Sitting of 31 March 1982

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

    Namibia
    Mr. Clinton Davisasked the Lord Privy Seal if he will make a statement on the latest proposals of the contact States relating to elections in Namibia.
    Mr. Robert C. Brownasked the Lord Privy Seal if he will make a statement on any consultations that Her Majesty's Government have had concerning the holding of elections in Namibia.
    The Minister of State, Foreign and Commonwealth Office (Mr. Richard Luce): Most of the constitutional principles have been agreed by all concerned, but agreement has not yet been reached on the Five's proposals concerning the electoral system for the constituent Assembly. These proposals are fair to all parties and groups. The Five hope to resolve this question as soon as possible, with the co-operation of those directly involved, and to move on to phase 2 of the negotiations without further delay.
    Mr. Davis: Is the Minister aware that the South Africans have frustrated a settlement in Namibia for nearly a decade and a half? Does he agree that the propositions advanced by the contact States about the electoral process are enormously complicated, especially for an unsophisticated electorate that is unused to elections? Does he agree that that is a sign that the contact States are preparing to appease South Africa because of that Government's obstruction?
    Mr. Luce: It is an exaggeration to say that the system now being discussed is enormously complicated. Not only in Europe, but in African countries, there are a variety of systems in which a number of votes are allowed for. We are here working towards a mixed system of proportional representation and single-member constituencies, although we are now working through the contact group to see whether there are further ways of simplifying the system. We are in close touch with all the parties concerned.
    Mr. Robert C. Brown: Is the Minister aware that the proposal to appoint Mr. Mishra, an Indian diplomat, as United Nations ambassador for Namibia is reported to have been opposed by Britain and other Western States, as being likely to delay Namibian independence? Will he deny that report, because if it is true it must surely mean further appeasement of the South African regime by the contact States?
    Mr. Luce: No, what the hon. Gentleman says is absolutely the case. The Government do not believe that filling the post of United Nations commissioner to Namibia is helpful to the current negotiations. Neither the United Nations Commission nor the United Nations Council for Namibia has a role to play in the present negotiations. We do not believe that the present position is helpful when we already have a United Nations representative to play a role in the transition and when the Five are working extremely hard to achieve a settlement.
    Mr. Nicholas Winterton: Does the Minister accept that many Conservative Members agree with his reply to the hon. Member for Newcastle upon Tyne, West (Mr. Brown)? Does he agree that it is SWAPO which is now holding up progress towards the independence of Namibia, as it does not accept the election proposals advanced by the contact group? Does he further agree that it is important that the United Nations should remain impartial if there is to be any meaningful and constructive settlement?
    Mr. Luce: On my hon. Friend's latter point, as I said to the hon. Member for Hackney, Central (Mr. Davis), it is essential when we reach phase 2 to discuss the impartiality of the United Nations. That is an important factor in a successful transition.
    On my hon. Friend's first point, SWAPO has expressed anxiety about the election method. We are discussing that with SWAPO and the front-line States. I do not believe that the procedures are complex. It is possible to find a simple procedure and we are working on that now
    Mr. Hooley: Is the Minister aware that the whole basis of the negotiations is a resolution that was passed unanimously by the Security Council in 1976? How can he claim that the United Nations has no role in the matter? Will he acknowledge that the dual system of voting is widely regarded as a trick to exclude the majority of the African population in Namibia from real power in an independent State?
    Mr. Luce: The hon. Gentleman cannot have listened to my earlier answer about the United Nations commissioner. That is quite different. The Government fully support Security Council resolution No. 435, which allows the United Nations to play a key role in the transitional phase. However, we opposed the appointment of a United Nations commissioner this week. That is a different matter and we believe that it further complicates the process. That should be made clear.

    Suppression of Terrorism (Convention)
    Mr. Stanbrookasked the Lord Privy Seal what is the policy of Her Majesty's Government towards seeking the adherence of those States which are parties to the international convention on genocide but not the European convention for the suppression of terrorism, to the latter convention.
    The Minister of State, Foreign and Commonwealth Office (Mr. Douglas Hurd): We strongly support the European convention on the suppression of terrorism, and would like all eligible States to become a party to it.
    Mr. Stanbrook: As the convention on terrorism is just as consistent with the general principles of international law as the convention on genocide, and as both

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    conventions deny to political offenders the right of immunity from extradition, are not the Government of the Irish Republic hypocritical, considering that they have already signed the convention on genocide, to assert that they cannot sign the convention on terrorism on constitutional grounds? If that is a demonstration of their sincerity, what reliance can be placed on their promises to respect the will of the majority in Northern Ireland?
    Mr. Hurd: My hon. Friend's question is really for the Irish Government. I can only say that we hope that they will find a way through the constitutional difficulties that they seem to see and will join the convention.

    Israel
    Mr. Lathamasked the Lord Privy Seal whether he will make a statement on the Foreign Secretary's visit to Israel.
    Mr. Neil Thorneasked the Lord Privy Seal if he will make a statement about the Foreign Secretary's visit to Israel
    Mr. David Marshallasked the Lord Privy Seal whether, in the visit of the Secretary of State for Foreign and Commonwealth Affairs to Israel, he has yet discussed the priority attached by the Israeli Government to security as an essential part of the peace process.
    Mr. Hurd: My right hon. and noble Friend arrived in Israel only last night. Today he has had talks with, among others, the Israeli Prime Minister, Foreign Minister and Defence Minister.
    Mr. Latham: Is my right hon. Friend aware that Conservative friends of Israel in the House send good wishes to Lord Carrington on his important mission and hope that he will be received with courtesy and warmth in Israel, because we believe him to be a fair-minded man who is genuinely seeking peace?
    Mr. Hurd: I am very grateful to my hon. Friend for what he has said. It is in exactly that spirit that my right hon. and noble Friend is in Israel.
    Mr. Thorne: During his visit to the Holy Land, will my right hon. and noble Friend take every opportunity to promote trade between this country and Israel, particularly with a view to overcoming the pernicious Arab boycott?
    Mr. Hurd: I think that my hon. Friend knows the Government's position on that. We in no way approve of the boycott, but we think that it is a matter best left to the judgment of the firms concerned.
    Mr. Marshall: Will the Secretary of State, during his visit to Israel, assure the Israeli Government that no representative of the British Government will meet representatives of the Palestinian Liberation Organisation so long at it remains committed to those clauses of its convention that call for the destruction of Israel?
    Mr. Hurd: We have contacts with the PLO at official but not at ministerial level. We use those contacts to urge the PLO to recognise Israel's right to exist and to make it absolutely clear to Israel that the PLO would fully accept the existence of Israel if Israel accepted self-determination for the Palestinians.
    Mr. Cyril D. Townsend: Will the Foreign Secretary tell the Israeli authorities that, despite the many injustices
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    that Jewish people have suffered in previous years, the way in which they are establishing settlements on occupied Arab land in Jordan, and their dictatorial policies on the West Bank, only exacerbate tensions in the area and are against the long-term interests of Israel?
    Mr. Hurd: Our views on the settlements have been frequently stated. In the past few days we have made a statement deploring the present activities on the West Bank. A statement was made by the European Council yesterday to the same effect.
    Mr. David Watkins: Will the Secretary of State represent to the Israeli Government that actions such as the dismissal of elected West Bank mayors and councillors by the illegal occupation forces are not only contrary to the Geneva convention but unacceptable to all fair-minded people in the United Kingdom?
    Mr. Hurd: We certainly regret the dismissal of those elected representatives.
    Mr. Alan Clark: Does the Minister agree that my right hon. Friend might suggest to his hosts that if they are serious about improving relations between Britain and Israel they might desist from publishing on postage stamps likenesses of prominent Jews who have murdered British subjects?
    Mr. Hurd: I am not sure that that particular point will come up, but I have a good deal of sympathy with what my hon. Friend says.
    Mr. Moyle: Is the Minister aware that we support the Foreign Secretary's visit to Israel, because it keeps open lines of communication in a difficult situation, but that most Arabs believe that the Israelis are on the point of annexing the West Bank and the Gaza Strip? Will the Foreign Secretary therefore associate himself completely with the EEC statement on this yesterday and tell any Israelis who are thinking of annexation that we would regard such a move as very dangerous and prejudicial to a peaceful settlement in the Middle East?
    Is the Minister also aware that we would associate ourselves with his right hon. Friend's statement about the dismissal of the West Bank mayors and with the views of the Israeli Labour Party in the Knesset on 23 March, which were vigorously critical of the current Israeli Government?
    Mr. Hurd: As the right hon. Gentleman has said, any attempt at annexation of the West Bank would certainly be very dangerous, but we have no actual evidence that that is being contemplated.
    Mr. Lawrence: Contrary to what the right hon. Member for Lewisham, East (Mr. Moyle) has said from the Labour Front Bench, have not the disturbances on the West Bank been instigated and organised by the terrorist PLO precisely because the Israeli Government are beginning to make headway with moderate Palestinian leaders?
    Mr. Hurd: I advise my hon. and learned Friend not to accept any such simple explanation. What has happened on the West Bank is the outcome of one incident feeding on another, leading to a cycle of violence and repression. As other countries, including ourselves, have known, this is a consequence of a regime of military occupation. It is for the Israelis to consider, as they are now clearly doing, whether such a system provides the best foundation for the security of Israel.

    El Salvador
    Mr. Frank Allaunasked the Lord Privy Seal what reports he has so far received from the observers sent to the elections in El Salvador on 28 March.
    Mr. Luce: We have not yet received a report from the United Kingdom observers.
    Mr. Allaun: How can there be free elections when anti-junta candidates do not stand because they are afraid of being murdered and when voting is compulsory? Secondly, do the British Government intend to recognise the Right-wing extremists now in the saddle in El Salvador?
    Mr. Luce: As I have said, we have not yet received the report of the two observers. They will return this week and report to my right hon. and noble Friend. Their report will then be published. I think that it would be sensible to wait and see what they have to say. That is why we sent them there—to see whether the elections were a valid test of opinion and to learn about the form in which they took place. On the first evidence, with more than 1 million people reported to have voted, we should be very cautious of insulting the people of that country who wish to use the ballot box rather than the gun.
    Sir Anthony Kershaw: Although the result of the elections may not seem entirely satisfactory, does not the very large turnout show that there is a majority in El Salvador that favours the ballot rather than the bullet? Ought not the results of the elections to be respected both inside and outside El Salvador?
    Mr. Luce: I very much appreciate what my hon. Friend has said, as I know that he has been in El Salvador with an all-party team. It appears from the first evidence that the poll has been high. I should have thought that anyone who believes in democracy would condemn those who use the gun to try to intimidate those who wish to use the ballot box.
    Mr. Healey: Does the Minister agree that 1 million voters is well under half those of electoral age and that many of those who voted did so out of fear of being punished by the Government, because voting is compulsory? Does he further agree that, unfortunately, my predictions have proved true and the situation after the elections is infinitely more difficult? Does he also agree that the only alternative now to negotiations, as suggested by the Mexican President, is continuing suppression of the people by a Government in El Salvador who have no respect whatever for human rights and have indeed boasted of that fact?
    Mr. Luce: I find it difficult to understand how the right hon. Gentleman, sitting in the House, can come to such sweeping conclusions at this stage. Surely it is more responsible to wait to hear what the observers have to say. Let us then read their conclusions and discuss them.
    Mr. Healey: The hon. Gentleman's figure of those who voted is well under 50 per cent. of those of electoral age. We all know that those who have not voted are breaking the law in El Salvador, yet about 60 per cent. chose to break the law rather than to vote, unless they were forced into emigration by the actions of the previous Government. Does the right hon. Gentleman agree that the majority of voters voted for parties of the extreme Right
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    wing, led by a man who has described President Duarte as a tool of international Communism? Is that the right hon. Gentleman's view?
    Mr. Luce: I am surprised by the rather unconstructive way in which the right hon. Gentleman seems to be approaching this problem time and again.
    Mr. Stanbrook: My hon. Friend should not be surprised.
    Mr. Luce: Yes, perhaps I should not be surprised. I am trying to help the right hon. Gentleman. I remain surprised by the attitude that he has adopted. Let us wait to hear what the observers have to say. In the meantime we note that the figures suggest that about 60 per cent. of the electorate has voted. If the right hon. Gentleman believes in the use of the ballot box, surely he should be supporting and encouraging that process rather than encouraging those who have used the gun to try to intimidate.
    Mr. Eldon Griffiths: Is my hon. Friend aware that those of us who had the privilege of visiting El Salvador find it hard to arrive at the same sort of certitude as the right hon. Member for Leeds, East (Mr. Healey) has expressed, without having been there? Will he accept that, whatever the result of the election, the main attack on human rights has come from those who sought to prevent people from going to the ballot box in peace? Secondly, does he accept that we should have the greatest admiration for the courage of the Salvadoran people who risked their lives to prosecute an election by the ballot and not by the bullet?
    Mr. Luce: I agree entirely with what my hon. Friend has said.
    Mr. Hooley: Is the hon. Gentleman aware that not all of those who went to El Salvador entirely share the views of the hon. Member for Bury St. Edmunds (Mr. Griffiths)? The evidence that we received from the man who was organising the elections showed that the techniques involved would allow the police in El Salvador to identify those who vote and those who do not. As those who do not vote are guilty of a crime, punishment may follow.
    Mr. Luce: When the observers' report is available it will be published in full. It will be available to the House, to the press and to the British public. We shall be able to study in great detail what the observers have to say. They have been in El Salvador for a number of days and they have observed the elections. Let us wait to hear what they have to say.

    United Nations Special Session on Disarmament
    Mr. Ioan Evansasked the Lord Privy Seal what ministerial representation Her Majesty's Government will have from his Department at the United Nations special session on disarmament.
    Mr. Hurd: As my right hon. Friend the Prime Minister told the House on 16 March, she plans to go to the second United Nations special session on disarmament. There are at present no plans for a Foreign and Commonwealth Office Minister to go as well.
    Mr. Evans: Does the Foreign Office think it wrong that the Heads of Government should be meeting in Geneva at the same time as the United Nations disarmament conference takes place? Surely it would be a good idea for

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    the Heads of Government of all countries throughout the world, including those from the NATO and Warsaw Pact countries, to attend the session and for Britain to submit constructive proposals for nuclear disarmament, for reducing the sale of conventional weapons throughout the world and for diverting the massive expenditure of £500 billion on the arms race to deal with the problem of world poverty, which would be a better way of bringing peace throughout the world?
    Mr. Hurd: The hon. Gentleman's argument about dates is a thin one. The NATO summit will last for one day whereas the United Nations special session will sit for five weeks. Many people, including my right hon. Friend the Prime Minister, plan to go to both.
    Mr. Michael McNair-Wilson: Will my right hon. Friend say something more about the shape of the session? Does he see its purpose as being to deal with particular hot-spots around the world or to try to take a global view of disarmament?
    Mr. Hurd: Certainly the second. The preparations are still continuing. We have tabled with some of our friends a draft programme for comprehensive disarmament that we think is realistic. We are discussing it with others who have other ideas and we hope that it will be possible to reach agreement at the special session on a framework that will act as a spur and a stimulus to the different negotiations on arms control and disarmament that are taking place and are in prospect.
    Mr. George Robertson: The House will commend the Prime Minister on her decision personally to attend the United Nations special session, although it may have some reservations about the fact that during the five-week session there will be no Forign Office Minister in attendance with the right hon. Lady. The House will hope that she will use the occasion, not for unhelpful rhetoric, but for exerting some political muscle to beak the deadlock that has been reached in disarmament negotiations. Will Her Majesty's Government use some of their influence to try to avoid the complications that will arise from the clash of dates between the Geneva summit and the United Nations special session, bearing in mind the widespread feeling on the issue?
    Mr. Hurd: As I have tried to make clear, there is no clash. We intend to take a lively part in the special session. It will not be a negotiating occasion but it might give a stimulus to those who are doing the negotiating in the different places where that is happening.
    Mr. Chapman: While I welcome my right hon. Friend's presence at this most important conference, can my right hon. Friend assure the House that the Government will bring forward fresh initiatives to encourage and promote multilateral disarmament? Will he ensure that the public are kept in touch? He must recognise that there is deep anxiety to see these initiatives stepped up.
    Mr. Hurd: I agree with my hon. Friend. We take initiatives where we think that it is sensible and useful to do so. We have done so recently in respect of chemical weapons. My hon. Friend is right about public information. We have recently published what I think is a reasonable pamphlet entitled "Peace and Disarmament". We shall do our best in the coming months to take our full part in public discussion.

    Nicaragua
    Mr. Easthamasked the Lord Privy Seal if he has had any recent discussions with the Foreign Minister of France concerning the aid given and the policies pursued by France in respect of Nicaragua; and if he will make a statement.
    Mr. Luce: No, Sir, but my right hon. and noble Friend has recently had discussions with the French Foreign Minister, M. Cheysson, on many issues, including Central America.
    Mr. Eastham: Is it not a fact that the French Government are recognising the freedom and independence of the Nicaraguans? Bearing in mind the overwhelming sympathy of the British people towards the Nicaraguans and their independence, is it not about time that the Government gave a lead to all the super Powers in urging them to allow the Nicaraguan's to have the freedom to which they are entitled?
    Mr. Luce: We can all say that we want to see freedom and independence in that part of the world. The Government have noted with some concern that the Nicaraguan Government have decided to suspend all civil rights and to declare a state of emergency. We regret that very much. There are some indications that the Nicaraguan Government are not entirely independent, as the hon. Gentleman suggests. The actions that they are taking against the Miskito Indians causes great concern to those of us who have respect for human rights, as I am sure the entire House has. We want to encourage the consolidation of a pluralist society in Nicaragua. I have had two meetings this month with the Nicaraguan ambassador. The discussions have been extremely useful.
    Mr. Peter Bottomley: Has my hon. Friend heard, through the press or direct from the Nicaraguans, whether they plan to bring their proposed elections forward from 1985? If they are to continue to have a plural society, it will be helpful to have elections so that people with different political views can be elected to a Nicaraguan Assembly.
    Mr. Luce: I agree entirely with my hon. Friend. I think that the outside world would be encouraged if there were evidence that the Nicaraguans were prepared to hold early elections and thereby demonstrated their wish to have a pluralist society. This is something that we have urged upon them in our recent discussions.
    Mr. Healey: Is the hon. Gentleman aware that on many occasions the United States Administration has made threats of direct intervention in the affairs of Nicaragua? It has been widely reported and not denied that the CIA has had a plan accepted costing $19 million for destabilisation of the regime in Nicaragua. As the United States has twice this century intervened by military force in Nicaragua, it is immensely important that Nicaragua should know that it has friends other than those in the Communist world who are prepared to support its desire for independence.
    Mr. Luce: As was said in an earlier debate, the Government have no knowledge of the use of any particular United States funds through the CIA. We have also noticed that on a "Panorama" programme earlier this week ambassador Bosworth of the United States denied that the United States had any intention of military

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    intervention, or the use of troops. We should take note of the fact that Secretary of State Haig has repeatedly said that the United States wants to foster and encourage democracy in that part of the world.
    Mr. Healey: Is the Minister aware that many of us have had opportunities to talk to Mr. Bosworth on this issue, and while it may be the case that the United States does not intend to send its troops to Nicaragua, it has made threats, widely reported in the American press, and supported by members of Congress and the Senate, of an organised campaign to destabilise the Government in Nicaragua? Does the hon. Gentleman not know that Nicaraguan terrorists are being trained in the United States for intervention inside Nicaragua? That, too, was recorded in the "Panorama" programme to which the right hon. Gentleman referred.
    Mr. Luce: I do not think that the right hon. Gentleman and I disagree. Any actions that are taken by countries interested in stability, whether in Nicaragua or any other part of central America, would be to help to do what we can to foster greater stability. That is our objective. All I was saying was that I had noted, and I hope that the right hon. Gentleman has noted, that the United States Government's objective is to try to foster and encourage democratic Government. That is something with which we ought to agree rather than disagree.
    Mr. Eldon Griffiths: While no one in the House can doubt that the replacement of the Somoza regime by the Sandanista revolution was a step forward, does my hon. Friend agree that the injection of French weapons into the situation is not helpful? Does he accept that there is grave disappointment in Nicaragua about a Government who have allowed their revolution, which had much support, to go sour in the suppression of civil rights, to bring about the militarisation of the country and the use of Nicaragua as a base for the destabilisation of surrounding countries?
    Mr. Luce: The British Government do not believe that it would be helpful to sell arms to Nicaragua. We condemn and criticise the suspension of civil rights as a result of the recent declaration of emergency and we express concern about the substantial build-up of the military in Nicaragua beyond any requirement for their own defence purposes.
    However, it is the desire of Her Majesty's Government to do whatever is possible to encourage and foster stability. We are in touch with Governments such as the Mexican Government and other Governments who play an important role in that part of the world.

    Cyprus
    Mr. Norman Atkinsonasked the Lord Privy Seal what progress there has been in the intercommunal talks in Cyprus since his reply to the hon. Member for Tooting (Mr. Cox) on 3 March, Official Report, c. 182.
    Mr. Thomas Coxasked the Lord Privy Seal what further discussions in the intercommunal talks on the future of Cyprus have taken place since his reply to the hon. Member for Tooting (Mr. Cox) on 3 March, Official Report, c. 182.
    The Lord Privy Seal (Mr. Humphrey Atkins): There have been regular meetings throughout March. Some progress has reportedly been made towards an agreed statement making use of the evaluation tabled by the
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    United Nations Secretary General in November. I understand that, at a meeting on 17 March, the Secretary General's representative opened a new phase in the discussion, to deal with freedom of settlement, movement and property.
    Mr. Atkinson: Is the Lord Privy Seal aware that international opinion generally agrees that intercommunal talks have reached a dead-end? Is he also aware that when President Kyprianou visits Rome next week for discussions with the Secretary General of the United Nations it will be put to the latter that the opinion of Cypriots is that they can make no further progress. Under these circumstances, and knowing that the Turkish Government have no intention, even after eight years' occupancy, of withdrawing their troops from Cyprus, has not the time come for the British Government to intervene if any progress is to be made?
    Mr. Atkins: It may be the hon. Gentleman's view that the talks have come to an end, but it is not the view of those taking part in the talks. In particular, a new phase of discussion has been opened by Mr. Gobbi. I do not know what President Kyprianou will tell the Secretary General of the United Nations next month when they meet. However, the talks are continuing. It is our view that they form the best basis for progress, and we wish to do everything that we can to support them.
    Mr. Cox: Is the right hon. Gentleman aware that the patience of the Greek Cypriot people is fast running out in their attempts to reach a possible honourable settlement? In view of the Minister's reply to my hon. Friend does he not think that the British Government should be putting pressure on the Turkish Administration to remove some of the many thousands of troops that they have on Cyprus? When will the right hon. Gentleman, or his right hon. and noble Friend the Foreign Secretary, visit Cyprus so that he can see at first hand the tragedy on the island?
    Mr. Atkins: With regard to the second part of the hon. Gentleman's question, Mr. Rolandis will be coming to see me in about four weeks' time. That will be a useful start, and I hope to go to Cyprus shortly afterwards. With regard to the Greek Cypriots' patience running out, I should draw the hon. Gentleman's attention to the fact that they are still engaged in talks with Mr. Gobbi.
    Mr. Rhodes James: Is my right hon. Friend aware that the intercommunal talks have now been going on for 15 years and that the results have been wholly ineffectual? How long are we and the people of Cyprus expected to continue with this form of negotiation? It has been fruitless up till now, which should surely lead us to the belief that a new initiative is required.
    Mr. Atkins: It has been made clear to us that a new initiative from us would not be welcome. My hon. Friend speaks of the talks having gone on for a long time. They have, but the evaluation tabled by the United Nations is only four months old.
    Mr. Squire: Will my right hon. Friend recognise how welcome his statement about his proposed visit to Cyprus will be to many people on both sides of the House? When he is in Cyprus, will he take the opportunity to listen to both sides of the community, as he will find that what links them is much greater than what separates them? Will he continue to bear in mind the fact that despite the apparent

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    relative non-success of the United Nations negotiations Britain still retains a responsibility as a co-guarantor and should take a major role in settling once and for all the affairs of this island?
    Mr. Luce: We shall not forget our role as co-guarantor, but we believe that it is our duty to make our best efforts to further the efforts of the United Nations. Both President Kyprianou and Mr. Denktash are meeting the Secretary General next month, and I hope that this will prove that this is the way forward.

    El Salvador
    Mr. Altonasked the Lord Privy Seal whether he will make a statement on the situation in El Salvador.
    Mr. Luce: The results of the elections are not yet final. No one party appears to have an overall majority.
    As the House knows, Her Majesty's Government take the view that if El Salvador is to achieve peace and stability, there is a need for peaceful rather than violent change and full respect for human rights and further progress on social and economic reform.
    Mr. Alton: In view of the legitimate concern of Her Majesty's Government that there should be a concerted European response to the problems of Poland, Afghanistan and the Middle East, why do Her Majesty's Government not take the same view when it comes to a response to the problems of Central America? In particular, will the Minister say why we fell out of line with our European neighbours on the vote on human rights in the United Nations on 16 December, and why we broke the line on the question of observers?
    Mr. Luce: It is right and important that the members of the European Community should continue to exchange views about Central Latin America. This will become increasingly important in the forthcoming weeks. What really matters if peace and stability are to be achieved in that part of the world is that the important nations such as Mexico, Venezuela and others, as well as the democratic nations such as Costa Rica, Honduras and so on should play a key role. It is their region, they have important views to express, and it is important to keep in touch with them.
    Mr. Bowen Wells: May I congratulate my hon. Friend on having the wisdom to stick by his decision to send observers to the El Salvador elections so that the House may be informed independently of the nature of those elections and their outcome? With the apparent result of the elections, will my hon. Friend and the Government now support a negotiated settlement with all parties interested in the El Salvador problem?
    Mr. Luce: We shall do whatever we can in our own way to try to foster peaceful change, social reform and respect for human rights. I was due to leave for Mexico tonight for discussions with the Mexican Government. I have decided to postpone my visit temporarily, but it will be helpful for us to have an exchange with them.

    Israel
    Mr. David Watkinsasked the Lord Privy Seal if he will raise at the United Nations Israeli conduct in the occupied territories, which is contrary to internationally accepted conduct on the part of occupying powers.
    Mr. Hurd: The United Nations Security Council is discussing the situation in the occupied territories at this moment in response to a Jordanian request. We have made clear our grave concern at recent developments on the West Bank, including the dismissal of the three mayors, and our hopes for an end to the violence which can only harm the prospects for a settlement.
    Mr. Watkins: In addition to those points, and recognising that many matters could be so raised, will the Government make a special point of raising the forcible and illegal closure of Bir Zeit university with the harassment of staff and students, which has now occurred for the fifth time in five years?
    Mr. Hurd: The action at Bir Zeit is one of the factors, although not the only one, that has built up this unfortunate situation. In New York, we are now trying to reach agreement on a resolution that can be carried by the Security Council which might help remedy this problem.
    Mr. Hicks: Does my hon. Friend agree that we are concerned not only about the closure of Bir Zeit university but about the closure of many other university and education establishments? Surely it is the wider aspect as well as the specific one that the Government should be drawing to the attention of the United Nations in the context of any resolution.
    Mr. Hurd: As I tried to explain in answer to my hon. and learned Friend the Member for Burton (Mr. Lawrence), we believe that many elements have built up this explosive situation on the West Bank, and through the Security Council and by other means we are trying to see what we can do to reduce the temperature.
    Dr. M. S. Miller: What is the internationally accepted conduct of occupying powers?
    Mr. Hurd: The hon. Gentleman will be familiar with the Geneva convention, which deals with the rights and practices open to an occupying power when it militarily occupies another territory. We believe that some of the activities of the Israeli military Government in recent months have run counter to that. We also believe that it would be sensible for all concerned in the area to accept resolution No. 242, which calls for withdrawal from occupied territories, and to accept the right of Israel to exist in security.

    Nuclear Weapons (Geneva Talks)
    Mr. Michael McNair-Wilsonasked the Lord Privy Seal if he will give a progress report on the Geneva talks aimed at limiting the number of intermediate nuclear weapons held by the Soviet bloc and the West.
    Mr. Hurd: In the first round of negotiations, which concluded on 16 March, the United States tabled a draft treaty embodying NATO's proposal to ban all the land-based intermediate range missiles of most concern to each side. The Soviet Union proposed limited reductions which would allow 300 such systems in Europe, but which would permit NATO no equivalent deployment. The second round of these negotiations will begin in May.
    Mr. McNair-Wilson: Will NATO's special consultative group again be brought into action to consider the next stage of the negotiations? In my hon. Friend's view, is the zero option still on the table or is it a dead letter?
    Mr. Hurd: The special consultative group, and the whole system of consultation within NATO, and between the United States and its allies, is working well in this area. The zero option remains on the table. It is embodied in a draft treaty. It is much the most radical and peaceable proposal on this subject that has been put forward by anyone, and we hope that everyone in this country concerned with the process of disarmament and arms control will support the zero option and do what they can to persuade everyone else to do the same.
    Mr. Healey: While I welcome the Government's attachment to the zero option, does the hon. Gentleman agree that the planned Polaris D5 force will have the same number of warheads as the current SS20 force of the Soviet Union and, therefore, is difficult to ignore in any negotiation on European-based nuclear missiles?
    Mr. Hurd: Not only is the right hon. Gentleman confusing Polaris with Trident, but he is also confusing intermediate and strategic weapons. We hope that it will soon be possible also to start negotiations on strategic weapons. We believe that that will be an important part of the process of seeking disarmament through balanced and verifiable measures.
    Mr. Healey: I welcome that statement. Does it imply that the Government are prepared to throw the Trident D5 force into the START negotiations?
    Mr. Hurd: The right hon. Gentleman knows perfectly well that that is nonsense.
    Mr. Whitney: Does my right hon. Friend agree that the right hon. Member for Leeds, East (Mr. Healey) seems to be ignoring the fact that the D5 option is related to the mid-1990's and that there are presently about 300 SS20's in position?
    Mr. Hurd: My hon. Friend is right. The House discussed this matter in great detail on Monday. The question of my hon. Friend the Member for Newbury (Mr. McNair-Wilson) related to the intermediate force negotiations now proceeding in Geneva. Surely it must be sensible to see whether we can make progress in this area. For that purpose, the United States, on behalf of the alliance, has made a very radical and worthwhile proposal.
    Mr. Newens: Should the right hon. Gentleman not request the United States to defer deployment of cruise missiles in Europe at the end of next year if there is any possibility of agreement being reached? If that decision is not made clear at this stage, are we not presenting the conference with a fait accompli?
    Mr. Hurd: It is up to the Russians. They have presented the alliance with a fait accompli by deploying the SS20s week-by-week in this period. If they now not only freeze that but are prepared to do away with this type of weapon, of course there will be no need for cruise and Pershing. That has been clear since December 1979.

    EUROPEAN COMMUNITY
    Mr. Speaker: Mr. Cryer. Question No. 50.
    Mr. Cryer: I shall not ask the question, Mr. Speaker, because I hope to catch your eye to put a supplementary question on the statement to be made later by the Prime Minister.
    Mr. Speaker: That has been done before and it usually works.

    European Commission (British Nationals)
    Sir Anthony Meyerasked the Lord Privy Seal if he will make representations to the President of the European Commission about the situation whereby fewer British nationals are employed by the Commission at all grades above A7 than nationals from the Federal Republic of Germany, France and Italy.
    Mr. Humphrey Atkins: I raised the problem of British under-representation in the Commission services, which in fact applies only to certain levels, with the President of the Commission when I called on him in October last year, and wrote subsequently to the Commissioner responsible for personnel matters. Since then we have been in frequent touch with those concerned in the Commission at many levels, most recently with Mr. Pisani, Commissioner for Development, when he was in London on 16 March. The Commission recognises the existence of the problem and is taking steps, with our encouragement, to redress the position, for example through the open competition now in progress.
    Sir Anthony Meyer: As there is now no reasonable doubt about the permanence of our membership of the EEC, should not British participation in the institutions of the Commission reflect our size and importance? Is it not absurd that at every level, except the top, the number of British civil servants in Brussels is not much more than half that of France, Italy and Germany? Is there a shortage of British applicants for those important jobs?
    Mr. Atkins: There is no shortage of applicants and agree that our nationals are under-represented. That is the point that I made to the President and to Mr. Pisani. They recognised the problem, which is not confined to Britain. Other more recently joined nations have the same problem and they are taking steps to set it right. That is a slow process, because vacancies do not occur all the time.
    Mr. Heffer: Can the Lord Privy Seal give us more. information about whether British people are applying for the jobs? Is there not also the problem that top civil servants employed by the British Government in Brussels are paid more than those who are employed by the Commission? The Commission people are overpaid, but we pay our people, for example, £36,000 as against £32,800. Is it not time that the rates were brought into line and the overpayment reduced all round?
    Mr. Atkins: The principle of the rate for the job should be applied throughout the Commission. I can tell the hon. Gentleman that there is no shortage of British applicants.
    Mr. Michael Shaw: In a number of areas, especially industry and commerce, do not British interests sometimes lie importantly with Brussels? If so, is it not even more important that Britons should hold a fair share of responsible posts within the Commission?
    Mr. Atkins: Yes, Sir. That is the purpose of our representations, which are slowly having an effect.
    Mr. Arthur Lewis: Has this not, unfortunately, gone on for some years? Will the Lord Privy Seal have a word with the previous President, who has attended the House

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    only when being introduced, to see whether he has any suggestions for saving British taxpayers' money and helping the British Government?
    Mr. Atkins: It would be more profitable to have a word with the present President.

    Council of Ministers (Meetings)
    Mr. Spearingasked the Lord Privy Seal what additional meetings have been arranged by the Council of Ministers of the European Economic Community for the months of April or May; and for what purposes.
    Mr. Humphrey Atkins: The forecast of business for the month of April was placed in the Library of the House on 29 March. In May it is expected that there will be meetings of the Agriculture, Steel, Social Affairs, Finance, Fiscal, Foreign Affairs and Energy Councils. As I told the House on 24 March, Foreign Ministers are to meet on 3 April to carry forward their discussions on the mandate.
    Mr. Spearing: Will the Lord Privy Seal confirm that it is the Government's intention that, whatever arithmetical agreement is reached, there will be a review clause at the end of the determined period? If so, is it satisfactory that we must renew our contribution to the EEC on a lease every four years?
    Mr. Atkins: We believe that a settlement of the problem should be for a period of five years, or more if we can get it. However, I agree that a review at the end of whatever period is determined is essential.
    Mr. Body: To what extent can I pass on to my constituents who are engaged in fishing an assurance from my right hon. Friend that something will be resolved definitely in the next nine months to protect their interests and prevent them from losing their livelihood by the end of that period?
    Mr. Atkins: I hope that the matter will be resolved. As my hon. Friend knows, we are awaiting the Commission's proposals on the total allowable catches and quotas, which I hope will be forthcoming soon.
    Mr. Hooley: Will the Government give an unequivocal assurance that there will be no question of further cutting Britain's capacity to make steel at the proposed Steel Council meeting?
    Mr. Atkins: No, Sir, that is not our intention.

    Reform and Structuring
    Mr. Teddy Taylorasked the Lord Privy Seal what propress has been made in the negotiations designed to reform the structure and policies of the European Economic Community since his reply to the hon. Member for Southend, East on 3 March, Official Report, c. 188.
    Mr. Humphrey Atkins: The Foreign Affairs Council devoted 23 March to a detailed discussion of the budget problem, the outcome of which I reported to the House on 24 March. The subject was further considered at the European Council and my right hon. Friend the Prime Minister will be reporting on this shortly. Foreign Ministers will meet again on 3 April and will take as a basis for their discussion the suggestions that have been
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    put forward by the Presidents of the Council and the Commission concerning the method of dealing with the United Kingdom's budgetary problem.
    Mr. Taylor: As about two-thirds of the total CAP expenditure was concerned with disposing of surplus foodstuffs to Russia and elsewhere, as most Common Market countries—including Britain—are finding ways of evading the CAP, and as the CAP is the basis of the continuing British budgetary problem, is my right hon. Friend at least willing to discuss with his colleagues in Europe the possibility of scrapping the CAP so that we can resolve many problems and begin to co-operate on matters in which we have common interests?
    Mr. Atkins: As my hon. Friend knows, our aim is not to scrap the CAP but to reform it. I agree with him that one reform that is needed is that not so much should be spent on producing goods in surplus.
    Mr. Haselhurst: To what extent does my right hon. Friend anticipate that the likely accession of Spain and Portugal will assist the process of reform on which our minds are set?
    Mr. Atkins: Before Spain and Portugal accede, we should have solved our immediate problems, because it would not be in the interests of the Community to enlarge without solving those problems.

    Policy Co-ordination
    Mr. Dykesasked the Lord Privy Seal if he plans to pay an official visit to the European Economic Community Commission in Brussels to discuss policy coordination matters.
    Mr. Humphrey Atkins: I paid an official visit to the Commission in October last year. I have no immediate plans for another formal visit, although I regularly meet the President and other members of the Commission in the course of normal Community business.
    Mr. Dykes: Although a fair and proper resolution of our budgetary problems is essential and must be obtained as soon as possible, does my right hon. Friend not agree that it is remarkable that even Labour Party spokesmen accept that if we scrap CAP aid our domestic farm prices support system would cost over £2 billion?
    Mr. Atkins: A return to national aid for agriculture would be very expensive.
    Mr. Richard Shepherd: Will my right hon. Friend advise the House whether, as of today, we have received full reimbursement of the moneys due under last year's European budget?
    Mr. Atkins: We have received nearly all our money. I believe that a small amount remains to be paid, but we should receive it soon.
    Mr. Heffer: Without anticipating what the right hon. Lady the Prime Minister will say, can the Lord Privy Seal tell the House whether the Government are turning their attention formally to what is likely to happen if the French dig in their heels, if we do not reach an agreement on the budget, and if—rightly—we do not agree to the farm price increases without an agreement on the budget? What are the Government likely to do? Is he aware that so long as

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    the Government stand firm, the Opposition will support them? We do not want any backing down whatever on this question.
    Mr. Atkins: I take note of what the hon. Gentleman says, and I am always grateful for his support. I shall not give him details of any plans that we might have in mind if there were a total breakdown in the discussions, because it is our hope and belief that there will not be such a breakdown.

    Reform and Structuring
    Mr. Skinnerasked the Lord Privy Seal whether, in view of his statement in the Official Report on 3 March, c. 267, he has anything further to add on British budget contributions; and if he will make a statement.
    Mr. Humphrey Atkins: I refer the hon. Member to my reply earlier today to my hon. Friend the Member for Southend, East (Mr. Taylor).
    Mr. Skinner: Is the Minister aware that when Britain entered the Common Market we were told that, irrespective of budget contributions, unemployment would be reduced? Throughout the five-year transitional period, when we were paying less than the others, we were told that that would also assist Britain to reduce unemployment. During the referendum campaign in 1975 we were also told that, whatever the budget contribution, unemployment would be reduced. We were also told that the refund that has just been mentioned would help Britain to bring down the level of unemployment. Is it not a fact that the Common Market, coupled with this Tory Government, is an unmitigated disaster, whatever the budget contribution?
    Mr. Atkins: It seems to have escaped the hon. Gentleman's attention that countries outside the Community also suffer from unemployment.
    Mr. Teddy Taylor: Will the Lord Privy Seal at least remind his colleagues in Europe that since we joined the EEC we have paid net more than £3,000 million, or more than £1 million every day of the week, including Saturdays and Sundays?
    Mr. Atkins: My hon. Friend has used those figures before. I remind him that our total net contribution last year was £55 million. That is an improvement, and the present discussions taking place in the Community are designed to secure the position for the future.
    Mr. Squire: Does my right hon. Friend think that the nature of questions tabled by the Opposition in any way reflects their disappointment that the Labour Government were unable to achieve what the Conservative Government have manifestly done—secure a major reduction in the amount that we pay to the EEC?
    Mr. Atkins: I am sure that it does, and the Labour Party has a great deal about which to be disappointed
    Mr. Cryer: As the right hon. Gentleman is so scathing about the alternative of the guaranteed deficiency payments system that Britain operated before making such massive contributions to the CAP, will he say what calculations have been made by his Department on the possibility of again embarking upon a guaranteed deficiency payments system?
    Mr. Atkins: No. Because our efforts at present are designed to reform the CAP, and we believe that we shall be successful.

    European Commission (President's Interview)
    Mr. Arthur Lewisasked the Lord Privy Seal whether he will obtain a transcript of the interview with M. Gaston Thorn, President of the EEC Commission, during which he made comments upon the Prime Minister and Her Majesty's Government; and whether he will publish this in the Official Report.
    Mr. Humphrey Atkins: No, Sir. The hon. Member will have noted that the Commission has issued a statement which makes it clear that Mr. Thorn was misreported. I understand that the radio station concerned has since confirmed this.
    Mr. Lewis: The original statement contained some rude and offensive remarks about our Prime Minister. That is now supposed to have been withdrawn. Why cannot we be told what the original statement said? If there was a correction, why should we not be told the facts? We have not yet seen the official details. The Minister has them. Why cannot he place them in the Library?
    Mr. Atkins: I did not say that the statement had been withdrawn. It could not have been withdrawn, because it was never made. Mr. Thorn's office and the radio station have confirmed that it was misreported. If the hon Gentleman wishes to see precisely what Mr. Thorn did say, I shall arrange for that information to be made available.
    Mr. Teddy Taylor: As Mr. Thorn is obviously embarrassed about this, will my right hon. Friend seek his. help and advice to establish what I am unable to establish—the view of the Commission and the EEC about our legal rights to keep EEC fishing vessels out of British waters after 31 December this year?
    Mr. Atkins: I do not think that matter arises from this question, but I shall pursue my hon. Friend's point.

European Council Meeting
3.30 pm
The Prime Minister, (Mrs. Margaret Thatcher): With permission, Mr. Speaker, I will make a statement on the meeting of the European Council in Brussels on 29 and 30 March, which I attended with my noble Friend the Foreign and Commonwealth Secretary.
At the end of the meeting, the President of the Council issued a statement of his conclusions on the economic and social situation and the 30 May mandate. Agreed texts on political co-operation were also released. I have placed copies of these documents in the Library.
The Council devoted most of its meeting on this occasion to the economic and social situation, both within the Community and in the world at large. We agreed that, although the specific characteristic of the situation in each member State might call for varying policies, all the member States had the same interest in combating unemployment and restoring economic growth, while preserving monetary stability and ensuring the competitiveness of their economies. The council expressed its concern at the level of productive investment in Europe, especially in the industries of the future, and agreed that the Community and the member States would take whatever steps were open to them to improve that level, while recognising that an increase in investment would mean a reduction in consumption.
During our discussions, I laid particular stress on the need to complete the Common Market in the services sector. We have made disappointingly little headway with the liberalisation of services such as insurance and air transport.
We also discussed the role that the Community can play in the development of information technology and the vital contribution that small businesses can make to the provision of new jobs.
On youth unemployment, which was a matter of special concern, we agreed that each member State would strive to ensure over the next five years that all young persons entering the labour market for the first time would receive vocational training or intitial work experience.
In our discussion of external policies, the Council looked forward to the Versailles economic summit in June. We agreed that our aim at that summit should be to encourage increased co-operation between the major industrial countries. In particular, we agreed that the persistence of high real interest rates in the international markets, combined with inadequate economic activity, was leading to a significant reduction in productive investment and made unemployment worse because of the squeeze on company liquidity and profits.
The Council urged Japan to open its market so as to integrate it more fully into international trade. We also urged Japan to follow an economic, commercial, monetary and exchange rate policy which was more compatible with the balance of responsibilities to be borne by the whole of the industrialised world, thereby contributing to economic recovery.
On the mandate, we had a relatively brief discussion in the light of the recent suggestions put forward by M. Tindemans and M. Thorn. We and most other member States were prepared to accept these proposals as a basis for negotiation. I emphasised the need for a solution to the United Kingdom budget problem which gave us a fair
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scale of compensation, which was sufficiently flexible to take account of either an improvement or a deterioration in the underlying situation and which would last for a substantial period.
I underlined the conclusion we had all reached in London in November that decisions on all aspects of the mandate must be taken together, that is to say decisions on the budget, the common agricultural policy and the industrial and social affairs of the Community. At this point the President of France stated that he could not accept the Thorn—Tindemans proposals as a basis for discussion.
As the Presidential conclusions indicate, foreign affairs Ministers have been asked to do all in their power to secure early decisions. The Ministers will meet in Luxembourg on 3 April.
The Council also had a very full political agenda. We spoke about transatlantic relations and welcomed the very warm message sent by President Reagan on the 25th anniversary of the European Community.
We discussed the economic and commercial state of East-West relations, in the light of the significant role played by Community trade with the Soviet Union and Eastern Europe. We agreed that these matters, including the related credit problems, should be studied further by the European Community and member States in close consultation with other members of OECD.
We also discussed the situation in Poland, where martial law continues in force, many thousands of persons are detained, and a dialogue with the Church and with Solidarity is still suspended.
We agreed that it was essential not to lose sight of the tragic sufferings of Afghanistan. There can be no solution except on the basis which two-thirds of the United Nations have endorsed, and which the Soviet Union alone has so far frustrated.
On Central America, our main conclusion was the need to support any intiative that could bring an end to the violence, and we noted proposals by Mexico and Honduras, among others. We agreed that economic aid given to Central America and the Caribbean should be coordinated and, where possible, increased.
This was not the moment for a major statement of policy on the Middle East. We expressed grave concern about the situation in the area, especially on the West Bank. The Council welcomed, as a contribution to the achievement of a just and lasting peace in the Middle East, the participation of four member states in the Sinai multinational force. My noble Friend the Foreign and Commonwealth Secretary is paying an official visit to Israel today and tomorrow.
This was a very busy Council in its discussion, both of Community affairs and of international problems. While we were all disappointed and surprised at the attitude of the French Government on the mandate, the same realism will have to be applied to decisions on those problems as was applied in the wider discussions during this European Council.
Mr. Michael Foot: First, I shall refer to what the right hon. Lady said about the mandate and discussions on the budget which were, of course, briefly referred to in the communiqué.
The right hon. Lady referred to her capacity for stubbornness in these matters. We all recognise that she has that capacity. As long as she is stubborn in defence of

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the legitimate interests of the British people, she will have some support from the Opposition. [HON. MEMBERS: "Some?"] It will be considerable, and much more generous support than ever my right hon. Friend the Member for Deptford (Mr. Silkin) received when he was also defending the legitimate interests of the British people in discussions at the European council.
The right hon. Lady also has no difficulty about a mandate from the House on this question. The mandate was given to her on two or three occasions. She should demand a zero net contribution. That was the proposal—indeed, demand—in the resolution passed in the House on 16 July 1979. That still stands as the opinion of the House of Commons and is the view that we believe must be translated into action.
The right hon. Lady said that she was surprised at some of the attitudes she had heard in the Council over the past day or two. She cannot have taken account of the full debates in the House, when many hon. Members prophesised that we would have to face these difficulties. That is a reason why more and more people all over the country are looking to see whether it would be better to try to settle some of these important matters with our allies, not in the Common Market context, but in an altogether different context.
An important aspect of the discussion was the general economic situation. The right hon. Lady referred to the necessity for a much bigger investment programme, but she is reported as saying at her press conference that there was a recognition that job-creating investment could be achieved only through lower consumption—through either increased taxation or wage restraint. We know that that may be her view, but that is one of the views that is impeding economic expansion in Europe. Those views might apply to full employment, but we are far from full employment at present. There are not merely 3 million unemployed in Great Britain but nearly 11 million unemployed in the Community countries as a whole. What is required is a much bigger concerted expansion and investment programme than anything that the right hon. Lady has been prepared to contemplate. We can understand how she fails to advocate those policies in Europe when she is not advocating them in Britain.
Would the right hon. Lady be prepared to consider a more open, adventurous and ambitious policy on those matters in preparation for the Versailles economic summit? The world is suffering from appalling unemployment. Unemployment figures are rising on both sides of the Atlantic. It would be of great advantage to the world if the Versailles economic summit could be turned into a success, but it would be a disaster for the world if nothing more were offered at the end of the economic summit than what was offered at the end of the meeting that the right hon. Lady has attended over the past few days. Nothing concrete or expansive has been proposed. Nothing of that nature appears in the communiqué. It does not appear that any solution comparable to the needs of the situation has been proposed by the Government in the discussions. [HON. MEMBERS: "Too long".] The right hon. Lady is still answerable to the House on the economic questions. We want her to explain why she has not been prepared to advocate in Brussels any proposals that would deal with large-scale unemployment.
I do not propose to cover all the general political questions to which the right hon. Lady referred, important though they are, because we wish to debate many of the
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matters such as Poland and Afghanistan in the House. However, there is one immediate question that I wish to ask the right hon. Lady. I am glad that at the meeting there were discussions on El Salvador.
Mr. Neville Sandelson: What about Afghanistan?
Mr. Foot: Yes, I have mentioned Afghanistan on many occasions.
With regard to El Salvador, I am glad to see that the right hon. Lady says in her communiqué that she has joined others in Europe in welcoming any new initiative. That is a considerable advance on what was said by the Government in our debate a few weeks ago. We urged the Government that they should accept and act upon the new initiative. [Interruption.] I am referring to what the right hon. Lady said in her communiqué. We urged that the Government should try to act on the basis of the new initiative for mediation from Mexico. The right hon. Lady and the Government refused to do that. Instead of doing that, they supported the gruesome fiasco of the election in El Salvador.
We are glad to see that the right hon. Lady has now been prepared to join some other countries in Europe in trying to seek a more intelligent way of escaping from the horrific war in El Salvador. We hope that the right hon. Lady will be able to build upon the proposals that she made, which have been belatedly agreed with some of her allies in Europe.
The Prime Minister: With regard to the mandate, I have made it clear that Britain is prepared to make a modest net contribution to the budget of the European Community. I think that that is reasonable and fair. During the time of the right hon. Gentleman's Government, there were occasions when a modest net contribution was made. This year we shall make a modest net contribution, but only last week some £813 million of refunds were returned to this country in respect of last year's budget. More will be coming. That is our money, which the previous Government would have left us to pay to Europe but for our negotiations. They talked a lot about it but did absolutely nothing to negotiate on the mandate.
If we do not succeed in getting an agreement on the whole mandate this year, the arrangement that we made at the last negotiations will persist through this year and would apply in respect of refunds that we should receive in the first quarter of next year. Nevertheless, we regard it as urgent to achieve a full and satisfactory solution, but it has to be on all three parts of the mandate at the same time—the budget, the common agricultural policy and the industrial and social affairs policies of the Community. I am afraid that the decision not to go ahead on the Thorn-Tindemans formula will hold up agreement on all three parts of the mandate, whereas we wished to come to a conclusion.
With regard to the investment programme, we were realistic about solutions to the unemployment problem. The right hon. Gentleman is looking for a magic wand in the absence of any practical policy put forward by his party. In a prolonged discussion, we said that all countries were affected by severe unemployment. In some countries unemployment is rising faster than in this country. There is no magic wand. If we are to have increased investment, there must be reduced consumption. The only alternative would be substantially increased interest rates. We all

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agreed how important it was to keep down interest rates. To pursue any policy that would increase interest rates would be the best way of aborting any early economic recovery.
With regard to Central America, we have welcomed before the initiative of the Nassau group, including Mexico and Honduras. Unlike the right hon. Gentleman, we also welcome elections in El Salvador.
Mr. Doug Hoyle: Farcical.
The Prime Minister: I do not understand why the right hon. Member for Ebbw Vale (Mr. Foot) is so reluctant to have the democratic process in that country and why he is so reluctant to urge the guerrillas to drop the bullet and take on the ballot instead, as we did in Rhodesia. We are glad that many other countries took the same view as we did about elections. The Pope was much in favour of them. A number of countries have sent observers to El Salvador to see the elections. What confounds the right hon. Gentleman is that, in spite of the difficulties, the turn-out in the El Salvador elections was greater than anyone ever thought it would be.
Mr. Foot: The right hon. Lady referred to a reluctance to have elections in El Salvador. Why does she connive at denying to the people of El Salvador what the British Parliament and Government insisted on for Zimbabwe, which was that the fighting had to stop before the elections took place? The elections in El Salvador are a mockery of anything that can be called democracy. For the right hon. Lady to lend the reputation of this country to those elections is to debase the name of democracy.
The right hon. Lady seems to be departing from some of our democratic traditions. With regard to the mandate, I know that some hon. Members do not care about the resolutions that are passed through the House. We do. The House of Commons has passed a resolution on two occasions supporting the zero contribution. The right hon. Lady has departed from that already in her replies today. She is talking of a modest net contribution. Why did she not put that proposal before the House of Commons? Let her put a motion on the Order Paper of the Council amending the very resolution to which she agreed and for which she invited general support in the House. I suggest that she should do that before she agrees to any modest net contribution.
What about a permanent solution of this problem? The right hon. Lady seems to have lost sight of that altogether. In spite of the stubbornness that she preached at her Press conference, it seems to me that she is yielding already. I ask the right hon. Lady to go back to Brussels and tell them of the resolution that was unanimously passed by the House.
The Prime Minister: Perhaps it has escaped the right hon. Gentleman's notice that El Salvador is a wholly independent country. Rhodesia was a British colony, which put us in charge of the elections which took place there. I may say that, alas, all the fighting did not stop before the elections took place there. I am glad that the right hon. Gentleman is very much in favour of past British imperialism.
Had we been left with the contribution formula to the Community from the Labour Government, we should have
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paid over£1 billion in net contributions in 1980, and over £1 billion again in 1981. Fortunately, we negotiated a very much better arrangement than the Labour Government had ever been able to negotiate. They have never liked that and they do not like it now.
Mr. Foot: Is the right hon. Lady aware that the agreement with the EEC, about which she was complaining a few minutes ago, was one to which she herself put her name when she was part of the Government that agreed it?
The Prime Minister: Has the right hon. Gentleman forgotten that his Government re-negotiated it, including some of the Budget provisions?
Mr. J. Enoch Powell: Is the right hon. Lady aware that the mass of people in Britain derive encouragement and hope from reports which say that the Prime Minister is willing to maintain our national interests, whatever toes she may have to tread on, and that she will protect our right to take our own economic decisions on matters which vitally affect Britain?
The Prime Minister: That is the position, and I am grateful to the right hon. Gentleman.
Mr. Peter Bottomley: Will my right hon. Friend first say whether there were discussions about trying to encourage elections in Nicaragua? Can she say what implications there are throughout the economy of Europe and Britain in trying to reduce the level of real interest rates and to increase the economic demand that she was talking about?
The Prime Minister: We did not go into detail about any particular country in Central America. The discussion was about Central America as a whole and we did not discuss Nicaragua in detail.
With regard to reducing real interest rates, in order to do that, we have to get down both inflation and the budget deficit. Countries that have done that have a much lower real interest rate. Countries that have either a high inflation rate or a high deficit tend to have very much higher real interest rates—for example, Ireland, Italy, France and Belgium. There is no magic in the formula. Both inflation and the budget deficit must be kept down.
Mr. Roy Jenkins rose—
Mr. Dennis Skinner: Mr. Common Market himself.
Mr. Speaker: Order. The hon. Member for Bolsover (Mr. Skinner) must not conduct a running commentary from a sedentary position. That will not be tolerated from anyone.
Mr. Jenkins: The right hon. Lady referred to the industries of the future. Was there a useful discussion at the European Council on the hard warning fact that, so far as the micro-electronic industry is concerned, Europe has 30 per cent. of the market and 15 per cent. of the production? If that continues—it will continue unless there is substantial Government and Community intervention—it is a severe warning sign that Europe as a whole will not be a major economic power by the end of the century. [Interruption.]
Secondly, will the Prime Minister bear in mind—
Mr. Sandelson rose—
Mr. Speaker: Order. I got to my feet because the hon. Member for West Stirlingshire (Mr. Canavan) was shouting below the Gangway and I think that that is exceedingly unfair. This House stands for free speech and we will have it.
Mr. Dennis Canavan: On a point of order—
Mr. Speaker: No point of order arises on that.
Mr. Jenkins: Secondly, will the right hon. Lady bear in mind that she should give her full support for Britain paying a fair contribution and nothing more? A small contribution is inevitable, given the fact that the major part of our aid to the Third world goes through the Community. Therefore, to talk about a nil cost makes a mockery of the position of the right hon. Member for Ebbw Vale (Mr. Foot) vis-a-vis the Third world.
Thirdly—
Mr. Canavan: This is a speech.
Mr. Jenkins: Thirdly, will the right hon. Lady tell us why, in the present circumstances, while nobody wants ill-directed investment, it is essential, particularly on a European basis, that increased well—directed investment should be accompanied by decreased consumption?
The Prime Minister: On the right hon. Gentleman's first point, we did not go into detail about microelectronic industries. He will recollect an occasion when we had a very effective paper before us which set out all the facts and figures which he has mentioned briefly today. We were very much aware that we should co-operate across countries in Europe—from firms in one country to firms in another—if we were to take best advantage of the large market that there is in information technology.
We are also aware that investment on its own is not necessarily good. There has been quite a lot of investment which has not been productive in any way. Therefore, our comments were all directed towards productive investment and to finding the markets of the future.
I am grateful to the right hon. Gentleman for what he said about making a modest net contribution. We must make a modest contribution. We must at least contribute to the administrative costs of the Community.
With regard to what the right hon. Gentleman said about aid to the Third world, he will remember that that is dealt with in a wholly different aspect of the budget. Our aid to the Third world which goes through the European Community is dealt with not on our Common Market budget but within our aid budget.
With regard to the right hon. Gentleman's third point, there was considerable agreement among Chancellor Schmidt, Mr. Spandolini, Mr. van Agt and myself that we had to have increased investment either by increasing taxation so that we could direct it towards that particular end or by asking for reduced wage increases so that we had money available to go towards investment which had not already been used up on wage increases, or it would have meant increasing the borrowing and increasing interest rates. As one of the objectives at the moment is to hold down the deficit—a number of countries are already in difficulty as a result of having pushed it up further—and because we are conscious of the effect of the interest rate both on agriculture and on small businesses, we are not prepared to do anything to push up interest rates.
Several Hon. Members rose—
Mr. Speaker: Order. I propose to allow questions to run until 4.20 pm, which will give 50 minutes on the statement. I hope that we shall have short questions.
Mr. Teddy Taylor: In view of the concern expressed by the Council of Ministers about Afghanistan, will the Prime Minister say whether any consideration was given to the massive exports of cheap subsidised food to Russia, which broke all records in 1980, and which, according to recent figures, have exceeded that total in the first six months of 1981?
The Prime Minister: We had a brief discussion about the whole commercial relationship between the Community, the Soviet Union and the Eastern bloc, concerning both what we are exporting and the credit policies that we have so far been pursuing. As my hon. Friend knows, those credit policies have led to enormous deficits on the part of the Eastern bloc. Some of them are having difficulty meeting those deficits, even in paying the interest upon them. We have to meet later to consider rescheduling the Polish debts again.
We have set in hand, through the EEC and the member States in consultation with the OECD, a whole study of our commercial relationship with the Eastern bloc, both as between individual countries and the Community as a whole. That will be dealt with in that study.
Mr. Bob Cryer: When the Ministers discussed the deficit with Japan, did they discuss the United Kingdom's deficit with the Common Market, which in 1980, in manufactured and in semi-manufactured goods, amounted to £2 billion, and has cost us many jobs? When we entered the Common Market there was a campaign run by the right hon. Lady's friends called "Jobs for the Boys". That was the claim made for the Common Market—
Mr. Skinner: And Hillhead got one.
Mr. Cryer: It is now clear that the Common Market has not benefited us one iota.
Mr. Skinner: It benefited one person—he got the job.
Mr. Cryer: Will the Prime Minister now accept that we cannot reform the Common Market, as the negotiations to improve our position have clearly shown? Before the Prime Minister says that she has done better that the Labour Government, will she remember that she supported every bit of the negotiation that the Labour Government undertook?
The Prime Minister: We are in balance with Europe taking manufactures and export of commodities into account. [HON. MEMBERS: "That is with oil."] Oil is a very important part of our trading capability and we are in balance. If something is a very important part of our trading capability, why not take the whole of it into account?
With regard to manufacturing industry, our trade with Europe has declined less rapidly than trade with the rest of the world. In other words, we have done rather better with Europe. I remind the hon. Member that our balance of payments last year was almost at an all-time record. He will not like that. He and his hon. Friends never like good news.
With regrd to jobs in Europe, perhaps the hon. Member has seen the CBI estimate that about 2½ million jobs depend on our membership of the Common Market.
Mr. Alan Clark: Was there much discussion concerning the French economy and the medium-term effect on unemployment of Socialist policies, which have brought about interest rates of over 20 per cent., a currency at an all-time low, and accelerating inflation?
The Prime Minister: For reasons which my hon. Friend will understand, we did not discuss in detail the French economy. Several of us had it very much in mind in some of the proposals that we were putting forward to reduce inflation and to keep down deficits.
Mr. Douglas Jay: Would there not be much less antagonism between the United Kingdom and France if we both followed our own internal policies and paid for them ourselves?
The Prime Minister: For the vast majority of our budget we do follow our own internal policies. For the rest, we are seeking some advantages from Europe which we have not yet obtained, particularly in services. If we had a full and free internal market in services, it would be greatly to our advantage.
Sir Brandon Rhys Williams: In view of the importance of the Thorn-Tindemans proposals to increase investment and improve the employment outlook, was my right hon. Friend able to discern any good reason why the Socialist Government from France were so obstructive?
The Prime Minister: No, Sir. We were both surprised and disappointed at the suddenness of the intervention.
Mr. Nigel Spearing: Is the Prime Minister aware that in answering questions today the Lord Privy Seal said that he hoped that there would be a five-year agreement concerning the budget arrangement? Will she agree that continual bargaining every five years is wholly unsatisfactory, as it means that in the intervening period the United Kingdom is a client State?
Do not the arguments in favour of withdrawal continue to grow, while those in favour of membership diminish each year?
The Prime Minister: No. Certainly the United Kingdom is not a client State. We wanted a five-year agreement, with a review at the end of five years. I am the first to say—I have said in that forum on many occasions— that we want a solution so long as the problem persists. The problem persists because of the way in which the common agricultural policy works, which we are trying to change, and because of the relationship between world food prices and Community food prices, which varies from year to year. That is why this year we have had some unexpected results in the budget. We shall try to get a five-year agreement, with a review at the end of it. What I do not want is a constant argument about this matter. We are also simultaneously trying to secure appropriate changes in the common agricultural policy, which is part of the mandate.
Mr. Michael Latham: Does my right hon. Friend know how the Opposition Front Bench have the gall even to talk about the Common Market deficits when their own record in Government on this matter was so absolutely abysmal? Is she aware that she will have the full support of Conservative Members in trying to sort this matter out, in view of the excellent progress made three years ago?
The Prime Minister: I am very grateful to my hon. Friend. May I make the matter absolutely clear? I cannot stress too often—we have stressed to our partners—that it is not only a question of getting a good result on the budget. We cannot go ahead with the proposals on the common agricultural policy or the others unless we get an agreement on the budget. The three must go ahead together. Unless we get reasonable results on the budget, a great deal of the Common Market forward proposals will be held up severely.
Mr. Donald Anderson: Why does not the Community, with its undoubted trade weight, go beyond merely urging Japan—the word "urging" was used twice in the communiqué—to open its domestic markets? Why is not the Community more even-handed in also criticising the United States of America for its interest rate and trade policies?
The Prime Minister: The Foreign Ministers agreed that the Community would take action with regard to Japan, and we are hoping to invoke article 23 of the GATT.
It ill behoves some of our partners to criticise the United States for having a high deficit. One cannot criticise someone else for having a high deficit if one is pursuing the same policy oneself. I am at liberty to criticise the United States for having a high deficit because we are running a low deficit.
Sir Anthony Meyer: As the United Kingdom is a permanent member of the Community, should not its budget contribution problem receive a permanent solution?
Will my right hon. Friend also accept that there will be very general support for the firmness with which she defended the idea that the Common Market should extend also to services?
The Prime Minister: I am grateful to my hon. Friend. The Common Market should extend to services, and it is a condemnation of some of our partners that they have not so far been able to agree to the directive with regard to services, particularly insurance and air fares. We have asked for and said that it would be very much better to have the kind of formula which tied the solution to the existence of the problem. We would then not have to look at it again, except, perhaps as a matter of form, to review it after a considerable number of years. We must still continue to try it for that, but I doubt whether we shall be wholly successful. Therefore, if we could get a settlement for five years, it would be an advance on what we have had hitherto.
Mr. David Stoddart: The right hon. Lady described the summit conference as a busy conference. Would it not be correct to describe it as a bitchy conference, bearing in mind the remarks by Mme. Cresson about the right hon. Lady being a terrorist and the discussion between Mme. Cresson and the Minister of State, Ministry of Agriculture, Fisheries and Food? They were slogging at each other on the BBC "World at One" programme? Has it not yet been brought home to the Prime Minister that European unity will be best achieved outside the Market instead of inside the Market, with the perpetual quarrelling about finances, agriculture and so on?
The Prime Minister: Mme. Cresson was not at the conference. There were only two women present at the

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conference. One was myself and the other was Mme. Flesch. She did not speak, and anything that I said was fully justified, as it usually is.
Mr. Richard Body: In discussing the problems of unemployment in Western Europe, was any conclusion reached by my right hon. Friend's colleagues and herself as to why the unemployment rate in Norway, Sweden, Austria and Switzerland is only 1 or 2 per cent., while it is more than 10 times as much as that in the Common Market, although 12 years ago we were all enjoying full employment? Can it be that the common agricultural policy is having some cumulative effect in misallocating resources?
The Prime Minister: Switzerland has run very low inflation policies and very orthodox financial policies. On that basis, and with very co-operative industrial relations, Switzerland and Austria have both done extremely well. Norway, like a number of Middle Eastern countries, has massive deposits of oil and gas and a very small population, yet even Norway is finding considerable difficulty in some of its industries.
Dr. M. S. Miller: In EEC matters, as in other matters, the right hon. Lady has exhibited, if I may use the words of the Home Secretary, an extraordinary degree of patience. Will she tell the House how long it will be before she realises what are the legitimate and reasonable interests of Britain in this respect and recommends that unless they are satisfied she will withdraw from the whole charade?
The Prime Minister: I am extraordinarily patient—provided I get my own way in the end. I have not done too badly so far. On the budget, we are now receiving refunds in respect of last year. In the absence of a fresh agreement, the same formula will continue, so we shall receive refunds at the beginning of next year in respect of this year. We were hoping to overtake that agreement with a much longer one—preferably one that lasts as long as the problem lasts, which would be the only sensible way to do it. If patience gets the right answer, it is the right quality.
Mr. Albert McQuarrie: Following the Prime Minister's statement that the CAP was discussed, can she say whether there were any discussions during the conference on the finalisation of the common fisheries policy, in view of the serious problems faced by fishermen at present?
The Prime Minister: There were not discussions during the full conference, but on the margins of it I made strong references to the need to achieve a common fisheries policy and not only that, but one that was fully fair to our fishermen.
Mr. Dick Douglas: Will the Prime Minister reflect on the serious omission from her statement of a reference to the position of the OPEC countries? The fact that the Council of Ministers has met and, apparently, not discussed the issue is a sign of its insularity from international events. Will the Prime Minister concede that the Community should try—I know that it would be difficult—to have meetings with OPEC countries to see how their production can meet the demands of the Western industrialised countries so that we can avoid the cyclical events that we experienced in 1973 and 1979?
The Prime Minister: The hon. Gentleman is reviving the old idea of the Euro-Arab dialogue. It has never got
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off the ground because the OPEC countries have not wanted it. It takes two to have a dialogue. With regard to what we discussed, the subject of oil prices came up a great deal in the context of future economic and social affairs. We were all conscious that we have had two world recessions because of a sharp increase in oil prices. While a reduction in oil prices may mean that some of the OPEC countries have less to spend on imports, which will affect high exporting countries, we all agreed that on balance, the reduction in oil prices augured well for the world economy and gave the prospect of increasing expansion which would not otherwise have been there.
Mr. John MacKay: Returning to the subject of interest rates, was there a discussion on the likely impact, perhaps later this year, on the diminishing interest rates in Europe of a further rise in American interest rates? Did the summit come to an agreement on how we could manage to isolate Britain and Europe from the adverse effects of an upward movement in interest rates on the other side of the Atlantic?
The Prime Minister: We had a number of discussions, which included American interest rates. At the moment some European interest rates are actually higher than American interest rates. One cannot attack someone else's policies if one is also pursuing them with the same disastrous results. We cannot insulate ourselves wholly from American interest rates. We can try to do our best to keep our own interest rates down by pursuing policies which reduce inflation. Countries which pursue low budgetary deficit policies have a lower interest rate than those which do not.
Mr. Ron Brown (Edinburgh, Leith): Despite today's royal presence, will the Prime Minister agree that the Afghanistan problem must be resolved? It has been raised already. Will the right hon. Lady not accept that Babrak Karmal's offer is worthy of consideration? As the right hon. Lady will know, he has offered to send Soviet troops out of the country provided that he is given certain guarantees. Will this question of negotiations not figure in the thinking of the EEC? Is the matter not important enough to invite the gentleman to London even if such a visit only exposes his offer as unworthy? Is the matter not important enough—
Mr. Speaker: Order. The hon. Member for Edinburgh, Leith (Mr. Brown) has asked that question three times now.
The Prime Minister: We are not likely to deal with a puppet Government which is held in power by an occupying force. The way to deal with Afghanistan is the way that the United Nations suggested—for the Soviet troops to withdraw. That is being frustrated only by the Soviet Union.
Mr. Ron Brown: You recognised Pinochet.
Mr. John G. Blackburn: Will my right hon. Friend accept the congratulations of the House on her statement regarding the Middle East, because it is the desire of the House to have peace in that area? Will she acknowledge that the State of Israel has honoured the Camp David agreement? It has sacrificed 50 per cent. of oil production, its natural gas and Yamit, a town in that area, as a token of peace. Will my right hon. Friend tell the House how she sees the position in Israel, particularly as the Foreign Secretary is there today?
The Prime Minister: We are all anxious to have a lasting peace in the Middle East which does justice to Israel's right to live in peace behind secure borders and does justice to the legitimate claims of the Palestinian people. We are concerned about the grave incidents that are taking place on the West Bank. I agree with my hon. Friend that when the withdrawal from Sinai is secured under the Camp David agreements, that will be a considerable step by Israel to yield some of those territories. I am aware that Israel has already given up some of the oil and gas wells. It is not possible to say precisely what will be the next step when the withdrawal has taken place. Doubtless my right hon. Friend the Foreign Secretary will be discussing that in Israel today. I am sure that his visit will be welcomed by the Israeli people and that he will come back with some constructive ideas.
Mr. Skinner: Will the Prime Minister tell the House what type of mechanism will be used by the Common Market countries to bring down interest rates, as the Community is based on the free movement of capital and labour? Is the right hon. Lady telling the House that, contrary to her views about lack of Government intervention in Britain and leaving matters to market forces, she acknowledges in respect of the Common Market that because of the high interest rates in America and prime rates elsewhere it will be necessary to intervene massively in order to bring down interest rates and to give the industrial economy a chance to breathe and reduce the ability of the casino economy that has proliferated across the Western hemisphere—
Mr. Speaker: Order.
Mr. Skinner: I am nearly done.
Mr. Speaker: Order. Another hon. Member wishes to catch my eye.
Mr. Skinner rose—
Mr. Speaker: Order. The hon. Member for Bolsover (Mr. Skinner) is merely preventing one of his hon. Friends from being called, because these questions will stop at 4.20 pm. The hon. Member has made a long statement rather than asked a question. Does the Prime Minister wish to reply?
Mr. Skinner: I know that I do not have a posh voice.
The Prime Minister: I shall answer in so far as I have grasped the meaning of the hon. Gentleman's question. First, there are large sums of money available to move
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around the world and there is no way in which any country can avoid the effects of the market without having a totally East European economy. Even East European countries have not been able to avoid the market and have come to the market economy countries for food and for help. Those closed economies cannot even feed their own people. Clearly they have full employment, but they cannot feed their own people and they have a low standard of living. The hon. Member for Bolsover (Mr. Skinner) is an East European economist and politician.
Mr. Skinner: No I am not.
The Prime Minister: The way to get interest rates down is to run our economies in a way which reduces inflation and keeps down the amount of money which Government have to borrow. That will bring down interest rates.
Mr. Skinner: On a point of order, Mr. Speaker. I should like to inform the Prime Minister that, unlike—
Mr. Speaker: Order. Hon Members cannot use a point of order for passing information.
Mr. Skinner: Unlike her lot, I do not go to East European embassies.
Mr. Arthur Lewis: A week or 10 days before the Prime Minister left for the conference there were reports in the press that a committee of the European Assembly had been discussing alleged misappropriation of funds and improper payments to various people. Were those matters discussed at the conference? If not, will the Prime Minister ascertain the facts and inform the House, because the charges were widely reported in the press and a number of members of the European Assembly have made allegations? As British taxpayers' money is involved, we ought to know whether there has been any misappropriation of funds under the previous or the current President of the Commission.
The Prime Minister: That matter was not discussed by the Heads of Government. It would be a matter for both the Commission and the Financial Council. I shall inquire further and get in touch with the hon. Gentleman.
Mr. Skinner: On a point of order, Mr. Speaker. As the Prime Minister referred to me as an East European economist, let me disavow all claims—
Mr. Speaker: Order. I think that the hon. Gentleman has made his point. He has disavowed the charges. Hon. Members must not use points of order to continue a debate. If they do, we shall have disorderly proceedings.

