Sitting of 16 November 1982

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

  BRITISH RAILWAYS (LIVERPOOL STREET STATION) BILL
  Order for Third Reading read.
  To be read for the Third time upon Thursday.

  WRITERS TO THE SIGNET DEPENDANTS' ANNUNITY FUND ORDER CONFIRMATION BILL
  Considered; to be read the Third time tomorrow.
Oral Answers to Questions
  DEFENCE

    Arms Sales
    Mr. Hooleyasked the Secretary of State for Defence how many persons are currently employed in the sales section of his Department.
    The Under-Secretary of State for Defence Procurement (Mr. Geoffrey Pattie): At the end of September 1982 the strength of the defence sales organisation was 352 civilian and serving officers.
    Mr. Hooley: As imports of manufactured goods to Britain now exceed exports, does the hon. Gentleman agree that it would be more sensible to redeploy those people in the organisation to the promotion of our civil exports instead of promoting the ugly and squalid sale of weapons of death?
    Mr. Pattie: One of the many lessons of the Falklands conflict is the vital importance of having a strong defence industrial base—one that is able to respond quickly to the demands of the Armed Forces. The activities of that organisation assist in that process.
    Mr. Robert Atkins: Does my hon. Friend agree that many people in the organisation have been working extremely hard to encourage sales of Tornado to as many countries as wish to buy it—Greece, for example? Can he give any background to how that proposed sale is going?
    Mr. Pattie: The proposed sale of Tornado to Greece is being pursued actively by the manufacturers of the aeroplane, Panavia, which is a consortium from Germany, Italy and Britain, and there has recently been a highly successful demonstration of the aircraft's capability to the Hellenic air force.
    Mr. McNamara: Does the hon. Gentleman agree that one of the lessons of the Falklands war is that we must be careful to whom we sell arms? Will he cancel the foolish
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    proposal to hawk arms on a ship around the Gulf—an area of great potential conflict—next year? The proposal can do neither that area nor the peace of the world any good.
    Mr. Pattie: I agree with the hon. Gentleman in one respect—we must be extremely careful about whom we sell arms to. We have always done so, as have Labour Governments, who sold far more to some South American countries than we have. I do not agree with the second part of of the hon. Gentleman's question.

    Falklands Campaign (Equipment and Weapons)
    Mr. Lathamasked the Secretary of State for Defence whether he will make a statement on the outcome of his review of the combat performance of the equipment and weapons of the United Kingdom Armed Forces during the Falkland Islands campaign.
    The Secretary of State for Defence (Mr. John Nott): I intend that the White Paper on the lessons of the Falklands campaign, which I have already told the House I am producing and which will include the operational, logistic and equipment lessons, will be published before the House rises for the Christmas Recess.
    Mr. Latham: Is my right hon. Friend aware that he cannot publish too soon the details of the alterations to defence policy that are obviously necessary in the light of the Falklands campaign? Is he also aware of the grave anxiety of Conservative supporters throughout the country at the frequent reports in The Daily Telegraph of grave dissatisfaction amongst extremely senior naval officers?
    Mr. Nott: If my hon. Friend believes what he reads in The Daily Telegraph, and that story, he will believe anything. It is normal for journalists to check on some of the facts that they report, but apparently that practice spoils these stories. The White Paper is not intended to be a fundamental defence policy White Paper. It is about the lessons of the conflict, especially logistics, operation and equipment.
    Mr. Duffy: Is the right hon. Gentleman aware that the combat effectiveness of two vital systems would have been crucially enhanced if his Department had not dithered over the lightweight version of Sea Wolf and cancelled the Sea improvement programme for the type 42s?
    Mr. Nott: The forward programme includes improvements to Sea Dart. The lightweight Sea Wolf is also in the programme.
    Mr. Duffy: What about then—before the Falklands conflict?
    Mr. Nott: I can tell the hon. Gentleman that we are spending far more on defence equipment than did the Labour Government. We must decide our priorities within the available resources, which are increasing, because of Government's policy, by 3 per cent. in real terms each year.
    Mr. Banks: Is it not the case that the Rapier system performed extremely well during the Falklands campaign? Will my right hon. Friend assure the House that our allies in NATO are fully apprised of the effectiveness of the equipment that was used?
    Mr. Nott: Yes. The Rapier system performed exceptionally well. We are providing to all our allies, both

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    to those, like the Americans, who are using Rapier, and to our other allies who are interested in the project, all the lessons that we have learnt about the equipment, which was an outstanding success.
    Mr. John Silkin: Will the right hon. Gentleman be presenting the White Paper himself? Does he intend that there should be a debate before Christmas in which he will take part, or will that duty be left to his successor?
    Mr. Nott: Unless the Prime Minister has a reshuffle before Christmas—I do not control that—I shall be presenting the White Paper. I hope that we can produce it in adequate time for the House to absorb it before hon. Members go away for the Christmas Recess. Whether there is a debate will be decided between the usual channels. Obviously, having published the White Paper, I should welcome a debate. Whether time can be found is a matter for discussion between the usual channels.
    Mr. Silkin: This is a serious question. It would be curious if the White Paper issued by the right hon. Gentleman, who has announced that he intends to leave, for reasons that we understand, were to be debated by someone following him.
    Mr. Nott: It is for that reason that I should welcome the opportunity of a debate on the White Paper, but the timing of it does not lie wholly in my hands.
    Mr. Cormack: Is the House to infer from my right hon. Friend's reply to my hon. Friend the Member for Melton (Mr. Latham) that there is no truth in the stories that have been appearing regularly in The Daily Telegraph?
    Mr. Nott: I am afraid that I do not know to which stories my hon. Friend is referring.

    HMS "Fisgard", Torpoint
    Mr. Hicksasked the Secretary of State for Defence whether he has yet determined the future use of the land now occupied by HMS "Fisgard", Torpoint; and if he will make a statement.
    The Under-Secretary of State for the Armed Forces (Mr. Jerry Wiggin): As has been announced, HMS "Fisgard" is due to close in December 1983. Provided that there is no other Ministry of Defence requirement for the land and buildings there, the property will be passed to the Property Services Agency for disposal in the usual way.
    Mr. Hicks: Will my hon. Friend state whether there is any prospect of the Royal Marines or some other Service unit occupying this valuable and extensive site? If not, can he give the House the assurance that he will instruct the PSA to get on as quickly as possible with the sale of the site for some other positive use?
    Mr. Wiggin: As the search has not been completed, I cannot say whether there will be any other Service use. If there is not, I can give my hon. Friend the assurance for which he asks. I can also inform him that the Royal Marines will not be going there.

    Cruise Missiles
    Mr. Newensasked the Secretary of State for Defence when the first cruise missiles are due to be deployed in the United Kingdom.
    The Minister of State for the Armed Forces (Mr. Peter Blaker): In the absence of concrete results in the arms reduction negotiations in Geneva on intermediate nuclear forces, cruise missiles are due to be deployed in the United Kingdom by December 1983.
    Mr. Newens: As the United States, on many occasions, particularly recently, has made it clear that it is prepared to put United States interests before those of Britain where it suits it, how on earth can the deployment of American owned and controlled cruise missiles in this country be justified? Does the hon. Gentleman recognise that the majority of people in Britain today reject this proposal?
    Mr. Blaker: The hon. Gentleman appears to misunderstand the reasoning behind the proposed installation of cruise and Pershing II missiles in Europe. That action is due to be taken, in the absence of an arms reduction agreement, at the request of the European countries. It is intended to demonstrate to the Soviet Union and to Western Europe that the United States is fully committed to the defence of Western Europe.
    Mr. Cartwright: Has the Minister noted statements by United States officials that development problems affecting cruise and Pershing II missiles are no worse than those affecting any new weapon system? Does he find that choice of words comforting? Is he convinced that the cruise will be ready on time?
    Mr. Blaker: According to the information that I have, I expect the cruise to be ready for deployment by the end of next year. The tests being conducted on the Tomahawk cruise missile, which is the relevant one, show a success rate of over 80 per cent.
    Mr. Stokes: Is my hon. Friend aware that most people hope that the sooner these weapons are deployed in the United Kingdom the better, especially in view of the threat from the growing number of Soviet SS20 missiles? Will my hon. Friend do all in his power to counter the dangerous and misleading opposition to the stationing of these weapons here?
    Mr. Blaker: I agree with my hon. Friend about the urgency of this problem. When NATO first proposed in 1979 the installation of cruise and Pershing missiles, and simultaneous negotiations with the Soviet Union to make that deployment unnecessary if agreement could be reached, the number of SS20s in the Soviet Union was just over 100. The figure is now 324. I believe, therefore, that the imbalance that existed in 1979 has worsened. We shall try to reach a disarmament agreement, but in the absence of such an agreement we must press on with our plans.
    Mr. Strang: Is the Minister aware that the brave women of the Greenham Common peace campaign are representative of the views of millions of women in this country? Has he recognised that the harsh decision of the authorities to imprison them will increase rather than decrease the determination of women and men throughout Britain who are determined to oppose this dangerous escalation of the nuclear arms race?
    Mr. Blaker: It is clear to me that the vast majority of people in this country believe in nuclear deterrence combined with a policy of multilateral negotiations for arms reduction. The case of the women at the so-called peace camp at Greenham Common is not a matter for me.
    Mr. Colvin: Will my hon. Friend confirm that cruise missiles are defensive or retaliatory, and that they are in no way offensive or first-strike weapons.
    Mr. Blaker: My hon. Friend is absolutely right. They travel at about the same speed as a British Airways jet. They would take three hours to reach Moscow.
    Mr. Denzil Davies: Is the Minister aware that the original decision to deploy cruise missiles, far from bringing America and Western Europe closer together, has created confusion and dissension, especially by raising the spectre of limited nuclear war in Europe? Why do not the Government cancel the project, which is a major and dangerous step on the ladder of nuclear escalation?
    Mr. Blaker: If there is confusion, it has been caused largely by some of the unilateralist organisations which have been spreading false information. I have previously told the House that one CND leaflet contained five gross errors of fact, three of which are conceded either by Monsignor Bruce Kent or by Lord Jenkins of Putney, a former hon. Member of this House. A limited nuclear war is not an objective of Western policy. The introduction of cruise missiles is intended to demonstrate that the United States is bound into the defence of Western Europe.
    Mr. Davies: Will the hon. Gentleman concede that the whole object of a cruise missile is to fight a nuclear war on the Continent of Europe? Why is that not a limited nuclear war?
    Mr. Blaker: The right hon. Gentleman is talking rubbish.

    Falklands Campaign (Argentine Weapons and Equipment)
    Mr. Robert Atkinsasked the Secretary of State for Defence if he will make a further statement concerning Argentine weapons and equipment discarded in the Falkland Islands; and if any uses can be found for such material within the Armed Forces of the United Kingdom.
    Mr. Wiggin: We are continuing to examine and, where appropriate, recover to the United Kingdom, Argentine military equipment left on the Falkland Islands. The majority of items being retained are for operational use by our own forces or for technical evaluation.
    Mr. Atkins: I am grateful for that reply. To what extent does my hon. Friend think the Territorial or reserve forces can use some of the equipment that has been left behind, thereby enabling them to have more ammunition than would otherwise be available? To what extent are the weapons or equipment being returned to this country for evaluation likely to be used by our forces?
    Mr. Wiggin: We are evaluating all these factors. If the Territorial Army has requirements that can be filled by this equipment, it may well be issued with such equipment. I am afraid that I cannot quantify the matter, as research is proceeding at the present time.
    Mr. James Lamond: As Conservative Members, and in particular the hon. Member for Preston, North (Mr. Atkins), continually stress, erroneously, that our enormous defence expenditure creates jobs, is it not rather illogical of the hon. Member to suggest that we should revert to using secondhand military equipment?
    Mr. Wiggin: In the interests of the taxpayer, my Department will always use that which is available to it. In this case all the equipment is in excellent order and will be of use to our forces.
    Mr. Hoyle: Were any Exocet missiles containing British components supplied to Argentina during the Falklands campaign? Did any of the Exocet missiles that were used during this campaign contain any British components? If so, what were those components?
    Mr. Wiggin: That is a long way from the original question, The facts about the Exocet missiles are well known.

    Public Weather Forecasts
    Mr. Warrenasked the Secretary of State for Defence if he will arrange for the regular publication of data on the accuracy of public weather forecasts and state the latest data on their accuracy which are available.
    Mr. Wiggin: No, the accuracy of public weather forecasts, which has been maintained at 86 per cent. nationally since my hon. Friend asked a similar question in July 1981, is very high, and any significant trend needs to be judged over a period of years.
    Mr. Warren: While I do not doubt my hon. Friend, I find his reply extremely surprising, and my surprise is widely shared. Will my hon. Friend explain, chapter and verse and more lucidly, about the weather forecast accuracy of 86 per cent., and say what it is based on? Can weather forecasters be a little more accurate in the presentation of their information, as their forecasts are supposed to be accurate?
    Mr. Wiggin: One of my predecessors wrote to my hon. Friend as long ago as 1977 explaining the procedures for evaluating weather forecasts. I am afraid, Mr. Speaker, that you would not allow me to do so in detail, but I am satisfied that as much care is given to this as is possible within the resources available.

    Chatham and Portsmouth Dockyards
    Mr. Dubsasked the Secretary of State for Defence when the closure of Royal naval dockyard facilities at Chatham and Portsmouth is now expected to occur; and if he will make a statement.
    Mr. Blaker: I have nothing to add to the remarks of my right hon. Friend the Secretary of State for Defence during the defence debate on 1 July.
    Mr. Dubs: Given that the White Paper on the lessons of the Falklands war has been promised us before Christmas, would it not make sense to delay making any further progress on the closures of these two dockyards until we have had a chance to debate the lessons of the war? This is particularly so as one outcome of such a debate might be that we would wish to put more resources into submarines, which would make the facilities at Chatham even more valuable.
    Mr. Blaker: We have already said that there will he no further redundancy announcements in Portsmouth before the beginning of next year, and some redundancy notices that had been declared have been withdrawn. With regret we have to repeat the decision, already announced, that Chatham will close as planned.
    Sir Frederick Burden: When did the first SSN submarine go to Devonport for refit and refuelling, what was the target date when it was to come out, what is the position with regard to that submarine now, and when is it now expected to come out?
    Mr. Blaker: The first submarine was "Swiftsure". It is now expected to come out in March next year. It has been delayed. The principal delay was at the beginning of the process when work was not started on the submarine for 15 months because of an industrial dispute. Since then there has been another industrial dispute, which affected all the dockyards last year, as my hon. Friend will know.
    Mr. John Silkin: Is not one of the lessons that can be drawn by the House in advance of the White Paper—and one that is corroborated by many people who took part in the Falklands war—that had the rundowns and closures in Chatham, Portsmouth and Gibraltar proceeded a little earlier there would not have been the slightest possibility of our being able to send a fleet to the Falklands?
    Mr. Blaker: That is untrue. As the right hon. Gentleman knows, we are expanding Devonport and Rosyth. We still have to take a decision about the exact size at Portsmouth, and in addition there are the commercial yards.
    Mr. John Wells: Will my hon. Friend assure the House that if he is quite determined on his policy on Chatham there will be sufficient opportunities for there to be a transition from military to civil use, so that the professional and technical skills that are so famous in Chatham will not be dissipated, and the work force can move over to civilian work with an easy transition?
    Mr. Blaker: I agree with my hon. Friend about the skills available at Chatham. Some of the personnel from Chatham have already moved to Devonport and others will move in future. As my hon. Friend will know, North-West Kent has been declared an enterprise zone, and Chatham is one of the only three places in the country that benefit from the enterprise allowance scheme. I hope that these measures will help.
    Mr. Rhodes James: How can my hon. Friend tell the House that the Government have already come to a decision before the White Paper has been published? Does he realise that many Conservative Members share the concern expressed by the hon. Member for Battersea, South (Mr. Dubs)?
    Mr. Blaker: We shall be taking a decision about the level of manning at Portsmouth in the light of the White Paper, and that allows us a certain amount of flexibility. With regard to the broad picture, we have said that we propose to continue with the strategy set out in last year's White Paper, but within that strategy we shall be prepared to draw lessons from the experience of the Falklands. On that basis, it is clear that we have to say, with great regret, that Chatham will not be necessary for our purposes.

    Warship Construction
    Mr. Hardyasked the Secretary of State for Defence whether any significant changes will be made in the design and the materials used in the construction of warships as a result of experience in the South Atlantic.
    Mr. Pattie: Analysis of the experience gained during the Falklands campaign is not yet wholly complete, but we are considering some detailed changes in warship design.
    Mr. Hardy: Will changes be made in the use of materials in warships now under construction or planned? In particular, is the Minister aware that naval design seems to have ignored aspects of technology that have long been obvious in other sectors of metal use? For example, in the technology of deep mining, the disadvantages of aluminium have long been seen. May we have an assurance that the experience in other sectors of technology will be urgently applied to naval construction?
    Mr. Pattie: I assure the hon. Gentleman that all these factors are being taken into account.
    Mr. Nelson: Does my hon. Friend agree that it is already apparent that the problem of fire in warships in the South Atlantic is not just a question of the aluminium superstructure but the flammable material inside the warship? Will future warships be rather more spartan and less comfortable internally, and are these factors being taken into account in the design and specification of ships already under construction?
    Mr. Pattie: I assure my hon. Friend that these are precisely the factors that we are examining.
    Mr. Concannon: Will the Minister confirm that the ships sunk off the Falklands are now war graves? Is he aware that some of the next-of-kin will find it difficult to believe that diving is being carried out on those ships when they were led to believe that that would not be possible, which was the reason for not bringing the bodies home?
    Mr. Pattie: The right hon. Gentleman has been written to in detail on the matter. Perhaps he will await the arrival of that letter.
    Sir Patrick Wall: Is not one of the lessons that of the inadequacy of our ships' surface-to-airdefences, and are plans being made to fit lightweight Sea Wolf to all our warships to combat missiles?
    Mr. Pattie: As my hon. Friend will be aware, these questions arising from the Falkland conflict will be addressed in the forthcoming White Paper.

    Gurkha Pension
    Mr. Neil Thorneasked the Secretary of State for Defence when the Gurkha pension of £5·88p a month was first paid; and what it should be now to offset the effects of inflation.
    Mr. Wiggin: The pension in question was payable with effect from 1 September 1980. It has already been raised in line with movements in the consumer price index for Nepal to £8·94p with effect from 1 April 1981 and to £10.00p with effect from 1 April 1982.
    Mr. Thorne: Knowing of my hon. Friend's great admiration of the Gurkhas, and as they did so much to assist us in the South Atlantic, standing shoulder to shoulder with our own Service men, does he agree that it would be wrong now to shelter behind the agreements made 30 years ago with the Indian Government to maintain the pensions in line with those of the Indian Army? Is it not now time thoroughly to review the position with a view to updating the amounts paid to a much more sensible and realistic figure?
    Mr. Wiggin: As my hon. Friend knows, a substantial change was made in 1981 to inflation proof this pension in terms of the economy into which these people retire. While I completely share his compliments on their performance—indeed, everyone has known of that performance for many years—the fact remains that they are not complaining about the new arrangements, which they welcomed at the time.
    Mr. Ron Brown: Is it not a disgrace that former soldiers from both world wars, not just Gurkhas, should have to depend on handouts from the Earl Haig fund? Will the Minister do something about it?
    Mr. Wiggin: I am not aware of any difficulties for Gurkha soldiers.
    Mr. Greenway: Does my hon. Friend agree that as the Gurkhas are performing identical duties to our own indiginous troops, in all fairness they ought to be moved more closely to our own scales?
    Mr. Wiggin: This question relates to terms of engagement. When the Gurkha soldier signs on, he is well aware of what his pension is likely to be, and, after all, we have made a substantial improvement on the previous payment.

    RFA "Fort Austin"
    Mr. Leightonasked the Secretary of State for Defence what were the circumstances in which the Royal Fleet Auxiliary "Fort Austin" sailed for the South Atlantic in March.
    Mr. Nott: RFA "Fort Austin" sailed from Gibraltar on 29 March to replenish HMS "Endurance".
    Mr. Leighton: Is the right hon. Gentleman confirming that the "Fort Austin" sailed before the Prime Minister said on 31 March that she was aware of the possibility of an Argentine invasion? Does it not stretch credulity too far to imagine that a ship of that size was meant to provision HMS "Endurance"? Will the right hon. Gentleman make a clean breast of this issue and say whether the vessel was sent to retrieve and collect the nuclear weapons that were contained on the ships of the task force?
    Mr. Nott: RFA "Fort Austin" sailed to replenish HMS "Endurance". She sailed on 29 March. Those are the facts.
    Mr. Dalyell: Did Ministers give the order for her to sail?
    Mr. Nott: Of course. Who else?
    Mr. Prescott: Is the Secretary of State aware that the merchant seamen now on board this vessel in the Falkland Islands are in industrial dispute because the Department refuses to pay them the danger and hardship allowance paid to other merchant seamen sailing on civilian vessels? In the interests of justice, will he intervene, correct the injustices and return the ship to full operation?
    Mr. Nott: I shall look into the points that the hon. Gentleman has made. However, in general the performance of our merchant seamen in the Falklands conflict was absolutely outstanding. The negotiations that we undertook at the outset of that conflict provided a substantial and well-deserved augmentation to the Merchant Navy's pay and allowances. I do not think that the hon. Gentleman or anyone else can say that they were not extremely well paid for doing a marvellous job.
    Dr. McDonald: Will the right hon. Gentleman confirm that the sending of the "Fort Austin" had nothing whatever to do with the invasion of the Falklands by Argentina? Is he saying that the Ministry of Defence knew nothing whatever of the invasion before the Prime Minister heard of it two or three days later? Will he also confirm that the sole purpose of the visit of "Fort Austin" was to provision HMS "Endurance"?
    Mr. Nott: I do not want to spoil the Opposition's excitement about this matter, but RFA "Fort Austin" sailed to replenish HMS "Endurance". That is why she was sent, that was the purpose of sending her, and much as I am sorry to disappoint the Opposition, that is the truth.
    Mr. Dalyell: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of that reply involving a lie—[Interruption.]
    Mr. Speaker: Order. Did the hon. Gentleman say that it was a lie? If so, he knows that he must withdraw the remark.
    Mr. Dalyell: On a point of order, Mr. Speaker. One does not send a 16,500-tonne—
    Mr. Speaker: Order. The hon. Gentleman is a parliamentarian and knows that he cannot accuse anyone of telling a lie. The sooner he withdraws that remark, the sooner we can return to questions.
    Mr. Dalyell: I do withdraw it, Mr. Speaker.

    Falkland Islands (Visit)
    Mr. Aitkenasked the Secretary of State for Defence if he will make a statement on his visit to the Falkland Islands.
    Mr. Nott: I visited the Falkland Islands from 22 to 25 October. The major achievement of our forces since the ending of hostilities has been the construction at Stanley of a runway capable of operating air defence aircraft. The top priority now is to provide adequate accommodation for all military personnel prior to the next Falklands winter.
    The excellent relations between Service men and islanders are mirrored by close co-operation between the military and civil authorities in their many areas of mutual concern. Much remains to be done and some significant problems, such as the presence of indiscriminately laid mines, remain. But the progress made since June provides every confidence for the future, and I am sure that the House would wish to join me in congratulating all concerned on what has been achieved so far.
    Mr. Aitken: I thank my right hon. Friend for that reply and agree wholeheartedly with his last remarks. In view of the recent reports that Argentina has been trying to purchase Exocets and other formidable military equipment, can he assure the House that our own forces are in a satisfactorily strong position to defend the islands against any future attack or invasion?
    Mr. Nott: Yes.
    Mr. Crawshaw: Does the right hon. Gentleman agree that the construction of the runway at Port Stanley by the Armed Forces is a remarkable achievement by any standards? Is he satisfied that the situation at that airfield is sufficient to carry out the military purposes of the task force? Has he any other place in mind for a second airfield?
    Mr. Nott: I agree with the hon. Gentleman that the achievement of the Royal Engineers in constructing the longer airstrip at Stanley is remarkable, and the speed with which they did it was amazing. We are looking at a more substantial airfield for the future. No decisions have been taken. A team has studied another site, but, as the hon. Gentleman may know, we have now asked the team to have another look at the present airfield site with a view to strengthening and lengthening it.
    Mr. Foulkes: Will the Secretary of State confirm the recurrent annual cost of maintaining the garrison on the Falkland Islands? Will he also confirm that as public expenditure as a whole is not to rise, and as defence expenditure will, the cost of maintaining the garrison on the Falkland Islands will result in substantial cuts in other expenditure? Is it right, for example, that old-age pensioners should be asked to pay for this through the clawback in the pensions increase that the Government are proposing?
    Mr. Nott: The hon. Gentleman knows that there is no clawback. The provision being made next year for the capital and revenue costs of the garrison is £424 million. That provision will be published in the public expenditure White Paper. That money will be used for the augmentation of our general defence capability and any increases in our forces to meet the garrison needs.
    Mr. Buck: Is my right hon. Friend aware that hon. Members on both sides of the House are grateful for the fact that he saw us immediately on his arrival from the Falklands, before some of us embarked for the Falklands? Will he confirm that the morale of our forces on the Falkland Islands is at its highest and that they will all be in fixed roof accomodation before the onset of the next South Atlantic winter?
    Mr. Nott: I am grateful to my hon. and learned Friend for leading a group of Members from both sides of the House to the Falkland Islands, and for what he has advised me on his return. The morale of our Service men was extremely high. They are still living under difficult conditions, and we have to get them into better accommodation before the next Falklands winter. They are doing a splendid job and morale is excellent.
    Mr. McNamara: All those Opposition Members who went agree with the right hon. Gentleman's statement about the conduct and morale of our troops, who are working under appalling conditions. We are anxious that there should be no doubt about their being in proper accommodation when the next Falklands winter comes. Secondly, there seems to be a grave lack of airborne early warning systems in the area. Does the right hon. Gentleman agree that it seems to be a waste of ships to have them still out on picket duty?
    Mr. Nott: On the latter point, we have good radar coverage of the islands. Until we update and modernise the radar systems, it is useful to use ships as radar pickets, to augment the existing system. The air defence of Port Stanley and the islands is now satisfactory. We have Phantom aircraft, augmented by Harriers. I agree with the hon. Gentleman that we must have proper accommodation by next winter.
    Sir Hector Monro: Does my right hon. Friend agree that the Royal Air Force squadrons flying the air bridge, the tanker crews and the fighter squadrons being refuelled
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    on the way to the Falklands are showing exceptional airmanship? Will he give the Royal Air Force the congratulations of the House on that achievement?
    Mr. Nott: I shall certainly pass on those remarks. The quality of the work and the spirit in which our forces are tackling the problem are remarkable. If it is representative of young people generally today, the country has a great future.

    Trident
    Mr. Canavanasked the Secretary of State for Defence whether he has received any representations from Scotland in support of Government policy to locate the Trident nuclear missile base in Scotland.
    Mr. Blaker: Our records do not distinguish between correspondence according to the residence of the author.
    Mr. Canavan: Does the Tory Government not realise that if they persist in trying to foist Trident on to the people of Scotland they may come up against direct action even more widespread than the recent events at Greenham Common? In view of the threat to peace that nuclear weapons pose, should it not be the Prime Minister who is gaoled for breach of the peace instead of the 16 courageous women who are the victims of a grave miscarriage of justice?
    Mr. Blaker: I am confident that when the people of Scotland fully understand the merits of Trident and the fact that it is the most efficient successor to Polaris at the most reasonable cost, they will support it. I am encouraged in my assessment of the views of the people of Scotland by a recent opinion poll, published in the Glasgow Herald on 18 October, which showed that a clear majority of Scottish people thought that Great Britain should retain nuclear weapons. In no category of age, sex or class was there a majority opposed.
    Mr. Marlow: Will there not be greater public reluctance about the siting of cruise than the siting of Trident as the British Government, in which the nation has a deeply enduring trust, have physical control over Trident, whereas the American Government have physical control over cruise?
    Mr. Blaker: My hon. Friend knows the arrangements for cruise. They will be the same as those that have applied to American nuclear forces in this country for many years under successive Governments—the bases cannot be used without the consent of both Governments.
    Mr. Denzil Davies: Since more than half the expenditure and most of the maintenance and servicing on Trident will be done in the United States, and since no one in his right senses believes that Great Britain will be engaged in a nuclear exchange with Soviet Russia against the will of the United States, why do the Government not cancel this ridiculous project, which distorts our defence strategy and places an intolerable burden on public expenditure?
    Mr. Blaker: There is no doubt that Trident in British hands will be an independent strategic nuclear deterrent, as is Polaris at present. It is still our assessment that 55 per cent. of the work on Trident will come to this country.

    Warsaw Pact (Nuclear Weapons)
    Dr. Mawhinneyasked the Secretary of State for Defence what is his latest assessment of deployment of medium-range nuclear weapons by the Warsaw Pact.
    Mr. Blaker: The Soviet Union has now deployed a total of 324 modern SS20 missiles, each with three warheads. Approximately two-thirds of those weapons face Western Europe. In addition, there are still up to 275 SS4s or SS5s deployed in the Western Soviet Union, and approximately 500 aircraft.
    Dr. Mawhinney: Will my hon. Friend assure the House that the threat posed by those weapons will be resisted by appropriate deterrents and that there will be a determined effort by the Government to see the number of such weapons reduced?
    Mr. Blaker: I entirely agree with my hon. Friend. As I explained earlier, we put forward proposals for disarmament negotiations in 1979. The Russians were slow to take up that offer. I am glad to say that they are now negotiating with the United States, but meanwhile we have to continue with our preparations for the deployment of those missiles. I believe that any other course would be fatal to any prospect of success in those negotiations.

  PRIME MINISTER

    Engagements
    Ql. Mr. Duffyasked the Prime Minister if she will list her official engagements for Tuesday 16 November.
    The Prime Minister (Mrs. Margaret Thatcher): This morning I had meetings with ministerial colleagues and others. I also met the chairman of the Indian Advisory Committee of the Festival of India to mark the end of the very successful festival. Early this afternoon I was present when Her Majesty the Queen welcomed Queen Beatrix of the Netherlands on her arrival in London. In addition to my duties in the House I shall be having further meetings later today. This evening I will be attending a State banquet in honour of Queen Beatrix of the Netherlands at Buckingham Palace.
    Mr. Duffy: What encouragement does the Prime Minister draw from the latest findings of the Central Statistical Office showing industrial production in September as flat, and with no improvement in the third quarter over the second, thus confirming the recent bleak forecasts of the CBI? Does the Prime Minister deny that the PSBR could now provide for some pump-priming, or has she abandoned unemployed people to the electoral needs of a give-away Budget?
    The Prime Minister: The hon. Gentleman is right, production is flat. But he will have noticed that the retail trade is buoyant and he will have drawn the conclusion that people are buying more goods. The demand is there, but it is not being met by production from our factories. That stresses the need once again to be competitive both in price and design. As regards the PSBR, as one of the world troubles in the coming financial year will be the accumulated deficits of debtor countries, it is far better that we do not join those countries, but keep our finances on a sound basis.
    Mr. Montgomery: Will my right hon. Friend find time today to study recent developments in the London borough
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    of Lambeth, where, due to the defection of a Social Democrat councillor, the Marxist-led Labour Party is now in control? Does she not think that that is bad news for the ratepayers of Lambeth? Does that not prove, as regards the Social Democrats, that once a Socialist always a Socialist?
    The Prime Minister: I agree wholly with my hon. Friend. What has happened in Lambeth shows that the Social Democrats prefer to keep their Socialist allegiance when there is a choice. I agree also that it is bad news for the Lambeth ratepayers. Under the Conservative-controlled Lambeth council the rates were reduced by a further 10p this year.
    Mr. Foot: Turning to a more serious subject than the SDP, may I ask the right hon. Lady whether she will be good enough to clear up the confusion that she left last week about the proposed pension clawback? There is a serious discrepancy among Ministers about the amount involved: the right hon. Lady says about £375 million and the Chancellor about £180 million. May not the Chancellor be correct, as the sum is only for part of a year? Will the right hon. Lady tell us that she will not proceed with the miserable measure to take back money which pensioners would otherwise have had under the law of the land?
    The Prime Minister: The right hon. Gentleman has confused two figures. The £375 million is the extra amount paid in advance, by virtue of the 11 per cent. payment being over and above the amount that would have been required for inflation. That is the extra amount paid out in advance this year. It is a payment in advance. The £180 million next year is an amount which is in the public expenditure plans and which has not yet been allocated.
    Mr. Foot: Will the right hon. Lady take the opportunity to state that she will not go ahead with the legislation? In the five years of the Labour Government the value of the pension was increased by over 20 per cent.—[Interruption.]—The real value was increased by over 20 per cent. Seeing that the pensioners might conceivably get a 2 per cent. increase, the right hon. Lady proposes to claw back part of it. Will she promise—we give her the chance—not to introduce legislation on the subject?
    The Prime Minister: No. What we also have to consider is—[Horn. MEMBERS: "Answer"] I answered directly. I said "No". If only hon. Members would listen instead of shouting. I also have to consider—[Interruption.] If hon. Members do not wish to listen, I shall not reply.
    Mr. Foot rose—
    Several Hon. Members rose—
    Mr. Speaker: Order. It is inevitable that if people are not allowed to speak, both sides of the House will get agitated. I remind the House once more that everyone is entitled to a reasonable hearing.
    Mr. Foot: It is right that the right hon. Lady should be heard. Everyone in the House and the country should hear her answer. The pensioners especially want to hear it.
    Mr. Robert Atkins: That includes the right hon. Gentleman.
    The Prime Minister: I believe that the pensioners would be the first to understand the burden on the working population. On a pay-as-you-go scheme, every penny paid

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    out this year must be paid in this year, and it is paid in by the working population, who will already be paying a 9 per cent. national insurance contribution on their wages, with the employer paying 10·45 per cent. What they are paying is not sufficient to meet the fund's outgoings this year, which is being borne from the reserves. We cannot go on that way. When we come to consider the amount for the pension next year, which will be decided in the Budget, we must take account of the pensioner and the working population, The right hon. Gentleman will remember that the phraseology that I use is similar to that used during the time of the last Government.
    Sir William Clark: Is my right hon. Friend aware that with the recent 2 per cent. cut in mortgage interest, rates have come down by 5 per cent this year? Does she agree that in many cases it is cheaper for a council tenant to buy rather than to rent, which should be an added incentive for people to buy council houses?
    The Prime Minister: Yes. In many cases the discount permitted to council tenants and the tax relief on mortgage payments will mean that the net mortgage repayment is less than the rent that would otherwise have been paid. I hope that that fact will lead many council tenants to take the opportunity to purchase their houses under the right-to-buy legislation.
    Mr. Dormandasked the Prime Minister if she will state her official engagements for 16 November.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Dormand: In view of the Government's gross interference in the price mechanism for gas and electricity, will the Prime Minister, who clearly acknowledges that there is merit in intervention, abandon other of her cherished principles and throw out the monetarist concept in order to get the country working again?
    The Prime Minister: The hon. Gentleman must be referring to a levy on gas. There is petroleum revenue tax on gas from some fields but not on gas from others. The recent decision was made wholly by the Gas Council, and the decision was made possible as it had kept within its external financing limit. I would have hoped that the hon. Gentleman would welcome the decision.
    Mr. Hordern: Is my right hon. Friend aware that the Labour-controlled council in Crawley has put up signs costing £900 stating that Crawley is a nuclear-free zone? Does she agree that neither Mr. Andropov nor the ratepayers of Crawley are likely to be impressed by the declaration and that it is a total waste of money?
    The Prime Minister: I entirely agree. The sign has no legal significance and serves no purpose. Unfortunately, it puts an extra burden on the ratepayers and shows once again that Labour has no consideration for them.
    Mr. Charles R. Morris: Will the Prime Minister recall the words that she intoned in Downing Street after the last election to the effect that she would seek to give hope where there was despair? Is she aware that in my constituency 125 people are now unemployed for each vacancy on the job register? Against that background, why does she refuse to meet a deputation from the Manchester city council and the North-West Industrial Development Association to discuss the industrial wasteland developing in the area?
    The Prime Minister: Had the Government not tackled the fundamental problems which the previous Government thrust aside, such as overmanning and keeping old industries going with money that should have been directed to new industries, because they were too difficult, there would be precious little hope for industry's future. We now have to make industry still more competitive and we have a long way to go to make up for the lost years. The deputation from Manchester city council should be seen by the Department of the Environment.
    Lord James Douglas-Hamilton: In view of the new Soviet leadership, will my right hon. Friend agree to support the Swedish Government in any new representations that they may make about the fate of Raoul Wallenberg, especially as his plight symbolises the fate of countless other political prisoners?
    The Prime Minister: As my hon. Friend knows, we have considered the matter before. It is extremely serious. Raoul Wallenberg disappeared a long time ago, having helped many people to escape from a dangerous situation, in which their lives may have been lost. We shall certainly join in any representations.
    Mr. Altonasked the Prime Minister if she will list her official engagements for Tuesday 16 November.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Alton: Following the Prime Minister's statement last night that pensioners should not be reduced to penury, will she confirm that had the £10 Christmas bonus kept pace with inflation it should now be about £30? Does she agree with what a Liverpool pensioner said to me recently, that if she does not increase this pitiful sum it could reasonably be said that Scrooge is alive and well and living in Downing Street?
    The Prime Minister: My comments last night referred to the savings of non-index-linked pensioners having been reduced by a policy of inflation over the years. I said that those days were over; the pensioners were abused disgracefully by a policy of inflation over a decade.
    It is easy for the hon. Gentleman to ask for increases in the bonus, but they must be met out of the pockets of the working population. Every time that we put extra burdens on them or on industry we make it more difficult for industry to be competitive. The hon. Gentleman knows of the increases in the national insurance contribution that we have had to make this year. It would not be wise to put an extra burden on the working population.
    Mr. Dykes: As my right hon. Friend has expressly not taken time for the purpose today or yesterday, does she believe that it was wise of President Reagan to sign the book of condolence in Washington for President Brezhnev?
    The Prime Minister: It is for President Reagan to make his own decisions. I sent a message of condolence direct to the Soviet Union, the Minister of State signed the book of condolence and the Foreign Secretary went to the funeral in Moscow.
    Mr. Dalyell: Did the Secretary of State for Defence tell the Prime Minister on 29 March that Ministers had ordered the Fleet Auxiliary vessel "Fort Austin" to the South Atlantic?
    The Prime Minister: The hon. Gentleman will recall that HMS "Endurance" had to be replenished. The Fleet Auxiliary vessel was sent to do that. I should have thought that the hon. Gentleman would be pleased that "Endurance" was to be replenished.
    Mr. Colvinasked the Prime Minister if she will list her official engagements for Tuesday 16 November.
    The Prime Minister: I refer my hon. Friend to the reply that I gave some moments ago.
    Mr. Colvin: Will my right hon. Friend ensure that at the forthcoming GATT conference the Government will
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    uphold the principles of genuine free trading, bearing in mind the activities of countries, such as Spain with cars and Korea with ships, which do not follow the British example?
    The Prime Minister: It is our purpose, and it is in our interests, to uphold the principles of free trade. However, we are in difficulty when other countries do not uphold the same principles. We must make it clear to them that if free trade is to continue, as we wish, they must bring down their barriers or they will be in danger of retaliation from Britain.

Personal Statement
3.31 pm
Mr. Edward Rowlands: Yesterday, in exchanges on Britoil, I used the phrase "false prospectus". That term has a special connotation under the Companies Acts and to issue such a prospectus would be an offence. I had no wish to imply such conduct and I withdraw the phrase.

Secretary of State for the Environment (Statement)
3.32 pm
Mr. John Maxton: On a point of order, Mr. Speaker. Yesterday afternoon the Secretary of State for the Environment made an important statement in the House on, among other matters, improved grants for housing and enterprise zones. The announcement for Scotland was made in a press statement and in a written answer. Is it not a great discourtesy to Scottish Back-Bench Members that the Secretary of State or one of his Ministers did not make a similar statement for Scotland?
Mr. Speaker: That is not my responsibility, and I cannot rule on it.

Secretary of State for the Environment (Statement)

  WELSH AFFAIRS
  Ordered,
  That the matter of the National Health Service in Wales, being a matter relating exclusively to Wales, be referred to the Welsh Grand Committee for their consideration.—[Mr. Cope.]

  NORTHERN IRELAND COMMITTEE
  That the matter of the proposal for a draft Dogs (Northern Ireland) Order 1982, being a matter relating exclusively to Northern Ireland, be referred to the Northern Ireland Committee.—[Mr. Cope.]

  STATUTORY INSTRUMENTS, &c.
  Mr. Speaker: By leave of the House, I shall put together the Questions on the motions relating to Statutory Instruments.
  Ordered,
  That the Immature Spirits (Rum) Order 1982 (S.I., 1982, No. 1575) be referred to a Standing Committee on Statutory Instruments, &c.
  That the Restriction on Agreements (Manufacturers and Importers of Motor Cars) Order 1982 (S.I., 1982, No. 1146) be referred to a Standing Committee on Statutory Instruments, &c.
  That the draft Employment Subsidies Act 1978 (Renewal) (Great Britain) Order 1982 be referred to a Standing Committee on Statutory Instruments, &c.—[Mr. Cope.]

Orders of the Day

  Water Bill
  Order for Second Reading read.
  3.32 pm
  The Minister for Local Government and Environmental Services (Mr. Tom King): I beg to move, That the Bill be now read a Second time.
  I recognise that the Bill is not the most newsworthy of the measures that will come before the House this Session, but it is none the less an important and neecessary measure. It follows the Water Act 1973, which is well known to you, Mr. Speaker. When my right hon. and learned Friend the Member for Hexham (Mr. Rippon) introduced the Bill in 1972, he referred to it as "commendably short" with its 40 clauses and nine schedules. I hope that the House will agree that its successor 10 years later, with 10 clauses and five schedules, is minute in comparison. The only comment that others might make is that the 40 clauses and nine schedules cost 73p, whereas our 10 clauses and five schedules cost £2·95. I make that point before another hon. Member makes it for me; it teaches the lesson of what has happened during the past 10 years and underlines forcefully the importance of other Government policies.
  Hon. Members who prepare for such a debate must consult earlier discussions on the matter. I know that hon. Members will have been interested to read the exchanges during the passage of the 1973 Act when you, Mr. Speaker, played a notable part as Shadow Secretary of State for Wales. There must have been a sense on the Conservative Party of your impending elevation. Lord Cledwyn, who was trying to adduce support for the Bill, intervened during the speech of my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths), just after you had spoken, to ask:
  "What about the Archdruid of Wales?"
  My hon. Friend replied:
  "I think that the Archdruid of Wales spoke just now."—[Official Report, 5 February 1973; Vol. 850, c. 152.]
  That was a recognition of the high rank to which you would subsequently rise, Mr. Speaker.
  It is common for Governments to present a Bill to the House as though it is the most remarkable piece of legislation that could have been brought forward and it is often the role of Opposition spokesmen to imply that it is the greatest disaster to hit the nation in peacetime. I am fairly confident that the right hon. Member for Birmingham, Small Heath (Mr. Howell) will not disappoint us on this occasion.
  Although this is not the most remarkable legislation, the Government attach considerable importance to it. Its overriding aim is to restructure our water management. I should make it clear that it refers only to England and Wales. The Bill proposes a new constitution for water authorities and the dissolution of the National Water Council and the Water Space Amenity Commission. The Bill contains further items relating to water and, with the possible exception of the repeal of the Water Charges Equalisation Act 1977, I hope that the other matters are non-controversial. Before the right hon. Member for Small Health laughs in amazement, I should say that they include

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  the borrowing limit, overseas powers and sewerage agencies. I hope that the right hon. Gentleman does not believe those to be controversial matters.
  It may assist the House if I rehearse the background to the Bill and the history of the organisation of water services in England and Wales. The background against which my right hon. and learned Friend the Member for Hexham introduced the 1972 Bill, assisted ably by my hon. Friend the Member for Bury St. Edmunds, the then Under-Secretary of State, was one of 198 statutory water undertakers, 29 river authorities and 1,300 sewage disposal and sewerage authorities. The Water Act 1973 introduced instead nine water authorities in England and one in Wales which, together with the 29 statutory water companies and the local authorities responsible for sewage agencies, combined to provide the continuing water services.
  However, the water authorities were given responsibility for the overall water cycle based on river basins. That moved the structure away from the predominant local government involvement that had existed previously in the 1,300 sewerage and sewage disposal authorities. A conscious compromise was reached when setting up the water authorities. There were some discussions about the membership of the authorities, but the outcome was that, although there had been a move away from the essential local government content of the previous arrangement, local authority members were given a majority on each water authority.
  Anybody who considers the past 10 years will recognise that the water authorities have been through a difficult time. They came into being at the time of a high and rising level of inflation and a fairly sharp increase in water demand. In addition, the introduction of direct billing had a marked effect on the public consciousness about water costs. Taken together, that resulted in considerable criticism and opprobrium being heaped on the water authorities which were associated with other trends which were not their direct responsibility.
  One must be honest and say that mistakes were made. There were problems in the structure of the new authorities. They had difficulty establishing a new corporate identity. Direct billing increased their difficulties and there was a tendency in some areas to establish substantial organisations beyond the level that could be justified.
  At the same time one must recognise that considerable progress was made. If one considers the capital investment levels immediately before the creation of the water authorities and the National Water Council, it will be recognised that there has been a considerable improvement in resource planning, the introduction of common standards, tighter control of pollution, improvement in training and a welcome development in the export effort and potential of the water companies and authorities, to which I shall refer.
  It is significant that, despite the criticisms made in the Monopolies and Mergers Commission reports on the Severn-Trent water authority and, more recently, on the Anglian and North-West water authorities, the MMC did not feel that there was any case for changing the basic structure that has been established.
  There is anxiety that the system is not working. I have expressed that anxiety on other occasions in the House and it has been expressed more widely by many right hon. and hon. Members. The problem at the water authority level is
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  the confusion that exists to some extent between management, consumer representation and local authority representatives on the individual water authorities. Are the 62 members of the Thames water authority supposed to run that authority or to provide representation for the community and involvement with consumer representation? That question has never been adequately resolved.
  A water authority is a substantial undertaking by any standards. One must recall the efforts that have been made by many well-intentioned and conscientious people to seek to discharge their responsibilities. I have been asked to check how many people have served in a position of responsibility on the board of the Thames water authority since it was set up 10 years ago. Board membership numbers 131. That number underlines the problems that exist.
  It may be said that they are the problems of democracy. One might have more sympathy with that if the people felt that they had representatives on the water authority, that they knew who they were and that there was a real sense of accountability on behalf of the members of the water authority to the general public. The right hon. Member for Small Heath will not wish to concede it, but, sadly, there is evidence that the genuine attempt to balance those two considerations has, in certain senses, faced up to the worst of both worlds. Few people knew who represented them.
  It was decided that there was a need for change, so a consultation paper was issued and representations on it were invited. The Bill contains the outcome of our deliberations—the proposal to have a small executive authority for each region, combined with consultative committees.
  It is proposed that there will be a part-time chairman on each executive authority and full-time executive members. There has been criticism that, although the chief officers have an important role, they are not members of the authority under the previous structure and that it is more difficult for them to be as accountable as the authority members. They often seemed to have less say in decision making.
  It is proposed that there should be executive members on the executive authority and that it should include local authority members. I emphasise that they will be chosen for their ability to contribute to the management of the substantial undertakings. They will also include appointments by my right hon. Friend the Minister of Agriculture, Fisheries and Food to cover the important requirements of both land drainage and fisheries.
  We seek to cover the other side of the problem—proper representation for consumers—by means of consultative committees. Such representation has been lacking under the present arrangements. Before Committee stage, we intend to publish our draft guidelines for the form of the consultative committee. My hon. Friend the Under-Secretary of State will, if he catches your eye, Mr. Speaker, seek to say more about that. Members of the Committee will wish to look carefully at those guidelines.
  Mr. Dan Jones: I must leave shortly, but I do not wish to imply disrespect to the Minister. May I ask a brief but important question? Will the inquiry be related to the supply of water, the purity of water, or both?
  Mr. King: Our intention is that the remit of the consultative committees should be as wide as possible. They should cover the performance of the authority, the

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  quality of the water, the reliability and speed of service and repairs, charges and individual customer complaints. It will try to provide the fullest opportunity for people to raise any matter. The hon. Member for Burnley (Mr. Jones) raised the important point about water quality and I know the problems that exist in parts of Britain.
  The hon. Member for Edmonton (Mr. Graham) has mentioned charges. There is some suspicion that the committees are intended to be a cover-up or somehow to prevent matters from being raised. If they are to be effective, they must be able to cover the widest possible area.
  It is a difficult problem. I know that the right hon. Member for Small Heath will pour scorn on the idea of consultative committees. However, I hope that the House and those hon. Members who wish to debate the matter seriously will recognise that we are trying conscientiously to deal with a difficult problem. Management is not the same as consumer representation. They are different responsibilities. It is difficult to see how to get the balance right. We have tried to remedy what the House will recognise is not a satisfactory position, in order to strike a better balance, not only in the interests of better management of resources and better performance by authorities, but in the interests of better accountability.
  Mr. Donald Anderson: As the Minister knows, Wales has gone through this exercise and guidelines have been established. Are those guidelines likely to be altered, or will the guidelines proposed by the Department exactly follow those in force in Wales?
  Mr. King: All will be revealed shortly—indeed, this week, when publication takes place. However, the guidelines will be basically on the same lines. I shall ask my hon. Friend the Under-Secretary of State to give a more detailed reply on that point.
  Mr. Dennis Skinner: Why is there no mention of the fact that people will get on the consultative committee and the executive boards through that new Tory system of the postal ballot?
  Mr. King: I am sure that the hon. Gentleman has read the Bill and noted the method by which appointments will be made by the Secretary of State or, in the case of agricultural appointments, by the Minister of Agriculture, Fisheries and Food.
  Another major proposal in the Bill is to abolish the National Water Council and the Water Space Amenity Commission. I recognise the valuable role that the NWC has played. As I said in my statement, at the time of the creation of the new water authorities the NWC played a crucial role in getting the new structure under way under the leadership of Lord Nugent and subsequently under Sir Robert Marshall. However, the main task has now been achieved.
  I imagine that the right hon. Member for Small Heath will attack me for proposing to abolish the NWC. However, if we had listened to his words on the Second Reading of the Water Bill 1973 it would not have been set up. He said:
  "I come now to the National Water Council which is mentioned in Clause 4. I cannot believe … that any more anaemic national body has ever been set up."
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  The right hon. Gentleman then went through the NWC's various responsibilities and concluded with the following punishing words:
  "If that adds up to a job of work for about 20-odd people of considerable eminence I must be a Dutchman and so must a great many other people."—[Official Report, 5 February 1973; Vol. 850, c. 56.]
  As you know, Mr. Speaker, I am a stickler for honesty and truth and I am sorry to say that there was then a sedentary interruption—which I know that you would deplore—from my right hon. Friend the Member for Chingford (Mr. Tebbit), who is now Secretary of State for Employment. It was most unlike him and most uncharacteristic, but he replied that the reference to being a Dutchman was a "good European sentiment". Whatever sentiment it was, it was hardly one of support for the NWC's continuation. The right hon. Member for Small Heath will now tell us that the NWC was a vital link in the chain. However, he may not take that line; he may suggest something rather different. In one respect, he had a point. A continuing role for the NWC cannot, we feel be justified. Although the right hon. Gentleman may not have thought so, we felt that it has an important role to play. However, there is now some justification in saying that it should not be continued.
  The right hon. Member for Small Heath made a slightly extravagant comment when I made a statement to the House on 7 July 1982. He said:
  "Why do they believe that it is better to replace that democracy by a system of corporate centralism, the like of which we can expect to find only behind the Iron Curtain or in other totalitarian States?"—[Official Report, 7 July 1982, Vol. 27, c. 294.]
  To a casual observer it may not have been immediately apparent that that was a reference to a modest change in the water industry's structure. However, it was obviously the enemy of corporate centralism speaking. When asked what the Labour Party would do, the right hon. Member for Small Heath stated his policy and said:
  "We believe in the public ownership of all the water resources of the country … We should place those water resources under the authority and executive control of a strong national water board".—[0fficial Report, 5 February 1973, Vol. 850 c. 59.]
  That is the opponent of corporate centralism speaking.
  The embarrassing point is that, although hon. Members may occasionally take facts or statements out of context, the right hon. Gentleman will not deny that his policy is to have a centralised national water authority to which all the regional water authorities will be subservient. I think that he will recognise that that is not a distortion of his policy, although he will obviously expand on it in a moment.
  Mr. Eric Ogden: The Minister is introducing a Bill, yet in almost 30 minutes he has referred to only one clause. Could we hear a little less of his opinion about the policy stated by the right hon. Member for Birmingham, Small Heath (Mr. Howell) and a little more about the Bill's other clauses?
  Mr. King: I am sorry that the hon. Gentleman should intervene just as I was about to expand on the Bill. Our judgment about the NWC is that the water authorities can now stand on their own and are well established. As the right hon. Gentleman knows, the practice has not changed since he was at the Department. Ministers deal directly with the individual water authorities. The Department determines the external financing limits—it used to be the capital allocations—of the individual water authorities. We no longer need to have 450 people involved in the

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  NWC with an administrative cost of £3·8 million direct and £7·7 million for the combined cost of the NWC and WSAC for those functions to be discharged. As the House knows, we have made suggestions about how the remaining functions of the NWC and the WSAC could be managed.
  Mr. Nigel Spearing: As the WSAC spends the enormous sum of £75,000 per year, how can its destruction be justified? Its demands on the NWC and/or the Department of the Environment are modest compared with its contribution.
  Mr. King: My hon. Friend the Under-Secretary will speak on the sports aspect and the WSAC. However, our judgment on the WSAC is similar to that on the NWC. It discharged an important role in the initial stages. Under the Water Act 1973, every water authority is under a duty to have regard to recreation and sport. We are considering that aspect and there is close contact between the regional sports councils and the regional water authorities. The hon. Member for Newham, South (Mr. Spearing) may be concerned that we are in some way working against sport and recreation, but in that case he did not listen to the statement made yesterday, when the Secretary of State for the Environment spoke about enhanced funding. Some of that money will undoubtedly go into that area.
  In response to the request by the hon. Member for Liverpool, West Derby (Mr. Ogden) I shall deal with the Bill's contents. Clause 1 deals with the constitution and procedure of the water authorities.
  Mr. Denis Howell: It is extremely flattering to know that in 30 minutes the Minister's only stated justification for abolishing the NWC is my past speeches. What other justification is there for abolishing the NWC, which is now the most important body in the country? [Interruption.] It is extraordinarily interesting that in order to justify this nonsense, the Minister has had to scour nine years of Hansard to find old jokes that he can trot out at the Dispatch Box. He failed to tell the House that nine years ago we were talking about the proposal of the then Tory Government to nationalise our municipal water undertakings without compensation or representation. Will the Minister justify the abolition of the NWC on its merits and not by making ridiculous references?
  Mr. King: That was a strange intervention. I was not telling old jokes. I was quoting from what I thought the right hon. Gentleman took to be a serious speech. If his serious speeches of 10 years ago, when the House last discussed this matter, have now become bad old jokes, the solution does not lie in my hands.
  The case that I thought I had explained to the right hon. Gentleman—I am sorry if it was too abbreviated for him—for the abolition of the National Water Council was that, although it did a valuable job in the early days of the creation of the water authorities when it played a valuable role in the setting of standards and the establishment of common training practices and a number of other things to which I have referred, we now feel that that role is no longer needed. Water authorities are sufficiently established. Significant costs are involved in the operation of the NWC. We believe that economies can be made.
  The right hon. Gentleman has lived with the water industry for a long time. When the Labour Government
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  were in office, manpower in water authorities rose by 15 per cent. The right hon. Gentleman presided blithely over that. He published a White Paper and did nothing else about it. I shall not take lectures from him on what is likely to produce efficiency or cost effectiveness when, since we came to office, we have encouraged water authorities not only to reduce their charges by nearly £100 million in one year but to reduce their manning levels by nearly 6 per cent. and by a further 4 per cent. in the next two years, which will be considerable progress towards undoing the damage done when the Labour Government were in office.
  Mr. Eldon Griffiths: When the National Water Council ceases to exist, where will the oversight of the pay negotiations for the industry reside? I hope that my right hon. Friend will not say that that will be a matter between the Government and the unions. A body should be set between the two.
  Mr. King: That matter is under discussion at the moment. In our consultation paper we set out the options. The employers and the unions will have to consider that matter. I do not think that there will be legislation on it.
  I dealt in my preamble with the justification for clause 1. Clause 2, which I hope is not controversial, involves borrowing levels which are now £4,381 million and is important with regard to capital investment for the industry. We expect that that limit will run out at the end of the financial year of 1983. The proposal is to raise the borrowing limit from £5,000 million to £6,000 million and by order to £7,500 million.
  Clause 3 deals with the dissolution of the NWC and the WSAC, about which I have been talking. Clause 4 is consequential in relation to recovery of expenses by the Secretary of State from the water authorities, if that is involved.
  I attach particular importance to clause 5, which I hope the House will support. I have taken a part in trying to stimulate the potential for exports of water technology equipment and the appropriate British skills to overseas markets. That is an area where the public and the private sectors can work well together. There were doubts about whether the public sector had the necessary legal powers to participate. Clause 5 seeks to clarify that.
  Clause 6 deals with arrangements for carrying out sewerage functions, particularly determinations under section 15 of the 1973 Act and the relationship between the water authorities and local authorities, which are their agents for sewerage work. The Monopolies and Mergers Commission has recently, at our request, produced a report on the sewerage functions of the Anglian water authority and the North-West water authority. A number of recommendations have been made, on which we have recently issued a consultation paper. There is one specific proposal of a modest nature, which is nonetheless important, about the Secretary of State's determination, which we believe it is sensible to incorporate in the Bill. Clause 7 concerns a matter that I have already mentioned.
  Mr. D. N. Campbell-Savours: What are the Minister's views on the relationship between authorities and the agency district authorities? Does he believe that one form of operation is more efficient than the other? Will he guide the House on that?
  Mr. King: The Monopolies and Mergers Commission report does not propose major changes. There are

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  sometimes problems when some authorities have difficulties, because of their size, in working to the standards that larger authorities operate. Sometimes there is tension between the water authorities and their agents about whether the work is being done to standard and is cost-effective. We do not expect a major upheaval in that area but there may be sense in making some minor changes.
  Clause 7 deals with consumer arrangements and the consumer committees. I have explained our proposals to the House and about the publication of the draft guidelines. If he catches your eye, Mr. Deputy Speaker, my hon. Friend the Under-Secretary will say more about that.
  Clause 8 deals with the repeal of the Water Charges Equalisation Act. As I have said, I recognise that that might be one of the more controversial aspects of the Bill. It is recognised and understood that the Act has not succeeded in achieving its intentions. At certain times equalisation under the mechanism of the Act has had the opposite effect. Some time ago we gave notice that we proposed to repeal it. Clause 8 contains that legislative proposal.
  Mr. D. E. Thomas: As the Minister is rejecting equalisation in the Bill, when are his right hon. Friends the Secretary of State for the Environment and the Secretary of State for Wales due to adjudicate on the application for bulk transfer payment made by the Welsh water authority to the Severn-Trent and North-West water authorities? We have been waiting for the response since October last year.
  Mr. King: I hope that the response will come shortly. I understand why the hon. Gentleman has raised that point, which is relevant. The matter is being considered by Ministers at present. I hope that it will be resolved soon.
  The remainder of the Bill—clauses 9, 10 and 11 and the schedules—are consequential on the provisions. I do not propose to describe them in detail.
  Mr. Denis Howell: As far as I can understand what the Minister has said, he has not yet uttered one word of justification for the decision to abolish the Water Space Amenity Commission and the National Water Council. So that we can have a sensible debate on the matter, will he let us know the Government's view?
  Mr. King: I am sorry. After the right hon. Gentleman's previous intervention, I sought to explain our position. If I have not said enough to satisfy the right hon. Gentleman, he must explain his criticisms and I will seek to reply. My hon. Friend the Under-Secretary will listen carefully to what he says. I cannot add to what I have already said. I shall not rehearse my arguments. The NWC had an important function in setting up standards and establishing a role. I explained why we felt that it was the right policy to discontinue it.
  Mr. Tom Clarke: Is the Minister proposing to pay full-time executive members? If so, what payments does he have in mind? I ask this question because public money is involved.
  Mr. King: The full-time executive members are already paid. There are chief executives and various directors of finance or operations in the water authorities.
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  There remains the question whether any of these officers, and if so which, are to be appointed to the authority. Hitherto, none of them has been a member of it.
  Our concern throughout has been to achieve the twin aims of providing a good service with a cost-effective use of resources and to back that up with effective representation for the consumer that is better than that which presently exists. We have taken a number of steps to try to improve the efficiency and accountability of the water authorities and we believe that the Bill takes that process an important step further. It is in that spirit that I commend it to the House.
  4.11 pm
  Mr. Denis Howell: The Minister heralded my speech by describing the contribution that he expected me to make. I shall not disappoint him. I have no hesitation in saying that it is the view of all local authorities, trade unions, much of the water industry and all sporting and recreational bodies that this is one of the most dangerous and damaging Bills to be brought before the House for a long time. My right hon. Friends and I will analyse all these claims in some detail.
  We have heard the thinnest ministerial justification for a major reorganisation of one of Britain's principal industries that most of us with long service in the House have ever heard. Yesterday an application was made under Standing Order No. 9 that was based on the damaging circumstances in the water industry as a result of the Minister's interventions. The right hon. Gentleman has not thought it right to utter one word about the collapse of the wage negotiations and the disaster that that held for the British people as a result of the Government's activities. He has offered no explanation or justification since yesterday and has treated the industry, as well as the House, with great contempt.
  It was the local authorities which built up the great water undertakings on which the water industry is still based. In 1973 they were taken over without proper representation. They bitterly resented that, as we all did. A Labour Government came to office within the year and it fell to me, as the appropriate Minister, to decide whether we should try to unscramble the egg of local government reorganisation—I accept that the right hon. Gentleman and his right hon. and hon. Friends were not Department of Environment Ministers at the time of reorganisation—
  The Secretary of State for the Environment (Mr. Michael Heseltine): I was.
  Mr. Howell: Apparently the Secretary of State was an environment Minister at the time. I am glad that he is accepting the lion's share of the blame for the nonsense that local government reorganisation turned out to be.
  The then Labour Government decided, rightly or wrongly, that although they disapproved of the reorganisation they would do the best that they could with it, work with it and develop it, as it had started on almost the day that they took office. They decided not to destroy the reorganisation that the previous Conservative Government had introduced. I think that most of those in the water industry were glad that we adopted that attitude. We were critical of the reorganisation, but we tried to implement that which Parliament had introduced.

