Sitting of 17 March 1983

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

  TEES AND HARTLEPOOL PORT AUTHORITY BILL (By Order)
  Orders for Second Reading read.
  To be read a Second time upon Thursday 24 March.

Oral Answers to Questions
  AGRICULTURE, FISHERIES AND FOOD

    Pig Industry
    Mr. Geraint Howellsasked the Minister of Agriculture, Fisheries and Food if he is satisfied with the present state of the pig industry; and if he will make a statement.
    Mr. Mylesasked the Minister of Agriculture, Fisheries and Food what is the current profitability in pig production.
    The Minister of State, Ministry of Agriculture, Fisheries and Food (Mr. Alick Buchanan-Smith): Pig prices are lower than they were a year ago, but there are indications that they have now steadied. The longer-term prospects will depend on the industry achieving a better balance between supply and demand and on expanding its share of the United Kingdom bacon market and developing pigmeat exports.
    Mr. Howells: Has the Minister any immediate plans to save many pig producers from going bankrupt? Will he consider introducing a deficiency payments scheme for pig producers similar to the scheme that has served the beef and lamb sectors well over the past five years?
    Mr. Buchanan-Smith: A deficiency payments scheme would not be appropriate, because the circumstances of pig and beef production, as the hon. Gentleman knows, are different. Help is already available in a number of ways—for example, in the private storage scheme and in the increase of restitutions. Such assistance has been given to the industry at the instigation of the Government.
    Mr. Myles: Will my right hon. Friend consider ways to improve the efficiency of pig processing plants, because that is where the weakness in the chain of pig production and processing occurs?
    Mr. Buchanan-Smith: One signficant point over this period of difficulty in the pig industry is that prices held up more strongly for quality products than for other products. Schemes, such as the bacon charter scheme are well worth supporting. I hope that in that and other ways we shall see an improvement in quality, to which I am sure the housewife will respond.
    Mr. Home Robertson: The Minister referred to supply and demand. Is he aware that the supply and demand for feeding grain for pig producers is severely distorted at the moment? Is he further aware that there are vast quantities of feeding grain that could be made available to pig producers at reasonable prices? In view of the severe crisis in the industry, is it not about time that he did something about the matter?
    Mr. Buchanan-Smith: The hon. Gentleman will realise, because this point was raised at the last Agriculture Question Time, that it is a question whether such a cost-effective scheme can be worked out.
    As to supply and demand in the pig industry, there was an expansion in the pig herd at the end of last year of over 4 per cent. when compared with the year before. In recent months there has been a 17 per cent. reduction in the amount of pigmeat coming from Denmark. Of these two factors, the industry has control over one. The other will, I hope, help in the longer term.
    Sir Peter Emery: Has my right hon. Friend had discussions about the size of the pig herd, because this is one of the major factors? What advice will my right hon. Friend give the smallholder, who is often caught between the problems of supply and demand and is more seriously affected than the big producer?
    Mr. Buchanan-Smith: As my hon. Friend knows, the pig industry can react quickly to changes in economic circumstances. The increase in the herd in the early part of the year was well beyond what was warranted. That is one of the major reasons for the present position. Equally, there is a wide variation in profitability between different herds, as the Cambridge survey shows. Efficient producers—and some of the small producers are efficient and good—can weather these problems.
    Mr. Beith: Will the storage scheme be continued for as long as it is needed? Will the Minister look at other ways in which the industry can be helped, such as assistance with veterinary examination costs?
    Mr. Buchanan-Smith: I am delighted to say that the storage scheme has been used by the industry to a greater degree than ever before. During the six weeks that the scheme has been operating we have taken up twice as much pigmeat as we did during the three and three quarter months that it operated a year ago. I am glad that the industry is using the scheme. If it needs to be extended, we shall consider how best to do so.
    I understand the problems about exports. There could be veterinary and other problems. Officials of my Department and representatives of the trade have been meeting to try to identify where improvements might be made. I have asked for a report from them by early next week.
    Mr. Buchan: Does the Minister accept that many pig producers are at present incurring losses? We find his answers terrifyingly complacent. Is he aware that we are subsidising intervention grain being sold to Spain to the extent of £69 per tonne, while our pig producers are paying £120 per tonne? Why cannot we release this grain in the normal way to this country's pig producers?
    Mr. Buchanan-Smith: The hon. Gentleman is complacent, because he always talks about trying to keep down the cost of the common agricultural policy. If the subsidy were at the same level as that for exports it would almost double the present cost of the Community's cereal regime. If that is what the hon. Gentleman wants, it is time that he said so. He says different things to different audiences. The hon. Gentleman should also remember that, while there are subsidies for the export of cereals, equal credit should be given to the subsidies available on the export of pigmeat to third countries. That balances the position.
    Mr. Buchan: The Minister is prepared to pay vast sums of money to subsidise wheat going elsewhere. Why cannot he use the same amount of money to subsidise grain and barley sold to British pig producers? He is willing to spend on foreign producers but not on our producers. He is adopting an extraordinary position.
    Mr. Buchanan-Smith: I have the United Kingdom's interest at heart. Unlike the hon. Gentleman, I am not prepared to see the cost of the cereal regime jump from £1,300 million a year to as much as £3,000 million a year. If that is what the hon. Gentleman wants, he should say so. I believe that the pig industry is on an even footing with the cereal industry, because the pig industry benefits from export restitutions in the same way as the cereal industry.

    Glasshouse Industry
    Mr. Bodyasked the Minister of Agriculture, Fisheries and Food whether he is satisfied with the state of the glasshouse sector of horticulture.
    The Minister of Agriculture, Fisheries and Food (Mr. Peter Walker): I am fully aware of the problems facing glasshouse growers and I am in close contact with representatives of the industry. I am hopeful that this year will see some upturn in the fortunes of the industry.
    Mr. Body: Has anyone in the glasshouse sector had a 45 per cent. increase in income during the last 12 months? If not, when will there be some good news that I can pass on to the hundreds of my constituents in the glasshouse sector who insist that their returns are declining?
    Mr. Walker: I am sure that my hon. Friend has told his glasshouse growers about the substantial increases in subsidies on fuel that the Government have provided. I am sure that he is aware of the continuing advantage, which is being taken up, of the special subsidies to convert to coal-fired heating, if required. It is a scheme that I hope will be further extended at the request of glasshouse growers. My hon. Friend will also be aware that the Government have negotiated the ending of the Dutch fuel subsidy, which was such a disadvantage to our growers and which finishes at the end of this month. The currency exchange rates, which have been to Holland's benefit during the past couple of years, are now moving to this country's benefit. I hope that he will retail all those facts to his growers.
    Mr. Speaker: Order. I ask for everyone's co-operation so that we may make a little more progress.
    Mr. Newens: There has been some progress as a result of the equalisation of fuel prices and the fall in the parity of sterling. However, does the Minister recognise that, after so many bad years, British glasshouse growers do not have the capital, and will not have it for several years, for the necessary investment to make their industry fully competitive? Therefore, will he study the grant system, because the Dutch taxation system is better than ours?
    Mr. Walker: I have already made a number of changes to the grant system to benefit the industry. One of the important benefits, of which increasing advantage is being taken, is the possible conversion to coal. I hope that that will continue after the expiry date, 31 March. We shall certainly study these matters. I hope that Food from Britain, which has just come into operation. will be of considerable help to the marketing side of the industry.
    Mr. John Wells: Is my right hon. Friend aware of the anomaly by which third parties which carry out promotional activities on behalf of the horticulture industry—I give Food from Britain and the Apple and Pear Development Council as examples—are charged VAT on their activities, whereas if the farmers and growers did it themselves they could claim back the VAT? A third party doing it on their behalf cannot do so. That is mad.
    Mr. Walker: There is nothing to stop organisations, such as Food from Britain, acting for other parties. It does not have to act on its own behalf.

    Peaty Soils
    Mr. Dalyellasked the Minister of Agriculture, Fisheries and Food to what extent his Department carries out work on the suitability of various plants and crops for peaty soils.
    The Parliamentary Secretary to the Ministry of Agriculture, Fisheries and Food (Mrs. Peggy Fenner): The agricultural development and advisory service carries out experiments on the growing of plants and crops on both acid and alkaline peaty in lowland conditions and ón acid peaty soils in the hills and uplands. This work represents about 2·5 per cent. of the total manpower effort on research and development in my Department.
    Mr. Dalyell: Have the researchers told the Minister that in order to obtain crops from acidic peaty soil vast quantities of lime and inorganic chemicals are needed, as Shackleton said? What is the cost, if use is to be made of this information, of transporting lime from the northern to the southern hemisphere? Is it surprising that the Davidson family have returned from their market garden? Would it not be better to recognise reality and go along the same lines as south Patagonia, where Mr. Pablo Llewelyn—
    Mr. Speaker: Order. The hon. Gentleman is imparting information instead of seeking it.
    Mrs. Fenner: The hon. Gentleman is well aware that assistance, for whatever purposes, from the Government to the Falkland Islands is a matter for the Minister for Overseas Development.
    Mr. J. Enoch Powell: Is the Parliamentary Secretary aware that one of the principal repositories of information

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    and knowledge on this subject is the Northern Ireland Department of Agriculture? Does the hon. Lady agree that peat is called turf?
    Mrs. Fenner: I can certainly agree with the latter point. I am aware of Northern Ireland's great experience in this matter. The results of research in my Ministry are available to the world.
    Sir Peter Mills: Will my hon. Friend inform the hon. Member for West Lothian (Mr. Dalyell) that if he is really interested in agriculture in the Falkland Islands—I welcome his interest if he is—he need only go to the southwest of England, where farmers are rearing superb cattle—hill cows and their calves—on peaty soils? The evidence is available there all the time.

    Pig Industry
    Mr. James Johnsonasked the Minister of Agriculture, Fisheries and Food if he will take steps to release supplies of barley at present in storage to pig producers at an affordable price.
    Mr. Buchanan-Smith: Both wheat and barley from intervention are on offer for sale in the United Kingdom at the lowest prices allowable under Community rules.
    Mr. Johnson: The highest density of pigs in the United Kingdom is to be found in the hinterland of Hull on both banks of the Humber. The pig producers believe that they are having a bad deal on any score. These men do not have a support system. Does the Minister accept that, they are paying too heavily for cereals to feed their pigs.
    Mr. Buchanan-Smith: The hon. Gentleman is wrong. There is a support system. It is not as strong a system as for other commodities, but, as he will have heard me say earlier, there is the financial benefit of the private storage scheme of which the industry is currently taking advantage. Export restitution is also available. Those are two areas in which direct financial help is available to the industry.
    Mr. William Ross: Is the Minister aware of the great difficulties experienced by Northern Ireland pig producers because so much grain has to be imported to feed the pigs? Will he give careful consideration to setting up an intervention store for grain in Northern Ireland?
    Mr. Buchanan-Smith: As the hon. Gentleman is aware, pig and livestock producers generally in Northern Ireland have traditionally had to pay higher prices than those applicable in other parts of the United Kingdom. In the various schemes that we have tried to negotiate we have tried to alleviate that problem. I have noted what the hon. Gentleman said.
    Mr. Nicholas Baker: If my right hon. Friend cannot accommodate the hon. Gentleman by having a cheap grain scheme for pig producers, will he lend his weight to improving the marketing of pig and pork products, which has been lacking in the past?
    Mr. Buchanan-Smith: We have already done that. My right hon. Friend has given his support to the launching of the charter bacon scheme, which is a worthwhile initiative. Food from Britain, which is a new initiative, is currently considering what its priorities should be. I hope that it will do its best to promote pork and bacon products. There is
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    no doubt that those two products are good value for the housewife. At present, both those products, given the prices, are good value for money to the housewife.
    Mr. Buchan: Does the Minister agree that pig producers are suffering from a treble disadvantage: competing with other meats that have a full support system; buying in commodities—mainly grain—which have a proper support system; and having no support system for themselves? The shortest, swiftest and best way to deal with their losses is to release the grain in intervention at the price at which it is being released to Spain.
    Mr. Buchanan-Smith: The hon Gentleman should get his facts straight before he makes such remarks. He should look at the consumption figures. The sheepmeat regime is an example. Comparing 1981 with 1982, one finds that pork consumption has increased, whereas sheepmeat consumption has declined. That gives the lie to the hon. Gentleman's accusation.

    Milk (Doorstep Deliveries)
    Mr. Dubsasked the Minister of Agriculture, Fisheries and Food what measures Her Majesty's Government have taken since his statement of 9 February to secure the future of doorstep deliveries of milk.
    Mr. Peter Walker: I believe that the doorstep delivery of milk is valued by the consumer and by the industry, and will have an enduring role in milk distribution. As regards the UHT milk judgment, my Department is having urgent discussions with the Commission about the health and hygiene safeguards that must be applied to any imports of UHT milk from other member states.
    Mr. Dubs: Does the Minister agree that there is widespread concern about the possible threat to doorstep milk delivery? Will he give an undertaking that he will not be forced to concede on that issue, no matter what the pressure is from Brussels or how enticingly it is wrapped up in a package deal?
    Mr. Walker: I give an absolute assurance. I think that I can claim that in the past four years we have done everything in our power to assist and encourage the doorstep delivery service. The high liquid milk consumption in this country is an advantage not only to the British work force, customer and houswife, but to Europe. If its liquid milk consumption were as high as ours, there would be no milk surplus problem.
    Sir Kenneth Lewis: Is my right hon. Friend aware that the milkman, like the postman, is the housewife's early morning friend, and that on that matter neither she nor we want to go continental?
    Mr. Walker: It is true that in this country not only is there a highly efficient system for delivering fresh milk of high quality to every doorstep every day, but that many elderly and handicapped people receive that important social service.
    Mr. John Morris: Will the Minister accept my endorsement of his stance on milk towards the French Minister of Agriculture? Will he press for an inquiry into the low consumption of liquid milk on the continent and strenuously object to the intrusion of Irish milk producers into the affairs of the Milk Marketing Board?
    Mr. Walker: Yes, Sir. At the last meeting of European Ministers the French Minister suggested that there should be an examination of the activities of the Milk Marketing Board. I am glad to say that, when I suggested the urgency of examining why liquid milk consumption in France was drastically lower than in Britain, that suggestion was accepted by the Commission.
    Mr. Deakins: Does the Minister agree that any threat to doorstep milk deliveries would be a threat not merely to the British consumer but to an industry employing about 60,000 to 70,000 people and to the sales of milk by British producers?
    Mr. Walker: I agree with the hon. Gentleman. That is why I intend to see that no harm is done to the doorstep distribution system.

    Common Agricultural Policy
    Mr. Ernie Rossasked the Minister of Agriculture, Fisheries and Food by what proportion the forecast expenditure on market regulation under the common agricultural policy in the United Kingdom for 1982–83 exceeds that for 1981–82.
    Mr. Peter Walker: In my reply on 7 December 1982 to the question from my hon. Friend the Member for Devon, West (Sir P. Mills), I gave details of expenditure by the intervention board in 1981–82 and of forecast expenditure for 1982–83. Since then the forecast for 1982–83 has increased by 5·5 per cent.
    Mr. Ross: In view of that staggering increase in one year, does the Minister agree with Commissioner Tugendhat's assertion that the EC is losing control of spending on agricultural support? Does he further agree that the continued rise in spending on agricultural support is likely to bust the EC? What further taxes does he intend to levy on consumers to make up the deficit?
    Mr. Walker: The Government's attitude is that this is a time for prudent price fixing. Mr. Tugendhat's remark was made to the European Parliament, which was urging substantial increases on the Commission's price fixing proposals. He was correct to say that that would be a dangerous step.
    Mr. Spearing: Will the Minister comment on the ability to subsidise cereal farmers but not pig farmers, with regard to the intervention board expenditure to which he has just referred? Is he aware that in 1979–80 £40 million was expended on intervention for cereals, but in the forthcoming year the estimate is nearly £400 million—10 times as much? Will he do something about that extension of public expenditure, to which the Government are opposed?
    Mr. Walker: As the hon. Gentleman knows, cereal stocks remain valuable and do not deteriorate in store. The United States, among many other western countries, has massive stocks of grain that it considers viable and sensible. As my right hon. Friend has made clear, there are subsidies and substantial export restitutions for pig producers.

    Male Workers (Weekly Earnings)
    Mr. Marshallasked the Minister of Agriculture, Fisheries and Food what was the increase in percentage
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    terms in the real weekly earnings of hired regular whole-time male workers of 20 years old and over in agriculture between 1972 and 1982.
    Mrs. Fenner: Average weekly earnings of adult male workers in agriculture in the United Kingdom increased by just over 20 per cent. in real terms between 1972 and 1982.
    Mr. Marshall: Is the Parliamentary Secretary aware that over the same period labour productivity increased by 46 per cent., or double the increase in real earnings? Does she accept that this year's wage award of 7 per cent. is pathetically low when compared with the 45 per cent. rise in farm incomes?
    Mrs. Fenner: The hon. Gentleman will know that pay is a matter for the independent agricultural wages board, not for Ministers. We have the greatest confidence in the chairman and the board. We know that they will take all considerations into account.
    Mr. Bill Walker: Does my hon. Friend agree that if the productivity of the farm worker were equalled elsewhere we would have few problems in Britain?
    Mrs. Fenner: Indeed. I readily acknowledge that farm workers have made notable contributions to agriculture's record of increased productivity.
    Mr. Cryer: Will the Parliamentary Secretary take into account her right hon. Friend's welcome for an increase in farm incomes last year of 45 per cent? Would she welcome a similar increase in the incomes of farm workers, who, as she has acknowledged, make an important contribution to and are the basis of the industry? Would she welcome a 45 per cent. increase for such workers, and perhaps workers elsewhere—for example, in the water industry?
    Mrs. Fenner: The hon. Gentleman would not welcome the same percentage increase for farm workers' incomes as for farmers' incomes, which in real terms have fallen by more than 27 per cent. since 1972. Despite an improvement in 1981 and 1982, farm incomes are still only 77 per cent. of the mid-1970s level.

    Intervention Butter
    Mr. Edwin Wainwrightasked the Minister of Agriculture, Fisheries and Food how many tonnes of intervention butter in the European Community are in store at the latest available date.
    Mr. Peter Walker: There are 229,723 tonnes of butter held in intervention stores in the European Community according to the most recent data provided by the Commission.
    Mr. Wainwright: Does the right hon. Gentleman agree that the total will probably be 600,000 tonnes by the end of the year? What will he do with the surplus? Is he aware that our top 5,000 farms produce 30 per cent. of the butter that is produced in this country and receive approximately 30 per cent. of the subsidies? Is he further aware that most of those farms belong to millionaire farmers? Have they the support of the Tory party? Why does not the right hon. Gentleman do something about that?
    Mr. Walker: The hon. Gentleman's analysis of the dairy industry is wrong. He is mixing cereal production

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    with dairy production, and the figures for dairy production are very different. At present we have 54 days' supply of butter. I do not share his view on estimates for the end of the year, because a range of imponderables could vary production and consumption performance.
    Mr. Geraint Howells: Will the Minister try to persuade his counterparts in Europe to sell butter surpluses to the Third world, not to the Russians?
    Mr. Walker: Yes, Sir. I shall also encourage them, as I already have, to increase consumption in Europe. That is why I am glad that the butter subsidy is now double what it was when the Government came to power.
    Mr. Jay: What tonnage of this subsidised butter will be exported by the EC this year as food aid to the Soviet Union?
    Mr. Walker: That will depend on the tendering position. As yet, the Soviet Union has put in no tenders.
    Mr. Deakins: Is it not disgraceful that the Common Market is selling butter to the Soviet Union at three times the subsidy at which that butter is available to the British housewife? Does the Minister agree that, as milk production has increased, despite price restraint in recent years, stronger measures are needed to reduce milk production?
    Mr. Walker: As a result of the much tougher stance of the Government, the intervention price of milk has decreased in real terms by 17 per cent. since 1979. I am glad to say that for almost two years we have stopped exports to Russia altogether. We are waiting to see the Soviet Union's tender, but both the British and German Governments remain opposed to such exports.

    Compound Feedstuffs (Ingredient Listing)
    Sir Albert Costainasked the Minister of Agriculture, Fisheries and Food if, in view of the overwhelming support expressed at the National Farmers Union's recent annual general meeting for mandatory ingredient listing of compound feedstuffs, he will amend the latest feed regulations to introduce such a scheme.
    Mrs. Fenner: No, Sir.
    Sir Albert Costain: Has my hon. Friend had an opportunity to consider the most recent statement by the National Farmers Union on statutory ingredients, and does she accept the case for consumer protection for farmers?
    Mrs. Fenner: Full ingredient listing would not add much of practical value. I am concerned about increased costs to consumers and the costs of enforcement.
    Sir Geoffrey Johnson Smith: Does my hon. Friend agree that, were she to accept the request of my hon. Friend the Member for Folkestone and Hythe (Sir A. Costain), it would mean increased costs to pig producers, about whom we are very anxious?
    Mrs. Fenner: We have estimated that it would cost the livestock industry as much as £40 million to £50 million a year.
    Mr. Mark Hughes: Does the Minister accept that many livestock producers believe that, although under the current arrangements they can be told what is in the mix if they ask politely, the information should be available publicly so that all can know?
    Mrs. Fenner: I know that some livestock producers believe that, but there is already a declaration of ingredients in respect of protein, oil, fibre and ash content. However, the door is still open for further discussion. I am studying further evidence that was recently submitted by the National Farmers Union.

    Glasshouse Industry
    Mr. Michael Marshallasked the Minister of Agriculture, Fisheries and Food what assessment he has made of competition in the European glasshouse industry after 30 June.
    Mr. Peter Walker: The elimination of the Dutch growers preferential gas tariff on 1 April will strengthen the competitive position of our growers. Our industry is also benefiting from the fall in inflation and interest rates; in addition, recent changes in the sterling-guilder relationship will help, provided that costs are kept under control.
    Mr. Marshall: Does my right hon. Friend agree that the welcome measures taken by the Government were in response to unfair competition in the European glasshouse industry? What further monitoring role does he see for himself and the Ministry in the second half of this year, and what will be the role of the Commission?
    Mr. Walker: I assure my hon. Friend that not only will my Ministry conduct severe monitoring, but the German and Danish Ministers are in close collaboration with us in insisting to the Commission that no further disruption of genuine market forces takes place.
    Mr. Newens: Will the right hon. Gentleman ensure that his inspectors continue to increase their vigilance on the import of cut flowers and produce from overseas, because standards for the elimination of chrysanthemum rust are much higher in Britain than on the continent, and our producers do not receive compensation when stock must be destroyed?
    Mr. Walker: I agree with the hon. Gentleman that if our producers are part of a scheme, from which they may suffer considerably if white rust is brought in, the toughest possible inspection must take place.
    Mr. Body: Is my right hon. Friend aware that it would now be in order for him to reply to my supplementary question to question 2, which was whether he was aware of any glasshouse growers who had had the advantage of a 45 per cent. increase in income during the past 12 months?
    Mr. Walker: I know my hon. Friend's views about the need substantially to reduce British agriculture. As he knows, the 45 per cent. increase followed a 52 per cent. drop. My hon. Friend should put the matter in the correct context.
    Mr. Lyell: To help to improve the competitiveness of British glasshouse growers, will my right hon. Friend arrange the setting up of a marketing organisation that would provide information, for example from the Dutch clock options and the French auction markets?
    Mr. Walker: Yes, Sir. The Food from Britain organisation is examining ways in which we can substantially improve our marketing information. Nowhere is it more important than in horticultural produce, where the Dutch take most advantage.
    Sir John Biggs-Davison: In view of what my right hon. Friend has said today and what he has done to help this industry, is he hopeful that competent Lea Valley growers can make a go of it in the years ahead?
    Mr. Walker: Yes, Sir. The current change in the competitive position between our main rival, Holland, and Britain means that in 1983 there will be a considerable improvement over this year. I am anxious that we should understand the markets, both here and in Europe, to ensure that we produce goods appropriate for those markets. That is why my answer to the previous supplementary question about improving the entire system of marketing is important.

    Fishing Industry (Aid)
    Mr. Austin Mitchellasked the Minister of Agriculture, Fisheries and Food when he intends to announce his plans for temporary and restructuring aid for the British fishing industry.
    Mr. Buchanan-Smith: We shall shortly be consulting the industry about restructuring measures.
    Mr. Mitchell: Does the Minister accept the importance of urgent decisions and an announcement on further temporary aid to the industry, and on a restructuring plan, if the industry is to survive the crisis of confidence that hangs over it and over the ancillary engineering industries related to fishing? It needs such aid to avoid further bankruptcies and a reduction in the number of fishing vessels. Does the Minister further accept that the matter is important in the light of the poor prices realised at fish auctions so far this season? Does he also accept the need for urgent restructuring if we are to have a viable fleet that can match our competitors, who are developing their fleets?
    Mr. Buchanan-Smith: I should have had more respect for the hon. Gentleman's remarks about uncertainty had he at least acknowledged that the industry is now considerably less uncertain because of the satisfactory settlement of the common fisheries policy. Only three months ago we gave the industry £15 million in temporary aid. Had the hon. Gentleman acknowledged those facts, I should have had more respect for his other remarks.
    Mr. Stokes: Despite all the aid given to the fishing industry, can my right hon. Friend explain why more and more retail fish shops are closing and why it is almost impossible in many parts of England to buy fresh fish?
    Mr. Buchanan-Smith: The position is not quite as bad as my hon. Friend describes. I should hate to think that the British housewife was discouraged from buying fresh British fish, which is an excellent product. However, there is enormous scope for improvement. I hope that my hon. Friend will welcome the work of the Sea Fish Industry Authority, which will soon come forward with effective plans to improve marketing and to meet his and my needs.
    Mr. James Johnson: Does the Minister agree that the distant water deep sea fleet in Hull is in a unique position? Does he intend to help us? If so, when can he tell us about that help?
    Mr. Buchanan-Smith: The details of the structural proposals must be put in the form of implementing regulations, which I hope will be published later in the
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    summer. However, in the meantime, we are entering into consultations with the industry on the outlines of the scheme to try to find the best way to use the restructuring measures. I assure the hon. Gentleman that the interests of Hull and of the deep sea industry will be fully taken into account. The industry will have the opportunity to work with us on those proposals.
    Mr. McNamara: I am sure that the House and the people of Hull will welcome the statement that their interests are to be taken into account, but will the Minister now say whether his proposals envisage a role for the deep sea fleet based on Hull?
    Mr. Buchanan-Smith: In these proposals we wish to look not only at restructuring but at quota management, now that we know our quotas. The consultation process that we are going into is worth nothing unless it means what it says. We intend to work with the industry on this, and when we have the documents ready, which we hope will be very soon, we look forward to as wide as possible consultation about it.

    Ultra-heat Treated Milk
    Sir Peter Millsasked the Minister of Agriculture, Fisheries and Food whether it is possible to sample ultra-heat treated milk at ports to obtain information on the quality and standard of the original milk; and whether this sampling could be done at the dairy.
    Mr. Peter Walker: Sampling of ultra-heat treated milk at the ports does not provide full information as to the quality and standard of the original milk, which is no doubt why the European Court envisaged that the United Kingdom should set objective standards for the quality of the milk before treatment. We are pursuing these questions in discussion with the Commission.
    Sir Peter Mills: Surely, my right hon. Friend agrees that imported UHT milk could contain antibiotics, straw, manure, and other unpleasant things, even though sterilised? Does he accept that the point of testing should be on the farm, where the milk can be discarded?
    Mr. Walker: Yes, Sir. That is why we are having discussions with the Commission to see that the same hygiene standards apply to European producers as apply in this country.
    Mr. Mark Hughes: Does the Minister accept that to disadvantage British farmers by allowing UHT to come in from farm premises with significantly lower standards of hygiene than we demand is wholly unacceptable?
    Mr. Walker: Yes, Sir. That is why we are negotiating to have the same standards of hygiene in Europe as here.
    Mr. Torney: Is the Minister aware that there is great fear in the dairy trade generally and among the mass of workers in the industry about their jobs because of the importation of UHT milk? Will he say what plans he has for the future, when undoubtedly the EEC will make a determined attempt to get French UHT into the country? Will he tell us what he proposes to do in the future, or will he make a statement to the House at an early date?
    Mr. Walker: If UHT milk in Europe has to comply with the same hygiene regulations as are required here, there is no way in which it will undermine our market. At present, UHT milk in France is selling in Paris at 19 to

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    19½p, compared with fresh milk on the doorstep here at 21p. There is no way in which that could compete with or undermine the doorstep delivery service in this country.

    Agricultural Tenants (Rents)
    Mr. Home Robertsonasked the Minister of Agriculture, Fisheries and Food if he will introduce legislation to restrict rent increases for agricultural tenants on the lines of the proposals of the National Farmers Union and the Country Landowners Association.
    Mr. Peter Walker: I have already said that the substance of any new legislation should be based on the principles of the NFU/CLA agreement. Unfortunately, it was not possible to find time for this legislation during the current Session of Parliament.
    Mr. Home Robertson: Is the Minister aware that inflated rent offers for scarce new tenancies are leading to intolerable and unjustifiable increases in rents for some existing tenants? Is he further aware that his right hon. Friend the Secretary of State for Scotland has found time to introduce a Bill that will overcome that part of the problem? As both sides of the industry in England and Wales are pressing for similar reforms, is it not time that he took the appropriate action?
    Mr. Walker: I gather from my right hon. Friend the Secretary of State for Scotland that he is not receiving much assistance from the Labour party in getting that legislation through. In answer to what the hon. Gentleman says about legislation that we should introduce in the next Session of Parliament, after the general election I am sure that we shall do that.
    Mr. Buchan: May I assure the Secretary of State that if he would introduce that half of the agreement that relates to rents and restrict the rise in rents we would give him full support? The nonsensical system of key money, scarcity money, and market value penalises the farmer and enriches the landowner. If he brings in the proper rent legislation, we shall support him.
    Mr. Walker: I notice, and I think that many young people who hope to obtain tenancies will notice, the totally doctrinaire attitude that the Labour party is taking, which will make sure that in future no farms become available to young farmers, other than under the system of nationalisation of land which the hon. Gentleman has advocated.

    Forestry Workers (Wages)
    Mr. Wigleyasked the Minister of Agriculture, Fisheries and Food by what proportion forestry workers' average gross wages have increased in each of the past three years; and if he will make a statement on the current year's negotiations.
    Mrs. Fenner: The gross earnings of forestry workers employed by the Forestry Commission rose by 14·8 per cent. in 1980, by 11·9 per cent. in 1981, and by 9·9 per cent. in 1982. No comparable figures are available in respect of workers employed in the private sector of forestry. The Forestry Commission intends to make a formal response shortly to the pay claim for forest workers lodged for the year beginning 1 February 1983.
    Mr. Wigley: Does the Minister accept that a few years ago there was parity of earnings between forestry workers
    344
    and farm workers, but that in recent years that has been eroded to the extent that forestry workers are now as much as £9 a week behind? In those circumstances, and in view of the failure of the piecework scheme, will she say that the 3·5 per cent. Government cash limit is unreasonable to bridge that gap?
    Mrs. Fenner: I know that the pay of forestry workers has been traditionally linked to the awards made to agricultural workers by the AWB. However, Forestry Commission workers enjoy superannuation and other benefits which are not available to forestry and agricultural workers in the private sector. That was reflected in the 1982 pay settlement and no doubt will again be reflected in that for 1983.

  PRIME MINISTER

    Unemployment
    Mr. Wigleyasked the Prime Minister whether she remains satisfied that Her Majesty's Government's financial measures will have a significant effect on reducing unemployment.
    The Prime Minister (Mrs. Margaret Thatcher):Our financial policies are designed to continue to reduce inflation and to secure a lasting improvement in the performance of the British economy, so providing the foundations for sustainable growth in output and lasting jobs. Improvements in the employment position always lag behind other indicators when coming out of a recession. Last year almost 4 million people left the unemployed register.
    Mr. Wigley: As the Budget assumes a continuing level of 3 million unemployed at a cost of £15,000 million to the Government, would it not make more sense, instead of paying those people to do nothing, to pay them a little more to do worthwhile work? If that needs a few more pence on the standard rate of income tax, is that not a price worth paying to ensure that the burden of unemployment is properly shared among the community, instead of putting on the 20 per cent. at the end of the jobs queue, with no economic benefit, and causing social cancer?
    The Prime Minister: Last year my right hon. and learned Friend the Chancellor of the Exchequer allocated some £150 million to a programme to help some of the long-term unemployed to do a certain amount of social work. It has not been easy to have that programme taken up. The hon. Gentleman will also know that we have extensive programmes on special employment measures and training programmes, which this year already amount to £2 billion.
    Mr. Eggar: Was not this a Budget for more employment? Will my right hon. Friend give a particular welcome to the announcement by her right hon. and learned Friend about reductions in North sea oil taxation, as that will lead specifically to more jobs in the oil supply industry?
    The Prime Minister: Yes. My right hon. and learned Friend's Budget was a Budget to lay the foundations for sustainable growth. It contained substantial measures to help industry. The last Government put £4 billion extra on employers in national insurance taxation, by loading the national insurance contributions to employers. This

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    Government have taken off £3 billion from employers in an effort to help with jobs. I agree with my hon. Friend that the purpose of the reduction of tax on North sea oil was to try to get future exploration in North sea oil and therefore more jobs in that industry and its associated support industries.
    Mr. Kilroy-Silk: Is not the Prime Minister ashamed that there are still 100,000 unemployed 19-year-olds—14,500 in the north-west—all of whom left school in the year in which she came to office, and not one of whom has ever had a proper full-time job?
    The Prime Minister: Yes, there are a considerable number of young people who are unemployed, and that is precisely why we are introducing a special training programme to take effect from September, because there are still shortages of some skills, even in the present state of unemployment. We are introducing that programme at a cost of about £1 billion, so that young people can either stay on in education, or find a job, or have training. Unemployment will then not be an option for them.

    Engagements
    Mr. Duffyasked the Prime Minister if she will list her official engagements for Thursday 17 March.
    The Prime Minister: This morning I presided at a meeting of the Cabinet and had meetings with ministerial colleagues and others. In addition to my duties in the House I shall be having further meetings later today, including one with the Spanish Foreign Minister and another with M. Thorn, President of the European Commission. This evening I am giving a reception for the Commonwealth Parliamentary Association.
    Mr. Duffy: The Prime Minister claimed yesterday that the Budget showed her Government facing their problems with honesty and fairness. Is she so brazen as to tell the House now that that is how she sees the Budget's meanness to old-age pensioners and its neglect of the unemployed and the industrial wastelands of the north?
    The Prime Minister: The Budget has the honesty to cover the vast majority of expenditure by taxation so that we do not have to borrow too much and thus put up interest rates. That will be of great help to the construction industry and all manufacturers who wish to hold stocks.
    My right hon. and learned Friend the Chief Secretary dealt with the hon. Gentleman's point on pensions yesterday, giving quotations from the Labour Government to the effect that the historic method is the fairest method that there is. We do not know what the historic or actual increase in RPI will be on 17 June—[Interruption.] We do not know what the historic increase in the RPI will be when it is published on 17 June. That is the latest figure that we can take. Whatever it is, that will be given to the pensioners and in the following year likewise. So they will get an actual increase. [HON. MEMBERS: "Oh."] We shall do away for all time with the undershoot, overshoot, clawback vocabulary that has grown up. Perhaps the hon. Gentleman will remember and acknowledge that one of the Government's first actions was to make good the undershoot to pensioners caused by his Government.
    Mr. Higgins: As some doubt has been expressed recently about the Government's commitment to the Gleneagles agreement, will my right hon. Friend confirm
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    that she supported it at the Heads of Commonwealth Governments' meeting and that there has been no change in policy since then? Does she agree that it would be wrong if British international teams or international sporting events were to suffer because some individuals were persuaded to take part in sporting events in South Africa?
    The Prime Minister: The Gleneagles agreement was reaffirmed at Lusaka and Melbourne and we are therefore committed to it. One of the objects is to try to ensure that sports all over the world are multi-racial. We hope that that will eventually come about.
    Mr. Foot: Does the Prime Minister agree that the value of the old-age pension is expected to fall by 2 per cent. between November 1982 and 1983? As that is the fact does she not think that the whole effort of her Government to try to disguise the nature of the clawback is a pathetic failure?
    The Prime Ministr: No, certainly not. My right hon. and learned Friend gave some quotations on the historic, or actual, method being very much better. I do not know what the level of inflation for May, to be published on 17 June, will be. I do not know what the level of inflation in November will be. Every time a Government have tried to predict that they have tended to get it wrong and therefore we have undershoot and overshoot. It is far better to give the increase in actual terms. I cannot say what the inflation rate will be in November 1983 and neither can the right hon. Gentleman, but I hope that it will be low.
    Mr. Foot: Is the right hon. Lady not aware that the Chancellor is assuming that it will be 4 per cent.? Therefore, she is engaged in cheating the pensioners—[HON. MEMBERS: "Withdraw."] As the right hon. Lady seeks to take shelter by referring to the Labour Government's actions, will she now confirm that the value of the pension under the Labour Government was increased by 20 per cent., whereas under her Government, by any reckoning, it will be 3 per cent. or even less?
    The Prime Minister: On 22 December 1981 the hon. Member for Birmingham, Perry Bar (Mr. Rooker) said that the historic basis
    "is very sensible considering the trouble that the Government have had over the past few years."—[Official Report, Standing Committee B, 22 December 1981; c. 186.]
    The hon. Gentleman was referring to the fact that in the past seven years the forecast had been accurate only twice. Therefore, it is better to work on an actual amount rather than a forecast amount.
    I believe that the total increase in pensions under the Labour Government was broadly what the right hon. Gentleman said, but will he admit that it would be a great deal fairer, when he tells the National Pensioners Convention that he agrees with its demand for greater pensions and when he gives the impression that those pensions will be given, to give the figures for the increase in national insurance contributions that would be required if pensioners' demands were to be met in full? To be fair, one must consider the burden on the working population. If pensioners' demands were to be accepted it would mean an increase in the weekly national insurance contributions of £20 a week for the man with average earnings.
    Mr. Foot: I am not at all surprised that the right hon. Lady wishes to escape from her shabby treatment of the pensioners by trying to accuse other people. Will she now

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    confirm that under the Labour Government there was never any cut in the uprating? She cut it in 1981 and, under these proposals, will do the same in 1983.
    The Prime Minister: Our pledge to the pensioners at election time was to protect them against the fall in the value of money. At present—(Interruption.]—taking our upratings from the Labour Government, the pension has increased by 68 per cent. and the RPI by 61 per cent. It is already 7 per cent. ahead of inflation.
    Mr. Speaker: Order. I rise to say that some hon. Members are deliberately making a rumbling noise and I shall have no hesitation in naming the constituencies of those concerned if it continues.

    Monopolies and Mergers Commission and Office of Fair Trading
    Mr. McCrindleasked the Prime Minister whether, in the light of recent decisions by the Monopolies and Mergers Commission and recommendations on matters placed before it by the Office of Fair Trading, she remains satisfied that both bodies continue to fulfil their functions adequately in the public interest; and if she will make a statement.
    The Prime Minister: Since both bodies deal with complex and difficult issues, their operation is often controversial. Both bodies recognise this and seek to take full account of different views in fulfilling their functions.
    Mr. McCrindle: Now that there is a programme of investigation into the nationalised industries by the Monopolies and Mergers Commission, does the Prime Minister feel that there may be an argument either for a separate body to continue that extremely important work or, at the very least, the creation of a separate division within the Monopolies and Mergers Commission for that purpose while the commission continues with its inquiry into private mergers? Alternatively, is there a case for extending the remit of the Office of Fair Trading, so that it can be more involved in the investigation of proposed private mergers?
    The Prime Minister: I recognise the reasons for my hon. Friend's proposal, but it would be a pity to set up an extra body when the present Monopolies and Mergers Commission is dealing with such matters, including the many references of public sector industries that have already been made to it, most of which have been
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    published. It can call on consultants to help with its audit work, but it would be better to allow the present arrangements to continue for a further period before reviewing them.

    Engagements
    Mr. Parryasked the Prime Minister if she will list her official engagements for Thursday 17 March.
    The Prime Minister: I refer the hon. Gentleman to the reply that I gave some moments ago.
    Mr. Parry: Will the Prime Minister discuss the effect of the Budget upon unemployment with her right hon. and learned Friend the Chancellor? As my hon. Friend the Member for Sheffield, Attercliffe (Mr. Duffy) has said, all our regions are becoming industrial wastelands and deserts—the north-west, the north-east, Scotland and Wales. The Budget does nothing for unemployment. Will the Prime Minister say that she will fight an early general election and also tell the unemployed of Darlington where they will find jobs?
    The Prime Minister: The hon. Gentleman is aware that the only way to maintain enduring jobs is to produce products that are good value for money, of good design and serviced, if necessary, wherever they may be sold in the world. There is no other recipe. Industry must go that way. The hon. Gentleman is aware that some of our industries are overmanned and that one of our car plants has been on strike and is unlikely to increase its sales. It is handing sales to some of our competitors.
    Sir Anthony Kershaw: Does my right hon. Friend agree that the announcement by her right hon. and learned Friend that child benefit is to rise by 11 per cent. in November makes this the highest rate of child benefit ever? Does that not reach a section of the population that needs it?
    The Prime Minister: That is correct. The child benefit is now at its highest ever level. Tax thresholds are 5 per cent, higher in real terms than they were in 1978–79.
    Mr. Rooker: On a point of order, Mr. Speaker. Is it in order for the Prime Minister to come to the Chamber prepared to quote hon. Members in Committee proceedings totally out of context?
    Mr. Speaker: I never comment on Ministers' replies.

Business of the House
3.32 pm
Mr. Michael Foot: Will the Leader of the House state the business for next week?
The Lord President of the Council and Leader of the House of Commons (Mr. John Biffen): Yes, Sir. The business for next week will be as follows:
MONDAY 21 MARcH—Conclusion of the debate on the Budget statement.
Motions on the Social Security (Contributions) Amendment (No. 3) Regulations, and on the report of the Court of Auditors of the European Communities for 1981.
TUESDAY 22 MARCH—Opposition day (9th Allotted Day). There will be a debate on railway workshops and afterwards a debate on Anderson Strathclyde. Both debates will arise on Opposition motions.
Motions on the Redundant Mineworkers and Concessionary Coal (Payments Schemes) Order, and on the Mineworkers' Pensions Scheme (Limit on Contributions) Order.
WEDNESDAY 23 MARCH—Remaining stages of the Housing and Building Control Bill.
THURSDAY 24 MARCH—Motion on the Easter Adjournment.
Proceedings on the Consolidated Fund (No. 2) Bill.
FRIDAY 25 MARcH—Private Members' motions.
MONDAY 28 MARcH—Progress on remaining stages of the Telecommunications Bill.
The House will wish to know, Mr. Speaker, that it will be proposed that the House should rise for the Easter Adjournment on Thursday 31 March until Monday 11 April.
[For debate on 21 March:
Annual Report of the Court of Auditors for 1981.
For relevant report of the European Legislation Committee see HC 34-xi (1982–83) paragraph 3.]
Mr. Foot: I renew the request I have made on several occasions for the right hon. Gentleman to give the House an assurance that there will be debates on disarmament and on the second Brandt report. Will the right hon. Gentleman confirm that he has agreed that such debates should be held?
Will the right hon. Gentleman tell the House, in view of the extraordinary development yesterday, when the Government will make available the revision of the Supplementary Estimates dealing with the pension clawback so that the House may understand what the Government are saying in their documents on that subject? When will those documents, which the Government have admitted must be corrected, be presented to the House?
The Opposition have put down two subjects for debate next week about which it was hoped that the Government would assist in providing time. We had to press for a debate on Anderson Strathclyde and Charter Consolidated. The Opposition believe that the action of overruling the Monopolies and Mergers Commission was an extra ordinary act by the Government. It is deeply regretted that the Government did not provide time for such a debate, but the Opposition have done so.
The Opposition have asked for a debate on Shildon and railway workshops generally. These are not, as the Prime Minister suggested, minor closures. These are major permanent closures that the Government are proposing. The Opposition wish to debate them.
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When is a statement to be made in the House on the future of Ravenscraig? The Secretary of State for Industry has shown that the responsibility for the future of Ravenscraig rests directly with the Government.
Mr. Biffen: As to the fifth point raised by the Leader of the Opposition, my right hon. Friend the Secretary of State for Industry is considering the British Steel Corporation's corporate plan and he will make a statement in due course.
The Opposition attach significance to the two topics that will be debated next Tuesday. There will be serious debates on those issues.
I shall raise the matter of the Supplementary Estimates on pensions with the Chief Secretary to the Treasury who was in charge of the debate when that subject was raised in the House yesterday.
I acknowledge the general interest in the House for a debate on the Brandt report. A debate on that subject will take place, but it will have to be in the context of considerable pressure of Government business upon parliamentary time in the near future.
I am conscious of having been quite explicit about the desirability of a debate on disarmament. The debate will be either just before or after the Easter recess.
Mr. George Cunningham: I pressed the Leader of the House last week for a debate on the growing practice by Labour-controlled authorities, especially in London, of using public funds for party political purposes. I have in my hand a letter from the leader of the Islington borough council to the one opposition councillor on that council refusing him his right of access to documents on the making of a grant from public funds to the London Labour leaders group. Does that bring home to the Leader of the House the urgency and seriousness of this issue and the necessity for a debate? [An hon. Member: "They do not want it known.") Of course they do not want it known.
Mr. Biffen: The hon. Gentleman makes his point effectively, and hon. Members who know him will not be disappointed. There will be ample opportunity next Thursday for him to take this matter further.
Mr. Robert Rhodes James: My right hon. Friend will be aware that I supported the hon. Member for Islington, South and Finsbury (Mr. Cunningham) last week in his demand for a debate on this subject. The House has had many experiences of Labour-controlled councils misusing ratepayers' money for political purposes.
Mr. Biffen: I note what my hon. Friend says.
Mr. Tam Dalyell: Will the Leader of the House arrange for the Home Secretary, the Defence Secretary or the Prime Minister, as head of the security services, to comment on the unanswered allegation that an arms dealer in the south of England whose name is known to the Government contacted MI5 and MI6 with information about the activities of Mr. Klein of New York and Mr. Carl Villavicienza of Hamburg, who are arms dealers, who wish to buy Exocet missiles through a gentleman in the Sudan for final distribution to Argentina and thereby abuse the end users certificate system? May the House have an answer to that serious allegation?
Mr. Biffen: I can best help the hon. Gentleman by referring the point he has raised to my right hon. Friends the Home Secretary and the Secretary of State for Foreign and. Commonwealth Affairs.
Mr. John Wilkinson: There is pressure from both sides of the House for the proposed disarmament debate. It must be explained to the country in clear terms why mutual and verifiable disarmament is the correct way forward.
Mr. Biffen: I gladly accept my hon. Friend's point. A debate on this subject is central to the wider national debate which has taken place on this issue.
Mr. Andrew Faulds: The right hon. Gentleman will be aware of the widespread support that my Buyers' Premium (Abolition) Bill received in the House the other day and of the massive support that I received from the Conservative Benches in pursuit of my object—the removal of the impropriety of this impost of the buyers' premium at auction. Given that widespread support in the House, would it not be advisable for the right hon. Gentleman to provide Government time to complete the legislative procedures on that necessary change in the law?
Mr. Biffen: I had the privilege and pleasure of being in my place to hear the hon. Gentleman present the Bill for which he feels such affection. However, if I were to single out that Bill for my personal favour, it would, far from enhancing its prospects, perhaps even diminish them.
Mr. J. W. Rooker: Before the Leader of the House finds time for the Second Reading of the social security Bill that is being introduced as a result of the Budget to change the basis of uprating pensions, will he find time to debate in the House early-day motion 151 which is supported by many Conservative Members?
[That this House urges Mr. Chancellor of the Exchequer not to take any steps to implement clawback arrangements on pensions and other benefits announced in his autumn financial statement; and hopes that the Budget in April 1983 will give greater help, not less.]
In that way, we can give hon. Members an opportunity to make clear how real that commitment in the early-day motion was.
Mr. Biffen: That is a well-angled question. However, as the guardian of time, I should observe that the speeches that might be made on a debate on that motion could be made just as well on the Second Reading of the proposed legislation.
Mr. Allen McKay: Will the Leader of the House find time to discuss the oppointment of Ian MacGregor to the chairmanship of the National Coal Board? Does not the right hon. Gentleman accept that that proposal is ill timed, ill judged and insensitive to the needs of the industry? Does the right hon. Gentleman realise that there is great anxiety in all the trade unions in the industry, and in the House, as evidenced by the early-day motion? Does not the right hon. Gentleman realise that there are people of sufficient calibre in the industry's management structure for a chairman to be found within it? The industry exports its products and management expertise abroad and this appointment will be seen as a slap in the eye of British management, because the Prime Minister has imported management from America.
Mr. Biffen: Obviously the hon. Gentleman will not expect me to endorse his arguments. Perhaps he will allow me to confine myself strictly to the question whether the Government can provide time next week for a debate on that topic. I am afraid that the answer must be "No".
Mr. Bob Cryer: Has the right hon. Gentleman seen the reports about the slush fund that is apparently being used by the Social Democratic party to provide cheques of £2,000 to secret donors? As that might interfere with our proper electoral processes, will he urge the Home Secretary to make a statement about the allocation of such funds and the openness of it? Will he also urge the Secretary of State for Trade to make a statement in the House on the leak that appeared in today's edition of The Guardian on the national security directive No. 75, in which the American Government urge fresh economic and trade sanctions against the Soviet Union? Given the great controversy that arose when the Americans tried to force John Brown to sack people because of their foreign policy and defence whims, and the Government's subservience to American foreign and defence policy in the siting of cruise missiles, will the Secretary of State make a statement?
Mr. Biffen: As to political contributions, there seems to be rather a lack of mutual harmony below the Opposition Gangway these days. I cannot hold out great hope that my right hon. Friend the Home Secretary will feel that he can say much to restore peace where now there is discord. I shall draw the hon. Gentleman's important and serious points to the attention of the Secretary of State for Trade so that he can take account of them.
Mr. Ioan Evans: Will the Leader of the House make a statement next week on the Government's policy on leaking information? As The Sunday Times and The Observer went into the Budget in great detail, and as there was a statement yesterday to the effect that Mr. MacGregor would be appointed next week, might it not be better to revert to the practice of telling the House such news first instead of letting the press know and leaving hon. Members to learn from what they read in the newspapers?
Mr. Biffen: The hon. Gentleman has raised what could be a very serious point for the House. Much more information is now made available as a consequence of the Industry Act requirements to enable political and economic commentators to make their own judgments, but it would do a disservice to ourselves if it were ever to be thought or put about that any Government—past, present or future—engaged in a strategem of leaks and fed out their Budget judgments to Fleet Street, because that is simply not so. Those who countenance that proposition do politics a great disservice.
Mr. George Foulkes: The right hon. Gentleman will be aware of all the details in the press about the impending appointment of Mr. Ian MacGregor which are causing widespread concern in the coalfields. When will a statement be made so that hon. Members can tell whether those stories are true and can cross-examine the Minister responsible about the fabulous figures for a transfer fee that are being bandied about and about Mr. MacGregor's remit? Does not the right hon. Gentleman accept that the House has a right to be given a statement on that issue and to be able to cross-examine the Minister on it?
Mr. Biffen: I am sure that it would be appropriate and, indeed, the customary practice for the House to be informed once a decision has been taken. I shall ensure that that practice is followed in this case.

Business of the House
  CONSOLIDATED FUND BILLS
  Mr. Speaker: On 31 January 1983, at column 19 of the Official Report, I made a statement to the House about the new procedure on Consolidated Fund Bills under Standing Order No. 93A. For the debate on the Adjournment on Thursday 24 March hon. Members should submit their subjects to my office not later than 9 am on Tuesday 22 March. A list showing the subjects and times will be published later that day.
Orders of the Day
  WAYS AND MEANS
  Order read for resuming debate on question [15 March].
  WAYS AND MEANS

    AMENDMENT OF THE LAW
    Motion made, and Question proposed,
    That it is expedient to amend the law with respect to the National Debt and the public revenue and to make further provision in connection with finance; but this Resolution does not extend to the making of—

    (a) any amendment with respect to value added tax so as to provide—

    (i) for zero-rating or exempting any supply;

    (ii) for refunding any amount of tax, otherwise than by a provision relating to supplies to, and importation by, a government department, within the meaning of section 19 of the Finance Act 1972;

    (iii) for varying the rate of that tax otherwise than in relation to all supplies and importations; or

    (iv) for any relief other than relief applying to goods of whatever description or services of whatever description; or

    (b) any amendment relating to the surcharge imposed by the National Insurance Surcharge Act 1976 and applying to some only of the persons by or in respect of whom the surcharge is payable, other than—

    (i) an amendment providing for a different rate of surcharge to be paid by the bodies specified in section 143(4) of the Finance Act 1982; and

    (ii) an amendment relating to the Commission to be established under the Act resulting from the National Heritage Bill [Lords].—[Sir Geoffrey Howe.]

    Question again proposed.

  Budget Resolutions and Economic Situation
  [Relevant European Community Documents: Nos. 10337/82, Annual Economic Report 1982–83, together with the final version as adopted by the Council, and 10480/82, Annual Economic Revue 1982–83, together with paragraph 7 of the Fourth Report from the Select Committee on European Legislation, House of Commons Paper No. 34-iv of Session 1982–83, and paragraph 4 of the Eleventh Report from the Committee, House of Commons Paper No. 34-xi of Session 1982–83.]
  3.46 pm
  The Secretary of State for Social Services (Mr. Norman Fowler): The social services are an essential element of the strategy set out in the statement made by my right hon. and learned Friend the Chancellor of the Exchequer in the Budget: first, because that statement included a number of very major improvements in social security benefits, and, secondly, because the maintenance of our social services depends so crucially on the performance of the economy as a whole.
  Perhaps I could begin by setting out for the House just how much this Government are now spending on social security, the Health Service and personal social services. Taken together, spending on those three programmes in 1982–83 amounts to something like £50 billion a year, or 45 per cent. of public expenditure. That means, for example, that on social security we are spending £32·5 billion in 1982–83. That is £625 million a week. In the

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  National Health Service we are now spending £14·5 billion a year compared with the £7·75 billion which was spent when we took office. But what matters more than the statistics of spending are the services that are being provided and that the help which is provided through the social security system is going to where it is needed most.
  As far as the Health Service is concerned, perhaps the most significant indicator of all is the number of patients being treated. The latest figures we have are for 1981. They show that the number of inpatients and day cases being treated in hospitals was 500,000 more in 1981 than in 1978. They also showed that the number of outpatients and emergency cases being treated at hospitals in 1981 was 1·5 million more than in 1978. This is a reflection on the improved efficiency inside the National Health Service. It is also a reflection on the fact that new real resources have been added to health.
  Mr. Mike Thomas rose—
  Mr. Fowler: I shall come later to the Health Service, if the hon. Gentleman can contain himself until then.
  As far as social security is concerned, the Chancellor's Budget on Tuesday contained a range of improvements in benefits which I shall want to describe a little later. Suffice it to say at this stage that we are increasing the real value of child benefit and one-parent benefit to their highest ever level; we are abolishing the invalidity trap which our predecessors were not able to do; and we are restoring the 5 per cent. abatement of unemployment benefit. All told, the benefit improvements announced in the Budget are the most significant made during the lifetime of this Government. They will give considerable extra help to many different groups in our community, to the unemployed, the sick, the disabled, the elderly and families with children. That is the context of this debate.
  Mr. Andrew F. Bennett rose—
  Mr. Fowler: I should like to begin with the important change in the method of uprating social security benefits which was announced by my right hon. and learned Friend the Chancellor and which is contained in a Bill which I presented to the House yesterday.
  Mr. Frank Hooley: I am sorry to interrupt the Secretary of State so early in his speech, but what I have to say is important. How far does the overall increase in social security payments represent the tripling of unemployment during the lifetime of the Government?
  Mr. Fowler: I shall come to those precise points later in my speech. I shall seek to set out all the benefits improvements that we are making. I shall give way later, if the hon. Member for Sheffield, Heeley (Mr. Hooley) wishes to intervene.
  I thought that it would be for the convenience of the House if I began with the important change in the method of uprating social security benefits. As the Chancellor announced, we are moving from the forecast method of uprating to the historic or actual method, and in judging whether such a change is right it is necessary to understand why the forecast method was introduced. It was introduced in the 1976 Budget and took effect from the 1976 uprating order. But no one, least of all the then Secretary of State for Social Services, Mrs. Castle, ever pretended that it was a change motivated by principle. It was a change made for one reason, and for one reason alone, and that was to save
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  £500 million, which in current terms is worth £1 billion. Had the Government of the day stuck to the historic method, it would have provided a 21 per cent. increase. The forecast method to which they moved provided a 15 per cent. increase.
  If anyone doubts that that was anything more than a public expenditure cut, they have only to refer to the diaries of Mrs Castle for the period 1974–76 when she recounts that the main aim of the then Chief Secretary to the Treasury was to get her to agree to a switch from the historic method of calculating the pension increase to the forecasting one
  "which would save the Treasury some £500 million".
  In September 1975 Mrs Castle recorded her intention
  "to resist this ferociously".
  But, as she recounts in her diary entries of 14 December, she lost that battle when it went to Cabinet. The Chief Secretary was adamant that he wanted the £500 million and the decision was captured in verse by another Cabinet Minister at the meeting, the right hon. Member for Deptford (Mr. Silkin), who pushed over the table a small rhyme commemorating the defeat which read:
  "All things bright and beautiful
  All projects great and small
  All things wise and wonderful
  The Chancellor cuts them all".
  Mr. Mike Thomas: That is a bit rich coming from this Government.
  Mr. Fowler: The hon. Member for Newcastle upon Tyne, East (Mr. Thomas) says that that is a bit rich. I cannot recollect when he changed parties, but, as I remember, that proposal and that decision must have been supported by him as he was then a member of the Labour party.
  Mr. Andrew F. Bennett: Will the right hon. Gentleman say whether he had a message passed across the table to him, or was he told he had been savaged this time after the decision had been taken?
  Mr. Fowler: No. We neither work in the same way as Labour Cabinets, nor—even more wisely—keep diary accounts of what takes place. If any cross-reference is required, one has only to go to the diaries of the then Chief Secretary to the Treasury, the right hon. Member for Heywood and Royton (Mr. Barnett), who makes no secret of the fact that this was a public expenditure cut.
  On one level, the 1975 Cabinet meeting was just an everyday story of Cabinet folk in the Labour Government agonising about public expenditure cuts. But what it also shows is that the forecast system was devised on grounds of expediency rather than on grounds of principle or, indeed, grounds of good government. The fact is—
  Mr. David Ennals rose—
  Mr. Fowler: I shall give way to the right hon. Gentleman in a moment.
  The fact is that, since the system was introduced, it has simply not worked. The forecast has been right only twice—in 1977 and in 1979. In other words, it has been wrong in five out of the seven years that it has been used. In 1978 the forecast was 1·9 per cent. too little. In the spring of 1980 the forecast was 1 per cent. too high. In 1981 it turned out to be 2 per cent. too low. In 1982 it was 2·7 per cent. too much. It was basically for such reasons that words such as "shortfall", "overshoot" and "clawback" entered the already not very elegant

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  vocabulary of social security. The case for a return to the historic or actual method of measurement is, in my view, overwhelming, for the plain fact is that the forecast method, judged by whatever criteria one likes to take, has simply not worked.
  Mr. Ennals: I speak with a clear record, because I was not in Cabinet when the Labour Government took the decision. During my period we got it right two out of three times. If the right hon. Gentleman's theory is right, that this was done by the Labour Government to save money—he will know that it was done at a time when inflation was dramatically falling—one can presume that the argument is now reversed and that the Government are assuming that inflation will go up and up and that the change is being made for the same reason, to save public expenditure.
  Mr. Fowler: I am glad that the right hon. Member for Norwich, North (Mr. Ennals) has been kind enough to confirm why the Labour Government made the change. He has made the point for me. I shall come in a moment to the differences between the methods.
  As the House knows, under the forecast method the Government pay pensions and other benefits on the basis of an estimate made several months previously of what inflation will be.
  Mr. Ennals: And earnings.
  Mr. Fowler: It is true to say that that was the position under the Labour Government. I shall try to tell the right hon. Gentleman what the position is now. I know that he likes fighting the battles of the past—
  Mr. Ennals: No.
  Mr. Fowler: —but I prefer to stay in the present.
  Now the uprating will be based on the actual inflation rate between May 1982 and May 1983. That figure will be known on about 17 June. That date has been chosen because it is the last date which enables us to present an order to the House—that is important—and to ensure that all pensioners and all other beneficiaries receive their uprated benefit in time in November. I believe that the certainty and the stability that this change will bring will be welcome, for the Government will pay on the basis of what has actually happened rather than on a forecast made at the time of the Budget.
  Mr. Brynmor John: When did the Government realise that they could uprate benefit in five months rather than in the six to seven months to which the Minister of State referred when he gave evidence to the Select Committee on Social Services?
  Mr. Fowler: I am glad to say that we have been able to bring down the period to just under five months. We judged that to be the minimum time necessary to carry the uprating measures through. The hon. Member for Pontypridd (Mr. John), with his knowledge of social security matters, will recognise that that is the case. We have improved upon the forecast, which is a matter for congratulation. If we could improve upon it further, no one would be more pleased than me. The hon. Gentleman's remarks since the announcement show that there is some agreement that it is a more sensible way to uprate benefits in principle.
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  The Times, in its leader today, was factually incorrect to refer to the May to May estimate. It is clearly an actual measure.
  Mr. Nicholas Winterton: While I fully understand my right hon. Friend's argument for changing the method from the forecast to the historic, does he not agree that doing so this year is, to say the least, a little unfortunate? Forgetting the possibility of an election, does not it appear to ordinary men and women in the street that it could be a way of obtaining the clawback that the Treasury sought to achieve, and that it is a devious way of doing so? Would not it have been more honest to have introduced the new method—which I fully support—next year. In those circumstances, Conservative Members could say "We have done a good thing".
  Mr. Fowler: I am grateful for my hon. Friend's support. I wish to explain to him the arithmetic of the method. It is too early to say by how much benefit will increase in November 1983. The rate will be finally determined in June, when we know the May figure. But it is clear that had we used the present forecast for November of 6 per cent., and taken away the 2·7 per cent. overestimate for last year, the benefit increase would have been 3·3 per cent. As my right hon. and learned Friend the Chancellor has said, we are expecting a May to May measure to provide a figure of about 4 per cent. If we take an illustrative assumption of 4·25 per cent. annual inflation in May, that would mean in aggregate that pensions will have increased by about 75 per cent. under the Government, compared with an expected rise in prices between November 1978 and November 1983 of about 70 per cent. We have kept entirely to the pledge made at the election.
  Mr. Andrew Bowden: Because of what I can describe only as the orchestrated campaign of misrepresentation of what my right hon. and learned Friend the Chancellor of the Exchequer has said, will my right hon. Friend confirm that the increase for pensioners in 1982 and 1983 will be an absolute minimum of 13 per cent.? There can be no question of any clawback. Will he also confirm that the increase that covered the period from November 1982 to November 1983, linked with the increase for May 1982 to May 1983, means that two five or six months' periods will fall within the same increased amount? That more than compensates for the five months lost between May and November.
  Mr. Fowler: In 1982–83, benefits were paid at 9 per cent. on the base of inflation, but it was in fact 11 per cent. because there had been a 2 per cent. shortfall. The RPI at that stage was 6·3 per cent., not 9 per cent. In 1983–84, if we accept the estimate of 4·25 per cent. that will be paid, on an RPI of 6 per cent., which is also an estimate, pensioners will be paid more than 13 per cent. compared with the 12·3 per cent. by which the RPI will have increased. In addition, any rise in prices between June and November this year that was not picked up for the November 1983 uprating will be picked up in the following uprating.
  We have taken a whole range of measures that I believe the country will welcome. First, there are measures to help families. We propose to increase child benefit to £6·50 a week for each child from November. The effect will be to establish the cash value of child benefit at its highest ever

