Sitting of 19 January 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. Questions and answers have been getting much longer recently. I appeal to the House for briefer questions and therefore briefer answers.
  Oral Answers to Questions
    TRANSPORT

      Goods-only Railway Track
      1. Mr. Gwilym Robertsasked the Secretary of State for Transport how many miles of goods-only railway track have been opened to passenger traffic since May 1979.
      The Under-Secretary of State for Transport (Mr. Reginald Eyre): I understand from the Railways Board that 35 route miles of goods-only lines have been opened to passenger services since May 1979.
      Mr. Roberts: In view of those appalling figures, will the Minister take this opportunity to reject some of the more lunatic suggestions in the Serpell report? Does he agree with the principle of opening some lines for passenger traffic? If so, will not the opening of the Walsall to Rugeley line have enormous economic and social benefits?
      Mr. Eyre: Reopening the Walsall line is entirely a matter for the Railways Board and the local authority concerned, which has power to make grants to public transport operators. The Serpell report is important and its handling will be dealt with by my right hon. Friend in answer to a later question. There has been wild and deplorable speculation on aspects of the Serpell report, with which my right hon. Friend will deal.

      Motorway Repairs
      Mr. Knoxasked the Secretary of State for Transport whether he is satisfied with the speed with which motorway repairs are undertaken.
      The Under-Secretary of State for Transport (Mrs. Lynda Chalker): In general, yes, but we are always trying to do better.
      Mr. Knox: Why does so much motorway seem always to be under repair? Why does it always seem to take so much longer to effect repairs here than in other countries?
      Mrs. Chalker: Perhaps my hon. Friend has not been in other countries as much as he has obviously been at home. I assure him that we do not take longer than other countries to effect repairs. To some extent we are the
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      victims of our own success. We have 20-year-old or more roadways that have taken far more traffic than they were designed for. We must make the best use of our investment in motorways by maintaining them regularly and carrying out our rolling programme of improvement. We are renewing 70 miles of motorway each year. As soon as we have finished restructuring and resurfacing work, it will be easier to do that.
      Mr. Skinner: Is the Minister aware that it is pleasing to know that the British are pretty quick at improving motorways and getting repairs completed? Is she further aware that the Prime Minister keeps lecturing and telling us that the Germans and the Japanese are better than us at everything?
      Mrs. Chalker: The speed of restructuring and resurfacing work depends entirely on the type of roadway being dealt with. Speed varies considerably from country to country. We do not do at all badly by international standards.
      Mr. Robert Atkins: Why are miles of the M1 and M6 coned off when there appears to be no work going on?
      Mrs. Chalker: Cones are required for several reasons, as I think my hon. Friend knows. They are used to protect concrete which is still setting. That can take some time. They are used to mark off excavated areas that must settle before more work can be carried out. They are also used so that damage to safety fences can be repaired. Sometimes weather conditions following the first stage of repairs or reconstruction do not remain suitable for the next stage to take place. Cones are not used unnecessarily on any motorway.

      Road Works (Acton)
      Mr. Greenwayasked the Secretary of State for Transport if he will make a statement on the progress of trunk road works and compensatory arrangements for those adversely affected in Perivale, Greenford and Northolt.
      Mrs. Chalker: The three contracts on this length of the A40 are progressing satisfactorily. Negotiations on compensation for loss of land and property are either completed or under way. Noise insulation is being provided for eligible dwellings.
      Mr. Greenway: I thank my hon. Friend for that reply and for the care that she and her Department have taken over road works in that part of my constituency. Is she aware that many people are suffering to the point of having to take tranquillisers to steady their nerves? Will she assure me that people and their property will be looked after and completely protected from the effects of the road works?
      Mrs. Chalker: I thank my hon. Friend for his comments about the help that he has received from the Department. There are three quite separate elements to compensation. The first is for loss of property, the second is to help with noise prevention and the third is for loss of amenities. All those matters will be dealt with. Negotiations are proceeding for the double glazing of about 200 properties, and we have completed about three-quarters of the qualifying properties about which my hon. Friend has been so concerned.

      Diesel Multiple Unit Fleet
      Mr. Strawasked the Secretary of State for Transport what investment approval he has given for the replacement of the diesel multiple unit fleet of British Rail.
      Mr. Eyre: My right hon. Friend has approved the construction of 40 light-weight vehicles as the first stage in a major construction programme. We look forward to receiving the Railways Board's proposals for medium-weight vehicles in due course.
      Mr. Straw: Is the Minister aware that, because of the Government's continued delays and refusals to pump cash into British Rail to replace the ageing diesel multiple units, staff and passengers on lines such as the north-east Lancashire and many others must endure discomfort, or even worse? When does the Minister expect the fleets to be replaced not only by the light-weight but by medium-weight units? What funds will the Government allocate to the project?
      Mr. Eyre: The hon. Gentleman is wrong in his allegations about Government contributions. British Rail's investment ceiling has been maintained in real terms, and public support is at a record level. The hon. Gentleman should understand that everyone wishes the ageing fleet of diesel multiple units to be replaced. British Rail has brought forward plans for light-weight vehicles, and will produce plans for medium-weight vehicles. Decisions on placing further orders will rest with the Railways Board, subject to any investment approval that it may need from my right hon. Friend.
      Mr. Stokes: Why has the new investment on the St. Pancras-Bedford line not yet been utilised, even though £150 million of taxpayers' money was spent on the project a long time ago?
      Mr. Eyre: I very much regret that ASLEF is stopping that important investment being brought into proper use. My hon. Friend's question emphasises the tremendous importance of improved productivity to the future of the railways system.
      Mr. Booth: Does the Minister agree that the investment ceiling to which he referred has become absolutely irrelevant for British Rail, and that the combined effect of the external financing limit and lack of Government investment approvals has been to reduce the real investment expenditure in every year since the Government took office?
      Mr. Eyre: As the right hon. Gentleman knows, a great deal of resources, which would have been available for investment in British Rail, have been lost because of the enormous cost of strikes—no less than £240 million last year.

      Rural Areas (Transport)
      Mr. Beithasked the Secretary of State for Transport what plans he has to improve public transport in rural areas.
      Mr. Eyre: I shall continue to encourage county councils to use their transport co-ordinating and revenue support powers judiciously. I shall also continue to encourage small private operators, which can sometimes provide services which larger operators find no longer economic, and the development of less conventional modes of transport.
      Mr. Beith: Is the Minister aware that in some rural areas, such as Northumberland, increasing efforts have been made to co-ordinate rail and other forms of transport to provide a network of rural services, including having post buses meeting trains? Will not all those efforts be entirely destroyed if major railway lines, such as those between Newcastle and Edinburgh and Newcastle and Carlisle, are closed?
      Mr. Eyre: I hope that the hon. Gentleman was in the Chamber earlier when I made it clear that wild, speculative statements had been made about the railway system. My right hon. Friend the Secretary of State will deal with aspects of the Serpell report in reply to a later question.
      Sir John Biggs-Davison: Will my hon. Friend, for the encouragement of others, publish information about the participation of private operators for the benefit of rural areas, including Essex and Epping Forest?
      Mr. Eyre: My hon. Friend makes a good suggestion. My Department is extremely active in encouraging county councils to consider various modes of unconventional transport arrangements to assist in dealing with problems in rural areas. We shall give serious consideration to my hon. Friend's suggestion.
      Mr. Weetch: Can the Minister give information about one rural area—Suffolk? What is the result of the Department's opinion on the inquiry into the western section of the Ipswich bypass? Will there be an announcement in the near future?
      Mr. Eyre: That is a road matter for which my hon. Friend is responsible. She will write to the hon. Gentleman.

      Serpell Report
      Mr. Adleyasked the Secretary of State for Transport if he will make a statement on the Serpell report.
      Mr. Ron Lewisasked the Secretary of State for Transport what action he intends to take on the recommendations of the Serpell report on British Rail finance.
      Mrs Dunwoodyasked the Secretary of State for Transport if he will publish in full the report of the independent committee to review British Rail's finances, chaired by Sir David Serpell.
      Mr. Colin Shepherdasked the Secretary of State for Transport when he will now publish the Serpell report on British Rail.
      Mr. Boothasked the Secretary of State for Transport if he will make a statement on the Serpell committee's report on British Rail's finances.
      Mr. Spriggsasked the Secretary of State for Transport what action he intends to take on the recommendations of the Serpell report on British Rail finances.
      The Secretary of State for Transport (Mr. David Howell): The full reports and detailed supporting work of the Serpell committee will be published tomorrow at 2.30 pm and will, of course, be available to all hon. Members at that time. I also hope to make a statement to the House then.
      Several Hon. Members rose——
      Mr. Speaker: Order. I propose to call first the six hon. Members whose questions are being answered.
      Mr. Adley: Does my right hon. Friend agree that it is thoroughly unsatisfactory that the press has analysed, and the British Railways Board has discussed and apparently rejected, the contents of a report that the House has not seen? My hon. Friend the Under-Secretary of State has this afternoon said that the speculation has been wild and deplorable and wild and speculative. Is my right hon. Friend aware that that is because we have not seen the report and have had to rely on rumour to know what has been happening? Before the recess I suggested that it would be in the Government's interest to publish the report, without comment, so that all hon. Members could have an equal opportunity to read it. May we look forward to a change in procedure?
      Mr. Howell: I wholly agree with my hon. Friend that the alleged leaks and speculation have been deplorable. The comments have been speculative and grossly distorted in many cases. As soon as the manuscripts of the report were received, I informed the House and authorised publication. There are many maps in the supporting documents and publication was not physically possible before tomorrow, when the full documents will be available to hon. Members.
      Manuscript copies were sent to the British Railways Board on a confidential basis as soon as I received them. It was right to do that, as the report obviously concerned British Rail and its operations. Those were the only manuscript reports circulated outside the Government.
      Mr. Lewis: Is the Secretary of State aware of the wide revulsion in all sections of the community towards the contents of the Serpell report so far leaked, especially the part that recommends wholesale closures by British Rail? Will he confirm his predecessor's view that Beeching-style cuts in British Rail would be a disaster and give the House a clear undertaking that he will loyally uphold his predecessor's decision?
      Mr. Howell: I repeat that the speculation is, in many cases, wholly and wildly inaccurate. I ask the hon. Gentleman to await the report and documents, which will be published in full tomorrow, and also my statement, and not to make the mistake of some right hon. and hon. Members, who rushed to condemn the report before they could carefully study the substantial work involved.
      Mrs. Dunwoody: If the Secretary of State is so certain that the comment has been wild, will he give an absolute guarantee that no suggestion that in any way damages British Rail Engineering Ltd. will be accepted by him? Does he accept that it must not be privatised or sold, and that the degree of engineering expertise available to it is one of the strongest cards held in Britain? Should we not do everything possible to encourage it and its export markets?
      Mr. Howell: The hon. Lady will have the full report in her hands soon. I ask her to await it and to study it. She will find much valuable information in it on that subject.
      Mr. Shepherd: Is my right hon. Friend aware that I share the disappointment of my hon. Friend the Member for Christchurch and Lymington (Mr. Adley) at the manner in which publication of the report has been handled, because any leakage of whatever dimension would seem to have come from the railways side? In view
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      of the great uncertainty that the leakage has created about the future of rural railways, electrification and many other matters, does my right hon. Friend agree that it behoves British Rail to work in conjunction and co-operation with the Government rather than to seek to box them in.
      Mr. Howell: I have expressed my strong feelings about all the speculation that has taken place. Some have described it as "astute", but I believe that it is counterproductive and highly damaging to the future interests of the railways and their users.
      Mr. Booth: What useful purpose has been served by delaying publication of the Serpell report until tomorrow? As the right hon. Gentleman has said that many reports have been inaccurate or misleading, will he tell us whether the reports that one of the options was a 40 per cent. increase in commuter fares and that options for substantial cuts in the network were inaccurate? If those reports were inaccurate, will the Secretary of State give a clear assurance that the Government have no intention of proceeding with any proposals on those lines?
      Mr. Howell: There has been no delay in the publication of the substantial reports and detailed supporting work. They are to be made available to Members of the House at 2.30 pm tommorrow, which is the first time that it is physically possible for them to be made available in printed and published form. There has been no delay at all in these matters.
      As for inaccuracies, of which the right hon. Gentleman has just repeated one or two, I repeat what I said earlier. To go on record condemning a report before there could possibly he time for it to be published and studied seems to me to verge on silliness.
      Mr. Spriggs: Does the right hon. Gentleman accept that if the Government carry out any part of the leaked report—I stress "leaked", because none of us has seen the printed report—or instruct the railway authorities to carry out its recommendations, it will be a virtual death sentence for the railway system as we know it? In view of the intense interest of the nation in this matter, will he give an undertaking today that, following publication of the Serpell report, there will be a full day's debate on the subject in the House?
      Mr. Howell: I ask the hon. Gentleman, who has considerable experience in these matters, to await the full report and the supporting detailed analysis, which I believe he will find extremely interesting and valuable. I have no doubt that he will have the opportunity, which will be welcomed by many, to participate in the invormed public debates and discussions everywhere on the issues involved when the report has been published.
      Mr. Crouch: Is my right hon. Friend aware that one aspect of the Serpell report that has leaked out is that commuters in the south-east, several thousand of whom are my constituents, will have to pay as much as 40 per cent. more to get to work in London? I hope that when my right hon. Friend has had a chance to study the report he will quickly scotch that rumour.
      Mr. Howell: That is among the many speculations that have been made. As I have said, they are widely inaccurate. I assure my hon. Friend that when he has the opportunity to study the report fully—it will be published

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      in full very shortly—he will discover that many of the so-called leaks are not leaks at all but manufactured speculations bearing no relation to what is in the report.
      Mr. Campbell-Savours: Will the Secretary of State incinerate the minority Goldstein report, which proposes that track product orders from British Rail be diverted to overseas producers, especially as the existing track producer in the United Kingdom in my constituency is highly competitive in international markets and exports more than 60 per cent. of its total production? Is he aware of the resentment that this has created in BSC towards the Serpell report and its findings?
      Mr. Howell: I do not think that burning reports is a healthy course to follow. As I have said before, the hon. Gentleman should await the full report and detailed supporting work, which will be in his hands very shortly, and then make his comments, rather than follow the foolish course of condemning the report before he has even seen or had time to study it.
      Dr. Hampson: When my right hon. Friend considers the options in the Serpell report, will he bear in mind that many Conservative Members have branch lines in their constituencies, such as the Harrogate-York line, which now carries 900,000 people and which, although loss making, we regard as crucial to the economy and to society?
      Mr. Howell: I ask my hon. Friend to await the report. I am sure that he will find what it says about all these aspects valuable and useful.
      Several Hon. Members rose——
      Mr. Speaker: Order. It is clear that there will be an opportunity for questions on the report after the statement tomorrow. I shall call one more hon. Member from each side and then move on.
      Mr. Whitehead: Is the Minister aware that it is not our fault that today we can discuss only the report's antecedents and not its contents? Why was it thought appropriate for the firm of Travers Morgan to produce the report on British Rail Engineering Ltd. which would apparently decimate all the rail workshops in this country, in view of the malign influence of Mr. Goldstein on the committee?
      Mr. Howell: I do not expect the hon. Gentleman to believe everything that he reads in the press. I hold him in higher esteem than that.
      Experienced consultancy back-up was required by the committee, and it was considered by far the most efficient arrangement to appoint consultant firms which could work directly with the distinguished committee members.
      Sir Albert Costain: Is my right hon. Friend aware that the availability of the report to hon. Members at 2.30 pm rather than 3.30 pm tomorrow is greatly welcomed by Back Benchers, but will he go the whole hog and make it available at 1.30 pm?
      Mr. Howell: The volumes concerned are substantial. I wish to be absolutely sure that they are available in the Vote Office so that hon. Members may have the first opportunity to see and examine the considerable work involved.

      Trunk Roads
      Mr. Roy Hughesasked the Secretary of State for Transport how many miles of non-motorway trunk roads will be resurfaced in the current financial year, following the transfer of another £20 million to the trunk road maintenance budget.
      Mrs. Chalker: The resurfacing of non-motorway trunk roads involves a great number of individual schemes every year. The lengths and widths of road resurfaced vary widely. It is not therefore possible at reasonable cost to express those schemes in terms of a single mileage for 1982–83. However, as a result of the transfer of the £20 million to the trunk road maintenance budget, a total of £56 million will be spent in 1982–83 on non-motorway trunk road structural repairs.
      Mr. Hughes: What proportion of the total road budget does that represent? As non-motorway trunk roads carry a far greater proportion of traffic than motorways, does the hon. Lady envisage any further transfer in the near future?
      Mrs. Chalker: The increase from £36 million to £56 million is more than 50 per cent. for the non-motorway trunk road budget. I believe that with current spending the figure is now about 40 per cent. I shall let the hon. Gentleman have the exact figure.
      Mr. Sheerman: Will the modernisation of non-motorway trunk roads provide an opportunity to improve the general facilities on those roads, which are at a very low level compared with those of our European counterparts?
      Mrs. Chalker: I am aware that facilities on many non-motorway trunk roads are lacking. I have been considering for individual roads schemes for the provision of toilets and safe stopping places in addition to parking areas. I emphasise, however, that, especially where a road is not a dual carriageway, the safety aspects of exit and entry must be considered.

      Metropolitan Counties (Public Transport)
      Mr. Cryerasked the Secretary of State for Transport when he next expects to meet representatives of metropolitan county councils to discuss public transport.
      Mr. Eyre: My right hon. Friend and I are open to further meetings and have welcomed the useful discussions that have already taken place, including those with West Yorkshire.
      Mr. Cryer: When the Minister meets those representatives, why does he not take notice of what they say? Does he understand that all the metropolitan county council representatives are totally opposed to the imposition of the transport guidelines in the Transport Bill, wish to see local authority democracy retained and thus have the right to determine their own public passenger fare levels? Does he not understand that when the metropolitan county councils are forced by the viciousness of his legislation to increase fares, it will be entirely because of the Conservative Government imposing their jackboot heel policies on local authorities?
      Mr. Eyre: Arrangements for services and fares are the responsibility of the PTAs. It is good that the wider allegations that we used to hear are being made much less frequently now. Furthermore, the final decisions on

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      services and fares that are to be charged in these areas will be made by the local authority, which contradicts the allegations that the hon. Gentleman has constantly made.
      Mr. Chapman: In any discussions on public transport with representatives of the metropolitan counties, will my right hon. and hon. Friends bear in mind that this year London Transport will receive subsidies totalling no less than £290 million, which represents 36 per cent. of its total costs? Will he also bear in mind that many Londoners believe that the capital city, in receiving 45 per cent. of the total transport supplementary grant next year, is being fairly and favourably considered?
      Mr. Eyre: I am grateful to my hon. Friend for mentioning those favourable factors affecting London. Central Government provides 40 per cent. of the total subsidy that my hon. Friend mentioned. That is equivalent to 15 per cent. of the total cost. That shows how grotesquely wrong is the 3 per cent. figure which the GLC has quoted in some of its misleading propaganda.
      Mr. Leadbitter: The Minister will accept that it is vital that discussions take place with the metropolitan and non-metropolitan counties. At least that is a bonus, whether the Government take notice or not. Nevertheless, rail is an important part of public communications and concerns these county authorities. If the Minister is discussing these matters with them, is it not right and proper that his right hon. Friend should say today that we will have a full debate on the Serpell report?
      Mr. Eyre: I have already given a full answer about the Serpell report. The hon. Gentleman is quite right to emphasise the importance of discussions with the metropolitan authorities. Those discussions are proceeding wherever possible and we welcome them. My right hon. Friend and I are quite prepared to receive further evidence which is relevant to the calculation of the protected expenditure levels.

      Vehicle Testing Stations
      Mr. Robert Hughesasked the Secretary of State for Transport if he has now concluded an agreement with Lloyd's Register on the future of heavy goods vehicles and public service vehicles test stations.
      Mrs. Chalker: Discussions with Lloyd's Register of Shipping are at an advanced stage but we are not yet in a position to announce final agreement. I hope to be able to come to the House with further news soon.
      Mr. Hughes: Is the Minister aware that she is in grave danger of tedious repetition by coming to the House month after month saying that she hopes to announce agreement soon? Why are the discussions taking so long, especially since the most recent Transport Act was passed only because it was said that agreement would be reached soon? Will she give a categoric assurance that the terms and conditions for staff, including the entitlement to any redundancy payments, will be fully protected with regard to the state of those conditions as and when the Bill passed through the House?
      Mrs. Chalker: If the hon. Gentleman continues to ask me the same question when he knows that proceedings will take a little longer, he will receive the same answer. However, I wish to reassure him that the terms and conditions available to vehicle testing staff are still under
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      discussion. I firmly believe that it is important to get this right, which is perhaps why it has taken longer—since November when the Bill received Royal Assent—than the hon. Gentleman hoped for. We have made it clear that we shall consider the possibility of special compensation if, in the event, terms for transferring are significantly less favourable than those at present available. The question of redundancy procedures and payments should not thus arise for those who transfer.
      Mr. Andrew F. Bennett: Is the Minister aware that when she has to come to the House to give the same answer each time she does a great deal of damage to the morale of all those who work in the vehicle testing centres, who do not like and are unhappy about all the uncertainty? Is it not high time that she improved their morale by letting them know now where they stand rather than promising reports in the future?
      Mrs. Chalker: This is the second month in which the hon. Member for Aberdeen, North (Mr. Hughes) has asked his question. I have said that we are proceeding thoroughly with these discussions because they are fundamentally important. I am afraid that I must disagree with the hon. Member for Stockport, North (Mr. Bennett). Morale is good in the heavy goods vehicle testing stations. We look forward to a continuation of their good work under the new system when the transfer takes place.

      Rail Services (Privatisation)
      Mr. Allan Robertsasked the Secretary of State for Transport what consideration he is giving to privatisation of any of the services provided by British Rail on passenger trains.
      Mr. David Howell: I understand that the Railways Board is considering the scope for private involvement in train catering on a number of services. I welcome this.
      Mr. Roberts: Will the Secretary of State give an assurance that the removal of sleeper cars from the intercity services to Liverpool and Manchester has not been done as a first step to their privatisation? Does he not realise that handing over Britih Rail catering to private firms will only provide a service as efficient, cheap and wholesome as that provided at the motorway service stations?
      Mr. Howell: The operation of sleeper car services is a matter for the chairman of British Rail. With regard to British Rail catering, it would be fair to say that, like the curate's egg, it is excellent in parts.
      Dr. Mawhinney: Will my right hon. Friend not only welcome British Rail's examination of privatising catering but encourage it to proceed more quickly?
      Mr. Howell: I have already said that I welcome this initiative.
      Mr. Sheerman: Will the Secretary of State urge British Rail to look seriously at the privatisation of southern suburban commuter services? We understand from the Serpell report—albeit the leaked Serpell report—that there is massive feather-bedding of commuters living in the south of England, to the detriment of those living everywhere else in the country.
      Mr. Howell: The hon. Gentleman has been feeding himself with inaccurate speculation. I advise him to await the report.
      Mr. Colin Shepherd: Is it not the case that motorway catering and service standards have improved enormously since privatisation?
      Mr. Howell: Yes, it is. We have many instances where privatisation has greatly increased the efficiency of the service provided.
      Mr. Leadbitter: Will the Secretary of State accept that any privatisation consideration within British Rail is entirely a part of the economic consideration of British Rail's future?
      Against the background of the economies and economic considerations of British Rail, is the right hon. Gentleman prepared to have the Serpell report, which is an economic consideration of British Rail, debated in the House?
      Mr. Howell: The final decisions on debates must be for the Leader of the House. He will have noted what has been said. It is an immensely important and valuable report, which will be available to us shortly. I am sure that it would be right for the House and the public to have full opportunities for debate. My right hon. Friend will take note of what has been said.

      Motorways (Traffic Flows)
      Mr. Mawbyasked the Secretary of State for Transport which sections of motorways have average daily traffic flows in excess of their design standards.
      Mrs. Chalker: As I explained to my hon. Friend the Member for Ashford (Mr. Speed) on 30 April 1982, we no longer work to design standards which are fixed in relation to traffic flows; so I cannot specify the degree of excess flows in the way requested. We recognise that delays can occur when traffic flows reach a certain level, which varies according to local circumstances, and traffic flows can attain these levels for short periods during peak hours on certain sections of MI, M4, M5, M6, M62 and M63.
      Mr. Mawby: Bearing in mind the high cost of disruption that repairs of these motorways cause, is any consideration being given in the design of future motorways to extend the design life, which at present is, I understand, about 20 years?
      Mrs. Chalker: In the current year we have reduced the delays due to motorway repairs. Our current practice is to adopt a design life of 20 years for new bituminous roads and 40 years for new concrete roads. In determining the strength of a road we take into account the level of future traffic, which is always uncertain, and the capital cost of provision. Varying strengths of roads have been monitored over the years by the TRRL and this work provides a good basis for decisions. We are considering the design life criteria, because I believe that it is high time that they were reviewed.
      Mr. Snape: As traffic flows on Britain's motorways have consistently failed to match those projected by her Department's civil servants before construction, will the hon. Lady consider referring these sections of motorway to Sir David Serpell with a requirement that he treat them in exactly the same way as he treated the railway system, and close them down?
      Mrs. Chalker: The hon. Gentleman is requesting detailed knowledge, for which I must ask him to give me
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      notice. Problems have occurred when flows have been higher than those anticipated 20 or 30 years ago. Where possible, hard shoulders have been strengthened so that they can take running traffic during repair periods. This is already being done. Many new developments that are available through new technology are being carried out very well and efficiently by officials in my Department as well as by many British construction companies, of which we are proud.
      Mr. Neale: When my hon. Friend arranges for surveys to be undertaken on trunk roads and motorways in the west country, will she please ensure that the times and dates upon which the surveys are conducted take proper account of the abnormal seasonal traffic flows to the west country? Will she ensure also that these statistics feature in her deliberations on whether further extensions are necessary?
      Mrs. Chalker: We shall do that, because no survey is correct unless it views an entire year. Traffic flows in different areas peak at different times.
      Mr. Park: If design factors are not related to traffic flows, is that why we have at the beginning of the M1, which caters for the Midlands, a motorway network that is continually in a state of repair, with one-lane traffic causing tremendous confusion and accidents?
      Mrs. Chalker: First, there have not been a tremendous number of accidents, but there have been far more than any of us would like. We must remember that the most southern part of the M1 is the oldest motorway in Britain, having been in use for more than 20 years and therefore requires restrengthening. The two-lane section is being brought up to three-lane standard and three lanes are now open on the southbound section. I assure the hon. Gentleman that where there is great peaking of traffic we can build to the best standard for the costs involved. We do not take traffic flows into account in isolation. We take into account, for example, the cost of widening. A good example is the M4 elevated section, which has extremely high traffic flows. The cost of widening that section would be so prohibitive that it would not make sense.

      British Rail Engineering Ltd.
      Mr. Stottasked the Secretary of State for Transport if he will meet the chairman of the British Railways Board to discuss the future of British Rail Engineering Ltd.
      Mr. David Howell: This is among the matters the chairman and I will be discussing in the light of the Serpell committee's reports.
      Mr. Stott: The Secretary of State will be aware that the British Railways Board withdrew the closure notices that were placed on Shildon, Swindon and Horwich in my constituency last year. Will he make a clear and unequivocal statement that he will ignore the leaked recommendations in the Serpell report to close down or to sell off British Rail workshops, especially those in Shildon, Swindon and Horwich? He must be aware that the closure of these workshops would represent a disaster for those towns, which depend on the workshops for what little employment still remains.
      Mr. Howell: The problem of British Rail Engineering Ltd.'s costs and capacities is one that has worried hon. Members and there has been concern in the industry for

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      some time. The problem remains. In the light of the Serpell report and the debates that will follow, there will be important new information and important matters to discuss. I ask the hon. Gentleman to await the full report, which will shortly be with him, when he will find that he will be able to make a full contribution on the issue that concerns him.
      Mr. Stoddart: Is the right hon. Gentleman aware that the problem of the workshops is not that there is insufficient work to be done? There is much work to be done on the railways to renew the clapped-out system and those who are employed in the workshops are only too ready and willing to undertake it if the right hon. Gentleman will only make it possible financially for them to do so.
      Mr. Howell: I wish that were so, but in some instances there is no longer a demand for equipment that was manufactured in the past on any of the world's railways, including British Rail. I want to see more investment in British Rail. The external financing limit that has already been announced for next year will allow an increase in the scope for investment, which I welcome. The higher the investment the more effective British Rail will be in cutting costs. The draining away of vast sums on futile strikes last year has not set a very good position for the future.
      Dr. Hampson: As I come from Shildon—I was born there—may I ask my right hon. Friend whether the product line in Shildon is good enough for most of the markets around the world? If it is not, are there any means by which a new line of development can be started in the Shildon works?
      Mr. Howell: These are matters which I know the chairman and board of British Rail have been considering carefully. There are problems of capacity and of making the equipment that is now needed. I know that British Rail's staff and chairman are considering these matters closely.
      Mr. Michael Martin: Will the right hon. Gentleman bear in mind that the Glasgow, Springburn workshops are the only British Rail workshops left in Scotland? In the community that I represent the unemployment rate is over 30 per cent. If anything happens to the workshops, a community will be destroyed. The only area in which apprentices are being taken in at present is that of the British Rail workshops. If they close, we shall be destroying the future for young people in the community that I represent.
      Mr. Howell: I am sure that the social implications as well as the economic ones of a changing industry and its problems will be carefully borne in mind, as in the past, by the British Railways Board.

      British Rail (Investment)
      Mr. McNallyasked the Secretary of State for Transport when he next intends to discuss British Rail's investment programme with Sir Peter Parker.
      Mr. Hicksasked the Secretary of State for Transport when he next expects to meet the chairman of the British Railways Board to discuss investment in the railways.
      Mr. David Howell: I meet the chairman frequently to discuss matters of mutual interest.
      Mr. McNally: Is the Secretary of State aware that rail users can now see for themselves the deterioration in the railways that has been caused by his policies, and that most Members know that railway investment programmes in their regions and constituencies could bring men back to work and improve the service? When he sees the chairman, will he make it clear that for most rail users the only post-Serpell resignation that they will want is his own?
      Mr. Howell: The hon. Gentleman should think also about the colossal contribution that taxpayers make to support the railway system and the concern that the traveller and taxpayer have not necessarily been getting value for money. These were the matters that led British Rail eagerly to seek the Serpell review and to welcome the members of the committee when it was set up. These were the factors that led it to take the view that the review was needed. In the light of the review, I believe that the debate will be carried forward.
      Mr. Stephen Ross: When the right hon. Gentleman next meets the chairman, will he please receive sympathetically the application that British Rail Sealink has made to him to be given sufficient money to put in an order for the replacement of passenger boats on the Rye-Portsmouth route? He will be delighted to know that next month, for the second or third year in succession, we shall go back 50 years when we start to go over to the island on a car ferry on which we shall be exposed to all the elements. May we please have priority given to our replacement boats so that some business is given to us on the Isle of Wight?
      Mr. Howell: I shall draw the hon. Gentleman's point to the chairman of British Rail.
      Mr. Eggar: When my right hon. Friend meets the chairman, will he urge him, whatever else he does, to sell Sealink?
      Mr. Howell: It is the present intention of the board to try to sell the Sealink subsidiary.

      Serpell Report
      Mr. Snapeasked the Secretary of State for Transport what discussions he has had with the railway trade unions on the report of the Serpell committee on British Rail finances; and if he will make a statement.
      Mr. David Howell: None. I shall welcome the views of all parties when the reports are published.
      Mr. Snape: Am I indulging in idle speculation in saying that the Serpell report proposes a reduction in the railway network of 1,600 miles, a reduction in safety standards for British Rail, the parcelling up and selling of British Rail Engineering Ltd. and substantial fare increases for commuters, especially in London and southeast? Am I speculating, or is that what is contained in the report?
      Mr. Howell: The hon. Gentleman is speculating.

    CIVIL SERVICE

      Civil Service Unions (Meeting)
      Mr. Canavanasked the Minister for the Civil Service what subjects he proposes to discuss at his next meeting with trade union representatives of the Civil Service.
      The Minister of State, Treasury (Mr. Barney Hayhoe): Plans for my next meeting with the Civil Service unions have not yet been made.
      Mr. Canavan: Will the Minister discuss the need to improve staffing levels, especially in the Department of Health and Social Security and in employment offices, so that a better standard of service can be provided to the increasing number of unemployed who must often queue for ages for the payment of benefit to which they are entitled? Why is there a shortage of staff to help the unemployed, while extra staff seem to be recruited to special investigation squads that simply hound and harass the unemployed?
      Mr. Hayhoe: Extra staff have been employed both in unemployment benefit offices and in the DHSS, but the detailed arrangements are the direct responsibility of my right hon. Friend the Secretary of State for Social Services.
      Sir John Biggs-Davison: Has progress been made in the consideration of no-strike contracts in the public service?
      Mr. Hayhoe: My hon. Friend may remember that those matters were dealt with in the Megan commission report. He will also know that negotiations with the unions on the basis of the recommendations of that report are now starting.
      Mr. Foulkes: When the Minister meets the trade unions, will he discuss the unfortunate position whereby civil servants cannot take complaints to the ombudsman? One example is the recent case in my constituency of Mr. Alastair Dewar, where there was an admitted failure by the Department. Mr. Dewar asked the ombudsman to consider his case, but the ombudsman could not do so. Does that not restrict the civil rights of some of our citizens by not allowing them to make complaints to the ombudsman?
      Mr. Hayhoe: I am prepared to discuss the matter with the unions if they so request, and I shall examine the point raised by the hon. Gentleman.
      Mr. Alan Williams: When the Minister meets the unions, how will he reconcile his assurance that there will be genuine negotiations in this year's pay round with the Government's even stronger commitment to a 3½ per cent. cash limit? Will he admit to the House that the Government are operating an incomes policy for the Civil Service and that since the previous pay comparison in 1980, whereas prices have risen by 32 per cent., Civil Service pay has risen by 14 per cent., which is a shortfall of 18 per cent.?
      Mr. Hayhoe: The Government have made it clear, for this year's pay negotiations with the Civil Service, that the 3½ per cent. figure is part of the public expenditure planning process for this year. The Government believe that to be a reasonable provision. Rateable inflation is already much lower than it was at this time last year. There
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      is no reason why the announcement of the 3½ per cent. figure should preclude genuine negotiations. It is neither a pay norm nor an entitlement.

      Efficiency and Effectiveness (White Paper)
      Mr. Eggarasked the Minister for the Civil Service what role the Management and Personnel Office is playing in assisting other Departments in preparing responses to the White Paper on efficiency and effectiveness in the Civil Service.
      Mr. Hayhoe: As explained in the White Paper, the Management and Personnel Office is directing the financial management initiative jointly with the Treasury. MPO staff are fully involved in the joint steering machinery, which has issued guidance to Departments and which will examine the responses. The MPO is also helping Departments directly through the joint MPO/Treasury financial management unit, and has directed the 1982 review of running costs, the report of which will be available shortly.
      Mr. Eggar: In the direct assistance that the financial management unit is giving to Departments, can my hon. Friend confirm that special importance is attached to ensuring that Departments have proper management information and accounting systems? Is that not much more important than the rest of the financial management initiative?
      Mr. Hayhoe: I agree with my hon. Friend about the importance of the two matters to which he referred. I also welcome the constructive comments and encouragement in my hon. Friend's recent Bow group memoranda, which dealt with many of those matters.
      Mr. Stoddart: Is the Minister aware that the real test of efficiency and effectiveness is what the public think about a service and the effect of that service on the public? Is he aware that, for example in my constituency, staff at the DHSS office has been reduced by three while the work load has increased by 50 per cent., thus hurting many people, especially claimants, in Swindon? Will he try to ensure that the Civil Service is effective at the point of use?
      Mr. Hayhoe: As I explained in answer to an earlier question, the details of DHSS offices are clearly a matter for my right hon. Friend the Secretary of State for Social Services. I do not agree that one should exclude cost effectiveness and value for taxpayers' money from considerations of efficiency in the Civil Service.
      Mr. Alan Williams: When replying to the White Paper, will the hon. Gentleman, as a Treasury Minister, outline how many of the savings claimed by Treasury Note 5 to the Select Committee have been lost to the Government in the form of tax that is no longer collected, national insurance contributions that are no longer collected, unemployment benefit that is paid to those who have been left in the dole queue instead of being recruited to fill the vacancies, and payments that are made to contractors who are carrying out the work that was previously done by civil servants? Is it not true that the net saving to the Government is a minute fraction of that which the Government claim?
      Mr. Hayhoe: I repudiate that statement. The reduction in civil servants has meant a net saving to the Government

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      of about £½ billion a year on the pay bill, which is a substantial sum. Although extra expenditure is involved in some privatisation arrangements, overall the entire exercise has been good value for the taxpayer.

      Ethnic Monitoring
      Mr. Greville Jannerasked the Minister for the Civil Service when he expects to publish volume II of the survey in Leeds on ethnic monitoring in the Civil Service.
      Mr. Hayhoe: The results of the job applicant part of the Leeds survey, which ran from 1 May to 30 September last year, should be ready for publication in March.
      Mr. Janner: Does the Minister recognise the great urgency with which the work should be completed, along with the approval of the CRE code on ethnic monitoring, which awaits the approval of the Secretary of State for Employment, and the need for safeguards against misuse of the information, as recommended by the Select Committee on Employment? Will he assure the House that he is receiving the full support not only of the unions but of all communities such as those in Leeds and Leicester, where community relations have been remarkably good, although the ethnic minorities are very large?
      Mr. Hayhoe: I assure the hon. and learned Gentleman that the work carried out in the Leeds survey followed consultation with the unions and was carried out in cooperation with them and with their full support. The code of practice issued by the Commission for Racial Equality is a matter for my right hon. Friend the Secretary of State for Employment, who hopes to announce his decision on
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      the matter soon. I agree with what the hon. and learned Gentleman said about the necessity to safeguard the confidentiality of information collected as a result of ethnic surveys and to ensure that it is not improperly used.
      Mr. Cohen: I am pleased to hear the Minister's reply. Will the Government take note of the experience of the city of Leeds, which has adjusted itself to absorb immigrant communities—Irish, Jewish, Italian, Central European and Asian—and which has had no problems? I hope that as a result of the inquiry conducted by the Minister, his colleagues and the Department, other British cities will learn from the experience of Leeds to absorb those communities without serious problems.
      Mr. Hayhoe: The hon. Gentleman's supplementary question goes somewhat wide of the survey of civil servants in Leeds, but I am delighted to hear what he has said and I am grateful to all in Leeds who made the carrying out of this survey so effective.
      Mr. Tilley: Does the Minister agree that the high participation rate shown in volume I of the report shows that it is feasible for widespread ethnic monitoring to take place throughout the Civil Service? How soon will the Minister be having meetings with the unions to ensure that the successes of Leeds can be repeated throughout the country?
      Mr. Hayhoe: As I explained in the answer to the main question, we are awaiting the second part of the survey, which, I hope the hon. Gentleman will agree, is an important element in it. It would be wise to await decisions and considerations of what should be done in the future until we have the full information.

Council of Agriculture Ministers
3.31 pm
The Minister of Agriculture, Fisheries and Food (Mr. Peter Walker): With permission, Mr. Speaker, I should like to make a statement on the meeting of the Council of Agriculture Ministers on 17 and 18 January in Brussels. I represented the United Kingdom, together with my right hon. Friend the Minister of State.
The Council had its first discussion upon the Commission's price proposals for 1983ߝ84; proposals that recommend an average of 4·4 per cent. increases in farm gate prices, which for British agriculture would work out at 4·1 per cent.
A diversity of views was expressed by member States, the majority of whom sought higher increases than those proposed by the Commission in view of the projected 9 per cent. rate of inflation for the Community as a whole.
The British Government expressed the view that this was a time for price restraint, particularly for those commodities in structural surplus.
The proposals will now be referred to the special committee on agriculture and the Council of Ministers will resume its discussions at future meetings.
The Council agreed to an extension for a further month of the regulation that enables New Zealand to export butter to Britain in accordance with the 1983 quotas, agreed by the Council at its meeting last October.
The French and Irish Governments retained their reserve on the ratification of this agreement, stating that they were linking their ratification with an examination of the manner in which the Soviet Union was being treated in the tendering for butter stocks. The United Kingdom Government, supported by other Governments, the Commission and the Presidency, made it quite clear that the New Zealand quotas of butter, as agreed last October, will be maintained.
Mr. Norman Buchan: I recognise that this is a very interim statement.
This may be a useful opportunity for the Minister to make it clear that there will be no restriction in relation to any other trade-off for the full import of New Zealand butter. That has been agreed and is supported by the whole House, and we shall not tolerate any other trade-off for reneging on that agreement.
What does the phrase mean about the French and Irish Governments
"linking their ratification with an examination of the manner in which the Soviet Union was being treated in the tendering for butter stocks"?
Who will be examining it? Does it mean merely the Irish and the French, or will the Council or the Commission become involved? What will they be examining? Is there any explanation of what they are looking for, and if so, are they looking for some other type of trade-off? When are they likely to report on it?
I am pleased to see that at long last the right hon. Gentleman is recognising that this is a time for price restraints. However, does the phrase in the statement about price restraint mean that the Government are reverting to the policy that they pledged in their manifesto for the last general election, that there would be no increase in price for those commodities in surplus production? If the right hon. Gentleman is sticking to that, the Labour Party will back him on it.
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Is the right hon. Gentleman clear that there must be no overruling this time of the British position in relation to the majority votes? The Labour Party would back the right hon. Gentleman on that. If this is pushed to the uttermost and these demands for something equivalent to 9 per cent. inflation are argued in terms of prices by our European partners, I trust that the right hon. Gentleman will oppose that as much as possible, to the extent, if necessary, of using his veto at the end of the day.
Mr. Walker: I welcome the remarks of the hon. Member for Renfrewshire, West (Mr. Buchan) about butter. I can categorically state that this has been agreed by all member countries. There is no way in which we would accept any restraint upon the quotas agreed for New Zealand butter, and there is no question of trading anything else off for it. We have the support of the Presidency, of the Commission and of the other member states, with the exception of France and Ireland.
As for the tendering arrangements affecting the Soviet Union, the Soviet Union has been as free as other countries to tender under these arrangements and has failed to do so. This might be disappointing to the French, who, we gather, would have been happy to export substantial amounts of butter to the Soviet Union, and whose agriculture Minister was in Moscow some time ago. It is a fair tendering system, and the Commission made that perfectly clear yesterday. However, the Soviet Union failed to tender.
It is a question not of anybody else examining the system, but purely of the Irish and the French saying that they feel that there is a bias against the Soviet Union in the system. It was made clear by the Commission that that was not so. The French Minister changed her tone on the second day of the Council from what it had been on the first day.
On the general question of price restraint, one of the major items in surplus during the period of this Government was milk, for which price-fixings have meant in real terms a 17 per cent. reduction on the price inherited from our predecessors. I am afraid, as the hon. Gentleman I hope recognises, that even with a 17 per cent. reduction over the four price reviews for which this Government have been responsible, there has not been a reduction in production. There is a tendency, if the price is restrained, for people to have more cows, and production is, if anything slightly increased.
The 9 per cent. that I mentioned in the statement refers to the rate of inflation in Europe. In fairness, other than comments by perhaps the Greeks and Italians on one or two Mediterranean commodities, no such high figure has been suggested. The figure suggested by one or two other countries was in line with what certain agriculture organisations have suggested, which is about 1 or 2 per cent. above what the Commission expected.
With regard to the Luxembourg compromise, we adhere to the view that it remains, and has an important role which we have a right to exercise in any matter of national interest. I noted that after it was breached on the previous occasion, two of the member Governments who breached it immediately issued a declaration saying that from now on they would adhere to it. I trust that they will.
Mr. Geraint Howells: Does the Minister believe that the pitifully low increases proposed today will

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satisfy the financial needs of agriculture in Britain? Will it stem depopulation of the land? How much have the costs of production gone up in the past 12 months?
Mr. Walker: I am pleased to say that in 1982, partly because of good weather conditions, there has been a recovery from the drop in real farm incomes that took place between 1978 and 1981. That has been good for the economy as a whole because it has meant an increase in investment in the construction and machinery industries, which I welcome.
We have the benefit of high standards of productivity in British agriculture, and our application of technology and plant and animal breeding is such that each year there is an improvement in productivity that assists in tackling problems. I expect that to continue. I hope, too, that improvements in marketing of British produce will help. It is reasonable, therefore, to have tolerably restrained price increases this year.
Mr. Anthony Nelson: Does my right hon. Friend agree that it is not in the long-term interests of farmers, let alone British consumers, to have an excessive price settlement agreed at the end of March, and that, conversely, as my right hon. Friend has recognised, too low a price settlement or a freezing may result in overproduction as farmers try to catch up on their income? Therefore, does my right hon. Friend accept that many of us feel that he has it absolutely right and hope that he will stick to his guns?
Mr. Walker: I am very grateful to my hon. Friend. It is worth pointing out that during the past three or four years we have, in comparison with most of our competitors, done very well in agriculture. It is also a period when the record on low food price increases has been remarkable. I am glad to say that, for example, food price increases during the lifetime of this Government have been well below half the rate of those under the previous Government.
Several hon. Members rose——
Mr. Speaker: Order. This is an Opposition day. We have a ten-minute Bill before we come to the privilege motion. I shall call hon. Members who have been rising in their places and then move on to the ten-minute Bill.
Mrs. Elaine Kellett-Bowman: The Minister said in his statement that milk production had not fallen. If, during the negotiations or subsequent ones, it is decided to follow the admirable example of the Christmas butter subsidy, and give an extra subsidy to citizens of the Community, will my right hon. Friend do his best to make sure that sufficient time is given for distribution arrangements, so that no hold-ups occur, as on the last occasion?
Mr. Walker: The arrangements for the Christmas butter subsidy were a bad way of encouraging consumption. That was a matter for the Commission. The British Government expressed the view that it would be better to increase generally the butter subsidy over a longer period than to have a once-for-all injection. I am sure that that is right. That is why I am glad that in the lifetime of the Government we have succeeded in doubling the general butter subsidy.
Mr. Thomas Torney: I am pleased that the Minister has dug his heels in over New Zealand
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butter and farm prices, but does he agree that there is no long-term solution for the common agricultural policy problems while we remain members of the Common Market? Does he agree that the real solution to the problem is to get out of the Common Market?
Mr. Walker: I suppose that, more than any other hon. Member, I am acquainted with the detail, difficulties and problems of the CAP. Most other parts of the world would like to have had the stability of prices and guarantee of supply that Western Europe has enjoyed.
Mr. Robert Maclennan: Does the Minister accept that the National Farmers Union will regard his attitude to prices with dismay and that it will find it hard to understand how he was prepared to accept institutional price increases last year of 10·4 per cent. while this year he is apparently boggling at the Commission's proposal of 4·1 per cent.? As farm incomes have not recovered to the mid-1970s level, will the Minister think carefully before bringing the modest farming recovery that took place last year to a juddering halt?
Mr. Walker: The hon. Gentleman has made an interesting statement on behalf of the alliance. The NFU will be interested in statements from his partners in the alliance about the re-rating of agricultural land. Any dismay that the NFU has about me is as nothing compared with its dismay about the ignorance of the Social Democratic Party about agricultural matters.
Mr. David Myles: Will my right hon. Friend state what agricultural commodities do not have direct price support under the proposals, such as turkey meat, which could be bought last year at the same price in cash terms as 30 years ago?
Mr. Walker: There have been considerable changes in the poultry industry over the past 30 years. The consumer has benefited. A large range of foodstuffs are unaffected by CAP price fixings although most British foodstuffs are—for example, cereal prices affect the poultry industry.
Mr. John Home Robertson: Does the Minister accept that British farming is not the main culprit for structural surpluses of agricultural commodities? Will he therefore take steps to ensure that British farming does not suffer unduly, if at all, from penalties for excess production?
Mr. Walker: Yes, Sir. That is why I am pleased to say that in the lifetime of the Government we have improved the share of the home market produced by British farmers so that this year our balance of payments will be £1 billion better than it would have been otherwise.
Mr. Teddy Taylor: Although I welcome, unlike the Social Democratic Party, the Minister's attempts to curb excessive food price rises, does he agree that even that restraint will not solve the problem of the growing structural surpluses in the Common Market, particularly now that the Americans are matching the dumping of food in the Middle East and elsewhere? Did any new thoughts emerge from the meeting about what to do with those large and growing surpluses? What would the Government do if the Council of Ministers overruled him and forced through a large price rise, as it did last year?
Mr. Walker: As I have said, I believe that the Luxembourg compromise will prevail in the countries that used it last year, so they will adhere to it this year. With his views on Europe, my hon. Friend will have noted the big reduction in the major surpluses in the European Community. All I can say is that a pricing policy which would diminish returns to a level where European farmers came out of production would result in a swift rise in world prices. The comparison with world prices that some people use is artificial and wrong.
Mr. David Stoddart: Is the right hon. Gentleman aware that I have a considerable interest in New Zealand butter as we pack a good proportion of Anchor butter in Swindon and that for that reason I support the tough and forthright attitude that he has taken with the French? However, as so often in the past, tough and forthright attitudes come to naught, as happened in the price review last year. Therefore, will the Minister give the absolute assurance that under all circumstances we shall import 89,000 tonnes of New Zealand butter this year? How long will that agreement run?
Mr. Walker: The figure is 87,000 tonnes. It is this year. I give the assurance that the hon. Gentleman requires.
Mr. Michael Brown: Does my right hon. Friend accept that this is probably one of the best farm price reviews that has come from the Commission in the past few years? What does he think will be the likely food price increase once the final negotiations have been concluded?
Mr. Walker: The relationship between the food price increases and the farm price increases is not substantial. Food prices this year have continued to increase less than
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the retail price index. The increase has been less than 5 per cent. whereas last year there was an increase of over 10 per cent. in farmgate prices. We have a whole range of disagreements on individual items. It will be possible to calculate the impact when we have looked at the increases for each item.
Mr. Eric Deakins: Does the Minister regard the Commission's price proposals as constituting price restraint? Does he regard it as an important national interest that we should get price restraint on products in structural surplus? If those price proposals are adopted, what will be the effect on Britain's contribution to the Community budget?
Mr. Walker: The last point depends totally on the method of calculation of our budget contribution for the coming year. That has yet to be negotiated. I can only say—I know that it will bring great joy to the hon. Gentleman—that the proportion of the CAP budget that benefits British agriculture has doubled during the lifetime of the Government. Therefore, we are obtaining much more benefit than our predecessors managed to obtain from the system. Part of that is directed towards the consumer in the doubling of the butter subsidy that the Government have achieved. Price restraint varies from one commodity to another. It depends upon productivity. In some areas a policy of price restraint is illustrated. For example, if one takes the price proposals combined with the suggestions on green currency proposals for a number of countries, the proposed price increases are way below the rates of inflation and increased input costs in those countries. It varies from one commodity to another. I repeat that I am happy to compare the Government's record in the past few years on food prices with that of any of our Socialist predecessors.

Rent (Agriculture) (Scotland)
3.47 pm
Mr. Gavin Strang: I beg to move,
That leave be given to bring in a Bill to provide security of tenure for tenants of agricultural tied cottages in Scotland.
A farm worker and his family in Scotland have no legal right to a roof over their heads. If the farm worker ceases to work on the farm, through ill health or retirement or as a result of a dispute with the farmer, the farmer has a right to secure vacant possession of the cottage. It is true that he must go to court to obtain an eviction, but in practice it is automatic. The farmer's motives are irrelevant. The farmer's intentions for the cottage are also irrelevant—whether he needs it for another farm worker, wants to sell it, let it as a second home or allow it to stand empty. It is an elementary act of social justice that that fundamental insecurity should be ended.
The purpose of the Bill is to give tenants of agricultural tied cottages broadly the same security of tenure as other tenants under the Rent Acts. It often makes sense for a farm worker to live in a cottage on a farm. In remote parts of Scotland there is little alternative for the shepherd or other workers but to live on a farm.
When a farm worker ceases to work on a farm, he may no longer wish to continue living in his tied cottage. He may wish to move into alternative accommodation in a nearby village provided by the council. The Bill will impose on local housing authorities the obligation to provide alternative accommodation where there is a genuine need for a cottage for an incoming worker.
The farmer would no longer be able to secure vacant possession automatically. The only arguments relevant to securing possession would be those related to the housing needs of the ex-worker and his family.
The Rent (Agriculture) Act 1976 provides security of tenure for farm workers and their families in England and Wales. As with all reforms of this nature, that measure was opposed by the Conservative party and by the National Farmers Union. The present position has worked well. It
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has been accepted by the National Farmers Union, and the Government have acknowledged that there is no need to alter it.
During the proceedings on the legislation, there were many scare stories about the implications for the practical working of our farms and the efficiency of British agriculture.
Where the agricultural dwelling house advisory committee recommends that a tied cottage is needed for an incoming worker, an obligation is put on the local authority to provide alternative accommodation. The legislation has worked very well. It abolished the insecurity and at the same time enabled a sensible arrangement to be reached between farm workers and farmers.
It may be argued that the legislation is not necessary because evictions from tied cottages are now relatively rare in Scotland. Evictions are the tip of the iceberg. The fundamental issue is that the farm worker and his family, or his widow, have no security to the roof over their heads. The question is not whether farmers are good or bad landlords. Most farmers are pretty good landlords. The issue is that the right of a farm worker and his family, or his widow, to the roof over their heads should not depend upon the benevolence of a good employer. That is why the Labour party, when it attains office, is committed to abolishing the insecurity of the agricultural tied cottage in Scotland. I hope this House will give leave to bring in this measure as an elementary act of social justice.
Question put and agreed to.
Bill ordered to be brought in by Mr. Gavin Strang, Miss Joan Maynard, Mr. John Home Robertson, Mr. Dennis Canavan, Mr. George Foulkes, Mr. William McKelvey, Mr. Martin O'Neill and Mr. Norman Buchan.

Rent (Agriculture) (Scotland)
  RENT (AGRICULTURE) (SCOTLAND)
  Mr. Gavin Strang accordingly presented a Bill to provide security for tenants of agricultural tied cottages in Scotland: And the same was read the First time; and ordered to be read a Second time upon Friday 18 March and to be printed. [Bill 57.]

Privilege
Mr. Speaker: Before I call the hon. Member for Hackney, South and Shoreditch (Mr. Brown) I must tell the House that I have received a letter from Mr. Ken Livingstone, headed
"Members Lobby, The County Hall, London"
I propose to read this letter to the House.
"Dear Mr. Speaker,
I understand from the media that some members of Parliament have raised an issue of privilege. I am enclosing a copy of the minutes of the GLC's Policy Committee which met on 12 January 1983 and decided:—
Agenda Item L(iv) Capital Allocation 1983/84
'…that lists be prepared of projects which are at risk in each constituency and that these be provided to MPs, who would be asked if they were willing to support an increased capital allocation for the GLC. It would also be made clear that decisions on which projects would proceed would not be based on how MPs voted but on the needs of London.'
You may also find helpful the press coverage of our press conference which preceded the Policy Committee (whose minute I refer to above) for although most papers give contradictory and confusing quotes both the Daily Telegraph and the Newsline both quote accurately the comment of John McDonnell:—
'…support us and we will implement this in your area, and your refusal to support our programme will mean this will not go ahead.'
You may also have seen an unusually accurate article in the Evening Standard which says:—
'Mr. Livingstone now claims that people "got the wrong idea" over remarks made by councillors. He said: "Of course the GLC will continue to allocate resources on the basis of need. To do otherwise would be to penalise the working people of London.'
I hope this letter will resolve an otherwise confused situation. I also hope that you will not mind my having given copies of this letter to the media as I am sure you will understand that there has been considerable media interest in our response to the issue raised in the House this afternoon.
Yours sincerely,
Ken Livingstone".
3.58 pm
Mr. Ronald W. Brown: I beg to move
That the matter of the complaint be referred to the Committee of privileges.
The purpose of my motion is to call attention to words spoken by Mr. Kenneth Livingstone, leader of the Greater London Council, and Mr. John McDonnell, chairman of the finance and general purposes committee of that body, indicating an intention to restrict the provision of new servuices in the constituencies of any London Member of the House who failed to support the provisions of a forthcoming Greater London Council money Bill.
I thank you, Mr. Speaker, for your courtesy in sending me a copy of the letter you have just read out, which I received this afternoon.
I had intended originally not to discuss the merits of this case as that is not the purpose of my asking it to be referred to the Committee of Privileges. I am not involved in the alleged threat because I have never voted against a money Bill since I have been in the House. I have no intention of voting against a money Bill. It is for local government to make and defend its own case.
I believe that it is in the interests of Parliament that hon. Members should never be put in a position such as this by
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anybody. There was a precedent in 1981 when an employer attempted to put pressure on a Member of Parliament. I submit that no one is in a position to offer any Member of Parliament money to vote in favour of a Bill, which is bribery, or to threaten to take action against him if he fails to vote in a certain way, which is blackmail. It is wrong to put pressure on a Member of Parliament in that way.
The press reports seem to suggest that pressure was being exerted. If the Committee of Privileges could examine this case hon. Members could be safeguarded from such pressure.
After hon. Members have voted, they must stand their corner. If an hon. Member has voted for or against a particular issue, he is subjected to all the criticisms and all the pressures from outside that anybody wishes to place on him. I accept, underline and approve of that behaviour, but the situation is different before the hon. Member votes.
The letter from Mr. Livingstone to you, Mr. Speaker, does have certain features about it and it goes some way towards clarification because it quotes from the agenda item, which was never quoted before. It says:
"It would also be made clear that decisions on which projects would proceed would not be based on how MPs voted but on the needs of London."
That was never quoted.
Another quotation which you, Mr. Speaker, also read out, purports to start with the word "support". However, the press report of what was said begins:
"We will be saying you either support us".
Those words are left our of the quotation given to you, Mr. Speaker, by Mr. Livingstone. The words put a different connotation on the point. The suggestion is that we either support the Bill or certain projects will not go ahead and that does not conform with the previous item on the agenda. The two items are incompatible.
Mr. Livingstone could have clarified another quotation which reads:
"We will write to every MP in London. We will put forward a positive victimisation policy. We will tell them what will happen if they do not support us."
I do not want to discuss the merits of the case. Your ruling yesterday, Mr. Speaker, leads me to believe that there is a prima facie case for giving precedence to the motion. I believe that it is right for the episode to be examined by the Committee of Privileges. When the Committee has reported to the House we shall be in a position to discuss the matter.
4.2 pm
Mr. John Silkin: Yesterday you, Mr. Speaker, explained to us that on the facts as given to you there was a prima facie case that could go to the Committee of Privileges. You did not say that the matter had to go to the Committee because the House would decide. That was yesterday. On the facts as we now know them a different situation has arisen. For that reason I would find it impossible to vote for the motion. I shall vote against it.
The motion is totally incorrect since it calls attention to words allegedly spoken by Mr. Livingstone, which he did not say, and which the hon. Member for Hackney, South and Shoreditch (Mr. Brown) admits he did not say. It refers to Mr. McDonnell, a councillor representing Hayes and Harlington. The Member who represents that area is the hon. Member for Hayes and Harlington (Mr. Sandelson), a distinguished member of the Social

341
Democratic Party. If he voted against the Bill, Mr. McDonnell would have to penalise himself and his constituents. That would be nonsense, but he would have to do that if this matter were taken seriously. The House has a great deal more important work to do than to bother with this matter.
4.4 pm
Mr. Harry Greenway: As a London Member I wish to explain how the issue has affected me in a direct and personal way, which does not involve hearsay. Last Thursday I was invited to take part in a debate with Mr. Boateng of the GLC on a breakfast television trial run. Mr. Boateng put to me, in front of the cameras, what Mr. McDonnell had said. He said that in practical terms Mr. McDonnell had said that if I did not support the GLC money Bill, it was possible zebra crossings, among other things in my constituency for which the GLC has responsibility for erecting—slow though it is in doing so—would be at risk and would not be proceeded with.
I told Mr. Boateng that that was political blackmail against a Conservative Member of Parliament by the Labour GLC and unacceptable. He persisted in saying that that was what the GLC was saying to London Members such as me. A transcript will show that. I reminded Mr. Boateng that kings had fallen before the House of Commons on the question of Supply and that they should be careful. I repeat that warning to the GLC, Mr. McDonnell and anyone else involved.
4.6 pm
Mr. Joseph Ashton: The remarks by the hon. Member for Hackney, South and Shoreditch (Mr. Brown) show what a charade and farce this whole business is. I speak as a Member who has been before the Committee of Privileges, so I know what I am talking about.
When an hon. Member is called before the Committee word goes round that if he grovels and apologises and says that it will not happen again he is bound over to be of good behaviour and nothing more is heard. Alternatively, the defendant can decide not to grovel but to go for the publicity and television cameras and take part in the charade.
The Committee of Privileges is the most unfair committee of inquiry in the British Isles today. The onus is put on the defendant to decide whether to make a personal appearance before the Committee. If he decides not to appear he submits his evidence in writing, a long and tedious business. If he decides to go before the Committee he faces top QCs and receives no legal aid or help with the cross-examination. There is no transcript or Hansard report at the end of the trial. The press and public are not admitted. The jury meets every Wednesday afternoon and can come and go as it pleases. It is not necessary for the same jury to be present at the same trial every week. The verdict is announced without the defendant being told.
I was severely censured by a Committee of Privileges when I alleged that MPs were making their services available for hire. Two years later three Members, Mr. Cordle, Reggie Maudling and the hon. Member for Normanton (Mr. Roberts) were found guilty. I was never pardoned. I did not receive an apology in any shape or form. There was no question of an apology.
342
In Britain we have freedom of speech. Mr. Livingstone was exercising his right to free speech. We have a free press. [Interruption.] Government Members who are shouting should look at the front page of today's Guardian which describes how the Soviet Union is putting Mr. Roy Medvedev on trial for criticising and slandering Soviet politicians. He could face seven years in prison. Will we get to that position here? The nonsense of referring matters to the Committee of Privileges just because someone feels aggrieved and wants to make a political point has gone on for too long.
The Diplock decision on political slander made in the House of Lords on 30 January 1974 states that if statements are made outside in the public interest by people who believe them to be true and believe that they have a duty to the public to say so, the privilege of free speech is not lost.
The GLC has the right to criticise the House of Commons and the right to free speech. It has the right to say what it likes about us. What the GLC advocates is no different from what the Government do when they give big grants to Tory constituencies for farming or defence while penalising steel towns by refusing to help them. The House should reject the charges which are made for political purposes by the hon. Member for Hackney, South and Shoreditch.
4.8 pm
Mr. John Wheeler: When bringing the matter to your notice, Mr. Speaker, I was concerned solely with the issue of principle and not of personality. The question for the House is—were threats made against hon. Members to do other than what their conscience or judgment dictates? The House must decide whether the threats were made publicly.
I sent you, Mr. Speaker, copies of the popular press which contained statements showing exactly what occurred. It is a matter of great concern to the House.
In Britain we win political arguments by debate, not by threats. I do not believe that it is right that London Members should be told that if they do not vote in a certain way their constituents will suffer accordingly. That is the issue upon which the House must vote.
4.9 pm
Mr. Peter Bottomley: The hon. Member for Bassetlaw (Mr. Ashton) was defending a breach of privilege that has not been determined. The matter should go to the Committee of Privileges, if only to clear up what appears to have been an ambiguity as to whether GLC members were saying, as they apparently now say, that if the House did not supply money that money would not be available for London, or whether, as the reports at the time said and which were apparently not cleared up until the press conference yesterday, there was a suggestion or threat that individual constituencies would be treated differently, and that that would be determined by how the Member of Parliament voted.
I do not believe that we should follow the line of the hon. Member for Bassetlaw and say that this is a breach of privilege that the House should pass over. We should refer the matter to the Committee of Privileges to decide.
4.10 pm
Mr. Arthur Lewis: I do not want to discuss the merits or demerits of the issue. Will you, Mr. Speaker, consider the points that arose towards

343
the end of the statement that you read? I do not have a copy, but no doubt you and the House will recall that you used words to the effect that Mr. Livingstone had said that you would not take it amiss if he informed the media.
Mr. Livingstone ought to know that he should not presume to inform the media of a matter that he knew was in the possession of the House. I am not worried about Mr. Livingstone. I am worried about the principle. This is not the first breach of privilege case. It has happened many times before, but I have never known of any person or organisation against whom complaint has been made writing to Mr. Speaker and, before Mr. Speaker receives the letter, going on the radio and television and telling Mr. Speaker that he was sure that Mr. Speaker would not take it amiss if the media were told.
We should tell everyone—whether the National Front, Mr. Livingstone, the Labour party, the Tory party or anyone else—that, if the matter is in the hands of Mr. Speaker, courtesy, custom and practice are that the will of the House should not be interfered with. Mr. Speaker is the custodian of the will of the House. Mr. Livingstone knew that the letter had been sent, and the matter should have been left there. We should have it made absolutely clear to everyone that when Mr. Speaker has been written to no one——
Mr. Dennis Skinner: Stop grovelling.
Mr. Lewis: Who is grovelling? If the hon. Gentleman had done only half as much for the working class movement as I have, and if he knew my record, he would know that I never grovel to anyone, be it Right, Left or Centre, Chief Whip or no Chief Whip—[Interruption.] I am not grovelling to anyone. Why should I grovel to Mr. Speaker? He is not a man who would accept grovelling. Mr. Speaker has the right to protect the House. The House has the right to decide the issue.
Will you look at this matter, Mr. Speaker, so that all people—whoever they may be—can be advised that, when Mr. Speaker is writtten to, courtesy, custom and practice require that the matter be left until after the House has decided. After the matter has gone to the Committee of Privileges they can say and do as they like. It is a matter of precedence because otherwise there might be prejudice.
4.14 pm
Mr. Alexander W. Lyon: In a succession of reports the Committee of Privileges has pointed out that the House should not take itself too seriously. When there appears prima facie to be a breach of privilege it ought not to be taken seriously by the House so that the members of the Committee of Privileges, having had to decide that a breach of privilege took place, should then have to recommend that the House should take no action.
This is a classic such case. No one has been seriously impugned. The freedom of individual Members to vote as they wish has no more been threatened than in any other kind of polemical interchange that takes place between parties throughout the country. On that basis at least, we should not refer this matter to the Committee of Privileges.
4.15 pm
The Lord President of the Council and Leader of the House of Commons (Mr. John Biffen): The motion in the name of the hon. Member for Hackney, South and Shoreditch (Mr. Brown) is of course debatable. This
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afternoon the House has taken advantage of that to express a number of views. The debate has been enriched by being wide-ranging. It is my job to recall the House to the narrower consideration of whether this matter should be referred to the Committee of Privileges.
As my hon. Friend the Member for Ealing, North (Mr. Greenway) has reminded us, the matter of privilege has been treated traditionally as one of the utmost gravity. The House will also be anxious to place in the balance a sense of realism and proportion in all these affairs. The choice of where that balance lies is one that requires the collective wisdom of the House. It is my task to say that I believe sufficient opinions have already been expressed to enable the House to proceed to that function.
Question put:—
The House divided:— Ayes 203, Noes 162.

Division No. 45]

[4.15 pm

AYES

Adley, Robert

Gorst, John

Alexander, Richard

Gow, Ian

Alison, Rt Hon Michael

Gower, Sir Raymond

Alton, David

Grant, John (Islington C)

Atkins, Robert(Preston N)

Greenway, Harry

Banks, Robert

Grieve, Percy

Bennett, Sir Frederic (T'bay)

Grimond, Rt Hon J.

Benyon, W. (Buckingham)

Grist, Ian

Berry, Hon Anthony

Hamilton, Hon A.

Best, Keith

Hamilton, Michael (Salisbury)

Bevan, David Gilroy

Hampson, Dr Keith

Biggs-Davison, Sir John

Hannam, John

Blackburn, John

Haselhurst, Alan

Boscawen, Hon Robert

Hawkins, Sir Paul

Bottomley, Peter (W'wich W)

Hayhoe, Barney

Bowden, Andrew

Heath, Rt Hon Edward

Braine, Sir Bernard

Heddle, John

Bright, Graham

Henderson, Barry

Brinton, Tim

Higgins, Rt Hon Terence L.

Brittan, Rt. Hon. Leon

Hill, James

Brooke, Hon Peter

Hogg, Hon Douglas (Gr'th'm)

Brotherton, Michael

Holland, Philip (Carlton)

Brown, Michael(Brigg & Sc'n)

Hordern, Peter

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

Howe, Rt Hon Sir Geoffrey

Buchanan-Smith, Rt. Hon. A.

Howells, Geraint

Budgen, Nick

Hunt, David (Wirral)

Cartwright, John

Hunt, John (Ravensbourne)

Channon, Rt. Hon. Paul

Irvine, RtHon Bryant Godman

Chapman, Sydney

Jenkins, Rt Hon Roy (Hillh'd)

Churchill, W. S.

Jessel, Toby

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

Johnson Smith, Sir Geoffrey

Clark, Sir W. (Croydon S)

Johnston, Russell (Inverness)

Cockeram, Eric

Jopling, Rt Hon Michael

Cope, John

Kaberry, Sir Donald

Corrie, John

Kellett-Bowman, Mrs Elaine

Costain, Sir Albert

Kershaw, Sir Anthony

Crawshaw, Richard

Kimball, Sir Marcus

Crouch, David

King, Rt Hon Tom

Dickens, Geoffrey

Knight, Mrs Jill

Dorrell, Stephen

Knox, David

du Cann, Rt Hon Edward

Lang, Ian

Dunlop, John

Lawrence, Ivan

Dunn, Robert (Dartford)

Lee, John

Eggar, Tim

Le Marchant, Spencer

Elliott, Sir William

Lennox-Boyd, Hon Mark

Ellis, Tom (Wrexham)

Lewis, Sir Kenneth (Rutland)

Eyre, Reginald

Lloyd, Ian (Havant & W'loo)

Fairgrieve, Sir Russell

Loveridge, John

Faith, Mrs Sheila

Luce, Richard

Farr, John

Lyell, Nicholas

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

Lyons, Edward (Bradf'd W)

Fox, Marcus

Mabon, Rt Hon Dr J. Dickson

Fraser, Rt Hon Sir Hugh

McCrindle, Robert

Gardiner, George (Reigate)

MacKay, John (Argyll)

Garel-Jones, Tristan

Maclennan, Robert

Gilmour, Rt Hon Sir Ian

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

Glyn, Dr Alan

McNally, Thomas

Goodlad, Alastair

McQuarrie, Albert

345

Magee, Bryan

Rost, Peter

Marten, Rt Hon Neil

Rumbold, Mrs A. C. R.

Mather, Carol

Sainsbury, Hon Timothy

Maude, Rt Hon Sir Angus

Shaw, Sir Michael (Scarb')

Mawby, Ray

Shepherd, Richard

Mawhinney, Dr Brian

Silvester, Fred

Maxwell-Hyslop, Robin

Sims, Roger

Meyer, Sir Anthony

Skeet, T. H. H.

Miller, Hal (B'grove)

Speed, Keith

Mills, Iain (Meriden)

Speller, Tony

Mills, Sir Peter (West Devon)

Spence, John

Mitchell, R. C. (Soton Itchen)

Squire, Robin

Moate, Roger

Stanbrook, Ivor

Molyneaux, James

Steel, Rt Hon David

Monro, Sir Hector

Steen, Anthony

Montgomery, Fergus

Stewart, A.(E Renfrewshire)

Morgan, Geraint

Stokes, John

Murphy, Christopher

Taylor, Teddy (S'end E)

Myles, David

Thompson, Donald

Neale, Gerrard

Thorne, Neil (Ilford South)

Nelson, Anthony

Townend, John (Bridlington)

Neubert, Michael

Townsend, Cyril D, (B'heath)

Newton, Tony

Trippier, David

Owen, Rt Hon Dr David

Viggers, Peter

Page, John (Harrow, West)

Wainwright, R.(Colne V)

Page, Richard (SW Herts)

Wakeham, John

Parris, Matthew

Waller, Gary

Pawsey, James

Watson, John

Pitt, William Henry

Wellbeloved, James

Pollock, Alexander

Wells, Bowen

Porter, Barry

Wells, John (Maidstone)

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

Wheeler, John

Prentice, Rt Hon Reg

Whitney, Raymond

Price, Sir David (Eastleigh)

Wilkinson, John

Prior, Rt Hon James

Williams, D.(Montgomery)

Proctor, K. Harvey

Williams, Rt Hon Mrs(Crosby)

Rees-Davies, W. R.

Winterton, Nicholas

Renton, Tim

Younger, Rt Hon George

Rhodes James, Robert

Rhys Williams, Sir Brandon

Tellers for the Ayes:

Ridley, Hon Nicholas

Mr. John Roper and

Rippon, Rt Hon Geoffrey

Mr. A. J. Beith.

Ross, Stephen (Isle of Wight)

NOES

Allaun, Frank

Douglas, Dick

Archer, Rt Hon Peter

Dubs, Alfred

Ashton, Joe

Dunwoody, Hon Mrs G.

Atkinson, N.(H'gey,)

Eastham, Ken

Barnett, Guy (Greenwich)

Edwards, R. (Whampt'n S E)

Beaumont-Dark, Anthony

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

Benn, Rt Hon Tony

Ennals, Rt Hon David

Bennett, Andrew(St'kp't N)

Evans, loan (Aberdare)

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

Evans, John (Newton)

Bray, Dr Jeremy

Flannery, Martin

Brown, Hugh D. (Provan)

Foot, Rt Hon Michael

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

Foster, Derek

Buchan, Norman

Foulkes, George

Campbell-Savours, Dale

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

Canavan, Dennis

Freeson, Rt Hon Reginald

Cant, R. B.

Garrett, John (Norwich S)

Clark, Dr David (S Shields)

Golding, John

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

Graham, Ted

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

Hamilton, James (Bothwell)

Cohan, Stanley

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

Concannon, Rt Hon J. D.

Hardy, Peter

Cowans, Harry

Harrison, Rt Hon Walter

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

Hattersley, Rt Hon Roy

Crowther, Stan

Haynes, Frank

Cryer, Bob

Healey, Rt Hon Denis

Cunliffe, Lawrence

Heffer, Eric S.

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

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

Dalyell, Tam

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

Davis, Clinton (Hackney C)

Home Robertson, John

Deakins, Eric

Homewood, William

Dean, Joseph (Leeds West)

Hooley, Frank

Dewar, Donald

Hoyle, Douglas

Dixon, Donald

Hughes, Mark (Durham)

Dobson, Frank

Hughes, Robert (Aberdeen N)

Dormand, Jack

Hughes, Roy (Newport)

346

Jay, Rt Hon Douglas

Richardson, Jo

John, Brynmor

Roberts, Albert (Normanton)

Johnson, James (Hull West)

Roberts, Allan (Bootle)

Jones, Rt Hon Alec (Rh'dda)

Roberts, Gwilym (Cannock)

Kaufman, Rt Hon Gerald

Robertson, George

Kerr, Russell

Robinson, G. (Coventry NW)

Kinnock, Neil

Ross, Ernest (Dundee West)

Lambie, David

Sheerman, Barry

Leighton, Ronald

Sheldon, Rt Hon R.

Lestor, Miss Joan

Shore, Rt Hon Peter

Litherland, Robert

Silkin, Rt Hon J. (Deptford)

Lofthouse, Geoffrey

Silverman, Julius

Lyon, Alexander (York)

Skinner, Dennis

McCartney, Hugh

Smith, Rt Hon J. (N Lanark)

McDonald, Dr Oonagh

Snape, Peter

McElhone, Mrs Helen

Soley, Clive

McGuire, Michael (Ince)

Spellar, John Francis (B'ham)

McKay, Allen (Penistone)

Spriggs, Leslie

McKelvey, William

Stallard, A. W.

MacKenzie, Rt Hon Gregor

Stoddart, David

McNamara, Kevin

Stott, Roger

Marshall, D(G'gow S'ton)

Strang, Gavin

Marshall, Dr Edmund (Goole)

Straw, Jack

Marshall, Jim (Leicester S)

Summerskill, Hon Dr Shirley

Martin, M(G'gow S'burn)

Taylor, Mrs Ann (Bolton W)

Mason, Rt Hon Roy

Thorne, Stan (Preston South)

Maxton, John

Torney, Tom

Maynard, Miss Joan

Varley, Rt Hon Eric G.

Meacher, Michael

Wainwright, E.(Dearne V)

Mikardo, Ian

Walker, Rt Hon H.(D'caster)

Millan, Rt Hon Bruce

Wardell, Gareth

Miller, Dr M. S. (E Kilbride)

Watkins, David

Mitchell, Austin (Grimsby)

Weetch, Ken

Morton, George

Welsh, Michael

Moyle, Rt Hon Roland

White, Frank R.

Newens, Stanley

Whitehead, Phillip

O'Neill, Martin

Whitlock, William

Orme, Rt Hon Stanley

Wigley, Dafydd

Palmer, Arthur

Willey, Rt Hon Frederick

Park, George

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

Parker, John

Wilson, William (C'try SE)

Parry, Robert

Winnick, David

Pavitt, Laurie

Woodall, Alec

Pendry, Tom

Woolmer, Kenneth

Powell, Raymond (Ogmore)

Prescott, John

Tellers for the Noes:

Race, Reg

Mr. John Tilley and

Rees, Rt Hon M (Leeds S)

Mr. Nigel Spearing

Question accordingly agreed to.
Resolved,
That the matter of the complaint be referred to the Committee of Privileges.
Mr. Arthur Lewis: On a point of order, Mr. Speaker. You will recollect that when I made my remarks a few moments ago on a matter that has now been disposed of I raised a point that I think has substance. I regret and apologise for the fact that I have not given you notice, but I had no intention of raising the matter at that moment. Therefore, Mr. Speaker, I know that you will not have had time to consider it. However, several hon. Members have come to me since to say that they think that we should ask Mr. Speaker whether at his leisure, when he has had an opportunity to look at what I said in Hansard, he will go into the matter to see whether my point was valid and what action should be taken on the general principle for the future. May I ask you to deal with this matter in whatever way you think best, either as a reply to a point of order or perhaps in a statement if you think that the matter is worthy of that at some future date?
Mr. John Grant: Further to that point of order, Mr. Speaker. When you consider the matter, will you take account of the fact that there are hon.

347
Members who have quite a different view and who believe that in that respect certainly the House would be taking itself much too seriously if it went up that path?
Mr. Speaker: I am much obliged to the hon. Member for Newham, North-West (Mr. Lewis), who raised the point of order. Not for the first time he has shown a concern about the rights and dignities of the House. I will of course look into the matters that he has raised and will write to him or make a statement in the House.

