Sitting of 27 April 1983

Preamble
The House met at half-past Two o'clock
PRAYERS
[MR. SPEAKER in the Chair]
Oral Answers to Questions
  Oral Answers to Questions
  Mr. Speaker: Order. I remind the House that long supplementary questions limit the number of main questions that can be called.
  Oral Answers to Questions
    ENVIRONMENT

      Litter Act 1958
      Mr. Michael McNair-Wilsonasked the Secretary of State for the Environment if he will seek to amend the Litter Act 1958 to make it more effective.
      The Under-Secretary of State for the Environment (Mr Giles Shaw): The maximum fine for an offence under the Litter Acts of 1958 and 1971 has recently been increased to £200, and we are currently consolidating these Acts with other litter provisions in existing legislation.
      I see no need to amend this legislation for the purpose suggested by my hon. Friend.
      Mr. McNair-Wilson: Does my hon. Friend agree that the Litter Acts are not being enforced, as much as anything because the police have so many other things to do and prosecutions are expensive? Should not the Litter Acts be amended to enable local authorities to appoint litter wardens, as happens in the Irish Republic, with the right to impose on-the-spot fines?
      Mr. Shaw: I accept that it is not always easy to enforce the Litter Acts, but I remind my hon. Friend that each year about 2,000 prosecutions take place under the Acts. The imposition of direct fines would involve many constitutional issues. Implementation of section 24 of the Control of Pollution Act 1974 would provide additional powers for local authorities.
      Dr. David Clark: Has the Minister read the report of the Keep Britain Tidy Group on marine litter, which found evidence of widespread litter dumping on the beaches round our island? I know that the Secretary of State may not be interested, but many people take holidays in this island. Is the Minister prepared to take action to ensure that those beaches are cleaned up?
      Mr. Shaw: I think that the hon. Gentleman is referring to a report about beaches by the Coastal Anti-Pollution League, which gained publicity in the morning papers. If he is referring not to that report but to a report by the Keep Britain Tidy Group, I should inform him that we have taken immense steps, in particular with the local authorities, to try to improve the situation. Of 14 beaches
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      expected to need derogations under the EC directive, only four were in fact submitted, so there has been an improvement.

      House Building
      Mr. Parryasked the Secretary of State for the Environment how many local authority housing starts there were in the first three months of 1983; and what was the equivalent figure for the same period in 1980.
      The Minister for Housing and Construction (Mr. John Stanley): Figures for March are not yet available, but provisional house building starts for English local authorities in the first two months of 1983 were 6,400, compared with 5,400 in the corresponding period in 1980.
      Mr. Parry: Is the Minister aware that, in the Liberal-controlled Liverpool city council area, there were no housing starts in 1981, 233 in 1982 and only 150 in 1983? Is he further aware that Liverpool city council has a housing waiting list of more than 25,000 and that aged —some in their mid-eighties—and handicapped people are living in the top floor flats of pre-war tenement blocks without hope of being rehoused? Will the Minister urge the council to build houses for rent for those in need`?
      Mr. Stanley: The issue in Liverpool is not merely the building of additional houses, but of making use of existing local authority housing stock. In Liverpool, 1,330 dwellings have been vacant for more than a year. I hope that the local authority will make every possible attempt to make better use of its existing stock.
      Mr. Alton: Will the Minister confirm that the Government cut housing support in Liverpool by £7 million last year? Is he aware that until that is restored it will be impossible to do anything about many of the vacant dwellings? What does he intend to do about the 500,000 homes in Britain which still do not have inside toilets, running hot water and bathrooms, and need money for restoration and renovation?
      Mr. Stanley: I must point out to the hon. Gentleman and the Liberal party in Liverpool that Liverpool city council has been a conspicuous underspender. The crucial need in Liverpool is for full utilisation of the resources that have been made available. The Liverpool city council underspent in 1981–82 and it appears that it has produced an increased underspend in 1982–83. The local authority should make better use of its stock and full use of its resources.
      Mr. Heddle: As my hon. Friend has confirmed that housing problems can be solved by better utilisation of the existing housing stock, does he not view with alarm the fact that at least two, possibly three, or more, properties in the constituency of the right hon. Member for Manchester, Ardwick (Mr. Kaufman) have been empty for more than six years? Does he agree that the Department should monitor the number of empty houses which the local authorities have and compel them to let immediately to those who deserve the right to rent?
      Mr. Stanley: I am grateful to my hon. Friend. I assure him that the HIP returns for all local authorities, copies of which are in the Library, show the number of empty dwellings, including those that have been empty for more than a year. I share his concern that the last set of returns showed that about 19,000 local authority dwellings in England had been vacant for more than a year.
      Mrs. Ann Taylor: In view of the Prime Minister's claim yesterday that the construction of new housing is improving, will the Minister confirm the depth to which such construction had sunk? Was not the Labour Government's worst year for council house building better than the Tory Government's two best years put together?
      Mr. Stanley: The hon. Lady should look at the totality of housing. The House will be glad to know that this year the Housing Corporation expects a record number of Housing Corporation-funded housing association dwellings to be completed. Private house building and home improvement grants are at a 10-year high, hostel approvals are now three times higher than under the Labour Government and grants for the disabled are five times higher than under the Labour Government. In total, the Government's housing record has been a conspicuous success.

      Local Government Financing
      Mr. Chapmanasked the Secretary of State for the Environment if he is satisfied with the present method of financing local government, including the rate support grant allocation.
      The Secretary of State for the Environment (Mr. Tom King): We have been reviewing the present rating system and intend shortly to bring forward new proposals.
      Mr. Chapman: In any new arrangement, will my right hon. Friend try to ensure as far as practicably possible that all people pay for local government services according to their needs? Is not an inherent weakness and unfairness of the present rating system the fact that a minority are always asked to foot the Bill for the ever-increasing demands of a non-paying majority?
      Mr. King: That is one aspect of the criticisms of the unfairness of the rating system that has been very much in our mind, together with our concern about the demands made on a number of ratepayers by the most irresponsible Labour authorities, which appear to have no regard to the problems facing their industrial, commercial and domestic ratepayers.
      Mr. Kaufman: What proportion of this year's rate increases is due to the Government's reduction in rate support grant and housing subsidies by £9,000 million?
      Mr. King: As I told the House yesterday—I know that the right hon. Gentleman listened with great interest —except for the GLC and ILEA and another 16 Labour authorities, which pushed the average up to 6·5 per cent., there were no rate increases this year.
      Mr. Beaumont-Dark: Does my right hon. Friend agree that many people living alone have a genuine grievance against those households in which there are often five or six high wage earners? In spite of all the complications, should we not look seriously at the possibility of a poll tax, when the new computer comes in, as such a tax could be collected on a PAYE basis, thereby permitting greater equity between those on high incomes and pensioners who live alone in similar houses?
      Mr. King: That is an interesting suggestion. I know that my hon. Friend would be the first to emphasise that, in looking at the way in which funds are raised, it is important to ensure that the demands made are kept as low
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      as possible. I know that he will join me in welcoming the achievements of the Conservative-controlled Birmingham city council, which has reduced its rates by 12·5 per cent.
      Mr. Kaufman: I am sure that the Secretary of State would not wish to mislead the House. Therefore, will he comment on the complaint by Surrey county council that 8 per cent. of its 13·7 per cent. rate increase this year is due to the withdrawal of Government grant?
      Mr. King: This is a new departure. I have heard of right hon. Members coming back when they cannot think of an answer to the response that they have received, but following a pause the right hon. Gentleman has come back on an entirely different matter. I know that I speak on behalf of all the ratepayers of Surrey who much prefer their rate poundages this year to those imposed by the right hon. Gentleman's authority in Manchester.
      Mr. R. C. Mitchell: Does the right hon. Gentleman expect rating reform to appear in the 1983 Conservative manifesto as it did in the 1979 Conservative manifesto?
      Mr. King: I was not aware that it had been announced that we shall have a 1983 Conservative manifesto.
      Mr. John Townend: When considering changes, will my right hon. Friend examine the possibility of abolishing completely the industrial and commercial rate and replacing the lost revenue by increasing other corporate taxes and paying local authorities by block grant, thereby making ordinary domestic ratepayers responsible for all marginal expenditure?
      Mr. King: My hon. Friend will know that we have conducted a comprehensive review, and he will be pleased to learn that we have excluded nothing from it.

      Municipal Housing
      Mr. Leightonasked the Secretary of State for the Environment what is his policy towards the future ownership and administration of estates owned by local authorities outside their areas.
      The Under-Secretary of State for the Environment (Sir George Young): The Government's view is that it is generally preferable for municipal housing to be owned and managed by the authority in whose area it lies.
      Mr. Leighton: Why did the Department hold referendums in the Newham estates in Hutton and Elm Park, which produced overwhelming majorities to stay with Newham, only to ignore the results completely? Is the Minister aware that many of the elected representatives of Newham feel that they are being robbed of valuable property that is central to their housing strategy and that that has resulted in bitterness and anger? Will the hon. Gentleman review his policy and make the wishes of the tenants paramount?
      Sir George Young: We took into account the views of the tenants expressed in the referendums before we announced our decision, but localised management accessible to the tenants is likely to be of a higher standard than remote management. Inevitably, when an estate is managed by an authority outside the local authority area in question, it is more likely to be remote, whereas if it is managed by the local authority in whose area it is situated, it can be more closely integrated with the other services that the local authority provides. For those two reasons, I believe that the decision was correct.
      Mr. McCrindle: Does my hon. Friend accept that many tenants on the Newham estate in Brentwood welcome the prospect of becoming tenants of the local authority to which they already pay their rates, thereby increasing their identification with the local community? Will he press on regardless with his intentions?
      Sir George Young: My hon. Friend makes a worthwhile point that the existing Brentwood tenants are well satisfied with the services provided by that local authority. I am confident that were another referendum to be conducted in a few years' time, tenants would be equally satisfied with the services that they had received from their new landlord.
      Mr. Arthur Lewis: We are not talking about a few years' time. The Minister has admitted that in a referendum 75 per cent. of tenants said that they were quite happy with things as they are. How can he fail to take that into consideration? Does that mean that if 75 per cent. of the Cowley workers decided to go back to work he would say, "Take no notice. Remain on strike"?
      Sir George Young: As I have explained, the views of the tenants expressed in the referendum was one of the factors that we took into account. In the context of the actual number of tenants eligible to vote, the number voting to stay with Newham fell to about 58 per cent. For the reasons that I have given, it makes sense for the estates to be managed by the local authority in whose area they lie
      Mr. Squire: Is my hon. Friend aware that within the past five years the London borough of Havering, within which the Elm Park estate lies, has transferred about 300 homes to other authorities because they were without its boundaries and in pursuance of the logic that all council homes should be within one area? Moreover, the service given by the London borough of Newham to many of my constituents who tried to purchase and had to wait a long time does not put that authority in the best position to put itself forward as advancing the interests of its tenants.
      Sir George Young: My hon. Friends have an important role to play in assuring the tenants of the high quality service that they will receive from their new landlords.
      Mr. Leighton: On a point of order, Mr. Speaker. In view of the unsatisfactory nature of that reply, I shall seek to raise the matter on the Adjournment at the earliest possible opportunity.

      Litter
      Mr. Ogdenasked the Secretary of State for the Environment if he will now increase the amount of money available to local authorities, especially to those in urban areas, for the reduction, collection and disposal of litter from roads and streets.
      Mr. Giles Shaw: It is for individual local authorities to determine, within their overall budgets, the resources they allocate to carrying out their street cleaning responsibilities. Education and persuasion of the public not to drop litter is the key to solving the problem of littering. In this respect I recommend to the House the work of the Keep Britain Tidy Group, which we actively support. In particular, I commend the Keep Britain Tidy system for adoption by local authorities.
      Mr. Ogden: Will the Minister now try to give a positive and enthusiastic reply? Does he agree that too many of our roads, streets and public places are tatty at best and too often downright filthy? Is it not time that an Environment Minister started a "Spring-clean Britain" operation to encourage those who want to take care of their environment to respect and take pride in it and to discourage those who think that the only place to dump their garbage or litter is down on the big hook?
      Mr. Shaw: I accept the hon. Gentleman's view that it is high time we motivated people to take more care of and have more pride in their communities. For that reason the Keep Britain Tidy Group has launched the "Beautiful Britain '83" campaign, and I am currently reviewing the central funds with which we support the group, because I commend its activities and would seek ways of increasing them.
      Mr. Neubert: Is my hon. Friend aware that among the worst examples of littering in Romford are cars parked on verges and excrement parked on pavements? Can he promise any higher priority to those problems?
      Mr. Shaw: My hon. Friend raises a matter which is for my colleagues at the Ministry of Transport rather than for me. On the other point he raises, the local authority is still the prime source of help in dealing with those nuisances.
      Mr. Parry: Is the Minister aware that the privatisation of the refuse collection in Liverpool is strongly opposed by the trade union movement and that a future Labour-controlled council will reverse that policy?
      Mr. Shaw: It does not surprise me to hear that. It is inevitable that many people will take a view such as the hon. Gentleman has expressed. It is equally inevitable that most councils which have changed to privatisation have shown substantial savings for their ratepayers and a greatly improved service.

      Public Inquiries
      Mr. Haselhurstasked the Secretary of State for the Environment whether he is satisfied with the financial arrangements pertaining to public inquiries for which his Department is responsible; and if he will make a statement.
      Mr. Giles Shaw: The arrangements are that accommodation for a public inquiry is normally provided by the local authority, which, in some types of case, may also be expected to meet the Department's costs. Parties to an inquiry are normally expected to meet their own costs, but one party may be ordered to pay another party's costs where these have been incurred because of unreasonable conduct. I regard these arrangements as satisfactory.
      Mr. Haselhurst: Is my hon. Friend telling the House that it is either satisfactory or equitable that the daily transcripts of the current airports inquiry, should be charged to interested parties at £7·50 a day, whereas for an inquiry of equal national importance, that at Sizewell, such transcripts are provided free?
      Mr. Shaw: I remind my hon. Friend that the Stansted inquiry is being conducted under the auspices of my right hon. Friend and the Department and that we are abiding by our traditional rules regarding the availablity of services

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      to those who are involved in the inquiry. All witnesses can examine the transcript free of charge. The Sizewell inquiry is being conducted under the auspices of the Electricity Act 1957, and it has long been a practice of the Secretary of State for Energy, through the CEGB, to direct that costs of this kind are met.

      Televised Football
      Mr. Weetchasked the Secretary of State for the Environment whether he has had any consultation with the Football League or the joint ITV/BBC committee regarding the future prospects of televised football.
      Mr. Robert C. Brownasked the Secretary of State for the Environment whether he will consult the football authorities about the future of televised football.
      The Under-Secretary of State for the Environment (Mr. Neil Macfarlane): The televising of football is a matter for the football and television authorities. Recognising, however, the considerable public interest in recent developments, I have been in touch with both sides. I hope that a satisfactory agreement can be reached, as I believe that the game and the public are best served by some continuation of the present arrangements.
      Mr. Weetch: I thank the Minister for that answer. Does he realise that there is a great deal of serious public concern about the possibility of football matches disappearing from television screens and going into public houses on video? Does he further realise that that would be a blow to family viewing and that it is undesirable for football as a spectator sport to be linked with the sale of alcohol? Will he continue to use his good offices to see that some other financial solution to the difficulty is found?
      Mr. Macfarlane: I cannot undertake to achieve the hon. Gentleman's last request, because that is very much a matter for the Football League and television authorities. Negotiations are still continuing. As for his assessment of the overall impact of football, I strongly sympathise with his views. I think that the combination of the alternative facilities which are being suggested are certainly not conducive to all that we have been trying to ensure for the future of this great national game of ours.
      Mr. Brown: Does the Minister agree that it would be an absolute scandal if children, the elderly, the sick, the disabled and the needy were prevented from viewing televised football, our national sport? Is he aware that the Football League has rejected what would have been an increase of 16 per cent. on the 1979 agreement and that in that period there has been an increase in the rate of inflation of 60 per cent.? Does he not feel that shirt advertising would be the answer to the problem?
      Mr. Macfarlane: Shirt advertising is very much a matter for the BBC and ITA. Sometimes I cannot help feeling that Opposition Members are closer to the source of influence than I am on some of the negotiations, and they may feel that they have greater influence in some of these matters. I believe that the hon. Gentleman has voiced the disquiet that is felt by many people—that if we are still trying to envisage the success of football not only as a family entertainment but as a means of sustaining the game outside the professional levels, it is best served by the continuation of the present arrangements.
      Sir Hector Monro: While appreciating that it is not my hon. Friend's direct responsibility, may I ask him to knock heads together a little harder so that the British public can see football on a limited scale on television at home? Does he agree that it really is not acceptable that, to see a recorded television match, one must go to a public house or a public place?
      Mr. Macfarlane: These exchanges have been most useful. I believe that those outside this House who are responsible for conducting the negotiations will take note of the general view of hon. Members. I personally hope that they will echo the sentiments expressed this afternoon.
      Mr. Hoyle: Will the Minister call a meeting of the Football League and television authorities and put it to them strongly that millions of people want to see football continue to be shown on television and that the gap between them is not large? If he uses his good offices in that way and seizes the initiative, I am sure we can keep football on the TV screens.
      Mr. Macfarlane: One must remember the locus of the Minister with responsibility for sport in these affairs. I assure the House that I have had detailed meetings—as indeed have my officials, on more than one occasion—with representatives of the BBC, IBA and the Football League. Meetings are to take place later this week, and I shall certainly draw to the attention of those representatives what has been said in the House today.
      Mr. Squire: Will my hon. Friend nevertheless undertake to resist any calls for grants to be made available for those who suffer from deprivation of televised football?
      Mr. Macfarlane: I take note of my hon. Friend's comment.
      Mr. Denis Howell: Does the Minister appreciate that we welcome his intervention in a matter of great public concern? Will he intervene even further if necessary, supporting the Office of Fair Trading, which is reported today to be intervening because the public interest would not be served if young people, the housebound and the ill in our society were prevented from watching football without having to enter licensed premises? There is much disquiet about that. On the other hand, I hope the Minister has represented to the television authorities that they should pay an adequate sum for the hours of television they get and, if necessary, relax their advertising rules about shirt advertising to bring them in line with other sport to provide the financial assistance which football needs. Is the Minister aware that we will support any initiative he takes to bring that about?
      Mr. Macfarlane: I am grateful to the right hon. Gentleman for those observations. I shall certainly maintain the closest contact with the individual authorities in the ensuing 48 hours. As for the Office of Fair Trading, the right hon. Gentleman must understand that this is primarily the responsibility of my right hon. and noble Friend the Secretary of State for Trade. I counsel the right hon. Gentleman not to believe all that he read in one newspaper today. I understand that the Office of Fair Trading has yet to receive any draft documents, and clearly it has not been able to form a view. However, I take note of the right hon. Gentleman's comments.

      Merseyside (Co-ordination)
      Mr. Spriggsasked the Secretary of State for the Environment if he is satisfied with the co-ordination between the programmes of central Government, Merseyside county council and St. Helens metropolitan borough council; and if he will make a statement.
      Mr. King: Local authorities are responsible to their electorate and not to me. However, through my north-west regional office and the Merseyside task force, I am satisfied that there is full co-operation where appropriate with St. Helens borough council and Merseyside county council on a variety of programmes and initiatives.
      Mr. Spriggs: Is the right hon. Gentleman aware that I am surprised at his answer? Since I would not be allowed by you, Mr. Speaker, to raise the many problems that lead to such serious lack of co-ordination between the Government, the Merseyside county council and the St. Helens metropolitan borough council, may I bring one matter to the right hon. Gentleman's attention? It concerns the correspondence that the borough treasurers had with him about the HIP, which falls about £2·2 million short of the requirement in the local authority's housebuilding programme. Will he have another look at that and, if necessary, accept my invitation to come up to St. Helens, meet the whole St. Helens council and all seven Members of Parliament?
      Mr. King: I was there one month ago. I talked to the treasurer, the leader of the council and the chief executive about those matters. My hon. Friend the Minister for Housing and Construction has been in correspondence with them. The hon. Gentleman will know that coordination and reaching complete agreement on bids made by individual authorities are not necessarily the same thing. I am anxious to see how we can work together. I hope that we can achieve satisfactory arrangements over co-ordination.
      Mr. Alton: Does the Secretary of State accept that the best service that he could render to people in St. Helens and the other four district councils on Merseyside would be to abolish the high-spending Merseyside county council?
      Mr. King: That is another question. It does not relate to co-ordination with St. Helens.

      Multiracial Sport
      Mr. Hicksasked the Secretary of State for the Environment whether there are any plans for discussion with his ministerial counterparts in other Commonwealth Governments to consider the implications of the commitments made at the Lusaka and Melbourne Commonwealth Heads of Governments meetings relating to multiracial sport; and if he will make a statement.
      Mr. Macfarlane: No, Sir. The Commonwealth's commitment to multiracial sport remains as set out in the 1977 Commonwealth statement on apartheid in sport.
      Mr. Hicks: In view of the contribution that sport makes to international relationships and understanding, does my hon. Friend agree that it would be traumatic, both for world sport and for Commonwealth sporting relationships, if a shortsighted decision were to be made, which would lead to England playing South Africa at cricket?
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      Furthermore, is it not a fact that if that were to happen all the other members of the International Cricket Conference would not follow our example, so that we would be left playing South Africa and South Africa alone, which would be very tedious?
      Mr. Macfarlane: My hon. Friend has put his finger on a most important point, which creates grave disquiet in the minds of those who put multiracial sport first throughout the world. No one in the House should be in any doubt about the serious threat that would arise to organised cricket if a tour of South. Africa were to go ahead by the MCC, which is technically a private club. It was at the ICC that the MCC and its governing body, the Cricket Council, voted 13 years ago to exclude South Africa from the cricket itinerary.
      Mr. Roy Hughes: Is this not an area where the Minister can usefully intervene and give guidance? Are there not many more areas in sport where help is very much needed at present? Would not the Minister's time be better spent on those functions rather than being turned into a children's nursemaid, which is the function that the Prime Minister seems to have in mind for him?
      Mr. Macfarlane: Somehow I feel that this important subject has been deflected by the hon. Gentleman. I wish that he would take a closer interest in these important matters. The fact is that Her Majesty's Government acknowledge the principle of the Commonwealth statement on apartheid in sport, which was upheld in 1979 and 1981. There is no deviation from that concept.
      Mr. John Carlisle: I take up the point that my hon. Friend made about the ICC. May I point out to him that the ICC went to South Africa in 1979 on a fact-finding mission and came back with a recommendation that an ICC team be sent to South Africa because of what it had seen? If my hon. Friend is so desirous, as I hope he is, of representing the interests of British sportsmen, will he go to South Africa to see for himself that sport is not organised on the basis of race, colour or ethnic origin? By seeing that for himself he will not have to rely, as he said on Radio 4 the other evening, on pictures and newspaper reports.
      Mr. Macfarlane: I do not have quite the amount of time that my hon. Friend has to visit South Africa. My hon. Friends from the Foreign and Commonwealth Office undertake visits to South Africa. That is not part of my locus. I am certain that my hon. Friend does not wish to mislead the House. There was no ICC-ratified visit to South Africa in 1979. The ICC voted to exclude South Africa from its cricketing itinerary in 1969. The visit about 10 years later was not an ICC visit. Some people went to South Africa who happened to be representatives of the ICC.
      Mr. Denis Howell: Will the Minister take note that we entirely support his view on this matter, that it would be absolutely disastrous for international cricket if this private tour went ahead, and that, as the hon. Member for Bodmin (Mr. Hicks) said, it would restrict, all our cricket matches to England versus South Africa? Will the Minister extend that thinking to Rugby Football Union? Does he agree that if the Rugby Football Union authorities are considering a public tour of the South Africa Rugby Union in two years'

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      time in exchange for an agreement by Dr. Craaven of South Africa not to let his private tour take place this year, that would be equally reprehensible?
      Mr. Macfarlane: The Rugby Football Union is well aware of the Government's opposition to this possible venture. I hope that the Rugby Football Union committee will take account of our advice when it makes up its mind.

      Council Houses
      Mr. O'Brienasked the Secretary of State for the Environment what is his latest estimate of the number of new council houses due for completion in 1983; and what is his estimate of the total stock of council houses at the end of 1983.
      Mr.John Fraserasked the Secretary of State for the Environment how many dwellings he estimates will be (a) started and (b) completed by local authorities in England in the current year.
      Sir George Young: It is for local authorities to decide what priority to give to spending on council house building within their total available resources. My Department makes no estimates of the numbers of starts or completions.
      Mr. O'Brien: Bearing in mind that answer, the totally inadequate answer that was given to my hon. Friend the Member for Bolton, West (Mrs. Taylor) and the false trumpeting about the housing record by the Prime Minister yesterday, when will the Minister admit that the Government's housing record is an unmitigated disaster? Is the Minister aware that in my constituency, which is a relatively small town, we have waiting lists of nearly 3,000 and that, because of the Government's financial restrictions, we shall be able to complete only between 70 and 100 dwellings this year? Is he aware that since 1979 we have been able to build only 276 dwellings, all for old-age pensioners? When will we return to the rate of building achieved under the Labour Government?
      Sir George Young: After falling for every year since 1975, local authority starts increased by one third in 1982. That seems to be a useful step in the right direction. I hope that the hon. Gentleman will use his influence in Darlington to broaden the horizons of the Darlington council. At the moment the council has no plans to extend the initiative developed by the former Conservative-controlled Darlington council to have a partnership with the private sector. Last year it refused to attend a tripartite meeting with the House Builders Federation and my Department's regional office on the release of land register sites for low-cost home ownership schemes. I hope that the hon. Gentleman will use his influence to change the council's policy on that subject.
      Mr. Latham: Was it not Mr. Anthony Greenwood, as he then was, when he was drastically cutting the housing programme as the Labour Minister responsible for housing, who first put forward the idea that the housing programme did not consist solely of building council houses but was made up of improvement grants, repair grants and many other initiatives?
      Sir George Young: My hon. Friend is absolutely right. In England alone more than 190,000 dwellings were renovated in 1982 with the aid of grant or subsidy, which is the highest annual total since the period of office of the Conservative Government between 1972 and 1974.
      Mr. Lofthouse: How much will the new dwellings cost? If the Government's proposals going through the other place at present are successful, the cost floor provisions are removed and the maximum discount is raised to 60 per cent., how much could a new tenant who qualified to buy at that discount pay for that dwelling?
      Sir George Young: I think that the hon. Gentleman is under some misapprehension. The cost floor is not being removed and the 60 per cent. discount cannot bring the price below the cost to the local authority of the dwelling concerned.
      Mr. Eggar: Is it not a scandal that so many Opposition Members and so many Labour authorities whinge on about building council houses but do not give proper priority to building for sale, improvements and other imaginative schemes?
      Sir George Young: My hon. Friend is absolutely right. The building of local authority dwellings for rent is but one aspect of meeting housing need. The estimated increase in the number of owner-occupied dwellings during this Parliament already exceeds that in any other post-war Parliament apart from the Conservative Administrations of 1955 to 1959 and 1959 to 1964.
      Mrs. Ann Taylor: As the total stock of council houses, to which the question relates, will be reduced still further if the Housing and Building Control Bill is passed, and in view of the Government's defeat in the House of Lords yesterday on the extension of compulsory sales, will the Secretary of State confirm his intention to withdraw that Bill?
      Sir George Young: No, Sir. The hon. Lady seems to think that if a local authority house is sold it somehow disappears from face of the earth—
      Mrs. Taylor: From the rented sector.
      Sir George Young: —but it is still there to meet housing need and the resources provided by the sale can be used by the local authority to complement its housing programme.

      Operation Groundwork
      Mr. Trippierasked the Secretary of State for the Environment what progress is being made with operation Groundwork.
      Mr. King: The Countryside Commission tells me that good progress is being made in each of the five new areas selected towards establishing Groundwork trusts and agreeing early action programmes.
      Mr. Trippier: I thank my right hon. Friend for implementing operation Groundwork in my constituency. It will certainly improve the environment and create more jobs. Does he intend to extend the system nationally?
      Mr. King: We have allocated funds to extend the original project from St. Helens to five other areas, including that of my hon. Friend. I am grateful for the interest that my hon. Friend has shown in this very imaginative programme. As it is fairly demanding of resources, I should like to see how these developments progress and then review the matter further.

      Repair Grants
      Mr. Lathamasked the Secretary of State for the Environment whether he will make a statement on the response so far to the 90 per cent., temporary level of repair grant introduced in 1982.
      Mr. Stanley: The response to the Government's initiative on repair grants has been exceptionally encouraging. The number of repair grants paid in England in 1979 was 345. Following the legislative changes in the Housing Act 1980 and the introduction of 90 per cent. repair grants in the 1982 Budget, the number of repair grants paid last year was 33,715.
      Mr. Latham: I should first declare an interest, because a Labour council has awarded me such a grant. May I congratulate my hon. Friend on progress in this direction, as it is without doubt the speediest and most effective way to deal with urban decay?
      Mr. Stanley: I am grateful to my hon. Friend. I hope that all local authorities will continue to give the most favourable consideration to the use of their discretionary powers in relation to repair grants while the Government's unrivalled generosity in respect of 90 per cent. repair grants is still on offer.
      Mr. Frank Allaun: Why do local authorities receive only 75 per cent. in similar grants? Should not they, too, receive 90 per cent.?
      Mr. Stanley: We felt that it was right to concentrate on the priority areas of home improvement — intermediate grants for the installation of basic amenities such as inside baths and WCs and repair grants—because the recent English house condition survey showed this to be the priority area of attack in home improvements.
      Mr. Cartwright: Is the Minister aware that there is public concern in some areas about increasing delays by local authorities in processing applications for improvement grants? What steps is he taking to deal with that problem?
      Mr. Stanley: I am aware that there have been some complaints on that score. This reflects in part the great upsurge in repair grants and home improvement activity that the Government have helped to generate. Local authorities did well in the last financial year, more than doubling the output on home improvement grants in 12 months. I recognise that there is a considerable burden of work, but most local authorities are deploying existing staff to that work.

      Water Authority Chairmen
      Mr. Fordasked the Secretary of State for the Environment if he will list the salaries and conditions of water authority chairmen in England.
      Mr. Giles Shaw: Regional water authority chairmen's current salaries range from £13,679 to £24,980. With permission, I shall circulate the details in the Official Report.
      The conditions of appointment, which are uniform for all water authority chairmen, were given in a written reply to the hon. Gentleman on 15 April.
      Mr. Ford: I thank the hon. Gentleman for that answer. Does he recall that in his reply of 15 April he stated that
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      the notional full-time pay of the chairman of the Yorkshire water authority was more than £29,000 pensionable income, plus perks? Is he aware that that is comparable with the salary offered to the new chief constable of west Yorkshire, whose duties are far more onerous? How does he justify that figure?
      Mr. Shaw: The notional annual salary is a full-time figure. The actual appointment for Yorkshire is for three days per week, so the pay taken is substantially less than the figure to which the hon. Gentleman referred. As for comparibility with other public service posts, such as that of chief constable, that is hardly a matter for me. I should point out, however, that the Yorkshire water authority provides a vital service to a region far larger than that presided over by the chief constable of west Yorkshire.
      Mr. Arthur Lewis: I thank the Minister for his original reply. If he can give that information, why can he not give the salaries of the chief executives? Information is available on the salaries of all the lower-paid workers in water authorities, so why should not Members of Parliament know the salaries of the chief executives? Will the Minister find out and tell the House or write to me?
      Mr. Shaw: The hon. Gentleman will be aware that the terms and conditions of appointment of chief executives are a matter for the authorities and not for my right hon. Friend the Secretary of State. He will also be aware that the information is given in the annual report of every water authority, which is laid before the House.
      Following are the details:

      Regional water authority and Chairmen

      Salaries and basis of appointment

      North-West: Mr. George Mann

      part-time; four days a week, salary £24,980 (notional full-time rate £31,225).

      Severn-Trent: Sir William Dugdale Bt

      Thames: Mr. Geoffrey Edwards

      Anglian: Mr. Bernard Henderson

      part-time; three and a half days a week, salary £20,504 (notional full-time rate £29,291).

      Southern: Sir Arthur Godfrey Taylor J

      Yorkshire: Mr. Peter Coverdale

      part-time; three days a week, salary £17,575 (notional full-time rate £29,291).

      South-West: Mr. Len Hill

      part-time; three and a half days a week, salary £19,150 (notional full-time rate £27,358).

      Northumbrian: Mr. Michael Straker

      part-time; two and a half days a week, salary £13,679 (notional full-time rate £27,358).

      Wessex: Mr. Malcolm Anson

      Greater London Council
      Mr. Eggarasked the Secretary of State for the Environment if he will introduce legislation to abolish the Greater London council.
      Mr. King: I have at present no plans to legislate for abolition. The need for the Greater London council in its present form is a matter that I keep under review as part of my overall concern with securing an economical and cost-effective framework for local government.
      Mr. Eggar: Is my right hon. Friend aware that Mr. Ken Livingstone has two achievements to his credit? First, he is slightly less unpopular than the Leader of the

      861
      Opposition. Secondly, he has made Londoners aware of the GLC. Now that Londoners are aware of the GLC they want it abolished. When will my right hon. Friend do that?
      Mr. King: My hon. Friend seems to be quoting the poll in today's Standard, in which Mr. Livingstone is identified by Londoners as an even greater misfortune for the capital than the Labour-controlled GLC that he leads. As my hon. Friend rightly points out, however, all things are relative and Mr. Livingstone still manages to achieve a higher score than the Leader of the Opposition.
      Mr. George Cunningham: Is the Secretary of State aware that some Labour-controlled authorities in London are still keen to use public funds to finance a Labour local authority association? Is he aware that, having been advised that it is not legal to do that explicitly, they are now building conditions into the constitution of the new association about, for example, the abolition or not of the GLC so as to ensure that only Labour authorities are likely to join the association? Will he look carefully at the proposed constitution of the association and take whatever steps are necessary to prevent Labour authorities from stealing public funds for Labour party purposes?
      Mr. King: The hon. Gentleman will be aware that that is not principally a matter for me. In the first instance, it is a matter for the ratepayers of the borough, who can make representations to the district auditor if they think that there is improper use of public funds. That is the long-hallowed responsibility of the district auditor. I am aware, however, that enterprises are now being undertaken by local authorities that are a total abuse of what local authorities in the past would have considered to be the proper use of their funds. This raises very serious issues and, as I said yesterday, I am considering the matter.
      Mr. Jay: Has the Secretary of State any proposals for the abolition of the constituency of Enfield, North?
      Mr. King: No, Sir.
      Mr. Squire: Despite the undoubted horrors perpetrated by Mr. Livingstone, will my right hon. Friend consider carefully before acting on the lines advocated by my hon. Friend the Member for Enfield, North (Mr. Eggar), not least because a number of regional functions will remain that cannot be devolved to local authorities? Is he aware that, faced with the choice between an elected authority or a non-elected quango, or arm of central Government, many of us prefer on balance to retain an elected regional authority?
      Mr. King: I understand my hon. Friend's point. He will have noticed from my reply that, although I understand the irritations that Mr. Livingstone can cause, the burden that he is placing on London and the number of jobs that have been lost in London as a result of his and his colleagues' activities, my overall concern is to secure an economical and cost-effective framework for local government.
      Mr. Graham: Before considering again the abolition of the GLC, will the Secretary of State reflect on the fact that Londoners have substantially endorsed the GLC's policies on transport and job creation?
      Mr. Eggar: Read the survey.
      Mr. Graham: If the hon. Member for Enfield, North (Mr. Eggar) is so anxious about performance in local
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      government, would he not be better employed using his time trying to improve the disgraceful level of services that are given to his and my constituents by the Tory-controlled London borough of Enfield?
      Mr. King: I am surprised that the hon. Gentleman is acting as an apologist for Mr. Livingstone and some of the activities of members of the GLC. He knows that some of their activities bring great discredit on the standards and tradition of local authorities, and many of the members of his party know it, too.

      Football Authorities (Discussions)
      Mr. Canavanasked the Secretary of State for the Environment what subjects he expects to discuss at his next meeting with the football authorities.
      Mr. Macfarlane: I have a regular dialogue with the football authorities, covering in particular the initiatives being taken domestically and in Europe to prevent and control crowd violence at matches.
      Mr. Canavan: To make up for the discriminatory ban against Scottish football fans, which was tried at Wembley two years ago, will the Minister ask the Football Association to ensure a fairer allocation of tickets this year so that as many Scottish fans as possible can go to Wembley to watch their team beat England, especially as recent improvements in the behaviour of Scottish football fans have been so great that many of them have set a good example to some of the hooligan elements south of the border?
      Mr. Macfarlane: I am sure that the authorities in the Football Associations in both England and Scotland will note what the hon. Gentleman has said.
      Mr. Ogden: When the Minister meets the football authorities, will he not spend too much time on the televising issue but encourage those who want to go and watch football matches at football stadiums to do so rather than go elsewhere?
      Mr. Macfarlane: That seems to go right to the heart of the matter, namely, whether the British public believe that the quality of product on display at professional football grounds is one on which they want to spend their money.
      Mr. Budgen: When my hon. Friend next meets the football authorities, will he take the opportunity to outline his important new responsibilities in respect of children's play?
      Mr. Macfarlane: I shall undertake to do that if my hon. Friend will approach the representatives of Wolverhampton Wanderers football club.

      Solid Fuel
      Mr. Skinnerasked the Secretary of State for the Environment whether he will issue a further circular to all local authorities giving advice on the case for using solid fuel and for the inclusion of chimneys in all building schemes; and if he will make a statement.
      Sir George Young: No, Sir. The choice of heating fuels and whether to include a flue in newly contructed local authority housing is a matter for each housing authority in the light of its knowledge of local needs and circumstances—particularly of tenants' preferences.
      Mr. Skinner: Will the Minister confirm that, during the past 12 months, there has been a significant increase in the number of people who have transferred to solid fuel? Does he agree that one of the problems that people often face when installing new appliances is that they are unable to burn solid fuel because of the misguided policy of local authorities not to build chimneys? As there are 50 million tonnes of coal on the ground, some of which can be used for domestic purposes, and since there is a 300 years' supply of coal underground and a limited supply of other fossil fuels, why does he not review his decision and encourage local authorities to take the action that I have suggested?
      Sir George Young: I am sure that local authorities are as aware of the facts that the hon. Gentleman has mentioned as he is. We have produced a domestic energy note that has drawn the attention of housing authorities to the possibility of including flues in new dwellings or designing new dwellings so that flues can be incorporated later. Ultimately, however, it is for local authorities to decide what needs to meet.
      Mr. Les Huckfield: Will the hon. Gentleman now advise local authorities on the installation of certain types of double glazing, in council and other dwellings so that tragedies such as we suffered in Nuneaton yesterday, and that occur elsewhere, can be avoided?
      Sir George Young: I am not sure how that issue arises from a circular on solid fuel. Perhaps it would be best if I wrote to the hon. Gentleman on the matter.

      General Rate Fund
      Mr. Dobsonasked the Secretary of State for the Environment how many local housing authorities have budgeted to transfer money from their housing revenue accounts to their general rate fund in 1983–84.
      Mr. Stanley: This information is not yet available.
      Mr. Dobson: Does the Minister agree that it is grossly inequitable to transfer funds from council tenants to the general body of ratepayers when the average income of council tenants is lower than that of owner-occupiers?
      Mr. Stanley: I do not agree. The House debated the subject at great length in 1980. If one examines the relative incomes of different tenure groups, one finds, for example, that the average income of tenants who rent in the private sector are somewhat lower than the income of those who rent in the public sector, yet the former are ratepayers. We give councillors discretion about making transfers from the general rate fund to the housing revenue account and the House has taken the view that we can give them the same discretion to make a reverse transfer if they believe it is reasonable to do so.
      Mr. Campbell-Savours: Now that it has been proved that many councils are making extortionate profits out of their council tenants and are transferring those profits to the general rate fund, will the Minister go to the Prime Minister, after her stupid comment in the House yesterday that council tenants throughout the country are being subsidised, and ask her to withdraw her statement and show some sensitivity towards people on low incomes, who invariably have to live in council accommodation?
      Mr. Stanley: The hon. Gentleman should have regard to what I have just said and consider the scale of the
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      transfer in the reverse direction. He may be interested to know that transfers from the housing revenue account to the general rate fund last year totalled some £21 million, whereas transfers from the general rate fund to the housing revenue account totalled £443 million.
      Mr. Kaufman: Is it not a fact that, this year, the Government have planned for £2,500 million in tax relief for people who are buying their houses on a mortgage, while housing subsidies have been reduced to £370 million. Is it not also the case that not only do council house tenants pay rent, which has increased by 134 per cent. under this Government, but they pay rates like everyone else? Therefore, is it not intolerable for the Government to force council house tenants to subsidise the rates of people whose incomes are 20 per cent. higher than theirs?
      Mr. Stanley: I am delighted to hear of the right hon. Gentleman's anxiety about council tenants as ratepayers. That is not exhibited by the level of rates levied by many Labour authorities. As to assistance for council tenants, I remind the right hon. Gentleman that more than half of all local authority tenants receive subtantial help with their rents through the rent rebate and supplementary benefit systems.

      Sheffield
      Mr. Hooleyasked the Secretary of State for the Environment what request was made by Sheffield for housing investment programme expenditure for 1983–84; and what amount was authorised.
      Mr. Stanley: Sheffield's HIP bid for 1983–84 was for £67·4 million and its allocation was £25·2 million.
      Mr. Hooley: Is that not typical of the position over the past three years? Is the Minister aware that Sheffield has persistently asked for money, which it is well capable of spending, to maintain an adequate housing programme, but that the money has been denied by the Government?
      Mr. Stanley: The hon. Gentleman says that Sheffield is well capable of spending the funds. It looks as though Sheffield might end up with an underspend this year. I have enourmous doubts about whether Sheffield is remotely likely to be able to spend the sum for which it bid, as it is more than twice as much as it has ever spent in one financial year.
      Mr. Flannery: Is it not a fact that Sheffield is being deliberately victimised by the Tory Government because of the success of its transport policy? Does the Minister agree that that victimisation has continued for several years, because the Tory Government are appalled at the success of that policy, and that every year more and more people vote Labour because of it?
      Mr. Stanley: The only evidence of victimisation that I see in Sheffield is of the many council tenants who have tried to buy their houses.
      Mr. Flannery: At half price.
      Mr. Stanley: The local authority there puts every possible difficulty in their way.

      Rate Support Grant
      Mr. Wrigglesworthasked the Secretary of State for the Environment what has been the percentage

      865
      reduction in real terms since 1979 of the rate support grant for the inner city partnership and programme authorities and designated districts.
      Mr. Giles Shaw: I refer the hon. Gentleman to the answer I gave to the right hon. Member for Crosby (Mrs. Williams) on 24 February.
      Mr. Wrigglesworth: Will the Minister explain the criteria by which decisions on this matter are reached? Is he aware that Stockton borough council applied for a grant under those programmes, but was turned down despite the fact that Stockton suffers from the same deprivation and difficulties as the other authorities that have received grants under the programme?
      Mr. Shaw: I fully understand the hon. Gentleman's concern for his constituents. My right hon. Friend the Secretary of State saw members of Stockton council a few weeks ago, and I am sure that the matter was discussed then.

      Metropolitan Green Belt Sites
      Mr. Dykesasked the Secretary of State for the Environment what recent representations he has received from the National House Builders Federation concerning proposals for building on Metropolitan green belt sites in and around Greater London.
      Mr. Giles Shaw: Representations have been received from the House Builders Federation that a number of sites included in the London green belt should be released for building. I shall send my hon. Friend a copy of my reply.
      Mr. Dykes: In the meantime, can my hon. Friend confirm the Government's attitude towards the suggestions in the federation's comments that the green belt is sacrosanct? Does he agree that it is much more important to redevelop inner city sites in London, including the docklands, for housing?
      Mr. Shaw: I endorse my hon. Friend's view that many inner city sites in London, especially the docklands, must be redeveloped as soon as possible. I take note of the federation's views, which are continually discussed by myself and my right hon. Friend.

Cable Television
3.30 pm
The Secretary of State for the Home Department (Mr. William Whitelaw): With permission, Mr. Speaker, I shall make a statement on the Government's White Paper on the development of cable systems and services, which is published today in the name of myself and my right hon. Friend the Secretary of State for Industry. Copies are available in the Vote Office.
The White Paper, as the subject requires, is a long and complex document with nearly 250 paragraphs. The House will need time to study it and to form its views on it. Subject to arrangements to be made by my right hon. Friend the Leader of the House, there will be an early opportunity for a full debate. Meanwhile, I hope that it will assist the House if in this statement I draw attention to the main cable issues — the regulation of programme services and the safeguarding of public service broadcasting — that were still unresolved when we debated the Hunt report on 2 December 1982.
The White Paper sets out a plan of action for future cable development. Central to this plan is the creation of a new statutory cable authority. Work is starting on the preparation of a Bill to be introduced at the earliest practicable date. The cable authority will have two main roles — to award franchise to cable operators for the provision of cable services, and to exercise supervision over those services in the manner which the White Paper describes in detail.
I wish to stress five particular aspects. First, on pay-per-view, the Government have decided not to follow the Hunt report in excluding this method of financing cable services. Cable operators have made it clear that they attach much importance to it, and we believe that over a wide area, pay-per-view can be allowed without damage to BBC and ITV services and the many viewers who rely and who will continue to rely on them. To protect the interests of those viewers, the cable authority will have the duty to exclude from pay-per-view events customarily covered by BBC or ITV.
Secondly, that restriction is in addition to the ban which, adopting the Hunt recommendation, we propose on the acquisition by cable of exclusive rights for the great national sporting events, such as the cup final.
Thirdly, on advertising, we follow the Hunt report in proposing that the cable authority should adopt an advertising code which in essential particulars would follow the existing IBA code. Arrangements for clearing the copy of advertisements would follow broadly the pattern for those on independent broadcasting. On the amount of advertising, we depart from Hunt in preferring to limit advertising on cable, on channels broadly comparable to ITV, to the amount allowed on ITV, which is currently six minutes an hour on average. Channels wholly or mainly devoted to classified or other advertising will, however, be allowed, and those limits will not apply then.
Fourthly, on foreign programme material, we intend that there should be from the outset more stringent obligations than Hunt proposed on the use of British programme material. The cable authority will be required to see that a "proper proportion" is shown on each channel as appropriate, to work towards a progressive increase in that proportion as United Kingdom production capacity
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grows, and to report progress regularly to the Government. We are anxious to maintain and develop the strong national production capacity that the BBC and ITV have helped to create.
Fifthly, the Government are anxious that the cable authority should ensure high standards of cable programme services. The same rules regarding good taste and decency as apply to BBC and IBA programmes will apply to all cable channels. There will be no exception for channels with electronic locks. As the White Paper says, so-called adult channels have no place on the cable systems which the Government wish to see develop.
Finally, in the period before the legislation is enacted, we are anxious to maintain and to continue the momentum for cable development, through two interim arrangements. First, the Government will be prepared, under existing powers, to authorise a limited number of new cable systems— not more than 12—as pilot projects, each covering a maximum of about 100,000 homes. Projects will be chosen for offering a positive contribution to advanced technology, a comprehensive range of programme services and a capability of interactive services. Secondly, we propose to allow cable relay operators to offer new programme services over their existing systems for a transitional period. Where necessary, the obligation to relay BBC and ITV services on the cable will be dropped, provided that operators offer their customers alternative means of reception at no extra cost. No application under either of those interim arrangements will be entertained until Parliament has debated and approved the White Paper.
The Government believe that the White Paper offers an acceptable and well-balanced set of proposals. They will give cable an excellent opportunity for development, with the stimulus that this will provide for advanced technology. At the same time they will protect public broadcasting services and those who rely on them. I commend them to the House.
Mr. Roy Hattersley: First, I thank the Home Secretary for making that statement today. We are most grateful that he eventually accepted our view that the national importance of the subject required him to report to the House rather than simply to rely on a press conference outside the House.
Is the Home Secretary aware that the Opposition regard cable television as potentially of great benefit to the nation as long as it is properly supervised and controlled, but that we fear that the proposals in the White Paper—indeed, the entire philosophy of the Government—will result in a system that meets the needs more of private profit than of the public interest? It remains our conviction that a satisfactory system meeting both present and future needs must be based on a national common carrier, and that that common carrier must be British Telecommunications.
In the light of that overriding principle, I ask the Home Secretary some specific questions on his statement. If pay-per-view is to be introduced, how, despite his bland assurances, will the interests of viewers outside the pay-per-view areas be maintained? Is it not a fact that the most popular programmes and the most recent films, as distinct from one or two national sporting events, will be bought by the pay-per-view areas and will not be available for transmission in the rest of the country?
Secondly, the Opposition welcome the controls on advertising in the cable sector, but what does the Home

869
Secretary mean by standards of programme content which broadly follow those presently required by the IBA? Can we be assured that "broadly comparable" does not mean a lowering of standards, and that the present standards of advertising will at least be maintained?
Thirdly—this is perhaps a highly topical issue—is there sufficient advertising to go round, or will the introduction of the new channels imperil independent broadcasting by the programme companies because of a lack of sufficient advertising to sustain all the available channels?
Fourthly, does the right hon. Gentleman accept—I am sure that he does—that we welcome the limit to be placed on the broadcasting of foreign material? However, will he tell us what a "proper proportion" of home-produced material means? The Opposition regard a "proper proportion" as no less than the proportion that is now required of the independent companies. Will he give us an absolute assurance that the cable companies will not be allowed to project a larger proportion of foreign matter than that which is now available to the IBA's individual areas?
Is the right hon. Gentleman aware that we very much welcome the rejection of the unsavoury notion of the adult channel? It never struck me that he would approve of such a proposition. I am delighted that our judgment of his character has been confirmed. Perhaps other doubts about his character will be justified later.
But what is all the rush about? Why cannot we have the legislation that the right hon. Gentleman promised the House on 2 December 1982? How does he reconcile parts of the White Paper's paragraphs with his absolute assurance on that date that material progress would not come about until the House had had the opportunity to vote on a Bill dealing with these matters? Why are the Government in such an unseemly rush to create two television nations—one which can enjoy cable television and another, comprising the majority of the nation, which will not be offered that benefit?
Mr. Whitelaw: I am glad to learn from the right hon. Gentleman that we are at one on the objective of what we should achieve through cable television and its benefits for advanced technology. He questioned in a number of ways whether the way that we have proposed to go towards that objective is the right one. First, he suggested that British Telecom should have a monopoly. My right hon. Friend the Secretary of State for Industry and I believe that it should have a substantial share but not an exclusive monopoly.
The safeguards that we have proposed for pay-per-view are reasonable; it took a lot for me to accept that, as I come from an area that is not likely to have cable in my lifetime, and I am unlikely to wish to live there for the rest of my life without ever being able to see some of the things that I see now. I believe pay-per-view to be a perfectly reasonable concept.
The controls on advertising will be the same and we wish them to be so. I can give that assurance.
In the long run it must be for the cable authority to decide exactly what proportion of foreign material there should be. It is important to note that the cable authority has an extra duty imposed on it in the White Paper above that presently carried by the IBA. It will have to show that
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there will be a progressive reduction in the amount of foreign material that is used. That duty is not placed on the IBA but it would be placed on the cable authority.
Mr. Dennis Skinner: Keep out the foreign muck.
Mr. Whitelaw: I think that our decision on adult channels is right. I am interested in the views of the right hon. Member for Birmingham, Sparkbrook (Mr. Hattersley) on my character. Many people have had views on my character, usually in contradictory directions.
I do not accept the right hon. Gentleman's remarks about a rush. When the White Paper has been approved by Parliament, as I believe it will be, I think that it will be reasonable for the Secretary of State for Industry and me to use our powers under existing legislation. It is important to maintain the momentum if Britain is to keep its lead in advanced technology.
Several Hon. Members rose—
Mr. Speaker: Order. I remind the House that the statement says that there will be an early opportunity for a full debate. I propose to allow questions to continue until 4 o'clock, when we shall move on to a further statement. The House is questioning the statement and not debating it.
Sir Paul Bryan: Is my right hon. Friend aware that the House will appreciate his success in achieving a balance between maintaining the standards on which we put so much value and giving sufficient freedom to the system to attract the capital that will be necessary to establish this important industry?
Is my right hon. Friend aware of the critical importance of the first dozen pilot schemes getting off to a good financial start? Will he confirm that the pilot schemes will have the availability of pay-per-view, which is a way of getting early revenue?
Mr. Whitelaw: I am grateful to my hon. Friend for his remarks about balance. That is exactly what we have sought to achieve, and I think that he is right in believing that we have achieved a balance. I accept the critical importance of a good financial start for the pilot projects, and they would have access to the pay-per-view system.
Rev. Martin Smyth: My colleagues and I appreciate the general statement and welcome it, especially the decision on so-called adult channels. In seeking to protect the interests of viewers, will the cable authority have a duty to exclude party political broadcasts from pay-per-view events? Will the right hon. Gentleman use his undoubted influence to raise the standard of such performances, especially after last night's appalling production?
Mr. Whitelaw: I am grateful to the hon. Gentleman for his remarks, especially those about adult channels. I think that it will be wise for me on this occasion not to be drawn into comments on party political broadcasts.
Sir Philip Goodhart: How will foreign programme material be defined? For example, the film "Gandhi" received massive financial support from the Indian Government and none from the British Government. Is it an Indian film or a British film?
Mr. Whitelaw: That must be a matter for the cable authority to decide in the course of time.
Mr. Clement Freud: The House will be cautious in encouraging new television schemes after Channel 4 and TV-am, but will the right hon. Gentleman accept that my right hon. and hon. Friends encourage the manner in which the White Paper is constructed and the way that he is moving away from the original Hunt report?
I shall ask the right hon. Gentleman three questions. [HON. MEMBERS: "No".] First, which Government Department will be in charge? If it is to be the Home Office, will he think again? Secondly, will he consider advertising and the natural break concept? Thirdly, will he produce a schedule? The reference to
"great national sporting events, such as the cup final"
is far too vague. The entire nation will want to know which events will be restricted.
Mr. Skinner: The hon. Gentleman is the Home Secretary-designate.
Mr. Whitelaw: I am grateful to the hon. Member for Isle of Ely (Mr. Freud) for what he has said. Responsibilities will be shared by my right hon. Friend the Secretary of State for Industry and myself. As the Home Office has taken the lead in publishing the White Paper, the Home Office—it has, of course, responsibilities for broadcasting — will take the lead in broadcasting matters. I note what the hon. Gentleman has said about advertising and I do not think that I have anything further to add. In the long run, it will be for the cable authority to come to a decision on a schedule. Having had discussions with various people, I recognise that it will be an extremely difficult issue, which will require considerable discussions and negotiations with all concerned, including broadcasters and sporting bodies.
Mr. Tim Rathbone: Will my right hon. Friend accept that we on the Conservative Benches find nothing bland about his statement and, in the first flush of reading it, nothing bland about the White Paper, which is excellent?
Does my right hon. Friend accept that the principle is accepted that enterprising private operators, after a period of testing, are more likely to meet the developing desires of people for cable television than any Government or Government authority?
Will the Home Secretary reconsider the maximum limit of 100,000 homes for the test areas, because, like my hon. Friend the Member for Howden (Sir P. Bryan), I have some doubt that the areas are completely viable for carrying out such tests?
Mr. Whitelaw: I am grateful for what my hon. Friend has said. The success or otherwise of cable television depends on those who decide to come forward, the money they have and their success when they come forward and on whether the public will pay to be connected to cable. Those are matters that the House cannot now determine.
As to the limit of 100,000 homes, the Government are anxious at this stage to have pilot projects and nothing beyond that, to proceed with advanced technology and to understand some of the problems, but not to pre-empt a Bill that will eventually pass through the House.
Mr. John McWilliam: Will the Home Secretary tell the House what representations were made to him by Mercury in relation to cream-skimming and high-density data service areas? Why did the Home
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Secretary and his right hon. Friends refuse to accept similar representations when they were made generally for telecommunications?
Mr. Whitelaw: I understand from my right hon. Friend the Secretary of State for Industry, to whom such representations would be made, that consultations have taken place and that he believes that he has gone a long way to meeting some of the points put forward.
Sir Geoffrey Johnson Smith: I congratulate my right hon. Friend and his hon. Friend the Minister for Industry and Information Technology on the statement and on the White Paper. Assuming that the House approves the White Paper, when does my right hon. Friend expect to grant the first extension of licences?
Mr. Whitelaw: I would not wish to commit myself at the moment. That depends on many factors.
Mr. John Golding: Is the right hon. Gentleman aware that the Post Office Engineering Union believes that cable should not be developed separately and that it will be better for the country to have a single integrated telecommunications network covering television, radio, data and telecommunications, and that the best body to do that is BT, which has the necessary skills, knowledge and physical assets?
Mr. Whitelaw: I have nothing further to tell the hon. Gentleman, whose interests I fully understand. British Telecommunications should have a substantial share, but the Government have decided that it should not be exclusive.
Mr. John Spence: I congratulate my right hon. Friend on the White Paper and draw his attention and that of the Minister for Industry and Information Technology to the main thrust of a national telecommunications structure. Is the introduction of 12 pilot projects the best way of giving impetus to that thrust? Should the Government not be thinking more seriously in terms of greater impetus than simply providing for 12 projects covering 100,000 homes?
Mr. Whitelaw: The reasoning behind the 12 projects and the limited nature of the development is the belief, which I strongly share, that while it is right to keep the momentum going, it would be wrong to pre-empt a decision on a Bill in the House.
Mr. Ian Wrigglesworth: Why do not the Government recognise the value of competing technologies more than they do in the White Paper? Will they consider the possibilities existing in other spheres for providing services of this type and try to develop a comprehensive communications network — something which is not apparent in the White Paper? What are the implications for the British Broadcasting Corporation? What is the Central Policy Review Staff doing about the BBC? Many hon. Members will have read recently in the newspapers about the dismemberment or abolition of the BBC, which is a great asset to this country.
Mr. Whitelaw: I suggest that the hon. Gentleman does not believe everything he reads. The White Paper makes clear the future position of the BBC, by which I stand absolutely and completely.
Mr. Tim Brinton: Will my right hon. Friend, bearing in mind the large amount of money which

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will have to be invested in these pilot projects, tell the House whether he is satisfied that, with the limitation of 100,000 homes and limitations on advertising, these pilot schemes will be able to break even, let alone make a profit?
Mr. Whitelaw: My right hon. Friend the Secretary of State for Industry and I have discussed this matter. We believe that, with some of the existing operators, who are presently licensed and with whom the Government can go further, and with the pilot projects, the Government are making a modest start. If we made more than a modest start we would run straight into pre-empting legislation —something I feel strongly about.
Mr. Robert Hughes: Will the right hon. Gentleman explain paragraph 247 of the White Paper, which suggests that, immediately this White Paper is debated and approved, existing companies will be given licences to 1986 to offer additional services? How does that square with competition? Does it not give those companies a head start?
Mr. Whitelaw: No. On the principles on which they are licensed by the Home Office, it does not give the companies a head start. It was thought reasonable to give them a chance to develop in the same way as the pilot projects.
Mr. Peter Fry: I applaud my right hon. Friend's White Paper, but is he aware that there is anxiety because in many urban areas the state of the highways, due to the efforts of public undertakings, are in an unsatisfactory condition? The onset of cable television will cause further problems. Will he ensure that the cost of reinstating the highways to the satisfaction of the highway authorities does not fall on the ratepayers or taxpayers but will be met by those who benefit by supplying cable television?
Mr. Whitelaw: I shall confine myself to reminding my hon. Friend that a code on this point is attached to the Telecommunications Bill, which is now passing through the House. There have been consultations on this matter, and they will continue.
Mr. Skinner: Is the Home Secretary aware that leaving a substantial number of television channels to the whims of market forces and allowing the lowest common denominator to apply will breed violence and materialism, resulting in a further weakening of the social fabric? As a result, those who have to pick up the debris, such as probation officers, among others, will have more problems to deal with. Does not the Home Secretary's statement show that the Government give more priority to those making money out of television than to probation officers, whose junior members may face a cut of £1,000 per annum?
Mr. Whitelaw: I shall confine myself to the matter in hand. I hope that the hon. Gentleman recognises that there are great advantages for the earning capacity of this country — from which many people are paid — in developing advanced technology and taking advantage of Britain's promising position in this sphere. If the hon. Gentleman does not believe that, he is even more of a Luddite than I thought he was.
Mr. Gary Waller: Will my right hon. Friend bear in mind that some of the most exciting developments in cable relate not to television but to the interactive services to which he referred in his statement? As there is much uncertainty in television, with breakfast television and Channel 4, there must, inevitably, be much uncertainty as to the future of cable television. Will my right hon. Friend ensure that those uncertainties do not act as a barrier to the development of the interactive services, which hold out great hope for the future?
Mr. Whitelaw: I think that the development of cable and the pilot projects are closely connected with the development of the interactive services, which are enormously important.
Mr. Austin Mitchell: Although the Home Secretary has modified the race into cable from a headlong rush to a moderate amble, is there not still a danger that large parts of the country will be lumbered with coaxial cable and with a tree-and-branch system that will quickly become outdated and could well leave Britain behind other countries which go wholeheartedly for fibre optics?
Mr. Whitelaw: The hon. Gentleman knows that there are particular incentives in the length of the franchise, in favour of companies going for the star system, which we recognise is the best system for the future.
Mr. Jonathan Aitken rose—
Mr. Skinner: Good morning.
Mr. Aitken: In view of the concern expressed by the Opposition about profits being made out of cable television, will my right hon. Friend give careful consideration to the argument that these cable franchises, like some others I could think of, may well turn out to be licences to lose money? Is my right hon. Friend prepared to reconsider the point that the figure of 100,000 viewers per station may turn out to be woefully inadequate and that, given the experience of cable television in America, the cable authority must ensure, to reserve jobs and livelihoods in the industry, that the finances of any cable operator are very solid and cautious?
Mr. Whitelaw: Many people see a future in cable and want to go into it, but they risk their own money. In our society, that is perfectly proper in every way. It is right that they should have the opportunity. In addition, we should show that we can make a success of cable in this country, with the right balance. We produced the White Paper against that background.

Citizens Advice Bureaux
4.1 pm
The Minister for Consumer Affairs (Dr. Gerard Vaughan): With permission, Mr. Speaker, I shall make a statement on the review of the National Association of Citizens Advice Bureaux. In the Adjournment debate last week I said that I would make an announcement to the House on the details of the review as soon as I could. I am glad to say that I can now announce the chairman and terms of reference of the review, which the association and I have agreed is urgently needed.
The terms of reference will be:
"To review the functioning of the National Association of Citizens Advice Bureaux and to make recommendations, with a view to ensuring that the Association gives the best possible service and support to local citizens advice bureaux; and that the monies available to the Association are spent in the most effective way."
The review will be chaired by Sir Douglas Lovelock. A firm of management consultants will be appointed to assist in its work.
Mr. Dennis Skinner: Is he a multilateralist?
Dr. Vaughan: A senior partner of the firm chosen will also be a member of the review team. I propose that a third member should be appointed and I hope to announce the name shortly.
Mr. Skinner: I bet he has been checked out.
Dr. Vaughan: The terms of reference and the membership that I have announced have been agreed with the national association.
I have asked the chairman to report to me in the next six months. The review team will, of course, work closely with the national association; and the report will be made available to it once I have received it. I propose that the report should be published.
The management consultants assisting the review team will examine the staffing and management structure of the national association and will be asked to complete their work within the next three months. In accordance with normal practice, we shall be seeking tenders at once for this job on the basis of a shortlist to be discussed with Sir Douglas Lovelock and the national association.
I am very glad to say that complete agreement has been reached with the national association that the review should be carried forward on this basis, and I am sure that that will be welcomed by the whole House. In the light of this, and my helpful discussions with the national association's officers, I can confirm that Government funding for NACAB for the whole of the current financial year—[HoN. MEMBERS: "Ah!"]—will be maintained on the normal basis.
Mr. Peter Archer: The whole House will welcome that assurance to the National Association of Citizens Advice Bureaux that at least it may proceed to budget on a proper basis and not on the hand-to-mouth basis that the Minister originally proposed. Does the Minister appreciate that no one would dispute that a body receiving public money should submit to a review of how that money is spent? Is he aware that the national association would welcome such a review?
The House will note with pleasure that the inquiry into staffing and efficiency is not intended to deal with the
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allegations of improper political activities, which emanated from his Department, but is it not the case that, however the allegations originated, the Minister has still not said clearly and unambiguously that they are without foundation? After three previous invitations, may I call upon him to do so now? When does the Minister propose to reply to the letter that I wrote to him on 12 April, inviting him to acknowledge the damage that has been done to the relations of some local citizens advice bureaux with their local authorities, on which they depend for finance, and to circularise local authorities urging them to continue funding citizens advice bureaux in the vital work that they are doing, at least to the same level as before?
If, as the Minister has just said, he is anxious that local citizens advice bureaux should receive
"the best possible service and support",
is the answer to my letter that he will send that circular to local authorities, or that he will not?
Dr. Vaughan: I am glad about the first part of the right hon. and learned Gentleman's remarks and about the welcome that he has given to the statement. I also welcome his supportive remarks, which are contrary to many of the comments that have been made, which undermine local bureaux—[AN HON. MEMBER: "That is a bit rich."] As to the various allegations, I have said several times that when complaints are put to me it would be quite improper not to pass on the general nature of what was said. I have announced clear terms of reference for the review, which speak for themselves. It is not for me to comment further on its scope, which, within the terms of reference, is a matter for the independent review team to determine. I made it clear in my statement and in the Adjournment debate that I expected local authorities to continue to support the local bureaux. On Friday, I gave an undertaking that I would consider the possibility of a circular to back that up.
Mr. Richard Wainwriight: As the Minister has frequently stressed to the House that the Government grant is for NACAB and NACAB only, will he now confirm that the review body will have no authority to make any judgments—incidentally or otherwise—on the work of the local bureaux?
Dr. Vaughan: The review body is to examine the functioning of the national body exactly in accordance with the terms of reference that I set out in the statement.
Mr. Ivan Lawrence: Is my hon. Friend aware that the achieving of agreement represents a signal success and will be welcomed by everyone? Is he also aware that the closing of DHSS caller offices, now that the benefits are no longer paid out, still leaves them providing a service by advising elderly people on how to fill in forms? Would not that service be performed better by the citizens advice bureaux? Will my hon. Friend bear that in mind when he considers future allocations of resources to CABs?
Dr. Vaughan: My hon. and learned Friend's remarks go rather wider than the statement, but I shall certainly bear them in mind.
Mr. J. W. Rooker: Will the Minister confirm that his statement has nothing to do with the highly critical report on DHSS local offices that was sent to the DHSS in December 1981 by NACAB and which drew attention to massive shortfalls in departmental services to the citizens of this country, as a result of which NACAB was having to pick up the pieces?

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In relation to the question asked by the hon. Member for Colne Valley (Mr. Wainwright) about the terms of reference, will the Minister confirm that the review body can look at NACAB in conjunction with its services to local CABs? Is the Minister aware of the effect that mass unemployment has had on the full-time and part-time staff of NACAB? The review body is welcome to visit Birmingham, where NACAB provides a local service that cannot be provided by any other body. There is nothing whatsoever to hide.
Dr. Vaughan: The hon. Member seems to be a little confused. Once again, he is mixing up a number of different points and trying to make some rather cheap political remarks by widening the issue. I have already had an invitation to visit one of the Birmingham bureaux, which I am happy to accept. I do not see any relationship between DHSS activities and what we are talking about today.
Mr. James Molyneaux: Will the Minister acknowledge that there will be a warm welcome in Northern Ireland for the resumption of funding for the current year? Will he ensure that local authorities are not discouraged from expanding the assistance that they give to the local citizens advice bureau, particularly in the light of increases in overheads through charges for rents and so on?
Dr. Vaughan: I assure the hon. Gentleman that overall funding of NACAB was never in any doubt. We were discussing the distribution and the allocation of funds. I am happy to take note of the hon. Gentleman's points.
Mr. Robert Hicks: Will my hon. Friend accept, from one who was critical of his initial decision, grateful thanks that he is to restore the second £3 million? Is he aware that some uncertainty has been created as a consequence of the events of the past 10 days or so? Therefore, will he consider issuing a circular to local authorities so that they continue to support these worthwhile voluntary organisations?
Dr. Vaughan: I welcome my hon. Friend's remarks on the general issues. I said clearly on Friday that I would be looking seriously at the possibility of a circular.
Mr. John Home Robertson: As a former local CAB chairman, I am relieved that the Minister has withdrawn his ill-judged threat to cut CABs' funding this year. On a Scottish point, is the inquisition that the Minister has announced to extend to the entirely autonomous Scottish parts of the CABs? If so, is that necessary, as SACAB's organisation and staffing have already gone through an inspection by the Minister's Department in recent months? Has the Minister had any specific complaint about political bias in Scottish CABs? When does he expect to reply to the parliamentary question that I tabled on this issue, which should have been dealt with six days ago?
Dr. Vaughan: I resent the suggestion that this is an inquisition. This is a review, agreed between the Government and NACAB. The hon. Gentleman does not do justice to NACAB when he tries to claim that in some way the review will be an aggressive inquisitorial attack. There is no question of a cut, and I have made that clear
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in a series of remarks. There have been three letters from Scotland, each of which has made a complaint, and I shall be answering the hon. Member's question today.
Mr. Tom McNally: Will the Minister make it clear that, in its terms of reference, the inquiry team has the right to recommend that the added burden put on national and local CABs could result in advice, which the Government will accept, that the association needs more money, not less?
Dr. Vaughan: I refer the hon. Gentleman to the terms of reference of the inquiry, which are:
"To review the functioning of the National Association … with a view to ensuring that the Association gives the best possible service and support to local citizens advice bureaux".
Mr. W. R. Rees-Davies: I congratulate the Minister on arriving at an agreed review, but will that review be able to consider whether there is any party political bias in any of these bureaux and be able to make recommendations accordingly? In the citizens advice bureaux that I have been conversant with over many years, there never has been any party political bias, and there is no reason why there should be. Will it be within the terms of reference to make a recommendation in that regard?
Dr. Vaughan: The agreed terms of reference have been designed to be as constructive and helpful as possible to the movement as a whole. It will be for the independent review team to determine what it looks at within the terms of reference.
Mr. David Ennals: I welcome the decision to extend the grant for a further six months. Does the Minister accept that most of those who have had close contact with NACAB think that the review is unnecessary? Is he aware that his intervention has caused a great deal of concern, not so much to the public, who already have a great respect for the work of individual advice bureaux, as to the many thousands of volunteers who unstintingly give their time so that the services can be provided? Is the Minister aware of what he has done to those—most of them quite non-political—who give their time to help this service?
Dr. Vaughan: If there has been concern—I accept that there has been some—it is generated and increased by remarks such as those that the right hon. Gentleman has been making.
Mr. Peter Bottomley: Had the hon. Member for Battersea, South (Mr. Dubs) been here, I am sure that he would have joined me in congratulating both the national association and my hon. Friend on reaching agreement. I understand that the national association welcomes this early review rather than the later inspection that had been planned. Will the review make recommendations so that the results of the work of the CABs can be shown to those public authorities and Government Departments that might be able to adjust their approach to consumers of services in such a way that the CABs need not grow year by year as they are at the moment?
Dr. Vaughan: I welcome my hon. Friend's remarks. I see the review as a constructive exercise, agreed between NACAB and the Government, which will be of service to the movement.
Mr. Lewis Carter-Jones: As a kindly and courteous man, will the Minister make a public apology to all members of the CABs, who have given their services willingly, for the slurs that he cast upon them?
Dr. Vaughan: I do not see those remarks as either kindly or courteous. I have never at any time cast any aspersions on or allegations against the local CABs.
Mr. Carter-Jones: Somebody has.
Dr. Vaughan: If the hon. Gentleman read my statements, he would know that I have not done so.
Mr. Tony Marlow: Does NACAB have any political role with regard to putting overt or covert pressure on the Government to change their policies?
Dr. Vaughan: None whatsoever.
Several Hon. Members rose—
Mr. Speaker: Order. If they are brief, I shall call those hon. Members who are standing, but I hope that they will be brief.
Mr. Ioan Evans: Will the Minister admit that he has publicly mishandled the attack on the CABs and take this opportunity of paying tribute to the fact that, in the past 12 months, the bureaux have had an increase of 11 per cent. in their cases, dealing with over 5 million, many of which have been brought about by the Government? Does the Minister realise that Members of Parliament are already overburdened with problems facing their constituents, and that if the CABs did not exist the burden on hon. Members would be far greater?
Dr. Vaughan: The hon. Gentleman obviously has not been following the exchanges. Over and again, I have paid tribute to the work done by the CABs and to the way in which the Government over the past three years have consistently increased the funds available to the CABs. That shows the amount of support that we give the association.
Mr. Christopher Price: Although I welcome the fact that the inquiry is going out to tender and is not being handed out without tender as the Government have been accustomed to do recently in other matters, in broad terms what is the expected cost of this, where is the money to come from and will it come from the money originally allocated to NACAB?
Dr. Vaughan: The money will be met by the Government. It is not coming from the allegation —[Laughter.]—the allocation—to NACAB. The review will be of service to all CABs.
Mr. Bob Cryer: How much will the inquiry cost? Will it not be an expensive exercise in face-saving, to which the Minister is stooping after having made—or having acknowledged — a number of unsubstantiated innuendoes? Does not the result appear to be a combination of a witch hunt and a face-saving exercise? As the Government place a cash limit on virtually every activity, except defence, upon which they get their dirty little fingers, why will the Minister not tell the House the cost of this exercise?
Dr. Vaughan: For the simple reason, as the hon. Gentleman knows, that until we receive the tenders and examine the scope of the review—a better word than inquiry—we will not know the exact cost. However, I assure the hon. Gentleman that it will be done thoroughly and quickly because we see great advantages in having a full review, done properly and rapidly.
Mr. Arthur Davidson: Why does not the Minister, in simple language, withdraw the unfounded allegation of political bias? It is not a difficult thing for him to do. He must understand that those who help in citizens advice bureaux, particularly those who give advice in a professional or semi-professional capacity, must be seen to be giving that advice free from bias. He owes it to them to withdraw the slur.
Dr. Vaughan: I am disappointed that the hon. and learned Gentleman does not welcome what we are doing and accept it in the spirit in which it has been entered into. I do not see how I can possibly withdraw allegations that I have not made. It is part of my job to pass on complaints as they arise and that is what I have been doing. I should have thought that I was the person who had been most witch-hunted. [HON. MEMBERS: "Oh".]
Mr. Clinton Davis: If the Minister has that sense of aggression it may be because he has been something of a witch. Is he aware that workers in the citizens advice bureaux in my borough to whom I have spoken volunteered to me the fact that they were incensed by his statement and that they believe that a slur has been deliberately cast on them? If that was not his intention, why did he specifically refer to the allegations that have been reported to him that citizens advice bureaux have been engaged in biased political activities? Was there any need for the hon. Gentleman to refer to that?
Dr. Vaughan: I hope that when those anxieties were put to him the hon. Gentleman reassured the local volunteers and I hope that he did not do so in quite the terms that he has just used to me. I welcome NACAB's recent reaffirmation of political impartiality in the CAB service and the assurances that I have received that any breach of that principle will be thoroughly investigated.

