on time, the printers were faced with an unreasonable task and they have done a magnificent job. I would like that to be recorded. I should like to thank also the noble Lord, Lord Mackie of Benshie, for his support on those problems which affect Northern Ireland. I feel that my noble friend the Minister has really had quite an easy ride because I had understood that my noble friend Lord Mottistone was going to give him a slight roasting. I hope my noble friend the Minister will be able to answer some of the problems which we shall put to him.
I would like to draw the attention of this House, first, to paragraphs 78 and 79 in which, for the very first time, a separate paragraph for Northern Ireland and its special problems has been inserted. I should like to thank noble Lords on the sub-committee and on the whole of the Select Committee for their co-operation and sympathy in dealing with what is really a very special and difficult problem.
Agriculture is the most important industry in Northern Ireland. As, daily, other industries are hammered the position of agriculture becomes more dominant. Unemployment in our Province is running at twice the national average and so the importance of maintaining employment and of maintaining the social structure of Ulster becomes even greater. The noble Lord, Lord Stodart of Leaston, said that the income of farmers in the United Kingdom has gone down by 50 per cent. He may be using a different date on which to base that figure, but the figure I have for the United Kingdom for 1974 is 20·6 per cent. But, even if it is 50 per cent., when we compare the amount that the income for the farmers of Northern Ireland has

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dropped—85 per cent.—we can see what a catastrophic situation is facing agriculture. I am sure, therefore, that noble Lords are not surprised at the interest I take in this discussion of both the guidelines and the actual price review. I join with other noble Lords in declaring an interest. I do not believe that any noble Lord reading Hansard would be under any illusion that I am growing fat on the profits of the CAP, because our income has dropped by 85 per cent.
The brutal fact about the CAP is that, so far as Northern Ireland is concerned, it is a disastrous policy. Here we have an efficient and ingenious industry which is surviving now on national aids provided by Her Majesty's Government in Westminster. Each of these national aids is laboriously negotiated in Brussels, wasting a lot of time and a lot of negotiating room for manoeuvre. It cannot, in my view, be a long-term solution.
In paragraph 79, our committee suggested that special measures would be needed to redress the disadvantage just mentioned, and they say:
"The Commission has recognised that special circumstances affecting Northern Ireland justify special arrangements".
This is because in the sheep régime special arrangements are being made. This paragraph was triggered off by the proposals in the guidelines and the price review to limit the importation of manioc from Thailand and maize gluten from the USA, and to put four times the duty, £40 a ton, on bran and wheat screenings. The Select Committee has made clear its opinion about the intention to do this in another report. If this action were taken by the Commission, I believe that the effect on our trading partners would be far more damaging than has been appreciated so far. The underdeveloped countries, such as Thailand, irrespective of what has happened in the past, would not trust us any more if we in the EEC encouraged another underdeveloped country to develop something else. I agree with the noble Lord, Lord Mackie, that it is difficult to justify bringing barley from a third world country under duty and not doing the same with manioc, but the fact is that the EEC encouraged the production of manioc and we cannot now duck our responsibilities.
So far as the United States of America is concerned, I do not believe for a moment that they would take kindly to limitation on their export of maize gluten. So what would we have? We should find ourselves able to hammer the weak, the underdeveloped, and unable to touch the strong in the shape of the United States of America. The effect of this—and I am now talking about Northern Ireland—would be to raise the price of compound feed in Northern Ireland. On accession, Ulster was denied access to the world market with a very efficient pork industry. The position today is that the pig industry is down by 40 per cent.; where we were killing 30,000 to 40,000 pigs a week, we are now killing about 17,000 pigs a week. But the industry—that is, the whole industry, the farmers and the millers—by ingenious use of manioc and other cereal substitutes has managed to stabilise itself. Now what happens? Once we have got the industry stabilised, the Common Market is about to change the rules, and change them, so far as I can see, without any reference to the damage
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it will do to Northern Ireland agriculture. Maybe they hope the Government at Westminster will provide more natonal aids to take us out.
I speak with the full authority of the industry when I say that any extra costs applied to Northern Ireland as a result of this decision must be compensated for. If any extra costs are not compensated, then we are going to halve the industry again; we are going to have 5,000 people on the dole at an expense to the Treasury of £25 million. We have suggested in our report that there shold be an incorporaton levy or subsidy, as happened with skimmed milk in days gone by. This would only cost about £3½ to £5 million, depending on the rate of the levy and other matters. Surely this must be the right thing to do in view of the appalling social consequences which would happen if we did not have a compensating subsidy.
I now turn to milk. As everyone else has said, we are all opposed to the co-responsibility levy. It is too high. It cannot be used for the purpose for which it was originally raised, for the promotion of the product. Here again, Northern Ireland has a special problem, and this is a result of a decision by Her Majesty's Governments of the past, because on accession it was decided that the method of determining the price for milk in the United Kingdom should be on the mix of liquid milk and manufactured milk in each of the Milk Marketing Board areas; that is, the Northern Ireland mix should be one thing and the Great Britain mix should be another. In Great Britain the amount of high-priced milk going into the mix is 50 per cent. of production; in Northern Ireland it is only 17 per cent. The result has been a significantly lower return to the Northern Ireland producers. This has been recognised by Her Majesty's Government and annually they have given national aid, but the result has always been a haggle with Brussels in which we have been uncertain whether we should in fact get Brussels' approval in the end. And it has been inadequate, The profit margin in Northern Ireland is 1p per litre. The profit margin in the rest of the United Kingdom is 2·3p per litre.