Opposition Day
[4th Allotted Day]
Opposition Day

  The Economy
  4.28 pm
  Mr. Peter Shore: I beg to move,
  That this House, recognising that a competitive exchange rate is essential for Britain's recovery, condemns the gross mismanagement by the Government of its economic policies, particularly its exchange rate and interest rate policies; believes that these have greatly contributed to the collapse of Britain's industry and to the massive increase in unemployment; and calls upon the Government, as part of a new strategy to get the country back to work, to reverse the recent increase in interest rates and to reduce Britain's vulnerability to speculation by the immediate reimposition of exchange controls.
  Mr. Speaker: I have selected the amendment in the name of the Prime Minister.
  Mr. Shore: After last week's events it is only natural that in addressing the House I should point my remarks more to the Prime Minister than to her Chancellor. Like all her predecessors, the right hon. Lady is First Lord of the Treasury, but few Prime Ministers have intervened more extensively or taken more direct responsibility, at least until things go wrong, than the present Prime Minister, and few Chancellors have played so subordinate a role as the present incumbent.
  While fever raged in the money markets last week, the Chancellor was so invisible and so inert that many of us thought he was spending the Christmas recess in a trappist retreat. Not a word or, in the presence of my right hon. Friend the Member for Leeds, East (Mr. Healey), not a bleat, not a sign of life came from Great George Street, except a daily drip of unattributable briefing for the media. The line was, "Do not blame us, we are only the Government; blame the Opposition instead."
  It was left not to the Chancellor of the Exchequer, but to the Paymaster General, who by some happy coincidence is also the chairman of the Conservative party central office—the Prime Minister's chosen man—to break the eerie ministerial silence and to put in public what he believed, had he been able to telephone the Prime Minister in the Falklands or to communicate with the trappist Chancellor of the Exchequer in London, was the Government's general line.
  Then on Thursday the Prime Minister returned, and within hours the Chancellor of the Exchequer was dispatched to the microphone and he found his tongue. But it was the Prime Minister, again on Saturday and then in a long interview on "Weekend World" on Sunday morning, who shouldered the task of stating the Government's position and intent. It is on what she had to say that I wish first to focus.
  Those who saw it will, I am sure, agree that it was an astonishing and revealing performance and wholly relevant to the debate. In the course of her prolonged exchanges-40 minutes of which were devoted to the economy, covering the exchange rate, interest rates, short-term and long-term economic policies and goals—the word "unemployment" left her lips just once. What did she say about it? She said:
  "as far as the costs of reducing inflation further are concerned, I think provided wage increases are below the current level of inflation, you need not have more unemployment".

  349
  There we have it. In short, if living standards are not held but actually cut, unemployment need not increase. All over Britain the scourge of unemployment has returned.
  Three and a half years ago we were told that Labour was not working. Today, having helped to destroy 2¾ million jobs, having reduced the work force to the levels of 1950, having one in seven of our working people on the dole, having turned much of Britain into an industrial wasteland, having blighted the hopes of the young and having brought despair to the over-fifties, the Prime Minister cannot muster one word of concern or compassion. She gives no hint of recognition of the moral and social outrage that is involved. She accepts without question that her goal is not to reduce the 3½ million unemployed now or in the years ahead. In all this the Prime Minister has revealed her own values and her basic philosophy.
  Two years ago I drew attention to another equally revealing speech that she delivered in St. Lawrence Jewry in the City when she described inflation as an evil and unemployment as a problem. It is this, of course, that leads her to over-value property and under-value people.
  When taxed by Mr. Walden on the issue of maintaining the jobless and providing services for them and their families, the Prime Minister gave it as her view that it was the duty of the state to provide no more than a safety net—an assertion followed by a laudatory outburst on the virtues of private charity, of the Victorian pre-welfare state, of the "benefaction feeling" of the rich, who provided voluntary schools, voluntary hospitals, town halls and, yes, even prisons.
  Mr. Dennis Skinner: And soup kitchens.
  Mr. Shore: Yes, and soup kitchens.
  What a view of the past. What a view for the future and what a threat. This is the moral and intellectual soil in which the notorious Cabinet Think Tank report last September was sown, with all its proposals for reducing pensions, dismantling the National Health Service, introducing school fees and imposing the obligation to repay loans upon recipients of university and higher education.
  At the heart of this debate is the economic decline of Britain over which the Government have not merely presided but have so perversely engineered. Among the instruments of deflation that the Government have employed to flatten our economy—increased taxation and cuts in public expenditure—none has had a more malign effect than the Government's interest and exchange rate policies.
  I do not think that there can be much argument or dispute that, throughout the period of this Government, we have had a serious over-valuation of the pound. Between May 1979 and January-February 1981 the pound was encouraged to rise to what at the time and in retrospect can be seen as a truly astonishing level. At the peak, in early 1981, the pound had appreciated by no less than 19·3 per cent. against the basket of other currencies and by no less than 16·5 per cent. against the dollar. Did this appreciation affect the increased strength or competitiveness of the British economy? Not at all. It rose because, in the fanatical pursuit of his money supply targets, the Chancellor shoved up the interest rate to 15 to 17 per cent. for a whole year. Capital then flowed into Britain.
  Was there competitiveness? The very opposite. Our competitiveness, measured by the International Monetary
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  Fund's index of relative normalised labour costs, fell by no less than 50 per cent.—a change in magnitude and over a timescale quite without precedent in this century. We all know what happened to industry in the following year. There was a collapse, with unemployment jumping by over 1 million in 12 months.
  It was these events that provoked Dr. Otto Emminger, in his evidence to the Select Committee on the Treasury and Civil Service as recently as 25 October 1982, to say:
  "the pound sterling rose against a group of important currencies on a trade-weighted basis between 1978 and the first quarter of 1981 by 25 per cent. in nominal and by 37 per cent. in real terms."
  He went on to remark:
  "This is by far the most excessive over-valuation which any major currency has experienced in recent monetary history."
  Between the peak in early 1981 and the beginning of November 1982 sterling depreciated by 10·4 per cent. against the basket of currencies and by over 30 per cent. against the dollar. Over the same period our relative normalised labour cost dipped from 56 per cent. above its earlier level to 41 per cent. It was this latter figure, this slight improvement, that the Chief Secretary and others triumphantly acclaimed as evidence of greater productiv-ity, greater efficiency and success for the Government's incentive and supply side policies.
  As recently as 9 December the Chief Secretary boasted in the House of an increase in competitiveness of some 20 per cent. When I said that it was due surely to the 10 per cent. depreciation of the pound, he claimed that the vast majority of the improvement had nothing to do with the exchange rate. Since then he has written to me to correct himself. In answer to a question put by my hon. Friend the Member for Blackburn (Mr. Straw), he has been forced to concede that 75 per cent. of that modest improvement was due to currency depreciation.
  That brings me to the third and most recent phase of the sterling story—the phase that began in early November following the publication of the Chancellor's economic forecast. That showed not only that the long heralded upturn was likely to be at best fragile, if not derisory, but, far more important, that the great benefit of North Sea oil that had provided us with such substantial trade surpluses in 1981 and again, although to a markedly reduced extent, in 1982 was due to vanish in the course of this year. Thus, the Government, in the middle of a most serious slump, when imports are inevitably low and in spite of the £40 billion contribution that North Sea oil has made to the British economy in the past three years, were operating the economy with such crass incompetence that we are heading for a deficit by the end of this year. On top of that, there were much publicised fears, which continue, that oil prices could well fall and are certainly unlikely to rise.
  What happened then will be within the recollection of the House. The exchange rate fell. The Chancellor rushed to the House on 18 November to reassure the money markets of the world that all was well and that the Government would maintain, as he put it, firm monetary conditions, and that his policy of allowing the exchange rate to reflect market forces was unchanged. Asked by myself and by my right hon. Friend the Member for Heywood and Royton (Mr. Barnett) for an assurance that this really was his policy and that he would not seek to reverse the market trend by raising interest rates or by seeking to prop up the rate through other means, he replied categorically:

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  "I shall not depart from my policy on the exchange rate … I shall allow it to be regulated by market forces."—[Official Report, 18 Novembr 1982; Vol. 32, c. 418.]
  Of course, he did not so allow it. He did just the opposite. Ten days later, the commercial banks were permitted to raise their interest rates by a full 1 per cent. Then, throughout December, as we learnt when the gold and dollar reserves were published on 5 January, no less than £500 million was drawn from the reserves by the Bank of England to prop up the rate. It was then, of course, that the markets began to panic. The Chancellor was nowhere to be seen. On 10 January the second folly was committed when the Bank of England failed to prevent the commercial banks putting up their interest rates yet again by a full 1 per cent.
  In eight weeks, there has been a two per cent. increase in bank rates, a depreciation of sterling by 12 per cent. and a loss to the reserves, taking November and December together, of $1 billion. Of course, the Chancellor would like to find some excuse. After all, that has been the Government's style since they came to office. In 1979ߝ80, the shooting up of inflation to 22 per cent. at an annual rate was due not to his doubling of VAT or to his other price increase measures, but to inherited pay settlements. The collapse of competitiveness was due not to his interest rate and money supply policies—17 per cent. at the peak—but to irresponsible pay claims. The appalling rise in unemployment was due not to the lethal combination of his massive increase in the tax burden, his cuts in public expenditure and his high exchange rate, but to the international recession.
  So it goes on. The Chancellor has refused to acknowledge, let alone face, the disasters that his policies have inflicted on the British economy and people. He has been stripped by events of all credibility on the crucial matter of the much vaunted and long heralded upturn in the British economy. Only last May, the Chief Secretary to the Treasury was seeing signs of recovery all around him. Driven to accept that the one tiny "success"—I use inverted commas—that he might still be able to claim is a reduction in the rate of inflation, the Chancellor and the Prime Minister have doggedly resisted any change in the exchange rate, however necessary they have known it to be.
  If change has come, it is in the judgment of domestic and international opinion and markets. If the judgment is that the Chancellor has failed and the absurdities of his monetarism have been rumbled, it must be the Opposition, with all their vast command over events, who are to blame. It is pathetic. I do not usually quote journals. I should like, however, to invite the Chancellor to read the current issue of The Economist with its direct and truthful statement that
  "the principal reason for sterling's fall this week was simply that it was over-valued."
  If the Chancellor wishes to know the view abroad, he should read the January bulletin of the Morgan Guarantee Trust Company of New York which states that
  "over the first three quarters of 1982, there was no further recovery in competitiveness"—
  referring to the United Kingdom—
  "thus the real exchange rate remained crippling for many British firms."
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  Even the Chancellor must surely have read the successive pleas of the CBI in pre-Budget submissions. In February 1981 the CBI stated—its words were prophetic—that
  "unless the exchange rate comes down there is a danger that companies will be forced to withdraw from markets on a large scale and to dispose of plant and equipment, management, skilled labour and sales organisations. Equally important, they will not be able to invest in the up-to-date capacity, research and development needed to meet intensified competition a few years hence. The CBI therefore calls for a declaration that the Government understands the need for a lower exchange rate and will seek to achieve it"
  A year later, in February 1982, the CBI was saying that
  "with present exchange rates, even with no rise in United Kingdom unit labour costs, it would take five years to bring labour cost competitiveness back to the 1975 level. To improve competitiveness, the success of businesses in controlling their labour costs ought to be backed up by further falls in sterling, particularly against European currencies."
  As recently as 16 December the CBI published its preliminary survey of the industrial opinion of its members under the heading:
  "Fall in pound will benefit output and profits."
  The survey stated:
  "Industry's output is likely to benefit significantly from the depreciation of sterling through higher exports and some improvement in domestic sales as firms are able to compete more successfully against imports."
  I do not apologise for concentrating on the exchange rate. A realistic exchange rate is not a sovereign cure for all our ills, but it is a pre-condition for recovery. Everyone knows why. An over-valued exchange rate is simply a tax on Britain's exports and, at the same time, a subsidy to foreign importers. It is a self-inflicted wound—one that we are no longer strong enough to bear. There has been only one other period this century when we have punished ourselves with a similar folly. That was in 1925 when we fixed sterling against gold at its 1914 parity. A year later, we had a general strike and a major recession.
  Mr. Geoffrey Rippon: What does the right hon. Gentleman think would be an appropriate exchange rate today for the pound against the dollar? Is he still asking for a 30 per cent. devaluation, or is it only 15 per cent. now?
  Mr. Shore: I shall come precisely to these exchange rate questions including the detailed ones. I shall put them and make my point within the framework of asking questions myself, because both the Chancellor and I, in a sense, have to deal with them. These will include some of the questions I mentioned in a speech at the weekend intended for the Prime Minister, together with some additional ones. I hope that the Chancellor will answer them during his speech. Is he aware that the pound, after he had pushed it up by 19 per cent. in his first period of office, has depreciated, in the two years since January 1981, by just on 22 per cent.? Has the right hon. and learned Gentleman, in the Prime Minister's words last Sunday, been totally irresponsible—or simply income-petent? Has he noticed that the rate of inflation has not increased but has fallen during this period? Does he believe that the most recent fall in the exchange rate—the 12 to 13 per cent. that has occurred in the past two months—is beneficial or harmful to Britain?
  Before he answers that question, the Chancellor should remember what was said when Mr. Brian Walden asked

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  the Prime Minister whether she regarded the recent fall in the value of the pound as having been a bad thing. What did the Prime Minister say? She said:
  "you cannot hold what is a fundamentally wrong value of your currency in relation to someone else's performance … so I am not surprised at that change because it goes to the fundamental thing, the underlying industrial performance."
  Did the Chancellor note the reply that was given during Question Time on Monday by his hon. Friend the Minister for Industry and Information Technology:
  "The recent sharp drop in the value of sterling—it has dropped against the deutschmark and the French franc by about 12 per cent. in 10 weeks and by about 19 per cent. against the yen—will improve the competitive position of many British manufacturing firms that export."—[Official Report, 17 January 1983; Vol. 35, c. 10.]
  If the Chancellor still thinks that a 12 to 13 per cent. depreciation is harmful, is it his purpose to regain the 13 per cent.? If so, how does he intend to do it?
  If the Chancellor believes that the exchange rate movement is beneficial, does he consider that the attacks that the Prime Minister, his colleagues and he have launched on the City and on the Labour party recently are just so much electoral humbug? Does he intend to maintain his publicly stated stance of leaving the exchange rate to be determined by the market, or does he intend to respond to the next flurry by pushing up interest rates yet again?
  As there is no reason to believe that Britain's productivity is rising or will rise faster than that of its competitors, what is the right hon. and learned Gentleman's policy for restoring the still substantial loss in our international competitiveness? Is not that policy the barren, cruel and strife-ridden course of attempting to enforce not pay moderation but continuing real cuts in the wages, salaries and standards of living of our fellow countrymen?
  Mr. J. Enoch Powell: Will the right hon. Gentleman clear up one point? He referred to the disastrous decision in 1925. It is certainly seen in retrospect to have been disastrous to fix the value of the pound sterling. Does he agree that those disasters would have been largely avoided if the pound sterling had fixed its value in the market instead of being permanently and deliberately kept rigid by Government?
  Mr. Shore: I am certain that Britain benefited enormously in 1931 when we severed the link with gold. I would not go as far as the right hon. Gentleman in arguing that in all circumstances it is better to have a completely floating exchange rate system rather than a sound one of international guidance and regulation. That is where the right hon. Gentleman and I differ.
  In the light of experience, does the Chancellor agree that it was a crass error to abolish all controls on the movement of capital and domestic savings out of Britain? Is he aware that the exodus of capital has been £10 billion a year since 1980? Is he not ashamed that the total capital investment in manufacturing industry in his own country is now far smaller than the flow of British money overseas? Does the Chancellor agree that, as we are now utterly defenceless against speculation, he has a bounden duty to restore the small but effective apparatus of control that was introduced by Neville Chamberlain in 1939 and was sustained by Sir Winston Churchill, Harold Macmillan, Sir Alec Douglas-Home and the right hon. Member for Sidcup (Mr. Heath)?
  Mr. Tim Eggar: Will the right hon. Gentleman explain how exchange controls assisted the Labour Government in 1976? What did they do that the IMF did not have to do for them?
  Mr. Shore: No one will claim that exchange controls are an iron-clad system. If the hon. Gentleman is serious about the matter, he should examine the net export of capital from Britain between 1974 and 1979 and during the period following the abolition of exchange controls. There is no comparison.
  What has the Chancellor to say about yesterday's publication, which appears in this morning's papers, of the index of industrial production? Those figures show that in November industrial production as a whole, and manufacturing output within it, fell to its lowest level yet—manufacturing output being no less than 3 per cent. down on the miserable level of 12 months ago.
  There should be no doubt where the Opposition stand. We believe that the central objective of national economic policy is to create wealth, to expand output and to reduce unemployment. We believe that those objectives can be achieved only by policies of expanding demand, achieving competitiveness and far-reaching measures at company and industry level to restore the shattered supply side of the British economy.
  We believe that not only was the exchange rate adjustment inevitable, but that, if the opportunity it offers is used, it will be of great benefit to Britain. It is perverse and wrong to attempt to prop up an uncompetitive rate by raising interest rates.
  We intend that interest and exchange rates should serve the interests of our industry and people and that they should not be determined by exploded theories about the paramount importance of the money supply. We shall reintroduce exchange control and see to it that the savings of the British people are used to strengthen the economy of the country to which we all belong and from the prosperity of which individual prosperity is, in the end, derived.
  4.57 pm
  The Chancellor of the Exchequer (Sir Geoffrey Howe): I beg to move, to leave out from "House" to the end of the Question and to add instead thereof:
  'notes that Government spending and borrowing are firmly under control and that inflation in the United Kingdom fell more in 1982 than in any other major country; rejects the reimposition of exchange controls and welcomes Her Majesty's Government's determination to maintain policies needed to combat inflation, and hence encourage growth and employment on a secure and sustainable basis.'
  The right hon. Member for Stepney and Poplar (Mr. Shore) was curiously coy about answering the question that my right hon. and learned Friend the Member for Hexham (Mr. Rippon) asked him. Throughout his speech, he showed how, ever since he published the programme for recovery of 23 November on behalf of his party, he has tried to dissociate himself from its natural implications.
  The press and everyone else who studied what the right hon. Gentleman said and wrote concluded that he was then prescribing a devaluation of the pound sterling by 30 per cent. So, at the time, did the right hon. Gentleman. In an interview on radio with Sir Robin Day the right hon. Gentleman reasserted what was plain from his document—that the only realistic way for Britain to recover was to bring about a realistic exchange rate. He

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  talked specifically about a 15 per cent. devaluation in the first year and another 15 per cent. devaluation in the following one.
  That is how the right hon. Gentleman's programme was interpreted. He notably failed, when presenting a rather guarded form of his prescription today, to answer the key question that he will face if he achieves that devaluation. He had nothing to say about the relationship that he would advocate between devaluation on that scale—supposing that he could achieve it—and the movement in pay and earnings that would accompany it. We would surely be entitled to conclude that his prescription for a devaluation of 30 per cent. was likely, on his analysis, to have a significant impact on inflation. We would be entitled to ask within the question—it is important that he answers it—what prescription he would then offer in relation to pay alongside such a devaluation if he could achieve it.
  Mr. Shore: Before the right hon. and learned Gentleman invites me to answer those questions, will he answer my question about what the implications would be for both prices and incomes policies of his depreciation of 12 per cent. during the past two months?
  Sir Geoffrey Howe: The right hon. Gentleman, having——
  Mr. Shore: Answer the question.
  Sir Geoffrey Howe: Perhaps the right hon. Member for Stepney and Poplar will allow me to get beyond the first four words of my reply before interrupting. The right hon. Gentleman delivered a positive fusillade of questions in his speech. I had hardly begun to address the House when he leapt to his feet to ask another question. I shall address myself to his questions in due course.
  If the right hon. Gentleman is serious in proposing a 30 per cent. devaluation of the pound sterling, that poses the most serious accompanying question. What does he wish to happen to wages alongside that change? His speech—[HON. MEMBERS: "Answer."] I shall make my speech in my own way and answer the questions when it is appropriate to do so. The curious thing about the presentation of the right hon. Gentleman's case—not only this afternoon but throughout recent months—is that he appears to be inviting the House to believe at least three contradictory propositions. He would have it believe that until November of last year the level and stability of sterling at that time was in itself bad, and that a major fall was therefore desirable. Yet he comes before the House today seeking to argue alongside that that the fall that has since taken place, although well short of his prescription, is nevertheless the signal for some economic crisis, which justifies his motion.
  The right hon. Gentleman argues that the Government should have prevented the market from raising interest rates in November and again this month. There is a particular effrontery about that charge because interest rates stand 5 per cent. lower than in the autumn of 1981. They stand undoubtedly lower than they would have had the Government not pursued a consistent policy of holding down their spending and borrowing programme. They stand massively lower than they would if the right hon. Gentleman ever had the opportunity to introduce his foolish policies.
  Mr. Denis Healey: Does the right hon. and learned Gentleman agree that real interest rates in relation to inflation are higher than they were in 1981?
  Sir Geoffrey Howe: The right hon. Gentleman knows well that during the conditions—[HON. MEMBERS: "Answer the question."] The right hon. Gentleman has returned to an economic debate following a long absence, and must contain his impatience and refrain from uttering "Answer the question" after the first four words of my reply.
  Real interest rates are high, and have been high in recent times around the world. That is because of the high uncertainty that still persists about the pace at which the world is making progress against inflation. I wish to take this opportunity to draw the attention of the House to those features that are of importance to our present economic position.
  The picture painted by the right hon. Member for Stepney and Poplar was, as usual, wildly distorted and selective. Government spending and borrowing are under control and on target, and will remain so. Public expenditure plans for 1983ߝ84, published in the autumn statement, show a reduction in public spending in cost terms and as a proportion of gross domestic product compared with the plans for 1982ߝ83. Spending in the current year is likely to be below the planned figure and so, too, is borrowing. In the autumn statement we indicated that the public sector borrowing requirement this year was likely to be £0·5 billion below the Red Book estimate of £9·5 billion. Present indications are that the reduction on the Red Book estimate may be rather greater than that. The Government deficit as a percentage of GDP is, and will continue to be, one of the lowest among industrialised countries.
  Monetary policy is also on course. Since February, the start of the current target period, all the main measures are within their target ranges of eight to 12 per cent. and fiscal and monetary discipline are demonstrably bringing results. During the past year inflation has been falling throughout the industrialised world but nowhere has it fallen faster than in the United Kingdom.
  At the time of my Budget statement I suggested that we might hope to see inflation down to nine per cent. by the end of 1982. In my autumn statement I spoke of 6½ per cent. It is now plain that both those forecasts erred on the side of caution. I suspect that the December figure will prove to have been below six per cent., compared to 10 per cent. at the end of 1981. The November figure was already lower than for a decade, and only a quarter of the level that inflation reached when the Labour party was last in office.
  Of course, sterling's recent fall will have some effect on future inflation levels, but, as I shall explain in a moment, not nearly as much as some appear to think, and much less than the Leader of the Opposition appears to hope. The Government's determination to bring down the rate of inflation is undiminished. Progress in recent months has been faster than was forecast, and may in consequence be rather slower in the months ahead, but we shall continue to experience the benefits of sound financial policies.
  With falling inflation we have also seen improving efficiency and more common sense on wages and

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  productivity. Productivity in the United Kingdom is up by 13 or 14 per cent. since the end of 1980, and is rising faster than among our partners in continental Europe.
  Unit labour costs are now rising by only about 5½ per cent. a year—below the rate in most of our major competitor countries. They need to come down further, but the House should welcome the solid progrees that has been made.
  Exports have held up better than many expected, and we continue to run a substantial current account surplus. That is another area where the autumn forecast is proving over-cautious. While the nation maintains a responsible approach to pay bargaining—and settlements need to come down still further—we can hope to maintain our share of a world market that should expand again in 1983, after falling in 1982.
  Of course, it takes time for all the results of sound policies to come through. If there were a short-cut route, identifiable in any country, consistent with sound policies, to reduce the current tragically high unemployment figures, the Government would be the first to take it. But experience demonstrates that there is not, and it is only by pursuing sound policies that we can hope to reverse the upward trend in unemployment that has lasted for so long in this country, and which is manifest—and the House cannot escape this disagreeable fact—throughout the industrialised world.
  Unemployment is more than 10 per cent. in the United States and Canada, as well as here. In Germany the figure has doubled in three years, stands at more than 2 million, and is rising faster than here. When the right hon. Gentleman pretends that the problem of unemployment is ours alone, and that an easy solution is on offer, he does the unemployed a grave disservice.
  Only by continuing to deal with the deep-seated malaise in our economy, by continuing—as he would agree—to work for improved competitiveness, so that we pay our way in the world, and by continuing the battle against inflation, can we offer a sustainable prospect of higher future employment.
  The November industrial production figures are disappointing, but the autumn statement foresaw a fall in the second half of 1982. The prospect for 1983 is still one of modest recovery in world trading activity, and some improvement in United Kingdom manufacturing output as a result of the improvement that we have already seen in the underlying competitive capacity of our manufacturing industry.
  If we look beyond our shores, we see that in the past two years industrial production in the major OECD countries has fallen by 6 per cent. whereas in this country it has risen by 2 per cent. In the same period manufacturing production in Canada and the United States of America fell by 14 per cent. and 10 per cent., but in the United Kingdom, on a consistent basis, by only 2 per cent. Of course the fall here started earlier, but the long-standing weakness of our economy was far greater than that of any other. OECD experts now expect output in this country to grow slightly faster in 1983 than the average of the other major European economies. In condemning a rise in output of only 0·5 per cent. in the United Kingdom last year the right hon. Gentleman would do well to remember that output for the whole OECD area is estimated by the OECD to have fallen by 0·5 per cent. during that period.
  Mr. Jack Straw: The Chancellor is raping statistics with the figures that he has quoted. During the period of this Government none of the major seven Western industrialised nations has suffered a greater decline in industrial production than the United Kingdom. Between the middle of 1979 and the middle of 1982 each of our major industrial competitors showed some growth in gross domestic product. Only Britain showed an absolute slump in national wealth. Only in Britain was national wealth destroyed.
  Sir Geoffrey Howe: Only Britain had accumulated such problems of declining competitiveness—problems to which the Labour party was properly ready to draw attention when in office. Only in this country were two or three times as many people working in production as could have produced output on terms competitive with other countries. When this country entered the international recession its economy was suffering from more longstanding faults than that of any other country. It was bound to suffer sooner and more substantially than any other country.
  It is equally true, however, that output has been falling in this way in almost every industrialised country. Our problems have an international background. That is one of the reasons why I attach so much importance to the part that I shall have to play in the weeks immediately ahead as chairman of the interim committee of the International Monetary Fund, and why I totally reject the suggestion in the amendment of the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) that there is anything "narrowly nationalist" in the Government's approach to economic issues. The right hon. Gentleman may choose to take that view, but my election as chairman suggests that other Governments do not.
  Mr. Healey: Second time of asking. The right hon. and learned Gentleman was blackballed the first time.
  Sir Geoffrey Howe: The right hon. Member for Leeds, East (Mr. Healey) can always be relied upon to make a cheap and unworthy point.
  The immediate tasks for the interim committee are to enhance the authority and the resources of the international financial institutions so that they can provide support, under suitably firm conditions, for the worst affected debtor countries—mainly, but by no means exclusively, in the developing world. That was one of the principal items on the agenda of the meeting yesterday in Paris, which I attended, of the Finance Ministers and bank governors of the Group of Ten industrial countries. I should like to report briefly to the House on the proceedings of that meeting.
  Reviewing the world economic outlook, we saw the prospect in 1983—in varying degrees in different countries—of building on the progress made in reducing inflation and interest rates to cultivate the opportunity for sustainable recovery of activity and employment. In that context, the importance of maintaining sound monetary and fiscal policies was emphasised.
  We were particularly concerned about the threats to recovery posed by the prevalence of large sovereign debt problems—another part of the unhappy legacy of the inflationary 1970s. We agreed on the need for close cooperation between the IMF, debtor countries, creditor countries and the world banking system. The Group of Ten countries were able to agree on an important contribution

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  that we could make at this stage towards strengthening the resources of the IMF for handling such debt problems. We agreed, subject to legislative approval, to enlarge the so-called general arrangements to borrow by increasing the potential credit available from 6·4 billion special drawing rights to 17 billion special drawing rights—that is about $19 billion—and making it available to finance support for other countries as well as Group of Ten members. I am placing a copy of the communiqué in the Library.
  I am sure that the House will welcome this important step by the world's leading industrial countries which I regard as a valuable contribution to the wider arrangements to reinforce IMF resources, which I hope will be achieved at the IMF interim committee meeting that I shall be chairing in Washington on 10 and 11 February.
  The central point of the speech of the right hon. Member for Stepney and Poplar concerned recent movements in the sterling exchange rate and his views about domestic interest rates. In considering these movements, it is important to bear in mind that the Government's financial and monetary policies are being maintained, that our commitment to sound money should not be in doubt, and that for the reasons that I have given the financial position is demonstrably good. That is why the inflation prospect remains good.
  The fall in sterling of more than 10 per cent. in effective terms since October, however, deserves further examination. The first point from which there can be no escape is that irresponsible policy statements by the Labour party have not helped the situation. Indeed, the extent to which the right hon. Gentleman sought to qualify and withdraw from those statements makes that clear. Some people in the market place, however few, have begun to hedge against the possibility, however remote, that those capable of such statements might some day have to exercise the responsibilities of office. I hope that the right hon. Gentleman and his friends will in future weigh their words more carefully, because Oppositions, too, have responsibilities—even those destined to remain per-manently in Opposition.
  Of course, that is not the whole story.
  Mr. Douglas Jay: Will the Chancellor answer this simple question? Do the Government welcome the fall in the sterling exchange rate in the past few weeks?
  Sir Geoffrey Howe: I shall deal with that point in explaining and setting out our views on that issue. In recent months there has been a period of turbulence in all the world's exchange markets. A general currency realignment has been taking place. Since the beginning of November the yen has strengthened against sterling by some 21 per cent. and the deutschmark by 12 per cent. Against the dollar, the change has been about 6 per cent. The deutschmark and the yen have also been rising against other currencies. There is nothing surprising about that. Indeed, it was long expected, given the underlying strength of the German and Japanese economies and their improving trade balances. A further factor has been uncertainty about world oil prices and what OPEC policies for the future may be.
  Such periods of turbulence obviously tend to create a sometimes understandable nostalgia for the old and, in
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  retrospect, simpler regime of fixed exchange rates and the Bretton Woods system. But the very factors that create the disturbance are precisely those that make a return to fixed rates impractical, especially for a major international currency such as sterling, which cannot be immune from strong market pressures.
  The amendment of the right hon. Member for Hillhead shows that his nostalgia takes the form of urging sterling's early membership of the EMS exchange rate arrangement. I appreciate that that is a seriously argued case that deserves examination. I make two points about it. First, we should all like to see a return to greater currency stability. That was agreed as a desirable objective at last year's Versailles summit. It was also agreed, however, that the way to such stability must be through greater convergence between the world's main economies, both in policies and in economic circumstances, and particularly through closer convergence towards lower and more stable inflation. There is no short cut or substitute for that.
  Secondly, sterling and the deutschmark are internationally held and traded on a far greater scale than other EMS currencies and sterling's petrocurrency status means that world events can cause sharp movements in the sterling-deutschmark rate. I have to say that there is little in recent events to suggest that the conditions yet exist in which sterling's full membership of the EMS margins arrangement would constitute a sensible step either for Britain or for the system as a whole.
  One role for national authorities in the type of situation which has obtained worldwide since the autumn is to try to smooth sharp fluctuations and maintain orderly market conditions. That was, of course, done in this country, in December, as it has been done before and as it would be done again if the need were to arise in the face of sharp movements in either direction. But no authorities could or should try to stand in the way of currency movements that are reflecting underlying economic factors. It would not make sense for the United Kingdom or even the United States authorities to try to order the yen and the deutschmark not to appreciate. Such a course would be hardly less implausible than that which the Leader of the Opposition has quite wrongly imputed to the Government, with his suggestion that for much of 1982 we contrived, in some magical fashion, to keep sterling artificially high in order to enjoy an inflation benefit. This is not, of course, to say that the Government can be indifferent to exchange rate movements, because they are important for the economy, for inflation, and for industry. The Government have long made it clear that the exchange rate is taken into account, alongside the monetary aggregates, in assessing monetary conditions, and in assessing the Government's attitude to interest rates.
  The disturbance in the markets around the turn of the year did, as I have said, owe something to fears, however unjustified, that the Opposition might conceivably be called upon by the electorate before long to put their inflationary policies into effect. And in the turbulent market conditions last week, the markets took interest rates higher. To have resisted that move could have been interpreted as a weakening of the Government's resolve.
  We have shown that there was no question of any lack of resolve—[HON. MEMBERS: "What resolve?"]—our resolve to maintain economic and monetary policies consistent with effective policies against inflation and consistent with the maintenance of sound money. There

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  can be no doubt that there is no reason for a further rise in interest rates now. If the exchange rate were to fall further, such a fall could well be only temporary, and those tempted to speculate on that could come to regret their action.
  Mr. Healey rose——
  Sir Geoffrey Howe: I shall not give way. I have given way many times.
  The underlying inflation prospect is still good. It has been suggested that a depreciation of the type that has taken place might, if it persists, add 2 to 3 per cent. to the RPI after 12 to 18 months. For a number of reasons that is much too pessimistic a view.
  First, a fall in the exchange rate will have a lasting effect on inflation only if it results from unsound money. That would, of course, be the case if the policies advocated by the right hon. Member for Stepney and Poplar were put into practice. But, as I have repeatedly said, the pursuit of policies for sound money will ensure no lasting effect. Secondly, to the extent that the depreciation of sterling discounted in advance a possible fall in the price of oil, its effect on domestic inflation could prove broadly neutral.
  Thirdly, commodity prices generally remain weak.
  Fourthly, competition for export markets makes it likely that exporters to this country will try to maintain the sterling price of their product by reducing their profit margins.
  So right hon. and hon. Members on the Labour Benches are wrong to suggest that the recent change in the exchange rate heralds a significant reversal of progress against inflation. The country knows that it wants to achieve further progress in that direction. It appreciates the progress that has been made and provided the gains in competitiveness—those already registered and those resulting from depreciation—are not dissipated, provided we see continuing moderation in the level of pay settlements, that progress should be maintained.
  The right hon. Member for Stepney and Poplar sees the resolving of our competitiveness as a simple matter. He appears to see at the heart of his programme for the improvement of competitiveness a substantial fall in the exchange rate. Let me give him this rather grisly assurance. A fall in the exchange rate is about the only thing the election of a Labour Government could guarantee, and on a scale far greater, and far more rapid, than his 30 per cent. The right hon. Gentleman's problem would not be to engineer a fall in sterling, but to stop it. What would be the result if he were able to secure that policy for the destruction of the exchange rate of the pound? Has he forgotten that from 1969 to 1976 sterling depreciated by more than a third in effective terms or, to take a narrower period, between February 1975 and November 1976, by 25 per cent?
  What happened as a consequence of those changes? Competitiveness scarcely improved at all because costs, especially wage costs, rose to destroy any competitive advantage that might have been secured. That is the importance of the question that I put to him at the outset of my speech. How could he ensure, if he secured devaluation on that scale, that the competitive advantages that he says might follow from it were not instantly destroyed? How could he ensure that history did not repeat itself?
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  The right hon. Gentleman proffers, in a rather tentative fashion, his so-called national economic assessment, but there is a degree of mystery about what that is meant to imply. The right hon. Member told the Labour Party conference last year a good deal about the national economic assessment. He said:
  "It is not an incomes policy under another name … not a way of introducing wage restraint by the back door."
  Yet, on his analysis, without such restraint, the downward spiral and the loss of competitiveness would still continue. The truth is that today, as ever, the Labour party offers no credible means of delivering that essential component of his managed exchange rate decline, even if he could manage that, which he could not.
  The Opposition also say that they share our desire to get interest rates down. Yet again one must ask what evidence they offer that they would will the means as well as the end. Would they, as the Government have been doing, hold down spending and borrowing? Of course not. Their prescription is precisely opposite. What would be the effect on interest rates if the right hon. Gentleman's "Programme for Recovery", a misnomer if ever there was one, were ever put into practice?
  In truth, the effect would be incalculable, and so in a sense it is, but one is entitled to consider the scale of what is prescribed and consider the proposals on offer and unveiled by the Labour party last year.
  The Labour party says that it would "need" public ownership in electronics, pharmaceuticals, the construction industry and building materials, private road haulage, major ports and forestry and timber. The cost is clearly immense—£10 billion, £20 billion, £30 billion. Who knows? We have no idea. The Labour party proposes to take
  "a majority stake in all existing and future North Sea oil fields".
  What would be the cost of that? Perhaps another £10 billion.
  The Labour party wishes to nationalise tenanted agricultural land. [Interruption.] Labour hon. Members may not like to hear about the programmes to which they are committed, but the question that the House and the country wish to have answered is what on earth would happen if the Labour party were elected seeking to promote and secure a fall in the exchange rate, and seeking to do that alongside the very policies to which they are committed, and seeking, if the House can believe it, to secure a lower exchange rate, lower inflation and more growth alongside lower interest rates? The truth is that that is quite incompatible with the vast programmes of public expenditure to which the Labour party is already committed.
  I do not understand how, consistent with all the natural economic consequences of those proposals, the right hon. Gentleman has the gall to call for and to offer lower interest rates. Perhaps the money would be available from higher taxes, but he would be offering exactly the opposite there again. He wants to lower value added tax, to increase tax thresholds and to do everything that is totally inconsistent with any rational economic prescription for holding interest rates down and stopping borrowing from going through the roof.
  What would all these changes do to the borrowing requirement? What would they do to inflation? What would they do to interest rates or the exchange rate? The right hon. Gentleman, as was pointed out, was foolish enough to believe—indeed to pretend—as he presented the

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  programme, that this reckless programme of extravagance would deliver economic growth, rising employment and lower inflation. He sought in that respect to enlist the Treasury model in support of his fantasy, but he has done so only by requiring the model to assume the two things that simply could not be assumed—that he would have success in restraining the growth of incomes on a scale that his party has totally failed to secure so far, and that the implementation of his irresponsible programme would have no adverse effect on confidence. We all know that exactly the contrary would be the case. Nothing could be further from the truth than either of those assumptions. When the right hon. Gentleman takes his plans through the model without those assumptions, what we see revealed by another of his equations is inflation soaring to 18 per cent., a current account deficit of up to £25 billion and a plain insight into the fact that the "Shore factor" is a prescription for economic disaster.
  I come to the Opposition's final attempt, reflected in the motion, to square the circle of self-contradiction about prescribing the reimposition of exchange controls, the suggestion that this would in some way save them and sterling from the consequences of the policies that they recommend. Did exchange controls have that effect, or any significant effect, when similar policies, although not quite so bizarre ones, were being followed in 1967 and 1976? Of course they did not.
  The House knows, and the Opposition must learn, that the growth in trade flows and markets made exchange controls ineffective long before their abolition in October 1979. There can be no question of their reimposition and Labour Members delude themselves if they believe that reimposing them could save them from the consequences of the policies that they currently put forward.
  So it is reasonable to conclude that none of the easy answers offered by the Opposition would deliver the goods—not devaluation, not the national economic assessment, not a spending spree on borrowed money with inevitably higher interest rates, and certainly not exchange controls. The good sense of the British people will see through all that as they have already done. They know that such policies will not work, just as they did not work when prescribed before.
  Therefore, the markets need not fear that the policies of fiscal and monetary irresponsibility, which so implausibly masquerade as Labour's programme for recovery, will be put into practice. The British people support the Government and the policies to which we are committed. With or without the support of the right hon. Member for Stepney and Poplar and despite the irresponsibility of his prescriptions and damaging statements, we shall keep the country's economy on the responsible road to sustainable recovery. I invite the House to support the amendment.
  5.32 pm
  Mr. J. Enoch Powell: The right hon. Member for Stepney and Poplar (Mr. Shore) complained of the absence, apart from one reference, in the television broadcast of the Prime Minister of any reference to unemployment. However, there was an even more remarkable absentee from both the speeches to which the House has listened this afternoon. It is a factor of the economic scene that is so large and so remarkable that it
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  dwarfs much of the contemporary debate. Perhaps it is so large that on that very account it escapes observation, or perhaps it is found inconvenient to take account of it by those who are following the beaten track of policies of the past. The factor to which I refer is the huge and continuing current account surplus of the United Kingdom.
  The right hon. Member for Stepney and Poplar, as many have done many times in the past three or four years, ventured a prediction that this was about to stop. I do not know whether he or I will still be here at the termination of the period that he proposed for his prediction. Maybe the Labour vote in Stepney and Poplar is as secure as the Unionist vote in Down, South. If so, we shall be able to compare notes at the end of the year, should there be an election in the meantime. Perhaps it would be no bad idea if he and I were to agree upon a minor wager by which we could test the reliability of our forecasts. At least that does not excuse us from taking account of the reality with which we are faced now and which has accompanied us through all the vicissitudes of the past three or four years.
  In a period in which industrial output is 20 per cent. down on what it was four years ago, in a period in which there have come to be between 3 million and 3·5 million statistically registered as unemployed, the United Kingdom on its trading and current account has continued to make an enormous and persisting surplus. The rate at which this is running currently is between about £6 billion and £7 billion per annum.
  This must be a factor of immense significance which we should not ignore. It appears to be a factor which makes nonsense of many proposals which are put forward, and not only from one side of the House. Those on the Government Front Bench and those in the Conservative party generally place continuing stress upon the importance of an improvement in competitiveness, presumably as calculated to render imports less attractive and exports more attractive. The result of that, if and in so far as it is secured, must be a further increase in the huge surplus on our balance of current payments.
  The right hon. Member for Stepney and Poplar has told us that he wants to depress the exchange rate of the pound sterling further still. He wants to do this artificially. He does not want to wait for it to happen in case it should happen—he is a Socialist and a planner. The right hon. Gentleman wants to organise it. He did not, however, mention to the House the method by which such a fall in the exchange rate is arranged; but he does know that the way it is done is by manufacturing large quantities of one's own currency and putting them on the market—a point which supports the view of the Chancellor of the Exchequer that measures to reduce the exchange rate artificially are inherently inflationary in their effect. But let that pass. The right hon. Gentleman wants a more competitive rate for the pound sterling. So he wants to boost still further the already large current surplus on the balance of payments account of the United Kingdom.
  Then there is strong pressure and frequent argument in favour of curbing the exports of countries which, to use the current expression, penetrate our market, thereby securing what is called a better balance in our trade with them. Japan has been notable in this context. In so far as we succeed in persuading the Japanese not to sell to us what we want to buy at the price at which we want to buy it, and in so far as we succeed in persuading them to buy from us what they do not want to buy from us at the price at which we offer it to them, the effect of that is bound to

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  be—it cannot be otherwise—a further increase in the huge current balance of payments surplus which is so staggering a feature, a feature unprecedented in the memory and experience of a whole generation.
  The significance of this factor is quite independent of the composition of the account. People are apt to say, "There is a large entry for oil in the account; so ignore it." The component parts of the surplus do not matter. It is still a huge surplus, and a dominant factor in our economy for a reason which should be close to the concerns of both sides of the House, and especially of the right hon. Member for Stepney and Poplar: its counterpart is an equally huge outflow of capital from the United Kingdom. If we are running a surplus on current account of £6 billion or £7 billion a year, we are exporting £6 billion or £7 billion of capital a year from this country.
  I do not believe that it can be argued or demonstrated that it could be beneficial to the United Kingdom deliberately to increase that outflow still further. The right hon. Member for Stepney and Poplar had a horrified reference to make to the tremendous outflow of capital from this country. It may be doubted whether even at its present level there is net benefit in this outflow; but to offer us a prescription of which the purpose is to increase the capital outflow still further cannot possibly make sense.
  I caught in the speech of the right hon. Member for Stepney and Poplar a hint of the Labour party line that says, "Ah, yes, but this is all the fault of having no exchange controls. The Chancellor has removed the controls and allowed people to exchange sterling for other currencies if they wish to do so and for whatever purposes they desire." The right hon. Gentleman says, "If and when we get the opportunity, we shall not allow any more of that hanky-panky. We will not allow this blood transfusion of capital from the United Kingdom." I thought I caught an aside to that effect from the right hon. Gentleman—that exchange controls will be used to prevent any massive outflow of capital and ensure that we use it to better effect within our own economy. His trouble is that if one stops the outflow of capital, if one destroys the deficit on capital account, the surplus on current account is automatically destroyed too.
  Mr. Jay: No.
  Mr. Powell: Yes, that must be so. I can differ or agree over many things with the right hon. Gentleman but we cannot disagree that the current account deficit and the capital account surplus are equal and opposite and inseparable concomitants.
  Mr. Allan Roberts: Why?
  Mr. Powell: I hope the hon. Gentleman will forgive me and spare the House the necessary argumentation but I should be happy to demonstrate that very simple proposition to him later. [Interruption.] I hope that some sections of the House will not tempt me, Mr. Speaker, into prolixity and into starting a seminar that I have not the slightest intention of conducting. Therefore, I will leave as purely a speculative proposition what is a fact of the universe—that, on the balance of payments, the deficit on current account and the surplus on capital account, or vice versa, are complementary and equal.
  So if the right hon. Member for Stepney and Poplar intends to use exchange control to extinguish the outflow
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  of capital, he will extinguish that expenditure of industrial and other effort, that quantity of employment, which is represented by the current surplus on our external trade.
  Dr. Jeremy Bray: I question the factual basis of the right hon. Gentleman's argument. He said that the current account is running at a surplus of £6 billion to £7 billion a year. In 1979, the true figure was minus £1 billion, in 1980, it was £2·9 billion, and in 1981 £6·1 billion. In the first 11 months of the past year the figure was £3·8 billion. Although the right hon. Gentleman dismisses forecasts, the Chancellor estimates the figure to be zero next year.
  Mr. Powell: We shall see about the "zero next year". When I said that the current account surplus is at present running at such a rate, I was taking the quarter up to last November—a quarter in which one would not have supposed that many of the movements, including movements on the exchanges, would be favourable to that factor. However, if he wishes, the hon. Gentleman may modify the figure; but the fact remains that for this country it is a most remarkable and unprecedented phenomenon to find ourselves with a persisting surplus on our current balance of payments. The phenomenon seems to me to invite us to reconsider our entire approach to the problem of unemployment and to the management of the economy.
  Disagreeable though the task is, I shall not shrink from showing what I believe this phenomenon portends. It shows that we cannot engineer ourselves out of our present unemployment or our present discontents by an increased and artificial emphasis on those very industries which, in the past, have contributed the mainstay of our international trade. Still less can we engineer ourselves out of it by artificially manipulating such factors in the equation as the exchange rate. We cannot fudge ourselves out of our difficulties.
  We must recognise that, consequent on many changes that have taken place in the world, we face a very different economy, perhaps even a very different society, in this country from that which we have previously envisioned. Our efforts and thoughts should be directed in quite different directions from those that occupy them presently.
  We should consider, for instance, how a larger element of one of the greatest forms of wealth—leisure—can be introduced into our society without the damaging effect of its being concentrated in the form of involuntary leisure. We should examine our legislation, including our social security legislation, to see whether there is anything in it that is fossilising an obsolete pattern of work and working life.
  We should, furthermore, see our economy as destined to be increasingly a service economy in which more and more of us will be occupied in providing services for one another that the rest of the world cannot provide for us. In an ageing population, a population in which the human needs of those disabled by age or any other kind of disability are increasingly understood and analysed, there is an immense reservoir of demand for the application of effort, thought and talent.
  It is in such directions as these that we should be looking. But we should not be asking ourselves what the Government should impose. No Government can foresee the new pattern of our economy and society that will once again absorb the energies of our people. It is a pattern that people will have to find for themselves, but they can best

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  do so if they are not hindered either by obsolete legislation or by policies that respond to the difficulties of the past and not of the present or by policies, such as many put forward today, that would increase rather than remove the contradictions of our present position.
  In this House and in this country, we are invited to contemplate what may be as large an impending revolution for the people of the United Kingdom as the industrial revolution was 150 years ago.
  5.47 pm
  Mr. Edward Heath: I shall be as brief as possible, because I know that many hon. Members wish to speak in the debate. I shall not cover the general ground, because my position is clearly known, especially the emphasis that I put on the undesirable nature of unemployment, which is just as serious as inflation.
  In my speech during the debate on the Loyal Address, I asked the Government to say what they believed would change—the general economic movement of this country or that of other countries. In replying to the debate, the Leader of the House said, very openly, that there was no connection between the Government's policies and the expansion of the economy that was required to solve many of our problems. He said it categorically, and I agree. Therefore, it worries me that in the Government's amendment there is still no sign of how they propose to change the economic direction of affairs in Britain.
  Of course, the point that the Government emphasised—the reduction in inflation—is to be welcomed. The fact that Government expenditure is under control is also to be welcomed, but that does not necessarily mean that it is at the right level. I was interested to hear the Chancellor's statement that Britain has the smallest proportion of its gross domestic product as a deficit on the budget. However, why should he be especially proud of that?
  Britain has a very large public sector—we can argue whether that is desirable or undesirable—and the process of reducing it can be carried on. However, it puts upon the Exchequer the burden of investment for those industries, which the Chancellor will agree has greatly increased under his rule. Therefore, we cannot be expected to be in the same economic position as the United States, which does not have a public sector. That matter must be examined and is an important factor in the reaction of many of those in the world's money markets when they see what is happening to Government expenditure and deficit. I see that the Government Front Bench is already becoming agitated. I hope that Ministers will calm down and consider the matter sensibly, because there is a difference that must be handled carefully.
  How can the economy be turned round? The Chancellor said that, at the recent meeting of the Group of Ten, it was agreed that there would be expansion in 1983. In that case, the world's finance Ministers are still kidding themselves in a way that no one else is. Perhaps my right hon. and learned Friend in his reply can tell us about the signs of that expansion in 1983. I congratulate the Chancellor on his appointment as chairman of the interim committee of 20. I welcome it because, as he says, it shows a worldwide vision in the Treasury. If some of his ministerial colleagues in the Treasury do not have worldwide vision, I hope that he will get rid of them as soon as possible.
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  As to the immediate question about the pound, it is natural that in this debate there has been much politicking and an attempt to blame the Opposition for the change in the sterling rate. I hope that we can abandon that. To attribute to the right hon. Member for Stepney and Poplar (Mr. Shore), who opened the debate with great fluency and skill, and to the Opposition Front Bench or to his party sufficient influence in the world economy to change the level of sterling is disproportionate to their position, as they would be the first to recognise. It also shows a lack of confidence in the survival of the Government through a general election period, which I deprecate. I do not share that lack of confidence.
  Those who operate in the money markets are hard-headed. They, the CBI and the Government have been discussing publicly during the past year or 18 months the fact that we are alleged to be 30 per cent. more uncompetitive than the rest of the world. Those people know that perfectly well. They also do not see how, either with ordinary policies or with measures such as those suggested by the right hon. Member for Down, South (Mr. Powell), we can regain 30 per cent. competitiveness in a bearable time unless there is a change in the exchange rate. Therefore, they acted accordingly. They did not act because of the influence of the Opposition, which is well known to be negligible. They acted because they considered the facts and knew that there was no other solution.
  The second factor that must be taken into account, which was not allowed for by the right hon. Member for Down, South in his figures that have already been proved to be exaggerated, is the existence of real doubts in the world about the course of oil prices and the impact that that will have on our revenues and on the Treasury. It may be beneficial to us from the point of view of countering inflation still further, but there are real doubts about the matter. That is especially true of the operations of BNOC and the spot market. I understand from those who handle such matters that the next month or two months will be critical.
  The third factor that must be taken into account is the Saudi Arabian position, which is that, in the event of world oil prices beginning to fall, Saudi Arabia will be in deficit on its current budget. Of course, Saudi Arabia can call on masses of reserves, but—not only for political but for doctrinaire and religious reasons—it is offensive to the Saudi Arabians not to have a balanced budget. Therefore, they cannot continue their policy of reducing production in order to maintain OPEC prices. If that is the case, we shall be affected both in revenues to the Treasury and in our balance of payments.
  A political factor is that the present poor relations between Britain and Saudi Arabia are bound to affect the latter's choice of country to deposit its surpluses. We cannot have it both ways. We cannot try to divorce our economic policy from our foreign policy and we cannot expect to escape the consequences of foreign policy in our economic position. That fact has become more and more plain in more and more parts of the world, and I ask the Government to consider the matter most carefully.
  Those are all factors in the depreciation of sterling. However, we return to the basic point that I hope the Government can answer—what do they consider to be a satisfactory position for sterling today in regard to our competitiveness and to the position of our colleagues in the Community and in the United States of America? The

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  Government have greatly changed their policies during the past two years. They have changed their policies on interest rates and on intervention in the currency markets. Yet they still continue to deny that they are using, or are prepared to use, those weapons. That makes it extremely difficult for the rest of the world to judge how to react to British monetary policy, towards the pound and towards Government policy as a whole.
  I suggest to the Chancellor that we would have a much sounder basis for operation if the Government said frankly that they are prepared to use all those weapons and—which is well known—that they are using them now. They must also say that the pure monetarism with which they started is no longer the doctrine to which they adhere. We all know it. Why cannot they say so frankly and have a much more sound basis for their operations?
  The international factor has become extraordinarily critical. Perhaps I may be forgiven for saying that, even two years ago in a speech in the House, I forecast what would happen to many of the developing countries unless effective action was taken. It has happened disastrously in Poland, Mexico, Brazil, Argentina and Nigeria and in many smaller countries. We all know of other countries on the list. The scale is enormous and is much greater than we recognised when we gave the warning. There has been no co-ordinated action to handle the matter. It is perhaps more astonishing to learn that the major banks have never had any means of knowing how much each of them was putting into the developing countries or what the total commitments of all the banks would be. The result is that the weakness of the developing countries has proved to be their strength up to this point. We could not possibly face the total collapse of the Western banking system and therefore Governments and international institutions have had to act.
  The most recalcitrant of all, the Washington Administration, maintained complete opposition to any help for developing countries until Mexico collapsed. As that country was on its border, it could not ignore it. Therefore, at 8 o'clock in the evening, in a rush operation, sufficient money was brought together to save Mexico from having to announce its total bankruptcy.
  These matters have not been solved permanently, as some like to think. They have only been dealt with for a year or 18 months. Year after year, the international organisations, the commercial banks and Governments will have to work out solutions for these countries to maintain their solvency. That is certainly the case as long as world depression lasts.
  I have a point about the expectation of the finance Ministers that things will be better in 1983. The best calculations that one has been able to obtain show that the developing countries themselves accumulated a deficit of $95 billion in the past 18 months or two years in running down their reserves. Many are bankrupt, and the others now do not have reserves with which to buy either commodities or manufactured goods. As the demand from the developed world has fallen so far, the developing world is receiving lower and lower prices for the great majority of its commodities. This is continuing.
  Therefore, where is growth to come from in 1983? The growth can only start if this deficit is being made up and if the developing world is given the wherewithal to start purchasing from the developed world, our own industrial world. That is why I welcome the decision announced by the Chancellor, that the general agreement on borrowing
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  was increased from 6·4 billion SDR to 17 billion SDR by the meeting yesterday. That is welcome and I congratulate my right hon. and learned Friend most wholeheartedly on achieving it.
  However, the gap between that and the deficiency of the developing world today is still great, and must be about $65 billion. Where will that come from in 1983? This is the task to which I suggest that the Chancellor will have to devote a great deal of his attention as chairman of the 20. If one looks at the possibilities, the movement for increasing the quotas of countries to the International Monetary Fund has at last gathered momentum, but that cannot become effective before 1984.
  The arguments about the percentage by which the quotas will be increased is continuing. Some think it should be 40 per cent., some 60 per cent. and France thinks 100 per cent. No doubt there will be a compromise, which will contribute, but not until 1984. Where will the rest of the money come from in 1983?
  A further source could be rapid action on special drawing rights. This could contribute considerably to what is required in the developing world, and particularly if the developed countries were prepared to forgo their right to drawing rights and enable them to be used, under the control of the IMF, by the developing countries. That is a proposition that should be considered. Provided that the control is there, it can be effective.
  The British played a large part in the creation of the SDRs. A general criticism of them is that they are inflationary. At a time of deep depression, with deficiencies in liquidity, it cannot be inflationary if, under control, one uses SDRs to enable the developing world to maintain its solvency and its demand on the developed world for the materials that we produce. Therefore, I ask the Chancellor to look at this problem from this point of view.
  Sir Geoffrey Howe: My right hon. Friend may be grateful to know that the decision to hold the IMF interim committee in February rather than in April has been taken by me specifically to accelerate, if we can, the date of agreement on the enlargement of IMF quotas. At our meeting yesterday, the finance Ministers of the Ten agreed that it would be desirable, if possible, to implement that agreement by the end of 1983. The item of special drawing rights is something else that will have a place on our agenda.
  Mr. Heath: I welcome this, and I am glad that the Chancellor brought the meeting forward, and that this has been agreed, although not published. The Chancellor says that it will be effective at the end of 1983, which does not alter my point that it cannot have any effect until 1984. Therefore, we are still faced, for the whole of this year, with a grave deficit of which only part, so far, has been mustered. That is why I am also glad to hear from the Chancellor that the SDRs are no longer taboo but can and will be considered, because they can play an important part.
  In his press conference before he left the United States for the Frankfurt meeting, Mr. Donald Regan, the Secretary of the Treasury in the United States, made some very important remarks, one of which was a revelation. He said that there had been no talks so far, and no coordination about the continued bankruptcy of the developing world and the impact on the Western banking

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  system. It is deplorable that, throughout this period, there have been no talks on an international level, but that is not the point that I wish to emphasise. I emphasise that Mr. Regan gave it as his view that the international organisations must now be reformed in order to cope with the world economy. He said that clearly and firmly, and I agree entirely with him.
  The IMF is carrying out part of that reform in that it has, for the first time, taken the lead in arranging packages as it did over Mexico, as it is doing over Brazil, and as it is trying to do for Nigeria and one or two other countries. What Mr. Regan says is true. After 30 years, the IMF and the World Bank need to be reconsidered and reformed from a positive point of view to enable them to do more. Moreover, the world financial system needs to be reorganised in a way that will enable us to have stability such as we had for 25 or 30 years.
  That stability has not been mentioned much today. The leader of the SDP may mention it if he catches your eye, Mr. Speaker, because he was responsible for so much of it. However, to help achieve that stability again, it is important for Britain to come into the European monetary system. It is important for us because it gives us a much broader base from which to face speculation on sterling, if it goes above what the Government want, without forcing higher and higher interest rates, which prevent national recovery.
  I do not wish to go into all the arguments about this and about what is involved in closer alignment of economic policies and so on, but this is desirable. I am prepared to face closer alignment because the basis of our prosperity for 30 years was consultation and co-ordination of the economic policies of the West. That is what we need to have now. We are suffering from those who think that they can run their own affairs regardless of anybody else.
  Mr. Nigel Spearing: The right hon. Gentleman is coming to a point on which there may be an important but legitimate difference of opinion. When a Government attempt to run their internal economy, they may not have control, but they have some option and choice, within limits. Is the right hon. Gentleman therefore content that in joining the EMS those options and that freedom of action would be constrained by virtue of joining that system and its system of political control through banking? The right hon. Gentleman must agree that that control would not exist if the Government concerned were not a member of that system.
  Mr. Heath: As the hon. Gentleman says, there is room for a difference of opinion. I differ from him because I believe that the options of the British Government are more and more limited. That is becoming clear. The EMS gives us a broader base on which to operate. It is now also apparent from two years' experience that the EMS is stable and more flexible than the Bretton Woods system ever was. Therefore, it is an advantage to us to be in a stable and flexible system. If we are to have world stability, we must face the fact that we must have an operation in which, in addition to a European area, we can have a dollar area and a yen area until we can come together under the IMF.
  It is not always realised that one of the major changes recently has been that the European Community has a GDP that is equal to that of the United States and, secondly, that the part that non-dollar currencies play today in world
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  financial matters is equal to that of the dollar. That puts on Europe with the EMS, and Japan with the yen, an equal responsibility with the American authorities, with the dollar, for establishing world stability. That must be brought home to those responsible. I hope that the Chancellor of the Exchequer will do so.
  When the Secretary of the Treasury in the United States made his statement, we should have seized the ball and run with it in the same way as Ernest Bevin as Foreign Secretary did with General Marshall's single sentence that the Americans would finance the recovery of Europe. Donald Regan's statement is equally important. He is supported by Mr. Shultz, the Secretary of State, a man of immense experience and great wisdom who understands the international situation as well as anyone in the United States today.
  My judgment is that if the Secretary of the Treasury and the Secretary of State together are prepared to work for the reform of the international institutions and the international monetary system, they will succeed. I hope to see the British Chancellor of the Exchequer taking the lead with as many of his European colleagues as are prepared to do so in pursuing that matter and saying "We agree. After 30 years a reform of those institutions is required for positive reasons—not to block their activities. We need to create an international financial situation that will allow the expansion of the world economy once again and therefore the recovery of our country." That is the message that I hope the Chancellor will convey. The quicker he does so, the better.
  6.12 pm
  Mr. Roy Jenkins: It may not surprise the House when I say that I agree with a number of the points that were made by the right hon. Member for Sidcup (Mr. Heath). I agree that the Government's excuse that the right hon. Member for Stepney and Poplar (Mr. Shore) was responsible for the slide in the value of the pound is nonsense. There was a much more fundamental change of sentiment. At any rate, the downward movement began before the right hon. Gentleman issued his policy statement in November. As a matter of fact, he was foolish, from his point of view, to announce a 30 per cent. devaluation as his goal. The idea that one can say that and follow a controlled glide path of descent is an extraordinary illusion. If the right hon. Gentleman were in control, he would have a tail spin and would not follow a glide path. None the less, I do not for one moment believe that he is responsible for what has happened in the past week or so.
  The right hon. Gentleman made a more powerfully argued case, though it was stronger on criticism than in dealing with the problems involved in his own policy, than the Chancellor of the Exchequer. After listening carefully to the Chancellor, I found it almost impossible to discover what was the Government's attitude to the exchange rate, past changes, the present level and future changes. The only thing that seemed to emerge with any approach to clarity was the implausible proposition that when under him an exchange rate fell in an unplanned way it did not have inflationary consequences, whereas if it fell under anyone else it had disastrous inflationary consequences. Apart from that, no clear point about the exchange rate emerged.
  I shall go a little wider and see how from our present position we can achieve greater stability and some

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  prospect for world growth. I, too, congratulate the Chancellor of the Exchequer on being elected chairman of the interim committee of the Group of Twenty. I am sure that that is an honour, although it is not necessarily an endorsement of all the Government's present policies. Looking at those who occupy international chairs—including myself in the past—one realises that it does not automatically amount to an endorsement of the policies pursued by the Government of the home country. I hope that the right hon. and learned Gentleman will use the opportunity to do something constructive.
  Let us be in no doubt that the world is spiralling down into the deepest slump for 50 years and that, on present policies, as broadly pursued around the world, the chances are that it will get worse not better. It is no good the Government taking comfort from how badly other countries are doing. As a matter of fact, the big countries are not doing as badly as we are. They are all doing badly. The idea that there is comfort in that is the most narrow-minded, short-sighted and, as we said in our amendment, nationalist outlook. From the point of view of making debating points, the point is that the worse they do, the worse is the prospect for us and for the whole world.
  Deflation and protectionism are breathing upon each other and can turn the situation from being not merely highly undesirable, but deeply menacing to such an extent that within a few years, unless we are able to do something about it, we shall see the great gains of 1948 to 1973 being thrown away. What can be done at present?
  Mr. George Foulkes: Before the right hon. Gentleman advances his proposals and suggestions, will he help the House by telling us, so that we know exactly what weight to put on his words, whether, at the convention of the alliance on Thursday, he will be adopted as undisputed leader of the alliance?
  Mr. Jenkins: That is the last time that I shall give way to the hon. Gentleman.
  What is the Government's present position? They almost always look inward. That is true of other Governments, too. Each country tries to find its own solution. Occasionally it tries to lecture other countries into more restrictive postures at home, particularly those with heavy debts. Nothing can be worse for the whole world than a collapse and further restriction of world markets. On the contrary, this is the moment when it would be both highly desirable and possible for the major trading nations of the world to proclaim a change of course.
  The basic cause of the trouble, to some extent since 1973, and more so since 1979, has been two oil crises. There were massive increases in oil prices followed by restrictive monetary policies by Governments to try to contain the inflationary consequences. That has been made substantially worse by wildly fluctuating exchanges.
  It is not true, as the Prime Minister is fond of telling us, that exchange markets reflect reality. How could that be so when for the past two years Japanese exports have been flooding the world, yet the yen has been depressed far below its real value until recently? That is not the true position. To a substantial extent, far from trade patterns setting exchange rates, exchange rates have set trade patterns. This has been very damaging. It has certainly damaged the prospects for world trade.
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  On top of that, there has been the over-extended position of many private banks lending, in itself desirable, to countries that can now hardly meet their debt charges from their total exports.
  Conditions are changing. A real window of opportunity is now open, but it may not remain open for very long.
  We shall not see a repetition of the oil crisis. It is more likely that there will be a decline, not an increase, in oil prices. In most places around the world, interest rates have temporarily been coming down. There is mounting concern, to a greater extent elsewhere than in this country, about unemployment. There is deep concern in Germany, and there is a growing appreciation in the United States, even in influential sections of the Administration, that it is not desirable to have anti-inflationery policies, whatever the consequences in other areas.—[HON. MEMBERS: "What about employment in Glasgow?"] We should seize the moment for co-ordinated action to try to reverse this decline.
  Action is required along three lines. There must be joint expansion among the leading trading nations. A country on its own can do a certain amount—and much more should be done in this country than is being undertaken at the present time—but it is much better and safer if countries can expand together. Otherwise there is the risk of a balance of payments problem with exchange rate and inflationary consequences. Now is the moment at which this could be done. Such an exercise was attempted at the Bonn economic summit in 1978. It was agreed, following some expansionary moves by the United States and the United Kingdom, that Japan would expand by 1·5 per cent. and Germany by 1 per cent. Canada, France and Italy agreed to make moves of their own.
  The conventional wisdom is that that exercise was misconceived because it proved abortive for one isolatable reason that is highly unlikely to be repeated—the oil price increase that came six months later. Whatever else happens, that will not be repeated. That lion will not be in the path again. The basic rationale of Bonn was sensible and should be revived. There would be much support throughout the world if that happened. Relatively small concerted changes in the fiscal stances of different countries would make a substantial difference to the GDP of all of them collectively and to levels of unemployment.
  The Economic Secretary to the Treasury (Mr. Jock Bruce-Gardyne): The right hon. Gentleman said that the concerted expansion of 1978, following the Bonn summit, was aborted by the single extraneous circumstance of the second oil shock. Was not the earlier period of concerted expansion aborted by the first oil shock? What leads the right hon. Gentleman to think that, there having been two attempts at concerted expansion, each of which was aborted by an oil shock, there would not be a comparable experience on the third occasion?
  Mr. Jenkins: I think that most people would agree with me, not with the hon. Gentleman, that it is the state of the world oil market. I am unaware of anybody who thinks that the world oil market is likely to produce major oil price increases in the near future. On the contrary, I believe that prices are likely to come down. I do not believe that this prognosis would be changed by a limited but significant increase in the growth rate of the major countries. I am amazed that such a question should be put from the Treasury Bench.

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  A much closer approach to monetary stability is also required. I am certain that the wildly fluctuating exchange rates are not representative of reality. They have been the enemies of world trade and international investment to a substantial extent. Consider what has happened to the sterling-dollar exchange rate. In the last four or five years it has gone up from $1·58 to $2·40 and down again to $1·58. That did not represent a real change in competitiveness or trading positions.
  Mr. Gordon Wilson: Will the right hon. Gentleman examine the example of Norway? Although being a large oil producer, it has managed to keep inflation under control and has unemployment of 3·4 per cent. compared with unemployment approaching 16 per cent. in Scotland.
  Mr. Jenkins: Norway has not coped well with inflation, but it has done very well on unemployment. The measures that I am advocating will help to reduce unemployment in Scotland, as they would elsewhere in the United Kingdom. I have much contact with Scottish opinion as I represent a Scottish constituency. I do not believe that Scotland thinks that its problems can be solved by not looking overseas.
  What can sensibly be done about international monetary stability? It is not possible to put the past on its throne again and to recreate Bretton Woods. There is no point in being Utopian. Bretton Woods served the world extraordinarily well for 27 years. At the end of that period, even the power of the United States economy was not sufficient to sustain the solar system that was the essence of Bretton Woods and which it had discharged splendidly over a long period. The system cracked. It is not possible to revert to the same form.
  There are variations in the performance and inflation levels of different countries. What can be done? There is now mounting disillusion with freely floating currencies. Few people think that such a system adequately serves the world. We have undoubtedly suffered from too high an exchange rate, as has the dollar more recently. That situation has helped to destroy competitiveness in the United Kingdom. It has exaggerated de-industrialisation. In the United States it has fanned the embers of protectionism that had been relatively dead for a long time. Markets alone cannot do the job.
  What can we do short of proclaiming fixed exchange rates, which would not necessarily stick in present circumstances? We can, and should, attempt to create a tripod between the dollar, the yen and the European monetary system. That would be of great advantage to this country, whatever one's views about Europeanism or anti-Europeanism.
  Mr. John Maxton: That is protectionism.
  Mr. Jenkins: It has nothing to do with protectionism. Had we been in the Community earlier, we would have substantially greater currency stability than we have.
  The hon. Member for Newham, South (Mr. Spearing) made an interesting intervention in which he said "But we have freedom to do what we like".
  Mr. Spearing: No, I did not.
  Mr. Jenkins: I think the hon. Gentleman actually said that we had limited options to do what we like outside but not inside.
  Mr. Spearing: That is it.
  Mr. Jenkins: In the early days of the EMS, I remember having conversations with two successive Prime Ministers, both of whom assured me that in principle they very much wanted to join the EMS. However, one said, "I am afraid of being locked in at too high a rate, which would inhibit our ability to deal with unemployment." The other said, "I am afraid of being locked in at too low a rate, which would inhibit our ability to deal with inflation." As a result, we did not join. Since then we have had higher unemployment and inflation than almost any country that belongs to the EMS. It is easy to find excuses for not doing things, but we may get a great deal more stability if we are in the EMS.
  The tripod that I have suggested should operate on the basis that Governments in charge of the major currencies should endeavour to keep within target zones. The 6 per cent. margins that the lira has within the European monetary system are better in present circumstances than the narrower Bretton Woods margins. Monetary policy should be used to keep within those margins in response to short term ways. I do not believe that any such system that is constructive can resist the long term swell of the ocean, nor do I think that it should try to do so. However, it can iron out many damaging short term fluctuations that in no way represent reality. On that basis, we would have a system that offered a real possibility of achieving greater stability. Buttressing a concerted move to achieve some expansion in the world economy could give us a better chance than we have had for a long time.
  If we are to achieve the ripple effect of this expansion from the major trading nations, there must be a greater flow of finance to the developing world. I agree broadly with what has been said on this issue, and I shall not develop my argument at any length. I am glad about what has been done in the IMF, but I believe that there should be a further issue of special drawing rights angled towards the poorer countries. There must also be a development of co-financing schemes between the private banks and the international institutions. There must also be some help with excessive interest payments. Otherwise, there is a great danger that the world banking system could collapse. It is possible to exaggerate that, but it is perhaps even easier to ignore it. At present, it remains a real danger.
  To take such an attitude to finance to the Third world is not soft hearted generosity on the part of the industrialised countries. It is enlightened self-interest of exactly the sort that enabled us to get out of the post-war position, such as when the Marshall plan picked Europe up off its back. Not only did that give Europe the greatest period of increased prosperity almost in recorded history, but it gave the United States the greatest increase in prosperity in the history of the world. It also led to the most freely accepted period of American leadership.
  That cannot be recreated. The balance has changed. The leadership must now come from both sides of the Atlantic. It is crucial that the European Community and the United States do not allow their trade differences, which are real but containable, to impair the vital political partnership that is now needed.

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  Those are ways in which we could take real steps forward. The first two proposals would ensure concerted expansion and greater currency stability, and the third would ensure that markets are not blocked by penury.
  We have done too well out of interdependence in the past to turn our back on it now in the harsher and more difficult circumstances of today.
  Mr. Maxton: Will the right hon. Gentleman give way?
  Mr. Jenkins: No, I am just about to finish.
  I am sure that those measures are almost the only route by which we can hope to recreate jobs, to give the world the prospect of growth and allow it to escape from the threatening dungeon of protectionism and deflation, which breed one on the other and pose the greatest threat that we are now facing.
  6.36 pm
  Sir Russell Fairgrieve: It is a great honour for me so quickly to follow, after the Front Bench speakers, three experienced parliamentarians. It was a pleasure to listen to what they said. I particularly agree with what was said by my right hon. Friend the Member for Sidcup (Mr. Heath) and the right hon. Member for Glasgow, Hillhead (Mr. Jenkins), not only about the Third world but about their belief that we should have been in the EMS from the beginning.
  However, what the right hon. Member for Down, South (Mr. Powell) said was possibly more important, and I should like to remark on it in my short speech. I may not have the right hon. Gentleman's gift of oratory, but I agree entirely with what he said about the need for radical change.
  I intend to turn away from the world scene that has been portrayed by these three world statesmen and to concentrate instead on the British economy. The debate has been called for by the Opposition to discuss what they term the economic crisis, so it might be a good idea first to find out whether there is a current economic crisis.
  We can use various indicators to measure such a situation—the rate of inflation, consumer spending, interest rates, the level of the stock market, the external value of our currency and the employment position. If those indicators are taken one by one, it will be seen that the Government have an excellent record. The rate of inflation is substantially down and is now running at about only 6 per cent. On consumer spending, we have just been told that the December figures in the High Street, and even now into the January sales, are the highest ever recorded. There is not much sign of an economic crisis there. Interest rates have come down considerably over the last 18 months—another pointer away from the economic crisis—and in the last year the stock market has come up quite a way and is now at a healthy level. I shall mention the exchange rate of the pound shortly.
  With the exception of the other indicator of employment, I suggest that to some extent the economic crisis is a figment of hopeful Opposition imagination.
  Last year, the Council of Europe had a full debate on this worldwide problem, and experts from every country agreed that even with unemployment in the OECD countries now running at about 32 million, it could rise to above 35 million by the mid-1980s. This is where I very much agree with the right hon. Member for Down, South.
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  We in the advanced world shall have to look at this problem in a completely different light, because, provided we do not all blow ourselves up there will have to be radical changes in this area.
  It is no good continuing to make steel that no one wants, to build ships that no one will sail or even to dig out coal that no one can use. The jobs will come in new industries, such as electronics, and in greater measure in the service industries and activities such as tourism. If we are able to make the wherewithal to preserve our standard of living with fewer working people, leisure must cease to be a dirty word. It must be properly planned and taken advantage of.
  Mr. Maxton: If the hon. Gentleman believes so strongly in leisure, why, on Monday evening, did he vote for a rate support grant in Scotland that demanded a cut of 33·3 per cent. by local authorities in leisure and recreation areas?
  Sir Russell Fairgrieve: The hon. Gentleman cannot raise his sights to the areas and vistas that I am trying to explain. We shall have to look at schemes for early retirement, different employment patterns of work-sharing and shift work, and all the other areas of human endeavour that were outlined by the right hon. Member for Down, South.
  I was amazed when the Shadow Chancellor of the Exchequer said that an incoming Labour Government would reduce unemployment in a parliamentary term from 3 million to 1 million. Since the end of the second world war, 38 years ago, there have been 11 British Administrations, of which six were Labour and five Conservative. Every time a Labour Administration demitted office, unemployment was higher than when they came in. This fact should never be forgotten. Who believes that a future Labour Administration will change that typical Socialist pattern? That also happened to some extent under Tory Administrations because unemployment has been increasing steadily since the end of the second world war. On a couple of occasions, the Tory party was fortunate enough, or some people might say clever enough, not to have higher unemployment at the end of its period of government than at the beginning.
  I hesitate to comment upon the Shadow Chancellor's statement that he would devalue the pound by 30 per cent. and what that would do to the economy. Most people have discounted the chance of a Labour Administration in the foreseeable future, or we would have a real economic crisis on our hands.
  The current level of the pound is about right for our business and exporting community. Who is to say that that level will be right in 12 months time? It has reached its present level during the past six months, but it is still 20 per cent. above the level at which the Shadow Chancellor threatens to devalue it, with all the dire consequences that that would have.
  Apart from the serious problem of unemployment in the developed countries, the economy of this country is in better shape than it has been for years, thanks to the Government. I trust that there will be no change in the path that the Government are pursuing.
  6.42 pm
  Mr. Michael Meacher: The right hon. Member for Down, South (Mr. Powell) made, as always, an interesting contribution. However, on this

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  occasion I believe that what he said about the speech of my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) was highly misplaced. Since that is central to the Labour party's alternative programme, I want to say something about it. The right hon. Member for Down, South made the point that there is a large current account surplus at present. That is true. He acknowledged also that it is mainly on the oil account. It is a key fact, and one of which in his strictures he did not take account, that the non-oil trade account has been deteriorating fast for some time, is continuing to deteriorate, and on the Treasury forecasts is expected to deteriorate further over the next year. By the end of the year, even net of the surplus on oil, there is expected to be no surplus on the trade account as a whole. That is serious.
  The alternative proposed by the right hon. Member for Down, South is that we should rely on a service-oriented economy. Although I do not believe that anyone would wish to deny that the service industries can continue to make an important and growing contribution to our balance of payments, there is no way in which it is possible for the service sector to take advantage of the wide and growing deficit on the trade account that would arise if there were any recovery of manufacturing industry. The right hon. Gentleman should take account of the Labour party's proposals for a further depreciation in the value of the pound although, as my right hon. Friend the Member for Stepney and Poplar said, there is no commitment to the 30 per cent. figure, which is purely an illustrative simulation. However, there is no doubt that we lean in that direction. The Chief Secretary to the Treasury may laugh, but if there has been a worsening in relative unit labour costs since 1975 of about 15 per cent. to 20 per cent., does he or the right hon. Member for Down, South seriously believe that we can grasp back that degree of uncompetitiveness solely by improvements in productivity relative to our competitors, or by improvements in lower relative labour costs? That is the central issue, and it is for that reason that the Opposition believe that it is crucial for some easing of that to take place through a further depreciation of the parity rate.
  Mr. David Myles: In what jobs are people to be employed under Labour? What jobs does he envisage appearing to take up our present dreadful unemployment deficit?
  Mr. Meacher: I suggest that the hon. Gentleman reads the "Programme for Recovery" published by the Labour party, in which that issue is extensively discussed. If there were an expansion in the economy, despite the improvement in microtechnology that we have seen, there would be ample room for an expansion in the number of jobs in all the traditional sectors where at present we have contracted out of all proportion to what is justified. If the hon. Gentleman doubts that, I suggest that he looks at Japan and California, which have the best records in microtechnology and employment.
  After four years' experience of an economic policy that has been pursued relentlessly by the Government, the speculation against the pound within the past week or two and whether the Government have or have not mismanaged the exchange rate are not the fundamental issues. The more important central issue to be considered is whether current economic policies can achieve a
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  sustainable economic recovery, not whether they have—it is patently obvious that they have not—but whether they can. That is why I believe this episode is such an important sign for the future.
  It is true that the recent fall in the pound is an overdue adjustment to the gross overvaluation of the pound that occurred in 1980 and 1981, as was made clear by the governor of the Bundesbank in his evidence to the Treasury and Civil Service Committee. If that straightforward view is taken, the pound should fall further, for the reason that I have already given. Even after a 12 per cent. depreciation of sterling since November, relative unit labour costs have still deteriorated substantially by about 15 per cent. to 20 per cent. since 1975. No realistic improvement in labour costs or increased productivity can possibly bridge such a gap without some further depreciation of the effective exchange rate.
  I believe that the markets are saying something much more fundamental than that. They are not simply making an overdue adjustment regarding the past; they are expressing their lack of confidence in the future, not just as to whether current policies are working—it is clear that they are not—but whether they can work. I believe it is with good reason that they form that view. Again, of course there are proximate reasons for a run on the pound, such as falling oil prices, which reduce the pound's attractiveness as a petro-currency. We are all familiar with that.
  But there are deeper and more significant calculations determining market sentiment at this time. These are, I think, crucially, that after four years' rigid adherence to strict monetarist-based policies and the biggest collapse of manufacturing that we have seen in 50 years, there are still no signs whatever of any economic recovery. Secondly, not only is unemployment not coming down; inflation is now irrevocably moving upwards. The one jewel in the Prime Minister's crown is now beginning to look distinctly jaded. Thirdly, Treasury forecasts that the balance of payments would do no better over the whole of 1983 than simply break even certainly imply that by the end of the year trade will be substantially in deficit. A Britain that cannot pay its way even when demand is so utterly depressed as it is today is surely a distinctly poor prospect. That is the message that the markets are giving to the people of this country.
  I do not think that anyone can say that this classic slump in international confidence is wholly unjustified. On the first point, the Government have never been able to say where a sustained recovery of demand is likely to come from. The latest alibi in the Industry Act forecasts places it in terms of a gradual increase in exports, plus an increase in stock-building. Those are the two factors that are stated in the Government's report. But the former certainly will not be achieved unless there is an improvement in world trade—and there is no sign of that—and the latter is unlikely since manufacturing stocks remain historically high in relation to manufacturing output, even today.
  On the key question of inflation, I do not think that it will have escaped the notice of the market that if monetarist doctrine has any validity at all inflation is bound to rise. Two years ago the money stock MTFS target of 6 to 10 per cent. was exceeded by an outturn of 13 per cent. Last year the target was 5 to 9 per cent. and it was exceeded by an outturn of 11·5 per cent. Where the Chancellor gets his ideas of sound money policies from I simply cannot understand.