House Transfer (Amendment)
4.22 pm
Mr. Bowen Wells: I beg to move,
That leave be given to bring in a Bill to extend competition in relation to services in connection with the transfer of ownership of houses in England and Wales, by amending section 22 of the Solicitors Act 1974.
My proposed Bill would permit those who are not solicitors to prepare and register transfers or charges in respect of dwelling-houses the title to which is already registered under the Land Registration Act 1925. The Bill would therefore be restricted to houses for which the first registration and initial subdivision had been undertaken by a solicitor, or to what might be loosely referred to as secondhand houses, the title to which had not been altered since the first sale. It is estimated that the procedure might apply to about 70 per cent. of secondhand house transactions at present, the rest remaining on unregistered title whose conveyance would have to be undertaken by a solicitor. In short, it seeks to take advantage of the great progress that has been made as a result of the Land Registration Act 1925.
The objective of my Bill is to make it possible for an enforceable contract of sale between a vendor and a purchaser to be signed in the shortest possible time, which should average no more than one month and preferably a shorter period. You may think, Mr. Speaker, that the amendment of the Solicitors Act in the way that I have outlined and the objective of my Bill are unrelated, but I shall explain the connection later in my speech. There is a need for action to be taken on simplifying, streamlining and reducing the expenses involved in house transfer. First, there is the compelling statistical evidence that home ownership has increased dramatically since 1918, when 10 per cent. of the housing stock of England and Wales was owner-occupied. In 1979, 60 years later, the evidence given to the Royal Commission on legal services by the Registrar of Lands said that 53 per cent. of the housing stock was then owner-occupied.
The House, under the able direction of my hon. Friend the Minister for Housing and Construction, has enabled over 1 million people to own their homes under the right-to-buy legislation. The figures emphasise the urgent need to seek a quick and inexpensive method to permit home owners to buy and sell homes easily and safely, unencumbered by out-of-date practices that are no longer necessary.
The second administrative reason for modernising our methods is that the land registry system that was introduced in 1925 will, it is hoped, be extended to the whole of England and Wales by 1985. As the House knows, under that excellent system the title to property is guaranteed by the state. In 1804, when the solicitors first acquired the monopoly of conveyancing, the reason given was that title to property was often defective and the interests of the public could be safeguarded only by those properly trained and bound by a set of rules of good conduct which was enforceable by their profession. That monopoly was granted by King George IV in exchange for their agreement to collect stamp duty on his behalf. With the advance of the land registry system those considerations have almost completely disappeared, so there are good and sound reasons for reform from an administrative and technical point of view.
882
The most compelling reason for change is the heart-rending and traumatic experiences of many people who have had the misfortune to be impoverished and harassed by the practical effects of the present system. Let me read to the House a few extracts from the hundreds of letters that I received following the "You and Yours" programme on this subject on Radio 4, so that people can speak for themselves. A letter dated 13 April—eight months after my correspondent had decided to buy a house—said:
"My wife and I saw a house we wanted to buy in August 1982. We made an offer for it which was accepted. Since then we have `sold' the house we are living in three times. We hope to move in in less than three weeks' time but have yet to exchange contracts because of a series of little problems at various stages in the chain. This week's problem is an inability between two solicitors to agree on the completion date. Because contracts have not been exchanged yet any one of six parties (and seven solicitors) in the chain can change his mind and the whole series of transactions could collapse. Delays we can handle but this uncertainty is difficult to bear."
Another letter said:
"After three months we thought we were ready to exchange contracts. Our purchaser withdrew and within days we received a bill from our solicitor for £200 and, not satisfied with sending us the bill so quickly, he tried to take the money out of our deposit for our purchase which we had only then handed over to him. We are now sure that our purchaser had already been buying another property when we signed contracts. The whole business has been a nightmare to us. It is a most traumatic experience to go through all those months of anxiety and then be left with nothing but a large bill."
Those are two samples of hundreds of letters that complain of the long delays, expense, genuine nervous tension and exasperation which the present system induces. Therefore, it seems imperative for those of us who are representatives of our people to seek urgently an alternative method without sacrificing the necesssary safeguards that the present system affords.
I said that I would explain why introducing competition into transferring houses by permitting persons other than solicitors to prepare and register transfer of title will bring an end to the build-up of what I call daisy chains of house buyers. The only way to prevent the present practice is to effect an enforceable contract between the two parties quickly. If it were possible for building societies, banks, property developers, estate agents and others to effect transfer, they would compete with solicitors to provide a service to the customer.
It is perfectly possible under our present system to effect a quick contract if both parties want it but a solicitor would not advise such haste without first checking the title and making certain that it was unencumbered, that there were no planning proposals which might affect the property, and that the house was structurally sound. Other than the question of title, which is now successfully guaranteed by the Land Registry, all the other matters can be checked by anyone and they do not require legal knowledge. Indeed, under present law the contract of sale does not have to be drawn by a solicitor. All these functions could be carried out in one office, much to the benefit of the clients and avoiding the delay inherent in the present system.
Precontract preparation could be done by all buyers and sellers in the following ways. First, the vendors' agent or solicitor would prepare a contract of sale before the property was marketed. Secondly, the mortgagee would have to be warned of the impending redemption of the mortgage. Thirdly, the vendor or agent would make local searches and inquiries before the sale. Fourthly, the

883
vendor would commission a report and valuation inspection report, so avoiding multiple surveys. Fifthly, the purchaser would satisfy the estate agent that he had the money or a promise of a loan and income sufficient to purchase the property. Sixthly, the agreement would be a standardised form of mortgage.
In case the House thinks that such reforms are too radical, I refer hon. Members to the report of the Royal Commission on legal services published in 1979 in which such reforms were suggested. The Royal Commission favoured the retention of the solicitors' monopoly and even its extension to the contract of sale. It also suggested that the Law Commission or the Law Society should establish a standing conveyancing committee which would include practising lawyers, building societies, estate agents, consumer organisations and developers to consider the reforms. However, neither body of lawyers has taken any steps to effect the Royal Commission's recommendations.
With the computerisation of the Land Registry and the records of the local authorities, it should be possible to check all factors by simply pressing a few buttons on a computer. In the absence of any move to reform, which I understand the Law Society promised the Royal Commission that it would urgently undertake, I believe that we must open house transfers to the winds of competition so that those more concerned with serving the public will themselves effect the necessary reforms.
That is not foolhardy, because the titles are now guaranteed and people lending money for house purchases will make certain that their money is lent on sound title and contract of sale. As house purchase is normally the largest transaction undertaken by most people, purchasers will also be very concerned to ensure that it is properly and correctly carried out.
With the title guaranteed, the transaction becomes similar to hire purchase, over which agreements solicitors have no monopoly. However, there is a need to establish a system of bonding those who handle clients' money and for insurance against the possibility of mistakes.
I hope that my Bill will focus the mind of those in Government and in the professions so that reform will be introduced voluntarily, but quickly. That will be much to the benefit of the professional standing and public respect of the solicitors who now unfairly take all the criticism for the system's shortcomings.
When the burden of criticism is lifted from their shoulders, I am sure that solicitors will be able to attract a large share of the business. Above all, I hope that the Bill will prevent the worry, delay and losses caused by housing chains from which so many of our increasing number of home owners suffer when they buy and sell their homes. I have pleasure in commending the Bill to the House.
Question put and agreed to.
Bill ordered to be brought in by Mr. Bowen Wells, Mr. John Heddle, Mr. Richard Page and Mr. Robin Squire.

House Transfer (Amendment)
  HOUSE TRANSFER (AMENDMENT)
  Mr. Bowen Wells accordingly presented a Bill to extend competition in relation to services in connection with the transfer of ownership of houses in England and Wales, by amending section 22 of the Solicitors Act 1974: And the same was read the First time; and ordered to be read a Second time upon Friday 8 July and to be printed. [Bill 140.]
Orders of the Day

  Finance Bill
  (Clauses 12, 16, 63, 73 and 88; Schedule 11; new clauses relating to the national insurance surcharge or the rate of value added tax first appearing on the Order Paper not later than 19 April.)
  Considered in Committee. [Progress 25 April]
  [MR. BERNARD WEATH BRILL in the Chair]

  Finance Bill
    New Clause 1

      REDUCTION OF RATE OF VALUE ADDED TAX
      'In section 9 of the Finance Act 1972 for the words "15 per cent." there shall be substituted the words "13 per cent ".'—[Mr. Straw.]
      Brought up, and read the First time.
      4.35 pm
      Mr. Jack Straw: I beg to move, That the clause be read a Second time.
      The Chairman of Ways and Means (Mr. Bernard Weatherill): With this it will be convenient to discuss new clause 5—Decrease of rate of value-added tax.
      Mr. Straw: The cost of reducing value added tax by 2 per cent. in this way would be about £1 billion in the first year and £1,380 million in a full year. It would have the effect of reducing the retail prices index by 1 per cent.
      Although VAT is a key revenue raiser and its imposition a matter for continuing discontent and controversy, this is the first opportunity that the House has had to debate VAT since the Chancellor of the Exchequer doubled the rate in his first Budget on 12 June 1979. As we near the end of this Parliament, we are afforded an occasion to examine the Government's record on indirect taxation and to advance our case for reducing VAT by 2 per cent. Such a reduction is a component of any strategy to secure the sustained recovery in output and employment that our economy so desperately needs.
      On Tuesday we debated at length the Government's broken promises and their dishonoured bribes about direct taxation. Ministers may wriggle and squirm, but they know, we know and the country knows that they promised to reduce the burden of direct taxation, but instead they have raised it for all but the very rich. The Government's record on direct taxation, on income tax and national insurance, is bad enough, but their record on taxation as a whole—on excise duties and value added tax— is appalling. It shows that in 1979 the Government treated the electorate with a cynical contempt that almost beggars belief.
      Many Members seem to be suffering from collective amnesia. I shall remind the House of what happened in April and May 1979. Early in the election campaign the Conservatives issued their manifesto and promised to
      "cut income tax at all levels to reward hard work, responsibility and success".
      As the election campaign progressed, senior Tory spokesmen expanded the manifesto promise and made it clear that they proposed to reduce taxes on earnings, including national insurance contributions as well as income tax. The Conservatives refused to do the arithmetic or make costings to support their bribes, so the Labour party had to do it for them.

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      We charged the then shadow Chancellor with misleading the nation. We said that there was no way in the world in which Conservatives could reduce direct taxation on the scale that they envisaged without doubling VAT.
      We all remember the response by the Conservative party and its lickspittle, the Daily Mail. They said that the suggestion that they would double value added tax was a lie. That was repeated in the Daily Mail of Thursday 28 April 1979. Since the Daily Mail goes on about the Government's inflation record, it is worth rereading that issue of the Daily Mail. The price of that paper has doubled under this Government. It was 9p in 1979 and it is 18p today. It is no better value today than it was then.
      The Economic Secretary to the Treasury (Mr. Jock Bruce-Gardyne): How much did it cost in 1974?
      Mr. Straw: I do not know. The Government claim to have a fine record for inflation, and yet the Daily Mail, their mouthpiece and organ, has doubled in price in four years.
      We all remember the so-called lies. It was said that we lied when we said that the Conservatives had claimed that there would be no freeze on European food prices. They said that it was a lie for us to suggest that British Petroleum would be hived off, that unions might be clobbered through legislation and that British Airways might be privatised. Above all, it was said that it was a lie for us to suggest that the Conservatives would introduce higher prescription charges. The Conservatives said that they had no intention of increasing such charges. The Chief Secretary should wipe the cynical smile from his face because prescription charges have not doubled or trebled —they have increased by a factor of over six.
      The Conservatives also said:
      "We have absolutely no intention of doubling value added tax."
      We all know what happened. The Prime Minister and the Chancellor came as close to lying as we have ever seen in an election campaign. Within five weeks, VAT had almost doubled at 15 per cent. Of course, once again, they tried to brazen it out. The former Financial Secretary, the right hon. Member for Blaby (Mr. Lawson), asserted that the Government had not, after all, doubled the zero rate.
      Besides reminding ourselves about the enormity of the Government's deception in 1979, it is important for us to examine the excuse that the Chancellor gave to the House in his Budget statement on 12 June, when he announced that value added tax would be increased to 15 per cent.
      Mr. Tony Marlow: I am concerned for the hon. Gentleman because he must be uncomfortable in making his speech. One has heard of the pot calling the kettle black, but, having read various things that the Labour party has put forward, one comes to believe that the raison d'être of the Labour party is to increase taxation on the British people. The hon. Gentleman appears to be making a case against the tax policies of Her Majesty's Government. Is the hon. Gentleman feeling slightly uncomfortable?
      Mr. Straw: As usual, the hon. Member for Northampton, North (Mr. Marlow) is misinformed. If he had read Labour's programme with the assiduity with which Treasury Ministers claim to have read it, he would
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      realise that there is no suggestion that we shall increase taxation in the early stages of our Government. This debate is about the Government's record. We did not go into the previous election promising to reduce direct taxation and promising that VAT would not be doubled. The Government's record is under examination today.
      Mr. Marlow: Is the hon. Gentleman telling the House that if a Labour Government come to power, which most of us believe will not happen, they will not increase taxation?
      The Chief Secretary to the Treasury (Mr. Leon Brittan): Answer the question.
      Mr. Straw: I shall be delighted to answer the question. We make it clear in our programme that we do not believe that an increase in taxation would assist to secure a recovery of the economy and assist in our programme. Indeed, over the period of an expansionary programme, the proportion of taxation as a proportion of our total national income would fall. One of the great ironies is that while the present Government have cut public spending, public spending as a proportion of the national cake has increased, as the Chief Secretary knows to his discomfort.
      Mr. Lewis Carter-Jones: Will my hon. Friend give the hon. Member for Northampton, North (Mr. Marlow) a lesson in arithmetic? VAT was 8 per cent.; it is now 15 per cent. The rate has doubled under the present Government.
      Mr. Straw: The hon. Member for Northampton, North and his right hon. Friends promised at the last election that direct taxation would be reduced and said scarcely a word about increasing value added tax.
      4.45 pm
      In his first Budget speech on 12 June 1979 in which he announced that VAT would rise to 15 per cent., the Chancellor said:
      "We made it clear in our manifesto that we intended to switch some of the tax burden from taxes on earnings to taxes on spending." — [Official Report, 12 June 1979; Vol. 968, c. 249–50.]
      We all know that the Chancellor is keen to try to rewrite history. In his 1982 Budget speech he claimed that two Parliaments would be needed to implement the Government's programme. The Conservatives said in their manifesto:
      "We must therefore be prepared to switch to some extent from taxes on earnings to taxes on spending."
      They went on to promise that they would simplify VAT. Neither of those statements conveys the idea that they would double VAT. In the same paragraph, the Conservatives promised to tackle the proverty trap. They did indeed tackle the poverty trap by making it much worse. We should have anticipated that the promise to simplify value added tax would mean an increase to a nice round number such as 15 per cent.
      Having referred to the Government's manifesto commitment, such as it was, the Chancellor in his Budget statement of 12 June went on to say that increasing taxes on spending, such as value added tax, would be
      "the only way that we can restore incentives and make it more worthwhile to work and, at the same time, increase the freedom of choice of the individual … Moreover, the increase…must be sufficient to provide for substantial and worthwhile reductions in income tax."
      He concluded that the doubling of VAT would
      "provide scope for further direct tax reductions in later years." —[Official Report, 12 June 1979; Vol. 968, c. 250–51.]

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      So the doubling of VAT was sold to the House on the basis that it would enable the Government to reduce direct taxation not only in the first year of the Government but in subsequent years.
      It is a testament and a tribute to the unparalleled mismanagement of the economy by the Government that over the past four years they have pulled off the double of a dramatic increase in indirect taxes and a dramatic increase in the burden of indirect taxation. The average family's overall tax burden is equivalent today to a 7p in the pound increase in income tax, as the Treasury has recently been forced to admit. Figures given in answer to questions from me and then translated by the Library into constant price terms show that a family with two children on average income with the wife not working has seen its overall tax bill rise by £61·65 in 1978–79 to £71·40—a rise of almost £10. Before the Economic Secretary to the Treasury asks whether child benefit is included in that calculation, let me say that the increase for a married couple without children where child benefit does not feature has been even greater. Their direct tax bill has increased not by £10 but by £11·27 over the past four years in constant price terms.
      The amounts that the Government are taking out of the economy, as one would expect, have risen dramatically. In 1978–79 indirect taxes, including value added tax, yielded £30 billion in constant price terms. Today, after adjusting the yield for inflation, the figure has increased by one third to £40 billion in 1978–79 constant price terms. At the same time the Government have increased the burden of direct taxation from £27 billion to £33 billion, an increase of 25 per cent.
      The increase in value added tax had a further and more serious effect on the economy as a whole. It dramatically forced up the rate of inflation. Inflation was running at 10 per cent. in May 1979 and would not have increased much above that figure by the end of that year.
      Mr. Bruce-Gardyne indicated dissent.
      Mr. Straw: Ministers know that to be the case. The increase in value added tax pushed up the retail prices graph vertically. It was the sharpest rise ever. It meant that by the end of that year inflation was running at 17·5 per cent.; by the early spring of 1980 it was running at 19·5 per cent. and it peaked at 22 per cent. in the middle of that year.
      Throughout this Parliament we have witnessed an astonishing evasion of responsibility by the Prime Minister and her colleagues. If anything goes wrong, it is always the fault of someone else. The rise in unemployment and the catastrophic fall in production are blamed on forces beyond the Government's control, despite the fact that our collapse has been far greater than that of any of our major competitors, our rise in unemployment has been far greater and we have had the benefit of North Sea oil. We should have been able to ride those problems better than other countries.
      When inflation falls, it is all to the Government's credit, despite the fact that the fall in inflation in this country has been little better than that in the countries of our major competitors. When inflation rose, we were told that it was nothing to do with the Government—but it was. The increase in inflation during the Government's first year was not the result of the Clegg wage increase or of the profiteering of oil sheikhs. It followed as a direct
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      consequence of a deliberate Government policy to double value added tax. That decision, combined with general deflationary policies practised by the Government, contributed in a major way to Britain's unique collapse.
      Our performance on inflation and unemployment compared with our major competitors is instructive. I hope that the Chief Secretary will listen to this, because it is clear from his speeches that even he is blind to Britain's relative position. The Prime Minister has talked about Britain's spectacular inflation record, but the truth is that it is simply average while our unemployment record is spectacularly bad.
      In May 1979, inflation in the western industrialised world was 9·7 per cent. Here, it was 0·6 per cent. more at 10·3 per cent. May I have the attention of the Front Bench for these figures? Inflation in Britain is now 5·3 per cent., but in the rest of the world the average is now 5·7 per cent. In other words, in 1979 we were 0·6 per cent. above the average, and today we are 0·4 per cent. below the average.
      However, in 1979 unemployment in the United Kingdom was just above the average for the western industrialised world. It was 5·5 per cent. on a standardised basis compared with 5·1 per cent. It is not true, as the Prime Minister and her Ministers assert, that in the last four years Britain has done no worse than other countries. In no other major western country has unemployment risen faster or further than here. Today, Britain's unemployment rate is 13·3 per cent., while the average in the rest of the western industrial world is only 8·9 per cent. Therefore, the rise in unemployment here has been twice that in the rest of the western industrialised world.
      The Government take credit for their record on inflation and somehow suggest that it has fallen as a direct consequence of the monetary policies that they have followed. In fact, the fall has virtually nothing to do with their performance in attempting to control the money supply. If the relationship between the money supply and inflation was what the Conservative party so naively believed when in Opposition, 1982 and early 1983 should have been a period of double-digit inflation on the back of the double-digit growth in the money supply about 18 months or two years previously. That was exactly what one of the British gurus of monetarism, Professor Brian Griffiths of the City university, predicted in the middle of 1981.
      The fall in inflation has been due partly to world factors, particularly the collapse in commodity prices, which at the end of last year were in real terms 30 per cent. below their 1980 level, and partly to the penal and unanticipated consequences of monetary policy. The Government thought that that would reduce inflation and increase output and jobs, but instead it turned into a crucifying, old-fashioned deflationary squeeze with record high interest rates to boot. In other words, the fall in inflation has been built on a consequence of that squeeze, high interest rates and an artificially over-priced pound. The price that we have paid has been an extra 2 million on the dole.
      Mr. Marlow: The hon. Gentleman is making comparisons with this and that. What has happened to inflation in France and why has that happened?
      Mr. Straw: Inflation and unemployment have been falling for the last four months. The unemployment rate

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      in France is 2 million, not 3° million. Having given way three times to the hon. Gentleman, I hope that he will do something unique and defend the Government's taxation policy. These debates have been characterised by a deafening silence from Conservative Members in defence of the Government's taxation record.
      The increase in the price of the pound has meant a dramatic loss of competitiveness, which up to mid-1981 was quite unparalleled in our post-war history. Last November, my right hon. Friends the Members for Stepney and Poplar (Mr. Shore) and for Ashton-under-Lyne (Mr. Sheldon), my hon. Friend the Member for Edinburgh, Central (Mr. Cook) and myself published Labour's programme for recovery. We said that a sustained recovery of manufacturing output and the British economy would not be possible unless Britain's competitiveness was restored, not least by the restoration of the pound to competitive levels. We also said that the impact of such a restoration would need to be offset by cutting industry's costs through the abolition of the national insurance surcharge and by acting directly on the retail price index by reducing VAT.
      At the time when we called for a more competitive pound, the response from some Ministers and some sections of the press was as though my right hon. Friends and I had committed gross indecency in a public place. Indeed, the Chancellor, ever anxious to evade responsibility for anything that he does not like, sought to blame us for the fall in sterling that took place in November, despite the fact that the fall had begun a week before publication of our paper. How quickly times change. November's heresy is today's conventional wisdom.
      Between last autumn and March, sterling had depreciated against other currencies by about 13 per cent., and the Chancellor and many members of the CBI suddenly discovered the virtue of a more competitive pound. I can do no better than quote the president of the Blackburn chamber of commerce, Mr. Geoff Livesey, a leading member of the north-west region of the CBI. He told the Lancashire Evening Telegraph on 21 January:
      "The message for the last two years has been that the pound was over-valued and has caused enormous hardship for manufacturers. The converse must be that with devaluation of this magnitude, we are becoming competitive again, whether we are exporting or offering an alternative to imports".
      As my right hon. Friend the Member for Stepney and Poplar pointed out on Second Reading, even the Chancellor began to echo the sentiments about the value of a lower pound, because when he objected to the NEDC report on 11 April and condemned it for its gloomy prognostications about the British economy, he said that
      "it failed to pinpoint the improving economic prospects being created by such things as the lower pound".
      That sentiment was echoed by the Chief Secretary's brother, the economic editor of the Financial Times, who said that the modest upturn
      "has been amplified in Britain's case by a major improvement in competitiveness, as a result of the fall in sterling since last November".
      He added:
      "Far and away the most important reason"
      why things were improving in the United Kingdom—
      "has been the depreciation of sterling".
      Mr. Marlow: Will the hon. Gentleman give way?
      Mr. Straw: Not again.
      Mr. Marlow: Frit.
      Mr. Straw: We are never frit of the hon. Gentleman. That is usually the case with his hon. Friends on the Government Front Bench, which is why he usually gets more change out of us than he does from them.
      The Chancellor has been right to emphasise how crucial the fall in sterling has been in modestly improving Britain's economic prospects. As the Chief Secretary admitted to me in answer to a parliamentary question in mid-December, three quarters of the improvement in Britain's competitiveness has been due to the fall in sterling.
      5 pm
      There is no question but that what marginal improvement in output has taken place, and is likely under the present Government to take place, has occurred principally as a result of sterling's fall. But the changes in output which have occurred and the prospects for any real recovery in present circumstances are fragile indeed. In a pre-election period, most newspapers, Ministers and the Tories' industrial poodle, the CBI, wish to put the most favourable gloss that they can on any titbit of news which suggests that the economy is doing a little better than it was last year or in 1981, but we notice how reluctant they are to compare the economy today with its performance in May 1979.
      The evidence of the fragility of Britain's economy and the falseness of the wild claims by Ministers about any major recovery come not only from our constituencies, where the pace of redundancies continues unabated, but directly from the small print of the CBI's survey of industrial trends, published this morning. For all the headlines in the newspapers today, the truth is that that survey shows that the real changes in the British economy in the last quarter have been marginal. They also show that the economy is still in a greater state of collapse and depression than at any time since the war.
      It is clear that 72 per cent. of firms record in that survey that they are still working below capacity, 51 per cent. say that their order books are below normal and only 10 per cent. say they are above normal. But most significant of all are the responses to the questions about future output and employment. In the last four months, only 8 per cent. of firms in Britain took on more staff; 40 per cent. kept the numbers of employees the same; and 52 per cent. declared redundancies. As for the next four months—which, we are told, herald a new economic dawn—four times as many firms are expecting to sack workers as are expecting to take workers on; 40 per cent. as against 11 per cent.
      When asked which factors were likely to limit output in the next four months, 89 per cent.—nine out of 10—still say that orders and sales, or a straightforward lack of demand, are the limiting factors. There is no need to look into the crystal ball to see whether economic recovery will take place. We have the facts and they show that it is a simple deception to suggest that we are involved in anything that could seriously be described as a major recovery.
      Mr. Bruce-Gardyne: The hon. Gentleman has made virtually no mention of the new clause which he puts before the Committee, nor one word of argument in support or advancement of it. Is it his intention. to withdraw it from our consideration? If so, we might as well know now.
      Mr. Straw: I was expecting something better even from the Economic Secretary. If that is all he can do as editor of the Daily Telegraph, there will not be much hope for that newspaper either. I referred in my very first words to the cost of the change and its impact on the retail price index and, when discussing the programme for recovery, I said that we saw a reduction in VAT as an important component of any strategy for recovery. I could not have made it plainer if I tried.
      In the last two and a half weeks—we must discuss the question of the economic prospects under the present Government — since the Chancellor attacked "Neddy" for its failure to take account of improving economic prospects through sterling's fall, sterling has appreciated again in value by about 6 per cent. The admitted principal engine of recovery—the fall in sterling—has now gone into reverse and the Government, instead of doing something about it, once again stand on the sidelines unwilling or incapable of taking any action.
      It is extraordinary, given the importance of international trade to the British economy, that the Government not only claim not to have an exchange rate policy but genuinely do not seem to have one. The result has been far more volatility in the exchange markets than there need have been and interest rates have been kept unnecessarily high; in real terms, they are at their highest rate ever. An exchange rate policy would not be a magic wand over the markets, and we have never suggested that it would. But if the Government had had an exchange rate policy, the Chancellor — having decided two weeks ago that sterling's level, at about 80, was of great assistance to the British economy — could, and should, have used a reduction in interest rates to meet the temporary increase in sterling's price in the last two weeks. Indeed, if the Chancellor is serious about recovery, he should now reduce interest rates by at least two percentage points.
      Mr. Marlow: What about VAT?
      Mr. Straw: Hon. Gentlemen opposite do not understand that the case for a reduction in VAT is the case for a strategy which seeks to put our economy on the road to recovery. They do not appreciate that the case for a VAT reduction stands or falls on whether under this Government there will be any sustained recovery.
      I call for a reduction in interest rates of two percentage points so that we can see sterling returning to the competitive levels it was at two or three weeks ago. That would still provide a rate of return for lenders at historically high levels while at the same time providing a major boost to British industry in a non-inflationary way. The simple truth is that the Government are not serious about recovery. Indeed, they have no strategy for sustained recovery. That is well illustrated by the deafening silence on the Benches opposite as to the way they would cope with the inflationary pressures that may arise whenever any recovery gets under way.
      Although there is some dispute about the exact relationship, it is a matter of simple arithmetic that a fall in sterling would add something to industry's costs, as onethird of what we in this country consume is imported. The Chancellor used to tell us that repeatedly, although since sterling's fall over the new year it is a factor which worries hon. Gentlemen opposite rather less. But we already see wholesale prices rising by 7·4 per cent. —getting on for double the rate of retail price rises—and,
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      unless action is taken, the rise in retail prices later this year and early next year could be 7 to 8 per cent. and on the way up.
      It is in that context that our proposal to reduce VAT by two percentage points makes sense. It would reduce the retail price index, on the Treasury's own estimate, by one percentage point and mean that the RPI early next year would be 6 to 7 per cent. rather than 7 to 8 per cent. This proposal is part of a coherent programme to put the nation back on the road to sustained recovery; not to ignore the inflationary implications, as the Government seem to do, but to take action directly to deal with them. It ties in with our proposals, to be debated tomorrow, for the complete abolition of the national insurance surcharge and with our proposals, published in Labour's alternative budget on 8 March, for a careful increase in public spending on housing, construction, major capital projects and the public services.
      We need no lectures from hon. Members opposite about the costings of our programme. No Opposition have provided more detail about their programme or better costings than we have, nor shown how our individual policies would have to be contained within an overall programme of public spending. I only wish that the Chancellor and his colleagues had done the same before the last election. Had they done so, they would not have deluded either themselves or the electorate about the likely outcome of their policies.
      The country is faced with a simple choice. It has a Government who are bankrupt of fresh ideas and who were elected on clear pledges to create more jobs and greater national output and to lower taxes, all within the lifetime of this Parliament. They are pledges on which they have failed the nation and they have broken every promise they made. What remains offers no hope to the bulk of the people. Or they can choose a party with a programme that places the people of the nation before the prejudices of a few and that will put this country back on the road to recovery. We did that after the war and we will do it again. I commend the new clause to the Committee.
      Mr. John Horam: New clause 5 is in the same group as new clause 1, and is in the name of the Liberal and Social Democratic parties. I wish to address my remarks to it. I shall endeavour to stick to the new clause rather than rambling wide and lengthily as the hon. Member for Blackburn (Mr. Straw) did, although he did so in an interesting fashion.
      The point of our new clause is to cut VAT in October from its present level to 12·5 per cent. The object is that the Government should take direct action to cut into the rate of inflation when it starts to rise again. We know fairly clearly what will happen over the next 12 months or so on the economic scene. It looks likely that inflation will be back to 6 per cent. and possibly higher, come the autumn, as measured by the retail price index. The reason is the falling pound that we have had over the past four or five months finally feeding through to price increases. It has been helpful to industry, as has been said, but there will be a price to pay—no pun intended—in terms of high prices in the autumn.
      Those high prices, as we saw when the Government foolishly doubled VAT when they first came to office, will pass through to higher wages. Not only that, but the small recovery that we are now seeing will lead to higher profits —inevitably and rightly so because we need them—and

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      this will lead to higher wage claims. The workers will expect some share of the higher profits, having made sacrifices when there were no profits.
      For those two reasons, both to match the increase in the RPI and to take a share of the higher profits, there will be higher wage claims and higher settlements this autumn. Those higher wages will, in turn, spark off a spiral of higher prices. Many forecasters are saying that by spring next year the RPI could be increasing not just at 6 per cent. or 7 per cent. a year but at 9 per cent. or 10 per cent. a year. That is the forward view on inflation. When we reach that stage, the Government, under their policy, will inevitably have to resort to tight money and higher interest rates to choke the increase in prices. The interest rates will have an effect on business. Business will be facing higher costs anyway with higher wages. It will start to destock, recovery will be hit on the head and unemployment will start to increase again.
      That is predicted not just by us but by many leading forecasters. A forecast of the St. James's group, which is one of about 10 groups that regularly make forecasts, was reported in The Economist on 23 April. It states:
      "Faster growth, however, soon peters out. Thanks to fast-rising wages, inflation is rekindled, and is kept below 10 per cent. only by tight money, which produces high interest rates. High costs and interest rates make companies destock, output slows, exports sag and workers are shed again as Britain enters a new recession".
      That is the basis of the cut-and-run charge that would be rightly made against the Government if they go for a June election. We are now seeing the small glimmerings of a slight improvement and of a new light in the medieval gloom—
      Mr. George Foulkes: You are doing well.
      The Chairman: Order.
      5.15 pm
      Mr. Foulkes: I am sorry. You are doing extremely well, Mr. Weatherill, and the hon. Member is doing equally well. The hon. Member seems to have been brainwashed by the CBI statement, which is not borne out by the facts, and also by the newspaper report that alleged that there was an upturn. I go back to my constituency every week to deal with more closures, more redundancies and more people on short time. What evidence does the hon. Gentleman have of even a glimmer of an upturn?
      Mr. Horam: The evidence is in a patchy improvement in the profit and output of some companies. It is on a very small scale and is very insubstantial. It will not last long and will soon peter out.
      Mr. Foulkes rose—
      Mr. Marlow rose—
      Mr. Horam: I shall not give way. Hon. Members on both sides of the Committee are well able to read the newspapers and consult their own constituents and companies in their own areas. They will have their own views. I am stating mine and I am confident that they are well supported by the evidence.
      Mr. Marlow rose—
      Mr. Horam: The hon. Member for Northampton, North (Mr. Marlow) intervened three times during the
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      speech of the hon. Member for Blackburn. He is almost the sole representative of the Conservative party on the Government Benches, although he has now been joined by one or two colleagues. He is taking on too much responsibility for supporting the Government. I am sorry, but he must make his own speech. The hon. Gentleman seems to have subsided now.
      I shall return to where I was before I was so rudely interrupted. There are small and insubstantial patches of light after four years of almost medieval gloom, but we shall soon be back in a dark era. There is plenty of evidence already, not merely that there is a certain amount of recovery but that the next recession is in sight. That points to the central conclusion that the Government have not brought about, even with all the inevitable small ups and downs and lifts from the bottom of the slope, a substantial and sustained recovery. There has been no permanent improvement in our industrial or economic performance. Nor have the Government broken into the inflationary cycle in a permanent way, which we need to do.
      It is the view of both the Social Democratic and the Liberal parties that they will not do so. I believe that it is also the view of many Conservative Members. They will not do so until they take a different approach to what is traditionally called incomes policy. The Government have refused to go into that area. There will be no permanent improvement in inflation or expansion until we embark on sensible proposals there. It is right to say that the Government have no policy for expansion. They have a policy for bumping along the bottom and occasionally going up a little and down a little, but they have no real policy for sustained expansion that would bring new hope to the people.
      Mr. Bruce-Gardyne: Before the hon. Gentleman embarks upon the wonders of his party's incomes policy, which we always listen to with enormous interest—I have been following his comments closely, which are the first that relate to the new clause—will he explain one thing? Is it his party's proposition that the £1,800 million that the Libera/Social Democratic new clause would cost in a full year should be recouped from additional taxation in other areas, and, if so, which? If it is not, how is it that forgoing that revenue and the consequential impact on the borrowing requirement would not lead to the rise in interest rates that he claims would follow as a consequence of higher wage settlements and higher profits later in the year?
      Mr. Horam: I shall not only address the new clause closely but answer the Minister's intervention clearly. Our plan would not cost £1,800 million because it would run only from October.
      Mr. Bruce-Gardyne: I said that that would be the cost of a full year.
      Mr. Horam: The Minister referred to a full year, but we are talking about cutting VAT in October. That makes it a six-month period. Moreover, the true net cost to the public sector borrowing requirement is £550 million. That gives a more accurate picture. That is how the Treasury model operates and it is a perfectly defensible statement of the net PSBR cost.
      The Minister also asked whether we proposed to match the cost, whatever it might be, with higher taxes or cuts

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      in public expenditure or whether it would be added to the PSBR. Our Budget makes it plain that it is to be added to the PSBR. As the Minister asked the question, I should be grateful if he would pay attention to the answer. We should not increase taxation or cut expansion. The cost would be a net increase in the PSBR.
      I believe that that could be achieved without any net increase in interest rates because currently there is no funding problem for the PSBR. The market has not been asked to absorb large amounts of gilts in the past six months or so, and there have been very few rights issues in the past 12 to 18 months. Thus, there is a great deal of institutional money around to mop up any relatively small increase in the PSBR. Indexed gilts, which the Government brought forward with some dissent on their own side, have also helped with the funding of the PSBR. I am glad to see that the Minister agrees. Indeed, there is so little funding problem that the Government have been able to overfund in the past few months in order to massage the money supply figures. The argument that our desire to cut VAT in October would inevitably lead to higher interest rates therefore does not stand up to serious market examination.
      In addition—the hon. Member for Blackburn put this rather well — a cut in VAT, whether to 13 per cent. from now as proposed by the Labour party or to 12·5 per cent. from October as we propose, is a good measure in its own terms. First, it will keep inflation down. We saw the powerful effect on inflation of a change in VAT in the reverse sense when the Government almost doubled VAT on coming to power, and they paid dearly for it. A cut in VAT would certainly have a powerful effect in the other direction. Secondly, the Financial Secretary told me that, expressed in terms of the standard rate of income tax, the increase in total tax burden as a result of the Government's measures has been about 7p in the pound. That is a massive extra burden, not just on the poor or the rich but on the average person. One reason for that was the near doubling of VAT in the Government's first Budget. In those terms, therefore, in addition to any economic reasons, it is right to cut VAT as soon as we reasonably can.
      In an ideal world, we might not suggest a proposal in exactly these terms, announcing our intention to cut VAT several months in advance, but it is the only way in which we can make the point that in an Alliance Budget it would probably have been right in present circumstances to consider cutting VAT in the autumn. Clearly, this would depend on how the economy behaved between now and then. If the pound fell still further, we should be more inclined to make the cut. On the other hand, if oil prices collapsed without a depreciation in the pound to compensate, thus costing the Government a great deal of revenue, that would certainly have to be taken into account. Although I do not believe that interest rates would inevitably rise as a result of our proposal, the overall fiscal balance would have to be taken into account and I should certainly be concerned if oil prices moved dramatically between now and the autumn. I do not think that they will, but one can never rule out the possibility.
      In all the circumstances, therefore, ours is a sensible measure designed both to keep any expansion going and to restrain inflation.
      One particular issue has been brought to my attention today. Although we do not propose changes in VAT in specific areas, a cut to 12·5 per cent. would improve the position of the building industry especially. We know of
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      the anomaly whereby new building is exempt but repairs and maintenance are subject to the full rate of VAT. Sensible Members on both sides must concede that that is nonsense. Our new clause does not deal with that directly, but it would lead to a small improvement in the position of the building industry. As we said in our budget, however, the SDP and the Liberal party remain committed to introducing zero rating for building repair and maintenance at the earliest opportunity as a measure to help the building industry and to help the home owner who wishes to improve his own house. Nevertheless, the reduction in the general rate of VAT to 12·5 per cent. would bring some small and welcome relief in that area.
      The main argument, however, as announced by the hon. Member for Blackburn and myself, is that direct action of this kind by Government on prices will substantially benefit the economy.
      Mr. Marlow: As always, it is my role to try to be as helpful as possible to the House. Indeed, I was trying to help the hon. Member for Gateshead, West (Mr. Horam) when I sought to intervene in his speech. He was groping around for evidence of recovery in the economy. I believe that one of the few members of the hon. Gentleman's faction is a certain Mr. Harvey-Jones, who runs ICI—one of our largest companies. The hon. Member for Gateshead, West may or may not know that ICI has recently reported distinct evidence of recovery in the economy. As there are so few members in the hon. Gentleman's faction, I suggest that he get together with that distinguished member so as to brief himself more properly on the subject.
      I can reassure the hon. Member for Blackburn (Mr. Straw). He was keen to have the attention of Ministers, so I should be grateful to have his attention now. Indeed, I can give him pleasure and perhaps even surprise him. I am a firm and convinced supporter of the Government's budgetary and economic policy. What I am about to say may not be precisely in line with what the Government are doing, but that is not entirely due to the Government's economic policy. It is certainly not the fault of my hon. Friend the Economic Secretary to the Treasury and it has very little to do with my right hon. and learned Friend the Chancellor. Other extraneous bodies restrict and restrain the Government in these matters.
      Mr. Foulkes: The movements of the planets, perhaps?
      Mr. Marlow: I am against new clause 1 because I do not think that it is strong enough or radical enough. I do not wish to reduce VAT by 2 per cent.: I want to do away with the whole rotten tax.
      Mr. Foulkes: On a point of order, Mr. Weatherill. I cannot find the hon. Gentleman's new clause on the Order Paper.
      Mr. Bruce-Gardyne: It has a damned sight more to do with this debate than what the hon. Member for Blackburn (Mr. Straw) said.
      Mr. Foulkes: I understood that the hon. Gentleman was introducing a new clause to reduce VAT to zero, but I cannot see it on the Order Paper.
      5.30 pm
      The Chairman: I do not think that it is on the Order Paper either. The hon. Member for Northampton, North (Mr. Marlow) was reflecting upon new clause 1 and saying that he does not think that it goes far enough.
      Mr. Marlow: My point is that I should like to support new clause 1 but that, sadly, it does not go far enough. I am about to give my reasons. Like my hon. Friend the Minister, I am in favour of a relatively large burden of taxation being levied through indirect taxation rather than direct taxation. I feel that a value added tax that is reduced by only 2 per cent. to 13 per cent., is the wrong means of raising the bulk of our indirect taxation. As to new clause 5, I do not wish to be discourteous but, as my right hon. Friend the Prime Minister said yesterday, a two-headed monster has recently emerged. The kindest and best thing to do is to ignore it and anything that it does.
      Napoleon once said that we are, were, or were about to become, a nation of shopkeepers. He might have been trying to make us a nation of shopkeepers or he might have believed that we were. We were not and did not become one. Where Napoleon failed, the bureaucrats of Brussels have succeeded. While we are not precisely a nation of shopkeepers we are a nation of tax gatherers.
      Perhaps we should go back to the good old days. We all like to look back to our innocent youth when we were carefree and times were better. In some respects, times were better. In those days, we had purchase tax, which had many advantages over VAT reduced to 13 per cent. One of the advantages of purchase tax was the possibility of having differential rates. A more luxurious item could attract a higher rate of purchase tax than others. In that way, we were rightly able to protect our poorer citizens.
      Another advantage of purchase tax as against VAT at 13 per cent. is that there was a lower level of political sensitivity to change the rate of purchase tax. If the hon. Member for Blackburn were to reduce VAT by 2 per cent., it would automatically be reflected in all sorts of other indices which would have a concomitant effect on public perception of Government economic policy, what was likely to happen to interest rates and so forth. Above all, Mr. Deputy Speaker, the big advantage—
      The Chairman: Order. We are in Committee.
      Mr. Marlow: I am most apologetic, Mr. Weatherill.
      There is also the problem of administration. I do not believe that anyone has stood back and examined the vast administrative burden that we put upon our people by this monstrous tax—value added tax. At the moment, there are 1·4 million VAT accounts. That does not mean that 1,400,000 people are involved in working on VAT—Customs and Excise also works on it. For each account, there might be one, two, three or, in bigger firms, 10 or 20 people working on it. If one adds all that up, one will probably find that there are as many people who work on, are involved in or are troubled or pestered by VAT as the entire population of England at the time of Napoleon. Where Napoleon failed, the Brussels bureaucrats have succeeded. We are a nation of tax gatherers.
      There are 500,000 VAT accounts under the relatively minute level of £50,000 a year turnover. We call it value added tax but we are not taxing people on a threshold of value added; we are taxing them on a threshold of turnover. Perhaps it would be sensible if people were taxed on a threshold of value added. What is a turnover of £50,000 a year up to which 500,000 accounts are involved and, no doubt, on which perhaps 1·5 million people are employed? What does a turnover of £50,000 a year mean in terms of a business? Such a business employs three people at the most. If it were engaged in selling used cars,
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      the turnover would be a maximum of two cars a month. That is nothing. It is hardly enough to make a living on, yet there are a vast number of accounts at that level.
      Perhaps the hon. Member for Blackburn, who wants to reduce VAT by 2 per cent., would have done better to abolish it altogether. If he had not thought of abolishing it altogether, he might have been wiser to tackle the problem of the threshold. What heaven on earth it would have been for many of our citizens if he had advanced that proposition and the House, in its good sense, had agreed with him and allowed it to happen. If the threshold were raised to £20,000, we should be taking six—
      The Chairman: Order. The hon. Gentleman is now going very wide of the new clause. Will he please stick to what is on the Order Paper?
      Mr. Marlow: Of course, Mr. Weatherill. The hon. Member for Blackburn wants to abate the burden of VAT on the economy in various ways. One way in which to do that is to abate the massive burden that it currently puts on people who are involved in industry, business and manufacturing and are trying to boost the economy out of the recession.
      The Chairman: Order. With great respect to the hon. Gentleman, that may be so but it is not what the new clause says.
      Mr. Marlow: To reduce that massive burden on the people the Government could follow the hon. Member for Blackburn. They should then have to raise other forms of taxation. Alternatively, they could reduce the burden through the VAT system by raising the threshold. They would then have to increase other taxes to balance it. The Government's budgetary sums are right. I agree with and appreciate them. What heaven it would be if some of that burden were reduced. My hon. Friend, a sensible, honourable and compassionate man, wants to do things that will benefit the nation. He would dearly love to do that but, sadly, it cannot be done.
      I do not know how many hon. Members realise it, but when asked whether my hon. Friend could increase the threshold of VAT, he answered that article 24(2)(c) of the EC sixth directive on VAT restricted the increase in the registration exemption limit to those which maintained its value in real terms. Although the hon. Member for Blackburn might want to reduce the level of VAT should he wish instead to increase the threshold he will find that he cannot do it. We are not allowed to do it and have not the power to do so, as it belongs to someone else. We are submerged under a foreign institution.
      The Chairman: Order. I am terribly sorry to interrupt the hon. Gentleman again but what he is saying has absolutely nothing to do with the new clause. He may well be right, but it is a matter for another debate.
      Mr. Marlow: All that I can say, to sum up my point, is that the hon. Member for Blackburn has the wrong new clause, as it goes in the wrong direction. Had he tackled the problem in a different way, which was allied to Britain's sovereignty and our ability to raise and control our own levels of taxation, he would have achieved far more agreement in the House. Sadly, he has the wrong new clause and I must vote against it.
      Mr. David Ennals: The Minister must be disappointed that only one Conservative Back

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      Bencher is present, apart from the Parliamentary Private Secretary behind him, and that he has received such monumental support for his stance on VAT.
      The hon. Members for Northampton, North (Mr. Marlow) and Gateshead, West (Mr. Horam) criticised new clause 1 only because it does not go far enough. The hon. Member for Northampton, North said that VAT should be reduced by another 13 per cent. and the hon. Member for Gateshead, West said that it should be reduced by another 0·5 per cent. I agree with the hon. Member for Gateshead, West that all the pressure for an early general election, which now seems to be on the Prime Minister, arises from the Conservative party's fear of circumstances in the autumn. The cut and run argument is powerful. I should be happy to have an election now, but it would be called because of the Government's fears not only that inflation will increase but that there are no convincing signs, except some patches here and there, of the end of the recession.
      I fully support the new clause. The Chancellor's decision to increase VAT from 8 per cent. to 15 per cent. was not only an open betrayal of an election pledge, but the greatest single impetus to inflation in 1979. It increased the cost of living immediately by 4 per cent. The high inflation caused by the Government of more than 22 per cent. began their battle against inflation, which caused massive damage to our industrial base and to employment. Unemployment in Britain is now almost the highest in Europe, and it will become higher. The Chancellor made an appalling mistake in introducing 15 per cent. VAT in his first Budget, and I am glad that my right hon. and hon. Friends have tried to lower the figure. As my hon. Friend the Member for Blackburn (Mr. Straw) said, instead of a decrease in public taxation, there has been a massive increase, except upon the very rich, who represent only a small proportion of the community.
      The effect of VAT on charities has aroused great concern on both sides of the Committee, and I am surprised that no Conservative Member is here to say something on behalf of charities. I have proposed—I hope that it will appear under another name in Standing Committee—
      Mr. Marlow: On a point of order, Mr. Weatherill. If it is not proper on this new clause to talk about thresholds, is it proper to talk about charities?
      The Chairman: I think that we must not have a tit-for-tat on this matter. I listened carefully to what the right hon. Member for Norwich, North (Mr. Ennals) said, and I believe that he is sticking to the new clause.
      Mr. Ennals: My point is directly related to the new clause. Charities perform an invaluable service that fits in with the theses of both the Government and the Opposition. They have taken on vast responsibilities in social services. They provide services such as homes for the elderly, the mentally handicapped and children, which would be excluded from VAT if they were provided by local authorities. It is grossly immoral that VAT is imposed on charities. This is relevant to the new clause because any reduction in VAT would give some relief to charities. Even if my right hon. and hon. Friends were proposing only a 0·5 per cent. cut, it would be some help, but year after year the Chancellor, when pressed about this matter, has said that there are problems in the definition of charities. I have a simple definition. When services are provided to the public by a charitable organisation that
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      might otherwise be provided by a local authority social services department, all VAT paid by the charitable organisation should be refunded. That proposition may not be accepted in Standing Committee, but the bodies that may benefit from my proposition or from the new clause include the Spastics Society, Dr. Barnardo's, Help the Aged, the National Society for Mentally Handicapped Children and Adults, the National Children's Home, the Royal National Institute for the Blind, the Royal National Institute for the Deaf and the Save the Children Fund. More than 100 charities, often staffed by volunteers, which provide invaluable service to help to meet the social needs that the Government have, sadly, neglected would benefit from the clause.
      5.45 pm
      The cost of my proposals for charities would be relatively small—about £1 million to £2 million—but already some charities have had to cut their services to the most needy in our society. It is deplorable that the Government have not stopped the removal of 15 per cent. of funds donated by the public to charities, which goes straight into the Exchequer's coffers.
      Mr. Bruce-Gardyne: No, it does not.
      Mr. Ennals: It does. If the Government will not completely relieve charities from VAT, at least this new clause will provide modest relief. If there was any political will to ease the burden of taxes, it would be done. The political will has been found to relieve the burden of VAT—
      Mr. Bruce-Gardyne: That is a lot of rot.
      Mr. Ennals: The hon. Gentleman is making comments from a sedentary position. Why does he not stand up to make them?
      Mr. Bruce-Gardyne: Why was that not done between 1974 and 1979?
      Mr. Ennals: During that period VAT was at 8 per cent., but this Government have almost doubled VAT. They have not only departed completely from the pledges that they made before the general election, but they have dramatically increased the effect of VAT on charities. The Government had the will to announce that private firms tendering to provide services in the National Health Service would be relieved of VAT so that they could make profits, but they have not done so for voluntary organisations. That is doubly immoral.
      The Government should consider some important commodities that should not carry the burden of 15 per cent. VAT. They are presiding over a period of massively increasing crime, especially burglaries, so locks and equipment that would discourage burglars from breaking in should be excluded from VAT—
      The Chairman: Order. I am sorry to interrupt the right hon. Gentleman, but the Committee expects me to be fair to both sides. We must not call upon the Government to reduce VAT on some items, because the new clause states that it should be reduced from 15 per cent. to 13 per cent, on everything.
      Mr. Ennals: I accept your ruling, Mr. Weatherill. The Government will have heard what I said and, in view of the tribute paid by the hon. Member for Northampton,

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      North (Mr. Marlow) to the sensibility, wisdom, justice and morality of the Minister, no doubt he will consider law and order as well as charities.
      The new clause would be of some help to the Government, who have broken many of their election promises. It would be a modest step towards giving credibility to what they say they will do in their next general election manifesto. So many of the promises that appeared in the Conservative party's 1979 manifesto have been broken, but if the Government eased their position and accepted the new clause, some members of the electorate would believe one or two of their statements in future. It would be in their own interests, apart from the interests of the country, to accept the new clause.
      Mr. Foulkes: I know that the Economic Secretary to the Treasury welcomes the opportunity to fulfil pledges and to do what he said he would do. I know that he is always pleased to honour commitments, and the new clause gives the Government the opportunity to honour an election commitment. If they agree to accept the new clause, they will reduce tax for those who really need a reduction to take place.
      Unlike my hon. Friend the Member for Blackburn (Mr. Straw), the hon. Member for Gateshead, West (Mr. Horam) and others who have participated in the debate, I am not a tax expert. I speak as an ordinary taxpayer—
      Mr. Bruce-Gardyne: A very, very ordinary taxpayer.
      Mr. Foulkes: —who talks regularly with other ordinary taxpayers. When they see me they say, "George" —they are a friendly lot—"which taxes have been cut? The Tories told us way back in April 1979 that our taxes would be cut. Please tell me which taxes have been cut."I tell them that although I do not wish to be political on the issue I can honestly say that no taxes have been cut for ordinary people. That is the truth.
      The introduction of the new clause offers the Government salvation. That is an argument, perhaps, for the Opposition not to support it. If the Government accepted the new clause and it were added to the Finance Bill and enacted, they would be able to say that a tax cut had been made. Acceptance of the clause would lead to a tax cut that would help the ordinary people whom I represent, as well as those represented by, for example, my hon. Friends the Members for Glasgow, Provan (Mr. Brown) and Fife, Central (Mr. Hamilton).
      I note that the hon. Member for Croydon, South (Sir W. Clark) has entered the Chamber. He is an old sparring partner of mine in Committee on Finance Bills. He will recall the article that appeared in The Times entitled
      "The Case for Cutting VAT."
      That article set out the effects of cutting VAT and how they would help ordinary people. It claimed that cutting VAT from 15 per cent. to 10 per cent. — a slightly greater cut than we are suggesting—would reduce prices by about 3 per cent. That would be a substantial reduction.
      The Government have an alleged commitment to reduce taxes, and they also want to reduce prices. The hon. Member for Gateshead, West said that the inflation rate will be increasing if things continue as they are. The new clause presents an ideal opportunity to keep down inflation. The article in The Times claimed that to cut VAT would be to increase output. It calculated that a cut from
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      15 per cent. to 10 per cent. would increase output by about 1 per cent., and we desperately need an increase in output. It was argued in the article that whereas a cut in income tax might result in more saving and less spending, a cut in VAT would result in more spending and would therefore help to reduce unemployment. Again, that is something that the Government need desperately.
      All these arguments bear directly on the new clause. It seems clear that the effect of the new clause would be to help the economic situation and, above all, those whom we represent. Statistics show that the burden of VAT falls disproportionately more on the lower quintiles. Ordinary working people find the effect of value added tax much greater than Conservative Members and those whom they represent.
      Value added tax is a regressive tax that affects pensioners substantially more than the majority of those whom Conservative Members represent. The Government have already clobbered pensioners enough. There have been clawbacks and the pensioners' year has been increased from 52 weeks to 54 weeks to enable the Government to take money away from them. The removal of the link with earnings was another means of clawing back money from the pensioners. The effect of the Government's latest proposal is a clawback of a further 2 per cent. A reduction in VAT would be of especial benefit to pensioners.
      The clause would give the Government an opportunity to fulfil a promise. As they have fulfilled few if any promises, they should accept the new clause with both hands. It gives them an opportunity to introduce a tax cut that would help ordinary working people, pensioners and the poor generally. These are the people who have not benefited from any tax changes that the Government have introduced. Those at the top end of the earnings scale have been the only people to benefit from the Tories' tax cuts.
      The new clause is positive and progressive and has been extremely well argued by my right hon. and hon. Friends on behalf of economists and tax experts, those who understand macroeconomics. I speak on behalf of ordinary taxpayers, and I know that it is a new clause that would be welcomed by them.
      Mr. Carter-Jones: I am in a dilemma because I do not know how to vote on the new clause. I am prepared to support 15 per cent., but I think that I would have benefited from hearing the Minister's contribution before making my speech. Representations have been made to the Economic Secretary to the Treasury on zero rating for charities. The voting pattern of hon. Members would be affected — whether the rate be 15 per cent., 13 per cent., or 12·5 per cent.—if zero rating concessions were made. If those concessions were made for charities, the hon. Gentleman might find himself in a position very different from that which is likely to result.
      I note that the payroll vote outnumbers those on the Conservative Back Benches. However, 89 Conservative Members signed an early-day motion calling for VAT relief for charities. The motion states:
      "This House knows that in 1972 the then Chancellor of the Exchequer gave a commitment"—
      Sir William Clark: What has this to do with the new clause?
      Mr. Carter-Jones: It has everything to do with the new clause.
      The Chairman: Order. The hon. Member knows that the rate of VAT paid by charities is to be debated in Standing Committee. I invite him to address his remarks to new clause 1, which calls for a reduction of VAT from 15 per cent. to 13 per cent.
      Mr. Carter-Jones: I can assure you, Mr. Weatherill, that there are Opposition Members who would stay with the Government if a statement were made on the Government's policy for charities. This is the dilemma that we face. I suppose that the Minister's silence is my answer. A reduction to 13 per cent. or 12·5 per cent. would be extremely helpful. I know that the difficulty of providing relief is used as an argument for the Government being unable to introduce zero rating. Hon. Members have been told how difficult the position is. The hon. Member for Croydon, South and I attended a meeting at which he said how difficult the position was. It is difficult to stand in a railway station, a tube station or a shopping precinct, holding out a bag for charity knowing full well that 15p in every pound goes to the Treasury. If the rate is reduced to 12·5 per cent. the position would be more satisfactory. Money would be put into the pockets of charities.
      6 pm
      Mr. Bruce-Gardyne: As the hon. Member for Eccles (Mr. Carter-Jones) is repeating something that the right hon. Member for Norwich, North (Mr. Ennals) incorrectly stated, I must correct him. There is no VAT on gifts to charities. I trust that he knows enough not to spread around that type of canard, which is without foundation.
      Mr. Carter-Jones: If an individual has 10 wheelchairs he does not pay VAT on them, but if a charity bought a wheelchair to be shared by 10 people, VAT is payable on it.
      Mr. Bruce-Gardyne: That is not the same point.
      Mr. Carter-Jones: It is the same point. When a collection is made, it is made for the relevant organisation.
      Mr. Bruce-Gardyne: VAT is not paid on the collection.
      Mr. Carter-Jones: VAT is paid on the collection.
      Mr. Ioan Evans: Is it not correct that for every pound that a charity spends it has to spend 15p extra because of the tax imposed by the Government? If people wish a charity to spend a pound, they should give it £1·15.
      Mr. Carter-Jones: Precisely. I do not understand why that fact is not realised. It is hard for someone who runs a coffee morning because 15 per cent. is lost from the proceeds.
      Those who raise money encounter difficulties. The Treasury have the ability to find a solution to the problem. That fact will condition the way Members will vote. Eighty-nine Conservative Members supported the early-day motion. If the payroll vote were removed and hon. Members voted according to their intentions and priorities — present in the Chamber are hon. Members who signed that early-day motion—the 12·5 per cent. rate would be carried tonight. That is the key to the position. It is interesting to note that people who belong to charities have become adopted Conservative candidates. They have fought the Government on this issue and will have to face it again.
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      Will the Economic Secretary, when replying, if he can negotiate the rules of procedure, state his attitude towards this policy because it may well influence the voting pattern?
      Miss Jo Richardson: I welcome the move that the Labour party has made towards reducing the rate of value added tax, but I wish that we could have had some zero-rated items as a preface to rethinking the position of indirect taxation. Reducing the rate from 15 per cent. to that proposed in new clause 1 would greatly assist pensioners and one-parent families, who. are the poor members of our community. They are overlooked in terms of what they have to fork out.
      Women pay 15 per cent. VAT on sanitary products and they would welcome a reduction in the rate. They have been campaigning, as have many male and female Members, for a substantial reduction in value added tax, if not for its abolition. I remember the 1979 Budget when value added tax was raised from 8 per cent. to 15 per cent. Outrage was expressed not only by hon. Members but by the public at the thought of the increase in the cost of living, especially on essential items, such as the one I have mentioned. The Treasury in previous discussions on this subject has acknowledged that sanitary products are essential for personal hygiene. I have a letter from the previous Economic Secretary to the Treasury stating that fact. However, there are many "buts" after that. The letter goes on to say that many other products are essential. The famous incident of razor blades for beards has been raised. Almost every hon. Member in the Chamber has used a razor this morning. An exception is the hon. Member for Croydon, North-West (Mr. Pitt) who does not consider razors to be absolutely essential for personal hygiene.
      Mr. Robert Sheldon: He would be better looking if he did.
      Miss Richardson: This is a serious matter for women and it varies from woman to woman. Prices vary. One chemist will charge 50p for 10 tampons or 10 sanitary pads whereas another store, perhaps in a village, will charge as much as £1 for the same product. I am, in a way, criticising the profiteering that arises from the pricing of sanitary products as a result of this horrendous tax.
      Women's needs vary. Some women in some months are able to use only one packet of sanitary towels. I am sure that I am telling hon. Members what they already know from their own family circumstances. Occasions exist when women need more than one packet. In some months they have to spend more money because they need two or three packets. A woman contacted me recently who had a menopausal problem. During her periods in one month she was using two packets a day.
      Others are affected by the level of tax on this product, such as people who are incontinent. Nappies are free from VAT, and it is quite ludicrous that VAT is not excluded from the other products I have mentioned.
      I welcome the fact that the Labour party is proposing that VAT should be reduced by a couple of percentage points. Magazines such as Mother, Woman, and prestigious bodies such as the National Federation of Women's Institutes and the National Housewives Association, have supported this move. Those organisations are not normally considered outrageous feminist bodies, but they involve women who are very concerned for their sisters. I cannot wait for a general election and

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      the reinstatement of a Labour Government. In our document we propose to abolish VAT on sanitary products and I am sure that that will be well received by women.
      My right hon. Friend the Member for Norwich, North (Mr. Ennals) listed organisations that are constantly battering down our doors because they rightly want relief from VAT. In my constituency a charitable organisation, Abbeyfield, builds and furnishes homes for the elderly. There are two homes in Barking and the organisation is furnishing a third home, which will be greatly welcomed because of the facilities that it will offer to those elderly who need some overseeing and care.
      It is slightly ironic that if—as I understand it — a local authority furnishes one of its homes, it does not have to pay VAT, while a voluntary or charitable body has to do so. It is particularly ironic that this Government, who pretend to be on the side of voluntary work and who rightly praise such work, apparently do not want to encourage it by reducing VAT for charitable organisations. As we all know, cuts have been made in local authority and social service spending and that places an even greater burden on charitable organisations. Consequently, it is ironic and cynical that the Government should refuse to help charitable organisations to do the job that the Government have suggested is theirs.
      6.15 pm
      Mr. William Pitt: I associate myself with the remarks made by the hon. Member for Barking (Miss Richardson) about sanitary products for women. I was rather shocked to notice the discomfort of some Conservative Members. If they consulted their wives and daughters they would realise the dilemma faced by many women. It is about time that something was done.
      It would be out of order to discuss zero rating, because we are discussing a reduction in VAT which will, in turn, reduce inflation. However, a discussion on zero rating would be helpful, and I echo the remarks made by the hon. Member for Eccles (Mr. Carter-Jones) in seeking some response from the Minister. New clause 5 has been tabled by Social Democratic and Liberal Members. The reduction of VAT to 12·5 per cent. would have a significant effect, but it would be wrong, for several reasons, to introduce a cut in VAT before 1 October 1983. For example, the effect of the devalued pound will not come through before then, and the new pay rounds will be starting. According to the Treasury model, if we reduce VAT by 2·5 per cent., we can reduce inflation by about 1 per cent.
      In February 1983 the OECD produced figures that enable us to compare inflation rates with unemployment rates in the big five economies: the United Kingdom, Canada, the United States of America, Japan and Germany. They show that Britain has the highest unemployment rate, at 13·5 per cent. and the third highest rate of inflation. The hon. Member for Northampton, North (Mr. Marlow), who is not in his place, asked about France. Its inflation rate is the highest, at 9.2 per cent., but unemployment is only 8 per cent. That says something about the Government's attack on the economy. By screwing down inflation, the Government have greatly increased unemployment in Britain.
      Earlier, we discussed the effect of VAT on certain industries. I am sure that many hon. Members have
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      received the letter from the National Federation of Building Trades Employers. The statistics show that about one in eight of those unemployed are associated in one way or another with the building industry. The NFBTE states:
      "The English House Condition Survey emphasised the serious problem of housing deterioration which exists and the continued positive rating of building repairs and maintenance means that the 'cowboy' has a definite advantage over the bona fide builder."
      If a man offers to do the roof or the garage for cash in hand and says, "You give me the money, no questions asked," the customer has no protection or guarantee that the work will be done, let alone done properly. I echo the sentiments of the NFBTE in its plea for zero rating, but a reduction in VAT would certainly help the building repairs industry. It is a stupid anomaly that new build does not incur VAT but repairs do. I should welcome some Government assurance about that.
      Any reduction in the rate of VAT would be positive. Conservative Members cannot deny that when they came to power they almost doubled the rate. It went up by a factor of about 1·9, which is as near to two as makes no odds.
      Sir William Clark rose—
      Mr. Pitt: A reduction in VAT would reduce inflation, would give an impetus to the economy — which the Government always claim to desire—and would also assist those most affected by VAT; those in the fifth quintile.
      Mr. D. N. Campbell-Savours: On 23 April 1979, the former Prime Minister, my right hon. Friend the Member for Cardiff, South-East (Mr. Callaghan) said that the Tories would double VAT to pay for income tax cuts. They had done so by 12 June, despite the denials of the Prime Minister and a scurrilous article run by one of the daily newspapers, entitled "Labour's Dirty Dozen".
      Sir William Clark: Perhaps we should get the facts right before the debate continues. When the Conservative party came to office VAT had two rates, at 8 per cent. and 12 per cent. Both were amalgamated into 15 per cent. Therefore, it is quite wrong of the hon. Members for Wokington (Mr. Campbell-Savours) and Croydon, North-West (Mr. Pitt) to suggest that VAT nearly doubled. The 8 per cent. rate may have nearly doubled, but the 12 per cent. rate increased by only three points.
      Mr. Campbell-Savours: The hon. Gentleman would do well to recall that the 12·5 per cent. rate represented a very small proportion of the total yield. The great majority of tax was levied at 8 per cent. That figure was nearly doubled. Twice eight is 16 and the rate is 15 per cent.
      I shall argue that a 2·5 per cent. cut will not lead to a reduction in the take if the Government pursue a certain course. Instead of examining collection arrangements and stamping out evasion to increase the take, the Government have used the crude tool of doubling the rate and have thus triggered off a massive exercise in tax evasion not only of VAT, but also of income taxes. The problem is that higher VAT rates act as a disincentive to compliance with the law. Furthermore, it has a spin-off effect on income tax receipts, because to keep records for VAT invites the attention of the Inland Revenue. Some say that there is an incentive to register, if only to offset a trader's payment

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      of VAT. However, that is not true because many traders believe that it is better not to register but to pay VAT on purchases and avoid contact with the state.
      Raising the VAT threshold in many ways further aggravates the problem, as it serves to legitimise the failure to register and the consequential failure to make genuine returns to the Inland Revenue. Raising the VAT threshold has enabled many to earn higher salaries without having to declare them to the Inland Revenue because they have not been monitored by any department.
      Evasion is not exclusively practised by the unregistered — it is also practised by the registered. Businesses providing services do this, and we see many examples in advertisements in local newspapers. When one contacts these so-called skilled people and they come to one's house to carry out a job—this has happened to me—their first question is whether one is paying cash, as one will otherwise have to pay the VAT. It is becoming standard practice by thousands of tradespeople to pursue such arrangements when they seek payment. We all know that that is the truth, and a higher rate of VAT further aggravates the problem. A lower rate acts as an incentive to end that.
      My hon. Friend the Member for Fife, Central (Mr. Hamilton) and I are members of the Public Accounts Committee. One can imagine our pleasure when last week we had the opportunity to examine the chairman of the Board of Customs and Excise, Mr. Fraser, and the director of organisation, Mrs. Strachan. Having checked that I am in order, I shall quote from the evidence that they gave to the Select Committee, which has been published, and which relates directly to the point that I am making. When asked a question about the level of undetected under-declarations, which would be reduced if we reduced the rate to 12·5 per cent., Mrs. Strachan replied:
      "What is noticeable is that the rate of under-declaration being discovered by our control staff has been going up quite substantially and the likely figure for the year ending March 1983 is very substantially up on the year previously. If one looks at that it suggests that the cost effectiveness of VAT control staff is up quite substantially compared with what it was before, whereas for the year ending 31 March 1982 we were getting something like £44,500 per control officer, for the year ending 31 March 1983 it was £87,300 per control officer."
      She went on to express reservations on certain aspects of the figures that she has quoted. She shows that it is an efficient use of resources to spend money on more control officers, thereby increasing the take, which would have the effect that I have explained.
      When Mr. Fraser was asked about staffing, and how that affected the take on VAT, he said:
      "Clearly the allocation of staff to the Civil Service as a whole is a political judgment."
      He went on to deal with the present arrangement and said:
      "if we want more control staff for VAT we can try to find savings in other areas of VAT, the non visiting area; or we can look at the Customs and Excise bits of the Department or the support services and try to find savings there to release the VAT; if neither those work and we still think we need more staff we can ask for more staff."
      At that point, the Chairman of the Committee asked what the effect would be if the Customs and Excise were to be given more staff. He asked:
      "Are you saying that you could not use more staff at the moment?"
      The reply came from Mr. Fraser on the behalf of his department:
      "We should be very glad to have more staff."
      The Chairman then asked:
      908
      "Could you use them more profitably?"
      Mr. Fraser replied:
      "We would undertake to employ them profitably."
      In the event that the requirements of the Customs and Excise officers were to be recognised by the Government and the staff allocated, there would be a substantial increase in the VAT take, perhaps sufficient to offset the cost of the 2·5 per cent. reduction in VAT outlined in the new clause.
      In connection with the reference to the Customs and Excise department and the suggestion that the staff could be drawn from it, it might be worth considering British ports. Dover is perhaps the best example. Customs and VAT control officers have three responsibilities. They must monitor imports, which include commercial consignments, with landing officers. They have a responsibility for dealing with private importations, on which, again, VAT payments are made. Thirdly, of no relevance to the debate, they have a responsibility for export documentation.
      Things have deteriorated so much at ports that the customs officers union, and others who have a responsibility for the collection of VAT, have accused the Government of allowing the United Kingdom to become a free port for heroin. I know that that point is clearly out of order today, but it should be formally noted. It is an illustration of the problems of monitoring imports and procedures for the collection of VAT. That is why the customs officers have used that analysis.
      The unions have considered industrial action in the ports because of the reduction in manning, and there were even stories in the press last weekend that control and Customs and Excise officers at Dover would take industrial action and withdraw all services by the coming weekend. It is only in the past week that meetings have ensured that those actions will not be taken, pending consultation and discussion between unions and management. The Society of Civil and Public Servants, represented by Judy MacNight, has said:
      "The department reached a stage some time ago when it began to fail to administer proper controls."
      The department responsible for collecting the moneys that we are discussing has lost 3,100 jobs since 1979. Another 500 jobs are due to go this year and more will continue to go up to 1988. The unions, recognising the downturn in tax takes, are demanding 1,000 more staff, but there has been no response from the Government.
      In a recent incident, a solitary customs officer faced a queue of 300 to 400 vehicles at Dover, and in desperation just waved them through because he could not monitor the vehicles as he should have done if he were carrying out his responsibilities properly. On that occasion, there was a VAT loss that could have helped to offset the reduction in VAT being sought in the new clause. On Sundays in Dover it is reported that individual officers have to deal with as many as 40 or 50 coaches, which come into the United Kingdom unchallenged. These are unparalleled developments which demand a response from the Government.
      The Economic Secretary has the right to reply if he catches your eye, Mr. Weatherill. He might consider in the meantime that at London Heathrow passenger traffic has increased by 67 per cent in the past 10 years. Cargo traffic, on which VAT could be due if clearance took place at the port and not at the place of import, has increased by 44 per cent. in 10 years, but there has been a 22 per cent.