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  I say in passing that one of the actions that brings the House into more contempt than almost anything else is the determination of a Government automatically to destroy what the previous Government did in any area of activity.
  Mr. Ogden: I could not have said it better myself.
  Mr. Howell: I am glad to hear that. With that in mind, I am astonished that the Government now say that all that their predecessors did has proved to be unhelpful.
  Mr. Tony Durant rose—
  Mr. Howell: No, I shall not give way so soon in my speech.
  The Minister took issue with my phrase "corporate centralism", but he is now proposing that every post in any water authority in Britain shall be appointed by the Secretary of State. He is adopting an almost totalitarian approach to our affairs. If the National Water Council is abolished and nothing is put in its place, all its powers will go to the Department. As we all know, power corrupts. It is proposed entirely to corrupt local government accountability as we know it. That is unsatisfactory for most people.
  There are other fundamental objections to the Bill. It is a deceitful measure. As the Minister has suggested, the real reason for its introduction is to meet the clamour which Ministers and Tory Members have engineered over the past five to seven years to reduce water charges. For the six years between 1974 and 1980 there were numerous questions from the then Conservative Opposition that had the common theme of reducing water bills. The clamour culminated in a great debate. I could quote the speech that the Minister made at the Tory Party conference when he tried to suggest to his hon. Friends and to the country that he would make changes that would result in reductions in water bills. I could quote it but I shall spare the House by refraining from so doing.
  The Bill is a piece of camouflage. It will not reduce water charges by one penny and the right hon. Gentleman knows it. The Bill is irrelevant to the political aims and ambitions of the Conservative Party.
  Mr. Spearing: Did my right hon. Friend notice that the Minister carefully omitted from his rather one-sided account of the previous reorganisation that when local authorities relinquished their sewerage functions to the new regional authorities they gave up about £1,000 million of Exchequer grant for water services, which subsequently had to be found by water rate payers? This has been partly responsible for the greatly increased charges which the Minister knows about.
  Mr. Howell: My hon. Friend is right. I shall be referring to some of the financial issues and they will certainly be aired in Committee. This is a dangerous Bill—
  Mr. Heseltine: Here we go again.
  Mr. Howell: It is central to a most important area of life and I am distressed that Ministers show so much amusement about the prospect of a national water strike. That amusement extends to the Government Back Benches. I shall prove that the Bill will bring the danger of a national water strike—the first one in our history—to the forefront of our lives.
  Mr. Geoffrey Dickens: The right hon. Gentleman is inciting it.
  Mr. Howell: No, I am about to prove that the Government are inciting it. I am trying to prevent such a catastrophe.
  The Bill is designed to destroy the basis of collective bargaining in the water industry and to replace it with 10 separate systems. Regional water authorities are already saying that they intend to go it alone in industrial relations and that they do not want national wage negotiations. How do the Government intend to deal with that? To his credit, I think that the hon. Member for Bury St. Edmunds (Mr. Griffiths) had that problem in mind when he intervened. If I am wrong, the Minister may tell me so when he winds up, but these matters should have been clarified at the beginning of the debate. The proposal is to destroy collective bargaining in a major industry.
  Another destructive feature of the Bill is the abolition of the Water Space Amenity Commission. The concept that in this respect the nation's water space should be managed as part of the national heritage will therefore be destroyed as the Bill puts nothing in the place of the Commission to ensure that that policy is continued.
  The first of my four principal objections to the Bill concerns the dangers inherent in it. It will create 10 separate, independent water authorities. That in itself is dangerous nonsense.
  Mr. Stephen Dorrell: That is what we have now.
  Mr. Howell: We have no such thing.
  The various authorities cannot decide their own wage settlements, investment programmes, training schemes or price levels. None of those matters are independently determined at present, nor will they be if the Bill becomes law. Those matters are decided nationally.
  The intention is clear. If one gets rid of the National Water Council, thus getting rid of national salary and wage negotiations and any input from the council to the investment programme and other matters, and then puts nothing in its place, either these matters will be decided independently by the 10 regions, which we all know will not happen, or they will be decided by the Department. In other words, the bureaucrats at the Department will rule. That is the intention.
  Mr. Durant: Does the right hon. Gentleman seek to mislead the House by suggesting that the National Water Council determines local water rates?
  Mr. Howell: I said no such thing. I said that it settled wage rates. The National Water Council has an input to the level of charges, but the Government themselves accept responsibility for the level of charges that is decided. That is why the Prime Minister was able to say this week that gas and electricity charges will be pegged for 12 months. The Minister made no such claim about water charges. Perhaps he can tell us whether the same prospect is involved in this instance. Certainly I hope that my right hon. Friend the Member for Rhondda (Mr. Jones) will pursue this point, as it is important.
  There is nothing in the Bill and there was nothing in the Minister's speech about future arrangements in the industry for wages, superannuation, working conditions and training. No statutory responsibility is laid down for any of those matters. In other words, the Minister hopes to create a vacuum. Indeed, he has already seriously destabilised the situation in the industry. As I have said—I

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  challenge him to deny this—authorities such as Thames, Anglia and probably Southern already wish to carry out their own wage negotiations.
  Mr. King: What is wrong with that?
  Mr. Howell: The Government do not even allow that nationally. To have 10 separate systems would be the greatest incentive ever for leapfrogging in wage negotiations. It would be nonsense. Clearly the Government do not know what they are doing. They would be allowing militant areas to run their own wage negotiations, leaving the rest behind. That would create most damaging industrial relations in the most vital consumer industry in the country. Ministers cannot see that, they have not thought about it and they do not understand the problem. It is time that they got down to considering the implications of their actions.
  There has been no consultation about this. The consultation document produced by the Minister in January was about the future of the regional water undertakings, but until he announced his decision in July no one had been consulted about the proposal to abolish the National Water Council or the Water Space Amenity Commission. That is no way to treat the trade unions, the industry, the National Water Council or anyone else. If a fundamental change is proposed in the structure of a national industry, the people involved should at least have been consulted. Most important, Parliament should have been consulted, but no attempt was made in January to consult us about this decision which had undoubtedly already been taken, judging from what the Government have now said.
  Mr. King: What does the right hon. Gentleman think we are doing now? How can he suggest that the decision has already been taken? The decision is now for Parliament to take.
  Mr. Howell: If the right hon. Gentleman is expected to join the Cabinet at any moment, one can only assume that the intellectual level there is falling every day. Does he really believe that announcing a decision and producing a Bill to make changes as drastic and radical as these constitutes consultation? Of course it does not.
  Wage negotiations—yesterday's business, as the Minister says—is of vital concern to us all. Despite the Prime Minister's claim at Question Time last week that this was not a matter for the Government, we now have clear evidence of direct intervention by Ministers on two separate occasions. In a critical area at a most delicate time—the trade unions were already concerned about the Government's failure to consult or even to observe the courtesy of discussing their proposals with the people involved—the national negotiating committee decided on an offer to put to the employees this year. The committee believed that it was reasonable and could be negotiated, but the Government vetoed the offer before it was even made.
  Last week, when negotiations were about to begin with the trade unions in the water industry, the Minister was frantically active during the morning reminding people that they could offer no more than 4 per cent. The 4 per cent. offer was accordingly made, but not one of the employers' negotiators believed in that offer as a basis for
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  negotiations. If the Minister wishes to challenge that, I shall gladly give way. Let him try to say that he did not intervene last Thursday to stop the first offer. Let it be recorded in Hansard that the Minister has no intention of taking up that offer.
  Mr. Durant rose—
  Mr. Howell: No, the hon. Gentleman is not the Minister yet. He may be next week, and we would welcome that.
  Mr. Durant rose—
  Mr. Howell: I shall not give way to the hon. Gentleman until he has the accolade.
  The Bill is the most disgraceful and blatant intervention in the collective bargaining system that any of us can remember. What does it mean? The Minister is amused. Because of his attitude, a ballot is being held for a national strike that will involve both the supply of water and the disposal of sewage. Raised against him will be not only the manual workers, but the staff, who feel equally strongly about his cavalier treatment.
  Imagine the consequences of a national strike that affects the purity and wholesomeness of our water supplies and our ability to clean up sewage. The resultant harm and danger to health will be incalculable. Even if the Secretary of State called on the Army of the Rhine, there would not be enough people to run the water industry. I am saying that advisedly. The Minister and I have faced these dangers before. We know of the dangers of a strike in one part of the water system. The dangers of a strike in the whole system are horrific. They cannot be countenanced, and the Minister knows that. An accommodation must be reached.
  The way in which the Minister dealt with the unions last week and his promotion of such a Bill make his job almost impossible. It is a serious matter. I am glad to see that the delight and happiness expressed on Ministers faces has now disappeared. They do not understand what they have unleashed by their promotion of the Bill and their interference in the wages system.
  The Bill is dangerous for many other reasons, with which we can deal in greater detail in Committee—not least the question of water charges. I was asked earlier whether I was saying that there had to be an intervention in water charges. In certain circumstances, there must be indirect intervention because water used in some parts of the country arises in other parts. If there is to be complete freedom for the regions—which the Government want—the exporting water authorities can charge what they wish. No Government could allow that. Therefore, there will be no freedom. That is why my right hon. Friend the Member for Rhondda will return to the question of water equalisation. The authorities must be treated fairly and honestly. They must receive a fair deal at a reasonable price, especially in Wales. That point is not referred to in the Bill.
  Other matters of importance include national strategic planning and capital investment programmes. Professor Alan Williams, a most distinguished economist, has told hon. Members of his views. In an article in the Water Bulletin he said:
  "The key feature of such discussions at the NWC has been that we have had an independent analytical input from the NWC's staff, which, while rehearsing the views of the water authorities and of the DoE (and Treasury, where appropriate),

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  has presented the issues in an industry-wide context…A good example is our recent discussions concerning the interaction of the various control mechanisms which the Minister now exerts over the water authorities. By setting 'performance aims' he controls the level of total operating costs, and by adding to this the financial target to be met on real capital assets, he effectively sets the level of charges."
  We know that he does that. He will not be accountable. He will not discuss matters with any national water authority. Professor Williams concludes:
  "So the Minister has provided himself with a pretty comprehensive and versatile set of strings, which would not be out of place in a marionette show!"
  That is the role that the Government have for the Minister—a puppet master in the water industry. Professor Williams's argument must be met by the Government.
  Mr. Charles Morrison: I do not follow the logic of the right hon. Gentleman's argument. He has criticised a course of action that he alleges the Secretary of State can already take here and now, but then says that it would be terrible if he continued with the same course of action under a reorganised water system.
  Mr. Howell: I said nothing of the sort. I have complained about the Government's interference in the water industry. There must be national water negotiations. There cannot be 10 sets of negotiations. There must be some accountability. I do not want to go further down that road, although I could do so.
  The one part of the Secretary of State's speech with which I agreed is that one reason for the current problems is the introduction of direct billing. Even during the six years that the Labour Government were attacked for their policies, but did their best to defend the water industry, Conservative Members did not explain to their electorates that direct billing included both the supply of water and the disposal of sewage. That should have been met with compensating reductions from local authorities that no longer had to provide for sewage and drainage. No doubt Conservative Members did not make that point because most local authorities were under Conservative control at that time. I felt that I had to draw attention to that deception. Nor did Conservative Members investigate the cost of bureaucracy, although the Minister tried to do so today.
  The amount saved by disposing of the National Water Council will be infinitesimal. I am glad to see the Minister shaking his head in dissent. Perhaps I can carry him through an examination of the figures. The National Water Council costs £8 million a year. As the total water bill is £2,000 million, the Minister can work out on his calculator that the council costs 0·4 per cent. of the total bill or 30p a year per household. We shall save each consumer 30p a year if we abolish all the work done by the National Water Council.
  However, there is no prospect of abolishing all the work of the council. The Minister tried to tell us in July how it would work. He resorted to the plaintive statement that we would save on train fares to London. That was the great justification for abolishing the National Water Council. He did not tell us in July, nor today—all part of the missing scenario—that he will replace the National Water Council with the Association of Water Authorities. Inevitably, that will become the National Water Council in a year or two under another guise. The national meetings will have to continue between the representatives of the 10 regional authorities. Finance officers, scientific people, those
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  charged with health standards, those charged with co-ordination of operations, those responsible for planning and strategic planning, those responsible for emergency services, those responsible for training and co-ordination and, not least, all chief officers, must be consulted. That represents nine sets of meetings. The right hon. Gentleman knows that no savings will he made.
  Mr. Dickens rose—
  Mr. Howell: If the hon. Gentleman will tell us how to make a saving, we shall listen to him.
  Mr. Dickens: I shall be delighted to do so. In the figures that he has given, the right hon. Member for Birmingham, Small Heath (Mr. Howell) has failed to mention the immense amount of money that is spent or wasted on maladministration. A better structure would save millions of pounds. The right hon. Gentleman has not referred to that.
  Mr. Howell: The Minister started by paying a tribute to the National Water Council. It is not part of his case to say that there has been maladministration there. I know the hon. Gentleman is referring to water authorities, but I am talking about the National Water Council.
  The Minister says that he can make savings. That is nonsense. If the hon. Member for Huddersfield, West (Mr. Dickens) is referring to maladministration in the regions, I must draw his attention to what the Minister said. He sent the Monopolies Commission to examine two of the largest water authorities and it found no evidence of maladministration, especially in Severn-Trent. It made some constructive suggestions—I do not object to that—but it found no evidence of maladministration. As I was saying, the National Water Council and the Water Space Amenity Commission were not mentioned once in the consultation document.
  The Secretary of State has not bothered to outline his proposal to abolish the Water Space Amenity Commission. The House and the country have been deceived. Perhaps he would like to explain now why he consulted no one about that decision. He has been negotiating for two years to abolish WSAC without referring to the House, to WSAC formally or to sport and recreation amenity interests. He laughs because he knows that it is true. He has been conducting clandestine negotiations behind the backs of everyone concerned. No doubt he did that because he did not want any representations to be made.
  I shall now deal with the Government's decision to eliminate from our water industry any concept of local government democracy. They have decided to set up purely functional managerial teams to operate the water industry. Every local authority association in the country, Tory and Labour alike, is against that move. Ministers cannot give one example of a local authority supporting the proposal that every elected representative in the country should be removed from every regional water authority.
  I shall give way to the Minister for Local Government and Environmental Services if he has something to say that will interest us—it will be the first time today. I see that he does not want to speak. He obviously has nothing interesting to say. Ministers hold local government and local government democracy in such contempt that they can sweep it away with no consideration for the people in

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  local government. What does the Minister intend to replace local government representatives with? I acknowledge that size has been a problem. I have said before—the Minister has said it and I agree with him—that one of the problems with the water industry is that it was set up on the river basin system. That means that it was founded on a geographical concept. No unit of local government is founded on the same basis, partly because we have no regional government. Perhaps we could turn our attention to that matter at some stage.
  If the Secretary of State has a problem with the size of an authority, the Opposition have much sympathy, and will help to rectify the matter. Each of the authorities should be a more workmanlike-sized executive authority, provided that it is accountable to the water authority. That is what should have happened. One does not deal with a problem of the size of an undertaking not matching the size of the local authority by eliminating democracy. Ministers should not have proceeded in that way.
  The Opposition have the greatest misgivings about appointments that the Secretary of State is likely to make. I say that having examined the appointments that he has made since coming into office. He has reappointed one Labour man but the others have never voted Labour or Liberal in their life. The hand of the Tory Central Office looms large in the Minister's appointments.
  Mr. Ted Graham: It is a back-hander.
  Mr. Howell: When the Labour Party came to power in 1974 and inherited the water industry, every chairman of regional water authorities was a Conservative supporter. We are returning to that circumstance. In 1974, I tried to work with those chairmen. I gradually changed matters so that some Conservative chairmen remained but Labour and Liberal supporters were also appointed to achieve a balance. We should not have to do that again. We should not reach the point where supporters of the party in Government—any party—govern industries. That is not acceptable.
  I give firm notice that if the Bill becomes law before the next general election and appointments are exclusively in favour of Conservative supporters, the Opposition will not accept them. Each of those appointments will be reconsidered and resignations will be required if necessary.
  Mr. King: That is disgraceful.
  Mr. Howell: It is not a disgrace. If the Government do not want that to happen they should consult the House about appointments and demonstrate that they are trying to keep a balance in what amounts to the 10 separate nationalised industries that they are establishing. The Opposition will not tolerate a return to the earlier position.
  Mr. King: I understand the right hon. Gentleman's point but his charge is monstrous. Of the reappointments that have been considered, the only one that has been made was of what, I imagine, is a Labour supporter. I should like the right hon. Gentleman to confirm that he shares our view that the industries are important and that the quality and ability of the person concerned is the first consideration.
  Mr. Howell: Public confidence is also important. I specifically said that the one reappointment that the
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  Secretary of State made was the Labour chairman of the South-West region. I then said that the four new appointments all fitted into the category that I outlined—those approved of by Tory Central Office. That is not the way to find 10 chairmen to run the 10 nationalised industries that we are told the Bill will create.
  Mr. Campbell-Savours: Will my right hon. Friend address himself to a problem that affects the constituencies of a number of Labour Back Benchers, that of the Government Chief Whip and also that of the Home Secretary? I refer to the arrangements made by water authorities to finance the bailiff services under the rivers provisions of the water authorities. There is some feeling in Cumbria that these services may have to be reduced under the new structure in order to comply with the more commercially oriented views that will be expressed by the new boards governing the water authorities. Does my right hon. Friend not think that a service which has always been regarded as crucial in maintaining rivers in areas such as the Lake District must be kept? There has been no guarantee by the Government that this will happen under the new arrangements.
  Mr. Howell: That is an interesting point which had not previously been brought to my attention. If what my hon. Friend says is right, it is a matter of some concern. I hope that I can persuade my hon. Friend to serve on the Standing Committee on the Bill to ensure that this matter is discussed.
  The Bill destroys the Water Space Amenity Commission. Just as all the local authority associations are united in their opposition to what the Government are doing to their interests, so, by common consent, as far as I can discover, all the members of the commission—the Sports Council, the Countryside Commission, the Nature Conservancy Council, amenity groups and the millions who enjoy water activities—agree that this is a retrogressive step for the Government to take.
  I notice that the Minister turns to his hon. Friend the Member for Bury St. Edmunds for support. The hon. Member for Bury St. Edmunds, who was responsible when the Water Act 1973 was going through the House, used a phrase in Committee that has become famous throughout the water industry. The hon. Gentleman described the then Conservative Government as creating the fourth dimension. This meant that recreation, sport and the interests of campers, caravanners, bird protectors, anglers and boaters and the millions interested in leisure would occupy a place central to the development of the water industry. The Water Space Amenity Commission ensured that this happened.
  There were some battles in the early days with the regional water authorities over protecting the interests of consumers and ensuring access to the countryside and to property owned by water authorities. Now the commission is to be abolished by the Government and nothing put in its place. The Minister intends leaving matters to the regions. Are we to understand that if, in future, the Sports Council, the Countryside Commission or the Nature Conservancy Council wish to negotiate about water space amenity, they have to be involved in 10 separate negotiations with each region that the Government are setting up? That is nonsense. The only solution is to set up some national authority.
  Mr. Eldon Griffiths: If I am fortunate enough to catch the eye of the Chair, I may say something about the Water Space Amenity Commission. The right hon. Gentleman, with his knowledge of the water industry, will recall that the safeguard for the fourth dimension, which all hon. Members, I believe, treasure, is the statutory requirement on each water authority to develop its water space for that purpose. That requirement remains under the present Bill.
  Mr. Howell: If the hon. Gentleman is right in his contention, the logic is that we have 10 water space amenity commissions instead of one. The proposal that there is any justification in the economics of this operation is washed away immediately. Of course, we cannot have 10 commissions. Even if the hon. Gentleman is right, how is one to achieve national input into the regional situation? How does one tell the North-West water authority, responsible for the great lakes and some of the most treasured part of our national heritage, that its obligation is not specifically to the people of the North-West, but that there has to be a national interest and involvement in, access to, and development of, the water industry? How is that done? The hon. Gentleman cannot say. Nor can the Minister say. The fact is that it cannot be done. By the nature of things, a regional authority will give first priority to the interests of the people in the region rather than to the national interest.
  Even the Severn-Trent authority and bodies of that sort have come out against the Minister. We shall fight the Bill hard in Committee. It treats local government, the water industry and recreational and sporting interests with contempt. It treats trade unionists and consumers with contempt. No one should be surprised. It is a Bill that comes from the most contemptible Government in our history.
  4.55 pm
  Sir William Elliott: I cannot say that I am extremely pleased to follow the right hon. Member for Birmingham, Small Heath (Mr. Howell). In introducing the Bill, my right hon. Friend said that it was not a long measure and not, as he saw it, terribly contentious, but that he suspected that the right hon. Member for Small Heath might treat it as one of the most savage pieces of proposed legislation to come before the House. That has proved to be the case. I fail to see how the Bill or the actions of my right hon. Friends the Secretary of State and the Minister for Local Government and Environmental Services are in any way prejudicing the present wage negotiations between employers and union representatives. It is beyond me how the right hon. Gentleman contends so firmly and savagely that this amounts to Government interference.
  I agree with the expressed irritation of my right hon. Friend the Minister for Local Government and Environmental Services when the right hon. Member for Small Heath referred to the appointment of chairmen of regional water authorities. I have no knowledge whatever of Conservative Central Office having anything to do with these appointments. I am certain that this has not happened. I agree with my right hon. Friend that merit, and merit alone, is taken into account when those appointments are made. I am told that, when the vacancy occurred recently for the Northern regional water authority, a number of people of the highest quality were interested in the post. I understand that it was extremely
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  difficult to make a choice. I am sure that the political sympathy of the person who is now chairman of the authority was a minor consideration, if a consideration at all. I know only that he is highly respected in northern public life and has given a great deal of public service across a wide sphere. It was a very good appointment.
  As is customary, I wish to declare an interest. I am chairman of the Newcastle and Gateshead water company. I also have the privilege at this time to be honorary president of the Water Companies Association. The relationship between the 28 statutory water companies and the National Water Council has been a good one. I join my right hon. Friend in paying tribute to Lord Nugent, the first chairman of the National Water Council, for the excellent job that he did and to his successor Sir Robert Marshall. As many of those with knowledge of the water industry are aware, there was a great deal of work for the National Water Council to do. Its initial task is now completed, and a new era begins. The relationship between regional authorities and the water companies has also been good.
  I welcome clause 5. We are unique in England and Wales in having the complete water cycle managed on river basins. This has led to highly developed and co-ordinated management of water services. A higher percentage—96 per cent.—of our population is connected to water supplies than anywhere else in the world. We have a long history of innovation in water supply and sanitation, and we have been instrumental in the development of many technologies. The water authorities and the statutory companies are in a unique position to assist developing countries in British techniques and processes and in the operation of British equipment.
  Authorities and companies are already doing much to assist United Kingdom manufacturers and exporters by allowing their installations all over the country to be used as show cases. The water companies and the regional water authorities, unlike other nationalised industries, do not have clearly defined powers to exert their ability to export their expertise. This has been detrimental to their earning capacity and to the support that they wish to give the industry to obtain overseas orders. Clause 5 seeks to give these powers, and I warmly welcome it.
  With regard to clause 7, the statutory companies will certainly wish to be involved in future arrangements for representation of consumer interests. The record of the companies in public contact is very good. Invariably and inevitably they have kept in close contact with their customers. Their record in dealing with breakdowns or stoppages has been very quick. The right hon. Member for Small Heath criticised the removal of the local authority content in the future of the industry under the terms of the Bill, but I emphasise that the companies have been careful to keep well in touch with the local authorities in the areas of their operation.
  Several times a year, the companies invite representatives of local authorities to see installations and to have explained to them how the water company is going about is work. Through this method of constant contact with local authority representatives the customer has been kept in close contact with the company and its work. This is a good thing.
  Mr. Robert C. Brown: The hon. Gentleman refers to very pleasant occasions, and, as a city councillor, I have taken part in them for many years. However, there is a vast difference between

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  what is, in essence, a social meeting once a year with the chairman and the directors of the Newcastle and Gateshead water company and the representatives of the Newcastle city council, and direct representation of the consumer by the elected members of the city council. That is the argument.
  Sir William Elliott: I am glad that the hon. Gentleman has enjoyed his visits—
  Mr. King: So far.
  Sir William Elliott:—so far—to the Newcastle and Gateshead water company's functions, but I hasten to say that those occasions are far from merely social, as the hon. Gentleman is well aware. I have presided over some recently. We are at great pains not only to give reasonable hospitality but to make sure that our officials and others explain exactly what the company is doing and how much it wishes to keep in touch with its customers who are represented on local authorities by the guests on those occasions. This is a good practical method by which water companies keep well and truly in touch with their customers.
  The setting up of vast machinery for consultation can be somewhat dangerous. The setting up of commissions to look into complaints in other spheres of industry has, in my experience, led to the creation of complaints. There is a great deal to be said for smallest being best, and for close contact between water suppliers and their customers.
  The dissolving of the National Water Council and the Water Space Amenity Commission will represent, as the Bill suggests, a considerable financial saving. I hope that there will continue to be a national water industry which, through efficiency and cost saving, will continue to give the excellent service to the consumer that it has given in the past. I support the Bill, and commend it to the House as a step forward to a more efficient water industry.
  5.6 pm
  Mr. David Lambie: Although I am a Scottish Member, I do not apologise for participating in this debate on an English Water Bill, as it will have consequences for regional water authorities in Scotland, including in my constituency, and will affect water interests in Wales.
  I am glad to welcome one of the junior Ministers from the Welsh Office to the Front Bench today because it shows that the Welsh Office has some interest in the effects and the consequences of the Bill on the people of Wales. Mr. Deputy Speaker, have you any power to summon the Secretary of State for Scotland to take his place on the Front Bench today, or even a junior Minister such as the Under-Secretary of State for Scotland who represents local government? Can you call them to take their places to look after the interests of the people of Scotland?
  Mr. Deputy Speaker (Mr. Paul Dean): I cannot help the hon. Gentleman. It is nothing to do with me who is in any part of the House.
  Mr. Lambie: In that case, can the junior Ministers at the Department of the Environment send for the Secretary of State for Scotland or the Under-Secretary of State to take part in this important debate? At Question Time a point of order was raised by one of my Scottish colleagues,
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  complaining that yesterday the Secretary of State for the Environment announced on the Floor of the House a number of new enterprise zones in England and Wales, and that Scottish Members were insulted by having a similar announcement affecting Scotland made by way of a written answer and a press conference in Edinburgh.
  The Scottish Members have been insulted by the inattention of Scottish Ministers to this important debate. Those of us who believe in devolution for Scotland, and perhaps a wee bit more than devolution for Scotland, recognise that we should meet in Edinburgh because we should see the Secretary of State for Scotland more there than here in any future debates.
  The Under-Secretary of State for the Environment (Mr. Giles Shaw): The hon. Gentleman will understand that this Bill applies to England and Wales, but not directly to Scotland except in those matters concerning the training and research facilities where there are common services paid for in part by both Scotland and Northern Ireland. However, there is no direct relevance to Scotland.
  Mr. Lambie: I am speaking because I wish to deal with the training arrangements of the National Water Council. The people in Scotland are affected by them and by the regional water authorities, the river purification boards, and especially the training centre at Melvin House, which happens to be in my constituency.
  The consequences of the Bill are in the melting pot. There is nothing in the Bill to say how the functions of the National Water Council are to be handled after September 1983 when the council ceases to exist.
  As the Minister has already said, Scottish water supply is administered in a way that is quite different from England and Wales, and Scotland is marginally affected by the Bill because some functions undertaken nationally by the National Water Council will have to be adjusted when that body ceases to exist. Training has been operated nationally, including Scotland and Northern Ireland, by the National Water Council. It has been reported that the chairmen of the regional water authorities in England are now discussing how they can incorporate training functions in the duties of their proposed association. Scottish authorities will have a direct interest in those discussions.
  The National Water Council Melvin House training centre is located at Kilwinning in my constituency. If the Bill goes through unamended, the jobs of the nine professional training staff and 24 administrative and domestic staff will be at risk. The activities at Melvin House affect the constituency of every Member of Parliament in Scotland and Northern Ireland. The training centre provides a comprehensive service to regional council water and sewerage departments and to the river purification boards in Scotland. In Northern Ireland, it provides a similar service to the Department of the Environment water services.
  Melvin House was established under the Industrial Training Act 1964 as the water supply industry training board. The staff and assets were transferred in 1974 on the establishment of the National Water Council. The training division in Scotland enjoys an excellent relationship with the participating bodies which since 1974 have participated fully on a voluntary basis. Melvin House is proud of its reputation and would very much like to continue its functions in the future.

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  When the consultative document was published just before the Summer Recess, I contacted the Under-Secretary of State for the Environment and inquired how the Bill would affect the National Water Council's training facilities. In a letter dated 8 October 1982, the Minister replied:
  "The National Water Council has hitherto managed training for the water industry on a United Kingdom basis. The paper therefore asks the water authorities and water companies in England and Wales, and the water authorities in Scotland, to decide what the future arrangements for training in the industry should be. It is up to these bodies themselves to decide on the future scale of centralised training, and the basis for owning and managing the assets. You will note that one possibility specifically mentioned is the establishment of a separate body for Scotland or Scotland/Northern Ireland."
  Perhaps the Minister will bring the House up to date on the Government's thinking on that suggestion. The Minister added:
  "We are now considering the responses to the consultation paper, including the comments of the Convention of Scottish Local Authorities".
  I draw the attention of the House to the comments of the Scottish Sub-Committee on Training, which were placed before the Minister earlier this year. It stated:
  "The Sub-Committee expressed its strong disapproval, not only of the content of the consultation document, but also of the manner in which the document had been presented … In the field of training, the Sub-Committee considered that the existing system worked well, and that the NWC Training Division had over the past 15 years built up a training organisation which, because of the close liaison and consultation with the industry in Scotland and in Northern Ireland, catered most competently for the industry's training needs. The training pattern so developed had contributed greatly to the more efficient and economic use of the workforce."
  It added—and I stress this point:
  "The consultation paper's reference to the need for training to be provided at a lower level was noted, but it was agreed by the Sub-Committee that this can be done only where adequate resources are available, which is not the case in Scotland, either with the Local Authorities or with the River Purification Boards."
  That is why I am disappointed that neither the Secretary of State nor the Under-Secretary of State for Scotland is present. If the Government are not prepared to provide extra resources from London to continue training for the workers in the water and sewerage industries in Scotland and Northern Ireland, the resources should be provided by the Secretary of State for Scotland through the Scottish Office Vote.
  The Scottish Sub-Committee on Training also states:
  "The advantages of a national training scheme are numerous, especially in the areas of managerial, professional and technical skills, where there is great opportunity for exchange of ideas, methods, practices, etc., among the trainees themselves. It would be most regrettable were yet another link between England and Scotland to be broken."
  My own opinion is that the sooner the parliamentary links between England and Scotland are broken, the better it will be for the people of Scotland. We might then get Scottish Ministers who reflect the opinions of the Scottish people rather than Ministers who do nothing but issue press statements from Edinburgh instead of answering these points on the Floor of the House of Commons.
  The comments of the Strathclyde regional council to the Convention of Scottish Local Authorities are typical of how the regional water authorities feel about the consultative paper. On training, Strathclyde regional council states:
  "The present style of training developed over some 15 years has contributed greatly to the efficient use of the workforce and consequently to economies in the costs of activities. There is no
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  doubt that the training scheme is amongst the best available to any group within the local government sector and a vigorous campaign should be mounted to maintain the national scheme status quo, or something very close to it."
  Such a national campaign can be led only by the Secretary of State for Scotland. Unfortunately, at present, we have the army but we have lost the general. I do not know what press conference he is attending or what announcement he is making today, but the right hon. Gentleman should be here to deal with the Scottish aspects of the Bill.
  The Strathclyde regional council also states:
  "The consultation paper also emphasises 'need assessment of training at the local level'. This is difficult to do if there are no longer suitable establishments for training or an organisation capable of providing outside specialists and in-house instructors for both staff and manual employees."
  That is the main point that I wish to stress. There is a need to continue training, especially at Melvin House in my constituency, not only for the workers in the water and sewerage industries in Scotland and Northern Ireland, but for workers in the North of England. We have provided an efficient service for the last 15 years, and it seems wrong that, just because successive Governments have made a mess of the water supply in England, the people of Scotland should also suffer. We have no water supply problem. In Scotland, the regional water authorities are the controlling bodies for the water supply industry. There is no political problem, but in spite of that our training facilities could be eliminated by a Bill which has been presented for Second Reading when the Secretary of State for Scotland is not present.
  Secondly, we were able to organise our water, sewerage and river management on the basis of large river basins. That too was an engineering solution to a political and administrative problem. There have been arguments about the precise frontiers of those regional water authorities but, none the less, they too have worked well. They are the envy of water industries of much of the rest of the world.
  5.19 pm
  Mr. Eldon Griffiths: During the early 1970s three pieces of Government reorganisation were enacted with varying effects. They were the reorganisation of local government, the National Health Service and the water industry. I believe, Mr. Deputy Speaker, that you were involved in one matter and I was involved in both the others. Neither the reorganisation of local government nor that of the water industry has been regarded nationally as an example of the most sublime Government success in managing our national affairs.
  This Bill is essentially an amendment to the Water Act 1973. That Act, which has been frequently abused, has rendered our country four specific improvements. First, it brought together the rivers, water supply and sewerage in a single hydrological cycle. That made it possible for us to manage our water and sewerage services better than anywhere else in the world. That is something of which we should be proud. It was an engineering solution to a political and administrative problem and has generally worked well.
  The third advantage is one of which all Governments can be proud. We have cleaned up our polluted rivers more successfully than any other industrialised country. I take pride in the fact that one can now catch an occasional salmon and numerous trout in the River Thames. The

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  River Trent, which was once the industrial sewer of middle England, is now on its way, painfully and slowly, towards becoming a fishing river. These dramatic improvements in the quality of our rivers must be seen against the background of the 1973 Act.
  Although all hon. Members will not agree, I believe that we also were right to save the private water companies. It would have placed an enormous burden upon the taxpayer if there had been an attempt to nationalise them. The fact that private water companies have worked alongside the public water authorities, each benefiting from the other, is a tribute to the mixed economy. It shows what can be achieved by agreement. Those are some of the achievements of the Water Act 1973.
  This Bill now seeks to amend that legislation. Clause 1 alters the constitution of water authorities. It will make them much smaller. They will each have between nine and 15 members instead of 36 to 62. The new smaller boards will be appointed exclusively by Ministers. This is the final break with the local authorities. I understand their distaste.
  It is worth explaining why in 1973 we kept that local government link, although I am sure that the Under-Secretary probably knows this already. If we had broken the link with local government, in the first place, it would have involved removing in one fell swoop all water, sewerage and river functions and all the capital equipment, experience and know-how that they had built up over generations. In the after-glow—if that is the correct word—of local government reorganisation, it would have been politically difficult to take all that away in one Bill, so I believed it right to retain their link with the new water industry by allowing the local authorities to have some access to the new authorities. That was achieved by allowing them to put up their own representatives to the authorities.
  The Government, of which I was then proud to be a member, also wanted to avoid all-out nationalisation. We therefore took the decision to keep local government involved instead of setting up an all-out state water industry. I believe that both those decisions were right.
  Water is one of my abiding passions, but time and circumstances change. I have thought a good deal about it and my conclusion is that the Government are now right to change to smaller, mainly executive, boards which will be able to handle this large capital-intensive industry more efficiently. I regret the passing of the local authority link, but I believe that in management terms the decision in clause 3 is right.
  One of the many reasons for reaching that conclusion is that experience has shown that local authority members on water authorities too often have fought their own corner. They regard themselves as delegates from specific counties or cities instead of taking a broader view of the interests of the region as a whole. By doing that they have worn out their welcome, and I have reached the conclusion that the time has come for them to go. Water is too important an industry, involving too many vital services and too much public capital, to be allowed to run any longer without tighter decision-making machinery. This Bill will provide that.
  Mr. Ogden: The hon. Gentleman is being disarming. If he is using the argument that the water industry is too financially large and important, surely he recognises that those who run local government control more important functions involving much more money.
  Mr. Griffiths: That is another point of view.
  Clause 3 provides for the abolition of the National Water Council. I should like to be associated with the tributes that have been paid to Lord Nugent, whom I had the pleasure to appoint, with the Secretary of State's support. He started it well and his successor followed up effectively. On balance, it is probably right to wind up the National Water Council, but I must ask the Minister one or two questions on matters about which I am anxious.
  The right hon. Member for Birmingham, Small Heath (Mr. Howell), who has been involved, as I have, with the water industry for a long time, raised the matter of national pay negotiations. I understand that the Government intend that they should be henceforth a matter between employees and employers. I have some doubt about the practicality of national unions negotiating with individual local water authorities. There is a discrepancy here and it could be difficult. For example, I have been involved in national negotiations on pay for the police service. It would be extraordinarily difficult if one had to deal on behalf of the national staff side—mainly the Police Federations of England and Wales—with a number of different police authorities.
  I hope that in Committee my hon. Friend can demonstrate that the machinery will work for negotiating between employees represented by powerful national unions and a series of separate employers with different circumstances and revenues and perhaps a different view about what is appropriate.
  I wonder, too, what will happen to the organisations that are still the industry's pride, such as its research and training capabilities. These assets must be properly handled. I do not know where the responsibility is to reside if henceforth the machinery lacks a national co-ordinating body. Nevertheless, I understand the Government's judgment that the National Water Council should go, and with my two reservations I support the decision.
  The Water Space Amenity Commission was set up in the full flush of enthusiasm to make our water space available for sport, recreation and other amenities. It complemented the statutory duty that we placed on water authorities. I pay tribute to Mr. John Humphries, the first chairman, who operated with a small budget and had some difficulty at first in dealing with many of the water authorities. He launched an excellent magazine telling us about the development of water space amenity. On an average weekend more people mess about in boats on our internal waters than are to be found on the football terraces. We should recognise how important water space has become. Once the Water Amenity Space Commission has gone, I hope that we shall have a mechanism to monitor how the individual water authorities perform their statutory duty without it. We need to know that they are not neglecting their duty. Perhaps the Minister should report to the House on how they are handling this duty to develop our water space for amenity and recreation.
  Clause 5 deals with the powers to offer and promote water and sewerage consultancy services overseas. It makes good sense to bring forward this clarificatory power. Two-thirds of the world is dry and badly needs

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  better to recycle its water. Our industry has a great deal to offer. Consultancy services arising from the efficiency of our industry can contribute mightily to our invisible earnings. The clause is a great encouragement to that end.
  Clause 7 sets out the arrangements for better communication with consumers. I freely confess that we did not handle the issue properly in the 1973 Act. Change is long overdue, but I have one small criticism. There is too much power given to the Department to prescribe methods. There will be variation between wide rural areas such as that covered by the Anglian water authority or the South-West authority and the heavily industrialised areas. Their problems and perceptions are different. Too many of Bill's powers lie with the bureaucracy. The details are set down too precisely. If my hon. Friend the Minister or the Under-Secretary of State were handling the matter, there would be no problem, but Ministers will move on to their other duties and the officials, estimable though they are, will monitor how the authorities perform their new statutory duties. I believe that these controls should be loosened in Committee.
  Clause 8 deals with equalisation. I spent six mornings in Committee on this extraordinary measure brought forward by the Labour Government before the last election to help them hang on to a few Labour seats in Wales. It did not work well and it is high time that we got rid of it.
  Mr. Denis Howell: We were trying to do justice to the Welsh people, but the measure also helped the people of East Anglia and Northumbria. The fact that some of those people voted Conservative shows how statesmanlike our approach was.
  Mr. Griffiths: As the Anglian water authority benefited from the measure, I showed great statesmanship in Committee in demonstrating that it was nonsense.
  Mr. D. E. Thomas: What proposals do the Government have before the next election to retain Conservative seats in Wales?
  Mr. Griffiths: The only proposal necessary is that the good sense of the Welsh people be allowed to prevail.
  Water metering is a vexed question. Many of our water authorities have been slow to get on with it. I have consequently had a good deal of correspondence with my hon. Friend and others. It is absurd for water authorities to insist on a £10 survey fee before they will look at a house to see where a meter should be put. This applies particularly to terraced houses. It is equally absurd to propose charges as high as £80 or £90 for a simple piece of equipment. Progress is being made. I hope that the Government will ensure that the industry more quickly establishes a just and equitable basis to charge for water and sewerage services.
  Incidentally, it is nonsense to say that water can be charged for but it is difficult to make sewerage charges. The amount of water that goes into a house and that which comes out is exactly the same. [HON. MEMBERS: "Oh, no, it is not."] It is almost exactly the same, and the matter can be handled sensibly.
  As we move towards smaller and more efficiently managed executive boards for our water authorities and abandon the superstructure of the National Water Council and its various bodies, it will be all the more important that each regional water authority accounts for what it does. Their accountability to consumers is improving but there
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  must also be better accountability to the House. I hope that the Government are not heading towards nationalisation. I do not believe that that is their intention, but there is a risk that the industry will be pulled more and more into the central bureaucracy of the Department of the Environment. The Secretary of State's innovation in local government—the concept of an efficiency audit to be reported to this House—should also be introduced in the water industry.
  The Under-Secretary of State will know of the debate on this subject some months ago. As the Bill proceeds, I therefore hope that the Government can organise an auditing system through which the House can be informed as to how well or how badly the new and more efficient authorities have handled all their statutory duties, such as the supply of pure water, drainage, river management, and their duties towards amenities and recreational activities. Such an audit would make the new administrative machinery more acceptable to the nation.
  5.39 pm
  Mr. Stephen Ross: The hon. Member for Bury St. Edmunds (Mr. Griffiths) has a much greater knowledge of water authorities than I have and I agree with him entirely about the reasons why they were restructured thus taking the river basins into the present regions.
  In my constituency we experimented uniquely in having a joint river and water authority. The system worked well but the authority had insufficient capital to cope with the continuing problems. However, I am grateful that the Southern water authority has already laid an additional pipeline under the Solent and that it has supplied more water to parts of the island that were severely affected by drought.
  At long last, the Southern water authority is also doing something about our appalling sewerage system. Hon. Members who attend Cowes week will know what I am talking about. I am ashamed to say that there are about 52 outlets of raw sewage into the River Medina and the Solent, which is only one part of the island. The sewage problem is enormous and cannot be tackled unless we have a regional authority with the resources to do the job.
  I also agree with the hon. Member for Bury St. Edmunds about private water companies. I remind the right hon. Member for Birmingham, Small Heath (Mr. Howell) that I played a small part in keeping those companies private during the Lib-Lab pact. I remember being called to his office when he was a Labour Minister. He read to me the Bill that was to set up a national water authority and told me how the private water companies would be nationalised. When the then Minister reached that point I said, "Sorry, that is not on." The right hon. Gentleman said "I thought that you would say that. I shall have to get out version two that omits those words." Consequently, we did not get a national water authority, nor were the private water companies nationalised. Since then, I have been about the sole non-Conservative to be invited to the private water companies' luncheon held annually in July. I am sorry that the hon. Member for Newcastle upon Tyne, North (Sir W. Elliott) is not here. The speeches at the luncheons are highly political but I enjoy the hospitality very much.
  I have visited some private water companies and I can say that most of them are extremely efficient and that it was correct to leave them alone. I hope that we shall never nationalise them.
  Mr. Denis Howell: I do not dispute the hon. Gentleman's outline of the history of the water authorities, but would he comment on the interesting point made about private water companies by the hon. Member for Newcastle upon Tyne, North (Sir W. Elliott)? If we must replace all local authority representatives by a consumer council—a signal failure in other nationalised industries—should not the consumer councils oversee the private companies as well as the regional water authorities?
  Mr. Ross: The private companies have shareholders to whom they are answerable. Generally, one does not hear complaints about the private water companies. I do not like consumer representation and I do not believe that it will work.
  I am sorry that the Minister for Local Government and Environmental Services, for whom I have considerable respect, chose to introduce this Bill. It is a useless and unnecessary measure that takes us backwards. I do not dispute the fact that the administrative boards of our regional water authorities are top-heavy. However, the solution adopted by the Government, based on the Monopolies and Mergers Commission report of June 1981, is profoundly mistaken. One can only deplore the fact that the Secretary of State and his Minister should reserve the power of appointment of all members of the authority, which are to range in size from nine to 15 members. As we have seen elsewhere—the evidence can be provided—the arrangement will almost certainly lead to jobs for the faithful, who will, of course, be loyal party hacks. Patronage must never be allowed to replace the choice of the electorate.
  One need only examine the Government's record to know that what I and the right hon. Member for Small Heath are saying is, unfortunately, true. The Department of the Environment is rapidly beginning to resemble the Kremlin and is taking on more powers that should remain with the local authorities. This Bill and yesterday's Transport Bill are further examples of that trend. I watched the funeral of Mr. Brezhnev yesterday and I wondered whether we should not extend the reinforced concrete wall around the Department of the Environment building and bury the present Ministers under the foundations. Why should we not direcly elect our representatives to the water authorities every four or five years? One county or a group of counties could elect a representative, while a few members, who should be in a minority, could be appointed by the Minister solely for their expert knowledge of the subject. There are many such people in Britain and they have an important role to play. One such person, Brigadier Hopthrow, is still alive and kicking in my constituency. He used to advise the CBI and I expect that the hon. Member for Bury St. Edmunds knows of him. It is sad that he disappeared from the scene after reorganisation.
  If that solution is unacceptable, a county should appoint its own member who must report to the quarterly meetings of the county council. That procedure was adopted recently in my county council, whose representative on the Southern water authority reports to the elected members, who can question him. However, direct election is preferable because the public would know their representative and where to contact him. At present, complaints about water charges, sewerage problems and cesspit costs nearly always land on the desk of the local Member of Parliament.
  Mr. Eldon Griffiths: The hon. Gentleman's remarks are interesting, but there is a practical problem. In one large water authority area, there may be as many as 10 county councils. That would mean automatically, under his system, 10 representatives. How would the hon. Gentleman overcome the problem of the representatives fighting their own corners on the board?
  Mr. Ross: I said "county or group of counties". I have examined the figures and Severn-Trent water authority, for example, comprises 46 members representing many councils, including one in Wales. In some areas, counties must agree on a joint representative. Members of the European Parliament are elected directly and we have a Wight and Hampshire East Member. I see no reason why Sussex East and Sussex West cannot elect one representative, although of course I hope that the Isle of Wight will have its own representative.
  What is wrong with fighting one's own corner? Someone should do just that. That is what Members of Parliament do when trying to look after their constituents. My fear is that from now on there will be no local representative to fight local causes.
  Mr. Mark Lennox-Boyd: How does the hon. Gentleman distinguish between consumers of water and consumers of gas and electricity? Would he have elections for everything?
  Mr. Ross: Yes. The right hon. Member for Small Heath has apparently also been converted to that concept and of course it has already happened in Scotland. Consumer representatives on electricity boards, post office boards and telecommunications boards are utterly useless. I know that that will cause many people to write to me saying that consumer representatives have achieved much, but they have not. When we were fighting to retain the words "Isle of Wight" on our envelopes, the consumer representatives did little to help us and the battle was taken up by the local authorities and the Member of Parliament. Consumer representation will not work in this case. Direct elections to the authorities are the only answer. Health and water authorities and arts and sports councils should be controlled directly, but I do not expect this Administration to embark upon such a radical project.
  If the Bill is to go through as now drafted, may I plead that the regional water authorities should be obliged to report fully to their Members of Parliament at least every six months? In that regard, I agree with the hon. Member for Bury St. Edmunds. Once a year members of the water authorities spend a couple of hours in a committee room and matters are generally glossed over. Only when there is a huge increase in the rate, or something like that, are all the members present. That is when they have a bit of a rough ride. In other cases, matters are glossed over. That is not good enough. The members must be there for a full day's session, to enable hon. Members to represent their constituents and to cross-examine the officers. That would be an advance on the proposed consumer committee which, as I said earlier, experience shows has few teeth when its services are needed.
  I do not know why we want to do away with the National Water Council. It is obvious from the Bill that it will have to be revised in some guise or other if the functions that it performs are to be continued. We have heard about training, overseas sales, pay negotiations, superannuation, information, advice and policy. Why on

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  earth destroy the very body that is doing those jobs at the moment? Is this the time to do away with the innocuous Water Space Amenity Commission? I am delighted that more and more people are taking up inland water sports. We know that leisure activities will form a big growth area in the future. That body is performing a sensible role and should be maintained.
  In short, I believe this to be a thoroughly bad and unnecessary piece of legislation which should be strangled at birth. That view is shared by the Association of County Councils and the Association of District Councils. Here, I must make an apology because I misrepresented the views of the ADC in the debate on the Transport Bill yesterday. I had had a rather good Beaujolais lunch and I think that that had something to do with it. I apologise to the House and to the ADC. However, the ACC and the ADC are certainly against this measure, as, I am sure, is the Association of Metropolitan Authorities. The breakdown of the link with the borough and district councils is a serious matter and one which I am convinced in due course the Government and the country will live to regret.
  That leads me to a question that I have been asked to pose. It concerns the problem of responsibility for the repair of sewage interceptor traps which, I gather, particularly arises in the Merseyside area. It is apparently a no-man's land. It is not clarified in legislation which goes back to the Public Health Act 1936. Those traps are now collapsing and neither the local authority nor the regional water authorities accept liability for their repair. I ask that the opportunity be taken to clarify that matter in the Bill to establish who is responsible for the work. Clause 6 might be suitable for such an amendment. I should be grateful if the Under-Secretary of State will mention that when he replies.
  5.52 pm
  Mr. Tony Durant: I welcome the opportunity to speak in the debate. The hon. Member for Isle of Wight (Mr. Ross) seemed a little confused about public representation. He cannot, on the one hand, attack the Government for suggesting consumer councils, which he says are ineffective, and, on the other hand, say that the present system is ineffective. He even decried it, saying that it was not 100 per cent. effective and that perhaps something else should take its place.
  Mr. Stephen Ross: I apologise if I did not make my point clearly. I agree entirely that the administrative boards must be much smaller—with approximately nine to 15 representatives. We should directly elect those representatives—one per county or even one for perhaps two counties together. People should know who their representatives are and should elect them.
  Mr. Durant: May I return to that later in my remarks?
  The right hon. Member for Birmingham, Small Heath (Mr. Howell) implied that there had been no consultation with the local authority associations—the Association of District Councils, the Association of County Councils and the Association of Metropolitan Authorities. I have a document which came out in July. It is 14 pages long and was sent out to all the authorities for their views on the Government's proposals. I am rather puzzled why the right hon. Gentleman said that there was no consultation. I
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  accept that there was no public consultation, but the document was sent out to about 140 organisations involved in the water industry.
  Mr. Denis Howell: The first consultation document about the future of the water industry was issued by the Government in January 1982. That was about regional authorities, as is the Bill. It said nothing about the National Water Council or the Water Space Amenity Commission. None of the people consulted about the January document—the main consultation document —knew anything about the proposals or could comment upon them. When the Minister announced from the Dispatch Box in July that he was going to abolish those bodies, he issued a second consultation document about what should be done in the wake of that decision. It is to that second consultation document, after the decision has been taken, that the local authority associations addressed themselves and sent their views to me, and, no doubt, to others.
  Mr. Durant: I follow that, but the right hon. Gentleman implied that there had been no consultation. He has now made the position perfectly clear and I do not dispute what he says. However, he implied that there was none and I was anxious to clarify that point.
  I support my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) when he says that this is an amending Bill. I welcome it. I have always been a critic of the water authorities. I am interested in the subject because the Thames and the Kennet are in my constituency, as is one of the regional headquarters of the Thames water authority. I have also been active on the subject of waterways.
  All hon. Members agree that there is a need for a better water administration. The argument is about the best way to achieve that. If anybody doubts that, they have not been reading their correspondence recently. I have had many letters about the water authorities. Are the water authorities a business, a service or a public undertaking? It is rather an oddball organisation. I do not use that word disparagingly. The organisation does not fit easily into any of those categories. I suggest that it is virtually a business because of its scale.
  Look at the size of the Thames water authority. It deals with 1,000 million gallons of water a day. It amalgamated 200 undertakings into one. It covers 5,000 square miles. It serves 11½ million people. It is run by a board of 61 people who try to run that enormous administration. It has a capital budget of £100 million and a revenue expenditure of £400 million. It has 31,000 miles of sewers and 26,000 miles of water main. Think of the size of that operation. It makes British Leyland look pretty small. There is no doubt that it is a big business. There must be good management. It is a capital-intensive industry and crucial decisions have to be made concerning capital expenditure.
  We have discussed representation. Not everywhere is represented. As a Member of Parliament I represent a Berkshire seat. There are on the Thames water authority one representative from the county council and one from the district councils for the whole of Berkshire. I know neither of those two gentlemen. I am not complaining about that. It may be my fault for not getting in touch with them. If I do not know them, how does my electorate know them? Surely they are responsible to the electorate.
  The hon. Member for Isle of Wight said that it is important that the local authorities have representation in

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  order to be in touch with the people. He suggested a different way of doing that—I accept that. However, he said that councillors were essential and yet I, a Member of Parliament, do not know those people. They do not automatically come to my attention and I am an elector in my area. The system is obviously not working. Those of us who have been in local government know what happens. At the council's annual meeting the mayor is elected and the committees are appointed. The boys fix up their jobs. All the high-powered fellows do finance and housing. Then there is a long list, which includes such bodies as the Post Office users' councils. The water authority is about No. 4 on the list. Someone asks who should be put on that body and the response comes that last year's mayor is a bit crestfallen because he has nothing to do and that he should have that task. I do not say that that happens every time, but there is a tendency for that to happen. I am not criticising it, because it is understandable.
  Nevertheless, enormous management decisions are being taken and it is therefore right to streamline the process. One management decision has come to my attention. A construction firm wrote to me saying that a financial limit had been put on the size of the contracts that it could bid for with the Thames water authority. At that time the limit was £350,000. That was the decision then, although it was nonsense. I entered into correspondence with the Thames water authority and it increased the limit to £600,000. However, some other water authorities allow up to £1 million for a contract. Those big decisions are being taken by other people, and I do not suppose that the elected representatives know anything about it.
  Mr. Ogden: A long time ago I was a member of a very small authority. It is not unusual for any organisation to have an approved list of contractors. On the basis of the contractors' record, expertise and financial viability, they are allowed to tender up to a certain limit. If the firms involved carry out the work properly they can go for larger contracts. Therefore, the difficulties outlined by the hon. Gentleman apply not only to water authorities but to any authorities that allocate contracts. It is a practical precaution.
  Mr. Durant: I am saying not that the procedure is wrong but that big decisions are being made. A board type of administration would prove much more competent.
  I welcome the provisions covering the consumer's interests. I introduced a Ten-Minute Bill which, of course, did not have much of a chance. The Irish were causing trouble at the time and so I lost the Bill. It sought to set up a consumer council for the water industry. Under this Bill that would not be practical, but I welcome the Government's appreciation of the consumers' problems. It has been a cause of mine for some time.
  So far, little mention has been made of the fact that the water council has been doubling up on many of the boards' activities. Water research and training, for example, are being done twice. That is another reason for reconsidering the position.
  Mr. Eldon Griffiths: Is not part of the trouble that too many of the authorities have wanted to do their own thing? With this reform I hope that there will not be 10 different
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  research capabilities and 10 different training schemes. There must be an arrangement whereby one major authority acts on an agency basis for all the others.
  Mr. Durant: I am sure that that could be done. Indeed, it is done with many organisations. I am not nervous about different elements. I am a diversionist. People can learn different techniques from each other, and I am not particularly worried about people doing their own thing. Therefore, I do not go all the way with my hon. Friend but I support his point.
  I was delighted when the Government saved the Inland Waterways Amenity Advisory Council. It can carry out much of the WSAC's work if it is given the opportunity. It is representative of all the leisure interests, including boaters, fishermen and walkers. They are all members of the IWAAC and it may be able to take on some of the WSAC's duties.
  The Welsh are very keen about water equalisation. However, it cost the Thames water authority some £5 million. As a householder, I had to pay some of that amount. Therefore, like the hon. Member for Isle of Wight, I shall speak for my constituents because they objected strongly to supporting the Welsh water authority. The rainfall in Wales is much higher than in Reading. If the water authorities in Wales had been more constructive and had been better at conserving their water, they might not have had to take that step.
  The public have criticised water authorities for their standing charges. People have become used to direct charges and their main criticism now concerns the standing charge. For example, an elderly person may live in a small house with only a couple of washbasins and a small loo, yet face enormous standing charges. A shopkeeper came to see me and told me that he had one small washbasin and a loo at the back of the shop. It is used three times a day, but the water bill is enormous. That is incredible. I hope that the new water authorities will consider the standing charge. That, and not the amount consumed, is the principal grievance.
  Bureaucracy has also grown enormously. The comparatively new chairman of the Thames water authority has tried to do something about it. Manpower figures have dropped and I am impressed by the work that he has tried to do. However, the bureaucracy remains vast. I visited a multinational company in my constituency that occupied one floor in an office block. The chairman said that he would try to reduce the number of those working there. I think that I met two people there. However, the chairman thought that the overheads were too great. He then took me by my coat collar, dragged me to the window and pointed to a building on the other side of the road. He asked what the devil I was going to do about that place. It was a building for one division of the Thames water authority, yet there were 12 floors. Somewhere along the line bureaucracy has got out of control. The new management boards can pursue that point vigorously. The Thames water authority has been restructuring itself, advisedly, and making divisional structures to streamline management. It has been proceeding in the right way and this new idea may help.
  However, there has been talk of doing away with the Thames Conservancy. That is a pity. The Thames is one of the best controlled rivers in Britain. It is well run and

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  is an example to the rest of the world. However, the matter is still under discussion and we shall have to see what happens.
  I can only praise the general concept of the water authorities as set up by a previous Conservative Government. Water standards are superb, sewage disposal is excellent and there has been extremely good marketing abroad of many of our concepts. We have made a lot of money from selling our expertise abroad. However, there is a need for change and reform and this amending legislation is a step in the right direction.
  6.8 pm
  Mr. D. E. Thomas: The hon. Member for Reading, North (Mr. Durant) made two points with which I agree, at least in terms of analysis. He said that we had to decide whether the water supply industry was a business or a service. Indeed, that theme ran through his speech and was highlighted in his comparison of the Thames water authority with a multinational company. However, he did not tell us what that multinational company produced.
  Over the years, the water industry has changed and is no longer a service that is run by the local authority. Most of the local water undertakings in Wales were running at a loss and were being subsidised from the general rate. The position in England is different, as the Daniel committee found in 1975. As a result of the move towards considering water as a large business undertaking and as a commodity to be sold to the consumer rather than a service to be supplied, the direct charge on the consumers has increased substantially, the structure of the industry has changed and the industry has become more a corporation and less a locally sensitive service.
  I agree with the way in which the hon. Member for Reading, North posed the problem. Those of us who represent constituencies that have both high rainfall and a high water charge believe that water supply is a service and not a commodity. There must a subsidy element, a transfer payment or an equalisation payment.
  The hon. Gentleman suggested that because much rain falls on Wales the supply of water for Wales must be less expensive. However, the hon. Gentleman forgets that rain falls where there are high mountains. The scattered nature of the population is one of the major factors in the higher cost of piped water supply. I know only too well that in my constituency, which has many small reservoirs, the Merioneth water board, subsequently the Welsh water authority, had the problem of piping and connecting the centres of water supply to provide a local water grid. Therefore, when the hon. Gentleman says that because water falls on Wales it should be cheaper there, he fails to understand the capital intensive nature of the water supply industry or service and the way in which the disciplines of a commercial capital intensive industry cannot be made to apply effectively or efficiently in Conservative Party market terms to the water supply industry. That is the basis of our argument against the thinking behind the legislation.
  I do not wish to make myself an honorary member of the alliance, but I endorse almost everything that was said by the hon. Member for Isle of Wight (Mr. Ross) about the need to bring back the democratic process to this public utility. One significant theme in the debate so far has been the clamour for English regionalism from the Liberal Party, which has traditionally supported it, and from the Opposition Front Bench. That would resolve many of our
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  attempts to make the large public utilities, which must be organised at some level of their operation on a regional basis, directly accountable. As we look at the regional structure of the health authorities, water authorities and all the other utilities and the attempt to balance efficiency in administration and central funding with consumer control and local democratic control, we shall have to turn increasingly to regional authorities and more powerful local authorities that have a democratic basis.
  As always, consumer committees are opportunities provided to advise after centralisation has taken place. That has been the familiar pattern since the 1960s in the creation of super Government Departments and super nationalised quangos or corporations. There is an opportunity for permitted participation when all the decisions have been taken. After centralisation, consumer committees are created, which are always small voices against the centralised decisions of the bureaucracy. That is why regional tiers of authority would go some way towards righting the balance between Whitehall and the English regions and in our case between the Welsh Office and the consumers of water or any other service in Wales.
  Water services have obsessed my party for many generations. My constituency has one of the largest reservoirs in Wales. I take a personal interest in the resources that are transferred from it to the River Dee and hence to the North-West water authority area. The other major transfers from Wales are from the Elan Valley reservoirs in the area of the Welsh water authority to the Birmingham conurbation in the area of the Severn-Trent water authority, from the Vyrnwy reservoir, which is in Wales geographically but is in the Severn-Trent water authority area, to Liverpool, which is in the North-West water authority area, and from the Alwen reservoir on the borders of Merioneth, which is in the Welsh water authority area, to the North-West water authority area. Those are the four major transfers. The charge for those transfers is a major complaint by water consumers in Wales.
  In the financial year 1981–82 the Welsh water authority had the highest average household bill for water supply. If one compares the present average payment in the Welsh water authority for this year with the water bill in the areas that receive water from Wales, one sees that the figure is over £79 in Wales, £59 in the North-West and £62 in the Severn-Trent area. In other words, the average payment in Wales is 32 per cent. higher than in the North-West.
  That argument exercised the Select Committee on Welsh Affairs. The Committee's report has not yet been published. Its deliberations contain valuable evidence that will help to enliven our debate. Throughout the discussions of the Select Committee and the questioning of the various authorities, including water authorities from England, transfer pricing and the difference between the bills for comparable households in Severn-Trent, the North-West and Wales have been brought up by members of the Committee. My party is not represented on that Committee, but we gave evidence on the issue. We are following its deliberations closely.
  Clause 8 removes entirely from the statute book one option that is being actively considered by the Select Committee.
  Mr. Alec Jones indicated assent.
  Mr. Thomas: I am glad that the right hon. Member for Rhondda (Mr. Jones) endorses that. The Select Committee was considering that option as a result of the evidence. If it were for that reason alone I would oppose the Bill.
  Although it was a limited measure, the Water Charges Equalisation Act began to transfer resources from one water authority to another. It has been made abundantly clear in Wales that full equalisation has substantial support. For example, the Wales TUC in its evidence to the Select Committee on 10 February this year stated that it had a policy of full equalisation between the water authorities in England and Wales so that consumers paying for water paid the same price.
  The Government reject equalisation in clause 8. When I intervened in the Minister's speech he failed to tell me with what the Government intend to replace equalisation. Is the inequity of the 30 per cent. differential between Wales and the North-West to remain? Is it Conservative policy that consumers in Wales should be expected to pay 30 per cent. more for their water although 15 per cent. of the total water supply of the Severn-Trent water authority is obtained directly from Wales and more is abstracted by the North-West from rivers that are regulated by reservoirs in Wales? I hope that it will be made clear in the debate whether that is or is not Conservative Party policy, so that the voters in Wales will be able to pass judgment on it when the general election takes place.
  If equalisation is rejected and if differential charges are permitted by the Government's policy, what is their view of the application made by the water authority, which takes a different view from them? The previously constituted and more democratic Welsh water authority and the present and more constricted authority have made two successive applications to the Severn-Trent and North-West authorities, the two recipient authorities of water from Wales, for a bulk transfer payment.
  A submission was made to the Severn-Trent water authority and it and the North-West water authority disagreed. The issue was referred to the Welsh Office in October 1981. The Minister said that there would be a response shortly, but I remind him that his Department and the Welsh Office have told us that since February, when the Welsh water authority was approached by the Welsh Office with a document laying down the procedure for submitting further information and allowing time for consultation. It was then assumed that a decision would be made in May. However, no decision was made then and we expected a decision before the Summer Recess. Again, no decision was made. We are now told that the issue is before Ministers and that a decision will be made shortly. I should like to know how shortly is "shortly".
  If the Government are turning down the option of allowing inter-authority bulk transfers to be charged for at a level above that charged to the North-West water authority or the Severn-Trent water authority as ordinary consumers of the Welsh water authority with only an abstraction charge to pay, and if the Government are not considering going beyond the no-profit and no-loss concept in inter-authority transfers, the Welsh electorate has a right to know. The implication of that policy is that consumers in England using water that has been abstracted in Wales and piped or abstracted outside through a regulating reservoir and a river will not be expected to bring about some equalisation of the 30 per cent. higher charge that is paid by Welsh consumers. They will have that advantage.
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  The then chairman of the Welsh water authority, Mr. Haydn Rees—I pay tribute to him for the helpful advice that he has given me—gave evidence to the Select Committee on Welsh Affairs. Mr. Haydn Rees is a major public figure in Wales who has served both local and central government in advisory capacities over the years. He knows the water industry and local government well. It is his considered view—this is the view which he presented in evidence to the Select Committee—that there is a need for the Government to address themselves to the difference between the way in which charges are made by water authorities and the basis upon which they are made by other public utilities.
  When Mr. Haydn Rees appeared before the Select Committee he was asked by the hon. Member for Aberdare (Mr. Evans) on 25 February:
  "How can we argue that a telephone call from Birmingham is the same as a telephone call from Cardiff, or that a letter posted in London is the same as one posted in Powys and yet for some reason people have to pay a different charge for water in these different areas?".
  Mr. Haydn Rees replied:
  "I believe that if you are to get rid of the emotion the only way is to treat it the same as gas and electricity… Thames, for instance, is a very wealthy Authority; it is 98 per cent. Self-financing and I believe it had surplus property sales last year of £95 million when we have been lucky to have sold just over £1 million of assets in three years."
  He was saying that the Welsh water authority and the Thames water authority are different because of the populations that they serve, their historic debts and the water arrangements that they inherited. He went on to argue in his evidence for standard charging throughout England and Wales. That is the view of someone who has worked in local government as a chief executive and more recently as the chairman of a water authority. It is a view to which the Government should listen.
  Mr. Anderson: Does the hon. Gentleman follow the consequence of that argument? If there were equality throughout Britain, there would be little or no scope for the Welsh water authority and it would be nationalised on a United Kingdom or England and Wales basis.
  Mr. Thomas: I should like to enter into a long debate with the hon. Gentleman about the nature of the structure of public corporations in Britain of a federal or centralised nature. However, I do not think that equalisation is the only model for transfer payments. There are other models, and I shall outline them. It is interesting that the chairman of an authority should argue for pricing. I do not believe that regulated or standard charges should result in the removal of a democratically elected regional authority. Gas and electricity provide the same example. Although the pricing is uniform, or within a 20 per cent. margin of uniformity, we still have area boards that can administer the services locally. That brings in a democratic element. Surely standard charging should not lead to abolition.
  The Under-Secretary of State for Wales (Mr. Wyn Roberts): I may be able to help the hon. Gentleman on how shortly is "shortly". The question turns on the determination by my right hon. Friends of the issue of bulk transfer charging. There has been some delay because we have had two authorities in Wales alone making different submissions. The English authorities have had to comment and have had to have time to do so. We hope to have a determination which can be taken into account by the Welsh water authority in determining next year's prices.