Nuclear Materials (Transport)
4.22 pm
Mr. Bob Cryer: I beg to ask leave to move the Adjournment of the House, under Standing Order No. 9, for the purpose of discussing a specific and important matter that should have urgent consideration, namely,
"the dangers of transporting nuclear materials".
The subject is specific and important. Both nuclear waste and nuclear warheads are transported along the Aire Valley railway line through my constituency.
On 10 March a derailment took place near Leeds and I put questions about the accident to the appropriate Minister. An empty nuclear material flask was involved. The importance of the matter is emphasised by the fact that, although the flask was empty and the Central Electricity Generating Board and British Rail claimed that there was no danger, the area was cordoned off and, according to the current issue of New Statesman, police threatened photographers and reporters with arrest if they entered the area in which the train stood. There has been no formal inquiry or published report on that accident.
I have been informed today that a further derailment has occurred at Healey Mills in West Yorkshire, again involving an empty nuclear fuel flask. That emphasises the urgency of the issue.
Many local authorities have declared nuclear-free zones, yet the transport of nuclear materials is continued, without any special precautions being discussed or called for from those authorities or any others.
The matter is urgent because the public have a right to know what has caused those potentially extremely serious accidents. They have the right to know urgently before a serious accident occurs, and they have the right to break through the cloak of secrecy that surrounds the subject. A debate would be an important means of ensuring that that was done.
Mr. Speaker: The hon. Member for Keighley (Mr. Cryer) gave me notice before 12 o'clock this morning that he would seek leave to move the Adjournment of the House under Standing Order No. 9 for the purpose of discussing a specific and important matter that he thinks should have urgent consideration, namely,
"the dangers of transporting nuclear materials".
Everyone who heard the hon. Gentleman will realise that he has drawn our attention to a very serious matter, but he and the House know that my powers are limited. Under Standing Order No. 9, I am directed to take into account the several factors set out in the Order, but to give no reason for my decision.
I do not underestimate the importance of the matter that the hon. Gentleman brought to our notice, but I must rule that his submission does not fall within the provisions of the Standing Order and, therefore, I cannot submit his application to the House.

SCOTTISH AFFAIRS
Ordered,
That the matter of health care in Scotland, being a matter relating exclusively to Scotland, be referred to the Scottish Grand Committee for their consideration.—[Mr. Garel-Jones]

European Court of Justice (Compliance with Judgments)
4.26 pm
Mr. Tim Eggar: I beg to move,
That leave be given to bring in a Bill to provide for the temporary prohibition or restriction on imports of goods in transit from member states which remain in breach of judgments of the Court of Justice of the European Communities.
The Bill empowers the Secretary of State for Trade, after consultation with the Commission, to restrict the import of any class or classes of goods from an EEC member country that has remained in breach of a judgment of the European Court of Justice for more than three months. Once the Secretary of State is satisfied that the member State has remedied the matter complained of, the restriction on imports shall be ended.
It is worrying that member States should even contemplate defying a declaration from the European Court of Justice. It is also unsatisfactory that we have to contemplate introducing trade sanctions agains fellow member States that defy declarations of the European Court. Almost every hon. Member, whatever his view on EEC membership, agrees that member States should observe Community obligations and co-operate with the Community institutions while they are members.
For many years it has been commonplace for member States to ignore EEC directives that they believe are against their national interest. My right hon. Friend the Prime Minister drew attention this afternoon to the slow progress being made on the Commission's service industry directive.
A more worrying trend has emerged in recent years of member States ignoring judgments from the European Court of Justice. It is extraordinary that Governments who constantly urge their own citizens to obey the laws that they pass should themselves ignore the laws of a Community that they joined voluntarily. I can think of no political or sectional justification for such action. Governments should behave in the way that they expect their citizens to behave towards them.
Not only is the attitude of member States to the European Court undermining respect for the law and the concept and future of the Community, but it is having a serious economic effect on this country, because it particularly adversely affects the Scotch whisky industry. The French Government have refused to comply with a declaration given by the European Court of Justice in February 1980.
Since January 1978, when we attained full membership of the EEC, the discriminatory taxation levied by France on Scotch whisky has amounted to £135 million—about two and a half times the United Kingdom's net contribution to the EEC last year. President Mitterrand would do well to look to the canard in his own back yard before criticising our attitude towards budget payments. It is well known that France is not the only member State that has ignored the judgment of the European Court in the past.
I hope that the House will bear with me if I go very briefly through the history of the action taken by the Commission against France in relation to taxation on Scotch whisky. In the early 1970s the Commission started discussions with the French Government about the ways in which French Government taxes discriminated unfairly

321
against foreign spirits, particularly Scotch whisky. After that long period of discussion, formal proceedings were initiated by the Commission in March 1976. Despite this, the French, in both 1977 and 1978, increased the discrimination against Scotch whisky and eventually, in August 1978, proceedings were lodged with the Court of Justice.
It was not until February 1980 that France was condemned by the European Court of Justice. Yet, rather than accept the inevitability of the judgment of the court, the French Government have simply ignored it. We know for certain that the illegal tax will be levied at least until February 1983, and we have no certainty that it will be rescinded thereafter. It is intolerable that, some three years after the judgment and some seven years after the commission acted formally, the French Government have still not complied with both the wishes of the Commission and of the European Court.
It is not surprising that the Scotch whisky industry feels particularly hard done by, since some of our companies in this country that export Scotch whisky have been at the receiving end of orders from the European Court with which they have had no choice but to comply.
The reason for member States' lack of interest in the judgments of the court is, in part, that there is no sanction that can be carried out by the court, by the Commission or by any other member State. The judgment of the court cannot be enforced if a member State wishes to defy it. The Bill that I am introducing today is designed to give the United Kingdom a sanction against action by another member State in defiance of the European Court of Justice.
It has been put to me that it is curious to respond to a fiscal restriction on trade within the Community by the imposition of another restriction. I am told by some that it would be best to pursue political remedies. Yet the very fact that a case comes before the European Court is itself a recognition that political means have failed. When, two and a half years after a European Court judgment, the member State concerned still prefers to defy that judgment, that is a recognition not only that political persuasion has failed but that the law has failed.
We should therefore be prepared to introduce this Bill. I hope that it will never be used. I hope that the fact that the Secretary of State for Trade possesses such a sanction will persuade the offending member State that it should obey the ruling of the European Court of Justice. Nevertheless, I feel that this House and the Secretary of State should have the power that my Bill would give them.
Mr. George Cunningham rose—
Mr. Deputy Speaker(Mr. Bernard Weatherill): Does the hon. Gentleman seek to oppose the Bill?
Mr. Cunningham: Yes, Sir, I do, but extremely briefly. I have no intention of calling a Division because, as we all know, the Bill the hon. Gentleman seeks leave to introduce has no chance whatever of reaching the statute book. I do, however, oppose the proposition because I would not like people to feel that the arguments that he adduced are sufficient. When I say that I shall not call a Division, that is a point on which I could change my mind before the end of my speech if I find my own arguments
322
sufficiently persuasive and if what I said at the beginning were to create a problem. Perhaps, on second thoughts, I would be prepared to call a Division at the end of my speech if I find my argument persuasive enough, unless I change my mind—[Interruption.]
More seriously, I hope that the apparently sound arguments that the hon. Gentleman has advanced in the cause of adherence to the law are not thought to lack any other aspect. I do not wish to suggest that I disagree with him on the subject of Scotch whisky, because, as he may know, if he knows anything about Scotch whisky, no representative of the borough of Islington would be likely to do that, since the borough of Islington is the only part of this country, south or north of the border, that has ever tried to get good statutory provisions with regard to Scotch whisky.
My opposition to the hon. Gentleman is based upon the consideration that if the Community progressively and swiftly seeks to advance to being what amounts to one country, with the law of that union enforceable throughout it in the rigid fashion that he suggests, the Community will break up and will deserve to do so. I suggest to the House that the attitude of the French is correct, not with regard to Scotch whisky but with regard to Community law. The French say that if Community law operates in a manner that is severely detrimental to the interests of France Community law must be bent or broken to protect French interests.
We should do the same with regard to British interests. That is not only a British national point that is being made there, but one that is in the long-term interests of the Community and those who want to see the Community continue indefinitely. A swift move to rigid union within the Community is something that will break it, not preserve it. I hope, therefore, that no one listening to the speech of the hon. Gentleman will feel that there was not a very strong argument for the other side of the case.
Having put that argument, I think it would not be helpful to the House if I were, after all, to press this matter to a Division.
Mr. Deputy Speaker: Although I do not know whether the hon. Gentleman has persuaded himself, he has certainly persuaded me that he intended to vote against the Bill. He cannot be compelled to vote or to put in Tellers.
Question put, pursuant to Standing Order No. 13 (Motions for leave to bring in Bills and nomination of Select Committees at commencement of public business), and agreed to.
Bill ordered to be brought in by Mr. Tim Eggar, Mr. Roger Sims, Dr. J. Dickson Mabon, Mr. John Spence, Mr. Ian Campbell, Mr. Michael Ancram, Mr. David Myles, Mr. Dick Douglas, Mr. Bowen Wells, and Mr. Richard Shepherd.

EUROPEAN COURT OF JUSTICE (COMPLIANCE WITH JUDGMENTS)
Mr. Tim Eggar accordingly presented a Bill to provide for the temporary prohibition or restriction on imports of goods in transit from member states which remain in breach of judgments of the Court of Justice of the European Communities: And the same was read the First time; and ordered to be read a Second time upon Friday 14 May and to be printed. [Bill 100.]

Oil and Gas (Enterprise) Bill (Allocation of Time)
Ordered,
That the Report [29 March] from the Business Committee be now considered.—[Mr. Pym.]
Report considered accordingly.
Question, That this House doth agree with the Committee in their resolution, put forthwith, pursuant to Standing Order No. 43 (Business Committee) and agreed to.
Following is the report of the Business Committee:
That—

(1) the order in which proceedings on Consideration are taken shall be New Clauses relating to Parts I and II, amendments to Clauses 1 to 17, remaining New Clauses, amendments to Clauses 18 to 36, New Schedules and amendments to Schedules 1 to 4;

(2) the allotted days which under the Order [8th March] are given to the Proceedings on Consideration and Third Reading shall be allotted in the manner shown in the Table set out below and, subject to the provisions of that Order, each part of the Proceedings shall, if not previously brought to a conclusion, be brought to a conclusion at the time specified in the third column of that Table.

Table

Allotted day and proceedings

Time for conclusion of proceedings

First day
New Clauses relating to Parts I and II and amendments to Clauses 1 to 11.

7 pm

Amendments to Clauses 12 to 17

10 pm

Remaining Proceedings on Consideration

Midnight

Second day

Third Reading

7 pm

Orders of the Day

  Oil and Gas (Enterprise) Bill
  [IST ALLOTTED DAY]
  As amended (in the Standing Committee), considered.

  Oil and Gas (Enterprise) Bill
    New Clause 1

      MEMORANDUM AND ARTICLES OF ASSOCIATION
      'The Articles of Association of any subsidiary established under sections 1 and 9 shall be laid in draft before both Houses of Parliament and shall be subject to an affirmative resolution.'—[Mr. Merlyn Rees]
      Brought up, and read the First time.
      4.38 pm
      Mr. Merlyn Rees: I beg to move, That the clause be read a Second time.
      We have just passed the business motion and very amicably it was done. I suspect that, had we known that we would have a statement lasting an hour and a Te n-Minute Bill, we might well have re-jigged our agreement. We tried to arrange discussion on one of the most important aspects of the Bill right at the beginning. We shall just have to see how we go.
      At last we have the articles of association. We had them towards the end of the Committee stage, but by then it was, of course, too late to discuss them. It is, therefore, appropriate that we discuss them today because it is the first time we have been able to do so. It is equally appropriate that we will eventually discuss the final copy, which is the reason for the new clause.
      We should, as of right, be given the chance to debate the articles of association of companies that are to be privatised. That debate should take place as they pass from being "shell" companies. If a company was being nationalised the House would expect the legislation m contain details of the rules by which the company was to be run. Equally, the articles of association of denationalised companies should be put into an order, discussed and voted on.
      Nothing in the Bill tells us about the nature of the company or its relationship with the Government. I shall come back to that when we discuss Government directors. Such details are central to legislation which, in effect, sets up a company as this Bill does. The articles should be dealt with by Parliament.
      We are talking only of draft articles. It would be appropriate that the final articles—I do not know to what degree they are to be changed—of Britoil and any other company privatised under the legislation should be dealt with in the way suggested in the new clause. That is the full purpose of the new clause.
      The new clause allows us to discuss the articles. Upstairs we should have had to contrive a way to discuss them. At the beginning of the articles is the memorandum of association of Britoil. It says what the objects of the company are. The House is setting up the company. We are entitled to look at its objects.
      Paragraph (C) on the first page of the memorandum states:
      "To carry on all or any of the businesses of developers, producers, refiners".

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      I go no further at this point. The new company, Britoil, must have the right, if it so wishes, to move into refining. It may not be clever to do that at the moment. In setting up the company on behalf of the Government, does the Secretary of State see it as being able, if it wishes, to move into refining?
      As I read the continuation of the paragraph, it appears that Britoil can not only deal in coal but produce it. The Secretary of State had the articles drawn up. I am not raising the problem of the National Coal Board. It has a monopoly, with small companies at the edges. I presume that Britoil could go into coal production in other parts of the world. Will the Secretary of State confirm that?
      On page 8, clause 3 (LL) states:
      "It is hereby declared that in this clause:
      (i) 'petroleum' means any of the following (other than coal) namely:—
      (a) mineral ore, natural gas and bituminous shales".
      Why is natural gas included in that way? I could guess. In the Bill as a whole the ability to produce oil has been taken away from the British Gas Corporation. Here Britoil is being allowed to go into the production of natural gas.
      4.45 pm
      The Secretary of State for Energy (Mr. Nigel Lawson): Obviously.
      Mr. Rees: The issue arose in another discussion on the Bill. If a company goes for one, it may get the other. Is that the reason? I am only seeking knowledge and not making a profound point. It is difficult to make profound points on articles of association.
      I turn to page 23 of the articles. It is important to get this clear. What on earth are the directors of these and other firms supposed to be doing? I raise a personal point. I have always been sceptical about what a Government director does in these companies. It would be useful to know what the Secretary of State has in mind. He is to appoint the Government directors.
      Article 85(E) states:
      "The number of Directors referred to in paragraph (A) of this Article is:—

      (i) two, at any time when the voting shares registered in the name of the Secretary of State represent more than 35 per cent. of the issued voting shares;

      (ii) one, at any time when the voting shares registered in the name of the Secretary of State represent more than 20 per cent., but not more than 35 per cent., of the issued voting shares;

      (iii) none, at any time when the voting shares registered in the name of the Secretary of State represent not more than 20 per cent. of the issued voting shares."

      Article 10(E) on page 4 states:
      "The Special Share holder may require the Company to redeem the Special Share at its nominal amount at any time." Is it the Government's long-term intention completely to withdraw from a shareholding in the company? If so, will the Secretary of State come back to the House and tell us why? He has powers over the number of directors and to redeem the special share. We have been told that the special share is an important element in protecting the national interest.
      I find article 71 (B) on page 19 intriguing. It states:
      "If there are, in the opinion of the Special Shareholder reasonable grounds for believing that any person or relevant persons has obtained or is attempting to obtain, directly or indirectly, control over the Board or its composition, the Special Shareholder, whether or not he has received any notice pursuant
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      to paragraph (A) of this Article 71, shall give written notice to the Board that he believes that there are such grounds, specifying them."
      There is then set out action that the special shareholder can take. What are the reasonable grounds? Why has the Secretary of State put in the words "reasonable grounds"? I read constantly in the newspapers of early morning coups, secret board meetings—[AN HON. MEMBER: "Dawn raids."] Yes, dawn raids—that is a much gentler way of putting it.
      If the grounds are reasonable, the Secretary of State will not know anything about it. It will all be over before he can do anything. What has the Secretary of State in mind? Will there be in the Department of Energy an office with a notice on the door "Reasonable grounds office"? Will there be a little chap going around the companies where there are special shareholders listening to find out whether anyone is to do anything so quickly that the special shares cannot be used?
      On the same point of control, in regard to article 71(B)(i) I turn to the EEC and its rules, if that is the right word. On the basis of a 51 per cent. shareholding by the Government, as I understand it, the EEC assumes that we have control of the company. Can the Secretary of State be absolutely sure that if we are below that—as we will be initially and even more so afterwards, I anticipate—the European Court will not rule that we are no longer in control of the company, with all the consequences of that?
      Even so, I am advised that Stock Exchange rules say that when a certain percentage of share ownership has been reached the owner of those shares has the right to buy the rest of the shares. I am seeking knowledge. Has that been taken into account in the drawing up of the articles of association? We want an assurance from the Secretary of State that legal problems will not arise.
      Dr. J. Dickson Mabon: I should like to get one point clear when the Secretary of State replies. The right hon. Member for Leeds, South (Mr. Rees) has raised a good point. As I understand it, there is no way in the present arrangements whereby we can have a special share. I know of no company—Government owned or privately owned—that has a special share system. Certainly I know of no company which has a special share system whereby the shareholders do not actually own any equity in the company. There is an attempt to make European company law. I am advised that there is no way in which this system can be integrated into that. Is it not possible that the Secretary of State is embarked on a perilous voyage of company law that will not stand up either in the British system or in the European system of company law?
      Mr. Rees: I am grateful to the right hon. Gentleman for reinforcing the question I asked. No doubt we shall get an answer at the end of the day.
      In regard to directors, there are many basic arguments about what the Government are doing in the Bill. However, over the years under the National Enterprise Board, the industrial relations commission and the Industry Act 1972, there has been a mix of ownership of companies. In some instances I would not want it, but in other instances it is appropriate.
      As long ago as 1964 the Labour Party manifesto said that a Labour Government would
      "Go beyond research and development and establish new industries, either by public enterprise or in partnership with private industry."

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      In Opposition we are talking about the investment of funds in companies which are publicly owned and partially publicly owned. I am talking not about nationalised industries with appointed directors in a non-Company Act atmosphere, but about companies with a Government shareholding of 100 per cent., 51 per cent. or even 49 per cent., in which the Government appoint directors. In what way will the Secretary of State seek to influence the Government directors?
      Article 85(A) says that the Secretary of State has the right to appoint directors. I am interested to know why it is put that way rather than that he will appoint directors. The greatest number he can appoint is two out of seven or two out of 20 if the Government have more than 35 per cent. of the shares.
      The degree of control in Britoil will be no greater than in BP, but I accept that that is a separate position. BP happens to have two Government directors and I have always been sceptical about their role.
      For the moment let us stick to the role of directors in mixed economy firms that will arise out of privatization—or the other way round, for the reasons that I quoted in our 1964 manifesto. What is the role of these directors to be? Is there an analogy with The Times where there are independent directors? They are all publicly appointed with a clear role to look after the national interest, but, as someone said, however, "You could have fooled me".
      I ask about the role of directors in this company because once we start going more broadly into the role of directors in this growing range of companies there might be ifs and buts. I can ask the Secretary of State directly about this because he has put it in the articles of association. I am dealing with Britoil, although the new clause is wider. At least, this will enable the Secretary of State to concentrate on why he told the drafters of the articles of association that he wanted Government directors.
      Will the task of these directors be exactly the same as that of the other directors who will be elected by the shareholders? Will the directors whom the Secretary of State appoints represent the Government's view? The Secretary of State may say, after consultation with his advisers, "We need somebody on that board who is good on receivership. The company does not look healthy so let us have someone who understands that sort of thing". Or he might decide to appoint someone with great financial acumen or someone who knows a lot about research in oil supply.
      A Government appointed director is of that sort. He carries on in the same way as any other director but a Government director is surely there to look after the Government's interests. What sort of person does the Secretary of State have in mind? I would be interested to go further, but I suppose it is too difficult.
      Another question that has arisen in the last year or two is whether the Government directors will have fiduciary responsibility in that their job will be to look after the interests of the firm on the basis of the articles of association, and they will be there for that purpose alone.
      Dr. Mabon: They cannot be directors otherwise.
      5 pm
      Mr. Rees: That may be so, but a Government might wish to do something directly against the narrow, but important, interests of shareholders. Why was the
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      provision for Government directors included in the articles, and what is the intended meaning of the Secretary of State's responsibility? That is important, as there will be more Government directors. It is a growing occupation. Whatever Governments have done, the number of such directors has increased in the past 10 years. The mix of the economy will continue and people will be appointed to boards, whether it be with 51 per cent., 30 per cent. or 75 per cent. of the shares. We should be clear about that. Some believe cynically that such positions are sinecures for people who behave themselves. I reject that entirely. I am sure that the Secretary of State has in mind a purpose for Government directors.
      Dr. Mabon rose—
      Mr. Rees: The right hon. Gentleman is always extremely helpful. Of course I shall give way.
      Dr. Mabon: If the Secretary of State has fewer than half the company's shares, the directors whom he appoints will be obliged by company law to act in the interests of all the shareholders. As the majority of shareholders are not represented by the Secretary of State, directors appointed by him will therefore be bound to act differently from the Secretary of State if they feel that the other shareholders are suffering as a consequence of the decisions that he is urging on his appointed directors. I do not believe that Government appointed directors will necessarily do what the Government want them to do.
      Mr. Rees: If that is the case, why are the Government bothering? Nevertheless, the Secretary of State has the special share. We should clear the matter up. In doing so, we shall do a good turn to those who work in other firms with Government directors.
      I turn now to the national interest and foreign shareholders. Is the special share intended to protect the national interest? Is it intended, for example, that nonresidents should not have shares? There are other ways of achieving the same result.
      When British Aerospace was privatised, the Government included a provision which, however incompetently it was drawn up, served that purpose. Would that not be a better way than depending on a special share which might disappear? The day must surely come when the special share disappears, so if the national interest is involved in this way it will suffer. I accept, of course, that the articles are not drawn up in the same way as those for British Aerospace.
      Those are the major points arising out of the articles of association. They are important and this is the first time that we have discussed them. The House should have a further opportunity to examine the articles when they are no longer in draft. The Opposition propose that
      `The Articles of Association of any subsidiary established under sections 1 and 9 shall be laid in draft before both Houses of Parliament and shall be subject to an affirmative resolution '
      This is particularly important, as the articles may change fundamentally over the years. If such a change took place, the new clause would provide for the articles to be embodied in a Bill if the Government continued to proceed in the present way. The Opposition believe that this is the right way to proceed. The new clause should be adopted in the interests of parliamentary accountability.
      Mr. Dick Douglas: The articles of association are novel. I have a few brief points to put to the Secretary of State.

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      First, have the articles been submitted to the council of the Stock Exchange? Has it expressed a view on the matter? I put that point in Committee to the Secretary of State, whose interest in financial matters was exhibited in a previous incarnation as the writer of the Lex column in the Financial Times. Would memorandum and articles of association of this type suffer the scrutiny of the council of the Stock Exchange and others interested in protecting shareholders?
      I well understand that the articles are drafts, that we are discussing a shell £100 company, and that there will be considerable embellishment before the articles become part of a prospectus. Nevertheless, it is shabby for a Government who purport to believe in enhancing private enterprise and releasing ensnared shareholders to embattle shareholders almost totally by means of a golden share. It is like being in President Lincoln's Cabinet when, apocryphally, he sat back and said:
      "The Ayes are 10 and Noes are one, but the Noes are the President, so the Noes have it."
      The articles will enable special shareholders to outvote the majority of shareholders on practically everything if they think fit. That is not in the interests of all shareholders. It does not wash with the established conventions or, indeed, with the legal position of companies now. I accept that other objectives have been put upon company directors. They must now look after the interests not only of shareholders, but, and rightly, the interests of employees, but the traditional view remains that directors should look after the interests of all shareholders and protect them.
      By the articles, the special shareholder, if he or the Secretary of State sees fit—we do not know what he will be pressed to do or how he will be persuaded to use that special share—may look after the national interest as opposed to what may be thought to be the interests of all shareholders.
      Article 10(E) states:
      "The Special Shareholder may require the Company to redeem the Special Share at its nominal amount at any time."
      How can that square with article 10(A), which states:
      "The Special Share may be transferred only to the Secretary of State or to a Minister of the Crown or to the Treasury Solicitor."
      That seems to suggest that the special share may be redeemed by the company. What is the consideration for the special share? There is no sign in the articles of association of what consideration may be offered to the special shareholder for that privilege.
      That either has a meaning or it does not. Either special shares can only be transferred to the Secretary of State and his nominees, or they can be redeemed. If they can be redeemed, what is the consideration for the redemption? An extraordinary privilege is being given away. I am not a lawyer and these are legalistic points, but either that has a meaning in the articles of association, or it does not.
      This is an attempt by the Secretary of State to square the circle. He is hiving off an important Government-owned enterprise. I shall not go into the case of Amersham International Ltd. and its present valuation. There may be opportunities to do that later in the debate. We are examining the logic and the benefit to the nation of this measure. The Secretary of State, in his strong-willed way, is entitled to get his policy, but we are entitled to say that it is wrong-headed.
      Mr. T. H. H. Skeet: The hon. Gentleman must recognise the difference between an equity investment, which is entitled to profitability, and what would be a purely voting share, which has control but no profitability attached to it.
      Mr. Douglas: That is an absurd suggestion from the Conservative Benches. We are talking about having all the power without much of the responsibility in terms of equity. The council of the Stock Exchange and the CBI have been irate about class A shares and have deprecated them. Yet, as a result of this shareholding, in many instances the Government will outvote those who hold the equity and take the risk.
      Mr. Skeet rose—
      Mr. Douglas: No, I shall not give way again at this stage. The Government will outvote those who take the risk. That is an appalling suggestion.
      I give warning on this. The Secretary of State has made a very interesting suggestion. If, as I hope, the next Government is a Labour Government, the Secretary of State's example will be examined further. It is a wonder that my right hon. Friend the Member for Bristol, South-East (Mr. Benn) is not already delving into it. We might consider the possibility of taking a golden share in the 100 largest companies in the country and outvoting everyone. What is the use of planning agreements and all the paraphernalia of committees if we can simply follow the Secretary of State's example and take a golden share? It is no wonder that my right hon. Friend called him the East European Minister. He is now outclassing East European Ministers.
      This is an absurd suggestion in terms of the operation of the traditional joint stock company in this country. I know that there are variations, but the Secretary of State must give precedents. He cannot do so because he is creating his own precedent, in which those taking the risk in terms of equity capital can be outvoted. I know that the articles of association are in draft and can be altered, but the Government must answer these questions. If the council of the Stock Exchange has examined the articles of association, we should have its views on them. If it has not, the Secretary of State should throw them in the wastepaper basket.
      Mr. Gordon Wilson: The demand was frequently made in the Standing Committee that the articles of association should be produced, in view of the problems which arose over how to safeguard the national interest following the disposal of the equity oil assets of BNOC and the formation of the acquiring company, Britoil.
      Having examined the articles of association, particularly those on page 19, I do not think that there is much more than a fig-leaf of protection. As the Monopolies and Mergers Commission showed in relation to the Royal Bank takeover, doubt must always be expressed about any assurances given about control and so on once the equity in a company has been disposed of. The Government intend to dispose of the equity but to try to retain some minimal control over Britoil through the special shareholder.
      I believe that the Government's efforts may be impotent in terms of paragraph 71(B). The Minister referred to the provision there that

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      "If there are, in the opinion of the Special Shareholder, reasonable grounds for believing that any person or relevant persons has obtained or is attempting to obtain, directly or indirectly, control over the Board or its composition,"
      the special shareholder would then have certain powers.
      5.15 pm
      Leaving aside for the moment the difficulties that the special shareholder may sometimes have in determining whether there is an indirect attempt to take over control of the company, there is still a problem in the wording dreamt up by the Department's lawyers. They must be "reasonable" grounds. If this had been worded in such a way as to give the Secretary of State, or his other persona, the special shareholder, absolute discretion to intervene at any time, there would be less difficulty. Having used the term "reasonable", however, the Secretary of State and the special shareholder, if challenged, will be under an obligation to defend the discretion being used as "reasonable".
      If the procedure set in motion by article 71(B) were attacked, the attacker would presumably be able to go to the courts. What would be the "reasonable grounds" on which the Secretary of State or the special shareholder could intervene? To judge from the speeches and arguments in Committee and on Second Reading, it is patently clear that the objective of the reasonable grounds would be to maintain the national interest in relation to the oil assets being disposed of.
      If anyone can take the Secretary of State or the special shareholder to court, it follows that the objective of the national interest may not be found by the courts to be "reasonable". The United Kingdom courts, including the Court of Session, if the jurisdiction of the Scottish courts were invoked, might find it reasonable, but if there were a subsequent reference, or indeed an initial reference, to the European Court and it appeared that the special shareholder had been trying to block an attempt by European companies or interests to take control of the company, I am sure that the European Court would regard the action of the special shareholder as unreasonable.
      In those circumstances, the protection that the Government seek to build in by the extraordinary means of having a special shareholder would become utterly nugatory. I am not sure what legal advice the Minister has had on this, but it seems to me that, once having disposed of the equity, he will in effect have lost control of the company, especially if European interests within the EEC were seeking to establish control over it.
      I shall not go into detailed criticism of the wording of article 71(B)(i), in which the attempt to secure control is couched in extraordinary gobbledegook. Those who play cards might express it more simply as giving the special shareholder the power to "trump" any opponents taking a view different from his own.
      My second question to the Minister is practical rather than legal. What kind of experience would the Government directors have? Does the Minister intend that they should be business men or people with knowledge of the oil industry, or does he intend that they should be civil servants, whether retired or active? I recall that civil servants were the equivalent of directors in BNOC. Or do the Government intend to select from their placement list of the great and the good those who, for a small fee, would be willing to take up the onerous duty of safeguarding the public interest? As we are disposing of equity oil assets,
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      it would be of interest to know what expertise the Government seek to place on the board of directors to safeguard the Government's interests in those assets.
      Mr. Lawson: Three main points have been made in this brief debate. The right hon. Member for Leeds, South (Mr. Rees) expressed concern about the understanding of the memorandum, the Government directors, and the powers that reside in the special shares. The right hon. Gentleman's understanding of the memorandum is correct in every respect. He asked about the definition of petroleum. There had to be a definition, and we have simply taken the definition that appears in the Petroleum and Submarine Pipe-Lines Act 1975. That seemed sensible and as far as I am aware has caused no problems.
      The hon. Member of Dundee, East (Mr. Wilson) asked about Government directors. There is no intention that these should be civil servants, unlike the Government directors on BNOC. The analogy was made, and it is a familiar one, with the Government directors on BP. It seemed appropriate that as the Government have a large shareholding it should be represented by directors on the board. However, these directors will have exactly the same duties and obligations under company law as any other directors of the company. The right hon. Member for Leeds, South may ask what point there is in having them. While the Government retain a substantial shareholding in Britoil, there is a value in having on the board directors who can keep the Government fully informed—there are, of course, other channels of information—and perform, in general, the job that the directors of BP perform.
      The right hon. Gentleman correctly said that I have the right to appoint the directors. However, I am not obliged to do so. If he is developing the strong argument that I should not exercise that right, it is one that I am prepared to consider. However, I am not yet persuaded. I believe that we should exercise the right to appoint Government directors.
      Mr. J. Grimond: Can the right hon. Gentleman tell the House whether the Government directors on BP have made any great contribution to the company? How often have they been called upon to defend public interest?
      Mr. Lawson: They perform their duties in the same way as other directors of BP. That is their job. They are a link between the Government, who have a significant shareholding of 39 per cent.—the Government will initially have a 49 per cent. shareholding in Britoil—and the company. There is a good precedent, and it is sensible to have such directors. It is not the heart and core of the matter—the special shareholding is a great deal more important and I shall come to that shortly—but on balance it is a sensible power to have in the articles. I am not sure of the right hon. Gentleman's position, but, if he believes that it is wrong to have Government directors, he should say so. I am prepared to consider not exercising that right, but at the moment I have not been so persuaded.
      A number of questions were asked about the special share. Attention was drawn to the power under the articles for the Government's special share to be redeemed. The hon. Member for Dunfermline (Mr. Douglas) asked at what price the share would be redeemed. The articles clearly show that the share will be redeemed at par—at the nominal price. If the shares are £1 each, they will be redeemed at £1 However, we have no intention of having

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      the share redeemed. The power is included because it is customary for articles of association to cover a range of contingencies. Those who are acquainted with articles of association will be aware of that. I give an undertaking to the House that not only do the Government have no intention of having the share redeemed, but that they have every intention of retaining it. If circumstances arise—I cannot envisage any—in which the Government feel that it is right that the share should be redeemed, we shall come to the House first. I give that undertaking freely, because it is the Government's intention to retain the special share.
      Dr. J. Dickson Mabon: Is it not true that under the Bill in its present form the Secretary of State, whoever he may be—probably not the right hon. Gentleman—can dispose of the share without parliamentary consent? The undertaking is, therefore, nonsense. It does not mean a damned thing.
      Mr. Lawson: That is an unwise and improper suggestion. I hope that the right hon. Gentleman, who was a former Minister, will withdraw it. When a Minister gives an undertaking at the Dispatch Box, it means something. To say that it means nothing is wrong. Ministers make such statements on many occasions.
      It is true that redemption will not require parliamentary consent. I do not suggest otherwise. However, if the Government of the day at any time feel that circumstances have changed and that the share should be redeemed, the House will be informed before redemption takes place. More importantly, we have no intention of having the share redeemed. The whole point of the share is that it is held, and retained.
      Mr. Merlyn Rees: I accept the Minister's word. There may be other arguments to deploy, but I want to be clear that he is giving the undertaking on behalf of the Government.
      Mr. Lawson: I give that undertaking on behalf of the Government.
      The hon. Member for Dunfermline asked whether the articles had been approved by the Stock Exchange council. The answer is "Yes, they have". I should not put before the House articles of association, and an important proposition, which had not been cleared by the Stock Exchange council. This is not the first time that the hon. Gentleman has suggested that this is a terrible proposal. He will recall that, although the power is slightly different, in Amersham International Ltd. there is a special share which has special powers. I was not aware that that put off investors. [Interruption.]
      Mr. Douglas rose—
      Mr. Lawson: I shall now reply to the main point of the right hon. Member for Leeds, South on how the system is meant to work, the share and the rights attached to it, and why articles 70 and 71 have been included.
      We have three key considerations and objectives in mind. We wanted to create effective safeguards which would enable the Government to prevent any unacceptable change in the future control of the company, whatever the nationality of the parties involved. That deals also with the issue raised by the hon. Member for Dundee, East. It is
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      important to protect the character of Britoil as an independent company, responsible for its own management and business strategy.
      The second point that lies behind the Government's thinking in devising this form is that it is essential, in the Government's opinion, that the special rights should not provide an opportunity for backdoor interference in the affairs of the company. I think that I made it clear on Second Reading—I certainly did so in Committee—that the Government do not intend to use their rights as a shareholder to intervene in Britoil's commercial decisions, except in the specific safeguard circumstances.
      The Government do not expect to vote with their shareholding—that is the whole of their shareholding, leaving aside the special share—in opposition to resolutions supported by a majority of the board, although they will retain the right to do so. We have tried to construct safeguards that will operate as reserve powers. They will come into force only in the event of an attempt to take over voting control of the company, control of the board or of its compositions, or to alter the safeguards or any other key articles of the company.
      5.30 pm
      The powers are passive. They will need to be triggered by outside events beyond the Government's control before they can be brought into play. In practice, it is highly unlikely that they will ever need to be brought into play. The very existence of these powers will act as the most formidable deterrent to anyone who tries to take over control of the board, of the company or of the majority of its shares, and who the Government consider to be unacceptable.
      It is possible that at some future date the Government will seek to reduce their shareholding below 49 per cent. It is important to make it clear that the powers will remain however much the ordinary shareholding is reduced. That is why the safeguards are attached entirely to the single special share with a nominal value of £1 fully paid, which is held by the Government and which is separate from the rest of the shareholding.
      Mr. Douglas: Is that right?
      Mr. Lawson: The hon. Gentleman is not fully acquainted with Stock Exchange terminology.
      The safeguards will remain fully active even if the Government have no other shareholding. It is right that there should be safeguards. There is concern on both sides of the House about the ownership of Britoil and its future ownership. The provisions that we are discussing meet that anxiety. They meet the will of the House on Britoil's crucial independence. We have given, as has BNOC and its advisers, considerable thought to the articles to ensure that they are an effective means of protecting Britoil's independence against unacceptable changes in control. Therefore, I commend the articles to the House.
      Dr. J. Dickson Mabon rose—
      Mr. Lawson: No, I shall not give way. Time is limited and the right hon. Gentleman has intervened more than once.
      It is the Government's opinion that it would not be appropriate to provide for the articles of Britoil, or any other subsidiary established under the Bill, to be subject to the affirmative resolution procedure or to any other parliamentary procedure. The Government take that view

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      for two main reasons. The central purpose is to make Britoil like any other independent private sector oil company. It would be contrary to that purpose to make its articles of association subject to some form of parliamentary procedure when those of other oil companies are not.
      Secondly, the procedure that the Opposition wish to introduce would be ineffective. If the new clause were to be accepted, Parliament could approve articles of association, but those articles could be changed. The feature that will prevent them from being changed as matters stand is the special share. That is what is important, and that is why it is part of the articles of association. There is no point in the procedure which the new clause seeks to introduce. It is both unnecessary and impracticable. I hope that the House will approve the arrangements that we have made to secure Britoil from unacceptable changes in control and that it will reject the clause.
      Dr. J. Dickson Mabon: I wish to protest at the way in which the Secretary of State has dealt with the debate. It is novel to have a special share system. If I understand the Secretary of State aright, Amersham International is the only other organisation that has such a system. Of course, that is an extremely bad example. The right hon. Gentleman's invention may prove in the course of time to be both novel and lasting. I suppose that we might apply it to BP and other institutions in which the taxpayer has a formidable if not an overweening interest. I agree that the right hon. Gentleman may have invented something that proves to be considerable. However, I object to his unwillingness solidly to argue on the articles of association.
      In Committee we were not allowed to discuss the articles of association. It would have been desirable to do so. We were not allowed, rightly, as a matter of procedure, to discuss them. We have been able to discuss them only in the short period since half past four. The right hon. Gentleman is uncomfortably aware that his articles are so delicate that they should not be subject to any buffeting. There are rumours of hybridity and of many other difficulties in the public market place. I am not responsible for them. I do not know who Lex is today—I do not know who is the right hon. Gentleman's successor—but he, whoever he is, is probably speculating on the rumours. The right hon. Gentleman should try to bring all the rumours to an end and try to ensure that Britoil is launched comfortably and properly on its course. Unfortunately, he has not done that. It is the form of the guillotine that prevents him from so doing.
      Mr. Lawson: The right hon. Gentleman was not in Committee when the guillotine was introduced.
      Dr. Mabon: I certainly was. I was in Committee for the entirety of its discussions on part I, which was a complete bore. As the right hon. Member for Leeds, South (Mr. Rees) knows, we had to extract tooth by tooth the various issues arising from the articles of association that we now see in their full form.
      The House has been allowed only one hour to debate what we are told by the right hon. Gentleman will be the greatest act of privatisation in British history. We are supposed to debate the articles of association in one hour. The new clause is designed to allow the House to debate them prior to the company going to the public exchange,
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      to the money markets. I do not understand why the Secretary of State refuses to accede to the terms of the new clause, which do not seek to damage his Bill. There will be no doctrinaire infringement of his concept. We are not challenging him on the fundamental issues. He might be right, but we are arguing that he might conceivably be wrong.
      That is what the House is all about. Ministers can be wrong and that is all we are saying. This conceited Secretary of State is so sure of himself that he did not allow the Committee, which was appointed by the House, to examine the articles. He refuses to give the House time to do so. He has presented them to us too late. He allows us only one hour to discuss them—he will have the backing of the Whips—and he expects us to accept them.
      The right hon. Gentleman is making a fundamental error in parliamentary procedure and is misjudging the good sense of the British people. What he has done is wrong and he knows that it is wrong.
      Mr. Merlyn Rees: It is said that there is only one other example of a company in which there is a special share. I merely say to the Secretary of State that I have known other conceited Secretaries of State and Ministers of State. Unfortunately, they are not unusual. We have not had time to discuss the issues properly. It would have been very much better if we had been able to discuss them in Committee. We did not have time today to do so. We have heard some interesting points today, but I did not think that the Secretary of State was answering new clause 1. It refers to
      "The Articles of Association of any subsidiary established under sections 1 and 9."
      Therefore, it is not just this but all the other matters that could arise in the Bill. The articles of association should be laid before the House. That is all that we are asking for—nothing more or less. The Bill is short in parliamentary accountability all the way through. I strongly recommend to my right hon. and hon. Friends that we vote for the clause.
      Question put: That the clause be now read a Second time:
      The House divided: Ayes 219, Noes 278.

      Division No. 113]

      [5.40 pm

      AYES

      Abse, Leo

      Campbell, Ian

      Allaun, Frank

      Canavan, Dennis

      Alton, David

      Cant, R. B.

      Anderson, Donald

      Carmichael, Neil

      Archer, Rt Hon Peter

      Cartwright, John

      Ashley, Rt Hon Jack

      Clark, Dr David (S Shields)

      Ashton, Joe

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

      Atkinson, N.(H'gey,)

      Coleman, Donald

      Bagier, Gordon A.T.

      Concannon, Rt Hon J. D.

      Barnett, Rt Hon Joel (H'wd)

      Cook, Robin F.

      Beith, A.J.

      Cowans, Harry

      Benn, Rt Hon Tony

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

      Bennett, Andrew(St'kP'tN)

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

      Bidwell, Sydney

      Crowther, Stan

      Booth, Rt Hon Albert

      Cryer, Bob

      Boothroyd, Miss Betty

      Cunliffe, Lawrence

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

      Cunningham, G.(Islington S)

      Bradley, Tom

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

      Bray, Dr Jeremy

      Dalyell, Tam

      Brown, Hugh D. (Provan)

      Davidson, Arthur

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

      Davies, Rt Hon Denzil(L'lli)

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

      Davies, Ifor (Gower)

      Brown, Ron(E'burgh, Leith)

      Davis, Clinton (Hackney C)

      Buchan, Norman

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

      Callaghan, Rt Hon J.

      Deakins, Eric

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

      Dean, Joseph (Leeds West)

      337

      Dixon, Donald

      Magee, Bryan

      Dobson, Frank

      Marks, Kenneth

      Dormand, jack

      Marshall, D(G'gowS'ton)

      Douglas, Dick

      Marshall, Dr Edmund (Goole)

      Douglas-Mann, Bruce

      Marshall, Jim (Leicester S)

      Dubs, Alfred

      Martin, M(G'gowS'burn)

      Duffy, A. E. P.

      Mason, Rt Hon Roy

      Dunn, James A.

      Maxton, John

      Dunwoody, Hon Mrs G.

      Maynard, Miss Joan

      Eadie, Alex

      Meacher, Michael

      Eastham, Ken

      Mellish, Rt Hon Robert

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

      Millan, Rt Hon Bruce

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

      Miller, Dr M.S.(E Kilbride)

      Ellis, Tom (Wrexham)

      Mitchell, Austin (Grimsby)

      English, Michael

      Mitchell, R.C. (Soton Itchen)

      Evans, Ioan (Aberdare)

      Morris, Rt Hon A. (W'shawe)

      Evans, John (Newton)

      Morris, Rt Hon C. (O'shaw)

      Field, Frank

      Morris, Rt Hon J. (Aberavon)

      Fitt, Gerard

      Moyle, Rt Hon Roland

      Fletcher, Ted (Darlington)

      Newens, Stanley

      Ford, Ben

      O'Halloran, Michael

      Forrester, John

      O'Neill, Martin

      Foster, Derek

      Owen, Rt Hon Dr David

      Foulkes, George

      Park, George

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

      Parker, John

      Freud, Clement

      Parry, Robert

      Garrett, John (Norwich S)

      Pendry, Tom

      George, Bruce

      Penhaligon, David

      Golding, John

      Powell, Raymond(Ogmore)

      Graham, Ted

      Prescott, John

      Grant, George(Morpeth)

      Race, Reg

      Grant, John (Islington C)

      Rees, Rt Hon M (Leeds S)

      Grimond, Rt Hon J.

      Richardson, Jo

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

      Roberts, Albert(Normanton)

      Harrison, Rt Hon Walter

      Roberts, Gwilym(Cannock)

      Hart, Rt Hon Dame Judith

      Robertson, George

      Hattersley, Rt Hon Roy

      Robinson, G. (Coventry NW)

      Haynes, Frank

      Robinson, P. (Belfast E)

      Healey, Rt Hon Denis

      Rooker, J. W.

      Heffer, Eric S.

      Roper, john

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

      Rowlands, Ted

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

      Sandelson, Neville

      HomeRobertson, John

      Sever, John

      Homewood, William

      Sheerman, Barry

      Hooley, Frank

      Sheldon, Rt Hon R.

      Horam, John

      Shore, Rt Hon Peter

      Howell, Rt Hon D.

      Short, Mrs Renée

      Howells, Geraint

      Silkin, Rt Hon J. (Deptford)

      Hoyle, Douglas

      Silkin, Rt Hon S. C. (Dulwich)

      Huckfield, Les

      Silverman, Julius

      Hughes, Mark(Durham)

      Skinner, Dennis

      Hughes, Robert (Aberdeen N)

      Smith, Rt Hon J. (N Lanark)

      Janner, Hon Greville

      Soley, Clive

      Johnson, Walter (Derby S)

      Spearing, Nigel

      Jones, Rt Hon Alec (Rh'dda)

      Spriggs, Leslie

      Jones, Barry (East Flint)

      Stallard, A.W.

      Kaufman, Rt Hon Gerald

      Steel, Rt Hon David

      Kerr, Russell

      Stewart, Rt Hon D. (W Isles)

      Kilfedder, James A.

      Stoddart, David

      Kilroy-Silk, Robert

      Stott, Roger

      Lambie, David

      Strang, Gavin

      Lamborn, Harry

      Straw, Jack

      Lamond, James

      Summerskill, Hon Dr Shirley

      Leadbitter, Ted

      Taylor, Mrs Ann (Bolton W)

      Leighton, Ronald

      Thomas, DrR. (Carmarthen)

      Lewis, Arthur (N'ham NW)

      Thorne, Stan (Preston South)

      Lewis, Ron (Carlisle)

      Tinn, James

      Lofthouse, Geoffrey

      Torney, Tom

      Lyon, Alexander(York)

      Varley, Rt Hon Eric G.

      Lyons, Edward (Bradf'dW)

      Wainwright, E. (Dearne V)

      Mabon, Rt Hon Dr J. Dickson

      Wainwright, R.(Colne V)

      McCartney, Hugh

      Walker, Rt Hon H.(D'caster)

      McDonald, DrOonagh

      Wellbeloved, James

      McElhone, Frank

      Welsh, Michael

      McKay, Allen (Penistone)

      White, Frank R.

      McKelvey, William

      White, j..(G'gow Pollok)

      MacKenzie, Rt Hon Gregor

      Whitehead, Phillip

      McNally, Thomas

      Whitlock, William

      McNamara, Kevin

      Wigley, Dafydd

      McTaggart, Robert

      Willey, Rt Hon Frederick

      338

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

      Wright, Sheila

      Wilson, Gordon (Dundee E)

      Wilson, William (C'try SE)

      Tellers for the Ayes:

      Winnick, David

      Mr. James Hamilton and

      Woodall, Alec

      Mr. George Morton.

      Woolmer, Kenneth

      NOES

      Adley, Robert

      Eyre, Reginald

      Aitken, Jonathan

      Fairbairn, Nicholas

      Alexander, Richard

      Fairgrieve, Sir Russell

      Alison, Rt Hon Michael

      Faith, Mrs Sheila

      Amery, Rt Hon Julian

      Farr, John

      Ancram, Michael

      Fell, Sir Anthony

      Arnold, Tom

      Finsberg, Geoffrey

      Aspinwall, Jack

      Fisher, Sir Nigel

      Atkins, Rt Hon H. (S'thorne)

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

      Atkins, Robert (Preston N);

      Fookes, Miss Janet

      Baker, Nicholas (N Dorset)

      Forman, Nigel

      Banks, Robert

      Fowler, Rt Hon Norman

      Beaumont-Dark, Anthony

      Fox, Marcus

      Bendall, Vivian

      Fraser, Rt Hon Sir Hugh

      Benyon, W. (Buckingham)

      Fraser, Peter (South Angus)

      Best, Keith

      Fry, Peter

      Biffen, Rt Hon John

      Gardiner, George(Reigate)

      Biggs-Davison, SirJohn

      Gardner, Edward (S Fylde)

      Blackburn, john

      Garel-Jones, Tristan

      Blaker, Peter

      Gilmour, Rt Hon Sir Ian

      Body, Richard

      Glyn, Dr Alan

      Bonsor, Sir Nicholas

      Goodhew, Sir Victor

      Boscawen, Hon Robert

      Goodlad, Alastair

      Bottomley, Peter (W'wich W)

      Gorst, John

      Bowden, Andrew

      Gow, Ian

      Boyson, Dr Rhodes

      Grant, Anthony (Harrow C)

      Braine, Sir Benard

      Gray, Hamish

      Bright, Graham

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

      Brittan, Rt. Hon. Leon

      Griffiths, Peter Portsm'thN)

      Brooke, Hon Peter

      Grist, Ian

      Brotherton, Michael

      Grylls, Michael

      Brown, Michael(Brigg & Sc'n)

      Gummer, John Selwyn

      Browne, john(Winchester)

      Hamilton, Hon A.

      Bruce-Gardyne, John

      Hamilton, Michael(Salisbury)

      Bryan, Sir Paul

      Hampson, Dr Keith

      Buck, Antony

      Hannam, John

      Budgen, Nick

      Haselhurst, Alan

      Bulmer, Esmond

      Havers, Rt Hon Sir Michael

      Burden, Sir Frederick

      Hawkins, Paul

      Butcher, John

      Hawksley, Warren

      Butler, Hon Adam

      Hayhoe, Barney

      Cadbury, Jocelyn

      Heddle, john

      Carlisle, John (Luton West)

      Henderson, Barry

      Carlisle, Kenneth(Lincoln)

      Heseltine, Rt Hon Michael

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

      Hicks, Robert

      Chalker, Mrs. Lynda

      Higgins, Rt Hon Terence L.

      Channon, Rt. Hon. Paul

      Hill, James

      Chapman, Sydney

      Hogg, HonDouglas(Gr'th'm)

      Churchill, W.S.

      Holland, Philip(Carlton)

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

      Hooson, Tom

      Clark, Sir W. (Croydon S)

      Hordern, Peter

      Clarke, Kenneth(Rushcliffe)

      Howe, Rt Hon Sir Geoffrey

      Cockeram, Eric

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

      Colvin, Michael

      Howell, Ralph (N Norfolk)

      Cope, john

      Hunt, David (Wirral)

      Corrie, John

      Hunt, John(Ravensbourne)

      Costain, Sir Albert

      Hurd, Rt Hon Douglas

      Cranborne, Viscount

      Irving, Charles(Cheltenham)

      Critchley, Julian

      Jessel, Toby

      Dean, Paul (North Somerset)

      JohnsonSmith, Geoffrey

      Dickens, Geoffrey

      Jopling, Rt Hon Michael

      Dorrell, Stephen

      Joseph, Rt Hon Sir Keith

      Douglas-Hamilton, Lord J.

      Kaberry, Sir Donald

      Dover, Denshore

      Kershaw, Sir Anthony

      du Cann, Rt Hon Edward

      Kitson, Sir Timothy

      Dunn, Robert(Dartford)

      Lamont, Norman

      Dykes, Hugh

      Lang, Ian

      Eden, Rt Hon Sir John

      Latham, Michael

      Edwards, Rt Hon N. (P'broke)

      Lawrence, Ivan

      Eggar, Tim

      Lawson, Rt Hon Nigel

      Elliott, Sir William

      Lee, John

      Emery, Sir Peter

      LeMarchant, Spencer

      339

      Lennox-Boyd, HonMark

      Rossi, Hugh

      Lester, Jim (Beeston)

      Rost, Peter

      Lewis, Kenneth(Rutland)

      Royle, Sir Anthony

      Lloyd, Ian (Havant & W'loo)

      Sainsbury, Hon Timothy

      Lloyd, Peter (Fareham)

      St. John-Stevas, Rt Hon N.

      Loveridge, John

      Shaw, Giles (Pudsey)

      Luce, Richard

      Shaw, Michael (Scarborough,

      Macfarlane, Neil

      Shelton, William(Streatham)

      MacGregor, John

      Shepherd, Colin(Hereford)

      MacKay, John (Argyll)

      Shepherd, Richard

      Macmillan, Rt Hon M.

      Silvester, Fred

      McNair-Wilson, M. (N'bury)

      Sims, Roger

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

      Skeet, T. H. H.

      McQuarrie, Albert

      Speed, Keith

      Marland, Paul

      Speller, Tony

      Marshall, Michael (Arundel)

      Spence, John

      Marten, Rt Hon Neil

      Spicer, Jim (West Dorset)

      Mates, Michael

      Spicer, Michael (S Worcs)

      Maude, Rt Hon Sir Angus

      Sproat, Iain

      Mawhinney, Dr Brian

      Squire, Robin

      Maxwell-Hyslop, Robin

      Stainton, Keith

      Mayhew, Patrick

      Stanbrook, Ivor

      Mellor, David

      Stanley, John

      Meyer, Sir Anthony

      Steen, Anthony

      Miller, Hal (B'grove)

      Stevens, Martin

      Mills, Iain (Meriden)

      Stewart, A. (E Renfrewshire)

      Mills, Peter (WestDevon)

      Stewart, Ian (Hitchin)

      Miscampbell, Norman

      Stokes, John

      Moate, Roger

      Stradling Thomas, J.

      Monro, Sir Hector

      Tapsell, Peter

      Montgomery, Fergus

      Taylor, Teddy (S'end E)

      Moore, John

      Tebbit, Rt Hon Norman

      Morris, M. (N'hampton S)

      Temple-Morris, Peter

      Morrison, Hon C. (Devizes)

      Thatcher, Rt Hon Mrs M.

      Mudd, David

      Thomas, Rt Hon Peter

      Murphy, Christopher

      Thompson, Donald

      Myles, David

      Thornton, Malcolm

      Neale, Gerrard

      Townend, John(Bridlington)

      Neubert, Michael

      Townsend, Cyril D,(B'heath)

      Newton, Tony

      Trippier, David

      Normanton, Tom

      Trotter, Neville

      Nott, Rt Hon John

      van Straubenzee, Sir W.

      Onslow, Cranley

      Vaughan, Dr Gerard

      Oppenheim, Rt Hon Mrs S.

      Viggers, Peter

      Osborn, John

      Waddington, David

      Page, John (Harrow, West)

      Wakeham, john

      Page, Richard (SW Herts)

      Waldegrave, Hon William

      Parris, Matthew

      Walker, B. (Perth)

      Patten, Christopher(Bath)

      Walker-Smith, Rt Hon Sir D.

      Patten, John (Oxford)

      Wall, Sir Patrick

      Pattie, Geoffrey

      Waller, Gary

      Pawsey, James

      Walters, Dennis

      Percival, Sir Ian

      Ward, John

      Peyton, Rt Hon John

      Warren, Kenneth

      Pollock, Alexander

      Wells, Bowen

      Porter, Barry

      Wheeler, John

      Prentice, Rt Hon Reg

      Whitelaw, Rt Hon William

      Proctor, K. Harvey

      Whitney, Raymond

      Pym, Rt Hon Francis

      Wickenden, Keith

      Raison, Rt Hon Timothy

      Wiggin, Jerry

      Rathbone, Tim

      Wilkinson, John

      Rees-Davies, W. R.

      Winterton, Nicholas

      Renton, Tim

      Wolfson, Mark

      Rhodes James, Robert

      Young, Sir George(Acton)

      RhysWilliams, Sir Brandon

      Younger, Rt Hon George

      Ridley, Hon Nicholas

      Rippon, Rt Hon Geoffrey

      Tellers for the Noes:

      Roberts, M. (Cardiff NW)

      Mr. Anthony Berry and

      Roberts, Wyn (Conway)

      Mr. Carol Mather.

      Question accordingly negatived.