      909
      reduction in the number of officers available for carrying out the monitoring and customs procedures. That is disgraceful.
      6.30 pm
      At Heathrow one person in 100 is challenged at the customs point—again showing a loss of VAT. Less than 2 per cent. of cargo is examined, but only four years ago that figure was 10 per cent. To fund their cuts in the Civil Service, the Government have reduced by four fifths the examination of goods entering the United Kingdom through Heathrow.
      The cuts have meant a slacker regime and a lower return to the public purse. The new clause is about the public purse and I submit that if VAT were reduced to 12·5 per cent., accompanied by proper monitoring arrangements and sufficient civil servants, there would be no reduction in revenue. I am also told that yachts are now freely allowed into and out of British ports, often without customs monitoring. To return to the subject that was slightly out of order before, the price of heroin in Britain is now 30 per cent. less than it was two years ago. That means a lot. It means that supply has increased and that can only happen because there has been a reduction in the number of officers available.
      Collection in the United Kingdom is becoming slack and shoddy, just as it is in Italy and some other EC countries where evasion is rife. It is not in keeping with the British character to conduct our affairs in such a way, but the Government have opened the door to this form of massive evasion.
      There was a report the other day that the Italian foreign minister, Signor Colombo, had asked for the 1 per cent. VAT contribution to EC funds to be doubled. We are told that the reason for that application is that they are trying to earmark more of our overpayment for EC purposes. I put it to the House that that is a stab in the back for the convergence policy which I am told the Prime Minister has been pursuing over the past few years. I hope that the Minister will reply to that point.
      Mr. Ioan Evans: It is interesting to record that, although every Labour Member who has spoken in the debate so far has supported the new clause, the only contribution from a Conservative Member was that of the hon. Member for Northampton, North (Mr. Marlow), who thought that the new clause did not go far enough. There is not a single supporter tonight of the Government's VAT policy.
      This debate is about the Government's taxation policies. They would not have been elected four years ago if it were not for their promise to reduce taxation. Yet we all know what they have done to direct taxation. The personal tax burden has risen for every person earning less than £550 a week. Everybody in Britain who is earning less than that is paying more direct taxation than he was under the last Labour Government. The average family on average earnings of £160 is paying £7·95 a week more in direct tax than they were under the last Labour Government. But those earning £50,000 a year are paying £24 a week less.
      This debate is not about direct taxation, but the case has been proved that the Government have broken their
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      promise to reduce direct taxation and it has been increased. I shall give way to any hon. Member who says that the Government have not increased taxation.
      This debate is about indirect taxation. Labour Members would prefer a tax on earnings rather than on spending, but VAT is a tax on spending.
      Sir William Clark: We do not.
      Mr. Evans: But the Government have imposed taxation on both.
      At the last general election there were strong denials from the Conservative party when Labour Members said that a Tory Government would increase VAT. Senior members of the Tory party said that they would not increase VAT. The evidence is there, although I do not have the quotes before me now. There was a famous article in the Daily Mail, which has already been referred to, which said that a Tory Government, if elected, had no intention of increasing VAT and that what the Labour party said was a lie. The Minister shakes his head, but he knows that the Daily Mail said that it was a lie for Labour to suggest that a Tory Government would increase VAT, but they have. They have increased VAT from 8 to 15 per cent.
      The Minister made the technical point that VAT on luxury goods is 12 per cent., but that is not the case for a whole range of products in Britain today. On a car valued at £4,000—a lot dearer now than under the last Labour Government—VAT under the last Labour Government was £320 — a substantial amount — but under this Government it has risen to £600. On such a car, a person must pay £280 more in tax under this Government. Under the last Labour Government there was a tax of £24 on a television set worth £300. Under this Government, one must pay £21 more in tax on that television set—a total of £345.
      Sir William Clark: Does the hon. Gentleman realise that the Daily Mail did not write the last Tory manifesto? It was made perfectly clear in our manifesto and election addresses that the emphasis was on taxation on spending rather than on taxation on earnings.
      Mr. Evans: The Tory party made categoric statements that it would not double VAT. The Government have increased not only income tax but indirect taxation as well.
      I do not want to give a catalogue of the whole range of products that have been affected under the Government, but every time people go shopping, with the exception of children's clothing and certain other items, they are paying more tax on their purchases. Another example is petrol. Under the last Labour Government a gallon of petrol cost about 73p. If we are to have an election in June people should remember as they go along to their polling station in their car that under this Government the regular price of petrol has risen to £179·1p. There is all the talk of competition, but wherever one goes the price is £179·1p. Taxation on petrol under this Government is about 98p a gallon. It is not just the petrol companies that put the price up; it is the Government. VAT must be paid on petrol, on cars and on car repairs.
      It is right that we should reduce VAT, but I hope that the next Labour Government will go further, because I genuinely believe that it is those with the greatest incomes who should pay the most tax.
      The Government have created unemployment for 4 million people. The unemployed may have thought that at

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      least they would not have to pay income tax because they earned nothing, but every time that they purchase goods they have to pay VAT. This Government have got at the unemployed, the pensioners and the disabled. They do not tax them on their incomes because that is insufficient, but they tax them on their spending.
      VAT is a Common Market tax. It has been imposed nationally because it is part of the harmonisation within the EC. We should not blame the Italians for talking about increases in VAT, because a document circulated by the Commission states specifically that because Community finances are in such a state revenue must be increased. They hope to do that by increasing VAT.
      Before the next election the Tories must deny or confirm whether they plan to increase VAT still further, even though they have already increased it from 8 per cent. to 15 per cent. If they are re-elected, what will the VAT rate be? I hope that they will not be re-elected, and that the people, in their wisdom, will recall the broken promises, throw out the Government and bring in a new party which will look after their interests.
      Mr. Bruce-Gardyne: When I listened to the hon. Member for Blackburn (Mr. Straw) I wondered whether I was here on the right day. Eventually he said about half a dozen words on the subject of the new clauses. Other contributions were more closely related to the new clauses and I shall deal with them first.
      The right hon. Member for Norwich, North (Mr. Enna1s), the hon. Member for Barking (Miss Richardson) and the hon. Member for Eccles (Mr. Carter-Jones) argued, not for the first time, the case for exempting charities from VAT. If I pursued that for long I should be in trouble with you, Mr. Armstrong. I do not find it all that alluring to listen to right hon. and hon. Gentlemen who had the opportunity to remove VAT from charities in five years of government but did nothing about it, saying today that it is a question of will. They knew then that the subject was more complex than that. I am not attracted by lectures from right hon. and hon. Members who ask us to take action which they were not prepared to take when in office. We shall discuss these matters in greater detail upstairs. It is more appropriate to discuss them then.
      My hon. Friend the Member for Northampton, North (Mr. Marlow) made a powerful plea for the abolition of VAT and for raising the threshold. The hon. Member for Workington (Mr. Campbell-Savours) seemed to argue in the opposite direction in favour of lowering the threshold. If I entered into that argument I should be out of order. It is not true that the only obstacle to a substantial raising of the VAT threshold is the European Community's attitude. Many traders are strongly opposed to a large increase in the threshold, although I confess that in terms of tax efficiency there is much to be said for it.
      The hon. Member for Workington culled many reports from the Sunday press. I assure him that they were, to a substantial extent, inaccurate. In any case, I confess that their connection with the new clauses is not immediately apparent to me. I concede one matter to the hon. Gentleman. He said that if we reduced the level of VAT that would tend to reduce the incentive for under-declaration. That must be true. It is a fair point and I accept it, but unfortunately there are more substantial objections to taking the action which the new clauses call upon us to take.
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      The hon. Member for Blackburn ranged wide in his speech. I should love to deal with what he said about exchange rate policy. I made a good speech about it last weekend. I shall send the hon. Gentleman a copy. That would be safer than discussing it this evening.
      6.45 pm
      The hon. Member said about half a dozen words which were relevant to the new clauses. He said that the increase in VAT from 8 per cent. to 15 per cent. in 1979 was solely responsible, or almost solely responsible, for the increase in inflation from 10 per cent. to 22 per cent. It is unwise for hon. Members on either side to pursue that line, although I accept that some of my hon. Friends did just that after the Labour Government took office in 1974. They said that the course of inflation in the first 18 months of a Government's life is predominantly determined by the Government's actions. I believe that to be untrue. I believed it to be untrue in 1974 and in 1979–80. The fact is that the increase in VAT in the summer of 1979 added 3·5 per cent. to the RPI—that is all. It is nonsense to pretend that it was the sole or even predominant factor in the rise in inflation which followed this Government's assumption to office. The dominant factor was the trend of inflation which the Labour party left behind. It is ludicrous to pretend otherwise.
      The hon. Member for Gateshead, West (Mr. Horam) said more than the hon. Member for Blackburn said about the new clauses. There is common ground on the factual implications of the proposal. New clause 1 would cost us about £1,400 million in a full year and new clause 5 about £1,800 million. If the House decided to give immediate effect to new clause 1, the RPI to be published in June, for May, would probably be about 1 per cent. lower than otherwise. If the House approved the alliance new clause, the RPI for October this year would probably be about 1·25 per cent. lower. One year later, in the index published in June 1984 or the index published in November 1984, that bonus would have disappeared, although the impact of either new clause on the general level of prices would endure. We can agree about that, but the rest is speculation.
      Opposition Members argue that the immediate reduction in the RPI would have an effect on attitudes to wage bargaining and that that would have a knock-on repercussion on inflation. I argue that, unless we took steps to recoup the revenue to be forgone by the passage of the new clauses, we would be bound to expect that the higher borrowing rate would lead to interest rates being higher than otherwise, or alternatively that the rate of growth in the domestic money supply would accelerate in a manner that would presage higher inflation. If, on the other hand, we were to recoup the revenue forgone by higher taxation, the secondary effects, for which the hon. Member for Gateshead, West was looking, in inflationary expectations would be negatived by those alternative forms of inflation.
      Mr. Horam rose—
      Mr. Bruce-Gardyne: The hon. Member for Blackburn will have an opportunity to reply, so, if the hon. Member for Gateshead, West will allow me, I will continue and conclude my remarks.
      Quite apart from what I see as the practical objections of revenue impact and inflationary expectations, there is a more philosophical objection to the new clauses. We

      913
      have heard from the hon. Member for Blackburn and others about what was said in the Conservative election manifesto. The hon. Member for Blackburn was good enough to say that we had made it clear that we intended to shift from direct to indirect taxation. Why he should then say that we had made it clear that we intended to do the opposite is not clear. What was said in the manifesto was accurate and was, indeed, our intention. That was why my right hon. and learned Friend the Chancellor decided in 1979 to raise VAT to 15 per cent. Even at the 15 per cent. rate, perpetuated in my right hon. and learned Friend's Budget this year, we are by no means out of line with our European partners. Only Luxembourg and Germany have lower standard rates. All the other countries have higher standard rates — some have substantially higher rates. While it was the conscious intention of the Government to tilt the balance back from tax on income to tax on spending, it is worth noting that since 1979 the balance has once again been slipping. In 1979–80, after my right hon. and learned Friend's first Budget, we drew 54·5 per cent. of our tax from spending taxes and 45·5 per cent. from earning taxes. Last year the figures were 51·5 per cent. from spending taxes and 48·5 per cent. from earning taxes. On those grounds, too, the new clauses do not appear attractive to the Government. On those self-same grounds, the new clauses should not appear attractive to the Opposition parties.
      Let us consider the record. In the final year of the Government of my right hon. Friend the Member for Sidcup (Mr. Heath), the share of direct and indirect taxes in the total revenue was almost 50–50. Then the right hon. Member for Leeds, East (Mr. Healey) took over and in the first flush of his pip-squeaking populism, shifted sharply in the direction of taxes on earnings to a balance of 53 per cent. of revenue from earnings and 47 per cent. of revenue from expenditure taxes. So far so good. The right hon. Gentleman did not maintain that position. By 1978–79, the right hon. Gentleman's last year in office, the direct tax take was down to 48·5 per cent. and the indirect tax take was up to 51·5 per cent. — precisely the same percentages as in the last financial year. This did not happen in a fit of absent-mindedness. On 30 November 1976—this will answer the points of the hon. Members for South Ayrshire (Mr. Foulkes) and for Aberdare (Mr. Evans)—the right hon. Member for Leeds, East said:
      "It certainly was true 30 years ago that, broadly, indirect taxation was regressive and income tax was progressive, in the social sense. That is no longer true when income tax is paid at levels of earnings below those which qualify for supplementary benefit. It cannot really be regarded as a progressive tax. On the other hand, the structure of the value added tax, which zero rates half—the most important half—of family expenditure, can be shown to be in many respects progressive rather than regressive." —[Official Report, 30 November 1976; Vol. 921, c. 719.]
      Mr. Foulkes: Not at all.
      Mr. Bruce-Gardyne: That was the verdict of the right hon. Member for Leeds, East. The right hon. Member for Heywood and Royton (Mr. Barnett), whom I am delighted to see in his place, said in that seminal work, Inside the Treasury, about the cut in VAT from 10 per cent. to 8 per cent. in 1974:
      "To my mind, this was a move in absolutely the wrong direction. We should have been increasing indirect taxes, not reducing them. I know that when I first joined the Labour party we all believed that income tax, since it fell on the rich, was good
      914
      and progressive, whilst indirect taxes … on consumer goods placed an unfair burden on the poor. That principle was justified then, when few workers were paying much income tax, but it has no relevance today, when the greater part of the income tax yield comes from average-paid workers, and when VAT is not levied on necessities such as food".
      We expect the right hon. Member for Leeds, East to change his views as often as he changes his socks, but we know and respect the right hon. Member for Heywood and Royton as a man of principle. On that basis alone, I hope that he will join us in the Lobby in opposition to the new clause.
      To agree to the new clauses would give our fiscal system another lurch in the direction of excessive reliance on direct taxation. On those grounds alone, and for the reasons so cogently argued in the past both by the right hon. Member for Leeds, East and the right hon. Member for Heywood and Royton, the new clauses should be resisted. The way to deal with inflation and the way to maintain our progress towards more stable prices is to follow the course that the Government have been pursuing, which has produced already the lowest inflation in this country since the early 1960s. As I informed the hon. Member for Glasgow, Central (Mr. McTaggart) in a written answer yesterday, over the life of this Government the rise in prices has been barely half that of the previous Government.
      By the consistent pursuit of sound and stable fiscal and monetary policies, Britain will enjoy the benefits of a permanent return to stable prices. That is the way to beat inflation. The new clauses are worse than a red herring. They are a snare and a delusion. I invite the House to throw them out.
      Mr. Straw: I apologise to my right hon. Friend the Member for Norwich, North (Mr. Ennals) and to my hon. Friends the Members for South Ayrshire (Mr. Foulkes), for Barking (Miss Richardson) and for Eccles (Mr. Carter-Jones) for not being able to deal with the point they raised in the short time that is available to me.
      My hon. Friend the Member for Workington (Mr. Campbell-Savours) pointed out that the Government are losing hundreds of millions of pounds through the lack of effective collection machinery for value added tax. My hon. Friend pointed out that a high rate of VAT encourages evasion and he drew to the attention of the House the fact that, over the past four years, the Government have reduced the effectiveness of fraud officers and the collection procedures for value added tax and income tax while at the same time pursuing so-called social security scroungers for benefits to the Revenue which are infinitely smaller.
      Both sides of the House have accepted that the cost of new clause 1 would be about £1,400 million in a full year. Unlike the alliance parties, we do not resile from that cost and we do not suggest that the initial cost would be anything like the full year cost. We believe that the costs can be met from borrowing and that there is no need to raise taxation.
      Before Conservative Members become completely befuddled by their dogmas, I must tell them that money is available. Figures produced yesterday show that £4 billion is flowing abroad every year under the Conservative Government. The savings of the British people are being forced abroad by city institutions to be invested not in the strength of the British economy but in the strength of our competitors abroad. The reintroduction

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      of exchange controls would make those funds available to the Government and British firms to invest in the health of our economy.
      7 pm
      As fund managers recognise, if exchange controls were reintroduced, it would be possible for the Government to borrow on a funded basis from the markets without an increase in interest rates. The total cost of our proposals would add about £6 billion to the PSBR, which would still mean a PSBR of 4 per cent. of GDP, well below the average for the other major competitors within OECD.
      Our principal reason for proposing a reduction in VAT from 15 per cent. to 13 per cent. is to offset the rise in inflation that is in the pipeline and which is due to the fall in sterling that has already taken place. It was significant that the Economic Secretary did not say a word about the prospects for inflation in the year ahead; nor would he accept interventions. Every Minister knows that, although inflation has come down to about the average for our competitors, it will rise inexorably towards the end of the year to 6, 7 or 8 per cent.
      Mr. Bruce-Gardyne: The Red Book published at the time of the Budget stated that the expected rise in the RPI by the end of this year would be about 6 per cent. The evidence since then is that, if anything, that may err on the side of pessimism, and there are reasons to expect that the outturn may be better.
      Mr. Straw: We shall see. If that is the case, why are so many Ministers desperate for a cut and run election in June? Indeed, the Economic Secretary, who has an interest in this Parliament running to the end of the century, seems to be the only Minister pressing for the election to be delayed past June.
      We do not mind when the election comes, because a central issue will be the Government's record on taxation. They promised to reduce direct taxation, yet they have forced up direct taxation to unparalleled levels. They promised that there would be no doubling of VAT, yet that is what they have done. When the election comes, the people will vote against the Government, not least for the way in which they deceived them on taxation issues at the last election.
      The new clause makes some modest recompense to the British electorate for the way in which it was deceived in 1979. It also seeks to offset the unquestionable rise in inflation that will take place towards the end of the year. I commend it to the Committee.
      Question put, That the clause be now read a Second time:—
      The Committee divided: Ayes 211, Noes 256.

      Division No. 134]

      [7.03 pm

      AYES

      Abse, Leo

      Booth, Rt Hon Albert

      Allaun, Frank

      Boothroyd, Miss Betty

      Alton, David

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

      Archer, Rt Hon Peter

      Bradley, Tom

      Ashley, Rt Hon Jack

      Bray, Dr Jeremy

      Ashton, Joe

      Brown, Hugh D. (Provan)

      Atkinson, N.(H'gey,)

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

      Bagier, Gordon AT.

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

      Barnett, Guy (Greenwich)

      Brown, Ron (E'burgh, Leith)

      Barnett, Rt Hon Joel (H'wd)

      Callaghan, Rt Hon J.

      Beith, A. J.

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

      Benn, Rt Hon Tony

      Campbell, Ian

      Bennett, Andrew(St'kp't N)

      Campbell-Savours, Dale

      Bidwell, Sydney

      Canavan, Dennis

      916

      Cant, R. B.

      Kinnock, Neil

      Carter-Jones, Lewis

      Lambie, David

      Cartwright, John

      Lamond, James

      Clark, Dr David (S Shields)

      Lead bitter, Ted

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

      Leighton, Ronald

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

      Litherland, Robert

      Cohen, Stanley

      Lofthouse, Geoffrey

      Coleman, Donald

      Lyons, Edward (Bradf'd W)

      Concannon, Rt Hon J. D.

      Mabon, Rt Hon Dr J. Dickson

      Cook, Robin F.

      McDonald, Dr Oonagh

      Cowans, Harry

      McKay, Allen (Penistone)

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

      McKelvey, William

      Crowther, Stan

      Maclennan, Robert

      Cryer, Bob

      McNally, Thomas

      Cunningham, G. (Islington S)

      McTaggart, Robert

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

      McWilliam, John

      Dalyell, Tam

      Magee, Bryan

      Davidson, Arthur

      Marshall, D.(G'gow S'ton)

      Davies, Rt Hon Denzil (L'lli)

      Marshall, Jim (Leicester S)

      Davis, Clinton (Hackney C)

      Mason, Rt Hon Roy

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

      Maxton, John

      Deakins, Eric

      Maynard, Miss Joan

      Dean, Joseph (Leeds West)

      Meacher, Michael

      Dewar, Donald

      Mikardo, Ian

      Dixon, Donald

      Millan, Rt Hon Bruce

      Dobson, Frank

      Mitchell, Austin (Grimsby)

      Dormand, Jack

      Molyneaux, James

      Duffy, A. E. P.

      Morris, Rt Hon A. (W'shawe)

      Dunlop, John

      Morris, Rt Hon C. (O'shaw)

      Dunnett, Jack

      Morton, George

      Dunwoody, Hon Mrs G.

      Moyle, Rt Hon Roland

      Eadie, Alex

      Oakes, Rt Hon Gordon

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

      O'Brien, Oswald (Darlington)

      Ellis, Tom (Wrexham)

      Ogden, Eric

      English, Michael

      O'Halloran, Michael

      Ennals, Rt Hon David

      O'Neill, Martin

      Evans, Ioan (Aberdare)

      Orme, Rt Hon Stanley

      Field, Frank

      Park, George

      Flannery, Martin

      Parker, John

      Ford, Ben

      Parry, Robert

      Forrester, John

      Pendry, Tom

      Foster, Derek

      Penhaligon, David

      Foulkes, George

      Pitt, William Henry

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

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

      Freeson, Rt Hon Reginald

      Price, C. (Lewisham W)

      Freud, Clement

      Race, Reg

      Garrett, John (Norwich S)

      Radice, Giles

      George, Bruce

      Rees, Rt Hon M (Leeds S)

      Golding, John

      Richardson, Jo

      Graham, Ted

      Roberts, Albert (Normanton)

      Grant, John (Islington C)

      Roberts, Allan (Bootle)

      Grimond, Rt Hon J.

      Roberts, Ernest (Hackney N)

      Hamilton, James (Bothwell)

      Roberts, Gwilym (Cannock)

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

      Robertson, George

      Harman, Harriet (Peckham)

      Robinson, G. (Coventry NW)

      Harrison, Rt Hon Walter

      Rooker, J. W.

      Hart, Rt Hon Dame Judith

      Roper, John

      Hattersley, Rt Hon Roy

      Ross, Ernest (Dundee West)

      Haynes, Frank

      Ross, Stephen (Isle of Wight)

      Healey, Rt Hon Denis

      Rowlands, Ted

      Heffer, Eric S.

      Sandelson, Neville

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

      Sever, John

      Home Robertson, John

      Sheldon, Rt Hon R.

      Homewood, William

      Shore, Rt Hon Peter

      Hooley, Frank

      Silkin, Rt Hon J. (Deptford)

      Horam, John

      Silverman, Julius

      Howells, Geraint

      Skinner, Dennis

      Hoyle, Douglas

      Smith, Rt Hon J. (N Lanark)

      Huckfield, Les

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

      Hudson Davies, Gwilym E.

      Soley, Clive

      Hughes, Mark (Durham)

      Spearing, Nigel

      Hughes, Robert (Aberdeen N)

      Spriggs, Leslie

      Hughes, Roy (Newport)

      Steel, Rt Hon David

      Hughes, Simon (Bermondsey)

      Stewart, Rt Hon D. (W Isles)

      Janner, Hon Greville

      Stott, Roger

      Jay, Rt Hon Douglas

      Straw, Jack

      Jenkins, Rt Hon Roy (Hillh'd)

      Summerskill, Hon Dr Shirley

      Johnson, James (Hull West)

      Taylor, Mrs Ann (Bolton W)

      Jones, Barry (East Flint)

      Thomas, Jeffrey (Abertillery)

      Kaufman, Rt Hon Gerald

      Thomas, Dr R. Carmarthen)

      917

      Thorne, Stan (Preston South)

      Williams, Rt Hon Mrs(Crosby,

      Tilley, John

      Wilson, Gordon (Dundee E)

      Tinn, James

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

      Varley, Rt Hon Eric G.

      Wilson, William (C'try SE)

      Wainwright, R.(Colne V)

      Winnick, David

      Walker, Rt Hon H.(D'caster)

      Woodall, Alec

      Wardell, Gareth

      Wrigglesworth, Ian

      Watkins, David

      Wright, Sheila

      Weetch, Ken

      Young, David (Bolton E)

      White, Frank R.

      Whitehead, Phillip

      Tellers for the Ayes:

      Whitlock, William

      Mr. Lawrence Cunliffe and

      Willey, Rt Hon Frederick

      Mr. Hugh McCartney.

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

      NOES

      Adley, Robert

      Dykes, Hugh

      Aitken, Jonathan

      Eden, Rt Hon Sir John

      Alexander, Richard

      Edwards, Rt Hon N. (P'broke)

      Alison, Rt Hon Michael

      Eggar, Tim

      Ancram, Michael

      Elliott, Sir William

      Arnold, Tom

      Emery, Sir Peter

      Aspinwall, Jack

      Eyre, Reginald

      Atkins, Rt Hon H.(S'thorne)

      Faith, Mrs Sheila

      Atkins, Robert(Preston N)

      Farr, John

      Baker, Kenneth(St.M'bone)

      Fell, Sir Anthony

      Baker, Nicholas (N Dorset)

      Fenner, Mrs Peggy

      Banks, Robert

      Finsberg, Geoffrey

      Bendall, Vivian

      Fisher, Sir Nigel

      Benyon, Thomas (A'don)

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

      Benyon, W. (Buckingham)

      Fletcher-Cooke, Sir Charles

      Berry, Hon Anthony

      Fookes, Miss Janet

      Best, Keith

      Forman, Nigel

      Bevan, David Gilroy

      Fowler, Rt Hon Norman

      Biffen, Rt Hon John

      Fox, Marcus

      Biggs-Davison, Sir John

      Fraser, Rt Hon Sir Hugh

      Blackburn, John

      Fraser, Peter (South Angus)

      Body, Richard

      Fry, Peter

      Bonsor, Sir Nicholas

      Gardiner, George (Reigate)

      Boscawen, Hon Robert

      Gardner, Sir Edward

      Bottomley, Peter (W'wich W)

      Gilmour, Rt Hon Sir Ian

      Bowden, Andrew

      Glyn, Dr Alan

      Boyson, Dr Rhodes

      Goodhew, Sir Victor

      Braine, Sir Bernard

      Goodlad, Alastair

      Bright, Graham

      Gorst, John

      Brinton, Tim

      Gow, Ian

      Brittan, Rt. Hon. Leon

      Gower, Sir Raymond

      Brooke, Hon Peter

      Gray, Rt Hon Hamish

      Brotherton, Michael

      Greenway, Harry

      Brown, Michael(Brigg & Sc'n)

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

      Bruce-Gardyne, John

      Griffiths, Peter (Portsm'th N)

      Bryan, Sir Paul

      Grist, Ian

      Buck, Antony

      Grylls, Michael

      Budgen, Nick

      Gummer, John Selwyn

      Bulmer, Esmond

      Hamilton, Hon A.

      Burden, Sir Frederick

      Hamilton, Michael (Salisbury)

      Butler, Hon Adam

      Hampson, Dr Keith

      Carlisle, John (Luton West)

      Hannam, John

      Carlisle, Kenneth (Lincoln)

      Haselhurst, Alan

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

      Hastings, Stephen

      Chalker, Mrs. Lynda

      Havers, Rt Hon Sir Michael

      Channon, Rt. Hon. Paul

      Hawksley, Warren

      Chapman, Sydney

      Hayhoe, Barney

      Churchill, W. S.

      Heddle, John

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

      Henderson, Barry

      Clark, Sir W. (Croydon S)

      Heseltine, Rt Hon Michael

      Clarke, Kenneth (Rushcliffe)

      Hicks, Robert

      Clegg, Sir Walter

      Higgins, Rt Hon Terence L.

      Cockeram, Eric

      Hogg, Hon Douglas (Gr'th'm)

      Cope, John

      Holland, Philip (Carlton)

      Cormack, Patrick

      Hooson, Tom

      Corrie, John

      Hordern, Peter

      Costain, Sir Albert

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

      Cranborne, Viscount

      Hunt, David (Wirral)

      Critchley, Julian

      Hunt, John (Ravensbourne)

      Crouch, David

      Irvine, RtHon Bryant Godman

      Dorrell, Stephen

      Irving, Charles (Cheltenham)

      Douglas-Hamilton, Lord J.

      Jenkin, Rt Hon Patrick

      Dunn, Robert (Dartford)

      Jopling, Rt Hon Michael

      Durant, Tony

      Joseph, Rt Hon Sir Keith

      918

      Kaberry, Sir Donald

      Rathbone, Tim

      Kershaw, Sir Anthony

      Rees, Peter (Dover and Deal)

      Kimball, Sir Marcus

      Rees-Davies, W. R.

      King, Rt Hon Tom

      Renton, Tim

      Knox, David

      Rhodes James, Robert

      Lamont, Norman

      Ridley, Hon Nicholas

      Latham, Michael

      Ridsdale, Sir Julian

      Lawrence, Ivan

      Rippon, Rt Hon Geoffrey

      Lawson, Rt Hon Nigel

      Roberts, Wyn (Conway)

      Lee, John

      Rossi, Hugh

      Le Marchant, Spencer

      Sainsbury, Hon Timothy

      Lennox-Boyd, Hon Mark

      St. John-Stevas, Rt Hon N.

      Lewis, Sir Kenneth (Rutland)

      Shaw, Giles (Pudsey)

      Lloyd, Peter (Fareham)

      Shaw, Sir Michael (Scarb')

      Loveridge, John

      Shelton, William (Streatham)

      Luce, Richard

      Shepherd, Colin (Hereford)

      Lyell, Nicholas

      Shepherd, Richard

      McCrindle, Robert

      Silvester, Fred

      Macfarlane, Neil

      Skeet, T. H. H.

      MacGregor, John

      Smith, Tim (Beaconsfield)

      MacKay, John (Argyll)

      Speed, Keith

      Macmillan, Rt Hon M.

      Speller, Tony

      McNair-Wilson, M. (N'bury)

      Spence, John

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

      Spicer, Jim (West Dorset)

      McQuarrie, Albert

      Spicer, Michael (S Worcs)

      Madel, David

      Squire, Robin

      Major, John

      Stanley, John

      Marland, Paul

      Steen, Anthony

      Marlow, Antony

      Stevens, Martin

      Marten, Rt Hon Neil

      Stewart, A.(E Renfrewshire)

      Mather, Carol

      Stewart, Ian (Hitchin)

      Maude, Rt Hon Sir Angus

      Stokes, John

      Mawby, Ray

      Stradling Thomas, J.

      Mawhinney, Dr Brian

      Tapsell, Peter

      Maxwell-Hyslop, Robin

      Taylor, Teddy (S'end E)

      Meyer, Sir Anthony

      Tebbit, Rt Hon Norman

      Mills, Iain (Meriden)

      Thomas, Rt Hon Peter

      Mills, Sir Peter (West Devon)

      Thompson, Donald

      Miscampbell, Norman

      Thornton, Malcolm

      Moate, Roger

      Townend, John (Bridlington)

      Monro, Sir Hector

      Townsend, Cyril D, (B'heath)

      Montgomery, Fergus

      Trippier, David

      Moore, John

      van Straubenzee, Sir W.

      Morris, M. (N'hampton S)

      Vaughan, Dr Gerard

      Morrison, Hon C. (Devizes)

      Waddington, David

      Mudd, David

      Wakeham,John

      Murphy, Christopher

      Waldegrave, Hon William

      Myles, David

      Walker, B. (Perth)

      Neale, Gerrard

      Walker-Smith, Rt Hon Sir D.

      Needham, Richard

      Waller, Gary

      Nelson, Anthony

      Walters, Dennis

      Neubert, Michael

      Watson, John

      Newton, Tony

      Wells, Bowen

      Page, Richard (SW Herts)

      Wells, John (Maidstone)

      Parkinson, Rt Hon Cecil

      Wheeler, John

      Parris, Matthew

      Whitelaw, Rt Hon William

      Patten, John (Oxford)

      Whitney, Raymond

      Pawsey, James

      Wickenden, Keith

      Percival, Sir Ian

      Wiggin, Jerry

      Peyton, Rt Hon John

      Williams, D. (Montgomery)

      Pink, R. Bonner

      Wolfson, Mark

      Pollock, Alexander

      Young, Sir George (Acton)

      Porter, Barry

      Prentice, Rt Hon Reg

      Tellers for the Noes:

      Proctor, K. Harvey

      Mr. Tristan Garel-Jones and

      Pym, Rt Hon Francis

      Mr. Ian Lang.

      Question accordingly negatived.

    New clause 5

      DECREASE OF RATE OF VALUE-ADDED TAX
      '(1) In section 9(1) of the Finance Act 1972 (Standard Rate of value-added tax) as amended by the Finance (No. 2) Act 1979 for the words "fifteen per cent." there shall be substituted the words "Twelve and a half per cent."
      (2) The above section 1 shall come into effect on 1st October 1983.'.—[Mr. David Steel.]
      Brought up, and read the First time.
      Question put, That the clause be now read a Second time:—
      The Committee divided: Ayes 39, Noes 234.

      Division No. 135]

      [7.16 pm

      AYES

      Alton, David

      Magee, Bryan

      Bradley, Tom

      Molyneaux, James

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

      Ogden, Eric

      Canavan, Dennis

      Parry, Robert

      Carter-Jones, Lewis

      Penhaligon, David

      Cartwright, John

      Pitt, William Henry

      Cunningham, G. (Islington S)

      Ross, Stephen (Isle of Wight)

      Dixon, Donald

      Sandelson, Neville

      Dunlop, John

      Skinner, Dennis

      Ellis, Tom (Wrexham)

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

      Freud, Clement

      Steel, Rt Hon David

      Grant, John (Islington C)

      Stewart, Rt Hon D. (W Isles)

      Grimond, Rt Hon J.

      Wainwright, R.(Colne V)

      Horam, John

      Williams, Rt Hon Mrs(Crosby)

      Howells, Geraint

      Wilson, Gordon (Dundee E)

      Hudson Davies, Gwilym E.

      Winnick, David

      Hughes, Simon (Bermondsey)

      Wrigglesworth, Ian

      Jenkins, Rt Hon Roy (Hillh'd)

      Lyons, Edward (Bradf'd W)

      Tellers for the Ayes:

      Mabon, Rt Hon Dr J. Dickson

      Mr. A. J. Beith and

      Maclennan, Robert

      Mr. John Roper.

      McNally, Thomas

      NOES

      Adley, Robert

      Clarke, Kenneth (Rushcliffe)

      Aitken, Jonathan

      Clegg, Sir Walter

      Alexander, Richard

      Cockeram, Eric

      Alison, Rt Hon Michael

      Cope, John

      Ancram, Michael

      Cormack, Patrick

      Arnold, Tom

      Costain, Sir Albert

      Aspinwall, Jack

      Cranborne, Viscount

      Atkins, Rt Hon H.(S'thorne)

      Critchley, Julian

      Atkins, Robert(Preston N)

      Crouch, David

      Baker, Kenneth(St.M'bone)

      Dorrell, Stephen

      Baker, Nicholas (N Dorset)

      Douglas-Hamilton, Lord J.

      Banks, Robert

      Dunn, Robert (Dartford)

      Bendall, Vivian

      Durant, Tony

      Benyon, Thomas (A'don)

      Dykes, Hugh

      Benyon, W. (Buckingham)

      Eden, Rt Hon Sir John

      Berry, Hon Anthony

      Edwards, Rt Hon N. (P'broke)

      Best, Keith

      Eggar, Tim

      Bevan, David Gilroy

      Elliott, Sir William

      Biffen, Rt Hon John

      Emery, Sir Peter

      Biggs-Davison, Sir John

      Farr, John

      Blackburn, John

      Fenner, Mrs Peggy

      Body, Richard

      Finsberg, Geoffrey

      Bonsor, Sir Nicholas

      Fisher, Sir Nigel

      Boscawen, Hon Robert

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

      Bottomley, Peter (W'wich W)

      Fletcher-Cooke, Sir Charles

      Boyson, Dr Rhodes

      Fookes, Miss Janet

      Braine, Sir Bernard

      Forman, Nigel

      Bright, Graham

      Fowler, Rt Hon Norman

      Brinton, Tim

      Fox, Marcus

      Brittan, Rt. Hon. Leon

      Fraser, Rt Hon Sir Hugh

      Brooke, Hon Peter

      Fraser, Peter (South Angus)

      Brotherton, Michael

      Fry, Peter

      Bruce-Gardyne, John

      Gardiner, George (Reigate)

      Bryan, Sir Paul

      Gardner, Sir Edward

      Buck, Antony

      Gilmour, Rt Hon Sir Ian

      Budgen, Nick

      Glyn, Dr Alan

      Bulmer, Esmond

      Goodlad, Alastair

      Burden, Sir Frederick

      Gorst, John

      Butler, Hon Adam

      Gow, Ian

      Carlisle, John (Luton West)

      Gower, Sir Raymond

      Carlisle, Kenneth (Lincoln)

      Gray, Rt Hon Hamish

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

      Greenway, Harry

      Chalker, Mrs. Lynda

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

      Channon, Rt. Hon. Paul

      Griffiths, Peter (Portsm'th N)

      Chapman, Sydney

      Grist, Ian

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

      Gummer, John Selwyn

      Clark, Sir W. (Croydon S)

      Hamilton, Hon A.

      920

      Hamilton, Michael (Salisbury)

      Page, Richard (SW Hert's)

      Hannam,John

      Parkinson, Rt Hon Cecil

      Haselhurst, Alan

      Parris, Matthew

      Hastings, Stephen

      Patten, John (Oxford)

      Havers, Rt Hon Sir Michael

      Pawsey, James

      Heath, Rt Hon Edward

      Percival, Sir Ian

      Heddle, John

      Peyton, Rt Hon John

      Henderson, Barry

      Pink, R. Bonner

      Heseltine, Rt Hon Michael

      Pollock, Alexander

      Hicks, Robert

      Porter, Barry

      Higgins, Rt Hon Terence L.

      Prentice, Rt Hon Reg

      Hogg, Hon Douglas (Gr'th'm)

      Proctor, K. Harvey

      Holland, Philip (Carlton)

      Rathbone, Tim

      Hooson, Tom

      Rees, Peter (Dover and Deal)

      Hordern, Peter

      Rees-Davies, W. R

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

      Renton, Tim

      Hunt, David (Wirral)

      Rhodes James, Robert

      Hunt, John (Ravensbourne)

      Ridley, Hon Nicholas

      Irvine, RtHon Bryant Godman

      Ridsdale, Sir Julian

      Irving, Charles (Cheltenham)

      Rippon, Rt Hon Geoffrey

      Jenkin, Rt Hon Patrick

      Roberts, Wyn (Conway)

      Jopling, Rt Hon Michael

      Rossi, Hugh

      Joseph, Rt Hon Sir Keith

      Sainsbury, Hon Timothy

      Kaberry, Sir Donald

      Shaw, Giles (Pudsey)

      Kershaw, Sir Anthony

      Shaw, Sir Michael (Scarb')

      King, Rt Hon Tom

      Shelton, William (Streatham)

      Knox, David

      Shepherd, Colin (Hereford)

      Lamont, Norman

      Shepherd, Richard

      Latham, Michael

      Silvester, Fred

      Lawrence, Ivan

      Skeet, T. H. H.

      Lawson, Rt Hon Nigel

      Smith, Tim (Beaconsfield)

      Lennox-Boyd, Hon Mark

      Speed, Keith

      Lewis, Sir Kenneth (Rutland)

      Speller, Tony

      Lloyd, Peter (Fareham)

      Spence, John

      Loveridge, John

      Spicer, Jim (West Dorset)

      Luce, Richard

      Spicer, Michael (S Worcs)

      Lyell, Nicholas

      Squire, Robin

      McCrindle, Robert

      Stanley, John

      Macfarlane, Neil

      Steen, Anthony

      MacGregor, John

      Stevens, Martin

      MacKay, John (Argyll)

      Stewart, A, (E Renfrewshire)

      Macmillan, Rt Hon M.

      Stewart, Ian (Hitchin)

      McNair-Wilson, M. (N'bury)

      Stradling Thomas, J.

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

      Tapsell, Peter

      McQuarrie, Albert

      Taylor, Teddy (S'end E)

      Madel, David

      Tebbit, Rt Hon Norman

      Major, John

      Thompson, Donald

      Marland, Paul

      Thornton, Malcolm

      Marlow, Antony

      Townend, John (Bridlington)

      Marten, Rt Hon Neil

      Trippier, David

      Mather, Carol

      van Straubenzee, Sir W.

      Maude, Rt Hon Sir Angus

      Vaughan, Dr Gerard

      Mawby, Ray

      Waddington, David

      Mawhinney, Dr Brian

      Wakeham, John

      Maxwell-Hyslop, Robin

      Waldegrave, Hon William

      Meyer, Sir Anthony

      Walker-Smith, Rt Hon Sir D.

      Mills, Iain (Meriden)

      Waller, Gary

      Mills, Sir Peter (West Devon)

      Watson, John

      Miscampbell, Norman

      Wells, Bowen

      Moate, Roger

      Wells, John (Maidstone)

      Monro, Sir Hector

      Wheeler, John

      Montgomery, Fergus

      Whitelaw, Rt Hon William

      Moore, John

      Whitney, Raymond

      Morris, M. (N'hampton S)

      Wickenden, Keith

      Morrison, Hon C. (Devizes)

      Wiggin, Jerry

      Murphy, Christopher

      Williams, D.(Montgomery)

      Myles, David

      Wolfson, Mark

      Neale, Gerrard

      Young, Sir George (Acton)

      Needham, Richard

      Nelson, Anthony

      Tellers for the Noes:

      Neubert, Michael

      Mr. Tristan Garel-Jones and

      Newton, Tony

      Mr. Ian Lang.

      Question accordingly negatived
      To report Progress and ask leave to sit again tomorrow. —[Mr. Bruce-Gardyne.]
      Committee report Progress; to sit again tomorrow.

Education (Fees and Awards) Bill
Order for Second Reading read.
7.27 pm
The Under-Secretary of State for Education and Science (Mr. William Waldegrave): I beg to move, That the Bill be now read a Second time.
The Bill is an urgent measure, which is designed to restore the position of overseas students in two important respects to what it was understood to be before a ruling given in another place on 16 December last. There would be serious consequences for institutions and for public expenditure—and much uncertainty on the part of the students themselves—if the Government did not seek to have this legislation enacted before the next academic year begins in the autumn. Before turning to the detailed provisions of the Bill I shall explain the background that gives rise to the need for it.
Under Governments of both parties overseas students have been treated differently from home students in three particular ways. First, they have not been entitled to student grants — that is, to the "mandatory awards" providing help with fees and living costs that education authorities are obliged to give to most undergraduates. Second, they have not been eligible for a variety of other grants —"discretionary awards" — that may be paid to home students not eligible for mandatory awards by education authorities, research councils and others. Third, they have been charged higher fees than home students. Under the present Government their fees are expected to cover the full cost of their education, but previous Governments too have operated a differential fee system.
The distinction that successive Governments and other award-making bodies have made between home and overseas students for these purposes has been based on the concept of residence or "ordinary residence". Students were or were not eligible for particular benefits or rates of fee on the basis of whether they had or had not been resident or ordinarily resident here for a particular period —usually three years. In 1980 the Government brought the test of eligibility for home fees into line with that for mandatory awards, by adopting the criterion of ordinary residence for all purposes.
Until the Lords' judgment on 16 December last the test of where a student was ordinarily resident was generally taken to be that of where his real home was. Boys and girls who came here for a few years to go to school were believed not to become ordinarily resident if their home remained in another country. Many adults who came here temporarily as members of diplomatic missions or representing foreign firms retained their homes abroad and neither they nor their children were thought to be ordinarily resident here.
Last year, however, it was ruled in another place that the question to be asked to determine whether or not someone was ordinarily resident here was:
"Has the applicant shown that he has habitually and normally resided in the United Kingdom from choice and for a settled purpose throughout the prescribed period, apart from temporary or occasional absences?"
We are grateful to have this clarification, as it provides certainty in an area which had been increasingly open to doubt. But the ruling means that a student's ordinary residence alone is no longer a sufficient test to allow us to maintain previous policies towards different categories of students. We therefore need to change the letter of the
922
rules so that, in the light of the authoritative interpretation of "ordinary residence", they continue to reflect a consistent spirit.
I should say a word about the position of present students. The Government intend that students who do not qualify for the home student rate of fee for 1983–84, and subsequent academic years, under the regulations to be made, if the House approves the Bill, should pay the overseas rate for those years even if they can claim in the light of the December ruling that they should have been regarded as ordinarily resident here in the current academic year or in earlier years.
A student's residential status at the beginning of the course does not determine his liability to fees for the whole course. I recognise that some students paying the overseas rate in the current academic year can claim to be ordinarily resident here in terms of the December ruling, but they come here in the expectation of having to pay the higher fee and are not therefore suffering as a result of the ruling. Such students should not assume that there is any general principle that imposes an obligation of liability on authorities or institutions to make any refund for fees previously paid even if the student concerned establishes an entitlement to an award for the year in question.
Circumstances will vary widely among students, institutions and authorities, and institutions will have to consider individual cases on the facts and in the light of their own legal advice.
Mr. Christopher Price: When the Bill was announced, it was said that there was no intention to bring in retrospective legislation. The force of what the Minister has just said is either a determination to make the measure into de facto retrospective legislation in terms of certain years of a student's course or an interpretation by the Minister from the Dispatch Box of the law in the light of the Scarman judgment in the period between that judgment and any Royal Assent that would change the law. Which is it?
Mr. Waldegrave: It is a gloss on what we understand the rule will be after Royal Assent—not in the present period. There is no retrospection here. The relationship between the regimes for fees and mandatory awards is different. If we had asked—as some of my hon. Friends and others may believe that we should have asked because there was a moral case for so doing—to go right back and make it impossible for anyone in any circumstances to claim mandatory awards, that would certainly have been retrospective legislation. We decided not to do that, as I believe has been generally recognised. As I have said, the situation as between fees and mandatory awards, which will be discussed in a Statutory Instruments Committee tomorrow on the prayer, is different.
In adapting the rules, however, it is necessary to ensure that we do so within the provisions of the Race Relations Act 1976. I shall explain briefly how the relevant provisions of that Act bear on the present situation.
It has been the policy of successive Governments that all people who have demonstrated that they are properly settled here should be treated equally and enjoy equal access to benefits paid for from the public's rates and taxes, but it has also been accepted that it is unnecessary to bestow the same benefits on those not part of our community who come here for a limited and temporary purpose. The example that springs to mind in connection

923
with students is that someone who comes here for a few years to attend an independent school or a further education college should not on that account alone gain the right to be treated as a home student if he should subsequently wish to go on to higher education here.
The Race Relations Act 1976, which was enacted under a Labour Administration, wisely recognised this situation. It thus contains provisions which allow actions that would be discriminatory to be treated as though they were not. One of those provisions—section 41—has been used, for example, to allow higher fees to be charged to overseas students in the circumstances that I have just described. Under section 41(1), acts done under statutory authority are not to be regarded as discriminatory. Under section 41(2), discrimination on the basis of nationality, ordinary residence or period of residence is permitted where such discrimination takes place in pursuance of arrangements made with ministerial approval or in order to comply with conditions imposed by Ministers. That provision allowed the Labour Administration in 1977, when the Race Relations Act came into force, to legitimate the discrimination implicit in the differential fees for overseas students that an earlier Labour Administration had first introduced in 1967.
I said earlier that overseas students are treated differently from home students in three ways. In relation to mandatory awards such treatment is covered by section 41(1). Because the rules of eligibility for mandatory awards are statutory, they are automatically exempted from the provisions of the Act. Those rules of eligibility have depended upon the test of ordinary residence, but because they are contained in regulations it has been possible to amend them without recourse to primary legislation. Those amendments are contained in the Education (Mandatory Awards) (Amendment) (No. 2) Regulations 1983, which were laid before the House on 30 March. The prayer against them in the names of the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) and others is to be debated in a Statutory Instruments Committee tomorrow morning. The same principle applies to the postgraduate awards made under the State Awards Regulations 1978.
The two other ways in which overseas students have been treated differently have been covered by arrangements for the charging of differential fees and the adoption of particular rules of eligibility for discretionary awards made under section 41(2), which allows Ministers to legitimate discrimination related to ordinary residence. Such arrangements have been approved by my right hon. Friend and his predecessors since the Act came into force. They will, however, no longer serve because they depend on the test of ordinary residence, and the interpretation now given to that test in another place will not allow Secretaries of State under section 41(2) to retain the substance of the distinctions that Governments of both parties have intended to make. This is primarily because "ordinary residence" as now defined may include residence here for the purpose of receiving full-time education.
Sir Paul Bryan: I do not think that my hon. Friend has yet said what ordinary residence means in terms of period. Is it three years?
Mr. Waldegrave: I apologise. The period is three years.
924
It is not possible under section 41(2) to approve arrangements which differentiate between those ordinarily resident here for different purposes. To take account of this new situation we have therefore decided to legislate to give statutory authority to the charging of higher fees to overseas students and to the adoption of limited rules of eligibility for discretionary awards, so that such practices will be brought within the scope of section 41(1) of the Race Relations Act. That is the purpose of the Bill.
The Bill creates two new regulation-making powers. Unlike most cases of the Executive taking regulation-making powers, this case will to some extent improve the accountability of the Executive to the House as the arrangements for exemption from the Race Relations Act that these regulations will replace have previously been made or approved by Ministers without reference to the House. There is not even a formal requirement that such arrangements should be notified to the House. That was the freedom of action that the Labour Administration gave themselves in these matters. From the point of view of the accountability of the Executive to Parliament, therefore, the present legislation may be regarded as a distinct advance. That consideration apart, however, I hope that the House will recognise that the urgency of this legislation and the need for consultation with the local authorities, research councils and others makes it desirable to proceed in this way if we are to have the necessary provisions in place in time for the coming academic year.
Clause 1 deals with fees. It allows the Secretary of State to make regulations requiring or authorising the charging of higher fees to those who, in convenient shorthand, I shall refer to as overseas students. The regulations will specify the nature of the connection with the United Kingdom that it is necessary for a student to have before he pays the home rate of fee. Although the detail of the regulations is still subject to consultation I can say that we have it in mind that the basic test should continue to be ordinary residence, with the meaning given to that term last year in another place. Exceptions will be specified to allow European Community students to be treated as home students for the purposes of fees and to exclude from treatment as home students those who have been in Britain only or mainly for the purpose of receiving full-time education.
Clause 2 similarly allows the Secretary of State to make regulations that will allow various bodies that make discretionary awards to students for education, training or research to adopt rules of eligibility for those awards that confine them to applicants with the specified connection with the United Kingdom. It is envisaged that the regulations will allow award-making bodies to make rules similar to those that now apply to mandatory awards, to exclude students who have been in Britain only or mainly for the purposes of full-time education.
Mr. Frank Hooley: I am not quite clear about the current academic year. If I understand the Minister correctly, all that he is talking about now will apply to 1983–84. Is the current academic year governed by the Scarman judgment?
Mr. Waldegrave: The circumstances of students who are in place in the current academic year will vary according to when they paid their fees and their relationship with their colleges. It is probably unwise for me to try to generalise about what the situation will be. If the hon. Gentleman will allow me, I must leave it at that.
Mr. Hooley: I am asking only whether the current academic year is governed by the Scarman judgment.
Mr. Waldegrave: The law between when Lord Scarman said what the law was and Royal Assent for the Bill is the law as Lord Scarman defined it. There is no question of that.
These are the bare bones of the Bill. We have already embarked on consultations about what the regulations made under it should contain and we shall, of course, take full account of the views that are expressed during consideration of the Bill here and in another place. We do, however, hope to have the Bill and the regulations in force in time to ensure that the statutory position is clear for the 1983–84 academic year. Until regulations are made, institutions and award-making bodies will have to act within the scope of ordinary residence as now defined in another place. They might otherwise render themselves liable to accusations of unlawful discrimination for acting outside the scope of the cover provided by the existing arrangements approved under section 41(2). They will be considerably inhibited and might, for example, be obliged to delay the offer of awards, which would cause considerable inconvenience to students and others.
Urgent action is also necessary because, if the present situation is allowed to continue into the next academic year, many students will receive an amazing windfall gain at the expense of the British taxpayer. Instead of paying overseas fees of from, say, £2,500 to more than £7,000 a year, they will have to pay only the home student undergraduate fee of £480. The cost could be more than £30 million a year in lost fee income alone. This is a quite unnecessary burden to have imposed on the taxpayer as the chance outcome of a legal ruling. The Government have never believed that British taxpayers should be asked to give an indiscriminate subsidy to all those from overseas who would like to come here to study. Our policy has been to end the general subsidy and to channel help to those whom a variety of national policy objectives and humanitarian reasons suggest that it would be helpful to help.
Mr. Neil Kinnock: I understand that the Bill, by secondary legislation, will provide for the continuation of the arrangement whereby EC students are home students. Is it not unfortunate to apply the word "indiscriminate" to those outside the EC who may come from poor backgrounds? I do not believe that any British taxpayers understood that, when they voted to remain in the Common Market, part of the obligation of membership would be to charge home student fees to people who are sometimes from extremely wealthy backgrounds.
Mr. Waldegrave: The trade in students in Europe is one from which Britain gains. The financing of higher education in Europe is largely done without a fee income to the institutions. It must be said that more British students go to Europe than European students come here. The matter has been discussed in the House. It was a reasonable piece of Europeanism by the Government.
Mr. Kenneth Carlisle: While my hon. Friend is dealing with the cost to the taxpayer of not passing the Bill, will he clarify one point? I understood that it might cost £50 million to the Exchequer, £30 million being lost in fee income and £20 million being spent on extra grants.
Mr. Waldegrave: We are discussing only fees. It is estimated that about £30 million would be lost in fees next year. Moreover, that money would go primarily to those overseas students who are best off. If the House chooses to put another £30 million into the overseas students programme, I do not believe that it would choose to give it to that group of people.
The Bill represents a continuation of existing policy but allows us, for the first time, to have a clear statutory basis for distinguishing between home and overseas students. I reaffirm the importance that the Government attach to encouraging overseas students to study here and, where appropriate, being assisted to do so. That is why the Government decided, in the light of last year's study by an independent non-governmental body—the Overseas Students Trust—to increase the existing provision for assistance to overseas students—which is already worth about £40 million a year—by a new programme that would provide an extra £46 million during the first three years and would be worth up to £20 million a year when fully operational.
The programme will allow 5,000 extra students to be helped to come here each year. That is in addition to the nearly 15,000 students who already receive assistance under various existing aid programmes. That is a significant response to the needs and aspirations of people overseas who would like to study here.
Mr. Hooley: The Minister should not say that there will be an extra £46 million, as £21 million of it is the allocation within the existing vote. It is an extra £25 million and it is spread over three years.
Mr. Waldegrave: I hope that I have made it clear that it is spread over three years. An extra £46 million over three years will be directed towards overseas students. I believe that the House welcomes that priority that the Government have set.
The arrangements that are being made for the allocation of those funds will allow them to be targeted precisely to serve the needs of specific groups and countries that we wish to help. The money will be part of a co-ordinated programme rather than a haphazard and indiscriminate subsidy to all corners. Details of the new provision were given in the statement of my right hon. Friend the Foreign Secretary on 8 February and in the document "A Policy for Overseas Students" which he deposited in the Library of the House two days later.
I hope that I have said enough to demonstrate that the Government's policy towards overseas students has proper regard both for the legitimate concerns of the taxpayer about the danger of indiscriminate subsidy and for the needs and aspirations of potential students whom we wish to help and encourage as part of our selective support programmes which, as we all recognise, are in the national interest as well as in the interests of those who receive assistance. This Bill will enable that policy to continue on an even keel, and I commend it to the House.
7.48 pm
Mr. Phillip Whitehead: The Under-Secretary of State has masked, in his usual diffident manner, what he describes as the bare bones of the Bill. Bare bones indeed, and a "Barebone's Parliament" this has been. I hope that we shall examine this skeletal provision at some length both now and in Committee. We acknowledge the problems.
Mr. A. J. Beith: The hon. Gentleman should take into account the June election that we keep being promised.
Mr. Whitehead: It cannot come a day too soon for me. However, with the prospect of an imminent election, this complex problem becomes urgent and, with that in mind, the Opposition will not take a fractious view of it. We shall have an inquiring attitude and shall subject the Bill to patient scrutiny.
It may be necessary to tell a slightly different tale from that outlined by the Under-Secretary of State. The late Aneurin Bevan used to say, "Tell me your truth and I will tell you mine." The Government are in this mess largely because of the decisions of 1979 and 1980 which widened the gap between the fees paid by home students and overseas students who pay full-cost fees — that is a misnomer because universities do not charge the full cost but only the cost that the market will bear. The problem became acute for those who believed that they were in a marginal area and could claim home student status. Under two Secretaries of State there has been a policy for almost total drift, and I shall quote evidence of that in a moment.
A tale—it may be apocryphal, as are all the best stories about the Secretary of State—was retold by Mr. Simon Hoggart. The Secretary of State was seen leaping into a taxi in Brighton after a party conference, beating on the partition and saying to the driver, "Tell me where I am going. Tell me where I am going." The Secretary of State can correct me if that is not the true story. However, like many apocryphal stories, it goes to the heart of the matter. On this matter the Government have been saying, "Tell us where we should go." They asked that question of the courts, but the courts told them to go in a direction in which they did not wish to go, which is why this Bill has been introduced.
The root of the problem is the progressive discrimination against overseas students in the payment of fees and granting of awards that has developed during the years and that, as overseas student numbers grew, reached a crescendo in 1979–80. By using the emollient phrase, "Governments of both parties", the Under-Secretary of State sought what succour he could from the fact that there were developments in that direction under the Labour Government when the right hon. Member for Crosby (Mrs. Williams) and, later, others held the office of Secretary of State for Education and Science.
However, the imposition of full-cost fees in November 1979 marked the sharp end of that process. It was announced then that the subsidy, as it was called—outside the overseas aid fund—to all overseas students would end. We know the cost of that policy. It was described by The Times Higher Education Supplement at the time as a mixture of
"crude financial expediency and dogma".
Even after attempts to get back on course and to put right some of the damage caused, the overall policy is still, and is seen to be here and abroad, "a disaster". Those are not my words but those of Professor Randolph Quirk speaking on this matter at Cumberland Lodge last week.
The consequence has been a massive reduction in the number of overseas students in further education. Institutions have been squeezed between home fees and the volatile market that they must tap for overseas students from countries or families that can pay the going rate, whatever it may be. That policy was condemned by the
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Overseas Student Trust. The Government are now taking what comfort they can from introducing some of the recommendations of the trust, but I echo the words of my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) that the policy has not thrown much new money at the problem. It has recycled some money, and the Secretary of State said in evidence to the Select Committee recently that not much of that money, if any, came from the education budget. The money comes from other departments, as happens so often when the Department of Education and Science must acquiesce in someone else's initiatives. The policy was condemned by foreign Governments at the Melbourne Commonwealth summit by the Association of Commonwealth Universities and others, which called for the introduction in Britain of fees substantially below full cost, as defined by the Government. We all know, and I have seen in my constituency, the impact of the full-cost fees policy.
The anomalies of the policy were mentioned in an intervention by my hon. Friend the Member for Bedwelty (Mr. Kinnock). If he is believed to be a partisan witness on this matter, may I tell the House that the "Secretary of State for Southend"—the hon. Member for Southend, East (Mr. Taylor)— intervened during Question Time recently to ask why a student in Britain from French Guyana pays fees of only £400, but a student taking the same course who came from what used to be British Guyana and is now the Republic of Guyana pays more than 10 times that sum. Those injustices have made the dilemma that we face today even more acute.
I hope that I shall have the opportunity, with the leave of the House, to reply to the debate because I wish to talk further about retrospection when we have considered more carefully what the Under-Secretary of State said. Suffice it to say now that, having heard what he said, there is some retrospection in this legislation. The hon. Gentleman spoke of "casting a gloss" on interpretations of the Government's response to the Scarman judgment. However, the way in which the Bill sets out the fees policy seems to show some retrospection, which will be very unfair to students who have been here during the period between the introduction of the full-cost fees policy and the Scarman decision and any subsequent legislation.
With soaring full-cost fees, it was abundantly clear that ordinary residence had become crucial for many students and potential students some years ago. The Select Committee on Education, Science and Arts—I am glad to see that the chairman of that Committee is here—
Mr. Christopher Price: There are three members of the Select Committee here.
Mr. Whitehead: I am glad that the members of the Select Committee, who were unanimous in their recommendations on this matter, are here to draw attention to what was said by the former Secretary of State, the right hon. and learned Member for Runcorn (Mr. Carlisle), in 1980. A Department circular on ordinary residence published then quoted that great legal authority Mr. Justice Karminski, who has now been laid aside or perhaps replaced by a greater legal authority in the shape of the Secretary of State. The Karminski judgment and other matters that were drawn to the attention of local education authorities by the Department did not stand up as an all-embracing definition of "ordinary residence". However, the Under-Secretary of State for Education and Science

929
who was then responsible for such matters, said in 1980 that after 1 September 1980 students starting new courses would be classified as
"home students only if they had been ordinarily resident for three years prior to the start of their course. It is not possible to give a definitive definition of the term 'ordinarily resident' since the question of whether a person is ordinarily resident in a particular place could involve a wide variety 'of factors. In simple terms"—
he said in his layman's language—
"it can be said that a person is 'ordinarily resident' in a place if his home is there."
That definition was picked up by the Select Committee, which on several occasions warned the Secretary of State that we needed a new definition of "ordinary residence". On each occasion, and in response to the interim report, the Department told the Select Committee that further advice would be offered as necessary, taking into account cases recently determined in the courts. There was a further response on this issue at the end of the year when the Select Committee said:
"We reiterate our former recommendation with greater urgency".
However, no response came from the Department of Education and Science, which waited upon the courts.
It has taken two and half years for the courts to reach a decision. I understand that the Department has been thrown into some confusion by the Scarman ruling, which among other things, picked up a piece of onerous legislation in which the interpretations of residence were so defined that they might distinguish between categories of person of immigrant origin. That showed that the Immigration Act 1971 used "ordinary residence" to denote something very much less than the right of abode or settlement. It showed that ordinary residence could be seen to have a normal role and could be normal residence in Britain without being acceptance for settlement. Lord Scarman concluded that the applicant had to show that he had
"habitually and normally resided in the United Kingdom from choice and for a settled purpose throughout the prescribed period, apart from temporary or occasional absences … An authority is not required to determine his 'real home', whatever that means".
I take the Scarman ruling to be the ultimate response, as settled in the courts and, I hope, accepted on both sides of the House, to the definition of "ordinary residence". That is not where the home is or was, and it is not where the predominant home is. It is the place where, for the preceding period of years, the person has been. I take it that the Government accept the Scarman definition and do not intend retrospectively to change it. I accept that they have been thrown into disarray by it and further delayed, as we understand, while they have weighed the chances of getting away with retrospective legislation. The Under-Secretary of State shakes his head unconvincingly, but that is the only explanation that I can offer on the Department's behalf. Those who have been waiting at the door of the Department over the past four months — universities, colleges, CLEA, the LEAs and individuals—have been told that there is no advice for them and that consultations are still taking place.
At the end of the Session before the Easter recess the Secretary of State pronounced on the regulations that had been laid, which provided for the repayment in some
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circumstances, as I understand it, of mandatory awards to persons who had failed in their claims to local education authorities for such awards.
We now have an attempt to return not to the status quo ante but to the law as we all thought it to be. This is being done in an attempt to get away with telling these students, irrespective of when they came here, that their fees will not be paid. I understood the Under-Secretary of State to say that they came to Britain not expecting their fees to be paid. I remind him that many of them came here thinking that they would not have to pay the sort of fees that were subsequently levied. I shall be interested to hear what he intends to say to the students—there are quite a number of them—who arrived here well before the switch to full-cost fees, who went through the three years of residence and who have since been in courses of higher education, for which they are now, I assume, to receive back their awards, or to receive for the first time a mandatory award to cover the years under the statutory instrument that is to be debated tomorrow. As I understand it, they are not to receive anything by way of fees. Is that the position?
Mr. Waldegrave: It will depend on the specific case and the relationship established between the college and the individual in a particular case. It must be for the college and the individual concerned to examine all the circumstances of the case. But fees are not in the same position as awards, as I am sure the hon. Gentleman is aware. If a student is given a mandatory award for part of a course, he is given it for the whole of the course. The position over fees is not the same.
Mr. Whitehead: I cannot say that I have been greatly enlightened by that answer. It assumes an area of discretion for the institutions concerned which it seems that they will not have when the Bill is enacted. The Bill seeks to confer great powers upon the Secretary of State and the Department over an area of local government. I do not believe that there is the discretion to which the hon. Gentleman has referred.
Mr. Waldegrave: I did not mean to suggest that the interpretation of the law will be a matter for the discretion of the colleges, but facts of particular cases may be. Awards and fees are different. Under statute, a mandatory award for any part of a course is an award for the whole of the course.
Mr. Whitehead: This is an issue to which we shall have to return. The dilemma in which many overseas students have found themselves over the past few months will be made worse by what they will read in the Official Report tomorrow morning. I hope that we can clear up the matter before the debate ends.
Mr. Hooley: Another category of students has had its expectations dashed. I refer to the students who were here for three years up to 1983–84, who certainly expected to have to pay the full fees until they heard the Scarman judgment. Having heard that judgment, they expected that it would be honoured, but it now seems that that will not happen.
Mr. Whitehead: I entirely agree. If we are to consider the impact of the Bill case by case, we shall have to examine the draft regulations as well as the Bill. The Bill

931
is bringing the fee arrangements into line with the mandatory award arrangements, except that both sets of arrangements will be different.
What will be the result of this enabling Bill? It is not possible now to have a satisfactory debate on this very short measure, which is, in effect, a two-clause Bill. We must know something about the regulations that it foreshadows. This is a clear example of the need for real scrutiny to take place in Committee with the draft statutory instrument before the Committee, irrespective of whether the Bill is considered by a Special Standing Committee that has the opportunity to hear witnesses. The effectiveness of our consideration of the Bill in Committee will depend on our getting the draft regulations and being able to examine them as thoroughly as if they were schedules to the Bill.
If there has been no debate within the Department on retrospection over the past four and a half months, I hope that the Under-Secretary of State will tell us when he replies what the Department was discussing. Why was there no consultation? There has been hardly any consultation since the Bill was published a few days ago. I appreciate that there is the need for haste because of delays that have not been of the making of the House. Responsibility for the delays lies with the Department. We know that CLEA approached the Department in January and asked for advice. It drew attention to many of the problems to which my hon. Friend the Member for Heeley has referred. It stressed that students in many institutions would be placed in an impossible position because they would not know, and their institutions would not know, what sort of fees they would be charged and what awards they might receive. In other words, they would not know the conditions of their continued periods of study. Those representations were being made three or four months ago and there has been no consultation.
Overseas students who believed that they would benefit from the Scarman judgment were led along in that belief by the way in which the press, without sensationalising the issue, covered Lord Scarman's obiter. Newspaper reports were akin to "Law Lords' £20,000 Christmas gift for students." Anyone who read those reports at the end of last year had to sweat for five months on that form of coverage with nothing from the Department but an embarrassed silence. Local authorities consider, with some reason, that the regulations and the Bill discriminate against them. Universities and direct grant institutions will be recompensed for their loss of income but no such undertaking has been given to the local authorities. In the course of the debate, I trust that those undertakings will be given to the local authorities. Once again, local authorities must reflect that this bare bones Bill removes further powers from them, which are assumed by central Government under clause 1(3)(b) and (c).
As a result of the Under-Secretary of State's asides and interventions, I am interested to know what powers of compulsion the Bill is intended to provide over local education authorities or educational institutions. What exceptions do the Government have in mind in the Bill? There is a specific reference to exceptions. Will the exceptions further widen the definition of non-home students either now or in the future because the Government are alarmed that there are too many students, or are they making future provision for further categories of exemption from full cost fees?
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What will be the position of recently arrived bona fide immigrants under the Bill and regulations? Currently, many immigrants who have waited for five or 10 years, or sometimes even longer, in the quota queue for settlement in Britain, then have to wait for financial support for a further three year period. The Government have the opportunity to be generous. Under the new definition of ordinary residence, such people will be in a different category. They will not be people who are in Britain purely or largely—the Bill is ambiguous on this matter—for the purposes of study. They will be here to settle. If that is the case, the Government could be generous. The total immigration quota each year is no more than 23,000, of which a tiny category would present themselves for education. Those are people whom we should and could help, if the Government take a generous interpretation of the Scarrnan judgment, by saying: "If Scarman is to be used properly, it should be used to help those most in need and not as a means of giving an unsolicited and unexpected gift to rich people who arrive here — who went through public school — with the intention later of qualifying for home student status I accept the aside made by the Under-Secretary on that subject.
A blanket payment would be made to people who have attended some form of education in this country prior to higher education, which would not necessarily be desirable. Immigrants who come to this country for settlement are not in that category and suffer an unconscionable delay before consideration for home student status.
Assurances were sought for several other special categories in the House on 30 March, and have subsequently been sought in representations to the Department. These are people currently engaged in full-time study, who arrived in Britain as political refugees or who have not sought political asylum but who have for one reason or another special permission from the Government because of the political position in their own countries. If the term of residence of those people goes to three years or beyond, will they be considered as home students or will that period of residence, which was in a sense enforced, be counted as education, wholly or in part and therefore exclude them from home student fees?
What is the position of returning residents who have been out of the United Kingdom for a long time who find that they may be in difficulties because of new interpretations the law? What will be the position of students transferring from one course to another, when they took up a course between 1979 and March 1983, who now receive a mandatory award under the regulations—if they claim it — but are moving on to a period of further study? Will they continue to be given home student status or will they not have that status for any further period of study upon which they embark after 30 March?
The Opposition wish to be informed whether the research councils will be restricted in their powers to make discretionary awards under clause 23. Traditionally they never have been, although they have kept in line with other award-making bodies. There is a power under the Bill further to restrict such councils to a degree which has not previously happened.
The Under-Secretary has talked about the eligibility of students with a specified connection to the United Kingdom, and what can be described in "convenient shorthand" as overseas students. That is not good enough.