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  What this shows, of course, is that it is not the Government's monetary restrictiveness that has brought clown inflation but the fact that Government policies have engineered a classic slump which, as a result, has cut back inflation. That is what has happened. If that is the case, I think that the Government have never managed to give a convincing answer to the rather crucial question of how, if a recovery were to occur, the inflationary spiral is to be prevented from starting all over again.
  What was supposed to happen, according to the Government, was that inflation would be squeezed out of the system once and for all before the expansionary surge began again. But there is not a shred of evidence of that. With unemployment at 3·25 million today and still rising, the wholesale and raw material price index is now rising at a rate of 7·5 per cent. a year, and where that index goes the retail price index will follow.
  What was also supposed to happen under a monetarist regime, if there ever was any validity in it, was that inflationary expectations would be irretrievably broken, so that in any future expansion the loss of volume at the expense of inflation—what the Government have always said has been the problem in the past—would be irreversibly improved. Yet what do we see? Again, the Industry Act forecast—this is the Government's own statement as to their expectations for the future—is that manufacturing output will recover by only 0·5 per cent. in volume over this next year, while Income Data Services reports at present are showing wage settlements at 7 per cent. and probably rising.
  It is this growing erosion of confidence, not only that the Government's policies are not working—I do not think that we need any proof of that—but that they cannot produce a sustained economic recovery, which lies at the heart of last week's debacle. I think that it is this growing realisation that is causing more and more people in this country to look to the alternative, which is the alternative that the Labour party has put forward.
  It is fundamentally untrue—I would say that this is the single biggest fallacy in the Government's case—that any expansion of demand by the Government is bound to be unreasonably inflationary. That is what the Government have repeatedly said and it is totally untrue. Simulations that have been done on the Treasury model show that a gradual increase—not a sharp increase but a gradual increase—in public expenditure, a modest further depreciation of the pound and a modest rising tariff on finished manufactures, linked with a significant annual cut in VAT, a similar annual cut in national insurance contributions and the national insurance surcharge and cuts in interest rates, as a combined package—that is important, because they are interlinked—can produce a cut in unemployment. I will not say whether it will be precisely 2 million but it will be a long way in that direction over a five-year period, without inflation at any time during that span of time exceeding 12 per cent., and, indeed, falling by the end of that period to about 7 per cent., which is actually below what is now forecast to be the result of continuing the present policy of persisting with deflation.
  That, I believe, is the kind of programme that is desperately needed if we are to get Britain moving again. It will require a new Government. It is because more and more people are coming to the view that the evil of mass unemployment will never come down under the policies
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  that are being pursued that I believe that, Falklands or no Falklands, the Government's days are numbered and that change cannot come too soon.
  6.56 pm
  Mr. Edward du Cann: My right hon. Friend the Member for Sidcup (Mr. Heath) did the House a great service in broadening the discussion as he did. He was right to remind us that we must take a world view. I thought that he made a superb speech. I was glad that it was so closely followed by the right hon. Member for Glasgow, Hillhead (Mr. Jenkins). I wish to make the same point, but perhaps I can put it in a slightly different way.
  In February of last year the Select Committee on the Treasury and Civil Service, as the hon. Members for Oldham (Mr. Meacher), for Motherwell and Wishaw (Dr. Bray) and for Colne Valley (Mr. Wainwright), all of whom are most hard-working and able members of the Committee, know well, began an inquiry into international financing arrangements, Since then we have experienced the sovereign lending crisis and a clear misalignment and volatility of exchange rates not only affecting the pound, about which we are chiefly talking today, but, as has been remarked, the over-valued dollar and the under-valued yen. These matters have made and will continue to make headlines. They have caused worry and confusion, and they are really the main reason for today's debate.
  We have taken evidence, written and oral, from academics, business men and central bankers. I would like to say on behalf of the Committee how helpful my right hon. and learned Friend the Chancellor and officials at the Treasury and the Bank of England have been to us in that regard.
  On 2 January the Committee visited the United States for a week of discussions. I cannot anticipate the Committee's report. Our work is not finished. I hope that it will be available in the spring. I merely remark that I hope that our Government and the other Governments of the free world are as near conclusions in regard to these matters as, I believe, the Committee is. What is so worrying is that they seem to be given so little thought at present.
  Meanwhile, I give my own views. I believe, as my right hon. Friend the Member for Sidcup said, that the world stands on the verge of an economic crisis. The evidence is all around us. Indeed, it shrieks for attention—the obvious recession, the slow-down in world trade, widespread, and rising, unemployment of 32 million in the OECD countries and more than 3 million in this country. This must stop.
  There is potential disaster facing the less developed countries, to which reference has also been made this afternoon. There are the problems of debt with huge risks for the banking system and now, inevitably, the pressure for protectionist policies. In this scene our country is vitally affected because of Britain's dependence on world trade and the obvious impact that any interruption to its steady growth must have on our prospects for employment and prosperity.
  As the right hon. Member for Down, South (Mr. Powell) said in another context, we are in a new situation that is not fully realised and understood. In any case, in the context of capital mobility internationally, plus the vulnerability of our domestic economy to economic developments in other countries, because of the scale of

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  our overseas trade relative to gross national products, we are less able by our domestic policies to affect our own economic destiny.
  What happens in the world is particularly Britain's concern. The world has a clear choice. We can continue what I believe to be the slide into disaster or we can attempt to lay the foundations for orderly growth. I had hoped that was going to come out of the Versailles summit. It is tragic that the words written in the communiqué apparently meant nothing. My desperate anxiety is that we should make the right decisions and that the United Kingdom should lead in the context that the United States has not yet fully come to terms with the dual role of the dollar on the one hand as the United States domestic currency and, more important by far, on the other as the world's currency of today. I warmly welcome the statement of Dr. Beryl Sprinkel, with whom we had conversations in Washington, that positive steps to this end should be taken forthwith.
  The causes of the world recession are not hard to define. In my view, for what that is worth, remedies for them are to hand. They must be taken. To go through them, it is clear that the two oil price shocks, now happily mitigating to some extent, were accommodated by too much borrowing. That delayed a necessary but inescapable adjustment. There has been a huge growth in non-official international capital markets. For example, many hundreds of billions of United States dollars float outside the United States uninvested in the sense that they are not producing goods and services. Thus, there are several United States dollars in various forms outside the United States for every dollar inside.
  One must give credit to the commercial banks for the effort they have made in the recycling of petrodollars and other currencies. Yet, in practice, they have run horrendous risks. To take some statistics shortly, about $300 billion are owed by Latin America. The largest nine United States banks have lent 50 per cent. of their capital and reserves to Mexico alone. To get that matter into scale, the total capital of all the 15,000 United States banks is approximately $40 billion. Over 1,500 banks are now being invited, or cajoled, to assist Mexico in debt rescheduling.
  Then there are the problems in Africa, in the Communist bloc, and so on. Without going into those in detail, I would just point out that the potential consequences for the banking system and for public confidence in it if something goes wrong, as it still may, are horrific to contemplate. Thanks, however, to the concerted, if belated, action by the world's bankers, disaster has been narrowly averted. Let us make no mistake. This is a crisis, the worst effects of which have only just been kept at bay.
  The world is a dangerous place. The collapse of a number of United States banks has been averted, but it has been a close call and the danger may recur. Potential political chaos in any one of the defaulting countries is still a possibility. Anyway, in consequence, the prospects for a recovery in the world economy are deferred somewhat and could easily worsen.
  In spite of what is said and written, there is happily no sterling crisis. There never was, and there never need be, since, on any rational assessment, Britain's economy is strong and in not too bad shape. There may be features that
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  one dislikes—certainly there are features that I dislike—but the balance of payments is strong. Britain's banks are by no means as heavily involved in doubtful overseas loans as are the banks of America. Whatever may have been said by later speakers, the chatter that we had from Labour's Front Bench about devaluation has not helped the situation.
  Leaving that and coming back to my main theme, there are two glaring weaknesses in the world banking scene. Both were referred to by my right hon. Friend the Member for Sidcup. The first has been lack of information between bankers about the affairs of the countries to which they lend. I regard that as inexcusable and I hope that the technical committee now established by the bankers will finally put that to rights. The second is the absence of coordinating mechanisms to restrict borrowing to tolerable levels. This is the responsibility of finance Ministers. When my right hon. Friend winds up, I hope he will be able to assure us that work is being done to put that firmly into place.
  As to the direction in which we should move, I agree with those who say that we need to look again at our institutions in the modern world, especially the International Monetary Fund. In the first place, I wonder whether the International Monetary Fund should be placed under tighter political command. To expect it to operate in response to directions from more than 100 countries seems absurd. It is, of course, good that there has been an increase in subscriptions. The Chancellor, as chairman of the interim committee, deserves every congratulation for his part in that.
  It is right for the moment to use the IMF as an arbiter and disciplinarian so that the commercial banks can come in behind it as may be necessary, but we need to consider whether the IMF in its present form is adequately constituted to deal with the problems of today. The perils are by no means over. There is the risk of a debtors' club, which could impose terms on the lenders in the Keynesian model. The House will remember the example that I have in mind—where one is in a position of strength the more one owes. There is the risk of restrictive regimes imposed by the IMF with the implications for world trade which follow from that. To sum up, the cost of the folly of our unpreparedness is not yet fully counted.
  By no means the least of our problems is the breakdown of the Bretton Woods agreement. That is not the cause, but it has certainly resulted in the persistently misaligned exchange rates and the exchange market volatility to which I have referred. It is extraordinary that the United Kingdom has had no declared exchange rate policy or target. I have never understood why that was. If the target is not appropriate this week it can be changed the next, but to have a complete apparent vacuum of policy is incomprehensible.
  To put the matter as simply as possible, I should like to lock up the wisest money men and economists in the world and demand that they reappear only when they have a replacement solution. To put it another way, it is essential that a formally accepted international commitment to exchange rate targets should be agreed if stability is to be achieved in future. Certainly it would be difficult of achievement but the problems are vastly less than the dangers of being without it. All our planning is for 1984 or the end of this decade. What is needed is to find solutions more promptly than that.

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  Reverting to the domestic, tight domestic monetary policies—now somewhat discredited, as we all know, as an exclusive remedy if not as a panacea; they never were and never should have been pretended to be—have not been co-ordinated among nations, especially with the United States. The result is that world purchasing power is less than expected, the recession is more severe than expected and no apparent end is in sight. I take interest rates as one example. There is no greater discouragement to economic activity in the United Kingdom or in any other country than high interest rates. In the United Kingdom, 5 per cent. real interest rates are intolerable. They are at the highest level known in recent history. The sooner thay come down, the better.
  The carrying costs of debt to many developing countries are insupportable. All that we do is to impoverish the people who should be our customers. Unless and until we address ourselves directly to the realities of today's monetary systems—their impact on trade, their disadvantages and the restrictive practices that follow in their train—the world will have problems. There is a need for a clear analysis and examination of the world's monetary systems. The world has been slow to react to these problems, which have been evident for some time. One useful result of this debate may be to focus attention in this country on the work that needs to be done internationally. I hope that the United Kingdom will be a leader in this process. The dangers are real and dangerous.
  At home, the Government have undoubtedly substantial achievements to their credit—the reduction of inflation, the real increases in productivity and the new realism that is abroad in our land. Make no mistake—we dare not falter in our declared course. Britain's industrial competitiveness reduced by 50 per cent. between 1979 and 1981. Sterling's 12 per cent. devaluation in the past two months hardly compensates for that.
  What must be done? We must teach our people that we are living in a new industrial revolution. We must come to terms with it. We must succeed in that environment. That was a point made by the right hon. Member for Down, South.
  I cannot and do not accept that, because of world recession, an increase in unemployment in the United Kingdom is inevitable. I deplore the fact that the Government's estimates, contained in the autumn statement, are for an increase of 300,000 this year. I refuse to accept that. So should the House of Commons. So should the Government. The prospect for too many young people and for older people is awful. Like unemployment, the fact that we now have the worst level of manufacturing output for 17 years is also unacceptable.
  It is our task to give our people hope. That is our duty. I am sure that it can be done. First, as I hope I have shown is possible, the conditions should be created for growth internationally, chiefly by replacing confusion and doubt with stability. At home, as I shall argue until it is done, there should be a programme and a crusade for national recovery. That, too, is feasible. I beg my right hon. and learned Friend the Chancellor and Ministers at the Treasury to pay some attention to the first report of the Select Committee on the Treasury and Civil Service for this Session dealing with the Government's autumn statement. I refer particularly to paragraph 48, which states:
  "In previous Reports we have pointed out the falling share of capital expenditure in total public expenditure".
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  I shall quote the figures for my right hon. and learned Friend the Chief Secretary to the Treasury sitting on the Government Front Bench. In 1976ߝ77, total public fixed investment as a percentage of total public expenditure was 17·7 per cent. The plans, at constant prices, for 1982ߝ83 represent 11·4 per cent. only. The paragraph goes on to state that the estimate in the autumn statement shows that the local authorities in 1982ߝ83 will overspend on current account by £1·5 billion but underspend on capital account by a similar amount. That is a disgrace. The Government should take action. Paragraph 49 states:
  "Local authority expenditure has in fact displayed a continual tendency to fall as a share of total public expenditure."
  Why should these trends not be reversed? We need a substantial capital programme, an explosion and a blitz on capital work. There is no shortage of private finance. There is no need to create inflationary tendencies as a result of doing what we all know needs to be done. There is no shortage of capital for good ideas. Heaven knows, capital expenditure is badly needed physically. All that is required is imagination and determination. I am confident that my colleagues will show both, on the domestic scene and internationally. I hope that they will make a publicly declared new year's resolution to do so.
  7.15 pm
  Mr. Richard Wainwright: It has been valuable and encouraging, at any rate for me, to be present throughout this debate and to listen to all the generous minded and imaginative speeches that have been made. The right hon. Member for Down, South (Mr. Powell) was right on the ball when he reminded the House of the completely new problems that this country faces and to which it is not addressing itself—namely, the consequences of being able to enjoy a surplus on our balance of payments in spite of manufacturing industry being so sorely stricken and still in serious decline. There is a great deal of work to be done in spreading the leisure rather than concentrating the misery on the unemployed.
  I touch only briefly on the problem. I have no complete answer. Many of these temporary and peculiar circumstances will disappear when North Sea oil begins to disappear. It is a major problem for a highly complex society to try to adjust the whole pattern of social life for what will perhaps be only a relatively short period so far as we know. I wish that the House could spend more time debating significant problems of this kind. We on the Liberal Benches do not pretend to have any comprehensive answer. It is more important that, in the mood that has prevailed in the House today, suggestions and solutions should be pooled.
  It is immensely reassuring to know that hon. Members on both sides—the hon. Member for Oldham, West (Mr. Meacher) was an exception—display a firm determination to resist protectionist measures and pressures and to retain, so far as possible, the open world trading system on which this country depends so greatly.
  The debate has exposed the frailty of the Government's position and has shown how easily the achievements that they claim can disappear. The Chancellor of the Exchequer put a brave face on the likely effect on inflation of the recent perturbation in the exchange markets. The right hon. and learned Gentleman overlooked the fact that his own chief economic adviser, Mr. Terry Burns, when he was examined by the Treasury and Civil Service Committee on 16 November 1982 and was specifically

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  asked what would constitute a major change in the exchange rate assumptions on which the Government's autumn forecast under the Industry Act 1975 was based, replied:
  "I think I would say, as far as I can take it, anything less than 5 per cent. strikes me as being clearly not major; anything over 10 per cent., say, begins to be clearly major."
  When the Government's chief economic adviser says that 10 per cent. depreciation is the beginning of a major change—we have now depreciated by between 12 and 13 per cent.—it is hollow for the Chancellor to say that there are special circumstances that will somehow prevent those conditions greatly increasing the upward trend of inflation.
  I shall not detain the House with the measures that I and many other hon. Members believe that Britain can take by itself. It is a pity if we must take steps by ourselves but there are some measures by which we could pull ourselves up by our own bootstraps. My party has estimated that perhaps 1 million jobs could be restored by domestic programmes of the type that the right hon. Member for Taunton (Mr. du Cann) spoke of when he dealt with national capital assets, which are themselves in a wretched state.
  I agree with the right hon. Member for Stepney and Poplar (Mr. Shore) when he talks of the value of bringing down the international value of sterling. As usual, however, key evidence of measures to restrain trade union monopoly pressure in important industries was missing from his programme. In the past, that pressure has destroyed almost all of the advantages of depreciating sterling after a year or two. The Labour Front Bench must face that fact. Until the Labour party puts something in its programme to deal with that immense leakage, its programme will not be credible.
  I should like to be in the fashion of today's debate and refer to global circumstances. That is the only realistic context in which we can debate today's subject. We are the custodians of one of the greatest trading currencies in the world, and British public opinion is far more educated about the key importance of currency values than people in the United States can ever be expected to be.
  If one lives in the middle of Iowa, one is not brought up to think that one's life depends on the exchange value of the dollar. British people, however, travel to Spain and other places on holiday and have a realistic appreciation of the subject. For the Government to talk about world circumstances as though they are the weather and for them to suggest that we can only put up a large golf umbrella, or get our husbands to do so, to protect us against the world is not the mark of a great nation under allegedly great leadership.
  It is high time that Britain got away from the parochial, nationalistic and jingoistic attitude to which the alliance amendment refers and tackled some of our world responsibilities. We should discover concerted measures for economic expansion and for the proper alignment of exchange rates. Above all, we must ensure that we do not embark on competitive devaluations, which played such an awful part in the years of economic chaos that bred Hitler and Mussolini and led to the second world war.
  We should also bear in mind the appalling state of primary producers. In some cases, they cannot pay even the interest on their debts out of the product of their entire world sales of raw materials because their markets are so
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  depressed and because of the threat to world banking. No one wants to exaggerate the banking problem for fear of contributing one scintilla to international fright. But it is no good avoiding the fact that banks are terribly exposed. They have taken on the debts of sovereign countries with little knowledge of what they are doing.
  It is fashionable in the House—there is some reason for it—to deride professional economists when they descend into the dusty arena and try to prescribe for the world's problems. It is also fashionable to say that they never agree with each other. But one of the most encouraging results of the Treasury and Civil Service Select Committee's visit to Washington was that we were presented with an impressive document that had been agreed by economists and leading economic advisers from 14 countries. They came from as far afield as India, Japan, Europe and the United States. The document is a plan to promote global recovery. It echoed the sentiments that hon. Members have expressed today—the need for concerted international action. These experts believe that Great Britain can play a considerable part in that by leadership, by bringing its own policies into line with civilised remedies.
  One of the suggestions in the annexe to this report has not been ventilated today. It is not enough to bolster up banks that have over-lent to sovereign States. That may be a palliative that will prevent a crash. We must give thought to new and better ways of lending on reasonable, not Shylockian, terms to those desperately needy countries.
  One suggestion is that savings institutions around the world, especially those in the United States and Britain, have a contribution to make. The Western world has enjoyed prosperity ever since the second world war. Our enormous savings institutions should accept far more global responsibility than they do. Many of them, such as pension funds, have liabilities at a long distance in time. If they are insuring a pension for a worker who is only in his twenties, their liability date is much longer distant than anything that the banks will consider. It has therefore been suggested that the resources of those institutions should be harnessed in a new way to lend to under-developed countries. That would be more satisfactory than leaving those sovereign States at the mercy of banks.
  Anyone who, like me, has had experience of a fairly large business that employs a substantial number of people and which is utterly dependent on bank finance that might be withdrawn the next day—albeit only in theory—knows what an appalling inhibition that is when one is trying to develop. It is dreadful for Governments of underdeveloped countries to be weighed down with the nightmare of debt burden.
  The Government should take a more internationalist stance. They should be less parochial and nationalistic. They should recognise that recovery for Britain, as for the rest of the free world, depends on concerted global action.
  7.28 pm
  Mr. Stephen Dorrell: The events of the past few weeks have almost inevitably thrown the spotlight of political debate about economics back on monetary policy. Today's debate has reflected that.
  Whenever I hear the right hon. Member for Stepney and Poplar (Mr. Shore) talk about monetary policy, it occurs to me that he seems unable to resist any argument that comes to hand which can be used against my right hon. and hon. Friends on the Front Bench, however inconsistent it may be with arguments that he has used previously. A

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  good example of that this afternoon was his argument that the pound had been over-valued over a long period, followed by his statement that it was a mistake for my right hon. and learned Friend the Chancellor to remove exchange controls. He did not explain how he would resolve the obvious inconsistency between those two assertions. If we had not abolished exchange controls, the pound would have been pushed to even higher levels.
  That is one example of the wider failing of all speeches from the Opposition Front Bench in recent months about monetary policy. They have never addressed the central issue—that is, however much they may disagree with the Government's monetary policy, what would they put in its place? We are entitled to know, as are the electorate if it is to be an election year, what yardsticks of monetary policy the Opposition would use if they formed a Government. They have never made that clear, and the House and the country are entitled to know.
  No one could argue that the Government have not had a clear policy. Not all of us have been entirely enthusiastic about it while the Government have been in office, but the policy has been clear. I compliment my right hon. and hon. Friends in the Treasury team. The policy has responded to the arguments about it.
  It would be instructive to trace developments since the Government took office. In the early days the yardsticks used to govern our monetary policy were extremely mechanistic and resulted in wrong policy conclusions. My right hon. Friend the Leader of the House said at that time that sterling M3, our chosen indicator of monetary policy, was a wayward mistress. Perhaps a more dispassionate way to describe its failings would be that it was an inaccurate meter of exactly how tight was monetary policy in the economy. It gave an entirely false impression of whether monetary policy was lax or tight. Because we followed that chosen meter, we made the wrong policy responses to what we thought was a lax monetary position, but other indicators at the time showed that it was not as lax as the sterling M3 statistics suggested.
  Opposition Members have tended to continue that argument as though it was a current criticism of Government policy. It has become ancient history. The Government no longer pursue a monetary policy devoted to maintaining a target for sterling M3. There is a danger that in debate we deal with yesterday's problem and do not move forward to deal with the new position created by the Government.
  It is no secret that at the time of the previous so-called sterling crisis in the autumn of 1981 the Government moved their monetary policy on to a rather wider base. From then they did not govern their monetary responses purely by reference to sterling M3. They took account—at first tacitly, and later explicitly—of other indicators of the course of monetary policy.
  That was confirmed in the Budget in March last year when my right hon. and learned Friend used a phrase that it would have been inconceivable for him to have used three years earlier. It was that those who wished to know about the implications of his remarks on the policy for sterling M3 could find that arcane statistic buried in the deepest recesses of the Red Book. It is inconceivable that he could have taken that view three years earlier. The signal that he gave in March last year was that his monetary policy was more broadly based and not purely concentrated on a single statistic. I welcomed that.
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  The past 12 months proved that it is impossible to argue that as a result of that more widely based monetary policy we continued with the tight monetary background that was a characteristic of the Government's early months in office.
  The object of tracing that development, which I believe to be historically accurate, is to suggest to the Minister that the time has now come for the Government to take the evolution of their monetary policy a stage further. As the policy was described in the Budget last year, the Government were to look at a whole range of monetary aggregates, including the exchange rate. In the circumstances that we now face, the Government should move again and regard the exchange rate not as purely another measure of monetary policy, but as the lead measure by which the tightness or laxity of monetary policy is judged.
  I was struck by what my right hon. and learned Friend the Chancellor said this afternoon about the stability of exchange rates as a concept. He said that that was accepted as desirable by finance Ministers around the world. He clearly stated that he regarded exchange rate stability as desirable, but he said that that was realistic only if it was seen as a consequence, and not a cause, of economic policy co-ordination by the major industrialised countries. I do not think that that is true. It is a chicken and egg problem—oscillating exchange rates make policy coordination in the major industrialised countries much more difficult. It is necessary to look towards currency stability and policy co-ordination as two sides of the same coin, and not as one being a John the Baptist for the other.
  The time in the evolution of the Government's monetary policy has now come to regard currency stability as their principal monetary objective and as the principal meter by which the laxity or tightness of monetary policy is judged. Having begun with sterling M3 as our principal measure, and moved away from it, we should now continue that move by regarding the exchange rate as not the exclusive, but the principal, measure of the laxity or otherwise of monetary policy.
  It is often said that Governments are relatively powerless to influence the course of events in foreign exchange markets. I find that hard to accept. There can be few markets where the interplay of forces of supply and demand are more perfect than in a foreign exchange market. I accept that the Government can only indirectly influence demand for a currency, but they can obviously and indirectly influence supply. It is not open to Treasury Ministers to argue that they cannot influence the supply of money when that has always been the cornerstone of their economic policy. The original policy was to influence the expansion of money supply by reference to sterling M3. We should now influence the expansion of money supply by reference to the foreign exchanges and to a stability target for sterling.
  It is conceptually impossible to argue that Governments have only limited control over foreign exchanges. History and experience both in this country and around the world have disproved that assertion. Perhaps the most recent and successful attempt, over a long period, of a Government to hold down their exchange rate for a clear purpose was the Japanese policy towards the yen, which has only recently been relaxed to allow it to rise. Without examining the background to the Japanese economy, it is

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  almost impossible to understand why, when a country is running a large current account surplus, it nevertheless ran a weak currency.
  The OECD report on Japan, published in the middle of last year, throws considerable light on how the Japanese managed to hold their exchange rate down for a specific purpose. The report states:
  "The long-term capital balance swung from a net inflow of $2·3 billion in 1980 to a net outflow of $9· billion in 1981. Reflecting the relaxation of capital controls … the relatively easier monetary conditions prevailing in Japan and large interest rate differentials against the yen, the net accumulation of long term foreign assets by Japanese residents more than doubled".
  The mechanism by which the Japanese were able to hold down their exchange rate was precisely the policy that the right hon. Member for Down, South (Mr. Powell) described as having nothing to be said in its favour. I doubt whether the Japanese would agree with him. They are investing their capital surplus in markets around the world where they think that they can get the best return on it. In so doing, they are expanding the very markets to which they seek to export their manufactured goods. Some hon. Members may decry that economic policy but, looking at the results in Japan, I do not think that it can be easily dismissed.
  I do not underestimate the difficulties of acting directly on the foreign exchanges. Only a fool would do that. Confidence is important, and there are many extraneous factors—the Shore effect may be one of them—that influence a foreign exchange market. The strength of the underlying supply and demand factors cannot, however, be indefinitely denied.
  To argue that something is possible is not the same as to argue that it is desirable. The Japanese experience shows why I consider such a policy desirable, but I should like to give a wider argument.
  It is no accident that world trade grew most consistently at a time when international currency movements were restrained within the narrowest limits. In the second half of the 1960s, world trade grew in volume terms by 9 per cent. In the 1970s it grew by 6 per cent. in volume but in the past three years it has fallen by 1 per cent. Seeing those statistics, we cannot ignore the fact that the decline in the rate of growth of world trade was almost exactly contemporaneous with the decline in discipline of foreign exchange markets. If that is a coincidence, it is a remarkable one, but I do not believe that it is a coincidence.
  Before I became a Member of Parliament I was in charge of an export department. I was a practitioner of the world trade statistics that I have just quoted. As an exporter, I realised that it was unrealistic to regard exporting simply as a matter of flogging a surplus. It is not a matter of getting on a plane to go and sell something when the currency movement is suitable or the price is right. The Japanese have invested over a long period in market development, market support and after-sales service. Building a market is a long-term investment, not a short-term response to price movements on the foreign exchanges. If it is a long-term investment, anyone making key decisions for world trade is fundamentally interested in the stability of the currencies in which he has to trade and particularly in the relationships between them.
  I share the Government's deep commitment to the importance of world trade—and free world trade—and
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  their recognition of the importance of an expansion in world trade for our economy. Much has been said about the importance of not deteriorating into protectionism and of resisting both tariff and non-tariff barriers to trade. I suggest that perhaps the most important single non-tariff barrier to trade now is the fact that no exporter ever knows until he actually receives the cash across the foreign exchanges the real price that he will receive for his product. Fluctuating exchange rates are a very important non-tariff barrier to trade, so if we are interested in free trade we should be interested in removing that barrier.
  There is another reason why stable currencies are important for this country as a yardsick of monetary policy. As I have emphasised throughout my speech, I am principally interested in a yardsick of monetary policy rather than in the Opposition arguments about competitiveness. I am interested in the means by which we define the monetary policy that we wish to pursue. Monetary policy is a vital discipline for anyone trying to run a modern economy because it defines the parameters within which a modern economy operates. Therefore, I believe that a monetary policy defined by reference to the exchange rate has a greater chance of achieving its objectives because it is clearer, less ambiguous and more easily understood than any other measure of monetary policy so far developed.
  I refer briefly to some of the arguments advanced by my right hon. Friend the Member for Taunton (Mr. du Cann) and the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) about the methods by which the currency stability for which I argue can be secured. We cannot, of course, simply conjure out of thin air today a revised and renewed Bretton Woods agreement. The world has moved on and we must deal with the world as it now is. I believe that the tripod approach outlined by my right hon. Friend the Member for Taunton and the right hon. Member for Hillhead of the European monetary system, the dollar and the yen is the first essential building block for the currency stability that I seek.
  Like my right hon. Friends the Members for Taunton and for Sidcup (Mr. Heath) and many others who have spoken, I attach great importance to international financial reform and its role in promoting the expansion of world trade and reducing the risk that some major Western banks now face in their investments, some of which they must now regret, in some newly industrialising and less developed countries.
  Several of those who have spoken referred to the recent election of my right hon. and learned Friend the Chancellor as chairman of the interim committee of the IMF and I join them in congratulating him. I suggest that that position gives my right hon. and learned Friend a unique opportunity to point the way for the world towards the international currency stability which I believe is the essential bedrock on which to build the re-expansion of world trade and to deal with the problems of international indebtedness to which my right hon. Friend the Member for Taunton referred. My right hon. and learned Friend has a great opportunity to show the world the way forward and I very much hope that he will take it.
  7.49 pm
  Mr. Allan Roberts: I am pleased to follow the able and courageous contribution of the hon. Member for Loughborough (Mr. Dorrell). It was an attack on the policies of his Front Bench in the guise of an attack on the

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  policies of the Opposition Front Bench. I agree with a great deal of what he said. By contrast, the speech of the right hon. Member for Down, South (Mr. Powell) was agreed with almost in total, judging by the nods of agreement from the Prime Minister.
  I hope the House will forgive me if I leave the global economic position to one side, say a little about the national economic position and concentrate more on the position in Merseyside in terms of the economic crisis and how it affects the people of Merseyside and Merseyside itself. I do so for three reasons. My first reason—perhaps it is the least important and least serious reason but none the less it is a reason—is that, having been called to speak in a debate which has so far had contributions from so many former Prime Ministers and so many aspiring Prime Ministers, it is not likely that the national press will report very much of what I have to say, although the Merseyside press is likely to do so if I say something about Merseyside.
  Secondly, an examination of Merseyside does three things. First, it gives the lie to what has been said by several right hon. and hon. Members on the Conservative Benches about the British economy being strong. I believe that it was the right hon. Member for Taunton (Mr. du Cann) who said that the British economy was strong. I say to him "Tell that to the unemployed in Merseyside". If he really believes the economy is strong, he should go for a walk or a drive around the area. The national decline in industrial output of 20 per cent. is only too apparent in Merseyside. Factories such as Tate & Lyle and Courtaulds have closed down. The docks are in decline and unemployment continues to increase, as it did under previous Governments, both Labour and Conservative. However, it has accelerated dramatically during the past three years under the Government.
  The right hon. Member for Down, South referred to the surplus of £6 billion to £7 billion per annum on our balance of trade. He said that it did not really matter that a large proportion of that surplus was to do with North Sea oil revenues, and that it was not a serious consideration to examine how that surplus was made up. The implication seemed to be that that surplus on the balance of trade showed that Britain was in a stronger and healthier position than perhaps the Labour party and Labour Front Bench spokesmen were suggesting.
  Mr. J. Enoch Powell: I was not arguing from the position of the current balance as to any prosperity or strength of the British economy.
  Mr. Roberts: To have the phenomenon to which the right hon. Gentleman referred—a £6 to 7 billion surplus on the current account—at the same time as industrial output is down 20 per cent. shows that the significant thing about that balance is that it is made up of North Sea oil revenues but that those revenues are not accruing to the benefit of British industy or to the benefit of the British people. It is that balance, as a result of North Sea oil revenues, which hides the very economic crisis that Britain is in and which the Government face. Where is the wealth going, which comes from North Sea oil and which should accrue to the nation from that balance of trade surplus? It certainly is not going to British industry to re-equip and modernise it; it certainly is not going to the British people because 3½ to 4 million people are unemployed. In my constituency 26 per cent. of the male population are unemployed—a phenomenally high figure.
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  Merseyside's problems are the nation's problems written large. Merseyside has been in decline for the past 30 years. Private money has been encouraged to invest in the area to create jobs but that has failed. Previous Labour Governments gave incentives. Merseyside has development area status, which gives grants to new industries. Some industries did come but they have upped sticks and left. They are not coming any more. Unemployment is increasing and the monetarist policies of the Government are doing nothing to create new jobs or even to maintain the existing jobs in Merseyside.
  A new approach is necessary. Already in the debate Labour Members have put forward the national policies that the next Labour Government would pursue, including exchange controls, selective import controls and massive amounts of increased public expenditure to re-equip British industry and to rebuild our public and social services.
  In addition, as Merseyside is in a disadvantageous geographical position and in a difficult position to benefit should any upturn in the economy come, and as it has never had a strong manufacturing base but has been a port-led economy with a service and commercial base rather than a manufacturing base, special policies must be pursued by the next Labour Government to help revitalise Merseyside, to create jobs and to enable Merseyside to benefit from the national economic policies that the Labour Government will introduce, which will benefit other parts of the country far more easily than Merseyside.
  Firstly, a policy must be introduced for the port and the docks. The future of the docks is crucial for the future of Merseyside. Instead of buying off jobs with public money, which is what is happening at the moment, the next Labour Government must set about to revive the fortunes of Liverpool docks. As a pre-requisite for action, the docks must be taken into public ownership. We need a policy for directing shipping so that Liverpool receives its fair share of trade. In order to prevent foreign ships so directed to Merseyside going to Rotterdam or Hamburg, we must reduce the handling costs and charges at Merseyside by adopting the same type of policies as are adopted by Hamburg by giving some Government support and subsidy but by taking away costs, such as lighting costs and the cost of dredging the estuary and maintaining the roads and highways in the area of the port, which at the moment are borne by the port but which should be borne by the community.
  Britain's withdrawal from the Common Market would benefit Liverpool considerably and is crucial if we are to revive the fortunes of Merseyside. Merseyside is geographically in the wrong place with regard to our present pattern of trade with Europe. We used to be able to import cane sugar as we wished from the Caribbean. It would go through Merseyside but now, because of the common agricultural policy, Lomé agreements and so on, not only does the sugar not come into Merseyside but neither does the rum. Tate & Lyle has closed as a consequence and the docks have declined. If Britain could buy its food where it best suited the British nation, in the markets of the world where food was cheapest, the docks in Merseyside would benefit considerably.
  Mr. Robin Squire: Will the hon. Gentleman accept that, regardless of the arguments for or against the Common Market, even if Britain came out of Europe there is no indication that our trade pattern would

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  be such that Liverpool would inevitably benefit, any more than he could invariably direct, to use his own words, trade to that port in preference to many other ports?
  Mr. Arthur Lewis: It was before.
  Mr. Roberts: I agree with the sedentary intervention of my hon. Friend the Member for Newham, North-West (Mr. Lewis). One can plot the rapid decline in Merseyside's fortunes from our entry into the Common Market and the gradual implementation of the transitionary arrangements for imports of food from Commonwealth and other countries. It is a fact that 75 per cent. of the activities of the Common Market are to do with the common agricultural policy and food and not with the exports and imports of manufacturing industries. There is no doubt that Merseyside would benefit considerably. There are already too many ports in Britain. That position would not alter but a national plan for the direction of shipping and the public ownership of all the ports would help Merseyside considerably.
  Secondly, there are only about 24 miles of Britain's considerable miles of roadway on which there are tolls. All these tolls are levied on estuarial crossings. They are levied on the crossings under the Mersey and everyone on Merseyside, including all Members of Parliament in the area, of all parties except those who become Ministers, is in favour of abolishing them. If we want to encourage trade and industry on Merseyside, we need to abolish the tolls. In so doing we shall help to provide a better communications system.
  Thirdly, it is meaningless for Merseyside to have development area status if the 22 per cent. Government development grant is not available to service and commercial concerns, either new ones arriving on Merseyside or existing ones that are expanding. Currently, grants are available only to manufacturing industries. This policy needs to be altered significantly.
  Fourthly, new jobs need to be created by the establishment of a new Merseyside enterprise board, which, along with the Department of Industry, would create new publicly owned industries on Merseyside. Local planning agreements within the framework of the national ones to which the Labour party is committed could be negotiated and enforced by law between private industry and the new enterprise boards.
  Fifthly, the local authorities should be given real powers to develop new municipal enterprises of any sort on Merseyside, especially in the building industry, with the expansion of direct labour departments, the baseload of these departments being new housebuilding and a modernisation programme, as well as meeting the needs of the homeless. This would help to reflate the economy through public expenditure without sucking in consumer goods from abroad. It would also employ the unemployed building workers.
  Sixthly, the next Labour Government should develop a regional alternative—I hope that it is not too late for the present Government to do so—to the expensive and unwise proposal to build a large third London airport. Liverpool and Manchester airports could work more closely together. That would bring trade and prosperity in some measure to the region and to Merseyside.
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  Seventhly, the inner city partnership machinery and the Merseyside Development Corporation should be brought together into a new, democratically accountable Merseyside development agency. The management committee of the agency should be composed entirely of elected councillors and, perhaps, Members of Parliament as well, who are accountable to the public through the ballot box. The areas covered by the organisation should be extended and should include all dockland and the inner city areas of Bootle, Litherland and, of course, Walton. It should be given real powers by the next Labour Government, if it is set up, to create new concerns and industries and to create real and lasting jobs.
  Eighthly, it is important in any area to have an efficient public transport system if the entire community is to benefit and not only those who use public transport. An efficient transport and communications system is a prerequisite for commercial and industrial growth. Therefore, the Merseyside county council needs the freedom and public support from Government to provide an efficient and cheap public transport system. This should be done by the next Labour Government.
  Ninthly, rail services between Liverpool and the rest of the country, especially London, should be greatly improved and upgraded and not cut back. Fast trains should be introduced into areas such as Liverpool to bring more prosperity and easier communications.
  The tenth point in my programme for Merseyside for the next Government is the reinstatement of the support that has been lost through massive cuts in rate support grant. These are the cuts that the previous Secretary of State for the Environment, who has moved on to new pastures, imposed on all Merseyside councils, thereby causing rates to be increased. The cuts should be reversed. More grant should be given to councils in areas of high unemployment and social deprivation such as Merseyside and less should be made available to shire counties in areas such as Essex, Cheshire and Kent.
  Merseyside will stand a chance of surviving through the 1980s only if a Labour Government are elected that introduce and implement the policies that I have outlined for Mersey side, along with national economic policies that are in Labour's plans for creating jobs and in the alternative economic strategy. Without these policies the decline will continue, unemployment will continue to increase and there will be an even greater breakdown in law and order. Time is short, but the people on Merseyside, a Labour Government, Labour councillors in the area and others of good will can make a difference.
  It is only the Labour party that is offering a clear alternative to the Government's policy of mass unemployment. The Social Democratic party and the Liberal alliance are not. Both parties are certainly committed to continued unemployment. My hon. Friend the Member for Liverpool, Walton (Mr. Heffer) has recently outlined in more detail than I have presented to the House the effect that Britain's membership of the Common Market has had on Merseyside. How any member of the SDP or the Liberal alliance can ask for votes on Merseyside is beyond me, bearing in mind the parties' commitment to Europe. Despite the public relations exercise mounted by the Government, and the former "Minister for Merseyside", I believe that the Government have already written off Merseyside. Their claim that there is no alternative to their no-hope policy is a blatant attempt to deceive many of the British people

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  into accepting bread-line living conditions. The only money to be put into Merseyside has been used to bribe workers into selling their jobs. A garden exhibition is planned while real industry has been closing. As I have said, Tate & Lyle and Courtaulds have already gone.
  The onus is on Labour Members and the Labour party, when advancing the policies that I have outlined, to answer the question "Where is the money to come from?" If the public opinion polls show anything, they show that the British people support the policies for which the Labour party stands and is advocating. They show also that the Conservative party has a national lead in the polls over the Labour party. The anti-Conservative vote, which is split between the alliance and the Labour party, is far greater than the pro-Conservative vote. In areas such as Merseyside, the north of England and Scotland, the Labour party has a lead in the polls over the Conservative party. We do not have the national lead in the polls that we need because we have not convinced the electorate, although it supports the main parts of our policy, that we shall implement the policies for which we stand if a Labour Government are elected. One of the reasons for this is that we have not fully put across to the people the answer to the question "Where will the money come from?"
  This is understandable when the Prime Minister, the Chancellor of the Exchequer and other Government spokespersons put forward a simplistic view of the economy, which has been advanced this afternoon and this evening once more. It is suggested that the nation is run like a family household and that no family household should borrow money because that is bad. They say that a Labour Government would have to borrow. It has been said this evening that a Labour Government would go on a borrowing and spending spree. This allegation needs to be answered. The simplistic and Mr. Micawber approach—income £20; expenditure £20. 0s. 6d: result, bankruptcy—is not real. Most households borrow, if for no other reason than to buy the house in which they live. They are on to a good thing as long as the money that they owe on the asset that they are buying with the money that they have borrowed is less than the value of the asset that the money is used to purchase.
  The same is true of the nation. The public sector borrowing requirement is presently oscillating between £10 billion and £14 billion. The Government are still borrowing, but now the money is used to pay unemployment and social security benefit. The money is being borrowed to pay weekly bills, not to invest in the house or in capital expenditure. I make no excuse for saying that the next Labour Government will borrow to put people back to work and to produce goods and services—the real wealth of the nation—and to create capital assets that will increase, not reduce, the wealth of the nation. The one thing that the Prime Minister has in common with the Militant Tendency, about which we read so much, is their detestation of borrowing.
  We have been speaking in abstract terms about the economy. I now speak about the economy in relation to the people about whom we are truly anxious—the unemployed, people in need, the badly housed and children who are leaving school and who cannot find work. One of the Merseyside unemployed has sent a small poem to me. It is not very long but it adequately illustrates the plight of Merseyside's unemployed:
  "She's never looked for work or stood in queues,
  Been snooped upon, or given grants for shoes;
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  Not once subjected to the deep despair
  Of making both ends meet on empty air,
  She's never seen her husband's self-respect
  Ground into dust from government neglect,
  Nor had to face a future, grimly bleak,
  On twenty-five pounds twenty pence per week.
  She's never been means-tested by the state;
  Grilled by the deemsters on things intimate,
  Has had to pour her heart out, simply for
  Those rights which rarely ever reach the poor,
  Whilst leaflets couched in fancy prose, contrive
  To keep the myth of gobbledygook alive.
  She's never had to see her children swop
  The classroom for the subterfuge of 'Yop'.
  Or else, because they see no prospect new,
  Seek solace from the act of sniffing glue.
  For who could now believe, without a doubt,
  In corners turned and levels bottomed out?
  From Tory doctrinaire all such sins flow,
  And what was Circe once is Thatcher now."
  8.6 pm
  Mr. Geoffrey Rippon: Whatever merit may be attached to the speech of the hon. Member for Bootle (Mr. Roberts), it made no contribution to supporting the Opposition's motion which is designed to criticise the Government's interest and exchange rate policies and to urge the reimposition of exchange controls. I am not surprised, because that has not proved to be much of a case.
  The debate has properly widened to more fundamental issues. In the past, I have had occasion to be critical of the Government's monetary policies. Certainly it was a mistake to pitch our interest rates in 1979ߝ80 so far above the then United States interest rates, especially when the pound was buttressed by high oil prices. I believed then that to push the pound to more than $2·4 was excessive and damaging to our trade and industry.
  I share many of the doubts expressed by other speakers about tight monetary policies. My doubts were reinforced by my belief that the monetary aggregates that were being used—whether M1, M2 or M3—were completely unreliable. As my hon. Friend the Member for Loughborough (Mr. Dorrell) said, what I used to call motorway madness has now finished and sounder monetary policies now seem to be in operation.
  Whether pursued by a Labour or Conservative Government, I have always found extremes of monetary policies, like the case for flexible exchange rates, excessively mechanistic and irrational. It is not always remembered that the Labour Government, when the right hon. Member for Ebbw Vale (Mr. Foot) was Chancellor, pushed up interest rates—[Interruption.] I forgot for a moment that the Leader of the Opposition is a dead body over which the candidate for Bermondsey has been selected. I should have referred to the right hon. Member for Leeds, East (Mr. Healey).
  There was then an interest rate of 16 to 18 per cent. In 1976, I wrote to The Times saying that interest rates at that level would prove to be a disaster. I was supported indirectly by the right hon. Member for Down, South (Mr. Powell) who, speaking to the junior chamber of commerce in Bangor, said that no country could prosper or indeed survive with an interest rate of 10 per cent.
  There is no simple monetarist cure for our fundamental economic problems. It has proved to be a dangerous and a damaging illusion, as my right hon. Friend the Member for Taunton (Mr. du Cann) said, to believe that one can divorce monetary policies from general economic, fiscal and social policies.

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  Unfortunately, just as the Government are making a half U-turn, the Opposition have chosen to adopt a monetary policy that is round the bend. I cannot as readily as the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) acquit the Opposition of not having had a seriously damaging effect upon the exchange rate by their announcement that a Labour Government would devalue by 30 per cent. in two stages. If we had a Labour Government, the pound would plummet and we would soon be back in the arms of the International Monetary Fund. It is all very well to say that it is highly improbable that the British people would turn to a Labour Government who advocate as a deliberate policy the devaluation of the pound. Nevertheless, the belief that the Opposition are so irresponsible as to put forward that policy has been very damaging.
  Artificially to depress the exchange rate, which is now arguably too low, would not help. It would be just as damaging as artificially pushing up the exchange rate with high interest rates. Any stimulus to exports, as the right hon. Member for Leeds, East has argued from time to time, is soon offset by rising import costs. Whatever view one takes of the Government's monetarist policies, we must accept that our exports depend upon improving the competitiveness of industry, on our capacity to innovate, on the maintenance of quality and on the observance of delivery dates. To try to solve the problem of industrial competitiveness and exports by further devaluation of what is already an under-valued pound would be similar to trying to dry a lump of ice in front of a fire.
  Happily, we now have a more flexible approach to monetary policy. I was pleased when a somewhat chastened Professor Friedman recently acknowledged that lower interest rates and lower unemployment would have meant lower Government spending, and higher economic growth would have meant higher revenues, and that on both counts the deficit would have been reduced. However, it is true to say, as other hon. Members have said, that there is no magic in the level of deficit. What matters is what goes into it.
  I have been worried about the extent to which the deficit is now made up of high repayments of debt interest. In 1974, the figure was about £2 billion a year. I remember that we heavily criticised the Labour Government when the figure rose to £8 billion, and now it is £16 billion. Equally, the enormous sums that we must pay in social security and other benefits are, to say the least, an unfortunate factor in our budget deficit. I share, and have long expressed, the anxieties referred to by my right hon. Friend the Member for Taunton about the continuing decline in capital investment. We have continually cut capital expenditure, which is a fundamental difficulty with which we must deal.
  As to the restoration of exchange controls, it is another illusion to believe that there could be or ever was a magic formula to prevent the rest of the world taking a subjective view of the value of sterling. As my right hon. and learned Friend the Chancellor of the Exchequer said, exchange controls did not prevent successive devaluations under the Labour Government.
  No Chancellor of the Exchequer, even a Socialist monetary despot, could be like the man in Browning's poem—
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  "His world to make, to contract and to expand
  As he shut or oped his hand."
  We cannot deal with our monetary and economic policies today in isolation from the rest of the world. That is why I join those who express satisfaction at the Chancellor's new role as chairman of the IMF policy-making interim committee. He will serve the country well if he follows the international route outlined by my right hon. Friend the Member for Sidcup (Mr. Heath) and by the right hon. Member for Hillhead.
  We must take initiatives in seeking international action to strengthen the world's financial system and to ensure greater exchange stability. Like my right hon. Friend the Member for Sidcup, I hope that the Chancellor will take up the call of Mr. Donald Regan, the Secretary to the Treasury in the United States, to have a new Bretton Woods type conference, which will have to be preceded by intensive work by Government officials and the central banks.
  Little purpose is served by having one summit meeting following another with satisfactory communiqués, in the sense that no one can disagree with the terms, but which result in no useful action. The Versailles communiqué was marvellous, but nothing happened. The Bonn communiqué in 1978, to which the right hon. Member for Hillhead referred, was an admirable document, but nothing happened. If this initiative is to succeed, it will need great care in preparation.
  I share the views of those who have said that a first stage would be our negotiating to join a developing European monetary system, not to create a wall around Europe, but to build a regional pillar for a reformed international monetary system of the type advocated by Mr. George Shultz in 1974, when he was one of the main authors of the Group of Twenty's report on monetary reform. I share the views of those who welcome his return to the international scene.
  There is no doubt, as my hon. Friend the Member for Loughborough said, that one of the best ways to restore international business confidence would be to achieve a method of managing floating currencies so as to avoid these increasingly erratic exchange movements. That will not be easy. I agree with the right hon. Member for Leeds, East who once said that international economic diplomacy is like rowing a boat through treacle. However, the effort must be made, and made urgently.
  I agree with those who say that competitive devaluations of the type of which the Opposition are apparently in favour is as great a threat to industrial and economic recovery as competitive interest rates.
  It is significant that in this debate speaker after speaker has made reference to the crisis created by the international debt time bomb. It has at last focused attention on the need to strengthen the resources of the IMF and the World Bank and to do something to bring order out of the chaos that many people, including Lord Lever in the previous Labour Government, have been warning the world is likely to happen and has indeed been inevitable.
  Today's report from the Bank for International Settlements and yesterday's meeting of the Group of Ten shows the recognition of the need to mount the rescue operation to help debtor countries that have been induced to over-borrow at rates of interest that would once have been regarded as criminal usury. The hon. Member for Colne Valley (Mr. Wainwright) spoke of Shylock, but, as I once said, Shylock would have been a wet today.

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  You may have seen, Mr. Speaker, that the notorious Mr. Meyer Lansky died last week in Florida. He was founder director of Murder Incorporated, which was a wholly owned subsidiary of the Mafia. He knew something about loan sharking, and obviously made a good business out of it as far as one can judge. He also knew that, to be a loan shark, one has to have enforcers. There is no way that one can go about breaking the legs of international debtor countries. One just has to bail them out. That is what the IMF, the Group of Ten and the World Bank have been doing. They are only postponing a real solution of the crisis.
  The principle is clear. We all know that if one owes £1,000 to a bank, one is in trouble. If one owes the bank £10 million, the bank is in trouble. Unfortunately, today there are short-term rescue operations only, when we should be considering how to end the world trade recession that the bankers have helped to create. The ultimate objective of Governments and of central bankers must be to secure substantial increases in international trade.
  Last year the president of the World Bank, Mr. Clausen, said that the present fabric of international cooperation in trade, finance and aid may not be able to survive prolonged economic stagnation. However, that stagnation is continuing. The danger remains, and it is grave.
  We should recognise that a time comes when international trade is not just business, but politics. There is also a time when politics becomes security. At least a third of the fall in inflation is due to falling commodity prices. It is that that makes it impossible for many of these debtor nations even to repay the interest on their debt. We may hail a fall in the price of sugar as a tremendous victory over inflation and a tremendous reduction in the cost of living, but what price do we put on the fall of a friendly Government in Mauritius, replaced, as it has been, by a manifestly unfriendly one? For example, one cannot ignore the warning, early this month, of the Jamaican Prime Minister who, according to Time Magazine, said:
  "If we don't have growth, you will be looking at independent countries searching for the alternatives to the private enterprise economy."
  Some Labour Members may welcome that, but I am not pleased to know how the Marxist parties are growing in strength in every Caribbean island.
  Another aspect of this problem relates to those who believe in protectionist policies, through which we could somehow isolate ourselves from what is happening in the rest of the world. I do not agree. I share the view of the hon. Member for Colne Valley that Britain, more than most countries, has a continuous interest in generally liberal trading policies.
  I am not sure about the views of the Opposition. The right hon. Member for Stepney and Poplar (Mr. Shore) is something of a protectionist. The right hon. Member for Leeds, East only this week denounced beggar-myneighbour policies. I hope that the Opposition will make it clear that they favour a liberal trading policy and that they will give all the support that they can to initiatives on the international scene to try to assist other countries, in particular some of the debtor developing nations.
  It is only when we and other industrialised countries are prepared to play an effective role in recreating world trade that we shall have any hope of dealing with our own critical unemployment problems.
  Several hon. Members rose——
  Mr. Speaker: Order. Four hon. Members are still waiting to speak. There are 32 minutes left before it is hoped to wind up. If those hon. Members could make eight-minute speeches, everyone will get into the debate.
  8.28 pm
  Mr. Dafydd Wigley: Several hon. Members have given attention to questions such as whether the exchange rate should be the dominant indicator that we try to keep stable, whether we should give more attention to the growth of the money supply or whether the rate of inflation, interest rates or the public sector borrowing requirement are the most important considerations. Unless all those policies and parameters come back to the question how they affect people, they will not be all that meaningful in places such as my constituency.
  The level of unemployment must not be a residential factor that is allowed to drift one way or another after all the other parameters are considered. In the area that I represent, male unemployment is 22 per cent. In the whole of Wales about 37,000 young people under 20 are out of work. Unemployment in Wales has increased from 7 per cent. in 1979 to 17 per cent. now. We have seen the activity rates falling so that there is hidden as well as overt unemployment. Activity rates for men have fallen from 78·3 per cent. in 1975 to 74·3 per cent. in 1981. There is a tragic waste of human potential. A cancer is running through communities. That is why I believe that the excuse given by the Government that unemployment is universal and inevitable must be questioned.
  A number of speeches from both sides of the House have challenged that excuse. Is it not depressingly defeatist to accept unemployment as inevitable at the levels that we are suffering today? It is untrue to say that it is universal. We are going through an international depression, but unemployment is not at the same massive levels in many small independent countries the same size as Wales. The Employment Gazette in December showed that unemployment was 2. · per cent. in Austria, 3 per cent. in Sweden, 1·8 per cent. in Norway, 0·5 per cent. in Switzerland and 2 per cent. in Greece compared with 17 per cent. in Wales. In Japan, which is a larger country, the level is 2ߝ3 per cent. It is 8·4 per cent in Germany—half the level that we are suffering in Wales.
  Other countries have not been prepared to accept unemployment at the level that we have had to suffer. When I was in Sweden a few months ago the incoming Government regarded 5 per cent. unemployment as unacceptably high and set about a programme to create 20,000 new jobs a month in public sector works, social schemes and so on to bring down unemployment. It is a myth that unemployment is universal and inevitable.
  Another myth that must be exploded is that in the modern technological world, with the present changes, no work is left to be done and there must be fewer net jobs as a result of that revolution. Automation and microtechnology mean that some jobs come to an end, but that does not mean that there must be fewer jobs in total. There will be fewer jobs in some sectors, but not all. If work is ended in one category, it does not mean that no other jobs will need to be done in the community. We need a mechanism to ensure that the wealth that is created by the new technologies is recycled so that other jobs in the

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  community are created and sustained. The same is true of the benefits that come from North Sea oil, to which I shall return later.
  Work needs to be done in our community. We need only to look about us to see it. The right hon. Member for Down, South (Mr. Powell) referred to the care of the elderly. That is an increasing problem. Given the demographic factors, it will be a major problem over the coming years. We must consider care for the elderly and disabled. There is a need for more staff in hospitals and day clinics and more home helps. Work needs to be done all round us, but it happens to be work that is not triggered by the present mechanisms. Therefore, we may need to look for a revolution in that direction.
  Work needs to be done in the physical environment on repairing and building homes. In Wales we need 60,000 new houses, and 100,000 need to be repaired. Work needs to be done on the building of roads, new training centres, hospitals and clinics. Work needs to be done in the environment, both in inner urban areas and in rural areas.
  People who are out of work want to do that work, yet we are paying people to do nothing rather than the work that needs to be done in our communities. As a community, should we not pay more to those people to do the necessary work than for being idle? Is it not fairer to spread the burden of the present depression through the whole community rather than landing it on the 20 per cent. who are at the bottom of the employment market, and, if necessary, increasing taxation to bring those people into employment?
  This is something we must not shirk. We must not hide behind the excuse that we can always borrow our way out of the problem. It may be necessary to raise taxation to give people work. We also need to ensure that the level of skills is increased. The number of people in recognised apprenticeships has dropped by a third from 153,000 in 1979 to 114,000 in 1982.
  The fundamental question to be asked is what is happening to the wealth that has been created from the oil industry and from the technological revolution? Why has not the wealth been recirculating to bring into employment people who are unemployed? Two major factors are causing the problem to be far worse in the United Kingdom than in other countries. Our exports have grown very substantially in terms of oil. If we are roughly balancing trade with our trading partners, we may be selling oil to them and importing manufactured goods from them to pay for the oil. We are selling oil that has a low labour content and importing manufactured goods that have high labour contents. A few months ago the Prime Minister in Glasgow said that over the last 20 years we had imported manufactured goods to the extent of 1·5 million jobs which was a sobering figure. She said that we cannot indefinitely continue on this pattern or we will have no manufacturing industry left when the oil runs out.
  The second question is, what has happened to the capital formed within the economy? I hesitate to cross swords with the right hon. Member for Down, South (Mr. Powell) as I respect his intellect in these matters, but if there is a current surplus within the domestic economy it does not inevitably have to be spent overseas. It must be possible to use the current surplus as capital investment within the home economy, thereby bringing benefit at home and creating jobs. With the lifting of exchange
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  controls, there has been a massive move of capital overseas. Three years ago there was virtually no outward capital movement. Two years ago there was £2 billion net capital outflow and last year it was up to £8 billion—equivalent to a million jobs. One million jobs appear to have been lost in terms of the outflow of investment. Taken together with the 1½ million jobs lost by importing manufactures, that accounts for a large proportion of the present unemployment.
  I am not advocating that we become an island and cut ourselves off totally. I am advocating that there is a need for control and planning of these factors. The free-for-all has landed us with the unemployment problem which is besieging communities like my own. That is why we need to look more radically and fundamentally at the questions of exchange controls and parity rates since these are fundamental factors which are causing unemployment in the community.
  Mr. Speaker: I am very much obliged to the hon. Gentleman, but one of the hon. Members who had been trying all night to speak became fed up when I spoke of eight-minute speeches and has departed. I want the House to know that speakers will now have a few minutes extra.
  8.38 pm
  Mr. Ernie Ross: During this debate on the economy, Conservative Members have argued that there is no going back to the failed policies of the 1960s and 1970s. Many hon. Members will agree, which is why my hon. Friend the Member for Oldham, West (Mr. Meacher) referred the House to Labour's programme and the alternatives contained therein. We have responsibilities tonight. We must not forget that the failed policies of the Tory Government have created the worst unemployment and the deepest industrial recession since the 1930s. The Government will also proclaim their achievement in reducing the rate of inflation, but we must point to the heavy cost in lost employment and output.
  We must argue that deflating the economy, depressing manufacturing output and throwing workers on the dole are not, and never can be, acceptable strategies for countering inflation. We must warn that, when the present very low level of world commodity prices begins to recover, inflation will inevitably take off again.
  When the Government try to shift the blame for the present slump on to the worldwide recession, which is affecting every country, we must stress that the slump in Britain has been, and still is, dramatically worse than elsewhere. In terms of output, industrial production, investment, loss competitiveness and unemployment, our record since 1979 has been markedly worse than those of our major industrial competitors. The Government have contrived to achieve this state of affairs despite the advantage of self-sufficiency in oil since 1980. The Conservative party always claims that everything will be better tomorrow. It is always "tomorrow". The Chancellor of the Exchequer said so in 1980. The Prime Minister said it in 1981 and the Financial Secretary said it in 1982. Conservative Members will be queueing up throughout 1983—right up to the election—to remind us that it will get better tomorrow.
  We must ensure that the British people are shown the real facts that lie hidden behind these Tory fantasies, such as those revealed in last month's seasonally adjusted and manipulated unemployment figures. They show that for

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  the 48th month in a row the number of people out of work in Thatcher's Britain has gone up to a post-war record of well over 3 million. It is on facts such as those, which reveal the Conservative party's mismanagement of the economy, that the Government must be judged.
  Like other hon. Members, I want to take the debate back to the real people of Britain, who are suffering from the effects of the Government's economic policy. Dundee has paid an enormous price for that disastrous policy. The announcement of 400 redundancies at Veeder-Root in November 1982, the shedding of 38 jobs at Holo Krome and the unemployment figures announced at the time, meant that unemployment then stood at 16,000. It has risen significantly since then.
  Those figures represent a 112 per cent. increase since the Conservative party came to power in 1979. Since January 1982, seven Dundee firms have gone to the wall, and there have been a further 25 redundancies in other companies. A total of 42 per cent. of men registered as unemployed have been out of work for more than a year. More than 1,000 are in "one step away from the dole" jobs—those are supported by job protection schemes. In Dundee, 20,000 people are claiming supplementary benefit, and more than 1,250 young people registered as unemployed have never had a job since leaving school.
  The number of engineering apprenticeships has dropped from 134 in 1978ߝ79 to 61 in September 1982. In November, when there were 452 redundancies in the Dundee engineering industry, there were only eight vacancies over which those people could scramble to find a job. These gloomy figures reveal the disastrous extent to which the Government's economic policies have hit Dundee.
  The textile industry was a major employer in Dundee. In 1977, it employed 7,500 people. In 1982, the number had fallen to 2,000. There has been a loss of 5,000 jobs with no vacancies. That industry had a docile work force that accepted closures, redundancies and short-time working allied to relatively low wages—all that the Prime Minister said they should do if they wanted to preserve employment. Instead, those people have lost their livelihoods and dignity because of the Government's failure to deal with cheap imports from Bangladesh and India and, more particularly, market saturation from the EC, especially Belgium. When a group of hon. Members met the Minister responsible for industry at the Scottish Office, all he could offer was platitudes. He could not even offer a retraining programme for those people.
  The most serious threat now facing Dundee affects the new technologies, even though the Government have said that we should all be concerned with their viability and success. Nimslo has recently announced that it intends to move the production of its 3D camera from Timex in Dundee to Japan. Despite the fact that that camera was developed as a result of the skills, expertise and experience of the Dundee work force, Nimslo has decided not to take advantage of the Government grants it was offered, has abused the Timex work force and has moved production to Japan.
  The company claims that it can produce it much cheaper in Japan. One of the reasons why it can argue that is that the Nimslo company did not take advantage of the investment that was offered. The Timex company failed to invest in the new plant and machinery that would allow
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  those engineering workers, tool makers and assembly workers who had produced the camera in less than two years to take advantage of their hard work.
  The Timex company came to Dundee in 1947 because, as a Timex publication recorded at that time, it found a pool of intelligent and readily trained people who adapted to a specialised industry with excellent results. Since then, the Timex company has had a tremendous and magnificent response from its work force. It has had a good industrial relations record. A traditional watchmaking industry is dying because of a lack of investment in plant and machinery that would allow the workers in the company to compete with their French counterparts in the use of new technologies.
  That is best expressed by the words of Mr. Jim Tinney, the chairman of the staff section of the AUEW at Timex. He said:
  "With no research and development facilities at Timex, new products only appeared on the production line as a direct result of union pressure."
  He refers also to Veeder-Root:
  "Veeder-Root lost out because of being unable to carry out research and development locally into electronic digital counters for petrol pump heads."
  Dundee is being denied research and development facilities which means inevitably that it is dependent upon the dictates of the parent company. We shall gain nothing from being able to solder microchips if the technology to produce them and the knowledge to design them remain in the United States.
  Those workers need assistance. They are putting together a package that they will present to the Scottish Office with, I imagine, little hope of any substantial financial assistance. That contrasts with the way in which the Mitterrand Government in France responded to the needs of the Timex workers at the Besancon plant. The Mitterrand Government were prepared to hand over £90 million to ensure that the Besancon plant could be modernised to take advantage of the technology that Timex wished to site there. If Jim Tinney's hopes are to be realised, a radically different economic approach requiring large scale public support is needed for the microelectronic industry in Dundee and for the application of new technologies throughout the industry.
  Specific measures for new technology must be backed by an increased rate of growth in the economy. That can be achieved only by a reflation of demand based on an increase in public spending, tax cuts for the low paid, a policy of full employment, the revitalisation of our manufacturing base and the control of import penetration by foreign manufactured goods. Priority must be given also to the level of effective demand in the economy to catch the increased productivity potential.
  There must also be a place in this equation for the trade union movement. During their three years in office the Government have made a point of denying the valuable role that is to be played by trade unions, particularly in the development of new technology. The trade union movement has a vital and central role to play in the introduction of new technology—the speed of its introduction, the way in which it operates upon working conditions, job content and status for employees and, more important, its effect on employment. That is clearly demonstrated by Timex in Dundee.
  At Blackpool last year, whatever else happened, the Labour party adopted a series of policies that offer the people of Great Britain relevant Socialist answers to the

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  many problems that beset them in a capitalist system in deep crisis. They are policies which offer the hope of rebuilding our industrial base, reconquering our domestic markets and restoring Great Britain to full employment. They are policies that aim at developing our social services, making major improvements in social benefits and eliminating poverty. They are policies that defend the rights and interests of ordinary workers, control rents, prices and fares. They will allow workers to organise freely in trade unions in defence of wages and conditions. They are policies that will bring into, or back into social ownership, those assets that are vital to the creation of an efficient and democratic industrial structure.
  "Labour's Programme '82" gives a detailed account of all our party's policies. They offer the prospect of a fairer, more prosperous and Socialist Britain. They are the only hope that the Timex workers can look to in 1983.
  8.49 pm
  Sir Brandon Rhys Williams: I have the honour to be a Member of the Parliament in Strasbourg where pressure on the timetable is often so severe that even party leaders have to confine their remarks to four or five minutes. I have more than once been confined by the Chair to 90 seconds. To be able to speak for 10 minutes is British plenty.
  I wish to comment on the speech of the right hon. Member for Stepney and Poplar (Mr. Shore) who made a strong attack on the Government's exchange rate policy. It struck me, as someone coming to the House of Commons from a business background, as rather academic. But the right hon. Gentleman drew attention to the fact that the Government have an element of choice in their exchange rate policy if they wish to exercise it.
  When the oil revenues began to flow in, the Bank of England must have recognised that there was a choice of policies possible—either to let London remain a high interest-rate financial centre, which would result in attracting capital to London, create a high value pound and give us the benefit of cheap imports but at the same time bring pressure on the internal price level; or to contrive that London should be a low interest-rate centre. The Bank of England has a certain element of discretion. It is not true to say that it does not. That would have given us a low exchange rate for the pound, provided a stimulus to exports and, of course, promoted investment within the British economy. It was a difficult choice to make.
  I do not believe that in 1980 and 1981 Britain was fully in a position to seize the opportunities that would have arisen had we had the benefit of a low rate of interest and a low exchange rate for the pound. I do not believe industry was ready to reinvest and modernise on the necessary scale. I am afraid that much of the investment that would have taken place would have gone into the purchase of existing assets, which is purely inflationary. Equally, I do not think that the unions were in the mood to allow the sort of economic revival which ought to have followed from a low interest rate and a low exchange rate for the pound. I do not know whether they would even now.
  At all events, the Government chose a policy of industrial reorganisation, trade union law reform and stable internal prices. In those policies they have achieved remarkable successes. Industry is much more competitive
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  than it was and the work force is far more aware of the need to innovate and to cut the costs of production. The British economy is far fitter now and much more ready for a revival; but confidence is lacking all round the world.
  The question therefore for the Government is how to help to create conditions in which business confidence will revive internationally. Britain is part of the world economy and cannot live simply for itself. I am certain that any business man will say that the Government can do nothing to help international business confidence by jiggering the exchange rate for the pound.
  Since the breakdown of the Smithsonian settlement in 1973 and 1974 we have been suffering exactly the same problems as the world experienced after the breakdown of the gold standard in 1931. I shall not draw up a list of all those problems, but the economic patterns of the 1930s and of the late 1970s and 1980s are very similar. We know what to do to solve our problems. The question is whether we have the will.
  We know that we ended the economic depression last time by setting up an international structure of exchange rates and stable financial conditions—the Bretton Woods agreement. Last year I had the privilege, as a member of the European Parliament's Economic and Monetary Affairs Committee, to be invited to attend the International Monetary Fund meetings in Toronto. I have been to these meetings on a number of occasions. This time the only spokesman who managed to fill the hall and arouse enthusiasm was Mr. Muldoon. It was known in advance that he was to make a call for the restitution of the Bretton Woods system. I listened to his speech but I do not think it was realistic.
  At the end of the war, in 1944ߝ45, the Americans were in a position to establish a world monetary order. Now they are suffering from what one might call aid fatigue; they are preoccupied with their internal problems of inflation, budget imbalance and so on. But that does not mean that we cannot make progress in reaching an international agreement which would assist business confidence.
  The structure of the SDR is 50 per cent. the United States dollar, about 12 per cent. the yen and the remaining 38 per cent. or thereabouts the three major European currencies, the pound, the deutschmark and the French franc. Our membership of the European Community thus enables us to do a great deal towards the restoration of international business confidence. We ought to be setting out to organise our own time zone, as I might call it, by working more closely with Paris and Frankfurt.
  Above all, we must avoid what one might call a return to national socialism, which was advocated by the right hon. Member for Stepney and Poplar—protectionism, bureaucratic intervention, controls, quotas, five-year plans and the rest. National socialism did Germany no good. Even at its height, Schecht had to recognise that Germany had to live by its exports. He tried to give German industry a prominent place in the export market. The retaliation that would inevitably follow if we adopted the recommendations of the right hon. Gentleman would be disastrous for Britain's place in the world community. We have to make the most of our practical opportunities.
  In regard to sterling and the European monetary system, I do not think that we should simply announce that we will join it from one day to the next. Sterling is so freely traded in such large volumes all over the world that if the Bank of England was committed to intervene at a fixed rate,

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  whatever the pressure of selling or buying, it would be a matter of weeks only before we had to leave the monetary system once again. We should not join the EMS without adequate preparation. However, there is a time—and it has come—for us to open negotiations to join the European monetary system under certain conditions. We should take the 6 per cent. margin which the Italians have. Also, it must be understood that we will move the central parity for sterling in accordance with the market's assessment of the relative value of the national currencies in the European monetary system.
  It is fruitless to exert pressure on national economies through over-valuation, which is the custom that has grown up within the European monetary system as it is at present being operated. To avoid variations in exchange rates there must be real convergence of the underlying economies, not just a persistence of fixed, false, numerical currency relationships which get overthrown sooner or later by market forces.
  The central rates for the European currencies should be adapted regularly, perhaps monthly, to reflect the purchasing power parities so far as we are able to assess them. Then I should like to see a truly European market for capital. At the moment it is only possible to establish a truly free capital market between London and Frankfurt, but in due course Amsterdam would come in; and I think Zurich would come in although strictly outside the European Community. Gradually a single real rate of interest for the Common Market would emerge instead of an artificial structure of fixed exchange rates which convinces no one. Unity of business conditions is far more important than an apparent unity of fixed currency exchange rates in which no one believes.
  There should be some stimulus to large-scale investment through the Ortoli facility, which fortunately has just been renewed. I should like to see deliberate progress towards the ending of the tax frontiers which still serve to Balkanise Western Europe because the various member states operate such different rules. European industry is wrongly structured to face the challenge from the Far East. Unless we work together and think in terms of international investment within the Common Market, we shall be the world's unemployment pocket in the next 20 years.
  We need also to improve as far as possible our relationship with the world's other currency areas. I believe myself to be reliably informed on the attitude of Japanese bankers, including the central bank. They are saying that they would prefer to see the world resisting Japanese goods because they are too dear rather than because they are too cheap. I believe that the Japanese authorities would welcome a rise in the exchange rate for the yen.
  The most that we can ask of the United States is that there should not be such violent interest rate movements and that a more permanent structure should be established between the European exchange rate system and the dollar. But now that my right hon. and learned Friend the Chancellor is in a leading position in the IMF, I am sure that where that institution is concerned a large new loan must be established to fund the OPEC surpluses. The best way to raise it would be on the basis of an indexed rate. I should like to say more, but time will not allow.
  9 pm
  Mr. Denis Healey: The debate has been distinguished by many able speeches, although I am bound to say that few right hon. and hon. Members surprised the House with the nature of their views. The only exception was perhaps the right hon. Member for Down, South (Mr. Powell) who surprises us so frequently that we cease to be surprised. For me, there is an element of nostalgia, to which the Chancellor referred, in this debate. It is some time since he and I confronted one another across the Dispatch Box. We are both older now than we were. I must say that, on this occasion, I feel a little more as if I was being nibbled by a hearth rug.
  In view of the heavy fall in sterling in the last 10 weeks, I think I should start by considering the relationship between exchange rates, interest rates and the main propositions of the theory by which the Government's economic policy has been guided over the last three and a half years. No one, I think, would feel that I was being unfair if I stated that the Government's policy has been based on three propositions—first, that there is no rational objective that a Government can set themselves in governing the economy, except to control the level of inflation; secondly, that this can be done only by controlling the growth of the money supply; and, thirdly, that the money supply can be controlled only by raising or lowering interest rates. These three propositions form the trinity of what I have come to call sado-monetarism.
  In the course of my exegesis, I wish to try to answer the questions that so bewildered the Prime Minister in her seminal interview with Mr. Brian Walden on Sunday. She said that what ultimately determined the value of sterling was the policies that the Government pursued steadily and consistently. She added:
  "We may go through a period of rocking"—
  I am not sure what she meant by that, but it certainly was not rolling—
  "but if we keep our policies firm and do all the right things, you know, keep public spending under control, keep the Budget deficit low and, keep public borrowing down, keep the money supply under control, these are the things that will tell, and the boat will come through surely and steadily, and sterling will stay firm".
  The right hon. Lady made it clear on Sunday, as she has done frequently over the last three and a half years, that it is the magic of the market place responding to this resolute approach by this Government which will achieve the desired objectives. She has, however, found the market place just a trifle disappointing in the last few weeks. When she arrived back in London from her visit to the Falklands she joined Queen Victoria in her regal pantheon by saying "We are not impressed by the behaviour of the markets". She was a little more direct when she addressed the Tory trade unionists on Saturday and referred to
  "the fickle fears of those who should know better".
  That is the Maggie that we know and love.
  One thing that has always struck me is that those who rely most on the market place to achieve their objectives are those who understand least how the market place works. I shall deal with the Prime Minister's puzzlement when she said that part of the realignment against the deutschmark and the yen was reasonable because their industrial performance has been much better than ours for a long time but that, for reasons which were utterly inexplicable to her, their currency was performing weakly

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  for a while. I should like to take this opportunity to try to disperse her bewilderment and explain what I and most people in the markets agree happened.
  For most of the past three years, interest rates have been determining exchange rates and the markets have been rewarding economic and monetary vice, not economic and monetary virtue. Countries with poor industrial performance, high inflation and inadequate monetary control have seen their currencies rise. Countries with good economic performance, low inflation and good monetary control have seen their currencies fall. For the first two years of the European monetary system, for example, the French franc was at the top of the basket and the German deutschmark was at the bottom, not in spite of the fact that French inflation was higher but because of it. I suspect that the reason for that is as follows.
  Since the world stagflation of the 1970s, those who manage the atomic cloud of footloose funds in the Euro markets have lost confidence in any long-term investment of those funds and been interested mainly, but not exclusively, in making short-term gains by exploiting interest rate differentials between one country and another. Therefore, billions of dollars have been moving hour by hour across the exchanges, following even marginal differences in short-term interest rates.
  Countries which have given absolute priority to controlling the money supply through interest rates have consequently witnessed their currencies rise whenever they publish bad monetary figures. That has been a regular phenomenon in both New York and London. It happened to the dollar a few days ago in New York. That has been the principal consequence of high interest rates in the countries that have adopted sado-monetarism, but the main purpose of high interest rates was never achieved. High interest rates did not succeed in controlling the money supply. The Chancellor will recall, although he may not wish to do so, that, for his first two and a half years as Chancellor, we had uniquely high interest rates, yet the money supply was completely out of control. It was rising at two or more times the rate that he planned for it each year.
  Those high interest rates crucified British industry by raising not only the cost of investment and research and development, but the price of the goods that it exported. Therefore, British industry, like American industry recently, has been subjected to a double squeeze. That is very unfair, because Government theology has taught Ministers to believe that precisely the opposite will be the result.
  Four days ago the Chief Secretary to the Treasury said that the way to reduce interest rates is to reduce the public sector deficit. But what happened? We have had the strictest fiscal policy of any major country in the industrial world—the OECD has said so and it was described in detail in a recent paper by a broker in London—but interest rates have been falling more slowly than in Japan, for example, which has had twice the public sector deficit. Despite the fiscal misery to which the Government have subjected us, our interest rates, as the Chancellor had to admit today, are now higher in real terms than they were three years ago, and 4 per cent. higher in nominal terms than interest rates in New York. After three years of crippling interest rates and an over-tight fiscal policy, it
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  is only now that the Government have the growth of M3 down to the average level to which it rose during the five years of Labour Government.
  Although money supply rose at more than twice the rate set for it by the Government two years ago, rather than having much higher inflation—which is what the Government told us to expect—inflation came down. That is another puzzle for the Prime Minister. But, of course, everyone knows that inflation has fallen partly because of the depth of the recession—there is no inflation in a cemetery—and partly because of a grossly over-valued exchange rate that reduced the cost of our imports. That is another puzzle for the Government and those who believe in sado-monetarism.
  Why is the exchange rate now falling? It is because the markets appear to be changing the priority that they give to interest rates compared with current account performance. There is a great deal of evidence in many countries that current account performance is becoming, as it used to be, the major factor in determining the value of the exchange rate.
  The Government told the markets last autumn that they expected the massive balance of payments surplus that they were expecting in 1982 to disappear altogether in 1983. Since giving that prediction, there has been a softening in the price of oil, with the risk of a collapse. I am sure the Government know that if the OPEC price falls this weekend as a result of the meeting of OPEC Ministers, all the pressures on sterling will begin again.
  Until recently, and, even now, they do so occasionally, the Government claimed that they could not control the exchange rate. However, as I have demonstrated, by raising interest rates they did push up the exchange rate. It is interesting that when the exchange rate fell below the level that the Government had privately set for it, they panicked. There were two increases in interest rates within a month and massive expenditure of reserves through intervention by the Bank of England—both actions that were wholly incompatible with the Government's theory.
  This afternoon the Chancellor tried to get out of it by saying that he raised interest rates to protect monetary policy. Oddly enough, that was done at the first moment since he took office as Chancellor that monetary policy was under control. It is not surprising that the guru of monetarism, that intelligent man Mr. Gordon Pepper—I always feel that one should take more salt with the pepper—wrote in the January issue of Greenwell's Monetary Bulletin:
  "In the foreign exchange market, the authorities' tentative interventions have brought them the worst of both worlds and have prolonged the period of sterling's adjustment to its previous over valuation.
  In domestic markets, too, the authorities have not been decisive."
  So much for the resolute approach.
  The Government do not know—I am trying to think of the anatomical phrase to best describe their position—by what rules they should operate. They have no policy. They find themselves in the economic area in much the same position as Lord Carrington found himself some 18 months ago, when he had no policy to deal with the Falklands dispute except to go on talking—and, my God, the Tories do go on talking.
  The Chancellor reminds me of a driver who was stopped by a patrol car on a motorway. The policeman said "You are drunk". The driver said "Thank God, I thought the steering had gone". I predicted a long time ago that the

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  Prime Minister would do for monetarism what the Boston Strangler did for door-to-door salesmen. She has, of course, succeeded. The memorial to her policy is visible to us all. The price of her experiment—as the Bank for International Settlements described it—is record unemployment, a record level of bankruptcies, the lowest manufacturing output for 17 years and the biggest fall in national output suffered by any industrial country in the past three years. Ironically, those who have suffered most from her policies are those whom she promised most to help. The entrepreneurs in private industry were, as the House will recall, to be galvanised by this Government. Boy, were they galvanised! The right hon. Lady has strapped them down in the electric chair and pulled the switch.
  In her interview with Mr. Walden on Sunday, the Prime Minister took credit for the wonderful things that she was to do for new industries and innovation. What are the facts? A CBI survey published in the newspapers this morning shows that research and development expenditure, the key to all innovation, had been on average absolutely flat for the past four years. The only industries in which it has increased are electronics and chemicals, but even there it has increased at only half the rate of the previous four years.
  There is an epitaph for this policy, whose author is very close to the Government's heart. Its author is the Morgan Guaranty bank—the British Government's bank in New York and the only New York bank which still has a triple A rating. A current issue of the bank's bulletin is entirely devoted to the lessons of Thatcherism. As I might be regarded as prejudiced if I made my own summary, I shall quote the summary in the Daily Telegraph business section.
  The Chief Secretary to the Treasury (Mr. Leon Brittan): Does the right hon. Gentleman have a copy?
  Mr. Healey: I have it here, and I shall quote from it:
  "Morgan believes Britain has suffered from an overvalued pound which, in turn, was the by-product of Mrs. Thatcher's determined monetarism combined with unrestrained pay rises during the early part of her Government. Morgan calculates that in terms of relative costs of production, the pound was 58 p.c. overvalued in 1981 and 34 p.c. overvalued during most of last year.
  Even after the 10 p.c. fall in the value of the pound in the last six weeks of 1982, Morgan calculates that the pound was 20 p.c. too expensive at the beginning of this year, which could explain why it continues to falter on foreign exchange markets."
  Morgan Guaranty devoted a whole issue of its bulletin to the Thatcherite experiment to point out the lessons for the United States, where Reaganomics is facing an even greater failure—mainly although not wholly for the same reasons—than Thatcherism.
  That brings me to the other main theme of the debate—the crisis in the world economy and the accompanying crisis in the world's banking system which, despite the Prime Minister's new placeman at the Bank of England, is still very much with us. Even as late as September, on the eve of the IMF jamboree in Toronto when I, like the right hon. Member for Sidcup (Mr. Heath), had been raising the problem for three years, I was told by the good and the great, and certainly by the Government, that it was absolute nonsense and there was nothing whatever in it. The only step that the Chancellor took was to bring forward the IMF discussion that should have taken place in 12 months' time to next Easter. Now,
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  thank goodness, he knows that there is a problem and has brought the discussion forward to February. We greatly welcome his belated recognition that there is a problem. It is a great pity that he did not recognise it when the rest of us did and took action before it became as grave as it now is.
  I very much welcome the decision to double the resources of the IMF. That is now under way. How could I fail to welcome it, having asked for it for so long? But many other steps must be taken by way of first aid to the world's banking system in the next few weeks. Central banks must be given more influence over commercial banks in their countries and the Bank for International Settlements must have more knowledge and influence in what the central banks are up to. A big increase in the resources in the World Bank is also needed.
  All that, however, is merely first aid for a banking system that is hourly threatened by collapse. As is daily more widely recognised throughout the world, there is no chance of saving the international financial system without a change of economic policy in the main industrial countries. The less developed countries that do not have their own oil—Mexico, incidentally, is not one of them, but despite its oil it is still in trouble—have seen the cost of servicing their debt rocket up due to excessive interest rates in the developed world, and their ability to service their debt cut colossally because, as a result of the world recession, commodity prices are the lowest for 30 years. The risk is that if we avoid an early banking collapse it will be at the expense of a contraction in bank lending to the non-oil developing countries, which would drive them into mass starvation and revolution and would probably lead before long to widespread default as well.
  The greatest worry for most of us, certainly in the Opposition, is that the problems now facing the world economy are due primarily to the extent to which other Governments are following the lead set by the British Government. The Chancellor boasted of that just a few moments ago. Yet the next voice that one hears is invariably that of the Prime Minister or the Chancellor saying that our problems are massively increased by the fact that there is a world recession. It is like the leader of the Gadarene swine complaining when he falls from the cliff that the other swine are falling on top of him.
  There is now increasing recognition even among Governments that there is no hope of saving the economic system of the Western world from collapse without a collective strategy for growth. The French Government have been preaching that for many months and now, to our immense surprise as well as relief, so are American Treasury Secretary Regan, American Secretary of State George Shultz, who has such massive influence in this area now that he is in Washington, and, above all, Mr. Beryl Sprinkel—until now the most rigid and doctrinaire of all monetarists anywhere in the world. Last weekend, according to the newspapers, Mr. Sprinkel actually tried to get the locomotive out of the shed again. He said that countries that have brought down inflation should take the lead in pulling the world out of recession by increasing demand and he named his own country, Britain, Germany and Japan. We all agree 1,000 per cent. with what he said, but the Chancellor turned him down flat and the refusal of the Group of Ten to accept that advice yesterday cancels out most of the value of the improvements in first aid to the IMF through the increase in the GAB and the coming increase in quotas.