I should like to ask my noble friend, is the figure in Great Britain too high or is the figure in Northern Ireland too low?—because there are no extra advantages to producers in Northern Ireland. We may grow grass more easily, but our fertiliser prices are higher. I feel that the gap between our price and the Great Britain price is too large. The difference so far, which has been made up by the Government, has come out of the Northern Ireland budget and not out of the Treasury in the United Kingdom. I wonder whether, in budgeting, if they cost production in Scotland, the extra price that the Scottish milk producers get is charged to the Scottish budget. The super levy has been advocated by Great Britain. But in Northern Ireland terms the super levy would punish us too hard. Milk is the one product which we can expand in and in United Kingdom terms it is not in structural surplus.
The time is getting on and I feel that I must try to cut short what I had proposed to say. Everything that has happened in Northern Ireland in the form of national aids has been a short-term solution. I think that in our report we provide the key. The key lies in paragraph 24 of our report, where we say:

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"In their report on the Budget Reform, the Committee drew attention to the inequity caused by the present structure of the Budget.… In the current world situation this inequity arises largely because:"—
and I shall not bother about Nos. (i) and (ii)—
"because of its relatively advanced farm structure, the UK's receipts from the CAP are proportionately less than those of most other Member States".
I think that that provides the key. Where I feel that the Government have not really played their part strongly enough or looked after Northern Ireland's case strongly enough, is in urgently pushing through a reform of the less favoured areas extension. That, if it were granted, would be an aide—to use the horrible word—communautaire that would be in accordance with the policy of the Community. It would not, therefore, be subject to constant review and constant haggling.
We are told that the Northern Ireland areas review—in fact it is now public—was carried out about two years ago, but the Northern Ireland case has still not been presented to the Commission. We were told that the whole United Kingdom case would be put in six weeks' time—that was some time at the end of November. It still has not been presented. The President of the Ulster Farmers' Union has told me himself that the Commission are anxiously waiting for the Northern Ireland case to be provided. Because it is a form of aid which is in accordance with the Community policy, they have promised to push it through extremely quickly. If Her Majesty's Government have the resolution, it is possible that the amount of money provided by the Community might go up beyond the level which is given at the moment. I press Her Majesty's Government to get on with the job. There would be less haggling; Ministers would suffer less wear and tear, and maybe our future would be assured.
9.11 p.m.
Lord Blease: My Lords, I should like to join in thanking the noble Lord, Lord Mottistone, for tabling this Motion which has enabled this House to debate and consider the important issues arising from the report. At this stage in the debate it is my intention to be brief. At the outset of my remarks I wish to indicate support for the points made by my fellow countryman the noble Viscount, Lord Brookeborough. Speaking as I do from these Benches, I should like also to say that I have every confidence in our Front Bench spokesmen on agricultural affairs. Their interest in Northern Ireland is well known. They have had ministerial responsibilities from time to time and, of course, my noble friend Lord Bishopston will be dealing in more detail with aspects which arise from the report.
My remarks are mainly directed to the position of agriculture in Northern Ireland. I find it encouraging that the Select Committee considered and reported in some detail on the particular and difficult problems of Northern Ireland's agriculture. Some of the problems, as has already been mentioned, are contained in paragraphs 78 and 79 of the report. At the same time, I must express disappointment that there is no direct reference to Northern Ireland in the summary of conclusions. I felt that, having justified two extensive paragraphs in considerable detail, at least they would
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have merited some consideration in the summary of conclusions.
Others have declared an interest in this particular debate. My working background and experience has largely been in trade unionism. It is from that background and experience that I can say that the agricultural and farming community is firmly integrated into all aspects of life in the Province. Manufacturing, commercial and business life in Northern Ireland is greatly influenced by the prosperity and buoyancy of the farming community. Trade unions and the Ulster Farmers' Union have very cordial working relationships. In the Province, where unemployment is at 20 per cent., as the noble Viscount has already mentioned, we depend a great deal on agriculture, which provides over 13 per cent. of the jobs. Much of the employment in the food processing industries is dependent on effective and efficient farming policies.
There are sound economic and social reasons for the United Kingdom Government and for the decision-makers in the European Economic Community to take urgent and appropriate action to ensure the revitalisation of Northern Ireland agriculture. In this connection, I should like to place on record the views expressed by the Ulster Farmers' Union in a statement issued on 4th March this year. They say:
"For social and security as well as economic reasons it is vital to maintain economic activity and employment in the Province. We believe therefore that at this time agriculture should be enabled to make its maximum contribution to the economy rather than being run down as has been the case in recent years. In 1980 the net income of Northern Ireland farmers in real terms was just 15% of the average for the years 1973 to 1978"—
a point that has already been mentioned by the noble Viscount. That is a reduction in income of something like 85 per cent. The statement goes on to say:
"Bank borrowing by farmers increased from £98 million in 1978 to £186 million in 1981 mainly to keep farms going. Interest paid rose from £13½ million in 1978 to £29½ million in 1980 and £26½ million in 1981. Investment has been minimal and maintenance has been delayed. New tractor registrations were 2,421 in 1978 and 970 in 1981. The industry has been debilitated. A radical improvement in profitability is needed to restore vigour and confidence to our farming and to enable farmers to make a start on reducing indebtedness".
That is an official statement from the Ulster Farmers' Union. It portrays to us the deplorable situation in which the farming community has been placed in Northern Ireland.