    New clause 2

      METHOD OF SALE OR VALUATION OF SHARES IN SUBSIDIARY
      `Before the disposal of any shares in any subsidiaries established under sections 1 and 9 draft orders establishing the
      340
      method of the sale of the shares, and their valuation of any such shares shall be laid before Parliament and shall be subiect to an affirmative resolution.'.—[Mr. Rowlands.]
      Brought up, and read the First time.
      Mr. Edward Rowlands: I beg to move, That the clause be read a Second time.
      This new clause has become much more important as a result of the fiasco of the sale of shares in Amersham International during our deliberations on the Bill. That fiasco followed other privatisation blunders involving Cable and Wireless and British Aerospace. The succession of blunders should be a severe warning to the Government as they approach yet another attempt to privatise and sell, on a much larger scale, the shares of Britoil. It should not only be a warning but should provide some lessons to the Government. We believe that Parliament should have the right to debate those lessons and, in moving the Second Reading of the new clause, I wish to draw those lessons to the attention of the Government and obtain from them a series of assurances about the method of valuation of Britoil and any British Gas Corporation assets that might be sold.
      The first lesson to be learnt from the three blunders, especially Amersham, is the Government's incompetence in handling privatisation and especially the incompetence of the Government's advisers. There has been a regular monotony about the sort of advisers to whom the Government have turned for advice on privatisation. We shall argue that the Government should remove all the advisers who were involved in the Amersham sale from any advisory capacity in the case of Britoil. There is no room for N. M. Rothschild and Sons Ltd. in Britoil and it is sad to know that, to date, it will be the adviser to the British National Oil Corporation.
      Mr. Douglas: Is not my hon. Friend being unduly harsh on the advisers? The company was given one form of advice and the Government were given another. That the Government took the wrong advice is directly their responsibility.
      Mr. Rowlands: My hon. Friend draws attention to an important point. He will find, when I come to my second point, that I believe that there is a wider lesson to be learnt from Amersham.
      The first lesson is that incompetence, whether of the Government or their advisers, has cost Britain money and benefited individual speculators. However, a much wider lesson must be learnt before there is any attempt to privatise Britoil. What emerged from Amersham was that there is a series of contradictory objectives built into the Government's privatisation programme. Those contradictory objectives led to the blunders.
      Presumably, the first basic objective of privatisation is to maximise the proceeds derived from any sale. The idea is to get as much money as possible, to reduce the public sector borrowing requirement and to have the opportunity to give some tax relief in the run-up to an election. However, the Government then set down a series of other objectives which in many ways conflicted with the first objective. I do not necessarily quarrel with those objectives, but the combination tends to lead to a contradiction and to the sort of blunders that we saw in Amersham.
      The second objective is the romantic view about popular shareholding capitalism. It goes back to the

      341
      nineteenth century idea that there are many individuals in the country buying and selling shares all the time. That is not true, but the Government believe that it is true and that privatisation should be a promotion of the concept. So they try to disperse the shares as widely as possible, but in doing so they cannot maximise the proceeds from the sale. If the shares are split up and cannot be offered in large blocks, for which people would pay a premium price, the shares have rather less value.
      The third objective concerns the desirable or undesirable control over the company. It also leads one to put restrictions on the sale of the shares which may allow the maximisation of the proceeds of any sale. Amersham typified that mixture of contradictions. The Secretary of State properly described the objectives during our debate on Amersham, but they can be conflicting. In Amersham, rather than an argument about sale by tender or sale by firm offer, the quickest and the best way to achieve maximisation of the proceeds would have been to sell the company lock, stock and barrel to an American company. We would have received much more than we did from the flotation of the shares. There are ways to maximise privatisation proceeds, but they conflict with the other privatisation objectives of the Government.
      The moment that one tries to introduce other objectives into the concept of privatisation one moves away from the simplistic view of free market evaluation. The argument about the method of sale, when one should sell and the valuation to be put on the assets moves out of the strict simplistic arena of the free market to a series of other objectives that have nothing to do with what price one can get for the assets. It is right and proper, and is the purpose of our new clause, that those issues behind the valuation should be debated in the House before any final decisions are made. That is one of the basic lessons arising from the conflicting objectives of the Government towards privatisation, and it has led to the sort of blunders and fiasco that we have seen in the case of Amersham.
      Our worry and concern is that if there was misjudgment and blunder over Amersham, an £80 million company, what will happen when we try to sell more than£1 billion-worth of oil assets in the form of Britoil? In addition, there will be further X hundreds millions of pounds worth of assets in respect of British Gas in the North Sea, to which we must add the sale of British Gas assets in Wytch Farm. All of those things will supposedly happen in the coming financial year.
      6 pm
      Mr. David Myles: I cannot quite understand the point that the hon. Gentleman is making. Does he believe that it is totally wrong as an objective to spread shares as widely as possible? I am aware of the argument that one man's gain is another man's loss, but surely it is better to spread the gain among the small investor rather than among the big companies.
      Mr. Rowlands: I shall explain our position clearly and simply. We do not believe that assets should be moved out of public and national hands for private gain. Whether the small investor makes an extra special private gain or whether it is an institution does not alter the wrongness and immorality of selling national assets at a price far below their true value.
      342
      A cost must be paid for trying to disperse the shares. One does not obtain the true value of such shares if they are sold off lock, stock and barrel to one company or organisation. That cost should at least be acknowledged. Although the idea of dispersing the shares might sound warm-hearted and gentle, just as in the case of Amersham, the day after it is done the benefit disappears. Nearly half of Amersham's shares—25 million—changed hands the following day. As a result, one does not know whether a wide dispersal has been achieved. All that we do know is that a wide dispersal was achieved in the initial flotation. However, a day later those shares could be in the hands of institutions.
      One has therefore paid a price for trying to disperse those shares to the so-called benefit of the wider interest or the wider concepts of popular share-owning capitalism. That reveals what is inherently difficult and wrong in the act of privatisation. If that happened with Amersham, what will prevent it from happening in the case of Britoil, a £1 billion-plus privatisation proposal?
      These are not merely the dilemmas of a Socialist Opposition. They were well presented and described in what everyone agrees to be a relatively reputable study and guide to Britain's North Sea oil and gas by Mr. Martin Lovegrove. On the privatisation of BNOC, this independent source refers to exactly the same sort of dilemmas. On page 59 of the study he said:
      "Whilst it is hard to justify any particular estimate, given in the evidence in the concluding paragraphs of the previous section it could be said the subsidiaries"—
      by that he means BNOC subsidiaries—
      "are worth anything between £2 and £2·5 billion. If Government were to strip the assets of the Corporation and sell say 50 per cent. at auction, at which both British and overseas companies could bid, the cash raised would probably reflect this estimate—e.g., £1 to £1·2 billion.
      He continues:
      "If BNOC shares are sold into the Stock Market, as Government currently intends, the money raised would probably be only of the order of £0·6 to £0·8 billion (although the state of the national economy and the world oil market, and the perceptions as to the chances of the Government's survival at the next Election, will naturally play a key role)…This is not regarded as being unreasonable…but it is still £0·4 billion less than the true realisable value."
      All we are saying is that if one of the consequences of proceeding by a method of privatisation leads to a discount of nearly £½ billion, this House ought to have the right to discuss it and to decide whether that is the way we wish to proceed. That is the purpose of the new clause.
      When talking about the various factors that could influence or affect the various amounts that might be obtained, and the valuation that could be placed on Britoil and British Gas oil assets, Mr. Lovegrove referred to the world oil market. We give a clear and unequivocal warning that unless something dramatic or significant happens to the existing oil market, there is no case for selling Britoil shares this year. The Government would be acting in dereliction of their duty if they did so.
      No one who at present holds oil shares would sell them. The "grocer of Grantham" would not sell her oil shares. Her stockbroker would certainly not advise her to do so at present unless she was stuck for cash or wanted to raise money to buy Amersham shares. I do not know whether the Secretary of State or the Minister of State hold oil shares—I do not know whether they are allowed to do so—but I doubt whether their stockbrokers would advise them to sell the nation's oil shares at the present time.

      343
      I have taken advice from a number of stockbrokers in the last few days, and everyone has recommended that, unless one is stuck for cash, one should not sell.
      Mr. Peter Rost: Will not the hon. Gentleman nevertheless admit that the Government are not proposing to sell Britoil shares at this moment? The situation may be quite different even in a matter of weeks, let alone months.
      Mr. Rowlands: That is true. I accept that the situation can change. Oil prices could fall further. If Sheik Yamani's blackmail works, perhaps that will stabilise oil prices. However, oil prices have fallen by 60 per cent. in the last 18 months.
      I take as an example two typical British independent oil producers who are comparable with the proposed Britoil company—Tricentrol and Lasmo. The value of Tricentrol in the last 18 months, based on the stock market's current estimate, has fallen by about £150 million. The value of Lasmo has fallen by £415 million.
      I am saying that if the Prime Minister and the Secretary of State—a grocer in Grantham and a business man in Blaby—held oil shares, they would not sell them in the current climate. We demand that the Government do not sell the nation's oil assets and oil shares in the current climate. We are opposed to the sale in principle, but even on the Government's own criteria, unless there is a dramatic and significant improvement in the oil share market, we do not believe that there is a case for such a sale taking place this year. If the Government did that, they would be selling short the nation's vital oil assets. They would sell them at a knockdown price and at the worst moment. An individual would not sell his oil shares now unless he was stuck for cash, and nor should the nation.
      That is the basis of our new clause. I shall put some other basic warnings and conditions to the Government on their approach to this new act of privatisation. First, no adviser associated with Amersham should be involved in any shape or form with the sale of Britoil. They should not be the Government's advisers or advisers of BNOC. Therefore, Rothschild must go.
      Mr. Robert Rhodes James: Rothschild must go.
      Mr. Rowlands: I agree that Rothschild must go and certainly not get involved. They made enough mess in Amersham and should not be given the chance to make a bigger blunder or mess. I also wish to ask the Minister—this is the first opportunity I have had to do this and I gave him notice of this question through his officials—about the peculiar and interesting comment in the Government's paper on the sale of special assets. Paragraph 55 of "The Government's Expenditure Plans 1982–83 to 1984–85", concerning the sale proceeds from privatisation generally, states:
      "Sale proceeds in 1982–83 are expected to total some £600 million. This assumes that proceeds from the disposal in 1982 of 51 per cent. of BNOC's upstream business, provided for in the Oil and Gas (Enterprise) Bill, will be received in two instalments: the first in 1982–83 and the second in 1983–84. It should be emphasised that the division of receipts between the two years is only an assumption and no decision has yet been taken on whether the flotation of Britoil will be on a partly-paid or fully-paid basis."
      The concept of a partly paid basis at Amersham would have been unbelievable. On that basis, one could have
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      paid half, cleaned up and, six months later, paid the rest. That would be an attractive proposition to anyone. Perhaps one must do that sort of thing to try to sell £1 billion of assets. First value them low enough to make sure that one can give them away and secondly ask the prospective buyers for a half and half payment. Do the Government put forward that as a serious proposition? Do we take paragraph 55 to be a kite-flying exercise or something deliberate and meaningful?
      Mr. Rost rose—
      Mr. Rowlands: I will not give way to the hon. Gentleman because we are under the guillotine and he has already had an opportunity to speak.
      When replying, I hope that the Minister will tell us a little about paragraph 55.
      Thirdly, there surely must be no question of further underwriting fees for the new Britoil sale. The real scandal of Amersham was that £890,000 was paid to underwriters to launch a share which was 20 times over-subscribed. The first day led to a 40p premium and 25 million shares changed hands within 24 hours. An underwriting company picked up £890,000 for doing that. There should be no question of underwriting fees for the privatised sale of any Britoil shares.
      Viscount Cranborne: I am sure that the hon. Gentleman understands the function of underwriters better than I do. Judging from his remarks, I beg leave to doubt him. Surely the function of an underwriter is to underwrite the risk before the launch. The hon. Gentleman said that the risk of Britoil not being sold was considerable. Therefore, perhaps the underwriters are performing a function in this case.
      6.15 pm
      Mr. Rowlands: The price is pitched and organised by the underwriters. On Amersham, they managed to collect £890,000 by organising a price 40p below what turned out to be the value, and then collected that £890,000 in fees. I understand why one needs underwriting fees in a private transaction. However, if the Government had been left with a percentage of the shares for Amersham, they would not have faced a terrible problem. They could hold those shares and decide what to do with them subsequently. There is certainly no case for producing large fees for underwriting the Britoil share. The Government can hold and bide their time if the shares are not sold. There is no problem in that respect.
      The basic reason for raising all these points is to demonstrate that there are serious arguments. On the issue of privatisation, there are serious arguments when one moves away from a strict free market concept of valuation When one introduces other factors and objectives which affect and alter concepts of privatisation—as they did in previous privatisation measures and share launches—cost issues are involved. The House should have a right to debate such issues.
      Therefore, the whole purpose of our new clause is to establish the principle that, before any decision is taken on valuation and method of sale, the Government must return to the House and debate the issue. From leaks, we understand that the Amersham debates took place when there were battles between the Treasury and the Department of Energy—Lawson v. Ridley. However, not one of those issues was brought to the floor of the House.

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      That occurred because there was no provision, when dealing with Amersham, to allow the issue to be brought to the House. Irrespective of the Opposition's stand on the divide about privatisation of public and private enterprise, the House ought to have a right, before the so-called "sale of the century" takes place, to discuss, approve or reject both the method and valuation of that company.
      Mr. Rost: The Opposition have raised some important issues in proposing new clause 2. Although I cannot support the clause as a solution to those issues, I sympathise with some of the arguments advanced by the hon. Member for Merthyr Tydfil (Mr. Rowlands). Indeed, I have been critical of the Government's method of selling shares from the State sector back into the private sector, because in my view they ought to pursue that policy more strenuously. They would succeed in doing that if the method of sale were shown to be politically more acceptable.
      To justify my arguments I shall refer not only to Amersham but to previous offers for sale. Cable and Wireless was certainly such an example. In that case, the method whereby the offers for sale was organised did less than justice to the Conservative objective of wider share ownership and risked discrediting the whole process of denationalisation. I am anxious that we get that right in future.
      Offers for sale of concerns such as British Aerospace, Cable and Wireless and Amersham can certainly be judged as highly successful under the traditional criteria of Stock Exchange offers for sale. They were certainly successful as flotations. Nevertheless, they are subject to criticism, because they would have been justified as successful private offers for sale. However, they are not necessarily justifiable when dealing with public assets.
      I am particularly critical that we have not given enough political guidance in these offers for sale to ensure that there is a genuine fair allocation to the small investor, and that we have not done enough to eliminate multiple applications—onal stags. Professional stags and multiple applications have a genuine role to play in normal offers for sale. However, when one is dealing with the sale of public assets at a discount—do not challenge—t is vital that the allocation of shares is seen to be as fair as possible, with a real emphasis on the small investor getting a fair share, rather than the multiple applicants.
      The Cable and Wireless issue was more than five times oversubscribed. It allowed for a ballot for small applicants for 100 shares. Only one in three of those small applicants obtained shares. I know of small savers, including my mother-in-law, who has savings of only a few hundred pounds and is a pensioner. I advised her to make an application for 100 shares. She was unsuccessful in the ballot. However, I know of other friends and associates who made large applications and who did not have to enter the ballot. If one applied for 1,000 shares, one was automatically allocated 300 shares.
      That system is justifiable and is an accepted method of launching a new issue when private assets are going into the hands of other private assets, but I maintain that that is not the right method when we are dealing with public assets going into private hands. There should be more political guidance to ensure that multiple applications are
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      eliminated That can be done and it is feasible It costs only a little more in time and effort to do that. In most cases, multiple applications can be weeded out.
      If the issue is oversubscribed, as I hope it will be, the allocation should be not just weighted in favour of the small applicant, but heavily biased in favour of him, so that there is not a ballot unless the number of small applicants does not cover the amount of shares on offer. If there is a ballot, the small applicants will have an equal chance with the large applicant. If such a method were adopted, we would promote the objectives of wider share ownership and popular capitalism in a way that would be politically more acceptable than the traditional methods of offer for sale that we have launched so far.
      I do not accept the Opposition's argument, but they are right to refer to the premium that has been attracted to the offer for sale of Amersham International Ltd., for example. I accept that if an offer for sale is to be successful it ought to be pitched at a price that will attract savers and investors. There is nothing wrong with that. However, I maintain that it is extremely difficult, because market sentiment changes so quickly, to value a new issue beforehand. It is easy to be clever afterwards. Therefore, I believe that there is an alternative solution, which can be adopted and which has been adopted in other cases.
      A tender offer is an alternative, but not one that will meet the objectives of wider share ownership. Offers for tender are primarily of interest to the larger institutional pension funds and put off the small investor, as they are so complicated. However, there could be a two-tier arrangement in an offer for sale so that some of the shares were allocated to the institutions that tendered for them in competitive bidding. That would establish a price that would be a market price rather than a price that was fixed in advance and might be wrong. The advantage of the tender offer is that it fixes a market price, because institutional investors are competing against one another as they would in an auction.
      If about one-quarter of the shares to be sold were offered by tender to appeal to the institutions, that would establish a market price and the institutions would obtain a share of the offer. If one followed that with a second offer for sale, which was deliberately arranged to appeal to the small saver, with all the multiple applications eliminated, if the allocation of shares gave strong preference to small investors and if the price of that second offer for sale were fixed at about 10 per cent. less than the tender price—a small discount to attract the small investor—the State would receive a fair price and realisation for the sale. The institutions would get a share of the sale, but at an attractive market price from the State's point of view. The small saver would get a genuine chance to obtain the shares, rather than a large proportion of the shares going to the multiple speculative applicants.
      Mr. Tam Dalyell: The hon. Gentleman is making an extremely interesting contribution. Does he agree that the figure of £21·3 million for the underwriting fees in relation to Amersham International, British Telecom, Cable and Wireless and British Aerospace is excessive and is relevant to his argument? Does he dispute the figure of £21·3 million?
      Mr. Rost: I am not discussing the underwriting figures. I was just about to suggest that if one adopted a system such as the two-tier sale that I am proposing there would

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      be no need for underwriting fees, because the institutions that would obtain their shares by tender would be offered the underwriting for the second offer for sale, which would be set at 10 per cent. less for the small investor. The institutions would be given the opportunity to top up their initial allocations if the small investor did not subscribe to the second offer for sale. That underwriting would cost nothing at all.
      Any pension fund that had acquired some of the shares by tender and wanted to top up its holding would jump at the opportunity of buying more shares at 10 per cent. less than the price of the original purchase. Therefore, the underwriting would be taken care of without fees on the second offer for sale to the small investor. I do not wish to go into further details, because I would be straying out of order if I were to do so.
      The Government must give firm political guidance for future offers for sale. It is no use blaming the merchant bankers, the brokers or the institutions that handle the issues. They were only doing their job, using their normal methods for handling offers for sale. If any blame should be attached to anyone, it should be to us in the House and to the Government for not giving guidance and saying that the offer for sale should be organised so that the small saver would get a better chance and a fairer price than so far.
      Mr. Arthur Lewis: I was hoping that the hon. Gentleman would give a further explanation when he said that it would be easy to stop professional stagging. I should like to know how he would do that. The Stock Exchange has tried all ways.
      Mr. Rost: I was just coming to that point. It is feasible to stop all but the most persistent multiple applicants. All that one has to do in advance is to announce that all cheques will be cashed. Many multiple applicants rely on the fact that the cheques are not presented. Such an announcement would eliminate the multiple applicants. They would not bother to apply because they have to put up the money. Secondly, it should be announced that it would be at least a week before the cheques were returned. If the Bank of England collected a little interest on the way, the taxpayer would not cry about that and nor would the Treasury. Therefore, if one announced in advance that all cheques would be cashed, that would discourage quite a few multiple applicants.
      The applications should be computerised. The shares have to be allocated subsequently in any case. It is not beyond the bounds of modern techniques for the applications to be computerised, which would bring to light many multiple applications, unless they were disguised. Today when there are new issues many applicants do not bother to disguise the fact that they are making multiple applications. At least if my method were used, such applications would be more difficult, because under a computerised system they would come to light.
      6.30 pm
      There are other ways in which the multiple applications can be discouraged. For example, one can say in advance that if any multiple applications are discovered they will all be eliminated as a penalty. I think that that would be a further disincentive. The genuine applicant for the shares will certainly not complain if cheques are cashed. A genuine applicant expects his cheque to be cashed. Nor would a genuine applicant for 100 shares complain if it
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      took a week or so before the allocation of the shares was announced. That again would not damage the genuine investor, but it would discourage the more speculative stag.
      There are other ways in which the Government could help to promote the objectives of wider share ownership and make the whole process of privatisation politically more acceptable. One such method is to advertise and to make the offers for sale more widely obtainable, perhaps through post offices. Advertisements for the prospectuses should be placed in popular newspapers, not just in the "heavy" newspapers.
      There should be more emphasis on providing shares to employees. The Bank of England could become involved in seeing that there is fair play in the allocation of the shares and act as the principal sponsoring bank.
      I am entirely in support of the Government's strategy to offer shares for sale. If we did it in a way that was less open to public criticism and was seen to be fairer to the small applicant, it would be possible to speed up the whole process. We could get other denationalisation measures launched in rapid succession. We could achieve the objectives of popular capitalism far more effectively if we were prepared to give a little more political guidance on the manner in which the offer for sale should be handled. If that is done, it will be to the advantage not only of the Government's strategy, but to the whole economy and its progress in years to come.
      The Minister of State, Department of Energy (Mr. Hamish Gray): I intervene at this stage in order that I may do the hon. Member for Merthyr Tydfil (Mr. Rowlands) the courtesy of dealing with one or two of the points that he raised. I appreciate that we are working under a guillotine. Therefore, I shall try to keep my remarks as brief as possible so that others may be able to participate as we move on.
      The hon. Gentleman started by giving us a fairly detailed account of his views on the Amersham International transaction. However, as most of us had already heard those views in Committee, he will perhaps forgive me if I do not follow him too closely along that line.
      My hon. Friend the Under-Secretary of State went into great detail on 16 March on this matter. He explained to the House the thinking behind the whole way in which it was handled. He pointed out—it is only fair to the House that I should reiterate it—that whatever criticism may have been made, the shares allocated to small investors amounted to 22·6 per cent. of the issue, although their applications represented only 12 per cent. of the total. As a result of the special arrangements made for them, employees were allotted 33·6 per cent. of the issue and over 99 per cent. of the employees now have an interest in their company. The offers of free shares were fully taken up by the employees who, in addition, received all the shares for which they made preferential applications. Therefore, the Government's objective of giving employees a direct interest in their company was achieved.
      The Amersham sale realised about £63 million for the taxpayer—an excellent return on the £6·3 million investment made by the Government. The Government's objective of a fair return for the taxpayer was achieved In short, as my right hon. Friend the Secretary of State said on an earlier occasion during our discussions on this

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      question and also in the House on another occasion, the Amersham transaction was a success. From the taxpayers' point of view it was unquestionably.
      Mr. Rowlands: The Minister referred to the employees as holding 33 per cent. of the shares. If he will check that figure I think he will find that it is more like 3·7 per cent. of the shares.
      Mr. Gray: I apologise. The hon. Gentleman is correct. It is 3·6, not 33·6—a substantial difference. I willingly concede the point.
      The hon. Gentleman then asked about the public expenditure White Paper. He very kindly gave me notice of the question, and I can give him a clear answer to it. The division of the receipts from the Britoil sale in the White Paper is simply an assumption only for the purpose of presentation in the White Paper and does not imply that any decisions have been taken on the timing of receipts. Clearly the possibility of a partly paid issue in which some of the receipts might be delayed until 1983–84 will need to be considered. I repeat that, as the White Paper makes absolutely clear, no decisions have yet been taken.
      The question of the arrangements for the offer, including the timing of receipts, can only be resolved by the Government and their advisers nearer the time of sales and in the light of conditions at that time.
      The hon. Gentleman quoted from Mr. Martin Lovegrove's book but, like most people who quote in debate, he quoted the part which best suited his argument. If the hon. Gentleman had read on a little further he might have been rather more enlightened, for Mr. Lovegrove goes on to refer to the advantages of privatisation for the corporation and concludes:
      "In fact, it can be argued that with a sale of shares management"—
      that is, management of the British National Oil Corporation—
      "should be able to expand the corporation's operations considerably, to the extent that Government, as a minority shareholder, would benefit through increasing dividends and, of course, taxes."
      So I think Mr. Lovegrove has given a very fair view in his book, but it is also fair that the House should have the other side of the story as well.
      The shares in Britoil will be available for purchase by the public. The Government intend that they should be widely spread, and we are giving a lot of thought to ways of ensuring that small investors have a proper opportunity to buy Britoil shares. In that regard, my hon. Friend the Member for Derbyshire, South-East (Mr. Rost)—who has made such a useful contribution to our deliberations in Committee, particularly on anything to do with shares—has given us the benefit of his experience. We shall consider very seriously the points made by my hon. Friend and by other hon. Members. We are equally anxious that the small investor should be properly catered for.
      Hon. Members will understand that at this stage the most I can say is that we would like there to be a fair measure of flexibility when the shares are allocated for the scaling down of large applications to give preference to small investors and to avoid undue concentration of ownership. We are taking safeguards in the articles against any unacceptable change of control of the company, a subject that we discussed earlier this afternoon.
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      There are several other aspects of the sale on which decisions have not yet been concluded and which cannot be finally settled until nearer the time of the sale, in the light of market conditions and in consultation with our advisers. But the Government's objective will be to obtain a fair price for the taxpayer, and my right hon. Friend has already assured the House that the Government would not go ahead with an offer for sale unless we were satisfied that the selling price represented fair value for the taxpayer. I made it clear in Committee that we would not arrange the sale of shares merely to meet a timetable. I made our objectives clear and said that we were anxious to obtain the best possible price.
      The Government are determined to ensure that the taxpayer benefits fully and fairly from the sale of Britoil shares. An independent evaluation of Britoil's North Sea assets will be available from the consulting petroleum engineers Energy Resources Consultants Limited in advance of the sale. On the basis of the consultants' report and the advice that we received from our merchant bank advisers S. G. Warburg and Co. Ltd., the Government will be able to form a clear and balanced view of the value of the shares.
      In addition, we shall look closely with our advisers at the market valuation of other oil companies, particularly those with North Sea interests. The House need be in no doubt that our valuation of the shares will be careful and thorough.
      I wish to add another point relating to the practicability of laying a valuation of shares before the House. The carrying through of the Britoil offer must be a matter for executive action by the Government. The preparations leading up to the offer should not be carried out in the glare of publicity.
      After all, the flotation will be an exercise of great complexity, which will require months of exacting preparatory work by experts before it is ready to go ahead. Many of the documents will entail heavy legal responsibility and much effort, care and thought will be needed in their compilation.
      Mr. Dalyell: This is humbug.
      Mr. Gray: It may be humbug to the hon. Member for West Lothian (Mr. Dalyell), but anyone who has been associated with a flotation will know the care that needs to be taken with such documents.
      My Department will be obtaining a detailed report on the oil assets of Britoil from independent petroleum engineers. The prospectus that will be published at the time of the offer will include an evaluation of the principal assets of the company. It will be carefully considered in the light of the legal responsibilities that all involved in the offer, including the Secretary of State and the Britoil directors, will bear for it.
      It would be wrong for the Government to anticipate the prospectus by publishing their valuation of assets in advance. A number of hon. Members raised that subject in Committee. For any such valuation to become available before shares are sold could be harmful to our objective of obtaining a fair price for the nation.
      To sum up, some aspects of the sale of Britoil shares can be decided only nearer the time of the sale, but I assure the House that we will want shares to be available to a wide spread of the public and to small investors as well as to employees of the company. We are determined to obtain

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      a fair price and we shall make sure that the shares are valued carefully and with the benefit of professional advice.
      The Government have been open and fair in explaining their aims and objectives in the privatisation of Britoil. It would have been wrong for us to do otherwise, and I believe that we are on the right course. The requirements that the new clause would impose are unnecessary and it would be wrong for the House to accept it.
      Mr. Frank Hooley: The Labour Party has made it clear that it opposes asset-stripping and the new clause should be read in that context. We have also made it clear that a future Labour Goverment will reverse the process and ensure that speculative gains are not made out of it. The process is inherently corrupt. The so-called privatisation is a process of handing over public assets to private individuals or groups of individuals for their own personal or group profit. That is the fundmental objection to it.
      6.45 pm
      If Conservative Members argue that there is some risk involved, they had better look at the record. They know that the assets that they are handing over—British Aerospace, Cable and Wireless and Amersham International—are precisely the sorts of assets from which those who acquire them expect to make substantial personal profits. The Goverment have no intention of putting on the market British Rail or other public assets on which there is no prospect of investors making personal profits.
      The process of privatisation is inherently corrupt and the corruption can be seen in the Amersham International scandal. That deal was a swindle of the taxpayer, as can be proved by the fact that long before the sale took place commentators were saying that there would be massive applications in the expectation of immediate and huge profits. And that is precisely what happened.
      The Government have made much play of the small investor, but if they were really concerned about the small investor, by which they presumably mean the individual citizen, they would leave great public assets in public ownership, because only in that way can the ordinary citizen hope to gain an equitable share in enormously valuable public property.
      Unless the Government have some weird idea of breaking public assets into 35 million pieces so that every citizen can have a piece—and the Government are not suggesting anything remotely approaching that—their so-called concern For the small investor is sheer hypocrisy. The Minister of State confirmed earlier that the employees, about which Conservatives profess to be so concerned, got only 3 per cent. of the Amersham International shares. Even the small investors got only 22 per cent. and the big boys who got 75 per cent. of the shares, made the killing on the deal.
      That is why I describe the privatisation process as corrupt. It is a disgraceful corruption of the process of government in this country and for that reason alone it should be brought to a halt.
      There is a particularly damaging aspect of the Bill and a particular reason why Parliament should have at least some say in the method of the sale of shares and their valuation. We are selling natural resources. It could be argued that various people contributed to the building up of the value of Amersham International, but the sale that
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      is proposed in the Bill is that of natural resources—oil and gas—which belong to no one but the community as a whole.
      We are attempting to sell the control and disposition of natural resources of all the people of this country, and the only reason for the sale is that those who buy shares expect to make a personal profit. There is no other reason why they should buy them. Even Conservative Members will hardly claim that those who buy the shares under this system do so in the hope of making a loss or out of sheer philanthropy. The only possible motive here is that the people, groups or corporations who acquire these shares do so because of their intention to make a personal profit, which is to come out of a natural resource that belongs to the whole country.
      We are dealing here, as we were with Amersham and British Aerospace, with an area of high technology, an area where public investment over the years—in the case of gas, over decades—has involved research and development at a cost to public funds which cannot seriously be valued in cash. What we have is a coherent enterprise, built up by public money over a long period, the assets of which consist not just of buildings and equipment, but of the scientific knowledge and the engineering skill of the people involved. No true valuation can be put on that.
      The Opposition are fundamentally opposed to this kind of swindle of the public purse, but if, through the statutory process, it has been agreed by Parliament that the assets should be stripped and public property should be given away for private profit—which is what Government Members want—then, at the very least, the new clause is justified. Parliament should at least be able to determine certain ground rules to prevent the deplorable scandal that occurred in the Amersham case and of which, in their hearts, Government Members are ashamed. Fundamentally, the Conservative Party is ashamed of the Amersham swindle, which involved paying huge commissions to people who were either grossly incompetent or grossly corrupt in the advice that they gave to the Government.
      The very minimum that the Government should accept, therefore, is the proposition contained in the new clause, which is that Parliament should determine the ground rules if this sale is to take place in order to prevent a second swindle of the public purse.
      Mr. Michael Morris: I will not follow the hon. Member for Sheffield, Heeley (Mr. Hooley) any more than I suspect his Front Bench would wish to follow him, because the primary charge the hon. Member for Merthyr Tydfil (Mr. Rowlands) made was that the Government had been incompetent. Given the sort of speech we have had to listen to, does the hon. Member for Merthyr Tydfil not agree that the issues were all highly successful, since there is a threat over the market that a Labour Government would renationalise without compensation in some cases and with minimal compensation in others, while the SDP policy, if I understand it, is to provide a degree of market compensation? Against such a background, the launching of British Aerospace, Cable and Wireless and Amersham International, although oversubscribed, was a major success.
      I ask my hon. Friend the Minister of State to give his attention to the combination of underwriting costs and the setting of the price of the issue, and the role of the Bank

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      of England. I hope this sale is part of a rolling programme. I shall certainly be putting pressure on my right hon. and hon. Friends to speed up the process of denationalisation. If anything, it has been going too slowly and I criticise them for that. In that rolling programme I hope that the role of the Bank of England will be considered. There is evidence that, with the BP sale, in which the Bank of England was involved, the issue price was achieved at a more equitable cost, maximising the return to the public, even though much of it was conducted on a placing basis.
      I come next to timing. The hon. Member for Merthyr Tydfil is playing for time when he suggests that we should delay denationalisation. He hopes that eventually there will be a general election and that the privatisation will not, therefore, take place. The current value of the asset within the industry is not the only relevant factor. Also relevant is the price that the asset will realise in relation to the Government's prevailing overall economic strategy. I might like the old-age pension to be increased by another 1 per cent. In order to achieve that, I might be prepared to sell Britoil at a discount, without maximising the resources, because that might be a better objective.
      I ask my hon. Friend the Minister of State to disregard the Opposition's suggestions on this issue. They are similar to their views on direct labour—and we have all heard about direct labour and its efficiency. Instead he should remember that the overall economic context is important in deciding the timing.
      My hon. Friend is right to listen to Parliament, to listen to the debate here and to listen to the Opposition. They could choose to devote half of a Supply Day to the issue, although they did not do so before. Instead the matter was raised in an application for an Adjournment debate by the right hon. Member for Leeds, South (Mr. Rees). The Government should certainly listen but, once the decisions are made and detailed negotiations are under way, it would not be right for individual political interference to take place.
      Mr. Douglas: I know and respect the hon. Member for Northampton, South (Mr. Michael Morris) as a member of the Public Accounts Committee. It would be wrong of me to comment on reports that will be published shortly in relation to British Aerospace, but I have to say to him that some of his remarks will not be borne out by the substance of the report which the all-party Public Accounts Committee will publish in relation to that particular venture, or by the views that the Committee will express on Government sales of public assets.
      I say this by way of a challenge, because this is an issue that ought to concern both sides of the House, whether we favour the sale of public assets or not. The Government are entitled to use their majority to carry through their policy, but they are not entitled to confuse the electorate by embarking on mixed policies.
      My hon. Friend the Member for Merthyr Tydfil (Mr. Rowlands) indicated that great difficulties lie ahead if the Government say they want to maximise the return to the public purse but, at the same time, they want to ensure the widest possible ownership of the equity of the assets. Even greater difficulties are encountered when one is dealing with, for example, the British National Oil Corporation. The Minister of State quoted Mr. Lovegrove's book. I ask the Minister of State, even at this juncture, to name one
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      authority that says that the British National Oil Corporation will be more valuable if it is split up and sold as a disintegrated organisation. To put this asset on the Stock Exchange in a way that denies the logic of the industry devalues the asset at a stroke, and the Minister of State knows it.
      In addition, the Minister of State knows that he is acting against the concerted advice of the board of the British National Oil Corporation. The hon. Member for Derbyshire, South-East (Mr. Rost) referred to our giving political advice. How are we going to give that political advice—behind your Chair, Mr. Deputy Speaker? In the Minister's office? Or on the Floor of the House? This is the place in which to give political advice, and if one is to do so one must have information. The Minister of State has indicated to us that all sorts of information will be available. There will be an independent survey but there is no indication that that survey, by eminent petroleum economists, will be made available to the Members of this House. How are we going to make a judgment? Will he give us an indication of that? That would, I imagine, be part of the prospectus. The prospectus has to be made public. Why should we not get an indication of the value of the public assets?
      The Minister of State is knowledgeable about the oil industry. The Government and the Secretary of State are addicted to selling the assets by the end of the year. There is no way that that can be done, because of the state of the oil market. The Minister of State is hedging and trying to put a gloss on the matter.
      The new clause is eminently fair and in the public interest. All hon. Members—.
      It being Seven o'clock, MR. DEPUTY SPEAKER proceeded, pursuant to the Order [8 March] and the Resolution this day, to put forthwith the Question already proposed from the Chair.
      Question put, That the clause be read a Second time:—
      The House divided: Ayes 214, Noes 275.

      Division No. 114]

      [7 pm

      AYES

      Abse, Leo

      Coleman, Donald

      Allaun, Frank

      Concannon, Rt Hon J. D.

      Alton, David

      Cook, Robin F.

      Anderson, Donald

      Cowans, Harry

      Archer, Rt Hon Peter

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

      Ashley, Rt Hon Jack

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

      Ashton, Joe

      Crowther, Stan

      Atkinson, N. (H 'gey,)

      Cryer, Bob

      Bagier, Gordon A.T.

      Cunliffe, Lawrence

      Barnett, Rt Hon Joel (H'wd)

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

      Beith, A, J.

      Dalyell, Tam

      Benn, Rt Hon Tony

      Davidson, Arthur

      Bennett, Andrew (St'kp'tN)

      Davies, Rt Hon Denzil (L'lli)

      Bidwell, Sydney

      Davies, Ifor (Gower)

      Booth, Rt Hon Albert

      Davis, Clinton (Hackney C)

      Boothroyd, Miss Betty

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

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

      Deakins, Eric

      Bradley, Tom

      Dean, Joseph (Leeds West)

      Bray, Dr Jeremy

      Dixon, Donald

      Brown, Hugh D. (Provan)

      Dobson, Frank

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

      Dormand, Jack

      Brown, Ron (E'burgh, Leith)

      Douglas, Dick

      Callaghan, Rt Hon J.

      Douglas-Mann, Bruce

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

      Dubs, Alfred

      Campbell, Ian

      Duffy, A. E. P.

      Canavan, Dennis

      Dunn, James A.

      Cant, R. B.

      Dunwoody, Hon Mrs G.

      Carmichael, Neil

      Eadie, Alex

      Cartwright, John

      Eastham, Ken

      Clark, Dr David (S Shields)

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

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

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

      355

      Ellis, Tom (Wrexham)

      Morris, Rt Hon C. (O'shaw)

      English, Michael

      Morris, Rt Hon J. (Aberavon)

      Evans, Ioan (Aberdare)

      Morton, George

      Evans, John (Newton)

      Moyle, Rt Hon Roland

      Faulds, Andrew

      Newens, Stanley

      Field, Frank

      O'Halloran, Michael

      Fletcher, Ted (Darlington)

      O'Neill, Martin

      Ford, Ben

      Owen, Rt Hon Dr David

      Forrester, John

      Park, George

      Foster, Derek

      Parker, John

      Foulkes, George

      Parry, Robert

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

      Pendry, Tom

      Freud, Clement

      Penhaligon, David

      Garrett, John (Norwich S)

      Powell, Raymond (Ogmore)

      Garrett, W. E. (Wallsend)

      Prescott, John

      George, Bruce

      Race, Reg

      Golding, John

      Radice, Giles

      Graham, Ted

      Rees, Rt Hon M (Leeds S)

      Grant, George (Morpeth)

      Richardson, Jo

      Grant, John (Islington C)

      Roberts, Albert(Normanton,)

      Grimond, Rt Hon J.

      Roberts, Gwilym (Cannock)

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

      Robertson, George

      Harrison, Rt Hon Walter

      Robinson, G. (Coventry NW)

      Hart, Rt Hon Dame Judith

      Robinson, P. (Belfast E)

      Hattersley, Rt Hon Roy

      Rooker, J. W.

      Haynes, Frank

      Roper, John

      Heffer, Eric S.

      Rowlands, Ted

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

      Ryman, John

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

      Sandelson, Neville

      Home Robertson, John

      Sever, John

      Homewood, William

      Sheerman, Barry

      Hooley, Frank

      Sheldon, Rt Hon R.

      Horam, John

      Shore, Rt Hon Peter

      Howell, Rt Hon D.

      Short, Mrs Renée

      Howells, Geraint

      Silkin, Rt Hon J. (Deptford)

      Hoyle, Douglas

      Silkin, Rt Hon S. C. (Dulwich)

      Huckfield, Les

      Silverman, Julius

      Hughes, Mark (Durham)

      Skinner, Dennis

      Hughes, Robert (Aberdeen N)

      Smith, Rt Hon J. (N Lanark)

      Janner, Hon Greville

      Soley, Clive

      Jay, Rt Hon Douglas

      Spearing, Nigel

      Johnson, Walter (Derby S)

      Spriggs, Leslie

      Jones, Rt Hon Alec (Rh'dda)

      Stallard, A. W.

      Jones, Barry (East Flint)

      Steel, Rt Hon David

      Jenkins, Rt. Hon. Roy

      Stewart, Rt Hon D. (W Isles)

      Kerr, Russell

      Stoddart, David

      Kilfedder, James A.

      Stott, Roger

      Kilroy-Silk, Robert

      Strang, Gavin

      Lambie, David

      Straw, Jack

      Lamborn, Harry

      Summerskill, Hon Dr Shirley

      Lamond, James

      Taylor, Mrs Ann (Bolton W)

      Leadbitter, Ted

      Thomas, Dr R. (Carmarthen)

      Lewis, Arthur (N'ham NW)

      Thorne, Stan (Preston South)

      Lewis, Ron (Carlisle)

      Tilley, John

      Lofthouse, Geoffrey

      Tinn, James

      Lyon, Alexander (York)

      Torney, Tom

      McCartney, Hugh

      Varley, Rt Hon Eric G.

      McElhone, Frank

      Wainwright, E. (Dearne V)

      McKay, Allen (Penistone)

      Wainwright, R. (Colne V)

      MacKenzie, Rt Hon Gregor

      Walker, Rt Hon H. (D'caster)

      McNally, Thomas

      Welsh, Michael

      McNamara, Kevin

      White, Frank R.

      McTaggart, Robert

      White, J. (G'gow Pollok)

      Marks, Kenneth

      Whitehead, Phillip

      Marshall, D (G 'gowS'ton)

      Whitlock, William

      Marshall, Dr Edmund (Goole)

      Wigley, Dafydd

      Marshall, Jim (Leicester S)

      Willey, Rt Hon Frederick

      Martin, M (G'gow S'burn)

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

      Mason, Rt Hon Roy

      Wilson, Gordon (Dundee E)

      Maxton, John

      Wilson, William (C'try SE)

      Maynard, Miss Joan

      Winnick, David

      Meacher, Michael

      Woodall, Alec

      Mellish, Rt Hon Robert

      Woolmer, Kenneth

      Millan, Rt Hon Bruce

      Wright, Sheila

      Miller, Dr M, S. (E Kilbride)

      Mitchell, Austin (Grimsby)

      Tellers for the Ayes:

      Mitchell, R, C. (Soton Itchen)

      Mr. Ron Leighton and Mr. James Hamilton.

      Morris, Rt Hon A. (W'shawe)

      356

      NOES

      Adley, Robert

      Finsberg, Geoffrey

      Aitken, Jonathan

      Fisher, Sir Nigel

      Alexander, Richard

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

      Alison, RtHon Michael

      Fletcher-Cooke, SirCharles

      Amery, Rt Hon Julian

      Fookes, Miss Janet

      Ancram, Michael

      Forman, Nigel

      Arnold, Tom

      Fowler, Rt Hon Norman

      Aspinwall, Jack

      Fox, Marcus

      Atkins, Rt Hon H.(S'thorne)

      Fraser, Peter (South Angus)

      Atkins, Robert (Preston N)

      Fry, Peter

      Baker, Nicholas (N Dorset)

      Gardiner, George (Reigate)

      Banks, Robert

      Gardner, Edward (S Fylde)

      Beaumont-Dark, Anthony

      Garel-Jones, Tristan

      Bendall, Vivian

      Gilmour, Rt Hon Sir Ian

      Benyon, W. (Buckingham)

      Glyn, Dr Alan

      Best, Keith

      Goodhart, Sir Philip

      Bevan, David Gilroy

      Goodhew, Sir Victor

      Biffen, Rt Hon John

      Goodlad, Alastair

      Biggs-Davison, Sir John

      Gorst, John

      Blackburn, John

      Gow, Ian

      Blaker, Peter

      Grant, Anthony (Harrow C)

      Body, Richard

      Gray, Hamish

      Bonsor, Sir Nicholas

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

      Boscawen, Hon Robert

      Griffiths, Peter Portsm'th N)

      Bottomley, Peter (W'wich W)

      Grist, Ian

      Bowden, Andrew

      Grylls, Michael

      Boyson, Dr Rhodes

      Gummer, John Selwyn

      Braine, Sir Bernard

      Hamilton, Hon A.

      Bright, Graham

      Hamilton, Michael (Salisbury)

      Brittan, Rt. Hon. Leon

      Hampson, Dr Keith

      Brooke, Hon Peter

      Hannam, John

      Brotherton, Michael

      Haselhurst, Alan

      Brown, Michael (Brigg&Sc'n)

      Havers, Rt Hon Sir Michael

      Browne, John (Winchester)

      Hawkins, Paul

      Bruce-Gardyne, John

      Hawksley, Warren

      Bryan, Sir Paul

      Hayhoe, Barney

      Buck, Antony

      Heddle, John

      Budgen, Nick

      Henderson, Barry

      Bulmer, Esmond

      Heseltine, Rt Hon Michael

      Burden, Sir Frederick

      Hicks, Robert

      Butcher, John

      Higgins, Rt Hon Terence L.

      Butler, Hon Adam

      Hogg, Hon Douglas (Gr'th'm)

      Cadbury, Jocelyn

      Holland, Philip (Carlton)

      Carlisle, John (Luton West)

      Hooson, Tom

      Carlisle, Kenneth (Lincoln)

      Hordern, Peter

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

      Howe, Rt Hon Sir Geoffrey

      Chalker, Mrs. Lynda

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

      Channon, Rt. Hon. Paul

      Howell, Ralph (N Norfolk)

      Chapman, Sydney

      Hunt, David (Wirral)

      Churchill, W. S.

      Hunt, John (Ravensbourne)

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

      Hurd, Rt Hon Douglas

      Clark, Sir W. (Croydon S)

      Irving, Charles (Cheltenham)

      Clarke, Kenneth (Rushcliffe)

      Jessel, Toby

      Cockeram, Eric

      Johnson Smith, Geoffrey

      Colvin, Michael

      Jopling, Rt Hon Michael

      Cope, John

      Joseph, Rt Hon Sir Keith

      Corrie, John

      Kaberry, Sir Donald

      Costain, Sir Albert

      Kershaw, Sir Anthony

      Cranborne, Viscount

      Kitson, Sir Timothy

      Critchley, Julian

      Lamont, Norman

      Dean, Paul (North Somerset)

      Lang, Ian

      Dickens, Geoffrey

      Latham, Michael

      Dorrell, Stephen

      Lawrence, Ivan

      Douglas-Hamilton, Lord J.

      Lee, John

      Dover, Denshore

      Le Marchant, Spencer

      du Cann, Rt Hon Edward

      Lennox-Boyd, Hon Mark

      Dunn, Robert (Dartford)

      Lester, Jim (Beeston)

      Dykes, Hugh

      Lewis, Kenneth (Rutland)

      Eden, Rt Hon Sir John

      Lloyd, Ian (Havant & W'loo)

      Edwards, Rt Hon N. (P'broke)

      Lloyd, Peter (Fareham)

      Eggar, Tim

      Loveridge, John

      Elliott, SirWilliam

      Lyell, Nicholas

      Emery, Sir Peter

      Macfarlane, Neil

      Eyre, Reginald

      MacGregor, John

      Fairbairn, Nicholas

      MacKay, John (Argyll)

      Fairgrieve, Sir Russell

      Macmillan, Rt Hon M.

      Faith, MrsSheila

      McNair-Wilson, M. (N'bury)

      Farr, John

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

      Fell, Sir Anthony

      McQuarrie, Albert

      357

      Marland, Paul

      Shelton, William (Streatham)

      Marshall, Michael (Arundel)

      Shepherd, Colin (Hereford)

      Marten, Rt Hon Neil

      Shepherd, Richard

      Mates, Michael

      Silvester, Fred

      Maude, Rt Hon Sir Angus

      Sims, Roger

      Mawhinney, Dr Brian

      Skeet, T. H. H.

      Maxwell-Hyslop, Robin

      Speed, Keith

      Mayhew, Patrick

      Spence, John

      Mellor, David

      Spicer, Jim (West Dorset)

      Meyer, Sir Anthony

      Spicer, Michael (S Worcs)

      Miller, Hal (B'grove)

      Sproat, Iain

      Mills, Iain (Meriden)

      Squire, Robin

      Mills, Peter (West Devon)

      Stainton, Keith

      Miscampbell, Norman

      Stanbrook, Ivor

      Moate, Roger

      Stanley, John

      Monro, Sir Hector

      Steen, Anthony

      Montgomery, Fergus

      Stevens, Martin

      Moore, John

      Stewart, A. (E Renfrewshire)

      Morris, M. (N'hampton S)

      Stewart, Ian (Hitchin)

      Morrison, Hon C. (Devizes)

      Stokes, John

      Mudd, David

      Stradling Thomas, J.

      Murphy, Christopher

      Tapsell, Peter

      Myles, David

      Taylor, Teddy (S'end E)

      Neale, Gerrard

      Tebbit, Rt Hon Norman

      Neubert, Michael

      Temple-Morris, Peter

      Newton, Tony

      Thatcher, Rt Hon Mrs M.

      Normanton, Tom

      Thomas, Rt Hon Peter

      Nott, Rt Hon John

      Thompson, Donald

      Onslow, Cranley

      Thornton, Malcolm

      Oppenheim, Rt Hon Mrs S.

      Townend, John (Bridlington)

      Osborn, John

      Trippier, David

      Page, John (Harrow, West)

      Trotter, Neville

      Page, Richard (SW Herts)

      van Straubenzee, Sir W.

      Parris, Matthew

      Vaughan, Dr Gerard

      Patten, Christopher (Bath)

      Viggers, Peter

      Patten, John (Oxford)

      Waddington, David

      Pattie, Geoffrey

      Wakeham, John

      Pawsey, James

      Waldegrave, HonWilliam

      Percival, Sir Ian

      Walker, B. (Perth)

      Peyton, Rt Hon John

      Walker-Smith, Rt Hon Sir D.

      Pollock, Alexander

      Wall, Sir Patrick

      Porter, Barry

      Waller, Gary

      Prentice, Rt Hon Reg

      Walters, Dennis

      Proctor, K. Harvey

      Ward, John

      Pym, Rt Hon Francis

      Warren, Kenneth

      Rathbone, Tim

      Wells, Bowen

      Rees-Davies, W. R.

      Wells, John (Maidstone)

      Renton, Tim

      Wheeler, John

      Rhodes James, Robert

      Whitelaw, Rt Hon William

      Rhys Williams, SirBrandon

      Whitney, Raymond

      Ridley, HonNicholas

      Wickenden, Keith

      Rippon, Rt HonGeoffrey

      Wiggin, Jerry

      Roberts, M. (Cardiff NW)

      Wilkinson, John

      Roberts, Wyn (Conway)

      Winterton, Nicholas

      Rossi, Hugh

      Wolfson, Mark

      Rost, Peter

      Younger, Rt Hon George

      Royle, Sir Anthony

      Sainsbury, Hon Timothy

      Tellers for the Noes:

      St. John-Stevas, Rt Hon N.

      Mr. Anthony Berry and Mr. Carol Mather.

      Shaw, Giles (Pudsey)

      Shaw, Michael (Scarborough)

      Question accordingly negatived

    Clause 12

      SUPPLY OF GAS BY OTHER PERSONS
      Mr. Dalyell: I beg to move amendment No. 6, in page 13, line 12, leave out 'Subject to section 29A below'.
      Mr. Deputy Speaker (Mr. Bryant Godman Irvine): With this it will be convenient to take amendment No. 7, in page 14, line 14, leave out from beginning to end of line 4 on page 15, and Government amendment No. 8.
      Mr. Dalyell: Our amendment would simplify the clause by creating a two-tier rather than a three-tier
      358
      structure. It would create a backstop to ensure that all supplies are subject to the Secretary of State's consent. It is an insurance policy if things go wrong. It in no way impinges on the other provisions in the Bill. It simply gives the Secretary of State powers to take control, if necessary.
      In a perfect market there may not be any need for intervention, but the gas market is not perfect. There is uncertainty. In Committee on 9 March the Secretary of State concurred with my hon. Friend the Member for Merthyr Tydfil (Mr. Rowlands), who said that anyone who forecast more than three months ahead was a fool. That applies not merely to prices, but to how much oil and gas are available. We do not know how much gas there is in the North Sea. We know that there would be severe problems if gas were used up too quickly and expensive alternatives had to be found if it looked like running out. Can we imagine the outcry if we had to switch to other fuels, involving massive investment in distribution?
      7.15 pm
      If the Government are serious about their assurances on the depletion policy, why can they not be enshrined in the legislation? My colleagues will have noticed that the Secretary of State waxed eloquent and righteous on the assurances. What is the objection to putting the assurances in the legislation? It is very puzzling. In all those hours in Committee, when so many amendments moved by my right hon. and hon. Friends were rejected, we were never let into the secret of why they could not be accepted. Instead, assurances were given.
      If the Government are willing to give assurances, why can they not be put in black and white in legislative form so that the courts can do the interpretation? However eloquent the speeches of my right hon. Friend the Member for Leeds, South (Mr. Rees), my hon. Friend the Member for Merthyr Tydfil, my hon. Friend the Member for Dunfermline (Mr. Douglas) and others, no court of law will read meticulously those speeches and the Government's replies. That is why, not only on this issue, but on compatibility and negotiations with the British Gas Corporation before anything happens, something ought to be written into the Bill.
      The Government cannot make the objection that the amendment would somehow prevent market forces from working. It would give the Secretary of State power, which he does not have under the Bill as drafted, to operate a depletion policy. The Secretary of State says that this is unnecessary because he has powers under the Petroleum and Submarine Pipe-Lines Act 1975. The Opposition do not agree. The Secretary of State can restrict flaring, but Ministers cannot tell the House that by restricting flaring they are implementing a depletion policy. Flaring is about the prevention of waste and the conservation of valuable resources. It has nothing to do with producing an orderly depletion policy.
      The Secretary of State said:
      "It is entirely right and proper that the Government of the day, rather than some nationalised industry, should decide whether a depletion policy is in the national interest, and, if so, what that policy should be."—[Official Report, Standing Committee E, 9 March 1982; c. 799.]
      That is precisely what our amendment proposes. Even if the Government have difficulty in accepting other amendments, surely they can accept this one, because it

      359
      is precisely on the point that they say is important and acceptable. It would help them to do what in their own terms they say they want to do.
      The 1975 Act does not give the Secretary of State the powers that he needs. It stops at the beach, and understandably so. That is why the 1975 Act was so designed. It was not designed to cover this situation. It is always unsatisfactory to go back to an Act that was designed to cover one situation and say that it should cover a new situation which was not anticipated when the measure was going through Parliament.
      The 1975 Act does not cover the inshore use of gas. It is at best an imperfect instrument. It can only control offshore development and, to an extremely limited extent, production. There is a long time lag between the decisions on development and the gas coming on stream. That time barrier must be taken into account. The 1975 Act is inadequate for what the Government say they want to do.
      The amendment places control in the Government's hands—not in the hands of the British Gas Corporation, which is where the Secretary of State himself says that it should lie. The Secretary of State himself makes the case for our amendment. Without more ado, I invite the Minister to rise and accept it as graciously as possible. The Government can, and indeed ought, to accept it. Having moved the amendment succinctly, the Opposition reserve the right to come back if the Minister's reply is less than favourable.
      Mr. Robert C. Brown: I support amendments Nos. 6 and 7. They are crucial to the Bill and to the future of both the British Gas Corporation and what passes as the Government's energy policy. We have stated forcefully, in the Chamber and in Committee, our opposition to the Bill. Given the Government's inbuilt, almost automaton-like majority, however, the amendments are designed to minimise the damage that this very bad Bill will do to the nation and national life.
      British is fortunate to have several indigenous sources of energy—coal, gas and oil. We are assured that coal will not run out for several generations, but that should not lead us to assume that we can squander our other indigenous sources of supply. For coal to be a viable form of energy, mines must be developed. Such development takes at least 12 years, and who knows how many Dukes of Rutland there are and whether the National Coal Board's experience in the Vale of Belvoir will be repeated. In that case, 12 years for development fades into insignificance—it could be 15 or 20 years before the deep-mine coal that we shall need in future will start to appear.
      When mines are developed, we should ensure also that the maximum possible quantity of coal is extracted. The cost of sinking new deep mines, such as at Selby, is enormous. That process is anything but rapid. I accept that there are more rapid methods of obtaining coal, but the express method of pulling coal out of the bowels of the earth destroys the very source that we are mining. Such considerations become pertinent when one takes account of the Bill's provisions. That is one of my reasons for strongly supporting the amendment.
      It is said that there are still about 17 trillion cu. ft. of natural gas under the North Sea. More may be discovered. Only a fool would say that there is no possibility of further discoveries of natural gas. No doubt we all hope that the 17 trillion cu. ft. are an underestimate and that we shall
      360
      discover much more, but we cannot rely on that. Even with the so-called magic wand of the Bill, there is absolutely no guarantee that we shall be able to pull out the 17 trillion cu. ft. that are supposed to be under the North Sea.
      At the current rate of depletion, those gas reserves will last for a maximum of 25 years. In the lifetime of a nation, 25 years is nothing. Indeed, with increased longevity that is not even one lifetime today. The figures are not somehow whistled out of the air. They are part of the necessary planning that the British Gas Corporation does and submits annually to the Secretary of State. More important anxieties arise. If gas reserves will last only for another generation, we should be seriously concerned about its uses.
      It is by now almost conventional wisdom that, because of the scarcity of other fuels, gas should be used efficiently. That means that gas should be used in the premium markets. That is, first, in the areas where gas is the only sensible fue—for example, where there is a need for tight temperature control and its use is not easily substituted. Secondly, gas should be used for the domestic market. It is accepted by all—except, it seems, the Secretary of State and the Government—that for bulk steam raising coal is the obvious and more appropriate fuel. Yet the Government are ambivalent about this aspect. On the one hand, they have made considerable sums of money available in grants to convert industrial boilers to coal, and I applaud them for that. On the other hand, however, they are promoting a Bill which effectively allows the unrestricted use of gas.
      Once the Bill is passed, it will not matter what people decide to use gas for—steam raising or any other industrial process. They will be able to use it without let or hindrance. That is a criminal betrayal of the nation and an utter waste of our natural assets. If gas is to be allowed to be sold to any industry irrespective of use, not only will severe damage be done to the coal industry, which is trying to build up its industrial market, but gas will run out considerably faster and the 25 years may become a substantial overestimate.
      As a result of the Bill, the coal that we need and will continue to need will not exist, because the unrestricted use of gas will force the British coal industry to run down. What will then happen? There is only one answer. We shall be forced to scramble for coal, thus doing irreparable harm to coal stocks. Worse than that, unlimited depletion will mean that, as the coal industry will be damaged, the substitute natural gas programme will simply not be ready in time. At the moment the plan is to use SNG for natural gas in the mid-1990s. That programme depends upon a viable coal industry.
      The unlimited use of gas for steam raising will mean that the coal will simply not be there, and nor will the gas. That will have devastating and dire consequences both for industry and for domestic consumers—and all for a short-term advantage for the Government. As I said when we debated the gas levy yesterday, the Government are more interested in a major contribution to the PSBR to facilitate the giving of a tax handout in the Budget leading up to the general election than in the future welfare of the country.
      7.30 pm
      I see that the Untler-Secretary of State is already getting excited. He will no doubt accuse me of gross scaremongering—a view with which I might have some sympathy, although I would be the accused. Nevertheless

      361
      if the new section 29A is allowed to stand, the situation that I have described could arise. A more likely scenario, however, is that the oil companies will be able to apply the screw to gas prices, armed with the powers of unlimited sales over 2 million therms. As the Bill stands, the figure is 1 million, but I am grateful to see from Government amendment No. 8 that the Minister is prepared to honour the commitment that he made in Committee when I sought to change the figure from 1 million to 3 million. As I said in Committee, I am grateful for half a loaf rather than none, and I compliment the Under-Secretary of State on having seen the folly of the authors of the Bill in setting the figure at 1 million therms in the first place.
      If section 29A stands, the nation will be in the crazy situation either of running out of gas far more quickly because there is no control on depletion or fuel substitution, with all the damage that that would cause, or of allowing price to be the determinant of energy policy. Neither is acceptable, and letting price determine how our finite resources should be used is lunacy in anyone's language.
      It is also unacceptable that, at this time, gas prices should be set to treble, which is a cautious estimate of the effect of the Bill. Given the way in which the Government have crucified British gas consumers over the past few years, it is diabolical to introduce legislation which will almost certainly treble the price of gas in the not-too-distant future.
      There are many reasons why the proposed section 29A should not be accepted. As I have said, it is an incentive to energy guzzling. Even if the House rejects that view, it should take account of the other defects. A glaring defect is that the only consideration in section 29A is whether users can guzzle energy fast enough. There is no consideration of whether the supply of private gas will endanger safety or security of supply. In Committee we tried to write in safety provisions, but because there were other safety provisions of equal or greater importance we were more or less impelled to leave consideration of this issue.
      The new section 29A destroys whatever pretence the Government have of an energy policy. I hope that the House will join us in throwing it out.
      Mr. RostMember for Newcastle upon Tyne, West (Mr. Brown) seems to want to have it both ways. On the one hand, he suggests that if the new section is allowed to remain in the Bill it will allow many more consumers to have access to gas and the supplies will be used up much more quickly. On the other hand, he argues that the price of gas will treble. The hon. Gentleman seems not to be listening. Perhaps I could have his attention for a moment. He argues that many more customers will want the new gas which will become available when there is more competition, but at the same time he argues that the price will treble.
      Where will all the new customers come from if gas is to be as expensive as he suggests? He cannot have it both ways. He suggests that the legislation will lead to massive energy guzzling, that the demand for gas will expand and that the supplies will be burnt up in all kinds of wasteful non-premium uses, although he believes that the price will soar to about three times the present level. He is talking
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      absolute nonsense. If the price rises as much as that, how does he imagine that all the new customers will be able to afford to use it? What other fuels will they be persuaded to reject in favour of this much more expensive gas so that they can waste it? If the price is to rise so much, all those consumers will continue to use their existing fuel rather than switch to a far more expensive fuel. The hon. Gentleman's argument does not bear examination.
      Mr. Robert C. Brown: The hon. Gentleman is clearly not paying much attention to the affirmed basis of Toryism—the law of supply and demand. He well knows that the Bill as drafted—and there is no doubt about the Government's determination to get it on to the statute book in this form—will allow oil companies to sell direct to Continental customers gas which by rights is British, and he knows that that will happen.
      Mr. Rost: The hon. Gentleman has raised a completely new issue to try to wriggle out of the collapse of his earlier argument. He now says that the oil companies will export the gas. As he will know, because he was present when the Standing Committee debated this matter at considerable length, there is no immediate intention to allow any export of gas. Some of us would argue that it should be allowed, but the Government have made it clear that until we are more than reassured that substantial new resources of gas have been discovered and are ready to be exploited, as I believe will result from the legislation, until we are assured that there is no need for a severe depletion policy because we know that there is sufficient gas for many years at present rates of consumption, there is no question of export.
      I return to the justification for rejecting the amendment. It simply makes no sense. The Opposition argue on the one hand that British Gas will no longer be able to obtain all the gas that it needs to meet its domestic and industrial contracts, and that because of this legislation new gas supplies will be channelled direct to new customers. They cannot at the same time argue that the effect of the legislation will be to raise the price of gas so high as to price it out of the market. Surely it must be one or the other.
      The proposed legislation will introduce more competition and provide more incentives for gas exploration and development. Much more gas will become available. British Gas will have alternative sources of supply which it does not have at present. That will stabilise rather than increase the price. New sources will be available for additional consumers, who will be offered a choice of supply. Consumers who have not been offered supplies by British Gas, because it is said that there is not enough gas available, will in some instances have the opportunity of contracting for supplies.
      To argue that all this gas will be burnt inefficiently is inconsistent with the laws of economics. Gas will continue to be a premium fuel because it has a premium value as an energy source. Therefore, it will continue to command a premium price. No consumer who wants to remain in business, whether industrial or commercial, will be able to use gas wastefully.
      In supporting the proposed legislation, I strongly argued that British Gas had abused its monopoly powers. It has used the excuse that it must continue to reserve supplies for the so-called premium market. That excuse was used to prevent the most efficient use of gas. It is

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      obvious that there are more efficient ways of using gas than by burning it in homes to provide central heating, and in the other ways in which it is burnt in boilers. That is efficient, but it is more efficient for gas to be burnt in combined cycle burners, where it produces both electricity and heat. However, British Gas has prevented that from happening because it would have been in competition with its own marketing objectives of selling gas to domestic consumers rather than allowing them the opportunity of having district heating that is a by-product of electricity generation.
      The proposed legislation will encourage the more efficient use of gas and provide an alternative market. British Gas has prevented the efficient development of a market for industries and commercial establishments that want to burn gas to produce electricity and heat combined, as happens in other countries. That is without question the most efficient way in which gas can be consumed as a fuel. Therefore, it should not be discouraged. More effective development will follow from the competition which will result if the legislation is enacted.
      Mr. Robert C. Brown: We must not get obsessed with the idea of using gas in combined heat and power schemes. In my native city of Newcastle the Government are considering a combined heat and power scheme. In a new development a combined heat and power scheme is feasible. However, in an old established development, such as the city centre of Newcastle, the capital expenditure and disruption necessary to put in the services from the power station would be enormous. We are a long way from the first major combined heat and power scheme.
      Mr. Rost: We have heard that argument before. It is used by those who wish to prevent the public from having an opportunity of much cheaper heat than has hitherto been available. The disruption caused by laying hot water pipes into a city is no more than the disruption caused when British Gas lays pipes to supply gas to houses. The hon. Gentleman has only to look to Europe to see how the consumer is benefiting from cheaper heating in homes because it is a by-product from the production of electricity. There is no question but that it is feasible and cost effective. This is one important premium use for gas which other countries have found to be the most valuable and cheapest form of using energy and providing heat for the consumer.
      7.45 pm
      British Gas was given a monopoly by Parliament and was, therefore, perfectly entitled to develop and exploit it. However, that has not been in the consumers' best interests because it has prevented the alternative development of even more efficient forms of heating, as have been developed on the Continent, through the combined production of heat and power. The Bill will allow the economic advantages of that form of energy use to become more self-evident. For that reason alone the Bill, when enacted, will be to the consumers' longer term advantage.
      Mr. Harry Cowans: I listened to the argument of the hon. Member for Derbyshire, South-East (Mr. Rost) with great care. In my view, the entire Bill is nonsense. It does nothing for the gas and coal industries. Indeed, it seeks to destroy them both. The amendment's aim is to save the Government
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      from themselves. Its purpose is to take the sting out of the Bill. The Opposition seek to maintain the gas and oil industries and not destroy them; the Government seemingly wish to destroy them both.
      The hon. Member for Derbyshire, South-East spoke of other sources of supply but he neglected to identify them. I hope that he will enlighten the House when he has the opportunity to do so. Even if he gives a satisfactory answer, that will do nothing to enhance the clause.
      When the Government took office they were pledged to energy conservation. The Bill will do exactly the reverse as it will allow all and sundry to squander our natural resources. We have throughout the world a premium of coal and gas and it will be nonsensical to allow it to be squandered.
      The amendment's aim is to save the Government. If they had the common sense to accept it, common sense would appear in the Bill and common sense would be made out of nonsense. Even at this late stage, it is not unreasonable to ask the Government closely to consider the amendment and to accept it. Many who work in the coal and gas industries would welcome the Government's acceptance of the realities. It does not make sense to waste a natural resource. Surely it makes sense to garner and protect it. The amendment will enable us to do so, but the Bill as it stands will do the reverse. It allows all and sundry to take away that natural resource and squander it ad lib on whatever they want. The amendment seeks to alter that. If the Government had any sense they would accept it.
      This Government want to squander the few natural resources that we have in our favour by giving them to private enterprise. That must be nonsense. It seems that at any time in the history of the country when coal and gas were under a central body responsible to the people to look after that resource, it made sure that it was not squandered ad lib. I have heard it said that if the amendment is not carried, and if the Bill goes through, we may have to import gas because of the squandering of this resource by private enterprise.
      I speak in the hope of persuading the Government to see common sense but alas, in the absence of their leaping to their feet to say they accept the amendment, it seems that the people will be sold—
      Mr. Robert C. Brown: My hon. Friend has had the hairy experience of serving on two Standing Committees at the same time over the past several weeks or months. With that experience behind him, has he any reason to suppose that he will have any more common sense from the Government now than he received in those Committees?
      Mr. Cowans: I am grateful to my hon. Friend. He and I come from the same city and we have many things in common. I have to reply to that valuable intervention by saying that in the course of serving on a number of committees—he and I have walked on the Committee corridor at some late hours—our tragic experience appears to be that the Government are infected by dogma. Once their dogma is applied, any logical argument and common sense flies out of the window. The Government can hear common-sense, logical arguments but because they are so infected with dogma they cannot accept the realities of life. They came in by a democratic election—I fully accept that—to look after the interests of the country. Yet, very quickly, they are selling the country down the river.