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  The lesson that has been learnt not only in Britain but in many other countries from the bitter experience of the past few years is that economic growth cannot be achieved without consensus at home and co-operation abroad. The tragedy of our country is that both consensus and co-operation are totally alien to the character of our Prime Minister. In that chilling interview on Sunday when the icy glitter of her eyes not once was softened by a glimmer of compassion for the victims of her rigidity, she pledged herself to those values of Victorian society which the leaders of the Conservative party in those days such as Lord Shaftesbury and Benjamin Disraeli fought the whole of their political careers to change—the values of the poorhouse.
  The Prime Minister and the Secretary of State for Employment are the Gradgrind and Bounderby of modern Britain, and they glory in it. Most frightening of all in that interview by the Prime Minister was what she said about consensus. She said:
  "There would have been no great prophets, no great philosophers in life, no great things to follow, if those who propounded the views had gone out and said 'Brothers, follow me, I believe in consensus.'" No Brian, no.'
  Jesus Christ was a great prophet. People followed him because he believed in brotherhood, equality and consensus—all the values that the Government reject. Even if I reduce the argument to the level of economics, nobody on the Government Front Bench can deny that the key to the success of the Japanese economy is consensus, which is institutionalised in the whole of Japanese society.
  Mr. Raymond Whitney rose——
  Mr. Healey: There is no hope for the world unless its Governments can get together, sink their differences and compromise for the sake of collective action. This is as true in economic affairs as it is in political affairs and in defence and disarmament affairs. We believe that there is no hope of a search for that consensus or co-operation under this Government. That is why we ask the House to support our amendment tonight.
  9.27 pm
  The Chief Secretary to the Treasury (Mr. Leon Brittan): When I think of the vicissitudes in the career of the right hon. Member for Leeds, East (Mr. Healey), when I look at the panoply of divided talents on the Labour Benches and consider some of the things that have been said by right hon. Gentlemen about one another, the one thing that I am not prepared to do is to listen to lectures from the right hon. Gentleman about consensus. I cannot think of anyone less qualified to talk about it.
  Until the right hon. Gentleman's pious last few words, we had witnessed today a rather unusual debate on economic policy. The international scene has been concentrated on to a much greater extent than in most of our debates. We have heard speeches from some of the most distinguished and experienced Members of the House on international issues—my right hon. Friends the Members for Sidcup (Mr. Heath) and for Taunton (Mr. du Cann), and my right hon. and learned Friend the Member for Hexham (Mr. Rippon) and the right hon. Member for Glasgow, Hillhead (Mr. Jenkins), to name but a few.
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  It is right that a wider scene should be set even when we are debating our domestic financial controversies. The anxieties that have been expressed about the international scene are those to which we should give vent.
  I hope that those who have contributed to the debate will forgive me if I do not consider in detail every one of the many constructive proposals that have been put forward. However, I assure them that my colleagues and I will wish to consider carefully what has been said.
  Three aspects of the international economic scene spring to mind—our policies, the use of institutions and the reform of institutions. The stress that has been laid in the debate on the need for international co-operation is right. However, less than justice has been done to the co-operation at the many international meetings of finance Ministers and others in recent years.
  The right hon. Member for Leeds, East is right to say that a consensus, to use his word, has emerged and that that consensus has centred largely on the Government's policies. The communiqué that was issued yesterday at the Group of Ten meeting states:
  "In addressing the world economic situation, the Ministers and Governors welcomed recent successes in the fight against inflation and prospects for further progress. They looked towards sound monetary and fiscal policies and appropriate moderation in the growth in incomes to encourage lower interest rates, expanding trade, higher employment and durable economic strength."
  The right hon. Gentleman has sought to suggest that the French Government seek to persuade the international community to follow different policies. He has sought to suggest also that prominent voices in the American Administration are calling for different policies. However, the statement which I have quoted was agreed by all members of the Group of Ten, including France and the United States, but yesterday. It was right to do so because in following the policies commended by the communiqué and advocated by the Government, the countries of the Group of Ten are dealing with the problem of inflation and its consequences on a world scale in the same way that we have attempted to deal with the problem on a domestic scale.
  The process of adjustment involved in pursuit of the recommendations set out in the communiqué will deal, if followed through, with one of the problems that has been rightly identified by a number of those who have participated in the debate. That is the problem of exchange rate instability. There is no doubt that if policies converge in the direction that the Group of Ten identified and commended, there will be less exchange rate instability. There is equally no doubt that the instability has been damaging. I agree with the right hon. Member for Glasgow, Hillhead (Mr. Jenkins) about that.
  I do not agree with the belief that has been expressed in some quarters in the House that what is called for is not world consensus on policies but massive world reflation. It is right that if reflation took place worldwide it might be less immediately catastrophic than if it were unilateral. However, I do not believe that such policies, even worldwide, would deal with the problem. It is precisely the growth of inflation and the extent of borrowing that have led us into the present international difficulties. Therefore, I do not believe that action to bring about world reflation would deal with the problem. However, that does not mean that we can do nothing, should do nothing, have

  417
  done or will do nothing. The reverse is true. There is considerable scope for the use of institutions and for action. We still have an international financial system.
  Although it is tempting, and although there is a case for advocating substantial changes in the world's financial system at such a time as the present, let us not forget that if we are concerned about the immediacy of the problems and the need for urgent action, the use of existing institutions is far more likely to produce quick results than any grandiose scheme for creating new institutions.
  My right hon. and learned Friend the Chancellor made it clear today when such institutions were to be used. He referred to a major announcement that was made yesterday—not next week. It is a substantial step forward to obtain from the Group of Ten an agreement to extend the general agreement to borrow from 6·4 billion SDRs to 17 billion SDRs. That is a substantial increase. Right hon. and hon. Members who have spoken have been good enough to accept that that is a substantial step forward.
  As long ago as the meeting in Toronto, my right hon. and learned Friend the Chancellor made it clear that he was in favour of another major measure that would assist the world in dealing with international difficulties—the extension of the IMF quotas by at least 50 per cent. He continues to work in that direction in his capacity as chairman of the interim committee of the International Monetary Fund.
  There is convergence in the right direction in relation to policies. There is substantial movement in the right direction in the use of financial institutions. However, I readily concede that if we are talking about the reform of institutions or the creation of a new Bretton Woods agreement, we have not taken steps in that direction. To attempt to do that in circumstances that have changed so dramatically and radically since the institutions of the immediate post-war period were set up would not be the best way to cope with the present serious international problems. We should make use of the institutions that we have.
  Mr. Rippon: Is my right hon. and learned Friend saying that the Government completely reject the initiative that was taken by the United States Secretary of the Treasury calling for a Bretton Woods type of conference? Of course the circumstances are different. That is why we need such a conference.
  Mr. Brittan: There is no agreement between the British Government and the United States Government on these matters. No initiative has been taken by the United States Government that has been rejected by the present Government. I welcome the opportunity to reassure my right hon. and learned Friend on that score. [Interruption.] If he is not reassured yet—as the hon. Member for Blackburn (Mr. Straw) appears anxious to show that he is not—I shall take the opportunity later to continue the process of reassurance.
  Dr. Bray: Will the Minister give way?
  Mr. Brittan: No. If I may proceed——
  Dr. Bray rose——
  Mr. Brittan: —to what should be of interest to the hon. Member for Motherwell and Wishaw (Dr. Bray), because the motion was put down by the official Opposition and it deserves at least some attention—
  Dr. Bray rose——
  Mr. Brittan: The motion which is the centre of this debate condemns the Government for high interest and exchange rates and blames those for high unemployment. The main part of my remarks should be addressed to the motion.
  That is what the motion states, but its real implication is that we should allow inflation to rip. The motion and the arguments in support of it ignore the consequences of a serious and concerted attempt to lower the exchange and interest rates. The central thrust of our policy has been to give primacy to reducing inflation. Only by reducing inflation can we have sustainable growth and a real and lasting reduction in unemployment.
  The right hon. Member for Stepney and Poplar (Mr. Shore) was, to put it extremely mildly, grossly unfair to my right hon. Friend the Prime Minister in quoting from her speech, because he tried to present her as heartless and uncaring—[HON. MEMBERS: "Hear, hear."] Hon. Members are entitled to their views, but they are not entitled to hold them on the basis of a distortion of what my right hon. Friend said. The right hon. Gentleman complained that my right hon. Friend the Prime Minister said in her speech at St. Lawrence Jewry that inflation was an evil and that unemployment was a problem. The right hon. Gentleman hung much of his speech on the heartlessness aspect, about which we have heard much.
  However, the right hon. Gentleman did not quote the statement of my right hon. Friend—I am reading from the same speech, not too far away from the passage relied upon by the right hon. Gentleman—that
  "I cannot conceal that of all the difficulties that I face unemployment concerns me most of all."
  [HON. MEMBERS: "Hear, hear".] So much for the standard of fairness that the right hon. Gentleman brings to the consideration of such matters.
  The reason for pursuing inflation as the primary objective is precisely because the curbing of inflation is a necessary condition for dealing with unemployment and because today's unemployment is largely the product of yesterday's inflation. An attempt to tackle unemployment directly by a process of reflation would very shortly be counterproductive. It does not lie in the mouths of Opposition Members to make accusations of heartlessness and lack of care about a Government who have followed sound financial policies and who have, within those policies, so ordered their priorities and expenditure as to introduce a massive youth training scheme, a job release scheme, job splitting and the young workers' scheme. Even within sound fiscal policies, primacy is given to assisting those who are unemployed through no fault of their own. [HON. MEMBERS: "It is your fault."] Right hon. and hon. Members might accept, in considering inflation and the implication of our policies on interest and exchange rates, that inflation does not fall by magic. It is a tough business and there are no easy alternatives. The policies criticised by Opposition Members were, and are, to reduce inflation and to keep it down. Unless that is done, there are no prospects for employment, however much the hon. Member for Blackburn may seek them.
  We could have tried to engineer a lower exchange rate and lower interest rates by throwing fiscal and financial prudence to the wind, although in today's world it is very doubtful whether we should have succeeded in achieving lower exchange and interest rates had we embarked on that attempt. Had we embarked on it, it would have meant

  419
  abandoning the policies needed to fight inflation. That is not a price that we were or are prepared to pay. To have paid it would not have brought about sustainable growth and a real improvement in employment prospects—quite the reverse.
  It has been charged that the exchange rate was and may still be overvalued. What does that mean? The effective exchange rate now is lower than it was when we took office. What Opposition Members mean is that it has not fallen enough to offset the rise in our domestic costs, which was, until recently, way in excess of that experienced in other major countries.
  Why has that been the cause? Part of the reason lies in the external events in the rest of the world and in the oil market, but the major reason has been that financial markets have believed that we mean business on inflation, while other markets, such as the labour market, have taken longer to adjust. Wages went on rising rapidly in 1979ߝ80, with the result that competitiveness deteriorated. That put severe pressure on industry, but it helped to speed the fall in inflation by spurring firms to be more efficient, by encouraging greater realism in pay bargaining and by holding down import costs.
  The initial rise in the exchange rate was the inevitable consequence of the policies designed to reduce inflation. Of course, it would have been much less painful if the increases in domestic costs had come down earlier and faster than they did. They are now coming down and our competitiveness is improving. Unit labour costs grew by 5½ per cent. last year—a rate below that of most of our major competitors. A policy designed to hold down the value of sterling and interest rates artificially would have undermined the attempt to reduce inflation and given a direct boost to domestic costs. It would have involved massive intervention in the foreign exchange markets or accelerating monetary growth.
  Mr. Shore: The right hon. and learned Gentleman has told the House how, in his view, the country came to be so uncompetitive, and to lose its competitiveness during the first two years of Conservative Government. Will he now answer the question put to him by virtually every hon. Member who has spoken today, and say whether he believes that the depreciation of sterling by about 12 per cent. in the past two months is a help to the restoration of our competitiveness? Does he agree with that, and does he look upon that as a substantial contribution to restoring that lost competitiveness—yes or no?
  Mr. Brittan: It is not possible or desirable for Governments to bring down the exchange rate to increase competitiveness. [Interruption.] The right hon. Gentleman asked me a question and must wait for the answer. If he does not want to hear the answer, he should not ask the question.
  It is right that in the short term it is easier for British industry to export than it was before this occurred. However, as I have made clear, I do not believe that, in any permanent sense, a fall in the exchange rate helps. Between 1972 and 1975, the exchange rate fell by 20 per cent., but competitiveness was no better in 1975 than it had been in 1972. There was a short-term boost and a short-term benefit that was soon dissipated in increased costs.
  420
  Even if forcing the exchange rate down made sense, I should seriously ask the question, would it have been possible? Success in manipulating the exchange rate in the face of strong market pressures either way is by no means something that can be guaranteed, as the right hon. Member for Leeds, East should understand. In 1977, he tried to prevent an appreciation of sterling. Intervention was massive. The right hon. Gentleman could not have done more if he had tried. Interest rates were cut from 14½ per cent. to 5 per cent. However, the attempt failed and had to be abandoned. The effect was a monetary explosion with M1 growing by 25 per cent.
  Mr. Shore: There are costs and benefits from every major change in policy. [HON. MEMBERS: "Oh".] Bless my soul. If that is a surprise to Conservative Members, they have been living in a very sheltered environment in the past few years. Of course there are costs and benefits. Having weighed them up and knowing, as my right hon. Friend the Member for Leeds, East (Mr. Healey) recently explained, that exchange rates are responsive to interest rates, on balance does the right hon. Gentleman wish to keep the present level of the exchange rate or is it his Government's policy to use interest rates to drive it back up again? Let us have an answer.
  Mr. Brittan: I have answered that question; the right hon. Gentleman knows that perfectly well. I said that I do not believe that it is right for Governments to attempt to force the exchange rate up or down to a substantial extent. In answer to the question that the right hon. Gentleman was so anxious to have answered, I said candidly and honestly that there were certain benefits to be got from what has occurred, and certain disadvantages. In his most recent intervention the right hon. Gentleman has been good enough to concede that there is a balance in these matters. That is exactly what I have said. It will not be surprising to him if I choose to place the balance somewhat differently from where he places it.
  In his motion the right hon. Gentleman goes on to deal with interest rates. They also play a vital role in securing monetary conditions that will bring down inflation. The policy of monetary restraint is bound to involve in the first phase high interest rates. That is why interest rates have been high all round the world. However, as monetary policy has its effect, so inflation comes down and interest rates with it. During 1980 interest rates reached about 16½ per cent., but they now stand at 11 per cent.
  However, it is absolutely essential to appreciate that in such a complex process it can never be an absolutely smooth linear progression. In the summer of 1981 interest rates fell to 12 per cent., but rose sharply in the autumn. As my right hon. Friend the Prime Minister said in her interview, and as my right hon. and learned Friend the Chancellor of the Exchequer said today, because the central thrust of our policy was right and clear, we were able to overcome that setback. We were following a responsible fiscal policy and cutting back on our borrowing requirement. We were not borrowing more and spending more, as the right hon. Gentleman advocates.
  The result was that by November 1982 interest rates were down to 9 per cent. Since then—
  Mr. Straw: They have gone up 2 per cent.
  Mr. Brittan: The hon. Gentleman is perceptive to observe last week's events, as he always is. Since then,

  421
  of course, there has been a setback that has triggered off the debate. However, as before, getting the fundamentals right will enable us to continue the downward trend in time.
  However, getting interest rates down has implications for fiscal policy, to which the right hon. Gentleman pays no heed. If one wants to avoid putting undue upward pressure on interest rates, it is necessary to limit the level of borrowing. It is dangerous nonsense to suppose, as does the right hon. Gentleman in his package, that the Government can decree that interest rates should be X per cent. lower and at the same time massively increase the Budget deficit and still hope to restrain inflation. Those were the financial policies of the late King Canute. They would be no more successful if followed in this country today than they were at that time.
  However, the Opposition have a single, simple answer to the problems. One way to square the circle—the way put forward by the right hon. Gentleman in his meretricious programme—is to restore exchange controls. It seems strange to me that the reintroduction of that which had already become an anachronism when it was abolished should be regarded as any kind of solution to the problems of the 1980s.
  Exchange controls were introduced at the beginning of the war to make gold and foreign currency available for the war effort. The huge growth in trade flows and international capital markets since the 1960s made them increasingly ineffective. The move to floating exchange rates and the effect of North Sea oil on our balance of payments made them quite irrelevant.
  Mr. Shore rose——
  Mr. Brittan: The exchange control component was an important part of the right hon. Gentleman's package. I am sure he would want me to do justice to it.
  Mr. Shore rose——
  Mr. Brittan: The right hon. Gentleman has had three bites of the cherry. He must allow me to explain why exchange controls would be quite useless as any sort of economic bulwark to prevent the natural consequences of his foolish policies. Today there are potentially vast movements of non-resident funds, which are quite outside our control. The introduction of exchange control would do nothing whatsoever to affect such movements.
  Mr. Straw rose——
  Mr. Brittan: Exchange control, if introduced, would not control the leads and lags on trade payment. In case that sounds a technical explanation of a phenomenon, I remind the right hon. Gentleman of the impact that can have on the flows. One month's movement could mean a shift across the exchanges of £10 billion. The experiences of the Opposition in 1967 and 1976 took place when the full panoply of exchange control was in operation. Not one official left the Bank of England and not one step had been taken to dismantle those controls. They would do nothing at all to give protection to that Government and their economic policies. The market had lost confidence in the then Government and that was reflected in the exchange rates.
  Mr. Straw rose——
  Mr. Brittan: With today's communications and sophisticated markets, no control regime can for long
  422
  prevent movements of funds in and out of a major international currency such as sterling. When we abolished exchange controls in 1979, we removed a bureaucracy of 750 people in the public sector and an administrative burden on industry that had become ineffective and without purpose. The last prop of the right hon. Gentleman's policy collapses. It is apparently impossible to square the circle.
  Mr. Shore rose——
  Mr. Brittan: The exchange rate and interest rate policies that the right hon. Gentleman is calling upon us to follow would inexorably lead to inflation. The exchange control route that he seeks to present as an alibi and excuse would get him nowhere.
  The final prop of the programme upon which the simulation depends disappears, because the right hon. Gentleman would never have the guts to face the trade union movement and ask it for the incomes policy without which his entire programme is a tissue of rubbish.
  The right hon. Member for Stepney and Poplar has had cold feet recently. He does not like the reference to the 30 per cent. devaluation. It is only an illustration—a simulation. The same can be said of the projected increase in output and employment that he put forward. That, too, is no more than an illustration which does not show up in real life.
  I therefore commend the amendment to the House and ask hon. Members to reject the motion.
  Question put, That the original words stand part of the Question:—
  The House divided: Ayes 218, Noes 334.

  Division No. 46]

  [10 pm

  AYES

  Abse, Leo

  Dalyell, Tam

  Adams, Allen

  Davidson, Arthur

  Allaun, Frank

  Davies, Rt Hon Denzil (L'lli)

  Anderson, Donald

  Davis, Clinton (Hackney C)

  Archer, Rt Hon Peter

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

  Ashley, Rt Hon Jack

  Deakins, Eric

  Ashton, Joe

  Dean, Joseph (Leeds West)

  Atkinson, N. (H'gey,)

  Dewar, Donald

  Barnett, Guy (Greenwich)

  Dixon, Donald

  Benn, Rt Hon Tony

  Dobson, Frank

  Bennett, Andrew(St'kp'tN)

  Dormand, Jack

  Booth, Rt Hon Albert

  Douglas, Dick

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

  Dubs, Alfred

  Bray, Dr Jeremy

  Dunnett, Jack

  Brown, Hugh D. (Provan)

  Dunwoody, Hon Mrs G.

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

  Eastham, Ken

  Brown, Ron (E'burgh, Leith)

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

  Buchan, Norman

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

  Callaghan, Rt Hon J.

  Ennals, Rt Hon David

  Campbell, Ian

  Evans, Ioan (Aberdare)

  Campbell-Savours, Dale

  Evans, John (Newton)

  Canavan, Dennis

  Faulds, Andrew

  Cant, R. B.

  Field, Frank

  Carter-Jones, Lewis

  Fitch, Alan

  Clark, Dr David (S Shields)

  Flannery, Martin

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

  Foot, Rt Hon Michael

  Ford, Ben

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

  Forrester, John

  Cohen, Stanley

  Foster, Derek

  Concannon, Rt Hon J. D.

  Foulkes, George

  Conlan, Bernard

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

  Cook, Robin F.

  Freeson, Rt Hon Reginald

  Cowans, Harry

  Garrett, John (Norwich S)

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

  Garrett, W. E. (Wallsend)

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

  George, Bruce

  Crowther, Stan

  Golding, John

  Cryer, Bob

  Gourlay, Harry

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

  Graham, Ted

  423

  Hamilton, James (Bothwell)

  Pendry, Tom

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

  Powell, Raymond (Ogmore)

  Hardy, Peter

  Prescott, John

  Harman, Harriet (Peckham)

  Price, C. (Lewisham W)

  Harrison, Rt Hon Walter

  Race, Reg

  Hattersley, Rt Hon Roy

  Radice, Giles

  Haynes, Frank

  Rees, Rt Hon M (Leeds S)

  Healey, Rt Hon Denis

  Richardson, Jo

  Heffer, Eric S.

  Roberts, Albert (Normanton)

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

  Roberts, Allan (Bootle)

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

  Roberts, Ernest (Hackney N)

  Home Robertson, John

  Roberts, Gwilym (Cannock)

  Homewood, William

  Robertson, George

  Hooley, Frank

  Robinson, G. (Coventry NW)

  Howell, Rt Hon D.

  Rooker, J. W.

  Howells, Geraint

  Ross, Ernest (Dundee West)

  Hoyle, Douglas

  Rowlands, Ted

  Huckfield, Les

  Ryman, John

  Hughes, Mark (Durham)

  Sever, John

  Hughes, Robert (Aberdeen N)

  Sheerman, Barry

  Hughes, Roy (Newport)

  Sheldon, Rt Hon R.

  Janner, Hon Greville

  Shore, Rt Hon Peter

  Jay, Rt Hon Douglas

  Short, Mrs Renée

  John, Brynmor

  Silkin, Rt Hon J. (Deptford)

  Johnson, James (Hull West)

  Silkin, Rt Hon S. C. (Dulwich)

  Johnson, Walter (Derby S)

  Silverman, Julius

  Jones, Rt Hon Alec (Rh'dda)

  Skinner, Dennis

  Kaufman, Rt Hon Gerald

  Smith, Rt Hon J. (N Lanark)

  Kerr, Russell

  Snape, Peter

  Kilroy-Silk, Robert

  Soley, Clive

  Kinnock, Neil

  Spearing, Nigel

  Lambie, David

  Spellar, John Francis (B'ham)

  Lamond, James

  Spriggs, Leslie

  Leadbitter, Ted

  Stallard, A. W.

  Leighton, Ronald

  Stewart, Rt Hon D. (W Isles)

  Lewis, Arthur (N'ham NW)

  Stoddart, David

  Lewis, Ron (Carlisle)

  Stott, Roger

  Litherland, Robert

  Strang, Gavin

  Lofthouse, Geoffrey

  Straw, Jack

  Lyon, Alexander (York)

  Summerskill, Hon Dr Shirley

  McCartney, Hugh

  Taylor, Mrs Ann (Bolton W)

  McDonald, Dr Oonagh

  Thomas, Dafydd (Merioneth)

  McElhone, Mrs Helen

  Thomas, Dr R. (Carmarthen)

  McGuire, Michael (Ince)

  Thorne, Stan (Preston South)

  McKay, Allen (Penistone)

  Tilley, John

  McKelvey, William

  Tinn, James

  MacKenzie, Rt Hon Gregor

  Torney, Tom

  McNamara, Kevin

  Varley, Rt Hon Eric G.

  McWilliam, John

  Wainwright, E. (Dearne V)

  Marks, Kenneth

  Walker, Rt Hon H. (D'caster)

  Marshall, D (G'gow S'ton)

  Wardell, Gareth

  Marshall, Dr Edmund (Goole)

  Watkins, David

  Marshall, Jim (Leicester S)

  Weetch, Ken

  Martin, M (G'gow S'burn)

  Welsh, Michael

  Mason, Rt Hon Roy

  White, Frank R.

  Maxton, John

  White, J. (G'gow Pollok)

  Maynard, Miss Joan

  Whitehead, Phillip

  Meacher, Michael

  Whitlock, William

  Mikardo, Ian

  Wigley, Dafydd

  Millan, Rt Hon Bruce

  Willey, Rt Hon Frederick

  Miller, Dr M. S. (E Kilbride)

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

  Mitchell, Austin (Grimsby)

  Wilson, Gordon (Dundee E)

  Morris, Rt Hon C. (O'shaw)

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

  Morris, Rt Hon J. (Aberavon)

  Wilson, William (C'try SE)

  Moyle, Rt Hon Roland

  Winnick, David

  Newens, Stanley

  Woodall, Alec

  Oakes, Rt Hon Gordon

  Woolmer, Kenneth

  O'Neill, Martin

  Wright, Sheila

  Orme, Rt Hon Stanley

  Young, David (Bolton E)

  Palmer, Arthur

  Park, George

  Tellers for the Ayes:

  Parker, John

  Mr. George Morton and

  Parry, Robert

  Mr. Lawrence Cunliffe.

  Pavitt, Laurie

  NOES

  Adley, Robert

  Alton, David

  Aitken, Jonathan

  Amery, Rt Hon Julian

  Alexander, Richard

  Ancram, Michael

  Alison, Rt Hon Michael

  Arnold, Tom

  424

  Aspinwall, Jack

  Faith, Mrs Sheila

  Atkins, Rt Hon H. (S'thorne)

  Farr, John

  Atkins, Robert (Preston N)

  Fenner, Mrs Peggy

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

  Finsberg, Geoffrey

  Baker, Kenneth (St.M'bone)

  Fisher, Sir Nigel

  Baker, Nicholas (N Dorset)

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

  Banks, Robert

  Fookes, Miss Janet

  Beaumont-Dark, Anthony

  Fowler, Rt Hon Norman

  Beith, A. J.

  Fox, Marcus

  Bendall, Vivian

  Fraser, Rt Hon Sir Hugh

  Bennett, Sir Frederic (T'bay)

  Freud, Clement

  Benyon, W. (Buckingham)

  Gardiner, George (Reigate)

  Best, Keith

  Gardner, Sir Edward

  Bevan, David Gilroy

  Garel-Jones, Tristan

  Biffen, Rt Hon John

  Gilmour, Rt Hon Sir Ian

  Biggs-Davison, Sir John

  Ginsburg, David

  Blackburn, John

  Glyn, Dr Alan

  Blaker, Peter

  Goodhart, Sir Philip

  Body, Richard

  Goodlad, Alastair

  Bonsor, Sir Nicholas

  Gorst, John

  Boscawen, Hon Robert

  Gow, Ian

  Bottomley, Peter (W'wich W)

  Gower, Sir Raymond

  Bowden, Andrew

  Grant, Sir Anthony

  Boyson, Dr Rhodes

  Grant, John (Islington C)

  Braine, Sir Bernard

  Gray, Rt Hon Hamish

  Bright, Graham

  Greenway, Harry

  Brinton, Tim

  Grieve, Percy

  Brittan, Rt. Hon. Leon

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

  Brooke, Hon Peter

  Griffiths, Peter (Portsm'th N)

  Brotherton, Michael

  Grist, Ian

  Brown, Michael (Brigg & Sc'n)

  Gummer, John Selwyn

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

  Hamilton, Hon A.

  Browne, John (Winchester)

  Hamilton, Michael (Salisbury)

  Bruce-Gardyne, John

  Hampson, Dr Keith

  Bryan, Sir Paul

  Hannam,John

  Buchanan-Smith, Rt. Hon. A.

  Haselhurst, Alan

  Buck, Antony

  Hastings, Stephen

  Budgen, Nick

  Havers, Rt Hon Sir Michael

  Bulmer, Esmond

  Hawkins, Sir Paul

  Butcher, John

  Hayhoe, Barney

  Butler, Hon Adam

  Heath, Rt Hon Edward

  Carlisle, John (Luton West)

  Heddle, John

  Carlisle, Kenneth (Lincoln)

  Henderson, Barry

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

  Heseltine, Rt Hon Michael

  Cartwright, John

  Higgins, Rt Hon Terence L.

  Chalker, Mrs. Lynda

  Hill, James

  Channon, Rt. Hon. Paul

  Hogg, Hon Douglas (Gr'th'm)

  Chapman, Sydney

  Holland, Philip (Carlton)

  Churchill, W. S.

  Hooson, Tom

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

  Horam, John

  Clark, Sir W. (Croydon S)

  Hordern, Peter

  Clarke, Kenneth (Rushcliffe)

  Howe, Rt Hon Sir Geoffrey

  Clegg, Sir Walter

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

  Cockeram, Eric

  Howell, Ralph (N Norfolk)

  Colvin, Michael

  Hudson Davies, Gwilym E.

  Cope, John

  Hunt, David (Wirral)

  Corrie, John

  Hunt, John (Ravensbourne)

  Costain, Sir Albert

  Hurd, Rt Hon Douglas

  Cranborne, Viscount

  Irvine, Rt Hon Bryant Godman

  Crawshaw, Richard

  Irving, Charles (Cheltenham)

  Critchley, Julian

  Jenkins, Rt Hon Roy (Hillh'd)

  Crouch, David

  Jessel, Toby

  Cunningham, G. (Islington S)

  Johnson Smith, Sir Geoffrey

  Dickens, Geoffrey

  Johnston, Russell (Inverness)

  Dorrell, Stephen

  Jopling, Rt Hon Michael

  Douglas-Hamilton, Lord J.

  Joseph, Rt Hon Sir Keith

  du Cann, Rt Hon Edward

  Kaberry, Sir Donald

  Dunlop, John

  Kellett-Bowman, Mrs Elaine

  Dunn, Robert (Dartford)

  Kershaw, Sir Anthony

  Durant, Tony

  Kimball, Sir Marcus

  Dykes, Hugh

  King, Rt Hon Tom

  Eden, Rt Hon Sir John

  Knight, Mrs Jill

  Edwards, Rt Hon N. (P'broke)

  Knox, David

  Eggar, Tim

  Lamont, Norman

  Elliott, Sir William

  Lang, Ian

  Ellis, Tom (Wrexham)

  Latham, Michael

  Emery, Sir Peter

  Lawrence, Ivan

  Eyre, Reginald

  Lawson, Rt Hon Nigel

  Fairbairn, Nicholas

  Lee, John

  Fairgrieve, Sir Russell

  Le Marchant, Spencer

  425

  Lennox-Boyd, Hon Mark

  Renton, Tim

  Lester, Jim (Beeston)

  Rhodes James, Robert

  Lewis, Sir Kenneth (Rutland)

  Rhys Williams, Sir Brandon

  Lloyd, Ian (Havant & W'loo)

  Ridley, Hon Nicholas

  Lloyd, Peter (Fareham)

  Rippon, Rt Hon Geoffrey

  Loveridge, John

  Roberts, M. (Cardiff NW)

  Luce, Richard

  Roberts, Wyn (Conway)

  Lyell, Nicholas

  Roper, John

  Mabon, Rt Hon Dr J. Dickson

  Ross, Stephen (Isle of Wight)

  McCrindle, Robert

  Rossi, Hugh

  Macfarlane, Neil

  Rost, Peter

  MacKay, John (Argyll)

  Royle, Sir Anthony

  Maclennan, Robert

  Rumbold, Mrs A. C. R.

  McNair-Wilson, M. (N'bury)

  Sainsbury, Hon Timothy

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

  St. John-Stevas, Rt Hon N.

  McNally, Thomas

  Sandelson, Neville

  McQuarrie, Albert

  Scott, Nicholas

  Madel, David

  Shaw, Giles (Pudsey)

  Magee, Bryan

  Shaw, Sir Michael (Scarb')

  Major, John

  Shelton, William (Streatham)

  Marland, Paul

  Shepherd, Colin (Hereford)

  Marten, Rt Hon Neil

  Shepherd, Richard

  Mates, Michael

  Shersby, Michael

  Maude, Rt Hon Sir Angus

  Silvester, Fred

  Mawby, Ray

  Sims, Roger

  Mawhinney, Dr Brian

  Skeet, T. H. H.

  Maxwell-Hyslop, Robin

  Smith, Tim (Beaconsfield)

  Mayhew, Patrick

  Speed, Keith

  Mellor, David

  Speller, Tony

  Meyer, Sir Anthony

  Spence, John

  Miller, Hal (B'grove)

  Spicer, Jim (West Dorset)

  Mills, Iain (Meriden)

  Spicer, Michael (S Worcs)

  Mills, Sir Peter (West Devon)

  Sproat, Iain

  Miscampbell, Norman

  Squire, Robin

  Mitchell, R. C. (Soton Itchen)

  Stainton, Keith

  Moate, Roger

  Stanbrook, Ivor

  Molyneaux, James

  Stanley, John

  Monro, Sir Hector

  Steel, Rt Hon David

  Montgomery, Fergus

  Steen, Anthony

  Moore, John

  Stevens, Martin

  Morgan, Geraint

  Stewart, A. (E Renfrewshire)

  Morrison, Hon P. (Chester)

  Stewart, Ian (Hitchin)

  Mudd, David

  Stokes, John

  Murphy, Christopher

  Stradling Thomas, J.

  Myles, David

  Taylor, Teddy (S'end E)

  Neale, Gerrard

  Tebbit, Rt Hon Norman

  Nelson, Anthony

  Temple-Morris, Peter

  Neubert, Michael

  Thatcher, Rt Hon Mrs M.

  Newton, Tony

  Thomas, Jeffrey (Abertillery)

  Normanton, Tom

  Thomas, Mike (Newcastle E)

  Nott, Rt Hon Sir John

  Thomas, Rt Hon Peter

  Ogden, Eric

  Thompson, Donald

  Onslow, Cranley

  Thorne, Neil (Ilford South)

  Oppenheim, Rt Hon Mrs S.

  Thornton, Malcolm

  Osborn, John

  Townend, John (Bridlington)

  Owen, Rt Hon Dr David

  Townsend, Cyril D, (B'heath)

  Page, John (Harrow, West)

  Trippier, David

  Page, Richard (SW Herts)

  Trotter, Neville

  Parkinson, Rt Hon Cecil

  van Straubenzee, Sir W.

  Parris, Matthew

  Vaughan, Dr Gerard

  Patten, John (Oxford)

  Viggers, Peter

  Pattie, Geoffrey

  Waddington, David

  Pawsey, James

  Wainwright, R. (Colne V)

  Penhaligon, David

  Wakeham, John

  Percival, Sir Ian

  Waldegrave, Hon William

  Peyton, Rt Hon John

  Walker, Rt Hon P. (W'cester)

  Pink, R. Bonner

  Walker, B. (Perth)

  Pitt, William Henry

  Walker-Smith, Rt Hon Sir D.

  Pollock, Alexander

  Waller, Gary

  Porter, Barry

  Walters, Dennis

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

  Ward, John

  Prentice, Rt Hon Reg

  Warren, Kenneth

  Price, Sir David (Eastleigh)

  Watson, John

  Prior, Rt Hon James

  Wellbeloved, James

  Proctor, K. Harvey

  Wells, Bowen

  Pym, Rt Hon Francis

  Wells, John (Maidstone)

  Raison, Rt Hon Timothy

  Wheeler, John

  Rathbone, Tim

  Whitelaw, Rt Hon William

  Rees, Peter (Dover and Deal)

  Whitney, Raymond

  Rees-Davies, W. R.

  Wilkinson, John

  426

  Williams, D.(Montgomery)

  Younger, Rt Hon George

  Williams, Rt Hon Mrs (Crosby)

  Winterton, Nicholas

  Tellers for the Noes:

  Wolfson, Mark

  Mr. Carol Mathers and

  Woodall, Alec

  Mr. Anthony Berry.

  Young, Sir George (Acton)

  Question accordingly negatived.
  Question, That the proposed words be there added, put forthwith pursuant to Standing Order No. 32 (Questions on amendments):—
  The House divided: Ayes 298, Noes 249.

  Division No. 47]

  [10.12 pm

  AYES

  Adley, Robert

  Crouch, David

  Aitken, Jonathan

  Dickens, Geoffrey

  Alexander, Richard

  Dorrell, Stephen

  Alison, Rt Hon Michael

  Douglas-Hamilton, Lord J.

  Amery, Rt Hon Julian

  du Cann, Rt Hon Edward

  Ancram, Michael

  Dunn, Robert (Dartford)

  Arnold, Tom

  Durant, Tony

  Aspinwall, Jack

  Dykes, Hugh

  Atkins, Rt Hon H. (S'thorne)

  Eden, Rt Hon Sir John

  Atkins, Robert (Preston N)

  Edwards, Rt Hon N. (P'broke)

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

  Eggar, Tim

  Baker, Kenneth(St.M'bone)

  Elliott, Sir William

  Baker, Nicholas (N Dorset)

  Emery, Sir Peter

  Banks, Robert

  Eyre, Reginald

  Beaumont-Dark, Anthony

  Fairbairn, Nicholas

  Bendall, Vivian

  Fairgrieve, Sir Russell

  Bennett, Sir Frederic (T'bay)

  Faith, Mrs Sheila

  Benyon, W. (Buckingham)

  Farr, John

  Best, Keith

  Fenner, Mrs Peggy

  Bevan, David Gilroy

  Finsberg, Geoffrey

  Biffen, Rt Hon John

  Fisher, Sir Nigel

  Biggs-Davison, Sir John

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

  Blackburn, John

  Fookes, Miss Janet

  Blaker, Peter

  Fowler, Rt Hon Norman

  Body, Richard

  Fox, Marcus

  Bonsor, Sir Nicholas

  Fraser, Rt Hon Sir Hugh

  Boscawen, Hon Robert

  Gardiner, George (Reigate)

  Bottomley, Peter (W'wich W)

  Gardner, Sir Edward

  Bowden, Andrew

  Garel-Jones, Tristan

  Boyson, Dr Rhodes

  Gilmour, Rt Hon Sir Ian

  Braine, Sir Bernard

  Glyn, Dr Alan

  Bright, Graham

  Goodhart, Sir Philip

  Brinton, Tim

  Goodlad, Alastair

  Brittan, Rt. Hon. Leon

  Gorst, John

  Brooke, Hon Peter

  Gow, Ian

  Brotherton, Michael

  Gower, Sir Raymond

  Brown, Michael (Brigg & Sc'n)

  Grant, Sir Anthony

  Browne, John (Winchester)

  Gray, Rt Hon Hamish

  Bruce-Gardyne, John

  Greenway, Harry

  Bryan, Sir Paul

  Grieve, Percy

  Buchanan-Smith, Rt. Hon. A.

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

  Buck, Antony

  Griffiths, Peter (Portsm'th N)

  Budgen, Nick

  Grist, Ian

  Bulmer, Esmond

  Gummer, John Selwyn

  Butcher, John

  Hamilton, Hon A.

  Butler, Hon Adam

  Hamilton, Michael (Salisbury)

  Carlisle, John (Luton West)

  Hampson, Dr Keith

  Carlisle, Kenneth (Lincoln)

  Hannam, John

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

  Haselhurst, Alan

  Chalker, Mrs. Lynda

  Hastings, Stephen

  Channon, Rt. Hon. Paul

  Havers, Rt Hon Sir Michael

  Chapman, Sydney

  Hawkins, Sir Paul

  Churchill, W. S.

  Hayhoe, Barney

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

  Heath, Rt Hon Edward

  Clark, Sir W. (Croydon S)

  Heddle, John

  Clarke, Kenneth (Rushcliffe)

  Henderson, Barry

  Clegg, Sir Walter

  Heseltine, Rt Hon Michael

  Cockeram, Eric

  Higgins, Rt Hon Terence L.

  Colvin, Michael

  Hill, James

  Cope, John

  Hogg, Hon Douglas (Gr'th'm)

  Corrie, John

  Holland, Philip (Carlton)

  Costain, Sir Albert

  Hooson, Tom

  Cranborne, Viscount

  Hordern, Peter

  Critchley, Julian

  Howe, Rt Hon Sir Geoffrey

  427

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

  Pink, R. Bonner

  Howell, Ralph (N Norfolk)

  Pollock, Alexander

  Hunt, David (Wirral)

  Porter, Barry

  Hunt, John (Ravensbourne)

  Prentice, Rt Hon Reg

  Hurd, Rt Hon Douglas

  Price, Sir David (Eastleigh)

  Irvine, Rt Hon Bryant Godman

  Prior, Rt Hon James

  Irving, Charles (Cheltenham)

  Proctor, K. Harvey

  Jessel, Toby

  Pym, Rt Hon Francis

  Jopling, Rt Hon Michael

  Raison, Rt Hon Timothy

  Joseph, Rt Hon Sir Keith

  Rathbone, Tim

  Kaberry, Sir Donald

  Rees, Peter (Dover and Deal)

  Kellett-Bowman, Mrs Elaine

  Rees-Davies, W. R.

  Kimball, Sir Marcus

  Renton, Tim

  King, Rt Hon Tom

  Rhodes James, Robert

  Knight, Mrs Jill

  Rhys Williams, Sir Brandon

  Knox, David

  Ridley, Hon Nicholas

  Lamont, Norman

  Rippon, Rt Hon Geoffrey

  Lang, Ian

  Roberts, M. (Cardiff NW)

  Latham, Michael

  Roberts, Wyn (Conway)

  Lawrence, Ivan

  Rossi, Hugh

  Lawson, Rt Hon Nigel

  Rost, Peter

  Lee, John

  Royle, Sir Anthony

  Le Marchant, Spencer

  Rumbold, Mrs A. C. R.

  Lennox-Boyd, Hon Mark

  Sainsbury, Hon Timothy

  Lester, Jim (Beeston)

  St. John-Stevas, Rt Hon N.

  Lewis, Sir Kenneth (Rutland)

  Scott, Nicholas

  Lloyd, Ian (Havant & W'loo)

  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

  Shersby, Michael

  Macfarlane, Neil

  Silvester, Fred

  MacKay, John (Argyll)

  Sims, Roger

  McNair-Wilson, M. (N'bury)

  Skeet, T. H. H.

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

  Smith, Tim (Beaconsfield)

  McQuarrie, Albert

  Speed, Keith

  Madel, David

  Speller, Tony

  Major, John

  Spence, John

  Marland, Paul

  Spicer, Jim (West Dorset)

  Marten, Rt Hon Neil

  Spicer, Michael (S Worcs)

  Mates, Michael

  Sproat, Iain

  Maude, Rt Hon Sir Angus

  Squire, Robin

  Mawby, Ray

  Stainton, Keith

  Mawhinney, Dr Brian

  Stanbrook, Ivor

  Maxwell-Hyslop, Robin

  Stanley, John

  Mayhew, Patrick

  Steen, Anthony

  Mellor, David

  Stevens, Martin

  Meyer, Sir Anthony

  Stewart, A. (E Renfrewshire)

  Miller, Hal (B'grove)

  Stewart, Ian (Hitchin)

  Mills, Iain (Meriden)

  Stokes, John

  Mills, Sir Peter (West Devon)

  Stradling Thomas, J.

  Miscampbell, Norman

  Taylor, Teddy (S'end E)

  Moate, Roger

  Tebbit, Rt Hon Norman

  Monro, Sir Hector

  Temple-Morris, Peter

  Montgomery, Fergus

  Thatcher, Rt Hon Mrs M.

  Moore, John

  Thomas, Rt Hon Peter

  Morgan, Geraint

  Thompson, Donald

  Morrison, Hon P. (Chester)

  Thorne, Neil (Ilford South)

  Mudd, David

  Thornton, Malcolm

  Murphy, Christopher

  Townend, John (Bridlington)

  Myles, David

  Townsend, Cyril D, (B'heath)

  Neale, Gerrard

  Trippier, David

  Nelson, Anthony

  Trotter, Neville

  Neubert, Michael

  van Straubenzee, Sir W.

  Newton, Tony

  Vaughan, Dr Gerard

  Normanton, Tom

  Viggers, Peter

  Nott, Rt Hon Sir John

  Waddington, David

  Onslow, Cranley

  Wakeham, John

  Oppenheim, Rt Hon Mrs S.

  Waldegrave, Hon William

  Osborn, John

  Walker, Rt Hon P. (W'cester)

  Page, John (Harrow, West)

  Walker, B. (Perth)

  Page, Richard (SW Herts)

  Walker-Smith, Rt Hon Sir D.

  Parkinson, Rt Hon Cecil

  Waller, Gary

  Parris, Matthew

  Walters, Dennis

  Patten, John (Oxford)

  Ward, John

  Pattie, Geoffrey

  Warren, Kenneth

  Pawsey, James

  Watson, John

  Percival, Rt Hon Sir Ian

  Wells, Bowen

  Peyton, Rt Hon John

  Wells, John (Maidstone)

  428

  Wheeler, John

  Young, Sir George (Acton)

  Whitelaw, Rt Hon William

  Younger, Rt Hon George

  Whitney, Raymond

  Wilkinson, John

  Tellers for the Ayes:

  Williams, D. (Montgomery)

  Mr. Carol Mather and

  Winterton, Nicholas

  Mr. Anthony Berry.

  Wolfson, Mark

  NOES

  Abse, Leo

  Ford, Ben

  Adams, Allen

  Forrester, John

  Allaun, Frank

  Foster, Derek

  Alton, David

  Foulkes, George

  Anderson, Donald

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

  Archer, Rt Hon Peter

  Freeson, Rt Hon Reginald

  Ashley, Rt Hon Jack

  Freud, Clement

  Ashton, Joe

  Garrett, John (Norwich S)

  Atkinson, N. (H'gey,)

  Garrett, W. E. (Wallsend)

  Barnett, Guy (Greenwich)

  George, Bruce

  Beith, A. J.

  Ginsburg, David

  Benn, Rt Hon Tony

  Golding, John

  Bennett, Andrew (St'kp't N)

  Gourlay, Harry

  Booth, Rt Hon Albert

  Graham, Ted

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

  Grant, John (Islington C)

  Bray, Dr Jeremy

  Hamilton, James (Bothwell)

  Brown, Hugh D. (Provan)

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

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

  Hardy, Peter

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

  Harman, Harriet (Peckham)

  Brown, Ron (E'burgh, Leith)

  Harrison, Rt Hon Walter

  Buchan, Norman

  Hattersley, Rt Hon Roy

  Callaghan, Rt Hon J.

  Haynes, Frank

  Campbell, Ian

  Healey, Rt Hon Denis

  Campbell-Savours, Dale

  Heffer, Eric S.

  Canavan, Dennis

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

  Cant, R. B.

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

  Carter-Jones, Lewis

  Home Robertson, John

  Cartwright, John

  Homewood, William

  Clark, Dr David (S Shields)

  Hooley, Frank

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

  Horam, John

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

  Howell, Rt Hon D.

  Cohen, Stanley

  Howells, Geraint

  Concannon, Rt Hon J. D.

  Hoyle, Douglas

  Conlan, Bernard

  Huckfield, Les

  Cook, Robin F.

  Hudson Davies, Gwilym E.

  Cowans, Harry

  Hughes, Mark (Durham)

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

  Hughes, Robert (Aberdeen N)

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

  Hughes, Roy (Newport)

  Crawshaw, Richard

  Janner, Hon Greville

  Crowther, Stan

  Jay, Rt Hon Douglas

  Cryer, Bob

  Jenkins, Rt Hon Roy (Hillh'd)

  Cunliffe, Lawrence

  John, Brynmor

  Cunningham, G. (Islington S)

  Johnson, James (Hull West)

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

  Johnson, Walter (Derby S)

  Dalyell, Tam

  Johnston, Russell (Inverness)

  Davidson, Arthur

  Jones, Rt Hon Alec (Rh'dda)

  Davies, Rt Hon Denzil (L'lli)

  Kaufman, Rt Hon Gerald

  Davis, Clinton (Hackney C)

  Kerr, Russell

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

  Kilroy-Silk, Robert

  Deakins, Eric

  Kinnock, Neil

  Dean, Joseph (Leeds West)

  Lambie, David

  Dewar, Donald

  Lamond, James

  Dixon, Donald

  Leadbitter, Ted

  Dobson, Frank

  Leighton, Ronald

  Dormand, Jack

  Lewis, Arthur (N'ham NW)

  Douglas, Dick

  Lewis, Ron (Carlisle)

  Dubs, Alfred

  Litherland, Robert

  Dunnett, Jack

  Lofthouse, Geoffrey

  Dunwoody, Hon Mrs G.

  Lyon, Alexander (York)

  Eastham, Ken

  Mabon, Rt Hon Dr J. Dickson

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

  McDonald, Dr Oonagh

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

  McElhone, Mrs Helen

  Ellis, Tom (Wrexham)

  McGuire, Michael (Ince)

  Ennals, Rt Hon David

  McKay, Allen (Penistone)

  Evans, Ioan (Aberdare)

  McKelvey, William

  Evans, John (Newton)

  MacKenzie, Rt Hon Gregor

  Faulds, Andrew

  Maclennan, Robert

  Field, Frank

  McNally, Thomas

  Fitch, Alan

  McNamara, Kevin

  Flannery, Martin

  McWilliam, John

  Foot, Rt Hon Michael

  Magee, Bryan

  429

  Marks, Kenneth

  Silkin, Rt Hon J. (Deptford)

  Marshall, D (G'gow S'ton)

  Silkin, Rt Hon S. C. (Dulwich)

  Marshall, Dr Edmund (Goole)

  Silverman, Julius

  Marshall, Jim (Leicester S)

  Skinner, Dennis

  Martin, M (G'gow S'burn)

  Smith, Rt Hon J. (N Lanark)

  Mason, Rt Hon Roy

  Snape, Peter

  Maxton, John

  Soley, Clive

  Maynard, Miss Joan

  Spearing, Nigel

  Meacher, Michael

  Spellar, John Francis (B'ham)

  Mikardo, Ian

  Spriggs, Leslie

  Millan, Rt Hon Bruce

  Stallard, A. W.

  Miller, Dr M. S. (E Kilbride)

  Steel, Rt Hon David

  Mitchell, R. C. (Soton Itchen)

  Stewart, Rt Hon D. (W Isles)

  Morris, Rt Hon C. (O'shaw)

  Stoddart, David

  Morris, Rt Hon J. (Aberavon)

  Stott, Roger

  Morton, George

  Strang, Gavin

  Moyle, Rt Hon Roland

  Straw, Jack

  Newens, Stanley

  Summerskill, Hon Dr Shirley

  Oakes, Rt Hon Gordon

  Taylor, Mrs Ann (Bolton W)

  Ogden, Eric

  Thomas, Dafydd (Merioneth)

  O'Neill, Martin

  Thomas, Jeffrey (Abertillery)

  Orme, Rt Hon Stanley

  Thomas, Mike (Newcastle E)

  Owen, Rt Hon Dr David

  Thomas, Dr R. (Carmarthen)

  Palmer, Arthur

  Thorne, Stan (Preston South)

  Park, George

  Tilley, John

  Parker, John

  Tinn, James

  Parry, Robert

  Torney, Tom

  Pavitt, Laurie

  Varley, Rt Hon Eric G.

  Pendry, Tom

  Wainwright, E. (Dearne V)

  Penhaligon, David

  Wainwright, R. (Colne V)

  Pitt, William Henry

  Walker, Rt Hon H. (D'caster)

  Powell, Raymond (Ogmore)

  Wardell, Gareth

  Prescott, John

  Watkins, David

  Price, C. (Lewisham W)

  Weetch, Ken

  Race, Reg

  Wellbeloved, James

  Radice, Giles

  Welsh, Michael

  Rees, Rt Hon M (Leeds S)

  White, Frank R.

  Richardson, Jo

  White, J. (G'gow Pollok)

  Roberts, Albert (Normanton)

  Whitehead, Phillip

  Roberts, Allan (Bootle)

  Whitlock, William

  Roberts, Ernest (Hackney N)

  Wigley, Dafydd

  Roberts, Gwilym (Cannock)

  Willey, Rt Hon Frederick

  Robertson, George

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

  Robinson, G. (Coventry NW)

  Williams, Rt Hon Mrs (Crosby)

  Rooker, J. W.

  Wilson, Gordon (Dundee E)

  Roper, John

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

  Ross, Ernest (Dundee West)

  Wilson, William (C'try SE)

  Ross, Stephen (Isle of Wight)

  Winnick, David

  Rowlands, Ted

  Woolmer, Kenneth

  Ryman, John

  Wright, Sheila

  Sandelson, Neville

  Young, David (Bolton E)

  Sever, John

  Sheerman, Barry

  Tellers for the Noes:

  Sheldon, Rt Hon R.

  Mr. Hugh McCartney and

  Shore, Rt Hon Peter

  Mr. Austin Mitchell.

  Short, Mrs Renée

  Question accordingly agreed to.
  Mr. Speaker forthwith declared the main Question, as amended, to be agreed to.
  Resolved,
  'That this House notes that Government spending and borrowing are firmly under control and that inflation in the United Kingdom fell more in 1982 than in any other major country; rejects the reimposition of exchange controls and welcomes Her Majesty's Government's determination to maintain policies needed to combat inflation, and hence encourage growth and employment on a secure and sustainable basis.'

  Welsh Rate Support Grant
  10.27 pm
  The Secretary of State for Wales (Mr. Nicholas Edwards): I beg to move,
  That the Welsh Rate Support Grant Report 1980 (Supplementary) (No. 2) Report 1982, which was laid before this House on 20th December, be approved.
  Mr. Speaker: With this, it will be for the convenience of the House to take the other four Welsh motions:
  That the Welsh Rate Support Grant Report 1980 (Supplementary) (No. 2) (Amendment) Report 1982, which was laid before this House on 17th January, be approved
  That the Welsh Rate Support Grant Report 1982 (Supplementary) Report 1982, which was laid before this House on 20th December, be approved.
  That the Welsh Rate Support Grant Report 1982 (Supplementary) (Amendment) Report 1982, which was laid before this House on 17th January, be approved.
  That the Welsh Rate Support Grant Report 1983–84, which was laid before this House on 20th December, be approved.
  Mr. Edwards: I think that it will be helpful if I deal with the supplementary reports before moving on to the main report for 1983–84. A supplementary report is the means by which account is taken of changes in certain costs and other factors which were uncertain or unknown when the main report was made. For example, it takes account of the most up-to-date information on rates of interest and rateable values. It also close-ends the grant. In other words, it ensures that grant payments to individual authorities in aggregate equal the total amount of grant available.
  The supplementary reports are significantly different from the supplementary report that we debated last year, in that they give effect to the Government's decision to withhold rate support grant in respect of the overspending by local authorities that occurred in 1981–82 and 1982–83.
  I had very much hoped that that action would not have been necessary. I had hoped that authorities would have kept their expenditure within the provision provided by the rate support grant settlements. As I said in the rate support grant debate last year, I took a conscious decision not to reduce the total amount of grant available for 1981–82, even though local authority budgets showed a total level of current expenditure in excess of the overall current expenditure target. I thought it right to give the local authority associations the chance to do what they said was possible and that they believed they would achieve. However, I said explicitly at the time that I was reserving my judgment, and that the Government would have to reduce grant by means of a further supplementary report if any expenditure excess remained.
  I regret that that has proved to be the case. In 1981–82, after discounting emergency snow expenditure, there was a net current expenditure excess of about £12 million above settlement provision. That amount is too large to ignore. Accordingly, I propose to withhold £2·2 million grant from authorities in respect of the 1981–82 overspend. The amount of grant withheld from an individual authority will be directly related to the contribution it made to the overall overspend. That is the fairest way of effecting grant withholding.
  I turn now to the supplementary report for 1982–83. That effects grant withholding for the current year. When authorities' original budgets for this year were analysed, they showed a total expenditure excess over rate support

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  grant provision of about £57 million. That was particularly disappointing in view of the very adequate rate support grant settlement for the current year. I therefore asked authorities to submit revised budgets by the end of July and, at the same time, I set individual authority total expenditure targets. The revised budgets led to a welcome reduction in planned expenditure, but there still remained a significant excess of £25 million. The Government cannot accept such an overspend. Accordingly, I propose to withhold £4·2 million grant. That figure has been reached after taking into account certain disregards under section 8(4) of the Local Government Finance Act 1982.
  Mr. Donald Anderson: How can the Secretary of State justify penalising Wales more harshly than England, which had a larger overspend?
  Mr. Edwards: The settlements for Wales have been much more generous than for England. The level of withhold is of the same order of magnitude in percentage terms as for England. Furthermore, because of the way in which the Welsh local authorities have performed relative to England during the period, they have had substantial additional capital resources made available to them. The level of withhold at £2·2 million is modest in relation to the overspend, as is the withhold in relation to this year. The amounts are a little less than I mentioned in the summer.
  Mr. Roy Hughes: How does the Secretary of State justify the position in Newport, which has a standstill rate for the forthcoming year—and for the previous two years—yet has a £250,000 penalty? In the grant-related expenditure assessment, why does the right hon. Gentleman not take into consideration the penny rate subsidy for the buses or the upkeep of Tredegar house in Newport, which has been an important asset to the town?
  Mr. Edwards: We are not talking about the rate supplement for this year, to which the hon. Member referred, but for the two previos years. Newport was fully aware of the targets being set and the consequences of the decisions when it took them. It had plenty of opportunity to revise its budgets accordingly. The provisional decisions that it has made for the current year, which provide for a modest amount on its current plans over targets, show that it needs only the smallest possible adjustment by a local authority to avoid any form of penalty at all.
  Mr. Dafydd Wigley: I am grateful to the Secretary of State for allowing a third intervention. Is it not true that for an authority that is overspending by 1 per cent., the penalty in Wales will be 1½p in terms of grant, while it will be only 1p in England? Why is that so?
  Mr. Edwards: The simple fact is that the total overspend in England has been much higher and the total amount withheld substantially greater. The amounts for individual authorities and the problems posed for those authorities are also much greater. The hon. Member for Caernarvon (Mr. Wigley) refers to small percentage differences, but the actual amounts that the Welsh local authorities have to deal with and their relation to the authorities' total budgets are relatively extremely small compared with the amounts with which some English authorities have to contend. We are not dealing with very
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  significant amounts. Indeed, some might believe that this withholding is no more than a token and a guide for future action.
  I regret having to withhold grant, but the Welsh local authorities knew full well that this would be the consequence of spending above the settlement provision. In response to questions after the statement on 20 December I made it perfectly clear that we would not hesitate to act in a similar way this year. The provision that we make is not decided lightly. Expenditure must be paid for out of the pockets of taxpayers and ratepayers. Every penny on the rates means an additional burden on the community at large and in industry and commerce may effectively destroy jobs, but I shall return to that aspect.
  I should also make it clear that I am not an enthusiastic advocate of setting expenditure targets. It would be far better all round if authorities ensured that their expenditure in aggregate was kept at the level of the settlement provision, but experience in the revised budgets exercise showed that setting targets was helpful in letting authorities know exactly where they stood. In fact, 18 out of the 37 district and eight county authorities met their targets this year and thus have avoided both the withholding of grant and the close-ending adjustment, so clearly it can be done. As in 1981–82, the remainder will suffer grant withholding in direct proportion to the extent to which they have contributed to the overspend.
  I turn now to the main Welsh rate support grant report for the coming year. This settlement, like previous settlements, has to be seen in the context of the Government's aim to contain local authority spending within a level that the country can afford. A start has been made in this direction. From local government reorganisation in 1974 until we took office, local authority expenditure in Wales outstripped inflation in its sector by 10 per cent. Since then, I am glad to say the trend has been reversed. Local authorities have been able to contain their spending to about 3½ per cent. below the increase in their costs. This change has been accompanied by a reduction in local authority manpower of just under 4 per cent. since June 1979. More needs to be done, but the level of total expenditure suggested in the present settlement should be readily achievable. What the Government have asked for is some restraint and a drive for improved efficiency on a scale that I fear that other organisations will regard as all too modest against the background of world recession.
  Members will be familiar with the main items of the settlement that I announced in the House in December and I do not intend to go over them again in detail. The most important features for local authorities are the totals of relevant expenditure accepted for grant purposes, particularly current expenditure and the aggregate Exchequer grant.
  For relevant expenditure, the provision of £1,385 million is an increase of about £84 million or 6·5 per cent. on this year's provision, with current expenditure at £1,205 million being £79 million or about 7 per cent. more than for this year. This is a very reasonable level of provision. The £1,205 million for current expenditure is exactly what I announced provisionally last July and it has not been reduced despite the welcome reduction in inflation since then. Current expenditure provision, after allowing for the reduction in authorities' national insurance surcharge payments next April and a modest budget drift of 1 per cent., is about 5 per cent. more than authorities' present level of current expenditure as

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  reported in revised budgets. I am satisfied that, provided pay settlements are kept low, this increase is sufficient to enable local authorities broadly to maintain their services at this year's level. It will require continuing efforts on their part to improve efficiency and thus reduce costs.
  Aggregate Exchequer grant at £975 million is £32 million or about 3·4 per cent. more than the figure set out in the main report for the current year. To those hon. Members who made a comparison with England earlier, I would point out that that is a significantly higher percentage than the percentage increase in England. This figure must be seen in the context of the amount authorities plan to spend in the current year.
  The revised budget exercise resulted in authorities reducing their original planned expenditure by £32 million, but authorities had already rated for this level of expenditure. They already have that money—they do not have to raise it again. In deciding on their rate level for the coming year, local authorities should therefore rememeber that the present rate level already allows for a total increase of £32 million over this year's expenditure as indicated by their revised budgets. They should also take into account that the excess rate income this year has contributed to an unplanned increase of about £60 million in their financial balances. Next year's current expenditure provision is about 5 per cent. more than the present level of current spending. Calculations accepted by the Welsh local authority associations show that on the basis of this provision and assuming broadly the same level of local authority services, there need be on average virtually no increase in rates next year. This is what must be borne in mind when considering the question of rate increases for the coming year.
  Mr. Wigley: The Secretary of State is talking in averages. As he knows, averages can be extremely dangerous. Does the right hon. Gentleman accept that there has been a significant increase in the specific grants for the improvement of houses—an increase of about £8 million—which, when taken out of the £32 million to which he referred, brings the rest of the increase to well below the increase that local authorities will have to face in wage inflation and cost inflation?
  Mr. Edwards: It is perfectly true that the position will vary from local authority to local authority. It is also true that certain specific grants have been increased more than the rest of the grant provision. But, to return again to the reserve that is already built into the system, I have pointed out that rate income in 1982–83 exceeds the amount required to finance the revised budgets' level of spending by £32 million. In addition, grant provision for 1983–84 is £50 million higher than the amount for 1982–83 assumed by local authorities when they originally compiled their budgets. As a consequence—I am dealing in averages at the moment—expenditure for Wales as a whole can rise by £82 million before the aggregate rate burden for Wales needs to rise at all. As the settlement and targets allow for a level of expenditure increase which is actually lower than that, I am justified in saying that there is no need on average, even without taking account of the increase in balances to which I have referred, for increases in rates.
  For those reasons the settlement for next year is fair and will not require authorities to slash services as some have claimed. Indeed, some of the initial indications from local authorities—we have had a reference to Newport's
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  plans—suggest that this is the case. Nor will it require authorities to make draconian cuts in staff provided that pay settlements are kept low. Hon. Members will be aware that there is an offer under consideration at the moment that is broadly in line with the type of figures we are discussing.
  Hon. Members will understand that the pay factor is probably the most important issue in determining the level of services that can be provided within the settlement cash provision. The settlement provides a reasonable level of relevant expenditure for services and a substantial Exchequer grant in support of this expenditure. There need, on average, be virtually no rate increases next year. Total expenditure would need to rise by more than 6 per cent. compared with the revised budget levels before the aggregate rate call for Wales as a whole need rise at all or before any use is made of balances. I believe that many local authorities will think it reasonable to use some of the balances.
  I turn now to other features of this year's settlement. First, I have strengthened the basic block grant mechanisms in order to put more pressure on the highest spenders above GRE. The ability to increase the ratepayer contribution for expenditure both above and below the threshold and therefore to ensure that the general taxpayer contributes less is, of course, an integral part of the block grant system. In this context strengthening the mechanisms to put greater pressure on the higher spenders is both logical and desirable. It is only right that authorities whose expenditure is well above GRE should make the greatest efforts to bring their expenditure down to more acceptable levels. In so doing they will leave more grant for authorities with lower levels of spending.
  Secondly, I have set individual authority expenditure targets. The Local Government Finance Act 1982 requires me to do this if I am to withhold grant in a discriminate manner. I very much hope that there will be no need to effect grant withholding for the coming year. I hope that authorities' expenditure in aggregate will be in line with provision. But, if this is not the case, it is those authorities which have contributed towards the expenditure excess that should be required to face the consequences of their actions, and not shrug off some of the burden to other authorities which have kept their expenditure down.
  The targets themselves are based on total expenditure and include components for current expenditure, capital charges and interest receipts and, for districts, rate fund contributions to the housing revenue account.
  This last component takes account of the Government's decision that, for calculating housing subsidies, local authority income will be assumed to increase by 85p per dwelling per week. This increase of 6 per cent. on the average council house rent in Wales of £14 is broadly in line with inflation. The least well-off tenants will continue to be assisted, of course, by either rent rebates or supplementary benefit. More than half of tenants are in that position. In order that all authorities have an achievable target, I have decided to set the current expenditure component of targets in such a way that every authority will receive extra cash over and above its present level of current spending. Thus, no authority will receive a cash increase for current expenditure of less than 1½ per cent.; similarly no authority will receive a cash increase greater than 5½ per cent. When account is taken of the reduction in authorities' NIS payments next year and the modest amount of budget drift to which I have referred,

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  these effectively become cash increases of 3 per cent. and 7 per cent. respectively. Higher spending authorities will have to make a real reduction in expenditure but none has been set an unrealistic or unattainable task: the lowest spenders will quite properly have the easiest job to do.
  I have, under the provisions of the Local Government Finance Act 1982, to set out the maximum amount of grant which could be withheld if expenditure exceeds provision. Guidance on this is contained in appendix 12 of the 1983–84 report and shows that holdback as a percentage of expenditure excess starts at 40 per cent. for a 1 per cent. expenditure excess over target, rising to a maximum of 75 per cent. of the expenditure excess. Of course, if expenditure in aggregate for all authorities is at or below the level of rate support grant provision there will be no need at all to effect grant withholding: I very much hope that this will be the case.
  The only other point that I need to mention is the safety net provision. I have set this at the same level as in the previous two years. It provides protection to ratepayers from changes arising in GREs and the residual effects of moving to the new block grant system. At the ratepayer level the protection is equivalent to 5p; that is 1p for the districts and 4p for the counties.
  That, then, is the background to the reports we are debating today. They must be seen in the context of the Government's general expenditure objectives. There remains in our view an overriding need for economy in local authority expenditure. I am convinced that ample opportunities exist for expenditure reductions to be achieved without adversely affecting services. Many authorities have already demonstrated that that is possible and there is no reason why others should not be able to do the same. The Government recognise that some authorities have made efforts to reduce expenditure, and this has been reflected in the targets set for the coming year; equally, others must make a far greater effort.
  At the end of the day, however, it remains the responsibility of local authorities to determine their own levels of expenditure and to set their rate levels. I trust that in doing so they will act responsibly. They should remember the very strong and legitimate feelings that exist among ratepayers about the burden of rates. They should especially realise the serious consequences for industry and for employment if they impose penal and destructive burdens on firms struggling to be competitive. It is significant that rates represent a charge of £240 a head on every person employed in Wales, or approximately £290 on every person employed in the manufacturing industry. If authorities were to overspend in 1983–84 by, say, 3 per cent., that would impose a direct job tax of £30 to £40 a head in their area.
  Mr. Edward Rowlands: That is nonsense.
  Mr. Edwards: The hon. Gentleman is always screaming about the need to improve the incentives for industry and to reduce job costs. To encourage, as he does—characteristically—from a sedentary position, such an additional burden on firms in his constituency merely shows his irresponsibility.
  Mr. Rowlands: If the Secretary of State wishes to talk about my constituency, will he tell the House what percentage of costs in industry generally—or in a sample company in my constituency—can be attributed to rates?
  Mr. Edwards: No, but I can tell the hon. Gentleman that only today I have read the correspondence that he has had about the relative costs of producing Hoover washing machines with those of Indesit. He suggests that everyone employed by Hoover should not worry if an additional tax burden is placed on that company. We need no longer take his representations seriously. We now understand exactly the way in which he cares about employment at Hoover.
  Mr. Rowlands: The answer is "No".
  Mr. Edwards: There is no reason why rate levels should not be held. Some local authorities—Birmingham is a good example—have shown that they can be reduced. There has been a substantial and widespread increase in balances since authorities prepared their original budgets in the summer. They have increased from about £70 million to about £130 million. Even with the most prudent use of balances, that means that there is real scope for rate reductions. I can think of no greater contribution that authorities can make to the communities that they serve and to those who seek employment than by their containing or, better still, reducing the rate burden this year. That is what the hon. Member for Merthyr Tydfil (Mr. Rowlands) should support.
  10.53 pm
  Mr. Alec Jones: For a variety of reasons, we have not had an auspicious start to today's debate. We are dealing with three reports published on 20 December, and two supplementary reports published on 17 January, which were necessary because of errors—presumably technical errors—discovered by 6 January. I do not propose to make heavy weather of that, but someone at the Welsh Office had either a very busy Christmas or a very embarrassing Christmas when those errors were discovered. The supplementary reports confirm the view that the present system of calculating the rate support grant has, under the Government, become so complicated that few understand it and even the technical experts at the Welsh Office can make errors.
  The two supplementary amendment reports show the extent of this Government's vendetta against local government. They give details of the amounts of grant witheld from local government in Wales over the past two years. Presumably the county of Clwyd, by the Secretary of State's criteria, is the biggest villain, because now it is to lose £650,000 in grant, while it wrestles with the problems associated with its particular difficulties.
  Clwyd has a higher percentage of school-children, old-age pensioners, old people in residential homes and unemployment than the all-Wales average. It is still to be penalised for profligate overspending.
  Sir Anthony Meyer: The right hon. Member is right in saying that Clwyd faces particular difficulties. I think that I am the only hon. Member for Clwyd here tonight. Clwyd faces severe difficulties, but those will be made worse unless the authorities in Clwyd make every effort to keep the rate burden low. The desperate need is for incoming industries, and a high rate burden will be the worse thing for attracting those jobs.
  Mr. Jones: The hon. Member for Flint, West (Sir A. Meyer) should not support a Government who are increasing that rate bill. I shall not give way to the hon. Gentleman again while he continues to make abusive remarks about my hon. Friend the Member for Flint, East (Mr. Jones), when he knows where my hon. Friend is.
  The Secretary of State constantly claims, as he did tonight, that expenditure decisions are matters for individual local authorities, when he knows that if a local authority makes a decision on spending that is not in accordance with his own diktats, it renders itself open to these penalties.
  The main report is the Welsh Rate Support Grant Report 1983–84. There is a common feature in all the rate support grant settlements introduced by this Secretary of State. That is that there have been reductions in grant and added burdens on ratepayers in one form or another in every one that he has introduced. In 1982, he reduced the level of domestic rate relief from 36p to 18 ½p in the pound. Year after year under this Secretary of State we have seen cuts in the percentage of Government support. This year is certainly no exception.
  Government support for local authority essential services such as education and social services, services that enhance the quality of life for most of the people in Wales, is again being cut, from 72·5 per cent. to 70·4 per cent., a cut of 2·1 per cent. This cut in the rate of grant means a loss of £28 million to Welsh ratepayers.
  The Secretary of State earlier talked of his concern for industrial ratepayers, but the £28 million will have to be made good by the industrial ratepayers as well. He has reportedly said that it is the cash position that matters, and that the percentages are rather meaningless. The unpleasant truth is that ratepayers, who include the industrial ratepyers whom the Secretary of State is so determined to protect, will now have to find £28 million more next year than they would have if he had had the guts and ability to fight to maintain the rate grant at the previous level.
  The Secretary of State has reasserted his claim that on average there need be hardly any increase in rates next year. He is living in cloud cuckoo land. That is not the view of local authority associations. I am convinced that local authority associations know a lot more about the matter than the Secretary of State.
  Is it the Secretary of State's view that there need be hardly any rate increases next year is shared by the local authority associations that he consulted in the consultative committee? The associations' view—those are professional people who are engaged in this matter year in, year out—is that the cut in grant from 72·5 per cent. to 70·4 per cent. means that on average rate levels in Wales will be approximately 7 per cent. That is more than 10 per cent. higher than if the present grant had been retained. While individual local authorities face different sets of circumstances, the overall consequence of reducing the level of rate support grant to this extent must be an increase in rates.
  Mr. Ian Grist: Why?
  Mr. Jones: If the Secretary of State has deliberately withdrawn by a reduction of grant £28 million from ratepayers in Wales, is he saying that the services in Wales now have to be cut back? The money will have to come from somewhere.
  Mr. Nicholas Edwards: As that is less than the £32 million that was overprovided, that alone, without taking into account the other factors that I mentioned, does not mean that there is any need for an increase in rates.
  Mr. Jones: That assumes that the local authorities will be content to see a continuation of their services being run down, as they have been run down in each of the past three years. If that is the Secretary of State's view of what local authorities should do, it is not shared by the people of Wales.
  The Secretary of State refered to rents. He should have hidden his head in shame because of what he has allowed to happen to council rents in Wales since he became responsible. In 1979–80 rents were £6·50 a week, the weekly unrebated rent for council dwellings in Wales. The first increase was 24 per cent., to £8·09. The following year there was a 41 per cent. increase to £11·41. The following year there was a 22 per cent. increase to £13·91. Even assuming that only 85p is added, rents this year will be £14·76 a week, the highest they have ever been.
  Mr. Tom Hooson: Will the right hon. Gentleman give way?
  Mr. Jones: No, I shall not give way.
  Council rents, under the Secretary of State's control, have risen by 127 per cent. in four years. I do not believe that any other section of our society in Wales has faced similar increases in housing costs.
  Just over a year ago, in response to a parliamentary question, we were told that more than half of the housing authorities in Wales were in surplus on their housing revenue accounts. What is the position today and what use is being made of that surplus? Is it being used in local authorities collectively or individually to finance either other local government services or the reductions in the rate support grant imposed by the Secretary of State? Either of those methods would be totally unfair to council tenants, who have suffered the greatest increase in housing costs.
  Like a good many people in local government and, I suspect, most hon. Members, I have become increasingly confused by the relationship, if there is any, between grant-related expenditure and the targets that have been set. By the Government's definition, grant-related expenditure for a particular authority is an assessment of how much it would cost that authority to provide a typical standard of service, having regard to the authority's circumstances and responsibilities.
  That seems to be a reasonable definition. We now find that local authorities in Wales have been set targets, some below the GRE and some above the GRE.
  At present, 25 district councils and four county councils in Wales have targets below their grant-related expenditure. If they attempt to provide the typical standard service envisaged in the Government's definition of GRE they must inevitably breach their targets and become subject to a reduction in their grants. Gwent county council is an example of this. It has a target of £2·5 million below the grant-related expenditure figure. Will it be penalised if it spends up to its GRE level by providing the same standard of service that applies in other parts of the country?
  Mr. Wigley: Gwynedd is in the same position. Its target is £86·25 million and the grant-related expenditure