You cannot get productivity and you cannot get increases in output unless there is proper investment and proper financing in connection with the economics of the farming community. Therefore, the policies that have been carried out by this Government and by the EEC have been seriously impairing the effectiveness of the farming community in Northern Ireland.
It would be wrong of me to give an impression that the United Kingdom Government have not done anything to help, because they have given some aid within the last couple of years due to the extreme depression in Northern Ireland farming. The United Kingdom Government made available £10 million special aid for 1981 and have proposed £16 million for 1982. In this connection the Ulster Farmers Union states—and here I again quote from the statement of 4th March:
"If our farmers got the same returns for their produce as farmers in Great Britain and obtained their inputs, particularly

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feeding-stuffs, at comparable prices, the need for this special help would not arise. The effect of these disadvantages on the net income of Northern Ireland farmers varies from time to time. Within the recent past the effect amounted to £40 million per year".
In other words, the statement indicates that, although they received £10 million in aid, they lost £40 million in any particular year—that is, a bad form of business if you are £35 million down, with the rate of inflation as it is at the present time.
Paragraph 21 of the report mentions that there are considerable differences between member states in the pattern of agricultural incomes. The report attempts to deal with some of the problems affecting farm incomes and especially mentions matters, such as agri-monetary measures, the cereal support prices, cereal substitutes and agricultural production targets. The report and the committee attempted in some way to deal with the detailed problems arising from these various issues. I believe that the committee noted the great disparity in farm incomes, not only between members countries but between farms within national boundaries. It is in that respect that I wish to follow the point made by the noble Viscount in dealing with the issue of the less favoured areas.
I may be wrong but nowhere do I find in the report that the Select Committee deals with this particular issue. Paragraph 48 deals with national aid, and hence perhaps there will be a future report dealing with this aspect of the problem, and paragraphs 15, 16 and 17 also skate around the issue of general economic conditions. But this is the most important factor so far as the Northern Ireland farming community is concerned, and has been highlighted by statements fom Ulster Farmers' Union and by their president within recent days.
The statement issued by the Ulster Farmers' Union in this connection—and I shall quote from it although it has been mentioned in considerable detail by the noble Viscount, Lord Brookeborough—indicates:
"A Government survey has shown that a substantial area of the Province which is not now in the less favoured area meets the criteria for inclusion. By definition conditions in areas which meet these criteria are such that the work in farming is hard and the income meagre. But in Northern Ireland even before the current economic depression, alternative employment was so scarce that families had little option but to remain on their farms".
In other words, as Members will well know, most of the farms in Northern Ireland are simply one-man operated hereditaments, and they are not able to sustain the families of the particular farmers, who are expected to look for employment elsewhere. But in a situation of high unemployment, as it is in Northern Ireland, this is an extra burden that farmers have to bear.
"The hardship to farmers in these areas is a matter of serious concern to the Ulster Farmers' Union".
The statement goes on to say:
"Government started a survey of marginal land three years ago, but have been inordinately slow in doing that work and preparing the case for the consideration of the Commission".
And:
"Three Weeks ago the Minister said the submission would be made within a few weeks";
and the Ulster Farmers' Union are pressing the Commission
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and the United Kingdom Government to make an early decision in connection with this particular issue of the less favoured areas.
I should like to end by expressing gratitude for the amount of work that has been put into this particular report by the committee, and for the fact that Northern Ireland has been specially mentioned not only in the report but in this debate, and for the interest that has been shown by a number of noble Lords in this aspect of it. I would compliment the chairman for the forthright way in which he presented the report to this House this evening. I feel that it has been a worthwhile debate, but I would urge the Government to get down to some form of action arising from it.
9.24 p.m.
Lord Forester: My Lords, at this late hour I would only make three points. Our concern is about the inequity of our contribution to the common agricultural policy. I should like to take up the point raised by the noble Lord, Lord Collison, about variable co-responsibility levies and modulation. In fact, my noble friend Lord Stodart stopped short on the latest terminology—probably wisely—of the principle of progressivity. That means that, with the variable co-responsibility levy, 78 per cent. of our production in the United Kingdom is paid at a higher level compared with 23 per cent. in Germany and 24 per cent. in France.
Those figures are bad enough, but they introduce a dangerous precedent. If the Community decide in the future that the cost of disposing of extra production should be borne through co-responsibility levy, that principle of progressivity would mean that our contribution, instead of the current 17 per cent., would be at least 20 and possibly 25 per cent., when we produce only 16 per cent. of the milk. We are trying to resolve inequities from the past. We must be careful that the Commission are not introducing new ones even now. I believe in the wider context of the Common Market. If it is to be effective, we must solve the inequities now. We have had one bite at the cherry. We now try for a second bite, possibly for five years, a five-year agreement with the Commission. Surely we must resolve the problem in the long term, before the EEC is enlarged again and the problems become even more complex.
In volume terms, investment in 1981 was at its lowest level for over 20 years. We did not come out of the 1981 price review negotiations at all well because the realignment of the central currency rates allowed every country bar ourselves and Germany to devalue, thus increasing the prices to their farmers. It must be right, especially if we want increased investment to keep British agriculture where it is, to ensure that our farmers receive at least the average increase received by other European countries. I hope Her Majesty's Government will be able to achieve those points.
9.28 p.m.