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      If only, even at this late stage, the Government would have the sense to produce a rational energy policy whereby we sensibly husbanded our good resources and looked after them in the interests of the people, that would make a great deal of sense. The Bill as it is seems to be part of the dogma that because there is a nationalised concern—that takes care of gas and coal—we must get rid of it. In the interests of doing that, in the dogma that they have adopted across the board, it appears that the Government are prepared to get rid of this at any price.
      The price that we shall have to pay—I hope that everybody outside the House is listening carefully—is that those resources that we have by inheritance—a natural field of gas close to our shores that should be used sparingly right across for the benefit of all, and the coal that is under the country that should be used for the benefit of the whole country—will be squandered on the altar of "profit only" and not for the best interests of the country. It seems that one would have to be a genius to be surrounded by gas and walking on coal and yet create a shortage of both so that only a few people can make a few shekels out of them. That is a very good reason why the amendment should be accepted by the Government.
      The Under-Secretary of State for Energy (Mr. David Mellor): I congratulate the hon. Member for West Lothian (Mr. Dalyell) on what is, I think, the first time that he has formally moved an amendment in these proceedings, although he was a very active member of the Committee. I wish that it were possible for me to go further towards his position than I fear I shall be able to do.
      I would be wrong not to pay tribute at the beginning to the speech of my hon. Friend the Member for Derbyshire, South-East (Mr. Rost), who painted a wholly accurate picture of present-day gas. Such reality was sadly lacking in much of what we heard from the hon. Members for Newcastle upon Tyne, Central (Mr. Cowans) and for Newcastle upon Tyne, West (Mr. Brown). We do not have gas coming ashore more than the nation requires. All of it is fully contracted and there are many people who would like to use gas but are not able to obtain it.
      I wish that the hon. Member for Newcastle upon Tyne, Central had been a member of the Committee that considered the Bill. I could perhaps have disabused him of one thing before now on the question of imports. He must know that more than 20 per cent. of our gas comes from Norway, and has done for most of the time that we have had North Sea gas. It is unreal to suggest that our prime concern must be to examine what gas we have and simply consider whether it is being properly used. We have to consider the way in which we are able to give some impetus for exploration for those gas resources in the North Sea which we hope will be found and brought ashore. That needs to be done in the best interests of our nation.
      Before I turn to the more serious points raised by the hon. Member for West Lothian, I must say a word or two about the accusation of "guzzling". It does not sound right in their mouths for the Opposition to be talking about "guzzling", when they supported a policy, deliberately, and for the most squalid of party political reasons, of
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      keeping down the price of domestic gas to 30 per cent. below what it was in real terms a decade before they left office.
      The hon. Member for Newcastle upon Tyne, Central coupled that with a policy of conservation, but what is the incentive for anyone using domestic gas under that price regime to value the fuel and not to use it in some of those artificial coal-gas fires with 16 per cent. efficiency? What is the incentive for people to put in roof insulation with that kind of pricing?
      It is irritating when one reads in the last Government's 1977 Energy Policy Review:
      "The Price Code limits, being related to current costs based on cheap Southern Basin gas, have prevented prices from giving consumers signals reflecting the limited nature of this resource and the substantially higher cost of future gas supplies … Even at fully economic prices gas will still be highly competitive and the 'best buy' in the domestic market."
      The allegation against the Labour Government is not that they obviously did not understand the point that we have been trying to get across in the teeth of a particularly unattractive campaign against trying to bring some reality into the market. The only way in which we will get sensible use of what is still the best buy for the domestic consumer is by a measure of de-regulation of the price of domestic gas. In that way, people will have the incentive to do some of the things that the hon. Member for Newcastle upon Tyne, Central would like, but which I fear are a long way from the reality of what he was suggesting.
      Having made clear, as I hope, our view of the problems in the present gas market—too many customers chasing too few supplies—what the Bill is about is providing an incentive for more exploration. Although we may wish to have an "Alice in Wonderland" position, companies will not go at enormous cost to some of the most difficult territory in the world to extract gas if they are asked to accept a price for it which is less than the cost of extracting it. Plainly, the market must be liberated so that those who extract the gas have the opportunity to sell and distribute it.
      8 pm
      When I hear some of the points made by Labour Members about premium fuel and guzzling, I fear that it is a thinly disguised attack on industry, because industry is not getting the gas that it needs at the moment. Anything that is seen as a defence of the present position could only be an attack on the legitimate requirements of industry to get the gas that it needs at a difficult time.
      We are also concerned to establish an effective regime whereby, having introduced competition into the gas market, the gas can be brought properly and safely to the customers. That lies at the heart of the clause.
      Mr. W. E. Garrett: The Under-Secretary of State said that industry was short of gas. I said in Committee that I knew of no company that had been denied gas supplies, to the detriment of its production being maintained or extended. I have no knowledge of any company, that wishes to expand and create new jobs, that has been denied gas supplies. Will the Under-Secretary of State tonight tell the House about any company—whether major, medium or minor—that is experiencing such difficulties? In the regions supplied by the Northern Gas Board, no company has been denied supplies.
      Mr. Mellor: I have the highest regard for the hon. Member for Wallsend (Mr. Garrett), but I cannot pretend

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      that that is the most convincing observation that I have heard him make in the House. He should understand that there are many industries, businesses and combined heat and power schemes—which my hon. Friend the Member for Derbyshire, South-East mentioned—which would wish to obtain access to gas and which cannot do so either because there are no supplies or because the position is rationalised by the industry into the doctrine of premium and non-premium use, to which I wish to turn in my reply to the central points of the hon. Member for West Lothian.
      As I know the hon. Member for West Lothian understands only too well, in clause 12 we wish to establish a three-tier arrangement. First, the British Gas Corporation will retain a monopoly of supply for premises within 25 yards of its mains and taking up to 25,000 therms a year. The second category includes enterprises other than the BGC which, with the Secretary of State's consent, may supply premises taking less than the required rate but, if those premises are within 25 yards of the BGC main, they must take more than 25,000 therms a year. If the House is so minded, the required rate will be changed by amendment tonight to 2 million therms rather than 1 million therms. The third and final category is where companies other than the BGC may supply premises taking more than the required rate without the Secretary of State's consent.
      We have not tried to disguise why we decided on that arrangement. It has nothing to do with the premium use of fuel. The regime that my right hon. Friend proposes, as he made clear on Second Reading, is based on safety requirements. I know that the hon. Member for West Lothian understands that. My right hon. Friend said on Second Reading:
      "In the case of those consumers whose premises take less than 1 million therms a year, the supply of gas will still be by the Secretary of State's consent. But I would envisage granting such consent in all cases where I was satisfied that the safety arrangements proposed were adequate."—[Official Report, 19 January 1982; Vol. 16, c. 173.]
      My right hon. Friend was making it clear that the reason for erecting this part of the structure was so that the Secretary of State should have the right to consider the proposals and to decide whether, in all the circumstances, he would be prepared to permit supply. However, in essence, my right hon. Friend is concerned about safety.
      My right hon. Friend has made clear his view about the premium uses of fuel. It is difficult for some of us to see the argument about the premium use of gas as anything other than a rationalisation of the corporation's difficulties. At present it is unable to supply all the customers that wish to have gas and must therefore draw up plans whereby it can differentiate between customers. At the heart of what has been said on the Government Benches is the fact that for many of the differentiations in terms of the mystique of the premium use the emperor has no clothes.
      We entirely agree that it is not proper to use gas for the wide-scale generation of electricity. Section 14 of the Energy Act 1976, which implements our obligations under EEC directives, precludes that. However, there are some combined power schemes—as my hon. Friend the Member for Derbyshire, South-East made clear—where gas is highly appropriate and where it would be wrong to introduce an argument about premium or non-premium use. One is dealing with a scheme that will lead to much greater efficiency in the overall use of fuel because one
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      will get so much electricity and heat from it. It would be quite wrong for any mysterious device such as the premium use concept to preclude that happening.
      Essentially, market and price will determine the question of premium use, which brings me to coal.
      Mr. Merlyn Rees: I am a little worried about what the Under-Secretary of State is saying. During the past five to seven years, not only the British Gas Corporation has believed in what he calls the doctrine of depletion, as though it is a sort of papal bull about premium and non-premium uses. The hon. Gentleman is talking as if that will go. He says that there is no objective or logical division between the two, but that the British Gas Corporation has erected it. Because it does not have enough gas and the Morecambe field is not yet on stream, therefore the corporation erects dogma which prevents us from having a proper market-dominated system.
      Is the Under-Secretary of State saying on behalf of the Government that the policy of premium and non-premium use—non-premium for steam raising and bulk heat raising—will be finished as a result of the Bill? He talked about a doctrine as though it were an erected dogma, whereas I understood that it was Government policy.
      Mr. Mellor: The right hon. Gentleman is inviting me to subscribe to a more simplistic point of view than I would wish. I have already made it clear to him that we fully accept section 14 of the Energy Act 1976, which deals with steam raising. However, as well as that legal requirement, there is also the essential common sense point that very few people are likely to use gas for mass steam raising when coal is so much more economical.
      As to other uses, when one talks about premium usage and getting the most out of our fuel, one must start with a sensible pricing structure. It lies at the heart of our domestic gas price policy and the deregulation that has taken place that we can now more credibly put forward insulation measures designed so that people can get more from their fuel, as against the present pricing regime when gas prices are artificially held down.
      As my right hon. Friend said in Committee in a more robust and effective way than I am capable of doing, it is essentially for the market, through the relative pricings of various fuels, to decide a large part of the usage of fuels and the amount that will be consumed. However much one may try to hide behind the mystique of premium and non-premium use, on many occasions when BGC is not supplying, the probability is that it would not be able to supply even if it wanted to. There must be an element of suspicion of the kind voiced by my hon. Friend the Member for Derbyshire, South-East when we know that at the end of the day one is trying to get a pint of gas into a quart pot. There is no question of our going back on the use of gas in power stations. That remains the law.
      It is perhaps appropriate at this point to deal with coal. It is at the heart of what the Government are saying that the market for gas, coal or any other form of energy ultimately hangs on its competitiveness. We are working to ensure the availability of all fuels on the keenest terms possible, consistent with the ability to maintain supply. We have maintained a solid commitment to the coal industry—I am glad that my hon. Friend the Under-Secretary of State for Energy, the Member for Croydon. Central (Mr. Moore), is present because no one has shown greater dedication to the coal industry than he and given

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      it the opportunity to realise the benefits of productivity and efficiency that should accrue from the massive investment that the industry has undertaken.
      We believe that the tripartite structure that I have suggested is the best way to ensure that private gas supplies go forward in a way that enables the Secretary of State, using the powers in the rest of the Bill, to have an appropriate safety regime, which on the one hand properly opens up the market with the minimum bureaucratic intervention and on the other gives everyone the protection to which they are fully entitled when dealing with a substance which, if mishandled, is dangerous.
      As I told the Committee when I indicated to the hon. Member for Newcastle upon Tyne, West that we were minded to uprate the limit, the question that we had to consider when drafting the Bill was the proper dividing line between those cases where consent is to be required and those where it is not. Before the original dividing line of 1 million therms a year was set, we obtained provisional data from BGC about the quantities of gas supplied within various bands to individual premises and about the type of work carried out at those premises. It was in the light of that data, and for no other reason, that in our judgment a rate of supply of 1 million therms a year was the proper rate to insert in the Bill.
      We then obtained further, more reliable data from BGC, which led to some different conclusions, and as a result we think it right to increase the level to 2 million therms. I hope that the House will accept the Government amendment in that regard.
      8.15 pm
      Mr. Dalyell: I welcome the last few sentences of the Minister's remarks, but perhaps I shall be forgiven if I try to interrogate him on some of the things that he said.
      Was not the cat let out of the bag, because it seems that the whole concept of non-premium use has now gone out the proverbial window? It was never made that explicit in Committee. From now on, do we entertain the concept of non-premium use? That must be made explicit, because it seems to us that the concept of non-premium use has gone the way of the Dodo. If we are wrong, we should be told.
      I return to the proper intervention of my hon. Friend the Member for Wallsend (Mr. Garrett) when the Minister was replying to my hon. Friends the Members for Newcastle upon Tyne, Central (Mr. Cowans) and Newcastle upon Tyne, West (Mr. Brown). Early in his speech, the Minister said that many people who use gas cannot obtain enough of it. Explicitly, in answer to my hon. Friend the Member for Wallsend, he then said that industry is not at present getting the gas it needs.
      The information received by my hon. Friend the Member for Wallsend from his region in the North of England contradicts that, as does the information that I receive from Scotland. I gather that other of my hon. Friends have the same experience. Therefore, who are these folk who cannot obtain gas? They may exist, but we deserve clear examples.
      I do not want to embarrass the Under-Secretary, but when we raised questions about Brush Electric we discovered that there were two sides of the coin. I am beginning to wonder whether this is another Brush Electric case.
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      I see a number of civil servants in the Box. They must have at their fingertips examples of those industries that want to obtain gas but cannot do so. We are asking for some examples.
      I understand why the Secretary of State could not attend throughout our debate. I do not complain about that, because Sheik Yamani is not in London every day. However, the right hon. Gentleman and his hon. Friends might give careful consideration to my moderate opening speech. In the light of what has been said, perhaps the Government will return to the matter in the other place and do something to meet the points we have made. The Minister has not answered the issue upon which I dwelt at some length about providing an insurance policy in case things go wrong. This amendment creates something of a backstop, ensuring that all supplies are subject to the Secretary of State's consent. I thought the Secretary of State wanted that. It impinges in no way on the other provisions in the Bill and simply gives the Secretary of State powers, if necessary, to use them.
      This amendment would be helpful to the Secretary of State if he were faced by the sort of emergency that none of us wants but which may occur. He clearly agreed in column 799 of the Standing Committee Official Report with my hon. Friend the Member for Merthyr Tydfil (Mr. Rowlands) that anybody who looked forward three months and made forecasts would be a fool. However, in crises this power may be useful. I see the Secretary of State frowning to his hon. Friends. However, he spelt out in some detail, in rather eloquent words, the reasons for the amendment we are putting forward.
      Flaring is no substitute for a depletion policy. Do the Government think that, by implying several times in Committee that they are doing something about flaring, they are putting forward a depletion policy? I am not a great one for yah-boo politics. However, since the Secretary of State is doing me the courtesy of listening carefully, I shall read his words:
      "It is entirely right and proper that the Government of the day, rather than some nationalised industry, should decide whether a depletion policy is in the national interest and, if so, what that policy should be."—[Official Report, Standing Committee E, 9 March 1982; c. 799].
      That is precisely what we propose. On reflection of his remarks, the Secretary of State might want to accept the amendment.
      Finally, I ask for comment on my remarks, which may be right or wrong, about the severe limitations of the powers of the Petroleum and Submarine Pipe-Lines Act 1975. That Act simply does not cover the use of onshore gas. At best, it is an imperfect instrument. All the Secretary of State can do is to control offshore development and, to a limited extent, production. There is a long time lag between decisions on development and gas coming on stream. Again, I ask that direct question about the Act and hope, after my hon. Friend's remarks, that the Minister, with the Secretary of State by his side, can give some answer.
      Amendment negatived.
      Amendment made: No. 8, in page 14, line 17, leave out `1,000,000' and insert '2,000,000'.—[Mr. Mellor.]

    Clause 14

      SAFETY REGULATIONS
      Mr. Mellor: I beg to move amendment No. 9, in page 19, line 3 at end insert—
      '(4A) Where in pursuance of any powers conferred by regulations made under this section, entry is made on any premises by an officer authorised by the relevant authority, the officer shall ensure that the premises are left not less secure by reason of the entry; and the relevant authority shall make good, or pay compensation for, any damage caused by the officer, or by any person accompanying him in entering the premises, in taking any action therein authorised by the regulations, or in making the premises secure.
      (4B) If any person wilfully obstructs any officer exercising powers conferred by regulations made under this section, he shall be guilty of an offence and liable on summary conviction to a fine not exceeding £200.
      (4C) The Rights of Entry (Gas and Electricity Boards) Act 1954 (entry under a justice's warrant) shall apply in relation to any powers of entry conferred by regulations made under this section as if—

      (a) any reference to the Corporation were a reference to the relevant authority, and

      (b) any reference to an employee of the Corporation were a reference to an officer authorised by the relevant authority.'.

      Mr. Deputy Speaker (Mr. Bernard Weatherill): With this it will be convenient to take Governmet amendment No. 16.
      Mr. Mellor: These amendments arise out of the most useful and constructive discussion we had in Standing Committee about safety matters and, particularly, about rights of entry. That was a somewhat maligned Committee and, perhaps rightly, observations were made that some of its discussions passed wider of the mark than some observers thought right.
      Therefore, it is perhaps proper to make it clear, in relation to this discussion, that the discussion in Committee on rights of entry was most useful and managed to pinpoint a matter which the Government have been reconsidering in the intervening period. In the light of that discussion and the impetus that it gave, the Government decided to seek to commend to the House certain changes in the rights of entry. The effect of that will be to put the rights of entry conferred on officers authorised by the Secretary of State on the same basis as those already given to officers of the BGC.
      Considering the matter in slightly more detail, clause14—
      Mr. Merlyn Rees: The hon. Gentleman said "officers authorised by the Secretary of State." Will they be civil servants from his Department or might they be a private firm contracting to a supplier?
      Mr. Mellor: It is the Secretary of State's officials. We dealt with that point in Committee. It would be improper to give certain rights of entry to private individuals, but it is plainly necessary in certain circumstances to supplement the contractual rights that will be incorporated in supply contracts about access between a private supplier and his customer with powers that the Secretary of State possesses under circumstances that I shall outline to the House in justification of the amendment.
      Clause 14 re-enacts section 31 of the Gas Act 1972. That empowers the Secretary of State to make safety regulations for gas, whether it is supplied by the corporation or by others. In the case of dangers arising
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      from a private supply, officers authorised by the Secretary of State may be empowered to enter premises, inspect gas fittings and so on and to disconnect supplies in cases of danger, in a similar manner as officers authorised by the British Gas Corporation in respect of dangers arising from the supply by BGC.
      The amendments are drafted so as to put the rights of entry that may be conferred on officers authorised by the Secretary of State in respect of private gas supplies on the same footing as those that may be conferred on the BGC in respect of its supplies. In deference to the discussion that we had in Committee and to the point made by the right hon. Member for Leeds, South (Mr. Rees). I shall look more closely at what is proposed.
      Under schedule 4(26) of the 1972 Act, officers of the corporation who enter premises under the regulations made under section 31 of the 1972 Act must ensure that the premises are not left less secure as a result of the entry. In addition, BGC is obliged to make good or pay compensation for any damage caused by the officer, or person accompanying him in entering the premises, in taking any action authorised by the regulations, or in making the premises secure.
      As part of the policy that I have set out, subsection (4A) of amendment No. 9 extends those provisions to the rights of entry of officers appointed by the Secretary of State in relation to the safety of private supplies.
      Under schedule 4(27) of the 1972 Act any person obstructing an officer of BGC in exercising the rights of entry is guilty of an offence punishable upon conviction by a fine. Subsection (4B) of amendment No. 9 ensures that in future obstructing either an officer of BGC or of the Secretary of State in exercising his rights of entry will be an offence punishable on conviction by a maximum fine of up to £200. That puts the two offences on an equal footing.
      At present schedule 4(28) ensures that the regulations made under section 31 conferring powers of entry on officers of the corporation shall have effect subject to the provisions of the Rights of Entry (Gas and Electricity Boards) Act 1954. Subsection (4C) of amendment No. 9 extends that provision so that regulations conferring powers of entry on either officers of the corporation or of the Secretary of State shall be subject to the 1954 Act—the locus classicus, as it were—for each category of persons. That means that rights of entry are to be exercised only with the consent of the occupier of the premises or under the authority of a magistrate's warrant or in an emergency.
      As we discussed emergency in Committee, it may be appropriate to dilate on that subject for a moment In an emergency no warrant would be required and the appropriate officer would be able to enter the premises immediately and take the action necessary to ensure safety under the new section 31 of the 1972 Act—that is to say, clause 14 of the Bill. Where there was not an immediate emergency and the occupier did not give his consent for the officer to enter, the officer could apply for a warrant to a justice of the peace or, in Scotland, to the sheriff. Provided that the justice of the peace was satisfied that entry was reasonably required for a specified purpose and that the officer was entitled under the safety legislation to right of entry, such a warrant could be issued. We believe that that procedure provides a sensible balance between the need to ensure safety in an emergency and the need to protect the rights of the individual.

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      8.30 pm
      The second amendment follows from the first. It simply contains drafting changes that are consequential upon the first amendment. Subsections (4a), (4b) and (4c) of the first amendment extend provisions relating to rights of entry of officers of the corporation in respect of the safety of the British Gas Corporation's supplies to rights of entry of the Secretary of State in respect of private supplies. They are drafted in such a way as to consolidate the two sets of rights of entry, and the original parallel provisions in the Gas Act 1972 become superfluous. Therefore, amendment No. 16 deletes those parallel provisions.
      The Government's intention was to put the rights of entry of those two categories of person on to the same footing. In my respectful submission, that gets over some of the problems. The interesting and worthwhile discussions in Committee made it clear that this was an appropriate way of doing it and I hope that these amendments—which, as I say, have been tabled in the light of those discussions—commend themselves to hon. Members.
      Mr. Merlyn Rees: I am grateful to the Under-Secretary of State for what he has said. He is absolutely right. Most of the comments about the Committee were written by journalists who never attended it and who listened to one or two stories. That is the way of the world if it is after 10 pm. When one is there late, why stay any later? It is much easier to write a story without bothering. That is certainly the approach on Committees. However, it was a very sensible Committee in many ways, and particularly on this matter.
      The Under-Secretary of State referred to two categories—the Gas Corporation's officers and the Secretary of State's officers. I must confess that I am not clear about this. It is always a problem when one is in Opposition and reading a Government clause. When we discussed the matter in Committee, I thought there was a third category. First, we postulated private gas spurring off the Gas Corporation's pipelines and sending gas to villages. We were told of villages in Leicestershire that would get gas. A few days later the poor old villages in Leicestershire had lost their gas. It had been a flight of fancy. I think that it was the Under-Secretary of State who told us that what he had been talking about was the provision of gas to industrial users.
      However, when we were discussing that subject we came to the question of how safety would be dealth with. Do I not recall that as well as the two categories that we have been talking about there was a third category—that it would be possible for the firm supplying the gas to put out to contract the safety functions that would otherwise have been operated by the Gas Corporation? That is how I recall it. We now have only two categories.
      I am genuinely seeking information. The Secretary of State's staff, centred in London, but regionalised as well, were, as I understood it, there for the purposes of inspection and regulation. I had not realised that there was a generalised safety function. This is where the third category that I have raised arises. However, the Under-Secretary has studied this and he says that there are two categories. Therefore, I must be wrong, but where do the private contractors come into the picture? I assume that the Secretary of State is right.
      We discussed a similar amendment in Committee in a slightly different context. The Secretary of State told us
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      that this puts the staff on all fours with those of the Gas Corporation under previous legislation. The clause says that
      "the officer shall ensure that the premises are left not less secure by reason of the entry; and…shall make good, or pay compensation"
      and so on.
      With regard to compensation, I know of only two cases of forced entry, although they may have been by consent. They were in difficult conditions and involved the Gas Corporation. If compensation had to be paid under those circumstances, one went to the Gas Corporation. The Gas Corporation has a procedure for dealing with it. I imagine that it happens on a wider scale.
      Leicester has been mentioned. Let us suppose that somebody in Leeds, in my constituency, finds a man from the Ministry breaking down the door. With whom does he get into touch? People already know how to get in touch with the British Gas Corporation, as they do in Merthyr. As we all know, in Merthyr they go to the gas showroom. Everybody gathers there every night. It is the centre of the universe. But what will people have to do in Leeds to get compensation? What is the point of contact?
      The clause states:
      "If any person wilfully obstructs any officer exercising powers conferred by regulations made under this section, he shall be guilty of an offence and liable on summary conviction to a fine not exceeding £200."
      I presume that is the same sum of money as in the gas legislation.
      If people are, for very good reasons, to break down doors in Leeds, I hope that they will display a medallion or something to enable them to be recognised by the public. When people come from the British Gas Corporation in coloured vans with flashing lights, in general the public know who they are.
      I recognise that when there is a serious gas problem one cannot be very tardy. Usually the local police are contacted, and the local community constable or someone from the police station will be present. Members of the public will know who is breaking down the door or trying to get a key from the neighbours. Again, the questiom comes back to the nature of the men from the Ministry to whom the Under-Secretary refers. The people from the Gas Corporation know their way around the city. They have a particular section of the city to deal with and they know the local police station and are in touch with it.
      Will the staff visualised in the clause operate on a regional basis? I gather that there will not be too many of them all together. Perhaps I misunderstood what the Under-Secretary said in Committee about emergency services. I should have made much more fuss if I had thought that private firms would be involved, but I gather that it is not the case, although I seem to remember private firms being discussed in Committee in this context.
      These are powers about which the ordinary householder may get very upset. When his door has been broken down, he is bound to say that everyone in the area knew that the key was kept at his aunt's house next door. However, I see the virtue of what is proposed. I am glad to hear that there are two categories and not three, but I should still like to know where the third category arises and where it fits in.
      Mr. Robert C. Brown: I welcome the fact that the Secretary of State, by tabling the two amendments, has at least given an indication that he listened to some of the speeches in Committee. The Secretary of State will recall

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      that we had a fairly extensive debate on the question of powers of entry, especially in relation to private contractors.
      I do not want to go over the ground covered by my right hon. Friend the Member for Leeds, South (Mr. Rees), but it cannot be disputed that the British Gas Corporation employees and vehicles are fairly easily identifiable. I remember that the Newcastle and Gateshead Gas Company had its vehicles painted in my favourite colour—green. It was a shade between leaf green and pea green. The vehicles were easily identifiable. Unfortunately, with the advent of nationalisation the colour changed. That had nothing to do with the nationalistion; the management of Northern Gas decreed that the leaf green vehicles should be changed to, of all colours, blue and white. It was rather unfortunate that we had blue and white. I would not have minded so much if it had been red, white and blue.
      Nevertheless, as my right hon. Friend the Member for Leeds, South said, the vehicles of the gas corporation are easily identifiable. However, I must correct my right hon. Friend because the vehicles do not have flashing lights.
      I am still concerned about entry by private individuals. Nice people though they might be, none of the civil servants behind the Chair could be identifiable as people with the right of entry to disconnect a gas supply because of an emergency.
      There are three categories of entry—entry by consent; entry by magistrate's warrant; and entry in a dire emergency which does not need a magistrate's warrant. I am concerned about emergencies where a private spur crosses private land. I remember my hon. Friend the Member for Rother Valley (Mr. Hardy) asking the Under-Secretary what will happen if the spur crosses the private land of somewone other than the consumer using gas from that spur. What will happen if, for safety or other reasons, someone needs to get at that pipe?
      That brings me to the question of how an individual representing a private contractor is to act in an emergency. That individual will have to get an officer authorised by the Secretary of State. The private contractor might be operating miles from a centre of population. Is the Under-Secretary seriously suggesting that the private contractor with a dire emergency on his hands will have to find a telephone and ring the nearest office of the Department of Energy to ask one of the suitably authorised officers to make the necessary break-in for the contractor to disconnect the supply? The Under-Secretary is shaking his head and I hope that that is an indication that my fears are unfounded. It is a serious point, but I hope that he can convince me that I need not be concerned.
      The increased number of burglaries and house breakings result in many old people being trapped in their homes. It is sad that Englishmen should be trapped in their castles, but that is the situation in many areas of the country under the Government's law and order policies.
      8.45 pm
      An old person may not be aware of the emergency which those outside his house know about. For example, my mother had no sense of smell, which was a great worry to us. Time and again I would smell gas even before I put my key in her front door. She may have put the kettle on and then thought of something else and walked away, leaving the gas turned on. Old people tend to do such things.
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      Many old people are trapped in their own homes and are frightened to open the front door. It will be terrifying for them to have the door broken down in front of them.
      Mr. W. E. Garrett: I shall not detain the House for long, because the matters of concern have been adequately stated by my right hon. Friend the Member for Leeds, South (Mr. Rees) and my hon. Friend the Member for Newcastle upon Tyne, West (Mr. Brown).
      However, I should like clarification of the reasons for the Government's approach in the clause and the amendments. It seems that we are to have two of everything. Why has it not been possible to weld the roles of the BGC officials and the private sector officials? Could they not form one body and have jointly negotiated wages and salaries?
      It is important to get clarification, because I can envisage protest groups that are concerned about freedom of the individual making merry out of what may appear to be another bureaucratic nonsense. We must prevent that and get on with deciding what is best for the consumer.
      It is also important to define the role of the officials. The Government are rightly attempting to define clearly their powers of entry, but there is still room for clarification.
      At a time when 3 million people are unemployed I should be applauding the Government on their initiative in creating more jobs, but in this case we need to create not more jobs but a new method of dealing with this problem of duplication of powers. I think that it can be done, and that, if the Minister and his advisers wanted, they could get round this problem.
      Mr. Mellor: This again has been a most helpful and useful debate and I fully accept the good sense behind the questions that have been posed. I shall do my best to answer them fully.
      The present position is that there are two levels of safety coverage where an incident involving gas occurs. First is the coverage provided by the supplier of gas and second is the overall monitoring and investigation by the gas standards branch. The aim of this amendment is to try to extend the procedure to cover supplies of gas by private suppliers as well as gas supplied by th BGC. At the moment, BGC is involved in day-to-day matters concerning supply to premises, whether business or domestic. Normally, of course, that is with the consent of the customer; indeed, he is often the person who rings up and asks for help. So the kind of situation involved in the 1954 Act—entry by application to the courts or, in an emergency, by force—would not normally arise.
      At the moment BGC does that from its own resources. The private suppliers will have to make arrangements so that the Secretary of State is satisfied that adequate safety arrangements exist. That relates to the discussion we had earlier of the reason for requiring the Secretary of State' s consent for all but the top two-thirds of the industrial and commercial gas market, which is exempted by reason of the 2 million therms limit.
      One of the points the Secretary of State will check is whether the arrangements include a contractual right of entry for emergency personnel provided by the private supplier, so that potential dangers arising from private supplies are covered in a similar fashion to those arising from BGC supplies.
      That led to the point the right hon. Member for Leeds, South (Mr. Rees) made in Committee which we clarified

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      in Committee; and it ties in with the very sensible point which the hon. Member for Wallsend (Mr. Garrett) was making about co-operation. I look forward, in all aspects of this, to the same kind of co-operation that exists between BGC and the private sector off-shore. Once we have all the debate out of the way, whatever the form in which this passes into law, and once people know what the law is, there is no reason why this co-operation between professional people of good sense should not continue.
      One possibility is that the private supplier would be able to enter into a contractual relationship with BGC, where BGC might supply some of the emergency cover for a particular contract. The alternative would be that other, properly qualified people would do so.
      That is the normal situation with day-to-day problems. Then we come to the particular point that can arise when there is need, because we are dealing with a dangerous substance, to have a right to enforce entry.
      Mr. Merlyn Rees: I am very grateful to the Under-Secretary of State. Again he has said that they may contract it to the BGC or to a private contractor. What about the rights of the private contractor when it comes to breaking down the door?
      Mr. Mellor: I am sorry if I did not make that clear earlier. He has no such rights and it would be quite wrong for him to have them. We have never contemplated that. The question at issue in Committee was whether the rights that we were giving to the officers of the Secretary of State, the gas standards branch, were properly on a par with the rights given to officers of the BGC. The decision was taken—rightly I think—that they were.
      Private maintenance personnel will have rights under the contract and, when the situation is not an emergency, rights of entry can be enforced under the contract in the normal way. The Secretary of State will have to be satisfied that the same kind of maintenance and emergency services regime exists for a private sector supplier as for the BGC before he will give consent. That is why we had the second of the tripartite category of supply arrangements that we were talking about earlier.
      When we come to the situation where someone has to be compelled to do something, we are on difficult and contentious ground. Some people believe that those who have the power should not have it. Although the 1954 Act has been around for about 30 years, it is not free from criticism. When there is consent there is no problem. The legislation permits entry with a warrant where there is no consent and, in an emergency, by such means as are appropriate. The right is presently exercised by BGC officers authorised by the Secretary of State, who have to carry appropriate documentation. Where necessary, they must show the warrant from the magistrates court.
      It would not be right to give the extra authority that BGC officers have to people carrying out private sector emergency cover, even though they may be professionally competent. It would be wrong to give another citizen the right to force an entry to someone else's premises other than through the civil law. That is where the gas standards branch comes in.
      Mr. Merlyn Rees: The private contractor cannot bust down the door. Does he ring the Department of Energy?
      Mr. Mellor: I hope that I am not being legalistic and pedantic. We are dealing with contractual arrangements which two freely consenting parties can enter into and which are enforceable through the civil law, with rights that the criminal court—the magistrates court—can enforce and with a separate power to enter in an emergency, which one would have to justify afterwards. One cannot await the decision of a court in a sudden emergency.
      If there is a breach of contract that cannot be dealt with in the normal way, it would be open to members of the gas standards branch, as officers of the Secretary of State, to apply to the magistrates for a warrant to enter the premises. In a true emergency, probably even the appropriate BGC officer would not be available. That is where the police come in.
      I hope that the former Home Secretary will forgive me for dilating on police powers. He must have forgotten more than I know. The police have a duty to preserve life and property. They can enter premises irrespective of anything that the officers of the Secretary of State—whether BGC officers authorised under the Act or members of the gas standards branch—have the power to do. In a dire emergency there is the police. Normally, the police deal with the type of situations postulated.
      The gas standards branch will not merely perform for the private sector a role to some extent performed by BGC officers who are empowered under the 1954 Act. The gas standards branch will retain an overview of regulations imposed on BGC and the private sector. It will continue its monitoring and investigation role for all gas supplies.
      The day-to-day maintenance will be done by BGC for its own contracts and by a person acceptable to the Secretary of State for private sector contracts. That may be an officer of the BGC under contract or a member of some other organisation. Under the 1954 Act, BGC officers have the right of entry in relation to BGC supplies. Officers of the Secretary of State—that is, the gas standards branch in this case—will have those rights in relation to private sector supplies. The police will have rights in emergencies to supplement any other necessary rights, whether it be in relation to the BGC or to the private sector.
      9 pm
      On the third matter, overall, the gas standards branch has an overseeing view of anything that BGC does to monitor the gas supply and investigate. We have always known this. This is pursuant to the regulatory power the Secretary of State has always had.
      In the case of gas supplied by other persons, the gas standards branch will have two roles—the monitoring and investigation role and acting in respect of fulfilling the right of entry that I have already mentioned.
      I appreciate that in explaining matters which deal with the civil and criminal law and police powers, one is inevitably led into somewhat tortuous prose. I hope that I have set out to the satisfaction of the House a system that integrates into the existing framework of law the same system in respect of the private sector.
      Mr. Robert C. Brown: I have been listening intently to the Under-Secretary of State in relation to the emergency situation that I referred to. With the best will in the world, I can still envisage a situation where the Minister's reply would not do anything to allay my fears. Assuming that the place is away in the wilds, even the

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      police will take some considerable time to arrive there to break into the premises. Someone in a semi-detached house in a village in Leicestershire might see outside a representative of the contractor who was looking extremely worried. If he said that there was a national emergency and there might be an explosion at any time but he had to wait for the police or somebody from the gas standards branch to arrive, how would the Under-Secretary of State, or indeed the Secretary of State, feel in such a situation?
      Mr. Mellor: The hon. Gentleman is adding unnecessary complexity to this. He is postulating a situation involving a remote location. Whether it is BGC or non-BGC, any human agency will be in difficulty. We are not in the business of legislating against that.
      Mr. Robert C. Brown: If the informant was an employee of BGC he could immediately take the necessary action and would not need to wait for the police.
      Mr. Mellor: What the hon. Gentleman says is not necessarily the case. I have outlined the situation with as much clarity as I can muster and, I hope, in objective terms, reasonable clarity. It will be on the record. If the hon. Gentleman remains troubled, I will happily dilate on any matters in reply. I am conscious that there is to be another debate. My right hon. Friend has come back to participate in that. I know the House will want to hear him. I commend the amendment to the House.
      Amendment agreed to.

    Clause 15

      CONSTRUCTION OF PIPE-LINES BY GAS CORPORATION
      The Secretary of State for Energy (Mr. Nigel Lawson): I beg to move amendment No. 11, in page 19, line 40, leave out from beginning to 'likely' in line 41 and insert—
      '(2A) The Secretary of State shall cause to be published in such publication or publications as he considers appropriate notice of the receipt by him of any notice under subsection (1) above; and a notice so published shall—

      (a) specify the points between which the proposed pipe-line is to run;

      (b) name a place or places where a copy of the notice under subsection (1) above (and of the map accompanying it) may be inspected free of charge, and copies thereof may be obtained at a reasonable charge, at all reasonable hours; and

      (c) specify the time within which, and the manner in which, representations may be made as to the matters mentioned in paragraphs (a) and (b) of subsection (3) below.

      (3) Where in the light of any such representations duly made the Secretary of State is satisfied—

      (a) that a demand exists or is'.

      I do not think this will be a controversial amendment. Indeed, the essence of the amendment was proposed by hon. Members opposite during the Committee stage. At that time my hon. Friend the Member for Putney (Mr. Mellor) said that while the Government were content to accept the principle that the Secretary of State's power to direct the BGC to increase the capacity of a new high pressure pipeline should be contingent on the receipt of representations—this was the point we were debating—we would nevertheless be considering how best to give effect to this. Hence this amendment.
      Mr. Merlyn ReesI am grateful to the Secretary of State. This is another example of the discussions in
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      Committee producing much that is valuable. I return to one point that prevents me from showing off a word shat I found. I bet that the House did not know that the corporation's pipeline is a reticulated system. I would have used the word more often had I spoken for longer. The corporation's pipeline is a reticulated system and much stems from that. The point that has been put to me, however, is delay.
      The notification procedure that we welcome will result in some delays. It has been put to me that as the Bill is drafted, the delays could last for up to two years. That is so long that the shorter period of six months during which the Secretary of State may advise the corporation of his intentions is assumed. Under the notification therefore, the choice of procedure, for the best way to achieve a given objective, must be made considerably earlier than is now the case. The extension of lead times means that the flexibility that is currently achieved through careful timing and phasing of alternatives will be lost. I should like a word, possibly not now, from the Department and the gas corporation about that matter. I am also interested to know about the extra staff for the Department of Energy, provision for which appears on the back of the Bill. Will this involve extra staff in the gas corporation as well?
      Timing is important. There are other issues, but they would have arisen as the Bill was first drafted. The new procedure is desirable and the Opposition welcome it, but how does it fit into timing and the problems of the gas corporation as a major supplier in this complicated system? If the process takes a long time, matters in the reticulated system will have changed. But timing is the only point that I want to raise with the Secretary of State.
      Mr. Lawson: The system is indeed complicated and reticulated. We must bear in mind that only a limited number of pipelines will be involved as we are here concerned only with main transmission pipelines and major distribution pipelines. I am concerned that there should be no undue delay. The question of delay arises much more seriously in the next amendment.
      Amendment No. 11, while meeting some of the excellent points made by the Opposition in Committee, will still allow a thoroughly businesslike process by which the corporation's plans to build pipelines will become known and allow private suppliers of gas an opportunity to make representations about the capacity of a pipeline before any direction is given.
      I see nothing in the amendment which would add to the staff requirements of my Department.
      Amendment agreed to.

    Clause 16

      INCREASE OF CAPACITY ETC. OF PIPE-LINES BELONGING TO GAS CORPORATION
      Mr. Merlyn Rees: I beg to move amendment No. 12 in page 21, line 32 at end insert—
      '(3A) If the Corporation is of the opinion that the modifications specified in a direction given under this section could impair the safe operation of the pipe-line, it shall inform the Secretary of State and submit alternative proposals. In the absence of agreement on how the modifications are to be carried out, the matter shall be determined by arbitration.'.
      I think that it is as well at the outset to explain the purpose of the amendment. We perhaps got into bad habits in Committee, wandering around the point before

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      returning to the actual purpose of the amendment—and very valuable that was. We thought carefully about this amendment. If the corporation believed that the modifications could impair the safe operation of the pipline, it would inform the Secretary of State in any event, but before dealing with alternative proposals and arbitration I ask the Secretary of State how this would work without the amendment.
      In the past couple of days, a number of us have met people working in the industry who came here to protest. A very sensible group of people came to talk to us. They put too many points for my liking about problems of safety as a result of the changes. The arguments were not made with bravado or for the sake of making them, but the question of safety arose far too often for my liking. I leave that matter there.
      How does the system work at the moment? The fear that it does not work properly is the reason for the amendment and the request for arbitration. In proceedings on the Petroleum and Submarine Pipe-lines Bill, the present Minister of State put forward an impassioned argument for arbitration on a similar issue. He said that it was
      "a vitally important point and something about which the industry not unreasonably feel very strongly".—[Official Report, Standing Committee D, 10 July 1975, c. 1504.]
      We are now in Opposition and I use exactly the same argument.
      It has been put to me that the integrated system of the Gas Corporation operates at pressures from 100 psi to 0·5psi. With regard to modifications to planned lines, the Secretary of State's directions are restricted to pipelines above 7 bars, but he can direct the location of junctions in any part of the pipeline. The powers of direction therefore have potentially far-reaching consequences. A decision affecting one part of a pipeline may have repercussions throughout the system. Gas may be supplied to premises by more than one route. In the event of pipeline failure it will still be possible to supply gas. Indeed, British Gas does rather well in guaranteeing supplies as it did last winter, particularly in the Northern regions and in Scotland where gas was re-routed by means of the reticulated system.
      The extent to which the ability to guarantee supplies will continue depends upon the degree to which the Secretary of State or his staff choose to use the powers of direction over technical matters. My inquiries reveal that such powers are unknown elsewhere in the world. The Government talk as though common carrier provisions were well established overseas, but that is not so. There are a number of voluntary carrying agreements, but there are no cases in which there is a rigid carrying obligation and technical decisions are taken out of the hands of the pipeline owners.
      Our request for arbitration arises out of the fact that decisions may be taken out of the hands of the pipeline users. Without our amendment, the situation could be extremely serious. If the Secretary of State wishes, he may direct the corporation to increase capacity or to locate junctions to his specifications. That means that he has the final say. Yet the Under-Secretary of State said that
      "Directions of the Secretary of State cannot take away responsibility from BGC…If the system leaks after the modifications have been carried out, it is clear that the sole responsibility must be with BGC."—[Official Report, Standing Committee E, 11 March 1982; c. 918.]
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      9.15 pm
      That is extremely difficult to understand. The sole responsibility rests with BGC and yet it is the Secretary of State who takes the decision. The amendment seeks to allow the Gas Corporation to refer back to the Secretary of State any modification that it believes to be dangerous and to submit alternative proposals. In many cases it will not be a clear-cut issue. There will be a need for professional engineering judgments.
      What are these modifications? The Secretary of State can direct an increase in the capacity of an existing pipeline. That means that a compressor will need to be built, which will require a highly complex decision. Judgments must be made on existing and future demand and on where that demand will come from. I understand that the balancing of the pipeline and compressor requires a great deal of effort. The Secretary of State could direct the building of a compressor that would have an adverse effect on the economics of transmission and on the provision of future gas supplies. If the third party requires the carriage of gas using BGC pipes which have no spare capacity, BGC will have to work out how to provide the additional capacity that will take into account present and future demand. There is no spare capacity in the system, so these powers of direction may be used more frequently than we expect.
      In some instances the gas corporation will not be able to carry the gas direct to the customer's premises, and it will be necessary for the private supplier to use his own pipeline to take the gas from a suitable point on the gas grid system. Our anxiety relates to the location and type of junction that is used.
      These technical difficulties were recognised in previous gas legislation, in that supplies direct from bulk transmission mains can be refused. I do not know what party was in power when that was done. Such a proposal would not have been in a party manifesto, but would have come from the Department itself. It is part of the main work of Government that is necessary whichever party is in power. One cannot alter the facts of life with a party manifesto.
      There will be a change. A Gas Corporation customer could be refused a connection from such a line while an identical customer, or even the same customer, could receive a connection under a direction from the Secretary of State. Once that is done, it is the responsibility of the Gas Corporation, although the decision is taken by the Secretary of State.
      In Committee, and previously, the Government stated that they did not doubt the British Gas Corporation's intentions. If so, surely the amendment is sensible. It gives to the organisation responsible for the carriage of gas the final say in the manner in which modifications are carried out. It does not hinder private sector access to the corporation's pipelines and ensures that it can be done in a manner that allows all present and future customers to take advantage of the integrated network.
      There may be disagreements in technical matters of this nature. The amendment provides for arbitration. I accept that the method of arbitration would have to be considered in another place.
      Many of my arguments apply to clauses 16 and 17. Clause 15 is concerned with planning the transmission and the most suitable network. Amendment No. 12 states:

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      "If the Corporation is of the opinion that the modifications…could impair the safe operation of the pipe-line, it shall inform the Secretary of State"—
      which I presume it does now—
      "and submit alternative proposals."
      If the argument continues, it goes to technical arbitration.
      At this time of night, and as we near the end of our consideration of the Bill at this stage, I shall not go on to dream about whether we shall win or lose the amendment. With the exception, perhaps, of those who produce or read technical journals, very few will ever know that we have discussed it. However, it is important that we do not cut corners on safety. These are highly technical matters involving, for example, reticulated gas systems—I rather fancy "reticulated" having discovered it today. We should put our minds to all these systems and joints about which I know precious little—I hope that I shall never have to put my mind to them again—if safety is involved.
      Mr. J. Grimond: First, I compliment the right hon. Member for Leeds, South (Mr. Rees) on the extreme honesty of his approach. I pay tribute to his remarkable knowledge of reticulated systems and his sound determination to wipe all these matters out of his mind for ever as soon as tomorrow dawns.
      On the face of the amendment, it seems reasonable that the British Gas Corporation should not be held responsible for carrying out modifications to which it may have objections. I had hoped that the right hon. Member for Leeds, South would tell us rather more about the form of arbitration. It seems that the arbitration might take a considerable time. When discussing a previous amendment the right hon. Gentleman appeared rather worried that delay would be caused. It seems that the proposed arbitration could lead to considerable delay. When the Minister replies, I hope that he will give us his views on how long the arbitration process will take, how it will be carried out and who will arbitrate.
      I did not have the great pleasure of considering the Bill in Committee. Therefore, I do not know whether at that stage much light was thrown on the type of direction that the Minister might give. Until it is proved otherwise, we must presume that Ministers are sensible people, despite considerable evidence to the contrary. After 32 years in the House, I live in hope that things will improve. However, we must not presume that Ministers will give directions that will be clearly dangerous. I hope that the Minister will enlighten us on the consultation that he will have with the corporation—presumably it will be fairly elaborate—and I hope that he will reassure us on the expertise to which he has access and the method by which any directions will be carried out.
      Mr. Robert C. Brown: I am sure that we would have all been delighted if the right hon. Member for Orkney and Shetland (Mr. Grimond) had been with us in Committee. It would have been a source of great pleasure. I am sure that the Secretary of State and the Minister would not have taken long to nominate the right hon. Gentleman as a substitute, if they had been asked, instead of one of the Members who in fact served in Committee.
      The amendment seeks to rectify the clearly unsatisfactory situation that prevails in the modification of pipelines. I implore the Secretary of State to accept the amendment. If any part of the Bill is crying out for amendment, it is that which concerns the modification of pipelines.
      As I have said, I am glad that the Government have seen fit to accept half the logic of the argument that I used in
      384
      Committee when I moved an amendment to raise unrestricted sales from 1 million therms to 3 million therms. The Secretary of State tabled amendment 8, which we have accepted tonight. However, the fact remains that between 25,000 and 2 million therms unrestricted use, subject, as far as I can see, to only minimum constraints, will be available. I am grateful for any small mercies that the Government are prepared to give us. We all know, having served those endless hours in Committee, that the small mercies have been small indeed. Nevertheless, I am happy to accept those small mercies rather than none—half a loaf is better than none.
      Mr. Dalyell: While we are on the subject of loans, it might be appropriate, as the hon. Member for Croydon, Central (Mr. Moore) is also in the House, to voice the real concerns that were put to us during the Committee stage, especially on junctions, by the National Farmers Union. There is also the seeming discrepancy between the letter from the hon. Member for Croydon, Central on 25 March to Sir Richard Butler and that from the hon. Member for Putney (Mr. Mellor) on 29 March about public inquiries. Will my hon. Friend accept that I gave notice to the Government that I would raise the matter, not in the form of an amendment, but at an appropriate stage? Either on clause 15 or 16 is the appropriate moment to do so. I hope that these rather complex issues of public inquiries that bother the National Farmers Union can be sorted out, especially with regard to junctions.
      Mr. Brown: I accept that. It is something of which we should not lose sight. We had a considerable debate in Committee and I am sure that my hon. Friend the Member for West Lothian (Mr. Dalyell) is right in saying that he asked for a commitment that we would be given some information on Report. I recall the fairly lengthy discussion that we had on the issue raised by the National Farmers Union and the concern that it expressed.
      The hon. Member for Banff (Mr. Myles) is not here, but I recall that he and I had a lengthy discussion in Committee on the subject of field drains. We even got on to the subject of stone drains. I admit to being almost on terms of friendship with the hon. Member. I was almost afraid that I should have to spend half my summer recess on his farm picking taffies.
      In Committee the Under-Secretary said that in practice the constraint would be one of safety. That being the case, why cannot the Government accept the amendment? At the moment, even where the British Gas Corporation, with its wealth of experience, tells the Secretary of State that any given modification is unsafe, he still has absolute discretion to override that advice simply because he thinks fit.
      To add insult to injury, the British Gas Corporation will be responsible for the continued safety of the whole network. I am not suggesting that the Secretary of Stale will be brutally stupid or anything like that and simply disregard the advice of the British Gas Corporation, but there might be a conflict of advice and the Secretary of State can be out on a limb, having to make up his mind on the advice offered to him. Ministers have to do that every day, because civil servants tend to offer a series of options. It does not make the life of the Minister any easier when, at the end of the day, he has to ponder the options.
      The normal option that a Minister must ponder does not involve public safety to such an extent. The BGC operates,

      385
      in the national interest, a network of about 250,000 miles of pipes, all within narrow pressure ranges. The whole system is fine-tuned and should not go wrong. When the network went wrong we had the King report, which resulted in a mains renewal programme. However, before that happened there was a series of explosions.
      It is not my job as the Member for Newcastle, West to put fear into either my constituents or the constituents of any other right hon. or hon. Member, but we should bear in mind exactly what happened before that major mains renewal programme was carried out. There was a series of extremely nasty explosions.
      9.30 pm
      Mr.Dalyell: Does my hon. Friend also recollect that in Committee I produced much evidence from such constituents as Mr. Bob Struthers and Mr. Chris Gorman along exactly the same lines? The events are not confined to the Newcastle area, but are in the minds of trade union officials in Scotland.
      Mr. Brown: I am grateful to my hon. Friend. I hope that I did not create the impression that the problems were confined to the Newcastle area. They are nation-wide.
      The Secretary of State need not give reasons why he directs a modification. Although he is duty bound to consult the BGC, he is not duty bound to listen to it. If he has already been nobbled by civil servants—he may be very busy with Cabinet meetings—he may not be too intent on listening to the BGC. It reminds me of the old chestnut about consultation being:
      "I am going to tell you what to do and what I am going to do—when you have had your say I am going to tell you how I have done it."
      If that is the proposed consultation, I hate to think of what we shall have in the future.
      Public interest will not be best served if the British Gas Corporation is overruled. It has some of the best safety standards in the world, with some of the most experienced gas engineers. If it says that any given modification is unsafe, for my money it is definitely unsafe. Although the Secretary of State will receive representations on modifications from equally experienced engineers, their experience is in oil technology, which is very different from gas. The chances of confusion or accident with such a finely-tuned mechanism as the transmission system will become infinitely greater.
      In Committee the Under-Secretary of State said—I regret to say with absolute seriousness—that, if the BGC was unhappy with the safety provisions arising from modifications, it could go to court. Their Lordships do not understand basic economics, let alone the finer points of gas safety. I would be happy to leave public safety on the streets to Lord Scarman, but heaven help us if he must adjudicate on public safety under the streets. I doubt whether he or his colleagues would wish that burden to be put on their shoulders.
      The Under-Secretary of State gave the game away in Committee when he said:
      "To leave the details of the Government's modifications entirely in the hands of the corporation would, I fear, be tantamount to asking the private supplier to sign a blank cheque."—[Official Report, Standing Committee E; 11 March 1982, c. 918.]
      386
      That is not what we mean by creating conditions of real competition in the market place. In other words, commerce, not safety, will decide and dictate modifications to British gas pipelines.
      While arbitration is not the most satisfactory method to be adopted in any event, it is, as the right hon. Member for Orkney and Shetland indicated the least damaging option. Therefore, I sincerely hope that the Secretary of State will be a little more generous and accept the amendment.
      Mr. Douglas: The Opposition have tabled an interesting amendment. I am glad that the hon. Member for Bedford (Mr. Skeet) is now in his place. The Secretary of State knows that he has pressed the Government to write into the Bill a definition of gas that we did not have before. The hon. Gentleman is to be congratulated by every hon. Member.
      Unfortunately, in a way this involves a comprehensive view of what should be included—not only natural gas or methane, but propane, butane, ethane and so on, and this could be an area of possible and probable dispute between the Secretary of State and the BGC. The clause states:
      "the Secretary of State may, after giving the Corporation an opportunity of being heard about the matter, give directions to the Corporation in accordance with subsection (2) below, in consequence of the application."
      With his industrial wisdom, the Secretary of State knows that it is bad for civil servants or anyone else to second-guess, especially when there are people in the field engaged in the day-to-day operation. As a principle, that is a difficult and bad thing to do. Nevertheless, under this clause, the Secretary of State takes unto himself the responsibility of adjudicating what shall be in the best interests of the system as a whole. He takes unto himself the responsibility of determining major and difficult matters of public safety.
      It is one thing to take on such responsibilities if one is running a system that will be totally related to United Kingdom requirements. Even that is difficult to embrace. However, in his oft-quoted speech at the Institute of Petroleum dinner, the right hon. Gentleman gave great credence to the fact that he would be favourably disposed to the export of gas. That is quite another matter. In that event, he will be concerned not only with the commercial good of the United Kingdom but with judgments of what is good in terms of the North Sea operators getting a higher price for the gas should it be exported.
      Even in the best of all possible worlds, there is bound to be pressure on both individuals giving advice to the Secretary of State and on the companies. We all know that lobbying is part of the parliamentary system. People can exert pressure and write to Members of Parliament or to the Secretary of State stating that we should open up the system because such-and-such an application would be beneficial to their constituency and attract jobs. That is perfectly legitimate. I therefore hope that the right hon. Gentleman will not argue that he will not be subjected to such pressures or that somehow or other he will remain completely above them. It would be almost impossible for anyone to be in that position.
      Therefore, if there were a legitimate difference of opinion between the Secretary of State—that is, his advisers—and the corporation on modifications specified in directions on safety, there would be a real need, in the public interest, to have it ventilated. I am sure that the Secretary of State would listen to the corporation's view.

      387
      However, he could not say, having listened to its view, that it was his judgment against the corporation's. No Secretary of State would want just that. Somehow or other, that fact would get out and he would have to defend his position. It is much better to have this type of highly technical matter ventilated and determined, where possible, by arbitration.
      I am obviously in some difficulty on this aspect because it is a question of who will second-guess both the Secretary of State and the corporation. That is a difficult decision. The appointment of an arbitrator or, in Scottish terms, an adviser, could be mutually agreed. I hope that the Secretary of State will deploy his mind on that issue. I am sure he appreciates that the whole House wants to be sure on this matter.
      There may be a conflict of opinion on opening the systems in terms of junctions and many modifications. The Secretary of State should not shut his mind to calling in opinions from outwith his Department and the corporation to settle such issues. That would be judicious and no Secretary of State, desirous of making it abundantly clear that public safety and not commercial gain was the main interest, could possibly resist this amendment.
      Mr. Michael Morris: I listened with care to the representations from the Opposition Benches. I find it difficult to believe that any safety dimension should be considered by arbitration. If the Secretary of State feels that the large number of modifications referred to by the hon. Member for Dunfermline (Mr. Douglas) is a smokescreen for preventing expansion, he should expose them as such. However, if there were genuine safety dimensions because of some particular—I cannot imagine there would be more than one or two at the most—modification, my right hon. Friend the Secretary of State would take advice. On taking that advice, he would respond to it.
      We would show gross dereliction of our duty in the House if we suggested that the whole issue should be shrugged off on to some arbitrator. In any case, he might get it wrong. The Secretary of State or his successor and the British Gas Corporation between them ought to be able to resolve the safety requirements. No Secretary of State, regardless of which party is in Government, will in the end go against the safety requirements.
      Dr. J. Dickson Mabon: I am astonished at what has happened tonight. The hon. Member for Dunfermline (Mr. Douglas) argued the case ambitiously for more than can be achieved. The Secretary of State does not want this amendment or change. He wants to stick to what he has got so far. In retrospect, perhaps a year from now, the Tories will substantially regret what they have done or are going to do tonight. They are doing something that is difficult to understand.
      The Tories are trying to evaluate a situation that does not exist. The Minister wants to privatise. That is what he is there for and that is why he has been sent to the Department. In the long run, he might be wrong. We are trying to argue with him. We should like him to come back to the House of Commons and say that we should discuss both this and other parts of the Bill. He will not discuss them. He knows—
      9.45 pm
      Mr. Dalyell: Please sit down.
      Dr. Mahon: I am not aware that the guillotine descends at 10 o'clock. [HON. MEMBERS: "It does. "] I must have made a mistake.
      The Minister is wrong and will regret his decision. I ask him to reconsider his decision, and to agree with the amendment.
      Mr. Lawson: I agree that we suffered a sad loss due to the absence of the right hon. Member for Orkney and Shetland (Mr. Grimond) from Committee. However, I regret that I cannot agree with the amendment.
      Let us remind ourselves of the purpose of the exercise. We are seeking to bring competition in the supply of gas that can be achieved only if there is effective private access to the British Gas Corporation's pipeline network so that there is a common carrier. At the same time, we have to maintain safety standards.
      I fully appreciate and accept the concern that Opposition Members voiced about safety, but the Bill correctly strikes a balance. In the debate on the previous amendment, the right hon. Member for Leeds, South (Mr. Rees) spoke about problems of delay. If amendment No. 12 were carried, that would be a recipe for delay and procrastination.
      There ar two concepts in the amendment—that, if it wishes, the BGC should come forward with alternative proposals for safety and that there sould be arbitration on disagreements. Those are already in the Bill as drafted, but the amendment seeks to submerge the common carrier under a welter of superfluous bureaucracy. Our intention is to operate—[Interruption.] We are concerned about safety. If the hon. Member for Merthyr Tydfil (Mr. Rowland) is not concerned about safety, he should not pretend that he is.
      We intend to operate the common carrier provision in the clause in a businesslike and expeditious way. Of course, it is right that the BGC should be given the opportunity to state its side of the story, whether on safety or any other matters. However, that opportunity is already guaranteed through clause 16(1). Once that has been done, the way is clear for me as Secretary of State to consider the evidence and to decide whether I propose to give a direction. It is in the interests of everyone that matters should not drag on or be dogged by uncertainty, but should be resolved definitely.
      Mr. Robert C. Brown: Does the Secretary of State agree that it is manifestly unfair that, when his direction is directly against all the engineering expertise of BGC, he says that BGC is still responsible for safety?
      Mr. Lawson: I do not think it is.
      Perhaps I should develop my account of the procedure as it is in the Bill. That might go some way towards satisfying the hon. Gentleman, although I doubt whether it will satisfy him totally.
      Under the amendment that we are now debating, the private supplier would be put in a totally impossible position. He might apply for a direction under clause 16 and, after the corporation had been heard, I might then issue a direction. However, the private supplier would still not know whether he could rely on that direction. The gas corporation might submit alternative proposals even at that late stage. The amendment proposes no time limit on the corporation coming forward with alternative proposals—it could be months, or indeed years, later.
      guru

      389
      How is a private supplier to undertake what may be a considerable investment in his project with this open-ended uncertainty hanging over him? The private supplier is not mentioned at all in the amendment. He will not even be informed if the corporation submits alternative proposals. Nothing in the amendment gives him any role whatever in an arbitration.
      Mr. Dalyell: I do not ask for an answer now, but can we have an assurance that the Government will consider the complex matter that has arisen relating to the farmers and the public inquiry and the letters of the two Under-Secretaries? Can that be looked at and a possible Lords amendment introduced?
      Mr. Lawson: The worries of the National Farmers Union on this matter are unfounded. In the letter of the Under-Secretary of State, my hon. Friend the Member for Croydon, Central (Mr. Moore), to the president of the National Fanners Union, he wrote:
      "I hope that I have fully answered the main concerns expressed in the memorandum, but if there are still points of difficulty, please let me know. I shall be happy to discuss them further if you feel that would help."
      No response has been received, but that offer remains open.
      The potential for delay, the issue that we are discussing in this amendment, has been borne out by discussions that we have had with oil companies about the operation of the common carrier system. As potential private suppliers, the companies want certainty and procedures that are not so lengthy and open-ended as to make commercial arrangements wholly impractical. That is what I fear would be the result of the proposed amendment.
      I am not sure whether the Opposition have discussed this amendment with any of the companies which are potential private suppliers. I rather doubt that they have done so. If they had, they would know that the amendment would render clause 16 useless from a private supplier's point of view. That could be their intention—I do not know. The Government are bound to reject it.
      As for the gas corporation coming forward with alternative proposals where it is concerned about safety, the corporation already has an opportunity to do so in the Bill as drafted. Indeed, it will have two such opportunities, I made it clear on Second Reading. I said:
      "In the first instance it will be up to other suppliers to negotiate with the corporation the terms on which it is prepared to transmit their gas through its grid."—[Official Report, 19 January 1982; Vol. 16, c. 173.]
      In Committee, my hon. Friend the Under-Secretary of State mentioned that it would be open to me, as Secretary of State, to reject an application under clause 17(1)(a) where I was not satisfied that the applicant had made sufficient attempt to achieve his objective through commercial negotiations with the corporations. He explained that the filter would probably also affect applications under clause 16 because it is unlikely that an applicant would pursue a question of increased capacity or the installation of junctions, the cost of which he would have to defray in normal circumstances, unless he was confident that he would have the opportunity to make use of the pipeline once the modifications under clause 16 had been executed.
      When a private supplier approaches the gas corporation to negotiate in this way, and the corporation sees some
      390
      safety difficulty—this is what Labour Members were particularly concerned about—there would be nothing at all to prevent the corporation from suggesting alternative modifications. That is the first opportunity.
      The second opportunity comes if the corporation and the private supplier disagree. The private supplier then applies to me for a direction under clause 16. Clause 16(1) provides that, before giving any directions, I have to give the corporation an opportunity to be heard. Here again, if the corporation sees any safety problem, it will be able to draw it to my attention. It should do so; I am sure it would do so, and would propose alternative solutions. Therefore, there is no need to provide yet a third opportunity, as the amendment would do.
      The concept of arbitration—the other part of the amendment—is also a duplication, because the whole purpose of clause 16 is to permit access to me as Secretary of State so that I can arbitrate on differences between the corporation and private suppliers which it has not been possible to resolve through negotiation. The only effect of laying one arbitration on top of another, as the amendment proposes, would be pointless delay and burgeoning bureaucracy.
      It is possible to conceive of a totally different system in which the regulatory responsibility rests not with the Secretary of State and the Department but with an independent regulatory agency. I made it clear on Second Reading that as we gain experience it may well be sensible to move the regulatory responsibilities from the Department to an independent agency, but at this stage it would be foolish to set up some brand new agency. To get off the ground it would be much more sensible to have the regulatory functions carried out by the Department and by the Secretary of State.
      Mr. Dalyell: Just who in the Department actually does the arbitrating?
      Mr. Lawson: The Department is recruiting extra staff. That was made clear on Second Reading when the hon. Member mentioned the matter.
      It is implicit in the suggestions of Labour Members that I or any other Secretary of State would be likely to make directions which flew in the face of safety considerations and that there should be some further safeguard or some outside arbitrator, although the amendment does not say precisely who that arbitrator would be, as the right hon. Member for Orkney and Shetland said. There is no need for such a safeguard because the clause already provides the opportunity for everybody to be heard. It is inconceivable that any Secretary of State would make directions which flew in the face of safety.
      I remind the right hon. Member for Leeds, South (Mr. Rees) and his hon. Friends that ever since the Gas Act 1972, which he and his hon. Friends fully support, it has been specifically the responsibility of the Secretary of State to make safety regulations under section 31 of that Act—regulations that we are strengthening, incidentally, in clause 14.
      Very shortly we shall be moving on to part IV of the Bill, dealing with offshore safety—another very important area of safety—where again the responsibility lies with the Secretary of State. This has all been agreed on both sides of the Committee and I am sure that it will be agreed on both sides of the House today.
      I do not believe that there is any reason on safety grounds for accepting the amendment. In practice, the

      391
      amendment would make the common carrier provisions of the Bill a dead letter. I ask the House to reject the amendment.
      Mr. Merlyn Rees:The Secretary of State referred to legislation from the early part of the last decade. The whole point is that we now have a common carrier provision. That is the change.
      The Secretary of State also said that perhaps in the long run there would be an independent agency. In that respect, minds on each side of the Chamber are thinking in the same direction. I would not contend that the amendment as drafted is the correct way to deal with the question, but it appears that the Secretary of State is thinking about the same problem as we are.
      We were prompted to table the amendment because it was said in Committee that the Secretary of State would direct the gas corporation to act in a certain fashion. The Under-Secretary said that from that moment on the responsibility was that of the gas corporation. In a court of law, whose responsibility would it be if the gas corporation's representative, following an accident, an explosion or whatever, said that modifications had been carried out not as the Corporation had wanted, but as the Secretary of State had desired. In my view, in law the responsibility would rest with the Secretary of State. We were directing our minds to that aspect when we tabled the amendment.
      Question put, That the amendment be made:—
      The House divided: Ayes 213, Noes 282.