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  real value. At the same time, we shall increase one-parent benefit by a proportionate amount to £4·05. That benefit will be well above its highest ever level. Indeed, the proposed level of benefit in November 1983 will be more than 100 per cent. higher than in November 1978, while prices are expected to have risen by only 70 per cent.
  But families will not be helped only by those benefit improvements. They will also receive substantial help from the proposed tax changes. Taking tax and benefit changes together, there is no doubt that the Budget is good news for working families with children, and that most will be better off in real terms.
  Secondly, we have taken a series of measures to help the elderly. Apart from pensions, they will also benefit from tax changes. In addition, there are to be improvements in the supplementary benefit rules that will be of especial help to pensioners.
  The improvements that we propose to the capital disregard limits will help in a number of ways. The increase in the capital limit from £2,500 to £3,000 is the second increase of £500 in successive years. Therefore, in the course of two upratings, we shall have improved the main capital disregard by £1,000—a 50 per cent. increase. That is a clear sign of our concern to help those with small savings or those who have received a modest lump sum redundancy payment. Moreover, it recognises the wish of both sides of the House not to penalise thrift.
  We shall also raise to £500 the present £300 limit that applies to claims for single payments under the supplementary benefits scheme. That will help the elderly who, for example, have put money aside towards funeral expenses. They can keep up to £500 intact and still receive a payment.
  Mr. Andrew F. Bennett: Will the Minister confirm that for the pensioners and others who had their supplementary benefit increased in November it was 0·4 per cent. less than the price increase because of the new proposals that take out housing? I understand that in May it is likely that there will be a substantial difference between the retail price index with housing and the index without housing. What will happen? Will there be an additional uprating for those on supplementary benefit based on the higher rate, or will they be treated as other beneficiaries?
  Mr. Fowler: We shall keep to the present system. If it benefits those on supplementary benefit, they will gain from it.
  We propose a new disregard for life assurance policies. I was pressed about that matter during parliamentary questions before the Budget. Up to now, the surrender value of such policies has been regarded in the same way as any other form of capital. We now propose that there should be a separate disregard of £1,500 on top of the ordinary capital limit. That means that a claimant can have policies with a surrender value of up to £1,500, plus other capital up to £3,000, and still be eligible for supplementary benefit. Alternatively, if he has no other capital, he will be able to have policies valued up to £4,500 and still be eligible for supplementary benefit. I believe that this change will be welcomed on both sides of the House.
  The third area of improvement is that of early retirement. The proposals in the Budget are designed to help not only those who have already retired but those on
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  the verge of retirement. That is why we are presenting measures to help men over 60 who have either effectively retired from work or wish to do so.
  We shall relieve men over 60 of the need to sign on at the unemployment benefit office if all they want to get are contribution credits towards their entitlement to retirement pension. We shall do this by awarding credits automatically to fill any gap in the contribution record of such men. We shall also allow all men over 60, whether unemployed, sick or disabled, to qualify for the long-term rate of supplementary benefit without having to serve a qualifying period of one year on the lower short-term rate. That will put them in the same position as people over pension age. This change will take effect in June. For those who qualify for supplementary benefit, it will be worth up to £7 a week for a single person who is a householder and up to £10·60 a week for a married couple.
  My right hon. Friend the Secretary of State for Employment has announced a third measure that will help men over the age of 60. The effect of this will be to extend the job release scheme to people over 62 who move from full-time to part-time work.
  Mr. John: What is the right hon. Gentleman's assumption of the effect on unemployment of the measures he has just announced?
  Mr. Fowler: The first measure, for example, will mean that about 90,000 people will not need to sign on at the unemployment benefit office. They will not be counted, of course, but that does not seem to me to be any reason for not taking a sensible measure.
  Taken together, the measures that I have put forward present a coherent package of help for those over 60 who have already effectively retired or who may wish to do so. The benefit change helps those who are least well off. The contribution credits change helps those who are not generally entitled to supplementary benefit, and the extension of the job release scheme offers the opportunity for partial retirement to those who are in work.
  The fourth group that the Budget helps is sick and disabled people. The House will probably agree that the most important measure here is the abolition of the invalidity trap. After November, invalidity beneficiaries will be able to qualify for the higher rate of long-term supplementary benfit after 12 months' receipt of incapacity benefits of one kind or another. Altogether this will help about 55,000 people-30,000 of those aged under 60, and 25,000 out of the 37,000 men over 60 who will be benefiting from the extension of the long-term supplementary benefit rate. The proposal will resolve a problem that has been recognised on both sides of the House, as well as by organisations outside the House, and will give valuable extra help to the families that need it most.
  Another important step forward—and my hon. Friend the Minister of State with responsibility for the disabled has done a great amount of work on this—is the improvement in the flexibility of provision for war pensioners with mobility needs. To achieve this we are introducing a new cash mobility supplement and will progressively phase out the existing vehicle scheme. This supplement will be set at £2·10 higher than the civilian mobility allowance, so maintaining the traditional war pensioners' preference. The advantage to war pensioners is that they will be able to choose how to provide for their

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  mobility needs—they can use the money to run a car or to obtain mobility by other means. If they wish to run a car of their own, they will be able to take advantage of the motability scheme. Some 11,000 war pensioners are likely to be entitled to the new allowance; 700 of them do not now drive and so do not benefit from the present scheme.
  Finally, we are giving a special boost to the therapeutic earnings limit for the second year running. This is the amount that people receiving incapacity benefits—sickness and invalidity benefits can earn before their benefit is withdrawn. I believe that, all told, these are substantial improvements in the social security provision that the Government have made available to pensioners.
  In the current year we shall be spending about £14·5 billion on the National Health Service compared with £7·75 billion in 1978–79. In 1983–84 that figure will go up to £15·5 billion. That represents an increase against inflation of about 17 per cent. It represents an expansion in services of about 7·5 per cent., and it has meant that since September 1978 the National Health Service has been able to employ over 45,000 more nurses and midwives and 3,600 more doctors and dentists. But above all, it has meant—and this is surely the criterion for a successful Health Service—that we have been able to treat more patients and more day cases than ever before.
  Mrs. Gwyneth Dunwoody: How much of that increased figure is represented by increased charges?
  Mr. Fowler: A very small amount, and a very small amount is due to efficiency changes as well. The bulk of the amount about which I am talking is extra resources which have been provided by the Government. I shall ask my hon. Friend the Economic Secretary to give the hon. Lady the exact figure.
  Mr. Mike Thomas: The right hon. Gentleman is wrong and he knows it. If he takes the net figures from his own public expenditure White Paper and makes allowance for the medical advances that need to be financed and the costs that demographic change impose on the health service, does he not arrive at a figure of minus nearly 1 per cent. in the net spending? It is only when he includes the charges paid by patients, not money provided by the Government, that he gets a positive figure.
  Mr. Fowler: The hon. Gentleman persists in this ridiculous and foolish argument that he trades round the country. It is absurd to suggest that the provision of more services for more old people—that is what demographic change means—and making modern treatment more widely available somehow do not count as growth. Clearly this is growth, and it is growth that has been financed by the Government.
  Mr. Thomas rose—
  Mr. Fowler: No, I shall not give way again.
  The fact is that, however spending is measured—whether in volume terms, economic cost terms or cash terms—spending on the Health Service has gone up. We have committed more resources to the National Health Service than any Government in history. I emphasise that we have no intention of turning our back on the National Health Service, which successive Conservative Governments have helped to build up.
  Mr. Thomas: It is wrong. The right hon. Gentleman has accused me—
  Mr. Fowler: Our aim is to develop the National Health Service and, above all, to provide better services for the patients. What that means in practice is getting the best possible value from the amount of money that the taxpayer is providing. There is no merit in spending money. What counts is what the money buys. That is why we have made it our job to improve efficiency by an entirely new system of regional reviews in which—
  Mr. Thomas rose—
  Mr. Fowler: I must make it clear to the hon. Gentleman that I am not giving way to him. I have answered the hon. Gentleman's question several times. He is incapable of understanding it, and I am not prepared to continue a teach-in for the benefit of the SDP.
  Mr. Thomas rose—
  Mr. Fowler: That is why we have made it our job to improve efficiency. That is why we have set up a management inquiry with men of exceptional management skills like Roy Griffiths—
  Mr. Thomas rose—
  Mr. Speaker: Order. The hon. Member for Newcastle upon Tyne, East (Mr. Thomas) has been told by the Minister that he is not giving way. The hon. Gentleman intends, I believe, to try to catch my eye and, if successful, he will have the opportunity to state his views. The Minister must be allowed to continue.
  Mr. Thomas: On a point of order, Mr. Speaker. Is it not the case that when any hon. Member directly refutes a statement made by another, the opportunity is given for the matter to be settled?
  Mr. Speaker: Not always, by any means.
  Mr. Fowler: I emphasise that our aim is to strengthen and develop the National Health Service. The starting point of our policy is that no one should be prevented from getting health care because he cannot afford it. The principle should be that good health care should be provided for everyone, regardless of ability to pay. An efficient National Health Service financed in its present way is the best means of achieving that goal.
  The Government also recognise that the state cannot and should not seek to do everything. This seems to me to be one of the fundamental divisions between our views and those of the Opposition. Basically, the view of the Opposition is that health care should be provided only by the public sector and that every effort should be taken to ban private provision or, at the very least, to discourage it to such an extent that it never has an opportunity to grow. We believe that that attitude is not only absurd, but damaging. It makes no sense to ignore the extra health provision that can be provided in the private sector any more than it does to ignore the provision that can be made by voluntary organisations. It is only by partnership involving the different sectors—the public sector, the voluntary sector and the independent sector—that we can tackle the social and health problems of the 1980s.
  Perhaps it is the belief of the Labour party that only the state can provide and that there are unlimited resources that leads the Opposition to make the wild promises that they make week by week as the election appears to draw

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  nearer. A few days ago the Leader of the Opposition put forward his 12-point plan for pensioners. The cost of that plan would be between £10 billion and £20 billion a year.
  Mr. J. W. Rooker: That is not true. Has the Secretary of State not received advice to the effect that the statement that he has made is totally untrue? Will he put papers before the House showing how he calculated the cost of the programme proposed by my right hon. Friend the Leader of the Opposition?
  Mr. Fowler: I shall be delighted to do just that. The House will then be able to judge the irresponsibility and wildness of the promises and pledges made by the Opposition and see how expensive—perhaps unknown to the Opposition—they are.
  The hon. Member for Crewe (Mrs. Dunwoody) proposes massive new spending on the Health Service and on the personal social services. Perhaps the hon. Lady wishes to deny that. The right hon. Member for Stepney and Poplar (Mr. Shore) in his pre-Budget statement, has proposed massive new spending, including massive spending on capital investment that the Labour Government did so much to cut back. The fact is that the Labour party appears to live in a fantasy world where spending can be increased virtually without limit, where pay can go unchecked and where no one appears to bother even to think of matching income and revenue with expenditure.
  Regrettably, it is not a private fantasy world. The worst charge against the Opposition is that they are seeking to raise expectations that they know, in their heart of hearts, they cannot conceivably fulfil. What, of course, they could and would do would be to recreate massive inflation, and that would inevitably lead not to increases in the social services, in health services and in social security, but to slashing cuts.
  Mr. Hooley rose—
  Mr. Fowler: No, I shall not give way again.
  The Opposition should study the words of the right hon. Member for Heywood and Royton who, a few days ago, in the debate on public expenditure, said:
  "I hope that what happened between 1974 and 1979 will be a powerful warning to those who may have it in mind to plan for huge increases in public expenditure. They could find happening again what occurred in 1974–75 when we increased public expenditure by 9 per cent. in real terms. Because we did not have the rate of economic growth to match that expenditure, at a time when there were also massive increases in money incomes, it meant that I"—
  he was speaking as a former Chief Secretary to the Treasury—
  "spent the following five years carrying out the unenviable task of cutting, cutting and cutting again."—[Official Report, 9 March 1983; Vol. 38, c. 885.]
  There is absolutely no sign that the Opposition will heed that warning.
  Mr. Hooley: The right hon. Gentleman gave a specific undertaking earlier that he would answer my point. Has he estimated how much of his social security expenditure is directly related to the 2 million unemployed who were not in the dole queues when this Government took office? This relates directly to the point that he is now making and the extent to which it is possible to spend this money on useful purposes rather than on keeping people doing nothing.
  Mr. Fowler: There must be, and clearly is, a correlation between the two. The hon. Gentleman will be
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  the first to concede that, because unemployment has gone much higher than anyone wishes to see, there is a responsibility on the Government to seek to make social provision for those who are unemployed. My point is that the Government have fulfilled that obligation.
  We, on the Government Benches, have always recognised that improvements in social services depend not just upon words but, above all, upon a responsible economic policy. The policies followed by the Government have succeeded in lowering inflation and establishing a stable foundation for economic growth in the future. In the final event, it is those policies that will most benefit the growth of social services in this country.
  4.27 pm
  Mr. Brynmore John: The Secretary of state in his entertaining and wildly inaccurate speech, made one point that I should dispose of straight away. I refer to the amazing allegation that, because there are more old people than there were, greater spending on the Health Service to cater for them represents a real growth in the Health Service. On that basis, the right hon. Gentleman should be boasting of a real increase in unemployment benefit. He is now paying for 3·5 million unemployed, whereas in 1979 there were only 1·3 million unemployed. The right hon. Gentleman must have had everyone culling the political memoirs at the Department of Health and Social Security. The Department cannot give the figures of payments that it is making in respect of the extra unemployment.
  For reasons that are apparent, there was no statement yesterday such as is normally provided. It will, therefore, be necessary to clarify some of the details that the Chancellor never seeks to attempt in his Budget statement, although he could have done so. The Government, so boastful of their modest measures, forget that they have cut the social security budget during their period in office by £1·5 billion a year. That is the reality. It is a figure that the Government, in one of the rare intervals when their civil servants were not cut culling through the political memoirs, did manage to come up with. It is not merely a matter of methodology that leads me to deal, in the main, with the historic and forecast method of uprating benefits.
  It is not an academic subject for two reasons. First, it is not an arid paper exercise because it affects the amount of money that is paid to people whose income is considerably below the national average. Secondly, it affects every benefit touched on in the Budget except child benefit, so that the spread of those affected by the change in methodology—the disabled, the invalids, the sick, the unemployed and the retired—goes right across the range of social security benefits.
  If I heard the right hon. Gentleman correctly I interpreted him as giving me a categoric assurance that there would be no delay in paying the new social security benefits at the due date in November. I emphasise that because the Minister of State, in a memorandum to the Select Committee on 15 December 1982, which even in this Government's memory is not the ancient past, said:
  "The timetable reflects the operational need for a period of six to seven months from the time the new rates are decided".
  That means a shaving of one to two months off the period that the right hon. Gentleman claimed was physically necessary for making the new payments. If it can be done, I welcome it, but it means that when the Government next say that an interim uprating in a period of high inflation

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  is impossible because of operational conditions, the argument will be less credible than it was last time. I hope that whoever winds up the debate will make it clear that no delay will be tolerated by the Government in the payment of the increased benefits.
  I do not know whether the right hon. Gentleman intends to give us further fascinating glimpses of Cabinet life under the Conservative Government. He says that they do not work as the Labour Cabinet did. The Conservative Government work in curious ways. The Secretary of State for Social Services and the Chancellor of the Exchequer apparently never talk to the Prime Minister, because the Prime Minister this afternoon at Question Time said that she could not possibly forecast what inflation will be next November; this is only two days after the Chancellor said, as we can see in c. 139 of Hansard, that inflation would be running at 6 per cent. at that time.
  Mr. Fowler: That is an estimate.
  Mr. John: Certainly, but Governments run on estimates. Perhaps the Government run on 2-star estimates rather than 4-star. They run on some sort of estimating principle. It is much to be pitied that the right hon. Gentleman does not take time off from his assiduous culling of political memoirs to tell the Prime Minister what assumptions both the Treasury and the Social Services Department are working on when they are talking about uprating. What is generally agreed in almost every forecast is that the period to May of this year will mark the bottom of the spiral.
  Mr. Richard Needham rose—
  Mr. John: I shall give way when I have finished this point, and not before.
  The inflationary spiral will be at 4 per cent.; the handout by the DHSS refers to
  "an illustrative assumption of a 4¼ per cent. increase".
  We shall be at the bottom of the spiral in May. In November it is expected that inflation will have gone up to 6 per cent.; that is the Chancellor's own assumption. Despite all the trumpeting about there being no clawback, there will be a shortfall of 2 per cent. between the forecast for inflation in May of this year and the forecast for November. That shortfall will not be made good in the November uprating that has been proposed by the Chancellor. Now I will give way.
  Mr. Needham: I am sure the hon. Gentleman appreciates that all forms of estimating are difficult. Surely it is more sensible to estimate five months into the future than 18 months into the future.
  Mr. John: The historic method is to work out what has happened; so it is not an estimate for five months, a year or nine months but it is worked out on past performance. As I am sure the hon. Gentleman understands, all economic commentators accept that the May figure will probably mark the bottom of the inflationary spiral, when the inflation rate will be about 4 per cent. The Chancellor himself has said that he expects that inflation will go up to 6 per cent. Hon. Members on the Government Benches may not agree with the Chancellor but he has to be taken as the most relevant authority on the subject.
  In November, when in the real world in which pensioners live inflation is 6 per cent., they will have a 4 per cent. uprating to compensate for the rise in the cost of
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  living. There will be a 2 per cent. shortfall, which will equal in a year one week's benefit for the elderly, the sick the unemployed and the disabled. Let no one be under any misapprehension about what will happen this year because of the change of method; I shall come back to whether it is more accurate. If inflation goes up from 4 per cent. to 6 per cent. in November, it will mean that those in the poorer categories will have one week's social benefit docked.
  Of course, this is being done apparently skilfully. when Ian Aitken, the political editor of The Guardian, wrote on 17 February about the clawback of pensions he told us to expect something apparently subtle. He said:
  "The Government is now expected to fudge the issue of a 'claw-back' of the excess pension payments … Indeed, officials at the Department of Health and Social Services believe that it is possible that the total clawback will be almost invisible."
  Unfortunately, as with the legendary hairpiece of Ernie Wise, we can see the join. Therefore the Government have been caught out. Under cover, under another name, under a pretence, they have operated a clawback of some sort. Therefore, the Chancellor is like the cat burglar whose career has been cut short because he stepped upon a squeaking floorboard and was discovered. The Chancellor tried to be stealthy but his argument did not hold together.
  The effect of the subterfuge has been to saddle the pensioners with a week's loss of income this year and with an unrealistic base for the future. In eight of the last 14 years to have adopted the historic rather than the forecast method would have led to pensioners being worse off. As I have said, we can debate in academic calm whether a historic or a forecast system should be adopted. What is not at issue is that the results of the change of method are unacademic; they are practical for everyone.
  There is a simple way of ensuring that none of us objects to the change from the forecast to the historic method; the Secretary of State should guarantee that no person will lose this year by the change in method. He should undertake either to uprate the benefit in November by 6 per cent., if that is necessary, or, if he cannot do that because of the system of the DHSS, he should undertake to pay in future a Christmas bonus to all the categories I have mentioned, and not just to pensioners, of a size which will compensate them for their loss.
  I am sure that the Minister will accept that it is not a once-for-all change. The effect carries forward. If he will give that undertaking, we are prepared to debate the merits or demerits of the historic as opposed to the forecast system. If he will not give that undertaking, I throw back to him the words that he has so feelingly quoted on many occasions—that the change is designed to save the Government money and that it will save them about £500 million if it is done in this way this year.
  Mr. Hooley: Earnings are currently running ahead of inflation, so if the Government had not repealed Labour's measure, pensioners would have enjoyed a higher increase in November than they will receive under the present system.
  Mr. John: I spend my parliamentary career trailing a little behind my hon. Friend's arguments. I was about to mention that. The effect of the 2 per cent. cut is to take £1·05 per week from married pensioners and 65p per week from single pensioners. As my hon. Friend says, because the Government have abolished the earnings link, the

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  married couple are already £2·25 per week worse off and the single person £1·45 per week worse off. The cumulative loss is therefore £3·30 and £2·10 per week.
  Secondly, by common consent the Budget holds out little or no hope for a rapid reduction in unemployment. Indeed the highest that those seeking to defend the Government pitched their case was to say that unemployment would not rise so quickly as it had in recent years.
  As the number of unemployed rises, so does the number of long-term unemployed—those who have been unemployed for more than a year. The figure has already soared to well over 1 million. After a year the initial catastrophic loss of income is compounded by the fact that they then go on to the shorter-term supplementary benefit rate and are never able to qualify for the long-term benefit. As the Minister confirmed when he gave the figures for a married couple, the Government are depriving people, who are hard pressed to make ends meet, of between £10 and £11 a week by not allowing them ever to receive the long-term rate of supplementary benefit.
  In the Budget, a tiny proportion—about a company in strength—of the army of long-term unemployed has at last been granted the right to long-term supplementary benefit. I refer to the 42,000 who are over the age of 60. We welcome that, but we are not satisfied with it. Nor will the rest of the army of long-term unemployed be satisfied. There is nothing magic about the age of 60 unless one is attempting to massage the unemployment figures. The long-term unemployed aged 40 and 50 have exactly the same battles to fight as the 60-year-olds and are frequently raising a family as well.
  One is left with the suspicion that the main reason for that concession was to massage the unemployment figures. Why else would the Government deal with only 4 per cent. of the long-term unemployed and leave the remaining 96 per cent. without any easement or betterment in their condition? Now that industry lies in tatters around us, it is time that the Chancellor took steps to protect the longterm unemployed by giving them the right to long-term supplementary benefit. That is the major strategic defect in the social security provisions of the Budget and it gives everyone the impression that the Government do not give a damn about the long-term unemployed.
  Mr. A. W. Stallard: Or the short-term unemployed.
  Mr. John: No, they seem not to care about any of the unemployed.
  We are told that the 5 per cent. abatement of unemployment benefit has been restored. In common with almost all hon. Members, I am glad and relieved that the Government have abandoned their undignified and untenable defence of the indefensible, but our enthusiasm must be tempered by the fact that by the time it is abolished a species of double taxation will have been endured for about 16 months. Many thousands of unemployed people will have spent a full year not just liable to taxation but liable to the 5 per cent. abatement of their benefit. From the small sums of money involved, the single person will have had to give up £1·05 per week and the married person £1·75 per week as a result of the 5 per cent. abatement. A person unemployed for a full year will have had to pay £54·60 if he is single and £91 if he is married. One's enthusiasm is tempered even more by the fact that this was
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  decided not by the macro-economic theories of a benevolent Chancellor but by the arithmetic of a worried Patronage Secretary who knew that he could never force that through the House again. The Government had already suffered enough narrow squeaks on that. We are glad for the unemployed that the Government have had to make a virtue of necessity.
  Abatement of benefit does not end there. Many hon. Members on both sides seem to have forgotten that in anticipation of taxation, invalidity benefit, sickness benefit and maternity allowance were also subject to the 5 per cent. abatement under the Social Security (No. 2) Act 1980. For the latter, the loss is £1·05 and £1·75, but the diminution in invalidity benefit is £1·40 and £2·30 per week. Statutory sick pay was calculated on the abated allowance and is therefore taxed on that basis.
  Mr. Stallard: Is my hon. Friend aware that the unemployed who lost the 5 per cent. will never get it back? As unemployment pay lasts for only 12 months, those who have been unemployed for a longer period will not benefit from the restoration of the 5 per cent. It will not benefit whose now unemployed, but only those who will be unemployed from next November, so it is an even bigger trick than it appears at first sight.
  Mr. John: Yes, it is the unemployed as a category rather than as individuals who will receive the benefit, so it is perhaps a mark of the Government's assumption of continued high unemployment in this country.
  Three years after the passage of the Act and the 5 per cent. abatement no scheme of taxation has been devised for invalidity and sickness benefit. Some people in receipt of those benefits would have been liable to tax, but those whose only income was long-term invalidity benefit would not be liable to any tax for the coming year and others would be liable to tax but not to the extent of a full 5 per cent. of their income. Yet all are subject to the 5 per cent. abatement, whether they would be liable to tax or not.
  That would not be tolerated in any other sphere of taxation. A scheme could not be worked out to deal with a particular category, so a notional amount was taken. One can imagine the outcry from Conservative Members if we said that we could not work out the details of some new company taxation so we intended to make an arbitrary impost of 5 per cent. There is not a company director or even a second-rate unit trust salesman on the Conservative Benches whose blood pressure would not rise at the very thought of such a thing. Yet they are prepared to tolerate the same injustice in this case.
  The Financial Secretary to the Treasury (Mr. Nicholas Ridley)rose—
  Mr. John: I had thought that it was not the custom, even for Ministers, to walk to the Despatch Box in that manner before one had agreed to give way. I am determined to finish this point.
  The point that even Treasury Ministers cannot deny is that either a person is liable or he is not. If he is, he is liable to be taxed at the correct rate. The 5 per cent. abatement catches many people who would not otherwise be liable to pay any taxes. We must demand of the Government that they either devise a system of taxation quickly or legislate to remove the abatement immediately. They cannot keep piling on the agony.
  Mr. Ridley: National insurance surcharge was just such a tax, imposed irrespective of a company's ability to pay, by the Labour Government—the hon. Gentleman's Government.
  Mr. John: I remember well the loud and clamorous sound from the Conservative party then. Does the right hon. Gentleman, in his discussions with the Treasury, ever raise a cheep on behalf of the sick and the invalids? I bet he does not. He just takes them as being the unmentionable people, those better forgotten.
  To continue with the comparative goodwill—it is becoming a little strained by the Treasury, but the DHSS is not quite as irredeemable as the Treasury—I offer the sincere congratulations of the Opposition to the Government on managing, after only four years of government, to restore the real value of the child benefit to the level that had been achieved when we left office. To be fair, the Government have done a little better. At a 6 per cent. rate of inflation, which is what they forecast, they would only have needed £6·45 a week to restore the previous level, so child benefit has been raised in real terms by 5p a week.
  We are asked to ignore the fact that over the past four years child benefit has consistently been running at below its real value under the Labour Government, as of April 1979. A parent has lost, in respect of each child, £80·60 over that period. A child born on the fateful day in November 1979 when the Government first started to plunder the social security system, would now be three and a half. Even if he is in full-time education, the longest time for which a parent can claim child benefit for him is until he is 19. He would therefore be entitled to 15 years more child benefit. At 5p a week, that would repay him only half the amount that he had lost over the past four years. It would take 30 years at 5p a week for the Government to restore what the parents have lost over the past four years.
  Mr. Ennals: Does that not also disregard the fact that one of the first things that the Government did was to cancel the extra 50p on child benefit that would be permitted by the Labour Government?
  Mr. John: That is part of it. I can envisage children being grandfathers when they catch up, but not great-grandfathers.
  The Financial Secretary could feed our view to his Department for costing, as his Department has such difficulty in costing our programme. We believe that much more should be done for children because our meanness to children is the main cause of family poverty. We should pay a sum equal to the real value as of April 1979 for the dependants of short-term national insurance beneficiaries. That could mean an increase of £2 a week. As it is, we have increased child benefit by less than the tax threshold. Tax thresholds have gone up by 14 per cent., and we have increased child benefit by 11 per cent. That is discrimination against the family by the Government who like to pride themselves on being the Government of the family.
  Over 1 million children have parents on unemployment benefit, and over 1·75 million children are members of families dependent upon supplementary benefit. While we welcome the tiny move made, let not the Government congratulate themselves that, having taken three steps backwards and one forward, they have made progress over the period that they followed.
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  We welcome the increase in the capital disregard for supplementary benefit, after pressure by us, to £500 for single payments. We are glad about the recognition of the hardship of taking into account the surrender values of life insurance policies. What puzzles me is why they are not totally disregarded, because the amount of money and the numbers that are involved—if one is taking the only capital of the person as being the life assurance policy, with a surrender value of £4,500—must be extremely small.
  What about redundancy payments? They too are designed not merely to bridge the immediate gap, but to compensate for the loss of the rest of the working life. However, receipt of redundancy payments disqualifies the recipient from supplementary benefit. We hope that this will be looked at as a matter of urgency.
  Some disregards are even more pressing. The Secretary of State will be aware of the furore about war pensions. Certainly the Minister of State will know about them, and the Secretary of State had something to say about them in his speech. What about the disregarding of income for war pensions? That was set at £4 in 1975. To bring it up to date now, it should be £9·50. Is it not time that the Government looked at this?
  We welcome the removal of the poverty trap in respect of invalidity pensions. There is some doubt as to whether that includes widows who are caught in the same poverty trap. Are the Government intending that they should be dealt with upon the same basis, or are the Government planning to replace the poverty trap by a widows' trap?
  There were some problems that were not included in the Budget. I have no doubt that the Minister of State will be interested in the first point, which concerns the Government's famous, although some might say mythical, review of the household duties test for the noncontributory pension, instituted by the Labour Government. It is like the horizon, because however far one travels towards it, it is equally far away. I remind the Minister of some of the statements that he had made over the past few years about this. In answer to my hon. Friend the Member for Eccles (Mr. Carter-Jones) the Minister said:
  "The review is nearly completed and I have already said that, when it is, the matter will be brought before the House."—[Official Report, 15 December 1981; Vol. 15, c. 108.]
  Later, he said, in reply to my hon. Friend the Member for Barking (Miss Richardson):
  "The review is nearing completion".—[Official Report, 26 January 1982; Vol. 16, c. 333.]
  Later, in answer to my hon. Friend the Member for Wolverhampton, North-East (Mrs. Short) he said:
  "The review is still not complete".—[Official Report, 30 March 1982; Vol. 21, c. 91.]
  On 29 June 1982, at an all-party group meeting on disablement he said:
  "The DHSS review of the household duties test is almost complete"—.
  it has been "almost complete" now for a year and a half—
  "and will probably be brought before Parliament in the Autumn."
  Then, my hon. Friend the Member for Wolverhampton, North-East became even more inquisitive and asked another question, to which the Minister replied:
  "the … test is under review. I am not yet in a position to make a statement."—[Official Report, 1 February 1983; Vol. 36, c. 75.]

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  Then the hon. Member for Aberdeenshire East (Mr. McQuarrie) finally tried to rumble the truth and asked another question to which the Minister memorably replied:
  "I can give no undertaking at present."—[Offical Report, 10 February 1983; Vol. 36, c. 444.]
  When will the review be completed? Is it going on? Is the Minister of State going on? He appears to be going round in endless circles. He might be the Flying Dutchman or a species of bird known to the armed forces, but he does not appear to be achieving a great deal of progress in this case. The household duties test is one that discriminates against married women and one about which they feel deeply. I hope that the Minister will be able to give us firm and reassuring news later.
  Operation Major at Oxford revealed to me the total inadequacy of the daily allowance given for the single homeless. At the moment it is £2·93. If one provides that sort of money, is it not likely that such people will be forced to go to the shady lodging house and the unscrupulous landlord? That may be the only type of accommodation that they can afford.
  Even those of us who take the rather naive view that a breach of the law is a breach of the law do not want such people prosecuted because poverty has forced them into lawlessness. The Secretary of State should consider urgently the single homeless allowance and act to avoid such unsavoury episodes in the future.
  The Chancellor boasted of his achievement in cutting the number of civil servants. May I remind Ministers that, despite the easy cheers that that received from their Back Benches, the quality of service in the welfare state depends upon the dedication and numbers of staff who service the system. The operational strategy could form the basis of an improvement in the quality of the service, but will it? The staff are worried that the Government will regard the Civil Service as having to be self-financing, which will lead to lower numbers rather than higher standards.
  The Government could set those fears at rest by undertaking that all the staff affected by the first phase of the exercise will be redeployed in improving the quality of the Civil Service and will not be declared redundant. In the past year in Birmingham and elsewhere we have seen the pressures placed upon staff and claimants by the number of claims and the restrictions imposed on claims by the Government. Unfortunately, the staff will suffer the hostility in the coming year from those who have suffered from the great clawback swindle, because for all the modest improvement in some parts of the Budget, the abiding impression will be of the trick that failed. The Chancellor has become by incompetence what Tommy Cooper is by design—a would-be grand illusionist whose performance goes wrong time after time.
  Those who have to live with the consequences of those mistakes will neither forgive nor forget the Chancellor.
  5.2 pm
  Sir Ian Gilmour: The hon. Member for Pontypridd (Mr. John) was labouring under considerable difficulty—the Labour Government's record. If it had not been for that, he could have made an effective speech. Even he agreed that there are a number of good things in my right hon. and learned Friend the Chancellor's Budget, and a great many of them occur within the responsibility of my right hon. Friend the Secretary of State for Social Services. I congratulate them both. I am
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  glad that the running sore of the 5 per cent. abatement has at last been removed. I hope that we never have such an episode again.
  Like everyone else, I am delighted by the elimination of the invalidity trap. I welcome the concessions on capital limits made by my right hon. and learned Friend the Chancellor and by my right hon. Friend the Secretary of State.
  I believe that the change in the method of indexing pensions and other benefits must be right. I was going to make the point made by my hon. Friend the Member for Macclesfield (Mr. Winterton) about the timing, but I became so lost in the learned exchange between my hon. Friend the Member for Brighton, Kemptown (Mr. Bowden) and my right hon. Friend the Secretary of State that I do not feel able to say any more about it. Perhaps my right hon. Friend can find some way round the difficulty.
  Like the hon. Member for Pontypridd, I regret that the Government have not introduced a long-term supplementary benefit rate for the long-term unemployed. However, the hon. Gentleman failed to point out that the Labour Government also failed to make such provision. I know that the hon. Gentleman can legitimately say that there were fewer long-term unemployed. Nevertheless, there was the same need for the Labour Government to do it. I hope that my right hon. Friend will be able to bring that reform in before long, because there is no reason why the unemployed and their children should be treated worse than other unfortunates who have to resort to supplementary benefit.
  The rise in child benefit is to be welcomed wholeheartedly and unreservedly. I congratulate my right hon. and learned Friend the Chancellor and my Night hon. Friend the Secretary of State upon that.
  Vast sums of money are spent on social security because there are so many people without jobs. The great gap in the Budget is the absence of measures to deal with unemployment. There are measures to deal with unemployment figures, but that is not the same thing—although, as my right hon. Friend made clear this afternoon, those measures are fully justified.
  On Tuesday my right hon. and learned Friend the Chancellor, at the beginning of his speech, said that his proposals were
  "designed to further the living standards and employment opportunities of all our people and to sustain and advance the recovery for which we have laid the foundations.…
  Lower inflation and lower interest rates are themselves the right foundations for economic recovery, a recovery which can be sustained."
  Lower inflation and interest rates are certainly good, but the claim that they will, by themselves, bring about a recovery is an act of faith. It is not based upon any evidence of which I know; still less is it based upon the evidence of the 1930s as Mr. Ronald Butt suggested, wrongly, in The Times today. There was a great deal of intervention from protection upwards or downwards during the 1930s.
  I give one last quotation from my right hon. and learned Friend's speech:
  "It is our purpose as well to secure a sustainable growth in job opportunities."—[Official Report, 15 March 1983; Vol. 39, c. 134–38.]
  That sounds hopeful, so we turn naturally to the Red Book to see how it will be done. Unfortunately, the first

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  bit is not encouraging. At the beginning of the chapter on the medium-term financial strategy, in paragraph 2·01 it states:
  "The objective over the medium term is to continue reducing inflation, and to secure a lasting improvement in the performance of the UK economy, so providing the foundations for sustainable growth in output and employment."
  After four years we are still providing the foundations. It is just as well that the Chancellor is not a builder. If he were, his buildings would never appear above ground level. He would always be laying the foundations. Even the foundations are not all that solid, because 3 million or 4 million unemployed people and a large loss of manufacturing capacity are not the best foundations upon which to build.
  Dr. Alan Budd, who is a great supporter of my right hon. and learned Friend's policies, although he sometimes admits to considerable mistakes, made a similar point in The Guardian on Monday when he suggested that it would be tragic to throw away the hard-won gains in reducing inflation in a premature dash for growth. After three or four years of unprecedently severe depression, I should not have said that it was necessarily premature to do something to help industry and reduce unemployment.
  I should like to ask the Government when, under the present policies, will it not be premature to go for expansion? When will it ever not be premature for the economy to be expanded? On Tuesday the Chancellor said that nothing could be more dangerous for recovery than a resort to reflation. It seems to be all right for other countries to expand and for us to try to take advantage of their expansion, but it is apparently not all right for Great Britain to expand.
  If we look at the more encouraging area of productivity, the Red Book states:
  "In 1982 there was evidence that the period of exceptionally rapid productivity gains in manufacturing was giving way, as had been expected, to more moderate gains."
  Nevertheless, there have been gains. Productivity is plainly a key element in growth, and we need to see what, in the Treasury's view, will happen to growth.
  In the debate last year I was sceptical about the Treasury's estimates of growth. The Treasury now admits that the estimates were wrong. It was 0·5 per cent. instead of 1·5 per cent. This year I am less sceptical. I hope that the estimates of growth made in the Red Book will turn out to be fully justified. What are those estimates? They are:
  "Real output is assumed to grow by 21/2 per cent. a year on average over the three years."
  Therefore, even on the Government's own showing, output will not rise enough to get unemployment down in the next three years. The only way that the Government could argue that unemployment will fall would be to say that the productivity gains were illusory and productivity had fallen, not risen. However, that is not true, and they would not say that.
  I think that it is fair to say that the Government have been generally over-optimistic about unemployment. However, this year they are being more cautious. The Red Book states:
  "Growth of total output in the range 2–21/2 per cent., if sustained for a period and accompanied by no major shifts in financial pressures on employers, is probably consistent with no great change in unemployment."
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  Unless the productivity gains are small, which would bode ill for our future, that phrase must be a euphemism for unemployment continuing to rise, though presumably more slowly than in the past. Therefore, on the Government's own figures the so-called "real jobs" will not materialise for the next three years. We shall still be laying the foundations, and the scourge of high unemployment will go on getting worse, not better.
  That is my first and major criticism of my right hon. and learned Friend's Budget. The second is that the Budget makes little attempt to further the objectives laid down by my right hon. and learned Friend. After the sentence already quoted —
  "It is our purpose to secure a sustainable growth in job opportunities"—
  my right hon. and learned Friend added:
  "So we must look for a larger share of rising demand to be translated into British output and British jobs."
  We all say, "Hear, hear" to that. In a mood of qualified euphoria, my right hon. and learned Friend said:
  "British business is now better placed than for many years to make inroads into markets at home and overseas".—[Official Report, 15 March 1983; Vol. 39, c. 138–39.]
  As we have seen, the Chancellor's euphoria is not firmly grounded in the experiences of the recent past. Although, fortunatelY, last year exports held up well, it was the first year in our history when we had a trade deficit in finished manufactures.
  Granted my right hon. and learned Friend's objective of translating a larger share of rising demand into British output and British jobs, surely there should have been a strategy in the Budget to achieve that objective. That would have meant at the very least not just a small diminution in the national insurance surcharge, but its abolition. The failure to abolish it was a damaging omission and at variance with the Chancellor's principal objective. A strategy to achieve that objective would also entail a considerable rise in public investment, not merely to shore up our decaying infrastructure but to help the construction industry, which is not import-intensive, and would produce many jobs.
  However, instead of seeki0ng to achieve his objective of translating rising demand into British output and British jobs, my right hon. and learned Friend is having a mini consumer boom. That was set off—intentionally or unintentionally; I do not know which—by the removal of hire purchase restrictions last July. It will not be stopped by the Budget.
  That absence of strategy is all the more serious because of what will happen to North sea oil. The Government's policies have been made possible only by North sea oil. Without those enormous revenues, the Government would not have been able to rely on a so-called medium term financial strategy. They would have been compelled to have a strategy for the real economy.
  An answer to a question asked by my hon. Friend the Member for Halesowen and Stourbridge (Mr. Stokes) makes it clear that North sea oil production is expected to decline from 1986 onwards and that from then on the revenue will decline, subject to the price level. On the same page of The Guardian from which I gave a quotation by Dr. Budd, that point was made by Mr. Francis Cripps and Professor Wynne Godley.
  The prospective decline in oil production and oil revenues highlights the need for the Government to act. Yesterday my right hon. Friend the Prime Minister said that the Government had a long-term plan. That is very

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  good news. However, there is not much sign of it in the Budget. Instead of allowing unemployment to rise or to continue at its present astronomic height, my right hon. and learned Friend should have started to rebuild the economy. Instead, he has merely gone on tinkering with the foundations.
  There are many good things in the Budget. Many measures deserve praise, particularly the social security measures. However, because my right hon. and learned Friend has not addressed himself either to the present problem of unemployment or to the future problem of the fall in North sea oil production, I fear that the Budget makes scant contribution to solving Britain's economic problems.
  5.17 pm
  Mr. David Ennals: The right hon. Member for Chesham and Amersham (Sir. I. Gilmour) has made a powerful attack on the Chancellor of the Exchequer's speech. Except for his preliminary incorrect comments about the record of the last Labour Government, I agree with every word that he said. I welcome his plea for expansion. I hope that what he has said, with all his experience, will be taken seriously by the Chancellor.
  We are debating a dismal, unimaginative Budget. It was a wasted opportunity. As the right hon. Gentleman said, with massive and rising unemployment, the Chancellor has not risen to the challenge or seized the opportunity to set Britain on a new course. If he had taken a little notice of the pre-Budget speech of my right hon. Friend the Member for Stepney and Poplar (Mr. Shore) a week before and had given us a Budget that compared with the Budget that a Labour Government would have put forward, it would have been a different story. The right hon. Gentleman referred to the need to rebuild the economy. We have seen none of that in the Chancellor's speech. It was a limp, lacklustre Budget that will soon be forgotten, but in many cases will not be forgiven.
  The industrial package was absolutely inadequate, especially for the major industries. There were many little goodies for small businesses, but the trouble is that most businesses are becoming smaller rather than bigger and some of them are going out of business altogether. The response that I have heard in East Anglia from industrialists to what the Chancellor did is tepid. The Chancellor admits that his Budget will have virtually no effect on unemployment. With so much to be done, it is a criminal waste of human resources that so many people are kept on the dole when work needs to be done.
  It is not my task, nor is there time, to comment broadly on the Budget. I shall pick up four points. Firstly, the Chancellor decided at the last minute to change the rules of the game in relation to the uprating of the retirement pension and the other benefits that go with it. I need to take little time over that as my hon. Friend the Member for Pontypridd (Mr. John) put the case so effectively. Only four hon. Members now in the Chamber have been Cabinet members, and my hon. Friend is not one of them. It was most extraordinary that the decision not to claw back but to change the rules of the game was taken at the last minute, either at the Cabinet meeting that morning or by the Chancellor the previous evening. It must have been taken within 24 hours before the Budget speech because, as my right hon. Friend the Member for Stepney and Poplar revealed from the documents that had already been
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  published, the Chancellor had intended to claw it back. [HON. MEMBERS: "Oh."] That is clearly true, and is one reason why the Chief Secretary to the Treasury said yesterday that the papers would have to be corrected. They had been prepared before the Chancellor delivered his speech.
  It is no wonder that the organisations who speak for the elderly were very angry. As I said in an intervention, the Chancellor has done this although he knows that inflation is increasing. The estimate of 6 per cent. in November may prove to be correct, but what may the figure be in February or in June 1984? We know the motivation for the Chancellor suddenly changing the rules of the game. There is no point in Conservative Members shaking their heads and saying that it was not a sudden decision. It must have been.
  I welcome the restoration of the 5 per cent. that was stolen from unemployment benefit. It was immoral and it tipped down the living standards of the unemployed for two years. There has been no suggestion of retrospection. Those individuals will never recoup what they lost as a result of the decision of the Chancellor or the Secretary of State—it is difficult to know who.
  The Spastics Society has said that it welcomes the restoration of the abatement
  "but is disappointed that there has still not been any similar commitment on the pension element of Invalidity Benefit; nor had a date been set for IVB to be brought into the tax system. Consequently many thousands of invalidity pensioners, whose income would be below the tax threshold, are being unfairly penalised."
  The Secretary of State boasts about what he is doing for the disabled, but he must accept that he is still forcing down the standard of living of invalidity pensioners. They still receive only £31·45 a week. The fact that 90,000 men aged over 60 will be fully entitled to pension rights without having to register is, as my hon. Friend said, largely massaging the unemployment figures. If that is a serious intention, why does not the Chancellor start now to bring down the pension age? The Select Committee and other bodies have concluded that it is time to bring the pension age below 65. Why does he not make a bold move instead of a small move that he knows does nothing but reduce the monthly unemployment figures?
  The Secretary of State said that VAT for charities is not his responsibility, but fortunately the Economic Secretary to the Treasury, whose responsibility it is, is here today and will reply to the debate. He knows the enormous service that has been rendered by voluntary organisations, especially in social services. Much of the work in the social services—caring for the elderly, children, the sick, the handicapped and the mentally ill and handicapped—has been carried out by voluntary organisations. They often perform exactly the same services as those performed by local authorities, who need not pay VAT.
  The Daily Telegraph of 2 March carried a moving letter from a charity of which I had not heard—the Foundation of Edward Storey in Cambridge—which stated:
  "To fulfil an urgent local need in 1981 our Foundation built an extra care home for frail elderly women. Since the social services do not meet any part of the running cost of the home and most of our residents have nothing to live on apart from their State pensions, we have had to base our charges to them on what they can claim through the Department of Health and Social Security supplementary benefits office, plus attttendance

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  allowance for a limited number. This means that the charity is finding a substantial proportion of the running costs out of its own income …
  A social services Part III home for the frail elderly is zero-rated for VAT. We received no VAT concession whatsoever. This is the level at which the Chancellor should be assessing the worth of charities for exemption from VAT. The work our Foundation is doing is being repeated over and over again throughout the country by charities caring for the frail, the disabled, the elderly, the blind and the mentally handicapped. We are happy to fulfil a need which Government resources cannot meet out of taxation. All we ask is that we be given the same concession for VAT as the Government grants to State-run homes."
  That irrefutable case has been made many times to the Chancellor and his Ministers by the group of organisations that has campaigned to be relieved of the burden of VAT. However, they have failed. It is not as though it cannot be done. The Secretary of State has relieved from VAT those commercial firms which, for private profit, will seek contracts with the National Health Service, but the Treasury cannot do the same for the voluntary organisations that perform such a great service. If the Government wanted to do it, they would. They always find ways of getting round problems to meet their needs. Since this Government believe very much in the voluntary sector—as I do—their action is deplorable.
  A Spastics Society news release states:
  "The Spastics Society feels bitter disappointment".
  This is a statement from Mr. Tim Yeo, who has just been adopted as a Conservative party candidate, so there are no party politics in the document. He is one of the lucky ones who has been selected to fight in the next election. No doubt when he sits on these Benches he will envy his present position. The document states:
  "The Spastics Society feels bitter disappointment that no VAT relief has been given to charities in the Budget. The arguments against granting relief are irrational because relief is not indiscriminate, as claimed by the Chancellor: it goes to charities who are incurring expenditure. The claim that relief for controversial charities is unacceptable is nonsense as other reliefs have been extended to them, including the new one on capital transfer tax, which only benefits larger charities, who are likely to receive legacies over £250,000. We have calculated that the extra concessions are worth about £60,000 to The Spastics Society in the next financial year as opposed to £518,000 in VAT."
  The Economic Secretary to the Treasury (Mr. Jock Bruce-Gardyne): Conservative Members share the right hon. Gentleman's admiration for the work of the voluntary sector, and I shall do my best, if I catch your eye, Mr. Deputy Speaker, to answer the right hon. Gentleman's basic point. However, perhaps he could clear up one point for our benefit. He had some responsibility in this area in the Labour Government, when the VAT position was precisely the same as it is now. Did he do anything about it then?
  Mr. Ennals: VAT is now 15 per cent. It has been doubled since the days of the Labour Government. Thus, the effect on charities has been doubled. I attended a meeting of representatives of 120 charities, all of whom felt that something had to be done. That feeling did not exist at the time when VAT was at a modest level. The hon. Gentleman's intervention is simply not good enough.
  The last issue that I want to raise also concerns VAT, but it does not concern health and social security. I hope that the Treasury will consider assistance in the fight
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  against rising crime. Indeed, I hope that an amendment will be tabled in Committee. My local paper this morning draws attention to the matter. It says:
  "At this time last year the Home Secretary … was under a great deal of pressure from the Right-wing of the Conservative Party and other prominent groups in the law and order lobby. A ten per cent. increase in the number of recorded serious crimes in England and Wales in 1981 had just been announced … There has been little so far to suggest that a similar emotional outburst will follow this week's relevation that the number of notifiable serious offences recorded by the police in England and Wales rose by ten per cent. again in 1982. This may be largely attributable to the fact that politicians and the media have been concentrating on the Budget in the past few days".
  The nation must face this issue. Under this Government, crime is going up steadily and seriously to proportions previously unknown. There is something that the Chancellor could do, and I hope that the Minister will listen to what I am saying, because it is something that he could do, which perhaps the Home Secretary could not do.
  The Home Secretary must be worried. Let us consider the situation as it affects Norfolk. In 1982, nearly 2,900 homes were burgled in Norfolk—a massive increase of 26 per cent. over the previous year. There has been a big campaign to persuade peo0ple to purchase various security devices—locks for doors and windows—all of which are subject to VAT. Many people simply cannot afford to make their houses secure. If VAT were removed from security devices, the situation would be easier for those people and more difficult for the burglar. Surely it is paradoxical for the Home Office and the police to urge people to purchase security equipment and then put a tax on it. I well appreciate the problems of seeking VAT exemption, but, as I said about charities, where there's a will there's a way. The Government could tackle the issue by removing VAT from security equipment to deter criminals, particularly burglars.
  I shall say no more, because I know that others of my colleagues wish to speak. I end by saying that this is a dismal Budget. It has failed to rise to the challenge of the nation. It gives no hope. It just gives away little crumbs to a large number of people and takes away crumbs from many others. It gives no hope and no leadership. That is what the right hon. Member for Chesham and Amersham said, and I entirely agree with him in the challenge that he put to the Government.
  5.33 pm
  Mr. Donald Stewart: The right hon. Member for Norwich, North (Mr. Ennals), at the end of his speech, gave an accurate description of the Budget. In some ways, what it omitted is of more interest that what it contains.
  The right hon. Member for Chesham and Amersham (Sir I. Gilmour) pointed to the widest gaping black hole of all—the lack of measures to deal with unemployment. Apart from the little frippery of the 90,000 who will be taken off the figures, reducing them to that extent, there is no mention of employment in the Budget. It contains no plans for putting the appalling number of people on the dole back to work. The Government look on unemployment—if they look on it at all—as something like rainfall that cannot be affected in any way by human or Government action.
  The same is true of the Government's lack of plans to rebuild the economy. The United Kingdom was in on the ground floor in the industrial revolution. Now this

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  Government are leading the industrial counter-revolution, dismantling the industrial base of the country, and making no commitments to rebuild it.
  The Chancellor of the Exchequer lectured the House about the usefulness of small businesses, their contribution to the national economy, and so on. He emphasised their vital role. That message should have been addressed primarily to his own Department. Who gave small businesses the kiss of death? This Government.
  The Budget is a low-key, totally uninspiring affair. It will do nothing to save the Scottish economy from the depression into which Westminster mismanagement and neglect have plunged it. It has been said in some quarters that it is a "something for everyone" Budget. I do not agree. There is plenty for the well-to-do, a few things for the middle class, and little for the poor.
  Mr. Ron Leighton: Many of them would be worse off.
  Mr. Stewart: The hon. Gentleman is right; many of them would be worse off.
  There was a fillip for the west midlands—that is, indeed, a depressed region—in the form of the reintroduction of the small engineering firms investment scheme. We know that that area needs it, but, as it is largely based on car manufacture, one wonders what was the point of raising the road fund tax and the tax on petrol.
  The rural areas of Scotland were dealt another blow by three measures. First was the rise in vehicle tax. The use of a private car or van is extremely important in rural areas of Scotland. In my constituency, where there are no railways, it is the only means of travel. Indeed, it will increase the cost of transport and inevitably the cost of living in those areas.
  Another blow was the application of another 25p on a bottle of whisky. I do not argue that whisky is a great priority in the national larder, but it makes an important contribution to the Exchequer. While it may be a fair target for the Treasury in normal times, one would have thought that an industry which in the past two or three months has lost 1,000 jobs throughout Scotland—from Galloway to the Orkneys, from the east to the west, mostly in small communities—would have been spared. Such areas of Scotland struggle constantly to avoid the triple jeopardies of depopulation, decline and deprivation. This Budget has not helped them one iota.
  The one piece of good news of any major proportion was the raising of personal allowances. The Government are acting as though it were a piece of great benevolence on their part. In fact, it is only a catching up. No one should forget that the Government froze the level of allowances in 1981, when they overturned the RookerLawson-Wise amendment which linked allowances to inflation.
  In opening, the Secretary of State made great play of quotations from Mrs. Castle's diaries. It was a fair point. It showed that the Labour Government were guilty of fiddling. Some of us in other parties in the House hardly needed to be told that Labour Governments have as much musical expertise in that respect as the Conservative party. There is nothing new in that. However, it seems odd that this Government think it sufficient defence to say, "You did the same." We come back to the fact that two blacks do not make a white, but the Government appear to believe that two blacks cancel each other out.
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  Even though there had been a cash handout, the low-paid are paying more of their wages in tax now than three or four years ago. Under the Labour Government the gap between rich and poor grew; under this Government that movement has been accelerated. Bankers, financiers, stock traders and big business men have never had it so good. Most of us have never had it so bad.
  This year revenue from Scottish oil will amount to £8,000 million. That figure brings home the extent of the fraud that is being perpetrated upon the Scottish people. The policy of over-production in the past has contributed to the world oil glut, and that has caused a danger of collapse in the price of oil. We welcome the tax adjustment for marginal fields. It makes sense to have continuity of development rather than a stop-go policy. It also safeguards employment, which is important to Scotland. However, Government action should have been instituted on prices. Future development will depend more upon a stable price structure than on taxation cuts and incentives.
  The Scottish National party recently announced its budget plans for an independent Scotland. Even in the present context, many of the suggestions could usefully have been implemented by the Chancellor. We demanded a cut in VAT from 15 per cent. to 10 per cent.
  I join the right hon. Member for Norwich, North in his comment about charities. That is an appalling situation. What the Government have done is a disgrace to any administration.
  We also suggested a reduction in the tax on petrol, but the Government have gone the other way. There is no justification for that. We would have used oil revenues for public spending in Scotland. That would be one way to overtake the appalling unemployment figures. We believe in using the opportunities presented by oil revenues to invest in capital projects for the future which would prevent money from being frittered away on unemployment benefit. It would assist the development of new industries and improve the quality of life in Scotland.
  The Budget has done nothing to solve the unacceptable level of mass unmployment. We believe that the Budget that we put forward and independence for Scotland represent a realistic plan to put Scotland back to work.
  5.42 pm
  Mr. Julian Critchley: I have a confession to make. I am a member of the Conservative party but I am not a monetarist. That, I acknowledge, can be something of a disadvantage in our great party. II is the equivalent in party terms of being young, black and unemployed. I have no economic beliefs and therefore I can have no invisible means of support, which means that I am unlikely to be asked to become a member of the Prime Minister's fifth brigade—that Chicago-trained corps of economic stormtroopers.
  I have other failings. [HON. MEMBERS: "Hear, hear."] My heroes—my Conservative heroes—are not such as might commend themselves to the new regime. Were I asked by some smart reporter on the Aldershot News to name my heroes from the pantheon of our party, I would not offer the names of either Mr. Wackford Squeers or Mr. William Sykes. Instead, I would offer the names of Archdeacon Grantly and Lord John Roxton. Bat enough of these wanderings.
  The Chancellor is the very embodiment of "economic man". He believes that what goes up must come down.