Lord Bishopston: My Lords, I thank the noble Lord, Lord Mottistone, for introducing the debate, which covers the 1982–83 farm proposals and the guidelines for European agriculture. It has been the habit tonight for noble Lords to delcare their interests. Although my family has been associated with agriculture

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for several centuries, I am not particularly involved, although I can say with considerable pride that I am in touch with the grass roots, so to speak, and that is most important.
The whole House is grateful to the noble Lord, Lord Mottistone, and my noble friend Lord Cledwyn—and of course to the Select Committee—for the detailed work they put in on the report, especially as it was done at very short notice and therefore under great pressure. We are grateful to the individual members for a report of very high quality indeed, presented in a concise form. Such effort was essential to produce a topical report, up-to-date, as it is, with last-minute proceedings from Brussels, and we are all appreciative of their endeavours, for the comprehensivenesss of the report and the quality of its recommendations.
Like other noble Lords, I have read the report in some detail and of course considered the other relevant papers. During the debate noble Lords have detailed their views and I was particularly interested in the contribution of my noble friend Lord Blease who, as always, ensures that the voice of Northern Ireland is heard. The presence of the noble Viscount, Lord Brookeborough, reminds me of the visits which my noble friend Lord Peart and I made over a number of years to Northern Ireland when we were Ministers, and I assure the people of Northern Ireland of our continued interest and support. It was nice to hear the Irish accent after hearing the Gaelic accent of my other noble friends from north of the border.
After this long debate—
Lord Mackie of Benshie: My Lords, it is not Gaelic; it is an entirely different accent. Every accent that your Lordships have heard from Scotland has been that of the Lowland Scot.
Lord Bishopston: My Lords, I am grateful to my noble friend for scotching that rumour. After a long debate noble Lords have naturally touched on the main points of concern, and I do not wish to repeat them; I am sure that your Lordships will be grateful to hear that pledge. I am bound to say that I agree with the Committees' conclusions and its 15 points, and i shall refer to some of them which I think are of particular interest and merit. The report rightly says:
"The way in which agricultural policy develops is clearly of great significance to the budget".
I consider that that claim is important because it should indicate the need to reform the common agricultural policy as soon as possible—if further discontent is not to grow—not only to get a reasonable budget, but to eliminate some of the quite unjustified farming and food policies on the way.
The Select Committee is to be praised for the way it did its job and for seeing the objectives so clearly. Guidelines are very important, as is the 5-year horizon, which will help towards longer-term planning. This is so essential to farming because we all know that confidence is the very basis of a successful agricultural industry. It is essential in this process to establish the guidelines with the CAP, as the report insists, adapted, as the report states, to the new realities of both general economic conditions and the agricultural sector itself, while re-examining all the time the circumstances which have changed rather radically in the past 20 years.
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The guidelines detailed in paragraphs 7 and 8 of the report are I think very realistic, but they need to take account of other factors, such as the conflicting interpretation of the common policies by individual member states.
Having made that personal speech note, I saw that the Select Committee came to the same conclusion, when in paragraph 10 it concluded that,
"The danger is that nothing acceptable will be achieved because it can never completely satisfy everyone".
This is one of the real dilemmas of the Community, despite the fact that we all say that we have a common interest in making the Community work.
Going back to the claim that the general economic situation has changed, I would say that we must recognise the effects of inflation, which are still very high in the United Kingdom and in the Community as a whole. We are indebted to the Select Committee and to those who gave evidence, including many bodies which have great experience and knowledge of the industry and of CAP problems.
The last Labour Government were blamed on occasion for the difficulties that they faced through their constructively critical Common Market attitude. The present Government's relationship with the EEC is no better, and I think some would say, having read the tapes tonight, far worse, since the United Kingdom, like other member states, is rightly forced to fight for its own position. Therefore, one asks the question: where does the fault lie: I think that it lies basically in the structure of the CAP and in its objectives. The fact that over 70 per cent. of the overall EEC budget is represented by the agriculture and food sector of the EEC distorts it further. The 16·3 per cent. average increase in the Common Market farm prices this year is recommended by COPA. I was very pleased to see that although the Brussels Commission is recommending a 9 per cent. average increase, in Brussels on 15th and 16th February our Minister urged, I think quite rightly the need to have prudent price increases on products, especially those in surplus. I think that it is the high pricing policy which has contributed to surpluses.
The farm price proposals fail to deal adequately with the problem of costly surplus production in the Community. The problem of surpluses also stems from the CAP structure. Farmers are rightly guaranteed a minimum price for much of their produce, and in order to prevent the market price falling below this level, the EEC buys food and stores it until price rises justify it being again put on the market.
Much of the criticism of the CAP arises because of the surpluses and the intervention policies and so on, which are necessary at times, but which are also in some ways encouraging the wrong trend. If surpluses cannot be disposed of within the Community, then, of course, we know they can only be sold at a discount outside the Community, where, as we all know, the food prices are lower. So the Community consumers are subsidising the non-EEC consumers, who pay lower prices while the EEC consumer—and that, of course, includes the British housewife—has to pay much more for food. Then, of course, we also pay the levies when we import cheaper food from abroad, so the British housewife comes off badly in both instances.
Lord Mackie of Benshie: My Lords, would the noble Lord permit me to interrupt him: Would he suggest that the people of Poland are better off than the people of this country? Would he not think that the people of Poland might prefer to have surpluses?
Lord Bishopston: My Lords, I think I can comment on the noble Lord's view in a moment. The point is, of course, that we need some surpluses, but there are excesses which are an abomination to the Community policy itself.