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  is £87·4 million. Does the right hon. Gentleman feel that it would be reasonable for the Government, even within their own parameters, not to penalise any authority unless the expenditure goes above the GRE and not just above the target?
  Mr. Jones: If authorities knew where they stood, it would be of some help. The snag is that the situation has become so complicated and confused that some councils are cheering and saying, "Hurrah for targets," and others in different positions are saying, "Hurrah for GREs." That is ridiculous. If the GRE was intended to express the amount of money which a local authority ought to expend to provide a fairly uniform standard of service, I cannot see the logic of penalising local authorities that provide it.
  On 20 December, when the Secretary of State made his announcement, he made some play about the position of Mid-Glamorgan. I have spent some time getting the figures from Mid-Glamorgan. I use Mid-Glamorgan as an example that has implications for most other councils in Wales. Mid-Glamorgan has a 1983–84 budget of £207·9 million. That is 4·4 per cent. above the target of £199·1 million. I should like to think that Government Departments such as the Ministry of Defence always got their expenditure to within 4·4 per cent.
  The Secretary of State had this to say about targets to the Welsh Consultative Council last October:
  "However they are viewed, targets are not cash limits for individual authorities and in no way reduce the right of an individual local authority to spend at the level it thinks appropriate".
  When looking at Mid-Glamorgan, we must ask—this applies to other authorities—whether it is a profligate authority or whether its budget proposals are appropriate. [HON. MEMBERS: "Yes."]
  It ill becomes anyone to say "Yes" until he has heard some of the facts about the area we are discussing. The facts clearly show that Mid-Glamorgan county council has made an appropriate decision.
  Education in Mid-Glamorgan has suffered £10 million in cuts over the last three years. The authority has reduced its teaching force by 500, and only 160 of those were brought about by falling rolls. If it was to meet the Government's new target, it would need to cut a further £4 million from its standstill budget of last year.
  The only realistic way of making such a cut in Mid-Glamorgan's education services would be to end totally the option of nursery education. That would make 400 teachers and other non-teaching staff redundant, close schools and mean that in 1983, under Tory Government, nursery education, which has continued in Rhondda for more than 70 years, would come to an end in an attempt to meet the target imposed by the Government.
  The thought of a county such as Mid-Glamorgan, with its excessively high unemployment, without nursery education, is a monstrous proposition that no one would support. That high unemployment increases the demands on the education service.
  As a consequence of the Government's economic policies, the number of free school meals in Mid-Glamorgan has increased from 14,054 to 25,018 a rise of 80 per cent. The number of clothing allowances has gone up from 2,765 to 9,300, an increase of 300 per cent. Maintenance allowances have gone up from 464 to 920,
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  an increase of 100 per cent. Those are the extra demands made upon Mid-Glamorgan by this miserable Government.
  Last March, that education authority received a report from Her Majesty's inspectors drawing attention to the considerable under-achievement by middle ability fourth and fifth year pupils in Welsh secondary schools. Faced with that report, the Mid-Glamorgan county council agreed to appoint 200 extra teachers in September and to restore the cuts in capitation. That is the correct decision, and I support the county council for taking it.
  Social services is another of the county council's high-spending departments, but the extra money that has been earmarked has nothing to do with improved services. The county council is merely seeking to maintain the same level of service for the greater number of people who need it.
  Industrial injury and disease is particularly high in Mid-Glamorgan. The death rate there is 17 per cent. higher than the average for England and Wales. Diseases of the respiratory system are 53 per cent. higher than the average for England and Wales. The percentage of people permanently unfit for employment is twice as great in Mid-Glamorgan as the percentage in England and Wales.
  Those facts, coupled with the geographical difficulties associated with steep valley communities—where the number of houses lacking essential amenities is the highest in the country—create complex situations that often require considerable resources in staff time, building works and equipment to provide the minimum help necessary.
  Today in Mid-Glamorgan, 1,200 disabled people are awaiting a first visit from county council officers for the physically impaired. An extra £400,000 is to be spent to help those people. That is not profligacy. It is an act of common decency and humanity.
  Mid-Glamorgan and other local authorities should have regard to the services required by their citizens as well as a regard—despite the Secretary of State's views—to the unemployment arising from spending cuts. The right hon. Gentleman has again continued with his obsession for reducing local authority staff. If he knew more about the subject, he would know that as more and more staff have been cut, more and more services throughout Wales have deteriorated.
  Since March 1979, the number of full-time staff has fallen by 15,500, and the number of part-time staff by a further 2,500.
  In his opening remarks the Secretary of State said that more needs to be done. At what cost are the staff to be cut? The cutting of staff is already playing havoc with social services and others in local government. Cuts are causing unemployment and worsening local government services. Those facts should be taken into account, not just by Mid-Glamorgan but by all other Welsh local authorities.
  Despite all the pious hopes of the Secretary of State for Wales, the present rate support grant settlement, like all his previous ones—this is a view shared by people who know a great deal more about this matter than almost anyone in the Chamber—will lead to higher rates and rents, increased unemployment and poorer services. For those reasons I trust that every Opposition Member will oppose the motion.
  Several Hon. Members rose——
  Mr. Deputy Speaker (Mr. Paul Dean): I remind the House that the debate must end shortly before midnight. It is evident that many hon. Members wish to speak.
  11.15 pm
  Mr. Tom Hooson: It is a remarkable achievement that, during a period in which responsible financial management has to be the Government's guideline, my right hon. Friend the Secretary of State can provide a 5 per cent. increase in the rate support grant. The Government cannot be accused of being unreasonable in a difficult period.
  I find a curious paradox in the dilemma of the control of local government expenditure. It is difficult for responsible councils—not all councils are responsible—to bring current expenditure under control, and that must be compared with the great difficulty in achieving desirable worthwhile capital expenditure. The capital expenditure record of every local council in Wales is distressingly poor. It is an area in which great doubts—not of a party political nature—are raised about the degree to which the constitutional system is geared to ensuring that type of expenditure is related to the appropriate long-term expenditure.
  I have asked questions about the utilisation of the total resources available on housing expenditure by some of the more responsible Welsh local councils. I am glad to say that some of the more responsible are in mid-Wales. The amount that has been used is rarely more than half the total available.
  I underline the paradox of the difficulty of controlling current expenditure with the difficulty of incurring responsible capital expenditure.
  I have made what I believe is the appropriate comment about the generosity of the Welsh Office in the overall increase that has been provided for the coming year. I want now to concentrate, for the first time, on the inadequacy of the statistical machinery by which the assessment of the needs of counties and districts is made.
  There was a false dawn early in this Parliament. I am a convinced supporter of the Government. I believe that the Government's record in mid-Wales is one of which we have reason to be proud. If there is one aspect of the performance of my right hon. Friend the Secretary of State and his colleagues in the Welsh Office about which I am critical, it is the complacent and slow-moving action of the Welsh Office in the reassessment of the formulae on which the rate support grant is levied.
  The system almost defies the abilities of ordinary humans to comprehend. It is a regression analysis formula which draws on over 300 factors, among which is sparsity of population. In a county which has the smallest population in England and Wales—barely 100,000 people live in Powys—yet one of the largest areas, the provision of local government services over a wide area puts a strain on the services which is disproportionate to the revenue which can be raised at the local base. I am describing in extreme form what can also be found in several other rural counties in Wales.
  One hoped that when the control of the allocation of the rate support grant moved to the Welsh Office there would be more flexibility in analysing the needs of rural counties. I am distressed about the slowness of Welsh Office Ministers in responding to this situation.
  Some situations are so obvious that they barely need to be described. I do not intend to take much of the time of
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  the House, but I will give the obvious example: a fire engine can hardly be required to cover an area with a radius of 60 miles. It follows that the cost of providing a bare minimum of essential services is far greater in rural than in urban areas. The results for Powys are so absurd that in every year's settlement it is necessary for a note of grace to be brought into the decision by the Secretary of State and provision is then made for a discretionary allowance.
  Mr. Nicholas Edwards: My hon. Friend should not imply that nothing is being done. Already in this year—these things are reviewed every year—adjustments have been made to the GRE to take account of sparsity factors in rural areas, particularly for transport. Powys gets about 90 per cent. in respect of particular allowances, while Mid-Glamorgan, say, gets only 60 per cent. There is a greater sparsity allowance built in to the GRE, and this has been altered this year.
  Mr. Hooson: I accept that there are particular places where adjustments have been made. What I am still driving at—I am not satisfied by my right hon. Friend's reply on this point—is that there is a basic built-in cost for all the rural councils, whether at county or district level, which is considerable. For example, public transport is virtually non existent in rural areas. The fire service I have mentioned. Then there is refuse collection, subject choice and computer studies in secondary schools, leisure centres, choice of library books and large museums within reasonable travelling distance. The list could go on endlessly, but I do not intend to go on endlessly.
  Mr. Gareth Wardell: It is interesting that, in the appendices relating to relevant expenditure, the proportion that is allowed out of the current expenditure for local transport has, indeed, fallen between 1982–83 and 1983–84. I agree with the hon. Gentleman about that particular aspect, which is extremely worrying for the people of my constituency, too.
  Mr. Hooson: I am grateful to the hon. Gentleman for that thoughtful and informative interjection.
  I make no complaint about the degree to which my right hon. Friend and his colleagues have responded to problems which have been identified as arising from rural circumstances. Last winter was very bad. I hope we shall see nothing like it in the next few weeks. I cannot complain about the way in which allowance has been made in specific cases, but if there is one quality in country people that a Conservative Secretary of State ought to appreciate, it is their self-reliance and reluctance to seek additional help.
  In this context it is absurd that Powys county council has to rely on a remarkable degree of charity—that is what it is—when it come to discretionary decisions by the Secretary of State on the allocation of a certain margin of funds. We are relying on the good will of the Secretary of State of the day, but the inhabitants of Powys would be content to rely upon objective criteria on the needs of specific areas.
  Mr. Delwyn Williams: Would my hon. Friend and neighbour care to comment on the glaring inconsistency that whereas Powys had £387 per head rate support grant at county level in 1981–82, which is ahead of the Welsh average, it had an average of only £61 per

  443
  head at district level, which is 30 per cent. below the Welsh average? Does he agree that this is an unfair and manifestly glaring omission by the Welsh Office?
  Mr. Hooson: This is yet further evidence of the fact that the system in the Welsh Office computer is inadequate to reflect the problems not only of Powys but of Dyfed, of Gwynedd, and, for all I know, to some extent even of Clwyd.
  I realise that there is a constitutional problem in the degree to which the association of local councils decides to review the allocation of the formula. This is the only area in which I am not satisfied with the excellent leadership in the Welsh Office. I am not satisfied that we have had a sufficient lead in re-examining the rate support grant formula with particular reference to the issue of sparsity. We need a more decisive commitment from the Welsh Office than we have so far received.
  11.28 pm
  Mr. Dafydd Wigley: I am glad to follow the hon. Member for Brecon and Radnor (Mr. Hooson). The points he has made are valid but difficult. The formula is complicated already. Much though I agree with him on the need to develop indicators that give the right reflection of the needs of rural and urban areas, one has to get a formula that is acceptable to both types of area and the right weighting of the various elements within that formula, such as sparsity and super-sparsity, the proportion of people over 75 who have a greater demand on services, the miles of road that have to be maintained and this sort of thing. The difficulty is deciding how a finite pool of money should be carved up.
  I suspect that at the end of the day a political judgment has to be reached, although nobody would admit to that. That judgment may be reached before or after things are published. Then one can use a multi-parameter model to justify one's conclusions. If there are to be need indicators they should stand up on a local basis. There are some sort of need indicators developed in the Welsh formula but then we see at table 9.2 a rider:
  "Since no part of the block grant is earmarked for particular services, the tables in this Appendix do not form a basis for calculating a notional allocation of either grant-related expenditure or grant to individual authorities for any particular service."
  If there are to be need indicators, they must stand up for each service and in each authority and in Wales as a whole. At the moment, we have moved only half-way towards that position. I know the difficulties. I shall not press the point. If, however, there are to be these parameters, it would be preferable to have the whole package built up element by element. One would therefore know what was available for individual services in individual authority areas.
  Mr. Hooson: Does the hon. Gentleman consider, as we are dealing with matters in a much smaller Welsh context, that it might be useful to reduce the number of factors involved to 30 or 40, which would permit a manageable debate on the needs of different areas?
  Mr. Wigley: It is obvious that hon. Members are more likely to understand 40 factors than a number several times higher. The problem, I suspect, will be the size of the ultimate cake. We in Plaid Cymru will be arguing always to try and obtain as large a cake as possible.
  444
  The settlement can be discussed only in the context of the economic problems facing Wales and also facing individual ratepayers, commercial and industrial concerns and especially the worst off, those who depend on social services, school meals and, as the hon. Member for Wrexham (Mr. Ellis) says, school transport. The economy is in an almighty mess. The need is greater but the resources provided have not significantly increased and are not adequate.
  For ratepayers, there are other additional costs. The water rate has been increased by 6 per cent. That is an average figure for all Welsh water authority customers. The increase will not, however, be applied for the water sold to Severn-Trent water authority. This means that the increase for Welsh domestic ratepayers will be greater than 6 per cent. It will be hard to bear. This settlement comes at a time when Wales may be missing out on European regional development fund grants. This fund is a finite sum, which is now to be redirected mainly to the inner cities, and the switch will be at the expense of areas that have benefited in the past.
  A document issued by the Department of the Environment on 13 December states:
  "The Government is concerned to present the case for ERDF aid to Inner Cities in ways which are least likely to generate opposition. … Indeed, we would like to minimise publicity at this stage".
  One can understand that view if areas such as Wales are to miss out severely should ERDF funds be directed to inner city areas at their expense. I hope that the Secretary of State is putting up a determined fight on this issue in Cabinet.
  In the planning of transport and buses, it is difficult to organise a programme for one year. There is a need to look two or three years ahead. A rolling programme is necessary in order to devise a coherent investment pattern for the purchase of buses to serve rural Wales. This cannot be done on the basis of a one-year settlement and better information is required for such planning.
  The Secretary of State has said little about the capital programme. We had expected in Gwynedd to have a capital settlement in excess of £11 million. We appear to have £7¼ million, which is cutting matters to the knuckle. As a result, a vital project for the economy of Gwynedd, the link road to Llandudno, was axed from the programme today. It is, however, much needed because of the increased pressure of traffic with the building of the Conway bypass. The Welsh Office has been short-sighted in not providing additional funds to meet that requirement.
  Given the increase in council house rents in recent years, I would have thought that there could have been a moratorium on increases this year. Council house rent payers have suffered enough.
  When the Secretary of State announced this settlement on the Monday before Christmas, he underlined several times the point that "on average" local authorities need not increase rates. He talked in terms of averages again today. As the right hon. Member for Rhondda (Mr. Jones) said, there is to be a reduction in the proportion of the total relevant expenditure that is to be met by aggregate Exchequer grants. There is to be a reduction from 72·5 per cent. to 70·4 per cent. That is a reduction of 2·1 percentage points. That figure should be compared with the rate borne expenditure proportion of 27·5 percentage points on which the calculation was made last year. That means that we are

  445
  losing 7·6 per cent. or, to put it another way, we need an additional 7·6 per cent. income from rates to retain the same expenditure.
  I told the Secretary of State on the last Monday before Christmas that that meant that there would have to be a 9p increase in the rates in Gwynedd, to which anything else to meet inflation would have to be added. He disagreed, and said that, on average there would be no need for rate increases. In fact, the rates in Gwynedd have been increased today by 14p. That represents 9p to regain what it has lost and an additional 5p to keep them more or less in line with inflation.
  I hope that the Secretary of State will accept that whereas on average he might have been right, when he applies that average to local circumstances, especially authorities such as Gwynedd,—the reserves of which at the end of the present financial year are expected to be virtually identical to the reserves at the beginning of the year—the formula does not work. The ratepayers in Gwynedd are facing a 14p increase in the rates because of the attempt to maintain services there. That is being done after Gwynedd has already, regrettably, cut 116 permanent staff and 187 part time employees. Those people were doing much-needed work in an authority that is not, by any stretch of the imagination, overstaffed.
  I realise that the hon. Member for Montgomery (Mr. Williams) would like to cut all services and leave people who rely on them without anything. He may be doing that in his constituency. Nevertheless, the services in Gwynedd are vital.
  Another factor to which the Secretary of State has not referred is that the changing demographic pattern works in two ways. There may be a reduction in school rolls, but there is an increase in the elderly population that needs to be sustained. Whereas the Secretary of State is willing to accept the underspending that may have arisen because of falling school rolls—he uses that as a justification for not giving a greater settlement this year—he has not taken account of the increased costs at the other end of the age scale.
  Will the Minister clarify whether there is a substantial transfer of resources from the county to the district in the way in which reserves are being used to justify a need not to cut services or increase rates? I suspect that reserves may have increased in those local councils with difficulties with their housing programme and that that increase in total reserves is being used as a justification for not giving the counties the money that they need.
  Will the Minister also reaffirm what I said in an intervention in the speech of the hon. Member for Rhondda? Will he seriously consider not penalising any authority the expenditure of which does not exceed the GRE even though it may not meet the target? Gwynedd will spend £87·4 million—identical with the GRE and the budget that was passed today. If the Government penalise on the basis of the target, Gwynedd will be penalised. If the Government use common sense and say that Gwynedd has not spent above GRE, Gwynedd's settlement will be accepted.
  11.38 pm
  Mr. Donald Anderson: There can be little doubt that, in the past three years, the consitutional balance has swung heavily against local government in
  446
  favour of central Government. The freedom that has been left to local government is the freedom to spend less and to avoid close ending and hold back.
  The first two reports reduce grants for those authorities that have exceeded targets. The essential fallacy is the Government's assumption that the targets that they have set have some objective validity. As the hon. Member for Caernarvon (Mr. Wigley) said, they are arbitrary targets that often depend on political assessments, yet on the basis of these arbitrary tagets, the penalties have been set.
  The 1982–83 targets were not announced until the end of May 1982, already into the budget year when expenditure decisions had been taken.
  In an earlier intervention, I told the Secretary of State that Wales had been treated more harshly than England in penalties. His response was that it was simply a token. If it was a token, why did he proceed with the penalties? Other hon. Members properly said that for three years a reduced level of expenditure has been met by central Government grant, this time reduced by 2·1 per cent. to 70·4 per cent. Expenditure has increased by almost 7 per cent. and the block grant by almost 3 per cent. The shortfall must be met from some source, and it inevitably must mean a greater burden on ratepayers.
  The Government, in their manifestos for the 1974 and 1979 general elections, spoke about the abolition of rates, yet are now adding greater burdens to the ratepayers—both domestic and industrial. They have added to the burden imposed by the halving of the domestic rate relief in Wales when the relief was put at 36p in the pound to compensate for higher water charges—
  Mr. Grist: Does not the hon. Gentleman realise that in South Glamorgan and Cardiff it is theoretically possible that, using balances held by the councils the rates could be reduced by between 10p and 20p in the pound this year?
  Mr. Anderson: That may be true for those authorities, but the balances are there for special reasons. The Government have paid insufficient regard to the revenue effects of the welcome increase in capital expenditure. For example, for the year 1983–84 Swansea will have a capital expenditure of £24 million, which will inevitably lead to an increase on the revenue budget of about 6 per cent. When we add to that 6 per cent. inflation of 5 or 6 per cent., it makes a mockery of the Government figures of an overall increase of 7 per cent.
  There is uncertainty about the current system. It will be three years before the 1983–84 grant will be finalised, and the three-year period will inevitably lead to caution by city treasurers.
  The real charge against the Secretary of State and his advisers on the rate support grant settlement is that they are living in a world of numbers, not people. In our world, we see the increase in unemployment, poverty, demands on the social services, the new calls on the welfare state and the decline in bus services and educational facilities. Yet the rate support grant settlement takes no account of that, but is consistent with the Government's overall monetarist policies.
  11.43 pm
  Mr. Geraint Howells: It is difficult to be brief when dealing with such a complex subject as the rate support grant. However, because of the limited time available I shall be brief. I shall try to concentrate on those

  447
  aspects of the settlement that are especially relevant to Dyfed county council and the Ceredigion district council, which is part of my constituency.
  This is the third year of the new system introduced by the Local Government, Planning and Land Act 1980. A pattern has emerged for the methodology for calculating the grant entitlement of individual authorities. I am sure that the Secretary of State will be glad to hear that I have been informed that Ceredigion district council has been generally satisfied with the level of grant support that it has received.
  That is not to say that all is well in Wales. An authority such as Ceredigion district council, with a target total 25 per cent. below the Government's own assessment of spending need GRE will find it far more difficult to keep within the target. Does the Minister agree that if that district council fails to meet the target and is classed as an overspender by the Welsh Office that will be a most unfair description of an authority with the fourth lowest district rate in Wales? What will be the effect of this different basis of assessment on a lower spending authority such as Ceredigion district council?
  Finally, is the Minister satisfied that all the necessary services in Wales will be maintained as they have been in the past few years?
  11.45 pm
  Mr. Alec Jones: The Opposition are convinced, for the following reasons, that we should oppose the motion.
  First, the aggregate figure allowed in the settlement will not allow local authorities in Wales to maintain their existing services and certainly will not allow them to carry out any much-needed improvements.
  We have already seen from the example given by the hon. Member for Caernarvon (Mr. Wigley) that rates in Wales will rise this year. His figure of 14p in the pound for Gwynedd excluded the rates that district councils themselves will add, so there is no doubt that rates will rise.
  The Secretary of State himself accepted that council rents would rise. Indeed, he seemed to welcome that. The Government seem also to welcome the fact that if local authorities are to meet Government targets there will have to be further redundancies and poorer services by local authorities in Wales.
  For those reasons, but above all because we regard the Government's attitude to local government as an assault on the very principle of local democracy, we oppose the motion. Whatever mandate the Government may have for national decisions, locally and democratically elected councillors have a mandate for their own decisions in their own localities. I fully accept that they must answer to their electorate. That is what local government is about. The Conservatives came to office on an election manifesto claiming that they would extend the role of local government, but all that they have done is to place it in ever tighter bonds.
  I ask all my hon. Friends to support me in voting against the motion.
  11.47 pm
  Mr. Nicholas Edwards: The hon. Member for Cardigan (Mr. Howells) asked whether I believed that services could be maintained. As I said in opening the debate, I believe that they can.
  The hon. Member for Caernarvon (Mr. Wigley) referred to an increase in rates by Gwynedd county council. He will know that last year, for reasons that I understand, that authority cut its precept and cut balances. To some extent, therefore, its situation is rather different from that of many other authorities in that it is catching up on a previous decision. It is clear from what the hon. Gentleman said, however, that it intends to exceed the target and will therefore suffer a penalty. That is the decision that it has taken.
  The hon. Gentleman is quite wrong, however, to say that a political element enters into the actual formula of grant distribution. Every year since I have had responsibility I have accepted in total and without amendment the GRE formula proposed by the Welsh local authority associations.
  Although the hon. Member for Caernarvon was wrong about that, he was absolutely right to point to the central dilemma of the debate. The right hon. Member for Rhondda (Mr. Jones) says that we should provide more for areas of urban deprivation such as Mid-Glamorgan while my hon. Friend the Member for Brecon and Radnor (Mr. Hooson) says that we should provide more for rural areas with problems of sparsity.
  I understand and sympathise with both views but sparsity factors are taken into account. They have been revised, not as a discretionary decision taken by me, or as a charitable decision as he implies, but because formulae have been worked out and agreed by negotiation within the local authority associations.
  When all has been said about the suffering of the rural areas, it is fair to point out that the GRE per head in Powys is £433 compared with the Welsh county average of £366. Though, my hon. Friend the Member for Montgomery (Mr. Williams) was right to draw attention to the lower figure for the districts, when he quoted £61 or £62 per head, I think that he was referring to the 1981–82 figure. That figure is up to £72 per head for 1983–84. The actual rates bills paid in Powys are about the lowest in Wales. I hope that my hon. Friend the Member for Brecon and Radnor (Mr. Hooson) will, from time to time, take a certain amount of credit for that instead of drawing down upon his head the blame that he appears, in a sense, to be attributing to me.
  The right hon. Member for Rhondda and others implied that because there was a reduction in the rate percentage grant of £28 million, that must mean an increase in rates. But he and the hon. Member for Caernarvon entirely ignored the figures that I have spelt out, and the fact that the Welsh local authorities had over-provided previously by more than the amount that he quoted. The right hon. Gentleman asked me whether the associations accepted what I said about maintaining services and the level of rate increases. The associations fully accept that if they spend in line with the settlement there need be no rate increases. They entirely accept the mathematics of the formula. They argue, as the right hon. Gentleman has argued, that in many cases they will not be able to do so. Many of them have taken note of the point in my statement in December, and which I repeated today, about the substantial increase

  449
  that has occurred in balances. Many local authorities will think that it is absolutely right to help industry as much as possible and to use some of those balances to hold down the rate burdens. I hope that they will do so.
  The right hon. Member for Rhondda also referred to rents. He said that I should hang my head in shame because of what we have done with rents. The right hon. Gentleman was a member of a Government who wanted to do exactly what we have done but did not have the guts or the integrity to do it. The right hon. Gentleman is the one who should be hanging his head in shame. We do not need lectures from him.
  As for the criticism that in some cases the targets are being set below GRE, the right hon. Gentleman appeared to be suggesting that Gwent, for example, was not providing a reasonable standard of service. Any individual local authority is perfectly free—Gwent and Gwynedd included—to judge what a reasonable standard of service is and whether it can be provided more economically. Individual local authorities have shown that it is possible to cut numbers and provide an adequate service. Birmingham, for example, has shown that substantial improvements can be made in refuse collecting services by making an agreement with its employees to provide as good a service as previously, but with fewer people. That is an example of what can be done.
  The right hon. Gentleman then tried to have it the other way round. Having made the point about targets in some cases being below GRE, he then turned to the problems of Mid-Glamorgan. No one would have judged from what he had said that there the target is set by the Government above GRE in recognition of many of the problems to which he drew attention. The leader of the Mid-Glamorgan council made it clear in his speech before Christmas that he was not acting for the reasons that the right hon. Gentleman set out, but that he was making a deliberate political challenge. His words were widely reported, and he challenged me to hold back in an election year. I made it clear to him, and I make it clear again, that if he likes to issue political challenges of that sort I shall have no hesitation in holding back in an election year. Having set out the targets, we shall ensure that they are carried through.
  Scaremongering nonsense has been talked. The right hon. Gentleman said that it would be a monstrous proposition to close all nursery schools in Mid-Glamorgan. I agree with him, but that is not my proposition. It is the proposition that is being advanced, apparently, by the Mid-Glamorgan county council. The county council has a free choice in the way it spends its money and the priorities that it selects.
  The settlement that we have made is fair and reasonable. The over-assumptions made by the local authorities previously and the large balances that exist give a real opportunity for authorities not only to hold rates this year but to cut rates for industry and to do something that the right hon. Member for Rhondda says should be a priority, which is to provide jobs. However, he is not prepared to reinforce his words with action.
  Question put:
  The House divided: Ayes 260, Noes 199.

  Division No. 48]

  [11.56 pm

  AYES

  Adley, Robert

  Arnold, Tom

  Alexander, Richard

  Aspinwall, Jack

  Ancram, Michael

  Atkins, Rt Hon H (S'thorne)

  450

  Atkins, Robert (Preston N)

  Grant, Sir Anthony

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

  Gray, Rt Hon Hamish

  Baker, Kenneth (St. M'bone)

  Greenway, Harry

  Baker, Nicholas (N Dorset)

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

  Beaumont-Dark, Anthony

  Griffiths, Peter (Portsm'th N)

  Bendall, Vivian

  Grist, Ian

  Bennett, Sir Frederic (T'bay)

  Gummer, John Selwyn

  Benyon, W. (Buckingham)

  Hamilton, Michael (Salisbury)

  Berry, Hon Anthony

  Hampson, Dr Keith

  Best, Keith

  Hannam, John

  Bevan, David Gilroy

  Haselhurst, Alan

  Biffen, Rt Hon John

  Hastings, Stephen

  Biggs-Davison, Sir John

  Havers, Rt Hon Sir Michael

  Blackburn, John

  Hawkins, Sir Paul

  Blaker, Peter

  Hayhoe, Barney

  Body, Richard

  Heddle, John

  Bonsor, Sir Nicholas

  Henderson, Barry

  Boscawen, Hon Robert

  Heseltine, Rt Hon Michael

  Bottomley, Peter (W'wich W)

  Higgins, Rt Hon Terence L.

  Bowden, Andrew

  Hogg, Hon Douglas (Gr'th'm)

  Boyson, Dr Rhodes

  Holland, Philip (Carlton)

  Braine, Sir Bernard

  Hooson, Tom

  Bright, Graham

  Hordern, Peter

  Brinton, Tim

  Howe, Rt Hon Sir Geoffrey

  Brittan, Rt. Hon. Leon

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

  Brooke, Hon Peter

  Howell, Ralph (N Norfolk)

  Brotherton, Michael

  Hunt, David (Wirral)

  Brown, Michael (Brigg & Sc'n)

  Hunt, John (Ravensbourne)

  Browne, John (Winchester)

  Irvine, Rt Hon Bryant Godman

  Bruce-Gardyne, John

  Jessel, Toby

  Buck, Antony

  Johnson Smith, Sir Geoffrey

  Budgen, Nick

  Jopling, Rt Hon Michael

  Bulmer, Esmond

  Joseph, Rt Hon Sir Keith

  Butcher, John

  Kellett-Bowman, Mrs Elaine

  Butler, Hon Adam

  Kershaw, Sir Anthony

  Carlisle, John (Luton West)

  King, Rt Hon Tom

  Carlisle, Kenneth (Lincoln)

  Knox, David

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

  Lamont, Norman

  Chalker, Mrs. Lynda

  Lang, Ian

  Channon, Rt. Hon. Paul

  Latham, Michael

  Chapman, Sydney

  Lawrence, Ivan

  Churchill, W. S.

  Lawson, Rt Hon Nigel

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

  Lee, John

  Clark, Sir W. (Croydon S)

  Lennox-Boyd, Hon Mark

  Clarke, Kenneth (Rushcliffe)

  Lester, Jim (Beeston)

  Clegg, Sir Walter

  Lloyd, Ian (Havant & W'loo)

  Cockeram, Eric

  Lloyd, Peter (Fareham)

  Colvin, Michael

  Loveridge, John

  Cope, John

  Luce, Richard

  Costain, Sir Albert

  Lyell, Nicholas

  Cranborne, Viscount

  McCrindle, Robert

  Critchley, Julian

  Macfarlane, Neil

  Crouch, David

  MacKay, John (Argyll)

  Dickens, Geoffrey

  McNair-Wilson, M. (N'bury)

  Dorrell, Stephen

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

  Douglas-Hamilton, Lord J.

  McQuarrie, Albert

  Dunn, Robert (Dartford)

  Madel, David

  Durant, Tony

  Major, John

  Dykes, Hugh

  Marland, Paul

  Eden, Rt Hon Sir John

  Marten, Rt Hon Neil

  Edwards, Rt Hon N. (P'broke)

  Mates, Michael

  Eggar, Tim

  Mather, Carol

  Elliott, Sir William

  Maude, Rt Hon Sir Angus

  Emery, Sir Peter

  Mawby, Ray

  Eyre, Reginald

  Mawhinney, Dr Brian

  Fairbairn, Nicholas

  Maxwell-Hyslop, Robin

  Fairgrieve, Sir Russell

  Mayhew, Patrick

  Faith, Mrs Sheila

  Mellor, David

  Fenner, Mrs Peggy

  Meyer, Sir Anthony

  Finsberg, Geoffrey

  Miller, Hal (B'grove)

  Fisher, Sir Nigel

  Mills, Iain (Meriden)

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

  Mills, Sir Peter (West Devon)

  Fookes, Miss Janet

  Miscampbell, Norman

  Fowler, Rt Hon Norman

  Moate, Roger

  Fox, Marcus

  Monro, Sir Hector

  Gardiner, George (Reigate)

  Moore, John

  Gardner, Sir Edward

  Morgan, Geraint

  Garel-Jones, Tristan

  Morrison, Hon P. (Chester)

  Glyn, Dr Alan

  Mudd, David

  Goodhart, Sir Philip

  Murphy, Christopher

  451

  Myles, David

  Speed, Keith

  Neale, Gerrard

  Speller, Tony

  Nelson, Anthony

  Spicer, Jim (West Dorset)

  Neubert, Michael

  Spicer, Michael (S Worcs)

  Newton, Tony

  Sproat, Iain

  Normanton, Tom

  Squire, Robin

  Onslow, Cranley

  Stainton, Keith

  Oppenheim, Rt Hon Mrs S.

  Stanbrook, Ivor

  Osborn, John

  Stanley, John

  Page, John (Harrow, West)

  Steen, Anthony

  Page, Richard (SW Herts)

  Stevens, Martin

  Parkinson, Rt Hon Cecil

  Stewart, A. (E Renfrewshire)

  Parris, Matthew

  Stewart, Ian (Hitchin)

  Patten, John (Oxford)

  Stokes, John

  Pattie, Geoffrey

  Stradling Thomas, J.

  Pawsey, James

  Tebbit, Rt Hon Norman

  Percival, Sir Ian

  Temple-Morris, Peter

  Pink, R. Bonner

  Thomas, Rt Hon Peter

  Pollock, Alexander

  Thompson, Donald

  Porter, Barry

  Thorne, Neil (Ilford South)

  Prentice, Rt Hon Reg

  Thornton, Malcolm

  Price, Sir David (Eastleigh)

  Townend, John (Bridlington)

  Prior, Rt Hon James

  Townsend, Cyril D, (B'heath)

  Proctor, K. Harvey

  Trippier, David

  Raison, Rt Hon Timothy

  Vaughan, Dr Gerard

  Rathbone, Tim

  Viggers, Peter

  Rees, Peter (Dover and Deal)

  Waddington, David

  Rees-Davies, W. R.

  Wakeham, John

  Renton, Tim

  Waldegrave, Hon William

  Rhodes James, Robert

  Walker, B. (Perth)

  Rhys Williams, Sir Brandon

  Waller, Gary

  Ridley, Hon Nicholas

  Ward, John

  Rippon, Rt Hon Geoffrey

  Warren, Kenneth

  Roberts, M. (Cardiff NW)

  Watson, John

  Roberts, Wyn (Conway)

  Wells, Bowen

  Rossi, Hugh

  Wells, John (Maidstone)

  Rost, Peter

  Wheeler, John

  Rumbold, Mrs A. C. R.

  Whitelaw, Rt Hon William

  St. John-Stevas, Rt Hon N.

  Whitney, Raymond

  Shaw, Giles (Pudsey)

  Wilkinson, John

  Shaw, Sir Michael (Scarb')

  Williams, D. (Montgomery)

  Shelton, William (Streatham)

  Winterton, Nicholas

  Shepherd, Colin (Hereford)

  Wolfson, Mark

  Shepherd, Richard

  Young, Sir George (Acton)

  Shersby, Michael

  Younger, Rt Hon George

  Silvester, Fred

  Sims, Roger

  Tellers for the Ayes:

  Skeet, T. H. H.

  Mr. Alastair Goodlad and

  Smith, Tim (Beaconsfield)

  Mr. Archie Hamilton.

  NOES

  Abse, Leo

  Cook, Robin F.

  Adams, Allen

  Cowans, Harry

  Allaun, Frank

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

  Anderson, Donald

  Crowther, Stan

  Archer, Rt Hon Peter

  Cryer, Bob

  Ashley, Rt Hon Jack

  Cunliffe, Lawrence

  Ashton, Joe

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

  Atkinson, N. (H'gey,)

  Dalyell, Tam

  Barnett, Guy (Greenwich)

  Davidson, Arthur

  Beith, A. J.

  Davies, Rt Hon Denzil (L'lli)

  Benn, Rt Hon Tony

  Davis, Clinton (Hackney C)

  Bennett, Andrew (St'kp't N)

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

  Booth, Rt Hon Albert

  Deakins, Eric

  Brown, Hugh D. (Provan)

  Dean, Joseph (Leeds West)

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

  Dewar, Donald

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

  Dixon, Donald

  Brown, Ron (E'burgh, Leith)

  Dobson, Frank

  Buchan, Norman

  Dormand, Jack

  Callaghan, Rt Hon J.

  Douglas, Dick

  Campbell, Ian

  Dubs, Alfred

  Campbell-Savours, Dale

  Dunnett, Jack

  Canavan, Dennis

  Dunwoody, Hon Mrs G.

  Carter-Jones, Lewis

  Eastham, Ken

  Clark, Dr David (S Shields)

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

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

  Ellis, Tom (Wrexham)

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

  Ennals, Rt Hon David

  Cohen, Stanley

  Evans, loan (Aberdare)

  Concannon, Rt Hon J. D.

  Evans, John (Newton)

  Conlan, Bernard

  Flannery, Martin

  452

  Ford, Ben

  Parker, John

  Forrester, John

  Parry, Robert

  Foster, Derek

  Pavitt, Laurie

  Foulkes, George

  Pendry, Tom

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

  Powell, Raymond (Ogmore)

  Freeson, Rt Hon Reginald

  Prescott, John

  Garrett, John (Norwich S)

  Price, C. (Lewisham W)

  Garrett, W. E. (Wallsend)

  Race, Reg

  George, Bruce

  Radice, Giles

  Golding, John

  Rees, Rt Hon M (Leeds S)

  Graham, Ted

  Richardson, Jo

  Hamilton, James (Bothwell)

  Roberts, Allan (Bootle)

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

  Roberts, Ernest (Hackney N)

  Hardy, Peter

  Roberts, Gwilym (Cannock)

  Harman, Harriet (Peckham)

  Robertson, George

  Harrison, Rt Hon Walter

  Robinson, G. (Coventry NW)

  Hattersley, Rt Hon Roy

  Rooker, J. W.

  Haynes, Frank

  Roper, John

  Heffer, Eric S.

  Ross, Ernest (Dundee West)

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

  Rowlands, Ted

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

  Ryman, John

  Home Robertson, John

  Sever, John

  Homewood, William

  Sheerman, Barry

  Hooley, Frank

  Sheldon, Rt Hon R.

  Howells, Geraint

  Shore, Rt Hon Peter

  Hoyle, Douglas

  Silkin, Rt Hon J. (Deptford)

  Huckfield, Les

  Silkin, Rt Hon S. C. (Dulwich)

  Hughes, Robert (Aberdeen N)

  Silverman, Julius

  Hughes, Roy (Newport)

  Skinner, Dennis

  Janner, Hon Greville

  Smith, Rt Hon J. (N Lanark)

  John, Brynmor

  Snape, Peter

  Johnson, James (Hull West)

  Soley, Clive

  Jones, Rt Hon Alec (Rh'dda)

  Spearing, Nigel

  Kaufman, Rt Hon Gerald

  Spellar, John Francis (B'ham)

  Kerr, Russell

  Spriggs, Leslie

  Kilroy-Silk, Robert

  Stallard, A. W.

  Kinnock, Neil

  Steel, Rt Hon David

  Lambie, David

  Stoddart, David

  Lamond, James

  Stott, Roger

  Leadbitter, Ted

  Strang, Gavin

  Leighton, Ronald

  Straw, Jack

  Lewis, Ron (Carlisle)

  Summerskill, Hon Dr Shirley

  Litherland, Robert

  Taylor, Mrs Ann (Bolton W)

  Lofthouse, Geoffrey

  Thomas, Dafydd (Merioneth)

  McCartney, Hugh

  Thomas, Dr R. (Carmarthen)

  McDonald, Dr Oonagh

  Thorne, Stan (Preston South)

  McElhone, Mrs Helen

  Tilley, John

  McGuire, Michael (Ince)

  Tinn, James

  McKay, Allen (Penistone)

  Torney, Tom

  McKelvey, William

  Varley, Rt Hon Eric G.

  MacKenzie, Rt Hon Gregor

  Wainwright, E. (Dearne V)

  McNamara, Kevin

  Walker, Rt Hon H. (D'caster)

  McWilliam, John

  Wardell, Gareth

  Marks, Kenneth

  Watkins, David

  Marshall, D (G'gow S'ton)

  Weetch, Ken

  Marshall, Jim (Leicester S)

  Welsh, Michael

  Martin, M (G'gow S'burn)

  White, Frank R.

  Mason, Rt Hon Roy

  White, J. (G'gow Pollok)

  Maxton, John

  Whitehead, Phillip

  Maynard, Miss Joan

  Whitlock, William

  Meacher, Michael

  Wigley, Dafydd

  Mikardo, Ian

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

  Millan, Rt Hon Bruce

  Wilson, William (C'try SE)

  Miller, Dr M. S. (E Kilbride)

  Winnick, David

  Mitchell, Austin (Grimsby)

  Woodall, Alec

  Morris, Rt Hon C. (O'shaw)

  Woolmer, Kenneth

  Morris, Rt Hon J. (Aberavon)

  Wright, Sheila

  Moyle, Rt Hon Roland

  Young, David (Bolton E)

  Newens, Stanley

  Oakes, Rt Hon Gordon

  Tellers for the Noes:

  O'Neill, Martin

  Mr. George Morton and

  Palmer, Arthur

  Dr. Edmund Marshall.

  Park, George

  Question accordingly agree to
  Resolved,
  That the Welsh Rate Support Grant Report 1980 (Supplementary) (No. 2) (Amendment) Report 1982, which was laid before this House on 17th January, be approved.
  Resolved,
  That the Welsh Rate Support Grant Report 1982 (Supplementary) Report 1982, which was laid before this House on 20th December, be approved.
  That the Welsh Rate Support Grant Report 1982 (Supplementary) (Amendment) Report 1982, which was laid before this House on 17th January, be approved.
  That the Welsh Rate Support Grant Report 1983–84, which was laid before this House on 20th December, be approved.—[Mr. Nicholas Edwards.]

  Philippines (Aid)
  Motion made, and Question proposed, That this House do now adjourn.—[Mr. David Hunt.]
  12.7 am
  Mr. Tom Clarke: I take this opportunity to congratulate the Minister for Overseas Development on his appointment, as I understand that this is the first occasion upon which he will be addressing the House on aid matters. From my brief experience in the House, I know that he will find the debates on Third world matters more agreeable than his previous experience on other matters might have been.
  I feel that it is right that we should have this debate not only to discuss the important matter of Mindanao but to deal with the wider implications of Government policy on aid, and particularly to the Philippines.
  I congratulate the right hon. Gentleman's predecessor on recent events, but some of us were slightly surprised that the announcement about Mindanao took place on 5 January, during the recess, after we had had two fairly important debates on the Third world when hon. Members might have expected an announcement of that kind. I questioned the Prime Minister on that subject on 2 December. Her reply implied that the announcement would be made soon. Because of the great interest in the matter on both sides of the House, expressed by my hon. Friends the Members for Greenwich (Mr. Barnett), Lambeth, Central (Mr. Tilley) and Harlow (Mr. Newens) and by the hon. Members for Essex, South-East (Sir B. Braine) and Ludlow (Mr. Cockeram), who made powerful speeches on the subject, I thought that a statement would have been made while the House was sitting.
  The press statement that was made contained these words:
  "the Minister for Overseas Development has agreed that the Commonwealth Development Corporation should participate in an oil palm project in the Philippines being undertaken by National Development Company of the Philippines—Guthrie Plantations Incorporated, to which CDC will be lending £6·4 million."
  That was an important statement. The statement as it stood, while endeavouring to meet some of the criticisms that have been made and some of the serious views on both sides of the House, was in some respects a little naive. For example, it said:
  "NGPI have invited CDC to station a representative in the area to monitor these provisions on a continuing basis, and also to nominate a CDC director to their Board."
  I should like to ask some questions about that appointment. Running through the statement is the suggestion that we should have greater reliance on the endeavours of the Filipinos in those matters than I feel recent history entitles us to have. The statement also said:
  "The NDC have given an assurance that the service has no connection now nor will have in the future with The Lost Command or its leader, Colonel Lademora."
  There has been no evidence, much as we would wish to see it, that the Government's position is so strong as to encourage that assertion to be made. Whereas all hon. Members have the highest regard for the CDC and wish it well in its endeavours, and although it has the good will of the House, we must urge upon it constant vigilance when dealing with the people who will be involved in the project.
  That is why I should like to ask the Minister about the specific responsibilities of the person who is to monitor the

  455
  provision. Will that person be the manager of another plantation? If so, that is some distance away from the point where one would expect managerial involvement on a day-to-day basis in view of the serious nature of the commitment. I should like to hear the Minister's statement on that matter.
  The statement also contains these words:
  "The drawdown of the CDC loan after June 1983 will be conditional upon CDC being satisfied with implementation of the new security arrangements."
  I wonder what measure the Minister sets for satisfaction and who, for example, will decide how effective or acceptable the implementation is. What will be the general guidelines? I should like to have more information on that point, as would many people who are deeply interested in the matter. There are those who, while encouraging the CDC, have great reservations about how the Government attempt to approach all the problems.
  There are and ought to be serious Government responsibilities. The Government cannot shut out all of these responsibilities and leave them with the CDC, particularly in view of the delicate situation in the Philippines.
  Amnesty International, which has a splendid record in these matters, made a comment which should be repeated. I ask the Minister to note its views:
  "Amnesty's investigation of the activities of the Lost Command suggest that this pars-military group has considerable entrenched power in the area in which the CDC assisted project will operate … The Lost Command is almost certain to attempt to assert that influence with regard to a project as economically important as this one."
  It is for that reason that I believe the House will wish to have the maximum possible surveillance of these matters and to discuss the progress or otherwise that has been made from time to time.
  I end with some general remarks. The standing of Great Britain, the basis of our commitment to human rights and our attitude to developing countries may be judged by how well these matters progress. It ought to be made clear that, whatever our views on aid, we cannot accept the abuse of human rights which has been taking place in the Philippines under President Marcos.
  Martial law was imposed 11 years ago. Two years ago we were told that it had ended. This, in my view, represented nothing other than the kind of public relations excercised by President Marcos and his regime to which most of us have now become accustomed and which ought not to be taken too seriously.
  Despite seven decades of parliamentary government in the Philippines, it is a sad fact that the state of affairs described so eloquently in the recent report by the Amnesty International mission to the Republic of the Philippines does exist.
  There is a responsibility on the House to assert its views on these matters; to resist the denial of human rights in the Philippines and attacks on trade unions to the extent that an old man of 79 is still in prison because of his trade unions views; to express its repugnance at attacks on the Church; to recognise that the Church is endeavouring to express the views of the people it seeks to serve and to represent; to resist the militarism of the Philippines; and particularly to express itself very clearly on the so-called "salvaging policy" of people being murdered and
  456
  disappearing without explanation. There are tortures in prison, and so on. I am sure that all of this is totally unacceptable to hon. Members on both sides of the House.
  I have said this in the knowledge that we wish the CDC well and wish it success in its endeavours. Many people remember with gratitude the ideas that CDC seeks to expound. They were first expressed by Creech Jones. Those ideas are still relevant today. Nevertheless, we must be extremely careful that our policies on aid and development are not taken to mean that as a nation or as a House we are propping up regimes whose attitudes to the basic fundamental rights in which we believe are totally unacceptable. It was Edmund Burke who said that all that is necessary for the triumph of evil is that good men should do nothing. The importance of this debate is that even by discussing these matters, the House is saying that in the light of the appalling record of the Government of the Philippines, we at least can be seen to be doing something.
  12.20 am
  Sir Neil Marten rose——
  Mr. Deputy Speaker (Mr. Paul Dean): Does the right hon. Gentleman have the agreement of the hon. Member for Coatbridge and Airdrie (Mr. Clarke) to intervene in his Adjournment debate?
  Sir Neil Marten: That is so, Mr. Deputy Speaker.
  Mr. Deputy Speaker: Sir Neil Marten.
  Sir Neil Marten: I am sorely tempted to answer the speech of the hon. Member for Coatbridge and Airdrie (Mr. Clarke), thereby relieving my right hon. Friend of that task. However, I shall not do so, as it is not up to me. As I was the Minister who took the decision to allow the CDC to go ahead with this project, I thought that I should just say that it was my decision.
  I heard the evidence from the various voluntary agencies concerned with this matter. We heard a lot about it in the debate in the House. I recognise people's feelings, particularly about the Lost Command. I took all those considerations into account, but I had to decide "Yes" or "No". It was no good hanging fire.
  I am sorry that the decision was announced during the recess, but had Parliament not had such a long recess it would have been announced during our first week back. On balance, I took the decision that on the whole the record of the CDC is so good that it would be of benefit to the poor in that area to have the CDC there. That is why I took the decision, and that is all that I wish to say.
  12.22 am
  The Minister for Overseas Development (Mr. Timothy Raison): I thank the hon. Member for Coatbridge and Airdrie (Mr. Clarke) for his kind words about my appointment to this job. I am very much aware of the responsibilities that I have inherited.
  This is clearly a significant subject. I am conscious of what and whom I have to follow. I know that my right hon. Friend the Member for Banbury (Sir N. Marten) commands enormous respect in the House and outside, and has done so for many years. He put in a nutshell what I shall say, and I am tempted to sit down, but on my first appearance at the Dispatch Box in this new role that might be thought to be a somewhat cursory approach. I shall therefore try to set out the considerations that have guided

  457
  our approach. I reinforce what my right hon. Friend has said. The decisions were his, but they seem to me to be exactly right.
  The subject of this debate is British policy on aid to the Philippines, and hon. Members will know that most British bilateral aid is directed towards the poorest developing countries and to members of the Commonwealth. My right hon. Friend is particularly associated with the cause of the Commonwealth.
  Although in neither category, we recognise that the Philippines is a member of ASEAN, the Association of South-East Asian Nations—a group whose objectives we generally support, and which is playing an increasingly important role in the affairs of South-East Asia and the Pacific. Our aid involvement in the Philippines is, however, very small compared with that of say, Japan or the United States, Belgium, Germany and Australia. It is roughly on a par with countries such as France and the Netherlands.
  We have a small technical co-operation programme, costing about £150,000 a year. This is almost entirely devoted to meeting the cost of training Filipinos, mainly from the public sector in this country. Our funds cover the cost of about 16 new training awards each year.
  We are also giving support, under the joint funding scheme, to British voluntary agencies working with local groups on small-scale projects in the Philippines. Such support will be in excess of £240,000 over the period 1981 to 1984. In addition, some 18 volunteers are recruited by Voluntary Service Overseas, which, of course, operates entirely independently of the Government, although it is in receipt of substantial funds from my Department.
  When suitable opportunities have arisen, we have made allocations—there have been two to date—from the aid and trade provision in support of British firms competing for sound development of projects. Finally, there are the activities of the Commonwealth Development Corporation, on which the hon. Member for Coatbridge and Airdrie has touched.
  In addition, the Philippines receives assistance through multilateral organisations such as the World Bank, the Asian Development Bank, the European Community, and the various specialised agencies of the United Nations, to which the United Kingdom is a substantial donor. Nevertheless, our share of the total aid provided from all international and bilateral sources to the Philippines is less than 2 per cent. of the total.
  The hon. Member for Coatbridge and Airdrie, however, has expressed particular anxiety about human rights in general in the Philippines. Although this is not relevant to British aid policy towards the Philippines except in the most general terms, let me first make it clear that the Government deplore all abuses of human rights, whether in the Philippines or anywhere else. The Philippine Government are well aware of our views. We were encouraged by their decision to lift martial law in January 1981, after nine years, throughout most of the country.
  I would not wish to pretend that we regard the treatment of human rights there as beyond reproach. It is not. But there are infringements of human rights in many countries; and these issues are all too often closely associated in particular with developing countries.
  The Commonwealth Development Corporation's proposed investment in Mindanao brings into sharp focus the conflicting factors which we have to weigh up in many
  458
  of our relationships with developing countries. It is fair to say, though, that observers of the CDC's involvement in this project would readily admit that they have been able to gather information with surprisingly little difficulty, even though much of it has been critical of the policy of the Philippines Government and of the behaviour of its security forces.
  I think the facts of CDC's involvement in this plantation project are well known to hon. Members. I shall briefly run over the background.
  Last summer CDC sought approval for a loan of up to £6·5 million to a company, NGPI, formed by the National Development Company of the Philippines and Guthries to develop an oil palm estate in the island of Mindanao in the Philippines. A parallel loan of the same amount would be made by the International Finance Corporation, an affiliate of the World Bank.
  It was at this stage, last August, that the Catholic Institute for International Relations drew to the attention of my right hon. Friend the Member for Banbury and the CDC the fact that NGPI was employing members of a paramilitary organisation known as the Lost Command as its security force. This organisation is engaged in anti-guerilla operations but, it is alleged, has committed serious violations of human rights, including murder and extortion, in the province of Agusan del Sur in which the NGPI project is located. CIIR asked that CDC should withdraw from any projects in which the National Development Company was involved until the Lost Command was removed from the area.
  Following these representations, arrangements were made by the general manager and other officials of CDC to visit the Philippines to look into these allegations and review the position on the spot. This they did in the latter part of October.
  During his visit, the general manager of CDC succeeded in negotiating a number of undertakings about security arrangements with the Philippine authorities. The board of CDC subsequently sought approval from my right hon. Friend the Member for Banbury to proceed with the project with these new safeguards. He decided that before reaching a decision it would be right for him to discuss the matter fully and openly with a number of right hon. and hon. Members who had expressed concern, the voluntary agencies which had made representations and the CDC.
  A meeting was held on 29 November; and in the light of it, as my right hon. Friend reported to the House on 7 December, he asked the CDC to seek to secure adequate safeguards concerning the new security arrangements and the observation of fair employment practices, as well as the association of peasant farmers with later stages of the project.
  The CDC held further discussions in the Philippines in December. As a result, the CDC received from the National Development Company and NGPI their agreement to provide a number of contractual undertakings and assurances and my right hon. Friend, therefore gave his approval to the CDC lending £6·4 million to the project.

  459
  The contractual undertakings that the National Development Company and NGPI have agreed to give cover two areas. A new security force for the estate will be provided by the National Development Company to replace the existing force. It is now being raised and trained and will be available to NGPI by the end of June 1983 at the latest. It will form part of a new security service, which is being set up by the National Development Company to serve all its subsidiary companies and it will be responsible for the protection of the estate's employees and its property and assets.
  NGPI has also undertaken to take all practicable measures to protect its employees against harassment; to provide suitable medical and educational facilities and, where appropriate, housing; and to continue to pay employees at rates complying with the requirements of Philippine law and comparable with rates payable on similar estates in the region. CDC will have the right to withhold loan disbursements after 30 June 1983 if these provisiona are not observed to its satisfaction or at any time after that date while any part of the loan remains undisbursed.
  In addition, the National Development Company has assured CDC that the new security service has no connection now, nor will there be in the future, with the Lost Command or its leader, Colonel Lademora. Pending the replacement of the existing security force, a detachment of the Philippines constabulary has been established in the middle of the project area to ensure that there is no disruption during the transitional period.
  The CDC board has given assurances that, in its judgment, it feels that the measures taken to replace the Lost Command are likely to be effective. I am confident that the main point originally made by CIIR and Amnesty International has therefore been met. I realise that they might have wished the disbandment of the Lost Command
  460
  to be achieved, but I do not believe, in all honesty, that this is properly a matter for the British Government or for CDC.
  The National Development Company and NGPI have also assured CDC that they intend to provide for significant participation by peasant farmers, if they so wish, in later stages of the project. They have invited CDC to station a representative in the area to monitor these undertakings. He will be the CDC development manager resident nearby in the same province, who is engaged in investigating and preparing a separate CDC project and who will be able to visit the NGPI project frequently. CDC, as the House knows, has also been invited to nominate a director to the board. This will be CDC's regional controller in south-east Asia. It really should be possible for CDC to exercise a close supervision of what is going on in the scheme.
  I believe that the undertakings and assurances that have been secured since CIIR first raised the matter are significant and valuable concessions, representing a real attempt to meet the criticisms that have been made. They should enable CDC to ensure that the project is carried out to the standards that it would normally expect elsewhere in the world. The project is providing nearly 2,000 jobs in an area where there are virtually no other employment opportunities.
  CDC's experience with similar developments in neighbouring countries is that the secondary development effects are quick to spread to local villages and townships. Above all, however, a substantial demand has manifested itself from small farmers who wish to become associated with the scheme as outgrowers and thus be given access to growing a remunerative cash crop. I accept the need for vigilance, but I trust that the undertakings and assurances which I have outlined will permit the security and success of the project, which I believe can bring real benefits to the people in a poor and seriously undeveloped part of Mindanao.
  Question put and agreed to.
  Adjourned accordingly at twenty-six minutes to One o'clock.

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  London Transport (Fares)
  London Transport (Fares)
  Trunk Road Programme
  Trunk Road Programme
  Bypasses
  Bypasses
  Road Accidents (Injuries)
  Road Accidents (Injuries)
  Falmouth Container Terminal
  Falmouth Container Terminal
DEFENCE
  Nuclear Tests (Radiation Compensation)
  Nuclear Tests (Radiation Compensation)
  Floater 83 Arms Exhibition
  Floater 83 Arms Exhibition

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

Procedure: Questions
Lord Jenkins of Putney Lord Jenkins of Putney rose to ask the Question standing in his name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether, having regard to their statement that the problems encountered as the result of the privatisation of refuse collection in Wandsworth have been exaggerated and that they are not aware of substantial allegations of bribery, they have noted that the Wandsworth Borough Council has urged the public in advertisements in the local papers to stop acceding to demands for payment and that traders who have obeyed this instruction have failed to get their rubbish collected and whether they will urge Wandsworth to abandon privatisation in the interests of public health and municipal integrity.
Lord Nugent of Guildford: My Lords, before the noble Lord, Lord Jenkins of Putney, asks his Question, I wish to rise on a point of order on the Question because I believe that the Question in its present form is in breach of our Standing Orders. I refer particularly to the Companion, page 82, and I quote from it as follows:
"It is considered undesirable to incorporate statements of opinion or the demonstration of a point of view in the text of Starred Questions".
It is that second part of the sentence that I particularly refer to here. I felt as soon as I saw it that the Question was out of order. I caused a message to be sent to the noble Lord, Lord Jenkins of Putney, in the hope that he might redraft his Question and in the fairly confident belief that, had he done so, in his supplementary he could, with his abundant wit, probably have worked in most of this long narrative before your Lordships stopped him. Unfortunately, however, he decided to stick to it, and I suggest that the Question is so obviously out of order in terms of the Companion that the normal flexibility that we allow in these matters has been exceeded and he really should not ask the Question in this form.
The Lord Privy Seal (Baroness Young): My Lords——
Lord Paget of Northampton: My Lords, before the noble Baroness replies, may I make a further point upon the point of order? The Companion says "undesirable". Does "undesirable" mean "out of order"? I submit that it does not.
Lord Denham: Yes, my Lords.
Baroness Young: Yes, my Lords. I rise as the Leader of the House to say that I agree with my noble friend Lord Nugent of Guildford that the Question which stands in the name of the noble Lord, Lord Jenkins of Putney, does breach the spirit of the Standing Order and the guidance in the Companion on pages 69 and 82. I very much hope that the noble Lord, Lord Jenkins, will take note of what my noble friend has said. In fact, I understand that the Procedure Committee are to meet shortly and it might be convenient if they were specifically to consider what has been said in the House. Meanwhile, I should like to suggest to the House that we leave the procedural matter and that we should proceed with Question Time.
Lord Cledwyn of Penrhos: My Lords, further to that point of order, I am sure the House will be grateful to the noble Baroness for the guidance she has given, although I am not absolutely certain that without further thought I could agree with what she has said about my noble friend's Question. I believe that it would be appropriate for the Question to go to the Procedure Committee so that the principle involved can be studied. It may well be that there are other Questions on the Order Paper which are open to the same charge as has been made by the noble Lord, Lord Nugent.
The fact of the matter, as I understand it, is that my noble friend's Question has been on the Order Paper since the beginning of December. Therefore, I think that any charge made should have been made well before now. However, the noble Baroness has made a constructive suggestion and I hope the House will accede to it.
Lord Nugent of Guildford: My Lords, may I say to my noble friend the Leader of the House—
Lord Jenkins of Putney: My Lords, before the noble Lord proceeds, will he permit me to say just one word? As my noble friend on the Front Bench has said, the Question has been on the Order Paper for some time. The preliminary part of it in fact consists of a quotation from a Written Answer given to me by the noble Lord, Lord Bellwin. I would not dispute as to whether it is or is not in order, and I rather welcome the idea that the Question is going to be examined by the Procedure Committee so that the whole issue can be discussed. I am grateful to the noble Baroness for her suggestion, and in the meantime I beg leave to be allowed to proceed with the Question.
Lord Harmar-Nicholls: My Lords, on a further point of order, if the noble Lord is going to proceed with his Question I think the House should give a clearer indication as to how it feels about that before the matter goes to the Procedure Committee, because, however one reads the Question as a whole, it is an expression of opinion and, as the noble Lord on the Front Bench opposite has said, one has seen this sort of thing developing and it is something which is not in the best interests of the House as a whole. Therefore, if the noble Lord is going to try to proceed with his Question, I believe that the House ought to give its view as to what ought to be taken into account; and I

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would move that the House do not accept the Question, as your Lordships are the only ones who can decide whether "undesirable" means "out of order". The Lobbies ought to give the message to the Procedure Committee, and if it can be arranged I should like to move that that be done.
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, may I ask my noble friend whether he has or has not moved anything, because I have certain duties to perform which depend upon the answer?
Lord Harmar-Nicholls: My Lords, I formally propose that this House decides that this Question be not heard.
Moved, That this Question be not heard.—(Lord Harmar-Nicholls.)
The Lord Chancellor: The Question is that leave be not given.
Lord Wigoder: My Lords, on a point of order, is it not right that there are no points of order in your Lordships' House? Is it not clear that in recent months there has been a tendency for Questions on the Order Paper to exceed the bounds of what many of us would regard as Questions, in the sense of being applications to the Government for the release of information? Bearing in mind the observations that have been made in your Lordships' House today, is this suggestion by the noble Baroness the Leader of the House that the matter should be referred to the Procedure Committee not a happy compromise, and in the meantime should the noble Lord not ask his Question in the ordinary way, if I may say so, without prejudice? In the circumstances, would it not be a little undesirable to proceed with the Motion of the noble Lord, Lord Harmar-Nicholls?
Lord Elwyn-Jones: My Lords, is it not now well established that the ruling of the Leader of the House is accepted? May I urge the importance of maintaining that principle, particularly in view of the fact that the noble and learned Lord the Lord Chancellor is powerless to intervene?
Lord Nugent of Guildford: My Lords, having raised the matter, perhaps I may add just this. I thank my noble friend the Leader for the helpful statement which she has made and, for myself, I am very happy for it to be referred to the Committee on Procedure, which happens to be meeting next week. It would be unfortunate, if I may say so, for us to divide on an issue like this. The fact is that in this noble House we are, each one of us, responsible for order and there is no machinery, as there is in the House of Commons, with which many of us are familiar, for deciding these matters in a more rational way.
So it would be very unfortunate to have a Motion on which we actually divided, with, naturally, strong feelings, perhaps even partisan feelings, arising on it, when what we are talking about is a simple point of procedure which at the end of the day matters to all of us: that our Order Paper should be kept in the best
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possible shape in the interests of the dignity and working of the House. Surely the Committee on Procedure is the best body to deal with that. Although I understand that my noble and learned friend the Lord Chancellor is still under an obligation to put this Motion to the House, I hope that before he does so my noble friend Lord Harmar-Nicholls will feel that this should not be pressed to a Division, because it really would be better to settle it in an amicable way.
Lord Molloy: My Lords, I am in something of a predicament because when the noble Lord spoke on his Motion the gravamen of his case was that my noble friend's Question gave an opinion. But only yesterday we had what seemed to me to be a very harsh opinion in a Question from the noble Lord, Lord Boyd-Carpenter, when his wording demonstrated beyond all peradventure his opinion that he wanted the GLC to be abolished. What is the difference between the opinion expressed yesterday and the opinion which it would appear is causing all the trouble today?
Lord Derwent: My Lords, is the noble Lord, Lord Molloy, yet again an expert on every subject that comes before your Lordships? He has not been here very long to know what is the custom of the House.
The Earl of Cork and Orrery: My Lords, may I suggest, with the greatest possible respect, that we are making slightly heavy weather of this? If the Question were allowed to proceed, as at the moment I think it cannot, the first thing that would happen is that the noble Lord, Lord Jenkins of Putney, would ask leave to ask his Question. The leave of the House has to be unanimous. Therefore, for it to be withheld it is only necessary for one voice to say, "No". May I suggest that a possible procedure might be for my noble friend Lord Harmar-Nicholls to ask leave to withdraw his Motion and then, when the noble Lord, Lord Jenkins, asks his Question, to stand up and say, "No"?
Lord Campbell of Alloway: My Lords, may I mention a difficulty for some of us who have not been here very long—myself, in particular? We will not know which way to vote on a Division until we have had the assistance of the Procedure Committee. One wishes lo vote intelligently and fairly, irrespective of party allegiance. Therefore, may I humbly suggest that we accept the view that this Motion is not put to a Division? It would cause people like myself considerable embarrassment.
Lord Harmar-Nicholls: My Lords, in the absence of Standing Orders—
Several noble Lords: Order!
Baroness Young: My Lords, this is not the Committee stage of a Bill, if I may put it like that. I hope very much that my noble friend Lord Harmar-Nicholls will feel able to withdraw his proposal. We have already taken up 10 minutes of the afternoon on a very busy day. I think I am representing the views of the House when I say that there is a concern about the Question. In order that this might be properly decided, I think that it should go to the Procedure Committee. It seems to me that that is the wish of the House. In

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order to put ourselves in order, I agree that we should now take the Question of the noble Lord, Lord Jenkins, and I hope that the suggested sequence of events might now take place. I ask my noble friend to consider that.
Lord Harmar-Nicholls: My Lords, in the absence of Standing Orders, and if it is the view of some of us that the self-discipline upon which the ruling of this House has previously been based is on the verge of breaking down, it may well be that the view of the House as a whole as to whether that tendency ought to be allowed to continue should be put to the test at the earliest opportunity. But, in view of the fact that my noble friend the Leader of the House has made a suggestion, and as the noble and learned Lord, Lord Elwyn-Jones, said it was the convention that we accept the ruling of the Leader of the House, I shall be happy to withdraw my Motion, in the hope that the noble Lord, Lord Jenkins, will also heed what was behind the ruling of the Leader of the House and not proceed with his Question. Attention has been drawn to it, and perhaps honour can be satisfied on all sides.
The Lord Chancellor: My Lords, is it your Lordships' pleasure that the Motion be withdrawn?
Motion, by leave, withdrawn.

Refuse Collection: Wandsworth
2.50 p.m.
Lord Jenkins of Putney: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether, having regard to their statement that the problems encountered as the result of the privatisation of refuse collection in Wandsworth have been exaggerated and that they are not aware of substantial allegations of bribery, they have noted that the Wandsworth Borough Council has urged the public in advertisements in the local papers to stop acceding to demands for payment and that traders who have obeyed this instruction have failed to get their rubbish collected, and whether they will urge Wandsworth to abandon privatisation in the interests of public health and municipal integrity.
The Minister of State, Department of the Environment (Lord Bellwin): My Lords, I am informed that Wandsworth Borough Council, whose responsibility this is, have investigated the allegations of bribery made in the press and have found them to be wholly unsubstantiated. On learning of these allegations, and at the same time as they were published, the council issued a reminder notice, aimed primarily at traders, making it char that there is no need to make payments to the contractor's employees and that if there should be any such approaches, they should be reported to them for investigation.
We have not the slightest intention of abandoning our policy of encouraging local authorities to examine
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the scope for achieving value for money through contracting out public services. Around the country, real benefits of improved efficiency and economy are being shown to be available in this way.
Lord Jenkins of Putney: My Lords, may I ask the noble Lord whether or not he is aware that corruption is now becoming a way of life through the privatisation of refuse collection in Wandsworth? May I also ask him whether he is aware that traders have reported under their own names in the local paper that they are paying sums ranging from £1 to £12 a week to have their rubbish collected? Is the noble Lord further aware that one trader who refused to pay any money has not had his rubbish collected for 17 weeks and that he has complained bitterly, since he himself is a tenant of Grand Met, the private firm which is running the refuse collecting organisation? In all these circumstances, will the noble Lord not ask Wandsworth Borough Council to have another look at the matter and not to allow ideological questions to overcome their—
Several noble Lords: Order!
Lord Jenkins of Putney: It is an ideological matter. It is a belief in privatisation.
Several noble Lords: Order!
Lord Jenkins of Putney: Let me just finish.
Several noble Lords: Order!
Lord Jenkins of Putney: Will the noble Lord not therefore have a word with the Wandsworth Borough Council about the matter?
Lord Bellwin: My Lords, the noble Lord makes really outrageous allegations which all the inquiries I have undertaken do not substantiate at all. If the noble Lord has specific cases and names which he wishes to bring to my attention, he knows that he has the opportunity to do so and I trust that he will do so. In the meantime, I certainly do not accept that there is widespread corruption where there is contracting out. That is a very unfortunate expression for the noble Lord to use.
Lord Renton: My Lords, if a trader has been aggrieved, as alleged, is not his best solution to go and see his representative on the district council or, if he seriously thinks that there has been a corrupt practice, to report the matter to the police?
Lord Bellwin: My Lords, I am sure that my noble friend has made a quite proper suggestion.
Lord Leatherland: My Lords, has it not always been the case that trade refuse put out for collection by traders has to be paid for? I ask this question as a former chief cost accountant of the Birmingham Corporation Refuse Disposal Department.
Lord Bellwin: My Lords, I think I can best help the noble Lord by pointing out to him that trade refuse

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collected under the contract which the local authority has with the company concerned is now costing the traders 30 per cent. less than they were paying under the previous arrangement.
Baroness Birk: My Lords, while accepting the Government's view on privatisation, would not the Minister agree that, even if there is a saving on the rates, this should not be at the expense of efficiency in collecting the refuse? If people are being almost forced to pay in order to get their rubbish collected, this is not an efficient way of running a refuse collection service.
Lord Bellwin: My Lords, there is nothing special about this arrangement. The traders were paying before. What I am saying and am reporting is that they are now paying 30 per cent. less than they were paying before. What I would regard as equally important, if not more important, is that the reports coming to me from the council—they will, I am sure, justify this, if challenged—suggest that the general standard of service has improved, as well as there being a great saving in cost.
Baroness Trumpington: My Lords, would my noble friend agree that enough rubbish has been talked about rubbish?
Lord Bellwin: Gladly, my Lords.
Lord Jenkins of Putney: My Lords, is the noble Lord aware that, as he suggests, I shall send him details of the specific cases? Perhaps we may leave it at that.

UK Cereal and Meat Production Increases 1973–81
3.55 p.m.
Viscount Mersey: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government what has been the growth, since 1973, of British self-sufficiency for cereal and meat.
The Minister of State, Ministry of Agriculture, Fisheries and Food (Earl Ferrers): My Lords, in 1981, United Kingdom cereal production accounted for 96 per cent. of our total supplies, as opposed to 68 per cent. in 1973. The corresponding figures for meat were 86 per cent. in 1981 and 77 per cent. in 1973. Figures for 1982 will be given in the Annual Review of Agriculture 1983 White Paper, which will be published shortly.
Viscount Mersey: My Lords, I thank my noble friend the Minister for those encouraging figures. I wonder whether my noble friend would agree that they are in part due to improved crop varieties stemming from the work done by the Agricultural Research Council? In that connection, may I ask my noble friend whether or not it is regrettable that there should be a proposed reduction in the funding of the Agricultural Research Council?
Earl Ferrers: My Lords, I agree that to a large extent much of the increase in production is due to new and improved varieties, in which the Agricultural Research Council has a very substantial part to play. But the expenditure on research which is commissioned by the Ministry of Agriculture from the Agricultural Research Council has increased from £30.4 million in 1979–80 to an estimated £48.5 million in 1982–83. There has, therefore, been no cut. The reduction to which my noble friend refers does not relate to the coming year but to the years 1984–85 and 1985–86. It is from funds which are distributed by the Department of Education and Science. This cut has been made on the advice of the Advisory Board for Research Councils, which gives advice to the Government on the distribution of the whole of the science budget.
Lord John-Mackie: My Lords, is not the Minister a little worried about the imbalance in the figures? The rise in meat production is less than 10 per cent., while the rise in cereal production is 28 per cent., if my quick calculations are correct—and I think they are.This shows an imbalance in agriculture which is worrying many people and it should be worrying the Ministry of Agriculture, too. I am wondering whether the Minister has any views on the subject.
Earl Ferrers: My Lords, I personally am delighted by the increase in both meat and cereals production, but the noble Lord, Lord John-Mackie, is quite right in saying that there is an imbalance. This imbalance is of concern to the Ministry of Agriculture. It is also of concern to the Commission. That is why the increases for cereals last year were less than those applicable to the meat sector.

The Civil Service: Administration Trainees
3.58 p.m.
Lord Beloff: My Lords, I beg leave to ask the Question which stands in my name on the Order Paper.
The Question was as follows:
To ask Her Majesty's Government whether they propose any action in relation to the shortfall in recruitment to the administrative trainee grade of the Civil Service.
Baroness Young: My Lords, the Government have taken steps to strengthen their graduate liaison arrangements, to publicise the 1983 competition more widely and to accelerate the selection process, and they are considering other ways of ensuring an adequate flow of top quality administration trainee entrants.
Lord Beloff: My Lords, I thank my noble friend the Leader of the House for her Answer. May I ask her whether the consideration will extend to a more imaginative and positive policy on the part of the Civil Service Commission, on the model of some major private companies which go out into the field to look for the kind of people they want, rather than remaining in London and hoping that people will come to them?
Baroness Young: My Lords, we are of course glad to receive suggestions, but I can tell my noble friend that the universities are visited in order to describe what is required by the Civil Service and to attract some of the most able graduates. As my noble friend will doubtless know, we have asked Sir Alec Atkinson to review the procedures for selecting fast-stream graduate entrants.
Lord Cledwyn of Penrhos: My Lords, may I ask the Leader of the House to ensure that, when they go out into the field, they will be good enough to travel as far as Wales, Scotland and Northern England to seek out civil servants for the future? Is it not the case that the Society of Civil and Public Servants have been very critical of what they regard as a new policy and a retrograde step?—retrograde, I think they mean, in relation to the Fulton reforms as a possible danger because this would lead to a new élitism, which I believe was the point being made by the noble Lord, Lord Beloff. Will the noble Baroness be good enough to give the House an assurance that this is not going to create an élitism but that there will be a broadly-based Civil Service giving opportunities to candidates from all British universities and also to those who come up from clerical and executive grades?
Baroness Young: My Lords, I can confirm both points. Recruits are looked for in all universities and institutions of higher education. At the same time, serving civil servants also have an opportunity to advance to the highest posts; so advancement to the highest posts comes not only as a result of recruitment through the administration trainee scheme.
Lord Plant: My Lords, does the noble Baroness the Leader of the House not agree that the best way of improving recruitment to the Civil Service and particularly to the administrative class is to have an injection of morale into the Civil Service and to improve pay, which, after all, is one of the means of improving morale? Does the noble Baroness not agree that there should be meaningful negotiations quickly on the Megaw Committee report, leading to the reimposition of arbitration?
Baroness Young: My Lords, I believe that even the noble Lord, Lord Plant, will accept that pay negotiations are wide of the Question concerned. I should like to confirm to him that we do recognise that in a contracting service there may be some who feel that promotion opportunities are not as great as they once were, and that this might be one of the causes for the shortfall in recruitment numbers. I should like to take this opportunity of saying that I and my colleagues very much appreciate how fortunate we are in the very high calibre of the British Civil Service and the impartiality with which it does its work.
Viscount St. Davids: My Lords, can the noble Baroness tell me if there is any sign of something which would surely have the approval of the noble Lord, Lord Beloff: that is, whether administration trainees are heading for industry rather than for the Civil Service?
Baroness Young: My Lords, there is some evidence that industrialists as well as those looking for recruits
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for the Civil Service are looking for the most able of the graduates we have—and naturally the graduates are going to look round at the jobs on offer.