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  Years ago when I was in the House and he was not—clearly the dark ages of the Conservative party—he came to me for advice on how best to be adopted for some seat in the far north-west. In those days, as in this, Treasury Ministers found some difficulty in getting suited. The Chancellor showed me his speech. It was all about economic man. Acting upon my advice he abandoned that gentleman in favour of a more reasonable approach. He was adopted and the rest is history. For my contribution I deserve a footnote in the history of our times.
  This is the Chancellor's fifth Budget. On Wednesday The Times, which has fallen into the hands of Sir Les Patterson, published one-line summaries of all five of his Budgets. So much is contained in so little. About the June 1979 Budget it said:
  "Tax incentives welcomed by managers but big boost to inflation."
  Those were the days when monetarists believed that wages had no effect whatever upon the rate of inflation. It was the year that they sat and failed their A-level in economics. About the March 1980 Budget it said:
  "Tight money and fiscal policies welcomed by City but little relief for industry in recession."
  A cloud no smaller than a man's hand. About the March 1981 Budget it said:
  "Few supporters, many critics."
  That was the understatement of the year; the majority of the then Cabinet were amongst the critics of the Chancellor's 1981 Budget.
  "Severe contractionary effect dismayed industry in depths of recession, not offset by promised lower interest rates."
  About the March 1982 Budget it said:
  "Modest expansion generally welcomed."
  About the March 1983 Budget it said:
  "something for everybody in a possible election year, though expansion thought inadequate by critics."
  What more should one say? As for the Chancellor's fifth Budget, I like the plums but not the pudding. I would mount a bus driven by the right hon. Member for Stepney and Poplar (Mr. Shore) but only to alight at the first stop. The Budget will stimulate the economy but a further reflation is essential for recovery. Perhaps we should look forward to the Williamsburg summit and to the agreements reached there. I hope that there will be an agreement on stabilising exchange rates. I also hope that there will be an agreement that the OECD countries should do a little more to concert the expansion of all our economies.
  For four years the Government have wrestled with inflation and, at some cost, have managed to bring it down. In the next four years they must wrestle with the problem of unemployment. We need more reflation and a change of rhetoric. It is clear that after the election the Chancellor, for whom we all have much admiration and affection, will leave the Treasury for the real world. We wish him well in whatever office he is called upon to serve—even in the Welsh Office, although I have a feeling that that office is reserved for my right hon. Friend the Member for Henley (Mr. Heseltine). We shall be sad to see him go but I only hope that when he does he does not forget to take economic man with him.
  5.50 pm
  Mr. Mike Thomas: Like the hon. Member for Aldershot (Mr. Critchley), whose act is well known to be hard to follow, I have been studying
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  my newspapers. I came, with some surprise, upon a most remarkable commentary on the Budget, more crisp and pungent than The Times ever manages to run to, that stated that the Budget was a "lack-lustre, pedestrian performance." It later stated:
  "Sadly the Chancellor's financial strategy lacked thrust and vision."
  I thought that was pretty tough stuff and that that commentary could not be from the damper end of the Conservative party but probably from the Morning Star or at the very least The Guardian. I was staggered to turn over my newspaper and discover that that was the verdict of the Daily Express on this year's Budget. If it carries on like that, the Prime Minister will have to get Mr. Murdoch to buy the Daily Express as well. Why did the Daily Express say such things? It was fascinating and illuminating reading yesterday morning. It stated:
  "More than anyone else, the 3,200,000 unemployed needed something to raise their hopes, some plan to get Britain cracking again.
  The best Sir Geoffrey could offer them was a cut in the National Insurance Surcharge—the jobs' tax based on company payrolls. This was no sweeping measure eliminating it altogether. It was a mere nick reducing it from one and a half per cent. to one."
  The Social Democratic party would have abolished the national insurance surcharge. The overall context of the Budget, even as perceived by the Daily Express, is couched in terms which the hon. Member for Aldershot would consider more than mildly critical. The reasons are clear. The Government's assumptions are, and the right hon. Member for Chesham and Amersham (Sir I. Gilmour) described them accurately, that unemployment will rise by 280,000 to 300,000 this year.
  If anyone believes that this is a partial judgment I pray in aid what the hon. Member for Carlshalton (Mr. Forman) said in yesterday's Budget debate. Like the Under-Secretary of State for Health and Social Security, the hon. Member for Braintree (Mr. Newton), the hon. Member for Carshalton is "damp but not green". He said:
  "Our gains in productivity and competitiveness—which I welcome—are unlikely to reduce unemployment. On the contrary, as table 3·8 in the Red Book shows, unemployment is likely to increase in the short term."—[Official Report, 16 March 1983; Vol. 39, c. 299.]
  What was the response of the Chancellor of the Exchequer to that position? He decided to restore the 5 per cent. abatement of unemployment benefit after cheating the unemployed for 16 months—there can be no justification for those 16 months—out of the money they were entitled to by right. He failed to give the long-term supplementary benefit rate to the unemployed. Hon. Members must remember that the Chancellor of the Exchequer did away, in a previous Budget, with the earnings-related benefit. The compassion of the Government toward the unemployed is, at best, limited and late. The Chancellor concentrated most of the remainder of his help, with the honourable exception of the child benefit increase, which the Social Democratic party welcomes, on those in employment. That is what I call the Richard Nixon approach to politics.
  In the 1960s, the President of the United States was approached by a person who was working in the White House, who had come with him from California, who said, "I have to tell you, Mr. President, that I cannot keep quiet any more. It is terrible what our polices are doing to the poor, to the blacks, to the unemployed and to the people who live in our great cities." President Nixon is reputed

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  to have replied, "Young man, go away and put a notice on your wall that says 'The majority of Americans are not poor, are not black, are not unemployed and do not live in the inner cities.'"
  For this Government to base their policies, as they do, on continuing to keep the support of some proportion of the 87 per cent. who are in employment at the price of largely disregarding the position of those who are not in employment, is the greatest moral—the word "moral" is that of the right hon. Member for Chelmsford (Mr. St. John Stevas)—criticism of this Government as well as the greatest economic and social criticism of their policies. The Government illustrate that criticism by the cheap deceit of choosing May as the month in which they will decide by how much the pensions and benefit are to be increased. They are perfectly aware that May will probably be the month when inflation will be at its lowest point for almost a decade and probably for a decade to come. I do not dispute the arguments about returning to the old system of dealing with the uprating. I think it is to be preferred. There are disadvantages and advantages to both.
  The right hon. Member for Western Isles (Mr. Stewart), said that the Government and the Labour Party thought that two blacks made a white as they exchanged criticisms across the Chamber, saying, "Well we are doing it and you did it when you were in office." The right hon. Member for Norwich, North (Mr. Ennals) said, "Yes, but they are blacker than we are." It is an illustration of what is wrong with this Chamber that such views can be taken of politics in this country. I do not intend to fall into that trap. There are disadvantages and advantages in both systems of uprating. On balance, I think that the Government are right to return to the old system. To choose May as the month is a classic illustration of what is wrong with the overall approach of the Government's policies.
  The right hon. Member for Chesham and Amersham demonstrated the bankruptcy of the Government's policies, underlined in last year's Budget debate by the right hon. Member for Sidcup (Mr. Heath) and his supporters. The Government provide no answer to the question posed in some of the more intelligent newspapers in the past few days as to how the Government can engineer a non-inflationary recovery for Britain. That is the central question. That is why there is no intellectual coherence to the fudging and mudging of the Government.
  Those hon. Members in the alliance—in the Social Democratic party and in the Liberal party—have stated how the national insurance surcharge and other matters would be dealt with. We would bite the bullet of increasing PSBR by about £3 billion net and do so in such a way as to distribute the benefits so as to reduce unemployment by about 1 million throughout a period of 18 months to two years. To ensure that that did not spark off a burst of inflation that could not be coped with, the alliance would, in two stages, reduce value added tax to 10 per cent. The figures are available, the programme has been costed and put through the Treasury model. From the launch of our party and the Warrington by-election, the SDP's proposals have never seriously been challenged by any Government economic spokesman. It will be interesting to see whether the Financial Secretary in his reply can mount any challenge.
  We should give credit where credit is due. A number of minor changes have been made in the benefits relating
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  to the invalidity trap and the rise in the disregard. There were some other measures. The Secretary of State listed nine or 10 in a press release, which are sensible and welcomed.
  We believe that increasing the personal allowance is the right way to cut income tax. However, we must be clear what it means. The Government are fond—I will come to the Secretary of State's propensity for this — of claiming the gross figures and never looking at the net. Let us examine what the allowances mean. We must discount what the increases in allowances mean against the rate of inflation during the past year, and also consider that national insurance contributions will rise. The Government conveniently announce those increases at another time.
  The increase in the single person's allowance is £220. If we take off the inflation rate and the increase in the national insurance contribution a single person will gain, if he is earning the average wage of £172 a week, £56 and not £220. Comparable figures for a married man, whose wife is not working, are £350 gross and £136 net. Those are the figures for those who pay the contracted-out rate of contribution. For those who are not contracted-out, the differences are greater and they are worse off. Thus, even the Chancellor of the Exchequer's increase in personal allowances offers only the most minor help.
  The second major aspect of the Chancellor's tax changes relates to the increase in mortgage tax relief. What a terrible retrograde step. No one would believe that a Government could do away with mortgage interest relief, particularly in the case of those who have bought houses on the assumption that they would continue to benefit from doing so. However, we all know that it has the most pernicious side effects and that it should 'lave been allowed to wither on the vine. Let us see what The Daily Telegraph had to say on that point. Again, I have not chosen a newspaper that might be construed to support my party or the Opposition, but a newspaper that supports the Government. It said:
  "The decision to raise the limit on loans qualifying for mortgage interest relief is understandable in the narrowest political terms, but in every other way it is shabby."
  It should be borne in mind that tax cuts do not help the unemployed and those who do not earn wages or pay taxes. However, the unemployed could have been helped by a direct attempt to use public expenditure to create real jobs. We illustrated that clearly in the Budget that we published together with the Liberal party. We have shown how we could increase the number of people in employment by about 1 million in 18 months to two years for a net £3 billion on the public sector borrowing requirement. We would do that by carefully directing the public expenditure increase so that we obtained the maximum benefit for employment, and the minimum risk to inflation and so that there would be the minimum risk of money put back into the economy being spent on items that would produce import suck. That would export jobs and would lead to possible balance of payments difficulties.
  The health and social services are labour-intensive and there one can engage in the most magnificent win-win game. For example, one can keep an elderly person out of hospital and give him a better quality of life, letting him stay in his own home, by spending money on home helps. However, many authorities have had to cut the number of home helps as a result of the Government's policies on

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  local government expenditure. In addition, money could be spent on the adaptation of such homes. Again, in many local authorities such work has been cut because of the Government's financial constraints. Such expenditure would give work to both home helps and construction workers.
  Let us put the Government's record on Health Service expenditure straight. The Secretary of State is fond of blustering and asserting that the figures that I quote to him are "wrong". I shall quote them to him quite straightforwardly and he can then stand up and tell me whether they are wrong. However, it is no good the right hon. Gentleman talking, as he does, in fudging phrases. The other day, he quoted at me something that I said about him in Darlington. I shall repeat it, just to put it on the record. I said:
  "Mr. Fowler's claims for Health Service spending are only true in the sense that the words he uses are literally correct."
  The Secretary of State got a cheap laugh out of that the other day. However, he did not read the rest of the sentence, which said:
  "on any reasonable judgment of the facts they"—
  the right hon. Gentleman's words—
  "amount to little more than forms of words to promote the false impression that NHS spending has been protected and to camouflage the unpleasant truth that it has been in fact ruthlessly squeezed by this government."
  I then gave several examples of the Secretary of State's use of such words as "growth", "development", "growth money" and "expansion". He uses such words in circumstances in which it is clear that there has been no such thing.
  I should like to take on the Secretary of State on the central charge, which is his assertion that the Government have increased the resources available to the NHS by 7·5 per cent. in real terms. Again, I give him full credit, because that is literally correct. If those words were measured in a court of law, they would be found to be truthful, but they do not represent the whole truth. As the hon. Member for Pontypridd (Mr. John) has said, if there are twice as many old people and spending on the elderly is doubled, the level of service will not be improved, but will remain in exactly the same position.
  I shall give the Secretary of State the exact figures so that he can be in no doubt. According to his public expenditure White Paper, net expenditure on the NHS in 1978–79 was £6,311 million. In 1983–84 net expenditure will be £12,465 million, on the right hon. Gentleman's own figures. That is a cash increase of 97·5 per cent, but when the increase in NHS pay and prices is deducted, it represents a growth in resources of 5·9 per cent.
  Mr. Stephen Dorrell rose—
  Mr. Thomas: When I have given the Secretary of State the figures I shall gladly allow the hon. Gentleman to take the bait.
  Thus, the growth in resources is 5·9 per cent. However, on the Secretary of State's own figures, which were given to me in a parliamentary reply, expenditure needed to grow by 6·5 per cent. to stay level with demographic changes, with the increase in the number of the elderly and with the cost of medical advance. Therefore, there is a net decrease of 0·7 per cent. The Secretary of State can get
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  out of that only by using words that are literally correct and that have been very carefully chosen and placed so that they cannot be literally argued with.
  Mr. Ennals: Weasel words.
  Mr. Thomas: Exactly. The Secretary of State can claim growth only by adding on to the net figures the increases in charges. However, that is not public or Government expenditure on the NHS, but the spending of patients' money paid by them in charges that in most cases have increased far faster than the rate of inflation. That is the only way that the right hon. Gentleman's claim can stand up.
  Before taking interventions from minnows on the Back Benches, I should like to know whether the pike in the pool wants to challenge. The figures are quite clear. Allowing for the effect of demographic change and for the cost of medical advance one obtains a figure of minus 0·7 per cent. for the net growth in resources, even on the Secretary of State's own figures for 1978–79 and 1983–84. Does the right hon. Gentleman want to argue about that or not?
  Mr. Fowler: I shall argue to the extent that what the hon. Gentleman says is quite wrong. For example, the hon. Gentleman takes away the figure for demographic change and medical advance from total NHS expenditure, although he should be taking it away from total hospital and community health services expenditure. That makes a difference of 2·5 per cent., and in turn makes all the hon. Gentleman's figures as silly as they were in the first place.
  Mr. Thomas: I suspect that the Secretary of State's convoluted explanation will be found wanting. I doubt whether it is even literally correct. However, we shall see. I have asked the right hon. Gentleman to provide me with the figures and I am sure that he will do so, because he is scrupulous and honest. He has always done so in the past, even when it has been to his detriment and he has regretted it, as he does now. However, that does not explain the situation or answer my question.
  The Government's claim to have spent more in real terms on the NHS, taking account of the changes in need, is false. It does not matter how many times the right hon. Gentleman comes to the Dispatch Box and says simply "You are wrong", because we shall not believe him until he shows us that we are wrong.
  Mr. Dorrell: I am grateful to the hon. Gentleman for giving us an opportunity for a contest of minnows. I have followed his argument carefully. He has been arguing that we cannot claim an increase in NHS expenditure, because spending per head has not increased substantially according to his figures. Will he apply the same principle to spending on education? Will he recognise that although expenditure on education has fallen, the number of children in school has fallen more quickly, and so spending per head has risen? Will the hon. Gentleman therefore welcome the fact that the Government have contributed to an increase in education expenditure, on the hon. Gentleman's definition?
  Mr. Thomas: The answer is yes. We are not trying to play around with figures to prove that black is always black. However, if the Secretary of State does not like the figures that he provided, he had better provide us with a new set. The situation is not much better on the Labour side of the House. I would still like to see the Labour party's irresponsible pledges costed. The looseness of the

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  £10 billion to £20 billion figure made me worry again about the Secretary of State's mathematics, but I understand that the pensioners' plan has been put forward, which the Secretary of State believes will cost between £10 billion and £20 billion. I do not know. I suspect that the hon Member for Pontypridd does not know either, which is what really worries me. Perhaps when the Opposition come to reply, they will tell us what their proposals will cost.
  Mr. John: Would the hon. Member for Newcastle upon Tyne, East (Mr. Thomas) like to be added to the mailing list again?
  Mr. Thomas: I should be more than delighted but I suspect that I would not discover very much. All I know about the costing of the Labour programme is that the hon. Member for Crewe (Mrs. Dunwoody), who is not in the Chamber at the moment, has been fond of saying that there will be a 3 per cent. increase in real terms but has been told that she must take that out of the programme, not because the Labour party is suddenly discovering financial probity but because she has been instructed that nothing in the programme must be capable of being costed.
  I do not wish to detain the House for much longer. The central criticisms of the Government remain: first, that they have increased unemployment unnecessarily while allowing a catastrophic decline in manufacturing output and in our manufacturing base; second, that they have dealt in the most miserly fashion with those most affected—the poor, sick and the unemployed—while claiming that they are "safe" with the Conservatives. Theirs is the Richard Nixon approach to politics—"Worry about the people you think might vote for you but disregard those you think never will." I suspect that they are right with regard to everyone who has become unemployed during the Government's term of office.
  Above all, the Government have laid no foundations for the future. There is no indication in what they say about how the country might be put back on its feet and how unemployment might be brought down without starting inflation running away yet again. In the changes they have made in taxation and benefits there is no long-term strategy, as was pointed out by the hon. Member for Carshalton yesterday. The Budget offers no prospect and no hope for Britain.
  I should like to rely on the Daily Express for a concluding comment on the Budget. It said:
  "After weeks of leaks about the contents of the Chancellor's famous Gladstone Box we now know the secret. The Box was empty."
  If this was a pre-election Budget, let us have the election without delay.
  6.11 pm
  Miss Jo Richardson: I hope that the House will forgive me if I do not follow the tortuous arguments of the hon. Member for Newcastle upon Tyne, East (Mr. Thomas).
  Generally people outside the House—the people with whom we are concerned who are at the receiving end of the Budget—are not impressed by it. Many of them are bitterly disappointed. Yesterday afternoon I met a group of pensioners in my constituency. It was a non-political occasion. I wondered what they would say when I arrived at the meeting. They all said, "Look, our pockets are full of the money that the Chancellor has given us!" The irony
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  was ringing around the hall before I entered it. They have quickly rumbled the disadvantages that the Government have brought them, having been led by the media into thinking that they would receive a better deal than eventually proved to be the case. The Budget was disappointing to them and was a cause of despair to the unemployed who needed substantial increases in benefit to improve their lives which have been made so unnecessarily miserable by the Government.
  I wish to make three specific points, two of which are connected with the Department of Health and Social Security. I am glad to see the Economic Secretary to the Treasury present because I hope he will have something to say about these matters at the end of the debate. I should like to say how disappointed I am, and how disappointed millions of women will be, at not having any response from the Government, let alone actual movement, on the removal of VAT from sanitary products. This is a matter of concern not only to women but to men—to fathers, to husbands and so on—particularly when the wife is not working. Millions of human beings—in the case of women, those between the age of 13 and 50—are affected by this issue. They represent a substantial proportion of the population. It is beyond belief that women should be so discriminated against on a product which is such a necessity to them.
  During debates in which this argument has been put forward—we have not had many such debates—we have always been told that, if VAT is removed from sanitary products, VAT must then be removed from razor blades because razor blades are as essential for men as sanitary products are for women. I believe that that is a load of rubbish. Men can grow beards, as my hon. Friend the Member for Stockport, North (Mr. Bennett) has already done. To equate the two is insulting to women. There is nothing that women can do other than purchase the product. On average, the product costs—it depends on where one buys it, of course-50p for a packet of 10, and at least one packet is needed every month.
  I make no apology for making these comments in the House. It is time for us to face up to this matter and to realise how essential these products are to such a large number of women. Not only menstruating women are affected. Elderly women use sanitary products because they have become incontinent. The product is widely used in that way, a fact which is not particularly considered. My right hon. Friend the Member for Norwich, North (Mr. Ennals) spoke in favour of the abolition of VAT on safety devices. I entirely accept what he said because they are essential, but I hope that he will forgive me for saying that, if the two are competing, sanitary products are even more essential.
  I hope that the Economic Secretary to the Treasury will say that he has studied the correspondence which has been written over the years about this matter, that he has heard about the petitions that have been presented to his colleagues at the Department of Health and Social Security and that he knows that the Prime Minister herself received a deputation a few months ago, led by my hon. Friend the Member for Eton and Slough (Miss Lestor), bearing a large petition with a huge number of signatures. I hope that the Chancellor will consider that.
  One of the other benefits to which I wish to refer, which has already been mentioned by my hon. Friend the Member for Pontypridd (Mr. John), is the housewife's non-contributory invalidity pension. My hon. Friend listed

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  the number of occasions on which the Minister has said that the review will come forward. Like my hon. Friend, I am inclined to think that it has gone straight into the wastepaper basket or has been slung out of the window or that a great many files have been put on top of it. I find it impossible to accept that, even within the Department of Health and Social Security, a review can take well over two and a half years. My guess is that the review has been received by the Minister but that he does not like what it says so he is now sitting on it, and has probably been sitting on it for 12 months.
  I should like to consider for a moment those who are disadvantaged by the delay. Women are disadvantaged and discriminated against in a real and pointed way. Men and single women, if they are employed, can claim the non-contributory invalidity pension as of right, but a married woman must go through the humiliating process of submitting to a household duties test to prove that she cannot carry out her household duties. The very idea of making people go through that test is hugely disciminatory and is contrary to the concept that most women have come to accept—that they are no longer content to be deemed housewives doing only housework.
  We all know that the Government have a family policy tucked up their sleeve, the aim of which is to encourage women back into the home, but these women receive no support in their efforts to manage a home and are discriminated against through not receiving a pension that should be theirs of right. They do not receive benefits because they have devised ways to help themselves. If a disabled person has guts and the will to carry on, he or she will devise ways to do their jobs.
  I know a woman who has devised a fork holder for peeling potatoes. He husband helped her to design and make it, but that meant that she did not qualify for benefit because she had shown that she could help herself and carry out some household duties. The cleverer the person, the more she is willing to help herself to crawl around the home and do things for herself—for example, in making out a shopping list—the more it militates against her because she has failed the test. The family policies study group, with its rhetoric about thrift and self-help, sounds hollow to the many women denied that pension precisely because they tried to help themselves.
  The benefit has had a chequered history, not least under the Labour Government—I fully admit that. But it had reached the stage where the National Insurance Advisory Commission had considered the matter and made recommendations. Yet today we are back to yet another review. I hope that the Minister will tell us, if he has been told, what has happened to that review and when we can debate it.
  The third benefit that I wish to discuss is also connected with women, and I make no apology for mentioning it. It is the invalid care allowance. Women are disappointed and dejected because the Chancellor made no reference to it in the Budget. Married men and single people qualify for the allowance, but married women and cohabiting women do not. Yet they form the vast bulk of the carers for invalids. There is a great deal of discrimination. It is almost always the mother, the married daughter, the married sister, or some female relative who looks after the invalid. The government must reconsider the matter.
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  The Government made great play in the Budget of cutting taxes by £11/2 billion. Most of my poorer constituents will find that little of that money will reach their pockets. To extend invalid care allowance to the women to whom I referred would cost about £60 million—well worth spending. The Government also made great play about the carers in our society. They always talk of the need for better and greater voluntary services and the need for women to stay at home and look after children and dependent relatives, yet they continue to discriminate against them. It makes nonsense of any suggestion that the Government are moving towards equality between the sexes.
  The next Labour Government will deal with all three matters that I have raised. The last two benefits will be extended to women. When that happens, it will be none too soon. There are many people outside these walls who cannot wait for that to happen so that in some small way they can feel that they are not forgotten. Many of them believe that the Government have entirely forgotten them.
  6.25 pm
  Sir Brandon Rhys Williams: In a short speech it is difficult to comment on all the aspects of a Budget that contains so many detailed changes, but I wish to give a special welcome to the decision of my right hon. and learned Friend the Chancellor of the Exchequer to raise both child benefit and one-parent benefit to the highest levels that they have ever achieved in real terms.
  I have been unpopular in some parts of my party in the past because of my continued emphasis on the importance of child benefit and the need for it to be increased for the sake of the economy. I welcome what my right hon. and learned Friend said in his speech about its importance in the Government's strategy for the relief of poverty and for increasing incentives.
  We must also praise my right hon. and learned Friend for his onsistency—which has run through his Budgets and was very much apparent in this Budget—in applying policies in which he believes: reducing the burden of Government borrowing, modifying the taxation of private capital, bringing down interest rates, bearing down on waste in Government expenditure, helping the growth of small business, and, of course, making a significant reduction in the real burden of income tax and employers' national insurance contributions.
  This is an extremely competent annual Budget, but is it part of a consistent, long-term plan? The Red Book helps, and it is a better production than ever before. My right hon. and learned Friend has tried to peer into the future and make known the Government's plans, at least in the medium term. At a time of great economic uncertainty, a duty falls on the Government to look as far ahead as possible to the economic future and to clarify and simplify the role of the Government, so that people outside Government can make long-term decisions in the reasonable expectation that they will prove right.
  In the presentation of the Government's accounts and future plans, there should be much greater clarification and precision between current account spending, capital account spending and what the Government do with the transfer account—where the Government act as agent and not as spender.
  I should like to call for a major programme of simplification in the way in which the Government impinge on the private sector. Yesterday my hon. Friend

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  the Member for Carshalton (Mr. Forman) revived the call for the reform of personal taxation and social security. I have campaigned for that for many years. If I have the good fortune to serve in the House after the general election, I hope to continue that campaign and to bring some success to it. I am committed to the concept of the basic income guarantee—what might be called the BIG idea. Inevitably, we shall have to bring in such a reform in clue course if only for administrative reasons.
  I should like also to take up the campaign initiated by Basil de Ferranti for the outright abolition of coporation tax. My right hon. and learned Friend, after consultation with industry, has decided not to make changes in corporation tax this year. I understand that, because of the unbelievable complexity of its impact on so many different industries. There are not many industrialists, however, who would disagree if the Government committed themselves to the progressive elimination of corporation tax. I would gladly dwell on the subject, but wish to take all the time I can to deal with another matter, and that is the balance of the economy as between different aspects—export and import, manufacture and services, consumption and investment.
  It seems to me that we are allowing the economy to change and develop in ways that are profoundly unhealthy. If evidence is needed we have only to look at table 3.8 on page 21 of the Red Book, which shows constant price forecasts 1980–84. This table deserves a great deal of careful study.
  Taking the whole period from 1980 to the first half of 1984 we find GDP static, consumers' expenditure rising, total fixed investment static, exports rising slightly and imports rising strongly. I do not think that those are signs that the economy is in a healthy state. In particular, it seems to me that it shows that during the period 1980–84 the exchange rate has been out of kilter with reality and has been creating unhealthy distortions in the way the economy has been developing.
  There are very many ways in which we can try to create the conditions for a revival of the economy. I should like to see a revival of investment in ambitious new projects so that British industry can catch up with the arrears of investment of very many years, perhaps even looking back to the period before the war. Other economies have been investing much more strongly and as a result those peoples have been improving their standard of living much faster than we have.
  We seem to be suffering in British industry from a kind of anorexia, a determination not to accept the funds which are on offer. Even with the Government's interesting new schemes for small businesses, there is not nearly sufficient confidence in the business future to take up the funds which are readily available in large volumes if business men can come forward with competent schemes.
  We have seen a very sharp reduction in the real profitability of British industry in recent years. We hope that profitability will revive, but there are still the problems of the very high borrowing cost to industry and the general unpredictability of market conditions. While profit margins are so low, business men must be prudent and they will be chary of making big investment judgments and big commitments, when they cannot be certain that will not simply be putting their businesses into liquidation by taking the course which perhaps would be in the best interest of the health of the economy if they had the courage to launch into it.
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  Here the parties divide as to what should be done. From the Opposition we hear a cheap kind of Keynesian policy—not one which Keynes himself would have advocated for one moment in the present circumstances. The Opposition's policy is to raise the temperature in the hothouse, raise the heat, to force the blooms to come out even if this sickens the plant in the long run. I do not accept that policy. The Government's policy is to get the conditions right for the long-term health of the different species in the greenhouse.
  While we have high rates of unemployment, there is a great deal of impatience for results. I feel that the Government need to do more to encourage the health of British industry and to restore the balance in favour of manufacturing investment. I do not think that Britain can afford to depend on a declining manufacturing sector in the long run.
  As to the high borrowing cost, the real rate of interest, as we see from what the Government need to spend in order to raise money on their own indexed issues, is 2½ per cent.—roughly what it was in the 1930s when inflation was not a consideration in anybody's mind. How are we to make it possible for industry also to borrow long by new types of company commitment to long-term loans, which would enable industry to get the benefit—in the same way as the Government—of issuing indexed stocks?
  I think that the announcement which the Chancellor made on Tuesday and which was developed more fully by the Financial Secretary yesterday offers an opening for industry to take advantage of the availability of funds at low real rates of interest, provided that the inflation risk can be overcome by some sort of benign indexation. I have spoken before about the difference between malignant indexation, which simply destroys one or other party to the deal, and benign indexation, which enables both parties to thrive in spite of changes in the basic value of the currency in which the deal is expressed. I hope that we shall now see dynamised debentures or indexed stocks beginning to be used much more as ways of financing companies' longterm plans and getting businesses out of debt to the bank and on to long-term relationships with their shareholders.
  The unpredictability of market conditions is to a great extent a world phenomenon and has certainly not been induced by anything that the British Government, in particular, have done. We are in many respects re-living the 1930s—hot money movements, high unemployment, low growth, low commodity prices. Many features of today's economic system remind us all too clearly of the problems of the 1930s.
  Under the Bretton Woods agreement we had an international regime which took the place of the chaos of the pre-war monetary system. It ushered in a tremendous period of real growth of wealth under a system of fixed rates of exchange. It is not unnatural that at this year's International Monetary Fund meeting it was Mr. Muldoon—who it was known would call for a return to Bretton Woods—who filled the hall when none of the other spokesmen did.
  What we are going through at the moment was thought to be an improvement on the fixed rate system of Bretton Woods, because it would give vent to real market forces through floating exchange rates. There is an attraction in allowing the market to dictate exhange rates provided we do not have what we have at the moment, which is known as dirty floating—rates of exchange dictated half by current account movements and half by capital account

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  movements which may be completely irrational and incompatible; half settled by controlled release of funds under Government intervention and half by free movement of funds from the economies where the Governments do not seek to intervene.
  The international exchange rate structure, therefore, is unrealistic and it is also completely unpredictable, as can be seen from the high cost of getting even short-term cover in the major currencies. Of course, in the minor currencies it is virtually impossible now to get cover for any sizeable period or sum of money.
  Therefore, it falls to the greater industrial countries, including our own country, taking part in the Williamsburg conference to come forward with recommendations for bringing the exchange rate structure back to some sort of predictability. I recognise the difficulties for Britain in joining the European monetary system as at present operated. There is far too much emphasis on the fixed angle and not nearly enough emphasis on the adjustable angle in the "fixed but adjustable" formula.
  I think, however, that the time has come when we should join the European monetary system, but we should do so on two very clear terms. One is that we should never be asked to maintain the exchange rate for the pound except at its purchasing power parity with the other major currencies of the system. There might be minor adjustments in the central rates every few months, but I do not think that would disturb the market as long as the Government's policy in making the changes in the central rate was clearly understood and could be predicted well in advance.
  The second thing we have to insist on if we are to join the monetary system is the steadily increasing freedom of arbitrage in the European Community's markets for capital. While all the other countries are maintaining one form of restriction or another on the market for capital we cannot have a really united European market for capital such as exists, for instance, in the United States of America. Until we have a really free and united market for capital, there will always be an unpredictable element bearing on the exchange rates, which is likely to shake confidence and to result in movements which business men cannot accommodate. In saying this I realise that I am in conflict with the Red Book, which states on page 13:
  "The exchange rate will continue to be determined by market forces".
  It is easy to place emphasis on market forces, but what will determine the forces that affect the market? Those forces are not blind. They arise from actions that we control to a great extent ourselves. First, there is the balance of payments. That is not the result of blind forces. By their tax and economic policies, the Government can affect the balance of payments, as happened successfully for many years under the Bretton Woods system when changes in the rates of exchange were not considered a normal part of the game.
  The forces that determine the market certainly include interest rates. What my right hon. and learned Friend the Chancellor has been doing about interest rates is highly commendable. Interest rates in London are determined largely by the Government's borrowing policies. Government and Bank of England intervention in the interest rate structure in London undoubtedly plays a part in determining market forces in relation to the rate of
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  exchange. I believe that we should deliberately work on our interest rate policies, to produce an exchange rate structure that is meaningful and realistic and accepted as such by the market.
  The market will also look at forecasts of inflation as these affect the major currencies in the international system. What is happening in Germany, Italy, France, the United States, Japan and elsewhere will be compared to what is happening to sterling. The Government's resolution in fighting inflation has achieved world respect, admiration and confidence. If, for example we can maintain a rate of inflation of the pound that is not greatly different from that which affects the deutschmark, the prospects for creating a genuine European market for capital are that much stronger. The Government are right to pursue their campaign against inflation of sterling because of the benefit that confidence in the currency brings to business men who want to make long-term plans.
  The other major factor determining exchange rates is political expectations. So long as overseas observers, who may or may not be well informed, believe that there is any risk of a return to power of an Opposition who plan to take Britain out of the European Community, who openly advocate wildly inflationary policies and who appear to have no conception of the real needs of business, the pound will be in danger and regarded as a speculative currency. My right hon. Friends, above everything else, have a duty to industry to win the next election. I should like to see the election come soon. I do not think that industry should be kept in a state of suspense for much longer. We need a decision about Government policy over coming years. Only a Conservative victory can give business the assurance it needs.
  6.43 pm
  Mr. Andrew F. Bennett: Of nine hon. Members who have contributed to the debate, only one has really given the Budget wholehearted support. I suppose that one can hardly expect the Minister to be critical. The odds seem fairly well stacked, as I look around the Chamber, that there is perhaps only one other hon. Member present, besides the Minister, who will have given the Budget an enthusiastic welcome by 10 pm. That seems odd for a Budget that was heralded as a give-away Budget. The truth is that it was probably an opportunity given away rather than a give-away Budget.
  I am pleased to be able to address the House on the Budget, although I have considerable regrets on two grounds that I am not able to be present in my constituency today. The first is that one of my constituents Miss Mary Crabtree, is celebrating her 100th birthday. I would have liked to be able to congratulate her. My second regret is that the Secretary of State for the Environment is visiting my constituency. I would have liked to show the right hon. Gentleman some of the conditions that I shall be describing to the House to emphasise that action should be taken. I am sure, however, that Stockport council will be lobbying the Secretary of State pretty hard on some of the worst problems in the borough.
  The most damning criticism of the Government is that their first Budget was designed to give away a considerable amount of money to the well-off in tax relief in order to stimulate investment. It was necessary, according to the Government, for everyone else, particularly the poor, to make sacrifices. In the first Budget, the tax concessions to the well-off amounted to about £1·5 billion. That has

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  been repeated each year. It is also unfortunate that the granting of those concessions involved cuts in the pension and unemployment benefit under the Social Security Acts of 1980 and 1981 of about £1·5 billion—almost exactly the same amount—taken from the less well off in society. I do not wish to take up the time of the House listing all the cuts. They are listed in early-day motion No. 368—"The less well off and the Budget".
  I suppose that I would have been just about prepared to accept this approach as justified if the Government's strategy had worked. It has not worked. The tax concessions have not stimulated industry or investment in my constituency. The 3 million to 4 million unemployed emphasise that the concessions have not worked. It is possible that the concessions stimulated investment abroad. They did not stimulate it in this country. Trade union officials in Stockport can point to examples of failure to invest. Bernard Reagan, the AUEW district secretary, has supplied Stockport Members with a list of 47 firms that closed or declared major redundancies between January 1980 and January 1983. I shall not read them out. They are listed in early-day motion No. 235 relating to the effect of Government policies on Stockport. The number since January has gone well over the 50 mark. In all instances, there was a loss of skilled workers and of major opportunities for training apprentices.
  It has not only been a matter of lost jobs. There have also been some interesting features about the closures. Many were supposed to be the result of so-called rationalisation. An interesting example is Bredbury Steel where steel making operations were to cease and manufacture of bright steel concentrated on the midlands. It was then discovered that the rolling mills part of the operation was to be exported to South Africa to permit railway lines to be manufactured in that country. So we were not only losing jobs in Stockport through the closure, but seeing equipment exported to another country to be reestablished there and presumably take away further opportunities for British industry. The Government's whole strategy in trying to attract investment to areas such as Stockport has failed.
  Another element of the first Budget was the announcement of the phasing out of intermediate status for areas such as Stockport. Not only did the Government fail to attract investment as a result of their concessions for the rich, but they removed an incentive for people to invest in areas like Stockport.
  There is great bitterness in the north-west over the lack of any Government strategy for regional policy or regional investment. It is particularly bad when we see on television in the north-west of England advertisements for Warrington new town, for example. Such places are trying to pinch industry from areas such as Stockport. That creates great bitterness. We do not want a big scramble for what little business there is. We want Government investment to encourage industry to develop in these areas. Intermediate status should be returned to them so that they are not forced to compete on unequal terms with other parts of the country. Stockport is attractive, but it can be developed only if it gets investment, particularly from the Government. One way in which the Government could help would be to return intermediate status to Stockport.
  Not only must the Government encourage investment in industry, but they must reflate the economy by spending on the environment, particularly on housing. Stockport has many old private dwellings which desperately need
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  improvement grant work done on them. During the last three years the Government have had a stop-go attitude almost all the time to improvement grant work. In January and February I had letters from constituents in which they hold me that they applied to the local council for an improvement grant but the council regretted it could not proceed with a grant because there might not be enough money.
  As a result of lobbying, the Government have announced that the ceiling on grants will be removed. For the next 12 months there will be more money available for improvement and repair grants. The local council, however, still has the uncertainty about what will happen in the following year. This discourages people from going ahead with grant work. One moment they are told that they should apply, and the next they are told that there is a lack of money. So they think about a foreign holiday or something else rather than getting on with the improvement work. As soon as they have changed their commitments, they are told that the grant will be available. If the Government want old housing property to be improved, they must have a firm five or six-year programme and they must make it clear to local authorities that over that period they can spend on improvement grants as much as they have got.
  The same argument can be made about improving council houses. The Government must give councils the opportunity to make long-term plans instead of allowing the money to be spent on a piecemeal basis.
  Government strategy was that the poor were asked to make sacrifices so that investment could be made. If the Budget was to be a give-away measure, the Government should have improved the position for some of the least well off. If there was any give-away element in the Budget, it has not been in favour of the least well off. For example, the Government are claiming great credit for putting up child benefit by 65p. All that means is that in real terms child benefit will be about 5p more than it was when the Government took office. Yet the whole strategy intended for child benefit was that in real terms it would be increased significantly.
  Why have the Government not dealt with child benefit in the same way as tax concessions? The tax thresholds are being raised by 14 per cent., but child benefit is being increased by only 11 per cent. If the Government are committed to a family policy, why do they not do at least as much for child benefit as for tax levels? If they had made a larger increase in child benefit, it would have meant more for the low paid, many of whom do not pay tax and therefore cannot benefit from a tax concession.
  The Government seem at long last to have been forced by pressure from their own Back Benchers to give back the 5 per cent. abatement to the unemployed. As was pointed out earlier, it is not being given back to those who lost it previously; instead, it will go to next year's unemployed. Those who will have been unemployed for 16 months and who have been charged tax on their unemployment benefit will not get back the 5 per cent. because, if they are not working again, they will have exhausted their unemployment benefit and will be receiving supplementary benefit. Those people have lost the 5 per cent. for ever. Why could not the Government have restored the 5 per cent. in June, the anniversary of when they took it into taxation? Why will the next group have to wait until November to benefit?
  I welcome the Government's decision to give the long-term benefit concession to people over 60. Why do they

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  not also give it to families who have to live on supplementary benefit? The shoe pinches much harder for families on supplementary benefit. If the husband or the wife is signing on for work, he or she is unable ever to get on to the long-term rate. It would cost only £150 million. I should have thought that if the Government wanted to have a give-away Budget, that would be one of the first areas for a concession.
  What a fiddle and what a twister the new uprating method is turning out to be. The Government seem deliberately to have chosen the one month in the year when inflation will be at its lowest. Why have they not chosen April? It would have been much easier administratively, because they would have had an extra month to do the uprating. It appears that the April figure is likely to be higher than the May figure. Because of the new method of uprating, retirement pensioners will be 1·05 per week worse off over the next 12 months. The relevant figure for an unemployed couple is £1·30 and, for the lone parent with two young children, 1·05. It is a very mean measure. The Government ought to think again about it.
  The effect on supplementary benefit raises a major problem. I was able to intervene briefly when the Minister was speaking. I hope that at the end of the debate there will be more explanation about what is to happen to supplementary benefit. Last November the system for uprating supplementary benefit was changed. It was no longer to be uprated in line with the general retail prices index, but in line with the retail prices index minus the housing element. Whereas other people were supposed to have got a so-called overpayment last November, those in receipt of supplementary benefit had a 0·4 per cent. underpayment.
  Will that 0·4 per cent. underpayment be restored? What will happen about the retail prices index minus the housing element in May? As I understand it, one of the elements that is bringing down the retail prices index in May is the considerable reduction in the mortgage rate since last year. If, for supplementary benefit purposes, we take out the mortgage element, the inflation rate will be that much higher. I hope it will be confirmed that supplementary benefit will be increased by the higher rate. I should also like to hear that the 0·4 per cent., which was lost last November, will be restored.
  Because the supplementary benefit rate will be increased slightly more than the pension rate, the implication is that more pensioners will have to get supplementary benefit. Administratively, that is difficult. Many pensioners already qualify for only small amounts of supplementary benefit. The Government should increase pensions by the same amount as supplementary benefit to avoid a rise in the number of pensioners who will be entitled to, but sadly often fail to claim, small amounts of supplementary benefit.
  The newspapers have said a great deal about the impact of the Budget on a family with two children and average or just below average earnings, but they have said very little about the way in which the new housing benefit legislation will operate for people receiving rebates and the fact that almost 1 million people will lose about 70p per week as a result. If we take those losses into account, as well as the changes in the Budget, it is clear that a large number of people will not benefit at all. I hope that the Government will make it clear that in uprating the amount
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  payable under the housing benefit scheme under the same legislation, with the changes in the benefit rules, they will take account of the need to eliminate those losses. Many of the people involved will lose more than 70p, because they will also face rent increases as a result of other aspects of Government policy.
  The Budget is extremely disappointing. It is clear that the Government's strategy of stimulating investment by tax concessions to the well off has not worked. The least well off have been asked to make unfair sacrifices. Now, in a give-away Budget, the Government are doing nothing for them, and they remain a neglected group.
  7.1 pm
  Mr. Richard Needham: I have listened with great interest to the Opposition speeches. It seems that they have not heard of the recession or the problems facing not only the British economy but the world economy and would blindly spend money without ever considering where it might come from. Their speeches increasingly lead one to conclude that if they had been in charge of the nation's affairs the IMF would have been here not just for a weekend but permanently ensconced in the London Hilton.
  We should be grateful to the Chancellor of the Exchequer, certainly from our side of the party—
  Mr. George Foulkes: Which side is that?
  Mr. Needham: —for increasing child benefit.
  Mr. Foulkes: Will the hon. Gentleman give way?
  Mr. Needham: No; I have only just started my speech. I will give way later. We should congratulate the Chancellor—
  Mr. Foulkes rose—
  Mr. Deputy Speaker (Mr. Bernard Weatherill): Order. The hon. Gentleman is not giving way.
  Mr. Needham: No, I am not giving way yet. I have only just started my speech and I wish to be reasonably quick.
  Child benefits have been increased, thresholds have been increased, the 5 per cent. abatement of unemployment benefit is being restored and we are grateful for that. The Chancellor's approach to the Budget reminded me of a family doctor bringing to a convalescent patient not, I admit, a hamper from Fortnum and Mason but an orange, three duck eggs and a pint of milk. I am grateful that at least he did not bring with him that famous male midwife, the Institute of Directors. I am also glad that my right hon. and learned Friend ignored the advice of the quacks in the Opposition who would have fed the patient on a mixture of porridge and pate administered by NUPE and paid for by those staying at Claridge's.
  Certain aspects of our economic condition are becoming chronic, especially the level of long-term unemployment. It was hoped that once the market was operating more successfully and efficiently labour, as the phrase goes, would begin to clear by finding its own price. Not only do I abhor the use of such terminology in dealing with human beings and their careers, but I doubt its efficacy. I do not believe that people can be compared with sides of bacon or failed British Leyland motor cars, which at least have a clearing price. If people could be cleared

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  in that way, unemployment in Ceylon where wages average £4 per week would not be running at about 50 per cent.
  Secondly, I doubt whether labour markets can clear on price because new technology requires a trained work force often with different skills from those of the people who have been made redundant. Moreover, those made redundant are often in different parts of the country from the areas in which new technology is likely to develop.
  Thirdly, skills are often short in one area and over plentiful in another, but the housing constraints in the economy are such that movement from one part of the country to another is almost impossible. Very little can be done about that as so many people own their own homes and cannot easily sell them and find new homes elsewhere.
  Fourthly, there is a historical lack of guidance, especially to young people, about the skills and occupations that they should pursue.
  Fifthly, structural change leads to high unemployment which will not be immediately reduced by the new industries that grow up to replace the old. That has certainly been the case in previous periods of recession and change. The process of restructuring and finding new jobs and industries is long and painful and may last for many years.
  This leads me to three conclusions.
  Mr. Foulkes: At the beginning of his speech, the hon. Gentleman referred to his side of the party. I have listened carefully to the five points that he has made. He seems to be eschewing the possibility of getting on his bike and going from one part of the country to another, so does one take it that he is on the high humidity side of the party?
  Mr. Needham: If the hon. Gentleman does not know which side of the party I am on, no doubt he will find out if he continues to listen to my argument. He can make his own judgment, if that is possible.
  The points that I have made lead me to three conclusions about the labour market. First, I do not believe that reducing wages as such is likely to have any effect on the majority of employers seeking adult trained workers. What most employers want is not cheap labour but a happy, efficient and productive work force using modern machinery. I accept the converse of that argument—that the same does not necessarily apply to young workers. Starting wages have certainly become ridiculous in many cases in recent years and have made it extremely difficult for young people to find work which might otherwise have been available to them.
  Secondly, although reducing wages will not force people back into work, increasing wages beyond increases in productivity, especially in long-established industries now facing major competition, will lead to a loss in competitiveness and to many firms having to close down. To take an example from another country, wage rates in the United States steel industry now exceed $26 per hour whereas output per man is half that in Japan. As a result, the only way in which the United States steel industry can keep going is by the introduction of import controls, which is totally against the principles of those of us who believe in free trade.
  My third conclusion derives from the previous two. For the reasons that I have given, I believe that long-term unemployment will be with us for a very long time. That being so, what should the Government do about it? The
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  first thing that this or any Government should do is encourage people to stay in work. The Government have accepted that principle in the Budget by extending the invalidity supplementary benefit so that those who receive it can increase their earnings to £22·50 until their benefit gets cut. The same applies to single-parent families. However, it does not apply to the vast majority of the unemployed who, after a £4 allowance, find that their benefit is reduced for each additional pound that they earn.
  There is an incentive for many of those living on short-term supplementary benefit to try to earn additional money, either through the black economy or in any other way they can. I do not see why, in principle, we should treat single-parent families or the disabled or chronically sick differently from the vast majority of the unemployed. Unemployment to anyone who is unemployed is as much a disease as any other disease. The disregard of £4 should be increased considerably because the Government should be prepared to assist anything that allows people to maintain a link with the world of work and to find additional money to give them increased dignity.
  The second point, which I know my right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour) has made on many occasions and recently in his splendid book, is that we should give long-term supplementary benefit to the long-term unemployed. In the first instance, we should give it to those with families, but, from a Conservative point of view, why should people be treated separately purely because of their age, and why should we, the party of law and order, consider treating the children of criminal families better than we treat the children of the unemployed? That is nonsense.
  Furthermore, more money for the long-term unemployed means that those people have the opportunity of greater mobility and more chance of escaping the trap of unemployment. They have some chance of getting round the country and finding work.
  Although I welcome the increase in the capital disregard to £3,000, and to £1,500 for life assurance policies, I do not believe, again as a matter of principle, that it is right to attack the capital of those who have sensibly saved over their lives and not to give them the same benefits as we give those who have not attempted to save.
  Unemployment is a slow-burning fuse which at the start of its increase began to worry people. Now it has started to frighten people. Next it will make people very angry. Because of the long-term nature of unemployment that all hon. Members must now accept, in November we should look to the Government to begin to take the steps, to make sure that those who find themselves unemployed for long periods through no fault of their own can begin to see a way out of the trap in which they are caught. I am sure that, having listened to the arguments of myself and my hon. Friends, my right hon. Friends on the Front Bench will agree.
  7.14 pm
  Mr. David Penhaligon: My years of being interested in politics from the Liberal Bench have taught me one thing. If one wants to produce a wet Conservative, one needs a Liberal breathing down his neck. I have never been certain whether this particular phenomenon is the result of the Liberal breathing down his neck or the result of the local Conservative association finding a candidate to maintain that position. There was very little in what the

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  hon. Member for Chippenham (Mr. Needham) said with which I disagree. I wonder how long he will be prepared to stay on the Government Benches.
  Mr. Needham: I remind the hon. Member that I maintained my position on these subjects when I had the honour of having a Liberal candidate against me and when I did not have that honour.
  Mr. Penhaligon: As the hon. Gentleman will no doubt recall, I said that I was not sure whether it was the Liberal breathing down his neck that made the wet or whether he got his nomination because his dampness appealed to the local Conservative association.
  One of the delights of being able to make a speech in the Budget debate is that one can complain about what is not in the Budget and therefore raise virtually anything. I have been promising a number of constituents that I would raise a point that was not referred to in the Budget but it is an anomaly that has been brought to my attention by three or four constituents. I am sure that it has been drawn to the attention of other hon. Members as well. It is beyond any logical explanation and one would be pleased if the Government could at some time apply their mind to resolving it.
  A couple are on supplementary benefit and have been for some time. Their general standard of living reflects the fact that they are on supplementary benefit, and perhaps the husband is in declining health. The husband dies and from that day the lady is in receipt of widow's benefit. Her poverty requires her to go to the local supplementary benefit office to get help towards the cost of burying her husband. She discovers that the fact that she became a widow excludes her from help towards the cost of burying her husband. The irony is that she lost the right to benefit because her husband died, but that was the reason why she requires some help towards the cost. I have had four such cases in my constituency and I cannot believe that other hon. Members have not had the same problem brought to their attention.
  Could not some administrative change be made so that those who find themselves in that position and who have been drawing supplementary benefit for six continuous months before the tragedy happens can be treated in the calculation of help towards meeting burial costs as if they were on supplementary benefit? I know of people who are faced with bills that they cannot meet. Despite their visiting everybody they think will be able to help, it is clear that the law stops people from helping them. It is a ludicrous position to which I should like to see the Government applying their mind.
  There are a number of useful measures in the Budget. I cannot recall a Budget that has been all bad. The tax allowances, the child benefit and the restoration of the 5 per cent. abatement are all welcome. They are in the Budget for different reasons, but I am pleased to see them there.
  However, the pension increase this year and the way in which it has been carried out are desperately unjust. The argument has been raised on a number of occasions in the past six or eight years about how we adjust pensions, but what is happening this year is matched only by what happened in 1977 for the fiddle that it is. The problem is a simple one. In a period of rising inflation, say, of 5 per cent., then 10 per cent., then 15 per cent., and then 20 per
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  cent., if one give a pension on last year's physical, measured inflation, the year that inflation is 10 per cent. the pensioner gets only 5 per cent., in the year that it is 15 per cent. the pensioner gets 10 per cent. and the year in which inflation is 20 per cent. the pensioner gets only 15 per cent. If after a year when there is 20 per cent. inflation we move into a year when it is reduced to 5 per cent., then for that year the pensioner hits the jackpot if the system is maintained because in a year with 5 per cent. inflation the pensioner gets a 20 per cent. rise.
  That is more or less what happened in 1977, but the Labour Government decided not to pay. They decided to change the system and to guess what the following year's inflation would be. We have been stuck with that system ever since. During a period of falling inflation, the Government make a profit, or find themselves with a lower level of expenditure. If inflation runs 20 per cent., 15 per cent., 10 per cent., 5 per cent. during a year of 20 per cent. inflation the Government guess that it will be 15 per cent. the following year. The pensioner therefore receives a rise less than that year's inflation. In a year when inflation is running at 15 per cent., the Government guess that it will be 10 per cent. the following year, so the Government do well. In the year that inflation runs at 10 per cent., the Government guess what it will be the following year and, again, they do well.
  All these trends come to an end. If we take a year in which there is 5 per cent. inflation rising to 15 per cent., clearly the time arrives once again when the pensioner does rather well. If during a year of 5 per cent. inflation the Government guess that the inflation the following year will be 15 per cent., the pensioner receives an increase in real terms. That is the present position. We are at the bottom of the curve. Inflation is about to rise again and so, surprise, surprise, the Government have changed the system and returned to the one that we had before.
  There is no doubt that in the coming year pensioners will receive an increase which is less than the current level of inflation. I believe that the Government by trying to be clever have put themselves on a hook that is less defensible than if they had been honest and come to the House and said that they would claw back the amount pensioners had received the previous year and guess at next year's inflation. I believe that the Government have made a mistake that they will live to regret.
  I sometimes wonder whether the cost of living index is the right index on which to base pensions. In the latest newsletter of the Cornwall branch of Age Concern there is a paragraph which suggests that the Treasury always
  "seems to overlook the fact that many pensioners do not have mortgages and do not purchase other items which have favourably affected the index. They do, for example, spend a sizeable proportion of their income on heating energy costs, which have risen at a rate greater than other items. As a result, they have been falling behind in the battle against rising living costs. Pensioners have experienced 12 per cent. more inflation than other households since 1974."
  I have no way of checking that figure, but I suspect that there is some truth in the allegation that those who live solely on the state pension experience an increase in the cost of living beyond that of the average. One wonders whether we should produce a pensioners index and promise to tie pensions to it. [HON. MEMBERS: "There is one."] I know that there is one. The House should agree that pensions will be calculated on that basis in future. Pension increases will be less than the average increase in wages during the Government's period of office. The

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  Government are reducing the living standards of the retired element of our society compared with that of working people who are the neighbours of pensioners. I see no logical reasons for doing that.
  Mr. Ridley: I hesitate to breathe down the hon. Gentleman's neck. Is he aware that there is a pensioners index compiled from the items which feature prominently in pensioners' budgets, which shows a smaller rise than the RPI? What the hon. Gentleman is suggesting would mean a reduction in the rate of old age pension.
  Mr. Penhaligon: The right hon. Gentleman knows that that is not true over a significant period. [HON. MEMBERS: "It is right."] It is probably true on a one-year basis, and it may be possible to produce figures to show that. Over a sustained period the right hon. Gentleman knows that it is not true.
  Pensioners have lost 2 per cent. and perhaps a little more this year. The figures have already been mentioned. It amounts to 65p for a single pensioner and £1·09 for a married couple. The Budget is interesting because of the way in which the Government have decided to treat pensioners compared with the way in which they treat young people or people who are considering buying their own houses.
  I have never met a constituent who has had any difficulty in obtaining a mortgage, or paying for it, when the mortgage is more than £25,000. I spent a fair proportion of time on the telephone this morning ringing building societies in my county to ask on how many occasions they could recall first-time buyers coming in to raise a mortgage in excess of £25,000. The answer was, "Not one."
  I admit that the position is a little different in the southeast. One is aware from going around the country that the section of our community that can afford mortgages of about £30,000 is not the one that has most difficulty in housing itself. It is not the element that comes to mind when one considers how the Government may use some of their hard-raised taxes to help a particular section of our community achieve the desirable objective of home ownership. I find the Government's attitude extraordinary.
  Mrs. Dunwoody: I do not want to disagree with the hon. Gentleman on the numbers that he has quoted from his constituency, but I thought that one of the difficulties in the south-west was the fact that a number of people buying retirement homes pushed up the cost of housing for ordinary families who were often faced with high prices.
  Mr. Penhaligon: There is some truth in that. The difficulty caused by people having two mortgages and a second home in Cornwall and receiving mortgage relief has now ended. I do not know whether it was this Government or the Labour Government who ended it. One can now get relief only on what is described as one's "principal" residence. Therefore, the problem is not as serious as it was.
  The population drift that has taken place towards my part of the country has undoubtedly forced up house prices, but there are still properties that the first-time buyer can buy for considerably less than £30,000. My constituents find that the problem is earning the money to pay for a £20,000 mortgage rather than obtaining the mortgage from the building society.
  My main criticism of the Budget is that it has no strategy to get the country out of its present trouble. I have
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  not heard one Conservative Back Bencher say that the Government have a strategy which will eventually bring Great Britain out of its difficulties. Unemployment has increased year after year. The predictions are that it will increase yet again this year. About 20 per cent. of our industry has gone. I have no reason to believe that the Budget represents anything other than a further step in that trend of the strategy.
  It is worth remembering that certainly in the medium term, and the short term probably, the nation has nothing other than its industry, its engineering ability, and its factory base to provide the pensions about which we have been talking and the roads, schools or anything else. Great Britain has little else to offer the world in order to earn her living. Let us be thankful that we have the City, but we cannot run an entire economy on it. We have North sea oil, but, as we all know, it is a finite resource and the day will come when the oil is no longer available.
  We must look to industry to provide a living for our people. I see little in this Budget to help this country's industrial base. It cannot be the answer for the Government to squeeze the source of our wealth just to reduce inflation. It may occasionally have to be done for a year to try to redress or balance the economy, but it cannot be sensible as a long-term strategy.
  My colleagues and I and our Social Democrat friends believe that the Government must expand the economy. We believe that the Government must start to differentiate between money put into good, sensible economic investments and money borrowed for other purposes. At public meetings that I have recently attended the obvious member of the local Conservative association has asked where the money will come from. It will be borrowed. It is extraordinary for Conservative Members to say that they do not like borrowing when many of them have succeeded in building up good businesses from very little over a short period. They know better than anyone else that there is nothing wrong with borrowing money, provided that the purpose of that borrowed money is good, sensible economic investment. The Government should be looking for and making that investment at the moment.
  I do not accept the general pessimism about long-term unemployment. I do not believe that 1979 or 1980 represent key years and that thereafter it will be impossible to offer everyone employment. I do not accept the pessimistic view that we shall have that problem on our hands from now to eternity. One of the most frightening things that one can find in the country is a general acceptance that perhaps there is nothing whatsoever that can be done about it.
  For areas with significant unemployment—in my county 20 per cent. of the male population is unemployed—the Budget gives no reason for optimism. One suspects that the only reason for optimism for them is that, as recent trends suggest, we may be in for a change of Government before long.
  Several Hon. Members rose—
  Mr. Deputy Speaker: Order. The 10 hon. Members who are in the Chamber are anxious to take part in the debate. There are 90 minutes left before the wind-up speeches begin. Will hon. Members bear that in mind?
  7.32 pm
  Mr. Ron Leighton: This is the Chancellor of the Exchequer's fifth Budget. It is said by

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  some to be his last, so it might make sense to put all the Budgets together as a package and at this stage of this Parliament to ask ourselves to what extent the right hon. and learned Gentleman has fulfilled his objectives and whether the Government's policies have failed or succeeded. I took the opportunity today to refresh my memory as to what he said when he introduced his first Budget on 12 June 1979. The right hon. and learned Gentleman started by talking of a new beginning, and said:
  "We need to strengthen incentives, by allowing people to keep more of what they earn, so that hard work, talent and ability are properly rewarded. We need to enlarge freedom of choice for the individual by reducing the role of the State. We need to reduce the burden of financing the public sector, so as to leave room for commerce and industry to prosper."
  The Chancellor said that the tax changes that he proposed on that occasion would be only the first step. When he referred to public expenditure, he said:
  "In order to reduce the borrowing requirement and the burden of direct taxation, we must make savings in public spending and roll back the boundaries of the public sector."
  When the right hon. and learned Gentleman spoke about cutting personal taxation, he said:
  "This is the only way that we can restore incentives and make it worth while to work and, at the same time, increase the freedom of choice of the individual. We must make a start now."
  On income tax, the Chancellor said:
  "That brings me to the keystone of our policy. Excessive rates of income tax bear a heavy responsibility for the lack-lustre performance of the British economy. We need, therefore, to cut income tax at all levels."
  Later the Chancellor talked about the deterrent effect of tax on additional earnings, and he ended on a rather euphoric note:
  "The Budget is designed to give the British people a greater opportunity than they have had for years to win a higher standard of living—for their country and for their families".—[Official Report, 12 June 1979; Vol. 968, c. 240–63.]
  That was the prospectus; that was the promise. That is what the Government set out to do. At this stage of this Parliament I should like to look at that policy and ask three questions. First, have the Government cut taxes, as they promised to do? Secondly, have they cut public expenditure, as they promised to do? Thirdly, have they increased wealth, and are we now all better off, as they said we would be?
  Let us look at public expenditure first. The 1979 White Paper began with the sentence:
  "Public expenditure is at the heart of Britain's present economic problems."
  There is nothing about efficiency, nothing about management expertise and nothing about trade unions. The prime cause was public expenditure. At a stroke the Government had discovered the solution to our sad performance and the philosopher's stone had been uncovered.
  As a newish Member, I suspected that that was a fallacy. What has happened? Only last week the Chief Secretary to the Treasury told us that in 1979–80 public expenditure was 40·5 per cent. of gross domestic product. However, in 1981–82, it had gone up to 44·5 per cent. It was to have come down, according to the Chancellor when he introduced his policies, but we now discover that it has dramatically increased. Therefore, all the misery and destruction has been for nothing.
  One asks oneself: what went so disastrously wrong? Public expenditure is spent primarily on the private sector. After all, who is the customer for bridges, roads, schools
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  and hospitals? Who buys and pays for the equipment that goes into hospitals and schools? It is the Government or the community. It is the public. Therefore, when the Government slash their spending, who is hit? When the Government stop issuing contracts and orders, who suffers? Private industry does, so it starts laying off workers. Here is the rub, the fallacy and the error. The Government never cease to tell us that customers create jobs. Who is the largest customer? It is the community. It is the Government, by public expenditure, who are the largest customer.
  If we could put all the unemployed who have been laid off into gas ovens, the policy might have a chance of succeeding, but, of course, we do not do that. We pay them dole money, which is extraordinarily expensive on both sides of the account. First, the Government lose the tax revenue that the workers paid and, secondly, pay them wages for not going to work. We give them dole money and redundancy payments. Each worker on the dole queue is costing us between £6,000 and £7,000. That is a direct charge to the Government. The dole queue is public expenditure.
  Therefore, as the Government cut public expenditure, it grows because of the cost of the dole queue. Then the Government are forced to cut faster and deeper, pushing the economy further into recession. The minimum figure that I have heard for the cost of the dole queue is £17 billion. My right hon. Friend the Member for Doncaster (Mr. Walker), in answer to a question that he asked, got the figure of £20 billion. That is more than we spend on the National Health Service. It is more than we spend on education. It is more than we spend on the whole of the rate support grant. If we push the economy into recession, we do not need steel, so we get Mr. MacGregor to cut the steel industry in half and sack half the work force and put them on the dole. But still the steel industry makes huge losses, and that is a further cost to the Government.
  If we do not need coal, that industry will lose money and be another charge to the Government. If we do not move steel or coal, we do not need the railways, so yet another loss-making industry is charged to the Exchequer. Every turn of the ratchet pushes up public expenditure. The public expenditure percentage of the gross domestic product under this Government has not decreased by 5 per cent., as they said it would, but has increased. The hon. Member for Perth and East Perthshire (Mr. Walker) is smiling engagingly, but he was probably waving his Order Paper euphorically in June 1979 when the Budget was announced.
  Mr. Bill Walker: I was in hospital in June 1979.
  Mr. Leighton: I am sure that the hon. Gentleman was listening to the radio and waving his bed sheet. However, I am glad to see him in rubicund good health today.
  What has happened to taxes? To pay for the recession and the dole queue, there has been a gigantic increase in personal taxation and a switch to the less well off. In the last year of the Labour Government personal taxation revenue was £42 billion. In the year just ended, the Government have received from income tax, national insurance and VAT a total of £67 billion. Allowing for inflation and considering that figure in real terms and at constant prices, that is £9 billion more. Could there be a more graphic illustration of Conservative deceit or failure?