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  I think that the hon. Gentleman is making too much of bulk transfer charging, bearing in mind the price that has been paid by the North-West and the Severn-Trent authorities in the past in relation to the running costs of the Welsh water authority, which in the current year amount to £154 million.
  Mr. Thomas: I am aware of the running costs of the Welsh water authority. I referred to them at the beginning of my remarks when talking about the cost of supply in geographically difficult areas. We must take account also of the way in which the Welsh water authority has been saddled with an especially large historic debt, which has penalised it in its annual pricing function. However, I accept the hon. Gentleman's argument about additional costs.
  I am not arguing that bulk transfer charging is the only way of producing equity. I am arguing for the options to which the Government are laying themselves open. As the Bill rejects equalisation, the only options open to the Minister are bulk transfer charging or local government, and therefore rate support grant, funding of the water service. Those are the alternative ways of providing differential funding. They would provide means of funding the differential or subsidising it to a degree in Wales and receiving areas. Bulk transfer charging appears inequitable to consumers of water in Wales who have to pay higher charges because they see regulating reservoirs within their localities having their water abstracted and used outside.
  The Severn-Trent water authority gave evidence to the Select Committee in December 1981. As one would expect, the authority, in its evidence to the Select Committee on 16 December, objected to the possibilities of a transfer pricing scheme and a bulk transfer scheme on the grounds that this would result, in the bill given to Severn-Trent by the Welsh water authority, in an increased charge of £2·668 million per annum or 2·3 per cent. of the average charge to the water supply customers. Severn-Trent argued that such an approach—the level of charge requested by the Welsh water authority for the bulk transfer—conflicted with the generally applied no-profit, no-loss basis of inter-authority bulk water supply transfers which received specific Government approval in paragraph 57 of the 1977 White Paper, "The Water Industry in England and Wales: the Next Steps".
  The Severn-Trent water authority argued:
  "The effect of the WWA proposal would be to charge to STWA, and also the North-West WA … a rate considerably higher than that which the WWA will charge to its own water supply customers in respect of abstraction costs. If this proposal were to be accepted the existing generally accepted 'no profit no loss' basis for inter-authority bulk transfers would no longer be seen within the water industry as the guiding rule and the precedent set could not be restricted to the present case. In the longer run experience in other parts of the world and in England and Wales prior to the 1974 reorganisation suggests strongly that this would lead to uneconomic use of resources as a whole."
  That is the case presented by the Severn-Trent water authority.
  When the Minister winds up I would like him to tell me what his proposals now are, as he has clearly rejected the Labour Government's equalisation proposals, if he is not to allow for a bulk transfer payment sufficient to equalise the 30 per cent. differential between prices charged in the North-West and Severn-Trent areas and in Wales. In this
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  context, it is useful to consider the other two options which the Government, according to their political position, might reject.
  As Ministers have already said, if the Government create 10 autonomous or quasi-autonomous water authorities, and if those authorities regard water as a commodity saleable both to their own consumers and to other authorities, it might well be argued—on the basis of the market mechanism which, according to the Conservative Party, apparently determines the whole of civilised existence—that the authorities should be free to charge a commercial rate. In my view, that would lead to chaos in the organisation of the water industry in England and Wales.
  Plaid Cymru has never argued for an exorbitant rate to be charged for water abstracted. We have argued for a fair return—25p per 1,000 gallons—as we said in our evidence to the Select Committee. Our concern has been to break down or reduce the differential between the amount paid by consumers inside and outside Wales, and also to ensure that the areas of abstraction were compensated for the economic resource abstracted.
  For example, one could imagine a payment to an economic development fund administered by Mid-Wales Development for the area that I represent. There should be some recompense to pay for the amenity development or even the conservation of some of the areas from which these resources are abstracted. That has been our argument. We have certainly not argued for transfers to be determined by commercial market forces. If the Government reject equalisation, however, given their view of the water industry as a business and water as a commodity, theoretically the Welsh water authority could charge the Severn-Trent or the North-West authority whatever it liked, on the basis that it was a fair commercial transaction.
  Will the Conservatives state clearly what kind of transfer mechanism they wish to apply, if it is not to be a commercial rate laid down by one authority against another? Other options include wiping out the inherited debt—the historic costs of the authority. I understand that that would make a substantial contribution, as the shortfall for the current financial year is about £8 million. If equalisation is rejected, there is also the possibility of a local authority mode of support through the rate support grant, as applies in Scotland.
  I shall not go into the details, but the reorganisation of the Scottish water industry in 1975 did not take place along the same lines as the reorganisation in England and Wales. Both the organisation of the industry and its funding arrangements are very different. Public water supplies are funded through the domestic water rate, but the services are located not in a centralised authority but in the regional or island authority and their funding is part of the general rate. The general rate, of course, is subject to rate support grant, although there is a mechanism to try to ensure that the rate support grant element is not directed specifically towards water service deficits. In other words, there is no hypothecation of the rate support grant element.
  A significant aspect of the Scottish system and one that has caused much concern in Wales is that, although rate rebates in Scotland are not generally applied to the domestic water rate element, they are so applied in the case of disabled persons. In 1980–81, the estimated total rate rebate paid in Scotland was £52·15 million, of which £1·04 million was attributable to that part of the regional

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  or island areas where the general rate is raised in respect of water charges. Additionally, an estimated £350,000 was paid in rebates to disabled persons in respect of domestic water rates, the total rebate to the disabled being £5·87 million.
  Organisations representing the disabled in Wales, and certainly my hon. Friend the Member for Caernarvon (Mr. Wigley) who conducted a long campaign on this, and indeed introduced a Bill last Session to deal with the matter, regard it as iniquitous that water rates should be rebatable for the disabled in Scotland but not in Wales. If the Government take the view that the water authorities in Wales should charge the present higher rate to their consumers, consumers on low incomes and disabled consumers should be able to obtain rebates. This is a matter of grave concern among organisations representing the disabled.
  The Conservative Party has clearly forgotten that the water service in Wales is not a new area of controversy. Historically, it is a matter of controversy because of the way in which the reservoirs were constructed. As the Minister will know, on the shores of the reservoir in my constituency there is a chapel of the Presbyterian Church of Wales—a denomination that the Minister and I know well—dedicated to the memory of the village of Capel Celyn which, with the consent of the House but with the opposition of nearly all Welsh Members at the time, was drowned to provide the reservoir. An historic sense of injustice is felt strongly in Wales, and not only about that reservoir.
  The Daniel committee was set up as a result of the demand for justice, and it reported to the Labour Government. It considered in great detail all the options available, including total equalisation. Its recommendations resulted in partial equalisation under the Labour Government. It considered extending the rate support grant to offset higher water costs. It investigated the notion of a direct Exchequer subsidy and also the imposition of surcharges, in addition to the existing abstraction charge, as surcharges imposed on water transferred to other authorities.
  The report proves that we cannot return to the period before 1975, when water charges were determined by each authority according to the cost of supply in its area. We cannot fall back on the no profit, no loss notion. Indeed, no less a person than the Under-Secretary of State for Wales told the Standing Committee on the Water Charges Equalisation Bill on 24 February 1977:
  "What I propose in the amendments is that there should be a more commercial pricing of water transfers … I suggest that the price should be enough to ensure that the average price of water to Welsh consumers is no different from the average price of water to consumers in Severn-Trent and the North-West."
  He added that
  "water is a scarce resource. Why should the areas that have it in abundance, and have very little else in abundance … not regard water as a saleable commodity."—[Official Report, Standing Committee B, 24 February 1977; c. 393–5.]
  Is that still the Minister's view?
  My final quotation comes from Haydn Rees. He argued a powerful case in his last chairman's foreword to the Welsh water authority annual report, He said:
  "As I have publicly stated on several occasions, whatever decision is reached, I personally believe that sooner or later (and the sooner the better) our legislators will have to realise that the Water Services Industry is the only important public utility
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  service that does not have either a common base charge or an equalisation of charges. That this, the most important civilised and civilizing of all the public services, should not have similar treatment is, I believe, unacceptable and inequitable to the people in the area we serve."
  This Bill makes far smaller the possibility of equality between the parts of Wales that transfer water and those which received it.
  Gas has a common charging base, with few variations. Electricity has a common charge for the cost of energy from the CEGB, which accounts for 80 per cent. of the bill; depreciation and rates take a further 10 per cent. and operating costs the remaining 10 per cent. Therefore, there is a slight variation. Posts and telephones have always been charged on a uniform basis. The Bill is an attempt to prevent the Welsh people in the areas where water is conserved, and from which it is transferred, from obtaining some justice. Because of that, many people have withheld payment of their bills this year. When the Minister replies, I hope that he will say clearly that there will be a response from the Government which will enable the areas to be recompensed. The Bill results only in a further attempt to create greater inequity and inequality between the areas. It also perpetuates the notion that water is a commodity, not a public service.
  6.45 pm
  Mr. Charles Morrison: Long ago I was taught that it was never wise to take a good political argument to a logical conclusion. I admit that I am not wholly convinced that the hon. Member for Merioneth (Mr. Thomas) has a good argument. Perhaps that is why he took it to a conclusion. He went into a great deal of technical detail, but the burden of his argument was twofold. First, he supported the retention of the Water Charges Equalisation Act. I must tell him that the Act has not been used since 1979, when the Government made a commitment to abolish it. I am delighted that they are now doing so.
  The hon. Gentleman, following the hon. Member for Isle of Wight (Mr. Ross), made an eloquent plea for democracy. I agree with his support of democracy, but I am not convinced that it is necessarily the best way to manage a public utility such as water.
  The right hon. Member for Birmingham, Small Heath (Mr. Howell) said that the Bill was dangerous and damaging. I could not help feeling that that was a slight exaggeration— even a wet could not become so overexcited about the subject of water—
  Mr. Denis Howell: Wait until there is a national crisis.
  Mr. Morrison: I have long lost my Utopian enthusiasm for reorganisation of any aspect of national life. Like my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths), I have lived through the reorganisation of local government, and I am not convinced that that was quite perfect. I have also lived through two reorganisations of the National Health Service; the first was so bad that we had to do it again, and I am not convinced that we got that right. I have lived also through the reorganisation of water—I think more than once, but I am not sure. No doubt I have lived through other reorganisations that are better forgotten. But on no occasion has reorganisation been found to be a total success. On no occasion would many members of the public consider that they were better off following

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  reorganisation. To be fair, what went before might soon have deteriorated into an administrative muddle at much greater expense and with less and less satisfaction to the consumer.
  I have reached the stage when I look at any reorganisation through jaundiced and sceptical eyes. That stated, I must declare an interest as a vice-president of the Association of County Councils, the Association of District Councils and the National Association of Local Councils. However, I disagree with the local government associations on this occasion. I understand their concern about local democracy. Over the years I have fought for their rights—
  Mr. King: Hear, hear.
  Mr. Morrison: I thank my right hon. Friend. My remarks have sunk in. I have fought for their rights and the maintenance of local autonomy against the trespasses of Whitehall and Westminster. Local government provides one of the all too few remaining checks and balances within our constitution. I shall continue to fight for local government on that basis. I hope that my right hon. Friend takes note of that.
  After lengthy consideration I am no longer convinced that water and those for whom it is provided benefit automatically from the intervention of local democracy or any other democracy. Indeed, I suspect that the opposite is true. Water is just the type of commodity that can be dealt with best by a public utility type of organisation. It is not so different in principle, as my hon. Friend the Member for Morecambe and Lonsdale (Mr. Lennox-Boyd) said, from gas and electricity.
  Mr. Ogden: They may all be nationalised or part-nationalised. Gas, electricity, oil and coal are all alternative forms of fuel—apart, that is, from the fuel used for lighting. However, there is seldom an alternative supply of water to the nationalised or local authority one.
  Mr. Morrison: I do not quite follow the logic of the hon. Gentleman's argument. Water is a resource that must be harboured and cared for, for a multiplicity of purposes. There is a consumer product to provide and waste that must be reclaimed, recycled and renewed. Those objectives are more likely to be achieved by good management and a sound management structure than by overt democracy. The Association of District Councils claimed in a letter to its vice-presidents that
  "local government membership gives the essential element of local accountability. This is a major factor in holding down water charges."
  Is it? I have received more letters of protest about water charges than about almost anything else. I doubt that I am unique in that. I do not believe that many consumers would support the association's contention, much as I should like to be able to agree with it.
  My hon. Friend the Member for Reading, North (Mr. Durant) pointed out that often—indeed, almost invariably—local authority members of water authorities are not personally known to be members of those authorities.
  There are two other points about local government representation. First, the work, if not the scope, of local government is now onerous and for many senior councillors it has become more of a full-time job than a voluntary task. As a consequence, therefore, it is likely to become increasingly difficult to find able councillors who
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  can spend extra time on water authority work. Secondly, I am not convinced that accountability and efficiency are automatically improved by local authority representation. I fear that councillors, once appointed to a water authority, often become ambivalent and uncertain whether to be loyal to the local authority, the water authority or to the consumer.
  A clear-cut division between a smaller water authority board and the consumer, whether individual, industrial, commercial, agricultural or even local government, is more likely to create a climate in which successes or failures, efficiency or inefficiency, can be highlighted and, where necessary, acted upon. I therefore welcome the Government's proposals. They will reduce bureaucratic costs and provide a more efficient structure for the supply and conservation of water.
  I am glad to note clause 2. I think that my right hon. Friend said that he hoped that clause 2 was not controversial. He could have been much more positive and enthusiastic. An increase in the limit on aggregate borrowing from £5,000 million to £6,000 million must be sensible in the face of inflation, although its rate has been much reduced. In present economic circumstances, I hope that clause 2 means that water authorities are to be encouraged to invest in, for example, sewers or other improvements that consumers need and thereby create more jobs for the construction industry. I also hope that my right hon. Friend the Secretary of State will not shrink from increasing the limit of borrowings to £7,500 million whenever it is necessary to maintain improvements and construction programmes.
  I shall not dwell on the abolition of the National Water Council and the Water Space Amenity Commission. I have no doubt that both have done good jobs but that their usefulness is now outlived and that it is time for them to be put to sleep quietly, albeit with thanks to those who have served on them. Clause 7 should reduce the fear that some people have about the lack of expression of consumer interests.
  It is useful legislation. It is not earth-shattering but it is sensible and in the fullness of time it will be of benefit to consumers and other users of water. I therefore wish it well.
  6.57 pm
  Mr. Eric Ogden: The hon. Member for Devizes (Mr. Morrison) said that he did not believe that democracy or a democratic process was necessarily the best way to control and operate water authorities. He gave insufficient credit to the simple fact that it was only because of democratically elected local authorities that the supply of pure water began. Occasionally, a philanthropist or business man, such as Lord Myddleton, made a New River to bring water into London. But such men were rare. The provision of the type of water that both he and I want supplied to British citizens was chiefly brought about by, and is to the credit of, local democracy. I agree with him about the extent of that responsibility going too much in one way or another. I also agree with the hon. Gentleman's scepticism about the ability of successive Governments, especially Conservative ones, to organise or reorganise anything effectively.
  Today's debate is one occasion when I could be tempted to speak for longer than is my usual wont. This is partly because other hon. Members have shown a fair

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  interest in the matter and partly because of my simple conviction that the Committee that considers the Bill could be rid of the dominance of the Chief Whip, the Secretary of State for the Environment and the Minister for Local Government and Environmental Services. If its proceedings went ahead with the good sense of the Under-Secretary of State for the Environment and the knowledge and sensibility of the Under-Secretary of State, Welsh Office, and if the malign influence of Government Whips were removed, there might be enough common sense in that Committee to achieve a practical improvement in the present circumstances without going for the wholesale massacre that is proposed in the Bill.
  The hon. Members for Devizes and for Bury St. Edmunds (Mr. Griffiths) made it clear that they have little faith in the ability of Conservative Governments to organise or reorganise anything successfully. One has only to mention local government and the National Health Service. There is nothing in the Conservative record to suggest that this Bill will improve the quality of water, lessen the cost or make the industry more accountable. For that reason, hon. Members should view the Bill with the same doubts brought to the issue by at least two Conservative Members.
  To be more than generous to the sponsors of the Bill, the title of the Bill is at least properly modest and accurate. It should cause no confusion. I am not certain from the procedures of the House that have been followed tonight whether this is a 100 per cent. English-Welsh Water Bill. I agreed very much with the comments of the hon. Member for Central Ayrshire (Mr. Lambie) on training. I hope, Mr. Deputy Speaker, that the precedent set before you came into the Chair, whereby the first Opposition Back Bencher to be called on a Bill concerned almost 99·9 per cent. with English and Welsh affairs was an hon. Member representing a Scottish constituency means that next time a Bill that is almost 99·9 per cent. Scottish, comes before the house an Englishman or a Welshman will be called before a Scots Member. I would not like to be the person involved but this is, I think, a point worth making.
  The Bill may be an attempt to change a water supply service to a water supply, use and re-use industry. The intention might be right and the principle worthy of support. But the Bill will not deserve support now or later unless it is considerably amended. In its present form the Bill has too many faults. The Minister might have been a Foreign Office Minister introducing the Bill. His performance was, in fact, better than that of most Foreign Office Ministers such was his selective approach to the history of the proceedings that led to the Water Act 1973. Even the hon. Member for Bury St. Edmunds revealed more than the Minister.
  It is no State secret—if it was a State secret under this Government it would be even better known—that the 1973 Act was a major compromise. That act resulted from some fantastic rows at the time involving the Department of the Environment, the Ministry of Agriculture, Fisheries and Food and the Welsh Office. There was fury and furore all over the place. It was a very lively occasion. At the time, the Welsh Office and the Ministry of Agriculture, Fisheries and Food seemed to have held their own. It was about 6–4 in favour of the Department of the Environment. The Bill was a compromise.
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  Now the Department of the Environment comes along with a new Bill, having made major concessions, especially to the Ministry of Agriculture, Fisheries and Food. It is piquant that the then Secretary of State for the Environment, who is now the Minister of Agriculture, Fisheries and Food, will receive what he originally planned that a different Minister of Agriculture would have. That is for the Ministers to sort out.
  My complaint is that this Bill brings too great a swing of the pendulum. This should be called the Government Centralisation and Ministerial Control of the Water Industry Bill. If hon. Members above the Opposition Gangway want a classic example of how to nationalise without bringing in nationalisation, it is before them in the Bill. The control of the English and Welsh water industry will rest in Marsham Street, with the Secretary of State and his Ministers. They will have the power to appoint and to dismiss. They will have control of the supply and of the consumer representation interests. The power will reside with them whether they say they want it or not. There will be no independence for the water authorities. Ministers talk of greater independence for the water authorities and greater opportunities for them to manage their own affairs. The Government are offering the water authorities shadows. The substance is entirely under the control of Ministers.
  In the North-West and especially in Merseyside, the record of the water authorities, established by the 1973 Act, has been, in most regards, good to very good, marred occasionally by some spectacular disasters in a particular area at a particular time. Overall, however, the record is good. This is almost a monopoly service. There is a difference between the supply of water and the supply of gas, coal or electricity where there are alternative sources available. In my house there is no alternative to the water authority supply.
  Mr. Lennox-Boyd: Has the hon. Gentleman recently tried to power an electric light with gas?
  Mr. Ogden: In one room there is still a gas mantle in the corner.
  Mr. Lennox-Boyd: I am trying to show the hon. Gentleman that electricity is a monopoly for lighting in the same way that water is a monopoly.
  Mr. Ogden: I will grant the hon. Gentleman a halfway house on lighting but not on heating. Water is almost a monopoly service subject to Government diktat, and not directly responsible to any elector or consumer. I recall that the hon. Member for Ormskirk (Mr. Kilroy-Silk) was at one time always asking why the North-West water authority had bought a large car with the registration NW 1. It is an obvious public target.
  Mr. Andrew F. Bennett: Is it not sad that the North-West water authority committed a series of public acts in its first years of existence that created the impression among a large number of people that it was spending money like confetti?
  Mr. Ogden: The hon. Member for Stockport, North (Mr. Bennett) had a great deal to do with encouraging that wholly wrong impression of the water authority's activities. It was right that there should be criticism of one part of the authority's activities. To say that the whole organisation was at fault amounted to a difference of emphasis which the hon. Gentleman should have known

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  better than to pursue. I have criticised aspects of the authority's work on occasions. Overall, the record has been good.
  We are fortunate in the North-West and on Merseyside in the purity and quality of the product. Export to the London area should be encouraged. Hon. Members representing Wales, the North-East and constituencies east of the Pennines will no doubt say the same about the quality of their water. Ours is the best. It is only when we have to come and work in London that we realise how good is the product at home. There is no reason to believe that the extent of Government control proposed in the Bill will improve the quality of the product, the price or the influence that can be brought to bear on water authorities. At least those in the North-West listen to what we have to say.
  The hon. Member for Newcastle upon Tyne, North (Sir W. Elliott) introduced what I would call the Sherlock Holmes factor—the dog that did not bark. I refer to a subject that the Minister did not mention. What is to happen to the private sector of the water supply industry or service? Some mention could have been made by the Minister of the relationship that should exist between the new water authorities operating under the Bill as it now stands and the private water supply authorities. There are reports that they have been asked not to make a fuss this time, but to leave everything quiet so that after the next election, if the Conservatives are successful, there will be something for each of them. I do not believe or disbelieve the reports, but it would be reasonable for the Minister to tell us what his proposals are about the private sector and how it will work and co-operate in the new arrangements. As the Minister did not mention this, I have some suspicions about his intentions.
  Mr. King: I did not mention it because there is no change. As the hon. Gentleman knows, the private sector is already an important and significant element which provides about one-quarter of all fresh water. There are 28 statutory water undertakings and we do not propose any change in their relationship. The statutory duties of the water authorities remain as they are.
  Mr. Ogden: I am grateful that the right hon. Gentleman has put that on the record. We are agreed that the relationship between the new authorities and the private sector should continue to be at least as good as they apparently were between the old and the new water authorities, and that the Minister has no proposals at this stage for any changes in that relationship. However, he would have been well advised to say so.
  The Bill is a nationalisation measure. At the moment there is some local influence and accountability, which may be too much, too wide and too diverse. Under the Bill, the Secretary of State will appoint members who are to have some regard for their local areas and some knowledge of the water supply industry or services. The Minister will have regard to the information, knowledge and experience and will have the power to appoint two members who will have responsibilities for agriculture, fisheries and drainage. The Secretary of State will supply them, and that is the division. On those figures of 6:12 the ratio between the Departments of the Environment and Agriculture, Fisheries and Food will be 7:2 or up to 13:2.
  The Minister said that executive members of a water authority would be full members of the water authority.
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  Does this mean that the chief executive will also be an appointed member of the water authority? Will he draw two salaries? Will he be a full-time executive and a part-time member of the water authority? How is that fitted into one working week? Will the treasurer or the chief surveyor be a full-time fully-paid member of the water authority, and a part-time, part-paid member of the executive? This is interesting. I am asking for clarification.
  There is a case for the chief officer of any authority to have real influence with his authority, whether local government or anything else, but the Minister will find conflict arising if it said that one can be a chief officer and a member of the authority at one and the same time.
  Mr. Dickens: Why is the hon. Member making such heavy weather of a small point? It is exactly the same as Ministers, who have an ordinary parliamentary salary and a ministerial salary, which they richly earn for the hours that they put in.
  Mr. Ogden: No, they do not.
  Mr. Dickens: Do they not? Well, they ought to.
  Mr. Ogden: I am tempted to leave it at that. Help of that kind from the Back Benches is something that the Minister could gladly do without. The Minister is not employed by anyone. He is a self-employed person, as we all are. Chief executives are employees. How can one be a master and employer, and a paid servant at the same time? Ministers—I wish they would think of this more often—are not paid employees of anyone. They are self-employed, and there is no comparison.
  Mr. King: The hon. Gentleman is making heavy weather, although perhaps not in the way suggested This would be more like a board, whether a gas or electricity board, in which there is a chief executive. One does not say about a private sector company that it is strange that the managing director is on the board, and ask how he fulfils those functions. It happens to follow from the function of his responsibility. I am not saying, and I made this clear, that we necessarily see a role for executive members. There will be discussion in Committee about whether they would, automatically and ex officio, because of the position that they hold, be on the authority, and about who might be executive members on the authority. These are matters that we shall consider, but I hope that the hon. Gentleman recognises that this is not an appalling conflict or a frightful problem about a man doing two jobs. This is the way that the whole of the private sector operates.
  Mr. Ogden: That is a point that we shall want to examine. I see the problem about a paid professional person such as a surveyor or an engineer on an authority also being on the board of directors. The duty of the one is to provide policy and the duty of the other is to put the policy into effect. The balance must be right.
  Between now and the Committee stage, which might come in two weeks' time, the right hon. Gentleman could look at the possibilities of finding some way, perhaps more modest than the Labour Party would want, of having a local area voice on the authority, whether through the county or the city council. Some people must go on to a smaller authority, which will be accountable, indirectly, to the electors of the area. The number might be modest, but there would be a degree of accountability. Under the

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  proposals in this Bill, the appointees, of one kind or another, will only be accountable to the Secretary of State in Westminster. I do not want that.
  The Minister might argue that if we do not agree with the borrowing limit, the industry will be in trouble. The simple answer to that is that if we do not give the Bill a Second Reading tonight, he can bring in a simple one-clause Bill next week. He will then have his borrowing without opposition. The argument about urgency is not supported by that.
  When we were talking about the dissolution of the water council, I became as lost between "TISWAS" and "WACO"s as I did in the Welsh hills when the hon. Member for Merioneth (Mr. Thomas) was speaking. I listened with great care to what the hon. Member had to say, but I wish that he had fed it to me in smaller buckets.
  I object to the abolition of the water councils in that the Minister is saying that the Secretary of State will hold all the assets and can dispose of them to somebody else if he wishes to, and in whichever form he wishes. If the operations cost the Secretary of State anything—for the dissolutions—he can charge the local water authorities. This is a dissolution edict. Henry VIII would have had much to learn from this Secretary of State. That king may have dissolved the monasteries but he did not charge them as well as taking their assets.
  I welcome the parts of the Bill dealing with training and overseas activities. However, how will the Minister achieve any co-ordination between the different authorities and prevent the mistake of having a multiplicity of smaller authorities each trying to do on a small scale what ought to be done regionally or nationally?
  I should like more information on the water authorities and local authorities as described in clauses 6 and 8.
  The Bill does too much. It concentrates too much control in the centre with the Secretary of State for the Environment, because the Secretaries of State for Agriculture, Fisheries and Food and Wales will be very much numbers two and three in this kind of organisation. The Bill could be subtitled "The Department of the Environment Strikes Back", "The Empire Returns", "Heseltine's Revenge" or something like that. It does not increase the real powers of suppliers and consumers in water authority areas. It is not essential that its provisions be controlled from the centre. The Minister will control the appointments, the authorities and even how the consumer interests will be represented and organised. Both aspects cannot be combined in a central organisation.
  The Bill goes too far, too fast. The pendulum swings too far. I shall vote against it, and I hope that other hon. Members will do so as well. It may be that some independent spirits on the Conservative Benches with some knowledge of the industry will be prepared to say "No". Change is needed, but not this change in this form.
  7.20 pm
  Mr. Mark Lennox-Boyd: I am happy to speak after the hon. Member for Liverpool, West Derby (Mr. Ogden), in whose speech I intervened. The assertion that the water authorities are a unique monopoly, thereby justifying the election of representatives, does not stand up to analysis. There are many public and private monopolies on which the consumer has no elected representative. For example, we have never
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  considered the possibility of elections to the body responsible for the sending of a message by mail, yet it is directly comparable.
  We have all played the famous game of "Monopoly". As well as four railway stations, that game also has an electricity company, a gas company and a water works. All those companies are utilities, and the game of "Monopoly" and common sense are a good precedent for establishing and asserting the fact that water is a utility.
  Mr. Andrew F. Bennett: When the hon. Gentleman played "Monopoly", did he go for the water undertaking? I suspect that he went for Park Lane. Many of us fear that, given the way in which the Government and the water authorities are behaving, the water authority will soon be the best part of the "Monopoly" board.
  Mr. Lennox-Boyd: I am grateful to the hon. Gentleman for that intervention. It would undoubtedly enliven the debate if I went down that path, but enjoyable though it would be I must stay in order.
  The right hon. Member for Birmingham, Small Heath (Mr. Howell) displayed considerable indignation which has not been matched by the attendance of his supporters. Indeed, only one Labour Back Bencher has contributed to the debate. Perhaps Labour Members accept, as my right hon. Friend said at the outset, that this is not the most newsworthy of measures.
  I welcome the Bill because it seeks to improve the relationship of the public, both as taxpayer and sometimes as an aggrieved party, with the water authorities. My area comes under the jurisdiction of the North-West water authority, and I should like to comment on its view of the Bill.
  That authority has not agreed with many of the things proposed by the Government, and I should like to demonstrate why I believe that it is wrong in this instance. As my right hon. Friend said, the Water Act 1973 moved away from local authority involvement, whereas previously local authority involvement included elected representation for consumers. Over the last decade, great tensions have resulted.
  In its annual report, the North-West water authority considers itself to be a consumer council, but experience has not borne that out. The area of the North-West water authority stretches from south of Crewe to north of Carlisle. It has 32 members—not as many as the 61 members of the Thames water authority. Under internal reorganisation plans, it is proposed to reduce the eight divisions to four. The authority is opposed to the creation of smaller boards and local advisory committees.
  I appreciate that worthy people serve on the board, some of whom are known to me personally, but I believe that their opposition to these proposals, while genuinely felt, demonstrates that they do not appreciate the remoteness in which they are held by the public.
  It is absurd to suggest that the 32 members of the North-West water authority should be considered as a consumer council, because inevitably a conflict of interest is involved. By using the phrase "conflict of interest", some hon. Members may think that I am suggesting that something improper is taking place. That is not so. There is no question of abuses taking place. However, if a member of an organisation is also responsible for representing complaints to it, he will find it impossible to do justice to both sides. That is what a conflict of interests

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  is all about. Such members cannot be expected to speak properly for the consumer, even when they try to do so. It is necessary to have bodies that are unafraid of being critical. That is what consumer councils are all about.
  How can the North-West water authority be a consumer body? The coverage would be ridiculously thin, because the 32 members, many of whom are professional experts, would represent 6£8 million people. To whom would an aggrieved consumer turn? Both the Cumbria county council and Lancashire county council have one appointee on the authority. Cumbria district council also has one appointee and Lancashire district council has two.
  Mr. Denis Howell: Better than none.
  Mr. Lennox-Boyd: The right hon. Gentleman says "Better than none", but better the consumer councils than this set-up. That is my assertion.
  The right hon. Gentleman complained earlier about the way in which Ministers tend to re-appoint their political placemen. I remind him that since the council elections last year, all seven county councils on the North-West water authority have placed new appointees on that authority. That cannot be right, and we must ensure that it does not happen. That is why we must treat the water authorities as utilities. Following a change of Government, we do not do stupid things such as changing the constitution of the CEGB. We respect the expertise that professionals bring to a particular job.
  I should like to see a local consumer council to which I could direct my constituents' grievances. The hon. Member for Isle of Wight (Mr. Ross) criticised the effectiveness of consumer councils and the North-West water authority seeks to do the same when it says that in its opinion consumer consultative committees of nationalised industries do not appear to be held in high esteem by the public. That is a rather patronising way to put it. Consumer councils should be angry and frustrated bodies. On many occasions they will fail to get their views across. Back Bench Members fail often to get their views across and are frustrated, but it is surprising and welcome when occasionally we succeed.
  In the North-West, consumer councils could be beneficial to the water authorities. We need to explain to the public the terrible problems of sewer dereliction, the need to rebuild, and the immense cost that that must legitimately place for several years on the water rate. The public has not been made properly aware of those facts. The committees will have a double reason for existing.
  The proposal is that the local consumer councils will deal with each of the districts of the water authority. The North-West water authority will reduce its districts from eight to four. In the North-West there will therefore be three dual purpose districts only, one of which will be fisheries. My constituency will be within the combined Northern and Ribble district which includes the whole of Cumbria and North Lancashire north of Chorley. It is a gigantic area and I do not believe that a consumer council can do justice if it has to cover such a large area. It will suffer from the appalling problem with which we have to live in Cumbria, that it takes hours to get anywhere. Perhaps the Secretary of State will consider it wise to make some modification.
  Mr. Campbell-Savours: Is the hon. Gentleman worried that under the new reorganised arrangements the
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  rivers division and the bailiff service in Cumbria will suffer? Will he seek assurances from the Government that that will not happen?
  Mr. Lennox-Boyd: I shall seek assurances if I should. I am not particularly worried about that, although I believe I know the point to which the hon. Gentleman is referring. I do not see how the Bill will affect the problem to which he has referred as it will not affect the constitution of the North-West water authority. The problem could well be helped if there is a consultative committee to take up the cases to which I believe he is referring.
  There is a great fear that a Government might become the sort of body that will make extremist political appointments. That fear has been genuinely expressed by many people. The hon. Member for Liverpool, West Derby (Mr. Ogden) said that one day there could be an extreme Government who would appoint their political supporters. If we treat these bodies as utilities that should not be a cause for great alarm.
  Clause 1(5) provides that appointees of the Secretary of State shall be persons who appear to him to have had experience and shown capacity in some matter relevant to the functions of water authorities. Does that give some general classification and protection? I appreciate that it is only what "appears" to the Secretary of State. I am glad to see the Under-Secretary nodding. Someone who has had no experience of the industry could not possibly be appointed. That appointment could be subject to legal challenge which would provide some protection against the provision of jobs for political appointees.
  People who wish to sue Governments are often faced with the problem of whether they have the locus standi to bring an action. The Under-Secretary might consider whether consumer councils could watch that aspect of the matter, although I do not see him smiling with great joy at that suggestion. Will he clarify what right the public has to challenge a Government seeking to make flagrantly political appointments?
  7.36 pm
  Mr. Andrew F. Bennett: I have listened carefully to what the hon. Member for Morecambe and Lonsdale (Mr. Lennox-Boyd) said. I believe that he made a major error in comparing the lack of representation under the new Bill with the position as it was before. Most people who argue in favour of democracy do not feel that the present position is satisfactory. It is the worst of all worlds. If we want local democracy we have to look further back.
  At a result of three pieces of legislation we have created a quango that is entitled to raise money from the public, but which is not accountable to the public. The principle of no taxation without representation is being stood on its head. The Government have set up a quango in three steps. I do not know whether the word for creating quangos is "quangoisation". The blame has to be laid at the door of the House, because it started to create water authorities in the 1960s. Until that time, water authorities had been developing for almost 100 years. They were based on local authorities or consortiums of local authorities. In some parts of the country there were water companies. It was a good system on the whole.
  There were many complaints in the early 1960s about the problems of collecting water, but there were few complaints from consumers about services in their areas,

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  because they were able to contact local councillors and complain. In many areas, people knew the water manager. There was a local personal service.
  The problem was that too many people said that the collection of water should be looked at nationally or on a larger scale. I accept that, but I believe that we should have separated collection from distribution. In the electricity industry there is the Central Electricity Generating Board and the distribution boards. In the 1960s there were strong arguments for saying that water collection needed to be managed nationally but that water distribution should still be a local service. It could have been left with the local authorities.
  In the 1960s we made local authorities come together in consortiums. That did not work well, but, just as the system was beginning to settle down, in the 1973 Act we went for river catchment areas, which in the North-West was distorted, as Manchester was already collecting from the Lake District. We lumped together a series of river basins to make the monstrous area of the North-West water authority. We are now making things even worse. My electorate can get hold of no one even to listen to their problems. The water authority is remote and distant and people are disillusioned.
  There is no mechanism for people to choose the quality of their water authority. The judgment must be made either to have a super-efficient authority with super-high prices or something more moderate. Before the 1967 reorganisation the old councils made the choice. There were good authorities with relatively high charges and bad ones with low charges. One reason why charges escalated in the 1970s was that the people who had opted over the years for a fairly poor service and modest charges found that the new council was asked to make high charges and demanded that the neglect in the area was put right and that the super-service that some towns had should be provided. Who will make the judgment now? Who is to decide whether to go for professional excellence and what the price should be? The consumer should have a voice in that.
  The Government should set up a national body for water collection and sewage disposal but return to local government the distribution of water and the collection of sewage, as that could be run on a local basis and be made firmly accountable to the democratically elected councils.
  Mr. Denis Howell: After our review we published a White Paper and our conclusion was the same as my hon. Friend's—that one national authority should provide water to the local authorities which would contract for it; the local authorities would clean it up and put it back into the system again.
  Mr. Bennett: I believe that that is the way in which we could return the industry to democratic control.
  There is also a problem with appointees. The Minister gives little authority to his appointees. Much greater authority comes from being elected, first by the electorate and then by fellow councillors as chairman of the committee. That attracts far more respect. If the appointee does a good job in criticising the Government and campaigning against them, they will sack him; if he presses for the authority to become more efficient, recommendations may be made to the Minister to get rid of the individual, suggesting that he does not do a good
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  job and interferes too much in day-to-day work. The appointee does not have the statutory position that comes from election.
  The Government's proposal is retrograde. They should bring back effective democracy to the water industry. Setting up consumer boards does not work. Those set up for gas and electricity have no real clout and in the water industry we need the clout of local democracy.
  The Bill gets rid of the National Water Council. The memorandum states that 448 people will lose their jobs. It is a sleight of hand by the Government. It cannot be argued that for the past three or four years that number of people have sat in the council's offices doodling on their blotters. I suspect most were working hard. The Minister is not abolishing their work; he is transferring it back to the individual water authorities. He will claim credit for the Government abolishing that number of jobs and say that they are efficient and the water authorities inefficient because they have had to take on extra staff to do the job that was being done nationally. He may get rid of the title of the National Water Council but most of its duties will have to be done by people in individual water authorities or in an umbrella organisation that they set up. I suspect that the same number of people will be involved. It may even require more, as often happens in reorganisations. Experts will be needed for wage negotiations and so on. Almost all the jobs that the council is doing will need to be done.
  I suspect that the only reason why the Minister wants to get rid of the Water Space Amenity Commission is that it is illogical to keep it if he is getting rid of the National Water Council. He should be giving it extra staff. We have a major problem over the use of water space. Because of rising living standards and possibly because of the Government's employment policy more people have leisure time and are turning to water sports for enjoyment. We need more campaigning so that every possible water space is used for people to enjoy their recreation.
  In most water leisure areas there is an appalling conflict of interest between those who want to fish peacefully and to water ski, between canoeists and those who want to go sailing, wind-surfing and so on. The best way to resolve the conflicts is to find more water. An awful lot of undertakings have water with notices saying "Keep out. Drinking water." People are forbidden to enter the area.
  The Water Space Amenity Commission was effective in pressing the water authorities to make more water available for sport. It is a national disgrace that so few reservoirs are available. With the growing demand for facilities for water sports, we need more campaigning and not less.
  The Bill does little to help my constituents who complain that the water industry is failing them. The Minister should have mentioned the standing charge, about which my constituents are bitter. They feel that it is unfair and imposes a penalty particularly on the elderly. The Government should clearly set out the basis on which charges should be made. They should choose either to use rateable values, which are not particularly fair, or to start to assess the needs of individual houses. Putting standing charges and rateable value into the calculation of water and sewerage charges loads the system heavily against the elderly and the single householder. That is unfair and it is a major complaint among my electorate about the water industry.

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  The Government must also examine water charges. The Bill should have been used to introduce a water rebate for the elderly and the poor. Local authorities were responsible for sewage disposal before water authorities were reorganised in 1973. Part of the rate bill was a charge for sewage disposal, for which one could claim a rebate. Why was it reasonable to claim a rebate on sewerage charges before 1973 and not now? The Government should extend rebates to cover both water and sewerage charges. The Government give some help towards heating charges through the social security system and they provide other assistance with household costs.
  Many single householder constituents tell me that they use very little water because of their age. Perhaps they are arthritic and it is not easy for them to bathe regularly. Their washing requirements are small, they have no car to wash and they have neither the time nor the inclination to water the garden. Next door to such a constituent will be a family paying exactly the same water rate, but it may have three or four children who bathe regularly and may use a washing machine continually, thus consuming vast quantities of water.
  The Government must find some way to alleviate the burden of water charges on the elderly. It is crazy that I should have constituents who are paying more in water service charges than in rates. They pay more for their water and sewerage services because they can claim rebates on other local authority services. I bitterly regret the fact that no provision for water and sewerage service rebates is made in the Bill.
  The Government have not examined charges. There is a major national campaign to persuade the Government to introduce water meters. The introduction would benefit employment by providing jobs in the manufacture of meters, as well as in reading them, but that is all that can be said in favour of water meters.
  I have said many times that it is illogical to meter water and not sewage. Recently, some people have suggested that sewage could be metered. That would be a crazy path for the Government to follow. Metering would be tremendously expensive because special measuring equipment would be required and it would be disastrous for public health. The Government should do nothing to encourage water authorities to adopt household metering. If they wish to help those who use little water, they should reconsider standing charges and rebates on water service charges.
  The Bill should include measures to encourage water conservation. It is disappointing that for many years water authorities have demanded the right to build extra reservoirs in the countryside when vast quantities of storm water are unused. In most towns—certainly in western parts of Britain—much storm water lands on the roofs of houses and goes down the drain, thus causing pollution problems. We should consider more effective ways in which to use roof water for the domestic water system. Such water is of sufficient quality for flushing toilets and operating washing machines and the increasing number of dish washers. If we concentrated on that task, we should need fewer reservoirs, many of which are unsightly and spoil large areas of attractive countryside.
  The Bill does nothing to enforce river purification. The North-West water authority has let my constituents down. The Tame and the Mersey, which flow through my constituency, are the two most polluted rivers in Britain. In the 1960s the old local authorities made a major effort
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  to improve the quality of the water in the area, yet since the North-West water authority has been responsible for those rivers it has made almost no improvements. There have been many working patties and discussions, but little or no improvement. In some areas the position has deteriorated. In new housing estates, schemes to bring the sewage up to the sewer levels on the slopes of the valley have failed during heavy storms and the sewage has entered the rivers. In some areas, angling clubs tried to reestablish fishing, but the sewage pollution has killed the fish. The Bill contains no measure to give my constituents hope that those rivers will once again become attractive.
  The problem that causes most anxiety in the North-West is sewer dereliction. Apart from the borrowing limits, the Bill contains no measure to give us hope that we shall not endure much disruption and expense when the sewers are improved. I regret that the Government are going ahead with their proposal for heavier lorries, because much of the damage that has been inflicted on the sewers is caused by the traffic flowing above them. I hope that the Minister can tell the House one day that the Government will provide the money to reconstruct many sewers. Many construction workers in my constituency are unemployed and they would be pleased to have the opportunity to earn money by helping to solve some of the problems of sewer dereliction.
  The Bill is extremely disappointing and does not meet the basic needs of the water industry. It has removed democracy even further from the industry and has removed local accountability. It gives us no system by which people can choose whether to pay high rates and have good services or to pay lower rates and have poor services. The experts must now deal with the matter. Experts tend to continue with their pet schemes and they will not respond to the demands of my constituents, who wish to have a good system but who also wish to know who is serving them and that, when they have a complaint, they can talk to an individual rather than send a letter to Warrington. The Bill fails totally to meet the needs of the nation and I hope that the House will reject it.
  7.58 pm
  Mr. Stephen Dorrell: The hon. Member for Stockport, North (Mr. Bennett) began by bemoaning the fact that there has been a series of reorganisations of the water industry during the past 20 years, but went on in enormous detail about how he wished to reorganise it yet again. On which side of the fence does the hon. Gentleman fall? It is one thing to argue that if one had been around in 1963 one would have resolved the matter in a certain way, but it is another to say that, in 1982, we must destroy everything that has been done during the past 20 years and start to rebuild something different. I welcome the fact that my right hon. Friend presented a Bill that tries to improve the present position. The Bill will result in a significant improvement in water industry organisation.
  There has been a continuum of concern from the Labour Party today that the new water authorities will not be democratic and that somehow the new water authorities will be too concerned with business and therefore insufficiently concerned ' with their role as a service industry.
  I have never been able to understand the distinction between a business and a service industry. Indeed, some of Britain's most successful businesses are service

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  industries. That distinction, which has been drawn time and again by Labour Members today, is dangerous. It was most accurately defined by the hon. Member for Merioneth (Mr. Thomas) when he said that it is a service industry and should therefore be subsidised. If "service" is merely a euphemism for "subsidy", that is precisely why Conservative Members are opposed to the arguments that have been presented by Labour Members and why we therefore support the Bill.
  The Bill is a logical development of the 1973 Act and therefore should be welcome. The objectives of that Act were to move away from the kind of locally based utility which had survived longer in the water industry than in the gas and electricity industries. It had precisely the same origins. All three of those utilities started life as locally based, municipally owned utilities and in all three that organisation became increasingly inefficient as the facts of modern life bore in upon them.
  The 1973 Act was introduced in recognition of the fact that water had become a major service industry. The Severn-Trent water authority has fixed assets of £775 million. By any stretch of the imagination, that is a substantial business. As consumers and taxpayers we have a vital interest in the efficient management of such an industry.
  The 1973 Act and the Bill organise the utility based industries as efficient modern management units. That was achieved rather earlier in the gas and electricity industries. It is entirely to be welcomed in the interests of the electorate, both as consumers and taxpayers.
  The Minister made it clear in his statement in July that at the time of the 1973 Act it was always intended that the new water authorities should have professional, management-based boards. It had been a concession to the local authorities that they did not have that. I regret the fact that that was not done from the beginning. It was a pity that the change was made in the 1973 proposals. I am certain that we are right now to reverse that concession.
  Why do I say that? The reason has been quoted many times by Conservative Members today. There is an essential distinction between management and politics. By and large, it is true to say that managers make bad politicians and that politicians make bad managers. The traditional, locally based arrangements within the utilities blur the distinction between management and politics. That is why the new arrangements are likely to lead to greater efficiency.
  Local government should be not a management-based organisation, but a political forum. I do not mean that it must be a party political forum but political in the proper sense. It should be representative in the same sense as the House. The proper functions of local government are concerned with the resolution of local conflict. A local consensus should be provided on political subjects. Local authorities are not properly equipped to run businesses of the size of a modern utility.
  The individuals in local government are not trained and the system that they operate is not suited to the skills of running a business. Furthermore, when a representative starts to run things he is likely to be unsuccessful not only in that but in his attempt to function as a representative. As my hon. Friend the Member for Morecambe and
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  Lonsdale (Mr. Lennox-Boyd) said, such a person could not efficiently and effectively represent his constituents in their complaints against a body of which he is a member.
  The existing arrangements are bad for the utilities and also for local government because they blur the essential distinction between management and politics.
  It has been argued that the larger authorities which were introduced in that Act were a good compromise between the two different ways of organising the authorities. That is not true. Far from being a good compromise, it was the worst of both worlds. As many of my hon. Friends have said tonight, it meant that members of the water authorities were not known to the people whom they were supposed to represent. Furthermore, because of the size and unwieldy nature of the water authorities, it was almost impossible for members of the water authorities to influence the authorities. The result was that the local government member on a water authority became an insider but was practically powerless within that body. In a sense, he had responsibility without power.
  The existing arrangements, which preserve only a tenuous link between local democratic control and the water authorities, have been shown not to work satisfactorily. It is now much better to cut the umbilical cord which links the water industry to local government and to recognise that that utility, like others, has come of age and that modern management structures are required to run it effectively. I welcome that part of the Bill.
  I want now to examine other aspects of the relationship between water authorities and local government and to ask my hon. Friend the Under-Secretary to comment on three aspects of that relationship. The first aspect concerns land drainage. I am conscious that in raising that subject I am treading in what could be a minefield. The arrangements which emerged from the discussions in 1973 were the result of a hard fought compromise. However, any impartial observer must accept that the present legislative arrangements for land drainage are a dog's dinner.
  A good example of that occurred in my constituency this summer when there was a series of not so much unseasonal as freak flash storms which produced serious flooding in four separate places in a relatively small constituency. When representations were made as a result of those flooding problems, we were told that the land drainage responsibility was divided between three separate authorities. In some circumstances the county council had a responsibility for land drainage, as did the district council and the water authority. Those people who were concerned to prevent such flash storm floods recurring found it almost impossible to get the representatives of those various authorities to accept responsibility.
  Although the Bill does not change the land drainage arrangements, I hope that it will be possible to reconsider land drainage to obtain a clearer division between the responsibility to act and that of representing constituents' interests. There should be the same division of duties in land drainage as in other parts of the water authorities' responsibilities.
  Another aspect of the relationship between water authorities and local authorities merits further examination. I refer to the role of local authorities in representing the consumers' interest vis-a-vis the water authorities. Clause 7 provides for consumer councils. As many hon. Members have said, although the consumer councils of nationalised industries undoubtedly make a valuable contribution, they are not always the most effective forum

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  for bringing consumers' complaints against those nationalised industries. When considering the arrangements for representing consumer interests, I hope that my right hon. Friend the Minister will remember that the local authorities still have substantial powers and responsibilities, even with the changes in the Bill. Under the Public Health Acts they still have certain responsibilities. The responsibility to represent consumers' interests to the water authorities still has a major local authority input. In any arrangements to represent consumer interests, those responsibilities should be given a high profile.
  Mr. Ogden: Apart from the local authority interest, will the hon. Gentleman bear in mind that the consumer councils could be funded, to advantage, by a Department other than the Department of the Environment? For example, if the consumer councils were funded by the Department of Trade, they might at least have a degree of independence that they would not have if they were funded by the Department of the Environment.
  Mr. Dorrell: In pure theory, that point might have some validity. However, the hon. Gentleman would be hard put to it to argue that the Post Office Users National Council would be more effective if it were funded by the Department of Trade rather than by the Department of Industry. However, my right hon. Friend the Minister may be more impressed by the hon. Gentleman's suggestion than I am. It will not contribute much to the effectiveness of a representative consumers' council.
  The third aspect of the continuing relationship between water authorities and local authorities concerns the section 15 agencies, which have been the subject of criticism in the recent report of the Monopolies and Mergers Commission. Clause 6 deals with that. In the explanatory memorandum the Government—or whoever wrote it—say:
  "Clause 6 requires the Secretary of State … to have regard to the financial consequencies for the parties."
  In my innocence I would have thought that the Secretary of State had regard to that before. I am not sure how clause 6 advances the situation in relation to section 15 agencies.
  The element most widely criticised about those section 15 agencies is that a duty is imposed to reach those agency agreements. In my local authority, Charnwood, there is general recognition that the system works, However, it is felt that the system does not work in other authorities in the immediate area. The Severn-Trent water authority feels that it is in some way obliged to reach an agency agreement and that it is relatively difficult to escape from that duty. I know that other water authorities have been more successful than Severn-Trent, but I hope that the Under-Secretary of State will tell us the Government's attitude towards the future of the duty to reach those section 15 agency agreements. Perhaps it is a leftover from the old arrangements for water supply and from the link between water authorities and local authorities.
  Those three aspects of the relationship between water and local authorities are not brought to a conclusion in the Bill and any elucidation of those points—either tonight or in Committee—would be useful.
  Mr. King: My hon. Friend the Under-Secretary will have to reply to several points and I should not like my hon. Friend's important point to go by default. As I said when opening the debate, the report of the Monopolies and Mergers Commission deals specifically with the sewerage
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  agencies. I hope that my hon. Friend will study it along with the consultation paper, which deals with those issues. In the Bill there is one specific minor but sensible provision. Following discussions further amendments may be tabled in the light of the responses that are made to the consultation paper.
  Mr. Dorrell: I think that my right hon. Friend the Minister has taken us a stage further, because the Government have indicated their willingness to table amendments as a result of the consultations taking place.
  The right hon. Member for Birmingham, Small Heath (Mr. Howell) made a great deal of the abolition of the NWC. Indeed, 95 per cent. of his comments were, so to speak, snow in the breeze. My hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths) made an important point when he accepted the argument for some sort of national wage negotiating body, even after the NWC"s abolition. The argument is that if the regional water authorities negotiate independently for a new wage agreement there will be substantial scope for leapfrogging. In a monopoly-based industry it becomes difficult to reach a satisfactory settlement on wages. The prospect of 10 regional water authorities all negotiating separately over wages does not fill me with joy. I hope that my right hon. Friend will encourage the water authorities—after the NWC has been wound up—to set up a national negotiation body to deal with that.
  I greatly welcome the clarification in clause 5 of the public sector's power to export water technology. I hope that my right hon. Friend will hold consultations or ensure that contact is opened and maintained between our public sector water industry and the Overseas Development Administration. In developing countries the supply of running water to outlying villages and sometimes to large cities is a first and essential step on the road to development. We can give a major lead and make a vital contribution not only to their development but to the sale of British equipment to make that development possible.
  My final and important point refers to the argument about professional water authority membership. It concerns the method by which water authority vacancies will be filled. I hope that my right hon. Friend the Secretary of State will not simply recruit people for the water authorities from the Civil Service list of the great and the good. I hope that occasionally there will he advertisements in the press for vacancies in regional water authorities. If one of the major arguments in favour of the Bill is that it introduces a professional management approach to the regional water authorities, one sure way of reinforcing that trend would be to recruit professional managers in open competition as other utilities and the private sector do.
  Mr. King: The reason why some of us found the remarks of the right hon. Member for Birmingham, Small Heath (Mr. Howell) so offensive when he inferred that there would be jobs for the boys was that we are the first Government who, in making new appointments of chairmen of water authorities, advertise those posts widely so that we are no longer confined to a list of the great and the good, as maintained in the Whitehall machine, although I do not wish to disparage that. That is to make sure that the jobs are widely available to as wide a range of people as possible. I warmly endorse what my hon. Friend has said.
  Mr. Dorrell: I am grateful to my right hon. Friend for his remarks. I hope that what has been done already with chairmen will be extended to all other members of the water authorities.
  I warmly welcome the Bill. It is a modest but significant step towards reinforcing the efficiency of a major national utility. That must be in the interests of every elector either as consumer or as taxpayer.
  8.20 pm
  Mr. David Stoddart: I am sorry that the hon. Member for Devizes (Mr. Morrison), who is my next-door constituency neighbour, is not here because I want to refer to what he said. I was most surprised to hear his corporatist approach to water undertakings and their management. His attitude is all the more surprising as he is vice-chairman of so many local authority associations. He does not seem to know the history of local authorities in building up our water and sewerage services over a long period.
  As I served on a local authority for about 18 years and was responsible for the amalgamation on local authority terms of the water industries in Reading, South Oxfordshire and Berkshire, I know that local authorities are highly capable of operating and managing a water undertaking and sewerage services in the best way. I am most disappointed and annoyed that the Government should see fit to abolish local authority representation on the water boards and in the water industry. There is no doubt that they have done a good job in the industry for a long time.
  In my constituency I have been lobbied forthrightly and thoroughly today by local authority members who are incensed at the way in which they have been treated over the Bill. They tell me—of course, I must take their word for it—that they thought that they were in the process of consultation and discussion on the Bill. They believed that the consultations and discussions would have some effect. Therefore, they were most surprised and angry when the Bill was published in its present form. They feel that they have been ignored and badly let down by the Minister for Local Government and Environmental Services, who seems to be the Galtieri of Whitehall, negotiating at one time and then taking aggressive action while the negotiations are still going on. The Minister should be ashamed of himself for the way in which he treats local authorities.
  I can understand local authorities' concern because they are to lose all their control of the services. They have had representation on the boards. They have managed and controlled the services for a long time. Many of us cannot understand why the Minister hates local authorities so. Under his aegis many powers have been removed from local government. One power after another has been removed. Local authoritiy members are not even allowed to fix the rate in their own areas because the Minister does not trust them. They are told what to do with the houses they own. They are told that they must sell them whether they like it or not and that the sale should be at a discount fixed by the Minister.
  Now local authority members are told that they are no longer fit to have anything to do with water and sewerage services and that their power must be transferred to a small body of the great and the good. I can understand the anger of those in my area, especially when one bears in mind the fact that Swindon forms part of the Thames water
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  authority, which is much dominated by London. Swindon feels that it will become even more dominated by it because Ministers will be forced in making appointments—
  Mr. Spearing: My hon. Friend may recall that when we were considering the Water Bill of 1972–73 on Report I was privileged, on behalf of London local authorities, to move that London become a regional water authority on its own, based on the former Metropolitan water board and the London county council drainage system. It could have become an adequate regional water authority, and if that had happened the disadvantage which my hon. Friend has mentioned, and with which I have sympathy, would have been overcome.
  Mr. Stoddart: My hon. Friend, who is an extremely able and sensitive Member of this place, had the right idea. I understand the concern that he had for provincial areas such as Swindon and the surrounding area. He recognised that their problems are different from those of London. I recognise that London has special and difficult problems. which would have been better overcome had the system which he proposed been accepted in 1972 and written into the 1973 Act. I am grateful to him for his help.
  Places such as Swindon already feel that they are dominated by Big Brother. They see themselves without any representation, remote from the centre and having to take whatever is handed to them. Water and sewerage have always been rated services and up to now their representation has been directly elected. In other words, there has been taxation with representation. If the Bill is enacted, there will be taxation without representation.
  Water is a life support service; it is not merely a commodity. There are public health implications when we deal with water, so it cannot and should not be treated by the Government or anyone else as a commodity. It should be subject to representation by elected representatives. The same is true, to some extent, of sewerage services.
  Local authorities feel that their constituents will be taxed and that there will be no representation for them. The Bill states that the new water authorities must make proposals for consumer representation but it gives no guidance on the sort of consumer representation that there should be. If the new authorities have anything to do with it, the new consumer associations will be toothless wonders. It will not be in the interests of the new authorities to have consumer councils or consumer organisations with teeth and power.
  I am surprised to hear hon. Members, especially the hon. Member for Morecambe and Lonsdale (Mr. Lennox-Boyd), criticising local authority representation. That is what democracy is about. It is no use saying that it is a good thing for local councillors to look after one service but a bad thing for them to look after another. The hon. Gentleman also argued that if local authority members sat on water boards, as they now do, there might be changes of policy if there were a change of political control. I thought that that was what power was all about.
  Mr. Dorrell: Does the hon. Gentleman accept that there is a difference between the responsibility of an individual running a business, whether or not it is a service, and that of a councillor making decisions on planning or transport involving the allocation of resources

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  and the resolution of local conflicts? In other words, is there not a difference between the representative and political function and the management function?
  Mr. Stoddart: The functioning of any organisation, public or private, may be the responsibility of people with management expertise. What is important is the policy laid down, and it is over policy that local councillors, and indeed Members of Parliament, wish to have control. When the Government took power, they had certain policies in relation to nationalised industry and they have put those policies into effect. They have altered the powers of the British Gas Corporation, they have completely transformed the British National Oil Corporation and even now they are selling off assets. It is policy that counts. I am surprised that Conservative Members should criticise local authority representation simply because a change in the political complexion of a local authority may lead to changes in policy in an organisation in the area concerned. That is what democracy is all about.
  Mr. Ted Leadbitter: To emphasise the point, does my hon. Friend appreciate that under clause 1 local commissioners' investigations, which have proved so useful, are also to be ended? Moreover, under clause 7 consumer interests will be in the hands of the new water authorities. There will be no representation at all by local authorities. It is a monopoly in which the consumer's right to effective complaint and the possibility of remedying the injustice to the poor and needy will be further and further removed. All these matters will be in the hands of a remote organisation and representation by the local authority, the local commissioner or even a consumer council will be completely removed. That is the most disgraceful aspect of the Bill.
  Mr. Stoddart: I am obliged to my hon. Friend. I was about to make that point. The Bill removes the power of the local ombudsman to investigate complaints put to him by local councillors or directly by consumers. As my hon. Friend says, another form of protection has been removed from the consumers. These very small bodies will not be accountable to any consumer or elected authority in their own areas. They will be subject only to the dictates of the Minister.
  Mr. Spearing: And his officials.
  Mr. Stoddart: And his officials. Democratic control is being removed completely from a service which is important to the people and close to them and should be under their control.
  Other hon. Members wish to speak, so I shall refer to only one more point—the abolition of the National Water Council and the Water Space Amenity Commission. My right hon. Friend the Member for Birmingham, Small Heath (Mr. Howell) referred in detail to that. It is strange that a Government who prated in 1973 about the necessity for a national water policy—that was their excuse for introducing the 1973 Act—are now, nine years later, abolishing the means by which that was achieved. I cannot believe that the abolition of the authority, leaving the overall policy to 10 different regional authorities, will in any way solve the problems of a national water service.
  We may currently have a superfluity of water, but, as my right hon. Friend knows, the time will come when we will need a guru to make it rain. We still need a national water policy.
  Mr. Denis Howell: During the drought, problems were created because we did not have a national strategic policy. There was no national grid system for water comparable to that for gas and electricity. The Labour Government sought to provide to make water transferable from regions of plenty to regions of scarcity. That was essential in the national interest. All that planning is in jeopardy because of the Government's proposals. Bureaucrats in the Department will make plans about which none of us will have any knowledge.
  Mr. Stoddart: The House will find my right hon. Friend's statement helpful. The Government's complacency will rebound against the best interests of the nation. Even such areas as South Wales, which has a devil of a lot of rain, had empty reservoirs during the drought. Although South Wales is usually a huge net exporter of water, certain parts of it desperately needed water from other parts of Wales, or even from England, which could have been provided had there been a national grid. It is absurd that the Government should abolish the National Water Council.
  The Bill is ill-conceived and badly timed, and I shall vote against it.
  8.38 pm
  Mr. Geoffrey Dickens: There is an old Chinese proverb, on the lines of "If men and women spoke on those subjects on which they were qualified to speak, the world would be filled with a profound and dignified silence." There is—[HON. MEMBERS: "Sit down then."]—at least one hon. Member whom all would admit is an expert on water and water resources, and that is the right hon. Member for Birmingham, Small Heath (Mr. Howell). Not only did he excel at a time of drought, he excelled during a time of great falls of snow when villages in Yorkshire were cut off. He flew over my house in a helicopter, and a thaw came immediately.
  We had floods, but the moment that the right hon. Gentleman was appointed the rivers dropped, the floods subsided and the skies were blue. He can claim to know something about the matter. Nevertheless, the right hon. Gentleman disappointed me in his opening speech. He had a marvellous opportunity and with his wide knowledge I should have thought that he would have thought differently. Although I admire the way in which he handled matters as a Minister, I have never agreed with his politics. That is hardly surprising. One of his main points was his worry about the control of water authorities slipping to a Minister.
  Mr. Denis Howell: A Ministry.
  Mr. Dickens: The right hon. Gentleman made his name by taking control and overriding all other agencies during an emergency. I should have thought that that would undermine his argument.
  Mr. Howell: I made my name by taking control as a Minister and by not leaving matters to the bureaucrats.
  Mr. Dickens: That just goes to show how former football referees handle these matters.
  We were discussing regional authorities that had up to 62 elected amateurs. I do not apologise for saying that. I was a councillor for 18 years at parish, county and district levels.
  Mr. Stoddart: The hon. Gentleman was an amateur.
  Mr. Dickens: Yes, I was an elected amateur. I was not a specialist on water matters. No reasonable person would disagree that there may be as many as 62 councillors on a regional water authority and that many of them are delegated, sometimes reluctantly, to take a place on that authority. Many water authorities have about 50 councillors and there are as many as 62 in larger ones.
  Hon. Members should compare that with what the Government want to do. We suggest that there should be about nine or 15 paid professionals who have their heart and soul in what they are doing. They have paid for their technical know-how and their earnings are controlled so that if they do not do the job properly and come up with the goods they can be penalised.
  The public are agitated about water charges, whether in the form of a standing charge or the charge for the water consumed. Perhaps that is more so now, as water charges have been isolated and revealed so that people can see what they pay for. Industry is also perturbed by the salary structure that runs through water authorities that is creaming off and scooping people out of industry to take higher salaries.
  I have received a few letters from companies in my constituency complaining that they have lost wonderful secretaries and clerks because they have been offered £X by the water authority. The managers can find no justification paying them more although they bitterly miss them, and their absence has caused a dent in the industry concerned. It seems unfair. Water authorities should be designed for one purpose and one purpose only—to look after consumer interests. They are not doing that at the moment.
  Some Opposition Members have made some nasty remarks. They have accused the Conservative Party of reorganising local government and the Health Service and said that that reorganisation has not worked. We may have reorganised the Health Service, we may now be undoing that reorganisation and doing what we believe to be better, but it is a sensible Government who will say "We were wrong the first time and will try to do better now". We cannot just sit back and allow water authorities to upset consumers in the way that they are. If we do not have some form of control, we must try to develop what we believe is a sensible and progressive system. This is what we are introducing. Other hon. Members wish to speak, and it is surprising how the time ticks on. My parting shot is this. There was a Minister who worked the impossible. Even those in the Sikh temples and the mosques were praying. They know a bit about praying for rain in India and Pakistan. I flew out from London airport and saw the cracked reservoirs at Staines. When I flew back after the Minister's appointment, they were filling rapidly. It was amazing.
  No one should underestimate my hon. Friend the Under-Secretary of State. He discharged his duties in Northern Ireland tremendously. He discharged his duties with the members of the quarry associations in the recent Bill that he piloted through Parliament. I am sure that he will be successful with the Bill now before the House. I wish him luck.
  8.46 pm
  Mr. Ray Powell: I am glad to follow the comedian from the Conservative Benches. It was interesting to hear what the hon. Member for Huddersfield, West (Mr. Dickens) had to say about
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  ailments being cured. A similar appointment was made in Wales. We had been under snow for a number of weeks. Following the appointment of my right hon. Friend the Member for Rhondda (Mr. Jones), the snow cleared and there were not even floods.
  I should like to congratulate the recently retired chairman of the Welsh water authority. I am pleased to record that his successor, Mr. John Jones, has conveyed his thanks to him for his work on behalf of the water authority. In the annual report, he also thanked the officers and staff for their dedication and work especially during the blizzards of last December and January and for coping with the operational problems of burst pipes and flooding after the snow and ice had cleared. It is easy to take for granted the work of the staff during last year's severe winter.
  I have been interested to hear what hon. Members have had to say about authorities becoming more democratic. I was elected a Member as an employee of the Welsh water authority. I know of the differences that can exist between elected members and appointees. I am aware of the opposition to quangos and the promises made by the Government during the election campaign to abolish quangos. The facts are that the Government are producing more quangos than existed previously. If they are not quangos, they are called consumer councils.
  The Bill takes away any semblance of democracy that may have previously existed in the authorities. Hon. Members must pay close attention to the membership of these authorities. Is it to be left entirely to the Minister's discretion to decide the appointments? Will this be good for democracy? Will it be good for the water industry? If someone happens to quarrel or disagree with the Minister, he will wind up in the same place as the chairman of the Welsh water authority and perhaps without an appointment. Therefore, the Minister will have to look closely at that.
  Mr. Wyn Roberts: The hon. Gentleman has given the wrong impression about the retirement of Mr. Haydn Rees, the chairman of the Welsh water authority. He retired at the end of his fixed term of office.
  Mr. Powell: I do not know that I created the wrong impression—perhaps the wrong impression was given to me by my close association, over a number of years, with Mr. Haydn Rees. I was given to understand that if he had been offered a reappointment, he would have accepted. However, he was not reappointed. I do not wish to be critical, but his successor's only connection with water, sewerage, land drainage or the Welsh Office was his attachment as family solicitor to and friend of the Secretary of State for Wales.
  Mr. Wyn Roberts rose—
  Mr. Powell: No, I shall not give way again.
  On Tuesday 9 November the first consumer council was held in the Gower division. What are these new watchdog committees to do? Who will be appointed? Are they to have any say at local, district council or community council level on the appointments? The first council met last Tuesday to appoint a chairman, and we shall have seven local consumer councils in Wales. They will meet and will give the new Welsh water authority their views and recommendations. However, they have no authority

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  to handle or deal with any complaints from consumers, and they cannot scrutinise the new body. We should examine this closely again.
  I do not have time to consider these committees in depth, but I hope that in Standing Committee there will be close scrutiny of them, of the way that they are set up, and who is appointed to them.
  There is no better example of the imperfection of democracy than the way in which social progress is subordinated to political expediency when certain matters are under consideration. That is what is happening to democracy under the Bill.
  The most far-reaching effect of the Bill is the abolition of the National Water Council. On 20 October 1982 the annual report of the council was published. The chairman made some comments about the abolition of the body. I quote from the condensed version of the annual report:
  "Sir Robert Marshall, chairman of the Council, warns. Such responsibility should remain within the industry.
  Sir Robert says he cannot 'do otherwise than express my great regret about the Government's decision to abolish the National Water Council' and he insists that the need for an independent central body has not ceased because the water authorities are firmly established.
  'National policies and objectives for the industry will still be needed', he says, 'sometimes on matters in which the Council has already played a major part in consultation with the authorities and companies, elsewhere on new or neglected problems of concern to the whole industry.'"
  I shall not read everything that he said, but I hope that before the Bill goes into Committee the Minister will look at what Sir Robert has said and take it into consideration. Perhaps the Minister will also provide a breakdown of his assessment of the savings if the National Water Council is abolished.
  NALGO is the major trade union involved in the water industry. What of its view of the abolition of the NWC? That union negotiates at national level because it represents the majority of staff in the water industry. It is totally opposed to the abolition of the NWC and claims that it plays a crucial role in the water industry. It emphasises the council's functions, such as training and industrial relations, and argues that it should be retained because the alternative will be unable to undertake the council's current functions.
  What will happen to the negotiating machinery that is at present the responsibility of the NWC? What are the Government's proposals on training? What pension offer will the Government make to the unions? How will they establish a negotiating machinery to deal with disputes and grievance procedures?
  The union argues that
  "the abolition of the Council will be highly disruptive … there is no evidence of the gains to be achieved as a result … new machinery, similar to those currently within the Council, will need to be established … the cost of establishing and running this new machinery will be equal to, if not greater than, that currently operated within the Council … the Government's proposals are based on political considerations, and do not take adequate account of the long-term needs of the industry, its staff and consumers … NALGO urges the Government to reassess their decision to abolish the Council."
  I asked the Prime Minister
  "whether, following the announcement of Her Majesty's Government's proposals for the reorganisation of the water industry, she will now take into account the possibility of requiring a standard water rating system throughout England and Wales".
  The right hon. Lady replied:
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  "We have no plans to change the existing arrangements whereby individual water undertakers are responsible for their own charges."—[Official Report, 22 July 1982; Vol. 28, c. 238.]
  I urge the Government to give serious consideration to that negative reply, and I urge the Minister to take account of the inherited loan debt that has substantially reduced freedom of action. That debt, which was inherited from the various boards and authorities, should be wiped out. The cost of the high interest charges would then be removed and the water rate could be reduced.
  We should aim to produce a pattern for water that is acceptable because it is thought to be right and not one thought to be right because it is acceptable. We should look for a system that would meet not only the requirements of today but the needs of tomorrow.
  9 pm
  Mr. Den Dover: As soon as I became the Member for Chorley three and a half years ago I was waylaid by a number of people who had formed themselves into an informal water consumers council in my area. Numerous complaints followed that had to be dealt with in surgeries or by letters. Those complaints show that my electors do not have much faith in the operations of the North-West water authority.
  Following reorganisation of the water authorities some years ago, I looked at their activities and thought that there should be elected members. I investigated how one would raise a matter with one of the local authority representatives on the North-West water authority. Although our local authority has an electorate of 80,000 people it has no representative on the water authority, and nor does the neighbouring authority. There is one distant county council represented on the water authority.
  The North-West water authority area is large and some of the local authority representatives live 40 or 50 miles from the offices where the meetings are held. I began to wonder whether election of representatives would solve the problem. I concluded that local authority councillors had more than enough on their plates representing their electors on the local council. Their position on the water authorities is a reward for their local activities. We are not getting value for money from the representatives that we have. I do not want to criticise their activities, but the present system does not work.
  I welcome the Government's intentions to have a much smaller body comprised of some full-time officials of the water authority. I believe that it is a management problem, and that if the water authority is controlled sensibly in terms of finance and management the consumers of the area will be better served. I consider that the arrangements to be made by each water authority to take consumer interests into account are a major part of the Bill. We must ensure that we have formal consumer councils operating inside a water authority geographical area. A water authority may need a dozen such consumer councils. Only then will local problems be raised and dealt with by local officers.
  I believe that will ensure that we have better value for money, more local accountability and a much more efficient water industry.
  Mr. Lambie: Why does the hon. Gentleman support the setting up of more quangos? I thought the Government's policy was to abolish quangos. Why does the hon. Gentleman not support the type of organisation