      Division No. 115]

      [10.00

      AYES

      Abse, Leo

      Dalyell,Tam

      Allaun,Frank

      Davidson,Arthur

      Alton,David

      Davies, Rt Hon Denzil (L 'lli)

      Anderson,Donald

      Davies, Ifor (Gower)

      Archer, Rt HonPeter

      Davis, Clinton (HackneyC)

      Ashley, Rt HonJack

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

      Ashton,Joe

      Deakins,Eric

      Atkinson,N.(H'gey,)

      Dean, Joseph (Leeds West)

      Bagier,Gordon A.T.

      Dixon,Donald

      Barnett, Rt Hon Joel (H'wd)

      Dobson,Frank

      Beith, A.J.

      Dormandjack

      Benn, Rt HonTony

      Douglas,Dick

      Bennett,Andrew(St'kp'tN)

      Douglas-Mann,Bruce

      Bidwell,Sydney

      Dubs,Alfred

      Booth,Rt HonAlbert

      Duffy, A. E. P.

      Boothroyd, MissBetty

      Dunn, James A.

      Bottomley,RtHonA.(M'b ro)

      Dunwoody, Hon Mrs G.

      Bray, Dr Jeremy

      Eadie,Alex

      Brown, Hugh D. (Provan)

      Eastham, Ken

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

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

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

      Ellis, R. (NED'bysh're)

      Brown,Ron(E'burgh,Leith)

      Ellis, Tom (Wrexham)

      Buchan,Norman

      English,Michael

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

      Evans, Ioan (Aberdare)

      Campbell,Ian

      Evans, John (Newton)

      Canavan,Dennis

      Field,Frank

      Cant, R. B.

      Fletcher,Ted (Darlington)

      Carmichael,Neil

      Ford, Ben

      Cartwright,John

      Forrester,John

      Clark, DrDavid (S Shields)

      Foster, Derek

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

      Foulkes,George

      Coleman,Donald

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

      Concannon, Rt Hon J. D.

      Garrett, Joh n (Norwich S)

      Cook, Robin F.

      Garrett, W. E. (Wallsend)

      Cowans,Harry

      George,Bruce

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

      Golding,John

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

      Graham,Ted

      Crowther,Stan

      Grant,George(Morpeth)

      Cryer, Bob

      Grant,John (IslingtonC)

      Cunliffe,Lawrence

      Grimond, RtHonJ.

      Cunningham, DrJ. (W'h 'n)

      Hamilton,James(Bothwell)

      392

      Hamilton, W. W. (C'tralFife)

      Penhaligon,David

      Hart, Rt Hon Dame Judith

      Powell Raymond(Ogmore)

      Hattersley, Rt Hon Roy

      Prescott,John

      Heffer, Eric S.

      Race, Reg

      Hogg, N. (EDunb't'nshire)

      Radice,Giles

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

      Rees, Rt Hon M (Leeds S)

      HomeRobertson,John

      Richardson,Jo

      Homewood,William

      Roberts,Albert(Normanton)

      Hooley,Frank

      Roberts,Allan(Bootle)

      Horam,John

      Roberts,Gwilym (Cannock)

      Howell, Rt Hon D.

      Robertson,George

      Howells,Geraint

      Robinson, G. (CoventryNW)

      Hoyle,Douglas

      Robinson, P. (Belfast E)

      Huckfield,Les

      Rooker, J. W.

      Hughes, Mark(Durham)

      Roper,John

      Hughes, Robert (AberdeenN)

      Rowlands,Ted

      Janner, Hon Greville

      Ryman,John

      Jay, Rt Hon Douglas

      Sandelson,Neville

      Johnson, Walter (Derby S)

      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

      Kilroy-Silk,Robert

      Short, Mrs Renée

      Lambie,David

      Silkin, Rt Hon J.(Depfford)

      Lamborn,Harry

      Silkin, Rt Hon S. C. (Dulwich)

      Lamond,James

      Silverman,Julius

      Leadbitter,Ted

      Skinner,Dennis

      Leighton,Ronald

      Smith, Rt Hon J. (N Lanark)

      Lestor, MissJoan

      Soley,Clive

      Lewis, Arthur (N'ham NW)

      Spearing,Nigel

      Lewis, Ron (Carlisle)

      Spriggs,Leslie

      Lofthouse,Geoffrey

      Stallard,A.W.

      Lyon,Alexander(York)

      Steel, Rt Hon David

      Lyons, Edward (Bradf'dW)

      Stewart, Rt Hon D. (W lsles)

      Mabon, Rt Hon Dr J. Dickson

      Stoddart,David

      McCartney,Hugh

      Stott,Roger

      McDonald,DrOonagh

      Strang,Gavin

      McElhone,Frank

      Strawjack

      MacKenzie, Rt Hon Gregor

      Summerskill,HonDrShirley

      Maclennan,Robert

      Thomas, DrR. (Carmarthen)

      McNally,Thomas

      Thorne, Stan (PrestonSouth)

      McNamara,Kevin

      Tilley,John

      McTaggart,Robert

      Tinn,James

      Marks,Kenneth

      Torney,Tom

      Marshall, D(G'gowS'ton)

      Varley, Rt Hon Eric G.

      Marshall,DrEdmund (Goole)

      Wainwright,E.(DearneV)

      Marshall, Jim (LeicesterS)

      Wainwright,R.(ColneV)

      Martin,M(G'gowS'burn)

      Walker, Rt Hon H.(D'caster)

      Mason, Rt Hon Roy

      Welsh,Michael

      Maxton,John

      White, FrankR.

      Maynard,MissJoan

      White,J.(G'gow Pollock)

      Meacher,Michael

      Whitehead,Phillip

      Millan,Rt Hon Bruce

      Whitlock,William

      Miller, Dr M. S. (EKilbride)

      Wigley,Dafydd

      Mitchell,Austin(Grimsby)

      Willey,Rt Hon Frederick

      Mitchell, R. C. (Soton Itchen)

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

      Morris, Rt Hon A. (W'shawe)

      Wilson,Gordon (DundeeE)

      Morris, Rt Hon C. (O'shaw)

      Wilson,William (C'trySE)

      Morris, Rt Hon J. (Aberavon)

      Winnick,David

      Morton,George

      Woodall,Alec

      Moyle, Rt Hon Roland

      Woolmer,Kenneth

      Newens,Stanley

      Wrigglesworth,Ian

      O'Halloran,Michael

      Wright,Sheila

      O'Neill,Martin

      Park,George

      Tellers for the Ayes:

      Parker,John

      Mr. Frank Haynes and Mr. Allen McKay.

      Parry,Robert

      Pendry,Tom

      NOES

      Adley,Robert

      Baker, Nicholas (NDorset)

      Aitken,Jonathan

      Banks,Robert

      Alexander,Richard

      Beaumont-Dark,Anthony

      Alison,Rt Hon Michael

      Bendall,Vivian

      Amery, Rt Hon Julian

      Benyon,W. (Buckingham)

      Ancram,Michael

      Best,Keith

      Arnold,Tom

      Bevan,David Gilroy

      Aspinwall,Jack

      Biffen, Rt Hon John

      Atkins, Rt Hon H. (S'thorne)

      Biggs-Davison,SirJohn

      Atkins,Robert(PrestonN)

      Blackburn,John

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      Blaker,Peter

      Gray,Hamish

      Body,Richard

      G riffiths, E. (B 'ySt. Edm 'ds)

      Bonsor,SirNicholas

      Griffiths, Peter Portsm'thN)

      Boscawen,HonRobert

      Grist,Ian

      Bottomley, Peter (W'wich W)

      Grylls,Michael

      Bowden,Andrew

      GummerJohnSelwyn

      Braine,SirBernard

      Hamilton,HonA.

      Bright,Graham

      Hamilton,Michael(Salisbury)

      Brittan, Rt.Hon.Leon

      Hampson,DrKeith

      Brooke, Hon Peter

      Hannam,John

      Brotherton,Michael

      Haselhurst,Alan

      Brown,Michael(Brigg& Sc'n)

      Havers, Rt Hon Sir Michael

      Browne,John (Winchester)

      Hawkins,Paul

      Bruce-Gardyne,John

      Hawksley,Warren

      Bryan,SirPaul

      Hayhoe, Barney

      Buck,Antony

      Heddle,John

      Budgen,Nick

      Henderson,Barry

      Bulmer,Esmond

      Heseltine,Rt Hon Michael

      Burden,SirFrederick

      Hicks,Robert

      Butcher,John

      Higgins, Rt Hon Terence L.

      Butler, HonAdam

      Hogg,HonDouglas(Gr'th'm)

      Cadbury,Jocelyn

      Holland,Philip(Carklton,)

      Carlisle,John (LutonWest)

      Hooson,Tom

      Carlisle,Kenneth (Lincoln)

      Hordern,Peter

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

      Howe, Rt Hon Sir Geoffrey

      Chalker, Mrs.Lynda

      Howell,RtHonD.(G'ldf'd)

      Channon, Rt. Hon. Paul

      Howell, Ralph (NNorfolk)

      Chapman,Sydney

      Hunt,David (Wirral)

      Churchill,W.S.

      Hunt, John (Ravensbourne)

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

      Hurd,Rt Hon Douglas

      Clark, SirW. (Croydon S)

      Irving, Charles (Cheltenham)

      Clarke,Kenneth (Rushcliffe)

      Jessel,Toby

      Cockeram,Eric

      JohnsonSmith,Geoffrey

      Colvin,Michael

      Jopling,Rt Hon Michael

      Cope,John

      Joseph,Rt Hon Sir Keith

      Corrie,John

      Kaberry,SirDonald

      Costain,SirAlbert

      Kershaw,SirAnthony

      Cranborne,Viscount

      Kitson,SirTimothy

      Critchley,julian

      Lamont,Norman

      Dean, Paul (NorthSomerset)

      Lang, Ian

      Dickens,Geoffrey

      Latham,Michael

      Dorrell,Stephen

      Lawrence,Ivan

      Douglas-Hamilton,LordJ.

      Lawson, Rt Hon Nigel

      Dover,Denshore

      Lee,John

      du Cann, Rt Hon Edward

      LeMarchanLSpencer

      Dunn,Robert (Dartford)

      Lennox-Boyd,HonMark

      Durant,Tony

      Lester, Jim (Beeston)

      Dykes,Hugh

      Lewis, Kenneth (Rutland)

      Eden, Rt Hon Sir John

      Lloyd, Ian (HavantA W'loo)

      Edwards, Rt Hon N. (P'broke)

      Lloyd, Peter (Fareham)

      Eggar,Tim

      Loveridge,John

      Elliott,SirWilliam

      Luce,Richard

      Emery, SirPeter

      Lyell,Nicholas

      Eyre,Reginald

      Macfarlane,Neil

      Fairbairn,Nicholas

      MacGregorJohn

      Fairgrieve,SirRussell

      MacKay, John (Argyll)

      Faith,MrsSheila

      Macmillan, Rt HonM.

      Farr,John

      McNair-Wilson, M. (N'bury)

      Fell,SirAnthony

      McNair-Wilson, P. (NewF'st)

      Finsberg,Geoffrey

      McQuarrie,Albert

      Fisher,SirNigel

      Marland,Paul

      Fletcher,A. (Ed'nb'ghN)

      Marshall,Michael (Arundel)

      Fletcher-Cooke,SirCharles

      Marten,Rt Hon Neil

      Fookes, Miss Janet

      Mates,Michael

      Forman,Nigel

      Maude, Rt Hon Sir Angus

      Fowler, Rt Hon Norman

      Mawby, Ray

      Fox,Marcus

      Mawhinney,DrBrian

      Fraser, Peter (SouthAngus)

      Maxwell-Hyslop,Robin

      Fry, Peter

      Mayhew,Patrick

      Gardiner,George(Reigate)

      Mellor,David

      Gardner, Edward (SFylde)

      Meyer,SirAnthony

      Garel-Jones,Tristan

      Miller,Hal (B'grove)

      Gilmour, Rt Hon Sir Ian

      Mills,Iain (Meriden)

      Glyn, DrAlan

      Mills, Peter (WestDevon)

      Goodhart,SirPhilip

      Miscampbell,Norman

      Goodhew,SirVictor

      Moate,Roger

      Goodlad,Alastair

      Monro,SirHector

      Gorst,John

      Montgomery, Fergus

      Gow, Ian

      Moore,John

      Grant, Anthony (HarrowC)

      Morris, M. (N'hamptonS)

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      Morrison, Hon C. (Devizes)

      Spicer, Michael (S Worcs)

      Morrison, Hon P. (Chester)

      Sproat,Iain

      Mudd,David

      Squire,Robin

      Murphy,Christopher

      Stainton,Keith

      Myles, David

      Stanbrook,lvor

      Neale,Gerrard

      Stanley,John

      Neubert,Michael

      Steen,Anthony

      Newton,Tony

      Stevens,Martin

      Normanton,Tom

      Stewart,A. (ERenfrewshire)

      Nott,Rt Hon John

      Stewart, Ian (Hitchin)

      Onslow,Cranley

      Stokes John

      Oppenheim, Rt Hon Mrs S.

      StradlingThomas,J.

      Osbornjohn

      Tapsell,Peter

      Page, John (Harrow, West)

      Taylor, Teddy (S'end E)

      Page, Richard (SWHerts)

      Tebbit, Rt Hon Norman

      Parris,Matthew

      Temple-Morris,Peter

      Patten,Christopher(Bath)

      Thatcher, Rt Hon Mrs M.

      Patten,Johnf(Oxford)

      Thomas, Rt Hon Peter

      Pattie,Geoffrey

      Thompson,Donald

      Pawsey, James

      Thorne,Neil(IlfordSoufh)

      Percival,Sir Ian

      Thornton,Malcolm

      Peyton, Rt Hon John

      Townend,John(Bridlington)

      Pollock,Alexander

      Townsend, CyrilD, (B'heath)

      Porter,Barry

      Trippier,David

      Prentice, Rt Hon Reg

      Trotter,Neville

      Proctor, K. Harvey

      van Straubenzee,SirW.

      Pym, Rt Hon Francis

      Vaughan,DrGerard

      Raison, Rt Hon Timothy

      Viggers,Peter

      Rathbone,Tim

      Waddington,David

      Rees-Davies, W. R.

      Wakeham,John

      Renton,Tim

      Waldegrave,HonWilliam

      Rhodes James, Robert

      Walker, B. (Perth)

      RhysWilliams,SirBrandon

      Walker-Smith, Rt Hon Sir D.

      Ridley,HonNicholas

      Wall,SirPatrick

      Rippon,RtHonGeoffrey

      Waller, Gary

      Roberts, M. (CardiffNW)

      Walters,Dennis

      Roberts, Wyn (Conway)

      Ward,John

      Rossi,Hugh

      Warren,Kenneth

      Rost, Peter

      Wells,Bowen

      Sainsbury,HonTimothy

      Wells,John(Maidstone)

      St. John-Stevas, Rt Hon N.

      Wheeler,John

      Shaw, Giles (Pudsey)

      Whitelaw,Rt Hon William

      Shaw,Michael(Scarborough)

      Whitney,Raymond

      Shelton,William(Streatham)

      Wickenden,Keith

      Shepherd,Colin(Hereford)

      Wiggin,Jerry

      Shepherd,Richard

      Wilkinson,John

      Silvester,Fred

      Winterton,Nicholas

      Sims,Roger

      Wolfson,Mark

      Skeet, T. H. H.

      Younger, Rt Hon George

      Speed,Keith

      Speller,Jony

      Tellers for the Noes:

      Spence,John

      Mr. Anthony Berry and Mr. Carol Mather.

      Spicer, Jim (WestDorset)

      Question accordingly negatived.
      Mr. Douglas: I seek your guidance, Mr. Speaker. It would perhaps be for the convenience of the House if I were not to move my amendment No. 13 to clause 20, so that we can have a tidier debate and perhaps, with your permission, refer to it in the debate on the following amendment.
      Mr. Speaker: I think that that meets the wishes of the House and, if it will help the House, so be it.

    Clause 23

      EXTENDED MEANING OF "OFFSHORE INSTALLATION"
      Mr. Merlyn Rees: I beg to move amendment No. 14, in page 28, line 5, at end insert—
      "(1) No person, company or organisation may operate in controlled waters unless they have agreed to the following terms and conditions; that they shall—

      (a) report each use of baskets for the transfer of personnel to the Secretary of State, with an explanation of the circumstances in which the use of the basket was deemed

      395
      necessary.

      (b) ensure all personnel have access at all times to immersion suits.

      (c) only employ personnel who have valid United Kingdom work permits.

      (d) only use vessels which are of a standard which is equal to that of U.K. registered vessels as regards safety; and ensure that such standards are met; and insist, as a condition of the chartering of a vessel that Department of Trade inspectors may at any time have access to the vessel.

      (e) ensure that safety inspectors have at all times access to any offshore installations without prior notice.".

      There are five parts to the amendment and I shall take them in turn, but by way of introduction I emphasise that we are dealing with the serious matter of safety in the North Sea. We discussed this at length in Committee and had a valuable debate. Like others of my hon. Friends I have detailed the deaths and accidents in the North Sea. We on the Opposition Benches have called in aid the safety at sea charter, drawn up by my colleagues in the House, of whom my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) was the leading member, and a group of trade unionists.
      If I take it as read, it is because we spent some time on it during the Second Reading and in Committee. The Minister of State responded to the charter, and part of our debate in Committee was on the detailed reply that the Minister of State gave to the delegation that went to see him.
      The amendment begins by saying:
      "No person, company or organisation may operate in controlled waters unless they have agreed to the following terms and conditions".
      The first condition relates to the use of baskets. This is a method of transferring people from a rig and, as the Secretary of State said, this would be done only in an emergency. We went into what constituted an emergency. We made the point that in other parts of the world, for example in Norway, there are very much stricter rules governing the use of baskets.
      10.15 pm
      This is an important matter. We take the point put to us by the Minister of State when we discussed the issue with him at the Department of Energy. We merely ask that each time baskets are used to transfer personnel it is reported to the Secretary of State, with an explanation of the need for their use. The information could be collected by the Department and after a year or two the point could be proved one way or the other.
      Paragraph (b) would ensure that
      "all personnel have access at all time to immersion suits".
      That is an important safety measure in the cold waters of the North Sea off Orkney and Shetland and the north-west of Scotland. The Royal Air Force provides such equipment to crews who might have to ditch in the North Sea. Last year a number of us went to visit a rig from Aberdeen and back to Sumburgh. We were provided with immersion suits and told that they were absolutely necessary. All personnel should have access to them at all times.
      Paragraph (c) concerns United Kingdom work permits. The responsibility is principally that of the Home Office. Over the years the trade unions have argued forcefully that if work permits are necessary on the mainland they should be necessary on the rigs. In Committee we argued that the rigs, and perhaps the safety zones, should be treated as part of the United Kingdom.
      One problem is that people may arrive on the rigs from Norway, but it would be easy for the employers to report
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      that a work permit had been applied for and was in use. There is always a point of exit back to the United Kingdom proper. It would be a simple task.
      As my hon. Friend the Member for Kingston upon Hull, East knows, there is a problem particularly with catering staff, whose wages are low. A person working without a permit knows that he may have a problem if he comes to the mainland, so he keeps his mouth shut.
      Paragraph (d) lays down that only vessels should be used
      "which are of a standard which is equal to that of U.K. registered vessels as regards safety".
      It is said that there would be difficulties when ships sailing under flags of convenience were in the safety zones. The Minister of State may argue that, if we take action, action might be taken against us in different parts of the world. I do not necessarily accept that, but that is why we have included the phrase "as regards safety". It is safety that we are concerned with here. It is the one thing that we have pulled out of the general argument.
      On the last point, what we are asking for is applicable in Norway, namely,
      "that safety inspectors have at all times access to any offshore installations without prior notice".
      What is the point of an inspection if notice has to be given? Anyone who was in the Services will be aware that, when it was known that there was to be an inspection, it was necessary to blanco everything in sight. Surely the safety inspectors should have access to any offshore installation without prior notice.
      Although we did not get all that we wanted on this the replies that the Minister gave were extremely helpful. They are a start in the longer process of getting the safety charter applied to the North Sea. We shall continue to press for that. What we have done in this five-part amendment is to put to the Government changes that oug ht to be made with regard to safety.
      If it is thought that work permits have nothing to do with safety, the House should remember that it is helpful in an emergency if people on the rigs can speak the same language or at least understand each other. It is like the problem in the Welsh pits after the war. It was not chauvinism when the Welsh miners did not like the Poles in the pits in the early days. If someone is in trouble, he wants to be able to communicate quickly and briefly. It is difficult when people do not speak the same language. All the points in the amendment relate to safety, and I hope that the Minister will accept it.
      Mr. Douglas: I agree with the amendment that has been moved by my right hon. Friend the Member far Leeds, South (Mr. Rees). With the indulgence of the House I should like to return to one or two aspects of the safety provisions of the Bill which my right hon. Friend may not have wanted to go over again because they were covered in Committee.
      In regard to the designation of a safety zone, I press the Minister again on the reasons for curtailing this to 500 metres. I know that this is part of the international convention and that there are difficulties about extending it, but the Minister should take cognisance of the spread of the anchor chains of the new generation of semi-submersibles. The safety zone of 500 metres is insufficient to cater for the spread of the 12 or perhaps more anchor chains that might be in a star configuration or whatever configuration is deemed necessary. To restrict the zone to 500 metres does not give the degree of safety that is

      397
      necessary when dealing with vessels that can drill in water from 2,000 to 5,000 ft deep, although they would hardly be anchored in 2,000 ft of water.
      Mr. Deputy Speaker: Order. Could the hon. Member enlighten me as to which amendment he is addressing himself to? He should be addressing himself to amendment No. 14. It think Mr. Speaker said that he would allow discussion on amendment No. 13, but it ought to be one or other of those.
      Mr. Douglas: I respect your stricture, Mr. Deputy Speaker. I am dealing with the generality of safety in amendment No. 14. If we are talking about safety in terms of a charter, we have to look at the zone to which that charter will apply. This relates to clause 20, where we designate particular areas as safety zones.
      Mr. Deputy Speaker: We are actually talking about clause 23, not clause 20.
      Mr. Douglas: I understand. I submit to you, Mr. Deputy Speaker, that clauses 20 to 27 hang together. One cannot speak about any of these clauses without referring to the interpretation clause and, indeed, to the meaning of offshore installations in clause 23. I am talking about an offshore installation around which there is a safety zone. It is perhaps a rather technical point, but a semi-submersible has a safety zone designated around it. I am arguing that the safety zone to be designated around an offshore installation, which is a semi-submersible, should be greater than 500 metres. I trust that I am now in order, Mr. Deputy Speaker.
      Mr. Dennis Skinner: Yes, my hon. Friend is in the safety zone.
      Mr. Douglas: I am always grateful to my hon. Friend the Member for Bolsover (Mr. Skinner) for keeping me on the right lines. He knows the rules of this place very well and we are indebted to him.
      I hope that the Minister will take this point on board, because many representations have been made to the effect that, although there are provisions to extend the safety zone, they are not given the same statutory force as the provisions in the Bill.
      The type of vessel that may enter the safety zone brings me to a part of the amendment that I intended to move to clause 20. I wish to press the Minister on the question of the pilotage of these vessels. As he represents an area adjacent to the Moray Firth, he knows that such waters may at times be extremely difficult to navigate and pilots are therefore required.
      Section 4(2) and (3) of the Merchant Shipping Act 1979, which gives certain powers to the Pilotage Commission, says:
      "(2) The Secretary of State may by order confer on the Commission such functions, in addition to the functions conferred on the Commission by this Act, as he considers appropriate for any of the purposes mentioned in the preceding subsection.
      (3) Without prejudice to the generality of the preceding subsection, an order in pursuance of that subsection may in particular provide for the making of schemes under which payments may be made by the Commission for the purpose of compensating pilots",
      and so on.
      We have here a provision whereby the Secretary of State may by order do certain things. We know that this
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      trigger has been held up, and this is causing great difficulty and uncertainty especially in pilotage in Scotland. I realise that this may be the responsibility of another Minister, but now is an appropriate time to raise the matter. There is no Scot on the Pilotage Commission and the problems of navigating Scottish rivers and areas adjacent to the North Sea are causing much concern. We know that the European Commission is trying to achieve harmonisation in the matter, but harmonisation may not be wholly desirable and practical for the problems in the United Kingdom.
      A European Commission directive about oil, gas and chemical tankers provides that vessels of less than 1,600 gross tonnes are not required to carry pilots. I submit, as do my constituents, that such vessels can be as lethal and disastrous as tankers of more than 1,600 gross tonnes.
      I could argue, despite the views of some Members of the European Parliament, that pilotage should be compulsory for all tankers in the congested waters of the Community. Such vessels may enter safety zones without any properly qualified person aboard. We are not discussing merely the safety zones as we now have them. I am sorry that the hon. Member for Dorset, South (Viscount Cranborne) is no longer present. We are reaching a situation where there might be offshore installations very close to land in the English Channel and the Moray Firth.
      10.30 pm
      Mr. Dalyell: I wish to associate myself with the remarks of my hon. Friend. He represents the north bank of the Forth and I represent the south bank. It so happens that two of the senior officials of the Forth Pilots Association are my constituents. I concur with everything that my hon. Friend has said. I urge Ministers to recognise that this is a really important matter.
      Mr. Douglas: As my hon. Friend has said, he represents the area south of the Forth and I represent the area north of it. I have to pay tolls on the Forth bridge to visit my hon. Friend, and vice versa. I ask that the Government take cognisance of a serious situation. There is the problem of vessels moving around the safety zones and the installations and the problem of other vessels that have individuals in charge of them who are not properly qualified to mavigate in the hazardous areas of the North Sea and our coastal waters.
      I declare an interest, because I advise a diving company called Colmex Diving. The certification of divers is a pressing issue. My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott) has done a great deal in pursuing the issue and an order has appeared before the House. However, there is still great concern that individuals who are not properly qualified to dive in the hazardous areas of the North Sea have obtained certificates. How many certificates were issued for divers in the North Sea by companies themselves? Individuals come on board who may have qualifications gained at American or other diving schools and companies see fit to put their imprimaturs on them, but that is not necessarily the imprimatur of the Department. I hope that the Minister will tell us how many individuals are diving in the North Sea on the strength of qualifications that were obtained by the companies that have employed them at some stage.
      What is happening to the diving school at Fort William? Proper safety is related to proper training. If we are to train

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      people and have them certificated, we must provide proper training provisions. I know that all my hon. Friends are anxious to learn what is happening to the Fort William school.
      I trust that the Minister will recognise that these are not political issues. I do not feel that there is any great party political mileage to be obtained from pursuing them and I am sure that the Minister will confirm that. These are
      400
      issues that we must try to face objectively so that we assist those who operate in the extremely hazardous environment of the North Sea, and who will no doubt have to enter the even more hazardous environment of the western sectors of the Irish Sea and west of Shetland. I hope that the Minister will give us his considered view on the issues that my right hon. Friend the Member for Leeds, South and I have raised.
      Mr. John Prescott: I am glad of the opportunity briefly to say a few words about safety, with which I have been involved since becoming a Member of this place in 1970. I declare an interest because I am a member of the National Union of Seamen, which organises quite a few members who work in the North Sea. It is pleasurable to take up the remarks of my hon. Friend the Member for Dunfermline (Mr. Douglas), who has spent a considerable time participating over the years in debates on safety in the North Sea. On many occasions only one or two hon. Members have been involved. He declared an interest in Colmex. My only connection with Colmex is that it taught me to dive, an interest that I have pursued for a long time. It gives me considerable satisfaction to know that we processed through the House in those 10 years many improvements in the diving regulations, under Governments of both parties. They have improved conditions for divers and reduced the high rate of deaths that were occurring in this most dangerous of occupations.
      Although I was not on the Committee, I should like to thank all the hon. Members on the Committee who addressed themselves to the safety charter. It was developed by Labour Members with the trade unions and was launched in Aberdeen in October..I am grateful to my right hon. Friend the Member for Leeds, South (Mr. Rees) who introduced the matter into the Second Reading of the Bill. He and many members of the Committee pursued the arguments embodied in the safety charter and amendment No. 14 covers a number of points in it.
      I am also grateful to the Minister for receiving, probably uniquely, the trade unions and Labour Members with a full representation of civil servants to listen to the arguments and the views about the charter. That was followed by a full reply, which we appreciate, on the matters of safety and our demands that the 20-point charter be implemented by the Government. The Minister will not be surprised if we do not accept all his arguments as to why he cannot implement some or many parts of the charter. Some are already under review and we shall wait to see what he has to say.
      There are some important points under review. One that has excercised the concern of many seamen, in the difficult conditions of the North Sea, is that of interface between ships and oil rigs and how to get cargoes from the one to the other in difficult weather. There is heavy lifting gear which at one moment may seem to be safe but which, when the waves have shoved the ship over by 14 or 15 feet, becomes a dangerous piece of metal slashing around. We hope that some attention can be given to that because we know that technical measures have been found to take account of these adjustments and that is an important question, about which we hope to hear from the Government in the study so that there can be some recommendations.
      Having expressed my appreciation for all that has been done by the members of the Committee, and the attention addressed to the charter, I am pleased also to note that while the Government may not be able to implement all our points, the Labour Party is well on its way to seeing that whatever is left should be implemented by an incoming Labour Government. A good start to that was the Scottish Labour Party conference at Perth, which adopted the 20-point charter. We welcome that development.
      402
      In making some points about this amendment I bear in mind some replies given in the correspondence with the Minister about his reaction to our charter. I have not read all the proceedings of the Committee. I hope to do so, so as to read the fuller explanation that the Minister may have given. I know that the response that we received on the charter was made available to members of the Committee, who were then able to argue with the Minister about the justification of some of the views in his response.
      In the argument about baskets, a judgment has to be made about whether one is prepared to enforce standards on people who may not want to carry them out by voluntary agreement. It may be convenient to get off a vessel at a particular time by basket because the person concerned wants to go home after a long time on the rig. The basket may be the only way to do so. A judgment has to be made and all the unions involved have decided that the basket should not be used. We recognise that there may be certain exceptional circumstances to which the amendment attempts to address itself.
      Norway has already accepted that immersion suits should be implemented on its oil rigs. I believe that two such suits should be made available at different points on the rig. The Government still appear to be studying whether they are required. There should be no doubt about their requirement. I am aware of one contractor who has approached my union with an immersion suit. He says that he is having difficulty in interesting Government Departments in it and mentioned the Department of Trade. Governments should be interested in any product on the market. I take the Under-Secretary of State's nod as meaning that it may be possible to consider such suits and I shall pass the message on. If anyone makes an improved suit, it will be a great asset to the seamen who may be thrown into the sea either from the rig or the ship. I hope that the Government can reach a speedy conclusion, because other countries implemented it some time ago.
      Work permits seem to be causing the Government some difficulty. The Bill is a step forward because it now provides the power to bring in an order and extend the Immigration Act 1971 to the rigs. The basis of the argument is that one cannot implement work permits unless the Immigration Act 1971 applies and, in this case, it does not apply to the oil rigs. Even if the Government are not convinced that the power should be extended, at least it would leave the Labour Party with a framework of legislation to bring in immigration controls and extend work permits.
      When one considers the statement of the Under-Secretary of State that in a recent survey conducted by the Inland Revenue only 15 per cent. of those polled were foreign workers, I do not wish him to believe that that is 15 per cent. of all occupations. Our evidence suggests that the figure is not as low as 15 per cent., but we shall try to obtain some more valuable information to check that. In some occupations, of which diving is one, it is a considerably higher percentage because it is a smaller part of the labour force.
      Divers who have put much time and money into extensive training are now finding out that other people are prepared to work for considerably less in order to get experience of the North Sea and then go to work somewhere else. The divers have not received a wage increase for three years and some have been told that they will be paid for the few weeks that they work—many other workers face the same position—but that they must get the

      403
      rest of the money through unemployment benefit. That is totally unsatisfactory and we are doing our best to prevent it. Many professions are under considerable pressure and have great difficulty in maintaining jobs. I hope that we can give more information about that later.
      Mr. Dalyell: Some hon. Members in Committee hoped that there would be a statement from Ministers on the issues raised about tax. We made a specific request that Mr. Linkie, the head of the East Kilbride centre, should be contacted about the view of the Inland Revenue, who had to operate the scheme, about tax avoidance or evasion in the North Sea, often by foreign nationals.
      Mr. Prescott: I thank my hon. Friend for that intervention. Taxation has always been a contentious issue and I fully endorse what he has said.
      I always find it difficult to understand why the Government believe that they cannot extend immigration controls. They readily admitted in their response that many workers going to the rigs already come through our immigration controls in one form or another, or they may fly directly out to Norway. France and Norway impose controls without any difficulties. I cannot believe, when we have all the talk about the security of our rigs, with commandos and submarines standing by, that our Special Branch does not have a good idea of who is on our rigs. Why are we building up such military squads if a man can catch a plane, go out to the rig and do whatever damage he wishes? It is nonsense. If the Government cannot do it, they should borrow the Special Branch's computers, which I am sure can keep watch on every man who goes on a rig. I do not accept that the Government cannot extend their powers to cover rig workers.
      I believe that the argument about access to the rigs was made in Committee. We want such access, particularly for health and safety inspectors. The Minister has assured us that the health and safety inspector can go out any time he wishes, but the general practice now seems to be that two or three days' notice is given. That is great, but it is not good enough. The sanction should be that he might drop out of the blue to inspect what is happening at that particular time rather than something that has been prepared for his visit.
      10.45 pm
      The argument has always been that there is not enough space on helicopters and that they are always full. I believe that on average the helicopters fly with 50 or 60 per cent. capacity, and that might even be a generous estimate. We therefore cannot accept that argument. We understand that employers do not like someone dropping out of the blue to inspect the rigs. That is a human reaction.
      However, the number of inspectors is important, particularly as in some cases the Minister seems to be relying on codes rather than on statutory requirements. That being so, it should be backed up with the sanction that an inspector might just drop in to see whether the code is being enforced. So far, we are not convinced by the responses that we have received.
      The maintenance of adequate and safe manning and competency standards on vessels is a cause of concern not only in the North Sea but in all areas of maritime activity. The amendment says that if we are prepared to establish a minimum standard for the United Kingdom, that should be the minimum standard that we are prepared to enforce
      404
      on other vessels; otherwise, what is the point of having minimum standards geared to minimum safety manning levels on a vessel?
      If any further evidence is required, we need only remember the tragic loss of the "Union Star" and the lifeboat in the Penlee affair just before Christmas. Once again, the House was confronted with the fact that a vessel inside territorial waters, owned by a British company had lower safety standards flying under another flag than the standards required had it been registered under its own flag. Many men died as a result of that incident.
      I welcome the setting up of a public inquiry, but the argument about minimum safety standards causes considerable concern when it is discovered that the crews are either not competent or inadequate or that the vessels are insufficiently manned. In some cases that can lead to the loss of the ship or, tragically, to the lives of the brave men who try to rescue the crew, simply because Parliament has not enforced minimum standards within our own territorial waters. Perhaps we shall hear more about that in the coming months as a result of the public inquiry.
      The Minister has talked about the possibility of supply boats to the North Sea being solely enforced by "M" notices. Such notices are a neat way of avoiding one's obligations. An "M" notice means maritime notice. It means that no one bothers to observe the recommendation because there is no legal obligation to do so.
      The reality about safety is that we have moved from codes, recommendations and voluntary agreements because they have failed. The number of deaths and accidents continue to increase. That is why diving and seafaring has moved more and more towards statutory control. I become alarmed when the Minister talks about submersibles—submarines—in respect of which we have no regulations.
      Frankly, the industry has always been loth to accept statutory requirements until a few lads die and it finds difficulty running for cover. Yet after all these experiences, the Minister is suggesting that codes of practice will be sufficient for submersibles. That will be fine until we lose another submersible, only 10 hours of air are left, the heat is running out and no one can find it. Once again there will be great concern from the press, and politicians will be accused of getting all the publicity. Now is the time to say that that is not adequate—before the incident occurs. As sure as eggs is eggs, one can be certain of another incident. Great attention will, of course, be given to it.
      Therefore, I have always been most strongly against the reliance on codes and practices. We seem to be going further along that road. Debates in Committee and the House, the awareness shown by the Minister in his full responses and some things under consideration to be implemented are large steps forward from the beginning of the 1970s when not much attention was given in the House to safety and when an awful lot of people were dying. The situation has improved since then. However, we cannot shake off this concern with voluntary cooperation, good will and the best practices. They fail in the North Sea. The quicker we realise that and enforce standards, the sooner we will come into line with the French, Norwegians and others. Only then will we achieve the levels that mean greater enforcement of statutory requirements. That will lead to fewer deaths and accidents. One cannot prevent them, but one can make a good step towards that aim.

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      I hope that these debates will contribute to the day when we will implement all 20 points in the charter and make conditions considerably safer for the many lads who work on, below and above the North Sea, producing a valuable resource for Britain.
      Mr. Michael Morris: The hon. Member for Kingston upon Hull, East (Mr. Prescott) made a powerful contribution. I shall address a few remarks to subsection 1(c) of amendment No. 14, concerning the employment of only
      "personnel who have valid United Kingdom work permits."
      Opposition Members and my hon. Friends expressed much surprise when we discussed this dimension in Committee. It was discovered that the United Kingdom Immigration Acts did not apply in the North Sea. Hon. Members who served on the Public Accounts Committee know that we considered the black economy in some depth. One of the biggest areas of leakage was undoubtedly those employed on North Sea oil rigs. It may be to the Government's satisfaction that only 15 per cent. of the workers are not currently covered by United Kingdom taxation. However, it is worth reminding Ministers that the numbers involved are not the odd half dozen. From memory, 15 per cent. of those involved must mean over 1,000—at least well into the hundreds.
      Some evidence showed that people were not just flying in from Norway by helicopter—thereby avoiding United Kingdom immigration, but that numbers of people were coming through United Kingdom immigration, who also did not have work permits. The Minister may be unable to give us some categorical assurance this evening that all those employed on North Sea rigs will have work permits in future. However, I hope he can tell us that this loophole will be closed in another place. Nowhere else in the world, least of all in the United States, does such a situation exist. Any worker in the oil industry, in any offshore capacity, with anything to do with America, would have no hope of work without a work permit. The same applies throughout the world. Britain must be the only anomaly. I hope that the Minister can give some reassurance that the Government will stop this situation.
      Mr. Gray: I am grateful to the House and to the right hon. Member for Leeds, South (Mr. Rees) for giving us another opportunity to debate safety. As the hon. Member for Kingston upon Hull, East (Mr. Prescott) rightly said, we dealt at considerable length with the subject in Committee. I am glad that he is to read the proceedings, because he will find that many interesting and useful contributions were made.
      I reiterate what the hon. Gentleman said about the useful meetings that we had with Labour Members and the unions that visited me with their 20-point plan. I said in Committee, and I say again, that I looked at that plan, to some extent, as one would a probing amendment. Those who presented it were not wholly satisfied that it had all the answers and that it required no amendment.
      When the deputation came to see me, the hon. Gentleman said that there would be consultations with some other Government Departments involved. He said that the members of the deputation would come back to see me in a few months' time when they had more information and that they would give me some more figures, which I shall welcome.
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      The Government are as anxious as the Opposition are to ensure that safety standards in the North Sea are maintained and improved. I wish to defend the stance that I took in Committee about guidelines, as opposed to legislating for everything.
      The hon. Gentleman made a statement with which no one could disagree, because it might happen. We all hope that it will not. He said that one day something would happen to one of the submersibles. That is a possibility. However, I remind the hon. Gentleman that merely legislating will not necessarily avoid such an accident.
      I shall use the example of the Norwegian sector. The Norwegians have legislated to a tremendous extent. Perhaps some would consider that they have almost overlegislated in some areas, yet, tragically, they have had a greater share of ill-luck than has been experienced on the United Kingdom continental shelf. Therefore, I do not think that legislation is necessarily the be-all and end-all.
      It is the training and attitude of all those who operate and work there that is important. That is something that we can only encourage all the time, while trying to ensure that it is improved. I shall come back to the charter and the points that the hon. Gentleman made, because a number of them overlap points made by the right hon. Member for Leeds, South.
      With this amendment we are discussing amendment No. 13, which was tabled by the hon. Member for Dunfermline (Mr. Douglas). The Government have no powers to establish pilotage districts over the continental shelf. A requirement that vessels entering safety zone installations on the continental shelf must have on board a pilot or a master with a pilotage certificate would call for international agreement. Thus, a new convention laying down international obligations on the use of pilots in certain areas of the high seas would have to be negotiated within the Inter-Governmental Maritime Consultative Organisation by its member States.
      I hope that the hon. Member for Dunfermline will accept that as an explanation of why the amendment that he did not move would not have been acceptable to the Government, anyway. That is an Irish way of putting it, but I know that the hon. Gentleman understands what I mean.
      Mr. Robert Maclennan: What is the Government's view about the possibility of obtaining international agreement, which would enable such legislation to be introduced in the House? If there had to be international agreement, a Government would have to initiate the discussions. Would the Government be prepared to do so?
      Mr. Gray: We would not be at this stage, first, because the existing legislation is adequate. Secondly, as the hon. Gentleman will be aware, such matters are slow-moving and it is easier to introduce something that requires only the legislation of one's own Parliament than to have to negotiate on an international scale. We have not given that possibility serious thought. At present we do not intend to initiate such discussions.
      Mr. Dalyell: It seems that we need carrier pigeons to find out what has happened on the subject of tax. Specific questions were asked in Committee. I understood that the Minister would give us some information.
      11 pm
      Mr. Gray: I shall say something about tax. However, I shall not pursue the point that the hon. Gentleman put to me in Committee and again tonight because, as I explained at that time, this is really a Treasury matter. The hon. Gentleman should take it up with Treasury Ministers.
      The right hon. Member for Leeds, South and the hon. Member for Kingston upon Hull, East mentioned baskets. I refer them both to my Department's safety letter, No. 10 of 1980, which laid down the limited situations in which a basket may be used, together with the conditions of such use. In fact, the terms of the letter were drawn up by a working party in which both the operators and the unions participated. They were agreed by the oil industry advisory committee of the Health and Safety Commission.
      In view of the stringent conditions specified in the letter, which have already been agreed by both sides of the offshore industry, I cannot see any need at this stage to make the terms and conditions of use part of the operating permission for an installation. Using the same argument, I cannot see any reason to involve the Secretary of State for Energy in a reporting procedure each time a basket is used.
      However, I readily accept that the letter to which I have referred did not require that either the movement of personnel by basket or the reasons for so doing should be recorded. However, if hon. Members feel that the letter should be reviewed so that such movements shall be recorded on the installation, if they care to take the matter up with me in writing I will ensure that their remarks are referred to the Health and Safety Commission for consideration.
      The question of personnel having access at all times to immersion suits has also been referred to. My Department is considering the practical value of immersion suits. If such suits are to be issued, it is important to ensure that they are of the right type and will perform adequately under specified conditions. The situation was highlighted as a result of the loss of the Alexander Keilland.
      As part of the overall consideration, my Department has commissioned a research project into the design and performance of such suits. My latest information is that we should have that report in about three months' time. This work is being carried out by the Robert Gordon Institute of Technology in Aberdeen. The offshore survival unit of that institute is involved to a large extent. I visited the institute myself about two months ago and had an opportunity of seeing some of the work that goes on there and some of the training that is offered to those going to work on the North Sea. It was an impressive experience.
      Mr. Prescott: Did the Minister have a suit on?
      Mr. Gray: No, I must admit that on that occasion I did not, but I did on a number of occasions when I visited oil installations.
      The subject of work permits was discussed extensively in Committee on 16 March. I regret that I can only reiterate the position as I explained it to the Committee. I shall do that briefly.
      Implicit in the amendment is the view that an unduly high proportion of the offshore work force consists of non-United Kingdom nationals. It reflects the views put to me at a meeting in June 1981 with the Inter Union Offshore Oil Committee; namely, that the Government should exert
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      pressure on oil companies via a work permit scheme to ensure that a higher proportion of United Kingdom nationals are employed.
      First, may I put the scale of this problem in perspective? As I explained in Committee, the most recent survey of employment on the United Kingdom continental shelf, carried out by the Inland Revenue, showed that in July 1981 about 85 per cent. of the total United Kingdom continental shelf work force were United Kingdom nationals. But that apart, entry to and stay in this country of overseas nationals is controlled, under the Immigration Act 1971, by the Home Office. The legislation does not apply offshore, and work permits for persons employed entirely offshore are not required.
      We had an interesting exchange of views in Committee on that very subject, because we were fortunate in having the right hon. Member for Leeds, South leading for the Opposition. Having been Home Secretary, he had been very much involved with the workings of the Immigration Act. He frankly admitted—many members of the Committee would have been in the same position—that it had not been fully appreciated—
      Mr. Douglas: I think that my right hon. Friend took the very strong view—it is unfortunate that he is not present—that if he had to reconsider the position today lie would not accept the advice that he was given and would seek to apply the Act offshore.
      Mr. Gray: The hon. Gentleman was a little premature in his intervention. I was going to say exactly that. The right hon. Gentleman said that at the time in question the significance of the measure in this respect had not been appreciated and that if he had to do it again he would do it differently.
      The provisions of the Bill do not require such an adjustment to the Immigration Act 1971. An extension of the work permit scheme to the UKCS would, however, require an amendment to the 1971 Act which could not be described as minor or consequential. It is not thought that the scope of the Bill is wide enough to admit a substantial item of immigration law.
      Several hon. Members, including my hon. Friend the Member for Northampton, South (Mr. Morris) mentioned tax and the fact that people working in the North Sea were evading tax. It is not possible to say precisely what percentage of employees who are liable to pay United Kingdom tax do not do so. I understand that a report to the Public Accounts Committee in 1979 estimated that the PAYE tax loss in the North Sea in 1971 was between £10 million and £20 million, and that it ran at about that annual figure up to 1973–74. The cumulative total up to 1978–79 was put at approximately £60 million. A substantial sum of money is involved.
      However, a survey in 1980, to which I have already referred, which monitored the general level of compliance and investigated individual cases of non-compliance, indicated that the earlier figures were overestimates. Sample exercises carried out since 1980 have produced only a few small cases of PAYE evasion, apart from those already under investigation, and confirmed that the work done by two of the Inland Revenue special officers had brought the North Sea to a satisfactory level of PAYE compliance.
      Mr. Michael Morris: Is the House to understand that, on the immigration dimension, Department of Energy

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      Ministers are saying that this is not their field of activity and that on the whole they would rather leave it alone? If that is the stance, it is not a very satisfactory one, because hon. Members on each side of the Committee took the view that, whatever may have been correct in 1971, we are now in 1982, in changed circumstances and the Government should look at the question. While it is not a Department of Energy matter, I hope that my hon. Friend will be able to tell the House that the question is being actively pursued with the Home Office, rather than being left in abeyance.
      I am encouraged to hear that the Inland Revenue is satisfied concerning PAYE. I should like to know—perhaps not this evening—whether the Inland Revenue is equally satisfied concerning those who are not paying PAYE. They may be categorised as self-employed. If they are overseas employees, is there some form of reciprocal tax, or are they not paying tax to anyone?
      Mr. Gray: An extension of the Immigration Act would require substantial new legislation and could not have been included in the Bill. We have taken legal advice and the position that I have outlined is the best advice available to us. However, that does not mean that the matter could not be dealt with by the Home Office at another time, though I cannot say whether it will feature in future legislation. We have informed the Home Office of the situation, so it is aware of the problem.
      I am glad that my hon. Friend the Member for Northampton, South is reassured by the information from the Inland Revenue. As to the payment of tax by the self-employed and workers from other countries, we have arrangements with some countries, but I do not suggest that they are foolproof or that we are satisfied with the situation. We have consultations with the Inland Revenue from time to time and no doubt the Revenue will be making its own arrangements to try to improve the situation.
      However, neither of those matters is the direct responsibility of my Department, although we are involved.
      Mr. Dalyell: I am curious to know how the Minister can answer the point about security put so graphically by my hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott). Obviously there must be records of who is on the rigs. If the records are not available, one shudders for reasons other than the loss of tax. I do not see that a solution is so difficult.
      Mr. Gray: Perhaps it is not so difficult, but it is difficult for my Department, because it is not our responsibility. We are anxious to do what we can on matters in which we have discretion, but the two matters that have been raised by hon. Members are not the Department's direct responsibility. No doubt those who read the report of our deliberations will note what has been said, but I cannot give the hon. Member for West Lothian (Mr. Dalyell) an answer tonight.
      Mr. Prescott: I understand that before the hon. Gentleman became a Minister the Department of Energy co-operated actively with the Services to consider how we could protect the rigs militarily from an external threat.
      Immigration Acts are used to prevent subversives—however they are defined—from coming
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      into this country. If we set up a ring of steel around the rigs, but have no controls over people flying out of them, is the Minister satisfied that there will not be attacks from within as well as from without?
      Mr. Gray: I am satisfied on security. I have answered the tax point to the best of my ability and hon. Members will have to raise any further queries with the Inland Revenue. I am sorry that I cannot be more helpful.
      I was asked about vessels matching United Kingdom standards on safety and so on. The safety standards of vessels are the subject of international agreement and are the responsibility of the flag State. I agree that there can be no room for complacency, but the United Kingdom is second to none, in both the implementation of internationally agreed safety and social standards and their enforcement.
      However, that does not justify the United Kingdom seeking to control the standards of every vessel that trades in our waters. I can give some reassurance about the safety standards of vessels flying other than the British flag. The European conference on maritime safety in Paris on 26 January 1982 adopted a memorandum of understanding on port State control, establishing with effect from 1 July this year a harmonised and co-ordinated system for the inspection of foreign ships calling at European ports. The purpose will be to detect those that fail to meet the standards laid down in the international conventions, to secure the rectification of deficiencies and to discourage the operation of such vessels. That system will be operated on the United Kingdom continental shelf by inspectors from the Department of Trade.
      I am sorry frequently to allude to other Departments, but the hon. Member for Kingston upon Hull, East will realise that there is a considerable amount of overlap. The system will represent a positive European response to the problem of substandard ships of any flag.
      The House might be interested to know that the British supply vessel fleet is fully utilised. I am advised that 92 per cent. of available United Kingdom-owned supply vessels are operating in our waters. They meet 60 per cent. of the offshore supply demand to serve the oil and gas installations on the United Kingdom continental shelf.
      11.15 pm
      Mr. Prescott: The Minister is giving the stock answer, but with a European dimension involving port State. It is all voluntary. Perhaps it is a step forward. We have for some time used the port State argument to enforce standards. Frankly, the Department of Trade cannot even manage the ships that call at our ports. I have experience of that.
      If we determine a minimum standard for vessels in our waters, we are entitled under the SOLAS agreements to stop ships that we consider to be unsafe. I do not believe that it is being argued that the standards are excessive. Under international law we are entitled to say that ships below the standard will not come into our waters. The standard should be made a condition of the contract to operate under the United Kingdom Continental Shelf Act 1964. The Minister says that the oil companies are recommended to lay down the minimum standard. Making it a condition would ensure proper and adequate standards, and there would be none of these difficulties.
      Mr. Gray: I take the hon. Gentleman's point. We shall no doubt come back to it.

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      The question of safety inspectors, without prior notice, having access at all time to offshore installations was also raised by the hon. Member for Kingston upon Hull, East and the right hon. Member for Leeds, South. Again, we discussed the issue for some time in Committee. I am not persuaded that safety inspectors necessarily need the power to inspect offshore installations without prior notice or that an enhancement of safety would result from such a power.
      Opposition Members intimate that prior notice leads to the employment of wheezes to ensure that, for instance, with helicopters, the house is full. We have no evidence of that. We know of no difficulties. We have not had complaints from people who work offshore. I gave the Committee the figures. We have about 70 installations. In 1980 there were 141 inspections, and in 1981, 181. We do not believe that safety would be enhanced by such legislation. The arrangements are working adequately. Again, if the hon. Gentleman or his hon. Friends can persuade us, we are persuadable on this issue, but we do not see that it would do anything to improve safety.
      Mr. Dalyell: I want to ask the Minister of State a simple question. When he was in the Services, what did he do when he knew that there was going to be an inspection within the next few days?
      Mr. Gray: I do not think that it would have made the slightest difference. I was a very good soldier.
      I do not think that we would do anything to improve safety by accepting that recommendation, but it is something that I am happy to talk about again.
      Mr. Douglas: I have waited patiently for replies to the points that I made about the certification of divers and the diving school. These are the Minister's responsibility. How many certificates were issued for divers by the companies? Also, what is the future of the diving school at Fort William? It may be that the Minister of State will want to write to me on these issues because he does not have the information readily available. I appreciate that.
      Mr. Gray: In relation to diving certificates, I do not have a figure of that sort available in the middle of a Report stage debate. If the hon. Gentleman wishes to put down a question or otherwise, I shall let him have the answer. The diving school is handled by the Department of Employment. It is not in my area of responsibility, so I cannot give him up-to-date information on that.
      Amendment negatived.

    Clause 31

      PROVISIONS AS TO REGULATIONS, ORDERS ETC.
      Mr. Rowlands: I beg to move amendment No. 15, in page 35, line 3, after 'section', insert '3(1) and '.
      It is a dubious privilege to end up with the last amendment on Report. I recall that I ended up with the last amendment in Committee. Like that one, this amendment is significant. It is fitting that we come back almost to where we started—the whole question of parliamentary accountability for all actions and powers taken away under the Bill by the Secretary of State.
      I feel that I could almost put on the record and disappear because we have in different ways debated this issue over and over again. I make no apology for returning to it. When we debated clause 31 in Committee we tried to
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      change the procedure for responsibility to the House to be subject to an affirmative resolution rather than a negative resolution. During that debate we raised the issue of making the powers of the Secretary of State accountable to Parliament under clause 31, but we did not have an amendment down to that effect.
      We decided to return to the issue because, as we have argued since the first time the Bill came before the House on Second Reading through almost every Committee debate and on the first two new clauses which we moved earlier today, we believe that the Secretary of State should be accountable to Parliament for the powers he is taking under the Bill.
      I pointed out in Committee that clause 3(1) is one of the most important provisions in the whole of part I. It gives the Secretary of State power to direct the British National Oil Corporation to exercise its power of disposal, and all the rest of it. It is the trigger provision for the privatisation of the British National Oil Corporation, yet not a single provision in clause 3(1) is to be subject to any further parliamentary responsibility or accountability. As clause 31 is now drafted, none of those provisions will be subject to the affirmative resolution or even to the negative resolution.
      We believe that, wherever we stand on privatisation, there is a powerful case in parliamentary terms for hon. Members on both sides of the House who are jealous of parliamentary rights, scrutiny and accountability to support the concept that the most important directions given under part I of the Bill should be subject to parliamentary scrutiny.
      It is no use the Government arguing, as they did in Committee, that these directions are no different from those under the 1975 Act. They are extremely important substantive directions which trigger off the whole process of privatisation of BNOC's assets. We believe that those directions at least should be subject to parliamentary accountability if only through the negative procedure. We accept that in Committee we lost the case for all directions and orders under clause 31 to be subject to the affirmative resolution. We have not sought to return to that, but we believe that the directions under clause 3(1) should be subject to some form of parliamentary scrutiny under clause 31.
      What is the case against this? We heard it at some length in Committee from the Secretary of State and from the Minister of State. The Government argued that the directions were no different from those under the 1975 Act, and that as those directions were not subject to parliamentary scrutiny, these should not be either. But these are directions of a very different kind. This is a matter of substantial and substantive power. These directions cannot be compared with those envisaged in the 1975 Act, because the directions under clause 3(1) trigger off the whole process of privatisation. We do not accept such a comparison, and we do not accept the "original precedent" argument used by the Secretary of State.
      The other part of the Government's case against any form of parliamentary accountability for the Secretary of State's actions under clause 3(1) was that they had already told the House exactly what they intended to do. They said that they had already told us of their intention to sell off 51 per cent., the manner in which this would be done, and so forth, but that is not so. The Secretary of State's decision to direct BNOC to create subsidiaries and shares and to float them off, which is the basic power under

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      clause 3(1), will be a major new step. We debated at some length when and how this would be done in relation to an earlier amendment on the valuation and the method of sale. Nevertheless, the power that the Secretary of State is taking under clause 3(1) should be subject at least to the negative procedure under clause 31.
      I therefore ask the Government to reconsider their position. To paraphrase the good old song about the girl who could not say "No", we are the guys who cannot accept the answer "No" on as significant, reasonable and parliamentary a matter as this amendment. I hope that the Minister will reconsider this in the spirit in which we have debated it. We have paid enough tributes to him. I now claim my rain check on all my tributes to him.
      Mr. Dalyell: Sing it.
      Mr. Rowlands: No, I only sing with at least 99 others. I am president of a male voice choir which is 101-strong, but as the House can see, I do not have the other 100 with me today although I realise, of course, that it is quality rather than quantity that counts.
      As we come to the final stages of the Report stage of a Bill which has been very little changed as a result of the 100 hours and more of detailed examination that we have devoted to it, I hope that as a fellow parliamentarian the Minister will accept this one last plea that the power to make directions that the Secretary of State seeks under clause 3(1) should be subject to some form of parliamentary scrutiny.
      That is all we are asking, and it is utterly reasonable. I have battered at this door repeatedly. In spite of the Minister of State's amiability, he says "No" most of the time. This time, however, I hope that he will say "Yes", or "Maybe", or that he will agree to look at the matter again. I do not mind how he phrases the reply as long as he gives the assurance that he will reconsider the point that we made in Committee and to which we have now returned on Report.
      The matter is important and significant. We decided to end the Report stage on this amendment because parliamentary accountability in the Bill is so weak and poor that he should at least make this concession. I ask and plead with him to do so.
      11.30 pm
      Mr. Gray: In moving the amendment the hon. Member for Merthyr Tydfil (Mr. Rowlands) said that we had discussed the matter a great deal in Committee and that he would only repeat what he had said many times before. He will not be surprised, therefore, if I repeat what I have said on many previous occasions.
      I assure him that we fully recognise the need for proper parliamentary accountability and debate and that that is why we made major policy statements about our plans for BNOC both on and before Second Reading. We explained at length in Committee exactly how we intended to use the powers in part I, and we have answered as many as possible of the detailed questions that he and his right hon. and hon. Friends have asked. Those who have followed our proceedings should be in no doubt about our policy and how we intend to implement it.
      In earlier debates we cited many of the precedents from earlier Labour and Conservative legislation that we are following in the Bill. I shall not quote them all again. They
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      are all on record in the Committee proceedings. It may be instructive to those hon. Members who were not on the Committee—there may not be many here, but I see present a few of my hon. Friends who are sufficiently interested to see the Bill complete its Report stage—to be told that on many occasions, for example, we used the precedent of the Petroleum and Submarine Pipe-Lines Act 1975. The corporation was set up with powers to give effect to participation agreements, but there was no requirement to submit those agreements to Parliament for approval.
      The Secretary of State was empowered by section 3(1) to approve plans for the general conduct of the corporation's undertakings. There was no requirement to report those plans to Parliament. The Secretary of State was also empowered to require reviews of the corporation's affairs. Those reviews do not have to be shown to Parliament. I could quote many other precedents, but I do not intend to weary the House with them. Everyone feels a little tired at the end of a long day.
      The hon. Member for Merthyr Tydfil was an exceptionally hard-working member of the Committee. He made a great contribution to it. I sincerely would have liked to make the concession that he seeks, but I regret that on this occasion the answer must still be "No".
      Mr. Rowlands: It is regrettable that the Minister has adopted that negative attitude on an issue of such seriousness. I shall not press the amendment to a Division, because I calculate that the result would be 12 votes to two, unless a few more Conservative Members come out of the woodwork. The issue of parliamentary accountability, which is raised by the powers that the Secretary of State seeks to take in the Bill, is of serious concern.
      Mr. Dalyell: Hear, hear.
      Mr. Rowlands: There will be other opportunities to raise it. In the spirit in which we have debated most of the Bill, I beg to ask leave to withdraw the Bill.
      Amendment, by leave, withdrawn.

    Schedule 4

      THE PATENTS ACT I977
      Amendment made: No. 16, in page 60, column 3, leave out lines 32 to 37 and insert—

      'In Schedule 4—

      in paragraph 2(1), the proviso;

      in paragraph 10, in sub-paragraph (1) the words "Subject to sub-paragraph (2) below" and sub-paragraph (2);

      in paragraph 26 the words "or by regulations made under section 31 of this Act";

      in paragraph 27 the words "or under any regulations made under section 31 of this Act"; and

      in paragraph 28 the words "and any regulations under section 31 of this Act".'.—[Mr. Gray.]