Educational Opportunities
3.2 p.m.
Lord Glenamara Lord Glenamara rose to call attention to the erosion of educational opportunities under the present Government, and the adverse effect this will have on economic recovery; and to move for Papers.
The noble Lord said: My Lords, debates on education usually turn not so much into a war of words as into a war of statistics. It is important to bear in mind at the beginning that what we are talking about today are children and young people; the immature members of our community to whom, I believe, we owe a very special duty. It is a duty for which, once we neglect it, we can never make amends because our children have only one childhood and one youth. If the opportunity is missed then, it is usually missed for life. We in the party to which I have the honour to belong believe that every child, irrespective of social class, irrespective of the interest or lack of interest of its parents, and irrespective of creed or colour, has an inalienable right to the opportunity to develop to the full whatever talents are latent in him.
It is a major function of Government to provide that opportunity for all our children. For three decades before this Government came into office we steadily progressed under all Governments towards this goal. The three great measures which propelled us along this way were, first, the Education Act 1944, the authors of which were a Conservative President of the Board of Trade, as he was called then, and a Labour Under-Secretary of State; secondly, the Robbins Report of 1962; and, thirdly, the formation of polytechnics in the mid-1960s.
All three measures commanded bipartisan support. Since 1979 the objective of the 1944 Act has clearly been abandoned, and that of the Robbins Report, as I shall show, is about to be abandoned. So in a country which is self-sufficient in oil, which has coal supplies for a thousand years (if we count the North Sea) and which can go to war at the drop of a hat, we can no longer claim that every child will be given an opportunity to develop his talents to the full. Pride in our self-sufficiency in fuel and justifiable pride in our victory in the Falklands has to be seen against the running down of our education system and the consequent diminishing chances of our children and young people, not only for employment but also for a decent education. That is our indictment of the Government today. That is why the Labour Peers have put down this Motion for debate today.
As I see it, the object of politics is very simple. It should be to enable people to lead fuller and happier lives, and every Government function contributes directly or indirectly to that end. But surely no function is more relevant to this than the organisation of an effective and comprehensive education system. Apart from its importance to the individual in helping him to lead a better life, it is equally and increasingly relevant to our performance as an industrial nation.
If we are to maintain, let alone improve, our living standards in Britain, we as a nation must be at the leading edge of industrial growth—of sophisticated industrial growth—and development. The kind of industry which alone can ensure our future demands very much more highly trained and educated manpower at board level, executive level and managerial level. It also demands better educated people at the workbench. It demands the operative who knows his algebra and geometry; the secretary who knows a second language; and the salesman who knows several languages. I believe that we as a nation are not nearly well enough educated. That is a rarely recognised reason for our relatively poor industrial performance compared with many other nations. The Government, who should be producing a better educated nation, are doing no such thing—quite the reverse. Just as they are destroying our manufacturing industry, the Government are also undermining and eroding our education system, which should be contributing so much to industrial recovery of the right kind.
Wherever we look at the system, at every stage, it has been run down and demoralised. It is not only failure to provide the necessary resources about which I want to speak but also the ludicrous attempts by the Secretary of State and others to apply the theories of a market economy, as being the best possible device to provide for human needs, to the organisation of an education system. I often think that Adam Smith must be rotating in his grave when he listens to some of the speeches made by the Secretary of State.
We heard about the latest piece of nonsense on breakfast TV on Monday; that the Secretary of State has appointed a new special adviser who has never set foot inside a state school. No doubt we shall now be getting a lot of even zanier ideas on the organising of the education system in the near future. I now turn from these more esoteric aspects of the Government's record to their failure to provide adequate resources. Your Lordships will have read harrowing stories in all the local newspapers of our country of wounding cuts which local authorities are being forced by this Government to make in their education systems.
I will say a word about the three most important physical resources required by schools: premises, teachers, and books and equipment. The stock of buildings is in a worse state than it has been for many years. Many of our school premises are literally falling apart. Many have not been painted for 10 years or more. Maintenance is woefully neglected. One delegate at a teacher's conference last summer described how the teachers in his school had to undertake the maintenance of the school building. This is happening at a time when it should be possible to have the best stock of school buildings ever and to get rid of all substandard buildings, because the fall in the birth-rate has now reached schools and school rolls are falling rapidly. Of course, there is the need to amalgamate schools and the need to close many schools, as many of your Lordships who are familiar with rural areas will know only too well.
Not many of your Lordships will have read or heard about the illuminating report by Her Majesty's Inspectorate of Schools, which is quite independent of the DES. These inspectors prepared a report, which
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was published last year, on the effects of the cuts on the educational service. I shall make a number of references to their report. They commented in detail on the deterioration of school buildings. Many of the worst are in inner city areas, but not by any means all of them; there are many in rural areas. It is clear from this report of the inspectors of schools that our stock of school buildings is falling very rapidly into a dilapidated, deteriorating state, at the very time when they should have been better than ever before.
Equally, the falling number of children in schools should have made it possible for the supply and distribution of teachers to be better than ever. Any sensible Government would have taken advantage of the drop in the number of children to ensure, for example, that no class in the country had more than 30 children. Instead of doing that they are allowing 38,400 teachers to be out of work. Those are the figures I received a few moments ago—38,400 teachers unemployed. I know it is easy to point to the pupil/teacher ratio. It may be the Minister will do that, and it may comfort the noble Baroness. When I was at the Department of Education and Science and I complained about an oversized class of which I had heard, the officials would say, "Ah, but the P/T ratio went down by 0.1 of a pupil last year, and that is very good". That may comfort the officials and it may comfort the Minister, but it is not much comfort to the half of the nation's parents whose children are in classes above the median.
This was put very well indeed by a press handout given by the Leicester teachers when they were commenting on conditions in Leicester. They commented on the number of classes over 36; they said there were 21. They said that that figure may be regarded by some as relatively insignificant—unless it is your school and your child in that school. The staffing cuts are being enforced by the Government with a ferocity never seen before; and, of course, they greatly exceed the cuts in numbers that could be justified by the cuts in the school population. For example—I could give many examples—in Kingston-on-Thames there has been a 2 per cent. reduction in the number of pupils in three years but an 8 per cent. reduction in the number of teachers.
This has had a number of effects. First of all, it has led to a very great increase in the number of mixed age groups. Sir Keith Joseph reported on education in Liverpool early last year, and he talked about the detrimental effect this was having on attainment in English and mathematics. I am not talking about small village schools where there have to be mixed age groups; I am talking about larger schools as well. For example, there is a school in Gainsborough about which I have a report. This is a school of 252 pupils. At the beginning of last term they faced the loss of two more teachers, so that the pupil teacher ratios are now 25 per cent. worse than they were in July 1980, with the added problem that most of the classes are now mixed age groups. The average class size at the top of the school is 35 or 36. I know the Secretary of State will say that that is an individual case, but the administration of education in England and Wales consists of individual cases. It is so easy to lose sight of the Gainsborough County North primary schools of this world in a mass of generalisations, as it is so easy to lose sight of children in a mass of statistics. That is the

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first effect: the great increase in the number of mixed age teaching groups.
Secondly, it is causing the dropping of very many worthwhile subjects. The HMI report has pointed out that because of staffing problems subjects like economics and homecare, and, for less able pupils, very often language courses, have had to be dropped. They say—this is their figure, not mine—a third of the local authorities have reduced their courses in their secondary schools in a way which has affected all pupils, but the less able most of all.
Thirdly, it has affected the supply cover which can be provided when teachers are absent from schools. Some local authorities are now providing a supply teacher only when a teacher has been absent for six weeks or more. Hereford and Worcester are two authorities which are doing that. Others provide a supply teacher after two weeks (Manchester and Gwynedd, for example) and some (Durham County) none at all. These are only statistics, but they are not so good if my child or yours is left without a teacher or with makeshift teaching for six weeks or more. And this is being done when 38,400 teachers are on the dole.
Fourthly—this is the saddest effect of all, and I hope the noble Baroness will comment on it—again from the HMI report and from many reports throughout the country, it is leading to a great reduction in, and sometimes the disappearance of, small remedial teaching groups, which have been, I believe, one of the most worthwhile kinds of teaching to emerge in the last few years. It is a sad reflection on Government policy that those in greatest need have suffered in this way. Small remedial teaching groups are disappearing when there are 38,400 teachers out of work.
After buildings and teachers the next important resource is books and equipment. The Bullock Report in 1975 told us what we all know: that books are an integral and vital part of the educational process. Here, the picture is just as bad as in the case of buildings and the supply of teachers. Even the Secretary of State himself recognised this in December 1981. He said:
"Local authorities have substantially reduced their expenditure in real terms on textbooks."
He said he would make £20 million available to restore the level of provision of textbooks to the 1978–79 level by 1982–83. I am glad he has recognised it, but after four years of his Government he hopes this year to restore the number of textbooks to where it was in the last year of the Labour Government. All the evidence since then indicates that the position about books is not improving but is getting worse.
We are grateful for the Secretary of State's acknowledgement of the problem, but there is really no way he can ensure that that £20 million is spent on books. Under our educational law it is impossible for the Secretary of State to make a specific grant. There is no guarantee that it will go into education at all, let alone books. But there is a second reason. Because of the machinery by which money is channelled to the schools every head teacher has a per capita allowance for each pupil. This always covers books, but if often covers other items as well. The practice has grown up in the last few years of including very many other items
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as well as books. To give just one or two examples, Sutton, for instance, includes, in addition to books and stationery, education equipment, office equipment, educational visits, PT equipment, printing, speech days, repairs, postage, first-aid and a great many other items.
Local authorities have pushed one item of expenditure after another into the capitation allowance in recent years. So the amount spent on books is getting less and less. Primary schools and secondary schools are being starved of books and equipment. This is producing the craziest results. For example, GCE and CSE students in Croydon have to pay a £10 deposit before they can take a textbook home to do their homework. In some schools in Merton, where incidentally the amount spent on books and equipment has been reduced by 16·9 per cent. in three years, children are not allowed to take textbooks home at all. The shortage of books is having a highly adverse effect on homework as well.
I can give many examples of London authorities who have reduced expenditure on books and equipment but I shall not take the time of the House by giving very many. Let me just quote one or two on textbooks. Barking and Dagenham have reduced expenditure on books in primary schools by 17·4 per cent. in three years; Enfield by 18 per cent. and Harrow by 11·6 per cent. In secondary schools, to take them at random, Barnet has reduced by 14 per cent., Bexley by 11·6 per cent., Brent by 37 per cent. and Ealing by 25 per cent. I must say that in all this the one bright spot in the whole area is Richmond which has considerably increased its expenditure, but most of the others show very great reductions.
There have been three wholly unwelcome side effects from this starving of the schools of books and equipment. First, there is a widespread growth of often illicit photocopying by teachers. Teachers are extremely conscientious and in order to provide some printed material for their pupils they often photocopy parts of a single issue of a book. Of course, after the recent case brought by the Music Publishers' Association there is a great deal of concern in the schools about that.
Secondly, this has led to a rather remarkable change in teaching methods. Because of the shortage of textbooks and very often of exercise books—I understand that many Surrey schools are using computer paper instead of exercise books—the teaching method has gone back 60 or 70 years to "talk and chalk" with far less practical work and far less use of the printed word. It is much more didactic than it has been for many years.
Thirdly, there has been a remarkable growth in parental financial contributions to the capitation allowances. The HMI's report commented in detail on this and the figures I give are all from that report. It states that in 1981—I believe the position is now much worse—in half the local authorities in England and Wales the contributions were moderate or considerable and often exceeded the capitation allowance. The report states that in one rural school parents contributed £12·50 each per year to the school. In a large London primary school £9,000 a year is produced by parents. In a large metropolitan grammar

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school £15,000 a year is contributed. In a shire primary school £1,000 is contributed. In some cases even the parish councils are contributing.
The Advisory Centre for Education has drawn attention to the fact that this practice—the reliance by local authorities on parental contributions to pay for essential equipment—is probably unlawful under the Education Act 1944, which forbids a local authority to charge either for admission to schools or for the educational provision in them. Parental contributions, of course, have been encouraged in terms by Ministers at the Department of Education and Science, but I would point out to the noble Baroness that with 3½ million people unemployed there cannot be any significant parental contribution in the inner city areas or in poorer working-class areas where there is a high incidence of unemployment.
So the gap widens, as it always does under a Tory Government, but never more markedly than under this one. Therefore, the gains in equipping and the staffing of our schools, and the improvement in teaching methods over the past 50 years, are being drained away by the Government and the disparity between the better off and the less well off areas and children is increasing.
But the Government cannot allow the physical environment of education to go to the dogs, as it is doing. They cannot allow the supply of books to diminish to far less than 1 per cent. of educational expenditure, as it has done. They cannot allow the contraction of the curriculum which is taking place. They cannot reduce the chances of the less able, the poorer and backward areas to catch up, without seriously affecting the morale of the schools and the educational achievement of our children, particularly at a time when vast numbers of young people in schools can only look forward to a long period of unemployment after leaving school. It is estimated that only one in three school-leavers this year will find jobs. I do not want to dwell on all the tragic problems posed for education by youth unemployment. I greatly welcome what the Government are doing, while wishing it could be more, but I point out that it is not a substitute for jobs.
I issue a word of warning. A familiar phenomenon during periods of high unemployment has appeared. There is pressure, and the HMI referred to it in its document, from employers to shed some of their training costs on to the education system. As I said, it is a familiar phenomenon in times of high unemployment and is perfectly understandable. I believe that the Government should resist this so far as the schools are concerned. The schools are not in the business of vocational training. That is not snobbery on the part of the teachers; it is because of a desire that schools should do the job for which they are trained—to develop the basic skills and the acquisition of knowledge required for living in a modern industrial society. The schools should be concerned with moral training, with cultural subjects and generally with our national heritage. That is their function, not to train fitters, bricklayers or typists. I look rather apprehensively at the extent to which the Manpower Services Commission is impinging on the schools. The MSC's function is in further education and not in the schools.
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During Question Time recently, after a Question by the noble Lord, Lord Beloff, I said that in my view the age of 16 is early enough for a young person to start doing the job he is to do for the next 49 years.
I turn now to the higher education sector which, as your Lordships know, consists of the universities on the one hand and the public sector—the large polytechnics and the small local authority colleges, of which there are about 350—on the other. The public sector caters for roughly 209,000 students. The Conservative election manifesto in 1979 stated:
"Much of our higher education in Britain has a world-wide reputation for its quality".
The manifesto went on to pledge the Conservative Party,
"to ensure that this excellence is maintained".
Having been elected on that, the Conservative Government reduced the recurrent grant to the universities, which is the major part of their income, by 8·5 per cent. over the three years to 1983–4. If to that is added the loss of subsidy for overseas students, there has been a total loss of income to the universities of between 11 and 15 per cent. for 1981–82 to 1983–84. That has come at a time when the number of 18-year-olds, and the number of 18-year-olds with sufficient A-levels to get to university, has reached an all-time peak. The University Grants Committee, which had to administer these cuts and which euphemistically refers to them as "restructuring", warned the Secretary of State that such a reduction would necessarily damage the quality of teaching in higher education and the research base. In spite of that warning from the UGC the Government went ahead with those two cuts.
If we look at the way in which the UGC made the cuts—or advised, which I think is what they do—it appears that Oxford and Cambridge suffered relatively little, but the more technological universities such as Salford and Bradford were cut by as much as 30 per cent., despite their vital role in the country's technological and industrial development. It is estimated that 4,000 academic and academic related jobs will be shed by the universities in this three-year period at a time—again I quote the figures—when there are 3,222 university teachers on the dole. That is how the excellence is to be maintained.
The result of this, of course, has been a greatly reduced intake of students by the universities this year. The Sunday Times, has carried a survey which it published recently. It says that science and engineering recruitment has gone down by 7 per cent. last year and by the same figure over 1979. Business management and accountancy have gone down by 5·5 per cent. this year, and the study of English, which is perhaps the most important tool of all, has gone down by 10 per cent. Incidentally, classics have gone up by 15·5 per cent. That is to staff the Foreign Office, no doubt.
These are some of the almost criminal results of Government policy. On the other hand, while this has been going on, the polytechnics and the local authority colleges have been cut to the bone. May I say that I have the honour to serve on the governing body of one of our largest, which is bigger than most provincial universities—I have seen all their figures and been through them with a small toothcomb. I have seen to

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what extent they have cut out everything which could be cut out of administration, cleaning, maintenance and so on. But by good management and becoming very cost-effective they have been able this year to take up the shortfall by recruiting an additional 13 per cent.
Therefore, the Robbins objective, which is that there should be a place somewhere in higher education for all who are qualified for one and prepared to take it up, is still for this year intact. But, in their White Paper on Public Expenditure, the Government also decree that there has to be a further cut of 10 per cent. in the public sector, in polytechnics and colleges by 1983–84. They have all been required to prepare plans, which they had to do by 31st December, to show how the cut could be made in their own cases. They have to submit them by early spring to the new national advisory body set up by the Government. The body will formulate an overall plan for the Government to put into effect their determination to make a further 10 per cent. cut in the public sector. The Government say this is going to be done. Bearing in mind the annihilation of a major part of our teacher training facilities in the past three years, if it is done, in the autumn of this year there is no way of avoiding drastic restrictions on recruitment, which would mean that for the first time since 1962 the Robbins objective, of a place for everybody who is qualified, will have been abandoned. I must tell the noble Baroness that there is no way of avoiding that if her Government stick to their determination to make the further 10 per cent. cut in the public sector of higher education.
Up to 20,000 pupils—this is very clear—who are now in the sixth forms or the higher forms of our secondary schools will find no places anywhere in higher education the universities, the polytechnics, the colleges or in teacher training. The only way in which it could be done, and to avoid that happening, would be to cobble together a new substandard sub-degree two-year course; but this would be done at the very time when the polytechnics and the colleges were being forced to close down excellent degree courses. My own polytechnic in Newcastle, in its 10 per cent. plan, has been forced to propose the closing down of two excellent degree courses. To set up any other kind of substandard qualification when that is happening would be educational lunacy. But, more than that, it would be the betrayal of a whole generation of young people who are now in the secondary schools who, like all their predecessors since World War II, feel they have a right, as surely they do in this great rich country of ours, to have their educational potential developed to the full.
That is why I said there was no credible alternative, if the Government are to go ahead with their 10 per cent cut. I challenge the noble Baroness to tell young people in the schools, to tell your Lordships, to tell the parents now, whether or not she will guarantee, for everybody who is qualified and willing to take it up, a place in higher education this year and next year, or whether after 20 years what I say is correct and the Government are going to abandon the Robbins principle.
I have described the situation in the schools. I have warned about the imminent abandonment of the Robbins objective. I have not mentioned the position
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with regard to a great many other aspects of the education system. I have not mentioned nursery education, school meals, school milk, the 16-to 19-year-olds or many other aspects of the Government's policy where the position is equally worrying. No doubt many other noble Lords will talk about those matters. But I hope I have said sufficient to show that this Government are doing major harm to our education system, and quite irreparable harm to the lives and chances of our children and young people, to an extent that we in this party believe merits the censure and condemnation of the House and of the country. My Lords, I beg to move for Papers.
3.36 p.m.
Baroness Seear: My Lords, I must first apologise to the House that, because I have to attend a Committee of your Lordships' House later this afternoon I shall not be able to be here throughout the course of the debate, but, judging from the length of the list of the speakers, I shall certainly be able to return long before the end of it.
It is common ground between the noble Lord, Lord Glenamara, and myself that all is very far from well with education in this country. What I found missing in the speech of the noble Lord was any suggestion that some part at least of that educational malaise can be laid at the doors of the educationists themselves. Those of us who listened with interest and apprehension to the evidence from educationists, given before your Lordships' Committee on unemployment, were deeply disturbed at the failure of the schools adequately to prepare young people for the world of work after they leave school.
I recognise, of course—and the noble Lord, Lord Glenamara, dealt with this to some extent according to his own view—that it is not the job of the schools to provide vocational training. Of course, in the narrow sense, many of us would agree with that. As one interpretation of vocational training, I would most emphatically agree with it. But it is surely part of a school's job to prepare youngsters for life. That is what they tell us, and quite rightly so. It is their task to prepare them also for that part of life which involves work.
When one is told, as we were told then, of the 40 per cent. of youngsters leaving school with nothing to present to the labour market to enable them to earn their living, one wonders what sort of criticism is being applied inside the educational service as well as the criticism, justifiably levelled, at what the Government have been doing in this field. For my part, I should say that any of us who has been involved in teaching knows perfectly well that it is not the subject being taught that determines whether it has educational value or not; it is the way in which it is taught and the relationship between teacher and the young person which develops in the process of education. There are some times, perhaps many times, with children of less academic ability, when one could rightly look to the critics, as a vocational subject being taught is, in fact, for that youngster, properly taught, the most educational way in which the young pupil can be developed. I am not sure what one is meant to call them now. I have heard some people refer to pupils of 11 as students. I get my terminology a little confused.

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The second criticism I should like to make is of the educationists themselves. I know this will be a very unpopular thing to say, particularly among my old colleagues in the academic world; but I think it needs saying. There are cuts taking place in colleges, universities and schools. Having worked for 30 years inside the higher education system, I know that there is room for both economy and change and that it is not altogether a bad thing that changes are taking place, although not necessarily in the way in which they are today and certainly not to the extent to which they are taking place today.
However, I question whether in the world of education, as indeed anywhere else—except for dealing with the short-term emergency—to rely almost exclusively on voluntary redundancy is a responsible way in which to handle cuts. It is of course always the job of the unions to look after the interests of their individual members who are becoming redundant. But it is essentially the job of managers and of the people running the educational institutions not to think only about the wellbeing of the people working in them. That of course they must do, but at the end of the day their primary responsibility must be to ensure that they have the most effective organisation able to do the job with which they are charged.
It is obvious that, if one relies indefinitely on voluntary redundancy, one is creating a position in which the ablest people and those most needed in the colleges and schools will leave, and one will be left with the people one could well do without because they are those who will find it extremely difficult to obtain employment elsewhere. I consider it essential that the schools and colleges should grasp this nettle and be prepared to face the fact that they must reorganise in a way which will enable them to do the best possible educational job that can be done.
Having said that some of the criticism must be levelled at the educationalists themselves, let me say that there is an educational crisis or emergency. That, alas! suggests that it is short term, but it is not short term: it is long term. We have a serious educational problem about which we have too little sense of urgency. I fear that too many of the English—it may be that this is a racist remark—do not, in their bones, take education seriously. I say "English" deliberately, because I suspect that this does not apply to the Scots and the Welsh. Very few English people at any level of society are ashamed of being ignorant—this would not apply in a great many other countries—and in fact, they are almost proud of it. So there are always reservations about our approach to the needs of education.
I would argue that, in the present economic situation, nothing, but nothing, especially if we take a long-term view, is more important than that we should be reorganising, reshaping and revitalising our education system in order that we can give people—and I am referring not only to young people, but to people who have lost out in the past, because many have done so—the opportunity to take advantage of whatever is going to come in the future.
We have said that we know that the opportunities for people who lack skills are bleak in the extreme. As I have said in your Lordship's House on other
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occasions, it is a reality that there may well be youngsters leaving school today who, because they are unskilled and because they have got so little out of their schooling, will never have a regular job between the time they leave school and the time they reach retirement age. That is surely horrible to contemplate. So we need—do we not?—to work now on building much better bridges between industry, education and work and to have in the schools people who really understand what that means.
It is not just a question of putting a few people into schools who have had a week or two exposed to industry so that they begin to understand something about the matter. We need a radical change in education and we need it to be led by the best teachers we can find, giving special training to enable them to do it—teachers who will command the respect of their fellow professional teachers. Surely now is the time, with teacher unemployment at its present level, to put money into the training of teachers who can really tackle this job properly. It is not being done at present.
Anything that the Government are saving on education through cuts should not be a saving overall; the money should be for reinvestment in a better educational system, a more relevant educational system—relevant not only for the economy but for the youngsters, many of whom are totally bored by what they have been getting in the schools up to now. That means money invested in a new type of training for teachers. I beg the noble Baroness, to say what is being done. If not enough is being done—as I am sure is the case—I hope she will consider looking again at the way in which this matter can be given much more serious and urgent attention as we have so often asked in the past.
The Government have embarked on the Youth Training Scheme, and that is in my view entirely to be desired. But it is an opportunity which we must not let slip. We have the chance now to do something to redress the balance between ourselves and our competitors in the highly industrialised world who give far better and more relevant education and training to their youngsters than we do. As I have said previously in your Lordship's House, 44 per cent. of youngsters leaving school in this country go either into unemployment or into jobs with no training at all. The figure for Germany is 9 per cent., for Belgium 4 per cent., and for France 19 per cent. If that situation continues when industrial recovery world-wide returns, it will be those countries, plus the Americans and the Japanese, who will take advantage of economic recovery and we shall be left trailing behind.
However, we cannot take advantage of this opportunity unless we can use this year that the Government are financing through the MSC for the Youth Training Scheme to build in every way we can better education complementing and supplementing what has been done, or not done, in the schools, and appropriate training. It is an enormous undertaking. We are asking for the collaboration of the colleges of further education to enable us to do it. How can they be adequately prepared to take on this task unless, as a matter of top priority, the Government are seeing what resources are available for them and are giving every possible help so that they can reorganise themselves sufficiently to take on the education and

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training aspects of the Youth Training Scheme? It is a very big and expensive task and it is in that direction that such resources as are being made by economies in the schools and colleges—some of them in my view long overdue—can best be used.
When we talk about ensuring that people receive the relevant education to enable them to take opportunities that are coming and to do something about the state of the economy, will the noble Baroness also say something about what is being done to ensure that the maths and science teaching of girls is given far more attention than it has been up until now?
Those are the immediate and urgent matters—the crisis matters—that call for attention at once particularly before the Youth Training Scheme really gets launched and tackles its huge responsibilities and takes advantage of its huge opportunities as it comes into force.
I should like to raise two other matters. As the noble Lord, Lord Glenamara, has said, many of us find it incomprehensible that, when the cuts were made, many of the universities which were doing what appeared to be a most relevant and useful job—I refer particularly to Salford, Bradford and Aston—suffered the heaviest of the cuts. I have asked and other noble Lords have asked before in your Lordships' House how those cuts came to be made for universities which were working on the technological and engineering side, which had built up the best possible contacts with industry and whose students were sought after and were obtaining jobs in the labour market even in the present depressed conditions. We were told then that this was a matter for the UGC and was not something in which we should interfere. In the crises of education and of the economy I do not think that that is a good enough answer. Your Lordships are entitled to know why valuable leading experimental institutions of that kind were curtailed in the way they were.
Finally, may I say—partly because my own experience was very closely associated with this and that gives me the right to say how valuable I think it—that I cannot comprehend why the Government (indeed, it was started by the previous Labour Government) have persisted in their attitude towards overseas students? Those students have enriched our colleges and universities educationally, but not only educationally. As I think I have said to your Lordships before, when the London School of Economics built its magnificent new library my colleague and your Lordships' colleague in this House, the noble Lord, Lord Robbins, went twice round the world visiting old students in order to raise money for that library. Without those overseas students it would have been a long time before that library went up. That just serves as a symbol of how overseas students, as they go into positions of great responsibility—and some of them go alarmingly fast into positions of alarmingly high responsibility as viewed through the eyes of the people who taught them—can influence, both economically and politically, the attitudes of developing countries towards this country. How can the Government be so short-sighted as to throw away all that goodwill?
3.52 p.m.
Baroness Young: My Lords, before turning to speak
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for the Government in this debate this afternoon, I should like to say how much we are looking forward to hearing my noble friend Lord Pennock make his maiden speech, and to wish him well. The noble Lord, Lord Glenamara, has sought vigorously to make out a case for his criticisms of Government policies in education. I should now like to state the Government's proposals and policies on education and to show that a dispassionate examination of facts and circumstances will not, in fact, take us down the same road as the noble Lord who spoke originally in this debate.
The keynote of the Government's education policy is the good management of scarce resources. At a time when demographic factors are forcing changes on educational institutions at every level, it is essential to ensure that money is not wasted, but is instead directed to the growth-points which will be of most relevance in achieving economic recovery. It is inevitable in this approach that hard choices have to be made as well as difficult adjustments. Change is often painful, particularly so in an area which affects so many people as intimately as does education, and where local traditions and loyalties are so strong. But it is the task of a responsible Government to grasp these nettles.
What then is the "erosion of opportunities" which the noble Lord, Lord Glenamara, alleges has taken place? In almost every area the proportion of the relevant age-group participating in education is higher than it was under the previous Administration. The percentage of three and four year-olds in nursery and primary schools has risen by about 3 per cent. since 1978–79. The percentage of 16 and 17 year-olds staying on at school after the minimum leaving age is also rising. And the age-participation rate for 18 to 20 year-olds in higher education last year was over 13 per cent.—the highest for several years—despite the fact that the size of the age-group was growing as well.
Nor should anyone underestimate the extent of the Government's financial commitment to education. In the current year we shall be spending a total of more than £14 billion on education in Britain—more than on our national defence. This has been sufficient to ensure a record level of spending per pupil in our schools. In England alone we have spent more than £7 billion on the schools, which works out at an average of more than £900 per pupil. And this spending is reflected in record pupil/teacher ratios: in England there is now one teacher for every 18.5 pupils.
What the nation's children need above all is good quality teaching—a point I thought very well brought out by the noble Baroness, Lady Seear—good curricula, a dedication to high standards, and high expectations on the part of the teachers, the parents and the pupils themselves—matters about which I shall say more in the course of my speech. One thing is certain: they cannot be provided merely by an expenditure of money that the nation cannot in any case afford.
Educational debate today must be seen against the background of the dramatic decline in pupil numbers from 9 million in 1979 to 7·5 million in the late 1980s. This is a massive drop. It is equal to the current pupil population of the whole of Greater London plus the cities of Birmingham, Liverpool, Manchester, Sheffield and Newcastle. This presents the educational

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service with a set of challenges, not the least of which is to convince the public that there is a problem. How, after 20 years of extending and expanding opportunities by building new schools, does one explain the sustenance of quality and opportunity by closing schools? This is a challenge which must be met because educational quality and opportunity will certainly suffer if the number of school places is not kept in line with pupil numbers.
There are two different problems here. The first is misunderstanding. Taking surplus places out of use is represented as a means of cutting back on public expenditure. On this presentation, "no cuts" means "no school closures", which, to those holding this view, spells harm to the pupils. But no apology is needed for the fact that taking surplus places out of use saves money. But prompt action on falling rolls can mean a better protected and better delivered curriculum in both primary and secondary schools.
The second problem is more difficult. There is apprehension among governors, teachers and parents—especially parents—about changes involving the closure of a school. I believe that it can only be eased by emphasising to all concerned four points: first, that the school is not merely a physical entity; the substance is the school community and the education provided. It is no use saving the shell if it is no longer able to provide the right substance. Secondly, change may become inevitable because of developments like demographic changes which are quite outside the control of the governors, the teachers and the LEA. Thirdly, timely and sensitive rationalisation, preceded by adequate consultation, can provide positive advantages in terms of quality of education. Fourthly, people are rightly convinced that "their" school is a piece of social or community capital. This applies just as much on council estates and in the inner cities as it does in rural villages. In each case where changes are to be made the use to which that capital is to be put should be carefully considered and explained.
A further problem which results from demographic factors and arouses similar sensitivities is the contraction of initial teacher training. Over the past 10 years, Governments of both parties have recognised the need to bring about a substantial reduction in the overall scale of the initial teacher training system. In 1971 such training was undertaken in 42 universities and 184 public sector institutions, producing about 40,000 newly trained teachers each year. In 1977 the Labour Government reduced this to 31 universities and 76 public sector institutions, producing about 39,000 initial teacher training students at any one time.
The present Government have continued this rational and well-established trend. Following advice from the Advisory Committee on the Supply and Education of Teachers, it was concluded that planned annual admissions to initial teacher training courses should be reduced from some 20,000 in 1981 to 15,650 in 1983. However, in the last three years the level of recruitment of teachers of shortage subjects has greatly improved—particularly in maths and the physical sciences—and has been helped by special Government schemes designed to attract more well-qualified people into teaching. In particular,
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recruitment to postgraduate certificate of education courses in mathematics and physics is now at a high level. Our plans for the number of places in initial teacher training next year allow for these high levels to be maintained, and the signs are that this will be reflected in the level of enrolments.
Furthermore, as this improvement in recruitment comes at a time when the overall demand for secondary teachers is falling because of falling secondary schools rolls, it means that schools will be able to appoint specialists in shortage areas where they may have had difficulty in the past. New teachers well qualified in these key subjects will give greater educational opportunities than are now always available in the schools. When I was myself a Minister in the Department of Education I took a particular interest in, among other matters, the education of girls; and I hope that the opportunities, particularly for maths and science which will follow not only from the increase of teachers but also on our proposals on the school curriculum will mean that opportunities for girls are improved in both those subjects.
Another recent development is that the general quality of those wishing to train for teaching has improved dramatically. The introduction of O-level requirements in both mathematics and English has ensured at least a basic minimum competence for all teachers. The certificate of education has been almost entirely replaced by graduate qualifications, which has meant that all students are now required to hold a minimum of two A-levels before embarking on an undergraduate course. Additionally there has been a marked movement by students away from undergraduate courses to the PGCE, with the consequence that the quality of the undergraduate work is known before potential teachers are selected for training courses. And in the past few years it has been possible to be far more selective when choosing graduates for these courses. The result of these factors is that the quality of those entering the teaching profession has probably never been higher. This, I think, must be a cause of satisfaction to us all.
I turn now to say something about higher education. I welcomed what the noble Baroness, Lady Seear, said in expressing her belief that in higher education there was room both for economies and for change. In higher education the Government have faced up to the challenge of trying to produce a more efficient and cost-effective system, more attuned to the needs of the country and the economy. Despite the savings being required of higher education, in the 1981–82 academic year more young people entered than ever before, and as I have said the 18–20 year-old age participation rate in higher education was over 13 per cent.—the highest for several years. The evidence suggests that young people who were suitably qualified and wished to enter higher education were able to do so, although naturally not always at the institution of their choice or in the subject of their choice. That, however, has never been possible. We do not yet have final figures for this year, but we expect that the participation rate will remain at about 13 per cent.
The universities are demonstrating both courage and determination in adjusting to their new levels of funding. My right honourable friend the Secretary of State for Eduction and Science has announced in

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another place his intention to make available some £100 million extra to the universities in 1983–84 to help them meet unavoidable additional costs, to assist in the restructuring process, to boost activities in information technology and ensure the continued recruitment of young able men and women to these institutions. These initiatives provide for some 70 additional university posts in information technology subjects, and some 230 "new blood" posts, mainly in the sciences, in the academic year 1983–84.
We have also made clear our view that we wish to see universities becoming less totally dependent on the public purse, and have said that income gained from external sources will not lead to any consequential reduction in UGC grant. This will strengthen universities' links with the industrial and commercial community. This year the universities will receive over £1,280 million from the Government through the UGC, and in addition over £450 million will be spent out of public funds on maintenance payments and tuition fees for university students.
Local authority higher education—now offered in some 400 polytechnics and colleges in England—has also expanded rapidly in the last decade and has for some time been recognised as in urgent need of coordination and management at the national level. The Government therefore established the National Advisory Body for Local Authority Higher Eduction last February to advise my right honourable friend on the provision to be made in local authority institutions and the consequent allocation of the funds available. The advice of this body should allow the effective rationalisation of the sector so that the best use is made of the available resources. It will also contribute to a rational approach to planning for higher education as a whole. In the meantime my right honourable friend's distribution of the resources available for 1983–84 as announced just before the Christmas Recess is designed to secure the greatest economies from the most expensive institutions while protecting those that are most cost effective. Perhaps I might answer at this point one of the points the noble Lord, Lord Glenamara, made on this matter and say that the advisory body's planning exercise in asking for plans based on a 10 per cent. reduction in resources in real terms between 1982–83 and 1984–85, is within the savings as originally planned and not additional to them.
The Government are not narrowly concerned with economies but they are concerned to provide new initiatives to increase educational opportunities. We have wanted to identify those areas where a special initiative or injection of resources can contribute to dealing with the nation's economic weaknesses at their roots. An outstanding example is the new Technical and Vocational Initiative announced by the Prime Minister in November. We believe that the 10 pilot projects—nine in England and one in Wales—will give new insights into the best ways of organising and managing the education of many of our 14 to 18-year-olds.
We must in particular provide these young people with the technical skills and personal qualities which will help to make industry and commerce more efficient and competitive and, of no less importance, increase the self-fulfilment and self-respect of young
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people as they reach adulthood. We believe this can best be done by offering four-year courses which combine the essential elements of a good general education with those specific vocational skills—enhanced by integrated work experience—which are needed in the modern world. The Government have asked the Manpower Services Commission to take the lead in setting up the projects so that as many as possible are operational by the beginning of the next school year.
We have been much encouraged by the expressions of interest and support that the intiative has received—from local education authorities, schools, colleges and others. We are confident that the combined efforts of the MSC, the education service, industry and commerce, will eventually result in a better equipped and more efficient labour force.
Further developments intended to ensure that the education offered to children in schools properly reflect the changes that are taking place in society as a whole are the Micro-Electronics Education Programme and the Micros in Schools Scheme. The Micros in Schools Scheme has resulted in there now being at least one micro in 95 per cent. of secondary schools, and, as required by the scheme, LEAs have provided a basic training for at least two teachers per school, or some 10,000 teachers in connection with it. As noble Lords will know, the scheme is now being extended to primary schools.
Under the Micro-Electronics Education Programme it is expected that by the end of this financial year about 14,000 teachers will have received training on different aspects of the use of micros in schools, with a further 10,000 to follow next year. Some 350 educational software programmes have also been produced, with many more to follow, and a regional information network has been established to provide information on the uses of the new technology in education, both to schools and LEAs. In this way the Government are building on work undertaken by LEAs from their own resources, and are stimulating further activity. Although designed on a £9 million programme overall, the Government are now funding around £4·5 million a year on the programme, and are also considering an extension beyond the current finishing date of 31st March 1984. It is clear, therefore, that in this area educational opportunities have significantly improved during the lifetime of the present Government and that major steps have been taken to ensure that the new technologies are being taught, used and understood. It is an area where Britain leads the world and the Government are proud of what they are doing to prepare young people for the future.
The Government also continue to recognise the need for and importance of training opportunities for teachers in service. In the coming year, provision has been made in the rate support grants for local authorities to continue programmes of in-service training at the same level as in the current financial year, and the Government also intend to introduce a new scheme of in-service training grants. These grants will be paid to local authorities towards the extra teaching costs incurred when eligible teachers are released to attend approved courses of training in the priority areas which will be included in the scheme.

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I have already mentioned the provision that the Secretary of State announced last December 1982 for "new blood" in the universities and information technologies. These are some examples of the developments which will in the years to come both widen and increase the quality of educational opportunities, and at the same time direct attention to the areas which must be strengthened if we are to meet the challenge of economic recovery and change.
Education is an enormous subject, and in the course of one debate there are many issues one cannot touch on at all, and one is only too conscious how briefly one must go over many important matters, important both to the country and to the individual children about whose future we are talking. But, speaking as one of the Ministers who was involved in the creation of the Education Act 1980, I believe it made a number of significant steps in extending educational opportunities. With the assisted places scheme, it restored the opportunity for children from poorer backgrounds to enjoy the best that independent schools could offer.
In maintained schools, the Act provided, for the first time, for parents to have the right to express an informed preference as to the school they wished their children to attend. We have given that responsibility to the parents. The greater interest and involvement parents have in schools as a result of this, and the Act's new provisions for parent governors, can, we believe, only be to the benefit of educational opportunities generally. In an important sense, it gives parents the opportunity as the Secretary of State said in his recent speech to the North of England Conference, to act as "agents of change" for the better within the schools in their communities.
In order to make parents more effective as agents of change, we have increased the amount of information available to them. Under the 1980 Act, schools must provide, on request, information about curriculum, results and methods. And, in the last few weeks, this process of opening up the schools to public scrutiny has been taken much further. The Secretary of State has announced that all HMI reports will from now on be published. This will, we believe, prove to be a measure of the utmost importance.
Throughout this speech I have emphasised the folly of a narrow concern simply with uniformity, quantity and money. The consistent programme of this Government has been to emphasise diversity and quality, to promote choice and to ensure that the already very large sums spent on education are used effectively and to the greater benefit of all our children.
Lord Glenamara: My Lords, before the noble Baroness sits down, may I ask her whether she intends to respond to my invitation to give an assurance to parents that there will be a place in higher education this September and next September for all who are qualified and want a place?
Baroness Young: My Lords, I have already said a great deal about the numbers who are going into higher education. The noble Lord, Lord Glenamara, is too old a hand in politics to expect me to be drawn into
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answering a question which begs so many other questions. We have not defined what we mean by "qualified" or "courses"; the only firm part of that question would be the numbers of institutions, and I think it would be most unwise to give categorical answers to a general question like that. All I can tell the noble Lord, and I reiterate it, is that we believe that the proportion going into higher education will be at least as high as it is this year, which is one of the highest on record.
Lord Glenamara: The House and the country will note that the Minister refuses to give that assurance.
Baroness Young: If the country is taking that great an interest in this exchange of questions on the subject, my Lords, it will realise that it is very dangerous to answer such very generalised questions on the spur of the moment.
4.16 p.m.
The Lord Bishop of Chichester: My Lords, we must all be most grateful to the noble Lord, Lord Glenmara, for providing the occasion for us to debate this important subject of the state of education in our country. It is the concern of all of us, and particularluy of those who have children still at school or university, or who have responsibilities in higher education—and I speak as one in all those categories, having a child still at school and a child at university and a child who has just left university and is unemployed, and being also chairman of the governors of an institute of higher education. I speak also because the Church of England has a long-standing concern and responsibility in the field of education, through our own church schools and in many other ways; but I wish to emphasise that we are not just concerned with RE, but with education in the broadest sense.
Before coming to the detail of the matter, I wish to make a general comment about the philosophy of education which is suggested to me by the two parts of the Motion; that is, the tying together of the cuts in educational opportunity and economic recovery. I believe there is still much wisdom on education to be found in the philosophy of Aristotle, but there is one sentence in that great thinker's writing which has always seemed to be a serious lapse from the nobility of his arguments. It is the sentence in which he says:
"The citizen should be moulded to suit the form of government under which he lives".
I sit in opposition to that view. The primary purpose of education is to help each child and young person to develop to the full the abilities and individuality that God has given him.
Of course, that development must include learning how to live in a right relationship and right association with his fellows. But I hope that all who are concerned for a true and liberal humanism, whether Christian or not, would reject any attempt to determine educational opportunities wholly by the supposed needs of society. There seems to have been rather too much of that attempt in the educational policies of both main political parties, and that is the one reservation I make in supporting the Motion now before the House.

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I listened with great attention and appreciation to the positive remarks of the noble Baroness the Leader of the House about Government policy and what it is hoped will come from it. But I do not think that that can be allowed to cover over and obliterate the disastrous aspects of Government policy, and their effects upon long-term recovery.
I expect that many of your Lordships, reflecting on your own earlier years, would agree with me that one of the most important formative things in life is the influence exercised by particular teachers on their pupils: the imparting of standards of behaviour and a sense of values and responsibility by the influence of example and personal relationships. The possibility of this depends very much upon the number of teachers in relation to the number of pupils; and the size of classes in many of our schools makes this extremely difficult to achieve. I was glad that the noble Lord, Lord Glenamara, pointed out the very misleading character of the official method of computing the pupil/teacher ratio. There can be, in a school, a pupil/teacher ratio of 18 or 19 to 1, and yet there can still be classes of 30, 35 or, in some cases, even more.
One would have hoped that the falling size of school rolls could have been used in order to reduce the size of classes. Instead, financial pressure has made it necessary to reduce the number of teachers; so that, as well as missing a great opportunity to improve the quality of education, we now have a growing number of trained teachers coming out of our universities and colleges with little or no prospect of employment.
Other Members of this House will no doubt speak of the erosion of opportunities in a variety of subjects. I wish to mention just one area: that of modem languages. The 20 years following the end of the war saw a great improvement in both the quality of the teaching of languages and the range of them available. The standard of teaching, I believe, is still being maintained, but the range grows ever narrower. I was talking the other day to a parent whose daughter is very anxious to learn Italian and Spanish, but her secondary school cannot provide teaching in either. Most secondary schools manage to keep up French, though sometimes with difficulty; and where a second language is available it is rarely anything but German. This is a sad state of affairs when the world is being drawn closer together than ever before and there is a pressing need for the understanding of other cultures besides our own—an understanding which can best be achieved by being able to read and to speak their own tongues.
Let me give your Lordships a picture of the present state of things as seen by one educational authority—and that in a county which is overwhelmingly of the political complexion of the Government. It is a county in which expenditure on education has been for a long time very modest and, on average, below the figure set by the Department of Education and Science as what they would expect to be an appropriate level in relation to the size of the population. That authority now suffers for its careful housekeeping. It will be penalised if it rises above the average of its own expenditure in recent years and comes nearer to the figure that the DES thought was the appropriate target.
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The effect of a standstill budget in the education service is not only that improvements are excluded but that the relative stability achieved in many areas with great pain and difficulty over recent years is now put at risk. I pick the following phrases from the report of that authority's schools sub-committee:
"The reduction of teaching staff, even though it was based on falling pupil numbers, was having an adverse effect upon the curriculum of schools; some of the smaller schools particularly were having to contract the provision of activities which were desirable but not in any way extravagant. Developments in certain main subjects had brought about a substantial need for in-service training which it was impossible to provide at present … schools which had set up rural studies units were finding it almost impossible to maintain them".
In the same county the increase in the number of handicapped young people wishing to continue in full-time education beyond the statutory school-leaving age is placing considerable pressure on the authority's special education provision and can be met only at the expense of other parts of the service. The provision in schools of facilities to develop work with microtechnology has been made possible so far only through the gifts and funds raised by parents' associations; and, as the noble Lord, Lord Glenamara, has said, there are many parts of the country where parents are not in a position to make that kind of contribution. There is still a great need to provide training of staff to make the best use of teaching techniques.
My Lords, these are just a few examples of the problems of one authority—and that not an extravagant or rich spender. They illustrate what has come about through the de facto transfer of the control of educational expenditure from the Department of Education and Science to other departments, particularly the Department of the Environment. The noble Baroness made reference to the Manpower Services Commission and the grants being made to it. I think it should be understood that local education authorities very much resent large sums of money being poured out in this way when, if they themselves had anything like a part of those resources, they are in a position to attract more students to vocational courses of greater length and greater thoroughness.
Before I sit down there is one other matter to which I wish to refer. Chichester, where I live, lies halfway between two universities, the University of Sussex and the University of Southampton. As a diocese, we have had much to do with those teaching religious studies at the University of Sussex and, indeed, have contributed financially to help them. Our theological college students, along with those of three other colleges, Roman Catholic and Anglican, take the Certificate in Theology offered by Southampton. As a result of the Government cuts there is now no religious studies course at the University of Sussex. The university hopes for its restoration eventually, but for the present it is frozen. At Southampton, the certificate course has just managed to survive for the time being, but the posts of professor and lecturer are suspended and the work of the department is sorely handicapped.
This sort of thing is happening also in relation to other subjects at other universities, as I am sure many of your Lordships know. Just before I came into this debate I was talking to the head of one of the colleges, and he said, "The state among us now is that every

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vacancy that occurs is frozen". The universities and every other educational institution in this country now live in a constant state of anxiety. No one knows where the axe will fall next. That is not a condition that makes for good education.
This brings me back to the point with which I began. What is the philosophy of the Government on education? That question cannot be evaded by saying that the Government are only concerned to set limits of expenditure, to work within certain limits. He who wills the end, wills the means. The determination of financial priorities involves moral and philosophical judgments. I hope very much that the noble Lord who replies to the debate will tell us a little more about what really is the Government's philosophy on education.
4.31 p.m.
Lord Hatch of Lusby: My Lords, I speak in this debate this afternoon as a member of a long-standing teaching family. My mother taught virtually all her life for 60 years until she was nearly 80 years old. Both my sisters are teachers, and I have taught in every stage of the educational system from the primary school to the university, including spending some years as chairman of the governors of a large comprehensive school in London. So I am tempted to draw the attention of the House to the wide spectrum that has already been dealt with by previous speakers, and I am deliberately resisting that temptation in order to confine myself to one aspect alone of the effects of educational cuts.
That aspect is the effect on the rural communities of the cuts in grants to the rural schools. Unusually in this House, I expect to find a considerable degree of sympathy on the other side of the House with what I have to say. I know from previous occasions that a number of noble Lords whose ideology is vastly different from mine come from rural areas and therefore must have some sympathy with the decline which is apparent in every part of the country which is basically rural. It is on the part played by education in rural disintegration that I want to spend all my time this afternoon.
My Lords, let me tell you a true story. Like all the best short stories, it has a surprising twist in the end. I am sorry that the noble Baroness, Lady Young, is not in her place at the moment; perhaps those who are making notes will draw my story to her attention, because I doubt whether she will believe the ending. In 1937 my mother and my family moved from the school on the Yorkshire side of the Pennines where she was headmistress because it was understood that that school was to be closed. I was privileged some 40 years later to be asked to open the gala celebrating the centenary of that same school. This was in 1978. Nevertheless, within two years I was acquainted by the parents' committee of that school that the decision had now been firmly taken to close it.
It was a decision taken quite a long way away because in the meantime there had been the reorganisation of local authorities and now the decision was taken in a city many miles away from the school itself, but it had been firmly taken. Fortunately, the parents of children in that school were sufficiently
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concerned to preserve the school to form a committee and to approach both the Member of Parliament for Keighley, Mr Bob Cryer, and me. This was one of the occasions on which Members of this House and Members of the other place can work together very well.
We agree to take a deputation from that parents' committee to see Dr. Rhodes Boyson, the Under-Secretary of State. I find myself entirely alien to the vast majority of the ideas of Dr. Rhodes Boyson. Nevertheless—and this is the twist in the tail—Dr. Rhodes Boyson was persuaded by the efforts of that committee to cancel the decision of the council in Bradford and to keep the school open. If it had been an inner city school it might have been different; but Dr. Rhodes Boyson sympathised with the case and told us that he himself had been brought up in a similar school just on the other side of the Pennines.
What is the lesson of this story? In this case it was not a village school; it could only be described as being at best in a hamlet. It covered a wide area of the moors on the other side of the valley from Bronté-land. Some children were walking three miles each way to school each day. That school was the centre of the community, and it was from that school that virtually all the social life of a very wide area stemmed. I remember that as a boy we used to have community meetings during the winter once a month always when the moon was full to make it easier to walk. We used to have lantern lectures and small orchestral groups, and so on. That was the only social activity.
Those parents who came down to see Bob Cryer and me knew that if that school closed not only would social activity cease, but a great deal of economic activity in the small mixed farming of the area would also cease and this would become an area for weekend cottages. I am sure that I am striking a chord in the minds of many noble Lords this afternoon in saying that that is still the situation today. I now live in Lincolnshire in a not dissimilar area. I have made it my business to talk to the local teachers about the problems that they are facing. They tell me that as a result of the cuts which have been made by this Government a number of things are happening.
We all know—as has been mentioned earlier in the debate—that we are approaching a substantial drop in enrolment. According to the teachers of the area in Lincolnshire in which I live, the cuts in teacher employment are far out of proportion to the reduction in the number of pupils to be taught. Instead of improving the teacher/pupil ratio, what has been done is to direct the cuts in expenditure to cutting the number of teachers.
What does this mean in the context of a rural school? It means, first of all, that you have larger classes now in the region, in this area, of 35 or 36 per class. But it means something else; and anyone who has had anything to do with a rural school knows this. It means that you are getting a wide range for age teaching for each teacher. Some teachers have to teach children from the age of five to the age of 11, and that spread has widened because of the reduction in the number of teachers, when, as my noble friend Lord Glenamara pointed out, there are more than 38,000 teachers unemployed in this country.

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It means something else, and again I will tell a true and more topical story. Only recently the inspector came round to the schools in the Spilsby/Horncastle area in order to find out what economies could or should be made. He said quite bluntly, "One school here will have to do without its peripatetic music teacher". The Lincolnshire authority has not yet undertaken comprehensive education, and so in Spilsby itself the choice had to be between the secondary modern school and the grammar school. What was done, on the authority of the inspector, was to end the services of the peripatetic music teacher at the secondary modern school and move him over as a replacement into the grammar school. I have asked a Question about this previously and got little satisfaction, although it gives some satisfaction in this area to know that this House will take time to consider such local matters.
This is not an isolated instance. Your Lordships may ask: is music one of the necessities in education? I would say "yes, most certainly" because if children are not introduced to music when at school, they are very unlikely ever to gain that enrichment of life which comes from musical appreciation later on. The central point I am making is that, as a result of the cuts which have been made by this Government, that school is now without the peripatetic music teacher it has had for many years; and therefore its school band has had to go. Fortunately, those concerned have come to a sensible arrangement, to have some facilities provided at the grammar school out of school hours.
If this is happening in the case of music—and I do not think that many of your Lordships would say that music is a luxury, above all for children—and if the Government say that it is a luxury which we must do without in hard times, let me go on to deepen the lesson that arises from this story, because it is not just music but also scientific equipment which is being cut. There are schools in this area which simply cannot afford to provide the scientific equipment for the teaching of their children, and that situation has come about over the last three years. Again the circle continues: Where is the money to come from? Parents are asked to contribute. Your Lordships will know what a rural area is like. There are some parents who could contribute the whole lot. But are we going back to that kind of feudal society, or are these not the essentials that should be provided by society for the teaching of our children?
My Lords, let us remember, too, that in the rural areas the mechanisation of agriculture over the last 20 years has led to a fall in population of agricultural workers. What we have tried to do in the rural areas is to provide alternative sources of employment; otherwise they will die. We have tried to develop small industries, for example; but you cannot get people to come into an area like that if the first question they ask—"What are the educational facilities like for our children?"—is to be answered by the words, "We are closing down schools here and we may have to bus children 10 or 20 miles away to get any higher school education". That is a prescription for the death of many of the rural areas in this country, and the running down and disabilities of the rural schools have a direct effect both on the preservation of rural
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communities and on their ability to diversify from the traditional agricultural occupations into the kind of industrial activities to which this Government have called our people.
May I just sum up, and hope that there is a great deal of support in this House for this case and that the Government will pay very special attention to what I fully admit is a form of special pleading for a particular area of the subject under discussion. If we are going to prevent the disintegration of our rural areas, and if we are going to preserve, extend and increase the prosperity of the rural and agricultural sector of our society, then special attention must be paid to the rural schools and to the provision for rural schools. Instead of just lumping them along with the schools of the urban areas in the generalised statistics that the noble Baroness gave us this afternoon, this is and should be a special responsibility of the Department of Education. They, and this House, should recognise that if this policy of attrition continues, we are going to undermine and finally destroy those rural communities on which a great deal of the renaissance of our economy depends.
4.50 p.m.
Lord Pennock: My Lords, as a newcomer to this august assembly, I have become speedily aware that contributions to its debates are made by those who are experts, and often masters, of their subject. Being in neither of these categories, and making a maiden speech, I rise to my feet, therefore, with some nervousness and trepidation. I am, however, somewhat fortified by the knowledge that the subject is a many-sided one, and I am grateful to the noble Lord, Lord Glenamara, for making it wide enough for me to take a deep breath, make the plunge and, hopefully. not sink in the process.
Much of the debate so far has centred on the alleged sins and omissions of the existing and previous Governments. I should like to turn to features of our educational system which are perhaps not the responsibility of specific Governments, but are possibly endemic in the system and have been with it since it was founded, as we know it, more than 100 years ago. These features are, however, vitally concerned with economic growth and industrial performance.
Noble Lords need little reminder from me that we live in a world of fierce international competition, which rides on the back of fast-moving changes in technology. We have seen rapid changes in chemical technology, in computer technology, more recently in information technology and now—the area where a company in which I am closely involved is working—in cable television technology. The word on everyone's lips in industry today is "technology" and the other word on everyone's lips is "change".
After 35 years in a fairly unusual position, as a graduate in history working in an industry where I have been surrounded at every stage and at every level in my career by chemists and engineers, and also where I have been engulfed in what has been perpetual technological change, it is now my submission from this experience that the demands of competition and technological change require more managers in

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business and industry who are graduates, and especially more graduates who are trained in science and technology. May I also make the plea, with some deference, that the need for more technically trained graduates should not be confined to business and industry. Might it not be that more of the leaders of our society should first be educated to comprehend the complexities of technological change and, recognising their crucial influence on our society, seek to stimulate their development still further?
If, then, we are to require changes in our human resource requirements, which I believe could be quite dramatic, how is our educational system at present geared to meet them? The latest figures produced by the Universities Central Council of Admissions revealed that, out of about 73,000 United Kingdom candidates currently accepted for first degrees, 25 per cent. will read social sciences—of which just little more than 1 per cent. is business studies—and 22 per cent. will read languages, literature and the arts. On the other side, about 25 per cent. will read science and mathematics, and only 13 per cent. will read engineering. So the bias in our university educational system still remains in favour of the arts.
What is even more significant is that figures supplied by the Department of Education and Science quite recently, which include other smaller miscellaneous categories, show that, whereas in 1972 the arts to science ratio was 46 per cent. to 44 per cent., in 1982 it is likely to be 48 per cent. to 42 per cent.—a bias still more firmly in the arts direction, and a bias, I believe, that continues, anachronistically, to pervade our society today.
Nor is this bias only a question of quantity; it is also one of quality. The same Universities Central Council of Admissions analysis shows that, for those seeking entrance to university today, medicine is the most difficult discipline and requires the highest academic level of attainment. Next is the law and, at the bottom of the list, the easiest subjects in which to secure university entrance are chemistry and engineering. In spite of this, this year, as I think we heard earlier, there are reports of substantial decreases in those applying for places in chemical engineering and mechanical engineering, which are the mainstay of so many managerial appointments in business and industry today.
Like many of the problems associated with our economic performance, this bias is not a new one. It has been incipient in our society for at least 100 years and, as in so many similar areas, it is the cold winds of current international competition and technological change which have brought it more clearly to the surface. As long ago as 1868, 1872, 1884 and 1895, there were a succession of Royal Commissions which reported on the inadequacy of our technical education and compared it sadly with the unified system of technical education which had existed in Prussia, and then Germany, from 1825 onwards. As late as 1913 we had only 4,200 science and technology students in England and Wales, compared with 24,000 in Germany. Even in 1939 there were still only 10,000 in these categories and, as a proportion of our total university intake, they had declined from 31 per cent. to 28 per cent. between the wars.
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In 1944, we had the famous Education Act, referred to by the noble Lord, Lord Glenamara, which pronounced the inauguration of technical and secondary modern schools to be situated alongside our traditional grammar schools. But, in the event, few of the former were ever created. In 1947, we had a new GCE system which replaced the old school certificate and, at the same time, narrowed the qualifications for university entry, so that specialisation in arts and science began at an earier age, thus further accentuating the division between them.
In the 1970s, as has been said, we extended the school-leaving age to 16, but the appropriate curricula and examinations to follow this extension have simply not come with it. Any investigation of the schools curriculum reveals that it is the examination system which lies at the heart of the matter. At A level especially, examinations are still used as a filter for higher academic achievement, and not to provide a syllabus which will prepare young people for life in the world outside. Much has been said about change and this may be the hour to achieve it. It is perhaps not impossible that the time is now ripe to consider the realignment of our educational institutions, because, surely, the implications of economic reality are certainly being thrust before us in a way not paralleled in the lifetime of most of us.
University professors are realising as never before that, if we do not equip more of our young people to apply themselves to wealth creation, the scope and standards of our educational system will decline in the face of economic stringency. Schoolmasters must be sad and reflective at the tragedy of school-leavers arriving in droves on the labour market without the prospect of long-term employment. Parents, and indeed the nation at large, must be recognising the dangers of too many careers centred on the distribution and spending of wealth, and too few directed at how to create it.
We should not forget that ours is a nation of great stability which, on the one hand, make us resistant to change but, on the other hand, once that change is finally accepted, we absorb it with good sense and wellbeing. At least three times in my life I have marvelled at, and been grateful for, the common sense of colleagues on the shop floor and their receptivity of the need for change once they saw that it was really necessary. No one is proud of our 3 million unemployment record, but, in spite of the extremists' forebodings, blood has not flowed in the streets. I would ask: if the impact of this shock can be taken with such resolution, could we not take in our stride any upsets which might come from the realignment of our educational system?
Finally, the last two or three years have seen quite radical changes in attitudes towards so many of our earlier accepted beliefs. Some of the attitude change has led to radical changes in our institutions. We are seeking at the moment to reform our trade unions. Some of our business houses in the City are being called upon to put themselves in order. There is scarcely a factory or an industrial company which has not made quite drastic changes in its establishments in recent years. Is it perhaps time for us to ask whether our educational system should not be moving more

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quickly to meet the needs and requirements of our competitive and technological age?
Socrates was right to nominate the teachers in Plato's State as guardians of society. There is always a danger that the guardians will not guard society but concentrate on guarding the institutions for which they are responsible. We urge them to look outside to provide new educational opportunities which will equip our society at large to meet the tests of competition and technology which face us so sternly today.
5.1 p.m.
Lord Kilmarnock: My Lords, it is my privilege to be the first to congratulate the noble Lord, Lord Pennock, on a thoughtful and thought-provoking maiden speech. The noble Lord is a distinguished past-president of the CBI, and has had a long and distinguished career in industry. The importance of the wide-ranging subject which we are debating is underlined by the fact that the noble Lord has chosen to make his maiden speech in the field of education. I am sure that I speak for all noble Lords when I say that we are delighted that he has jumped in, as he put it himself, and swum so successfully to the edge of the pool. We hope that the noble Lord will jump in again very soon.
The Motion is very wide, and I want to concentrate on two issues. The first is the relationship between the education service and the Manpower Services Commission, including their funding. The second concerns educational maintenance allowances. In June of last year I had the privilege of introducing in your Lordships' House a debate on the Manpower Services Commission's youth task group report. In that document it was proposed that 50 to 60 local training boards would be set up and that each would be coterminous with one or more of the 104 local education authorities which would be represented, along with employers, unions and voluntary and youth organisations, on these boards.
It was also envisaged—or so I understood—that a big input to the improved educational side of the training programmes would be made by colleges of further education. In fact, your Lordships' Unemployment Committee, in chapter 11, paragraph 9 of their report ventured to predict that:
"The youth training scheme … will bring about a major expansion in colleges of further education, equivalent to about 80,000 full-time places funded by the Manpower Services Commission".
It seemed then that the best mix of local expertise and central resources was going to be used to rebuild "the broken bridge" from school to work.
It seems that something quite different, or rather different, is in motion. If the Times Educational Supplement of 19th November 1982 is to be credited, the Manpower Services Commission appears to be setting up,
"new institutional arrangements for technical and vocational education for 14-to 18-year-olds within existing financial resources"—
that is, the Manpower Services Commission's 1983–84 budget—
"and, where possible, in association with the local education authorities".
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I underline the words "where possible". This quotation was taken from the Prime Minister herself.
In her speech the noble Baroness, Lady Young, also referred to this scheme and claimed that it would provide "the essential elements of a good general education". I should like to ask the noble Baroness or, in her absence, the noble Earl when he comes to wind up how the Manpower Services Commission can expect to provide a good general education without the assistance of, at any rate, certain local education authorities in certain areas.
Ten pilot projects were reported on in that article, each embracing 1,000 young people, at a total cost which could reach something of the order of £35 million to £40 million per year when the new schemes are fully developed. It cannot be right that such sums should be spent in the education and training field without any participation at all from certain local authorities.
It is not my intention to take up the cudgels on behalf of the education establishment against the employment establishment. All establishments tend somewhat to overstate their own case. But I seriously believe that we are in grave danger of falling into and institutionalising a dual system of funding education and training for those over 16—and, as the noble Baroness has confirmed, for some over 14—which will drive a further wedge between education and training precisely at a time when they need to be drawn closer together. On the one hand, emergency funds of very considerable magnitude are being pumped through the Manpower Services Commission into what may well become a separate, permanent system, while some local education authorities are going to find it increasingly hard even to meet their existing obligations under the 1944 Act. Is this sensible? Is this a balanced use of resources when education authorities have spare capacity and teachers as a result of falling rolls?
It is very important that we get the balance right of what we offer, not only to the 16 to 18 year-olds but also in schools before the minimum leaving age. I am certainly not saying that the education service is faultless here. The noble Baroness, Lady Seear, had some remarks to make about this subject in her speech. Your Lordships' Unemployment Committee recognised specifically in its chapter 11, paragraph 3, that,
"The secondary curriculum does not cater sufficiently for the less academic 40 per cent. of children whom unemployment is more likely to hit".
It also regretted the shortage of a,
"technical/vocational band in the schools to offer something of equal status",
to the more academic achievements. But the words are "in the schools", not "outside" them, for those still under 16. Those criticisms are grounds for curriculum and examination reform and retraining of teachers. They are not grounds for further emasculation of the education service.
My party published only yesterday a White Paper titled Education and Training. The two are treated together. On page 1 there is a section called "Education and the Economy". The first two sentences read:

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"Educationalists have traditionally resisted the notion that education should 'serve the needs of industry' and have instead insisted on education's prime function of 'developing the individual'. We believe the dichotomy is now becoming increasingly irrelevant and that the barriers that have been erected between education and training have proved harmful to both".
But the Government seem to me to be setting out on a course that will raise those barriers even higher.
Our document goes on to say:
"First, at national level, there must be a very much closer working partnership between the Department of Education and Science and those parts of the Manpower Services Commission responsible for administration of youth training".
Our proposal is that statutory joint committees of the local education authorities and the area boards would be responsible for the development of training schemes in this area.
There are no doubt other possible formulae, but the important thing is the political will to end rivalries between the two departments of state most closely concerned with this very important training initiative. But we seem to be going in the opposite direction. I therefore want to ask the noble Earl to tell us when he comes to reply exactly what is afoot. Can he say when the training boards outlined in the task group report will be in place—I believe April 1983 was the date given in that report—and what their composition will be? Will the local education authorities be represented as of right? In view of the Unemployment Committee's reference to 80,000 full-time equivalent places in further education which might be expected to be funded by the Manpower Services Commission, can the noble Earl say whether those funds will be available for that purpose?
I repeat that I am not making any special pleas for the education service. The Manpower Services Commission has done a notable job in some respects. But we must be clear, as our White Paper recognises on page 1, that:
" 'Serving the needs of industry' is no longer a matter of turning out dull wage slaves … such a way of life is fast disappearing … Rather, industry now needs far more people who can think independently and apply a range of skills in a versatile way".
Therefore, job-specific training is a dubious proposition in an uncertain world, though conceptual skills and learning to learn will always be required, and these specifically are the province of education.
In pursuit of the balance I believe we need, I turn now to the question of support for those staying at secondary schools or in non-advanced further education after 16. It is right that they should receive support on at least three counts. It is right in equity; it is right in the interests of a better educated population; and it is right in that it would relieve some of the very heavy pressure that is bound to be exerted on the MSC's training programmes. At present there is a very strong disincentive for parents of poorer families to encourage children to stay on at school until their 19th birthday, which is their statutory right, as the family would in most cases receive nothing but child benefit, whereas registration for unemployment secures almost immediate entitlement to supplementary benefit.
are strongly of the opinion that no one should be off in education than they would be if unemployed and theoretically available for work that
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is not there for them to do. This was also the opinion of your Lordships' Unemployment Committee, which recommended in chapter 11, paragraph 48:
"Those staying on at school or college full-time should, subject to a means test, receive a personal allowance which equals the difference between the ruling child benefit rate and the supplementary benefit rate."
My party, in this document, has come up with a somewhat different method whereby means-testing is carried out automatically through our proposed tax benefit scheme and the student or pupil receives the whole equivalent of supplementary benefit, but the cost would be much the same. Such schemes are invariably attacked on grounds of cost, and it is true to say that they look expensive owing to the deadweight cost of paying even a means-tested allowance to those who would continue in education in any case.
But now, of course, there are two new factors. First, the state is now paying out enormous sums for training schemes which cost much more per head than continuance in education. Taking a median figure of (on my calculation) £2,700 per annum for an MSC scheme and a marginal cost of £1,100 per annum for a school place (arising largely out of the new allowance) there would be a net saving of £80 million on the MSC budget if an additional 50,000 pupils stayed on at school rather than join MSC programmes. The saving would, of course, be very much higher for 100,000 pupils. I personally believe that this is about the right balance and that we should aim to encourage 100,000 more youngsters to say on at school, thus reducing the MSC's target figure from 460,000 (which would impose a huge strain on employers) to a more manageable 360,000 in 1984–85.
Secondly, if the money saved here were added to funds released by falling rolls (but not at present ploughed back by the Government into education, as the noble Lord, Lord Glenamara, was at pains to point out) it would be possible very largely to finance an education maintenance allowance for all at 16-plus. The point is that the education system is there and is in place, is not perfect but can be improved. The MSC schemes depend either on employers and subsidies or on new facilities, and they are very expensive. I am sure that we need both, but we need a better balance between them.
In conclusion, we supported the youth task group report and still support the spirit behind it. But we fear that its recommendations are being subverted and we would like some reassurances on this point. I shall be most grateful to the noble Earl who is to reply if he will answer my specific questions under that heading. Next, we should like to hear from the Government what plans they have, if any, for making better use of educational resources released through falling rolls, and what, if anything, they will do to encourage young people at the age of 16-plus to continue in education in their own better interests and those of the country.
5.15 p.m.
Baroness Jeger: My Lords, we are all indebted to my noble friend Lord Glenamara for giving us the opportunity of talking about education this afternoon. I intervene very briefly on one specific point. I want to ask the Government what has happened to the Education Act 1981. In case everyone, including the

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Government, have forgotten about the Education Act 1981, may I remind your Lordships that this was the legislation which was meant to put into practice the report of the Warnock Committee on disabled and handicapped children and all children in need of special education.
That Act was due to come into force on an appointed day decided by the Secretary of State. During the Committee stage several of us attempted to get a date written into that Bill because we felt that would concentrate the minds of local education authorities as well as the minds of the Government on this problem. On 19th October 1981 (Official Report, col. 581) the noble Baroness, Lady Young, in resisting our suggestion to insert a date, said:
"We hope that all the provisions of the Bill, or nearly all of them, will be in force in time for the early part of the academic year 1982–83; that is, in a year's time. That is the date to which we are working and that is the date by which I hope we shall see the provisions of the Bill implemented."
Now, 1982 has come and gone.
So, kindly as ever, I put a very fair Question to the Government on 21st October, 1982, asking what progress had been made towards implementing the Education Act 1981. I received such a long Answer that I will not bore your Lordships by reading it all, but I was informed by the noble Lord, Lord Elton, that Section 14 of the Act, relating to the discontinuance of maintained special schools, was brought into effect on 5th January 1982. That means that special schools are discontinued. That is clearly what the noble Lord has said. So of course, teachers and local education authorities all over the country are asking me, since special schools have been discontinued according to what the Minister has told me, in what sort of vacuum are they continuing?
Under the Act, the special schools were supposed to be integrated into the normal schools system. The first part has happened, but the second part has not happened. On 21st October the noble Lord the Minister told me that there was going to be a conference on 15th November 1982; perhaps someone will be able to tell me what happened at that conference. The noble Lord went on to say that it was hoped that the regulations would be ready in time for January 1983. So we abolished the special schools legalistically, but not in practice, in 1982; and still, by January 1983, we have not been able to bring the corresponding provisions into effect.
In honesty—and he is honest—the noble Lord, Lord Elton, went on to say, about January:
"This will not be possible and, in order to give the local authorities adequate time in which to take account of the regulations, my right honourable friends … now plan to bring these provisions into force at the beginning of April 1983."
It is fair and right, and it is essential, that the Government should make some definite statement about this matter. Everyone who is working in this difficult field is confused and disturbed; they do not know where they are.
May I remind your Lordships that, according to the Warnock Committee Report, we are talking about 20 per cent. of the nation's children. I have listened with great interest to many of the speeches which have been made today, but it is very important to impres's upon your Lordships the urgency of making provisions for
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children who have special needs because of some handicap. As the years go by—the years may seem short to the Government, but they are final so far as the lives of these children are concerned; these years are never coming back—these children will have missed out on the implementation of the 1981 Act and they will never recover from that deprivation.
One of the most important provisions of that Act which I especially welcomed was that we were to take education down to the age of two for children with special needs and to take it over 16 for young people with handicaps. I should like to ask the Government how many local authorities have made provision for the education of the under two's. These were to be children—this is the Government's legislation—who were found by the doctors to have a special need, and it applied especially to deaf children, because, if deaf children can get some education from the earliest years, then they are much more able to overcome their handicaps. I do not know of any education authority which has as yet got a working scheme for the under two's. I think that this important part of the legislation ought to be brought to their attention.
I do not want to stray beyond the subject matter of this debate, but may I say that when I ask representatives of education authorities why they have not done anything about these provisions of the Act they say, "It is because the Government will not let us have the money". I will leave that there and not pursue the point. But it is quite clear that the restrictions on local authority expenditure are having a great effect on this field. Of course, it is much harder for a local authority, when it is trying to economise, to start something new than to try economising on something that is already in effect: priming the pump and starting up the new scheme and the new provision involves more expenditure. I hope I can get an answer to that question at the end of the debate.
Then I should like to know what increase in staff is being allowed to take account of the fact that our normal schools (if I may use that word) are expected now to take in an unknown number of disabled children. The noble Baroness, Lady Young, spoke about the falling rolls in schools, and I know that the effect of the falling rolls has been the unemployment of many school teachers. What I want to know is whether the falling rolls in schools are enabling the local authorities to enrol more teachers in order that all the children from the special schools who go into the normal schools can have, the extra attention and extra teaching that they need.
Some people may think that it is progressive in the world of education to close down special schools and put every crippled, deaf, dumb or blind child into the ordinary schools. My Lords, I say to you that that is cruel, that that child is going to be more lonely, more isolated at the back of a class in an ordinary school than if he were within the smaller community of a special school. If we take these children into the ordinary school without the back-up of help then we are not doing what the Act set out to do.
For instance, it is not only the question of having a high proportion of teachers if you have a class with a very variable intelligence achievement. There must be ancillary help. Children with spina bifida have got to be taken to the lavatory; spastic children have got to be

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fed at school dinners, and washed and helped. Unless a local authority has the money for this back-up staff then, again, they cannot carry out the Act which is the Government's policy.
I must ask whether the Government are satisfied with reports from local authorities on structural improvements. For some children the whole difference between going to a school that will be helpful and a school that will not be helpful is whether there are ramps or lifts. What monitoring is there of all this? Can one local authority decide that it cannot afford to do anything; or can another decide that it wants to implement the Government legislation and then get rapped over the knuckles by some Government Minister in the Treasury for overspending? These are questions that have to be asked, and I hope I shall get some answers this afternoon.
I was very hopeful about the Act, and I know noble Lords on all sides of the House welcomed it. The ideal of the Act, which we all support, was to try to maximise the potential of handicapped children by stretching their lives in company with normal children (whatever "normal" means in this context) and with children who might even be above normal, and at the same time to enrich the lives of the so-called normal children with the broad human understanding of and respect for children different from themselves. I think the change in attitude to the disabled must start at school. The friendships and the seeds of human wisdom and co-operation are very important, and cannot start too young.
So we must have a more diversified syllabus. Because we need a diversified syllabus these schools will need an increasing number of peripatetic teachers, and these are the very teachers whose numbers are being reduced. I will refer only to one subject—music. Some people think music is just a luxury extra, but I think it is a discipline of the mind and a dimension of a civilised education. It is also of immense importance to children who are restricted in other ways. It has been found that many autistic children have a feeling for and a response to music which they do not have to ordinary teaching or to the more conventional subjects.
Therefore, I do not want to stress the question of the disabled only, because I think these aspects of education are important for all our children and young people, just as swimming is important for the physically handicapped and for the physically fit as well. I am very sad to see as I travel around—and I have many contacts in the education world—that it is these things which are being reduced, rather as fringe extras. It is because of this that I think it very important for the Government to make clear that it is not their policy that these restrictions should happen, and that they are as dedicated as anyone in this Chamber today to the implementation of the Education Act 1981. In conclusion, all I want to ask is: When?
Baroness Faithfull: My Lords, before the noble Baroness sits down I wonder whether she could help me. We were all very involved in the Education Bill. Did I understand her to say that the special schools had closed; and, if so, under what jurisdiction were they closed? I think the intention of the Bill was that some special schools would have to continue, and I am
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somewhat alarmed, as a member of the Council of Barnardo's, because we run several residential special schools.
Baroness Jeger: My Lords, they are not closed in practice, but according to the noble Lord, Lord Elton, they are closed in effect. I read out what the noble Lord said to me; it is in Hansard of 19th October. He said that Section 14 of the Education Act 1981, relating to the discontinuance of maintained special schools, was brought into effect on 5th January 1982. I can only refer the noble Baroness to her noble friend.
5.30 p.m.
Lord Beloff: My Lords, we are all very grateful to the noble Lord, Lord Glenamara, for introducing this debate, if only because it has enabled us to hear a remarkable maiden speech from the noble Lord, Lord Pennock, putting our current worries into an historical perspective, which is something we often fail to do, and also, if I may say so, demonstrating that a degree in history is not necessarily an impediment to progress in a variety of fields.
I cannot say that I am as grateful to the noble Lord, Lord Glenamara, for his own speech as I am for his introduction of the subject, because I believe that it is, on the one hand, perfectly proper and right that we should be reminded of our responsibilities to the children and young people of this country and should take them seriously and, indeed, gravely, but if that is done one ought not to accompany it by what might be called the ordinary cut and thrust of party politics.
Lord Glenamara: What is the noble Lord doing, my Lords?
Lord Beloff: To claim an interpretation of the intentions or outlook of the Secretary of State by reference to a piece of, on the whole, incorrect gossip, either on breakfast television or in a Sunday newspaper—no doubt The Times Educational Supplement would have been an even less satisfactory source—is not to make progress. We have been asked by the right reverend Prelate—and I shall come back to that—to suggest a philosophy for the Conservative Party in the matter of education. Perhaps there is something to be said for the Secretary of State having access to a philosopher.
I should like to take some discrete and positive points. The noble Lord, Lord Glenamara, attempted, on the matter of higher education, to pin down my noble friend the Leader of the House to a precise undertaking in relation to the so-called Robbins principle. All of us suffer in these debates, and will go on suffering, from the ill health which prevents us from having, as we have had in the past, the contributions of the noble Lord, Lord Robbins, himself on this important subject. But if he were with us he would be the first to admit that the Robbins principle, the accessibility to higher education for every young person qualified, is not, and can never be, a positive physical, mathematically calculated principle. It is not like the Plimsoll line, which can be drawn so that the ship is either loaded to it or is overloaded, because the opinions of what may be suitable material for the