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One man's convenient shorthand is another man's obfuscation. The problem with a definition of overseas students is that it is so diaphanous that it is extremely hard to see whether there is—it is hoped the legislation will give it— a correct and all-embracing definition of an overseas student. I wish the Under-Secretary, when he replies, correctly to answer the question — unlike the Prime Minister yesterday. What is an overseas student? The Opposition wish to hear that definition given to the House now and then build upon it in Committee.
The post-Scarman period could have been an opportunity for generosity by the Department of Education and Science, to diminish the heavy charges levied on overseas students. Whatever its precise interpretation of the Scarman judgment, it could then diminish those anomalies and injustices that led to the pressure, which in turn went to the courts and resulted in the Scarman judgment. There could have been an opportunity to build on the positive aspects of the Scarman judgment and to get a workable definition of "overseas students" which has not yet come from the Government. It could still be an opportunity to extend to immigrants — in terms of the new definition of residence which the authorities are beginning to enforce—the opportunity for home student status and to widen the category that is exempt from full-cost fees and follow the comparatively modest FCO initiative in these matters.
When the Secretary of State and his officials are faced with the possibility of taking initiatives, they tend, first of all, to count the cost and then count the ideological cost. When those two are added together, all too often a niggardly attitude develops. That attitude has occurred in all areas where the Department of Education and Science ought to relate to other Government Departments. Little response has come from the DES to repair some of the damage to overseas students which the Foreign and Commonwealth Office had to do. We have seen areas of activity for young people in this country taken out of the hands of the DES and the initiatives, such as they were, coming from the Department of Employment—
Mr. Kinnock: And industry.
Mr. Whitehead: Will the Secretary of State take the initiative and show some generosity? When he had that opportunity in the past he usually turned it down. If I were giving a teacher's progress report on the Secretary of State I think I would say that he has pretty much messed things up. In the words of the old report by the craft lecturer, "Give him the job and he will finish the tools."
That has been one of the problems of the Secretary of State throughout his period in office. I trust that further consideration of this important matter will not merely be left to the House but will include a detailed Committee stage. I hope that there will be a fresh approach and more generous thinking following a general election.
8.19 pm
Sir William van Straubenzee: I feel sure that I speak for the whole House when I thank the hon. Member for Derby, North (Mr. Whitehead) for quite one of the nicest jokes that I have heard for a very long time. Even if the rest of his speech is not remembered, that will be. Perhaps I could give an end of term report on his speech. I mean it in the nicest possible way when I say that
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it was a very skilful contribution — as the hon. Gentleman's contributions usually are—and was made by a parliamentary cat walking on eggshells.
Unlike most Opposition spokesmen, the hon. Gentleman did not at any point outline the Opposition's approach to the Bill. On such occasions, the Opposition spokesman invariably says, at least towards the end of his speech, that the Opposition will vote against, or in favour of, the Bill. However, I listened to the hon. Gentleman's speech carefully. We went through the pluses and the minuses, but there was no intimation of the Opposition's attitude to the Bill. That is rather curious.
Mr. Kinnock rose—
Sir William van Straubenzee: Does the hon. Gentleman want to come clucking to the rescue of his chick?
Mr. Kinnock: I distinctly recall that the hon. Member for Wokingham (Sir W. van Straubenzee) was in the Chamber at the beginning of the speech made by my hon. Friend the Member for Derby, North (Mr. Whitehead). I am sure that he enjoyed it as much as I did. I did not time it precisely, but my hon. Friend, between the second and third minutes of his speech, told the House precisely what the Opposition intended to do about the Bill. We shall not vote against it tonight, because we recognise that there are various considerations, but we shall give it careful consideration in Committee. If that is not a direct and specific approach, I do not know what is.
Sir William van Straubenzee: In that case, we shall have to look at Hansard carefully. I do not know about my right hon. and hon. Friends, but I did not hear that sentiment being expressly stated. However, I am sure that we have been greatly helped by the remarks of the hon. Member for Bedwellty (Mr. Kinnock).
I had also expected to hear a fairly clear statement of policy on the principal issue. If elected, would a future Labour Government restore home student fees to "overseas students", as we understand that phrase? It is all very well to talk of lack of generosity. However, it would be not only helpful but appropriate to have a clear statement of the Opposition's policy. The difficulty did not begin in 1979. In 1967, I spoke from the same Dispatch Box as the hon. Member for Derby, North has spoken from tonight. That was when the difficulties began. The then Labour Government distinguished between home and overseas students. As hon. Members know, it is very rare that I get anything right, but for once I think that I got things right. I pointed out that that was a key moment. The measure was piloted through the House by one of the nicest Members of Parliament to have served in the House, the former right hon. Member for Caernarvon, Mr. Goronwy Roberts as he then was. He became increasingly uncomfortable about it, because he recognised what he was doing.
We must firmly nail the idea that this affair started in 1979. The record shows that, doubtless under pressure from successive Treasuries, successive Governments have increased the fees charged to overseas students. I accept that it happened to be a Tory Government that finally charged fullcost fees, but I assert—although I can never prove it—that if the Tory Government had not done it, a Labour Government would have done it.
Mr. Christopher Price: You will remember, Mr. Deputy Speaker, as well as I do, the speech made by the

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hon. Member for Wokingham (Sir W. van Straubenzee) from the Opposition Benches. At the time I was sitting on the PPS Bench, behind the late Mr. Crosland and Lord Goronwy-Roberts. I am sure that the hon. Gentleman will accept that he was even less specific about the Conservative party's policy than he would have us believe my hon. Friend the Member for Derby, North (Mr. Whitehead) has been about the Labour party's policy.
Sir William van Straubenzee: There was a substantial reason for that. I was only the minor, junior spokesman. That point was dealt with by those who led at the time. I am afraid that the name of the hon. Member involved has slipped my memory temporarily. The record shows that that point was rightly dealt with by the Opposition's principal spokesman at the time.
The present Opposition have no jurisdiction in this matter. In a society such as ours, the judicial decisions of the other place are exceedingly important. They must be observed. In its judicial capacity, the other place has ruled.
Mr. Hooley: I have much sympathy with the hon. Gentleman's earlier point, because, for the first time in my parliamentary life, I voted against a three-line Whip on that issue in 1967. The decision in 1967 was a serious error of judgment. However, the hon. Gentleman cannot claim that the Labour Government's actions bore any resemblance to the subsequent actions of the Conservative party. If he does, he will have to explain why the worldwide fury that greeted the actions of this Government was not in any way replicated between 1967 and 1979.
Sir William van Straubenzee: The hon. Gentleman has surely forgotten something. I believe that the largest percentage increase ever made in fees for overseas students was imposed by a Labour Government. I should like to look up the figures, but I think that the hon. Gentleman will find that to be so. Of course, there were violent protests every time Governments took such action. The truth is that both the major parties are in this together. The country having embarked upon that course, there was a good reason to restructure the way in which we finance our support for overseas students. I was keen to do that more than 10 years ago. It is a strength, not a weakness, that a substantial amount of the money comes from other sources. We have wisely been reminded of the Government's response to the important report from the Overseas Students Trust, the £46 million available over a period and of the 5,000 or 6,000 additional students thereby brought to Britain. However, the point is that they have not been brought here indiscriminately. It should be done, not indiscriminately, regardless of country and background and the rest, but in a more fair and discerning way than it was done before.
Mr. Kinnock: Is not the hon. Gentleman unhappy with his general attitude, which we respect, of agreement with the criteria announced by the Secretary of State for Foreign and Commonwealth Affairs, that the estimated 5,000 or 6,000 students should serve British interests in coming to Britain for their higher education?
Sir William van Straubenzee: It is not a bad thing when operating an overseas aid programme to have due and proper consideration for British interests. British interests are world-wide, which gives a wide definition to "interests". We should not wish to narrowly interpret it, as the French do, as the House knows.
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I am sure that my experience is not exclusive to me. We are representatives and not delegates, and have to argue the case with those who send us here—properly so in a democracy. The cause of the overseas student is a minority cause among the electorate, which has to be argued, explained and fought for. If those who send us here think that the money that they provide is used indiscriminately, regardless of British interests, our case for securing the necessary finance is weakened. In a democracy, securing finance is a large part of what we do.
I profoundly believe, as the House knows, that we have nothing short of a moral duty to share some of our educational wealth with students from countries much less fortunate than ourselves. However, I have always been conscious of a deep duty to the British taxpayer, who provides the money and expects us to spend it on a rational and not an indiscriminate basis.
Mr. Martin Flannery: I share the hon. Gentleman's dilemma in not knowing what my colleagues will do. My hon. Friend the Member for Derby, North (Mr. Whitehead) did not make our position clear. He said that we would not vote against the Bill—I wish that we were to do so — and that we should pursue the Bill in a spirit of inquiry. However, I cannot understand the hon. Gentleman's point about arguing for giving this money to overseas students. His implication is that hitherto the case was not accepted by the British people and we now therefore have to cut the money. Will he kindly prove to us that the British people were in an uproar against foreign students and that as a result of that we have had to cut the money we give them? Is it not the case that, as there are cuts across the board being enforced by the Cabinet and the Prime Minister, we are cutting these grants and losing much sympathy throughout the world because we seem to be victimising the poorest overseas students, whose culture was helping us in many ways?
Sir William van Straubenzee: I did not expect to find myself grateful for the powerful support of the hon. Gentleman, but I am grateful for his support for my initial contention. I am sorry that he has sent a shot across the bows of his Front Bench.
As to the hon. Gentleman's second point, I am making a simple assertion, which has applied over a number of years and has nothing to do with what may or may not have happened in 1979. The case for making places available in our institutions of education, particularly those of higher education, for overseas students is one that has constantly been fought for, pleaded and discussed. It is not one—I cannot prove this but I believe it—of which the vast majority of our constituents warmly approve. However, our constituents are susceptible to leadership, and leadership is a requirement of being a Member of Parliament. Therefore, these things must be done rationally and not indiscriminately.
Mr. Whitehead: Why does the hon. Gentleman have such a curiously distant view of the electorate? What would he say to those of my constituents who find their jobs and livelihood in the railway workshops in Derby imperilled because orders from Malaysia have been cancelled to show that country's disapproval of the Government's full cost fees policy? Does he not see that many British people make both the moral and practical

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judgment on this issue which would support those hon. Members who have throughout condemned the full cost fees policy?
Sir William van Straubenzee: I should point at once to the enormously improved relationship between Britain and Malaysia and to the substantial number of students who continue to come here to places such as UWIST in Cardiff where the number of Malaysian students continued to increase even during that period. I should go on to point to the large number of students at sub-degree level. We often overlook the massive contribution that is made, particularly by the further education sector, in assisting students at sub-degree level.
Mr. Whitehead: It has been cut in half.
Sir William van Straubenzee: It is still massive, and, incidentally, the private sector plays a major role here. I should also point to the foreign policy and commercial interests that follow.
I took the hon. Gentleman's intervention to mean that he believes that we should go back to pre-1967 so that all foreign students are put on an equal basis.
Mr. Whitehead: No.
Sir William van Straubenzee: I should be grateful if the hon. Gentleman would be much more explicit than he has been in saying precisely what he would like to do in replying to the debate.
I want finally to raise a technical point that has always been a hobby horse of mine. It is simply to say how often successive Governments run into problems because of difficulties with the law. One can think, particularly in the Department of Education and Science, of problems that confronted the last Labour Government and which have certainly also dogged this Government. I have often felt that government is much too narrow in the sources from which it takes its legal advice. Successive Governments would have avoided considerable difficulties if it had been part of Government practice to take advice from the wide number of people who are available on a confidential basis to the ordinary person, and certainly to the Government, rather than confine themselves only to those who are in Government service. I make no criticism of the individuals concerned— to do so would be unfair and unreasonable. I make the point as one of principle. One day I hope that we shall see Governments, preferably of all colours, shopping around for legal advice.
Having said that, the Government are right — although I understand the point about the grey area which can be explored in Committee— to accept the judgment of another place in its judicial capacity without retrospection but to say what the ordinary man believed the law to be and that it was right and proper to make the law conform with that understanding. That is why I shall vote for the Bill tonight.
8.39 pm
Mr. A. J. Beith: I begin with a complaint about the way in which the Government have brought the Bill before us. It is a short Bill, I readily admit, but it is complex in its implications and effects on many people in whom many organisations take a proper and careful interest. The Bill has not had the usual full week and two weekends' consideration. It was printed last
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Thursday and it has been brought before the House today. That is not the proper way to proceed. The long-standing convention in the House is that a Bill is available for two weekends and the intervening week before Second Reading. Only strong overriding emergency circumstances should change that.
The Government may say that the measure is urgent because local authorities and institutions need to know what is to happen. The way to solve that problem is not to deal with the Bill in haste, but to have presented it earlier. The result may be a longer Committee stage, because insufficient consultation has taken place before Second Reading, but the Government will not have saved those involved any time at all. I criticise strongly the breach of the two-weekend practice. It is a breach of a valuable precedent, which the House should guard jealously.
The Government's policy on overseas students involves a history of mistakes and decisions which have been very damaging to our country's interests. I need look no further for a simple and eloquent testimony to that than the first report from the Industry and Trade Committee which sums up the situation well. The Committee members went to the far east to consider trade issues, but they said:
"The single issue most frequently raised, both in South East Asia and in Hong Kong, was not a normal trade matter at all, but one which we are in no doubt has trade implications far beyond normal tariff or non-tariff barriers: it was the issue of the UK's changed policy on the fees of overseas students. The London Chamber of Commerce and Industry and many others … stressed the long-term trade benefits to the UK of training foreign students in UK educational establishments … They argued forcibly that the effect of the present Government's increase in students' fees 'whatever the rights or wrongs of the argument may be … [had] been the loss of considerable amounts of business and may well have created a political climate, notably in Malaysia, to our disadvantage over the years ahead, far outweighing the money saved'."
Both parties were represented on that Committee and Government Members were in the majority. The Committee also said that the policy was "inept". It said that
"it was contrary to the UK's best interests."
I agree with the aside by the hon. Member for Wokingham (Sir W. van Straubenzee) that the concept of British interests, as most of us hope that we understand it, is wide enough to embrace objectives for overseas students policy which go far beyond what the Government have done and is different from that which is implicit in the Government's decision to charge fees for overseas students.
The damage is considerable and I fear that some of it is irreversible. That is because of the general psychological impact of a decision which is so inimical to the poor in the Commonwealth. They feel kicked in the teeth. When that happens, relations are not easily restored if the person who delivers the kick in the teeth returns some months later and says that he is prepared, under certain conditions, to contribute to the cost of a set of new dentures to replace the gap that he has created. The effects of such a cataclysmic decision cannot be easily redressed even by a near-total reversal of policy.
The Government's statement and the commitments involved are not enough to restore the good feeling that existed between Britain and so many of our Commonwealth partners.
A secondary type of damage is created by the new patterns which students, their families and Governments in the Commonwealth and Third world have had to

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establish in the interim so that students had somewhere to go while they waited to see whether the British Government would change their policy. Some students have gone to other countries and established new patterns of higher education with other providers, including some in eastern Europe. It will be difficult to repair that damage. The precise implications of the Bill may be limited, but we must view it against that background.
Amendments are necessary to pave the way to an acceptable overseas students policy. The Bill's main weakness is its vagueness and the provisions that it leaves out. Many issues are left to regulations. In practice that means that statutory instruments subject to the negative procedure are to be used. It means that the Government will come before the House with a set of regulations which define much more clearly the real issues about which we are all concerned. Hon. Members will not be able to amend those regulations. If they find that one category is omitted, they will not be able to have that category included. If they find that a definition is faulty, they will not be able to have it modified. More than that, they may not be able to secure a debate on the issue on the Floor of the House and they certainly will not be able to secure a Division.
Mr. Waldegrave: Does the hon. Gentleman agree that, under the previous Government, supported for a time by the Liberal party, even that capacity was not available to the House? I do not remember the Liberal party raising the issue of the exemptions given under the Race Relations Act 1976, which is how the matter has been dealt with before, which gave the House no status whatsoever. I do not remember that being said.
Mr. Beith: The Minister must know that, during my time in the House, I have been a constant critic of the negative procedure which prevents us from doing anything to regulations and orders. The Minister is right to say that features in the Bill, because they differ from the Race Relations Act, will bring certain matters before the House which would not have been brought before it, but bringing matters before the House in this way is little more than a nominal procedure. I regard the negative procedure as affording the House no more than an opportunity to criticise Ministers, very often only in Committee and not on the Floor of the House.
My main criticism of the negative procedure is not that many of these debates are taken in Committee. My criticism is that, at the end of the day, there is no means by which Members can secure a Division. Let us consider the position of an hon. Member who is critical of some features of regulations. His first problem is that, even if he could vote against them, he might not wish to vote against the good features of the regulations in order to deal with one bad point. The regulations might contain five categories of students to whom he thinks special provision should be extended but omit one category. If a Division was available to him, he would be able only to vote against all five for the sake of the one, because there is no way of amending the regulations.
Under the negative procedure, if the matter goes into Committee, there is no Division at all. The only Division that can take place in Committee is on the proposal that the Committee has considered the statutory instrument. As hon. Members know, even if the Division goes against the Government, it is still faithfully reported to the House that
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the statutory instrument has been considered by the Committee. There is no Di vision on the Floor of the House and therefore there is no means of challenge. It is therefore an inadequate procedure by which to deal with an issue as fundamental to the individual as whether he will be able to get a course of higher education, particularly when the issue involved is the definition of categories of students. That is why, when an opportunity presents itself, I will want to change that part of the Bill so that the statutory instruments are subject to an affirmative procedure.
I am also led to argue that much more could have been included in the Bill itself, so that we could assess here and now whether the range is adequate, and amendments could be made. In many situations the Government accept and welcome redefinitions of categories which have proved during discussion in the House not to have been adequately worked out at the beginning. We cannot do that with the procedures offered to us. Unless, as the hon. Member for Derby, North (Mr. Whitehead) suggested, we have the regulations with us in Committee and can go through them in immense detail, we will have no chance effectively to influence those crucial decisions.
Clause 1 refers to a student's connection with the United Kingdom. A number of groups could make a strong claim for having the nature of their connection spelt out in the Bill rather than afterwards. One such group, about which the Government disagree with Opposition Members, is students from British dependent territories. As a firm supporter of British membership of the European Community, I still find it indefensible that a student from what is in effect a French dependent territory is charged a fraction of the cost of a student from a comparable British dependent territory. There is also a comparison between French overseas territories and British Commonwealth countries, but the comparison between British dependent territories and comparable parts of the French overseas departments is even more striking. The Government must think again about the small dependent territories, which still have a relatively close relationship with this country and in most of which there is no alternative provision for higher education.
Mr. Christopher Price: The Falkland Islands.
Mr. Beith: The Chairman of the Select Committee mentions the Falkland Islands. That is an obvious case. It is noticeable that the Government gave citizenship to the Falkland islanders only in the aftermath of the fight for the very freedom of those inhabitants.
There are refugees under the United Nations convention, those granted asylum and those awaiting, a decision on asylum, all of whom we should consider more carefully. There are people granted exceptional leave to remain in the United Kingdom. In recent years, Poles, Afghans, Ugandans and Iranians have for special reasons been granted rights to remain in the United Kingdom. Their lives have been disrupted, but in almost all cases they do not have the means to proceed through higher education at high cost, even though they have a good case for doing so.
There are also children of diplomats, returning residents, children of expatriate Britons in the public service, the services and commercial and other work overseas, whose connection with the United Kingdom is clear, although it is not necessarily embraced in the Bill. Once again, that should be spelt out more clearly.

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There are those who have proved their connection with the United Kingdom by virtue of being permanently resident for non-education purposes for three years. There are recently arrived immigrants— for example, from the Indian subcontinent. There is a special problem in that regard which the Government must consider. The quota queue on the Indian subcontinent is extremely long. If someone has waited seven years to come here, why must he wait a further three years to qualify for admission to higher education when it will be clear by that time that he wishes to take up permanent residence in the United Kingdom? It is an unreasonable imposition if the effective qualifying period is as long as that.
Clause 1(2) allows for
"different provision for different cases or purposes".
That is an intriguing phrase which could cover a multitude of Government sins or herald a sensible approach to overseas student fees. I agree with those hon. Members who have argued that, if limited resources are available, we may have to be discriminatory in the way that they are allocated to overseas students so that we assist most of all poor students from poor countries, students whose links with the United Kingdom it is particularly desirable to foster, and students from countries towards whose development Britain feels a special responsibility. There are a number of categories for which we should do more, and we should use the clause for that purpose.
So far the evidence is not encouraging, and we need a more positive commitment from the Government. They still seem to be taking half a step back from the disastrous position that they adopted over their earlier decision on full-cost fees.
Clause 1(3) and (4) have a different impact in that they relate to charges made to overseas students for things such as halls of residence. Those provisions appear to buttress the iniquitous manner in which overseas students are treated in some halls of residence in some public sector institutions of higher education. A recent National Union of Students survey shows that many differential charges are imposed on overseas students for their residence costs in public sector institutions, ranging from 17 per cent. at Hatfield polytechnic to an astonishing 181 per cent. at Portsmouth polytechnic. I suppose that that is an outcome of the impossible budget-balancing exercise in which many polytechnics hve become involved in an attempt to maintain their residential facilities. These provisions will add another tier of discrimination which in some cases is particularly heavy.
We are talking about an absolute level of charges that is often very high. There is no agreed formula for calculating the charges, which include elements for utilities, porterage and maintenance. They vary greatly between institutions and are another element in cost discrimination against overseas students in which the Government should take a more careful interest. I am worried that these provisions will simply buttress that practice.
Clause 2 has a different effect. It relates to discretionary awards, and little is likely to be said about that provision because I know of few local authorities which are granting discretionary awards to overseas students, or indeed to anybody else; discretionary awards are scarcely available to home students, including for a wide range of important courses, so the effect of clause 2 will be negligible. It is
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probably legitimising the present position in which most local authorities say, with even more speed and expedition to overseas students than they say to home students, "There is no money in the kitty. There are no discretionary grants available." But the broad provisions of the clause are still subject to some of the same criticisms which I applied to clause 1.
I agree with the Under-Secretary that not to pass the Bill would be to ensure that the limited additional assistance involved— he spoke of £ 30 million— might go to a group who include many of the les needy and less deserving overseas students— those, for example, who have been able to afford to establish a period of residence here by attending fee-paying educational institutions, whether public schools or private sector colleges of various kinds. I make no criticism of them for doing that. Indeed, it was a sensible decision for many of them to take, coming, as many of them do, from wealthier families in the wealthier countries from which students come here.
Bearing that in mind, the assistance that we have available needs to be channelled to other groups than some of them, and therefore I do not dissent from the need to introduce legislation dealing with these issues. But I criticise some of the detail of it and I share the criticism of what we may call the element of retrospection— or at least the impact of the Bill— on those who have already entered on courses with an assumption — which has certainly existed since Scarman— that the fees would not be grotesquely high and, in many cases, an assumption, dating from before the Government's change of policy, that they could complete higher education in this country at reasonable cost.
Both of those assumptions would be completely knocked away if the Government were to apply, as they seem to intend to do, the provisions of the Bill to those already entered on courses. The Bill should apply to those beginning courses in the forthcoming academic year and not to those who have already entered on them. I would support attempts during the proceedings on the Bill to confine it in that way.
Some aspects of the Bill could be used to make more intelligible the policy of this country towards overseas students. It is a policy of tremendous importance which the public understand better than the Government give them credit for. Many people have reason to know how much former students who studied here have contributed to the long-term good of Britain and the countries to which they returned. There is widespread understanding that it is valuable for British students to be educated alongside those from other countries, and there is far wider public understanding of the value of overseas students, particularly from poorer countries, in our institutions than Ministers recognise.
Further changes of policy to get back to a more sensible approach, one which would do Britain long-term good, would be more widely supported than the Government recognise. It is an approach which my hon. Friends and I take and we shall seek to use the Bill to further that objective.
8.59 pm
Mr. Tim Brinton: Back in 1980 there were inevitable signs that this debate would be taking place about now. I cite as my evidence for saying that the interim report of the Select Committee on Education, which was laid before the House on 16 April 1980. That

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looked into the funding and organisation of courses, in particular the question of an interim report on overseas students' fees being made.
It was clear in that report, to which I subscribed, in paragraph 45 and ensuing footnotes, that the definition of "ordinary residence" was in a state of considerable muddle. Our report said:
"In approving the new arrangements for overseas students in January 1980 in pursuance of Section 41(2) of the Race Relations Act 1976 the Secretary of State amended the definition of an overseas student in such a way that some applicants who would have qualified for 'home student' status for fee purposes will no longer do so. The new definition for the purpose of these arrangements— and hence for the policy of charging full-cost fees — is ' … any person who has not been ordinarily resident in the United Kingdom, the Channel Islands or the Isle of Man throughout the period of three years immediately preceding the date that his course is, or was, due to begin'."
That was one shot at it. The footnote contains another with which I shall not detain the House but which makes life more complicated.
The next paragraph of the report states:
"Asked if he thought that further guidance was likely to be given to institutions on the meaning of 'ordinary residence', Mr. Thompson of the DES said 'I do not think so. This is a matter which has to be settled ultimately through the courts and that administrative advice is not in point."
There was a clear forecast that at some stage, thanks to the Government's policy on overseas students, which I fully support, the matter had to be placed before the courts. That is why, after the Scarman decision has been made and deliberated upon, we are considering the new Bill.
The problem of overseas students coincides with many other debates in the House concerning the problem of subsidy. I personally believe that while Governments must support those who cannot support themselves in education or in any other matter, subsidy now distorts and falsifies. This is a prime example. The hard-pressed taxpayers and ratepayers believe that the money that they have contributed to the education of people in this country should be used for them. However, a portion is spent at the Department of Education and Science on overseas students. The diversion made by the Government for some of that money to come out of the budget for the Foreign and Commonwealth Office makes sense. I wish that the Department of Education and Science had nothing more to do with the financing of overseas students. That is a different responsibility in the context of government. To avoid distortion, it is correct to say that the full fee is the normal fee. Then one can create scholarships and bursaries for those who need them and need to come to this country. Those are the steps that the Government seem to be taking. They are going in the right direction.
My hon. Friend the Member for Wokingham (Sir W. van Straubenzee) said that we are not the only Government who have raised overseas student fees. In the report from which I quoted there is a table that shows that, during the period of office of the Labour Government, overseas students in the year from 1976–77 to 1977–78 almost doubled. Postgraduate fees rose from £595 to £ 1,080 and undergraduate fees rose from £ 595 to £ 825. That is an example of how in this matter the Government are not necessarily the baddies and the Opposition the goodies who wish to lavish money on overseas students.
I believe that at heart, as my hon. Friend the Member for Wokingham said, the people have to be persuaded that their money is being spent wisely. It is not, as the hon. Member for Berwick-upon-Tweed (Mr. Beith) suggested,
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something that they fully understand. I fully support our making a contribution to world education and gaining in our trade by fostering students in the universities and colleges in this country, but we should do so sensibly and economically because, at the end of the day, we are aiming at spending prudently the great contributions by our taxpayers and ratepayers. I look forward to supporting the passage of the Bill.
9.4 pm
Mr. Christopher Price: I must begin with a complaint about the pace at which the Bill has been brought in. The hon. Member for Berwick-upon-Tweed (Mr. Beith) has also complained, as I did at business question time last Thursday. It is a House point, but it is a strong convention, which few Governments ever breach, that except in a real emergency which happens one day and requires legislation within the week. Opposition and Back Bench Members who wish to comment on a Bill should have a full week and two weekends between publication and Second Reading.
On this occasion, as I shall now show, there was no such emergency. When I complained at business question time I received such a gracious apology from the Leader of the House— one might almost call it a grovelling apology — that it is hardly fair to complain further. Nevertheless, the fact that the Government dithered for nearly three years and then rushed in a Bill against all the conventions is yet one more example of the procrastination and incompetence of their approach to the question of overseas student fees.
I fully accept that the problems of overseas student fees did not begin in 1979–80. They began long before that. Indeed, as it is now ancient: history, perhaps I can tell the story of how as Parliamentary Private Secretary to the late Mr. Crosland I was given an inspired written question to put down two days before Christmas eve 1966 [HoN. MEMBERS: "Shocking!"]. That never happens now, of course. That ensured that the argument took place in 1967. My hon. Friend the Member for Derby, North (Mr. Whitehead) is right. There was indeed an argument. Had I not been bound by the Trappist vows of a Parliamentary Private Secretary I might have said something quite different. Certainly there was argument. Labour Members voted against their own Government and a number of Conservative Members refused to vote with their party because they felt that it was hypocritical to oppose a measure that they knew perfectly well a Conservative Government would have introduced equally rapidly. A comparatively small differential was created at that time, the pressure coming from the Treasury rather than from the Department of Education and Science, and I now regret that it happened.
I also agree that the present Government were not the first to rely on the ludicrous legal judgment of Stransky — Stransky. It was first relied upon by the right hon. Member for Crosby (Mrs. Williams) when she was Secretary of State— no doubt on the advice of the legal luminaries who advise the Department of Education and Science and whose track record has not been the best of the various Departments over the years. One recalls the Enfield grammar school case, in which Patrick Gordon Walker was not particularly well advised as to what he should do. There was then the Tameside case which produced a House of Lords judgment and now the Stransky— Stransky case has been litigated as far as the Seaman

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judgment in the House of Lords. For some extraordinary reason which I do not understand, the Department of Education and Science seems to be somewhat accident prone in legal matters.
The Secretary of State for Education and Science (Sir Keith Joseph): The hon. Gentleman is perfectly entitled to criticise Ministers to his heart's content. It is Ministers who take decisions. They receive advice, but they must decide what advice to accept.
Mr. Price: I shall stick to the conventions. The problem that has run throughout this issue has been the attempt to use a definition— "ordinary residence"— for a purpose for which it was never intended. The paradox is that, in tax law, the Inland Revenue has tried for the past 50 years to make the largest possible number of people that it can lay its hands on ordinarily resident in Britain to maximise the tax intake. Suddenly, the Department of Education and Science tries to make as few people as possible ordinarily resident, also so that the Exchequer can benefit.
The use of the concept of ordinary residence for those completely opposite purposes was bound at some time to come up against its present problem. I am pleased that we had someone of the legal status of Lord Scarman to reverse the weasel judgments in the lower courts under which both Lord Denning and the lower courts were willing to go along with the Karminski judgment of the "real home". They were going along with the administrative convenience of the Government rather than with the real meaning of the words in the English language.
I am glad that Lord Scarman said that one could be ordinarily resident because one likes the flowers and that the reason for one's being ordinarily resident has nothing to do with the stamp on one's passport. At last we have got some clarity in the issue.
I am about to criticise Ministers, but not the present Secretary of State just yet. I am amazed at the mistake which the right hon. and learned Member for Runcorn (Mr. Carlisle) made. He has a great deal of legal experience but, by relying on the Karminski judgment in 1980 to go over to full cost fees, he made a sea change. There can be no doubt that that was a ministerial mistake.
The hon. Member for Gravesend (Mr. Brinton) quoted from the Select Committee report. I shall mention a civil servant, partly because he is retired. He is called Mr. Alan Thompson. Most civil servants in the Department of Education and Science seem to be called Thompson these days. He gave evidence to the Select Committee. When asked whether he thought institutions needed any further guidance about the meaning of "ordinary residence", he said:
"I do not think so. This is a matter which has to be settled ultimately through the courts and that administrative advice is not in point."
Time and again we have told Ministers, both in the Select Committee report and elsewhere, that saying that something must be settled in the courts necessarily means that there will be a two or three-year delay in the ordinary course of events. It is impossible to get away from that, as it is the extent of legal delay. By using the courts instead of legislation to solve this problem, for three years overseas students simply did not know where they stood. It is all very well for the Minister to say that those students
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came here expecting to pay overseas student fees. They came here without a clue about what was happening because the Government could not make up their mind and said that the courts should settle the matter. They did not know how much they had to pay until Lord Scarman settled it. Many of them visited my surgeries, and I told them to wait for a decision from the Lords, who are much more intelligent than the Appeal Court judges, and that is was most unfair.
Perhaps I may give an explanation of the delay from 1980 until 1982. The Government have been willing to legislate on many other matters, and it is most uncharacteristic for Governments to say that the courts should settle a matter. I believe that the reason was the British Nationality Act 1981. The increase in overseas student fees was strongly connected with that repressive Act. The Government wished to pass the immigrant legislation, with its rule about living here for 10 years, which was directly aimed at excluding from British citizenship children born here to overseas students. The Government wished to get the Act through the House before they legislated on this matter. The result was that thousands — no one has managed to work out the number— of overseas students who had come here with great difficulty and who genuinely wished to study at our institutions, did not know where they stood. On that point the Government are guilty of unreasonable procrastination and, ultimately, incompetence.
There was then a second, extraordinary, delay. The Government must have known that the Scarman judgment would take the line that it did. The Law Lords could have done only two things— they could have stuck by the Karminski judgment on the real home, or they could have made a much more generous judgment, as Lord Scarman did. Why did the Government wait from December until 30 March before introducing this Bill? I have no explanation for that, except for the one offered by my hon. Friend the Member for Derby, North— that a furious argument was continuing about whether to include some straight retrospective legislation. Instead, the Government decided to include some fuzzy retrospective legislation. The opening paragraphs of the Minister's speech tonight did not convince me that there was no element of retrospective legislation in the Bill. I do not necessarily complain about that, because I defended retrospective legislation from time to time when the Labour party was in power. I am not a complete purist who says that legislation must never be retrospective.
Mr. Bob Cryer: In the Clay Cross councillors case, Conservative Members were the purists who said that there must never be retrospective legislation. They called it the slippery slope towards Fascism. There has been a curious change of attitude now that they are in government.
Mr. Price: That is an excellent point. All political parties have such curious changes of attitude once they are in government. I shall need a great deal of convincing in Committee that this is not a retrospective measure but rather, as the Minister put it, a gloss on preceding legislation.
Mr. Beith: Does the hon. Gentleman have the same difficulty that I have experienced in squaring what the Government say about fees and awards with the background of the Bill? It was stated in the circular that

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was sent to local authorities that the Government accepted that it would not be right to seek to deprive students already on courses, and others who had completed their courses, of the benefits which the judgment has shown they have always been entitled to receive.
Mr. Price: We have had an ex cathedra statement from the Under-Secretary of State that fees and awards are utterly different. That statement will be probed in Committee to ascertain how utterly different they are.
Overseas students add things up and try to ascertain whether they can afford to remain here as students. If they cannot afford to do so, they return home. It will come as a great surprise to many overseas students when they are told that in principle fees and awards are different.
The Scarman judgment came as a great relief to many students who were thinking that they could afford to stay on no longer because of the high level of fees that they were being charged and the lack of maintenance awards. They had three months of phoney peace, as it were, while the Government hesitated. They are now being told that they can have their awards but will be deprived of the right to a home student fee which Lord Scarman appeared to give them. This is another issue that will have to be probed in Committee. Having had some experience of these matters, it is not nearly so self-evident to me as it is to the Minister that fees and awards are so different.
Mr. Hooley: They are different in one respect because whereas a fee is intractable once set, an overseas student can, in effect, modify the cost of living for himself.
Mr. Price: Had that assertion been put the other way round, I should have seen some logic in it. However, we have the Minister's gloss, and that will be subject to scrutiny.
The Government are in chaos, but not only because of incompetence and procrastination. The chaos stems from the disastrous and unnecessary concession that the Prime Minister, as I understand it, gave to EC students. It appears that there was a straight swap with the Germans so that we could get German support for our stand on the EC budget after the Dublin summit. That story has often been printed and it has never been denied. I shall continue to believe it until it is categorically denied.
When the concession was made to the Europeans, it was never thought that it would produce too many anomalies. It led to the specious argument that there would be roughly a straight swap with EC students coming to the United Kingdom and United Kingdom students going to the EC. It was said that we should do a deal on that basis. There was no justification for so doing and the United Kingdom was not compelled to make the deal under any EC regulation. It seems that we entered into the deal to please some of our friends in Europe as part of a package deal. I am not wholly against that approach, but it has had some fascinating consequences from which it will be difficult to escape.
Within the EC is France, which has an attitude to Third world countries that are connected with it that is quite different from the one that we adopt. As a result, we have given an amazing array of French dependent territories a concession that I am sure we never intended to make. By making the concession, we gave another £ 1.5 million to quite wealthy European students, when everyone agrees that it would have been far better to have made that sum available to more deserving students from the Third world.
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If the number of EC students admitted to British universities and colleges in the previous September is monitored, the extraordinary result arises that the universities and colleges do not want EC students any more because they do not drag a big hefty overseas student fee with them. The universities and colleges are more prepared to take students from Canada, the United States, or anywhere else for that matter. They are prepared to accept students not because they are appropriate for the course or because they have the appropriate qualifications in competition with British students but simply because the students, by attending that university, drag a whopping £ 3,000, £ 5,000 or £ 7,000 fee behind them. That distorts not just the academic but the moral nature of the institution.
Mr. Whitehead: Those distortions are far worse and more sinister for home students than the alleged distortions of subsidy stated by the hon. Member for Gravesend (Mr. Brinton).
Mr. Price: I thoroughly agree. The hon. Member for Wokingham (Sir W. van Straubenzee) said that our constituents, bearing in mind the election, might not be especially interested in overseas student fees. My constituents, who cannot get their children into university because the University Grants Committee, under orders from the Government, has put an absolute limit on the numbers of students in certain universities, are not at all pleased. They know that those universities can take as many overseas students, on top of their home quota as they want. My constituents are interested but not very pleased about that state of affairs.
The Labour Government's effort to solve the problem by quotas instead of money did not work properly because it was not planned sufficiently carefully by the right hon. Member for Crosby (Mrs. Williams).
Mr. Cryer: Some civil servants probably sabotaged it.
Mr. Price: In principle, quotas are the right way to deal with the problem rather than to allow the power of the overseas purse to fix the number of overseas students attending institutions. Little by little, home students will be pushed out, although they should have a prior right to attend educational institutions.
Mr. Waldegrave: There is no question of overseas full-fee-paying students pushing out home students, as the hon. Gentleman well knows. Quite outside the UGC quota, some universities have a net income from their overseas students that helps with the overheads and strengthens the institutions for home students.
Mr. Price: I appreciate that that is the Government's line. If I were standing at the Dispatch Box that is the line I would be purveying. If the Under-Secretary had listened carefully to some of the speeches by Professor Ralph Dahrendorf on this issue and knew the deep cynicism with which he went to the United States to whip up students for his one-year diploma course, while accepting that they were not up to the standard of other home students at the Lodon School of Economics, I do not think he would take that line. The overseas students must have desks, and classrooms to sit in. Although in brute financial terms they might strengthen institutions, the truth is that if this state of affairs continues at the present level the effect will be to squeeze out home students.
Mr. Kinnock: Is it not a logical and widely understood extension of the Minister's case that by discouraging overseas students from coming to British institutions, the Government are weakening the institutions for home students? Has not that been one of our main arguments against the full cost fee system?
Mr. Price: I certainly agree. The objection to the present system is that it distorts the institutions and courses. In addition, it prevents universities and other bodies from sticking to academic criteria and they find themselves distorted by other criteria. The Government now seem to have adopted a policy of allowing EC students and students from Hong Kong to pay home student fees. Perhaps students from Cyprus will win home student fees one day, I do not know. There seems to be a policy of selecting countries because of trade, or because they are in danger of becoming Communist. As a sort of reward, their students are given home student status. So far that status has been extended only to the Falkland Islands and Hong Kong but, once the thin end of the wedge is in, it can be shoved in further and further, and other countries will then qualify for the privilege. I hope that the Government will think carefully about the problem, because it represents one more distortion in the system.
The Minister frequently mentioned students who came to Britain thinking that they had to pay full-cost fees. He constantly referred to overseas students. One of my constituents, Anthony Nnonelyu, is a first year student of architecture at a London polytechnic. His case is in the grey area. He has been in Britain since the age of 10 and has been to a London comprehensive without paying any fees. However, for the past 10 years the Home Office has argued with me about the status of his mother, who happens now to be the head of a single-parent family. She says that she is a student, but the Home Office says that she is not a student any more. It is about to throw his mother, and the rest of his little brothers and sisters, out of Britain and to send them back to Nigeria after many years here.
Mr. Cryer: That shows Tory concern for the family.
Mr. Price: It is a scandal. However, the Home Office has graciously said that as Anthony has reached the age of 18, he might be allowed overseas student status — although he has been a home student for 10 years— because his mother has no right to stay here any more. Is someone in that position a home or overseas student? This week, I have been arguing with the Home Office, because Anthony was asked to go on a field trip to France next week. Today, the Home Office told me that as his status was not settled, it could not give any guarantee that he would be allowed to return to Britain if he went to France with the rest of his class.
Mr. Cryer: Scandalous.
Mr. Price: I checked with Lunar house in Croydon to make sure that it was not just the Minister's private office that said that. However I was told that he should not go on any field trips until his status had been settled. I tell that little story only because it gives the lie to the bland assertion that there are overseas and home students. In London, hundreds and hundreds of students still do not know— even with the Bill— whether they are home or overseas students. If someone like Anthony comes to Britain, and his mother's status is in question, is it deemed
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that he has come to Britain solely for educational purposes or that he has come to be with his family? There are hundreds of similar issues that need to be sorted out. However, they will not be resolved if the Government adopt the simplistic view that students fall into one category or the other.
Thousands of students about whom we are talking— I am sorry to have to remind the Minister of this— are real people, with real worries. These are not just financial worries. They are worries that extend to the fact that if they suddenly lose their student status because they cannot afford to keep up the overseas fee, they are then subject to visits from the police because they are no longer students and no longer legally here, and they are in danger of being thrown out of the country. Often, male students have dependent families and are worried about their wives and children.
At the end of his speech, the Minister spoke of using the convenient shorthand phrase "overseas students". That is not convenient shorthand but a hopelessly inconvenient phrase. The Minister said that the Bill had to be brought in in a hurry to clear up a problem. I got the impression from his speech that the Bill as it stands, even with the regulations that we must see in Committee go into it, clears up nothing. If the Minister wants to push through the Committee stage quickly so that we can get our general election over and come back in a new Parliament with the Bill passed into law, he will have to do very much better in Committee in addressing the students' predicament than he has in the Second Reading debate.
9.37 pm
Mr. John Watson: The hon. Member for Derby, North (Mr. Whitehead) referred to this as being a "Barebone's Parliament." On the odd occasions that I am successful in catching your eye, Mr. Deputy Speaker, that is normally the case. Some hon. Members have a reputation that is such that when their name appears on the monitor, they have the ability to empty the Tea Room of enthusiasts who wish to hear the pearls that they have to offer. Normally when I rise, I seem to have the opposite effect and people develop a sudden interest in what the Tea Room lady has to say. I see that my hon. Friend the Member for Lincoln (Mr. Carlisle) is setting a good example. I understand that the tea is good this evening.
When I was first elected I was advised that one should never rise to make a speech unless one possessed considerable powers of intellectual analysis or considerable originality of thought, or could crack a few jokes. I have tried to follow that dictum over the past four years, which has caused some people to wonder why it is I get to my feet at all. Whenever I try to pretend to intellectual ability or originality of thought, it seems to strike some colleagues as a tolerably good joke, and I can get away with the odd speech once a month.
That is not the reason why I am speaking tonight. I am speaking tonight because I think that this is a predominantly good Bill that has been unfairly criticised. My other reason is the old parliamentary dictum that if one asks a nasty question on Tuesday, one gets wheeled in to make a nice speech on Wednesday.
Some unfair allegations have been made against the Bill. The first is that it is retrospective. I cannot see how that can be said, in all fairness. There is no mention that awards already paid should be clawed back and no serious mention that fees charged in the past should be reinvoiced

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and charged to the greater sum. To describe this legislation as retrospective it is necessary to say that fees charged in the future may be higher and awards paid in the future may be lower than some people have half expected them to be between December 1982 and April 1983. Only by that extremely narrow and rather artificial definition can the Bill be presented as retrospective.
By that definition, how does one judge the Greater London council rates, which have this month gone up substantially, in spite of the fact that the fearless leader of the Greater London council said in December last year that he hoped that the rise would be kept to a minimum? They are on all fours.
I have heard it suggested that the regulations that follow the Bill should be retrospective, and that is why the Minister was right to say that we must avoid any element of retrospection. There is a simple and clear reason for that. Why do overseas students come here in the first place? Partly, I submit, to benefit from our education establishments, but partly also because they perceive Britain to be a free country which can set a civilised example to the rest of the world. That freedom is based in no small part upon the concept that we call the separation of powers— the idea that it is the job of the judiciary to interpret the will of Parliament and that Parliament will respect that interpretation. The moment that Parliament tells the judiciary that it does not like that decision and not only shall we change the law but we shall change the law back to square one so that the ruling will come as an irrelevance is the moment when retrospective legislation begins, albeit slightly, to erode the standards of civilisation that cause some overseas students to come here in the first place.
The second criticism, which has not been clear so much as implied throughout the debate, is that perhaps it might be wrong in principle to introduce this legislation. Speaking on behalf of the Liberal party, the hon. Member for Berwick-upon-Tweed (Mr. Beith) said that he appreciated the need for legislation and that he could support it, at least in principle. That was not quite so clear from the speech of the hon. Member for Derby, North. I hope that when he replies to the debate he will answer this simple question. Suppose that, following the Scarman judgment last December, the Government had done nothing. Suppose that the Government had said, "Oh dear, that is a pity. We did not expect that judgment but it has come and we shall have to live with it. We shall not propose any legislation as a result." Would a Bill of this kind have formed part of the next Labour party manifesto? If the hon. Gentleman answered that question in his opening speech, I cannot have been listening sufficiently closely because I confess that it eluded me.
Mr. Whitehead: The hon. Gentleman asks a rhetorical question. I can put him out of his agony now. If he reads the Official Report he will see that I accepted, given the situation in which the Government now find themselves and the comparative urgency following the Scarman judgment, that the Bill is necessary. But I would not, as the Irishman said when asked for directions, ever have got to this place in the first instance.
Mr. Watson: I am grateful to the hon. Gentleman for that clarification. My question was not rhetorical. I wanted an answer and I am grateful to him for giving me one.
I shall take this opportunity to raise a constituency problem. I ask no forgiveness for doing that because it is
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a problem of general rather than specific concern. A constituent of mine, who lives in Skipton, works for the Overseas Development Administration. Between 1967 and 1980 he was based in Uganda. Between 1980 and 1982 he was based in Kenya. In the middle of last year his son gained admission to Cambridge university. At that time, the family had had their home in Skipton for some years. The son gained admission to Cambridge university but in June last year he was not resident in Skipton. Therefore, when his eligibility for an award came to be judged, it was not the education authority of north Yorkshire that had to make the decision because the money came from some Government fund, nor was it the Department of Education and Science; the decision was made by Cambridge shire county council. It decided that because my constituent's father had been working in Uganda between 1967 and 1980 his job with the ODA was not temporary but permanent. Therefore, he found himself disqualified under the three-year rule and initially my constituent's son did not receive an award. Subsequently, Cambridgeshire county council changed its mind— I can only put it that way— and the problem seemed to go away.
There were several elements of that case which left me with a deep uncertainty about the manner in which the system works at the moment. First, the decision on the award was taken, not by north Yorkshire county council where my constituent lives, or by the Government who ultimately have to pay the money, but by Cambridgeshire county council, because that is where the university is based. Secondly, elected Cambridgeshire councillors had to sit in judgment and decide whether my constituent from 200 miles away was working permanently or temporarily when he was in Uganda. Thirdly, on the basis of somewhat slender evidence, they decided that he was based there permanently and was therefore excluded on the basis of the three-year rule.
Fourthly, faced with almost identical facts other county councillors and education authorities in other parts of Britain have come to dramatically different conclusions. Fifthly, the means used to communicate the decision to my constituent was so inefficient and inadequate that his son had already started university and personally paid the fees before he received the bad news that he was not entitled to an award.
There must be scope for clarifying the guidance to local authorities in such cases, which I am sure are general rather than specific and typical rather than isolated. We are looking forward to the Minister's response with eager anticipation and I hope that he can clarify the position.
9.47 pm
Mr. Frank Hooley: The Government are reaping the fruits of their folly in introducing full cost overseas student fees. At one time, one of the glories of the academic world was that it regarded itself as international and did not take much account of national frontiers. At one time a student could go to Oxford, Paris, Bologna or Prague universities and be part of the fraternity. He did not have to take account of whether he was German, Czech or English. The move towards discrimination between overseas students and home students which, as the hon. Member for Wokingham (Sir W. van Straubenzee) said, was a disastrous innovation by a former Government, is creating more and more complications and will continue to do so.

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The full folly is the sheer idiocy of so-called full cost fees and trying to treat education as if it were a commodity in the market place like margarine rather than something with a special social and cultural value which must be preserved.
The Government have committed the same folly over home students. They thought that they could chance their arm and push up fees from £ 400 to £ 900, but their decision kicked back at them. The Government discovered that they were making a serious mistake and had to cut fees from £ 900 to £ 480.
If Governments treat students in that way, the kickback will come from all directions. I suspect that this is only the beginning of a long line of emergency Bills, patching, mending and cobbling because of the idiocy of the original policy.
It is extraordinary to note that instead of the United Kingdom being proud that our universities, polytechnics and colleges are so highly regarded, so famous and have such a magnificent reputation around the world— which indeed they have — we should want to introduce hindrances, obstacles and difficulties for students from all over the world who want to take advantage of our great education facilities. Other countries do not do that. Britain is unique in going for the concept of full cost fees. I know of no other country that has indulged in this idiotic and counter-productive policy. It is landing us in more and more difficulties internally, and they will continue.
Most overseas students would have been prepared to make do and mend, to get along and to pay their way with fees of £ 200, £ 300 or £ 400, but when the Government imposed fees of £ 2,000 or £ 3,000 the stakes became enormously high and, as a consequence, the litigation arose. The litigation has not gone the way that the Government expected and they do not like it. The Government's behaviour towards overseas students has been arrogant, high-handed, xenophobic and grossly discriminatory.
I use the word "discriminatory" deliberately, because the Government have given rich students from some of the richest countries in the world — Germany, Holland, France, Italy and Belgium— the opportunity to study here for the same fees as home students, while the poorest students in the world, from villages in Tanzania, Malawi, Bangladesh and Ghana, are being screwed for every penny and every shilling that can be taken from their pockets in a ruthless, savage and unscrupulous manner as a consequence, they are staying away. The Government have carried out this policy without consultation with the organisations that could have advised them better. Almost every organisation concerned with Commonwealth and overseas students has complained bitterly about the lack of serious consultation by the Government on the complex of issues that arises from this massive jump in oveseas students fees.
Since the Government came to office overseas students have been kicked around from pillar to post. Fees and charges have risen enormously. The Government have sought to impose health charges. The consequence is that the overseas student world is becoming disillusioned with education in Britain. The figures are startling. Obviously the Europeans, against whom there is no discrimination, are not worried and still come. I am told that the overseas student intake at the university of Sheffield is down to one
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fifth of its former level. About 80 per cent. of the overseas students who a few years ago might reasonably have been expected to come to the highly distinguished university which I had the pleasure to serve for 14 years before coming to the House, no longer come. The figures will fall. As the intake goes down, the multiplier effect goes into reverse.
The figures nationally are nearly as disastrous. It is estimated that, in 1978, 700 undergraduate students came to this country from the poorest countries. By December 1981, the number had fallen to 474. On public sector non-advanced courses— I am discussing countries whose per capita income is about £ 200, or $ 300, a year— the number of students in 1978 was 1,568. By 1981 the number had slumped to 607— cut to about a third. The 1981 figures are not the end of the story and I expect that the 1982 figures are as low or lower. On public sector advanced courses, there were 2,200 students in 1978. In 1981 the figure had slumped to 1,300— about a 40 per cent. fall. That is the trend from the poorest countries in the world.
A similar trend occurs in countries which, though poor, are better off than the others I have mentioned. There, the number of university undergraduates has declined from 8,664 to about 7,000. In the public non-advanced sector — largely the further education colleges— the figure has slumped from more than 10,000 to under 4,000, yet it is in that sector that much valuable training for developing countries can be given. The developing countries do not necessarily want postgraduate students in philosophy. Rather, they want students who are trained in the engineering, electronics and similar practical and vocational courses which are given par excellence by the further education colleges.
Although the slump has not been so sharp in public sector advanced courses, the figure has fallen from nearly 11,000 to 8,300. That is the impact of the Government's policy on the number of overseas students, and the damage to our standing and reputation has been enormous.
The hon. Member for Wokingham suggested that not much damage had been done, that countries such as Malaysia were still sending many students here and that there was nothing to worry about. But it was Malaysia that kicked back and started to worry the Government. It was when Malaysia kicked the Tory Government where they are sensitive— in their business pocket— that they began to wake up to the folly of the policy on which they had embarked. When Malaysia began to take over British business interests and told British business men that it would not trade with them if its students were treated in this fashion, the Foreign Office suddenly began to take on board the idiocy of what the Secretary of State for Education and Science and his colleagues were doing. As a result, after some anguish and puzzling about what to do, the Foreign Secretary came forward with his scheme to get extra money from the Treasury.
Sir William van Straubenzee: I simply made the point— I think that the hon. Gentleman will find that I am right— that the number of students enrolled from Malaysia at the University of Wales Institute of Science and Technology increased throughout the period.
Mr. Hooley: The number of students may have increased at one institution — I cannot dispute that without looking at the figures— but the fact remains that

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it was the sharp reaction of Malaysia among others that induced the Foreign Office suddenly to look at this problem with new urgency and to decide that something had to be done. If the hon. Gentleman's argument is correct, he must explain why Malaysia was one of the three countries singled out for special treatment with the £25 million political patronage money that the Foreign Office had at its disposal for overseas students.
The modification of policy that the Foreign Office has rushed in to repair the damamge done by the Department of Education and Science will not bring back the students who have gone for good to the United States, Canada and other English-speaking and non-English-speaking countries. The trend is now established. These countries are fed up with the shenanigans of the Department of Education and Science. I do not suppose that legislation of this sort will satisfy them. As my hon. Friend the Member for Lewisham, West (Mr. Price) has said, all the grey areas, ambiguities and uncertainties about this legislation will cause more dismay, alarm and concern to overseas students rather than reassure them.
I shall try to explain what the Bill will seek to do when we see what the regulations are. The Minister will correct me if I have it wrong, which would not surprise me in view of the sketchy outline of the Bill we have had and the fact that we do not have the regulations. My impression is that a student who has put in three years' ordinary residence by the Scarman definition before 1 September 1982—
10 pm
Ordered,
That, at this day's sitting, the Education (Fees and Awards) Bill may be proceeded with, though opposed, until any hour. — [Mr. Major.]
Question again proposed.
Mr. Hooley: A student who has put in three years' ordinary residence according to the Scarman definition before 1 September 1982 must be given a mandatory award for 1982–83 if he is otherwise qualified. That is, if he has the three years and is otherwise qualified, he must have the award for 1982–83. I am not sure whether the award will be for the length of his course or just for one year. That is a feature that could land us in further litigation because if the Government say, "Under the Scarman judgment he can have it for one year but not subsequently", all sorts of litigation will arise as to whether what is called a mandatory award is for a course or for a bit of a course, and we shall find ourselves with many more jolly bits of legislation to consider late at night.
Mr. Waldegrave: I can put the hon. Gentleman out of his agony on that straight away. I have said twice that mandatory awards are given by statute for the whole of the course.
Mr. Hooley: That is a help. As I understand it, if the student has had his ordinary residence as per Scarman for three years before 1 September 1982, he must be given a mandatory award for 1982–83 and the remainder of his course if he is otherwise qualified, in accordance with the other regulations. Similarly, a student who has put in three years' ordinary residence according to the Scarman judgment before 1 September 1981 must be given a mandatory award for 1981–82 and the rest of his course. Likewise, a student who has put in three years' ordinary residence as per Scarman before 1 September 1980 must be given a mandatory award for 1980–81 and the remainder
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of his course. I believe there is a limitation going back to 1979. While I am not certain of that. I assume there is some limitation.
I assume also— again, this was not clear from what the Minister said— that a student who has put in three years' ordinary residence before 31 March 1983, when the new regulation came out, would qualify for a mandatory award for 1983–84 and subsequently, unless that is to be regarded as cancelled out by this measure. I am not clear of that and it would be useful to have some clarification.
Mr. Cryer: Would my hon. Friend agree that a difficulty under which the House is labouring is that we are dealing with a Bill which is of a sketchy nature which gives virtually unfettered powers to the Secretary of State to produce regulations? Would he further agree that the regulations should be part of the primary legislation, or at least should be produced for the Committee stage? 'The likelihood is that they will not be produced and it will be left to the Secretary of State's powers to produce them subsequently.
Mr. Hooley: That is a serious difficulty and it was rehearsed by my hon. Friend the Member for Derby, North (Mr. Whitehead). Without the regulations it is difficult to see where we are going. I should have thought that the Minister could at least have produced an outline along the lines I suggested, subject to the ultimate production of the detailed regulations. There may be problems with the regulations because I do not know how quickly the Minister thinks he can lay them. I believe that there must be a period of sitting days during which the House can consider them or vote to annul them. He will therefore come perilously close to the new Session unless he gels a move on, and, again, that will not enhance the reputation of this country in its dealings with overseas students.
We are plunging deeper into trouble because of our discriminatory fees policy, which no other country in the world practises. We should stop discrimination in fees between home and overseas students. We should restore to the great academic institutions of this country the freedom that they once enjoyed to exercise their own good sense and wisdom in balancing educational needs, and their responsibilities to our students, which they have never neglected — given the resources — against I he undoubted value of admitting overseas students from other countries, partly in response to the dire need of the poorest countries for that service and partly to sustain a long and distinguished international academic tradition, which was once a splendid feature of Europe and which has now been badly damaged by the Government's folly.
10.6 pm
Mr. Kenneth Carlisle: I support the Bill because it backs two basic principles. The first is that any change in the law should be a considered change and meant by the Government rather than arising by chance. As we know, the ruling of the other place in December means that the law is no longer what was intended by Parliament because it allows many more overseas students to claim ordinary residence in the United Kingdom. Parliament never intended that. The scope of the law has been extended by interpretation. It is right in principle to put the situation back to what it was before the December judgment. I do not believe that the House can feel that that is unreasonable. Because of that principle alone, the Bill

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deserves all-party support. In supporting the Bill we have to remember that under all Governments overseas students have been treated differently from home students.
The second basic principle that sustains the Bill is that Parliament should approve expenditure. We should understand that above all in the House; yet the very judgment of the other place could cost the taxpayer an extra £ 50 million. I understand that it could cost £ 20 million more in grants, and in addition we shall lose £ 30 million in lost fee income. Even today such a sum is not to be sniffed at, despite all the inflation of the past years. It is right that, if such an extra sum is to be spent, it should be done after a vote in the House rather than through judgments in the courts. Therefore, it can be argued that the Bill only reaffirms the House's control over expenditure. On that second count it is hard to fault the Bill.
However, the Bill is narrow. As many hon. Members have stated, we should take a generous approach to overseas students. Historically, we have welcomed them in this country, we have good links with the Commonwealth and, above all, as a trading nation, we need to forge future links that will give us our markets and provide us with a welcome in other countries. Overseas students help towards the quality and breadth of our universities. It is right, therefore, that we should seek to continue the traditional generous and outward-looking nature of our policy towards overseas students. We should pursue a policy of enlightened self-interest.
It is easy for the hon. Member for Sheffield, Heeley (Mr. Hooley) to say that we should not worry about the cost. The Government had a specific duty to make this country live within its means for the first time, so they had to hold back on Government expenditure in the difficult conditions after 1979. That was a central aim and duty of the Government. One can therefore understand the pressures for cuts in overseas aid which then existed.
No one can dispute that it was right to cut down the grants and aid that were being given to the wealthiest of overseas students. At the same time, however, we continued our aid to overseas students through our aid programme.
Mr. Whitehead: Will the hon. Gentleman give way?
Mr. Carlisle: I hope that the hon. Gentleman will forgive me if I do not give way, because time is getting on.
Now that Government expenditure is at last under control, we can have a more generous policy. For that reason, I welcome the Government's change of heart in February when an additional £ 20 million per year was given to provide scholarships for overseas students. The number catered for each year was thus increased substantially from about 9,000 to about 15,000. That is the correct way to increase expenditure. That was a specific judgment made by the Government and supported by the House. It was a careful decision and not one thrust upon the Government by the courts. For that reason, I support it.
I hope and believe that the Government will continue the trend towards a more generous policy for overseas students, but for the reasons of principle that I have stated I support the Bill.
10.11 pm
Mr. Bob Cryer: The hon. Member for Lincoln (Mr. Carlisle) said that Government expenditure was under control. Does he think that the cost of the dole queue, largely created by the Government, will remain at £ 17 billion? If the Government's present economic policies are maintained, it will increase. The hon. Gentleman seems to have forgotten the massive expenditure represented by the dole queue.
Mr. Hooley: And Trident.
Mr. Cryer: The hon. Member for Lincoln said that the Bill was a reaffirmation of Parliament's original intention, but the Library research document gives a very different picture.
The Act of 1962, which started all this, was then interpreted not by Parliament but by DES administration memorandum 14/67. When local authorities began to change the DES interpretation, the DES in circular ACL 1/78 accepted the changed interpretation in practice. The then Secretary of State referred back not to some parliamentary view but to Stransky v. Stransky as an authority that should be accepted. In other words, the Secretary of State in an administrative memorandum referred to a court decision, so the notion that the Bill somehow re-establishes a parliamentary supremacy over the courts which prevailed prior to the House of Lords decision in December 1982 is simply not true.
Mr. Christopher Price: Ministers referred not just to Stransky v. Stransky but to MacRae v. MacRae 1949 and to the Australian case of Clarke v. The Insurance Office of Australia Limited 1965. On such a tenuous basis do the Government make our law.
Mr. Cryer: Indeed, they referred not even to a string of statutory instruments but to a string of court decisions.
Mr. Christopher Price: In Australia.
Mr. Cryer: Yes. I reaffirm my strong reservations about the notion of differential fees. As my hon. Friend the Member for Sheffield, Heeley (Mr. Hooley) said, they diminish the status of academic enterprise and create difficulties, which I shall describe when I have heard what the Under-Secretary of State has to say.
Mr. Waldegrave: I did not want to interrupt the double act of the hon. Members for Keighley (Mr. Cryer) and for Lewisham, West (Mr. Price). As a result of the speed of that double act, the House may not have realised that the atrocities to which the hon. Member for Keighley referred were those conducted by the Government of which I believe he was a member for a while. My hon. Friend the Member for Lincoln (Mr. Carlisle) is right to say that this measure introduces more parliamentary control than would result by leaving the matter to the administrative procedures that were followed before.
Mr. Cryer: I am not one of those people who believe that because something happened between 1974 and 1979 it is true for all time. Indeed, I was a member of the Labour Government for two years, but that does not mean that everything that that Government did should be absolved from criticism. I happen to believe that it was a damned sight better Government than this one and I also recall that unemployment in Keighley then was 4· 5 per cent. whereas it has increased to more than 14 per cent. under the Tories. Moreover, during the 1979 general election campaign, the

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Tory candidate tried to claim that unemployment had reached the astronomical height of 7 per cent. under Labour. Of course there are things about which the Labour Government can be criticised—this is one—but that does not mean that there were not a host of other issues on which the Government acted correctly. The British people benefited far more from that Government than from the economic whirlwind that this Government have introduced.
The Government say that part of their reason for introducing this legislation is the need to save a bit of money because of difficulties with public expenditure. They do not apply that criterion to farmers who get almost £2 billion a year in subsidy. There is not a peep out of any Tory Member about that, certainly not out of members of the Tory Cabinet, many of whom coincidentally have farms.
I shall now return to the narrow issue which we are considering. The Minister diverted me. The full-cost fees policy is against our interests. I do not say that on the philosophical ground that we should benefit humanity, but on the narrow view of the possible advantage to commerce and industry. If people are encouraged to come to Britain for education, it is likely that they will look to Britain more readily when placing commercial orders in the future.
As the Minister kindly referred to my membership of the Labour Government for two years, perhaps I should mention that I met a head of a power supply operation in a former Commonwealth country who had been educated and trained in Britain. He had been on a sandwich apprentice course with GEC. It struck me that he had a predilection to buy from Britain as he had been trained here and was familiar with the technology that we produce. That is right.
Quite apart from that narrow commercial advantage, there must also be a philosophical sympathy. No doubt during the next general election campaign the Government will talk about the influence of the Soviet Union being under beds in Britain. They will defend American foreign policy which contains Communist expansion hither and thither, yet, by their policies, the Government are pushing students from other countries into the arms of the Soviet Union and its supporters, which provide educational facilities. Perhaps those countries' philosophies dictate that they should encourage students to be trained there or perhaps they want to have a political advantage and influence. Whatever the reason, the poorest nations are more likely to send students to Communist countries, despite the recent additional expenditure through the Foreign and Commonwealth Office to provide another 5,000 to 6,000 places in our education system.
Many of the poorer nations have had difficulties. Recently Zimbabwe, which is very poor, had to bring home some of its students in the United Kingdom because it could not afford to keep them here, although the Government claim that they gave that country sufficient money to enable those students who had already embarked on courses to remain here. That claim is not borne out in practice,.
The Bill is a churlish measure, and although the cost has been estimated at between £30 million and £46 million, that pales into insignificance beside the £2 billion subsidy to farmers and the £10 billion that Trident will cost. The annual cost of even partial support for overseas students so that the full-cost fees are reduced to a more reasonable level could be met with some change out of the
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cost of stationing cruise missiles in the United Kingdom — although the Government continually claim that we are getting them at a rock bottom price.
I do not like legislation that gives the Secretary of State power to introduce regulations by the negative procedure. There are some fetters on his power, and the Minister will no doubt confirm that the Bill cannot be interpreted as retrospective legislation and that all the statutory instruments produced under the legislation will have no retrospective element. The. Bill uses phrases such as
"This section applies to any award".
Statutory instruments will not apply to awards already in existence, but only to awards that would have been made but for the legislation authorising the statutory instrument. It is not good for the Chamber to give unfettered powers to a Minister to make regulations. If the regulations are in hand, there is no reason why they should not be included in the primary legislation, with power to amend. However, the regulations are not before us. The primary legislation is simple and gives wide enabling powers to the Secretary of State. We should be cautious about that procedure.
The Bill must be considered and agreed to, but the statutory instruments that the Minister will produce need not be considered. They are subject to the negative procedure, and we all know how difficult it is in practice to debate a prayer. A prayer will be debated on another relevant instrument in Committee, but it has taken years for the Government to accept that if a statutory instrument is defeated in Committee it must be debated on the Floor of the House. Even that is not hard-and-fast constitutional practice, although it should be. For a prayer to be debated in the House, it must always be signed by a Member of the Opposition Front Bench. If it is not, the Government will not consider it. That is wrong. I should have thought that if six people signed a prayer the Government should allocate time to it.
In 1951, when there was a Labour Government with a small majority, Conservative Members suddenly became interested in praying against instruments because they were open-ended. Members could talk for as long as they wished to stop other Government business, but, following that abuse of the House, prayers were limited to one and a half hours. That seems to be reasonable if Members have the right to lay a prayer and to command some debating time. Unfortunately, Members do not have that right, and when a contentious issue arises—the Bill seeks to deal with a highly contentious and difficult matter, and I am sure that everyone admits that it is the product of a tortuous process—an affirmative instrument should be brought before the House so that there can be a debate and a vote.
The negative procedure is not appropriate in this instance, because the powers that we are being asked to give the Secretary of State are, in my opinion, far too wide and lack the necessary qualifications in the primary legislation. I did not want the Bill to be given a Second Reading without some criticism being placed on record of the wide powers that it contains for the Secretary of State in addition to the criticisms expressed by my hon. Friend the Member for Derby, North (Mr. Whitehead).
10.25 pm
Mr. Harry Greenway: At times I wondered where the hon. Member for Keighley (Mr. Cryer) was taking us, especially when he complained almost constantly about farmers receiving a £2 billion subsidy. Does the hon. Gentleman object to food prices

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having risen by less than 1 per cent. in the past year? Does he object to cheap food for the housewife? He talked about the cost of Trident and he seems not to remember that the Labour party's proposed programme would cost £30 billion to £40 billion a year. If that programme were implemented, it would mean an extra 12p on the standard rate of income tax and would lead to 5 million being unemployed. The hon. Gentleman always throws these figures about wildly, and I advise him to think a little more steadily about the other side of the coin. It would be a healthier approach if he balanced his remarks more carefully.
I have listened with respect to what has been a good debate. I have been concerned about the examples of individual overseas students who have experienced hardship. Instances of hardship among overseas students have arisen in my constituency, but I wish to consider the need for the Bill through the eyes of those who live, as it were, next door to such cases and who are home students, indigenous people who are unable to get discretionary awards and who hear the strident arguments that are always advanced on behalf of overseas students.
I feel keenly that overseas students should be accommodated in this country as far as is possible, but when I canvass the views of home students I find that they are keen on the Bill for three reasons. First, the Bill will close a loophole which, if left open, would change the intake of universities and Government policy by default, which would surely be wrong. Secondly, by closure of the loophole the Bill will prevent an enormous extra and unplanned financial burden from taking place on the British taxpayer; and it is reasonable to consider that. Thirdly, the Bill will prevent undue discrimination against some students.
The loophole that the Bill will close was opened by the test case in the House of Lords on the definition of "ordinary residence". With the new definition of the term, only those resident here for three years will be entitled to be treated as home students. Many of the students to whom I have spoken in my constituency have argued that any number of wealthy foreigners could abuse the system and achieve a university education on the cheap for their children by sending them to boarding school or college here for three years prior to their university application. This has happened a good deal and it has been mentioned in the debate. However, it is worth mentioning it again. There is a need for the Bill on the ground of abuse of the system alone.
The financial implications for the British taxpayer are horrendous. It has been estimated that the cost in grants will be about £20 million per annum and that over £30 million per annum is lost in fee income. This is because foreign students under both complexions of Government have been charged a higher fee than home students. A home student's undergraduate fee is £480 and a foreign student may pay anything from £2,500 to over £7,000. The financial loss and consequent burden on the British taxpayer would not stop at that point without the Bill. Many foreign students might have become eligible for a grant when they would normally never have expected to receive one. Such grants could only be discretionary and would necessarily be limited in number. Presumably, the entitlement of overseas students would deplete the pool of places for British candidates.
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The obvious unfairness resulting to home students would be hard to square with the young in my constituency, who are striving hard to gain university places. In saying that, I am arguing not against help for overseas students but against an indiscriminate subsidy for all overseas students, regardless of their families' means. On humanitarian grounds, it is important that students who are refugees, who are given political asylum or who are from EC countries are liable only for the home rate of tuition fee.
I welcome the £3 million annual subsidy that is available under the overseas research students award scheme for 1,500 scholarships. Those students must be of high academic merit.
I have argued long and hard for an increase in Britain's aid programme to the Third world. Aid in the form of university education in Britain is at its most profitable in the long term, not only because some of the best students return home to put their utmost into developing their countries but because, as the greatest democracy in the world, Britain may have legitimate hopes that the traditions of our democracy may be exported as well.
The extra £46 million that was announced in February by my right hon. Friend the Secretary of State for Foreign and Commonwealth Affairs as being available during the next three years to foreign students showed that the Government were not guilty of massacring the funding for needy overseas students. I stated that fact when my right hon. Friend the Foreign and Commonwealth Secretary announced that that money was being made available. The money is substantially for needy students. An additional 5,000 to 6,000 scholarships and awards will be available each year to them.
The method of funding of overseas students has changed. Formerly, overseas students were subsidised from part of the recurrent grant. That subsidy has been removed and overseas students who are not in receipt of special scholarships or under the aegis of the aid programme are expected to cover the full cost of their education. That is only right and just at a time when the number of home and EC students is probably being reduced.
Without the Bill, I would feel unable to justify my party's position on the funding of overseas students, because the policy would be changed by default, which is unacceptable and unsatisfactory. If the 5,000 to 6,000 extra scholarships a year go to new entrants, the total number of overseas students may well be up next year on the 1979–80 figure.
As a nation, we must make a real effort to give meaning and value to our young people's lives. Although some have been disappointed by their failure to gain a university place, we must not lose their talents. To that end, the Government funded scheme for the unemployed wishing to pursue a university education through the Open University is a contribution. That point has been overlooked in the debate. Another way of ensuring that our young people hold their heads up high is to close the loophole created in the other place and to see the Bill through, so that they do not see the university place or discretionary grant that they coveted going to a foreign student by default.
10.35 pm
Mr. Peter Griffiths: My qualification for intervening at this late stage is that for

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several years before 1979 I was the admissions tutor in one of the main departments of Portsmouth polytechnic and dealt on a day-to-day basis with the problems that have been discussed tonight.
Access to further education generally is fraught with all sorts of anomalies. The difference between mandatory and discretionary awards often seems arbitrary. The difference between the policies of one county and another in granting discretionary awards sometimes seems arbitrary. The parental contribution has sometines seemed unfair. In the best of all possible worlds we would get rid of such anomalies and offer free access to higher education for all, as the hon. Member for Sheffield, Heeley (Mr. Hooley) suggested. However, in the real world of limitation and of many more applications than places on courses in our universities, polytechnics and colleges of education, there must be an element of selection. That being so, it should be made on the basis suggested in the Bill and in the arrangements developed over the years rather than on the basis of those introduced by the right hon. Member for Crosby (Mrs. Williams) when she was Secretary of State. Her arrangements imposed on people such as me the almost impossible task of setting quotas of overseas and home students. As a result, we often had to select students according to their country of origin rather than on their academic ability.
I greatly resent the point made by the hon. Member for Lewisham, West (Mr. Price). He suggested that students were admitted to courses because they brought funds to Britain rather than because of their academic ability. As there are many non-academic qualifications for entry to all courses in higher education, that is not possible. The sweeping statement that we are bringing in many overseas students just to bolster the coffers does not fit well with the comments of the hon. Member for Bedwellty (Mr. Kinnock). He suggested that the full-cost fee system deprived our colleges of further education of the advantages of large numbers of overseas students.
Mr. Kinnock: The hon. Gentleman does not understand the economics of his own party. There has been a lack of resources in higher education because of the full-cost fee system, which has driven away students who would otherwise have gained access. As a result, institutions have to scour the world to invite students—whom they otherwise would not have invited, on academic grounds—to go to their institutions. By such means, universities can gain some finance by selling themselves as educational Hiltons, thus relieving the Government and conforming with their monetarist policies. The points made by my hon. Friend the Member for Lewisham, West (Mr. Price) and by me are perfectly compatible.
Mr. Griffiths: Those points may have a certain compatibility, but they are based on the assumption that students are necessarily wealthy because they come from wealthy countries or are poor because they come from poor countries. I have known many extremely wealthy students from Third world countries and many poor students from EC countries and North America. That sort of blanket statement is, therefore, most unhelpful. I do not wish to labour these points at this late stage in the evening.
If the Bill were not passed, the Government would be committed to spending sums that have been variously suggested as between £30 million and £50 million on providing for overseas students, however the money is to
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be divided, courses at the same fee as that charged to home students. I should like to see all students on an equal basis. That is a worthy cause. However, we think—this was clearly implied in the speech of the hon. Member for Derby, North (Mr. Whitehead)—that that is not the top priority for spending that money. If we had that sum, it could be spent on various aspects of education, such as getting rid of anomalies in access to higher education. For that reason, much of the criticism of the Bill has been shadow boxing because we know that the Bill is essential to maintain a system. Neither side of the House would be prepared to spend that amount of money on removing the full cost fee for overseas students.
10.42 pm
Mr. Whitehead: By leave of the House, Mr. Deputy Speaker.
I would point out to the hon. Member for Portsmouth, North (Mr. Griffiths) that nobody has said that it is not necessary to have a Bill—the criticisms are about this Bill. The criticisms have been fairly and forcefully expressed from the Opposition Benches, and to a degree that I hope will persuade the Secretary of State and the Minister that in Committee we shall not be fractious, but we shall scrutinise the Bill carefully. I said this at the outset, but it seems to have been forgotten. There are things about the Bill about which we feel most unhappy.
I am glad to be able to make a few comments on the speeches made tonight. I am always glad to start with the hon. Member for Wokingham (Sir W. van Straubenzee), who spoke with his customary eloquence. He is a Norman Hunter on ice—one is so struck by the elegant facade with which he approaches that one misses the boot until it has almost struck home. I am prepared to spell out to the hon. Gentleman Labour party policy which will be implemented shortly after the general election. [HoN. MEMBERS: "Oh!"] That was a feeble cry of dissent from the Conservative Benches. I shall comment on the hon. Gentleman's part in 1967, because there are curious parallels between what was said then and what has been said tonight, and with some of the criticisms of the Bill and its timing.
The Labour party's policy is in the excellent publication which I can recommend to the hon. Gentleman, on education after 18. I shall not bore the House with the whole section on education, but I shall give the final paragraph on page 20 for his further elucidation. We say that our priority is for a substantial expansion of the student sponsorship schemes of the ODA, and go on:
"Preference should be given to entrants whose country of origin has a low GNP and students from low income families."
I accept that there are the differences within countries and between students, as the hon. Member for Portsmouth has said, but we have to make that distinction in going out to look where the need is greatest. The document continues:
"Our highest priority must be poor students from poor countries. The ODA, in collaboration with reputable nongovernmental organisations such as Amnesty, Oxfam and Christian Aid, should also offer scholarships to students in Third World countries whose governments may refuse to sponsor them… Reciprocal exchange schemes should also be expanded All other overseas students (with the present exception of those from EEC countries) will continue to pay fees but"—
this is the point, and it is here that there is a major difference and argument between us—
"the fees should be set at levels which properly reflect marginal costs and which are related to comparable fees elsewhere."