The situation with milk needs review. As we all know, the United Kingdom has a very efficient milk production and distribution system, especially in herd size and in productivity; and, of course, the reprieve of the Milk Marketing Board a year or two ago shows that even the Community appreciates the productivity and efficiency of our milk producers. But the United Kingdom milk producer is being discriminated against, as the Committee claims, as the co-responsibility levy, which is supposed to discourage over-production, favours the small EEC farmer, as we know, to the United Kingdom's disadvantage. This underlines one of the grave defects of the CAP, which should be directed to the encouragement of the efficient producer in any sector and to the discouragement of the least efficient. If we do not do that, and if we have high prices, then, of course, we get the surpluses about which we complain. Paying high returns to keep the less efficient farmer in business only adds to the cost and creates the surpluses, as I say. The elimination of the less efficient producer is, of course, a matter for social budgets, and should not be a cost to the overall farm budget; and we have made this point many times with our European colleagues.
Recently, when we have been discussing agriculture, there has been some extensive publicity about EEC surpluses, including wine lakes, butter mountains and so on. I stress the point made by the noble Lord, Lord Mackie of Benshie, that we need reasonable food reserves, but there is no justification for excessive surpluses—and it is no good, on occasion, trying to explain that away. I think I would say very briefly on this that the making of molehills out of EEC butter mountains has helped to put the CAP on the slippery slope, and action is still needed to deal with this particular problem.
Import levies, as we know, raise the prices of imported foods to the higher EEC price levels, so let no one claim that the EEC food prices are unnecessarily high. As we can, as we know, produce only about 60 per cent. of our food, the United Kingdom depends on imported food. Our EEC budget contribution has been high as the number engaged in agriculture is relatively small, being, as we know, about 2·7 per cent., compared with the figure of over 9 per cent. in the rest of the EEC. So what we get in agricultural support is relatively lower but we have yet to give the United Kingdom farm-worker the kind of reward or return which is justified bearing in mind the way in which he has contributed to
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productivity. We often say that people should only be paid in relation to what they can produce. The farm-worker is one of the most productive workers in this country, and it is about time that we took that into account in making our proposals.
Of course, we need to support our own agricultural industry to ensure its efficiency and competitiveness. When we entered the Common Market we went through a period of transition. There were the problems connected with the beef sector. I think it was due to the initiative of my noble friend Lord Peart, who was the Minister of Agriculture at the time, that the EEC, after a long period of disagreement, established what became known as the Peart premium, now called the variable premium and referred to in our report. How right the Committee is to recommend, in Recommendation 15, that the United Kingdom variable premium for beef should be a permanent feature of the beef régime to keep down the price of beef to the consumer.
It should not be, as we know it is, a matter for annual bargaining in relation to the budget and price proposals. Having read the Hansard of another place, I can see there has been some misleading allegations about Labour's agricultural policy. It is as well to remember, as, indeed, do many farmers, that it was Tom Williams who, as Minister of Agriculture in the crusading post-war Labour Government, laid the foundations of British agriculture with the 1947 Agriculture Act. It is our intention to work for the continued efficiency, viability and prosperity of British agriculture and food production and of all who work in it as employees or employers with the main interest of the consumers very much in mind, regardless of our future with the EEC.
I was interested in the passing comment of the noble Lord, Lord Stodart, when he spoke about Euro-jargon. Sometimes we are in danger of not seeing the wood for the trees. We are confused with Euro-jargon, talk about MCAs, green currency, intervention and surpluses, export restitutions, sluice gate prices; we say with some truth that the world price plus the variable levy equals the threshold price, that the EEC price plus the export levy equals the world price. We cannot get away from these facts. I am not saying that these details do not matter but we must get them into perspective. Like agriculture and food production, they are but a means to an end and we must not lose sight of that fact.
The British agriculture industry has a great deal to contribute and as we go deeper into the micro-technological age and the era of biotechnology we must harness science to meet the needs of the millions who, the Brandt Report insists, desperately and urgently need what we can provide. The time has come when we must endeavour to lift the sights of the European Community to the wider horizons which must embrace the needs of a hungry world. There is no time to lose in that.
9.43 p.m.
Earl Ferrers: My Lords, I should like to go back to the beginning when my noble friend Lord Mottistone declared an interest as a food processor, the noble Lord, Lord Mackie of Benshie, declared an interest as a farmer, and I would declare an interest in the fact that I am a farmer and a consumer. I like to think that I produce some of the food and eat rather less of the food that is produced in this country. In this debate, we are all concerned to see that the right course is taken for British agriculture and European agriculture. I liked the final words of the noble Lord, Lord Bishopston. I liked a number of his words but particularly the final ones where he said that we must try to lift our sights above the problems immediately of Europe and think about those parts of the world which are less fortunate than we. In that way, British agriculture, expertise and technological know-how has a great part to play in helping other countries develop their own agriculture.
The debate is timely because it gives your Lordships the opportunity of giving your own advice and guidance as to how the Government might, could and should react in the common agricultural price fixing negotiations before they are determined and while they are, as they are, still in process of being negotiated. It has a somewhat inhibiting effect on a Minister replying to a debate because a negotiation is a negotiation and this means that results can emerge which are acceptable to all and which seek to meet the sometimes differing requirements of member states. But it is useful for us to get to know what your Lordships see as the negotiating stances and objectives and the things which ought to be done.