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various and constantly varying forms of higher education will continue to differ.
I agree, and I am sure the noble Lord, Lord Glenamara, believes, that there are a great many young people in this country who ought to be receiving higher education of one form or another but are deprived by our lack of resources from receiving it. At the same time, as any university teacher knows—there are several of us in this House who have had that experience—there are also students who would certainly be much better employed doing something else, at any rate at that stage of their lives.
It is always a balance. The most one can ask from a Government in relation to higher education or further education in all except the basic compulsory years of school learning is to make the best possible use of the resources they have for the greatest possible number of students. That is bound to vary from time to time, if only because the educational budget, and the universities' sector of that budget, has to take into account not only overall numbers but also, as the noble Lord, Lord Pennock, reminded us, a more nearly correct distribution between particular subjects and the importance, not only to industry but to the nation, of the promotion of scientific research, some of which is provided by the research councils but much of which depends on universities. Therefore, it seems to me that to try to raise the Robbins principle to some kind of measuring rod is really unworthy.
My second point is one in which the noble Lord, Lord Glenamara, rather to my surprise, appeared to share what I know is a very marked prejudice in some sections of the education profession against the idea of introducing vocational principles, or questions of vocation, into schools before the compulsory school-leaving age has been reached. In this respect I refer to something which was raised during Question Time a few weeks ago by the noble Lord, Lord Byers—the experience of the ORT schools which have done much to inspire Mr. Young in his efforts in the Manpower Services Commission. These schools have, as the noble Lord, Lord Byers, mentioned, a very long history. They were started in the poorer quarters of the Jewish areas in the old Czarist empire, in order to provide an escape for my co-religionists from their limited range of occupations by introducing them into the values as well as the practice of manual skills. Since then they have played an important part in a variety of situations in Israel, in some other countries in the Middle East—for instance, in Iran before the upheaval—and in France, as a part of the adaptation to French society of the large intake from North Africa after the independence of Algeria.
These are, if you like, vocational schools. That is to say, the fact that these children will have to earn their living is a part of the philosophy of education which prevails in them. But it has never been thought in those schools, and experience shows that it would be untrue, that an introduction to vocational skills at a relatively early age is an impediment to general education. On the contrary, the experience of these schools, which have been running in these different guises for three-quarters of a century or more, is that for many children, particularly when they have difficult backgrounds as, for instance, those who have gone to
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France, Israel or Switzerland as a result of the upheavals in the Middle East and the Mediterranean areas, it is through their realisation of the demands of technique that they come to understand and be motivated towards general education.
I should have thought that, particularly in our cities where we do know, as truancy figures and many other figures tell us, that, among other things, motivation in some children is difficult to create, a limited experiment of this kind ought not to meet with the conservatism that exists in some quarters of the teaching profession. I am glad to say that it has certainly not met with this in many of the local authorities, including those where the political control lies with members of the party opposite.
My third point is more general. The noble Lord, Lord Glenamara—and I have great sympathy with him—refused to pay too much attention to overall statistics and overall averages. After all, it was Mr. Gladstone who said that mathematics is no necessary part of the education of a gentleman. But there is the fact that, within the provision—and this provision, as the noble Baroness the Leader of the House pointed out, is not overall less than in the past, and in some cases can be regarded as being greater—there are enormous varieties of performance. However one measures educational achievement, performance does differ from one local authority to another and from one school to another. All of us know this. Indeed, it would be surprising if it were not the case. Therefore, the injection of financial resources on a larger scale, in certain instances, would no doubt conduce to better performances, but in other cases such additional resources might not be used to the best advantage.
A great deal of money has been put into the Inner London Education Authority. Some of the work it does is, undoubtedly, of a high standard, but some of this money has been spent, and spent quite recently, on the creation of new posts which seem to have only very marginal relevance to the needs of the children of inner London. So I think it is up to those who criticise the Government and their use of financial resources to accept, as I am sure the noble Lord, Lord Glenamara, accepted when he held the high office of Secretary of State, that money is not universally available. There is a limited amount, even if we think the limit should be higher. There is some obligation to look at some of the ways in which over the years to which he pointed with pride money was not spent to the best advantage; whether administratively or for other reasons better could have been achieved. It would be interesting to know whether that is a consideration which has occurred to noble Lords opposite.
On one point I find myself in agreement, also I imagine, with the noble Lord, Lord Glenamara; that is, in taking the point made by the noble Baroness, Lady Seear. I think she is right to remind us again that we have not done well about overseas students. They are—and this is a universal view in the university world and the world of higher education generally—as the noble Baroness said, an asset, whether to the institutions themselves or to the country at large in their future roles as ambassadors. This does not mean, as I think is now generally accepted, that the extraordinary and uncontrolled expansion here and there and everywhere of a decade ago was a burden which the

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taxpayers and ratepayers ought to have been asked to adopt, because they could equally well have said that the money that was available, in some cases at any rate, could perhaps have been better spent on the education of those nearer and dearer to them.
I am not suggesting, nor I think is it likely, that a Government of any colour would not do something to restrain, above all to direct, the nature of our expenditure. The Overseas Students Trust has shown that with a relatively limited amount of expenditure—nothing like that which has been saved by the extra fees—it would be possible to satisfy the needs of certain countries, particularly Commonwealth countries, with which it is very important that our relations should be very close. The arguments for this have been put forward by a very powerful group of people. They are now before Ministers, and I would implore the noble Earl who is replying to this debate to give us some indication that when Ministers look at the quite modest proposals of the Overseas Students Trust they should realise that these proposals cany with them the support of all sides of this House, as well as all parts of the education profession.
Finally, philosophy. It is a pity, I think, and I can understand how the right reverend Prelate could have got into this position, that noble Lords on this side of the House, and Ministers in particular, have to spend a lot of time discussing the reasons for and the nature of the cuts or limitations upon expenditure that our situation creates. But I think it would be wholly wrong to believe that the Government and the Secretary of State do not themselves cherish one of the positive ideals that may be held. It is not an ideal which predominates in the writings and speeches of noble Lords opposite; but it is an ideal. It is one that suggests that it should be possible, in a country as varied as ours, to create an educational pattern as varied as that country needs, which would balance to a better extent than we have always been able to in the past the inevitable conflict, the unavoidable conflict, between the interests and, above all, the desires of the individual pupil and parent and the national needs to which the noble Lord, Lord Pennock, called our attention.
We believe that the changes that have been made in the universities, painful though they have been, and the changes now being looked at, very experimentally, in connection with the schools, have an ultimate purpose. Bit by bit, particularly if, as I believe it will, the economy recovers and resources can be made available on a wider scale and directed rather more positively than we have felt able to direct them in the past, I think that the right reverend Prelate will see that this Government, to which I give my support, have a perfectly convincing philosophy on education.
5.48 p.m.
Baroness Stewart of Alvechurch: My Lords, as the governor of a large comprehensive school I am very glad to be here this afternoon to hear, and will read later, the views of those who are also governors or who have much to do with schools. I welcome this debate and the opportunity for learning and considering the problems through the eyes and ears of many different people.
I do not think I shall be able to make this speech. I
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noticed a reference made to parents. Being a school governor, I find that parents are quite invaluable and help to make constructive changes in schools. I think that is all I can say now. I am sorry.
5.49 p.m.
Lord Vaizey: My Lords, I should like to thank the noble Lord, Lord Glenamara, for introducing the debate. I join with other noble Lords in congratulating the noble Lord, Lord Pennock, on a notable maiden speech. I should also like to take the opportunity of saying from this side of the House how much the educational world must appreciate the services which have been given over the years by that notable marital couple, Lady Stewart of Alvechurch and Lord Stewart of Fulham. I always think that the departure of Lord Stewart from the Department of Education to higher realms, as they might be thought, was one of the great losses of the first Wilson Administration.
This debate is about the erosion of educational opportunities. The greater part of my professional and personal life has been spent in taking part in arguments and negotiation for widening educational opportunities. If I thought that the present Administration were seriously eroding those opportunities, I should be strongly tempted to withdraw my support, something which my noble friends might think is lightly given and easily taken away in any case, in view of my changes of spot from time to time. Nevertheless, it is not lightly given. I can assure the House that I should be in even more constant correspondence with the aides of the Prime Minister if I thought that the position were as it has been described.
I have spent a great deal of my professional life trying to get the facts straight. When I first started investigating the educational system the then Ministry of Education—not I think one of the great glories of the Whitehall bureaucracy—had managed to count the number of children in the schools wrongly by a factor of half a million, but I always felt, "What is half a million here or there between friends?" Despite the risk of the noble Lord, Lord Glenamara, feeling that all we care about on this side is dry as dust facts and figures, in my view the facts and figures are interesting and important and I wish to recite some of them. I assure the House that I shall do so not for purely party political purposes but because they lead to some of the points that I wish to make later in my speech and I think that they deserve consideration.
The central and overwhelming fact of the past few years has been the fall in the child population, and that was a matter to which the noble Baroness the Leader of the House referred. It is a very dramatic fact. It has inescapably led to teacher unemployment because teachers were trained for a very much larger child population. It has also led to substantial improvements in the pupil/teacher ratio. I have every sympathy with those who say that their particular education authority is suffering, or their particular child is suffering, or their wife is teaching in a school where the classes are of 90 or something of that kind. Indeed, I listened with some interest to the speech of the right reverend Prelate the Bishop of Chichester, who referred to a large Tory rural education authority. It did not take much brightness, on my part anyway, to discern that he might be referring to the County of West Sussex. I hared along to the Library, telephoned

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the Department of Education and Science and found that the West Sussex figures for the pupil/teacher ratio in primary schools in 1978 were 24·7 and in June 1982, 23·5—an improvement of 1·2; and in secondary schools they were 18·2 in 1978 and 17·4 in June 1982. I am sure that there are classes in West Sussex, taught no doubt by colleagues of the right reverend Prelate, where there are 35 or 40 on the roll. But the laws of arithmetic tell us that if that is the case there must be an equal and opposite number of classes containing fewer than two or three children.
The Lord Bishop of Chichester: My Lords, in that part of my speech in which I referred to the teacher/pupil ratio I was referring not specifically to West Sussex; it was later in my speech that I made such a reference. However, as this matter has been raised, may I say that in the years which the noble Lord has quoted, my wife was teaching in one of those schools and she was attempting to teach French to a class of 35, and I think that that was happening as regards other subjects.
Lord Vaizey: My Lords, I am perfectly aware that the right reverend Prelate was not speaking exclusively about West Sussex. Indeed, he is of course representing the entire panoply of the Bench of the Church in this House and it would be quite wrong of him to push the particular interests of his own diocese. But, with great respect, if he regards his wife as a typical case, then I point out that the laws of arithmetic show that that cannot be—she must be at the extreme of the distribution.
I am reminded of those who complained bitterly throughout the whole of my political and educational life that it was disgraceful that their children were being taught in classes in which the ratio was above average. It is in the nature of the laws of arithmetic that half the children in the country will be taught in classes which are above average and the other half in classes which are below average.
There are other signs of improvement in the quality of the education service. There is an increase in the rate of school attendance both before the age of compulsory school attendance and after the age of 16. There is no evidence whatever of a diminution in the proportion of those going on to higher and further education. There are welcome indications of an improvement in teacher quality. Indeed, the noble Baroness the Leader of the House gave an indication of that as regards the qualifications on entry of those taking initial teacher training courses, and that is most important. Perhaps what is even more important is that when I was a member of the Inner London Education Authority Education Committee that rate of teacher turnover in Inner London was unbelievably high. There were many schools in the inner city where the average rate of turnover was faster than the entire teacher population of the school in a year. One of the consequences of teacher unemployment is that if someone gets a job he now hangs on to it. I am tempted to say that however bad a teacher may be—perhaps that is an over-exaggeration—or generally speaking however poor a teacher may be, if he stays in the same school for three or four years
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rather than three or four months, he is probably better able to cope with the job. There has been an improvement in that respect, if not in others, as a result of the current economic situation.
I do not think that in the current situation it is fair to blame everything on the present Government and to imply that the situation has markedly deteriorated—it has not. Moreover, it is well known that the Prime Minister herself was a very distinguished Secretary of State for Education and she managed to raise the school-leaving age—something which had defied Secretaries of State for a good many years before she stuck to her guns and had the school-leaving age raised. Therefore, I do not think that it is a fair charge to levy against the Tory Government.
Nevertheless, having said that, there is clearly a widespread feeling that something is wrong. Part of it has to do with the second half of the Motion moved by the noble Lord, Lord Glenamara. Clearly the state of economic depression in which we live must have to do in some respects with the general failing of the British economy. That seems to me to be common sense and common logic. I was one of those who always felt that the British economy would be stronger if we had a more highly educated workforce. The European figures, and above all the Japanese figures, tend to support the thesis that those countries which have on the whole a higher average level of training and educational attainment have escaped the worst blight of unemployment and it has been concentrated on the other countries. Nevertheless, there is a feeling that the education system has not played its part in preparing the country for the new economy which will be necessary if we are ever to get out of the present blight of unemployment.
I should like to give an example which may seem a long way removed from the problem of training for employment but which is in fact closely related. It was raised by the noble Baroness, Lady Jeger, in what I thought was an interesting and important speech. I am referring to music. I was chairman of the committee of inquiry appointed by the Gulbenkian Foundation into the training of professional musicians. I had a very expert committee and a great many expert advisers and we went into the matter thoroughly. Even in the palmy days when money was pouring out of the local education authorities' ears, music was always the least favourite subject in the school curriculum in any survey carried out by the Schools Council or by the inspectors. There was no doubt at all that the attainment of the children musically was generally speaking appallingly low, and the quality of music teaching was deplorably low as well.
The question arises: if we are trying to rationalise our use of educational resources, what exactly would we do? Would we cut out one of the more popular subjects or would we cut out the subject which everyone knew caused mayhem in the classes and which the children loathed—that is, music? Would we make an attempt to improve the teaching of music? Such attempts are being made throughout the country, but one of the consequences of improving the teaching of music is that we get an increasing number of boys and girls going to the music colleges and to read music at the universities and polytechnics, and we get more and more unemployed musicians. We have the most

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highly qualified, but among the most highly unemployed, force of professional musicians in the world at the moment. One reason why the United Kingdom is a great centre of music—and it is a great centre of music—is that we have available very versatile people, produced by our education and training system, who can form our great orchestras and who provide the best reservoir of talent in the world for the recording companies. That is why a quite disproportionate number of records are made here.
I think the particular example of musjic that I have taken highlights a general problem which has been referred to by a number of noble Lords and, in particular, the noble Baroness, Lady Seear. It is the question of the relation of education and training in this country. I think that what the Manpower Services Commission has been doing in The New Initiative and the new approaches which have been announced—particularly the new modular system in Scotland, about which my noble friend Lady Carnegy can speak with great authority—are very important breakthroughs. In the long run they may turn out to be even more important than the 1944 Act itself. But they have not been announced with a great fanfare of trumpets; they have not been particularly remarked and commented on or discussed in the press, which has been occupied with other matters. However, they represent a totally new approach.
It is very important to get the educational debate off the sterile question of "Are pupil/teacher ratios bigger or smaller?", and so on, and widened so that it covers the much more fundamental question: What is the relevance of higher education to providing a country which can make its own way in the world?
I should like to conclude by bringing the argument closer to the whole question of our higher education system, in which I have spent a great deal of my professional life. There is very much to admire in the higher education system, both in the university sector and in the non-university sector. I think that it has always been a very great pity that the two systems were divided, one from the other. I argued strongly and bitterly with my late lamented friend Tony Crosland at the time of the announcement of the binary system, saying that I thought it was a great error that we enshrined this division permanently, as it then seemed, into our higher education system, because it ultimately implied that we had universities for the clever, the scientific and, ultimately, in a sense, for the irrelevant—which was an absurdity because, after all, the universities produce the lawyers, the accountants, the engineers, the scientists and the people who make industry go—and the polytechnics, which produced the practical chaps, the people who kept industry on the road. As most of the people I knew at polytechnics were teaching classics or sociology at the time, this seemed to me to be a highly unlikely doctrine.
I think that at least the Department of Education and Science, under the present Secretary of State, has come to see the error of this particular way. I certainly welcome the creation of the new National Council for the Maintained Sector, which is long overdue, and I certainly hope that over the next five to 10 years we shall see a growing together of these two systems and a rationalisation of the use of resources.
When I was on the ILEA at County Hall I always felt
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very strongly that we were running a system with five polytechnics which contained virtually identical provision to that provided in the colleges of the University of London and, as far as I could see, never so much as a conversation took place between the two systems, although they were duplicating libraries, scientific laboratories, student residences and student health care systems. This was bound to be wasteful. The money all came out of the same pocket—the taxpayers' pocket. The aim was always the same; namely, the better education of our students, both home and overseas, in our great capital city. But why on earth was not all this brought together with at least discussions held on a regular basis about the best use of public resources? This is the issue and, despite the party polemics, this is what Secretaries of State of both parties have actually been doing over the past 10 or 15 years—some better than others. If they continue to do it, all I can say is, all strength to their elbow.
6.5 p.m.
Lord Taylor of Blackburn: My Lords, I am pleased to take part in this debate today and also to pay my compliment to my noble friend Lord Glenamara for initiating this debate, because I reckon that he was one of the first Secretaries of State who got local authorities and people concerned in education really thinking about the future of education. I am grateful to be able to take part because of what my noble friend has done, and I pay him my compliment publicly for what he initiated while he was Secretary of State at the department.
I now turn to what the debate is about. It is about educational opportunities. This is something that many of us have forgotten in what we have been saying. Many of us who were around when the school-leaving age was raised thought at that time that we were giving youngsters an opportunity to know what was going on in industry, commerce and so on. But we have found that this has not been so. Many youngsters no longer know what is going on in industry, commerce, trade unions, and so on. I have found that many teachers themselves do not know what is going on simply because many of them go straight from school to college, from college to university, and then back into the teaching profession. When they go back into the teaching profession they do not know what the outside world requires of them. It is important that they should have an opportunity of knowing what is happening in the outside world.
I come across quite a number of young people who do not know what a cheque book is or how to sign a cheque, or what goes on in a building society. Simple things like that are, I believe, most important to them in understanding living as I understand living. Therefore, I should like to encourage more and more of my friends in the teaching profession to get to know what is going on. I know that many industrialists and many people in commerce would be very pleased to take youngsters for half a day a week and train them—indeed, not only youngsters but teachers themselves—and show them what is going on.
I do not want to raise my pet subject of what should be the link between the community and the school as regards governing bodies and so on; that is not really the purpose of today's debate. I want to try to impress

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upon your Lordships—and Secretaries of State must try to do this with teachers' associations, and so on—the relationship between the outside world and the teaching world in which these people live.
6.10 p.m.
Baroness Faithfull: My Lords, I am thirteenth on the list out of 23, and all that I wanted to say has been said by the noble Lord, Lord Beloff, and the noble Lord, Lord Vaizey. But in deference, and because I so much respect the noble Lord, Lord Glenamara, I propose to continue to say and duplicate what has already been so very well said. I am grateful to the noble Lord for giving us this opportunity. Education is not my subject; my subject is the social services. The social services have been given more money in the last few years in real terms than in the years prior to the time that this Government came in. Having said that, however, the social services need more.
I am interested in the education of delinquents; of those who are disturbed and deprived; of those who are in difficulties; and of the non-school attenders. While a great deal of money is being spent on this I would wish for more. Therefore, I look to see how best one can legitimately have more money in this country to spend on these children. Then I hear the quite outstanding speech of the noble Lord, Lord Pennock, who talks about the realignment, I think he said, of educational institutions.
A short time ago an eminent vice-chairman of a successful nationwide business in this country who travels widely and also works with the EEC told me, together with a number of friends, that what was noticeable in industry and in commerce was the lack of technology and the lack of practical skills. He gave two places where he thought this should be dealt with. First, in the schools. He did not say—and therefore I fall between the two stools of the noble Lord, Lord Glenamara, and noble Lord, Lord Beloff—that technology should necessarily be taught in the schools. He said that he felt that the point of view and the needs of commerce and industry were not put to the pupils when they were considering the future of their lives. While he would not want only commerce and industry and the needs of commerce and industry to be put to the pupils, he thought that there ought to be a fair balance between the arts and technology.
I know that the noble Baroness, Lady Platt, is going to speak. We all pay tribute to her for the post she has been allocated in the Equal Opportunities Commission, knowing that she, I think I am right in saying, trained as an engineer. Very few teachers recommend to girls, for instance, that they should go into engineering. It is always cookery. We all like cookery, but I think we can learn it from a book. The noble Lord, Lord Vaizey, has already spoken about the position that occurred with the late Mr. Crosland when he was Minister of Education. He, as the noble Lord, Lord Vaizey, has already said, hoped to have the binary system by which the universities and the polytechnics complemented one another. For some reason which was not necessarily the fault of the Department of Education, this did not occur. Therefore, many polytechnics have given up, or at least not developed, the technical side of technology
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but have developed the arts side, which was already being carried out in many universities.
I come from Oxford where the technical courses at the polytechnic are extraordinarily good, but I noticed that the students in the arts at the polytechnic have a kind of feeling that they are doing an inferior course because they are in competition with the university. Therefore, one looks to see whether, as the noble Lord, Lord Pennock, has said, there should be a realignment and reconsideration of the role of the polytechnics. In this area I pay tribute to Her Majesty's Government who, while cutting back 10 per cent., at the same time have asked the chairman of the National Advisory Body for Local Authority Higher Education, the warden of Keble College, to look at the planning and funding of higher education.
The warden, in turn, has set up a special working party under the chairmanship of Sir Henry Chilver, the Vice-Chancellor of Cranfield, to advise on the services required for industry, business and commerce. I hope that this report will come out in the not too distant future, and that we will look at it and that it will help us to develop much more the possibilities and opportunities for those in the schools to go into higher education on the technical, commerce and business sides. It is here that money will be made so that this country will be put on a more stable financial plane, and so that I in my field will have the money to spend on the social services that we most need.
I should like to turn to the question of overseas students. Like the noble Lord, Lord Beloff, I bitterly regret, as the noble Baroness, Lady Seear, said, that we are no longer financially able to take overseas students. It is financially understandable when we are in such difficulties that we cannot support the whole world. Nevertheless, I remember that I was very friendly when at university with an Indian woman doctor. I learned more about India, and understand more about the problems of India, than I would ever have done if I had not met her. As a member of the Swann Committee looking into the education of children of ethnic minorities, I look with gratitude on what she taught me of the needs of India. Had she not been an overseas student in this country, I would not have learned what I did.
Secondly, we are going to lose out in industry because many of the students who come to this country go back, as well as being ambassadors, as businessmen, as manufacturers, and business will not come this way. When one has to sit down and say, "We cannot afford it, families have to go without if they cannot afford it," we should remember that we have to go without the grant for the overseas students. But why should we go without? There is the Overseas Trust chaired by Sir Kenneth Berrill. This is supported by industry. If we all believe that the Overseas Trust is something which should help students from overseas to come to this country, should we not know about it much more widely? Should we not support it much more widely, believing that we should have overseas students in this country but acknowledging that at this point of time we have not the finance to pay for it? My Lords, if you cannot get a thing one way, surely you can get it another. Cannot we all support the Overseas Trust so that we can go back to having overseas students in our universities?
6.20 p.m.
Lord Perry of Walton: My Lords, I largely share the views of the noble Lord, Lord Glenamara, about the erosion of educational opportunities that we have seen under the present Government, and I, too, see adverse effects on our national economy arising as a result. I have said on previous occasions in this House all that I really have to say about the ruthless and largely indiscriminate cuts in the educational resources that they have made, and I have nothing to add on that today. However, I wish to say something very particular about continuing education.
The noble Baroness the Leader of the House said she was proud of the Government's measures to provide more technological insight for children by installing micro-computers in schools. But that has come far too late. The school-leavers of five years ago should have had this kind of skill and insight. One must go further back in time in apportioning blame. I fear that one must attack Governments both Conservative and Labour for their failure to anticipate this need and, even more, for failing to anticipate the need for continuing education in the modern world, a failure that is certainly a factor that contributes to the recession and, even more, contributes to the inhibition of our recovery from it. Despite massive unemployment, companies cannot recruit people with the skills they require. It really is tragic.
Before 1968 I lived in the cloistered calm of one of our ancient universities and I was, I fear, lamentably ignorant of everything outside my own subject. I was then plunged into the jungle of adult education by joining the embryonic Open University, and within a few weeks I suffered a real culture shock; I became aware of the virtual lack of provision of updating courses, refresher courses and retraining courses, without which technically-based industry—and what industry is not technically based?—cannot keep pace with developments in the world.
As the noble Baroness, Lady Seear, said, and as the noble Lord, Lord Pennock, commented in a very notable maiden speech with which I almost completely agreed, high schools have venerated the professions, our universities have concentrated on the scholars of the future and even our adult education, starved of funds, has devoted itself almost wholly to leisure activities and has regarded examinations as a dirty word. Training has declined and has been left to private initiative.
There were, even then, in 1968, a few voices raised in protest, and I became another such. But we surely cried in the wilderness. In 1969 I said in public that the Open University, while it must first establish its academic respectability by offering a first degree programme of high quality, in the longer run would be, far more importantly, concerned with continuing education. In 1975, the university having achieved that respectability, it set up the Venables Committee on continuing education, which reported in 1976. That report made recommendations which closely resemble those of the Advisory Committee on Adult and Continuing Education, chaired by Richard Hoggar, in its 1982 report, Continuing Education: From Policies to Practice.
These things have been said for many years, but no Government did anything until growing
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unemployment forced the present Government to act. They did so, as my noble friend Lord Kilmarnock said, not through the educational establishment—not through the Department of Education and Science—but through the Manpower Services Commission. I am a great admirer of what the MSC has accomplished but, as has been said, was it the right body to choose to accomplish those things? In any case, the various measures introduced by the MSC can all properly be described as ad hoc schemes, however good, designed to cope with emergency situations. They are not—as they should have been—part of a coherent education and training policy and they were not—as they should have been—introduced early enough to act as preventives rather than as cures. It is a sad story. Neither Labour nor Conservative Governments listened to the warning voices. Neither provided any funds for continuing education, and that is a condemnation.
Baroness David: Nonsense!
Lord Perry of Walton: Neither provided any encouragement, any leadership, for continuing education, and that, my Lords, is a far worse condemnation. I recognise that central Government cannot directly control education, which is a local responsibility. But it is their job to provide leadership. In my experience, they have shown great timidity, and I fear that has been because of their fear of offending the professional associations, unions and local authorities.
Lord Glenamara: What nonsense!
Lord Perry of Walton: That is the real lesson we must learn, from the present mess, my Lords, and that is why we very badly need a change of direction and a change of party in power.
6.26 p.m.
Lord Molloy: My Lords, I wish to begin by thanking my noble friend Lord Glenamara not only for introducing this debate but for the manner in which he did so—the very able contribution he made. I wish also to thank the noble Lord, Lord Perry of Walton, for the frank admission with which he prefaced his speech; one can understand some of the absurdities he uttered and can forgive him in view of his admission that for many years he was isolated from the hurly-burly of ordinary life in the cloisters of some university. All he need do is to look at the facts and figures; the creation of comprehensive education was by the Labour Party and the biggest injection of cash in the history of the nation for education was made by a Labour Government.
Lord Perry of Walton: I was referring to continuing education, my Lords, not the whole of education.
Lord Molloy: I was aware of that, my Lords, but the noble Lord seemed to see no difference between a Tory Government and a Labour Government; and, of course, there are none so blind as those who will not see. However, I must resist the temptation to reply to many of the points that have been made. I have listened to what has been an extraordinary debate in

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many ways; I have listened in the spirit of a debater who loves debating. I listen to debates of this type in the hope that something factual will emerge in the end, and I must resist the temptation to reply to many things that have been said.
Having said that, I am amazed at some of the remarks made by noble Lords opposite. If there is any subject ordinary people are talking about, it is not merely the corrosion of education, but the ravaging of education that is taking place by the present Government. Unfortunately, that is not spread across the newspapers. The noble Lord, Lord Pennock, made some interesting points and I am sure he knows that one will not find what I am saying spread across the sycophantic Tory national press of this country, which is about 95 per cent. of it. According to them, everything this Government do, whatever the disaster, contains some wonderful good points somewhere, and that is the sort of view we have had from the Benches opposite.
The debate is about the erosion of opportunities for all our people. There has been an increase in opportunities for the wealthy, and part of the cuts in education will make a contribution to the massive tax reductions for the very well-off so that they can send their children to private schools; and I am glad that I think I see the noble Lord, Lord Pennock, nodding in agreement. He understands. Noble Lords opposite should try to understand what I am saying. We are in the midst of a nasty bubbling cauldron. It is beneath the surface in the current situation in Britain. I have said in your Lordships' House before, and I repeat, that even among the unemployed, and those who might be unemployed, all the things we have seen in Liverpool and in London represent the upsurgence of a frustrated youth who will not be like we were in the mid and late 30s, when we had to wait for Adolf Hitler—not the CBI or TUC—to put us back into jobs. He put us back into jobs; when property was at risk, we were given the opportunity (for many of us it was the first opportunity in our lives) to have a suit of the same colour, a khaki one, and a gun to go with it.
The youngsters of today have probably had a better basic education, at any rate theoretically, than I had. I went to a very rough, hard school. What I am afraid of is not that one will see the day when miners, sea workers and engineers will march down from the Midlands, from the North and from South Wales to demonstrate in Hyde Park and singing their hymns (as I have said before in this House) to the strains of "Cwm Rhondda". The answer this time could be much more serious. These are some of the things we have to take into consideration when we are discussing the whole issue of unemployment. We now have—and this is the gravamen of what I am saying—young men or young women who have been very well educated in their secondary modern or comprehensive or grammar schools and who then through ability find their way to the universities where university teachers, like my noble colleague Lord Perry and other Members of the House, have devoted themselves to their further education. But, for what?—To join the ranks of the unemployed!
And that is part of education as well. It has educated them, I hope, never again to trust a Tory Government.
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One of the most heinous things that one can do is contemptuously to reject the top talent of our nation as not being required. I am sorry that she is not in her place now but we have had the contribution from the noble Baroness the Leader of the House who, quite sincerely, made the case of the falling rolls, because we have fewer children, being the reason why we should give teachers, or potential teachers, the sack. It scarcely ever enters the Government's mind what an opportunity this is to make some reality out of the proper teacher/pupil ratio. Do not sack the teachers! Give them more opportunity to exploit their ability! I should have thought that a backward child of about six would realise that—and, below that level, we have got the present Secretary of State for Education! I believe that the spending of money and the creation of fair opportunities is not merely an advantage for our children but a means of ensuring a better nation. When we are talking about any aspect of education, and about the future of all our children, we are then talking about the future of our nation.
There is another point that I should like to raise, which has been touched on here and there. It seems to me that the majority of the speeches in this House have been concerned (and rightly so) about technicians, technology, engineers, doctors and so on. I believe that part of education also means the enrichment of leisure. I want to see the day when all over this island of ours—and not merely in South Wales in the case of miners—working people are talking of some wonderful rendering of a particular opera or some fine performance of a ballet shown on television. I want to see this, as well as rugby football, as part of their normal conversation. I want to see that spread. I want the shop steward in some factory, or a London bus driver as well as his manager and as well as the chairman of his company, all wanting to go to see some gorgeous opera or be able to examine the recent work of some new poet. That is the society that I want to see; and I believe that in this island we can do it—given the opportunity. Within all that we have been talking about in employment, one has got to relate the effects of literature, the theatre, music and opera. This is all part of education. Teach it at the beginning and later the pupils teach themselves.
I want to make a brief comment about the remarkable contribution that we had from the noble Lord, Lord Beloff. Of course, it does not matter what this Government do, he will find that whatever they do is the right thing. I could not quite understand him when he talked about university students not being of quite the right material. I can understand that there could well be a case made out that not everyone who qualifies for a university education is suited for it; but I cannot understand the phrase of the noble Lord, Lord Beloff, when he said—and I wrote it down—"Those who are not suitable for university education would be better employed elsewhere".
Where are these "elsewheres" that we have to which we can send our unemployed workers as well as these unemployed students? This sort of absurdity frightens me in a debate in this House, a debate that ought to be of the highest calibre. Talking about students, it is still the case by and large, but not as much as it used to be, that some students come from ordinary families who are very proud that their son or daughter has gone to

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a university. Those families were prepared (and are still prepared in many instances) to skimp and save to send a bright son or daughter to university, and to aid them when they are there. I do not want to see a return to the times when I went to university, when I got it fixed so that I could work nights in the docks or in the pits to be able to attend the university in the day and then work very hard over the weekend in making my contribution to a meagre family exchequer. I do not want to see those days return; but I can see them on the horizon, and this is going to have a sad effect on our teaching as a whole.
Many of your Lordships have given examples of what is happening in various fields of education. I have been close to the London borough of Ealing which has suffered pretty badly because, unfortunately, there always seems to be a massive loyalty in the Conservative Party's local government agents (masquerading as councillors for all the people) to the Government. When I look at the position today, I find it remarkable. Aneurin Bevan used to say that the only place where you could find total unanimity is in the Tory Party or in any graveyard. The same thing is happening now with local government and national Government. There are not enough protests in defence of their own people coming from Conservative councils that have been elected to do just that.
I should like to give the example of the London borough of Ealing, where the elimination of grants has resulted in cutting back play groups, groups for mums and toddlers; which has also resulted in cruel amalgamations of first and middle schools which will cause difficulties in the years to come. There has been a reduction in teaching posts. Instead of taking action to the advantage of the pupil/teacher ratio, as I have mentioned, there has been withdrawal of what is termed "excess accommodation". This in a borough where some of the schools are over 100 years old. Excess accommodation! As I understand it, they are going to knock down physically 132 classrooms. Of course, there has been a reduction in the teaching staff. With all these things, the caretakers and the women who look after the children at school meals will be pushed out of work to fit in with the parrot cry of the Government, which seems to be: "We want no more of you! To the dole! To the dole!" This, I believe, is something which is most distressing.
I found very interesting the speech of the noble Baroness. Lady Faithfull. She mentioned the need for us to have a better idea of foreign languages. I agree with her intensely. Therefore, I hope that she will back me against the Tory-controlled council of the London borough of Ealing who are going to do away with those who teach foreign languages, or do away with a great many of them, all in the interest of cuts. We have seen a reduction in the school meals service; further and higher education has suffered a 4 per cent. cut. The only increase has been in the adult education charges. All these cuts, following those of last year, come roughly to about £2 million.
Ealing, they used to say, was the queen of the suburbs. In a few years this Government have reduced it to the role of Cinderella. This sort of thing is going on throughout our entire nation, and I believe that it constitutes a grave danger for which we will pay a very severe penalty in the future. I should also like to
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comment, in the few minutes that I am going to take, on the interesting and formidable speech that we had from the right reverend Prelate. It was right of him to return to the principles of idealism and philosophy. I am going to close on that.
I want to preface my philosophy with these words: where there is no idealism, there is no education. You cannot aim high unless you have an honoured principle of philosophy. Therefore I believe in equality of opportunity and actual equality of influence among members of organised society. This is where the vital role of education comes in right at the beginning. I conceive the duty of the state as being responsible for seeing that all its members are so placed as to be able to seek without favour their own "best"; and so arranging things to bring to light each human talent, skill and ability wherever it exists. In such wise inequality, when it comes, will be justified: for it will be sanctioned either by the mysterious power of nature or the deserving merit of volition.
True democracy needs efficient equality at the starting point in order to produce at the finish that inequality which gives the palm to the apter scholar. Achievement will not therefore be stained or debased by the execrable privilege of class, caste or anything else. Neither will it be immobilised by being the preserve of any particular group—but rather be continually renewed from the living fountain of all the people. It is along these lines that I believe lies the primary tenet of Labour Party. It has not by far achieved it; but this is something which we have as our ideal and which can be of benefit for our nation. From this our practical endeavours will emerge. This is a policy which I believe will enrich the lives of our own people. We want to acknowledge very quickly the natural aristocracy of talent and virtue.
Therefore, I conclude by saying that there have been many exceptional arguments submitted in this Chamber this evening. What they all relate to in the end is the decency of an ideal, the decency of a good philosophy and in matching the practical estimates to fit into that high ideal as near as is possible. Only thus in my judgment will we get out of the morass that we are in and build a nation, and the building of that nation will be an example for generations to follow.
6.44 p.m.
Baroness Platt of Writtle: My Lords, first of all, I must apologise to the House that I was not able to be present at the start of the debate on this important subject by the noble Lord, Lord Glenamara. I feel, however, that there have been interesting developments in education over the past few years which will help to promote the economic recovery of our country, which we all want to see. The hour is late and I shall be brief. I think the most interesting development has been a change in attitude in schools, colleges and universities which, fortunately, has achieved all-party support. Some years ago, I think in the late 1960s, I remember reading the words:
"Education we believe no longer has agreed aims".
Those words disturbed me profoundly as they came from the senate of my own University of Cambridge, one of our most ancient seats of learning, which I had always believed knew what education was about.

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I should now like to read from the Green Paper of July 1977:
"In his speech at Ruskin College, Oxford on 18th October 1976 the Prime Minister called for a public debate on education. The debate was not to be confined to those professionally concerned with education, but was to give full opportunity for employers and trades unions, and parents, as well as teachers and administrators, to make their views known.
"The speech was made against a background of strongly critical comment in the Press and elsewhere on education and educational standards. Children's standards of performance in their school work were said to have declined. The curriculum, it was argued, paid too little attention to the basic skills of reading, writing, and arithmetic, and was overloaded with fringe subjects. Teachers lacked adequate professional skills, and did not know how to discipline children or to instil in them concern for hard work or good manners. Underlying all this was the feeling that the educational system was out of touch with the fundamental need for Britain to survive economically in a highly competitive world through the efficiency of its industry and commerce."
That debate showed how important to parents and employers—and, indeed, to the whole nation—were the long-standing (some might even say old-fashioned) standards in education. This led on to a statement of aims, which I read:
"The majority of people would probably agree with the following … aims, though they might differ in the emphasis to be placed on one or the other:

(i) to help children develop lively, inquiring minds; giving them the ability to question and to argue rationally, and to apply themselves to tasks;

(ii) to instil respect for moral values, for other people and for oneself, and tolerance of other races, religions, and ways of life;

(iii) to help children understand the world in which we live, and the interdependence of nations;

(iv) to help children to use language effectively and imaginatively in reading, writing and speaking;

(v) to help children to appreciate how the nation earns and maintains its standard of living and properly to esteem the essential role of industry and commerce in this process;

(vi) to provide a basis of mathematical, scientific and technical knowledge, enabling boys and girls to learn the essential skills needed in a fast-changing world of work;

(vii) to teach children about human achievement and aspirations in the arts and sciences, in religion, and in the search for a more just social order;

(viii) to encourage and foster the development of the children whose social or environmental disadvantages cripple their capacity to learn, if necessary by making additional resources available to them."

In my view this constituted an important turning point which was long overdue. It resulted in Circular 14/77 asking for a response from local authorities on the curriculum. Matters were quantified. Questions were asked about primary and secondary school curricula, and these questions were taken very seriously by local authorities. They had to make their response by July 1978. I hold in my hands a thick document which was the response from the Essex local authority, of which at that time I was chairman. These answers referred to basic literacy and numeracy; and the need for children to retain their core curriculum in such subjects as English, maths, religious education and science throughout their compulsory school life.
So far as Essex were concerned, we regarded the teaching of maths as an essential part of the curriculum until the age of 16. Whether it is an essential part of the education of a gentleman, I am not sure. We thought all secondary schools should offer at least one modern language to children entering them; and at that time, 90 per cent. of our children were taking at least one science option. I have checked, and those
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statements are still true today. There were many other statements, but I shall not go into those in detail as late as this in the evening.
These responses led to the publication in January 1980 by the right honourable Mark Carlisle, who was then Secretary of State for Education and Science, of a framework for the school curriculum. This emphasised the importance of a common core of subjects to be followed by all pupils according to their ability: English, maths, science, a modern language, religious and physical education, and preparation for adult and working life. That includes, of course, many other subjects—history, geography, the arts, craft design and technology, not forgetting careers guidance.
Over the last few years the school curriculum has developed further in this direction. Both the Department of Education and Science and local education authorities have made their contribution to this development. Nationally, money has been injected into the schools in various schemes to encourage children's familiarity with computers in all stages of education—a vital development if young people are to press ahead with applied technology in industry in the 21st century. There is a programme to develop more effective and practical education for the least able 40 per cent. of our children who take few public exams. There is the MSC and the LEAs' pilot scheme for full-time technical, vocational and general education for the 14–18-year-olds; and, of course, there is £1 billion a year for three years for the youth training scheme, which will guarantee to all employed and unemployed 16-year-old school-leavers and some unemployed 17-year-olds a year's training, which will do a great deal to ensure that young people are better prepared and more skilled, so as to help them get jobs.
Locally, education authorities have also pursued the same aims in different ways, which I hope will warm the heart of the noble Lord, Lord Pennock, who referred to this in his excellent maiden speech. In Essex, we have been encouraging schools to teach computer skills for many years. We set up an education in industry committee to bring teachers, councillors, employers and trade unionists together regularly to find much more common ground in educational terms and to help young people to get jobs on leaving school. We have invited the Industrial Society into our schools to ensure that young people in their last years at school discuss the real problems found in working life and start to seek solutions in a practical way.
Through the Understanding British Industry Scheme, and in many ways, schools and industry have been brought closer together. There are teachers seconded into industry; industrialists working with teachers in our schools; and close relationships with the schools and with science and educational organisations regionally so that project competitions are held in our schools to encourage young people to grapple with simple problems and with designing and producing practical schemes, and sometimes to consider marketing them. I was interested to see that in The Times money programme unit trust competition a schoolboy of 17 came first in the under-18 section, with three choices that were better overall than those of any other winning entrant, including the professionals.

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As there always have been, there are problems in the educational service which present a challenge to local education authorities in coping with them. Resources are short and priorities have to be set, as always in a real world. As Her Majesty's Inspectorate recognise, the effectiveness with which resources are used is of vital importance. The numbers in our schools are falling, and we have to rationalise provision to see that the curriculum continues to be sufficient to provide a good broad education, to be practical and to give children a sound basis for their future lives. However, I believe that the new attitudes and interests in our schools will do just that for our young people, and will prepare them well to help the economic recovery of our country.
6..57 p.m.
Lord Irving of Dartford: My Lords, I hope your Lordships will forgive me if I deal with only one subject and indeed one institution tonight. It is a matter which concerns many of us and has an effect in respect of something about which the noble Baroness the Leader of the House talked to us this afternoon—the quality of teaching and the opportunity for training, in a particular establishment.
Just over 100 years ago, in 1881, a most remarkable Swedish woman came to London. She was called Martina Bergman, and she was only 32. She was asked by the London Schools Board to introduce to their classes the Swedish system of exercises for girls; and by 1888 she had taught 1,312 teachers. In 1885 she opened the Hampstead Gymnasium, a private ladies' college—the only place outside Stockholm to have theory and practice courses in physical education—with the object of teaching gymnastics and swimming in girls' schools, the conduct of outdoor games and the spreading of knowledge of physiology and hygiene during a two-year course. I do not think I need to tell your Lordships how extraordinary it was that this should even have been put forward in 1885, and certainly the curriculum was very advanced indeed. It included anatomy, animal physiology, chemistry, physics, hygiene, theory of movement, gymnastics, swimming and outdoor games. I can imagine many Victorian fathers holding up their hands in horror.
In 1886 she married Dr. Per Osterberg and became better known to us as Madame Osterberg. In 1887 she gave evidence to the Cross Committee on the means of improving physical education in girls' schools, in which she stressed the value of Swedish exercises and advised their use in training colleges to train more gymnastic teachers. She was subsequently instrumental in introducing women's gymnastics in other women's training colleges.
In 1895 she bought Kingsfield at Dartford and transferred her college there. By 1895 there were 25 students at Dartford and the local schools were used for teaching practice. She pioneered games for girls and first introduced basketball into this country following a visit to America. It is well established, as everybody knows, in girls' schools today as netball. She also introduced lacrosse into the United Kingdom from Canada, and this again helped to form the basis of training in girls' schools today.
More remarkably, she also ran a local clinic in
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Dartford for medical gymnastics and massage given by her students under medical supervision. I know of many children who benefited from this work, including one of my own. Again the curriculum was very wide indeed. Most students went on to work in secondary schools and others pioneered gymnastics and physical education in factories, prisons and working girls' clubs. Even more remarkably, the British Army and Navy exercises—notably the British Army 1908 Manual of Physical Training—were based on her Swedish exercises as developed by the London Schools Board. By 1913 her system was being taught in all principal training colleges and girls' schools in England and Scotland; and her students opened colleges and clinics worldwide.
On 29th July 1915 Madame Osterberg died, leaving the college to the nation under trust. For nearly 50 years it was managed by a board of governors appointed directly by the Minister of Education of the time. It was the only college in the country to be administered in this way. In 1920 the college course was extended to three years and in 1944 it changed its name from the Bergman Osterberg College of Physical Education to the Dartford College of Physical Education. In 1948 it became a constituent part of the University of London Institute of Education and student numbers had arisen to about 120. In 1953 college diplomas were replaced by teachers' certificates from the Institute of Education. In 1961 it ceased to be a voluntary body and a trust was set up, and later transferred to the LCC. Under Robbins, of course, it became a college of education in 1963. In 1968 a primary education course and a fourth-year University of London B.Ed. course was introduced. Men were allowed to take part with women in the primary course. At its peak, the college had 630 combined physical education and primary students and in 1976 an amalgamation took place with the Thames Polytechnic.
My Lords, that was a remarkable achievement and Madame Osterberg was a remarkable woman. She developed a centre of excellence from which for decades countless women qualified in physical education have gone far and wide, all deeply concious that they shared a remarkable tradition and that they had come from a very special institution.
What a shattering blow it was to hear last summer, without prior warning, that such training as they have benefited from was to stop entirely at Dartford. It is almost unbelievable that this Government, who have spoken so much about preserving centres of excellence, should be crudely extinguishing one with an unrivalled history of achievement at Dartford and which is still inspiring its graduates by its fine traditions. The successor to the college started by that remarkable woman, Martina Bergman—a person to whom women everywhere owe so much—is to go. The official reason is that in May, 1982, as I think we have heard today, the Advisory Committee on the Supply and Education of Teachers submitted advice on the initial teacher training system for England and Wales, and that the committee's projection pointed to a considerable reduction in the overall need for newly trained teachers. We know that the target of the cuts was 25 per cent. To meet this, the Secretary of State concluded that planned annual admissions to initial teacher training courses should be reduced.

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But what the Bergman-Osterberg Union, which is an association of its present and past teachers, and I want to know is: Why close the premier pioneering college in the country for the training of women specialist teachers of physical education, which has 100 years of experience in the training of teachers and which has maintained and developed a national reputation in women's physical education and, more recently, in primary education? The union feels most strongly that the time chosen for the announcement, which was the middle of last summer, was far too short to allow it to consult all its friends on the representations that had to be made. It also feels that the polytechnic's new B.Ed.(Hons.) degree satisfies all the criteria established at the DES conference in Leeds in April, 1982. Dartford enjoys the advantage of first-class indoor and outdoor physical education facilities on site, which will enable it—and this is important—without further expenditure, to meet the projected needs of secondary schools into the 1990s.
In more recent years, the polytechnic has developed as a centre of excellence in primary education. Its B.Ed. degree/honours course in primary education was one of the very first to be granted indefinite approval by the CNAA. It is also a professionally orientated course, which is especially designed to meet the present and future needs of primary school teachers. A particular feature of the course is the preparation of the student for work in inner city schools—and what could be more relevant?—and it has been given the full support of both Her Majesty's Inspectorate and the ILEA Inspectorate. In 1982, all the students who had decided not to continue with study leading to an honours degree obtained a teaching post, many with the ILEA. It is interesting to read on page 2 of the DES Bulletin of Statistics, November, 1982, under the heading "Employment of new teachers," that:
"in relation to numbers being trained physical education does not appear to have had particularly high unemployment".
This is especially true at Dartford. What more powerful testimony could one have for the continuation of an institution of this excellence?
I hope that I might have the support of all of your Lordships, but particularly of the noble Baronesses, who will, undoubtedly, appreciate very much the excellence of the work done at Dartford and of the contribution made by Martina Bergman—more, perhaps, than the rest of us—and I hope to secure their help in appealing to the Prime Minister, who, of course, knows Dartford very well, because she contested the seat in the 1950s, not to allow the closure of such an excellent institution as the college at Dartford.
7.3 p.m.
Lord Stewart of Fulham: My Lords, we have all listened to that speech with the greatest interest. I most earnestly hope that, unless the Government's mind is already irrevocably made up, they will listen to the plea which was so eloquently put forward, because it appears from what has been said that they are in danger, for the sake of a minor economy, of destroying something of real value. Indeed, I am reminded—and this has occurred to me several times in thinking of the
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Government's policy towards education—of the phrase which somebody used, I forget who, that "He knows the price of everything and the value of nothing". There have been several occasions when the Government seem to have acted in that spirit, and this will certainly be another, if they persist in destroying this college.
I want to make a few general remarks about education and will later refer to one particular topic. Like the rest of your Lordships, I am much indebted to my noble friend Lord Glenamara for having initiated the debate and for giving us this opportunity. The case he made was bombarded, as we knew it would be, with statistics from the other side. But I have noticed in the course of the debate that it has not been possible to destroy the main case made by my noble friend about the unemployment among teachers, the neglect of buildings, the sometimes grotesque shortage of books and equipment in schools and the dangerous and increasing reliance on the generosity of parents to do things which it is the public concern to do. That last is particularly dangerous, because it can mean an increasing tilt at the education system, to the benefit of those whose parents are already better off, and that certainly will not help us out of our present difficulties.
There has been some discussion about the educational philosophy of the Tory Party. The present Prime Minister, when she held the office of Secretary of State for Education, once said that she conceived it to be her duty to look after remarkable people. Of course, one might take the view, and I think I would myself, that a Secretary of State for Education ought to regard all children as remarkable. After all, that is how their parents regard them. But I am not sure that that is what was in the Prime Minister's mind. The doctrine that, if you look after the remarkable, the rest will manage somehow can so easily become looking after the fortunate.
There have been several instances of the Government's policy which have shown that they have been moving in that direction. The pressure on the nation's own schools, partly through the Department of Education and Science itself and partly through the working of local government finance and the Department of the Environment, has meant that it has been increasingly difficult for ordinary children to get a good education, whereas other aspects of Government policy, such as reductions in taxation and assisted places, have made it easier for those who are better off to get a good education.
That, I am afraid, provides us with the answer to the question: What is the educational philosophy of the Tory Party? I must not proceed along those lines, or I shall distress the noble Lord, Lord Beloff, even in his absence, because he laid down the doctrine that this is not a matter for party politics, which means that it is perfectly all right to discuss education provided that you do not say anything which is critical of the Tory Government. We know of old that phrase about not bringing in party politics.
If I understood the right reverend Prelate the Bishop of Chichester aright, he was a little critical of the Motion for the combination of references to educational opportunity and to the recovery from unemployment. I think he was giving us a warning against taking too utilitarian a view of education. I

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have thought a good deal about the question: what ought education to be for? I fully accept the definition given some time ago, and read out by the noble Baroness, Lady Platt, of the purposes of education. To put it more briefly, I would say that what you want to do for the pupil in the educational process is to enable him to develop all the faculties that he has on every side of his personality. One side of his personality is that he is going to be a worker, unless he is extremely fortunate, although, in the end, it is unfortunate not to be under a necessity to work like the rest of us. He has to be a worker, he has to be a citizen and he has a right to be himself, and the purpose of education is to develop him to do all those things.
We cannot really cut education up into different parts and say, "This is for the citizen, this is for the worker", and so on. A boy at school who learns how to use his own language well and effectively is doing something that will make him more efficient as a worker, more efficient as a citizen and more capable of enjoying life and using his leisure well. This is so with almost every subject we learn, so we ought not to distress ourselves too much with the question whether education ought to be vocational. In some sense it cannot help being vocational. It would be very unreal if it were not.
Two extreme attitudes have been expressed about the vocational content of education. One was by Mr. Wackford Squeers who said, "W-i-n, Win; d-e-r, der: Winder. Boy, go and clean them winders". Now there is vocational education in its simplest form. I am awaiting the day when the present Secretary of State for Education recognises the depth of Mr. Squeers' philosophy and raises him to the proper status which he ought to enjoy in the Tory pantheon. The other extreme is that of the extremely learned man who, proposing a toast at an academic dinner, raised his glass and said, "To the higher mathematics: may they never be of any use to anyone". I hope we also reject that view.
In a recent article in The Times somebody argued that if a subject can be shown not to be relevant at all to everyday life that is a positive reason for teaching it. We must reject those views and, as I say, concentrate on the fact that the human being is, and is going to be, worker, citizen and individual, and that his education ought to equip him to be a more fully developed personality in all those fields. But at the present time, with the present level of unemployment, we are bound to give special consideration to the question: is what we are proposing about education going to help us to get out of our present economic difficulties?
Whenever we propose that more money should be spent on education we are told that it cannot be afforded because of the country's economic difficulties. It is therefore proper to consider whether or not a little more expenditure on education in certain directions might help us to get out of our difficulties. I believe that it would. It is still, oddly enough, in view of the amount that has been thought and written about it, something of a mystery why these cycles of boom and depression occur in the world. But we do know, at any rate, that we want our young people, whenever the more favourable wind begins to blow, to be able to take advantage of it. For that they need a good general education. That is why the dismantling of the
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education system which my noble friend Lord Glenamara described in his speech is so damaging. More and more people will grow up without the basics of education and very ill-equipped to take advantage of any turn in the economic fortunes of mankind.
It must also mean, reverting to the question of vocational education, that we give more attention than we have to seeing that young people are equipped for the increasingly technical world in which they live. I am not proposing that we should turn the schoolboy into a plumber, but I believe that it is good that more and more young people will be acquainted with what a computer is and what can be done with it. We want people to leave the education process with that general alertness of mind and dexterity of hand which will enable them to earn their living in whatever the kaleidoscope of modern industry throws up. It is all the more important not to make the training too narrowly vocational, because modern invention is always destroying some jobs and creating others. That is why education should be, in the old and strict sense of the word, polytechnic: equipping people for a variety of skills. That remark is made in one of the writings of Karl Marx. I hope that the present Government will not necessarily ignore it for that reason. Above all, education must provide the proper superstructure, the basic skills, the knowledge of one's language, the knowledge of the use of numbers and so on. It is for that reason that I return again to the indictment made by my noble friend when opening the debate, of the neglect, for reasons of penny-pinching economy, of certain essentials in our education system so that, with the best will in the world, teachers cannot turn out pupils as well educated, even in the most elementary sense, as they ought to be.
Finally, I want to refer to one particular subject: that of the special field of adult education. I am speaking of those who in middle age decide to pursue education. They can do this in a variety of ways: in colleges run by the local authority, in evening institutes, in the Open University. They may do it for vocational reasons, in the hope that it will increase their earning power. They may do it because they are unemployed and do not want, for that reason, to feel completely aimless and useless. It is valuable then in keeping their self-respect and dignity alive.
Another feature of adult education which we notice particularly in certain parts of the country is its usefulness in helping to promote good race relations. The evening institute can be a place where people of different races meet, where the immigrant obtains a more complete mastery of the language of the country in which he is living and where mutual understanding is promoted. That is why this part of the education system—although, if you like, a rather humble and limited part—is of considerable value at the present time. I have been looking at a study of education of this type in a particular area of the country which is not untypical. It shows disquietingly that in the last few years the number of people pursuing education classes of this kind has gone down and that the Government have produced this result partly by striking at the resources of the local authorities or colleges which provide it and partly by insisting on the raising of fees beyond the means of a number of those

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who pursue adult education courses. The result has been that those who have dropped out are the most vulnerable—the lowest paid and, very often, the housewives. I stress this point because it seems that the result which the Government are producing is not merely to reduce educational provision in general but to do it in a way which is particularly damaging to those who are most vulnerable, and to do it without regard for the real value of adult education in making our society more harmonious and more civilised. It seems to me to be another example of what I said at the beginning: a power to see the price of everything and the value of nothing.
7.18 p.m.
Baroness David: My Lords, I have certain misgivings about taking part in these rather long debates when there is to be no vote at the end to keep Members here and to keep up the interest. Today, however, we have had an extremely lively and interesting debate, with many different contributions. I hope that the Government will take note of our debate. It has been particularly satisfactory to have had the maiden speech of the noble Lord, Lord Pennock, with which I find myself in very substantial agreement. In almost every area there is a need for change in our educational system. The Government's policies are not working out as they would really wish them to do.
I wish to say a little about higher education. We have heard about the reduced opportunities for young people in the higher education sector, the university sector, from my noble friend Lord Glenamara. According to the University Grants Committee figures which I have, there will be some 22,900 fewer places in the universities by 1984–85, so I do not know why the noble Baroness, Lady Young, did not answer my noble friend Lord Glenamara. It seems to me that in 1984–85, when we know that the age group concerned will be at its largest, there will most certainly not be the number of places that there have been in the past.
I also want to say a word about overseas students. This subject has been mentioned by the noble Baronesses, Lady Seear and Lady Faithfull, and by the noble Lord, Lord Beloff. We cannot stress often enough how important it is to have overseas students here. The Overseas Students Trust, which the noble Lord, Lord Beloff, mentioned, wants £15 million. That is a comparatively small sum, and granting it would make such a good impression overseas. We already have a reduction of 17 per cent. in the number of overseas students, and we should try to improve on that figure and encourage more overseas students, both for the sake of goodwill and for trade and business contracts. For example, Malaysia has already taken positive action to express her resentment at our having fewer students.
I admit and agree that change was perhaps necessary in universities, and that a good look at what was happening was essential. The mistake the Government have made is in the speed with which they have set about doing this. They ordered the UGC, as their agent, to proceed at a very fast rate. I sometimes wonder why the UGC agreed to act in this way and did not resign en masse. The result of what the Govern-
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ment tried to put in train is that 11,200 staff, both academic and non-academic, are expected to leave over a three-year period. The losses in engineering technology, mathematics and computer science are much higher than the average among the staff, no doubt because the teachers of these subjects find it very much easier to gain other employment. A golden handshake on top of the chance of a new well-paid job must be tempting.
The result is surely not what the Government wanted when they set about chopping the university system, and it is surely not likely to help the training of those people needed to bring about the economic recovery of this country. The noble Lord, Lord Pennock, mentioned the decrease in entries to science and engineering courses, and that there was a decrease in entries to business management and accountancy courses, which are the particular courses the UGC said it was trying to protect.
Some universities have shed posts faster than they have reduced numbers, since the student/staff ratio has deteriorated sharply. Some universities have even got rid of staff so fast that they have overshot their targets and will have to start recruiting again, which is really an Alice in Wonderland situation. Figures of staff losses do not in themselves reveal the damage to a department when a particularly valuable member of staff leaves, or what courses may have had to be withdrawn, with the resulting impoverishment of the curriculum. The UGC has recognised that some universities will have to make temporary arrangements for teaching students whose courses are being phased out, and they are prepared to reimburse up to 75 per cent. of the salary costs of part-time appointments for this purpose. These may even be temporary re-engagements of redundant staff, and this really does seem to be a mad world.
While this painful exercise has been going on in the university sector, the maintained sector has had to accommodate many more students than usual to make up for those turned away from universities. The number of home students in these colleges has risen by 13 per cent. this year. But now, the national advisory body having instructed all 350 polytechnics and colleges that provide AFE courses to produce plans for reducing their expenditure by 10 per cent., these plans to be put into operation by September 1983, it looks as though that sector will reduce in numbers by possibly as much as 10 to 14 per cent. in a very much smaller space of time than was given to universities.
The noble Baroness said that the age participation rate was 13·2 per cent. and might even stay that way this year. Perhaps it may when the polytechnics and colleges can take in some more students; but according to the figure I have seen the age participation rate is expected to be 11·2 per cent. in 1984–85. The noble Baroness did not say that, but it is in the figures.
Lord Vaizey: My Lords, I wonder if the noble Baroness, Lady David, could give the source of that projection of 11·2 per cent.? I myself have never seen it, and I am sure it is not a DES figure.
Baroness David: My Lords, it cannot have been from the UGC. I have the source, but I cannot

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remember it at the moment. I will write to the noble Lord and tell him. It is not a figure out of my head.
In all this, in the higher education sphere, the Government have been directly responsible for eroding educational opportunities. In addition, they have been indirectly responsible for cuts forced on local authorities. Reduced grants to local authorities have already meant the removal of numerous courses for non-advanced further education and a reduction of staff there. The fall in the amount available for discretionary awards has also had an effect. I have some figures for my own local authority, which show that the percentage of successful applicants for awards in 1977–78 was 82 per cent. but that for 1982–83 it is only 65 per cent. Changes in council policy meant that awards were not given to those who had been established in careers, whether or not they had previously attended a course of further education. Nor were they granted to those who had begun courses previously but who had not completed them. That meant no second chance and no re-training.
With a reduced number of staff and courses in non-advanced further education, one wonders how the educational input—13 weeks for those on a youth training scheme—will be provided when the very colleges which will be asked to mount the courses have been forced to get rid of the very people best suited to carry out such training. There seems to be no logic to the Government's position. While the opportunities in higher and further education are being eroded, so are the opportunities for apprenticeships. Recognised apprenticeships have fallen to 60 per cent. of those in 1979–80, while the engineering apprenticeships this year are likely to be at less than half the 1979–80 level. It remains to be seen whether the Government are really going to tackle this problem by building on the youth training scheme and continuing the initial training to provide more skills at the next level, and so help us to catch up with our European partners, who are so much better at this than we are.
In the meantime, the abolition of the 16 industrial training boards makes me suspect that it is not the training and acquisition of skills by young people that the Government are into, but the cosmetic effects on the dole queues and the massaging of the unemployment figures.
My noble friend Lord Glenamara spoke about schools and the HMI report. The right reverend Prelate mentioned, in particular, modern languages, which from the HMI report we also heard were going to suffer, and from the report of the NASUWT, which appeared this week. There are also fears for craft, design and technology, and for keeping the three sciences in the curriculum as well. I want to mention the cutting of the modern language assistants. Their number is at an all-time low this year at 1,897—less than half those recorded in 1974–75. It seems to me very sad that a scheme started as long ago as 1904 by France and Britain should be mangled in this way 80 years later, when, as a trading nation dependent on our exports, we need good linguists so much.
I myself do not believe that language labs and cassettes can fully take the place of a face-to-face conversation with a native of the country. But, of course, to get rid of assistants is an easy way of
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economising, and stimulates minimum reaction from parents and ratepayers compared with other forms of economy, such as cutting down on books and equipment. The provision of modern language assistants needs to be organised on a United Kingdom basis as a matter of national policy.
The subject of remedial teachers has already been dealt with, but I believe it is very important that children who need remedial treatment should receive it. We may be building a lot of trouble for ourselves and for our social services in the future if we do not provide that necessary teaching. We hear all too often, also, of swimming and music vanishing from school activities. These are not so irrelevant to the nation's economic health as the Government appear to think. There was an excellent article, "Discord Spread by Cash Dirge" in yesterday's issue of the Guardian, which made a very strong case for music being an integral part of the school curriculum for every child, and not a luxury. Arts and sports are vital to the development of the whole child and a nation will achieve little unless its children are encouraged to become integrated, interested and creative citizens.
I turn to books. My noble friend spoke about what the HMI had said in their report about the lack of books in schools. I should like to say a word about books in libraries in universities, polytechnics and colleges. The report to the Minister for the Arts on library and information matters during 1981 said:
"Reduction to a dangerously low level of funds for acquisition and running expenses is leading to the erosion of many well-established libraries in both the academic and the public library sectors."
It is claimed that cuts of 50 per cent. in spending have reduced provision to dangerously low levels. What effect will this have on the education of our students, and, from the country's point of view, what effect will a depressed home market in book buying have on the export market? Publishing is a major British exporting industry and depends on a buoyant home market; when that is eroded its export business is threatened. In 1980 42 per cent. of hard-backed books produced in this country were exported, as were 38 per cent. of scientific paperbacks. Can this be taken into account by the Department of Education and the Department of Industry?
My noble friend Lord Stewart has spoken of adult education, for which I have a special concern, and nobody can pretend that there has been no erosion of opportunities here. Government funds for it were cut by 25 per cent. in the year ending April 1981, and by a further 33 per cent. in the year ending April 1982. Those statistics come from the public expenditure figures. University cuts have led to reductions in their extra-mural work. Local authority cuts have led to reductions in both vocational and non-vocational classes and courses.
What I hope we shall have from the Government is at last a statement on their intentions after their 15-month digestion of the responses to the document, The Legal Basis of Further Education, which appeared in June 1981. I have asked repeatedly for this and was promised an early statement back in October by Lord Elton. All those devoted and enthusiastic people who work in the field of adult education want some sign that Ministers have some understanding of their work and that they care. If the Ministers need help there is

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a proposed amendment to Section 41 of the 1944 Act on page 41 of the Labour Party's discussion document, Post 18: Expansion with Change.
I was very surprised by something said by the noble Lord, Lord Perry. I see that he has gone, but I shall express my surprise and amazement at what he said. He said that neither of the main parties concern themselves with continuing education. My noble friend Lord Glenamara, when he was Secretary of State for Education, set up the Open University, and Lord Perry was appointed then as the first vice-chancellor. There must be something very seriously wrong with his memory if he could say what he said today. I think it was really quite shocking. Also Lord Glenamara fought for the funds for the Open University against Roy Jenkins, who I suppose was then Chancellor of the Exchequer, and who is the Leader of Lord Perry's party, the SDP, at the moment. So I hope that somebody in the SDP will ask him to read Hansard tomorrow and put him right about this. I should also like to say that the Post 18 document, the Labour Party discussion document I mentioned, is almost entirely about continuing education, giving opportunities and access to those over 18.
I must say a word about the 14 to 18 suggestions. I am rather halfway between what the noble Baroness, Lady Seear, said about vocational education for work and what my noble friend Lord Glenamara said. I think there is room for some vocational education, certainly for learning about work when in school, but I think if that were the only thing they were going to do that would be disastrous. We need a general education to go with it, and I think those are some of the anxieties about the 14 to 18 proposals. Of course, the noble Baroness, Lady Young, spoke of this as one of the new ventures that her Government have embarked on. I look on it really as a sort of gimmick. We all know it was the brainchild of Mr. David Young. It was suddenly conceived and delivered before anyone at the DES knew about it, except just, I think, the Secretary of State. The Permanent Secretary was in Australia, and I understand that top officials at the department were in complete ignorance, as certainly were the local authority associations, who were justifiably furious.
The LEAs have not surprisingly been bribed by the £25 million on offer. Ten projects, involving in all 10,000 children, are to be started, we hear, in September 1983. Sixty-three LEAs have put in bids, and you cannot wonder at it when you consider the money involved. Now I am in some confusion about the money which is proposed to be spent on this. In an article in the Educational Supplement, David Young said £7 million this year or the following academic year; £25 million was mentioned in another Guardian article; the noble Baroness today said £9 million, probably £4.5 million this year. When I was talking to our chief education officer in Cambridgeshire last week and asked him about it, he said it works out at £3,000 per child. I should like to have these figures confirmed, or otherwise, when the noble Earl replies. The average cost of a secondary school pupil is £900, and at 16-plus £1,000, so there is a very sharp difference between that and what the MSC scheme is apparently proposing.
I also want to ask the Minister this: is that £3,000 additional to what the authority is already getting for
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each pupil through the rate support grant? I would ask the Minister when the MSC-DES are going to respond to the inquiries made by education officers in the local authorities—because I understand they have been writing in asking numbers of questions about what details are required in their submissions and applications, but they get no reply. Now it is over two months since the scheme was first mooted. Also, are there enough staff available for teaching the technical subjects? From the noble Baroness's reply to an oral Question I asked on 2nd December, it would seem that the qualifications to be studied for under the scheme are City and Guilds, Business and Technical Education Council, now BTech., and RSA—just exactly what many young people are now preparing for in our FE colleges, and indeed in some schools. What will be different from what is happening now, except the source of funding?
Can we have some guarantee from the Minister that the comprehensive principle is not to be breached? There is a direct implication that a secondary modern system could be reintroduced at 14-plus under the guise of vocational education, and that there could be a division between academic study with its minority provision and higher status, and non-academic study with its traditionally, and wrongly, inferior status and amenities. There is also the danger that the education of the so-called non-academic grouping will be taken out of the hands of professional educators and of democratically accountable LEAs. Can we please have some statement from the Minister when he replies, to allay these fears? Are students of all abilities to be among those participating? May we also hear what is intended to be the fate or the future of the certificate for the pre-vocational education 17-plus exam? It appeared to be getting approval and the go-ahead from the Secretary of State. Is it to be run in harness with the new technical and vocational initiative, or not?
Since this Government took office their policy has been to reduce public expenditure, and this policy has been pursued dogmatically, and I would say fanatically. I wrote down some of the first phrases the noble Baroness used when she started to speak. They were, "Good management of scarce resources", "Do not waste", and "The nation cannot afford". Instructions go out to cut back and local authorities, threatened with penalties from the Department of the Environment, have little choice but to conform, and services suffer. The implications of the cut-backs are not realised at the time the instructions go out, and nowhere is this clearer than in the education service. The numbers of students, staff, teachers and training are reduced. The reductions are to be made within a stated timescale.
I remember the debates we had in the House in the summer of 1981 when the then Minister of State, the noble Baroness, Lady Young, was challenged by many noble Lords working in universities to say what would be the cost of the redundancies that were to be sought as a result of the pruning of the university grant. Clearly there had been no costing. The result was that later £100 million had to be offered to pay the cost. Now there is the "new blood" money. The speed with which the number of staff had to be cut meant that there could be virtually no new appointments for a considerable time and no money for new

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developments. So in December last Sir Keith announced £100 million was to be made available over the next three years in order to make some new development and new appointments possible so that some vitality could be maintained in what might otherwise have become an aging and possibly ossifying academic profession. There is also to be another £30 million to stimulate the appointment of young academics in the natural sciences. Also, in December there was the £2 million extra funding for information technology for the polytechnics and the colleges. Then there is the £25 million for the new technical and vocational initiative. Money is to go into in-service training and training heads in management. Money is being produced for the new technology in the shape of computers in schools. Again, that is a gimmick. One computer for each school is totally inadequate. It is not much use having a computer if the capitation allowance does not permit the purchase of software and there are not enough qualified staff to do the teaching.
There is a mixture of totally inadequate foresight and planning and a distrust that the local authorities will carry out what the Government wishes. The Government's policy appears to lack all consistency. What can be more confusing for those in charge, whether in the university or the local authority sector, than to be forced to go into an elaborate, time-consuming, painful exercise, planning curtailment of the opportunities they are offering and later, when the powers-that-be realise the extent of the harm they are doing, to be thrown some crumbs and told to rearrange and plan again? How can a service survive and prosper when improvisation appears to be all that Ministers can offer? It is Government by whim.
I am sad for the education service. It was a proud and splendid service. Hopes were very high in the 1950s and 1960s when the 1944 Act was being made to work and when the Robbins Report was published, and different hopes were raised with the Russell Report in 1973. If one looks back to those in charge of education—Butler, Tomlinson, Crosland—they created excitement and promise. They believed in education for the whole nation. Even Mrs. Thatcher produced Framework for Expansion.
Now, since 1979, Secretaries of State have presided over the disintegration and demoralisation of the service. There is no doubt that morale is very low indeed. English education is in in a mess. There is no confidence in those in charge and there is no leadership. There was a very good analysis of the situation in The Times Educational Supplement on 31st December. I shall quote two paragraphs because they echo exactly what I have been saying:
"A great many politicians, from the Prime Minister downwards, have convinced themselves that the education system is incorrigible—doomed to perpetuate an anti-industrial, anti-commercial culture, for ever looking inwards at its own unreal, private world.
"No doubt Sir Keith really believes he can stand outside it, a baronet in shining armour, sent by an Iron Lady to bring it to heel. The reality is otherwise. Sir Keith is clobbered as the DES is clobbered, by this myth that the educational establishment has to be written off. Hence the progressive subordination of the Education Department to the Environment Department, while the initiative for educational innovation passes from the DES to the Department of Industry and the Manpower Services Commission …
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"At some point he has to step out of his determined detachment and give up the arrogant notion that only those who are uncontaminted with any real experience of the system can see the wood for the trees. It means finding advisers who are a bit closer to the chalk face than the learned Lord Beloff and the extremely clever but inexperienced Mr. Oliver Letwin. Above all it means throwing in his lot with the education service—fighting its corner, not just in discreet tussels with the Chief Secretary to the Treasury, but also in the infighting with other empire-building departments and, not least, in public debate".
I do not know whether that is why we had the jibe at the DES from the noble Lord, Lord Beloff, earlier.
If there is not a healthy and happy education service producing a healthy and happy next generation of workers, innovators and creators who are rounded, whole people and not just technologists, it is a poor outlook for the economic and spiritual recovery of this country. We have thrived in the past because we were inventive and original and prepared to tackle new things. Our arts and our sports have both fostered our vitality as a nation and been a symptom of it. All these faculties need to be encouraged in all our young people if the nation is to prosper, and the finance supplied to make that possible. At the moment £11 billion is going every year in unemployment benefit. It is totally unproductive. If only some part of that could be put back into the education service, it would do an enormous amount for our young people, and indeed for our older people, too. What is the Government's philosophy? The right reverend Prelate asked that. I remind noble Lords of what my noble friend Lord Glenamara said when he opened the debate: if young people are neglected now, one can never make amends.
7.48 p.m.
The Earl of Swinton: My Lords, we have had a long, wide-ranging, and interesting debate, as I am sure your Lordships' House will agree. It is fair to say that perhaps we have not always agreed with everything that has been said, but I pay tribute to the noble Lord, Lord Glenamara, for raising the subject of the debate.
In the course of it a number of criticisms have been levelled at the Government. Where these have been informed by genuine concern for the condition and future of particular features of the education system or for the difficulties faced by particular institutions, we may respect them, even where we disagree. I hope that I shall be able to offer some reassurances to noble Lords who have raised such points.
I now turn to some of the specific points raised. The noble Lord, Lord Glenamara, made a lengthy point about the supply of books in schools. We have sought, both in last year's and in this year's rate support grant settlement, to signal to authorities that we wish to see this trend reversed. As I believe the noble Lord himself said, it is for the local authorities to decide what they do with the rate support grant they receive; we can only suggest that they use it on books.
The noble Baroness, Lady Seear—I am glad to see that she has returned—made a point about Salford, Aston and Bradford being particularly hard hit. The noble Baroness and one or two others referred to them as technological universities. That is, perhaps, somewhat misleading, because the majority of universities consider themselves worthily involved in teaching and research in these areas. The universities

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which were asked to make the greatest savings—and not all the former colleges of advanced technology are in this category—are by no means exclusively devoted to engineering. Much of the reduction in student numbers will fall on arts based subjects.
The noble Baroness and a number of noble Lords and noble Baronesses referred to overseas students. However much noble Lords and noble Baronesses may regret the need to ask overseas students to pay full-cost fees—I do not wish to reiterate the arguments for and against such fees tonight—the fact is that on provisional figures there are still nearly 50,000 students from outside the United Kingdom in our higher education establishments, including about 30,000 in our universities.
The work of our universities and the lives of our students therefore continue to benefit from the presence of large numbers of students from outside the United Kingdom and I have some news—I do not wish to raise any false hopes—that proposals made in a study by the Overseas Students' Trust on future policies for overseas students are at an advanced stage of consideration by the Government. So there may be hope. I would not say more than that.
The right reverend Prelate the Bishop of Chichester made a point about universities. I think he said, if I quote him correctly, that no one knows where the axe will fall next. He mentioned particularly the threat to religious studies. I should say that the universities are currently adjusting to the levels for funding indicated for 1983–84. The UGC has given general and specific guidance to universities to assist with this process. The additional money being made available to universities to meet unavoidable increased costs will help them avoid having to make further unplanned savings. The UGC has indicated that it will take action if provision for particular subjects is threatened nationally by the aggregate of decisions being taken by individual institutions.
A number of noble Lords questioned the Conservative Party's philosophy on education. I thought I might quote something here which is from the speech made by my noble friend the Secretary of State at the North of England conference held in Liverpool on 7th January:
"English education is properly ambitious. We aim to educate every child to his or her full potential and within this to equip him or her not only with basic literacy, numeracy and communication skills, but also with understanding and practical competence over a wide area, as well as self-reliance and a sense of the moral values of our society. The aim is to encourage the personal development of each child and to prepare each child for life and for work".
I do not think that that is at all a bad educational philosophy. I am aware that perhaps my noble friend is not the most popular person, as seen from the Benches opposite, but I do not think there are many of us who could disagree with such philosophy for the education of children in this country.
I was delighted to hear the noble Lord, Lord Hatch, defending rural disintegration, depopulation and the closure of village schools. I was also very intrigued to find out some of the things he was doing when the moon was full, which gave me all sorts of marvellous ideas which perhaps I had better keep to myself. That is one subject that I know quite a lot about because I was the chairman of an education committee which
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had a large rural area. For many years we were faced with the problem of rural schools being closed; it is not a new one.
I always love the things that people can say when their schools are threatened. We had attempted to close one school which was three miles up a rather steep hill from the local large village or market town. We were told that if we closed this school and transferred the children to the little primary school down the road they would never get there in the winter because the road was always blocked. In fact, we in the education committee decided to close the school and the matter was taken to a full meeting of the county council where it was overthrown and the school was redeemed. Six months later the admirable lady teacher who lived in the house attached to the village school said that she wanted to retire and, frankly, she had had enough. We advertised to try to get a new teacher for this little school. We had great difficulty getting one because no one wanted to live in the schoolhouse. It was particularly isolated and was a fairly small school, anyway.
Eventually one admirable lady answered and we interviewed her. I interviewed her with various others of my colleagues, plus the vicar, who happened to be the chairman of the managers of the school. In the end she said she would take the headship on one condition—that she did not have to live in the school-house but would live in the little market town and travel up every day. I said rather brightly that I was sure that that would not be a very good idea because all through the winter the road was closed. The vicar said that he had been living there for 15 years and to his certain knowledge that road had never been closed once. Thus, one can see that it is very easy to prove anything, especially if one lives in a village community and atmosphere. On that question the village schools have probably had this for a long time as the noble Lord, Lord Hatch, rightly said. Rural depopulation has been going on for a number of years, and although falling rolls may be a novelty in some of the towns and inner city areas, they are something that the countryside has learned to deal with.
In fact, all statutory proposals are very carefully considered on their individual merits in the light of the educational and expenditure issues involved and on the views of the local people. My right honourable friend recognises the valuable part played by village schools in the life of their community and in providing for their pupils, but he has to accept that as school rolls fall it can be in the educational interests of the children concerned for some schools to be closed.
I was also delighted with the maiden speech of my noble friend Lord Pennock. I may say to Lord Pennock, "Welcome to the club". I made my maiden speech on education and look where it has got me. He has been a very brave man for doing that. I might also say to him that perhaps he does not know, though the House may, that this is also my maiden performance in winding up a debate in your Lordships' House. As we bore with you, my Lord, I hope you at least will bear with me during the ordeal which I am going through at this moment. My noble friend made a remarkably interesting and worthwhile speech and we were very glad to hear it. He spoke about technology and about change. To embark at this stage on a

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completely new education Act would be somewhat ambitious. He mentioned, in particular, the need for more science graduates and the Government fully agree with the noble Lord about the need for more emphasis on science and technology in education.
In this context perhaps I might repeat that the University Grants Committee's student number targets envisage a shift in the arts/science ratio towards the sciences by 1984–85, compared with 1979–80. The Government are continuing to encourage throughout higher education an increasing emphasis on scientific, technological and vocational subjects generally.
The noble Lord, Lord Kilmarnock, asked a number of questions on new technical and vocational education initiative and whether that drives a wedge between education and training, and finances the latter so much better than the former. A number of noble Lords were interested in this so I will give a fairly full answer to that. The resources available for five years through the MSC are intended as a boost to encourage LEAs to explore new ways of organising and managing the education of 14 to 18-year-old young people by enabling them to start vocational/technical training younger and to complete four-year courses by 18. Sixty-four LEAs have expressed their intention of bidding for inclusion in the 10 pilot schemes. The chances, therefore, of separate MSC institutions being set up, although theoretically possible, are very unlikely. The unit costs of the pilot projects cannot be assessed at this stage. No detailed costings have been submitted by LEAs. The total amount available through the MSC will also cover the MSC central team's costs, evaluations and so on. One would, however, expect the unit costs of technical/vocational education to be relatively high because of the capital equipment and consumable materials required. At the end of the five-year pilots, assuming that they are successful, those most likely to become a permanent part of the education system, financed through the LEAs, are those which are not disproportionately expensive to run.
The noble Lord also asked about the youth training scheme and the composition of the area manpower boards which are being established by the MSC to plan and promote youth training schemes in their areas. There are to be 54 of these boards and their membership is being settled after consultation with the CBI, TUC, local authorities and other interested bodies. There will be, as of right, an education service representative, normally a chief education officer, a representative of professional education interests, normally a college principal, and two or three local authority representatives, who may include educationalists. Boards may also co-opt additional members if they wish. The boards are now in operation or in the process of setting up to start work quickly.
The noble Lord went on to ask about the financing of further education or off-the-job training element of the youth opportunities scheme. Under what is known as mode A of the scheme, where employers act as sponsors, assisted by financial support from the MSC, I am glad to say that the CBI and local authority associations have recently reached agreement on the fees to be charged for the further education element in
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the scheme where this is to be provided by the fee colleges. Where training is commissioned direct by the MSC, under mode "B", the FE college contribution will be funded by the MSC at full cost. I hope that the noble lord is reassured by that information. He also mentioned financial support for 16 to 19 year-olds, and he pressed the case for specific financial support for 16 to 19 year-olds staying on in schools and FE colleges. This would take the place of child benefit which is currently paid to the parents for as long as the child remains in full-time education up to the 19th birthday.
Many argue that supplementary benefit for the unemployed and the training allowance paid to those on MSC programmes are disincentives to continue in full-time education. The fact of the matter is that there has been a marked increase in staying on at 16 in both schools and colleges since 1980–81, in spite of the supposed attraction of the Youth Opportunities Programme or supplementary benefit. This suggests that many young people are still prepared to put the attainment of qualifications above financial considerations.
The noble Lord, Lord Vaizey, referred to this increase in participation. We have always considered that an education benefit would mean a substantial increase in net expenditure. I am sure that the suggestion of the noble Lord, Lord Kilmarnock, for offsetting savings will be examined carefully, In the meantime, cases of hardship can sometimes be relieved by means of a discretionary grant from the local education authority. Practice varies from area to area, it is true, but this source of possible assistance should not be discounted.
The Government's priority in terms of support for 16-to 19-year-olds in education has been to enable LEAs to cater for the increased demand for places in schools and FE colleges to which I have referred. In 1982–83, provision for additional expenditure by LEAs of some £85 million in this area of education was made in RSG. This will be carried through into 1983–84 and beyond.
We had a very interesting and caring contribution which was typical of the noble Baroness, Lady Jeger, who asked about the 1981 Act. I think that some of the things that she said caused some looks of surprise around the Chamber. As I was also someone who was very interested in that Act when it was going through this House, again I think that I can clear the minds of some noble Lords. The 1981 Act allows the continuance of special schools, and I can assure the noble Baroness that the Government foresee a continuing role for special schools. They have decidedly not been discontinued. The commencement order for the 1981 Act was laid today and will come into force on 1st April. Regulations governing assessment of special educational needs will be laid next week and will be followed by a circular of guidance. Provision for children under two with special educational needs will be a matter for development as time goes by, but I can assure the noble Baroness that the Government are very much aware of the particular needs of young deaf children.
The noble Baroness also asked about the special education needs in ordinary schools. This is one of the areas included in the Government's new scheme for

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specific grant for the in-service training of teachers. I am sure that this will be very welcome. One-sixth of available resources—more than £1 million in a full year—will be devoted to providing LEAs with additional funds to release teachers to attend appropriate in-service training courses. The inclusion of special education needs in ordinary schools in this new scheme is evidence of the importance that the Government attach to this area of education and their determination to prepare teachers to meet it.
I should like to thank various of my noble friends sitting behind me—the noble Lords, Lord Beloff and Lord Vaizey, for what they have said, and my noble friend Lady Platt of Writtle. I should also like to congratulate her on her recent appointment as chairman—and I think she said that she is prepared to be known as "chairman" and not "chair person" or "chairwoman"—of the Equal Opportunities Commission. I am sure that we are all very glad about her appointment.
I agree with everything that the noble Lord, Lord Taylor of Blackburn, said. I am sorry to see that he has left the Chamber. He made the point about teachers going straight from school to college and back to school again without any industrial concern. I think that that is a point that was made in a debate the other day, and it also arose on a Question.
I was rather frightened when my noble friend Lady Faithfull started her speech because she began talking about money for social services. That took me straight back to my county council days and the terrible squabbles and fights that used to go on over the famous rate support grant, and how much went to education and how much went to social services. I though that she was going to start on that, and I thought, "Oh, Lord!". In fact she did not do so and I was delighted with what she had to say.
The noble Lord, Lord Irving of Dartford, mentioned Dartford College of Education. I am afraid that I have nothing but fairly gloomy news for him. I can explain the situation. The number of newly trained secondary teachers needed by schools will fall to about 4,700 a year in the years 1985–89. The present production of such teachers is more than double that number. Reductions have to be made and these must include some courses in physical education. Final decisions were announced on 8th November. These decisions will discontinue initial teacher training at the Thames Polytechnic, of which Dartford College is part. They will certainly not destroy the institution. It is inevitable when reductions of the size now necessary are being made, that some valued courses will be lost. This is the case at Thames. It is not that the course in physical education is not valued, rather that other considerations were overriding. However, I understand that there is to be an Adjournment Debate in another place on Monday.
Lord Irving of Dartford: My Lords, will the noble Earl give way? He made an interesting comment in saying that the institution will not be destroyed. I wonder whether he would enlarge on that, because so far as I am concerned it will disappear altogether in the tradition of Madame Osterberg and physical education.
The Earl of Swinton: My Lords, as I understand the situation, it will still remain part of the Thames Polytechnic and the whole Thames Polytechnic is not disappearing.
Lord Irving of Dartford: My Lords, I am referring to physical education; that is the point.
The Earl of Swinton: My Lords, I think that they will have to find something else to do with the building. We heard a very interesting speech from the noble Lord, Lord Stewart of Fulham, who particularly concentrated on adult education, although his speech ranged over a large number of subjects. The Government continue to attach importance to a viable adult and continuing education sector. It has played a valuable role in the past and will make an increasingly important contribution in the future in helping individuals to develop their own potential, whether in personal or vocational terms.
The Government's expenditure plans for the coming year—1983–84—assume that the number of students in adult education courses provided by LEAs in 1983–84 will remain at approximately the same levels as the projections for 1982–83. In general, to the extent that fees for some courses are raised, it should be possible for the subsidy for disadvantaged group, such as the unemployed and old age pensioners, to be increased. Overall, if costs are contained, then the level of provision should be maintained. In the case of bodies grant aided by the department, such as the extramural departments of universities, workers' educational association districts, the Government's expenditure plan will provide, if costs are contained, for the level of support in 1983–84 to broadly maintain the levels sustained over the past four years. Also, the survey by the National Institute of Adult Education for October to November 1981 and 1982—it is a sample survey, but usually reliable—shows that there has been only a very marginal change in the level of enrolment since 1980–81 after a marked drop of 11 per cent. between 1979–80 and 1980–81.
Finally, we heard from the noble Baroness, Lady David, who asked me a number of questions at the very end of her speech. I am sure she will understand that as regards some of them it may be a great deal better if I write to her rather than try to give her some rather inaccurate information. The noble Baroness particularly asked about the legal basis of further education. I am sure that it has not slipped her mind, any more than it has mine, that she will be asking me a Question on that subject tomorrow, and it might be better to wait for that rather than to give her any information today. The figures that she gave and which she thought were on the technical and vocational educational initiative, were in fact the figures given by my noble friend Lady Young for the Micro-Electronics Education Programme. Therefore, I think that perhaps it might be better to wait until we see it all in Hansard before I write to her. I would also like to write to her on the new technical initiative, on which she asked for quite a lot of detail; and also on her related question on the 17-plus qualifications.
I have endeavoured to answer as many questions as possible of those that have been raised this evening. As

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your Lordships know, it is my first time at this Dispatch Box, so I hope that if noble Lords and noble Baronesses think that I have not done adequately, they will forgive me. I shall read with great interest all that has been said, and will try to answer those questions which I have not covered this evening. It is no secret that the country is at present facing very severe economic difficulties, and it is also inevitable that, to some extent, these will be reflected in the education service. I think it is only right and proper that this service, in fact, must bear its share.
One can say, as I think the noble Lord, Lord Glenamara, said in introducing the debate, that school is a one-time thing, and if you cut school, you are cutting a lifetime opportunity. Perhaps you could argue this if you were dying and wanted a kidney support machine, saying that you had only one life to live and if you do not have the machine you have had it.
In fact, I do not think that in comparison the education service has suffered as enormously as have some of the others, but the Government cannot afford the luxury, so tempting to the Opposition, of seeking to solve problems by throwing money at them. Instead, they must seek to manage scarce resources so as to conserve them and free them for use where they will be most effective in promoting our economic recovery.
My noble friend the Leader of the House demonstrated in her speech that on the most essential measures—participation rates and staffing provision—standards have been maintained, and in many cases improved. She also listed a number of new developments intended to ensure that resources are available where they are most needed. The promotion of educational opportunities requires more than a willingness to spend the taxpayers' money; nor can it be the work of Government alone. It requires from local education authorities, from parents and from students and, indeed, from the public at large, the willingness to recognise where change is needed and to participate to make it effective. I most firmly believe that, in a context in which change is inescapable, the Government have set the scene for fruitful new developments in education over the coming years.
8.12 p.m.
Lord Glenamara: My Lords, we have had an extremely interesting and, I think, very useful debate. May I say how very sorry I was that I missed the speech of the noble Lord, Lord Pennock. In mitigation, perhaps I may tell him that I was entertaining to a cup of tea a friend of his and I forgot to watch the annunciator, but I shall read his speech with very great interest. I should also like to congratulate the noble Earl, Lord Swinton, on his first major speech from the Dispatch Box. I think that I can congratulate him without agreeing with what he said. It is a pleasure to have someone there who has such a wealth of experience at grass roots level.
I shall not make another speech, but I shall make three one-sentence comments. First, I want to underline the fact that the noble Baroness the Leader of the House refused to give an undertaking that there will be places for all pupils who have the right number of A-levels to get into higher education from
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September of this year. Secondly. I hesitate to cross swords with her educational economists, but the arithmetic of the noble Lord, Lord Vaizey, really was deficient when he said that when there is a pupil/teacher ratio, there are as many classes below as there are above—an equal number he said. Let me give him an example. If there were three classes of 35—that is 105 children—and one class of 15—making 120 children—taught by four teachers, there would be a pupil/teacher ratio of 30. There are three classes above it and one below, so his arithmetic was defective.
Finally, I would like to comment on the richest remark made in the whole debate. I am not referring to the comment of the noble Lord, Lord Beloff, that we should keep party politics out of education. Had I been commenting on that, I should have said: "Look who's talking!", but I am not. The richest remark in the whole debate was made by the noble Lord, Lord Perry of Walton, when, in fact, we took the biggest step forward ever taken in continuing education and appointed him to implement it. But my noble friend spoke about that, so I shall not talk any further about it. My Lords, I beg leave to withdraw my Motion for Papers.
Motion for Papers, by leave, withdrawn.