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It is in those two areas that the problem is now at its most acute. I say in all seriousness to the hon. Gentleman that when he considers our practice now compared with that of some of our European partners and other countries such as the Soviet Union, he will see that the disincentive in the current fees, which do not reflect marginal costs and are extremely onerous for overseas students, is an area that must be tackled quickly. It is one of the factors that have made the problem so acute.
In his interesting speech, the hon. Member for Berwick-upon-Tweed (Mr. Beith) referred, among other things, to the representations that we have all had from the National Union of Students about hall fees and the extraordinary burden which those fees now place on overseas students, in contradistinction to home students. They are counted in with the fees those students have to pay in their institutions, yet they carry many overheads of the institutions that are not reflected in the residential cost, for example, that is charged to home students. It is in such areas — the distinction betweeen home and overseas students, the fees charged to them and the widening of the gap—that I am led to believe that we are have probably now reached almost the end of the process whereby the home student's fee is seen as anything more than an actuarial convenience for the Government of the day. We cannot go on pretending that it represents a fee at all.
Although I was not a Member in 1967, I accept what was said and, had I been here, I would have echoed the criticisms that were made of the late Mr. Crosland's statement. The hon. Member for Wokingham made three criticisms of the introduction of that legislation. First, he said that it had been introduced in a great hurry. There had been a statement the day before the recess. Surprise, surprise. I seem to remember that that is what happened on 30 March. Secondly, he said that there had not been adequate consultations and that the vice-chancellors and the local authorities had been unable to see the Minsiter. Thirdly, he said that the new rules appeared to be hastily drafted and were open to criticisms that might have been avoided had they come forward after more consideration.
All those criticisms apply to this legislation, and they could be, and indeed were, made by Labour Members. I wonder whether the spirit of Christmas past, revived by the hon. Gentleman today, will enthuse his actions in accepting that criticisms can be made of the manner in which this legislation has been brought forward.
If the hon. Gentleman believes that we are doing terribly well in non-advanced further education, he should look at the figures and the record set out by my hon. Friend the Member for Sheffield, Hooley—[HoN. MEMBERS: "Heeley."] Hooley and Heeley have been so indistinguishable in my mind for so many years that now that the link is to be broken I can say that if my hon. Friend were never to make another speech in the House he would be remembered by the one that he made tonight. He spoke today as a United Nations man; as someone who cares about what we do for the rest of the world. He spoke for the world as a community in terms that will simply not be understood by some Conservative Members. I shall remember his speech with affection and warmth.
The record of student numbers in non-advanced further education in the past three years is not a good one. For some reason, the hon. Member for Wokingham is seized of the number of Malaysian students swarming over
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UWIST. I seem to recollect that at Question Time three or four months ago, his hon. Friend the Member for Lancaster (Mrs. Kellett-Bowman) asked about the falling number of Malaysians at Lancaster university. I went recently to Manchester polytechnic, not so far from there, where there had long been links with Malaysia. The main complaint was the enormous damage done not merely to studies at that institution but to relationships with Malaysia. That argument has been dealt with, so I shall not labour it.
I am glad that the Liberal party accepts with us that the negative procedure is not a proper way to discuss such regulations. It is farcical to believe that such matters can be dealt with in one and a half hours in Committee, followed by a procedural vote, when so many lives are affected. I hope that the draft regulations will be made available for scrutiny.
The hon. Member for Gravesend (Mr. Brinton) talked about the Select Committee's interim report and said, curiously, that we were distorting what happens in the universities and colleges. That was picked up by my hon. Friend the Member for Lewisham, West (Mr. Price). Some of our institutions of learning have to tout abroad for students who are acknowledged to be below our normal academic standards, when the standards are being raised for British students. That causes resentment among home students beyond that described by the hon. Member for Ealing, North (Mr. Greenway).
Hon. Members should see what is happening at the Gabbitas-Thring educational trust, the agency which is taking a 10 per cent. share of student fees. Public money goes to that agency for touting in the advanced countries for rich students who do not necessarily have the correct qualifications and who could almost certainly receive higher education in their own countries. Poor students are the subject of discrimination.
I could not understand the hon. Member for Lincoln (Mr. Carlisle) when he talked about living within our means and expressed other worthy sentiments. He said that it was right to cut back because we were discriminating against the wealthy. How on earth does he work that out? Gabbitas-Thring is in business in a big way recruiting the wealthiest students, so how can that be called discrimination against the wealthy? In the last few years the discrimination has been against the poorest.
The definition of "ordinary resident" has been mentioned. Those who read the report of our proceedings will be left in confusion about the meaning of the phrase in the Bill
"not having such connection with the United Kingdom or any part of it as may be specified in the regulations".
What will the regulations contain? What should a "connection with the United Kingdom" be?
Will we say to people of foreign origin, "If you have been here for many years and did not have a thought in your mind to undertake higher education, you can apply for an award, but if you did have, wholly or in part, the aspiration to education, by heaven, you will not receive an award of any description."?
Mr. Hooley: Might not the position be that if a person prepares himself in no way for education he will qualify for an award, but that if he prepares himself he will be disqualified?
Mr. Whitehead: That thinking would commend itself to the Tory party. I do not believe that that is a sound educational principle and I am sure that it would not be supported outside.
We are told that people in Ealing and elsewhere are standing around talking of nothing else but the dreadful discrimination they may suffer if we do something for overseas students. The hon. Member for Ealing, North should be more concerned about the huge gulf between home and overseas students. We were told that we cannot do anything about that. We were told by the hon. Member for Ealing, North that we must accept the wide gulf between the two, but the wider the gulf becomes, the greater the sense of unfairness.
The sense of unfairness works both ways. It works on the home student, if he feels that the enormous fees for overseas students are to be alleviated. The sense of unfairness works equally on those who have to pay the fees. If there is no attempt to ameliorate the general position of those paying overseas fees, we shall reach the same position as we have with the death grant: every year the Government say that it is harder to do anything about it, because the burden is growing all the time.
Mr. Greenway: There is nothing notional about the constituents who complained to me about their difficulties in obtaining grants, compared with the generosity with which the Opposition appear to want indiscriminately to invite to this country large numbers of students from all over the world.
Mr. Kinnock: That is a notional front argument.
Mr. Whitehead: I will not pursue that too far.
If the constituents of the hon. Member for Ealing, North complain to him that there are not enough discretionary awards and that discretionary awards might go, as a result of the Lords ruling and if the Bill were other than it is, to overseas students, he could say to them, "Hang on for a minute fellows — who got rid of discretionary awards? Why are there no discretionary awards for home students? You cannot blame that on overseas students. Blame it on the Government's policies and on the fact that the clammy hands of the Department of the Environment and the now febrile and wizened paws of the Department of Education and Science have left the area of discretionary awards almost untenanted." That is what the hon. Gentleman should say to his constituents. If he does not, they will be left in error on these matters.
We understand why the Government are scuttling from one section of the Race Relations Act 1976 to another. They cannot now use section 41(2), because they must not differentiate among those in the country for different purposes. They are setting out a new purpose. They are saying that, if there is any educational intent on the part of those who come here, that is a reason to disqualify them from educational support. They must do that now under section 41(1) of the Act. They are doing so in circumstances which leave two major points of principle between us. First, nothing is being done in general for overseas students, given the fact that the fees they pay, the so-called full cost fees, have escalated as far as they have. Secondly, they are not offering the people specifically covered by the Bill any genuine interpretation of what an overseas student now is. I do not believe that the Under-Secretary of State, who is highly intelligent and
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responsive, knows what an overseas student is. He knows that there is a shorthand term for it—but a squiggle is not a policy, nor an interpretation.
If we hear nothing else from the Under-Secretary, I hope that we hear what an overseas student is.
11.58 pm
Mr. Waldegrave: With the leave of the House, Mr. Deputy Speaker. This has been a wide-ranging debate. We have dealt with Trident., farming and the propriety or otherwise of the negative procedure. Our Bill is more limited than that. It does not even deal with mandatory awards. They are dealt with under a different procedure. Nor does it deal with the level of fees. The argument whether it would be right to put fees at a long-run or short-run marginal cost level is conducted in the Overseas Students Trust report by the proponents and opponents of its recommendations. There is nothing in the Bill about the level of fees.
This is a Bill to take powers. I think that the hon. Member for Derby, North (Mr. Whitehead) and the hon. Member for Berwick-on-Tweed (Mr. Beith) accept that the powers will be needed. They give room for Government to follow different policies, and that is reasonable.
My hon. Friend the Member for Wokingham (Sir W. van Straubenzee), as usual, made one of the most powerful speeches, and managed to prick the humbug that surrounds some of the Opposition's remarks. Their argument in an attempt to counter the charge that they introduced the original discrimination is rather like the ancient joke about the unwanted baby— it did not matter if it was very small. They introduced the principle in 1967 and all Governments since then have maintained it.
I also agree strongly with my hon. Friend that in terms of future policy we are now in a strong position. It is in no way a criticism of the Department of Education and Science that decisions affecting national interests of varying kinds, including aid and humanitarian interests, are not within the capacity of the DES to take. Those are for the Departments of State that have responsibility for such matters. Under the leadership of the Foreign Office, we can now have a properly structured and targeted policy that, improves the situation.
Labour Members will say, as they do of every expenditure policy, that we must increase the expenditure by some factorial amount. That is their right while in prolonged opposition.
The hon. Members for Derby, North, Lewisham, West (Mr. Price) and some of my hon. Friends mentioned a number of the categories that could be helped under various changes of policy. We shall doubtless explore some of those categories in Committee. The hon. Member for Derby, North mentioned immigrants, and my hon. Friend the Member for Skipton (Mr. Watson) quoted an expatriate case. I can give no assurance that this year we shall make policy changes. Our stated intention is to restore the situation to what we thought it was. These are legitimate suggestions and proposals about which we shall argue in Committee and other forums.
I was asked once and for all to settle the definition of an overseas student. The whole purpose of the Bill and its regulations is to settle that definition. It will not be finally settled until the regulations are passed. The Bill provides the power to attach that definition, and that is what we shall explore in Committee.
Mr. Whitehead: In that case the hon. Gentleman can help me further now. Will the draft regulations be placed before the Committee?
Mr. Waldegrave: I can give no assurance that we shall have the draft regulations. The Committee will certainly have in front of it the principles that lie behind them. I can give the assurance that any consultative papers offered to those with whom we are consulting—as we shall be doing while the Committee is sitting—will also be put before the Committee.
The shape of the definition is clear from the Government's intentions. It will be related to three years' ordinary residence, excluding those here principally for educational purposes.
Mr. Kinnock: The hon. Gentleman will recognise that in Committee, in the manner of this Court of Parliament, we shall be taking a precise decision on what is an overseas student. While the hon. Gentleman is trustworthy and honourable, it is not enough to provide us with the shape of the definition, which will not be excused by being a little shape. Consequently, we shall have to insist on the wording of the proposed law so that we can refer to it and examine it.
Mr. Waldegrave: I cannot give the hon. Gentleman the assurance of having the draft regulation before the Committee, but I note what he says.
The debate ranged widely over the whole area of overseas students policy and took in a number of criticisms of the Foreign Secretary's scheme and of other schemes. Sone of the points, which were not germane to the Bill, I can lay to rest. The hon. Member for Berwick-upon-Tweed made some play with the different status of the dependent territories of France and of this country. The Foreign Secretary has made it clear that there will be the scheme for Hong Kong and that the other dependent territories will have home fee status.
Several hon. Members listed a number of changes in the law that they would like to see, and they will be legitimate arguments that we shall have in the years ahead. I repeat that our clear intention is to put the law back to what we thought it was and not, at present, to make large numbers of further concessions.
The hon. Member for Derby, North said sadly that the Government always seemed to start by counting the cost. I make no apology for that. It is right that those who stand here, backed distantly by the tremendous powers of taxation, should count the cost before charging into different areas of expenditure. This is indeed an area where we must take the electorate with us. We are kidding ourselves if we believe that the electorate understood the nature of the open-ended subsidy that existed for overseas students. Indeed, I do not think that some hon. Members fully understood it. I do not believe that any Government came to the House — say, in 1969 — and said, "We intend to multiply the number of overseas students by 300 per cent. over the next 10 years".
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The numbers of university applicants from overseas are creeping up again, which I welcome, and the numbers who will be here after the full-cost fee policy has come through will probably be at about the levels they were in the mid-1970s. I do not remember the then Labour Government saying that we had far too few overseas students here in the mid-1970s. On the contrary, they were enmeshed in the most incomprehensible schemes—of quotas and so on—to try to control even those numbers. So there has been a touch of humbug in some of the comments.
Mr. Hooley: If the so-called open-ended subsidy is such an appalling phenomenon, why does every other country happily tolerate it?
Mr. Waldegrave: The hon. Gentleman is too optimistic about the intentions of other countries. Though other countries do not exercise control by fees, virtually every other country has some measure of control, some by using immigration procedures, an area in which we have never got involved in terms of students. The Australians do it by charging for student visas. There is a whole range of controls. The fact that other countries do not do it by fee control does no mean that no control is exercised by them.
My hon. Friend the Member for Skipton perhaps answered more clearly than I did the question why the Bill does not involve retrospection. There is no question of retrospection. The Government are taking no action in relation to the current year. Whether or not students are entitled to a refund of feees depends on the law as it stands. Students should not assume that they have any entitlement to a refund. Whatever the press have said, the Government have said nothing to encourage students to think that they have such an entitlement.
My hon. Friend the Member for Skipton was right to say that the Bill may result in some people's expectations being disappointed, but it would be nonsense to say that those expectations were in some sense retrospectively removed. It is in the nature of expectations that they are often disappointed, but there is no retrospection.
We shall return to many of the detailed points in Committee, particularly the detailed definition of what is going into the regulations. However, I welcome the fact that, although different parties with different policies on the matter criticise the contents of the Government's policy, we have not heard serious criticism of the need to take the powers to amend the policy, in whichever way various parties want. The Bill is brought before the House with the grudging approval of other parties—I will not put it higher than that. There is all-party support. There will be much legitimate argument about the way in which the powers that are taken in the Bill are used in future. Therefore, I commend the Bill to the House.
Question put and agreed to.
Bill accordingly read a Second time.
Bill committed to a Standing Committee pursuant to Standing Order No. 42 (Committal of Bills).

Demonstrations (Policing)
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Douglas Hogg.]
11.10 pm
Mr. Michael McNair-Wilson: I am glad to have this opportunity to speak about the costs of policing demonstrations since my constituency, which takes in the whole of RAF Greenham Common, the atomic weapons research establishment at Aldermaston and the Royal Ordnance factory at Burghfield, is having more than its fair share of protests. It is widely known that last December 30,000 women took part in a demonstration around the perimeter fence at the Greenham Common airbase. Over Easter we were faced with 40,000 supporters of the Campaign for Nuclear Disarmament staging first a blockade of the Royal Ordnance factory at Burghfield and subsequently a 14-mile human chain stretching along the road from Burghfield via Aldermaston to RAF Greenham Common.
I am told that we are to have one, if not two, demonstrations in May and presumably there will be others up to and perhaps after cruise missiles are stationed at Greenham in December 1983, assuming that those at the intermediate nuclear force talks at Geneva fail to reach an agreement.
For this calendar year, Thames Valley police tell me that the estimated cost of policing all the demonstrations relating to the coming of cruise missiles to Greenham in 1983 is more than £1 million. Unless the Government help out, the whole of that cost will fall on the ratepayers of the Thames Valley police authority area.
That figure applies solely to providing police and has nothing to do with the legal costs of evicting some of the women from the common land on which they have pitched their tents illegally or the cost of clearing up the litter left on the common during the December demonstration, and other incidental expenses. I repeat that we are talking about a sum of more than £1 million as being the likely cost of policing the demonstrations this year.
Because that figure is so massive, I have found myself asking, "Why should those who wish to demonstrate in a way that will require a great deal of police manpower and huge expense expect to do so without contributing one penny piece towards the cost of the police presence?". At the moment the answer is "Because no law exists that says that they should." Anyway it is argued, "Would not such a charge interfere with the rights of each one of us to protest and demonstrate about our protests?"
If I thought that what I intend to suggest would deny the individual or small groups of individuals that right—any of us can think of demonstrations in our constituencies that consist of parents protesting about the closure of a local school or the demonstrations outside the town hall —I would not be raising this subject, but I am talking not about small local demonstrations but about the protest marches organised by national groups that are in possession of considerable funds, groups that plan their demonstrations professionally, produce publicity material, advertise, issue literature and pamphlets and have full-time staff. The CND, for instance, claims an annual income of over £400,000, not counting the £200,000 that it gets from the sale of books. It employs 28 persons. In short, I am talking about organisations which could book a football ground or a conference hall for a protest
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demonstration if they were so minded, except that if they did so they would have to pay the cost of any police presence at a rate of about £100 per day for every policeman employed.
The annual cost of policing demonstrations is very large and is rising. I cite some examples. The National Front demonstration on Remembrance Day 1979 cost £313,000 and involved 4,497 policemen. The trade union march in March 1980 cost £144,000 and involved 1,814 policemen. The National Front march in Lewisham in April 1980 cost £300,000. The British Movement rally in London on 23 November 1980 cost £209,000 and involved 3,400 police. The women's demonstration at Greenham Common on 12–13 December 1982 cost £57,000 and required the presence of 633 officers.
I am told that the cost of policing the CND demonstration in my constituency on Good Friday this year will be more than £300,000—£43,700 for police pay and £252,000 for overtime, plus additional costs for transport, petrol, catering and signposting. That demonstration required more than 1,000 police to be on duty. As the Thames Valley police authority could not provide all the policemen because the number required was one third of the authority's total strength, it had to ask the Hampshire constabulary and the Metropolitan Police to help out.
I do not wish in any way to suggest that demonstrations have become peculiar to Berkshire. In a report of 7 August 1980 the Select Committee on Home Affairs stated that it had been told that the number of demonstrations in London had quadrupled in the past two decades. Two figures relating to London demonstrations bear that out. In 1979, the estimated gross cost of policing major demonstrations in the capital was £5·75 million. In 1981, the cost of policing major demonstrations, marches and meetings in metropolitan London requiring the presence of 100 or more police officers was £8·85 million, and that figure does not include the cost of the civil disturbances in Brixton and elsewhere. Naturally, I hope that we never reach comparable figures in Berkshire, but I am worried for my constituents and for those living in the Thames Valley police authority area.
In those terms, I ask my hon. and learned Friend the Minister of State whether the Home Office will reconsider the view that it expressed in the 1980 review of the Public Order Act 1936 when it stated that the practical difficulties in the way of imposing financial conditions on the organisers of marches and demonstrations were formidable and that the proposal could not profitably be pursued.
I suggest that the Department's stated preference for advance notice of processions on a nationwide basis—a system already operated in 107 local authority areas in England and Wales and three areas in Scotland—could help to remove some of the difficulties. If the law were changed to impose a statutory requirement that processions and demonstrations had to be notified in advance, those organising national demonstrations would have to contact the local authority and the chief constable in the chosen area before their protest could get under way.
If the law were further amended so that those organising a procession or demonstration requiring more than 100 police were required to pay part of the cost of the additional policing and to put down a deposit, the organisation planning the demonstration could decide for itself how big a protest it wished to mount, at least in terms of the cost of the policing required.

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Of course, protesters are apt to believe that too many police are used. Only today, I received a letter from the chairman of the Northfield branch of CND in which he told me that, in his opinion, the Good Friday CND demonstration was "over-policed" and therefore so costly. He is writing with hindsight. He knows now that 40,000 demonstrators turned up. He does not know that, when CND talked to the Thames Valley police authority about the demonstration, it said that it expected a minimum of 40,000 demonstrators but could not guarantee that there would not be much more.
What should the chief constable have done? I suggest that his correct course was to have done precisely what he did, which was to have a force that was large enough to cope with 40,000 or more demonstrators and the enormous number of buses — it turned out to be 680 — which brought them to the demonstration. He had to have a force that was large enough to ensure that people who lived locally could go about their lawful business without let of hindrance, could cope with any violence or direct action that might arise and could ensure that the demonstrators could make their protest peacefully.
If CND had been asked to pay a percentage of policing its Good Friday demonstration, as would be the case under my proposal, it must be anybody's guess whether it would have decided to spread the demonstration along 14 miles of road, with all the policing that that required. CND might well have decided to concentrate the demonstration to keep down the cost. The choice would have been CND's. According to the funds that it was willing to spend, it could either have used its reserves to cover the cost of the demonstration or have asked the demonstrators to contribute something towards that cost, much as it did at the campsite and Burghfield where it asked for £1 per head.
There is, of course, another way in which to approach the problem that I have outlined. The demonstration organisers could enter a financial guarantee with the local authority to pay a part of whatever costs arise. However, that would not allow the organisers to have a say in the cost of their proposal and how that cost could be kept to a minimum.
Britain is in the middle of the largest crime wave in its history. Our police forces have a massive task in proving to society that crime does not pay. As we all agree, that means getting the bobby back on the beat and rebuilding confidence in the community. How can that be achieved if large numbers of police are constantly being taken off their regular duties to police demonstrations? Is it fair to the people who expect protection from the local police to discover that their police force is being bussed off to a demonstration in which they have no interest, but for which they will be asked to pay?
Mr. Michael Neubert: Perhaps I can strengthen my hon. Friend's already cogent case by drawing attention to London? Is he aware that more recent figures compiled by the Commissioner of Police of the Metropolis show that the number of demonstrations requiring the attendance of 100 or more police officers has increased from an average of one a week to one a day in nine years? The number has therefore increased seven
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times in London rather than the quadrupling that my hon. Friend has mentioned. That has the same consequences for the campaign against crime, which is at a high level.
Mr. McNair-Wilson: I am very grateful for that intervention as it strengthens considerably the point I was making. As those police officers are drawn off to look after demonstrations, they leave areas under-policed when there is a crime wave and yet the people who will pay for those police officers are the very people who are being denuded of police cover.
The problem is even worse in Thames Valley. The police authority there has the smallest number of police per head of population anywhere in England, even if one includes the recent increase of 43 in its establishment.
I have said, and I repeat, that nothing in my proposals is aimed at depriving individuals or groups of their inalienable right to protest and demonstrate without being asked to pay for any policing that may be needed. All that I am saying is that when more than 100 policemen are needed, the organisers of a demonstration should make a contribution to the cost of policing, in fairness to the people who live locally and who must otherwise pay the bill. I am aware that CND makes a point of discussing its protests with the local authority and the police, and I am equally aware that ad hoc groups do not have such discussions, but if the law required advance notice of protests and demonstrations that problem could be overcome. The increasing cost of demonstrations would not fall entirely on the pockets of those who generally play no part in them, but would fall in part on those who instigate demonstrations, as fair play would demand that it should. I look forward to my hon. and learned Friend's reply.
11.25 pm
The Minister of State, Home Office (Mr. Patrick Mayhew): I congratulate my hon. Friend the Member for Newbury (Mr. McNair-Wilson) on raising a matter of topical interest and of real concern. His constituency experience enables him to speak with direct and current knowledge about demonstrations and their implications, about the burden that they can place on the police, and therefore on those who pay for the police, and about the disrupting effects that demonstrations can have on the community. I pay warm tribute to the skilful and professional manner in which Thames Valley police and its reinforcements from other forces have coped with the challenge. I also express sincere sympathy for his constituents, whose interests in such matters he has so diligently represented in the House from the outset. Scant consideration has been shown for them by those who have descended upon them from outside and often subjected them to squalor and obstruction.
We must uphold the freedom to demonstrate within the law on the one hand and, on the other, the rights of ordinary citizens to go about their business and pleasure without obstruction or inconvenience. My hon. Friend has made an eloquent and timely speech on behalf of the latter, at whose general and sometimes personal expense, both in money and amenities, the freedom to demonstrate is exercised. But he has not overlooked the profound importance to all of us—and he emphasised it in his closing words — of peaceful assembly and of public protest within the law. They are no less important when,

975
however paradoxically, they are exercised in support of policies that may be thought likely to lead to their removal, if ever they were implemented.
For many years Governments have been reluctant to propose, and Parliaments reluctant to enact, changes in the law that would restrict the freedom to organise and to take part in demonstrations. In 1936 our predecessors, worried by the violence caused by marches by the British Union of Fascists through the east end of London, passed the Public Order Act of that year. However, the regulatory powers of that Act to impose conditions on marches and, in the last resort, to ban them, can be exercised on only one criterion — the apprehension of the police that serious public disorder cannot otherwise be avoided. Similarly, the common law powers of the police in respect of static demonstrations, for example to move or disperse them, are governed by the need to prevent or to deal with breaches of the peace.
In the light of recent events, it is not surprising that some people sometimes believe that those constitutional arrangements tip the balance too much in favour of demonstrators, and too much against the interests of the wider community. The cost of policing demonstrations has featured prominently in this regard. Nevertheless, as my right hon. Friend the Home Secretary has made clear, the policing of demonstrations is a proper duty for the police, as proper as the duties of preventing and detecting crime. Chief officers of police do their best to police demonstrations as economically as possible, and as far as possible without impairing their effectiveness in other areas. I entirely agree with what my hon. Friend said in response to the protest made to him by the local branch of the CND that one demonstration had been over-policed. What are the police to do when they are told that a minimum of 40,000 people may attend a demonstration? They must have officers there in reserve to meet contingencies, and they would be greatly criticised if they were found wanting in that respect.
There is no denying that in recent years the duty of policing demonstrations has placed an increasing burden on the resources of the police service. That is one of the reasons why we embarked upon the review of the Public Order Act 1936 and related legislation. The review began with the Green Paper in 1980 and its scope was extended following the civil disorders in 1981. The review has been wide-ranging but we hope to announce its conclusions before too long. Tonight's debate highlights some of the most important factors.
As my hon. Friend has noted, the costs of policing demonstrations can be considerable. For example, the chief constable of the Thames Valley police estimates that the total manpower costs of policing the demonstrations over Easter at Greenham common, Burghfield and Aldermaston were about £340,000, of which about £252,000 was attributable to additional costs over the four days. The whole of the cost does not fall upon the ratepayers, as 50 per cent. is reimbursed under the ordinary arrangements for reimbursing police expenditure from central Government funds. That means that 50 per cent. of the cost was able to be passed on. None the less, the net cost to my hon. Friend's ratepayers was considerable.
Secondly, the number of demonstrations has been rising. As my hon. Friend the Member for Romford (Mr. Neubert) said in an intervention, between 1972 and 1981 the number of demonstrations in London requiring the
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presence of 100 or more officers rose from 55 to 352. In broad terms, that is an increase in such demonstrations from an average of one a week to one every day.
Thirdly, the impact of such demonstrations upon the freedom of movement and general amenities of the public has increased. It is therefore understandable that requests have been made that the Government consider whether at least the cost to the public occasioned by demonstrations can be properly reduced.
My hon. Friend has asked why those who wish to demonstrate in a way that is costly in police manpower should expect to do so without contributing a penny, to use his phrase, towards the cost of the police attendance. He made it clear that he was not discussing small local demonstrations—for example, parents protesting against the closure of a local school. He had in mind the protest marches and demonstrations, sometimes prolonged, that are organised by national groups that are sometimes possessed of substantial funds. He asked the Government to consider changing the opinion that they expressed in 1980, when they published the Green Paper. We there expressly referred, in paragragh 64, to
"suggestions that have been made from time to time that financial conditions should be imposed on the organisers of marches and demonstrations; for example, that they should be required to meet some or all of the cost of the policing arrangements or that they might be required to enter into a bond from which they would be expected to meet the cost of any damage resulting from the march."
As the foreword to the Green Paper made clear, it was our hope that the paper would lead to a full and informed debate. None the less, the difficulties inherent in the proposals were such that we thought it right to set out our opinion there and then, and we did so in these words:
"There are obvious theoretical attractions in making those whose activities occasion disorder liable for the cost, and the Government has a good deal of sympathy with the feelings that often lie behind these suggestions. However, the practical difficulties about such proposals seem formidable. First, it can be argued that it is unreasonable to hold the organiser of what is intended to be a peaceful march responsible for the activities of elements who may join the march but over whom he may have no control. Equally … events have shown that responsibility for disorder occasioned by marches can be caused almost wholly by counter-demonstrations seeking to disrupt the march, rather than by those taking part. Ai other times, the blame is more or less equally shared. Then there is the objection of principle that imposing financial restrictions of this sort would in effect be taking away the exercise of a fundamental freedom. The effect of a requirement for a financial guarantee might ultimately be to restrict marches to those on uncontroversial issues and organised by people of considerable financial means. For these reasons, the Government doubts whether these suggestions can profitably be pursued".
That was said in 1980. As the context of the Green Paper makes clear, the comments applied equally to static demonstrations and marches. To those difficulties can be added the fact that organisation has to be proved, and that is not an easy matter in every instance.
These suggestions remain under consideration until the review is concluded, as we have stated on a number of occsions since 1980, most recently in my written answer last week to my hon. Friend the Member for Christchurch and Lymington (Mr. Adley). We shall give our final conclusion in the announcement of the review as a whole, and I cannot anticipate that tonight.
My right hon. Friend will naturally want to take into account what my hon. Friend the Member for Newbury has said tonight together with the increased numbers of demonstrations and their greater impact upon the

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convenience of the community to which I have referred. Lest my answer last week, however, should wrongly be taken as indicating that the Government has already decided to change its approach to these problems I must make it clear that this is not so. We will be continuing with our review and bringing it to a conclusion but it is fair to say that the practical difficulties to which we referred in 1980 do not seem to have become less formidable since then.
We shall certainly wish to consider, however, as indicated in the Green Paper, my hon. Friend's suggestion that notice should have to be given of demonstrations and processions to local authorities and chief officers of police, although the inclusion of demonstrations raises wider issues of statutory control.
I sympathise with my hon. Friend's attraction to the idea of linking an advance notice requirement to a charge on the organisers when the event would require the presence of a specific number— say, 100 — of police officers. But there could be serious, practical difficulties. For example, it could appear to constrain the operational discretion of the police, who might anticipate that only a lesser number of officers would be required but then find on the day that it was necessary to deploy more than 100 men. The arrangement could encourage opponents to a demonstration to attempt to join it, in order to have the charge incurred. That itself would increase the potential for disorder, and so policing and other costs.
Our conclusions will certainly also deal with other measures to improve co-operation between the police and demonstrators, among many other matters.
Lest it be thought that the entire cost of demonstrations falls on the locality involved and that the Government make no contribution, it is important to emphasise the constitutional position.
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The Police Act 1964 provides for a partnership between central and local government on policing which is reflected in the arrangements for financing the police service. Police expenditure qualifies for a 50 per cent. specific grant from the Government and is taken into account for the purposes of the rate support grant settlement. So the Government are already sharing the financial burden with the ratepayers of the three counties.
Complete indemnity and reimbursement, for example, for the cost of policing demonstrations with a national significance would upset the balance of our policing arrangements approved by Parliament in much more than financial terms. It would carry the implication that the Home Secretary should have some direct control of the police operation in question. This is something that very few people would find acceptable. Nor is it something that my hon. Friend advocated.
For the Government's part, we hope that the conclusions of our review of public order will, when we announce them, help to improve the legal framework in a complex and controversial area. The police will continue to carry out its duty impartially to maintain the peace and prevent the commission of offences.
But it is only right that the public should be able to know the scale of expense and dislocation falling upon them consequent upon any exercise of the right to demonstrate as it is understood. Demonstrations are intended to influence public opinion, and in a democratic parliamentary society among the things that go to make up public opinion is a healthy sense of proportion and of what is fair and reasonable. To that informing process, which I regard as extremely important, the debate initiated by my hon. Friend has contributed most notably tonight.
Question put and agreed to.
Adjourned accordingly at twenty-two minutes to midnight.

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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 Hereford.

Channel 4 TV: Financial Support
Lord Winstanley: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what is their estimate of the loss to public funds which will result from the financial support now being given to Channel 4 TV by the independent television companies.
The Parliamentary Under-Secretary of State, Home Office (Lord Elton): My Lords, during the passage of the Broadcasting Act 1980, which paved the way for the fourth channel, the Government estimated that the likely reduction in the yield of the ITV levy during the first three years of the new channel might amount in total to some £75 million in 1979 prices. It remains our view that that estimate is broadly correct.
Lord Winstanley: My Lords, I thank the noble Lord for his Answer. May I ask him, however, to go a little further? Does he accept that in real terms the Exchequer has lost £100 million in levy from ITV between 1978 and 1983 and that the main factor has been the start-up of Channel 4? Does the noble Lord accept that this is likely to be an ongoing situation, whatever happens with regard to the Equity strike; that anxieties already have been expressed by the IBA and others about the reduction in programme output by the ITV companies; and that any attempt by the Government to recoup further finance from the 15 ITV companies could have a disastrous effect on programme standards? In other words, will the Government continue to bear their share of this very substantial burden?
Lord Elton: My Lords, a new television channel has been launched, financed entirely on a current account basis. It is only to be expected—indeed, it always was expected—that the profits of ITV companies would diminish sharply in the introductory years. The receipts from levy and corporation tax must also therefore go down until the new channel generates sufficient advertising revenue to be self-supporting. This we expect it to do.
Lord Aylestone: My Lords, while accepting that the Government, and public funds, have suffered a loss of £75 million, could the noble Lord say what the television companies have lost during the same time?
Lord Elton: My Lords, the fourth channel did not come on the air, I think I am right in saying, until some time in November of last year. It is impossible to predict the results of the profit and loss account so early in the financial year.
Lord Taylor of Gryfe: My Lords, could the Minister say exactly what is the contribution of the independent television companies to the fourth channel for this year? Most of the companies have already published that amount.
Lord Elton: My Lords, I am not certain in what terms the noble Lord is asking his question, but I think the right answer is cultural diversity and the provision of material which minority groups would not otherwise have the opportunity to see.
Lord Taylor of Gryfe: My Lords, I am merely asking what is the total contribution of the independent television companies, in financial terms, to the maintenance of the fourth channel.
Lord Elton: My Lords, the noble Lord will be able to deduce that from the text of my first and substantive Answer.
Baroness Burton of Coventry: My Lords, on a more cheerful note, not dealing with finance, is the noble Lord aware that many people greatly appreciate the in-depth news programme put out by Channel 4 each night at 7 o'clock? Would the noble Lord convey that appreciation to Channel 4, in view of the very difficult time that they are having?
Lord Elton: My Lords, if they know their business as well as I think they do, they will be aware of it in approximately 30 seconds.

Greenham Common Demonstrations: Public Costs
2.39 p.m.
Baroness Sharples: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what has been the cost of coping with the demonstrations on Greenham Common, and how this cost has been divided between local and public funds.
Lord Elton: My Lords, we understand from the Chief Constable of the Thames Valley Police that a running total of the costs of policing demonstrations at or associated with Greenham Common, where demonstrators first arrived in October 1981, has been kept since 1st January this year and is current to 4th April. The total manpower costs of policing such demonstrations between 1st January and before the Easter demonstrations is estimated at approximately £185,000; and the same total costs of policing the Easter demonstrations, some of which took place at Burghfield and Aldermaston as well as Greenham Common, are estimated at approximately £340,000. Of that figure of £340,000, some £252,000 was attributable to additional costs. Police expenditure is shared between local and central Government and attracts 50 per cent. specific grant from central Government.
Baroness Sharples: My Lords, I thank my noble friend for his Answer. Would he not agree that the Greenham Common demonstration is a continuing, running sore? Is my noble friend further aware that I visited the site on Sunday and can well understand the appalling "fix" in which local residents find themselves because of the disgusting state and the very offensive smell of the place? Has my noble friend any comment to make?
Lord Elton: My Lords, I suppose the proper comment is that those who pursue aims of public policy by means of demonstration should seek to do so in ways which are less than offensive to those whom they seek to persuade.
Lord Renton: My Lords, would not the Greenham Common ladies and others have done more for peace and for the safety of our people if, instead of incurring these large sums of police expenditure, they had agitated for increased expenditure by local authorities—or some local authorities, at any rate—on civil defence?
Lord Elton: My Lords, it is scarcely the function of a Minister of Government to advise persons opposed to their policy how best to pursue that aim, but I can see a certain logic in what the noble Lord proposes.
Lord Mishcon: My Lords, is it not one of the great traditions of this country that, whether or not we agree with what demonstrators are demonstrating about, if they are doing it peacefully and lawfully it is one of the great rights that they have here—a right which is not enjoyed in other countries that we criticise? Therefore, is there not existent within our tradition the right for people who demonstrate peacefully to be protected by the police, if that be necessary, at public cost? And if they offend against the law, is not the right of prosecution there, and should it not be pursued?
Lord Elton: My Lords, the presence of the police on any such occasion is entirely impartial. Their duty is to protect the peace, and this they have done with considerable success.
Lord Boyd-Carpenter: My Lords, arising out of the question asked by the noble Lord, Lord Mishcon, is there not a distinction to be drawn between a peaceful expression by individuals of a point of view and a heavily organised demonstration, with people brought in coaches from all over the country? In the latter case, is there not a moral responsibility on the organisers to secure that local people do not have a financial burden imposed upon them as a result? If any offer has been made, will my noble friend make it clear that it would be perfectly acceptable in roubles?
Lord Elton: My Lords, I am not aware that any such offer has been made. I do not doubt that if it was made, those to whom it was made would consider very carefully whether it was to their benefit to accept it.
Lord Jenkins of Putney: My Lords, is it not the case that the Greenham Common demonstration has had two effects? First, it has demonstrated the effectiveness of women when they choose to act on their own in
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drawing public attention to certain matters without the aid of any help at all from our sex. Secondly, it has drawn attention to the peace issue to the extent that time has been spent on it in this House that otherwise would not have been spent.
Lord Elton: My Lords, I have always had the highest regard for the effectiveness of women, when acting on their own or in concert. On the question of using up the time of this House, however, the women have not acted alone but have had the notable support of the noble Lord himself.
Baroness Trumpington: My Lords, did the figures given by my noble friend include the cost of providing the necessary sanitary arrangements for the women demonstrators? If not, can he give the cost of providing those facilities?
Lord Elton: My Lords, I answered the Question in the terms in which I thought it was directed at me; that is, in terms of the police costs. There were of course incidental costs borne by the local authority. One of these has been the collection of litter. They do not have an obligation, I think they maintain, to collect refuse, which the people of the camp disposed of elsewhere in a manner which my noble friend's original Question leads me to suspect was not entirely effective.
Baroness Sharples: My Lords, is my noble friend Lord Elton aware that I was informed yesterday that the cost of Newbury has been put at £45,000 so far?
Lord Elton: My Lords, I am obliged to my noble friend for that information.
Viscount St. Davids: My Lords, can the noble Lord, Lord Elton, reply to this point? I have some experience of organising very large rallies for inland waterways purposes. There, we inevitably have a follow-up party which clears the refuse and the rubbish and leaves the entire place clean. Would it not be possible for the noble Lord's Ministry or for anybody else to persuade demonstrators that if they really want public goodwill, then they should do the same?
Lord Elton: My Lords, as I said earlier, anybody who seeks to secure public support should do so in a manner that does not offend the public to whom their request is made.

HM Schools' Inspectorate: Effectiveness
2.46 p.m.
Lord Gainford: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what action they are taking to improve the effectiveness of Her Majesty's Schools' Inspectorate.
The Earl of Swinton: My Lords, the Secretaries of State for Education and Science and for Wales published a policy statement on the work of Her Majesty's Inspectorate on 24th March. Copies are available in the Library and one has been sent to my noble friend Lord Gainford.
Lord Gainford: My Lords, I thank my noble friend for that Answer; I have indeed received a copy of the report. Does my noble friend have any information as to the effectiveness of the inspectorate in connection with independent schools and also with schools which help handicapped or invalided children?
The Earl of Swinton: Yes, my Lords. Under the Education Act 1981 a local education authority in England or Wales is able to place a child who is the subject of a statement of special educational need at an independent school only if the school is approved by the Secretary of State as being suitable for such children or if he consents to an individual placement. Individual schools applying for approval have been required to meet similar standards in respect of premises, staff, education and care to those required in maintained specialist schools. Each school applying for approval will be visited by a team of HMIs before a decision is taken. The team will conduct a rigorous examination of all aspects of the school's functioning. In addition, independent schools for handicapped pupils have regularly been included in HMI's programmes of school inspections—and informal visits are often made to these schools.
Baroness Fisher of Rednal: My Lords, how does the Secretary of State make the effectiveness of Her Majesty's Inspectorate applicable in schools? I am reminded of the difficulty in Oxford at the present time, where a confidential letter was sent from HMI that textbook provision and staffing levels in primary and secondary schools there are inadequate, but where the chief education officer has failed to convince the elected members that there is a necessity to spend more money on these two items in order to avoid falling standards.
If Her Majesty's Inspectorate are to be effective, quite obviously their recommendations have to be put into operation and practice. What steps does the Secretary of State take to ensure that the inspectorate's reports are taken up and put into practice, when the inspectorate have made adverse reports?
The Earl of Swinton: The Government have introduced a more systematic follow-up arrangement for all reports published since the beginning of this year on schools or colleges providing full-time education for 16 to 18 year olds. Under these arrangements those reponsible for the institution—normally the local education authority, and this will obviously be the case in Oxford—are asked to report after three months on the actions taken in the light of the report. The follow-up arrangements will be extended to cover all reports shortly.
Lord Beloff: My Lords, does my noble friend the Minister not agree that the work of the inspectorate is likely to be hampered if they are asked to undertake other tasks? In particular, has the attention of my noble friend been drawn to the apparent insistence by the ILEA under its new leadership that the inspectorate should investigate political teaching in schools—a matter that has excited opposition from many heads of maintained schools?
The Earl of Swinton: My Lords, as I understand it, the great point about HMI is that they are independent; independent of the Secretary of State and independent of LEAs. Therefore, I do not believe that a local education authority can tell them what they have to do and what to inspect. Their reports are being published. I think they are a very splendid body of people, and thank goodness they are independent!
Lord Alexander of Potterhill: My Lords, does it create difficulty in a local education authority if Her Majesty's Inspectors say, "You must spend more money on books or other equipment", and the Secretary of State says, "You must not do so"?
The Earl of Swinton: My Lords, I think if that were the case the answer is that it almost certainly would.
Lord Hatch of Lusby: My Lords, before 1979 it was always the practice that one HMI specialised in the teaching of international affairs, which is a very important issue throughout the schools. I understand that in 1979—
Noble Lords: Question!
Lord Hatch of Lusby: My Lords, I understand that in 1979 this post was removed. Can the noble Earl tell the House whether this post has been replaced or if Her Majesty's Government have any intention of replacing it?
The Earl of Swinton: My Lords, I will have to write to the noble Lord with details about the post he describes. Her Majesty's Government have decided that the present complement of 430 inspectors in England is to be sustained, and that the number in post, currently 385, will be brought up to complement as a matter of urgency. The size of the inspectorate in Wales is being reviewed. But, as I said, on this particular post I will have to write to the noble Lord with the answer.

The Young Socialist's Conference: Northern Ireland
2.52 p.m.
Lord Monson: My Lords, I beg leave to ask the Question standing in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what action they intend taking in connection with the calls for the killing of British troops in Northern Ireland, which according to several press reports were made at the Young Socialist's conference at Bridlington on Easter Monday.
Lord Elton: My Lords, we are, of course, aware of reports that these disgraceful statements were made on that occasion. It is, however, for the police and not the Government to consider whether any criminal offence may have been committed, and, if so, what action to take.
Lord Monson: My Lords, I thank the noble Lord for his reply and for the robust sentiments he expressed. While one appreciates that there is little the Government can do directly, can the noble Lord say whether the attention of the Director of Public Prosecutions has been drawn to the rallying cry made by one delegate, which according to at least nine national newspapers contained the phrase, "Forward to the death of British troops"? Surely the right of free speech, which we all value so highly, cannot extend to blatant incitement to murder.
Lord Elton: My Lords, while I have considerable sympathy with the noble Lord, I should say, first of all, that the question of a reference to the Director of Public Prosecutions would be for the police, who would have to be aware of the circumstances to a greater degree than I am. Secondly, as the noble Lord rightly says, the right of free speech is very precious. I understand that this utterance was made on an occasion in a debate on something that was called, "Capitalist Imperialism and Terrorist Violence", and the remarks, I gather, received little support, if any, on that occasion. That perhaps suggests that we should not dignify this event with a great deal of opprobrium when it was in fact an extraordinarily foolish, unpleasant, distasteful and disloyal thing to do, but no more than that.
Lord Underhill: My Lords, would the noble Lord the Minister not agree that it is highly desirable that it be stressed that these particular observations are abhorred and repudiated as much by supporters and members of the Labour Party as by any other section of the community? May I say how much I appreciate the remarks of the Minister that the pro-IRA resolution was overwhelmingly rejected in a democratic way by the hundreds of delegates present, with only a handful supporting it? Is the noble Lord aware that a subsequent resolution was carried deploring and repudiating the actions of the IRA and other terrorist organisations as being of little use to the people of Northern Ireland?
Lord Elton: My Lords, I think terrorist methods are abhorred inside and outside this House by all right thinking people.
Lord Paget of Northampton: My Lords, surely the Foreign Office is an exception.

Business
Lord Denham: My Lords, at a convenient moment after 3.30 this afternoon my noble friend Lord Elton will repeat a Statement on the Cable White Paper. This will be followed by my noble friend Lord Lyell who will repeat a Statement on Citizens' Advice Bureaux.
With the leave of the House, in the usual way I should like to say a word about the timing of the two Short Debates this afternoon. In accordance with the principle that the mover should be entitled to approximately 15 minutes and that the Minister should rise to reply no later than 20 minutes before the scheduled
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end of the debate, may I suggest that other speakers in the first debate—that in the name of the noble Lord, Lord Oram—should limit their speeches to a maximum of 11 minutes, and that other speakers in the second debate which is in the name of the noble Lord, Lord Hunter of Newington, should limit their speeches to a maximum of nine minutes. Perhaps I should point out that if any noble Lord should speak longer than the suggested maximum he will do so at the expense of other speakers taking part in the debate. May I also point out that the time limit for the first of the two debates will be extended by the time taken by the interruption for the two Statements. The new time limit will be announced from the Government Front Bench at the end of the speech following the interruption.

Diseases of Fish Bill
Brought from the Commons; read a first time, and to be printed.

Brandt Report: "Common Crisis"
2.56 p.m.
Lord Oram Lord Oram rose to call attention to the second report of the Brandt Commission, Common Crisis; and to move for Papers.
The noble Lord said: My Lords, this second report of the Brandt Commission, to which I wish to call your Lordships' attention, does not repeat the first report of three years ago, which, as your Lordships will recall, was a challenging and comprehensive review of the relationships between developed and developing countries. Instead the commission briefly recalls and endorses what it said three years ago, but then moves to the present situation and warns us of the impending crisis in the world economy. It summarises that warning, if I may quote, on page 12 of its report in these terms:
"This is already a crisis of contraction: contraction of production, of employment, of trade, of credit, of aid, of economic growth … If each country retreats inwards out of an impulse to self-preservation we shall end up hurting each other and worsening both our collective and individual condition … There is not much more time to take the policy measures necessary to avert a major world depression".
Having summarised the threat of depression and crisis, the report then puts forward an emergency programme calling urgently for interim action to ward off the economic and social collapse that threatens the world. This debate comes, I think, appropriately midway between the debate on international finance which was initiated by the noble Lord, Lord Soames, on 23rd March—and which carried much the same message from the noble Lord as the Brandt Commission conveys—and the debate which I am glad to see the noble Lord, Lord Seebohm, proposes to initiate on world hunger on 18th May. This debate is timely also because it follows a full-scale debate on the Brandt Report in another place just 10 days ago, so that we have had the advantage of reading the Government's attitude as expressed by the Foreign Secretary, and also, of course, the views of Mr. Edward Heath, who was a member of the Brandt Commission.
When the first Brandt Report was published, the Government issued this White Paper in response to it. I must say that this document was one of the most negative, depressing, cold and heartless documents that it has been my misfortune to read. Your Lordships may recall that that White Paper and the Government's attitude provoked a mass lobby of historic proportions. I say "historic proportions" because that lobby, led by churchmen and churchwomen from all over the country, brought to Parliament many more protesters against Government policy than I have ever seen in these buildings in my 35 years at Westminster in one capacity or another. That was the degree of interest and the degree of protest that was provoked on that occasion.
But there is a contrast this time. Perhaps it is the impending general election which has induced the Government this time to try not to alienate that section of public opinion, because on this occasion we read of welcoming phrases from the Foreign Office. In the other place we had a friendly speech from the Foreign Secretary, Mr. Pym. He promised us another White Paper and it will indeed be interesting to compare this new White Paper with the one of three years ago. If I may make a forecast, it is that the White Paper will be like Mr. Pym's speech—it will be bland, it will be complacent and it will be completely inadequate. The keynote of this document, called Common Crisis, is its sense of immediacy and urgency; but the Government's response is one of self-satisfaction and complacency.
I cannot of course in a few minutes take up the Government's attitude to all the 59 Brandt proposals. I therefore propose to deal with a number of them under five headings. The first is the question of economic expansion. The second is the need to increase the resources of the IMF and of the World Bank. The third is the volume of bilateral aid to developing countries; and the fourth of my headings concerns commodities and the fluctuations in their prices. Lastly, I should like to deal with the machinery of consultation and negotiation which is necessary if the Brandt proposals are to be properly implemented.
First, then, on the general economic policy. The Brandt Commission is openly expansionist in its economic philosophy. But the British Government, as we know only too well, still takes the opposite view, despite their protestations that they welcome Brandt. I believe that one day the Government will have to face the fact that if they genuinely embrace Brandt, the inevitable consequence of that attitude is a radical change in their economic policies. They cannot have it both ways.
Secondly, I refer to the international resources of the IMF and other institutions. What the Foreign Secretary complacently said 10 days ago was:
"In fact, much progress has already been achieved … The Government will certainly approach the subject with an open mind … On the whole, we think that the system has worked well and the judgments made have been broadly correct".—[Official Report, Commons, 18/4/83; cols. 34–35.]
He was followed by the Minister for Overseas Development, Mr. Raison, who also said that his mind was wide open on the question of IMF quotas.
But the Brandt Commission recommended a 100 per cent. increase in IMF quotas. Britain has gone along with a mere 50 per cent. increase. Therefore, I suggest that in this respect the British Government so far has been literally half-hearted or, as they say, open-minded. In a critical situation—and that is what we are in—we do not want Ministers with persistently open minds. We want Ministers who can make up their minds. To use a phrase that I think I have seen elsewhere, what we need in this situation is "the resolute approach".
My third heading is on the question of the volume of bilateral aid. We are forever being told that the Government are providing £1,000 million, and that sounds a great sum. But if one examines the record, as we have from time to time during Question Time, one finds that in real terms the Labour Government increased aid in every year, bar one, whereas the Conservative Government have so far decreased aid in every year, bar none. Only two days ago, in a Written Answer in another place, the Minister for Overseas Development had to admit that 1982 was still worse and that the figure was down to ·38 per cent. of GNP compared with ·44 per cent. in the previous year. So much for the comparative record on the provision of bilateral aid.
Fourthly, what about commodities? Depressed commodity prices are one of the third world's most serious problems. But on this crucial subject all that Mr. Pym could say by way of self-justification was that we have joined the Common Fund and that the Government hope that the EEC will join the Sugar Agreement. Surely we in the United Kingdom, with London as one of the most powerful world centres of commodity markets and with all our experience and authority in commodity trade, are in a position and are due to take initiatives and to take a lead in this matter. We should now be advocating schemes which improve upon and greatly extend the STABEX scheme under the Lomé Convention. I know that that scheme is open to some criticism but at least it compensates signatory members who suffer from depressed commodity prices. My point is that I see no signs of drive or leadership in this area, and I only wish that I could see them.
Fifthly and lastly, we come to what I have referred to as the negotiating mechanism for implementing the Brandt proposals. The first Brandt Report suggested a summit conference. As we know, that summit conference was staged at Cancun, and what a disaster it was! We had just two days of well-publicised discussion with set speeches. There was no real negotiation and no real results. There was, as I say, publicity, but no agreement for action. From the point of view of this country, unfortunately, our representative, the Prime Minister, was seen to be in a close partnership with President Reagan as the hard-line minority resisting even the modest action that was proposed at that conference.
The Brandt Commission this time, in this second report, seems to have recognised the weakness of its proposed summitry proposals which led nowhere. It now suggests—and I welcome the suggestion—that if another such conference is called there should be much more detailed preparation and that there should beforehand and at the conference be much more

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down-to-earth negotation. But, in my view, it is not the nature of the machinery which counts in the long run. It is the will for action: the determination to achieve results. It was that which was lacking at Cancun. Our Government must take a major part of the blame for that failure, because I suggest that from what I have already said it is clear that in these matters the Government obviously lack the will.
In conclusion, I remind your Lordships that the Brandt Commission comprised people of many and varied political views. There were Socialists like Herr Brandt of Germany, Mr. Amir Jamal of Tanzania and Mr. Olaf Palme, the Prime Minister of Sweden. On the Commission there were also Conservatives like our own Mr. Heath. But, despite their differences of political attitude, they reached agreed conclusions both in the first report and in this second report. I suggest that what the world desperately needs is that kind of agreement on world affairs between people of different political persuasions. What we need is a progressive approach to world problems. We need to be outward and forward-looking and not as we are at the moment, inward-looking, monetarist and narrow.
I am conscious, as I hope your Lordships are, that an opportunity will soon be presenting itself on the world stage for some world leader to give a lead. I refer to Williamsburg. At the Williamsburg summit it will be again the Prime Minister who will be representing the United Kingdom. I suggest that there at Williamsburg is for her a supreme opportunity to grasp this nettle of the common crisis. I would echo Mr. Heath's proposal that Britain should put on the table at Williamsburg this emergency programme proposed by the Brandt Commission. I could only wish that my country, the United Kingdom, were to be represented at that vital conference by a statesman big enough to meet that enormous challenge. My Lords, I beg to move for Papers.
3.14 p.m.
Lord Banks: My Lords, I should like to thank the noble Lord, Lord Oram, for raising this important matter this afternoon and for doing so in such a comprehensive manner. We on these Benches warmly welcome the second report of the Brandt Commission and give general support to its principal recommendations. We see that report as a warning cry which cannot be ignored and as an emergency programme which ought to be considered with urgency.
There are, broadly speaking, two schools of thought which tend to dominate discussion of North-South relations. One I would call the school of global Keynesianism, and it is that which has to a large extent inspired the two Brandt Reports. Supporters of that particular point of view—and we on these Benches would be among them—see the need for a transfer of resources from North to South. We see the need to increase liquidity in the world financial system, to increase Government aid to third world countries, to stabilise commodity prices, to make some reform of the international financial institutions and also in many cases to ease the conditions of loans to the third world.
Supporters of the other school of thought—for simplicity I would call that the monetarist
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school—consider that the transfer of resources and an increase in liquidity would simply cause inflation and ought to be avoided. They believe that world recovery will be spontaneous and does not require any governmental stimulus. They rely almost entirely on market forces. They think that low commodity prices are advantageous since they will help the developing countries to sell their exports. They do not want to make any alteration to the conditions which are made as far as loans to third world countries are concerned. The more extreme supporters of this point of view would think that governmental aid was of no use at all.
The monetarist school accuse the global Keynesians of pursuing Socialist and inflationary policies. What Socialism means today is difficult to define. It can mean anything from Communism to social reform. Of course there is a sense in which we are all Socialists now—as a Liberal Chancellor of the Exchequer said some 90 years ago. But if Socialism is taken to mean outright hostility to market forces, hostility to the mixed economy and a preference on every occassion for state action, then it is extraordinary that the leading exponent of Brandt policies in the United Kingdom, as the noble Lord, Lord Oram, made clear, is Mr. Edward Heath, a Member of the Commission, a former Conservative Prime Minister, and one who, as a Conservative Cabinet Minister, abolished retail price maintenance. The fact that he was able to distinguish the unacceptable face of capitalism from the acceptable did not make him a Socialist.
As to whether Brandt II, the report, Common Crisis, which we are discussing, is inflationary, Mr. Heath himself has argued with some force that when world reserves have fallen in a short period of time by 200 billion dollars, and those of the developing countries by 85 billion dollars, then the 50 billion dollar special drawing rights which are proposed by Brandt can scarcely be considered to be inflationary.
There are these two schools of thought. I have made it clear where we on these Benches stand in relation to them. But the question I want to ask is: where do the British Government stand in this clash of arguments? To some extent this question has already been raised in the comments of the noble Lord, Lord Oram. After the publication of the first Brandt Report and the reaction of the British Government at that time, I should have said that they stood firmly with the monetarists. After all, the Government have followed a deflationary policy at home. They have certainly resisted moves to reflate the European or world economies. The report, Common Crisis, emphasises the ill-effects on developing countries of deflationary policies, including high interest rates and states how these policies pursued in the developed countries have adversely affected the developing countries.
However, the Government's welcome for the second Brandt Report has been much warmer. As the noble Lord, Lord Oram, said, one Common Crisis recommendation is for an increase of 100 per cent. in IMF quotas. As the noble Lord made clear, the Government have not gone as far as that, but the Chancellor of the Exchequer presided over the meeting at which it was decided to increase the quotas by nearly 50 per cent., and that has led the Chancellor to be criticised by some for being a monetarist at home and a Keynesian abroad.

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Another Brandt recommendation is that there should be a major new allocation of special drawing rights, distributed on a basis which takes into account the particular needs of developing countries in deficit. The Foreign Secretary has indicated that the Government have an open mind on that. From our point of view on these Benches, it would have been better had he made up his mind on it and in favour of it; but at any rate he has an open mind and is agreeable that these matters should be discussed in the autumn. However, the delay is alarming. Surely it is possible to bring forward the discussions and consider the matter now as one of urgency.
The Common Crisis speaks of the need for temporary arrangements to overcome funding problems for the sixth replenishment of the International Development Association—the soft loan arm of the World Bank—and the need also to proceed to consider the seventh replenishment. As Mr. Pym has made clear, the Government have urged the United States to complete its contribution to the sixth replenishment.
The report Common Crisis calls for the ratification of the Common Fund for Commodities. The Government have ratified, and have urged others to do so. But what a lengthy, drawn-out process is the establishment of the Common Fund! The Common Crisis calls for Government aid to be raised to 0·7 per cent. of gross national product in five years. The Government accept the target, but not the timetable. They have no commitment as to when they will achieve it, or hope to achieve it.Common Crisis urges a relaxation of the conditions of loans to the third world, but if what we read in the papers this morning is correct, the Government are clearly opposed to that and still believe that policies of considerable austerity must be imposed on borrowers.
So looking overall at the Government's record, it is clear that they are not opposing the Brandt II Report root and branch. They are agreeing to some of the proposals. There is at least a partial acceptance of Brandt. The Government are betwixt and between. But my fears are two-fold, and to a considerable extent they correspond with fears expressed by the noble Lord, Lord Oram. My first fear is that the reaction of the Government, and indeed of the Governments of the countries of the North (if I may call them that) will be a case of too little, too late. The 50 per cent., instead of 100 per cent., increase in IMF quotas, the delay over dealing with an increase in special drawing rights, and the rigidity over conditionality, suggest that what I fear may well be the case.
My second fear is that which was expressed by the noble Lord, Lord Oram: that there will not be the political will to get things done. There will be an acceptance, in part, of the second Brandt Report, but there will not be sufficient enthusiasm for it in order to take a crusading position at Williamsburg, or in UNCTAD VI, when it is held in June.
Common Crisis says that there are far greater dangers today than there were three years ago. I wonder whether the Government would agree that although some indications of a slight recovery in some Western countries are encouraging, nevertheless the problems that we are discussing today remain a serious threat. Do the Government agree that there is a crisis
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of the magnitude described in Common Crisis? If so, does their response, and that of the North generally, match up to the challenge and to the emergency? That, I believe, is the central issue that is before the House today.
3.25 p.m.
The Lord Bishop of Hereford: My Lords, the Churches are grateful to the noble Lord, Lord Oram, for this debate because it will underline the crisis which exists and to which the publication Common Crisis draws attention. Some of your Lordships may remember that on 15th January a front page headline in The Times read:
"Parliament urged to act on jungle of commodities market".
That referred not to a quotation from the Brandt Commission's memorandum, but to a statement made by a judge at the Central Criminal Court when acquitting a man of fraud. The judge said that there was no Government body or code of ethics to protect clients; nor was there any restriction on premiums charged to clients. He continued:
"The trouble is that the world of commodity dealing is a jungle. It seems to me to be a most perilous state of affairs, which merits attention by Parliament. Whether legislation is required, it is not for me to say, but I hope my words may reach beyond the walls of this court".
The first point that the Churches would wish to make in today's debate is that there should be such a code of ethics to establish control of the London markets in commodities. This is one of the major pleas of the Brandt Commission, and it appears on page 105 of its second publication, where it is stated:
"Solutions have to be found urgently to the severe problems caused by the continuing slump in primary prices if the deprivation and hardship already experienced by poor countries is not to be exacerbated further.".
On the previous page we are told that the price of raw sugar fell by 78 per cent. in a two-year period ending in June last year; rubber fell by 37 per cent., and copper by 35 per cent.
On Easter Day consideration was given in the "Food Programme" on Radio 4 to the production, marketing and selling of cocoa for Easter eggs. Dealers from 30 countries operate in the London cocoa markets. Ghana, Nigeria, and the Ivory Coast have a combined international debt of over 20 billion dollars. These countries depend substantially upon their export earnings from cocoa for their balance of payments. Yet as the judge to whom I have already referred pointed out in the Central Criminal Court in London,
"Small investors had been charged enormous hidden premiums on their investments in cocoa and other commodities.".
He said further that:
"there is no code to sell at the best price, to reveal commissions charged, or to reveal true market prices".
The same is true of the coffee market. In his book, Human Rights Begin with Breakfast, John Madeley, the journalist, describes how one speculator on the coffee market is thought to have made a profit of £18 million. The people who produce the coffee to make possible such speculation are lucky if they earn £200 a year. John Madeley concludes:
"An improvement in the way that commodities are traded in international markets could probably do more to promote economic rights in developing countries than any other single measure".

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The Churches would urge, as a first step, the setting up of just such a code of conduct for the London commodity markets.
The director of Christian Aid has estimated that in the last five years, 500 billion dollars has actually been transferred from the countries producing primary products—which include Canada—to the developed industrial countries, through the deterioration in the terms of trade. No wonder there is acute and growing poverty in all parts of the world. It is trade and reform of its structures, not aid, that remains the primary focus of the concern of the Brandt Commission and of its second publication.
But, of course, the theme of the Brandt Commission's message is that the world is facing a financial crisis, and to alleviate that immediate crisis, aid is vital. The visit of the President of the World Bank to see the Prime Minister in London this month drew attention to the crisis facing the funds of International Development Assistance—IDA as it is commonly known—which is the arm of the World Bank that provides long-term loans at concessional rates of interest to the poorest countries. In its publication we read that,
"IDA projects have a weighted average rate of return of 21 per cent., excellent by any standards".
Yet our partner across the Atlantic is failing to meet its commitment to the existing replenishment of its funds and the prospects for the seventh replenishment next summer are somewhat grim.
In addition to the plea that there should be a code of ethics to establish control of the London markets in commodities, the Churches would want to make three observations. First, as Common Crisis points out, concessional funding from multilateral aid agencies like IDA is essential for programme aid to rural agricultural development schemes. Malawi, Kenya and Zambia have drawn up national food strategies. It is crucial that they have access to funds to finance them if the face of famine is not to threaten the whole of sub-Saharan Africa.
Secondly, as the Berg Report on that region made clear last summer, development is chiefly related to the exploding rates of population growth. In sub-Saharan Africa, six children are at present being born to every fertile woman. As a result of this population growth and other factors, every person now living in the region is eating at least 10 per cent. less food than was available to them in 1970. Aid is crucial if the population explosion is to be restrained by the end of this century.
Thirdly, aid, and particularly low interest, long-term, official multilateral aid, is related to the problem of debt. According to page 45 of the commission's report, total foreign indebtedness of developing countries reached 630 billion dollars in 1981 which stretches the resources of the whole credit system. Surely, this astronomical figure must be related to the 500 billion dollars mentioned earlier as an estimate of wealth transferred through deteriorating terms of trade to the industrialised economies and to the 650 billion dollars that is spent by the world annually on the arms trade.
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Here, clearly, there are symptoms of enormous strain in the financial system and of great insecurity felt by nations intent on arming themselves beyond their means. Both conclusions suggest that the Brandt Commission, in Programme for Survival and Common Crisis, is right in identifying a critical point having been reached in the world situation. It calls rightly for new start to be made in the North-South dialogue.
The Churches would therefore call upon Her Majesty's Government at the Williamsburg Summit in May and at the United Nations Conference on Trade and Development in Belgrade in June to go determined to negotiate a new start. We have the important initiative of the Commonwealth Secretariat in producing its report The North-South Dialogue: Making it Work that will guide us. We have the important Plan of Action to Combat World Hunger, proposed by the European Community and supported by Canada, to direct us. Above all, I believe that we have a growing political will in this country, fostered by the Churches and other non-governmental organisations to which the Brandt Report pays tribute, that will back us.
I end with a quotation from page 10 of the report where it states:
"A new century nears, and with it the prospect of a new civilisation. Could we not begin to lay the basis for that new community with reasonable relations among all peoples and nations, and to build a world in which sharing, justice, freedom and peace might prevail?"

Cable Systems and Services: White Paper
3.35 p.m.
Lord Elton: My Lords, with the leave of the House, I will now repeat a Statement being made in another place by my right honourable friend the Home Secretary. The Statement is as follows:
"With permission, Mr. Speaker, I will now make a Statement on the Government's White Paper on the Development of Cable Systems and Services, which is published today, in the name of myself and my right honourable friend the Secretary of State for Industry. Copies are available in the Vote Office.
"The White Paper, as the subject requires, is a long and complex document—nearly 250 paragraphs. The House will need time to study it and form its views on it. Subject to arrangements to be made by my right honourable friend the Leader of the House, there will be an early opportunity for a full debate.
"Meanwhile, I hope it will assist the House if, in this Statement, I draw attention to the main cable issues to do with the regulation of programme services and the safeguarding of public service broadcasting, which were still unresolved when we debated the Hunt Report on 2nd December last.
"The White Paper sets out a plan of action for future cable development. Central to this plan is the creation of a new statutory cable authority. Work is now starting on the preparation of a Bill to be introduced at the earliest practicable date. The cable authority will have two main roles: to award franchises to cable operators for the provision of

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cable services, and to exercise supervision over those services in the manner which the White Paper describes in detail. I wish to stress five particular aspects.
"First, pay-per-view. The Government have decided not to follow the Hunt Report in excluding this method of financing cable services. Cable operators have made it clear that they attach much importance to it and we believe that over a wide field pay-per-view can be allowed without damage to BBC and ITV services and the many viewers who rely and will continue to rely on them. To protect the interests of those viewers, the cable authority will have the duty to exclude from pay-per-view events customarily covered by BBC or ITV.
"Secondly, that restriction is in addition to the ban which, adopting the Hunt recommendation, we propose on the acquisition by cable of exclusive rights for the great national sporting events, such as the Cup Final.
"Thirdly, advertising. We follow the Hunt Report in proposing that the cable authority should adopt an advertising code which in essential particulars would follow the existing IBA code. Arrangements for clearing the copy of advertisements would follow broadly the pattern for those on independent broadcasting. On the amount of advertising, we depart from Hunt in preferring to limit advertising on cable, on channels broadly comparable to ITV, to the amount allowed on ITV—currently six minutes an hour on average. Channels wholly or mainly devoted to classified or other advertising will however be allowed, and these limits will of course not apply then.
"Fourthly, foreign programme material. Here we intend that there should be from the outset more stringent obligations than Hunt proposed on the use of British programme material. The Cable authority will be required to see that a 'proper proportion' is shown on each channel as appropriate; to work towards a progressive increase in that proportion as United Kingdom production capacity grows; and to report progress regularly to the Government. We are anxious to maintain and develop the strong national production capacity which the BBC and ITV have helped to create.
"Fifthly, the Government are anxious that the cable authority should ensure high standards of cable programme services. The same rules regarding good taste and decency as apply to BBC and IBA programmes will apply to all cable channels.
"There will be no exception for channels with electronic locks. As the White Paper says, so-called adult channels have no place on the sort of cable systems which the Government wish to see develop.
"Finally, in the period before the legislation is enacted we are anxious to maintain and continue the momentum for cable development, through interim arrangements, of two kinds. First, the Government will be prepared, under existing powers, to authorise a limited number of new cable systems—not more than 12—as pilot projects, each covering a maximum of about 100,000 homes. Projects will be chosen for offering a positive contribution to advanced technology, a comprehensive
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range of programme services and a capability of interactive services. Secondly, we propose to allow cable relay operators to offer new programme services over their existing systems for a transitional period. Where necessary the obligation to relay BBC and ITV services on the cable will be dropped, provided operators offer their customers alternative means of reception at no extra cost. No application under either of these interim arrangements will be entertained until Parliament has debated and approved the White Paper.
"Mr. Speaker, the Government believe that the White Paper offers an acceptable and well-balanced set of proposals. They will give cable an excellent opportunity for development, with the stimulus that this will provide for advanced technology. At the same time they will protect public broadcasting services and those who rely on them. I commend them to the House".
My Lords, that concludes the Statement.
Lord Ponsonby of Shulbrede: My Lords, I thank the noble Lord for repeating the Statement on the White Paper. I am sure that your Lordships would also wish, as in another place, to have an early and full debate on the contents of the White Paper. Cable television is potentially of great benefit to the nation, but it would seem that the Government's proposals and their rush for implementation before an Act is on the statute book meet more the needs of private profit and less the longer term needs of the nation as a whole.
I should like to comment on some of the areas specifically mentioned in the Statement. First, pay-per-view. Will not one of the effects of pay-per-view be that the most popular programmes and the most recent films, as opposed to national events, will be bought for pay-per-view, creating a situation of even greater advantage for those living in the more populated and richer areas?
We would welcome the limits proposed to be placed on the amount of advertising. The Statement refers to the cable authority adopting an advertising code
'
"which in essential particulars would follow the existing IBA code".
I wonder if the noble Lord could indicate whether these "essential particulars" will follow the type and quality of advertising control imposed by the IBA on ITV at present?
We would welcome the remarks made concerning the amount of foreign material to be included. The Statement refers to the fact that:
"The cable authority will be required to see that a 'proper proportion' is shown on each channel as appropriate".
What does that mean? We would be concerned that "a proper proportion" would mean that at least as much British produced material is shown on cable as the IBA would insist on being shown on the independent television channels.
We welcome the rejection of the Hunt proposal of a specific adult programme with electronic locks. When your Lordships debated the Hunt Report the idea of the electronic lock was exposed as being the fallacy that it is. Finally, we wonder what is the rush to proceed with an experiment before any Act is on the statute book at all. We are very concerned that the

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results of these proposals might be an ever-increasing divide between two nations.
Lord Winstanley: My Lords, on behalf of my noble friends on these Benches I should like to join with the noble Lord, Lord Ponsonby, in thanking the noble Lord, Lord Elton, for repeating this important and, so far as it goes, reassuring Statement. As the noble Lord, Lord Elton, has said, the House will need time to study the White Paper. Having glanced at it I think the noble Lord can say that again! It is a very complicated document, and thus the noble Lord may care to note that, like the noble Lord, Lord Ponsonby, we on these Benches greatly welcome the assurance that there will be an early opportunity for a full debate on these important matters.
As regards the detailed content of the Statement, I would merely raise three brief points for the noble Lord's consideration. First, will the noble Lord note that we on these Benches particularly welcome the assurance about a restriction on the use of foreign programme material, and also the requirement for the use of a reasonable proportion of British programme material? We regard that as particularly important, and would like the noble Lord to note that we welcome it. Perhaps the noble Lord would also note that, on balance, we think that the Government are probably right in not turning their back on pay-per-view, particularly when we bear in mind the present plight of Channel 4 and of TV—AM, which appears to indicate that supplies of funds from advertising as support for broadcasting are not inexhaustible.
Finally, can the noble Lord tell us whether there is any significance in the fact that there is little reference, if any, in the Statement—I do not yet know about the White Paper—to the interactive services which may be carried by cable, such as the paying of bills, reading meters and things of that kind? Does the noble Lord the Minister not agree that perhaps some of those services are more important than the purely entertainment aspects of cable? Therefore, I ask the noble Lord, Lord Elton, if he would tell us whether there is any special significance to be attached to the fact that all reference to interactive services has been omitted from the Statement.
Lord Elton: My Lords, I am grateful to both the noble Lord, Lord Ponsonby, and the noble Lord, Lord Winstanley, for their reception of the Statement. Both noble Lords are anxious that there should be a debate. I understand that it is likely to be on 23rd May. The noble Lord, Lord Ponsonby, suggested that the principal motivation of the White Paper is to generate private profit. To that suggestion I can only say that private profit will only be generated by public interest and support. The public only pays for what it wants, and if there is private profit that will be a vindication of the policy which we are pursuing.
The question of pay-per-view is an important one. I am glad that the noble Lord, Lord Winstanley, supports the Government in their decision to pursue it, and that the noble Lord, Lord Ponsonby, regards this as preferential for what he terms the more populated and richer areas (which does not apply to the inner cities, which are the most populated areas in many
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cases). I do not wish to pursue that at this stage. This is not the occasion for a debate; that occasion will come on the later date which I gave your Lordships.
The question of the proper proportion of British-generated material is obviously one which must be dealt with flexibly because it will depend upon the capacity of the British producing agencies to generate enough material of a sufficient standard for the service which we propose. That is why, in the sentence following that to which the noble Lord, Lord Ponsonby, directed your Lordships' attention, we say that they will be directed also,
"to work towards a progressive increase in that proportion as United Kingdom production capacity grows".
Finally, I should like to draw the attention of the noble Lord, Lord Winstanley, to the record of what I said. He will find that I in fact referred to the interactive services, albeit in the context of the interim arrangements. I said that projects will be chosen, among other things, for their ability to provide interactive services, which we regard as important. It is because of the pace of technological change that we believe we must maintain the impetus. I can tell the noble Lord, Lord Ponsonby, that that is why we wish to proceed after debate but before legislation—to catch the wind in our sails while it still blows.
Lord Aylestone: My Lords, in thanking the noble Lord for repeating this Statement, I should like to ask him three brief questions. First, who will be responsible for setting up the new cable authority? Will it be the Home Secretary or, perhaps rather more correctly, the Secretary of State for Industry? My second question is on programme content. The Minister may recall that in our debate in November he agreed with me that there was some doubt as to whether the Obscene Publications Act 1959 and the Indecent Displays Act 1981 would apply to cable television. I have not cleared my mind. Has he? If he is still in doubt, will this be included in a new, proposed Bill?
My third and final question is this. Will the noble Lord confirm that the new cable authority will not be allowed freely—and I mean without payment—to take programmes off the air from the BBC and ITV?
Lord Elton: My Lords, as I said, I do not want to get drawn too much into the detail of this Statement when a debate is to follow. The appointments will be made by the Home Secretary. As to the question of obscene publications, I would rather not commit myself to a statement which, on consulting the lawyers, I might regret. But the noble Lord was sufficiently industrious in his pursuit of me on the last occasion to make me sure that he will not allow me to get away with such an answer when it comes to the debate.
The Lord Bishop of Rochester: My Lords, we on these Benches should like to thank the noble Lord, Lord Elton, for repeating the Statement. We are grateful that among the five points that he picked out was the question of the maintenance of standards. We shall look forward to hearing the ways in which these are to be maintained and the way in which the new authority is to be appointed and is to work, and to hearing about its relationships with the corporation

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and the independent authority, which are already in existence. By and large, we believe that the nation has been well served by those bodies, and we hope that the newer body will be of the same quality and have the same authority throughout the country.
Lord Elton: My Lords, I am grateful to the right reverend Prelate for his reception of this Statement. We will look forward to useful and constructive contributions from the Bench of Bishops during the debate.
Lord Molloy: My Lords, it would appear that what the noble Lord has enunciated this afternoon will require an Act of Parliament. It also appears that, in anticipation of that Act of Parliament, the Government will proceed on certain lines. This seems to me to be a remarkable course. What the noble Lord has enunciated seems to be a reasonable proposition. But would he not agree that, if we can have the debate first and if Parliament can examine these matters, the great advantage is that that occasion also provides an opportunity for ordinary people and a variety of associations to submit their observations and to write to Members of the other House and to Members of this House, which then helps us all to contribute to what might be proposed? Would he not agree that such a proposal might be submitted to his right honourable friend for consideration?
Lord Elton: My Lords, the device of having interim arrangements in advance of legislation was recommended in the Hunt Report. As the noble Lord suggests, the House will have an opportunity to debate the matter before the interim arrangements are brought into effect. This will provide an opportunity for what the noble Lord refers to as ordinary people to bring matters to our attention. My own view is that both Houses of Parliament are full of ordinary people.
Lord Glenkinglas: My Lords—
Lord Denham: My Lords, if my noble friend will give way, the noble Lord, Lord Annan, has been trying to speak for some time. May I suggest that we hear the noble Lord, Lord Annan, first and then my noble friend Lord Glenkinglas.
Lord Annan: My Lords, is the Minister aware that some people will welcome his statement that experiments are to take place, because it is very likely that these experiments will make for better legislation when the time actually comes to pass a Bill through Parliament? However, I should like to ask the noble Lord two questions. Do I infer from this Statement that it is now possible for any system of transmitting cable television to be used—for instance, tree and branch as well as star, and any other system? Secondly, is there anything in the White Paper which will specifically hold out hope to British industry, which is interested in the laying of either co-axial cable or fibreglass cable, that such firms will receive some preferential treatment in being allowed to develop these systems?
Lord Elton: My Lords, I am grateful for the support of the noble Lord, Lord Annan, for the idea of having experiments in advance. On the question of the
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technology, which I rather hoped the noble Lord would not lead me into, I can say that all underground ducts will have to be laid in a star configuration, but tree and branch, or switched topologies, will be allowed. This obviously means more to some people than to others!
Lord Glenkinglas: My Lords, will my noble friend accept that I think his ideas on cable television are very good? Will he also accept that before the debate takes place someone on the Government Benches should be prepared to explain why it is that all these new channels, such as Channel 4, are splendid for people who live in towns but are absolutely useless to a comparatively small number of the population, who have great difficulty in getting television at all?
Lord Elton: My Lords, this is a subject to which doubtless my noble friend will return in the course of the debate.
Lord Ardwick: My Lords, can the noble Lord tell us whether the Government have any idea about the time-span involved? How long is likely to elapse before cable becomes a substantial competitor of the BBC and ITV?
Lord Elton: My Lords, indeed, that would be looking into the crystal ball. I cannot tell your Lordships the extent to which or the rate at which what is experimental will become successful. What I can tell your Lordships is that the Government believe that this is an important area, not only for entertainment, which we believe is the necessary infrastructure to provide the paths through which information can pass, but also for a later generation of technological developments, such as that to which the noble Lord, Lord Winstanley, was alluding when he spoke about interactive services, which, to use an Americanism in what we hope will be predominantly a British enterprise, is a whole new ball game.