I was interested in the experiences of the noble Lord, Lord John-Mackie, with members of the European Parliament. He said that he wished we could do away with green pounds, MCAs and so on and that these ought to be irrelevant. In a totally organised situation they would be an irrelevance. They were only devised in order to take account of excessive movements. Of course, so long as currencies remain in a position or are apt to remain in a position of periodic turbulence, it is very difficult to see how they can be done away with.
I was sorry to hear my noble friend Lord Stodart attack the processors. He is normally such a reasoned person. I thought that momentarily his reason had left him—at least on that particular subject. He said the interests of the producers and processors were diametrically opposed. With the greatest of respect to my noble friend, I disagree. The interests of processors, consumers and producers are all the same though there may be different inflexions upon them. It is no different from buying a motor-car. The garage depends upon the driver and the driver upon the garage. If the garage does not do the work properly they will not have the driver's custom. If the driver has no use for the product of the garage, he will not make use of it.
I would go along with the noble Lord regarding the need for simpler language. That not only applies to the European Community but to a lot of other things. If my noble friend has ever gone through the disagreeable experience—and no doubt being a prudent man, he has—of making a will, he will know that he has not the slightest idea of what he has said once the lawyers
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have their hands on it. So it is with doctors, dentists and scientists. They have a precise jargon of their own which is totally indecipherable to anyone else who is not familiar with it. But I agree with him in his sympathies.
We have argued as a Government for some time—and indeed the European Commission have argued—that the Commission should produce medium-term projections of how production and consumption are likely to develop which could act as background to the annual price fixing. The Commission have adopted this approach in the guidelines and have made projections up to 1988. They have recommended a number of measures which should be taken to ensure that production is continued within reasonable limits, bearing in mind the likely growth of demand and other calls on Community production.
The Government support this approach because the time has clearly come when the Community must take action to contain the cost of support in surplus sectors and to indicate to producers that an unlimited guarantee is no longer possible. Despite the criticisms, the CAP are enabling British agriculture to make a growing and significant contribution to our own economy. The Annual Review White Paper shows that in 1980 the United Kingdom was 75 per cent. self-sufficient in those foodstuffs which we can grow here, as opposed to 61 per cent. just before our accession to the Community. More recently, our self-sufficiency for all foodstuffs increased from 53 per cent. in 1978 to 60 per cent. in 1980, and we calculate that this improvement was worth some £900 million extra to the balance of payments in 1980 alone. That is a very substantial improvement.
In 1979, of all the FEOGA guarantee expenditure the United Kingdom received back about 5 per cent. In 1981, this amount doubled, so we now receive back 10 per cent. For all these reasons, the Government believe that our aim should be to reform the common agricultural policy and to make it work even better.
The noble Lord, Lord Mackie, referred to the relationship between food prices and agricultural prices, and he was right to do so. I wonder whether I may put this in a different way because, during the period from December 1978 to December 1981, which is a three-year period, retail food prices rose, as the noble Lord, Lord Mackie, said, by 37 per cent. Some 24 per cent. of this was attributable to the rise in labour and other costs and the margin of processors, distributors and retailers. Only 13 per cent. was due to a rise in the cost of basic products in those three years. That is the measure of the effort which agriculture has made in the attack on inflation, and it is a measure of the benefit which housewives have received even from the processors as well, which the noble Lord, Lord Mackie, may be disappointed to hear. But the fact is that, while the retail price index has increased so much, the price of food has increased by less and the price of the actual article of food which goes into the product has increased by even less. When you consider that inflation and recession have been caused by energy and that agriculture is a source of energy as well as a product of it, that is a pretty remarkable achievement.
The noble Viscount, Lord Sidmouth, referred to the glasshouse industry and said he was worried about

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Dutch gas. I know the glasshouse industry has had a very difficult time and the horticultural industry has had one too. We are concerned to see the gas problem resolved properly and permanently and we have continued to press the Commission for a solution on this subject. It is hoped that they will shortly be able to find a permanent solution. Meanwhile assistance up to the value of £4 million is being provided in the current year. I accept, of course, the noble Viscount's desire for an early solution to that problem. That is what my right honourable friend the Minister of Agriculture is urgently doing with the agreement of his fellow Ministers in Europe.
The Commission's price proposals for 1982–83 recommend price increases averaging 9 per cent. and a 4·4 per cent. revaluation of the green pound. The Government believe that there should be lower increases for products which are in surplus, and that has been our line in Brussels. We have also made it clear that we reject the Commission's present proposal for a revaluation of the green pound—a proposal which would mean that the United Kingdom's support prices would go up by less than 4 per cent., with severe consequences for incomes and the future levels of agricultural production, while those of others in the Community would of course rise by nearly twice as much.
The Government have considered the price proposals in the light of the guidelines document, and this has been the sub-committee's approach too. Some aspects of the proposals clearly reflect the spirit of the guidelines, in particular the proposals for production thresholds for some of the main sectors and for lower relative price increases for cereals which follow naturally from the guidelines. The Government agree with the sub-committee that the Commission has not gone far enough, especially in its proposals for production thresholds.
My noble friend Lord Mottistone said that the Commission had provided increased prices every year since the United Kingdom joined the Community. I thought that was a somewhat unfair inference, because of course we joined the Community at the very moment when oil prices took off and when inflation took off—
Lord Mottistone: My Lords, I hope that my noble friend will forgive me. Perhaps on reflection he would agree that I did not say the Commission had produced increased prices every year since we joined the Community: I said that in every year since we joined the Community the Council of Ministers had added to what the Commission had produced—which is really slightly different.