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  that we have in Scotland where water and sewerage are under the control of regional authorities, and where water is no longer a political problem? Both Conservative and Labour Members are happy with a set-up that does not need quangos. The regional authority does everything as a committee function with local councillors. We have local representation, a local voice and no quangos. It is strange that the Government wish to see more quangos when the Prime Minister wishes to eliminate them.
  Mr. Dover: They are to be not quangos but local consumer centres where problems can be dealt with by the officers. If they do not work properly, we should see that a better system prevails. The Government are not setting up quangos by introducing the consumer mechanism. Indeed, a quango can only operate nationwide.
  Water authorities use local authorities as their agents for sewerage works. I hope that water authorities will not now get rid of the servants and officers of the local authorities who have carried out those functions well and increase their own work forces. Not only should local authorities continue to be used as agents, but we should bring in private enterprise. Private contractors may not be able to perform certain statutory functions, but involving the private sector could provide better value for money. Local firms with no overheads could give a quick and efficient service. I hope that water authorities will not use the change as an excuse to build empires. I pay tribute to the first-class service given by local authorities as agents for water authorities.
  We should think seriously about the provision of water. Hon. Members receive many complaints from their constituents about the large bureaucratic body that hardly appears to be answerable to the electorate. The Bill is a move in the right direction. We need more accountability, better value for money and more involvement of the consumer and of the business sector, which pays more than 50 per cent. of the water rates. It would be good to see business men on the water authorities.
  I welcome the Bill and shall vote for it.
  9.7 pm
  Mr. Alec Jones: When I was first elected to the House I was impressed by the zeal with which Governments loved to reorganise. I have served on so many committees reorganising various aspects of our public life that I am surprised that by now we have not perfected some of those spheres.
  Not only are the Government keen on reorganising; they are obsessed with reorganising the organisations that they have already reorganised. In 1974 the Conservative Government extolled the virtues of a reorganised National Health Service. They commended the change to the nation and forced it through the House. In 1981 the Secretary of State for Wales said that the brainchild of the present Secretary of State for Education and Science was an "over-elaborate paraphernalia" of administration.
  In February 1973 the right hon. and learned Member for Hexham (Mr. Rippon), who was then Secretary of State for the Environment, described the Water Act 1973 as
  "a radical reconstruction"
  enabling us
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  "to keep pace with the problems with which we shall have to deal through the remaining decades of this century".—[Official Report, 5 February 1973; Vol. 850, c. 34.]
  The Act has hardly lasted through the twentieth century because we are again discussing the reorganisation of water authorities in England and Wales.
  The Welsh water authority has already been reorganised after an Order passed last year. Welsh people have thus had some experience of the second phase of water authority reorganisation and have some idea of how the Government regard the water authorities' role and appointments to those authorities. Now that the Government's consultative document on Wales has been published, we also know how the new consumer councils are to be set up.
  Water authorities have been and always will be criticised in the House. The main criticisms that are levelled are remoteness, bureaucracy and, above all, charges. By almost abolishing local authority representation the Bill exacerbates the problem of the remoteness of water authorities from the general public. The Bill is also likely to increase water authority bureaucracy. We shall now see power concentrated in the hands of fewer non-elected individuals.
  The Bill fails completely to tackle the wide and unfair variation in water charges. The Conservative Party manifesto for Wales stated:
  "We shall seek to enlarge the responsibilities of local authorities."
  Those words were omitted from the Conservative Party manifesto for the rest of the United Kingdom. Far from enlarging the responsibility of local authorities, the Bill continues to undermine it.
  Local authorities are responsible for housing, environment, planning, education and social services and they are also responsible for developing those services—all of which depend on adequate water and sewerage services. Because organisations such as the Association of County Councils and the Association of District Councils are so dependent on water and sewerage services and have so much experience of them they have denounced the proposals as a denial of local democracy. Such organisations say that the proposals ignore the vital need for co-operation between water authorities and other local government services.
  I am sorry that the right hon. and learned Member for Hexham is not present. During the Second Reading of the 1973 Water Bill the right hon. and learned Gentleman said:
  "Therefore, I am convinced, as I hope the House will be, that the provisions in the Bill governing the constitution of the regional water authorities provide a far better way of associating the democratic element in local government with the administration of water services in the new system."—[Official Report, 5 February 1973; Vol. 850, c. 38.]
  The Government have no regard for any democratic element in local government. When the Government were in Opposition they purported to dislike quangos, but I suspect that they have created more than almost any other Government. The Government are now proposing to turn 10 water authorities that are responsible for billions of pounds in capital financing and revenue expenditure into paid quangos of 15 placemen who will owe their places on the new water authorities to the patronage of the Secretary of State.
  My hon. Friend the Member for Coatbridge and Airdrie (Mr. Clarke) tried to ask the Minister about the remuneration of members of the water authority. In

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  fairness to him, I believe that the Minister misunderstood my hon. Friend's point. Perhaps the Minister will tell us when he replies what the Government mean by schedule 1, which states that members of the authority will not only be paid but will be pensionable. We shall have paid, pensionable quangos instead of democracy.
  The Minister may say that local authorities have the right to nominate, but the Bill does not say that. Even if it were true, the Secretary of State can reject the nominee. The Secretary of State for Wales has already done that. The Welsh Counties Committee nominated two members, one from North and one from South Wales, but the Secretary of State rejected the nominee from West Glamorgan and substituted one of his choice. If the Secretary of State for Wales can do that, so can the Secretary of State for the Environment.
  Mr. Dickens: Can the local authority nominations be considered seriously if there are historical links between the authority and the water industry? If the nominees do not match the criteria, there may be a problem.
  Mr. Jones: The nominee of the Welsh Counties Committee who was rejected has considerable experience and represented West Glamorgan, which is one of the largest Welsh counties, on the water authority. The result of the rejection means that Wales, with eight counties and a population of about 2½ million, has only one representative. However, the old county of Hereford, with a population of 140,000 has a representative of its own. I hope that the Minister will assure the House that he will not use his powers of appointment in England as arbitrarily as does the Secretary of State for Wales.
  Does the Minister believe that the water authority meetings should be held in public or in private? The Western Mail, a newspaper in South Wales, wrote that in the four full meetings of the Wesh authority held to the end of July 44 items were discussed in public and 33 in secret. On one agenda, there were 20 confidential items and just four ordinary items for discussion in public. Even a report on public information was considered in secret. Such excessive secrecy is not in the best interests of consumers, nor is it likely to develop confidence in the water authority. I hope that the Secretary of State for Wales will ensure that such practices cease and that the Minister responsible for water authorities in England will discourage excessive numbers of secret meetings.
  Mr. Lennox-Boyd: Will the right hon. Gentleman give way?
  Mr. Jones: I have already given time to Conservative Members from my winding-up allocation. I shall not be able to finish if I give way again.
  Clause 7 places reponsibility on the local authority to establish local consumer advisory committees. If the Bill goes through, I wish those committees well. We shall have seven in Wales and an unknown number in England. However, with the best will in the world, they will have an impossible task. According to the guidelines issued by the Secretary of State for Wales—the Minister confirmed today that the English guidelines would be much the same—the consumer advisory committees will have powers to consider any matter, to make recommendations, to make complaints, and they may be asked for advice. However, there is no guarantee that their considerations, recommendations, complaints or advice will be heeded.
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  They will be absent from the decision-making body. The consumer's voice must be heard and their interests must be taken fully into account before decisions are made.
  I cannot understand why, in clause 1(2), it is necessary that water authorities should no longer be investigated by local commissioners. I should have thought that, even though one is going perilously close to turning the water industry into a nationalised industry, no one has yet justified that change which denies the local commissioner a role in water services.
  Even if the consumer councils are to fulfil a minimal role—what was described earlier as "a tame watchdog"—they need to be given far greater independence from the water authorities. The committees are to be appointed by the water authority. It seems odd indeed that I should appoint the body that is to keep an eye on me. It says that in the guidelines that I mentioned earlier. Half the things that are not in the Bill are clearly in the guidelines.
  The secretary of the consumer councils is to be an officer of the authority appointed by it. There will be a tame watchdog there all right. The extent of the secretarial service to be provided, or any other facility, is to be decided not by the consumer council but by the authority. The chief executive of the water authority will even decide what technical and professional advice it is to be provided with.
  It is reported that the Welsh water authority published a memorandum which said:
  "I foresee these bodies"—
  the so-called consumer bodies—
  "being as much public relation vehicles for the authority as they are vehicles of redress for the consumer".
  Is that really how the Government see the bodies being set up in England? Will the Under-Secretary of State for Wales at some stage give us some view as to whether that is a reasonable approach by the water authority to those consumer councils? I thought we were talking of great new armaments and controls for the consumer.
  Clause 8 concerns the repeal of the Water Charges Equalisation Act 1977. I know that the Tories never liked it, that they voted against it and delayed its implementation. They have ceased to use its priorities and now they propose to kill it off. Despite all the criticisms—I have never seen them spelt out clearly yet—the Act was worth between £3 million and £3½ million between 1978 and 1981 to the Welsh water authority, and hence to the domestic water consumers in Wales. Its abolition only adds to the feeling of unfairness in Wales regarding domestic water charges.
  It is right that we should seek to organise water supplies in Britain so that water can be transferred from areas of abundance to areas of shortage. It is certainly abundant in Wales. If anyone can find a way of taking it before it falls to the ground, they are welcome to it. Such a transfer might be from Wales to England, or, as could happen in a drought, from parts of England to Wales. We need an equally civilised and fair system of charging for the water. The figures for 1982–83 clearly show that the average domestic water service charge for Wales is £44·60 while that for England and Wales is £33·10. As long as that difference persists, it will be unfair to Wales and is demonstrably so. That must he remedied if the free flow of water is to continue. In July 1979 the Secretary of State for Wales seemed to agree with me. He said:

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  "There is no question that water charges are an issue of major concern in Wales".
  Water charges were of major concern in 1979. It is now 1982, but the Government have done nothing about them.
  However, as hon. Members have spelt out, methods are available. I shall mention only two schemes. Perhaps one should allow an increase in the charges made by the Welsh water authority for the bulk supply of water to other water authorities. Alternatively, some new equalisation scheme could be introduced. I think that it was the hon. Member for Merioneth (Mr. Thomas) who went into the details of increased charges. In October 1981—a long time ago—the Welsh water authority made such a request. I willingly concede that there were genuine reasons for delay. However, the matter has now gone on for long enough. In opening the debate, the Minister said that this issue was now actively before Ministers and that a decision could be expected shortly. I hope that the decision will be made in time for it to be included when setting water charges for Wales next year. We have not heard any explicit comment. The Minister merely said that he expected a decision shortly.
  If the increase in charges does not go wrong it will become more essential than ever to have some sort of equalisation scheme. The Under-Secretary of State for Wales has always been a great advocate of water equalisation schemes. The hon. Member for Merioneth has cited one of his indiscretions. In turn, I shall remind the Under-Secretary of what he said in the Welsh Grand Committee in July 1979. He said:
  "in principle we recognise that a system of equalisation is the right way to achieve a balance between water authorities, and the Government will be giving their consideration to the best way in which this can continue to be achieved."
  I hope that the Under-Secretary will elaborate on that great consideration. He has told us that the principle of equalisation is right. Therefore I am sure that he will be able to tell us the Government's conclusion and the type of equalisation scheme that we can expect.
  Mr. Wyn Roberts: Is not the right hon. Gentleman as aware as I am that since making that statement and since orders were made under the Water Charges Equalisation Act the position deteriorated to a point at which the Act was not working in favour of 42 per cent. of consumers in this country? Even when that Bill was passed we knew that it would have, in due course, an adverse effect.
  Mr. Jones: The Under-Secretary of State knows—and if he does not, his advisers will tell him—that when the Bill was introduced it was known that it would have a diminishing effect. The instruction was that the NWC was to co-operate with the water authorities to introduce a more permanent equalisation scheme. The hon. Gentleman conceded that. It was not suddenly discovered after he made that statement. Even in that statement, he said:
  "As it stands that Act is cumbersome and expensive to administer, and we may have to see whether it is possible to simplify it."—[Official Report, Welsh Grand Committee; 18 July 1979; c. 13-31.]
  Is the Under-Secretary of State now saying that the Government have concluded that there will never be a water equalisation scheme in Wales? We want to know the answer. If the Under-Secretary of State can tell us, I shall gladly give way.
  Mr. Wyn Roberts: An inter-departmental committee was looking for an alternative to the partial equalisation scheme in the Act. No such satisfactory alternative was ever found.
  Mr. Jones: I take it that what the Minister has just said is that as long as we have a Conservative Government Wales will never have a fair deal on water charges.
  In the absence of either of the two schemes it is not good enough for the Government to say that only general rates can be rebated because they are a tax on the beneficial occupation of property. Most domestic consumers regard water rates as in the same category as other rates. They are based on the rateable value of the property.
  The Government have a new love of price freezes. They have decided to freeze prices of gas for industry and electricity charges. In the run-up to the general election, which is always looming in the Government's mind, it is possible that they will consider limiting or freezing the increase in water charges. If they do so, I shall give them my full support. My time is limited now, but in Committee we shall go into those matters in greater detail.
  Because the Bill increases the remoteness of water authorities, adds to bureaucracy and to the patronage of Secretaries of State and runs away from the difficult problem of water charges, we shall vote against it.
  Mr. Lambie: On a point of order, Mr. Deputy Speaker. Since the Bill has serious implications for the National Water Council training centre at Melvin House in my constituency and for the regional councils and river purification boards in Scotland, it is a disgrace that no representative of the Scottish Office is present.
  Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. That is a point of argument, not a point of order.
  Mr. Lambie: I have not reached my point of order.
  Mr. Deputy Speaker: Order. The hon. Gentleman took some time to reach the last point of order. Is this a new point of order?
  Mr. Lambie: I am coming now to my point of order. There is a Minister representing England and a Minister representing the Welsh Office—
  Mr. Deputy Speaker: Order. That is the same point of argument.
  Mr. Lambie: I am coming to my point of order. I am asking you, Mr. Deputy Speaker, whether you have the right to summon to the Chamber the Secretary of State for Scotland and the Minister responsible for local government in Scotland—
  Mr. Deputy Speaker: Order. The hon. Gentleman made that point in his speech. He knows that I have no such authority.
  9.33 pm
  The Under-Secretary of State for the Environment (Mr. Giles Shaw): I shall try to answer the points that have been raised by the hon. Member for Central Ayrshire (Mr. Lambie). I know that he has a problem in his consitituency. I shall see that the matter is referred to the Under-Secretary of State for Scotland so that he can reply to the hon. Gentleman by letter.
  I congratulate the right hon. Member for Rhondda (Mr. Jones) on bringing such a fine demonstration of thrill and excitement to the debate. Interventions have been made

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  about the Welsh water issue. Thanks to them and the intervention by the hon. Member for Central Ayrshire, there has been more Celtic excitement than English excitement around the measure. However, that in no way detracts from the considered views on both sides of the House about the Bill.
  Equalisation will be further discussed in Committee, as the right hon. Gentleman said. Equalisation in relation to water charges is not a cosy Welsh arrangement that affects only Welsh Members. I remind the right hon. Member for Rhondda as he sits within one yard of the right hon. Member for Birmingham, Small Heath (Mr. Howell), whose constituents have to pay substantially for Welsh water costs, that there must be fair play and agreement. I hope that the undertaking of my hon. Friend the Under-Secretary of State for Wales to deal with the matter under determination as soon as possible—I emphasise that such a decision will be made in time for the issues that are to be determined by the Welsh water authority next year—is one that the right hon. Gentleman wishes to have.
  The debate has ranged over a number of issues. The right hon. Member for Small Heath presented his usual robust defence of the central authority for water and demonstrated his general capacity to act as a shop steward on these occasions. I venture to suggest that in his closing remarks he went rater further than he intended. He said apropos the appointments currently being made for the chairmanships of the water authorities that, were he to be returned to office in the Department of the Environment, he would, as a member of a Labour Government, remove such appointments. I am sure that he did not wish to suggest that he would have powers under any statute so far passed to enable him to do such a thing without carefully considering the contracts of employment that had been made. I am sure that the right hon. Gentleman would not wish to suggest that there is some incipient threat over the appointees who have been selected to chair and run these important undertakings.
  I welcome the remarks of my hon. Friend the Member for Newcastle upon Tyne, North (Sir W. Elliott), who gave his support for the Bill. I welcome also the comments of my hon. Friend the Member for Bury St. Edmunds (Mr. Griffiths). He has certainly seen a number of measures come before the House dealing with water and local government. I shall try to clarify one issue which he and I suspect others have misunderstood. My hon. Friend suggested that the Bill would break completely the links with local government. That is not so. Provision will be
  made for local authority associations to make nominations for the appointments to be made to the new authorities. Clause 1 states that my right hon. Friend the Secretary of State will give proper consideration in making appointments to the qualifications of those who are offered for appointment. They shall
  "in the case of the regional water authorities, be persons who appear to him to have had some experience of, and shown capacity in, some matter relevant to the functions of water authorities".
  It must be concluded that one of the tragedies, perhaps, of the local government system of representation on existing authorities is that it has not worked because numerically it has been overwhelming. I think that it has been admitted by hon. Members on both sides of the Chamber that the appointees from the representative councils were not as committed to the running of the authorities as we would have wished. I do not think that
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  that has been said in any sense of disrespect to local government appointees. It is a fact that the system hardly made it possible for them to have that degree of commitment.
  We know from the comments made by the chairman of the Thames water authority of the appalling effect that the many changes in appointees have had. Deputies have arrived for one meeting only and 200 per cent. of the local authority nominees for the Thames water authority changed in the nine years of the authority's life. These distortions cannot be accepted as producing a sensible method of running a water authority. If, as the right hon. Member for Small Heath suggests, they are demonstrations of democracy, they are demonstrations that hardly add to the public's confidence in water authorities and in the way in which they are run.
  My hon. Friend the Member for Bury St. Edmunds talked about research. It is extremely important and nothing that is proposed by the Government in the Bill should result in a diminution of the research effort of the water industry. The water research centre is the vital research organ for the industry and it is fully supported by the individual regional water authorities. If for some reason a regional water authority wishes to withdraw its support, under section 24 of the 1973 Act the Secretary of State has power to direct a water authority to make suitable research arrangements. My hon. Friend can take it from me that the continuity of commitment to research is a real one so long as this Government remain in office.
  Many hon. Members talked about their own regional water authorities and the difficulties experienced in overcoming the various problems. They should be aware, however, of the wide remit of the water authorities and how effective many of them are becoming at discharging their obligations. The water authorities may not be as reflective of consumer demand as one would wish, but few who have read the most recent reports can fail to be impressed by the wide range of activities undertaken. I have here the Anglia water authority report. The section on recreation covers byelaws, navigation, canoeing, sailing, angling and nature reserves—all under the direct control of the Anglia water authority.
  Mr. Spearing: And all thanks to the Water Space Amenity Commission.
  Mr. Shaw: The authority's fisheries policy is a measure not just of the sports aspect but of the wider importance of that activity. The authority also deals with water resources, land drainage, sewerage, sewage treatment, and so on—not just the provision of pure water to consumers.
  The regional water authorities are important regional institutions supplying a wide range of services, most of them to an increasingly high standard. Let us, therefore, give due praise to the authorities for reaching such high standards despite the incubus of a management structure the sheer scale of which the Monopolies and Mergers Commission report on Severn-Trent found to be excessive. Indeed, I know that my hon. Friends have already drawn considerable comfort from the major proposition of the Bill to reduce the size of the boards to more manageable proportions.
  On the crucial matter of efficiency, my hon. Friend the Member for Bury St. Edmunds was anxious that efficiency audits and the like should continue to be undertaken. As

  225
  he knows, the Government have not been slow to use the instrument of the Monopolies and Mergers Commission to investigate water authorities and, more recently, the sewerage agency. He will also be aware of the use that has been made of consultants and the way in which auditing has been carried out. There is a real need to ensure efficiency and to maintain pressure to ensure that the monopoly position of water authorities is examined from time to time so that public confidence may be increased.
  The hon. Member for Isle of Wight (Mr. Ross) asked a question about sewerage that I cannot answer at this moment, but I will write to him about it. His point related to sewage interceptor traps. That is no doubt something that an Under-Secretary of State winding up a debate should try to avoid. I appreciate that there is a lot in drains, but I am not sure exactly where the interceptor trap comes in. I imagine that it is something between a public utility boundary and the arrival of a single connection. The complexities of the sewerage provisions of the Public Health Act 1936 are not my bedside reading, but I will try to disentangle them and to throw some light on the problem.
  My hon. Friend the Member for Reading, North (Mr. Durant) expressed anxiety about the future of the Thames Conservancy. As I am sure he knows, the Thames Conservancy per se was wound up in April 1974, but a Thames conservancy division continued until 1 April 1982. I understand that in the recent reorganisation that division ceased to exist, its catchment-wide functions being absorbed into the regional headquarters organisation of the Thames water authority while its other functions went to the other multi-functional divisions of Thames. If the position has altered, I will write to my hon. Friend to update that information.
  The support of my hon. Friend the Member for Devizes (Mr. Morrison) was especially welcome, bearing in mind his long association with local authority associations at both county and district levels. Although the local authority organisations have vigorously opposed at least some parts of the Bill, individual councils have taken differing views. That is understandable, because when one is dealing with a measure on which some take one view and some another there cannot be unanimity. I welcome the way that hon. Members, especially my hon. Friend the Member for Devizes, have recognised the necessity for making structural changes, even if it means removing the local authority majority. I shall say a few words later about where local authorities may find new and fruitful ground for using their considerable expertise.
  My hon. Friend the Member for Morecambe and Lonsdale (Mr. Lennox-Boyd) raised a number of interesting points. He referred to the divisions in which consultative consumer bodies could be established. He said that the North-West water authority had three large divisions, which were not suitable for that purpose. We hope shortly to publish our proposals for establishing consumer bodies. There will be plenty of room for flexibility. The whole object of the proposals that we hope to lay before the Committee will be for individual regional authorities to have a consumer structure that is suitable not only for their geography—which varies considerably—but for the needs and interests of their areas.
  The House far too infrequently considers the vast difference between regional water authorities. The
  226
  problems of the South-West, with its difficulties of obtaining resources, of the North-West with its sewerage dereliction and Anglia with its major drainage problems all require different expertise, a different system of consultation with interested consumers and those most affected and, above all, a common commitment to achieve their particular roles. The Bill is before the House to help to achieve that, and the consultative committee structure will shortly follow.
  My hon. Friend the Member for Loughborough (Mr. Dorrell), in an extremely effective speech—I regret that I did not hear most of it—[Interruption.] I am sure that, had I heard it, I would have found it an even more effective speech. Such is the supreme omniscience of my right hon. Friend the Minister that he supplied me with the important details. My hon. Friend the Member for Loughborough was concerned with the complexities of land drainage arrangements, and I share that concern, but the position is not quite as confusing as the sewerage sections of the 1936 Act. There are real problems in the overlaps among the Ministry of Agriculture, Fisheries and Food, the water authorities and others. An interdepartmental committee has been set up, which will include a review of land drainage arrangements. It will produce a report on simplifying the systems under which those arrangements are made.
  The hon. Member for Ogmore (Mr. Powell) complained about the lack of local democracy in the proposals. That leads me to consumer consultation. All hon. Members must agree that the original intention of using local authority members to represent consumers on water authorities has failed to give consumers confidence or to impress upon water authorities the importance of settling consumer issues. As we are reducing local authority representation, we must seek a new method of forming consumer consultation bodies, and we intend to do that through the new consultative committees.
  The right hon. Member for Rhondda rightly reminded us that in Wales not only the restructuring of the authority but the consultative committee process has begun and seven committees have been established. The intention for England is to consult widely water authorities and consumer interests on what might be the best form of guidelines for consumer committees.
  The Bill provides that water authorities will have the statutory obligation to produce schemes of consumer consultation that the Secretary of State will approve for the area for which they are designed. I emphasise that they will be for an area because those schemes could vary between one area and another.
  I assure the House that the consultative committees will prove effective in so far as the terms of reference that we have produced for them are concerned. It is important to allow the committees to be properly representative of consumers and other interest groups. They should, therefore, be set up in each divisional area of a water authority. There are three major divisions in the North-West area. As the area is large, there may have to be four consultative committees. The important fact is that in each water authority's area there should be a committee for a division, not for the whole area.
  We also advise in the guidelines that every district council within a water authority's area should be represented on the consultative committees. We imagine that other local authority groups such as county councils would also wish to be represented. Moreover, we

  227
  anticipate that the representatives will include farming and industrial interests and consumer and amenity groups. The water authorities will be responsible for setting up the committees and we are anxious that they provide major matters for discussion, such as charging and charging policy and capital investment and capital investment policy. A wide remit of all matters that are of serious interest to consumers should be able to be discussed at consultative committees.
  The consultative committees would therefore have real access. They would discuss problems and be able to be more locally representative of the interests that district councils and other consumer groups wish to discuss. I hope that I have given the House the flavour of the guidelines that we shall produce. I hope that hon. Members will recognise that we are genuinely trying to make a major step forward to remedy what has been a conspicuous lack—effective representation of consumers on regional water authorities.
  The Water Space Amenity Commission is not an odd part of the Lord Chancellor's Department; it is the Water Space Amenity Commission that was set up with the National Water Council. It is to be abolished. Many hon. Members were anxious that its abolition should not mean the demise of the amenity interest and the progress that has been made towards recreational activities. I assure the House that nothing is further from the truth. The main reason for the WSAC's abolition is that it has fully carried out its initial remit and it has broadly completed its work load. The right hon. Member for Small Heath will concede that regional water authorities have fully accepted the importance of recreation and amenity activity. Their reports make it clear that authorities have directors who are specifically involved with recreational and amenity activities, and that they already have full discussions with regional sports bodies, including regional councils. That is how it should continue.
  We are not withdrawing the importance of amenity and recreation. We are telling regional water authorities that they have demonstrated their capacity with regard to regional amenities and recreation and that they must continue. It will be up to the Government to ensure that regional water authorities and their consultative consumer committees keep the focus on amenity issues. It is clear that regional water authorities are a major and increasing source of sporting activity and recreation.
  The importance of the measure cannot be overestimated. As hon. Members have said, it deals with what is practically the most important service that any Government can provide—water. There is no genuine alternative to it.
  The reasons why the Government now consider it is necessary to make these changes have been disclosed in part in the comments made about the report of the Monopolies and Mergers Commission and in the general observations made about the efficiency of the regional water authorities.
  I wish to make it clear that this is not in essence a destructive measure. It is a measure that acknowledges that the regional water authorities have fully come of age in relation to their duties and that they have demonstrated a significant capacity to run large businesses under extremely difficult conditions. What is important now is that the structure that is set up for the future of these authorities should be capable of responding to the
  228
  challenges ahead. There can be no doubt that boards of 47 or 65 are an anachronism if we want to see efficient use of the nation's resources.
  Some of the major historical links between water authorities and local government no longer exist. Originally, the water authorities took over from local authorities the assets of water supply and of sewage treatment. We are now 10 years on. There is no reason why the original owner of the assets should be a participant in the operation. The fact that local authorities have not been able to discharge the consumer obligation in the manner intended is a reason why local authority membership should be significantly reduced. The fact that local authorities acted originally as the agents for billing for water authorities whereas virtually all authorities row bill direct is another reason why the local authority influence on regional water authorities should be reduced.
  The connection between regional authorities and local authorities has undergone major change over the past 10 years. Local authorities, I believe, recognise this to be the case. There is no question that local authorities feel that the regional water authority is a separate organisation and that it busies itself with different matters. It is clear that local authorities are not queuing up to fill the vacancies that occur on regional water authorities for the representation of local authorities.
  There have been significant changes in the context in which regional water authorities carry through their statutory responsibility. The Government are attempting in the Bill to make it clear that regional water authorities should now have a much more decisive and efficient management structure. We base these recommendations not only on the investigations of the Monopolies and Mergers Commission but on observations of what has occurred in various local authorities over a considerable period.
  Hon. Members have made it clear that they want to see more accountability to the House. The role that the Secretary of State for the Environment now takes for water matters and will take when the Bill becomes an Act means that there will be much more direct accountability. The appointees to the water authorities will be those of the Secretary of State or the Minister of Agriculture, Fisheries and Food. There will be the opportunity to consult and question on these matters.
  Mr. Stephen Ross: Will the hon. Gentleman deal with the issue of water authorities responding to hon. Members?
  Mr. Shaw: I agree entirely with the hon. Gentleman. Water authorities should respond to hon. Members who wish to question them, to visit them or ask them to intervene on matters that affect their constituencies. There are very few authorities, so far as I am aware, that fail to respond when hon. Members seek to obtain assistance. I should be grateful if the hon. Gentleman would write to me about any point he has in mind.
  The Government expect to see the regional water authorities under the Act discharge their responsibilities with greater efficiency. We expect them to be able to satisfy consumers through the committees that they appoint that they are sensitive to local needs and can discharge their obligation. Above all, we expect to see them continue to increase the high standard of provision of water and to improve river quality and the discharge of

  229
  their sewerage functions in such a manner that the country can claim that we have the highest standards of water treatment anywhere in the world.
  Question put, That the Bill be now read a Second time:—
  The House divided: Ayes 284, Noes 230.

  Division No. 9]

  [10 pm

  AYES

  Adley, Robert

  Dunn, Robert (Dartford)

  Aitken, Jonathan

  Durant, Tony

  Alexander, Richard

  Dykes, Hugh

  Alison, Rt Hon Michael

  Eden, Rt Hon Sir John

  Amery, Rt Hon Julian

  Eggar, Tim

  Ancram, Michael

  Elliott, Sir William

  Arnold, Tom

  Eyre, Reginald

  Aspinwall, Jack

  Fairbairn, Nicholas

  Atkins, Rt Hon H.(S'thorne)

  Faith, Mrs Sheila

  Atkins, Robert(Preston N)

  Farr, John

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

  Fell, Sir Anthony

  Baker, Kenneth (St.M'bone)

  Finsberg, Geoffrey

  Baker, Nicholas (N Dorset)

  Fisher, Sir Nigel

  Banks, Robert

  Fletcher-Cooke, Sir Charles

  Beaumont-Dark, Anthony

  Fookes, Miss Janet

  Bendall, Vivian

  Forman, Nigel

  Bennett, Sir Frederic (T'bay)

  Fowler, Rt Hon Norman

  Benyon, Thomas (A'don)

  Fox, Marcus

  Benyon, W. (Buckingham)

  Fraser, Rt Hon Sir Hugh

  Best, Keith

  Fraser, Peter (South Angus)

  Bevan, David Gilroy

  Gardiner, George (Reigate)

  Biggs-Davison, Sir John

  Gardner, Edward (S Fylde)

  Blackburn, John

  Garel-Jones, Tristan

  Blaker, Peter

  Gilmour, Rt Hon Sir Ian

  Body, Richard

  Glyn, Dr Alan

  Bonsor, Sir Nicholas

  Goodhart, Sir Philip

  Boscawen, Hon Robert

  Goodhew, Sir Victor

  Bottomley, Peter (W'wich W)

  Goodlad, Alastair

  Bowden, Andrew

  Gorst, John

  Boyson, Dr Rhodes

  Gow, Ian

  Braine, Sir Bernard

  Gower, Sir Raymond

  Bright, Graham

  Grant, Anthony (Harrow C)

  Brinton, Tim

  Greenway, Harry

  Brittan, Rt. Hon. Leon

  Grieve, Percy

  Brooke, Hon Peter

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

  Brotherton, Michael

  Griffiths, Peter Portsm'th N)

  Brown, Michael(Brigg & Sc'n)

  Grist, Ian

  Browne, John (Winchester)

  Grylls, Michael

  Bruce-Gardyne, John

  Gummer, John Selwyn

  Bryan, Sir Paul

  Hamilton, Hon A.

  Buchanan-Smith, Rt. Hon. A.

  Hamilton, Michael (Salisbury)

  Buck, Antony

  Hampson, Dr Keith

  Budgen, Nick

  Hannam, John

  Bulmer, Esmond

  Haselhurst, Alan

  Burden, Sir Frederick

  Hastings, Stephen

  Carlisle, John (Luton West)

  Havers, Rt Hon Sir Michael

  Carlisle, Kenneth (Lincoln)

  Hawkins, Sir Paul

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

  Hayhoe, Barney

  Chalker, Mrs. Lynda

  Heath, Rt Hon Edward

  Channon, Rt. Hon. Paul

  Heddle, John

  Chapman, Sydney

  Henderson, Barry

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

  Heseltine, Rt Hon Michael

  Clark, Sir W. (Croydon S)

  Hicks, Robert

  Clarke, Kenneth (Rushcliffe)

  Higgins, Rt Hon Terence L.

  Clegg, Sir Walter

  Holland, Philip (Carlton)

  Colvin, Michael

  Hooson, Tom

  Cope, John

  Hordern, Peter

  Cormack, Patrick

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

  Corrie, John

  Howell, Ralph (N Norfolk)

  Costain, Sir Albert

  Hunt, David (Wirral)

  Cranborne, Viscount

  Hunt, John (Ravensbourne)

  Critchley, Julian

  Irving, Charles (Cheltenham)

  Crouch, David

  Jenkin, Rt Hon Patrick

  Dickens, Geoffrey

  Jessel, Toby

  Dorrell, Stephen

  Johnson Smith, Sir Geoffrey

  Douglas-Hamilton, Lord J.

  Jopling, Rt Hon Michael

  Dover, Denshore

  Joseph, Rt Hon Sir Keith

  du Cann, Rt Hon Edward

  Kellett-Bowman, Mrs Elaine

  230

  King, Rt Hon Tom

  Ridsdale, Sir Julian

  Kitson, Sir Timothy

  Rifkind, Malcolm

  Knight, Mrs Jill

  Rippon, Rt Hon Geoffrey

  Knox, David

  Roberts, M. (Cardiff NW)

  Lamont, Norman

  Roberts, Wyn (Conway)

  Lang, Ian

  Rossi, Hugh

  Latham, Michael

  Rost, Peter

  Lawrence, Ivan

  Royle, Sir Anthony

  Lawson, Rt Hon Nigel

  Rumbold, Mrs A. C. R.

  Lee, John

  Sainsbury, Hon Timothy

  Le Marchant, Spencer

  St. John-Stevas, Rt Hon N.

  Lennox-Boyd, Hon Mark

  Shaw, Giles (Pudsey)

  Lewis, Kenneth (Rutland)

  Shaw, Sir Michael (Scarb')

  Lloyd, Ian (Havant & W'loo)

  Shelton, William (Streatham)

  Lloyd, Peter (Fareham)

  Shepherd, Colin (Hereford)

  Loveridge, John

  Shepherd, Richard

  Luce, Richard

  Silvester, Fred

  Lyell, Nicholas

  Sims, Roger

  McCrindle, Robert

  Skeet, T. H. H.

  Macfarlane, Neil

  Smith, Dudley

  MacKay, John (Argyll)

  Smith, Tim (Beaconsfield)

  Macmillan, Rt Hon M.

  Speller, Tony

  McNair-Wilson, M. (N'bury)

  Spence, John

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

  Spicer, Michael (S Worcs)

  McQuarrie, Albert

  Sproat, Iain

  Madel, David

  Squire, Robin

  Major, John

  Stainton, Keith

  Marland, Paul

  Stanbrook, Ivor

  Marlow, Antony

  Stanley, John

  Marshall, Michael (Arundel)

  Steen, Anthony

  Mates, Michael

  Stewart, A.(E Renfrewshire)

  Mawby, Ray

  Stewart, Ian (Hitchin)

  Mawhinney, Dr Brian

  Stokes, John

  Mayhew, Patrick

  Stradling Thomas, J.

  Mellor, David

  Tapsell, Peter

  Meyer, Sir Anthony

  Taylor, Teddy (S'end E)

  Miller, Hal (B'grove)

  Tebbit, Rt Hon Norman

  Mills, Iain (Meriden)

  Temple-Morris, Peter

  Mills, Sir Peter (West Devon)

  Thomas, Rt Hon Peter

  Miscampbell, Norman

  Thompson, Donald

  Mitchell, David (Basingstoke)

  Thorne, Neil (Ilford South)

  Moate, Roger

  Thornton, Malcolm

  Monro, Sir Hector

  Townend, John (Bridlington)

  Montgomery, Fergus

  Townsend, Cyril D, (B'heath)

  Moore, John

  Trippier, David

  Morris, M. (N'hampton S)

  Trotter, Neville

  Morrison, Hon C. (Devizes)

  van Straubenzee, Sir W.

  Morrison, Hon P. (Chester)

  Vaughan, Dr Gerard

  Murphy, Christopher

  Viggers, Peter

  Myles, David

  Waddington, David

  Neale, Gerrard

  Wakeham, John

  Needham, Richard

  Waldegrave, Hon William

  Nelson, Anthony

  Walker, Rt Hon P.(W'cester)

  Neubert, Michael

  Walker, B. (Perth )

  Newton, Tony

  Walker-Smith, Rt Hon Sir D.

  Nott, Rt Hon John

  Wall, Sir Patrick

  Onslow, Cranley

  Waller, Gary

  Page, John (Harrow, West)

  Walters, Dennis

  Page, Richard (SW Herts)

  Ward, John

  Parris, Matthew

  Warren, Kenneth

  Patten, Christopher (Bath)

  Watson, John

  Pattie, Geoffrey

  Wells, Bowen

  Pawsey, James

  Wells, John (Maidstone)

  Percival, Sir Ian

  Wheeler, John

  Peyton, Rt Hon John

  Whitney, Raymond

  Pink, R. Bonner

  Wiggin, Jerry

  Pollock, Alexander

  Wilkinson, John

  Prentice, Rt Hon Reg

  Williams, D.(Montgomery)

  Price, Sir David (Eastleigh)

  Winterton, Nicholas

  Proctor, K. Harvey

  Wolfson, Mark

  Raison, Rt Hon Timothy

  Young, Sir George (Acton)

  Rathbone, Tim

  Younger, Rt Hon George

  Rees, Peter (Dover and Deal)

  Rees-Davies, W. R.

  Tellers for the Ayes:

  Rhodes James, Robert

  Mr. Anthony Berry and

  Ridley, Hon Nicholas

  Mr. Carol Mather.

  NOES

  Abse, Leo

  Allaun, Frank

  Adams, Allen

  Anderson, Donald

  231

  Archer, Rt Hon Peter

  Hardy, Peter

  Ashton, Joe

  Harman, Harriet (Peckham)

  Atkinson, N.(H'gey,)

  Harrison, Rt Hon Walter

  Barnett, Rt Hon Joel (H'wd)

  Hart, Rt Hon Dame Judith

  Beith, A. J.

  Hattersley, Rt Hon Roy

  Benn, Rt Hon Tony

  Haynes, Frank

  Bennett, Andrew(St'kp't N)

  Healey, Rt Hon Denis

  Bidwell, Sydney

  Heffer, Eric S.

  Booth, Rt Hon Albert

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

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

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

  Bray, Dr Jeremy

  Home Robertson, John

  Brocklebank-Fowler, C.

  Homewood, William

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

  Hooley, Frank

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

  Howell, Rt Hon D.

  Brown, Ron (E'burgh, Leith)

  Howells, Geraint

  Buchan, Norman

  Hoyle, Douglas

  Callaghan, Rt Hon J.

  Huckfield, Les

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

  Hudson Davies, Gwilym E.

  Campbell, Ian

  Hughes, Mark (Durham)

  Campbell-Savours, Dale

  Hughes, Robert (Aberdeen N)

  Canavan, Dennis

  Hughes, Roy (Newport)

  Cant, R. B.

  Janner, Hon Greville

  Carter-Jones, Lewis

  Jay, Rt Hon Douglas

  Cartwright, John

  Jenkins, Rt Hon Roy (Hillh'd)

  Clark, Dr David (S Shields)

  Johnson, Walter (Derby S)

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

  Jones, Rt Hon Alec (Rh'dda)

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

  Jones, Barry (East Flint)

  Cohen, Stanley

  Jones, Dan (Burnley)

  Concannon, Rt Hon J. D.

  Kaufman, Rt Hon Gerald

  Conlan, Bernard

  Kilroy-Silk, Robert

  Cook, Robin F.

  Lambie, David

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

  Lamond, James

  Crawshaw, Richard

  Leadbitter, Ted

  Cryer, Bob

  Leighton, Ronald

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

  Lewis, Ron (Carlisle)

  Dalyell, Tam

  Litherland, Robert

  Davidson, Arthur

  Lofthouse, Geoffrey

  Davies, Rt Hon Denzil (L'lli)

  Lyon, Alexander (York)

  Davis, Clinton (Hackney C)

  Lyons, Edward (Bradf'd W)

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

  Mabon, Rt Hon Dr J. Dickson

  Deakins, Eric

  McDonald, Dr Oonagh

  Dean, Joseph (Leeds West)

  McGuire, Michael (Ince)

  Dewar, Donald

  McKay, Allen (Penistone)

  Dixon, Donald

  McKelvey, William

  Dobson, Frank

  Maclennan, Robert

  Dormand, Jack

  McMahon, Andrew

  Douglas, Dick

  McTaggart, Robert

  Dubs, Alfred

  McWilliam, John

  Duffy, A. E. P.

  Marks, Kenneth

  Dunnett, Jack

  Marshall, D(G'gow S'ton)

  Dunwoody, Hon Mrs G.

  Marshall, Dr Edmund (Goole)

  Eadie, Alex

  Marshall, Jim (Leicester S)

  Eastham, Ken

  Mason, Rt Hon Roy

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

  Maxton, John

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

  Meacher, Michael

  Ellis, Tom (Wrexham)

  Mitchell, Austin (Grimsby)

  English, Michael

  Mitchell, R. C. (Soton Itchen)

  Ennals, Rt Hon David

  Morris, Rt Hon A. (W'shawe)

  Evans, Ioan (Aberdare)

  Morris, Rt Hon C. (O'shaw)

  Evans, John (Newton)

  Morris, Rt Hon J. (Aberavon)

  Ewing, Harry

  Morton, George

  Faulds, Andrew

  Moyle, Rt Hon Roland

  Field, Frank

  Mulley, Rt Hon Frederick

  Fitch, Alan

  Newens, Stanley

  Flannery, Martin

  Oakes, Rt Hon Gordon

  Ford, Ben

  Ogden, Eric

  Forrester, John

  O'Neill, Martin

  Foulkes, George

  Orme, Rt Hon Stanley

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

  Owen, Rt Hon Dr David

  Freeson, Rt Hon Reginald

  Park, George

  Freud, Clement

  Parker, John

  Garrett, John (Norwich S)

  Parry, Robert

  George, Bruce

  Pavitt, Laurie

  Gilbert, Rt Hon Dr John

  Pendry, Tom

  Golding, John

  Penhaligon, David

  Gourlay, Harry

  Pitt, William Henry

  Graham, Ted

  Powell, Raymond (Ogmore)

  Grant, John (Islington C)

  Price, C. (Lewisham W)

  Hamilton, James (Bothwell)

  Race, Reg

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

  Radice, Giles

  232

  Rees, Rt Hon M (Leeds S)

  Summerskill, Hon Dr Shirley

  Richardson, Jo

  Taylor, Mrs Ann (Bolton W)

  Roberts, Albert (Normanton)

  Thomas, Dafydd (Merioneth)

  Roberts, Allan (Bootle)

  Thomas, Dr R.(Carmarthen)

  Roberts, Ernest (Hackney N)

  Thorne, Stan (Preston South)

  Roberts, Gwilym (Cannock)

  Tilley, John

  Robertson, George

  Tinn, James

  Robinson, G. (Coventry NW)

  Torney, Tom

  Rooker, J. W.

  Urwin, Rt Hon Tom

  Roper, John

  Varley, Rt Hon Eric G.

  Ross, Ernest (Dundee West)

  Wainwright, E.(Dearne V)

  Ross, Stephen (Isle of Wight)

  Walker, Rt Hon H.(D'caster)

  Rowlands, Ted

  Wardell, Gareth

  Ryman, John

  Wellbeloved, James

  Sever, John

  Welsh, Michael

  Sheerman, Barry

  White, Frank R.

  Sheldon, Rt Hon R.

  White, J. (G'gow Pollok)

  Shore, Rt Hon Peter

  Whitehead, Phillip

  Short, Mrs Renée

  Whitlock, William

  Silkin, Rt Hon J. (Deptford)

  Willey, Rt Hon Frederick

  Silkin, Rt Hon S. C. (Dulwich)

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

  Silverman, Julius

  Williams,Rt Hon Mrs (Crosby)

  Skinner, Dennis

  Wilson, Gordon (Dundee E)

  Smith, Cyril (Rochdale)

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

  Snape, Peter

  Wilson, William (C'try SE)

  Soley, Clive

  Winnick, David

  Spearing, Nigel

  Woodall, Alec

  Spellar, John Francis (B'ham)

  Woolmer, Kenneth

  Spriggs, Leslie

  Wrigglesworth, Ian

  Stallard, A. W.

  Wright, Sheila

  Stewart, Rt Hon D. (W Isles)

  Young, David (Bolton E)

  Stoddart, David

  Stott, Roger

  Tellers for the Noes:

  Strang, Gavin

  Mr. Lawrence Cunliffe and

  Straw, Jack

  Mr. Hugh McCartney.

  Question accordingly agreed to.
  Bill read a Second time.
  Bill committed to a Standing Committee pursuant to Standing Order No. 40 (Committal of Bills).

  Water Bill

    BUSINESS OF THE HOUSE
    Ordered,
    That, at this day's sitting, the Motion relating to Ways and Means may be proceeded with, though opposed, until any hour.—[Mr. Garel-Jones.]

    WATER [MONEY]
    Queen's Recommendation having been signified—
    Resolved,
    That, for the purposes of any Act of the present Session to make provision as to the constitution and procedure of water authorities and their borrowing and other powers and as to arrangements for the carrying out of their sewerage functions; to enable water authorities and statutory water companies to provide advice and assistance outside the United Kingdom; to provide for the dissolution of the National Water Council and the Water Space Amenity Commission and to repeal section 25(1)(d) of the Local Government Act 1974 and the Water Charges Equalisation Act 1977, it is expedient to authorise—
    (a) any increase in the sums payable out of or into the National Loans Fund or the Consolidated Fund attributable to provisions of the said Act increasing to £6,000 million, with power to increase by order to £7,500 million, the limit imposed by paragraph 34(5) of Schedule 3 to the Water Act 1973 in relation to borrowing by water authorities;
    (b) the payment out of money provided by Parliament of—

    (i) any sums required for making payments to statutory water undertakers under provisions of the said Act of the present Session enabling adjustments to be made in connection with the repeal of the Water Charges Equalisation Act 1977;

    (ii) any expenses incurred by the Secretary of State in connection with the dissolution of the National Water Council and the Water Space Amenity Commission; and

    233

    (iii) any administrative expenses incurred by any government department in consequence of the provisions of the said Act of the present Session;

    (c) payments into the Consolidated Fund.—[Mr. Garel-Jones.]

    WAYS AND MEANS

      WATER
      Resolved,
      That it is expedient to authorise the levying from water authorities—

      (a) of such contributions as appear to the Secretary of State necessary to meet the expenses incurred by him in connection with the dissolution of the National Water Council and the Water Space Amenity Commission; and

      (b) of amounts which are, in the opinion of the Secretary of State, appropriate in relation to the making of adjustments in equalisation levies and equalisation payments in connection with the repeal of the Water Charges Equalisation Act 1977.—[Mr. Garel-Jones.]

  Public Passenger Vehicles
  10.14 pm
  Mr. Roger Stott: I beg to move,
  That an humble Address be presented to Her Majesty, praying that the Devon Trial Area Order 1982 (S.I., 1982, No. 1243), dated 1st September 1982, a copy of which was laid before this house on 9th September, in the last Session of Parliament, be annulled.
  I wish to deploy the arguments that my right hon. Friend the Member for Barrow-in-Furness (Mr. Booth) and others of my hon. Friends in the Shadow transport team have used for a number of years.
  Not a week goes by without the Government attacking the fabric of our public transport system. The way that the Transport Bill was presented yesterday is a constitutional outrage. It seeks to impose Marsham Street views on local authorities. Metropolitan authorities in England will be forced substantially to increase bus fares. This evening we are discussing a statutory instrument to introduce a trial area in parts of Devon. Doubtless the Minister will say that the Devon county council applied to the Department of Transport for authority to introduce a trial area only in part of the county. That fact may be significant.
  A hallmark of the Government is that they persistently try furtively to bring before the House controversial issues of varying importance. This matter is important and the Government have slipped it through in a statutory instrument. The order was originally made on 1 September and laid before Parliament on 9 September. It came into operation on 1 October. All the provisions came into operation before the House had had an opportunity to debate the statutory instrument. I am not an expert on procedure but I challenge the validity of the Government's putting into force the provisions of a statutory instrument before the House has had an opportunity to debate the issues.
  The concept of a trial area may be attractive at first sight, but the proposal will be extremely damaging to the network of services operated by the National Bus Company and others.
  Mr. Terence Higgins: The hon. Gentleman makes a serious accusation in saying that the order was brought before the House invalidly. Had that been so, the Chair would have objected.
  Mr. Stott: I said nothing of the kind. I said that I was not an expert on procedure but I doubted the validity of the procedure. However, as the measure has been proceeded with, it must be valid.
  The order was made on 1 September, laid before Parliament on 9 September and came into operation on 1 October when the House was not sitting, so we did not have an opportunity to debate the contents of the statutory instrument. It is yet another measure that has been slipped through the House furtively and put into operation without hon. Members having an opportunity to comment on it.
  At face value, a trial area may seem attractive, but my hon. Friends and I disagree with the proposition because we believe that it could be very damaging. In the past, when transport operations wished to alter stage carriage routes or fares or to open new routes, they had to satisfy the local traffic commissioners that their plans were in the best interests of local public transport. The Transport Act 1981 circumvented that essential safeguard and curtailed the functions of the traffic commissioners by freeing from

  235
  licensing requirements all journeys other than local services. It also eliminated fares control and the licensing of conductors.
  The Secretary of State for Transport may be aware of the example of Yeowarts in Cumbria. During a debate on the Transport Bill in 1981 the then Secretary of State claimed that the measures would improve local transport by broadening the parameters. When Yeowarts applied to run stage carriage services on routes operated by the local authority and the National Bus Company, both the local authority and the traffic commissioners objected. However, the company appealed to the Secretary of State, who overturned the objections and granted a licence. The local transport undertaking is now losing much valuable revenue on those profitable routes and some provincial services, notably in inner Lakeland have been withdrawn.
  In addition, because of the chaos that was created by granting that licence, the then Under-Secretary of State decided to repair the damage of the Bill by giving the local authority a further tranche of transport supplementary grant. So profitable local routes could be privatised and the damage would be repaired with taxpayers money. The same may happen in this trial area.
  Mr. D. N. Campbell-Savours: Does my hon. Friend also recall that about two years ago I was given assurances as I was sitting here by the then Under-Secretary that routes would not be lost in my constituency, but which were subsequently lost? Is he also aware that this morning I received yet another letter from Cumberland Motor Services expressing concern about further decisions that have been taken by Yeowarts to press ahead in seeking additional routes, and that the likelihood is that even more routes will be lost in my constituency? Is it not a disgrace that the Government can get away with that?
  Sir Frederick Burden: Are we not going rather far from the provisions of the order?
  Mr. Deputy Speaker (Mr. Bernard Weatherill): The hon. Gentleman pre-empts what I was going to say. It is perfectly legitimate to draw attention to that matter but not to deal with it in detail.
  Mr. Stott: I was seeking to draw attention to the provisions in the Transport Act 1980 which allowed trial areas and delicensing and the consequences which flowed from them. The consequence of that legislation has been applications from several shire counties to introduce trial areas. It is not surprising that the applications so far received by the Department of Transport have come from shire county areas which have provided less than satisfactory services for their people. I know because I have spent the past three years examining shire county transportation policies and I stand here tonight unashamedly and say so.
  This is the second trial area application to be debated by the House. My hon. Friend the Member for Kingston upon Hull, East (Mr. Prescott), in his speech on 21 October 1981, succinctly deployed our arguments against the introduction of the trial area in Hereford and Worcester. While I cannot debate the principle of trial areas tonight, I would be in order to record some of the views of those major operators who must contend with trial areas, such as, the National Bus Company.
  Mr. Robert Adley: The hon. Gentleman tells us that he has been studying these
  236
  matters. Can he say how many times in the past three years he has been to any of the areas in Devon, Hereford and Worcester?
  Mr. Stott: I went to Hereford and Worcester on two occasions and I have been to Norfolk once. I have not been to Devon, but I am in close contact with people there and I studied the situation carefully before making my remarks to the House this evening.
  Mr. Peter Snape: Does my hon. Friend agree with me that if the hon. Member for Christchurch and Lymington (Mr. Adley) had as much expertise on this as on all the matters on which he is quoted regularly in the daily newspapers, he would not have time to come to the House anyway?
  Mr. Stott: My hon. Friend is continually sparring with the hon. Member for Christchurch and Lymington (Mr. Adley). Perhaps I may remain above that battle.
  I was saying that it would be proper for me to deploy this evening some of the arguments that have been raised by the National Bus Company, whose subsidiary, Western National, submitted evidence to the Devon county council when it became apparent that it was seeking Government permission to carry out the experiment.
  I have today secured a press release issued by the National Bus Company's subsidiary reported in the Exeter Express on 17 September. It says:
  "Western National today warned that it will be forced to scrap vital Exeter bus services if a private operator gets the go-ahead. Routes affecting hospital and industrial services must be axed to make up for an expected loss of more than £27,000."
  The article ends:
  "The bus company is already running a deficit in the city centre services of £53,000 a year."
  It is difficult to see how those counties that apply for trial area status could any longer enter into satisfactory agreements for the provision of services under revenue support arrangements, as the supported services would be open to the competitive creaming off of traffic on parts of routes or at certain selected times of day. As a result, counties would face increasing and unquantifiable revenue support demands if services were to be maintained at times that were unattractive to competing operators.
  It would be difficult, if not impossible, to operate or sustain in trial areas the network of services that they are currently able to provide with the benefit of cross-subsidisation. By the threat of unregulated competition operators would be forced to concentrate on the more profitable operations, and the continuance of less profitable but socially necessary services—made possible by cross-subsidy—would have to cease to the detriment of the services and the passengers who depend on them.
  That is the nub of our case. We have argued it consistently in all the transport debates of the past three years. The Government do not seem to understand that it is the value of network services that allows unprofitable routes to be maintained. The basis is that other, profitable, routes cross-subsidise the non-profitable routes, which can then remain in existence.
  In evidence to Devon county council, one of the major operators of public transport in the area told the council's chief executive that
  "The Road Servicing Licensing system has enabled and indeed required network bus operators working in co-operation with the local authorities concerned to provide services in areas and at times of varying demand. The licensing system provided a safeguard against an operator seeking simply to provide services at the times most attractive to him.

  237
  Should this licensing system be removed it must be expected that operators will seek to exploit the services or journeys of maximum return without accepting an obligation to provide journeys which are less attractive financially. It is likely, therefore, that whilst in some places in the short term there may be apparent benefits, the implications for less populous areas and less popular days or times of day will be bleak unless services are supported from public funds. Services in the Trial Area would in all probability be without the benefit of cross-subsidy otherwise available on the network basis."
  That reinforces the argument that we have consistently put forward about cross-subsidisation. Any interference, opening of the parameters or privatisation of those routes will affect the cross-subsidy and inevitably affect the loss-making routes of rural areas.
  Mr. David Penhaligon: I understand the hon. Gentleman's argument, but if an area applied for trial status although there were no profitable bus routes, would the Labour Party's objection to such experiments fall to one side?
  Mr. Stott: We would prefer public transport and the transport supplementary grant to be used properly. That is where we differ from the Conservative Party, which wishes to restrain the transport supplementary grant and to shackle public transport. It wants to change the nature of public transport by increasing fares.
  There should be public transport provision throughout the United Kingdom. I refer the hon. Gentleman to the Labour Party's programme, which has been endorsed by the TUC and the National Executive of the Labour Party. We commit ourselves to the minimal service concept. It is a very good document. The hon. Gentleman comes from a rural area and he should read it, because it deals with the very point that he raised.
  Simply because Devon county council has applied for a trial area experiment to come into operation does not mean that it has universal support. I am advised that on 24 September 1980 the transport policy committee of the said county council, comprising members who I imagine would specialise in transport interests, rejected the suggestion that a trial area should be introduced in that area on the basis that it would harm existing services and profitable routes. Unfortunately, the transport policy committee was over-ruled. Subsequently the full county council decided at its meeting to ask the Secretary of State for Transport to bring forward a statutory instrument to allow it to introduce a trial area.
  Therefore, there must be at least some dubiety in the Tory ranks in Devon if the transport policy committee rejected the proposal, but the committee was over-ruled by the full county council. However, there is still opposition to the proposal from the people in the Devon area. I am advised that the Confederation of British Road Passenger Transport is opposed to the provision and that Exeter city council objects strongly to the proposal. It is not surprising that Exeter city council object because it would come off worst, and it knows that it would. That is why it is against it.
  The Association of County Councils is opposed to the principle of trial areas. The National Bus Company's subsidiary, Western National, is opposed to the introduction of the trial area. The National Union of Railwaymen, contrary to common belief—I am advised by my hon. Friend the Member for West Bromwich, East
  238
  (Mr. Snape)—organises in the bus industry. If my hon. Friend catches your eye, Mr. Deputy Speaker, I have no doubt that he will elucidate that issue.
  What are the results of such competition? There is bound to be creaming off of the more lucrative routes, possibly with a reduction in fares, but at the expense of the rural network, the services of which might suffer. We keep coming back to that point.
  The promoters of the trial area lost the battle in the transport policy committee of the Devon county council on 24 September 1980. The only change so far is the exclusion of the Exeter city council area from the provisions. However, 4 million passenger journeys each year are still subject to the order. The bus depots at Exmouth and Sidmouth and about 80 jobs in the whole east and mid-Devon area could easily be put at risk—for what? All the social benefits claimed by the trial area promoters are available under current legislation. A trial area puts too much at risk for benefits that are already achievable. We do not have to go down that road.
  Some people may argue that the only way to prove the failings of the trial area is to try it out. I do not subscribe to that view as I think that if we do so the damage would be far reaching and irreconcilable. My hon. Friend the Member for West Bromwich, East will allude to the points that were made by his union when it submitted its evidence to Devon county council. Some of its submissions should be taken seriously by the House. They were made in good faith and against a background of concern for the membership that works in the area.
  I have some questions to ask the Minister. First, what guarantee has she received that, as a consequence of the introduction of the trial area, services in the rest of Devon will not suffer? Secondly, as there was a Dutch auction in Hereford and Worcester in respect of the transport supplementary grant, on what basis will she agree to allocate part of the county council's supplementary grant to private operators and private routes if they should submit applications?
  The trial area concept may seem superficially attractive, but the Opposition believe that in practice it is the thin end of the wedge. It allows the shire counties to abrogate their responsibilities to run a proper public transport system in the way in which we believe that it should be run. It allows them to get away with network planning. Trial areas allow private operators to cream off profitable routes. The concept means in practice that private operators are no longer accountable to anyone, least of all to the traffic commissioners to which they were accountable hitherto. It is no substitute for a properly financed, well planned and soundly managed public transport policy. It is the principle of the trial area rather than the specific request that I shall be asking my right hon. and hon. Friends to vote against this evening. We are implacably opposed to it because of the damage that we feel that it will do.
  10.43 pm
  Sir Peter Mills: I welcome the opportunity to speak in this important debate. The argument advanced by the hon. Member for Westhoughton (Mr. Stott) does not reflect his knowledge of the area with which we are dealing. It is strange that the Opposition should be praying against the order when to my knowledge there is not a Socialist Member representing a constituency in the South-West—
  Mr. Snape: There are not many Tories in South Yorkshire.
  Sir Peter Mills:—who knows the problems that we are experiencing in the transport system.
  The hon. Member for Westhoughton talked about a "rural network of buses". That is a joke. He must learn a little more about the facts of life in the remote parts of Devon and Cornwall. He talked also about the concern of the National Union of Railwaymen. Did the NUR have any concern for my constituents in the rural areas when it was on strike, and, only recently, for those trying to get work on the few remaining railways in Devon? Of course it did not. It went on strike. And more than that, it damaged the future of the lines.
  Mr. Stott: The NUR had a strike that lasted for two days. The industrial action that was taken on the railways was not taken primarily by the NUR. It was taken by another railway union. I was referring specifically to the NUR. I hope that the hon. Gentleman will remember that if he chooses to make similar accusations in future.
  Sir Peter Mills: I accept that, but I am sure that the hon. Gentleman was referring to ASLEF as well as to the NUR, and the combined action of the two has had a devastating effect on the future of the railways in the South-West.
  I am sure that my hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop), whose area is involved, would have liked to be present at this debate. [HON. MEMBERS: "Where is he?"] Unfortunately, he is away on an important trip with a Select Committee.
  Mr. Snape: I bet it is not a bus trip.
  Sir Peter Mills: As I am a constituent of my hon. Friend's, perhaps I may make a few pertinent remarks.
  I welcome the trial proposal as a worthy way to try to help with the difficult problem of rural transport in remote areas. Many other ideas have been tried without much success. It is all very well for Labour Members to condemn the proposal, but what did they do? I have a long memory and I remember many years of Socialist rule. The problem was just as bad then. My hon. Friend the Minister has made a worthy effort in supporting Devon county council in this way, and it is certainly worth trying to get the experiment under way.
  My only criticism is that the wrong area has been chosen. [Interruption.] I am trying to be frank, which is more than one can say of the Opposition at times. I must declare an interest, as West Devon is probably the remotest of all areas in Devon.
  Mr. Tony Speller: After North Devon.
  Sir Peter Mills: With North Devon. Therefore, I believe that the trial area should have been in North or West Devon. The area that has been chosen has more railway lines than we have. It also has better bus services in some places, so there may be some danger there. That is why this needs to be an experiment, to see whether it works. There are also more and better roads than there are in the remoter areas of North and West Devon. That is why I believe that the wrong area has been chosen. Perhaps the Minister will comment on that. The area that I have the privilege of representing has virtually no railways, very difficult roads and smaller villages with, it seems, more retired people and others who need this type of transport.
  240
  This is a real and growing problem, and it will continue to grow unless something is done, so the experiment is well worth trying.
  Perhaps I may try to educate the Opposition on this. It is true that there are more cars in the remoter areas, but this leaves a hard core of people who cannot afford a car, retired people and so on, and who need bus transport into the towns and perhaps into the cities of Plymouth and Exeter. Many of the existing bus operators make their bread and butter living from school transport. I believe that they would be very suitable operators to provide a service for the village people. After the children have been taken to school, a service could be fitted in with the times at which the village people want a service into the towns or cities to do their shopping, and so on. At present, those operators cannot undertake such a service, so most of their services run at a loss. If they were given the freedom to run these additional services they could help to solve the problem and also win back many people who would prefer to go into the cities or the towns by bus rather than using their cars. If the times were fitted in correctly, such a service could be much more flexible than the present situation.
  Mr. Albert Booth: Did the hon. Gentleman ask the Devon county council to include his constituency in the trial area order? If not, why not? If so, why did the council refuse his request?
  Sir Peter Mills: The council did not refuse my request. It used the same area for the trial of Post Office vans. It has always been the experimental area. I hope that the trial will be a success and will move to my constituency.
  Perhaps the Minister could pay attention to the types of buses used in the experiment. Usually, village buses that transport children to school are second-hand, rather large, and not suitable for the purpose. It is a great pity that there is not enough profitability in school bussing for operators to buy smaller buses of smaller capacity that are easy to operate in difficult conditions in remote areas.
  The experiment can be criticised. It might not work, but at least it is a start. The Socialists did not even attempt an experiment. It is a bold experiment—let us try it and see if it works. It can then move to other areas, especially West and North Devon. I fully support it, even with its warts and possible problems.
  Several Hon. Members rose—
  Mr. Deputy Speaker (Mr. Paul Dean): Order. The debate must end at 11.30 pm. A number of hon. Members wish to speak, so I hope that speeches will be brief.
  10.52 pm
  Mr. Peter Snape: I shall bear your strictures in mind, Mr. Deputy Speaker. Before being challenged about the lack of Devon burr in my voice, I declare an interest as a member of the National Union of Railwaymen. Many of the bus services in Devon are operated by members of the National Union of Road Operatives, which is a subsidiary of my union.
  The only two occasions since I was elected to the House when I have visited Devon were during two annual holidays some years ago. I do not profess to be an expert on its local traffic problems. The arguments that I shall deploy come exclusively from Devon, and the House will

  241
  have to accept that I am merely the voice not only of members of the NUR but of others from that part of the world.
  The concept of trial areas resulted from the Transport Act 1980. That Act had three main prongs—the concept of car-sharing, the increase in the number of those allowed to operate long-distance coach services and trial areas. It would be improper for me to refer to the first two prongs of the legislation, other than to say that it is widely accepted that both car sharing and the whole nonsense of competition from private long-distance coach hauliers have proved to be damp squibs.
  The Devon county council was the first to plunge in with an application for a trial area, not long after the Act came into force. It then discovered to its horror that most of the district councils in the county opposed the concept of trial areas. My hon. Friend the Member for Westhoughton (Mr. Stott) mentioned Exeter city council in his able speech. It is Tory-controlled, of course. One hates to see public brawls between members of the Conservative Party but they happen occasionally. It certainly happened on this occasion. Exeter city council felt that trial areas in that part of the county would have a strongly adverse effect on the services that it was operating.
  The hon. Member for Truro (Mr. Penhaligon) intervened to say that there were no profitable bus services in Devon and Cornwall anyway. That statement was greeted with jeers from Conservative Members. Exeter city services operate under a remit to break even. That shows that some services in the city must make money to subsidise those that do not.
  In early 1981, the Secretary of State for Social Services, then Secretary of State for Transport, visited Devon and Cornwall. One could argue that his knowledge of that part of the world is as sketchy as mine. Nevertheless, he visited the area to persuade Devon county council to take up the offer. Having made its initial application, it appeared to want to back away. He did more than attempt to persuade the council—he offered the not inconsiderable sum of £500,000 if it would participate in the scheme. Whether it was due to his visit or to his inducement—I hesitate to call it a bribe, because that would be improper—to Devon county council I do not know, but on the Minister's return to London, the council threw out the whole scheme and decided that it wanted nothing to do with it. It was only when that not-so-subtle arm-twisting took place in the hallowed portals of county hall in Devon that the transportation committee's decision was hurriedly reversed and the application that we are discussing was made.
  The NUR will be accused of taking a dog in a manger attitude and of being interested only in protecting jobs, regardless of public need in the area. I hope to show that that is not so by reading from a letter written to all Devon county councillors this year by the divisional organiser of the NUR, Mr. Viv Taylor. His area covers division 10 in union parlance which is the Exeter area. He said that
  "The employees of Western National are only too happy to participate in and assist with Experimental Areas."
  Those are the areas that the hon. Member for Devon, West (Sir P. Mills) referred to a moment ago, inadvertently or otherwise. Mr. Taylor continued:
  242
  "The new mini-bus proposals at Beer and Whimple and at Tiverton in the evenings are very worthwhile experiments and we hope they are successful. Social experiments like this are well worth trying out.
  We are also happy about other operators runningover routes and to places we do not currently serve. What may not be generally known is the fact that any operator can provide such services with a Section 34 licence without the need for court appearances and the like. Such operators come in and even use our bus station—and they are welcome to."
  That is hardly a dog in the manger attitude.
  Moreover, Mr. Taylor refutes an argument that was advanced by the hon. Member for Devon, West when he writes:
  "Some people argue that the only way to prove the failings of the 'Trial Area' is to try it out."
  That is virtually identical to what the hon. Gentleman said. The letter continues:
  "The damage done to the service network will then be beyond repair. Surely, you"—
  the county councillors—
  "will not allow this to happen."
  Sadly, it seems that the county councillors are prepared to let that happen. Why that area? Why allow a trial area when the services provided will compete with those provided by Exeter city council which was one of the bodies that objected to the concept?
  Perhaps we should examine the glossy blurb that Devon county council has produced, no doubt at great cost to the taxpayers. I trust that not too many businesses have gone bust as a result of this exercise. The leaflet is entitled, "The Trial Area Explained". Under the heading, "Why does Devon want one?", the Tory-controlled county council says:
  "Despite paying out large amounts of subsidy the County Council has had to accept cuts in service level as passengers steadily drift away, deterred by rising fares".
  This is a Tory-controlled authority telling the Secretary of State that its services are declining because it is forced by the Government to put up fares. I wish that I had been in possession of this document for yesterday's debate on the Transport Bill. I would have been able to quote it, although, given the standard of the Government's opening and closing speeches, I doubt if it would have made much difference. What about the attitude to the hallowed Tory principle of competition?
  Mr. Adley: Before the hon. Gentleman gives his sob story about attitudes, can he justify the action of his union, the National Union of Railwaymen, just up the road at the West Somerset railway where it has refused for 20 years to allow a private railway to run into Taunton and has thus prevented the legitimate transport aspirations of many people in that area from being fulfilled?
  Mr. Snape: It is difficult to reply directly to the hon. Gentleman, who always speaks in the extravagant language in which he is quoted in the newspapers. The problems of the railway line to which he refers are not covered under the order. I might be ruled out of order if I took the trouble to answer the hon. Gentleman. The intention is to protect bus services, but I have no wish, Mr. Deputy Speaker, to arouse your ire by saying more.
  On 17 September 1982, before the traffic commissioners for the Western traffic area, an application was made to run two bus services by an operator not a million miles away from Devon and close to the trial area designated under the order. The operator, Mr. R. M. Holladay, and his wife proposed a one-man-bus operation. Among the objectors was Mr. A. T. W. Davies who

  243
  appeared on behalf of Devon county council. In his extremely relevant evidence, Mr. Davies said that there were a number of points that he wished to put to the commissioners in the hope that they would refuse the application. Mr. Davies said:
  "We have a concern about the level of resources available to the applicant"—
  Mr. Holladay—
  "to maintain the service if granted."
  There is some difficulty, if the concept of trial areas is accepted, in knowing the sort of operators who will run the services. Will they be one-man-bus people? Worthy though his application may have been, Mr. Holladay did not wish to run the bus on a Wednesday afternoon because that was the day on which he maintained it. It seems a sketchy principle, to say the least, if this is the sort of applicant who comes forward.
  Mr. Davies, on behalf of the Devon county council, added:
  "It therefore appears that while some areas of the city"—
  Exeter—
  "would enjoy a bus service they do not have at the moment, there is a serious danger that this marginal increase or improvement in service would be more than offset by a loss of benefit from the decrease in service which you have heard Western National"—
  another objector—
  "are at least contemplating if the application is granted."
  The myth of competition in Exeter has already been rejected by Devon county council as recently as September this year. It is opposed by my union not because of any dog in the manger attitude but because of the belief that it will have a serious impact on services in that part of the county. I hope that Conservative Members will accept that what I say is based on evidence from that part of the world. I have stated it because I believe it. I hope Conservative Members will join my hon. Friends and myself in the Lobby tonight to protect bus services in their constituencies.
  11.5 pm
  Mr. Tony Speller: I start by paying what might be a surprising tribute. Members of the National Union of Railwaymen man most of the buses in my part of Devon. They work hard and well, and co-operate with their authority to try to provide the non-existent new network referred to by my hon. Friend the Member for Devon, West (Sir P. Mills). It is pointless to pretend that there is an existing rural network in the West Country. There are towns with one bus a day and large villages with one bus a week. The hon. Member for Westhoughton (Mr. Stott) confuses himself if he believes, in his urban fastness, that there is any form of public service transport in areas such as Devon.
  Therefore, any trial area is worth a trial. We may be debating an order called the Devon Trial Area Order, but we are asking ourselves whether there is any future for public service buses in rural areas. I am sad at, and tired of, seeing a bus with one passenger and a driver. We must accept that a change must come. It is no good the hon. Member for West Bromwich, East (Mr. Snape) talking of the excellence of his union workers, excellent as they are, when they are driving uneconomic services that, sooner or later, are bound to lose their subsidy.
  Any trial that aims at keeping people on buses rather than forcing them into cars—we are talking about an area where there are no trains—must be sensible. It is not dog
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  in the manger, but dead dog in the manger to suggest keeping the existing order and hope to keep it going for one, two or three years.
  The redundancies accepted by the NUR over the years show that it realises the problem. I give every good wish to this trial area. Like my hon. Friend the Member for Devon, West, I should have liked it to come forward a little, as Chawleigh is in it, but Chulmleigh is out. I should have liked a bigger trial area. However, if we have no trial, we shall have no verdict, and if we have no verdict, sooner or later we shall have no bus service.
  11.7 pm
  Mr. David Penhaligon: I agree with much that was said by the hon. Member for Devon, West (Sir P. Mills). This is the wrong trial area. I must confess to the cardinal sin of all time as a Cornishman commenting on the affairs of Devon. If I came from anywhere else in England, it would probably be all right, but for a Cornishman to talk about Devon is pushing his luck.
  I wish to address myself to hon. Members on the Opposition Benches. I enjoy and appreciate their enthusiasm for providing some sort of social service in rural areas for the elderly, those who can no longer afford to drive, and children. I concur with their spirit and understand and appreciate it. However, things are so bad in some of the rural areas that they are worse than many hon. Members recognise and realise.
  Looking at the map of this part of Devon, I can imagine that there is some sort of service operating around Tiverton, which is a substantial town. In the rural areas to the north of this trial area, the chances are that there are very few buses. Those that do run probably operate the same game that we play in Cornwall—spot the passenger. I have reluctantly reached the conclusion that we ought to be even more adventurous in our experiments than simply employing devices such as trial areas.
  In parts of Cornwall, which I know rather better than this part of the country, there is a subsidised taxi service. It takes people from their homes to the shops where they want to go and, most important, takes them back with their shopping. It may be more credible financially and no more expensive than running a bus service, and it may provide a better service for the elderly.
  The present position is not acceptable. All the trends are towards deterioration. I know that there is opposition to the trial area, but it is opposition based on desperation. The people can see that they have so very little going for them that they express the fear that the trial area will lead to no service at all. Often if one talks to the people concerned, one finds that they are convinced that what remnants of a service that they have run by the Western National bus company will disappear in the next four or five years, even if there is not a trial area, as the losses mount and mount.
  The House could do itself a substantial service if it concentrated some of its time, abilities and energies on looking, in some depth into the often heart-rending transport difficulties that exist in some of the more remote rural areas.
  The simple truth is that many people living in this part of the country now have a worse public transport system than any that has existed at any time in the last 100 years. As my dear grandmother used to say "At least in my young days we had the horse and cart. It was not very fast, but it was regular and reliable". Many areas no longer have even that.