      Bill to be read the Third time tomorrow.

      DEFENCE
      Ordered,
      That Mr. John Cartwright be discharged from the Defence Committee and Mr. Gregor MacKenzie be added to the Committee.—[Mr. Philip Holland, on behalf of the Committee of Selection.]

      HMS "Speedy"
      Motion made, and Question proposed, That this House do now adjourn.—[Mr. Gummer.]
      11.36 pm
      Mr. Keith Speed: I am grateful for the opportunity to raise the rather strange circumstances surrounding the all too short life and the apparent demise of HMS "Speedy". The termination of her life is in unseemly haste and for no reason that I can determine. HMS "Speedy" was not named after myself, but she has a number of illustrious predecessors, including a frigate that was with the fleet in the eighteenth century.
      HMS "Speedy" is a 119-tonne jetfoil that was built by Boeing in Seattle and fitted out by Vospers of Portsmouth with much British equipment aboard. She was ordered by the previous Labour Government for evaluating the offshore oil and fishery protection roles and other roles where the Royal Navy could use her unique capabilities of high speed and extreme manoeuvrability. The hon. Member for Sheffield, Attercliffe (Mr. Duffy), who was the Under-Secretary of State for Defence for the Royal Navy in the previous Labour Government, will confirm strongly the latter capability.
      HMS "Speedy" was launched in Seattle by Mrs. Margaret Jay, the wife of our then ambassador to the United States, in June 1979. She was commissioned into the Royal Navy in the summer of 1980. Her operational evaluation in what is called the offshore tapestry role—that is, fishery and oil rig protection—was planned for two phases. Phase 1 was to identify her main strengths and weaknesses in the offshore tapestry role. Phase 2 was to investigate in greater depth the tasks that phase 1 showed to be the most interesting.
      In the event, phase 1 was restricted and phase 2 was never carried out. No practical examination has been made of non-tapestry tasks—for example, her use as a fast attack craft, in patrolling separation lanes, as a security ship and fast resupply vessel of men or materials plus her possible use in the mine countermeasure role. I believe that the evaluations were restricted and not proceeded with for financial reasons. I hope that my hon. Friend the Under-Secretary of State will deal with that when he replies.
      At the beginning of February the story appeared—first on the tapes and subsequently in the national press—that HMS "Speedy" was to be sold or otherwise disposed of because North Sea weather conditions had proved too severe for her. Having been to sea in the Firth of Forth in gale conditions, I saw her proceeding at speeds of up to 42 knots, which no other surface craft could have achieved in such weather.
      Having cut short the various evaluations, I find the reason given by the Ministry of Defence strange, to say the least. Boeing has it in writing—as far as I know the letter is neither private nor classifiedߞin a letter from the Ministry of Defence, which it received last December, only a couple of months before her disposal was announced, that
      "the sea-state and weather limitations of the craft are certainly no worse than that advised by Boeing at the time that we bought her. Indeed, our experience is that the operating envelope can be slightly extended beyond the limits predicted by the company."
      Therefore, I ask the Minister, has "Speedy" failed to meet any of Boeing's or Vosper's specifications?
      On the evaluation point, I had several interesting hours in her in rough weather and was launched from her in a
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      searider in pretty hairy weather conditions. I should be grateful if the Minister would tell me, before the decision was made to dispose of "Speedy", how many other Ministers and flag officers have been out to sea in her, and the date of those trips.
      After personal discussions with the entire crew, it seemed to me that the "Speedy" has been popular with the crew of all rates and ranks and I should be grateful if the Minister could confirm this. As my hon. Friend will know, she has done exercises with the German Navy in he Baltic. It would be helpful for the House and the public to know the reaction of the German Navy to her.
      In view of the reasons given by the Ministry of Defence in February when her disposal was announced, perhaps the Minister could also tell the House what the limitations were that prevented foil- and hull-borne operations and the launching of searider craft, and whether these are less than those claimed by her builders at the time of purchase. As my hon. Friend and the House will appreciate, a craft of this kind can ride, once she achieves a certain speed, up on the foil, and below a certain speed, she rides like a normal boat upon her hull.
      While I was Minister responsible for the Royal Navy I did not envisage that "Speedy" would be evaluated for the offshore tapestry role and that would be the end of the story. Like my predecessor who ordered her, I expected an evaluation into a variety of other roles, making use of her unique capabilities, that include speeds up to 50 knots and turning rates of about 6 degrees a second, which are fantastic by any yardstick.
      I should be grateful if the Minister would tell the House what other roles have been evaluated and with what results. I do not believe that there has been any time for such evaluation to take place. If that is so, that makes her disposal now all the more extraordinary. It would also be useful if the House were told what other high-speed craft are available for target training on other Royal Navy ships, particularly now that it has been announced that the hovercraft trials unit is also being wound up.
      My hon. Friend will appreciate the importance of this, because our conventional frigates, destroyers and corvettes need to have high-speed craft to train. Many potential adversaries in many parts of the world have these high-speed craft and are unlikely to be accommodating enough to lend us their craft so that we can train using them as targets. Traditionally we have always had high-speed craft of our own. However, we are in the process of scrapping them or winding up the unit.
      Finally, and in some ways most important, as the Minister will be aware, Boeing has recently offered to pay to run on "Speedy" for an agreed period so that these various evaluations and trials can be completed. My understanding is that the only cost that would then fall on the Ministry of Defence would be the manpower costs of her 24-strong crew, who presumably have to be paid for anyway, as it is unlikely that they will all be declared compulsorily redundant. The offer has been rejected out of hand. I cannot believe that we know all that there is to know about this advanced, high technology vessel and her method of operation.
      The United States Navy is bringing into operation craft similar to "Speedy" and probably considerably larger, called PHMs. I went to sea in one last week. They are armed with missiles and a 76 mm gun and incorporate the

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      high speed and extreme manoeuvrability of "Speedy". The United States Navy believes in such craft. So do some of our allies and many of our potential adversaries.
      There are too many disturbing questions that must be answered, in fairness to the manufacturers, the crew of "Speedy", the Royal Navy and our defence effort. At the end of the day, the overriding constraint may have been financial or possibly a prejudice against the Royal Navy. I hope that I am wrong. We are once again, as with HMS "Invincible" and the hovercraft unit, baling out of a high technology area where we have much developing experience, as I am sure my hon. Friend would agree.
      I hope that even at this late stage, Boeing's offer, which is both imaginative and generous, will be accepted and that the future of "Speedy" in a number of roles can be properly and fully evaluated. I hope that Boeing's offer is not being rejected on administrative grounds or on grounds that it will be too difficult to unscramble the drafting procedures of the crew. I am sure that the computers at HMS "Centurion", which deal with the drafting procedures, are flexible enough to cope. If the crews are asked whether they wish to volunteer to be re-drafted to "Speedy", the drafting officer will receive an overwhelmingly affirmative reply from both officers and men.
      I hope that even at this late hour my hon. Friend can give a positive answer at least to that proposal, which will mean very little additional expenditure by the Ministry of Defence or out of the defence budget. It will mean that this imaginative vessel, which has already done well, can be further evaluated. If the answer is still "No", we must all draw our own conclusions. Her premature disposal would seem to be almost an act of spite or of burying one's head in the sand. I am sure that my hon. Friend and my right hon. Friend the Secretary of State would not wish that.
      What of her future? I believe that "Speedy" and craft like her have a future in all maritime nations. She has proved herself so far and should be allowed the chance so that we can examine her in the various roles that I have outlined tonight.
      I have posed some searching questions, for which I make no apology. I look forward to my hon. Friend's reply and I hope that what appears to be the far too short life of one of the latest acquisitions of the Royal Navy can be extended, and that HMS "Speedy" can continue along the lines and traditions of her eminent predecessors and serve with distinction in the fleet for many years to come.
      11.47 pm
      The Under-Secretary of State for the Armed Forces (Mr. Jerry Wiggin): My hon. Friend the Member for Ashford (Mr. Speed) has quite rightly drawn attention to the useful work done by his near namesake, HMS "Speedy" during her service in the Royal Navy. I am grateful to him for providing me with the opportunity this evening to say something about the results of her operational evaluation during the past two years, as well as to put the record straight about the reasons for the recent decision to pay her off.
      HMS "Speedy" is a militarised version of the 117-tonne Boeing jetfoil passenger ferry and was ordered by the Ministry of Defence in 1978. The Royal Navy wished to evaluate the suitability of hydrofoils for military use,
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      principally in the offshore protection role. After her fitting-out was completed by Vosper Thornycroft Ltd. HMS "Speedy" commenced her operational evaluation in 1980.
      The opportunity was taken to operate HMS "Speedy" in as many different offshore environments around the British coast as possible in order to establish for which tasks she was best suited and how she performed in varying operating conditions. That programme was designed not only to gauge the operational potential of HMS "Speedy" herself but to provide a demonstration of the usefulness of hydrofoils in general, HMS "Speedy" being rather smaller than military hydrofoils such as the American Pegasus class.
      During her operational evaluation HMS "Speedy" was thoroughly put through her paces as a fishery protection vessel. She showed that in favourable operating conditions she was capable of carrying out the majority of the tasks performed by the ships of the fishery protection squadron. In this connection my hon. Friend will recall that during his time in the Ministry of Defence HMS "Speedy" successfully intercepted and arrested with her speed a Spanish trawler fishing illegally within British limits off the South-West Coast and escorted her to harbour.
      My hon. Friend will also know that, by its very nature, a ship of a hydrofoil type and of this size suffers from a number of deficiencies. First, she is relatively incapable of towing, certainly not any vessel of substanital size. Secondly, a hydrofoil is not good at "loitering", a task that she is often required to perform when involved in fishery protection work. By that I mean with the foils below the water and out of use and at speeds at which she could not plane.
      Thirdly, and very much the overriding factor, she is not able to operate in sea states much above the top end of 5. In the sea areas in which we have been operating our fishery protection vessels, I am led to believe that this sea state, and worse, prevails for about 25 per cent. of the time.
      It is true that the forte of HMS "Speedy" was shown to be her ability to operate at very high speed in the right weather conditions. This conferred obvious operational advantages. She demonstrated that during a normal sortie she was capable of covering a much larger area than conventional vessels in the same time. Compared with aircraft, while the area covered per sortie was less than half, she was capable of collecting a similar amount of information about the number of fishing vessels and was able to identify positively a greater number. She could, of course, also be used to carry out boardings.
      Another feature, especially valuable in this context, has been the capacity of HMS "Speedy" to arrive on the scene suddenly and with little forewarning, and so catch illegal fishing vessels red-handed. This has had a useful deterrent effect.
      There is no doubt, therefore, that HMS "Speedy" was capable of making a positive contribution to the offshore patrol task, but I again stress that that was only in favourable operating conditions. There were severe limitations on the performance of HMS "Speedy". She was generally unable to operate on her foil by day above sea state 5 and at night above sea state 4, when the operator was unable to gauge the wave pitch. This limitation did not apply when she was hull-borne, although as in any small boat the going tended to become a little rough in high

      419
      seas and she was unable in such conditions to maintain the high speed of which she was capable when foil-borne and which was her most useful characteristic.
      In this context, I remind my hon. Friend that on the first occasion he planned to visit her some defect made the ship inoperable, and although on the second occasion he is perfectly right to say that the wind was about force 8 or 9, the sea state was such that in the end it was the captain's judgment that it was about the maximum operating conditions for her. I do not claim to be anything like the expert my hon. Friend is, but I further understand that, particularly in the fishery protection role, when the weather is worse than that it is easiest for those who would contravene our fishing regulations to operate. In sea states of 6, 7 and 8 it is necessary to be able to apprehend a foreign vessel, or even one of our own, that is breaking our rules. This ship was unable to do that.
      A matter that is not so widely known, although I am sure my hon. Friend is aware of it, concerns the ship's extremely limited endurance. She carries sufficient fuel for only about 10 hours of foil-borne running, at about 45 knots. That gives a total range, out and back, of approximately 500 miles. In terms of coastal responsibilities for offshore fishing protection, that is a considerable limitation on her operating capacity.
      The operational evaluation of HMS "Speedy" has provided the Royal Navy with a thorough understanding of the vessel's potential. It has also given a useful insight into the military application of hydrofoils in general. I know my hon. Friend wishes that that evaluation could continue. However, it has effectively been taken as far as it usefully can. Enough was learnt about strengths and weaknesses of HMS "Speedy" over the period during which she was in operational service with the Royal Navy for a reasoned judgment to be formed on the craft's longer-term utility.
      The trials particularly served to show that, while HMS "Speedy" might be a useful addition to the Royal Navy's capability, she could not completely replace any of the existing class of offshore patrol vessels. It would have created problems for the captain of the fishery protection squadron to have a craft in his squadron limited in both endurance and to a particular area, when he required flexible operating capability to cover the waters around the United Kingdom for whose policing he was responsible. Therefore, it was concluded that the expense of further trials was not justified.
      I assure my hon. Friend that that decision has been reached as a result of the professional advice of the Navy. I certainly resent the suggestion, and I am sure he did not mean to imply, that decision-making is based on prejudice against one or other of the Services. Within the overall allocated budgets, the Navy has to make certain decisions. As I understand it, the professional advice of those responsible is that, given the limitations that I have described, a conventional vessel—despite the lack of speed—gives an all round better return for money over a given period.
      Against that background it was decided to dispose of HMS "Speedy" as one of a number of measures designed to bring the naval share of the defence budget down to target in the financial year ahead. I have no shame in saying that. Debates on this subject are well known and we shall have an opportunity to debate the matter again when we consider the defence White Paper. This decision represents only a minor adjustment to the broad decisions
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      taken in our reappraisal last year of the defence programme. However, given the pressure on the defence budget, we can maintain only elements of the programme that are essential.
      It is right that I should emphasise to the House that the decision to pay the vessel off does not stem, as was alleged, from design shortcomings. It is simply that the evaluation has been taken sufficiently far for the potential of HMS "Speedy" to be assessed. She showed that, in favourable weather conditions, she was capable of putting up an effective performance. It is also fair to say—1 agree with my hon. Friend on this—that her limitations in bad weather turned out to be less than her manufacturers had originally predicted.
      My hon. Friend referred to the offer made by Boeing. There were two factors in our rejection of this offer. First, that it came extremely late, after postings had been arranged for the crew and plans had been made for the laying up of the ship. Secondly, the offer was, of course, for only a limited number of operating hours. It was felt—I believe rightly—that once a decision was taken it would not have been of any profit to the Navy to continue with this work.
      Mr. Speed: My hon. Friend the Minister said that the offer was made for a "limited number" of hours. Can he be more specific? My understanding is that it was clearly not an open-ended commitment for ever and a day, but that the offer was on an agreed basis between his Department and Boeing, so that the evaluations could be properly done. There was not a specific limitation on the number of hours laid down by Boeing.
      Mr. Wiggin: I do not believe that there is any secret about this matter, but I have not seen the letter. It may be commercially in confidence. I do not know.
      Mr. Speed: I assure my hon. Friend that there is nothing confidential about this matter. I have checked with Boeing so that I would not embarrass my hon. Friend or anyone else. There was nothing confidential about the hours.
      Mr. Wiggin: The answer to my hon. Friend's question is that the offer was for 200 hours' worth of work. We did not feel that in those circumstances it was right and proper to accept that offer.
      The ship is to be offered for sale in the first instance. While it is true that to date no purchasers have come forward, we are still hopeful that her disposal will attract some interest in various parts of the world. Only today we received some inquiries.
      My hon. Friend asked about the reaction of the crew to the decision to dispose of the ship. We have no evidence that service in HMS "Speedy" has been in any way unpopular. On the contrary, all those involved seem to have enjoyed the novel and unusual experience.
      My hon. Friend asked how many Ministers and flag officers had been to see the ship. My hon. Friend, when he was the Minister responsible for the Royal Navy, was the only Minister to have been to sea in HMS "Speedy". I understand that some flag officers have been to visit her and two have been to sea in her. I do not wish to delude my hon. Friend —one of those was the chief medical officer.
      I think that it is reasonable to say that those who have been closely involved with the ship's operation have also

      421
      been closely involved in this decision. I have no reason to doubt that the professional advice is the best possible judgment of those who were asked to consider the matter.
      HMS "Speedy" did some exercises with the German Navy and successfully carried out all the trials for which she was programmed. However, it is not right that I should be the mouthpiece for the German Navy, although I understand that there is a widespread feeling among experts in NATO that that ship is on the small side for such work and that if hydrofoils are to have a future, a larger version will be needed.
      With regard to target practice, I understand that infinitely the cheapest way of providing targets to represent fast-moving vessels is to use helicopters.
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      I sympathise with my hon. Friend's wish to see the Navy continue to operate HMS "Speedy". I know that he has taken a close personal interest in the vessel. She has provided the Royal Navy with some useful lessons. I do not believe that we can be taken to task for not wishing to investigate modern technology. The Navy has seen fit to operate that ship for a limited period and to carry out, as far as is practicable, work in our own waters of a realistic nature. Nevertheless, it has been proved to the satisfaction of the seamen concerned that the present state of the art is not sufficiently advanced for us to make use of such vessels at present. Given that fact, the course has been finished and the ship is available for sale.
      Question put and agreed to.
      Adjourned accordingly at three minutes past Twelve o'clock.

DEFENCE
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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 Lord Kensington—Sat first in Parliament after the death of his kinsman.
The Marquess of Queensberry—Took the Oath.

British Airports Authority: Ministerial Direction
The Earl of Kimberley: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether under Section 2 of the British Airports Authority Act 1975 the Secretary of State has an overriding administrative discretion in connection with the authority's functions which is unchallengeable provided he consults with the authority.
The Parliamentary Under-Secretary of State, Foreign and Commonwealth Office (Lord Trefgarne): My Lords, the short answer to my noble friend's Question is, No. The Secretary of State's power in relation to the functions of the British Airports Authority under Section 2(7) of the Act is limited to giving to the authority, after consultation with it, directions of a general character as to the exercise and performance of its functions in relation to matters which appear to the Secretary of State to affect the national interest. As with any statutory power, the exercise by the Secretary of State of this power is subject to judicial review.
The Earl of Kimberley: My Lords, while thanking my noble friend for that Answer, may I ask whether he would not agree that sometimes the British Airports Authority seems to exceed its terms of reference, as, for example, in its dictatorial attempts to make Stansted London's third airport and in the way in which it managed to change the names of the lounges at London Airport the other day?
Lord Trefgarne: My Lords, I do not think I would agree with my noble friend about that. In my opinion, the British Airports Authority is a very well-managed organisation and discharges its duties admirably.
Baroness Burton of Coventry: My Lords, I am looking at subsection (7) of Section 2 and doubtless the Minister will have a copy in front of him. So, while wishing him many happy returns of the day—
Noble Lords: Hear, hear!
Baroness Burton of Coventry: —may I ask him whether giving to the authority "directions of a
1382
general character" covers maladministration where this affects the national interest or where it can be shown to him that such is the case?
Lord Trefgarne: My Lords, the fact is, I am informed, that a direction of this nature has never been given, under this section at least, and therefore there is no case law upon which I could base an answer to the noble Baroness. In the absence of any guidance from the courts or elsewhere, I think I ought to refrain from offering a legal advice to the noble Baroness.
Baroness Burton of Coventry: My Lords, while I accept regretfully that obviously that is a correct answer, is the Minister aware—if I may have his attention—that he is really very good at finding excuses for never being able to give me a proper answer? Does he think that perhaps together with the noble Earl, Lord Kimberley, we might be able to have a case and create a precedent?
Lord Trefgarne: My Lords, I am sorry about my improper answers. I can assure the noble Baroness that is has nothing to do with her improper questions.
Lord Bruce of Donington: My Lords, will the noble Lord say whether he conceives it to be within the powers of his department to give a direction to the airports authority concerning the scandalous monopoly enjoyed by duty-free shops at certain of the airports?
Lord Trefgarne: My Lords, I think I ought to give to the noble Lord the same answer as I gave to the noble Baroness, because to answer the noble Lord, in view of the way that he has put his question, would be to give a specific legal advice much like a counsel's opinion, which would be inappropriate from this Box. But, on the face of it, I should have thought that the type of direction which the noble Lord is suggesting would fall outside the scope of the subsection.

Industrial Stoppages in 1981
2.41 p.m.
Baroness Trumpington: 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 working days were lost during 1981 owing to industrial stoppages, compared with the average since 1975.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers): My Lords, the provisional number of working days lost in industrial stoppages recorded in 1981 is nearly 4·2 million, compared with the annual average of 114·7 million over the six years 1975 to 1980.
Baroness Trumpington: My Lords, while thanking the Minister for his most encouraging Answer to my Question, may I ask him whether he would agree that the figures he has quoted reflect a growing sense of

1383
realism in the workplace, an understanding that profits maintain jobs, and that excessive wage demands damage profitability and result in unemployment?
Earl Ferrers: My Lords, I think that my noble friend is absolutely right. In order to ensure more employment, industry has to be competitive in price and to be sure of continuity of supply. Of course strikes militate against both those objectives.
Lord Wedderburn of Charlton: My Lords, is the noble Minister aware that the President of the Birmingham Chamber of Commerce yesterday stated that the level of major disputes reflects directly the recession and—as he put it—the unacceptably high level of unemployment, and that no one should be under any illusions that that will remain when the economy accelerates? Is the noble Earl aware that it is widely understood that, because of that situation, his right honourable friend has introduced in another place the repressive labour legislation which is now about to go through Parliament?
Earl Ferrers: My Lords, I was not aware of the quotation to which the noble Lord, Lord Wedderburn of Charlton, referred. The noble Lord quoted from somebody who is perfectly entitled to have his own view. I am grateful to him for doing so. However, I disagree totally with his concept that my right honourable friend's legislation is repressive.
Lord Orr-Ewing: My Lords, is my noble friend aware that these remarkably good figures are not widely known in the United States and other countries which are contemplating investment in this country, and that the wider these figures do become known the better for future investment and, therefore, for jobs in this country? At the same time could he possibly give us some figures which would show the disruption which occurs in industry and in our services as a result of go-slows, work to rules or internecine quarrels?
Earl Ferrers: My Lords, my noble friend is quite right in saying that if these figures are well publicised perhaps people will be keener to invest in this country. I cannot give him the figures which he requested in the latter part of his supplementary question, but perhaps he will take comfort from the fact that in both 1980 and 1981 the number of strikes was fewer than in any year since 1941.
Lord Blyton: My Lords, is the Minister aware that from 1975 to 1979 unemployment was well below the million mark? Could he not add the number of days lost, with a 4 million unemployment market, to the figures that he has quoted on the loss of work due to industrial strikes?
Earl Ferrers: My Lords, I cannot give the noble Lord the answer which he has requested without notice.
Lord Davies of Leek: My Lords, is the noble Earl aware that much of our success is due to the constructive approach of British trade union leaders who, more than ever in any country in the world, co-operate
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with management? Is not it time that management also looked to its own house and put in in order?
Earl Ferrers: My Lords, I do not think that there is any great value in apportioning blame. We must recognise that we are in a state of world recession and that we each—whether management or employees—owe it to each other to try to get out of this recession. The only way in which we can do that as a country is by being competitive, both in price and in work.
Lord Winstanley: My Lords, does the noble Earl agree that what people do when they are actually at work is every bit as important as how often they miss work owing to a strike? Is he aware that in many Eastern European countries at the moment there are no strikes at all because they are illegal, but that the productivity in those countries is extremely low?
Earl Ferrers: My Lords, that, of course, is one of the reasons that unemployment is as high as it is now. Much of the unemployment which we see now was, in fact, carried before by firms and now they have had to slim down, so those figures, which were previously concealed, are now, regrettably, on the unemployment list.
Lord Jenkins of Putney: My Lords, is the noble Earl aware that at a rough estimate the number of days lost by the 3 million unemployed is about 900 million, which, of course, is many times the number he quoted in his answer to earlier questions?
Earl Ferrers: My Lords, I would just remind the noble Lord, Lord Jenkins, that even if we have a level of unemployment which is totally unacceptable in this country—as it is, in fact, and has been up to now—we have a higher proportion of our population employed than any other country in Europe, other than Denmark. That is worth remembering.

Enterprise Zones: Designations
2.46 p.m.
Lord Campbell of Croy: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they expect more enterprise zones to be established, in addition to those already designated.
The Parliamentary Under-Secretary of State, Department of the Environment (Lord Bellwin): My Lords, of the 11 enterprise zones announced, 10 have now been designated. We expect the Isle of Dogs zone to be designated by the end of April. We are closely watching the development of the existing zones, but have no plans to designate any more at the moment.
Lord Campbell of Croy: My Lords, I thank my noble friend for that reply, the reasons for which I fully understand. As there is no doubt that the 10-year holiday from imposts and form-filling has already

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been proving itself to be a very successful scheme, will the Government bear in mind the possibility of designating other zones, perhaps in four or five years' time?—because circumstances can change considerably in different parts of the country.
Lord Bellwin: My Lords, I am grateful to my noble friend for bringing out the point, but perhaps I could offer him even more encouragement by saying that as we are watching this so closely, if the success for which we are hoping is shown, he would not have to wait the four or five years to which he refers.
Lord Cledwyn of Penrhos: My Lords, is the Minister aware that we welcome the fact that there will not be a delay for five years? But can he tell the House what is the difference between an enterprise zone and a special development area? Is he aware that special development areas were created in those districts which had the highest unemployment, and that there are special development areas throughout the country with unemployment of over 20 per cent? Would it not be sensible and proper, if these enterprise zones have any validity, to make every special development area an enterprise zone?
Lord Bellwin: My Lords, with respect, I think that the noble Lord knows the great difference between the special development areas and the enterprise zones. Many concessions are given in the enterprise zones that do not apply anywhere else, not the least of which is the freedom from paying rates. At this stage I do not think that the House would want me to reel off all the other concessions, but they are very considerable and there is quite a difference. I know that everyone is hoping that they will be the success which I think they will be.
Lord Cledwyn of Penrhos: My Lords, with respect, the noble Lord has not answered my question. I asked him whether he recognised that special development areas have the worst unemployment problem in the country. If there is merit in the enterprise zones, can he not say that he will make these special development areas enterprise zones, so that they can reap the benefits which he has just described?
Lord Bellwin: My Lords, I do not know whether the special development areas have the worst employment situation in the country. I hear what the noble Lord says. But whether it is those areas or any other areas, because of the success that we are hoping to see in the enterprise zones, when we are considering where others should be we shall certainly take into account the point that the noble Lord makes.
Lord Glenkinglas: My Lords, will my noble friend bear in mind that, although I very much agree with what he is doing, it needs a little care? Perhaps he will remember the Gilbert and Sullivan tag:
"When everyone is somebody,
Then no one's anybody".
Lord Bellwin: My Lords, I learn something new every day, and have done yet again. I take the point.
Lord Underhill: My Lords, as the noble Lord referred to the Isle of Dogs enterprise zone, is he able to comment upon recent press reports that there have been some unfortunate delays and disappointments in connection with the launching of this by the London Docklands Corporation? Could he comment on those reports?
Lord Bellwin: My Lords, I fear I cannot comment on that. If the noble Lord would like me to look into it further and be in communication with him, I gladly undertake to do so.
Baroness Sharples: My Lords, can my noble friend give any estimate of how many small businesses have been helped in the enterprise zones so far started?
Lord Bellwin: My Lords, again I fear that it is too early for me to be able to do that. I am sure that my noble friend will know that one of the features within the zones is that we are not calling for as much statistical information and as many returns as one normally does outside the zones. Nevertheless, I understand the point that my noble friend is making and I would think that it will not be long before Government will be saying much more about what is being achieved. I am anxious not to be saying all the goodies which are taking place and then leading to disappointments, but we are very encouraged by what is going on and so, I hope, will be your Lordships.

Criminal Injury: Compensation to Victims
2.52 p.m.
Baroness Sharples: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what steps they are taking to ensure that victims of criminal injury and assault receive adequate compensation.
The Parliamentary Under-Secretary of State, Home Office (Lord Belstead): My Lords, under the Criminal Injuries Compensation Scheme for Great Britain, and the similar statutory scheme for Northern Ireland, payments of compensation from public funds can already be made to persons who sustain personal injury, and to the dependants of persons who die, as a result of crimes of violence. Throughout the United Kingdom the criminal courts have wide powers to order convicted offenders to pay compensation for any personal injury, loss or damage resulting from their crimes; and in the Criminal Justice Bill we are seeking to strengthen and clarify these powers in England and Wales.
Baroness Sharples: My Lords, I thank my noble friend for that reply, which is extremely informative. Could he please tell your Lordships' House how much co-operation we get from countries other than the United States and Germany, whom I believe are both very helpful? Are other countries in Europe being of any help to us?
Lord Belstead: My Lords, the Criminal Injuries Compensation Board has been trying hard to establish arrangements for mutual co-operation with boards in other countries. I would add to what my noble friend Lady Sharples has just said that, to my knowledge, we also have good co-operation with Canada and Australia. We hope that mutual co-operation of the kind that we wish for will be a feature of a European convention on compensation for victims of crime which is currently under discussion in the Council of Europe.
Lord Avebury: My Lords, in the consideration of the Council of Europe of a convention on the payment of compensation, will the noble Lord have regard to the fact that under the present legislation the Criminal Injuries Compensation Board withholds payment from individuals who are alleged to have committed offences themselves even where those offences have nothing to do with the injuries they sustained, and even where the offences have not been proved in a court of law? Does not the noble Lord think that the Criminal Injuries Compensation Board should not possess that discretionary power, and will he take steps to see that it is not embodied in any European legislation?
Lord Belstead: My Lords, I am terribly sorry, but I have not followed the noble Lord. Could the noble Lord put it just a little more shortly and then I shall give an answer?
Lord Avebury: My Lords, I was asking whether the noble Lord was aware that the Criminal Injuries Compensation Board has the power to withhold payment to victims of assault where it is alleged that the victims themselves have committed an offence even when the offence has nothing to do with the causing of the injury to the victim? Does not the noble Lord think that this discretionary power should be removed in any European legislation?
Lord Belstead: My Lords, I do not agree with the noble Lord necessarily on that, but I should like to look at it further and, if there is anything I ought to add, I shall write to the noble Lord.
Lord Shinwell: My Lords, when a culprit is called upon to pay compensation to someone who is the victim of a criminal assault and declines, or is unable, to pay, what happens?
Lord Belstead: My Lords, in the Criminal Justice Bill which is at the moment before the House of Commons, the Government are introducing a provision which will require the courts to give preference to compensation over a fine on sentencing where the offender's means are limited. But, of course, cases which are taken by the Criminal Injuries Compensation Scheme are precisely designed to overcome the problem which the noble Lord, Lord Shinwell, has put to me.
Lord Elwyn-Jones: My Lords, is the Minister satisfied that the courts make sufficient use of their powers to require offenders to make reparation for their crimes? Could perhaps magistrates be encouraged to use their powers to make compensation or restitution
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orders without needing a request from the victim that this should be done? One has a feeling that often these things go by sheer default.
Lord Belstead: My Lords, I would entirely agree with the noble and learned Lord. When the Criminal Justice Bill comes to your Lordships' House I think it will be found that greater weight is being placed upon this matter. But the figures show that in 1980 there were 128 orders made by the criminal courts, and my advice is that the number of orders being made is increasing year by year.
Viscount St. Davids: My Lords, in further backing up the noble and learned Lord, could not further pressure be put on offenders to assist their victims, possibly by asking the judiciary whether they might let it get around that an offender who showed some sympathy and some willingness to assist his victim might receive a lesser sentence?
Lord Belstead: My Lords, that, I think, is a matter for the courts.
Lord Winstanley: My Lords, is the noble Lord aware that many people who would be entitled to compensation do not apply because they mistakenly believe that it is first necessary for somebody to be apprehended and convicted of a criminal offence, whereas, as the noble Lord will confirm, all that is necessary is that the Criminal Injuries Compensation Board should be satisfied that the injuries have resulted from a criminal act? Can the Government do something to publicise that important fact?
Lord Belstead: My Lords, I confirm that what the noble Lord, Lord Winstanley, said is correct. I think that the board has in mind the need to make the existence of the scheme known to citizens generally, but I should like to take away what the noble Lord has said and see whether there is anything which either the board, or the Government indeed, ought to do in response to the noble Lord's suggestion.
Baroness Ewart-Biggs: My Lords, could the Minister say whether the number of requests for compensation for criminal injuries has gone up considerably in the last year, or stayed the same, or indeed decreased? That is, the actual requests for compensation for criminal injury.
Lord Belstead: My Lords, I am afraid that I have not got that information. If I may, I will write to the noble Baroness on that point.

EUROPEAN COUNCIL: BRUSSELS MEETING
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon, my noble friend Lord Trefgarne will, with the leave of the House, repeat a Statement that is to be made in another place on the European Council Meeting in Brussels.

Cities: Regeneration Problems
2.58 p.m.
Baroness Gardner of Parkes Baroness Gardner of Parkes rose to call attention to the problems of the regeneration of inner, middle and outer areas of old cities; and to move for Papers.
The noble Baroness said: My Lords, there can be no one present today who has not heard of the problems of the inner city. Currently and readily available there are 146 publications listed on a single computer print-out on this very subject. These range from small pamphlets to large volumes. The number of views put forward is almost as diverse as the number of authors.
I know that in your Lordships' House there is a great awareness of the deterioration of the inner city and a desire to see a reversal of the rundown which has become so apparent in recent years. in this debate today I wish to draw attention not only to the problems of regeneration of the inner city itself but to the spill-over effect of these problems as they extend to the middle and outer areas, and further to highlight the need to ensure that measures introduced to help the inner city—measures we welcome—do not adversely affect the adjoining areas and cause a deterioration there.
I read with interest the debate in another place on inner cities, which was mainly about Liverpool. It was interesting to note the similarities and considerable differences between Liverpool and London. It is clear that no one solution to the problems of older cities can be applied nationally. Each city requires specialised knowledge and understanding and each may benefit from the experience of others. My experience of local and regional government has all been in London, in the inner city right here in Westminster and in Southgate in outer London. From the 1981 Census, we see that greater London has lost 10 per cent. of its population in the decade, 20 per cent. from inner London and 5 per cent. from outer London. Westminster has lost over 23 per cent. of its population; more than 20 per cent. of the population are over retiring age and 42 per cent. of those elderly people live alone. That is the highest proportion of any London borough.
That proportion of aging residents in inner London, plus the vast daily influx of commuters, creates strains on the provision of services such as the health services in central London. It is difficult to get doctors to live in rundown areas, and it is far from ideal that they should have to travel considerable distances from their homes to treat their patients. A solution is to provide adequate premises for a group practice where one of the doctors can be readily available at any time, and the rent of doctors' premises is funded through the National Health Service.
The dental problem is different, and I must declare an interest as a general dental practitioner. The NHS pays a uniform rate to each dentist, wherever the dentist happens to practice. That is a piecework rate; the dentist provides his own premises and equipment and the scale of fees is based on a notional rent. The figure built in for rent and rates at present is £670 per year, yet many dentists are paying—I put this as a moderate rent—£3,670 per year; so they must earn
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an extra £60 a week before they begin to pay their staff, rates and other expenses. Hospital and community dentists receive London weighting, but not the general practitioner. As London costs have risen ever more rapidly, many dentists have been forced either to close down or give up NHS practice, and I emphasise that unless there is some recognition of actual costs, as opposed to the present notional paying system, the primary health services in the cities will deteriorate and people will find that they cannot obtain NHS treatment.
Polarisation has taken place in London with a loss of the middle income group, the middle age group, the privately rented sector and vast numbers of small businesses. Rising property values have forced young would-be buyers out of the middle areas and then out of the outer parts, and now my constituents find that their children must move out of London altogether if they are to buy a home of their own. Shortage of accommodation in inner London has been aggravated by the squeezing out of the private landlord and thus the privately rented sector.
The percentage who were neither local authority tenants nor home owners fell from about 50 per cent. to 30 per cent. in the last 10 years. The shortage of privately rented accommodation in London, aggravated by successive Rent Acts, discriminates today against young people. There is plenty of accommodation for overseas visitors, but the British born are not welcome. I regret that the recent changes made for shorthold tenure did not include London, as they would have helped many young people wishing to buy a short-term home at the outset of their marriage. It is interesting to note that Tower Hamlets—where four out of five households are owned by the local authority and the private sector is virtually non-existent—has the highest level of overcrowding in London. That surely indicates that massive public ownership of housing is no answer to the housing problems.
In housing, the Greater London Council has pioneered homesteading in this country. Since commencement of the scheme in 1977, 1,437 properties have been sold to homesteaders. They were neglected, often derelict properties which were sold to would-be owner-occupiers who undertook to carry out the necessary work to bring the properties up to standard. About 95 per cent. of those who have now completed the job are delighted and say they would start all over again if they found themselves in the same position. Numbers have varied widely in different boroughs, from 203 in Haringey and 184 in Newham to only four in Camden and three in Westminster. An important factor is that the small, usually two-storey house, ideal for homesteading, barely exists in Westminster and Camden. But there are many larger properties suitable for groups of homesteaders, and I should be pleased to hear from the Minister that the grants for home improvements outlined in the Budget would be available for those cases.
I understand that the GLC and Westminster Council have had informal discussions with some building societies, who have shown a keen interest in providing finance. Tomorrow the first ROWS house—Homes of Westminster Scheme; ROWS has no connection with the Chancellor—will be opened in the City of Westminster. Under that scheme, a building has been converted into four flats. Each floor of the property

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will be bought by a young couple, and I understand that the building societies have undertaken to finance the purchase. I urge the Minister to give every encouragement to the building societies to put the sources of private finance into the housing of people in London, because that could do much to make more home units available.
The voluntary sector has a major role to play in housing, and indeed is playing such a role. Notable examples include a block of 60 riverside flats on the Isle of Dogs—the London Enterprise Zone to be—and 125 dwellings which the Toynbee Housing Association have just built in Spitalfields in the heart of London. They are low rise buildings providing the type of homes which people would choose to live in; they have young, active resident caretakers who are taking a pride in the maintenance of high standards of care and cleanliness.
Last week I was talking to someone involved in letting flats on the older Peabody Estates in Central London and I heard to my surprise that they have virtually no trouble letting those older properties. Applicants are often seeking to move from what might superficially appear to be much more attractive and modern estates. Inquiries have revealed two main causes: first, that in the Peabody Buildings there remains a living community spirit and, secondly, that there is a feeling of safety and security, with the attention of a resident caretaker.
Law and order has been widely debated in your Lordships' House and I shall do no more than comment that where residents are afraid to walk the streets by day or night, the community spirit cannot survive. People withdraw into their own private safe areas, which leads to further loss of contact and further damage to the community. Security and personal safety are of great importance in people's lives. The published statement of the GLC leader attacking the new Commissioner for the Metropolitan Police is doing great damage. Instead of these deliberate attacks on the police constantly issuing from the GLC, we should be seeing efforts to support the police and to develop harmonious working relationships between the police and the people of London.
The community spirit developed over generations has often been destroyed by unfeeling redevelopment following mass demolition. Plans must provide for, among other essentials, good recreation and sporting facilities to channel the natural, spontaneous exuberance of the young into healthy and socially desirable activities. Vandalism is too often the product of boredom, and, at this time of high unemployment, boredom with underlying anxiety and insecurity. The paid official "good neighbour" of today's social services department cannot compare with the homespun good neighbour of the past. Sadly, those older communities were often destroyed as part of an official policy.
As the LCC policy moved out the "non-conforming" industries in the 1970s, those jobs were lost to Londoners. The inner city of London lost 44 per cent. of manufacturing jobs between 1961 and 1978. A new force is now driving business out of the capital—the rate burden. Major companies, such as W. H. Smith, have moved their whole operations out of
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London, Tube Investments has gone to Birmingham, British Steel has vacated 127,000 square feet of offices near here, and the five big banks have each moved over 1,000 jobs out of London. As the enterprises go, again the jobs are lost to Londonders; and we notice this now, whereas the over-employment of the 'seventies then masked what was really a growing problem.
We must stop the outflow, and we must encourage those who are willing to start up small businesses again in London, especially where they will provide the much needed employment opportunities. Greater flexibility in zoning is necessary where jobs will result. The London unemployment situation is made worse by a mismatch between jobs available and the individuals seeking jobs, and there is special need for less skilled jobs and semi-skilled jobs, particularly in manufacturing.
Let us for a moment consider the rate burden. Westminster City Council has just cut its own rate, but the rate bill has gone up. The Westminster cut of 4½ per cent. means that the city council part of the rate has gone down to about 17½-pence in the pound, but the rate is 141·6 pence in the pound. The GLC rate has gone up from 18·7 pence to 34·85 pence. Inner London education now demands 71 pence in the pound. The rate equalisation levy takes 7·33 pence. The Cities of London and Westminster together pay £63 million to the equalisation pool, from which the 11 other inner London boroughs receive money. Camden receives £12 million, Lambeth £6 million, and the lowest is Greenwich, receiving £3·6 million.
Westminster City Council contributes over £200 million to the inner London education budget—more than a quarter of the education budget for the whole of inner London. It has often been made very clear that the Westminster residents and ratepayers could send every child in Westminster to the best public school for less than it is costing them at the moment to meet the ILEA costs. The Westminster Council's budget is £64 million, but it must collect £108 million for the Greater London Council and £220 million for ILEA, as well as contribute £22 million to the inner London equalisation pool.
An Oxford Street department store will this year pay an extra quarter of a million pounds in rates. The rates now payable for the same store are over £2 million. An international corporation will see an increase from £1½ million to more than £1¾ million. A Park Lane hotel will find its rates going up to £448,000 from £381,000, and for professional offices in the Strand the rates alone will increase from £9,700 to £11,400.
Over zealous and inflexible planning ideas have killed off too many small industries and businesses in the past, and now the rate demands are out to finish off the bigger concerns. I see that the London Chamber of Commerce is hoping that the Secretary of State will introduce abolition of rates on empty property. I recall that this was the situation when I first became a councillor in Westminster, and I must point out to the Minister the harm that this proposal would do. At present if a firm is leaving London and vacating its premises, it remains liable for half rates, and therefore it is very much in its interests to find a successor to occupy the premises. If no rates were payable, there would be great advantages (especially with the current

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exorbitant rent and rate levels) simply to close up a building and leave it empty. The rate base would then be reduced, and those who had to go on paying rates would have to find even more to meet the continuing expenditure. While I am convinced that there is a direct link between high costs, especially high rates, and unemployment, I believe that a full reform of the rating system is due and piecemeal changes will provide no real solution.
I hope that the Minister will tell us more about the progress of the enterprise zones. I appreciate that he covered this point when dealing with a Question earlier this afternoon, and perhaps he has nothing further to say about the Isle of Dogs. I know also of the extensive measures which have been introduced by the Government to help small businesses, and I am convinced that they will gradually bring back jobs to London. It is important that new businesses should provide real jobs, with long-term employment prospects—not just artificially created jobs with little future. Earlier today a noble Lord discussed other areas of the country which he claimed now have the highest unemployment, even though they have been special development areas. Obviously there was something wrong in regard to the long-term employment prospects if the situation has changed so dramatically.
There is constant discussion of docklands redevelopment and the opportunities that that will bring, but it seems to be the subject of many squabbles. As I came into your Lordships' House I picked up a cutting from the Standard, which stated that the GLC is proposing to give grants of £720,000 not for redevelopment, but in order to argue and fight over the type of redevelopment and possibly to delay redevelopment in docklands yet again. Jobs are needed all over London, and jobs are needed near to where people live.
I would ask the Minister to ensure that the plans that he has for London, such as the enterprise zones, are well implemented and do not cause an adjoining area to become deprived. Each action in one part of this great city causes a reaction in another part, and we must view the problem of regeneration as a whole. There is need to co-ordinate the measures designed to help regeneration of the city, to provide homes and jobs, recreation and sports facilities, a secure environment, and a mixed community, reversing the polarisation of the past and creating a community proud to belong to this great capital. My Lords, I beg to move for Papers.
3.20 p.m.
Baroness Birk: My Lords, I think we are all grateful to the noble Baroness for having raised this very important subject today. She has certainly demonstrated that the major cities of our country face a formidable range and complexity of problems. These problems have to be confronted at a time when the major cities are losing population, are skimped of resources and are replete with unemployment and, also, worrying social and racial disturbances. Just today, the Guardian reports that the Census reveals that the metropolitan counties and Greater London lost 1·3 million people between 1971 and 1981.
Yet 37 per cent. of the population of England continue to live in these metropolitan areas, and many more live in other large cities like Bristol, Nottingham,
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Leicester and Middlesbrough. They live with major problems which can be effectively tackled only if major financial and physical resources are made available. The people, who really are the most precious resource in any area, whether it is inner, middle or outer, will fade spiritually as well as physically; and the fabric of the cities, which also represents an important part of our resources, will, if we are not careful, continue to be underused and even wasted.
What are needed are roads, railways, sewers, houses, factories, parks and playgrounds; and here I agree with the noble Baroness, that these form an essential part of the social as well as the economic regeneration of any area, and particularly any community. These are investments that we cannot afford not to make. The trouble is that, Governments always being rather short of money, even when their priorities vary there is never enough to put into those things which many of us consider are of the highest priority and which, if neglected, result in more money having to be spent in order to deal with all the physical, social, health and other casualties which result from the decay and decline.
When we were in office we placed great emphasis on helping the inner urban areas of this country. The Inner Urban Areas Act 1978, which I introduced in this House and in the debate on which the noble Lord, Lord Evans, who is to speak later, made a very effective maiden speech, gave additional powers to authorities and provided the basis on which more help was made available to areas of greatest need. In doing this, it is true, we concentrated not on the suburbs but on the inner areas, for the inner area of each city is the heart of that city, and that heart has to be kept beating by people populating it or the city as a whole will suffer and wither away. The noble Baroness was wide-ranging in her speech and embraced a great many aspects of this three-headed subject, and in this short debate I shall not follow her in them. I shall concentrate largely on the inner city because of the vital role it plays, and also because of its effect. There is a dual and reciprocal effect from the inner to the middle and outer areas, and also vice versa.
"The current state of inner areas has its roots in social and economic events reaching back to the last century and beyond. Much has been done to ease their problems since the second world war, principally through the relief of overcrowding. But much remains to be done".
Those words are taken from the Labour Government's White Paper of 1977, and they are as true today as they were five years ago.
When she was referring to housing, the noble Baroness talked about the squeezing out of the private landlord. The depletion in private rented property and the squeezing out, as she put it, of the private landlord has been going on since the beginning of this century; and, while the noble Baroness was asking for more shortholds and thought that that would help the London situation, I am afraid she will find out (and I think any figures that the Minister gives in reply will have to illustrate this, though he will not use these words) that it has really been a disastrous experiment. What has happened to housing in recent years is that in both the private and the public sector the housing starts have reached an all-time low. We are now seeing a slight upturn, but, with almost the complete

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collapse of the construction industry at one time, it is very difficult to build new and resuscitated inner, middle or outer areas of cities when we have this basic fall-down right in the middle.
One must be fair and say that the present Government have promoted some initiatives in the inner city, by grafting on, for example, urban development corporations and enterprise zones. They have been of arguable value, and although to discuss them would take another debate all on its own, there are a great many problems about them which have been recognised by local authorities, both in relationships with the training boards, with the hold-over of the 10 per cent. of the rate rebate, and in other ways, which make it rather a questionable answer; and where it works in some places it certainly would not in others. While the enterprise zones have undoubtedly stimulated some activity, there is also growing evidence of blight in adjacent areas. This has been reported from, for example, Trafford and Clydebank. There again, this is something which the noble Baroness referred to—the effect of blight on other areas caused through using particular remedies. This is a very great problem, and it is a great problem whichever Government are in power.
But all this, I feel, pales into insignificance beside the draconian financial cuts which have been imposed on inner cities through the reduced rate support grant in recent years. This is a process which has been reversed only in a very limited fashion for this forthcoming financial year. I will try not to weary the House with a mass of detailed statistics, but the partnership authorities' share of the rate support grant, for instance, fell from 16·9 per cent. in 1980–81 to only 14 per cent. in 1981–82. The total loss of grant in partnership areas, comparing those two years, was £390 million.
I have written to the Minister giving a detailed breakdown at 1981–82 out-turn prices to show clearly that, when one allows for all the variables, it is clear that all the partnership authorities have lost, many of them substantially. Birmingham has lost over 16 per cent. in this period, Lambeth over 27 per cent., Tower Hamlets over 35 per cent. and Newcastle 15 per cent. These are only a few instances. Such losses far outweigh the marginal contribution of enterprise zones and the questionable contribution made by urban development corporations. They also add to the higher rate demands to industry about which the noble Baroness was quite understandably complaining. That and inflation makes it extremely difficult, and it is hard to isolate these particular ingredients from the whole of a Government's national policy and strategy.
The Government now propose to restrict the power of local authorities to assist industry by reducing the product from a 2p rate to that of a ½p rate, and authorities such as Knowsley, Tameside, Walsall and Kirklees, which are not designated under the Inner Urban Areas Act, will have their ability to assist in the regeneration of their areas substantially curtailed. Cities which have experienced riots, like Bristol, will also have their financial recuperative powers reduced. If authorities with 20 per cent. unemployment, which unfortunately is not now unknown in this country, will no longer be able to spend to the extent of last year—and many of
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them will not if the rate product for industry is cut—then the Government are master-minding not a progressive but a retrogressive step, which I hope they will be changing during the progress of the Local Government (Miscellaneous Provisions) Bill, which is going through the House at the present time.
The status of being designated under the Inner Urban Areas Act is of great importance. Under this Act, we designated 48 districts which could enjoy the power embodied in it and receive financial support. It is interesting that the initial list set out in Circular 68/78 has not subsequently been revised by this Administration, since there are many authorities which are making out a powerful case for designation. I know that the AMA have made representations for a review of designations and I should like an assurance from the Minister that designations are being reviewed on the basis of cases being presented and are not being fobbed off by reference to selective census data. We are also concerned about the divergence between the inner cities programme and the regional programme. This differentiation must be difficult for many people to understand, until one acknowledges that Whitehall does not work corporately and that the Inner Urban Areas Act is the "baby" of the Department of the Environment, while regional policy lies with the Department of Industry. This explains, presumably, why Knowsley, for instance, is a Grade 1 Assisted Area (a special development area) but, absurdly, is not a designated district.
I know that this was the situation when the previous Government were in power but then it was early days and we would have hoped for a change. I still hope for a change under this Government because these differences matter very much. Under regional policy, only assisted areas can receive EEC quota funds; inner city areas are not eligible for them unless they are in assisted areas. So authorities in the inner parts of the West Midlands or London do not receive any form of EEC quota aid, which is surely ridiculous. Authorities like Birmingham, Manchester and Hackney are Grade 1 Inner Urban Areas, that is, partnership authorities, but they are not assisted areas. Again there are these anomalies. If the problems of our cities are to be tackled effectively they must receive the resources necessary, whether through the rate support grant or through EEC aid or through a mixture of both. The Government must give higher priority to these areas and make resources available. Such a package could form the basis of a positive economic policy which could begin to lead us out of the appalling recession into which the Government's economic singlemindedness has largely dragged us.
If we are to have—and I agree with the noble Baroness—a much greater input of community spirit into the areas, it is impossible for it to be done without resources being available and used as cost-effectively as possible. It is essential that primary emphasis should be placed upon making the best use of the existing buildings in the city. But that fabric is decaying. The AMA publication Ruin or Renewal, shows what is happening to our housing stock. It is true—and here I have sympathy with what the noble Baroness has said about the houses that are rotting and out of use—that we should do what we can with our old housing stock as long as it does not take away

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from the needs of those who are in greatest housing need on the waiting lists. Too little is being done; too little money is made available.
If the Government want to do one thing to help renewal, they would change the VAT regulations so that repairs are zero-rated rather than paying the penal rate of 15 per cent. New building is already zero-rated. To me it was wrong when we were in office that this was not done; and it is wrong now. The dead hand of the Treasury has yet to be lifted from this particular control. All Governments, it seems to me, fight the Treasury and, alas! all Governments have lost so far. If this Government want to make a name and to stamp an imprint for themselves, they will wear down the Treasury and win this battle. This is essential.
What gives our cities their vital character is the history embodied in many of their buildings. The Committee on Alternative Uses of Historic Buildings, chaired by the noble Lord, Lord Montagu, which I set up when we were in office, made many recommendations including, I would emphasise, asking for the end of VAT on the repair of historic buildings. In particular, the report highlights the many possible uses which can be made of historic urban buildings; for example, turning warehouses into factories and small craft shops, churches into community centres and even houses and making the best use of places which are beautiful to look at but which must function as well, otherwise, not only are they wasted as physical assets but wasted as a human and social asset for the community.
So far the Government response to the report has been disappointing. I appreciate that there have been some instances when the Secretary of State has taken positive steps to protect an element of our heritage; but this is a rather more specialised point. This House has not yet debated the Montagu Report. I hope we shall do so fairly soon, since it will be an opportunity for the Government to announce some plan for reversing the tragic decay of much of our heritage. As the 1977 White Paper said:
"The regeneration of the inner areas is not, however, a job for central or local government alone. A new and closer form of collaboration is required between Government and the private sector, between Government and the community including the various representative organisations of the cities and bigger towns, with the voluntary bodies, and, above all, with the people living in the inner areas. It is their welfare, immediate and longer-term, which must be the ultimate touchstone for success.".
These are the sentiments of five years ago, but they are as fresh and as necessary today as they were then. The problem is not just one of bricks and mortar, of cubic feet of adequate living or working space, of sewers, of street lighting and of transport facilities; it is also a human problem that requires the human touch: a touch which expresses the visual and emotional needs of people as well as their physical needs; in other words, the framework for the life of a humane and civilised community.

European Council: Brussels Meeting
3.35 p.m.
Lord Trefgarne: My Lords, with your permission,
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I will repeat a Statement being made in another place by my right honourable friend the Prime Minister. The Statement is as follows:
"With permission, Mr. Speaker, I will make a Statement on the meeting of the European Council in Brussels on 29th and 30th March which I attended with my noble friend the Foreign and Commonwealth Secretary.
"At the end of the meeting the President of the Council issued a statement of his conclusions on the economic and social situation and the 30th May Mandate. Agreed texts on political co-operation were also released. I have placed copies of these documents in the Library.
"The Council devoted most of its meeting on this occasion to the economic and social situation, both within the Community and in the world at large. We agreed that, although the specific characteristics of the situation in each member state might call for varying policies, all the member states had the same interest in combating unemployment and restoring economic growth, while preserving monetary stability and ensuring the competitiveness of their economies. The Council expressed its concern at the level of productive investment in Europe, especially in the industries of the future, and agreed that the Community and the member states would take whatever steps were open to them to improve that level, while recognising that an increase in investment would mean a reduction in consumption.
"During our discussions I laid particular stress on the need to complete the Common Market in the services sector. We have made disappointingly little headway with the liberalisation of services such as insurance and air transport.
"We also discussed the role that the Community can play in the development of information technology and the vital contribution that small businesses can make to the provision of new jobs.
"On youth unemployment, which is a matter of special concern, we agreed that each member state would strive to ensure over the next five years that all young persons entering the labour market for the first time would receive vocational training or initial work experience.
"In our discussion of external policies, the Council looked forward to the Versailles Economic Summit in June. We agreed that our aim at that summit should be to encourage increased co-operation between the major industrialised countries. In particular, we agreed that the persistence of high real interest rates in the international markets, combined with inadequate economic activity, was leading to a significant reduction in productive investment and made unemployment worse because of the squeeze on company liquidity and profits.
"The Council urged Japan to open its market so as to integrate it more fully into international bade. We also urged Japan to follow an economic, commercial monetary and exchange rate policy which was more compatible with the balance of responsibilities to be borne by the whole of the industrialised world, thereby contributing to economic recovery.
"On the mandate, we had a relatively brief discussion

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in the light of the recent suggestions put forward by M. Tindemans and M. Thorn. We and most other member states were prepared to accept these proposals as a basis for negotiation. I emphasised the need for a solution to the United Kingdom budget problem which gave us a fair scale of compensation, which was sufficiently flexible to take account of either an improvement or a deterioration in the underlying situation and which would last for substantial period.
"I underlined the conclusion we had all reached in London in November that decisions on all aspects of the mandate must be taken together, that is to say decisions on the budget, the common agricultural policy and the industrial and social affairs of the Community. At this point the President of France stated that he would not accept the Thorn/Tindemans proposals as a basis for discussion.
"As the presidential conclusions indicate, foreign affairs Ministers have been asked to do all in their power to secure early decisions. The Ministers will meet in Luxembourg on 3rd April.
"The Council also had a very full political agenda.
"We spoke about transatlantic relations and welcomed the very warm message sent by President Reagan on the 25th anniversary of the European Community.
"We discussed the economic and commercial state of East/West relations in the light of the significant role played by Community trade with the Soviet Union and Eastern Europe. We agreed that these matters, including the related credit problems, should be studied further by the European Community and member states in close consultation with other members of OECD.
"We also discussed the situation in Poland, where martial law continues in force, many thousands of persons are detained, and a dialogue with the Church and with Solidarity is still suspended.
"We agreed that it was essential not to lose sight of the tragic sufferings of Afghanistan. There can be no solution except on the basis which two-thirds of the United Nations have endorsed, and which the Soviet Union alone has so far frustrated.
"On Central America, our main conclusion was the need to support any initiative that could bring an end to the violence, and we noted proposals by Mexico and Honduras among others. We agreed that economic aid given to Central America and the Caribbean should be co-ordinated and, where possible, increased.
"This was not the moment for a major statement of policy on the Middle East. We expressed grave concern about the situation in the area, especially on the West Bank, The Council welcomed, as a contribution to the achievement of a just and lasting peace in the Middle East, the participation of four member states in the Sinai multinational force. My noble friend the Foreign and Commonwealth Secretary is paying an official visit to Israel today and tomorrow.
"Mr. Speaker, this was a very busy Council in its discussion both of Community affairs and of international problems. While we were all both disappointed and surprised at the attitude of the French
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Government on the mandate, the same realism will have to be applied to decisions on those problems as was applied in the wider discussions during this European Council."
My Lords, that concludes the Statement.
3.43 p.m.
Lord Bruce of Donington: My Lords, the House will be grateful to the noble Lord for having repeated the Statement being made in another place by his right honourable friend the Prime Minister. The Statement itself deals with so many topics and covers so wide a canvas that we on this side of the House will not proceed to question it save in its important detail. We shall prefer to have the chance of seeing the items that have been placed in the Library and read them in association with the Statement. It might also be helpful if we can also have the Tindemans' proposals. I shall be questioning the noble Lord about these presently.
In general, this Statement follows very largely its predecessors to which we have become accustomed these past few years. It is full of generalities. It is full of general aspirations, but it is very short on concrete information as to any firm and agreed decisions that have been made. One cannot blame the right honourable lady the Prime Minister for that, but we on this side of the House think that it is a reflection of the way in which business is being conducted at the present time and the atmosphere which obtains still in the Council of Ministers—one of continued inability to arrive at any unanimous decision on any important aspect of European affairs. We note from the Statement that the Prime Minister is still insisting that the whole question of the United Kingdom's budgetary contribution to the European Community must be firmly linked with the price review. The Statement did not say price review, it said the common agricultural policy. So the first question that I have to ask the noble Lord is: Will he state unequivocally that the Government's position remains, as it was stated to be a few months ago, that the agreement on farm prices is conditional upon a satisfactory solution to the United Kingdom's budgetary problems with the Community? May I remind the noble Lord that we on this side of the House still consider that the Government are bound by the mandate given to them by another place on 15th July 1979 to press for a zero contribution situation? May we have his observations as to whether that is still the Government's aim?
Arising from that—particularly in the light of the Statement reported to have been made by the President of the Commission concerning the possible abandonment of the unanimity rule established at the Luxembourg Convention in 1975 at the insistence of the Government of France—may we have an assurance that the United Kingdom will insist on the maintenance of the unaminity rule? We note from the Statement that all of the members of the Community deplored the lack of investment in Europe at the present time. One observes that the right honourable lady the Prime Minister has indicated that increased investment can only come at the expense of consumption. We on this side of the House would keenly contest that point of view because it is quite clear that one of the

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reasons for the lack of investment at the present time is falling demand and continuing falling demand or lack of demand in this country.
To end my questioning on a more favourable note, may I express our agreement with the Prime Minister's insistence that further progress should be made in the freedom of services in the EEC. The noble Lord will recall that many governments other than our own in the EEC have been busily trying to avoid freedom of services being given in the field of insurance other than life insurance. This has been pressed for now for about seven years inside and outside the European Parliament. Will the noble Lord give an undertaking that these matters will be pressed for with even greater vigour than they have been in the past?
Lord Banks: My Lords. I should like to join in thanking the noble Lord, Lord Trefgarne, for repeating the Statement made by the Prime Minister in another place. It is clear, as has already been said, that the European Council had a very comprehensive agenda, and I must restrict myself to one or two points only. The question of unemployment, quite rightly, was an important matter under discussion and we welcome the decision of the Community and member states to take whatever steps are open to them to improve the level of investment of the Community, but I wonder just what that will amount to in practice. Can the noble Lord give us any idea what plans the Community might have in that respect and what plans the United Kingdom Government might have in that respect?
Is it correct that there was a division of opinion over the need for a co-ordinated reflation of the economy on a European basis, with France, Denmark. Ireland and Greece being in favour of it and the United Kingdom being among those who were opposed? We would regret such a situation. We are glad that emphasis was placed on the serious effect of high interest rates and we of course share the general regret that there seems to be no sign as yet of the settlement of the United Kingdom's contribution to the budget. We regret that the French Government have turned down the Thorn-Tindemans proposals as a basis of discussion, but we hope that perhaps they will have second thoughts about that. I wonder whether the noble Lord would agree that in the long run the only lasting solution must be one that involves an increase in the budget of the Community, with money being spent on policies more beneficial to this country than the common agricultural policy. Finally, I should like to ask the noble Lord whether he can tell us the position with regard to the Genscher Colombo plan. Is there to be any further discussion of that in the European Council or is it before the Council of Ministers? What exactly is its status at the moment?
Lord Trefgarne: My Lords, I am obliged to both noble Lords for their interventions following this Statement. If I may first respond to the noble Lord, Lord Bruce, on the detail of the Tindemans-Thorn proposals, these have so far been made only on an informal and personal basis by the Presidents of the Council and the Commission simply in the nature of a framework for the negotiations. There is no formal proposal yet, and I have no doubt that when one is
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made its details will be made available. Therefore, I cannot go into more detail than is contained in the Statement. In any event there was only the briefest discussion on this matter in the Council—substantive discussion awaits the meeting of the Foreign Ministers which will take place later this week.
Regarding the other matters raised by the noble Lord, Lord Bruce, particularly on the linkage with negotiations on the agricultural prices which are going on this very day and in regard to the Budget generally, I must confess that it seems to me it would be very difficult for the agriculture Ministers to reach a conclusion today in the light of the position which the United Kingdom Government have often stated about the contribution within the total budget to the agricultural policy itself. Regarding our contribution to the budget, the noble Lord asked me to confirm that a zero contribution was still our aim. I would confirm that is still our aim, but I think we would be able to accept some less ambitious proposal, for example, for a very modest contribution by the United Kingdom. I think that would be acceptable in the context of an overall settlement, but if a substantial increase in agricultural prices were to be agreed by the agriculture Ministers in Brussels today, then I fear that would not be attainable because the additional contribution to the budget would come in a large measure from the United Kingdom.
The noble Lord, Lord Bruce, also raised the question of freedom of services and particularly asked about the non-life insurance matter—a matter which we have discussed before in your Lordships' House. I certainly confirm that the Government remain most anxious to secure an agreement on this matter, but I fear I have nothing to report on progress since the noble Lord questioned me on this matter a few months ago.
The noble Lord, Lord Banks, asked me in particular about the economic conclusions and decisions taken by the Council. A number of detailed observations were made by them in this context, which are contained in the document which I have referred to and which is to be placed in the Library. I hope the noble Lord will find the information that he wants in that document.
Lord Walston: My Lords, we too on these Benches are grateful to the Minister for repeating the Statement —a long one and full of many pious hopes with which I do not think many of your Lordships, if any, would disagree. One question I should like to put to the Minister refers simply to one of those more or less at random. The hopes are very good but the implementation is a far more important matter. Could the noble Lord give us any indication as to how it is expected and intended that one of the hopes expressed on Central America will in fact be carried out and what initiative Her Majesty's Government will be taking? It states:
" We agreed that economic aid given to Central America and the Caribbean should be co-ordinated and, where possible, increased".
Perhaps the noble Lord could expand a little on that. With regard to the vitally important matter of the mandate, it is implicit in the Statement that Her Majesty's Government agree in general principle with the proposals put forward by M. Tindemans and M. Thorn and find nothing in them antagonistic to

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our own desires and demands within the mandate. Could the noble Lord categorically confirm that that is so and that we are prepared to enter into negotiations within the guidelines set out by M. Tindemans and M. Thorn?
Lord Trefgarne: My Lords, I cannot go as far as the noble Lord asks me to go with regard to the Thorn-Tindemans proposals. They are only a framework for discussion at the present time and the United Kingdom has accepted then as such; but of course the French President dismissed them out of hand, it seems. On the questions about Central America, and particularly the point about aid referred to in the Statement, individual member states and the Community will doubtless be considering this in the context of their own financial constraints. On the political aspect of affairs in Central America, I think that a European Community initiative at this moment would unduly complicate the issue in that part of the world, but we broadly welcome the Mexican initiative which is to help to bring the parties together.
Lord Mayhew: My Lords, would the noble Lord say what procedural or institutional reforms in the Community the Government are supporting in order to put an end to these repeated nationalistic dogfights which bring no credit to any country, and certainly none at all to the EEC?
Lord Trefgarne: My Lords, the Government share the desire, inherent in the noble Lord's question, that the negotiations currently going on with regard to the mandate should be conclusive and not just a short-term thing, which would lead, as the noble Lord rightly points out, to another discussion and further disagreement in a short time to come. This negotiation is now renewing the arrangements which were agreed rather less than three years ago. We certainly think that the negotiations now being conducted should reach a conclusion which should last longer than that.
Lord Cledwyn of Penrhos: My Lords, on the international section of the Statement, while I welcome the general remarks about Poland, Afghanistan and the Middle East, can the noble Lord confirm that the Government are now firmly associated with other Community Governments in supporting negotiation on El Salvador? One had the feeling that there was a certain amount of tepidness before, but one is now confirmed in the belief that the Government are rather more anxious to co-operate and accept the offer of mediation by the Mexican President. I wonder whether the noble Lord can say a word about that possibility.
On the price proposal side, I think the noble Lord said a moment ago that there was some difficulty about Ministers reaching a conclusion in the talks which are taking place now and tomorrow, and I would not dissent from that. But would he say, if the French Government succeed in securing the increased prices for which they are obviously fighting, but which are totally unacceptable to this country and to Her Majesty's Government, what steps Her Majesty's Government will then take if there is a breakdown in the agricultural talks?
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Can he also say a further word about the mandate? Can he tell us what is the implication of the French President's stated attitude on this, because it certainly seems to me to be the cause of what might be a longstanding difficulty. Finally, does he accept generally that failure to achieve agreement will adversely affect the prospects of the world economic summit at Versailles in June?
Lord Trefgarne: My Lords, first on the question of Central America, as I said in answer to the noble Lord, Lord Walston, a moment ago, I do not think that a European Community initiative with regard to El Salvador, or any other country in that region, would be appropriate at the present time. But we broadly welcome the Mexican initiative, which is to help to bring the parties together. The Mexican concept of a regional approach has some merit in this situation, but I think it would be a fallacy to imagine that agreement will be soon or easily reached in that area.
On the question of what would happen if agreement was reached in Brussels today and tomorrow on a substantial increase in agricultural prices, the noble Lord is putting to me what I must regard as a hypothetical question at the present time. We have made very clear where we stand with regard to agricultural prices. It is a fact that the agricultural policy already absorbs 65 per cent. or thereabouts of the budget as a whole, and we think that if that percentage were to increase, or if the policy were to develop the further production of surpluses, that would be very unsatisfactory indeed. But I hope that the noble Lord will excuse me from answering what is, for today at least, a hypothetical question with regard to the outcome of the negotiations in Brussels.
Lord Bruce of Donington: My Lords, will the noble Lord forgive me if I press on him one question which he did not answer? I asked specifically for an assurance that any endeavour to dispense with the Luxembourg convention of unanimity among members—the unanimity rule—would be resisted by Her Majesty's Government. Can he give a specific assurance on that?
Lord Trefgarne: My Lords, I apologise for not answering that point, which the noble Lord did indeed put to me earlier. I can assure the noble Lord that the Government attach the greatest importance to the understanding that decisions on matters of major national interest are taken by unanimity, and there is no question of our accepting any erosion of this principle.
Lord Banks: My Lords, may I ask whether the noble Lord is in a position to answer the question which put to him on the Genscher Colombo Plan?
Lord Trefgarne: My Lords, that was again touched on during the discussion and I think it is referred to in the document which I am placing in the Library. I hope that the noble Lord will find that helpful.
Lord Hunt: My Lords, I apologise for prolonging the questions arising out of the Statement, but I should like to put a question connected with the discussions

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which took place on youth unemployment. In view of the very grave importance of this subject, and the fact that it is a European problem and not only a United Kingdom one, may I ask the noble Lord for an assurance that, particularly during the early stages of the steps being contemplated and implemented by different states, there will be the very closest exchange of views and opinions about the measures that are necessary to tackle the problem, so that the maximum benefit may be obtained by each from the other?
Lord Trefgarne: My Lords, the major responsibility for unemployment must, of course, lie with member states. But there is, however, an important complementary role for Community action; for example, in improving the co-ordination of member states' economic policies—in particular, fighting inflation through the operation of the social and regional fund. The social fund, in fact, provides significant assistance for training and employment schemes to help the unemployed and those threatened by unemployment, particularly through an increase in the capital of the European Investment Bank. But with regard to youth unemployment specifically, which I think is uppermost in the noble Lord's mind, my right honourable friend the Secretary of State for Employment announced on 15th December 1981 the Government's plan to help the young unemployed in 1982–83 and beyond. Essentially the Youth Opportunities Programme will be expanded to cover 630,000 entrants next year, with 100,000 new style one-year training places. In 1982–83, therefore, the YOP will be developing towards the new youth training schemes, which will provide for 300,000 young people at any one time, mainly through new one-year training courses in industry and commerce.