Earl Ferrers: My Lords, I am grateful to my noble friend. I quite agree that I totally misheard my noble friend, and am glad to be corrected. We think there should be prudent price increases for products in surplus, and I would emphasise the word "prudent". We endorse much of what the sub-committee had to say on individual commodities. My noble friend Lord Mottistone—and I hope that I am not wrong again this time—said that there should be more of a feeling that it should be a food and agriculture policy as opposed to
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just an agriculture policy. But, of course, my right honourable friend has been pressing this point hard in the Council of Ministers to ensure that in fact prices do not rise out of all reason and thereby harm the consumers.
The cereals sector is expensive: it accounts for about 15·2 per cent. of FEOGA guarantee spending, or £1,209 million a year. The Commission's proposals aim to reduce this. For the second year running, support prices for cereals would go up by 2 to 2½ per cent. less than average, and the increases proposed less than cover inflation. In real terms, they represent not a freeze but a cut in prices for the second year running. The Commission proposes that, in future, support prices for cereals would be liable to reduction if the total quantity produced over-ran a pre-set target level of 119·5 million tonnes. These measures are designed to improve the balance between the cereals and livestock sectors, and to limit the cost to the Community budget of the cereals régime. We support the Commission's objectives, but have reservations about the details. In particular, we think that the proposed production threshold is too high.
We are opposed, also, to the Commission's proposal to increase the levy on brans. This would put up the cost of livestock feed, especially in Northern Ireland where, as we have been told only too clearly, grain prices are high and farmers rely on imported materials. It is not in the interests of the livestock sector or of the farming industry as a whole to reduce these imports or to put up their prices. We are, therefore, resisting moves to restrict these imports, except in the case of manioc, where we were very concerned about the budgetary implications of a high level of imports.
My noble friend Lord Brookeborough and the noble Lord, Lord Blease, quite rightly made special note of the position in Northern Ireland, which I recognise is a very difficult and a very delicate one. They both referred to the social problems which are connected with agriculture in Northern Ireland and with the high level of unemployment there at the moment. Since we took office, there has been agreement on a number of measures of specific assistance to agriculture in Northern Ireland, such as the agricultural development programme, which gives improved rates of grant in the less-favoured areas; enhanced aid for processing projects in the animal feed sector; doubling the suckler cow premium; the beef development programme; giving assistance with artificial insemination; beef performance testing; liming and first-time silage making.
These schemes qualify for assistance from Community funds, and further national funds were made available in 1981–82 which have helped to maintain jobs in the dairy and intensive livestock sectors. I do not say that these are all the answers that are required, but it is an indication of the fact that the Government are aware of the position in Northern Ireland. My right honourable friend the Secretary of State for Northern Ireland has also announced that he is making a further £6 million available in 1982–83, and we are in touch with the Commission on how that can be utilised. It is hoped that we shall shortly be able to give further details, and that this will further help the position in Northern Ireland.

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My noble friend Lord Brookeborough referred to the liquid milk position. Because only about 18 per cent. of milk in Northern Ireland goes into the liquid market, compared with about 50 per cent. in Great Britain, the higher returns from the liquid market do not help Northern Ireland producers as much as they assist producers in Great Britain. Northern Ireland producers are partially compensated for this disadvantage by a higher liquid price and this, in turn, is offset by a consumer subsidy which is approved by the Commission, and which ensures that the retail price in Northern Ireland does not exceed the retail price in England and Wales.
Both my noble friends Lord Brookeborough and the noble Lord, Lord Blease, referred to the application for the alteration in the less-favoured areas régime. They are quite rightly concerned to see this area extended in Northern Ireland. The work has been done and preparations are now being made to present these proposals to the Commission. I would only remind my noble friend that the Government have never entered into any commitment to make more money available for any increased area which might come about as a result of the new delineation of the less-favoured areas. But I accept the urgency for this to be done and we hope to do it as soon as possible.
Many noble Lords referred to the milk position and it is quite right—and I agree with the noble Lord, Lord Collison—that the surplus of milk in the Community means that a proper price policy and effective measures to tackle the surplus are essential. United Kingdom dairy farmers need some increase in the support price to offset the pressure on their incomes. The basic co-responsibility levy is certainly not the answer since it applies to all producers, regardless of whether they are adding to the surplus. It increases the price and it so reduces the consumption. The noble Lord, Lord Bishopston, my noble friend Lord Stodart of Leaston, the noble Lord, Lord Collison, and my noble friend Lord Forester, in a remarkably short speech which I would have wished to emulate but which unfortunately I am unable to emulate, said that they were concerned about the basic levy on the first 60,000 kilogrammes of milk. We are opposed to this proposal as it favours other member states whose herd sizes are smaller than our own and discriminates against the United Kingdom which has an efficient industry and a herd size almost four times the Community average. I agree with the noble Lord, Lord Bishopston, that there should not be penalties for efficient production.
Obviously the Government are concerned about the financial implications of the Commission's proposals. Agriculture's share of the Community budget has fallen from 80 per cent. in 1978 to 66 per cent. in 1981. We are anxious that this progress should be maintained. The Commission claim that their proposals will not lead to any increase in agriculture's share of the budget, but it is the Government's view that Community agricultural expenditure should grow more slowly than the Community's own resources in 1983. We wish to keep our eye closely on that.