Brandt Report: "Common Crisis"
Debate resumed.
3.58 p.m.
Viscount Hanworth: My Lords, whether we look at it from a Christian or other ethical point of view, we cannot ignore the plight of the third world. Millions are dying of starvation or are so undernourished that the children suffer permanent disability. The WHO statistics should really bring us up short: some 18 million with leprosy, 12 million or more with preventable blindness, and untold millions with debilitating diseases which make life hardly worth living.
We respond to all this by doling out some very limited aid and with a response to emotional appeals from organisations such as the Save the Children Fund. It is a bit like our grandfathers, where a 10 per cent. contribution to charity from a person's income justified exploiting labour to any possible extent. The capitalist system and free enterprise justified this and,

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of course, the plight of the workers was said to be their own fault. I think that the last point is a very relevant argument for developing countries today. If only they would control their birth rate and produce stable and enlightened Governments, how much more help could we easily give! But human nature is very imperfect both here and elsewhere and we cannot fall back, as our ancestors did, on the comforting idea of colour prejudice. The two Brandt Reports have highlighted the problems and suggested what might be done. They have also made the point that even if the self-interest of the West is the only criterion we cannot carry on as we are doing indefinitely.
At the moment most developing countries can hardly, if at all, service their debts, and rescheduling such debts is only a palliative. The day of reckoning must come unless there is a quite enormous improvement in the world economy. As Roy Jenkins said recently:
"If an immediate and imaginative worldwide initiative is not taken, present conditions may, in a year or two's time, make today's ills seem almost benevolent."
The world is now interdependent and it could well be that what is at stake is not only the fate of the developing countries, but the whole of Western democracy and of capitalism as we know it. Most of us believe that in a very imperfect world the capitalist system, with all its warts, is the best that we can achieve overall, but it is working badly, and as Brandt makes clear some fundamental changes are now needed.
We have only to look at Western unemployment to realise how the economic system has become our master, not our slave. It is a truism that "the more people who work usefully and efficiently for the longest possible time, the richer a nation should be". Yet, at a time when even the West cannot afford to do what they would wish to alleviate the relative poverty of some of their people or provide many other things, such as improved hospitals and prisons, the system is creating higher and higher unemployment.
I am afraid that the economists, who almost always disagree, are primarily concerned with trying to make the present system work, rather than with how it might be improved on a world-wide basis. What we need even more than expertise is a sense of practical idealism which would mean that Britain and other nations would be prepared to make sacrifices to achieve a better world. Most people have a latent sense of such idealism if given leadership in that direction. Most certainly Brandt has shown the way.
I am not an economist and I cannot therefore comment on the recommendations in the report, certainly not without a great deal of research, by which I mean talking to many people whose views would be important. Nevertheless, I have a "gut feeling" that at least some of the recommendations are those of a committee and bear that hallmark. Increased lending by IMF or other bodies may be necessary, but I think is not, per se, a solution.
The report talks about fundamental changes. I have the feeling that this may be little more than an extension of the present system and not really all that fundamental. Do we not perhaps almost want to think in terms of barter for the developing nations' raw
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materials, currency being the uncertain thing it has now become? Could the wheat, butter and other food surpluses perhaps not best be treated on this basis?
What else, my Lords? There are too many international committees and organisations, and I unkindly say that the merit of some of their staff is judged solely by the amount of somewhat irrelevant paper which they produce. Could we not cut through some of this, and try to do what Brandt has done or proposes? Most certainly the Government's comments on the first Brandt Report epitomised the very worst that our Civil Service and democratic system could reasonably produce. That is in fact what the noble Lord, Lord Oram, said in rather different words. Although this speech represents my own views, my party is particularly concerned with the issues raised by Brandt and is determined to make some of his proposals a reality.
Before finishing I should like to raise one specific issue, which is that of the aged. Here the state does what it feels it can, but in the developing world the aged must rely on the family groups, which are increasingly breaking down as the younger generations leave the country for the towns. We might remember as well that if we are as concerned with the rapid increase in population, at least one reason for this is that if you are in a country where there is no security for age, the more children you can have the better chance there is of at least one of them being able to look after you later.
Brandt has highlighted this problem and proposed some solutions, and the United Nations World Assembly on Ageing has done the same. I finish by an appeal that we must really try and look into the future not only because it would pay us to do so, but with some idea of real idealism, which I feel is lacking.

Citizens' Advice Bureaux
4.7 p.m.
Lord Lyell: My Lords, with permission, I should like to repeat a Statement which is being made in another place on the review of the National Association of Citizens' Advice Bureaux. The Statement is as follows:
"I said to the House in the adjournment debate last week that I would make an announcement to the House on the details of the review as soon as I could. I am glad to say that I can now announce the chairman and terms of reference of the review which the Association and I have agreed is urgently needed.
"The terms of reference will be:
'To review the functioning of the National Association of Citizens' Advice Bureaux and to make recommendations, with a view to ensuring that the Association gives the best possible service and support to local Citizens' Advice Bureaux and that the monies available to the Association are spent in the most effective way'.
"The review will be chaired by Sir Douglas Lovelock KCB. A firm of management consultants will be appointed to assist in its work. A senior partner of the firm chosen will also be a member of the review team. It is proposed that a third member

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should be appointed and it is hoped to announce a name shortly. The terms of reference and the membership I have announced have been agreed with the National Association.
"My honourable friend has asked the chairman to report to him in the next six months. The review team will of course work closely with the National Association; and the report will be made available to them once he has received it. It is proposed that the report should be published.
"The management consultants assisting the review team will examine the staffing and management structure of the National Association and will be asked to complete their work within the next three months. In accordance with normal procedures we shall be seeking tenders at once for this job on the basis of a short list to be discussed with Sir Douglas Lovelock and the National Association.
"I am very glad to say that complete agreement has been reached with the National Association that the review should be carried forward on this basis and I am sure this will be welcomed by the whole House. In the light of this, and the helpful discussions my honourable friend has had with the National Association's officers, I can confirm that Government funding for NACAB for the whole of the current financial year will be maintained on the normal basis."
My Lords, that concludes the Statement.
Lord Ponsonby of Shulbrede: My Lords, I welcome the Statement made by the noble Lord, and particularly the last sentence of that Statement confirming the funding for any CAB for the current year. However, the Statement does not do anything to withdraw the allegations made about inappropriate political activity by the Citizens' Advice Bureaux, and I wonder whether the Government are now prepared to withdraw these allegations.
I should be less than honest if I did not express our concern about the inept handling of the whole question of the CAB grant by the Government. This, my Lords, could have a considerable effect on local authority support for local Citizens' Advice Bureaux. As the noble Lord will know, some local authorities are much more supportive of the work of local Citizens' Advice Bureaux than others, and I hope that in these circumstances the Government will think it wise to bring to the attention of local authorities the value of the work of the Citizens' Advice Bureaux and the need for local authorities to give them as much support as they can.
Lord Winstanley: My Lords, on behalf of my noble friends on these Benches I should like to join with the noble Lord, Lord Ponsonby, in thanking the noble Lord for repeating this Statement. May I ask the noble Lord whether he has noted that I have on the Order Paper an Unstarred Question on this subject? I wonder whether this Statement would pre-empt that particular Question. Perhaps the noble Lord would care to note that, having heard the Statement, I take the view that it does not pre-empt that Unstarred Question and that I would still wish to pursue that.
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The Statement deals in the main, as the noble Lord has made clear, with the proposed review of the working of the Citizens' Advice Bureaux. I hope the noble Lord will note that we greatly welcome that review, since we are entirely convinced that the review will demonstrate what we already know—namely, that the NACAB is a highly efficient and cost-effective organisation. Perhaps the noble Lord will also note that we are very delighted to learn that the terms of the review are agreed entirely with the association. I am delighted that there is now an end to the uncertainty about the funding of the NACAB, but there is nothing in the Statement that explains for a moment why that uncertainty was caused at all. That is a matter that we will want to pursue on another occasion rather than weary the House with it now.
May I finally ask the noble Lord to use his good offices and his influence to ensure that local government, which funds Citizens' Advice Bureaux locally, does not now follow the melancholy example set by central Government and start dishing out its grant in small six-monthly packages?
Lord Lyell: My Lords, we are very grateful for the interest which has been taken in this Statement, and, indeed, in this subject, by the noble Lord, Lord Ponsonby, and the noble Lord, Lord Winstanley. As far as the noble Lord, Lord Ponsonby, is concerned, the noble Lord raised the allegation of political campaigning and mentioned political activities in connection with the National Association. My Lords, my honourable friend made the position quite clear in the adjournment debate in another place on Friday and he welcomed the National Association's reaffirmation of the political impartiality of the Citizens' Advice Bureaux service. The assurance I have received is that any breach of this principle will be thoroughly investigated.
So far as the handling of this particular matter is concerned and the ineptitude of it or otherwise, I believe that, certainly in your Lordships' House, we have handled this matter with the utmost dignity and, I hope, clarity. I would reiterate my honourable friend's views on the tremendous value of the Citizens' Advice Bureaux and indeed the help that they have obtained from the local authority. So far as the comments of the noble Lord, Lord Winstanley, are concerned, I note his view that the Statement I have made this afternoon does not necessarily pre-empt his Unstarred Question, and we shall look forward to anything he has to raise on a future date. We are very happy that the terms of reference of the review give him some satisfaction.
As regards the uncertainty over the financing of the National Association, or the financing of the bureaux by local authorities, certainly I believe there was no uncertainty in your Lordships' House. There may have been speculation outside your Lordships' House, but certainly the position here was absolutely clear. I am very flattered that the noble Lord believes that my good offices will help in any further inquiries into this particular matter.
Lord Ponsonby of Shulbrede: Before the noble Lord, Lord Lyell, sits down, I hope he will appreciate that I was referring to the inept handling of the situation by the Government and not by him.
Baroness Burton of Coventry: My Lords, we on these Benches, too, welcome the Statement made by the Minister and particularly, of course, the fact that Government funding for NACAB for the whole of the current financial year will be maintained on the normal basis. It is quite vital that we know that and, of course, there should have been no necessity for such a Statement to be made. The noble Lord, Lord Winstanley, has stated that he intends to leave his Unstarred Question on the Order Paper for debate next week. That will give us an opportunity of discussing many points for which we have not the time now, and which certainly should be made. We should welcome an opportunity to discuss this unhappy affair in more detail on that date next week.
As the terms of reference and the membership have been agreed with the National Association of Citizens' Advice Bureaux, may I express the hope that the third member of the review body will be somebody active in the voluntary advice services field? We think that that is important. I myself was not altogether happy that a team of management consultants was to do this job; although I think that does emphasise what many of us feel—namely, that the query on this whole affair might be that of financial management and not the other matters to which reference has been made. However, I would press the Minister to try to ensure that the third member of the committee is somebody from the voluntary services movement. We on these Benches very much regret that this whole episode arose as it did, and we should like to say, in conclusion, that we have much admiration for the work and the efficiency of the Citizens' Advice Bureaux and regret that this trouble has descended upon them.
Lord Lyell: My Lords, we are very grateful for the forthright, clear and succinct comments of the noble Baroness. As far as the third member of this review body is concerned, I am sorry to say that we can only wait and see. But assure the noble Baroness and your Lordships that the appointment of a third person is being pursued with extreme urgency. The noble Baroness will have noted in the terms of reference that the review of the functioning of the National Association will be one of the objectives, with a view to making recommendations and, above all, to seeing that the monies available to the association are spent in the most effective way. I am sure that the noble Baroness and your Lordships would agree that a firm of management consultants in this particular field would be able to give clear and succinct advice of the type which was given by the noble Baroness to my honourable friend.
Lord McGregor of Durris: My Lords, as President of the National Association of Consumers' Advice Bureaux, I must declare an interest before reaffirming the complete agreement between the noble Lord's right honourable friend and the association as to the basis on which the independent review should be carried forward. Is the noble Lord aware of the satisfaction which will be felt among the many full-time and voluntary workers in the service throughout the country at the return of our funding to the normal basis throughout the current financial year? Is the noble Lord aware that the CAB's pleasure at the setting up of the independent review arises in part from
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the fact that we have been pressing for a review for many months, not only because we feel sure that it will show a need for additional funding but because it will the better enable the bureaux to give the best service to which the Statement refers? Has the noble Lord noted the heartening support for the bureaux from all shades of political opinion, from local government and from citizens who use the service? In particular, the National Association welcomes the reiterated support for the service from the Minister for Consumer Affairs, a support to which the noble Lord referred in one of his replies to questions.
Lord Lyell: My Lords, we are grateful for the authoritative voice of the noble Lord, Lord McGregor. I wonder whether he made the same error as I did on the last Statement. Did he mention the National Association of Consumers' Advice Bureaux or did he say "Citizens' Advice Bureaux"? I know that I said "Consumers" on the previous Statement. If I heard him aright—
Lord Elwyn-Jones: He said "consumers' advice".
Lord Lyell: I am grateful to the noble and learned Lord.
Lord McGregor of Durris: My Lords, if I made a mistake, I was doubtless misled by the noble Lord!
Lord Lyell: My Lords, I am always grateful that your Lordships point me in the direction of clarity, even on this occasion. I should like to thank the noble Lord for his robust and forthright comments and support for the entire Citizens' Advice Bureaux movement. We hope that the movement is satisfied. As the noble Lord has said, his organisation has been pressing for an inquiry. I hope that he will feel satisfied that his efforts have been rewarded by the Statement I have made this afternoon. The noble Lord drew attention to the support for the CAB from all sections of the political community. I am sure that he will have noticed, we have noticed and your Lordships have noticed the forthright and robust support from my honourable friend on at least eight occasions, or may be nine occasions, in another place in the last two discussions when my honourable friend dealt with this particular matter. We are very grateful for the forthright support of the noble Lord, Lord McGregor.
Lord Taylor of Gryfe: My Lords, may I ask a brief question? Is the set-up of this committee such that they are making the same mistake as did the Serpell Committee, in so far as the management consultants concerned were members of the committee? I have no objection to the use of management consultants—I think they can be useful and appropriate—but in so far as a member of this three-man committee is going to be one of the consultants it makes him a prisoner of their recommendations. Would it not be wiser if the three members of this committee were completely independent of the management consultants whose report has to be considered, I hope, objectively?
Lord Lyell: My Lords, I take the noble Lord's point but I think that he might agree that the terms of reference of this review committee are a little different

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from those of the Serpell Committee—although much of what he says may have relevance. My honourable friend believes that the review committee that he is suggesting is the correct channel in present circumstances. Above all, the noble Lord will have noticed that the first report is to be presented within three months and the committee hopes to present its full report within six months. Speed is of the essence.
Lord Denham: My Lords, before the short debate resumes, it might be useful if I were to tell your Lordships, according to Standing Orders, that 39 minutes have elapsed already. One hour and 51 minutes are left; so that the debate must now end at 6.15 p.m.

Brandt Report: "Common Crisis"
4.25 p.m.
Debate resumed.
Lord Hatch of Lusby: My Lords, the document that we are discussing this afternoon is not a Socialist document. If it had been, no doubt Mr. Edward Heath would not have signed it. I personally have many criticisms of it and, in particular, of the defects in the use of international financial and economic institutions which are not really dealt with in this document. I wonder if Her Majesty's Government still maintain the support which they showed in their reactions to the first Brandt Commission Report in regard to existing international economic institutions. But this report has done one invaluable service to our generation. It has spotlighted the growing world crisis, the irrational policies which are being followed by a number of Governments and the mounting misery of the majority of the world's population.
In a short speech of this kind it is necessary to concentrate, and I want to concentrate on one issue within the report which is contained on pages 15, 101, 103 and 104. In doing so, I take up what I thought was a most constructive and valuable speech made by the right reverend Prelate the Bishop of Hereford. I want to build on what he said. Indeed, he helped me very considerably by quoting figures which therefore I no longer need to quote. The situation so far as the whole question of aid and trade is concerned—and at the moment I put the two together—is really very clear. It has been clarified by both Brandt Commission Reports.
In the low-income countries (if one excludes China and India for the sake of convenience) the increase in trade during the 1960s was some 5.3 per cent. During the 1970s trade declined by 1.1 per cent. At the same time (as the right reverend Prelate pointed out) the prices of the commodities on which a great deal of this trade depended virtually fell through the floor. I can perhaps summarise the figures which the right reverend Prelate has so usefully given us by saying that in the two years that he mentioned—that is, from 1980 to 1982—the average rate of decrease in the terms of trade was, in real terms, 19 per cent. a year.
I give one example. Since independence, after two boom years, the new State of Zimbabwe, now just three years old, has had a decrease in its export prices
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of 5 per cent. and an increase in its import prices of 6 per cent. I think that we would all agree that those figures are not unrelated to the unrest which, unhappily, is now prevalent in that country. What is the result of this in global terms? It is that the majority of mankind and the majority of countries in the world—because they are unable to continue the increase in their exports, because their exports are priced at a lower figure and because they still have to pay either static or higher prices for their imports—have problems of foreign exchange; they have a declining amount of foreign exchange, they have declining imports, and, in the final result, there is the debt crisis which the world has been facing for the past two years. This affects us, as Brandt very rightly points out. I believe that most of your Lordships would agree that, with the exception of the nuclear threat, the greatest challenge to mankind in this century is how to bridge the gap between the 800 million people who are living in the world today in dire poverty and the unemployment of over 30 million people who are living in the industrial world.
I want to know from the Government what they are doing about this central problem to this generation and to the next generation. I also want to point out that their record so far does not seem very good. As my noble friend Lord Oram pointed out, they have now reduced overseas aid by some 19 per cent. When we left office the figure of aid, in constant terms, was over £1,100 million a year. In constant terms it is now less than £900 million—and I am saying "in constant terms". When we left office at least 40,000 British workers were employed as a result of the aid programme, and over one million in exports to the third world.
I have asked the noble Lord this question before, and I still have not received an answer. The Ministry of Overseas Development was able to give these figures, and the Overseas Development Administration should also be able to give them now. Does the cut of 19 per cent., which has been admitted in another place, mean that there has been a cut in the employment of British workers as a result of the cut in overseas aid? Before the noble Lord gives his usual answer to me on the question of aid—that it is going up this year—will he please deduct the amount that should have come from the Ministry of Defence and which is being given to the rehabilitation of the Falkland Islands? I ask that because on present terms each Falkland islander is receiving in overseas aid well over £500 per person from our aid budget, whereas a person in India is receiving approximately 25 pence. That is the scale of the difference.
What I want to concentrate on for the last couple of minutes is to ask the Government again to address themselves to the question of expanding trade between this country and the third world. Our trade with third world countries is much less than that of the United States or Japan; and I should like to make a special point and draw the attention of the noble Lord to the quite remarkable changes that have taken place over the last seven or eight years in Japanese policy. I know some people may consider this to be Japanese economic imperialism, but I hope it is not. The Japanese have greatly increased their exports to the third world, but they have increased their imports by

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a much greater extent, and they are now running a regular annual deficit in order to build up the purchasing power of the third world countries. At the same time they are increasing their aid, which has risen in very considerable proportions since 1977 and now stands, in the latest figure I have, at 0·34 per cent. of their GNP, because they recognise that overseas aid and trade have to work hand in hand.
In some ways I am a heretic in this party. I believe that as this Government have dropped the education of the British people in the realities and the morality of development, it is necessary to pursue the policy of tied aid, so long as that is not another phrase for simply giving subsidies to the powerful companies. I agreed wholeheartedly with the right reverend Prelate when he said we must give more programme aid and that that must be conditional upon the recipient Governments spending that aid in rural renaissance and in providing for a growing quantity of basic needs being supplied by the people of the third world out to their own communities. If those are called political or economic "strings", so be it. I believe that we are acting on behalf of the people of the third world themselves if we make sure that the aid we give is directed to those Governments and those societies which are already committed to building up the rural agricultural communities which can provide for their own needs. I believe they themselves will welcome such action.
The Minister of State, Foreign and Commonwealth Office (Lord Belstead): My Lords, before the noble Lord, Lord Gladwyn, speaks, I think that the mathematics of my noble friend the Chief Whip were not entirely right when he said that this debate should end at 6.15 p.m. I am advised that the debate should end at six minutes past six.
The Earl of Longford: My Lords, may I ask for guidance on how long that leaves for each of us on the Back-Benches in the time remaining?
Lord Belstead: My Lords, a quick division sum will provide the answer for the noble Earl.
4.37 p.m.
Lord Gladwyn: My Lords, I imagine that it will be in order for me to speak for approximately 10 minutes, which is what I originally intended to do. May I begin by saying that I agree with a great deal of what the noble Lord, Lord Hatch of Lusby, has said. For my part, as an acknowledged non-expert, I would venture (greatly daring) to try to draw certain conclusions in respect of the very difficult and contentious problems dealt with in this excellent report which is before us this afternoon.
My first point (though I do not know if everyone would accept it) is that I feel that if we—and by "we" I mean all the industrialised countries—are really going to help what used to be called the underdeveloped countries (but are now more aptly called the very poor countries) to get out of the appalling mess in which they now find themselves, and for which I do not dispute they themselves may be partially responsible, we are unlikely to do so entirely painlessly
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even if it can be shown that doing so is in a sense in our own interests. In other words, any real assistance that we give them is likely to be given at the expense, I am afraid, even if to a slight extent, of our own still very high standard of living.
Take only one instance—sugar. One of the chief ways in which we could by common consent do a great deal to avoid disaster in quite a few of these lands would be to import much more cane sugar. But if we did so we would have to reduce drastically the amount of sugar beet, and indeed of surplus sugar beet, which we—and, here, by "we" I mean members of the EEC —produce at considerable expense in Western Europe. Of course, if the 10 Governments concerned were to take such a salutary decision (at any rate, I think it would be salutary) there would be tremendous protests from the electorally important farmers' lobbies, for many of the more prosperous farmers would stand to lose a great deal of money. So, for this reason alone I think that sort of proposal is never likely to see the light of day. Yet, unless this sort of measure is taken it is pretty clear that no serious direct—and I repeat, "direct"—attempt to assist the poorer countries will be taken by the richer countries.
Naturally, assistance can always, and should, be given indirectly, the effect of this on the standards of living of this country and of the various other countries concerned being presumably not so noticeable. For instance, as recommended in the report, the International Monetary Fund can be authorised to increase the special drawing rights; its conditionality can also be improved; the percentage of the various gross national products devoted to aid can be stepped up by a point or two; certain loans can be written off, others can be rescheduled; the International Development Agency—IDA—can be given further support. At least here I think that the performance of Her Majesty's Government has been, on the whole, very creditable. The Lomé Convention can continue to be applied. I hope it will be and that in no way will it be restricted. And so on and so forth. But all these measures, however desirable, are, in a way, palliatives. It does not look as though great progress can be made—here I agree entirely with my noble friend Lord Banks—without major reform of the whole international trading and financial system: a kind of new Bretton Woods, if you will, which is recommended at the end of Brandt Report II in a general way and which has been described, again by my noble friend Lord Banks, as the end of Keynesianism—the terminus ad quem of the Keynesian thesis.
What is pretty certain is that nothing like this will come out of Williamsburg, which I am afraid is likely to be vitiated to a large extent by questions relating to East-West trade, if I read my press correctly. Indeed, the whole world economic situation will quite likely have to get considerably worse before this sort of thing is even contemplated. And when it is contemplated it will probably, I fear, be found that a general world trade revival is not possible without acceptance by all concerned of at least some likelihood of renewed inflation, leading perhaps, in the long run, to a measure of debt repudiation. Was it not Lord Keynes himself who said on one occasion that in this wicked world progress usually results from a series of gigantic debt repudiations? These are obviously dangerous

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thoughts. In any case, they are all for the future and they are just speculation.
But there is one factor which stands out, even now. The general philosophy of the Tory Government, as we all know, based on the general thesis known, rightly or wrongly, as monetarism, seems to be that in the long run all depends upon free play being given to the operation of "the market". You leave the market to operate entirely by itself, with the minimum of governmental interference; then eventually all will be well. It is basically the doctrine of "Let nature take its course".
With great diffidence, because I am not an expert, I suggest that we have arrived at a stage in world history when such considerations no longer apply. Certainly we can admit that if things go on as they are, the present world recession is unlikely to lift in any material way until such time as the American market recovers and world trade consequently takes a turn for the better. But in spite of present insistence, largely on the part of our own Government—possibly dictated by electoral exigencies—that recovery is virtually on the way, it seems that we shall have to face some even greater recession, based on at least a partial collapse of the international banking system. I do not say that this is inevitable. I sincerely trust not. But even now we ought to contemplate this possibility—as it were, take some kind of preventive action, or have plans in hand for taking some action in that event.
But—I do not know whether this is so—there might be an alternative. We could, if we were intelligent, choose to create a genuine European Union—not a federation of the old-fashioned type but a full, free trade area with a large communal budget, many times the present budget, in respect of which decisions were ultimately taken by a qualified majority vote in the Council of Ministers, endorsed by a majority in the European Parliament, with the advice of the European Commission. At least as a first step in this direction, we could even now join the European Monetary System and, as part of a deal involving a revised common agricultural policy (which I regard as essential), agree in the next year or two to a considerable increase in the Community budget, based on increasing the 1 per cent. VAT limit. This would lead to a large increase in the budget generally. It would enable us to begin to create a suitable regional fund and to pursue a common industrial and transport policy. Then one thing would lead to another.
There is little doubt that by such means, even in the sad event of continuing stagnation in world trade and a malfunctioning of the world financial system, we might be able in the first place to immunise ourselves to a considerable extent from the political and economic infection of protectionist tendencies and also, let us hope, be the initiators of some ultimate world trade revival. At the moment, as I have said, we seem to be simply waiting on such a revival in the United States, but that, as we all know, is held up—and may be held up indefinitely—by the dreadful decision (as I think) of the administration to pour enormous sums into the achievement of some kind of nuclear "predominance", thus creating an unmanageable budget deficit of some 200 billion dollars, which in its turn necessitates high interest rates and consequently stifles trade.
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But there is no logical reason why we should necessarily go on waiting for America. The Community is larger than the United States. Its GNP is not now very dissimilar. We have the intelligence, the techniques and, if only we would use them, the men, All we have to do is to create, on our own and, so to speak, by an act of will, a real "market"—not just wait, in accordance with the inclinations of American and British "monetarists", for the mysterious world market of Professor Hayek to perform miracles, all on its own.
I quite realise that such possibilities are beyond the wildest dreams of the present leadership of the Labour Party, who are only intent, so it would seem, on getting us out of the Common Market as soon as possible. But when it comes to the point, when there is a real economic crunch in the world, I would not despair of the leaders of other parties—notably, of course, those of the Alliance—being prepared to take the plunge and, indeed, to take the country with it. Admittedly the situation will have to get very much worse than it is now if these kinds of things are to happen. All one can say with some certitude is that the British are quite capable of reading the writing on the wall, but only when they have their backs right up against it. And when that happens we must, somehow or other, produce an inspired leader as well.
4.48 p.m.
Lord Thomas of Swynnerton: My Lords, there is no doubt among your Lordships that the second volume of the Brandt Report, Common Crisis, is a high-minded document. I am also sure we all agree that it is desirable to discuss these matters as fully and as candidly as possible. I recognise that there is so much in this report, and so many recommendations, that we can all find one or two things with which we fully agree. I myself fully support the statement on page 156 that we should desire to see supported by our Government and by the other Governments in the European Community,
"A reinforcement of the commitment to the principles of an open, rule-governed trading system".
Most of us would accept that recommendation, although it is fair to say that there are a great many countries which make declarations in favour of trade but which do not carry those declarations through into practice as effectively as they might. We must also not forget that protectionism is the natural reaction of all democracies at a time of recession.
I hope your Lordships will not feel it either discourteous or churlish of me to dwell on one or two criticisms which I have of this report, since on the whole I think that all those who have spoken up to now have done so without any criticism of any sort. It would be difficult to believe that a document of this length and ambition should not have some things wrong with it.
The first matter I wish to criticise is the use of language. The suggestion that there is a third world and a fundamental difference between countries of the North and South is extremely inaccurate and possibly even damaging. Confucius—that famous inhabitant of what I see from the report's map is still regarded as part of the third world—said that the first business in

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politics was to define your terms. There is no doubt whatever that the expression "third world" is an extremely bad definition. It is a sludgy amalgam, as Churchill put it in relation to the proposed European army in the 1950s. Any suggestion that countries such as Venezuela and Bangladesh, Argentina and Haiti, or Kuwait and China, have more in common with each other than they have not shows gross contempt for cultural and historical differences.
I know that "third world" was a phrase invented by a French demographer in the 1950s, in the same way that the expression "Left" and "Right" is a distinction (from which we have gained so much evil as well) derived from the French Revolutionary Parliament. We should recognise that not every invention of terminology by our French neighbours is a good contribution to our vocabulary. This is particularly important where major political recommendations are made—and this book is full of major political recommendations since it suggests that political systems do not count. But they do count. Political systems are what determine what is good and bad in the world. It is quite ridiculous to make all these ambitious suggestions without having some consideration of the fact that there are some states, such as those in Latin America, which have had 150 years of independent statehood and those of Africa which are new countries created in the lee of the European empires.
I must also say, because perhaps no one else will do so, that despite the presence of Mr. Edward Heath on the commission there is no mention at all that one of the main problems of the world, if not the main problem, is that of the expansion of the Soviet empire. This may be thought irrelevant, but nevertheless it not only forces the world to spend a great deal on armaments which otherwise it would not do, and not only creates refugees in all continents, but it also deprives the world, because of the malfunctioning of the political system in the Soviet Union itself, of those beneficial agricultural exports on which Europe and other countries depended in the years before 1914.
This neglect of the Soviet dimension is particularly surprising because in the introduction to "Brandt II" by Herr Brandt himself there is almost excessive dwelling on the subject of arms and armaments—although it is fair to say that, rather strangely considering that Herr Brandt was a distinguished mayor of Berlin, there is an equation of East and West as far as this is concerned.
Another point which occurred to me when going through this document—although, again, it may appear churlish to your Lordships—is that there seems to be excessive faith in the efficacy of Government-to-Government aid. Of course, emergency aid is very desirable. Of course, educational aid—especially in relation to agriculture—is greatly desirable, and the report has some excellent ideas on those matters. But the fact is that relative prosperity, such as that which we have achieved in the industrial countries, and such as that which has been nearly achieved by the so-called newly industrialising countries, is not likely to be obtained by the provision of aid, however large.
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The achievement of our relative prosperity and the achievement of relative prosperity in countries such as Taiwan and South Korea—and I say this having listened carefully to what was said by my noble kinsman Lord Gladwyn—depends on the economic climate which has been achieved in those countries and on an economic climate in which a private profit must play a part. There is no instance of a state coming out of misery simply because of aid.
Lord Gladwyn: My Lords, is it not the case that with Taiwan and South Korea their economy has benefited by enormous subsidies from the West?
Lord Thomas of Swynnerton: My Lords, whatever may have occurred in those countries, it is certain that they have not benefited from the constant intervention by the state in their economy—as has occurred in so many countries in Africa and Latin America.
The first report of the Brandt Commission also devoted a good deal of attention to the subject of agricultural reform. In this report, I am pleased to see, there is not quite so much attention. What is missing, though, is that hardly any attention is paid to what makes for successful agriculture. If one is discussing the future of the world's food supply, I would have thought that one should devote some pages to why it is that the countries of the North, to use the commission's own language, have been able to develop enough food to be able to provide the whole world—the communist world as well as the developing world—with reserves of those commodities for the future.
At the back of my complaints in relation to the Brandt Report finally is the tacit assumption made that the liberal heritage of the West has no part to play. But a point that must occur constantly is this: what kind of political system can guarantee that the assets of companies adventurous enough to risk their money in, say, Latin America can be safeguarded? What kind of political system can make certain the export of profits, where these are made? And what kind of political system can be expected to attach importance to the repayment of loans; quite apart from being sensitive to new ideas of industrialisation and new technology? The answer is, those Governments based on consent and the rule of law. It may well be said that this is inconceivable in many countries; but if India and Honduras (to take two extreme examples) are able to provide a democratic system, it is rather contemptuous to suppose that this subject is one of no relevance or importance to the rest.
I should like to conclude with the suggestion that we keep some sense of proportion in respect of the figures which we have been given in this debate. The first report of the Brandt Commission mentioned 600 million people living in what was called the direst poverty—and the noble Lord, Lord Hatch of Lusby, mentioned a figure of 800 million. As a proportion of world population—and this must be said in all seriousness—both figures amount to something like 15 or 18 per cent. Considering the increase in the population of the world over the past 50 or 100 years, considering the incessant political mismanagement by over-ambitious or simply rotten Governments, and considering the number of wars, this does not seem too

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bad a figure—that 75 or 80 per cent. of the world's population can be said now to be living not in the direst poverty. I doubt very much whether it has ever been possible to say it before.
5.59 p.m.
The Earl of Longford: My Lords, it is a rare privilege to follow such a brilliant family team as that to which your Lordships have just been listening. The relationship of father-in-law and son-in-law has not been very common in British history. One's mind goes back to James II and William of Orange. What I am saying now is without reference to the personal beliefs of both speakers which have been so evident this afternoon, but on the strength of their speeches this afternoon I hope that their domestic struggles will work out in a different way!
In the few minutes available I am going to deal with matters entirely from the rather crude moral angle. That is not to say that other speakers, including, first of all, obviously, my noble friend Lord Oram, and Lord Hatch and others, have not; they and others have of course spoken about the moral aspect. But I am concentrating on that, picking it out of the wider issue. I would quote something that comes in the Brandt Report which is quite brief:
"There is a clear common interest"—
by which Brandt meant an economic and social interest which is common to all nations of the world—but what I want to concentrate on comes in the next sentence:
"This, of course, does not reduce the moral obligation of the rich to the poor, in particular towards those whose situations have become more desperate in the last few years."
It is on that aspect, rather than on the mutual interdependence of which we are all conscious, that I want to dwell. Here I support the noble Lord, Lord Gladwyn, who called for sacrifice. He said that sacrifice is necessary, and I think that unless we face the point made by the noble Lord we shall be humbugging ourselves; we shall go on in the end doing nothing, because when we come up against it we shall always realise that there is sacrifice involved and we will have avoided it and therefore do nothing.
This aspect of sacrifice has been looked at in the Labour Party, and perhaps in other parties, but more obviously in my own, over a great many years. The late Mr. Hugh Gaitskell laid stress upon it in the 1950s. In those days it was considered an absolute minimum that we should give one per cent. Others may have had bolder aspirations, but Hugh Gaitskell and others insisted on that one per cent.; it was thought that was the irreducible minimum. Now we have descended to a wretched level. We are nowhere near reaching the 0.7 per cent. which is regarded as a kind of interim target. I understand from the figures supplied by the noble Lord, Lord Oram, that we have now come down in the last year from 0.44 to 0.38 per cent. If that is the way the Government are moving there seems no likelihood of their increasing it.
So I think we may take it that aid is dropping. Certainly—this has been brought up by the noble Lord, Lord Hatch, and others—the total amount has been brought down by 19 per cent. since this Government have been in office. The noble Lord, Lord Thomas, may be rather gratified with that
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development. If he thinks aid is a bad thing, he will be delighted to find it is being cut down. We read in the newspapers that Lord Thomas is very close to the Prime Minister. I can only hope that on this matter he and she do not see eye to eye. But in any case that is what has occurred under this Government, a reduction of 19 per cent.
Lord Thomas of Swynnerton: My Lords, on a point of correction. I merely said that I thought aid was ineffective.
The Earl of Longford: My Lords, I understand; but do not let us waste our time on what is ineffective. I would think, at any rate for the noble Lord, Lord Thomas, it would be a pity to waste time on what is ineffective. That is a point of view, that it is either harmful or ineffective. At any rate, it is not likely that a Government that take up that attitude are going to do much about increasing aid.
Here I am bound to say—I will leave out the Liberal Party for the moment, and the Alliance too, because the noble Lord Lord Gladwyn, seems to be so close to my way of thinking that I would not like to say anything to annoy him.
Lord Gladwyn: I do not mind, my Lords.
The Earl of Longford: Well, the noble Lord is in a genial mood today. My Lords, I shall simply compare my party with the party opposite. I can only say that on this matter of aid—and I do not always agree with what appears to be the official line for the time being of my own party, as some speaking on defence may be aware—there is a great gulf fixed between the Labour Party and the Conservative Party, particularly under the present auspices. I have never been more clear in my mind that the Labour Party is the party for any humane person to belong to.
The practical steps to give effect to this idea of one per cent.—or at any rate the practical steps towards that objective—have been set out by Mr. Heath in a masterly speech elsewhere and by my own leaders here. They will no doubt be developed finally and conclusively by the noble Lord the Leader of my party in this House. I would only say, with regard to something that was said earlier from the Liberal Front Bench, that there is obviously a great difference in the economic thinking of those who could roughly be called Keynesian and those who could roughly be called monetarist. I am not going to get involved in that today. I once taught economics for a short time at the London School of Economcs, but that was so long ago that if I learned any economics I have long since forgotten what I learned or what I taught. I am not talking economics this afternoon; I am talking morals.
I am saying that whatever the economics, there is this moral obligation which cannot be shirked. I defy anyone in this House, at any rate in a reflective moment away from his own Front Bench, to say that it is technically impossible to transfer one per cent. Certainly you could not do it tomorrow; obviously, you would have to move by fairly rapid steps, but you could not move at once from 0.38 per cent. to one per cent. I am merely submitting that there cannot be any technical reason why that is not possible. I am asking the noble Lord who is to reply to say why that is not done and why our performance has been so appalling,

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except on the assumption, if that is his assumption, put by the noble Lord, Lord Thomas, that it does not do any good. The Government, after all, have welcomed the second report of the Brandt Commission, and most people in the House believe that it can make an awful lot of difference. I am asking why it is not done.
My Lords, I shall not go on for more than one more minute. I shall just reflect on the fact that before the war people growing up and coming to manhood in this country felt a great sense of moral obligation for what happened in the world; perhaps it was overdone at times and we may have exaggerated our influence, and certainly there was plenty of failure; but there was this overwhelming sense that what happened anywhere in the world was, to some limited extent, a British responsibility. Have we lost that sense altogether?
It may be said that in these days of super powers Britain cannot either rule the waves or control the destiny of everybody, but still it would be a bad day, a tragic day, if we abandoned altogether the idea that all this poverty, distress and starvation has nothing to do with us. So I am asking the noble Lord, who as I know is a very moral person, to go back to the Gospels, when Christ said:
"When thou makest a feast, thou shalt call the poor, the maimed, the lame and the blind and thou shalt be blessed".
I do not think anybody who tries to give effect to the Christian gospels today imagines that that injunction stops short at the national frontier.
5.9 p.m.
Lord Beaumont of Whitley: My Lords, I am no great admirer of the two Brandt reports; I think they suffer from a great many disadvantages, not least of which is that they were brought together by a group of very able people of extremely different views, and therefore they suffer to quite a large extent from the fault of the lowest common denominator. A report which could be signed by Mr. Heath and by some of the other members was obviously not going to be a very sharp-nosed report. Nevertheless, I think that these two reports have had one very good effect, which is that they have given us a focus for discussion of a subject which is one of the most important in the world today. I am indeed extremely grateful to the noble Lord, Lord Oram, for having raised this matter today. He is indefatigable in his pursuit of this particular subject, and as someone who is deeply involved in it myself I think we should all be extremely grateful to him.
I want to take advantage of the eight or nine minutes at my disposal to raise a single particular point. It is one that I have raised in your Lordships' House on previous occasions but it is illustrative of a wider range of points. One of the things that we in this country have done rather well over the years in terms of aid is to set up organisations largely connected with Government, sometimes a part of Government, which have a tremendous amount of expertise. It is the least one would expect of an old imperial power that we should have this ability. It is a very good thing that we have set up a number of departments in Whitehall. We have cherished a number of different bodies to try to improve not only the quantity of our aid but, rather more importantly, the quality of our aid.
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These bodies have to some extent recently been under threat from the present Government. It is my objective this afternoon to suggest to the Government, and particularly to the new Minister, for whom I have great admiration having known him for a very long time, that it is time the Government took a different view; a view that will, in fact, fall in with their basic philosophy, because I believe that they can do that.
I shall be putting forward a case in the next two or three minutes but I am not asking for an answer from the noble Lord, Lord Belstead. I know the kind of answer I would receive. I am not asking him to waste time in his reply, but that my argument should be taken back, read and considered.
The particular example to which I refer is of an institution—the Land Development Resources Centre—which is run by the Government and which is known to all the specialists on this subject in this House but probably to very few others. This centre is in the process of being cut. Its manpower and its budget are being cut and it is under grave threat. I asked a Question about this on 16th February but I received a very dismissive reply. To summarise, I was told that future demands for the services of the centre are uncertain, that equivalent services can be provided from the private sector and that the centre remains in being and viable even with a complement of about 40 per cent. of what it was.
There is the question of future demand. This body deals with technical advice on land resources, which is extremely important for the development, and particularly the rural development, of any developing country. It is a long time before the professional capacity of developing countries is adequate in such spheres as agriculture, forestry and engineering, so there will be no real lack of demand for advice on the rural sector. What has happened is that the level of aid supply that channels through ODA has been drastically cut in recent years. Indeed, it was cut from 31 per cent. of aid in 1977 to 7.4 per cent. of aid in 1980.
It is not just the overall level of aid funding that has been cut. There has been a drastic alteration in aid priorities away from the natural resources of the rural sector. Instead, it has been directed to industrial, commercial and political outlets. For example, a high level of political prompting on the part of the ODA led recently to the provision of ships to India with £40 million of aid. This aid would have been better regarded as aid to Scotland rather than to the third world because it was helping our shipbuilding industry. That is a very good thing in its way, but it was not really aid and as such should have come from the budget of the Department of Trade. A prime consequence of this reallocation of aid was a redirection of funds away from the villages and away from the poorest people.
This leads to the question whether the aid funds that remain for the rural sector should be channelled, as the Government believe, towards private enterprise. The aim of the private companies operating in the aid business is quite simply, naturally, to make money. This requires finding work and carrying it out profitably. Such an aim is not necessarily compatible with the essential purposes of aid.

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On the other hand, developing countries have certain things that they demand that the Land Resources Development Centre can supply. The Land Resources Development Centre can supply political objectivity. Many developing countries suspect the motives of private companies, in some cases wrongly and in some cases rightly. But work requiring close Government-to-Government co-operation and involving delicate political issues such as land reform, distribution of scarce water supplies or priorities in area development cannot with confidence be contracted out to private firms. There are a large number of countries which actually prefer to operate in direct co-operation with donor Government bodies which can be trusted for their impartiality and objectivity.
The Land Resources Development Centre and similar bodies—I emphasise it is only typical of similar bodies—can produce flexibility in timetables in a way that private enterprise cannot. It can monitor over a long period of time in a way that private enterprise cannot. It is extremely cost-effective and in a number of cases has been proved to be so. For instance, there were the 1983 estimates for a project in Somalia. In the private sector the figure was £4,300 a month and for the Land Resources Development Centre it was £2,000 a month.
This is one of a number of advantages which these Government departments have. If we start cutting them down from 100 people to 45 people, and if the 45 people include the typing pool, and so on, we shall be getting rid of a wideness of expertise which they can give to the developing countries. It is important that we should continue with this kind of help.
A great deal of aid is wasted. Sometimes it is wasted through the fault of the developing countries and sometimes through our own fault. The more we do it through the Department of Trade and the less we do it through Overseas Development, the more that will be wasted, because all that we are doing so often is throwing in bribes for uncompetitive industry. What we should be doing, as a number of speakers have emphasised—not least the noble Earl, Lord Longford, my noble friend Lord Gladwyn and the right reverend Prelate the Bishop of Hereford—is thinking in terms of the absolute good that we can do and the help that we can give. If necessary, we should be thinking in smaller terms but in effective terms. We should be thinking of what really has a sharp edge and of aid and gifts rather than the profits that we shall obtain in return.
If we concentrate on that and increase the quality of our aid we shall do what is best for the developing countries. I hope that the Government will see that such actions are in line with much of their basic philosophy and can be done without indiscriminate, old-fashioned aid of a kind which possibly many of us should have deplored earlier. We may have learned our lesson now: that there is some good that can be done and that we must concentrate on doing it where it will have the most effect.
5.19 p.m.
Lord Walston: My Lords, the trouble with speaking late in a debate like this is that there are so many aspects that have been raised by previous speakers that one is tempted to take them up, answer them and
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amplify them. I should dearly have enjoyed, even in his absence, answering some of the points raised by the noble Lord, Lord Thomas of Swynnerton, particularly with regard to agricultural production and agrarian reform. I should have reminded him of the work of the Commonwealth Development Corporation, with which until recently I was closely associated, and whose finances have, regrettably, been curtailed by the present Government, and of the work of the Voluntary Service Organisation and the magnificent help that has been given in that way. But there is no time to enter into any of these problems. I shall confine myself tonight simply to the matter of indebtedness, already mentioned by very many noble Lords who have spoken.
We all know that the indebtedness of the third world is now rising to astronomical heights. In 1981, for instance, out of the whole of the grants and loans, which totalled nearly 90 billion dollars, given by, let us call it, the North to the South (by the rich countries to the poor), repayment of previous loans and interest amounted to something in the neighbourhood of 70 billion dollars, leaving only 18 billion dollars available for help to those countries. The net flow of aid to the third world has shrunk from the peak of 34 billion dollars in 1978 to this 18 billion dollars. That cannot be anything to be proud of, and nor can it be anything that we can suggest will really help to solve the growing and appalling problem of the ever-widening gap between the wealth of the rich nations and the poverty of the poor nations.
The answer to all of these problems among the bankers is, "Let us reschedule. That is the thing to do". But what does rescheduling do? If I, as a private individual—as a farmer—say to the bank, "I am very sorry. I cannot repay my loan. I cannot even afford to pay the interest because the income from my farm is too low", the banker does not say, "All right. We will reschedule it". He will only reschedule the debt if I can prove to him that by so doing there will be an opportunity for me to become very much more profitable. The same holds good for companies and for countries. There is no point in thinking that we shall solve this problem of indebtedness by rescheduling unless it is regarded purely as a stop-gap measure while other measures take effect. Otherwise, it is simply a Micawberish attitude of saying. "Let us hope something will turn up in the meantime".
I believe that there is only one answer. Rescheduling as a stop-gap measure may be all right, but there is only one answer to the poverty and the gap between the rich and the poor countries. It is, quite simply, to alter the terms of trade between the rich countries and the poor countries. Let me give your Lordships a few figures. I do not want to give too many. In December 1981, for instance, a tonne of cocoa bought 65 barrels of oil. In November 1982, 11 months later, that same tonne of cocoa bought only 46 barrels of oil. In December 1981, a tonne of sugar bought 8½ barrels of oil; 11 months later it bought just half that amount: 4¼ barrels. That is not only because the price of oil had risen but because the price of the commodities in question had fallen. Again, a few more figures: between 1977 and 1982, cocoa fell from close on £3,000 a tonne to under £1,000 a tonne; coffee fell from 530 United States cents a pound to 140 cents;

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palm oil fell from 530 dollars a tonne to 355 dollars. It is hard enough for any country to live with that type of decline in its main export earnings when other prices are stable and bank overdrafts remain the same, but at a time of rising overdrafts, rising interest rates and rising relative prices of essential imports, no wonder these countries are in dire straits.
It is no good saying, as some speakers on this subject have said, "If only they would not spend so much money on armaments, nuclear power stations, and so on, they would be all right". Some countries do spend their money foolishly. Undoubtedly, some spend far too much on armaments. But let us look at three small countries with very stable Governments and with virtually no expenditure on armaments or anything of that kind. In Costa Rica, which does not even have an army of its own, the adverse balance of trade has risen from 92 million dollars to 512 million dollars. In Fiji—which is not a warlike or aggressive country—it has risen from 65 million dollars to 213 million dollars. In Malawi—one of the shining examples in central Africa—it has risen from 49 million dollars to 175 million dollars. I repeat that these are all stable countries with good Governments.
What we require is not the code of conduct in commodities that the right reverend Prelate spoke about, if he will allow me to say so (although I agree with so much of what he said), but stable and higher prices for these countries for their main products. This is not a new idea. I am not talking about commmodity agreements. They have been tried and they have many difficulties. But, after ail, the United Kingdom invented the Commonwealth Sugar Agreement under which we undertook to buy specified quantities of sugar from individual Commonwealth countries at an agreed price for a period of years, thereby giving them stability so that they could plan their future and know what their income was likely to be. When we entered the EEC, with much negotiation, we were able to negotiate so that the Commonwealth Sugar Agreement could continue under a different and somewhat expanded guise. That is what we should do for the primary commodities from the third world. We should, if possible through the EEC but, failing that, on our own, negotiate commodity agreements which would give to the third world primary producing countries stability for specified quantities of their products.
It may be argued that this will raise the cost of living in this country and increase inflation. It will, but it will not do it to anything like the extent that people believe that it will. A rise of 20 per cent. in the price of tobacco for the grower of tobacco in Malawi would put up the cost of a packet of cigarettes by only 1p, from £1·04 to £1·05, which is hardly a disastrous impact on the cost of living. A rise of 20 per cent. in the price of cocoa for countries like Ghana, and others, which would have an enormous impact on their economies, would mean only a couple of pence on a 70p bar of chocolate. These are increases that we can live with. The improvement that would be made in the country concerned would be quite out of proportion to any cost to this country.
I urge Her Majesty's Government to take a lead in this simple but enormously helpful move in order to
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reduce the gap between the rich and the poor countries. I urge them to do so at Williamsburg and to put forward a thought-out plan then, and to use their influence in the EEC to persuade our European partners to do the same. If they fail in both those cases, they should introduce a similar kind of arrangement on their own. It is only in this way that we can narrow the gap between the North and the South, between the rich and the poor. It is worth mentioning that by so doing we shall increase enormously the demand from the third world for the products of our factories and our workers, so many of whom at present have no jobs to do.
5.31 p.m.
Lord Cledwyn of Penrhos: My Lords, as all noble Lords who have taken part in the debate have said, we are indebted to my noble friend Lord Oram for giving us the opportunity to debate the problems of the third world and in particular the second Brandt Report. We should be grateful to Herr Willy Brandt and to the members of his commission, including Mr. Edward Heath, for the time and energy which they have devoted to these historic reports. My noble friend set the scene with a well-informed and wide-ranging speech. Other noble Lords have built upon that, and we have had a most constructive debate.
The first report of the Brandt Commission, which we debated at length in this House, was a much longer document, and much more time was spent on its preparation. It dealt in considerable detail with, for example, the problems of the less developed and undeveloped countries of the world, and warned us of the consequences of failure to find constructive policies to deal with them. What has been done since that report was published? This is the one question that we should consider in today's debate. Has urgent action been taken by the industrialised countries? Has there been a concerted policy by developed countries to help the undeveloped? I fear that the answer is in the negative. The West has carried on much as before; perhaps with even less enthusiasm than before. As my noble friend Lord Oram said, the conference at Cancun, upon which we had built our hopes for something better, was a profound disappointment.
I shall come in a moment to the question of the Government's attitude; but it would be wrong to put the blame for all this on Britain. I recall the pleasure with which I read what the noble Lord, Lord Carrington, said when he first went to the Cancun conference; but he received very little support at that time. Then, again, the United States seems to be off course for the time being. When the United States fails to give a clear lead—the kind of lead, for example, that it gave with the Marshall Plan, the kind of lead that it gave at Bretton Woods—then the prospect of implementing Brandt or any other significant plan to deal with third world poverty becomes limited indeed. A dependence on Europe alone, which the second Brandt Report seems to favour, would make the task infinitely more difficult. We should work very hard to get the complete co-operation of the United States in any plans we may embark upon.
The disillusionment and disappointment over the failure at Cancun was plain to see at the meeting of non-aligned nations in India three weeks ago. I am not

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proposing to neglect the Soviet dimension, to which the noble Lord, Lord Thomas of Swynnerton, referred. I would agree that in matters of aid, such as it is, the Soviet bloc move in their usual secretive and enigmatic way. We must proceed not without them, but in spite of them; and it is one of the tragedies of the modern world that this must be so.
The United Nations was set up partly to encourge its members to co-operate in matters of this kind, and United Nations agencies exist for the purpose. It is a tragedy that 40 years on we have not yet learnt to work together with a common will, to achieve a common good. The East, and indeed the West, seem to be more concerned with the political mileage which may be gained from dollops of aid here and there, than with the overall need to raise standards everywhere, regardless of short-term political benefit. Until we start to get away from this outdated and dangerous posture, we shall not begin to grapple with the real problems. This lack of interest in international co-ordination is severely criticised in the second Brandt Report.
There are those—some in this House—who believe that we should do little, or nothing, and that undeveloped countries should be left to solve their own problems without outside help of any kind. That is a point of view which is held by some people. I read an article in The Times by the noble Lord, Lord Bauer, and his colleague, Professor Yamey, and they appear to me to come within this category. Their article appeared in The Times on l1th April, and I found it depressing and misleading. It is entitled,
"Why we should close our purse to the Third World".
They take an entirely contrary view to that taken by Brandt. They say,
"Aid is the source of the North-South conflict, not its solution".
I find that a totally insupportable statement. No doubt aid has been misapplied over the years, and it will be misapplied again; and no doubt it can be used more efficiently and effectively. As the right reverend Prelate said in his constructive speech, aid should be properly programmed. But to talk of abolishing it is not only foolish, it is wicked, too. Official Government aid is a comparatively new concept, and it needs to be developed and organised properly. As noble Lords have said, where poverty and disease are rife, and where they exist, there is a happy hunting ground for the political extremist and adventurer. Are we to look on and do nothing at all? Is that the attitude which modern Governments should take? That is a recipe for trouble for the free world, and worse than that: as my noble friend Lord Longford said, it is morally insupportable as well.
The right reverend Prelate drew our attention to the suffering which is caused by drought and other natural disasters, and this was further stressed by my noble friend Lord Hatch of Lusby. Drought and famine ravage the Horn of Africa and Ethiopia, and over the next few months further large areas of Africa may be affected as well. Crops in Zambia, Mozambique, Botswana and neighbouring countries are likely to be severely affected. What should more fortunate countries do in these circumstances? Should we tell them, as the critics of aid might well do, to tighten their belts? My Lords, the dead have no belts to tighten.
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The second Brandt Report examines the problem and suggests regional programmes to combat the causes of food shortage. The South African Development Co-ordination Conference is the appropriate agency here, and it has a strategic food programme. Perhaps when he winds up the noble Lord, Lord Belstead, can tell us what is the Government's attitude to this matter, and what help the United Kingdom is giving to the countries which are suffering and which will suffer if adequate support is not forthcoming.
My noble friend and others have dealt in some detail with the second Brandt Report, and I do not propose to enlarge further, save to say that the warning seems to me to be even more urgent than ever before. It is a warning of deteriorating economic conditions already threatening the political stability of developing countries. The report states:
"Further decline is likely to cause the disintegration of societies and create conditions of anarchy in many parts of the world".
The report outlines a practical programme of action; and it can he criticised. The noble Lord, Lord Thomas, says that the report is not free from criticism; I agree with him. But it provides us with a base on which to build, on which to take constructive action. If action were taken to implement the report, phase by phase, it would not only immediately improve the prospects of world peace; it would also result in increased economic and industrial activity, which in turn would help us to get out of the current recession.
One of the most important sections of the report deals with the IMF and the World Bank. In this House in recent weeks we have had many exchanges on both of these agencies. The report calls for a substantial enlargement of the IMF's role and its resources, in order to resolve the current balance of payments, debt and banking crisis. It also calls on all donor countries to commit themselves to increasing their funds for the seventh International Development Association replenishment.
As the House knows, the poorest countries receive assistance on terms that they can afford from IDA, which is the World Bank's lending arm for this purpose. But the availability of money at low rates is not the only or even the most important consideration. Practical assistance is needed to assist the underdeveloped countries not only to develop their own resources but also to process their own resources. This is where the need for programming comes in once again. It is only in that way that they can raise their standards and become self-reliant. For example, massive drainage schemes and major agricultural development suited to soil and climate are probably the most important needs of some of the poorest countries of all. The experiences of Ethiopia in recent months, to which I have referred, should have made that plain to the whole world.
In spite of what the noble Lord, Lord Bauer, and Professor Yamey say, people everywhere do respond to this need. The marvellous work of Christian Aid and OXFAM is sustained not by Governments but by the contributions of people who care about what is happening in these countries. The trouble is that Governments are not as responsive and not as good as the people they purport to represent. The Commission itself congratulates the non-governmental voluntary

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aid organisations for what they call their truly remarkable record,
"in circumventing bureaucratic red tape and getting things done".
It then calls for more confidence on both sides in private lending to the third world.
The task is therefore a formidable one. But it is a practical possibility. I was glad that the Foreign Secretary, Mr. Francis Pym, gave a warm welcome to the report and promised,
"a positive and flexible approach"
to the problems set out in the new document. I think that Mr. Francis Pym is perfectly sincere when he says that. That is a much more promising reaction than the one that the Government gave to the first Brandt Report.
We also have the opportunity to help to give a lead because the Chancellor of the Exchequer is the current chairman of the IMF's current policy-making body which will have to agree ways to increase liquidity. We must also bear some part of the responsibility for the long-lasting economic crisis that contributes to third world problems. The monetarist policies of our own and other Western countries have produced the appalling recession, the worst since 1930, and the consistent high rate of interest which has stultified production in this and other countries.
We believe that certain measures should and can be taken now. I shall enumerate them briefly in the few minutes remaining to me. First, the debts of the poorest nations should be cancelled as, indeed, they were cancelled by the Government in 1978. Secondly, we should provide cheaper loans through IDA to which I have referred, and, thirdly, we should aim at reaching 0·7 per cent. of gross national product and continue to work towards a target that is even better.
These, in my submission, are attainable targets. I hope that the noble Lord will agree that we need a resolute approach, as my noble friend Lord Oram has said. We are on the eve of what is, in my view, potentially one of the most important conferences of recent years—namely, the summit conference at Williamsburg—which the Prime Minister and other Ministers will be attending. This will provide the opportunity for a new initiative in the Western world. It can help to promote the start of healthy growth once again. I was glad to note that Vice-President Bush has indicated that this might well be the objective. Let us hope that it is. In his introduction to the report, Willy Brandt said:
"Time is short and every day may count".
I hope that the Prime Minister will be seized with this same urgency. I read some words in the report last night that impressed me greatly. By leave of the House, I should like to read them. They are the words of the United States representative at the Bretton Woods conference, who said:
"Where modern diplomacy calls for swift and bold action, we engage in long drawn-out cautious negotiation; where we should talk in terms of billions of dollars, we think in terms of millions; where we should measure success by the generosity of the government that can best afford it, we measure it by the sharpness of the bargain driven; where we should be dealing with all-embracing economic, political and social problems, we discuss minor trade objectives, or small national advantages; … we must substitute, before it is too late, imagination for tradition; generosity for shrewdness;
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understanding for bargaining; toughness for caution; and wisdom for prejudice. We are rich—we should use more of our wealth in the interest of peace".
It is possible to be cynical about such words. But they are the only worthwhile objective for everyone everywhere.
5.45 p.m.
Lord Belstead: My Lords, I am most grateful to the noble Lord, Lord Oram, for giving the House the opportunity to debate the Brandt Commission's memorandum, Common Crisis. The Government have welcomed the publication of the memorandum. I am most grateful to the noble Lord, Lord Cledwyn of Penrhos, for his generous acknowledgement of the response of my right honourable friend the Foreign and Commonwealth Secretary. We have recognised that the report deals with the most grave and pressing issues which the international community faces at the present time. The Government intend to publish a White Paper setting out in more detail their position on the issues in the memorandum.
In welcoming it the Government have stressed that we accept its central message—that we live in an interdependent world. The reality of interdependence has meant that the recession in the industrialised countries has had a severe effect on the developing countries, and particularly on the poorest among them. But, by the same token, the economic problems of the developing countries are having a direct impact on the industrialised countries, through a reduction of their ability to import the goods we produce—a point made by the noble Lord, Lord Walston. The UNCTAD Secretariat has suggested that developing countries are likely to cut their imports by around 40 to 50 billion dollars over the 12-month period from September 1982. That is a serious matter, particularly for a country like the United Kingdom. Developing countries represent nearly a quarter of our world markets. If we leave aside trade within the European Community, 37 per cent. of the Communities' exports went to developing countries in 1981.
The long term solution to the problems faced by the developing countries can surely only be a sustained non-inflationary growth in the world economy. There are now signs that the worst of the recession may be beginning to abate. Here, in the United Kingdom, we have reduced inflation down to under 5 per cent. There are signs of increased activity in the economy. Your Lordships may have seen in the newspapers this morning reports of the latest CBI quarterly trends survey which shows an encouraging picture. Manufacturing industry order books have shown strong improvement for both domestic and export orders. There are similar signs in other industrialised countries, particularly in the United States.
But, of course, I acknowledge at once that the developing countries have been hard hit by high interest rates, falling commodity earnings and rising oil import prices. More than 60 developing countries still depend on commodities for half of their export earnings. Yet commodity prices are at their lowest level in real terms for 30 years, a matter to which many of your Lordships, especially the right reverend Prelate, the Bishop of Hereford, and the noble Lord. Lord Walston, have referred.

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The United Kingdom is playing its part in a variety of schemes and funds relating to commodity prices that will be familiar to many of your Lordships. We are active participants in the six main commodity agreements. We are ready to sign the jute agreement, which would make the seventh. Nonetheless, it is the case that the total debt of developing countries, including short-term debt, has been estimated by the president of the World Bank as 700 billion dollars. The right reverend Prelate the Bishop of Hereford incidentally also referred to the highly relevant report on improving the North-South negotiating process produced by a group of Commonwealth experts last year. Here again, we have already commended that report to our European partners and to the OECD.
But in the light of that evidence and the evidence which has been given in your Lordships' speeches this afternoon, it is hardly surprising that the Brandt Commission gave top priority to the need for immediate measures to strengthen the international financial system. The Government fully recognise that need. If I may say so, the actions of Her Majesty's Government, and the speech in another place the other day of my right honourable friend the Foreign and Commonwealth Secretary have not been bland or complacent—which was the charge levelled by the noble Lord, Lord Oram—in supporting the international financial system which has shown itself remarkably flexible and resilient in adapting to the new problems which have confronted it. That is why we have supported measures designed to strengthen the existing international institutions.
At the February meeting of the IMF Interim Committee, it was agreed that quotas should be increased by 47½ per cent. It was also agreed that the implementation of the quota increase would be brought forward by two years to early 1984. The scope of the General Arrangements to Borrow (GAB) is to be extended and its size is to be increased from special drawing rights of £6 billion to special drawing rights of £17 billion.
In opening the debate the noble Lord, Lord Oram, complained that the IMF quotas had only been increased by nearly 50 per cent. when Brandt recommended a 100 per cent. increase. However, the measures which I have just outlined will create a very substantial increase in the usable resources available to the fund. In fact, the managing director of the fund has estimated that, taken together, these measures represent a virtual doubling of those usable resources. Many tributes have been paid to the skill that my right honourable and learned friend the Chancellor of the Exchequer displayed in bringing about that speedy and practical agreement.
The possibility of a further allocation of special drawing rights is also being reviewed in preparation for the fund's annual meeting in September. I hope it will not be a jarring note if I say that it really is no use noble Lords opposite complaining that we have not yet given a view about this. Of course, we are not prepared to make judgments on the outcome until we have seen the results of the review. But the rest of what I think is good news on this front is that the World Bank, too, is playing its part, specifically by instituting a 2 billion dollar special assistance programme—a programme which in effect is to adjust the structure of economies
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of developing countries to cope with the problems of the recession. I hope that this will make its contribution to improving agricultural efficiency in developing countries—a point referred to specifically by the noble Lord, Lord Cledwyn, the right reverend Prelate the Bishop of Hereford and the noble Lord, Lord Walston.
As regards the specific question from the noble Lord, Lord Beaumont of Whitley, on the Land Resources Development Centre, I have nothing to add to my reply to the noble Lord's oral Question of some weeks ago. But I do give an undertaking to the noble Lord that I will certainly study his speech with the greatest care.
Other institutions on the international financial scene are also considered in the Brandt memorandum, including the Paris Club, the Bank for International Settlements, central banks and private banks. These institutions, too, have shown that they can extend their role and can greatly increase the level of their co-operation and co-ordination as circumstances demand. Coherent rescue packages have been put together with remarkable speed for a number of major debtor countries. These packages have required decisive action and the very closest co-operation by all concerned. I think we can be proud of the role which the United Kingdom—the Government, the Bank of England and the private banks—have played in that process. Our approach throughout has been to try to work with the instruments which we have, to cope with the problems that we face instead of indulging in impracticable dreams when help is so urgently needed.
We must also be realistic in assessing the prospects for sustained recovery in the world economy. I most certainly agree on behalf of the Government with the view of the noble Lord, Lord Banks, that there are many potential dangers remaining. Perhaps the greatest is the danger against which the Brandt memorandum warns us so forcefully—the danger of protectionism.
The Government share the commission's belief in the importance of preserving the open trading system. The record of the United Kingdom and of the European Community is one of the best in the world in this area. Recent studies by the Department of Trade indicate that only 9·7 per cent. of United Kingdom industrial imports from developing countries are subject to any form of restraint at all. We have reaffirmed our commitment to the open trading system in our practical efforts to resist protectionism and keep our markets open to developing countries.
I must say I am surprised that, although the speeches from all parts of the House have been enormously interesting and informative, noble Lords opposite have felt able to make their speeches this afternoon without even mentioning just once the Labour Party's apparent intention to withdraw this country from the European Community. Of course, it was left to the noble Lord, Lord Gladwyn, from the Liberal Benches to mention it, but to make very little comment because I think he felt that mention of it was enough. Who can doubt that if that were to come about, the Labour Party would be forced to desert Britain's support for open trading—however good their intentions may be—they would be bound to raise tariff

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barriers and then they would pull up the drawbridge of protectionism behind them?
Another way of helping developing countries, also stressed by the Brandt memorandum, is development assistance. I would like to reply directly to the noble Earl, Lord Longford, and say that it is the case that the level of our aid could not be exempt from reductions in Government expenditure in the last three years. But this year we expect the total United Kingdom aid programme to reach £1,129 million. This is a cash increase of almost 10 per cent. over last year. In the light of the expected level of inflation, this should mean a useful increase in real terms and a move which I hope the noble Lord, Lord Cledwyn, will see as being a move in the right direction.
Like the Brandt Commission, we accept that it is essential that emphasis should be given to the poorest countries. That is why about two-thirds of our bilateral aid goes to those countries, all in the form of grants. That is why we have followed the previous Government in waiving debts, not only from the least developed countries, as recommended by Brandt, but also from other poor developing countries.
The noble Lord, Lord Hatch of Lusby, asked me two specific questions about aid. The first was to what extent jobs had been involved in either cuts or, indeed, in increases in aid. I have to say to the noble Lord that there really is no way of producing reliable figures for the number of jobs directly generated by the aid programme or by trade with developing countries. It is true that previous Government were willing to publish their guesses, but the present Government are not willing to publish unreliable statistics.
The noble Lord then asked me to except from anything that I said, aid given in respect of the Falkland Islands. Here I would say that the reasonable needs of the dependencies are a priority in the aid programme and I think that the House will appreciate the needs of the people of the Falkland Islands after all that happened last year. The increase of assistance to the Falkland Islands is but a small part of the total increase in the aid programme. For this year the increase in the programme is over £100 million to £1,129 million. Total aid proposed to the Falklands is £46 million spread over four years.
The Brandt memorandum also attaches importance to private investment in developing countries. Again, the United Kingdom fully endorses that view. We have signed investment promotion and protection agreements with 21 countries and 14 are already in force. By ending exchange control restrictions, which have been a matter of considerable controversy, the Government have also clearly made a most important contribution to the flow of international investment funds. Total financial flows from the United Kingdom to developing countries in 1981 were £4,987 million, which is equal to 2.01 per cent. of our GNP. This is double the United Nations target of 1 per cent. for combined aid and private flows.
The noble Lord, Lord Cledwyn, asked me one direct question about what the Government are doing and our attitude to the terrible problems of drought and, therefore, of hunger in Southern Africa. My right honourable friend the Minister for Overseas
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Development, who represented the United Kingdom at the last meeting of the Southern African Development Co-ordination Conference, announced a new pledge of £2 million, in addition to the £10 million already promised from this country, in respect of the question which the noble Lord asked me.
I hope I have said enough to show that the Government look on these issues with the greatest seriousness. The best solution to the very real difficulties faced by developing countries is surely a return to sustained recovery in the world economy, without refuelling inflation. The economy of the United Kingdom, under policies of the present Government, has gone a long way to show that this can be achieved.
But at the same time, we are determined to give the developing countries all the support we can within our means to help them to bridge the intervening period. I have tried to outline to your Lordships what we have done in this respect. Of course we are aware of the limits on what can be done and of the risks and uncertainties for the future. But it is in this spirit that we shall be approaching the principal international meetings later this year. The Brandt Report, like the debate in the House today, for which we are most grateful to the noble Lord, Lord Oram, has made a valuable contribution to that process. For this reason the Government have greatly welcomed its publication.
Lord Hatch of Lusby: My Lords, before the noble Lord sits down, as he referred specifically to me, may I just point out to him that, in asking my question about the issue of employment and aid, the figures that were given by the Ministers in the last Labour Government were not guesses—they were worked out by officials. I resent the suggestion that this was guesswork. They were worked out by officials. I have repeatedly asked the Minister why he cannot instruct them—because the same officials are in the ODA, and I am sure they would be very willing to do this—to give him the figures of the results of the cuts.
Secondly, when I referred to the Falklands, I was simply asking him—I was not criticising the aid to the Falklands—to deduct that amount from the aid increase this year and to give the real figure, which I think he will find comes to 3 per cent. in real terms. That is welcome, but it is minuscule in comparison to the cuts of the last four years.
Lord Belstead: My Lords, on the second point, I am afraid that I cannot improve on the answer that I gave to the noble Lord, Lord Hatch. On the first point, the noble Lord continues to ask me the same question, and I am afraid that the noble Lord must accept the same answer.
6.4 p.m.
Lord Oram: My Lords, I think that I only have time to thank all the speakers who have taken part in this debate. I am glad that I used my good fortune in the ballot to introduce this subject, because the speeches have shown that it is of great importance and of considerable interest in your Lordships' House. From listening to all the speeches, what has impressed me most has been the great variety of aspects of this

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subject which is covered by the second Brandt Report. For that reason, of course, it is quite impossible for me to attempt any meaningful response to the many points that have been raised.
It may be invidious to pick out any, but I should just like to commend the reference to the commodity problem, which, in the first instance, was dealt with by the right reverend Prelate the Bishop of Hereford, and latterly most effectively by my noble friend Lord Walston. I think that that pointed to the fact that when we are talking about this problem of world poverty, we are not just talking—although it is important—about aid and the transfer of resources directly. Equally, or perhaps even more, important are the terms of trade, and I think that the way in which those two speakers dealt with that was very helpful indeed.
I think that, whatever our differing points of view on the various aspects, we have all listened to the speeches and learned a great deal. In conclusion, may I hope that some of the points, at any rate, that have been made may at least prompt the Government to take more resolute action than they have so far. My Lords, I beg leave to withdraw my Motion for Papers.
Motion, for Papers, by leave, withdrawn.