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  In Birmingham, a few days before the general election, the Prime Minister said:
  "The Conservatives are going to put that incentive back. We are going to do it by cutting tax."
  That was her promise. The Conservative party election manifesto stated:
  "We shall cut income tax at all levels to reward hard work, responsibility and success; tackle the poverty trap."
  The truth is that we are now paying a substantially larger proportion of our income in tax. Answers to parliamentary questions show that the average family, with two children, on the average wage is paying about £9 a week more.
  Peter Jenkins, in The Guardian yesterday, said:
  "The relief given to those below average earnings makes only minor redress for the disproportionate burden of taxation which has fallen upon them during the Thatcher Administration. For example, a family with two children earning half the average wage of about £160 a week in 1978–79 paid 12·7 per cent. of its income in tax and stamps. In 1982–83 it paid 18·6 per cent. Sir Geoffrey's tax reliefs do not alter the fact that during his Chancellorship he has helped the rich and soaked the poor."
  That is the reason for the existence of the Labour party. It is here to champion the interests of the poor. While there are poor people in Britain, there will always be a Labour Party. We shall be here in this House fighting the battle for the less well off.
  I excuse the hon. Member for Perth and East Perthshire from being obsessed with monetarism, because he is not one of those who talk about M3s, PSBRs and all the other mumbo-jumbo. Some of us, like him, tend to look at the real economy—real people working in real factories and producing real goods, or perhaps not producing goods at the moment. The biggest disaster to have hit Britain in peace time has occurred in that sector. Our industrial base is being smashed. We have shattered and devastated our economy, and we are enduring the worst economic crisis for more than half a century.
  An industrial wasteland of silent factories and workshops is spreading across the country, especially in Scotland. There are record bankruptcies and company liquidations. Firms that made a valuable contribution to their communities are now being consumed in the monetarist holocaust. We know that the high interest rates for which monetarist policies called led to an over-valued pound, which rose, as Dr. Emminger told us, by 37 per cent. between 1978 and the first quarter of 1981. No wonder British competitiveness under the present occupants of the Treasury Bench declined by 35 per cent. As a result, we have had the spectacle of companies shutting down and seeing their modern machinery sold at auctions, crated, shipped abroad, used to manufacture goods in countries, such as the United States of America, with higher wage levels, and exported back to us. We are manufacturing 20 per cent. less than when the Government came to office.
  Are we becoming wealthier? We have destroyed 20 per cent. of factory output, and the manufacturing decline, plus the remorseless increase in imports, means that, for the first time in recorded history, we have become a net importer of manufactures. We are ceasing to be an industrial nation. If private industry is flat, why should there be investment? Firms are restricting, not expanding, their operations. In the last year of the Labour Government, investment in manufacturing industry increased by 9 per cent. In the first year of the Tory Government it fell by no less than 18 per cent.
  It is not as though there is a shortage of savings or of money. On the contrary, there are plenty of savings and
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  money, but it is being shovelled abroad. Last year more than £6 billion was exported, primarily to equip our rivals the better to compete against us. As a result, we have higher unemployment than in the 1930s, the highest jump in unemployment in any year since 1930 and the biggest collapse in production since 1921. If we consider the postwar world, our car production is lower than it was in 1957–26 years ago—and our steel production is lower than it was in 1950. We are producing less steel than Poland. Fewer houses are being built this year than in 1947, which was a difficult post-war year.
  The Government are a destroyer of wealth, and the destruction is cumulative because the wealth cannot be replaced. If we add together the costs of the dole queue—£17 billion—idle factories and lost production, tens of billions of pounds of wealth is being thrown away. It is no wonder that there is now a growth of real poverty, especially among children. It is no wonder that the country is becoming shabbier and tattier, that our services are worsening and that our railways are becoming more decrepit.
  Under the Labour Government, our national wealth increased each year, but under this Government it has decreased each year. Under the Labour Government it increased by 9·5 per cent., which was worth £1,800 to the average family. Under the present Government, the GDP has decreased by 4 per cent., which means that the average family is £800 worse off. There is much talk about a world recession. It is true that many countries have difficulties, but no other country, apart from Canada, is worse off than Britain. If we take the average of the OECD countries, their wealth increased by 3 per cent. Britain was the only one to go down.
  Why has our manufacturing output declined by 20 per cent. and our GDP by only 4 per cent? Why have we not had the most horrendous balance of payments problem and run on the pound? How have we been able to pay the prodigious cost of the dole queue? The answer is North sea oil. Without North sea oil, the Government would have collapsed and the country would have gone bankrupt. We could not have afforded redundancy payments. We would have had to slash unemployment benefits, as we did in the 1930s. We have already taken £40 billion out of the North sea.
  The crimes of this Government are being disguised by oil. When we had the first oil shock under the Labour Government, we did not have a drop of oil. Now we are self-sufficient. We are a net exporter. So we are paying for our deficit in manufactures by this one-off amazing piece of good fortune. Instead of wisely using the North sea oil wealth for investment and training to modernise and rebuild our industrial base for the future, we are pouring it down the drain. It is being squandered on the Government's dole queue and disguising Britain's industrial collapse.
  If the Conservative party were to win the next election, it would be the first occasion on which an election was won on North sea oil. A second term would make everything horribly worse. We have already seen leaks of Conservatives' future plans to destroy the welfare state. They claim that inflation has come down. It had to come down. At the time of the next election it is likely to be what it was at the time of the last election—about 7 per cent. However, I hope that the House will not be fooled by the oft-stated philosophy—when inflation comes down, real jobs will begin to grow. No one has explained to me the

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  process by which that happens. Presumably, it is by some process of spontaneous combustion. It is simply not true. We know that from history. During the inter-war slump we had nine years of negative inflation, from 1926 to 1933. Prices came down each year. In 1931, prices came down by 7 per cent. The peak year for unemployment was 1933. In that year, prices came down by 3 per cent. So it is the savage deflation caused by unemployment that has brought down inflation.
  It is clear that the strategy of the Chancellor of the Exchequer and the Government has been an abysmal failure. Unless there is a change, there can be no prospect of recovery. This Budget is a non-Budget. It tackles none of the problems. It is purely peripheral. We need a complete change of Government to restore any hope to this country.
  7.53 pm
  Mr. Terence Higgins: I welcome the substantial increases in the income tax thresholds that the Chancellor has introduced, and which I think are the essential feature of the Budget. It is also true that the Chancellor has been remarkably responsive to many pressure groups, and that the Budget therefore contains a number of complex issues on which I shall comment in the central part of my speech. First, however, I shall concentrate on broader economic issues which, to some extent, have been neglected in our debate today, partly because there are so many individual items which are matters of controversy or congratulation, as the case may be.
  It is important to consider the relationship between the Government's present monetary and fiscal policies. My right hon. Friend the Financial Secretary to the Treasury, who I am glad to see on the Front Bench, will know that I criticised some of the Chancellor's earlier Budgets, particularly with regard to monetary policy. I pointed out that in earlier years my right hon. and learned Friend did not adopt what one might describe as a true monetarist policy. Because we were unable in the early years to cut public expenditure substantially, there remained a large gap between public expenditure and taxation, with the result that we had large public sector borrowing requirements, and it was necessary to have high interest rates to fund those high borrowing requirements. The effect, therefore, was very different from the situation envisaged by those who advocate monetarist policy, where there is a small gap between taxation and expenditure, a small PSBR, and low interest rates. Certainly, we had a substantial deflation in the early part of this Government's period in office.
  It is also true that the effect of those high interest rates, combined with North Sea oil, which was mentioned by the hon. Member for Newham, North-East (Mr. Leighton), was a massive rise in the sterling exchange rate. That itself had a serious effect, not least on industry. As a result, we had a recession, which did not start with an inadequacy of consumer demand; it started halfway along the productive chain, in manufacturing industry. Therefore there was a substantial reduction in overmanning in British industry.
  The present situation is much closer to what I have described as a true monetarist policy. Recently we have been much more successful in getting public expenditure
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  under control, although, as the Treasury and Civil Service Select Committee pointed out, not perhaps as successful as the Chief Secretary has at times suggested.
  Here I express a word of caution about the system of cash limits. The system works well in restraining public expenditure when inflation is high and rising, but when inflation is coming down fast and one has a set series of cash limits, spending Departments may find that they have an additional claim over resources which, in real terms rather than money terms, might be better reallocated elsewhere. That matter should be borne in mind.
  As a result of the improvement in controlling public expenditure, and as a result of other changes, the public sector borrowing requirement is now much lower than it was previously, and we have therefore been able to lower interest rates substantially. This change has been combined with a growing understanding, not least by the Government, of the importance of the exchange rate. There is a contrast between the original statements that were made by the Government when they came to office and the present situation, when far greater weight is placed on the exchange rate. This underlines an important feature of the background to the Budget. Because the exchange rate has fallen so far and fast, I believe that it would be a mistake for it to fall significantly further, particularly in relation to the dollar. The effect of that on the rate of inflation would be important and disadvantageous, and it would not benefit British industry—not least in the west midlands. My impression is that no one there is much in favour of a further fall in the exchange rate. As a consequence, the Government have needed to keep interest rates high for international reasons and to prevent the exchange rate falling further. The general structure of interest rates in Britain at present is such that the Government should have little difficulty in financing the PSBR. So the relationship between monetary and fiscal policy is important, and we have to get it right.
  In recent years I have tended to stress the importance of getting down the PSBR rather than controlling money supply. The Government tended, at any rate initially, to take the opposite view. My feeling is that the Government could have taken a slightly more relaxed fiscal stance than the Chancellor adopted in this Budget, because the borrowing requirement will be funded with comparative ease because the interest rates are high for international rather than domestic reasons. My view is that—I hesitate to refer to that good old-fashioned expression, "the Budget judgment"; it has not been mentioned by the Chancellor or others in this debate—the Budget judgment could have been a little more generous—if I may put it that way—than would otherwise be the case because of this.
  If that is so, the right thing to spend that money on—if that is the right way to put it—would have been to abolish rather than simply reduce the national insurance surcharge, which is a tax on jobs. It puts us at a disadvantage compared with importers and it does not help exports. If one has rather more scope for the reason that I have just analysed there would be a case for abolishing the national insurance surcharge, not least because in purely electoral terms it is much better to abolish something rather than to reduce it.
  Be that as it may, I hope that, as time goes on and the considerable uncertainties in the present economic position clarify, particularly with regard to oil prices, my right hon. and learned Friend will not rule out abolishing the national insurance surcharge at a later stage, not

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  necessarily waiting for an autumn Budget but perhaps doing so at the Report stage of the Finance Bill. The sums involved are substantial—about £400 million in the remainder of this financial year and about £800 million in a full year. None the less, if we are able to make further change that is where we should place our priorities. While I am advocating what might be regarded as a policy of perfection I would not wish to underestimate the important reductions that the Chancellor has already made and which undoubtedly will help industry.
  Considerable controversy has arisen on the precise analysis of the Government's pension proposals. It is not unimportant to realise that one is returning to the system that the Labour Government abolished when they were—I almost said "in the clutches"—being encouraged by the IMF to cut public expenditure. That is what we are going back to and it has considerable advantages over the system that we have had recently and which we are now proposing to change. I was astonished by the fact that the hon. Member for Truro (Mr. Penhaligon) did not know that there was a pensioners' index or that the increase that we are proposing to give to pensioners would have been somewhat less if we had based our calculations on the index rather than on the RPI. If we had done what he suggested we should have cut the proposed increase for pensioners.
  There is not just the increase in pensions but the reduction in taxation on elderly people. If one looks at the figures in the various press releases, the tax relief per week for a single person is between £1·27 and £3·90 and for a married couple it is substantially more—from £2 up to £4·80 a week. The pensions increase must be seen against the background of those tax reductions for the elderly. That, combined with other of my right hon. and learned Friend's proposals, has put them in a significantly better position than they were before.
  It is important to remember that our last election manifesto stated in clear and categoric terms that we would phase out the earnings rule for pensioners during the life of this Parliament. I regret that that has not been done. Time is running out and it would be unfortunate if we had to delay the next general election to fulfil that promise. Therefore, I urge the Government to take action on that. Of course, there will be arguments from Labour Members that such a measure is in some way unfair to the unemployed; that pensioners will be taking jobs away from the unemployed, and so on. That is not true. It is wrong that pensioners who wish to continue to work to make a little extra money should be penalised in the way that they are by the earnings rule. I hope that we shall have an opportunity to debate that on the Floor of the House when we come to the Committee stage of the Finance Bill.
  I must declare an interest, as I did in the course of the debates on the Armitage report and in other debates on heavy lorries. The proposed taxation changes for lorries will have the effect of encouraging operators to change from the type of heavy lorries that do the most damage and are the most dangerous. Even though the Budget will increase taxation on some operators it will be beneficial because the adverse environmental effects of the decisions that the House made to increase the weight limit on heavy lorries a short time ago will be ameliorated. Operators will be encouraged to use heavy lorries which have three axles on the front tractor and two on the back trailer, rather than two at the front and three on the back. As we know from earlier debates that will have a beneficial effect both in
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  terms of reduced road damage and increased safety, because three-axle tractors are much less likely to jackknife. That is one of the many specific proposals in the Chancellor's Budget that should be welcomed, rot just by my hon. Friends but by Labour Members as well.
  I return to my original theme of economic management, with reference to the remarks of the right hon. Member for Stepney and Poplar (Mr. Shore) both in this debate and earlier. I regret that the right hon. Gentleman's reputation as a serious student of economic affairs has been undermined by his statements over the past six to nine months, in particular his suggestion that the sterling exchange rate should be devalued by some 30 per cent. I recognise the need to restore competitiveness to British industry but the idea that that can be done by the devaluation of the pound combined with a massive reflation is a complete and utter mistake. We lost competitiveness partly because of the rising exchange rate and that, to a considerable extent, has already been ameliorated. However, we particularly lost competitiveness because of a massive increase in wage inflation. That cannot be corrected at a stroke by the kind of policies that the right hon. Gentleman is advocating. On the contrary, an increase in import prices would follow from the fall in the exchange rate and general relaxation in the economic climate that would result from such a massive reflation, would lead to a vast increase in the level of wage settlements. That, inevitably, would not help unemployment. On the contrary it would mean that unemployment a couple of years or so hence would be a great deal worse because we would become completely uncompetitive once his measures had taken effect.
  The crucial point is that we are facing a completely different kind of unemployment from that which we have faced in any period since world war 2. We have seen an enormous reduction in overmanning. Many companies have cut their labour force by about 30 per cent. and they have made enormous redundnacy payments as a result of the Employment Protection Act 1975. Now that they know that they can produce probably as much as they could before they are not likely to take those people who have become unemployed, often through no fault of their own, back on their payrolls. It is bound to take time but we must encourage more investment and more firms to start up. Several of the measures in my right hon. and learned Friend's budget will achieve that objective.
  At the same time it is crucial that we should reduce the level of real interest rates. That will be difficult for the reasons that I have mentioned. We must look at interest rates in relation to those in America and the projected size of the American deficit is horrendous. Anything that my right hon. and learned Friend can do to persuade the Americans to reduce that deficit is bound to be good, not only for Britain and the world economy but for the United States as well. If we are to reduce our interest rates and real interest rates it is essential that we should do everything we can to restore confidence in sterling. It is essential that the change in wage negotiating attitudes that has been apparent recently should be sustained. That is the only way that we shall reduce unemployment. It is a matter of great regret to me that in the past the trade union movement has consistently pushed for higher and inflationary wage settlements rather than protecting the employment prospects of their members and their competitiveness. Therefore, it is important that that responsible attitude should continue in the future, and that

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  the Government should do all they can to reduce industrial costs. That is one of the reasons why I have put great stress on the need for further progress in eliminating the national insurance surcharge.
  The recommendations of the CBI in regard to industrial costs were relevant to reducing the level of unemployment. If the Government are to reduce interest rates and restore confidence, they must be seen to be pursuing responsible economic policies. The recent statements by the shadow Chancellor have tended to undermine confidence. It is highly unlikely that there will be a future Labour Government. It is important that we should get a decisive result at the general election. If the Government achieve that, they can reduce interest rates, increase investment, get the economy going and see a further succession of five or more Conservative annual Budgets.
  8.11 pm
  Mr. A. W. Stallard: It is inevitable at this time and at this stage of the debate that hon. Members have time simply to concentrate on one or two aspects. Much as I would have wished to follow the right hon. Member for Worthing (Mr. Higgins) by talking about taxation and other issues, Back-Bench Members are denied that privilege because of time. I shall restrict my remarks to the social services and pensions because of my position as co-chairman of the all-party group and my interest in pensions both inside and outside the House.
  The debate has centred on pensions, which I welcome. Campaigns that have been carried on outside the House as well as by hon. Members on both sides of the Chamber have focused on a number of issues during the past 12 months. The Government, especially in this election year, have shown some sensitivity to the opinions of those who have studied this issue throughout the country.
  The Chancellor, in his first Budget speech in 1979, said that the Government's general policy would be to make substantial reductions in public expenditure but that it must not be done in a way that bore unfairly on the most vulnerable members of society. Hon. Members have proved today, and can prove a million times over, that exactly the opposite has happened. The Government's policy has fallen heavily on those who could least afford it. I calculate that since 1979 social security savings have amounted to more than £20,000 million. A substantial amount of that figure has come from the pensioners. It is safe to say that, whatever concessions the Chancellor has handed out this week, many of them have come from the money he has clawed back, stolen, swindled, cheated, thieved or nicked—and it is quite right to use those terms to describe what has happened. That is the money that he has been able to dole out this week in his so-called concessions.
  My hon. Friend the Member for Pontypridd (Mr. John), in an excellent contribution, mentioned some of the pensioners' problems, such as the break with the earnings link and the amount that that cost pensioners. He could have mentioned the shortfall of 1·7 per cent. in 1980–81 which was never made up and how much that cost pensioners. He could have mentioned the lengthening of the normal 52 weeks in a year for the rest of us which became a 54-week year for pensioners. He could have said how much that cost the pensioners who never got it back. It was far more than the £2·25. If we were to make a
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  calculation, it would be at least double that sum. He could have mentioned the money that pensioners will lose because of the change in housing benefits—the new unified benefit scheme. I have ascertained from answers to written questions that some pensioners will lose money on that deal.
  When the Chancellor announced in his statement that he would claw back money from pensioners, it was inevitable that there would be a massive backlash from all parts of the House and all parts of the population. There have been lobbies, meetings and motions. It was noticeable, from the language of Front Bench spokesmen in their speeches and in the replies to questions, that a softening had taken place and I was able to speculate with others that the clawback would not take place but that the Chancellor was looking for another trick and scheme by which he could get the same amount of money but without mentioning the dreaded clawback.
  It was gratifying that the political editor of The Guardian rumbled that and began to agree with us. He said recently that the Chancellor was looking for other methods. His not-so-new trick was the 1976 formula which was based on the alleged current rate of inflation. That is all right if inflation remains stable. If it increases between May and November, the pensioners and other beneficiaries lose again and they are back to where they started. I calculate that the reversion to the old method will cost the pensioners £105 million. That represents another saving at the expense of pensioners. It is another means of clawing back money from pensioners.
  There are alternatives. The Chancellor could have agreed to a bi-annual review, which has been argued for many years. Many political correspondents will understand that. Other countries can, if necessary, increase pensions monthly, but, with all our computerisation, according to the latest estimate, we are not able to do it in less than seven months.
  The Chancellor of the Exchequer could have reviewed, as I asked him to do a few weeks ago, the pensioners RPI. We know its inadequacies. That is why we have been asking for a review and a complete rethink as to how pensions are calculated. The Chancellor could have taken guidance from a document sent to him by Age Concern printed by Mr. W. Smith, who was able to prove that if the Chancellor used the new index that Mr. Smith has devised—it is based on pensioners' costs—the pensioners' rate of inflation has increased by 12 per cent. more than that of the rest of the population since 1974. Pensioners say that there is a differential rate between pensioners and the rest of us. There is even a differential rate among pensioners.
  The method of calculating pensions is in need of urgent review. The Chancellor could have looked at those alternatives rather than returning to 1976 policies.
  That leads me further to speculate that this Budget is an interim sweetener. The Chancellor has stated that by a date in June he will be able to announce the pension increase because it is based on the month of May. If one examines the election calendar, that is a very good date. June will offer another great bunch of goodies to pensioners based on what the Chancellor would consider to be the inflation rate. It might set the scene for an October election. That is the type of strategy that is not beyond the trickster who on Tuesday introduced what the Labour party hopes is his last Budget.

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  The right hon. Member for Worthing, (Mr. Higgins) mentioned the omission from the Budget of mention of the earnings rule. The Conservative party's manifesto commitment on this was far clearer than most. The Conservative party said that in the lifetime of a Parliament, and not eventually, the earnings rule would be abolished. Under the present rule, if pensioners earn more than £57 a week they lose some of their basic pension. I understand from a reply given recently that if the figure had been increased to keep in line with inflation it would now be £72. The Government have not made any progress towards abolition, or got anywhere near its true value of £72. In any language that is a disgrace.
  I do not think that the Minister for Health is considered a wet or to be damp. Therefore, I cannot do better than to quote something that he wrote on the earnings rule in a pamphlet which was published by the Conservative Political Centre in July 1976. He said:
  "The earnings rule is a form of taxation which embodies almost everything that Conservatives traditionally oppose:

  (i) It falls on the elderly but not the young.

  (ii) It is levied on earned income but not unearned, and

  (iii) It is a disincentive to work."

  I wish that the Minister had been able to convince the Chancellor of the Exchequer of that. If he had been able to convince him, we might not have been talking about the earnings rule any more.
  Nothing has been done for the over-eighties. Many crocodile tears are shed for them. An ever-dwindling and decreasing number of people who did not qualify for full pensions because they had not made enough contributions were given a non-contributory pension, which is about 60 per cent, of a normal pension. However, that has not been changed. Nothing has been done for the over-eighties in this Budget. Furthermore, nothing has been done about that miserable allowance of 25p that is given to the over-eighties. It could have been raised. Nothing has been done about the death grant or about the unanswerable case that has been made by hon. Members on both sides of the House and by all the voluntary organisations that are involved. Much has been left undone that could have been done if the Chancellor of the Exchequer had been seriously concerned about his intitial Budget statement in 1979.
  This Budget has done little or nothing for pensioners. There is no joy about it among the pensioners in my constituency, and I am sure that pensioners in the constituencies of Conservative Members do not feel any joy either. The pensioners will not forget. They realise that they are not yet back to the position they were in in 1979, despite all the talk to the contrary. They will draw their own conclusions about the trickster who has introduced yet another awful Budget for them.
  8.21 pm
  Mr. Stephen Dorrell: The hon. Member for St. Pancras, North (Mr. Stallard) began by saying that, because of the constraints of time, the wise Back Bencher chose between discussing the details of the pension and social security provisions in the Budget and the macro-economic judgments. He made one choice, and I hope that he will forgive me if I make another.
  Those hon. Members who have regularly attended economic debates during the lifetime of this Parliament will know that I have not been the most persistent or ardent admirer of some of the Chancellor of the Exchequer's previous Budgets. I agreed with the view expressed by my
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  right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour) about the previous Budgets, particularly the Budget in the spring of 1981, which pressed the economy still further and needlessly into deep recession. I do not retract any of the comments I made at the time about that Budget and some of the other things clone then.
  However, one of the most dangerous traps in politics is to pursue yesterday's issues when the circumstances that gave rise to them have changed. My right hon. and learned Friend the Chancellor of the Exchequer made what my right hon. Friend the Member for Worthing (Mr. Higgins) insisted on calling the Budget judgment against a background that is in many important respects different from that against which earlier Budget judgments were made. For that reason I find much less to take issue with in this Budget.
  I shall run through the various factors that have changed and that make the judgment that the Chancellor of the Exchequer made on Tuesday something that most Conservative Members can support and defend. The first and most obvious change in the past six to nine months is the substantial drop in the external value of sterling. It has cut the dollar costs of manufacturers in this country and has contributed to a considerable easing of the competitive pressures on British manufacturers and the widening of their margins. It has also made it easier for them to compete, not only for export orders overseas, but for orders within the British economy, where they must compete against imports. The pressure on manufacturers' margins is considerably less than it was 12 months or two years ago.
  Therefore, although I have argued in the past that the emphasis on tax cuts should be placed on cutting the national insurance surcharge, I no longer regard that as my principal concern. Industry is now better able to deal with the competitive pressures to which it is subjected and its primary concern now is not the cost pressures that were so compelling two years ago, but the lack of orders. That is why I take the view expressed in the Budget that the emphasis this year should be placed on personal tax cuts, because of their impact on demand.
  If one wants to increase the demand for British goods, and thus increase orders for British factories, it is much more effective to put money into people's pockets, and particularly into those of relatively low earners, than to try to do it through reducing the national insurance surcharge. Therefore, that switch of emphasis was right.
  The second aspect of the changing background is that we are no longer dealing with a world economy that is sinking further and further into recession. That is a dangerous statement to make in such categoric terms, but there are clear signs in the American and German economies that they are, at the very least, turning round. In the United States of America, in particular, there is increasing evidence of the possibility of quite a strong upturn in the level of that economy's activity. Given that 30 per cent. of the total wealth that we produce is export-dependent, if that is true, it highlights the essential need to ensure that the international initiatives that the Chancellor of the Exchequer has undertaken as chairman of the interim committee of the IMF, and which he has repeatedly said that he proposes to continue at the Williamsburg summit, and in the review of the international monetary arrangements, can have just as great an impact on the level of economic activity in Britain as any of the Budget's contents. Therefore, the decline in

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  the value of sterling and the improvement in the prospects for world trade amount to a significant change in the background against which my right hon. and learned Friend made his Budget judgment. Given those two factors, the House may legitimately ask what the proper response is, but it must be done against that background.
  The Chancellor's Budget has been represented by the press as being a low-key, safe Budget and as having a relatively low impact on the outlook for economic activity in Britain. In many ways the press has underestimated the likely stimuli that will come to bear on the British economy in the next few months. Hon. Members should remember that last autumn my right hon. and learned Friend injected a further £1 billion into demand by cutting the national insurance surcharge. The tax cuts in Tuesday's Budget are in addition to the other three factors that I have mentioned. All those things amount to a considerable stimulus to the likely level of economic activity in the next few months. Bearing all those stimuli in mind, it is only sensible and prudent to consider what constraints in the economy prevent further and more imaginative initiatives—as some of my right hon. and hon. Friends might call them—being taken.
  We must remember that we cannot simply look at a graph of declining manufacturing output and economic activity and say that that is spare capacity lying around waiting to be taken up. It is not. Many of those factories are closed, people are on the dole and the work forces have been dispersed. We start from the position that we are in now, not from a position 17 per cent, above it. If that is true, we must expand the level of activity at a pace which the industrial and commercial base of this country will be able to match. We must remember that, precisely because the recession has been so long and so deep, many parts of our manufacturing industry, particularly in the west midlands, are in a fragile state and that, against the background that I have described, a massive injection of demand at this stage would have been an unreasonable risk for any Chancellor of the Exchequer to take.
  Previous Governments have made the easy mistake of imagining that, because we have been through a recession, a major stimulus is required to get the economy moving and have provided that stimulus at exactly the wrong moment, just as the economy has started to recover. It is true that bigger stimuli are needed in the depths of a recession than when the economy begins to recover. If my analysis that the level of activity is likely to increase over the next few months is correct, this is not the time for a major stimulus to domestic demand. What we need during recovery is what I have often described as a policy of "drip feeding" the economy out of recession. I wish to see the Budget followed up by a similar package of measures with the emphasis on "little and often".
  Earlier this afternoon my right hon. Friend the Member for Chesham and Amersham said that if one projects the Budget judgment forward for three years it would contribute to a 2·5 per cent. growth rate over that period. If it were true that this was the end of wisdom for the next three years, that analysis might be correct, but I hope that when my hon. Friend the Economic Secretary to the Treasury comes to reply he will be able to assure the House that this is not the end of wisdom and that we shall see, if necessary, further stimulus measures being taken when
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  it is clear—if it is clear—that the economy has successfully responded to the stimuli that are already in the system.
  I agree with my right hon. Friend the Member for Chesham and Amersham to the extent that the Budget is not sufficient by itself, but for the moment it is probably a reasonable judgment for my right hon. and learned Friend to have made. I hope, most of all, for the future that we can get away from the absurd annual ritual of insisting that in March we make a decision that will last us right through the year. As the recovery progresses, as I hope it will—I think it is now reasonable to anticipate that it will—I hope that my right hon. and learned Friend will ensure that whatever can be done to increase the rate of recovery will be done, but obviously within the context of the ability of the economy to respond to the stimuli injected into it.
  8.32 pm
  Mr. Michael Meacher: There are two clearly overriding criteria by which judgments of the Budget should be made: first, how much will it reduce mass unemployment, the biggest single political and economic scourge in this country, and, secondly, what effect will it have on living standards? With regard to both, I believe that the Thatcherite echo in this Budget is unmistakable. The Budget will lead to unemployment rising still further and overwhelmingly benefit the rich.
  On the first point, calculations suggest—here I agree with the right hon. Member for Worthing (Mr. Higgins)—that the overall balance of the Budget—I think he called it the Budget judgment—is mildly reflationary. But thanksgiving that the continuing and deliberate contraction of the economy engineered by the Chancellor's preceding four Budgets has now been halted is tempered by the fact that a 0·75 per cent. of GDP stimulus—that is the view of most people—pales into insignificance when placed alongside the Government's fiscal and monetary policies which remain excessively conservative and extremely tight. That is clearly shown by the fact that if we exclude the cyclically oriented components of the Budget deficit—the £17 billion which is expected to be spent on unemployment benefit, supplementary benefit, and taxes forgone in the next year—with a public sector borrowing requirement of only £7·5 billion, the Government are running a huge surplus in the middle of the biggest world slump for 50 years. No other western country pursues such a horrendously damaging and self-destructive policy.
  The central criticism of the Budget must be that, with a collapse in manufacturing production of no less than 20 per cent. during the past three and a half years—a collapse without precedent in the history of capitalism, apart from the 1930s—it offers no answer to mass unemployment and falling living standards.
  The Budget contains the Chancellor's micro measures—and they are certainly microscopic. They are pathetic little baubles, full of sound and wind, but signifying next to nothing compared with the enormity of the industrial collapse that has befallen Britain under the right hon. and learned Gentleman's regime.
  The Chancellor has given no answer to the two essential questions facing Britain if a recovery happens—not that there is much prospect of that. First, how, on the Government's own premise, do they intend in the longer term to sustain a recovery without refuelling inflation?

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  Hitherto, the only means by which the Government have held down wage inflation has been by the threat and reality of mass redundancies.
  Secondly, if a recovery occurs, how will the Government prevent an upturn in demand being dissipated on imports, which will create an intolerable balance of payments debt? It is important to note that during the two years to the end of 1982, British demand for manufactures increased by 11·5 per cent., but our supply of manufactures fell by 3·5 per cent. Those are the central questions of British economic policy, but the Budget gives no answer to them.
  Another yardstick for judging the Budget is its effect on living standards. The judgment is stark. Following the Budget, it is clear that, for the first time since the war, the Government will conclude their five-year parliamentary term leaving virtually the whole of the population—other than the very rich—worse off than at the beginning of the term. Even previous Conservative Governments did not manage to achieve that.
  The Government's figures show that real personal disposable income, which is acknowledged to be the best indicator of living standards, fell by 6·5 per cent. between the last quarter of 1979 and the middle of last year, which is the latest available figure. All classes of people, other than the rich—those earning more than £30,000 a year—have shared in that decline.
  What about those in poverty, dependent upon supplementary benefit? Their numbers have risen by no less than 60 per cent. since the middle of 1979. One in eight of the population is now explicitly in poverty. That represents more than 7 million people. What about families on average earnings? I am grateful to the Treasury for the interesting answer that it gave me earlier this week. It showed that, taking account of all changes in income tax rates, personal allowances and thresholds throughout the last four years, and including all five Budgets, those on average earnings made a gain of precisely £5. That is insignificant, and it is before taking account of large, swingeing increases, such as the 3·5 per cent. increase in national insurance contributions. Therefore, those on average earnings made a substantial loss during that period.
  Low-paid workers earn two thirds of the national average. According to Treasury figures, they made a tax loss during that period of £45 in real terms. By contrast—I again quote the Treasury figures—company directors and top professionals earning over £30,000 a year have been awarded a massive real tax gain of no less that £3,650.
  That is the record of Thatcherite Britain. After five Budgets, including the latest and four years of Thatcherite rule, the official verdict is tax increases for the low and average paid and colossal tax cuts for, and only for, the richest 1 per cent. elite of this country. That is the official verdict on four years of Tory rule according to Treasury figures.
  The Chancellor boasts—the right hon. Member for Worthing mentioned this, understandably—that his tax cuts this week are worth about £2, or more on some calculations, to families throughout the land because he has raised personal allowances by 8·5 per cent. above the level of inflation. What he did not say was that two years ago he left personal allowances where they were, which was precisely 15 per cent. below the level of inflation
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  when he failed to put them up at all. The fact is, therefore, that people, even today, after the handouts in the latest Budget, have not made up what they lost then.
  It is not just the average paid who have suffered. Middle managers and professionals on double average earnings—£15,000 a year—have actually made a tax loss under this Budget because they do not earn enough to benefit from the increase in the higher rate threshold, and at the same time they have been hardest hit by the big increases in national insurance contributions.
  As some of my hon. Friends have said, we have the really unpleasant spectacle in this Budget of the Chancellor showering tax handouts on the rich. According to Treasury figures, he has given more than £800 a year to senior managers, at the same time changing the method of assessment for the pension uprating in a manner that can have been designed only to cut it back surreptitiously. First, we had direct, overt clawback of the 2·5 per cent. so-called overshoot. Now that that has become too politically hot, even for Tory Back Benchers, we have the snide clawback.
  The pension uprating will be fixed, as we all know, at 4 per cent. in June in line with inflation in May. When pensioners get it in November, inflation will be 6 per cent., if not higher. It is mean to use back-door methods to cheat the pensioners of what they are clearly entitled to, at the same time, in the same Budget, handing out £20 a week extra to Mr. Ian MacGregor and the likes of him—and, incidentally, let me say to the Chancellor, to himself and to other Members of the shadow Cabinet—[Interruption.] That was indeed a serious mistake. I withdraw the word "shadow"—to other Members of the Cabinet. I was obviously thinking six months ahead.
  Those are the values of Thatcherite Britain—look after self, especially selfish rich, and the devil take the hindmost. This is not a Budget on which we can say anything different from what we have said before. The most notable feature is yet again massive largesse for the rich and pretty small beer for everyone else. The Budget does not address itself to the central problems of Britain today—problems which cry out for a solution, for hope of bringing down the level of mass unemployment, and of pointing the way to an early recovery. That is the essential measure of its failure.
  8.44 pm
  Mr. Bill Walker: I shall endeavour to concentrate my remarks into as short a space of time as I can because I know that other hon. Members are keen to speak.
  I believe that we must accept that this Budget has to be seen against the background of the present fragile state of other world economies, the historic endemic high rate of inflation, low productivity, indifferent management and intransigent unions and the overmanning that has bedevilled British industry for the past 30 years.
  Lack of demand worldwide has created a situation in which protectionism is again rearing its ugly head and United Kingdom exporters are having to face intense competition, particularly on prices and delivery, in order to hold their existing markets. The prospects of increasing their market share is made much more difficult by the introduction of modern technology and equipment in countries that have been largely Third world, low labour cost countries, which today still enjoy low labour cost and also now the benefits of modern technology.

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  The pressure to reflate must have been substantial, particularly at a time when the thoughts of most hon. Members and of the media are on the coming general election. After all, this has been the accepted practice in the past. Governments of different political complexions and in different parts of the world have taken the view that increased borrowing in the last year of office which, in turn, led to increased inflation and increased rates of interest, could be justified if the Government were reelected. Power was more important than the underlying and true state of a country's economy. To their credit, this Government and the Chancellor have recognised that, in unstable financial and economic world conditions, it would be dishonest and foolhardy to attempt to purchase short-term popularity by increased borrowing or by printing money.
  I wish particularly to refer to the Scottish element of the Budget. There are no doubts in Aberdeen and in Scotland that the measures contained in the Budget to encourage further North sea exploration and appraisal will stimulate activity and produce more wealth and jobs in Scotland. I only wish that I could, with confidence, say that the Scotch whisky industry looks forward to an increase in activity. The Scotch whisky industry has a remarkable record of success in the export market. Indeed, if all other British manufacturers could emulate the Scotch whisky industry's record, there would be no problem for the British economy and reflation would be a viable proposition.
  The Scotch whisky industry is paying a heavy price for the failure of other sectors of manufacturing industry in the United Kingdom. I am concerned at the continuing shift from bottle sales in the export market to the export of bulk whisky, particularly malt. I believe that the Government have understood the problems of the industry and that they have attempted to assist in a real and positive manner. For that, the industry and myself are thankful. The deferment of duty was an example of Government assistance to industry that was most welcome.
  I recognise, as, I am sure, do the Government, that the home market for Scotch can set the pattern and give a lead to the rest of the world. We must acknowledge that the level of taxation imposed in' the United Kingdom, if emulated by every other country where Scotch is sold, could lead to a reduction in the demand for Scotch. This would create even more problems for our exporters. My right hon. and hon. Friends will not be surprised when I say that I, for one, have never accepted that because taxation was at a certain percentage level in 1975 or, for that matter, in 1925, it should be at the same percentage level today on a product such as whisky. I realise that Ministers accept this view. Otherwise, the tax on whisky would have been substantially increased. If my mathematics are correct—I believe that they are—the price of whisky is about half what it was 20 years ago. I hope that Ministers will acknowledge that prices in the Scotch whisky industry have not risen to the same extent as prices in other industries and that this has contributed substantially to the export success of the Scotch whisky industry.
  Another element in rural costs that are so important to Scotland is the price of petrol and derv. I am glad that my right hon. and learned Friend the Chancellor has taken these costs on board in considering his Budget. This is much appreciated. Those living in rural areas depend on
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  private transport much more than public transport. Petrol and diesel prices can be a regressive form of cost, particularly if they continue to be indexed to the rate of inflation. I hope that the new structure of vehicle excise duty will help the rural areas and that the reduction of 10 per cent. on lighter commercial vehicles will help to reduce costs for the movement of goods and the provision of services in rural areas.
  I also welcome the reduction in corporation tax for small businesses from 40 per cent. to 38 per cent.
  I wish there had been some provision in the Budget to encourage the National Coal Board either to lease at peppercorn rents or to give for nothing to miners those mines in Scotland that the miners believe can still be worked but which the National Coal Board wishes to close.
  I am pleased to note that the work done by the Select Committee on Scottish Affairs on free ports has not been ignored. In some small way it has contributed to the decision to establish free ports. This is a good decision and will, in the main, be given a welcome on all sides of the House. May I draw to the attention of the Minister the fact that the Scottish Select Committee was considering Prestwick? I hope it will be top of the list when the decision is taken about where free ports are to be sited. If Scotland is fortunate enough to have two, may I put in a bid for Dundee? I do not have a constituency interest in either of these sites. If there are to be two free ports in Scotland, both sides of the country should benefit, but my first preference is for Prestwick.
  8.51 pm
  Mr. Frank Hooley: Much of the economic debate has tended to concentrate on the level of public expenditure and whether it is high enough or low enough. The aspect of public expenditure that has not been debated enough is what the Government are spending the taxpayers' money on. In this respect table 1·14 on page 17 of the public expenditure White Paper, volume 1, is revealing.
  If we compare the unproductive expenditure for 1978–79 with 1983–84, taking note particularly of expenditure on armaments and on the unemployment element in the social security payments—that is, allowing for 2 million more unemployed—we find that in 1983–84, to which the Budget relates, the Government will be spending £8 billion more in real terms at constant prices on armaments and unemployment than was spent in 1978–79. If we turn to productive expenditure on industry, energy, trade, transport, housing, environment, education and science, and compare 1978–79 with 1983–84, we find that there has been a reduction of £4 billion. That is £4,000 million less in real terms on expenditure on the essential productive parts of the economy.
  The totally unproductive expenditure has gone up by £8 billion while the productive expenditure on the important sectors of the economy has been reduced by £4 billion under this Government. I remind the House that these are constant prices and do not take account of inflation. It would have been possible to reverse those equations without spending a penny more overall in public expenditure. This shows the grotesque failure of the Government. It is one of the reasons why industries are being destroyed and why we are falling behind our competitors. The fundamental expenditure on industrial training and equipment, on energy and on the infrasructure

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  of society has been grossly neglected and cut back by the Government while unproductive expenditure on financing the dole queue and on our absurd armaments level, which is far beyond that of our NATO partners, has soared up to these fantastic levels—£8 billion more wasted and £4 billion less being spent on the essentials of the economy.
  Every hon. Member knows of the need for expenditure on industry, microchips, electronics, telecommunications, biotechnology, investment in energy conservation and on energy sources. All these things are crying out for additional money. What has happened is that expenditure on precisely those things has gone down during the past five years.
  The Minister will no doubt remind us of the Chancellor's announcement that £240 million will be available for technology and innovation, but that is over three years so it is really only £80 million—a petty, fiddling amount compared with the gigantic increases in expenditure on armaments and the enormous cost of financing an ever-increasing dole queue.
  One of the Government's standard alibis for the troubles of the past three years has been the world recession, as though it were some kind of measles that no one could do anything about. A major problem in that recession, however, has been the trap in which the Third world countries have found themselves. With falling commodity prices and rising oil prices, their difficulties are appalling compared with ours. One way out of the recession and this trap would be an injection into the Third world economies to build up international markets and thus help our own. Yet between 1978–79 and 1983–84 overseas aid has been cut by £172 million at constant prices—a cut of 16 per cent. or 17 per cent. in real terms. Those are the figures in the Government's own White Paper.
  It is no use the Government constantly whining that the world economy must expand if we do nothing to expand our own economy, because we are part of it. One no longer needs to rely on the Brandt report in this argument. Internationally, spokesman after spokesman from America, West Germany and elsewhere has said that unless the major economies of Japan, the United States, Germany, France and Britain follow a path of expansion there will be no way out of the trap of international recession and slump.
  Yet the Chancellor has introduced a deflationary Budget. The public sector borrowing requirement is screwed down rigidly to 2·75 per cent., as though there were some special virtue in that. What is the Chancellor forecasting for the current year? I quote his own forecast, not any invention of mine. The Chancellor forecasts rising unemployment, rising inflation and a miserable rise in output of 2 per cent., which itself is suspect, as this time last year he forecast a 1·5 per cent. rise in output and the result was a third of that—a mere 0·5 per cent.
  A number of people have commented that this is a rich man's Budget and that is certainly true. A man or woman on £40,000 a year will be £1,000 better off as a result of the tax changes. The person on average income will be about £100 better off or, if he is single, only £66 better off. The Chancellor has given 10 times as much tax relief to the rich as to those on average earnings. Moreover, we still have the fantastic situation in which a single person earning £40 per week or a married couple with £60 per week will jump straight into the 30 per cent. tax rate—the
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  highest in the world for that level of income, I believe—the same rate as that paid by the person who enjoys an income of £300 per week.
  The so-called tax give-away amounts to £2 per week, but a moderate smoker will spend an extra 25p per week on cigarettes, a moderate drinker 12p on beer and the person with a small car an extra 28p on petrol and 10p per week on car tax—not to mention the 0·25 per cent. increase in national insurance that the Government were careful to announce way back in November. All that will offset any tax advantage as a result of the Budget.
  In addition, anyone who is unlucky enough to be a council tenant will find that he gets 85p on his rents and increases in rates, inflation and transport charges. By my rough calculations, the chances are that anyone on a moderate or even a medium income will be practically no better off as a result of the Budget, if one calculates all the pluses and minuses. The Guardian this morning calculated—I have not checked the calculations—that those on medium incomes, because of the effect of the higher national insurance contributions, will be net worse off because of the increase in the band and the 0·25 per cent. extra, offset by such a miserable amount of tax relief.
  There is now no time to go into some of the details of the Budget. In it, there is no hope for unemployment. Perhaps the most cynical sentence in the pile of documents that have poured out from the Treasury is the one that says that a severely disabled person can now earn £22·50, in place of the £20, before the benefit is affected. How many severely disabled persons have a dog's chance of getting a job at all with 3·25 million on the dole?
  We have heard much about the small business man. My guess is that the tax changes are an accountant's paradise, which the average small business man will not understand. I can see how many small business men will rush along to buy some deep discounted stock, which is the new gimmick of the Chancellor.
  This is a slump Budget, a deflationary and an unemployment Budget. It is a "no hope" Budget. The claim to fame of the Chancellor will be that he has grimly persisted to the bitter end in a policy of mass unemployment and industrial dereliction.
  9.2 pm
  Sir Anthony Meyer: Like most of my right hon. and hon. Friends who have spoken in the debate, I come tonight not to bury Caesar but to praise him, and to add my modest contribution to the chorus of faint praise that has greeted my right hon. and learned Friend's Budget. I take my theme from the editorial in the Liverpool Daily Post, headed "Consistent if colourless", which ended with the words:
  "Sadly, for the moment, the jobless it seems will have to be patient."
  In between, the editorial praised the Chancellor for his refusal to be diverted from the austere path of rectitude that he has chosen.
  It is wrong to underestimate the importance of consistency or the difficulty of maintaining it. One phrase that has been dropped from the political vocabulary these days is "stop-go". Some say that it has been replaced by the word "stop", but that is not fair either. The Government have halted, and perhaps reversed, the slide towards catastrophe. A nation such as ours, dependent on exports, cannot go on with three men doing two men's jobs and getting four men's pay. There is now a real

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  possibility—I put it no higher—that we can avert catastrophe in the 1990s and 2000s. However, there is still the rest of the 1980s to get through. We may have to get through with 3 million-plus unemployed for many years to come. That problem is bad in the south-east, but intolerable in the north and Wales.
  Some people may find compensation in the high level of unemployment and say that it induces a more reasonable attitude to pay bargaining in private industry in weakening the monopoly power of the unions and the public sector. Although I welcome both these developments, I cannot regard them as justifying unemployment. I see better ways of bringing such things about. In a society where a real job is still a vital ingredient in a person's self-respect, there are no compensating advantages in unemployment.
  I accept that at this stage there is no possible action that would have an immediate effect on unemployment. I warmly welcome the minor measures in my right hon. and learned Friend's Budget—particularly the raising of the thresholds and the things that he has done for small businesses that could create many more jobs. We have fewer small businesses than most of our partners in the EC, especially Germany.
  I welcome also the idea of free ports. I can understand the eagerness of Liverpool to be considered as a free port. I hope that this will not be done at the expense of those smaller ports in the region on which Liverpool has so often in the past cast a baleful eye. If claims are being made that Liverpool and Merseyside would benefit from free port status, I am entering a claim on behalf of my constituency for free port status for the tiny port of Mostyn which, with the nearby enterprise zone in Flint, could give a boost to economic activity in north-east Wales, which has the worst unemployment in Great Britain.
  I was glad to hear my right hon. and learned Friend talking about the modest steps that he is taking in relation to job sharing. I shall say a word about that later. I am not entirely persuaded by those of my right hon. and hon. Friends who wanted to see some reflation in the Budget. There is a serious risk that more reflation would lead not to more jobs but to more imports. I believe that there is room for considerable expansion in the economy that would not create an extra job. On the contrary, expansion could create bottlenecks through shortage of skills. Therefore, I warmly welcome what my right hon. Friend the Secretary of State for Employment is doing with new training initiatives.
  I welcome the Government's other new job creation programmes, many of which I am bound to say were treated with considerable scorn by Conservative Members when they were introduced by the Labour Government. I welcome particularly the community programme, which enables unemployed people to do work that is valuable to the community and important to the environment. All these schemes, admirable though they are, are patchy and makeshift and are not seen as part of an imaginative drive to get everyone to work.
  Above all, two things are lacking in the Government's and the Chancellor's approach. The first is proper recognition of the fact that anything that we can accomplish nationally is liable to be undone by international developments over which we have all too
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  little control. The second is any vision of the type of society that we are trying to bring about. I cannot properly develop these themes in the two minutes that I have left.
  We have only to see how fluctuating sterling exchange rates have shaken the Chancellor's attempt to pursue a consistent course and how much uncertainty is introduced by movements in oil prices to recover our sense of proportion and to wonder why we do not join the European monetary system exchange mechanism and, in the longer term, as the hon. Member for Sheffield, Heeley (Mr. Hooley) pointed out, why we so glibly ignore the dangers and opportunities that have been pointed out to us in two successive Brandt reports.
  At home, the need is not just to recognise that the days of full employment are gone for ever, but to act upon that conclusion and to move at an accelerating pace away from the 40-hour week, 40-week year and 40-year working life towards the 30-hour week, 30-week year and 30-year working life. From there we must move towards industry, only a small part of which will be manufacturing, whose purpose is not only to provide jobs but to create wealth and to use that wealth to bring about the best social services, the best education system, the most generous pensions and the most agreeable environment of any country.
  We need from Ministers a vision of Great Britain and its place in the world. The Government and the Chancellor are moving in the right direction, but let them move rather faster, and let them tell us where we are going, if, indeed, they know.
  9.8 pm
  Mrs. Gwyneth Dunwoody: There used to be a time when Chancellors came to the House to enunciate their financial strategy. They laid down a policy which was meant not just to restore the balance in our economic performance but to give some sign to the people of exactly how the Government imagined that we would develop in the coming year. Those days are long gone. On Tuesday the Chancellor explained a strategy that was just about as clear as mud. It bore a close resemblance to a swamp. We know that we are in it, but neither he nor anyone else seems to be capable of getting us out.
  The theme that has been repeated time and again in today's debate has been the real dismay that has been expressed, with considerable honesty by the Opposition and in veiled terms by Conservative Members, about the complete failure of the Budget to give encouragement to the British people.
  Since the Government took office there has been no understanding of the damage that they were doing and no caring for the social cost. Ministers come to the House time and again prepared to massage the unemployment figures. This Budget is no different from any other. Have we been given any stimulus for economic growth? No, we have not. We have heard about overmanning. I assure Conservative Members that there is no overmanning in firms that go bankrupt. At present we have the largest number of bankruptcies ever recorded in small firms that Conservative Members are so fond of telling us they are anxious to promote.
  What the Budget does is to try—I say "try" advisedly—to cover up the paucity of political commitment and thought in the Conservative party at present. The Secretary of State showed that clearly when he opened the debate. He has an endearing habit of acting as publicity agent for various members of the Labour

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  party. He tells us what has been in the various books that they have published during the time that they were either in or out of the House. However, he then gave the whole game away in one sentence. We asked him, "Now you have told us what happened when the Labour party was in power, tell us how much consultation there was by the Chancellor with you on the Budget, tell us how much notice he took of your views on what should happen to pensions, and tell us how he wanted to know what your policy was on the social services." In one sentence the right hon. Gentleman put it all into perspective, saying, "We do not do anything like that." What happens is that the Prime Minister tells Ministers what they ought to do and then they proceed to do it. Otherwise, they know that they would not retain their places on the Front Bench.
  I positively encourage and applaud certain aspects of the Budget—for example, the suggestion that we shall alter the law on benefits in kind of directors and employees, and the suggestion that in future it will be far more difficult for directors of private enterprise to benefit by having special loan facilities for their homes and the private schools to which they send their children.
  The Secretary of State told us that we were so lacking in information about what was happening in the National Health Service that we needed yet another management survey. That is an absolute disgrace when one thinks that we have had a Royal Commission on the National Health Service and continuous management monitoring, but still the right hon. Gentleman is convinced that the only way that he can find out what is happening in the NHS is to have yet another management survey. To do that he is calling in his friends from private enterprise. The Government are good at doing that. They did it for the transport system, and it cost the taxpayer a great deal of money.
  If the right hon. Gentleman is suggesting that the same advantages and tax benefits will be offered to the management in the NHS that have been offered to directors in private enterprise, or to the nurses and the ancillary workers, who are so appallingly paid, that may be welcome. Under the present Government there has been a direct attack on the NHS.
  The Secretary of State says that the Health Service overall is 7·7 per cent. better off. Of course, he is not talking about the hospital budget, because it has suffered significantly. Even so, the right hon. Gentleman has had to work fairly hard to find his new percentages. He has enunciated a new theory. He says that in future expenditure on maintaining the same level of service because of demographic change within the population is equal to the expenditure of new growth money. He knows that that is absolute nonsense. It cannot be defended in any way.
  Since the Government came to office, demographic change has made it necessary to spend an extra £431·9 million on the Health Service just to stay level with the services provided in 1979. The right hon. Gentleman ignores the effect of the costs of new medical technology, which are £265·6 million more than in 1979. In addition, we must not forget that we have suffered the largest industrial dispute in post-war Britain—the health workers' dispute—for which the Government have made the health authorities pay £59·2 million. They are trying to invent new ways of apparently saving money on the National Health Service. They have invented a system of efficiency savings, which is a remarkably imaginative piece of
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  creative accounting that claims arbitrarily that health authorities are wasting 0·5 per cent. of their money and that they had better give it back to a central pool. That is not only a meaningless juggling of figures, but is almost as bad as a direct cut, because it disrupts the planning of expenditure without guaranteeing a long-term improvement.
  Mr. Fowler: If the hon. Lady believes that it disrupts planning, why do the regional health authority chairmen accept that a 0·5 per cent. efficiency saving can and should be made?
  Mrs. Dunwoody: I suppose that it has nothing to do with the fact that the Secretary of State carefully selected regional health authority chairmen who would not give him any trouble, even if that meant sacking several highly talented and responsible members, and removing people such as the former deputy general secretary of COHSE from any board on no grounds other than political prejudice.
  The reality of efficiency savings is that the DHSS has taken an arbitrary cut across the board and told authorities that they should be capable of saving that amount. If they cannot, it means, unfortunately, that patient care will suffer. That is the extent of their commitment to the National Health Service. The hospital and community services budget has fallen by as much as 3·9 per cent., but to avoid that damaging admission several Ministers have spent sleepless nights with their accountants trying to produce the magnificent sum of £80 million, which the Secretary of State announced in the House last November as though he was handing out a positive benefit to the NHS.
  Between £40 million and £50 million of that sum was produced because inflation has fallen faster than the Government expected, but for which they constantly take credit. The result was that health authorities and departments had more cash than they expected. However, in many cases, there has been a direct cut in the money available.
  The pensions offshoot was not the only instance where the Government clawed back money that they wanted. Last year 3,120,000 working days were lost in industrial disputes. The Government will say that the Health Service workers are lucky to have a job, and one can understand that attitude if one considers the amount of economic stimulus in this Budget. However, let us assume that £70 is an acceptable average wage. In that case, the days lost in strikes when staff were not paid meant that health authorities kept £43·7 million in wages that they had expected to pay. The Government, in their infinite generosity, have decided not to take that money away from the NHS. However, of the £80 million, £50 million will go to the hospital budget, and £40 million of that will be used to pay for the 1983–84 contingency reserve and the 1982 pay deal. The Government have insisted on the health authorities paying a larger percentage of the cost of the extra pay rise—more than 4 per cent.—and they must pay half the amount for this year.
  The money for health authorities will be given to them, in effect, from their own reserves. That is what is called new money. We are told, "If you deduct all of these sums, you will see that we have £10 million of new money. However, do not relax too much, because £6 million of that is already going towards propping up the Government's initiative on

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  joint financing." In every debate in this House, we are told that the Government are seeking to expand care in the community and that they will do it by encouraging joint financing. They know that that is the most empty of the empty gestures that they make regularly. Joint financing is collapsing for the simple reason that the previous Secretary of State for the Environment, who had to weigh the amount of money in the social service budgets of local authorities, ensured that they were totally unable even to keep up their previous expenditure on local authority social services. It makes nonsense of all the discussion papers and the empty confessions that the Government are seeking to do something considerable to change the pattern of health care in this country.
  The real expenditure in the DHSS, the real expansion, the real costs, are the Government's action in putting 2·2 million people on the dole. The Government have increased to £15 billion the cost of unemployment and expenditure on maintaining the people who are unemployed. They have squandered the money that has come from the North sea oil revenue. On top of that, by removing all exchange controls and allowing £1 billion a month to leave this country, they have encouraged investment in the industries of our competitors.
  The north-west and the midlands are not bothered about the minor cosmetic changes in the Budget. The only growth they see has been in the work of estate agents who have taken it on themselves to sell off the assets of factories which for many years produced jobs for the people in their communities. The Government's economic policy is consistently damaging the employment prospects of our people. We are told that there are many concessions in the Budget. We are told that we are being unreasonable. We are told to look at the assistance that it gives to the elderly, and the changes that have been made in the income tax bands.
  Let us talk about some of the things that are not in the Budget. We know that the Government pride themselves on encouraging the voluntary sector. They talk constantly of the need for partnership between those who offer their services and the state services. However, there has been no concession whatever to the charities. By removing value added tax from charities, the Chancellor could have made a positive contribution to real care in the community. By not doing it, he will continue to take large sums from the charities. The Spastics Society has calculated that the amount that it will pay in VAT this year is equal to the provision of a new home. That shows the Chancellor's priorities. Help the Aged has said that if it were relieved of or zero-rated for VAT it could provide eight minibuses. However, it has been given no assistance whatever.
  Nevertheless, when it suits the Government, they are perfectly able to relieve some sectors of the community of VAT. The new cowboys' charter for privatisation has no difficulty in relying on the assumption that small enterprises and private enterprises should be relieved of the payment of VAT. Indeed, in an attempt to assist private enterprise to tender for jobs in the hospital service, the Government are insisting that health authorities must provide office space and equipment, special clothes, sterilisation and special disinfectant materials, and that all those must be free to the private contractor. They must also have direct subsidies for office space and telephones and on top of that they are exempted from VAT. Just to make
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  sure that the authorities come up with the correct result—after all, this is the fourth time that the Secretary of State has tried to bully people into taking these measures—the authorities must take the lowest tender. [Interruption.] This is the fourth time that the health authorities have been circulated with demands to move towards privatisation. The Secretary of State is perfectly well aware of that.
  That one change alone, on top of all the costs of the NHS, is worth £2·2 million to the present contractors—a small gift from the Chancellor to the contractors who will undercut the employment of ancillary workers in the NHS. There will be great pressure on the authorities to move rapidly towards the position where, instead of going for capital growth and modernising their equipment, they are required, in a wholly artificial manner, to hand out contracts to those who want to go into the NHS in order to make a profit.
  It has been said that because the Government care so much about the family they have made considerable changes in the various rates not just for pensions but for child benefit. In Britain there are nearly 1 million children living in homes with parents living on either supplementary benefit or unemployment pay. Those children are living in real poverty. They represent Britain's future, yet the Government's sole contribution is the great concession of bringing the child benefit rate back to where it was when the Labour party left office, with only 5p extra.
  But even when the Government talk about child benefit they are still not honest with the House and the country. There are two elements in child support for persons receiving supplementary benefit. One is the straightforward child benefit and the other is the child dependency addition. In the last three upratings the Government have taken advantage of loosely drafted legislation to cut the value of the child dependency additions. Instead of uprating the total child support in line with inflation, they have held the separate element steady and the total cost of child benefit has not increased to anything like the amount that it would have done had that happened. Were the correct rate now to be paid, child benefit would be up to £8·50 for each child. That is the reality of the empty gestures that the Government have made in the Budget.
  Mr. Mike Thomas: What is the cost of the Labour party's social security proposals and the improvements that it says it wishes to make? Is the Labour party still committed to the 3 per cent. real increase in NHS spending over and above the 1 per cent. for demographic change? What will be the cost of the other promises, including the pensioners programme that the Secretary of State said would cost between £10 billion and £20 billion?
  Mrs. Dunwoody: If I thought that the hon. Gentleman could read, I would send him a letter. [Interruption.] I am delighted to tell the hon. Gentleman that the Labour party, when it is returned to power after the next general election, intends to commit 3 per cent. in real terms to the NHS and 4 per cent. in real terms to the personal social services. The hon. Member for Newcastle upon Tyne, East (Mr. Thomas) should take great care not to offer himself to the electorate too often by making light commitments, because it is unlikely that he will be able to fulfil them.
  Mr. Fowler: Are hon. Members to assume that that 3 per cent. increase in the National Health Service expenditure is in addition to demographic growth and

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  medical advance? Will the hon. Lady make an estimate of the increase in the social security programme to which the Labour party is committed?
  Mrs. Dunwoody: The commitment is a commitment in real terms. Moreover, if hon. Members are looking for an expansion in jobs and social services and for a civilised way of life, they ought to ask why the Government are not prepared to give the same commitment that the Labour party is prepared to give, instead of asking whether the Government are prepared to see a 15 per cent. increase in defence expenditure.
  The Government have a commitment to spend 3 per cent. in real terms on defence. Even after allowing for all the extra costs, the growth in expenditure on defence under the present Government has been 15 per cent.
  Mr. Fowler rose—
  Mrs. Dunwoody: The Secretary of State has made his speech. I shall not give way.
  Mr. Fowler rose—
  Mr. Speaker: Order. If the hon. Lady is not giving way, she must be allowed to continue.
  Mr. Fowler rose—
  Mr. Speaker: Order. I think that I have interpreted the mind of the hon. Lady, and the answer is no.
  Mrs. Dunwoody: I am concerned that it should be made very clear—[Interruption.] The Secretary of State does not like the simple fact that his Government think that spending 3 per cent. on defence is the right priority. The Labour party intends to spend 3 per cent. on the National Health Service. It is as simple as that. That encapsulates the point that under this Government there has been a 15 per cent. increase in defence spending and a direct cut in the National Health Service. What will happen next year—it is noticeable that the House has not been given the figures for the coming year—is that five regional health authorities will have a direct cut in the amount of finance available to them and an RHA such as Oxford will not be given any extra money to deal with demographic changes, and will face even more difficulties.
  The reality of this Budget is that it contains no clear economic strategy or commitment to the people of this country and shows no concern for the young, the unemployed or the sick. The Government's clear commitment is to support the wealthy, some but not all small businesses, a society where if one cannot pay for provident care one is not entitled to enjoy the National Health Service, and a system of education which believes in privilege, where some are given good conditions and good school books and others are in under-funded and rundown buildings without the proper equipment.
  The Government are totally insensitive to the state and size of the social damage in the country today. I am utterly appalled that a Chancellor of the Exchequer should come to the House and put before it so thin a gruel at so great a cost.
  9.34 pm
  The Economic Secretary to the Treasury (Mr. Jock Bruce-Gardyne): The House will have taken careful note of the way in which the hon. Member for Crewe (Mrs. Dunwoody) responded to a factual question from the hon. Member for Newcastle upon Tyne, East (Mr. Thomas) and
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  a further factual question from my right hon. Friend the Secretary of State. She totally failed to answer either question. She evaded them and that put her whole performance in a proper perspective. She said that the Budget made no concessions to charities. I can only assume that she has not studied the Budget statement, because several important concessions were made to charities, just as they have been in all our previous Budgets.
  Indeed, I shall remind the hon. Lady of what my right hon. and learned Friend the Chancellor of the Exchequer has done for the benefit of charities in successive Budgets. He has abolished the stamp duty on transfers to charities, exempted charities from development land tax and exempted charitable bequests of whatever value from capital transfer tax. He has reduced the minimum period for covenanted gifts from seven years to four years. He has introduced higher rate tax relief for covenanted gifts and has increased the ceiling to £5,000 per year. The hon. Lady should be the first to recognise that he has also gone out of his way, in successive Budgets, to provide special VAT reliefs on medical equipment and aids for the disabled.
  Mr. Ennals rose—
  Mr. Bruce-Gardyne: If the right hon. Member for Norwich, North (Mr. Ennals) will calm himself I shall come to the very point that he raised, which the hon. Member for Crewe also touched on. I refer to the relative treatment of charities for VAT and local authorities providing competing services. The hon. Member for Crewe referred to the proposal to exempt from VAT contracted-out services in the National Health Services. She is, of course, quite wrong to imagine that that is a concession to the providers of such contracted-out service. They do not get a penny out of it. It simply ensures that the position of the NHS on VAT is unchanged in practice.
  To return to the point raised by the right hon. Member for Norwich, North and by the hon. Member for Crewe, the right hon. Gentleman should be the first to recognise that throughout the lifetime of this tax and throughout the period when the right hon. Gentleman was responsible for such matters the position has remained the same. When the tax began it was deemed that there was no real point in charging local authorities VAT for non-business services, which would then have to be recovered through rates or taxation. They have been reimbursed for the VAT on those services from the start under section 15 of the 1972 Act. When the right hon. Gentleman was in office he did not make any attempt to change the position, and for good and sufficient reason.
  Mr. Ennals: The Minister has failed to take any note of two points. First, an increasing responsibility has fallen on charities, because of the cuts in expenditure on social services. As a result more, proportionately, is done by charities. Secondly, VAT has been doubled since the Conservative party came to power. Despite the long list that the Economic Secretary read out of the benefits given to charities, the major charities say that they have got back about one eighth of what they lost because of the Chancellor of the Exchequer's refusal to make a concession on VAT.
  Mr. Bruce-Gardyne: As I said during an intervention in the right hon. Gentleman's speech, we profoundly

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  welcome the contribution that charities make. However, the right hon. Gentleman should be aware from his period in government that the problem about arranging for the repayment of VAT to charities is that there are a- mass of charities, some which would benefit disproportionately to their public support. In many cases the charities' objectives would not command universal support. All Governments have faced that problem. [Interruption] The hon. Member for Crewe must allow me to make my speech. The right hon. Member for Norwich, North made an extremely lengthy intervention and I wish to reply to the debate.
  Thursday's Budget debate might almost be described as a claimants' union day—the day when Opposition Members parade their plans for extra spending of their constituents' taxes and insurance, sometimes with a crass indifference to their failure to oblige when they have had responsibility for such matters. This afternoon has been no exception.
  I wish to touch on other matters before I conclude. I refer, first, to some of the points raised by the hon. Member for Pontypridd (Mr. John). I had some sympathy with the comments of the right hon. Member for the Western Isles (Mr. Stewart) about the change from forecast to historic assessment of benefits uprating having a certain air of circularity about it in view of what happened in 1976. Opposition Members have made great play of the claim that the date chosen for this year's planned historic assessment—May—promises to be a month of low inflation. It simply represents the last month compatible with achieving uprating on time in November—[Horn. MEMBERS: "Oh."]. That happens to be true.
  Mr. John rose—
  Mr. Bruce-Gardyne: The hon. Gentleman asked a question to which I am trying to give an answer. I can assure the hon. Gentleman that it is indeed my right hon. and learned Friend's intention that the November deadline will be met. Comments from the Labour Benches about the timing of this change from the forecast to historic method are curious when one recalls that the switch in the other direction from the historic to the forecast method was so arranged that the whole period from March 1975 to November 1975 was effectively disregarded. It is a curious coincidence that that happens to be the period of the highest level of inflation in our history. I can assure the hon. Gentleman that his suggestion that the difference between the effect of the historic arrangement to May and the possible level of inflation in November could not remotely approach in money terms the £500 million saving that his right hon. and hon. Friends obtained on that occasion, and which they gloried in so doing.
  Mr. John: Will the hon. Gentleman undertake on behalf of the Treasury that no person on sickness benefit, unemployment benefit or invalidity benefit will lose as a result of any difference in inflation between May and November?
  Mr. Bruce-Gardyne: I cannot possibly give such undertakings because, apart from anything else, we do not know what the level of inflation will be at those respective dates. I can guarantee that the scale of withdrawal that the
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  Labour party perpetuated in 1976 will bear no relation to what the Government are doing this year. Those figures are way out of sight.
  Mr. Ennals rose—
  Mr. Bruce-Gardyne: The hon. Member for Crewe intervened during the speech of my right hon. Friend the Secretary of State for Social Services to ask a question, the answer to which he promised I would give when I came to reply. She made the charge that the increase in real resources allocated to the National Health Service under this Government was largely accounted for by efficiency savings and extra charges.
  Mrs. Dunwoody: I asked, "How much?"
  Mr. Bruce-Gardyne: I see nothing wrong with harnessing charges and efficiency to improved performance in the NHS. In any case, I can assure the hon. Lady that she is wrong, because, against a rise of real resources, as my right hon. Friend explained, of about 7·5 per cent. since the Government took office, charges account for about 1 per cent.
  The hon. Member for Pontypridd and others asked about the review of the household duties test.
  Mr. Mike Thomas rose—
  Mr. Bruce-Gardyne: I must continue. I have been interrupted twice and time is running short.
  I can assure the hon. Member for Pontypridd that the review is continuing and that a statement will be made in due course when it is ready.
  The hon. Member for Stockport, North (Mr. Bennett) sought an assurance that the uprating of supplementary benefit would be done on the same basis as last year, that is, with a disregard of the housing element in the RPI. I am afraid that I must disappoint him, because the answer is that it will.
  The hon. Member for Barking (Miss Richardson) and the right hon. Member for Norwich, North urged upon us the need for a number of concessions in value added tax. I could not help noting that the hon. Lady told her right hon. Friend that the concessions that she sought were more important than those that he sought. Unfortunately, that is the fact of the matter. With all the perfectly legitimate campaigns that we face for concessions on VAT, those who support and promote each one regard theirs as of overwhelming importance. Each concession granted in one area inevitably leads to the strengthening of demand in other areas until we gradually find that the tax base is eroded. It would not be right to go down that route.
  My right hon. Friend the Member for Chesham and Amersham (Sir I. Gilmour) and my hon. Friend the Member for Aldershot (Mr. Critchley), together with other hon. Members, broadened the area of debate, and I make no complaints about that. My right hon. Friend and my hon. Friend made typically elegant and, perhaps, sceptical comments about the Budget. I must tell my hon. Friend the Member for Aldershot that his choice of phrase is always so enjoyable, even when one does not agree with it, that I marvel that he ever thought to conceal it behind a cloak of anonymity.
  I must pick up my right hon. Friend the Member for Chesham and Amersham on one specific point. He said, as others have said before, that last year was the first in our history to produce a deficit on manufactured trade.