  245
  I am against the order because I believe that it has been applied to the wrong area. It should have been applied to one of the remoter areas of Devon so that we could properly judge its effect.
  Mr. Campbell-Savours: If that is the case, why did the Liberal Party vote for the Hereford and Worcestershire order about 12 months ago?
  Mr. Penhaligon: To my knowledge, Tiverton is not in Worcester. The hon. Gentleman can make party points if he wishes. It does not matter what points the Labour Party makes in my part of the country, because I know both of the remaining Labour Party Members in my constituency. He is fighting an uphill battle in that regard.
  People of a radical political persuasion are only too well aware of just how bad the situation now is. If the Liberals in Hereford and Worcester concluded that an experiment such as this might improve things in their area, I am willing to abide by their judgment.
  The south coast of the Devon trial area is not typical of the remoter, rural, and less densely populated areas with which I and Devon Members are familiar. Even if this trial is successful in the southern part of the area, it will not prove to be a solution for the difficulties facing the remoter parts of the country.
  We must be far more adventurous than the Government. The Liberal Party supported much of the primary legislation on which the order is based. We must consider the possibility of applying the bus subsidy to taxis, because it would be interesting to see what emerged from such an arrangement.
  11.12 pm
  Mr. Colin Shepherd: I am grateful for this brief opportunity to inform the House of the consequences so far of the trial experiment in Hereford, which has now been going on for a year. It is only right that Devon should know what has happened in Hereford.
  This is best summed up in a letter to the Hereford Times on 28 May from the general manager of Primrose Motors, a local bus company. I know that the Hereford Times is not top of the reading list of the hon. Member for Westhoughton (Mr. Stott). Nevertheless he may be interested in the letter. It states:
  "In your May 21 issue you reported that a local Transport Workers delegation stated that the 'free for all' on bus routes in Herefordshire was already causing problems for passengers and that 'all some of these private operators want to do is to take the cream off the top'. While agreeing that there may be possibly one or two operators who fit the description, I would like to reply that most independent operators have served the sparse population at a cost to themselves because of a sense of service to their local clientele. We at Primrose, have served the Leominster area over the last 60 years at a price and service frequency that I am sure no national subsidiary would attempt to maintain. Because of the `free for all' we at last have a chance to challenge the previous State monopoly on busier routes and bring the benefits of competition to the remaining long suffering passengers; on these busier routes if our fares are economically correct but not more than the public is prepared to pay, if our service is reliable, and if our drivers are pleasant in their attitude, then we deserve to make a small profit. If we get it wrong, we deserve to go out of business. If however, there are not enough potential passengers living on the route to maintain a profitable bus service, but there is a social need, then the Council is expected to pay for this social requirement. The ratepayers then deserve to get the most efficient service at the least cost to themselves. On rural routes this option is rarely provided by the nationalised transport concern with its
  246
  artificially high cost partly caused by restrictive trade union agreement and excessive number of headquarters staff etc. Having worked sixteen years with London Transport both as driver—6 years—and in the office, I am convinced, like the Transport Workers delegation, that there is a need for a 'comprehensive public transport system', but this need can be met in rural areas such as we live in by a co-ordinated service of independent operators—it does not have to be a State monopoly. Specific benefits provided by Primrose Motors to public transport users in the Hereford-Leominster-Ludlow area since the 'free for all' have included lower fares and increased services, including the introduction of Sunday services linking Hereford with Leominster, Presteigne and the black and white villages of Pembridge and Eardisland, for no more than 50 pence single fare. We intend to restore the faith in local public transport that has been eroded by years of nationalised neglect."
  That was pretty fighting stuff and it was written in May. Today I asked the gentleman who wrote that if he had any wish to modify anything that he had written and he said "No, Sir" without reservation.
  Mr. Les Huckfield: Touching his forelock.
  Mr. Shepherd: He does not have to touch his forelock to me. After an experiment that has run for a year, Herefordshire has routes and services in town and country where Midland Red and Red and White were not able to operate before. We have routes in the country that did not exist before. We have restructured routes in the city of Hereford—I am disappointed that the city of Exeter is not taking up the idea—which are more in keeping with what people want. We have fare reductions and drivers and conductors in the nationalised industry being nice to people for the first time, and that is remarked upon in Hereford. That is important. Buses are attractive. When the experiment started I said that it needed watching, but it is well under way now and Devon need not be afraid.
  11.16 pm
  The Under-Secretary of State for Transport (Mrs. Lynda Chalker): There is nothing furtive about the order. The hon. Member for Westhoughton (Mr. Stott) knows full well that every Government have brought forward orders, and prayers have then been tabled at the beginning of the new Session for the annulment of those orders and they have been debated as early as possible.
  The prayer against the order for the Devon trial area tonight gives me an opportunity to put a number of facts before the House about the working of the trial area legislation and to answer the questions that have been asked.
  The House will recall that the Transport Act 1980 was inspired by a desire to respond in a more flexible way to transport needs. What better identification could we have had than the speech by my hon. Friend the Member for Hereford (Mr. Shepherd)?
  During those debates Opposition Members expressed many fears. Some have been repeated tonight. The debate tonight is significantly different. We have now the actual experience of two trial areas on which to base our judgments—not assertions and hypotheses.
  The Government's purpose in providing for the designation of trial areas was to give counties the option of seeing whether, in their areas, the 50-year-old system of road service licensing might have outlived its usefulness. Opposition Members, with the exception of the hon. Member for Truro (Mr. Penhaligon), alleged that those areas would be overrun immediately by "cowboys"

  247
  and that "pirates" would rush in to cream off revenue from the most lucrative routes. In that atmosphere of cut-throat competition, marginally profitable or non-profitable routes would be shed and services would decline abruptly. They said that there would be a transport desert. That is what they alleged.
  What has actually happened? In Norfolk there has been no destruction of public transport by unscrupulous private operators, as was so gloomily prophesied, but there has been no dramatic upsurge of the new services that we hoped to see.
  The opportunity remains for operators to begin or revise services where they see the need. I was asked about Cumbria. I should be out of order if I went into that in detail, but the accusation by the hon. Member for Westhoughton that a special transport supplementary grant was paid to Cumbria because of Yeowarts is nonsense. Cumbria was going to talk to my predecessor after the intervention by the hon. Member for Workington (Mr. Campbell-Savours) but it never took up the offer, and went to court. That is where it is still. With that we leave Cumbria's experience this evening.
  The position in Hereford and Worcester, about which my hon. Friend the Member for Hereford has so ably spoken, has been different from what was prophesied. As in Norfolk, there is no sign of the predicted collapse of public transport. What is different there is the county council's active approach to the trial area. It has taken the opportunity to revise the arrangements by which it pays revenue support to stage carriage operators.
  Hereford and Worcester has instituted a system of tendering for contracts to run subsidised services. That arrangement was criticised by people who at that time feared unfettered competition. Now they have shifted their ground to protest at the greater control being exercised by the county council. They cannot have it both ways.
  It was said that control contradicted the underlying concept of trial areas as zones of unrestricted entrepreneurial competition, but it was the Opposition, not the Government, who saw that as the inevitable outcome in trial areas. The Government simply said that we could give counties the opportunity to remove road service licensing where they thought it appropriate. There is nothing wrong with the way in which Hereford and Worcester has used the opportunity in an attempt to obtain cheaper and more efficient public transport.
  The public sector operator declined to tender for subsidised services and withdrew from a number of services in the area. That was its decision. It had the freedom to tender. As a result of open tendering 19 services changed hands and nearly all the services abandoned by Midland Red were taken over by independent operators. The public sector operator did not try because it could not compete. The exceptions were three evening or Sunday services for which there was hardly any demand and which would probably have been discontinued in any case.
  On many of the new services lower fares are being charged and the operator is in receipt of less revenue support. The net result has been a benefit to travellers and ratepayers. It is against that background that the debate takes place.
  The hon. Member for Westhoughton asked about cross-subsidisation, which is at the root of all the arguments about licensing and trial areas. But for its traditional importance in sustaining the network, road service
  248
  licensing would have been abolished in 1980. Cross-subsidisation has recently been blessed by the Monopolies and Mergers Commission and by the Select Committee on Scottish Affairs, but it is not unchallenged. It means charging more to passengers on better used routes to help those on more lightly used routes. That may be socially regressive and against the operator's long-term best interests. We are not against the subsidy but we wish the best possible service to be offered. We shall use all the means at our disposal to bring transport to such areas as the hon. Member for Truro mentioned.
  My hon. Friend the Member for Tiverton (Mr. Maxwell-Hyslop) very much wanted to be here, but he has advised me about his area of Devon. He is with the Select Committee on Industry and Trade in the Far East. I know that he will read the Official Report with great interest. I am also grateful to my hon. Friends the Members for Devon, West (Sir P. Mills) and for Devon, North (Mr. Speller) for welcoming the trial order.
  We should give Devon a chance to operate the system. It is too early to report on experiences. The leaflets that the county council has issued publicising the trial area have been well received. I hope that operators in the area will respond to the opportunity by starting new services of benefit to the community. That will give us new insight into the role of road service licensing.
  The county council has also made use of other powers in the Public Passenger Vehicles Act 1981 under which taxis can be shared. Two schemes in Beer and Whimple have already been started. The hon. Member for Truro mentioned the need for similar services in other areas. We shall welcome suggestions from any county council for trial areas to bring transportation for the first time to people who have no other means to get about.
  The hon. Members for Westhoughton and West Bromwich, East (Mr. Snape) both mentioned the Exeter private operator. Mr. Holladay's application is still before the traffic commissioners, but it is important to realise that he does not operate in the trial area and that an appeal is possible if the traffic commissioners decide against him.
  It was said that the Association of County Councils opposes the provision for Devon. That is not true. The association is prepared to have trial areas, because it knows the benefits of new transportation in areas that, as my hon. Friends the Members for Devon, North and Devon, West said, have no other means of transport and that have been without transport for a long time.
  The hon. Member for West Bromwich, East also commented upon the transport supplementary grant. He knows that bids can be entered, but that does not mean that they will be granted. No decisions have been made for this year. Councils are providing for unforeseen events. The past bids by Norfolk and by Hereford and Worcester tried to provide for future difficulties, and neither authority has had to use that provision.
  The purpose of the trial areas is to allow counties the opportunity to see how public transport can be improved in the absence of road service licensing. They are trials, and we have learnt that, above all, we should not prejudge their outcome. We have seen different results from the two areas previously designated, with no sign of the dire consequences that some people forecast. I have no reason to believe that the forecasts made in the House tonight will be more true in Devon than they were in the other trial areas. Indeed, I am confident that the county council is not prepared to allow that to happen. I expect the third trial

  249
  area to provide new and illuminating findings, to be of benefit to the local community and to contribute to our wider understanding of the role of road service licensing.
  Devon county council has taken a long look forward. This is an innovatory approach to the improvement of passenger transport in that county. The council has been involved actively in Rutex experiments and has tested the operation of shared taxis in the experimental area. I am pleased that it has followed the trail that it blazed, which is why Devon is the third trial county. It is for Devon county council and not the Government to decide which operators it should support and for what period. The transport supplementary grant is the way in which the Exchequer's money may be channelled to the county councils, and the councils must ensure that it is spent in the best way. I am confident that Devon county council will do that.
  Since the proposals for the Devon trial area were published, there have been only five objections and the county council has restricted the area to that which will be of benefit to the travelling public. The council has ensured that the areas to be served are those that are much in need of new services and where the existing services were reduced long ago. The council is in favour of a trial area so that improvements can be made.
  The Government are anxious to promote innovation, and experiments in transport, whether they be urban or rural, can do that. We do not believe that the protection of the conventional bus services by licensing, appropriate perhaps before the war, is to be clung to slavishly now. We know from East Sussex that by supporting experiments in the co-ordination and brokerage of social services, education, health and public transport, a great improvement has come about. We want to see more experiments and more post buses and we welcome the National Bus Company's recent leaflet on community buses and its flexibus experiment in the Potteries. It is in the spirit of innovation and renewal that we are happy to support Devon county council in this venture.
  In the light of what I have said tonight I hope that the Opposition will see fit to withdraw their prayer. If they do not, I have no hesitation in calling upon the House to reject it.
  Question put:—
  The Houses divided: Ayes 185, Noes, 271.

  Division No. 10]

  [11.30 pm

  AYES

  Abse, Leo

  Carter-Jones, Lewis

  Allaun, Frank

  Clark, Dr David (S Shields)

  Anderson, Donald

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

  Archer, Rt Hon Peter

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

  Ashton, Joe

  Cohen, Stanley

  Atkinson, N.(H'gey,)

  Concannon, Rt Hon J. D.

  Barnett, Rt Hon Joel (H'wd)

  Conlan, Bernard

  Benn, Rt Hon Tony

  Cook, Robin F.

  Bennett, Andrew(St'kp't N)

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

  Booth, Rt Hon Albert

  Cryer, Bob

  Bray, Dr Jeremy

  Cunliffe, Lawrence

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

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

  Brown, Ron (E'burgh, Leith)

  Dalyell, Tam

  Buchan, Norman

  Davidson, Arthur

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

  Davies, Rt Hon Denzil (L'lli)

  Campbell, Ian

  Davis, Clinton (Hackney C)

  Campbell-Savours, Dale

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

  Canavan, Dennis

  Deakins, Eric

  Cant, R. B.

  Dean, Joseph (Leeds West)

  250

  Dewar, Donald

  Maxton, John

  Dixon, Donald

  Meacher, Michael

  Dobson, Frank

  Mitchell, Austin (Grimsby)

  Dormand, Jack

  Morris, Rt Hon A. (W'shawe)

  Douglas, Dick

  Morris, Rt Hon C. (O'shaw)

  Dubs, Alfred

  Morris, Rt Hon J. (Aberavon)

  Duffy, A. E. P.

  Moyle, Rt Hon Roland

  Dunnett, Jack

  Mulley, Rt Hon Frederick

  Dunwoody, Hon Mrs G.

  Newens, Stanley

  Eadie, Alex

  Oakes, Rt Hon Gordon

  Eastham, Ken

  O'Neill, Martin

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

  Park, George

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

  Parry, Robert

  English, Michael

  Pavitt, Laurie

  Ennals, Rt Hon David

  Pendry, Tom

  Evans, Ioan (Aberdare)

  Powell, Raymond (Ogmore)

  Evans, John (Newton)

  Race, Reg

  Ewing, Harry

  Radice, Giles

  Faulds, Andrew

  Rees, Rt Hon M (Leeds S)

  Field, Frank

  Richardson, Jo

  Flannery, Martin

  Roberts, Albert (Normanton)

  Ford, Ben

  Roberts, Allan (Bootle)

  Forrester, John

  Roberts, Ernest (Hackney N)

  Foulkes, George

  Roberts, Gwilym (Cannock)

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

  Robertson, George

  Freeson, Rt Hon Reginald

  Robinson, G. (Coventry NW)

  Garrett, John (Norwich S)

  Rooker, J. W.

  Garrett, W. E. (Wallsend)

  Ross, Ernest (Dundee West)

  Gilbert, Rt Hon Dr John

  Rowlands, Ted

  Golding, John

  Ryman, John

  Gourlay, Harry

  Sever, John

  Graham, Ted

  Sheerman, Barry

  Hamilton, James (Bothwell)

  Sheldon, Rt Hon R.

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

  Shore, Rt Hon Peter

  Hardy, Peter

  Short, Mrs Renée

  Harman, Harriet (Peckham)

  Silkin, Rt Hon S. C. (Dulwich)

  Harrison, Rt Hon Walter

  Skinner, Dennis

  Hattersley, Rt Hon Roy

  Snape, Peter

  Haynes, Frank

  Soley, Clive

  Heffer, Eric S.

  Spearing, Nigel

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

  Spellar, John Francis (B'ham)

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

  Spriggs, Leslie

  Home Robertson, John

  Stallard, A. W.

  Homewood, William

  Stoddart, David

  Hooley, Frank

  Stott, Roger

  Howell, Rt Hon D.

  Strang, Gavin

  Hoyle, Douglas

  Straw, Jack

  Huckfield, Les

  Summerskill, Hon Dr Shirley

  Hughes, Robert (Aberdeen N)

  Taylor, Mrs Ann (Bolton W)

  Hughes, Roy (Newport)

  Thomas, Dr R.(Carmarthen)

  Janner, Hon Greville

  Thorne, Stan (Preston South)

  Jay, Rt Hon Douglas

  Tilley, John

  Jones, Rt Hon Alec (Rh'dda)

  Tinn, James

  Jones, Barry (East Flint)

  Torney, Tom

  Jones, Dan (Burnley)

  Urwin, Rt Hon Tom

  Kaufman, Rt Hon Gerald

  Varley, Rt Hon Eric G.

  Kilroy-Silk, Robert

  Wainwright, E.(Dearne V)

  Lambie, David

  Walker, Rt Hon H.(D'caster)

  Lamond, James

  Wardell, Gareth

  Leadbitter, Ted

  Welsh, Michael

  Leighton, Ronald

  White, Frank R.

  Lewis, Ron (Carlisle)

  White, J. (G'gow Pollok)

  Litherland, Robert

  Whitehead, Phillip

  Lofthouse, Geoffrey

  Whitlock, William

  Lyon, Alexander (York)

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

  McCartney, Hugh

  Wilson, William (C'try SE)

  McDonald, Dr Oonagh

  Winnick, David

  McGuire, Michael (Ince)

  Woodall, Alec

  McKelvey, William

  Woolmer, Kenneth

  McMahon, Andrew

  Wright, Sheila

  McTaggart, Robert

  Young, David (Bolton E)

  McWilliam, John

  Marshall, D(G'gow S'ton)

  Tellers for the Ayes:

  Marshall, Dr Edmund (Goole)

  Mr. George Morton and

  Marshall, Jim (Leicester S)

  Mr. Allen McKay.

  Mason, Rt Hon Roy

  NOES

  Adley, Robert

  Alexander, Richard

  Aitken, Jonathan

  Alison, Rt Hon Michael

  251

  Alton, David

  Fowler, Rt Hon Norman

  Amery, Rt Hon Julian

  Fox, Marcus

  Ancram, Michael

  Fraser, Rt Hon Sir Hugh

  Arnold, Tom

  Fraser, Peter (South Angus)

  Aspinwall, Jack

  Freud, Clement

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

  Gardiner, George (Reigate)

  Baker, Kenneth(St.M'bone)

  Gardner, Edward (S Fylde)

  Baker, Nicholas (N Dorset)

  Garel-Jones, Tristan

  Banks, Robert

  Gilmour, Rt Hon Sir Ian

  Beaumont-Dark, Anthony

  Glyn, Dr Alan

  Beith, A. J.

  Goodhart, Sir Philip

  Bendall, Vivian

  Goodhew, Sir Victor

  Bennett, Sir Frederic (T'bay)

  Goodlad, Alastair

  Benyon, Thomas (A'don)

  Gorst, John

  Benyon, W. (Buckingham)

  Gow, Ian

  Berry, Hon Anthony

  Grant, Anthony (Harrow C)

  Best, Keith

  Greenway, Harry

  Bevan, David Gilroy

  Grieve, Percy

  Biggs-Davison, Sir John

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

  Blackburn, John

  Griffiths, Peter Portsm'th N)

  Blaker, Peter

  Grist, Ian

  Body, Richard

  Grylls, Michael

  Bonsor, Sir Nicholas

  Gummer, John Selwyn

  Bottomley, Peter (W'wich W)

  Hamilton, Hon A.

  Bowden, Andrew

  Hampson, Dr Keith

  Boyson, Dr Rhodes

  Hannam, John

  Braine, Sir Bernard

  Haselhurst, Alan

  Bright, Graham

  Havers, Rt Hon Sir Michael

  Brinton, Tim

  Hawkins, Sir Paul

  Brittan, Rt. Hon. Leon

  Hayhoe, Barney

  Brooke, Hon Peter

  Heddle, John

  Brotherton, Michael

  Henderson, Barry

  Brown, Michael(Brigg & Sc'n)

  Hicks, Robert

  Browne, John (Winchester)

  Higgins, Rt Hon Terence L.

  Bruce-Gardyne, John

  Holland, Philip (Carlton)

  Bryan, Sir Paul

  Hooson, Tom

  Buchanan-Smith, Rt. Hon. A.

  Hordern, Peter

  Buck, Antony

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

  Budgen, Nick

  Howell, Ralph (N Norfolk)

  Bulmer, Esmond

  Howells, Geraint

  Burden, Sir Frederick

  Hunt, David (Wirral)

  Carlisle, John (Luton West)

  Hunt, John (Ravensbourne)

  Carlisle, Kenneth (Lincoln)

  Irving, Charles (Cheltenham)

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

  Jenkin, Rt Hon Patrick

  Chalker, Mrs. Lynda

  Jessel, Toby

  Channon, Rt. Hon. Paul

  Johnson Smith, Sir Geoffrey

  Chapman, Sydney

  Jopling, Rt Hon Michael

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

  Joseph, Rt Hon Sir Keith

  Clark, Sir W. (Croydon S)

  Kellett-Bowman, Mrs Elaine

  Clarke, Kenneth (Rushcliffe)

  King, Rt Hon Tom

  Clegg, Sir Walter

  Kitson, Sir Timothy

  Colvin, Michael

  Knight, Mrs Jill

  Cormack, Patrick

  Knox, David

  Costain, Sir Albert

  Lamont, Norman

  Cranborne, Viscount

  Lang, Ian

  Critchley, Julian

  Latham, Michael

  Crouch, David

  Lawrence, Ivan

  Dickens, Geoffrey

  Lawson, Rt Hon Nigel

  Dorrell, Stephen

  Lee, John

  Douglas-Hamilton, Lord J.

  Lennox-Boyd, Hon Mark

  Dover, Denshore

  Lewis, Kenneth (Rutland)

  du Cann, Rt Hon Edward

  Lloyd, Ian (Havant & W'loo)

  Dunn, Robert (Dartford)

  Lloyd, Peter (Fareham)

  Durant, Tony

  Loveridge, John

  Dykes, Hugh

  Luce, Richard

  Eden, Rt Hon Sir John

  Lyell, Nicholas

  Eggar, Tim

  McCrindle, Robert

  Elliott, Sir William

  Macfarlane, Neil

  Eyre, Reginald

  MacKay, John (Argyll)

  Fairbairn, Nicholas

  Macmillan, Rt Hon M.

  Faith, Mrs Sheila

  McNair-Wilson, M. (N'bury)

  Farr, John

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

  Fell, Sir Anthony

  McQuarrie, Albert

  Finsberg, Geoffrey

  Madel, David

  Fisher, Sir Nigel

  Major, John

  Fletcher-Cooke, Sir Charles

  Marland, Paul

  Fookes, Miss Janet

  Marlow, Antony

  Forman, Nigel

  Marshall, Michael (Arundel)

  252

  Mates, Michael

  Shepherd, Richard

  Mather, Carol

  Silvester, Fred

  Mawby, Ray

  Sims, Roger

  Mawhinney, Dr Brian

  Skeet, T. H. H.

  Mayhew, Patrick

  Smith, Cyril (Rochdale)

  Mellor, David

  Smith, Dudley

  Meyer, Sir Anthony

  Smith, Tim (Beaconsfield)

  Miller, Hal (B'grove)

  Speller, Tony

  Mills, Iain (Meriden)

  Spence, John

  Mills, Sir Peter (West Devon)

  Spicer, Michael (S Worcs)

  Miscampbell, Norman

  Squire, Robin

  Mitchell, David (Basingstoke)

  Stainton, Keith

  Moate, Roger

  Stanbrook, Ivor

  Monro, Sir Hector

  Stanley, John

  Montgomery, Fergus

  Steen, Anthony

  Moore, John

  Stewart, Ian (Hitchin)

  Morris, M. (N'hampton S)

  Stokes, John

  Morrison, Hon C. (Devizes)

  Stradling Thomas, J.

  Morrison, Hon P. (Chester)

  Tapsell, Peter

  Murphy, Christopher

  Taylor, Teddy (S'end E)

  Myles, David

  Tebbit, Rt Hon Norman

  Neale, Gerrard

  Temple-Morris, Peter

  Needham, Richard

  Thomas, Rt Hon Peter

  Nelson, Anthony

  Thompson, Donald

  Neubert, Michael

  Thorne, Neil (Ilford South)

  Newton, Tony

  Thornton, Malcolm

  Onslow, Cranley

  Townend, John (Bridlington)

  Page, John (Harrow, West)

  Townsend, Cyril D, (B'heath)

  Page, Richard (SW Herts)

  Trippier, David

  Parkinson, Rt Hon Cecil

  van Straubenzee, Sir W.

  Parris, Matthew

  Vaughan, Dr Gerard

  Patten, Christopher (Bath)

  Viggers, Peter

  Pawsey, James

  Waddington, David

  Penhaligon, David

  Wakeham, John

  Percival, Sir Ian

  Waldegrave, Hon William

  Pink, R. Bonner

  Walker, B. (Perth )

  Pollock, Alexander

  Walker-Smith, Rt Hon Sir D.

  Prentice, Rt Hon Reg

  Waller, Gary

  Price, Sir David (Eastleigh)

  Walters, Dennis

  Proctor, K. Harvey

  Ward, John

  Raison, Rt Hon Timothy

  Warren, Kenneth

  Rathbone, Tim

  Watson, John

  Rees, Peter (Dover and Deal)

  Wells, Bowen

  Rees-Davies, W. R.

  Wells, John (Maidstone)

  Rhodes James, Robert

  Wheeler, John

  Ridley, Hon Nicholas

  Whitney, Raymond

  Ridsdale, Sir Julian

  Wiggin, Jerry

  Rifkind, Malcolm

  Wilkinson, John

  Roberts, M. (Cardiff NW)

  Williams, D.(Montgomery)

  Roberts, Wyn (Conway)

  Winterton, Nicholas

  Rossi, Hugh

  Wolfson, Mark

  Rost, Peter

  Young, Sir George (Actor)

  Royle, Sir Anthony

  Younger, Rt Hon George

  Sainsbury, Hon Timothy

  Shaw, Giles (Pudsey)

  Tellers for the Noes:

  Shaw, Sir Michael (Scarb)

  Mr. Robert Boscawen and

  Shelton, William (Streatham)

  Mr. John Cope.

  Shepherd, Colin (Hereford)

  Question accordingly negatived.

  Public Passenger Vehicles

    PROCEDURE (FINANCE)
    Ordered,
    That the Standing Order of 22nd January 1982 relating to the nomination of the Select Committee on Procedure (Finance) be amended, by leaving out Mr. Kevin McNamara.—[Mr. Stradling Thomas.]

    SOUND BROADCASTING
    Ordered,
    That the Standing Order of 18th July 1979 relating to the nomination of the Select Committee on Sound Broadcasting be amended, by adding Mr. Michael English.—[Mr. Stradling-Thomas.]

  Post Office Closures
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. Mather.]
  11.42 pm
  Mr. Frank Haynes: I should like to draw the Minister of State's attention to our proceedings on 19 February 1980 when we had a considerable debate on Post Office closures. My right hon. Friend the Member for Salford, West (Mr. Orme) opened the debate for the Opposition. He drew the attention of the Secretary of State for Social Services to the closures that would be caused by the Government's proposals. The Minister will probably remember the demonstration and lobby at the House by sub-postmasters. It seems that now the chickens have come home to roost. The Post Office closures have taken their toll.
  There are 635 constituencies in this country. If a sub-post office closed in each one, there would be 635 closures. There has been a similar amount of closures since the Conservative Government took office. However, there has not been an average of one closure in each constituency. There have been four closures in the rural areas in my constituency. There has been nothing but suffering following the decision of the postmaster in Nottingham.
  The rural post office service is under threat because of the events of the past few years. The number of rural post offices continues to fall. No doubt the Minister has been provided with the number of sub-post offices three years ago and the present number. The figures reveal declining rural post office services.
  On 19 February 1980 the then Secretary of State for Social Services said:
  "The Government came into office committed to examine the cost and efficiency of the public sector and, wherever possible, to make savings in administration."—[Official Report, 19 February 1980; Vol. 979, c. 273.]
  It seems that that is exactly what is happening. Those in rural areas, especially the elderly and young mothers, are being denied the right to a service that has been theirs for many years. This is happening across the nation but my constituency has been hit especially hard.
  I agree with many of the comments that have been made, even by the Government, to the effect that the provision of a sub-post office involves someone taking on the job of running it and at the same time selling various commodities. The result is that various licences are issued. The Department of Health and Social Security uses sub-post offices in the rural areas quite heavily for Girocheques for pensions, children's allowance, unemployment benefit and for payments to those who are sick or away from work due to an accident.
  There are many in rural areas who regard the sub-post office as a bank. However, the service that is provided by it is being denied to so many. The Ashfield district council has its rental payments paid at post offices. Tenants take their books to post offices.
  Most local authorities carry rent arrears. The loss of a local post office encourages some tenants not to pay their rent and to go into arrears. That happens if the service that has been provided for many years is withdrawn.
  The most recent closure took place because the post office service was provided in a co-operative shop. The
  254
  shop provided also the services of the Nationwide building society and a bank. When the co-operative society decided to close the shop, the post office went too.
  The area concerned is one of the largest parishes in the country, with more than 11,000 people. The centre of the village, where the post office was, lies in a basin. The loss of the post office means that people now have to go to the outer perimeter of the village for post office services. In the central part of the village there are a number of complexes where elderly people live, and many mothers with young children. Moreover, because the village is in the middle of a mining area many of the elderly people who have retired after a lifetime's service in the pits suffer from chest complaints. Yet they are now expected to climb a hill in one direction or the other to the post office yonder.
  The people of that area demonstrated their views powerfully, although in an orderly fashion, when they sent the postmaster a petition begging him to provide a local service. A local newsagent then expressed a willingness to take the job on. As the newsagent's shop had been built as a post office in the first place, there would have been no problem about security.
  I know that there are supposed to be guidelines on these things, but I am at a loss to understand what is going on. In view of what the Secretary of State for Social Services said about saving money in the public sector I can only conclude that pressure is being applied over and above the guidelines and that is why there is to be no post office in that central area. The local authority has decided to develop the area by providing more shops. We already have a supermarket and there is to be a health centre across the road. The lady running one of the shops is quite prepared to take the post office job on.
  I quote from a briefing given by the National Council For Voluntary Organisations:
  "One interesting point about rural post offices is that in many villages where the proportion of pensioners and other recipients of State benefits is high, correspondingly the proportion of DHSS agency business in that local post office may be much higher than the national figure of about 35 per cent. and it can reach 80 per cent. or 90 per cent."
  That is almost the case in the area to which I refer. Yet the postmaster is adamant that a post office will not be provided.
  I therefore applied for this Adjournment debate in the hope that the Minister will take note of what has happened and influence the Post Office to provide those people with the services to which they are entitled. I cite the wonderful example of an old lady of 86 who did not draw her pension for six weeks after the sub-post office was closed. In the end, someone had to take her. There are other problems. It is fair enough to suggest that someone should fetch the pensioners and others who cannot climb the hill and help them as much as possible. At the same time, they are entitled to a certain amount of privacy. Not every old-age pensioner wants everyone to know his business.
  The newsagent who offered to take on the sub-post office recently said that she would operate it for nothing. Surely that is an incentive for the postmaster to provide the so desperately needed service. The guidelines refer to distances between post offices, the terrain and profitability. Those guidelines fit the problem in the village of Selston. Yet the postmaster has seen fit to turn down the application.
  I hope that the Minister has listened carefully. I hope that he will use his influence to secure the provision of a sub-post office in Selston.
  11.56 pm
  The Minister for Industry and Information Technology (Mr. Kenneth Baker): I wish to convey to the House the apologies of the Under-Secretary of State who deals with such matters and who should have replied to the debate tonight. His wife went into labour earlier today, and he is at her bedside. I am pleased to reply to the debate. The hon. Gentleman has fulfilled a pledge that he gave in his local newspaper to bring the matter to Parliament.
  The Government are conscious of the importance of sub-post offices in rural areas. They are not only providers of important business services but are community meeting places that meet a social need. In many small communities they provide the necessary cement for the community.
  In the hon. Gentleman's opening remarks he implied that there was a Government policy to reduce the numbers of sub-post offices. I do not want to make a political point, but I have the figures for closures during the past few years. During the lifetime of the Labour Government, the closures averaged about 200 a year. In the financial year ending March 1974, 234 closed; in 1975, 216; in 1976, 256; in 1977, 261; in 1978, 201 and in 1979, 129. The rate of closure fell a little in 1980 to 157, and in 1981 to 162. In the year ending March 1982 it fell to 62. Since March this year only six have closed. The matter has nothing to do with politics. I assure the hon. Gentleman that in no way have I or any of my predecessors influenced the Post Office on sub-post office policy.
  I fully understand the concern expressed by the hon. Gentleman. The future of sub-post offices, especially in rural communities, is of concern to the Government. Ministers have frequently referred to the value that they attach to sub-post offices as a central part of rural community life. The matter was debated 18 months and two years ago. That is why my right hon. Friend the then Secretary of State for Social Services—he is now the Secretary of State for Industry—in his statement to the House on 12 May 1981 pledged to ensure the maintenance of an adequate sub-post office network. I welcome the opportunity to reiterate that commitment.
  The hon. Gentleman may find it helpful if I set out the statutory position. In common with other nationalised industries, the Post Office is responsible for managing its day-to-day affairs under the powers that were vested in it when it was established as a public corporation by the Post Office Act 1969. The legislation also imposed a duty on the Post Office, in exercising those powers, to have regard to efficiency and economy and also to the social, industrial and commercial needs of the community. I remember those words being repeated as I took the British Telecommunications Bill through the House in 1981.
  The nature and scale of counter services in a locality are, therefore, operational matters for the Post Office. A decision whether to close a post or sub-post office is one for the corporation. I therefore completely refute the hon. Gentleman's allegation that the Government are putting pressure on the Post Office to close sub-post offices. That is untrue. No Government has done that. The previous Labour Government did not do that. Governments do not have the power to do so.
  Successive Governments have taken the view that it would not be right, even if they had the necessary powers,
  256
  to intervene in the detailed provision of sub-post offices. I repeat, however, that the Government are committed to the maintenance of an adequate sub-post office network.
  I shall now deal with Post Office policy on the provision and closure of sub-post offices. The hon. Gentleman expressed disquiet about the criteria. I understand that it is based on the need to maintain a balance between the reasonable needs of the local community and the cost of meeting those needs. In practical terms, that translates into a broad criterion that a post office is not normally opened or replaced within one mile of an existing office in a town or within two miles of an existing office in a rural area. Those standards are not applied rigidly, and many other factors are taken into account. Such factors include the volume of business that is transacted at the office concerned, the nature and terrain of the area that it serves and the availability of bus services.
  In view of the hon. Gentleman's comments about the aged and the infirm, I emphasise that the Post Office specifically consider the needs of that group. The procedure for the closure of an office takes careful account of all those factors and provides for consultation with local representatives to ensure that local interests are taken fully into account.
  Although those criteria have applied for a considerable time, the opportunity to consider whether a sub-post office is replaced usually occurs on the resignation or retirement of the sub-postmaster or sub-postmistress or, in this case, the closure of the local co-operative society shop. As those positions might have been held for a long time, during which population movements could have taken place, the circumstances in which the original sub-post office was justified may change significantly. In each case, the post office must balance the need to serve the community and the need to provide a service at a reasonable price.
  I accept that in some cases the decision may seem harsh. Nevertheless, I know that the Post Office takes a great deal of care when making decisions about closing sub-post offices. The examinations are carried out most thoroughly. It should not be forgotten, however, that in some cases an office has to be closed because no suitable applicant for the sub-postmastership can be found.
  I have asked the Post Office to provide me with details of the case that has been raised by the hon. Gentleman. The village of Selston had three sub-post offices until the closure of the central sub-post office at the end of August 1982 as a result of the closure of the shop that housed it. As the two remaining sub-post offices at each end of the village are some 1·3 miles apart—well within the normal two-mile criterion for rural sub-post offices—the head postmaster did not think that a replacement sub-post office would be justified, particularly taking into account the fact that one of the remaining sub-postmasters has offered to deliver pensions at no extra cost and there is the existence, I understand, of an hourly bus service. One applicant, who, as the hon. Gentleman said, has received considerable publicity, through her offer to provide a service free, has been turned down on the grounds that her premises are less than half a mile from the existing sub-post office. The Post Office has commented that it would still have to meet the initial costs of setting up a service, including security and future administrative costs. There is only a limited amount of business available. A new sub-post office would take business away from the existing two sub-post offices.

  257
  The hon. Gentleman asked if I would exercise powers to try to ensure that the sub-post office was reinstated. I do not have those powers. I would not seek to exert pressure on the Post Office. I have looked into the case in some detail. I am satisfied that the Post Office has operated its procedures. I am sorry that it has given inconvenience to some of the hon. Gentleman's constituents. I feel, however, that the procedures have been followed properly and reasonably. I would not wish to bring any influence
  258
  to bear to try to ensure that they are reversed. I am following the precedent that all Ministers who have been responsible for these matters in the past have followed. It is surely right that a body like the Post Office, which is very responsible and aware of its social responsibilities, should be allowed in these matters to conduct its affairs in its own way.
  Question put and agreed to.
  Adjourned accordingly at six minutes past Twelve o'clock.

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

The Nuclear Threat and School Education
Lord Hatch of Lusby: 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 agree with the retiring president of the Assistant Masters' and Mistresses' Association that school-children should be invited to consider how to remove the threat of nuclear war through peace studies.
The Lord Privy Seal (Baroness Young): My Lords, there is everything to be said for introducing school pupils to political facts and values, at appropriate stages in their education and in a fair and balanced way. What is more doubtful is whether activities described as peace studies should take priority over the many other claims on curriculum time. In any event, what the school offers should always be education not indoctrination.
Lord Hatch of Lusby: My Lords, may I ask the noble Baroness whether she has read the same report as I have mentioned in my Question, in which Miss Barbara Hall, the retiring president of the Assistant Masters' and Mistresses' Association, said at the annual conference of that association that children should be invited to consider how to remove the threat of nuclear war? Would the noble Baroness agree that this is an important part of the education of children and young adults? If so, will she use her influence within the Government to foster this form of education?
Baroness Young: My Lords, I have seen a press report of what is stated to be the views of the outgoing president of the Assistant Masters' and Mistresses' Association. I would say to the noble Lord, Lord Hatch, that any contentious area of the curriculum must always be taught in an accurate and balanced way, and that in our devolved system of education it is to local education authorities and to head teachers that the decisions fall as to how the time of the curriculum is used.
Lord Beloff: My Lords, would the noble Baroness the Minister agree that, irrespective of the bona fides of the assistant mistresses in question, it is very doubtful whether children have much to contribute to the solution of a problem to which the best minds in many countries are devoting themselves? Is it therefore not simply a case of using this as another peg to enable CND propaganda to enter the schools?
Baroness Young: My Lords, I would agree with much of what my noble friend Lord Beloff has said. I think the most important thing is that the valuable time that children spend in schools should be used so that they are well educated and therefore able to get jobs in future life.
Lord Beswick: My Lords, following what was said by the noble Lord, Lord Beloff, is it not the case that if children fail to find a solution to the nuclear problem it puts them on a par with their elders?
Baroness Young: My Lords, I should like to thank the noble Lord, Lord Beswick, for his intervention.
Lord Balfour of Inchrye: My Lords, if there is ever to be any instruction, could we be quite sure that it includes peace through strength?
Baroness Young: My Lords, I understand that the National Union of Teachers suggested to the Foreign Office Ministers that there was a need in the schools for balanced, factual information about disarmament, and after giving notice to the local education authorities the Foreign Office has distributed just such material linking it to the recent United Nations Special Session on Disarmament, so that both sides of the case are put.
Baroness David: My Lords, is the Minister aware that the recent Youth Service report, which was published only about four weeks ago, made a case for much more political education for young people? And surely peace studies would come within the general realm of political education?
Baroness Young: My Lords, there are schools where political studies are taught, and I have no doubt there are many instances in the teaching of history, geography, and English where political matters are raised. What is important in all this is that children should not be used by adults in this matter and should not be subject to any form of indoctrination.
Lord Clifford of Chudleigh: My Lords, will the noble Baroness bear in mind the effect of the Peace Pledge Union before the last war in encouraging Hitler to start the last war, and see the follow-on from that in what CND are trying to do now?
Baroness Young: Yes, my Lords; that is an important point.
Lord Molloy: My Lords, does the noble Baroness agree that we are talking about one of the greatest facets of our constitution, of which we are rightly proud? Are the Government saying not so much, to quote the Bible, "out of the mouths of babes and sucklings", as that they are afraid of the babes and sucklings? Does she recall that at one of our great universities before the war the students passed a resolution saying that they would not fight for king and country, but that this did not apply to the mass of ordinary people? Surely we have enough confidence in ourselves and our children to allow them to realise that this is a serious matter and they ought to be permitted to consider it even at an early age. There has been nothing like it before in the history of mankind.
Baroness Young: My Lords, the whole question of peace and disarmament is a delicate, sensitive issue. Many children are far too young to understand it, to make any reasonable comment about these matters at all. A tremendous responsibility, therefore, rests with adults in the teaching profession and others who subject them to indoctrination, and that is a responsibility not only to the children but to the country.
Lord Alexander of Potterhill: My Lords, may I ask the noble Baroness the Leader of the House to reassure me, unless I am misinformed, that political education is not within the terms of the 1944 Act?
Baroness Young: I am sure that what the noble Lord, Lord Alexander, says about the 1944 Act may be true, my Lords, but there is no doubt that political studies take place in some schools and come up in other subjects of the curriculum.
Lord Harmar-Nicholls: My Lords, is my noble friend aware that, as neither this House nor the Government have any responsibility for the president of the Assistant Masters' and Mistresses' Association, the Question on the Order Paper is irrelevant? Does my noble friend have any idea when the noble Lord, Lord Hatch, will run out of irrelevant Questions? Will she bear in mind that this one, in the context, gets very near to being an abuse of the procedures of this House?
Baroness Young: My Lords, in our devolved system of education, what is said by leading members of the educational world is, naturally, of interest. However, as the noble Lord, Lord Hatch, put down an almost identical Question last July, I hope he will feel, after this Question, that it is not necessary to table another one on the same subject for a long time.
Lord Cledwyn of Penrhos: My Lords, in relation to what was said by the noble Lord, Lord Harmar-Nicholls, may I ask the noble Baroness the Leader of the House if she is aware that, while this remains a free House, my noble friend has the right to ask Questions of this kind?
Lord Harmar-Nicholls: It is still irrelevant.
Lord Brockway: My Lords, would the noble Baroness agree that this is the most important issue for children and the future of their lives? Would it not be possible, apart from any propaganda for one point of view or the other, for older students, those aged 16 onwards, who are deeply concerned about this issue, to be able to hear both points of view or any point of view on this subject so that they may reach their own decisions?
Baroness Young: My Lords, everybody in this country is concerned about the issues of war and peace, but on the question of the school curriculum I have nothing further to add to the answers I have already given to other noble Lords. Perhaps I might suggest that, now that we have spent nine minutes on this Question, it would be an appropriate time to move on to the next Question.
Lord Hatch of Lusby: Before we do that—
Noble Lords: Order!
Lord Hatch of Lusby: Will the Leader of the House—
Noble Lords: Next Question!
Baroness Young: My Lords, we have spent a very long time on this Question and I think it is the wish of the House, as supplementary questions have been taken from all parts, that we should now move on to the next Question.
Noble Lords: Hear, Hear!
Lord Hatch of Lusby: May I ask a final supplementary?
Noble Lords: No!
Lord Hatch of Lusby: I must—
Noble Lords: Order!
Baroness Young: My Lords, if the noble Lord, Lord Hatch, has another question to ask, he would have an opportunity to put down another Question on the Order Paper on a future occasion.

Bank Loans to the Mexican Government
2.47 p.m.
Lord Kennet: 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 why the Treasury has "agreed to give the Bank of England an indemnity in respect of the Bank's "contingent liability for 140 million dollars under the IMF and the BIS arrangements to lend 1·85 billion dollars to the Government of Mexico," and whether this agreement implies Her Majesty's Government's satisfaction with the uses made of previous international loans to the Government of Mexico.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Trefgarne): My Lords, as explained in Cmnd. 8651, the Government's decision to support the BIS operation and to give the indemnity took into account that the Mexican Government had applied for assistance to the IMF and that the BIS loan was essentially of a bridging character. The decisive consideration was the Government's view of the importance of facilitating Mexico's economic adjustment and the contribution that a bridging facility would make towards safeguarding the health of the international financial system. The arrangements imply no judgment about the previous policies of the Mexican Government, but Mexico's right to draw on the BIS facility is linked to satisfactory progress in her current negotiations with the IMF.
Lord Kennet: If it was simply a bridging loan of very short term, my Lords, why did it need a Treasury guarantee?
Lord Trefgarne: My Lords, it was a very substantial sum of money, as the Question indicates, and that was the essential difference on this occasion.
Lord Bruce of Donington: My Lords, will this guarantee count as part of the public sector borrowing requirement, and will it be deducted from that? If not, how does it differ from those other guarantees that are made for the loan requirements of nationalised industries?
Lord Trefgarne: My Lords, it will become part of the public sector borrowing requirement when, and if, the guarantee is called, but of course we hope that will not happen.
Lord Kennet: My Lords, do all BIS bridging loans of this order of magnitude benefit from Treasury indemnities?
Lord Trefgarne: My Lords, I understand it is the first time that a loan of this size has involved the Treasury, and thus called for the guarantee to which the noble Lord refers.
Lord Bruce of Donington: My Lords, may I press the noble Lord further on that? I understand from his reply that the only occasion when this particular guarantee will become part of the public sector borrowing requirement is in the event of the guarantee being called upon. Is he aware that that is not the case when loans for nationlised industries are guaranteed by the Government, and may I ask him to explain the difference in treatment?
Lord Trefgarne: My Lords, another difference, apart from the one to which I referred earlier, is the statutory basis on which these guarantees are made. This latest guarantee has been done in accordance with the general arrangements for providing for public expenditure, which are different from the specific arrangements which lead to the guarantees to which the noble Lord referred.
Lord Kennet: My Lords, since we have now learnt that it is the first time that such an indemnity has been issued to back a BIS bridging loan, and since the amount is just about equal to the amount of Mexican capital which has left that country in the last year or two for the purchase of real estate in the United States, would the Government agree that it would be appropriate to pursue this matter further in this House at a convenient time?
Lord Trefgarne: My Lords, the question of whether or not the noble Lord wishes to pursue the matter further is one for him and the usual channels. As for the relations between Mexico and the United States, that falls rather wide of the matters for which I have responsibility.

Pensioners: Christmas Bonus
2.50 p.m.
Baroness Lane-Fox: 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, as in all previous years during their administration, pensioners will receive a Christmas bonus.
Lord Trefgarne: My Lords, the £10 bonus will be paid from week commencing 29th November on the same basis as last year, and in accordance with the provisions of the Pensioners' Payments and Social Security Act 1979.
Baroness Lane-Fox: My Lords, in thanking my noble friend the Minister for that very satisfactory reply, which surely must be welcome by very many pensioners, may I ask him how many pensioners will in fact receive the bonus?
Lord Trefgarne: My Lords, 10½ million.
Baroness Jeger: My Lords, can the Minister tell us what would now be the proper bonus payment if it were to retain the original £10 value? How are the Government protecting the value of pensions in this regard?
Lord Trefgarne: My Lords, in order to restore the bonus to its 1972 value, the payment would have to be about £35, and that would cost an additional £260 million in public expenditure As has been said so often, the main thrust of our policy is to contain and reduce inflation, thus preserving the value of these benefits. However, I have to say that it would not be possible to restore this particular bonus to the figure that I have just indicated, nor indeed to any other figure above the one that we are making, without imposing unreasonably upon the public purse.
Lord Blyton: My Lords, is the Minister aware that the reply to this inspired Question will not raise any enthusiasm among the old-age pensioners? Can he further assure us that the clawback that the Chancellor of the Exchequer intends to take next year for his supposed mistake will not take the ginger off the bread?
Lord Trefgarne: My Lords, before the noble Lord contemplates what is going to happen next year, he might perhaps reflect upon the fact that pensions are to be increased by 11 per cent. next Monday.
Lord Banks: My Lords, is it the policy of the Government to allow the real value of the Christmas bonus to continue to decline in subsequent years?
Lord Trefgarne: My Lords, naturally we shall want to keep the matter under review as time passes, but I must say that it will not rate high in the priorities when compared with other improvements of benefits which yet press upon us.
Baroness Lane-Fox: My Lords, may I additionally ask my noble friend the Minister whether I am right in thinking that the bonus is tax free?—because that is an important point.
Lord Trefgarne: My Lords, my noble friend is quite correct. The bonus is tax free, and it will cost about £104 million this year.

Mental Health (Amendment) (Scotland) Bill [H.L.]
2.54 p.m.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers): My Lords, on behalf of my noble friend Lord Mansfield, I beg to introduce a Bill to amend the Mental Health (Scotland) Act 1960; to amend the Tenants' Rights, Etc. (Scotland) Act 1980 so as to extend to tenants of state hospital dwelling-houses the right to buy and the right to discount; and for connected purposes.
I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.— (Earl Ferrers.)
On Question, Bill read a first time, and to be printed.

Trade Marks Act 1938 (Amendment) Bill [H.L.]
Lord Campbell of Alloway: My Lords, I beg to introduce a Bill to amend the Trade Marks Act 1938 to afford registration for service marks.
I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.— (Lord Campbell of Alloway.)
On Question, Bill read a first time, and to be printed.

Rent (Abolition of Control) Bill [H.L.]
Lord Vaizey: My Lords, I beg to introduce a Bill to repeal the Rent Act 1974, the Rent (Agriculture) Act 1976, the Rent Act 1977, and other enactments restricting the freedom of tenants.
I beg to move that this Bill be now read a first time.
Moved, That the Bill be now read a first time.— (Lord Vaizey.)
On Question, Bill read a first time, and to be printed.

Hampshire Bill [H.L.]
The Chairman of Committees (Lord Aberdare): My Lords, I beg to move that this Bill be now read a third time.
Moved, That the Bill be now read a third time— (Lord Aberdare.)
On Question, Bill read a third time.
Clause 54 [Licensing of Portsmouth Watermen and boats]:
Lord Aberdare Lord Aberdare moved Amendments Nos. 1 and 2:
Page 35. line 20, after ("required") insert ("to be certificated")
Clause 59, page 41, line 18, after ("unless") insert ("in the case of a requirement under paragraph (a) of that subsection").
The noble Lord said: My Lords, there are two amendments to the Bill. They are both purely drafting amendments, and I think that it might be for the convenience of the House if I move them en bloc. The first amendment is pure drafting, where the three words "to be certificated" are to be inserted on page 35, at line 20, after the word "required". The second amendment is in order to insert words which were left out in error. I beg to move the two amendments en bloc.
On Question, amendments agreed to.
Bill passed, and sent to the Commons.

British Transport Docks Bill
Read a second time.

Examiners of Petitions for Private Bills
Lord Aberdare: My Lords, I beg to move the first Motion standing in my name on the Order Paper.
Moved, That pursuant to the Private Business Standing Order 69, Mr. H. M. Barclay be appointed as Examiner of Petitions for Private Bills in the place of Mr. J. H. Willcox— (Lord Aberdare.)
On Question, Motion agreed to.

European Communities Committee
Lord Aberdare: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That a Select Committee be appointed to consider Community proposals, whether in draft or otherwise, to obtain all necessary information about them, and to make reports on those which, in the opinion of the Committee, raise important questions of policy or principle, and on other questions to which the Committee consider that the special attention of the House should be drawn;
That, as proposed by the Committee of Selection, the Lords following be named of the Committee:

Brimelow, L.

Brookeborough, V.

Cranbrook, E.

Faithfull, B.

Greenhill of Harrow, L.

Harris of Greenwich, L.

Hayter, L.

Kearton, L.

Kilmarnock, L.

Kings Norton, L.

Llewelyn-Davies of Hastoe, B. (Chairman)

Mackie of Benshie, L.

Mottistone, L.

Mowbray and Stourton, L.

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Nugent of Guildford, L.

O'Brien of Lothbury, L.

Oram, L.

Plowden, L.

Robson of Kiddington, B.

Rochdale, V.

Ross of Marnock, L.

Scarman, L.

Seebohm, L.

Serota, B.

Torrington, V.

That the Committee have power to appoint Sub Committees and to refer to such Sub-Committees any of the matters within the terms of reference of the Committee: that the Committee have power to appoint the Chairmen of Sub-Committees, but that such Sub-Committees have power to appoint their own Chairman for the purpose of particular enquiries; that two be the quorum of such Sub-Committees:
That the Committee have power to co-opt any Lord for the purpose of serving on a Sub-Committee:
That the Committee and any Sub-Committees have power to adjourn from place to place;
That the Committee have power to appoint specialist advisers;
That the Committee have leave to report from time to time;
That the Reports of the Select Committee from time to time shall be printed, notwithstanding any adjournment of the House;
That the Minutes of Evidence taken before the Committee or any Sub-Committee from time to time shall, if the Committee think fit, be printed and delivered out;
That the Committee or any Sub-Committee appointed by them have leave to confer and to meet concurrently with any Committee of the Commons on European Legislation, &c. or any Sub-Committee of that Committee for the purpose of deliberating and of examining witnesses; and have leave to agree with the Commons in the appointment of Chairman for any such meeting; and that any Lord requested by any Committee of the Commons on European Legislation, &c. to attend as a witness before them or before any Sub-Committee appointed by them shall have the leave of this House so to attend, if his Lordship think fit. —(Lord Aberdare.)
On Question, Motion agreed to; and it was ordered that a Message be sent to the Commons to acquaint them therewith.

Statutory Instruments (Joint Committee)
Lord Aberdare: My Lords, I beg to move the third Motion standing in my name on the Order Paper.
Moved, that a Select Committee of seven Lords be appointed to join with a Committee appointed by the Commons to consider—
(1) Every instrument which is laid before each House of Parliament and upon which proceedings may be or might have been taken in either House of Parliament, in pursuance of an Act of Parliament; being

(a) a statutory instrument, or a draft of a statutory instrument;

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(b) a scheme, or an amendment of a scheme, or draft thereof, requiring approval by statutory instrument;

(c) any other instrument (whether or not in draft), where the proceedings in pursuance of an Act of Parliament are proceedings by way of an affirmative resolution; or

(d) an order subject to special parliamentary-procedure;

but excluding any Order in Council or draft Order in Council made or proposed to be made under paragraph 1 of Schedule 1 to the Northern Ireland Act 1974.
(2) Every general statutory instrument not within the foregoing classes, and not required to be laid before or to be subject to proceedings in the Commons only, but not including Measures under the Church of England Assembly (Powers) Act 1919 and instruments made under such Measures:
with a view to determining whether the special attention of the House should be drawn to it on any of the following grounds—

(i) that it imposes a charge on the public revenues or contains provisions requiring payments to be made to the Exchequer or any Government Department or to any local or public authority in consideration of any licence or consent or of any services to be rendered, or prescribes the amount of any such charge or payments;

(ii) that it is made in pursuance of any enactment containing specific provisions excluding it from challenge in the courts, either at all times or after the expiration of a specific period;

(iii) that it purports to have retrospective effect where the parent Statute confers no express authority so to provide;

(iv) that there appears to have been unjustifiable delay in the publication or in the laying of it before Parliament;

(v) that there appears to have been unjustifiable delay in sending a notification under the proviso to subsection (1) of section 4 of the Statutory Instruments Act 1946, where an Instrument has come into operation before it has been laid before Parliament;

(vi) that there appears to be a doubt whether it is intra vires or that it appears to make some unusual or unexpected use of the powers conferred by the Statute under which it is made;

(vii) that for any special reason its form or purport call for elucidation;

(viii) that its drafting appears to be defective; or

on any other ground which does not impinge on its merits or on the policy behind it; and to report their decision with the reasons thereof in any particular case:—
That the Lords following, as proposed by the Committee of Selection, be named of the Committee:

Airedale. L.

Auckland, L.

Brooks of Tremorfa, L.

Cullen of Ashbourne, L.

Darling of Hillsborough, L.

Dilhorne, V.

Spens, L.

That two be the quorum of the Committee;
That the Committee have power to agree with the Committee appointed by the Commons in the appointment of a Chairman;
That the Committee have power to appoint one or more Sub-Committees severally to join with any Sub Committee or Sub-Committees appointed by the Committee appointed by the Commons; and to refer to such Sub-Committee or Sub-Committees any of the matters referred to the Committee;
That it be an instruction to the Committee that they do not consider any instrument which is directed by Act of Parliament to be laid before and to be subject to proceedings in the Commons only; and that the Committee do not join with the Committee appointed by the Commons in considering any such instrument;
That it be a further instruction to the Committee that, before reporting that the special attention of the House be drawn to any instrument, the Committee do afford to any Government department concerned therewith an opportunity of furnishing orally or in writing to them or to any Sub-Committee of the Committee such explanations as the department think fit;
That the Joint Committee have leave to report from time to time;
That the Committee do meet with the Committee appointed by the Commons this day at a quarter-past Four o'clock.— (Lord Aberdare.)
On Question, Motion agreed to; and it was ordered that a Message be sent to the Commons to acquaint them therewith.