"The Public/Private Mix for Health"
6.6 p.m.
Lord Hunter of Newington Lord Hunter of Newington rose to call attention to the Nuffield Provincial Hospitals Trust publication entitled The Public/Private Mix for Health; and to move for Papers.
The noble Lord said: My Lords, the National Health Service has received much assistance from two organisations—the King Edward Hospital Fund for London and the Nuffield Provincial Hospitals Trust. It is to the latter that we are indebted for the report which forms the background to this debate.The Public/ Private Mix far Health will, I hope, do something to still the passions aroused by pay beds in the National Health Service and enable the future to see a constructive collaboration between the National Health Service and private medicine.
In May 1946 there were a number of vitally important meetings between the representatives of the British Medical Association and Aneurin Bevan. These meetings showed clearly the continuing opposition of the BMA to the National Health Service plans. One thing that Bevan agreed to do was to consider more protection for private hospital practice. In spite of opposition from some of his colleagues, he was anxious to encourage consultants to direct their private as well as their public practice in hospital premises by allowing some private beds to be used without any limit on the fees charged by the consultant. He rejected any amendment to the proposed hospital structure.
Undoubtedly this concession made a great difference to the attitude of consultants to the National Health Service. There was clear confirmation of the favourable view to Bevan's proposals in the speeches made by Lord Moran in your Lordships' House. In only a few hospitals were there private wings, and in none a separate administration. Though the system
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worked reasonably well between 1948 and 1968, there were difficulties, not the least of which was the remuneration of nurses and other staff of the private beds.
The formation of the Department of Health and Social Security in 1968 had no direct effect on this problem, but inevitably this great new department was in the forefront of the political scene. This did not help. Nor did the changing attitude of the trade union movement. I remember in 1970, when I was vice-chancellor of Birmingham University, talking to one of my militant student leaders. When asked what he was going to be, he replied "hospital orderly". In response to being asked why, he said that the future—his political future—was with the health and social services.
In the 1970s we had a situation where two out of three Secretaries of State were interested primarily in the social services, and one at least had profound sympathy for the criticisms voiced against the pay bed situation and private medicine in the National Health Service.
In contrast to this, the present Government have encouraged private medicine, and now there are wild stories that the National Health Service is threatened, that private medicine will ruin it, that private medicine should be squashed, and that a frank objective assessment by the "Think Tank" cannot be examined objectively. Recently, all doctors in the National Health Service have been allowed 10 per cent. of their time for private practice. It is therefore most opportune to have a study such as that conducted by the Nuffield Provincial Hospitals Trust examining objectively the public/private mix for health in the United Kingdom and elsewhere.
It has been said many times that our health service is the best in the world. It is certainly unique. Perhaps no others have copied it because they cannot afford it. One thing is certain: this conflict about private medicine must be stilled if possible. It contributes to tensions and difficulties in an already beleaguered service—beleaguered because it is subject to financial restraints, which restraints are not being rigorously applied on the clinical side of the service. The Royal Commission on the National Health Service said in 1979 that the private sector probably responded much more directly to patients' demands for services, and often provided a useful pointer to areas where the National Health Service was defective.
In the summer of 1981 Dr. Vaughan, then the Minister of State, talked optimistically of change, including change in funding. In the same year the Department of Health and Social Security issued a memorandum of guidance on contractual arrangements with independent hospitals and other forms of co-operation between the National Health Service and the independent medical sector. The bar against co-operation with profit-making bodies was lifted. It is with some surprise that one finds in the report of the Nuffield Provincial Hospitals' Trust similarities, not differences, between the health systems and their problems. The characteristics are that the health market is monopolistic, not competitive, and the primacy of the doctor in making decisions about resource allocation operates in both the public and

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private sectors; in fact, the most important basic factors are the same.
The current debate about health policy, wherever it takes place, is against a background of severe public expenditure constraints, little knowledge about the efficacy with which health care is produced, and ill-defined distribution goals in the National Health Service. The state, in all Western countries, has given the medical profession considerable monopoly powers to influence the quality and quantity of the service and its own remuneration. The general view would be that the profession has used its powers responsibly and in the public interest, and to some extent in its own self-interest.
In both the National Health Service and the insurance system the doctor has a crucial role as an allocator of resources. In the National Health Service he decides who will be treated, and how. In the insurance system the doctor also decides who will be treated, and how. Because of his training and responsibilities to the individual patient the doctor tends to seek to maximise the benefits of health care without considering cost. As the Secretary of State commented in the foreword to his publication Health Care and its Costs, the costs of treating patients cannot be measured and the figures in the report cannot measure,
"the human care for each individual patient and the concern for quality that must be central to any health service worthy of the name".
This, inevitably, cannot be reflected in the statistics about the quantity of services increasing, as they have done, by 1·6 per cent. a year since 1976. One thing is clear: the main responsibility for cutting costs and improving productivity will lie with the medical profession. Are they really ready and equipped to do it?
The United Kingdom provident companies, about which I think we shall hear a good deal, are not fully developed insurance carriers in that their monitoring and rationing of demand is limited and unsophisticated. In the present limited United Kingdom market for private health care BUPA and the others generally meet all expenditures, and the financial burden on patients is lifted apart from their contributions. If the market for health care expands and insurers carry a wider burden of risk, escalating expenditure will lead to some devices to ration the demands of patients.
The commitment of the National Health Service as defined in the 1948 and later Acts is far wider and more comprehensive than any insurance scheme. There really cannot be rivalry between the two sectors; they are not comparable. But I believe that co-operation and the disappearance of conflict—political conflict—between them is in the interests of all. One has also to recognise the wide role of the National Health Service in preventive medicine and health education. Private health care has little or no part in this sector of the health economy, and it is of the greatest importance. The good health of our country today is the consequence of good public health and preventive measures of the past. The gap created by the loss of the medical officers of health in 1973 still remains to be filled.
The whole field of clinical research and other aspects of curative medicine are based on the National Health Service. Cancer research is primarily supported by the public sector, not the private sector, though much of it is by private funds given as voluntary subscriptions. If one had to identify the greatest needs, they are, first, the equitable distribution of resources with a greater professional, input at all levels; and the radical alteration of the philosophy behind the undergraduate curriculum so that doctors see themselves as having additional wider responsibilities, not just to the individual patient. They are responsible for the use of scarce resources, and though the circumstances are often agonising they must realise that waste means that someone else who greatly needs help gets less. The other skill that they require is linked to the use of resources and the complex delivery of medical care by the different professions, and that is in management.
It is sad to see the discussion about the public private mix for health dominated by oversimplified ideological concerns. The Nuffield investigation shows that whatever the mix-50–50, or 98 per cent. of one or the other—partnership between public and private providers is inevitable. Shifting the public/private mix does not diminish the need to regulate and control resources, and there is a good deal of evidence that partnership can be cheaper. My Lords, I beg to move for Papers.
6.18 p.m.
Lord Wells-Pestell: My Lords, it is always a delight to listen to the noble Lord, Lord Hunter of Newington, because, although we would not see eye to eye on this particular matter, he can always be relied upon to put a case much better balanced than most of us who have, shall I say, very strong opinions. The subject of this debate is of supreme importance in view of the Government's thinking in respect of the future of the National Health Service. I feel at some disadvantage because I was not able to get a copy of the Nuffield Trust report until last Saturday, and I believe that a number of my noble friends are in a similar position. Therefore, although I have read part of it I have been, and am, dependent on a wide variety of comments and observations which one has found in professional journals as well as in newspapers.
I want to make one thing perfectly clear. I do not want there to be any misunderstanding that we on this side of the House are very suspicious of possible Government action and handling of the National Health Service. We need to examine any report and any recommendations from the standpoint of the effect upon the mass of the people. I want to make perfectly clear that we in the Labour Party regard the National Health Service as the most sacred of all cows. It is our sacred cow, and woe betide anybody who attempts to destroy it, even in part. As a result of that, it is no secret that we on this side of the House view the private sector with considerable suspicion and we feel, rightly or wrongly, that, if the present attitude towards private medicine were allowed to develop without control, it could in some measure harm the National Health Service.
The Cabinet Paper which was prepared by the Central Policy Review Staff, which is not available to Parliament, suggests replacing the National Health

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Service with private health insurance. This would provide health insurance, which in turn would provide savings of between £3,000 million and £4,000 million. This was the suggestion of the Central Policy Review Staff Paper. As I understand it, the suggestion was made to try to stop poor people from under-insuring. It was also suggested that there would be a compulsory minimum of private insurance, not to mention charges for visits to doctors and even higher prescription charges.
I know that that report has not seen the light of day so far as Members of Parliament are concerned, and that to all intents and purposes it has been shelved. However, I understand that the Secretary of State for Health and Social Services has ruled out—I venture to suggest only for the time being—financing the National Health Insurance by insurance.
I was able to get a copy of the Lloyds Bank Review, and I should like to quote from it. It says:
"Public reaction was hostile and the Conservative Government responded by apparently rejecting this option"—
the option of privatisation. It continues:
"Most people believe that this rejection was a temporary measure, as the Government continue to advocate 'partnership' between the public and private sectors, and various pressure groups continued to demand 'competition' in health care markets, the 'reduction of bureaucracy' and 'greater choice' for consumers".
Nevertheless, in a speech to the Members of the Office of Health Economics on the 23rd September last, the Secretary of State made it clear that there should be an alternative to the state system. We need to remember that in health insurance systems rationing is by ability, or non-ability, to pay, and in those cases it is the poor who always suffer. They need the National Health Service and, so far as I can see, will continue to need the National Health Service.
As I say, I have very grave reservations about the private sector. In a democracy I accept that people should have the right to choose, but I also believe that in a democracy people should have the best possible care when they need it and should not have to go on a waiting list and wait their turn, which can be harmful to them. It is no good people denying that there are waiting lists, because there are. My own view is that the private sector must be rigidly supervised and controlled, otherwise the National Health Service will become a kind of Cinderella of the medical services.
My noble friend Lord Hunter of Newington made reference to pay beds and said that Bevan had to agree to pay beds. But let us be frank about it, Bevan had to bribe the consultants at that particular time and agree to have pay beds, otherwise he would never have got the National Health Service scheme through. It was not the doctors being generous: it was a bribe that he had to give way to. Already we have seen that the number of pay beds has increased by about 200 or 300 since this Government have been in power.
I think the Government sees the private medicine field as productive and the National Health Service as a drain. If we are going to have a private medical service, then we must see that it pays for the services which it uses in the National Health Service. I am sure that noble Lords are going to tell us that it does, but many of us know that it does not. I believe that there is ample evidence that the private medical services use our hospitals and do not always pay the proper rate.
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For example, pay beds in the National Health Service are not charged at their full economic rate, because overheads and capital expenditure must be taken into account, and if we are going to have a private medical service it must be prepared to do that.
The Minister might say that more is being spent on the National Health Service than hitherto, but that does not answer the fact that in some respects medical services are being reduced and wards are being closed. In fact only this week a maternity ward in one of the large hospitals has been closed—I am referring to Stoke Mandeville. Although we may be spending more on the National Health Service, we are spending more for a restricted service.
My noble friends and I believe that a second Thatcherite Government would seriously consider dismantling the National Health Service. I believe they recognise the National Health Service to be an electoral evil, but one which they have got to accept.
The Nuffield Trust report is a book of essays on the public/private mix for health in seven countries and in the United Kingdom. In view of the time, I cannot say very much more, other than that Dr. Alan Maynard, one of the principal contributors, says that the Conservative policy of a partnership between the public and private sector is little more than political rhetoric. Another contributor, Professor Culyer, a distinguished professor and scientific adviser to the Chief Scientist at the DHSS, says:
"A combination of part-time salary in the National Health Service plus private practice provides a direct incentive to generate the National Health Service waiting list in order to bolster demand for more private beds.".
I could continue to give examples of people who have given this evidence, quoting what they have said, in order to point out that a widespread development of private medicine in this country could be a liability, but I will rest there.
6.29 p.m.
Lord Wigoder: My Lords, I am grateful to the noble Lord, Lord Kilmarnock, for agreeing that he and I should change places in the order of speakers. The Nuffield Provincial Hospitals' Trust is a curious name to give a body which has never had any connection with any hospital either in the provinces or in London. It is in fact a small research organisation which occasionally produces a curate's egg of a symposium such as the one that we are discussing today. Thanks to the noble Lord, Lord Hunter of Newington, it has enabled us to have what I have no doubt will be a stimulating discussion on the relationship between the public and the private sector. In the 10 minutes or so at my disposal, I want simply to seek to demolish some five myths that are currently circulating about that relationship between the two sectors. I declare an interest as being chairman of BUPA and I shall do my best not to make my observations sound like a television commercial.
The first myth is that, in some way, the private sector wants to see the end of or to destroy the NHS. Nothing could be further from the truth. Everyone in the private sector is full of admiration for the work the NHS does. We all recognise that it is a cornerstone of the welfare state. That, I think, does not stop us from recognising at the same time that it is not in any way

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a free service. It is a service that has to be paid for; and the existing stock of doctors, nurses, hospitals and equipment will all have to be paid for, whatever system of financing it is used. Whether we finance it out of general taxation, as we do at the moment, or whether we go over to some sort of insurance-based method of financing seems to me to be a very marginal issue indeed and certainly not worthy of the furore which was caused a few months ago by the publication of the "Think Tank" report.
The second myth which circulates is that, in some ways, the private sector acts as a drain on the resources of the NHS. The fact is that, of our total expenditure on health care, 2 per cent. goes on the private sector and 98 per cent. on the NHS. It is a curious 2 per cent. that acts as a drain on 98 per cent. Of course, the NHS is short of resources and we all know and deplore that. It is partly due to the fact that we live in times of economic recession, partly due to the fact that there is an ever-increasing proportion of elderly people in the population, partly due to the rapidly increasing cost of the latest technological equipment. But the shortage of resources in the NHS is not due to the existence of the private sector.
May I give some illustrations of that? The question of nurses is sometimes raised. The facts are that in the NHS there are 430,000 nurses. In the acute private sector there are 7,500 nurses. That is a smaller number than the number of nurses currently registered as unemployed and seeking work. The figures speak for themselves. There are some 1,500 doctors unemployed at the moment. There are a large number of people who, because they are out of work, are only too happy, to obtain employment in private hospitals in the various administrative grades and all the degrees of staff employment.
The third myth, and one which I think ought to be scotched once and for all, is that private medical care is, in some ways, the prerogative of the wealthy on some sort of class basis. The facts are these. A middle-aged man can comprehensively cover by insurance himself, his wife and his children for an average cost, outside London, of a packet of cigarettes a day or, inside London, of a packet and a half of cigarettes a day. It is no wonder in those circumstances that there are some 4 million people covered by the various provident associations; it is no wonder that some 350,000 trade unionists are themselves subscribers to the provident associations and that does not take account of all the trade unionists who, very sensibly, use the Manor House Hospital, which is entirely outside the NHS. Private medicine is not a privilege in these circumstances; it is simply the offering of freedom of choice to people, the great majority of whom are in the position, if they so choose, financially to afford it. Perhaps I ought to add that slightly different considerations may apply to the extremely highly profit-motivated American hospitals which have begun to come here. But they affect only the most minute proportion of health care in this country.
The fourth myth—which the noble Lord, Lord Wells-Pestell, raised in the course of his observation—is that, because the private sector uses doctors and nurses who have been trained by the state, the private sector ought to pay the state in some way
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for that training. This is an odd concept: that those who use skilled labour should be obliged to pay the party that has educated that labour. Indeed, the NHS itself uses a vast amount of skilled labour that comes from the Indian sub-continent. They would be somewhat startled if it were suggested that the NHS is, therefore, under some obligation to pay the governments of India or Pakistan for training the resources that are now being used in this country.
The fact is that we all recognise in our society that the state undertakes the technical training of young people and that once they are trained they are entirely free to go as they please into the public or private sector in any way they choose. I should add that the private sector recognises that there are obligations upon it to assist in such training and it does its very best to do so. I have a list here of some 27 private hospitals already, where there are training schemes in progress in co-operation with the local health and education departments, to many of which NHS staff in the vicinity and invited and take part.
The fifth myth—and that is not the easiest expression to utter in the English language—is that the private sector does not look after long-stay patients but confines itself to the short-term highly profit-making operations. The facts are simple. There are altogether 34,000 beds in the private sector; 27,000 of those beds are occupied by long-stay patients, geriatric or psychiatric; and that is a substantially higher proportion of private accommodation devoted to that end than exists in the NHS.
In my remaining three minutes, may I say just a little about the areas of assistance and co-operation between the two services. First of all, let us not overlook the fact that those who use private medicine contribute somewhere in the region of £1,000 million a year by way of tax and national insurance to the National Health Service and, for the most part, seek nothing at all in return; in other words, some 7 per cent. of the total of the NHS budget is provided by people who, quite voluntarily, do not use the NHS and who use other services instead. Secondly, the income from pay beds is £50 million per year. Thirdly, the private sector carries out approximately 250,000 operations a year. Most of those people would have to be added to the present NHS waiting list of some 750,000 if they were not dealt with in that way.
There are ways in which the private sector helps directly. The noble Lord, Lord Wells-Pestell, mentioned Stoke Mandeville Hospital, the very hospital to which, a couple of years ago, BUPA gave a quarter of a million pounds as a donation and provided the complete cost of the acute admissions ward as a gesture of co-operation with the NHS. We have given recently a mammograph machine for the early detection of breast cancer to the Elizabeth Garratt Anderson Hospital. We sponsor lectureships in medical schools. Our whole body scanner which we have in London is used frequently—and we are delighted that it should be—by NHS patients. There are some 4,000 NHS patients at this moment in beds in the private sector in one way or another.
In addition to that, the existence of the two sectors stimulates competition, competition in design and building of hospitals, competition in the use of day

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surgery, developments in preventive medicine, and so forth.
The NHS for its part co-operates, too, in many ways. We share in many parts of the country pathology facilities, we share the blood transfusion service, although a higher proportion of private patients give their blood to the blood transfusion service than the proportion of the population as a whole. I believe that the Government are right to have attempted to set out along the path of co-operation between the two sectors. It is not always easy to co-operate when one partner is willing and, sometimes, the other partner, for reasons of political dogma, is not so willing. Our experience all over the country has certrainly been that when you speak to doctors, nurses and administrators they are not interested in political dogma; they are interested in medical care, and the co-operation between those in the private and public sectors flourishes substantially and I believe that, with Government encouragement, it can continue to flourish to the great benefit of the future of medical care in this country.
6.40 p.m.
Lord Auckland: My Lords, the House will be grateful to the noble Lord, Lord Hunter of Newington, with his considerable medical expertise, for raising this very important debate this evening. I should like to preface the few remarks which I have to make with a tribute to Mr. Albert Spanswick, whose tragic death was recorded yesterday. It so happened that he and my wife sat on the same magistrates' bench; and although his views and mine, and those of many of my noble friends, will be considerably at variance, I believe the contribution which Mr. Spanswick made to COHSE and to the Health Service in general should be put on public record. I believe that the Health Service will be the poorer for his passing.
I suppose I have taken part in more debates on the National Health Service and similar Motions connected with medicine since I first entered your Lordships' House than almost any other subject. I should like to pay a special tribute to the author of this Nuffield Foundation Trust Report. Like most of your Lordships, I have read only excerpts from it because the whole document is a pretty formidable piece of reading which I, for one, in the time available would not have been able to digest.
When the National Health Service came into being, my late uncle was the Secretary of the Kingston Hospital in Surrey. He had a great deal to do with the late Mr. Aneurin Bevan, whose sterling work for the National Health Service and for medicine as a whole, in retrospect—even by those who may violently have disagreed with his views and his methods—is something for which the nation can and should express much gratitude. I recall several stories told to me by my uncle of the meetings between consultants at that time and the then Minister of Health on the vexed question of private medicine and the coming into being at that time of the National Health Service. Certainly there were acrimonious remarks made on both sides but always in the end friendliness seems to have been restored.
I do not think it is too naïve a point to make that there must be very few countries throughout the world
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where there is not some form of private health service—even, I would suggest, in the Comecon countries, two of which I have visited. For example, in Czechoslovakia and in Rumania there are clinics which are frequented by the hierarchy of those countries. Is it seriously to be supposed that if a senior minister in Bucharest were taken ill, he or she would queue up at the equivalent of a National Health Service clinic? I make this point in no sense of facetiousness but I just try to put it into perspective a national health service and a private medical health service, as the noble Lord, Lord Wigoder, in his admirable speech, has tried to show.
I know that figures can be misleading but it is an interesting point, at a time when the present Government have been accused of trying to dismantle and destroy the National Health Service—and I speak as one who, with his family, uses it and will continue to use it and, generally speaking, derives much benefit from it—that £14.5 billion will be spent on the National Health Service in the year 1982–83: that is an estimated 7 per cent. increase in manpower.
Here I should like to ask my noble friend a question, and I have not given him notice of it, so I do not expect an immediate answer. I would ask him: how much of this 7 per cent. will be reflected in the increase of nursing staffs, especially in the grey areas? I am not thinking so much of the London teaching hospitals, where I believe there are quite considerable waiting lists for nurses, but of areas such as the Potteries and the North-East, where hospital conditions are not perhaps quite so salubrious as in the newer hospitals which have been built nearer London and elsewhere. I think that is an important point.
I have myself visited a number of National Health Service hospitals. As your Lordships know, I have served on house committees of both paediatric and mental hospitals so that I have had some experience of discussions on the various matters being considered. It is a fair point, of course, that nurses in the private sector within BUPA, within Western Provident and other organisations should have in due course (and perhaps already have) their own private nursing training schemes. I have mentioned this point during discussions with representatives of these hospitals and they agree in principle.
I do think that, as in industry and in other walks of life, the training of nurses in the National Health Service should include some training within the private hospital schemes and vice versa, in order to get used to various grades of patients and of equipment. But, having said that, I have always believed, and I have always said to your Lordships, that when it comes to the provision of equipment, the National Health Service should have the first call on anything coming from private funds.
Mention has been made also of the latest Lloyds Bank Review, and Alan Maynard, who is concerned with York University—I believe on their Medical Faculty—has written a very interesting article. I must admit that I have only had an opportunity of skating over it, but I would like to quote very briefly from the final paragraph, entitled "Overview", as follows:
"The time for superficial polemics is surely over and the time for sustained research and improved management, public and private, is surely dawning?"

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Health care in this country is something of which we can well be proud; and anybody who has been to Canada, which I visited very recently on Parliamentary business, or the United States of America, and knowing the enormous costs of health care and of insurance if an accident happens, is brought down with a sober bump to conditions in this country.
It is generally recognised that the National Health Service in this country is here to stay. I believe that all political parties are committed to seeing it function in the best possible way. Co-operation between the National Health Service and private nursing and private medicine, just as in the public and private sector of industry and commerce, is in the best interests of the best results.
6.51 p.m.
Lord Kilmarnock: My Lords, it is unusual, I think, in your Lordships' House to debate a book of essays. The noble Lord, Lord Hunter of Newington, referred to it as a report, but in fact that is what it is. Perhaps this will become a precedent. I might, for example, put down Keynes' Essays in Persuasion, or Roy Jenkins' Nine Men of Power, (a very readable book), or the collection on the Mixed Economy, edited for the British Association for the Advancement of Science by Lord Roll of Ipsden, which I have just taken out of your Lordships' Library. But whether or not the practice catches on, we are grateful to the noble Lord, Lord Hunter of Newington, for concentrating our minds on an important and topical issue and for illuminating it by foreign comparisons which we do not usually make.
The only contributor to this volume whom I had previously read is Professor Culyer of York who contributed a robust essay, called Health Services in a Mixed Economy, to Lord Roll's collection which I have just mentioned. He came down firmly in favour of a National Health Service type solution, while acknowledging the role of a relatively small private sector, treating not more than, say, seven to eight per cent. of patients.
"If, for example",
he wrote there,
"it were to treat 25 per cent., as some have suggested would be desirable, that would have a creaming-off effect, leaving the National Health Service the geriatric, mental, chronic and costliest cases. It would remove most of the articulate and critical middle-class clientele from the National Health Service. It would also make the planning of an overall effective health care system a good deal more hard. In short, the market for health care in Britain performs a useful function so long as it is small …"
That is Professor Culyer's view.
The first thing to emerge loud and clear from the present collection is that a very high proportion of national income is devoted to health care and a very high proportion of the working population is devoted to its delivery in most industrialised countries. Costs are mostly within the range of 8 to 10 per cent. of national income, and health care employs between 4 and 6 per cent. of the working population. In the United States of America, expenditure rose from 5.3 per cent. of GNP in 1960 to 9.4 per cent. in 1980. Although there is a universal preoccupation with rising costs, my guess is that these orders of magnitude are
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not likely to decrease significantly. We have dramaticlly prolonged life and improved technology, but we have also raised expectations correspondingly. And though we have routed many old plagues and slain some ancient demons, the stresses and strains of modern industrial life take a different sort of toll.
The next thing to emerge from these essays is the almost universal commitment to equity in health care, at any rate in theory, whether the writer approaches the matter from a free market or a collectivist point of view. But it is pointed out by the editors on page 526 that the private solution to health care problems is unlikely to lead to the attainment of equity goals, unless purposefully directed—I repeat, unless purposefully directed. Indeed, it is another theme, running through a number of contributions, that private insurance schemes in almost all countries where they exist give rise to the need for Government regulation, and that private sector regulation tends to be more contentious and more administratively difficult—and more costly—than the regulation of the public sector. I would add, myself, that some marketeers talk of restricting Government intervention to the provision of a "safety net", but in my book a "safety net", meaning rock bottom minimal emergency provision, is not the same thing by any means as social justice for all.
I was further struck by some other considerations. Though the National Health Service has come in for mounting criticism on account of its total costs—some of it certainly justified—it remains cheaper to run than any other system under survey. Its administrative costs in the mid-1970s were only 2·6 per cent. of the total health expenditure, as compared at that time with 10·8 per cent. for France, 10.6 per cent. for Belgium, 6·5 per cent. for the Netherlands and 5 per cent. for Germany. I have this afternoon obtained a more recent figure of 3·71 per cent. for 1981–82, but the corresponding costs have no doubt risen in the other countries that I have mentioned.
Even if the proportion of National Health Service administration to total cost has crept up, it is clear that revenue collection for a tax-based system is bound to be cheaper than for an insurance-based system. There is also the question of the main cost falling on any health system, which is that of wages, salaries and fees. I am not suggesting that British doctors are greedy. The noble Lord, Lord Hunter of Newington, spoke of power used responsibly by the profession, and I think that this is an entirely justified claim. But it is not unnatural that any professional group in a monopoly position should seek to increase its earnings, and in my view professional monopoly is best balanced by monopsony—that is, the sole or predominant buying power of the National Health Service.
The state is not of course the employer of doctors—they have, very understandably, resisted this—but it is by far and away the largest agency with which they can contract and this arrangement is almost certainly more cost-effective than a plurality of insurance schemes bidding against each other. In his essay, entitled The Semantics of Health Care Policy, Gordon Forsyth reminds us on page 73 that:
"In Europe, governments of countries with insurance-based health service systems are not yet in a position to control costs".

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Your Lordships might say: does that matter? Why should people not invest as much or as little as they like in their health? This is a free society. The noble Lord, Lord Wigoder, has made an extremely good case for the activities of BUPA. He made the very fair point that the private sector provides 7 per cent. of National Health Service income but makes no claim, or only a limited claim upon its services. Certainly I agree with him that the present "mix" is perfectly satisfactory in our society.
One of the problems, I think, is that if we have a great extension of insurance-based schemes, employers, finding that they have to foot a part of their employees' health bill, either will turn to more capital intensive forms of production or will claim compensation or relief from public funds. I was interested to read, in the essay by Mr. Walter McNerney from the United States in this volume, (his subject was the control of costs in the United States of America) that the chambers of commerce in that country regard health care expenditure as their number one problem. We have not reached that point in this country, but it is possible that widely extended privatisation could create similar problems for the CBI.
I did not scour these essays for reasons against a major switch to an insurance-based scheme, or schemes, in this country. I read them, I hope, objectively and in search of enlightenment. The arguments I have just deployed are just some of those which rose to the surface and lodged in my mind. It also struck me forcibly that my party's commitment to a health policy rather than a sickness policy—that is, preventive medicine, early screening, primary care, et cetera—would not be helped very much by a widespread extension of unco-ordinated private health schemes, whose accent would essentially be on sickness and repair rather than on a positive promotion of health. I have no particular quarrel with other versions of the public-private "mix" which have developed, for historical or other reasons, in other countries, but I could not find in this volume any very good reason for a major switch away from the current balance in this country.
For these reasons, I support the statement in our White Paper that:
"The SDP rejects on grounds of both equity and efficiency any plan to dismantle the NHS and replace it with an insurance-based scheme".
This does not mean that we would seek to abolish the private sector, but we would seek to ensure that the development of the private sector did not make it more difficult for the National Health Service to achieve its aims and that resources mobilised by the private sector were additional to those of the NHS, rather than merely representing a shift from one sector to another. We agree, in fact, with the policy option advanced by Professor Rudolf Klein in his essay in this volume, entitled Private Practice and Public Policy: Regulating the Frontiers. This would involve the revival of something like the Health Services Board, of which the noble Lord, Lord Wigoder, was a distinguished chairman, which operated from 1976 to 1980. But to avoid over-centralisation it would now have an appellate function only. All proposed developments in the private sector of health would be subject to regulation by the district health authorities
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to ensure that the two sectors are genuinely complementary, with the health services board acting as a final court of appeal in case of dispute.
Finally, I return to Professor Klein's contribution. On page 125 under the sub-heading Where is the Critical Point? he points out that public policies designed to encourage the growth of the private sector are substitutable, in terms of their effect on the PBSR, with expenditure on the NHS. He goes on to ask:
"At what point, then, does the active encouragement of the private sector threaten the survival of the NHS as a viable institution? The same point can be made in political, as well as financial terms. At present the private sector acts as a useful safety valve for the NHS … But if the private sector continues to grow, the risk is that the overflow mechanism may turn into a waste-pipe: that the exit of the most articulate, politically resourceful customers of the state sector will drain away effective political support for it. This would suggest that there is a point at which the growth of the private sector would threaten the whole balance of health care in Britain. tilting it away from the social equity model to the market model."
We would restrain private growth well before such a point is reached. What I want to ask the noble Lord, Lord Trefgarne, when he comes to reply, is: where do the Government situate Professor Klein's critical point?
Lord Denham: My Lords, before the noble Lord, Lord Prys-Davies, begins his speech, it might be worth while reminding your Lordships that this is a Short Debate. We are not running very much overdue but we are running at an average of 11 minutes per speech and this should be 9½ minutes if every noble Lord is to have his say.
7.1 p.m.
Lord Prys-Davies: My Lords, I value the essays very much because they have identified in an objective sense the problems which face all the health care systems, be they private or public; and they have established in an objective way that the major problems are common to all health systems. Those problems are efficiency, escalating costs, limited resources, an unequal distribution of services which favours the better off and some groups and regions at the expense of others, and unlimited demands from the medical profession and from the public.
One of the lessons of this book is that there are no quick solutions. The NHS is a huge vessel which does not respond quickly to the rudder. Neither are there any easy or simple solutions. The other day the Secretary of State for Health spoke of the,
"immense contribution that can be made by private health care".
The other day the Chancellor of the Exchequer advocated that private provision,
"can supplement or in some cases, possibly, replace the role of Government in health".
I prefer to return to the objectivity of the Nuffield studies. The Nuffield authors are clear in their advice: it is simply not sufficient to pledge more support to private practice. They hammer home the point that more privatisation may well be completely irrelevant to the problems of the NHS. But neither must we on these Benches be complacent about the public health care system. There are difficulties which we have to face.
These are the critical question which arise from the studies. How can one close the gap between the supply

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of health care and demand? How can one facilitate equality of access to the health service? How can one improve its efficiency at the point where it all happens—at the surgery, the clinic, the ward, and the theatre? The answers have eluded us. They have also eluded health services across the Western world.
The way forward is not easy. I shall not concentrate on destroying five myths: I shall concentrate on constructing five signposts. First—and the noble Lord, Lord Hunter of Newington, has already made this point—the doctor must appreciate that he is not a law unto himself. The influence of the medical profession within the service, quite naturally, is of necessity overwhelming. It calls the tune. But most doctors do not think in cost-benefit terms. We know—and I know this as the former chairman of a hospital regional hoard—that there are wide variations in the workloads of doctors involved in the same speciality and doing the same kind of work.
But the system has to follow the doctor. It is estimated in the studies that each United Kingdom consultant makes decisions which may cost the NHS about £500,000 a year. Herein lies the main awkwardness of the health system. But for how long can the clinician remain a law unto himself? The editors conclude that clinical freedom, interpreted as the freedom to do that which is best or convenient to the doctor and be subject to no appraisal, is probably in the process of ending. That may be over-optimism on the part of the Nuffield essayists—indeed, they put it bluntly:
"It is necessary to establish health profiles so that the characteristics and costs of medical practices of individual doctors can be identified and any 'deviance' from practice norms 'remedied'."
That is challenging language. It is new language; but I believe that it makes common sense.
The authors plead for a place to be given in the curriculum of every teaching hospital to educate medical students to think in cost-benefit terms. This point has been made very well by the noble Lord, Lord Hunter of Newington. I should like to ask the noble Lord the Minister: is the Secretary of State pressing this case on teaching hospitals regularly? Secondly, we need to develop an efficient management structure serviced by adequate information. Throughout the book a great deal is made about the need for appropriate information flow if informed decisions are to be taken. However, I am racing against the clock and will not elaborate upon that point.
Thirdly, much depends upon competent and imaginative managers at all levels within the system. This calls for a questioning and yet constructive approach; and it calls also for vigorous leadership. Many questions come to mind. Is it necessary for clinics to be called for nine o'clock although the doctors will probably not turn up until half-past nine or quarter to ten? Is it necessary for a patient to be hanging around the clinic for about three hours before he is seen? We know this happens. How can we reshuffle resources in order to prevent a build-up on the waiting lists of two years or more? Some noble Lords may ask: to what extent can a non-commercial organisation produce greater incentives to make the best possible use of resources? I turn to the objectivity of the book. The experience of this book shows that
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the private sector is probably less efficient in the use of resources than is the public sector.
The fourth signpost is that central Government must play a more active part in monitoring the performance of their agents. In the debate on the partially deaf a few weeks ago I mentioned the district in Wales where people were kept waiting for two years between referral by their GP and an appointment with a consultant. I was told then, in effect, by the noble Lord the Minister that this was a matter for local management. But surely there must come a time when the central Government department, be it the DHSS or the Welsh Office, must intervene to see whether more effective use can be made of resources. If a two-year waiting list does not justify intervention by a central Government department, at what point will central Government consider that intervention is justified? Will it be when the waiting list reaches three years, five years, or even longer? Notwithstanding the pressures from the Committee of Public Accounts, it is still not clear to what extent central Government are playing an active part in monitoring the performance of their agents.
Fifthly, the service needs to encourage innovation in preventive measures. In a free society that can never be easy, but we already know that the beneficial results of seat-belt legislation are dramatic on the workload in the accident departments.
Finally, the major worry facing the NHS during the next decade is the ageing population. To meet the foreseeable demand we need to increase the whole range of services—day hospitals, community services and beds—and to mobilise the services of voluntary organisations. But we should also be asking whether the service is equipped to pioneer and to experiment in the care of the elderly. The NHS is right to ask for every penny that it can possibly get, but the justification for such a demand is to ensure that we are providing best possible value for money. The service must be planned so that we can make the best possible use of its resources. While this begs the crucial question of how we achieve this end, it is now clear that it is in this direction, and not in the reshuffling of the mix of public private health, that the health systems must now proceed. To this end we must will the co-operation of doctors, nurses and managers.
7.12 p.m.
Lord Richardson: My Lords, I wish to speak upon one point and one point only, but it has a direct bearing on the private/public mix. It concerns private practice within the NHS hospitals. I wish to make it quite clear that I am unequivocally committed to the continuation of the NHS, and have spent my life in it. My views are, therefore, entirely based on my wishes for the prosperity, in a wide sense, of the NHS, and they are not influenced by any interest in private practice, although I have practised privately and in hospital. Simply expressed, I am convinced that private practice within the NHS is for the good of the NHS and its patients.
Section 5 of the 1946 Act allowed part-time contracts for consultants and made provision for pay beds. The noble Lord, Lord Wells-Pestell, attributes this to successful blackmail upon Mr. Aneurin Bevan.

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I take a different view of Mr. Aneurin Bevan's character and ability. I think it was because he was a very intelligent man; and in fact he said that he wished to keep the best specialists in the hospitals so that they worked there and did not dissipate their time in travelling around to private hospitals and to nursing homes. He was perfectly right, and in the early days of the National Health Service, when we had a small number of contract periods—half-days, or whatever they were then—the National Health Service benefited quite enormously from a very large amount of time that was put into the hospitals by those very part-time consultants without them really noticing it; and this was possible because they could see their private patients and could go back to the wards, or see them after their clinics, and not watch the clock in any sense. His concept was years before the term "geographically full-time" became widely canvassed; namely, to keep people in one place—not to waste their time but to allow them to distribute their time properly to their private patients and to their hospital patients, and what was left over would doubtless go entirely to the hospital patients.
The new contracts for consultants of 10 per cent. of their time to be used as they wish only strengthens the case for this concept. The noble Lord, Lord Wigoder, has told your Lordships most fairly of the advantages that BUPA and like organisations can provide. I will not, therefore, touch on any material matter; I will touch on a more subtle one, and that is the promotion of goodwill—goodwill for the hospital, and even fame for it. This can be the more easily promoted by the intimate nature of the contact, and the expenditure of time, that is possible for private patients—time over and above that which is technically required to be given, and which I believe is practically always given, of course, to all patients.
Why should the goodwill, the influence and the fame be debarred to the National Health Service? Such goodwill can only lead to support in a material sense for appeals for research and the provision of personal services—personal service that can lead to so much interest and to local pride. Of course, the National Health Service can provide such service and promote such local interest; of course it can. But it would be idle to pretend—and your Lordships' House would be the last place in which anybody would be so stupid as so to pretend—that influence does not bear some relation to the position of those who will exert it. Although, as the noble Lord, Lord Wigoder, has said, the private sector is not the sole province of the wealthy or the powerful, it has a large proportion of influence in it.
This goodwill is no small thing. It can be a very present help in trouble. But it must be goodwill that is not earned at the expense of promoting bad will within the hospital itself. I think it is hardly surprising that there was a considerable degree of bad will in some quarters to private medicine within the hospitals when no local advantage at all was apparent to those serving in the hospitals. The money went back to the anonymous source—right to the top; right back to the Treasury. I think it is essential that if the private practice of medicine in hospitals is to continue, to the benefit of the NHS, the staff should be aware of the benefits to them, to their patients and to their own hospitals.
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I hope that the Minister will be sympathetic to this particular point, and, indeed, to the general one that private practice should be encouraged actively within NHS hospitals, and not encouraged solely outside them. I feel very strongly that the NHS benefits from private practice within its walls. I have 35 or more years' experience in this matter, and for that reason I feel justified in putting it to your Lordships in, I hope, fairly strong terms.
7.19 p.m.
Lord Ardwick: My Lords, I must thank the noble Lord, Lord Hunter, for introducing this subject for debate. I myself had the idea of doing the same thing, but I did not quite see the way to do it; I was not bold enough. But, as there has been some suggestion that it is an innovation that we should debate a book of essays, I may say that I have a dim recollection that many years before I came to this House a book of essays was debated under the leadership of the noble Lord, Lord Walston, who organised a team each of whom took one chapter of the book. Thus he got a highly structured debate. I am sorry that we did not have time in this short debate for any such device to be adopted.
I have a much softer spot for this report, and for the Nuffield Hospital Provincial Trust, than has the noble Lord, Lord Wigoder. I worked for it over 25 years ago, when we had joint staffs for the Nuffield Foundation and the Nuffield Hospitals Trust. But for a quarter of a century the trust has been an independent body professionally headed by Mr. Gordon McLachlan, one of the editors of this efficient, sensible and useful volume.
The work of the trust has changed. It was wrong of the noble Lord to say that it has no connection with hospitals. It has been intimately connected with hospitals over the years. It is now largely a research organisation, it is true, but in the easy years when there was not so much pressure on resources it could explore the possibilities of improvement in the hospital services. If adopted, these inevitably added to the costs of the National Health Service. In these days of financial restraint the trust is more concerned with the best use of limited resources, and it is very much concerned with the health of the health service, including its mental health. For controversies, charged with emotion, such as have arisen in recent years, must affect the morale of the staffs of the Health Service; and the efficacy of its services is largely dependent on the maintenance of a high morale.
The hospital service is labour intensive. In times of inflation the wage bill becomes, inevitably, an increasing burden and when cash limits are applied the staffs must see either a decline in their relative pay, or a decline in their numbers. One can understand the fears and the anguish that they have shown in recent years.
As this study reminds us, the problem was once to ensure that the health service retained its share of an increasing GDP. The new problem is whether the NHS can increase its share of a static or a falling GDP. This study shows that the problem is not just a British one. It is universal to the Western world. It exists in every country, no matter what national health system

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they have. It is rendered more difficult because neither the customers nor the medical people who operate the health schemes are responsible for paying the bills. They are not responsible for the costs.
The study we are reviewing today is most useful to those of us who are not or who are no longer experts on the health service. All our welfare services confront the thoughtful citizen with difficulties, since one administrative change has followed another and particularly, say, in the case of housing, one piece of legislation has been built up on top of another. In the end, only the expert can find his way through the maze. The ordinary intelligent citizen can do little more than speak out of his limited personal experience.
This book is of enormous help to everyone who is not an expert but who wishes to concern himself with policy. For a start it shows that there are no simple solutions. One cannot sell off the assets and privatise the hospital service. Nor is there an acceptable solution by way of social insurance. That would just add to the costs and add to the complications. And, because it would be regressive, it would make the poor poorer. As regards private insurance, this too could touch only the corner of the problem but the size of this corner is of absolutely supreme importance.
Private medicine, as one of these writers suggested, might be the tempter in the National Health Service's Garden of Eden. Yet it must be tolerated. People will always insist on being free to spend their own money on their own bodies, even if it includes such bizarre means of treatment as getting a Chinaman to stick little needles into them or buying some kind of witches' brew from a herbalist.
The danger is, as one of the authors points out—and here I, too, shall quote the words so appropriately quoted by the noble Lord, Lord Kilmarnock—that private medicine, acceptable as a safety valve, could grow to be a wastepipe, the exit of the most articulate and politically resourceful of customers of the state sector, and could draw away public support for it. That is the danger and that is the fear that we have on this side of the House.
I am very glad to say that the editors of the study do not believe that that is likely to happen. They reach the rather cheerful conclusion that:
"After reviewing the evidence"—
and they are perhaps the only ones among us who have read all the 250,000 words of this great book—
"we both feel that despite its faults, the variety of complex services which is termed the National Health Service constitute a unique and precious national asset. It provides basic services of a high standard at a very low proportion of GDP compared to other countries. Above all, it retains a vital core of the ideal regarding equity in service with which it was launched in 1948".
Finally, the authors conclude:
"The fears of any dismantling of the NHS, or the slipping eventually into a two-tier system, whatever that may mean, are to our minds ill-founded given the present proportion of the mix and the nature and order of private service likely to be developed in the foreseeable future".
When I see the provident associations going out trying to recruit wholesale I sometimes fear that this corner could easily become too big, but the authors of this book do not. I hope they are right. They would prefer
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a partnership between the private and the public sectors rather than separation; a separation which is in vogue today. The challenge as they see it is to find the right mix. That, of course, is the problem—it is by no means the solution.
The Lord Bishop of Norwich: My Lords, before the noble Lord sits down, does he feel that his phrase "a witches' brew' from a herbalist" may have been a hyperbole about a particular item that might be obtained at a herbalist and did not seek to smear the whole health-giving useful homoeopathic work of other herbalists?
Lord Ardwick: My Lords, I regarded that as a piece of verbal fun and not a serious charge.
7.29 p.m.
The Countess of Loudoun: My Lords, although the private sector is more likely to be concerned with acute surgery than with chronic illness, there is clearly a certain amount of private enterprise in caring for the elderly and mentally ill. There are a few voluntary and private homes caring for a considerable number of these patients. Due to the failure of the National Health Service to provide sufficient beds, many elderly people or their families are making their own arrangements to use private nursing homes. But statutory authorities are also using these places, sometimes at the client's or patient's own expense, owing to this lack of sufficient NHS hospital beds. According to the most recently published figures from the DHSS, in 1975 there were more than 22,000 elderly people living in registered voluntary homes and a further 19,000 elderly people living in registered private homes.
At present the private provident associations exclude many chronic cases and the elderly from their services. There is also the problem of mentally handicapped people who are refused admission to a hostel over the age of 55 but who do not qualify for a place in an old people's home for another five or even 10 years. The DHSS is currently reviewing the statutory control and supervision of both voluntary and privately run old people's homes and nursing homes. A working party on services for elderly people, set up by the Personal Social Services Council, has also pressed for a revision of both the legislation and existing regulations. Ideally, revised legislation and regulations should take account not only of broad physical provision but of all factors which affect the quality of life for residents.
There are discrepancies in what is provided. What is now needed is an urgent look at the overall mix of private and public sector, as both are vital. Without the private sector, the National Health Service and local authorities would be swamped. We have the finest National Health Service in the world and now is the time to examine it to improve standards and to make sure that our resources are being used in the best possible way.
7.31 p.m.
Lord Rea: My Lords, I think that the noble Lord, Lord Hunter of Newington, has been very ingenious—or perhaps I should say canny—to bring in

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a debate on the question of private practice by citing this book. I think I would like to thank him, because it has stimulated me to try to read it. I cannot say that I have been very successful: it is eminently respectable academically but pretty tough going for a non-economist. A general conclusion of the series of essays is that our system is much more economical than others in terms of cost in relation to gross national product, and no less efficient. It also seems that there is less continuous confrontation between the Government and the medical profession here than in most of the other countries, as the noble Lord, Lord Kilmarnock, has mentioned. I think that Aneurin Bevan's shrewd deal with the medical profession at the beginning of the National Health Service has turned out to have been both far-sighted and largely acceptable and workable.
The fact that in our National Health Service no money changes hands at each consultation or for each investigation, treatment or operation has not only saved administrative costs but has also led to economy in the use of clinical procedures and tests. It has also greatly improved doctor-patient relationships. In those countries where a fee is paid for each consultation or procedure there is a tendency for these to multiply and costs to escalate. There has been a greater tendency for costs to rise in those countries where the services are run by the "providers" than in this country. Over the last decade in all the countries described, Governments have had to step in with more and more regulations to curb the escalation of costs, so that the freedom of private medicine has more and more been curbed. Doctors' incomes in several countries have also been curbed, so that they are rising less than the national average.
In this country private practice, although still used by a very limited proportion of the population, has grown because of the difficulties facing the National Health Service. I suggest that these are in three main areas. The first two are largely due to under-funding. First, there is the speed of access to specialists and for non-urgent operations: in other words, the existence of waiting lists. Secondly, there is the lack of comfortable amenities and privacy for hospital in-patients. Thirdly, there is the difficulty of guaranteeing that one is to be seen or operated upon by a particular physician or surgeon. It is in fact questionable whether the actual treatment received is any better from a private doctor. It may in fact be worse—for instance, through less good post-operative observation in a single room rather than being in an open ward—but it may be more convenient and it may be done in "nicer" surroundings.
I consider that one of the most damaging results of an increase in private practice is that it leads to the exit of powerful voices which could effectively insist on National Health Service improvements. As Professor Bob Evans of the University of British Columbia writes in the book:
"Those most likely to exit are the wealthy, the well-informed and articulate, the politically most influential, the loudest voices".
He goes on to show how in the United States the Reagan administration is able to slash funding for social programmes, including Medicaid, because its beneficiaries are a minority of the population: poor,
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black and generally voting Democratic, if at all. He goes on to say:
"When we are all in the same boat the boat is maintained more carefully".
A further important objection to an increase in private practice is that it is socially divisive and may lead to a two-tier service, as has been mentioned by several speakers. Many middle-class people, and Members of this House, are full of praise for the skill, care and humanity with which they have been looked after in NHS practices and wards. When facing a common enemy—and here I am talking about ill-health and not the ward sister!—class barriers fall away.
It seems clear to me on reading the book that it would be more economical in terms of national resources to improve the National Health Service than to allow private practice to fill in the gaps, as well as being fairer and more socially cohesive. There is still much scope for increasing the efficiency of the National Health Service. This is particularly necessary now when we are in a period of slow economic growth. General practitioners, for instance, it is estimated, each cause approximately £100,000 to be spent per annum, while their own income is only one-fifth of this. As my noble friend Lord Prys-Davies has said, hospital consultants are thought to spend nearer to half a million pounds on more highly technical procedures. Other speakers, particularly the noble Lord, Lord Hunter of Newington, have mentioned how important it is that in medical education the economical use of scarce resources should be presented to students and that all procedures should be looked at from the point of view of cost benefit.
I have spoken in a previous debate about the need to identify and use incentives for good general practice, and the same applies—and perhaps even more so—in hospital. If doctors can practice good medicine, but spend measurably less National Health Service resources than average, could they not be rewarded? As a start, it would be very useful for all doctors, as my noble friend Lord Prys-Davies has said, to be given fuller details of the expenditures which they incur. A start has been made with hospital activity analysis, in which consultants arc given details of various aspects of their work, including the average duration of a patient's stay in hospital.
But with electronic data processing, all doctors could be given breakdowns of their activities: the number of patients seen, the number admitted to hospital, the drugs prescribed, investigations, treatment, operations, and many other things. These could be costed where appropriate. Clinical behaviour tends to change when this sort of comparative data is given. I think that the medical profession is now ready to participate in this sort of auditing activity, but it needs help and encouragement from the Department of Health.
Finally, I should like to quote a passage from the conclusions in this book. The editors state:
"The National Health Service constitutes a unique and precious national asset which provides basic services of a high standard at a very low proportion of the gross domestic product compared to other countries. Above all it retains a vital core of the ideal regarding equity in service with which it was launched in 1948".

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We have an opportunity to improve, and not to destroy, the National Health Service. Let us not waste this chance. It may be the last.
7.38 p.m.
Lord Hayter: My Lords, I was reminded by the debate before this one, on economics, of the time when I went to take my tripos examination and was met outside by Professor Clapham, one of my lecturers, who asked me why I looked so worried. I said, "Well, I do not know what the questions are going to be". He said, "My dear chap, in economics the questions are always the same; it is the answers that are always different". The same thing is true of health.
Over the years of the King's Fund, about every second year we have had a conference of European countries—sometimes as many as 17 of them, with people from behind the Iron Curtain. There you have the same patients and the same illnesses, but the ways in which those patients and those illnesses are coped with differ widely one from another. That was why I was so interested in this particular debate. The one point that is common to all these health services is contained in the wise remark that the noble Lord, Lord Porritt, made to me a long time ago: that there is no country in the world that can afford the health service that it wants. I am sure that that is still true today.
In connection with the book which we are considering, there were two statements that struck me. One was that,
"private medicine excludes many chronic cases and the elderly from their services".
Some people have already given the lie to that one. Another statement reads:
"In all technically developed countries, no matter how the medical services are financed, governments have continued to support the poor, the elderly and the chronic sick".
That is not absolutely true.
If there is one certain thing in this uncertain world, it is that we are all going to die; and as Dame Cecily, Saunders says, there is a right for people to die in dignity, surrounded by those who can provide tender, loving care. That brings me to my only point in connection with the debate, and it relates to the hospices that have grown up in this country. To my surprise, I find that there are 63 of them already in being, and that another 40 are in the pipeline. I find it very difficult to understand the policy regarding the grants made by the department. I am told that an average hospice would cost about £2 million, and I can quite understand that the department can truthfully say, "That is a private affair, and if you want to raise the money that is up to you". It is when it comes to the income side that I become so confused. I looked at an extract from Charity Statistics, and it was very difficult to tell what grants were going from the department to the separate hospices.
There was a lot of talk the other day about lobbying. I have not been lobbied at all. I merely have friends, as perhaps have other noble Lords, who have been mixed up with hospices. I am thinking of one hospice in particular, which is in the process of raising its £2½ million. Those involved in the hospice are saying to
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me that surely it is possible to get from the Government an indication of the income that will be provided from the department when the hospice is a going concern.
It may well be that in these days of economies the department cannot give that indication, and it might say that it will have to consult individually. I do not quarrel with that at all. But I believe that it is logical, reasonable and common sense that if a venture such as this is going to help people—and, incidentally, help the National Health Service, too—those involved have almost a right to obtain from the department an indication of the help that they will receive in due course.
It may well be that in some areas the surrounding hospitals can cope with the problem, though I doubt it myself because, as I understand it, a hospice is built on the supposition that the care of the terminally ill involves a very high ratio of nurses to staff it, which cannot be duplicated in the average hospital. So I would appeal to the noble Lord the Minister to try to give some guidance on what is the best way of indicating to the individual hospices as they are being developed how they will be able to manage in the future so far as their income is concerned.
7.44 p.m.
Lord Colwyn: My Lords, I am very pleased to be able to take part in the debate this evening. I have to say that, owing to having had rather too many patients this afternoon, I must apologise to the noble Lord, Lord Hunter of Newington, for not hearing his introductory speech, and also for missing the speech of the noble Lord, Lord Wells-Pestell, whose opinions I highly respect, but do not necessarily agree with. I have not been able to read the entire publication, having managed to obtain my copy only on Monday; and I must apologise for perhaps using my notes a little more often than I usually do.
I agree with the general recommendation of the publication relating to the need for constant review of total health services and the co-ordination and improvement of specific areas of service. The document tried to give us some advice for the future, and, while the authors confirmed their faith in the National Health Service, it was quite clear that they did not envisage any extra resources being available from the Government, despite constant calls for more money.
Our goal must be to use the money available more effectively, to control expenditures, increase efficiency, of services, and ensure equity of distribution of health care. However, provision of health services, is, and will become, an increasingly major cost to the taxpayers, whether it is under private insurance, or within the NHS. It is important to recognise that private health insurance companies are primarily a distribution agent for monies collected for health costs, and that increasing payments to medical care will equally affect the taxpayer's pocket, whether it is via the private system or the NHS.
I have to point out to the Government that under our present system of health care, which has its accent totally on the treatment of disease, the future appears extremely bleak. I do not have the exact figures, but

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the Government will be aware that a large number of our present population was born between 1946 and 1951. When in the next 10 to 15 years these war babies reach the age of chronic disease, the costs to the NHS and to the private insurance companies will rise dramatically. The increase will fall directly on the taxpayer, whether it be under private insurance or within the NHS. It is clear that it is the relatively healthy 30- to 40-year-olds who are subsidising, and will continue to subsidise, the more senior members of our society. In 10 to 15 years' time, these individuals must carry much of their own burden, because the future group of 30- to 40-year-olds will be substantially smaller.
I should like to give some advice to the Government, and I would recommend that they investigate the following four specific ideas in their consideration of the document which is the subject of our debate this evening. First, I suggest the production of a public education television series on disease development. The purpose of the series would be to inform the people of this country so they may be able to detect disease problems and consult their physician before major and costly medical care may be needed.
Secondly, I suggest that a further television series could be developed on the subject of home self-care. The purpose of the programmes would be to provide the public knowledge which would be self-administered by the patient to improve the chance of maintaining health with appropriate supervision and dialogue with his family physician. The television series could be created by a re-allocation of priorities within the budget of the BBC, with little, if any, immediate additional cost to the Government, and the series could be re-utilised within the public education system to ensure continued awareness of methods to prevent disease. Not only would such a series potentially reduce health care costs; it could also increase the productivity of our workers by substantially reducing the number of days away from work.
Thirdly, I suggest that the Government promote the scientific testing of existing drugs for the purpose of preventing disease. Some existing medications have effects on physiological functions which logically suggest that these drugs might create a human environment which will be better able to resist disease and increase tolerance to stress. In the past, extensive research has been conducted to treat disease. I suggest that efforts be made to utilise the same resources which have produced such superb methods to alleviate pain and suffering to develop applications which increase the quality of life and reduce the burden of health cost to the taxpayers.
Fourthly, I suggest that the Government promote the scientific evaluation of existing medical procedures that might be used to prevent disease progress. In the past, medical intervention has been focused on the time of greatest need, and care of the patient has been postponed until the individual perceived treatment was absolutely necessary. Perhaps the notion that an ounce of preventive maintenance saves several pounds of cure is as important a concept for the human organism as it is for the safety of aircraft travel.
In summary, I suggest that the Government direct their energies to prevention in health care, in a similar spirit to my own profession of dentistry. I suggest that
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physicians should be responsible for the treatment of disease while I encourage the people of our society to be better educated and motivated to be responsible for their health.
7.51 p.m.
Lord Wallace of Coslany: My Lords, I am sure that the House will wish to thank the noble Lord, Lord Hunter of Newington, for raising this debate. There has for some of us been a difficulty. I must apologise to the noble Lord. The noble Lord, Lord Colwyn, only obtained his copy of the book on Monday. My noble friend Lord Wells-Pestell seems to have been very devious and got his on Saturday. The books arrived in the Printed Paper Office only late on Friday afternoon. There was one copy in the Library. During the Recess, when I saw that this debate was to take place and guessing that I would be appointed to deal with it—I nearly said "lumbered"—I rang up the Library. I was told that there was one copy, that it had already been taken and that I came second on the list. That copy has not come back. I notice that the borrower has not even put down her name for the debate, so I do not know what has happened to the book. I have, however, been able to scan it. Thanks to my thoughtful and caring bank, Lloyds Bank, I was sent a copy, as a customer, of its review. An article written by Mr. Alan Maynard, who has also contributed to the book, gave me a useful outline. So far as delay in getting copies to Members is concerned, I wish to put on record that it is no fault of the officials of the House. Our respected Clerk of the Parliaments gave permission for copies to be obtained but the publishers did not send them until the last possible moment. I shall now take away a valuable book for further consideration.
What we are debating is not new, inasmuch as the public and private mix of the Health Service is already taking place in fairly considerable measure. I would hazard a guess that a sizeable majority of consultants with NHS contracts for specified hours are now considerably active in the lucrative private field. One cannot blame them, and I do not blame them. They have the skills and take the opportunities to obtain additional financial advantage. That is fair enough. I make no complaint whatever about it.
It is, however, a fact—I have given some degree of notice of this matter to the noble Lord, Lord Trefgarne—that, in many cases, NHS property and facilities are used for examination and tests of private patients: for example, physiotherapy, pathology and X-rays. This takes place in fair measure in a large number of hospitals. Of course, the consultants are not pursuing this work in their own hospital time. It is done, shall we say, for the sake of a good expression, during their free time. This involves expense. It may be possible for the Minister to say what charges are recovered by the NHS for such use of facilities and on what basis. It would be useful and helpful if he could give the total income received nationally each year from such charges. I am assuming that charges are made, because I believe that they should be made.
I have stated already that consultants, through their skills, have the opportunity to obtain further financial advantage. I wish to stress, however, that no financial advantage arises for other hospital staff providing

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facilities and services for private patients in the NHS. It has to be faced that the majority of such staff are underpaid compared to those in the private sector. New private hospital facilities have expanded rapidly. Indeed, they have expanded to such an extent that saturation point is possibly close. Here, I should like to raise a further point of which I have given notice. It is a serious matter.
I make no apology for raising an issue that is causing considerable concern in the area where I live. Situated in the grounds of Queen Mary's Hospital, Sidcup, is a mansion dating back to the 1600s. Frognal House is a listed building which, at one time, I believe, was the residence of the Sydney family who founded Sydney, Australia. It is a health service property. Problems have been experienced with the Department of the Environment in getting adequate repairs carried out. Eventually, a commercial arrangement was made by the regional health authority. A conversion was recently carried out, at a cost of £700,000, designed to create offices.
Now, however, the leaseholders, Housetrend, want permission to hand it over as a hospital for paying patients to a company called Hospital Capital Corporation Limited. This move is described by the Kentish Times, our local newspaper, which is certainly not politically biased, as an insult to Queen Mary's Hospital, where appeals for new equipment are being started all the time because, as the newspaper states, it is underfunded by a Government that pays lip service to a National Health Service. Those are the words of the newspaper, not mine.
I can vouch for the local efforts made in the area, which is not exactly wealthy. The Friends of Queen Mary's with whom I am associated—in fact, I am president—have raised about £80,000 in the last five years. Many hundreds of thousands of pounds have also been raised by numerous other efforts to provide much needed equipment that is not available due to lack of public funding.
The response has been simply magnificent. The hospital has gained the admiration and the support of the community. That is good. The Bexley District Health Authority is appalled by the plans and has expressed unanimous opposition. But the decision rests with the South Eastern Regional Health Authority. I take the view—rightly, I think—that the decision should be taken by the Minister following an inquiry locally. I am sure that the great majority of people in the area, which comes under the Bexley health authority, will simply not agree to, or support, such a venture. It is a proposed public-private mix of the worst possible type, constituting, as it would, a grave conflict for nursing and ancillary staff. It should not be forgotten that it is situated a mere few yards from the magnificent new hospital that we now have.
It is an insult to all those many people who have given effort, time and sacrifice to raise funds for a hospital endeavouring to maintain its high standards in spite of enforced financial cuts. The hospital staff, from consultant to ancillary, are giving a magnificent example of providing efficient assistance and service under extreme financial difficulties. I pay them tribute. In the industrial dispute that took place not long ago,
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which was, of course, regrettable, they did little to become involved. They gave their service to the hospital willingly.
The private hospital obviously would be an investment for financial reward, as indeed most are these days. In the main, they are not charitable organisations. I am sure that the noble Lord, Lord Wigoder, will agree that even BUPA has to pay its way and show a reasonable margin to operate. If people wish to pay for private treatment, I say emphatically that they are entitled to do so. Indeed, this is not the first time that I have said so. This is a country where one can choose and the choice is up to the individual. But the main benefit would be priority, however minor the medical need. To my mind, the standard of treatment would be no higher than in the National Health Service, where our standards are high and administration costs lower than in the majority of other countries. Two noble Lords at least have mentioned the summing up in this excellent publication and in the Lloyds Bank Review about the high standard here as compared with that in other countries.
It is fair comment to say that the advance of the private sector has been encouraged by the Government, in that, although claims are made that more is being spent on the National Health Service, widespread closures of hospitals and reductions of services are still taking place, which in turn obviously extend waiting lists and provide a ready bait towards the private sector. I say that in no derogatory way.
At present, private health care premiums can be offset against tax only for those earning less than £8,500 per annum—a policy which in 1982–83 will cost an estimated £4 million. To extend this would be a retrograde step as it would widen still further the social gap between the rich and the less well off. Even so, £4 million is lost to the Exchequer and indirectly—it is fair to say—to the National Health Service.
It is possible for both public and private sectors to develop a degree of co-operation in an exchange of facilities but not at the financial cost of the National Health Service. Co-operation is possible. I personally would not rule it out at all. But it must be very carefully worked out so that the National Health Service does not suffer financially.
As has already been admitted, facilities in private hospitals vary considerably, particularly in the field of intensive care. It seems that in any public/private mix, National Health Service hospitals would carry the burden of difficult cases. Therefore, costing would have to be carefully worked out to avoid disadvantage to the National Health Service.
Another difficult question is that of staff. Here perhaps to some extent I cross swords with the noble Lord, Lord Wigoder. A great many in the private sector have received their training in National Health Service hospitals. I understand that it costs about £60,000 to train a doctor, and there is also the cost of nurse training, as regards which I have no figures, but it must be considerable. As I have already suggested in a much earlier debate in this Chamber, the private sector should pay towards the training of nurses and doctors a levy to be determined and agreed. There is

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no logical reason why it should not do so. It is only fair and reasonable that the private sector should bear some of the cost of the benefits acquired in recruiting skilled staff trained by the National Health Service. As matters stand at the moment, let us face it, the National Health Service is subsidising the private sector in this particular section alone.
Whatever future decisions are made regarding the future of the National Health Service, it is inevitable that a clash of ideologies will arise in the forthcoming general election. I must honestly say that personally I wish it were not so and that the National Health Service might be regarded as a vital service to the nation to be fully expanded and restored without that idiotic new Conservative word "privatisation" rearing its ugly head in any direction. I detest that word as much as I detest their pet word "quango". One disservice which they have done to the country is to introduce the word "privatisation": it is detestable.
With some pride I number myself among the many unknown thousands who battled for a National Health Service and lived long enough to receive from it benefits beyond price. There can be no mistake about it that many others in this House can say the same. Therefore, to me, there can be only one priority: medical need and not financial advantage. However, I recognise that the private sector exists and will continue to do so. That being so, ways and means of co-operation between the two sectors must be found, with the main objective of advancing the health care of the nation, but not the overriding motive of profitable financial achievement in the private sector. Whatever happens, the extension and improvement of the National Health Service must be the number one priority of any Government, regardless of their political basis.
Once again, I thank the noble Lord, Lord Hunter of Newington. But it is regrettable in a way that we have not had a longer period for this debate.
8.7 p.m.
The Parliamentary Under-Secretary of State, Department of Health and Social Security (Lord Trefgarne): My Lords, I have greatly welcomed the debate we have had today, for it has given us the opportunity to consider some of the wider questions concerning the future of health services—both public and private—that are sometimes crowded out in the discussion of more immediate issues and problems. The debate gives me the opportunity of restating our commitment to the National Health Service and to make clear how we see the relationship between the public and private sectors developing in the future.
I must start by paying two tributes. First, we are indebted to the noble Lord, Lord Hunter, for instigating the debate and, indeed, for his comments today. I am sure we are all conscious of the authority that the noble Lord brings to the subject following his lifelong involvement in medical issues, and in particular his contribution to the development of medical education.
Secondly, the Nuffield Provincial Hospitals Trust are to be congratulated for their role in producing this book. It is a most valuable bringing together of the information, arguments, and ideas underlying any
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discussion of the mix of public and private health care provision. The publication is in line with the concern of the trust to keep under review the effectiveness of the total health services available. The general message of the book is perhaps that, although different countries naturally have different ways of providing and financing health care, all industrially advanced Western countries face a number of common problems.
In recent years the generally difficult world economic situation has focused attention on the level of resources that can be made available to health services. In no country can the funding of health services be divorced from the general ability of the economy to pay the cost. This has applied however health services are organised and, in this country, has had to be faced by all administrations since the war. At the same time we are conscious of the continuing growth of demand for health services. Again this is a common experience. On the one hand, we have the demographic pressures: in particular, the growth in the numbers of the very elderly. On the other hand, demand for health services rises with increasing expectations and the emergence of new medical techniques. The development of life-saving procedures is of course welcome but we have to face up to the consequences, in terms of pressure on resources. These comments would be familiar to anyone in the Western industrialised world. How have the various countries responded? Clearly the exact response has been linked to the various methods of organising the funding of health care reviewed in the book. The structures vary; but between countries two messages stand out.
First, in all the countries involved there has come to be a considerable state financial contribution to the funding of health care. The proportion and the method of channelling the funds may vary but almost everywhere the state is to some degree involved in the provision of health financing.
Secondly, what is noteworthy is the extent to which systems abroad have been subject to regulations in recent years with the aim of matching expenditure to the ability of the economy to bear the cost. The book records actions, such as controls on the supply of things like beds, intervention in the price of health provision, and other means such as adjusting the coverage guaranteed to the insured person. Both intervention and the concern to ensure the best use of resources—that is, value for money—are common themes whatever the structure.
It is of course right to keep an eye on what is happening elsewhere. It would be arrogant to believe that this country has nothing to learn from foreign experience. And no doubt, given the similar issues, there are essays on the United Kingdom system in similar books produced in other countries. But there is no one system which in itself solves all resource and efficiency problems. We also have to take account of our own traditions and strengths. For example, our general practice service is rather different from that in other countries, where there is generally greater direct access to specialists. Further, while such comparisons are notoriously difficult, it does seem that our administrative costs compare favourably with those of other countries. It would not be sensible to move to any alternative system which, while theoretically meaning

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less Government involvement, in practice led to more bureaucracy and more involvement in the detailed regulation of health services.
The Government's approach was summed up last July by my right honourable friend the Secretary of State as follows:
"The Government have no plans to change the present system of financing the National Health Service largely from taxation, and will continue to review the scope for introducing more cost-consciousness and consumer choice and for increasing private provision which is already expanding".—[Official Report, Commons, 30/7/82; col. 860.]
In the rest of my comments I shall deal with the three elements inherent in that statement: our commitment to the NHS, our concern to promote the efficient use of resources. and our approach to a developing partnership between public and private sector.
Our first aim is to strengthen and develop the National Health Service. The principle should be that good health care should be provided for everyone, regardless of ability to pay. Our support for the NHS is clearly demonstrated by our record on expenditure. Since we came to office, in England alone we have increased spending on the NHS from £6·5 billion in 1978–79 to £12·9 billion in 1983–84. Even allowing for inflation this increase has meant real growth in services of some 7½ per cent. over this period and growth of over 17 per cent. when measured against the Retail Price Index. The charge which we hear from some quarters that we are "dismantling the NHS" is therefore wholly without fundation. So far as activity to increase the efficient use of resources is concerned, the Government have recently taken or set in hand a number of initiatives. They include: changes to the structure of the NHS; a regional review system and the development of performance indicators to review authorities' use of resources; the setting up of a special inquiry into NHS management; a review of information; improvements in audit; a new scrutiny procedure for administrative and managerial functions, and measures to improve efficiency in specific areas such as purchasing goods and services. These are all part of our central concern to make the best use of available resources.
I turn now to the place of private care. I believe with total conviction that our people should be free to seek health care outside the NHS if they wish, that private medicine does not pose any general threat to the NHS, and that the independent sector, and the NHS under the "pay-bed" system, should be free to provide facilities to meet the demand for private care and treatment. Indeed, I greatly welcome the fact that over 4 million people are now covered by private health insurance, representing, as the noble Lord, Lord Wigoder, told us, over 7 per cent. of the United Kingdom population.
I should like to remind your Lordships that we have restored tax relief on employer-employee private medical insurance schemes to those earning less than £8,500 per annum, which was to correct discrimination against this benefit alone. This is an example, incidentally, which contradicts the assertion made by some of your Lordships on that side of the House yesterday during Questions that the Government's tax concessions have all been directed at the higher paid.
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A major aim of the Government is to encourage greater personal responsibility for health, and full recognition of the contributions of the voluntary sector and private health care. Part of the health care of this country has of course always been provided by the independent sector. In the past, however, Governments have too often neglected or ignored private care and the opportunities for co-operation between the independent and public sectors. We aim to encourage a more imaginative approach to the provision of services and a constructive partnership between both sectors.
Beside the National Health Service the private health care sector is still comparatively small. It is most important to bear this in mind in the context of the kind of issues explored in the NPHT publication. The total amount of money spent on independent health care represents but a few per cent. of what the nation spends on the NHS.
But the private sector has an important role to play. By increasing available health care provision, it relieves some of the pressures on the NHS. But there are other benefits, too. There are dangers in being a monopoly supplier or a monopoly employer, and the private sector provides a useful alternative to the NHS. It shows that there are different ways of doing things.
I disagree with those who argue that private health care should only be available outside the NHS. We shall continue to authorise private practice in NHS hospitals where there is a demand for it. There is no reason why it should interfere with the provision of services to NHS patients. We have reached agreement with the medical profession on six principles designed to ensure the equitable operation of private practice in the NHS, and there is a statutory safeguard which prevents private practice from being authorised in NHS hospitals if it would prejudice service to non-private patients. Further advice on the management of private practice within the NHS was given to health authorities in the circular we issued earlier this year.
So far as private practice outside the NHS is concerned, I recognise it is possible that a particular private development might, in certain circumstances, adversely affect, for example, the staffing of a local NHS hospital. We have therefore retained certain powers of control over private developments, with which I shall not trouble your Lordships now.
The qualitative safeguards provided by the Nursing Homes Act 1975 are on the whole working well. There is however a need for greater consistency of approach in the requirements of health authorities—something which has been highlighted by the creation of a large number of health authorities at district level. With this in mind we suggested that the National Association of Health Authorities might like to prepare further guidance on the registration and inspection of private sector premises. They responded promptly and constructively to this, and hope to be able to publish some guidelines later in the year.
We see the NHS and the private health care sector as essentially complementary. Co-operation and not competition is what we need, so that all health care facilities are used to capacity. Health authorities and managers of local private facilities will I hope increasingly develop close working relationships.

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There are many areas where there can be co-operation between the NHS and the private sector.
For example, a number of health authorities make use of private facilities as a way of providing NHS services where they can contribute economically and effectively to the care and treatment of their patients. I should like to see many more such arrangements introduced. For our part, we have lifted the administrative restriction on contractual arrangements with profit-making organisations and institutions, issued guidance to health authorities, and urged them to take present and planned private sector provision fully into account when considering the future pattern of their services. I hope that anyone in the independent sector with spare capacity will bring it to the attention of the health authorities in his area. On the other hand, several private institutions obtain pathology, radiology, and other services from NHS hospitals. Such arrangements can be mutually beneficial, and avoid unnecessary wasteful duplication of services.
Co-operation between the public and private sectors of health care should take place at all levels. I also hope for instance that many more joint training courses, seminars, and study days will be arranged. Activities of this kind can do much to promote better understanding, foster closer relationships, and encourage the exchange of ideas and information about good practice. I have been pleased to hear of some new training initiatives by the private sector and of the active consideration being given to ways of further expanding its contribution for the training of health professionals.
For our part, we shall continue to look for and promote ways of improving the total health care system in the country. Officials are, for example, keeping in close touch with representatives of the Nuffield Provincial Hospitals Trust and we have recently discussed with regional health authority chairmen the scope for co-operation between the public and private sectors and hope shortly to continue that discussion with district health authority chairmen.
May I turn now to some of the points raised during the course of the debate this afternoon? The noble Lord, Lord Wells-Pestell, referred to the problem of waiting lists, and more than one noble Lord referred to it subsequently. It is the case that, prior to the industrial dispute last year, in the three years that we had been in office waiting lists had steadily declined. Naturally, during the dispute that was not so. I hope, now that the dispute is well behind us, we shall see those waiting lists dwindling again.
The noble Lord, Lord Wallace, suggested that Government policies would extend waiting lists; but of course that is not so. Our policies in fact reduced the waiting lists. The noble Lord soft-pedalled the proposed policies of the Labour Government—should they ever come into office again—in this particular area. I have in front of me a document, recently published, called Labour's Plan: New Hope for Britain. I must say that there is not much hope for National Health Service patients under the proposals that the noble Lord and his colleagues are proposing to put before the nation.
The noble Lord, Lord Auckland, asked me about the percentage increase in nursing staff, in particular in
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the provinces. The increase in total health authority manpower between 1976 and 1981, taken on an annual basis, has been about 1·5 per cent.; that is, 1·5 per cent. per year over that period. The two regions with the highest increase were the Trent Region and the North Western Region, at 2·8 per cent. and 2·4 per cent. respectively. I am afraid I cannot give my noble friend the figures for nursing staff in those two regions, but I would expect them to be similar in percentage terms.
The noble Lord, Lord Wells-Pestell—and the noble Lord, Lord Wallace, underlined this—asked me about the way charges are calculated for private patients in NHS hospitals. Charges include overheads and an amount assigned to capital, so I think that the charges are calculated on the proper basis and I do not think that the fears of both noble Lords are justified. Indeed, we have recently altered the basis of charges, or at least are proposing to do so, so that the charges made at individual hospitals now more precisely relate to the costs incurred in those hospitals rather than to some general national formula which, in the past, has not necessarily proved particularly accurate.
Lord Wallace of Coslany: My Lords, would the noble Lord allow me to intervene? Is the noble Lord talking about charges for private beds? I referred to the other services given in various parts of the hospital.
Lord Trefgarne: My Lords, the other services, too, are charged for, broadly on the same basis. The noble Lord, Lord Kilmarnock, asked me in particular about the critical point. He asked: where is the critical point? I think he was wondering what was the point at which the growth of the private sector might threaten the public sector. I am not quite certain where that critical point is, but I am quite certain that we are a very great way from that point at this moment, when the private sector is some 2 per cent. or 3 per cent. of total health care in this country.
The noble Lord, Lord Prys-Davies, asked me about the question of teaching hospitals; about persuading the doctors of the future of the need to make efficient use of resources. I entirely accept the importance of doctors being aware of the cost as well as of the clinical implications of the treatment they prescribe or perform. The department is active in promoting a better understanding on this point. We support the management training of clinicians, and we are also promoting a study of the concept of clinical budgeting. However, the training and education of the medical and other health professions is not a matter which is ultimately within our control. It is, as many noble Lords in this House know so well, the medical schools and medical education bodies which determine what medical students are taught and to what extent they are educated in the resource as well as the clinical consequences of their work. I hope very much that the medical education bodies will give this aspect of medical education continued thought and emphasis.
The noble Lord, Lord Richardson, asked me about the private revenue, and in particular whether the revenue from private medicine could be retained by the hospital itself rather than perhaps tipped into the general, national kitty. This year's health circular repeats earlier advice that private practice income

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should be retained in NHS hospitals so far as is practicable for use on identifiable purposes where it is so earned. I would refer the noble Lord to paragraph 24 of the circular I mentioned earlier. It is No. 7 of 1983.
The noble Lord, Lord Hayter, asked me about the revenue funding for hospices, and asked me if I could give some assurances that we in the department would look favourably on making some commitment for particular projects. This is a matter for district health authorities and not for the department itself. District health authorities will want to look at each particular case in the light of the requirements of their particular district. I know that some districts make a commitment to take a certain number of beds in existing and presumably in planned hospices as well. Indeed, I was myself asked to consider a matter of that kind quite recently, and that is the sort of solution that was there being canvassed.
The noble Countess, Lady Loudoun, referred to the need to examine the legal basis of registering old people's homes. I can assure the noble Countess that this is contained in the Health and Social Services and Social Security Adjudications Bill, which started in your Lordships' House a few months ago, which is currently before the other place, and which will doubtless come back to your Lordships for consideration of their amendments in due course.
My noble friend Lord Colwyn made a particular plea for more preventive health care. In the United Kingdom preventive health care, which embraces health promotion and health education, forms part of the normal health care services provided by the National Health Service. There is some work going on in districts in this matter, but nationally the Government have produced a series of discussion booklets on prevention aimed at professional and informed lay readership, and will fund the Health Education Council to the extent of some £9 million in 1983–84. The council has an ongoing programme of health education relevant to the prevention of smoking-related diseases and to the promotion of healthy life styles.
The noble Lord, Lord Wallace, asked me particularly about the proposed use of Frognal House as a private hospital. Any proposal to change the use of Frognal House to a private hospital will require planning permission. Under the terms of the lease on which Frognal House is held the approval of the South-East Thames Regional Health Authority is required for the making of an application for change of use. I understand that the leaseholders did seek the RHA's permission to make such an application but in fact do not now intend to pursue the proposal. Had the request been pursued and had the RHA given its agreement, the proposal would then still have been subject to all the normal procedures and safeguards applying to planning approval and the control of private hospital development.
To sum up, I should like to say that we want the independent sector of health care to be seen as a small but growing and complementary part of total health care provision. Our view is that the number of pay beds and the number of private hospital beds should find their own levels in each locality, and that there
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should be the maximum of co-operation locally between the public and private sectors. The relationship between the NHS and the private sector of health care is an area not for ideological battle, but for common sense collaboration. I believe that all of us can make a contribution to a better understanding, to improved working relationships and, in the end, to the provision of better health services for all our people. I regard "partnership" as very much the key word for the 'eighties.
Lord Hunter of Newington: My Lords, I rise, first, to thank all noble Lords who have contributed to this debate. I thank them for raising the standard of debate, and I express the hope that if this topic arises outside the House, as it surely will, the standard of debate there, too, will be raised. I thank the Minister, particularly, for the clarity of his exposition, but would also say to him that to my mind the House has clearly said: "We accept that there must be a mix: find the right mix". So the Government are now fairly challenged by the situation as to what is the right mix and what role they themselves should play in this matter. For example, should they study the elderly and all the interconnections, and give advice to local district hospitals, or should they study hospital development and the share of private hospital development of the hospice kind which has been so clearly put to the House? I would have thought that one would like to see more action, more detail and more proposals for debate, because there is a natural anxiety in many quarters that the right mix must be found. My Lords, I beg leave to withdraw my Motion.
Motion for Papers, by leave, withdrawn.