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  That is not the case. On a balance of payments basis—[Interruption.] It is the only basis on which we can make a strict and proper comparison—
  Mr. Shore rose—
  Mr. Bruce-Gardyne: I shall not give way.
  Mr. Shore rose—
  Mr. Speaker: Order. We cannot have two Members standing at the same time.
  Mr. Bruce-Gardyne: I wish to complete my remarks on the points raised by my right hon. Friend the Member for Chesham and Amersham. On a balance of payments basis, which is the only one that compares like with like, there was a surplus of £2½ billion on manufactured trade last year. If my right hon. Friend has other figures, I should like to hear about them. In any case, we cannot ignore the impact of oil on the current account. Of course, it means that the balance is struck on a different basis.
  Sir Ian Gilmour: Is my hon. Friend disputing the Government figures that show a deficit on finished manufactures of £186 million?
  Mr. Bruce-Gardyne: Those figures are based on the trade accounts. They ignore the fact that imports are calculated on a cost-inclusive basis, but exports are not.
  Mr. Shore: Surely the origin of the dispute is simple. The right hon. Member for Chesham and Amersham (Sir I. Gilmour) is correct. The value of manufactured goods imported by Britain last year exceeded, for the first time since the Tudors, the amount that we exported. What the hon. Gentleman is telling us—and he is correct—is that when we take account of the shipping charges, the insurance and the other charges we are still in narrow balance. But the point is that for the first time in British history we are exporting fewer manufactured goods than we are importing. Our shipping services have always been in surplus.
  Mr. Bruce-Gardyne: The right hon. Gentleman is not comparing like with like. The only strictly comparable basis is a balance of payments basis. Therefore, the figures I have given to the House are correct.
  Several Hon. Members rose—
  Mr. Speaker: Order. Hon. Members must not have a personal discussion. Only one Member can speak at a time, and the Minister is addressing the House.
  Mr. Critchley: My hon. Friend referred to a very readable article that I wrote in The Observer years ago. This is a compliment from a fellow journalist who has vanished into Government and now publishes nothing save his private correspondence.
  Mr. Bruce-Gardyne: I can only say "Touché" to that. I want to turn to the comments of my hon. Friends the Members for Kensington (Sir B. Rhys Williams) and for Loughborough (Mr. Dorrell), who picked up a point which has been raised several times in this debate about the desirability of a more explicit exchange rate objective.
  We had the same argument this morning from, of all people, Mr. Samuel Brittan, a gentleman with whom, as my hon. Friend will recognise, I exchanged correspondence. If I had been in a Shakespearian mood I would have felt inclined to say "Et to Sam" when I read his comments
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  this morning, because Mr. Brittan was the John the Baptist of the floating rate. Never a week went by, from 1967 right through to 1972, when he did not berate successive Chancellors for failing to let the pound float free. I therefore find it a little curious that he should now, together with others, such as my hon. Friends the Members for Kensington and for Flint, West (Sir A. Meyer), urge upon us the need for a more explicit exchange rate target.
  I wish that Mr. Brittan and Opposition Members as well as hon. Members on this side of the House who want an exchange rate target would spell out a little more clearly how they see it operating in practice. It is not, according to Mr. Brittan this morning, by wholesale intervention which
  "suppresses symptoms and postpones problems",
  he said, although some hon. Members, such as my hon. Friends the Members for Flint, West and for Kensington, who favour immediate participation in the exchange rate mechanism of the EMS, would presumably take a different view since willingness to intervene is effectively a precondition of such participation. According to Mr. Brittan, however, the pursuit of an expressed exchange rate purpose would apparently be backed up by conscious overshoot or undershoot of the monetary targets—in layman's language, by actively encouraging a rise or a fall in interest rates, as the case may be. This, in effect, was the point made by my hon. Friend the Member for Kensington this evening.
  If we consider the practical implications of such exchange rate management, we face certain difficulties. I think it is fair to say that in recent months by far the strongest impact on the movements in the sterling rate has been made by the shifting preceptions of the likely course of world oil prices. From time to time it may have been affected by some of the wilder pronouncements of the right hon. Member for Stepney and Poplar, for while you, Mr. Speaker, and I know that the likelihood of the right hon. Gentleman having a chance of putting his crazier notions into operation is so remote as to be discountable, to the outside world he remains the spokesman for the alternative Government, and laying off for the outside chance that the British electorate might take leave of its collective senses may seem a cheap precaution. Let us suppose that the exchange rate was to diverge—
  Mr. Shore rose—
  Mr. Bruce-Gardyne: I am not giving way again.
  Hon. Members: Give way.
  Mr. Speaker: Order. It appears that the Minister is not giving way. He might be allowed to continue.
  Mr. Shore rose—
  Mr. Speaker: Order. The Minister cannot be made to give way.
  Mr. Shore rose—
  Mr. Bruce-Gardyne: I am not giving way. I am sorry.
  Mr. Speaker: Order. We have had an orderly debate. I hope that we can continue in that manner. It is clear that the Minister is not giving way. He must be allowed to continue.
  Mr. Bruce-Gardyne: I am sorry, but time is short. I have a number of points that I wish to cover. I cannot give way to the right hon. Gentleman again.

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  The question that has to be asked is whether, if the exchange rate were to diverge markedly from some chosen and published zone because expectations of oil prices shifted dramatically for whatever reason, it would necessarily be right to loosen or tighten domestic monetary conditions simply for that reason. That is by no means clear to me. For my part, the course of wisdom in these matters seems to be the one that the Chancellor has mapped out repeatedly in recent years and once again on Tuesday—that the exchange rate is one of several indicators of domestic monetary conditions that may, from time to time, in the short term, be primarily influenced by wholly extraneous pressures. If it moves significantly in one direction or another, it is only common sense to consider whether it is telling us something about the domestic monetary environment calling for corrective action. However, we must also study what is happening to other indicators.
  I wish to say a few words about a subject that was raised by my hon. Friends the Members for Perth and East Perthshire (Mr. Walker) and for Flint, West and that has been much discussed in the press. This relates to my right hon. and learned Friend's announcement of our intention to legislate to provide for the possibility of the establishment of free ports in the United Kingdom. I should perhaps say first that since, as the House knows, the working group that I chaired reported only a fortnight ago, I am afraid that it will not be possible to include the text of the legislative proposals in the Finance Bill in time for the First Reading. I can assure the House that the necessary clauses will be tabled in ample time to allow them to be properly debated in Committee.
  I wish to add a word or two of warning. I get the impression sometimes that a good many eminent
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  authorities, and even perhaps some hon. Members look on free ports as a sort of cross between a status symbol and Shangri-La, a place of hash and dancing girls and cut-price videos, where the Humphrey Bogarts of the 1990s will come together to do business from the corners of the globe—places in whose reflective glory adjoining civic heads will bask. [Interruption.] It is rather good stuff, actually.
  Unfortunately, I must tell the House, free ports will be a good deal more prosaic—a group of wired-off enclosures where, for the most part, at any rate, goods from anywhere beyond the Common Market can be transhipped, handled, stored and proceed prior to onward shipment to any export market beyond the Common Market. There will be no tariff privileges that are not readily available elsewhere in the United Kingdom, no tax or rates relief, no absence of control of drugs, arms and pornography. What they will enjoy is a large measure of exemption from basic customs control procedures unless or until their products are sent out into circulation within the European Community and a potentially alluring style and title, although even there there is no copyright.
  It follows, as our working group emphasised in its report, that the success or failure of the whole experiment will turn upon the interest of traders. The enthusiasm of port and airport operators, of regional development officers and chief executive officers of metropolitan councils and the like is both understandable and meritorious, but they will not add a penny to the cash flow of a free port. That will depend on traders who will take a stake and set up shop within them. We have already embarked, with other interested Departments, on the preparation of guidelines.
  Debate adjourned.—[Mr. Major.]
  Debate to be resumed upon Monday next.

Orpington and District Hospitals
Motion made, and Question proposed, That this House do now adjourn.—[Mr. Major.]
10 pm
Mr. Ivor Stanbrook: I last called the attention of the House to the problems of Orpington hospital on 11 February 1982. On that occasion a consultative document issued by the South-East Thames regional health authority had suggested that the accident and emergency service at Orpington hospital could be reduced from the present full-time department to the status of a peripheral unit open only during office hours and not at all at weekends. The effect would have been to leave only one full-time accident and emergency service in the Bromley health district, that being the one provided by Bromley hospital.
That was a deplorable proposal. Bromley hospital alone could not cope with the out-of-office hours demand from the Orpington catchment area, which includes Sevenoaks and other areas to the south of Bromley. Moreover, Bromley hospital is located on a small island site in Bromley town. Its expansion is inhibited unless the district health authority wastes millions of pounds of its resources on acquiring the extra land nearby, whereas Orpington hospital is on a wholly-owned large 31-acre site with ample space for expansion.
The people who made this ill-conceived proposal were professional planners and certain medical people who were drawn from areas outside Bromley distict and other parts of the region. They used questionable statistics and were ignorant of many relevant facts and certainly of the strong feelings which people in the south of Bromley borough and in the Sevenoaks area have about keeping open the Orpington hospital casualty department.
As far as I can see, the only support they had was from some people who are naturally alarmed at the widening gap between resources and needs in the National Health Service and think that centralisation of all medical services in one hospital in the district would be in the public interest. They are wrong. The most furious opposition to the idea came from the inhabitants of the Orpington and Sevenoaks areas themselves. I organised a petition to the regional health authority against the plan and it speedily attracted over 7,000 signatures from local residents.
However, when one is fighting a battle of this kind one must expect the enemy to appear in a variety of guises. The formal proposal to downgrade Orpington hospital's casualty department has how been shelved. Instead, I discern evidence of trends which, if allowed to continue, could make that downgrading inevitable in time. I refer especially to the continual neglect of the need for an additional orthopaedic surgeon at Orpington and Sevenoaks hospitals. I am glad to see my hon. Friend the Member for Sevenoaks (Mr. Wolfson) in his place. No doubt he will be seeking to catch your eye, Mr. Speaker, to deal with this problem as it affects his own constituency.
For any department of a hospital to exist, I am told that there must be a consultant in charge of it. He is responsible for the running of the department. Mr. Soli Lam, who is the only orthopaedic surgeon at Orpington and Sevenoaks hospitals, was in charge of the accident and emergency department at Orpington hospital in a voluntary, unpaid, capacity for almost 14 years from 1969. During that time, the number of patients referred to him or treated by him
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personally rose in volume 15 times. He has an excellent professional reputation and an enormous waiting list, so that a patient joining his waiting list may wait five years or more for what is known as "cold" surgery from the time when he first joins the list. By the end of 1981, at Orpington alone, Mr. Lam had a total in-patient waiting list of 458, including 144 day cases. I believe that that figure exceeds that of the rest of the hospitals in the district together, and it must be one of the highest figures for an individual consultant in the entire country. It derives, of course, largely from the fact that Mr. Lam has a very high professional reputation and that for all this time he has had no orthopaedic surgeon as a colleague to assist him.
In 1982, due to the pressure of his work as an orthopaedic surgeon, Mr. Lam resigned from the post of head of the accident and emergency department at Orpington hospital. As no other consultant of any kind at Orpington hospital is willing to assume that responsibility, the department is now being run by a "committee". No one consultant is in charge of the service regularly.
The only way to keep the department open permanently, whether as a full-time or a part-time unit, is by the appointment of an extra consultant for that purpose. Unless that is done, there can be no long-term future for the accident and emergency department at Orpington hospital.
The attitude of the Bromley district health authority is perplexing and typical of the authority's attitude to the future of Orpington hospital as a whole. When I first raised the matter of the proposed downgrading of the casualty service, the chairman of the district health authority, Mr. Peter Gibson, accused me in the local press of scaremongering. He said that it might never happen. All that I had done was to criticise an official recommendation to consider the downgrading of the casualty department of a hospital in my constituency. One would have thought that that was a perfectly proper thing for a Member of Parliament to do, but to Mr. Gibson it was an unwarranted interference in the bureaucratic process.
I therefore did not expect much response when I asked about our missing consultant. The casualty department at Orpington hospital has now been without a consultant for 12 months and Mr. Lam is still coping single handed with his enormous waiting list. Mr. Gibson assures me that he shares my concern about the problems in this specialty, and says that measures are in hand to see what more can be done for the orthopaedic services.
I got more help out of Sir John Donne, the chairman of the South-East Thames regional health Authority, who has been an excellent chairman and whose recently announced retirement is a grievous blow to the region. Besides expressing his anxiety, Sir John told me:
"Mr. Lam actually works in two Health Districts, at Orpington and Sevenoaks Hospitals. There are two other surgeons working within the Bromley Health Authority and the equivalent of a little over two (in terms of sessions) in the Tunbridge Wells Health Authority. You will appreciate that it is the responsibility of District Health Authorities to finance the cost of Consultant posts, and the question of whether or not to appoint an additional orthopaedic surgeon between those two Health Authorities has to be determined by them. Both Districts recognise that their waiting lists for orthopaedic surgery are far too long, but neither District is in a position to finance the appointment of an additional surgeon, either whole-time or part-time."

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He added that it would be wrong in principle for the regional authority to provide additional funds for this purpose to any one district authority, with which comment I am bound to agree.
The ball is firmly in the court of the Bromley district health authority. What is it doing about it? Like many other health authorities, it has devoted much time, energy and resources to deciding its priorities for expenditure. It has produced a mountain of paper, and I can speak with feeling about this because I receive much of it. However, it still does not seem to have grasped the point that, when it decides its priorities for expenditure, the last department in which cost-cutting should be exercised is the delivery of clinical services to the patients. The administration seems to grow bigger and bigger, but we hear about cost-cutting only on the clinical side. What the proportion of costs due to administration is to the whole no one seems to know, but I believe that it is large and growing. I suspect that there is a whole army of people in the Bromley district, including highly paid doctors, engaged on producing circulars, memoranda, directives, guidelines, strategic plans and consultative documents and spending many man hours serving on working parties and medical committees, while poor Mr. Lam works himself to a frazzle giving treatment to his patients.
The latest example of this imbalance is the rumoured reduction of junior house surgeon posts at Orpington hospital as a result of a decision taken by the manpower control committee. If it is true that there has been such a cut, it represents a serious decline in medical standards at Orpington hospital generally. There is a point to put to Bromley district health authority—it has not yet put out to tender its laundry and catering services. It has not yet found out whether it might make any economies itself. Until this is done, it cannot say that it cannot find money from savings if that is the reason why it has been unable to provide an additional orthopaedic surgeon.
The people of Orpington take a close interest in their hospital. There is even a local voluntary organisation, the Orpington Nurses and Citizens Association, which monitors the work of the hospital and keeps me informed. Not surprisingly, it has been denied a place on the community health council. What they and the rest of us in Orpington fear is that, despite all the past protestations about the projected status of Orpington as a district general hospital and the building of new wards, the Bromley district health authority, or at least some of its members, would like to concentrate on Bromley hospital and transform the nature of Orpington hospital from an acute general hospital to a largely geriatric one. That has never been stated openly, but it seems to be the logical end of the present policy. Orpington's representatives are a minority on the district health authority and its medical committees and on the community health council. It is therefore naturally up to me to try to restore the balance by exposing the facts in the House.
I therefore earnestly request the Minister to press the district health authority to appoint a second orthopaedic surgeon to be shared between Orpington and Sevenoaks hospitals. Mr. Lam deserves relief. The Orpington casualty service needs a leader. The consequences of not acting soon in terms of human misery and suffering could be immeasurable.
10.16 pm
Mr. Mark Wolfson: I am grateful to my hon. Friend the Member for Orpington (Mr. Stanbrook) for giving me an opportunity to participate in the debate and also to my hon. Friend the Minister for giving me time to do so. My hon. Friend has spelt out clearly the seriousness of the position and how it could affect the long-term viability of Orpington hospital. I associate myself with all the points that he has made. Sevenoaks hospital depends for the more serious accident and emergency services and for a number of its consultant services on Orpington hospital.
I wish to associate myself also with my hon. Friend's point that large units are not the way forward for the National Health Service. Sevenoaks hospital is an important part of our community and one that we cherish and about which I have spoken previously in the House.
A second orthopaedic surgeon is needed to service Sevenoaks as well as Orpington. I am advised by general practitioners in Sevenoaks that the current waiting time there for hip operations is three years. Mr. Lam is the only surgeon at Sevenoaks able to carry out those operations. This compares with a waiting time for similar operations at the London teaching hospitals of 12 to 18 months. I also understand that only and one other orthopaedic surgeon in the country cover such a large area.
Mr. Lam's involvement with Sevenoaks hospital is that he runs a clinic on one half day a week, an out-patients fracture clinic on another half day and operates on a third half day.
I should like to finish by bringing the human factor into the debate by demonstrating what long waiting lists mean to patients, because I am certain that it is the Minister's intention that patient care will have priority over all else in the National Health Service.
I shall quote from a letter from Mrs. Smith in Otford. She says:
"Dear Sir, I wonder if you could help me. I am writing on behalf of my daughter Pauline, aged 16. Over three years ago she started having pains in her right knee. After two years of being on crutches, going backwards and forwards to the … clinic, Mr. Lam decided to operate and found that she had a badly torn cartilage. Last Christmas it was wonderful to see her walking about without aid. June came and she started swimming. After ten minutes in the pool, the pains returned. After two trips back to Sevenoaks outpatients, Mr. Lam said that he would do an exploratory operation. I am now in hospital recovering from a car crash. I asked the nursing officer if she could find out when Pauline could be admitted and was horrified to find her card had been pushed back and will have to wait another year. Pauline is heartbroken. Four years, and no teenage life. Can you help me in any way?"
That is the challenge of the debate, and is what the House and the Government have to be about.
Pauline has not been pushed back. I have ascertained that. The problem is the length of the waiting list. Mr. Lam explains the position. My hon. Friend has specified that the increase in demand has been 15-fold since 1969. Mr. Lam says:
"Because of this dramatic increase in demand I get at least 10 to 12 requests per week from patients, relatives and even some MPs and general practitioners to expedite, or review, or other euphemisms, patients in order that their operations may be done more quickly."
Mr. Lam cannot meet those requests and should not, for all have their own priorities. He says:
"This is a patent impossibility if the establishment remains the same and the volume of demand continues to increase as it is doing."

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I join my hon. Friend in requesting the Minister to take all the steps that he can to ensure that our health authorities give priority to providing an additional surgeon at the Orpington and Sevenoaks hospitals.
10.22 pm
The Under-Secretary of State for Health and Social Security (Mr. Geoffrey Finsberg): I congratulate my hon. Friend the Member for Orpington (Mr. Stanbrook) on securing this Adjournment debate about a second orthopaedic surgeon to serve Orpington and Sevenoaks hospitals. I know that he has already been extremely active in approaching the chairman of the South-East Thames regional health authority and the Bromley and Tunbridge Wells health authorities. The debate is clear evidence of his dedication to his constituents' interests. I have listened to the problems that he has described with much feeling and, although I have no easy answer, because it must be for the health authorities themselves to decide on their priorities, I should like to try to explain some of the national and local background. I shall also cover the points that were raised by my hon. Friend the Member for Sevenoaks (Mr. Wolfson).
I remind the House that in spite of serious economic problems the Government have managed to make available to the Health Service resources that are 5½ to 6 per cent. more in real terms than when we came to office. Therefore, we have created a larger cake. However, it is for the regions, with the allocations that they are given, and the districts, to decide how they shall cut it up. That is why in the end the Government cannot say to a particular hospital that it must have three of these and two of those.
Alas, the problem of orthopaedic waiting lists is not unique to these hospitals. Techniques have developed dramatically in recent years, but we are still nowhere near the position where everyone needing them has fast enough access to them. The long delays in obtaining some type of orthopaedic treatment cause us considerable concern, particularly when one considers the pain and anxiety of the individuals involved. The young girl whom my hon. Friend the Member for Sevenoaks mentioned is, alas, only typical of so many. That is why we are doing all that we can to reduce waiting lists for orthopaedic surgery.
The British Orthopaedics Association is considering the report of the Duthie working party. The association has sent this report to all orthopaedic surgeons, asking them to evaluate their services in the way recommended by Duthie to see whether changes in practice could reduce local waiting times. This will be followed up by a questionnaire, again from the association, to all orthopaedic surgeons, asking what use they have made of the report's recommendations. Because of the importance that we attach to solving the waiting lists problem, this questionnaire will go out with a letter from my hon. and learned Friend the Minister for Health; commending the Duthie report's recommendations. I hope that surgeons will give those helpful recommendations very positive consideration.
As to the matter that my hon. Friend has described, services at Orpington hospital are, as he knows, the responsibility of Bromley health authority. At present, three consultant orthopaedic surgeons are employed in the Bromley district. Two work at Farnborough and Bromley hospitals and one at Orpington hospital. He also carries out two sessions a week for Tunbridge Wells health authority, at Sevenoaks hospital, in the constituency of my hon.
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Friend the Member for Sevenoaks. It must be clear that neither Bromley nor South-East Thames disputes the desirability of having a second consultant surgeon at Orpington hospital. They accept that waiting lists at Orpington and Sevenoaks are too long and that the number of orthopaedic surgeons in the Bromley district is below the national level. But the problem is finding the resources to pay for another surgeon.
I noted with interest, as I am sure the chairman of the authority will note, what my hon. Friend said about putting out to tender to test whether they are getting value for money in what I call the support services. Until one has tested them, it is impossible to say, hand on heart, that we have made every effort to spend the money available in the best possible way.
The cost, which would fall mainly to Bromley, could be considerable because it would be much greater than just an additional consultant's salary. Although he would be using existing beds, he, or she, would generate additional activity, giving rise to increased spending on secretarial and nursing support and of course on materials. Some of the equipment used today is very expensive. Whether money should be spent in this way or on another service for which there is an equal, if not even greater need, must be for the health authority and not Ministers to determine. I should explain that Bromley must decide on its priorities against a background of resource constraint, which I shall examine briefly.
Bromley is in the South-East Thames area, which is well provided with health care facilities in comparison with the rest of the country. I am leaving in about half an hour for Newcastle, which has special problems. The authorities there believe that they are under- resourced compared with what they will tell me tomorrow is the lush South-East Thames health authority. We are committed to moving towards a fairer distribution of resources in the NHS and a provision of services that matches need and demand throughout the country. It must be the aim of Government to ensure that there is, broadly speaking, equality of access to care and treatment for all patients. This policy means in effect that South-East Thames receives a smaller proportion of growth money—I stress those words because it is extra money—than do regions less historically well-endowed with hospitals and other services.
Even within South-East Thames, there are wide differences in the allocation of resources between the 15 districts. That is because districts, such as Bromley, in or near to London are—again for historical reasons—comparatively well provided in health care terms in contrast with some other districts in the region, such as Medway. My hon. Friend will know that my hon. Friends from Medway are rather unhappy with their position, and that they would consider that Bromley is better off than Medway. There are very serious deficiencies in the service at Medway, which is why the region is rightly committed to a policy of redistribution between districts. What this means for Bromley is that, working on the formula used, it is regarded as being 15 per cent. above its resource target. It must make savings to come back within those targets.
There are already important calls on Bromley's resources. One of them is the need to ensure that funds are available to meet the running costs—estimated at an additional £140,000—of the new development to be commissioned shortly at Orpington hospital. This

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development, I know, has had from its inception my hon. Friend's warmest support and encouragement. Another priority for the health authority is one on which we place great emphasis at national level. That is the need for a redistribution of resources from the acute sector towards the Cinderella services—those for mentally handicapped, mentally ill, and elderly people. I know that Bromley takes this need seriously and is involved, for example, in the move to run down the large mental handicap hospital at Darenth Park and make provision for its residents within the district.
I understand, as a London Member, that, despite all I have said, my hon. Friends' constituents may not feel that
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they are especially over-provided with health care. I certainly do not suggest that the district is free of problems. It has its share, including that of orthopaedic waiting lists. The matter is being considered. I cannot promise an easy answer, but I hope that I have been able at least to explain that even deserving cases such as the one put tonight must compete alongside other national and local priorities, and so cannot always be put into instant effect. At local level, health authorities must be allowed to determine their priorities within national guidelines.
The Question having been proposed at Ten o'clock and the debate having continued for half an hour, MR. SPEAKER adjourned the House without Question put, pursuant to the Standing Order.
Adjourned at half-past Ten o'clock.

  Manufactured Goods
  Manufactured Goods

  Catalytic Gas Heaters
  Mr. John Fraser
  asked the Minister for Trade if he will use his powers under the Consumer Safety Act 1978 to prevent the importation and supply of catalytic gas heaters containing asbestos panels and replacement asbestos panels for such heaters.

  Mr. Sproat
  My hon. Friend the Minister for Consumer Affairs issued a press notice recently about catalytic gas heaters with asbestos panels that could disintegrate with age and release asbestos fibres; though the risks to health were small he judged it necessary to warn the public. We understand the heaters most likely to be unsatisfactory have not now been imported for some time and retailers' stocks are exhausted. In a subsequent version and in replacement panels still on sale, the asbestos is held in place by a sandwich of other material and at present there is no evidence to justify a ban.
  210
  balance of payments and (iii) a balance of payments basis adjusted to take account of changes in the terms of trade each quarter as a percentage of 1975.

  Mr. Peter Rees
  The information requested in (i) and (ii) is as follows:

  Textiles
  Textiles
  Car Imports
  Car Imports
ATTORNEY-GENERAL
  Legal Aid
  Legal Aid
FOREIGN AND COMMONWEALTH AFFAIRS
  United Nations World Disarmament Campaign
  United Nations World Disarmament Campaign
  Helen Smith (Inquiry)
  Helen Smith (Inquiry)
EDUCATION AND SCIENCE
  Higher Education
  Higher Education
  Museums, Galleries and Libraries
  Museums, Galleries and Libraries
  Student Grants
  Student Grants
  Items in Lieu of Tax
  Items in Lieu of Tax
ENERGY
  Departmental Staff
  Departmental Staff
WALES
  Housing (Structural Defects)
  Housing (Structural Defects)
HOME DEPARTMENT
  West Yorkshire (Crime Statistics)
  West Yorkshire (Crime Statistics)
  Prisoners (Solitary Confinement)
  Prisoners (Solitary Confinement)
  Prisoners (Correspondence)
  Prisoners (Correspondence)
  Police (Complaints)
  Police (Complaints)
  Prisons (Manufactured Goods)
  Prisons (Manufactured Goods)
  Jurors
  Jurors
  Remanded Persons (Strangeways Prison)
  Remanded Persons (Strangeways Prison)
  Mr. K. K. Abrol
  Mr. K. K. Abrol
  Missing Persons
  Missing Persons
SCOTLAND
  Sheltered Housing
  Sheltered Housing
  Hospitals (Statistics)
  Hospitals (Statistics)
  Waiting Lists
  Waiting Lists
  National Health Service Staff
  National Health Service Staff
  National Health Service Expenditure
  National Health Service Expenditure
  Nurses
  Nurses
  Roads
  Roads
EMPLOYMENT
  Unemployment Statistics
  Unemployment Statistics
  National Average Wage
  National Average Wage
  Average Incomes
  Average Incomes
  Wages Councils
  Wages Councils
  Trades Unions (Membership)
  Trades Unions (Membership)
  Shipbuilding Industry (Trainees)
  Shipbuilding Industry (Trainees)
OVERSEAS DEVELOPMENT
  Inter American Development Bank
  Inter American Development Bank
  Overseas Aid
  Overseas Aid
PRIME MINISTER
  Engagements
  Engagements
  Rural Schools (Closures)
  Rural Schools (Closures)
  European Community (Budget Structure)
  European Community (Budget Structure)
  Family Benefits
  Family Benefits
  Birmingham
  Birmingham
  Ayot St. Peter
  Ayot St. Peter
  Sandhaven
  Sandhaven
  Parliamentary Elections (Pamphlet)
  Parliamentary Elections (Pamphlet)
  Health Service Budget
  Health Service Budget
  Radioactive Waste
  Radioactive Waste
CIVIL SERVICE
  Unified Grading
  Unified Grading
  Administrative Forms
  Administrative Forms
NATIONAL FINANCE
  Government Funds (Payments to Organisations)
  Government Funds (Payments to Organisations)
  Age Allowance
  Age Allowance
  Industrial Performance
  Industrial Performance
  Inland Revenue
  Inland Revenue
  Television Advertising
  Television Advertising
  Exchange Controls
  Exchange Controls
  European Community (Budget)
  European Community (Budget)
  Official Report (Postal Deliveries)
  Official Report (Postal Deliveries)
  Family Income
  Family Income
  Taxation and National Insurance Contributions
  Taxation and National Insurance Contributions
  Public Expenditure
  Public Expenditure
SOCIAL SERVICES
  Hospitals (Treatment)
  Hospitals (Treatment)
  Maintenance Payments
  Maintenance Payments
  Day Nurseries
  Day Nurseries
  Population Statistics
  Population Statistics
  Occupational Cancer Risks
  Occupational Cancer Risks
  Sickness Pay Regulations
  Sickness Pay Regulations
  Road Accidents
  Road Accidents
  Asbestos and Cancer
  Asbestos and Cancer
  Social Security (Expenditure Savings)
  Social Security (Expenditure Savings)
  Prescription Charges
  Prescription Charges
  Solvent Abuse
  Solvent Abuse
  National Insurance Contributions
  National Insurance Contributions
  Retirement Pensions (Credit Transfers)
  Retirement Pensions (Credit Transfers)
  Supplementary Benefit
  Supplementary Benefit
  Place of Safety Orders
  Place of Safety Orders
TRANSPORT
  Costs and Taxation
  Costs and Taxation
  Road Maintenance (Survey)
  Road Maintenance (Survey)
DEFENCE
  Service Officers (Foreign Government Employment)
  Service Officers (Foreign Government Employment)
  Southern Thule
  Southern Thule
AGRICULTURE, FISHERIES AND FOOD
  Hedgerows
  Hedgerows
  Poultrymeat and Egg Industries
  Poultrymeat and Egg Industries
  Intervention Stocks
  Intervention Stocks
  Farm Wardens
  Farm Wardens
  Farming Inputs (Surplus Control)
  Farming Inputs (Surplus Control)
  Food from Britain
  Food from Britain
  Pig Industry
  Pig Industry
  Animal Welfare
  Animal Welfare
  Marginal Land Areas
  Marginal Land Areas
  Compound Feedstuffs (Ingredient Listing)
  Compound Feedstuffs (Ingredient Listing)
  Common Agricultural Policy (Price Proposals)
  Common Agricultural Policy (Price Proposals)
  Glasshouse Growers
  Glasshouse Growers
  Common Fisheries Policy (Inspectors)
  Common Fisheries Policy (Inspectors)
  Common Agriculture Fund
  Common Agriculture Fund
  Dog Licences
  Dog Licences
  Poultry Industry
  Poultry Industry
  Tenancy Agreements
  Tenancy Agreements
  Manufactured Foods (Imports)
  Manufactured Foods (Imports)
  Farm Inputs (Costs)
  Farm Inputs (Costs)
  Nutritional and Health Information
  Nutritional and Health Information
  Aquaculture
  Aquaculture
  Green Pound
  Green Pound
  Forest Land
  Forest Land
  New Zealand Lamb (Imports)
  New Zealand Lamb (Imports)
NORTHERN IRELAND
  Family Income
  Family Income
  Prisoners (Solitary Confinement)
  Prisoners (Solitary Confinement)
  Plastic Bullets
  Plastic Bullets
  Terrorism (Murders)
  Terrorism (Murders)
ENVIRONMENT
  Land Registers
  Land Registers
  Defective Housing
  Defective Housing
  Housing Improvement Grants
  Housing Improvement Grants
  Rate Support Grant
  Rate Support Grant
  Homes Insulation
  Homes Insulation
  Hayes Bypass
  Hayes Bypass
  Derelict Land
  Derelict Land
  Asbestos
  Asbestos
  Land Prices
  Land Prices
  Building Repairs
  Building Repairs
  Listed Buildings
  Listed Buildings
Preamble
The House met at three of the clock (Prayers having been read earlier at the Judicial Sitting by the Lord Bishop of Rochester): The LORD CHANCELLOR on the Woolsack.

School-leavers: Youth Training Scheme
Lord Monk Bretton: 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 percentage of school-leavers in Britain at present receive no vocational training whatsoever.
The Minister of State, Northern Ireland Office (the Earl of Gowrie): My Lords, the Youth Training Scheme will guarantee the early offer of a high quality training place to all unemployed 16-year-old school-leavers. Some employed 16-year-old school-leavers will also be covered. Sixteen-year-old school-leavers entering employment, who are not covered by the scheme, may receive training, but that will depend on the employer.
Lord Monk Bretton: My Lords, may I thank my noble friend the Minister for that reply, and following from it, may I ask him how well we compare in vocational training with other member countries of the EEC, and how well he expects the Youth Training Scheme will improve our position?
The Earl of Gowrie: My Lords, I have to say that I do not think that we compare at all well; hence the introduction by the Government of the scheme. In total, just over half of our young people receive any systematic vocational educational preparation, compared with more than 90 per cent. in West Germany, and 80 per cent. in France. We are pleased with the reception given to the scheme by employers. So far, 65,000 places have been promised by large companies, and 100,000 new training places under the Youth Opportunities Programme will be converted to places under this scheme.
Lord Hooson: My Lords, is it not correct that in, for example, West Germany the actual cost of placing youngsters in vocational training schemes is relatively small as against what we have to pay in unemployment benefit to youngsters who do not have jobs? Is it not time that we took advantage of the recession at least in order to ensure that our youngsters are all given vocational training, which they very much need?
The Earl of Gowrie: My Lords, I do not know the costs in Germany, but having looked at the scheme here, I cannot say that the costs are very slender. Nevertheless, the Government think that the money must be spent.
Lord Byers: My Lords, is it not a fact that the figures that the noble Earl quoted of 90 per cent. in West Germany and 80 per cent. in France relate to young people who have had the training by the time that they leave the educational system, and is that not what we must try to do?
The Earl of Gowrie: My Lords, I am altogether in agreement with the noble Lord.
Lord Kilmarnock: My Lords, setting aside the Youth Training Scheme, which is not yet in place, can the noble Earl tell us how the situation now compares with when the Government came into office? If I am correct, at that time 40 per cent. of those going into work received no training, and another 20 per cent. received training for only eight weeks or less.
The Earl of Gowrie: My Lords, I should need separate notice of that point. However, while they have tried to discharge their responsibilities towards unemployed young people through the Youth Opportunities Programme, the Government were not satisfied that the programme set up by the previous Government contained enough hard training element. That is why we are trying to "up" the amount of actual training that young people can obtain, so that later as, we hope, we move out of recession in the West, and there are greater opportunities, young people will be able to find real places.
Lord Beloff: My Lords, will the noble Earl the Minister agree that the initiative taken in the schools by the Manpower Training Commission is likely to raise the prestige of vocational training and make young people more interested in taking advantage of the schemes to which he has referred?
The Earl of Gowrie: Yes, my Lords; while I was still a Minister in the department with responsibilities for youth training and the rest, I was very anxious that the schools should get in on the act, and I am glad that they have done so.
Baroness David: My Lords, can the Minister say whether the technical colleges and further education colleges will be ready to provide the educational part of the scheme next September? From what I hear, there is considerable confusion about what they are expected to do, and there are constantly changing instructions and requests. There seems to be much anxiety and confusion within the colleges.
The Earl of Gowrie: My Lords, no such anxiety or confusion has been brought to my attention; but if the noble Baroness cares to channel some of it my way, I shall try to spread some balm.
Lord Drumalbyn: My Lords, so that we can get the comparison, and indeed the problem, into perspective, can my noble friend say what are the school leaving ages in France and Germany?
The Earl of Gowrie: My Lords, I think that in France school-leavers may be a little younger than ours, but I should need separate notice of that question.

British Airways: Fares and Facilities
3.5 p.m.
Lord Bethell: 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 are aware that British Airways are now running certain flights from London to Brussels, Amsterdam and Frankfurt on a Club-class only basis, and whether they will refuse any application by British Airways for tariff increases on European routes until proper provision is made for Economy class passengers.
Lord Lyell: My Lords, British Airways offers Club-class fares and facilities only on seven out of 194 flights a week between London and Brussels, Amsterdam and Frankfurt. Economy fares are not part of British Airways' new pricing structure on these routes, but the Civil Aviation Authority is currently seeking to encourage British Airways to make a proportion of seats on all flights available at the cheaper Eurobudget fares. I believe that these discussions are the right way to pursue the matter at this stage.
Lord Bethell: My Lords, can my noble friend tell me whether, while flying to Europe over the past two years, he has noticed that the partition dividing Club-class from Eurobudget-class has been moving steadily from the front towards the back of the aircraft until, as he has just pointed out, on some flights it has disappeared entirely? In his talks with the CAA and British Airways will my noble friend point out that the Club-class was introduced as an alternative to the then Economy class, and that British Airways ought to provide the two services, since it was on that basis that it put the original proposals for ratification by the CAA?
Lord Lyell: My Lords, I am most interested in what my noble friend said about the partition moving back and forth throughout the aircraft. I fear that I have not noticed this, since those of us who live in Scotland travel by one class on the "Shuttle", on which there is no partition. I shall certainly note the noble Lord's points and bring them to the attention of the Civil Aviation Authority and British Airways. However, I am sure that he will be aware that the Club-class and the Eurobudget-class tickets are part of the new European product in British Airways' scheme. From the outset of the scheme, approximately two years ago, it was envisaged that on business routes, such as those mentioned and indeed greatly utilised by my noble friend and his colleagues, there would be times when demand for Club-class would be so great that all-Club-class flights would be provided. British Airways has pointed out to us that the number of such flights is small: as I mentioned to my noble friend, there are only seven out of 194. British Airways considers—and we believe that it is sensible—that when demand for Club-class is exceptionally high, it makes good sense commercially to cater for the requirement at the expense of lower rated traffic. It is British Airways'
828
decision, and we believe that it should be free to pursue it.
Lord Strathcarron: My Lords, will my noble friend not agree that it is a waste of money to pay extra for Club-class on Trident aircraft, where one is herded together with other passengers in exactly the same way as with Eurobudget-class and it is impossible to drink the difference in fare in the time available?
Lord Lyell: My Lords, I do not know why it always falls to me to engage in drinking competitions with my noble friends. I should willingly attempt to compete with my noble friend, and certainly I shall raise his point with British Airways in regard to flights where there is a two-class system in Trident aircraft, whether my noble friend is flying on a Mark I, Mark II, or Mark III Trident.
Lord Beswick: My Lords, will the noble Lord agree that no one is compelled to go by Club-class? There are ample economy services available—
Several noble Lords: No, no!
Lord Beswick: Noble Lords should look at the timetable. Will the noble Lord explain the reasoning of the noble Lord, Lord Bethell, who has been arguing for deregulation, who wants a free-for-all in fares, and yet complains when British Airways exercises its marketing judgment in offering these particular services?
Lord Lyell: My Lords, I should hesitate to intervene in any free-for-all, even in your Lordships' style, between the noble Lord and my noble friend Lord Bethell. Certainly it is far from being within my capacity to explain what is in the mind of my noble friend. He has been pursuing the subject for some considerable time, and I am sure that the noble Lord, Lord Beswick, will be able to read in the Official Report the various very interesting debates initiated by my noble friend.
Lord Boyd-Carpenter: My Lords, particularly in the difficult situation facing the civil aviation industry at the moment, is it not best to leave these commercial matters to the judgment of British Airways with the guidance of the Civil Aviation Authority?
Lord Lyell: My Lords, I would agree wholeheartedly with my noble friend.
Lord Whaddon: My Lords, is it not a fact that on certain flights from London to East Europe which are served only by British Airways and Eastern European airlines, a similar situation exists where no private airlines are operating and therefore passengers are put under monopolistic pressures? Will the noble Lord look into this and make sure that economy seats are available?
Lord Lyell: My Lords, I think we are straying a little wide of the original Question. I can inform the noble Lord that currently, under the winter timetables, there are 17 all-Club-class flights out of a total of 1,368 flights. These will be reduced to 12 all-Club-class

829
flights for the coming summer. Various flights are Club-class only, but I do not see any of them which go to Eastern Europe. If the noble Lord would wish to put down another Question about tickets to East Europe, I will endeavour to answer it.
Lord Bethell: My Lords, surely my noble friend would agree that it is dangerous and inappropriate to leave these matters to the commercial judgment of British Airways when British Airways are part of a cartel which fixes these prices conspiratorially together with the other airlines on the route?
Lord Lyell: My Lords, I believe that my noble friend is referring to commercial practice undertaken by British Airways and other airlines. I am sure that he will be the first to agree that this does not prevent other airlines from offering a competitive alternative. I would stress to my noble friend that, as he knows and as your Lordships will realise, there are alternatives. On the three routes having Club-class only flights by British Airways there are valid alternatives returning to London from Brussels, from Amsterdam and from Frankfurt.

Owner-occupied Dwellings: Statistics
3.13 p.m.
Lord Orr-Ewing: 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 total increase in the number of owner-occupied dwellings since May 1979.
Lord Skelmersdale: My Lords, in Great Britain the estimated increase from the end of March 1979 to the end of 1982 was about 1.1 million—a rise from approximately 54 per cent. to 58 per cent. of the housing stock.
Lord Orr-Ewing: My Lords, is my noble friend aware that it will give great satisfaction that this policy is succeeding? Could he say how many sales of council properties have been made since April 1979? Could he also perhaps tell the House whether there is an increase in both the public and private sector housing starts in the current year?
Lord Skelmersdale: Yes, my Lords; both have been increased dramatically in recent years. It is estimated that between 1st April 1979 and 31st September last a total of 428,000 public sector dwellings were sold in Great Britain. I am afraid that I do not have the figures to which my noble friend referred in his initial supplementary question; but I can tell him that private house-building starts have increased by 20 per cent. in each of the last two years. The House Builders' Federation expect a further rise of 10 per cent. in 1983—a cumulative rise since 1980 of over 60 per cent.
Lord Cledwyn of Penrhos: My Lords, out of the total number given by the noble Lord, can he say how many
830
were leaseholders buying reversions from landlords under the Leasehold Act?
Lord Skelmersdale: No, my Lords, I am afraid I cannot; but I can say that there are now up to about 300,000 right-to-buy sales.
Viscount Hanworth: My Lords, can the noble Lord say to what extent the houses which have been sold to tenants are being replaced? Furthermore, would he agree that, with the importance of mobility as a means of reducing unemployment, it is very important (possibly for the future) to have an adequate number of council houses so that mobility from one area to another area can, if necessary, be arranged?
Lord Skelmersdale: My Lords, if I may be allowed to say so, I think the noble Viscount is half right. While I agree that there must be houses available in the total housing stock in various areas to assist with mobility of labour, I cannot necessarily agree that these should be part of the rented stock. I think it would be a good thing that a man who has exercised the right to buy in one area and who, because of the labour situation, wishes to move, should be able then to sell his house and move to a private house in another area of the country. Having said that, it is a fact that a lot of voluntary sales have been made and were initiated in the year before the Housing and Building Control Act 1980 got on to the statute book.
Lord Gibson-Watt: My Lords, would my noble friend agree that the housing picture is not complete unless one includes the figures of those houses which have been improved as a result of Government grants? Has he any figures which he can give us for these improvements which would perhaps give us the whole picture?
Lord Skelmersdale: My Lords, my noble friend is quite correct; grants for improvement are a very important part of Government housing policy. I am afraid I have no current figures in that respect, but I would say that the increase in the mortgage ceiling in the Budget two days ago will naturally make quite a big improvement to these particular figures.
Lord Winstanley: My Lords, will the noble Lord tell the House how many unoccupied dwellings there have been during the same period? Is it not deplorable that there should apparently be so many empty houses when there are so many homeless families?
Lord Skelmersdale: Not without notice, my Lords. That is a totally different question. The reason why buildings are unoccupied is not necessarily because of Government action or because of the action of people on the waiting list who want to buy them.
Baroness Fisher of Rednal: My Lords, is the Minister aware that the English and Welsh housing conditions survey showed that the largest number of dwellings in poor condition were those in owner-occupation? Four million of these are in the occupation of old-age pensioners who are living on very small incomes. Would the Minister agree that he needs to look at the grants system as it affects old-age

831
pensioners? For those pensioners who have little or no capital, the 90 per cent. grant does not do much to help them to get their homes into what we call the fit condition and thus out of the unfit categories in which they are included in the housing survey.
Lord Skelmersdale: My Lords, I have already made clear that grants are available for home improvement—not only the 90 per cent. grant to which the noble Baroness refers but, in certain cases, the discretionary grant from the local authorities. Each particular case has to be looked at on its merits. If there are problems specifically connected with old-age pensioners and their particular housing needs in the private sector, I will make certain I look at them.
Baroness Fisher of Rednal: My Lords, will the noble Lord look particularly at the Anchor Housing Trust, which are very concerned about this issue and were one of the pioneers in trying to arrange what we call a package deal for the old-age pensioners who are in the owner-occupied category?
Lord Skelmersdale: Yes, my Lords, now that the noble Baroness has drawn that to my attention, most certainly I will do so.
Lord Monson: My Lords, will the Minister not agree that the intellectually indefensible raising of the mortgage interest relief ceiling from £25,000 to £30,000, to which he has referred, will almost certainly push house prices up across the board, thereby making house purchase impossible for many potential first-time buyers?
Lord Skelmersdale: My Lords, I would not agree with anything of the sort. What I would agree with is that it gives a useful amount of money, which is, in part, tax deductible, for furthering private improvement schemes on the same houses.
Lord Orr-Ewing: My Lords, would my noble friend not agree that, now that the Government have had such tremendous success with their policy of owner occupation, it might perhaps be a good idea to start looking at the rent restriction Acts while reserving the right of the old and the poor to full rent protection. There may he other sectors of the economy where houses or free accommodation could be made available for leasing or for letting. There is badly needed—as noble Lords opposite have said—a flexibility in housing which is available for young people, for students and the rest through letting and not having to buy houses. Ought we not now to look at this sector of the housing economy?
Lord Skelmersdale: My Lords, while that is a slightly different question, I was very interested to listen this morning to the BBC "Checkpoint" programme on which this subject was aired. I must say to my noble friend that, given another five years of Conservative Government, I have no doubt that this is one of the subjects that will be considered and looked at.

The Post Office: Investment Programme
3.22 p.m.
Lord Gisborough: 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 is the total amount of new investment being made by the Post Office in the current financial year; and what increase this represents on the amount invested in 1978–79.
Lord Lyell: My Lords, the Post Office is expected to spend its full capital investment allocation this year, amounting to £115 million. This represents nearly three times the level of capital investment in 1978–79.
Lord Gisborough: My Lords, I thank my noble friend for that Answer. It will impress the House that the expenditure has gone up by three times. Can he say whether we can now expect to see rapid progress in investment in such things as letter sorting equipment?
Lord Lyell: My Lords, the actual programme of future capital investment is, I understand, to be spread over five years, and indeed one of the items is complete mechanisation of the major sorting offices. That will receive investment of approximately £140 million and I believe about another £100 million will be spent on replacing inadequate and outdated sorting offices. I am afraid I cannot give my noble friend further or more closely argued details, but possibly I may write to him.

Business
Lord Denham: My Lords, it may be for the convenience of the House if I announce that dinner will be available at the usual time this evening. The report stage of the Transport Bill will be adjourned at approximately 7 p.m. for a short period and during this adjournment the Report stage of the Marriage Bill will be taken.
It may also be for the convenience of the House if I announce that, subject to the progress of business, the House will adjourn for the Easter Recess on Wednesday 30th March and return on Monday 11th April. If it should prove necessary for the House to sit at 11 a.m. on Thursday 31st March, I will inform the House at the earliest opportunity.

Litter Bill [H.L.]
The Lord Chancellor (Lord Hailsham of Saint Marylebone): My Lords, I beg to introduce a Bill to consolidate the Litter Acts 1958 and 1971, together with Section 51 of the Public Health Act 1961, Section 4 of the Local Government (Development and Finance) (Scotland) Act 1964, Section 24 of the Control of Pollution Act 1974 and related provisions of those Acts. I beg to move that the Bill be now read a first time.
Moved, That the Bill be now read a first time.—(The Lord Chancellor.)
On Question, Bill read a first time, and to be printed.

Mental Health Bill [H.L.]
Read a third time, and passed, and sent to the Commons.

Representation of the People Regulations 1983
3.28 p.m.
Lord Glenarthur Lord Glenarthur rose to move, That the regulations laid before the House on 22nd February be approved.
The noble Lord said: My Lords, I beg to move that the Representation of the People Regulations 1983 be approved. I hope it will be convenient for your Lordships to consider at the same time the Representation of the People (Northern Ireland) Regulations 1983. Before I deal with the substance of the regulations, I should like to comment briefly on the point that was raised by the Joint Committee on Statutory Instruments in its fifteenth report, that the regulations were made before the parent Act, the Representation of the People Act 1983, was published. I can assure your Lordships that there was no sinister motive in doing this. As the Home Office stated in the memorandum supplied to the Joint Committee, and as my honourable and learned friend the Minister of State assured the Standing Committee on Statutory Instruments in another place, the provisions of the 1983 Act dealing with the electoral registration of voluntary patients in mental hospitals come into effect on 1st April, and it was essential that the necessary regulations should be in force on that date.
The purpose of consolidation is to make things less complicated. Rather than confuse your Lordships and those in another place with two sets of regulations in quick succession—one dealing with the registration of voluntary patients and the other a partial consolidation of existing regulations—we thought it best to ask for Parliament's approval on a fully consolidated set of regulations at the earliest opportunity. I am glad to see that the Stationery Office has been able to print the Act so that it is available to your Lordships today.
The purpose of these regulations is threefold. First, they consolidate the existing Representation of the People Regulations, which govern the registration of electors and absent voting at parliamentary elections in England, Wales and Northern Ireland and at local government elections in England and Wales. Secondly, they supplement the new provisions for the electoral registration of mental hospital patients introduced by the Mental Health (Amendment) Act 1982. Thirdly, they introduce what I hope are uncontroversial changes which have been agreed between the political parties and the local authority associations. We have taken the opportunity of compiling both sets of regulations in a more logical and convenient order than was the case hitherto. We have reduced the number of prescribed forms and we have made a number of minor drafting amendments designed to express the intention of the regulations more clearly. These consolidated regulations follow the consolidation of existing electoral law in the Representation of the People Act 1983, which came into force on 15th March. I understand that your
834
Lordships will shortly be invited to approve similar Scottish regulations.
Your Lordships will recall that the Mental Health (Amendment) Act 1982 introduced a new procedure allowing voluntary patients in psychiatric hospitals to make a declaration entitling them to be entered in the electoral register for an address outside the hospital. Regulation 10 requires a patient's declaration to be attested by a member of the hospital staff appointed by managers of the hospital and enables the hospital to send the declaration to the electoral registration officer on the patient's behalf. Regulation 15 tells the electoral registration officer how to enter a patient's name in the register. Voluntary patients will be able to make a declaration from 1st April for inclusion in the register which comes into force on 16th February 1984.
Of the other changes introduced by these regulations, the most important concerns the timetable for absent voting. Following discussions with the political parties, electoral registration officers and local authority associations, it has been agreed that in future the deadline for the receipt of absent voting applications at both parliamentary and local government elections will be noon on the eleventh day before polling day, not counting Saturdays, Sundays, Bank Holidays and other breaks. This means that at a parliamentary election the deadline will move from midnight on the Thursday two weeks before polling day to noon on the previous day; that is to say, Wednesday. Because of changes in the parliamentary elections timetable introduced in 1981, the elector will in fact have one day longer to submit his application than he did at the last general election in 1979. It is too late to bring the new timetable into force at this year's May ordinary local elections, but it will come into force immediately afterwards.
The other changes of substance are increases in certain fees and fines prescribed by the regulations, including the price of spare copies of the electoral register and of copies of a return or declaration of a candidate's election expenses. Regulation 76 increases the fines for offences under the regulations, including failure to comply with or giving false information to the electoral registration officer, to £100. This is the maximum increase which can be made under existing provisions.
When your Lordships were considering the Bill consolidating the Representation of the People Acts, my noble friend Lord Renton was kind enough to thank the Government for their efforts on what I am sure we can all agree was a highly complicated and long overdue piece of work. These regulations are part and parcel of the same exercise, and they should serve to make things easier for all concerned with fighting, running or voting at elections. I commend them to your Lordships.
Moved, That the regulations laid before the House on 22nd February be approved.—(Lord Glenarthur.)
Lord Underhill: My Lords, we are grateful to the noble Lord for outlining the provisions of these regulations, and as they have been the subject of consultation with the political parties and with the bodies concerned with the registration officers,

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generally speaking we are satisfied with the regulations. We are very pleased to have the regulations at this stage because all those concerned with elections—registration officers, returning officers and constituency voluntary workers of all kinds, including the election agents—always like to see the regulations in one booklet rather than having to refer to other documents. Despite the controversy over the registration of voluntary mental patients, as reflected in the joint committee's report, we are delighted that it has been possible to include that in these regulations.
The only question I would wish to raise is on the last item in the explanatory note: that the regulations no longer prescribe the forms required for the service voter's declaration. I wonder what is the reason for this, because it is an important form and it saves only one sheet of paper; if it is for a spouse it will save two sheets. It is important at the outset for those concerned with elections to have all these forms in one booklet. Therefore, I am wondering what the particular reason is for not prescribing that particular form.
Lord Glenarthur: My Lords, I am grateful to the noble Lord, Lord Underhill, for the welcome he has given to this order. The service declaration forms—forms J, K, L and M of the 1974 regulations—have been omitted from the forms prescribed by the 1983 regulations for England and Wales. The prescribed forms are unnecessary as the contents of a service declaration form are set out by the Representation of the People Act, 1983. This still means that any person who knowingly makes a false statement in his service declaration form will continue to be guilty of an offence under the Perjury Act 1911. For similar reasons, no form is prescribed in the regulations for a patient's declaration, and I can tell the noble Lord that Her Majesty's Stationery Office will continue to print and supply blank registration forms. I hope that covers the point that he has raised.
On Question, Motion agreed to.

Representation of the People (Northern Ireland) Regulations 1983
Lord Glenarthur Lord Glenarthur rose to move, That the regulations laid before the House on 24th February be approved.
The noble Lord said: My Lords, I beg to move the second Motion standing in my name on the Order Paper.
Moved, That the regulations laid before the House on 24th February be approved.—(Lord Glenarthur.)
On Question, Motion agreed to.