The British Volunteer Programme
8.15 p.m.
Lord Oram Lord Oram rose to ask Her Majesty's Government whether they will now recognise, by an increased financial allocation, the value of the work done by the British Volunteer Programme and the voluntary agencies engaged in educating the British public concerning the problems of developing countries.
The noble Lord said: My Lords, I beg to ask the Question concerning overseas volunteers and development education which is on the Order Paper in my name. We look forward to hearing from the Minister, who I think is himself a former volunteer, the Government's intentions in these matters. I understand—I hope that I am right—that he will be able to announce some increase in support for the organisation. Voluntary Service Overseas, which is the largest of the organisations in the British Volunteer Programme; and if I am right in that expectation, it is, of course, something that we shall all welcome. But I hope that the Minister will not think that that is the end of the matter or that he is giving us by any means full satisfaction in his approach to this subject.
There are, of course, other organisations in the British Volunteer Programme—the IVS, UNA and the CIIR, together with VSO. I hope that the Minister will be able to assure your Lordships that Government support for all the organisations will enable all of them to meet the increasing demand that there is for the skills and the enthusiasm which volunteers take with them when they go to serve in developing countries.
I also hope that the Minister will recognise the very close link that there is between the work of the young people who go overseas as volunteers and the need here at home, in Britain, to create the right climate of public opinion about the desperate needs of the developing countries. That indeed is the reason why,

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in framing my Question, I linked the need for the support of the volunteer organisations with the need for the support of those many other organisations which are engaged in development of education.
Referring first to the volunteer movement, not only is the demand for volunteers expanding, but there is another change. The level of qualifications, of expertise, that the developing countries want from the volunteers is also rising, and I think it is commendable that over the years the volunteer organisations have a proud record of meeting the changing needs and circumstances in the developing world.
Moreover, I think that all who know their work will recognise that volunteers are highly cost effective by comparison with other forms of technical assistance. I have seen one estimate that a year's service by a volunteer costs something like £4,000, whereas one year's service by a career expert can cost up to £30,000. So the volunteers are very good value for money, not only from the point of view of this country, but even more so from the point of view of the developing country because they, of course, provide a good deal of the support for the people who go as volunteers.
The volunteers provide a very wide range of expertise; the kind of jobs which they do are very varied. Geographically, they are working in a wide range of developing countries, particularly in the poorest countries. Moreover, the young people—I say "young people" because most of them are young people, but we know that the age range can extend quite widely—or whatever age they are, tend to live in the villages with the ordinary people. They are therefore ambassadors in both senses: ambassadors from this country to the developing country and the other way round, for when they return they can help their neighbours and friends to understand the problems of the third world.
I therefore hope that the Government fully recognise these virtues of the volunteer programmes, and that in addition the Government will recognise two necessities, to which I should like to point, if the excellent work of the volunteer organisation is to be expanded, as I believe it ought to be. First, there is the need for the volunteer organisations to be able to plan ahead much more certainly than they can at the moment. At the moment they live in a state of uncertainty from year to year, wondering just what it will be that the Government will decide to provide for them. That is an unsatisfactory situation. They should be able to look ahead with an expanding plan for, say, a three-year period, or perhaps, better, a five-year period. I hope that the Minister will turn his and his colleagues' attention to that possibility.
Secondly, I would say that the organisations of which I am speaking need to be relieved from financial anxiety so that they do not have to put so much effort and time into fund-raising. They of course provide voluntarily a proportion of the funds, and if they were released from the obligation to do so much fund-raising they could turn the energies and time of their staff to the other difficult and exacting sides of their work. They need to identify the projects overseas. They need to be propagandist, if that is an appropriate word, to motivate potential volunteers to volunteer.
They need to do much skilful work in matching the skills of the volunteers with the needs of the particular posts which they are intending to fill.
Of course, there is a great deal of administrative work in arranging the journeys, the accommodation overseas and the welfare of the volunteers when they are there. It is a complex life that the volunteer organisations lead. It is for this reason that I believe the Government ought to give them all possible support. The work of these organisations, both in respect of recruiting the volunteers and in fund-raising, and in the other matters to which I have referred, would be greatly eased if there were in this country a much fuller understanding of the problems of the third world.
For that reason I would now wish to turn from the volunteer movement to the need for Government support of development education in this country. When I speak of the need for a higher level of understanding I mean a long-term understanding of the problems of the third world, not a spasmodic generosity. That is the problem that faces all of us who are concerned with this kind of work. If there is a disaster anywhere in the world, and particularly if it is depicted on our TV screens, the British people are, as we well know, very ready to respond with instant generosity. But if they are asked to consider the merits of long-term support of aid programmes directed towards relieving the persistent poverty which is the sad lot of two-thirds of the world's population, if they are asked what is their view about the priority that should be given to that kind of Government expenditure, then it is sad to say, but true to say, that all too many of them are inclined to reply, "Well, we have our own problems here at home, and we must deal with them first".
The Government, far from seeking to overcome the problem of that kind of public attitude, have in recent years moved in exactly the opposite direction. I should like to illustrate this from the history of the Centre for World Development Education. In 1979 Government support for development education was £560,000. There were plans then for a national programme expanding over the next four years. In October 1980 the Minister announced that that would be phased out and that the education fund would have to come to an end, with the result that, this year, the centre is receiving, not the half a million pounds but only £150,000. Next year it will get only £100,000. After that, we are told, Government funding will end.
Faced with what I would call that wrecking action by the Government it is commendable that brave efforts are being made by a group of dedicated people to save what can be saved from the wreckage. One example is the determination to continue, so far as is possible, the work of the former Advisory Committee on Development Education. Another example was seen only last night on Channel 4, when there was the first of a series of television programmes of a serious kind about the problems of the third world. Those are developments of which I am sure we all approve, and they are good. But however good those activities are, they cannot possibly be a substitute for the work that was originally planned for the Centre for World Development Education.
If one thinks of the whole range of valuable activities of that centre—its publications, its courses for

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teachers, its seminars for journalists and businessmen, and its education work in schools, colleges and universities—we can but contemplate with dismay the gap that will be left if, through a lack of public financial support, that work has to come to an end.
We must also remember that what is involved is not just the work of one or two central organisations at the national level. I am conscious from my own experience—and I am sure it is an experience shared by many in your Lordships' House—of the many groups up and down the country, groups of dedicated people in ail walks of life, of all political persuasions or religious beliefs, who are constantly, evening after evening, trying to bring to the notice of the broader British public the dangers—and I stress the word "dangers"—to us all inherent in the present world situation.
Those educational and social organisations would not wish to be entirely supported by the state. They would not wish to escape the need to raise their own funds by voluntary subscriptions from their members, as they do now. But what was so valuable in the past, when there was an adequate grant, was that the public funds acted as a pump priming mechanism which enabled the voluntary efforts to be much greater than they otherwise would have been. It is that element which, sadly, is, or is due to be, missing before long.
There have been some interesting international comparisons on this question of development education. There is evidence to show that in those developed countries where public expenditure on development education is high, the level and effectiveness of the work done by them in developing countries is correspondingly high. For that reason it is a sad reflection that the United Kingdom is lowest in the league table of public expenditure for development education. That must have a detrimental effect on the work that is done overseas, and I believe we should be failing in our duty as a nation if we allowed that situation to continue without protest. We must see the matters to which I have referred against that sombre backcloth, which we often hear described in terms of two-thirds of the people of the world living in dire poverty.
When we think of the work I have been describing—of the volunteer organisations and educational bodies—maybe we are talking about individual efforts (perhaps of the VSO nurse volunteer going abroad to some distant land to serve in a hospital); or when we think of development education here, we are perhaps thinking about a particular lecture to a small group of people in a women's institute or at an adult education seminar. They are detailed examples, and while they are mere drops in the ocean when we think of the vast problem of world poverty, unless those individual efforts—those small group activities—are allowed, and are helped, to continue and multiply by the Government's decisions, we are all in danger, in my view, of being overwhelmed by the global problems to which world destitution will inevitably lead.
We must tackle the problem of world poverty, and the responsibility for tackling it rests with us all—individuals and political parties—and, in passing, I must say that it is noteworthy that, as with all aid
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debates we have in your Lordships' House, the noble Lord, Lord Skelmersdale, sits lonely on the Government Front Bench with no one behind him; not just this evening but on other occasions that has happened. I say therefore that there is responsibility on all political parties, as well as on all Churches and social organisations of all kinds, to tackle these problems resolutely; but above all it rests with Government, and that is my main point tonight. It is to put a challenge to the Government to change their attitude on this matter of world development education, because if the level of understanding among the British public about third world problems is too low—and I believe it to be abysmally low—then it is the Government's responsibility to help increase that understanding. They have a duty to do that, and they can fulfil that duty only, or best, by increasing rather than diminishing the support they give to the many organisations to which my Question refers. Time and again—and I have heard it from the noble Lord, Lord Skelmersdale—the Government claim that they would like to do more by way of aid to the third world. I suggest that if that is their wish, they would be helped in that objective if it were supported and prompted by a public opinion vividly conscious of the true situation in third world countries. Ministers should not rest content with what I believe to be their very inadequate policies in these matters, simply because they are not yet being sufficiently badgered to do more. They should want to be badgered; they should want a public opinion which is conscious of these vast problems and wants something done about them. The creation of an enlightened public in such matters is, in my view, one of the major duties of the Government, but, sad to say, this particular Government are failing in that duty.
8.36 p.m.
Lord Beaumont of Whitley: My Lords, we must express our gratitude to the noble Lord, Lord Oram, for asking this Question tonight. I am very grateful indeed. To start with, he has restored my belief in the Labour Party's loyalty to the developing world, which was sadly shattered last night by the contribution of the noble Lord, Lord John-Mackie, in the debate on the Plant Varieties Bill, which led me to believe that the Labour Party history of the last 40 years had been in vain.
Tonight we have had an important and helpful opening to the debate. It is a wide-ranging subject and the noble Lord has made it wide-ranging. We have, as a result—and as a result of the genuine feeling that many of us have—a large number of speakers for an Unstarred Question so late at night. Because of that, I shall not attempt to cover the whole ground covered in the Question, but will merely talk about the education side, and in doing so keep my contribution brief, which comment will, I am sure, draw "Hear, hear" from noble Lords opposite.
Several noble Lords: Hear, hear!
Lord Beaumont of Whitley: Thank you; and from noble Lords on this side, too.
If we talk about the educational side of the matter, that is not to ignore the volunteers themselves. One of the most important effects of having volunteers is their influence, first on the country they go to—not just for

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what they manage to do, but their influence on spreading the idea of caring and the idea of one world—and, secondly, their influence when they come back to their own country. They are usually in many ways fairly outstanding people, people whom we would call information forwarders, and they usually manage to spread their influence, opinions and knowledge of the part of the world of which they have experience in wider circles than is true of the ordinary run of the average citizen. Indeed, the Minister may be taken as a good example of what I am saying. This interchange of people is tremendously important, as important as the actual help which is given.
Likewise, reference was made in the last debate to the training and education of overseas students. It is very important that we should have this interchange, particularly in higher education, and that we should have people who come to know our way of life and that we should learn about theirs. And we learn as much about theirs, I think, by the students we entertain and train in this country as we do from our returning volunteers; because it is education which is at the heart of the question and at the heart of the problem.
We are a laggard country in this matter; laggard in our aid, where we are now fairly low down the list of western countries giving aid, and considerably laggard in our desire to give it, as a recent opinion poll unfortunately has shown. I do not believe that this is because we are basically an ungenerous country. I think that over a long period of time we have shown the opposite. I would agree with the noble Lord, Lord Oram, that it is because to a large degree we are ignorant; and one of the reasons why we are ignorant is that we do not spend money on education in this matter—and the little that we are spending we appear to be going to stop. It was good to hear Mr. Pym say recently that the Government would welcome debate on this matter. Let us hope that not only will they welcome debate but that they will listen to the debate, and that when they have listened they will act. Let us hope that tonight may be the beginning of that.
The noble Lord, Lord Oram, has already mentioned the Centre for World Development Education and the fact that, in the little work that it has been able to do, it is threatened with a total turn-off of funds. This is coming down from a measly half-million. They regard it (and many of us regard it) as a high spot to have got to £500,000 as aid, but it is of course an absolutely measly amount compared with what is needed and with what we should be giving.
The centre is in danger, and so are many of the locally-based development education centres, many of which have had to be closed already. They are tremendously cost-effective as well, because so often they are run by one or two professionals who manage to collect around them a very large group of volunteers who will do part-time work and undertake part-time education in this field. That spreads and helps to build up the knowledge of the work that all of us so want to see. But it cannot go on, and it does not go on, to nearly the same extent unless you have one or two professionals there in the centre. It takes professionals to look after volunteers and to make certain they have the continuity that they need.
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Education, I think, will have two results in this field. It will make people more aware of the moral imperative and of the practical advantages of aid, for there are both and neither of them should we dismiss. Moral imperative is, I am sure, extremely important. I believe that it is felt to be important by a large number of people in this country. Hence the large numbers of people you get for meetings on this subject, really extremely surprisingly large, from time to time, and hence the big lobby that we had of Parliament last year (or the year before, or whenever it was) which was heartening indeed. People do care.
But there is also a practical advantage in aid. We are now one world, and unless we realise we are one world and we help the developing countries we will not ourselves prosper. And not only will we not ourselves prosper, but I fear that in the time to come and in the centuries to come—because I think there are going to be centuries to come for this world; I am not a doom-monger—we may find ourselves rather further down the ladder than we have found ourselves over the last 500 or 600 years; I think that it is very much to our advantage that we try to establish a method of world order, world care and world training which is fair to everyone; because we in this country have not all that many great resources ourselves. We are heavily over-populated; we are in need of the interaction of the world, whether it is in trade or aid; and we will do well to set a good example ourselves.
I think the second form of education which is needed is that we all of us need to be educated as to what kind of aid is required to be given. We all know that many people say that aid is wasted, that a lot of it is frittered away, that it goes to help the rich-living élites in the developing countries. When they say that they increase the pressure on governments not to give aid, and, particularly, I am afraid, on a Conservative Government. This is a vicious circle, and it is all the more vicious a circle because there is a sense in which they are right. There is a sense in which we give far too much of our aid in the wrong kind of way, and far too much of our aid is wasted.
We need to break this circle, and I think we can break it by education. We need to know where to concentrate aid, and what kind of aid to give. It is only then, I suspect, that we shall really need to give more. I know we give little enough as it is, but so much of it goes on useless things. The more we concentrate on tying our aid to specific bits of trade, the more we risk devaluing the whole concept of aid. But if we have a public opinion in this country which gets to learn some of the questions at issue and which begins to concentrate on thinking how we may most help the poorest people or help the countries which are truly democratic, or provide help which is not wasted or just goes into the pockets of the rich élites living in the cities, then we will put a powerhouse behind our efforts for aid which will grow and which will reverse the circle, so that we are then educating ourselves to give more and more aid for more and more worthwhile ends.
My Lords, I should like to have spoken rather more tonight on the whole problem of the kinds of aid that we should be giving, but that is not the particular subject of the Unstarred Question tonight. Also, as I have said, we have a number of speakers, some of whom have great expertise to offer; so I will conclude

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by quoting President Nyerere of Tanzania who, when asked what the people of Britain could usefully do to help the poor of his country, said:
"Change public opinion in your own country; for the rich countries use democracy against equity".
He went on:
"In Scandinavia and the Netherlands they take a lot of trouble to develop public opinion, and as a result their governments have much bolder policies towards the third world".
I am sure that all of us in this Chamber tonight wish to increase our help towards the third world. It seems to me that there is one absolutely key way to do it, and that is to pump what will be, by any standards, a very small amount of money indeed into the educational work which is already being undertaken in this country. I hope that the Government, both tonight and in the near future, will be able to say that that is what they are going to do.
8.50 p.m.
The Lord Bishop of Derby: My Lords, I am grateful—as I know are many members of the Christian Churches—to the noble Lord, Lord Oram, for raising this Question. I rise to lend my support to what he has said. He has mentioned the two approaches to practical action which harness both Government and voluntary initiatives: the expanded support that is necessary for the British Volunteer Programme; and expanded support for development education. The two go closely together. From the point of view of the volunteers themselves, participation in development programmes overseas itself contributes the very best form of development education. VSO has stated that, along with all the diversity of experience gained, returning volunteers all agree on one thing: you will learn far more than you are able to pass on.
The Government's record on the volunteer programme is good, with the financial allocation increasing. Their record on financing development education in this country, however, I can only regard as deplorable with the phasing out of the entire Development Education Fund. On the volunteer programme, the Foreign Secretary had some encouraging things to say in his speech to the Royal Commonwealth Society on 7th December last year:
"We have also increased our financial support for the British Volunteer Programme from £2·2 million in 1979 to £4·1 million this year. Our goal is to encourage a further growth in numbers of volunteers which I am delighted to say, after several years of decline, have now started increasing again".
This year, for the third year running, VSO will increase the size of its programme. In 1980–81, 380 new VSO volunteers were sent abroad. In 1981–82, the number was 435. The target in 1982–83 is 500. With adequate support, it is hoped to send at least 560 in 1983–84. At current prices, this year the Overseas Development Administration grant to VSO is £3·4 million. For 1983–84 VSO seeks £378 million. Successive Governments have provided financial support to VSO through grants from ODA on a year-to-year basis. But as the noble Lord, Lord Oram, has already pointed out, such short-term undertakings of Government support hinder forward planning and the continuing of commitments. VSO seeks some scheme for earlier and longer-term initiatives of Government support.
Only a small contribution, as has been indicated
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already, can have results out of all proportion to its size. For example, a midwife working in Nicaragua through CIRR: her first cycle of training courses extended to 25 midwives, 40 health workers and 12 nursing auxiliaries. So much can spread out from the training of such numbers. Two workers engaged in a project in Zimbabwe are a physiotherapist and an occupational therapist whose task is the treatment and rehabilitation of many thousands of local people maimed and disabled by the war there. The Mugabe Government's determination to provide education for all children, announced in 1981, has brought a doubling of the primary school attendance since that year. CIRR have sent out four teachers to help in this work; and so the achievements increase.
But to enable them to increase further, both VSO and CIRR look for increasing financial support from Her Majesty's Government. This is necessary partly because many volunteers now need to be more highly skilled if they are to meet the needs of the local communities. They are often older people, in the 30 to 50 age range, and many of them have families here at home. Finance is needed to help support the families of these volunteers. If the Government and voluntary agencies are to continue to work closely together in this programme, there needs to be a greater trust in the partnership. It is sad to record that although the Catholic Institute made requests of this nature known to the Foreign Affairs Select Committee of the House of Commons in May last year, no action has yet been taken by Her Majesty's Government to attempt to meet their requests or support the volunteers' families. There is need for greatly increased aid in this particular area of work.
To turn to voluntary agencies and development education, as we have heard and know only too well, Government policy has been to close down the Development Education Fund of the Overseas Development Administration which, between 1977 and 1979, committed a total of £1·7 million on 382 grants to 240 projects involving 174 recipients. Government funding of development education was planned to cease by April 1982, but agreement has secured continued funding until 1984, on heavily reduced terms, for the Centre for World Development Education in London, and Scottish Education and Action for Development in Edinburgh.
It was because of the awareness of the dangers of this reduction in the Government's contributions that in June 1979 the House of Bishops of the Church of England, along with the Welsh and Scottish Bishops, expressed their alarm at the direction of this policy and its consequences. More recently, on 23rd November last year, in his speech on the third world at a Roman Catholic seminar at Archbishop's House, Westminster, attended by some senior politicians and bankers, the most reverend Primate the Archbishop of Canterbury spelt out the sad consequences of this policy for the Centre for World Development Education. He said:
"If a Government make these kind of cuts it takes more than rhetoric to restore lost time, lost programmes, lost effort and lost confidence".
The noble Lord, Lord Oram, has given the details of the way in which the contributions have been reduced.
It is vital that this programme of attrition should be

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arrested. People will not give, nor will they support enlightened political action, unless they know the facts. Not surprisingly, the Churches, in conjunction with the Continuing Committee on Development Education, are wishing to draw the recommendations that aid should be increased for development education to the attention of the British electorate in the next election. Action has already been taken to give the necessary information. In addition to this, the Churches Committee of the World Development Movement decided in 1982 to continue with its "One World Week" development education programme for a further five years, and funds will be allocated by all the major Churches to offset the total withdrawal of Government money from this programme. These are contributions from the Churches and not simply voluntary contributions. The Churches and the other voluntary agencies, as the noble Lord, Lord Oram, mentioned, are sharing in this series of programmes on TV Channel Four—programmes backed up with study material for use in groups. Many Churches will be building Lent study groups around them. Interest and concern in the Churches is growing—witness the support given to the lobbying of Parliament over the Brandt Report, when representativers of scores of church congregations were present.
People's consciences are gravely disturbed at the paltry contribution we make and at the way in which it falls short compared with other countries which, like us, are facing the current recession. A few figures help to bring out the facts of the situation. Sweden, on the last figures given, contributed 23·6 pence per head; West Germany 1·7 pence; Belgium 0·7 pence; the United States of America 0·5 pence and the United Kingdom 0·3 pence. There is surely need for a great increase there. It is an abrogation of a Government's duty when they place on voluntary agencies the whole task of education in world development: so much of what might be given in aid has to be diverted to education in the need for it. Voluntary organisations for aid cannot produce in people generally the awareness of how seriously world poverty poses a threat to world peace. Need goes on increasing while our official funding decreases. There are things at home which can wait when the need in other parts of the world is infinitely greater.
It is not too late for Her Majesty's Government to have a change of heart which will enable governmental and voluntary agencies to make progress together in the field of aid and in education about it. I lend my strong support to the raising of this Question by the noble Lord, Lord Oram, and I hope there will be a clear and strong response from Her Majesty's Government.
9.3 p.m.
Lord Hunt: My Lords, I have to begin with a provisional apology to those few Members of your Lordships' House who are present this evening. I had not anticipated the very late hour at which this Unstarred Question would begin. I have not brought my sleeping bag, let alone a tent, and I do not fancy the prospect of sleeping rough on the Embankment. Therefore, I may have to leave to catch the latest train home.
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I should also, of course, like to thank the noble Lord, Lord Oram, for putting down this Question and for persuading me to take a small part in the debate on it. I was a member of the original Council for Volunteers Overseas from its inception in 1964 until 1974. I was its president for the last six years of that period and I had a hand in drafting the constitution which changed the CVO to the British Volunteer Programme before handing over to the noble Lord, Lord Oram; so I felt I could not do less than respond to his invitation. I have not kept in close touch with the progress of events since then. I have been concerned by what the noble Lord, Lord Oram, and other speakers have said; and I have listened with great care.
Because I was in at the beginning I hope that your Lordships will forgive me if I provide the briefest historical background. The Council for Volunteers Overseas was established under the presidency of Prince Philip in 1964. It was a reflection of the spirit of those times. The Governments in the 1960s had the vision to give strong and practical support to the prevailing attitudes of a great many adventurous and public-spirited young people through the agencies of VSO, UNA, IVS and CIIR. I think your Lordships know what those abbreviations mean. The right reverend Prelate the Bishop of Derby laid great stress, and rightly so, on the work of the VSO. It is no reflection on that work if I suggest that its larger-scale and very powerful backers have tended to draw attention away from the no less excellent work, in quality, of the smaller agencies that I have mentioned.
The noble Lord, Lord Oram, in introducing his Question, suggested that the volunteers sent out by those sending agencies, as they are called, are good value for money. One thing which certainly struck me in those days, eight years ago and more, was the element of what I call "self-interest" in respect of individual volunteers for both their future employers and for the country at large, which accrued from experience, quite apart from the contribution they made in the countries to which they were accredited.
This I regard as one form of development education, of meeting and working with people in other countries, of experiencing their cultures, their customs and getting to understand their political systems and being made aware, as was so movingly put by the right reverent Prelate, of their needs, which are far greater than those of most people in the Western countries. This may be the good fortune of only a small minority of overseas volunteers, most of them young, but the importance of that minority cannot be gainsaid. The noble Lord, Lord Beaumont, referred to them as "outstanding people", and they are outstanding not because they are other than perfectly ordinary young people but because they have had this quite exceptional experience. The noble Lord, Lord Oram, referred to the volunteers as "ambassadors" and, if I understood him rightly, he spoke in respect of the information and enthusiasm they brought back about the developing countries when they return to this country.
The other thing that struck me was the very considerable value—it is not one of those things one can quantify—of those volunteers as our unofficial ambassadors abroad, our ambassadors at large. I should like to quote from a letter I have just received

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from a young man recently returned from a teaching job in Zimbabwe. He writes as follows:
"I was one of the few Europeans who ventured into the townships where I was greeted by everyone, shown around and made to feel thoroughly at home. At work the boys were very friendly and I stayed with one of them in his house during part of one of the holidays. That was the most memorable part of the whole year. It is only since coming back and reading letters from my friend that I realise how radical I was in staying there. He wrote"—
and this is the friend writing—
" 'This is the first time anything like it has happened in Seke. People here no longer think of white men as gods and you do not think of us as barbarians'."
He finished by saying this:
"Although my experience has been very limited, I am convinced that the most effective aid, or, more importantly, understanding, can only be achieved through personal involvement. It was fantastic! I am very grateful to all those people".
The noble Lord, Lord Beaumont, said words to the effect that a good deal of aid goes in the wrong direction. Whatever the doubts, as he has, which are entertained—and probably rightly—about overseas aid going into the wrong hands to bolster powerful private interests or to prop up inequitable power structures, I suggest that no one would doubt that this young man, whose letter I have read, and many others like him, are in the right place, bringing valuable help where the need is greatest, not least because of this intimate face-to-face kind of relationship.
Before I sit down, I should like to turn to one other aspect of this matter of Government support in the form of overseas aid. During my time on the council, returning volunteers formed an association which they called VOSA, Volunteers Overseas Services Association, which was later, more appropriately, changed to RVA, Returned Volunteer Action. It was, and always has been, an enterprise run entirely by returned volunteers themselves and it has been staffed all along by a minute staff of three people. Its purpose is to maintain the contacts which were established during their overseas service, to act as a kind of clearing house for doing some kind of volunteer service here at home and, not least important, to provide a forum for constructive criticism on a comprehensive basis for each of the sending agencies—as Lawrence Taylor called it in his book, a kind of "loyal opposition".
In 1974 the Council for Volunteers Overseas acknowledged its value by including RVA in the constitution of the new body, the British Volunteer Programme. I have here a copy of the RVA's magazine, Come Back. I wish that your Lordships could glance through it. It is a most informative, stimulating and thought-provoking journal. It is evident that returned volunteers form a nucleus of citizens in this country, who have been made deeply conscious of the third world and who have acquired a global perspective. This may seem tiresome to those who are concerned with the United Kingdom's national politics and the narrow interests of particular political parties. Statesmanship requires that we take note of the experience and opinions of these volunteers. As the noble Lord, Lord Oram, has said, for the most part they are young people and their concern is rightly not with the next election, nor even with the next decade. They are looking to the future.
I understand that the Government decided in 1981 to terminate their grant to RVA on financial grounds.
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The sum involved was a mere £8,500. The Minister, Mr. Neil Marten, told the BVP delegation—and I have nothing personally in criticism of the Minister, because he is a very close personal friend and he was conforming with policy—that RVA should be funded by the sending agencies. Such meanness by Government towards the spirit of overseas service is really astonishing. What is more, the essential character and value of the Returned Volunteer Action movement lies in its independent stance, in its ability to ensure that the sending agencies do not suffer from complacency or from illusions. At the risk of being perceived as parti pris, because I was the first president of the RVA, I must ask the Minister whether the Government will reconsider that cheeseparing decision to the tune of £8,500 a year and ensure that RVA, which as I said, was described in Lawrence Taylor's book as the "loyal opposition", can continue to serve the cause of overseas aid in that unique way.
9.13 p.m.
Lord Pitt of Hampstead: My Lords, I, too, am very grateful to my noble friend Lord Oram for introducing this Unstarred Question. At the moment the world is divided between rich and poor, and also between black and white, and the two are intertwined. How to bridge the gap between rich and poor is one of the biggest problems confronting the world today. The solution of this problem is one of the ways in which the world can be brought out of the present dark tunnel, in which we are travelling, to the rich, sunlit uplands of which we all dream.
Like the noble Lord, Lord Beaumont of Whitley, I want to quote President Nyerere, but in a different context. President Nyerere once said that if countries were like companies, a number of the poor, and even the ambitious but not so poor, would by now be declared bankrupt. That is of course a fact. Within the poor states, millions of people face the risk of starvation, and some do starve. Even where health and education services exist for the masses there is often a shortage of drugs and books. Their transport and distributive systems are at the moment in danger of grinding to a halt. In the developed world, on the other hand, there is mass unemployment. Public services are being cut and reinvestment has been drastically reduced.
All nations are experiencing severe economic problems, but that does not excuse the fact that at the moment the gap between the rich and the poor is wider than ever before. The challenge to the world is how to harness the surplus capacity of the developed industrial world to help to provide the goods and services which the people of the poor, underdeveloped countries so badly need. The balance exists. There is surplus capacity on the one hand and need on the other.
This country is in a very good position to play a major role in helping to bring about the desired result. The reason why that is so is because many of the poorer countries are former British colonies and are therefore in the Commonwealth. Moreover, Great Britain is an important member of the International Monetary Fund, the World Bank, the European Economic Community and the United Nations. What is even more important is that we are a major trading

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nation and rely on these underdeveloped countries for many essential commodities, for which developed country sources offer no substitute. For all these reasons it is necessary for us to see that we play a major role in bridging the gap about which I have been speaking.
What are the developing countries asking for? They are not asking for very much. The developing countries seek enlarged capacity to produce. They seek the opportunity to sell the goods which they produce. They seek justice in international exchange. That is all they are asking for. There is little which can be objectionable in these goals, yet we all know that the world has made very little progress towards their realisation. Some of my friends would say that the world has made no progress towards that realisation, but I would not say that no progress has been made. Some progress has been made, but very little.
We accept that the economic contribution which Britain can make is limited, but this country can be moved by moral causes. That is a very important fact. Mention has already been made of the mass lobby of Parliament over the Brandt Report. I still cannot get over the thrill I felt when I saw a large number of people who were prepared to stand in the rain—it was raining heavily that day—to take their turn to come to the meeting in Westminster Hall. It showed that there is a large reservoir of goodwill. What is required is the mobilisation of that spirit of being my brother's keeper, which I felt was being demonstrated that day in such a remarkable way. It is the mobilisation of that spirit which must be our objective. It is that which the voluntary organisations engaged in educating the British public about the problems of developing countries are doing; and it is that which my noble friend is asking the Government to support, with more liberal financial provisions than they are doing at present.
The British Government have always supported some measure of education, but it was not until 1977 that a real effort and contribution started to be made. As the right reverend Prelate has already said, between 1977 and 1979 good work was started and done. But then the present Government came to office and decided that they should stop funding these organisations. I well remember the number of times that my noble friend Lord Hatch of Lusby raised in this House the question of the Government's failure to continue funding the development of education, and the number of times on which Ministers attempted to fob him off with one excuse or another. But my noble friend is never fobbed off and has continued to plug away at this question. The Government have since changed their mind to some extent and have conditionally agreed to continue funding two central organisations, as the right reverend Prelate has pointed out. But that is obviously not enough. What is required is an extension, and not a reduction, of the present financial provisions.
The results of a survey published in 1978 made important and interesting reading. It showed that more than four-fifths of the public supported the idea of richer countries helping poorer countries. However, less than half were in favour of British aid, even though four-fifths of those people wanted richer countries to
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help the poorer ones. What is even more interesting from the point of view of this debate is that the less educated were generally less favourable in their attitude toward British aid. An even more interesting aspect of that survey was that at the beginning of the interview, only 10 per cent. of the interviewees thought that the Government should be spending more on aid—but by the end of the interview, that 10 per cent. had risen to 33 per cent. What that survey showed was that there are real benefits in providing information on which people can make their judgments.
At the moment, there are organisations and agencies who are willing and anxious to help disseminate appropriate information. What they need is more Government financial assistance. I sincerely hope that when the noble Lord the Minister comes to reply, he will be in a position to assure us that such assistance will be forthcoming.
9.25 p.m.
Lord Garner: My Lords, like other noble Lords, I welcome the initiative taken by the noble Lord, Lord Oram, this evening, and I am very happy to give his thesis my general support. As the noble Lord, Lord Pitt of Hamspstead, said so eloquently at the beginning of his remarks, the gap between rich and poor is ever-widening and means that the world is heading for a very dangerous future. The facts are not in despute. Every study, Brandt included, demonstrates this. The question is what we can do, and there are, no doubt, a number of things we could and should do.
One thing that strikes me is that one of the essentials at the basis of all this is to deal with the population explosion, a matter which has not so far been mentioned this evening, because unless we can cope with that, it seems to me that the wellbeing of millions in the world is going to be seriously affected. But, of course, tonight we are concentrating on development in a rather narrower sense and the debate has fastened on the need for support for progress of the voluntary services and development education.
The noble Lord, Lord Oram, spoke about a change in climate of opinion, and to be realistic I think we must recognise that there are many difficulties to be solved in the present situation before we can hope that there will be active public support for the sort of things that we are asking for this evening. In the first place, for reasons already mentioned by the noble Lord, Lord Oram, the whole basis of voluntary services has changed since those early days. Originally it was a dramatic and exciting scheme for young people, mainly school-leavers, to go out in a spirit of high adventure and enterprise, and this caught the public imagination. Now the operation is something far more sophisticated, more serious, to meet the real needs of the developing countries, but it is something that obviously has lost the glamour in the public mind. Again, the needs are as great as ever, but the theme has been presented for decades and perhaps inevitably loses some of its freshness.
Further, in the heady post-war years perhaps there was some euphoria about the new world order that was likely to arise and the prospects for many of the newly developing countries were exaggerated. For example, one cannot deny that some of the newer countries have

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not readily found a political life of stability and maturity. Many things have happened which have shocked opinion in the Western countries, and as already mentioned, of course, considerable doubts are felt as to whether aid has always been wisely spent. So all of these factors have militated against a readiness in the public mind to accept sacrifices on behalf of others. Finally, of course, there have been our own domestic difficulties, which we share in common with all the other industrial countries, and which have given us obsessions about our own position and have made us both less able, and certainly less willing, to make sacrifices for others.
I mention all these points not in any sense as excuses for inaction, but merely because I think we should realistically recognise what some of the difficulties are that have to be overcome if we are going to seek that full measure of public support we are looking for. I want to be fair to the Government and recognise that there are these difficulties, because in a moment or two I shall have something to say, perhaps, on the other side. We all know that one of the most difficult things to achieve is a change in public opinion. For my part, I am slightly doubtful as to how much can be achieved by a programme of education alone. I believe that the single most effective influence on public opinion is evidence that the Government themselves are giving convincing proof by their actions, not by words alone, that they take the problem seriously and are giving it a high priority.
We all recognise the Government's difficulties and I am grateful for many of the actions taken recently by the Government. I particularly welcome the support that they continue to give to two organisations with which at one time I was closely concerned; namely, VSO and the wholly admirable Commonwealth scholarship scheme which continues and does valuable work. Nevertheless, I confess that the message that reaches me as to the Government's attitude is a faint and somewhat muted one. I shall mention some of the signs that worry me. In the first place—and I think this has already been mentioned—having regard to our history and experience our record in aid is not outstanding and certainly does not compare favourably with that of Scandinavia or Holland.
When economies are imposed they often seem disproportionately to affect the third world. For example, cuts are made in the Overseas Service of the British Council or the BBC which are sometimes only rescued after a vehement protest in your Lordships' House. A particularly mean example of economy was the charging of students' fees at cost price for overseas students coming to universities and other places of learning. I was happy to hear from the noble Earl, Lord Swinton, in the earlier debate this evening that there is hope—he did not put it higher than that—that, as a result of the Government's study of that admirable paper by the Overseas Trust, some progress may be made in that direction.
Again it seems to me that there have been too many examples recently of a lack of sensitivity towards the susceptibilities of developing countries. I do not wish to go into details on all this because it opens up a wider sphere, but I mention as an example the different treatment accorded at the highest level to the repre-
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sentative of the PLO and to Ian Smith on proposed visits to London. I do not suggest for one moment that the two examples are on all fours but that brings out a striking contrast in attitudes.
My final point on these straws in the wind is that, while I think that the ODA generally has an excellent record in understanding the needs of developing countries and in making practical contributions towards dealing with the matters in hand, I should frankly like to see, particularly at the top level in Government, more understanding of the complexities and subtleties in relations with our Commonwealth friends and a more wholehearted determination to make the most of the Commonwealth relationship.
All these are, admittedly, only straws in the wind against what I believe the noble Lord, Lord Oram, described as the sombre background to the world situation. Indeed, the task is immense and it will take years to complete, requiring action at both national and international level. Public opinion needs a strong lead from the Government. I hope that tonight's debate will encourage the Government to increase their efforts and step up their contribution to the eminently practical schemes which have already proved their value.
9.35 p.m.
Lord Hatch of Lusby: My Lords, I hope that the two noble Lords on the other side of the House who have faithfully stayed with us will report to their superiors the lack of support which they are receiving from their Back-Benches. Theirs is supposed to be the caring party, and it really gives little lead to the rest of the country to see that not a single Back-Bench Conservative Member has seen fit to stay for this debate.
Like other noble Lords I am grateful to the noble Lord, Lord Oram, for putting down this Unstarred Question. If he will forgive me, I feel that I should ignore one half of it—that connected with the VSO. That is not because I have the slightest criticism of the VSO. Indeed, I have every admiration for it. I would not go so far as a previous speaker in referring to the good it does to the volunteers themselves, at least politically, as we have one example here tonight who seems to have taken the wrong turn. Nevertheless, the reason for my ignoring the VSO in this debate is because I was a member of the Advisory Committee on Development Education, which has been referred to by many speakers, and I think it is only right that I should concentrate upon the work that we did.
There is one further reason for concentrating on this. Although I think I am right in saying that all parties in this House would support the principle of the VSO, it is not the case that all parties in this House necessarily support the principle of Government aid to development education. I think it is very important tonight that we have a clear statement of principle. It is because those of us who were members of that committee believe in that principle that we have continued to meet and will continue to meet in the hope that eventually there will be a Government which take the same attitude as that taken between 1977 and 1979 on the responsibility of the Government to assist in a programme of development education in the country.

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I think it would help the House if I were to outline very briefly the work that our committee did. The first important issue is to define what is development education, because there is a great deal of confusion about that in this House and elsewhere. Indeed, there is a great deal of confusion in the Government, as has been shown by the absence of answers to Questions that I have put down, as referred to by the noble Lord, Lord Pitt of Hampstead.
We tried to define what is development education, and this was the definition we came up with. First of all we presented the case for a substantial, increasing and permanent Government involvement in financing development education in the United Kingdom. We then went on to say that by development education we mean those processes of thought and action which increase understanding of worldwide social, economic and political conditions, and, particularly, those related to or responsible for under-development. It was our task to supervise the use of Government money in promoting that form of education in this country, through the agencies of the various voluntary organisations, plus activities in both the formal and informal sections of education in this country, plus also assisting with the media exposure to the question of development, resulting in a clear and practical demonstration that the Government supported not just the principle but also the practice of educating the British public in both the need for development and the problems of development.
When the committee was first set up in 1977 the first thing we did was to commission the report to which my noble friend Lord Pitt of Hampstead has referred. My noble friend gave some outline of the findings of that report—the Schlackman Report. It is now well over three years since I asked the Government Minister whether he had read the Schlackman Report and I am still waiting for his answer. The important point about the Schlackman Report was brought out by my noble friend Lord Pitt, but let me re-emphasise the report's findings. The report shows that 64 per cent. of our people believe that this country is too poor to help overseas countries. That was the situation when the report began. But when these people are told the amount of aid, their opinion changes. There is a great belief in this country that we just pour out aid willy-nilly, but when the facts are given to the people their opinion changes. We based our work upon the proof of the effects of development education when it is put into practice.
Secondly, the right reverend Prelate has saved me the time needed to go through the number of projects which we decided to finance, but I would draw the attention of the House to the fact that those projects came under a whole host of different categories: some of them were helping week-long "One world" ventures; some were helping churches; some were helping schools and some were helping teacher-training college projects, one of the best ones being in Jordanhill. Moreover, some were helping extra-mural departments; some were helping various voluntary organisations, and others were actually commissioning members of the media. It was a consistent and determined attempt by the Government to put their whole weight behind the concept that the Government
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themselves have a responsibility to educate the people of this country in the facts of development.
The committee published its report in July 1978. That report was based upon costing and budgeting, which was going to rise step by step to no more than £2·7 million in the current financial year. That report was discussed by our committee, not just with the Ministry of Overseas Development, which had set up the committee, but with the Treasury, the Foreign Office, the Department of Education and Science, the Northern Ireland Office, the Welsh Office and the Scottish Office. Unanimously—and note that this includes the Treasury—they accepted that report. Then came the election.
I saw the Minister of State who was in charge of overseas development very soon after the election. He asked to see me and he asked for some outline of what we had been doing and how I thought things should progress. Obviously, I had no impact at all on him. But let me point out that the election was held in May 1979, that in September 1979—or was it August?—the Commonwealth Conference was held in Lusaka, and that the Prime Minister put her name to the communiqué emanating from that conference.
I want to quote just one part of a sentence from that communiqué which is relevant to this debate. The Prime Minister signed this pledge:
"to improving the public understanding of the need for change in the countries participating in the interdependent international system",
which is another way of defining development education. I would go one stage further. The Minister himself, Mr. Marten, can be quoted as having stated in the other place, according to column 1181 of the Official Report of 30th October 1979:
"It is important that people in Britain should understand the problems of development and the extent of our interdependence with the third world".
How will they do that unless the Government take some responsibility for ensuring that they know the facts?
Unfortunately, the same lady who signed that declaration in Lusaka is the lady who, on television just three days ago, was apparently delighted to give her fullest support to the concept of Victorian values, which she seized upon very avidly from the questioner. Is her concept of the Victorian values the one that she described in the word "handout" when she was referring to overseas aid? If it is, then when she signed that document she did not know what she was signing. She was thinking in the language of the 19th century, of the little black Sambos and the 10 little niggers, and of handouts.
As your Lordships know, it has always been my case in this House that overseas aid is not a handout; overseas aid is seed corn, it is investment. This is the attitude towards overseas aid which we, in the advisory committee, were trying to encourage the various voluntary organisations which we assisted to put over to the British public. When that committee was wound up, or when the Government tried unsuccessfully to wind it up, as the right reverend Prelate has pointed out, there was protest from all the major Churches in this country and all the voluntary organisations which the Conservative Party had, in its manifesto, stated that it was supporting. But that protest got nowhere.
Again, the right reverend Prelate has saved me the

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necessity of going into the figures, but perhaps I may re-emphasise what he said about those figures, about the comparison between the expenditure on development education in this country and that in parallel countries also suffering from the world recession. He mentioned Sweden as giving 23·6 per cent., and the Netherlands over 20 per cent. Our contribution, 0·3 per cent. Why, my Lords? The only answer that I have ever received from that Front Bench when I have been asking this question over the last 3½ years is that this Government have decided to transfer the whole £2·7 million from expenditure on development education in this country to the developing countries themselves.
The developing countries would much prefer—and many of them have said that they would much prefer, and have said it at Commonwealth conferences—that it was spent on the education of the people of this country. I hope that the Minister will not trot out again that canard that the only reason for depriving the organisations of development education of that money is to give it directly to the developing countries. Indeed, this is really the depths of hypocrisy, because is it not a fact that in Government expenditure cuts, with the exception of housing, the largest percentage cut has been in overseas aid? Again, time after time I have asked the Front Bench opposite this question, and every time they have tried to fudge the answer.
After the speeches that have been made tonight I do not need to emphasise the moral aspects of the this issue. I do not believe that the British people have lost their moral sense to the extent that, if they were to be told that every minute that this debate has been taking place 25 children under the age of five have died somewhere in the world, they would not feel a moral guilt, and indeed a moral challenge. Nor do I believe that if parents are told that the kind of world in which their children will live will depend upon the kind of relationship that is built up between the people of this country and those of the developing countries, they would shy away from that obvious conclusion.
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I should like to end by using the language which I believe Members on the other side understand better; that is the language of commerce. Is it not a fact that as a result of that aid we receive back in contracts and commercial deals more than we contribute to overseas aid? Is it not a fact that the overseas aid budget of the last Government—nobody will tell me what the figures are for the present Government—created 40,000 jobs in this country? Is it not a fact that our contribution to the International Development Association runs out in this way: for every £11 that we contribute to the IDA we receive £14 back in contracts and commercial deals?
What I want the Minister to tell us tonight is whether it is the Government's policy to support publicly and practically in the form of money the efforts of those of us who are dedicated—including all the voluntan,' organisations, the Churches, and the educational associations—to the work of development education in this country. If not, why not? Do not every Government use a publicity department and education to put forward their policies to the people of the country? They certainly do in defence, as I know clearly from some of the leaflets that have been shown to me and have been sent to schools by the Ministry of Defence. They certainly do in foreign policy, for I have seen the same sort of material in schools, sent, unsolicited, by the Foreign and Commonwealth Office. Why not the Overseas Development Department? Why make that the exception? If the Government believe in overseas aid and in the Overseas Development Department, does not that department need to tell the people the facts? Does it not need an arm, like any other department of Government, to give an educational lead to the people affected by its policy? I am glad to say that the Labour Party is firmly pledged to restore Government support for development education. I hope that tonight the Minister will be able to tell us that the present Government have had a change of heart.
9.57 p.m.
Lord Walston: My Lords, I join with others in thanking the noble Lord, Lord Oram, for allowing this debate to take place. It has undoubtedly been useful and, in most cases, constructive. I shall resist the temptation to go into the wider question of aid, much as I should like to do so. and, in contradistinction to the noble Lord, Lord Hatch, I shall confine myself solely to VSO. I do so for three reasons. The first is that, since its inception, I have followed its activities with enormous interest and the greatest admiration. The second is that, with my noble friend Lord Caradon, I share the honour of being one of its two vice-presidents. The third and most important reason is the actual volunteers themselves and the work they have been and are doing, work that I have seen in a wide range of countries throughout the world. Whether it be in the Eastern Caribbean, in Tanzania or in the Solomon Islands, one comes across these magnificent people—mostly, but not all, young people—doing a first-class job and having a real impact on the areas in which they live.
Of course, the primary object of VSO always has been to spread some of the knowledge which we in this country have among people in the third world so as to teach them to be teachers, health workers, artisans, mechanics, plumbers and better farmers and foresters. That is the primary objective, one which is carried out to the highest degree. But, as has been suggested by other speakers, there are other benefits, benefits not to the recipient countries but to ourselves.
The first of these is that these people—and this has been said already and I make no apology for repeating it—are ambassadors for this country and a very different type of ambassador from the persons whom we usually associate with that name. I have nothing against their excellencies; some of my best friends are ambassadors, but we need something more than them, and in the volunteers we have it. After all, it is only a very limited number of people who can rub shoulders with diplomats; it is only a relatively limited number of people who can rub shoulders with visiting businessmen looking for contracts, trying to do a deal, or with the tourists who drive through the country on their way from one luxury hotel to another. Not many people meet them and not always do they give the best impression when they are met.
But volunteers actually live among the people in areas which have no conception whatever of what an Englishman or Englishwoman is. I have seen them in the highlands of Papua New Guinea living with the people there, being part of the community, as my noble friend Lord Hunt said in reading out that very moving letter from a young man. The impact they have is in making people realise that in England, in the United Kingdom, there are people just as they are, living with them, enjoying the same things, having the same desires and willing and anxious to share with them such skills as they may have and to share their lives and their pleasures with them. That is one of the great advantages, one of the great benefits, that we in this country get from the volunteers.
The second is that, when they return to this country, they have improved their own knowledge and their
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own abilities in their own particular spheres of expertise in a far greater way than they could possibly have done had they stayed at home teaching or nursing in a hospital, doing whatever their jobs might be. They have broadened their experience; they are actually more valuable in their own work.
Thirdly, and perhaps most importantly, they have gained an inestimable asset in understanding how other people in other parts of the world live and in being able to spread that knowledge among their own circle, usually a fairly wide circle, of people who are interested but who are ignorant, and who, without the contacts with the returned volunteers, would have no opportunity of gaining that knowledge. The noble Lord, Lord Hatch, and others have spoken of the need of getting across to the people of this country what are the needs of the third world. One of the best ways in which this can be done is by having an ever-increasing number of returned volunteers scattered throughout the whole of the country and imparting their knowledge and the experience that they have gained to those with whom they come in contact.
Those are the main advantages that we gain from the volunteers, from the whole system of VSO. But we must not forget that it is not only the volunteers themselves. Although they are the main part of this operation, they are by no means the only part of it. The staff in London, the staff throughout the third world where we have such people, play their part; and I should like to pay tribute to all of them because without them the success of the organisation would never have reached the heights that it has. The selection of the volunteers, too, is enormously important. A large number of people come forward—not enough; but a large number do so. They cannot all go; they do not all have the qualities necessary to enable them to be good volunteers. One of the reasons for the success of the scheme is in the method of selection; so that to all intents and purposes, and with very few exceptions, only those who really make the grade are selected and sent out.
We have heard quite a lot about the lack of funds and the "skinflintedness" of the Government in matters of aid. It is good to be able to say that at least so far as VSO is concerned that is not the case. Of course, VSO could do with more money. I hope that it will get more money as time goes on. Given the present economic climate, and the attitude of the Government towards aid in general, there is little cause for complaint at this stage. The relationship between those concerned with VSO in London and with the officials in ODA is something which makes one very happy indeed. So there are some things in regard to which, rightly, we can congratulate the Government and thank them for all that they have done.
I should not like to give the wrong impression on this matter. I have gratitude and it is only right to express it; but I certainly go along with what the noble Lords. Lord Hatch, Lord Garner and others have said in this respect. The record of the Government in aid as a whole is a lamentable one; a record of which all of us as citizens of this country must be ashamed, and of which I only wish the Government themselves were

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ashamed. Of course we are poor by our own standards. I shall not go into the reasons why; that is another matter. But when we have to find £500 million for the Falkland Islands, when we are committing ourselves to expenditure of hundreds of millions of pounds a year for the 1,800 people living in the Falkland Islands—and I am not saying that it is wrong that we should do so—we cannot plead that we are so poor that we cannot afford a few million pounds here and there for overseas students, for more education or in the much wider aspects of economic aid itself. It is hypocrisy for us to use poverty as an excuse when we can find money for those things which we really want. We must face the fact that it is because the present Government do not really want to make this money available for aid that we are now being subjected to the starving of aid that has been spoken about so eloquently by those who have already contributed to the debate.
10.8 p.m.
Lord Caradon: My Lords, I think that we all wish to express to the noble Lord, Lord Oram, our gratitude for initiating this discussion, which has been of very great value and will have a considerable and wide effect. The hour is late, and we do not want to go over ground which has already been covered. But outstanding in my mind is that everyone who has spoken has referred to the shameful failures of the Government in dealing with questions of overseas development.
I have worked for a number of years for the United Nations development programme. One of the first acts of the present Government was to cut it down severely. We have heard before this evening about the effect on overseas students and of such drastic action doing very great harm throughout the Commonwealth, particularly in the case of the island of Cyprus, where such fierce complaint is made on this subject. Yes, the general record of being determined to cut down anything which is connected with development, and particularly by way of the reduction or the ending, if they could, of the Development Education Fund—pul them all together and it is a record which is, as I say, shameful.
But when something happens which is on the other side it is well to recognise it; and we can express gratitude and indeed rejoicing that in regard to the volunteers overseas the Government have not only maintained but I gather may be prepared to increase the allocation to Voluntary Service Overseas and to the other organisations. I am glad that the right reverend Prelate referred to the work of the Catholic organisation, the CIIR, which does such excellent work on a smaller scale.
As to the work of the VSO, in its 25 years 20,000 volunteers have gone overseas to some 35 countries in different parts of the world, and, now. hundreds go year by year. The flow goes on, and I pay a very special tribute (and I am glad that the noble Lord, Lord Walston, referred to it because he knows more about this than I do) to the part which has been played by those who have organised the recruitment and the posting of the volunteers for VSO. A very special
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quality is needed. First of all, there must be a very wide knowledge of the need, even down to the details of the posts and the tasks; and there must be an equally good understanding of the candidates, their qualifications and the posts in which they can be most effective.
It needs a very skilful and devoted staff to run the organisation, which, as I say, has already been responsible for 20,000 volunteers going from this country throughout the world. I pay tribute to those who have conducted this remarkable and wonderful operation, and I pay tribute also to the present director, who has not been content for a moment to slacken the elfort. It is one of the most remarkable things that the effort is year by year going forward and is impeded now only by insufficient money.
I might mention in passing that last week I had the opportunity to attend a meeting at which the leaders of Voluntary Service Overseas welcomed and established a liaison with those who run the operations of UNV, the United Nations Volunteers. It has been running for only 10 years, but it has 1,000 volunteers in the field. It is good to know that the international organisation and our own voluntary organisation should be working so closely together. It shows inspired cooperation. We can feel that there is in this sphere an understanding between ourselves and the Government that this great enterprise should be allowed to go forward.
What a wonderful thing it would be if it were possible to find a means of providing funds over a period of five years, as has been suggested. What a difference it would make in an organisation where, preferably, every volunteer serves for two years at least. How difficult it is to plan ahead if you only know what you are going to get for the subsequent year. What a big improvement it would make, and what great strides forward could be taken, if an undertaking could be given over a period of, say, five years. And if, within that period, there was a change of Government I think we on this side of the House could give an assurance that the new Government would gladly continue, extend and expand the five-year grant. There is an opportunity for us to agree and to look for a method of making the volunteer system more effective in future, and I hope that that may be done.
It is worth saying that it is a triumph of co-operation, and not only between the volunteers and the receiving Governments. Incidentally, of course, the receiving Governments pay pretty well half the total cost of each volunteer, in the form of their accommodation and local pay. Therefore, it is a matter of full, open and close co-operation between this country and 30 or 40 countries elsewhere.
We think tonight of the volunteers themselves, to whom we also pay our tribute. They give two years of their lives to this project. But when I say that, I know that they certainly do not do it in any spirit of compromise or of sacrifice. They go for the adventure of understanding and personal co-operation with the peoples of other countries, in a way which is inspiring to us all. When they come back, hundreds of them, they have a contribution to make in this country, too. They have a contribution to make in this sphere of development education. I hope that, in future, they

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may even be able to influence the Government to play an honourable part in the great enterprise of development in the third world—something in which they are the pioneers.
10.17 p.m.
Lord Skelmersdale: My Lords, it is a real pleasure for me to have been asked to reply to this Unstarred Question from the noble Lord, Lord Oram, on behalf of the Government, not only because I enjoy listening to, and sometimes profiting from, his wide experience of overseas aid matters, but also because, for once in my political life, I am able to address the House upon a subject about which I know a little from first-hand experience. So that, speaking for the Government, I welcome this opportunity to make absolutely clear that the Government appreciate as much as I do personally the contribution that the societies which are members of the British Volunteer Aid Programme have made.
This programme is a partnership between the societies themselves and the Government of over 20 years' standing, of which we are justly proud. It is also an example of what I believe to be one of the major roles of Government—that of pump-priming—which has been followed consistently by Governments for two decades. Unfortunately, it cannot be claimed that this was originally a Government initiative. They came in with financial help only about 18 months after the first volunteers were sent by Voluntary Service Overseas to Sarawak some 24 years ago. VSO, of which I was once a proud member, did this very thing.
In those days, the call was mainly for school-leavers with the adaptability of youth, available to slot into whatever position the host country required. Many of them went as teachers in schools, others into agriculture, a few into industry and one or two into the Wildlife Service. I particularly like the story of the VSO who spent 15 months on a project in Zambia—my own stamping ground—to discover what elephants ate. This meant spending part of his time following them on foot—an interesting, if somewhat unnerving, job at times. However, as developing countries became more able to provide what were basically untrained personnel, the call, as has been mentioned this evening, came for graduates with all sorts of skills. So the school-leaver element—the so-called cadet force—became gradually phased out over the 1970s. I agree entirely with the noble Lord, Lord Oram, the noble Lord, Lord Walston, and other noble Lords who have spoken on their assessment of the value of volunteers.
Much as I should like to add to this short summary of volunteer projects and work, as has been pointed out, the night is hardly young and the debate is principally about ODA involvement in all this. I have already mentioned pump priming as the method of Government finance for the voluntary organisations, of which there are four, as noted by the noble Lord, Lord Oram. VSO is the biggest and the best well known, but magnificent overseas development work is done by the Catholic Institute for International Relations, the United Nations Association
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International Service and the International Voluntary Service.
All of these organisations receive 90 per cent. of their agreed budget costs in the form of an annual grant. I do not agree with the noble Lord, Lord Oram, that it should be 100 per cent., because I believe that this would of itself be self-defeating. Only by raising a proportion of their own funds are the organisations able to keep their fingers on the pulse of prospective volunteer recruitment and the attitude of people towards the work that they are so usefully doing. The grant includes the cost of recruiting, briefing and posting new volunteers, as well as the United Kingdom and overseas costs of administration. The salary which the volunteer receives is a matter for the host country, by agreement with the sending organisation concerned.
In the current financial year, £4·131 million is expected to be allocated to the British Volunteer Programme societies, representing an increase of 28 per cent. on the actual expenditure for the previous year. This is no mean figure. The noble Lord, Lord Walston, would, I hope, include that particular figure in his congratulations. Subject to parliamentary approval, support in 1983–84 will total £4·864 million, an increase of 18 per cent. Again I hope the noble Lord, Lord Garner, will appreciate this particular straw in the wind. This again represents a significant increase in real terms at a time of financial restraint and is a clear demonstration of our continuing commitment to the activities of all the voluntary services, not just VSO, as asked for by the noble Lord, Lord Oram.
Many noble Lords have spoken of public opinion. I am sure the House knows that no official Government survey has been undertaken since the one carried out by the last Government. That survey was published in 1978 and was mentioned by the noble Lord, Lord Pitt of Hampstead, the noble Lord, Lord Hatch of Lusby, and others. The attitude towards aid and development issues is that this subject should be monitored at distant intervals as part of the general household survey. While I have no official facts. I would suggest that public attitudes on giving money to the developing world are directly related to the perception of one's own wellbeing. Since we have been going through a severe economic passage, attitudes towards aid will almost certainly have hardened, just as they will become more generous as we emerge from the recession. This is a point to which I shall return.
The noble Lord, Lord Hatch of Lusby, asked me if I had read the report, and said that he had been waiting for an answer for 3½ years. Since I have not being doing this job for 3½ years, he was not, I think, asking the question of me. The noble Lord, Lord Oram, and others talked about the long-term financial commitment, which I agree is an important subject. I recognise, naturally, the planning problems caused to the societies by the current system of annual commitments. The Government have to retain flexibility in the rearrangement of the total resources available for aid expenditure, and we cannot commit ourselves to supporting long-term expenditure plans. However, ODA has proposed a limited form of medium-term

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commitment to the societies. I hope that this will allow them to plan their programmes with more confidence.
A point which was touched on by the noble Lord, Lord Hunt, was that there should be a greater willingness on the part of employers to release volunteers for overseas assignments. Like the noble Lord, Lord Hunt, I believe that this benefits the volunteers, the host country and, perhaps most important, the long-term future of the firms themselves. It is a wonderful situation (and, I believe, rare in the world) where everyone in this particular case is the winner.
Although the noble Lord, Lord Hunt, said that he had to leave early, he asked me in particular about the returned volunteer action. The decision was taken in 1982 to discontinue this grant, but it was taken after the most careful consideration. The Government welcome the continued involvement of the RVA in the British Volunteer Programme council and committee. The Government do not think that to pursue their role of loyal opposition requires finance from an independent source. The RVA now receives support from all volunteer sending societies rather than from Government; a clear indication of the value seen in its work and the maturity of the volunteer sending societies themselves.
The right reverend Prelate the Bishop of Derby, the noble Lord, Lord Garner, and other noble Lords mentioned the level of spending by other donor countries. I have to agree that other donor countries spend considerable sums of money, and that their Governments can raise the level of aid programmes accordingly; but currently we do not have the money to raise our aid programme faster than already announced. Also, we would not consider it to be ethical use of public money to finance our own pressure groups.
The noble Lord, Lord Pitt of Hampstead, devoted part of his speech to the gap between the rich and the poor countries, which has been getting wider in recent years, as mentioned in the report of the Commissioner for Aid for the EEC, Mr. Pisani. The noble Lord, Lord Pitt of Hampstead, gave the impression, to me anyway, that this has something to do with cuts in aid in the developing countries. I do not believe it is that at all. My own feeling is that the sums which have been spent over the past 20 years have not always been used to the best effect. This is something that my right honourable friend Mr. Raison will wish to reflect upon in the very near future, as he will on the other causes which undoubtedly exist—such as the population overseas and its health.
The noble Lord, Lord Caradon, spoke about the United Nations volunteers. I am aware of the work of the noble Lord in creating a greater understanding of the United Nations volunteers among the volunteer sending societies of Europe and America as well as in our own country. I was glad to hear about the new phase of co-operation between the VSO and the United Nations volunteers which he helped to launch last week. The noble Lord made another point to which I will come later.
Turning to the second part of the Question—that of development education—the Government accept the
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need for greater public awareness of the issues of world development and interdependence. While demands on the aid programme as a whole continue to far outrun the finance available, I am sure noble Lords will agree that development education for people at home cannot claim priority over direct aid for the people of the third world countries. The noble Lord, Lord Hatch of Lusby, whom I see grinning to himself, may regard this as a well-tried canard but, whether it is or not, we believe it to be a fact. This is the overriding reason why this Government feel unable to continue official funding.
The phasing out of official support, however, does not seem to have been damaging to the cause of development education in this country in the way that had been foretold, and suggested in certain parts of the House this evening. Certain projects supported under the Development Education Fund have been brought to a tidy conclusion; the three-year Northamptonshire teachers in-service project in Sierra Leone, for example. Other projects once supported under the fund have survived, although perhaps in a modified form. Some have gone from strength to strength on alternative funding. For example, there is OXFAM's Birmingham development education centre. New groups and organisations which have never had ODA funds are taking an increasing interest in world development and are diverting existing resources and efforts into this important activity. Pump priming is not necessarily financial.
When the Government announced their decision in October 1979 they expressed the hope that there would be sufficient voluntary and professional interest to keep things going. Some three years later development education seems as active as before. The media are more conscious of development issues: this week saw the first in a series of television programmes by the International Broadcasting Trust, an example of voluntary agencies pooling their interest and resources in independent initiative. The Churches have come together in joint sponsorship at One World Week, a fine example of voluntary effort at the local community level. There is growing evidence that schools and other educational institutions are taking up such themes for study. Parliament, too, has been caught up in these currents. One has only to recall the lobby of Parliament about the Brandt Report, organised by the World Development Movement and other voluntary organisations, to realise that the development lobby in this country is healthier than it has ever been.
It is certainly not true that people are prepared to be concerned about the world only if they receive a Government grant—something which comes to me, in flavour, at any rate, from the Benches opposite daily. Should noble Lords take issue with me on this, I would respond forcefully that they are belittling the very valuable efforts of bodies such as OXFAM, Christian Aid, the Catholic Fund for Overseas Development and others; of the numerous church-based groups who over many years have sought to alert the British public to the plight of people in the third world; and of those educationists and journalists who have done so much to bring these important matters to the attention of the public.
Lord Hatch of Lusby: My Lords, would the noble Lord allow me to intervene. Nobody has suggested that the future of development education depends upon Government finance, or, as the noble Lord's Leader would say, Government handouts. What the previous Government tried to do were two things: first, to assist the voluntary organisations the noble Lord has listed, and secondly, to take an initiative themselves. Can the noble Lord prove that development education is better than ever, as he suggested, and would he not relate that to what he said earlier, when he suggested that people would feel better towards overseas aid when they were better themselves? Will he not see that development education on behalf of his Government's programme of overseas aid is necessary in order to show people that one way out of their present economic plight is to help the half of the world that is unable to buy our products at the present time?
Lord Skelmersdale: My Lords, the noble Lord should contain his soul in patience just a little longer. He made the point very concisely—not quite as concisely as now—in his original speech and there really was not any need for him to repeat it.
Lord Hatch of Lusby: Answer it.
Lord Skelmersdale: When the time comes I will answer it.
I was speaking of the other organisations which are without Government funding, specialising very effectively in the subject of development education. In this respect the recent initiative of VSO to help British schools link up with schools in third world countries is an interesting development, since volunteers overseas are well placed to make contacts at a local level. Of course, much depends on those who help form public opinion—in Parliament, in the pulpits and in the press. I hope, too, that British business and industry, dependent as it is upon what happens in the world economy at large, will become even more active and involved.
The noble Lord, Lord Beaumont of Whitley, claimed that many development education centres have had to close as a result of the withdrawal of Her Majesty's Government's funding. None of the centres previously supported have closed, and some have increased their activities with alternative funding. For example, the Welsh Centre for International Affairs at Cardiff, which I accept was only a minor recipient of about £3.000 a year, had a one-year extension after the 1979 announcement, during which time it raised a stupendous £60,000. It is active and has financial reserves.
Lord Beaumont of Whitley: My Lords, my point is that many local centres have had to give up having paid workers, and this has inevitably cut their effectiveness. Southampton and Oxford are examples.
Lord Skelmersdale: My Lords, the point that I have been trying to make is that no project has come to an end through these cuts. The fact that they are operated differently and that some have gone up and some down is, I contend, very much a matter for the organisations themselves.
As regards the Centre for World Development Education, I think noble Lords are a little confused over our treatment of this organisation. The grant was previously £150,000 a year, and not £500,000, as I believe was quoted by the noble Lord, Lord Oram. I can tell the House that this (misrepresentation is too strong a word) disagreement is quite wrong, and that our treatment of them has been generous. This grant has been extended on two separate occasions to enable them to secure their future and become independent of Government funding by April 1984. It remains our intention to terminate financial support at the end of 1983–84 for development education.
The noble Lord, Lord Hatch of Lusby, spoke of the duty of the Government on development education. I should say that the primary duty of a Government is to its people as a whole. This Government believe that while accepting the need for development education it should not be something upon which we spend money. There are many more important things in the aid budget, and with a limited amount of money choices have to be made. As I said, to my knowledge no project has ceased through the withdrawal of Government funding.
I am of course aware of the resolution on development education passed by the Assembly of the British Council of Churches, and of the views recently expressed by the most reverend Primate and those expressed tonight, of course, by the right reverend Prelate. I very much respect the strength of feeling on this issue, and I can assure noble Lords that the Government did not reach their conclusions lightly in respect of development education.
Nobody in my position could be proud of overseas aid figures, but unlike other noble Lords who have spoken tonight I recognise that, in order to win the ultimate prize, every spending department has had to come under financial scrutiny. Cuts have been made, and there is no denying it; but under the recent Minister of State at the ODA they were kept to the absolute minimum. Now, once again, the figures of total aid spending are on the increase. My right honourable friend the Chancellor of the Exchequer recently announced an increase from £950 million in 1982–83 to £1,025 million in 1983–84.
This is a small but welcome increase and bears out the statement I made—I should think some time last year or possibly the year before—which the noble Lord, Lord Oram, referred to in speaking to his Question: that when the economy improved we would see an increase in the overseas aid figures. I believe that this is starting. I believe that the economy will continue to improve, and I believe that aid will no longer suffer.
House adjourned at nineteen minutes before eleven o'clock.

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