Cities: Regeneration Problems
4.7 p.m.
Debate resumed.
Lord Evans of Claughton: My Lords, I, too, should like to add my congratulations to the noble Baroness for initiating this debate on a matter of serious concern not only for people involved in urban areas but for the country as a whole. I think it would be agreed that, if our great cities are in decline, that affects the whole of our society. I am particularly grateful to her for the fact that she did not limit the subject of the debate to inner areas alone, but included middle and outer areas. The problems of inner areas, as I think we all recognise, are very serious, but because of the special aid which is given to them under the Inner Urban Areas Act and other legislation, they are now no more serious, and very often are becoming less serious, than the problems arising in the outer areas where local authorities principally built in the '50s, '60s, and '70s huge dehumanised high-rise satellite towns, such as Kirkby outside Liverpool, or, in the area where I live, the Noctorum, Woodchurch and Ford estates in the Wirral.
The problems of the people living in those outer urban areas affect the middle urban areas in ways which the noble Baroness is perhaps not strictly thinking about. In smaller cities, people are decanted,
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very often without full recreational and other facilities, so that they spend much of their time tramping back through the middle urban areas to the inner urban areas, where their families still are, where their recreational facilities are and where the local pub is. Some of the less responsible, or more dissatisfied, of these people, on their trips to and from the inner urban area, do a lot of damage to the middle area, largely from frustration, possibly from various kinds of bitterness and a feeling that the circumstances in which they live compare unfavourably with those in the suburbs, but nevertheless doing damage, causing difficulties and contributing towards the increasing crime rate in this country.
My experience is that the crime rate in the outer urban estates is very often much higher—and, indeed, it is the highest in some parts of Merseyside—than in any other part of the urban conurbation. I have frequently argued in your Lordships' House that the Government's inner urban policies, while recognising the serious problems there, have given too little recognition to the problems of the outer areas.
I hope the noble Lord the Minister will be able to report on the progress of the Government's special initiative to find, and I quote his right honourable friend the Prime Minister in her statement of 9th October last:
"new ways of tackling the economic, environmental and social problems of inner cities".
It may not surprise your Lordships that I shall speak principally of Merseyside. So far as Merseyside is concerned, what that statement meant was the establishment of a Merseyside task force working to the noble Lord the Minister's right honourable friend the Secretary of State for the Environment and a London based financial institutions group.
This initiative was very much welcomed at that time in Merseyside. Much hope and expectation were placed upon its efforts to do something about the Merseyside problems and those of Liverpool in particular. Your Lordships may recall that the task force was given 12 months to carry through its gigantic mission. Half that time has now passed. I am told that the Merseyside County Council and the other local authorities in the area have made a number of approaches to the task force, including project proposals and major policy reviews of the economy and housing, and that the county council have suggested there should be joint working arrangements with the task force.
Although a number of meetings have taken place, I am told that the response by the task force to the county council's project proposals has been poor, that there has been no response to the policy review documents and that no attempt to develop joint working arrangements has taken place. It may be a deliberate policy on the part of the task force not to work too closely with the local authorities, though I hope this is not the case, because the right honourable lady the Prime Minister referred in the same statement to the role of the Secretary of State as:
"bringing together and concentrating the activities of central. Government departments, and to work with local government and with the private sector".
So far as the local authorities in the Merseyside area are concerned, this does not appear to have happened.

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In his covering letter to the then leader of the county council, the Secretary of State for the Environment said:
"The task force will of course be concerned with policy issues and major problems, including the allocation of resources, rather than with detailed case work".
I am advised this week that, so far as the local authorities in the task force area are concerned, they have not seen any concrete evidence of a concentration of central Government activities. The feeling on Merseyside appears to be that the task force is not working with local people and that most of the effort is concentrated on projects, not on policy issues. I hope the Minister will be able to reassure me about this. Since the task force is not accountable locally, no progress reports have been published at local level, which again underlines some of the criticisms which have been voiced at various times in your Lordships' House about the lack of consultation and of working with local government which has occurred under the present Government's régime.
So far as resources are concerned, when there is a Conservative Government in power, the shire counties tend, broadly speaking, to be favoured in the allocation of resources. Since the introduction of the block grant system two years ago and the development of special initiatives which by-pass main allocation systems such as the urban development corporations and the urban programmes, and with central Government's own direct spending, it is getting very much more difficult for people involved at the local level to be sure what the public spending impact on the old cities now is. If the resource allocation mechanisms continue to rely heavily on population figures as an indicator, your Lordships will probably agree that it is inevitable that the older, inner urban areas with the declining populations, to which the noble Baroness referred, will be inadequately recognised, despite the well accepted fact that they face economic and social problems of a horrendous and growing scale of complexity.
Despite the new block grant system's complexity, which again has often been discussed in your Lordships' House, it is in my opinion still too crude a yardstick in some respects for measuring the relative spending needs of local authorities with different problems and in different parts of the country. As I argued earlier, many of the most serious problems are in outer urban satellite areas such as Kirkby, yet the local authority, Knowsley District Council, which covers this area is, surprisingly enough, the only Merseyside district which is neither a partnership nor a programme authority. Therefore it does not gain the benefit of the assistance which is given to other authorities in the same county. Although they have very serious problems, they do not have a problem of the size which Kirkby presents.
Nevertheless—this is an optimistic point in what I suppose may be seen as a somewhat pessimistic speech—a Kirkby study has been undertaken jointly by the county council, the Knowsley District Council and the European Community to examine the problems and, it is hoped, to come up with action proposals in the context of similar problems elsewhere in the United Kingdom and Europe. I hope that the kind of study and the kind of action which is being undertaken
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in Kirkby will be followed in many other areas similar to Kirkby which need to be regenerated. Despite being comparatively new, these areas are in great need of regeneration and, to an even greater extent than in the case of the inner urban areas, very often have social and economic problems of a very serious nature.
As has already been mentioned, jobs, housing and recreational and community facilities will probably remain the principal problem in regenerating the urban areas of the old cities. I would suggest that the initiatives taken by Liverpool City Council and other councils in bringing back owner occupation to inner city areas are one extremely important, comparatively cheap and immediately effective way of regenerating the inner urban areas. I would also underline the very considerable work, which the noble Baroness herself mentioned, that housing associations are doing in providing rehabilitated and new-built houses to let. As the noble Baroness said, it is sad that the private sector continues to decline. One would hope to see this decline reversed.
Many of us are concerned that up to now the initiative of the shorthold tenancy does not appear to have met with much success. I believe that there is a role for the private sector, but I would underline that building for owner occupation in the inner areas—I am glad that Mr. Kaufman, the spokesman for the Opposition in the House of Commons, has accepted this—and the housing associations' policy of building to let must he the main means of regenerating these areas.
The problems remain enormous, and it is apposite that the noble Baroness should have brought them to our attention. She will probably agree that it is not just the old cities which have these enormous problems. The many smaller towns where populations have declined—places hardly larger than villages like Blaenau Ffestiniog, where quarrying has almost disappeared—have the same kind of problems, though on a smaller sacle.
I gather that this year we built fewer houses than at any time since the First World War. Rehabilitation, job creation and infrastructure work seem to me to be very important. We have all been regaled by the speech made by the noble Lord, Lord Bowden, about the effect of failing to do infrastructure work on the Roman Empire. I do not think we here are in quite so serious a position, although it is important to take the opportunity of doing important work on the infrastructure which will not only reclaim the infrastructure but will also create jobs—which in itself is probably the most important means, with housing, of regenerating inner urban areas.
4.20 p.m.
Baroness Faithfull: My Lords, we are most grateful to my noble friend Lady Gardner of Parkes for initiating this debate at this time. In part—and only in part—I am sure that the planning not only of our inner cities but also of new estates outside the inner cities has, as the noble Lord, Lord Evans of Claughton, said, produced problems of law and order, unhappiness and lack of satisfaction to those who live there.
Before the war I lived for five years in one of the worst slums in Birmingham, where the terraced houses

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were back-to-back and where the people very rarely ventured out of their neighbourhoods. The other day, I had the opportunity of meeting some of the people who lived in that area 40 years ago. They looked back upon those days with some nostalgia. We tried to analyse that nostalgia and found that it was due to several things. In those back-to-back, dreary streets there was a neighbourly feeling. For one thing, there were no cars in the roads and so children could play in the streets knowing it was safe and watched by their parents. The children had a playground, albeit not a very satisfactory playground. The women, when their work was done, sat on the doorsteps, talked, and discussed with one another their difficulties, lives and enjoyment. The old men sat outside on those kinds of wooden chairs which were brought out from inside the house. The old men smoked their pipes and talked. There was a sense of neighbourliness and support for one another.
Then came the war. At that stage, I was involved in taking children from London and escorting them to the country. It was a tremendous eye-opener for me, to learn what was in the minds of those children. They were fearful and frightened of the great wide spaces. They were terrified of the sea. They were frightened of the stillness. One child said to me, "Isn't the noise of stillness dreadful?" They did not know what went on in the country. One child with great big eyes said, "I don't understand it. I've just seen a horse with handlebars". I looked up and saw that it was a cow. They had never seen a cow before. Despite the fact that these children had been happy in their neighbourhoods, they were now learning what the countryside was like.
Years later these children returned to their cities. They had high hopes of returning to the inner city areas, but what did they find? They found that it was no longer possible to play in the streets, even if they wanted to do so. No longer were the women able to talk to one another, because of the cars and the traffic and the building of high-rise flats. At that stage, a number of us, having seen children of the inner cities before the war, and having seen children return from the country to the inner cities, realised that one of the things greatly needed was not only good housing but also open space. Several of us made representations to the then LCC. We pointed out that, with the bombing there had been in the East End, here was a great opportunity to set up a park in the East End; why should the West End have Hyde Park and St. James's Park and the East End have none? We thought that this was a magnificent suggestion. It would have drawn together the best of pre-war London and the experiences which the children had had in the country. What were we told? We were told that this could not he done because it was financially impossible. We were told that the land would be needed for housing and that the then LCC would not be able to afford such a scheme because it needed the rates. I went to the East End and, although there was the space, at any rate for a smaller park, this is what we were told. We then made representations to the LCC, asking, if a park could not be made available, could they not dot little squares all over the East End, Islington and the Docklands so that people would have some places to meet? That request was also refused.
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How I wish that central and local government could bridge the gap of departmental barriers. How one wishes that planners, architects, civil servants, local government officers and council members could have insight into the emotional needs of people which, if met, would go some way to saving our country money in the very long run and would give happiness to our people.
Many of us are very fond of Post Impressionist paintings and perhaps the most delightful of these shows the Luxembourg Gardens; the old men sitting and talking to one another, the old women pushing prams, the children playing. Such activities do not demand any staff, for they are natural activities in any area. So what now? Even today, when driving through all parts of London, one can still see shored-up buildings which have been bought by the local authority in order to develop them. Has not the time come for us all in central and local government and in the communities to recognise the need that people have for open spaces? Is now not the time to give over what little land is left to open spaces?
4.28 p.m.
Lord Ferrier: My Lords, like the rest of your Lordships, I am grateful to my noble friend Lady Gardner of Parkes and to the "luck of the draw", for having this interesting debate introduced today. The matter is one deserving of very careful thought, and it is thought which must be careful and farsighted. In saying this, I am not going to follow what was said by my noble friend Lady Faithfull except that one of my daughters, who was a teacher, said to me some years ago, "Daddy, if ever you get the chance you must beg for spaces where the children can play". This is very important to the environment of a community, as my noble friend Lady Faithfull and the noble Baroness, Lady Birk, have both said.
I have studied the Statement repeated by my noble friend Lord Bellwin on 9th December on the subject of inner cities. Although, in reply to a question of mine, he agreed that it did not apply to Scotland, he added that the Secretary of State for Scotland was "fully in the picture". Although I shall confine my remarks to my native city of Edinburgh, my remarks will be on matters which concern any city, no matter where it may be, in relation to two particular problems. The problem, as the noble Baroness has said, is a general one.
I turn to the need for by-pass roads, which have received a fillip from recent publications of the intentions of government. They are divided into two sorts: one the by-pass road designed to speed trunk traffic, the other the by-pass road to deal with the concern of this debate, namely, the relief of central inner areas of cities. This brings me to the first point which I believe to be of universal appeal. In a situation which includes the ultimate establishment of a by-pass—it is not every city that has this problem, as I think the noble Lord, Lord Evans of Claughton, would agree—let the by-pass be constructed as a contribution to the final phase, as early as possible. The need for by-pass roads is now generally accepted, and I see them as of the two types I have described.
The existence of a by-pass will inevitably alter the traffic pattern of the whole area, especially that of the

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inner and middle areas of old cities. By-pass problems must be an important contribution to the internal planning; otherwise such internal planning must be based on conjecture. Unless you know what the traffic is going to be like in the centre, plans for roads, buildings and everything else in the centre must be subject to conjecture, and one result of such conjecture can be that, as in the case of Edinburgh, whole areas may, in efforts to relieve traffic pressures for internal road construction, be subjected to "planning blight" which may turn out finally, when the by-pass comes, to be more massive than is ultimately necessary. As for the human issues raised by the noble Baroness, Lady Birk, and my noble friend Lady Faithfull, they are extremely important and are likely to suffer from excessive road building in inner cities which turns out to be unnecessary in the end.
Nobody has mentioned tower blocks. I had expected my noble friend Lady Faithfull to say something about them. I like the story of the mother in Edinburgh who said she did not like her tower block because, "When I throw a piece out to the wains the seagulls get it before the wains". It is all very well having places for children to play, but from a tower block they cannot be overseen by their parents. Lessons must be learned from what has happened. In whole areas integrated communities in the cities all over the country are being divided; these areas may be broken up and the living environment of the inhabitants impaired or destroyed when existing buildings are needlessly demolished to give place to tower blocks, or these concrete highways which sweep through towns level with the windows. That is my first point—that, if you are eventually going to have a by-pass road, build it first, not last.
My second point has nothing to do with roads but arises from an idea being put forward just now by the Cockburn Association in Edinburgh, whose work in contributing to the conservation of the ancient city over the years is well known. In this connection—I bethought myself of it when the noble Lord, Lord Evans, was speaking—Edinburgh has been irreverently called "the Holy City", because of the ghastly holes in many places where buildings have been destroyed and removed and the sites left gaping, as it were, to the high heaven. Many of them are in the inner centre of the cities; there they are, and Edinburgh is not alone in this respect. The time must come, and the sooner the better, when the development of these vacant sites is taken in hand. Surely, with the success of this Government's policy and resolve, the time has come when construction can begin to be undertaken to revive and reinvigorate the building industry. I say this because one of the major difficulties facing developers in inner cities today is the high cost of land and the high cost of finance. As for the land in local authorities' hands, it is lying idle and unproductive in every way, not only in terms of lost revenue, but also in lost rates. As for finance, in order to encourage filling up the holes with needed buildings the Cockburn Association's suggestion is, I gather, that vacant sites now lying idle might be transferred free of charge to developers who contract to construct thereon, by agreement with the local authority, buildings which the authority will want on completion, to purchase on agreed terms, to be occupied by them or leased by them or sold by them.
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In saying that, I turn again to what the noble Lord, Lord Evans of Claughton, said. That is one way of making owner occupation more possible in the city centres: if buildings could be constructed in that way and made available for the local authority to sell, it would contribute to what the noble Lord looked forward to. I gather it will not be long before this proposition or something like it is made to the Lord Provost of Edinburgh. It will be very interesting to hear what my noble friend Lord Bellwin may say on this proposal, which has not been touched on before. I hope that this is a worthwhile contribution to the noble Baroness's debate, and I look forward to my noble friend's reply, turning, as I do again, to his Statement of 9th December.
4.39 p.m.
Lord Vaux of Harrowden: My Lords, like other speakers before me, I would like to thank my noble friend Lady Gardner of Parkes for initiating this very interesting and very important debate. Any debate concerned with the regeneration of our cities will almost certainly concentrate on housing, employment and the needs of industry. Although these matters, and the regeneration of wealth, are all essential, we must not lose sight of what is arguably the nation's greatest wealth. That is its children.
There is no doubt that the urbanisation of our society can hit children very hard indeed. Many are born into overcrowded, high density housing, surrounded by increasingly murderous roads. More and more natural play space has been eroded away to be replaced by a hostile, sterile environment of brick and concrete. It has been estimated that in this country an area the size of the Isle of Wight disappears under concrete nearly every year. All these factors stifle the natural instincts and energies of children, many of whom also experience the social and educational problems that tend to have a higher incidence in the city areas.
One of the main requirements is play space and one of the main problems is that land is all too often considered to be too valuable to be spared for the needs of children. We render children's lives quite intolerable if we seek to confine their play to their homes and their usually very tiny gardens. I know that it has been quoted in this House before, but I think that what Lloyd George said in 1925 in a message to the National Playing Fields Association bears repetition. He said:
"The right to play is a child's first claim on the community. No community can infringe that right without doing deep and enduring harm to the minds and bodies of its citizens".
Play is an instinctive need for children as well as a human right recognised by the United Nations in their declaration of the rights of children. Play space is a "must" for children and for this to be used to the best advantage there must be adult involvement in the form of play leaders. Play leaders must make it their aim to see that children do not become bored, because it is when children become bored that we can expect perverted play in the form of vandalism, shoplifting and juvenile crime, of which we have heard a tremendous amount in recent debates in your Lordships' House.
Society cannot afford to deprive children of play opportunities and leadership in their play, any more

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than it can afford to deprive them of education. Central and local government spend many millions of pounds educating children for 260 days of the year, but very little is spent on them when they leave school, after school hours and during their holidays. Government recognise that adult play and leisure is of great importance—so much so that they fund the Sports Council to the tune of £21 million, which is a good thing, and the Arts Council to the tune of £80 million. But children's play and leisure is funded to the tune of just a mere few hundred thousand pounds. Government, up to now, have failed lamentably in their responsibility towards children for their play and leisure. It is now time for political acceptance of the importance of play to children as an essential part of their healthy development.
I would urge all those charged with the regeneration of our cities not to overlook the very special human needs that must go hand in hand with economic regeneration. Among those human needs, may significant priority please be given to the very legitimate and important needs of children? Let us bear in mind that today's children are tomorrow's adults. The shape of tomorrow's society depends largely on children and particularly on how they develop into adult life. In this, their play and recreational opportunities have an essential role. Our urban life must necessarily both accommodate and sustain it. I know that funds are limited and that they are needed for countless other commitments. But money spent now on children and their needs for play, will pay tremendous dividends in future years.
4.45 p.m.
Lord Bellwin: My Lords, I, too, would like to begin by congratulating my noble friend Lady Gardner of Parkes on selecting so interesting a subject for what is, I think, the first debate that she has initiated in this House. It is, of course, a broad subject and there can be few Government policies which do not, in some measure, affect our urban areas. I hope, therefore, that noble Lords will forgive me if I do not respond to all of the points mentioned, some of which, indeed, fall slightly outside my own province.
It is, indeed, in the inner cities that the greatest concentrations of deprivation are to be found: the familiar combination of high unemployment, poor housing, too few job opportunities, inadequate facilities, and socially disadvantaged people left behind as industry and the more enterprising and better-educated have moved to the suburbs or even further afield. It is in those areas that the problems of society, to which the noble Baroness referred, are at their greatest. The communities that remain lack the balance that is necessary if they are to thrive. The problems faced by the people living there reinforce and feed upon each other, creating a vicious spiral of decline.
Of course, these problems are the result of decades of decline. They have not come about overnight and—as much as some of us would like to think that they can—the reality is that they cannot be solved overnight. This Government have maintained their commitment to the inner cities and, as I will show, have taken a wide range of initiatives which demonstrate that commitment. Indeed, I would claim
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without any hesitation that no Government have ever before shown such imagination in the width of the range of activities on which they are currently embarked in trying to deal with the problem. For myself, I am particularly pleased to be able to make the Government contribution to this debate because, within the Department of the Environment, my right honourable friend the Secretary of State for the Environment has asked me to take a special interest in urban policy.
The Government's aim is to make the inner cities once more places where people want to live and work. But it is no use pretending that it is an easy task. The problems can only be tackled by a co-ordinated approach with the twin aims of getting the best possible value for the huge sums of money already being spent in the inner cities, and by providing additional Government help.
The Government are giving that help in numerous ways. The time available today means that I can give details of only some of them. But the main help is through the special emphasis which we give to inner cities within main programmes, such as dealing with derelict land, and through the urban programme. For 1982–83, despite the general need to control public expenditure, we have been able to increase the total resources available under the urban programme to £270 million—the highest ever in real terms. The great bulk of this will be spent by the partnership and programme authorities; I myself chair four of the six partnership committees and I am responsible for approving the inner area programmes prepared by the 15 programme authorities. In addition, £64 million is being made available to the two urban development corporations which we set up in 1981 to regenerate London and Merseyside docklands. Their expenditure on projects is expected to rise from £15 million in 1981–82 to £50 million in 1982–83.
But we are not in the business of handing out subsidies for marginal projects with little long-term benefit. Making effective use of these resources is at least as important as the volume of resources available. Valuable work is being carried out under the urban programme in many fields. Our priority is, and must be, to secure lasting regeneration by stimulating local inner city economies. For it is only by so doing that the people who live in the inner areas will be able to help themselves—by finding proper jobs and restoring their sense of pride in themselves and their areas. Now more than 50 per cent. of partnership funds go on projects aimed either directly or indirectly at economic regeneration. But all this effort would be fruitless if the private sector were not involved. Public sector activity is not enough. In isolation it does not create real wealth. That is the task of private enterprise, and it is the private sector—not the public sector—on which the inner cities must rely for their future prosperity.
We firmly believe that a new approach to the problems of our older urban areas must involve closer association between local government and the private sector. So local authorities must now first consult in detail with private sector interests before submitting their inner area programmes for our approval. It is essential that they draw in private sector ideas for the inner cities at an early stage, taking full advantage of local

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knowledge and experience and, above all, ensure that schemes have local support.
I can tell your Lordships that this co-operation is now most encouraging. I see it happening everywhere and, for the first time, I see a working together between public and private sectors that we have never seen in the past. I do not want to digress, but perhaps I may recall being in a town hall with the local authority membership, when the local chamber of commerce and chamber of trade came in and said: This is the first time for 20 years that we have been here as a body". I thought that that was very encouraging. I should like to be able to say that the meeting that followed was very productive, but frankly it was not. However, it set the base and today, perhaps a year later, there is cooperation between the two sectors; and so it must be.
This same effort to encourage private sector involvement and investment underlines the designation of enterprise zones. Recently I seem to have been asked many questions in this House about enterprise zones, and it is right that I should be asked them. However, I have stressed all along that this is an experiment. I notice that the noble Baroness, Lady Birk, spoke about blight, and she referred to certain reservations that she has. It is not unreasonable to have reservations because these are still early days. But, as I have said before, I shall say this about it: At least it is an attempt to do something imaginative and to try to see what can be done with areas which, for so long, have simply lain derelict, doing nothing. All we have done in the past is to bemoan the situation and say: "Someone ought to do something about it". Well, someone is trying to do something about it. I am trying to be careful not to go further than I did in answering a Question earlier today, when reporting what is being achieved. Therefore, I shall only say that we are very encouraged by what we see and hope that before too long we shall h able to give more details of why we are encouraged.
Baroness Birk: My Lords, before the Minister leaves that point, perhaps I could ask him a question. As regards enterprise zones, one of the matters with which people are concerned is that of the levy, which in an enterprise zone they cannot pay to the industrial training boards, and are not allowed to. But at the same time they do not receive a grant if they want to send someone for industrial training. This has caused a great deal of disquiet among local authorities, industries and other people. I wonder whether the Government will see this is straightened out. It has been raised before.
Lord Bellwin: My Lords, I cannot give an immediate answer to the noble Baroness on that point because it is one of the many points at which we are looking. We have appointed people to monitor what is happening and to give an independent view. In addition, we are in touch with the local people who are trying to develop. Therefore, so far as I am concerned, what the noble Baroness says is part of the whole situation which we shall watch carefully. If there is some way in which we can do something better, we shall not hesitate to do so, because this is another genuine attempt to do something about these areas. As I
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said in answering the Question, if we are right, and if it is successful, there will be more such areas.
I want to say a few words about enterprise agencies. In answering this debate, apart from picking up the individual points that have been made by your Lordships at the end, it is right that I should give some indication of the various initiatives which are being taken. So it is not just pious words, hopes and generalities; attempts are being made. Therefore, I refer now to the enterprise agencies. For those who do not know it, in the main, these are bodies of the private sector, which come together in various towns with, I think it is fair to say in every case, the blessing of the local authorities and, in some cases, their help. Basically, it is an attempt by people in the private sector—business people, banks, building societies, professional people and even the local press—to get together to form little agencies which will help people who are trying to start in business, who want to be in business, and even those who are already in business and are having difficulties.
There are also many success stories to be told concerning this. At the moment there are some 60 such agencies actually operating. As a result, thousands of new people have started out in business with consequent employment. I do not want to overestimate or overstate the case at all, but there are at least another 50 such agencies which are currently being talked about. If we can spread this enthusiasm throughout the whole country, it would be another major initiative for actually doing something rather than just bemoaning one's fate.
Finally, on that point, my right honourable friend the Chancellor of the Exchequer announced in the Budget that tax relief will be given on firms' contributions to approved enterprise agencies. I hope that that will be an additional incentive to companies to become involved—perhaps some which may have so far stood back from participation.
Another initiative to involve private sector expertise in our efforts to secure economic regeneration in the inner cities is the secondment of some 40 managers to work with Government for a year. I think that the readiness of companies to come forward in this way must be an encouragement to everyone. Many of your Lordships will also know of what, in the department, we call the Financial Institutions Group, which has seconded to it some 26 managers drawn from banks, building societies, insurance companies and pension funds establishments; they are examining a whole range of questions which they have identified in the older urban areas. They are doing this on their own; they are not being guided or told. We want to see what outside, fresh thinking can bring to the problems and, again, some really exciting ideas are coming forward. We shall see how we can develop them.
Perhaps I may mention the Merseyside task force to which the noble Lord, Lord Evans, referred. He expressed some concern about what it is actually achieving. I thought that what he said was quite contrary to the impression which I had gained from a recent visit to Liverpool, when I spoke to the Liberal leadership of the authority. I thought that they were very keen on what was going on.
Lord Evans of Claughton: My Lords, perhaps I

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could interrupt the Minister for a moment. The concern that has been expressed has been expressed by the county council, which is controlled by a different party—one further down this Bench from me.
Lord Bellwin: My Lords, I was about to say that. As regards my right honourable friend's involvement, when he starts to talk to me about things being not "fair" in Liverpool, I know that he is really getting the message there, because he is speaking with the Liverpool accent. It is a pity that the noble Lord, Lord Sefton, is not here; I am sure that he would come to my aid on that. But he would say that it is not "fair" at all.
The task force is, indeed, concentrating on projects rather than grand strategies, because of the vital need to get matters moving right now and not to wait. If they ought to be more involved in strategies, as the noble Lord, Lord Evans, implied, then that and the rest of his remarks that he has made today, will be passed on to my right honourable friend, who I know will be very interested to read them. But, again, it is another attempt to tackle a most serious problem; arguably, in terms of scale, I should have thought the most serious of all the inner urban area problems in the whole of the country. That would be my assessment.
I have stressed the priority we are giving to economic regeneration, but that does not mean that we are not conscious of the need to improve services for people who are already living in the inner cities. Local authorities already spend vast amounts of tax and ratepayers' money on education and social services. This means that the main scope for improvement must obviously be through more effective use of those resources. But a sizeable part of urban programme resources are used for social projects, particularly those which do not fit easily into existing programmes—for example, because they are innovative and involve a voluntary sector, or are aimed at the special needs of particular groups such as the ethnic minorities.
I am particularly pleased to be able to say that through that programme we support about 350 projects designed specifically to benefit ethnic minorities, in addition to the multitude which benefit all inner city residents. It must be remembered that over half the ethnic minority population live in designated inner city authority areas. So in considering area programmes we are always conscious of the special ethnic dimension.
My noble friend Lady Gardner referred particularly to the need for better sport and recreation facilities in urban areas. She is absolutely right. I think at this time perhaps more than ever before there is a need to recognise this. We are doing so. Last year some £22 million was spent on recreational projects under the urban programme, and that is quite apart from whatever the Sports Council and other bodies may do. For the partnerships the figure was £13 million, which in fact represented 12 per cent. of their total spending.
As in other aspects of the urban programme we believe it is vitally necessary for local authorities to involve the local community and the private sector in recreational projects as well. One of the initiatives my right honourable friend was able to take during his first visit to Liverpool last summer was his announcement
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that he would match pound for pound, up to a total of £2 million, money that private sporting interests could raise for local sporting and leisure facilities on Merseyside. I understand that the response has been magnificent. As with other initiatives which we are currently taking on Merseyside, we shall want to consider the lesson that this teaches for tackling similar problems in other conurbations.
I want to mention here a point that my noble friend Lady Gardner mentioned when she referred to the problem of what happens when companies move out of the area because of the rate burden. I am anxious not to stress the political side of this whole debate. I recognise it is there and that it cannot go away, but we should concentrate today as far as we can on looking at what really happens. There surely now can be few who would say other than that where rates are high it means that people, businesses, stores, the kind of companies my noble friend mentioned, just have to move out. They cannot stay.
I was in a meeting with one local authority who asked me to try to bring in the private sector—and this was another one who had not been in the town hall for many years. I sat down with them to try to see how they would work together and to help. It was so difficult when a number of them said, "Why do you expect us to come here and help? We are moving out. Why should we pay so much more here?" and I shall not state the figures they mentioned—"when down the road in an adjoining authority we pay much less?", and the figures were staggeringly less. "Why should we remain here?" they said, to which there truly is no answer. Why should they? These were like authorities. One could not say, "Well, one is a shire county and one is an inner city"; they were like authorities. I was frankly embarrassed for the authority I was trying to help.
If we get over to authorities—and, frankly, I think we can; with the odd exceptions of some who are so steeped in dogma that they just do not want to know, the message is getting over—that high spending means high rates, and that means that people cannot afford to continue to stay in their authority area and must look elsewhere, I am hoping that that too will be a situation which will improve.
I am not going to rise to the bait that the noble Baroness, Lady Birk, put out about discussion of the figures of grants to the partnership authorities. We are having a healthy correspondence. I am sure your Lordships would like to know that. It goes on pretty much all the year round. At the moment it is dealing with this issue. I could quote figures which I think would show the noble Baroness that her suppositions are not correct, but then We will leave that for another day because time is getting on.
I would say on finance that we are trying to stress the point that there will be room, indeed there is room, for greater capital spending in the inner cities if there is less emphasis, if there is a reduction, on current spending. It has been the almost obsession with current spending in the past which has led to this on-going, continuing commitment of money year after year which has been at the expense of massive cutbacks of capital spending; 65 per cent. has been the cutback in capital spending over the last seven years—I am saying this off the top of my head. This is an

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enormous cutback, and has reflected itself in work for the construction industry, and so on.
That is why we emphasise wherever we can the need for more spending where money is there—and it is there. As I mentioned in answering another recent question, local authorities now have some hundreds of millions of pounds of capital receipts which they can spend as they wish. I am hoping that some of that, indeed a lot of it, will go in spending on capital projects for the inner cities. Not all capital spending necessarily has to result in future revenue outgoings as well. If you repair your housing stock, if you rehabilitate it, that has no on-going commitment for revenue purposes. I hope that is something else that will be received.
The noble Lord, Lord Evans, mentioned his concern that we should also look to areas outside the immediate inner city. He is quite right. in some cases you get housing estates with problems of dereliction and deprivation every bit as bad as anything you will find in the immediate inner city area. The only difference is that it is not as concentrated. The scale is not quite the same. One is always between the Scylla on the one hand of wanting to concentrate the help so everyone can see that things are happening, and the Charybdis on the other hand of sprinkling it too widely and doing a little to help but in practical terms achieving not too much. In looking at programmes I try to be flexible about this, and I shall go on being flexible, and we shall try to help wherever we can.
May I touch on some of the points raised in the debate. I am so glad that my noble friend Lady Gardner spoke about homesteading. She is right. It is an opportunity. I should like to see much more. The former GLC administration put some 1,300 houses out to be done in this way, and that was good. Unfortunately, the present administration are not concerned about this and are doing nothing. But happily Westminster, as an authority, is now coming forward with an imaginative scheme. That is splendid because any scheme that will take old, broken-down, clapped-out dwellings and give them to people who are willing to work on them themselves, and they can then have their own homes, must be good and a benefit for housing generally.
My noble friend Lady Gardner also spoke about shorthold. The noble Baroness, Lady Birk, said, "Well, it has been disastrous". I say on this issue the same as I said on enterprise zones; anything which attempts to improve a situation and which makes it better can never be said to he disastrous, because it is only making better something already existing. There are now several thousand homes let under shorthold. Certainly over 5,000 was the figure at the end of last year. It is going up now. I would have to remind the noble Baroness (and I do this as gently as I can) that the scheme would have had much more success had her right honourable friend in another place not announced at the time of its introduction that should his party eventually come to office—in that unlikely but not impossible event—they would do away with shorthold. What encouragement under shortholds can that be to landlords to let? So, with respect to the noble Baroness, she must not say too much about the achievements or otherwise of shortholds.
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My noble friend Lady Gardner talked about dentists, and I understand that a review is going on along. the lines she mentioned. While I am sure that today she will not expect me to be too specific on the subject, I hope she is pleased to hear me say that. She also referred to exactly what rate increases mean when a district or borough levies its own rate, only to find that the precepts from outside bodies—the GLC, ILEA or metropolitan counties—make almost a mockery of what they have achieved. How can one react, except feel depressed about it? Those concerned with the matter can be assured that the Government are very cognisant of it. I must choose my words carefully; I will only say that it cannot stay like that forever.
My noble friend Lady Gardner also talked about abolishing rates on empty property, which is a real problem for many people. I know of at least two people who have actually pulled down property on which they could not afford the rates. What an indictment that is! I would only tell my noble friend that we have powers to change the 50 per cent. mentioned in the Act, and that we are watching the situation carefully.
The noble Lord, Lord Evans, said the shire counties got more favourable resources than the towns and cities. I wish he were with me at some of the consultative meetings I have to attend, when we hear the opposite case put most forcefully. I think everyone would say that certainly this year, in the last settlement, extra emphasis was placed on the GRAs (the grant-relation assessments) for social services and other such factors. There are now 62 factors going to make the rate support grant settlement, and we are attaching much emphasis to those problems precisely to help the inner cities.
Both he and the noble Baroness, Lady Birk, mentioned Knowsley. The noble Baroness agreed that her own Government did not designate Knowsley, and she went on to say—I noted her words carefully—that they would have hoped for a change. I am not sure what she meant by that, unless she meant it was hoped we would make a change. Again, I can only tell her—I hope this will comfort her—that we are always willing to review the matter of designation. What we try to do in cases like Knowsley, Sandwell and Coventry—there are areas which are not designated—is to give extra help under the traditional urban programme which, as she knows, is another source of funds.
When we see the programmes for near-miss authorities—what a dreadful term that is; I cannot think of being called anything worse than a near-miss authority—we try to look very favourably at their applications for projects and schemes and be helpful to them. I assure the noble Baroness that the game is not over and that we are looking into the issue all the time. Imagine the position if we were to say, "Yes, we are about to announce new designated areas, but the following will no longer be designated". We should start receiving delegations as soon as the list was published. There is only so much money and it must be spread out.
I have said most of what I wanted to say, although I could go on speaking for hours on this subject which, as noble Lords will be aware, is very close to my heart.
Lord Ferrier: My Lords, may I remind my noble friend that we had a Statement earlier and that at least 40 minutes remain before we shall have completed two and a half hours on this debate?
Lord Bellwin: I am tempted, my Lords, and in view of my noble friend's interruption, the very least I can do is refer specifically to the point he made about the number of small sites standing idle in inner areas, and he even suggested that some of them should be given away to people willing to develop them. So far as Scottish cities are concerned, I must refer that suggestion to the Scottish Office, and I take pleasure in so doing.
In England, through our land register initiative we are making sure that public authorities take a more realistic view of their land holdings, and we have decided to concentrate on larger sites so far as the formal registers are concerned. Some very interesting results are coming out of the land register procedure, to which I did not refer earlier in the interest of some brevity, despite the comments of my noble friend Lord Ferrier. But as I have been reminded that I might take a little more of your Lordships' time (I hope the Chief Whip is not listening) I should perhaps comment on the remarks of my noble friend Lady Faithfull about the need for more open spaces in inner cities, a subject to which my noble friend Lord Ferrier also referred. She referred to East London, and I am sure my noble friend Lady Gardner will tell us of the GLC's efforts, notably Victoria Park in Hackney and Burgess Park in Southwark, both major new parks.
Under the urban programme, we have helped to fund a number of new open space developments, many of them small-scale environmental improvements; for example, improving the surroundings of some of the tower blocks to which my noble friend Lord Ferrier referred, or opening up some of the derelict sites, surrounded by rusty corrugated iron, which despoil our cities. Some of them have been on a larger scale; for example, the new open space surrounding the Britannia Leisure Centre, which was also built up in Hackney with urban programme support.
Being the final speaker for the Government in debates of this kind—I sometimes feel that I should go into the watchmaking business, I wind up so much—one is always concerned lest one has not referred to the points made by so many of your Lordships, many of which in this debate have been particularly apposite. I promise that I shall write to any noble Lord whose point I have not covered, in so far as it is a matter which concerns the Government, and I am sure my noble friend Lady Gardner will have a comment to make about that.
I conclude by saying that urban problems are not confined just to these shores; we are looking also at what is being done in other countries, at how they are trying to tackle their problems, not least in the United States, and some of their experiences are very helpful to us. As I said at the beginning, the problems which the areas we have been discussing face have been developing over decades and the real solution will be slow. However, I hope I have shown, at least so far as the Government are concerned, that we have begun that process, and we are determined it will succeed.
Baroness Gardner of Parkes: My Lords, I wish to thank those who have taken part in the debate. I have greatly appreciated their contributions, which have been very wide-ranging and which have taught me a great deal about other cities I knew little of. I. also thank the Minister for a comprehensive and detailed reply. I appreciate his comments and I am grateful to him for mentioning the amount the GLC has done to provide open spaces. I would only add that apart from open spaces on the land, they have done a great deal to encourage water facilities and recreation on the Thames and canals of London, and those are not to be overlooked. Again I thank the Minister, and I am most grateful because he covered almost all the points raised in the debate. My Lords, I beg leave to withdraw the Motion.
Motion, by leave, withdrawn.

Copyright, Designs and Performers' Protection
5.19 p.m.
Lord Lloyd of Hampstead Lord Lloyd of Hampstead rose to call attention to the consultative document on the Reform of the Law relating to Copyright, Designs and Performers' Protection; and to move for Papers.
The noble Lord said: My Lords, it was in March 1977 that the Whitford Report on copyright first saw the light of day and, as is often the fate of reports of that sort, it gathered dust for a number of years, virtually neglected by successive Governments and, indeed, by Parliament. So far as I have been able to ascertain, this is the first occasion since 1977 that the report has actually been the subject of a debate in either House.
However, the present Government have at last bestirred themselves, and in July 1981 they produced a Green Paper (the consultative document) which is now the subject of our debate, though one cannot perhaps avoid wondering whether, after all those years, it might not have been possible for the Government to reach conclusions and to give us the benefit of a White Paper. Of course consultation is always valuable, but one cannot help wondering when consultation is going to end. When in the introduction to the Green Paper the Government hope for what they call "a lively public debate", one cannot help feeling that, after such a long period of neglect, it is a little disingenuous to look forward to such a prospect. However, I hope that the discussion in your Lordships' House will at any rate provide some semblance of such a debate. I would venture to think that our hope is not so much for soft words at this stage, but for some form of positive action.
Yet, despite the long neglect, the importance of copyright law is not in doubt. It provides a legal framework within which considerable areas of our cultural and industrial life are able to function. Unfortunately, however, it is also one of the most complex and technical branches of the law, concealed behind almost impenetrable jargon. In this respect the United Kingdom is somewhat worse off than many other countries, because of the peculiar style in which the Copyright Act 1956 is framed. As the Whitford Report says, the Act may be a draftsman's dream but it has proved a nightmare to those who try to understand

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it. The report goes on to cite as an example the difference between the German copyright law and our own.
It might be of some interest to your Lordships to have a comparison between the opening subsections of the two respective pieces of legislation. The German statute, by Article 1, provides that
"The author of an intellectual work shall, by the mere fact of its creation, enjoy an exclusive property right in the work effective against all persons".
That is a fairly straightforward statement, I should have thought, of what the Act is about.
This is how Section 1(1) of the English Act begins:
"In this Act, 'copyright' in relation to a work (except where the context otherwise requires) means the exclusive right, by virtue and subject to the provisions of this Act, to do, and to authorise other persons to do, certain acts in relation to that work in the United Kingdom or in any other country to which the relevant provision of this Act extends".
That, your Lordships might well think, is something of a mumbo-jumbo, and therefore one might understand why Whitford called for the whole general structure of the Act to be revised in order that the law might be placed on a plain and uniform basis. The Green Paper has replied that it will attempt that so far as possible. But one suspects that what will probably result will be some piecemeal legislation. I would venture to suggest that what is probably needed in this area is to set up a small, expert drafting committee, not to consider changes in the law, but to redraft the Act itself. Of course, it is most important that that process should not hold up the vitally needed legislation, but there seems no reason why that larger process should not go on and develop while the amending legislation is being put through.
I now turn to the substance of the report. The Whitford Report is a massive document, which took four years to prepare. It called for a complete overhaul of the law, and made over 100 specific recommendations. I should like here to pay a belated tribute to Mr. Justice Whitford and his distinguished team of eight ladies and gentlemen, who devoted so much of their time, over many years, to assisting the public interest in advising how this branch of law might be amended.
In opening this short debate it is impossible to do justice to the wealth of material contained in the report. Therefore, I must be ruthlessly selective and, in so doing, I hope that no one will think that I am overlooking the innumerable matters that I am unable to mention. I propose to concentrate on two areas which have been the subject of particular concern. They both result from technological innovations not even foreseen at the time of the 1956 Act, and which have made further strides even since Whitford.
These two areas are, first, photocopying—referred to in both the report and the Green Paper by the rather unlovely expression "reprography"—and, secondly, recording on sound and video cassettes, including video discs, which I understand are to appear on the British market in May of this year.
First, I should like to make a general observation. Copyright law has to seek some kind of balance between what might be the conflicting interests of authors and publishers, and those of members of the public. The law sets out to protect the products of intellectual creativity and the livelihood of authors
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and artists, as well as the great industries which have arisen in modern times for the exploitation of these products. At the same time, there is the public interest which is served by a legal mechanism which encourages and supports creative work and enables the public to enjoy its fruits.
Often, however, it is very difficult to know where the balance is to be struck, and the crux of this emerges in particular in the area of research and teaching, where the taking of copies might be absolutely essential. Does this mean that everyone must first obtain consent of the copyright owner, or pay a fee for every copy that he takes? When copying was a rather laborious affair that was perhaps not a very vital issue, but in the present day, with the ease with which it can be accomplished on a massive scale by photocopying, there is introduced an utterly new dimension.
Authors and publishers, on the one hand, see the rapid erosion of their rights by multiple copying of their works. The eductionial world, on the other hand, stresses the absolute necessity of the enjoyment of these facilities if the whole process of instruction and research is not to grind to a halt. Here perhaps I ought to disclose an interest as at any rate something of a part-time author, but I think I can say that that interest is offset by my equal interest in the educational world. So I hope that I can be regarded as being fairly dispassionate on this subject.
Whitford saw the only solution as lying in providing a blanket licensing system, on the analogy of the Performing Rights Society in the area of music. However, to make this workable, the committee also considered it vital to curtail the existing fair user and library provisions of Sections 6 and 7 of the Act. The Green Paper is not very explicit on this point, but, as I understand it, it implicitly accepts Whitford's main recommendation about the blanket licensing system, though it has considerable reservations about Sections 6 and 7.
We are faced here with a genuine dilemma. How are we to preserve the features of fair user by the taking of single copies, while restraining abuse by way of systematic multiple copying? There is really no perfect solution. Authors must be protected; or the educational world might end up with no tools of research or teaching at all; suitable texts might simply dry up. At the same time, there is a strong public interest in ensuring access to copyright material, either free or at reasonable cost.
I would suggest that the implementation of the Whitford blanket scheme would be a considerable advance, and that the important thing is likely to be a long and tedious business—one has only to think of public lending right in this connection—so the sooner we get it started the better. Of course, there will have to be some modification of Sections 6 and 7, but I would hope, at any rate, that there would be recognition of the strong case for continuing exemption in the case of university and similar libraries, particularly in regard to learned periodicals.
I turn now to the second problem, which is that of the private recording of audio and video cassettes and discs. Recent developments have effected a technological revolution in our lives. The ease and comparative cheapness with which a recording can be made, either from a disc or from a broadcast programme,

1425
or from another tape, has placed this facility at the disposal of the public at large. The value to the public is undoubted. But what of the copyright owner, whose legal and commercial rights are subject to widespread infringement? There are two aspects here, I think, to he borne in mind. The first is that there is a strong public interest in not being deprived of this facility, provided it is used privately. The second is that it is impracticable to police private copying. Owners therefore have to make a virtue of necessity; but, at the same time, they are surely entitled to the protection of their commercial interests.
There is a considerable threat, both to the recording and to the film industry, of which I suggest the Green Paper makes too light. As regards the recording industry, the Green Paper, while referring to estimated losses of some £50 million a year, contents itself with the comment that it cannot really be precisely quantified. As regards films, we are blandly told that the Government are not convinced that video recording harms the interests of film producers. So far as records are concerned, of course, precise quantification is unattainable. Nevertheless, it cannot be denied that the damage is very substantial. Moreover, there is a serious effect on the recorded music repertory, which is steadily shrinking owing to the loss of profitability. So far as films are concerned, I venture to suggest that the Government are ignoring the impact that video cassettes are likely to have on the central area of cinema exhibition, as indeed was expanded in the recently published report of the Wilson Committee, the interim action committee on the film industry, of which committee I had the honour to be a member.
The real problem here is likely to arise not so much from the copying of television broadcasts but on account of the widespread copying of prerecorded cassettes and discs. Here it seems to me that the Government are a little naive in their report, because they say that people are unable to copy prerecorded cassettes or discs. I am credibly informed by those whom I believe to be well qualified to speak on this matter that this is far from being the case, and such copying can be effected quite easily. Also, the Government say, it is not worth doing anyhow, but here they appear to overlook the fact that by this copying, as against buying a prerecorded cassette, a considerable saving would be effected.
Whitford favoured the German system of putting a levy on the recording machine, the hardware, for distribution among copyright owners. You can of course also impose a levy on the software, on the blank cassette, and this seems a sensible proposal—and I venture to think it deserves more careful consideration than is given it in the Green Paper. The Government's arguments regarding audio are really not very convincing, and indeed in some aspects are rather trivial. For example, they say that part of the levy would go abroad.
Their main objections are, first, that on the industry's own figures it would need a £1.40 levy per blank cassette, and that this is more than the traffic will bear. I think the answer to that is that the industry do not have in mind any such huge levy; they would certainly be content, on my information, with a levy of 50p, which probably would not make the cost of
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blank cassettes prohibitive. The Government's second main point is that the increase in prices is contrary to the Government's anti-inflation policy. This seems to be quite misconceived. Copyright law surely cannot be framed to conform with a particular Government's economic policies. Copyright law has to have an element of permanence, and cannot fluctuate as economic policy changes.
My Lords, I regret that time does not permit my going into numerous other important matters dealt with by Whitford and discussed in the Green Paper. I should have very much liked to have had time to refer to the pressing problem of piracy of feature films, which poses a most serious threat to the film industry. Indeed, the melancholy fact is that London is now the acknowledged centre of this illegal copying trade. I find little consolation to be derived from the fact that one of the main reasons, apparently, why London enjoys this dubious preeminence is because of the superior technical resources that we possess in the film industry, which makes this process more simple.
This matter, anyhow, has received some airing as a result of the Private Bill which was introduced the other day by the noble Lord, Lord Fletcher. I should have thought that there was at any rate clearly a strong case for tightening up the law, and particularly putting increased penalties in the place of the really derisory level of penalties for which the present law provides. Other noble Lords will doubtless wish to deal with some of these matters in greater detail, but I have more than exhausted the appropriate time allotted to me and, accordingly, I beg to move for Papers.
5.38 p.m.
Lord Ardwick: My Lords, we are all indebted to the noble Lord, Lord Lloyd of Hampstead, for initiating this debate. As he said, it is a large and intricate subject, and we cannot do full justice to it in a short debate. However, many of the proposals in the Green Paper could be discussed only by professionals and by well-briefed interest groups, for the problem of protecting their copyright demands a knowledge of practices and techniques which most of us are unlikely to possess.
Indeed, some of the Green Paper, let alone the Act istelf, is hardly comprehensible for this reason, and because the authors of it have been too economical of space as they have ranged across problems from gear wheels and exhaust pipes, through grand opera to computer programmes via satellite television. However, there is an important range of problems which immediately affect us at the receiving end—the problems which the noble Lord discussed, arising from reproduction in sound and in pictures, in voice and in vision.
A difficulty arises because many of us have been reproducing copyright material for our own use over a number of years, first by our tape recorders, then by the photocopier and finally, perhaps, by video, and the owners of the copyrights have so far muttered a good deal but they have made no effective protest against what has been a fast developing practice. So now, when we are confronted by proposals to claim copyright, we feel as the villagers might do who have been crossing a field for years and then suddenly find that they have no right of way in law and the farmer wants to block the entrance, or even put a bull in the field

1427
to scare them off. The fact is that the record makers have been contemplating something analogous to the bull frightener. They have been searching for a device, inaudible when a record is played but which will make a nasty noise on a tape taken from that record. They have not, it seems, conquered the technical difficulty. I hope myself that they never will. I tape my own records because I find that tapes call for less effort to play and are less easily scratched than is a record. But, first, let us look at what is horribly called, in a kind of Latin-Greek mix up, reprography—a new vice which all of us practise here in our House of Lords Library.
Of course, it has always been accepted that a person could copy bits from a book by hand or even with the help of a typewriter, and it has long been the practice of the teachers to copy out and reproduce passages from text books, from literature or short poems and then to distribute them to the class. One of my earliest childhood recollections was of being given a copy of some verses by Walter de la Mare. But the teacher had to expend considerable effort. She had had to write this out in script and then to reproduce it by a primitive device colloquially known as a "jellygraph". No doubt many people will recall when handwritten letters were duplicated before being sent out. They were duplicated in a great Victorian device, a press-copying book. At a time in my life when the summit of my ambition was to become a clerk at Manchester Town Hall, I had to learn how to use a press-copying book.
Reprography was in its infancy during our childhood and, as long as it was arduous and the quantity produced was modest, this form of reproduction was happily accepted. But the photocopier of today, as the noble Lord has said, is so easily operated and so quick as to encourage proliferation. It adds enormously to the efficiency of teaching. The other day I came across an adult student pouring over a dozen pages of James Joyce's Finnegan's Wake. He told me that all 15 members of the class had received these reproduced pages from their diligent teacher. Previously she would have had to read out the passages aloud and her students would have had to wait to borrow the book. Since they were doing a score of books in the year, it would have been impossible for the college to provide each of the 20 books for all students; but before the day of the photocopier the college might have felt it necessary to provide two or three copies of each of the books; and so there was probably a loss to the publishers in the use of the photocopier in this context.
The practice is to some extent defensible, as the noble Lord has said, when it performs a public good such as in formal education. But this is only part of the story. Many large business firms today have libraries or information units staffed by people familiar with the technical processes and business environment of the firm. It is common practice for these people in the information departments to milk the learned journals and trade magazines for items of particular interest to the firm's executives, to photocopy them and to distribute them around. Previously these firms might have taken several copies of the journals and worked out a distribution plan so that each executive could have a sight of them within a few weeks.
It is this wholesale use of reproducers that disturbs
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publishers, and it is not unjust that they should now try to get some reward. The problem is: how should the money be collected? How much should be collected, and from whom? And how should it be distributed, and to whom? One of the difficulties of the subject is that nobody knows how much of this illicit wholesale copying goes on, and how much it damages the sales of copyright works. How does one find out what happens between consenting adults in private?
My Lords, obviously one cannot. The old Whit-fordians recommended blanket licensing of libraries. The owners of copyrights should transfer them to a central collecting society which would levy royalties at standard rates and then disburse them to the original copyright owners. But the Whitford Committee went further. They wanted to remove those sections of the 1956 Act which permit a student to make a facsimile copy for himself for private study and permit the users of the library to buy single copies from the librarian. I think that the Government were quite right to purse their lips and to frown upon this suggestion from the Whitford Committee, although they are willing to tighten up Sections 6 and 7 to prevent or deter abuse.
Of course, it is true that libraries able to give the limited facilities permitted by the section might not find it necessary to take out a licence under a blanket scheme. But if they want to do more than the law now allows, they would have to pay the licence fee. It seems from this Green Paper that already, under the existing law, the copyright owners could band together to create licensing schemes, certainly for industrial and professional organisations, although it would obviously be useful to have an official copyright tribunal to judge disputed rates and conditions.
The British Copyright Council join Whitford in wanting these permissive sections to be removed. They seem not to believe that educational institutions would behave properly and might break the law which would forbid multiple copies of the same material. I do not think that this would happen in educational circles and, if this was applied to schools and universities, I should have thought that the authorities could easily keep a check on what is going on simply by the amount of expensive paper which is used.
My Lords, I have spent some time on this limited aspect of the Green Paper because I think that this is the most important section of the Green Paper. It is most important because it is concerned with education and with the transmission of knowledge and information. The problems set up by tape recorders and video recorders are concerned to some extent with culture but largely with entertainment, with fun. Reprography diminishes our ignorance and adds to our inadequate stock of knowledge; but gramophone records increase what, even without them, would be a pretty adequate supply of entertainment.
With the tape recorder, one must start by saying that not everyone uses them for music and, of course, even for those who do, it is not always gramophone records that they tape. Recorders can be used for a variety of purposes. They are excellent for language studies and for the effortless jotting down of ideas about a book that one is reading, for passages that people may need to know for examination purposes, for drafting essays and speeches. I should imagine that all the students of the Open University tape record

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the lectures that are concerned with their courses.
The suggestion of a levy on tape recorders to reward copyright owners is not acceptable, but a modest levy on blank cassettes might be accepted because those who use the recorder as an aid to study need to buy only a limited number of cassettes and, as a great deal of the information on them will be ephemeral, they can be wiped off and used again. It is not unreasonable, however, that the tape should bear some small levy once we put out of our minds the absurd idea that almost every tape made is a record sale lost. Many people will tape a record which they would not dream of buying.
The figures given in the Green Paper do not enlighten us very much. From 1973 to 1979 the economic lean years following the oil crisis—the number of trade deliveries of LPs stayed consistent at about 100 million a year. Almost twice as many people in that period gained access to a tape recorder. The sale of blank cassettes doubled to 35 million a year. To make much of these figures one would have to know a lot more about changes in population, age, income, tax rates and so forth. Yet at the end of it common sense tells one that record companies lose quite a bit, that some people who would buy a particular record avoid doing so by recording a borrowed or a broadcast record.
The Green Paper asserts that to give a degree o compensation would need a levy that was a high percentage of the sale price of tapes. They base this on a survey made in 1977 when 35 million blank tapes were sold, and the conclusion was that their use for unauthorised recording cost the industry 25 million lost sales.
I cannot take this seriously. The assumption that the majority of people who spent something like £1·30 on a tape, would have spent nearly a "fiver" on an LP, does not accord with common sense or everyday experience. Accepting for the moment this figure, the Green Paper estimates the loss would require, as the noble Lord has said, a levy of £1·40 on every tape of this length, which would more than double its price. Obviously, a levy of that kind would kill the tape and the recorder industry.
The White Paper, however, comes to the sensible conclusion that the losses to the record industry cannot he measures, and so if a levy is to be put on the tapes, the percentage is an arbitrary one. Wisely, the authors refrain from saying what that percentage should be. It is, they say, a matter for the Government and they would wish to consult the industry and the consumers.
My guess is that in the end the copyright owners may get a very modest compensation for unquantifiable losses, just as authors get a modest sum for the multiple use of their works in libraries. The number of cassettes sold, according to one of the publications of the British Copyright Council, is 60 million. At 50p each that would mean handing over a sum of £30 million to the companies. That is quite a considerable sum in total. But there is no encouragement even for such as this in the Green Paper.
The Copyright Council's heart must have sunk when they read the dread conclusion:
"The Government has still not received convincing evidence that the introduction of a levy on audio or video equipment or blank tape would provide an acceptable solution; at the end of
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the day it may have to be accepted that there is in fact no acceptable conclusion".
Still, all is not quite lost. They say:
"The Government however would welcome a public debate before reaching any final conclusions on the matter
Since, however, the industry has already made its views clear, the only people who have not yet been consulted are the consumers. It is very hard to believe that they would support for one moment any idea that the price of tape recorders or tapes should be increased.
The Government have, one notices, carried on the logic of the tape recorder to the video recorders, which of course are now in a phase of explosive development. There is a tremendous difference between people recording televised material for their own use and the pirates who are making copies for sale and costing the industry very heavy sums of money. However cautiously one approaches the subject of a levy for private recording, one must hope that the Government will do all they can to stop the piracy. We have already explored that subject a week or two ago, in the debate on the Second Reading of the one clause Bill introduced by the noble Lord, Lord Fletcher.
The Government, I suggest, should give this Bill the little parliamentary time it needs. It is not enough to say that the Government will not hinder the Bill, which was the reply which the noble Lord gave at the end of the debate; they should really say that they will give some positive help. It is obvious from the Green Paper that with a subject so complex and fraught with difficulties and controversies—unresolved controversies—it is going to be a considerable time before we see a Bill giving a substantial reform of the law of copyright, and the delays are even greater because there is a temptation to wait until there is a European directive on the subject. As one knows, the Community do not act exactly at the speed of light. I think that it will be quite a considerable time before we see a Bill on this subject. In the meantime, the publishers should think again about the Government's suggestions. I do not think that it is going to be possible to persuade any Governments to abolish the permissive sections (Nos. 6 and 7) of the Copyright Act.
But will these permissive sections, if they are amended really make the blanket licence worthless, as the Copyright Council suggests? Surely, if the law allows the copyright owners to protect their right by the use of blanket licences, they should make every endeavour now to protect that right. If it proves in practice to be worthless, then they have a strong case for asking the Government for legislation.
5.56 p.m.
Lord Perry of Walton: My Lords, I too am grateful to the noble Lord, Lord Lloyd of Hampstead, for initiating this debate, for although I wish to speak on only one matter it is, I believe, of some importance. I refer to the relationship of copyright ownership to education. The nature of the educational process has been changing and will continue to change very fast because of the explosive growth of communications technology. It may still be true that education requires only a teacher, a student and possibly a blackboard, but it is no longer practicable on a large scale. Teaching materials as aids in the process are already common. Books have, after all, been with us for a long