Unemployment: Select Committee Report
2.58 p.m.
Baroness Seear Baroness Seear rose to move, That this House takes note of the report of the Select Committee on Unemployment. [H.L. 142 (1981/82)].
The noble Baroness said: My Lords, I beg to move that this House takes note of the report. In moving the Motion I feel that I owe the House an apology for producing so mammoth a report following a truly elephantine gestation period. On behalf of all of the committee, I should like to thank your Lordships' House for giving us the opportunity to study this truly important and deeply interesting subject. The extent to which an all-party committee has reached agreement is a measure of what can be achieved when people who are deeply concerned with a question, though their political opinions may vary, tackle it together and sincerely to try to find at least some solutions to what is the major problem facing us today.
Of course, it was not possible for all of us totally to agree. It was not possible for any sincere monetarist to go the whole way in our conclusions, and I am very glad that the noble Lord, Lord Vaizey, is to put to the House the point of view of the monetarist—which I must confess has great academic support—which did not find favour with the committee but which undoubtedly ought to be heard.
I should also like to thank the Government for giving us the detailed reply that has been published and for sending it to every member of the committee in advance of today's debate. I should also like to add that I am very grateful to the noble Baroness the
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Leader of the House for the fact that she is taking part in the debate at what I know is very great personal inconvenience to her.
In tackling this problem, this charge that your Lordships gave us, we attempted first to look at the causes of unemployment, then at the nature of the unemployment that we have in this country today, before moving on to consider what kind of long-term remedies we could recommend to your Lordships' House.
The causes are multiple. It is of course true that demography is not on our side. We have, proportionately, a larger number of the population in the labour force than have most of our competitors. It is also true that we are suffering from a worldwide recession, fuelled by the oil crisis, which all countries are experiencing, though in many ways we are experiencing it to a more serious degree than most of our competitors. There is, too, the vexed question of the impact of information technology—of advanced technology in general. Here, I am going to say two things. Those of our competitors who have gone further than we have in the development and use of microtechnology have a smaller unemployment problem than we have in this country; so, whatever the major causes of our position, it cannot at the moment be attributed to that.
As to the future, the evidence that we received was so wide and varied that it was impossible to come to any conclusion as to what is likely to be the final impact—of course, there will be no "final" impact, but the impact over the next decade—of information technology on jobs in this country. It was perhaps fortunate that there was, however, agreement on one matter: that whatever high technology was going to do to the number of jobs in manufacturing industry, failure to take advantage of it would have a worse effect on employment prospects than would its introduction. So we recognised that, whatever the price, we had to go along that route.
But, when these other causes had been examined, we came back again and again to the hard fact that it is the non-competitiveness of British industry which is probably the central problem that we have to tackle, and is surely in any case the problem which it is most within our power to handle in comparison with the other causes that we were able to identify. The realisation that in the long term, whatever might happen in the short-term, a failure to increase that competitiveness could only increase the depth of unemployment was in the mind of all members of their Lordships' Committee throughout our deliberations.
Moving from causes to the nature of the unemployment problem that we face in this country today, I and I think other members of the Committee were very much educated by being introduced to the idea of the "stock" and the "flow" of unemployment as a method of analysing the unemployment situation. Of course, we had been aware that there was a difference to be made here; but I think that along with a great many people in this country we had not fully appreciated before the analysis was done how very large a number of people in fact obtain jobs by one route or another even at the very worst times of unemployment. For example, in the second quarter of 1982, when the unemployment figure in Great Britain

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excluding school-leavers reached a peak of 2,815,000, the outflow was no less than 1,159,000—and that is no mean figure in the depths of unemployment.
So we realised that the problem that we were up against was the problem of the people who do not join that outflow, the problem of the long-term unemployed; and, in attempting to look at remedies, it was of course essential that we should be able to identify the hard core of the problem so that we could direct our remedies to that part of the problem which was not going to cure itself and which was likely to get more severe.
We also realised that the hard core long-term unemployed consisted to a quite disproportionate extent of people who lacked marketable skills or competencies of any kind—the people who have nothing to offer in the labour market except time and physical strength. The people who comprise the long-term unemployed are, alas, now being joined by people who have some degree of skill or who have been in junior, lower level professional and executive jobs, but it is still overwhelmingly the unskilled who make up the great mass of the long-term unemployed who are at the centre of the unemployment problem.
With this brief analysis of both the causes and the nature of unemployment today, we turn to the remedies, such as they are, that we are able to suggest to your Lordships' House. From this analysis we drew the main themes which dominate the report. The first theme, as I have already implied, is the importance of restoring and maintaining the competitiveness of British industry. We all recognised that without this there was no future for employment in this country, that the decline would continue. We realised that any attempt to deal with the problem simply by spending money regardless of inflationary consequences was no answer at all in the longer-term, whatever it might do in the short-term. We realised that greater competitiveness was likely to mean—indeed, would mean—that there would be still further decline in the numbers employed in manufacturing industry, but we were determined to push ahead with increased competitiveness.
Up to this point it may sound as if I was speaking very much from a Government brief, but the point at which we begin to diverge is when we say that, if we are to go ahead with the inevitably painful changes which have to be made, then, simultaneously, steps must be taken to provide opportunities for employment for the increasing number of unemployed in the categories which I have already described. In our view—and this is where we differ from the pure monetarist point of view—it is leaving it too late to allow market forces (if this could ever in fact take place) to pick up the persons displaced from an increasingly efficient manufacturing industry, and only intervention now, and intervention quickly, will bring about a situation in which we can hope to get support from the great mass of people in this country for the drastic changes which still lie ahead. It is, I think, perhaps in the matter of timing more than anything else that we disagree with much that is being said from the Government Benches.
The second theme which runs through our deliberations is the realisation, from an examination of the condition and character of the long-term unemployed, of the tremendous importance of reducing the
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percentage of people in our labour force who are unskilled. When we came to examine our figures in comparison with those of other countries, it was alarming to find that at the end of the 1970s 44 per cent. of our school-leavers were going either into unemployment or into jobs in which they received no training at all. That figure has to be compared with 19 per cent. in France, 9 per cent. in Germany and 4 per cent. in Belgium.
We have to remember that it is not only that they fail to get training as they leave school: those school-leavers become the labour force in their twenties, thirties and forties. So, because of decades of neglect of training, we have piled up in our labour force an alarming percentage of people who in fact lack cerebral competences. I hesitate to use the word "skills" because I do not want to imply that we are talking only about manual skills. Therefore, the need to increase the number of people who have skills and competences of some kind or another is a dominant theme in our recommendations.
My Lords, we are very glad that, since the day long ago when we began our committee deliberations, the Government have moved very considerably in the direction of improving the opportunities for training for those aged 16 to 17. The importance of this training theme is threefold. It reduces the percentage of untrained in the labour force—and if we do not do this we shall not be in a competitive position in relation to our industrial competitors when the world recession passes—and also, to a small extent, it takes youngsters out of the labour market because, to the extent that they are in training although they are not in actual employment, that reduces the scale of youngsters unemployed. We are glad that the Government are moving along this line. We should like to see the ages 16 to 18 become a time when youngsters, voluntarily and not compulsorily, are essentially trainees rather than employees. We recognise that the cost of doing this will be considerable, but we hope that it will not be long delayed and we welcome the advance for the 16- to 17-year-olds.
May I make a point which is not in the report, because the developments of the Government's scheme had not fully taken place when we were drafting the report. Is it too much to suggest that the Government might already extend the training opportunities to all the 17- to 18-year-olds and not only to those who are out of work? If the seriousness is accepted of the degree that we lack trained people, and will lack them in the future, then we want to start quickly to reduce the numbers in that group. As I understand it, a fair number of 17- to 18-year-olds already are included because they are unemployed. Would it not be possible to say that this could be extended to all those under the age of 18 on a one-year basis? I am not suggesting that at this stage (although we hope it will be so before not too long) it will be possible for it to be a full two-year course for all the 16-to 18-year-olds. But that, we recognise, is for the future.
May I also say that because of the backlog of the untrained, we need more vigorous steps for the training and re-training of adults. Again, we are going to find it very difficult to reduce that large block of the long-term unemployed unless even more positive steps are taken than have been taken so far to cut down the

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numbers in that group. In particular, if I may say so, great attention needs to be paid to the position of girls and women. Your Lordships' House will not be surprised to hear me say this and neither will the noble Baroness fail to sympathise with me on this point. But it is a special position because the semi-skilled and unskilled jobs traditionally done by girls and women are particularly at risk; and, unless we take far more vigorous steps to use Section 47 of the Sex Discrimination Act in order to provide special training so that girls and women can get into non-traditonal jobs, then unemployment among women is going to get considerably worse over the next decade. What I have said about women applies with even greater force to the ethnic minorities, for which there is provision under Section 37 of the Race Relations Act, a provision which is very lightly used.
My Lords, in addition to training, we looked at other aspects, and particularly at the supply of labour and at the demand for labour. On labour supply, we do not accept the idea of a simple reduction of working hours. We believe that that would only lead to an increase in labour costs. However, we greatly support the job release scheme. We hope that the Government have no intention of removing this scheme. We would urge that, on the other hand, it should be extended even further down the age scale than has been the case so far. We are very glad that the Government have agreed that job pairing for the older age groups, for people of 60 and beyond, should be encouraged and we think that here is a real opportunity to reduce the number of people in the labour market without inflicting the hardship of full-time retirement.
While on the subject of job sharing, would it really not be possible at the other end of the age scale, for the youngsters, to introduce full pairing there, as is being done by the General Electric Company in their offices at Coventry, so that for every job taken by a youngster between 16 and 18 there would be two youngsters for each job? The whole pairing concept can be applied at both ends of the age scale and, to some extent, probably at other stages, too; but it is in these two places that we should like to see it pushed really vigorously.
In addition to the impact of the labour supply, there is, of course, the question of the increase in labour demand. In the paper that they have circulated, the Government have criticised our proposals for increase of demand of labour which we see as essential if the gap in employment, which is going to get worse as industry gets more efficient, is to be plugged. The Government have criticised the degree of expenditure and, in the annexe of the paper that they have put round, they have gone so far as to say that our figures are meaningless.
In the time at my disposal, I cannot argue the figures in detail. I will only say this. The raw material of the figures we obtained from Government departments; the calculation of the average cost of an unemployed person was worked out for us by the Institute of Fiscal Studies; we did not include in this figure any cost at all for the unquantifiable social costs which, although unquantifiable, are unquestionably real. We do not suggest that it is a precise figure. We do not suggest that it needs to be a precise figure. We would say that, even on the figure we have given, the additional
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expenditures that we have proposed amount to no more than the margin of error in the calculation of the PSBR which the Chancellor put forward in his Budget last year—and if he cannot get his sums more right than that, why should we?
The increase in demand that we propose falls under two main beliefs: on the one hand, capital expenditure on jobs of a labour-intensive kind, which will have to be done sooner or later and which, if delayed, will only cost more money when they have to be done. The list is already familiar. I will not go through it: improvement in the housing stocks, the sewers in Manchester (which seem to be called in evidence every time anybody talks about job creation), railway electrification, energy conservation—all these involve expenditure; but they are job-creating in an important way.
In terms of creating jobs most capital expenditure does not work through into the system for a considerable time. If the Government commit themselves to expenditure of this kind now, then the actual number of people in employment as a result of that decision will not be very considerable for months to come and, in some cases, even for years. We need some kind of job creation which will work quickly. The Government have admitted that the unemployment figures will continue to rise despite the improvements which they detect in the economy as a whole. Here we ask the Government to consider low-cost job creation, mainly but not exclusively of the social services kind, creation at a very painful rate, but jobs which are very much at the lower end of the pay scale in any case. We urge particularly that these should be not only in local authorities but by harnessing the voluntary organisations up and down the country which are now very much in a position to be able to collaborate in job creation. I leave that to the noble Lord, Lord McCarthy, who has done a particular amount of work on this subject and who will expand the matter considerably.
When I mentioned the voluntary bodies, I did so especially because we believed that it is very important that the development of new jobs should not be handled in a bureaucratic fashion with developments at the centre in an attempt to pass down to the grass roots what ought to be done. We believe that the whole burden of the new programme must be to find ways in which one can release energies, activities and ideas at the lowest possible level. This may mean looking at public expenditure in a rather different way, and at the controls over it in a rather different way. But it is our profound conviction that there is a great deal of energy, enterprise, skill and determination up and down the country to beat unemployment, if we can find the ways of releasing it.
I have spoken objectively, perhaps rather clinically, about the problem of unemployment. I do not think that anybody in your Lordships' House will forget for a moment that we are talking about at least 3,500,000 human beings and their families. We do not know what unemployment means to those people; we can only guess. To some it is a stressful, disagreeable experience, but it passes and when it has past perhaps it leaves no great scar. To others it is a catastrophe. In evidence given to the Manpower Services Commission one witness said:
"I get terribly depressed. Sometimes I think that I will finish it all, but I have not the nerve".
I do not know how many people reach that brink, but I do know that one is one too many. My Lords, I beg to move.
Moved, That this House takes note of the report of the Select Committee on Unemployment.—(Baroness Seear.)
3.22 p.m.
Baroness Young: My Lords, I am very pleased to speak for the Government this afternoon immediately after the noble Baroness, Lady Seear. I have to apologise to the House at the outset because, as I have already explained to the noble Baroness, I am commanded to be elsewhere later this evening and although I shall listen to as much of the debate as I can, I shall not, I fear, be present for the later stages of the debate nor for Lord Gowrie's concluding speech. I can, however, assure the House that I shall read the whole debate with great interest.
Let me say straight away that I regard this as a very important debate on an important Select Committee report. I doubt if any ad hoc Select Committee of your Lordships' House has ever sat for so long or produced so full and comprehensive a report. There are inevitably difficulties in producing an agreed report on such a wide-ranging and sensitive subject. But I should like, as Leader of the House, to thank the members of the committee and their supporting staff very much for their great industry and hard work over a period of nearly three years.
At the outset of my remarks, I should like to wish my noble friend Lady Carnegy of Lour, who will be speaking later in the debate, well in her maiden speech. She comes to us with great experience as chairman of the Manpower Services Committee for Scotland and we shall listen with interest to what she has to say.
By now, the House will have seen the Government's response to the committee's main recommendations, and I was grateful to the noble Baroness, Lady Seear, for what she said. I do not intend to go through this response in all its details. But at the start, I should like to say two things. First, although in a number of important respects I and other Government colleagues do not share all the conclusions arrived at by the committee, we welcome the report as a useful contribution to the problem of unemployment. Secondly, to say again that the Government are deeply concerned at present levels of unemployment and are determined to put matters right so that a permanent and sustainable improvement in the nation's employment is secured. As my right honourable friend the Prime Minister said in her speech at the Guildhall last night, "The schemes which we have initiated to minimise the impact of unemployment are as great as the effort devoted by any Government to any single social problem in this century".
I do not minimise the extent of the unemployment problem which we face. It is one which we share with the rest of the industrialised world. Thirty million people are unemployed in the OECD countries. In many of those countries, unemployment is now at post-war record levels; and has been rising more quickly over the past year than it has in the United Kingdom. I have recently returned from a visit to the USA and Canada. Both those countries have experienced very steep rises in unemployment recently. In
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the USA over 11 million people are now unemployed, an increase of 33 per cent. over the past 12 months. In Canada nearly 1½ million people are unemployed, 51 per cent. more than a year ago. In the United Kingdom, unemployment has increased by only 10 per cent. over the past year. But, of course, our level of unemployment is still among the highest.
The committee has recognised the many reasons for that; and I quote:
"To the extent that unemployment in Britain is more severe than in the rest of the western industrial world, the major cause lies in our lack of competitiveness and in the loss of our share of world markets, including home markets. The fact that the decline has continued over decades suggests that the causes are deep-rooted and consequently hard to eradicate".
And the responsibility for this is shared not only by Governments—and I accept that Conservative Governments have their share as well as Labour ones—but also by management and the trade unions. All have failed in the past to come to grips with overmanning, restrictive practices and pay rises unmatched by productivity. I do not believe that any of this is a matter of dispute between the Government and the committee. Nor is there any question about the very serious effects which high levels of unemployment have: through wasted skills, and the cost to those in work of supporting those without jobs. They mean hardship, discouragement and loss of purpose for very many people, who rightly expected better things for themselves and for their families. The committee, in their very useful analysis of the problems caused by the present levels of unemployment, recognised that there is no easy way to solve them.
If I may say so, the good sense of the committee's observations on this point make a change from the reflationary proposals put up by other political parties: the proposals of the Labour Party, estimated at £8–9 billion; those of the SDP-Liberal Alliance at £3–4 billion. And the TUC has in the past mentioned a sum as much as £24 billion over a five-year period to buy our way out of unemployment. In fact, the committee has wisely and specifically ruled out general reflation as "a primrose way leading to destruction". We must therefore reject the dangerous notion that unemployment can be overcome simply by increasing monetary demand and that those who have a job need not moderate their expectations of increased pay for the sake of those without jobs. This is the kind of attitude that has created so many of our problems.
Let me therefore set out the Government's strategy. We believe there can be no prospect of lasting growth in output, and therefore employment, unless we manage to improve our industrial competitiveness. The central aim of our economic policy is, therefore, to reduce inflation and to create the conditions in which industry can achieve this much-needed improvement. That means the Government must keep to their policies of firm restraint in public borrowing and in public expenditure and the maintenance of sound monetary conditions.
We therefore endorse the committee's view that restoring competitiveness is the priority. The only way for a country so heavily involved in international trade to earn its living is to produce goods and services of such quality and at such prices that they are better value for money than those of our competitors.

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So keeping costs down is vital. And pay forms the largest share of costs in the trading sector. As the committee has said, realistic pay settlements are crucial in improving our competitiveness and hence our prospects for faster growth and more employment. The fact that pay moderation is taken for granted by our most formidable competitors, Germany and Japan, has enabled them to achieve both higher living standards and lower unemployment than in Britain.
Thankfully, there is a growing sense of realism and commonsense about pay. CBI figures show that pay settlements in industry are now around 7 per cent. Inflationary expectations are down. Scottish and Newcastle Breweries and Caterpillar Tractors have concluded three-year pay deals with their unions. People know that unrealistic pay rises can mean the loss of jobs and it is unhelpful, I think, for anyone in a position of responsibility to suggest that pay has nothing to do with unemployment.
In the last 18 months or so we have begun the long haul back to restoring the competitiveness of our industry. Inflation was 15 per cent. when we entered office. It went to 22 per cent. but is now back to 6·8 per cent.—the lowest level for a decade. We expect it to fall to 5 per cent. early in 1983. The rate of increase in earnings is continuing to moderate. Productivity is rising—output per head has risen 13 per cent. in manufacturing industry since the end of 1980. As a result, our manufacturers' unit wage and salary costs rose only 4 per cent. over the last year—a figure below the average of our major competitors. Overall our cost competitiveness improved by 10 to 15 per cent. during 1981.
But much remains to be done. The world economy remains severely depressed; the expected upturn in world trade and output has been delayed. The fact is that despite recent improvements our competitive position is still a third worse than in 1975. But as the figures on inflation and productivity indicate, we can expect a modest recovery next year and a growth of around 2½ per cent. in world trade should provide new opportunities for industry. If we are to make the most of the opportunities thus afforded, and create real jobs for the future, there must be no let-up in our efforts to keep costs down. Furthermore, our task in tackling unemployment will be all the harder because in the next few years (as in the past) the numbers reaching retirement will be at a relatively low level, due to the low birth rate during the First World War; while the numbers leaving school will remain at near record levels, due to the very high birth rate of the early 1960s.
I now turn to the committee's wide range of proposals for helping to reduce unemployment. Taken together, they amount to a substantial increase in public expenditure—more spending on public sector capital projects, more current expenditure on low-skill jobs and more selective employment measures. The Government accept the committee's general view that it is right to supplement our essential economic measures with others designed to tackle the problems of large scale unemployment. The key questions are: first, how much can be afforded for such measures without putting the success of the Government's economic strategy at risk? Here, I do not believe that the amount the Government are already spending is
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fully appreciated. This year we are spending £1·5 billion on special employment measures; next year it will be nearly £2 billion. Secondly, how far can effective measures be devised which do not in one way or another cut across what our strategy is trying to achieve by bolstering inefficiency or blunting the pressures to improve competitiveness? It is at this point that the Government do not accept the proposals of the committee. For reasons that I have already indicated, we believe that to go as far as the aggregate of measures suggested by the committee would be to go too far, and would put the Government's economic strategy at risk. The result could well be more inflation and fewer real jobs in the long term.
We have considered seriously, and shall continue to do so, measures suggested by the committee. For example, the Youth Training Scheme and the new job splitting schemes in their final form follow in important respects suggestions put forward by the committee. The Government's initiatives in the field of employment and training measures play a key part in tackling the problem of unemployment, as the noble Baroness, Lady Seear, told us. My noble friend Lord Gowrie will be speaking about these in more detail later in this debate, including the important area of new technology to which the noble Baroness also referred.
I would like to say something about what we are doing in the area of employment for women, and I should make clear that my interest in this theme has not been aroused just by the latest episode of the television programme, "Yes Minister"! The committee suggest that women have fared worse than men in terms of unemployment during the last decade. This is not strictly true. Throughout the period 1971 to 1982, female unemployment rates have been consistently lower than male unemployment rates, even when estimates of unregistered unemployment are taken into account.
Up to 1980, women's unemployment rates did grow more quickly than male unemployment rates, but it needs to be remembered that the female labour force was expanding. There were not disproportionate losses in female employment—indeed, during the period 1971 to 1979 the number of women employees grew, while that of male employees decreased. Nevertheless, the Government recognise the need for special programmes to further their policy of equal employment opportunities for women. We are particularly keen to encourage women—especially younger women—to train for work in areas where employment is likely to expand in the future and where they are at present under-represented—a view with which I am sure the noble Baroness will agree. Our response to the committee's report describes the various provisions which the Manpower Services Commission is making here.
I would also like to mention the new initiative in technical education for 14- to 18-year-olds which my right honourable friend the Prime Minister announced on Friday. This programme will, of course, be open to girls on equal terms with boys and will provide a welcome additional opportunity for them to gain valuable work experience and recognised technical qualifications. I very much hope that girls will take this and other opportunities to train for jobs using the skills and technology of the future. This is not only

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important for them; it is important for this country's future.
The committee expressed particular concern about the problem of long-term unemployment, which was identified by the noble Baroness as one of the most important issues. We share that concern. But, sadly, the growth of long-term unemployment reflects the overall increase in our unemployment total. The principal remedy is the same for both—to get the economy right and create the conditions in which sustainable employment opportunities can be developed. But, again, it will be a long haul.
Nonetheless, things can be done to help—and they are being done. Since the committee completed its report we have introduced a new community programme, which will operate on a much larger scale than the Community Enterprise Programme which it replaces. We are prepared to finance up to 130,000 places on the new programme—or more if the demand is there. By 1984–85 this scheme will account for nearly one-quarter of total expenditure on special employment measures. It is early days to be sure about the likely take-up of the new programme. We believe, however, that it offers a real opportunity for those concerned about the long-term unemployed to come forward with really useful and productive projects. And it shows that the Government, like the committee, believe in the value of part-time work to assist unemployed people. The new Community Programme will, I think, offer much the sort of boost for temporary employment for the long-term unemployed that the committee wanted to see.
No doubt in the course of this debate we shall hear much about the committee's estimates of the cost of unemployment and of measures to remedy it, to which the noble Baroness referred. This is a very difficult subject. As the Government response makes clear, we do not believe it is sensible to talk about "the cost of unemployment" as if there were a single figure. The costs arising from unemployment will vary according to the causes of change, including movements in world trade, United Kingdom competitiveness and so on.
It is even less meaningful to talk, as the committee does in paragraph 6.34, of a total Exchequer cost of £15 billion. This is based on the unrealistic assumption that unemployment could be totally eliminated and that in the process of reducing unemployment there would be no consequent changes in earnings, prices, tax rates et cetera. In the same way, great caution has to be exercised in trying to assess the net costs of particular measures that may be put forward. There is virtually none which can be considered truly without cost.
For example, the committee suggested that the Community Enterprise Programme had no net cost. But experience with that scheme suggests that even its successor, the Community Programme, which is designed to be more cost-effective, will involve substantial net Exchequer costs, both in the payment of allowances above the average benefit level and in the cost of materials, supervision and administration. These are important points to bear in mind when assessing any proposals for new measures.
It is gratifying to see that the committee broadly supports those special measures which make up the remaining quarter of our programme. Since the
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committee reported, the Government have announced the introduction from next January of a new job-splitting scheme, which is broadly in line with what the committee terms "pairing". We are also maintaining the job release scheme with its extended age limit, and we are now evaluating the Enterprise Allowance pilot projects. We are encouraged by the take-up so far and have noted the committee's view that a scheme along these lines should continue, provided that it is properly evaluated.
As I said at the beginning of my remarks, the Government are putting more substantial resources than ever before into employment and training measures to help the unemployed. We are actively developing our programme with all the resources we think it appropriate to make available for the important task of helping those worst affected by the current high levels of unemployment. I can assure the House that we will continue to give this programme a very high priority. We recognise its importance, both for the country and in human terms.
In conclusion, I should like to thank again the noble Baroness, Lady Seear, and her committee on the contribution which they have made to the public discussion of this most important and serious issue of unemployment. I, and other Government representatives, will be listening with great interest to all that is said in today's debate in your Lordships' House.
3.42 p.m.
Lord McCarthy: My Lords, I have three tasks today. First, I should like, with great sincerity, to thank the House for allowing me to serve on this committee. I was never very clear by what process we were chosen, but I am glad that we were chosen, because I cannot think of any activity in which I have taken part in this House which I have found more enjoyable and more instructive. Secondly, I want to define the general view of the Labour Party members of the committee to this report; and, thirdly, I should like to explain the somewhat limited nature of my own contribution to this debate today. But, before I do any of those three things, I should like to say that, together with the noble Baroness, Lady Young, who has been commanded elsewhere—I have not been commanded elsewhere—I have a long-standing engagement which, unfortunately, means that if the 24 or so speakers that we have on the list today take their usual time, I must apologise for the fact that it is very unlikely that I shall be here at the end.
First, let me say something about the work of the committee. As I suggested to the House, this has been the most instructive and enjoyable activity that I have had since taking part in the business of this House. Secondly, I have no doubt whatever that it was very largely because of the personal qualities of our chairman, or perhaps I should say our chairperson—I am not quite certain what the noble Baroness's view is about the appellation.
I think I can say that, though we have a dissentient minority of one on our major conclusions, we have no dissent whatever—indeed, we have a unanimous conclusion—on the fact that we would never have completed this report without the highly individual mixture of charm, guile and obstinancy which the noble Baroness brought to her task. In passing, I

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should also like to thank the excellent staff that we were given by the House and, in particular, our Secretary, Mr Hayter. So on the work of the committee we have nothing but joy to report.
On the general view of the Labour Party members, I must say first that we are extremely sorry that my noble friend Lord Melchett is not here today. He has to apologise, and I have to apologise on his behalf, because he has been struck down by an attack of glandular fever which prevents him from being here today. That is a great pity, because there are many things which I do not have time to say and which he would have said. Therefore, I am afraid that, in broad terms, they will be left unsaid, unless they are to be said by our very welcome noble friend Lord Allen of Fallowfield, who will sum up the debate from this side of the House. But, on his behalf, I apologise for the absence of my noble friend Lord Melchett.
So, on the general view of my noble friend Lord Melchett and myself, we feel that we had to make compromises in order to achieve the virtual unanimity, with one exception, on the main recommendations in the chairman's report. We have no objection to that, because, if one wants to make progress, one makes compromises. Because I do not intend to deal with a very broad part of the report, I would not want anyone in the House to believe that we do not support it. I want to deal, as the noble Baroness said, with a very important section of the report on long-term, low-cost job creation. But because I do not intend to talk, and Members on this side of the House who were members of the committee do not intend to talk, on other parts of the report, I would not want anyone to think that, in general terms, we do not agree with the general thrust of that report, because we do. With what influence I might have on my party, I would recommend the general direction of this report to them.
Therefore, I come to what I want to say today and I want to focus on the recommendations on what we call long-term, low-cost, group-specific, net job creation. The noble Baroness, Lady Seear, always said that she disliked this phrase. Indeed, she almost invariably finds it impossible to spell it out in full terms. She tends to say "Low-cost, whatever". I must say that I accept a certain responsibility for this because, as she kindly said, I invented this phrase. But I have to say to the House that what it lacks in elegance and euphony it makes up in precision and comprehensiveness. I want to suggest to the House that it seems to be infelicitous only to those who look for what H. L. Mencken called simple, easy, attractive solutions which are almost always wrong.
This is a complicated phrase, but it deals with a complicated problem. Therefore, what I wish to do in the time available to me is very quickly to go through why we say, as a central thrust of our argument for dealing with the problem of unemployment, that what is needed is long-term, low-cost, group-specific, net job creation.
One might ask: why job creation in the first place? The answer is that the overwhelming majority of the committee took the view that, although we believe that there were all kinds of problems on the supply side and on the training side to match the supply of labour to the demand for labour, we could not believe that the problem of unemployment in this country was simply
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a supply-side problem. There is a deficiency of jobs and, therefore, jobs must be created. In effect, we are saying that jobs must be created as a deliberate and conscious act by Government. That is the central thrust of this part of the report.
We can give many reasons for this—some sophisticated, some simple. The simplest reason of all is that we have at the moment a job-applicant ratio of 30 to one; that, in broad terms, there are 30 applicants for every job in this country. In some areas, the job-applicant ratio is much worse than that. Whatever you do about getting on your bike, moving from place to place and getting yourself retrained and becoming more and better skilled, while there is a job-applicant ratio of 30 to one, we find it incredible to accept the argument that this is just a supply-side problem.
Secondly, there are no plans by this Government that I know of—if I am wrong about this I hope that the spokesman for the Government will get up and tell me I am wrong—to reverse this basic job-applicant ratio in the foreseeable future. The Government accept that unemployment is rising at 0·5 million a year, so that next year it will be something like 4 million or so, that unemployment now stands at 14 per cent. and that unemployment will be rising at something like the present rate for the foreseeable future. The Government accept that this is the case. Independent surveys—and not only independent surveys but the Government's own institution, the Manpower Services Commission—expect unemployment to go on rising at much this rate well into the end of 1984. Therefore, not only do we have this job-applicant ratio of 30 to 1 but there are no plans by the Government to reverse this basic ratio.
Thirdly, the process of securing competitiveness—which, as the noble Baroness quite rightly said, this committee put at the centre of its solution to the problem and which is so essential—is likely to destroy more jobs than it creates—at least, for the foreseeable future. There are many figures in the report which indicate this. Most recently, there was a most interesting report in the National Institute Economic Review last August by a Mr. Roy on labour productivity in the 1980s which I commend to the House. It is merely one figure of many figures which one could quote. It indicates, for example, that if we had the output per head of Germany, we should be producing our present level of output with something like 7·5 million less jobs in manufacturing industry than we have at the moment, and that if we had the output per head of America we should have something like 9·5 million less jobs than we have at the moment. We are not suggesting anywhere in our report that this process should be arrested. As the CBI says, if this process is arrested, then, for every 1 per cent. loss of our world trade, we shall lose a further 250,000 jobs. We are not suggesting that this process should be arrested, but we are saying that if this process goes forward, then no man can say that anything like the present policies will reabsorb the jobs which will be destroyed as a result of the search for competitiveness.
Fourthly, we would say that over a wide area of British manufacturing industry—and, I would say, distribution of wealth as well—there is what labour economists now call a negative employment multiplier: that as you raise the proportion of investment, the result, over foreseeable degrees of

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output increase, is a declining demand for labour; that the situation in manufacturing industry is that investment destroys more jobs than it creates. For all these reasons, therefore, we see no expectation at all that the Government's policies, or any alternative policies by any Government—of a general expansionary kind, for example—could create the jobs which will necessarily be displaced if this economy is to survive.
Indeed, I would say that the Government admit this. That is why, whatever the Government may have said when they came to office, we are moving, as the noble Baroness said, into the fourth year of the special programmes. Therefore, the Government plan this year to take half a million people off the register by means of their youth training scheme, their community programme and one device or another. In our report we say that the trouble with this expanded special programme is that, first, it is meeting increasing resistance in enrolment. Secondly, it is meeting increasing resistance in its ability to get sponsors to carry out this programme. Thirdly—and most important of all—it is a short-term programme. It plans to take young people or older people out of the unemployment situation and off the register for periods of up to 12 months. In 12 months' time it will throw them back into the labour market, unless it constantly recycles itself and we have the son of YOP, the son of YTS, the mother of CP—and on, and on, and on.
That brings me not just to job creation but to the long term. Why are we saying that this must be long term? Because it is a long-term problem, because you cannot solve this problem by a series of endless, short-term expedients. I should like to ask the member of the Government who is to reply for the Government to say what they propose to do with all those young people who go on to the youth training scheme in a year or 18 months' time when they come off the end of the assembly line. Do they seriously suggest to us that jobs will be available? Similarly, with the community programme, even if they get the numbers they anticipate, what are they going to do with these people when they come off the end of the assembly line?
What is happening already? In the October issue of its Special Programme News the Manpower Services Commission gave us some very interesting figures about the present placement ratios of young people on the old Youth Opportunities Programme. In 1978, when the level of unemployment was 5·1 per cent., 80 per cent. of those who came off the other end of the assembly line were reabsorbed in one way or another. They were placed. In 1981, when the level of unemployment was 11·7 per cent., only 50 per cent. found placement, and that placement included not just jobs but the recycling of those people into further education and training. So as the level of unemployment rises, the level of placement falls, and it falls faster than the level of unemployment rises.
If we assume an increase in unemployment of half a million or so in the next two years, what will be the level of placement from YOP and the community programme, on the Government's own assumptions, in 18 months to two years' time? I ask the Government whether they have made any estimates of this—not
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just of the overall level of placement, not placement assisted by recycling into further and further short-term programmes, but net placement: placement in terms of people finding jobs, My figures may be utterly wrong, but on the Government's existing trends I make the level of net placement in 18 months' time something below 20 per cent. This means that these quite expensive programmes are only producing jobs for something like one person in five of the people put on the programmes. Therefore we say that there has to be something more long term and more significant. Therefore, we put forward our proposals for low cost job creation.
I want to say something about the low cost element. Let me say that I agree entirely with, as I understand it, what the noble Baroness said. We are not suggesting that what we are putting forward is nil cost. There is no nil cost way of putting people back into jobs. Nevertheless, I should like to make several points against the Government's reply to our report, in particular what they say in paragraphs 12 to 15, in paragraphs 17 to 72 and in their Annex. First, we do not say that the gross costs of long-term job creation are approximately £5 billion above the present expenditure plans. To some extent, I feel that paragraph 14 of the Government's reply to our report suggests that that is the case. We do not say that it will cost £5 billion, because the £5 billion includes our version of the existing short-term job creation programmes of the Government—that is, YOP, CEP, pairing, job release and so on.
In the case of long-term job creation, our overall gross cost is something like £3,650 billion gross over a two-year period, or something like 3p or 4p on the standard rate of income tax, for which we offer to provide over a two-year period half a million jobs. I say that is low cost because, if one cut a similar amount off the standard rate of income tax, then the evidence we have from various surveys which we have looked at suggests that that would produce around 30,000 jobs; in other words, an annual job price of £38,000 per job rather than £2,000. I call that low-cost job creation. Certainly it is much cheaper than seeking to move back into full employment by cutting the standard rate of income tax.
The second point is that these are gross costs. The net cost of these 500,000 jobs is about £1 billion, we say, over a two-year period; something like half the overshoot of the PSBR in the average year, or one-seventh of the difference between the 1980 Treasury estimate of what the PSBR would be in 1983–84 and what the PSBR is likely to be in 1983–84—or, if you prefer, about one penny on the standard rate of income tax. Once again, £2,000 per person per job per year as against tax cuts, which would produce £38,000 per person per job year.
We are told in the Annex (and I want to say just a word about this) that this is an under-estimate. I have sought to understand as best I may the argument in the Annex as to why this is an under-estimate. In so far as I understand the argument, it seems to have three legs. First, we are told that some of those taken off the register will not be paying average rates of tax. That may be the case. Secondly, we are told that some of those taken off the register will not be receiving average social welfare benefits. That, too, may be the case. Thirdly, we are told that there must be something less

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than 100 per cent. additionality—in other words, even on our carefully designed proposals, there must be some substitution.
I have a number of points to make in reply to those arguments. First of all, the Government very carefully do not tell us in their Annex how far these three considerations actually raise our estimate. Do they raise it to £2 billion, or £3 billion, or £4 billion? They cannot raise it above £3.650 billion because that is the gross figure based on £5,000 per person and the Government do not quarrel with that. So how far do these three factors raise our net estimates? The Government do not tell us. I would suggest that even if it means a 50 per cent. under-estimate of our estimate, we are still talking of a figure of £1.5 billion over two years or l½p on the standard rate of income tax. I would suggest that that is low-cost job creation.
I would remind the House that we are talking here of Exchequer costs. As a committee, we were very careful not to mention the social cost even though we thought it was very important. We did not mention the fact that we established very substantial costs—although we could not quantify them—and substantial links between high levels of unemployment and ill health, suicide, self-harm, crime rates, the prison population and social unrest in general. On all these issues we found correlations (not only in this country but also in other countries) between high levels of unemployment and high social costs. We made no attempt to put figures to these because I believe it would have been unrealistic to do so. But, if one says that what we are suggesting is high cost rather than low cost, then it seems to me only fair to ask about the social costs as well.
Also, there will of course be a product. Again, we made no attempt to specify the value of that product but the kind of low-cost job creation we are specifying will provide better care for the elderly; better care for the disadvantaged; new capital investment in sewers, roads, and urban renewal; as well as in all other aspects of our social life. Therefore, we are saying that, whatever the cost may be, on the other side you have to set the social cost and the value of the product.
This brings me to the question of why it is group-specific. We argue for group-specific job creation for two reasons. First, we believe that unemployment itself is group-specific—especially is long-term unemployment group-specific. Long-term unemployment is concentrated among certain groups. It is concentrated in certain districts, in development districts, among the old, among the young, among the disadvantaged, and among ethnic minorities. Therefore, all forms of non-selective reflation or market-led growth are likely not to deal with the specific problems of the long-term unemployed. As far as we can, we want to create jobs which are directed in particular at the long-term unemployed. We want our job creation to be directed at those who are most in need of help. That is why it is group-specific.
It is group-specific in another sense because we wish to create specific categories of jobs. We wish to create jobs which are relatively low cost in themselves and which are likely to result in high community benefit in the short term. In broad terms, we direct our attention at two different groups: first, at essential investment occupations and trades in housing maintenance, sewer
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rebuilding, road building and maintenance, urban renewal and so on; and secondly, at certain essential services and occupations in the National Health Service, in local government, in other welfare and community services and in full-time posts for organisers in voluntary and charitable societies.
I realise that what we are suggesting here is among the most controversial parts of our report. Indeed, what we suggest for essential investment occupations—what we call investment-led job creation—may find some support outside our committee in all kinds of organisations and institutions. For example, the CBI in its recent publication on what we can do to solve the problem of unemployment suggested an increase in investment-led job creation. But when we talk about what we call service-led job creation in institutions such as the NHS, local government and welfare and community services generally—which for the most part must be in the public sector, which to us is an accidental fact and it is just that these services are in the public sector at the moment—we fully appreciate that we are going to be told that this is a very controversial aspect. Therefore, I want very briefly to mention the magnitude of what we are suggesting.
Let me first mention the National Health Service. We are suggesting something less than a 10 per cent. increase in the overall size of employment in the NHS. In certain areas—in ancillaries, for example—we are suggesting something near to a 30 per cent. increase. That is the major area of increase. For nurses, we are suggesting maybe something below a 5 per cent. increase, and for other groups in the National Health Service virtually no increase at all. This is the magnitude of what we are suggesting. If one contrasts this with the growth in the National Health Service in the past three or four years, as the Government have made out, one finds that the greater part of that increase has been the result of Government policy. It has been the result, for example, of the introduction of a shorter working week for nurses, or it has taken place among occupations in which we are not proposing that there should be any increase at all. The increases we are proposing are at what the noble Baroness calls the "sharp end".
What is the argument that the Government put against what we are suggesting? They put their argument in paragraph 72 of their reply to us, and I quote:
"The Government believes that any commitment to creating more jobs in the public sector, beyond those necessary' to provide a cost-effective service, would risk regenerating inflation. The outcome would be reduced efficiency in the public services, and upward pressure on pay, not just in the public sector but in the economy as a whole".
I put it to the House that that is a statement of faith, a statement of belief; it is a statement without substantiation. Why should it be the case that £1,000 million spent on public sector pay should be more inflationary than £1,000 million spent on private sector pay or £1,000 million remitted in tax? Why should it be the case that, as we are told in the quotation, another 300,000 or so workers in the National Health Service and local government—that is all we are talking about in this area for workers in the public sector—should so transform the power of the unions in wage bargaining that all the efforts of the Government, much public-

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ised in the last two years, to bring the unions into line would be vitiated? Why should this modest increase in public sector employment create a reversal of the process of controlling public expenditure, begun with the efficiency fines and continued in the manpower watch, which makes it quite clear that there is no sense in which, as the Government repeatedly tell us, manpower in the public service sector is in any sense out of control. The fact is that this is an article of faith, this is a piece of religion. There is no reason whatever why the Government should ask us to believe this.
So we are saying that we are in favour of long-term, low-cost, group-specific, net job creation, net because we believe that we have proposed, in paragraphs 62 and 63, a complex set of checks on substitution. We do not deny that there may be some substitution, but the degree of substitution under this scheme is likely to be infinitely less than the degree of substitution on the existing short-term schemes. And in any case, with great respect, I would say that arguments about substitution come very ill from the Government which introduced the young workers' scheme, a scheme which will be totally alternative, in no sense additive, and in which there are no attempts to correct substitution in any sense.
So we have sought to put forward a modest policy which we believe is increasingly close to the views now taken by the TUC and the CBI, both of which are looking for specific proposals without general reflation to ease the problem of unemployment. We believe that this is a genuinely all-party set of proposals which could provide the basis for a very broad approach on a very real problem. We believe that only dogma, only a refusal to believe that previously adopted positions could conceivably be wrong, prevents the Government from coming to our position, and we beg them to change their mind.
4.13 p.m.
The Lord Bishop of Lincoln: My Lords, I should like to thank the noble Baroness the Leader of the House for having courteously sent me a copy of the Government's response to the report. It may be that she sent them to all Members of your Lordships' House, but I am grateful for having received it myself. I think one of the most important and impressive things about this report is that the members of the Select Committee, by virtue of being that, represented every party in your Lordships' House and independent and Church opinion, and I say that this concerted view which they have produced is important and impressive because it is in contrast to what one tends to hear. Party views on unemployment can be very divergent as to remedies; some of our most strongly felt political tensions are about this, and obviously so because we are here concerned with matters not only of crucial economic importance but also of deep human and social, and therefore moral, import. Because of this, because of the nature and the seriousness of the subject, I think that the tone of voice of the political debate that takes place about it matters a lot.
The report ends by saying:
"The transition to prosperity is painful. It cannot be made without popular consent".
Because of this issue of consent, which I should like to return to in a moment, I have to say that I feel anxious
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at the tone of voice in the Department of Employment, which at the moment sometimes seems to me so explicitly confrontational, and this seems to me on the whole contrary to a general tradition in that department and not to promote consent.
Noble Lords and the noble Baroness have spoken about the detailed short-term and long-term recommendations of the report. I would want to put myself squarely with those who support the report's contention that we cannot wait for the turn-up in the economy before we act for the unemployed, and that we should do so not only in terms of education and training, which the Government are doing, but also in some measure of carefully selected job creation for the worst hit, as the report suggests and as the noble Lord, Lord McCarthy, has just been saying. I say this not from sentiment, but, though I realise it is a highly contentious matter, it does seem to me that there is a very great weight of authority on the side of the report as well as against it.
In this connection I want to say a brief word about the Church's involvement in this whole matter. I recognise that this may be thought of as just cosmetic, and in a sense it is, but most women and certainly most men agree that cosmetics have their place. All Churches in the United Kingdom are very much involved in projects with the Manpower Services Commission. There is an inter-denominational agency called Church Action with the Unemployed which has set up 50 consultants throughout the country to advise Church bodies on projects that they can get involved in. It has circulated 200,000 churches with a leaflet with the details about all this. Certainly two dioceses have appointed full-time industrial chaplains solely to work in the field of employment. I think I could give a picture of the sort of things that happen in my own diocese, where we have appointed a full-time consultant on management of our community enterprise projects and for our training workshop, which I think was one of the first to get under way in the country.
That is all part of the short-term picture. In the long term, I believe it is important to look further ahead than the report does. Many authoritative commentators and participants still are rather guarded in what they say about the really long-term scene of unemployment. I understand that, because we need to concentrate our minds and our work intensively on regenerating the economy. But in the really long term I believe that regeneration is still going to leave us with a very large number of unemployed people, and that as much economic, political and social energy needs to be given to that as to what is more immediately under our noses. Figures for the long-term unemployed are a good deal worse than they were when the report was produced. That means that hundreds of thousands of people are already in that longer long-term future now.
It is because of the implications of this that I believe that the report's emphasis on political consent is so important. All sorts of things can engender consent. I have in mind not so much exhortation as, for instance, hard facts. The hard facts of the present crisis seem to be engendering consent to more moderate wage settlements and less stomach for strikes. But the line between consent and constraint can be a very fine one. What we are beginning to see may be the result more of constraint than of consent. In the long term that will not provide an adequate motivation for our recovery,

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only a grudging one and not a ready and a creative one. In the old days of pre-war unemployment, the tactical power in industry lay with management and Government. With full employment between the last war and now the tactical power shifted to the shop floor. Now it may simply be shifting back to where it was before without—this seems to me to be crucial—our having learned in the two-and-a-half decades of full employ ment the lessons about consent that we needed to learn in the face of organised labour coming to power. We did not learn that we needed to consent to the fact that there was a new balance of power in our national industrial life, demanding new thoughts of management and new responsibilities for trade unions. If we had learned that, and consented to it we might not have been where we are now.
If we needed that sort of consent then, we certainly need it now, as this report makes clear—consent, for instance, for modest financial courses for great social gains. Constraint may bring us to our senses the hard way, but more is needed—a more positive motivation, real consent—if that is really going to be a way ahead.
4.20 p.m.
Baroness Carnegy of Lour: My Lords, your Lordships may feel that a debate on the much disputed subject of unemployment is an awkward occasion for a non-controversial maiden speech. I take heart from the fact that the authors of the report come from all parts of your Lordships' House and at the same time cowardice seems inapposite to a new Peer whose Letters Patent were sealed on 14th July this year—Bastille Day. I say to myself "courage, and advance".
In fact, it seems to me that, through the political "ding-dong", to which the right reverend Prelate the Bishop of Lincoln referred, people are more and more seeing for themselves the truth about unemployment. They are seeing that we are living through nothing less than a second industrial revolution. They are seeing that for all sorts of reasons we have allowed ourselves to grow weak in the face of our competitors. They are seeing that we have to make greater adjustments than most countries, and with little time in which to make them. They are seeing that in the process millions of people are vulnerable and that some groups are far more vulnerable than others. They are seeing that no simple panacea exists and they are very anxious that the action we take must be designed to have lasting effects.
Of the possible action suggested by the Select Committee, I should like to refer to one of the less controversial parts— Chapter 11—which refers to education and training. In so doing, according to your Lordships' Addison Rules, I must declare an interest as a commissioner for the last three-and-a-half years in the Manpower Services Commission, as the present chairman of its Committee for Scotland and as chairman of the Scottish Community Education Council.
The report says little about schools, rather more about training. It says that schools should include more preparation for work than is generally the case and makes the point that it is a moot point how early in the educational process foundation working skills
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are laid. Among the points the report makes on training is to welcome the Government's new training initiative. It welcomes the youth training scheme. The report would like to see greater coverage of this, but recognises that that will take time. It welcomes two other closely linked parts in that training initiative that we must not ignore—the introduction of skills training for standards and more and far wider opportunities for adults. I am delighted that the report takes that view. I believe that swift improvement in education and training are among the most urgent matters of all. It is so easy to say, "Why all this fuss about training? Training for what? What is the use of training if there are no jobs?". It is so easy to say that. We are faced with the chicken-and-egg situation. We must begin somewhere. There are a whole host of reasons why a massive effort now in relevant education and training is one crucial way to begin.
It is important from the point of view of our economic life that in the changing work scene we must have a young workforce with foundation skills on which to build, a chance to develop new skills and a chance for people to train and to retrain as adults. Competitiveness and the quality of the workforce are inseparable.
From the point of view of young people themselves, anyone who has lately been, as I have, a local government councillor and chairman of the education committee in an area such as Tayside region, where unemployment is high, will know just how anxious are young people, and their parents, about how they will get into the labour market and how they will stay in it. Their main concern is that schools should equip them properly and that training opportunities will exist so that they can earn a decent living and thus contribute to the common weal. From the point of view of society as a whole, it may well be that we shall come to accept, as time goes on, that spells between jobs are normal. But it is essential that it is not the same people who are always left out.
In spite of the figures given by the noble Lord, Lord McCarthy, the evidence is that this is happening. Last year over 5½ million jobs changed hands, yet at the same time over 1 million people were unemployed for over a year. Of those, 370,000 were unemployed for two years or more and 165,000 for three years or more. Once a person is out of the labour market it is very difficult indeed for him to get back. As the noble Baroness, Lady Seear, so rightly said, more than half the people who are long-term unemployed are unskilled or semi-skilled. We must avoid a situation in this country, in the long term, where some people are in better and better jobs and other people are permanently left out. That is inhuman; it is wasteful and highly dangerous.
So we have to proceed swiftly on three fronts. Two are mentioned in the report, and a third is not mentioned. Under the new training initiative as a country we have to make, all of us, a maximum effort in the youth training scheme which is beginning next September—the school-to-work bridge, the opportunity to turn what one learns at school into the skills for working life and for adult life, the broad-based foundation on which subsequent training can be built. To get this scheme off the ground will demand a great deal of many people, a lot of employers, a great deal of trades unions and a great deal of the teaching

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profession and the education authorities. If we succeed in this we will leap-frog the German scheme—a scheme which is now not meeting what that country needs—and we will be giving young people one of the best chances of any developed country.
Within industry and the MSC the beginning of training to standards which, with the youth training scheme will replace the now outdated apprenticeship, has to get going as quickly as possible. The open tech and other schemes are being worked at now for adults. We must proceed as quickly as we can with the new training initiatives. Good work is being done in secondary schools and right back into primary schools, for all those are important in this matter. However, I believe that change is far too slow. We are far too content in our education system to wait for the next report; to wait for the results of the next pilot scheme; to wait for the outcome of the next negotiation; and to say that we cannot change anything unless we have much more money.
Individual schools can, in my view, do a great deal now. They can do a lot towards helping young people relate what they learn to adult life and to work. Indeed, I heard one employer say at a conference last week that the right place really for the school-to-work bridge is in the schools. If schools could build the school-to-work bridge effectively there would be no need for another agency. I hope that my right honourable friends in another place, the Secretaries of State for Education and for Scotland, will give a strong steer on this. The youth training scheme will be a catalyst for schools, and so will the new technical education initiative just announced by the Prime Minister. New exam arrangements may help. But the education service does not have to wait for any of these.
Finally, and not mentioned in this report although in another two recently published reports, there needs to be a concerted efford by informal educators, voluntary organisations, youth and community workers, and self-help groups. Education and training is not just about skills, it is about the person behind the skills. Many new demands are being made on people today. The changing nature of work, the new ways one has to think, changing work patterns, more time to call one's own, far more time spent together at home, are not easy. Young people meet a thousand different points of view on television. Somehow they have to sort out what they think and believe. It is confusing; it is demanding. Modern life is an increasingly complicated maze through which one has to find the way. There is information available. There is help. But where to find it?
Too many, naturally full of youthful zest, find the maze impenetrable, stop trying, lose confidence, and become switched off. There is need for massive effort by all concerned. In Scotland we have had a pilot scheme, in conjunction with the European Community, on youth information. Every 16-year old school-leaver has a pocket book now with information about where you can go to find out this and that, who can help you, and so on. There are information points in many towns. There has been a tremendous response. Thousands of young people have been helped to help themselves. Denmark is now following suit, as, I believe, is the city of Rome.
A small shift in resources within local authorities by
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the Government towards a youth work community education approach could bring huge change, and huge savings, I believe, on other costs as it helps the person behind the skills. It seems to me that in these respects at least we are in exciting times. Unemployment, the subject of this debate, is the dreadful catalyst, but we are making great improvements in training, improvements that have been needed for a long time, and we could, through them, overtake our competitors. We have huge opportunities in schools if we can get up, get on and take them. We have great scope through informal education if we can rejig resources a little. It seems to me, my Lords, that the Select Committee report is a most useful tool in all this.
4.34 p.m.
Lord Kilmarnock: My Lords, it is my privilege to be the first to congratulate the noble Baroness, Lady Carnegy of Lour. I say "the first" because I am sure that she will receive many more congratulations during the course of this debate. She is the chairman of the Manpower Services Commission Committee for Scotland and is very active in Scottish affairs, both secular and, religious. Her knowledgeable and constructive contribution, particularly in relation to education and training, has given us a taste of something that I know that all of your Lordships will want to be able to repeat again, and I hope that the noble Baroness will frequently give us the opportunity in the future.
I am also sure that the whole House will be grateful to the noble Baroness, Lady Seear, not only for the way in which she introduced the report but for the firm yet patient and long-suffering—but not too long-suffering—way in which she chaired the committee. I am afraid that I was partly to blame for the burden which she accepted and carried so admirably. In a debate on 20th June 1979, on a Motion of the noble Lord, Lord Spens, to call attention to the then unacceptably high level of unemployment, I proposed to the Government that a Select Committee of this House should be set up with fairly wide terms of reference. The noble Earl, Lord Gowrie, replying to that debate—and I am delighted to see that he will be winding up this one—said that a Select Committee was not something that he could hand out from the Dispatch Box, but that he would bring the suggestion to the attention of the Leader of the House.
In the event, the Government had the courage to give us our committee, and we are all grateful for that. I say "courage" because the previous Labour Administration had been too embarrassed by the then figure of 1,300,000 to look at the idea. But I am afraid I cannot say that the Government have been equally courageous in their response to the report we are debating today—though of course I am grateful to them for sending an advance copy of that response to those of us who served on the committee.
When the committee was appointed in November 1979 unemployment stood at 1,355,000. During the course of our deliberations it passed the 2 million and 3 million marks, and is now practically 2 million higher than when we started work three years ago. But the curious thing about this is that alarm and despondency have not risen in step with the devastating advance of the official figure—not, at any rate, in

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establishment circles. What was unacceptably high to the noble Lord, Lord Spens, and many others when it stood at 1,300,000 has, by some strange shift of opinion, become more tolerable now that it stands at more than twice that number. There seems to be a new orthodoxy of acceptance and resignation and—dare I say it?—of relief that people are not making more of a fuss about it; are taking it lying down.
How on earth, my Lords, has this come about? Is it that the Government have sized with a sigh of relief on Milton Friedman's "natural" rate of unemployment, or on the variant advanced by Mr. Sam Brittan called the Non-Accelerating-Inflation-Rate-of-Unemployment (NAIRU, for short)? I am indebted, incidentally, to the noble Lord, Lord Harris of High Cross—I am sorry that he is not here—for sending me Hobart Paper No. 90 by Mr. Sam Brittan, in which I discovered on page 50 that NAIRU—that is the Non-Accelerating Inflation-Rate-of-Unemployment—
"is probably around 10 per cent. or 2 to 3 million seasonally adjusted, excluding school-leavers".
Actually, I read the whole paper, which contains some very valuable suggestions, including electoral reform and other matters acceptable to the SDP and to the Alliance. But perhaps the Government's eye lit only on that page.
Is it perhaps the lack of social unrest on any widespread, co-ordinated or consistent scale that has lulled the Government into complacency? Our report does, I think, a useful job of analysis in Chapter 3 —the noble Baroness, Lady Seear, referred to this—on the "Pattern of UK Unemployment", where it distinguishes between "stock" and "flow". The stock is the monthly headline figure. The flow measures the throughput. The stock rises largely because the median time out of work is constantly rising and we now have more than 1 million long-term unemployed—that is, out of work for more than one year.
But even at high rates of unemployment with a rising median, some 300,000 people leave the register every month. This—I quote from Chapter 3 paragraph 25—
"puts into perspective suggestions that the unemployed should rebel, engage in retraining, move geographically, start their own businesses or behave in some other adventurous way. . . Those for whom unemployment lasts long enough to become a chronic Condition tend to be older workers, less than fully fit and the unskilled. In short, they belong to the groups least likely to engage in rebellion, retraining, geographical transfer or starting new businesses."
In other words, the unemployed have no clout and pose, or seem to pose, no real threat. Is that what has lulled the Government, and what is in danger of perhaps lulling the rest of us, into weary acceptance of the figure published on the last Tuesday of every month?
Well, my Lords, before the Government or anyone else sink into resignation, let them read our Chapter 7 on "The Social Effects of Unemployment and their Costs". The noble Lord, Lord Melchett, was, I believe, going to address part of his speech to this chapter, in which he played a significant part. I shall do my best to make up for his absence. In a sense this condensed, laconic but quite pungent chapter was the hardest to write. It was not just slipped in as a sop to the sociologists. I think all of us felt it was at the core or heart of the matter, but feared it would necessarily become the poor relation dealing, as it does, with things that are
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not easily measurable.
Professor Brenner has attempted to measure the increase in ill health and the death rate due to unemployment and to cost the results. His methodology has been attacked, but he is clearly on to something real. Paragraphs 7.17 to 7.21 on crime and unemployment repay reading, in conjunction with Appendix 4 on pages 178 and 179 showing the incestuous relationship between unemployment and prison and borstal admissions. There is another curve not shown here, I think, in which the unemployment and indictable offences curves clamber happily entwined up the trellis we have constructed for them.
Inevitably, paragraph 7.21 comments on Brixton and Toxteth, but these were merely the causes celèbres, and it is worth looking at Appendix 5 on pages 180 to 196 entitled,
"Unemployment statistics in certain areas seriously affected by riots and civil disorder 1981",
which show higher than average levels of unemployment among young males, black and white, in most of the affected areas, which include Ellesmere Port, Hull, Leeds, Huddersfield, Handsworth, Nottingham and Leicester. The Government should bear this chapter in mind when they call into question, as they do in the Annex to their response, our estimate of the Exchequer cost of unemployment. This subject was referred to also by the noble Baroness, Lady Seear, and the noble Lord, Lord McCarthy.
In our paragraph 7.23 we come to a very tentative estimate of an additional cost to the Exchequer from the social side-effects of "some hundreds of pounds" for every person unemployed. But we make no allowance for this whatever in our estimated Exchequer cost of £5,000 per person unemployed. Some of us wanted to, but the uncertainties were too great to permit the inclusion of an arbitrary figure in a respectable attempt at costing unemployment. All the same, I am convinced that our chapter on social costs reveals only the tip of the iceberg.
Why is that? It is simply because social costs are not static; like financial costs, they are cumulative. If you do not service them, they will accumulate at compound interest. Increasing numbers of people disaffected from the society in which they live will slash away at the fabric of that society and the cost of stitching and patching will grow and grow. Policing will become more expensive, the prison population will increase and even if people do not become violent but simply sink into apathy, the costs will go on going up. Not only physical but mental health will deteriorate. The health and social security bill, which the Government want at least to hold steady, will take off. I have spoken at some length on this short chapter, but that is to ensure it is not overlooked.
I turn briefly to the supply side. Britain has the largest workforce in relation to population in the Community, as the noble Baroness mentioned. The committee did not see any great possibility of redistributing work through the reduction of working time owing to the resulting increase in unit labour cost. We concentrated instead on the reduction of supply through later entry to the labour market and earlier, or phased, withdrawal from it. At the point of entry, some people ask, as I think the noble Baroness, Lady Carnegy, asked: Why more education and training? For what? A categorical answer is difficult at a time of

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changing technology and uncertain prospects for world trade. But it is certainly suggestive that our partners in the Community, who all retain their young in education or vocational training much longer than we do and release them with higher skills, are suffering lower rates of unemployment than we are. One can understand the Government's caution—in their response in paragraph 22—over committing a further £1 billion to extending the YTS to two years (that is, up to 18) but that is undoubtedly where we shall have to go, sooner rather than later.
Turning to the middle years, on a lighter note, I am afraid that the famous remedy of the noble Lord, Lord Spens—which consists (or consisted; he will correct me if I am wrong) of requiring the women of England to lay down their jobs for their males by committing a sort of mass labour market hara-kiri—is simply not on. At least, I have to tell him that my party would not support it. We believe in "Jobs for the Girls".
As we approach the end of working life, I am glad to see that the Government, for once, agree with us on what we call pairing, and what they call job splitting. Here I would ask the noble Earl a specific question; if he does not have the answer at his fingertips, I shall be happy if he will write to me. In our paragraph 10.26 advocating pairing for those over 60, we suggested a waiver of national insurance contributions for the two employee halves of the pair. We also suggested that the employer should be compensated for any additional costs incurred through employing two people for one job by a waiver of his national insurance contributions. In paragraph 50 of their response, the Government consider,
"direct payment to employers a more efficient way of providing an incentive to split jobs",
and they go on:
"It is worth noting that in most cases where a job is split, the National Insurance contributions are also split, so there is no extra cost".
Is that in fact the case? As legislation stands, or will shortly stand, surely any earnings over £32·50 a week will surfer a 9 per cent. national insurance deduction, whether it is the reward of half time or part-time or sharing or splitting or whatever. The Government have said they will help the employer. Will they not also help the employee? I hope the Minister will be able to clear up that point.
I said at the beginning that I thought the Government's overall response was disappointing, and I repeat that. They have said No to our proposed graduated allowance for trainees; they have recoiled from a second year of YTS, though I hope they have not rejected it out of hand; they have in effect left adult training to the lucky dip of voluntarism; they have refused even a modest expansion of Community Industry, which is a very effective and cost effective programme for disadvantaged 17- and 18-year-olds, who will not readily be catered for by the YTS. The Government have also stalled on the very reasonable suggestion of the extension of long-term supplementary benefit to the long-term unemployed over 55; they are cool on co-ops (I wish the noble Lord, Lord Melchett, were here take that one up, but I see the noble Lord, Lord Oram, in his place); they summarily dismiss our major proposal for long-term, low-cost, group specific net job creation in the public and
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voluntary services, so ably explained by the noble Lord, Lord McCarthy (I agree that is a handsome specimen of jargon, but it would provide 400,000 low-cost jobs in areas where they are desperately needed); and they have stalled on raising the earnings disregard for the unemployed, even though they have brought unemployment benefit into tax, and they have shown themselves much more timid incidentally on tax credits than have some of their supporters.
The Government have several packages on offer. There is the CBI's, there is my party's and there is this one, the one contained in the report. In fact, they are not really packages at all but open baskets, each containing one or more of the others' wares. That does not mean that the Government can simply saunter by, toying with one or other of the cheaper items of merchandise and dropping the more expensive in distaste because they do not conform with some tenet of neo-classical economic theory, or would not fit into some Treasury model simulation of the economy that is completely incomprehensible to the British public at large.
If the Government are even faintly serious in their protestations of distress over unemployment, they must set their sights on 1 million new jobs. Anything less, will make very little impression. Even that million, which is achievable, will not knock 1 million off the present figures because the structural sea-change—or should I say North Sea change?—in our economy is not yet completed and there will be other job losses on the way. I suspect that my noble friend Lord Roberthall—who, incidentally, made a notable contribution to Chapter 5 of the report—will have something to say about that when he speaks on the macro-economic side.
What it would do is knock 1 million off the grand total we shall otherwise have in two or three years' time, and that would be an important achievement; it would reverse the relentlessly upward thrust of the official figure and give the British public some hope, some smell of better things to keep them going, while the longer-term effects of education and training and other supply and demand side remedies are working through the system.
This is no matter for party political one-upmanship. I can see that the Government might be chary of the advice of a single pressure group or a single political party, but the outstandingly important thing about the proposals in this report is that they are all-party; every one in the committee had to put some cherished belief or bête noire on the shelf. The result is not a soft-centred consensus but an achievement in hard-headed, well-wranged compromise, and I saw it blow by blow. The Government would be extremely unwise to disregard it. We must put the urgency back into the attack on unemployment.
4.49 p.m.
Lord Kaldor: My Lords, like the noble Lord, Lord Kilmarnock, I wish to begin by congratulating our maiden speaker, the noble Baroness, Lady Carnegy of Lour, who made an extremely able and erudite contribution. She comes from a country where, in my view, education is much more sensible and well directed than in the rest of the British Isles, and therefore she is able to speak with special authority about the numerous ways in which we can improve

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vocational education and thereby improve the abilities and skills of people in industry.
The committee, too—and chiefly its chairman, the noble Baroness, Lady Seear—must be congratulated for producing in a short period a very solid piece of work, extending to a history of unemployment, a review of the theories of unemployment, and to assembling a vast amount of statistical material on the costs of unemployment, its social effects, as well as a detailed review of possible remedies. In my view it is all the more regrettable that the committee missed its target as regards the basic causes of unemployment, and the causes of its aggravation since 1973.
I think that it is true, as it is true in medicine and everything else, that one cannot find the right remedy without giving the right diagnosis; and the right diagnosis the committee certainly failed to give. Indeed, the noble Baroness the Leader of the House in her speech came rather nearer to it than did the report. The section of the report which comes near to it is that which discusses United Kingdom export performance, looked at from two different points of view: exports as a share of the national income, and exports as a share of world trade. These two measures of performance appear to yield widely divergent results.
I do not know how many of your Lordships took the trouble of bringing with you a copy of the report, but if you did I would ask you to turn to page 42 and Table 6, about which I have much to say. This is a very important table. Unfortunately, the table is marred by a bad misprint. On the very top row the year 1963 should read 1953. Until I discovered that it gave me quite a headache. Actually it is obvious that it refers to 1953, since 1963 appears again two lines lower down. Thus the table covers a period of 26 years up to 1979.
If your Lordships take the first of these two measures—exports as a share of national income—we seem to have done frightfully well. Comparing the initial year, 1953, with the final year, 1979, we see that the share of exports in our total national output has increased in a most remarkable fashion—from 24.3 per cent. to 33.4 per cent.; in other words, from less than a quarter to just over a third of total output. As your Lordships will see, most of the improvement occurred after 1973. The rise in share up to 1973 was only from 24.7 per cent. to 27 per cent. Whereas at the earlier date, one in four of everything produced in this country—and I think that, judging from their source, the figures relate to manufacturing industry only—was exported abroad, by 1979 one in three of everything produced was exported. That is a very significant difference.
But any glowing feeling of pride and satisfaction derived from these figures is badly shaken by a glance at the second column of the same table, which shows that over the same period we lost more than one-half of our share of world trade in manufactures. Whereas in 1953 we still accounted for 21·2 per cent. of the whole world trade, the share fell to less than 10 per cent.—to 9·7 per cent. to be exact—by 1979. The figures do not go much further, but I do not mind disclosing to your Lordships that since then the share has fallen by a further 20 per cent. and is now just over 8 per cent.
That Britain's share of world trade has a diminishing trend is a long-established fact. It was first noted in the 1880s—100 years ago. But then, and for
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many years afterwards, people took comfort from the fact that a fall in our share of trade was an inevitable consequence of the spread of industrialisation to other countries. There was a time when Britain was the only country to produce factory-made goods. Then our share was necessarily 100 per cent. of "manufactures", if we confine the term to factory-made goods and exclude hand-made goods.
We could not prevent other countries from following our example. Indeed, we actively assisted in the process by sending out our engineers, our skilled workmen, by establishing factories abroad, and sometimes by providing them also with the necessary funds through the City. Thus our share of world trade was bound to fall, but that was not regarded as a source of great worry, because it was thought—and, up to a point, rightly—that the size of the market is increased pari passu with the expansion of the number of producers.
But this kind of complacent attitude will not hold water if applied to the post-World War II period. For there it can be seen that all other industrial countries—with the sole exception of the United States—managed to keep their share, or even to increase it, during the same period in which our share of trade was halved. Thus between 1953 and 1979 France's share increased from 9 per cent. to 10·4 per cent., Germany's share increased from 13·3 per cent. to 20·7 per cent., Italy's from 3·3 per cent. to 8·4 per cent., and Japan's from 3·8 per cent. to 13·6 per cent.
Clearly, while Italy and Japan were exceptional in more than doubling or trebling their share of world trade, so were we exceptional. Nobody else in the world has diminished its share by one half, or anything like it, during these 26 years. Yet nobody else seems to have been as successful as Britain in increasing its share of exports in total output—not even Japan, I believe. We have increased it to 33 per cent. Ministers make speeches all over the country saying that there is no other middle-sized country—neither Germany, nor Italy, nor France—which exports such a high share of total manufacturing production as we do; and that is true. For Germany or France the figure is only 20 or 25 per cent.
How is this paradox to be resolved? It can be resolved, and can be resolved only—I am sorry that the noble Earl, Lord Gowrie, is not here, because I think that his intellectual powers are adequate to understand what I am going to say; I am not sure about everybody else—on the basis of Sir Roy Harrod's theory of how foreign trade is brought into balance. Put quite simply, the theory says that imports are brought into balance with exports through changes in the total effective demand; meaning by the term "total effective demand" the sum of home demand and foreign demand. This is not on account of deliberate policy measures, but because businesses naturally contract their operations whenever new orders fall short of current production; and, equally naturally, they expand their operations whenever the flow of new orders exceeds current production.
Harrod then shows that the first state of affairs—the tendency to contract operations—is a result of an excess of imports over exports; and the second state of affairs—the tendency to expand—is the result of the opposite. Harrod's contention was that it is through