Transport Bill
3.36 p.m.
Report received.
Clause 1 [Interpretation of Part I]:
Lord Underhill Lord Underhill moved Amendment No. 1:
Page 2, line 9, leave out from ("Executive") to ("and") in line 11.
The noble Lord said: My Lords, I hope it will be for the convenience of your Lordships to take with Amendment No. 1 Amendment No. 3. Before moving Amendment No. 1, I would comment that it is noticeable that, despite the fact that there are 36 amendments on the Marshalled List, not one is in the name of the Government. It may be argued that this is because the drafting has been so exemplary that there is no need for any Government amendments, but I would remind your Lordships that in Standing Committee in another place no clauses beyond Clause 2 were dealt with. Therefore, it remains for your Lordships to consider the amendments which are on the Marshalled List. Your Lordships may feel that there are other reasons why there are no Government amendments.
The first amendment to Clause 1 takes out the reference to "revenue grants" including grants made in respect of reductions in fares for children. The purpose of Amendment No. 3 is to insert in Clause 2 that the combined charges, which shall be not less than the combined revenues of an executive, shall exclude grants made in respect of children's reduced fares. Your Lordships may recall that a similar amendment relating to the exclusion of children's fares, but in a different context, was debated during the Committee stage and therefore I will not repeat all the detailed arguments but will simply mention a few important points.
Reduced fares for children are essential to give opportunities for children to use public transport for visits of an educational nature to museums, places of interest and similar visits; and also to enable children to participate in recreational events. As was emphasised by a number of your Lordships at Committee stage, special fares are needed to assist the poorer families, and without the reduced fares for children many families will find it virtually impossible to travel together as a family. May I say that we are talking about travel within the area of a passenger transport authority and not throughout the whole of the country.
I must also remind your Lordships that travel to school under three miles is not subject to free school transport and just a fraction of a mile can mean that travel costs to and from schools can be heavy for many families, particularly where there are a number of children. Some transport executives charge a flat fare for children's travel anywhere in the area and I can assure your Lordships that those executives, from their experience, are able to say what a great boon this has been, not only for children but for the families as a whole.
Although in a different context I wish to deal with the arguments put forward by the Minister at Committee stage, the noble Lord, Lord Lucas, said that the reduced fares for children would be in the general fares structure. What we are talking about are grants for special reduced fares, and I think they should be treated as such on social grounds and not in the transport fares structure.
The Minister also said that having received its PEL—its protective expenditure limit—it was up to the authority to make the distribution so that nobody was disadvantaged. But that ignores the purpose of the Bill. The Secretary of State may advise on

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modifications of the three-yearly plan, and if the PEL is as determined by the Secretary of State's guidance, that could put the executive and authority in the position of having to consider whether to increase fares, cut services or possibly change the basis of reduced fares for children.
As your Lordships are aware, concessions for the aged, the blind and the disabled are, rightly, excluded from the effects of the Bill—they are not dealt with as part of revenue grants—and therefore they do not affect the PEL. The amendment seeks to secure the same position for reduced fares for children. The noble Lord, Lord Lucas, said that it was not for the Secretary of State to say whether a subsidy was too low or too high. That ignores the fact that the guidance given by the Secretary of State will determine the decision on this matter.
The Minister went on to say in Committee that most noble Lords who had spoken had missed the point in that the Secretary of State had no direct responsibility for determining fare levels. I say with respect to the noble Lord that he missed the point. Although he said that he had no direct responsibility, in fact he has responsibility in that he can modify the plan, and the authority is expected to take note of that; or he can determine the revenue grant level, of which, again, the authority is expected to take note, under the threat of possible court action.
The Minister then commented that emotion was being brought into the debate, saying that the emotion I was introducing was called children. It had nothing whatever to do with children, he added; it had to do with money and how it was spent. But I believe that is standing words on their head. We are discussing grants for children's fares and whether such grants should be part of the combined charges; in other words, that they should not be involved in the PEL. The Minister then said that reduced fares would be grant-aided within the terms of the PEL, but when asked by my noble friend Lord Mishcon to give an undertaking that any grant for children's reduced fares would be met in full, he answered that no guarantee could be given.
Emotion does not come into the argument. Nor does commercial judgment. It goes beyond that. It is the realisation by a local authority—which it is free to decide to do or not—that reduced fares for children meet an urgent social need and therefore should be outside the PEL. That is the purpose of the amendment, which I beg to move.
Lord Lucas of Chilworth: My Lords, we had a long discussion on this issue in Comittee, when I said that a specific reference in Clause 1 to reduce fares for children not only made it clear that they were included within revenue grants made by authorities, but also confirmed the power to pay grants for children's fares. That surely is a helpful and positive step. Some authorities have recently had doubts about the legality of payments for reduced fares for children which they have traditionally made, and a variety of authorities make different arrangements for fare reductions. As there is doubt about the law relating to subsidies, it is appropriate that the Bill should clarify matters. The first of the two amendments we are discussing, in removing the reference to children's grants from the definition of revenue grants, would, once again, cause
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uncertainty about authorities' powers to provide them, and that could not be in anybody's interest.
As the noble Lord, Lord Underhill, reminded us, we must remember as we consider this issue that we are not talking about payments made by LEAs in relation to journeys to school. They are for other journeys. In London and most metropolitan counties, reduced fares for children are part of the overall fares structure and provision for their funding is included in the general subsidy which the authority pays to the executive. While the noble Lord described this as a boon to families—and while one would not deny that it is quite helpful—children's fares rarely cover their total costs, even if the bus is nearly full. But they are a major factor in the subsidy policies of authorities and cannot be excluded from decisions on the overall level of subsidy.
Subsidies for children's fares are part of the general subsidy. They are eligible for Government support through the transport supplementary grant, and I reiterate that it is because children's fares are part of the overall structure, included as part of the general subsidy from the authority to the executive, that we believe it right and proper to include them in the PEL.
The second amendment would exclude grants for children's fare reductions from the combined charges. I think it is the intention to exclude the costs and revenues from the duty to break even. If so, the Government could not agree to weaken the financial duty in that way; we could not leave executives able to make huge losses on child fare reductions year after year. That would impair the whole concept of the financial discipline, which is what the Bill is about, and would imply that Parliament in effect condoned profligacy and poor financial management. Both in Committee and today I have indicated why the Government believe it is proper to include the grants within the PEL, and for that reason I must resist the amendment.
Lord Pitt of Hampstead: My Lords, I had hoped that the Minister would have improved on his performance in Committee, but I am afraid he has not; he has simply read out his brief again. He has missed the point. We are trying to safeguard children's fares. If there is a certain amount of money available and it is spent on X, it cannot be spent on Y, and therefore if children's fares are included in the PEL, some authorities will feel that the answer is to subsidise other services rather than provide cheap fares for children.
I do not know how other noble Lords feel about this, but I believe that providing cheap fares for children is of extreme importance, and therefore they should be safeguarded. That is the whole point of the amendment. The Minister says that school journeys are safeguarded. They are if they are over three miles, but not otherwise; if they are 2¾ miles, they are not safeguarded. What we are trying to do, and what I had hoped the Minister, together with his advisers, would have thought about between Committee and now, is safeguarding children's fares so that they are not part of the PEL, so that authorities—just as they provide fares for the old and disabled and treat them separately—would provide them. The PEL would be concerned with the rest of the subsidy and would play a part in the management of the transport service, but

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children's fares would be excluded. The Government seem to have missed that point at least or refused to take it on board.
Lord Mishcon: My Lords, I have one quarrel at the outset with my noble friend Lord Underhill—a most unusual event. He took the credit for being accused of being emotional in the last debate. That accusation was made by the noble Lord the Minister. I claim that I was the one who was accused of being emotional and I resent the fact that the Minister's charge was taken away from me and adopted by the noble Lord, Lord Underhill. It is perfectly proper to be emotional about this matter, without overdoing it. Your Lordships are never happy recipients of over-indulged emotionalism. But if it is accompanied by common sense, your Lordships, regardless of party, are usually prepared to listen.
This is an important matter. May we look at the kind of authority to which this could well be a problem. It is much more likely to be an authority which contains a majority of poorer citizens. As I ventured to say at the Committe stage, in the poorer authorities there will be rather more children who do not have the ability to ride with their parents in a family car. We dealt with the family as a unit at the Committee stage. There are few authorities throughout our Kingdom which do not have a percentage of families whom we would call poor families. The last time that this matter was discussed, the family unit, travelling together, was looked upon by various parts of the House as of great value nationally and also, one might say, spiritually. Quite apart from the point which has already been made about school journeys of under three miles and the social journeys which might be made, I should like to address myself to the kernel of the argument, as I see it, and as I hope your Lordships see it. The Minister says that the Government do not prevent authorities from putting into the budget such costs as authorities believe to be necessary for children's concessionary fares. That is absolutely right. However, when I put to the Minister at the Committee stage the proposition that the structure of the Bill is based upon the Government taking a decision about the total transport subsidy and then dividing that figure among the various areas, having regard to their budgets and plans, I thought he agreed that that is indeed the structure. There is, therefore, a ceiling and a division of that figure among the various authorities.
I put it to the noble Lord the Minister at that stage—I did not get a very clear reply from him, perhaps because this point came near to the end of the debate—that maybe he could undertake that, whatever was put in by way of concessionary fares (I had in mind the poorer authorities) would be admissible expenditure in full within the PEL. The Minister said he could not guarantee that 100 per cent. of the budget would be admitted for PEL purposes. If you do not exclude the children's allowance, this means that if that allowance is put within the PEL the budget must be cut down to meet the overall limit. Quite apart from whether or not the plan is good in all its aspects, there has to be a ceiling for the region because of the overall limit. Therefore, the kind of
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authority I am asking your Lordships to consider which will need the children's concessionary fare more than other authorities will be restricted in its PEL. From the point of view of that kind of authority, it will not necessarily be able to spend money on children's concessionary fares, either because of other priorities or because the Secretary of State has seen fit, when looking at its budget, to decide that part of the children's concessionary fare cannot be admitted—not because he has examined the situation in the area but because the total must come within his overall limit.
The old, the sick and the disabled have been taken out of this, for the reasons which I have just advanced. That leaves the children. I can be accused of being emotional and, if the amendment is taken to a Division, I can be accused of casting an emotional vote for children when I walk through the Lobby; but I do not suppose many noble Lords will feel that to be a wrong and offensive walk to make if the Government still resist the amendment.
3.58 p.m.
Lord Lucas of Chilworth: My Lords, if I may come to the point made by the noble Lord, Lord Pitt of Hampstead, in a moment, I say straight away to the noble Lord, Lord Mishcon, that I am very sorry to have been the person to induce a quarrel between the noble Lord, Lord Mishcon, and his noble friend. Certainly that was never the intention.
The noble Lord, Lord Pitt of Hampstead, says that it is important to safeguard children's fares. Of course we have to do so. May I try to answer both of the points which have been made. The way in which children move around, with or without their parents, is important. Let no noble Lord believe that we do not recognise the importance of the family unit. Many families do not have motor cars. Many children travel with their parents because they are too young to travel on their own, We pay due regard to the importance of this point. If I may take the kind of authority which the noble Lord Mishcon, describes—one with a larger proportion, perhaps, of poor families than other authorities—it would be quite wrong for the Government to make a decision about these families. We heard during the Committee stage about the Government taking a decision but not knowing the position because they are not directly involved in the area. That is why it is for the authority to make the decision as to how the subsidy should be spent. Their subsidy bid in preparing the PEL would take account of that. It would take account of that because it is part of the figures which would be offered to the Secretary of State in consideration of the PEL. Of course there is an overall limit, and of course the Government have to take account of the national over-view; I believe that the noble Lord, Lord Mishcon, recognised that. It does not mean to say that, because the over-view would restrict the totality of money, everybody faces a pro rata reduction. It does mean that, within the totality, regard has to be paid to the plans. Those which have a higher proportion of needing people—of children wanting subsidies—would be taken into account. But when the subsidy is arrived at, it is for the authority to decide exactly how it should be used. If the authority believes, because of the situation outlined by the noble Lord, Lord Mishcon, that there

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is a very strong social need—such as an environmental need, in that these families live far from the shopping centre—it is then for that authority to use more or less of its subsidy for that reason, if it feels that this is justified.
Lord Mishcon: My Lords, if I am interrupting the noble Lord, Lord Lucas of Chilworth, at an inconvenient moment, I apologise to him; but I thought that he was moving on to another point. This aspect is so important that I make no apology for intervening but merely thank the noble Lord for his courtesy in allowing me to do so.
The noble Lord keeps on saying that it is not for the Secretary of State to decide what is the need in the area in regard to children's concessionary fares and that it is for the authority to decide. If the noble Lord admits that, what is his difficulty in giving an undertaking that, where the children's concessionary fares form part of the budget which is submitted to him, the Secretary of State will allow that figure 100 per cent.?
If the noble Lord is saying that it is not for the Secretary of State to judge that amount but for the local authority, and if the noble Lord says to me and to your Lordships, "Yes, it is for the authority and we will allow that as to 100 per cent., and will give an undertaking to do so", then I will not waste your Lordships' time. But if the noble Lord does not do so, then his point is a false one, because he is saying that it is for the authority to decide, and is then saying that it is for the Minister to cut the figure if he sees fit.
Lord Lucas of Chilworth: My Lords, the noble Lord, Lord Mishcon, knows very well that I cannot give an undertaking that children's concessionary fares will be allowed in full. It is the total subsidy that is looked at; how that subsidy is spent is entirely for the local authority. I have said already that children's fares do not meet their full cost. If I were in commercial business right now, I might suggest, "Why not load as much as I can onto the children's fares, because after all, the Secretary of State is going to pick that up, and then I can use my subsidy somewhere else?" The whole point of this is to achieve a balance of expenditure. How it is spent is the responsibility of the local authority to decide in the light of its local requirements.
It is for the authority to make proposals in regard to children's fares, in association with the total plan. It is for the authority to decide finally, when it determines the grant and approves the plan, exactly how that is to be spread.
4.5 p.m.
Lord Sefton of Garston: My Lords, we should be grateful to the noble Lord, Lord Lucas of Chilworth, for clearly establishing the thinking—if there is any—behind the Government's intention. It has been unkindly suggested to me that, contrary to the tradition of this Chamber, the Government are not prepared to accept any amendments—however reasonable and however minor—to this Bill purely because of the need or desire of the Government to get this Bill through by a certain date. If that is true, it is regrettable.
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I do not believe that I have misunderstood the noble Lord opposite when I say that he is saying, in effect, that the question of priorities between children and the rest of the community in a local authority's area is the responsibility of the local authority and not of central Government. If that is what the noble Lord is saying, then we should look at this matter against the background of the Government's attitude to the disabled, the sick and other persons whom the Government have excluded from the PEL.
If we are to persuade the Government to make a move and to accept a simple amendment (which I am assured by the nodding head of the noble Lord, Lord Bellwin, is something that the Government would do if the amendment was reasonable and had nothing to do with timetables), then we have to demonstrate that the essential relationship between schoolchildren and central Government is exactly the same kind of relationship as that between central Government and the other disadvantaged members of our community, such as the disabled or the sick, who are excluded from the PEL.
I do so on these grounds. One of the major items of expenditure of central Government is in the field of education. They demonstrate that, in the educational field, they play an important role. Different Governments have made several representations about the kind of education that local authorities should practise. One would not say, even stretching one's imagination as far as it can go, that local authorities had been left completely free to make their own decisions in regard to education. So the closeness of the relationship between central Government and children has been pretty well established over the years.
If one examines the question of need in regard to children, and compares that need with the need of disabled people and others not included in the PEL, one finds that there are exactly the same circumstances. In a place such as Merseyside, this situation is exacerbated because the incidence of the number of children on the household is perhaps one of the factors which occasions more hardship to the community than any other single factor, including disabled people. If one examines the efforts of central Government, in particular in a place such as Liverpool, where the boundaries between one social stratum and another social stratum are so close, one realises that it is vitally important that children move freely across those areas, most of which are under the limit allowed for free travel to schools. There must be an incentive to children to move across them if we are to establish the right kind of educational system in a place such as Liverpool.
If I may give just one example, most people think of Toxteth as being a fairly run-down, highly congested, disadvantaged area of Liverpool, but nothing could be further from the truth. Toxteth consists, in the main, of two areas. The first is the area that most of the country knows about; but the other is an extremely affluent, wealthy area around Sefton Park. If anything is to be done about the social mix in that area, and if there is to be any hope in the future for the community in that kind of area, then the movement of young children across boundaries of the three-mile limit, and

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from one social area to another in order to attend the same school, is of vital importance.
I am quite certain that the Government will not accept anything in respect of this amendment. But if one thing is certain, it is that if the Front Bench do not accept this amendment then everyone else on the Benches opposite, if they really meant it when they voted against the Government on the question of school travel (when the Government were defeated and had to change their mind), should recognise that the principles here are precisely the same. We are talking here about the young children of this country, who should be removed from having to have their priority established between a general subsidy for fare-paying passengers and the educational needs of this country. It is vitally important, The principle is the same.
I would conclude with this. No one could accuse the Archbishop Worlock of Liverpool of any political axe to grind, and he has made representations to me that in this kind of situation this Bill should not include in the PEL young children, it should not include people who are needy, it should not include this disadvantaged social strata; in this Bill there should be an exception made and they should be taken out of the PEL in the same way as other disadvantaged people are already.
Lord Lucas of Chilworth: My Lords, the noble Lord, Lord Sefton, appeared to me to have momentarily—I am quite sure it was only momentarily—lost sight of the purpose of this Bill. The purpose of this Bill is to bring some degree of control on the expenditure upon transport by the metropolitan authorities. Your Lordships will remember that my noble friend said at Second Reading and during the Committee stage that expenditure in the current financial year was estimated at about £400 million, and for the coming financial year there was a total expenditure of £700 million anticipated. If we added those elements that the noble Lord, Lord Sefton, has just outlined to us—a whole wide-ranging group of people—that £700 million could be even larger. That is the burden that fell upon the ratepayers, and that is the burden which the ratepayers felt unacceptable.
I think it is interesting to note that since the passage of this Bill local authority estimates—which, as I said, were £700 million—have fallen quite dramatically. In other words, they have been able to bring to bear upon their finances a harder and harsher mind, with the result that these expenditures are now likely to be around £550 million.
Lord Mishcon: My Lords, if the noble Lord will forgive me, is he quite conscious of his words—"a harder and harsher mind"? Does he wish that to be the attitude of the Front Bench in this matter?
Lord Lucas of Chilworth: My Lords, I am quite happy for the words "harder" and "harsher" to remain when it comes to monetary matters. When it comes to looking after other people's money, a hard and harsh look has to be taken at expenditure. A lot of businesses have been doing that for a number of years, and there is nothing wrong with that. Yes, I am quite happy about that.
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The noble Lord, Lord Sefton, took us back to the principles of transport involved when we discussed education. The principles are quite different—absolutely different. I have said that there can be no good reason under the terms of this Bill for excluding the grants for children's fares from the financial duty. That duty of course covers all revenues and all costs, including, for example, the cost of providing concessionary fares. I am quite happy to repeat "harsh" and "hard" when looking at that duty. It would, therefore, totally confuse that financial duty if we were to accept these amendments.
Lord Tanlaw: My Lords, before the noble Lord sits down, I wondered, on a technicality, this being Report stage, whether the noble Lord should have prefaced his last remarks with the words, "with the leave of the House". I am not entirely clear whether or not he should be able to speak without that formality. I always enjoy listening to the noble Lord the Minister, but if we are to get on perhaps he could confirm that he was a little out of order.
Lord Lucas of Chilworth: My Lords, with the leave of the House, of course the noble Lord, Lord Tanlaw, is absolutely right. Perhaps your Lordships will forgive me on this occasion and put it down to my being a comparatively new boy in this position.
Baroness Fisher of Rednal: My Lords, it was interesting to hear what the noble Lord said about the hard, harsh look. Before local government reorganisation, local authorities also had to look at the services provided by public transport. They had to look at them very seriously because of the amount of money they were going to raise in rates. But I never heard of one large municipal authority changing its mind regarding children's fares. I stand to be corrected, but I do not think I heard of one large local authority that decided to change its policy on cheap fares for children.
It is, I suppose, something which is inculcated in the British system that we feel that there should be some help for parents with young children. The Government seem to be going all against what is the natural pattern. If you have children and you take them to a carnival or a festival, you find that the admission for adults is X amount and, for children, half price; if you take them on the carnival fairground, it is X amount for adults and half price for children; and if you are booking a holiday abroad you will find in all the brochures that it is X amount for adults, half price for children. In fact, there are now many travel brochures which offer free accommodation and free travel for children on holidays abroad. These people have to look at the facts with a hard, harsh look, because they operate under a business system; but, nevertheless, they operate half fares for children, and in many cases for travel abroad during the season they will offer even free travel and accommodation for children.
It seems to me strange that the Government should take a line which is contrary to what is accepted practice in the country, contrary to what local authorities used to do, and even contrary to what is done by business people, who have to study the hard, harsh facts. There was a great body of opinion in the country which felt, when the Government decided to raise the

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school-leaving age from 14 to 16, that that age group from 14 to 16 should travel free. Most local authorities would not agree for that subsidy to go on to 16 years of age, though many ratepayers and many taxpayers thought that that was not equitable. It is not an emotional issue. It is not an issue about hard, harsh statistics. It is something which is recognised throughout the country as something we do for young people and for children in particular. For this Government who believe in the family, to act contrary to what is accepted practice in this country is, to me, absolutely remarkable.
Lord Underhill: My Lords, your Lordships will have noticed the degree of support there is in your Lordships' House for these two amendments. Although I am sure we all agree that we must keep to procedure, I am delighted that the noble Lord the Minister was able to make his third intervention, because we now know the attitude of the Government on this question of the hard and harsh look.
At some time during the course of this Report stage we may want to go further into the question of figures. Let us take a hard and harsh look at the figures, because figures have been bandied about. It has been said that a 75 per cent. increase in subsidies has been demanded by these authorities. I have figures which, in real terms, means 18 per cent., comparing their TPP for next year with their position for 1982–83. We have heard that £700 million has been asked for, but that includes £141 million for concessionary fares for pensioners. Are we going to take a hard and harsh look and tell the authorities to knock out concessionary fares for pensioners?
I am one of the lucky ones. I get a British Rail concessionary fare. Many of your Lordships have local authority concessionary fares. Let us take a hard and harsh look, talk about economic realities, and cut out the pensioners fares as well. That is what it means if we are to take a hard and harsh look.
Several noble Lords: No.
Lord Underhill: Noble Lords may say "No", my Lords, but it is up to each authority to decide whether or not to give concessionary fares. It will be up to local authorities to decide whether to give concessionary fares for children.
The noble Lord said that to delete the words from Clause 1 would cause uncertainty. I hope the House will support the principle of the second amendment by voting for the first one. I guarantee that I will then come back on Third Reading and put down another amendment which will show that it is legal for councils to give concessionary fares for children. The Government can do that themselves. Therefore, we can decide the principle by supporting these amendments and adjust the position on the other question, if there is any doubt, when we come to Third Reading.
I remind your Lordships of what has been said by other noble Lords. Yes, local authorites will be able to decide what they will do. It will be a question of priorities. But if the PEL is to take into consideration grants paid for reduced children's fares, the executive and the authority will have a problem to face. They will have to take a hard and harsh look if the guidance
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determined by the Secretary of State means a large cut in the subsidy that they are allowed to make. Make no mistake about it, the decisions will have to be taken. That is what the Government want—cut services, increased fares, or cut out allowances for children.
A noble Lord: Increased efficiency, my Lords.
Lord Underhill: Of course, my Lords, increased efficiency, but we will come back to that at another stage.
I mentioned in Committee that three authorities had conducted their own voluntary reviews and had engaged consultants to do them. The suggestion that the seven authorities do not want to encourage efficiency is, frankly, nonsense. With all due respect to the Minister, we cannot put the question of tackling efficiency against the issue that we have raised today. Of course, we want efficiency.
In supporting these amendments your Lordships will be helping to safeguard children's fares if the Secretary of State is to take a hard and harsh look and cut the PEL to a figure where councils have to take serious decisions. They cannot tackle the situation of old age pensioners, because that is outside, and we are glad that is so. We want children's fares to be outside so that they will not have to be dealt with if the local authority has to take a serious decision. Whether your Lordships vote on emotion, on common sense, on humanity or whether your Lordships vote for using public transport for social considerations in an efficient way, I hope that your Lordships will support these amendments.
4.24 p.m.
On Question, Whether the said amendment (No. 1) shall be agreed to?
Their Lordships divided: Contents, 68; Not-Contents, 112.

DIVISION NO. 1

CONTENTS

Airedale, L.

Jeger, B.

Aylestone, L.

John-Mackie, L.

Beaumont of Whitley, L.

Kagan, L.

Beswick, L.

Kennet, L.

Birk, B.

Kilbracken, L.

Bishopston, L.

Kilmarnock, L.

Boston of Faversham, L.

Lawrence, L.

Briginshaw, L.

Leatherland, L.

Brockway, L.

Listowel, E.

Byers, L.

Llewelyn-Davies of Hastoe, B.

Cledwyn of Penrhos, L.

Lloyd of Kilgerran, L.

Collison, L.

Longford, E.

Cooper of Stockton Heath, L.

McNair, L.

Cudlipp, L.

Mar, C.

David, B.

Mishcon, L.

Denington, B.

Molloy, L.

Diamond, L.

Oram, L.

Elwyn-Jones, L.

Paget of Northampton, L.

Evans of Claughton, L.

Peart, L.

Fisher of Rednal, B.

Pitt of Hampstead, L.

Foot, L.

Ponsonby of Shulbrede, L. [Teller.]

Gaitskell, B.

Garner, L.

Prys-Davies, L.

Hanworth, V.

Rathcreedan, L.

Hatch of Lusby, L.

Rochester, Bp.

Hooson, L.

Rochester, L.

Ilchester, E.

Sefton of Garston, L.

Jacques, L.

Segal, L.

847

Stedman, B.

Wells-Pestell, L.

Stewart of Alvechurch, B.

White, B.

Stewart of Fulham, L.

Wigoder, L.

Strabolgi, L.

Wilson of Langside, L.

Tanlaw, L.

Winstanley, L.

Underhill, L.

Wootton of Abinger, B.

Wallace of Coslany, L. [Teller.]

NOT-CONTENTS

Ailesbury, M.

Lucas of Chilworth, L.

Alport, L.

Luke, L.

Ampthill, L.

Lyell, L.

Auckland, L.

McAlpine of Moffat, L.

Avon, E.

Mackay of Clashfern, L.

Balfour of Inchrye, L.

MacLehose of Beoch, L.

Bellhaven and Stenton, L.

Malmesbury, E.

Bellwin, L.

Mancroft, L.

Beloff, L.

Marley, L.

Belstead, L.

Merrivale, L.

Boyd-Carpenter, L.

Milverton, L.

Burton, L.

Monk Bretton, L.

Campbell of Alloway, L.

Montgomery of Alamein, V.

Cathcart, E.

Morris, L.

Chelwood, L.

Mottistone, L.

Cottesloe, L.

Mowbray and Stourton, L.

Cox, B.

Norfolk, D.

Cullen of Ashbourne, L.

Norrie, L.

Dacre of Glanton, L.

Northchurch, B.

Daventry, V.

Nugent of Guildford, L.

Davidson, V.

Orkney, E.

De Freyne, L.

Orr-Ewing, L.

De L'Isle, V.

Pender, L.

Denham, L. [Teller.]

Porrit, L.

Derwent, L.

Portland, D.

Dundonald, E.

Renton, L.

Ebbisham, L.

Rugby, L.

Eccles, V.

St. Davids, V.

Elles, B.

Saint Oswald, L.

Elliot of Harwood, B.

Salisbury, M.

Elton, L.

Sandford, L.

Erroll, E.

Sandys, L.

Ferrers, E.

Selsdon, L.

Fortescue, E.

Shaughnessy, L.

Fraser of Kilmorack, L.

Skelmersdale, L.

Gainford, L.

Somers, L.

Geoffrey-Lloyd, L.

Spens, L.

Gisborough, L.

Stamp, L.

Glanusk, L.

Strathcarron, L.

Glasgow, E.

Strathspey, L.

Glenarthur, L.

Sudeley, L.

Glenkinglas, L.

Suffield, L.

Gore-Booth, L.

Swansea, L.

Gridley, L.

Swinfen, L.

Hailsham of Saint Marylebone, L.

Swinton, E. [Teller.]

Taylor of Hadfield, L.

Harmar-Nicholls, L.

Terrington, L.

Henley, L.

Teviot, L.

Hives, L.

Teynham, L.

Hunt of Fawley, L.

Trenchard, V.

Hylton-Foster, B.

Trumpington, B.

Ingrow, L.

Vaux of Harrowden, L.

Killearn, L.

Vickers, B.

Kinnaird, L.

Vivian, L.

Lane-Fox, B.

Ward of Witley, V.

Lauderdale, E.

Young, B.

Long, V.

Resolved in the negative, and amendment disagreed to accordingly.
4.32 p.m.
Lord Underhill Lord Underhill moved Amendment No. 2:
Page 2, line 15, at end insert—
(""benefits" includes such factors as the potential long-term impact on land use, environmental considerations and the travel needs of the poor and the elderly").
The noble Lord said: My Lords, this is an amendment to Clause 1, the interpretation clause.
848
Noble Lords will recall that at Committee a more restricted definition of "benefits" was proposed on that occasion, that for the purposes of Sections 3(4)(c) and 4(6)(b) the word "benefits" would mean the social, economic and environmental transport advantages. The present amendment which I now move is not a restrictive definition but that the meaning of "benefits" shall include, as it says in the amendment:
"the potential long-term impact on land use, environmental considerations and the travel needs of the poor and the elderly".
I am almost tempted to say that I hope that you will put on one side the hard, harsh look on that occasion.
I hope that noble Lords will deal with the issues of this amendment, which is the interpretation, and not with the broader question of social benefits which we shall be asking your Lordships to consider when we come to Amendments Nos. 8 and 12 under Clause 3. The amendment suggests that it is impossible effectively to plan a public transport system without taking into account the factors which are mentioned in the amendment. That is why we want them included in the definition of the word "benefits".
So far as I can see, nowhere in the Bill is the word "benefits" defined. The amendment, as I say, does not seek a restrictive, narrow meaning but makes it clear that benefits must include the factors set out in the amendment. I am certain that all bodies which are concerned with planning would agree that any transport planning which does not take into account these factors could not be fully effective. Moreover, these factors are included in the duties placed upon transport executives and transport authorities under the 1968 and 1969 Acts.
The noble Lord, Lord Lucas of Chilworth, speaking as a Minister on the amendment in the Committee stage, said that the amendment was unnecessary, as under Clauses 3 and 4 the executive and the authority are empowered to consider any benefits. The amendment does not prevent that. It emphasises the important aspects which shall be taken into consideration by these being placed in the meaning of the word "benefits". Moreover, the actual wording of the amendment is a straight quotation from the report of the Department of Transport published as recently as December 1982 A Report on Urban Public Transport Subsidies: An Economic Assessment of Value for Money. I ask the House to note that—the hard, harsh look. That is what the report is about. I will quote from paragraph 1.7 on page 2 of this report issued by the department only last December:
"The model"—
that is the model which is to be drawn up in order to get this assessment of value for money—
"is limited in that it does not reflect all the effects of subsidy. It excludes at least explicitly such factors as the potential long term impact on land use, environmental considerations and the travel needs of the poor and the elderly".
Note what comes next:
"These factors have to be taken into consideration together with the measure of transport benefits in determining the total amount of revenue support and its distribution between areas".
That is exactly what this amendment proposes.
We have taken out the actual words from the department's own document, which I assume was with

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the approval of the Ministers, and transferred these into the meaning of the word "benefits". Therefore this is one amendment which I am certain the Minister will be delighted to accept; otherwise, he has to explain to us why the proposal appears in this document as a matter which it is essential should be taken into consideration. I beg to move.
The Minister of State, Department of the Environment (Lord Bellwin): My Lords, your Lordships will recall that we had an interesting debate on this issue in Committee following an amendment put down by my noble friend Lord Teviot. I have considered what was said then and have just now listened with much interest to the noble Lord, Lord Underhill. Let me assure you that the Government entirely accept that wider considerations of the kind described by the noble Lord, Lord Underhill, and by the amendment, ought to be, and indeed must be, taken into account when planning the provision of transport services. Indeed, we made it clear in the White Paper that we expect the wider benefits flowing from revenue support to be fully assessed. But I really do think that the Bill makes it absolutely clear that these wider benefits can and should be taken into account.
The difficulty about this amendment is that it does not in practice provide a working definition of benefits, for it simply refers to three examples of factors which would be included. It ignores one of the prime benefits of public transport systems; that is, the benefits felt by the users of the system. The Bill as it is drafted does not qualify the word "benefits" at Clause 3(3) and (5) or at Clause 4(2)(b) or (6), because the word is not qualified at those references. The meaning can be as wide as one might wish. In fact the amendment might actually reduce the breadth of meaning.
At Clause 3(4) the executive is asked to submit precise estimates of those factors which are directly related to the services which it provides—their cost, the level of demand for them and the benefits they produce. This subsection is not concerned with assessing the wider benefits of grant and that is why we resisted the amendment put down by my noble friend Lord Teviot during Committee and which is now put down again by the noble Lord, Lord Underhill, for our consideration at this Report stage.
But having said that, let me also say at once that, although the reference to benefits at Clause 3(4) relates only to users, I must make it absolutely clear that the executive is also required under Clause 3(3) to accompany its plan with particulars showing the benefits expected to accrue from the grants. This reference to benefits is not qualified and it can clearly include consideration of the kind of factors aimed at in the amendment in so far as it is within the power of the executive to take these into account. The Secretary of State can, under subsection (5), give advice on the method of determining benefits under subsection (3)—but the executive can refer to whatever benefits it wishes. In addition, the authority can, under Clause 4(2)(b), ask the executive to estimate for any other benefits which the authority specifies. Last, the authority can of its own accord add further reference to benefits, if it wishes, when submitting the plan and its proposed determination to the Secretary of State.
850
It must therefore surely be clear that the wider considerations under discussion in this amendment can already be taken into account. The Bill is flexible—completely flexible—and does enable both the executive and the authority with complete discretion to consider whatever benefits they wish. I hope I have made it clear that to insert the definition proposed by this amendment in Clause 1 is simply not necessary and, indeed, I contend, risks narrowing the meaning of benefits.
At the beginning of his remarks, the noble Lord, Lord Underhill, said that he did not see any Government amendments. Let me say to the noble Lord—and this is an offer—that if he can show me any particular form of benefit which the executive or the authority itself or through its executive could not refer to in the plan, then I assure him that I will consider the matter with a view to making a suitable amendment at Third Reading.
Lord Sefton of Garston: My Lords, I apologise for interrupting the noble Lord but it may perhaps save the noble Lord asking for the leave of the House to speak later. Can he give an assurance that the Government will not issue guidance or a list of benefits for the local authorities to take into consideration which are not mentioned in the Bill?
Lord Bellwin: My Lords, obviously I would want to think about what the noble Lord has said. Offhand, I do not think that I could give that assurance but I would want to consider the matter. I have made the offer to the noble Lord, Lord Underhill, and I assure the noble Lord, Lord Sefton, that the offer applies equally to him. Frankly, I do not see that what he has said in any way takes anything away from the offer that I have made. If he comes forward—if not now, at a later stage, because there is time to think about it—with any particular form of benefit which he feels could not be referred to in the plan, I promise him that I shall look at it in the way in which I have already said.
Lord Underhill: My Lords, perhaps I can deal with the last point first. The Minister says that if I can show him any benefit to which the executive or the authority cannot refer, he will have a careful look at the matter. When we come to the debate on social benefits I shall show the noble Lord such a case. This was referred to in our debates last time. There is a clear instruction as to what will not be considered. It is said that the use of the word "includes" narrows the interpretation. I am not an English scholar but I should have thought that if one says "'benefits' includes", it would not be restrictive. The word "includes" makes certain that these matters will be taken into consideration.
The Minister says that the authority and the executive can put into their plan any benefits that they so wish and must give details of those when they submit the plan. But what will the Secretary of State do? That is what we are concerned about. By putting in the interpretation that the word "benefits" will include the matters set out in the amendment—we are not saying that it will only be those matters but that it will include those matters—it is not narrowing the interpretation and it is not being restrictive.

851
Do the Government really mean that an authority would be free to take these matters into consideration and that the Secretary of State would take them into consideration when he fixes his guidance? I ask this because at the end of the day we are concerned about what his figure of guidance will be. We are very concerned, and I am sure that many noble Lords in the House are concerned, that unless we bring these words into the Bill—there is nothing in it at present—when the Secretary of State comes to determine the guidance level, these matters will not be taken into consideration by him. Alternatively, to put it the other way round, he will take them into consideration but will not allow for them in the guidance level. It is this hard, harsh look again, of which we shall be reminding the Minister throughout many of the debates. I shall not press the matter to a vote but this is an amendment that we shall ask to be negatived because we still stand by the principle.
The Deputy Speaker (Lord Derwent): My Lords, is it your Lordships' pleasure that the amendment be withdrawn?
Lord Underhill: No, my Lords, not withdrawn.
The Deputy Speaker: My Lords, I did not understand what the noble Lord was saying. He was rather inaudible.
Lord Underhill: My Lords, the principle is there. We are not asking for a Division. But on the first voice we want to make it quite clear that we support the amendment.
On Question, amendment negatived.
Clause 2 [Financial duty of Executives]:
[Amendment No. 3 not moved.]
4.46 p.m.
Lord Underhill Lord Underhill moved Amendment No. 4:
Page 2. line 25, leave out ("following accounting period") and insert ("three following accounting periods")
The noble Lord said: My Lords, I was just looking behind me for the noble Lord who I hoped might be here to move the amendment, but I shall move it myself. I should also like to speak to Amendment No. 5. Noble Lords will recall that in Committee Amendment No. 7 sought to provide that any deficit made in one year be carried forward to the next accounting period, and that the PEL should not be reduced accordingly. On that occasion the Minister, the noble Lord, Lord Bellwin, said that there must be commercial discipline—and we have heard that again this afternoon—and should there be a deficit, it should be made good in the following year. But the noble Lord, Lord Bellwin, stressed:
"The new financial duty, however, does not provide a financial straitjacket".
He continued:
"The section requires the executive to break even so far as practicable, which ensures that an executive which ran a large and truly unavoidable deficit would not, come what may, be forced to make good that deficit in the following year if it was impracticable to do so".—[Official Report, 28/2/83; col. 968.]
852
The Minister said that the Secretary of State will take that into account when considering his guidance on the level of protected expenditure. But the Secretary of State's comment is not statute law. We were reminded of that not so many weeks ago by the noble and learned judges. The Minister implied, however, that subsection (2) need not be applied too rigidly and that there will be room for flexibility. We welcome that, but it is not statute law either; it is not in the Bill.
The amendment would enable any deficit to run forward for three accounting periods. I ask noble Lords to keep in mind that the plan which is to be submitted each year is a rolling plan covering a period of three years. Therefore, there is a lot of logic in the suggestion we put forward in this amendment. The amendment uses some of the arguments put forward by the noble Lord, Lord Bellwin, in Committee that if a deficit due to unavoidable circumstances arises, then the revenue grant for the next accounting period should be increased to make good the deficit and that the Secretary of State shall take that into account in giving guidance. I have paraphrased what the noble Lord, Lord Bellwin, said at columns 968 and 969 of Hansard.
I hope that the common sense of the amendment will be seen and that Amendments Nos. 4 and 5 will meet your Lordships' approval. I beg to move Amendment No. 4.
Lord Lucas of Chilworth: My Lords, I have listened with interest to the explanation given by the noble Lord, Lord Underhill, of Amendments Nos. 4 and 5. Amendment No. 4 is very similar to the one put down during the Committee Stage. I am afraid that my noble friend was not persuaded then and, indeed, we are not persuaded on this occasion.
The effect of the amendment would be to allow the executive a three-year period to pay off the deficit. The problem with this is, first, that it would substitute a rather slack, financial duty for a taut one. Secondly, the deficit could accumulate from year to year. That, indeed, might have a roll-on effect so that, were it to be rolled on for three years, for example, the accumulation might be so large that it would be impossible to draw it back into the whole scheme of things. Then it would be quite obvious that the authority would never be able to meet the financial duty of break-even.
It certainly would not be in the interests of the executives, the authorities or, even more important, the ratepayers and taxpayers, who might find their money wasted on excessive subsidies and increasingly inefficient transport services. It is not unreasonable to expect the executives to exercise this tight financial control about which we have been talking throughout the passage of the Bill.
On the points contained in Amendment No. 5, I recall the discussions at an earlier stage on whether an authority ought to be able to provide additional grant in an emergency, because this is part of the reason for rolling on a deficit. There are, in fact, further amendments down at a later point in our considerations this afternoon. But the point made in Committee was that any deficit which arose because of an emergency could be covered either by the executive borrowing on the open market or from the authority, or by the unplanned use of reserves. Such a deficit could then be

853
made good in the following year's plan by making an appropriate adjustment to the amount of revenue grant provided. This could be done by raising fares or, alternatively, it could be adjusted by the planned use of reserves. I think that that indicates how the authority could propose to increase the grant, as suggested by the amendment. Indeed, it could use other methods to make good the deficit. So, in effect, there is no need for the amendment.
Finally, I ought to remind your Lordships that the duty to break even is, as my noble friend has just said, qualified by the phrase, "so far as practicable". Clearly, if, despite all the alternatives that I have outlined, it was nevertheless not practicable for the executive to make good the deficit in the following year, it would not be bound so to do. The clause allows a deficit to be carried forward for a further year if the executive and the authority did all that was reasonably possible to recover the deficit but nonetheless were unable to do so.
Lord Pitt of Hampstead: My Lords, I think that there is real value in this amendment which seems to have been ignored. In fact, it could be part of the planning of the programme that for the first year a deficit is incurred, because, for example, you deliberately expect that over three years a certain level of fares will bring a certain level of passengers and that, therefore, you will cover your expenditure. The way in which the Government want it to be done is that you incur a deficit this year; you are allowed to incur it the following year; but you are not allowed to plan it over the three years, which it seems to me you could do if this amendment were allowed.
I am saying that an executive and its authority could agree that there would be a level of fares which, by all accounting, would mean that in year one there would be a deficit but, by the process of the expectation in terms of take-up—in terms of the use of the transport—they could expect the deficit to be less in year two and to be completely eliminated in year three. It seems to me that this amendment would help this, whereas I am not sure that as things stand, they would be free to do that.
Lord Sefton of Garston: My Lords, perhaps I may try to see whether the Front Bench opposite can be a little accommodating. I am not an expert—certainly not in accounting procedures—so I take my advice from other places. I am advised that all the executives—and I am not talking about London because it is a place with which I do not very often consort—would support this amendment if they had the privilege of being in this House. Therefore, there must be something in the case that to restrict them in the way the Bill intends to restrict them is bad management practice.
As I understand the noble Lord, Lord Lucas, the Government have said that, if we allow this amendment, it means that they will be able to abuse the privilege and upset the whole purpose of the Bill. I do not think that they should be allowed to do that, but there is another way. I am quite sure that if noble Lords opposite put their heads together, they would get a very good product and be able to produce an amendment at a later stage of the Bill which allowed
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this flexibility in planning that all our managers seem to want; and the Government do not seem to be at odds with the executives—they seem to think that they are the right people to run our transport and the only wicked people are the elected representatives, who go too far.
If that supposition is right, I think that there is a means of producing an amendment which, on the one hand, gives the executives the freedom they want for this three-year carry on and which at the same time gives the Government power to restrict any abuse. Would the noble Lord, Lord Bellwin, give this House an assurance that he will look at the possibility of an amendment that will seek those two aims? If they do that, they will establish—in my mind anway—the willingness of the Government to be accommodating to a point of view not being put forward as a political gimmick or from a party political point of view, but being put forward by the management of the transport undertakings of this country. At the same time they would be trying to achieve what the Government want to achieve in the Bill. It would be quite simple. All that would be needed, as I understand from my short experience in this Chamber, is an amendment to be moved by the Government at Third Reading.
Lord Lucas of Chilworth: My Lords, I think it might be particularly helpful to the noble Lord, Lord Pitt, if I went at some length into this matter of how to deal with the deficit. The Bill provides that where an executive makes a deficit, it has to make good that deficit in the following year. But the Bill also provides that, where the executive plans to use the reserves, the associated deficit is exempted from the duty to make it good. In the first year—and this is the matter about which the noble Lord, Lord Pitt, particularly asked—exemption is provided by Clause 10(4), always provided that the executive has notified the Secretary of State of its intention to appropriate reserves before he gives his guidance to the authority. But in subsequent years the proposal to use reserves must be proposed by the executive in its plan and it has to be approved by the authority. The relevant power is in Clause 2.
The planned use of reserves can effectively augment or substitute for revenue grant, so the use of the reserves is exempted from the duty to make good a deficit, provided that it has been taken into acount by the Secretary of State when giving his guidance. In the event of the executive's forecasts going badly wrong, or if an emergency arises, the executive may find itself heading for a deficit; but the Bill certainly does not allow the authority to provide additional grant. I have described courses open to the executive before.
In preparing a plan for a following year, the making good of the deficit can once again be effected either by increases in fares or by reductions in costs, or by a proposed change in the level of grant or, at this stage, by the planned use of reserves. I think that that explains how the deficits might be met; but, of course, what one is anticipating is that a deficit will not occur. It is quite wrong, as a general point of management, and certainly of financial management, that any deficit should be allowed to roll on and accumulate, because that just compounds the wrong from the first year.

855
So far as the comments made by the noble Lord, Lord Sefton, are concerned, I noticed what he said about the third year. He called it, "a carry on". I think I described it to the noble Lord, Lord Pitt, as indeed a "carry-on". It cannot be a "carry-on", and I put those words in inverted commas. I shall, of course, as indeed will my noble friend, carefully read what the noble Lord, Lord Sefton, had to suggest.
Lord Underhill: My Lords, once again we are disappointed with the Government's attitude on an amendment. There has been considerable reference to the use of reserves. That is always assuming that there are reserves. There may not be reserves. One does not know what might be the emergencies which are beyond the control of the executive or the authority. All sorts of things can be imagined. Quite a number of instances were mentioned during the Committee stage. One would have thought that it was good practice that, if you have a three-year plan, a deficit should be enabled to be cleared within that three years and not the immediate accounting period afterwards.
I become more and more mystified when I read reports of your Lordships' debates, as I did after the Committee stage, and refresh myself with what the Minister said about flexibility: that it does not mean that an executive would have to settle things immediately; that the Secretary of State would take all these matters into account. But these are statements. There is nothing in the Bill about them. Whenever we want things written into the Bill in order to safeguard the executive, safeguard the authority, and even safeguard the Secretary of State, there is nothing in the Bill.
However, as the Minister said that he will look carefully at the suggestion put forward by the noble Lord, Lord Sefton—and we shall read again what the Minister has said in reply—and bearing in mind that there is still one further stage at which we might try to get some common sense into this question of deficit, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 5 not moved.]
Clause 3 [Preparation and submission of financial plans]:
5.4 p.m.
Lord Underhill Lord Underhill moved Amendment No. 6:
Page 3, line 15, after ("period") insert ("and shall have particular regard to the duty of the Authority and the Executive under section 9(3) of the Act of 1968 of sections 1 and 5(1) of the Act of 1969").
The noble Lord said: My Lords, this amendment is straightforward. I do not suppose that that will have much appeal, because it seems as though the Government are going to resist the most common-sense amendments; but we hope that other noble Lords may think otherwise. The executive has to prepare each year a plan which covers the next following period of three years. The purpose of this amendment is to require that the executive shall prepare the plan with particular regard—not exclusive regard—to the duty imposed on both the authority and the executive under the 1968 and 1969 Acts, as the case may be. As has been mentioned time and time again in previous
856
debates, there are duties imposed on the GLC and the metropolitan authorities under either the 1968 or the 1969 Act.
At the Committee stage an Amendment No. 16 was proposed. That sought to write into Clause 3(1) a requirement that the executive should in the three-year plan submit proposals for carrying out these duties. At the Committee the noble Lord, Lord Bellwin, took the view that that amendment would distort the purpose of paragraphs (a) and (b) of the subsection. He said that the duties under the 1968 and 1969 Acts would remain binding, and that therefore there was no need to refer to them in the present context.
I recall that I asked the Minister whether he would be prepared to accept a later amendment which would propose that the duties under the 1968 and 1969 Acts shall be taken into consideration. The Minister said that he would send to me a chronology of the planning process in a normal year, and that that might help me in considering what I might wish to do. I thank the Minister, because he carried out that promise and he has sent me the chronology of the planning process. I have not had an opportunity to compare it with the planning process which was outlined and submitted by my friends in the Association of Metropolitan Authorities. The full details were given and read out to the Standing Committee on the Bill in the other place. However, I thank the Minister for sending that, and I shall be able to compare it.
In sending the chronology the Minister wrote:
"My concern with Amendment 16 was that it would require the executive to add into the content of the plan factors which we feel should be considered in relation to its preparation."
That is just what the amendment seeks to do: that in preparing the plan it shall have particular regard to the duty of the authority and the executive under the various sections of the 1968 or 1969 Acts.
If the amendment is accepted subsection (2) would then read:
"The proposals"—
that is, in the plan—
"shall be such as to enable the Executive to discharge their duty under section 2 above in the relevant period and shall have particular regard to the duty of the Authority and the Executive".
and it then goes on to refer to the 1968 and 1969 Acts.
I am grateful for the chronology of the planning process, but that does not deter me from wishing to move this amendment. We have considered carefully what the Minister said on the last occasion, and I and my noble friends are satisfied that the amendment that I now move covers the objections put forward by the Minister at the Committee stage. I beg to move.
Lord Bellwin: My Lords, the noble Lord, Lord Underhill, will not mind, I know, if in responding to amendments which are similar, and in some cases almost identical, to ones we had at the earlier stage, I say the same things. One tries to be original the whole time, but it is not always possible. If I think the case was made fairly at the earlier stage, then I cannot do much better than say the same again.
This amendment seeks to insert a requirement that, in addition to being compatible with the financial

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duty, the executive's proposals in its plan must also take account of the general duties under the 1968 and 1969 Acts. I said it before, and I say it again: these provisions have not been repealed by this Bill. I repeat: the provisions have not been repealed by the Bill. The general duties still apply, and authorities and executives will continue to be required to have regard to them when carrying out their duties under the Bill, particularly when preparing their plan. Indeed, this is emphasised by the requirement imposed on the Secretary of State under Clause 4(6) when giving guidance to authorities to have regard to these general duties.
This is not a large amendment. It is not, I suppose, the most contentious part of the Bill. But I hope that the noble Lord, Lord Underhill, will feel, even with these few remarks, that I have reassured him on this point, and that the amendment does not add anything to the Bill and is not necessary.
All I would add is that the authority and the executive will of course have regard to their general duty; hence there is no need for the amendment. But the Secretary of State is not himself under the general duty, and that is why he is required by Clause 4(6) to have regard to it. I hope that the noble Lord, Lord Underhill, will see what I regard as the logic of this argument and perhaps withdraw the amendment.
Lord Sefton of Garston: My Lords, before the noble Lord sits down, will he give to this House an assurance that no instructions that conflict with the Act mentioned will be issued from the department to local authorities?
Lord Bellwin: My Lords, the noble Lord, Lord Sefton of Garston, very frequently asks whether I will give assurances as to what the department will or will not say. Of course I cannot do that because I do not know exactly how these points will transpire as they are put into practice. There are perhaps others better qualified than I to say that. As with most matters of this kind, we are trying to set up a régime which is clearly understood and which sets out what authorities and executives must do in submitting their plans, taking guidance, and coming to conclusions. I am with the noble Lord in wanting within that framework the greatest degree of flexibility possible. I do not want to encourage régimes which make it impossible for an authority or an executive to act; I do not want that at all. As we come to further amendments we shall see why the Government feel that the whole Bill is necessary. It is with that point in mind all the time that I respond in the way that I do to the present amendment.
Lord Boyd-Carpenter: My Lords, is not the very simple answer that, if my noble friend were to do what the noble Lord opposite suggests and issue a guidance which conflicted with statute—whether it be the 1968 Act, or the 1969 Act—any aggrieved person could take him to the courts and, judging from the case that the noble Lord may recall of Laker v.the Board of Trade, would be very likely to score a victory? Surely it is perfectly easy for my noble friend to say that he will continue to comply with the law and not expose himself to that possibility.
Lord Bellwin: My Lords, I must seek the leave of your Lordships to speak again, and I must apologise for not having done so when I last rose. I am very grateful to my noble friend who, as so often, goes straight to the root of the matter and puts it in very logical and, I am sure, precise terms.
Lord Underhill: My Lords, the intervention of the noble Lord, Lord Boyd-Carpenter, may seem very logical. But we do not like these matters going to the courts if we can avoid it; and that is what this House, too, ought to try to do. We must make certain that the Bill is correct and that we are not working on the basis of the flexibility of a future Secretary of State. We should write into the Bill exactly what we want to happen. Then we can avoid court actions of various kinds.
I shall certainly read what the Minister has said. He said that the powers have not been repealed. We agree; the 1968 and 1969 Acts are still there. In this and other amendments we are endeavouring to make it entirely clear, not only to the present Secretary of State, but to future Secretaries of State, exactly what shall be taken into consideration when plans are made, when approval is given, and when guidance levels are determined. They are the points that we want written into the Bill. The Minister does not feel inclined to go that way. A further stage of the Bill remains, and perhaps at Third Reading we can yet improve it, so that we do not have flexibility only in the mind of a Secretary of State, but rather a statute that clearly shows what an authority may do and what the Secretary of State may do. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
5.14 p.m.
Lord Underhill Lord Underhill moved Amendment No. 7:
Page 3, line 23, leave out from ("grants") to ("; but") in line 24.
The noble Lord said: My Lords, I am sorry that I have to keep popping up, but my noble friends are engaged elsewhere, in one case in a Committee of your Lordships' House. I beg to move Amendment No. 7, and in doing so would say that Clause 3(3) (which we are now considering) provides that in preparing the three-year plan the executive may assume that the transport authority will make grants
"of such amounts as the Executive may determine".
The clause must be read with Clause 4(1), which provides that the authority shall approve with or without modification the plan submitted to it by the transport executive, and that the authority shall make the annual determination of the amount of the revenue grants to be made to the executive.
Quite clearly the provision in Clause 3(3) and that in Clause 4(1) cannot both be right. If the authority has to determine the revenue grants, then the executive, in formulating the plan to be submitted to the authority, cannot do so on the basis of revenue grants that it assumes shall be determined. The clause says that the executive itself shall determine that. It is completely artificial to have an assumption by the executive that the authority will give grants of certain amounts. In the amendment we state that it is an assumption that the executive is not entitled to make. These two conflicting

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provisions could lead to some confusion; and to remove the possibility of any such confusion, the amendment proposes leaving out the words
"of such amounts as the Executive may determine".
That is because the executive has no power whatever to make such a determination. I beg to move.
Lord Bellwin: My Lords, we believe that it is important that in preparing the draft plan the executive should make an assumption about the appropriate level of grant and that that assumption must be made in the light of any advice given by the Secretary of State under Clause 3(5) as to the amount of grant that it would be appropriate for the executive to determine. These are important provisions because, if the Secretary of State is to provide protection from challenge to a reasonable level of subsidy, it is surely only sensible that, at the initial stages of the plan, the executive should be required to take into account any advice which the Secretary of State gives about the kind of figure that he has in mind. It is also right that at least an element of the plan should bear some relation to any initial advice which the Secretary of State has given.
But let me make it quite clear that these provisions in no way confine the executive to considering only the Secretary of State's advice, and preparing the plan only on that basis; nor do they impose any restrictions on the authority. I am sure that it is concern about that latter point that has given rise to the amendment. For its part the executive will be free to make any amount of other assessments that it chooses. Equally, before it prepares the plan, the executive must consult the authority, which at that stage can ask for consideration to be given to the consequences of the provision of different levels of revenue grants. Again, the authority can also, at a later stage, and under Clause 4(2)(a), call for further alternative proposals based on different levels of revenue grant. At the end of the whole process, after the Secretary of State has given his guidance, the authority has the final word on the actual amount of grant to provide.
So the Bill provides full flexibility. It allows the executive to make its own assessments, and also provides for it to consider the effects of any advice given by the Secretary of State. But it goes further: it also enables the authority to call for alternative proposals and preserves its ultimate responsibility—and this I stress—for the provision and financing of local transport, by giving it the final say. But the whole purpose of the relevant part of Clause 3(3), and the reason why I resist the amendment, is to ensure that proper consideration be given to a number of alternative proposals. Surely that is in everybody's interests. Nothing would be achieved by preparing a plan based on only one proposal from the authority, which is what would result from the amendment. We must recognise that there are a number of possible alternatives and a number of interests to consider. They must all be taken into account. In short, if he wishes, the Secretary of State needs to be able to see an exemplification of a level of grant of a general order of size similar to that which he might be able to protect, but he would not want to prevent the authority and the executive from exploring the effects of different levels
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of grants. That is why the Government are not able to accept the amendment.
Lord Underhill: My Lords, I shall consider very carefully what the Minister has said. I should like to read out part of subsection (3) of Clause 3.
"The plan may be formulated on the assumption that the Authority will in the relevant period make revenue grants of such amounts as the Executive may determine".
The point of this amendment is that the executive has no power in the Bill to determine the revenue grant. It is the public transport authority which will determine the level of revenue grant; and then the Secretary of State will either say that he agrees with it or he will cut it down. I doubt that he will increase it. The Secretary of State will consider the determination of the revenue grant made by the public transport authority. It is not a decision to be taken by the transport executive.
This is the point of the amendment. We are not trying to take away any rights of the Secretary of State under the Bill. We are saying that you cannot have two bodies which determine the revenue grant in the Bill. It is not a question of alternative plans; it is not a question of the executive saying that they would like to have it. They are going to work on the assumption that the revenue grant will be that which the executive may determine.
Again, we will not divide the House on an issue of this kind but I should like the Government to have a careful look at this. How you can have conflicting provisions of this kind in one Bill, I fail to see. One ought at least to get some accuracy. It again reflects the desire of the Secretary of State to have more direct contact with the transport executive than he ought to have. The transport executive is the operating body functioning under the transport authority and it is the transport authority which is the elected body which has complete responsibility. We will read very carefully what the Minister has said. At the moment, not having re-read it, I disagree with what he said. Nevertheless, I ask that the amendment be withdrawn.
Amendment, by leave, withdrawn.
5.22 p.m.
Lord Underhill Lord Underhill moved Amendment No. 8:
Page 3, line 33, leave out ("to potential users")
The noble Lord said: My Lords, this is an amendment to which I made reference when dealing with an earlier amendment. I should like to discuss with it Amendment No. 12. At the Committee stage, an amendment was tabled which sought to include definition of the use of the word "benefit"; that it means the social, economic and environmental transport advantages. In the course of my remarks, I shall have to refer to some of the arguments used on that occasion. Subsection (5) of this clause provides:
"In preparing the plan the Executive shall take into account any advice given by the Secretary of State as to the amounts",
to be determined for revenue grants and the method of determining the benefits expected to accrue from the grants.
The amendment will provide that the method of determing the benefits shall not exclude social benefits. We are not saying that that should be the only thing, but that it shall not exclude social benefits. It is not

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possible effectively to plan transport services without taking into account all the benefits that expenditure in connection with these services will bring. Even before the White Paper (which was supposed to be a consultation paper although it was published on the same day as the Bill), the Secretary of State gave a Written Answer on 26th July related to public transport in the metropolitan authorities and in the Greater London Council from which it is clear that he had made up his mind, because he said that, although the legislation on subsidy had worked reasonable well in the past, it had not prevented excessive subsidies by the metropolitan county councils.
The White Paper in paragraph 7 stated that the Government's proposals will require the metropolitan authorities and the GLC to describe and evaluate the benefits which the authority regards as justifying its subsidy. Paragraph 8 of the White Paper qualifies this. It stresses that the cost of any subsidies must be justified by "general transport benefits" in providing services which would not otherwise be viable or for the alleviation of road congestion. Paragraphs 14, 16 and 18 of the White Paper all make broad references to benefits but the benefits are not properly described in the White Paper, although paragraph 18 stresses that the new legislation will enable benefits which are being subsidised to be identified and to ascertain whether the benefits are cost effective.
We have not heard a great deal about the White Paper, but I am quoting from it. In paragraph 21, it is pointed out that in giving guidance the Secretary of State will take account of benefits to users of public transport and to other road users in terms of reduced congestion and that considerable weight will be given to the more direct economic and social benefits which can be measured in different areas on a comparable basis. That statement in the White Paper appears not to be supported elsewhere in the White Paper or in the Bill now before the House.
The Bill contains various references to benefits. These have not been modified in any way by amendment since the Bill was first published. Clause 3(5) provides that the Secretary of State will give the executive advice on a method of determining benefits which may accrue for revenue grants included in the annual plan. Under Clause 3(3), the executive shall take account of this advice in giving particulars of those benefits. The benefits are not described. Clause 3(4)(c) provides that the plan shall be accompanied by estimates of three items, one of which (in paragraph (c)) is estimates of the benefits to potential users of the services and facilities proposed in the plan. Again, there is a general reference to the word "benefits".
The next reference in the Bill to benefits is in Clause 4(6): that, before the authority may approve the plan, it shall take into account the guidance of the Secretary of State as to the level of grant which he considers to be appropriate—that is, the protected expenditure level. In arriving at this he shall have reference to benefit which will result from making the grant. Although these provisions all provide for looking at benefits, and they give the Secretary of State full discretion strongly to influence the way that benefits are expressed, in effect the Secretary of State, elsewhere in the Bill, is put in the position of being both advocate and arbiter in this matter.
At the Committee stage, the noble Lord, Lord Lucas, said that everybody would want to see the widest possible consideration for all types of benefits which can be derived from public transport provision. Although that is not made clear in the Bill, Lord Lucas said that the amendment was not necessary. The Minister also said that, in giving advice to the executive under subsection (5), he would not wish to discourage them from taking account of any benefits. Again I ask: where is this made clear in the Bill? Then, again, as quoted in Column 958 the noble Lord, Lord Lucas, said:
"Again I confirm that the Secretary of State can take into consideration any benefit whatsoever that is shown and put forward in the plan. So there is no restriction there".
Noble Lords will recall that at that stage in the Committee debate, my noble friend Lord McIntosh referred to a memorandum issued by the Department of Transport to the metropolitan authorities and the GLC setting out benefits which were to be included in the model for the determination of the permitted expenditure level and those other benefits which were not to be included. It will be recalled that my noble friend read out extracts. Lord Lucas, replying to those extracts said:
"It all seems eminently satisfactory to me".
And he said this although the statement seems to conflict with everything on which there are no interpretations or provisions in the Bill.
The noble Lord said that he could only repeat that the amendment was wide,
"but we feel that there is at least a possibility of argument that some benefit which it is believed will be derived from the plan when is offered will not fall within that definition".
My Lords, I do not want to read the extracts from that Department of Transport memorandum. The memorandum was a document setting out proposals for legislation on public transport subsidies, the planning system and the information to be provided. The annexe set out the scope of the Department of Transport revenue support assessment model and the items which were to be included. The document made quite clear the matters which were not to be taken into account—and I repeat, not to be taken into account. These were:
"The effect on the city's economy in terms of employment, location of homes and workplaces and the environment, the additional economic disadvantages of higher taxes and rates … social needs such as accessibility".
It was made absolutely clear that these are matters which shall not be taken into account; so the use of the word "benefits" is not as wide as the noble Lord, Lord Bellwin, and the noble lord, Lord Lucas of Chilworth, have suggested at various times in the provisions of the Bill.
I have already quoted the document—An Economic Assessment of Value for Money—which said that these items should be taken into consideration. That was dated December 1982, but the other document to which I have referred I understand was published on 1st February this year. So something happened between December 1982 and 1st February. Whereas in December 1982 it was said that these matters must be taken into consideration, we have the document of 1st February which says that these matters shall not be

863
taken into consideration. So we might have some clarification about that.
The two amendments are in our view necessary to ensure that there is consistency in the treatment of benefits and to ensure that all benefits are taken into account. If we do not provide that social benefit should be taken into consideration, frankly we are not going by what the document of December 1982 said. Moreover we cannot plan an effective transport system on that basis.
I am sorry to have spoken at some length on this, but this goes to the heart of what we want to see from a transport system; not only the economic advantages, not only cost benefits but the social advantages and social benefits of an effective public transport system. That is what the Department of Transport said in December 1982. I beg to move.
Lord Prys-Davies: My Lords, while I fully adopt the arguments which have been canvassed by my noble friend, I find that I am in difficulty with Clause 3(4)(c) as it stands. I have considerable sympathy with any official who has to prepare estimates of benefits to potential users of those services and facilities. I see two weaknesses in this particular subsection. The term "potential user" is itself extremely vague. The clause refers to a class or category which is not itself capable of being defined with a sufficient degree of precision and accuracy. It seems to me that there are three categories: the non-user, the potential user, and the user. When does a non-user become a potential user? What kind of criteria or test will this Bill give to the official who has to work with this subsection? I am not sure when a non-user becomes a potential user.
My second objection is that it seems to me that, by implication, if the official is able to show in the estimates that improved facilities will bring benefits to the user, that could be excluded because he is no longer a potential user. He is the user. As I read the subsection the official in his town hall will have to go further and will have to show that the facility will lead to additional persons using the transport system. Is that really the thrust of this clause?
My noble friend wished to define "benefit" and I was in great sympathy and agreement with my noble friend when he called for a definition of "benefit" to include impact on land use. How will the official connect improvement in land use with the needs of the non-user, who may become a potential user? In addition to the points made by my noble friend, I believe that the subsection in itself leads to great difficulties and excludes benefits to a direct user, a present user, a man or woman whom we can identify, which is of benefit to the community.
Lord Sefton of Garston: My Lords, I raise a point that I have raised twice before. It is the question of the assurances for which I asked from noble Lords on the Front Bench opposite about whether guidance would be given by the department that conflicted with the powers already passed in Parliament that enabled local authorities to take certain things into consideration. When this issue of the document that was published on 1st February this year was first raised in this Chamber, the Front Bench responsible for the Bill did not know
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of the document. That could be excused if there were that many documents of minor importance floating about on the Bill and the Ministers did not have their attention drawn to it. But this document contains the very heart of the assessment of need in local authority areas. It contains the guidance given to the executive committee. I think that at this late stage of the Bill noble Lords opposite should tell us this: do the Government stand by this document issued by the Ministry or do they reject it? In fact it is a complete contradiction of all the urgings, all the coercion and all the persuasion that has been used by central Government to executives in the planning of transport systems throughout the country.
I will go further back than that. Central Government commissioned a report on Traffic in Towns by Buchanan that in its day was the textbook of town planning. Nobody has upset that concept and the guidance that was given by the Ministry to the executives on 1st February this year flies in the very face of that. It flies in the face of every reasoned document that has been produced on town planning and transport.
I think at this late stage in the Bill, almost the last stage, it is quite evident now from the reasoned cases put forward by noble Lords on this Front Bench that the Government will not consider even a minor amendment. The Government do not even intend to consider what appear to be drafting mistakes because of the fear of not getting the Bill through by a certain date in order to carry out their real aim. Their real aim was to teach the Greater London Council who was the boss in this capital city of ours. I have not forgotten that that is the fundamental reason behind the Bill. It is a fundamentally bad reason, but at this late stage, after first disclaiming any knowledge of a document that was issued for guidance to local authotities, I think the noble Lord opposite should at least give us a straight answer. Do the Government support this document or do they not?
Lord Bellwin: My Lords, I should perhaps remind the noble Lord, Lord Sefton of Garston, that if the Government are as concerned as he says about getting the legislation through in time, then the quickest way of doing it is to do precisely what he says; that is to agree to amendments and everything that goes with it. To resist them is not to speed up the process at all.
Lord Sefton of Garston: Will the Minister give way?
Lord Bellwin: I will, my Lords.
Lord Sefton of Garston: My Lords, does the Minister mean to tell me that the Government would consider an amendment to the Bill? It would then have to go back to the Commons and then come back to this Chamber.
Lord Bellwin: My Lords, the noble Lord really misses the whole point of what we are seeking to do. I keep saying it again and again. The fact is that the Government are entitled to bring forward their legislation and your Lordships' House is the place to modify that and to make sure that there are no drafting errors such as the noble Lord refers to. It is the place

865
to make such adjustments as they feel able, but basically the policy is set down in another place and the noble Lord is as staunch an advocate as anybody I know in ensuring that policy is not interfered with. So, frankly, I do not think it advances us very much to debate this particular aspect.
Let me say, in regard to this amendment, that the Government entirely accept that wider considerations of the kind described on this occasion by the noble Lord, Lord Underhill, and in Committee by my noble friend Lord Teviot—I said it before and I will say it again—must be taken into account when planning regional transport services. We have made it clear in the White Paper that we expect the wider benefits flowing from revenue support to be fully assessed. I really do think that the Bill makes it absolutely clear that these wider benefits can and should be taken into account, but I must add that there would be real difficulty in amending Clause 3(4) in the way proposed by this amendment, No. 8.
Under Clause 3 subsection (4) we are concerned that the executive must submit precise estimates of those factors which are directly related to the services which they provide—their cost, the level of demand for them and the benefits they produce. This subsection is not concerned with assessing the wider benefits of grant and that is why I think it would be quite inappropriate to amend the subsection in the way suggested.
Let me at once make it absolutely clear that the executive are required by Clause 3 subsection (3), when submitting proposals for revenue support, to accompany them with particulars of the benefits expected to accrue from such support. The reference to benefits in subsection (3) is not qualified—it can clearly include consideration of the kind of factors aimed at in the amendments, in so far as it is within the power of the executive to take them into account. The Secretary of State can, under subsection (5), give advice on the method of determining benefits under subsection (3)—but the executive can refer to whatever benefits it wishes. In addition, the authority can, under Clause 4(2)(b), ask the executive to estimate for any other benefits which the authority specifies. Last, the authority can of its own accord add further reference to benefits, if it wishes, when submitting the plan and its proposed determination to the Secretary of State. I hope that I have reassured your Lordships that the wider considerations under discussion in this amendment can already be taken into account. The Bill is flexible on this and enables both the executive and authority, with complete discretion, to consider whatever benefits they wish. I hope I have made it clear that to amend Clause 3(4) as proposed would distort the purpose of that subsection.
I am going to repeat what I said before—that if any of the noble Lords opposite can show me any form of benefit which the executive or the authority itself or through its executive could not refer to in the plan, I undertake to consider the matter with a view to bringing forward a suitable amendment on Third Reading. The noble Lord, Lord Underhill, has pointed out that the Secretary of State appears from the consultation document—and this refers also to the point raised by the noble Lord, Lord Sefton—to be proposing to ask for specific benefits to be taken into account and proposing to exclude other specific
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benefits. I would say first that the reference the noble Lord made is to the part of the document which refers to cost-benefit analysis. If, especially as a result of consultation, it were to appear to the department that it is practicable to take meaningful account of other factors, then we would want to consider so doing. I would not want your Lordships to underestimate the technical difficulties involved in any major expansion of this helpful model.
So the first point is that if anyone wishes to demonstrate how the model could usefully be expanded, I would ask him, please, to tell the department's officials. Secondly, because a particular item is not to be a factor in the model, that most certainly does not mean it should not be taken into account by the executive, the authority and the Secretary of State. Therefore, if the executive believe that there is a particular and important benefit provided by their services or through the revenue grant which does not feature in the model and which they wish to draw to the attention of the authority and the Secretary of State, there is nothing to stop them from so doing. On the contrary, there is every merit in their so doing. The model is simply one among many factors which the Secretary of State will take into account when assessing the executive's plan and the authority's proposed modifications and the proposed grant. So there is no conflict at all in what I said earlier between the executive and authority really putting forward material on any benefit they care to identify and the specific requests which the Secretary of State may make under Clause 3(5), Clause 6(1) or Clause 6(4).
As regards Amendment No. 12, I must confess I am at a loss to think of anything new to say. We have already debated three separate amendments on this issue which, in all honesty, I think we could perhaps have dealt with in one discussion. I have demonstrated that the Bill already provides for these issues to be fully considered. Moreover, the amendment to Clause 3(5) does not in any way clarify which social benefits should be assessed. For his part, the Secretary of State might have certain benefits in mind when giving advice to executives but I have shown in previous debates that if the executives have a different view about other social benefits that need to be assessed, there is nothing to prevent them from assessing these and putting forward their views.
I suppose that perhaps I might try to pick up more detailed points that were made, but we are on Report stage and I do not want to make a Second Reading speech. I just feel that we have, as with so many other amendments, a point of view which is different from that of noble Lords opposite. While I personally regret that, that is the reality and that is why I cannot accept these amendments.
Lord Underhill: My Lords, there seems to be little point in trying to persuade the Government to accept what the department have said in these documents. We seem to be offering a number of challenges one way or the other. My noble friend Lord Sefton asked: do they support them or do they not? I must remind your Lordships of what the documents say. The first is dated December 1982: Urban Public Transport Subsidies: An Economic Assessment of Value for

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Money. I will read again what paragraph 1.7 says on page 2:
"The model is limited in that it does not reflect all the effects of subsidy. It excludes, at least explicitly, such factors as the potential long-term impact on land-use, environmental considerations and the travel needs of the poor and the elderly. These factors have to be taken into consideration together with the measure of transport benefits in determining the total amount of revenue support and its distribution between areas".
Then we have the other document issued on 1st February: Proposals for Legislation on Public Transport Subsidies: A Planning System: Information to be Provided. It makes absolutely clear that:
"Other factors not taken into account in the model include the effect on the city's economy in terms of employment, the location of homes and workplaces and the environment".
I should have thought they were factors you must take into account when planning transport. It goes on:
"The additional economic disadvantages of higher … rates and social needs such as accessibility".
Those shall not be taken into consideration. In other words, someone had second thoughts between December 1982 and 1st February. My noble friend Lord Sefton asked: do they or do they not support this document? Perhaps I should ask: do they support both documents? Therefore, the position is not as clear as the noble Lord, Lord Bellwin, said. He is always so persuasive—and I have said on other occasions that being persuasive and being convincing are two different things entirely.
I agree that there is nothing new to be said. We want to ensure not only that the executive and the authority will be able to take these matters into consideration, but that in doing so the Secretary of State will not be able to challenge them. We are told continually that the transport authority can do these things, but it is no good them doing them if, at the end of the day, the Secretary of State says, "This might be in your plan, but you must take it out. My determination of the revenue grant will depend on your taking it out". That is why it is so important to clarify these matters.
The noble Lord, Lord Bellwin, says that if we can show any form of benefit which will not be covered under the plan, he will introduce an amendment on Third Reading. The document published on 1st February says, "you shall not take this into consideration", so perhaps we shall get a Government amendment making it clear that such matters shall be taken into consideration. If a Government department document says that certain matters shall not be taken into consideration, I cannot see how the Minister can claim that no benefits are debarred.
Lord Bellwin: My Lords, the noble Lord is not correct in saying that the benefits he quoted shall not be taken into account. It is said in the department's cost-benefit model that these benefits are not to be taken into account, but the authority and the Secretary of State can take account of them. When the noble Lord reads my remarks carefully he will see there is a big difference.
Lord Sefton of Garston: The Minister is playing with words. We are talking about the principles underlying proper transport planning—something the Government are supposed to want. If the principles are there,
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how on earth can one have a cost-benefit analysis which does not include them?
Lord Bellwin: Not for the first time, my Lords. I disagree totally with the noble Lord. When he reads what I said on the subject he will see that I gave a full and total answer to the point made by the noble Lord, Lord Underhill.
Lord Underhill: My Lords, it is clear that we approach public transport in different ways. We want cost benefits, but we also want social benefits to be taken into consideration; whereas the Government concentrate on cost benefits only. The document I have with me, Urban Public Transport Subsidies: A Technical Report, is rather technical for me, but I am trying to get through it. It would do noble Lords opposite no harm to study it. In that document is a massive amount of detail, the detail the department wants to make the necessary assessment in order to get cost benefits and cost effectiveness only. We want to be sure there will be no disbarment of social benefits.
If the Minister would say he believes that with the assistance of his colleagues in the department he will be able to bring forward a better amendment on Third Reading to describe what is meant by social benefits, I would withdraw the amendment. In the absence of such an offer, we can only believe that he does not want to include social benefits. Amendment No. 12 simply says, that,
"the method of determining the benefits shall not be such method as will exclude particulars of social benefits".
In other words, we are standing by paragraph 1.7 of the department's document issued in December 1982. I must, therefore, press the amendment.
5.54 p.m.
On Question, Whether the said amendment (No. 8) shall be agreed to?
Their Lordships divided: Contents, 51; Not-Contents, 104.