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time. Even in my young days there were wall charts and slides as well as the jelly graph. Very soon, however, we will have studio and video recordings on tape, disc and film. We will have recorded programmes of computer assisted learning; we will have individual access, via a terminal with a monitor screen, to central computer stores of reference material of all kinds, and we will have other aids based on technology not yet developed, although someone may already be dreaming of them.
Changes of this magnitude raise new problems of copyright. In the Open University we had to think of them rather sooner than most people because the university was to depend on the new technology to reach students in their own homes. It was decided at the outset that conditions of service for academic staff would make it clear that all copyright and teaching materials would vest in the university. I am perfectly certain that this was the right decision. I am equally sure that it is a condition that will have to be applied in future to the staffs of all Government funded educational institutions. I am not trying to take away from individual teachers their rights to make extra money in other ways on the books that they have written or the learned works that they have written. It is therefore vital to define very closely what is meant by "teaching materials". Lecture notes clearly are—text books clearly are not.
In the Open University, staff were given the right to determine the date on which their teaching materials should be withdrawn because they were out of date; and we undertook to permit them to use teaching materials where they wished as pieces of a privately published book or other work. But just as I am clear about it being right and proper to do these things, I am equally clear that there is no justification for payments to a teacher whose lecture notes, for instance, prepared for use in one university, are used in another. But this is the current understanding and it has meant that there has been very little exchange of teaching materials in this way. This perhaps does not matter very much in the case of cheaply-produced lecture notes or slides but it will matter very much with expensive video tapes and expensive recorded programmes of computer-assisted instruction. One hour of student instruction of this type may require one-quarter of a man-year of academic staff-time to prepare, to say nothing of the costs of recording.
Thus it is commercially essential that such teaching materials are used by large numbers of students, and this may require their use in more than one institution. This should not be inhibited by copyright restrictions. If one member of staff in each of 45 universities made one video-recording and all 45 recordings were used in all 45 universities, then, if any award were paid to individual authors, no less than 1,980 such awards would be payable and the taxpayer would have to foot the bill. He already pays the salaries of all 45 members of staff and supports all the students. He should not be further burdened. I hope that the Government will take all the steps they can and will encourage others to take steps, where necessary, to ensure that we do not get into this position.
There is just one other point I should like to touch on. The Whitford Committee has recommended that
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when copyright in a work vests in an employer it should be the case that:
"if the work is exploited in a way not within the contemplation of the employer or the employee at the time of making the work, the employee should have a statutory right to an award from his employer."
I very much hope that the Government will reject this recommendation, which can only make the situation worse. It is always difficult to determine what was or was not contemplated; it is wholly impossible to contemplate the technology of tomorrow. The proposal would be bound to cause friction and to inhibit the exchange of teaching materials. The present Copyright Act of 1956 is better left unchanged in this respect.
6.2 p.m.
Lord Colwyn: My Lords, I am most grateful to the noble Lord, Lord Lloyd of Hampstead, for initiating this debate this afternoon and for bringing the consultative document to our attention. At the risk of boring your Lordships, I also wish to confine my remarks to the problems of the record industry. In doing so, I must declare an interest in that I am a member of the Musicians' Union and I have a group of musicians who have made records and intend to make many more. Having personally financed the making of one LP, I am only too well aware of the way in which the collective skills in manufacturing records can be cheaply copied by members of the public, who then enjoy the product without contributing any cost to the production whatsoever.
The British record industry is a major export earner, with a 25 to 30 per cent. share of the American market, which itself constitutes one-third of the world market. Its trading activity is valued at an annual total of £1,500 million. The large companies have never sought legislative assistance for their problems, as can be seen with their recent success in bringing commercial piracy of their products to below 3 per cent. in the United Kingdom and the prevention of dumping within the EEC of cheap, often pirated, products through action in the European courts.
In 1973, 30 per cent. of the adult population in this country had access to a recording facility—now it is probably in the region of 70 per cent. I think that my figures may be possibly at some variance with those of the noble Lord, Lord Ardwick, but the sale of blank cassette tapes has risen from 15 million per year in 1977 to a figure probably in excess of 70 million at the moment, of which 98 per cent. are manufactured elsewhere.
Lord Ardwick: My Lords, if I may interrupt for one moment, in the Green Paper it goes from 15 million to 35 million but in the paper which was distributed by the British Copyright Council, it goes up to 60 million. You have now added 10 million to that; so at 50p per go that is £35 million for the industry.
Lord Colwyn: My Lords, I am grateful to the noble Lord and I am sure that between us we are pretty near to the actual figure. The evidence that vast sale losses are occurring is undeniable. It is estimated that over 200 million LPs are copied every year and that between 50 million and 60 million of those copies

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prevent a legitimate sale. This represents about half the United Kingdom industry's current output and about £100 million per year lost by the rights owners from private copying. The industry is now faced with such an enormous problem that it is unable to remedy matters without governmental assistance. The business of home taping is a massive and uncontrollable form of law breaking, for under the present Act it is an infringement to make a recording of a piece of copyright music or of a copyright record.
The law has to change with the times. It would be impossible and impracticable to prevent the copying of records and broadcast items; but some way must be found to compensate the artists and manufacturers for this massive loss in revenue. Successive Governments have always accepted the principle that the fruits of intellectual endeavour should be protected, and this county has traditionally led the world with its protective legislation.
As a musician, I am very aware of the shortage of work for other members of the profession. The number of recording sessions has been cut back, particularly in the classical field, and I feel that this lack of work is due to the growth of home taping and the inadequate protection for our musicians, composers and artists, together with the record companies and publishers. The vastly broadened repertoire of the record business over the last 20 years has made a wide catalogue of music available and there are signs that, largely because of home taping, the recorded music business will be unable to keep this very broad spectrum of music on the market. The music profession has never been an easy one: life as a musician is precarious and there is a relatively low level of government support for music in this country.
I feel that the proposals in the Green Paper are very disappointing in relation to the record industry and to our musicians, who have brought us to the top in world standards. The issue is really very clear—all civilised nations provide some protection and assistance for creative workers. Rapid technological advance makes it essential to keep these protections under constant review.
New technology is rapidly changing our daily lives. How can the manufacturers of video cassette machines, video disc players, cable TV systems and satellite broadcast systems expect anyone to buy their products if there is nothing to show on it? There can only be a product to show if there is a commercial return available for the producers of the product, and there can only be a commercial return if the product is adequately protected both here and abroad. The music industry are united in their response to the developing situation. It was a pleasure for me to meet the Musicians Union secretary, Mr. John Morton, on Monday and to learn that he is in complete agreement with the proposals formulated by the record companies and the British phonographic industry.
Because many citizens are now unwilling lawbreakers, the Government have only three possible courses of action. They can ignore the matter; they can take away the protection at present afforded by the law; or they can act to remedy the situation. I know the Minister has been provided with comprehensive details of the music industry's scheme, so I will not go into too many details of their proposals except to
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say that these problems can be solved by charging a royalty on the sale of blank tapes. The industry are entirely happy that they have the machinery to impose and collect this levy, probably with existing copyright protection societies. They have proposed details of the allocation of the money which would benefit the artists and manufacturers and which would also enable the support of a music development trust fund to promote music and musicians who would not otherwise be recorded by commercial companies. The Green Paper admitted, and the music industry agree, that a figure of £50 million would have to be recovered annually to make good present losses. The allocation of this loss to a levy on blank tapes would certainly double the present cost of an average C.90 tape. The Government may feel that it would be a better idea to make the tape levy smaller-50p has already been suggested—and combine it with a flat rate levy on the sale of recording equipment, as suggested by the Whitford Committee. I feel sure that the record industry would agree to this, as there is no doubt that replacement of existing recording machines contributes greatly to the hardware manufacturers' annual turnover.
I am aware that any increase in costs is against the Government's policy, but I feel sure that the sale of cassette tapes and recording machinery has very little influence on their computations for the cost of living. I am assured by the music industry that the problems of exemption from the proposed levy for tapes of 15 minutes or less, and for cassettes for pre-recorded books for the blind, will be easily accommodated in their plans for collection. The Green Paper also suggested that by pre-recording some trivia on the blank tapes, or by setting up direct mail order depots outside the United Kingdom, the levy could be avoided.
It is the music industry's firm belief that, as the majority of tapes are manufactured by reputable companies, and that as they are well aware of the problems affecting the industry, this simply will not happen. They also believe that reciprocal arrangements with other countries, as they inevitably change their copyright laws, will eliminate the problem of a small percentage of the levy going abroad when non-United Kingdom recording companies, writers or performers are involved. I think that the record industry have got it right, but they do not have long. I urge the Government to give their proposals in this field urgent consideration, and I hope that reform of the copyright law will be given a high priority.
6.12 p.m.
Lord Somers: My Lords, I, too, am extremely grateful to my noble friend Lord Lloyd for having introduced this debate, because it is a subject that is not debated very often in your Lordships' House, and it is one that rightly needs discussion. The noble Lord referred to copyright law as being a nightmare when you try to understand it. I sat on the Copyright Council for a time and I must say that, at the end of that time, I was completely at sea regarding certain aspects of it. Nonetheless, we must do our best, as everybody has said during the debate, to protect the rights of those who produce creative work. I suppose that I must declare an interest here, in that I now have one published work—I had a few more at one

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time—and, therefore, I suppose that I come into that category.
One of the chief problems, certainly, seems to be tape recording in the home. Here I speak with ail due apologies to the noble Lord, Lord Ardwick, because I know that he does not record any copyright work. But a lot of people do, and the figures that I have been given of the estimated loss on the sale of records are these; in 1977, £75 million, in 1980, £200 million and I have no doubt that the figure will go on rising. As I think the noble Lord, Lord Colwyn, said, 98 per cent. of the blank audio tapes come from abroad. There is no major British manufacturer of blank tapes.
The rights which are hit come under three chief headings. There are the manufacturer's costs, there is the composer's royalty which comes via the publisher and, of course, there is the artist's royalty. Your Lordships have heard that the British phonographic industry have recommended a levy on tapes, which I think would be a very workable way of solving the problem. I do not see why there should not be a different levy for short and long tapes, because there is no doubt that it is the long tapes which are chiefly used in the recording of music.
One must remember that every time one makes a home tape, as it is called, one is acting in contravention of the Berne Convention, of which Britain is a signatory, and which reads:
"Authors of literary and artistic works protected by this convention shall have the exclusive right of authorising the reproduction of these works in any manner or form".
Therefore, composers have a right to allow or to prevent the reproduction of their works. But, unfortunately, under present-day conditions they have no earthly way of enforcing it. Therefore, it seems to me that the present law of copyright is very little but a farce.
One cannot possibly go around policing home tapes, as has already been said. One must allow people to make what tapes they like, and to be guided by their own consciences as to whether or not they record something. Much the same problem exists as regards photo-copying. Many schools and education centres have photo-copying apparatus, and I firmly hold that they should be allowed to have them without any restriction whatsoever, provided that the copies which they make are used purely for educational purposes. I think one would find that that regulation was very well held to.
Finally, I should like to mention one anomaly which I have always felt exists in copyright, and that is as regards the composer's copyright. As I have never written a book I cannot speak with any authority, but I believe that the author gives his publisher the licence to print, but himself maintains the copyright for his book. The poor wretched composer has to hand over his copyright to the publisher when he has a work published; otherwise, the publisher will not take it. That seems to me a totally unfair, unjust and unreasonable way of working. I cannot see why the same conditions cannot apply to the composer as to the author. Of course, the composer also gets performing rights whenever his works are put on, I remember that one year I received a magnificent cheque from the Performing Rights Society for £1·40. That was my income for
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that one year. Of course, other composers have done better, but it is not a lucrative profession and I think that all protection should be given to artistic creators, who are doing their best to lift us out of the ordinary everyday world.
6.20 p.m.
Lord Willis: My Lords, I should like to join other noble Lords in thanking my noble friend Lord Lloyd of Hampstead for introducing this debate, which is very timely. I have also to declare an interest, in that I am an author and the owner of a copyright. I am also chairman of the Authors' Lending and Copyright Society, which collects royalties and other sums of money for authors from various parts of the world and from various organisations.
I also share the concern that has been expressed today at the Government's Green Paper on the reform of the law of copyright. Indeed, in common with the British Copyright Council and the 27 organisations it represents I was shocked by the tone of the Green Paper and by its content. It would be unfair to let this debate go by without letting the Government understand the very great anger and impatience which exists in the industry and among copyright owners about the dragging of the feet which has been going on on this issue.
My initial reaction, after reading the Green Paper, was that the Government did not care a tinker's damn about copyright, copyright owners, authors, composers or publishers. If your Lordships think that this is a heavy charge to make, consider this: as the noble Lord, Lord Lloyd of Hampstead, said, seven years ago the Whitford Committee was appointed to review the law on copyright and to make recommendations as to its reform. It sat for three to four years. It took evidence from dozens of interested organisations and individuals, evidence which took money and time to prepare, and four years ago it presented its report, a report covering a thorough review of copyright law and containing over 100 well-considered recommendations.
The Government reacted to this report with all the speed and enthusiasm of a crippled tortoise. Three and a half years later they emerged from hibernation with a Green Paper. They brushed aside Whitford's most important recommendations and, after a total of seven years of public debate on the issues, decided that there was a need for a lively public debate on the issues. Moreover, it set no time limit on this new period of debate. It could, presumably, go on for another seven years, by which time our existing law of copyright will be as much good as a leaky bucket at the scene of a major fire.
What is astonishing about the Green Paper is that it is full of the most extraordinary contradictions. It begins, solemnly enough, with statements like "Copyright exists to protect the products of intellectual endeavour", and "(Copyright) serves to protect the individual against plagiarism and ensure reward for his intellectual efforts". Fine, marvellous, wonderful—congratulations! But then, through 60 pages of argument, it proceeds to demonstrate why, in this technological age, such protection is impossible or, at best, too difficult. It not only abandons Whitford's most vital recommendations. It abandons the field, retreating with the cry that we need more debate, more

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time, that nothing can be done, that the issues are not important, anyway.
Take the issue of home recording which has been touched on today by several speakers. As your Lordships will know, the invention and development of the audio tape and, more recently, the video tape has led to this enormous increase which has been referred to. You can now record, if one can make a new phrase, music from records or films and programmes from television in the "piracy" of your own home. This is illegal. This is theft. I was a little dismayed by the tone of the noble Lord, Lord Ardwick, on this matter. It is not quite so simple and quite so easy as he suggested in his speech. He referred—using it, I have no doubt, as a shorthand—to "the industry" and to the fact that "the industry" was complaining of its losses. If the noble Lord cares to look again at the Green Paper, he will see from the figures for the sale of one gramophone record, when broken down, that the money received is distributed to dozens of people. We are talking about composers, lyric writers, shopkeepers, all of whom are robbed of a huge amount each year just as surely as if their pockets were being picked or their safes broken into.
Why on earth do people buy a blank tape? Your own common sense will tell you: they are buying it because they want to record something. And what are they most likely to record? Music, poetry, plays—all the things which are written and put on the radio or on records. That is why they buy blank tapes. So do not turn round and tell people in the business, like myself and the noble Lord, Lord Colwyn, who has spoken, that this is not very a important problem. Millions of blank tapes are being sold and they are being used to steal our property.
What is the Government response to this widespread flouting of the law? They argue, in effect, in the Green Paper that since millions of people make illegal recordings, and clearly enjoy doing so, it would be highly unpopular to stop them doing it. This is rather like saying that if mugging is widespread in a certain district nothing should be done by the police to stop the muggers' enjoyment. Surely a law is a law. If it cannot be upheld, then it needs to be revised. The worst possible thing is to allow an ineffective law to creak on without adequate revision.
I am not suggesting—neither did Whitford or the British Copyright Council—that we should appoint an army of uniformed wardens to invade people's homes to see what they are doing. What was suggested is the solution which has been mentioned by other speakers. It is neat, simple and it has been well tried. For years the Mechanical-Copyright Protection Society has operated a scheme under which the importers of records from North America and certain other countries have to stick a stamp on each record. I believe that the stamp costs them 61¼per cent. of the retail price. Some 2 million such stamps are sold each year and the money, calculated by computer on the basis of a sample, is distributed to the copyright owners—to hundreds of people.
That would be a very effective and straightforward way of plugging this hole in our copyright law. The machinery is there and it is very simple to operate. For a small cost, the home recordist would be acquitted of piracy, and each tape he purchased would bear a
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levy stamp. And, as the Green Paper puts it, the "intellectual endeavour" of the producer would thus be rewarded. It has been suggested by the noble Lord, Lord Ardwick, that if you put a 50p levy on every blank tape it would bring in far too much money: £35 million, £50 million, what-have-you. We are being robbed of far more than that, I do assure my noble friend. In fact, that is a small sum in recompense. There would still be a loss.
It might also be necessary to introduce, as the noble Lord, Lord Colwyn, said, a small levy on the equipment itself, especially in the case of reprography, to which I will turn in a moment. The Government, however, in the Green Paper—this is what worries me, and shattered me—virtually reject this straightforward solution on the grounds that it might be too expensive for the purchaser of the tapes or for the purchaser of the equipment. The fact that it is already very expensive for the copyright owner—for authors, composers and so on—is not taken into account.
The Government then make the absolutely extraordinary claim that it also might be inflationary. Inflationary, my Lords? Surely copyright has nothing to do with the economic policy of this Government, or any other—as the noble Lord, Lord Lloyd of Hampstead, said. Copyright is a moral right which even the Green Paper recognises. Since when has it been possible to qualify or modify a moral right on the argument that fully to uphold it would cost too much? In this country we have the moral right and the constitutional right to general elections. Supposing a Government were to turn round and say "We cannot have this right any more because it is too expensive"? It is a very dubious path to tread when you accept a moral right on the one hand but deny it on the other by saying that it would be too expensive.
What I have said about home recording applies also to repography. Nobody wishes to restrict the right of students and genuine researchers to reproduce the material which they need for their studies. But there is evidence—and much of it was presented to Whitford—that repography is being abused, again at the expense of the copyright owner. In many colleges, universities and schools round this country they are wickedly and irresponsibly stealing copyright material. I do not want to stand between what is the right of students and the right of schools. But particularly because of the cutback in the allowances to schools, through the rates and so forth, they are being forced more and more on to this path of piracy. And any educationalist in any educational establishment, if he is honest, will tell you that what we regard as the free right is being wickedly abused. It ought to be stopped.
About a year ago I was in a school office where I saw one of the secretaries running off 24 copies of a play by a colleague of mine. She was reproducing them from one copy of the play purchased at a book shop or perhaps purchased by the school. For what purpose? For the school's amateur drama society. My colleague is not going to miss the couple of pounds he would have made in royalties on those books, but it is not a very good education for children to realise that property can be stolen in this way, and it is theft. Multiply that one example, as one must, by hundreds of similar infractions and it adds up to a very considerable sum.

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Here again, a fluid licensing system enforcible by law would solve the problem, or would go a long way towards doing so. There is no real difficulty in doing this. There is no need for further public debate or consultation. Everything is already there. The technology exists to implement most of Whitford's recommendations and the organisations are already in place to handle the administration without undue overheads or any cost to the Government. Indeed, the Government would gain because by restoring this lost income to its rightful owners, the Inland Revenue would benefit.
What is needed is the political will to bring the copyright laws into line with the present conditions. The present law has been out-distanced and out-dated by modern technology. It needs to be changed as a matter or urgency. In asking the Government to reconsider their attitude—or at least indicate a timetable for reform of copyright—I am thinking not only of the interests of copyright owners. It is in the interests of all that our arts, and the industries which support them, should flourish. In crude economic terms, they earn millions of pounds for the economy and do a great deal for the prestige of Britain abroad. But they would not have been able to do any of this without the copyright protection which at present exists—and they will not be able to do so in the future unless that protection is brought up to date.
A long time ago, the forethought of our fathers' fathers devised the notion of copyright, enshrined it in legislation, and thus laid the foundation on which artists, authors and composers could live and work. We now have the task of protecting the interests of new generations of creative artists. I hope that it will not be said of us that we failed to respond and that we failed to recognise that copyright was indivisible; that if one allows one part of it to weaken, then the whole fabric will collapse.
6.33 p.m.
The Earl of Gosford: My Lords, I should like to join with the ever-increasing list of noble Lords who are indebted to the noble Lord, Lord Lloyd of Hampstead, for bringing this debate at last to the Floor of this House. I want to make only one or two remarks and to underline a few points—some of which have already been submitted by the British Copyright Council—and seek clarification on one or two items in the Green Paper. I must declare an interest as a visual artist and also as the Artists' Union's joint representative on the British Copyright Council. The council brings together 31 bodies (and the number has increased by four since the noble Lord, Lord Willis, spoke a few minutes ago) representing the owners of copyrights under Part I of the 1956 Act: that is to say, authors and creators in the broader sense—literary, musical, dramatic and visual—as well as publishers. In this respect, I believe that the British Copyright Council is unique in the world.
The nub of the problem is that "rights" are a livelihood to the creator. Until these rights are established world-wide, the creator will be vulnerable. Whatever our views on the EEC may be, proposals beneficial to the creator are established in Europe, where the concept of authors' rights is fully understood
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and accepted. In this country the same right is seen as a property right and not as an author's right. One could say that it is an intellectual property right.
There is an urgent need for action. Technology has overtaken the 1956 Act and is now overtaking even Whitford's recommendations made in 1977. New technology is here to stay and must be faced. Creators have no way of controlling events. Already, people have forgotten that they are copying illegally. Reprography, video and audio have already been mentioned, and we have yet to cope with the newest technology represented by satellite and cable TV. Without the immediate entrenchment of these rights in legislation, the creator is going to lose rights granted by international treaty to which the United Kingdom is party. The British Copyright Council is therefore most anxious about the fact that the Green Paper talks of "several" recommendations only out of more than 100 recommendations made by the Whitford Committee, which was appointed seven years ago and reported four years ago on its "thorough review of copyright law".
The Council also dissents most emphatically from the way the Green Paper wriggles, eel-like, out of its responsibilities towards the livelihood of creators, by implying that,
"copyright laws must be framed in the light of contemporary economic conditions".
The Green Paper upholds "moral" rights, but maybe the noble Lord, Lord Lyell, will elaborate on the term "reasonable modification". Yet, in the "ownership" section, by not emphatically stating that copyright is owned by the creator in all circumstances, Her Majesty's Government are not being consistent. The United Kingdom is isolated in this, as in several other points, as regards provisions in Europe. There is no mention of "paying public domain". This novel way of gleaning finance from all works after the expiry of the life plus 50 or 70 years is for the common good of the community of artists as a whole.
Lastly, I must turn, as a visual artist, to the glaring omission of droit de suite, or artists resale rights. As stated by the Whitford Report,
" the inalienable right of the author, or his heirs, to an interest in any resale of original works of art and original manuscripts is provided for in Article 14 ter of the Berne Convention".
Whitford recommended that artists' resale rights should not be introduced in the United Kingdom, largely because it was thought that the scheme would be difficult to administer. The Green Paper does not feel compelled to introduce it either. Since Whitford—last year, in fact—the Visual Artists' Rights Society has been set up to collect copyright fees and also to press for legislation in favour of ARR. The steering committee comprises representatives from the Art Registration Committee, the Artists' Union, the Artists' General Benevolent Institution, Artlaw Services, the Arts Council of Great Britain, the Association of Artists and Designers in Wales, the Association of Fashion, Advertising and Editorial Photographers, the Association of Illustrators, the Crafts Council, the Federation of British Artists, the International Association of Art, the Printmakers' Council, the Royal Academy of Arts, the Royal Institute of British Architects, the Royal Photographic Society of Great Britain, the

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Royal Society of British Sculptors, the Society of Industrial Artists and Designers and the Welsh Arts Council.
Visual artists are alone in this respect. Once the created object has been sold, it can then pass through many hands with the creator deriving no benefit. Many a "middleman" is making an excellent living out of such works. There is a huge market in this country for the works of dead artists, whose families or heirs receive no benefit. The argument that only rich artists become richer from this scheme is unfounded. Recently, for instance, the London Borough of Tower Hamlets introduced artists' resale royalties in their picture buying scheme.
Harmonisation is essential here as in other copyright matters if works are not to escape to countries which may not have artists' resale royalities legislation. Collection is simple in those countries that have this: a few hours of computer time a week are all that are necessary. There is a strong feeling among visual artists that they are owed a share in what they have created, and that is why I read out that long list of organisations in the steering committee of the Visual Artists' Rights Society. For them and for all creators the Government must act quickly and positively. We must not be carried away by the wealth of stars. Many thousands of creators are hardly making a meagre living. Harmonising of copyright laws must be the aim universally. Without strong rights backed up by legislation, and effective means of implementation, the author or creator will remain in a weak or impossible position. Without artists making a living, we are going to have no art.
6.42 p.m.
Lord Jenkins of Putney: My Lords, the noble Lord, Lord Lloyd of Hampstead, has done us a great service because he has enabled us to demonstrate in the House two very important things which have been revealed in this debate; first, a strong sense of urgency in the matter, a strong feeling expressed by every noble Lord who has spoken, that all of us—I do not make any party point on this—have failed to give this subject the urgency it deserves. And this has been the case more recently because, with the widespread development of home taping of both audio and visual character, the subject has now acquired an extraordinary importance, to such a degree that, if it goes ahead without being arrested, will have two disastrous results.
The first is that the development of home taping must necessarily lead, and is already leading, to widespread commercial piracy, so that the whole situation is being undermined, the whole basis of the recording industry in this country is being affected. Already the effects of that can be seen in this way. It has long been the case, for example, in gramophone recording, that the profitable popular music end has subsidised the more classical end, the less profitable end. Profitability in the industry has been held back and the range of programmes of classical recording which have been characteristic in the British industry have been considerably reduced already and unless something is done they will run right into the ground. So we are up against a serious problem.
The only other point I want to make on that aspect is that this is unanimous; it is not only the recording
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companies we are concerned about; it is also what are sometimes called the "talent unions" which are wholly in favour of this project because they recognise that unless something is done fairly rapidly they will not have an industry to be engaged in in a year or two. It could be as serious as that.
The figure of 50p has been mentioned as a possible one on a sound cassette. I think that is the sort of figure which would produce a very reasonable result. The figure of £1·40 on a cassette is not anybody's figure but the Government's. They have presented the highest possible figure in order to suggest that this is something which would be widely objected to and would have the effect of creating public resentment against the whole development. It does not need to go at that level. But I think it is equally important that it should go on video cassettes as well as on audio cassettes, and on video cassettes I should have thought they could stand £1 quite easily. There are some people who think that the matter ought to be on a percentage basis. I rather think that that might make it a little too complex, but either of these things ought to be examined.
Having joined in the general feeling that the Government must be urged to take this matter more seriously, to recognise its urgency and introduce legislation to give effect to it quite quickly, I would also like to say something about two other aspects of this complex subject. There are in fact 18 chapters in the Government's Green Paper, Reform of the Law Relating to Copyright, Designs, and Performers' Protection. Each of these 18 chapters refers to a specific aspect of this difficult issue. I want to refer to three of those chapters. I have already dealt with the question of recording of home taping and what needs to be done about that.
I want this time to say something in praise of the Government and that is to congratulate them on their intention, which they announce in their section on performers' rights, to give performers a civil remedy. The Performers Protection Acts of 1958 and 1972, as the Green Paper makes clear, make it a criminal offence punishable by fine or imprisonment to record or film a public and unauthorised live performance. This is something which is already an offence. What the Government do in this decision is to agree with Whitford that this ought to be not only a criminal offence but ought to be available for civil remedy. It does mean, therefore, that if this legislation is introduced, and I hope it will be done quickly, the performer will have the right to sue to recover damages in the event that his performance has been stolen and publicly broadcast. I hope the Government will introduce a Bill which will not only do what they say they are going to do in this chapter but also do what at the moment they are not convinced about. I hope this debate will have helped to convince them on the question of home taping as well.
Finally, I would follow the noble Earl, Lord Gosford, in saying one word about droit de suite. I am afraid we must disappoint noble Lords; this has nothing to do with droit de seigneur. This refers to the right of an artist to follow his work through and to gain a benefit from the resale of his work. It is in the nature of things that a visual artist sometimes sells his work, in the early stages of his career, extremely cheaply. It then passes from hand to hand and can become extremely

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valuable. The artist at the moment gains nothing whatever, but the right which is proposed here, to give the artist a percentage in the further sale of his work, is one which is already in practice in some places; for example, it is being carried out in California, I think other states are contemplating it, and it is already the case elsewhere. The Government's suggestion is that this is something too difficult to contemplate. I would suggest that they do examine what is being done in other countries and possibly come back to us with further thoughts on that. There are six countries in the European Community—Belgium, Denmark, France, Italy, Germany and Luxembourg—whose legal provisions I think it would be worth the Government looking at.
I shall not go along with my noble friend Lord Willis who felt that the Government were to be wholly castigated. They at least have produced something. They have produced it far too late and they have produced far too little, but they have at least announced the intention of introducing legislation. What we want from them now is to see, as a result of this debate, or following from it, some more comprehensive legislation. We want to see that legislation as quickly as possible, and we want to see it embracing not only those things that they say that they are already convinced about, but also those things which we hope the debate this afternoon will have had the effect of convincing them about.
6.51 p.m.
Lord Lyell: My Lords, the Government's Green Paper on copyright, designs and performers' protection which, as your Lordships I am sure are all aware, was published last July, invited a lively, vigorous and, to my mind, fascinating public debate on all aspects of copyright. For that reason alone I, with I am sure the whole House, am very grateful to the noble Lord, Lord Lloyd, of Hampstead, for affording your Lordships the very welcome opportunity of discussing some—and I would say only some—of the very important issues which are currently under review in both copyright and related areas. We are all grateful, too, to the other noble Lords who have contributed to this most interesting and valuable debate. The Government will pay very close heed to all the views that have been expressed and we shall take those views fully into account in the deliberations that assuredly will follow the completion of the present consultative phase.
I should like to begin by referring to the noble Lord, Lord Willis. The noble Lord criticised the fact that the Green Paper appeared, having regard to the earlier publication of the Whitford Report. But I am sure that, as he and all your Lordships will notice, the Green Paper explains in the introduction that the Committee was, of all things, not unanimous on a number of very important issues. Subsequent consultations have also shown that it had a very mixed reception. In those circumstances, the Government thought it right to formulate their own views, and to present them in a Green Paper. Having said that, I should emphasise that the Government's views on the reforms that are needed in the various fields of copyright have not yet been finalised and, indeed, will not be finalised
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until after the process of consultation has been entirely completed.
The many proposals for revision of the present law which are set out in the Green Paper—and the specific points to which I shall shortly be referring—must therefore be viewed in this particular light. They do not represent the final views of the Government on any of the issues which have been raised this evening; indeed, in some areas the Green Paper does not express a single view, but puts up alternative proposals for public discussion and for public consideration.
Since very shortly after the Green Paper was published, comments on its proposals have been flowing into the Department of Trade from interested organisations and individuals. At the latest count over 120 direct responses have been received, and they are still arriving in substantial numbers. Some important bodies representing both creators and users of copyright material have already replied, but many others whose responses will be of equal significance have not yet done so. In view of the complexity and, indeed, the far-reaching nature of this subject, we cannot wonder that it takes a considerable time for all of these bodies to put together their comments, despite their specialist interest in, and knowledge of, the subject of copyright.
There is one other major factor which is affecting progress on copyright reform. The Commission of the Euroean Communities has for some considerable time been looking at the entire question of the need to harmonise the copyright laws of the member states of the Community, especially in view of the provisions of the Treaty of Rome on the free movement of goods within the Community. The Commission is at present working towards the production later this year of a memorandum which will examine the interaction of copyright with the Treaty of Rome and is expected to contain or lead to some specific proposals. The publication of this document will, of course, be followed by a further period of consultation with the Governments of member countries, and Her Majesty's Government will obviously take a very active part in these consultations. The feedback that has been received since publication of our own Green Paper will greatly strengthen the Government's understanding of the issues and of the many interests entailed during these negotiations within the Community, and will ensure that the British voice is very clearly heard in the process leading towards harmonisation.
The Government will naturally wish to enter into negotiations in the Community in the full knowledge of what United Kingdom interests require of Community copyright. To that end, I must now announce that the Government would like all direct responses to the Green Paper to reach the Department of Trade by the end of August this year. This should allow adequate and, we hope, fully sufficient time for those individuals and organisations who have not yet finalised or submitted their comments to do so. The Government recognise and share the concern which has been felt in your Lordships' House, as well as outside—as we have heard this evening—and most of all in the film and video industry at the growth of commercial piracy in this relatively new area. The Green Paper reflects this in that it contains a number of proposals to strengthen the position of copyright owners against piracy.

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I hope that your Lordships will allow me, first, to summarise the existing remedies which are available to copyright owners. Under the 1956 Act, there are both civil and criminal remedies available. The civil remedies which are available under Sections 17 and 18 of that Act provide for relief such as injunction, delivery up and damages. They are very frequently used in conjunction with what we technically call Anton Piller orders, which are granted on ex parte application and empower the plaintiff to enter a defendant's premises for the purposes of inspection or removal of documents and articles which are alleged to contain evidence of, for example, infringement of copyright.
These remedies are now used to very good effect by copyright owners against the piracy of commercial copyright. This is particularly true in the field of sound recordings where they have enabled copyright owners to restrict the proportion of pirate material on the United Kingdom market to a very low figure—I understand, under 5 per cent. of the total. My noble friend Lord Colwyn mentioned 3 per cent. So we can see that these measures are, indeed, effective in that particular area. The figure of between 3 per cent. and 5 per cent. is well below that which occurs in almost every other country in the world. These existing remedies are available to copyright owners in all fields of copyright. To use them effectively, as in the record industry, requires careful organisation and, I would add, energetic operation. But this can be done, and we believe should be done, on an industry-wide basis.
At the same time, the Government recognise that there are areas where these already effective remedies can be strengthened and improved. The Green Paper makes a number of proposals in this direction. Perhaps I could mention the most significant of them. Already there is a provision whereby, in certain limited circumstances, the court can award exemplary and penal damages in cases of flagrant infringement. The Green Paper proposes that the scope of the courts to award such damages should be extended. It is proposed that possession by way of trade of an infringing copy, for example, of a video or sound recording, in the knowledge that it infringes copyright, should become an infringing act, and also that this should be added to the category of acts that make the person concerned liable to criminal proceedings under Section 21 of the Act.
The Green Paper also proposes that the fines applicable under Section 21 should be increased to make them more effective as deterrents. There are several other proposals, including one that the import restrictions that at present allow a copyright owner in a book to have importation of infringing copies banned, should be extended to cover infringing copies of records and films, including, of course, video. So it is entirely clear that the Government are concerned to reduce copyright piracy as far as is possible. We have made proposals to reinforce the already powerful weapons available to copyright owners.
I hope your Lordships will now allow me to move on to consider the very valuable and, indeed, constructive contributions that all of your Lordships have made to the debate this evening. The first major subject which was raised was that of photocopying. This has several facets. I am afraid we chose a rather odd word—I think that it is called "reprography"—
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but photocopying is a fairly clear English substitute for that. Your Lordships will note that in the Green Paper it can be seen that the Government agree with Whitford that perhaps the most practical way of controlling the photocopying of copyright works is by some form of blanket licensing, but they see no need to make this statutory. The current law provides a satisfactory legal framework within which blanket licensing could operate. In another field of copyright, the Performing Right Society operates a successful non-statutory licensing scheme. Furthermore, successful actions in the courts by the Music Publishers' Association suggest that copyright may not be quite so difficult to enforce in the face of photocopying as has sometimes been suggested, although in your Lordships' House this evening, I would not say entirely so.
Of course, there is the fair dealing exception. This allows individual students to make copies for private study. We believe that this is a very important one for education and research. This aspect has been brought before your Lordships with great emphasis this evening by several noble Lords. Indeed, the noble Lord, Lord Perry of Walton, to my mind made a notable contribution in this area. We believe that it should be retained. To limit it by excluding the use of photocopiers would either deny students the benefits of modern technology, which we believe to be illogical, or, indeed, increase their expenses, which we also believe to be unjustified as long as the student is not prejudicing the copyright owner's legitimate interests. But the main object of the library exceptions is simply to extend the fair dealing exceptions so that the student can get his copy from a library, and they should, therefore, be retained for the same reasons. There is nothing in either of these exceptions to prevent blanket licensing from operating in relation to copying outside the area of fair dealing.
Of course, multiple copying is an abuse of the existing statutory exceptions and damages copyright owners' interests. The Government therefore propose a significant strengthening of the copyright owners' position by introducing tighter controls on the related production of multiple copies of the same materials in libraries. In addition, we propose limiting the exceptions allowing copying for research and private study so as to exclude commercial research. It is not equitable that a commercial organisation should be allowed free copying of an author's work for the purpose of its own profit, and this exclusion should facilitate the operation of blanket licensing within commercial organisations. The definition of "commercial" copying will, of course, need careful consideration.
The second and I believe equally important subject, which I think was covered by every noble Lord this evening, concerned what we call recording or home taping, be it audio or visual, depending on whatever one wants to do. I seem to be unique in your Lordships' House in that I have not yet acquired the necessary technical expertise to attempt to copy even with a fairly simple cassette recorder. Any of my efforts have damaged tape, recorder and, indeed, once required the services of an electrician. So I claim no interest in this particular area. It is also equally clear that your Lordships have great technical expertise in this area.

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The Government have not received convincing evidence that it would be right to introduce a levy either on recording equipment or, indeed, on blank tapes. As your Lordships will have seen and, indeed, as has been explained and discussed this evening, the Green Paper sets out the relevant facts as far as they were known last year, in July 1981. But part of the difficulty is knowing the size of the problem. There has been talk of hugh losses of anything up to £1 million per day to the record industry as a result of in-home taping; but the figures quoted in the Green Paper suggest something a great deal less than this, even if allowance is made for updating. The exact losses seem, in fact, to be virtually unquantifiable.
Lord Willis: My Lords, if I may interrupt the noble Lord, does the size of the problem really matter? Is it not a question of principle? If something is being stolen, do not you stop it being stolen, whether it is £1 or £l million?
Lord Lyell: My Lords, if the noble Lord will be patient, I shall come to that in a paragraph or two, when I hope to cover his particular point. To charge a levy which would be sufficient even to raise the Green Paper figure of £50 million per year—and I would stress that that figure does not represent a Government estimate of actual losses, but is merely a reworking and modification of earlier figures provided by the record industry—would require a very large percentage increase in the price of tapes, and the Government would be reluctant to impose this upon the public, especially since imposition of a levy would involve what we would regard as rough justice, with many tape users who never record copyright music having to pay; these could include, for example, organisations for the blind, and would also probably cover and catch the educational use, which has been referred to widely in your Lordships' House tonight.
Since publication of the Green Paper, strong opposition to such a levy has continued to be voiced by the users. Any rebate scheme to compensate the users would be cumbersome and, indeed, it would be very expensive to operate. Furthermore, a levy on blank tapes could be circumvented by selling tapes with trivia recorded on them or by obtaining by mail order from abroad. We believe that this is a very powerful argument. As many copyright owners and, indeed, record companies are foreign or foreign-owned we believe that a substantial part of the levy would go abroad, with little compensatory inflow.
Since publication of the Green Paper, the suggestion has been put to the record industry by the Government Minister then responsible that the industry should cease to focus all its hopes on a levy and should instead closely re-examine the possibility of devising a comprehensive and realistically priced and, perhaps most importantly, vigorously publicised voluntary licensing scheme for private taping. The fact that the now defunct amateur recording licence did not raise adequate income need not mean that it is impossible to devise an adequate replacement.
I should like now to turn swiftly to video recording. As your Lordships will have heard, there is new and, indeed, even newer technology appearing day by day
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and week by week. Indeed, the Green Paper considered that there was no clear evidence that video taping in the home harms the interests of the video industry, and concluded that it was difficult to see any real case for a levy in the video field. But as on all aspects of copyright, the Government have not yet finalised their view on this issue of video taping, which they appreciate was in its infancy when the Green Paper was published last year but has since burgeoned considerably.
There was further comment from your Lordships on the problems of who in fact owned the copyright. The Green Paper—indeed, it is the Government's view—says that we recognise, as indeed Whitford did, that it is natural for copyright to vest in the author unless he has entered into an agreement to the contrary. We believe that the question of ownership should, wherever possible, be settled by contract, and we agree with Whitford that the law should contain provisions concerning employees and commissioners for use only in the event of the parties failing to reach an agreement. The concern of the Government is to establish a fair balance consistent with modern day conditions, and the Green Paper invited public comment on some specific suggestions. Indeed, there have been a number of responses on this question so far.
The noble Earl, Lord Gosford, raised the dual queries of moral rights, and indeed he went on with artists' resale rights, which I think he called droit de suite. May I deal first with what he called moral rights. The noble Earl brought this question up, and I think he will see that reference to "reasonable modification" comes from the Green Paper at page 59, paragraph 6. It means that changes should be allowed, if we take one example, when a work is being adapted for the screen. The paragraph goes on to elaborate by saying that reasonable changes are those to which the author could not in good faith refuse consent. I hope that covers the noble Earl's query so far as moral rights are concerned.
So far as the droit de suite is concerned, we would agree in this instance with Whitford that the artists' resale rights should not be introduced into this country because we believe it is not necessarily fair or logical. Indeed, experience abroad suggests that it is not entirely practical either from the point of view of administration—and we believe that sales are driven underground to avoid payment of the royalties—or as a source of income for artists since collection tends to be cumbersome and expensive. Furthermore, it is not entirely clear that the majority of British artists would benefit. The handful of well-known artists whose works commonly appear for resale would be very much enriched, but sales of works of the less well-known artists might be discouraged by the prospect of what we see as a tax on resale.
The Earl of Gosford: My Lords, would the noble Lord give way? I am pleased, as I am sure the House is, to learn that August is now the date set. On the point of moral rights, the noble Lord quoted from the Green Paper, which I have also read. That needs more clarification. If these things come into courts of law artists are going to need certain kinds of protection. I am thinking also in the censorship field and fields where artists' works are cut up and sold in

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small lots, as happened to our great friend Rembrandt at one time.
On the question of droit de suite I think that the noble Lord should look into the question that the noble Lord, Lord Jenkins, raised.
Lord Sandys: My Lords, I think that the noble Earl ought to phrase his remarks in the form of a question so that my noble friend can reply.
The Earl of Gosford: I am most grateful, my Lords. On the question of droit de suite, may I draw the noble Lord's attention to the suggestion made by the noble Lord, Lord Jenkins, and research into how the other countries collect artists' resale rights? It really is quite a simple matter.
Lord Lyell: Indeed, my Lords, I shall take careful note of this particular suggestion raised by the noble Lord, Lord Jenkins. I am grateful to the noble Earl for correcting me if I have misinterpreted anything so far. I take note of his preliminary sortie on the deadline for comments coming into the department.
The House will recall that I have already stressed that the proposals enshrined in the Green Paper do not in any way represent the Government's final views on the future shape of copyright law in this country. These views are not formulated. Indeed, we want to await the completion of the consultative process for which the Government have now set the deadline for the receipt of comments, and that is August of this year. New legislation will also depend on the position within the European Community, but I assure your Lordships that every effort will be made to expedite matters once these developments in both cases have taken place.
Lord Jenkins of Putney: My Lords, before the noble Lord sits down, may I ask him for an assurance on one point—on the question of home taping, as it is called, both audio and visual? It is inevitable, in the circumstances of the case, that what he said to some extent was prior to the debate. Will he be able to give us an assurance that, having heard the debate, he will take back his to noble friends what was said, and will take full account of what has been said on all sides on this subject?
Lord Lyell: Yes, my Lords.
7.16 p.m.
Lord Lloyd of Hampstead: My Lords, the hour is late. I understand that there is another subject for debate to follow. I certainly do not wish to detain your Lordships for more than a moment or two. However, I do not think I can refrain from thanking all noble Lords who have been good enough to participate in this debate, and to say that certainly in my view their contributions have been most valuable and have made this a most stimulating and excellent debate.
I am bound to say that I shall leave the Chamber with a certain sense of disappointment at the reaction of the Government. I did not detect in the reply that we received from the Minister any great sense of urgency. The mention of the date of the end of August for the receipt of final comments is perhaps slightly better than the Greek kalends, but nevertheless it is a
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remote date and it is merely to be the time when the documents are to be submitted. How long the subsequent deliberations will take, we do not know.
Dr. Johnson once remarked that if a man knows that he is going to be hanged in a fortnight, it concentrates his mind wonderfully. I am not suggesting that this is a fate which is impending in relation to the Government, but one would have hoped that by now there would be rather more concentration of mind. However, if this debate has served to create some concentration of mind and I think one can derive some little consolation from the indication by the noble Lord, Lord Lyell, that the Government have not totally made up their mind yet on some of these controversial questions—I would suggest that the debate may yet be shown to have served some useful purpose. My Lords, I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

The Queen's Flight
7.19 p.m.
The Earl of Kimberley The Earl of Kimberley rose to ask Her Majesty's Government, when, in the interests of both economy and prestige, they will update the aircraft of the Queen's Flight and amalgamate the flight into one squadron.
The noble Earl said: My Lords, I beg leave to ask the Question standing in my name on the Order Paper. Three and a half years ago in your Lordships' House I said that the Queen's Flight was the most prestigious flight in the world, and it still is. The Andovers are washed daily, they are polished weekly, and they are painted every three years. They are no longer 14 years old as they were I last spoke about them: they are now nearly 18. In fact, in about another six months they will have the vote! That, my Lords, is one of the reasons why they ought to be replaced. It is beyond belief that the Head of State, Government Ministers, foreign dignitaries and Chiefs of Staff, should be subjected any more to this somewhat obsolescent form of air transport. The decision is long overdue, and it is a decision which must, if we are to do the job satisfactorily, be taken soon.
The British Aerospace 1–11 production line is now closed and if the Government will not make a decision now, or very soon, we shall lose the last chance to equip the Queen's Flight, in conjunction with 32 Squadron RAF, with a wholly British-built solution and we shall continue the present unnecessarily complex, inefficient, wasteful and out-moded method of air transport. I do not believe there are many noble Lords or honourable Members of another place who would deny the need for the Sovereign, Cabinet Ministers, service chiefs and foreign dignitaries to have safe, comfortable, fast and convenient air travel. It makes no difference which political party is in government, because the same service is required and used. In fact, its use has probably increased because of the United Kingdom's ever-increasing role in NATO and our role in the European Economic Community, and that makes fast travel even more fundamentally necessary.
If we examine the two organisations, for want of

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a better word, we have the Queen's Flight at Benson and 32 Squadron RAF at Northolt. The Queen's Flight was formed in 1936 by the late King George VI, and it presently comprises three Andovers and two Wessexes. The Andovers, with average seating, have a range of about 1,000 nautical miles, and the Wessexes about 130. It is interesting to note that last year, from 1st January to 31st December, there were 865 passenger flights in fixed-wing aircraft of the Queen's Flight and 32 Squadron RAF. Of those, 182 flights were on behalf of members of the Royal Family, 261 were for Government Ministers, none for Members of Parliament and 36 for visiting foreign dignitaries. Due to the Andover's inability to fly over the weather and because of its design, with rather low performance, there are few people who fly in it as passengers, royal or otherwise, who appreciate it.
That brings me to 32 Squadron RAF, which at present has three Mark II Andovers, two British Aerospace 125/600 series, four 125/400 series and one Gazelle helicopter. Those aircraft are allocated by the Assistant Chief of Air Staff (Operations), and the decision as to which aircraft are to be used is based on the number of passengers. But each Government department is required to pay for the operating costs. I have been slightly pre-empted by the tape machine this afternoon, but I shall continue because it did not say that the Ministry of Defence charges levied on the use of those aircraft are often higher than those of a civil charter company. And, with the economy drive of the Government, departments are often reluctant to use the aircraft of 32 Squadron. That may sound all very well, but as a result, air crews are frequently required to fly on training flights merely to maintain their flying proficiency and get their requisite number of hours in. That cannot be economical.
I come to the question of capability. Do the present means, methods and set-up meet the necessary requirements? Could matters be managed in a better way? The Andovers and 125s may be suitable for internal and short overseas flights, particularly when there are not many passengers, but they have a severe limitation over long distances due to their small passenger capacity and short range. That means, of course, that they must stop many times, and much more security is necessary wherever landings take place. I believe that not long ago His Royal Highness the Duke of Edinburgh took two days to get to Canada and nine to Australia. In the England—Australia air race in the 'thirties a de Havilland Comet did it quicker with two tiny engines.
What about senior Government Ministers and foreign dignitaries? Why should they put up with the present state of affairs? It is an exhausting waste of time and an exhausting way to travel. I agree that there are certain instances where small parties can travel commercially, and that, where possible, is the usual practice. But that does not work with major overseas tours by Her Majesty or with major overseas tours and conferences attended by senior Ministers, particularly when a large staff is needed.
The drawback to scheduled services is that they may leave and arrive at inconvenient times. In addition, there is today the ever-present and much greater threat and hazard of international political terrorism if the
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Head of State or senior Ministers travel on regular airlines. One may charter, but the wide-bodied aircraft of which there are so many nowadays have made suitable aircraft for charter more difficult to obtain. It is true that RAF VC10s are used; they are altered internally for VIP flights. But two aircraft must be withdrawn from their military role to do that because of the need for a back-up aircraft in case one does not work, so the VC10s are taken out of service, and that must disrupt the defence schedules of the Ministry of Defence.
What can and should be done? Bearing in mind that it is never the right time to do anything about it, a much more rational and economical way would be to set up a combined royal and ministerial squadron with a mix of aircraft to provide for all normal needs and which would largely prevent taking VC10s out of service, except for extremely long distances and multi-passenger tours. The mix could comprise two British Aerospace 1–11/475 series with a range of 2,400 nautical miles, and I shall return to the question of the mix shortly. Those two aeroplanes, the 1–11s, could replace the Andovers, as they have an equal ability and capacity to operate from very short airstrips, and that is extremely important. For other trips with just a few passengers and for very short-range work—to Northern Ireland, Brussels and so on—the British Aerospace 125 would be fine, and the two Wessexes could remain as well as the Gazelle. That would be the most economical way to provide Her Majesty with a modern, British-built jet aircraft for the majority of her many flights, at the end of which she would arrive in much better shape for the often extremely arduous duties which she then has to perform.
This subject has been discussed since 1972, but the issue has always been fudged, for political or financial reasons. There have been lengthy debates in both Houses, and many articles have been written in magazines and newspapers. In fact, the use by Her Majesty of the elderly Andovers has attracted not inconsiderable adverse comment from the British public and in worldwide aviation circles. One cannot compare our methods of transport with those of other Heads of State or even certain top businessmen.
The question of cost is, of course, important and obviously that would decide the types and number of aircraft for the combined squadron, and that would be dictated by the number of hours needed to be flown by each aircraft. The combined unit might comprise two 1–11s, five 125s, instead six, and the three helicopters, which would make a total of 10 aircraft instead of 16. That suitable combination of aircraft merged into one squadron, one wing, or one combined unit—call it what you will—must surely be an obvious rationalisation. The combined unit must be based at one location, as opposed to the present two locations.
Here I wish to digress for a moment. The autonomy of the Queen's Flight would not in any way be lost. It would still be the Queen's Flight of the combined unit—whatever one wished to call it. So no prestige at all need be lost there. But it would lead to considerable further economy in administration, maintenance facilities and costly manpower. I would not dream of trying to tell my noble friend the Minister which is the best location; I would leave that for him

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to decide. But I maintain that we cannot continue both stations.
It is true that there might be some initial short-term expenditure, but over a comparatively short period of time that would be amortised. However, the snag is the capital cost, and, so long as the Ministry of Defence has to pay, the answer to my Question tonight is probably going to be, no. But why should the Ministry of Defence pick up the whole tab? Simply because it has done so in the past? Is that any criterion as to why it should have to go on doing so in the future? I maintain very seriously, and so I think do many other people in this country, that the costs should be borne by, and spread over, all of the Government departments. In fact the initial cost would be only about £9 million for the two 1–11s being partly exchanged for the Andovers, and should the Government not feel like putting down the cash, I understand that British Aerospace has some very advantageous hire purchase or leasing terms to offer over a period of 15 years. Lastly, in the event of hostilities, the 1–11 could be used for casualty evacuations, since I gather from the MoD that there are no aircraft specifically earmarked for that operation.
I realise that my noble friend may not this evening be able to answer in as affirmative or as positive a way as many of your Lordships might wish. But I should like to conclude by saying that, if we wait until the Andovers are 20 years old—which is only another two years off—and until the day finally comes for a change, it will have to be made not to British, but to American, aeroplanes. Foreign aircraft may be all right in the British airlines that operate out of this country, but the prestige of the Queen's Flight surely needs the best—and the best is British.
7.33 p.m.
Lord Beswick: My Lords, the noble Earl is to be commended for again raising this Question, and I congratulate him on the way in which he has done so. As he said, it is not a new question. The need to re-equip the Queen's Flight with new aircraft has been apparent for some years, and the need to replace ageing aircraft does not recede with the passing of time. I am very much hoping that this discussion will provide the opportunity for the Government departments involved to have another look at the matter and that it will tip the balance in favour of a common-sense solution to the problem.
I add only a very few words to what the noble Earl said about the need. I greatly hope that when the noble Viscount replies he will not again tell us that the Andover is a good, reliable aircraft, Of course it is, and it is superbly maintained. But, frankly, I was a little ashamed when on a recent occasion I saw the Prince of Wales, with all the television cameras on him, step out of this machine. That good, old, reliable aircraft really does not convey the image of a country capable of making some of the most advanced aircraft in the world.
It is probably correct to say that the objection to re-equipment has come from two quarters: namely, a certain section of Her Majesty's present Opposition and the Treasury. I believe that on the basis of the proposals put forward by the noble Earl the objections from both these quarters can fairly be satisfied.
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May we look first at what might be thought to be the political objections? These are strongly held by some people, and we must accept, are sincerely held. It can sincerely, if mistakenly, be held to be wrong to spend money on what are thought to be personal aircraft if, at the same time, essential social services are being cut. We have to show, and show much more clearly, that we are not here talking of providing expensive aircraft for some kind of leisure activity for a privileged few. We have to show, and again show much more clearly, that a properly run communications unit can be a cost-effective, timesaving exercise, and not very different from the kind of thing that is operated by many large-scale organisations.
Of course the figures quoted by the noble Earl relating to passengers carried on the Queen's Flight show that the aircraft have not been restricted to the personal use of the Queen or members of her family, but utilisation could be extended, and seen to be extended, if we had a merger with the RAF Squadron. Personally I should be sorry to see the Queen's Flight title go, but I have no doubt that the new squadron could acquire its own special character and prestige without misleading anyone as to its workaday purpose. It is on that basis that I believe that some of the past political doubts about the functional character of the Queen's Flight could be met.
Then we come to what I have called the Treasury objection the narrow objection of cost, or the question of departmental estimates. We cannot across the floor of this House go into the details of a balance sheet, but, given the replacement of the old Andovers with the new 1–11s, given the merger of the Queen's Flight with the RAF Communications Squadron, given the consequent rationalisation of the flight with reduced overheads and increased utilisation, I should be surprised—very surprised—if any accountant could show me that there was not a net reduction of cost to the nation. Certainly there would be a reduction of cost to the nation, if not to a particular department.
There was once a possible response to this cost-saving assertion. It might have been said that it was all very well talking of an annual saving on the basis of conventional amortisation of capital expenditure on new aircraft, but the Treasury looks at capital expenditure in the year in which it is incurred. However, even that objection is met by the offer, which I believe British Aerospace will confirm, that the new 1–11s can be made available on a leasing arrangement. I am sure that the noble Viscount can see that this businesslike offer can be looked at in a businesslike way.
There is just one other point that I mention, and I mention it very reluctantly. Over the years the Air League has most nobly and usefully put forward the case for new British aircraft for the Queen's Flight. But I gather that more recently the Air League has suggested that an additional reason for acquiring the 1–11 aircraft is to show approval that British Aerospace is now, as they apparently put it, denationalised. I very much hope that the Air League, under its new Chairman, will not pursue that line. In the long run it can be counter-productive. In the short run it can divert attention into unrewarding argument.

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The proposal to operate a really efficient national air communications unit of which we could all be proud, and which could profitably show the flag in all respects, seems to me to be overwhelmingly sensible, and, if anyone can ensure that it is fairly considered, I am sure that it is the noble Viscount. I look forward to hearing what he has to say, but I hope that he will take into account, and I hope that he will be able to tell us that others will take into account in any reconsideration, the fact that since this evening's debate has started the Andover is an older aircraft, and, moreover, that the 1–11 leasing arrangement obviously cannot be held over indefinitely.
7.40 p.m.
The Minister of State for Defence Procurement (Viscount Trenchard): My Lords, I thank my noble friend Lord Kimberley and the noble Lord, Lord Beswick, for the contributions they have made in the pursuit of the noble Earl's Unstarred Question. They have both been studying these questions far longer than I have, and they have raised a number of matters of operational significance in relation to No. 32 Squadron and the possible amalgamation which I shall ensure are drawn to the attention of those who are currently again reviewing the whole question of the organisation of both the Queen's Flight and No. 32 Squadron, and other matters arising out of last July's Defence Review, with the object of economising to the greatest possible extent in what we perhaps loosely term the support and logistic areas of the Royal Air Force in order to be able to afford what we need in the frontline.
So I would thank them for their detailed comments; and I think the House would regard it as being almost superfluous, and possibly even impertinent, for me to start by saying that I know the whole House will be of the view that we should put very high priority on anything we can do to lighten the burdens which Her Majesty the Queen and her family carry so conscientiously and, indeed, so superbly in the interests of the whole country. We all know, also, that our Royal Family have never disassociated themselves from practical and budgetary problems. Indeed, many of us believe that they have set a very fine example for us all in this respect.
We believe that the operational efficiency—and I have to say this notwithstanding what the noble Lord, Lord Beswick, said—and the safety standards of the Queen's Flight are paramount, and we know that under both those headings they are superbly carried out. We know that there could be advantages in being able, at some stage, to replace the Andover aircraft; but we say—and I shall return to this in a minute, if I may—that the main requirements are being met, and met perhaps a hit better than my noble friend has today indicated. But before I come to that let me deal with this sordid matter of money and with my noble friend's points about the fact that it is never the right time.
My old father had a cliché when I was not doing something immediately, when he used to say, "What's wrong with now?" So that is ringing in my ears, and I was brought up to it. But if I may answer his question and also that of the noble Earl, there really are quite a lot of things wrong with now, and it is not just a question of whose budget. The noble Earl
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knows very well that the national economy, which has been running down for years, is at a crisis stage; and that, in that situation, keeping a defence budget, and indeed increasing it by 3 per cent. real per annum, and keeping national expenditure under control and, indeed, lowering it in other and non-essential respects, is a monumental task. It is very easy to except any of a thousand very desirable areas from the necessary pressure on public expenditure and the necessary priority selection within a larger defence budget to meet the growing threat—the growing threat and the escalation of cost, which my noble friend Lord Kimberley also knows well, caused by the ever-greater sophistication of the threat and the reply.
Lord Beswick: My Lords, would the noble Viscount give way? Is he going to leave it at that? Is he going to answer the assertion that is made—made by me and, I think, by the noble Earl—that the cost could in fact he lowered?
Viscount Trenchard: My Lords, I am going to comment on that point at a later stage. At this stage I will return for a second to the requirements of the Queen's Flight as such. The requirements are for short journeys and for long journeys, at home and abroad, and for landing on big airfields and small airfields. In that context the aeroplanes that Her Majesty and the Royal Family can draw on at the moment are not too bad a range for doing all those things.
On a fllight to Scotland, for instance (and I have taken one recently in an Andover) you take an hour and a half and you are served with a very good meal while you are doing it—or you can be; I hope very much that the Royal Family has that opportunity, too. That is as opposed to a jet aircraft, which may go twice as fast but still takes an hour because it has to take off and it has to land. That is a measure of inconvenience; but the Andover can land where jet aircraft cannot. When longer journeys overseas are required, VC-10s are made available to Her Majesty, and the Andovers are often pre-positioned—in Africa, for instance, so that when the Queen arrives she can be carried to small airfields and on shorter journeys. I will deal with the matter of prestige in a moment, but in terms of the combined aircraft available to the Royal Family they are not so inconvenient. The HS-125 has also been mentioned. It does not carry the size of party that is often required, but it is a very fine aircraft and it is used from time to time.
My Lords, I note that the noble Earl was beaten, as he said, by the news on the tape. The coincidence of this Question and the news on the tape will strike noble Lords as perhaps being interesting. In fact, I am entitled and am allowed to say that in relation to the trips that His Royal Highness Prince Philip took to Canada and to Australia, which took 2 days and 9 days, I am given to understand that on both these visits, when an Andover was due to be pre-positioned for His Royal Highness's engagements in Australia early in 1973 and in Ottawa and Caracas in September 1980, His Royal Highness chose to travel out in the Andover rather than call upon the services of a VC-10 or charter aircraft. Indeed, the journey to Australia was carefully planned to take a couple of weeks to include several visits en route. So I want to get the media interpretation

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of this, which the noble Earl has mentioned and perhaps slightly echoed today, into perspective.
I will return to the economies of the thing, but perhaps I may turn for a second to the alternatives currently available should budgetary and priority considerations allow replacement of Andovers at this time. The BAC 1–11 is, as both noble Lords know, a very much larger aircraft. It is not, I suggest, the last British aircraft that could be available. The BAC 146s are being made, although they are only just coming into service and a much longer time would have to be considered in relation to them. Neither of them are perhaps ideally suitable. Whether the noble Lord's contention is right that there will never be another British aircraft that is suitable, I would question as a statement of certainty. On the capital cost I have to say to my noble friend that the estimated cost that he mentioned of some £9 million is not the net capital cost that would be necessray if two BAC 1–11s were to replace three Andovers. In total, including the requirement to keep them up to the standard necessary for this service, the cost would be in excess of £12 million.
It is perhaps at this point that I have to say to both noble Lords that there have been two reviews (and a third is currently going on) into the whole question of both capital and running costs of the Queen's Flight itself and of the possible amalgamation of No. 32 Squadron at Northolt and the Queen's Flight at Benson. On putting those two stations together, there could be a final economy. There would be an initial cost. So far as running costs are concerned, it is a complicated equation. The noble Earl made a number of interesting assumptions which I shall study with care in his suggestion that the whole affair could he run more economically. On the aircraft, per se, the BAC 1–11 is and would be a more expensive aircraft to operate than the Andover. That is not the whole of the question. I can say to the noble Earl that the figures are very much bigger on all the studies that have been done so far; although a new study on the amalgamation of the squadron and the Flight is currently taking place.
I think there is enormous importance in the Queen's Flight remaining as a separate entity, with all the esprit de corps that it has. The present flight is staffed by specially selected volunteers. The standards of the Queen's Flight are regarded as a pinnacle for the rest of the RAF to look up to. I believe it is important that in any amalgamation that might or might not come out of the current review, we keep the identity of the Queen's Flight, and also maintain the permanent rediness of aircraft for Her Majesty and for her family which is a feature of the present arrangements. There is already overlap in the operational use of aircraft for the Royal Family and other VIPs, as I have described.
So far as Ministers are concerned, I have had to travel within the current arrangements and I am not aware that either my senior colleagues or my immediate colleagues are inconvenienced by the present arrangements. The noble Earl has made a number of points about No. 32 Squadron and its present level of utilisation which I wish to look into and to come hack to him upon. But I say very sincerely that I believe that Ministers, too, take the view that priorities have to be selected for short-term economic reasons and there is no use pushing those to one side. Much
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as I should like other departments to augment the Ministry of Defence budget on this subject and in many other areas for obvious reasons, I think that all my colleagues and I are looking at this in terms of the priorities for the Government as a whole in the economic conditions that I have outlined.
The Earl of Kimberley: My Lords, if my noble friend will allow me—I hate to disagree with him—I would say that I think my figure of £9 million which I have from British Aerospace is nearer the right figure than his £12 million. Perhaps he will look into it. Could he say whether there was any chance if the Government or the Ministry of Defence do not want to put down the cash in full that they would consider a 15-year lease?
Viscount Trenchard: My Lords, as my noble friend knows very well, whether it is looked at as a capital sum or as a lease, it is a financial burden and a financial burden at this stage. As far as his statement and assertion that his figure is nearer than mine is concerned, I can only say that this has been examined by all the experts concerned and the figure that I have given—which was not £12 million but well in excess of £12 million—I believe to be the accurate figure.
Lord Beswick: My Lords, could the noble Viscount say when that estimate was made?
Viscount Trenchard: My Lords, in a study which took place in 1980 or 1981. That is my recollection of that particular figure which I noted in preparing myself to answer this Unstarred Question. It is not just the costs of the aircraft; it is the cost of the necessary equipment to maintain them in the kind of permanent readiness, the degree of spares and of back-up that needs to be provided.
If I may say in summary, the Ministry of Defence and the RAF will continue to ensure the maintenance of the Queen's Flight at the highest conceivable standards of safety and reliability. The Government believe that the combination of aircraft available to the Royal Family, including the HS-125s and the VC10s for longer journeys as well as the Andovers of the Queen's Flight, meet the requirements for long and short flights including at times the use of smaller airfields at home and abroad. The strains on the defence budget caused by the increasing threat and the costs of ever higher technology to meet it are well known and are particularly acute at the present time. There are not at the moment any ideally suitable British aircraft available as replacements, and those that have been considered would require a substantial capital cost and, compared with the Andover, increased running costs, also.

Hong Kong and China Gas Company Limited Bill [H.L.]
The Bill was reported from the Unopposed Bill Committee with an amendment.
Saint Thomas' Burial Ground (Southwark) Bill
The Bill was reported from the Unopposed Bill Committee without amendment.
Thomas Brown and Sons, Limited Bill [H.L.]
The Bill was reported from the Unopposed Bill Committee without amendment.
House of Lords' Offices
Second Report from the Select Committee made, and ordered to be printed.
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