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such movements in output that foreign trade is brought into, and kept in, equality. Since imports vary in direct proportion to home income (while exports vary with world income) these tendencies imply that a country's economic growth relative to other industrial countries—that is to say, its growth of capacity and its growth of productivity and of employment—will tend to diminish or increase accordingly as the yearly percentage rise in imports exceeds or falls short of the percentage rise in exports. That is the really fundamental point on which the whole question of unemployment hinges.
To resolve the paradox in Table 6, the left-hand side of which is good news and the right-hand side of which is bad news, we must ask what happened during these years to actual exports and imports. What do we find? We find that between 1953 and 1979 the volume of British manufactured exports increased threefold, which I think is quite a respectable figure. But the volume of manufactured imports increased 12.9 times; that is, four times as fast as the volume of exports. The result of this discrepancy was that the level of total manufacturing output over the whole period increased by only 85 per cent.—that is to say, production increased by less than a third of the annual rise in exports and by less than a sixth of the annual rise in imports.
What I am contending is that the shortfall in the growth of production over the growth of exports is nothing more than a mirror image of the shortfall in the growth of exports over the growth of imports. The two are connected; and if your Lordships were used to having a blackboard in this Chamber, as at a seminar, I could demonstrate it by means of simple equations.
The fact that imports expressed in terms of annual rates rose at just over 10 per cent. a year during the whole of that period was consistent with exports rising at only 4.7 per cent. a year, because, and only because, total income (or output) rose at only 1.9 per cent. a year. We had a very low growth rate of production because our growth rate of exports, although it was much higher than our growth rate of output, was so much less than our growth rate of imports. Every year more of the income generated by domestic production was expended on imports and less of it returned to the producers, who originally laid out the wages and salaries which provided the source of demand. Therefore, the producers naturally found that orders did not expand fast enough; on the contrary, they consistently fell short.
Whereas if, one way or another—there are many ways, but one way or another—we had had a situation in which imports had risen in proportion to the rise in total output and no more, total output would also have risen in proportion to exports and no less, which in our situation means that both exports and imports, and total production, would have risen around 5 per cent. a year instead of 1.9, 4.7 and 10 per cent. respectively. In that event our output between 1953 and 1979 would have increased by 255 per cent. instead of the 85 per cent. actually achieved. That is to say, we had it in our power to increase three times the rate of growth of total production, if only we had kept the growth of imports down to the requisite level and not allowed it to exceed it.
The fact that the United Kingdom's propensity to
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import foreign goods was so much higher than the world's propensity to buy British goods meant that our total output could rise at only a fraction of the rate of growth of our exports—a fraction which tended to diminish as the volume of imports took up a steadily rising part of total domestic demand.
Hence the rise in the export ratio from one-quarter to one-third of total output, which I referred to before, from 25 to 33 per cent., is a sign not of strength but of extraordinary weakness. The export ratio was rising not because exports were rising fast but because total production was rising so much more slowly. After all, a ratio is a ratio, and it depends on both the numerator and the denominator how it moves. Production rose far more slowly than exports, and a fortiori far more slowly than imports. In fact, it is interesting to note that the large improvement in the export ratio—again, please look at Table 6 on page 42—occurred in the six years from 1973 to 1979. That was a period during which the growth of manufacturing output was negative, being minus one-half per cent. a year, and the growth of exports was only half as large, at 2.8 per cent., as during the previous 20 years.
No doubt Sir Geoffrey Howe is formally correct in repeating on every possible occasion that both of these phenomena—fast growth of import penetration combined with the slow growth of export penetration—are manifestations of the same thing; that is, the fact that consumers, whether home consumers or foreign consumers, increasingly prefer foreign goods to British goods. We suffer from what the Government call "supply side difficulties". That is almost Her Majesty's Government's favourite expression; and by "supply side difficulties" they simply mean that British producers find it more difficult to sell, either in the home market or in foreign markets, than foreign producers, and therefore their share of the market is shrinking both abroad and at home.
No doubt this is true, but it is the duty of the Government to help British industry to get out of this situation, and this is what the present Government are manifestly not doing; or they are doing it on the theory that if you want to cure a man of pneumonia the best thing to do is to expose him half naked in the middle of a cold night to a rainstorm.
Owing to the importance of economies of large-scale production in manufacturing (which are very important but very little emphasised) both comparative success and comparative failure have cumulative effects. If we want to make British industry more successful we must begin by improving its market prospects, and this requires a limitation on the growth of imports, of the kind that we are already applying in connection with Japanese cars. Japanese cars are the one case where we operate a market penetration ceiling, at 10 per cent. We tell the Japanese that they must not sell more than 10 per cent. of the total car sales. They do it voluntarily, but obviously they do not do it because they like doing it.
We must improve the market prospects also by ensuring a competitive exchange rate; that is, we must ensure that British goods are not in general handicapped by high unit costs owing to the overvaluation of the pound. The best example of the artificially high value of the pound is that you can buy

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a motor-car, either a British or a foreign car, in any continental country at 20 per cent. or 25 per cent. cheaper than you can buy it in England.
The problem of unemployment appears insoluble so long as we are not prepared to tackle the problem at its source. Tackling the problem at its source means eliminating the disparities between the growth rates of imports and exports. Unlike many other speakers, I do not regard this as an insoluble problem; I do not regard it as a terribly difficult problem, and neither do I regard it as a problem for which you have to do hundreds of different things, as enumerated in a long list of things recommended for alleviating unemployment or its consequences. I think that once you solve the problem of keeping down the growth of imports to the growth of exports, then manufacturing production will pop up to equality with the two growth rates and you will find unemployment literally melting away. You do not have to do anything about it. It will just melt away of its own accord—without special skills or vocational schemes or job splitting or all the hundreds of other things that the Government have in contemplation. And you will be surprised at how quickly it happens.
I wish to end by giving just one example. At the end of the war, everybody—and I was one of them because I was there—was extremely pessimistic about the future of Western Germany. It was an over-populated country; how on earth was it going to live? Then it had to absorb 4 million expellees from East Prussia, Silesia and from the Sudetenland. Much to everyone's surprise, in a very few years in the 1950s it absorbed them, because its exports were growing faster than its imports and therefore domestic production had a double engine to enable it to go forward very fast. Then the expellees ran out and they came up against a labour shortage. What did they do? They lifted the barriers and let in, first, the Italians and then, when there were no more Italians, the Spaniards. When there were no more Spaniards, they let in the Greeks and, finally, the Turks. So with 4 million people in addition, 40 per cent. of the manufacturing labour force was comprised of expellees and the so-called guest workers. In other words they had over-full employment of 40 per cent. Nobody had planned it; it just happened by itself—and it happened because the exports grew faster than the imports.
My Lords, I submit that, if people want to solve the unemployment problem, then the remedy is in their hands. I can think of five different schemes by which the growth of imports can be kept down to the level which would enable unemployment to be absorbed.
5.13 p.m.
Lord Vaizey: My Lords, I should like to congratulate my noble friend Lady Carnegy of Lour on her maiden speech and I must also express my admiration for the noble Baroness, Lady Seear, for her chairing of the Committee. It was, indeed, a marathon. One remembers that the good Abbe Sieyès, when asked what he had done during the revolution, replied, "J'ai vécu"—"I survived". I cannot help thinking that that is the motto that is on the escutcheon of the noble Baroness. Rarely can a committee have been so subject to the infirmities of the flesh and of anno domini. The right reverend Prelate the Bishop of Worcester retired in good health; the noble Lord, Lord
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Spens, was severely ill twice; the noble Lord, Lord Drumalbyn, resigned; I had a heart operation which rendered my heart even more steely than it was before; the noble Lord, Lord McCarthy, presided over innumerable tribunals, giving more and more to more and more railwaymen and others. And so we went on and eventually it drew to a close.
Every shade of opinion was represented, from the ornithological far Left—who I regret is now ill—to the episcopal purple; and two disciples of the former Prime Minister, Mr. Heath. The only people not represented were Her Majesty's Government. I did not represent Her Majesty's Government. My noble friend on the Front Bench does so while his noble Leader wines and dines with two Queens; so we shall expect him to reply to the noble Lord, Lord Kaldor, since Lord Kaldor said, rightly, that the noble Earl is one of the few people with a powerful enough intellect to comprehend the argument.
I want first of all to concentrate on the areas of agreement on that committee. About the horror of unemployment, we are all united. I will not waste words on that because others have already said it better. I merely say, "Ditto, with knobs on", about what they have said. It is indisputable that unemployment is not what the headlines make it seem. In any period of time, large numbers of people are unemployed and large numbers of people return to work, as the noble Baroness said in her maiden speech. Much measured unemployment, therefore, is the gap between leaving one job and taking another and, for the majority of the unemployed, what is actually happening is that the gap between leaving one job and taking another is increasing.
It is not quite true that there are two nations, the employed, on the one hand, and the unemployed, on the other; because a lot of unemployed people become employed and a lot of employed people become unemployed. Nevertheless, as has been said, there are between 1 million and 1½ million long-term unemployed. These people are in the vulnerable group, as the noble Lord, Lord McCarthy, has correctly said, and I, personally, think that special measures to deal with the problems of these groups are worthwhile, desirable and possible.
There is, I must say, a distinction which was drawn in the report and in the evidence between "work" and "jobs". I think that people have a need both for jobs (because they give them income and because they give them a position in society) and for work, which is not quite the same thing; and there is scope for an increase in voluntary work. When we read about vandalism in tower blocks, I am struck by the fact that, after all, rich New Yorkers live in tower blocks. They do not suffer from vandalism in the tower blocks because they have porters and liftmen and so on. There really seems to me to be scope for more and more people who live in tower blocks and are unemployed to put themselves on a rota and do these kinds of jobs voluntarily. I give that as a particular example of an area where I myself think there is scope for voluntary work which, although it is not a job, would be beneficial to society in general and to the unemployed in particular.
I turn now to the crucial question which the noble Lord, Lord Kaldor, alone in the debate, has tackled—whether the long-term unemployment will endure and whether it will get worse. I think I should

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like to point out that the number of people seeking work has been increasing, notably with an increase in the proportion of married women; and there has been a very substantial immigration into the United Kingdom. This growth in the labour force is, I think, coming to an end through natural causes; it has a natural limit. The numbers in the age groups up to 16 are falling, although of course they will rise towards the end of the century.
The question I really want to address is whether or not the total number of jobs will decline in the longer term. I venture to disagree with the noble Lord, Lord Kaldor, although I would not dream of doing so in a seminar because he would probably annihilate me. So, let us thank goodness that there is not a blackboard in your Lordships' Chamber yet. I myself think that manufacturing industry in this country and in the rest of Western Europe is bound to decline. I think that heavy jobs in coal-mining and steel will diminish and I also think, and have long thought, that mass manufacturing has a declining future as a source of jobs in this country. I do not think that this is a new view; it has been a commonplace of long-term economic forecasting for many, many years. Mr. Colin Leicester produced a famous report for the old Post Office—now even worse under the name British Telecom—which forecast exactly what is now happening with these manufacturing jobs; and manufacturing industry is drifting to Brazil and other newly-industrialising countries. I cannot help feeling that, viewed analytically, Britain, like other Western European countries, is now a service economy of which for the greater part manufacturing industry is a subsidised appendage.
In my view, the argument turns on when will the service trades turn upwards. I think that the present slump has already bottomed out and that jobs will follow. But we all know that there is about a 21 -month time lag between the bottom of the slump and the period when you get to the bottom of the employment cycle.
I think that the question which I should like to address—after all, the committee was about long-term remedies for long-term unemployment, so the long term is the question that we were addressing—is whether the next boom at the end of the 'eighties, which will be a high consumption boom, will also be a high employment boom. That depends on the nature of the recovery. Perhaps the word "recovery" is wrong. Perhaps we ought to talk of transformation of the economy. Last week, in the economic debate, I argued that periodically the world economy goes through one of these troughs, which Schumpeter called a gale of creative destruction, and which were analysed in detail by Kondratieff, whose work has been revived by a young Irish economist, whose PhD I have just been examining. The point of this excursion into the realms of high theory—some might think dotty theory—is that each previous trough has been followed by a boom in capital investment. New trades, new areas, develop, and it saves brute labour, raises real wages and increases the number of jobs. That so far has been the general story. I do not think that joblessness is inevitable if you take the real long run, though it may well be—and this is very serious and worrying—for the next five or six years.
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Supposing we look ahead towards the end of the decade. Where are these jobs and what are they likely to be? The short answer to this question is that we do not know. If we knew, we could buy shares in the firms concerned which are going to boom and we would all be incredibly rich. Obviously, nobody knows and we all have to guess. Businessmen have to gamble. I am agnostic about the exact nature of the jobs which will be coming at the end of the 'eighties but I will say this: I am convinced that they will be in the service trades rather than in manufacture. They will be in services which are internationally traded. There are certain to be jobs which are available for the more rather than the less skilled. The robots will take over the dull, repetitive work and leave the jobs where judgment and ingenuity are required.
If I am correct—and naturally I would not say it if I did not think I was—then that means that certain important aspects for long-term Government strategy must be thought about. I agree very much with my noble friend Lady Young and with my colleagues on the Committee about the importance of competitiveness. I am quite convinced—contrary to what the noble Lord, Lord McCarthy, appeared to be saying—that measures to improve the competitiveness of the labour market are absolutely at the heart of any long-term strategy for curing the problems of unemployment. But I do think that there are other factors. I think that the time has come to look long and hard at the array of subsidies for manufacturing, especially the so called regional policy. Firm after firm (subsidised to the hilt to go to the old declining areas) has gone "bust". Sixty years of regional policy have failed.
I agree with Professor Peter Hall of Reading University that we should back success as other Western European countries have done, and that means backing the service trades in the more prosperous areas and, if necessary, helping people to move out of declining areas. They have already left the declining areas in extremely large numbers—in their millions—and the proof of that, if people do not believe it, is the successive redrawing of boundaries for constituencies which has eliminated dozens of constituencies in the older industrial areas of the country over the past 30 years.
As many of us said in the economic debate, we need to keep international trade going. I am opposed to the imposition of tariffs by a country which is as weak in manufacturing as we appear to be. I reiterate the call that the noble Lord, Lord Soames, made last week for a new world agreement on exchange rates. It seems to me absolutely vital that if we are to make any effort substantially to increase output, young businessmen of all kinds need encouragement. The report goes into this and I find that its arguments are very convincing, and many of the measures which the Government have taken are well worthy of support.
I am on the panel of the Bowmaker awards for small business achievement and I think that if other noble Lords sat on that panel they would be as astonished as I am at the immense variety and inventiveness of a very large number of youngish people who set up business for themselves, and it is extremely important that we should encourage people to set up in business for themselves rather than to seek a steady career in some bureaucracy, whether that bureaucracy be

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private or public. For many years it has not been very respectable to do that. That has really been much of the source of our trouble.
I also agree very much with the Government and with the report that the important point is the shortage in this country of skills, and that training needs to be encouraged. The Government have already done much. I was one who favoured the merger of the further education and higher education branches of the Department of Education and Science and the training parts of the Department of Employment into a new Ministry of skills. On reflection, I think the Prime Minister was right in disapproving of playing around with the boundaries of Whitehall departments. She took a major step, however, in appointing my right honourable friend Sir Keith Joseph to the Department of Education straight from the Department of Industry, and in appointing Mr. Norman Tebbit at the Department of Employment. They have brought out the substance of the policy in this new training programme which, if fully implemented, could revolutionise education in this country. I only hope that the quasi -autonomous bodies which report to the two Secretaries of State—the Manpower Services Commission and the University Grants Committee—do not drag their feet in this area.
Last but not least, I must say that I do not share Lord McCarthy's enthusiasm for the long-term, low cost, group-selective job creation, about which he talked at some length. In my less charitable moments, I sometimes think of it as the "let's subsidise NUPE" scheme. The proposal comes down to giving non-jobs in the health service to thousands of people doing jobs which those people in the health service already do not do very well. What the National Health Service suffers from is appallingly bad management at all levels. It is grossly over-manned in consequence of this bad management and what it needs is far better management and, in my opinion, far fewer workers. Nobody, so far as I can see, has been all that badly affected by the strike.
It is really not desirable in my opinion in the interests of long-term productivity in this country, which depends upon good management, to spread bad management habits, to subsidise people to take on all and sundry on the grounds that it is cheaper than paying them unemployment benefit. That way lies the total demoralisation of all kinds of management, and to do it in a health service which has already been subjected to reform by the Government of Mr. Heath and bad management under the previous Government seems to me to be something that I could not conceivably support. That was why I fundamentally disagreed with the report of the Select Committee which the noble Baroness chaired. I did not disagree with the analysis or with many of the recommendations but I did specifically disagree with that, because I think that what is wrong with the country in this particular field lies much more in the hands of management than of any other single group in our country.
When this House is reformed, I suppose the select committee system will also be reformed. Obviously then the spurious search for unanimity will go by the board. I would have preferred to have set out my dissent far more lengthily and much more carefully
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argued than I have been able to do in what has proved to be the longest speech I have ever made in this Chamber—though it is the shortest speech that has been made so far in the debate. But, until that day when newly-elected people take our old seats and all the old bad habits are cast out, we have to do our best. I have tried to do my best by saying quite candidly where I disagreed with my colleagues in these three vast years of taking evidence and reflecting on the report.
I think the analysis is first class. When I first came to this Chamber seven years ago a friend of mine (whom I see in the Chamber) once said to me: "Don't say anything in the House of Lords you can sell to the newspapers for money." I think that was sound and wise advice and in line with the argument which, generally speaking, I have been presenting in my speech this afternoon, which is that we should be more businesslike. But I have chosen to ignore it both this afternoon and, as I hope the noble Baroness will agree, also in my contributions, such as they were—and I know they sometimes irritated her—in the Committee.
Lord Ardwick: My Lords, before the noble Lord sits down, may I ask him to extend his speech a little further? How does he reconcile his statement, if I heard it correctly, that he regards the future of industry not only in this country but also in Western Europe as a subsidised appendage of a service society with his desire for the continuance of world free trade?
Lord Vaizey: My Lords, I think it is a general truth that manufacturing industry in this country not only pays comparatively little corporation tax—of course I may be quite wrong in saying that, but that is my judgment—but also attracts very substantial subsidies of one kind or another. We also have a rather higher proportion of manufacturing industry than many of our richer neighbours, such as the United States, for example. So I do not see any contradiction in that, as a matter of fact.
5.33 p.m.
Lord Wolfenden: My Lords, let me first say what a very great privilege I think it was that the noble Baroness, Lady Carnegy, should make her maiden speech in this debate. We were all, I am sure, profoundly impressed by her knowledge and her concern, and I hope we shall hear her many times more. I was myself particularly rejoiced because she anticipated in what she said a good deal of what I was proposing to say—which means that my contribution this evening can be even shorter than it was going to be originally.
I am not an economist; I am not a technologist; I have never belonged to any political party. It may, therefore, well be wondered how I have the temerity to take part in this debate or indeed to have sat on the committee presided over with such distinction by the noble Baroness, Lady Seear. It was for one reason and one reason only. I have spent practically all my working life in education of one sort or another, and it is against that background that I venture to make just one point as briefly as I possibly can.
One chapter of our report (Chapter 11) deals with education and training, and, since the report is

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concerned with long-term remedies, I think it is reasonable that there should be some concentration on these facets of our problem. It is widely accepted that, in these fields, as they relate to work, we lag far behind our competitors both inside the EEC and outside it. I am not going to waste your Lordships' time on semantic controversies about the precise meaning of the words "education", "training", "vocational", "academic", and the differences between them. Far too much time has been spent in the past on these barren arguments—their barrenness proved by the simple fact that for some of us a thoroughly rigorous academic education turned out to be totally vocational.
A good deal has been written in recent years about education for life, education for leisure, education for a changing world and even, in one splendid book, education for "a world adrift". May I suggest that it is high time we began to think and write seriously about education for work? Chapter 11 sets out the frightening figures and refers sadly to the broken bridge between education and the world of work. I am not going into details about whether secondary schools, sixth form colleges, tertiary colleges, colleges of further education, universities or polytechnics, or even a combination of them would be the best institutions to provide what we need. My simple plea (simple-minded if you like) is that all those concerned—schools, local education authorities, employers, trade unions and even, if I may dare to say so, the multiplicity of government departments and agencies rather untidily involved—could collectively give their minds to framing a synthesis, a strategy, a policy, which will build bridges between education and training and between both of them and work, so that all the very praiseworthy initiatives which have already been undertaken—and I do not undervalue them at all—may be welded into a coherent scheme of education and training for work.
Obviously there are practical problems—educating the educators, training the trainers, learning each other's languages across the chasms where bridges do not at present exist—but the first essential, I suggest, is that all the parties concerned should clear their minds about the objective. The second essential is that they should all collaborate in a united strategy for relating education and training to work. Only so, I submit, shall we begin to be competitive in the world market and to provide work for those who are going to grow up over the years to come.
5.38 p.m.
Baroness Lockwood: My Lords, I, too, should like to congratulate the noble Baroness, Lady Carnegy, on her maiden speech. The constructive nature of the speech, I think, was much appreciated by the whole of the House and I certainly agree with the sentiments she expressed when she said that education and training represented one of the most important aspects of the subject we are discussing today.
I should like also to congratulate the noble Baroness, Lady Seear, and her committee on their very comprehensive and penetrating report. It brings out the dilemma facing us: first, the need to become competitive, which requires investment in capital-intensive industries and particularly in the new
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microtechnology field and, secondly, the need to bring down unemployment speedily, which requires investment in labour-intensive areas.
In the debate on economic and industrial affairs last week the Minister, the noble Earl, Lord Gowrie, who replied and who will be replying again today, said that,
"On the central issue of jobs, we must now get a debate going on the distinction between social and economic needs".—[Official Report, 10/11/82; col. 346.]
I think the committee accepted that very real distinction, but they concluded that both needs must be tackled simultaneously; and the noble Baroness this afternoon underlined the need for simultaneous action. We just cannot afford for one to await the outcome of the other.
That conclusion is supported in another report which has been referred to in the course of the debate this afternoon; that is, the report of the CBI's steering group on unemployment. Perhaps all the particulars in that report are not the same, but the main thrust of the report is the same. Incidentally, I may add that it is backed by an excellent film which also brings out the social and practical implications of the problem. The need for simultaneous action was also supported in the debate last week by many noble Lords, including the noble Viscount, Lord Caldecote, and the signs are that the Government, too, are beginning to move.
In her introduction the noble Baroness, Lady Seear, commented that, perhaps, the point at which the committee diverged from the Government was on timing. I would say that this problem is one of the most urgent that the country has faced since the end of the war and that we must move quickly. But other noble Lords will be continuing this argument and I want to concentrate the remainder of my remarks on the supply of labour.
First, I want to welcome the recognition in the report of women as an essential part of the labour force, central to the problems of coping with unemployment and training for new skills, and not a peripheral sector to be dispensed with when unemployment among males grows. The noble Lord, Lord Kilmarnock, referred to some of the comments which have been made in this House in previous debates, and which were no doubt made during the discussions of the committee, because I note that the noble Lord, Lord Spens, was a member of the committee. I can only hope that, as a result of the deliberations of the committee, we shall not have from him some of the comments about the return of married women to the home that we have had on previous occasions.
As I say, the report, by its implications, rejects this; so does the CBI's report and so do the Government in their response. Therefore, we start from the premise that the economic activity rate among married women has risen very considerably, and that it will remain more or less as it is at the present time at around 50 per cent. Future projections indicate that it might vary slightly, but such variations will largely be concerned with demographic factors. If this is so, it seems to me that it is foolish for us to accept the fact that the numbers of unemployed among women are largely hidden.
The noble Baroness the Leader of the House quite fairly referred to the fact that the percentage of unemployed among male workers is higher than

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among female workers. She went on to say that the time when the rise in female unemployment was growing more rapidly than the rise in the rate of male unemployment coincided with the time when we were still getting an increase in the actual number of women in employment. Therefore, I suggest not only that we were getting an increase in the numbers of women in employment, but that there is also a hidden reserve among married women who have not yet come into employment and who have not been included among the registered unemployed.
The unemployment figures only partially reveal the position of women. The report points out that, from March 1980 to March 1981, the number of women in employment fell by some 445,000 but the female unemployment statistics rose by only 240,000, which means that 200,000 women were lost sight of in our economic activity rate in the course of a single year. That figure can be multiplied and has no doubt increased since that time.
I suggest that the new scheme of voluntary registration among the unemployed will not help the situation either. Indeed, it will probably accentuate this disappearance of women from official statistics. First, many women, because they have opted out of paying full national insurance contributions, will not be entitled to a benefit and therefore they will not register. Forty-three per cent. of women who are working are part-time workers, and if they become unemployed there is not much point in their registering. They will not be entitled to any benefit, because they will not be available for full-time employment, nor will they be included in the statistics, because the statistics deal only with full-time employment. Therefore, that is another area of women that we lose sight of once they become unemployed.
I feel that the committee's excellent suggestion of more in-depth counselling will not touch women either, because one of the groups that is most in need of such counselling is that of married women returning to the labour market, and, for the reasons I have explained, many of them will not be registered as unemployed and, therefore, they will not be taken into account for counselling.
I think we ought to recognise that the growth in the numbers of married women in the work force has brought greater flexibility into our employment patterns, and that that is something to be welcomed. They have broken the former rigidity of the five-day, 40-hour week, and this is surely something of which we need to take account in our planning for the future. Certainly, I suggest that the importance of this new flexibility is something which is recognised by employers, who are only too anxious to take avantage of part-time employees for crucial points in their daily and weekly work performance. It must be recognised by the Government, because we have had the introduction of the new job splitting scheme, and the whole question of more flexible patterns of working is something which is today being considered by the European Economic Community.
But our new scheme for job splitting will, I am afraid, again not be of much help to married women because the new scheme for job splitting is for the registered unemployed and for the full-time worker who may become redundant—two areas which will
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exclude most of the married women. I shall not go into that point this evening. Shortly there will be another occasion when we can discuss that kind of problem. It is a fact, however, that our manpower forecasting, our economic and social planning, must take much more account of this new element in the labour force than it has done in the past.
Secondly, and very briefly, I want to welcome the comments in the report and the emphasis that has been placed on the need to assist women to compete on equal terms for skilled and responsible jobs. Of all the schemes to withdraw numbers from the labour force, those concerned with educating and training are, I submit, the most important. They will be the most rewarding in the long term and they are essential if Britain is to become competitive with her European neighbours. The Government's response has quite rightly referred to the excellent initiatives of the Manpower Services Commission. All I would say about that to the noble Baroness, Lady Carnegy of Lour, as I have said to the chairman of the Manpower Services Commission, is that we need to move from the pilot stage towards full-scale schemes to cover more people.
Next may I refer to the youth training scheme which, despite all the shortcomings, is one of the most promising bases for future development in training. It has removed some of the elements from training which in the past have militated against women and girls. One example of this is the long-term continuous apprenticeship system which is now being replaced by the modular scheme. It is very much to be welcomed. However, it is no good just hoping that girls will take advantage of the scheme. We must ensure that the sponsors, the project managers and the careers service are conscious of the need positively to encourage girls into the skilled areas of the manufacturing sector and particularly into the new skills in computer and microtechnology. The YOP scheme tended to reinforce the traditional pattern of girls' employment and boys' employment. We must ensure that the youth training scheme does not do this—similarly, with the very important micro-electronic programme for schools.
This is a very exciting area. The fact that the United Kingdom has said that it will have a computer in every school puts us ahead of our European neighbours, but already we are seeing the need positively to encourage girls to use the computer as much as the boys are doing. If we are not careful, the girls will be crowded out. Perhaps I may give an example. One local education authority has decided that computers will be placed in the humanities department of schools and not in the science department, for the very reason that if it is in the humanities sector it is likely to be used more by the girls and to encourage women teachers to be trained in the use of the computer. Both of these factors are of extreme importance.
Similarly, in the information technology area we have evidence of the fact that fewer girls than boys have gone into the new information technology centres and that where girls have gone into these centres they have concentrated on the office skills section of information technology instead of moving around and getting a taste of all the training aspects which are available.

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While, therefore, these new developments are both exciting and promising for the future they will not of themselves bring about the equal opportunities which the committee commented on. As I say, we shall have to be much more positive in our approach if girls are to take full advantage of the facilities. I hope that the Government will bear this in mind.
5.56 p.m.
Lord Carr of Hadley: My Lords, first may I ask for your Lordships' indulgence. I shall have to leave the House at about 7.15 to take the chair at a dinner which was fixed long before the date of this debate. I can only assure your Lordships that it is not a social occasion and that I shall make a point of coming back after the dinner in the hope that I may just be in time to hear the winding up speeches.
Secondly, may I also add to the praise and thanks which have been extended to the noble Baroness, Lady Seear, for her outstanding chairmanship of this very difficult committee—a difficult subject, though not, I hope, all that difficult in membership—and for the way in which she introduced our report. May I also include in that thanks and praise the great support which we received from the clerk. I should also like to congratulate, as have other noble Lords, my noble friend Lady Carnegy of Lour on an outstanding maiden speech. Obviously she spoke from great knowledge and experience. I can only say from my own experience that everything which she said was both valid and important.
May I say to her and to all noble Lords, as chairman of the CBI's special programme unit which was set up to try to stimulate industry to help in the training of young people, first in the YOP scheme and, secondly, in the future Youth Training Scheme, that we in industry are going about this with vigour and determination in order to try to make sure that the opportunities provided and the content of the new programme will lead to the success of the scheme. The difficulties are great, both in the quality of the scheme required and in the speed at which a vast number of places have to be found; but I am encouraged to find that a growing number of companies all over the country believe that this scheme is a very important development which deserves to be taken seriously.
What I want principally to say tonight revolves around two general but fundamental propositions which are contained in this report. First, the primary and only permanent remedy for our present deplorable state of high unemployment is to make British industry more competitive. Not only manufacturing industry, although principally that, but also our service industries and our financial industries—indeed, all our business activities—must become more competitive. The second general but fundamental proposition is that the present level of unemployment is intolerable. It is not just deplorable; it is intolerable. I was interested and glad that the noble Lord, Lord Kilmarnock, drew attention to the fact that in some strange way—rather as we have now ceased to be shocked as we once were by the terrible violence, terrorism and death in Northern Ireland—we are now in danger of becoming somewhat too tolerant of the present level of unemployment. It is intolerable.
Both of these propositions, in my view, are essential and inseparable. Therefore there is no easy remedy,
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and the road back towards full employment is bound to be a long—I fear a very long—and hard grind. But that seems to me to be all the more reason for the people of this country to see and to feel that their Government are absolutely committed to it. I do urge the Government to use this debate as an opportunity to make an unequivocal commitment to both of these propositions. There is no doubt about their commitment to the objective of competitiveness, but I am afraid to say that there is genuine doubt about their commitment to the proposition that the present level of unemployment is intolerable. Yes, of course they are deeply concerned about it and deplore it—but do they really mean that it is intolerable? It is against that that too many people put a question mark. I cannot help referring to a speech made by a leading member of the Cabinet back in the summer, when he used this phrase, and, to put it mildly, the cool reception which his description of unemployment as "intolerable" appeared to receive from some of his Cabinet colleagues and from many of his supporters in the House of Commons.
Then I must refer to the Prime Minister's speech at Guildhall last night, when she claimed, rightly, that no Government have ever done more in terms of effort or commitment of money than the present Government are doing to minimise the impact of unemployment. That is a true and very important claim and the Government deserve very high praise for it. Unfortunately, the Prime Minister made no mention of a commitment to reducing the total of unemployed. Of course we all believe that is what she wants to see, but I believe that the commitment has to be open, specific and repeated. Moreover, I could not help noticing, and I am afraid regretting, that the statement made by the Chancellor of the Exchequer in another place last week maintained a fiscal stance which, as he admitted, is bound to result in a further increase in unemployment next year.
Now I come to the Government's recently published reply to the Select Committee's report. That reply, I fear, seems to be equally equivocal on this point. Their reply contains a great deal of good, sensible stuff with which I am sure the whole House agrees and welcomes. Certainly, much of it is in line with the committee's report and recommendations. Yet when I came to the end of reading it, I felt desperately that there was something missing—something missing in substance of policy and in firmness of commitment to the necessity for reducing the total of unemployment. It seemed to me that in that reply there was almost a studied refusal on the Government's part to meet head-on—either in order to accept or to refute it—the committee's argument that the long-term remedy of improving competitiveness should be partnered with measures of more immediate effect. That was a point referred to by the right reverend Prelate the Bishop of Lincoln in his speech. It is not just of humanitarian necessity to do something more quickly, but it is, in view of this non-partisan, all-party committee, a necessity in order to win that measure of general consent and support that is necessary to carry through what is a long programme of recovery, which is bound to be painful and one in which many people are bound to suffer in the short run.
This proposal for partnering long-term remedy with shorter term measures seems to be the main argument

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and conclusion of the committee which the Government, at least by implication, reject. I believe they are wrong to reject it. I urge them to change their mind. I believe most strongly that it would be possible to take measures that would halt the upward surge of unemployment without endangering the absolutely vital need to go on winning the battle against inflation.
I would like to devote the last part of what I have to say to the question of the long-term remedy of restoring competitiveness. To an important extent competitiveness is a matter of quality, design, service and marketing. All these matters are clearly the responsibility—in my view the sole responsibility—of industrial managers and not of the Government. But costs, and therefore prices, are also an absolutely vital part of competitiveness. It is on costs that Government policy can and does have a critical impact. Let me mention now some of the main elements in costs and prices, over all of which the Government have either a major influence or actual control.
First, and most important is the rate of inflation. I am sure that the Government were absolutely right to make this a clear top priority in their first two or three years of office. Unless they have that under control, nothing else can be done with success. But their success, which is now apparent, now makes other actions both possible and necessary. Secondly, there are wage costs. It seems to me at least that the Government started life appearing strangely indifferent to this terrible engine of cost inflation. I am glad to say that they now take a rather different view, although I notice that the Government reject what the committee call an incomes policy for the indefinite future. Let me say that I myself am not asking them to embark on some statutory incomes policy, but I do hope that we can now depend on them to set an example and to communicate facts, and to urge on all the people of this country that the limiting of wage costs to increases based on productivity is a vital part of our national salvation so far as dealing with unemployment is concerned.
Then there are tax costs, over which the Government have complete control. We in industry welcome the recent further reduction in the national insurance surcharge, but this still has a long way to go. So too has the undemocratic imposition and unreasonable degree of rates on industry; undemocratic in the sense that industry has no means of making representation before taxation. Now I move to the costs of financing business. Manufacturing industry in particular has suffered long and cruelly from high interest rates. The recent very substantial reduction is a most important and valuable blessing and assistance for the future, but I beg the Government to believe that lower interest rates are not a self-starter for the engine of growth. Once growth has started they are very high octane fuel in the engine, but something else is needed to start the engine.
That brings me to the one element of costs which I believe is neglected by the Government and which is certain to be of very great importance in manufacturing industry. I refer to the effect on unit costs of fixed overheads; that is, the servicing costs wrapped up in machinery and buildings. In my view, we in manufacturing industry are now in danger of some of our most efficient and highly-capitalised plant being faced with closure. One can work for a short
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time at below break-even point, but with a typical highly-capitalised, efficient plant the break-even point is very high—and to work for a protracted period of years significantly below capacity is in the end literally killing. I really do not believe that the Government have paid enough attention to the need to achieve a higher throughput for many of our potentially most efficient factories as an essential part of this remedy of making British industry more competitive. I believe increasingly strongly, while rejecting massive reflation, that something must be done to get the level of demand in the economy moving upwards.
The PSBR is of course a very important matter, but it is a matter very difficult to predict. Whilst enormously increasing or enormously decreasing the PSBR has a quick and dramatic effect, I very much doubt the measurable effect of very small changes. Indeed, as successive Chancellors have discovered to their cost, it is a figure almost impossible to predict with accuracy within £1 billion or £2 billion one way or the other. I believe it would be madness, and I support the Government in saying it would be madness, to support the policy of a major increase in the borrowing requirement. But I simply do not see the rationale for the particular figure chosen by the Chancellor at the moment compared with one marginally higher. If I had to take my stance on what I would call Shore's madness, or what I heard somebody else describe as Howe's meanness, in relation to public sector borrowing requirement, I would take it very much nearer to the level of Howe's meanness than to that of Shore's madness. But I believe it ought to be somewhat marginally higher than it is at the moment, and I think it is extremely urgent that the Government should make that marginal adjustment. I stress that I am asking for a marginal increase in borrowing requirement, not a major one. A major one would be disastrous.
So, in conclusion, may I say this, my Lords. The battle against inflation had to be given clear priority. It was a necessary precondition of doing other things. It was unavoidable that giving it that priority would in the short run have painful and temporarily depressing effects on the levels of employment. But now both the opportunity and the necessity to begin to act directly against unemployment have come, as well as the opportunity and necessity of continuing to act against inflation. So I urge upon the Government that we must now start to plan and to act for economic expansion; not sudden, large expansion but slow, gradual and persistent expansion. And we must act not only nationally but we should also take the lead internationally in getting both monetary exchange reforms and also a more expansionary thinking into our Western international economy and arrangements. If we do not, we are handing on a plate, in the long run, the very victory to totalitarianism and communism which we are devoted to avoiding. Unemployment may no longer, thank goodness, produce the crude, harsh visible poverty and despair of 50 years ago, but it still is surely a deadly cancer in our society when large numbers of our fellow citizens find it impossible to find work for months and even for years on end. So we must attack unemployment itself now, with urgency and determination, and I beg the Government to make sure that all the people of this country see that they have that commitment.
6.13 p.m.
Lord Spens: My Lords, may I also offer my congratulations to our chairman, the noble Baroness, Lady Seear, and express my admiration of the way in which she managed to bring together an enormous variety of views and get them put into a document which I think is fairly readable. The noble Lord, Lord Kilmarnock, mentioned the fact that the idea of our Select Committee was probably started off in a debate which I had the honour to introduce in June 1979. I took the opportunity of re-reading the speech that I made then because I wanted to check to see how relevant it is today. It is gratifying to see that a lot of what I then said was looked at by the committee and even in some cases turned into recommendations, such as the need to change our educational systems, help for small businesses, earlier retirement and work sharing.
They did not, however, as the noble Lord, Lord Kilmarnock, said, agree with my view that married women should be positively encouraged not to take paid employment. The noble Baroness, Lady Lockwood, said that she hoped I would not talk about this, but I am afraid I will talk about it, if only very briefly. I am not contrite about having made that remark, and I still believe there are many married women who would prefer to be able to stay at home if there were a positive encouragement to them to do so, and that encouragement would almost certainly have to be a financial one.
I am sad that the matter which I thought was the most important in my speech was not considered in depth. I hasten to say that that was not the fault of the committee but of its terms of reference. To make recommendations on long-term remedies for unemployment implies that at some time full employment will return if the remedies are right. If I may just quote one sentence from that speech, I said, at col. 971 of Hansard of 20th June:
"I believe that we can resolve this problem once we have accepted the fact that huge job gaps are here to stay. The problem then becomes a question of how to deal with the fact of a permanent job gap".
Unfortunately, I had to go out while the noble Lord, Lord Kaldor, was making his speech, but I believe he spoke about this to a certain extent. I am afraid I am going to disagree with some of the remarks that (I am going to call him) my noble friend Lord Vaizey made about it, because I am pessimistic; I believe that these job gaps are permanent.
I managed to get a reference put into the report, in Chapter 4.38, which argued that there is a ceiling now to the total number of jobs available in the labour market and it is now less than 22½ million, and that this ceiling will gradually descend as more and more jobs become automated, squeezing more jobs out of the market as time goes on than can be recovered through new industries. The trouble is that new industries will themselves be automated and that the whole objective of our inventive engineers is to invent machines which will work without the need of human help. I want to say straight away that there is obviously going to be some minimum to the number of jobs that will still remain available. And here I am talking of paid jobs, not work, because I believe that there is any amount of work that can be done by those who have the brilliance or the entrepreneurial spirit to look for it.
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To beging with, we have seen large numbers of jobs being shed in a number of our old industries. They have been shed chiefly because of over-manning. Those jobs are never going to come back. Those industries may well increase their productivity, but they are going to be able to do it, now that they are slimmed down, without the need to increase their labour force. Therefore, we cannot look to the old industries to produce the new jobs that will be necessary if we are to try and stop this job gap from getting even larger than it is at the moment.
I want to quote a little from the CBI's recent report, from a committee of which the noble Lord, Lord Carr of Hadley, was a member, because I think that it very much supports what I want to say. It talks about constructing, for illustrative purposes, three scenarios for unemployment over the next 20 years. When I talk about permanent job gaps I am referring to 20 years because I do not believe anyone can go further ahead than that. The report makes the point that, assuming current policies remain unchanged, there could be a good scenario, a bad scenario and an ugly scenario. The good scenario is the only one of the three which shows any hope of achieving reductions in unemployment. This will happen provided
"the United Kingdom economy grows substantially faster than in recent years due to the expansion of world trade, reduced cost inflation"—
which we may well be achieving at the moment—
"and a considerable improvement in the United Kingdom's international competitiveness, including the widespread adoption of new technologies".
Even then, the report warns, spells of unemployment may be longer. It may take longer for people to adjust to new jobs and the creation of new jobs is,
"likely to attract more people back into the labour force, which will further slow down the decline in unemployment".
That is the CBI's view of the good scenario. The bad scenario
"entails broadly a continuation of present trends—i.e. slow growth in world trade and creeping protectionism",
which the noble Lord, Lord Kaldor, advocated. The report adds that under those conditions unemployment will continue to rise, but more slowly than at present. I do not think we want to contemplate the ugly scenario where unemployment would rise very much more quickly than in the others. So there we have a large body of industrialists considering that it is unlikely that we shall get unemployment down for a very long time.
I have another document which only came into my hands this morning. It is even more damaging. It is the report on a survey which appeared in the November issue of Chief Executive. It is a survey conducted by Chief Executive and Management Centre Europe carried out between the middle of August and the middle of September this year. A questionnaire was sent out and 985 replies were received from senior executives in nine countries. Seven of those countries, including the United Kingdom, sent in more than 100 replies each and only two—Sweden and Spain—sent in less. They sent in 80 and 82 respectively. It is a fascinating survey and I have not had time to absorb it, but its introduction is enough for our plans. It states that,
"three out of four senior executives unequivocally support a statement that…..Most Western countries will be forced to accept a higher level of unemployment in future".

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At least two-thirds of them are looking for their own business expansion during the next five years, but less than one-third think that their workforce will rise above its present size, and more than that foresee further cuts in their workforce. I think that that is a very good expression of what senior management today are considering.
Where do we go from there? I do not know. I had hoped that our committee would have been able to study this but, as I said, the terms of reference did not allow it so to do. If I may make some suggestions, I think that to consider occupation rather than employment might give a clue as to how we treat the future. It is possible we might have another look at something like conscription; not military conscription but conscription to help underdeveloped countries. I have a theory which I have been turning over in my mind for some time, but I cannot establish it. Why cannot we do something more to make labour acceptable to industry? At the moment we treat labour as an expense—in fact, we even tax it with the national insurance surcharge—whereas we encourage industry to invest in new machinery. Industry receives 100 per cent. capital allowances against tax for anything that it invests in. A switch in some way to encourage taking on more labour and, perhaps, restrict the amount of new investment might be a solution, but it is not going to be a very good one.
The fact that the whole of our industrial sphere is changing is getting very clear. We are just about at the beginning of an office revolution. It will not be long before we see most offices disappear centrally and people working from their homes. It is already happening in the United States. It will not be long before it comes here. In fact, I noticed on the tape today this interesting little item:
"Armchair banking. A scheme enabling bank and building society customers to operate their accounts from their own living rooms is to be unveiled later this week. The scheme, involving the Nottingham Building Society, which has 150,000 members, and the Bank of Scotland will allow customers to use their television set and an electronic push-button console to cable instructions to the bank and building society".
These technological changes are coming very fast and they will all cause more people to lose their jobs. This office revolution, when it takes place, may cause the end of commuting as we know it. Think of the loss of jobs that will follow in the various transport sectors of industry.
I do not want to go on. I have spoken long enough. I leave it with your Lordships that we have not really tackled the job, and the job is that we shall be faced with at least 3½ million unemployed in the future and that that number will probably get bigger and bigger, instead of smaller and smaller.
6.30 p.m.
Lord Balogh: My Lords, I wish to join other noble Lords in congratulating our maiden speaker. We wish her well. We hope that she will let us see the fullness of her knowledge. I also want to express my gratitude to the members of the Committee. They have tried to tackle a job which is all-important yet which has not been really thoroughly investigated. Economists are still extremely divided about the causes and remedies of unemployment.
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I do not believe that a Select Committee consisting of experts and politicians can really contribute very much, especially if they have honestly-held strong convictions. In this case differences of opinions are not always differences of knowledge—though it might be that they are from time to time—but of ethics. The only conclusion that can be made is a destructive criticism of their fundamental assumptions. The impact of their arguments is clearly visible. The main exercise is an application—which cannot be accepted—of the modified, neo-classical analysis of demand and supply of labour.
We are led through the various theories of demand, without analysing the problem whether such a system is feasible. The word oligopoly, which ought to have been a basic concept in this respect, does not get even a mention in the report. In the end there is produced a report in which business-cycle theories are briefly set out, and are mainly non-economic. They permit themselves some hints about remedial policies. But, as one would expect, specific measures to act directly, or indirectly, on unemployment pale into insignificance when they are really analysed.
There is insufficient analysis of the international aspects as the cause of deflation. There is no attempt to discuss in detail the problem of world liquidity and the possibility and limits of recycling. Bland statements are used to give a somewhat blurred impression that incomes policy has failed. But one has to ask in this respect: what would have happened if there had been no incomes policy? The fact that a year after an incomes policy was introduced it was repealed caused anticipations which made the system unworkable.
Austria and Sweden are eloquent examples of success which we ought to have developed further. There is only about a paragraph in the report on this problem. The committee maintains that the process of recovery hurts. It is surely a deflationary policy which hurts and degrades. The abolition of exchange restrictions has been the cause of recent troubles. It enforced a high rate of interest—additional to a cyclical disturbance—and the net outcome was that we have more or less eaten away our oil and gas finds.
Altogether this report is, interestingly enough, a repetition of much of Lord Beveridge's first plan which he eventually replaced with a further analysis based on Keynesian precepts. No doubt the situation has worsened since Beveridge's time. Britain was once the largest creditor country. It is now a net debtor country. The refusal to intervene when the massive hot money streamed in, indeed throttled our manufacturing output, an admirable way to increase our foreign exchange reserve, was totally missed. Yet anybody who was not blinded by Smith and Ricardo, Walrus and Marshall, would advocate purchasing in foreign exchange under these conditions. However, one can only hope that next time around will find the Government better prepared, both intellectually and materially, and better able to deal with a problem which is insistent and complicated.
6.37 p.m.
Earl De La Warr: My Lords, I should like to start by offering my warmest congratulations to the noble Baroness, Lady Carnegy, for her excellent maiden

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speech on a subject about which she quite clearly knew a lot. I go on immediately to pay the warmest tribute to the noble Baroness, Lady Seear, for the splendid way in which she led the committee through its long deliberations. It was in truth a great privilege to serve under her.
In the short time that I shall allot myself in this debate, I want to deal in the main with long-term unemployment—that is, those who have been unemployed for over 12 months. But I want to emphasise that I go along to exactly the same extent in my support with the whole of the rest of the report. I only choose this because one cannot do the whole thing. We are suffering, as we know, from a depression which is literally worldwide. Neither Government nor businesses had even three years ago begun to appreciate its depth or its duration, and we still know all too little about its duration.
Nor, I think, did we appreciate what it was going to do to this country's economy. Had we realised earlier that in the last decade we had paid ourselves 450 per cent. more in wages and salaries as against an increase in production of 17 per cent. we might, I suppose, have stopped pricing ourselves out of the market sooner. But, as it was, we lost our edge, and lost it very seriously, against every one of our international competitors. I wonder very much just how easy it is going to be to catch up the ground that we have lost. Never let us forget that we are not the only country at this moment trying desperately hard to increase its own efficiency—against us, if you like. That makes no difference, though, to the vital importance of doing everything we can here to increase our competitiveness.
We must continue our attack on inflation because it is only by a reduction in inflation that we can hope to keep wages under reasonable restraint. I, for one, applaud the Government's courage in refusing to contemplate any general reflation. Furthermore, there will be much investment to come in labour-saving plant, and, until the whole industrialised world gets back to a period of growth, the outlook for unemployment, I fear, looks very bleak indeed, and the Government have warned only recently that things may get worse. Among other things, I believe that de-manning by industry—by efficient industry—is not by any means finished, and I must say that that is right because it is one of the conditions of getting ourselves into a competitive stance.
The report is at pains—I am glad the noble Baroness, Lady Seear, referred to this—to give a picture of how unemployment works, because the figure we get every month gives only part of the story. It is, in a way, like a snapshot; it tells you what, at a particular moment, is the total stock, to use a jargon word. This can be broken down into categories (age group, sex, colour, location). But in one important way it gives an impression which is inclined to be false; namely, that the unemployed are a permanent, unmoving group. When it is announced each month that there is no change in the numbers unemployed, one tends to think it is the same people, when that is not so, for there is a tremendous flow of labour all the time, as the noble Baroness said. About 300,000 people flow on to the unemployment register every month, and about the same number leave it.
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A closer study of the stock and flow figures, however, produces a formidable fact which may be obvious but I think it needs saying. It is that the longer someone has been without a job the smaller are his chances of finding one. I have with me a chart, part of a paper published last week by the Manpower Services Commission on long-term unemployment. It gives clear statistical evidence to the effect that 40 per cent. of those who have been unemployed for less than three months find a job within the next three months, whereas not 40 per cent. but only 14 per cent. of those who have been unemployed for over a year have the same success. The long-term unemployed are increasing, and they are increasing at a faster rate than the whole. I do not want to be a Cassandra, but I suspect that in the next two years the numbers in long-term unemployment will go up well in excess of 1 million, and possibly will get nearer to 1½ million.
What are we to do about the situation? Will we let this body of people rot?—because that is what will happen to them. These are people who in many cases have lost hope and feel themselves to be social outcasts. These are the people who, above all, in the view of the committee, are in need of help. We really are kidding ourselves if we think that an upturn in world trade, when it comes, will produce an immediate downturn in unemployment. Furthermore, we know that there is a preponderance of unskilled and semi-skilled among the long-term unemployed, and they will be the last to get jobs. So we have a problem which is growing very fast, and for sure it is a problem that will not go away by itself.
It is clear that the Government are deeply and increasingly concerned about the whole tragic situation and are doing a great deal to improve matters. Very large sums of money are being spent covering a wide field. The initiatives now being taken in the sphere of youth training are moving towards that most desirable of objectives, a training scheme which serves to keep the young in training and off the labour market until they reach 18. The community programme, which stemmed out of the community enterprise programme, is especially important and, while we have some reservations about it, the Government are to be congratulated on its new form.
However, when we take together all the remedies that exist or are on the way and consider the near certainty that, even so, long-term unemployment will rise, we must ask whether we really think we are doing enough. The answer is only too clear to me: Not by a long way. For that reason the committee has dwelt at some length on its recommendations for what I will briefly call long-term, low-cost job creation. This is not just another short-term response to what is thought of as a cyclical rise to unemployment; it is concerned with long-term job creation to counter long-term structural unemployment.
The schemes must fulfil certain criteria. There must be no displacement of existing workers; the jobs must not be high cost; and they must concentrate on the people with the least chance of getting work. The committee well recognises that the effect is expansionary, but, in that the scheme seeks out specific objects, we believe that it will avoid any general reflation—and that, as we have said, is absolutely essential, for general reflation would be wholly counter-productive in its effects, as we

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constantly point out in the report.
There is a great deal of work to be done to improve the infrastructure in this country. Much of it, though not all, is deferred maintenance. We cannot wait indefinitely for the electrification of the main line railways, we badly need much work done on maintaining roads and, in some cases, the construction of new ones, we could save a great deal in the cost of energy by large-scale house installations, and there is a crying demand for more low-cost housing and the renovation of millions of old houses that are crumbling for lack of maintenance. Note, my Lords, that much of this work, though very likely commissioned by the public sector, would in fact be done by private enterprise.
We also believe that there is significant scope for job creation in the field of what I would very broadly call community service—not only caring for the mentally sick, the elderly, and the disabled, but doing all kinds of other physical work, such as looking after streets and playgrounds, and working in community centres. I think that some of us had our doubts—I know that my noble friend Lord Vaizey had—that this would lead to a large increase in the staff of NUPE. We all have to compromise on these things, and most of us felt that, first, the work would cover a very wide range, secondly, much of it would be voluntary, and, thirdly, the priority meant that we must go for community service in the widest and most energetic way possible.
I am well aware that from these Benches I have been treading on ground that is somewhat more contentious than are other parts of the report. Some of your Lordships may have read the recent CBI document on unemployment, in which you will find much space devoted to its recommendations on deliberate long-term job creation—and many of the recommendations are exactly the same as ours. Other noble Lords may have seen a leading article in the Financial Times, which described the CBI report as taking
"a moderately interventionist line which has much in common with the ideas proposed earlier this year in a House of Lords' report".
It is in that spirit that I finish by commending to your Lordships a report in which I had the honour to play a very small part.
6.53 p.m.
Lord Roberthall: My Lords, I must confess that when the committee whose report we are discussing was first established I was rather doubtful about the wisdom of your Lordships in setting up a committee to deal with such a complicated and such a political subject as unemployment, where there is a sharp division between the political parties. I thought there was a real danger that either the report would consist of a series of disagreed recommendations—which is the only way in which your Lordships can have a minority report—or would comprise a lot of unexceptionable platitudes. I must apologise for those sceptical or uncharitable thoughts because the report that we have before us is, I believe, a great credit to your Lordships' House, to the committee itself, and in particular to the noble Baroness. We all knew that she was a formidable character, but I think that we were underestimating her abilities. To produce a report that is agreed, which says so many good things and which covers the ground so well, is a great achievement, and I congratulate your Lordships, the committee, and the noble Baroness.
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The report covers the subject very widely indeed, and one of its most useful aspects is in analysing the very complicated things that the Government are already doing, as well as discussing and extending them. It struck me, as an ex-teacher of economics, that if the Stationery Office could produce a cheap edition of at any rate the first volume of the report, it would be extremely useful for the educational world and might even turn out to be a best-seller.
I shall speak in a rather general way, and mainly about something that the committee did not deal with very fully—the macroeconomic aspects of the subject. In economics there are two causes of unemployment, which one can express in a very general way. One is structural, or transitional, unemployment, which requires adjustments in the community so as to make the community more flexible. That side is covered fairly well. When I use expressions such as that I am not criticising the report; as I have already said, it deals with an enormous subject. The other cause is what used to be called "conjunctural", or now perhaps cyclical, and it deals with the effect of demand on unemployment.
There is very little relating to the stance of the committee on the international aspects. Those of your Lordships who last week were present at a debate on economics must have been struck, as I was, by the support given to the thesis that, although we are in a world of recession, we cannot get out of the recession without collective action, without action that is taken in the different countries involved, in a spirit of co operation. There used to be that kind of co-operation. It has now broken down, and we shall never get any further without it. One can get out of a recession by oneself, when the rest of the world is in it, only by moving towards cutting off one's links with the rest of the world.
The other aspect of this point of view is that the committee seems to take the view—in fact it argues very strongly—that we must become more competitive. The difficulty about that is that it will take a very long time to get down unemployment if we are looking to growth in competitiveness and considering our costs in relation to those of the rest of the world. The committee—very admirably, I think—says that the tendency of costs to rise must be dealt with by means of an incomes policy, and not just by the use of unemployment, which is what the present Government are doing; and certainly on the Alliance Benches this will be a very welcome part of the report. We want to deal with this, but it will take a very long time, and, if we are to recover our competitiveness, we ought probably to let the exchange rate go. I think that the leaders of the CBI were much more sensible than their constituents on this question a week or two ago. This is something that ought to be considered. It is argued that, as a result of demand management, our exchange rate will move against us as imports flood in, which is a real difficulty about the present position. But if the result is that the exchange rate drops then that is something which we shall have to face if we hope to get out of this unemployment situation otherwise than by waiting a very long time.
On stimulation, the committee begin with a rather resounding statement against spending your way out of a recession—the passage about mangold-wurzels is quite striking in this context—and that, I think, is also

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the Government's view. No one thinks that we can spend our way quickly out of this recession, and we certainly are not flexible enough to do anything like that. But I was encouraged to see as I read on that the committee take a more moderate view on this matter, which is essentially that the present position is too serious for inaction and that we must make a start. I very much agree with what many of the speakers have said on this today, and that is that some stimulation of the economy is essential.
It ought to be as cost-effective as possible, and in this respect I think the most valuable of the suggestions from the point of view of efficiency is what they recommend; that is, a long-term project for doing useful work which will employ as many as possible of the long-term unemployed. There is no doubt at all that there are a great many things, to which a number of speakers have already referred—housing, roads, sewerage, water—badly calling out for work to be done on them; and they are all things which ought not to have much effect on inflation. Furthermore, the import content of them is rather small in two ways: the materials that would be used are mostly home-produced, and the employment will be in a field which, in the absence of an incomes policy, will not have much stimulation on cost inflation, which has been so much trouble.
There are several other recommendations of that kind of which I think the most sensible is the suggestion that elderly people should be encouraged to retire or to leave their employment. That will get people out, and if they want more leisure that is a good way of getting it.
Then we come to the training programmes. It is very important as a matter of flexibility that the workforce should be better trained, and I am very much in favour of that side. But I should like to end on a sombre note, and it is one with which the noble Lord, Lord McCarthy, dealt very well. The committee remark in several places that it is no good training people for jobs if the jobs are not going to be there, and elsewhere in their report they say that the real way to get people back to work is to ensure that there is something for them to do.
That again stresses the importance of finding every way we can to get back to some reasonable level of employment before too long, because although it is a good thing to train people and a good thing to give them variegated skills, there is no doubt that if at the end of that time there is no job waiting for them then people will be dispirited and discouraged, and the schemes, however good they are, will tend to get a bad name. Therefore, there must be a two-pronged attack: to try to make us more flexible and, at the same time, to do all we can to see that there is at least some stimulus to demand.
7.5 p.m.
Lord Campbell of Alloway: My Lords, it is always a pleasure to follow the noble Lord, Lord Roberthall. It is especially right that he, as an ex-teacher of economics, should be followed by an ex-student of the subject who gave it all up before the last world war. But may I at the outset offer my congratulations to my noble friend Lady Carnegy of Lour on the originality
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of her maiden speech, delivered with great authority and charm, with an instruction manual as to how to play leapfrog with some of our competitors.
At the outset of this speech, as with other speakers, I would wish to join in the general tribute to the noble Baroness, Lady Seear, and members of this Select Committee. It is not everyone who toils in a mine who is able to put on display nuggets of precious material such as are to be found in this report—and all this in the cause of our common concern, the relief of unemployment in our own country. As Lord Roberthall has just stated, we alone can cope with this problem, and we alone must seek our own salvation as best we may. The draft budget of the European Parliament for 1983 makes this all too plain.
The salient features of this report reflect the realistic approach of this Government in the measures which they have introduced and maintained. Indeed, the courage of this Government in this regard is expressly acknowledged: the major cause is want of competitiveness, both here and abroad; the imbalance between incomes and productivity must be corrected; we cannot spend our way out of inflation, this leads to destruction; and income restraint and long-term low-cost jobs which are not too expensive are the order of the day. The misconception of zero unemployment is exposed by acceptance of the concept of full employment at round about the million mark; and the value of small businesses, co-operatives, training in the new technologies and education are all emphasised.
As an objective assessment of economic policy this report—and I have been quoting some of the salient features of it—does a signal service. So also as to the implementation of policy. On this question of the implementation of policy—this for the future—the report makes some serious, crucial findings: that unemployment should not be treated as a single problem but as a series of disparate, related problems; that the short-term approach is not the same as the long-term solution; that human degradation may not be wholly assessed in terms of Treasury estimates; that there is a social significance which transcends additional statistical charges to the Exchequer as benefit payments; and that there is a relationship between endemic, long-term unemployment and the suicide rate; and also that this relationship exists with the increase in crime.
This, of course, brings in its wake so many unwelcome consequences such as, for example, the overcrowding of the prisons and the extra policing. And your Lordships will know that these unwelcome consequences also have their cost on the Exchequer which has to be thrown into the balance. This is why the arid approach of a Treasury estimate is not, in my submission, the right approach to deal with the degradation of man. In the manufacturing industries, we have to accept that, until we gain competitiveness, the demand for labour in this sphere will not rise. It is the expanding service industries and the oil industry which now hold the fort. But in the main this demand, when it comes, will be for a specialised type of skilled labour, skilled labour trained in the new technologies.
For the hard core of the unemployed technicians today, for the school-leavers in the years to come, there will be a benefit; and they will have had the benefit of these training schemes and of the educational facilities, but they will alone directly

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benefit. Even in the long term—as has been said by so many noble Lords and I choose but a few at random: the right reverend Prelate the Bishop of Lincoln, the noble Lord, Lord Spens, my noble friend Lord De La Warr—when we regain our markets for goods, there will still be residual unemployment.
My Lords, there is another aspect to the problem; that is, that the mass of the unskilled and untrainable, to whom so many of your Lordships have referred, will not benefit, at least not directly. There is what I may look at, if I may, as the short-term problem; that the transition, the gap before these people reach their retirement age, must be bridged. Hence the need to entertain works of construction such as those to which my noble friend Lord De La Warr and other noble Lords referred—public works to improve our sewers and means of communication and, indeed, increased staff in certain sectors of the health service to which other noble Lords have referred, so that work within their capacities—within what the noble Baroness, Lady Seear, stylised as within their time and physical strength—may be found for them, work which is of value to the community as a whole, work referred to by one noble Lord as being of high community benefit.
In this we have to recognise the need for the stimulus of generated demand beyond the ambit of aid to small businesses and training schemes. This need not be inflationary. On balance, the balance to which the noble Lord, Lord McCarthy, referred, this could operate as a saving to the Exchequer. But in any event, whether it does or whether it does not, it is a risk which must be taken if we are to live with our social conscience. I agree unreservedly with the noble Baroness, Lady Seear, that we cannot merely rely on the laws of supply and demand; we must generate employment. We require quick job creation, along the lines suggested by the noble Baroness and by other noble Lords, including Lord McCarthy; but I accept the assurances which have been given and that there are plans to reverse this, notwithstanding paragraph 72 of the White Paper—because I pin my hope upon the fact that the term in it, "cost-effective service", could mean anything or nothing, depending upon which way you look at it. Being a Conservative, I look at it in the light that it will be interpreted in the way in which I have suggested it should be, and I have faith in the Conservative Administration to do so. But as my noble friend Lord Carr of Hadley emphasised, the present level of unemployment is intolerable. Steps must be taken to halt the upward surge; the injection of this high octane fuel. My noble friend Lord De La Warr asked the question, "Are we doing enough?" The answer is, "No, not by a long chalk".
My Lords, the hope is expressed in this report at paragraph 14.16 that in the end the unemployed will price themselves into jobs and, in particular at para. 9.37, that long-term, low-cost job creation should be implemented. But—and I seek assistance from the noble Baroness in the winding up speeches—it is truly not understood by me how such concepts could marry with the recommendation that a flexible comprehensive incomes policy of indefinite duration should be introduced. Nor, with the utmost respect—and it is not a simulated misunderstanding—do I truly understand what is envisaged by the term, "flexible and comprehensive incomes policy of indefinite duration", any more than I really truly understand the term "cost
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effective service" on paragraph 72 of the White Paper. Nor is it understood how the introduction of an incomes policy in any form, whether short term or long term, could alleviate the problem of unemployment.
This report, which to some extent has been overtaken by events, identifies the cause, prescribes the cure and provides an analysis of acceptable options while rejecting others—this for the period of transition. Although reduction in inflation and the level of wages have put us on the road to recover our markets for manufactured goods—and I see the noble Lord, Lord Bruce of Donington, looking this way, and he stresses this aspect of the economic problem from time to time in your Lordships' House—the first steps along this road to recovery of these markets have not yet been taken. I refer to the figures which I saw printed in, I think, The Times about the 15-year survey for manufactured goods.
Is there a need for project financing? Is there a need for a relaxation of over-rigid Treasury rules and definitions, to which my noble friend Lord Caldecote has referred? Is there a need to amend the statutes which restrict building societies' investment so as to enable building societies to finance public works and industry with debentures on public works, redevelopment of the inner cities, mortgages on industrial property and a small percentage investment in equities? I realise that this last question could present problems of expertise.
Is there a case for a change in the tax structure which impedes the part-time earner, the part-time worker? Is there scope for the introduction of new measures? If there is. so be it. But is it not of vital consequence that in any process of change resort should never be had to quack panaceas, such as incomes policies or debasing the coinage, whether direct by devaluation by decree, as was apparently suggested by the noble Lord, Lord Roberthall, or indirect by the printing of false money? If, in the words of Dr. Johnson, we are to improve the golden opportunity and catch the good within our reach, let us never again suffer the abject humiliation of being seen at the IMF toting our begging bowls.
7.23 p.m.
Lord Molloy: My Lords, may I at the outset offer my apologies to the noble Lords on both sides of the House who will be winding up this debate? Because of the exigencies of political life, I shall not be able to have the privilege of listening to their speeches; but, being an avid reader of Hansard from both Houses, I can assure them that I shall certainly read, mark and digest what they have said. I should like immediately to congratulate the noble Baroness, Lady Carnegy, on her maiden speech. I mean that very sincerely because she has a capacity which I fail in considerably. I always admire those people who do something that I cannot do. How she skated so skilfully through her speech without being in the least controversial is certainly beyond me.
I think that it is right and proper for me to both thank and congratulate the noble Baroness, Lady Seear, for her most magnificient introduction to this debate. I have read the report of her Committee. If I had known that we were going to have such a full, exacting and examining report of the fundamentals and the quintessentials of what it contained, I might

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have saved myself a lot of time, because I am sure that I am going to read it all when I re-read her magnificent introduction when it appears in Hansard.
There has been one theme that has been running through this debate, particularly from the Benches opposite, which I find perplexing. Everybody runs down the reason that we have unemployment. They have watched it grow since this Government came into power year by year. Up and up it has gone. There have been fewer jobs; all deplore that but congratulate the Government on their efforts. I cannot understand that, and, if I may say to noble Lords and Baroneses opposite, neither can people outside understand that. They are not the fools that some people on the opposite side of this House and in the Government in the other place may think.
Ordinary people know full well that inflation had been brought down and was sent soaring by this current Administration, and then they claim credit for bringing it back down. Then they tell us how they hate and deplore unemployment. By the time they have finished their Conservative speeches, the probability is that unemployment has gone up again. I wondered when reading this remarkable document how many people who gave evidence before the committee are now themselves on the dole. I have had the remarkable experience of being on the dole, signing on in the labour exchanges, twice in my life: once in the 'thirties under a Conservative Government, and then in the 'eighties under a Conservative Government—and there must be a message there somewhere.
When I was listening to the maiden speech of the noble Baroness, I was reminded of the discussion that has been taking place in Scotland. That has been suffering abominably in the past three years, as the noble Baroness agrees. There, unemployment is savage. This is in a nation that produces so much of our steel and which is now being denuded,. Speaking parenthetically, I noticed that creeping into the debate is the slow acknowledgment of something that I have been saying ever since I have been in this House whenever we have had economic debates or discussions on unemployment: of course, you cannot buy your way out of it. To print money is an absurdity. But there has to be some level—if it only equates to the millions that we have poured out in dole money—at which to start to recreate building for the construction industry. We want new schools, new hospitals, and new homes. All this can be done and it will be worth-while instead of simply dishing out millions in dole money.
Let me give your Lordships this little example of what is going to happen in Scotland to our Scottish steelmakers. May I say that what hurts Scotsmen and Welshmen is that this Government turned to America to find someone—there were no Scotsmen, no Englishmen and no Welshmen—to try to save our steel industry. That gentleman was brought over here for an outstanding fee which makes the mind boggle. Ever since he has been in charge of our steel industry it has gone down and down. This is how it appears to the ordinary very skilled steelworkers. There are a variety of extraordinary skills when you see the tipping of a Bessemer and a hot catcher and how steel is made and transferred ultimately into all sorts of items upon which our industrial base depends. The lights in this
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Chamber depend on the contribution of Great Britain's mineworkers and Great Britain's steel-workers. It seems to me an appalling policy that we should do the sort of thing we are doing to these two great industries in running them down.
The example I was going to give of what will happen is already happening to Scottish steelworkers—and I beg your Lordships to listen to this, Because in addition to the thousands who have been made redundant there is now a scheme to render another 14,000 redundant before long. For these people who lose their jobs, to sweeten getting the sack, to sweeten not making any more steel for Great Britain, they are going to be paid 64 million a year. I would have thought that a non-precocious child would have said, "How daft can you get? You are going to spend more to put steelmen on the dole than to pay the wages for making steel, which is the base of all our industry". It was said in Scotland only yesterday that this is the economics of lunacy: and so it is. I hope others will not have the experience I went through. I have to say in this House that the man who put me back into a job was the late unlamented Adolf Hitler, and fascism. That is what did it when we started rearmament. Can you re-arm without coal? Can you re-arm without steel? Can you re-arm without converting great factories from making one thing into making bombs, bullets and shells? Of course you cannot. It does not matter what way you use them, you depend absolutely on the great energy industries and the great steel-producing industries. I would have thought that in this great Christian nation we could use them now to help the families who are suffering from the scourge of unemployment, and do two things at the same time.
In addition to the economic facts, there is the heartbreak and the anguish that goes on in a family. I ask each and every one of your Lordships just for a second of time to ask: "When did I last sign on the dole? When did I last stand in the dole queue? When did I then go home and have a row with my wife because the rates summons has come, or a notice from the town hall or the private landlord, to say that unless they got our rent or rates they would have to take further action?"—and there ain't no money to pay. How many of your Lordships have gone through that? I have gone through it. I know what it is. I am no economist or great academic—and after listening to the speech of the noble Lord, Lord Vaizey, I am glad I am not, because after he deplored unemployment and all that goes with it—and I would beg your Lordships to look in Hansard tomorrow—one of his suggestions was for us to cut down on the health service, to get rid of our doctors, midwives, consultants and ambulance men. That is a smashing way to reduce unemployment! According to the great academics the way to reduce unemployment is to stick another couple of thousand on the dole. I am glad I did not go to any university. Therefore, I say that these are not simply the arguments of myself, but the arguments of ordinary people outside. I would say to everyone within hearing of my voice: we should not be so bombastic or so supercilious.
Now may I make this point quickly because it is vitally important. When we were on the dole in the 'thirties I can remember the hunger marches from Jarrow—not a policeman was required. We came up here to Hyde Park and sang our hymns. I can

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remember "Cwm Rhondda" rolling down from Slough to London: hardly a police officer was required. But it is a different situation today. It is a different situation in Liverpool, in Glasgow and in Brixton, where the basic root cause is that young men and young women feel they have no right to be left to decay. When I hear people talk about new skills, of course we must have them, but let us in heaven's name use the very accomplished skills that we have today—those of a bricklayer, a quantity surveyor, a steelmaker. They are all there: they are just going rusty; they need to be used.
The only economist I have ever thought worth reading is Kenneth Galbraith, and while he, along with Keynes, gave this advice there were scores of economists from Oxford and Cambridge and lots of other places who produce horny-handed sons of toil who told them how hopeless and idiotic they were. Yet had it not been that their theories were applied we would have been an easy push-over for fascism. Let us declare war on the fact that we have not enough houses to house our folk decently. Although we have still got hospitals which used to be workhouses, we need to build new ones. Let us declare war on unemployment and mean it.
That is what I believe we have to do, because what gives me the greatest concern is that our youth today, and indeed some of their parents, are not going to take for every just an occasional burst of outrage at the way they are being treated. It could well be something very much more serious, as the noble Lord, Lord Carr, said. Indeed I thought his speech was so courageous that it tempts me almost to say to him: "Come and join us". He would be happier on this side. The important thing is to note the difference between what happened. I know the noble Earl, Lord Gowrie, will take this seriously because he has responsibility where people decide their arguments by blowing someone up or shooting someone. He more than anyone else will understand the seriousness of what I am saying when we look at what has been happening in parts of this island home of ours.
I am afraid we have lost that equilibrium, political, economic and social, which gives men that sense of ease and security and which gives them confidence in themselves and faith in the goodwill of their neighbours. I believe that if we do return to a careful, guided policy to get our industrial base created and get our great industrial wheels turning, and if we are prepared in a prudent manner to spend and prosper, we will gain the confidence of the ordinary folk of this country of ours which is the main and most mighty of all the desiderata that we can desire: that is the confidence of the British people that we are going to make a change in the economic life of this country which will allow them to have pride in themselves and encouragement for the future.
7.39 p.m.
Lord Rochester: My Lords, I count it a great privilege to have been a member of the Select Committee and I should like to join with others in the tributes that have been paid to my noble friend Lady Seear. From these Benches I should like also to join in congratulating the noble Baroness, Lady Carnegy, on her maiden speech. She is well qualified to talk in a
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debate of this kind, and we certainly look forward to hearing her on many more occasions. If there was a particular contribution that I was able to make to our discussions, other than that stemming from such practical industrial experience as I have acquired, I like to think that it was to seek as much common ground as possible. In that respect, may I say how very much I admired what I found a most moving speech by the right reverend Prelate the Bishop of Norwich.
In my own contribution to this debate, I should like to speak about training as a long-term remedy for unemployment to help balance labour supply and demand. It is a matter on which I can best speak from personal knowledge, I having at one time been responsible for training large numbers of people in industry, and being privileged now to speak as chairman of one of the district manpower committees set up by the Manpower Services Commission, to help in trying to solve employment and training problems in the localities.
With unskilled jobs disappearing, it is essential, as has been said by a number of speakers, to raise the level of skill in our workforce so as to make British industry more competitive and thus to improve long-term employment prospects. For that reason, the Select Committee are at one with the Government in supporting wholeheartedly the youth training scheme which is to be introduced in September 1983.
I welcome very much the first major step that has now been taken to provide during the year 1982–83 100,000 new training places offering young people 12 months high-quality training and work experience of the kind that will be standard under the new scheme. I am particularly glad that the training needs of the bulk of young people are to be catered for within the mainstream of industrial and commercial development. It is very much in accord with the Select Committee's recommendation that training should be work-based to the greatest possible degree so that it is both effective and relevant to market needs.
However, that is very much more easily said than done and I was therefore greatly encouraged to learn last week how one large company operating in Cheshire, where I live, has now actually begun to do it, by sponsoring no fewer than four separate pilot schemes for the Manpower Services Commission in preparation for next September. They cover scientific, commercial, clerical and other areas, and the work experience element in each programme concentrates on the need for skills to be learned that are transferable, in being of potential value to companies and organisations other than the particular firm concerned.
It is gratifying also that in his Statement in another place last June, the Secretary of State ultimately accepted the recommendations of both the Select Committee and the MSC's task group, that the youth training scheme should cater for employed as well as unemployed young people. The Government have also agreed that, for at least the first year of the scheme's operation, supplementary benefit should not be withdrawn from 16 year-olds. Welcome, too, is the requirement that, from next year, those taking part in the youth training scheme should spend at least 13 weeks off the job in training or relevant further education, and that is very much in line with the Select Committee's recommendation.