DIVISION NO. 2

CONTENTS

Airedale, L.

Lloyd of Kilgerran, L.

Aylestone, L.

Longford, E.

Beswick, L.

McIntosh of Haringey, L.

Boston of Faversham, L.

Mishcon, L.

Brockway, L.

Molloy, L.

Bruce of Donington, L.

Ogmore, L.

Cledwyn of Penrhos, L.

Oram, L.

Collison, L.

Phillips, B.

Cooper of Stockton Heath, L.

Pitt of Hampstead, L.

David, B.

Ponsonby of Shulbrede, L. [Teller.]

Denington, B.

Diamond, L.

Prys-Davies, L.

Elwyn-Jones, L.

Ross of Marnock, L.

Fisher of Rednal, B.

Seear, B.

Gaitskell, B.

Sefton of Garston, L.

Gladwyn, L.

Stedman, B.

Harris of Greenwich, L.

Stewart of Alvechurch, B.

Hatch of Lusby, L.

Stewart of Fulham, L.

Houghton of Sowerby, L.

Stone, L.

Hughes, L.

Strabolgi, L.

Jacques, L.

Underhill, L.

Jeger, B.

Wallace of Coslany, L. [Teller.]

Jenkins of Putney, L.

John-Mackie, L.

White, B.

Kagan, L.

Wigoder, L.

Leatherland, L.

Winstanley, L.

Llewelyn-Davies of Hastoe, B.

869

NOT-CONTENTS

Airey of Abingdon, B.

Long, V.

Auckland, L.

Lucas of Chilworth, L.

Avon, E.

Lyell, L.

Balfour of Inchrye, L.

McAlpine of Moffat, L.

Belhaven and Stenton, L.

Mackay of Clashfern, L.

Bellwin, L.

Macleod of Borve, B.

Beloff, L.

Mancroft, L.

Belstead, L.

Marley, L.

Boyd-Carpenter, L.

Merrivale, L.

Burton, L.

Monk Bretton, L.

Campbell of Alloway, L.

Montgomery of Alamein, V.

Cathcart, E.

Morris, L.

Chelwood, L.

Mottistone, L.

Coleraine, L.

Mountevans, L.

Colwyn, L.

Mowbray and Stourton, L.

Cottesloe, L.

Newall, L.

Cox, B.

Northchurch, B.

Cranbrook, E.

Nugent of Guildford, L.

Cullen of Ashbourne, L.

Orkney, E.

Dacre of Glanton, L.

Portland, D.

Daventry, V.

Renton, L.

Davidson, V.

Romney, E.

De La Warr, E.

Rugby, L.

Denham, L. [Teller.]

St. Davids, V.

Digby, L.

St. John of Bletso, L.

Dilhorne, V.

Salisbury, M.

Elles, B.

Selsdon, L.

Elliot of Harwood, B.

Sempill, L.

Elton, L.

Slim, V.

Erroll, E.

Soames, L.

Ferrers, E.

Somers, L.

Gainford, L.

Spens, L.

Gardner of Parkes, B.

Stamp, L.

Garner, L.

Strathcarron, L.

Gisborough, L.

Strathcona and Mount Royal, L.

Glanusk, L.

Glasgow, E.

Strathspey, L.

Glenarthur, L.

Sudeley, L.

Greenway, L.

Suffield, L.

Hailsham of Saint Marylebone, L.

Swansea, L.

Swinfen, L.

Hayter, L.

Swinton, E. [Teller.]

Henley, L

Teynham, L.

Hives, L.

Trefgarne, L.

Holderness, L.

Trenchard, V.

Hornsby-Smith, B.

Trumpington, B.

Hunt of Fawley, L.

Tryon, L.

Hylton-Foster, B.

Vaizey, L.

Ilchester, E.

Vaux of Harrowden, L.

Killearn, L.

Vickers, B.

Kinnaird, L.

Vivian, L.

Lane-Fox, B.

Ward of Witley, V.

Lauderdale, E.

Young, B.

Resolved in the negative, and amendment disagreed to accordingly.
[Amendments Nos. 9 and 10 not moved.]
6.2 p.m.
Lord Underhill Lord Underhill moved Amendment No. 11:
Page 3, line 36, after ("State") insert ("or the Authority").
The noble Lord said: My Lords, it will be for the convenience of the House if in moving Amendment No. 11 I speak also to Amendments Nos. 13 and 29. Subsection (5) of Clause 3 says:
"In preparing the plan the Executive shall take into account any advice given by the Secretary of State as to the amounts that it would be appropriate for the Executive to determine under subsection (3) above and the method of determining the benefits referred to in that subsection, and generally as to the form and contents of the plan".
As the authority has the final responsibility for approving the plan, Amendment No. 11 proposes that the executive shall take into account any advice given by the Secretary of State and the authority. Amendments Nos. 13 and 29 are consequential.
As was mentioned in previous debates, the executive is the unelected operating body, and it is responsible to the authority. The authority is the elected body and has the final responsibility. We say that as the authority is the elected body it, as well as the Secretary of State, should give advice to the executive. That is the simple principle which is covered by these three amendments. I beg to move.
Lord Pitt of Hampstead: My Lords, the Government ought to accept this amendment. When the noble Lord, Lord Bellwin, replied to Amendment No. 7, he said that the Government wanted the executive to submit a series of plans and a series of suggestions about the grants which it should receive from the authority. I do not know how they can do that without consulting the authority and taking its advice. In view of what the noble Lord, Lord Bellwin, said on Amendment No. 7, it seems to me that the Government ought to accept the amendment. It is also right in principle that they should do so. The executive is asked to prepare a plan. The plan requires that part of it should be the determination by the authority of what grant the authority is going to make to the executive. It seems to me that before they can prepare the plan the executive must discuss with the authority what is likely to be the proposed grant, just as much as they must discuss with the Secretary of State what level of grant he is likely to accept. In preparing the plan, therefore, advice must be taken from both. I do not see how the Government can refuse to accept the amendment.
Baroness Gardner of Parkes: My Lords, I do not understand the wording of the amendment. Is it suggested that, by the words "or the Authority", the advice of the authority should be taken rather than the advice of the Secretary of State? I take the point made by the noble Lord, Lord Pitt of Hampstead, that it might be necessary to have the comments or political advice of the authority, because that is an elected body and has a view to give. However, the amendment proposes that the executive should take into account any advice given by the Secretary of State "or the Authority". Therefore it seems to me that the executive is being asked to take the advice of the authority but to rule out the advice of the Secretary of State. On those grounds, I find the amendment to be slightly puzzling and I should appreciate a comment on that point.
Lord Mishcon: My Lords, I immediately make that comment, with all deference, because the noble Baroness, Lady Gardner of Parkes, never rises to her feet unless she has something sensible to say, but I am afraid this occasion was a rare exception to that rule. If you are directed to take note of the advice of one body or the other, it means that if one body or the other chooses to give you advice you must take note of it. It is not exclusive. You cannot say, "If both of them tender advice I shall decide to take the advice of the Secretary of State: I have no obligation to take the advice of the authority". Here, the word "or" means "and" if both parties do indeed give advice.
Lord Bellwin: My Lords, at first sight these amendments might seem to be a logical consequence

871
of the provision in Clause 6(1) which requires the executive to consult the authority before it prepares its draft plan. If the executive must consult the authority, why should it not also be required to take into account any advice given by the authority? The Government's view is that it is right for the executive to take account of what is said by the authority during consultation. Therefore, it seems to me that Amendment No. 29 is unnecessary. It adds nothing to Clause 6(1), as the consultation process is bound to result in the executive having regard to the advice of the authority. That is what consultation is all about.
Moreover, the problem with Amendments Nos. 11 and 13 is that they would serve only to confuse the executive in its preparation of the plan. The amendment would upset the planning process in the Bill, which follows an ordered and logical course. If the executive had to have regard in the initial stage to advice both from the Secretary of State and the authority as to the amount of grant it would be appropriate for them to determine—the method of determining benefits, the form and content of the plan and the method of determining the matters in Clause 3(4)—then how would the executive decide whose advice they would regard? I fear that the amendment will result in a draft plan which, by taking account of different advice from different sources and placing it in a mixing bowl, will result in a plan based on the executive's attempt to resolve these conflicting pressures. The plan might be based on a single level of grant, following a particular methodology which was unsatisfactory to all the parties, and hedged about with too many "ifs" and "buts".
What we want is for the executive to set out a plan on the assumption of an amount of grant and following a standard methodology that takes account of the Secretary of State's advice; that is, advice under Clause 3(5). This will enable him to assess the plans of the various local authorities before arriving at his guidance. We want also, if the authority has the view that a very different level of grant is desirable or that different methods of assessing benefits, and so on, are desirable, that they could also ask for this during consultation or later when, under Clause 4(2) they can require such exemplifications after receiving the draft plan. Of course, the authority have the final word on the plan.
It is important to maintain the step by step procedure in the Bill. I believe that the correct moment for the executive to consider the views and advice of the authority is both during consultation, before beginning to prepare the plan; and again after they have prepared the plan, and after the authority have considered it. It is then that the authority will be in the best position to know whether it wishes to call for additional exemplifications and proposals. I also believe that it is of paramount importance that we retain the ordered process set in the Bill in relation to both the views, methodology and so on requested by the Secretary of State and the requirements of the authority.
The Bill as it stands ensures that each party knows exactly what is required of it and when. I respectfully suggest that the amendments will put the executive
872
into the impossible position of trying to respond to two masters at once rather than, as the Bill provides, for them to respond separately to each. That is why the Government have difficulty in accepting them.
Lord Mishcon: My Lords, I wonder whether the noble Lord the Minister will deal with a point that I believe is worrying many of your Lordships. Throughout his addresses on this subject (and the noble Lord, Lord Lucas of Chilworth, has followed the same line) we have been told that this Bill is one that in no way interferes with the dignity, rights and prerogatives of the authority; and that there is a simple programme of procedural events—and the Minister has just gone through them—where the last word is that of the authority.
In my view, and in the view of my noble friends, it is wrong to put right in the middle of that programme a procedural step where advice has to be taken into account by the executive before reaching the ultimate stage of the final plan that goes to the authorities for their approval. This is the point for which we are really fighting; the right of the authority to give advice and the duty of the executive to take it into account.
I do not intend to be facetious in the slightest degree, but I shall try to give the noble Lord the Minister an example of how it is that one can listen to the advice of two separate people and elect to choose the advice of one or the other of them. The noble Lord, the Minister, might tender to me the perfectly proper advice that I have said enough and that I should sit down. My noble friends behind me may, out of sheer loyalty, tender the advice that in spite of what the noble Lord the Minister has said, I should continue with my speech.
The ultimate result is that I have not a conflicting duty here; I merely have the great benefit of the advice of such an eminent person as the noble Lord the Minister that I should sit down and the affection which I hope I shall receive behind me, in the advice tendered that I should continue. It is left to me, with both the dignity behind the Minister—or in this case, the Secretary of State and that of the authority—to take such advice into account. The Bill does not say that I have to follow such advice. The ability to tender that advice is obviously something that I believe gives a proper dignity to the local authority.
I am going to test the bona fides of the noble Lord the Minister. I did not say "the good faith" but especially used a Latin term, so that nobody should think that I was ever doubting the noble Lord the Minister's good faith. The noble Lord has said often—in answer to my noble friend Lord Sefton of Garston, for example—that there is no set law of the Medes and Persians which the Government intend to superimpose upon on this House, that regardless of the merit of any amendment there will not be a change of one word in this Bill. The noble Lord has said that the Government are open to the proper amending wisdom of this House and that this House will be listened to if it has a sensible amendment to make.
There cannot be the slightest objection to this amendment. It is not the desire of the Opposition merely to put forward amendments in order to delay the passage of this Bill. The noble Lord the Minister knows perfectly well that if he inserted the words

873
proposed, the other place is unlikely to have any objection—and if it did, the matter would be debated in a couple of minutes. I test what is happening in this House, which I believe is all wrong from the point of view of Parliament itself. We are dealing with a Bill where, if I remember correctly, the other place did not go beyond Clause 2. So far, not one word has been amended at Committee stage and not one at Report stage.
The impeccability of the draftsman and the clearness of view of the Government are undoubted qualities which they both have—but it would be an extraordinary thing if this Bill has not, for good reason, to be altered by one single word. Is that because there is a policy not to alter this Bill, whatever suggestions are made? Or is it because your Lordships, for the first time in a long time in dealing with an important Bill, have not one contribution to make by way of amendment, even though the other place has not considered any but Clauses 1 and 2 of this Bill?
Lord Boyd-Carpenter: My Lords, I would never seek, whether in Latin, English or in any other language, to challenge the bona fides of the noble Lord, Lord Mishcon, although I have expressed before and will continue to express my admiration for his adroitness and flexibility, But I should like to take up the noble Lord's last remark, which related to the fact that, so far at any rate, the amendments which he and his noble friends have put forward have not been accepted by the House.
I have been present for the whole of this Sitting and have paid the best attention that I could to the amendments. I have to say to the noble Lord, Lord Mishcon, that in no single case have the amendments so far brought forward been acceptable from the point of view of those who support the policy of this Bill. They have all been, in greater or lesser degree, designed not to improve the Bill but to frustrate its purpose. The noble Lord, Lord Mishcon, knows perfectly well that that is true. It is, therefore, not altogether surprising that my noble friend at the Dispatch Box, who is the Minister in charge of the Bill, has advised the House to resist them and that the House in its wisdom has so far resisted them.
Let us take the current amendment as an example of that proposition. I should like to test it—if the noble Lord, Lord Sefton, will not get angry with me if I do so—by quoting the example of London. I know that the mention of London is like a red rag—perhaps given what is happening at County Hall that is not an inappropriate metaphor—to the noble Lord, Lord Sefton. Can your Lordships visualise the position of the London Transport Executive if at this stage of the proceedings, the formulation of the plan, they had advice tendered to them simultaneously by my right honourable friend the Secretary of State and by Mr. Livingstone and his colleagues? They would have only conflicting, completely differing advice, one advising moderation and restraint in expenditure and one advocating the maximum expenditure it was possible to envisage. That would, would it not, put the executive in a position of really very great difficulty, and perhaps in the same sort of position as those who sometimes sit, as the noble Lord, Lord Underhill, knows, on tribunals of inquiry to adjudicate on wage
874
claims, when the decision so often tends to be not a clear-cut decision as to what is right but to some extent a compromise between wholly conflicting and completely challenging views.
So, my Lords, I must say with great respect to the noble Lord, Lord Mishcon, that the proposition which I venture to put forward is that the amendments so far have been amendments that really no Government believing in the policy of its Bill could be expected to accept, because they challenge the policy of the Bill. This particular amendment, on which the noble Lord, Lord Mishcon, saw fit to make this challenge, is the clearest possible example of that, for it would produce a situation which would be wholly unworkable, and the noble Lord knows that as well as I do.
Lord Sefton of Garston: My Lords, I never lose my temper over London; I merely say I do not want to discuss London.
Lord Boyd-Carpenter: Well, do not bother.
6.22 p.m.
Lord Sefton of Garston: My Lords, what happens when you are discussing London is that you are discussing with a lot of people in a self-contained community who are almost completely ignorant of everything that happens the other side of the Watford Gap. I think that too much attention has been given to London, but I do not get bad-tempered over it. I do not see why the noble Lord had to introduce it into this debate, because it clouds the issue. The issue is whether or not our amendment is a wrecking amendment or designed to a greater or lesser degree to defeat the purpose of this Bill. Well, it is not; the noble Lord put the wrong interpretation on it.
Let me interpret, if I may attempt the almost impossible, what the Government have in mind, giving them the benefit of the doubt, something I do not like doing and which strains all my resources to do, but I will do my best. The Government consider that some local authorities have gone too far in giving assistance to a certain section of people, the travelling public, and they have sought a Bill in order to remove what to them is that iniquitous action. But in doing that they do not want to go to war with local authorities; they only want to teach them the error of their ways. They certainly do not want to go to war with the executives; they think the executives are the finest thing since sliced bread in regard to the planning of transport.
So they say, "Now let's get sensible, lads. We will declare a ceiling on expenditure and we will call it the PEL", and introduce a new word into our language. "Having done that, we will then say, 'This is the way we are going to plan it—, and they really are attempting to plan it in a way which is acceptable to the local authorities and to the executives in order to get a concerted plan on transport. I assume I am being fair in saying that this is the Government's intention. There is going to be some slight uneasiness at first, but in time they are hoping it will all work out and we shall get a system of planning for transport finance which will be a success and will satisfy everybody. Good enough.

875
The first thing that that calls for is co-operation between the local authorities and central Government. I say that this is an important amendment because it seeks to stress the need for co-operation between local authorities and central Government—and believe me, if the noble Lord, Lord Boyd-Carpenter, does not think that this Bill has introduced a gulf between central and local democracy and parliamentary democracy, then he does not know what is happening the other side of the Thames, never mind the Watford Gap. Because that is what is happening. More and more the executives, seeing themselves being pilloried because of some of the mistakes in the capital city of our country, are subscribing to the point of view of two nations.
There is one easy way in which the Government can demonstrate their good intentions, certainly with no adverse effect on the policy of the Bill and, if anything, with a good effect on the policy of the Bill: accept this amendment and demonstrate that, just as the executives are being told to take into consideration the views of certain sections of our political life, they should take into consideration the views of the executive, the views of the authority and the views of central Government at the same time. That is the purpose of the amendment. It is a good amendment, and, much as I dislike the whole darned Bill, the amendment subscribes to the principle of the Bill, and, if anything, will help to remove that distrust which the Government have, by introducing the Bill, occasioned between local authorities and central Government.
Lord McIntosh of Haringey: My Lords, I have a simple question to ask the noble Lord the Minister; some might call it a naive question. It does seem to me that this amendment, so far from being, as the noble Lord, Lord Boyd-Carpenter, said, in opposition to the intention and spirit of the Bill, is very much in line with the intention and the spirit of the way the Government propose to enforce the Bill. I come back, with no apology, to the document Proposals for Legislation on Public Transport Subsidies: The Planning System. Information to be provided, where the model which has been discussed both in Committee and today does say:
"The DTP model will be made available to Executives and Authorities. It is well recognised, however, that some Executives and Authorities have already carried out substantial work in this field and that they may wish to continue developing their own approaches. Certainly there is scope for developing further the Department's own model and this could most usefully be achieved in co-operation with Executives and Authorities".
Surely that is exactly what the amendment is seeking to achieve—that there should be this co-operation between the Secretary of State, the executives and the authorities in preparing the models which are to be the basis of revenue support.
Lord Bellwin: My Lords, the noble Lord, Lord Mishcon, prayed in aid the Romans with his Latin quotation, and he prayed in aid the Medes and the Persians. He was at his usual eloquent and most persuasive best. I think that some of the points he made, by themselves, I would have to say have some merit. That sounds terribly patronising, but the noble Lord knows that it is not meant to be that, but is meant sincerely.
Lord Mishcon: My Lords, so far the noble Lord is very kind.
Lord Bellwin: Well, my Lords, so far I am doing well, but I am afraid that I am going to have to disappoint the noble Lord in the end. The fact is that the Secretary of State has to decide and, to give guidance, he needs information. That is what Clause 3(5) is about. But the need of the Secretary of State for information does not prevent an authority from asking for its own advice with the plan, for example, under Clause 4(2), and giving its views to the executive under the consultation arrangements. I will come back to this point in a moment and to the point that the noble Lord, Lord McIntosh made, and indeed all noble Lords are making, as to why this amendment should be accepted.
I do not want to get on to making Second Reading speeches—heaven forbid! But I cannot let go the point made by the noble Lord, Lord Sefton. I wish that he had not brought in the point on local democracy and the GLC. If I was to pick that up again, as I did previously, he knows that I would be bound to say why the thrust of this legislation comes about. It is precisely because there has been what I consider to be an enormous attack upon local government by those within local government themselves who behave in such a totally unreasonable manner as to create a revulsion and a need for someone, as your Lordships have heard me say before, to protect the interests of all people, not just one sector. However, I will resist the temptation to go off on that tack.
A noble Lord: He has just said it.
Lord Bellwin: My Lords, I could go on much longer and the noble Lord knows that I could. I believe this deeply and with a passion equalling that which I know is sincerley held by noble Lords opposite. My concern about the amendment is genuinely that it would lead to confusion if the Secretary of State's requests under Clause 3(5) were ranked alongside those of the authority so that the executive could then choose between them. However, I recognise that here we are only talking about what I consider—and I know that noble Lords opposite feel differently—are very much the mechanics of the operation. I intend—and I say this despite the advice I have been given—to read carefully what has been said. The noble Lord knows that I can make no commitment, and that will doubtless be a disappointment to him. However, I intend to read what has been said and if I and my colleagues feel that there is the expressed intention of really making it a better and more logical procedure without adding to the confusion, which I fear is the case, then we would, of course, want to come back to it again.
That is as far as I can go. It is not as far as the noble Lord, Lord Underhill, wants, but let me hasten to assure him that it is a darn sight further than I am advised I should go. Nevertheless, it is something I would want to do because I believe it is right that if the intention is as said, and I accept that, then I shall want to see if the amendment does what is said. If it does not, then we certainly will not come back to it. However, we shall see.
Lord Underhill: My Lords, the noble Lord, Lord Bellwin, said that he did not want to give a Second Reading speech. He proceeded to give his introduction and then said he would not go further. Well, I have not given any Second Reading speeches at all but I would just like to say that if one looks at the overall rate of grant towards local spending as a whole it will be seen that it has fallen from over 65 per cent. in 1974–75 to under 53 per cent. in 1983–84; and whereas local spending between 1976–77 and 1983–84 would have risen by 97 per cent., central Government spending would have risen by 143 per cent. If we exclude social security payments, central Government expenditure will still have risen by 124 per cent.
Having said that, I do not want to go on any further but it is pretty clear that one could have a long debate on the whole question of local government spending in relation to central Government spending if one wished. I merely put it to the noble Lord that there is more than one argument to make on these matters. I thought at first that when the noble Lord said that Amendment No. 29 was not necessary he was going to say that he would accept the other two. However, my heart dropped because that was not the case. All Amendment No. 29 is saying is that they shall consult the authority,
"and take into account their advice".
The noble Lord, Lord Bellwin, says that it will be automatic that they will take their advice into account. There are numerous references in subsection after subsection in the Bill about taking advice into account and taking guidance into account. He said that to accept these amendments would be to frustrate the purpose of the Bill and make the planning process unworkable. I think that is carrying the argument a little too far, because Clause 3(5) says:
"in preparing the plan the Executive shall take into account"—
note, "take into account", not "must accept"—
"any advice given by the Secretary of State".
What we are saying is that we should add at that point,
"or the Authority".
We have had free legal advice from my noble friend as to what the legal interpretation and meaning of "or" is. But the subsection then continues:
"as to the amounts that it would be appropriate for the Executive to determine under subsection (3)".
On a previous amendment we argued that it was not the job of the executive to determine revenue grants. Now the Government's view is that the authorities should not even give advice to the executive as to what should be the level of revenue grants, and yet it is the authority that pays it.
I do not want to argue the case much more. Again, there is a difference here but one should carefully read subsection (5) because it does not refer only to advice as to the amounts it would be appropriate for the executive to determine, but to the method of determining the benefit referred to and generally to the form and contents of the plan. Surely it is common sense that the authority, which is the responsible, elected authority that pays the grants, should be able to advise the executive before those things are done, and not afterwards. The noble Lord says that this would throw out the planning process. I should have thought that the planning process would have been
878
helped if the body which provides the money, that is the body elected by the people—because that is what it is and the executive is not—gives this advice right at the outset.
Note the words,
"shall take into account"
the advice of the Secretary of State or the authority. If the noble Lord, Lord Bellwin, will say honestly that there is some substance in our amendment but that the wording could be improved, I will readily withdraw it, but he has not said that. I should like him to bear in mind the comments of my noble friend Lord Sefton. This Bill could do immense harm to relationships between the GLC and the six metropolitan authorities which the White Paper says cover one-third of the population of this country—I repeat, one-third of the population of this country. I should have thought, knowing as we do the respect that the noble Lord the Minister has for local government, that he would want this to be put in the clause in order to give some respect to the position of the elected authority. Therefore, we will stand by the position of an elected authority really being put into that position of trust, and we ask that the House declares its view on this.
6.38 p.m.
On Question, Whether the said amendment (No. 11) shall be agreed to?
Their Lordships divided: Contents, 45; Not-Contents, 84.

DIVISION NO. 3

CONTENTS

Airedale, L.

Lawrence, L.

Aylestone, L.

Llewelyn-Davies of Hastoe, B

Birk, B.

McIntosh of Haringey, L.

Boston of Faversham, L.

Masham of Ilton, B.

Brockway, L

Mishcon, L.

Bruce of Donington, L.

Molloy, L.

Cledwyn of Penrhos, L.

Ogmore, L.

Collison, L.

Pitt of Hampstead, L.

Crowther-Hunt, L.

Ponsonby of Shulbrede, L. [Teller.]

Denington, B.

Diamond, L.

Prys-Davies, L.

Elwyn-Jones, L.

Ross of Marnock, L.

Fisher of Rednal, B. [Teller.]

Seear, B.

Gaitskell, B.

Sefton of Garston, L.

George-Brown, L.

Stedman, B.

Hatch of Lusby, L.

Stewart of Alvechurch, B.

Hayter, L.

Stewart of Fulham, L.

Houghton of Sowerby, L.

Stone, L.

Jacques, L.

Strabolgi, L.

Jeger, B.

Underhill, L.

Jenkins of Putney, L.

Wallace of Coslany, L.

John-Mackie, L.

White, B.

Kilmarnock, L.

Winstanley, L.

NOT-CONTENTS

Ampthill, L.

Coleraine, L.

Auckland, L.

Colville of Culross, V.

Avon, E.

Colwyn, L.

Belhaven and Stenton, L.

Cottesloe, L.

Bellwin, L.

Cox, B.

Beloff, L.

Cullen of Ashbourne, L.

Belstead, L.

Dacre of Glanton, L.

Boyd-Carpenter, L.

Davidson, V.

Brougham and Vaux, L.

De La Warr, E.

Burton, L.

Denham, L. [Teller.]

Caithness, E.

Digby, L.

Campbell of Alloway, L.

Elles, B.

Cathcart, E.

Elliot of Harwood, B.

879

Elton, L.

Morris, L.

Ferrers, E.

Mottistone, L.

Ferrier, L.

Mountevans, L.

Gardner of Parkes, B.

Mowbray and Stourton, L.

Glanusk, L.

Newall, L.

Glasgow, E.

Northchurch, B.

Glenarthur, L.

Nugent of Guildford, L.

Greenway, L.

Orkney, E.

Hailsham of Saint Marylebone, L.

Portland, D.

Renton, L.

Henley, L.

St. Davids, V.

Hives, L.

Salisbury, M.

Holderness, L.

Soames, L.

Hornsby-Smith, B.

Somers, L.

Hunt of Fawley, L.

Spens, L.

Hylton-Foster, B.

Strathspey, L.

Kinnaird, L.

Sudeley, L.

Lane-Fox, B.

Swansea, L.

Lauderdale, E.

Swinfen, L.

Lindsey and Abingdon, E.

Swinton, E. [Teller.]

Long, V.

Teviot, L.

Lucas of Chilworth, L.

Trefgarne, L.

Lyell, L.

Trenchard, V.

Macleod of Borve, B.

Trumpington, B.

Mancroft, L.

Tryon, L.

Marley, L.

Vaux of Harrowden, L.

Massereene and Ferrard, V.

Vickers, B.

Merrivale, L.

Vivian, L.

Monk Bretton, L.

Ward of Witley, V.

Montgomery of Alamein, V.

Resolved in the negative, and amendment disagreed to accordingly.
[Amendments Nos. 12 and 13 not moved,]
6.46 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 14:
Page 3, line 43, at end insert—
("(6) Any advice or guidance given under this Act by the Secretary of State as to the method of determining benefits or estimates or as to the form of the plan—

(a) shall only be given in accordance with principles to be applied to all Authorities and Executives;

(b) shall set out the matters taken into consideration in preparing the advice or guidance and contain a reasoned justification and the matters taken into consideration for each item of advice or guidance.").

The noble Lord said: My Lords, by leave of my noble friend, this amendment contains some part of an amendment which was moved in Committee to which the noble Lord, Lord Bellwin, gave an answer which gave us cause for a modicum of hope that he was prepared to reconsider the issues involved, that he appreciated that there were some principles involved which deserved reconsideration, and that he might be able to say something friendly to us at this stage or, perhaps, at Third Reading. I do not know whether he is going to justify that modicum of hope that he gave us. I suspect not in view of what has taken place so far on this Bill, but I shall proceed on the assumption that he has appreciated that there are reasonable points here which deserve further attention, and I shall treat with them again only very briefly.
What is proposed here is a new subsection in which there are two parts. First of all, there is a statement that the guidance given:
"shall only be given in accordance with principles to be applied to all Authorities and Executives".
The noble Lord the Minister said in Committee that this would seek the application of a standard formula or formulae. For the life of me, I cannot see how that
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can be the case. It does not say that there should be a standard formula or formulae. What it says is that there should be principles applied to all authorities and executives.
That is not an idle phrase. It is a phrase which appears in the legislation about rate support grant. It has never caused any difficulty in the past. It has never made it impossible for central Government to express their views very clearly to local authorities either about the general level of expenditure of local government as a whole or about the level of expenditure of particular local authorities. In all parts of local authority finance, particularly and sadly in the last four years, there have been very specific levels of expenditure laid down for individual local authorities. That has been within the terms of the rate support grant, which says that the principles applied shall be applicable to all authorities and executives. So there is no practical difficulty about the Government agreeing to this amendment.
Secondly, the amendment says that any advice given by the Government:
"shall set out the matters taken into consideration in preparing the advice or guidance and contain a reasoned justification".
Again, I really cannot see what objection the Government can have to that statement and to that being enacted with this legislation. It is already clear—and the noble Lord, Lord Bellwin, has repeated it within the last half hour—that the Government are going to seek detailed information from local authorities, and are already doing so, in order to determine the level of revenue support which they consider to be appropriate. It is also already clear that the Government are going to be very precise about the level of support which they consider to be appropriate.
The only missing gap here is that the Government are not being required by the Bill to set out their justification for the conclusions to which they have come. Surely that is contrary to, I was going to say "natural justice", but I shall put it lower than that and say the most simple business principles, that when you are dealing with other people about money it is your obligation not only to say to what conclusion you have come but why you have come to that conclusion, in order that there can be some type of meaningful dialogue, as the noble Lord the Minister has indicated he would wish to see. Therefore, it is impossible to see from the Minister's comments in Committee, or from the nature of the wording which is proposed here, on what basis the Government can rationally reject the amendment.
I would make only one further comment. In Committee the Minister said that these were issues on which he thought that there should have been detailed discussions with the local authority associations, and particularly with the Association of Metropolitan Authorities. My noble friend Lord Underhill spelt out exactly what negotiations and discussions there had been between the AMA and the Government. In other words, he made it clear that those consultations had already started and that there was no reluctance on the part of the AMA to take part in negotiations. The noble Lord the Minister said that he would look to further discussions and consultations both before and after the passage of the Bill. I would ask him now, in his reply, not only to indicate his response to the arguments that I have put forward but to tell us

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factually what further consultations and discussions have taken place and what effect they have had on the Government's thinking. I beg to move.
Lord Bellwin: My Lords, when we discussed this issue during the Committee stage I indicated that it was important that in giving advice the Secretary of State should have sufficient flexibility to take account of the individual circumstances of each area. This really is important. It is true, as this new subsection seems to recognise, that certain aspects of the Secretary of State's advice will contain some common elements, particularly on the method of assessing the benefits of grant. Nonetheless, the difficulty with the amendment is that it would create a system that we fear will be too inflexible and would not provide sufficient flexibility to take account of local factors and local circumstances. I know that that is certainly not the intention of the noble Lord, Lord McIntosh.
Lord McIntosh of Haringey: My Lords, would the noble Lord the Minister be good enough to indicate in what way he thinks that inflexibility has arisen from the use of the same formula as that used in the case of the rate support grant?
Lord Bellwin: My Lords, perhaps the noble Lord will allow me to develop the matter as I go along. The fact is that I do not think that this new provision would at all help the authorities or the executives. The new subsection 6(b) would require the Secretary of State to provide detailed explanations of his reasoning in arriving at his advice and guidance. The result would he to make the issuing of that guidance a cumbersome, bureaucratic and legalistic process. I do not want to see this, nor, I suggest, do your Lordships, the authorities or the executives.
The noble Lord has asked how I equate this with the rate support grant. Let me remind him that the strongest advocates of the present system of block grant and rate support grant would not claim that it is the simplest of things to follow or understand. Indeed, I see many delegations of people who require further explanation. I am sure the noble Lord would not want me to challenge him to give his interpretation of how the 62 components in the settlement are laid out and are there for all to see. However, I digress slightly only because the noble Lord asks how I say that this would be difficult when we have it in the rate support grant.
Having said that, let me hasten to add that I am by no means saying that the formula at present is other than a very fair one; but, frankly, it seeks to do different things. It seeks to take a finite sum of money and to divide it between some 430 authorities on the basis of equalisation taking into account needs and rateable values. With great respect to the noble Lord, we are really into two quite different areas. I understand the thrust of what he is saying and how he tries to make the same point; but he would have to concede to me on this one at least that the rate support grant formula, the block grant, is not too good an example to pray in aid.
I do not want to see the processes become more cumbersome and I know that that is not anyone's wish, least of all the noble Lord who moved the amendment, but we think that that would be the
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effect. We fear that the guidance on protected expenditure levels would become a more formal and less practically useful procedure if this were to happen. I understand your Lordships' earlier concern to know the basis on which the guidance figures are arrived at, and I made a statement about this on behalf of the Government at an earlier stage in your Lordships' House. However, this part this amendment would turn a relatively simple procedure for issuing advice and guidance into a procedure which was more detailed, time-consuming and, in the end, less helpful. Further, it would involve detailed comments from the Secretary of State on the proposals of the authority which would amount to an increased degree of interference in the democratic process which opponents and, indeed, some supporters of the Bill have been at pains to prevent.
Opponents of the Bill really cannot have it both ways. They have criticised the Bill's intention that, under Clause 4(5), the Secretary of State may indicate respects in which the plan would need to be altered, while asking under this amendment for the reasons for the guidance. I respectfully submit that those notions are somewhat contradictory. It is really all about balance. The Government believe that the balance in the Bill is right and that is why we are resisting this part of the amendment.
In the previous debate on this issue I gave at some length—and the reference is Hansard for Tuesday, 1st March, columns 1055 and 1056—a description of how the Secretary of State was to arrive at his guidance. I am sure your Lordships do not wish me to repeat all that again, but it is there for all to see and I refer your Lordships to it.
I should like to make one more point. The noble Lord, Lord McIntosh, referred to the words in the first part of the amendment and said they were indeed similar to RSG. I hope that I have covered that point. I think he has probably gathered by now that this is one subject upon which I would dearly like to expand at great length and quite off-the-cuff. I assure him that I deal with it almost every day of my working life.
I am sorry that I cannot be more helpful on this point. I recognise that this, like the previous amendment, is setting out to do something helpful in the working of the Bill, and I am not averse to that—far from it. But for the reasons given, I cannot accept the amendment.
Lord Underhill: My Lords, I support my noble friend in his amendment. The noble Lord, Lord Bellwin, has said that we cannot treat each area as being the same. I would like him to point out anything in this amendment which would suggest that we are not going to take account of the different characteristics and circumstances of each of the metropolitan areas. We have been making the point right the way through that it is the Minister, the Secretary of State, who cannot try to treat things as a matter of methodology; each one has to be treated differently. In any case, the amendment is saying that there should be a method of determining benefits in accordance with principles to be equally applied. It is the principles that we want to he the same. The principles determining what should be done in one area should be the same as regards another area.

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We are concerned with the principles and not the details. If the noble Lord says that this cannot be done, I presume that he is discounting the document which I have in my hand entitled Urban Public Transport Subsidies: An Economic Assessment of Value for Money—Technical Report. What is all that about, unless it is trying to determine a common model for all the authorities? The noble Lord said that the system must be flexible to take account of all local factors and circumstances. He also said the we must not be bureaucratic. The noble Lord kindly sent me the chronology of the planning process. This shows the bureaucratic nature of the planning process. It takes almost 12 months before one arrives at the ultimate determination.
At the Committee stage, during which the very lengthy amendment, of which this amendment is a considerably abbreviated version, was moved, my noble friend Lord Mishcon asked whether anything could be written into the Bill about a consultative procedure. In reply the Minister said that although he could give no assurance about this. he would consider the points made, consult his colleagues and find out exactly the current feeling. I think I am fair in commenting that in his reply the Minister has made no reference to that.
What are the views of the Secretary of State about writing into the Bill a consultation machinery? That is the question that my noble friend Lord Mishcon asked at the end of the last debate on the lengthy Amendment No. 22 during the Committee stage. I think that the House would like to know the current feeling on this. If the Government still have not made up their minds, I have not the slightest doubt that my noble friend Lord McIntosh will readily withdraw his amendment on the understanding that the Government are still prepared to consider writing some consultation machinery into the document.
There is nothing in the amendment which the Government cannot accept. It does not say that there should be the same details laid down for everyone—for the metropolitan authorities and for the GLC. We are merely concerned that the method and the principle should be the same. I cannot understand why the Secretary of State is not prepared to give a reasoned justification for taking certain decisions. I am certain that when the noble Lord. Lord Bellwin, was at Leeds he expected a Minister to tell him why he wanted certain changes made and why he was taking certain decisions.
I have seen quite a number of letters from the permanent official at the Department of Transport to authorities giving reasons why certain information must be given in this document. Why should this not be written into the Bill? If the Minister is not prepared to look at this aspect once again and see whether something can be written in, he will be creating a deliberate upset with local authorities which ought to be avoided. I hope that he will consider this before my noble friend replies.
Lord Bellwin: My Lords, by leave of the House, perhaps I may make a quick response. The noble Lord, Lord Underhill, knows that if one starts trying to write into a Bill a consultation process, where does it
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begin and where does it end? He is right when he says—and indeed, the noble Lord, Lord Sefton, made the point earlier and in my reply to him I did not respond to it—that it is very important that at the end of the day the relations with local authorities should be as good as possible. We certainly want that; no one wants it more than I. Anything that we can fairly do within the Bill, we will do. But to write in a consultation process is not a starter.
At times I have staggered through many Bills, if I can put it that way, and every time one talks about consultation the mind starts to boggle. Where do you start and where do you finish? One of the unhappy incidents in regard to this particular Bill is that at the time when the Government wanted consultation it was not readily forthcoming. Indeed, I am glad to say that the associations which have most contributed—not least the AMA—are now coming forward and therefore at the end of the day they, local government as a whole and the Bill will benefit.
Therefore, I am an absolute advocate of consultation. But that is vastly different from seeking to write in a Bill, chapter and verse, something that can be challenged on any word, on matters where you are talking to people to get advice. I do not think that that is a starter. I am sorry, but it is not something I can accept.
Lord McIntosh of Haringey: My Lords, I introduced this amendment in a very low key way, expressing a modicum of hope that the statements which the noble Lord, Lord Bellwin, made in Committee might have borne some fruit—that he might be prepared to go in for further consultation with the local authority associations; that he might recognise that there is a real difference between accepting that there should be common principles applying to all authorities and saying that every full-stop, comma, word and letter should be the same for all authorities; and that we might see some hope of progress or movement on the part of the Government.
I am sorry to say that, despite being invited to do so again by my noble friend, the noble Lord the Minister has made no progress whatever in that direction. He has given no understanding or indication that continuing negotiation might produce a better Bill. He said just now that we "might have a better We shall not get a better Bill if every amendment that is put forward is treated as a straightforward party political amendment by the Government—because it is certainly not being treated in that way by this side—and if the Government are determined—as they appear to be—that this Bill shall pass through this House without a single comma being changed and shall not go back to the other place. That is the truth of the matter. It does not matter what we say here now, the Government are determined not to have any changes, and no amount of reason will change that.
The emollient words of the Minister at the Committee stage have had no effect. I personally am sadly disappointed in the outcome of what I had thought were reasonable discussions. They may have been lengthy, but they were reasonable discussions at the Committee stage. I am disappointed that we should come to this stage now. However, I quite appreciate that it will not be helpful to continue to divide on every

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amendment before the House and, having no feeling whatever that we have been given any indications of progress, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Denham: My Lords, I think that this is probably a convenient moment to break for dinner and, therefore, I shall be moving that further consideration on Report be now adjourned. But before I do so, perhaps I could say that we shall not be starting reconsideration on Report before ten minutes to eight.
I beg to move that further consideration on Report be now adjourned.
Moved accordingly, and, on Question, Motion agreed to.

Marriage Bill [H.L.]
7.8 p.m.
Report received.
Clause 1 [Marriages of house-bound and detained persons in England and Wales]:
Lord Glenarthur Lord Glenarthur moved Amendment No. 1:
Page 2, line 9, leave out from ("section") to ("short") in line 11 and insert ("2, 4, 5, 35, 36 or 136 of the Mental Health Act 1983").
The noble Lord said: My Lords, in moving this amendment, it may also be convenient if I speak to Amendments Nos. 2, 4, 5, 6, 7 and 8. The House will be aware that consolidating legislation in the form of a Mental Health Bill is currently before Parliament. This Bill, if passed, will have the effect of re-enacting the provisions of the Mental Health Act 1959 and the Mental Health (Amendment) Act 1982, thus requiring revision of the references to both these Acts in the Marriage Bill before your Lordships this evening.
The position that faces us, therefore, is that if we leave this Bill in its present form it will have to be returned to your Lordships' House for amendment if the Mental Health Bill is approved in its present form. Normally this would be the proper course to follow but we are talking about a consolidation Bill which, by its nature, should be uncontroversial and I have therefore tried to anticipate what I hope would be the wish of your Lordships; namely, that by making the necessary technical amendments at this stage we can save having to reconsider the Bill for this purpose at a later date.
This then is the purpose of these technical amendments, if I may so describe them, on pages 2, 12 and 15 of the Bill. By substituting for references to the 1959 and 1982 Acts references to the 1983 Act, there is an assumption that the consolidation Bill will have effect before the Marriage Bill if and when enacted. This does not present a difficulty. The consolidation Bill should come into operation on 30th September 1983, or possibly on later dates for sections consolidated from provisions not themselves in force at present. If the provisions of the Marriage Bill become law, however, it is necessary to allow time for the general register office and the other administrations concerned to make appropriate arrangements and give guidance. I do not consider, therefore, that it
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will be reasonably practicable for the provisions to come into operation before the end of September.
I hope that your Lordships will see in these amendments an attempt in good faith by the Government to ease the burden on your Lordships' House and that the House will feel able to support them. The one other amendment in my noble friend's name, No. 6, to page 14, line 11, is that for the sake of drafting consistency in the Bill the words "of this section" would be more appropriate than the word "above". That is the sole purpose of this simple amendment. It is an amendment on which I shall not make any lengthy or impassioned plea on behalf of the Government, and I therefore beg to move.
Lord Mishcon: My Lords, the noble Lord the Minister has been most thoughtful in regard to the convenience of this House. From these Benches we certainly support the amendments he so lucidly explained.
On Question, amendment agreed to.
Lord Glenarthur Lord Glenarthur moved Amendment No. 2:
Page 2, line 16, lave out (" Part IV of the Mental Health Act 1959") and insert ("Part II of the Mental Health Act 1983").
On Question, amendment agreed to.
Schedule 1 [Amendment of Marriage Act 1949]:
The Lord Bishop of Derby The Lord Bishop of Derby moved Amendment No. 3:
Page 11, leave out lines 28 to 31 and insert ("either

(b) stating that in the opinion of the responsible authority the circumstances of the individual case are such as to require the marriage to he solemnized within the precincts of the establishment: or

(c) stating that the detained person has elected to have the marriage solemnized within the precincts of the establishment: or

(d) stating that in the opinion of the responsible authority there are no circumstances which require the marriage to be solemnized within the precincts of the establishment.").

The right reverend Prelate said: My Lords, at the end of my speech at the Committee stage of the Bill I mentioned bringing the matter back in some form or other at this particular stage. I have, of course, read most carefully the records of the debates both at Second Reading and at the Committee stage. It seems to me that the case made by me and others was not really answered on either of those occasions, and particularly the latter. The main point is that Her Majesty's Government, having had a Damascus Road experience through giving serious attention to Article 12 of the European Convention on Human Rights, have undergone a conversion even more complete than St. Paul's.
Marriage outside prison, if this Bill is passed unamended, is likely to be as impossible as is sin to the completely new man. Without this Bill—and in general it is a good Bill—marriage is not possible outside prison. Under this Bill it is unlikely to be possible outside prison. There is a place of worship in prison, yes, but it is not places of worship with which I am primarily concerned. It is giving prisoners and their spouses the opportunity of having their marriages outside prison and having relatives and friends

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present. Such weddings will not necessarily be in a church.
The demands on prison governors and staffs to provide escorts is a most important consideration, and none of us wants to add to their difficulties. But I wonder why the Government did not see the force of this consideration without the help of the European Convention on Human Rights. Legislation like this Bill, however, should not be passed to meet a situation which we all hope will be improved. We all look forward to some relieving of the strain on those responsible for the care of prisoners and to a reduction in their number altogether. Legislation is not quickly amended, and if this Bill is passed marriage inside prison will become the norm in the future. At least, that is the anxiety which many of us feel.
The intention of the amendment which I propose is to give prison governors real discretion, but it also does something to leave marriage outside prison as a live option, where special requirements of security do not obtain. There is no question here of demanding particular guarantees of the Government which they cannot possibly meet. The intention is to allow some freedom in the situation, with reasonable considerations brought to bear on the particular circumstances. Under paragraph (b) in the amendment the governor of a prison has unfettered authority in certain instances. Under (c) the detained person has real choice. Under (d) the governor leaves the situation open. It is with these diversities and the freedom they contain that I beg to move this amendment.
Lord Mishcon: My Lords, I am delighted to have my name associated with that of the right reverend Prelate. On one side indeed I might term this a holy alliance, and from my point of view, as I said, it is a privilege. As the right reverend Prelate has reminded us, we discussed this matter at great length on the last occasion when this Bill came before your Lordships. I am not going to quote from the Committee proceedings at this hour, but from all parts of the Committee there were sympathetic queries, and there was downright—or upright, in my view—support for the principle that it was wrong for the Bill at all events to give the appearance of setting down a new procedure—because new procedure it would be—by which prisoners would only have their marriages celebrated in prisons.
Reasons were given by the Government which had to be taken into account. As the right reverend Prelate again reminded us, there was a shortage of prison staff. There could be inconveniences suffered by other prisoners if a prisoner had to be escorted to a prison, and of course there were some cases where it would be quite impossible from the point of view of security to allow a ceremony to take place outside the prison, even with an escort. I have tried to take these considerations into account, and I am sure that it was quite clear from the right reverend Prelate's speech that he himself took them into account.
However, we were left with the feeling that it would be an ordinance going out that it must be the exception to the rule. Even where a person was suitable, from the point of view of his record and the question of security, for the marriage to take place outside the prison, if the
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Bill were enacted as it now stands, the prisoner's request might well normally be refused. If a prison governor allowed a few weddings to take place outside the prison, it might set a precedent which other prison governors might consider thoroughly undesirable.
There was another consideration that I ventured to bring before your Lordships at Committee stage; and I raised it, too, during the contribution that I tried to make on Second Reading. Where a marriage took place in prison, there would appear on the marriage certificate an identifiable address showing that the marriage had been solemnized in prison. The Minister told us that attempts were being made to see whether an address could be given on the certificate in such a way that, while it would not be misleading, it would to some extent conceal the place of solemnization of the marriage. Nevertheless, we were left feeling unhappy about the situation.
It has been pointed out to me that even before the new procedure of a marriage in prison, the address of a prisoner would be given on a marriage certificate. That is not a complete answer to our concern. The noble Lord the Minister, in a very courteous letter that he sent to me and I believe to the right reverend Prelate, too, seemed to think that it was a complete answer. Of course it is not. No one would necessarily raise a query regarding an address which the father might have had at a certain time. However it would be very peculiar if the place of residence (even if stated in a slightly obscure way) turned out to be the same as the address given on the certificate for the solemnization of the marriage, while everybody knew that usually solemnization would be at a registry office or a place of worship. So in my view it was not a complete answer to say that the situation would not be changed because of the new procedure.
I mention this point because it might form a quite proper, understandable, consideration in a prisoner's mind in asking for his marriage to be solemnized outside the prison. The address given on the marriage certificate could cast on the whole of his future, and on a family yet unborn, a shame which temporarily he had had to face.
I ask your Lordships to consider the position where circumstances are suitable and there are not considerations of paucity of prison staff, and where, as the right reverend Prelate put it, the prisoner has opted for a marriage outside the prison, and his conduct, character and record are such that no security risk is thought to arise. We want to be sure that we do not allow the Bill to pass in such form that the prisoner's request, made in those circumstances, would be unlikely to be granted. I should like to see the amendment passed, though I can see difficulty in some of its wording. However, on the basis of the principle of the amendment being accepted, I wonder whether the Minister can help us, having considered the previous speeches, as well as those made this evening on the point. I should then be able to decide how to deal with the amendment. I wonder whether the Minister can assure us that a directive will be issued to prison governors, stating that where there are not difficulties over shortage of staff, and security is apparently all right, governors are expected to agree to marriages taking place outside prison. Having said that, I await—and perhaps the right reverend Prelate

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awaits—not only the contribution that any of your Lordships might wish to make to the debate, but also, and in particular, the reply by the noble Lord the Minister.
7.26 p.m.
Lord Glenarthur: My Lords, the right reverend Prelate and the noble Lord have again raised a point which I know causes them very deep concern. Not for a minute should I like them to think that the Government do not share that concern. However, though I have listened with great sympathy to the arguments that they have put forward this evening and previously, I fear that I cannot accept the amendment, and I shall explain why. But before doing so I wish to detain your Lordships for a few minutes in order to remind you why the Government brought forward the provisions in the Bill, which would enable marriages to take place in prison.
Until a few years ago prisoners were not allowed out of the establishment to marry other than in the most exceptional circumstances. However, the European Commission of Human Rights recently considered two cases which raised the question of how far prisoners could exercise the right guaranteed by the convention that those of marriageable age should be able to marry. The commission concluded that, although the mere fact of detention clearly prevented a prisoner from exercising the convention rights fully, he had the right to form the legally binding association of marriage.
In the light of the commission's views, both the last Government and this one introduced administrative changes, and the restrictions on the circumstances in which prisoners might marry have been gradually reduced. As your Lordships will know, at present marriages cannot take place within a prison, and in making the changes the Government have been mindful of the quite real burden that escorting prisoners to ceremonies outside could place on a prison service which, your Lordships will need no reminding, is already under very serious pressure. Sometimes the burden falls also on the police, who have to make extra security arrangements; and there is, I am afraid, a risk that a prisoner who is taken to a wedding ceremony will use the occasion to abscond, as has happened.
In order to ensure that the burden does not become unmanageable, the Government have had to maintain significant restrictions on the circumstances in which prisoners may be taken outside to marry. Accordingly, we have introduced the provisions of the present Bill to be able to give the right to marry to a much greater proportion of the prison population, thus enabling us to meet our international obligations, as do other European countries, by permitting marriages inside prison. Without that facility there is a grave risk that the burden of escorting all of those who wish to take advantage of the right to an outside ceremony would mean that we should not be able to grant the right of marriage and would not be able to meet our international obligations.
At the Committee stage I described the drastic effect that providing an escort so that one prisoner can be taken out to a wedding can have on the very basic essentials of life for a large number of other prisoners.
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The right reverend Prelate and the noble Lord have suggested that these difficulties could be overcome by giving prisoners who are to be married the option of a ceremony outside the prison. The Government have thought about this very carefully, but we do not think that it would answer the problem. As the right reverend Prelate has said more than once, the proper place for a wedding is away from the prison environment. The Government share that view. I think it would be surprising if the great majority of prisoners who wish to marry did not prefer outside ceremonies. But, as it would not be realistic to expect an individual prisoner to take account of the effect that his wedding would have on the life of others when he decided whether he would wish to opt for a ceremony away from the prison, we should almost certainly find that all prisoners opted for outside weddings, thus defeating the purpose of the Bill.
I should not like your Lordships to think that, without this amendment, prisoners will not be allowed to marry outside the establishment. I should like to say again that the Government entirely share the view that an outside ceremony should be allowed whenever possible. If the prisoner concerned can be given temporary release without escort, there is obviously no difficulty in achieving this ideal; otherwise, I can assure your Lordships that prison governors will be given the flexibility to consider sympathetically every application to be taken out to a wedding. Circumstances vary considerably between different establishments. If the governor can provide an escort so that the prisoner can be married away from the establishment without seriously disadvantaging the rest of the population, there will be no reason why he should not do so.
My Lords, in view of the anxiety that has been expressed by the right reverend Prelate and by the noble Lord, Lord Mishcon, I am glad to give an undertaking that, as the noble Lord, Lord Mishcon, asked, an instruction to this effect will be issued to prison governors when the Bill is enacted. I hope that that relieves him. I hope that, in view of this assurance, the right reverend Prelate will feel able to withdraw his amendment.
The Lord Bishop of Derby: My Lords, I am grateful to the noble Lord the Minister for this reply and this undertaking. I am grateful to him for giving us so much reassurance about the attitude of the Government—this is a great help—and also for the way in which he dealt personally with our considerations at the different stages of this discussion. It seems to me that issuing some directive to governors is likely to be a much more effective way of having our concerns dealt with than trying to express them in legislation. That kind of approach enables the much more personal and human considerations to be weighed up; whereas anything that is written into a Bill tends to be very precise and restrictive. In view of the undertaking that the noble Lord has given, I, for my part, am happy to withdraw the amendment.
Lord Mishcon: My Lords, before the right reverend Prelate sits down, I wonder whether I may be allowed to express my personal gratitude to the noble Lord the Minister, as so eloquently expressed by the right reverend Prelate, for all the consideration that has

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been given and for the concession now made, which is much appreciated.
Amendment, by leave, withdrawn.
Lord Glenarthur Lord Glenarthur moved Amendments Nos. 4 to 8:
Page 12, line 21, leave out ("Part IV of the Mental Health Act 1959") and insert ("Part II of the Mental Health Act 1983").
Page 12, line 23, leave out ("59(1)") and insert ("145(1)").
Page 14, line 11, leave out ("above") and insert ("of this section").
Page 15, line 6, leave out from ("section") to ("(short") in line 8 and insert ("2, 4, 5, 35, 36 or 136 of the Mental Health Act 1983").
Page 15, line 13, leave out ("Part IV of the Mental Health Act 1959") and insert ("Part II of the Mental Health Act 1983.").
The noble Lord said: My Lords, I have spoken to Amendment No. 4 with Amendment No. 1. I beg to move Amendments Nos. 4 to 8 inclusive.
On Question, amendments agreed to.
Lord Glenarthur: My Lords, I beg to move that the House be now adjourned during pleasure until ten minutes to eight.
Moved accordingly, and, on Question, Motion agreed to.
[The Sitting was suspended from 7.35 until 7.50 p.m.].