Opticians: Office of Fair Trading Report
8.32 p.m.
Lord Rugby Lord Rugby rose to ask Her Majesty's Government what steps they intend to take in respect of the opticians' monopoly following the Office of Fair Trading Report.
The noble Lord said: My Lords, the noble Lord, Lord Donaldson, asked me to express his regret that he could not speak in this particular debate, but he wished to assure me that he was very much in support of what I have to say.
The Opticians Act 1958 was a seemingly harmless Act, concerned only with compiling a register of opticians and regulating their professional standards. The manner in which the Act has been interpreted has been more sinister. The impact of Section 21—that is, its impact on the public—has given cause for concern. That concern has been reflected in the press right across the board. The Government must surely have been aware of recurrent words in the headlines, such as, "fraud", "swindle", "rip-off", "frame-up", "scandal". These emotive expressions have reflected the defencelessness of the public in the face of what they see as a form of persecution by deprivation: they believe that there is indeed something rotten within the state.
The truth and the obvious have been constantly deployed in order to counter the sheer deviousness of

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this monopoly, and never more so than in the debates and Questions in the last three and a half years in your Lordships' House and another place. In the face of it all, no straight answer has ever been offered by the Government. There has been no attempt to offer a straight answer to the 23 million for whom these bits of plastic and mass-produced glass inserts spell the difference between being an able-bodied person and an incapable person in a demanding, competitive world.
Is it trite to ask whether it is not palpably obvious that it is only by the combined use of all its senses working in unison that mankind obtains its ability to survive? For centuries we have developed simple tools to compensate for physical changes and to help us to perform essential tasks. The conversion of script into mental imagery is central to civilisation. There are different ways to do this—for instance, by being read to—but mainly by scanning the lines of print and delivering the message to the brain, in a sighted person with the eyes and in a blind person with the fingertips.
Where these physiological changes occur, as they do, gradually and naturally, the scripted words need visual enlargement by magnifiers. This is in order to maintain a status quo vis-à-vis the comfortable distance for performing all manner of tasks. Different distances require different glasses. Maximum efficiency is decreed by simple trial and error. Of prime importance is the fact that both hands must be freed for co-ordinating movements and thus these magnifiers are held in a special frame. This compromise is universal and hallowed in history.
Can a task be performed better by using an optical appliance? That should be a 100 per cent. personal decision—it cannot be anything else. No person is privy to the thought processes and mental responses of another person. Sight means one thing to one person and something different to someone else. Our right to our own sight is a basic fundamental right. Likewise, the power to increase or decrease the focal length of the eyes by means of selected aids in the performance of the demands placed upon us is a basic human right. The choice of single vision lenses which achieve this purpose has been with us for centuries.
However, the Opticians Act 1958 introduced its own set of rules concerning our rights in these matters. It managed to persuade Government that oculists, by changing their name to ophthalmic opticians—which is somewhat like a farmer upgrading his style by calling himself an Alimentary Dietician—began to know better than we do; that by some indefinable knowledge they have the right to interfere in these mental visual processes; that, in order that we may continue to use these simple tools, we must make application to them. We must subject ourselves to interrogation; we must try to explain and divulge what is going on in our minds before access to a visual aid—known as an optical appliance—will be released.
It is futile to remonstrate. This is not an eye-test at all; it is a test of sanity with penalty clauses. At the mature age of 50, or thereabouts, when faced with the greatest reliance on these status quo tools, you comply or you go without, or, as many do, you go abroad to buy them. Over the years, Government have been in possession of a vast quantity of correspondence. Their vaults must be overflowing with complaints from the
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public on this one issue—namely, the right to deprive people of the maximum deployment of their eyesight at a stroke by taking visual sensory aids off the market. By so doing, the efficiency of the whole nation has been impaired. The Government have been complacecent by choice, despite the violent opposition to what is now exposed as a restrictive practice concerning our eyesight and our freedom to make personal judgments about our own bodies.
My Lords, 23 million users of spectacles may have had enough, but their voice is as nothing compared with an organised lobby of a few thousand opticians ensuring that the mailbags of politicians are kept filled with their special pleading. The lobbying stems directly from the Bill itself. The tactics are the same as those used in the Private Member's Bill of 1958, and who knows it better than the noble Lord, Lord Northfield? There was barely a quorum in the House at that time. A Division on the most reasonable amendments to safeguard the public interest would have been futile when that quorum was composed of opticians and their friends in the majority. Indeed, it was by the continuous use and repetitive reference to those very words "public interest" that public interest became the first casualty.
If anyone seeks to study the archetypal method of using the democratic processes in order to secure a lucrative market, a monopoly, or, in business terms, a coup, he need only study Hansard. Read the reports of those debates and then relate the promise to the fulfilment. One is almost prepared to forgive anything in the business world when compared with cornering the market in visual sensory aids, depriving people for weeks of their natural abilities and relating the charges to an unbridled price structure. This form of Uriah Heep succour has no place in the doctrines of Hippocrates. When such methods can be and are being used by some to obtain payments out of all proportion to the intrinsic value of a vital and essential product, that, my Lords, is blackmail. The first chink showing that the Government were yielding was when Mrs. Sally Oppenheim, the Minister for Consumer Affairs, set up the first full-scale inquiry—and God bless her for it! In effect, she said that competition in the sale of spectacles must come back. The Office of Fair Trading will be charged with taking this vehicle apart and thereby enabling Parliament and the public to view it piecemeal in all its parts.
That report is a masterpiece. It says everything that is required of it without a hint of bias, with an enviable economy of adjectives and a total suppression of opinion. The Government now have in their hands the very indictment of the opticians' cartel which the Minister sought. Why is she no longer in office? Is this something to do with the lobby? The Office of Fair Trading report is of great public import and concern.
Promises were implied to me when I agreed not to go to a Division in your Lordships' House in sponsoring a Bill to repeal Section 21 of the Opticians Act. That debate was over a year ago. It was then made contingent upon the findings of the report. That Bill was entirely vindicated by the report. But the Bill remains on the Table. If the Government shrug it off now because of an impending election, I believe that this will be construed as a cover up; and if it looks like being collusion, it may well turn out to be an albatross.

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I hope that I am wrong in that suggested possibility. I have a letter from a retired optician of the old school who says that if all else fails, one thing that we can count on is that Mrs. Thatcher will not stand for British people being fooled.
This debate is essentially about the report of the Office of Fair Trading. But, taken in conjunction with the report of the Committee of Public Accounts, again one is confronted with unique and wholly unacceptable sources of hidden revenue for opticians. The chairman of that committee referred more than once to wool being pulled over the eyes of the Department of Health and Social Security, and unintended profits being filched out of the Exchequer. Lack of surveillance was admitted; an estimated £10 million of VAT went astray over two or three years. These figures are estimates and taken out of the top of their heads; no one really knows what the figures are; Accountability seems to be a dead duck; the department could not get at the facts and was an easy touch.
Later in the report, we find that bankrupt stocks of lenses from abroad namely, the Argentine and Brazil—were being dumped on the world's markets at 25p each. Landed here, they were qualifying for reimbursement at standard rates—all perfectly legal, or so we are informed. The world is awash with spectacle frames. Whole frames and lenses are selling abroad—in Holland, for instance—at from £2 to £6. Here, frames alone are starting at £40 before a lens has been inserted. We can find bills of £100 or more. One old lady I know was charged £450. There are no limitations. At least 85 per cent. of these frames are imported. What is the effect upon the home industry? Why should it have to compete with chicanery at this level?
In the wake of this transport of deceit, we now learn that the opticians have been impoverished to the tune of £70 million to £90 million as a result of the eye tests that they inflict upon us. I understand—although I stand to be corrected—that every optician's business in the country stands to receive an ex-gratia payment of between £10,000 and £25,000. My arithmetic suggests, therefore, that a multiple business that we all know of, owned by a tobacco company, will be in receipt of £12 million to £15 million of taxpayers' money. Yet, over the years, we know only too well that they have been recouping this alleged losses by fleecing the public on private frames.
Perhaps before I end the noble Lord may explain why, under the Health and Safety Regulations, far better frames can be bought for company operatives from £14 to £19 but are denied to the public and small businesses who are forced to buy the poorer quality product at inflated prices. How can this hypocrisy be excused? Is it because every trickle through this dam is quickly plugged with an optician's finger? The tragedy for all of us can be found as I have said in the pages of Hansard, when the noble Lord, Lord Northfield, and a few other stalwarts were prevented by smear and innuendo from securing fair play for the public.
Their predictions are self-evident and are borne out now by the consumers acting independently and getting their own report. It is also borne out by the survey of ophthalmologists who emphatically
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demanded the repeal of Section 21 of the Act which controls the sources of supply, the retail outlets and links them to the opticians' consultancies, which are anything but medical consultancies. The Government must now be fully aware of what is at issue. Is it not time for the Privy Council to be asked to review the conduct of the General Optical Council? So long as this cloak of respectability is available, it will be used as a shield for malpractice. The public will remain defenceless; unintended profits will remain a euphemism for milking the public purse. It will continue unabated.
8.46 p.m.
Lord Northfield: My Lords, that is a very hard-hitting speech to follow. I pay tribute to my noble friend Lord Rugby who in recent years has been fighting very hard on a trail which started 25 years ago when some of us opposed the Opticians Act at that time and forecast exactly what would happen over the years. I am delighted that not only his pressure but the pressure of other colleagues in this place is now bringing some results and I shall come to that in a moment. But what a long trail it has been!
There are really two issues and I do not start on either of them by saying that we are here dealing with a lot of sharks or dishonest men. I do not think frankly that that is the case. I think that we are all victims of Parliament's mistake in 1958 when the Opticians Act was passed, when the sanctity of professionalism was given to a commercial service, competition was totally ruled out and we are now paying the price in the shops for that mistake. If I may say so to my noble friend Lord Rugby, it was not because of dishonest men outside. I think they are all honest and I think that we are victims of the system which Parliament has allowed them to erect around their profession.
There are two issues here, as I have said. One is the degree of competition in this activity and the rules about publicity, with the possible consequent effect upon the price of spectacles. The second issue, which is highlighted in the report of the Office of Fair Trading, is the issue of the sale of ready-glazed reading spectacles outside the profession. Let me deal with them in turn.
In the case of publicity and competition we are still—is it not extraordinary?—after 25 years trying to get Governments to face up to the simple point that we were pressing from 1958 onwards; namely, that the problem arises because of the dual functions of opticians in our society. They are, on the one hand, professional people testing our eyes and, on the other hand, they have the purely commercial activity of selling spectacle frames. No Government has yet faced up to the dilemma of trying to cloak the whole of that activity under the guise of professionalism.
Let us look at what has happened since 1958, since I tried to get the Opticians Act counted out and moved all sorts of amendments to expose this expected racket; let us look at the number of reports that have littered our desks over the years: the Monopolies Commission on Professional Services of 1970, the Price Commission Report in 1976, which said that it is quite clear that dispensing private spectacles is a very profitable activity; the Dollond and Aitcheson report

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in 1979 which showed 300 per cent. and 400 per cent. mark-ups on frames, without real competition in the trade—for it is a trade, and that is all.
Let us consider the debates that we have had in this House. On somewhere between 10 and 20 occasions we have raised this subject since 1978; and yet we have still been put off with "Wait for another report". And, when the report is out, we have to start some more consultations. God knows when we are going to see the end of this!
A noble Lord: We soon shall!
Lord Northfield: The noble Lord says, "We soon shall". I hope he is correct but I have not had any hint that we are going to see the end tonight. Anyway we now have the report of the Office of Fair Trading, and let us say quite bluntly that it justifies the whole of the fight we have had over the years. It comes out totally on our side on the degree of competition and publicity. We should go back—because people do, as though it were the Bible—to the Crook Report of 1952. Over the years everybody has said "You must go back to the Crook Report because everything that has followed has stemmed from it." But reading the report, what it was saying in 1952, and in explicit terms, was that it expected the professional activity of eye-testing gradually to become dissociated from the commercial activity of selling frames. What the Crook Report wanted to do, quite properly and justifiably was to create a professional optical council for that professional activity alone. So nobody should pray in aid the Crook Report for what is going on now, which is the confusion of the two activities under the cloak of professionalism.
Today let us look at the figures to justify what I am saying about publicity. There are about 8,000 opticians. Over 7–8 million pairs of spectacles are sold per annum and over 70 per cent. of those frames are private ones. My Lords, gross this up for yourselves. We now have an activity tagged on to the professional job of testing eyes which, on my calculations, grosses well over £200 million a year and probably over £300 million. The tail is wagging the dog. This selling side of the optical profession is now more important than the revenue from testing eyes. That is where the problem has arisen, because under the cloak of the Optical Council total restrictive practices have been imposed with regard to publicity for that more dominant part of their activities.
If you read the 1981 rules on publicity, which are of course sanctified by having been passed by the Privy Council after they had gone through the Optical Council, you can see what it is all about. It is about keeping very discreet, like doctors and the very high professions, who, of course, do not soil their hands with any of this commercial activity. But it makes no allowance at all in those rules for the need for competition on this most dominant part of their activities.
We have made some progress after the pressure in this House. Let us not deny that. We can claim some credit—though, I would say to the Minister, not for his department—that we have forced at last a display of prices to be shown in the windows. The Optical Council did not want it. We kept raising it in this
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House until at last they were shamed into changing the rules to allow a price display in opticians' windows. I understand—I may be wrong—that it was carried by one vote on the Optical Council and at last we got a breakthrough to some signs of competitions. So at last we now prevent the problem, which I have raised many times, of the captive customer who is lured into the professional testing room and then feels he cannot walk out when it is only then that he discovers how high spectacle frame prices are. We have begun the breakthrough. What we have now to press for is the final breakthrough as recommended by the report of the Office for Fair Trading. What the report says on this issue is this. Having said that there have been these improvements on the subject of publicity, it continues:
"The remainder of the orders effectively deny patients information on available opticians in their locality, the range and prices of available products, the services which are offered by opticians in terms of opening hours, speed of dispensing, product guarantees and specialised services such as contact lens work and to a lesser extent quality. Customers are therefore denied the knowledge on which to make an informed choice of optician".
This is the next stage we have to crack and I shall make a suggestion in a moment although I do not know whether the Minister will like it. What would happen if we did open up the opticians' trade? I do not mean that offensively; I refer to opening up this side of their activities to real competition and publicity. What might happen? First—and the Office of Fair Trading's report is quite blunt about it—there would be fewer opticians. Some would be squeezed out. This is the problem the noble Lord, Lord Rugby, ought to be looking at because this report said that prices among small opticians in particular are something like 28 per cent. too high because of the low number of tests and supplies of spectacles that they handle in any one year.
So, if competition took its force we would have to face up to the loss of some opticians in small practices. I have a shop too. I have two off-licence shops. Nobody protects me from the big boys round the corner. Fifty yards from my shops—one is in a very poor district with high unemployment—is a supermarket selling liquor as a loss-leader and I have to keep my shop going in the face of this competition. There is no Optical Council or other professional body protecting me from that. Why should we protect an uncompetitive system if it means that too many small opticians are charging too-high prices because they are really uneconomic in terms of real competition?
Secondly, I should like to see what I see in America when I go into Sears Roebuck. What does one see? It is a proper commercial activity. There is a range of spectacle frames at 18 dollars; another range of frames at 34 dollars; and another at 54 dollars—real merchandise on display so that you can make your choice, and not all these fancy prices you can see in windows such as £32.62½p. That is all nonsense. These are mythical prices not based on real competition. The frames are pretty standard in their cost at wholesale prices. So we would get the customer being able to make a rational choice of different kinds of frames at fairly sensible prices.
Another thing we might see if we really let competition go a little further in this industry is something I saw on Friday. Nikon, the Japanese company, have just opened a factory in my New Town of Telford and I went to see what they are selling. They

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are selling this instrument, which is a totally technological, microprocessor approach for testing eyes. You simply sit at one end of this machine and there is a man at the other end who is a trained operative—he does not have to be an optician. He simply moves a handle until he gets the right result and the computer then prints out your prescription. This is happening throughout Europe. In Holland and other countries modern developments are happening. But here, because we still keep this as a "cottage industry", if you like, without real competition taking force, everybody is pretending that there is a great deal of mystique in the testing of eyes, so they say, "We must have not too many of those machines because it would give the game away".
Lord Trefgarne: My Lords, I wonder whether the noble Lord would allow me to ask him whether the machine he is talking about can detect the medical conditions that can exist.
Lord Northfield: My Lords, I am coming to that. I quite accept the Minister's point. But what I am saying is that this would be a good thing to take some of the mystique out of all this activity in the country. Before I come to the end of what might happen if we got a little more competition going, we would have to say to the Minister that just improving the prices of tests, the dispensing fee and all that and having better National Health Service frames—all the things which he has put to us at other times as ways of helping to get the balance right—is no substitute for competition. You cannot have competition stopped the minute it begins to bite you. That is what it is all about, in a trade. Once it begins to bite it is probably being effective. You cannot keep using gimmicks to stave off the decision on real competition.
I suspect that the Government will run away and do nothing. However, I suggest to those noble Lords who have been with me all this time that we should now draft very carefully amendments to the 1981 rules on publicity, send them to the General Optical Council and dare them to turn them down. We want to widen further the degree of competition beyond the simple display of prices in shop windows. I challenge the Minister to back us if we do that. It is a fair challenge. If the Government will not do anything, will they back us if we do something about this part of the Office of Fair Trading report? I should be prepared to draft those amendments. I am sure that the noble Lord, Lord Rugby, and the noble Lord, Lord Orr-Ewing, frustrated as they are after all these years, will join me in sending a precise suggestion to the General Optical Council about the relaxation of these rules and in daring the council to turn it down. We would not go mad. We should try to take them gently along this road of relaxation of the rules of competition.
Let me now deal with the Minister's point about testing and the sale of ready-glazed spectacles outside the optical profession. I come straight to the noble Lord's point. The issue is summarised on page 160 of the OFT report:
"Overall, therefore, the central question which Ministers will wish to consider is the balance between the benefits of greater competition and the risk, in the absence of the provisions of Section
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21 of the Act, of symptoms of abnormality and disease not being discovered as a result of breaking the present link between the sale of spectacles and sight testing".
I want to face head on the issue which the noble Lord put to me. First, we have at last got Ministers to accept—but, goodness me! has it not been a long time before it has been accepted, as the noble Lord, Lord On-Ewing, who shared the burden of the correspondence with Ministers with me knows—that wearing the wrong spectacles does not do you any harm. We first of all had to disabuse Ministers of that idea. They said, "It will do terrible harm to your eyes if you wear the wrong spectacles". At last that argument has been disposed of. The only argument left is that about glaucoma. If people think they have diabetes they will sensibly go to the doctor; that disease is not normally first diagnosed through the eyes. The noble Lord shakes his head. But he has been in a room when Mr. Trevor Roper has told him that this is the case. Mr. Trevor Roper has more experience of this than either the noble Lord or his civil servants.
The real issue, if not the only issue, is glaucoma. The Office of Fair Trading estimates that if ready-glazed spectacles were put on sale, about three to five per cent. of spectacles would be sold in this way. Specialists like Mr. Trevor Roper estimate that when eye tests are carried out, about 0·2 per cent. and up to 2 per cent. of people might have some signs—nearly always wrongly diagnosed signs—of glaucoma. If we allowed the sale of ready-glazed spectacles, whom should we be putting at risk? We should be putting at risk between 0·2 per cent. and 3 to 5 per cent. of people. Therefore the figure, as the Office of Fair Trading report says, is so marginal that it is ridiculous to make it the prime point of public policy. It is absolute nonsense to say that 0·2 per cent. and up to 2 per cent., or 3 to 5 per cent. of people is such a big figure that we have got to make a big issue of it.
I would urge wider considerations on the Minister. People are sensible enough nowadays to go to opticians to have their eyes tested. We are not back in the dark ages of the 1930s when people were unable to think about how to get their eyes tested properly. People know that there is a National Health Service. We have had 40 years of it. If people think that their eyes are defective in some way, they know that they should go to a doctor or an optician to have a proper test. Times have changed, compared with 40 years ago. Other matters are now more at issue.
First, why should I be forced to go through an optician to buy a spare pair of spectacles, with all the costs which that implies for the public purse, in testing and the rest? As for glaucoma, as the British Medical Journal said, if you really believe that the only people who should be allowed to sell spectacles should be opticians, then you should say that the only people allowed to sell toothbrushes should be dentists. It is as simple as that. It is an appliance which can do you no harm. The case is totally parallel with the selling of toothbrushes. Therefore, I beg the Minister to have something to say to us tonight.
When I go to America, I am always being asked by Members of this House to bring back pairs of spectacles for them. It is ridiculous that we in this country have reached the stage where a pair of spectacles can cost up to £90. I have been stopped in

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the corridors of this House and been asked to bring back spare pairs for 12 dollars. The wind of competition in this trading activity really must be allowed to blow. We must at last persuade the Government to recognise that we are not chasing charlatans or crooks. We are trying to criticise a system which we as parliamentarians have wrongly allowed to happen.
9.6 p.m.
Lord Cullen of Ashbourne: My Lords, when the noble Lord, Lord Rugby, attempted in his Private Member's Bill to repeal Section 21 of the Opticians Act, I was Government spokesman at the Department of Health and Social Security and responsible for replying on behalf of the Government. Although I no longer occupy this position, I have by no means lost my interest in optics, since I was recently appointed President of the Federation of Optical Corporate Bodies. It is in this capacity that I want to make a few observations.
The first point I should like to make is that there are two important aspects to be considered by your Lordships when giving consideration to the desirability or otherwise of repealing Section 21. The first is the all-important aspect of the freedom of the individual. This has been very fully examined in the OFT report. I should like, if I may, to pay tribute to Sir Gordon Borne and his colleagues on the thoroughness of that report. I would remind your Lordships that the OFT was asked in its terms of reference not to make recommendations or come to conclusions which would affect the public interest. My own quarrel with the report is that the authors did come to conclusions—some of which seemed to take scant account of the evidence that had been so painstakingly presented by such eminent bodies as the Faculty of Ophthalmologists, the International Glaucoma Association, and the National Ophthalmic Treatment Board Association.
The second aspect is, of course, the health of the population. It was this aspect which lay behind the inclusion of Section 21 in the Act. However much noble Lords may like to play down the importance of this, it is obvious that it would be folly to ignore it. In fact, I believe the reason why the OFT were asked not to come to conclusions or to make recommendations was because they were required to look only at one side of the coin. Quite rightly, however, the OFT did acknowledge the importance of the health aspect in their report.
Now that this report has been publicised, I trust that the review by the DHSS of general optical services will soon get under way. Personally, I hoped that this review would have been undertaken concurrently with the OFT review since, considering the amount of controversy that has taken place in recent years on this subject—both in your Lordships' House and in the media—it is just as much in the interests of opticians to conclude this long running saga as it is for the public, the Government, and noble Lords who have shown such an interest in this subject.
I know there are some noble Lords who are impatient to have Section 21 of the Act repealed, but it must be the duty of the Government to consider very carefully the value of the health checking service that
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arises from sight testing as it is performed in this country. This consideration is clearly impossible until the DHSS review has been completed. I would suggest to the noble Lord, Lord Rugby, and his supporters that they will have to possess their souls in patience for, I would guess, at least a year.
Noble Lords: Oh no!
Lord Cullen of Ashbourne: My Lords, it is indeed a pity that the Government have taken such an unconscionable time in getting started on the DHSS review. It transpires now that the process of selecting a chairman and members is "under way" and that the terms of reference are being revised.
I will now turn to a very important point, which is either ignored entirely by the newspapers or is sometimes alluded to in passing without emphasising the crucial part that this point has played in the cost of private spectacles. As many of your Lordships are aware, opticians provide three categories of spectacles. These are NHS spectacles; hybrids, which are NHS lenses in private frames; and private spectacles. It is well known that NHS spectacles and NHS lenses have had to be subsidised from private sales. Unfortunately, the fees payable to opticians for NHS work, despite the inflation that has occurred in recent years, remained substantially unchanged between 1978 and 1982. The effect of this was that the DHSS underpaid opticians by some £100 million. It was only on 1st February this year that increased levels of sight testing fees and dispensing payments finally came into operation. The sum of £ 100 million is a very large figure. In December 1981 there were 6,037 ophthalmic opticians and 2,661 dispensing opticians on the GOC register. Opticians were, therefore, owed about £12,000 each on average, or about one year's earnings.
That is the reason why opticians increased the prices of private spectacles, in order to remain in business; and the reasons why the increases were substantial is because NHS spectacles on which they were losing money, amount to no less than 32·4 per cent. of the market. So opticians have found themselves in a very difficult situation since 1978.
It is generally accepted that we enjoy optical services of a very high order. The OFT review concluded that opticians have not been making excessive profits. They have been owed huge, mounting sums by the DHSS. Yet they are accused of rip-offs, frame-ups, and the like. I thought it was high time that somebody gave a little of the background to that which has been happening. I should now like to tell the House how the prices of private spectacles have been falling—not rising—over the past 12 months.
In April 1982—four years after the last adjustment—the DHSS introduced an interim increase in sight testing and dispensing payments. As a result, the optical companies were advised by the federation in April 1982 to reduce private prices—and a significant number of individual opticians also reduced their prices. A substantial proportion of the company reductions then made were up to 20 per cent. Subsequently, since the final increase in NHS payments came into effect on 1st February 1983, many companies have reduced further the prices of prescription spectacle frames by percentages ranging

1015
from 15 to 20 per cent. So we are now, and have been for about 12 months, in a period of falling private spectacle prices. So far as I am aware, the only time this has been mentioned in your Lordships' House was when in June last year I asked Her Majesty's Government if there were any signs of a fall in prices, and my noble friend Lord Trefgarne replied that falls of up to 20 per cent. had been reported. Nor, as far as I am aware, have many newspapers drawn attention to these falling prices. Prices have fallen for the simple reason that, after a four-year delay, the NHS fees have been raised to a more sensible and realistic level, despite the fact that even now the new NHS payments do not enable opticians fully to recover their overhead costs on NHS work.
Lord Northfield: My Lords, may I ask the noble Lord to go on from that, because what the report also says is that on top of those kinds of price reduction you could obtain a further 28 per cent. price reduction if the smaller optician disappeared, or at least did the level of trade that competition brings in the more prosperous optician companies?
Lord Cullen of Ashbourne: My Lords, I think the noble Lord is really talking about Section 25.
Lord Northfield: No.
Lord Cullen of Ashbourne: My Lords, perhaps the noble Lord would explain a little further; I do not quite understand.
Lord Northfield: My Lords, the noble Lord is quite right to say that prices have gone down. But the report says that, if real competition took place and the very small optician disappeared or at least got more business at that sort of level of economic activity, prices could then be reduced by a further 28 per cent.
Lord Cullen of Ashbourne: Well, my Lords, the noble Lord is obviously never satisfied. I have told your Lordships that we have had two lots of reductions, at last, after reasonable fees were paid, of 15 to 20 per cent. and then another 15 to 20 per cent. This, at least, is something in the direction which no noble Lord, as far as I know, has ever suggested in this House before.
I was going to say that, had these matters been attended to in one year instead of four, the distortion in private spectacle prices would never have taken place, though no doubt they would have risen in line with inflation. I suggest to your Lordships that, if it had not been for the four-year logjam which held NHS fees down during a very inflationary period and triggered the rise in private spectacle prices, now being reversed, there would have been no call for a return to the days when ready-made spectacles were made available without prescription. I find it difficult to believe that the Government would seriously contemplate such a retrograde step as deregistering dispensing or allowing ready-glazed spectacles to be sold by unqualified people.
Lord Orr-Ewing: My Lords, would my noble friend allow me to intervene? I am most grateful. I think a point that should be made is why should the Government not come in line with what every other free nation already does? Is there some sin in copying other free economies and therefore advantaging consumers?
Lord Cullen of Ashbourne: My Lords, I was just about to say that it might be of interest to the House to know that both Hong Kong and Malaysia are at the moment considering legislation to go along the lines of our Opticians Act 1958, in the very reverse of what has been suggested.
Lord Rugby: My Lords, would the noble Lord consider that to be an Englishman's disease, that they should go along with the 1958 Act?
Lord Cullen of Ashbourne: My Lords, I think I will just carry on with my speech. I enjoyed hearing the noble Lord, Lord Northfield, who has been absolutely consistent on this over 25 years. He knows a great deal about the subject, and I always used to feel slightly cagey about arguing with him in the days when I was on the Front Bench. However, I did enjoy his speech. I cannot say that I enjoyed the speech of the noble Lord, Lord Rugby, who I thought was quite unreasonably exaggerated in his remarks about the opticians. I look forward very much to hearing what my noble friend Lord Trefgarne has to say in reply to the debate.
9.20 p.m.
Lord Winstanley: My Lords, like other noble Lords I am mindful of the lateness of the hour. I have also not forgotten that I have already been on my feet three times in your Lordships' House today, and I fully recognise that in some things enough is more than enough. In any case, much of what I wish to say has already been said in a powerful speech by the noble Lord, Lord Northfield. I could have listened to him all night. In fact, for a time I thought I was going to have to. I make no complaint. The noble Lord is a great expert, and he put the arguments forcefully.
However, I cannot allow this occasion to pass without offering some support to the noble Lord, Lord Rugby, in his efforts. I support him not just as a noble Lord who happens to sit on these Benches and who is therefore automatically, by inclination, opposed to monopolies, be they private, public or professional: I support him as a doctor. In that capacity I must choose my words with extreme care. I am anxious not to be misunderstood. When a member of a profession which some will say has a very powerful monopoly of its own is talking about colleagues in another profession, he must be careful.
The point has already been made clearly by the noble Lord, Lord Northfield, that we are talking about two different activities. We are talking about the very necessary and important business of the care and maintenance of the health of the eyes. That is a vital activity. We are also talking about the rather separate business of selling spectacles. The poblem that faces us arises from the entanglement of those two separate and different activities. I want to make it utterly clear as a doctor that I have no wish at all to place any obstacles in the way of patients and people having regular and

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proper ophthalmic examinations at regular and proper intervals. That is important and valuable for public health in general.
In practice over many years as a general practitioner I have relied heavily on a local optician for advice and guidance on many occasions. Having said that, I must say—and I hope I am not misunderstood—that there are opticians and opticians. There is the kind of optician who gets to know a patient and his family and who takes a continuing interest in the optical health of that person during that person's life. That kind of optician seems to be in a slightly different position from the qualified optician who is merely an employee of a big multiple firm, who may be there for a short time and then gone and who does not have a continuing interest in the welfare of the individual patient.
So I greatly value the work of the opticians and I share the view expressed by the noble Lord, Lord Cullen of Ashbourne, that the longer this kind of wrangling continues the more damage is done to very well-intentioned and able members of a very distinguished profession. It is, therefore, in the interests of the opticians themselves that some of these matters should be dealt with.
I have always felt, and still do, that the provisions of the Opticians Act 1958 create a monopoly that is sometimes so rigid that it acts against the interests of the consumer, and that means the patient. There is a continuing pressure on patients always to buy their spectacles from the persons who test their eyes. That is not necessarily logical or proper. Over the years there has been an inadequate explanation of the National Health Service provisions and what is available, to whom and for how much. There has certainly been inadequate information in the past about prices, about the different kinds of prices and about choices. In my view there has quite often been an insistence on totally unnecessary optical tests purely for the sake of doing them. The case was referred to of a person who wants a second pair of glasses merely because he wants to keep a pair at home as well as in his office or another place, and so on.
There have, of course, already been many welcome changes. That has been referred to by many noble Lords. Those changes have come about in part as a result of debates which have taken place from time to time in your Lordships' House. There have been welcome changes in the display of prices, and reference has already been made to that. There has also been an increase in competition. That competition has begun to operate in the interests of the consumer rather than in the interests of the person selling spectacles. As the noble Lord, Lord Cullen of Ashbourne, has reminded the House, prices have come down. That, surely, is a benefit, and it is one which we should welcome. But many problems and difficulties remain, and it is high time they were dealt with. I make that point again. The longer they are left, and the more wrangling there is about these matters, the more damage is done to reputable people in a very reputable profession.
Let me conclude by making just one or two points and, perhaps, dispelling one or two myths. I would just say again, as a doctor, that there really seems to me to
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be no danger in elderly people suffering from presbyopia purchasing magnifying lenses without a test. I do not see any danger in that. Nor do I think that there is any particular danger in people getting a second pair of glasses without a further eye test when they may have had one very recently. Certainly there is no danger in an individual having total freedom to have his optical prescription dispensed by any one of a whole number of people and having a choice, instead of, as at the moment, often having almost no choice at all. But let me ask your Lordships to look at what actually—
Lord Cullen of Ashbourne: My Lords, I understand that there is no difficulty about that at the moment. You can get your prescription and go to any optician you wish.
Lord Winstanley: My Lords, the noble Lord may say so now, but I wish he would go and say it to the thousands and thousands of people in areas that I know who are perhaps not sufficiently aware of that point and who have often been misled. The fault may be theirs, but there are misunderstandings about that. There is an assumption that that is what they must do.
Look what happens now. In my experience in general practice glasses are handed down through members of the family, particularly now that spectacles have become so expensive. It happened in my own family. My wife is younger than I am, and much less decrepit, but despite that she has already grown up through two pairs of my old spectacles. But now, at long last, as I have developed a different kind of refractory error and have had to resort to bifocals, I have totally rumbled her and she will have to go and get her own glasses in the end. What I am saying is this. We really must get away from this delusion that wearing the wrong glasses damages people's eyes. All that happens is that you cannot see. You may get run over, or something unpleasant like that, but the idea that it does some terrible damage to the eyes is one which we should forget about.
I accept that there are these problems about the detection of very serious matters like glaucoma, but I would also remind the House that a safeguard, to be a genuine safeguard, must be wholly safe. I think it is a fact that sometimes, and not infrequently, conditions of that kind are missed by opticians. It is regrettable—and I do not say that critically. It is understandable. I think that public reliance on a safeguard which is sometimes not wholly safe is unhelpful. Let me give your Lordships an example. It is not very long ago that a previous Government got rid of the mass miniature X-rays. Why? It was because it was found that they were not cost-effective—but it was for another reason as well. They very often missed things. But they also instilled in people a false sense of security. A person with a chest complaint would say, "I do not need to worry; I have had an X-ray". What had he had? He had just had a mass miniature X-ray which could very well have missed the thing. It was a good thing, in a way, that we got rid of that safeguard which was not really a safeguard.
All I am saying is this. If we were to rely totally on the fact that people have fairly regular optical tests by opticians as the only way of detecting glaucoma in our community, we should be in a very dangerous

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situation indeed. I think we must be aware of many other steps that have to be taken. That having been said, I as a doctor am in favour of encouraging people to have regular optical tests and regular eye tests. I should not like it to be thought for a moment that I take a contrary view. I merely say that I do not think that the Government should swallow this document lock, stock and barrel, every bit of it; but I do say that it is high time that some action was taken on some of these points. If action is not taken, further damage will be done to a profession which has already been seriously damaged.
9.30 p.m.
Lord Harris of High Cross: My Lords, I join with other speakers in warmly congratulating my noble friend Lord Rugby on his persistence, courage, and single-mindedness in pursuit of a quarry which I begin to sense we have at bay. It was a splendid example of the indefatigable in pursuit of the indefensible, and I rejoiced to hear for the first time the noble Lord, Lord Northfield, denouncing sin and upholding market competition from the Labour Benches. I welcomed that as much as I did hearing the noble Lord, Lord Winstanley, speaking in those liberal accents for which I often listen in vain from the Liberal Benches. I wish that I could say anything more agreeable of the noble Lord, Lord Cullen of Ashbourne, than that it was certainly a brave effort in a bad cause, and I think that we should warn the Minister, the noble Lord, Lord Trefgarne, that if he does not do better he cannot expect in the future to escape as lightly.
The Office of Fair Trading report in January confirmed the prediction of standard economic analysis that restrictions on competition in both the advertising and the sale of spectacles must raise prices to the consumer. I should like at once to acknowledge that economists are not always right—I would add especially when they are Left. They are seldom in perfect harmony. Indeed, there are in this House half a dozen admitted, professional economists, and I find that they are fairly impartially scattered over the Conservative, Labour, Social Democrat, and Cross-Benches. Yet I dare say that they would be in broad agreement that monopoly—if not in every case wrong, or even avoidable—always has great potentiality for evil.
The confusion of counsels that we hear arises from wanting to have it both ways. Thus every businessman, every trade union leader, I would say every professional spokesman, will denounce monopoly in general, but is not above striving to suppress competition in the particular product or service that he supplies. Adam Smith said it all in 1776, in a celebrated passage that I have previously quoted. It reads as follows:
"People of the same trade seldom meet together, even for merriment and diversion, but the conversation ends in a conspiracy against the public, or in some contrivance to raise prices".
The truth is that all monopoly power enables a producer to exploit the customer by cutting him off from alternative sources of supply. But, where the monopoly power is exercised by a private supplier to raise prices, the resulting prospect of higher profits will
1020
invariably attract new entrants or imported products, or it will provoke substitution from competing products. The deeply objectionable feature of a state-entrenched monopoly is that none of these correctives is permitted by law. That is why I would argue that the power of the voluntary OPEC cartel is as nothing compared with the statutory opticians' cartel under the 1958 Act.
It must be admitted that in the Second Reading debate in February last year on the Bill of my noble friend Lord Rugby to repeal Section 21, the majority of speakers upheld the present arrangement whereby the sale of spectacles is monopolised by opticians and made subject to compulsory testing of eyes. We found that in every case the defenders of monopoly pleaded a high-minded concern for the nation's eyesight. In particular, one noble Lord, speaking with all the lofty authority of a past president of the British Medical Association, the General Medical Council, and other seemingly impartial interest groups, argued that we must defer not only to his opinion but to the opinion of the president of the Faculty of Ophthalmologists. There was much blinding talk of professionalism, objectivity, and freedom from sordid commercial interests.
I found it all very suspicious. After all, the Repeal Group which had encouraged my noble friend Lord Rugby to bring forward his Bill, had consulted equally distinguished specialists, who had enthusiastically supported our attack. We had collected leading articles from both The Lancet and the British Medical Journal in favour of the uncompromising stand that the noble Lord, Lord Rugby had taken. We were thus confronted with a direct clash of opinion between what appeared to be equally qualified experts.
It was to try to resolve this conflict that the Repeal Group decided to ask the Ophthalmological Society at the end of last year for a list of its United Kingdom members so that we could circulate a questionnaire in terms that we offered to discuss with it. It took three months for the same president of the faculty, who was lauded for his objectivity in this House, to refuse outright any co-operation in this endeavour to find out what his members really believed. Since the Ophthalmological Society is not a secret organisation, we had no difficulty in getting a list of members and writing to invite the 650 living in the United Kingdom to complete a postal ballot giving their opinion anonymously on the following question:
"Should the present statutory monopoly for opticians (or doctors) to sell simple reading spectacles be repealed?".
They were invited to vote Yes, No, or to say that they were undecided. Of the 350 expressing a direct reply, 200 said "Yes" against 150 saying "No". This clear 57 per cent. majority in favour of ending the monopoly contrasts sharply with the published opinion of the president of the Faculty of Ophthalmologists that what he had earlier called this
"direct attack on the optical profession"
was, he said,
"without the support of any more than a very few vociferous doctors".
Thus, we find, like some medical Arthur Scargill or BL shop steward, the exalted president of the Faculty of Ophthalmologists was shown to be completely out of touch with those he claims to represent.

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From the mountain of letters accompanying the voting slips, it was clear that the key difference in judgment arises over the possibility that an optician's test for glasses may discover more serious defects. So it might. The 6,000 retail opticians, as has been stated, perform a useful function, but they lack the training and clinical experience necessary to diagnose serious abnormalities and are likely to miss as much as they spot. They certainly cannot be relied upon to diagnose glaucoma, which is estimated to affect between 1 and 0·1 per cent. of the population. So there is the real danger, touched upon by the noble Lord, Lord Winstanley, that this hit or miss approach will bring a false sense of security.
The issue is put beyond doubt by a letter in the current BMJ from Mr. Redmond Smith, who is senior consultant in charge of glaucoma at Moorfields. He writes:
"If the wrong spectacles could damage a person's eyes there would be some justification for the optician's monopoly—rather along the lines of the wrong drugs being harmful justifying the doctor's monopoly of prescribing many medicines. But the wrong glasses do not damage eyes, at least no well informed person now seriously believes they do. Hence, the original grounds cited for a monopoly no longer exist. An attempt is now being made to perpetuate the
1022
monopoly by inventing new grounds: the non-detection of diseases which might result from people being able to buy spectacles over the counter".
This authoritative source concludes:
"The present law, which leads to the absurd position that it is legal to buy a pair of racing binoculars but not a pair of spectacles, should be scrapped".
The abolition of the optician's monopoly would not put the opticians out of business. Most people would continue to have periodic eye tests. But the competition for replacement glasses and simple magnifiers would bring prices down, often to a fraction of the present costs, and so would set limits to the exactions levied by the statutory opticians' cartel on what has been called their "captive" customers. The noble Lord, Lord Rugby, has on his side the Consumers' Association, the National Consumer Council and now the majority of specialist ophthalmologists. Against us are ranged only phantom fears and vested interests. If the Government will not act in this matter, I very much hope that my noble friend Lord Rugby will again table his Private Member's Bill to sweep this offensive monopoly from the statute book.
9.41 p.m.
Lord Orr-Ewing: My Lords, I should like to follow the noble Lord, Lord Rugby, and congratulate him on his initiative in having this short debate and also all those other noble Lords who have spoken from representative Benches. We opened with a Cross-Bencher, followed by a Labour supporter, a Liberal supporter, another Cross-Bencher and now I am speaking in favour of some competition from the Conservative Benches—a very natural place from which to make such a plea.
I should like to endorse the view of the noble Lord, Lord Winstanley, drawn from his professional life. He speaks with great experience and humorously, too, which is something very pleasant in this House. I believe like him, that one needs to separate the testing of eyes, which should be honourably and professionally carried out, from the marketing of eyes. This Government were elected to oppose monopolies, to introduce price competition wherever it could be introduced and, at the same time, to protect the consumer—we have a Minister for Consumer Protection—and also of course the poor and needy who had to have some special circumstance which would help them to buy such essential things as spectacles. This monopoly has existed now for some 25 years and from all the experience surely it is time that we set about doing something, and doing something rather more quickly than we have in the past.
We have had all-party meetings. We have seen two Ministers. Indeed, many noble Lords speaking in this debate have been part of those assemblies. The noble Lord, Lord Northfield, led us to a meeting with the Minister, Mr. Kenneth Clarke, who was accompanied also by the noble Lord, Lord Trefgarne, who is to reply. One thing which all those present would agree emerged was that the civil servants were still under the impression that this whole set-up, this monopoly, was essential to preserve the health of the examination of people's eyes. That idea was exploded because we had with us a most senior consultant at Moorfields, Professor Trevor Roper. The Minister seemed startled that all the advice he had received from people was contrary to the professional advice received from Professor Trevor Roper.
One has to be a little suspicious about those who desire to preserve the status quo. Something like between 7 million and 8 million pairs of spectacles are marketed each year. Many people have to have two pairs. I broke my spectacles recently and I had to go today to get some new ones and I will talk about that later. Very large sums of money are at stake although the cost of the frame cannot be more than perhaps £3 unless—God forbid!—it is made of tortoise-shell which, apart from anything else, would be illegal but also very expensive. A frame costs about £2 or £3. Yet when I went today I was told that it would cost £24 and that it would last much longer. That was the type of argument that was put forward. Maybe they are right. But perhaps spectacles are accidently broken or changed because one's eyes change over a period. I am not sure that one needs one's spectacle frame to last 30, 40 or even 50 years because they are almost always invariably broken long before that time has expired.
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I had my eyes tested today and it was an interesting experience. I had not had them tested for some three years. When I visited Mr. Clive Kay of Warwick Way, conveniently on my route to this House, I was told that if I wanted National Health Service spectacles I could not have them, and I could not have the lenses either, unless I had my eyes tested. I said that I really did not need to have them tested because I did not want to put any extra burden on the poor taxpayer. I said that I knew roughly what I wanted and that I am +3 on each eye, and I suspected, as it is three years since I last had my eyes tested, that 3·25 would probably be very satisfactory for me. He said "I am very sorry, but we cannot supply these unless you undergo a test." So I underwent a test. He seemed to be extremely well trained. A nice young lady took me into a back room and tested my eyes very thoroughly. After all these tests she came out and said "Yes, you were quite right, you do want 3·25." I then said "What will the taxpayers have to ante-up for that, or do I pay?" They said "No, the taxpayer will pay. It is an improved rate now", as my noble friend pointed out. They said that it would be £8, which seemed to me to be fairly good value for money for the taxpayers.
However, when I asked about all the other beautiful frames that were scattered around and where they all came from, they said that they were all imported. This brings out a point that we have made all the way along. We have said that if one goes on grossly over-charging in this country compared with every other free nation in the world, there can be only one inevitable consequence, which is that there will be wholesale importation, and in this case from Taiwan. Every single one of those demonstrated in the shop—apart from the national health ones, which comprised a very small minority—had been imported from Taiwan and had thus done away with the jobs of people in this country, valuable jobs which everyone in this House would wish to see preserved. So not only have we charged the consumers grossly more than is desirable, but we have actually destroyed jobs in this country because we are no longer competitive.
Two arguments have I think been destroyed over these many presentations, debates and Questions that we have had. Secondly, there is the question which was dealt with by a previous speaker, that to some extent to use wrong spectacles would harm the eyes. Trevor Roper dealt with this perfectly. He said that if you are using the wrong spectacles, you would very quickly get a headache and realise that a mistake had been made. Therefore, neither on the medical grounds of finding glaucoma nor on the grounds that you are harming your eyes does the argument for the continued monopoly stand up.
It is a great shame that we are about to start on yet another round of investigation. The one way in which to delay justice, to prevent the consumer getting value for money, is to have investigation on investigation. No one investigation goes on in parallel. We took a year over the last one. It was a very good investigation by the Office of Fair Trading. It was set up in December 1981, but it did not report until December 1982 because there were only part-timers on it. Now we are told that they are looking for a new team of people to set up yet another investigation.

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I should like to remind my noble friend that this Government were elected on a manifesto which said that they would protect the consumers and they would increase competition so that, so far as conceivably possible, everyone received value for money. I ask my noble friend for early action so that we honour that promise.
9.49 p.m.
Lord Ferrier: My Lords, I do not know quite where to begin because, when my noble friend Lord Orr-Ewing asked if I minded him taking the place of the noble Lord, Lord Donaldson, I said that I did not mind at all because I think that that ends the range of noble Lords who are inclined to become rather outspoken and almost hysterical on this matter, to the great distress of a number of us who are ordinary men in the street.
I am not happy at all about this criticism of the word "monopoly". The noble Lord, Lord Winstanley, is a doctor. He has a monopoly. There are monopolies in medicine, in the law and in dentistry. Of course there must be such monopolies. My noble friend Lord Orr-Ewing said that this Government was elected to protect the consumer: it is also elected to protect the customer and the people whose eyes have to be attended to; they must be properly protected in that respect. I am not happy about this nonsense with regard to the monopoly. After all, the report that we are supposed to be discussing, although we have heard very little about it, says clearly on page 157:
"The evidence of the survey of opticians' costs, profits and margins discussed in Chapter 8 does not suggest that opticians' profits were excessive".
However, as we shall hear from the Minister when he winds up and as has already been mentioned, the Government have found it necessary to repay to the opticians something in excess of £70 million.
If you do not want a monopoly here, what do you suggest? Is the suggestion that the supply of spectacles should be a purely business proposition, leaving eye care behind as a piece of old history? To me, eye care is an integral part of our precious National Health Service which it is our duty to nurture, and about which in a previous debate this very day we heard an outspoken expression of view on behalf of the Government that they intend to nurture the National Health Service, of which the ophthalmic services are an integral part.
After all, an independent survey of ophthalmic practice in 1981 revealed that 13 per cent. of the patients of opticians required referral for medical attention. This is where my personal interest lies. From astigmatism as a schoolboy, to the need for reading glasses after malignant malaria and massive doses of quinine in my younger days, to the advance of years requiring glasses for driving or for looking at television, I have relied on regular attention to my precious eyes, my windows on the world.
It was thus, at a fairly recent visit to an optician, that I was recommended to get my doctor to refer me to a specialist lest I might be liable to glaucoma. I lost no
1026
time in following this up, whereupon the specialist, after careful examination, said he congratulated my optician for being suspicious but that I was not likely to suffer from that condition. The suspicion which had been aroused in my optician was due to many long years in tropical sunshine.
I know that skilled medical advice is necessary. Incidentally, to my noble friend Lord Harris of High Cross, I suggest that he visits his optician and gets his frames to fit his nose properly so that he can hold them easily. It is no use suggesting that this is not a matter for specialised medical knowledge. It is such a matter. I look forward to the Minister's reply. I expect that we shall hear that the Government have the matter well in hand. I hope and pray myself that it will be many years before this debate is reimposed upon this House. I am pretty sure that the Government will take steps to try to provide against that.
I remember that in one of the previous debates one of the objections hurled at the opticians was that nobody could repair their spectacles. I happened to mention this to my secretary. The next time she came she brought me an eye glass repair kit bought at a petrol station with a key ring for 50p. So we get back to what really is at the background of all this, the old Latin tag, caveat emptor. If anything can come out of this debate it might well be that, as my noble friend Lord Colwyn suggested in the last debate, some publicity should be given to people to guide them in how they can, as buyers, take care.
9.55 p.m.
Lord Bowden: My Lords, I find myself very puzzled by what has been said in this debate. The point is that I know a great many opticians, and I find it incomprehensible that the description I have heard of them as grasping and unscrupulous people can in fact be applied to those men that I know and like. I felt that many of Lord Rugby's strictures were quite incomprehensible. I should like to introduce him, if he would allow me to do so, to some of those opticians, particuarly those who are running the Eye Hospital in Manchester, to those who are running the ophthalmic optics department in my own institution, and who are very dedicated professional men. It is most worrying to me, because the very first degree course which was ever given to ophthalmic optic students was given in my institution and was given because we were promised the opportunity to expose the students to clinical tests being performed in the Manchester Eye Hospital.
I was speaking today to the man now responsible for organising these contacts, and he said that they were in fact increasing them and that the students got a great deal of practical experience from observing eye defects. He said that many of the students saw more diseased eyes than the medical students did at a corresponding stage in their career; so they are very well able to tell when something is wrong with the eye. They are not under any circumstances expected to treat it themselves, but they can arrange for the person

1027
concerned to be referred to a consultant, usually through the general practitioner. This has led to a slight distortion of the statistics, because I believe that of all the referrals to consultants, more than half now come through general practitioners, but they have been asked to do the job by the opticians themselves.
The whole of the profession is most concerned to do what it can to preserve the eyes of those for whom it has assumed responsibility. This is what I find so extremely offensive in some of the remarks which have been made this evening in regard to their irresponsibility and the grasping sort of way in which they have seized on any available source of cash. We have already had it explained to us by Lord Cullen of Ashbourne that they were something like £70 million light at one stage in the fees due to them from the National Health Service—and what could they do? Everyone realises that it is an indefensible anomaly that the payment for eye testing should have to come out of the profits made by selling spectacles. The DHSS has now increased the fee for eye testing, and I think it is £8. The noble Lord, Lord Orr-Ewing, said that he had just had his eyes tested and he thought that the lady who did it was very well paid for her time. Has he ever tried to have half an hour of a good solicitor's time; and, if so, how much was he charged for that?
I cannot but believe that the fees they charge are reasonable. The average income of an optician is in my experience not excessive, and no one has said that it is. I cannot accept that this report which has been published by the Office of Fair Trading is a good report. Much of what it says was based on inadequate evidence, and much of the inadequate evidence was misinterpreted. They did not consult a representative body of the Ophthalmic profession; they took evidence from only one person, and he was opposed to the plan.
This is not simply a case of good versus evil: it is a case of a profession which has been struggling to be born for many years and which is doing a very good job. When people speak of the possibility of handing down spectacles, I can remember when false teeth used to be handed down. When I was a child you could go and buy false teeth in some secondhand shops in the district, and many people did this; but no one would recommend this as a good policy. It was the only thing that people could afford. The concept that spectacles can be handed down is about as sensible. It may work out that your jaws are the same shape as your father's jaws, and you can wear his false teeth. If you do so, I am sure that it will not hurt your jaws; but I do not believe that it is a policy to be commended in normal operating practice.
Lord Winstanley: My Lords, if the noble Lord will allow me to intervene, since I think he referred to my remarks, may I make it clear that not for a moment did I recommend that glasses be handed down? I said that because they were so expensive they were handed down. I said that being handed down did no actual harm to anybody's eyes; but I did not recommend it.
Lord Bowden: My Lords, I am glad about that. Conversely, I would not recommend the handing down of false teeth on the grounds that it would not damage your jaws. What I am trying to say is that we
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have heard bitter attacks on what seems to me to be basically a very responsible, sensible and caring profession. Much of the problem has been due to the fact that they were for a long time unable to survive because the fee for eye testing was inadequate and a great deal had not been paid. It is true, as has been said, that the price of spectacles has been dramatically reduced in the last few years, and even on the occasions when it has not been reduced it has not been raised, as might have been the case when, for example, the price of lenses was raised about three or four months ago.
I think the best thing I could arrange to do, if I may say this to the noble Lord, Lord Rugby, is to introduce him to some of the people who are now in Manchester arranging for the teaching of students. I should like him to get to meet some of the students and to see the conditions in which, in hospitals, they are introduced to those defects of vision so that they can spot them and cause some action to be taken to save the sight of those who might otherwise go blind.
I speak with feeling on this because my sight is going, very badly. I cannot claim to be a success story in the treatment I have had from either the medical profession or the opticians. No one was able to save my eyes, which have gone for other reasons and which are beyond medical help. I feel strongly that, despite my own difficulties, the profession is a supremely effective method of helping the general population at a relatively small price. Even the Office of Fair Trading, prejudiced as it was, did not think that the incomes that the opticians achieved were excessive. It may be that, by forcing a few out of business, the competition might come down. But, similarly, if solicitors were to advertise more, if barristers and architects were to advertise more, this might reduce the prices. But would that do anything but harm to the professions concerned? Let us remember that this profession is struggling to be born. It is not long since the dentists first acquired a charter—it was in 1923, I think—and it ceased to be possible to set yourself up in dental practice with no other tools than a pair of pincers and a chair. People were not compelled to have any medical qualifications until the Dentists Act 1923. Let us remember, too, that when the Duke of Wellington was dying he said: "Send for the apothecary!" In those days there were no physicians. Let us also remember there was a time when the barbers had to separate themselves from the surgeons in order that the surgeons could become an independent profession and achieve their present distinction.
All these professions have grown against opposition, and all are now part of society. I believe strongly that the ophthalmic opticians, beset as they are by all the difficulties canvassed this evening, are an important, worthwhile and responsible profession of both men and women who, in many cases, are the first and best people to help other people to see better.
10.5 p.m.
Lord Energlyn: My Lords, I do not think any of us could fail to admire my noble friend Lord Rugby for his persistence in trying to put right something which he firmly believes is wrong, and which many people likewise believe is wrong. In listening to the various

1029
contributions to this debate, I suggest that one thing has come out quite clearly: that is, that there are two different subjects here. One is a medical subject and the other is a commercial subject; and it is the combination of these two subjects which has led to the substance of this debate.
The reason we are debating it this evening is because of the clumsy, badly-worded, ambiguous and contradictory statements in the Act. It is an extraordinary Act, full of ambiguities and misunderstandings, and although I have a great affection for the noble Lord, Lord Cullen of Ashbourne, his speech—his heartrending speech—on behalf of the opticians did not touch me at all, because the 14th Report of the Public Accounts Committee, says:
"We are glad to note the willingness of opticians concerned to repay promptly the £3 million involved for that period."
They rushed to pay back £3 million to the DHSS. What does it mean? It means that they were not entitled to it. This is what the Public Accounts Committee are saying—that throughout the whole plexus of this commercial enterprise are what they describe in very careful terms as "unintended profits". They have not been able to unearth sufficient evidence to provide accurate figures as to what these unintended profits might be. The best they can do is to suggest that they are somewhere between £3 million and £5 million per annum. If the opticians are pleading poverty, it is an extraordinary situation that they are suddenly able to repay £3 million for unintended profits. That is the first point I should like to make.
Lord Bowden: My Lords, may I ask the noble Lord this question: is it not also true that the Public Accounts Committee had to admit that they owed £70 million and if they paid them a bit in excess of the £70 million they then had to repay £3 million of that?
Lord Energlyn: My Lords, that is quite correct and it rather pinpoints the fact that these opticians are apparently entitled to their £70 million, by virtue of Section 21. The question before us is: is Section 21 an admissible monopolistic section? I challenge that really, because if you read Section 21 carefully—and I do this as a scientist—how can you get away from the simple language, ambiguous though it is, of subsection (3) which says:
"Subsection (1) of this section shall not apply to the sale of an optical appliance"?
In other words, the monopolistic part which involves the medical professions of Section 21(1) does not apply to four following categories. Category (b) says that subsection (1) shall not apply
"to a manufacturer of or a dealer in optical appliances for the purposes of his business;".
His business is to manufacture spectacles and his business is to sell spectacles. So, as I read that Act, there is no difficulty about anybody manufacturing and selling spectacles. That is what the simple, Queen's English tells me. It is emphasised by the fact that if he is not allowed to do that, he can, under subsection (3)(e), ignore subsection (1) for the purposes of export. In other words, he can manufacture spectacles for anybody abroad, but according to subsection (1) he cannot sell them in this country. I could therefore argue that under subsection
1030
(3) there is no argument; it is just a misunderstanding. But you get hooked when you come to subsection (4), under which the General Optical Council can fine you and put you out of business if you sell spectacles, unless they are antiques. Therefore subsection (4) contradicts subsection (3). These are the kinds of contradictions that one finds.
Without going into the question of the merits or otherwise of the subdivision between the mechanical and the medical aspects of his profession—and I think I can claim to speak with some authority as I once was a professor of optical mineralogy and I have invented a number of so-called optical appliances—there is a clear distinction between testing eyes for focal length and dispensing ophthalmology. They are two entirely different things. As many noble Lords have pointed out, you can borrow somebody's glasses and it will do you no damage whatsoever.
This introduces two quite fascinating repercussions. Ready-to-wear shoes are selected by the wearer. He decides whether or not they fit. Similarly, with ready-to-wear glasses, which you could buy before the Act, it was the purchaser who decided whether or not he had got sufficient magnification. The report states quite clearly that no damage can be done to your eyes as a result of these ready-to-wear spectacles. If you talk about industry and the competition from Taiwan, why is it that you have glass lenses placed into frames? Commercially, it is a very good idea, because the Department of Health and Social Security will pay for the glass lenses and you can charge whatever you like for the frames. Furthermore, why is it that you are kept waiting three or four weeks for a pair of spectacles? The commercial reason is that a person who is handicapped to this extent will buy two pairs of spectacles. One pair is for contingencies. So this increases sales. It is very subtle.
To go a little further, I would say, in support of the noble Lord, Lord Northfield, that many of us could suggest to the Minister several quite minor amendments which would bring the whole matter into line—for example the clarification of subsection (3). This means that you now look at the activities of the General Optical Council. Are they above reproach? Or are they above criticism? They are the people who determine who goes on to the register and who does not. What enables you to get on to the register? A certain number of qualifications, but above all you must be a person of good character. That is absolutely clear in the Act.
Under the clauses relating to erasure, I would ask the Minister how many cases he could quote—I choose my words very carefully—of dispensing opticians and corporate bodies who have been erased from the register by virtue of their character. I wonder whether the noble Lord can tell us how many, because I have not been able to find a single case.
That is an important point because it highlights the fact that, unlike the Pharmaceutical Society and the pharmacists, there is no inspectorate in the General Optical Council. In other words, there is no jurisdiction over or inspection of the standards of an optician. Yet these gentlemen have access to drugs and all kinds of things. There is no means of deciding whether an

1031
optician is behaving properly or otherwise, unless he is reported to the GOC.
Who will report someone to the General Optical Council? It would have to be one optician reporting another. What would he be reporting the other optician for? He would not know. He would not be reporting him for commercial malpractice. But if one of the opticians commits a criminal offence, then the picture is entirely different. And a criminal offence was perpetrated in 1979. I hate to use this kind of argument, but I have to use it in order to emphasise the behaviour of the General Optical Council.
In 1979 there was a certain gentleman named Mr Brian Harris, who was committed for the misuse of drugs and sexual offences. He owned nine optical firms in Blackpool. He was committed. The police reported him to the General Optical Council but the council took no action. His name was on the register after he came out of prison. This means that the GOC is prepared to ignore the primary qualification of good character. One might think that this was an isolated incident—but not a bit of it.
In March of this year, this same gentleman was caught by the police again perpetrating the same criminal offence. He was convicted. But because he has nine businesses, even if he is struck off the register, he can still take the profits out of his business. Be that as it may, his name is still on the register and the General Optical Council have taken no action.
I come rapidly to the point of trying to establish that it is time—as the noble Lord, Lord Orr-Ewing, has said—to do something. It is high time for the noble Lord the Minister to assure us that he is prepared to accept our assistance in modifying the Act so that this discussion can cease and the public can get value for money.
10.18 p.m.
Baroness Jeger: My Lords, I understood from the Order Paper that we were supposed to be discussing what action the Government propose to take in respect of the opticians' monopoly following the publication of the report of the Office of Fair Trading. I must admit that many speeches have seemed totally irrelevant to this, and that is a matter for some regret to those of us who have studied this report carefully and who hoped that it was to be the subject of tonight's debate. Those of us who have survived many debates on this subject will regret that the matter does not seem to have been taken much further forward. We have to agree that there must be some revision and some changes in this set-up. This report should have taken us a step forward on that way. I hope that the noble Lord the Minister will be able to point us in the direction that the Government have in mind.
Because of the lateness of the hour, I will only say that we are grateful to the noble Lord, Lord Rugby, for giving us an opportunity to discuss this important matter. I should like to refer also to the involuntary absence of my noble friend Lord Crook, who very much regrets that, owing to ill health, he is not able to be with us tonight. Your Lordships will remember that he was chairman between 1949 and 1952 of the committee which did try to set out how the optical
1032
services could be made an integral part of the National Health Service. This I think is the position which many of us would want to keep: that optical services are part of the National Health Service and not part of a marketing set-up. Many of us regret that quite rightly when the Government wanted some investigation into the situation, the matter was referred to the Office of Fair Trading rather than to the DHSS, because many of us do not think that the question of eyesight is a matter for trading practices.
I would only say this to my noble friend Lord Northfield, whose views I well understand, that there is one point I do not understand. He referred to the fact that many noble Lords ask him to bring back cheap spectacles from the United States. I find that when I go to the United States all my friends envy my NHS glasses and ask me if I can get them some of these, with an eye test thrown in for nothing. I really think the United States has nothing to teach this country in terms of public health care in any sphere whatever, and anyone who calls in aid practices of the non-national health service in the United States really is going backwards in history, and I am only very sorry about them. In the United States the question of health care, including eye care, is purely one of merchandising. I think that is perfectly unacceptable.
The noble Lord, Lord Northfield, also suggested that the figure of people at risk is negligible. My Lords, I say to you that if one person loses their eyesight through changes in our procedures that is one too many. For those noble Lords who mentioned the difficulty of getting a spare set of spectacles—and I refer particularly with all understanding to the noble Lord, Lord Orr-Ewing—anyone can ask their optician for a spare prescription. That cannot be refused. I hope that because this matter has been raised in the debate tonight there will be more public information about this fact.
I will say to the noble Lord, Lord Orr-Ewing, that I am glad that when he went and had to have his compulsory eye test he came out with a clean bill of health and felt that he need not have had it. But I can tell him about a friend of mine who happens to work in this House who was in the same position. He came out from what he thought was a routine eye test to get a spare pair of spectacles with a letter to his GP, and he ended up with a diagnosis of cancer of the eyeball. If that optician had not insisted on doing what was thought to be a purely routine examination that man would probably have lost his sight, if not his life. I am informed that 13 per cent. of patients who go to opticians are referred to general practitioners for all sorts of problems. They may turn out to be not serious at all. But how much better that the optician sends the patient to the GP, even if the GP says that there was not any need for it.
My Lords, had we discussed the matter on the Order Paper more fully, I think some noble Lords might have noticed, even if they had not bothered to read the report, that it does suggest that in matters concerning children and in contact lens cases the present situation should continue, that there should be no buying and selling over the counter of contact lenses or in dealing with children.
I must suggest to your Lordships that if one takes away from an optician in a small town or village

1033
everything except contact lenses and dealing with children one will destabilise his business. How can he pay his rates and how can he meet his overheads if people are all rushing to Woolworths to buy their ordinary spectacles and he is told that he must stay and pay his overheads because someone might want contact lenses or to bring their child to him? That makes it very difficult for opticians to carry on their businesses.
I do not know why there has been so much talk tonight about profiteering. I know many opticians and none of them seems to be exactly a fat cat living very high on the hog, if I may mix my zoological metaphors. The DHSS guidelines suggest that about £12,000 a year would be pretty fair earnings for opticians, but research shows that about 60 per cent. of opticians over 45 earn less than 10,000 a year. If we take it on a purely commercial basis, there will be a reduction in income for rural practitioners, and for people who try to do domiciliary work and who look after children.
I honestly believe that we must get away from this commercial approach. Some noble Lords blame the opticians for having a commercial approach, but some of the speeches tonight have been a matter of real marketing commercialism. We have to consider the benefit, if any, of greater trading competition against the risk of undiscovered ocular abnormality. I have already said that I wish the Government had asked the DHSS to look into this and I understand that they are doing so.
Lord Northfield: My Lords—
Baroness Jeger: No, my Lords, it is too late and the noble Lord spoke a great deal longer than I intend to speak. He has often taken longer than I intend to speak.
Let us never lose sight of the fact that the Opticians Act was put on the statute book to safeguard the most precious of our senses. Although we have talked a great deal about the cost of spectacles tonight I trust that your Lordships will give fair consideration to the cost of eyesight, which is a price beyond reckoning. However small might be the number of people whose eyesight would be at risk by breaking the present relationship between diagnosis and prescription, one person's loss of sight would be one too many. A single case of preventable blindness, or even partial loss of vision, would be too heavy a price to pay for cheaper, jazzier spectacle frames.
10.29 p.m.
Lord Trefgarne: My Lords, it would be as well for me to say at the outset that I have no major announcement to make to your Lordships' House this evening. I suppose I could sit down at that but perhaps I should go a little further. I am sorry to say that the Government are not yet ready to reach firm conclusions on this aspect of the report by the Office of Fair Trading.
Your Lordships may wonder why it is that we have not yet reached firm conclusions on a report published in January. It may help to recall the genesis of this report and the nature of its conclusions. The review
1034
undertaken by the Office of Fair Trading had its origins in public concern at the high cost of private spectacles. Indeed, the noble Lord, Lord Rugby, and other noble Lords, have been unstinting in their efforts at articulating public concern on this matter. It was felt that among the possible factors leading to this high cost were the restrictions on competition which arose from the provisions of the Opticians Act 1958. The Director General of Fair Trading was accordingly asked to review the effect upon competition of two aspects of that Act: first, the statutory monopoly to sell optical appliances conferred by Section 21 of that Act upon registered medical practitioners and registered opticians; secondly, the rules of the General Optical Council made under Section 25 of the Act concerning advertising by opticians.
I would remind your Lordships that the director was not asked to come to any conclusions on whether the Act should be revised in any way, since this raised questions of public interest which went wider than the competition aspects to be dealt with by his review. In my opinion, the report by the Office of Fair Trading has been very helpful in providing a clearer picture of the ways in which the Act operates with regard to competition and therefore prices. Indeed, it makes out a strong case on competition grounds for some relaxation of the present restrictions. With regard to those on advertising, my honourable friend Dr. Vaughan announced in another place on 19th April that he had taken up with the General Optical Council the need to take early steps to reconsider those of its rules which affect competition and can be changed under Section 25 of the Opticians Act. This has already borne some fruit, as I shall mention in a moment. But it does show that the Government have taken the report seriously.
As regards the removal of the statutory monopoly, the central question which the Government are addressing is the balance between the benefits of greater competition and the risk, in the absence of Section 21 of the Act, of symptoms of abnormality and disease not being discovered as a result of breaking the present link between the sale of spectacles and sight testing. This is an important question and full weight must be given to the health care factors involved and not merely to considerations of competition or price.
Your Lordships may be aware that one of the individuals invited to submit evidence to the Director General of the OFT was the distinguished ophthalmologist, Dr Trevor-Roper. Indeed, a good deal of weight was attached in the report to his views. Your Lordships will be familiar with that illustrious family name and will, I am sure, understand that determining the validity of evidence on complex issues is a delicate and difficult matter; and your Lordships will appreciate the Government's wish to give the most careful consideration to the arguments on all sides regarding the question of opticians and competition.
I would therefore ask your Lordships to bear with us a little longer while we continue to evaluate the evidence and receive further advice. I can assure you that this is not being done for any reason other than the desire to be as positive as we can that we are not exposing the sight of vulnerable members of the public to unnecessary risk. Your Lordships may well ask whether the same risk is attached to patients taking a

1035
recent prescription obtained from an ophthalmic medical practitioner or ophthalmic optician to an unregistered person for dispensing. Changing the Opticians Act to allow unregistered dispensers to sell glasses against a prescription from a registered ophthalmic medical practitioner or registered ophthalmic optician would retain the link between sight-testing and the supply of glasses, and therefore would not open the public to the risk of undetected eye disease. Could we not perhaps proceed more speedily in this way by freeing dispensing and obtaining the benefits of competition without incurring these same risks to health?
Even on dispensing, however, the arguments are not all in one direction. Standards of dispensing in the United Kingdom are high. If the need for statutory registration was removed and untrained people could enter the field, standards would inevitably fall. Unskilled dispensing is probably not harmful to the eye. However, unskilled dispensing could well result in less than optimal improvement to sight and could perhaps act as a contributory cause to accidents. It may well be that this is a very small risk, but I personally would not choose to be driving down the M1 behind or in front of somebody who had less than perfect eyesight. I recall also that before I came to your Lordships' House I was a pilot. I had on my licence an endorsement to the effect that I had to wear "approved correction to defective vision". I imagine that those of your Lordships, if there are any, who had the misfortune to fly with me would have preferred that the glasses that I was wearing were the correct ones.
The report makes it clear at paragraph 9.31 that the OFT
"did not seek evidence on the question of disease".
They merely
"reported the arguments that were put to"
them and acknowledged that
"they may not represent the comprehensive range of views upon clinical matters".
That is why we are continuing to evaluate the available evidence and receiving advice.
The noble Lord, Lord Harris of High Cross, referred specifically to the poll of Ophthalmological Society members. I fear that the poll cannot be regarded as disposing of informed medical opinion on this matter. The question was a little naïve in referring to repealing the monopoly to "sell simple reading spectacles". Those polled may not have realised the problems in defining reading glasses. As the OFT says,
"One person's reading glasses could well be identical to another person's prescription for distance vision, and a cut-off in terms of lens power would be arbitrary and difficult to apply".
The results are also ambiguous. Out of 654 members polled, only 55 per cent. replied. It is simply invalid, I believe, to ascribe to the missing 45 per cent. the views of those who did reply —
Lord Orr-Ewing: My Lords, will my noble friend allow me to intervene? While throwing distrust on that survey, has my noble friend noticed that there has been published a survey undertaken by the optical bodies themselves, who have an interest in this matter? My noble friend has not commented on the veracity of
1036
that. Perhaps they, too, have gained a distorted impression as a result of their examination of those who wish to see an improvement in the supply arrangements.
Lord Trefgarne: My Lords, I am trying to demonstrate that the arguments in these matters are not all in the same direction, and those who come before your Lordships seeking to rely on one particular set of arguments need, I think, to have those arguments questioned. I am quite prepared to agree that the other arguments that have been adduced are of equal validity, though maybe they are 100 per cent. in the opposite direction.
Several noble Lords referred to the question of glaucoma referrals. One risk to health of breaking the link between sight testing and the supply of spectacles is that of glaucoma. Evidence on the value of screening the population for this eye disease is, I admit, mixed. We cannot however totally dismiss the fact that recent studies show that four-fifths of referrals of glaucoma patients to eye hospitals were made following a supposedly routine eye test for spectacles by an ophthalmic medical practitioner, or ophthalmic optician.
These are weighty questions, which need to be carefully evaluated. I agree that we are not in general talking about risk to the sight of individuals. We are however talking about the future shape of a service which contributes to the general optical welfare of the public as a whole. Again, I would ask for patience while we weigh the costs and benefits on this score, also. My noble friend Lord Cullen suggested that these matters should await the review of the General Ophthalmic Service. That review is to start in the near future, and is expected to take some 18 months to complete—
Several noble Lords: Oh!
Lord Trefgarne: My Lords, the process of selecting a chairman and members is under way. Interested bodies, including the Federation of Optical Corporate Bodies, have been consulted on the terms of reference, and these are being revised in the light of the comments received. While the proposed terms of reference for the review include a review of the Opticians Act, it is not the Government's intention to delay consideration of the Office of Fair Trading Report on this account.
In the meantime, we are not unmindful that public concern at the cost of private spectacles has not diminished. As I mentioned earlier, the General Optical Council is undertaking a thorough revision of its rules on publicity with a view to deciding what relaxation of the rules will allow fuller information to be given to the public. We expect that this will be completed within the next two months, that we shall see some real progress on this front, and that this will result in cheaper spectacles for the public. Even now, however, the price of private spectacles is falling, as my noble friend Lord Cullen has observed.
It is true that the OFT found evidence that some opticians had increased the profitability of their private work as partial compensation for the decline of the profitability of their NHS business, as a result of NHS fees not having been changed for some years.

1037
Others may even have been able to compensate fully. Agreement has now been reached, and new fees levels and substantial back-payments have been implemented. This has given scope for some reduction in the price of private spectacles. Indeed, as the OFT observes, without such reductions profits would become excessive. There has been evidence of reductions. Nevertheless, the Government share the OFT's pessimism that without action to increase competition these reductions will not be as significant or as widespread as they could be. I cannot therefore share my noble friend's view that the increase in NHS fees obviates the need for the Government to give serious attention to the conclusions in the report in favour of improving competition among opticians.
The Government take extremely seriously the public's concern about the cost of private spectacles. However, they also have to take extremely seriously both health risks for the public and the long-term future for the general ophthalmic service provided by the NHS. I hope that your Lordships will be content to wait a little longer for our definitive views on the future of the opticians' monopoly.

Ashridge (Bonar Law Memorial) Trust Bill
Reported from the Unopposed Bill Committee with amendments.

Medical Bill [H.L.]
Reported from the Joint Committee with amendments, and recommitted to a Committee of the Whole House.
House adjourned at twenty minutes before eleven o'clock.

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