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There is agreement, too, that the high level of wages paid to young people is a disincentive to employers to recruit school-leavers and, in my view, it is most important that in future pay negotiations the percentage of the adult rate that is payable to young people should gradually be reduced. While recognising that the costs and practical problems of changing to a new system would necessarily delay the introduction of a comprehensive scheme for all 16 and 17 year-olds, your Lordships committee were clear that a second year's training should be a long-term goal. The Government, in their response to our report, were more cautious in their approach to that objective, but at least they are keeping the matter open, as I understand it, for later consideration.
I am sorry that the Government cannot accept a system of graduated allowances for young people on the lines proposed by the committee, but I am not going to waste precious time in trying to persuade them to change their minds now. Although I do not think that the point has been mentioned specifically in the Government's response, I do not doubt that they, too, welcome another element of the youth training scheme, which is that there should be certified standards of achievement and of performance in replacement of time-serving and age-restricted training.
As regards the funding of the scheme, my understanding is that of the two modes that will be available the intention is, rightly, to allocate most resources to the one which will offer employers a block grant of £1,850 per trainee per year, provided that an agreed number of trainees are taken on additional to normal intake, with a further £100 for employers who act as managing agents rather than merely as sponsors. That compares with a current average labour cost of about £3,000 a year for a 16 year-old employee, and thus produces a shortfall of more than £1,000 per place.
In its report the Select Committee recommended that the cost of the trainee's wage should be shared between the employer and the Exchequer, according to the proportion of time spent at and away from the work place. The committee considered that training undertaken away from the work place should be a charge on the tax or rate payer. I understand that education authorities are to charge fees for further education under the youth training scheme, but I am not clear who is to foot the bill. I wonder, therefore, whether I may ask the noble Earl, Lord Gowrie, a question of which I have not given him notice and I shall quite understand if he is not able to respond tonight. The question is: is the recent announcement that the Government are to inject £7 million into schools and colleges to set up technical and vocational courses for 14 to 18 year-olds an indication that the full cost of further education under the scheme is not to be borne by employers? If they have to pay it all, that will surely run counter to existing practice and will place what I should have thought was a quite insupportable burden upon employers.
If I may turn to the question of delivery of the youth training scheme, and also to the administration of adult training, the Select Committee observed that in
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recent years the two main vehicles for training have been industrial training boards and the training services division of the MSC.
In noting the recent disappearance of many of the training boards the committee felt sure that there should continue to be some statutory framework for training, based still, maybe, on industrial sectors but, much more important in our view, geared to local needs. We therefore recommended a structure very similar to the 54 new area manpower boards which the commission aim to have in place by the beginning of January next year, together covering England, Scotland and Wales. That number takes account of the number and the size of local education authorities with which there is clearly a need to work very closely. Indeed, to judge from earlier debates on this subject in your Lordships' House there may well be a number of noble Lords who consider that control should be transferred from the Manpower Services Commission to local education authorities. I hope, however, that now that a decision has been taken they will acquiesce in it.
The essential thing, surely, is that at local level there should, as the Government acknowledge, be effective co-ordination of the activities of employers, educationalists and others concerned with training. Incidentally, I notice that in the Government's response to the Select Committee's report mention is made of the senior managers who are to be located in the new area offices of the commission in their reorganised training division. I very much hope that these people will prove to have not only experience of training but the ability to persuade people to take effective action.
The Select Committee further expressed the view that the bodies to be set up under an improved local structure should have their own budget within the MSC programme and should be vested with executive power. In that connection I welcome the recent announcement that the area manpower boards which are to operate from the beginning of 1983 are, among other things, to have power to approve training plans within guidelines established by the commission, to approve opportunities and projects in the areas within agreed targets, budgets and policy guidelines and to assist in monitoring and assessing them.
I have said little about adult training and nothing at all about technical training. Time does not allow. However, it should not be thought from that that the committee are unsympathetic, or that I am myself, to what, I understand, the Government have in view in this area. I am thinking particularly but not exclusively of the open tech. and the moves introduced by the Government last week in this connection. We certainly look forward to hearing any more that the noble Earl is able to tell us when he winds up about developments in that area.
May I simply say in conclusion that I believe that training is an investment which offers us hope. It also signifies faith, particularly in the young people of this country upon whom our future prosperity depends. I derive great satisfaction from the knowledge that in a committee consisting of members of all parties and of none in the House, we were, in this matter of training, unanimous in our conclusion. I am delighted to join in commending the report to your Lordships.
7.54 p.m.
Lord Pitt of Hampstead: My Lords, the hour is late and I do not intend to delay your Lordships for very long. May I begin by complimenting the noble Baroness, Lady Carnegy of Lour, on her maiden speech. While she was speaking I remembered that when I was a student in Edinburgh there was a chap called Alfred Carnegy who was extremely brilliant; he won all the medals that were going. It is nice to think that I am now being joined in this House by a female counterpart of Alfred. I look forward to hearing the noble Baroness again.
I want to congratulate the noble Baroness, Lady Seear, and her committee on their comprehensive and very good report. May I say at the outset that I am sad that the Government's response does not match the report. The report was a very thorough analysis of the problem and gave us certain remedies which could be used. I accept the full thrust of the report. Therefore I do not want to say any more about it, apart from the criticisms which I am about to make. I hope that the noble Baroness and the members of her committee will forgive me.
Before I launch into these criticisms, may I also say that I owe the noble Baroness an apology. I was unable to be here for her opening speech. The truth is that I did not expect even to hear half of the speech made by the noble Baroness, Lady Young, or the speech made by the noble Lord, Lord McCarthy. But my patients were reasonably kind to me today, so I missed only the speech of the noble Baroness, Lady Seear, and the first half of that made by the noble Baroness, Lady Young.
There are three points which disappoint me about the report. One may be small, the other two large. First, I thought that the report was over-cautious about capital investment. I believe that there is room for much more capital investment than the report suggests. For example, when I was in County Hall we intended that the Jubilee Line should go as far as Lewisham. It stops at Charing Cross. I give this only as an example. Many other capital investment programmes could be launched. I leave it there.
The second disappointment is the way in which the committee deals with the suggestion about shorter hours. Speaking personally, I regard this as of the utmost importance. I believe—I am not quite so pessimistic as the noble Lord, Lord Spens—that we shall have to cope with a certain amount of unemployment for a very long time; that one of the ways in which we could deal with it would be by part-time employment, shorter hours and flexi-time, and that the combination of the three would give us the opportunity to enable people to work shorter hours and have more leisure time. At the same time we should produce the goods which we need. The chapter dealing with the extent of robotics in Japan indicates what is likely to happen as technology increases. Therefore I am a little disappointed that the committee were not prepared to face in greater detail the question of shorter working hours.
My third disappointment over the committee's report was that it did not touch at all on the part which can be played by aid in the production of jobs in this country. I believe that aid is a subsidy of a kind for jobs in this country. I spoke in one of the debates which we had some time ago about cocoa and sugar. The noble Viscount, Lord Long, made a joke about it when I
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spoke to him subsequently. I indicated the extent of employment in this country as a result of our importation of cocoa and sugar. I was trying to demonstrate that there was a link between these things. I would have welcomed an analysis by this committee of the whole question of aid and its relationship to jobs. I would have welcomed an analysis of the whole question of the world situation. An analysis of aid in relation to jobs would have involved an analysis of the role of the IMF and of the World Bank as well as of the aid that we make to underdeveloped countries. I am very sorry that there was nothing in the report on this particular point.
The other point I want to make concerns the question of black unemployment. There was nothing which illustrated the attitude of the Government on this matter in the speech made by the noble Baroness the Lord Privy Seal. The noble Baroness felt it necessary to explain what the Government are doing about women's unemployment, but there was not a word about black unemployment. Yet all the statistics show that blacks and Asians are suffering a higher rate of unemployment than the indigenous population. That being so, the Government must have a policy for dealing with this problem. I do not intend to delay your Lordships by going over ground which I have already covered. I am not going to repeat myself by re-stating all the things I have said about this matter, but I do believe that it is necessary for the Government to recognise that they have an obligation to do something about bridging the gap between blacks and the indigenous population, and combatting the discrimination that is the basic fuel behind the high degree of black unemployment. The Government have it in their power to do so. By serving as an example to other employers they would go a long way towards battling against and tackling this problem.
There are two further small points which I wish to raise which come as a result of patients talking to me at my surgery. They both deal with supplementary benefits. The first concerns insurance. When people become unemployed and reach the stage where they require supplementary benefits, they are expected to surrender their insurance policies because the value of their insurance policies is one of the things that is taken into account before they get their supplementary benefits. I have been told that by more than one of my patients. That seems to me to be wrong. It seems to me that what is required is a form of accommodation under which, during a period of unemployment, a person does not meet the premium but the premiums are added together and then the person pays a little more when he is back at work. That is the kind of thing that would be done for people who owed rent. I cannot see that it is necessary for people to be made to surrender their insurance policies during a period of unemployment. I hope that point will be taken on board.
The other point I have to make is that in this age of equality, we rather take it for granted that because a woman is quite happy to live off her husband's wages a man should be happy to live off his wife's wages. In fact, that is not true. To some extent, a man feels frustrated if he is forced to live off his wife's wages. When it comes to the stage where he has to claim supplementary benefits he will not get such benefits if his wife is working. It seems to me that something

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could be done that does not have to be sexist at all; when people have been unemployed and have to claim supplementary benefit, if the partner—be it the wife or husband—is working, the unemployed person should still get a portion of the supplementary benefit. I do not think that it should be the full amount, but it should be something. I put that forward because I know of the effect this situation has on men but I do not see any reason why women should not receive the same consideration.
My Lords, I was disappointed with the Government's response to the report. I know the noble Earl, Lord Gowrie, to be an able, aggressive and liberal-minded Minister, and, whatever may be his brief, I hope that in his reply he will be able to lift some of my pessimism and gloom.
8.6 p.m.
Lord Oram: My Lords, in my judgment this report is one of the very few bright spots shining through the general gloom of the discussion on unemployment. For that reason, I believe that its authors—the committee, and particularly its chairman, the noble Baroness, Lady Seear—are to be congratulated for the constructive and hopeful report they have produced and which is in sharp contrast to the continual counsel of despair which is offered by the Government. Speech after speech by Ministers on this subject tell us that the unemployment problem is but part of the widespread world depression; that there is little we can do about creating long-term jobs. There is much they claim that they do in respect of what I would call palliatives, but little they think that they or anyone can do about long-term jobs; and they offer us the prospect of simply waiting for the upturn in the economy which we are constantly promised is around the corner.
This report does not take that negative line. It faces up to the difficulties but makes positive proposals, and therefore gives us and the country hope that something can be done in the face of this dreadful problem of unemployment. The report uses strong words in various places to condemn the present industrial climate. For example, I very much agree with a sentence from page 146:
"We regard the existence of over three million unemployed as an affront, a prodigal waste of human resources, the source of much personal misery and a stumbling-block in the way of prosperity."
Unemployment is indeed a prodigal waste. It means lost output and lost revenue to the Treasury. On the other side, it means a vast public expenditure on those who are without jobs. It means the steady erosion of public services, which we are seeing, and, as the noble Baroness, Lady Seear, pointed out, there follows a whole catalogue of consequential social ills.
All this, it seems to me, is completely unnecessary. If we look around to our industrial areas there are machines lying idle. If we look to our financial institutions, there is money waiting for investment. It goes without saying that there are men and women available. Moreover, we have the need for the goods and services which those machines, that money and those people could produce. This is not only true in this country; it is glaringly obvious that the need is there if we look abroad, particularly to the third world, the theme that was taken up by my noble friend Lord Pitt, and about which I believe my noble friend Lord Hatch will have something to say when I sit down.
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Surely it is madness not to bring together those machines, that money and those men and women in order to produce those goods and services which are so much needed. Of course, that need, that demand, is ineffective because it cannot be expressed through purchasing power, and that is the great problem.
In an earlier situation in the 'thirties of this century it was Keynes and it was Roosevelt who showed the way out of world depression, and I do not accept, as it is all too fashionable to suppose these days, that their basic concepts are not relevant to the present troubles. I believe they are still relevant and that what is necessary is that we should apply in this new situation of depression Keynesian principles but in an updated way. Of course, many economists and many commentators have been saying this for a long time, but with apparently no impact of significance on the Government's thinking.
It is a welcome feature of the report that we are discussing that its general proposition is in line, in my judgment, with general Keynesian principles, and that proposition is also implied in the proposals put forward by my own party as put before your Lordships by my noble friend Lord McCarthy, in the proposals put forward by the TUC, and, in principle, though to a much lesser degree, in the proposals put forward by the CBI. All in their various degrees are asking for expansion.
But it seems to me that there is something missing in all these sets of proposals, including the recommendations of this report and including the proposals of my own particular party. The various packages are in effect promises to embark upon the road to full employment. I recall a White Paper, issued now many years ago in the late 'forties, which committed the Government and all political parties to full employment. But, despite all those promises that have been made along the way, over the years, we are now approaching 4 million people unemployed. I should like to suggest that the vital element that has been missing, and indeed is missing in this report, is the political will to ensure full employment.
What we need is a Government which is prepared not only to put in its manifesto a promise of full employment but an undertaking to guarantee it. The noble Earl smiles, but his noble friend Lord Carr, in a notable speech, used a phrase "unequivocal commitment"; that is what he wanted. Unequivocal commitment or guarantee, whichever phrase is used, is what I want, and I believe the noble Lord, Lord Carr, was thinking similar thoughts to mine in that particular part of his speech. If we could get that political will and that determined Government, I believe we could generate a climate of economic confidence and expansion that could and would prove irreversible.
In order to do this, I believe we should begin our annual budgetary calculations not as this Government and indeed successive Governments have done with money: we should begin those calculations with men, and of course with women. Instead of starting at the Treasury, we should, I suggest, start at the Department of Employment. The Minister at the Department of Employment should tell the Government how many jobs are needed, what gaps there are and what categories of jobs are needed in the economy. It would then, in the second place, and only in the second place, be up to the Chancellor of the Exchequer to consider

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the financial implications. He would have to ensure that there was sufficient purchasing power in the economy to buy the products which the workforce estimated by the Department of Employment would be able to produce.
He would first of all assess what incomes were likely to be generated in the economy in the ordinary way and, if that estimate fell short of the purchasing power needed to provide the Department of Employment with the jobs it wanted, then—and this is the significance of this report we have before us today—at that point the whole package of job creation measures which this report proposes would come into operation, creating those long-term, low-cost jobs the case for which was spelled out so effectively and strikingly by my noble friend Lord McCarthy earlier this afternoon. But even then, if these proposals were fully implemented, there would possibly still be a shortfall below the "unequivocal commitment", to use Lord Carr's phrase, which the Government would have entered into, and it would be at that point that special fiscal measures, reductions in taxation perhaps, increases in social security benefits perhaps—that kind of measure—would be brought into play in order to increase the nation's purchasing power to the required level. As I have said, if we had a Government prepared to give that undertaking and to implement it in that kind of way, then I believe the morale and willpower of the nation could and would be uplifted and confidence would be restored in all parts of the economy.
The Minister of State, Northern Ireland Office (The Earl of Gowrie): I am much obliged to the noble Lord for allowing me to intervene. Can he elucidate a little bit further on this issue of the nation's purchasing power, which is bothering me? There is no evidence whatever that there is any great depression of the purchasing power of the nation. Purchasing is rather buoyant at the moment.
Lord Oram: My Lords, if you have 3 to 4 million people unemployed, their purchasing power is well below what it ought to be. I am suggesting that that gap should be filled by the method which I have suggested. I have suggested earlier that the weakness of the recommendations of Lady Seear's wise report and of others is that they make no proposals to ensure their implementation. On reflection, I do not think that is a valid criticism. It is not the committee's job to ensure that. That is the task of Government. It is a case of providing and generating the political will. What we need is that political will expressed through a Government. It is the sadness of our present situation, facing, as the country does, this great economic crisis, that the Government we have in power are not, unfortunately, the Government which can generate that political will.
8.20 p.m.
Lord Hatch of Lusby: My Lords, I must apologise to your Lordships for not having my name on the list. It was not until I arrived here this afternoon that, after some investigation, I discovered that the one point on which I want to comment in regard to the report was unlikely to be put by anyone else. However, the
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context has been set by my noble friends Lord Kaldor and Lord Pitt, and referred to by the noble Lord, Lord Oram.
It will not surprise the noble Earl who is to reply that the few words I have to say are a continuation of the speech I made last week during the debate on the economy, but I feel that the Government have not yet given me a rational answer to the submission that I have consistently made to them over the past three years. Like other noble Lords, I am grateful to the noble Baroness, Lady Seear, for her report and for her speech. Domestically I believe this to be a very fine report. But my single point is that on the international side this report is extremely weak. Indeed, it omits a very great deal of the substance that underlies the present day tragic unemployment figures in the United Kingdom.
May I say to my noble friend Lord Pitt, "Yes, aid does provide jobs". I gave the figures last week so far as I knew them when the Labour Party was in office. Aid was providing at least 40,000 British jobs a year. I have not had any updated figures given by the Government. What I want to concentrate on, and what seems to be missing from this report, is any connection between the trading relationships of this country with the developing world and employment in this country. As I said last week, it is a crying disgrace of our generation that, while there are well over 3 million unemployed in this country, there are also 700 million to 800 million people living in absolute poverty in the outside world. Surely the Government accept the responsibility of filling the breach between those two facts. I ask the noble Earl to address himself, on this single issue, to what the Government are doing to increase our export trade with the developing world, with the 700 million to 800 million potential customers in the outside world who are outside the market at present, and thereby increase employment in this country.
Let me briefly repeat some figures that I gave last week. At present 25 per cent. of our total exports go to the developing world. They provide 1 million British jobs. Of those exports to the developing world, 90 per cent. are manufactures. But that figure of 25 per cent., which is the last figure I was able to obtain, is pitiful compared with the 35 per cent. from the United States, 36 per cent. from the EEC and, above all, with the 41 per cent. from Japan. I again draw the noble Earl's attention to the example which has been set by Japan, and which is too little known. The Japanese recognise that if they are to be able to import the raw materials which they need from the developing world, they must invest in the developing world and they must export to the developing world. They are content to have an annual deficit of 10 billion dollars with the developing world because they recognise that only by keeping up this trade cycle can their own unemployment be kept down to between 2 or 3 per cent. and at the same time their industrial production go on increasing.
We have not been able to break this vicious circle despite all our advantages and our historical connections with the various parts of the developing world. The developing world cannot buy our goods because it does not have the purchasing power. Why does it not have the purchasing power? Look at the price of commodities. Look at the price of copper.

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Copper is being sold at a price which is lower than the cost of production. Therefore, one is getting terrible problems of lack of foreign exchange which is leading, through high interest rates, to great debt problems and threatening the entire financial system. We have not been able to break that vicious circle. What are the Government doing in order to break it? Employment in this country depends far more, in the long run, on our trade with the developing world than it does on trade with the developed world, which consists of our competitors.
Finally, let me kill one myth which is common on this side of the House as well as on the Government side. There is a myth that a large number of jobs in this country are in danger as a result of imports of manufactures from the developing world. Only a quarter of the imports from the developing world are manufactures, and a half of our total imports from the developing world come from four countries alone—Hong Kong, India, South Korea and Taiwan. Let me take the central issue which is so often used—again, on this side of the House as well as on the Government side—as a reason for being extremely cautious and very conservative in our attitude towards imports from developing countries.
The issue of textiles is often used as an example of British people losing jobs as a result of the import of manufactures. Again, I have to apologise for not having the current figures. These are the latest figures I can obtain, but they show what is happening. In 1966, 66 per cent. of our textile imports came from other developed countries; our competitors. Only 33 per cent. came from the less-developed countries. By 1975, those figures had changed to 81 per cent. of textiles coming from the developed world and only 18 per cent. coming from the lesser-developed countries.
I suggest that here is a simple, straightforward and rational case. It will only help this country and the economy of this country; it will only allow us to get out of the depression into which we have sunk; it will only allow the objectives of this report on unemployment to be reached if we are able to break that vicious circle, if we are able to develop our trade as well as our aid with the 700 million to 800 million people in the developing world who are living in absolute poverty.
It is by encouraging particularly the manufactures of the developing world as imports into this country that we can assist in building up the purchasing power of the developing nations; a purchasing power which can be used to buy our more sophisticated production, the products of our new technological revolution. It is only by these means that the objectives of this report can be achieved.
8.32 p.m.
Lady Saltoun: My Lords, I too should like to apologise to your Lordships for not having given earlier notice of my wish to speak. I did not realise until the middle of the debate that the three points I should like to make were unlikely to be made. I should also like to add my congratulations to those of your Lordships to the noble Baroness, Lady Carnegy, on a most distinguished maiden speech, and to the noble Baroness, Lady Seear, on the report of her Select Committee.
First, I should like to urge the Government to consider building toll motorways. This would give a
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lot of employment, and we desperately need better roads. Other countries have them, and so why not Britain? Secondly, I would urge the Government to implement one particular recommendation in Chapter 14, paragraph 7, of the committee's report. That is to increase the number of home helps and people involved in day-to-day care of old people so that more of them can be cared for in their own or their families' homes which many, indeed I think most, of them would prefer instead of in residential homes and hospitals at far greater expense to the country.
Thirdly, in view of the fact that the cost to the country of unemployment is, I believe, over £4,000 a year per person unemployed, would it not be possible to set up some scheme by which rebates against employers' national insurance contributions, up to perhaps between £70 and £80 a week per extra person employed over and above the employers' normal workforce, could be given? Or, in the case of someone who does not employ anyone at present, could there not be a voucher for a similar sum? Safeguards would of course be necessary, but people employed under such a scheme would be paying PAYE and would be cheaper to employ than "moonlighters" and less likely to enter the black economy.
8.35 p.m.
Lord Allen of Fallowfield: My Lords, I rise to take part in this debate, and at the outset I obviously would want to join with those who have preceded me by saying how much I personally enjoyed reading the report of the noble Baroness, Lady Seear, and her colleagues. Certainly it is a great deal of food for thought. It avoids the ideological dogma that perhaps one is associated with in many other ways. I also enjoyed the supplementation of that report, which interested me considerably. The second point, on which I am sure again there will be no controversy, is to say, as others have done, how much I enjoyed the maiden speech of the noble Baroness, Lady Carnegy, with its depth of information and statistical detail born out of experience of dealing with manpower problems. I do not suppose there could have been a more fitting association of a maiden speech with the subject matter that has been under examination here this afternoon and this evening.
It is impossible at this time of the evening to attempt to make a contribution in this debate without at some point or another cutting across and repeating figures—particularly figures—that have been used by other speakers in this debate. But for a few moments I ask the House to examine the subject matter that has been under discussion against this backcloth. In January 1982 we had registered unemployed who exceeded 3 million. That was an increase of over 25 per cent. from January 1981, and more than double the level of unemployment two years ago. Now there are more people out of work than at any time since records began in 1886. I am reliably informed that that is statistically correct. The cost of unemployment to the Exchequer last year was over £12 billion. This year, with the average level of unemployment well above 3 million, the cost could be in excess of £14 billion. The Government attempts to cut public spending and reduce borrowing are in my considered opinion self-defeating against the

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background of the cost to the Exchequer that I have just referred to.
The tragedy of the present economic crisis is that it comes at a time when the United Kingdom is a net exporter of oil, unique among its partners, and is receiving large and rising revenues from North Sea oil. Indeed, one is reliably informed that the total current account surplus of possibly £6 billion or thereabouts in 1981 was unfortunately not due to a successful export drive. Without oil there would have been a deficit of over £7 billion. This reflects, in my view, the true state of the British economy.
The Government are estimated to have received over £8 billion in North Sea oil tax revenues in 1981, and they are expected to rise to £20 billion a year by 1986. However, these revenues have been used to finance the rising cost of unemployment—a product of the present administration despite all that has been said, part of which I accept, about the world recession. They have been used to finance the cost of unemployment, and not to ensure a massive increase in overseas investment and to regenerate the British industrial base. No new jobs—very few at least—are being created for the time when the existing oilfields become exhausted.
Output in Britain has fallen by over 7 per cent. since the present Government came to office in May 1979. Manufacturing output has fallen by over 16 per cent. As for long-term productivity, which we in this country have been talking about for as long as I can remember in my active public life—I can remember previous Administrations which set about doing all they could to murder it and the consideration being given to the case for it—it has been damaged, certainly not improved, during this recession. The level of training and investment has been sharply cut back and manufacturing investment is over 21 per cent. lower now than it was in 1979, and, as one who served on the Wilson Committee of Inquiry looking into finance for the City and industry generally, I find that very disturbing.
The Government's policies have been highly deflationary; they have reduced public expenditure, increased taxation, raised interest rates—thankfully, we see the opposite taking place, at the moment—and caused the exchange rate to trise to a highly uncompetitive level throughout the whole of 1980. Finally—because I hear quite a lot of talk about it—I ask the Government to give evidence to the House that there is indeed statistical and factual proof that workers have been pricing themselves out of jobs or that unemployment benefits are too generous. I do not believe that there is statistical evidence to justify that. I believe it is a fallacy and no more than an excuse, looking for issues which are well beyond those which everyone who has to deal with the problems of today knows to be genuine.
I listened intently to many of the remarks of previous speakers in the debate. I noticed, in particular, that the noble Lord, Lord Carr—I regret that he is not in his place at the moment—paid tribute to the extent of money allocated by the Government to deal with the problem of unemployment. A few seconds later he said—on this, I totally agreed with him—that something must be done to encourage demand in the United Kingdom. Then he asked the House to accept that the issue confronting us now was whether we
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accepted the meanness of the present Chancellor of the Exchequer or the madness, as he so described it, of what I believe is described as the Shadow Chancellor of the Exchequer. I am not sure whether the noble Lord is aware—he surely must be—that there are many people (human beings, men and women) in Britain today who believe they are experiencing a combination from the present Exchequer of both meanness and madness, so it is not a question of posing that distinction between one set of politics and another. That is how I see it and I am sure that many people who are the casualties of this system are also seeing it like that.
I have spoken about unemployment and its cost. I have also referred to the tragedy of the present economic crisis as we are seeing it unfold. In recent years it has become fashionable to talk about Britain's industrial decline. Indeed, if one is to accept the opinions of a number of pundits, just as Britain was the first country to experience the industrial revolution, so we are clearly on the verge of being the first country to experience the process which, rightly, has been given the name of de-industrialisation.
There is no question but that our manufacturing sector has performed badly in recent years. Figures show, for example, a consistent decline in manufacturing's percentage share of the total labour force. Of course, that fact in itself is not necessarily serious. But, when one combines it with statistics which demonstrate manufacturing industry's declining share of total United Kingdom investment and with the decline in the percentage contribution of manufacturing to gross domestic product, then one is forced to conclude that something is seriously wrong in Britain. I am sure that, in stating that, I am on uncontroversial ground, because there can be little, if any, disagreement over that inescapable fact. However, when it comes to analysing the causes of the decline, or even more so when remedies are called for, then, as we all know, there is an infinite variety of proposed correctives.
In the brief period during which I intend to speak tonight it would be impossible for me not to enter a particular minefield, and I begin by raising five points. First, two inseparable problems have faced our nation for all too long; namely, the twin problems of inflation and unemployment. Secondly, neither, it would seem, is capable of easy solution, but both, in the considered view of many—particularly those who support an alternative strategy to that being operated in Britain today—can be combated, and will be solved and their adverse effects minimised, only by a combination of political will, sound economic management and industrial common sense and effort. There is a tremendous void there, in terms of the practical world outside, as they see it.
Thirdly, the market in which we operate is not, as some would have us believe, a market of abstract theory, but is defined by what our competitors do and how they perform. Unfortunately, time, as many have said in the debate, is not on our side. North Sea oil revenues, the present bulwark of the British economy, are finite, and in the short term the rising tide of manufactured imports could become a flood which severely diminishes the options that we have. Finally, protection, in my view, is not a remedy, other than on a selective basis, for the causes that have brought us to

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this situation.
It must be made clear that only by harnessing more effectively than we are at present all the human and technological resources of the nation, and dealing with the many barriers to competitive performance, will we reverse the position. I should be remiss in my commentary about this if I failed to say that all the interests—not one or two but all of them—on a tripartite basis have a part to play if we are to see our way out of the problems which have been confronting us for so long.
I have never personally wavered in my conviction that if the achievements that we seek are to be sustained, all three parties must work in close and constructive partnership. That, I regret to say, is not happening at the present time; it is a matter of great regret that it is not. I am convinced—and I am sure that the view is shared elsewhere in this House—that such a partnership is essential to deal with the interrelated problems of international competitiveness, the effective use of capital, pay, prices, productivity, output, growth, public expenditure and employment, which are all central to our economic future.
It is a little aside to what I really want to say tonight, but there is in the report a sentence with which I totally concur. It is the sentence which refers to the question of incomes policy. I express a personal view and I give that my support because I genuinely believe that, until such time as we have a sensible basis on which to deal with wages, profits and dividends in this country, we shall continue in the morass that we have been in for so long.
Reliance on market forces is no solution to the problems of the new industrial revolution, which is based on North Sea oil and micro-electronic technology. The Government, business, yes, and financial institutions, and the trade union movement by their action help to decide how the economy works. This has fundamental implications for the proper handling of the relationship between these great interests. In particular, I believe that there must be closer working understanding involving the trade union movement and the TUC, with its broad and undisputed representative capacity, and there is a need for it to accept that its expanding role also carries with it wider responsibilities.
On the question of industrial and technological change, I first of all recognise and share the anxieties about employment prospects in the next few years. No one can be other than very concerned about the face of Britain at present and the manner in which our economic and social problems are unfolding before our eyes. Today, it is a matter of deep concern that it is far easier to identify areas where jobs will be lost than areas where new job opportunities will be created. However I firmly believe—and I am certainly most optimistic about this—in the adaptability and skills of our people, the skills of men and women at the bench and on the shop floor, the expertise and know-how of management. The process of adaptation and the matching of skills to the prospective changes in world demand must go ahead with all speed—and it is very tortoise-like in its movement at the present time.
Moreover, technological change must be seen to benefit the whole of society, and in my book among the benefits there certainly ought to be shorter hours,
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improved conditions of work, and, most definitely, improved education. The report before us today deals with those three issues, though it may not accept the view about shorter hours. Certainly the Government's view is contrary to that. I certainly consider that, if you are going to ask people to accept technological change and to work for it, people will be much more satisfied if they believe that they will be the beneficiaries of it, and if indeed they understand themselves as being the beneficiaries.
I believe, too, that the prospective developments in technology call for the closer relationships between the great savings institutions in Britain. Here I refer to pension funds and insurance companies, which collectively account for more than one half of the equity in the Stock Exchange in Great Britain at the present time. The challenge that we face is to provide additional resources through Government in a manner which helps to diversify and strengthen the forces for decision making, to fill the gaps in the market that our competitors are filling more successfully, to assist the taking of risk, and to be the midwife of corporate change. In my view that is by no means an impossible task if the will is there and the economic climate is right. Here the human relations side is fundamental, since the willingness to change, whether one is manager or managed, lies at the heart of our industrial problem?
As so many have said today, the current economic difficulties confronting the United Kingdom are related to long-term problems and of course to the world recession. But there are other factors which have had a profound and damaging influence, prolonging and deepening the recession. The two main factors are as follows. I shall refer first to Government monetary policy. It is argued that high public sector expenditure leads to a high public sector, that high public expenditure entails high taxes and consequent lack of incentive to create wealth. High PSBR reduces investment in industry and pushes up interest rates. Ask any entrepreneur in Britain whether that is not the case. Ask any of the management leadership of the great industries of Britain at present and they will tell you in no uncertain manner that that is the case. I speak as having done three terms of office as the chairman of the chemical EDC until my resignation from it in November of last year, and I must say that over the previous two years in particular I never witnessed a more depressing spectacle than that of the leadership of an industry of such standing feeling so depressed about its present and future under the existing policies to which it is asked to conform.
So, if attempts to control the money supply by reducing PSBR have been deflationary, intensifying the recession, capital expenditure has been cut, which in itself has a strong deflationary influence. But public expenditure has in fact been forced upwards to meet the costs of rising unemployment. So it appears to me that the Government seem to be caught within a vicious circle of deflation to contain the growing costs of unemployment within their own expenditure targets. High exchange rates and interest rates have been very much the subject of discussion. Attempts to control the money supply through high interest rates have strengthened the attractiveness of sterling. So, too, of course has the influence of North Sea oil. Increasing demand for sterling has led to high

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exchange rates. It is said that it is artifically over valued. This has made exports substantially more expensive and of course imports much cheaper. As a result, the competitive position of United Kingdom producers has deteriorated even further, while import penetration has increased.
I know that the Government's view, or so I have heard—and my discussions with many of their representatives and in public debate confirm this—is that industry will become more efficient and competitive, emerging leaner and fitter, and in a stronger position at the end of the recession. It is also argued that the recession has now bottomed out, and that recovery is beginning. Of course, there are many who dispute that particular view, and I am one of them. I see very little tangible evidence that the recession is now bottoming out and that recovery is beginning—that is, evidence of a tangible character.
Now, quickly, I turn to the current recession. That shows that the economic downturn of 1974 to 1975 (which, as everyone will accept, was precipitated by the oil crisis) was followed, not, as in the case of previous cycles, by full recovery and subsequent expansion, but by very sluggish and partial recovery. This lasted until the end of 1979, when the United Kingdom economy entered a deep depression, the severity of which has not been seen since the 'thirties. We know that the recession has produced a dramatic intensification of the present economic problems. It has caused a high and unacceptable increase in unemployment. As I said earlier, there are now in excess of 3 million registered unemployed, not counting those supported by MSC programmes, which I think are roughly about 350,000, and the unregistered unemployed, over 700,000, notably married women.
The national GDP has fallen 6 per cent. below the 1979 level, which represents a decline in output on a scale not witnessed since the early 'thirties—and this, again, despite increased oil production. Moreover, manufacturing output has fallen by 50 per cent. over the last two years; and manufacturing employment has declined by 1.3 million since 1979. Manufacturing investment has fallen by more than 20 per cent. since 1979. Furthermore, the service sector, previously providing a vital source of employment growth, is now also losing jobs. Between the end of 1979 and mid J 980 this sector of employment fell by over 400,000. These trends have been described as depressing. Surely a more descriptive term must be "disastrous".
It is clear that within a situation of world recession United Kingdom industry has had to face stronger competiton, not only in export markets but also at home, where an increasing market share is regrettably now being taken by imports. While it is clear that the recession is an international problem, it is also unmistakably clear that it is much more severe in the United Kingdom than it is in many other industrialised countries, although temporarily moderated for those in work by the contribution that North Sea oil makes to trade and tax revenue to support the unfortunate unemployed.
While total employment fell by 7 per cent. in the United Kingdom between 1979 and 1981—and I cannot quite understand why 1979 figures in this so much—it actually increased in Germany, Italy, Japan and the USA. Unemployment has also risen much
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faster in the United Kingdom than in the rest of the EEC. The current economic difficulties confronting the United Kingdom are undoubtedly related to long-term problems and the world recession, but there are other factors which have had a profound and damaging influence, prolonging the depression and the worrying recession, and devastating industry generally.
It is against that background that one is obliged to make the comments that I have made, and I see and recognise these comments, as I do much of what I read in the report, as an indictment of the situation confronting Britain at the present time. I do not believe, and nor does the great wide public believe, particularly those who have been casualties of this system, that it is good enough to say that it is all the fault of somebody else, that it is the fault of the world recession. I share the hope which has been expressed here today that there will be room in the Government's mind to give some deep consideration to the need for some expansion in the economy in an attempt to change a situation which is depressed to one which is more buoyant.
9.5 p.m.
The Earl of Gowrie: My Lords, I promised to try to exercise a self-denying ordinance and, in spite of the temptations put in my way by the noble Lords, Lord Kaldor and Lord Balogh, and now most recently by the noble Lord, Lord Allen, to resist engaging in a debate on macro-economic policy. We debated economic affairs on the Queen's speech and I had the privilege to wind-up last week's before your Lordships. In the spirit of this report we now look more closely at the effects of policies, and the effects of economic phenomena generally on individuals and their lives, and discuss how we can try to improve things.
Nevertheless, I must point out to the noble Lord, Lord Allen, that people do not deflate economies for fun. They deflate because they run out of money or they run out of credit. Their borrowing capacity is reduced; and if the Government are to borrow more, interest rates will go up, and even in conventional or Keynesian forms that will depress demand. If Governments tax more, that will also depress demand. If exchange rates fall, as I understand the noble Lord would want, then our imports of raw materials will go up. That, again, has a depressive effect on the economy. I must also say to the noble Lord, and indeed to many in the debate who referred to North Sea oil, that it is only a small part of the total economy. It is a very valuable part, valuable in easing us through painful transitions in our economy as we move from one kind of industrial society to another. Nevertheless, it is only a small part of the total economy.
I felt the presence of a ghost at the feast of the speech of the noble Lord, Lord Allen. The ghost was the noble Lord, Lord Lever. He not only disagrees with the present Government's policy but disagrees, and has done so publicly, with the policy of the Treasury of which he was a distinguished member. He said that if monetary policy is wrong—and, he said, he believed it was wrong—whether under Mr. Healey's Treasury or Sir Geoffrey Howe's, it can only account for about one quarter of a million unemployed. He said that he believed it was 100 per cent. wrong and therefore he blamed the Treasury for a quarter of a million

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unemployed. He said that the remainder were due to factors outside our control as which we must play our part with the international family of nations in trying to control. That seems to me to be a fair comment to make, although I do not accept that either the previous or the present Government were 100 per cent. wrong in their policies. I think both of us frequently face the same arithmetic.
To return to the debate, it is my pleasant task to start by congratulating my noble friend Lady Carnegy of Lour on a notable maiden speech. I am privileged to have a "mole" among her relations and my mole has informed me that she is a very successful business woman as well as a commissioner on the MSC. The MSC is a fine, upstanding body of people but it certainly needs more successful business men and business women among its numbers, I am delighted that she is there.
My own role, in terms of this debate and this Select Committee report, is to me at any rate an interesting one because I believe that I was a kind of godfather to the Select Committee when it was set up. There was some resistance from my noble and right honourable friends to the idea of the Select Committee. Unemployment is not a topic that a Government flushed with electoral success immediately want to contemplate. I remember being able to resist various intimations that we might not have such a body; that it would only create a stick with which to beat the back of the Government and others. I believe that my advice, which I am glad my colleagues accepted, has been vindicated by the report, which is an excellent one. Certainly, the Government have no quarrel with the analysis that has been made of the causes and problems of unemployment, although we do quarrel with some aspects of the suggested remedies to the problem. I am not going to spend much time on discussing the suggested remedies and our own conclusions about them because, as your Lordships will know, the Government took the report most seriously and issued a White Paper response to it. Our feelings are set out very clearly there and they were echoed today very cogently by my noble friend Lord Vaizey.
When I was preparing this speech, I looked back to the first contribution I made to your Lordships' House as an Employment Minister in the lifetime of this Government. I found that in June 1979 I said, if your Lordships will forgive me for quoting from myself:
"Southern Britain and pockets of the North adjacent to the richer agricultural areas remains a stable and prosperous country exporting services, especially financial ones. But crudely welded to southern Britain is the debris of a great manufacturing civilisation, our industrial Mezzogiorno, as I have always thought it. a kind of Italy in reverse. When one contemplates this the remarkable thing is how many people are still in work and not out of it. My own instinct is that real employment in the sense of value-adding Productive work is much less in our economy than appears. By inference, therefore, prospective unemployment is greater than it is at all pleasant to contemplate".
I was very interested in the comment made by the noble Lord, Lord Kilmarnock, that we have the largest workforce in relation to population in the European Community. Although unemployment has doubled (as it doubled under the previous Government) since I uttered those words, I hope that your Lordships will not misinterpret me if I say that in my view events have shown me to have been rather too pessimistic. It
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has been remarkable, in my view, how much industrial and manufacturing employment has held given the situation inherited not just from the previous Government but from 20 or 30 years of national and international decline. This decline occurred in terms of our share of overseas markets, as was mentioned by the noble Lord, Lord Kaldor. I also see some encouraging signs that that manufacturing capacity—for I do not agree with my noble friend Lord Vaizey that we shall be able somehow to slide easily out of manufacturing and towards a predominantly service economy—is now starting to hold on to its markets. If it is successful in this present unpropitious climate in holding on to its markets, then it should be successful in being able to increase them as things improve.
May I, too, pay tribute to the noble Baroness who opened the debate. One of the factors which urged me to urge upon my colleagues that the Select Committee should go ahead was the fact that it would be chaired by the noble Baroness. I have always suspected the noble Baroness of being somewhat of a "dry" at heart. She pointed out that demography was not on our side. The 'sixties babies' bulge—to which I have to confess I contributed—is finding its way on to the labour market before the immediately post-First World War baby bulge comes off it. That makes a very bleak climate for our young people as they come on to the labour market in unprecedented numbers. So it was very welcome to the Government that the Select Committee gave so much attention to the stock and flow of unemployment, and also pinpointed the size and therefore the relative success of the labour market. We should not be too depressed about the labour market. It is remarkable how much it services the needs of what is a very large workforce, a workforce which, I am glad to be able to say to the noble Baroness and to the noble Baroness, Lady Lockwood, has a large number of women in it.
In the light of this, the report narrows the problem down, it seems to me very fairly, not as—with respect to him—the noble Lord, Lord Allen did, to general economic issues or economic policy of one kind or another, but to the permanent and underlying phenomenon of the long-term unemployed, and to those who have difficulties in making the transition from school to work. Our focus should be on them. If the Government's economic strategy is successful—and I am profoundly convinced that it will be—it will certainly make lives a great deal easier for those who have skills and who have opportunities. There are already sufficient signs of this to give one confidence. But no economic policy—successful or unsuccessful—is liables to make a very great dent in the present climate on the problem of the long-term unemployed. So I agree with the report that we may have to start thinking laterally about what happens where they are concerned. I find myself in considerable agreement here with my noble friend Lord De La Warr. When one is extolling the virtues of new technology, one does not find many possibilities in that field for redundant people who have worked in, say, steel foundries all their lives. The transitions are highly complicated and difficult to make.
Because of this, I welcome the way that the Select Committee report—and indeed all the speeches today—were at one in emphasising the need for

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training. By concentrating on the problem of the long-term unemployed, we concentrate on the problems of low skills and low possibilities. These can only be solved through training. I was glad last week to be able to record that even the noble Lord, Lord Scanlon, had a good word to say for the Government in respect of training. We must, as the noble Baroness said, reduce the numbers of unskilled workers in our labour market. If we could do that, I am quite convinced that we would halve our problem, if not numerically right away, at least in terms of the trends and patterns which are developing.
I also agree with the noble Baroness when she says that youngsters of 16 to 18 should be trainees rather than employees. If your Lordships think of yourselves—as I certainly do—as professional or middle class persons, you do not really long for your children to enter the labour market at the age of 16. You do not urge them to do so. I should have thought that with the blurring and abolition of class barriers in modern Britain, we should all wish those young people—voluntarily, of course—to seek later rather than earlier entry to the labour market.
The noble Lord, Lord Rochester, in this connection brought up the problems caused by the way our young people expect comparatively high levels of pay with older workers in their early years of employment. One of the difficulties I had as an employment Minister was to find jobs in and around the £40 mark rather than the £25 youth allowance mark or the ordinary clearing levels for labour which started at about £60 a week. If I had been able to locate a lot of £40 jobs, I could certainly have placed many young people in them. There is food for thought in that and in our Young Workers Scheme.
I also agree that training and retraining is not simply a matter for the young. It is very important in terms of adults, particularly married women who wish to re-enter the job market—and why should they not? Here again I have to repeat the original cause of my disagreement with the noble Lord, Lord Spens: were it not for the efforts of a particular married women—my wife—I should scarcely be able to afford to address your Lordships in this capacity.
The noble Lord, Lord McCarthy, gave us warning that he could not remain in his place to hear my reply. Equally well, he will not expect me to give as detailed a consideration to his remarks, as if he were here. The doubts I myself feel about the noble Lord's solutions were most cogently expressed by my noble friend Lord Vaizey. When you boil down the suggestions of the noble Lord, Lord McCarthy, and allow for his extreme skill and expertise in their presentation, they come to something like "let us subsidise more prospective members of NUPE", or more prospective members of something which seems remarkably like NUPE to us. The noble Lord asked rhetorically why public sector pay should be more inflationary than private sector pay. As chairman of the railway pay board, he certainly should know the answer to that. He doubted—and I welcome his doubt—whether general expansionary policies by any Government could create the jobs that were needed. He asked me what happened to trainees at the end of the special programmes assembly line and whether they would just be recycled into other special programmes. He noted the low level of placement, which is a level we
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would certainly like to see improve. I believe he was best answered by my noble friend when she said in her maiden speech: "We are in a chicken and egg situation. You have got to start somewhere, and it is very important to educate people in the workings of the labour market if they are to have a chance in bad times as well as in better times to compete successfully in it."
The noble Lord did not go into sufficient detail about the great problem over the numbers of lower paid public sector jobs which enjoy a union monopoly. When I was an employment Minister there were already movements to try to unionise those in the Youth Opportunities Programme. I have no objections, as the House will know from our debates on the Industrial Relations and Employment Bills, to trade union activities; but it is not really compatible with the point made by the noble Lord, Lord Rochester, in terms of young people pricing themselves out of jobs, for them to be encouraged to enter cartels which, fairly enough, exist largely for the purpose of raising levels of pay.
I said I would speak a little more specifically about training. I do not think the Government's priorities given to training can be much in doubt. We intend with the youth training scheme to take an opportunity to give the country and employers a better equipped and better qualified and better educated workforce. The new scheme will be fully in operation by September of next year and will provide school-leavers with a year's training as a foundation for work The House will note that the coverage of the scheme and the level of the allowance is very much in line with the committee's recommendations.
This scheme will be costly. By 1984–85, which will be the first full year, we expect to be spending over £1 billion a year on training young people. That will be over half our total expenditure on special employment measures, and I think it reflects our concern to give young people a good start in their working lives. It is also in line with the recommendations made by the Select Committee's report. We are trying to balance this with our provision for adults. We are doing a substantial amount of adult training. About 50,000 people a year, many of them unemployed, benefit from courses provided under the Training Opportunities Programme, largely in skill centres and colleges.
However, there are limits to the amount of training it is sensible to provide in this way when in many occupations placement rates for those competing for training have fallen substantially. It does not make sense, surely, at the taxpayers' expense to expand existing training provisions in such occupations. Indeed, we have to go on looking critically at the effectiveness of existing courses. In any case, improving training and increasing job opportunities is not just a matter of providing more training places and having a kind of "numbers game" in terms of the training places provided. There is a big job for industry to agree on training standards—I know that is close to the noble Baroness's heart—for all important occupations and removing restrictions on people's access to training. This job is not simply a question of resources. It is a question of industry's and trades unions' willingness to tackle outmoded attitudes and practices, and it is a vital part of the MSC's and

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Government's new training initiative. In the longer term, whatever system of organisation and funding we adopt, it will not give us the results that we need, unless it is flexible and adaptable enough to meet the constantly changing requirements for skills. Fast footwork is really the biggest essential in today's labour markets.
Many speakers reminded us that we have to make full use of the new technology and new methods for training, such as distance learning. I am glad that the noble Lord, Lord Rochester, mentioned the Open Tech, which was very dear to the heart of my Secretary of State when he was Secretary of State for Employment. We will be spending £4 million on that in the next financial year and it will give many, who would not otherwise have a chance of that kind, access to training in a new way to become technicians and supervisors.
If I may come to the question put to me by the noble Lord, Lord Kilmarnock, it was a somewhat technical one. I have an answer for it, but it might be better, since the details are complex and vary according to whether an employee is contracted in or out of the state scheme, if I were to write to the noble Lord. If he is not satisfied with my answer, perhaps he would like to put down a Starred Question on the subject.
The noble Lord, Lord Kaldor, and I have had many exchanges, both public and private, on economic affairs. As I said last week, I have never once heard him speak without learning something fresh. His is a remarkable mind and your Lordships' House is very fortunate to have him. This time I was surprised to find that in my official, as well as in my personal, capacity, I agreed with a lot of what he said. We certainly agree with his analysis on the loss of competitiveness and the effects of the loss of our share of world markets. We do not, of course, regrettably—however much we should like to do so—agree with his belief that we can shout, "Stop", to the world, "we want to get off for a time". I yield to no one, not even to the noble Lord, Lord Kaldor, in my admiration of the great Conservative Prime Minister, Mr. Stanley Baldwin, but our overall share of world trade was very large in his time. In putting the protective mechanisms around us we were then facing fewer competitors outside. We were generally in a better case in terms of our world share. I have to concede to him that the Japanese experience is a persuasive one, though, of course, we are all using might and main at the moment to try to get the Japanese to liberalise their own trading markets, and my noble friend Lord Cockfield had a lot to say about that last week. I am also worried about what would happen to our internationally and globally successful financial markets, where, on the whole, we are ahead of the Japanese, perhaps because they are less interested in them. What would happen if we retaliated over productive manufacturing and they were forced into the sectors like banking and insurance where we are still very successful.
I have already mentioned the speech of my noble friend Lord Vaizey. The nub of his difference from the rest of the committee is that he wanted demand-related or demand-encouraging activities to be done privately. He wanted people to set up in business for themselves. It certainly seems to me, as one who
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travels a great deal in my work by public transport and by rail, that there would be nothing against small businesses servicing one's needs in catering, rather than the bureaucracy of British rail. I am sure that many other noble Lords have had similar wishes from time to time.
The noble Lord, Lord Wolfenden, mentioned that married women have started to break down rigidities in the workforce—a point echoed by the noble Baroness, Lady Lockwood—and I certainly agree with that. I come quickly to a remarkable speech by my noble friend Lord Carr. It was, of course, critical of the Government and may get reported on that score alone, which would be a pity. My noble friend's speech should be reported in its entirety, because he was certainly supportive of our overriding need to reduce inflation and improve competitiveness. This need is the cornerstone of the Select Committee's report.
If I have a criticism of my noble friend it is that he seemed to be asking us to rob Peter to pay Paul. As the successful chairman of a great company he was stern about the need for lower levels of taxation and lower levels of interest rates. But he also wanted us to spend more money, despite that conflict of priorities. It is extremely difficult to know exactly how to set the public sector borrowing requirement, but the key factor in the short term is the judgment of the money markets as to what you are up to. The Government are such a big borrower that we could create havoc in the money markets. I am sure that the Prudential would not be very pleased if we did so.
The noble Lord, Lord Campbell of Alloway, made some very interesting suggestions about what practical legislative improvements we might make in order to increase employment. If I may, I shall take up the points which he made with my noble and learned friend the Lord Chancellor.
The noble Lord, Lord Oram, looked at me sternly across the Chamber and said that I had to give an unequivocal commitment to full employment. I do not see how any Government in the world can do that. We are competing very fiercely at the moment.
Lord Oram: My Lords, if the noble Earl would give way, in using that expression I was quoting his noble friend Lord Carr of Hadley.
The Earl of Gowrie: My Lords, my noble friend can answer for himself, but I do not think that he asked for such a commitment from me. He is far too experienced and knows the impossibility of delivering it and the terrible things one could do to people's rational expectations if one were so foolish as to do so. It would be quite extraordinary to ask the Government, as the noble Lord, Lord Oram, wished, to ask their Chancellor to decide how many jobs might exist in any given field. How would the Chancellor decide, for instance, the number of jobs that should exist in motor-car importation and distribution? It would be a totally impractical task.
I have, however—again somewhat to my surprise—some sympathy with the speech made by the noble Lord, Lord Hatch of Lusby. I certainly agree that third world and developing world markets are crucial to this country. But there is nothing whatever to stop our financial institutions or our manufacturers and exporters from developing trade links with third

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world countries—and many of them do. Where the noble Lord and I part company is that he feels that in some way the Government can take on this business exclusively.
Lord Hatch of Lusby: My Lords, I wonder whether the noble Earl would give way for a moment. What the noble Earl does not know is that in his absence from the House I specifically raised with one of his colleagues the use of the ECGD to assist British exporters to the third world. Each time I raised the question I had a negative answer from the Government.
The Earl of Gowrie: My Lords, the Export Credits Guarantee Department system exists exactly to do that—to protect and help exporters; but obviously it is a finite system since it is costly. The Government cannot finance exporters' activities indiscriminately, particularly in a world which, as the noble Lord himself was fair enough to admit, has great financial problems so far as the developing world is concerned. The noble Lord himself asked how the developing world gets the money to pay for our goods. The international banking and financial difficulties cannot be compounded. We dealt with some of those points in our debate last week, so I cannot go into them now.
May I say to the noble Lady, Lady Saltoun, that I, too, have a soft spot for toll motorways. It seems to me that a Government interested in trying to reduce public sector borrowing and get more private participation in the whole economy should be favourably disposed towards toll motorways. I have never quite understood the argument against them, and again I shall bring the point to the attention of my right honourable friend.
When I was employment Minister we tried to increase the number of home helps and I imagine that the Manpower Services Commission still does so. We had considerable problems with union resistance. My noble friend Lady Carnegy of Lour will know how difficult these can be, but I am glad to say that it was the case, at least in my experience, that in the end people were helpful. We did succeed in quite a few cases.
May I close by saying that the real service to the unemployed that we in this country have to provide is to break the vicious inflationary circle of high wages, high costs and the consequential need for expensive benefits for those out of work. While people are still young and before they take on major responsibilities, they can generally afford to take lower wages in return for experience or training. If they do so, the employer can afford to employ them. This is one lesson that our competitors—for instance, in Germany—have learned and one that we did not have to learn a generation or more ago. I very much agree with what was said by the right reverend Prelate the Bishop of Lincoln, that perhaps we did not learn sufficient lessons during the period when we enjoyed full employment. We need to provide more low-cost jobs for those people who can afford to take them and who otherwise, because of the disciplines of the market place, would have no jobs at all. We can do this through encouraging part-time work, through the job splitting scheme and through the young workers' scheme, and also through the part-time jobs provided under the community programme.
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I have some sympathy nevertheless with those who are critical of the schemes that we provide. They are not the ideal answer; in the long run, the answer must be in general economic achievement and success. Lower inflation, which the Government can reasonably claim to be achieving, means that people no longer need ever-increasing money wages. Expectations are demonstrably adjusting and we are now returning to a realistic assessment of what people can expect to be paid at different stages in their working lives. The time lags are profound and no one knows entirely how long they take to work out in detail. But I am confident that many unemployed people will again be taken into employment, but only as this lesson is expensively and painfully learnt. I am also confident that, while we are learning our expensive and painful lessons, many of the suggestions in the Select Committee's report will be valuable to the Government and will be acted upon by them.
9.36 p.m.
Baroness Seear: My Lords, one thing of which I am certain is that at this late hour the House does not want another speech from me. I will make the customary winding up speech as briefly as I can and if I do not comment on some points which have been raised I hope it will be realised that this is out of consideration for the desire of the House to rise rather than out of any disrespect for the people who have spoken.
I should like first to congratulate the noble Baroness, Lady Carnegy of Lour, on her maiden speech. I suppose that somebody told her that the most successful speeches in this House come from specialists speaking from a highly expert point of view. That is what we had today from the noble Baroness. I cannot help but give what I suppose is the reverse of a chauvinist point in showing special delight in a speech of that kind coming from a fellow Baroness, even if she does sit on the wrong side of the House. I hope very much that she will give us in future a great deal of her wide experience in these very tricky questions; questions which often seem superficially to be easy but which prove to be extremely difficult when one knows something about them.
Of the main critics who spoke this evening, I believe that the noble Lord, Lord Balogh (who does not seem to be here now) was the most severe. He complained that we had not dealt, as professional economists would have dealt, with the macro-economic considerations because, I think I heard him say, we lacked the intellectual ability to do so—and I see the noble Lord, Lord Vaizey, retreating quite modestly on that point! We did not do so partly because most of us were not quite up to it, but also because, if we had attempted so to do, to be quite frank, we should never have had an agreed report. Secondly, it would not have helped us a great deal in our attempt to find practical solutions to the problems we are facing at the present time. Thirdly, if I may say so in the absence of the noble Lord, Lord Balogh, and after 30 years at the London School of Economics, I believe that, if the committee had been a team of economists, the disagreements would have been even greater than they were.
The second criticism came from two or three speakers—that we had neglected the international aspects of unemployment. I think there is some proof

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in this. It is a very wide subject that we were attempting to deal with, and I would not for one moment deny that there are certain facets which we did not deal with as fully as we should. We did not discuss sufficiently, in my view, relations with the EEC. We did not talk as much as I wish we had done about overseas trade. But I would say to the noble Lord, Lord Hatch, and to others who made this point that, after all, success in international trade is a function of our increased competitiveness. If we did not elaborate sufficiently, one can only say that, if our competitiveness increased as we hoped it would and as we planned that it should, then indeed the problems of international trade would be resolved.
The noble Lord, Lord Molloy, expressed a point of view which troubled me somewhat, it is so sincerely held. He so passionately believes that by spending more money, reviving the old industries, such as steel, the great old steel industry, we shall find our unemployment problems largely dealt with. The whole burden of our theme—and this is a tragedy, if you like, of the present situation—is that those old industries are not going to revive because the demand for what they make is no longer there. There is no point in reviving an industry, however magnificent it once was, however tremendous and skilled many of the people who worked in it, if what they are producing the world no longer wants. That is what the noble Lord, Lord Molloy, and the many people who think as he does have failed to face. Until this happens then the path to greater competitiveness remains blocked, because as long as we look back and not forward then indeed there is no hope.
I would say this to some of the other critics—I think this includes the noble Lord, Lord Allen—using the argument that we should be spending our way out and that the Government have been concentrating too much on pulling down inflation and have been too afraid of reversing the trend towards yet again greater inflation. The burden of the theme of this report is that in the longer run inflation is the enemy of employment. Those people who have protested this afternoon and this evening that you should not be afraid of inflation if by spending money you can get rid of unemployment are thinking short-term. We have said in this report that it would be easy to do all manner of things which would improve the employment position in the short run, but that is the enemy of long-run and sustained employment prospects. That is the burden of our theme. If that is what the noble Earl, Lord Gowrie, means by saying that I am a "dry" at heart, then I am a dry at heart, but if he puts any other interpretation on it he is totally wrong.
The noble Lord, Lord Campbell, asked me to explain what we meant by our references to incomes policy. I do not think we would all give precisely the same interpretation of that paragraph, but what I think we primarily mean is this: that we do not want rigid incomes policies; we fully understand the problems they have created in the past and would in the future create. But because we believe that some risks have to be taken with expanding employment at the present time, and because we fully accept that a return to inflation would defeat the object of affirmative action, then, if the lessons of the last three
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years have not been learned, if with improvement in the employment position and some improvement in trade there were a real upsurge in incomes, unjustified in terms of increased productivity, reluctantly we would take the steps necessary to control it, because we are so determined that improvement in the position of employment should not be accompanied by a return to inflation. That is the thinking behind that paragraph.
May I say, and I think this is in part true of some of the members of the committee as well as those who have spoken this evening, that when it is said that on the future employment prospects we must accept that there will be continuing large-scale unemployment, I find myself much more on the side of the noble Lord, Lord Vaizey. I am a guarded optimist. This is still an extremely poor world. If one turns to international trade and the demand for goods and services all over the world, we have a huge problem of distribution, but we do not have a problem of over-production. I do not see the slightest possibility of the chip meeting all the requirements of this very hungry and poor world for generations and generations to come. Even in this country there is still a very large range of unsatisfied needs for goods and services which we would satisfy if we were more successful. That is the prospective we have to have.
I accept that it is extremely difficult to get there, but it is extremely dangerous to allow ourselves to settle for the idea that there will always be unemployment. There will be some unemployment. I am not, of course, pretending that unemployment will disappear, but that is not to be based on the idea that the need for work will disappear. There is an idea that, somehow or other, one can cope with this by encouraging people to enjoy their leisure, but the people who are most likely to be out of work and who will continue to be out of work are, unfortunately, those least likely to be able to use leisure constructively. They are the very people who, through lack of education, lack of opportunity and for a whole variety of reasons, are the people who are the long-term unemployed, the unskilled, the people who have been the least successful in the education system. Those are not the people who will find it easy to make constructive use of leisure time.
I should like to thank the noble Earl, Lord Gowrie, for intervening to have the committee set up. I rather suspected that he had a finger in it. For me it has been an extremely enjoyable experience. I was, of course, interested in his reply this evening. The noble Earl, Lord Gowrie, is very persuasive, but he sidestepped the major burden of the criticism of his noble friend Lord Carr of Hadley, and the major burden of what we have been attempting to say, and of what the noble Lord, Lord McCarthy and the right reverend Prelate the Bishop of Lincoln said. We cannot wait. Unemployment is nearer 4 million than 3 million if the sums are done properly.
I return to the point on which I started this afternoon. If we are to make the drastic changes that have to be made, people have to see that the employment position is improving, not deteriorating, and that those changes will not lead to deterioration. We do not have the time to wait for the market to work. True, in the end there will be improvement, but the time lag is of the essence, and unless the Government take action now to see that jobs are created for the people who are

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not going to get jobs unless action is taken, I believe the objective that we all share of greater competitiveness, greater success in the economy and, through that, greater employment, will be frustrated, I beg the noble Earl to think again. We are not suggesting large sums of money. We are saying that action needs to be taken and taken quickly to gain the consent for the necessary painful action which will have to be taken.
It only remains for me to thank my fellow members of the committee. It was very much a joint affair. Everybody contributed. It could not have been as agreeable, and it could not have been as productive, as it was, if it had not been so much a co-operative, a partnership affair, in which our party differences seemed to slide away from us, enabling us, because of our genuine concern with this problem of such central importance, to work together—for far too long, admittedly—and to come to a report on which we had so much agreement. I am not supposed to say it, but without the help of Paul Hayter we would have been in terrible difficulty.
On Question, Motion agreed to.
House adjourned at nine minutes before ten o'clock.

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