Transport Bill
Further considered on Report.
Clause 4 [Approval of financial plans and determination of revenue grants]:
Lord Underhill Lord Underhill moved Amendment No. 15:
Page 4, line 26, leave out ("have particular regard") and insert ("be satisfied that they and the Executive have had proper regard to such matters as they consider to be relevant and they shall include among such matters the general duty of the Authority and the Executive under section 9(3) of the Act of 1968 or sections 1 and 5(1) of the Act of 1969, as the case may be and").
The noble Lord said: My Lords, I think it will be for the convenience of the House if in moving Amendment No. 15 I speak also on Amendments Nos. 17, 19 and 20, although I should like to emphasise that Amendments Nos. 19 and 20 could each stand on their own. I make that statement right at the outset because if the Government feel disposed to accept Amendments Nos. 19 or 20 they do not have to accept the others, whereas Amendments No. 15 and 17 are to be considered together.
Clause 4, with which we are now concerned, deals with the approval of financial plans and the determination of revenue grants. Subsection (3), which involves the making of revenue grants, states:
"the Authority shall have particular regard to"
the matters listed in the three paragraphs (a), (b) and (c). The purpose of the four amendments is to vary the matters to which the authority must have regard in approving a plan. The three paragraphs in subsection (3) contain no reference whatever to the general duty of both the authority and the executive to which they must have regard when approving a plan. On previous amendments we have debated the general duty of the authority under the 1968 and 1969 Acts. However,
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that point is still relevant in discussing this clause. That is why we have this amendment before your Lordships this evening.
The first amendment provides that the authority must be satisfied that it and the executive have had proper regard to those duties placed on them by the 1968 and 1969 Acts. That is rather important. The third amendment seeks to insert an additional subsection, subsection (7), and this will provide that when the Secretary of State has required a management review to be carried out, in accordance with the provisions of Clause 7, the authority or the executive shall inform the Secretary of State of the estimated cost of that review and that the Secretary of State shall take that estimated cost into account when he gives guidance for the following year as to the protected level of revenue grant for that year.
I should like to thank the noble Lord, Lord Lucas of Chilworth, for the letter he sent to my noble friend Lord Mishcon, of which he kindly sent me a copy, which set out the different alternative steps which may be taken in meeting the costs of the review, but I should like to know whether the Minister feels it would be good to put in this amendment because it will ensure that the cost will be met in the PEL for the following year.
The final amendment will provide that, before giving guidance or advice under the Bill, the Secretary of State shall consult the relevant local authority associations and also the authorities and executives with whom consultation appears desirable. In the light of what the noble Lord, Lord Bellwin, said on a previous amendment, I must emphasise that the wording of this final paragraph is taken, except for the nine opening words, from Section 8(2) of the Local Government Finance Act 1982. If I read that, your Lordships will see the relevance of that subsection to this amendment. Section 8(2) of the Act says:
"Any guidance issued for the purpose of subsection (6)(c) above shall be framed by reference to principles applicable to all local authorities: and before issuing any guidance for those purposes the Secretary of State shall consult such associations of local authorities as appear to him to be concerned and any local authority with whom consultation appears to him to be desirable".
Therefore, on this occasion, I am sure that the Minister will not say that he is bringing forward something new, because the present Government introduced the Local Government Finance Act 1982. It was introduced less than a year ago. Therefore, we are not bringing forward a new feature and there would appear to be no reason, whatever the Government may feel they wish to do with the other three amendments, why that one in particular should not be accepted. I beg to move.
Lord Bellwin: My Lords, this amendment would require the authorities when considering executives' plans not only to have regard to the matters listed in Clause 4(3)(a) to (c), but also to have regard to their and the executives' general duties under Section 9(3) of the 1968 Act and Section 105(1) of the 1969 Act.
Once again I have to question the extent to which these amendments are necessary. These provisions have not been repealed by the Bill. The general duties still apply and authorities and executives are still required to have regard to them when carrying out

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their duties under the Bill, particularly when preparing their plan. Indeed, this is emphasised by the requirement imposed on the Secretary of State under Clause 4(6) when giving guidance to authorities to have regard to these general duties. Therefore, for these reasons I hope the noble Lord, Lord Underhill, will, on reflection, agree that there is no need for the amendments.
The fact is, if I may go further, that executives and authorities will continue to be under the general duties and the question is: is there any need—and we think there is not—simply for the Bill to remind them of the fact? On the other hand, because the Secretary of State is not himself under these duties there is a need to remind him to take account of them when giving his guidance, as Clause 4(6) does.
I very much understand the concern which the noble Lord, Lord Underhill, and others have expressed that the costs of a management review under Clause 7 should be included in the Secretary of State's guidance figure. We had a similar discussion in Committee, although the intention of the amendment then under discussion was to exclude the costs of such a review from the PEL. Nonetheless, the intention of this and the previous amendment is clear: that the executive should not in any way be penalised financially because the Secretary of State has required it to undertake a review. I do not believe that there is a need to make a special provision in the Bill on this matter. I assure your Lordships that it will be the normal practice of the Secretary of State to consider whether a review is necessary when he considers the authority's plan. It is at this stage that he will expect to have the information on which to judge whether a review is required. If a review is then considered to be necessary he will call for it when setting his guidance, and I assure your Lordships that he will take into account any costs which fall on the executive as a result when setting his guidance.
My noble friend Lord Lucas of Chilworth has indeed written to the noble Lord, Lord Mishcon, with a copy to the noble Lord, Lord Underhill, giving this same assurance following our debate in Committee. In the light of what I consider to be a positive assurance—I am sure the noble Lord will tell me it is not the same as having it written into the Bill, but nevertheless it is a positive assurance—I hope that the noble Lord might feel, as I do, that the amendment is not necessary.
I think that the assurance I have given is positive and helpful. There is no intention to allow an authority required by the Secretary of State to carry out a review to force an executive into a review halfway through a year after the plans, the guidance and the final determination of grant by the authority have been set. I think that my assurance will be of value to the authorities and the executives, and of more value than the amendment because the costs of any review will be taken into account when setting the PEL for the same year, whereas under the amendment the executive would not receive financial cover for the review until the next year.
Under this amendment the authorities and executives would still have to find the funds to cover the cost of the review to tide them over until the next
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year's guidance is set. As I promised during our lengthy discussion in Committee on the subject of consultation, I have given careful thought to the points made then by several noble Lords. The amendment now tabled by the noble Lord, Lord Underhill, concentrates on the main issues which were highlighted in our previous debate. The question now is: should the Secretary of State be required to consult with local authority associations, executives and authorities before giving his initial advice or before he sets the PELs?
Much as I respect the principles involved in requiring the Secretary of State to consult the associations and individual executives and authorities, I must, I fear, come back to the two principal reasons cited for resisting the previous amendments. First they would considerably delay the announcement of the Secretary of State's guidance and thereby hinder the authorities and executives in their effective forward planning. There would be uncertainty while the consultations took place. That cannot be a good thing.
Secondly, any consultations with the local authority associations are a matter for the authority. It is for them to decide who should be consulted over their proposals. The amendments would seriously undermine the responsibilities and accountability of the authorities for their plans and the provision of local public transport, if the Secretary of State was required, quite independently, to consult local authority associations on an authority's plan. And if I were a member of the authority I frankly would resent the Secretary of State consulting the association about my authority's individual problems. This would, as I said in Committee, seriously undermine the responsibilities and accountability of each individual authority over planning and provision of local transport. I am perfectly sure this is what the noble Lord opposite really wants.
Before sitting down, I will just add that there may be matters related to the Bill on which it will be desirable for the Secretary of State to consult. As I have said before, on three occasions since the legislation was announced, we have tried to do just that—first seeking views on the broad structure of the proposals and, more recently, seeking views on the details, including the cost benefit model. But the Secretary of State can of course consult on such matters without specific provision in the Bill.
We have had throughout our discussions on this Bill frequent allegations of attacks on local democracy; yet I respectfully suggest that this amendment tends to do just that and, as I say, I do not think it is what the noble Lords opposite really want. I wonder, when they consider carefully what I have said, whether they would not be inclined to agree with me that whether or not that is the intention of the amendment, that would be its effect.
8.4 p.m.
Lord McIntosh of Haringey: My Lords, I wish to refer to Amendment No. 20, which my noble friend is asking your Lordships to consider together with No. 15. I should like to refer to what the noble Lord the Minister has said in reply on this. He said that it would be an infringement of the rights of an individual local authority if the Secretary of State were to consult the

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association of local authorities before giving advice or guidance. That could conceivably be the case if the intention of the amendment were that the Secretary of State should consult the association about the advice or guidance given to a single authority. But that surely is not the intention of the amendment or what the amendment actually says.
The advice or guidance is given to the passenger transport authorities as a whole. It is specified as between one passenger transport authority and another, but I have assumed all the way through the discussion on the Bill that the Secretary of State was going to announce a total amount of money which he considered was appropriate for passenger transport authorities in metropolitan authorities to have as revenue grant to executives for a year and the division of that total amount of money as between different authorities. I never understood that there was going to be separate advice or guidance—in March to the GLC, in May to the West Midlands County Council, or whatever it may be. There is no infringement at all of the rights of an individual authority if the local authority association is consulted, as is proposed in the amendment, on the total amount of money which is to be the permitted expenditure level for revenue grants. Have I misunderstood the noble Lord?
Lord Bellwin: My Lords, I think the noble Lord has misunderstood me, but if he wishes to continue I can assure him that I am listening very carefully to what he is saying.
Lord McIntosh of Haringey: My Lords, that was the point I wished to raise.
Lord Underhill: My Lords, I continue to be disappointed and, for the record, when one looks at Amendments Nos. 15 and 17, we are not really asking for anything revolutionary there. All we are proposing is to take out the words "have particular regard" and to insert wording so that the authority must be satisfied that they and the executive
"have had proper regard to such matters as they consider to he relevant and they shall include among such matters"
a general duty under the 1968 or 1969 Acts. We are not removing the three sub-paragraphs (a), (b) and (c) which the Government regard as important. They are still there, and therefore I cannot understand why this is resisted.
On Amendment No. 19 the Minister said that the Secretary of State will take this cost into account. It depends what the amendment asks for—that when the estimated cost of the review is given the Secretary of State shall take that estimated cost into account. I readily accept what the Minister says about the positive assurance being given, which will be of value. But the present Secretary of State may not be there for long; the present Government may not be there for long; but the Bill will be there. If it is the intention of the present Secretary of State that he will take into account the estimated cost of review, then surely we ought to put it into the Bill so as to ensure that another Secretary of State adheres to that. It seems to me such plain logical common sense that I shall be almost lost for words if I cannot get it accepted by the Government.
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When we come to No. 20, I am even more mystified as to why that cannot be accepted. I know that the noble Lord is very genuine when he says he respects the principle; but when I respect a principle I like to act upon it and I should like the Minister himself to act upon this. I do not see how this can delay the chronological process of planning for the whole of this procedure, which we have heard before would undermine it.
He says that anyone who wished to support that would resent the local authorities undermining the authority of their own organisation, but I must remind noble Lords opposite and the Minister of the section I read out from the Local Government Finance Act 1982, where the precise words that we want to put in under Amendment No. 20 are used in subsection (2) of Section 8 of that Act. I would suggest to the Minister that he knows where this guidance was derived from because Section 6 deals with the making of the amount of block grant payable to the authority. What is the difference between having consultations with the associations and with the authority concerned on the question of block grant and asking that it should go in on the question of guidance and advice dealing with PEL under this Transport Bill?
I cannot see, if the Minister cannot accept the other one, why he cannot accept No. 20. Even if he does not like the wording of it, that wording comes, as I say, from the 1982 Act; and if it is good enough for that Act why is it not good enough for the 1983 Transport Act which is doing the same thing? I would ask that if the Minister cannot accept the other three he would at least give an undertaking to look again at No. 20 and, before Third Reading, let us know what the reactions of his colleagues are.
What the Government thought fit to put in the 1982 Act they do not think is fit to be put into this Bill. There can be no reason why it should not be done—unless, of course, the Government do not want to see the slightest amendment to this measure, because there could be some hiccups. But there need be no hiccups so far as your Lordships' House is concerned because the Minister, with his colleagues, is in charge of the timetable; they could make us sit up all night, if they wanted to, in order to get the Bill through. Therefore I see no reason why Amendment No. 20 should not be accepted—I look forward to hearing the Minister's observations on that—even if he cannot accept the other amendments.
Lord Bellwin: My Lords, with regard to giving guidance, there is not a division of a total sum of money in the circular; rather, there will be a letter to each authority setting out the PEL and giving other indications. It has not yet been decided what will be the form of the initial advice for 1984–85. An analogy with block grant, as I said earlier when we were discussing rate support grant, is not really applicable. It is true that there is an in-depth and long-running consultation period with the local authority associations on rate support grant which concerns block grant as well, and that, as the noble Lord will be aware, is quite an involved procedure, so I do not see the analogy with what we are discussing here.
Regarding Amendment No. 20, that is designed to require the Secretary of State to consult with the

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associations, executives and authorities first, before he gives advice to executives under Clause 3(5)—that is, as to the initial guidance and on methodology—and, secondly, before he informs the authorities of the PEL under Clause 4(5). I submit that the amendment would considerably circumscribe the Secretary of State's power to give advice and guidance. The consultation procedures envisaged by the amendment would seriously delay the announcement of both the intitial and final guidance figures, which in turn would adversely affect any effective forward planning by the authorities. The proposed consultations with the local authority associations are, in reality, properly matters for the authorities to undertake, if they believe them to be necessary. Again, it seems that what we felt to be not necessary, noble Lords opposite feel is very important—almost fundamental, it would seem—from the way they have put their case. It is clear that what seems simple is not simple and that there is a real difference between us on this issue. I regret to say that, but it seems to be the case.
Lord Underhill: The Minister always sounds plausible, my Lords, but we have still not received an answer to the question why, if, in relation to block grant—in the process of block grant, far larger amounts are involved (the whole question of the financing of a local authority is involved in the block grant) whereas we are concerned here with just one part of the financing—it was good enough and there was no possibility of delay, it should not be appropriate here. Apart, therefore, from the fact that such a provision is in the 1982 Act, one would have thought that here was an issue which was so plain and simple that our views would be taken into account. This is not a question of simply pacifying the Opposition in your Lordships' House but a way of showing that there is concern for the situation of local authorities.
I am extremely tempted to divide the House on the amendment, but at this hour on a Thursday I will not do so. Nevertheless, I hope the Minister will read what we have said—I will certainly read what he said—and accept that if the plainest piece of common sense will not under any circumstances be accepted by the Government, we might as well finish the Report stage now. I am not asking the Government to accept everything we propose, but if our most logical arguments are to be blocked, even though what we propose has been incorporated in measures within the last 12 months, this Report stage will become pretty useless. Having said that, I beg leave to withdraw the amendment.
Amendment, by leave,withdrawn.
8.15 p.m.
Lord Underhill Lord Underhill moved Amendment No. 16:
Page 4, line 26, leave out ("have particular regard to") and insert ("include among the matters to which they shall have particular regard").
The noble Lord said: We battle on, my Lords, and we might strike fertile ground sooner or later. Subsection (3) provides that when determining a plan which would involve an authority making a grant, the authority shall have regard to the three items listed in
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paragaphs (a), (b) and (c). In Committee a similar amendment was tabled, but it proposed to leave out the phrase, "have particular regard to" the three points and replace it with,
"include among the matters to which they shall have regard".
The Minister said on that occasion that the items in (a), (b) and (c) were so important that the authorities should pay special regard to them. He added that by removing "have particular regard to", the amendment we then moved would weaken the provision and authorities would be free to give matters of this sort very low importance. He said repeatedly that the emphasis was on the word "particular", though he agreed to look further at what was Amendment No. 27, which would have provided that regard should be paid to the general duty as specified in the Acts of 1968 and 1969. Perhaps we may be told the Minister's reaction to that now.
Today's amendment would retain the word "particular" but in a context which, I feel certain, the Minister will be willing to accept. The amendment leaves open the items to which the authority shall "have particular regard", including the three items mentioned in (a), (b) and (c). We are, therefore, trying to leave the position open and not be so restrictive as the Minister thought we were being in Committee. I beg to move.
Lord Bellwin: My Lords, following our discussion in Committee I have, as I promised my noble friend Lord Campbell of Alloway and the noble Lord, Lord Mishcon, looked again at the wording of Clause 4(3). It might be helpful if I began by reminding your Lordships of the purpose of the subsection. It sets out the matters to which the authority is to have particular regard in assessing the executive's plan. These are: first, the cost of provision of services and facilities, and the level of demand and benefit to users; secondly, any advice given by the Secretary of State to the executive on the appropriate amount of revenue support, on methods of determining benefits derived from revenue support, on the form and content of the plan and on the methods of determining costs, levels of demand and benefits to potential users; and, thirdly, the need to achieve a proper balance between the interests of ratepayers and users.
These are vitally important issues, and we are concerned that authorities should pay special attention to them and that they do not in any way get overlooked when authorities are assessing the proposals in the plan. Authorities are, of course, free to look at whatever other issues they wish, and I recall our debate on the word "particular". I am glad to see that the noble Lord, Lord Underhill, has accepted the need to put some stress on the points listed in this subsection and, in his new amendment, has retained the word "particular". But I am afraid that there still remains a significant difference between the text of the Bill, which says the authority must have particular regard to three specific issues, and the amendment, which says that included among the matters to which the authority must have particular regard are three issues. The amendment would very much weaken the stress which we wish to place on those three specific points. There is, of course, nothing whatever to prevent the authority having regard to other issues if

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they wish to do so. But we are concerned that particular emphasis should be given to the three issues listed; and that is why I have difficulty with the amendment. But there is nothing to prevent authorities from having regard to such other issues as they feel are appropriate. I do not know how the noble Lord, Lord Underhill, and I can differ about that.
Lord Underhill: My Lords, I have one difference with the Minister about what the ultimate effect is on the Secretary of State when he gives his guidance. In the amendment we are saying that, instead of having particular regard only to the three items mentioned, there are other matters to which particular regard should be paid. The Minister says that there is nothing to prevent an authority from having regard to other matters. Before Third Reading we shall consider whether or not to move an amendment which refers to having particular regard to these three points, notwithstanding other points to which particular regard can be paid. We want to be assured that when regard is given by the authority or executive to other matters, neither this nor a future Secretary of State will be able to say that these are not matters to which particular regard can be paid and that he is going to knock them out of the plan. The Minister may say that although they cannot be knocked out of the plan the Secretary of State will advise the authority or the executive to knock them out, and that if they do not it will affect his decision on guidance.
One wants to remove the atmosphere of suspicion which has been built up. I am certain that the metropolitan authorities want that suspicion to be removed. The more the Government resist simple amendments of this kind and do not come forward with an alternative form of words which would go some way towards adjusting the situation, the longer that suspicion will remain. However, I shall read what the Minister has said. I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 17 not moved.]
Lord Underhill Lord Underhill moved Amendment No. 18:
Page 5, line 15, leave out ("have regard to") and insert ("if requested to do so by the Authority or the Executive take account of information provided by them concerning").
The noble Lord said: This amendment relates to Clause 4. Subsection (6) sets out the matters by reference to which the Secretary of State shall give guidance. The last few lines of subsection (6) read:
"In giving the guidance the Secretary of State shall have regard to the general duty of the Authority and the Executive under Section 9(3) of the Act of 1968 or Sections 1 and 5(1) of the Act of 1969, as the case may be".
The Secretary of State cannot comply with his obligation to have regard to the general duties of the authority or the executive without investigating the needs of the area and the other matters set out in those two Acts. Clause 4(5) sets out an extensive range of matters about which guidance can be given. There are powers to call for information under Clause 6. The existing wording of Clause 4(6) could be used in a way which subordinated the local decision-making bodies to the Secretary of State's guidance. I am certain the
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Minister will agree that this is undesirable. There has been criticism of it at various stages of the Bill. We do not want local decisions always to be subordinated to the Secretary of State's guidance.
The Bill changes the position so that, if requested by the authority or the executive, the Secretary of State shall take account of information provided by them concerning the general duties under the two Acts. This is a simple matter. If one looks carefully at the wording of the amendment, we leave out "have regard to" and insert,
"if requested to do so by the Authority or the Executive take account of information provided by them concerning".
the point contained in the subsection. I beg to move.
Lord Bellwin: My Lords, the general duties of the authority and the executive, set out in the 1968 and 1969 Acts, are very important. It is right that when the Secretary of State is considering his guidance he should have a specific remit to take account of these general duties. I am sure that the noble Lord, Lord Underhill, and those noble Lords who sit opposite would have criticised the Government very strongly had the Government suggested that the Secretary of State should ignore or override these general duties in setting the PEL. Yet here noble Lords opposite seem to be saying that one should not take into account the general duty unless the authority or executive specifically request it and that even then one should take account only of what information they give about the duty. If that is not so, the noble Lord, Lord Underhill, will tell me. However, this seems to me to be very confused.
The Secretary of State must take an overall view of the general duty. He would be open to criticism if he did not do so. As the Bill stands, the Bill requires the Secretary of State to have regard to the general duty of the authority and the executive. There is nothing to prevent the authority or the executive from drawing the Secretary of State's attention to any particular point that they wish to make. With this in mind, again rather like the last amendment, it would be simple to say that we shall read carefully what has been said and see if there is sufficient merit in it for us to make what seems, on the face of it, to be a simple adjustment. But surely the noble Lord, Lord Underhill, must in turn take heed of what I have just said, which is absolutely valid. One would need to be convinced before taking what, on the face of it, seems to be an unremarkable step by way of an amendment.
Lord Underhill: My Lords, once again we meet a brick wall. The amendments which we are putting forward have been considered by the representative body of the bodies which are affected by the Bill. They are troubled by the provisions in the Bill and want assurances. Many of the amendments are directed towards that end, but once again the Minister, speaking on behalf of the Government, is definite in resisting this amendment. Again, therefore, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendments Nos. 19 and 20 not moved.]
Clause 5 [Payment of revenue grants]:
8.28 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 21:
Page 5, line 19, leave out subsection (1) and insert—
(" (1) Subject to subsection (1A) below, an Authority shall not in any year make any revenue grant to an Executive except in accordance with a determination made by the Authority under section 4(1) above.
(1A) An Authority may in any year make a revenue grant or grants to an Executive by way of increase over the amount of revenue grant determined under section 4(1) above at such time or times as they think fit having regard to their duties under this Act, the Act of 1968 or the Act of 1969 and to circumstances not provided for in a plan prepared under section 3 above; subject to such circumstances being agreed between the Authority and the Executive as being circumstances of an emergency nature.")
The noble Lords said: My Lords, by leave of my noble friend, I beg to move Amendment No. 21. This amendment, in a wider form, at the Committee stage drew great rage—or, rather, I may not use that word, may I?—so let me say indignation from the Government Benches when it was suggested that it was opening the door to all sorts of financial irresponsibility even to admit the possibility that there might be emergencies which would require financing in between the annual determinaion of revenue grant. When I suggested, moving Amendment No. 35 at that time, that it was not the most businesslike procedure to force an executive to borrow to meet genuine emergencies such as the effects of bad weather in the winter, the noble Lord, Lord Bellwin, described the amendment as an incitement to deficit financing and said that it would open the possibility of financing proposals not provided for in the plan. This amendment crawls back on its hands and knees in an attempt to convince the Government that when we spoke about genuine emergencies we meant genuine emergencies and were not intending to ride roughshod over the intentions of the Bill—much though, in other ways, we should like to do so.
Therefore, the amendment which I am moving refers specifically to "circumstances being agreed between the Authority and the Executive as being circumstances of an emergency nature." My assurances, and those of my noble friends, to the Government in Committee that that was what was intended cut no ice whatsoever. It cannot be said now that any executive or authority will declare a genuine emergency without due reason. It would be an admission of bad management and of bad financial control. People do not do that kind of thing unless they must. The noble Lord the Minister suggested in Committee, at col. 1077 of Hansard for 1st March, that under those circumstances:
"Such a deficit could be covered either by the executive borrowing on the open market or from the authority by the unplanned use of reserves,"
The problem with that answer is that when this Bill is enacted, there will be less scope for a passenger transport executive to make emergency financial arrangements than there is for any other local authority service. In other local authority services it is recognised that there are cases—for example, national wage settlements which cannot be foreseen, bad weather, and so on—for which an authority keeps contingency reserves and where the possibility of virement still exists. Those possibilities, as I
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understand it, are not permitted to a passenger transport executive. Instead, under those circumstances, the passenger transport executive is required to borrow—as the noble Lord the Minister said—on the open market or to make an unplanned use of its own reserves; note, my Lords, the executive's reserves and not the reserves of the authority as a whole.
In the wording we have now, there is no intention to weaken the financial control of the Secretary of State over the authority or of the authority over the executive. What is intended is to have a more businesslike recognition of the kind of emergencies which occur in the best enterprises and which ought not to be provided for either by borrowing on the open market or by the use of unplanned reserves. They ought to be treated in the same way as other emergencies arising in local authority work. I beg to move.
Lord Bellwin: My Lords, I recall our interesting discussion in Committee on a similar, albeit wider, amendment. Then, the noble Lords, Lord McIntosh and Lord Sefton of Garston, eloquently put the case for the authority to be able to make more than one grant determination in the year. We felt then that we had to resist because this struck at the heart of the Bill. We have here basically similar amendments which allow for an authority to pay additional grant where the authority and executive consider that this is necessary because of circumstances of an emergency nature.
I made the point in Committee, as the noble Lord, Lord McIntosh, fairly said, that any deficit that arose because of an emergency could be covered either by the executive borrowing on the open market, from the authority or by the unplanned use of reserves. Such a deficit could then be made good in the following year's plan by making an appropriate adjustment to the amount of revenue grant provided by raising fares, or by the planned use of reserves which would then, by virtue of Clause 2(3), relieve the executive from the duty to break even so far as the deficit was covered by that planned use of reserves.
Let me stress again that the executive are only required to break even "so far as practicable"—and this is a fundamental response to this particular point. If because of an emergency it was completely impracticable to break even, then this will provide the flexibility for which your Lordships have pressed. This flexibility applies both to the year in which the deficit first arose and also to the next following year—during which the deficit should, so far as practicable, be made good. Let me assure your Lordships again that there are remedies available to executives to cover unforeseen circumstances arising during the year without the need for increasing grant in that year.
I appreciate that these amendments are less far-reaching than that previously tabled, and I have listened with care, as I hope I always do, to that which the noble Lord has said in support of them. But again, I have to say that this amendment—unlike the previous two—really does strike at the heart of the Bill and would provide a loophole which I am sure some may wish to exploit. There is no definition of
"… circumstances of an emergency nature."

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Indeed, I totally accept that it would be impossible to define—and the impossibility of defining it strengthens the Government's objection to this amendment. The Bill makes fully adequate provision for flexibility in the event of an emergency, and surely that is what the noble Lords, Lord McIntosh and Lord Underhill, are seeking to achieve. If I can assure them, as I do again, that it does achieve that which they are seeking, perhaps they will feel happier about withdrawing this amendment.
Lord Sefton of Garston: I rather suspect that, if this Bill had been considered for a longer period and in more detail in another place, the two opposing sides—if I may put it that way—would have been able to reach an accommodation in the form of an amendment. On one side, we have the executive and the authority saying that an emergency should be tackled immediately and that one should not have to go to the money market and have interest levied on the money borrowed to help in an emergency. However, good management would say that one should do that in agreement with the authority and the executive, so that it is not carried on.
If an emergency occurred in Merseyside, say, between the two modes of transport used for crossing the river, and there was a long industrial dispute, it would throw a tremendous burden on the other form of transport. If, as the noble Lord the Minister said, the local authority considered that to be an emergency and that it needed more money because the services had already been cut to a minimum under this Bill, and that it was not right to call in service from elsewhere in order to deal with that particular emergency, the local authority would have to go to the money market to borrow money. That may lead to an objection; it may also provide the trade union concerned in the strike with a good reason to go to the courts and dispute the ability of the local authority to accede to the PEL in this particular emergency. Again, we shall be into legislation because it may happen that the authority will spend money over and above the PEL and therefore give the trade union the right to go to the courts.
The Government for their part say there is a difficulty in establishing that which is
"… of an emergency nature."
I agree that there is a difficulty in defining that. But just assume that the Secretary of State could agree on what constituted matters of an emergency nature. The other side could be accompanied by writing into this amendment a requirement that the
"… circumstances of an emergency nature"
must also be agreed by the Secretary of State. If that was done, everyone could be satisfied: the local authorities would be satisfied. The executives would certainly be satisfied, not having to go to the money market because the best way of meeting this is by direct grant from the local authority. And the Minister would be satisfied, according to what has been said by the noble Lord, Lord Bellwin, because he himself had agreed on that particular emergency.
Such an amendment would again restore some of the confidence that has drifted away between local
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authorities and central Government. I cannot see any reason why this should not be done. We are not speaking for ourselves but are speaking for the representatives of the transport executives and the authorities. They do not like this kind of legislation to leave your Lordships' House. They mean it; and they mean it in the interests of good management. They mean it in regard to an emergency. If the Secretary of State had the final, overriding say over what constituted an emergency, then I cannot see why there should be any objection to such an amendment.
If the noble Lord, Lord Bellwin, with the permission of the House, was able to tell your Lordships that he will consider that, perhaps we can agree upon an amendment that will satisfy all the differences on this point at Third Reading.
Lord Underhill: My Lords, before the Minister replies may I say that it so happens that just before my noble friend Lord Sefton spoke I had written down exactly the same words on my pad. I took note of what the Minister said, that there is no definition of "circumstances of an emergency nature", and I immediately wrote, "Say we inserted 'subject to the approval of the Secretary of State' ". That suggests that there are at least two people thinking on sensible lines, and I think that there are others as well. I will dispense with the rest of the notes I have here, because I believe that is the cardinal point which has been put to the Minister. He can cut out a lot of the other parts of the amendment, but if we could have written in,
"circumstances being agreed between the Authority and the Executive as being circumstances of an emergency nature, subject to approval of the Secretary of State",
that would meet the point, and would also help to undo some of the feelings of suspicion which have gathered. Perhaps the noble Lord the Minister would like to reply to that.
Lord Bellwin: My Lords, with the leave of the House, perhaps I can comment on that. On the particular point we are talking about—that is, the definition of an emergency—what the noble Lords suggest is not without its attractions. If one took that by itself, perhaps not that formula but something like it, it might be possible to cover such a definition of what is an emergency. Certainly I undertake to talk to my colleagues about that.
I am indeed very anxious to take up the point the noble Lord, Lord Sefton, makes about building back a few bridges, although he knows that he and I would differ—perhaps less than some; perhaps the noble Lord, Lord McIntosh, and I would differ more—as to why the need for bridges is there in the first place. But that is not the point now. I am very attracted by anything that would do that. The fact is, as I said in the first half of my remarks, I believe that with the caveat that there is, that the duty is to break even so far as is practicably possible", in what really was an emergency there could be no possible complaint, there could be no possible expectation of the authority having to do something that was not practicably possible, for whatever reason. I think that really is the nub of it.
Again in an attempt to be helpful—I am sure noble Lords know that I mean that when I say it—I will look

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at that other point to see if there is the kind of merit in it that noble Lords feel is there. I suspect a formula might he found. But I do not know whether that overcomes the other basic obstacle; namely, the duty to break even so far as is practicably possible, with the other opportunity which exists if it is not practicably possible—and to borrow is not the only alternative; there are others. I do not know, but I suspect I would come to the conclusion that the one does not override the other; but I am certainly attracted to the possibility of doing something of that kind. I can go as far as that, but I am afraid no further than that.
Lord McIntosh of Haringey: My Lords, the noble Lord the Minister appears to take two steps forward and 1·9 steps back again. I do not think we are getting a great deal further, because I do not think the nature of the issue has been fully comprehended, with great respect. The provision in the Bill that authorities shall be required to work within the grants so far as is practicable is still subject to the provision that the protected expenditure level shall be considered taking one year with another; in other words, one year with the next. If an executive overspends in one year the presumption must be that the PEL will be reduced for the following year by a comparable amount. If I am wrong about that, I will gladly give way.
Lord Bellwin: My Lords, if I may intervene very quickly, I would not have thought that necessarily follows. I am open to correction. When I look at the other points I will look at that, too, but I would not have thought it was necessarily so. I could be wrong.
Lord McIntosh of Haringey: My Lords, I think it is a very important point which does need to be clarified. I would be grateful if the noble Lord would agree, as I am sure he will, to find some way of clarifying it before the Bill leaves your Lordships' House.
Lord Bellwin: My Lords, I am assured that I am right in what I say. I hope that is helpful.
Lord McIntosh of Haringey: Does the noble Lord mean that any overspending is not necessarily taken off the protected expenditure level for the following year?
Lord Bellwin: Yes.
Lord McIntosh of Haringey: My Lords, that is certainly helpful. That certainly was not clear to me; I do not know whether it was to my noble friends. That encourages me to think that perhaps the noble Lord the Minister has taken only 1·8 steps back. Under those circumstances, in view of what the Minister has said to my noble friend about considering the possibility of an amendment which would have the further proviso that the certification of an emergency would be subject to the approval of the Secretary of State, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
8.47 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 22:
Page 5, line 21, at end insert—
("An Authority may after consultation with the Secretary of State increase the amount of any revenue grant in any year where the amount determined under section 4(1) above becomes inadequate due to circumstances which are beyond the ability of the Executive and the Authority to control.").
The noble Lord said: My Lords, I beg to move Amendment No. 22. I think it would be unreasonable to detain your Lordships too long with this amendment. It is another attempt to do the same thing. The Government do not appear to like the phrase "circumstances of an emergency nature". The other phrase which we are proposing here is "circumstances which are beyond the ability of the executive and the authority to control". I anticipate that in this case, as in the last, the Minister will say that these circumstances are not defined. I would be the first to say that if he will agree to give the same consideration to the possibility that the definition of circumstances beyond the ability of the executive or the authority to control shall be subject to the approval of the Secretary of State, I think we might make progress.
I do not think it can seriously be said, first, that there are no circumstances which are beyond the ability of the executive or the authority to control, or, secondly, that the recognition of the fact that there are likely to be such circumstances is a true breach of the intentions of the Bill. It must be right to have flexible financing for this type of circumstance. It must be right to have the alternative of additional revenue grant, in addition to the borrowing powers the Government are proposing. I think the same argument would apply here for this quite modest amendment. I beg to move.
Lord Bellwin: My Lords, I actually have more difficulty with this, because although the amendment is very similar in purpose, the fact is that it would provide for the opportunity to make more than one grant determination, where the existing grant becomes inadequate because of circumstances beyond the ability of the executive or the authority to control. This again provides an opportunity to circumvent the planning procedures, and, indeed, it has to be said, even an excuse for slack management, which is just what the Bill is trying to prevent.
The amendment really worries me because what it says in effect is that an authority can increase the grant where the amount becomes inadequate due to any—I underline "any"—circumstances beyond the ability of the executive or the authority to control. I am sure that with their ingenuity some authorities could, if they wished, find examples of circumstances beyond their control. Would there not then be never ending approaches to and discussions with the Secretary of State?
If I am right in what I said on the previous amendment, at least with regard to the first part of it—namely, what happens if a situation arises which is beyond the control of the authority and how they deal with it—then surely the same applies to this amendment, which is so similar in many ways. There is a point that I have already said I wanted to look at—picking up the point made by the noble Lord,

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Lord Sefton, in particular—because I am indeed anxious to see where it might prove to be possible to build bridges, if I may use the term, or whatever, with local authorities. That is one thing that I undertook and I will certainly do that. I am not sure where it will get me but I promised and I should like to see what might come from it. But here I feel that we are into something else and I cannot accept the amendment.
Lord McIntosh of Haringey: My Lords, I find it very difficult to understand why this alternative wording, which is not more loose than the wording in Amendment No. 21, should be more objectionable to the Government than the previous one. No authority or executive wants to admit that there are circumstances beyond its control, just as no authority or executive wants to admit that it has to spend money on items of an emergency nature.
The Minister emphasised the word "any" in the phrase "due to any circumstances beyond the ability of the Executive or the Authority to control". The amendment does not actually say that. The word "any" does not appear in that context. It is certainly not the intention of the amendment to try to widen the breach or break down the annual financial control which is proposed.
It does look as if we are not going to get any further with this series of amendments. With the advantage that I believe we have gained on the assurance that overspending is not necessarily set against the protective expenditure level for the next year, I ask only this of the Government: When these genuine one-off emergencies occur—I am talking about such one-off emergencies as, say, the Mersey Tunnel falling in or snow blanketing our major cities rather than the kind of continuing expenditure as, for example, a higher wage settlement than had been anticipated—can some way be found of recognising in legislation that these one-off emergencies "will not" be set against protected expenditure levels for next year rather than "may not" be? If we can make some progress on that—and I am not asking for an answer now—I am prepared to beg leave to withdraw the amendment.
Amendment, by leave, withdrawn,
The Deputy Chairman (Earl Cathcart): In calling Amendment No. 23, I remind your Lordships that if this amendment is agreed I cannot call Amendment No. 24. Amendment No. 23, Lord McIntosh of Haringey.
8.52 p.m.
Lord McIntosh of Haringey Lord McIntosh of Haringey moved Amendment No. 23:
Page 5, line 22, leave out subsection (2).
The noble Lord said: My Lords, by leave of my noble friend I shall speak to this amendment. This is a much more important amendment than those which we have attempted to put before your Lordships in the last few minutes. I make no bones about it, but here we come back to what is to us one of the most objectionable features of the Bill. The Bill says, not openly, "If you spend more you are in trouble" but, negatively and by the backdoor, "If you spend within
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this arbitrary limit, you are not in trouble", and therefore, by implication, "If you spend more you are likely to be in trouble".
I must avoid making a Second Reading speech, despite the fact that the issue is so fundamental, but this is the place where we have the willingness of the Government to wound but the unwillingness of the Government to strike. In other words, the Government are proposing to achieve an objective which is profoundly abhorrent by giving the Secretary of State the right, entirely without let or hindrance, to approve expenditure and to say to the courts, "Under these circumstances which I alone, the Secretary of State, have determined, expenditure will be considered to be safe."
We know that there have been many problems with the law on public transport expenditure over the past few years. There is no denying that. I appreciate that one of the reasons for the Government introducing this legislation is that there has been this measure of confusion. The decision in the Greater London Council case, and the situation of the legal advice being given to the metropolitan authorities in the case now before Mr. Justice Woolf, have given rise to a great deal of anxiety and expenditure on legal advice and assistance to local authorities, and no doubt to the Government as well. Legal uncertainty of that kind certainly is undesirable. There can be no doubt of that.
However, the legal situation which affected both the Greater London Council and the metropolitan authorities has in large measure been resolved before the passage of this Bill. The decision of the Divisional Court earlier this year and the decision of Mr. Justice Woolf have in fact relieved the anxieties both of the Greater London Council and of the metropolitan authorities. In that sense there is no need for this legislation if its purpose is to clear a legislative confusion. Indeed, the matter is worse than that because what the legislation now proposed is doing is to cobble on to the 1968–69 Acts, which still remain in force, a new series of criteria and of rules for local authorities to work to.
The legislation proposes giving the Secretary of State the power, entirely of his own accord and without any reference to further authority, to say "If you local authorities obey my financial guidance you are protected under the law". That is not just in what it does but in what it does not do. It is an abhorrent principle. The way to maintainj financial control of public transport does not lie through means of that sort. I beg to move.
Lord Sefton of Garston: My Lords, I wish to support the amendment but I would not want to make a Second Reading speech. That is going to be a difficult problem. I can see that immediately. But it is quite simply resolved because in fact the Bill proposes that the Government should have the power to restrict the spending of local authorities on transport. They have chosen this method, contained in this clause as one method by which that control can be exercised. So if I address myself to alternative methods of control of that expenditure I do not think that could be interpreted as a Second Reading speech. I would therefore like to apply myself to that problem.

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I made the point in Committee and on Second Reading that the real damage that this Bill does is in the relationship between central and local government, as opposed to the developments in democratic states throughout the world where in some, because of the peculiar nature of the difficult economic environment, they are moving towards one-party states. No democracy is static. Developments must take place and it is very important to see which way those developments are tending to go.
In this country, because of an economic policy accepted by the present Government the emphasis is now coming—I do not think anyone will deny it—on more central control being exerted on local authorities and on the local part of our democratic system than existed before. We have seen it in many instances. Not only is it extended on the question of finance; it is also extended on the question of administration.
I said at Second Reading that water was once in the main democratically controlled by many local authorities; it has now become the prerogative of the Secretary of State, completely removed from any democratic control of any elected people except through the other place and perhaps this place. So the trend is towards more centralisation. That is not only seen in water and transport, Very shortly if I read the Sunday Times right—and it sometimes gets it right, as it got the Budget right—in education there are moves afoot to begin to centralise power, centralise direction and to tell local authorities where to go for the best bargain in the educational field. Of course there are.
As I said on Second Reading, perhaps one of the most glaring examples of the centralisation of our democratic system is in the question of how we handle that very important affair of law and order. I do not think that anybody will deny on the issue of law and order that we have certainly moved towards central control. We have certainly moved towards the most effective policing authority being a regional task force, which is not answerable to any democratic body at all but takes very important decisions and perhaps influences national policy in policing more than any other organisation in the country. So the centralisation is there.
If we go back to the principle of the Bill, this Bill at the moment is supposed to be aiming only at financial control. If in fact the Government really only mean that, and they do not mean they want to extend power generally over transport decisions in the country as a whole, then there are other ways of doing it. I said before, and I still say, that this clause means in effect that the people who are going to decide transport policy locally are those people who take the local authority to court. Under this Bill they are going to be able to take the local authority to court for an entirely different reason than they did before. The reason that they took a local authority to court before was an issue of common law as to whether or not the local authority was carrying out its duties in a proper and reasonable manner in accordance with the dictates of local government. That was the reason before. Now a new idea is being entered. Now it will be seen that people will be taking local authorities to court because of the fixing of the PEL. That will be used as the bench mark as to what is the right amount.
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Why do the Government not come forward with an amendment that really is the heart of the Bill? Why do they not come forward with proposals for block grants to be fixed by the Secretary of State without any recourse to law at all? They shy away from that and the reason is that they do not want to appear to be in fact controlling local authority transport matters, when the truth is that this Bill will lead them inexorably in that direction. It will go from determining the PEL to then determining the situation in regard to any individual part of a transportation plan. The Government will insist on having all the information necessary for them to declare a PEL. In the end what we shall have is a duplication of services.
I would not know whether it is in order to put down an amendment that has not been submitted in writing. I rather suspect that it is, although this is not the custom and practice. I have been sitting here trying to think of how I could amend this amendment or put an amendment in the other way which would enable the Government to have their way in regard to the limitation of the final amount that would be spent by local authorities as a PEL but would remove the incitement of people to take local authorities to court. I think that there are 101 ways of doing it, and I think that the Government have to demonstrate that they are perfectly willing to look again at that clause. I think that this clause should be defeated on the grounds that we start de novo, looking again at other ways in which the Government can meet their intended purpose in this Bill without introducing the courts into the matter.
9.4 p.m.
Lord Underhill: My Lords, before the Minister replies, may I make just two or three points. I have been looking very carefully at all the Second Reading speeches which were made on this subsection in the Committee stage, but I certainly do not want to repeat any Second Reading speeches. But time and time again the Ministers opposite say that the final decision rests with the authority, which is free, so we are told, to make up its own mind about the amount of revenue grants to be paid. As my noble friends have emphasised quite strongly, the freedom is there but with an iron glove behind it. So long as the local authority does what the Secretary of State says in his guidance, it is free to do what it likes. But if it does not accept the Secretary of State's guidance, there is almost an encouragement—we mentioned this at Second Reading—in the White Paper for people to go to court. Therefore, there is no freedom of the authority when one comes to the last analysis. The freedom is there so long as it accepts the advice and guidance of the Secretary of State.
We were also told by the Minister—and I have looked at the last debate—that there is an attempt to ignore many of those who live in the areas of the authorities concerned and who are affected by what happens. But I thought that that was why we had elections. That is why we have local council elections; that is why we have metropolitan county elections and why we have metropolitan district elections. When one puts before the electors a transport plan which takes into consideration the needs of the people and planning needs and it is made a focal point of the

911
election, the people say they will support this and the authority then says, "This is what we want to do", but the Minister says, "You are free to decide to do it but we are not going to give you the money to do it, and if you dare go above the guidance figure for revenue support then there is every encouragement for people to take legal action against you", where is the freedom and where is the flexibility? This goes against the wishes of local people who declare, "This is what we want in our transport plan".
Every single effort that has been made from this side of the House to put into the plan social needs and planning needs has been turned down. Therefore, there is no flexibility; there is no freedom for the authority to make up its own mind so long as we keep subsection (2) of this Clause in being.
Baroness Gardner of Parkes: My Lords, I am slightly puzzled by the comments that have just been made by the noble Lord, Lord Underhill. He seemed to imply that if an authority is elected, not just on one point of policy, then that gives that authority an automatic mandate. It was quite apparent in the case of the Fares Fair Scheme that in London the people who elected the authority were quite stunned when they found that they were getting a supplementary rate demand. That was when all the letters started flowing in, protesting on that basis.
It is very important to retain this subsection in the Bill because this is the subsection that makes clear how much you can spend and that there can be no legal challenge within that limit. I understood that this was one of the main purposes of the Bill. To delete it now would be returning us to exactly the same position as previously. To act in that way and to say that this gives no flexibility is pretending that there is no approved amount for the present London Transport grant; whereas instead we have had a figure of £115 million put to us which I understand we would be able to spend. That is a not inconsiderable sum by anyone's standards. It is very wrong to adopt the attitude that this is removing democracy. I cannot accept that, and I hope that the Minister will retain this part of the Bill.
Lord Bellwin: My Lords, let me say at once that, of all the amendments, we clearly cannot accept this one. I am in exactly the same dilemma as the noble Lord, Lord Sefton: how do I avoid making Second Reading points and yet answer what has been said? I shall try and do as the noble Lord did—and I think he did it very well. He did it fairly shortly, and I shall try to do the same. I shall try, as he did, to contain the depth of feeling which I have on this subject.
I, too, am desperately anxious about what is happening to local government. Of course, the noble Lord, Lord Sefton, is right in saying that there is a move taking place—there has been a move taking place for the last 25 years—for the centre to take more and more control. I know that there are members on all sides who could weep as to what local government is doing to itself by confronting and taking on central Government and, in effect, by challenging central Government. There are those not far from here who wholly delight in challenging central Government.
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What are the Government to do in a situation like that? With respect to the noble Lord, Lord Underhill, it is not good enough to rest on the mandate of a local election. There is a national mandate which must always override the local mandate. As your Lordships have heard me say before many times in this House—and none more so than the noble Lord, Lord Sefton—local government was proud of the fact that it worked within the parameters set down by the centre. That is what government is all about. It is more important to all of us in your Lordships' House than any local mandate, whatever it may be.
Never mind all the talk about the GLC: there are authorities like the South Yorkshire Authority which for nine years has not put up its fares one penny and which is now raising a subsidy on its people of £60 million. How long before it is £70 million, or £80 million? When we talk about the issue of local government and the feelings that we all have for it, we cannot turn away from what it is doing to government. One may say, "Why should it be so important to government that they should want to take this kind of action when local people act in this way?" I shall not repeat all the points I made on Second Reading. But one has to be concerned about the people who are affected; that is what it is all about.
The noble Lord said, "Why not block grant?" He made what I know he thinks is a constructive suggestion. But let me tell him that block grant has its weakness, too, or its strength, depending on whether you are buying or selling. Block grant sets out to give grant; it does not set out to limit expenditure. It does not stop an authority from deciding, if it wishes, to go to its ratepayers and apply a precept or a rate. It can do whatever it likes above block grant. We can look at some of the effects of that. On Second Reading my noble friend Lady Gardner gave an impressive list of the impact of that upon prosperity and upon people's businesses.
I have before me a whole clutch of letters that have come from different businesses and concerns within the authorities that we are talking about. I shall not read them out but if any noble Lord asks me later I shall gladly show them to him. Some of them are so sad as regards what is happening to the people in these areas. So when the Government are challenged on their basic philosophy in bringing forward a Bill of this kind, which I know the noble Lords opposite dislike so much, noble Lords must recognise why this comes about. If we fail to recognise that, truly in terms of debate all is lost, because we shall never convince anyone as to what we are doing there. I do not know what more I can say on this without going into much greater length than I think is proper at the Report stage of this Bill.
Perhaps noble Lords would bear with me because I want to put something on the record; I think that the noble Lord, Lord Underhill, in particular will be pleased if I do so, and it is right that I should. At Second Reading I said something which was not strictly speaking correct. I am always at great pains to put right something that is wrong. At the time I said that the AMA had spent money on the campaign by way of advertisements, leaflets and so on. It must be said that they had a great deal to do with that campaign and, so far as I know, still have. But the

913
record shows that they did not spend money. It is proper that I should put that on the record. It is to be regretted, and it is not my way to say something that is not true. I said it in good faith because of information that I was given. However, the chairman of the association wrote to me and properly drew my attention to this. I wanted to take this, my first opportunity, to put the record straight. It would be wrong it I did not do so. It is a slight digression, but I wanted to make that statement.
Clearly, we do not go along with the amendment. It needs a much longer debate. The feelings are deeply held on both sides. The noble Lord, Lord McIntosh, referred to the proposals as abhorrent. From where he sits, I understand what he says. In return, I ask him to understand that, with my tremendous concern for local government, I feel equally deeply that if things are not done, we shall only fall deeper and deeper into the mire. That is not what this Government are about to allow to happen.
Lord McIntosh of Haringey: My Lords, first, on behalf of my noble friends, we are grateful to the Minister for the correction of an earlier, obviously inadvertent, misstatement and we accept entirely what he has just said.
I described an earlier amendment as being on its hands and knees in the sense of coming back with a more modest proposal for something which we tried to achieve in broader terms in committee. This amendment is not on its hands and knees. It stands on its two feet and must be defended on that basis, because at the Committee stage my noble friend Lord Underhill moved an amendment with such complex wording that I am not sure that I fully understood it at the time or that I understand it now. The amendment attempted to give some protection to local authorities in making revenue grants on the basis of their general duties under the 1968 and 1969 Acts. The Government did not like that amendment. It was rejected, partly on the broader grounds to which the noble Lord, Lord Bellwin, has referred, but partly also because the wording itself was difficult.
Therefore, we come to the conclusion that we have no alternative but to put forward the full and proper amendment here and now, which is to delete any of this protection for compliance with the Government's wishes under all circumstances. Those are the words used. I shall not repeat the reasons why we find this to be abhorrent. But I think I ought to correct the noble Baroness, Lady Gardner, because she specifically referred to the supplementary precept levied by the Greater London Council in October 1981 as if that were something which had not been anticipated. That is not the case. In fighting and winning the election in 1981, the Labour Party specifically said that fares would be reduced by 25 per cent.—and I believe that that was as late as 4th October 1981—and that a supplementary precept of 6p would be raised for that purpose. It was in our election manifesto; it was made widely known to the people of London; and the Labour Party was elected on that basis. What then happened was that, completely beyond the control of the Greater London Council, the Government decided that it would be appropriate to penalise the Greater London Council further and to save the taxpayers'
914
money at the expense of the ratepayers. So there was no increase in public expenditure as a whole, but the supplementary precept which had to be levied in October was twice the amount which had been anticipated. However, the principle is absolutely clear. The Greater London Council knew what it had to do, had declared it to the electorate in advance of the election, and in fact carried that out.
I move as rapidly as I can away from the question of the GLC because I know it gives great offence, not least to my noble friends. I do not see how we on this side of the House could let a Report stage go without seeking to remove this legal monstrosity of the protected expenditure level. I shall not repeat the arguments again except to say that it is only in the interests of the relatively small number of people here and the time of night that I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
[Amendment No. 24 not moved.]
9.21 p.m.
Lord Underhill Lord Underhill moved Amendment No. 25:
Page 5, line 29, at end insert—
("An Authority may only excercise their powers under section 15(3) of the Act of 1968 where no increase in the amount of the revenue grants determined by section 4(1) above will result.").
The noble Lord said: My Lords, this is quite a simple amendment. I am certain that the Minister will not say that it is in any way an attempt to wreck the Bill, because it provides that there will be no increase in the amount of revenue grant. It refers to Section 15(3) of the 1968 Act. We debated the principles of Section 15(3) of that Act a number of times at Committee stage. Where an authority considers a particular service is essential but the transport executive considers that the cost is prohibitive and it cannot meet it, the authority may instruct the executive to operate that sevice but gives an undertaking to meet the cost involved. That is paraphrasing the provisions of Section 15(3) of the 1968 Act.
This amendment says that the authority should have the power to exercise that authority under Section 15(3) of the Act but only
… where no increase in the amount of the revenue grants determined …"
will result. We want the authority to have that power, but it is not seeking to make it an additional charge over and above the determined revenue grant. I shall be interested to see whether the Minister will accept this amendment. The only differences can be whether they want the Section 15(3) powers to continue. We hope they will. I beg to move.
Lord Bellwin: My Lords, in Clauses 9(2) and 10(1)(c) of the Bill, there are provisions to repeal Section 15(3) of the 1968 Act. This amendment must, I think, assume the continuation of Section 15(3). To clarify matters let me set out the effect of this section and the purpose of the repeal. Under Section 15(3) of the 1968 Act, an authority which wishes to see an unwilling executive provide a loss-making service may direct the executive to provide that service, and the authority must then provide a specific grant to the executive to meet the costs. Section 15(3) is to be

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repealed by the Bill because the planning procedure which the Bill introduces will allow the authorities to require the executive to include in the plan any service or facility it considers necessary. Section 15(3) will therefore become superfluous. But as the planning procedure will not be fully implemented before 1st April 1984, we do not intend to remove this power until that date. Section 15(3) will be superseded by Clause 4(1) of the Bill. But as the first plan under Clause 4(1) does not itself come into effect until 1st April 1984, of course we have no intention of repealing Section 15(3) before then.
Under the Bill the authority may, under Clause 4(2), require the executive to add to their plan the provision of an unremunerative service; and the authority will in each year approve the plan with or without modifications and determine the amount of revenue grant it gives the executive. The power contained in Section 15(3) will therefore be fully replaced by the Bill as part of the annual process. During 1983–84 before Section 15(3) is repealed the situation will be exactly as described in the amendment. An authority will only be able to exercise this power within the amount of grant they have determined. So, my Lords, I think that the noble Lord will surely agree that this amendment at least is unnecessary because for 1983–84 Section 15(3) remains. Since in subsequent years Section 15(3) will no longer be in existence, the amendment is inappropriate.
Lord McIntosh of Haringey: My Lords, I believe there are two principal reasons why the House should not accept the advice of the noble Lord, Lord Bellwin, about Section 15(3) of the 1968 Act. First, although it is undoubtedly the case that in the early years relatively little use had been made of Section 15(3), it became an issue in the Merseyside judgment of Mr. Justice Woolf. I should like to quote from the judgment:
"While the Executive's duty is the same as that of the Authority, they have to form an independent judgment and, if they come to the conclusion that the cost of a possible policy is too high, they should not adopt it but leave it to the Authority if they think differently to use their power under Section 15(3)".
So certainly in that case Mr. Justice Woolf felt that it was desirable to remind the executive and the authority of the existence of Section 15(3), and of the powers available to an executive to demand that the authority should use that section of the 1968 Act in order to provide unremunerative services. We are now talking about the kind of services comparable to those which can be provided by British Rail under the public sector obligation, which part of the Act, I understand, is not to be repealed.
The second reason why the House should not accept the advice of the noble Lord is that there is a difference between the planning powers given in Clauses 3 and 4 of the Bill and the powers under Section 15(3) of the 1968 Act. That difference is an extremely valuable one in relation to the 1968 Act, the point being that it is open to an executive to identify not just a general level of service but particular services which will be unremunerative, which will be too expensive for it to run within its normal financial remit from the authority, and yet which it is recognised should for social
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reasons be maintained. There are, for example, services operated at hospital visiting times, and services in rural areas. As we have heard from a number of noble Lords, there are a considerable number of rural areas within the boundaries of the metropolitan authorities.
It is important that individual decisions should be made by local people when they want to have unremunerative services preserved and are willing to pay the price for them. This has nothing do with general financial irresponsibility; it has nothing to do with the issue of the general level of fares. It is provided for under Section 15(3) of the 1968 Act, and it would not be available to an executive or an authority if, after 1983–84, Section 15(3) were to be repealed. For those two reasons I consider it is important that we should retain these provisions under the 1968 Act, and that the amendment should be accepted.
On Question, amendment negatived.
Lord Underhill Lord Underhill moved Amendment No. 26:
Page 5, line 29, at end insert—
("(3) To the extent to which the amount of revenue grants made in any year by an authority in accordance with any such determination exceeds the amount specified in guidance given by the Secretary of State under section 4(5) above in relation to that determination, the making of those grants up to and including the amount so specified shall, without prejudice to any other proper exercise of the power of the Authority to make revenue grants, be regarded for all purposes as a proper exercise of that power.").
The noble Lord said: My Lords, this is the final amendment under Clause 5, and I would remind your Lordships that subsection (2) seeks to give protection to a transport authority from any challenge in the courts where it makes revenue grant up to the guidance level set by the Secretary of State. That is the point that we have been discussing for the last half-hour or so. The amendment seeks to deal with the question of what is the legal position if the guidance level is exceeded. In such circumstances the amendment seeks to protect the expenditure up to the guidance level.
Let me put it in the following way. Let us say that £30 million is the guidance level fixed by the Secretary of State, and that, due to unforeseen circumstances, it is exceeded. Will the £30 million level be protected? This is not an academic question. It was raised in Standing Committee in another place and is referred in columns 321 and 322. The Under-Secretary of State, Mr. Reginald Eyre, was asked whether in the light of the discussion, he was saying that, if an operating authority for operational reasons exceeds its budget during a financial year and the authority subsidises the operation over and above the guidance of the Minister, not only the additional expenditure but all expenditure is challengeable in the courts. The Minister said that he would like to reply to the matter when Clause 5 was reached. When pressed further, the Minister asked that this matter be not pressed because he wanted to deal with other matters raised during the debate. He said:
"I shall be glad to return to the matter on Clause 5 and properly answer then".
Unfortunately, Clause 5 was not reached. There was no debate on this. The other place had no reply from Mr. Eyre or from any other Minister. We have put

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down this amendment because we want this legal matter clarified. I hope that the Minister can do it this afternoon.
Lord Bellwin: My Lords, I suppose that, in a way, this is a probing amendment; for, ironically, what was said was never actually reached in another place.
The amendment, as I understand it, seeks to ensure that if an authority exceeds the Protected Expenditure Level, then the grant which it pays to the executive up to the PEL will still be fully protected. Any challenge would therefore be restricted to the excess above the PEL. Lord Underhill has explained that this results from the way that, under the Bill, protection is afforded only if the authority keeps wholly within the PEL. If an authority exceeds the PEL, then the amount up to the PEL will still benefit from the protection afforded by Clause 5(2). Clause 5(2) clearly states that,
"to the extent to which the amount of the revenue grants … does not exceed the amount specified in guidance given by the Secretary of State, the making of those grants shall be regarded as a proper exercise of [the Authority's] power".
The crucial phrase is "to the extent", which I interpret to mean that payments up to that extent are protected; but that on any payments over that amount the excess would not be protected. I think that that is pretty categorical. I hope it will reassure the noble Lord, Lord Underhill, and noble Lords opposite so that they may feel able to withdraw this amendment.
Lord Sefton of Garston: My Lords, may I ask the noble Lord where the Bill mentions the excess? Where does it say in the Bill that the disqualification applies only to the excess over the PEL?
Lord Bellwin: My Lords, while my noble friend turns the pages, perhaps I can repeat the point which I think states it clearly, which is the statement that:
"to the extent to which the amount of the revenue grants … does not exceed the amount specified in guidance given by the Secretary of State, the making of those grants shall be regarded as a proper exercise of [the Authority's] power".
I said that the crucial phrase was "to the extent". Of course I will give the noble Lord the detail he requires if he will bear with me for a moment.
Lord Sefton of Garston: My Lords, perhaps I may make a point while this is being looked at. I accept what it says in the clause, but it does not specifically say subsequently that only the excess is to be applied. We can all imagine what is going to happen. It will not be just a question of a local authority and somebody discussing with the Minister what the excess will be. What will happen is that both sides will employ barristers and will go to court and then will have a field day. Somebody will be saying that the law is an ass; because a barrister will be arguing whether, once the amount has been exceeded, that makes the whole payment invalid. That is what he will argue. The barrister on the other side will argue against it and, at the end of the day, the judge will decide. That could be the scenario. What that implies is, as I said earlier in Second Reading, that the judge is sitting before two barristers hearing the arguments and then deciding whether the Bill allows him to say that the rest of the payment even up to the PEL is invalid. Having made that point, that is what could happen. A simple
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amendment that makes that crystal clear, which will not cost the Government anything, is surely reasonable and will remove all our arguments in the courts.
Lord Bellwin: My Lords, the fact is that the Bill states the amount up to that which is legal, and the noble Lord, Lord Sefton, is right that beyond that, if challenged, the authority have to have a case to justify to the courts that above that figure was reasonable, and so on.
I do not know whether there is a case for looking for further clarification. I have not the slightest doubt in my mind—indeed I have said so—and when the noble Lord reads Hansard he will see I chose my words carefully to try to reassure your Lordships. When we too consider what has been said and we feel that there is not absolute crystal clarity, we will see what has to be done. That is the best I can do with this matter for tonight.
Lord Underhill: My Lords, as the Minister said in his first statement, this was partly a probing amendment because we wanted a ministerial statement about why, for various reasons, such was not forthcoming in the other place. But the point which my noble friend Lord Sefton of Garston makes is one to which I hope the Government will give some attention. The Minister just used the words "if challenged". We want to avoid anybody being challenged and to avoid the necessity of local authorities having to go to court or being taken to court. This is not in any way attempting to sidetrack the Bill. I think that the Minister agrees. We are not arguing about the Government's or the Secretary of State's power to fix the guidance level.
Our amendment may not be properly worded, but we are saying that if, for any reason, the authority finds it necessary to exceed the revenue grant, the expenditure up to the figure which is permitted shall be regarded as a proper exercise of the authority's powers. That would avoid anybody taking the authority to court except for a balance above that figure. That is not clearly stated in the Bill. It may well be that there will be legal argument one way or the other but I ask the Minister, as I know he will, to note carefully what has been said. There is not a great deal of time before Third Reading, but it would be helpful if there could be a legal discussion on this to decide whether it would be better to put something into the Bill which the Law Officers can determine to avoid the possibility of challenge. That is what we want to do on all sides of the House.
Lord Bellwin: My Lords, with leave of the House and if the noble Lord will allow me, I think it may be helpful if I were to write to him and to the noble Lord, Lord Sefton of Garston, on the legal interpretation as we see it, to see where it takes us.
Lord Underhill: I thank the Minister for that. So long as, with all due respect, it is a legal interpretation that holds water; because we must bear in mind that the London Transport Executive and the GLC both had a legal interpretation, but that did not avoid a court case. Therefore, if a few words in the Bill will

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clarify the position then I think it is best to have them. In the meantime, I beg leave to withdraw the amendment.
Amendment, by leave, withdrawn.
Lord Denham: My Lords, I think we have made quite satisfactory progress today, and perhaps this is a good time at which to finish tonight. I beg to move that further consideration on Report he now adjourned.
Moved accordingly, and, on Question, Motion agreed to.
House adjourned at twenty minutes before ten o'clock.

  AGRICULTURAL GRANTS: DISCRETIONARY POWERS
  AGRICULTURAL GRANTS: DISCRETIONARY POWERS
  AGRICULTURAL CO-OPERATIVE GRANTS
  AGRICULTURAL CO-OPERATIVE GRANTS
  CANTHAXANTHIN: ADDITIVE TO FISH FOOD
  CANTHAXANTHIN: ADDITIVE TO FISH FOOD
  SPINAL INJURIES: EARLY DISCHARGE OF PATIENTS
  SPINAL INJURIES: EARLY DISCHARGE OF PATIENTS
  SPINAL UNIT, STANMORE: REVENUE FUNDING
  SPINAL UNIT, STANMORE: REVENUE FUNDING
  SCHOOL EXAMINATION TITLES
  SCHOOL EXAMINATION TITLES
  CENTRAL LONDON TRAFFIC CONGESTION: BUSES
  CENTRAL LONDON TRAFFIC CONGESTION: BUSES
  SPECIAL QUOTA VOUCHERS: DATES OF APPLICATION
  SPECIAL QUOTA VOUCHERS: DATES OF APPLICATION
  GOVERNMENT FORMS
  GOVERNMENT FORMS
  CIVIL SERVICE: UNIFIED GRADING
  CIVIL SERVICE: UNIFIED GRADING
  YOUTH TRAINING SCHEMES: PROTECTION AGAINST RACIAL DISCRIMINATION
  YOUTH TRAINING SCHEMES: PROTECTION AGAINST RACIAL DISCRIMINATION
  CRUISE MISSILES: LAUNCHING
  CRUISE MISSILES: LAUNCHING
  CRUISE MISSILE BASES: BRITISH FORCES
  CRUISE MISSILE BASES: BRITISH FORCES
  BASES IN UNITED KINGDOM: UNITED STATES USE
  BASES IN UNITED KINGDOM: UNITED STATES USE