The noble Lord, Lord Walston, said that he thought agriculture should not become a political football and
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that the decision on common agricultural price fixing should not necessarily be involved with the budgetary position. I would merely reiterate that throughout the discussions within the Community—on the mandate of 30th May—it has been agreed that work on all three chapters (the common agricultural policy, the development of our other Community policies and the budgetary problems) must go forward in parallel because all three chapters are interrelated. That, in our view, remains the position and that is why decisions on the common agricultural policy can be taken only in parallel with decisions on the budgetary problems.
I believe that the Government's approach to the guidelines and to the price proposals is very similar to the sub-committee's. We think the guidelines are on the right lines. Our main criticism of the price proposals is that they do not go far enough in implementing the principles which are set out in the guidelines. We have already developed this point at the Council of Agriculture Ministers in February, and again earlier this month, and we shall continue to do so, with a view to securing a settlement which meets the needs of our industry, consumers, processors and distributors.
Agriculture is a great industry which we wish to see succeed, not just for those engaged in it but for the nation as a whole. The sub-committee's report provides much welcome support for our negotiators. The Government are most grateful to the sub-committee for the work which they have done and to your Lordships this evening for the contributions which have been made. They will be taken very seriously into account because I know only too well of the conscientious diligence with which the sub-committee carry out their hard work.
10.4 p.m.
Lord Mottistone: My Lords, it only remains for me to thank all noble Lords who have taken part in the debate. I am most grateful to the members of the subcommittee—and also to those noble Lords who are not members of the sub-committee whose contributions have been particularly valuable and enlightening. My thanks go also to the many noble Lords who made nice remarks about me. I do not deserve it. But it was very kind of them to do so.
May I endorse my noble friend Lord Brookeborough's thanks to our clerk, to our specialist advisers and to the printers if not to the publishers (I am never quite sure about that). May I also thank the secretaries who worked very well for us in the background and also the shorthand writers who at times have been very hard pressed in taking down the evidence.
The hour is late and my noble friend the Minister has already commented on the points made by individual speakers. I should like to mention two points only. First, I entirely agree with the noble Lord, Lord Stodart of Leaston, on the need for jargon not to be used. We have done something about that in that we are providing a glossary in Volume II, which I hope the noble Lord will get in addition to Volume I. We would have liked to include it in Volume I, but printing pressures prevented that.

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To the noble Lord, Lord Blease, I will say that there is no mention of Northern Ireland conclusions because your Lordships will notice that we took out Northern Ireland and the United Kingdom as being separate from the rest. We were trying to produce a report that would be of use to the Community as a whole. And we did not want to highlight national interests, as it were, except to pick out special points which have a lot of attention paid to them. I would like to suggest that the amount of time given over to Northern Ireland in the speech made by my noble friend the Minister was out of all proportion. I cannot say that—my wife would never forgive me. Of course I do not mean that my noble friend's remarks were out of all proportion to what Northern Ireland deserves. It is a real reflection of the great work which my noble friend Lord Brookeborough puts in to make sure that Sub-Committee D never forgets Northern Ireland.
My noble friend Lord Brookeborough rather ticked me off for not being brutal to the Minister. I do not think I needed to be brutal, and, of course, I never wanted to be brutal because, if I heard him aright, my noble friend the Minister endorsed a great deal of what was said in our report and indeed will use the report to advise his right honourable friend the Minister in how to fight the battle in Brussels. If I could pick out one thing from the general debate, it struck me that all of us—including the farmers—agree that 9 per cent. is about the maximum there ever should be. It was also noticeable that, on the whole, we did not talk about revaluation. I believe we would like the message to go to the Minister that 9 per cent. is the maximum—although some of us would like it to be less, it is true—and that revaluation, as my noble friend said, is not something that we would support. I hope that my noble friend will convey these messages. Perhaps this time, this year, with a little question mark in the table as to the Council of Ministers' response to the 9 per cent. proposal by the Commission, it will be equal to and not at least two percentage points above, as it has been in most previous years.
On Question, Motion agreed to.

  CRIMINAL OFFENCES: ETHNIC ANALYSES
  CRIMINAL OFFENCES: ETHNIC ANALYSES
  IMMIGRATION: INTERVIEWING OF WIVES
  IMMIGRATION: INTERVIEWING OF WIVES
  CYPRIOT REFUGEES: RESIDENCE IN BRITAIN
  CYPRIOT REFUGEES: RESIDENCE IN BRITAIN
  LABOUR AND TRADE UNION PRESS SERVICE: NATO GRANT
  LABOUR AND TRADE UNION PRESS SERVICE: NATO GRANT
  DHSS: WORKLOAD AND STAFFING
  DHSS: WORKLOAD AND STAFFING
  RESETTLEMENT UNITS IN LONDON
  RESETTLEMENT UNITS IN LONDON
  EEC DIRECTIVE 79/409: DESIGNATION OF WORLD BIRD PROTECTION AREAS
  EEC DIRECTIVE 79/409: DESIGNATION OF WORLD BIRD PROTECTION AREAS
  LPG: MOORING OF STORAGE VESSELS IN BRITISH COASTAL WATERS
  LPG: MOORING OF STORAGE VESSELS IN BRITISH COASTAL WATERS
  LAUDER: EXPRESS COACH SERVICE
  LAUDER: EXPRESS COACH SERVICE
  ANGOLA: IMPRISONED MERCENARIES
  ANGOLA: IMPRISONED MERCENARIES
  PRISONERS OF WAR: RECORDS AND ACCOUNTS
  PRISONERS OF WAR: RECORDS AND ACCOUNTS